EXHIBIT 10.3.1
PURCHASE AND SALE AGREEMENT
BY AND AMONG
CABLE TV FUND 12-A, LTD.
AS SELLER
▇▇▇▇▇ INTERCABLE, INC.
AND
OLYMPUS COMMUNICATIONS, L.P.
AS BUYER
TABLE OF CONTENTS
1. PURCHASE AND SALE OF ASSETS........................................... 1
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1.01 TRANSFER OF ASSETS............................................... 1
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1.02 ASSUMED LIABILITIES.............................................. 2
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1.03 EXCLUDED ASSETS.................................................. 4
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2. CLOSING DATE, PURCHASE PRICE, PAYMENT & ADJUSTMENTS................... 5
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2.01 CLOSING DATE AND LOCATION........................................ 5
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2.02 PURCHASE PRICE................................................... 5
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2.03 DEPOSIT.......................................................... 5
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2.04 PAYMENT OF THE PURCHASE PRICE.................................... 5
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2.05 ALLOCATION OF PURCHASE PRICE..................................... 6
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2.06 ADJUSTMENTS TO THE PURCHASE PRICE PRORATIONS..................... 6
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2.07 NON-COMPETITION AGREEMENTS....................................... 8
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3. REPRESENTATIONS WARRANTIES AND COVENANTS OF SELLER.................... 9
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3.01 PARTNERSHIP STANDING............................................. 9
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3.02 AUTHORIZATION.................................................... 9
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3.03 FINANCIAL STATEMENTS.............................................10
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3.04 TITLE TO ASSETS..................................................10
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3.05 THE ACQUIRED SYSTEMS.............................................11
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3.06 FRANCHISES.......................................................15
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3.07 POLE ATTACHMENT AGREEMENTS.......................................16
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3.08 HEAD-END SITES AND OFFICE LOCATIONS..............................17
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3.09 OTHER CONTRACTS AND LEASES.......................................17
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3.10 AGREEMENTS WITH EMPLOYEES........................................18
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3.11 LITIGATION OR JUDGMENTS..........................................18
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3.12 TAX RETURNS AND PAYMENTS.........................................18
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3.13 COMPLIANCE WITH LAWS.............................................19
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3.14 ADVERSE DEVELOPMENTS.............................................19
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3.15 CONDITION OF ASSETS TO BE ACQUIRED AND INSURANCE.................19
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3.16 PATENTS, TRADEMARKS AND COPYRIGHTS...............................20
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3.17 LABOR RELATIONS..................................................20
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3.18 RESTORATION......................................................20
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3.19 BULK SALES COMPLIANCE............................................20
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3.20 RIGHT OF FIRST REFUSAL...........................................21
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3.21 ENVIRONMENTAL MATTERS............................................21
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3.22 EQUIVALENT BASIC SUBSCRIBERS; GROSS REVENUES.....................21
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3.23 HSR ACT FILING...................................................22
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3.24 DISCLOSURE.......................................................22
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4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER....................22
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4.01 STATUS, POWER AND AUTHORITY......................................22
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4.02 AUTHORIZATION OF AGREEMENT.......................................23
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4.03 LITIGATION.......................................................23
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4.04 HSR ACT FILING...................................................23
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4.05 CONSUMMATION OF AGREEMENT........................................23
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5. CONDUCT OF BUSINESS OF ACQUIRED SYSTEMS PENDING CLOSING AND
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ADDITIONAL COVENANTS OF SELLER.............................................24
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5.01 MAINTENANCE OF BUSINESS..........................................24
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5.02 INSURANCE........................................................25
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5.03 ORGANIZATION.....................................................25
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5.04 ACCESS FOR INVESTIGATION.........................................25
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5.05 NOTICE...........................................................25
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5.06 CONSUMMATION OF AGREEMENT........................................25
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5.07 COOPERATION WITH BUYER...........................................25
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5.08 ACCOUNTS LIST....................................................26
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5.09 FCC APPROVAL.....................................................26
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5.10 CERTIFICATES.....................................................26
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5.11 THIRD-PARTY CONSENTS.............................................26
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5.12 APPROVAL OF FRANCHISE AUTHORITIES................................26
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5.13 FCC AND OTHER REGULATORY COMPLIANCE..............................27
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5.14 APPROVAL OF LESSORS..............................................27
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5.15 EMPLOYEES........................................................27
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5.16 TRANSITIONAL BILLING SERVICES....................................27
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5.17 FINANCIAL STATEMENTS.............................................28
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6. CONDITIONS TO CLOSING - BUYER.........................................28
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6.01 CONDITIONS TO OBLIGATIONS OF BUYER...............................28
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7. CONDITIONS TO CLOSING - SELLER........................................31
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7.01 CONDITIONS TO OBLIGATIONS OF SELLER..............................31
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8. CLOSING...............................................................33
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8.01 ACTION TO BE TAKEN AT AND AFTER CLOSING..........................33
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9. REAL ESTATE PRORATION AND ADJUSTMENT ITEMS............................34
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10. DAMAGE TO PROPERTY AND RISK OF LOSS...................................35
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11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION...........36
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11.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................36
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11.02 INDEMNIFICATION.................................................36
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11.03 INDEMNIFICATION WITH RESPECT TO THIRD-PARTY CLAIMS..............37
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12. TERMINATION AND REMEDIES..............................................40
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12.01 TERMINATION BY MUTUAL AGREEMENT.................................40
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12.02 BUYER'S DEFAULT.................................................41
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12.03 SELLER'S DEFAULT................................................41
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12.04 TERMINATION BY BUYER OR SELLER..................................41
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13. NOTICE................................................................42
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14. BROKERAGE COMMISSION..................................................43
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15. LAWS GOVERNING........................................................43
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15.01 LAWS GOVERNING..................................................43
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15.02 CONSENT TO JURISDICTION.........................................43
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16. MISCELLANEOUS.........................................................43
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16.01 COUNTERPARTS; TELECOPY..........................................43
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16.02 ASSIGNMENT......................................................44
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16.03 ENTIRE AGREEMENT................................................44
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16.04 INTERPRETATION..................................................44
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16.05 EXPENSES........................................................44
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16.06 CONFIDENTIALITY.................................................44
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16.07 PUBLIC ANNOUNCEMENTS............................................45
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16.08 WAIVERS.........................................................45
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16.09 PARTIAL INVALIDITY..............................................45
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16.10 INCORPORATION BY REFERENCE......................................46
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16.11 ATTORNEYS' FEES.................................................46
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AGREEMENT
THIS AGREEMENT is made this 25th day of March, 1998, by and among
CABLE TV FUND 12-A, LTD., a Colorado limited partnership ("Seller"), OLYMPUS
COMMUNICATIONS, L.P. ("Buyer") and, solely with respect to its obligations in
SECTION 11 hereof, ▇▇▇▇▇ INTERCABLE, INC. ("▇▇▇▇▇").
RECITALS
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WHEREAS, Seller owns and operates cable television ("CATV") systems in
and around the communities of ▇▇▇ County, Florida and the City of Ft. ▇▇▇▇▇,
Florida (the "Acquired Systems"); and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, on the terms and conditions hereinafter set forth, all of the
assets of Seller used by, or useful to, Seller in connection with the operation
of the Acquired Systems, except the Excluded Assets (as defined in SECTION
1.03); and
WHEREAS, ▇▇▇▇▇ is the general partner of Seller.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein set forth and each act done pursuant hereto, the parties
hereto, intending to be legally bound, do represent, warrant, covenant and agree
as follows:
1. PURCHASE AND SALE OF ASSETS.
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1.01 Transfer of Assets. On the Closing Date, as defined in SECTION 2.01,
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Seller shall sell, convey, transfer and assign to Buyer, and Buyer shall
purchase from Seller, all of the assets of Seller of every kind and character,
real, personal, tangible, intangible or mixed, used by, or useful to, Seller in
connection with the operation of, the Acquired Systems in existence on the
Closing Date (the "Assets to be Acquired"), which shall include, but not be
limited to, the following:
(a) All items of tangible personal property owned or leased and used
by Seller in connection with the operation of the Acquired Systems, including
all equipment associated with receiving and distributing signals at the headend
sites, and all other antennas and down leads and all electronic equipment,
headend amplifiers and associated equipment, line amplifiers, aerial and
underground trunk and feeder line cable, distribution plant, programming signal
decoders for each satellite service which scrambles its signal, converters,
housedrops, including disconnected housedrops, installed subscriber devices,
utility poles, local origination equipment (wherever located), test equipment,
machinery, spare equipment and parts inventory, housedrop equipment inventory,
system design and engineering maps and drawings, supplies, vehicles and trailers
(to be transferred under fee title and not under lease), furnishings
and other personal property of any nature, and all real property interests owned
or leased and used by Seller in connection with the operation of the Acquired
Systems, including all fee interests, leasehold interests and rights-of-way in
real property, buildings and improvements and construction-in-progress, towers,
fixtures, poles, vaults and pedestals.
(b) All of the rights of Seller to, in and under any and all
subscription contracts with subscribers for CATV service relating to the
Acquired Systems; except as provided in SECTION 1.03, all instruments and
agreements for the purchase, sale or other receipt or distribution of
programming, news, data and microwave relay signals relating to the Acquired
Systems which Buyer expressly agrees to include among the Assets to be Acquired
at Closing; and all of the Franchises (as herein defined) and any franchise
applications; all of the Pole Attachment Agreements (as herein defined) and all
retransmission consent agreements relating to the Acquired Systems which Seller
does not retain as provided in SECTION 1.03(C); all variances, easements, right-
of-way agreements, licenses, registrations, copyright notices, signal
registration and other statements, construction and other permits, leases,
including leases of all head-end sites, and all other contracts or agreements
relating to the Acquired Systems.
(c) All options, claims and contract rights and all goodwill relating
to the Acquired Systems; all subscriber accounts receivable of the Acquired
Systems for all periods prior and subsequent to Closing; subscriber and customer
lists and subscription contracts of the Acquired Systems; and all books and
records which relate solely to the operation of the Acquired Systems (including,
without limitation, subscriber records, vendor records, accounting records,
accounts payable records, accounts receivable records, general ledgers and any
other documents necessary to support a regulatory filing); provided, however,
that Seller shall provide Buyer with access to such other books and records of
Seller as is reasonably necessary for Buyer's review and operation of the
Acquired Systems for a period of three years subsequent to the date of Closing.
Seller acknowledges and agrees that Buyer shall be the exclusive owner of all
subscriber and customer lists relating to the Acquired Systems subsequent to
Closing.
(d) All of the rights of Seller to, in and under that Joint Venture
Agreement dated as of April 27, 1992, between Seller and ▇▇▇▇▇▇ Communications
Incorporated, a Delaware corporation, as the same has been amended or extended
from time to time (the "Joint Venture Agreement") which Joint Venture Agreement
created the venture otherwise known as Southwest Florida Cable Advertising.
1.02 Assumed Liabilities. At the Closing on the Closing Date, Buyer shall
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assume, by instruments of assumption reasonably satisfactory to counsel for
Seller, and discharge at the Closing or as they become due and payable, the
following liabilities and obligations of Seller and no others:
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(a) All obligations of the Seller arising after the Closing Date under
the Franchises, Leases and Rights-of-Way, Pole Attachment Agreements, licenses,
and any agreements, consents, permits and other instruments relating to the
Acquired Systems and in existence on the Closing Date and entered into in the
ordinary course of business to the extent included in the Assets to be Acquired;
(b) The obligations of Seller for subscriber deposits and subscriber
advance payments, any other liabilities and obligations of Seller shown on the
1998 balance sheets of Seller as current liabilities, part of SCHEDULE 3.03
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attached hereto, to the extent that such liabilities are so shown and have not
been paid prior to the Closing Date, and other obligations and liabilities of
Seller relating to the Acquired Assets but only to the extent that there is an
adjustment to the Purchase Price in favor of Buyer with respect thereto;
(c) All unpaid liabilities and obligations of the Seller incurred in
its operations in the ordinary course of business from the date of December 31,
1997, balance sheets to the Closing Date which would appear as current
liabilities on a balance sheet prepared in accordance with generally accepted
accounting principles ("GAAP") and are identified by name and amount on an
update to SCHEDULE 3.03 to be delivered by Seller to Buyer on the Closing Date
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but only to the extent that there is an adjustment to the Purchase Price in
favor of Buyer with respect thereto; and
(d) All obligations of Seller arising after the Closing Date under the
Joint Venture Agreement, including, but not limited to, capital contributions
required to be made thereunder and any obligations or liabilities related to
Southwest Florida Cable Advertising.
The liabilities and obligations described in this SECTION 1.02, to the
extent they are to be assumed by Buyer, shall be herein referred to as the
"Assumed Liabilities." Buyer shall assume only those Assumed Liabilities
specifically stated in this SECTION 1.02 and no others. Without limiting the
foregoing and except as provided above where an adjustment to the purchase price
has been made, Buyer shall not assume or become liable for (i) any income,
profits, franchise, sales, use, occupation, property, excise, ad valorem or any
other tax to which the Assets to be Acquired are subject prior to the Closing
Date, and Buyer shall not assume or become liable for any liability or tax due
as a result of any contest, audit or other tax proceeding involving Seller or
the Assets to be Acquired for any taxable period ending on or prior to the
Closing Date, except as otherwise provided herein, (ii) any liabilities relating
to the Excluded Assets, (iii) any liability for franchise fees, pole attachment
fees, leasehold rentals, any obligation for wages, commissions, overtime,
vacation and holiday pay, sick pay, bonuses, other employee benefits or any
pension withdrawal liability, any on-going workers' compensation benefits for
any accident arising prior to the Closing Date except for accrued overtime, sick
pay, vacation pay, holiday pay or other employee benefits
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treated as a current liability under SECTION 2.06(B)(XII) hereof, or any
obligation under any employment agreement or employment-at-will relationship
other than obligations arising from and after the Closing Date, or (iv) any
liability or obligation of Seller which is not a current liability as defined
under GAAP and which is not included as part of the Working Capital Adjustment
pursuant to SECTION 2.06(A) OR (B).
1.03 Excluded Assets. Notwithstanding the foregoing, it is specifically
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agreed that the following assets are excluded from the Assets to be Acquired
(collectively, the "Excluded Assets"):
(a) all cash and cash equivalents on hand or in the bank accounts of
Seller;
(b) all satellite programming agreements and agreements which Seller
maintains with any of its respective suppliers of programming;
(c) any retransmission consents, must carry or will carry agreements
designated on SCHEDULE 1.03 which Seller maintains that relate to broadcast
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signals which are carried on other ▇▇▇▇▇ cable systems;
(d) all documents relating to the legal existence of the Seller;
(e) all insurance policies, intercompany receivables, letters of
credit and surety bonds and any cash surrender value in regard thereto;
(f) all claims, rights and interest in and to any refunds for federal,
state or local income or other taxes or fees of any nature whatsoever for
periods prior to the Closing Date, including, without limitation, fees paid to
the United States Copyright Office;
(g) any books and records that Seller is required by law to retain,
subject to the right of Buyer to have access to and to copy for a reasonable
period, not to exceed five years from the Closing Date, and other books and
records related to internal corporate matters and financial relationships with
Seller's lenders, provided that nothing herein shall limit Buyer's right to
receive at Closing copies of all documents, books and records necessary in
connection with the operation of the Business;
(h) the trademarks, trade names, copyrights, service marks and all
other information and similar intangible assets relating to Seller or the
Acquired Systems;
(i) contracts and agreements relating to Seller's subscriber billing
system and all equipment related thereto;
(j) any of the Assets to be Acquired sold or otherwise disposed of in
the ordinary course of business and not in violation of the terms and provisions
of this
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Agreement between the date of this Agreement and the Closing Date;
(k) all interest of Seller and/or ▇▇▇▇▇, if any, in Gateway/▇▇▇▇▇
Communications, Ltd.; and
(l) The rights, assets and properties described on SCHEDULE 1.03.
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2. CLOSING DATE, PURCHASE PRICE, PAYMENT & ADJUSTMENTS.
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2.01 Closing Date and Location. The consummation of the transfer and
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delivery of the Assets to be Acquired to Buyer and the receipt of the
consideration therefor by Seller shall constitute the "Closing." Unless
otherwise mutually agreed to by the parties, the Closing shall take place at
10:00 a.m., local time, at the offices of ▇▇▇▇▇ Intercable, Inc., ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The parties agree to close the
transactions contemplated by this Agreement upon a date designated in a Closing
Notice, as herein defined, which in no event shall be sooner than ten (10)
business days after either party's receipt of such Closing Notice, which
specified date and time shall constitute the "Closing Date." A party shall have
the right to deliver a Closing Notice once all of the conditions to Closing set
forth in SECTIONS 6 AND 7 have been satisfied or waived. Either Buyer or Seller
may deliver notice in writing to the other parties hereto setting a Closing Date
in accordance with this SECTION 2.01 (a "Closing Notice"). The effective date of
the sale of the Acquired Systems shall be at the close of business on the
Closing Date and all prorations and allocations provided for hereunder shall be
made as of the close of business on the Closing Date, except as otherwise agreed
in writing by the parties. Notwithstanding the foregoing, this Agreement may be
terminated pursuant to SECTION 12 hereof if the Closing has not occurred by
October 31, 1998.
2.02 Purchase Price. Buyer shall acquire and accept the Assets to be
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Acquired from Seller and shall pay to Seller the aggregate amount of One Hundred
Ten Million and No/100th Dollars ($110,000,000.00) for the Assets to be Acquired
(the "Purchase Price"), subject to adjustment pursuant to the provisions of
SECTION 2.06.
2.03 Deposit. Upon execution and delivery of this Agreement by Buyer and
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Seller, Buyer shall deliver to Colorado National Bank ("Escrow Agent") the sum
of Seven Million Five Hundred Thousand and No/100th Dollars ($7,500,000.00)(the
"Deposit"), to be held in an interest bearing account and applied pursuant to
the terms of that certain Escrow Agreement, dated the date hereof, by and among
Seller, Buyer and Escrow Agent.
2.04 Payment of the Purchase Price. On the Closing Date, Buyer will pay to
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Seller, in immediately available funds by wire transfer, an amount equal to the
Purchase Price less the amount of the Deposit which shall be delivered by Escrow
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Agent to Seller at Closing. The Purchase Price shall be further adjusted at
Closing pursuant to the provisions of SECTION 2.06. At Closing, any interest
which has accrued on the Deposit shall be delivered to Buyer by Escrow Agent.
2.05 Allocation of Purchase Price. The Purchase Price shall be allocated
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among the Assets to be Acquired based upon an appraisal to be obtained prior to
the Closing. The parties agree to engage ▇▇▇▇ ▇▇▇▇▇ Associates, Inc. ("KRA") or,
if unavailable, The Strategis Group, to prepare such appraisal, and agree to
share equally the costs of the appraisal. The parties shall cause the appraiser
to consult with Buyer and Seller during the preparation of such appraisal, and
the appraiser shall deliver the final appraisal to Buyer and Seller
simultaneously. Buyer and Seller agree to be bound by such allocation and to
file all returns and reports in respect of the transactions herein contemplated,
including all federal, state and local tax returns, on the basis of such
allocation.
2.06 Adjustments to the Purchase Price Prorations.
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(a) The Purchase Price shall be: (i) decreased by an amount equal to
the Working Capital Adjustment (as hereinafter defined) to the extent such
Working Capital Adjustment is a negative amount as of the Closing Date; or (ii)
increased by an amount equal to the Working Capital Adjustment to the extent
such Working Capital Adjustment is a positive amount as of the Closing Date. For
purposes hereof, the Working Capital Adjustment shall be the number obtained by
subtracting (x) the sum of the liabilities of Seller (as defined and determined
in accordance with GAAP) on the Closing Date which constitute Assumed
Liabilities, including, but not limited to, Seller's pro rata share of the
liabilities of the Joint Venture, from (y) the sum of the current assets of
Seller (as defined and determined in accordance with GAAP, except that inventory
shall not be included as a current asset) on the Closing Date which are included
within the Assets to be Acquired, including, but not limited to, Seller's pro
rata share of the assets of the Joint Venture, exclusive of inventory. The
Working Capital Adjustment shall be determined in accordance with GAAP.
(b) Without limiting the foregoing, in connection with the
determination of the Working Capital Adjustment:
(i) the amount of service charges of Seller that have been
prepaid by subscribers shall be a current liability;
(ii) the amount of accrued but unpaid pole rentals of Seller, if
any, shall be a current liability;
(iii) the amount of prepaid pole rentals of Seller transferred to
Buyer, if any, shall be a current asset;
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(iv) the amount of franchise fees of Seller payable by Buyer
after Closing covering periods prior to Closing shall be a current
liability, and the current portion of all other accrued but unpaid
liabilities under all agreements which constitute Assets to be Acquired
shall be current liabilities;
(v) the pro rata share accrued to the Closing Date of
rentals, utility charges, water and sewer charges, municipal garbage and
rubbish removal charges, rents and other customarily proratable items of
Seller (relating to the Assets to Be Acquired) shall be determined and
appropriately credited;
(vi) the amount of all refundable deposits from subscribers of
Seller for converters, encoders, decoders and any related equipment, and
any other prepaid item shall be a current liability;
(vii) the amount of all prepaid expenses of Seller which are
part of the Assets to be Acquired (except for prepaid expenses related to
the Excluded Assets and any insurance or bonds) shall be current assets;
(viii) the amount Buyer shall be required to pay, if any, in
order to obtain fee title to all leased vehicles of Seller which constitute
Assets to be Acquired shall be current liabilities;
(ix) the amount of Seller's pro rata share of the copyright
royalty payments to be paid after the Closing Date, as measured by the
number of days during the semi-annual accounting period during which Seller
operated the Acquired Systems divided by the total number of days in such
accounting period, shall be current liabilities;
(x) the amount of any accrued but unpaid real estate taxes of
Seller as of the Closing Date, as determined in accordance with SECTION 9
of this Agreement, shall be a current liability;
(xi) all accounts receivable of Seller and/or Southwest
Florida Cable Advertising for services rendered in connection with the
Acquired Systems prior to the Closing Date shall be current assets except
for those accounts receivable which were declared as uncollectable in
accordance with GAAP as reflected on the books and records of Seller and/or
Southwest Florida;
(xii) all accrued overtime, sick pay, vacation pay, holiday pay
or other employee benefits assumed by Buyer for employees being hired by
Buyer pursuant to SECTION 5.15 shall be current liabilities; and
(xiii) unpaid development fees, if any, that are due and payable
as of the Closing Date shall be a current liability.
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(c) At least three business days prior to the Closing Date, Seller
shall deliver to Buyer a certificate setting forth a good faith estimated
calculation of the adjustments to the Purchase Price calculated as of the
Closing Date pursuant to subparagraphs (a) and (b) above (the "Estimated
Adjustment"), together with such supporting documentation as the Buyer may
reasonably request. The Estimated Adjustment shall be used to determine the
estimated adjustment to the Purchase Price pursuant to subparagraphs (a) and (b)
above on the Closing Date.
(d) On or before 90 days after the Closing Date, Seller shall deliver
to Buyer a final calculation of the adjustments calculated as of the Closing
Date (the "Final Adjustment"), together with such supporting documentation as
Buyer may reasonably request, which shall evidence in reasonable detail the
nature and extent of each adjustment. Each party shall cooperate with the other
and provide reasonable access to the necessary personnel and records of the
other to review the Final Adjustment. Should Buyer dispute Seller's Final
Adjustment, Buyer shall promptly, but in no event later than 60 days after
receipt of the Final Adjustment (the "Grace Period"), deliver to Seller written
notice describing in reasonable detail the dispute, together with Buyers
determination as to the Final Adjustment in reasonable detail. If the dispute is
not resolved by the parties within 20 days from the date of receipt by Seller of
written notice from Buyer, the parties agree to engage promptly the Pittsburgh,
Pennsylvania office of Price Waterhouse or, if unavailable, another "big six"
accounting firm mutually acceptable to Seller and Buyer (the "Independent
Accountant") to resolve the dispute within 30 days after such engagement. The
Independent Accountant's determination shall be final and binding on the
parties. The Buyer, on the one hand, or Seller, on the other hand, shall make
appropriate payment to the other of the difference between the Final Adjustment
amount and the Estimated Adjustment amount within twenty business days following
either the resolution of the dispute by the parties or the receipt of the
Independent Accountants final determination, as the case may be; provided, that
any amount which is payable based upon the Final Adjustment delivered by Seller
hereunder shall be paid before resolution of the dispute by the parties or
receipt of the Independent Accountant's final determination. All fees and costs
of the Independent Accountant shall be borne pro rata by the Buyer and by the
Seller in proportion to the difference between the Independent Accountant's
determination of the Final Adjustment and each of the Seller's and the Buyers
determination of such adjustment divided by the sum of the two differences.
Buyer shall not dispute Sellers Final Adjustment unless the Buyer's computation
of the Final Adjustment differs from Sellers computation by more than $25,000.
If Buyer fails to notify Seller prior to the expiration of the Grace Period that
it disputes Sellers Final Adjustment, Seller's Final Adjustment shall be deemed
to be accepted by Buyer and shall be final and binding on the parties.
2.07 Non-Competition Agreement. On the Closing Date, Seller and ▇▇▇▇▇
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shall execute and deliver to Buyer a non-competition agreement, substantially in
the
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form of EXHIBIT A (the "Non-Competition Agreement").
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3. REPRESENTATIONS WARRANTIES AND COVENANTS OF SELLER
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Seller represents and warrants that the following statements and
representations are true and correct as of the date hereof in addition to which
Seller covenants with Buyer as follows:
3.01 Partnership Standing. Seller is a limited partnership duly organized,
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validly existing and in good standing under the laws of the State of Colorado.
Seller has all of the requisite partnership power and authority to own or lease
all of its assets, to own and operate the Acquired Systems owned and operated by
it, to carry on its business as now conducted, to enter into this Agreement and
to perform the terms of this Agreement. Seller is duly qualified or licensed to
do business and is in good standing in the State of Florida. ▇▇▇▇▇ is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado and has all requisite corporate power and authority to
own all its assets and to carry on its business as now conducted. ▇▇▇▇▇ is duly
qualified and licensed to do business and in good standing in the State of
Florida.
3.02 Authorization.
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(a) Except as set forth on SCHEDULE 3.02, the execution and delivery
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of this Agreement and of the Seller Transaction Documents by Seller, the
consummation of the transactions contemplated hereby and thereby and fulfillment
of and compliance with the terms and provisions hereof and thereof do not and
will not: (i) violate any provision of any judicial or administrative order,
award, judgment or decree applicable to Seller; (ii) conflict with or violate
any of the provisions of the Limited Partnership Agreement of Seller; or (iii)
conflict with, result in a breach of or constitute a default under any agreement
or instrument to which Seller is a party or by which Seller or any of its assets
is bound, subject to obtaining required consents from, or giving notices to,
third parties. SCHEDULE 3.02 sets forth the name of any governmental authority
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or other third party from whom consent must be obtained or to whom notice must
be given in order for Seller to validly and lawfully perform its obligations
hereunder and under the Seller Transaction Documents.
(b) This Agreement has been, and each and every other agreement,
instrument, certificate or other document to which Seller is a party that is to
be executed, delivered and performed by Seller pursuant hereto, including,
without limitation, the Noncompetition Agreements (collectively, "Seller
Transaction Documents"), when executed and delivered by Seller, will have been,
duly authorized, executed and delivered by Seller and constitutes, or, when
executed and delivered by Seller will constitute, legal, valid and binding
obligations of Seller, enforceable against
-9-
them in accordance with their terms.
3.03 Financial Statements. True, complete and correct copies of the
unaudited financial statements of Seller for the three years ended December 31,
1997, December 31, 1996 and December 31, 1995 and true, correct and complete
unaudited financial statements for the month of January, 1998 are attached as
SCHEDULE 3.03. Except as set forth on SCHEDULE 3.03, such financial statements
------------- -------------
accurately reflect all of the cash flows, income, expenses, liabilities,
operations, equity and assets of Seller and the Acquired Systems at the
respective dates thereof and the operations of the Acquired Systems as of such
dates. Except as set forth on SCHEDULE 3.03, all of the assets reflected in such
-------------
financial statements and all assets acquired by the Seller since the date of
such financial statements are included within the Assets to be Acquired, except
the Excluded Assets and such assets as have been consumed, replaced or sold in
the normal course of business or as have been destroyed by fire, act of God or
other occurrence beyond the control of Seller prior to the date hereof. Except
as set forth on SCHEDULE 3.03, the respective above-referenced financial
-------------
statements, including the notes thereto, if any: (a) are in accordance with the
respective books and records of Seller; (b) are true and correct in all material
respects and present fairly the financial condition of Seller as of the dates of
such financial statements and its respective results of operations and cash
flows for the respective periods then ended; and (c) except as indicated in the
notes to such financial statements, have been prepared in accordance with GAAP,
consistently applied with prior periods, and can be reconciled with the
financial records maintained, and the accounting methods applied, by Seller for
tax purposes. Also attached hereto as SCHEDULE 3.03 are (i) true and correct
-------------
copies of an accounts receivable aging for the Acquired Systems as of December
31, 1997; and (ii) a true and correct schedule of liabilities of the Seller at
December 31, 1997.
3.04 Title to Assets. Except as set forth on SCHEDULE 3.04 attached
-------------
hereto, Seller has good and marketable title to all of the Assets to be
Acquired, free and clear of all mortgages, liens, pledges, security interests,
liens, restrictions, encumbrances or other charges of any nature whatsoever (a
"Lien"), except for the following with respect to real property owned or leased
by Seller: (a) liens for taxes not yet due and payable; (b) easements,
rights-of-way, restrictive covenants and other encumbrances of record; (c)
zoning, subdivision and other similar laws and ordinances; (d) matters which
would be disclosed by an accurate survey of the property; (e) minor
imperfections of title with respect to real property under lease used in the
Acquired Systems which do not interfere with the use of or impair the value of
said property; and (f) except for any Lien not listed on SCHEDULE 3.04 with
-------------
respect to which the underlying indebtedness is paid in full and the Lien
removed from the record on or before the Closing Date (collectively, the
"Permitted Liens"). The Assets to be Acquired, whether owned or leased,
constitute all of the assets used in connection with the Acquired Systems as
presently conducted, except for the Excluded Assets.
-10-
3.05 The Acquired Systems.
--------------------
(a) To the best of Seller's Knowledge, the information as to the
mileage of trunk and feeder plant of the Acquired Systems, the channel capacity
of the Acquired Systems and the dwelling units passed by the Acquired Systems
plant set forth on SCHEDULE 3.05 attached hereto are all true and correct in all
-------------
material respects. The Acquired Systems, when loaded with the number of
television channels (picture and sound) indicated on SCHEDULE 3.05 will perform
-------------
in all material respects to the standards contained in the Rules and Regulations
of the Federal Communications Commission (the "FCC"). As of January 31, 1998,
to the best of Seller's Knowledge, there are approximately 778 miles of
energized cable plant, approximately 61,813 residential dwelling units passed by
the Acquired Systems, and approximately 11,985 of bulk units passed by the
Acquired Systems. The Cable Data Report for the Acquired Systems for the month
ended December, 1997, a copy of which is attached hereto as part of SCHEDULE
--------
3.05 is true, correct and complete in all material respects. Seller has not
----
itself, nor have any of Seller's officers, directors, partners, affiliates,
agents or employees (except to the extent that payment was made for CATV
services received by them at their own dwelling), paid any of Seller's accounts
receivable from subscribers. Except as set forth on SCHEDULE 3.05, since
-------------
January 1, 1998, Seller has not changed the channel lineup of the Acquired
Systems set forth on SCHEDULE 3.05; added additional channels to the Acquired
-------------
Systems; increased its subscriber rates and services set forth on SCHEDULE 3.05;
-------------
or conducted any extraordinary or unusual marketing programs, including any
amnesty programs.
(b)(i) Seller has complied in all material respects with all
notification and reporting provisions and all other provisions
of the FCC rules and regulations applicable to the Acquired
Systems; the Acquired Systems have been and are being operated
in substantial compliance with the Communications Act of 1934,
as amended, including the amendments effected by the Cable
Communications Policy Act of 1984 (the "1984 Act"), the Cable
Television Consumer Protection and Competition Act of 1992 (the
"1992 Act") and the Copyright Act of 1976, as amended (the
"Copyright Act"), and with all Rules and Regulations of the FCC
and the U.S. Copyright Office; provided that Seller does not
make any representations about rates charged to subscribers
except as set forth below. Without limiting the generality of
the foregoing, each of the communities served by the Acquired
Systems has been registered with the FCC; all of the semi-
annual and annual performance tests on the Acquired Systems
described in Section 76.601 of the FCC Rules and Regulations
have been made by Seller; the Acquired Systems currently meet
the technical standards set forth in the FCC Rules and
Regulations,
-11-
including the leakage limits contained in Section 76.605(a)(11);
and Seller has delivered to Buyer a copy of the most recent FCC
Forms 320 filed with the FCC (Basic Signal Leakage Performance
Report) for Seller. Copies of the most recent signal leakage
tests conducted in accordance with Section 76.611 of the FCC
Rules and copies of the most recent "proof of performance" tests
on the Acquired Systems have been delivered to Buyer by Seller
(the "Proof of Performance Tests"). Each of the signal leakage
tests and the Proof of Performance Test was conducted on the
Acquired Systems within the last six (6) months and in accordance
with the testing procedures set forth in Sections 76.601 and
76.609 of the Rules and Regulations of the FCC and evidence that
the Acquired Systems meet or exceed all of the technical
standards set forth in Section 76.605 of the Rules and
Regulations of the FCC. The Acquired Systems are being operated
in compliance with the provisions of Sections 76.610 through
76.619 of the FCC Rules and Regulations (midband and superband
signal carriage); appropriate authorization from the FCC has been
obtained for the use of all aeronautical frequencies in use in
the Acquired Systems; the Acquired Systems are presently being
operated in compliance with such authorization; Seller has
provided privacy notices to subscribers of the Acquired Systems
in accordance with the requirements of Section 63(a)(1) of the
1984 Act; and the Acquired Systems are in compliance in all
material respects with the requirements of Sections 76.92
(Network Non-Duplication Protection) and 76.151 (Syndicated
Program Exclusivity) of the FCC Rules and Regulations.
(ii) The monthly rates charged by Seller for each service provided by
Seller to subscribers of the Acquired Systems are set forth on
SCHEDULE 3.05. Such rates were calculated in good faith in
-------------
accordance with the FCC Rules and Regulations to comply with the
FCC Rules and Regulations as of the date hereof unless such rates
were not subject to regulation pursuant to a specific exemption
from rate regulation contained in the Cable Act. Except as
provided above, Seller makes no representations or warranties
that rates charged to subscribers (a) are allowable under any
rules or regulations of the FCC or any authoritative
interpretation thereof; or (b) would be allowable under any rules
or regulations of the FCC or any authoritative interpretation
thereof, promulgated after the Closing Date. Except as set forth
on SCHEDULE 3.05, Seller has not received any notice that it has
-------------
any obligation or liability to refund any portion of the revenue
received by it from the subscribers of the Acquired Systems.
-12-
(iii) There is no legal action or governmental proceeding pending or,
to Seller's Knowledge, as hereinafter defined, any investigation
or proceeding threatened (nor any basis therefor of which it is
aware) for the purpose of modifying, revoking, terminating,
suspending, canceling or reforming any of Seller's FCC licenses
or other FCC authorizations or permits, or which might have a
material adverse effect upon, or cause disruption to, the
operation of the Acquired Systems.
(iv) The Acquired Systems are currently operated and maintained in all
material respects in accordance with the National Electrical
Safety Code and the terms and conditions of all pole attachment
agreements between Seller and any public utility, municipality or
other authority which has granted such authorization.
(v) Seller holds all FCC licenses, permits and authorizations
necessary or used in connection with the operation of the
Acquired Systems. Except as set forth on SCHEDULE 3.05, each such
-------------
FCC license, permit and authorization is listed on SCHEDULE 3.05
-------------
is in full force and effect, has been validly issued or assigned
to Seller, accurately lists the current parameters of the
facility licensed and is not subject to any special conditions or
limitations. All licensed facilities owned or operated by Seller
are being operated in accordance with the operating parameters of
the relevant FCC license.
(vi) Each employment unit operated by Seller, including any
headquarters employment unit has been certified by the FCC for
compliance with the equal employment opportunity requirements
contained in the 1984 Act for each calendar year from 1991
through 1997 and any subsequent periods prior to the Closing
Date.
(vii) All broadcast television signals carried on the Acquired Systems
are being carried in accordance with the requirements of the
Communications Act of 1934, as amended, and FCC regulations
promulgated thereunder. Seller has entered into a retransmission
consent agreement with each broadcaster of television signals so
identified on SCHEDULE 3.05. Seller is carrying, pursuant to a
-------------
"must-carry" request, each broadcaster of television signals so
identified on SCHEDULE 3.05 Seller has not received any notice
-------------
that any broadcaster of television signals has complained
regarding its channel positioning.
-13-
(c) The Acquired Systems are in material compliance with respect to
all notices, filings and payments of copyright fees required by Section III of
the Copyright Act and the United States Copyright Office regulations. The
copyright fees shown to be due on all Statements of Account (as amended by any
required filings and/or any other corrective supplements) have been calculated
in accordance with the regulations of the United States Copyright Office issued
pursuant to the Copyright Act. Except as set forth on SCHEDULE 3.05, Seller has
not received any notices from the United States Copyright Office, or any other
person or entity either questioning any copyright filing or payment, or the
failure to make any copyright filing or payment, or threatening to bring suit
for copyright infringement which have not been settled and resolved.
(d) The Acquired Systems are being operated in compliance with the
Rules and Regulations of the Federal Aviation Administration ("FAA"). SCHEDULE
--------
3.05 lists all of the existing towers of the Acquired Systems. Without limiting
----
the generality of the foregoing, the existing towers of the Acquired Systems are
obstruction marked and lighted in accordance with the Rules and Regulations of
the FAA and FCC or are exempt from such requirements. All required
authorizations, including, but not limited to, Hazard to Air Navigation
determinations, for such towers have been issued by and pursuant to the Rules
and Regulations of the FAA. Except as set forth on SCHEDULE 3.05, Seller does
-------------
not lease space on such towers to any third party. Copies of all FAA documents
and correspondence relating to such towers have been delivered to Buyer.
(e) Except as set forth in SCHEDULE 3.05, and except for customer
-------------
claims (other than those on Form 329, which are listed on SCHEDULE 3.05 arising
-------------
in the ordinary course of business, none of which, individually or in the
aggregate, are material), there are no claims pending or, to the best of
Seller's Knowledge, threatened against Seller with respect to the operation of
the Acquired Systems.
(f) Except as set forth on SCHEDULE 3.05, there are no unfulfilled
-------------
promises or commitments for capital improvements, whether or not legally
binding, which Seller has made to third parties in connection with the Acquired
Systems. Seller has described in SCHEDULE 3.05 all construction and improvement
-------------
programs in progress. Except as set forth on SCHEDULE 3.05, there are no
-------------
obligations or liabilities to subscribers or to other users of Seller's CATV
services which are material to the business of the Acquired Systems, except: (i)
with respect to deposits made by such subscribers or such other users; and (ii)
the obligation to supply services to subscribers in the ordinary course of
business pursuant to the Franchises. No default exists in respect of any
provisions of any Franchise governing relations with subscribers or other users
of Seller's CATV services, and no notice of any such default has been received
by Seller. Except as set forth on SCHEDULE 3.05, to Seller's Knowledge, no
-------------
complaints have been made by subscribers or other users of Seller's CATV
services that, individually or in the aggregate, could have a material adverse
effect upon the
-14-
Assets to be Acquired or the financial condition or operation of the Acquired
Systems.
(g) The Acquired Systems are in compliance in all material respects
with engineering standards generally accepted in the CATV industry.
(h) Except as set forth on SCHEDULE 3.05, there is no free service
-------------
liability to subscribers existing with respect to the Acquired Systems. Except
with respect to deposits for converters, encoders, decoders and related
equipment, and any other prepaid income item which Buyer is to receive a credit
for pursuant to SECTION 2.06 and except as set forth on SCHEDULE 3.05, to
-------------
Seller's Knowledge, Seller has no obligation or liability for the refund of
monies to its subscribers.
(i) Except as set forth on SCHEDULE 3.05, with respect to the Acquired
-------------
Systems, Seller has not made a commitment to any franchising authority to
maintain a local office in any location. Further, Seller has not made any
commitment to any of the municipalities served by the Acquired Systems to pay
franchise fees to any such municipality in excess of the amounts set forth on
SCHEDULE 3.05.
-------------
(j) Except as described on SCHEDULE 3.04, and other than satellite
-------------
master antenna television services, multichannel multipoint distribution
services and direct broadcast satellite services, as of the date of this
Agreement, (i) the System is the only multiple channel operator presently
serving the communities which it serves, (ii) to Seller's Knowledge, no other
multiple channel operator is presently contemplated by any Person in the
communities now served by the System, and (iii) no franchises or other
authorizations other than the Franchises have been issued with respect to the
communities served by the System.
3.06 Franchises.
----------
(a) Listed and identified on SCHEDULE 3.06 attached hereto are all of
-------------
the existing governmental authorizations for maintenance and operation of the
Acquired Systems (individually, a "Franchise" and collectively, the
"Franchises") presently held by Seller, and the political entity or authority
which has granted each Franchise. All governmental authorizations necessary or
required for the construction, maintenance and operation of the Acquired Systems
have been obtained by Seller, as the case may be. To the best of Seller's
Knowledge, all such agreements, statutes, ordinances, resolutions, licenses or
permits granting the Franchises are validly existing, legally enforceable
obligations of Seller and are validly existing, legally enforceable obligations
of the other parties thereto, in accordance with their terms, and that the same
have been granted and renewed in accordance with all applicable federal, state
and local laws, and Seller is validly and lawfully operating the Acquired
Systems under the Franchises and applicable law. Further, Seller has obtained
in accordance with all federal, state and local laws all Franchises required for
the lawful operation of the Acquired Systems. Except as set forth on SCHEDULE
--------
3.06, none of the political entities
----
-15-
or authorities which have granted a Franchise have been, or have applied to be,
certified to regulate the CATV rates charged by Seller pursuant to the 1992 Act
and the FCC Rules and Regulations.
Each of the Franchises expires on the dates set forth on SCHEDULE 3.06
-------------
attached hereto. Except as set forth on SCHEDULE 3.06, Seller has duly complied
-------------
in all material respects with all of the terms and conditions of the Franchises
and has not done or performed any act which would invalidate its rights under,
or give to the granting authority the right to terminate, the Franchises. There
is no pending assertion or claim that operations pursuant to any Franchise have
been improperly conducted or maintained, or, to Seller's Knowledge, any facts or
circumstances that might give rise to any such assertion or claim. Except as
set forth on SCHEDULE 3.06, all construction of distribution plant required by
-------------
any of the Franchises has been completed in accordance with the terms of such
Franchises.
(b) True, complete and correct copies of the Franchises, all
amendments, assignments and consents thereto and the latest rate change
approval, if any, to the date hereof have been delivered by Seller to Buyer.
3.07 Pole Attachment Agreements.
--------------------------
(a) Listed on SCHEDULE 3.07 are all of the pole attachment
-------------
authorizations and agreements (individually, a "Pole Attachment Agreement," and
collectively, the "Pole Attachment Agreements") presently held by Seller and the
public utility, municipality or other authority which has granted such
authorizations. True, complete and correct copies of each of the agreements,
ordinances, resolutions, licenses or permits granting the Pole Attachment
Agreements and all amendments, assignments and consents thereto have been
furnished by Seller to Buyer. Seller has duly complied in all material respects
with all of the terms and conditions of the Pole Attachment Agreements to which
it is a party and has not done or performed any act which would invalidate its
rights under the Pole Attachment Agreements. There is no pending assertion or
claim against Seller that operations pursuant to any Pole Attachment Agreement
have been improperly conducted or maintained or, to Seller's Knowledge, no facts
or circumstances that might give rise to any such assertion or claim. SCHEDULE
--------
3.07 lists and describes the results of any audits or investigations conducted
----
by any of the parties to the Pole Attachment Agreements during the previous
three (3) years.
(b) All poles shown on SCHEDULE 3.07 are contacted under valid permit
-------------
under and in accordance with the terms of the Pole Attachment Agreements. All
fees due and payable under the Pole Attachment Agreements have been paid. A
true, correct and complete copy of the most recent invoice from each utility or
other entity with whom Seller has entered into a Pole Attachment Agreement has
been delivered by Seller to Buyer.
-16-
(c) There is no claim or action pending or, to Seller's Knowledge,
threatened, against Seller by any public utility, municipality or other
authority which has granted a Pole Attachment Agreement, or by any third party.
All rearrangement work on the poles and/or all pole changeout work requested of
Seller prior to the date hereof by any grantor of a Pole Attachment Agreement or
required under any Pole Attachment Agreement has been completed or, if in
progress, will be completed by the Closing Date, or if not completed, an
adequate reserve has been accrued therefor by the Seller.
(d) The location of each utility pole owned by Seller is set forth on
SCHEDULE 3.07.
-------------
3.08 Head-end Sites and Office Locations.
-----------------------------------
(a) All of the real property owned by Seller is described on SCHEDULE
--------
3.08 attached hereto. Except as otherwise described on SCHEDULE 3.01, Seller
---- -------------
has fee simple title to all such real property, free and clear of all mortgages,
claims, security interests, liens or encumbrances of any kind, except for the
Permitted Liens and minor exceptions to title which do not affect the use of the
property in the Acquired Systems. A copy of the deed pursuant to which Seller
acquired such real property and any title insurance policies related thereto, if
any, have been furnished by Seller to Buyer.
(b) All leases and rights-of-way used in the Acquired Systems are
listed on SCHEDULE 3.08 (the "Leases and Rights-of-Way"). Except as set forth on
-------------
SCHEDULE 3.08, Seller has a valid and subsisting lease for and leasehold
-------------
interest in and right-of-way to all of the real property not owned by Seller and
used by Seller as head-end sites or office locations for the Acquired Systems.
Except as set forth on SCHEDULE 3.08, as allowed by federal law, or where the
-----------
failure to do so would not have a material adverse effect on the Assets to be
Acquired taken as a whole, Seller has a valid and subsisting right-of-way
agreement, whether public or private, for all of the real property crossed by
its CATV plant. Except as disclosed on SCHEDULE 3.08 attached hereto, all such
-------------
leases and rights-of-way are fully assignable by Seller. Except as disclosed on
SCHEDULE 3.08, all written leases or memoranda of leases with respect to headend
-------------
or office sites are in recordable form. True, correct and complete copies of
each of such leases, written rights-of-way, all amendments, assignments and
consents thereto have been furnished by Seller to Buyer, and each of such leases
and rights-of-way is described on SCHEDULE 3.08 attached hereto. Seller has duly
-------------
complied in all material respects with all of the terms and conditions of such
leases and rights-of-way and has not done or performed or failed to perform any
act which would allow for the termination of its rights under such leases or
rights-of-way.
3.09 Other Contracts and Leases. SCHEDULE 3.09 lists each existing
-------------------------- -------------
contract, agreement, lease, permit, consent, license, microwave agreement or
commitment, including pole line agreements, whether written or oral, affecting
or relating to the
-17-
Acquired Systems (the "Agreements") other than the Excluded Assets; the
Franchises; the Pole Attachment Agreements; the Leases and Rights-of-Way;
subscription agreements with individual residential subscribers for the cable
services provided in the ordinary course of business, agreements which may be
canceled by Seller without penalty on not more than 30 days notice;
miscellaneous service contracts terminable at will without penalty; other
contracts or agreements relating to the Acquired Systems not involving either
aggregate liabilities under all such agreements exceeding $25,000 or any
material nonmonetary obligation; and programming agreements. Each of the
Agreements is in full force and effect in accordance with its terms. Without
limiting the foregoing, the Acquired Systems, and all equipment and real
property used in connection therewith, are now being utilized, operated and
maintained in conformity in all material respects with the provisions of the
Agreements. Seller has not in any manner failed to so utilize, operate and
maintain the Acquired Systems in a manner which could now or hereafter result in
cancellation or termination of, or liability for damages under, the Agreements,
nor is Seller in default in any material respect in the performance of one or
more of its obligations pursuant to the Agreements.
3.10 Agreements with Employees.
-------------------------
(a) Except as set forth on SCHEDULE 3. 10, Seller is not a party to
--------------
any employment agreement, written or oral, which cannot be terminated at will by
Seller, and, except as set forth on SCHEDULE 3.10, Seller does not currently
-------------
have any pension or profit sharing or other employee benefit plan for its
employees. True, correct and complete copies of all agreements and descriptions
of the plans listed on SCHEDULE 3. 10 hereto have heretofore been delivered by
--------------
Seller to Buyer.
(b) The titles and rates of compensation of all of the employees of Seller
are listed on SCHEDULE 3.10.
-------------
(c) Seller's policy with respect to the amount of vacation time earned by
employees is set forth on SCHEDULE 3.10.
-------------
3.11 Litigation or Judgments. Except as set forth on SCHEDULE 3.11 to
-------------
this Agreement, there is no litigation, at law or in equity, or any proceedings
before any commission, agency or other governmental authority, pending or, to
Seller's Knowledge, threatened against Seller or the Acquired Systems, and, to
Seller's Knowledge, no facts or circumstances exist which could reasonably be
expected to give rise to any such litigation or proceedings.
3.12 Tax Returns and Payments. With respect to the Acquired Systems,
Seller has timely and properly filed or caused to be filed all tax returns which
it is or has been required to file on or prior to the date hereof by any
jurisdiction to which it is or has been subject, all such tax returns being
true, correct and complete in all material respects. All income, unemployment,
social security, franchise, property and other
-18-
taxes levied, assessed or imposed upon Seller or the Acquired Systems by the
United States, or any state, or governmental sub-division of either, to the
extent due and payable and not contested by Seller, have been timely and
properly paid to date, and no liability exists for deficiencies. Except as set
forth on SCHEDULE 3.12 attached hereto, there are no tax audits pending nor any
-------------
outstanding agreements or waivers extending the statutory period of limitations
applicable to any federal, state or local income tax return of Seller for any
period. Except as set forth on SCHEDULE 3.12, to Sellers Knowledge, no tax
-------------
deficiencies have been determined, nor proposed tax assessments charged, against
Seller (nor is there any reasonable basis therefor). Seller has made or caused
to be made all withholdings of taxes required to be made, and such withholdings
have either been paid to the appropriate governmental agency or set aside in
appropriate accounts for such purpose. True, correct and complete copies of the
federal, state and local tax returns of Seller for the Acquired Systems for all
income, gross receipts, franchise and property taxes for the last three (3)
fiscal years have been delivered to Buyer.
3.13 Compliance with Laws. Seller is in compliance in all material
--------------------
respects with all applicable foreign, federal, state and local laws, rules,
regulations, orders, writs, injunctions, ordinances or decrees of any governing
authority, federal, state or local court, or of any municipal or governmental
department, commission, board, bureau, agency or municipality having
jurisdiction over it or the Acquired Systems.
3.14 Adverse Developments. Since October 1, 1997, (i) no material adverse
--------------------
change has occurred with respect to the Acquired Systems or their financial
conditions or operations, taken as a whole, other than changes arising from (a)
matters of a general economic nature or any change affecting the United States
cable industry as a whole; (b) matters caused by or arising from legislation,
rulemaking or regulation affecting the cable industry in general; or (c)
competition caused by or arising from other multiple channel distribution
services; and (ii) there has been no material damage, destruction, loss or other
casualty to the Assets to be Acquired, taken as a whole, that has not been
repaired or replaced.
3.15 Condition of Assets to be Acquired and Insurance. The Acquired
------------------------------------------------
Systems, both as integrated systems and in their respective component parts, are
operated and maintained in a proper manner; to Seller's Knowledge, are free from
any material (either individually or in the aggregate) defects of workmanship or
material in light of its age and the use to which it has been put; and meet in
all material respects the requirements of: (i) the Franchises, (ii) the Pole
Attachment Agreements, (iii) the Agreements, and (iv) all applicable technical
standards, rules, regulations and orders of federal, state and local governing
or regulatory authorities. The Assets to be Acquired are all in good operating
condition, reasonable wear and tear excepted. None of the cable used in the
Acquired Systems requires any rearrangement or rehabilitation other than routine
system maintenance. The Assets to be Acquired include such spare parts as are
necessary in order to permit the operation of the Acquired Systems without
material
-19-
interruption for a thirty-day period. Except as set forth on SCHEDULE 3.15, the
-------------
Assets to be Acquired are and have been insured, and all such insurance policies
are in full force and effect, are on an "occurrence" basis, and are in terms and
scope and amounts which are customary in accordance with industry standards for
CATV systems of comparable size. Seller has not received any notice of
cancellation with respect to such policies. During the past three (3) years, no
application by Seller for insurance with respect to the Assets to be Acquired
has been denied for any reason. Seller has provided Buyer with copies of the
loss claims history of Seller for the past three (3) years.
3.16 Patents, Trademarks and Copyrights. The operation of the Acquired
----------------------------------
Systems by Seller does not infringe upon, or otherwise violate, the rights of
any person or entity in any copyright, trade name, trademark right, service
▇▇▇▇, service name, patent, patent right, license, trade secret or franchise,
and there is not pending or, to Seller's Knowledge, threatened any action with
respect to any such infringement or breach.
3.17 Labor Relations. Except as set forth on SCHEDULE 3. 11, the employees
--------------- --------------
of Seller are not parties to any collective bargaining agreement. This Agreement
and the transactions contemplated hereunder shall not obligate Buyer to
recognize any union or to assume any collective bargaining agreement that
applies to Seller's employees. Except as set forth on SCHEDULE 3.17, There
-------------
currently are not, nor in the past five years have there been, any grievances,
unfair labor practice claims, disputes or controversies with any union, or
threats of strikes, work stoppages or any pending demands for collective
bargaining by any union. Seller has received no notice of any grievances, unfair
labor practice claims, disputes or controversies with any other organization of
Seller's employees, or threats of strikes, work stoppages or any pending demands
for collective bargaining by any such organization.
3.18 Restoration. Other than in the ordinary course of business, no
-----------
material restoration, repaving, repair or other work is required to be made by
Seller to any street, sidewalk or abutting or adjacent area pursuant to the
requirements of any ordinance, code, permit, easement or contract relating to
the installation, construction or operation of the Acquired Systems. Except with
respect to the installation of cable lines and facilities in the ordinary course
of business, no property of any person or entity has been damaged, destroyed,
disturbed or removed in the process of construction-or maintenance of the
Acquired Systems which has not been, or will not be, prior to Closing, repaired,
restored or replaced, or, if not repaired, restored or replaced, for which an
adequate reserve has not been accrued by the Seller prior to Closing.
3.19 Bulk Sales Compliance. Seller shall comply, in connection with the
---------------------
sale and transfer of the Assets to be Acquired pursuant to this Agreement, with
any applicable law pertaining to bulk sales or transfers.
-20-
3.20 Right of First Refusal. Except as set forth on SCHEDULE 3.20, no
---------------------- -------------
person or entity has any option, warrant or right of first refusal to purchase
either the Acquired Systems or any of the Assets to be Acquired.
3.21 Environmental Matters. Except as set forth on SCHEDULE 3.21, Seller
--------------------- -------------
has complied and is in compliance in all material respects with all applicable
federal, state and local laws, regulations and ordinances relating to protection
of human health and the environment ("Environmental Laws"), including those
related to hazardous substances, wastes, discharges, emissions, disposals,
dumping, burial or other forms of disposal, as defined by the Environmental
Laws. Except as set forth on SCHEDULE 3.21, there are no current or pending
-------------
claims, administrative proceedings, judgments, declarations or orders relating
to violations of Environmental Laws or to the presence of Hazardous Substances
(as defined by the Environmental Laws) on, in or under the owned or leased real
property of Seller. No hazardous waste has been dumped, buried, discharged or
disposed of on, in or under the owned or leased real property of Seller by
Seller in violation of any Environmental Laws or, to the best Knowledge of
Seller, by any other person or entity. Except as set forth on SCHEDULE 3.21,
-------------
neither Seller nor, to the Knowledge of Seller, any third party has installed or
placed on, under or in the owned real property or the leased real property of
Seller: (i) any treatment, storage, recycling or disposal facility for any
hazardous waste as that term is defined under 40 CFR Part 261 or any state
equivalent; (ii) any underground storage tanks, in use or abandoned; or (iii)
any polychlorinated biphenyls (PCBs) in any hydraulic oils, transformers,
capacitors or other electrical equipment.
3.22 Equivalent Basic Subscribers; Gross Revenues. At the conclusion of
--------------------------------------------
the 1997 calendar year, the Acquired Systems had 46,450 "Equivalent Basic
Subscribers." For the year 1997, the Acquired Systems had approximately
$19,234,640.00 in gross revenues. For the purposes of this Agreement, the term
"Equivalent Basic Subscriber" shall mean the number obtained by adding (i) the
number of first outlet residential subscribers for basic CATV service of the
Acquired Systems who have made at least one monthly payment for service at the
normal monthly rate for basic service and whose accounts are not more than sixty
(60) days past due from the first day of the month for which service was
rendered (ii) the result obtained by dividing the aggregate of the gross monthly
billing for limited basic, tier 1 and tier 2 services (excluding installation,
connection, relocation and disconnection fees and miscellaneous rental charges
for equipment such as remote control devices and converters) from business and
commercial accounts, residential bulk units, hotels/motels and other commercial
establishments who have made at least one monthly payment for service at the
normal monthly rate and whose accounts are not more than sixty (60) days past
due from the first day of the month for which such service was rendered, by
$28.60, which represents the average monthly service charge in effect for a
first outlet residential connection for expanded basic CATV service.
-21-
3.23 HSR Act Filing. Seller shall cooperate reasonably with Buyer
--------------
and, to the extent required, shall file or cause to be filed with the Federal
Trade Commission ("FTC") and the Department of Justice ("DOJ") within thirty
(30) days after the date hereof a notification and report on behalf of Seller,
completed in accordance with applicable law and regulations, with respect to the
transactions contemplated hereby, pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the rules promulgated
thereunder. Seller agrees to use commercially reasonable efforts to comply with
any additional requests for information, whether formal or informal, under the
HSR Act; provided, however, that, notwithstanding such efforts, if the FTC or
the DOJ has not certified as complete each party's compliance with a formal
second request under the HSR Act by the Termination Date, then Seller may
terminate this Agreement without further obligation hereunder.
3.24 Disclosure. No representation or warranty by Seller in this
----------
Agreement or any Schedule or Exhibit, or any statement, list or certificate
furnished or to be furnished by Seller pursuant hereto, or in connection with
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading or necessary in order to provide a prospective purchaser
of the Acquired Systems with proper material information as to the Assets to be
Acquired and the business of Seller.
3.25 Media One Facilities Agreement. Seller has been negotiating the
------------------------------
terms of a Facilities Agreement with Colony Communications, Inc., d/b/a MediaOne
(the "Facilities Agreement"). A copy of the latest draft of the Facilities
Agreement is attached hereto as SCHEDULE 3.25. Seller represents and warrants
-------------
that the Facilities Agreement has not been executed by Seller.
For the purposes of the representations and warranties made by Buyer
and Seller hereunder, the term "Knowledge," with respect to any matter, shall
mean the actual awareness or knowledge of such person (if a natural person) or
any of the officers or general manager of the Acquired Systems (if not a natural
person), as opposed to implied or institutional knowledge, but without any duty
of investigation or inquiry.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER. Buyer represents and
--------------------------------------------------
warrants that the following representations and warranties are true and correct
as of the date hereof and will also be true and correct on the Closing Date, in
addition to which it covenants with Seller that:
4.01 Status, Power and Authority. Buyer is a corporation duly organized,
---------------------------
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power and authority to own and lease its properties and to
conduct its
-22-
business as currently conducted and to acquire the Assets to be Acquired.
4.02 Authorization of Agreement.
--------------------------
(a) Buyer has taken all necessary action to authorize and approve this
Agreement, the consummation of the transactions contemplated hereby and the
performance by Buyer of all of the terms and conditions hereof on the part of
Buyer to be performed. The execution and delivery by Buyer of this Agreement and
each and every other agreement, instrument, certificate or document to which
Buyer is a party that is to be executed, delivered and performed by Buyer
pursuant thereto (collectively, "Buyer Transaction Documents"), and the
consummation of the transactions contemplated hereby and thereby, do not and
will not: (i) violate any provisions of any judicial or administrative order,
award, judgment or decree applicable to Buyer, or (ii) conflict with any of the
provisions of the charter documents of Buyer, or (iii) conflict with, result in
a breach of or constitute a default under any material agreement or instrument
to which Buyer is a party or by which it is bound.
(b) This Agreement and the Buyer Transaction Documents, when executed
and delivered by Buyer, will have been duly authorized, executed and delivered
by Buyer, and this Agreement constitutes, and the Buyer Transaction Documents,
when executed and delivered by Buyer, will constitute, legal, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms.
4.03 Litigation. There is no litigation, at law or in equity, or any
----------
proceedings before any commission or other governmental authority, pending or,
to the knowledge of Buyer, after due inquiry, threatened against Buyer which
could reasonably be expected to impair the ability of Buyer to consummate the
transactions contemplated by this Agreement.
4.04 HSR Act Filing. Buyer shall, to the extent required, file or cause to
--------------
be filed with the FTC and the DOJ within thirty (30) days after the date hereof
a notification and report form on behalf of Buyer, completed in accordance with
applicable law and regulations, with respect to the transactions contemplated
hereby, pursuant to the HSR Act and the rules promulgated thereunder. Buyer
agrees to use commercially reasonable efforts to comply with any additional
requests for information, whether formal or informal, under the HSR Act;
provided, however, that, notwithstanding such efforts, if the FTC or the DOJ has
not certified as complete each party's compliance with a formal second request
under the HSR Act by the Termination Date, then Buyer may terminate this
Agreement without further obligation hereunder.
4.05 Consummation of Agreement. Buyer shall use commercially reasonable
-------------------------
efforts to perform and fulfill all obligations and conditions on its part to be
performed and fulfilled under this Agreement, to the end that the transactions
contemplated by this
-23-
Agreement shall be fully carried out.
5. CONDUCT OF BUSINESS OF ACQUIRED SYSTEMS PENDING CLOSING AND ADDITIONAL
----------------------------------------------------------------------
COVENANTS OF SELLER. Seller covenants and agrees with Buyer that from the date
-------------------
hereof to and including the Closing Date:
5.01 Maintenance of Business. Seller shall continue to operate the Acquired
-----------------------
Systems, shall maintain the Assets to be Acquired (including the maintaining of
a level of inventory of spare equipment and parts in a manner consistent with
past practices) and shall keep all of its business books, records and files, all
in the ordinary course of business in accordance with past practices
consistently applied and in accordance with the capital budget and operating
budget delivered by Seller to Buyer. Seller shall not sell, transfer or assign
any assets except in the ordinary course of business and for fair market value.
Seller shall not permit the creation of any lien, charge or encumbrance on any
of its assets that would survive the Closing other than the lien of current
taxes not yet due and payable. Seller shall not initiate or otherwise cause any
other person to initiate any action to amend or cancel, nor permit any other
person to take any action to amend or cancel, any of the Franchises, the Pole
Attachment Agreements or the Agreements without the prior written consent of
Buyer. Promptly after becoming aware thereof, Seller shall notify Buyer of any
action taken or proposed to be taken by a person other than Seller to amend or
cancel any of the Franchises, the Pole Attachment Agreements or the Agreements.
Seller shall not enter into any contract or commitment nor incur any
indebtedness or other liability or obligation of any kind relating to the
Acquired Systems which is not in the ordinary course of business in accordance
with past practices without the prior written consent of Buyer. Seller shall not
permit any of its partners, officers, directors, shareholders, agents, employees
or affiliates to pay any of Seller's accounts receivable from subscribers
outstanding on the date hereof. Notwithstanding the foregoing, such persons
shall be permitted to make payment for CATV services received by them at their
own dwellings. Without the prior written consent of Buyer, which consent shall
not be unreasonably withheld, delayed or conditioned, Seller shall not, except
as otherwise required by law: change the channel lineup of the Acquired Systems;
add additional channels to the Acquired Systems, except for channels added at
the request of a franchising authority as part of the process of renewing a
Franchise (in which event, Seller shall give Buyer written notice of the
addition of such channels); change its subscriber rates other than in the
ordinary course of business (provided, however, that if Seller is required to
change its subscriber rates pursuant to a regulatory order, Seller may do so
without the consent of Buyer upon 30 days' prior written notice); or conduct any
extraordinary or unusual marketing or collection programs, including, without
limitation, any amnesty programs, or any extraordinary collection practices
which might adversely affect customer relationships. Seller shall increase its
subscriber rates in the ordinary course of business consistent with past
practice and with the prior written approval of Buyer, not to be unreasonably
withheld. Seller shall comply with all laws, rules and regulations of federal,
state, city and local governments. Seller shall not violate the terms of any
lease or contract
-24-
connected with the operation of the Acquired Systems or with the utilization of
the Assets to be Acquired. Seller shall not grant any increase in the rate of
wages, salaries, bonuses or other remuneration of any employee, except in
accordance with past practices, and provided that Seller may incent employees to
remain employees of the Acquired Systems through the Closing Date without
violating this covenant.
5.02 Insurance. Seller shall use commercially reasonable efforts to
---------
maintain in full force and effect until Closing all existing insurance policies
to cover and protect the Assets to be Acquired against damage or destruction.
5.03 Organization. Seller shall use commercially reasonable efforts
------------
consistent with sound business judgment to preserve intact its present business
and organization, to retain the services of its present employees, to preserve
its relationships with subscribers, suppliers and others having business
relationships with it and to maintain the goodwill enjoyed within the
municipalities serviced by the Acquired Systems.
5.04 Access for Investigation. Seller shall afford Buyer and its
------------------------
representatives access during normal business hours to the properties, plant and
equipment and to the books and records of Seller in order that Buyer shall have
full opportunity to investigate the business affairs of Seller.
5.05 Notice.
------
(a) Promptly upon Seller becoming aware of the occurrence of, or the
impending or threatened occurrence of, any event which would cause any of the
representations or warranties of Seller contained herein, or in any Schedule or
Exhibit, to be inaccurate in any material respect, Seller shall give detailed
written notice thereof to Buyer and shall use commercially reasonable efforts to
prevent or promptly remedy the same.
(b) Seller shall refrain from knowingly taking, and shall use
commercially reasonable efforts to refrain from knowingly suffering or
permitting, any action which would render untrue any of the representations or
warranties of Seller contained herein, and Seller shall not knowingly omit to
take any action reasonably required to maintain the goodwill enjoyed within the
municipalities serviced by the Acquired Systems in the ordinary course of
business, consistent with past practice.
5.06 Consummation of Agreement. Seller shall use commercially reasonable
-------------------------
efforts to perform and fulfill all obligations and conditions on its part to be
performed and fulfilled under this Agreement, to the end that the transactions
contemplated by this Agreement shall be fully carried out.
5.07 Cooperation with Buyer. Seller shall cooperate, to the extent not
----------------------
inconsistent with its obligations hereunder, as Buyer may reasonably request, in
apprising the municipalities serviced by the Acquired Systems and the utility
companies
-25-
which have issued the Pole Attachment Agreements of the sale of the Acquired
Systems to Buyer in such manner as to preserve the goodwill of such
municipalities and utility companies.
5.08 Accounts List. Prior to the Closing Date, Seller shall deliver to
-------------
Buyer a list of all persons to whom Seller makes recurring periodic payments in
connection with the business and operations of the Acquired Systems (the
"Accounts List"), except for persons to whom Seller makes recurring periodic
payments in connection with any Excluded Asset. Each individual entry set forth
on the Accounts List shall list the name and address of each account creditor
and the approximate average amount and approximate frequency of the recurring
periodic payments paid to each such account creditor. Seller shall use its
reasonable efforts to ensure the accuracy and completeness of the Accounts List.
5.09 FCC Approval. Seller shall make application to the FCC for the consent
------------
and approval of the FCC to the transfer of the ownership and operation of any
FCC licenses of the Acquired Systems from Seller to Buyer, to the extent such
consent and approval is required to be obtained.
5.10 Certificates. On or before the Closing Date, ▇▇▇▇▇ shall deliver to
------------
Buyer: Certificates of Good Standing issued by the Secretary of State of
Colorado as to ▇▇▇▇▇'▇ good standing in such state and a Certificate of Good
Standing from the State of Florida.
5.11 Third-Party Consents. Except for fees relating to filings required by
--------------------
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act, the costs of which shall be
shared equally by Buyer and Seller, Seller shall, at its sole cost and expense,
use commercially reasonable efforts to obtain prior to Closing all consents and
approvals from third parties which are identified on SCHEDULE 3.02 (including a
-------------
provision permitting the subsequent assignment by Buyer to any affiliate of
Buyer); provided, however, that the costs and expenses associated with the
performance after the Closing Date of obligations which are required by a third
party as a condition of granting its consent or approval and which obligations
are accepted by the Buyer shall be borne solely by the Buyer. All such consents
shall be in writing and in form and substance reasonably satisfactory to Buyer.
In the event that Buyer's cooperation is required to obtain such consents, Buyer
shall reasonably cooperate with Seller and shall be responsible for its own out-
of-pocket costs in connection therewith. If a third party refuses to include a
provision allowing the subsequent assignment by' Buyer to its affiliates, Seller
will notify Buyer and Buyer may discuss such refusal with the third party.
5.12 Approval of Franchise Authorities. Seller shall use its commercially
---------------------------------
reasonable efforts to obtain the consent of the applicable franchisors to the
transfer to Buyer (and subsequently by Buyer to its affiliates) of all of the
Franchises. Seller shall use commercially reasonable efforts to obtain a
certificate from each franchisor
-26-
certifying that: (a) the Franchise was properly granted; (b) the Franchise was
properly extended (if applicable); (c) the Franchise is validly existing and in
full force and effect; (d) there exists no fact or circumstance which, with the
passage of time or the giving of notice or both, would constitute a default
under the Franchise, or permit the franchisor to cancel or terminate the rights
thereunder, except upon the expiration of the full term thereof; (e) the
Franchise may be collaterally assigned to Buyer's lenders. Buyer shall
reasonably cooperate with Seller in Seller's efforts to secure such approvals
and consents, including attending such meetings and providing such information
with respect to Buyer as the franchisors may reasonably request. Buyer shall
post any bond or other security reasonably required pursuant to the terms of
such approvals and consents.
5.13 FCC and Other Regulatory Compliance. Seller shall consult with Buyer
-----------------------------------
prior to implementing any subscriber rate changes relating to the implementation
of any FCC regulations, except as otherwise provided in SECTION 5.01 hereof.
5.14 Approval of Lessors. Seller shall use its commercially reasonable
-------------------
efforts to obtain the consent of each lessor of real property relating to the
Acquired Systems listed on SCHEDULE 3.02 as being required to consent to the
assignment to Buyer of any lease. Seller shall use its commercially reasonable
efforts to obtain a certificate from the lessor under each lease for real
property relating to the Acquired Systems to which Seller is a party and which
is listed on SCHEDULE 3.01 certifying that: (a) the lease is validly existing
and in full force and effect; and (b) all payments under the lease due and
payable prior to the date of such certificate have been paid in full.
5.15 Employees. Seller shall terminate all of its employees immediately
---------
prior to Closing. Seller shall remain solely responsible for any termination
benefits to which any of the employees is entitled by reason of such termination
whether or not such person is subsequently employed by Buyer. Buyer shall have
no obligation to offer employment to any of the employees of Seller. Buyer shall
notify Seller at least 60 days after the date of this Agreement, or 30 days
prior to Closing, whichever is earlier, of those employees to whom Buyer intends
to offer employment. Buyer agrees to offer such employees credit for accrued
overtime, sick pay, vacation pay, holiday pay and other employee benefits to the
extent Buyer offers equivalent benefits to its existing employees and to the
extent the foregoing are included as current liabilities under SECTION 2.05(A)
hereof. Seller shall refrain from making any statements or communications to its
employees regarding subsequent employment by Buyer or Buyers employment policies
without Buyer's prior written consent.
5.16 Transitional Billing Services. Seller shall provide to Buyer, upon
-----------------------------
request, access to and the right to use its billing system computers, software
and related fixed assets in connection with the Acquired Systems for a period of
up to 90 days following the Closing Date to allow for conversion of existing
billing arrangements ("Transitional Billing Services"). Buyer shall notify
Seller at least 60 days after the
-27-
date of this Agreement as to whether it desires Transitional Billing
Services. Transitional Billing Services, if any, that are requested by Buyer
shall be provided on terms and conditions reasonably satisfactory to Seller;
provided, however, that the amount to be paid by Buyer for such Transitional
Billing Services shall not exceed the reasonable direct incremental cost to
Seller of providing such Transitional Billing Services.
5.17 Financial Statements. Seller shall provide Buyer with copies of all
--------------------
regularly prepared monthly financial statements relating to the Acquired Systems
promptly after the same become available in the ordinary course.
5.18 Facilities Agreement. Seller shall not execute the Facilities
--------------------
Agreement without the prior written consent of Buyer, which consent shall not be
unreasonably withheld. Seller shall not withhold its consent to Seller's
execution of the Facilities Agreement if: (a) the Facilities Agreement is not
modified from the form attached hereto as SCHEDULE 3.25 except as set forth
-------------
below; and (b) the Facilities Agreement: (i) prohibits MediaOne from splicing
into the fiber covered by the proposed Facilities Agreement with the exception
of splices at the end points of the fiber run; (ii) has a maximum term of two
(2) years; and (c) the Facilities Agreement does not authorize further build-out
of additional dark fiber facilities on the System by MediaOne; provided,
however, that Buyer shall have the right to review and approve the language to
the Facilities Agreement effectuating the changes contemplated by subparagraphs
(b) and (c) above. In the event that Seller executes the Facilities Agreement
in accordance with the provisions hereof, Buyer shall assume Seller's rights and
obligations under the Facilities Agreement arising after the Closing Date.
Seller reserves the right not to enter into the Facilities Agreement and/or to
terminate its existing arrangement with MediaOne at any time. Except for
routine maintenance and construction, Seller covenants and agrees that it will
not at any time after the date hereof commit to any build-out of the facilities
to be transferred to Buyer for the benefit of any third party without the prior
written consent of Buyer.
6. CONDITIONS TO CLOSING - BUYER.
-----------------------------
6.01 Conditions to Obligations of Buyer. The obligations of Buyer to
----------------------------------
consummate the purchase of the Assets to be Acquired at Closing shall be subject
to the satisfaction of the following conditions precedent, except to the extent
waived by Buyer in writing:
(a) All of the representations and warranties of the Seller contained
in this Agreement shall be true and correct in all material respects at and as
of the Closing Date as though such representations and warranties were made at
and as of such time except for changes permitted or contemplated by this
Agreement and except for representations or warranties made as of a specific
date; Seller shall have performed and be in compliance in all material respects
with all of the covenants, agreements,
-28-
terms and provisions set forth herein on its part to be observed or performed,
and no event which would constitute a material breach of the terms of this
Agreement on the part of Seller shall have occurred and be continuing at the
Closing Date.
(b) Since the date of this Agreement, (i) there shall not have
occurred any material adverse change with respect to the Acquired Systems or
their financial condition or operations, taken as a whole, other than (a)
matters of a general economic nature or any change affecting the United States
cable industry as a whole; (b) matters caused by or arising from legislation,
rulemaking or regulation affecting the cable industry in general; or (c)
competition caused by or arising from other multiple channel distribution
services; and (ii) there has been no material damage, destruction, loss or other
casualty to the Assets to be Acquired, taken as a whole, that has not been
repaired or replaced.
(c) The number of "Equivalent Basic Subscribers" of the Acquired
Systems for the month of Closing shall not be less than 90% of the Equivalent
Basic Subscribers of the Acquired Systems for the same month of the Date of
Closing in the year 1997. The parties acknowledge and agree that Exhibit B
---------
attached hereto sets forth the number of Equivalent Basic Subscribers for each
month of the year 1997. For example, if the Date of Closing were to occur in
August of 1998, Buyer and Seller would look at the number of Equivalent Basic
Subscribers for the Acquired Systems in August of 1997 as shown on Exhibit B.
---------
Per Exhibit B, the Acquired Systems had 42,549 Equivalent Basic Subscribers in
August of 1997. Buyer's condition to Closing would then be that the number of
Equivalent Basic Subscribers for the month of Closing (August) would not be less
than 38,294.
(d) The general partner of Seller shall have executed and delivered to
Buyer on the Closing Date a Certificate, dated that date, in form and substance
reasonably satisfactory to Buyer to the effect that the conditions set forth in
each of the provisions of SECTION 6.01(A) AND (B) of this Agreement have been
satisfied in full.
(e) Seller shall have delivered to Buyer complete and correct copies
of the resolutions of its general partner authorizing the execution, delivery
and performance of the Seller Transaction Documents and the sale of the Assets
to be Acquired and the transactions contemplated hereby, certified by the
general partner of Seller.
-29-
(f) Seller shall have obtained and delivered to Buyer each of the
consents of the governmental agencies and third parties designated on SCHEDULE
--------
3.02 as Required Consents, with no adverse conditions imposed by such consents;
----
provided, however, that for the purposes of this Section 6.01(f), the consent of
---------------
the respective utilities with whom Seller has pole attachment agreements shall
be deemed to have been given if, as of the Date of Closing, any such utility
company is not threatening to: (a) refuse to consent to the assignment of such
pole attachment agreement to Buyer; (b) refuse to execute with Buyer a
replacement pole attachment agreement in such form as is customarily executed by
such utility with cable television companies and which does not contain material
changes from the agreement heretofore existing between Seller and the utility
company; or (c) order or otherwise compel the removal of the cable plant owned
by Seller from such utility poles. Notwithstanding the foregoing, Seller agrees
to continue to use Seller's good faith, commercially reasonable efforts
subsequent to the Date of Closing to complete the assignment to Buyer of any
pole attachment agreements not actually transferred to Buyer as of the Date of
Closing.
(g) Buyer shall have received a legal opinion from the General Counsel
of the general partner of Seller, dated the Closing Date and in a form mutually
agreeable to both Seller and Buyer.
(h) Seller shall have delivered to Buyer:
(i) the Non-Competition Agreements duly executed by Seller and
its general partner;
(ii) the Good Standing Certificates described in SECTION 5.10;
and
(iii) a certificate of incumbency of the general partner of
Seller duly executed by the Assistant Secretary and each of
the officers of the general partner executing this
Agreement and the documents delivered hereunder on behalf
of Seller.
(i) Buyer shall have received an opinion of Cole, Raywid, & ▇▇▇▇▇▇▇▇▇,
LLP, FCC counsel for Seller, dated the Closing Date and in a form mutually
agreeable to Seller, Buyer and Seller's FCC counsel.
(j) All documents and other items required to be delivered hereunder
to Buyer at or prior to Closing shall have been delivered or shall be tendered
at the Closing.
(k) On the Closing Date, no suit or action or other proceeding shall
be pending or threatened before any court or other governmental agency against
Seller
-30-
or Buyer in which the consummation of the transactions contemplated by this
Agreement are sought to be enjoined.
(l) Seller shall have delivered to Buyer, at Seller's expense, at
least ten (10) days prior to the Closing Date, lien searches dated not more than
forty (40) days prior to the Closing Date showing all UCC-1 financing statements
filed with any filing offices in the States of Florida and Colorado wherein
Seller is named a debtor, all federal, state or local tax liens filed against
the Seller, and all unsatisfied judgments naming Seller as a judgment debtor,
all of which shall be released or terminated prior to or at the Closing.
(m) All notification and report forms required to be filed on behalf
of the parties to this Agreement with the FTC and the DOJ under the HSR Act and
rules shall have been filed, and the waiting period required to expire under the
HSR Act and rules, including any extension thereof, shall have expired or early
termination of the waiting period shall have been granted.
(n) Seller shall have delivered to Buyer a commitment or commitments
for owners title insurance with respect to real estate owned by Seller as part
of the Assets to be Acquired, issued by a nationally reputable entity, agreeing
to insure fee simple title to each parcel of real property, subject only to the
Permitted Liens including, but not limited to, (i) zoning restrictions,
prohibitions, and other requirements imposed by any governmental authority
having jurisdiction over the property, (ii) public utility easements of record,
(iii) taxes not yet due and payable, (iv) easements, rights-of-way,
restrictions, and other similar encumbrances of record, and (v) other standard
exceptions, including survey exceptions. Such commitment or commitments shall be
dated not more than sixty (60) days prior to the Closing Date (provided that any
insurance shall be obtained at Buyer's cost).
(o) Seller shall stand ready to deliver the matters described in
SECTION 8 hereof.
7. CONDITIONS TO CLOSING - SELLER.
------------------------------
7.01 Conditions to Obligations of Seller. The obligations of the Seller to
-----------------------------------
consummate the sale of the Assets to be Acquired at Closing shall be subject to
the satisfaction of the following conditions precedent, except to the extent
waived by Seller in writing:
(a) All of the representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing Date as though such representations and warranties were made at and
as of such time, and Buyer shall be in compliance in all material respects with
all of the covenants, agreements, terms and provisions set forth herein on its
part to be observed and
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performed, and no event which would constitute a material breach of the terms of
this Agreement on the part of Buyer shall have occurred and be continuing at the
Closing Date.
(b) An executive officer of Buyer shall have executed and delivered to
Seller on the Closing Date a Certificate, dated that date, in form and substance
reasonably satisfactory to Seller to the effect that the conditions set forth in
each of the provisions of SECTION 7.01 (a) of this Agreement have been satisfied
in full.
(c) Buyer shall have delivered the Purchase Price, as adjusted, to
Seller in accordance with SECTION 2.03.
(d) Buyer shall have delivered to Seller complete and correct copies
of the corporate resolutions of Buyer authorizing the execution, delivery and
performance of this Agreement and the purchase of the Assets to be Acquired.
(e) Seller shall have received an opinion from ▇▇▇▇▇ ▇▇▇▇▇▇, Deputy
General Counsel for Buyer, dated the Closing Date substantially in the form
mutually agreeable to both Seller and Buyer.
(f) On the Closing Date, no suit or action or other proceeding shall
be pending or threatened before any court or other governmental agency against
Seller or Buyer in which the consummation of the transactions contemplated by
this Agreement are sought to be enjoined.
(g) Buyer shall have executed and delivered to Seller assumption
documents in form and substance reasonably satisfactory to Seller pursuant to
which Buyer shall have assumed the Assumed Liabilities.
(h) Buyer shall have delivered to Seller Certificates of Good Standing
issued by the Secretary of State of Delaware and the Commonwealth of
Pennsylvania as to Buyer's good standing in such jurisdictions.
(i) All notification and report forms required to be filed on behalf
of the parties to this Agreement with the FTC and the DOJ under the HSR Act and
rules thereunder shall have been filed, and the waiting period required to
expire under the HSR Act and rules thereunder, including any extension thereof,
shall have expired or early termination of the waiting period shall have been
granted.
(j) Buyer shall have delivered to Seller a certificate of incumbency
duly executed by the Assistant Secretary of the Buyer and each of the officers
of Buyer executing this Agreement and the documents delivered hereunder.
(k) Seller shall have obtained the consent of each applicable
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franchising authority to the transfer of the Franchises to Buyer.
8. CLOSING.
-------
8.01 Action to be Taken at and after Closing.
---------------------------------------
(a) At Closing, Seller shall deliver to Buyer:
(i) Such bills of sale, endorsements, assignments, general
warranty deeds and other good and sufficient instruments of
transfer and conveyance as shall be reasonably deemed
necessary or appropriate by Buyer to vest in or confirm to
Buyer good and marketable title to all of the assets and
properties constituting the Assets to be Acquired, free and
clear of any and all liens, security interests, mortgages,
charges or encumbrances of any kind, except for current
taxes which are not yet due and payable but which are timely
paid and except for the Permitted Liens;
(ii) A complete itemized list of all of Seller's subscriber
accounts receivable relating to the Acquired Systems as of a
date no later than thirty (30) days prior to the Closing
Date, showing sums due and their respective aging for the
period ending on the Closing Date;
(iii) With respect to the Acquired Systems, a true, accurate and
complete schedule as of the Closing Date of monetary
obligations owed by Seller and not yet paid, items billed to
Seller and not yet paid, items charged to or claimed against
Seller and not yet paid, whether or not disputed, under each
of the Franchises, Pole Attachment Agreements and Agreements
to be assumed by Buyer under the terms of this Agreement;
(iv) Actual possession and operating control of the Acquired
Systems;
(v) The documents and instruments required to be delivered by
Seller to Buyer pursuant to the terms of SECTION 6; and
(vi) All of the consents designated as Required Consents on
SCHEDULE 3.02.
-------------
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(b) At Closing, Buyer shall deliver to Seller:
(i) The Purchase Price, as adjusted in accordance with SECTION
2.06; and
(ii) The documents and instruments required to be delivered by
Buyer to Seller pursuant to the terms of SECTION 7.
(c) After Closing, Seller shall deliver to Buyer, as received from
time to time:
(i) any cash or other property that it may receive in respect
to subscriber accounts receivable received after the
Closing Date relating to the business and operations of the
Acquired Systems arising prior to or subsequent to the
Closing Date;
(ii) any Assets to be Acquired not effectively transferred to
Buyer at the Closing; and
(iii) from time to time at the request of Buyer and without
further consideration, such further instruments of
conveyance, transfer and assignment as Buyer may reasonably
request in order to convey more effectively the transfer to
Buyer of any of the Assets to be Acquired, and Seller shall
assist Buyer in the reduction to possession of any such
assets, possession of which was not delivered to Buyer at
Closing. Buyer shall be responsible for the preparation of
all of the documents incidental to such conveyance,
transfer and reduction to possession.
9. REAL ESTATE PRORATION AND ADJUSTMENT ITEMS. Water and sewer charges,
------------------------------------------
municipal garbage and rubbish removal charges, rents, interest, real estate
taxes, common area maintenance charges, utilities and other charges of an annual
or recurrent nature, assessed against or paid in conjunction with the ownership
or operation of any real property owned or leased by Seller to be transferred to
Buyer hereunder shall be prorated as of the Closing Date. Real estate taxes
shall be prorated as of the Closing Date. Real estate taxes for the calendar
year of Closing shall be prorated based upon real estate taxes levied or
estimated to be levied in that year by each taxing body (without regard to the
date of levy or the fiscal year of the taxing body); provided, however, if any
of such real estate taxes have not yet been levied as of the Closing Date for
the calendar year in which the Closing Date occurs, the tax PRORATION shall be
based upon the prior years tax levy, taking into account any adjustments in real
estate tax assessments which may have been made. Upon final levy
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of the real estate taxes, Seller and Buyer agree that a final proration will be
made as of the Closing Date, and if it is determined that either party shall owe
the other based upon a discrepancy between the amounts included in the Final
Adjustment and the final proration, then the owing party shall make payment to
the other within thirty (30) days of final settlement thereof
10. DAMAGE TO PROPERTY AND RISK OF LOSS
-----------------------------------
.
(a) The risk of any loss or damage to the Assets to be Acquired and the
Acquired Systems resulting from fire, theft or any other casualty (but excluding
any loss or damage attributable to reasonable wear and tear) ("Damage") shall be
borne by Seller at all times prior to the Closing. In the event that any such
Damage shall be sufficiently substantial so as to preclude and prevent
resumption of normal operations of all or any portion of the Acquired Systems
within thirty (30) days from the occurrence of the event resulting in such loss
or damage, Seller shall immediately notify Buyer in writing of its inability to
resume normal operations or to replace or restore the lost or damaged property,
and Buyer, at any time within ten (10) days after receipt of such notice, may
elect either (a) to waive such defect and proceed toward consummation of the
transaction in accordance with the terms of this Agreement, or (b) to terminate
this Agreement. If Buyer elects to terminate this Agreement pursuant to this
Section, the parties hereto shall stand fully released and discharged of any and
all obligations hereunder and the Deposit shall be returned to Buyer.
(b) If Buyer shall elect to consummate this transaction notwithstanding such
Damage and does so, there shall be no diminution of the Purchase Price, and all
insurance proceeds (other than for bodily injury or for damage to property other
than the Assets to be Acquired or for business interruption prior to the Closing
Date) payable as a result of the occurrence of the event resulting in the Damage
shall be delivered to Buyer, or the rights thereto shall be assigned to Buyer if
not yet paid over to Seller, and Seller shall pay to Buyer the amount of any
deductible associated with the insurance claim.
(c) Notwithstanding the provisions of this SECTION 10, in the event of
Damage to the Acquired Systems which is not material damage to the Acquired
Systems, Seller shall have the full responsibility for the completion of all
necessary repair and/or restoration work with respect to such damage, whether or
not such work is capable of being completed prior to the Closing Date, and shall
promptly and with due diligence, in a prudent and workmanlike manner, proceed
with such work, time being of the essence.
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11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
-----------------------------------------------------------
11.01 Survival of Representations and Warranties. All representations,
------------------------------------------
warranties, covenants, stipulations, certifications, indemnities and agreements
contained herein or in any document delivered pursuant hereto shall survive the
consummation of the transactions provided for in this Agreement; provided that
the representations and warranties contained in this Agreement shall expire and
be extinguished six months after the Closing Date, except for representations
and warranties relating to (i) title and ownership, which shall survive forever,
(ii) environmental matters, which shall survive for five years, and (iii) tax
matters, which shall survive until the third annual anniversary of the Closing
Date, and Buyer's and Seller's rights to make claims based thereon shall
likewise expire and be extinguished on such dates. The parties hereto
acknowledge and agree that Seller shall remain responsible for any refund
liability with respect to the rates charged by Seller in the Acquired Systems
through the Closing Date and Buyer's right to be indemnified for any such claims
shall survive forever.
11.02 Indemnification.
---------------
(a) Seller and ▇▇▇▇▇ shall, jointly and severally, defend, indemnify
and hold Buyer harmless from and against any and all claims, liabilities,
damages, losses, deficiencies and expenses (including reasonable attorneys' fees
and expenses and costs of suit including, but not limited to, travel expenses
and discovery costs for such matters as transcripts, photocopying, subpoenas and
telecopies) (individually, a "Loss" and collectively, "Losses") arising out of
(i) any and all inaccurate representations and warranties, and out of any and
all breaches of covenants, agreements and certifications made by or on behalf of
Seller in this Agreement or in any document delivered hereunder, (ii) any
failure to comply with any applicable bulk transfer acts, or (iii) any and all
liabilities and obligations of Seller (except for the Assumed Liabilities) and
any and all liabilities and obligations of Seller not disclosed to Buyer in this
Agreement; provided that in connection with the indemnification provided for in
SECTION 11.02(A)(I) hereof, Seller and ▇▇▇▇▇ shall not be obligated to indemnify
Buyer for Losses subject to indemnification thereunder (other than Losses
relating to tax matters) once the total amount of Losses for which Seller and
▇▇▇▇▇ have provided indemnification under such SECTION 11.02(A)(I) equals
$7,500,000 ("Seller's Cap"). Buyer shall not be entitled to be indemnified by
Seller or ▇▇▇▇▇ for any Losses under this SECTION 11.02(A) arising out of any
single claim or aggregate claims until the total amount of all such Losses
suffered or paid by Buyer exceeds $500,000 ("Seller's Basket"). Buyer shall
then be entitled to be indemnified for all such Losses under this SECTION
1.02(A) arising out a single claim or aggregate claims. For example, if the
total amount of such Losses equals $502,000, Buyer shall be entitled to be
indemnified for the entire amount of such Losses, and not just the amount of
Losses in excess of
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$500,000.
(b) Buyer shall defend, indemnify and hold Seller harmless from and
against any and all Losses arising out of (i) any and all inaccurate
representations, and out of any and all breaches of covenants, warranties,
stipulations, agreements and certifications made by or on behalf of Buyer in
this Agreement or in any document delivered by Buyer hereunder; (ii) the Assumed
Liabilities; and (iii) all debts, liabilities or claims owing by or against
Buyer subsequent to the Closing Date or arising out of the business activities
of Buyer subsequent thereto.
11.03 Indemnification with Respect to Third-Party Claims.
--------------------------------------------------
(a) Definition. As used herein, a "Third-Party Claim" means a Loss or
----------
potential Loss for which indemnification is claimed by Buyer or Seller (the
"Indemnitee") under the provisions of this Article 11 and which is consequent to
a claim against the Indemnitee by a person, corporation, association,
partnership or other business organization, or an individual, or a government,
any political subdivision thereof or a governmental agency by commencement
against the Indemnitee of a legal action or proceeding or receipt by the
Indemnitee of an assertion of a claim for which indemnification is provided
pursuant to this Article 11 by Buyer or Seller and ▇▇▇▇▇, as the case may be
(the "Indemnitor").
(b) The Indemnitee will give notice of a Third-Party Claim to the
Indemnitor, together with, if such Third-Party Claim is subject to arbitration
pursuant to SECTION 14 hereof, demand for arbitration, stating the nature
thereof and enclosing copies of any complaint, summons, written assertion of
such Third-Party Claim or similar document. No claim for indemnification on
account of a Third-Party Claim shall be made and no indemnification therefor
shall be available under this Article 11 until the Indemnitee shall have given
initial written notice of its claim to the Indemnitor.
(c) Retention of Counsel by the Indemnitor. Except as hereinafter
--------------------------------------
provided (including, but not limited to, SECTION 11.03(D)(II) hereof), the
Indemnitor shall engage counsel to defend a Third-Party Claim, and shall provide
notice to the Indemnitee not later than 15 business days following delivery by
the Indemnitee to the Indemnitor of a notice of a Third-Party Claim. The
Indemnitee will fully cooperate with such counsel. The Indemnitor will cause
such counsel to consult with the Indemnitee as appropriate as to the defense of
such claim, and the Indemnitee may, at its own expense, participate in such
defense, assistance or enforcement, but the Indemnitor shall control such
defense, assistance or enforcement. The Indemnitor will cause such counsel
engaged by the Indemnitor to keep the Indemnitee informed at all times of the
status of such defense, assistance or enforcement.
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(d) Employment of Counsel by the Indemnitee.
---------------------------------------
(i) Notwithstanding the provisions of SECTION 11.03(C), the
Indemnitee shall have the right to engage counsel and to
control the defense of a Third-Party Claim if the
Indemnitor shall not have notified the Indemnitee of its
appointment of counsel and control of the defense of a
Third-Party Claim pursuant to SECTION 11.03 (C) within the
time period therein provided.
(ii) Notwithstanding the engagement of counsel by the
Indemnitor, the Indemnitee shall have the right, at its own
expense, to engage counsel to participate jointly with the
Indemnitor in, and to control jointly with the Indemnitor,
the defense of a Third-Party Claim if (x) the Third-Party
Claim involves remedies other than monetary damages and
such remedies, in the Indemnitee's reasonable judgment,
could have an effect on the conduct of the Indemnitee's
business, or (y) the Third-Party Claim relates to acts,
omissions, conditions, events or other matters occurring
after the Closing Date as well as to acts, omissions,
conditions, events or other matters occurring prior to the
Closing Date, or (z) the claims involve monetary damages
which could exceed Seller's Cap.
(iii) If the Indemnitee chooses to exercise its right to appoint
counsel under this SECTION 11.03(D), the Indemnitee shall
deliver notice thereof to the Indemnitor setting forth in
reasonable detail why it believes that it has such right
and the name of the counsel it proposes to employ. The
Indemnitee may deliver such notice at any time that the
conditions to the exercise of such right appear to be
fulfilled, it being recognized that in the course of
litigation, the scope of litigation and the amount at stake
may change. The Indemnitee shall thereupon have the right
to appoint such counsel.
(iv) The reasonable fees and expenses of counsel and any
accountants, experts or consultants engaged by the
Indemnitee in accordance with the provisions of SECTION
11.03(D)(I) in connection with defending a Third-Party
Claim shall be paid by the Indemnitor in accordance with
the provisions of this Article 11. If the Indemnitee's
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employment of counsel is for a Third-Party Claim of the
type described in subdivision (ii)(y) or (ii)(z) of this
SECTION 11.03(D), then subject to the provisions of SECTION
11.03(E), the amount of fees and expenses so payable by the
Indemnitor shall be that fraction of the aggregate of such
fees and expenses, the numerator of which is the portion of
the amount of any judgment on, or settlement of, such
Third-Party Claim for which the Indemnitee is indemnified
pursuant to this Article II and the denominator of which is
the total amount of such judgment or settlement, but
provided further, if such defense of a Third-Party Claim is
successful (in the sense that as a consequence thereof,
there is no Loss (other than such fees and expenses) for
which the Indemnitee is indemnified pursuant to this
Article 11), the Indemnitee and the Indemnitor will attempt
in good faith to reach an agreement on the amount of such
fees and expenses so payable by the Indemnitor.
(e) Settlement of Third-Party Claims.
--------------------------------
(i) The Indemnitor may settle any Third-Party Claim solely
involving monetary damages only if the amount of such
settlement is to be paid entirely by the Indemnitor
pursuant to this Article 11.
(ii) The Indemnitor will not enter into a settlement of a Third-
Party Claim which involves a non-monetary remedy or which
will not be paid entirely by the Indemnitor pursuant to
this Article 11 without the written consent of the
Indemnitee (which consent shall not be unreasonably
withheld, delayed or conditioned).
(iii) The Indemnitee will not enter into a settlement of a Third-
Party Claim without the written consent of the Indemnitor,
which consent shall not be unreasonably withheld, under the
circumstances described in subdivision (i) of SECTION
11.03(D), if the Indemnitor has accepted all or any portion
of the liability for such Third-Party Claim. Otherwise, the
Indemnitee shall be free to compromise, defend and settle
Third-Party Claims without prejudice to any of its rights
hereunder or under applicable law.
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(iv) As to any Third-Party Claim of the type described in
SUBSECTION (ii)(y) or SUBSECTION (ii)(z) of SECTION
11.03(d), the Indemnitee and the Indemnitor shall consult as
to any proposed settlement. If the Indemnitee notifies the
Indemnitor that it wishes to accept a proposed settlement
and the Indemnitor is unwilling to do so, if the amount for
which the Third-Party Claim is ultimately resolved is
greater than the amount for which the Indemnitee desired to
settle, then (x) the Indemnitee shall be liable only for the
amount, if any, which it would have paid had the Third-Party
Claim been settled as proposed by the Indemnitee, and (y)
all reasonable attorneys' fees and expenses and costs of
suit incurred by the Indemnitee subsequent to the time of
the proposed settlement shall be paid or reimbursed by the
Indemnitor.
(v) In determining whether to accept or reject any settlement
proposal, each party shall act in good faith and with due
regard for the reasonable commercial and financial interests
of the other.
(f) Claims as to Which Indemnification is Partially Payable.
-------------------------------------------------------
Notwithstanding the foregoing, in the event of any settlement of, or final
judgment with respect to, a Third-Party Claim which relates to acts, omissions,
conditions, events or other matters occurring both before and after the Closing
Date, the Indemnitee and the Indemnitor shall negotiate in good faith as to the
portion of such Third-Party Claim as to which such indemnification is payable.
(g) Cooperation, etc. The Indemnitee and the Indemnitor shall
-----------------
cooperate with one another in good faith in connection with the defense,
compromise or settlement of any claim or action. Without limiting the generality
of the foregoing, the party controlling the defense or settlement of any matter
shall take steps reasonably designed to ensure that the other party and its
counsel are informed at all times of the status of such matter. Neither party
shall dispose of, compromise or settle any claim or action in a manner that is
not reasonable under the circumstances and in good faith. The Indemnitor and
Indemnitee shall enter into such confidentiality and other non-disclosure
agreements as the Indemnitee or Indemnitor, as the case may be, shall reasonably
request in order to protect trade secrets and other confidential or proprietary
information of the Indemnitee or Indemnitor, as the case may be.
12. TERMINATION AND REMEDIES.
------------------------
12.01 Termination by Mutual Agreement. This Agreement may be terminated
-------------------------------
prior to Closing (i) by mutual agreement of Seller and Buyer or (ii) by Buyer in
the
-40-
event of a substantial loss under SECTION 10. In such event, this Agreement
shall terminate and neither Buyer nor Seller shall have any further obligation
or liability to the other hereunder, except that SECTIONS 14, 15, 16.05, 16.06
and 16.07 of the Agreement shall survive and continue in full force and effect
notwithstanding such termination.
12.02 Buyer's Default. In the event that the transactions contemplated by
---------------
this Agreement are not consummated on the Closing Date (if and as extended upon
the mutual agreement of Seller and Buyer) due to Buyer's failure or refusal to
close, and Seller is not in material default under the terms and provisions
hereof, then Seller shall be entitled to terminate this Agreement and pursue any
and all of its legal and equitable causes of action against Buyer, including
without limitation, the remedy of specific performance by Buyer of it
obligations hereunder. Notwithstanding anything to the contrary contained in
this Agreement, Buyer and Seller acknowledge that Seller may apply all, or any
portion of, the Deposit against any damages incurred by Seller as a result of
Buyer's failure or refusal to close or as a result of Buyer's breach of any of
the terms and provisions of this Agreement. The application of the Deposit
against any such damages incurred by Seller shall be governed by the terms and
provisions of the Escrow Agreement. In no event shall the amount of the Deposit
be deemed to limit or restrict the monetary damages that Seller may assert
against Buyer in the event of a default by Buyer under the terms and provisions
of this Agreement and in no event shall the forfeiture of all or any portion of
the Deposit by Buyer be deemed or construed as payment of liquidated damages for
Buyer's default under the terms and provisions hereof. Notwithstanding the
foregoing, Seller acknowledges that in the event that the amount of damages
incurred by Seller as a result of Buyer's breach of the terms and provisions of
this Agreement is less than the amount of the Deposit, then that portion of the
Deposit which is not applied by Seller towards such damages shall be returned to
Buyer.
12.03 Seller's Default. In the event that the transactions contemplated by
----------------
this Agreement are not consummated on the Closing Date (if and as extended upon
the mutual agreement of Seller and Buyer) due to Seller's failure or refusal to
close, and Buyer is not in material default under the terms and provisions
hereof, then Buyer shall have the right to terminate the Agreement and Buyer
shall be entitled to pursue any and all of its equitable and legal causes of
action against Seller, including, without limitation, the remedy of specific
performance by Seller of its obligations hereunder, and without regard to
Seller's Cap on damages provided in SECTION 11.02(A).
12.04 Termination by Buyer or Seller. This Agreement may be terminated by
------------------------------
Buyer or Seller at any time after October 31, 1998 (the "Termination Date") in
the event that any condition set forth in SECTIONS 6 OR 7 hereof has not been
satisfied or tendered by the party owing performance for any reason other than a
material breach or default by such party of its respective covenants,
agreements, or other obligations under this Agreement, unless such condition has
been waived by the party for whose
-41-
benefit the condition is intended. Upon such termination, neither Buyer
nor Seller shall have any further obligation or liability to the other
hereunder, except that SECTIONS 14, 15, 16.05, 16.06 AND 16.07 of this Agreement
shall survive and continue in full force and effect notwithstanding such
termination.
13. NOTICE. All notices and other communications hereunder shall be in writing
------
and delivered by one of the following methods of delivery: (i) personally, (ii)
by registered or certified mail, return receipt requested, postage prepaid,
(iii) by overnight courier, or (iv) by legible facsimile transmission, in all
cases addressed as follows:
To Buyer:
Olympus Communications, L.P.
c/o Adelphia Communications Corporation
▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
With a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Professional Corporation
One Oxford Centre
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
To Seller or ▇▇▇▇▇:
▇▇▇▇▇ Intercable, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
With a copy to:
▇▇▇▇▇ Intercable, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
-42-
or to such address as such party may indicate by a notice delivered to the other
parties hereto. Notice shall be deemed received the same day (when delivered
personally), five (5) days after mailing (when sent by registered or certified
mail) or the next business day (when sent by facsimile transmission or when
delivered by overnight courier). Any party to this Agreement may change its
address to which all communications and notices may be sent hereunder by
addressing notices of such change in the manner provided.
14. BROKERAGE COMMISSION. Buyer and Seller each represent and warrant that all
--------------------
negotiations relative to this Agreement and the transactions contemplated hereby
have been carried on by each directly with the other without intervention of any
person, except that Seller has retained The ▇▇▇▇▇ Group, Ltd. ("Seller's
Broker") as its sole broker and finder in connection with this Agreement and the
transactions contemplated hereby, and Seller has agreed to pay the entire
commission of Seller's Broker. Buyer shall have no liability or responsibility
for the commissions payable to the Seller's Broker. Each party to this Agreement
indemnifies the other and holds it harmless against and in respect of any claim
against the other for brokerage or other commissions relative to this Agreement
and the transactions contemplated hereby by the indemnifying party's employees,
agents or consultants.
15. LAWS GOVERNING.
--------------
15.01 Laws Governing. The construction, interpretation and enforcement of
--------------
this Agreement and the rights of the parties hereunder shall be governed by the
laws of the State of Florida without regard to any jurisdiction's conflicts of
law provisions.
15.02 Consent to Jurisdiction. Each of the parties hereto hereby
-----------------------
irrevocably consents and submits to the nonexclusive personal jurisdiction of
the United States District Court for the Southern District of Florida and the
courts of ▇▇▇ County, Florida over any suit, action or proceeding under this
Agreement, and irrevocably agrees that all claims with respect thereto may be
heard and determined in such courts. Service of process in any such suit, action
or proceeding may be made in the manner hereinabove set forth for the giving of
notices and the same shall constitute valid personal service for all purposes,
each party hereby waiving personal service by other means.
16. MISCELLANEOUS.
-------------
16.01 Counterparts; Telecopy. This Agreement may be executed in one or
----------------------
more counterparts, each of which shall be deemed an original, but all of which,
when taken together, shall constitute one and the same instrument. Delivery of
executed signature pages hereof by facsimile transmission shall constitute
effective and binding execution and delivery hereof.
-43-
16.02 Assignment. This Agreement may not be assigned by any party hereto
----------
without the prior written consent of the other parties; provided, however, that
Buyer may assign this Agreement to one or more of the subsidiaries or affiliates
of Buyer, without the prior written consent of Seller, provided Buyer remains
primarily liable to fully perform the terms of this Agreement.
16.03 Entire Agreement. This Agreement is an integrated document, contains
----------------
the entire agreement between the parties, wholly cancels, terminates and
supersedes any and all previous and/or contemporaneous oral agreements,
negotiations, commitments and writings between the parties hereto with respect
to such subject matter. No change, modification, termination, notice of
termination, discharge or abandonment of this Agreement or any of the provisions
hereof, nor any representation, promise or condition relating to this Agreement,
shall be binding upon the parties hereto unless made in writing and signed by
the parties hereto, except that termination or notices of termination which may
be effected pursuant to the terms of this Agreement by either party to the
Agreement shall be binding if made in writing and signed by the applicable
party.
16.04 Interpretation. Article titles and headings to Sections herein are
--------------
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of any of the provisions of this
Agreement. All references to Sections, subsections, Schedules or Exhibits
contained in this Agreement are references to the Sections and subsections of
this Agreement and the Schedules or Exhibits described on the list immediately
following the signature page hereto and attached hereto. All references to the
word "including" shall have the meaning represented by the phrase "including
without limitation." As used herein, the phrase "after due inquiry" is limited
to inquiry within the organization of Seller or Buyer, as the case may be. As
used herein, the phrase "commercially reasonable efforts" shall not be deemed to
require a party to undertake extraordinary measures, including the initiation or
prosecution of legal proceedings or the payment of amounts in excess of normal
and usual filing and processing fees, if any.
16.05 Expenses. Except as otherwise expressly provided herein, Seller and
--------
Buyer each will pay all costs and expenses, including any and all legal and
accounting fees, of its performance and compliance with all agreements and
conditions contained herein on its part to be performed or complied with. Seller
and Buyer agree to share equally (i) any sales or transfer taxes, recording fees
or other similar costs or fees payable in connection with the transfer of the
Assets to be Acquired, (ii) the costs and expenses relating to the appraisals
performed pursuant to SECTION 2.05, and (iii) the fees required under the HSR
Act.
16.06 Confidentiality. Any and all information obtained by Buyer from Seller
---------------
in connection with the transactions contemplated by this Agreement which is
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confidential in nature (collectively, the "Evaluation Material") shall be kept
strictly confidential by Buyer prior to the Closing Date; provided, however,
that any Evaluation Material may be disclosed to agents, employees, officers,
directors, investors, advisors and other representatives of Buyer who need to
know such Evaluation Material (it being agreed that such representative shall be
informed by Buyer of the confidential nature of such Evaluation Material and
shall be directed to deal with such Evaluation Material confidentially) and,
further, may be disclosed to the extent required by law, including applicable
securities laws, or by written or oral question or request for information or
documents in legal proceedings, interrogatories, subpoenas, civil investigative
demands or similar processes. For purposes of this Agreement, the term
"Evaluation Material" does not include information which (i) becomes generally
available to the public other than as a result of disclosure by Buyer or any
Buyer representative in violation of the terms hereof, (ii) was available on a
nonconfidential basis prior to disclosure to Buyer by Seller or any of their
directors or any of its directors, officers, employees, agents or
representatives, or (iii) becomes available to Buyer on a non-confidential basis
from a source which is not bound by a confidentiality agreement with Seller.
16.07 Public Announcements. Neither Buyer nor Seller shall, without the
--------------------
approval of the other party (which may not be unreasonably withheld), make any
press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that such party
shall be so obligated by law (including any legal obligation imposed on Buyer in
connection with its status as a publicly-held corporation), in which case the
other party shall be advised and Buyer and Seller shall use their reasonable
efforts to cause a mutually agreeable release or announcement to be issued.
16.08 Waivers. Any term or provision of this Agreement may be waived, or
-------
the time for its performance may be extended, by the party or parties entitled
to the benefit thereof, but any such waiver must be in writing and must comply
with the notice provisions contained in SECTION 13. The failure of any party
hereto to enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
16.09 Partial Invalidity. Wherever possible, each provision hereof shall be
------------------
interpreted in such a manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provisions had never been contained herein, unless the
deletion of such provision or provisions would
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result in such a material change as to cause the completion of the transactions
contemplated hereby to be unreasonable.
16.10 Incorporation by Reference. Any and all Schedules, Exhibits,
--------------------------
Recitals, statements, reports, certificates or other documents or instruments
referred to herein or attached hereto are incorporated herein by reference
thereto as though fully set forth at the point referred to in this Agreement.
16.11 Attorneys' Fees. Notwithstanding any other provision of this
---------------
Agreement, the prevailing party in any litigation or other legal proceeding
between Buyer and Seller with respect to this Agreement or the transactions
contemplated hereby shall be entitled to recover from the nonprevailing party
its reasonable attorneys' fees and costs of the proceeding.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized corporate officers on the day and year
first above written.
OLYMPUS COMMUNICATIONS, L.P.
By: ACP Holdings, Inc., its managing general
partner
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Title: Executive Vice President
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CABLE TV FUND 12-A, LTD.,
a Colorado limited partnership
By: ▇▇▇▇▇ INTERCABLE, INC.,
General Partner
By:/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Title: Vice President
-------------------------------------
▇▇▇▇▇ INTERCABLE, INC.
By:/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Title:Vice President
-------------------------------------
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EXHIBIT A
[FORM OF NONCOMPETITION AGREEMENT]
(See Separate Document Attached)
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