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ST. MARY'S COUNTY
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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
AMERICAN CABLE TV INVESTORS 5, LTD.
AND
▇▇▇▇ MULTIMEDIA PARTNERSHIP
DATED AS OF
NOVEMBER 27, 1996
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TABLE OF CONTENTS
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1. Definitions.............................................................................................. 1
Accounts Receivable...................................................................................... 1
Adjustment Time.......................................................................................... 1
Affiliate................................................................................................ 1
Alternative Transaction.................................................................................. 1
Assets................................................................................................... 2
Assumed Liabilities...................................................................................... 2
Basic Services........................................................................................... 2
Basic Subscriber Rate.................................................................................... 2
Best of Seller's Knowledge............................................................................... 2
Business................................................................................................. 2
Business Day............................................................................................. 2
Buyer.................................................................................................... 2
Buyer Financial Statement................................................................................ 2
Buyer Interim Financial Statement........................................................................ 2
Cable Act................................................................................................ 2
Capital Project.......................................................................................... 2
Closing.................................................................................................. 3
Closing Date............................................................................................. 3
Code..................................................................................................... 3
Commitment Expense....................................................................................... 3
Communications Act....................................................................................... 3
Consents................................................................................................. 3
Copyright Act............................................................................................ 3
Deposit.................................................................................................. 3
Employer................................................................................................. 3
Employer Plans........................................................................................... 3
Encumbrance.............................................................................................. 3
Environmental Law........................................................................................ 3
Equipment................................................................................................ 3
Equivalent Basic Subscribers............................................................................. 4
ERISA.................................................................................................... 4
Escrow Agent............................................................................................. 4
Escrow Agreement......................................................................................... 4
Exchange Act............................................................................................. 4
Excluded Assets.......................................................................................... 4
Excluded Liabilities..................................................................................... 4
Exhibits................................................................................................. 4
Expanded Basic Services.................................................................................. 5
FCC...................................................................................................... 5
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Final Adjustments Report................................................................................. 5
Franchise Areas.......................................................................................... 5
GAAP..................................................................................................... 5
General Partner.......................................................................................... 5
Governmental Authority................................................................................... 5
Governmental Permits..................................................................................... 5
Hazardous Substances..................................................................................... 5
Homes Passed............................................................................................. 6
HSR Act.................................................................................................. 6
Indemnity Escrow Agent................................................................................... 6
Indemnity Escrow Agreement............................................................................... 6
Intangibles.............................................................................................. 6
IRS...................................................................................................... 6
Legal Requirement........................................................................................ 6
Limited Partners......................................................................................... 6
Management Agreement..................................................................................... 6
Partnership Agreement.................................................................................... 7
Pay TV................................................................................................... 7
Permitted Encumbrances................................................................................... 7
Person................................................................................................... 7
Preliminary Adjustments Report........................................................................... 7
Prime Rate............................................................................................... 7
Purchase Price........................................................................................... 7
Real Property............................................................................................ 7
Regulatory Requirement................................................................................... 7
Required Consents........................................................................................ 7
Schedules................................................................................................ 7
SEC...................................................................................................... 8
Securities Act........................................................................................... 8
Seller................................................................................................... 8
Seller Contracts......................................................................................... 8
Seller's Escrow.......................................................................................... 8
Seller Financial Statements.............................................................................. 8
System................................................................................................... 8
Taking................................................................................................... 8
Tax Return............................................................................................... 8
Taxes.................................................................................................... 8
TCI...................................................................................................... 8
Telecom Act.............................................................................................. 8
Termination Date......................................................................................... 8
WARN Act................................................................................................. 9
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ARTICLE II....................................................................................................... 9
2. Purchase and Sale of Assets............................................................................. 9
2.1. Purchase and Sale of Assets.................................................................. 9
2.2. Time and Place of Closing.................................................................... 9
ARTICLE III...................................................................................................... 9
3. Consideration........................................................................................... 9
3.1. Consideration for the Assets................................................................. 9
3.2. Purchase Price Prorations.................................................................... 10
3.3. Purchase Price Adjustments................................................................... 10
3.4. Preliminary and Final Settlements............................................................ 11
3.5. Disputed Liabilities......................................................................... 13
3.6. Allocation of Purchase Price................................................................. 13
ARTICLE IV....................................................................................................... 14
4. Assumed Liabilities and Excluded Assets................................................................. 14
4.1. Assignment and Assumption.................................................................... 14
4.2. Excluded Assets.............................................................................. 14
ARTICLE V........................................................................................................ 15
5. Representations and Warranties of Seller................................................................ 15
5.1. Organization and Qualification............................................................... 15
5.2. Authority and Validity....................................................................... 15
5.3. Consents and Approvals; No Violation......................................................... 16
5.4. Complete Systems............................................................................. 16
5.5. Title........................................................................................ 16
5.6. Real Property................................................................................ 17
5.7. Environmental Matters........................................................................ 17
5.8. Compliance with Law; Governmental Permits.................................................... 17
5.9. Seller Contracts............................................................................. 18
5.10. Copyright Compliance......................................................................... 18
5.11. Financial Statements......................................................................... 19
5.12. Legal Proceedings............................................................................ 19
5.13. Employment Matters........................................................................... 19
5.14. System Information........................................................................... 21
5.15. Finders and Brokers.......................................................................... 21
5.16. Tax Matters.................................................................................. 21
5.17. Condition of Equipment....................................................................... 21
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5.18. Insurance.................................................................................... 21
5.19. Franchises................................................................................... 21
5.20. Capital Project.............................................................................. 22
ARTICLE VI....................................................................................................... 22
6. Buyer's Representations and Warranties.................................................................. 22
6.1. Organization and Qualification............................................................... 22
6.2. Authority and Validity....................................................................... 22
6.3. No Breach or Violation....................................................................... 22
6.4. Litigation................................................................................... 23
6.5. Financial Statements......................................................................... 23
6.6. Adequate Financing........................................................................... 24
6.7. Finders and Brokers.......................................................................... 24
6.8. Qualification of Buyer....................................................................... 24
ARTICLE VII...................................................................................................... 24
7. Additional Covenants.................................................................................... 24
7.1. Access to Premises and Records............................................................... 24
7.2. Continuity and Maintenance of Operations; Financial Statements............................... 24
7.3. Employee Matters............................................................................. 26
7.4. Franchise Extensions......................................................................... 26
7.5. Environmental Report......................................................................... 26
7.6. Required Consents............................................................................ 26
7.7. HSR Notification............................................................................. 27
7.8. Notification of Certain Matters.............................................................. 27
7.9. Risk of Loss; Condemnation................................................................... 27
7.10. Adverse Changes.............................................................................. 28
7.11. Action By Limited Partners................................................................... 28
7.12. No Solicitation.............................................................................. 29
7.13. Sales and Transfer Taxes and Fees............................................................ 29
7.14. Commercially Reasonable Efforts.............................................................. 30
7.15. Title Insurance.............................................................................. 30
7.16. Non-Competition.............................................................................. 30
7.17. Forms 394.................................................................................... 30
7.18. Fairness Opinion............................................................................. 30
ARTICLE VIII..................................................................................................... 31
8. Conditions Precedent to Obligations of Buyer............................................................ 31
8.1. HSR Act...................................................................................... 31
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8.2. Governmental or Legal Action................................................................. 31
8.3. Accuracy of Representations and Warranties................................................... 31
8.4. Performance of Agreements.................................................................... 31
8.5. No Material Adverse Change................................................................... 31
8.6. Consents and Extensions...................................................................... 32
8.7. Transfer Documents........................................................................... 32
8.8. Opinions of Seller's Counsel................................................................. 32
8.9. Opinion of Seller's FCC Counsel.............................................................. 32
8.10. Discharge of Liens........................................................................... 32
8.11. Additional Documents and Acts................................................................ 32
8.12. Indemnity Escrow Agreement................................................................... 32
8.13. Certificates................................................................................. 32
8.14. Minimum Subscribers.......................................................................... 32
ARTICLE IX....................................................................................................... 32
9. Conditions Precedent to Obligations of Seller........................................................... 32
9.1. HSR Act...................................................................................... 33
9.2. Governmental or Legal Actions................................................................ 33
9.3. Accuracy of Representations and Warranties................................................... 33
9.4. Performance of Agreements.................................................................... 33
9.5. Consents..................................................................................... 33
9.6. Opinions of Buyer's Counsel.................................................................. 33
9.7. Limited Partner Approval..................................................................... 33
9.8. Payment of Purchase Price.................................................................... 33
9.9. Assumption of Liabilities.................................................................... 33
9.10. Additional Documents and Acts................................................................ 34
9.11. Certificate.................................................................................. 34
9.12. Fairness Opinion............................................................................. 34
9.13. Indemnity Escrow Agreement................................................................... 34
ARTICLE X........................................................................................................ 34
10. Termination............................................................................................. 34
10.1. Events of Termination........................................................................ 34
10.2. Manner of Exercise........................................................................... 36
10.3. Effect of Termination........................................................................ 36
10.4. Liquidated Damages........................................................................... 36
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ARTICLE XI....................................................................................................... 37
11. Nature and Survival of Representations,
Warranties and Agreements............................................................................... 37
11.1. Nature of Representations, Warranties and Agreements......................................... 37
11.2. Survival of Representations and Warranties................................................... 37
11.3. Time Limitations............................................................................. 37
11.4. Limitations as to Amount..................................................................... 37
ARTICLE XII...................................................................................................... 38
12. Indemnification......................................................................................... 38
12.1. Rights to Indemnification.................................................................... 38
12.2. Procedure for Indemnification................................................................ 38
12.3. Indemnity Escrow............................................................................. 39
ARTICLE XIII..................................................................................................... 39
13. Miscellaneous........................................................................................... 39
13.1. Parties Obligated and Benefitted............................................................. 39
13.2. Press Releases............................................................................... 40
13.3. Notices...................................................................................... 40
13.4. Waiver....................................................................................... 41
13.5. Captions..................................................................................... 41
13.6. CHOICE OF LAW................................................................................ 41
13.7. Nonrecourse.................................................................................. 42
13.8. Terms........................................................................................ 42
13.9. Rights Cumulative............................................................................ 42
13.10. Further Actions.............................................................................. 42
13.11. Time......................................................................................... 42
13.12. Expenses..................................................................................... 42
13.13. Specific Performance......................................................................... 42
13.14. Schedules.................................................................................... 42
13.15. Counterparts................................................................................. 42
13.16. Entire Agreement............................................................................. 43
13.17. Severability................................................................................. 43
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EXHIBITS
Exhibit A Geographic Areas of Seller's Business
Exhibit B Escrow Agreement
Exhibit C Form of Engagement Letter
Exhibit D Form for Opinion of Seller's Counsel
Exhibit E Form for Opinion of Buyer's Counsel
Exhibit F Form for Opinion of Seller's FCC Counsel
Exhibit G Form of Indemnity Escrow Agreement
SCHEDULES
Schedule 1.1 Subscriber Rates
Schedule 1.2 Consents
Schedule 1.3 Equipment
Schedule 1.4 Franchise Areas
Schedule 1.5 Governmental Permits
Schedule 1.6 Permitted Encumbrances
Schedule 1.7 Real Property
Schedule 1.8 Seller Contracts
Schedule 1.9 System
Schedule 4.2 Excluded Assets
Schedule 5.3(b) Violations of Partnership Agreement and Legal Requirements
Schedule 5.4 Complete Systems
Schedule 5.5 Encumbrances on Seller's Title
Schedule 5.8(f) FCC Information
Schedule 5.12 Legal Proceedings
Schedule 5.13(c) Employment Matters
Schedule 5.13(d) Employees
Schedule 5.13(e) Employer Plans
Schedule 5.14 System Information
Schedule 5.16 Taxes
Schedule 6.3(a) Consents to be Obtained or Waived by Closing Date
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("AGREEMENT") is made as of the
27th day of November, 1996, by and between AMERICAN CABLE TV INVESTORS 5, LTD.,
a Colorado limited partnership ("SELLER"), and ▇▇▇▇ MULTIMEDIA PARTNERSHIP, a
Pennsylvania general partnership ("BUYER").
R E C I T A L S:
A. Seller is engaged in the business of providing cable
television service to subscribers in and around the geographic areas set forth
on Exhibit A.
B. Buyer desires to purchase and Seller desires to sell the
assets of Seller designated in this Agreement used or held for use in connection
with that business, upon the terms and subject to the conditions set forth in
this Agreement.
Accordingly, the parties agree as follows:
ARTICLE I
1. DEFINITIONS.
"ACCOUNTS RECEIVABLE" shall mean all accounts receivable of
Seller representing amounts earned by Seller in connection with its operation of
the Business through the Adjustment Time.
"ADJUSTMENT TIME" shall have the meaning set forth in Section
3.2.
"AFFILIATE" shall mean, with respect to any Person, any other
Person controlling, controlled by or under common control with such Person, with
"control" for such purpose meaning the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting interests,
by contract or otherwise.
"ALTERNATIVE TRANSACTION" shall mean any transaction which
could result in the transfer of control over, or ownership of, all or
substantially all the Assets, including (a) any merger or consolidation of
Seller in which another Person or group of Persons acquires 50% or more of the
partnership interests in Seller or the equity interests of the surviving entity,
as the case may be, (b) any tender offer or exchange offer for partnership
interests in Seller which, if consummated, would result in a Person or group of
Persons (other than the existing partners in such entities as of the date of
this Agreement) owning 50% or more of the partnership interests in Seller or (c)
any sale or other disposition of all or substantially all the Assets.
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"ASSETS" shall mean all properties, privileges, rights,
interests and claims, real and personal, tangible and intangible, of every type
and description that are owned, leased, used or held for use in the Business in
which Seller has any right, title or interest or in which Seller acquires any
right, title or interest on or before the Closing Date, including, without
limitation, the System, Accounts Receivable, Governmental Permits, Intangibles,
Seller Contracts, Equipment, inventory and Real Property and including, without
limitation, all of the foregoing disclosed in any Schedule but excluding any
Excluded Assets and any Assets disposed of by Seller in the ordinary course of
business prior to the Closing Date.
"ASSUMED LIABILITIES" shall have the meaning set forth in
Section 4.1.
"BASIC SERVICES" shall mean the lowest tier of cable
television programming sold to subscribers of the System for which a subscriber
served by the System pays a fixed monthly fee to Seller, excluding Expanded
Basic Services, Pay TV and any charges for additional outlets and installation
fees and revenues derived from the rental of converters, remote control devices
and other like charges for equipment.
"BASIC SUBSCRIBER RATE" shall mean, for the System, the
monthly fees and charges derived from the provision of Basic Services to single
family households, as of June 30, 1996, as set forth on SCHEDULE 1.1.
"BEST OF SELLER'S KNOWLEDGE" shall mean the actual knowledge
of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇.
"BUSINESS" shall mean the cable television business conducted
by Seller on the date of this Agreement through the System in and around the
Franchise Areas.
"BUSINESS DAY" shall mean any day other than Saturday, Sunday
or a day on which banking institutions in Denver, Colorado or New York, New York
are required or authorized to be closed.
"BUYER" shall mean the Person identified as such in the
preamble to this Agreement.
"BUYER FINANCIAL STATEMENT" shall have the meaning set forth
in Section 6.5.
"BUYER INTERIM FINANCIAL STATEMENT" shall have the meaning set
forth in Section 6.5.
"CABLE ACT" shall have the meaning set forth in Section 5.8.
"CAPITAL PROJECT" shall have the meaning set forth in Section
5.20.
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"CLOSING" shall mean the consummation of the transactions
contemplated by this Agreement, as described in Article II.
"CLOSING DATE" shall mean the date on which the Closing
occurs.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"COMMITMENT EXPENSE" shall have the meaning set forth in
Section 3.3(b).
"COMMUNICATIONS ACT" shall have the meaning set forth in
Section 5.8(c).
"CONSENTS" shall mean any registration with, consent or
approval of, notice to, or action by any Person or Governmental Authority
required to permit the transfer of the Assets to Buyer or permit Seller to
perform any of its other obligations under this Agreement, as set forth on
SCHEDULE 1.2.
"COPYRIGHT ACT" shall mean Title 17 of the United States Code,
as amended, and all rules and regulations thereunder.
"DEPOSIT" shall have the meaning set forth in Section 3.1.
"EMPLOYER" shall have the meaning set forth in Section
5.13(a).
"EMPLOYER PLANS" shall have the meaning set forth in Section
5.13(e).
"ENCUMBRANCE" shall mean any mortgage, lien, security
interest, security agreement, conditional sale or other title retention
agreement, limitation, pledge, option, charge, assessment, restrictive
agreement, restriction, encumbrance, adverse interest, restriction on transfer
or any exception to or defect in title or other ownership interest (including
reservations, rights of way, possibilities of reverter, encroachments,
easements, rights of entry, restrictive covenants, leases and licenses).
"ENVIRONMENTAL LAW" shall mean any Legal Requirement relating
to pollution or protection of public health, safety or welfare or the
environment, including those relating to emissions, discharges, releases or
threatened releases of Hazardous Substances into the environment (including
ambient air, surface water, ground water or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.
"EQUIPMENT" shall mean all tangible personal property used or
held for use by Seller in the conduct of the Business and operation of the
System, including without limitation, all electronic devices, trunk and
distribution coaxial and optical fiber cable, amplifiers, power supplies,
conduit, vaults and pedestals, grounding and pole hardware, subscriber's devices
(including converters, encoders, transformers behind television sets and
fittings), headend
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hardware (including origination, earth stations, transmission and distribution
system), test equipment, vehicles and computers, including the items described
on SCHEDULE 1.3.
"EQUIVALENT BASIC SUBSCRIBERS" shall mean, with respect to
each Franchise Area, as of any date, the number of active customers for Basic
Services either in a single household, a commercial establishment or a
multi-unit dwelling (including a hotel unit); provided, however, that the number
of customers in a commercial establishment or multi-unit dwelling that obtain
service on a "bulk-rate" basis shall be determined for each Franchise Area by
dividing the gross bulk-rate ▇▇▇▇▇▇▇▇ for Basic Services and Expanded Basic
Services (but excluding ▇▇▇▇▇▇▇▇ from a la carte tiers or premium services,
installation or other non-recurring charges, converter rental or any outlet or
connection other than the first outlet or connection, pass-through charges for
sales taxes, line-itemized franchise fees, fees charged by the FCC and the like)
attributable to such commercial establishment or multi-unit dwelling during the
most recent billing period ended prior to the date of calculation (but excluding
▇▇▇▇▇▇▇▇ in excess of a single month's charge) by the rate charged at the date
of determination to individual households for the highest level of Basic
Services and Expanded Basic Services offered in the Franchise Area, such rate
not to be less than the rate for such Franchise Area set forth on SCHEDULE 1.1
(excluding ▇▇▇▇▇▇▇▇ from a la carte tiers or premium services, installation or
other non-recurring charges, converter rental, pass-through charges for sales
taxes, line-itemized franchise fees, fees charged by the FCC and the like). For
purposes of this definition, (i) an "active customer" shall mean, as of any
date, any person, commercial establishment or multi-unit dwelling that is paying
for and receiving Basic Services from the System in that Franchise Area who has
an account that is not more than 60 days past due (except for past due amounts
of $10.00 or less, provided such account is otherwise current) but excluding any
person, commercial establishment or multi-unit dwelling that as of the date of
calculation has not paid in full the charges for at least one month of the
services ordered and (ii) the number of days a customer account is past due
shall be calculated from the first day of the period for which the applicable
billing relates.
"ERISA" shall have the meaning set forth in Section 5.13(b).
"ESCROW AGENT" shall have the meaning set forth in Section
3.1.
"ESCROW AGREEMENT" shall have the meaning set forth in Section
3.1.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of
1934, as amended.
"EXCLUDED ASSETS" shall have the meaning set forth in Section
4.2.
"EXCLUDED LIABILITIES" shall have the meaning set forth in
Section 4.1(b).
"EXHIBITS" shall mean the exhibits prepared and delivered
pursuant to this Agreement.
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"EXPANDED BASIC SERVICES" shall mean any video programming
provided over the System, regardless of service tier, other than Basic Services,
any new product tier and video programming offered on a per channel or per
program basis, for which a subscriber served by the System pays a fixed monthly
fee to Seller, excluding Pay TV and any charges for additional outlets and
installation fees and revenues derived from the rental of converters, remote
control devices and other like charges for equipment.
"FCC" shall have the meaning set forth in Section 5.8(c).
"FINAL ADJUSTMENTS REPORT" shall have the meaning set forth in
Section 3.4(b).
"FRANCHISE AREAS" shall mean those areas in which Seller is
authorized under one or more Governmental Permits issued by the applicable
franchising authorities to provide cable television service to subscribers
located in such areas through the ownership and operation of the System, as set
forth on SCHEDULE 1.4.
"GAAP" shall mean generally accepted accounting principles as
in effect in the United States of America on the date of this Agreement.
"GENERAL PARTNER" shall mean IR-TCI Partners V, L.P., the
general partner of Seller.
"GOVERNMENTAL AUTHORITY" shall mean any of the following: (a)
the United States of America; (b) any state, commonwealth, territory or
possession of the United States of America and any political subdivision thereof
(including counties, municipalities and the like); or (c) any agency, authority
or instrumentality of any of the foregoing, including any court, tribunal,
department, bureau, commission or board.
"GOVERNMENTAL PERMITS" shall mean all franchises,
authorizations, permits, licenses, easements, registrations, leases, variances
and similar rights obtained from any Governmental Authority which authorize or
are required in connection with the operation of the Business, including those
described on SCHEDULE 1.5.
"HAZARDOUS SUBSTANCES" shall mean any pollutant, contaminant,
chemical, industrial, toxic, hazardous or noxious substance or waste which is
regulated by any Governmental Authority, including without limitation (a) any
petroleum or petroleum compounds (refined or crude), flammable substances,
explosives, radioactive materials or any other materials or pollutants which
pose a hazard or potential hazard to the Real Property or to Persons in or about
the Real Property or cause the Real Property to be in violation of any laws,
regulations or ordinances of federal, state or applicable local governments, (b)
asbestos or any asbestos-containing material of any kind or character, (c)
polychlorinated biphenyls ("PCBs"), as regulated by the Toxic Substances Control
Act, 15 U.S.C. Section 2601 et seq., (d) any materials or substances designated
as "hazardous substances" pursuant to the Clean Water Act, 33 U.S.C. Section
1251 et seq., (e) "economic poison," as defined in the Federal Insecticide,
Fungicide and
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Rodenticide Act, 7 U.S.C. Section 135 et seq., (f) "chemical substance," "new
chemical substance" or "hazardous chemical substance or mixture" pursuant to the
Toxic Substances Control Act, referred to above, (g) "hazardous substances"
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq. and (h) "hazardous waste" pursuant
to the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.
"HOMES PASSED" shall mean, with respect to the System and as
of June 30, 1996, the total of (a) the number of single family residences
capable of being serviced without further line construction, (b) the number of
units in multi-family residential buildings capable of being serviced without
further line construction and not then governed by bulk-service agreements and
(c) the number of bulk service agreements regardless of the number of units
serviced or the equivalent billing units.
"HSR ACT" shall have the meaning set forth in Section 7.6.
"INDEMNITY ESCROW AGENT" shall mean The Chase Manhattan Bank.
"INDEMNITY ESCROW AGREEMENT" shall mean the Indemnity Escrow
Agreement to be entered into at Closing among Buyer, Seller and the Indemnity
Escrow Agent, in the form attached as Exhibit G.
"INTANGIBLES" shall mean all general intangibles, including
subscriber lists, claims (excluding any claims relating to Excluded Assets),
patents, copyrights and goodwill, if any, owned, used or held for use by Seller
in connection with the Business.
"IRS" shall mean the Internal Revenue Service.
"LEGAL REQUIREMENT" shall mean any statute, ordinance, code,
law, rule, regulation, order or other requirement, standard or procedure
enacted, adopted or applied by any Governmental Authority, including judicial
decisions applying common law or interpreting any other Legal Requirement.
"LIMITED PARTNERS" shall mean the Persons who own or hold
units of limited partnership interests in Seller.
"MANAGEMENT AGREEMENT" shall mean the agreement related to the
operation of the System and the other cable systems owned by Seller between
Seller and TCI Cablevision Associates, Inc. (formerly known as ▇▇▇▇▇▇▇ &
Associates, Inc.).
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"PARTNERSHIP AGREEMENT" shall mean the Amended and Restated
Limited Partnership Agreement of Seller, dated as of January 1, 1987, by and
between IR-TCI Partners V, L.P. (formerly known as IR-▇▇▇▇▇▇▇ Partners V, L.P.),
as the general partner, and ▇▇▇▇▇ ▇. ▇▇▇▇▇, as the initial limited partner.
"PAY TV" shall mean premium programming services selected by
and sold to subscribers of the System for monthly fees in addition to the fee
for Basic Services.
"PERMITTED ENCUMBRANCES" shall mean the following: (a) liens
for taxes, assessments and governmental charges not yet due and payable; (b)
zoning laws and ordinances and similar Legal Requirements; (c) rights reserved
to any Governmental Authority to regulate the affected property; (d) as to
leased Assets, interests of lessors and Encumbrances affecting the interests of
the lessors; (e) the Encumbrances described on SCHEDULE 1.6; and (f) any liens,
easements, rights-of-way, servitudes, permits, leases, restrictions and
imperfections or irregularities in title that do not in any material respect,
individually or in the aggregate, affect or impair the value or use of the
affected Asset as it is currently being used by Seller in the Business or
System.
"PERSON" shall mean any natural person, corporation,
partnership, trust, unincorporated organization, association, limited liability
company, Governmental Authority or other entity.
"PRELIMINARY ADJUSTMENTS REPORT" shall have the meaning set
forth in Section 3.4(a).
"PRIME RATE" shall mean the rate of interest quoted from time
to time in The Wall Street Journal as the prime rate.
"PURCHASE PRICE" shall have the meaning set forth in Section
3.1.
"REAL PROPERTY" shall mean all Assets consisting of interests
in real property (including, to the extent applicable, improvements, fixtures
and appurtenances), including the fee and leasehold interests described on
SCHEDULE 1.7.
"REGULATORY REQUIREMENT" shall mean any filing required
pursuant to the Securities Act, the Exchange Act, the HSR Act, state securities
laws (including, but not limited to, state "blue sky" laws) and state corporate
laws (including, but not limited to, takeover statutes).
"REQUIRED CONSENTS" shall mean the Consents designated as such
on SCHEDULE 1.2 by an asterisk.
"SCHEDULES" shall mean the schedules prepared and delivered
pursuant to this Agreement.
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"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SELLER" shall mean the Person indicated as such in the
preamble to this Agreement.
"SELLER CONTRACTS" shall mean all contracts, agreements and
leases, other than those that are Governmental Permits, to which Seller is a
party and pertain to the ownership, operation or maintenance of the Assets or
the Business, including those described on SCHEDULE 1.8.
"SELLER'S ESCROW" shall have the meaning set forth in Section
3.1.
"SELLER FINANCIAL STATEMENTS" shall have the meaning set forth
in Section 5.11.
"SYSTEM" shall mean a cable television reception and
distribution system operated in the conduct of the Business, consisting of one
or more headends, subscriber drops and associated electronic and other
equipment, and which is, or is capable of being without modification, operated
as an independent system without interconnections to other systems as set forth
on SCHEDULE 1.9.
"TAKING" shall have the meaning set forth in Section 7.7(b).
"TAX RETURN" shall mean any return, report, information return
or other document (including any related or supporting information) filed or
required to be filed with any taxing authority in connection with the
determination, assessment, collection, administration or imposition of any
Taxes.
"TAXES" shall mean all taxes, charges, fees, liens, imposts,
duties or other assessments including, but not limited to, income, withholding,
excise, employment, property, sales, franchise, use and gross receipt taxes,
imposed by the United States or any state, county, local or foreign government
or any subdivision thereof. Such term shall also include any interest, penalties
or additions attributable to such assessments.
"TCI" shall mean TCI Communications, Inc., a Delaware
corporation.
"TELECOM ACT" shall have the meaning set forth in Section
5.8(e).
"TERMINATION DATE" shall mean June 25, 1997; provided,
however, Seller shall have the right, upon five days notice to Buyer, to extend
the Termination Date to a date designated in such notice, which date shall in no
event be later than August 25, 1997; provided further, Seller shall have the
right, upon five days notice to Buyer, to further extend the
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Termination Date to a date designated in such notice, which date shall in no
event be later than November 24, 1997.
"WARN ACT" shall mean the Worker Adjustment and Retraining
Notification Act.
ARTICLE II
2. PURCHASE AND SALE OF ASSETS.
2.1. PURCHASE AND SALE OF ASSETS. Subject to the satisfaction
of the conditions to each party's obligations set forth in Articles VIII and IX
(or, with respect to any condition not satisfied, the waiver thereof by the
party or parties for whose benefit the condition exists), Seller shall sell,
assign, transfer and deliver to Buyer all of Seller's right, title and interest
in, and Buyer shall purchase, acquire, accept and pay for, the Assets.
2.2. TIME AND PLACE OF CLOSING. Subject to the terms and
conditions of this Agreement, the Closing shall take place at 10:00 a.m. New
York City time on a date specified by notice from Seller to Buyer (but shall not
in any event be prior to the satisfaction or waiver of the conditions to Closing
as set forth in Sections 8.1, 8.6, 9.1, 9.5 and 9.7), in New York, New York at
the offices of ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP, or at such other
time or place as the parties may agree; provided, however, the date specified in
such notice shall not be less than 15 nor more than 40 days after the date of
such notice (unless the Termination Date would occur within such 15-day period,
in which event Seller shall have the right to designate any date prior to the
Termination Date as the date of Closing).
ARTICLE III
3. CONSIDERATION.
3.1. CONSIDERATION FOR THE ASSETS. The aggregate consideration
for the Assets shall consist of (i) an amount equal to $30,636,900, subject to
proration as set forth in Section 3.2 and adjustment as set forth in Section 3.3
(the "PURCHASE PRICE") and (ii) the assumption by Buyer of the Assumed
Liabilities. The Purchase Price shall be payable as follows: (a) $765,923 (such
amount, as increased by any earnings thereon and as reduced by any disbursements
or losses on investments, the "DEPOSIT"), payable concurrently with the
execution and delivery of this Agreement in cash by means of wire or interbank
transfer in immediately available funds to the trust account of ▇▇▇▇, Scholer,
Fierman, ▇▇▇▇ & Handler, LLP (the "ESCROW AGENT"), to be held, administered and
distributed for the respective benefits of the parties hereto in accordance with
the terms of this Agreement and the Escrow Agreement among Seller, Buyer and the
Escrow Agent dated the date of this Agreement (the "ESCROW AGREEMENT") in the
form set forth as Exhibit B attached hereto and (b) $30,636,900 payable by Buyer
to Seller, or Seller's designee, at Closing in cash by means of wire or
interbank transfer in immediately available funds, reduced by the amount, if
any, of the Deposit actually released to Seller, or
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Seller's designee. At Closing, Seller and Buyer shall direct the Escrow Agent to
release the Deposit to Seller, or Seller's designee, in accordance with the
terms of the Escrow Agreement. Simultaneously with the payment of the Purchase
Price, Seller shall deposit $765,923 ("Seller's Escrow") at Closing in cash by
means of wire or interbank transfer of immediately available funds to the
account of the Indemnity Escrow Agent, to be held, administered and distributed
in accordance with the terms of this Agreement and the Indemnity Escrow
Agreement.
3.2. PURCHASE PRICE PRORATIONS. (a) All revenues (other than
Accounts Receivable being purchased by Buyer hereunder) and all expenses arising
from the operations of the Business up until 12:01 a.m. on the Closing Date (the
"ADJUSTMENT TIME"), including, but not limited to, pole rental fees, rental or
other charges payable in respect of the Seller Contracts, sales and use taxes
payable with respect to cable television service and equipment, which shall not
include sales or use taxes arising out of the consummation of the transaction
contemplated hereunder, power and utility charges, real and personal property
taxes and assessments levied against the Assets, applicable franchise, copyright
or other fees, sales and service charges, wages, payroll taxes and payroll
expenses (including accrued vacation pay except to the extent a Purchase Price
adjustment in Buyer's favor is made under Section 3.3) of employees of Employer
who primarily perform services in connection with the operation of the Business
who are employed by Buyer as of the Closing, and other prepaid and deferred
items shall be prorated between Buyer and Seller as of the Adjustment Time in
accordance with GAAP and the principle that Seller shall receive all revenues
(other than Accounts Receivable being purchased by Buyer hereunder) and shall be
responsible for all expenses, costs and liabilities allocable to the period
prior to the Adjustment Time and Buyer shall receive all revenues and shall be
responsible for all expenses, costs and liabilities allocable to the period
after the Adjustment Time.
(b) The amount of each item of revenue prorated under
subsection (a) above, to a party which has not received, and under the terms of
this Agreement will not receive, such revenue shall be deemed a charge against
the other party. The amount of any item of cost or expense prorated under
subsection (a) above to a party which has not paid, and under the terms of this
Agreement will not pay, such cost or expense shall be deemed a charge against
such party. If the aggregate charges allocated to Seller as set forth in this
Section 3.2(b) exceed the aggregate charges allocated to Buyer as set forth in
this Section 3.2(b), the Purchase Price shall be decreased by an amount equal to
the difference between the aggregate charges allocated to Seller and the
aggregate charges allocated to Buyer. If the aggregate charges allocated to
Buyer as set forth in this Section 3.2(b) exceed the aggregate charges allocated
to Seller as set forth in this Section 3.2(b), the Purchase Price shall be
increased by an amount equal to the difference between the aggregate charges
allocated to Buyer and the aggregate charges allocated to Seller.
3.3. PURCHASE PRICE ADJUSTMENTS. (a) The Purchase Price shall
be increased by an amount equal to the aggregate of the following:
(i) the face amount of all Accounts Receivable which,
as of the Closing Date, are outstanding for a period of not more than 60 days
after their respective invoice dates; and
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(ii) to the extent not included in the prorations to
the Purchase Price as set forth in Section 3.2, the dollar amount of all advance
payments to, or deposits with, third parties relating to the Business which, as
of the Closing Date, are for the account of Seller or are security for Seller's
performance of its obligations under any agreement relating to the Business or
any Assets, including, but not limited to, deposits made with lessors and
deposits for utilities to the extent the foregoing will inure to the benefit of
Buyer and are net of known claims or charges against such payments or deposits.
(b) The Purchase Price shall be decreased by an
amount equal to the aggregate of the following:
(i) the dollar amount of the remaining balance, as of
the Closing Date, of all advance payments to, or monies of third parties on
deposit with, Seller relating to the Business, including advance payments and
deposits by customers served by the Business for converters, encoders, decoders,
cable service and related sales;
(ii) the dollar amount of accrued vacation pay of
employees of Employer identified on Schedule 5.13(d) who are employed by Buyer
as of the Closing;
(iii) (a) 50% of the dollar amount of all charges and
fees of any financial institution incurred by Buyer to extend its commitment and
maintain its loan availability necessary to pay the Purchase Price to Seller on
and after June 30, 1997 (the "COMMITMENT EXPENSE"), which Buyer would not have
incurred if the Closing had occurred prior to June 30, 1997; provided, that the
failure to close by such date is not attributable to any default or breach by
Buyer or Seller and (b) 100% of the Commitment Expense if the failure to close
by June 30, 1997 is solely attributable to any default or breach by Seller;
provided, however, that, in either case, the amount by which the Purchase Price
is increased pursuant to this Section 3.3(b)(iii) shall not exceed $125,000; and
(iv) if, as of the Closing Date, the aggregate number
of Equivalent Basic Subscribers served by the System is less than 18,900, an
amount equal to (x) the difference between 18,900 and the aggregate number of
Equivalent Basic Subscribers served by the System as of the Closing Date times
(y) $1,621; provided, that the amount by which the Purchase Price is decreased
pursuant to this Section 3.3(b) (iv) shall not exceed $1,531,845; provided,
however, that if the Preliminary Adjustments Report sets forth a pro forma
determination of the adjustments set forth in this Section 3.3(c) based on an
estimate of the aggregate number of Equivalent Basic Subscribers served by the
System as of the Closing Date being greater than or equal to 17,955, then there
shall be no limitation on the amount by which the Purchase Price may be
decreased pursuant to this Section 3.3(b)(iv).
3.4. PRELIMINARY AND FINAL SETTLEMENTS. Preliminary and final
adjustments to the Purchase Price will be determined as follows:
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(a) At least five Business Days prior to the Closing
Date, Seller will deliver to Buyer a report (the "PRELIMINARY ADJUSTMENTS
REPORT"), prepared in good faith and on a reasonable basis, setting forth in
reasonable detail a pro forma determination as of the Closing Date of the
prorations set forth in Section 3.2 and the adjustments set forth in Section
3.3. The Preliminary Adjustments Report shall be certified by an authorized
officer of the general partner of the General Partner to have been prepared in
good faith and on a reasonable basis.
(b) Within 60 days after the Closing Date, Seller
will deliver to Buyer a report (the "FINAL ADJUSTMENTS REPORT"), prepared in
good faith and on a reasonable basis, setting forth in reasonable detail the
final determination of the prorations set forth in Section 3.2 and the
adjustments set forth in Section 3.3. The Final Adjustments Report shall make
such changes to the Preliminary Adjustments Report as are necessary to cover
those prorations or adjustments which (i) were estimated or were not calculated
as of the Closing Date in the Preliminary Adjustments Report and (ii) were
adjusted in the Preliminary Adjustments Report and which require subsequent
adjustment. The Final Adjustments Report shall be certified by an authorized
officer of the general partner of the General Partner to be true, complete and
correct as of the date it is delivered.
Buyer shall provide Seller with reasonable access to all
records which Buyer has in its possession and which are necessary for Seller to
prepare the Final Adjustments Report. Seller shall provide Buyer with reasonable
access to all records which Seller has in its possession which are necessary for
Buyer to review and verify the Final Adjustments Report.
(c) Within 45 days after receipt of the Final
Adjustments Report, Buyer shall review the Final Adjustments Report and notify
Seller whether or not Buyer accepts all or any of the prorations and adjustments
set forth on the Final Adjustments Report. If Buyer accepts the Final
Adjustments Report with respect to all prorations and adjustments contained
therein, Buyer or Seller, as appropriate, shall, within ten Business Days of
such acceptance, make the following payments: (i) if the Purchase Price
calculated based on the Final Adjustments Report is greater than the Purchase
Price calculated based on the Preliminary Adjustments Report, Buyer shall pay
such difference to Seller in cash by wire or interbank transfer in immediately
available funds, or (ii) if the Purchase Price calculated based on the Final
Adjustments Report is less than the Purchase Price calculated based on the
Preliminary Adjustments Report, Seller shall pay such difference to Buyer in
cash by wire or interbank transfer in immediately available funds. In the event
any payment required by this Section 3.4(c) is not made when due, Seller or
Buyer, as appropriate, shall make the payment required by this Section 3.4(c)
with interest accruing from the date such payment was due at the Prime Rate plus
2.5%.
(d) If Buyer in good faith objects to any prorations
and/or adjustments set forth on the Final Adjustments Report, Buyer shall give
notice thereof to Seller within 45 days after receipt of the Final Adjustments
Report, specifying in reasonable detail the nature and extent of such
disagreement and Buyer and Seller shall have a period of 45 days from Seller's
receipt of such notice in which to resolve such disagreement. If such notice of
objection is not
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received by Seller within 45 days after receipt of the Final Adjustments Report,
it shall be deemed that Buyer has accepted the Final Adjustments Report with
respect to all items set forth therein and within three Business Days after the
expiration of such 45-day period Buyer or Seller, as appropriate, shall make the
payments described in Section 3.4(c). Any disputed amounts which cannot be
agreed to by the parties within 45 days from Seller's receipt of Buyer's notice
of objection to any of the adjustments set forth in the Final Adjustments Report
shall be determined by a nationally recognized accounting firm selected by Buyer
and Seller who has not been employed by Buyer or Seller for two years prior to
the date hereof (the "ACCOUNTANTS") in accordance with the engagement letter set
forth on Exhibit C attached hereto with such changes as may be requested by the
Accountants and approved by Buyer and Seller. The engagement of and the
determination by the Accountants shall be binding on and shall be nonappealable
by Seller and Buyer. In the event that (a) the Purchase Price calculated based
on the determination by the Accountants is less than the Purchase Price
calculated based on the Final Adjustments Report, the fees and expenses payable
to the Accountants shall be paid by Seller or (b) the Purchase Price calculated
based on the determination of the Accountants is greater than or equal to the
Purchase Price calculated based on the Final Adjustments Report, the fees and
expenses payable to the Accountants shall be paid by Buyer. Seller and Buyer
will bear equally the fees and expenses payable to the Accountants in connection
with such determination, unless (a) the determination of the Accountants results
in a payment by Seller to Buyer of an amount which exceeds 10 percent of the
cash amount paid by Buyer to Seller on the Closing Date, in which case the fees
and expenses payable to the Accountants shall be paid by Seller or (b) the
determination of the Accountants results in no payment from Seller to Buyer or
results in an additional payment from Buyer to Seller, in which case the fees
and expenses payable to the Accountants shall be paid by Buyer. Within five
Business Days after the determination by the Accountants of all disputed
prorations and/or adjustments, Buyer or Seller, as appropriate, shall make the
payments described in Section 3.4(c) as if the determinations of the Accountants
were included in the Final Adjustments Report. In the event any payment required
by this Section 3.4(d) is not made when due, Seller or Buyer, as appropriate,
shall make the payment required by this Section 3.4(d) with interest accruing
from the date such payment was due at the Prime Rate plus 2.5%.
3.5. DISPUTED LIABILITIES. If a proration or adjustment to the
Purchase Price is made in Buyer's favor for any liability assumed by Buyer but
is in good faith being contested by Seller as of the Closing Date, and if Buyer
is relieved of this liability, Buyer shall pay to Seller or its designee in cash
(by means of wire or interbank transfer in immediately available funds) an
amount equal to the unpaid portion of this liability within five Business Days
after the date Buyer is relieved of this liability. In the event any payment
required by this Section 3.5 is not made by Buyer when due, Buyer shall make the
payment required by this Section 3.5 with interest accruing from the date such
payment was due at the Prime Rate plus 2.5%.
3.6. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the classes of assets set forth in Section 1060 of the Code and
the regulations thereunder in the manner agreed to by the parties prior to the
Closing. After the Closing, Seller shall cooperate with Buyer in the
preparation, execution and filing with the IRS of all information
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returns and supplements thereto required to be filed by the parties under
Section 1060 of the Code relating to the allocation of such consideration, and
Seller and Buyer agree to file Form 8594 (or any substitute therefor) when
required by applicable law.
ARTICLE IV
4. ASSUMED LIABILITIES AND EXCLUDED ASSETS.
4.1. ASSIGNMENT AND ASSUMPTION. (a) Seller will assign, and
Buyer will assume and perform for all periods on or after the Adjustment Time
(and prior to the Assignment Time with respect to liabilities and obligations
for which a Purchase Price Adjustment has been made in Buyer's favor under
Section 3.3) the following liabilities and obligations of Seller (collectively,
the "ASSUMED LIABILITIES"): (A) Seller's obligations to subscribers of the
Business for (i) refunds of subscriber deposits held by Seller as of the Closing
Date in respect of which a Purchase Price adjustment is made in Buyer's favor
under Section 3.3(b), (ii) refunds of subscriber advance payments held by Seller
as of the Closing Date for services to be rendered by the System after the
Closing Date, in respect of which a Purchase Price adjustment is made in Buyer's
favor under Section 3.3(b) and (iii) the delivery of cable television service to
customers of the System after the Closing Date; (B) obligations and liabilities
in respect of which a Purchase Price adjustment in Buyer's favor is made under
Section 3.3 including, but not limited to, accrued but unpaid real and personal
property taxes related to the Assets which correspond to a period of time prior
to the Adjustment Time, expenses accrued under Governmental Permits and Seller
Contracts which correspond to a period of time prior to the Adjustment Time and
certain accrued vacation pay; (C) obligations accruing and relating to periods
on or after the Adjustment Time under Governmental Permits and Seller Contracts;
(D) any taxes accrued and relating to periods on or after the Adjustment Time in
connection with the ownership of the Assets and the ownership of the Assets and
the operation of the Business; and (E) all other liabilities or obligations of
Seller arising out of or relating to the conduct of the Business and incurred in
the ordinary course of business.
(b) Notwithstanding any other provision of this
Agreement, except for the Assumed Liabilities, Buyer will not and shall not
assume or have any responsibility for any liabilities or obligations of Seller
or Employer which arise out of, result from, or relate to the Excluded Assets or
any matters allocable to the period prior to the Adjustment Time, whether
relating to the Assets, the Business, the System or otherwise, unless a Purchase
Price adjustment in Buyer's favor has been made under Section 3.3 (collectively,
the "EXCLUDED LIABILITIES"). Liabilities or obligations which relate to the
Excluded Liabilities shall be the obligation of Seller, which Seller covenants
and agrees to discharge in the ordinary course unless such liability or
obligation is being disputed by Seller in good faith.
4.2. EXCLUDED ASSETS. Excluded from the assets which will be
transferred from Seller to Buyer pursuant to this Agreement (collectively, the
"EXCLUDED ASSETS") are all Seller's right, title and interest in, to and under
the following: (a) all programming agreements
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relating to the Business; (b) all insurance policies and rights and claims
thereunder (except as otherwise provided in Section 7.7(a)); (c) all bonds,
letters of credit, surety instruments and other similar items and any cash
surrender value thereunder; (d) all cash, cash equivalents and securities; (e)
all trademarks, trade names, service marks, service names, logos and similar
proprietary rights used in the Business; (f) any contracts, licenses,
authorizations, agreements or commitments which are not assumed by Buyer
pursuant to this Agreement; (g) the Management Agreement; (h) any asset or
properties owned by Seller that are not used in the Business; (i) all subscriber
deposits and advance payments held by Seller as of the Closing Date in
connection with the operation of the Business for which a Purchase Price
adjustment is made in Buyer's favor under Section 3.3(b); (j) all claims, rights
and interests in and to any refund for federal, state or local franchise, income
or other taxes or fees (including, but not limited to, copyright fees) of any
nature relating to the operation of the Business prior to the Closing Date; (k)
the account books of original entry, general ledgers and financial records used
in connection with the Business, provided that for a period of three years after
the Closing Date, Buyer shall have access to and the right to copy, at its
expense, during usual business hours upon reasonable prior notice to Seller,
portions of such books and records that are relevant to Buyer's ownership and
operation of the System; (l) the retransmission consent agreements relating to
the carriage of WMAR, WRC, WTTG, WBAL, WBFF and WJZ; and (m) those properties,
rights and interests set forth on SCHEDULE 4.2.
ARTICLE V
5. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer as follows:
5.1. ORGANIZATION AND QUALIFICATION. Seller is a limited
partnership duly organized, validly existing and in good standing under the laws
of the state of Colorado and has all requisite partnership power and authority
to own, lease and use the Assets as they are currently owned, leased and used
and to conduct the Business as it is currently conducted. Seller is duly
qualified or licensed to do business and is in good standing under the laws of
each jurisdiction where the Assets are located and the Business is conducted,
except any such jurisdiction where the failure to be so qualified or licensed
and in good standing would not have a material adverse effect on the validity,
binding effect or enforceability of this Agreement, or on the ability of Seller
to perform its obligations under this Agreement.
5.2. AUTHORITY AND VALIDITY. Seller has full partnership power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by Seller have been
duly and validly authorized by all necessary action on the part of Seller (other
than, with respect to the sale of the Assets, the approval of such transaction
contemplated by this Agreement by the Limited Partners). The General Partner has
taken all necessary action so that it may recommend that the Limited Partners
approve the
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transactions contemplated by this Agreement. This Agreement has been duly and
validly executed and delivered by Seller and constitutes a valid and binding
obligation of Seller enforceable in accordance with its terms. Except for the
approval by the Limited Partners, no further partnership action on the part of
Seller is required in connection with the consummation of the transactions
contemplated by this Agreement.
5.3. CONSENTS AND APPROVALS; NO VIOLATION. (a) Except for (i)
the Consents, (ii) the consent of the Limited Partners with respect to the
transactions contemplated by this Agreement and (iii) the Regulatory
Requirements, no consent, waiver, approval or authorization of, or filing,
registration or qualification with, any Governmental Authority is required to be
made or obtained by Seller in connection with the execution, delivery and
performance of this Agreement by Seller.
(b) Except as set forth on SCHEDULE 5.3(b), the
execution, delivery and performance of this Agreement by Seller do not and will
not: (a) violate or conflict with any provision of the Partnership Agreement;
(b) violate any Legal Requirement; or (c) (i) violate, conflict with or
constitute a breach of or default under (without regard to requirements of
notice, passage of time or elections of any Person), (ii) permit or result in
the termination, suspension or modification of, (iii) result in the acceleration
of (or give any Person the right to accelerate) the performance of Seller under,
or (iv) result in the creation or imposition of any Encumbrance under, any
Seller Contract or any other instrument evidencing any of the Assets or any
instrument or other agreement to which Seller is a party or by which Seller or
any of its assets is bound or affected, except such violations, conflicts,
breaches, defaults, terminations, suspensions, modifications, and accelerations
which would not, individually or in the aggregate, have a material adverse
effect on the System, the Business, or Seller's ability to perform its
obligations under this Agreement or Buyer's ability to conduct the Business
after the Closing in substantially the same manner in which it is currently
conducted by Seller.
5.4. COMPLETE SYSTEMS. The Assets represent all assets,
properties, franchises, licenses, permits, consents, certificates, authorities,
operating rights, leases, contracts, (with the exception of programming
contracts and retransmission consents which Buyer acknowledges may need to be
replaced in order for Buyer to continue to operate the Business), agreements,
commitments and arrangements reasonably necessary for the conduct of the
Business in the ordinary course in the same manner as that in which such
business is currently conducted by Seller. No property of the type or nature
defined in this Agreement as an "Asset" has been removed, sold, transferred or
conveyed since January 1, 1996, except (i) in the ordinary course of business,
(ii) for property which has been replaced or (iii) for property which was not
necessary for the operation of the Business.
5.5. TITLE. Except as set forth on SCHEDULE 5.5 and for the
Permitted Encumbrances, Seller has, and on the Closing Date will have, good and
marketable title to the Assets. The Assets on the Closing Date will be free and
clear of all Encumbrances of any kind or nature, other than Permitted
Encumbrances.
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5.6. REAL PROPERTY. (a) All the Assets consisting of interests
in Real Property that are material to the conduct of the Business are described
on SCHEDULE 1.7. Seller has valid leasehold interests in Real Property leased by
Seller under written leases or subleases, correct and complete copies of which
have been made available to Buyer.
(b) All easements, rights-of-way and other rights
obtained directly by Seller which are necessary in any material respect for
Seller's current use of any Real Property are valid and in full force and
effect, and, to Seller's knowledge after due inquiry, Seller has not received
any notice with respect to the termination or breach of any of those rights.
5.7. ENVIRONMENTAL MATTERS. (a) To the Best of Seller's
Knowledge, Seller's use of the Real Property complies in all material respects
with all Environmental Laws. Seller has not received written or oral notice of
any claim or investigation based on Environmental Laws which relates to any Real
Property or any operations conducted by Seller on such Real Property.
(b) Seller has provided, or prior to Closing will
provide, Buyer with complete and correct copies of (i) all studies, reports,
surveys or other materials in Seller's possession relating to the presence or
alleged presence of Hazardous Substances at, on or affecting the Real Property,
(ii) all notices or other materials in Seller's possession that were received
from any Governmental Authority having the power to administer or enforce any
Environmental Laws relating to current or past ownership, use or operation of
the Real Property or activities at the Real Property and (iii) all materials in
Seller's possession relating to any claim, allegation or action by any private
third party under any Environmental Law.
5.8. COMPLIANCE WITH LAW; GOVERNMENTAL PERMITS. (a) Except as
set forth on SCHEDULE 5.8, the ownership, the leasing and use of the Assets as
they are currently owned, leased and used by Seller and the conduct of the
Business as it is currently conducted by Seller, do not violate any Legal
Requirement, which violation(s), individually or in the aggregate, reasonably
could be expected to have a material adverse effect on the Business. Seller has
not received any notice claiming a material violation by Seller or the Business
of any Legal Requirement applicable to Seller or the Business as it is currently
conducted and, to the Best of Seller's Knowledge, no basis exists for any person
to claim that such a violation exists.
(b) SCHEDULE 1.5 lists all Governmental Permits that
are necessary to the conduct of the Business as it is currently conducted by
Seller. Complete and correct copies of all such Governmental Permits as
currently in effect have been, or prior to the Closing will be, made available
to Buyer. All such Governmental Permits are currently in full force and effect.
There is no action, proceeding or investigation pending or, to the Seller's
knowledge after due inquiry, threatened, relating to the termination, suspension
or modification of any such Governmental Permit and Seller is in compliance in
all material respects with the terms and conditions of all Governmental Permits.
Seller is not in violation of or default under any material provision of any
Governmental Permit, and to the knowledge of Seller based on due inquiry, there
exists no fact or circumstance which, with the passage of time or the giving of
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notice or both, would constitute a violation of or default under any
Governmental Permit, or permit any issuing Governmental Authority to cancel or
terminate the rights thereunder except upon the expiration of the full term
thereof.
(c) The operation of the System has been, and is, in
compliance in all material respects with the Communications Act of 1934, as
amended (as so amended, the "COMMUNICATIONS ACT"), and the rules and regulations
of the Federal Communications Commission (the "FCC"), except that, as to any
rate regulation thereunder, the foregoing is limited to the Best of Seller's
Knowledge. Seller has delivered, or prior to Closing will deliver, to Buyer
complete and correct copies of all reports and filings for the past three years
made or filed pursuant to the Communications Act or FCC rules and regulations
with respect to the Business.
(d) To the Best of Seller's Knowledge, the operation
of the System has been, and is, in compliance in all material respects with the
Cable Television Consumer Protection and Competition Act of 1992 (the "CABLE
ACT"), and the rules and regulations of the FCC promulgated thereunder.
(e) To the Best of Seller's Knowledge, the operation
of the System has been, and is, in compliance in all material respects with the
Telecommunications Act of 1996 (the "TELECOM ACT"), and the rules and
regulations of the FCC promulgated thereunder.
(f) Except to the extent that the failure to comply
with any of the following does not have a material adverse effect on the Assets,
the System or the Business and except as set forth in SCHEDULE 5.8 hereto, where
required, appropriate authorizations from the FCC have been obtained for the use
of all aeronautical frequencies in use in the System and the System is presently
being operated in compliance with such authorizations (and all required
certificates, permits and clearances from governmental agencies, including the
Federal Aviation Administration), with respect to all towers, earth stations,
business radios and frequencies utilized and carried by the System has been
obtained. SCHEDULE 5.8(e) sets forth information identifying aeronautical
frequencies, the geographic coordinate of the approximate center of the System's
service area and the authorized radius of the System.
5.9. SELLER CONTRACTS. SCHEDULE 1.8 lists all Seller Contracts
that are material to the conduct of the Business as it is now conducted.
Complete and correct copies of the Seller Contracts as currently in effect have
been, or prior to the Closing will be, made available to Buyer. Neither Seller
nor, to the Best of Seller's Knowledge, any other party to any Seller Contract
is in any material respect in breach of the performance of its obligations under
any Seller Contract.
5.10. COPYRIGHT COMPLIANCE. Seller has deposited with the
United States Copyright Office all statements of account and other documents and
instruments, and paid all royalties, supplemental royalties, fees and other sums
to the United States Copyright Office, required under the Copyright Act with
respect to the Business and operations of the System as
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are required to obtain, hold and maintain the compulsory copyright license for
cable television systems prescribed in Section 111 of the Copyright Act. Seller
and the System are in material compliance with the Copyright Act. Seller and the
System are entitled to hold and do now hold the compulsory copyright license
described in Section 111 of the Copyright Act, which compulsory copyright
license is in full force and effect and has not been revoked, canceled,
encumbered or materially adversely affected in any manner. Seller has made
available to Buyer complete and correct copies of all reports and filings, and
all reports and filings for the past three years, made or filed pursuant to the
Copyright Act with respect to the Business. Seller has not received any notice
to the effect that the conduct of the Business as currently conducted infringes
on the rights of any Person in any copyright or other intellectual property
right, except as to potential copyright liability arising from the performance,
exhibition or carriage of any music on the System.
5.11. FINANCIAL STATEMENTS. (a) Seller has delivered to Buyer
correct and complete copies of certain financial information for the System for
the years ended December 31, 1995 and December 31, 1994 and the six-month period
ended June 30, 1996 (collectively, the "SELLER FINANCIAL STATEMENTS"). Except
for the absence of footnote disclosures, cash flow statements and statements of
equity and except for estimated, annualized or projected financial information,
the Seller Financial Statements fairly present, in all material respects, the
results of operations of the System for the respective periods ended on such
dates, all in conformity with GAAP consistently applied, and with respect to the
Seller Financial Statements for the six-month period ended June 30, 1996,
subject to normal year-end adjustments (none of which are expected to be
material in amount).
(b) Since the latest date of the Seller Financial
Statements (i) the Business has been operated only in the ordinary course and
(ii) there has been no material adverse change in, and no event has occurred
which, so far as reasonably can be foreseen, is likely, individually or in the
aggregate, to result in any material adverse change in the results of operations
of the Business, other than any change arising out of matters of a general
economic nature or matters (including, but not limited to, competition caused by
or arising from direct broadcast satellite, the Multichannel Multipoint
Distribution Service, legislation, rule making and regulation) affecting the
cable television industry (national or regional) in general.
5.12. LEGAL PROCEEDINGS. Except for any judgments, orders,
actions, suits, proceedings or investigations as may affect the cable television
industry (national or regional) generally, there is no judgment or order
outstanding, or any action, suit, proceeding or investigation by or before any
Governmental Authority or any arbitrator pending or, to Seller's knowledge based
on due inquiry, threatened, involving or affecting any of the Assets or the
Business which, if adversely determined, would have a material adverse effect on
the Assets or the Business or would materially impair the ability of Seller to
perform its obligations under this Agreement.
5.13. EMPLOYMENT MATTERS. (a) Seller does not employ any
individuals in connection with the operation of the Business and does not, and
is not obligated to, maintain or
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contribute to any employee benefit plan, as defined in Section 3(3) of ERISA.
All individuals managing the operations of the Business are employees of TCI or
its Affiliates (other than Seller) (the "EMPLOYER"). The Employer is reimbursed
for employee-related expenses relating to the operations of the Business by
Seller under the Management Agreement or the Partnership Agreement.
(b) To Seller's knowledge after inquiry of Employer, Employer
has complied in all material respects with all Legal Requirements relating to
the employment of labor and those relating to wages, hours, collective
bargaining, unemployment compensation, worker's compensation, equal employment
opportunity, age and disability discrimination, immigration control and the
payment and withholding of taxes with respect to employees of Employer who
primarily perform services in connection with the operation of the Business.
(c) Employer is not a party to any contract with any labor
organization, and Employer has not recognized or agreed to recognize any union
or other collective bargaining unit with respect to employees of Employer who
primarily perform services in connection with the operation of the Business.
Except as set forth on SCHEDULE 5.13(c), no union or other collective bargaining
unit has been certified as representing any of the employees engaged in the
operation of the Business, and, to the Best of Seller's Knowledge, Employer has
not received any request from any party for recognition as a representative of
employees engaged in the operation of the Business for collective bargaining
purposes. Neither Seller nor Employer is party to any agreement, oral or
written, express or implied, that would require Buyer to employ any individual
after the Closing Date.
(d) SCHEDULE 5.13(d) sets forth a true and complete list of
all individuals employed by Employer who primarily perform services with respect
to the operation of the Business. Except as provided on SCHEDULE 5.13(d),
neither Seller nor Employer is a party to any written employment contract,
agreement, commitment or arrangement with any individual identified on SCHEDULE
5.13(d).
(e) Except for those plans described on SCHEDULE 5.13(e) and
in the TCI Employee Handbook dated February, 1995 (the "EMPLOYER PLANS"), which
are sponsored by the Employer, or to which the Employer contributes or is
obligated to contribute, the employees of Employer who primarily perform
services with respect to the operation of the Business do not receive benefits
under any bonus, deferred compensation, pension, profit-sharing, retirement,
severance pay, insurance, stock purchase, stock option, or other fringe benefit
plan, arrangement or practice, or any other employee benefit plan, as defined in
Section 3(3) of ERISA.
(f) Seller has not incurred or taken any action, and to the
Best of Seller's Knowledge, no action or event has occurred, that could cause
Seller to incur any material liability (i) under Section 412 of the Code or
Title IV of ERISA with respect to any Employer Plan that is a single-employer
plan, within the meaning of Section 4001(a)(15) of ERISA, (ii) on account of a
partial or complete withdrawal from any Employer Plan that is a multiemployer
plan, within the meaning of Section 3(37) of ERISA, or on account of any unpaid
contributions
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to any such multiemployer plan, or (iii) for any tax or penalty under Section
4975 of the Code or Section 502(i) of ERISA on account of any prohibited
transaction, within the meaning of Section 4975 of the Code or Section 406 of
ERISA, with respect to any Employer Plan.
5.14. SYSTEM INFORMATION. (a) (i) The number of Equivalent
Basic Subscribers served by the System, the number of subscribers served by the
System taking Expanded Basic Services and the bandwidth of the System and (ii)
to Seller's knowledge based on due inquiry, the number of Homes Passed by the
System and the approximate number of miles of plant included in the Assets, each
as of June 30, 1996, are as set forth on SCHEDULE 5.14.
(b) Seller has filed offset notifications or obtained
appropriate waivers for all aeronautical frequencies currently in use by the
System. Seller's use of such aeronautical frequencies is in compliance with all
applicable FCC rules, regulations and requirements. The System is presently
carrying channels and is providing reception on all such channels in compliance
with the technical standards set forth in all applicable FCC rules, regulations
and requirements.
(c) To the Best of Seller's Knowledge, the System is
the only cable television system presently servicing the area included in the
Franchise Areas or in any area in which Seller operates the Business that does
not require a franchise.
5.15. FINDERS AND BROKERS. Except for its engagement of
▇▇▇▇▇▇▇ & Associates, L.P. to assist Seller in the solicitation of offers to
purchase the Assets and except for a disposition fee payable by Seller to an
Affiliate pursuant to its Partnership Agreement, Seller has not employed any
financial advisor, broker or finder or incurred any liability for any financial
advisory, brokerage, finder's or similar fee or commission in connection with
the transactions contemplated by this Agreement.
5.16. TAX MATTERS. Except as set forth on SCHEDULE 5.16, (a)
all Tax Returns required to be filed by Seller before the Closing with respect
to the Business or the Assets have been or will be filed on or before the
Closing and (b) all Taxes shown as due or payable before the Closing on such Tax
Returns have been or will be paid when required by law.
5.17. CONDITION OF EQUIPMENT. The Equipment material to the
operation of the System is generally in good repair and operating condition
(subject to normal wear and tear).
5.18. INSURANCE. Seller has maintained insurance policies in
the ordinary course of business which when taken together provide adequate
insurance coverage for the Assets and the operations of the Business for all
risks normally insured against by a Person carrying on the same business as
Seller.
5.19. FRANCHISES. The franchises described on Schedule 1.5 are
the franchises necessary for Seller to operate the System lawfully and in a
manner in which it is presently being
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operated. As of the date of this Agreement, no community serviced by the System
has become certified by the FCC for the purpose of regulating a System's
operations and/or rates.
5.20. CAPITAL PROJECT. By the Closing Date, Seller shall have
completed in good and workmanlike manner the capital project represented to be
undertaken and completed by Seller in the ▇▇▇▇▇▇ & Associates, L.P. Information
Memorandum dated May 1996 (the "CAPITAL PROJECT") and the description of the
Capital Project set forth in the memorandum shall be deemed to be incorporated
herein by reference
ARTICLE VI
6. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer represents and warrants to Seller as follows:
6.1. ORGANIZATION AND QUALIFICATION. Buyer is a corporation or
partnership, as the case may be, duly organized, validly existing and in good
standing under the laws of its state of incorporation or formation and has all
requisite corporate or partnership power and authority to carry on its business
as currently conducted and to own, lease, use and operate its assets. Buyer is
duly qualified or licensed to do business and is in good standing under the laws
of each jurisdiction in which the character of the properties owned, leased or
operated by it or the nature of the activities conducted by it makes such
qualification necessary, except where the failure to be so qualified or licensed
and in good standing would not have a material adverse effect on the validity,
binding effect or enforceability of this Agreement or the ability of Buyer to
perform its respective obligations under this Agreement.
6.2. AUTHORITY AND VALIDITY. Buyer has all requisite corporate
or partnership, as the case may be, power and authority to execute, deliver and
perform its obligations under this Agreement. The execution and delivery by
Buyer of, the performance by Buyer of its obligations under, and the
consummation by Buyer of the transactions contemplated by, this Agreement have
been duly authorized by all requisite corporate or partnership action, as the
case may be, of Buyer and no other corporate or partnership proceedings, as the
case may be, on the part of Buyer, are necessary to authorize the execution and
delivery of this Agreement or the performance of Buyer's obligations hereunder.
This Agreement has been duly and validly executed and delivered by Buyer and
constitutes a valid and binding agreement of Buyer, enforceable in accordance
with its terms.
6.3. NO BREACH OR VIOLATION. (a) Except for (i) any consents
that will be obtained by Buyer or waived on or prior to the Closing Date and are
identified on SCHEDULE 6.3(a), (ii) filings and consents which, if not made or
obtained, would not have a material adverse effect on Buyer's ability to perform
its obligations under this Agreement and (iii) the Regulatory Requirements, no
consent, waiver, approval or authorization of, or filing, registration or
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qualification with, any Governmental Authority is required to be made or
obtained by Buyer in connection with the execution, delivery and performance of
this Agreement by Buyer.
(b) The execution, delivery and performance of this
Agreement by Buyer do not and will not: (a) violate or conflict with any
provision of Buyer's Certificate of Incorporation or By-Laws or partnership
agreement, as the case may be, (b) violate any Legal Requirement; or (c) (i)
violate, conflict with or constitute a breach of or default under (without
regard to requirements of notice, passage of time or elections of any Person),
(ii) permit or result in the termination, suspension or modification of, (iii)
result in the acceleration of (or give any Person the right to accelerate) the
performance of Buyer under, or (iv) result in the creation or imposition of any
Encumbrance under, any material contract, agreement, arrangement, commitment or
plan to which Buyer is a party or by which Buyer or any of its assets is bound
or affected, except such violations, conflicts, breaches, defaults,
terminations, suspensions, modifications and accelerations as would not,
individually or in the aggregate, have a material adverse effect on Buyer's
ability to perform its obligations under this Agreement.
6.4. LITIGATION. (a) There are no claims, actions, suits,
proceedings or investigations pending or, to the best of Buyer's knowledge,
threatened, in any court or before any governmental agency or instrumentality,
or before any arbitrator, by or against or affecting or relating to Buyer, or
any of its Affiliates which, if adversely determined, would restrain or enjoin
the consummation of the transactions contemplated by this Agreement or declare
unlawful the transactions or events contemplated by this Agreement or cause any
of such transactions to be rescinded.
(b) There are no judgments, injunctions, orders or
other judicial or administrative mandates outstanding against or affecting Buyer
or any of its Affiliates which would materially hinder or delay the consummation
of the transactions contemplated by this Agreement.
6.5. FINANCIAL STATEMENTS. Buyer has delivered to Seller
copies of its audited financial statements for its last fiscal year ("BUYER
FINANCIAL STATEMENT"). The Buyer Financial Statement and the notes thereto
fairly present the assets, liabilities and financial condition of Buyer as of
the date thereof and the results of operations and cash flows or changes in
financial position, as applicable, of Buyer for the period ended on such date,
all in conformity with GAAP consistently applied, except as may be noted
therein. Buyer has delivered to Seller copies of its unaudited financial
statements for its last fiscal quarter ("BUYER INTERIM FINANCIAL STATEMENT").
Except as noted therein, the Buyer Interim Financial Statement was prepared on a
basis consistent with the Buyer Financial Statement and fairly presents, in
conformity with GAAP consistently applied, the financial position of Buyer as of
such date and the results of operations and cash flows or changes in financial
position, as applicable, for such period, subject to normal year-end adjustments
(none of which are expected to be material in amount), other adjustments noted
therein and the absence of footnotes.
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6.6. ADEQUATE FINANCING. Buyer currently has, or has received
binding commitments pursuant to which one or more lenders or investors have
agreed to loan or contribute to Buyer, all funds necessary to satisfy all its
obligations under this Agreement and with respect to the transactions
contemplated by this Agreement, including its obligations to purchase the Assets
and to pay the Purchase Price to Seller.
6.7. FINDERS AND BROKERS. Buyer has not employed any financial
advisor, broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement for which Seller will in any way
have any liability.
6.8. QUALIFICATION OF BUYER. Buyer knows of no reason why it
cannot obtain the licenses and permits necessary for it to own and operate the
Business in the manner in which it is currently conducted by Seller.
ARTICLE VII
7. ADDITIONAL COVENANTS.
7.1. ACCESS TO PREMISES AND RECORDS. Between the date of
execution and delivery of this Agreement and the Closing Date, Seller will give
Buyer and its representatives, during normal business hours and with reasonable
prior notice, access to the books, records and facilities of the Business and to
the Assets and will furnish to Buyer and its representatives such information
regarding the Business and the Assets as Buyer may from time to time reasonably
request.
7.2. CONTINUITY AND MAINTENANCE OF OPERATIONS; FINANCIAL
STATEMENTS. Except as to actions which Buyer has been advised and to which it
has consented in writing and except as specifically permitted or required by
this Agreement or required by any Legal Requirement, Seller shall:
(a) Operate the Business in the ordinary course
consistent with past practices and will use commercially reasonable efforts to
cause Employer to keep available the services of the employees of the Employer
who are primarily involved in the operation of the Business and to preserve any
beneficial business relationships with subscribers, customers, suppliers,
Governmental Authorities and others having business dealings with Seller
relating to the Business;
(b) Maintain the Assets in operating condition
consistent with past maintenance practices;
(c) Maintain adequate inventories of spare Equipment
consistent with past practice;
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(d) Maintain insurance as in effect on the date of
this Agreement;
(e) Complete the Capital Project and otherwise
conform its operations to its existing capital budget through the Closing Date;
(f) Keep all of its business books, records and files
in the ordinary course of business in accordance with past practices;
(g) Continue to implement its procedures for
disconnection and discontinuance of service to subscribers whose accounts are
delinquent in accordance with those in effect on the date of this Agreement;
(h) Not sell, transfer or assign any Assets other
than in the ordinary course of business;
(i) Use commercially reasonable efforts not to permit
any material amendment to, or cancellation of, any of the Governmental Permits
or Seller Contracts;
(j) Not enter into any contract or commitment for the
acquisition of goods or services relating to the System or the Business
involving an expenditure in excess of $40,000 other than in the ordinary course
of business;
(k) Not modify or change the Basic Subscriber Rate or
any other subscriber rates nor employ any new promotions to obtain subscribers
that provide a discount or other feature that results in rates lower than those
presently in effect other than in the ordinary course of business in accordance
with past practices or with Buyer's written consent; or
(l) Not take or omit to take any action that would
cause Seller to be in breach of any of its representations or warranties in this
Agreement in any material respect, provided, however, that the foregoing shall
not preclude Seller from engaging a financial advisor to render an opinion as to
the fairness, from a financial point of view, of the transactions contemplated
by this Agreement.
Seller shall continue to prepare all periodic statements and
reports historically prepared by it regarding the System and shall deliver to
Buyer, promptly after such statements and reports become available to Seller,
correct and complete copies of unaudited monthly and quarterly income statements
and operating reports for the System that are prepared by or for Seller at any
time between the date of this Agreement and the Closing; provided, that, subject
to the following sentence, Seller shall not be required to make and shall not be
deemed to make any representation or warranty concerning such statements or the
contents of any such information delivered to Buyer. Unless the Closing occurs
on or before April 30, 1997 or Buyer waives the following requirements, Seller
shall deliver to Buyer (i) promptly when available, a copy of the financial
statements for the System for the year ended December 31, 1996, and (ii) at
Closing, if the Closing occurs after May 15, 1997 but before August 15, 1997 or
after August 15, 1997,
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internally prepared financial statements for the System for the three-month or
six-month period ended March 31, 1997 or June 30, 1997, as applicable; except
for the absence of footnote disclosures, cash flow statements and statements of
equity and except for estimated, annualized or projected financial information,
the financial statements delivered pursuant to this sentence shall fairly
present, in all material respects, the results of operations of the System for
the respective periods ended on such dates, all in conformity with GAAP
consistently applied, and with respect to the financial statements for the
three-month and six-month periods ended March 31, 1997 and June 30, 1997,
subject to normal year-end adjustments.
7.3. EMPLOYEE MATTERS. (a) Buyer may offer employment to
certain of the employees of Employer who primarily perform services with respect
to the operation of the Business as of the Closing Date. Not later than February
24, 1997, Buyer shall deliver to Seller a notice containing the names of
employees of the Business whom Buyer intends to hire on the Closing Date;
provided that if the Termination Date is extended by Seller, Buyer may deliver
to Seller a notice no later than 60 Business Days prior to the extended
Termination Date updating the list of employees to which Buyer intends to hire
on the Closing Date. Seller shall undertake to provide to all affected employees
and any other necessary persons any notice that may be required under the WARN
Act.
(b) Nothing in this Section 7.3 or elsewhere in this
Agreement is intended to confer upon any employee of Employer or his or her
legal representative or heirs any rights as a third party beneficiary or
otherwise or any remedies of any nature or kind whatsoever under or by reason of
this Agreement, or the transactions contemplated hereby, including, but not
limited to, any rights of employment or continued employment. All rights and
obligations created by this Agreement are solely between the parties hereto.
7.4. FRANCHISE EXTENSIONS. Seller covenants and agrees that,
as soon as practicable following the execution of this Agreement, it will apply
to the applicable Governmental Authority for an extension (the "EXTENSIONS") of
each franchise described on SCHEDULE 1.5 with an expiration date prior to June
30, 2000. Each such Extension shall have an expiration date no earlier than June
30, 2000 and may include modifications customarily imposed by Governmental
Authorities issuing cable television franchises as a condition to obtaining such
Extension but in any event shall not impose any conditions or obligations which
are materially more burdensome than contained in the current franchise.
7.5. ENVIRONMENTAL REPORT. Buyer may cause to be prepared at
its expense a Phase I environmental report for the Real Property described on
SCHEDULE 1.7. Seller shall cooperate with Buyer and permit access to the Real
Property during normal business hours in order for the Phase I environmental
report to be prepared. Seller shall permit Buyer during normal business hours to
inspect environmental records in the possession of Seller which are necessary
for the preparation of the Phase I environmental report.
7.6. REQUIRED CONSENTS. Seller will use commercially
reasonable efforts to obtain, as soon as practicable and at its expense, all the
Required Consents, in form and
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substance reasonably satisfactory to Buyer; provided, that "commercially
reasonable efforts" for this purpose shall not require Seller to undertake
extraordinary or unreasonable measures to obtain such approvals and consents,
including, but not limited to, the initiation or prosecution of legal
proceedings or the payment of fees in excess of normal and usual filing and
processing fees. Buyer will use commercially reasonable efforts to assist Seller
in its efforts to obtain all the Required Consents and the Extensions, and in
connection therewith will consent to such modifications to any Governmental
Permit that a Governmental Authority may request as a condition to (i) the
transfer of such permit to Buyer and/or (ii) obtaining extension of the term of
such Governmental Permit, provided, however, that Buyer will not be required to
agree to any modifications to a Governmental Permit unless they are customarily
imposed by Governmental Authorities issuing cable television franchises as a
condition to obtaining the consent to the transfer of such franchises and do not
impose upon Buyer any conditions or obligations which are materially more
burdensome than are contained in any such Governmental Permit.
7.7. HSR NOTIFICATION. As soon as practicable after the
execution of this Agreement and if required by applicable Legal Requirements,
Seller and Buyer will each complete and file, or cause to be completed and
filed, any notification and report required to be filed under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"). Each of the parties will take any additional action that may be
necessary, proper or advisable, will cooperate to prevent inconsistencies
between their respective filings and will furnish to each other such necessary
information and reasonable assistance as the other may reasonably request in
connection with its preparation of necessary filings or submissions under the
HSR Act. Buyer and Seller shall use commercially reasonable efforts (including
the filing of a request for early termination) to obtain the early termination
of the waiting period under the HSR Act.
7.8. NOTIFICATION OF CERTAIN MATTERS. Each party will promptly
notify the other of any fact, event, circumstance or action the existence or
occurrence of which would cause any of such party's representations or
warranties under this Agreement not to be true in any material respect.
7.9. RISK OF LOSS; CONDEMNATION. (a) Seller will bear the risk
of any loss or damage to the Assets resulting from fire, theft or other casualty
(except reasonable wear and tear) at all times prior to the Closing. If any such
loss or damage is so substantial as to prevent normal operation of any material
portion of the System, Seller shall promptly notify Buyer of that fact and
Buyer, at any time within 10 days after receipt of such notice, may elect by
written notice to Seller either (i) to waive such defect and proceed toward
consummation of the acquisition of the Assets in accordance with this Agreement
or (ii) to terminate this Agreement pursuant to Section 10.1(c)(v). If Buyer
elects to consummate the acquisition of the Assets notwithstanding such loss or
damage and does so, there will be no adjustment in the Purchase Price on account
of such loss or damage but all insurance proceeds payable as a result of the
occurrence of the event resulting in such loss or damage (to the extent not
previously applied by Seller with respect to such loss or damage) will be
delivered by Seller to Buyer or the rights to such proceeds will be assigned by
Seller to Buyer if not yet paid over to Seller.
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(a) If, prior to the Closing, any part of a material
Asset or an interest in a material Asset is taken or condemned as a result of
the exercise of the power of eminent domain, or if a Governmental Authority
having such power informs Seller or Buyer that it intends to condemn all or any
part of a material Asset (such event being referred to, in either case, as a
"TAKING"), then Buyer may terminate this Agreement pursuant to Section
10.1(c)(vi). If Buyer does not elect to terminate this Agreement then (a) if the
Closing occurs, Buyer shall have the sole right, in the name of Seller, if Buyer
so elects, to negotiate for, claim, contest and receive all damages with respect
to the Taking, (b) Seller shall be relieved of its obligation to convey to Buyer
the Asset or interests that are the subject of the Taking and (c) at the Closing
Seller shall assign to Buyer all of Seller's rights (including the right to
receive payment of damage) with respect to such Taking and shall pay to Buyer
all damages previously paid to Seller with respect to the Taking.
7.10. ADVERSE CHANGES. Seller shall promptly notify Buyer in
writing of any materially adverse developments affecting the Assets, the System
or the Business which become known to Seller, including, but not limited to, (i)
any damage, destruction or loss (whether or not covered by insurance) materially
and adversely affecting any of the Assets, the System or the Business, (ii) any
material notice of violation, forfeiture or complaint under any material
Governmental Permits, (iii) anything which, if not corrected prior to the
Closing Date, will prevent Seller from fulfilling any condition to Closing
described in Article VIII or (iv) matters or events which may have a material
adverse effect upon the Business, the System, or the business activities,
finances, conditions or earnings for the System.
7.11. ACTION BY LIMITED PARTNERS. (a) If required by
applicable Legal Requirements and the Partnership Agreement to consummate the
transactions contemplated by this Agreement, or if the Seller otherwise elects
to do so, the Seller, acting through the General Partner, shall in accordance
with the applicable Legal Requirements and the Partnership Agreement: (i) within
a reasonable period of time (as determined by the General Partner) after the
execution and delivery of this Agreement, duly call, give notice of, convene and
hold a special meeting (the "SPECIAL MEETING") of the Limited Partners for the
purpose of approving the transactions contemplated by this Agreement; and (ii)
subject to its fiduciary duties (as determined by the General Partner after
consultation with independent counsel), include in any proxy statement the
determination and recommendation of the General Partner to the effect that the
General Partner, having determined that this Agreement and the transactions
contemplated hereby are in the best interests of Seller and the Limited
Partners, has approved this Agreement and such transactions and recommends that
the Limited Partners vote in favor of the sale of the Assets to Buyer pursuant
to this Agreement.
(b) As soon as practicable after the execution and
delivery of this Agreement, Seller shall, at its sole cost and expense, file
with the SEC under the Exchange Act, and shall use commercially reasonable
efforts to clear with the SEC and mail to the Limited Partners no later than
February 15, 1997, a proxy statement with respect to the Special Meeting (the
"PROXY STATEMENT"). Seller and Buyer shall cooperate in the preparation of any
Proxy Statement; without limiting the generality of the foregoing, Buyer shall
furnish to Seller the
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information relating to Buyer required by the Exchange Act to be set forth in
the Proxy Statement. Seller agrees that the Proxy Statement shall comply in all
material respects with the Exchange Act and the rules and regulations
thereunder; provided, however, that no agreement is made by Seller with respect
to information supplied by Buyer expressly for inclusion in the Proxy Statement.
Buyer and its counsel shall be given a reasonable opportunity to review the
Proxy Statement prior to the filing thereof with the SEC.
7.12. NO SOLICITATION. (a) Seller shall not, and shall cause
the General Partner, employees, agents and representatives (including, but not
limited to, any investment banker, attorney or accountant retained by Seller)
not to, initiate, solicit or encourage, directly or indirectly, any inquiries or
the making of any proposal with respect to any Alternative Transaction, engage
in any negotiations concerning, or provide to any other Person any information
or data relating to, the Business, the System, the Assets or Seller for the
purposes of, or have any discussions with any Person relating to, or otherwise
cooperate in any way with or assist or participate in, facilitate or encourage,
any inquiries or the making of any proposal which constitutes, or may reasonably
be expected to lead to, any effort or attempt by any other Person to seek or to
effect an Alternative Transaction, or agree to or endorse any Alternative
Transaction; provided, however, that nothing contained in this Section 7.12
shall prohibit Seller or the General Partner from making any disclosure to the
Limited Partners that, in the judgment of the General Partner based upon the
advice of independent counsel, is required under applicable Legal Requirements;
and provided, further, that (i) Seller or the General Partner may, upon the
unsolicited request of a third party, furnish information or data (including,
but not limited to, confidential information or data) relating to the Business,
the System, the Assets or Seller for the purposes of facilitating an Alternative
Transaction and participate in negotiations with a Person making (or who may
reasonably be expected to make) an unsolicited proposal regarding an Alternative
Transaction and (ii) following receipt of a proposal for an Alternative
Transaction, Seller or the General Partner may terminate this Agreement pursuant
to Section 10.1(b)(ii).
(b) TCI shall not, and shall cause its Affiliates
which it controls not to, make a proposal to Seller regarding an Alternative
Transaction. The restriction set forth in this Section 7.12(b) shall terminate
on the earlier of (i) the Closing or (ii) termination of this Agreement.
7.13. SALES AND TRANSFER TAXES AND FEES. Buyer and Seller
shall each pay 50 percent of any state or local sales, use, transfer, excise,
documentary or license taxes or fees or any other charge (including filing fees)
imposed by any Governmental Authority as a consequence of the transfer of any
Assets pursuant to this Agreement. Seller shall timely file any sales tax
returns required to be filed with any Governmental Authority as a consequence of
the transfer of any Assets pursuant to this Agreement. Buyer shall cooperate in
the preparation and filing of any submission or application necessary to obtain
any clearance relating to, or, if available, exemption from, any Taxes or fees
described in this Section 7.13.
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7.14. COMMERCIALLY REASONABLE EFFORTS. (a) Seller shall use
commercially reasonable efforts to take all steps within its power, and will
cooperate with Buyer, to cause to be fulfilled those of the conditions to
Buyer's obligations to consummate the transactions contemplated by this
Agreement that are dependent upon its actions, and to execute and deliver such
instruments and take such other reasonable actions as may be necessary or
appropriate in order to carry out the intent of this Agreement and consummate
the transactions contemplated hereby.
(b) Buyer shall use commercially reasonable efforts
to take all steps within its power, and will cooperate with Seller, to cause to
be fulfilled those of the conditions to Seller's obligations to consummate the
transactions contemplated by this Agreement that are dependent upon its actions
and to execute and deliver such instruments and take such other reasonable
actions as may be necessary or appropriate in order to carry out the intent of
this Agreement and consummate the transactions contemplated hereby.
7.15. TITLE INSURANCE. Seller shall cooperate with Buyer if
Buyer elects to obtain title insurance policies on any Real Property owned in
fee or leased. Buyer shall have the sole responsibility for obtaining and paying
for such policies. The parties agree that the obtaining of title insurance on
any Real Property shall not be a condition to the obligation of Buyer to
consummate the transactions contemplated hereby.
7.16. NON-COMPETITION. Each of Seller and the General Partner
hereby covenants and agrees that for the period commencing on the Closing Date
and expiring on the third anniversary thereof, it shall not, directly or
indirectly, compete with Buyer in the provision of terrestrial cable television
video services by means of cable, microwave, fiber optics, satellite receivers
or broadcasts all of which being directed to the delivery of terrestrial cable
television video services to businesses, residences, multi-family dwellings,
hotels, motels, trailers and other users, in any portion of the Franchise Areas
in which the Business operates on the Closing Date. Each of Seller and the
General Partner further covenants that for the period commencing on the Closing
Date and expiring on the third anniversary thereof, it shall not, directly or
indirectly, manage, operate, join, control, participate, or become interested
in, or be connected with (as a consultant, partner, stockholder or investor) any
such terrestrial cable television video service that would compete with Buyer in
the provision of cable television service within any portion of the geographical
area described above, except as a passive investor or stockholder holding less
than five percent of the outstanding voting stock or equity interest in any
corporation or other entity.
7.17. FORMS 394. At Seller's option, Buyer shall prepare, in
form and substance reasonably satisfactory to Seller, within 15 Business Days
after receipt of Seller's written request, and Seller shall file, Forms 394 with
the applicable Governmental Authorities.
7.18. FAIRNESS OPINION. Seller shall use commercially
reasonable efforts to obtain the Fairness Opinion.
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ARTICLE VIII
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.
The obligations of Buyer under this Agreement are subject to
the satisfaction at or prior to the Closing of each of the following conditions,
any one or more of which may be waived by Buyer, in its sole discretion.
8.1. HSR ACT. If required under applicable Legal Requirements,
all filings required under the HSR Act shall have been made and the applicable
waiting period shall have expired or been earlier terminated without the receipt
of any objection or the commencement or threat of any litigation by a
Governmental Authority of competent jurisdiction to restrain the consummation of
the transactions contemplated by this Agreement.
8.2. GOVERNMENTAL OR LEGAL ACTION. No action, suit or
proceeding shall be pending or threatened by or before any Governmental
Authority and no Legal Requirement shall have been enacted, promulgated or
issued or deemed applicable to any of the transactions contemplated by this
Agreement by any Governmental Authority that would (a) prohibit Buyer's
ownership or operation of all or a material portion of the System, the Business
or the Assets or (b) prevent or make illegal the consummation of the
transactions contemplated by this Agreement.
8.3. ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date, with the same effect as though made on and as of the
Closing Date, except for such changes permitted or contemplated by the terms of
this Agreement and except insofar as any of such representations and warranties
relate solely to a particular date or period, in which case they shall be true
and correct in all material respects on such Closing Date with respect to such
date and period.
8.4. PERFORMANCE OF AGREEMENTS. Seller shall have performed in
all material respects all obligations and agreements and complied, or caused to
be complied with, all covenants and conditions required by this Agreement to be
performed or complied with by Seller at or prior to the Closing Date.
8.5. NO MATERIAL ADVERSE CHANGE. During the period from the
date of this Agreement through and including the Closing Date, there shall not
have occurred any material adverse change in the business, financial condition
or operations of the Business, taken as a whole, other than any change arising
out of matters of a general economic nature or matters (including, but not
limited to, competition caused by or arising from the Multichannel Multipoint
Distribution Service, direct broadcast satellite, legislation, rule making and
regulation) affecting the cable television industry (national or regional)
generally, and Seller shall not have sustained any material loss or damage to
the Assets or the System, whether or not insured, that materially affects the
ability of Seller to conduct the Business in a manner consistent with past
practice.
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8.6. CONSENTS AND EXTENSIONS. Seller shall have delivered to
Buyer evidence, in form and substance reasonably satisfactory to Buyer, that all
the Required Consents and Extensions have been obtained or given.
8.7. TRANSFER DOCUMENTS. Seller shall have delivered to Buyer
customary bills of sale, deeds, assignments and other instruments of transfer
sufficient to convey good and marketable title to the Assets in accordance with
the terms of this Agreement.
8.8. OPINIONS OF SELLER'S COUNSEL. Buyer shall have received
the opinion or opinions of ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP, counsel
for Seller, dated the Closing Date, substantially in the form of Exhibit D.
8.9. OPINION OF SELLER'S FCC COUNSEL. Buyer shall have
received the opinion of ▇▇▇▇, Raywid & ▇▇▇▇▇▇▇▇▇, FCC counsel for Seller, dated
the Closing Date, substantially in the form of Exhibit F.
8.10. DISCHARGE OF LIENS. Seller shall have secured the
termination of all material Encumbrances of any nature on the Assets, other than
Permitted Encumbrances.
8.11. ADDITIONAL DOCUMENTS AND ACTS. Seller shall have
delivered or caused to be delivered to Buyer all other documents required to be
delivered pursuant to this Agreement and done or caused to be done all other
acts or things reasonably requested by Buyer to evidence compliance with the
conditions set forth in this Article VIII.
8.12. INDEMNITY ESCROW AGREEMENT. Seller shall have executed
and delivered the Indemnity Escrow Agreement.
8.13. CERTIFICATES. Seller shall have furnished Buyer with
such other certificates of Seller and others, dated as of the Closing Date, to
evidence compliance with the conditions set forth in this Article VIII, as may
be reasonably requested by Buyer.
8.14. MINIMUM SUBSCRIBERS. The aggregate number of Equivalent
Basic Subscribers served by the System as of the Closing Date shall not be less
than 17,955.
ARTICLE IX
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER.
The obligations of Seller under the Agreement are subject to
the satisfaction, at or prior to the Closing Date, of each of the following
conditions, any one or more of which may be waived by Seller in its sole
discretion.
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9.1. HSR ACT. If required under applicable Legal Requirements,
all filings required under the HSR Act shall have been made and the applicable
waiting period shall have expired or been earlier terminated without the receipt
of any objection or the commencement or threat of any litigation by a
Governmental Authority of competent jurisdiction to restrain the consummation of
the transactions contemplated by this Agreement.
9.2. GOVERNMENTAL OR LEGAL ACTIONS. No action, suit or
proceeding shall be pending or threatened by or before any Governmental
Authority and no Legal Requirement shall have been enacted, promulgated or
issued or deemed applicable to any of the transactions contemplated by this
Agreement by any Governmental Authority that would (a) prohibit Buyer's
ownership or operation of all or any material portion of the System, the
Business or the Assets or (b) prevent or make illegal the consummation of the
transactions contemplated by this Agreement.
9.3. ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date, with the same effect as though made on and as of the
Closing Date, except for such changes permitted or contemplated by the terms of
this Agreement and except insofar as any of such representations and warranties
relate solely to a particular date or period, in which case they shall be true
and correct in all material respects on such Closing Date with respect to such
date and period.
9.4. PERFORMANCE OF AGREEMENTS. Buyer shall have performed in
all material respects all obligations and agreements and complied, or caused to
be complied with, all covenants and conditions required by this Agreement to be
performed or complied with by Buyer at or prior to the Closing Date.
9.5. CONSENTS. All Required Consents shall have been obtained
or given.
9.6. OPINIONS OF BUYER'S COUNSEL. Seller shall have received
the opinion or opinions of Hourigan, Kluger, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.C., outside
counsel for Buyer, dated the Closing Date, substantially in the form of EXHIBIT
E.
9.7. LIMITED PARTNER APPROVAL. The transactions contemplated
by this Agreement shall have been approved by the affirmative vote of or consent
by the Limited Partners to the extent required by the Partnership Agreement or
if Seller otherwise elects as permitted by Section 7.11.
9.8. PAYMENT OF PURCHASE PRICE. Buyer shall have paid to
Seller the Purchase Price as set forth in Section 3.1.
9.9. ASSUMPTION OF LIABILITIES. Buyer shall have delivered to
Seller a customary assumption of liabilities agreement which is sufficient to
cover Buyer's obligations for the Assumed Liabilities as set forth in Section
4.1.
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9.10. ADDITIONAL DOCUMENTS AND ACTS. Buyer shall have
delivered or caused to be delivered to Seller all other documents required to be
delivered pursuant to this Agreement and done all other acts or things
reasonably requested by Seller to evidence compliance with the conditions set
forth in this Article IX.
9.11. CERTIFICATE. Buyer shall have furnished Seller with such
other certificates of Buyer and others, dated as of the Closing Date, to
evidence compliance with the conditions set forth in this Article IX, as may be
reasonably requested by Seller.
9.12. FAIRNESS OPINION. Seller shall have received an opinion
(the "Fairness Opinion"), in form and substance reasonably satisfactory to
Seller, from its financial advisors as to the fairness, from a financial point
of view, of the transactions contemplated by this Agreement.
9.13. INDEMNITY ESCROW AGREEMENT. Buyer shall have executed
and delivered the Indemnity Escrow Agreement.
ARTICLE X
10. TERMINATION.
10.1. EVENTS OF TERMINATION. This Agreement and the
transactions contemplated by this Agreement may be terminated at any time prior
to the Closing:
(a) by the mutual written consent of Buyer and
Seller;
(b) by Seller:
(i) if the consummation of the transactions
contemplated by this Agreement by Seller would
violate any nonappealable final order, decree or
judgment of any Governmental Authority having
competent jurisdiction;
(ii) following receipt by Seller or the
General Partner of an unsolicited proposal for an
Alternative Transaction to the extent that the
General Partner determines in good faith on the
basis of advice of independent counsel that such
action is necessary or appropriate in order for the
General Partner to act in a manner that is
consistent with its fiduciary obligations under
applicable law;
(iii) if any representation or warranty of
Buyer made herein is untrue in any material respect
(other than a change permitted or contemplated by
this Agreement) and such breach is not cured within
10
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days of Buyer's receipt of a notice from Seller
that such breach exists or has occurred;
if Buyer shall have defaulted in any
material respect in the performance of any material
obligation under this Agreement and such breach is
not cured within 30 days of Buyer's receipt of a
notice from Seller that such default exists or has
occurred; or
(v) if any one or more of the conditions to
Seller's obligations to consummate the Closing as
set forth in Article IX cannot reasonably be
satisfied on or before the Termination Date.
(c) by Buyer:
(i) if the consummation of the transactions
contemplated by this Agreement by Buyer would
violate any nonappealable final order, decree or
judgment of any Governmental Authority having
competent jurisdiction;
(ii) if any representation or warranty of
Seller made herein is untrue in any material
respect (other than due to a change permitted or
contemplated by this Agreement) and such breach is
not cured within 10 days of Seller's receipt of a
notice from Buyer that such breach exists or has
occurred;
(iii) if Seller shall have defaulted in any
material respect in the performance of any material
obligation under this Agreement and such breach is
not cured within 30 days of Seller's receipt of a
notice from Buyer that such default exists or has
occurred;
(iv) if any one or more of the conditions to
Buyer's obligations to consummate the Closing as
set forth in Article VIII cannot reasonably be
satisfied on or before the Termination Date;
(v) within 10 days after receipt by Buyer of
a notice from Seller that the loss or damage to the
Assets resulting from fire, theft or other casualty
is so substantial as to prevent normal operation of
any material portion of the System, as contemplated
by Section 7.9(a);
(vi) following a Taking, as contemplated by
the first sentence of Section 7.9(b);
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(d) Unless the Closing shall have theretofore taken
place, by either party after the Termination Date, provided that the terminating
party is not otherwise in default or breach of this Agreement.
10.2. MANNER OF EXERCISE. In the event of the termination of
this Agreement by either Buyer or Seller, pursuant to Section 10.1, notice
thereof shall forthwith be given to the other party and this Agreement shall
terminate and the transactions contemplated hereunder shall be abandoned without
further action by Buyer or Seller.
10.3. EFFECT OF TERMINATION. (a) Subject to paragraph (b) of
this Section 10.3, in the event of the termination of this Agreement pursuant to
Section 10.1 and prior to the Closing, all obligations of the parties hereunder
shall terminate, except for the respective obligations of the parties under
Section 13.12; provided, however, that no termination of this Agreement shall
(i) except as set forth in Section 10.3(b) and Section 10.4, relieve a
defaulting or breaching party from any liability to the other party or parties
hereto for or in respect of such default or (ii) result in the rescission of any
transaction theretofore consummated hereunder.
(b) If this Agreement is terminated after June 30,
1997 (i) by Seller pursuant to Section 10.1(b)(ii) or (ii) by Buyer pursuant to
Section 10.1(c) solely because Seller is in default or breach of the Agreement
and Buyer is not otherwise in default or breach of this Agreement, Seller shall
promptly (within ten days of termination) pay to Buyer the Commitment Expense
incurred by Buyer, up to $125,000. If this Agreement is terminated by (i) Seller
pursuant to Section 10.1(b)(ii) or (ii) by Buyer pursuant to 10.1(c)(iii) due to
Seller's non-compliance with Section 7.18, Seller shall promptly (within ten
days of termination) pay to Buyer a termination fee of $765,923; provided, that
if Seller terminates this Agreement pursuant to Section 10.1(b)(ii) with respect
to an unsolicited proposal for an Alternative Transaction proposed by a Person
who submitted a written proposal prior to the date of this Agreement to purchase
the System pursuant to the competitive auction conducted by ▇▇▇▇▇▇▇ &
Associates, L.P., then the amount of such termination fee shall be $1,148,884.
Any such termination fee shall be liquidated damages and not a penalty, and upon
receipt thereof Buyer shall be precluded from exercising any other right or
remedy available under this Agreement or applicable law.
10.4. LIQUIDATED DAMAGES. Provided Seller is not in default of
this Agreement and in the absence of any right of Buyer to terminate this
Agreement under Section 10.1(c) above, in the event of (i) the breach or default
by Buyer of its obligations under this Agreement and (ii) the termination of
this Agreement prior to the Closing, Seller shall have the option, upon notice
from Seller to Buyer given as provided in the Escrow Agreement, to receive as
liquidated damages, and not as a penalty, the Deposit. In the event Seller
elects to receive the Deposit as liquidated damages as set forth in this Section
10.4, Buyer shall promptly (but in no event more than two Business Days after
receipt of such notice) take all action required under the Escrow Agreement to
cause the Deposit to be released to Seller. If Seller elects to receive the
Deposit as liquidated damages as set forth in this Section 10.4, Seller shall,
upon receipt of the Deposit, be precluded from exercising any other right or
remedy available under this Agreement or applicable law.
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ARTICLE XI
11. NATURE AND SURVIVAL OF REPRESENTATIONS,
WARRANTIES AND AGREEMENTS.
11.1. NATURE OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Neither party will be deemed to have made any representation, warranty, covenant
or agreement except as set forth in this Agreement. Without limiting the
generality of the foregoing, neither party will be liable or bound in any manner
by any express or implied representation, warranty, covenant or agreement that
is made by any employee, agent or other Person representing or purporting to
represent such party.
11.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller and Buyer in this Agreement and in the
documents and instruments to be delivered by Seller and Buyer pursuant to this
Agreement shall survive the Closing as and to the extent only set forth in this
Article XI.
11.3. TIME LIMITATIONS. If the Closing occurs, Seller shall
have no liability to Buyer with respect to any representation or warranty or any
covenant, agreement or obligation to the extent required to be performed or
complied with prior to the Closing Date, unless on or before the first
anniversary of the Closing Date Seller is given written notice by Buyer
asserting a claim with respect thereto and specifying the factual basis of that
claim in reasonable detail to the extent then known by Buyer. If the Closing
occurs, Buyer shall have no liability to Seller with respect to any
representation or warranty or any covenant, agreement or obligation to the
extent required to be performed or complied with prior to the Closing Date,
unless on or before the first anniversary of the Closing Date Buyer is given
written notice by Seller of a claim with respect thereto and specifying the
factual basis of that claim in reasonable detail to the extent then known by
Seller. A claim with respect to any covenants to be performed or complied with
by Buyer or Seller after the Closing Date may be asserted at any time.
11.4. LIMITATIONS AS TO AMOUNT. (a) If the Closing occurs,
Seller shall have no liability (for indemnification or otherwise) with respect
to any failure or breach of any representation or warranty or any covenant,
agreement or obligation to the extent required to be performed on or prior to
the Closing Date until the total of all damages with respect to such failure or
breach exceeds $50,000, and then only for damages in excess of $50,000.
(b) If the Closing occurs, Buyer shall have no
liability (for indemnification or otherwise) with respect to any failure or
breach of any representation or warranty or any covenant, agreement, or
obligation to the extent required to be performed on or before the Closing Date
until the total of all damages with respect to such failure or breach exceeds
$50,000, and then only for damages in excess of $50,000.
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(c) If the Closing occurs, Seller's aggregate
liability (for indemnification or otherwise) with respect to any failure or
breach of any representation or warranty or any covenant, agreement or
obligation to the extent required to be performed on or prior to the Closing
Date shall be limited to Buyer's right to make an indemnification claim against
Seller under Article XII and shall be further limited as set forth in Section
12.3.
(d) If the Closing occurs, Buyer's aggregate
liability (for indemnification or otherwise) with respect to any failure or
breach of any representation or warranty or any covenant, agreement or
obligation to the extent required to be performed on or prior to the Closing
Date shall be limited to $765,923.
ARTICLE XII
12. INDEMNIFICATION.
12.1. RIGHTS TO INDEMNIFICATION. Subject to the limitations
set forth in Sections 11.3 and 11.4, Seller agrees to indemnify and hold
harmless Buyer against any loss, liability, claim, damage or expense (including,
but not limited to, reasonable attorneys' fees and disbursements) arising from
(a) any claim for brokerage or agent's or finder's commissions or compensation
in respect of the transactions contemplated by this Agreement by any Person
purporting to act on behalf of Seller, (b) any claim that Buyer is liable for
the Excluded Liabilities and (c) Seller's failure or breach of any
representation, warranty, covenant, agreement or obligation made or required to
be performed by Seller under this Agreement. Subject to the limitations set
forth in Sections 11.3 and 11.4, Buyer agrees to indemnify and hold harmless
Seller against any loss, liability, claim, damage or expense (including, but not
limited to, reasonable attorneys' fees and disbursements) arising from (a) any
claim for brokerage or agent's or finder's commissions or compensation in
respect of the transactions contemplated by this Agreement by any Person
purporting to act on behalf of Buyer or, (b) the failure to perform the
obligations of the Assumed Liabilities or (c) Buyer's failure or breach of any
representation, warranty, covenant, agreement or obligation made or required to
be performed by Buyer under this Agreement.
12.2. PROCEDURE FOR INDEMNIFICATION. Promptly after receipt by
an indemnified party under Section 12.1 of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party under such section, give notice to the
indemnifying party of the commencement thereof, but the failure so to notify the
indemnifying party shall not relieve it of any liability that it may have to any
indemnified party except to the extent the indemnifying party demonstrates that
the defense of such action is prejudiced thereby. In case any such action shall
be brought against an indemnified party and it shall promptly give notice to the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, within
ten Business Days of receipt of such notice, to assume the defense thereof with
counsel satisfactory to such indemnified party and, after notice from the
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indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under such section for any fees of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation. If an
indemnifying party assumes the defense of such action, (a) no compromise or
settlement thereof may be effected by the indemnifying party without the
indemnified party's consent unless (i) there is no finding or admission of any
violation of law or any violation of the rights of the indemnified party and no
effect on any other claims that may be made against the indemnified party and
(ii) the sole relief provided is monetary damages that are paid in full by the
indemnifying party and (b) the indemnifying party shall have no liability with
respect to any compromise or settlement thereof effected without its consent
(which shall not be unreasonably withheld). If notice is given within ten
Business Days to an indemnifying party of the commencement of any action and it
does not, within ten days after the indemnified party's notice is given, give
notice to the indemnified party of its election to assume the defense thereof,
the indemnifying party shall be bound by any determination made in such action
or any compromise or settlement thereof effected by the indemnified party.
Notwithstanding the foregoing, if an indemnified party determines in good faith
that there is a reasonable probability that an action may adversely affect it or
its Affiliates other than as a result of monetary damages, such indemnified
party may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise or settle such action, but the indemnifying party shall not
be bound by any determination of an action so defended or any compromise or
settlement thereof effected without its consent (which shall not be unreasonably
withheld).
12.3. INDEMNITY ESCROW. Buyer acknowledges and agrees that
recourse against the Seller's Escrow is its sole and exclusive remedy in the
event of a claim against Seller with respect to any representation or warranty
or any covenant, agreement or obligation, whether for indemnification pursuant
to Article XI or this Article XII or otherwise; provided, however, that this
limitation shall not apply to claims by Buyer for breaches of covenants to be
performed or complied with by Seller after the Closing Date.
ARTICLE XIII
13. MISCELLANEOUS.
13.1. PARTIES OBLIGATED AND BENEFITTED. (a) Subject to the
limitations set forth in clauses (b) and (c) below, this Agreement will be
binding upon the parties and their respective assigns and successors in interest
and will inure solely to the benefit of the parties and their respective assigns
and successors in interest, and no other Person will be entitled to any of the
benefits conferred by this Agreement.
(b) Without the prior written consent of the other
parties, no party will assign any of its rights under this Agreement or delegate
any of its duties under this Agreement; provided, that Buyer may assign this
Agreement to any Affiliate of Buyer without Seller's
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consent; provided, however, that notwithstanding such assignment Buyer shall
remain obligated to Seller pursuant to the terms and conditions of this
Agreement.
13.2. PRESS RELEASES. Except as required by applicable law
based on the advice of independent counsel, neither party shall make any public
announcement, press release or Form 8-K filing under the Exchange Act with the
SEC or any other filing with any other regulatory agency with respect to the
transactions contemplated by this Agreement, without the prior written approval
of the other party. Prior to the Closing Date (or at any time if the Closing
does not occur), Buyer shall, and shall cause its officers, directors and
representatives to, keep confidential and not disclose to any Person (other than
its officers, employees and representatives) or use (except in connection with
the transactions contemplated hereby, including, but not limited to, efforts to
obtain from Governmental Authorities and third parties Required Consents and
Extensions to the transactions contemplated hereby and the operation of the
Business) all non-public information obtained by Buyer pursuant to this
Agreement. Except as permitted by Section 7.12 (a) hereof, prior to and
following the closing, Seller shall, and shall cause its officers, employees and
representatives to, keep confidential and not disclose to any Person or use
(except in connection with preparing Tax Returns, conducting proceedings
relating to Taxes or the Excluded Liabilities and, prior to the Closing Date, as
required in conduct of the Business) any non-public information relating to the
Business, and any information relating to Buyer. Buyer agrees to the inclusion
of a description of the transactions contemplated by this Agreement in a letter
to the Limited Partners. This Section 13.2 shall not be violated by disclosure
pursuant to court order or as otherwise required by law, on condition that
notice of the requirement for such disclosure is given to the other party hereto
prior to making any disclosure and the party subject to such requirement
cooperates as the other may reasonably request in resisting it.
13.3. NOTICES. All notices, consents, approvals, demands,
requests and other communications required or desired to be given hereunder must
be given in writing, shall refer to this Agreement, and shall be sent by
registered or certified mail, return receipt requested, by hand delivery, by
facsimile or by overnight courier service, addressed to the parties hereto at
their addresses set forth below, or such other addresses as they may designate
by like notice:
To Seller:
American Cable TV Investors 5, Ltd.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
40
49
With copies to:
▇▇▇▇, Scholer, Fierman,
▇▇▇▇ & Handler, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
To Buyer:
▇▇▇▇ Multimedia Partnership
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention; ▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Hourigan, Kluger, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice from a party hereto may be given by such party's
respective attorneys. Any notice or other communications made hereunder shall be
deemed to have been given (i) if delivered personally, by overnight courier
service or by facsimile, on the date received, or (ii) if by registered or
certified mail, return receipt requested, five business days after mailing.
13.4. WAIVER. This Agreement or any of its provisions may not
be waived except in writing. The failure of any party to enforce any right
arising under this Agreement on one or more occasions will not operate as a
waiver of that or any other right on that or any other occasion.
13.5. CAPTIONS. The article and section captions of this
Agreement are for convenience only and do not constitute a part of this
Agreement.
13.6. CHOICE OF LAW. THIS AGREEMENT AND THE LEGAL RELATIONS
BETWEEN THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO THE
PERFORMED IN THAT STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
41
50
13.7. NONRECOURSE. Notwithstanding anything in this Agreement
to the contrary, in any action brought by reason of this Agreement or the
transactions contemplated hereby, no judgment shall be sought or obtained
against any of the general or limited partners of Seller or enforced against any
of such partners or any of their assets.
13.8. TERMS. Terms used with initial capital letters will have
the meanings specified, applicable to both singular and plural forms, for all
purposes of this Agreement. The word "include" and derivatives of that word are
used in this Agreement in an illustrative sense rather than a limiting sense.
13.9. RIGHTS CUMULATIVE. Except as set forth in Section 10.4,
all rights and remedies of each of the parties under this Agreement will be
cumulative, and the exercise of one or more rights or remedies will not preclude
the exercise of any other right or remedy available under this Agreement or
applicable law.
13.10. FURTHER ACTIONS. Seller and Buyer will execute and
deliver to the other, from time to time at or after the Closing, for no
additional consideration and at no additional cost to the requesting party, such
further assignments, certificates, instruments, records, or other documents,
assurances or things as may be reasonably necessary to give full effect to this
Agreement and to allow each party fully to enjoy and exercise the rights
accorded and acquired by it under this Agreement.
13.11. TIME. If the last day permitted for the giving of any
notice or the performance of any act required or permitted under this Agreement
falls on a day which is not a Business Day, the time for the giving of such
notice or the performance of such act will be extended to the next succeeding
Business Day.
13.12. EXPENSES. Except as otherwise expressly provided in
this Agreement, each party will pay all of its expenses, including attorneys'
and accountants' fees, in connection with the negotiation of this Agreement, the
performance of its obligations and the consummation of the transactions
contemplated by this Agreement.
13.13. SPECIFIC PERFORMANCE. The parties agree that
irreparable damages would occur if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, in addition to any other remedy to which they
are entitled at law or in equity.
13.14. SCHEDULES. Any disclosure made on a Schedule to this
Agreement will be deemed included on any other Schedule to which such disclosure
may be pertinent.
13.15. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original.
42
51
13.16. ENTIRE AGREEMENT. This Agreement (including the
Schedules and Exhibits referred to in this Agreement, which are incorporated in
and constitute a part of this Agreement) contains the entire agreement of the
parties and supersedes all prior oral or written agreements and understandings
with respect to the subject matter. This Agreement may not be amended or
modified except by a writing signed by the parties.
13.17. SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable will be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining rights of the Person intended to be benefitted by such provision or
any other provisions of this Agreement.
43
52
IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the day and year first above written.
SELLER: AMERICAN CABLE TV INVESTORS 5, LTD.
By: IR-TCI Partners V, L.P.,
its general partner
By: TCI Ventures Five, Inc.,
its general partner
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
BUYER: ▇▇▇▇ MULTIMEDIA PARTNERSHIP
By: Cable TV, Inc., Managing General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
With respect to Section 7.12(b) only:
TCI COMMUNICATIONS, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
With respect to Section 7.16 only:
IR-TCI PARTNERS V, L.P.
By: TCI Ventures Five, Inc., its general partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
44
53
List of Schedules and Exhibits
Pursuant to
Asset Purchase Agreement
of American Cable TV Investors 5, Ltd.
for AMERICAN CABLE TV OF ST. MARY'S COUNTY
EXHIBITS
Exhibit A Geographic Areas of Seller's Business
Exhibit B Escrow Agreement
Exhibit C Form of Engagement Letter
Exhibit D Form of Opinion of Seller's Counsel
Exhibit E Form of Opinion of Buyer's Counsel
Exhibit F Form of Opinion of Seller's FCC Counsel
Exhibit G Form of Indemnity Escrow Agreement
SCHEDULES
Schedule 1.1 Subscriber Rates
Schedule 1.2 Consents
Schedule 1.3 Equipment
Schedule 1.4 Franchise Areas
Schedule 1.5 Governmental Permits
Schedule 1.6 Permitted Encumbrances
Schedule 1.7 Real Property
Schedule 1.8 Seller Contracts
Schedule 1.9 System
Schedule 4.2 Excluded Assets
Schedule 5.3(b) Violations of Partnership Agreement and Legal Requirements
Schedule 5.5 Encumbrances on Seller's Title
Schedule 5.8 Compliance with Law
Schedule 5.8(f) FCC Information
Schedule 5.12 Legal Proceedings
Schedule 5.13(c) Employment Matters
Schedule 5.13(d) Employees
Schedule 5.13(e) Employer Plans
Schedule 5.14 System Information
Schedule 5.16 Taxes
Schedule 6.3(a) Consents to be Obtained or Waived by Closing Date
54
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
EXHIBIT A
GEOGRAPHIC AREAS OF SELLER'S BUSINESS
St. Mary's County, Maryland
Leonardtown, Maryland
North Beach, Maryland
Chesapeake, Maryland
Lothian, Maryland
Exhibit A -- Page 1
55
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
EXHIBIT B
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of _________, 1996, by and among
American Cable TV Investors 5, Ltd., a Colorado limited partnership ("Seller")
and ▇▇▇▇ Multimedia Partnership, a ______ limited partnership ("Buyer"), and
▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP, a New York limited liability
partnership, as escrow agent ("Escrow Agent").
Seller and Buyer have entered into an Asset Purchase
Agreement, dated as of _________, 1996, to sell and purchase certain cable
television assets (the "Agreement"). Pursuant to the Agreement, ▇▇▇▇, Scholer,
Fierman, ▇▇▇▇ & Handler, LLP, was designated as the escrow agent thereunder.
Escrow Agent has agreed to act as an escrow agent pursuant to the terms of this
Escrow Agreement. Capitalized terms used but not defined herein shall have the
meanings set forth in the Agreement.
It is agreed as follows:
1. ESCROW FUND. Buyer has, pursuant to Section 3.1 of the
Agreement, deposited $765,922.50 in cash by means of wire or interbank transfer
in immediately available funds in Escrow Agent's "▇▇▇▇, Scholer, Fierman, ▇▇▇▇ &
Handler, LLP Attorney Trust Account No. ▇▇▇-▇▇▇▇-▇▇; Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,"
at The Chase Manhattan Bank, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ -- ABA
No. ▇▇▇▇▇▇▇▇▇ to be held in escrow pursuant to the terms of the Agreement (such
amount, together with any earnings thereon, being the "Escrow Fund"), to be held
and disbursed by Escrow Agent in accordance with this Escrow Agreement.
2. DISBURSEMENT.
2.1 NOTICES. Escrow Agent shall pay over the Escrow Fund upon
receipt of a written notice, in the form attached hereto as Exhibit I, as
follows: (a) upon receipt of such notice executed by Seller directing the Escrow
Agent to pay the Escrow Fund over to Buyer, to Buyer; (b) upon receipt of such
notice executed by Buyer directing the Escrow Agent to pay the Escrow Fund over
to Seller, to Seller; or (c) upon receipt of such notice executed by Buyer and
Seller, to the parties and in the amounts specified in the notice.
2.2 AGREEMENT OF SELLER AND BUYER. Seller and Buyer have
agreed that (i) the Escrow Fund shall be disbursed in accordance with the terms
of this Escrow Agreement and the Agreement, (ii) at the Closing Seller and Buyer
shall instruct Escrow Agent to disburse the
Exhibit B -- Page 1
56
Escrow Fund to Seller or Seller's designee and (iii) unless the Closing shall
theretofore have taken place or unless an unresolved claim against the Escrow
Fund remains outstanding, on the date which is 30 days after the termination of
the Agreement pursuant to Article X thereof, Seller and Buyer shall instruct
Escrow Agent to disburse the Escrow Fund to Buyer.
2.3 RELIANCE ON NOTICE. Upon receipt of the appropriate notice
described in Section 2.1, Escrow Agent shall pay the Escrow Fund in accordance
with Section 2.1, and Escrow Agent shall not be subject to any liability to any
party for doing so. Seller and Buyer each agrees not to assert (and shall
actively resist any attempt to assert on their behalf) any claim against Escrow
Agent for making a payment in accordance with this Section.
3. INVESTMENT OF ESCROW FUND. Escrow Agent shall invest the
Escrow Fund in (a) interest bearing accounts in, or certificates of deposit of,
The Chase Manhattan Bank, (b)(i) obligations of the United States of America,
(ii) United States government securities of agencies of the United States
government which are guaranteed by the United States government or (iii)
securities of governmental agencies, if the same are covered by a bank
repurchase agreement, or (c) for periods of less than seven days each,
non-interest bearing accounts at The Chase Manhattan Bank. Escrow Agent may
invest the Escrow Fund in one or more of the investments permitted by the
preceding sentence, and may change those investments from time to time, all as
it may determine in its sole and absolute discretion. Escrow Agent shall have no
duty to maximize the return on the Escrow Fund and shall be fully protected in
making any investment or combination of investments permitted by this Section.
4. ESCROW AGENT AS COUNSEL TO SELLER. Buyer hereby
acknowledges that it is aware that Escrow Agent is acting as counsel to Seller
in connection with the Agreement, this Escrow Agreement and other matters, and
agrees that Escrow Agent's acting under this Escrow Agreement shall not affect
its ability to act as counsel to Seller in any matter, including, but not
limited to, any claim, action or proceeding with respect to this Escrow
Agreement or the disposition of or entitlement to the Escrow Fund.
5. ESCROW AGENT.
5.1 GENERAL. Escrow Agent shall act as escrow agent and hold
and disburse the Escrow Fund pursuant to the terms and conditions of this Escrow
Agreement. Its duties under this Escrow Agreement shall cease upon disbursement
of the Escrow Fund.
5.2 LIQUIDATION OF INVESTMENTS. Unless otherwise directed by
notice executed by Seller and Buyer, all payments required by Section 2 shall be
made in cash by means of wire or interbank transfer in immediately available
funds. When necessary to provide funds in order to make any payments required by
Section 2, Escrow Agent shall liquidate any investments held by it as it may, in
its sole and absolute discretion, determine to be necessary to make such
Exhibit B -- Page 2
57
payments. Escrow Agent shall have no liability for losses upon the liquidation
of any such investments.
5.3 LIMITED DUTIES. Escrow Agent undertakes to perform only
such duties as are expressly set forth in this Escrow Agreement. Escrow Agent
shall incur no liability whatsoever to any other party hereto, except for Escrow
Agent's own willful misconduct in its capacity as escrow agent.
5.4 RELIANCE ON NOTICES. Escrow Agent may rely and shall be
protected in acting or refraining from acting upon any written notice,
instruction or request furnished to it hereunder and believed by it to be
genuine and to have been signed or presented by the proper party or parties.
Escrow Agent may conclusively presume that the undersigned have full power and
authority to instruct Escrow Agent on behalf of the respective party for which
they have signed.
5.5 LIMITED RESPONSIBILITIES. Escrow Agent's sole
responsibility upon receipt of the notice specified in Section 2.1 requiring
payment pursuant to the terms of this Escrow Agreement is to pay the Escrow Fund
to such party as is specified in accordance with Section 2.1, and Escrow Agent
shall have no duty to determine (and shall not be affected by any knowledge
concerning) the validity, authenticity or enforceability of any specification,
certification made in or information contained in such notices.
5.6 ACTION IN GOOD FAITH. Escrow Agent shall not be liable for
any action taken by it in good faith and believed by it to be authorized or
within the rights or powers conferred upon it by this Escrow Agreement, and may
consult with counsel (including partners or any attorneys employed by Escrow
Agent) of its own choice and shall have full and complete authorization and
protection for any action taken or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel.
5.7 RESIGNATION. Escrow Agent may resign and be discharged
from its duties or obligations hereunder by giving notice of such resignation to
Seller and Buyer specifying a date upon which such resignation shall take
effect, whereupon a successor escrow agent, which shall be a bank or trust
company with an office in New York City, shall be appointed by Seller. Escrow
Agent shall be entitled to pay the Escrow Fund to any successor escrow agent so
appointed. In the event no successor escrow agent has been appointed by the date
specified in the notice of resignation given by Escrow Agent, Escrow Agent shall
be entitled (but not required) to deliver the Escrow Fund as set out in Section
5.8(b) and shall be thereupon relieved of all further responsibility.
5.8 DISPUTES. In the event of a dispute between the parties,
or if Escrow Agent shall be uncertain as to the proper disposition of the Escrow
Fund, Escrow Agent shall be entitled (but not required) (a) to retain the Escrow
Fund pending direction as to the disposition
Exhibit B -- Page 3
58
thereof by a final order, from which no further appeal may be taken, of a court
of competent jurisdiction, or (b) to deliver the Escrow Fund into the United
States District Court for the Southern District of New York and, upon giving
notice to Seller and Buyer of such action, shall thereupon be relieved of all
further responsibility.
5.9 INDEMNIFICATION; ESCROW AGENT'S INTEREST IN ESCROW FUND.
(a) Seller and Buyer hereby jointly and severally agree to indemnify Escrow
Agent and all partners and employees thereof for, and to hold such persons
harmless against, any loss, liability, damage or expense incurred without bad
faith on the part of such persons arising out of or in connection with the
Escrow Agent's entering into and/or performing under this Escrow Agreement,
including, but not limited to, the cost and expense (including, but not limited
to, attorneys' fees, which may consist in whole or in part of the time charges
at their standard rates of partners of and attorneys employed by Escrow Agent)
of investigation and defending themselves against any claim or liability, and
including taxes, penalties, additions to tax or interest that are incurred by
the Escrow Agent with respect to taxes imposed on the Escrow Fund or any income
earned or derived therefrom.
(b) Seller and Buyer hereby (i) jointly and severally agree
that Escrow Agent shall be entitled to (x) withdraw from the Escrow Fund all
sums due or reasonably likely to become due to Escrow Agent on account of
Seller's and Buyer's indemnification obligations set forth above, and (y)
withhold a portion of the income earned on or derived from the Escrow Fund and
pay such withheld amount to the proper taxing authorities on behalf of the
Escrow Fund to satisfy any tax imposed on such income, and (ii) grant to Escrow
Agent a first priority lien on and security interest in and to the Escrow Fund
for the purposes of securing satisfaction by Seller and Buyer of their
indemnification obligations to Escrow Agent.
6. ESCROW AGENT NOT AFFECTED BY OTHER AGREEMENTS. This Escrow
Agreement expressly sets forth all the duties of Escrow Agent with respect to
any and all matters pertinent hereto. No implied duties or obligations shall be
read into this Escrow Agreement against Escrow Agent. Escrow Agent, in its
capacity as such, shall not be bound by the provisions of any agreement among
the parties to this Escrow Agreement and shall have no duty to inquire into, or
to take into account its knowledge of, the terms and conditions of any agreement
made or entered into in connection with this Escrow Agreement, including, but
not limited to, the Agreement.
7. AUTHORIZED SIGNATORIES. Seller hereby authorizes ▇▇▇▇▇▇
▇▇▇▇▇, and Buyer hereby authorizes __________, to receive and execute all
notices required to be given hereunder, and either party may authorize other
officers to sign on its behalf by notice to the other party.
Exhibit B -- Page 4
59
8. NOTICES. All notices, consents, approvals, demands,
requests and other communications required or desired to be given hereunder must
be given in writing, shall refer to this Escrow Agreement, and shall be sent by
registered or certified mail, return receipt requested, by hand delivery, by
facsimile or by overnight courier service, addressed to the parties hereto at
their addresses set forth below, or such other addresses as they may designate
by like notice:
(a) If to Seller:
American Cable TV Investors 5, Ltd.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Buyer:
▇▇▇▇ Multimedia Partnership
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Hourigan, Kluger, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Exhibit B -- Page 5
60
(c) If to Escrow Agent:
▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq. and
▇▇▇▇ ▇▇▇▇▇▇▇▇, Director of Finance
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
9. MISCELLANEOUS.
9.1 JURISDICTION. Any action or proceeding seeking to enforce
any provision of, or based on any right arising out of, this Escrow Agreement
shall be brought against any of the parties in the courts of the State of New
York in the County of New York, or, if it has or can acquire jurisdiction, in
the United States District Court for the Southern District of New York, and each
of the parties hereby consents to the exclusive jurisdiction of such courts (and
of the appropriate appellate courts) in any such action or proceeding and waives
any objection to venue laid therein. Process in any such action or proceeding
may be served anywhere in the world, whether within or without the State of New
York.
9.2 CAPTIONS. The captions in this Escrow Agreement are for
convenience or reference only and shall not be given any effect in the
interpretation of this Escrow Agreement.
9.3 NO WAIVER. The failure of a party to insist upon strict
adherence to any term of this Escrow Agreement on any occasion shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Escrow Agreement. Any
waiver must be in writing.
9.4 EXCLUSIVE AGREEMENT; AMENDMENT; ASSIGNMENT; NO THIRD PARTY
RIGHTS. This Escrow Agreement supersedes all prior agreements among the parties
with respect to its subject matter, is intended as a complete and exclusive
statement of the terms of the agreement among the parties with respect thereto,
and cannot be changed or terminated orally. No party may assign any rights or
delegate any of its duties under this Escrow Agreement, but this Escrow
Agreement shall be binding upon and inure to the benefit of the successors to
the business and assets of Seller and Buyer and to any successor escrow agent
appointed in accordance with Section 5.7. No third party shall have any rights
hereunder.
9.5 COUNTERPARTS. This Escrow Agreement may be executed in
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
Exhibit B -- Page 6
61
9.6 GOVERNING LAW. This Escrow Agreement and all amendments
hereof and waivers and consents hereunder shall be governed by, and all disputes
arising hereunder shall be resolved in accordance with, the internal law of the
State of New York, without regard to the conflicts of law principles thereof.
9.7 TREATMENT OF ESCROW FUND. It is understood and agreed
among the parties hereto that Buyer will be treated as the owner of the Escrow
Fund and Escrow Agent shall report the income, if any, that is earned on, or
derived from, the Escrow Fund as income of Buyer in the taxable year or years in
which such income is properly includible.
AMERICAN CABLE TV INVESTORS 5, LTD.
By: IR-TCI Partners V, L.P.,
its general partner
By: TCI Ventures Five, Inc.,
its general partner
By:
-------------------------
Name:
Title:
▇▇▇▇ MULTIMEDIA PARTNERSHIP
By: Cable TV, Inc.
its Managing General Partner
By:
-------------------------
Name:
Title:
Exhibit B -- Page 7
62
▇▇▇▇, SCHOLER, FIERMAN,
▇▇▇▇ & HANDLER, LLP
as Escrow Agent
By:
-------------------------------
Name:
-------------------------
Partner
Exhibit B -- Page 8
63
EXHIBIT I
FORM OF JOINT NOTICE
TO ESCROW AGENT
[DATE]
To: ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP
as Escrow Agent ("Escrow Agent") under
the Escrow Agreement dated ________, 1996,
by and among American Cable TV Investors 5, Ltd.,
▇▇▇▇ Multimedia Partnership and the Escrow Agent (the "Escrow Agreement")
Dear Sirs:
You are hereby instructed and directed to pay the Escrow Fund
(as defined in the Escrow Agreement) to the following corporation:
Payee: [NAME]
-----------------------------
[ADDRESS]
-----------------------------
Very truly yours,
AMERICAN CABLE TV INVESTORS 5, LTD.
By:
-----------------------------
▇▇▇▇ MULTIMEDIA PARTNERSHIP
By: Cable TV Inc.,
its Managing General Partner
Exhibit B -- Page 9
64
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
EXHIBIT C
FORM OF ENGAGEMENT LETTER
[ACCOUNTANT'S LETTERHEAD]
_______ __, 1997
American Cable TV Investors 5, Ltd.
c/o TCI Communications, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ Multimedia Partnership
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear _____________:
This letter is to confirm our understanding of the agreed-upon procedures to be
performed in connection with the sale of assets by American Cable TV Investors
5, Ltd. (the "SELLER") to ▇▇▇▇ Multimedia Partnership (the "BUYER") pursuant to
the Asset Purchase Agreement dated _______ __, 1996 (the "AGREEMENT").
Capitalized terms not otherwise defined in this Letter shall have the meanings
set forth in the Agreement.
This letter describes the objective of the review and nature of the services we
will provide. It also includes an overview of the procedures we intend to
perform, describes the type of report we intend to issue, and includes an
estimate of our fees.
Based upon our discussions with you, we believe the following proposed
procedures are those requested by you in connection with the Final Adjustments
Report, as described in Section 3.4 of the Agreement:
1. Obtain the Preliminary and Final Adjustments Reports, prepared by the
Partnership (the "ADJUSTMENTS") as contemplated by Sections 3.4(a) and
3.4(b) of the Agreement.
Exhibit C -- Page 1
65
2. Obtain the appropriate Accounts Receivable aging and recalculate the
adjustment as contemplated by Section 3.3(a)(i) of the Agreement.
3. Obtain third party invoice or other appropriate documentation of
prepaid real and personal property taxes and other prepaid fees and
expenses identified by you. Recalculate the relevant adjustments, as
contemplated by Section 3.3(a)(ii) of the Agreement, based on a
proration as of the Closing Date on the basis of the period covered by
such payment.
4. Agree advance payments to, or deposits with, third parties; advance
payments to, or monies of third parties on deposit with, Seller;
accrued and unpaid real and personal property taxes; and other accrued
and unpaid expenses, as defined in Sections 3.3(a)(ii) and 3.3(b) of
the Agreement, to the appropriate account(s) per the most recent
general ledger of Seller.
We will perform the aforementioned procedure(s) and report our findings to you.
We will report to you any differences noted in performing Steps 2 through 4,
regardless of amount.
Due to the nature of the engagement our fees will be based upon time and
expenses required to complete the engagement. We estimate that our total fees
including expenses will not exceed $________.
Because the above procedures do not constitute an audit made in accordance with
generally accepted auditing standards, we will not be expressing an opinion on
any of the accounts specified or items referred to above. Our report is intended
solely for the information and use of the managements of Seller and Buyer and
should not be used for any other purpose.
If the foregoing is in accordance with your understanding please sign the copy
of this letter in the space provided and return it to us.
Very truly yours,
[ACCOUNTANT]1
--------
1 A NATIONALLY RECOGNIZED ACCOUNTING FIRM WILL BE SELECTED BY BUYER AND
SELLER.
Exhibit C -- Page 2
66
ACCEPTED BY:
------------------------- ------------------------ -------------
Seller's Signature Title Date
------------------------- ------------------------ -------------
Buyer's Signature Title Date
[PARAGRAPHS 2, 3 AND 4 ABOVE WILL ONLY BE INCLUDED IN THE ENGAGEMENT LETTER TO
THE EXTENT THAT ANY AMOUNTS ABOUT WHICH SELLER AND BUYER DISAGREE PURSUANT TO
SECTION 3.4(d) OF THE AGREEMENT FALL WITHIN THE CATEGORIES DESCRIBED IN THOSE
PARAGRAPHS. THE PARTIES ACKNOWLEDGE THAT THE PROCEDURES TO BE FOLLOWED BY THE
NATIONALLY RECOGNIZED ACCOUNTING FIRM TO BE SELECTED BY SELLER AND BUYER ("THE
ACCOUNTANT") WILL DEPEND ON WHAT THE ACCOUNTANT IS REQUESTED TO PERFORM BY
SELLER AND BUYER AND THE ACCOUNTANT'S CONCURRENCE THAT SUCH PROCEDURES CAN BE
PERFORMED BY THEM.]
Exhibit C -- Page 3
67
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
EXHIBIT D
FORM OF OPINION OF SELLER'S COUNSEL
_______________ __, 1997
▇▇▇▇ Multimedia Partnership
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
We have acted as counsel to American Cable TV Investors 5,
Ltd., a Colorado limited partnership ("SELLER"), in connection with the sale
today by Seller of certain of Seller's assets (the "ASSETS") delineated in the
Asset Purchase Agreement dated _________, 1996 (the "AGREEMENT") between you and
Seller. This opinion is given pursuant to Section 8.8 of the Agreement.
Capitalized terms not otherwise defined herein are defined as set forth in the
Agreement.
This Opinion Letter is governed by, and shall be interpreted
in accordance with, the Legal Opinion Accord (the "ACCORD") of the ABA Section
of Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord, and this Opinion
Letter should be read in conjunction therewith. Except as herein the Law of the
State of New York. Insofar as our opinion pertains to matters of Colorado law,
we have relied upon the opinion of Colorado counsel, ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, ▇.▇.,
dated _______________, 1997, a copy of which is attached hereto.
Based on the foregoing it is our opinion that:
1. Seller is a validly existing limited partnership under the
laws of the State of Colorado.
2. The Agreement is enforceable against Seller.
Exhibit D -- Page 1
68
3. The execution and delivery of the Agreement by Seller and
the performance by Seller of its terms do not breach or result in a violation of
the Certificate of Limited Partnership or the agreement of limited partnership
of Seller.
This opinion is rendered solely for your information and
assistance in connection with the above transaction, and may not be relied upon
by any other person or for any other purpose without our prior written consent.
Very truly yours,
Exhibit D -- Page 2
69
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
EXHIBIT E
FORM OF OPINION OF BUYER'S COUNSEL
______________ __, 1997
American Cable TV Investors 5, Ltd.
c/o TCI Communications, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
We have acted as counsel to ▇▇▇▇ Multimedia Partnership, a
_________________ limited partnership (the "BUYER") in connection with the
purchase today by 1996 (the "AGREEMENT") between you and Buyer. This opinion is
given pursuant to Section 9.6 of the Agreement. Capitalized terms not otherwise
defined herein are defined as set forth in the Agreement.
This Opinion Letter is governed by, and shall be interpreted
in accordance with, the Legal Opinion Accord (the "ACCORD") of the ABA Section
of Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations, all as more particularly
described in the Accord, and this Opinion Letter should be read in conjunction
therewith.
Based on the foregoing, it is our opinion that:
1. Buyer is validly existing in good standing under the laws
of the State of ____________.
2. The Agreement is enforceable against Buyer.
3. The execution and delivery of the Agreement by Buyer and
the performance by Buyer of its terms do not breach with or result in a
violation of the Certificate of Limited Partnership or agreement of limited
partnership of Buyer.
Exhibit E -- Page 1
70
This opinion is rendered solely for your information and
assistance in connection with the above transaction, and may not be relied upon
by any other person or for any other purpose without our prior written consent.
Very truly yours,
Exhibit E -- Page 2
71
ACT 5
AMERICAN CABLE TV OF ST. MARY'S COUNTY
Exhibit F
Form for Opinion of Seller's FCC Counsel
__________, 1997
▇▇▇▇ Multimedia Partnership
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: American Cable TV Investors 5, Ltd.
Ladies and Gentlemen:
This letter is furnished to you pursuant to Section 8.9 of the
Asset Purchase Agreement, dated as of ____________ __, 1996 (the "Agreement"),
between American Cable TV Investors 5, Ltd., a Colorado limited partnership
("Seller") and ▇▇▇▇ Multimedia Partnership, a Pennsylvania general partnership
("Buyer").
As communications counsel for Seller, we are engaged in the
representation of Seller before the Federal Communications Commission ("FCC") in
connection with its cable television business in the communities identified in
Schedule I hereto (the "System"). We have examined such records, certificates
and other documents and have considered such questions of law as relate to the
Seller and the System as we have deemed necessary or appropriate for purposes of
this opinion. This opinion is limited to the Communications Act of 1934, as
amended (the "Communications Act"), the Rules and Regulations of the FCC (the
"FCC Regulations") and Section 111 of the Copyright Act of 1976 (17 U.S.C.
Section 111) (the "Copyright Act") as applicable to the System as operated by
Seller. Except as specifically provided, we offer no opinion as to the Seller's
compliance with the Cable Television Consumer Protection and Competition Act of
1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992), or those FCC regulations
promulgated pursuant to such Act.
In rendering this opinion, we have assumed the genuineness of
signatures on documents and the conformity to the original of all copies
examined by or submitted to us of photocopies or conformed copies. As to various
questions of fact in connection with this opinion, we have relied upon
examination of available files of our office, those of the FCC and the United
States Copyright Office (the "Copyright Office"), and pertinent statements and
representations of officers, directors and responsible representatives of the
Seller. We have not undertaken an independent field investigation to verify the
accuracy of this information, and express no opinion regarding technical matters
or matters that would require on-scene knowledge of the System's operations,
technical or engineering matters, or local franchising matters.
Based upon and limited by the foregoing and except as set
forth in Schedule II hereto, we are of the opinion that, as of the date set
forth above:
1. Seller holds all licenses, permits and authorizations required from
the FCC to operate the System in the manner in which we have been advised that
it is being operated, which licenses, permits and authorizations are listed in
Schedule I hereto. Each such license, permit and authorization has been issued
by the FCC, remains in full
Exhibit F -- Page 1
72
force and effect, and transfer thereof to Buyer on the Closing Date as defined
in the Agreement has been approved by the FCC, to the extent such approval is
required.
2. All materially required FCC filings required to be made by Seller
in connection with its operation of the System have been made, including, but
not limited to, Registration Statements and FCC Annual Report Forms 325,
Schedule A, to the extent such forms are required. All FCC authorizations needed
to utilize the frequencies currently used by the Systems have been obtained.
3. Basic Signal Leakage Performance Reports (FCC Annual Report Forms
320) for 1990-1996, are on file with the FCC for each community unit operated by
the System. Although those forms indicate passing test results, we render no
opinion as to the methodology or accuracy of the actual measurements taken.
4. EEO Annual Report Forms 395(A) have been filed with the FCC for
each employment unit associated with the System for calendar years 1988-1996.
Except as noted in Schedule II, the employment unit has been certified by the
FCC for calendar years 1988-1996.
5. To the best of our knowledge, Seller has provided subscriber
privacy notices to subscribers of the System on an annual basis since 1986.
Seller also provides these notices to new subscribers at the time of
installation. Our opinion is limited to the fact that such notices have been
provided, and we express no opinion as to whether the contents of such notices
comply with the requirements of the Communications Act or FCC regulations.
6. To the best of our knowledge, based on information provided by
Seller, the System is carrying all of the "must-carry" signals required to be
carried pursuant to Federal Law. Except as set forth in Schedule II hereto, to
the best of our knowledge, based on information provided by Seller, there have
been no "must carry" complaints filed at the FCC against the System.
7. There is no FCC judgment, decree or order which has been issued
against Seller with respect to the system, nor is there any FCC action,
proceeding or investigation pending or, to the best of our knowledge, threatened
by the FCC against Seller with respect to the System.
8. The timely filing of the periodic Statements of Account and
accompanying royalty fees qualifies the Seller for a compulsory license for the
carriage of the broadcast signals utilized by the System. Seller has filed all
required Statements of Account and supplements thereto, and, to the best of our
knowledge, has timely paid its statutory royalties for all accounting periods
beginning at least as early as the first accounting period of 1993, and all
primary transmissions listed in the latest Statements of Account qualify for a
compulsory copyright license. Although we render no opinion as to the
methodology or calculations used to determine "gross receipts" for copyright
purposes, there have been no inquiries received from the Copyright Office or any
other party which challenge or question either the computation or amount of any
royalty payments or the validity of the Statements of Account, and there is no
claim, action or demand for copyright infringement or for non-payment of
royalties, pending or, to the best of our knowledge, threatened against the
Seller.
9. Except for any necessary FCC approvals which have been obtained,
the execution, delivery and performance of this Agreement does not require the
approval of the FCC, will not result in any violation of the rules and
regulations of the FCC, and will not cause any forfeiture or impairment of any
FCC license, authorization or permit of Seller.
This opinion has been prepared solely for your use in
connection with the closing of transactions under the Agreement, and may not be
relied upon by, filed with or furnished to any other person or entity without
the prior written consent of this firm.
Exhibit F -- Page 2
73
Very truly yours,
▇▇▇▇, RAYWID & ▇▇▇▇▇▇▇▇▇, L.L.P.
By:_________________________
Exhibit F -- Page 3
74
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
EXHIBIT G
INDEMNITY ESCROW AGREEMENT
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Re: Indemnity Escrow Agreement
Ladies and Gentlemen:
This Indemnity Escrow Agreement is hereby accepted as of
___________, 1997, by and between American Cable TV Investors 5, Ltd., a
Colorado limited partnership ("SELLER") and ▇▇▇▇ Multimedia Partnership, a
_______ limited partnership ("BUYER"), who have entered into an Asset Purchase
Agreement, dated as of ____________, 1996, to sell and purchase certain cable
television assets (the "ASSET PURCHASE AGREEMENT"). Capitalized terms used but
not otherwise defined in this Indemnity Escrow Agreement shall have the meanings
set forth in the Asset Purchase Agreement.
It is agreed as follows:
1. Deposit and Investments. Buyer and Seller have, pursuant
to Section 3.1 of the Asset Purchase Agreement, deposited $765,923 (the
"DEPOSIT") in an account at The Chase Manhattan Bank, as escrow agent (the
"ESCROW AGENT"). The Deposit may be invested in Investment Securities (as
defined below). The Deposit shall be held in escrow (the "ESCROW") by Escrow
Agent pursuant to this Indemnity Escrow Agreement. The Escrow Agent shall
continue to invest the Deposit in Investment Securities in accordance with the
joint written instructions of Seller and Buyer. The term "Investment Securities"
means (a) interest bearing accounts in, or certificates of deposit of, The Chase
Manhattan Bank, (b) (i) obligations of the United States of America, (ii) United
States government securities of agencies of the United States government which
are guaranteed by the United States government or (iii) securities of
Exhibit G -- Page 1
75
governmental agencies, if the same are covered by a bank repurchase agreement,
or (c) for periods of less than seven days each, non-interest bearing accounts
at The Chase Manhattan Bank.
2. Holdings of Deposit. The Escrow Agent shall hold and
disburse the Deposit pursuant to the terms of this Indemnity Escrow Agreement
and the Asset Purchase Agreement.
3. Disbursement of Earnings, Etc. All interest, earnings, and
gains received by the Escrow Agent from the investment of the Deposit shall be
distributed monthly to Seller. In connection with the investment of the Deposit,
Seller shall provide the Escrow Agent with its taxpayer identification number.
4. Disbursement Instructions.
a. Anything in this Indemnity Escrow Agreement to the contrary
notwithstanding, Escrow Agent is authorized and directed to deliver and disburse
the Deposit, or any part of the Deposit, as directed from time to time in joint
written instructions of Buyer and Seller.
b. Seller and Buyer have agreed that the Deposit will be
disbursed in accordance with the terms of this Indemnity Escrow Agreement and
the Asset Purchase Agreement.
c. Unless a claim against the Deposit, or any part of the
Deposit remains outstanding, Seller and Buyer have agreed that on the first
Business Day after the first anniversary of the Closing Date, Seller and Buyer
shall instruct Escrow Agent to disburse the Deposit, or any part of the Deposit
which is not subject to a claim, to Seller or Seller's designee.
5. Claims Against the Deposit by Buyer. The following
provisions shall control with respect to claims made against the Deposit by
Buyer:
a. If Buyer wishes to make a claim against the Deposit, Buyer
will send a notice of such claim to Escrow Agent and Seller. Any such notice
will state that Buyer is making a claim under Article XII of the Asset Purchase
Agreement. Any notice of a claim made shall specify the factual basis of such
claim in reasonable detail to the extent known by Buyer.
b. If Seller disputes the right of Buyer to obtain the
Deposit, or any part of the Deposit, Seller, within ten Business Days after
receipt of the notice as provided in Paragraph 4(a), shall send a notice to
Escrow Agent and Buyer stating that Seller disputes the right of Buyer to obtain
the Deposit, or any part of the Deposit, and will include in such notice a
description in reasonable detail of the basis for disputing such claim. Escrow
Agent shall continue to hold the
Exhibit G -- Page 2
76
Deposit (or the part thereof which is subject to a dispute) until advised in
writing by Seller and Buyer that such dispute has been resolved, in which case
Escrow Agent shall disburse the Deposit pursuant to said writing; provided that,
if a suit or action is commenced for collection of the Deposit or part thereof
and Escrow Agent is so advised in writing, Escrow Agent shall, unless otherwise
advised in writing by Seller and Buyer, continue to hold the Deposit or the part
thereof which is the subject of such suit or action until final disposition of
such suit or action. Upon the final disposition of such suit or action, Escrow
Agent shall disburse the Deposit or part thereof which is subject to such suit
or action in accordance with the determination of the court in which such suit
or action was pending.
c. If Seller fails to notify Escrow Agent within the period
described in Paragraph 4(b) that it contests Buyer's claim to the Deposit (or
any part thereof), Escrow Agent shall, within 5 Business Days, disburse the
Deposit (or any part thereof which is subject to a claim by Buyer that Seller
fails to timely contest) to Buyer.
6. Termination. If no claims have been made against the
amount of the Deposit remaining in the Escrow on the first Business Day after
the first anniversary of the Closing Date, Escrow Agent shall disburse such
remaining amount of the Deposit to Seller at the address set forth below.
7. Rights, Duties, and Liabilities of Escrow Agent.
a. Escrow Agent shall have no duty to know or determine the
performance or non-performance of any provision of any agreement between the
parties to this Indemnity Escrow Agreement, including, but not limited to, the
Asset Purchase Agreement, which shall not bind Escrow Agent in any manner.
Escrow Agent assumes no responsibility for the validity or sufficiency of any
document or paper or payment deposited or called for under this Indemnity Escrow
Agreement except as may be expressly and specifically set forth in this
Indemnity Escrow Agreement, and the duties and responsibilities of Escrow Agent
under this Indemnity Escrow Agreement are limited to those expressly and
specifically stated in this Indemnity Escrow Agreement.
b. Escrow Agent shall not be personally liable for any act it
may do or omit to do under this Indemnity Escrow Agreement as such agent while
acting in good faith and in the exercise of its own best judgment, and any act
done or omitted by it pursuant to the written advice of its counsel shall be
conclusive evidence of such good faith. Escrow Agent shall have the right at any
time to consult with its counsel upon any question arising under this Indemnity
Escrow Agreement and shall incur no liability for any delay reasonably required
to obtain the advice of counsel.
c. Other than those notices or demands expressly provided in
this Indemnity Escrow Agreement, Escrow Agent is expressly authorized to
disregard any and all notices or
Exhibit G -- Page 3
77
demands given by Seller or Buyer, or by any other person, firm, or corporation,
excepting only orders or process of court, and Escrow Agent is expressly
authorized to comply with and obey any and all final process, orders, judgments,
or decrees of any court, and to the extent Escrow Agent obeys or complies with
any thereof of any court, it shall not be liable to any party to this Indemnity
Escrow Agreement or to any other person, firm, or corporation by reason of such
compliance.
d. In consideration of the acceptance of this Escrow by Escrow
Agent (as evidenced by its signature below), Seller and Buyer agree, for
themselves and their successors and assigns, to pay Escrow Agent its charges,
fees, and expenses as contemplated by this Indemnity Escrow Agreement. As
between Buyer and Seller, they shall each be responsible for one-half of such
charges, fees and expenses. The escrow fees or charges, as distinguished from
other expenses under this Indemnity Escrow Agreement, shall be as written below
the Escrow Agent's signature at the time of acceptance of this Indemnity Escrow
Agreement. Such sum is intended as compensation for Escrow Agent's ordinary
services as contemplated by this Indemnity Escrow Agreement and shall be paid as
described above. In the event Escrow Agent renders services not provided for in
this Indemnity Escrow Agreement, Escrow Agent shall be entitled to receive from
Buyer and Seller reasonable compensation and reasonable costs, if any, for such
extraordinary services, and such compensation and costs shall be borne equally
by Buyer and Seller.
e. Escrow Agent shall be under no duty or obligation to
ascertain the identity, authority, or right of Seller or Buyer (or their agents)
to execute or deliver or purport to execute or deliver this Indemnity Escrow
Agreement or any documents or papers or payments deposited or called for or
given under this Indemnity Escrow Agreement.
f. Escrow Agent shall not be liable for the outlawing of any
rights under any statute of limitations or by reason of laches in respect of
this Indemnity Escrow Agreement or any documents or papers deposited with Escrow
Agent.
g. In the event of any dispute among the parties to this
Indemnity Escrow Agreement as to the facts or as to the validity or meaning of
any provision of this Indemnity Escrow Agreement, or any other fact or matter
relating to this Indemnity Escrow Agreement or to the transactions between
Seller and Buyer, Escrow Agent is instructed that it shall be under no
obligation to act, except in accordance with this Indemnity Escrow Agreement or
under process or order of court or, if there by no such process or order, until
it has filed or caused to be filed an appropriate action interpleading the
Seller and Buyer and delivering the Deposit (or the portion of the Deposit in
dispute) to such court, and Escrow Agent shall sustain no liability for its
failure to act pending such process of court or order or interpleader of action.
8. Modification of Indemnity Escrow Agreement. The provisions
of this Indemnity Escrow Agreement may be supplemented, altered, amended,
modified, or revoked by
Exhibit G -- Page 4
78
writing only, signed by Buyer and Seller and approved in writing by Escrow
Agent, and upon payment of all fees, costs and expenses incident thereto.
9. Assignment of Indemnity Escrow Agreement. No assignment,
transfer, conveyance, or hypothecation of any right, title, or interest in and
to the subject matter of this Indemnity Escrow Agreement shall be binding upon
any party, including Escrow Agent, unless all fees, costs, and expenses incident
thereto shall have been paid and then only upon the assent thereto by all
parties in writing.
10. Notice. Any notice required or desired to be given to
Buyer or Seller shall be deemed to have been given only if it is given in the
manner set forth in Section 13.3 of the Asset Purchase Agreement. Notice to
Escrow Agent may be given in the manner set forth in Section 13.3 of the Asset
Purchase Agreement to Escrow Agent's address set forth above (Facsimile No.:
(▇▇▇) ▇▇▇-▇▇▇▇) or at such other address as Escrow Agent may direct by giving
notice to Buyer and Seller.
11. Indemnity Escrow Agreement Binding. The undertakings and
agreements contained in this Indemnity Escrow Agreement shall bind and inure to
the benefit of the parties to this Indemnity Escrow Agreement and their
respective heirs, personal representatives, successors, and assigns.
12. Counterparts. This Indemnity Escrow Agreement may be
executed in one or more counterparts, each of which will be deemed an original.
Whenever pursuant to this Indemnity Escrow Agreement Buyer and Seller are to
deliver a jointly signed writing to Escrow Agent or jointly advise Escrow Agent
in writing, such writing may in each and all cases be signed jointly or in
counterparts and such counterparts shall be deemed to be one instrument.
Very truly yours,
SELLER:
AMERICAN CABLE TV INVESTORS 5, LTD.
By: IR-TCI PARTNERS, V, L.P.,
its general partner
By: TCI Ventures Five, Inc., its
general partner
By:________________________
Name:
Title:
Exhibit G -- Page 5
79
BUYER:
▇▇▇▇ MULTIMEDIA PARTNERSHIP
By: _________________________,
its general partner
By:________________________
Name:
Title:
ACCEPTED this ___ day of ____________, 1997.
THE CHASE MANHATTAN BANK
By: __________________________
Name:
Title:
Fee: [$2,000] Inception Fee.
Exhibit G -- Page 6
80
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 1.1
SUBSCRIBER RATES
Monthly Subscriber Rates
as of June 30, 1996
Basic Subscriber Rate
Leonardtown system $ 9.85
Northbeach system 9.92
Boones system No charge
---------
Total $19.72
Expanded Basic
Leonardtown system $11.73
Northbeach system 12.16
Boones system 17.33
------
Total $41.22
Total Basic and Expanded Basic $60.94
Schedule 1.1 -- Page 1
81
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 1.2
CONSENTS
1. Town of Leonardtown.*
2. St. Mary's County.*
3. Town of North Beach.*
4. Town of Chesapeake Beach.*
5. Department of the Navy.*
6. Boones's Mobile Estates, pursuant to a lease, dated September 5, 1984,
between Boones's Mobile Estates and Eastern Communications of Maryland,
Inc., as assigned to American Cable TV Investors 5, Ltd. by ▇▇▇▇▇▇▇
Communications Company, L.P.**
7. Southern Maryland Electric Cooperative, Inc. pursuant to a Pole
Attachment Agreement, dated May 15, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Electric Cooperative, Inc. and ▇▇▇▇▇▇▇ Communications Company, L.P, as
amended and as assigned to American Cable TV Investors 5, Ltd. on May
19, 1992.
8. Chesapeake and Potomac Telephone Company of Maryland, pursuant to a
License Agreement for Pole Attachments, dated August 1, 1993, between
the Chesapeake and Potomac Telephone Company of Maryland and American
Cable TV Investors 5, Ltd.
9. Baltimore Gas and Electric Company, pursuant to a Pole/Trench License
Agreement, dated August 31, 1987, between Baltimore Gas and Electric
Company and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
10. ▇▇▇▇▇ ▇▇▇▇▇▇▇ Joint Venture, pursuant to an Agreement Authorizing the
Construction, Operation and Maintenance of a CATV System, dated August
13, 1987, between ▇▇▇▇▇ ▇▇▇▇▇▇▇ Joint Venture and ▇▇▇▇▇▇▇
Communications Company, L.P., as assigned to American Cable TV
Investors 5, Ltd.
--------
* Required consent.
** Notice only required.
Schedule 1.2 -- Page 1
82
11. St. Mary's College, pursuant to an Agreement for the Construction,
Operation and Maintenance of CATV System, dated January 17, 1994,
between Saint Mary's College and American Cable TV Investors 5, Ltd.
12. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, pursuant to a Lease
Agreement, dated July 9, 1981, among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ and CATV Leonardtown, Inc., as amended and as assigned to
American Cable TV Investors 5, Ltd.
13. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, pursuant to a
Lease Agreement, dated September 1, 1991, among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Communications Company,
L.P., as amended and as assigned to American Cable TV Investors 5, Ltd.
14. Hickory Hills Townhomes Limited Partnership, pursuant to a Bulk Cable
Television Multiple-Unit Agreement, dated July 31, 1995, between
Hickory Hills Townhomes Limited Partnership and American Cable TV
Investors 5, Ltd.**
15. ▇▇▇▇▇ View, pursuant to an Agreement for Construction and Operation of
a CATV System, dated September 28, 1992, between ▇▇▇▇▇ View and
American Cable TV Investors 5, Ltd.**
16. Placid Harbor, pursuant to a Bulk Cable Television Multiple Unit
Agreement, dated June 15, 1995, between Placid Harbor and American
Cable TV Investors 5, Ltd.**
17. WJLA-TV, pursuant to a Retransmission Consent Agreement, dated June 27,
1994, between WJLA-TV and TCI Cable Management Corporation.
18. Lenders, pursuant to a Revolving Credit Agreement, dated as of June 30,
1992, among American Cable TV Investors 5, Ltd., Various Financial
Institutions, Bank of America, Illinois f/k/a Continental Bank, N.A.
and NationsBank of Texas, N.A. and all financing and security documents
relating thereto.(1)
19. TCI Cablevision Associates, Inc. f/k/a ▇▇▇▇▇▇▇ & Associates, Inc.,
pursuant to a Management Agreement, dated May 14, 1987, between TCI
Cablevision Associates, Inc. f/k/a ▇▇▇▇▇▇▇ & Associates, Inc. and
American Cable TV Investors 5, Ltd.
--------
(1) The proceeds from the sale of the System will be used to repay any
amount of the loan outstanding as of the Closing Date.
** Notice only required.
Schedule 1.2 -- Page 2
83
20. Federal Communications Commission for the licenses listed on Schedule
1.5*
--------
* Required consent.
Schedule 1.2 -- Page 3
84
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 1.3
EQUIPMENT
Distribution Equipment
LEONARDTOWN NORTH BEACH BOONES
=========== =========== ======
YEAR UPGRADED/REBUILT: Partial 1989
HOMES PASSED AT 12/31/95: 22,299 1,663 450
EBUS AT 12/31/95 16,541 1,241 276
MILES OF PLANT:
Aerial 395.7 14.5 0
Underground 176.8 4.3 3.6
-------- ------- -----
Total 572.5 18.8 3.6
DENSITY: 39 88 125
CHANNELS:
CHANNEL CAPACITY: 42 42 42
IN USE: Basic: 14 14 11
Expanded Tier: 21 18 9
Premium: 6 5 4
PPV/Other: -- -- --
------- ------- -----
Total 41 37 24
BANDWITH: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇:
Fiber: AT&T N/A N/A
Trunk: .750 Times/CommScope .750 Times/CommScope .750 Times/CommScope
Feeder: .500 Times/CommScope .500 Times/CommScope .500 Times/CommScope
Drops: RG-6, RG-11 Times/ RG-6, RG-11 Times/ RG-6, RG-11 Times/
CommScope CommScope CommScope
PLANT ELECTRONICS:
Amplifiers Magnavox Magnavox Magnavox
Longest Amplifier Cascade 54 7 4
TAPS: Eagle, Regal, Magnavox Eagle, Regal, Magnavox Eagle, Regal, Magnavox
PREMIUM SECURITY:
Addressable No No No
Positive/Negative Traps Eagle Positive - St. Mary's Eagle Positive - St. Mary's Eagle Positive - St. Mary's
Eagle/Rio - Negative Eagle Pico - Negative
CONVERTERS:
Addressable N/A N/A N/A
Standard ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇ EQUIPMENT
Schedule 1.3 -- Page 1
▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
=========== =========== ======
HEADEND LOCATION: Next to ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ Water ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
PROPERTY OWNED/LEASED: Leased Leased Leased
TOWER TYPE/SIZE: 170' Guyed* 150' Water Tower 150' Water Tower
EARTH STATIONS: 2 - 5.0 meter 1 - 5.0 meter 1 - 4.3 meter
1 - 2.8 meter 1 - 4.3 meter 1 - 5.0 meter
1 - 4.3 meter 2 - 2.8 meter (unused) 1 - 2.3 meter (unused)
RECEIVERS: 27 - Microdyne 23 - SA 13 - SA
MODULATORS: 28 - SA 24 - SA 13 - SA
PROCESSORS: 13 - SA 14 - SA 11 - SA
STEREO ENCODERS: N/A N/A N/A
SCRAMBLER/ENCODERS: N/A N/A N/A
DESCRAMBLERS: 27 - Videocipher 23 - Videocipher 13 - Videocipher
AD INSERTION EQUIPMENT: Sony AO Lieutenant N/A N/A
BACKUP POWER SUPPLY: Yes Yes Yes
------------------------------------
* Plans to install a new 190' self-support tower should be complete by
year-end 1996.
Schedule 1.3 -- Page 2
86
VEHICLE LIST
YEAR MAKE/MODEL OWNED/LEASED
==== ========== ============
1991 Ford F-150 Owned
1992 Ford Aerostar Owned
1992 Ford Aerostar Owned
1993 GMC Pickup Owned
1993 GMC Pickup Owned
1993 GMC Pickup Owned
1993 GMC Pickup Owned
1993 GMC ▇▇▇▇▇ Owned
1993 GMC Bucket Owned
1993 GMC Bucket Owned
1994 GMC Pickup Owned
1994 GMC Pickup Owned
1994 GMC Pickup Owned
1995 GMC Pickup Owned
1995 GMC Pickup Owned
1995 GMC Pickup Owned
1995 GMC Pickup Owned
1995 GMC Pickup Owned
1995 GMC Pickup Owned
1995 GMC Pickup Owned
1995 GMC Bucket Owned
1996 GMC Pickup Owned
1996 GMC Pickup Owned
Total Number of Vehicles 23
Schedule 1.3 -- Page 3
87
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 1.4
FRANCHISE AREAS
1. City of Chesapeake Beach
2. City of Leonardtown
3. City of North Beach
4. Patuxent River Naval Air Station
5. St. Mary's County
Schedule 1.4--Page 1
88
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 1.5
GOVERNMENTAL PERMITS
FRANCHISE AUTHORITIES:
1. Town of Chesapeake Beach cable television franchise.
2. City of Leonardtown cable television franchise.
3. Town of North Beach cable television franchise.
4. Department of the Navy, Patuxent River Naval Air Station cable
television franchise.
5. St. Mary's County cable television franchise.
FCC LICENSES AND REGISTRATIONS:
Type Call Sign City, State
---- --------- -----------
ES WT99 Leonardtown, MD
ES E860751 North Beach (Chesapeake), MD
ES E860718 Boones MME (Lothian), MD
IB * KNAF340 Leonardtown (Charlotte), MD
IB * WNUT599 Leonardtown (Great ▇▇▇▇▇), MD
-----------------
* Consent required to transfer.
Schedule 1.5 -- Page 1
89
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 1.6
PERMITTED ENCUMBRANCES
None.
Schedule 1.6 -- Page 1
90
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 1.7
REAL PROPERTY
City Description Location Owned/Leased
---- ----------- -------- ------------
Boones's ▇▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ Mobile Estates Leased
Leonardtown Headend Greenbriar Road Leased
Hollywood ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Headend Old Bayside Road Leased
North Beach Office 8924 Chesapeake Leased
Avenue
Schedule 1.7--Page 1
91
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 1.8
SELLER CONTRACTS
1. Pole Attachment Agreement, dated May 15, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Electric Cooperative, Inc. and ▇▇▇▇▇▇▇ Communications Company,
L.P., as amended and as assigned to American Cable TV Investors 5, Ltd.
on May 19, 1992.
2. CATV License Agreement for Pole Attachments, dated August 1, 1993,
between the Chesapeake and Potomac Telephone Company of Maryland and
American Cable TV Investors 5, Ltd.
3. Pole/Trench License Agreement, dated August 31, 1987, between Baltimore
Gas and Electric Company and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
4. Right of Entry, dated August 13, 1987, between ▇▇▇▇▇ ▇▇▇▇▇▇▇ Joint
Venture and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
5. Cable TV Service Agreement, dated May 9, 1989, between ▇▇▇▇ ▇. ▇▇▇▇▇
and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to American Cable
TV Investors 5, Ltd.
6. Right of Entry, dated June 7, 1988, between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to American Cable TV
Investors 5, Ltd.
7. Cable TV Service Agreement, dated May 27, 1988, between Baycrest
Partners I and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
8. Cable TV Service Agreement, dated September 21, 1990, between RAR
Associates Development Corporation and ▇▇▇▇▇▇▇ Communications Company,
L.P., as assigned to American Cable TV Investors 5, Ltd.
9. Cable TV Service Agreement, dated May 29, 1987, between ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, Inc. and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
Schedule 1.8 -- Page 1
92
10. Cable TV Service Agreement, dated May 11, 1988, between ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
11. Letter Agreement authorizing installation and operation of CATV system
in an apartment building, dated August 27, 1986, between Breton Bay
Garden Apartments and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned
to American Cable TV Investors 5, Ltd.
12. Cable TV Service Agreement, dated September 1, 1987, between Cameron
Apartments and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
13. Cable TV Service Agreement, dated July 1, 1987, between Heritage Manor
Homes of Lexington Park Inc. and ▇▇▇▇▇▇▇ Communications Company, L.P.,
as assigned to American Cable TV Investors 5, Ltd.
14. Cable TV Service Agreement, dated June 20, 1988, between Cedar Cove
Yacht Basin, Inc. and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned
to American Cable TV Investors 5, Ltd.
15. Cable TV Service Agreement, dated July 24, 1989, between Chancellors
Run Associates Limited Partnership and ▇▇▇▇▇▇▇ Communications Company,
L.P., as assigned to American Cable TV Investors 5, Ltd.
16. Cable TV Service Agreement, dated December 15, 1987, between Kettler
Brothers, Inc., as agent for Windward Key Associates, Limited and
▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to American Cable TV
Investors 5, Ltd.
17. Permission to Install Cable Television System, dated December 10, 1987,
between Chesapeake Station Home Owners Association, Inc. and ▇▇▇▇▇▇▇
Communications Company, L.P., as assigned to American Cable TV
Investors 5, Ltd.
18. Cable TV Service Agreement, dated September 18, 1987, between Paragon
Builders, Inc. and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
19. Cable TV Service Agreement, dated March 1, 1988, between ▇▇▇▇▇▇ ▇▇▇▇▇▇
(▇▇▇▇▇▇ Apartments) and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
20. Cable TV Service Agreement, dated May 5, 1988, between ▇▇▇▇▇▇ Builders
(Beechwood Estates) and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
Schedule 1.8 -- Page 2
93
21. Cable TV Service Agreement, dated May 5, 1988, between ▇▇▇▇▇▇ Builders
(Countryside Garden Apartments) and ▇▇▇▇▇▇▇ Communications Company,
L.P., as assigned to American Cable TV Investors 5, Ltd.
22. Cable TV Service Agreement, dated May 5, 1988, between ▇▇▇▇▇▇ Builders
( Countryside Townhouses) and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
23. Cable TV Service Agreement, dated November 18, 1987, between ▇▇▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇▇▇▇ (Country Lane Apartments) and ▇▇▇▇▇▇▇ Communications
Company, L.P., as assigned to American Cable TV Investors 5, Ltd.
24. Cable TV Service Agreement, dated December 5, 1987, between ▇▇▇▇
▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇ Sheet Metal) and ▇▇▇▇▇▇▇ Communications Company,
L.P., as assigned to American Cable TV Investors 5, Ltd.
25. Cable TV Service Agreement, dated September 9, 1988, between ▇▇▇▇▇▇
▇▇▇▇▇ (▇▇▇▇▇ Apartments) and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
26. Cable TV Service Agreement, dated May 2, 1988, between L&M Partnership
and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to American Cable
TV Investors 5, Ltd.
27. Cable TV Service Agreement, dated August 22, 1988, between ▇▇▇▇▇▇
Enterprises Inc. and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned
to American Cable TV Investors 5, Ltd.
28. Cable TV Service Agreement, dated August 25, 1989, between Foxchase
Village Associates Limited Partnership and ▇▇▇▇▇▇▇ Communications
Company, L.P., as assigned to American Cable TV Investors 5, Ltd.
29. Letter Agreement Authorizing Right of Way, dated March 24, 1989,
between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
30. Cable TV Service Agreement, dated February 23, 1990, between Greenview
Village Apartments and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
31. Cable TV Service Agreement, dated July 22, 1988, between ▇▇▇▇▇▇▇
Apartments and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
Schedule 1.8 -- Page 3
94
32. Cable TV Service Agreement, dated October 25, 1989, between Hai
Management Inc. (Great ▇▇▇▇▇ Ct.) and ▇▇▇▇▇▇▇ Communications Company,
L.P., as assigned to American Cable TV Investors 5, Ltd.
33. Cable TV Service Agreement, dated October 25, 1989, between Hai
Management Inc. (▇▇▇ ▇▇▇▇▇ Village) and ▇▇▇▇▇▇▇ Communications Company,
L.P., as assigned to American Cable TV Investors 5, Ltd.
34. Cable TV Service Agreement, dated November 24, 1986, between Heritage
Manor Homes of Lexington Park, Inc. and ▇▇▇▇▇▇▇ Communications Company,
L.P., as assigned to American Cable TV Investors 5, Ltd.
35. Cable TV Service Agreement, dated June 7, 1988, between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ (▇▇▇▇▇ Apartments) and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
36. Cable TV Service Agreement, dated March 15, 1988, between ▇▇▇▇ ▇▇▇▇▇▇▇
(Hilton Run) and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
37. Cable TV Service Agreement, dated February 27, 1992, between
Corporation for Shelter Management and ▇▇▇▇▇▇▇ Communications Company,
L.P., as assigned to American Cable TV Investors 5, Ltd.
38. Cable TV Service Agreement, dated November 26, 1990, between R&H
Properties and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
39. Bulk Discount Cable Television Service Agreement, dated October 15,
1990, between K-Mart No. 3586 and ▇▇▇▇▇▇▇ Communications Company, L.P.,
as assigned to American Cable TV Investors 5, Ltd. (Inactive)
40. Cable TV Service Agreement, dated January 28, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Camping Resort and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
41. Letter guaranteeing 29 subscribers, dated March 5, 1996, between
Potomac Land, Ltd. and American Cable TV Investors 5, Ltd.
42. Cable TV Service Agreement, dated May 5, 1988, between ▇▇▇▇▇▇ Builders
(▇▇▇▇▇▇ ▇▇▇▇▇) and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
Schedule 1.8 -- Page 4
95
43. Letter Authorizing Installation of CATV, dated March 26, 1984, between
▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.*
44. Cable TV Service Agreement, dated December 4, 1989, between Lexwood
Apartments and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
45. Letter, dated March 26, 1984, from ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to ▇▇▇▇▇▇▇ Cable TV
of Leonardstown consenting to wiring, as assigned to American Cable TV
Investors 5, Ltd.
46. Letter Agreement Authorizing Installation and Maintenance of a CATV
System, dated October 1, 1986, between ▇▇▇▇▇▇▇▇▇ Apartments and ▇▇▇▇▇▇▇
Communications Company, L.P., as assigned to American Cable TV
Investors 5, Ltd.
47. Cable TV Service Agreement, dated January 24, 1990, between Maryland
Manor Mobile Home Park and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
48. Cable TV Service Agreement, dated October 19, 1988, between Paragon
Properties and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
49. Cable TV Service Agreement, dated January 24, 1990, between National
Mobile Home Park and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned
to American Cable TV Investors 5, Ltd.
50. Cable TV Service Agreement, dated January 29, 1988, between ▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Tall Timbers) and ▇▇▇▇▇▇▇ Communications Company,
L.P., as assigned to American Cable TV Investors 5, Ltd.
51. Letter Agreement Authorizing Installation and Maintenance of a CATV
System, dated March 12, 1985, between New Town Village and ▇▇▇▇▇▇▇
Communications Company, L.P., as assigned to American Cable TV
Investors 5, Ltd.
52. Cable TV Service Agreement, dated February 15, 1989, between ▇▇▇▇▇ ▇▇▇▇
(Park Hall Mall) and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned
to American Cable TV Investors 5, Ltd.
--------
* A portion of the underlying property has been foreclosed upon, and is
now owned by a new owner. The validity of this contract is in question,
and it is intended that an agreement to replace this contract will be
negotiated with the new owner of the property.
Schedule 1.8 -- Page 5
96
53. CATV System Right-of-Way Easement, dated December 12, 1979, between
Pautexent Court and CATV Leonardtown, as assigned by ▇▇▇▇▇▇▇
Communications Company L.P. to American Cable TV Investors 5, Ltd.
54. Cable TV Service Agreement, dated September 21, 1990, between St.
Mary's Housing Authority and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
55. Cable TV Service Agreement, dated October 3, 1988, between Route 347
Realty Corp. and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
56. Cable TV Service Agreement, dated January 8, 1988, between ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇ Apartments) and ▇▇▇▇▇▇▇ Communications Company, L.P.,
as assigned to American Cable TV Investors 5, Ltd.
57. Cable TV Service Agreement, dated April 18, 1988, between ▇▇▇ ▇▇▇▇▇▇▇
(The Pines) and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
58. Cable TV Service Agreement, dated January 7, 1988, between ▇▇▇▇▇▇▇ &
Wise and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to American
Cable TV Investors 5, Ltd.
59. Pre-Wire Agreement, dated July 9, 1992, between Lexington Park Assoc.,
Ltd. Partnership and American Cable TV Investors 5, Ltd.
60. Cable TV Service Agreement, dated April 5, 1988, between Seaforth
Partnership and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
61. Cable TV Service Agreement, dated September 1, 1987, between Serenity
Farms and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to American
Cable TV Investors 5, Ltd.
62. Letter Agreement Authorizing Installation and Maintenance of a CATV
System, dated February 25, 1987, between St. Mary's Nursing Center and
▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to American Cable TV
Investors 5, Ltd.
63. Cable TV Service Agreement, dated February 23, 1990, between Southern
Mobile Home Park and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned
to American Cable TV Investors 5, Ltd.
Schedule 1.8 -- Page 6
97
64. Cable TV Service Agreement, dated May 9, 1989, between St. Mary's One
Limited Partnership and ▇▇▇▇▇▇▇ Communications Company, L.P.
65. Cable TV Service Agreement, dated November 2, 1988, between St. ▇▇▇▇▇▇▇
General Store (▇▇▇▇ Corp.) and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
66. Cable TV Service Agreement, dated December 24, 1987, between ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ (T&S Apartments) and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
67. Cable TV Service Agreement, dated January 2, 1988, between ▇▇▇▇▇'▇
Store (Apartments) and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
68. Cable TV Service Agreement, dated October 27, 1987, between ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
69. Cable TV Service Agreement, dated February 21, 1989, between Interstate
General Company L.P. and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
70. Cable TV Service Agreement, dated February 2, 1988, between
▇▇▇▇▇▇▇▇/▇▇▇▇▇ Partnership and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
71. Apartment Community Agreement, dated August 20, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Limited Partnership and ▇▇▇▇▇▇▇ Communications
Company, L.P., as assigned to American Cable TV Investors 5, Ltd.
72. Cable TV Service Agreement, dated March 26, 1990, between ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
73. Cable TV Service Agreement, dated October 6, 1987, between Village Barn
South Apartments and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned
to American Cable TV Investors 5, Ltd.
74. Right-of-Way Agreement, dated October 28, 1986, between ▇▇▇▇▇▇▇ ▇▇▇▇
and Triad CATV, Inc., as assigned to American Cable TV Investors 5,
Ltd. by ▇▇▇▇▇▇▇ Communications Company, L.P.
Schedule 1.8 -- Page 7
98
75. Right-of-Way Agreement, dated October 28, 1986, between ▇▇▇▇ ▇▇▇▇▇ and
Triad CATV, Inc., as assigned to American Cable TV Investors 5, Ltd. by
▇▇▇▇▇▇▇ Communications Company, L.P.
76. Right-of-Way Agreement, dated October 28, 1986, between ▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and Triad CATV, Inc., as assigned to American Cable TV
Investors 5, Ltd. by ▇▇▇▇▇▇▇ Communications Company, L.P.
77. Right-of-Way Agreement, dated October 28, 1986, between ▇▇▇▇▇▇▇ ▇▇▇▇▇
and Triad CATV, Inc., as assigned to American Cable TV Investors 5,
Ltd. by ▇▇▇▇▇▇▇ Communications Company, L.P.
78. Right-of-Way Agreement, dated October 28, 1986, between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and Triad CATV, Inc., as assigned to American Cable TV Investors 5,
Ltd. by ▇▇▇▇▇▇▇ Communications Company, L.P.
79. Right-of-Way Agreement, dated October 28, 1986, between ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ and Triad CATV, Inc., as assigned to American Cable TV
Investors 5, Ltd. by ▇▇▇▇▇▇▇ Communications Company, L.P.
80. Cable TV Service Agreement, dated September 4, 1987, between ▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
81. Cable TV Service Agreement, dated October 6, 1987, between ▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
82. Cable TV Service Agreement, dated January 19, 1988, between ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Content Apartments and ▇▇▇▇▇▇▇ Communications
Company, L.P., as assigned to American Cable TV Investors 5, Ltd.
83. Cable TV Service Agreement, dated September 1, 1987, between Winter's
Apartments (▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.) and ▇▇▇▇▇▇▇ Communications
Company, L.P., as assigned to American Cable TV Investors 5, Ltd.
84. Lease, dated July 19, 1981, as amended, between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ and CATV Leonardtown, Inc., as amended on June 28,
1991, as amended and as assigned to American Cable TV Investors 5, Ltd.
85. Lease, dated September 1, 1991, as amended, between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Communications Company,
L.P., as amended and as assigned to American Cable TV Investors 5, Ltd.
Schedule 1.8 -- Page 8
99
86. Lease, dated January 29, 1985, between the Town of North Beach and
Triad CATV, Inc., as assigned to American Cable TV Investors 5, Ltd. by
▇▇▇▇▇▇▇ Communications Company, L.P.
87. Lease, dated October 25, 1984, between the Town of Chesapeake Beach and
Triad CATV, Inc., as amended on March 1, 1989, as assigned to American
Cable TV Investors 5, Ltd. by ▇▇▇▇▇▇▇ Communications Company, L.P.
88. Lease, dated September 5, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
Eastern Communications of Maryland, Inc., as assigned to American Cable
TV Investors 5, Ltd. by ▇▇▇▇▇▇▇ Communications Company, L.P.
89. Postage Meter Rental Agreement, dated July 2, 1985, between Pitney
▇▇▇▇▇ Inc. and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
90. Photocopier Rental Agreement, dated May 3, 1991, between ▇▇▇▇▇▇▇▇
Business Equipment and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
91. Advertising Sales Agreement, dated November 15, 1990, between NuAd,
Inc. and ▇▇▇▇▇▇▇ Communications Company, L.P., as extended by American
Cable TV Investors 5, Ltd.
92. Bulk Discount Cable Television Service Agreement, dated July 1, 1990,
between Lexington Park Super 8 Motel, Inc. and ▇▇▇▇▇▇▇ Communications
Company, L.P., as assigned to American Cable TV Investors 5, Ltd.
93. Bulk Discount Cable Television Service Agreement, dated March 4, 1991,
between Swans Hotel, a G&H Properties corporation and ▇▇▇▇▇▇▇
Communications Company, L.P., as assigned to American Cable TV
Investors 5, Ltd.
94. Cable Television Bulk Billing Agreement, dated November 15, 1994,
between Wildewood Village Association, Inc. and American Cable TV
Investors 5, Ltd.
95. Bulk Discount Cable Television Service Agreement, dated May 4, 1989,
between Patuxent Inn and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
96. Cable Television Easement and Maintenance Agreement, dated December 27,
1993, between St. Mary's Hospital and American Cable TV Investors 5,
Ltd.
Schedule 1.8 -- Page 9
100
97. Bulk Discount Cable Television Service Agreement, dated August 1, 1991,
between A&E Motel and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned
to American Cable TV Investors 5, Ltd.
98. Bulk Discount Cable Television Service Agreement, dated May 6, 1991,
between Belvedere Motor Inn n/k/a Days Inn and ▇▇▇▇▇▇▇ Communications
Company, L.P., as assigned to American Cable TV Investors 5, Ltd.
99. Cable Television Bulk Billing Agreement, dated August 19, 1993, between
Leonardtown Motel (Relax Inn) and American Cable TV Investors 5, Ltd.
100. Bulk Discount Cable Television Service Agreement, dated August 1, 1990,
between ▇▇▇▇▇▇'▇ Apartments and ▇▇▇▇▇▇▇ Communications Company, L.P.,
as assigned to American Cable TV Investors 5, Ltd.
101. Bulk Cable Television Multiple-Unit Agreement, dated July 31, 1995,
between Hickory Hills Townhomes Limited Partnership and American Cable
TV Investors 5, Ltd.
102. Agreement for the Construction and Operation of a CATV System, dated
January 17, 1994, between St. Mary's College and American Cable TV
Investors 5, Ltd.
103. Bulk Discount Cable Television Service Agreement, between Vex ▇▇▇▇
(Navy Lodge) and American Cable TV Investors 5, Ltd. [NOT YET EXECUTED]
104. Agreement for the Construction and Operation of a CATV System, dated
September 28, 1992, between ▇▇▇▇▇ View and American Cable TV Investors
5, Ltd.
105. Bulk Cable Television Multiple-Unit Agreement, dated June 15, 1995,
between Placid Harbor and American Cable TV Investors 5, Ltd.
106. Cable Television Bulk Billing Agreement, dated March 14, 1995, between
Lore's Apartment and American Cable TV Investors 5, Ltd.
107. Cable TV Service Agreement, dated August 10, 1987, among St. Mary's
Home for the Elderly, Inc. and St. Mary's Home for the Elderly II, Inc.
and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to American Cable
TV Investors 5, Ltd.
108. Bulk Discount Cable Television Service Agreement, dated August 10,
1990, between ▇▇▇▇▇▇ Financial Corporation and ▇▇▇▇▇▇▇ Communications
Company, L.P., as assigned to American Cable TV Investors 5, Ltd.
109. Retransmission Consent Agreement, dated June 27, 1994, between WJLA-TV
and TCI Cable Management Corporation.
Schedule 1.8 -- Page 10
101
110. Retransmission Consent Agreement, dated November 5, 1993, between The
Detroit News, Inc. (licensee of WUSA) and TCI Cable Management
Corporation.
111. Retransmission Consent Agreement, dated June 6, 1993, between Paramount
Stations Group of Washington Inc. (on behalf of WDCA) and TCI Cable
Management Corporation.
112. Revolving Credit Agreement, dated as of June 30, 1993, among American
Cable TV Investors 5, Ltd., Various Financial Institutions and Bank of
America, Illinois f/k/a Continental Bank, N.A. and NationsBank of
Texas, N.A. and all financing and security documents relating thereto.
113. Management Agreement, dated May 14, 1987, between TCI Cablevision
Associates, Inc. f/k/a ▇▇▇▇▇▇▇ & Associates, Inc. and American Cable TV
Investors 5, Ltd.
114. Letter Agreement, Authorizing Easement Over Rims Property, dated June
21, 1991, between Maryland Department of Natural Resources and ▇▇▇▇▇▇▇
Communications Company, L.P., as assigned to American Cable TV
Investors 5, Ltd.
Schedule 1.8 -- Page 11
102
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 1.9
SYSTEM
American Cable TV of St. Mary's County comprising the System included
in the Franchise Areas set forth in Schedule 1.4.
Schedule 1.9 -- Page 1
103
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 4.2
EXCLUDED ASSETS
Revolving Credit Agreement, dated as of June 30, 1992, between American
Cable TV Investors 5, Ltd., Various Financial Institutions, Bank of America,
Illinois f/k/a Continental Bank, N.A. and NationsBank of Texas, N.A. (including
all financing and security documents relating thereto).
Schedule 4.2 -- Page 1
104
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 5.3 (b)
VIOLATIONS OF PARTNERSHIP AGREEMENT AND LEGAL REQUIREMENTS
If consents to transfer the franchises and FCC licenses listed
on Schedule 1.5 which require consent to transfer are not obtained, Seller may
be deemed to have violated a Legal Requirement.
If consents to the assignment of the following agreements are
not obtained or notices are not given as required by the terms of the
agreements, such agreements may be terminated:
1. Pole Attachment Agreement, dated May 15, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Electric Cooperative, Inc. and ▇▇▇▇▇▇▇ Communications Company,
L.P, as amended and assigned to American Cable TV Investors 5, Ltd. on
May 19, 1992.
2. License Agreement for Pole Attachments, dated August 1, 1993, between
the Chesapeake and Potomac Telephone Company of Maryland and American
Cable TV Investors 5, Ltd.
3. Pole/Trench License Agreement, dated August 31, 1987, between Baltimore
Gas and Electric Company and ▇▇▇▇▇▇▇ Communications Company, L.P., as
assigned to American Cable TV Investors 5, Ltd.
4. Right of Entry, dated August 13, 1987, between ▇▇▇▇▇ ▇▇▇▇▇▇▇ Joint
Venture and ▇▇▇▇▇▇▇ Communications Company, L.P., as assigned to
American Cable TV Investors 5, Ltd.
5. Agreement for the Construction, Operation and Maintenance of CATV
System, dated January 17, 1994, between Saint Mary's College and
American Cable TV Investors 5, Ltd.
6. Retransmission Consent Agreement, dated December 1, 1993, between
WJLA-TV and TCI Cable Management Corporation.
7. Management Agreement, dated May 14, 1987, between TCI Cablevision
Associates, Inc. f/k/a ▇▇▇▇▇▇▇ & Associates, Inc. and American Cable TV
Investors 5, Ltd.
8. Lease Agreement, dated July 9, 1981, among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ and CATV Leonardtown, Inc., as amended and as
assigned to American Cable TV Investors 5, Ltd.
Schedule 5.3 -- Page 1
104
105
9. Lease Agreement, dated September 1, 1991, among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Communications Company,
L.P., as amended and as assigned to American Cable TV Investors 5, Ltd.
10. Lease, dated September 5, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
Eastern Communications of Maryland, Inc., as assigned to American Cable
TV Investors 5, Ltd. by ▇▇▇▇▇▇▇ Communications Company, L.P.
11. Bulk Cable Television Multiple Unit Agreement, dated July 31, 1995,
between Hickory Hills Townhomes Limited Partnership and American Cable
TV Investors 5, Ltd.
12. Agreement for Construction and Operation of a CATV System, dated
September 28, 1992, between ▇▇▇▇▇ View and American Cable TV Investors
5, Ltd.
13. Bulk Cable Television Multiple Unit Agreement, dated June 15, 1995,
between Placid Harbor and American Cable TV Investors 5, Ltd.
14. Revolving Credit Agreement, dated as of June 30, 1992, among American
Cable TV Investors 5, Ltd, various financial institutions, Bank of
America, Illinois f/k/a/ Continental Bank, N.A. and NationsBank of
Texas, N.A. and all financing and security documents relating thereto.*
--------
* Proceeds from the sale of the System will be used to repay any amount
of the loan outstanding as of the Closing Date.
Schedule 5.3 -- Page 2
106
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 5.5
ENCUMBRANCES ON SELLER'S TITLE
Assets of American Cable TV Investors 5, Ltd. have been
pledged as collateral under the Revolving Credit Agreement, dated as of June 30,
1992, among American Cable TV Investors 5, Ltd., Various Financial Institutions,
Bank of America, Illinois f/k/a Continental Bank, N.A. and NationsBank of Texas,
N.A., including all financing and security documents relating thereto. All
encumbrances related to the foregoing shall be satisfied at or prior to Closing
by Seller and the Lenders thereto.
Schedule 5.5 -- Page 1
107
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 5.8
COMPLIANCE WITH LAW
None.
Schedule 5.8 -- Page 1
108
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 5.8(f)
FCC INFORMATION
Aeronautical Frequencies: Channel Visual or Control Carriers (MHz)
------------------------ ------- -------------------------------
--- 108.6250
--- 117.4750
--- 117.5250
--- 117.5750
--- 123.4875
--- 123.5125
--- 123.5375
--- 135.4875
--- 135.5125
--- 135.5375
A-2 109.2750
A-1 115.2750
A(14) 121.2625
B(15) 127.2625
C(16) 133.2625
L(25) 229.2625
M(26) 235.2625
N(27) 241.2625
O(28) 247.2625
P(29) 253.2625
Q(30) 259.2625
R(31) 265.2625
S(32) 271.2625
T(33) 277.2625
U(34) 283.2625
V(35) 289.2625
Schedule 5.8(f) -- Page 1
109
W(36) 295.2625
AA(37) 301.2625
BB(38) 307.2625
CC(39) 313.2625
DD(40) 319.2625
EE(41) 325.2625
FF(42) 331.2750
GG(43) 337.2625
HH(44) 343.2625
II(45) 349.2625
JJ(46) 355.2625
KK(47) 361.2625
LL(48) 367.2625
MM(49) 373.2625
NN(50) 379.2625
OO(51) 385.2625
PP(52) 391.2625
QQ(53) 397.2625
Geographic Coordinate of
Approximate Center of Service Latitude 38" - 18' - 33" North
Area: Longitude 76" - 38' - 16" West
Authorized Radius of System: 35 Miles
56 Kilometers
Schedule 5.8(f) -- Page 2
110
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 5.12
There is currently pending a class action lawsuit in the
Circuit Court for Baltimore City, ▇▇▇▇▇, et al. v. United Cable Television of
Baltimore, et al, Case No. 95311038/CL204287. The lawsuit was initially filed
against just the cable system in the city of Baltimore. The complaint was
recently amended to include Tele-Communications, Inc., UCTC of Baltimore, Inc.,
TCI Cablevision of Maryland, Inc., TCI Cable, Inc., UCTC of Baltimore, Inc., TCI
Cablevision of Maryland, Inc., TCI Cable Management, Inc. and TCI Southeast,
Inc. as defendants. Although the class that was previously certified by the
Court included only customers in Baltimore, the Plaintiffs are now seeking to
expand the class to include TCI-affiliated customers in the entire state of
Maryland, including the System served by Seller. Currently, the lawsuit is in
the discovery process and is scheduled to go to trial within the first 6 months
of 1997.
The plaintiffs are alleging that the five dollar ($5.00)
administrative fee assessed by the Company violates the Consumer Protection Act,
Maryland Code Annotated, CL Section 13-101 et seq; that the administrative fee
constitutes impermissible liquidated damages in violation of state law, Maryland
Code Annotated, CL Section 2-718; and, that the fee is a breach of implied
covenant of good faith and fair dealing.
Schedule 5.12 -- Page 1
111
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 5.13(c)
EMPLOYMENT MATTERS
None.
Schedule 5.13(c)
112
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 5.13(d)
EMPLOYEES
OFFICE/ADMINISTRATION
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
TECHNICAL
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Milan
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
MARKETING
▇▇▇▇▇ ▇▇▇▇▇▇
Schedule 5.13(d) -- Page 1
113
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 5.13(e)
EMPLOYER PLANS
CIGNA Health Maintenance Organization
CIGNA Preferred Provider Organization Plan
1995 TCI Benefits Plan
Schedule 5.13(e) -- Page 1
114
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 5.14
SYSTEM INFORMATION
AS OF JUNE 30, 1996
Number of Equivalent Basic Subscribers: 18,324
Number of Subscribers of Expanded
Basic Services: 17,952
Bandwidth: 330 MHz
Homes Passed by the System: 26,469
Number of Miles of Plant: 703.67
Fiber: 15.2
------
718.87
Schedule 5.14 -- Page 1
115
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 5.16
TAXES
All Tax Returns required to be filed for the year ended December 31,
1996 and Taxes due or payable on such Tax Returns are anticipated to be filed
and paid by Seller no later than June 30, 1997.
Schedule 5.16 -- Page 1
116
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF ST. MARY'S COUNTY
SCHEDULE 6.3(a)
CONSENTS TO BE OBTAINED OR WAIVED BY CLOSING DATE
First Union National Bank of North Carolina, as Agent to the
Lenders, and Mellon Bank, N.A., as Co-Agent.
Schedule 6.3(a) -- Page 1
117
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of November 27, 1996, by and among
American Cable TV Investors 5, Ltd., a Colorado limited partnership ("Seller")
and ▇▇▇▇ Multimedia Partnership, a Pennsylvania general partnership ("Buyer"),
and ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP, a New York limited liability
partnership, as escrow agent ("Escrow Agent").
Seller and Buyer have entered into an Asset Purchase
Agreement, dated as of November 27, 1996, to sell and purchase certain cable
television assets (the "Agreement"). Pursuant to the Agreement, ▇▇▇▇, Scholer,
Fierman, ▇▇▇▇ & Handler, LLP, was designated as the escrow agent thereunder.
Escrow Agent has agreed to act as an escrow agent pursuant to the terms of this
Escrow Agreement. Capitalized terms used but not defined herein shall have the
meanings set forth in the Agreement.
It is agreed as follows:
1. ESCROW FUND. Buyer has, pursuant to Section 3.1 of the
Agreement, deposited $765,923.00 in cash by means of wire or interbank transfer
in immediately available funds in Escrow Agent's "▇▇▇▇, Scholer, Fierman, ▇▇▇▇ &
Handler, LLP Attorney Trust Account No. ▇▇▇-▇▇▇▇-▇▇; Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,"
at The Chase Manhattan Bank, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ -- ABA
No. ▇▇▇▇▇▇▇▇▇ to be held in escrow pursuant to the terms of the Agreement (such
amount, together with any earnings thereon, being the "Escrow Fund"), to be held
and disbursed by Escrow Agent in accordance with this Escrow Agreement.
2. DISBURSEMENT.
2.1 NOTICES. Escrow Agent shall pay over the Escrow Fund upon
receipt of a written notice, in the form attached hereto as Exhibit I, as
follows: (a) upon receipt of such notice executed by Seller directing the Escrow
Agent to pay the Escrow Fund over to Buyer, to Buyer; (b) upon receipt of such
notice executed by Buyer directing the Escrow Agent to pay the Escrow Fund over
to Seller, to Seller; or (c) upon receipt of such notice executed by Buyer and
Seller, to the parties and in the amounts specified in the notice.
2.2 AGREEMENT OF SELLER AND BUYER. Seller and Buyer have
agreed that (i) the Escrow Fund shall be disbursed in accordance with the terms
of this Escrow Agreement and the Agreement, (ii) at the Closing Seller and Buyer
shall instruct Escrow Agent to disburse the Escrow Fund to Seller or Seller's
designee and (iii) unless the Closing shall theretofore have taken place or
unless an unresolved claim against the Escrow Fund remains outstanding, on the
date which is 30 days after the termination of the Agreement pursuant to Article
X thereof, Seller and Buyer shall instruct Escrow Agent to disburse the Escrow
Fund to Buyer.
2.3 RELIANCE ON NOTICE. Upon receipt of the appropriate notice
described in Section 2.1, Escrow Agent shall pay the Escrow Fund in accordance
with Section 2.1, and Escrow Agent shall not be subject to any liability to any
party for doing so. Seller and Buyer
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each agrees not to assert (and shall actively resist any attempt to assert on
their behalf) any claim against Escrow Agent for making a payment in accordance
with this Section.
3. INVESTMENT OF ESCROW FUND. Escrow Agent shall invest the
Escrow Fund in (a) interest bearing accounts in, or certificates of deposit of,
The Chase Manhattan Bank, (b) (i) obligations of the United States of America,
(ii) United States government securities of agencies of the United States
government which are guaranteed by the United States government or (iii)
securities of governmental agencies, if the same are covered by a bank
repurchase agreement, or (c) for periods of less than seven days each,
non-interest bearing accounts at The Chase Manhattan Bank. Escrow Agent may
invest the Escrow Fund in one or more of the invest ments permitted by the
preceding sentence, and may change those investments from time to time, all as
it may determine in its sole and absolute discretion. Escrow Agent shall have no
duty to maximize the return on the Escrow Fund and shall be fully protected in
making any investment or combination of investments permitted by this Section.
4. ESCROW AGENT AS COUNSEL TO SELLER. Buyer hereby
acknowledges that it is aware that Escrow Agent is acting as counsel to Seller
in connection with the Agreement, this Escrow Agreement and other matters, and
agrees that Escrow Agent's acting under this Escrow Agreement shall not affect
its ability to act as counsel to Seller in any matter, including, but not
limited to, any claim, action or proceeding with respect to this Escrow
Agreement or the disposition of or entitlement to the Escrow Fund.
5. ESCROW AGENT.
5.1 GENERAL. Escrow Agent shall act as escrow agent and hold
and disburse the Escrow Fund pursuant to the terms and conditions of this Escrow
Agreement. Its duties under this Escrow Agreement shall cease upon disbursement
of the Escrow Fund.
5.2 LIQUIDATION OF INVESTMENTS. Unless otherwise directed by
notice executed by Seller and Buyer, all payments required by Section 2 shall be
made in cash by means of wire or interbank transfer in immediately available
funds. When necessary to provide funds in order to make any payments required by
Section 2, Escrow Agent shall liquidate any investments held by it as it may, in
its sole and absolute discretion, determine to be necessary to make such
payments. Escrow Agent shall have no liability for losses upon the liquidation
of any such investments.
5.3 LIMITED DUTIES. Escrow Agent undertakes to perform only
such duties as are expressly set forth in this Escrow Agreement. Escrow Agent
shall incur no liability whatsoever to any other party hereto, except for Escrow
Agent's own willful misconduct in its capacity as escrow agent.
5.4 RELIANCE ON NOTICES. Escrow Agent may rely and shall be
protected in acting or refraining from acting upon any written notice,
instruction or request furnished to it hereunder and believed by it to be
genuine and to have been signed or presented by the proper
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party or parties. Escrow Agent may conclusively presume that the undersigned
have full power and authority to instruct Escrow Agent on behalf of the
respective party for which they have signed.
5.5 LIMITED RESPONSIBILITIES. Escrow Agent's sole
responsibility upon receipt of the notice specified in Section 2.1 requiring
payment pursuant to the terms of this Escrow Agreement is to pay the Escrow Fund
to such party as is specified in accordance with Section 2.1, and Escrow Agent
shall have no duty to determine (and shall not be affected by any knowledge
concerning) the validity, authenticity or enforceability of any specification,
certifica tion made in or information contained in such notices.
5.6 ACTION IN GOOD FAITH. Escrow Agent shall not be liable for
any action taken by it in good faith and believed by it to be authorized or
within the rights or powers conferred upon it by this Escrow Agreement, and may
consult with counsel (including partners or any attorneys employed by Escrow
Agent) of its own choice and shall have full and complete authorization and
protection for any action taken or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel.
5.7 RESIGNATION. Escrow Agent may resign and be discharged
from its duties or obligations hereunder by giving notice of such resignation to
Seller and Buyer specifying a date upon which such resignation shall take
effect, whereupon a successor escrow agent, which shall be a bank or trust
company with an office in New York City, shall be appointed by Seller. Escrow
Agent shall be entitled to pay the Escrow Fund to any successor escrow agent so
appointed. In the event no successor escrow agent has been appointed by the date
specified in the notice of resignation given by Escrow Agent, Escrow Agent shall
be entitled (but not required) to deliver the Escrow Fund as set out in Section
5.8(b) and shall be thereupon relieved of all further responsibility.
5.8 DISPUTES. In the event of a dispute between the parties,
or if Escrow Agent shall be uncertain as to the proper disposition of the Escrow
Fund, Escrow Agent shall be entitled (but not required) (a) to retain the Escrow
Fund pending direction as to the disposition thereof by a final order, from
which no further appeal may be taken, of a court of competent jurisdiction, or
(b) to deliver the Escrow Fund into the United States District Court for the
Southern District of New York and, upon giving notice to Seller and Buyer of
such action, shall thereupon be relieved of all further responsibility.
5.9 INDEMNIFICATION; ESCROW AGENT'S INTEREST IN ESCROW FUND.
(a) Seller and Buyer hereby jointly and severally agree to indemnify Escrow
Agent and all partners and employees thereof for, and to hold such persons
harmless against, any loss, liability, damage or expense incurred without bad
faith on the part of such persons arising out of or in connection with the
Escrow Agent's entering into and/or performing under this Escrow Agreement,
including, but not limited to, the cost and expense (including, but not limited
to, attorneys' fees, which may consist in whole or in part of the time charges
at their standard rates of partners of and attorneys employed by Escrow Agent)
of investigation and defending themselves against any
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claim or liability, and including taxes, penalties, additions to tax or interest
that are incurred by the Escrow Agent with respect to taxes imposed on the
Escrow Fund or any income earned or derived therefrom.
(b) Seller and Buyer hereby (i) jointly and severally agree
that Escrow Agent shall be entitled to (x) withdraw from the Escrow Fund all
sums due or reasonably likely to become due to Escrow Agent on account of
Seller's and Buyer's indemnification obligations set forth above, and (y)
withhold a portion of the income earned on or derived from the Escrow Fund and
pay such withheld amount to the proper taxing authorities on behalf of the
Escrow Fund to satisfy any tax imposed on such income, and (ii) grant to Escrow
Agent a first priority lien on and security interest in and to the Escrow Fund
for the purposes of securing satisfaction by Seller and Buyer of their
indemnification obligations to Escrow Agent.
6. ESCROW AGENT NOT AFFECTED BY OTHER AGREEMENTS. This Escrow
Agreement expressly sets forth all the duties of Escrow Agent with respect to
any and all matters pertinent hereto. No implied duties or obligations shall be
read into this Escrow Agreement against Escrow Agent. Escrow Agent, in its
capacity as such, shall not be bound by the provisions of any agreement among
the parties to this Escrow Agreement and shall have no duty to inquire into, or
to take into account its knowledge of, the terms and conditions of any agreement
made or entered into in connection with this Escrow Agreement, including, but
not limited to, the Agreement.
7. AUTHORIZED SIGNATORIES. Seller hereby authorizes ▇▇▇▇▇▇
▇▇▇▇▇, and Buyer hereby authorizes ▇▇▇▇▇▇ ▇▇▇▇, to receive and execute all
notices required to be given hereunder, and either party may authorize other
officers to sign on its behalf by notice to the other party.
8. NOTICES. All notices, consents, approvals, demands,
requests and other communications required or desired to be given hereunder must
be given in writing, shall refer to this Escrow Agreement, and shall be sent by
registered or certified mail, return receipt requested, by hand delivery, by
facsimile or by overnight courier service, addressed to the parties hereto at
their addresses set forth below, or such other addresses as they may designate
by like notice:
(a) If to Seller:
American Cable TV Investors 5, Ltd.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Buyer:
▇▇▇▇ Multimedia Partnership
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Hourigan, Kluger, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to Escrow Agent:
▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq. and
▇▇▇▇ ▇▇▇▇▇▇▇▇, Director of Finance
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
9. MISCELLANEOUS.
9.1 JURISDICTION. Any action or proceeding seeking to enforce
any provision of, or based on any right arising out of, this Escrow Agreement
shall be brought against any of the parties in the courts of the State of New
York in the County of New York, or, if it has or can acquire jurisdiction, in
the United States District Court for the Southern District of New York, and each
of the parties hereby consents to the exclusive jurisdiction of such courts (and
of the appropriate appellate courts) in any such action or proceeding and waives
any objection to venue laid therein. Process in any such action or proceeding
may be served anywhere in the world, whether within or without the State of New
York.
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9.2 CAPTIONS. The captions in this Escrow Agreement are for
convenience or reference only and shall not be given any effect in the
interpretation of this Escrow Agreement.
9.3 NO WAIVER. The failure of a party to insist upon strict
adherence to any term of this Escrow Agreement on any occasion shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Escrow Agreement. Any
waiver must be in writing.
9.4 EXCLUSIVE AGREEMENT; AMENDMENT; ASSIGNMENT; NO THIRD PARTY
RIGHTS. This Escrow Agreement supersedes all prior agreements among the parties
with respect to its subject matter, is intended as a complete and exclusive
statement of the terms of the agreement among the parties with respect thereto,
and cannot be changed or terminated orally. No party may assign any rights or
delegate any of its duties under this Escrow Agreement, but this Escrow
Agreement shall be binding upon and inure to the benefit of the successors to
the business and assets of Seller and Buyer and to any successor escrow agent
appointed in accordance with Section 5.7. No third party shall have any rights
hereunder.
9.5 COUNTERPARTS. This Escrow Agreement may be executed in
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
9.6 GOVERNING LAW. This Escrow Agreement and all amendments
hereof and waivers and consents hereunder shall be governed by, and all disputes
arising hereunder shall be resolved in accordance with, the internal law of the
State of New York, without regard to the conflicts of law principles thereof.
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9.7 TREATMENT OF ESCROW FUND. It is understood and agreed
among the parties hereto that Buyer will be treated as the owner of the Escrow
Fund and Escrow Agent shall report the income, if any, that is earned on, or
derived from, the Escrow Fund as income of Buyer in the taxable year or years in
which such income is properly includible.
AMERICAN CABLE TV INVESTORS 5, LTD.
By: IR-TCI Partners V, L.P.,
its general partner
By: TCI Ventures Five, Inc.,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
▇▇▇▇ MULTIMEDIA PARTNERSHIP
By: Cable TV, Inc.
its Managing General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
▇▇▇▇, SCHOLER, FIERMAN,
▇▇▇▇ & HANDLER, LLP
as Escrow Agent
By: /s/ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
----------------------
Partner
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EXHIBIT I
FORM OF JOINT NOTICE
TO ESCROW AGENT
[DATE]
To: ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP
as Escrow Agent ("Escrow Agent") under
the Escrow Agreement dated November 2, 1996,
by and among American Cable TV Investors 5, Ltd.,
▇▇▇▇ Multimedia Partnership and the Escrow Agent (the "Escrow Agreement")
Dear Sirs:
You are hereby instructed and directed to pay the Escrow Fund
(as defined in the Escrow Agreement) to the following corporation:
Payee: [NAME]
---------------------
[ADDRESS]
---------------------
Very truly yours,
AMERICAN CABLE TV INVESTORS 5, LTD.
By:
---------------------------
▇▇▇▇ MULTIMEDIA PARTNERSHIP
By: Cable TV Inc.,
its Managing General Partner
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