ASSET EXCHANGE AGREEMENT
DATED OCTOBER 25, ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, INC.
AND
UNITED CATV, INC.
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS...................................................2
1.1 1992 Cable Act................................................2
1.2 Affiliate.....................................................2
1.3 Assets........................................................2
1.4 Basic Service.................................................2
1.5 Business Day..................................................2
1.6 Cable Act.....................................................2
1.7 Cable Business................................................2
1.8 Closing Time..................................................2
1.9 Communications Act............................................2
1.10 Contract......................................................2
1.11 Environmental Law.............................................3
1.12 Equivalent Basic Subscribers..................................3
1.13 ERISA.........................................................3
1.14 ERISA Affiliate...............................................3
1.15 Expanded Basic Service........................................4
1.16 FCC...........................................................4
1.17 Financial Statements..........................................4
1.18 Governmental Authority........................................4
1.19 Hazardous Substances..........................................4
1.20 HSR Act.......................................................4
1.21 ▇▇▇▇▇ Assets..................................................4
1.22 ▇▇▇▇▇ Books and Records.......................................5
1.23 ▇▇▇▇▇ Cable Business..........................................5
1.24 ▇▇▇▇▇ Leased Property.........................................5
1.25 ▇▇▇▇▇ Intangibles.............................................5
1.26 ▇▇▇▇▇ Real Property Interests.................................5
1.27 ▇▇▇▇▇ Owned Property..........................................5
1.28 ▇▇▇▇▇ Required Consents.......................................5
1.29 ▇▇▇▇▇ System Contracts........................................5
1.30 ▇▇▇▇▇ System Franchises.......................................6
1.31 ▇▇▇▇▇ System Licenses.........................................6
1.32 ▇▇▇▇▇ Tangible Personal Property..............................6
1.33 Judgment......................................................6
1.34 Knowledge.....................................................6
1.35 Leased Property...............................................6
1.36 Legal Requirement.............................................6
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1.37 Lien..........................................................6
1.38 Litigation....................................................7
1.39 Losses........................................................7
1.40 Owned Property................................................7
1.41 Pay TV........................................................7
1.42 Permitted Lien................................................7
1.43 Person........................................................7
1.44 Real Property Interests.......................................7
1.45 Required Consents.............................................8
1.46 System........................................................8
1.47 System Contracts..............................................8
1.48 System Franchises.............................................8
1.49 System Licenses...............................................8
1.50 Tangible Personal Property....................................8
1.51 Taxes.........................................................8
1.52 TCI Assets....................................................8
1.53 TCI Books and Records.........................................8
1.54 TCI Cable Business............................................9
1.55 TCI Leased Property...........................................9
1.56 TCI Intangibles..............................................9
1.57 TCI Real Property Interests..................................9
1.58 TCI Owned Property............................................9
1.59 TCI Required Consents.........................................9
1.60 TCI System Contracts..........................................9
1.61 TCI System Franchises.........................................9
1.62 Licenses......................................................9
1.63 TCI Tangible Personal Property................................10
1.64 Transaction Documents.........................................10
1.65 Other Definitions.............................................10
SECTION 2. EXCHANGE......................................................11
SECTION 3. CONSIDERATION.................................................12
3.1 Value of Assets; Cash Consideration...........................12
3.2 Adjustment and Proration Payments.............................12
3.3 Calculation of Adjustments....................................13
SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS.......................14
4.1 TCI Assumed Obligations and Liabilities.......................14
4.2 TCI Excluded Assets...........................................15
4.3 ▇▇▇▇▇ Assumed Obligations and Liabilities.....................15
4.4 ▇▇▇▇▇ Excluded Assets.........................................16
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SECTION 5. ▇▇▇▇▇' REPRESENTATIONS AND WARRANTIES.........................16
5.1 Organization and Qualification of ▇▇▇▇▇.......................16
5.2 Authority and Validity........................................16
5.3 No Conflict; Required Consents................................17
5.4 Assets........................................................17
5.5 ▇▇▇▇▇ System Franchises, ▇▇▇▇▇ System Licenses, ▇▇▇▇▇
System Contracts and ▇▇▇▇▇ Real Property Interests............18
5.6 Real Property.................................................19
5.7 Environmental.................................................19
5.8 Compliance with Legal Requirements............................20
5.9 Patents, Trademarks and Copyrights............................21
5.10 Financial Statements; Undisclosed Liabilities; Absence of
Certain Changes or Events.....................................22
5.11 Litigation....................................................22
5.12 Tax Returns; Other Reports....................................23
5.13 Employment Matters............................................23
5.14 ▇▇▇▇▇ Systems Information.....................................24
5.15 Bonds.........................................................24
5.16 Finders and Brokers...........................................24
SECTION 6. TCI'S REPRESENTATIONS AND WARRANTIES..........................25
6.1 Organization and Qualification of TCI.........................25
6.2 Authority and Validity........................................25
6.3 No Conflict; Required Consents................................25
6.4 Assets........................................................26
6.5 TCI System Franchises, TCI System Licenses, TCI System
Contracts and TCI Real Property Interests.....................26
6.6 Real Property.................................................27
6.7 Environmental.................................................28
6.8 Compliance with Legal Requirements............................29
6.9 Patents, Trademarks and Copyrights............................30
6.10 Financial Statements; Undisclosed Liabilities; Absence of
Certain Changes or Events.....................................30
6.11 Litigation....................................................31
6.12 Tax Returns; Other Reports....................................31
6.13 Employment Matters............................................31
6.14 TCI Systems Information.......................................32
6.15 Bonds.........................................................33
6.16 Finders and Brokers...........................................33
SECTION 7. ADDITIONAL COVENANTS..........................................33
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7.1 Access to Premises and Records................................33
7.2 Continuity and Maintenance of Operations; Certain
Deliveries and Notices........................................33
7.3 Employees.....................................................35
7.4 Leased Vehicles; Other Capital Leases.........................37
7.6 Title Commitments and Surveys.................................38
7.7 HSR Notification..............................................39
7.8 No Shopping...................................................40
7.9 Lien and Judgment Searches....................................40
7.10 Transfer Taxes................................................40
7.11 Distant Broadcast Signals.....................................40
7.12 Letter to P...................................................41
7.13 Supplemental Schedules........................................41
7.14 Use of Names and Logos........................................41
7.15 Transitional Billing Services.................................41
7.16 Satisfaction of Conditions....................................42
7.17 Confidentiality and Publicity.................................42
7.18 Bulk Transfers................................................43
7.19 Allocation of Value to Exchanged Assets.......................43
7.20 Environmental Reports.........................................43
7.21 Board Approvals...............................................43
7.22 Further Assurances............................................43
7.23 Consents......................................................44
7.24 Post-Closing Cooperation upon Inquiries as to Rates...........44
7.25 Idaho Springs Extension/Renewal...............................44
7.26 Microwave Compliance..........................................44
SECTION 8. CONDITIONS PRECEDENT..........................................45
8.1 Conditions to ▇▇▇▇▇' Obligations..............................45
8.2 Conditions to TCI's Obligations...............................47
SECTION 9. THE CLOSING...................................................49
9.1 The Closing; Time and Place...................................49
9.2 TCI's Delivery Obligations....................................49
9.3 ▇▇▇▇▇' Delivery Obligations...................................50
SECTION 10. TERMINATION AND DEFAULT.......................................52
10.1 Termination Events............................................52
10.2 Effect of Termination.........................................52
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION...............................................53
11.1 Survival of Representations and Warranties....................53
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11.2 Indemnification by TCI........................................53
11.3 Indemnification by ▇▇▇▇▇......................................54
11.4 Third Party Claims............................................54
11.5 Limitations on Indemnification - TCI..........................55
11.6 Limitations on Indemnification - ▇▇▇▇▇........................55
SECTION 12. MISCELLANEOUS PROVISIONS......................................56
12.1 Parties Obligated and Benefited...............................56
12.2 Notices.......................................................56
12.3 Attorney's Fees...............................................57
12.4 Waiver........................................................57
12.5 Captions......................................................57
12.6 Choice of Law.................................................57
12.7 Terms.........................................................58
12.8 Rights Cumulative.............................................58
12.9 Time..........................................................58
12.10 Late Payments.................................................58
12.11 Counterparts..................................................58
12.12 Entire Agreement..............................................58
12.13 Severability..................................................58
12.14 Construction..................................................58
12.15 Expenses......................................................59
12.16 Risk of Loss..................................................59
12.17 Tax Consequences..............................................60
12.18 Commercially Reasonable Efforts...............................60
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ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT ("Agreement") is made and entered into
as of October 25, 1996, by and between ▇▇▇▇▇ Communications of Colorado, Inc., a
Colorado corporation ("▇▇▇▇▇"), whose U.S. Taxpayer Identification Number is 84-
1322920 and United CATV, Inc., a Maryland corporation ("TCI"), whose U.S.
Taxpayer Identification Number is ▇▇-▇▇▇▇▇▇▇.
RECITALS
▇. ▇▇▇▇▇ owns and operates cable television systems which are
franchised or hold other operating authority and operate in and around the Towns
of ▇▇▇▇▇▇▇▇, Empire, Georgetown and Silver Plume, Colorado, the City of Idaho
Springs, Colorado and Jefferson, Arapahoe and Clear Creek Counties, Colorado
(the "▇▇▇▇▇ Systems").
B. TCI owns and operates cable television systems which are
franchised or hold other operating authority and operate in and around Annapolis
and ▇▇▇▇ Arundel County, Maryland, and the U.S. Naval Academy (the "TCI
Systems").
C. This Agreement sets forth the terms and conditions on
which ▇▇▇▇▇ will convey, or cause to be conveyed, to TCI substantially all of
the assets comprising or used or useful in connection with the ▇▇▇▇▇ Cable
Business and TCI will convey, or cause to be conveyed, to ▇▇▇▇▇ substantially
all of the assets comprising or used or useful in connection with the TCI Cable
Business, all in such a manner as to effect, to the extent reasonably possible,
a like-kind exchange of such assets under Section 1031 of the United States
Internal Revenue Code, as amended (the "Code").
AGREEMENTS
In consideration of the mutual covenants and promises set forth herein,
the parties agree as follows:
SECTION 1. DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following
capitalized terms or terms otherwise defined in this SECTION 1 will have the
meanings set forth below:
1.1 1992 Cable Act. The Cable Television Consumer Protection
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and Competition Act of 1992 and the FCC rules and regulations promulgated
thereunder.
1.2 Affiliate. With respect to any Person, any Person
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controlling, controlled by or under common control with such Person; "control"
means the ownership, directly or indirectly, of voting securities representing
the right generally to elect a majority of the directors (or similar officials)
of a Person or the possession, by contract or otherwise, of the authority to
direct the management and policies of a Person.
1.3 Assets. The ▇▇▇▇▇ Assets or the TCI Assets, as the context
------
requires.
1.4 Basic Service. The lowest tier of service offered to
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subscribers of a System.
1.5 Business Day. Any day other than a Saturday, Sunday or a
------------
day on which the banking institutions in Denver, Colorado are required or
authorized to be closed.
1.6 Cable Act. The Cable Communications Policy Act of 1984, as
---------
amended, and the rules and regulations promulgated thereunder.
1.7 Cable Business. The ▇▇▇▇▇ Cable Business or TCI Cable
--------------
Business, as the context requires.
1.8 Closing Time. 11:59 P.M., Mountain Time, on the Closing
------------
Date.
1.9 Communications Act. The Communications Act of 1934, as
------------------
amended, and the rules and regulations promulgated thereunder.
1.10 Contract. Any contract, mortgage, deed of trust, bond,
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indenture, lease, license, note, franchise, certificate, option, warrant, right
or other instrument, document, obligation or agreement, whether written or oral.
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1.11 Environmental Law. Any Legal Requirement relating to
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pollution or the protection of public health, safety or welfare or the
environment, including Legal Requirements relating to emissions, discharges,
releases or threatened releases of Hazardous Substances into the environment
(including ambient air, surface water, ground water or land) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances.
1.12 Equivalent Basic Subscribers (or "EBSs"). An active
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customer for Basic Service either in a single household, a commercial
establishment or in a multi-unit dwelling (including a hotel unit); provided,
however, that the number of customers in a multi-unit dwelling or commercial
establishment that obtain service on a "bulk-rate" basis will be determined on a
System by System basis by dividing the gross bulk-rate ▇▇▇▇▇▇▇▇ for Basic
Service and Expanded Basic Service (but not ▇▇▇▇▇▇▇▇ from a la carte tiers or
premium services, installation or other non-recurring charges, converter rental
or from any outlet or connection other than the first outlet or connection or
from any pass-through charge for sales taxes, line-itemized franchise fees, fees
charged by the FCC and the like), attributable to such multi-unit dwelling or
commercial establishment during the most recent billing period ended prior to
the date of calculation (but excluding ▇▇▇▇▇▇▇▇ in excess of a single month's
charge) by the rate charged at the time of determination to individual
households for the highest level of Basic Service and Expanded Basic Service
offered by such System, such rate not to be less than the rate for such System
set forth on SCHEDULE 6.14 (in the case of TCI) or SCHEDULE 5.14 (in the case of
▇▇▇▇▇) (excluding a la carte tiers or premium services, installation or other
non-recurring charges, converter rental, pass-through charges for sales taxes,
line-itemized franchise fees charged by the FCC and the like). For purposes of
this definition, an "active customer" will mean any person, commercial
establishment or multi-unit dwelling at any given time that is paying for and
receiving Basic Service from the System who has an account that is not more than
60 days past due (except for past due amounts of $5 or less, provided such
account is otherwise current). For purposes of this definition, an "active
customer" does not include any person, commercial establishment or multi-unit
dwelling that as of the date of calculation has not paid in full the charges for
at least one month of the services ordered or any subscriber whose service is
pending disconnection for any reason. For purposes of this definition, the
number of days past due of a customer account will be determined from the first
day of the period for which the applicable billing relates.
1.13 ERISA. The Employee Retirement Income Security Act of
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1974, as amended, and the rules and regulations promulgated thereunder and
published interpretations with respect thereto.
1.14 ERISA Affiliate. As to any Person, any trade or business,
---------------
whether or not incorporated, which together with such Person would be deemed a
single employer within the meaning of Section 4001 of ERISA.
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1.15 Expanded Basic Service. Any video programming provided
----------------------
over a cable television system, regardless of service tier, other than (a) Basic
Service, (b) any new product tier and (c) Pay TV.
1.16 FCC. The Federal Communications Commission.
---
1.17 Financial Statements. ▇▇▇▇▇ Financial Statements or TCI's
--------------------
Financial Statements, as the context requires.
1.18 Governmental Authority. The United States of America, any
----------------------
state, commonwealth, territory or possession of the United States of America and
any political subdivision or quasi-governmental authority of any of the same,
including any court, tribunal, department, commission, board, bureau, agency,
county, municipality, province, parish or other instrumentality of any of the
foregoing.
1.19 Hazardous Substances. (a) Any "hazardous waste" as defined
--------------------
by the Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C.A. (S)(S)
6901 et seq.), as amended, and the rules and regulations promulgated thereunder;
(b) any "hazardous substance" as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C.A. (S)(S) 9601 et
seq.) (CERCLA), as amended, and the rules and regulations promulgated
thereunder; (c) any substance regulated by the Toxic Substances Control Act
(TSCA) (42 U.S.C. (S)2601 et seq.), or the Insecticide, Fungicide and
Rodenticide Act, each as amended, and the rules and regulations promulgated
thereunder; (d) asbestos or asbestos-containing material of any kind or
character; (e) polychlorinated biphenyls; (f) any substances regulated under the
provisions of Subtitle I of RCRA relating to underground storage tanks; (g) any
substance the presence, use, handling, treatment, storage or disposal of which
on Owned Property or Leased Property is prohibited by any Environmental Law; and
(h) any other substance which by any Environmental Law requires special
handling, reporting or notification of any Governmental Authority in its
collection, storage, use, treatment or disposal.
1.20 HSR Act. The ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
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of 1976, as amended, and the rules and regulations promulgated thereunder.
1.21 ▇▇▇▇▇ Assets. All of the assets, properties, privileges,
------------
rights, interests and claims, real and personal, tangible and intangible, of
every type and description that are owned, leased, held, used or useful in the
▇▇▇▇▇ Cable Business in which ▇▇▇▇▇ has any right, title or interest or in which
▇▇▇▇▇ acquires any right, title or interest on or before the Closing Time that
are not ▇▇▇▇▇ Excluded Assets, including the ▇▇▇▇▇ Tangible Personal Property,
▇▇▇▇▇ Owned Real Property, ▇▇▇▇▇ Leased Property, ▇▇▇▇▇ Real Property Interests,
▇▇▇▇▇ System Franchises, ▇▇▇▇▇ System Licenses and ▇▇▇▇▇ System Contracts, ▇▇▇▇▇
Books and Records and the ▇▇▇▇▇ Intangibles, but excluding any ▇▇▇▇▇ Excluded
Assets.
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1.22 ▇▇▇▇▇ Books and Records. All engineering records, files,
-----------------------
data, drawings, blueprints, schematics, reports, lists, plans and processes and
all files of correspondence, lists, records and reports concerning the ▇▇▇▇▇
Cable Business, including subscribers and prospective subscribers of the ▇▇▇▇▇
Systems, signal and program carriage and dealings with Governmental Authorities,
including all reports filed by or on behalf of ▇▇▇▇▇ with the FCC and statements
of account filed by or on behalf of ▇▇▇▇▇ with the U.S. Copyright Office and
all documents, reports and records relating to the employees of the ▇▇▇▇▇
Systems who are hired by TCI.
1.23 ▇▇▇▇▇ Cable Business. The cable television business
--------------------
conducted by ▇▇▇▇▇ on the date of this Agreement through the ▇▇▇▇▇ Systems.
1.24 ▇▇▇▇▇ Leased Property. The leaseholds of real property
---------------------
described as ▇▇▇▇▇ Leased Property on SCHEDULE 1.24.
1.25 ▇▇▇▇▇ Intangibles. All intangible assets other than ▇▇▇▇▇
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System Franchises, ▇▇▇▇▇ System Licenses and ▇▇▇▇▇ Systems Contracts, including
subscriber lists, accounts receivable, claims (excluding any claims relating to
▇▇▇▇▇ Excluded Assets), patents, copyrights and goodwill, if any, owned, used or
held for use in the ▇▇▇▇▇ Cable Business.
1.26 ▇▇▇▇▇ Real Property Interests. The easements and rights of
-----------------------------
access (other than those relating to multiple dwelling units) and other
interests in real property held by ▇▇▇▇▇ in connection with the ▇▇▇▇▇ Cable
Business, including those interests described as ▇▇▇▇▇ Real Property Interests
on SCHEDULE 1.26.
1.27 ▇▇▇▇▇ Owned Property. The fee interests in the real
--------------------
property described as ▇▇▇▇▇ Owned Property on SCHEDULE 1.27 and all improvements
thereon.
1.28 ▇▇▇▇▇ Required Consents. Any and all consents,
-----------------------
authorizations and approvals required under the ▇▇▇▇▇ System Franchises, ▇▇▇▇▇
System Licenses, the leases and other documents evidencing ▇▇▇▇▇ Leased Property
and ▇▇▇▇▇ Real Property Interests and ▇▇▇▇▇ Systems Contracts or otherwise for
(a) ▇▇▇▇▇ to transfer the ▇▇▇▇▇ Assets to TCI, (b) TCI to own, lease, use and
operate the ▇▇▇▇▇ Assets and the ▇▇▇▇▇ Systems at the places and in the manner
in which the ▇▇▇▇▇ Assets are used and the ▇▇▇▇▇ Systems are operated as of the
date of this Agreement and as of the Closing and (c) TCI to assume and perform
the ▇▇▇▇▇ System Franchises, the ▇▇▇▇▇ System Licenses, the leases and other
documents evidencing ▇▇▇▇▇ Leased Property and ▇▇▇▇▇ Real Property Interests and
the ▇▇▇▇▇ System Contracts.
1.29 ▇▇▇▇▇ System Contracts. The pole line agreements,
----------------------
underground conduit agreements, crossing agreements, multiple dwelling, bulk
billing or commercial service agreements and other Contracts (other than ▇▇▇▇▇
System Franchises and ▇▇▇▇▇ System Licenses) described on SCHEDULE 1.29.
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1.30 ▇▇▇▇▇ System Franchises. The franchises and other
-----------------------
authorizations or permits described on Schedule 1.30.
1.31 ▇▇▇▇▇ System Licenses. The intangible cable television
---------------------
channel distribution rights, cable television relay service (CARS), business
radio and other licenses, authorizations, consents or permits issued by the FCC
or any other Governmental Authority (other than ▇▇▇▇▇ System Franchises, ▇▇▇▇▇
System Contracts and ▇▇▇▇▇ Real Property Interests) described on SCHEDULE 1.31.
1.32 ▇▇▇▇▇ Tangible Personal Property. All tangible personal
--------------------------------
property, including towers, tower equipment, office equipment, computers,
billing equipment, furniture, fixtures, inventory, supplies, electronic devices,
trunk and distribution coaxial and optical fiber cable, amplifiers, power
supplies, conduit, vaults and pedestals, grounding and pole hardware,
subscriber's services (including converters, encoders, transformers behind
television sets and fittings), headend hardware (including origination, earth
stations, transmission and distribution system), test equipment, vehicles and
other tangible personal property owned, leased, used or held for use in the
▇▇▇▇▇ Cable Business, the principal items of which are described on SCHEDULE
1.32.
1.33 Judgment. Any judgment, writ, order, injunction, award or
--------
decree of any court, judge, justice or magistrate, including any bankruptcy
court or judge or the arbitrator in any binding arbitration, and any order of or
by any Governmental Authority.
1.34 Knowledge. The actual knowledge of a particular matter of
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one or more of the executive officers of such party or the general manager or
one or more of the managers of such party's Systems.
1.35 Leased Property. The ▇▇▇▇▇ Leased Property or TCI Leased
---------------
Property, as the context requires.
1.36 Legal Requirement. Applicable common law and any statute,
-----------------
ordinance, code or other law, rule, regulation, order, technical or other
written standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority, including any Judgment.
1.37 Lien. Any security interest, security agreement, financing
----
statement filed with any Governmental Authority, conditional sale or other title
retention agreement, any lease, consignment or bailment given for purposes of
security, any mortgage, lien, indenture, pledge, option, encumbrance, adverse
interest, constructive trust or other trust, claim, attachment, exception to,
defect in or other condition affecting title or other ownership interest
(including reservations, rights of entry, possibilities of reverter,
encroachments, protrusions, easements, rights-of-way, rights of first refusal,
restrictive covenants, leases and licenses) of any kind, which constitutes an
interest in or claim
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against property, whether arising pursuant to any Legal
Requirement, System License, System Franchise, System Contract or otherwise.
1.38 Litigation. Any claim, action, suit, proceeding,
----------
arbitration, investigation, hearing or other activity or procedure that could
result in a Judgment and any notice of any of the foregoing.
1.39 Losses. Any claims, losses, liabilities, damages,
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penalties, costs and expenses, including interest that may be imposed in
connection therewith, expenses of investigation, reasonable fees and
disbursements of counsel and other experts, and the cost to any Person making a
claim or seeking indemnification under this Agreement with respect to funds
expended by such Person by reason of the occurrence of any event with respect to
which indemnification is sought.
1.40 Owned Property. ▇▇▇▇▇ Owned Property or TCI Owned
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Property, as the context requires.
1.41 Pay TV. Premium programming services selected by and sold
------
to subscribers on a per channel or per program basis.
1.42 Permitted Lien. Any (a) Lien securing Taxes, assessments
--------------
and governmental charges not yet due and payable, (b) zoning law or ordinance or
any similar Legal Requirement, (c) right reserved to any Governmental Authority
to regulate the affected property, (d) as to Owned Property and Real Property
Interests, any Lien that does not individually or in the aggregate interfere
with the right or ability to own, use or operate the Owned Property or Real
Property Interests as they are being used or operated or to convey title to the
same in accordance with SECTIONS 9.2.3 and 9.3.3 and (e) in the case of Leased
Property, (i) the rights of any lessor and (ii) any Lien granted any lessor of
Leased Property; provided that "Permitted Lien" will not include any Lien
securing a debt or claim (other than inchoate materialmen's, mechanics',
workmen's, repairmen's or other like Liens arising in the ordinary course of
business or any Lien described in clause (e) above) or any Lien which could
prevent or impair in any way the conduct of the business of the affected System
as it is currently being conducted, and provided further that the classification
of any Lien as a "Permitted Lien" will not affect any liability which TCI may
have under this Agreement for any such Lien with respect to the exchange of the
TCI Systems or which ▇▇▇▇▇ may have under this Agreement for any such Lien with
respect to the exchange of the ▇▇▇▇▇ Systems, including pursuant to any
indemnity obligation under this Agreement.
1.43 Person. Any natural person, Governmental Authority,
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corporation, general or limited partnership, limited liability company, joint
venture, trust, association or unincorporated entity of any kind.
1.44 Real Property Interests. The ▇▇▇▇▇ Real Property Interests
-----------------------
or the TCI Real Property Interests, as the context requires.
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1.45 Required Consents. The ▇▇▇▇▇ Required Consents or the TCI
-----------------
Required Consents, as the context requires.
1.46 System. Any of the ▇▇▇▇▇ Systems or the TCI Systems, as
------
the context requires.
1.47 System Contracts. The ▇▇▇▇▇ System Contracts or the TCI
----------------
System Contracts, as the context requires.
1.48 System Franchises. The ▇▇▇▇▇ System Franchises or the TCI
-----------------
System Franchises, as the context requires.
1.49 System Licenses. The ▇▇▇▇▇ System Licenses or the TCI
---------------
System Licenses, as the context requires.
1.50 Tangible Personal Property. The ▇▇▇▇▇ Tangible Personal
--------------------------
Property or the TCI Tangible Personal Property, as the context requires.
1.51 Taxes. All levies and assessments of any kind or nature
-----
imposed by any Governmental Authority, including all income, sales, use, ad
valorem, value added, franchise, severance, net or gross proceeds, withholding,
payroll, employment, excise or property taxes and levies or assessments related
to unclaimed property, together with any interest thereon and any penalties,
additions to tax or additional amounts applicable thereto.
1.52 TCI Assets. All of the assets, properties, privileges,
----------
rights, interests and claims, real and personal, tangible and intangible, of
every type and description that are owned, leased, held, used or useful in the
TCI Cable Business in which TCI has any right, title or interest or in which TCI
acquires any right, title or interest on or before the Closing Time that are not
TCI Excluded Assets, including the TCI Tangible Personal Property, the TCI Owned
Real Property, the TCI Leased Property, the TCI Real Property Interests, the
TCI System Franchises, the TCI System Licenses and the TCI System Contracts, the
TCI Books and Records and TCI Intangibles, but excluding any TCI Excluded
Assets.
1.53 TCI Books and Records. All engineering records, files,
---------------------
data, drawings, blueprints, schematics, reports, lists, plans and processes and
all other files of correspondence, lists, records and reports concerning the TCI
Cable Business, including subscribers and prospective subscribers of the TCI
Systems, signal and program carriage and dealings with Governmental Authorities,
including all reports filed by or on behalf of TCI with the FCC and statements
of account filed by or on behalf of TCI with the U.S. Copyright Office and all
documents, reports and records relating to the employees of the TCI Systems who
are hired by ▇▇▇▇▇.
-8-
1.54 TCI Cable Business. The cable television business
------------------
conducted by TCI on the date of this Agreement through the TCI Systems.
1.55 TCI Leased Property. The leaseholds of real property
-------------------
described as TCI Leased Property on SCHEDULE 1.55.
1.56 TCI Intangibles. All intangible assets other than TCI
----------------
System Franchises, TCI System Licenses and TCI System Contracts, including
subscriber lists, accounts receivable, claims (excluding any claims relating to
TCI Excluded Assets), patents, copyrights and goodwill, if any, owned, used or
held for use in the TCI Cable Business.
1.57 TCI Real Property Interests. The easements and rights of
----------------------------
access (other than those relating to multiple dwelling units) and other
interests in real property held by TCI in connection with the TCI Cable
Business, including those interests described as TCI Real Property Interests on
SCHEDULE 1.57.
1.58 TCI Owned Property. The fee interests in the real property
------------------
described as TCI Owned Property on SCHEDULE 1.58 and all improvements thereon.
1.59 TCI Required Consents. Any and all consents,
---------------------
authorizations and approvals required under the TCI System Franchises, the TCI
System Licenses, the leases and other documents evidencing the TCI Leased
Property or the TCI Real Property Interests and the TCI System Contracts or
otherwise for (a) TCI to transfer the TCI Assets to ▇▇▇▇▇, (b) ▇▇▇▇▇ to own,
lease, use and operate the TCI Assets and the TCI Systems at the places and in
the manner in which the TCI Assets are used and the TCI Systems are operated as
of the date of this Agreement and as of the Closing and (c) ▇▇▇▇▇ to assume and
perform the TCI System Franchises, the TCI System Licenses, the leases and other
documents evidencing TCI Leased Property or TCI Real Property Interests and the
TCI System Contracts.
1.60 TCI System Contracts. The pole line agreements,
--------------------
underground conduit agreements, crossing agreements, multiple dwelling, bulk
billing or commercial service agreements and other Contracts (other than TCI
System Franchises and TCI System Licenses) described on SCHEDULE 1.60.
1.61 TCI System Franchises. The franchises and similar
---------------------
authorizations or permits described on SCHEDULE 1.61.
1.62 TCI System Licenses. The intangible cable television
-------------------
channel distribution rights, cable television relay service (CARS), business
radio and other licenses, authorizations, consents or permits issued by the FCC
or any other Governmental Authority (other than TCI System Franchises, TCI
System Contracts and TCI Real Property Interests) described on SCHEDULE 1.62.
-9-
1.63 TCI Tangible Personal Property. All tangible personal
------------------------------
property, including towers, tower equipment, office equipment, computers,
billing equipment, furniture, fixtures, inventory, supplies, electronic devices,
trunk and distribution coaxial and optical fiber cable, amplifiers, power
supplies, conduit, vaults and pedestals, grounding and pole hardware,
subscriber's services (including converters, encoders, transformers behind
television sets and fittings), headend hardware (including origination, earth
stations, transmission and distribution system), test equipment, vehicles and
other tangible personal property owned, leased, used or held for use in the TCI
Cable Business, the principal items of which are described on SCHEDULE 1.63.
1.64 Transaction Documents. The instruments and documents
---------------------
described in SECTIONS 9.2 and 9.3 which are being executed and delivered by or
on behalf of ▇▇▇▇▇ or TCI in connection with this Agreement or the transactions
contemplated hereby.
1.65 Other Definitions. The following terms are defined in the
-----------------
Sections or Recitals indicated:
Term Section or Recital
---- ------------------
Action 11.4
Adjustments 3.3.1
Agreement First Paragraph
Antitrust Division 7.7
Cash Consideration 3.1
Closing 9.1
Closing Date 9.1
Code Recital C
Cost of Service Election 5.8.4
Due Diligence Date 10.1.4
Environmental Report 7.19
Final Adjustment Certificate 3.3.2
FTC 7.7
Idaho Springs Franchise 7.25
Hired Employee 7.3.7
Indemnified Party 11.4
Indemnifying Party 11.4
Initial Adjustment Certificate 3.3.1
▇▇▇▇▇ Assumed Obligations and
Liabilities 4.3
▇▇▇▇▇ Balance Sheet 5.10
▇▇▇▇▇ Counsel Opinion 9.3.12
▇▇▇▇▇ Damages 11.5
▇▇▇▇▇ Excluded Assets 4.4
▇▇▇▇▇ Financial Statements 5.10
-10-
▇▇▇▇▇ Plans 5.13.2
▇▇▇▇▇ Systems Recital A
▇▇▇▇▇ Title Policies 9.3.4
Prime Rate 12.10
Retained Employees 7.3.1
Surveys 7.6
Survival Period 11.1
Taking 12.15.2
TCI First Paragraph
TCI Assumed Obligations and Liabilities 4.1
TCI Balance Sheet 6.10
TCI Counsel Opinion 9.2.12
TCI Damages 11.6
TCI Excluded Assets 4.2
TCI Plans 6.13.2
TCI Systems Recital B
TCI Title Policies 9.2.4
TCI's Financial Statements 6.10
Title Commitments 7.6
Title Company 7.6
Title Defect 7.6
Transitional Billing Services 7.14
WARN 5.13.1
1.66 Accounting Terms. All accounting terms not otherwise defined
----------------
in this Agreement will have the meanings ascribed to them under generally
acceptable accounting principles as in effect from time to time in the United
States.
SECTION 2. EXCHANGE
Subject to the terms and conditions set forth in this Agreement, at the
Closing:
2.1 TCI and ▇▇▇▇▇ agree to exchange simultaneously the TCI Assets,
except the TCI Excluded Assets, for the ▇▇▇▇▇ Assets, except the ▇▇▇▇▇ Excluded
Assets, free and clear of all Liens (except Permitted Liens). TCI and ▇▇▇▇▇
agree to use all reasonable efforts to structure the transaction in such a way
that it will be a tax free exchange of like-kind assets under Section 1031 of
the Code.
2.2 Such exchange is to occur as follows: (a) the TCI Tangible Personal
Property and the ▇▇▇▇▇ Tangible Personal Property are being exchanged each for
the other; (b) the TCI Owned Property, TCI Leased Property and TCI Real Property
Interests and ▇▇▇▇▇ Owned Property, ▇▇▇▇▇ Leased Property and ▇▇▇▇▇ Real
Property Interests are being exchanged each for the other; and (c)
-11-
the TCI System Contracts, TCI System Franchises, TCI System Licenses and TCI
Intangibles and the ▇▇▇▇▇ System Contracts, ▇▇▇▇▇ System Franchises, ▇▇▇▇▇
System Licenses and ▇▇▇▇▇ Intangibles are being exchanged each for the other, in
each case to the maximum extent permitted by Section 1031 of the Code and
regulations promulgated thereunder.
SECTION 3. CONSIDERATION
3.1 Value of Assets; Cash Consideration. The parties agree that the
-----------------------------------
value of the ▇▇▇▇▇ Assets is greater than the value of the TCI Assets, and that
TCI will pay to ▇▇▇▇▇ at Closing, by wire transfer of immediately available
funds pursuant to wire instructions delivered by ▇▇▇▇▇ to TCI no later than two
Business Days prior to the Closing Date, $2,500,000 reflecting the agreed upon
difference in fair market values between the ▇▇▇▇▇ Assets and the TCI Assets,
subject to adjustment as provided in SECTIONS 3.2 and 3.3 (the "Cash
Consideration").
3.2 Adjustment and Proration Payments. ▇▇▇▇▇ or TCI, as
---------------------------------
appropriate, will pay to the other the net amount in favor of the other of the
adjustments and prorations called for in this Section, by wire transfer of
immediately available funds, to an account designated in writing by the
recipient, at the time or times specified in SECTION 3.3.
3.2.1 EBS Adjustment. ▇▇▇▇▇ will pay TCI an amount equal to the
--------------
product of $1,795 multiplied by the excess, if any, of 26,050 less the number of
EBSs served by the ▇▇▇▇▇ Systems as of the Closing Time, and TCI will pay ▇▇▇▇▇
an amount equal to the product of $1,720 multiplied by the excess, if any, of
25,670 less the number of EBSs served by the TCI Systems as of the Closing Time.
These Adjustments will be in addition to or deducted from (as applicable) the
payment of the Cash Consideration.
3.2.2 Prorations. On the Closing Date, the following amounts will
----------
be calculated for the ▇▇▇▇▇ Systems, on the one hand, and the TCI Systems, on
the other, and paid by the applicable party, without duplication:
3.2.2.1 Each party will make adjustments on a pro rata
basis as of the Closing Date for all prepaid expenses, other than inventory (but
only to the extent the full benefit thereof will be realizable by the other
party within 12 months after the Closing Date), accrued expenses (including real
and personal property Taxes), copyright fees and franchise or license fees or
charges, prepaid income, subscriber prepayments and accounts receivable related
to such party's Cable Business, all as determined in accordance with generally
accepted accounting principles consistently applied, to reflect the principle
that all expenses and income attributable to such party's Cable Business for the
period through and including the Closing Date are for the account of such party,
and all expenses and income attributable to such party's Cable Business for the
period after the Closing Time are for the account of the other party. Neither
party will receive credit for any (a) accounts receivable resulting from cable
service sales any portion of which is 60 days or more past
-12-
due from the billing date as of the Closing Date, (b) accounts receivable
resulting from advertising sales any portion of which is 120 days or more past
due as of the Closing Date, or (c) accounts receivable from customers whose
accounts are inactive or whose service is pending disconnection for any reason
as of the Closing Date. Notwithstanding the foregoing, no adjustment will be
made for any items of income or expense that relate to any Excluded Assets. For
purposes of making "past due" calculations under this paragraph, the billing
statements of a System will be deemed to be due and payable on the first day of
the period during which the service to which such billing statements relate is
provided.
3.2.2.2 All advance payments to, or funds of third parties
on deposit with, a party as of the Closing Date, relating to such party's Cable
Business, including advance payments and deposits (including any accrued
interest on such deposits) by subscribers served by such party's Cable Business
for converters, encoders, decoders, cable television service and related sales,
will be assumed by, and credited to the account of, the other party.
3.2.2.3 TCI shall pay ▇▇▇▇▇ the economic value of the
vacation time which ▇▇▇▇▇ assumes pursuant to SECTION 7.3.7 for the Hired
Employees (as defined in SECTION 7.3.7) in the TCI Systems. ▇▇▇▇▇ shall pay TCI
the economic value of the vacation time which TCI assumes pursuant to SECTION
7.3.7 for the Hired Employees in the ▇▇▇▇▇ Systems.
3.3 Calculation of Adjustments.
--------------------------
3.3.1 Each party will estimate in good faith with respect to
their respective Systems, and set forth, together with a detailed statement of
the calculation thereof, the adjustments and prorations with respect to its
Cable Business prescribed by SECTION 3.2.2 (collectively, the "Adjustments"), in
a certificate (the "Initial Adjustment Certificate") executed by an authorized
representative of ▇▇▇▇▇ or TCI, as appropriate, and delivered to the other party
by a date they reasonably believe is at least 10 Business Days prior to the
Closing. Each Initial Adjustment Certificate will be accompanied by a complete
list of subscribers and appropriate documentation, including a detailed
calculation of the number of EBSs and an accounts receivable detail with
relevant aging information as of the Closing Time, in summary form, supporting
the Adjustments proposed in such certificate. Each party will also furnish to
the other party the preparer's billing report for the most current period as of
the Closing Date. Following receipt of such Initial Adjustment Certificate and
supporting information, the recipient will have five Business Days to review
such schedule and supporting information and to notify the preparer of such
Initial Adjustment Certificate of any disagreements with the preparer's
estimates. If the recipient provides a notice of disagreement with the
preparer's estimates of such amounts within such five Business Day period, TCI
and ▇▇▇▇▇ will negotiate in good faith to resolve any such dispute and to reach
an agreement prior to the Closing Date on such estimated amounts as of the
Closing Date. The basis for determining the preliminary amounts payable at
Closing will be (a) the estimate so agreed upon by TCI and ▇▇▇▇▇ or (b) if the
parties do not reach such an agreement or notice of disagreement is not timely
given, the estimates of such Adjustments set forth in the Initial Adjustments
Certificate.
-13-
3.3.2 Within 90 days after the Closing, ▇▇▇▇▇ and TCI
will each deliver to the other a certificate (the "Final Adjustment
Certificate") showing in full detail the final determination of their respective
Adjustments, which certificate will be accompanied by appropriate documentation
supporting the amounts proposed in such certificate, including a detailed
calculation of the number of EBSs and an accounts receivable detail with
relevant aging information as of the Closing Time, and which will be executed by
an officer of ▇▇▇▇▇ or TCI as appropriate. Each party will provide to the other
reasonable access to all records in its possession which were used in the
preparation of its Final Adjustment Certificate.
3.3.3 ▇▇▇▇▇ and TCI will each review the other's Final
Adjustment Certificate and will give written notice to the other party of any
objections it has to the calculations shown in such certificate within 30 days
after its receipt thereof. TCI and ▇▇▇▇▇ will endeavor in good faith to resolve
any such objections within 30 days after the receipt by both parties of the
other's objections. If any objections or disputes have not been resolved at the
end of such 30-day period, the disputed portion of the Adjustments amount will
be determined by Price Waterhouse, whose determination will be conclusive. ▇▇▇▇▇
and TCI will bear equally the expenses arising in connection with such auditor
determination of all disputed amounts, and payment of the final Adjustments
amount (after taking into account any estimated Adjustments amount paid at the
Closing) will be made by the party responsible therefor to the other party
within three Business Days after the final determination is made.
SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS
4.1 TCI Assumed Obligations and Liabilities. At the Closing, TCI
---------------------------------------
will assume and after the Closing Time, TCI will pay, discharge and perform the
following (the "TCI Assumed Obligations and Liabilities"): (a) those
obligations and liabilities accruing and relating to periods after the Closing
Time under or with respect to the ▇▇▇▇▇ Assets assigned and transferred to TCI
at the Closing; (b) those obligations and liabilities of ▇▇▇▇▇ for subscriber
prepayments and converter deposits related to the ▇▇▇▇▇ Systems existing after
the Closing Time to the extent that an adjustment in favor of TCI is made with
respect thereto pursuant to SECTION 3.2; (c) customer, advertising and other
advance payments held by ▇▇▇▇▇ as of the Closing Time in the amount for which
TCI received credit under SECTION 3.2; and (d) all other obligations and
liabilities accruing and relating to periods after the Closing Time and arising
out of TCI's ownership of the ▇▇▇▇▇ Assets or operation of the ▇▇▇▇▇ Systems
after the Closing, except to the extent that such obligations or liabilities
relate to any ▇▇▇▇▇ Excluded Asset. All obligations and liabilities,
contingent, fixed or otherwise, arising out of or relating to the ▇▇▇▇▇ Assets
or the ▇▇▇▇▇ Systems other than the TCI Assumed Obligations and Liabilities will
remain and be the obligations and liabilities solely of ▇▇▇▇▇, including any
obligation, liability or claim relating to or arising pursuant to (i) rate
refunds to subscribers of the ▇▇▇▇▇ Systems with respect to rates charged to
such subscribers during periods through and including the Closing Time, (ii)
litigation commenced prior to, or related to an event occurring through and
including, the Closing Time, or (iii) credit, loan or other agreements pursuant
to which ▇▇▇▇▇ has created, incurred,
-14-
assumed or guaranteed indebtedness for borrowed money or under which any Lien
securing such indebtedness has been or may be imposed on any ▇▇▇▇▇ Asset.
4.2 TCI Excluded Assets. "TCI Excluded Assets," which will be
-------------------
retained by TCI, means all: (a) TCI programming (including cable guide
agreements) and retransmission consent Contracts; (b) TCI vehicle leases and
leases relating to Tangible Personal Property; (c) TCI Plans; (d) TCI insurance
policies and rights and claims thereunder (except as otherwise provided in
SECTION 12.16); (e) TCI bonds, letters of credit, surety instruments and other
similar items; (f) TCI cash, cash equivalents and notes receivable; (g) TCI
trademarks, trade names, service marks, service names, logos and similar
proprietary rights; (h) TCI subscriber billing Contracts and related leased
equipment; (i) any agreement, right, asset or property owned or leased by TCI
that is not used or held for use in connection with the operation of the TCI
Systems; (j) all claims, rights, and interest in and to any refunds of taxes or
fees of any nature, or other claims against third parties, relating to the
operation of the TCI Systems prior to the Closing Time; (k) the account books of
original entry, general ledgers and financial records used in connection with
the TCI Systems provided, however, that TCI will provide to the ▇▇▇▇▇ access, in
connection with litigation, administrative proceedings, payment of taxes or any
other valid business reason, to any of such books and records as may be in TCI's
possession for a reasonable period, not to exceed seven years from the Closing
Date, from time to time upon reasonable notice from ▇▇▇▇▇ to TCI during normal
business hours; and (l) rights, assets and properties described on SCHEDULE 4.2.
4.3 ▇▇▇▇▇ Assumed Obligations and Liabilities. At the Closing,
-----------------------------------------
▇▇▇▇▇ will assume and after the Closing Time, ▇▇▇▇▇ will pay, discharge and
perform the following (the "▇▇▇▇▇ Assumed Obligations and Liabilities"): (a)
those obligations and liabilities accruing and relating to periods after the
Closing Time under or with respect to the TCI Assets assigned and transferred to
▇▇▇▇▇ at the Closing; (b) those obligations and liabilities of TCI for
subscriber prepayments and converter deposits related to the TCI Systems
existing after the Closing Time to the extent that an adjustment in favor of
▇▇▇▇▇ is made with respect thereto pursuant to SECTION 3.2; (c) customer,
advertising and other advance payments held by TCI as of the Closing Time in the
amount for which ▇▇▇▇▇ received credit under SECTION 3.2; and (d) all other
obligations and liabilities accruing and relating to periods after the Closing
Time and arising out of ▇▇▇▇▇' ownership of the TCI Assets or operation of the
TCI Systems after the Closing, except to the extent that such obligations or
liabilities relate to any TCI Excluded Asset. All obligations and liabilities,
contingent, fixed or otherwise, arising out of or relating to the TCI Assets or
the TCI Systems other than the ▇▇▇▇▇ Assumed Obligations and Liabilities will
remain and be the obligations and liabilities solely of TCI including any
obligation, liability or claim relating to or arising pursuant to (i) rate
refunds to subscribers of the TCI Systems with respect to rates charged to such
subscribers during periods through and including the Closing Time, (ii)
litigation commenced prior to, or related to an event occurring through and
including, the Closing Time, or (iii) credit, loan or other agreements pursuant
to which TCI has created, incurred, assumed or guaranteed indebtedness for
borrowed money or under which any Lien securing such indebtedness has been or
may be imposed on any TCI Asset.
-15-
4.4 ▇▇▇▇▇ Excluded Assets. "▇▇▇▇▇ Excluded Assets," which will
----------------------
be retained by ▇▇▇▇▇, means all: (a) ▇▇▇▇▇ programming (including cable guide
agreements) and retransmission consent Contracts; (b) ▇▇▇▇▇ vehicle leases and
leases relating to Tangible Personal Property; (c) ▇▇▇▇▇ Plans; (d) ▇▇▇▇▇
insurance policies and rights and claims thereunder (except as otherwise
provided in SECTION 12.16); (e) ▇▇▇▇▇ bonds, letters of credit, surety
instruments and other similar items; (f) ▇▇▇▇▇ cash, cash equivalents and notes
receivable; (g) ▇▇▇▇▇ trademarks, trade names, service marks, service names,
logos and similar proprietary rights; (h) ▇▇▇▇▇ subscriber billing Contracts and
related leased equipment; (i) any agreement, right, asset or property owned or
leased by ▇▇▇▇▇ that is not used or held for use in connection with the
operation of the ▇▇▇▇▇ Systems; (j) all claims, rights, and interest in and to
any refunds of taxes or fees of any nature, or other claims against third
parties, relating to the operation of the ▇▇▇▇▇ Systems prior to the Closing
Time; (k) the account books of original entry, general ledgers and financial
records used in connection with the ▇▇▇▇▇ Systems provided, however, that ▇▇▇▇▇
will provide to TCI access, in connection with litigation, administrative
proceedings, payment of taxes or any other valid business reason, to any of such
books and records as may be in ▇▇▇▇▇'▇ possession for a reasonable period, not
to exceed seven years from the Closing Date, from time to time upon reasonable
notice from TCI to ▇▇▇▇▇ during normal business hours; and (l) rights, assets
and properties described on SCHEDULE 4.4.
SECTION 5. ▇▇▇▇▇' REPRESENTATIONS AND WARRANTIES
▇▇▇▇▇ represents and warrants to TCI as of the date of this
Agreement and as of the Closing, as follows:
5.1 Organization and Qualification of ▇▇▇▇▇. ▇▇▇▇▇ 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, lease and use the ▇▇▇▇▇ Assets owned, leased or used by it and to conduct
the ▇▇▇▇▇ Cable Business as it is currently conducted. ▇▇▇▇▇ is duly qualified
to do business and is in good standing under the laws of each jurisdiction in
which the ownership, leasing or use of the ▇▇▇▇▇ Assets owned, leased or used by
it or the nature of its activities in connection with the ▇▇▇▇▇ Systems makes
such qualification necessary, except in any such jurisdiction where the failure
to be so qualified and in good standing would not have a material adverse effect
on the ownership or operation of the ▇▇▇▇▇ Cable Business, ▇▇▇▇▇ Assets or ▇▇▇▇▇
Systems or on the ability of ▇▇▇▇▇ to perform its obligations under this
Agreement.
5.2 Authority and Validity. ▇▇▇▇▇ has all requisite corporate
----------------------
power and authority to execute and deliver, to perform its obligations under,
and to consummate the transactions contemplated by, this Agreement and the
Transaction Documents to which ▇▇▇▇▇ is a party. Subject to the approval of the
Board of Directors of ▇▇▇▇▇, the execution and delivery by ▇▇▇▇▇ of, the
performance by ▇▇▇▇▇ of its obligations under, and the consummation by ▇▇▇▇▇ of
the transactions contemplated by, this Agreement and the Transaction Documents
to which ▇▇▇▇▇ is a party have been duly and validly authorized by all action by
or on behalf of ▇▇▇▇▇. This Agreement has been, and
-16-
when executed and delivered by ▇▇▇▇▇ the Transaction Documents will be, duly and
validly executed and delivered by ▇▇▇▇▇ and the valid and binding obligations of
▇▇▇▇▇, enforceable against ▇▇▇▇▇ in accordance with their terms, except as the
same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to the
enforcement of creditors' rights generally or by principles governing the
availability of equitable remedies.
5.3 No Conflict; Required Consents. Except for the ▇▇▇▇▇
-------------------------------
Required Consents, all of which are listed on SCHEDULE 5.3, and the TCI Required
Consents and the notification and expiration or earlier termination of the
waiting period under the HSR, the execution and delivery by ▇▇▇▇▇, the
performance of ▇▇▇▇▇ under, and the consummation by ▇▇▇▇▇ of the transactions
contemplated by, this Agreement and the Transaction Documents to which ▇▇▇▇▇ is
a party do not and will not: (a) violate any provision of its charter or bylaws;
(b) violate any Legal Requirement; (c) require any consent, approval or
authorization of, or filing of any certificate, notice, application, report or
other document with, any Governmental Authority or other Person; or (d) (i)
violate or result in a breach of or default under (without regard to
requirements of notice, lapse of time or elections of other Persons or any
combination thereof), (ii) permit or result in the termination, suspension or
modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of ▇▇▇▇▇ under, (iv) result in the creation
or imposition of any Lien under any System Contract or any ▇▇▇▇▇ System Contract
or other instrument evidencing any of the ▇▇▇▇▇ Assets or by which ▇▇▇▇▇ or any
of its assets is bound or affected, except for purposes of this clause (d) such
violations, conflicts, breaches, defaults, terminations, suspensions,
modifications and accelerations as would not, individually or in the aggregate,
have a material adverse effect on any ▇▇▇▇▇ System, the ▇▇▇▇▇ Cable Business or
▇▇▇▇▇ or on the ability of ▇▇▇▇▇ to perform its obligations under this Agreement
or the Transaction Documents to which ▇▇▇▇▇ is a party.
5.4 Assets.
------
5.4.1 ▇▇▇▇▇ has exclusive, good and marketable title to
(or, in the case of Assets that are leased, valid leasehold interests in) the
▇▇▇▇▇ Assets (other than ▇▇▇▇▇ Owned Real Property, ▇▇▇▇▇ Leased Property and
▇▇▇▇▇ Real Property Interests, as to which representations and warranties in
SECTION 5.6 apply). The ▇▇▇▇▇ Assets are free and clear of all Liens, except (a)
Permitted Liens and (b) Liens described on SCHEDULE 5.4, all of which will be
terminated, released or, in the case of any rights of first refusal listed on
SCHEDULE 5.4, waived, as appropriate, at or prior to the Closing. Except as
described on SCHEDULE 1.32, the ▇▇▇▇▇ Tangible Personal Property is in good
operating condition and repair (ordinary wear and tear excepted).
5.4.2 Except for items included in the ▇▇▇▇▇ Excluded
Assets, the ▇▇▇▇▇ Assets constitute all the assets necessary to permit TCI to
conduct the ▇▇▇▇▇ Cable Business and to operate the ▇▇▇▇▇ Systems substantially
as they are being conducted and operated on the date of this Agreement and in
compliance in all material respects with all applicable Legal Requirements,
▇▇▇▇▇ System Franchises and ▇▇▇▇▇ System Contracts and to perform all of the TCI
Assumed Obligations and Liabilities.
-17-
5.4.3 Except as described in SCHEDULE 5.4, as of the date of
this Agreement, to the Knowledge of ▇▇▇▇▇, no third party has been granted or
applied for a cable television franchise or is providing or intending to provide
cable television services in any of the communities or unincorporated areas
currently served by the ▇▇▇▇▇' Cable Business.
5.5 ▇▇▇▇▇ System Franchises, ▇▇▇▇▇ System Licenses, ▇▇▇▇▇ System
------------------------------------------------------------
Contracts and ▇▇▇▇▇ Real Property Interests.
--------------------------------------------
5.5.1 Except for the ▇▇▇▇▇ Excluded Assets and except as
described on SCHEDULES 1.24, 1.26, 1.29, 1.30 and 1.31, ▇▇▇▇▇ is not bound or
affected by any of the following that relate primarily or in whole to the ▇▇▇▇▇
Cable Business: (a) leases of real or personal property; (b) franchises for the
construction or operation of cable television systems or System Contracts of
substantially equivalent effect; (c) other licenses, authorizations, consents or
permits of the FCC or any other Governmental Authority; (d) material easements
or rights of access; (e) pole line agreements, underground conduit agreements,
crossing agreements or bulk or commercial service agreements; or (f) System
Contracts relating to the operation of the ▇▇▇▇▇ Cable Business other than those
described in any other clause of this SECTION 5.5.1 which contemplate payments
by or to ▇▇▇▇▇ in any 12-month period exceeding $10,000 individually or $30,000
in the aggregate or that are not terminable by ▇▇▇▇▇ without cost or penalty on
not more than 90 days prior written notice.
5.5.2 Complete and correct copies of the ▇▇▇▇▇ System
Franchises and ▇▇▇▇▇ System Licenses have been delivered by ▇▇▇▇▇ to TCI. The
▇▇▇▇▇ System Franchises and ▇▇▇▇▇ System Licenses are currently in full force
and effect, are not in default and are valid under all applicable Legal
Requirements according to their terms. There is no legal action, governmental
proceeding or investigation, pending or to ▇▇▇▇▇' Knowledge threatened, to
terminate, suspend or modify any ▇▇▇▇▇ System Franchise or ▇▇▇▇▇ System License
and ▇▇▇▇▇ is in compliance with the material terms and conditions of all the
▇▇▇▇▇ System Franchises and ▇▇▇▇▇ System Licenses and with other material
applicable requirements of all Governmental Authorities (including the FCC and
the Register of Copyrights) relating to the ▇▇▇▇▇ System Franchises and ▇▇▇▇▇
System Licenses, including all requirements for notification, filing, reporting,
posting and maintenance of logs and records.
5.5.3 Complete and correct copies of all material ▇▇▇▇▇
System Contracts (including Contracts relating to the ▇▇▇▇▇ Leased Property and
the ▇▇▇▇▇ Real Property Interests described on SCHEDULE 1.26) have been provided
to TCI. Such documents constitute the entire agreement with the other party.
Each such ▇▇▇▇▇ System Contract is in full force and effect and constitutes the
valid, legal, binding and enforceable obligation of ▇▇▇▇▇ and ▇▇▇▇▇ is not and
to ▇▇▇▇▇' Knowledge, each other party thereto is not, in breach or default of
any material terms or conditions thereunder.
-18-
5.6 Real Property. All the Assets consisting of ▇▇▇▇▇ Owned
-------------
Property, ▇▇▇▇▇ Leased Property and material ▇▇▇▇▇ Real Property Interests are
described on SCHEDULES 1.24, 1.26 and 1.27. Except as otherwise disclosed on
SCHEDULES 1.24, 1.26 and 1.27, ▇▇▇▇▇ holds good, marketable and indefeasible fee
simple title to the ▇▇▇▇▇ Owned Property and has the valid and enforceable right
to use and possess such ▇▇▇▇▇ Owned Property, subject only to the Permitted
Liens; and ▇▇▇▇▇ has valid and enforceable leasehold interests in all ▇▇▇▇▇
Leased Property and, with respect to ▇▇▇▇▇ Real Property Interests, has valid
and enforceable rights to use all ▇▇▇▇▇ Real Property Interests subject only to
Permitted Liens. Except for routine repairs, all of the material improvements,
leasehold improvements and the premises of the ▇▇▇▇▇ Owned Property and the
premises demised under the leases and other documents evidencing the ▇▇▇▇▇
Leased Property are in good condition and repair and are suitable for the
purposes used. Each parcel of ▇▇▇▇▇ Owned Property and each parcel of ▇▇▇▇▇
Leased Property and any improvements thereon and their current use (a) has
access to and over public streets or private streets for which ▇▇▇▇▇ has a valid
right of ingress and egress, (b) conforms in its current use and occupancy to
all material zoning requirements without reliance upon a variance issued by a
Governmental Authority or a classification of the parcel in question as a
nonconforming use and (c) conforms in all material respects in its current use
to all restrictive covenants, if any, or other Liens affecting all or part of
such parcel.
5.7 Environmental.
-------------
5.7.1 To ▇▇▇▇▇' Knowledge, the ▇▇▇▇▇ Owned Property and
▇▇▇▇▇ Leased Property comply in all material respects with and has previously
been operated in compliance in all material respects with all Environmental
Laws. ▇▇▇▇▇ has not, either directly or indirectly (a) generated, stored, used,
treated, handled, discharged, released or disposed of any Hazardous Substances
at, on, under, in or about, to or from or in any other manner affecting, any
▇▇▇▇▇ Owned Property or ▇▇▇▇▇ Leased Property, (b) transported any Hazardous
Substances to or from any ▇▇▇▇▇ Owned Property or ▇▇▇▇▇ Leased Property or (c)
undertaken or caused to be undertaken any other activities relating to the ▇▇▇▇▇
Owned Property or ▇▇▇▇▇ Leased Property, which could reasonably give rise to any
liability under any Environmental Law and, to ▇▇▇▇▇' Knowledge, no other present
or previous owner, tenant, occupant or user of any ▇▇▇▇▇ Owned Property or ▇▇▇▇▇
Leased Property or any other Person has committed or suffered any of the
foregoing. To ▇▇▇▇▇' Knowledge, (i) no release of Hazardous Substances outside
the ▇▇▇▇▇ Owned Property or ▇▇▇▇▇ Leased Property has entered or threatens to
enter any ▇▇▇▇▇ Owned Property or ▇▇▇▇▇ Leased Property, nor (ii) is there any
pending or threatened litigation based on Environmental Laws which arises from
any condition of the land adjacent to or immediately surrounding any ▇▇▇▇▇ Owned
Property or ▇▇▇▇▇ Leased Property. No litigation based on Environmental Laws
which relates to any ▇▇▇▇▇ Owned Property or ▇▇▇▇▇ Leased Property or any
operations or conditions on it (A) has been asserted or conducted in the past or
is currently pending against or with respect to ▇▇▇▇▇ or, to ▇▇▇▇▇' Knowledge,
any other Person or (B) to ▇▇▇▇▇' Knowledge, is threatened or contemplated.
5.7.2 To ▇▇▇▇▇' Knowledge, other than as described on
SCHEDULE 5.7, (a) no aboveground or underground storage tanks are currently or
have been located on any ▇▇▇▇▇ Owned Property or ▇▇▇▇▇ Leased Property, (b) no
▇▇▇▇▇ Owned
-19-
Property or ▇▇▇▇▇ Leased Property has been used at any time as a gasoline
service station or any other facility for storing, pumping, dispensing or
producing gasoline or any other petroleum products or wastes and (c) no building
or other structure on any ▇▇▇▇▇ Owned Property or ▇▇▇▇▇ Leased Property contains
asbestos, asbestos-containing material or material presumed to be asbestos-
containing material under environmental law.
5.7.3 ▇▇▇▇▇ has provided TCI with complete and correct
copies of (a) all studies, reports, surveys or other written materials in ▇▇▇▇▇'
possession or, to ▇▇▇▇▇' Knowledge to which it has access, relating to the
presence or alleged presence of Hazardous Substances at, on, under or affecting
the ▇▇▇▇▇ Owned Property or ▇▇▇▇▇ Leased Property, (b) all notices or other
materials in ▇▇▇▇▇' possession or, to ▇▇▇▇▇' Knowledge to which it has access,
that were received from any Governmental Authority having the power to
administer or enforce any Environmental Laws relating to current or past
ownership, use or operation of the ▇▇▇▇▇ Owned Property or ▇▇▇▇▇ Leased Property
or activities at the ▇▇▇▇▇ Owned Property or ▇▇▇▇▇ Leased Property and (c) all
materials in ▇▇▇▇▇' possession or, to ▇▇▇▇▇' Knowledge to which it has access,
relating to any litigation or allegation by any private third party concerning
any Environmental Law.
5.8 Compliance with Legal Requirements.
----------------------------------
5.8.1 The ownership, leasing and use of the ▇▇▇▇▇ Assets
as they are currently owned, leased and used and the conduct of the ▇▇▇▇▇ Cable
Business and the operation of the ▇▇▇▇▇ Systems as they are currently conducted
and operated do not violate or infringe in any material respect any Legal
Requirements currently in effect (other than Legal Requirements described in
SECTION 5.8.4, as to which the representations and warranties set forth in that
subsection will apply). ▇▇▇▇▇ has received no notice of any violation by ▇▇▇▇▇
or the ▇▇▇▇▇ Cable Business of any Legal Requirement applicable to the operation
of the ▇▇▇▇▇ Cable Business as currently conducted, or the ▇▇▇▇▇ Systems as
currently operated and to its Knowledge, there is no existing fact, circumstance
of condition that could reasonably form the basis for an allegation of any such
violation.
5.8.2 A valid request for renewal has been duly and timely
filed under Section 626 of the Communications Act with the proper Governmental
Authority with respect to all ▇▇▇▇▇ System Franchises that have expired prior to
or will expire within 36 months after the date of this Agreement.
5.8.3 ▇▇▇▇▇ has complied and the ▇▇▇▇▇ Cable Business
is in compliance, in all material respects, with the specifications set forth in
Part 76, Subpart K of the rules and regulations of the FCC, Section 111 of the
U.S. Copyright Act of 1976 and the applicable rules and regulations thereunder
and the applicable rules and regulations of the U.S. Copyright Office, the
Register of Copyrights, the Copyright Royalty Tribunal and the Communications
Act, including provisions of any thereof pertaining to signal leakage, to
utility pole make ready and to grounding and bonding of cable television systems
(in each case as the same is currently in effect), and all other
-20-
applicable Legal Requirements relating to the construction, maintenance,
ownership and operation of the ▇▇▇▇▇ Assets, the ▇▇▇▇▇ Systems and the ▇▇▇▇▇
Cable Business.
5.8.4 Notwithstanding the foregoing, to ▇▇▇▇▇' Knowledge, each
▇▇▇▇▇ System is in compliance in all material respects with the provisions of
the 1992 Cable Act as such Legal Requirements relate to the operation of the
▇▇▇▇▇ Cable Business; provided however that ▇▇▇▇▇ does not hereby make any
representation about rates charged to subscribers, other than the representation
about rates charged to subscribers set forth below. ▇▇▇▇▇ has complied in all
material respects with the must carry and retransmission consent provisions of
the 1992 Cable Act as they relate to the ▇▇▇▇▇ Systems. ▇▇▇▇▇ has used
reasonable good faith efforts to establish rates charged to subscribers,
effective since September 1, 1993, that are or were allowable under the 1992
Cable Act and any authoritative interpretation thereof now or then in effect,
whether or not such rates are or were subject to regulation at that date by any
Governmental Authority, including any local franchising authority and/or the
FCC, unless such rates were not subject to regulation pursuant to a specific
exemption from rate regulation contained in the 1992 Cable Act other than the
failure of any franchising authority to have been certified to regulate rates.
Notwithstanding the foregoing, ▇▇▇▇▇ makes no representation or warranty that
the rates charged to subscribers (a) are allowable under any rules and
regulations of the FCC or any authoritative interpretation thereof or (b) would
be allowable under any rules and regulations of the FCC or any authoritative
interpretation thereof, promulgated after the date of the Closing. ▇▇▇▇▇ has
delivered to TCI complete and correct copies of all FCC Forms 393, 1200, 1205,
1210, 1215, 1220, 1225, 1235 and 1240 filed with respect to the ▇▇▇▇▇ Systems,
copies of all other FCC Forms filed by ▇▇▇▇▇ and of all correspondence with any
Governmental Authority relating to rate regulation generally or specific rates
charged to subscribers with respect to ▇▇▇▇▇ Systems, including copies of any
complaints filed with the FCC with respect to any rates charged to subscribers
of the ▇▇▇▇▇ Systems, and any other documentation supporting an exemption from
the rate regulation provisions of the 1992 Cable Act claimed by ▇▇▇▇▇ with
respect to any of the ▇▇▇▇▇ Systems. As of the date of this Agreement, ▇▇▇▇▇
has received no notice from any Governmental Authority with respect to an
intention to enforce customer service standards pursuant to the 1992 Cable Act
and ▇▇▇▇▇ has not agreed with any Governmental Authority to establish customer
service standards that exceed the customer service standards promulgated
pursuant to the 1992 Cable Act. Except as specified in SCHEDULE 5.8, ▇▇▇▇▇ has
not made any election with respect to any cost of service proceeding conducted
in accordance with Part 76.922 of Title 47 of the Code of Federal Regulations or
any similar proceeding with respect to any of the ▇▇▇▇▇ Systems (a "Cost of
Service Election"). ▇▇▇▇▇ has not entered into or is not subject to any so-
called social contract or proposed resolution with the FCC with respect to rates
charged for cable television services in the ▇▇▇▇▇ Systems and is not currently
negotiating or anticipating entering into or being subject to the same.
5.9 Patents, Trademarks and Copyrights. ▇▇▇▇▇ has timely and
----------------------------------
accurately made all requisite filings and payments with the Register of
Copyrights with respect to the ▇▇▇▇▇ Cable Business. ▇▇▇▇▇ has delivered to TCI
complete and correct copies of all current reports and filings for the past
three years, made or filed pursuant to copyright rules and regulations with
respect to the
-21-
▇▇▇▇▇ Business. ▇▇▇▇▇ does not possess any patent, patent right, trademark or
copyright related to or material to the operation of the ▇▇▇▇▇ Systems and ▇▇▇▇▇
is not a party to any license or royalty agreement with respect to any such
patent, trademark or copyright, except for licenses respecting program material
and obligations under the Copyright Act of 1976 applicable to cable television
systems generally. The ▇▇▇▇▇ Systems and the ▇▇▇▇▇ Cable Business have been
operated in such a manner so as not to violate or infringe upon the rights, or
give rise to any rightful claim of any Person for copyright, trademark, service
▇▇▇▇, patent or license infringement or the like.
5.10 Financial Statements; Undisclosed Liabilities; Absence of
---------------------------------------------------------
Certain Changes or Events. ▇▇▇▇▇ has delivered to TCI complete and correct
-------------------------
copies of its unaudited financial statements for the ▇▇▇▇▇ Systems, including
balance sheets and related statements of income for and as of the year ended
December 31, 1995 and as of and for the 6-month period ended June 30, 1996 (all
of such financial statements being hereinafter referred to as "▇▇▇▇▇ Financial
Statements"). ▇▇▇▇▇ Financial Statements are in accordance with the books and
records of ▇▇▇▇▇, were prepared in accordance with generally accepted accounting
principles, applied on a consistent basis throughout the periods covered
thereby, and, except as may be described therein, present fairly the financial
condition of ▇▇▇▇▇ at the dates and for the periods indicated, subject, in the
case of unaudited ▇▇▇▇▇ Financial Statements, only to standard year-end
adjustments and the omission of footnotes. The unaudited Balance Sheet as of
June 30, 1996 of ▇▇▇▇▇ is herein called the "▇▇▇▇▇ Balance Sheet." At the date
of the ▇▇▇▇▇ Balance Sheet, ▇▇▇▇▇ had no material liabilities required by
generally accepted accounting principles to be reflected or reserved against
therein that were not fully reflected or reserved against on the ▇▇▇▇▇ Balance
Sheet, other than liabilities included in ▇▇▇▇▇ liabilities as set forth on
SCHEDULE 5.10. Except as set forth on SCHEDULE 5.10, since the date of the ▇▇▇▇▇
Balance Sheet, with respect to the ▇▇▇▇▇ Cable Business: (a) ▇▇▇▇▇ has not
incurred any obligation or liability (contingent or otherwise), except normal
trade or business obligations incurred in the ordinary course of business, the
performance of which, to ▇▇▇▇▇' Knowledge, would be reasonably likely to,
individually or in the aggregate, have a material adverse effect on the
financial condition or results of operations of the ▇▇▇▇▇ Cable Business; (b)
there has been no material adverse change in the business, condition, financial
or otherwise, or liabilities of the ▇▇▇▇▇ Cable Business (except any change
affecting the United States cable industry as a whole, including any change
arising from (i) legislation, litigation, rulemaking or regulation or (ii)
competition caused by or arising from other multiple channel distribution
services); and (c) the ▇▇▇▇▇ Cable Business has been conducted only in the
ordinary course of business consistent with past practice.
5.11 Litigation. Except as set forth in SCHEDULE 5.11: (a) there
----------
is no Litigation pending or, to ▇▇▇▇▇' Knowledge, threatened, by or before any
Governmental Authority or private arbitration tribunal against ▇▇▇▇▇ which, if
adversely determined, would materially adversely affect the financial condition
or operations of the ▇▇▇▇▇ Cable Business, the ▇▇▇▇▇ Systems, the ▇▇▇▇▇ Assets
or the ability of ▇▇▇▇▇ to perform its obligations under this Agreement, or
which, if adversely determined, would result in the modification, revocation,
termination, suspension or other limitation of any of the ▇▇▇▇▇ System
Franchises, ▇▇▇▇▇ System Licenses, ▇▇▇▇▇ System Contracts or leases or other
documents evidencing the ▇▇▇▇▇ Leased Property or the ▇▇▇▇▇ Real Property
Interests; and
-22-
(b) there is not in existence any Judgment requiring ▇▇▇▇▇ to take any action of
any kind with respect to the ▇▇▇▇▇ Assets or the operation of the ▇▇▇▇▇ Systems,
or to which ▇▇▇▇▇ (with respect to the ▇▇▇▇▇ Systems), the ▇▇▇▇▇ Systems or the
▇▇▇▇▇ Assets are subject or by which they are bound or affected.
5.12 Tax Returns; Other Reports. ▇▇▇▇▇ has duly and timely filed
--------------------------
in correct form all federal, state, local and foreign Tax returns and other Tax
reports required to be filed by ▇▇▇▇▇, and has timely paid all Taxes which have
become due and payable, whether or not so shown on any such return or report,
the failure of which to be filed or paid could adversely affect the ▇▇▇▇▇ Assets
or result in the imposition of a Lien upon the ▇▇▇▇▇ Assets, except such amounts
as are being contested diligently and in good faith and are not in the aggregate
material. Except as specifically identified on SCHEDULE 5.12, ▇▇▇▇▇ has received
no notice of, nor does ▇▇▇▇▇ have any Knowledge of, any deficiency, assessment
or audit, or proposed deficiency, assessment or audit from any taxing
Governmental Authority which could affect or result in the imposition of a Lien
upon the ▇▇▇▇▇ Assets.
5.13 Employment Matters.
------------------
5.13.1 SCHEDULE 5.13 contains a complete and correct list
of the names and positions of all employees engaged in the ▇▇▇▇▇ Cable Business
as of the date set forth on SCHEDULE 5.13. ▇▇▇▇▇ has complied in all material
respects with all applicable Legal Requirements relating to the employment of
labor, including the Worker Adjustment and Retraining Notification Act, 29
U.S.C. (S) 2101, et seq. ("WARN"), ERISA, continuation coverage requirements
with respect to group health plans and those relating to wages, hours,
collective bargaining, unemployment insurance, worker's compensation, equal
employment opportunity, age and disability discrimination, immigration control
and the payment and withholding of Taxes.
5.13.2 Each employee benefit plan (as defined in Section
3(3) of ERISA) or any multiemployer plan (as defined in Section 3(37) of ERISA)
with respect to which ▇▇▇▇▇ or any of its ERISA Affiliates has any liability or
in which any employees or agents, or any former employees or agents, of ▇▇▇▇▇ or
any of its ERISA Affiliates participate is set forth in SCHEDULE 5.13 (the
"▇▇▇▇▇ Plans"). Neither ▇▇▇▇▇, any of its ERISA Affiliates nor any ▇▇▇▇▇ Plan is
in material violation of any provision of the Code or ERISA. No "reportable
event" (as defined in Section 4043 of ERISA) has occurred and is continuing with
respect to any ▇▇▇▇▇ Plan and no "prohibited transaction" (as defined in Section
406 of ERISA) has occurred with respect to any ▇▇▇▇▇ Plan which reasonably could
result in material liability to ▇▇▇▇▇ or any of its ERISA Affiliates. No
material "accumulated funding deficiency" or "withdrawal liability" (as defined
in Section 302 of ERISA) exists with respect to any of the ▇▇▇▇▇ Plans. After
the Closing, TCI will not be required, under ERISA, the Code or any collective
bargaining agreement, to establish, maintain or continue any Plan currently
maintained by ▇▇▇▇▇ or any of its ERISA Affiliates.
-23-
5.13.3 There are no collective bargaining agreements
applicable to any Person employed by ▇▇▇▇▇ that renders services in connection
with the ▇▇▇▇▇ Systems and ▇▇▇▇▇ has no duty to bargain with any labor
organization with respect to any such Person. There are not pending any unfair
labor practice charges against ▇▇▇▇▇, any demand for recognition or any other
effort of or request or demand from, a labor organization for representative
status with respect to any Person employed by ▇▇▇▇▇ that renders services in
connection with the ▇▇▇▇▇ Systems. Except as described on SCHEDULE 5.13, ▇▇▇▇▇
has no employment agreements, either written or oral, with any employee of the
▇▇▇▇▇ Systems and none of the employment agreements listed on SCHEDULE 5.13
requires ▇▇▇▇▇ or will require TCI to employ any Person after the Closing.
5.14 ▇▇▇▇▇ Systems Information. SCHEDULE 5.14 sets forth a
-------------------------
materially true and accurate description of the following information relating
to the ▇▇▇▇▇ Cable Business as of the date(s) indicated in such Schedule
(provided that such date(s) are no earlier than two months prior to the date of
this Agreement):
(a) the approximate number of miles of plant included in
the ▇▇▇▇▇ Assets;
(b) the number of subscribers and EBSs served by the ▇▇▇▇▇
Systems for each ▇▇▇▇▇ System Franchise;
(c) the approximate number of single family homes and
residential dwelling units passed by the ▇▇▇▇▇ Systems;
(d) a description of basic and optional or tier services
available from the ▇▇▇▇▇ Systems, the rates charged by ▇▇▇▇▇ for each and the
number of subscribers (and, if such information is available, EBSs) receiving
each optional or tier service;
(e) the stations and signals carried by the ▇▇▇▇▇ Systems
and the channel position of each such signal and station; and
(f) the cities, towns, villages, townships, boroughs and
counties served by the ▇▇▇▇▇ Systems.
5.15 Bonds. Except as set forth on SCHEDULE 5.15, as of the
-----
date of this Agreement, there are no franchise, construction, fidelity,
performance, or other bonds or letters of credit posted by ▇▇▇▇▇ in connection
with its operation or ownership of any of the ▇▇▇▇▇ Systems or ▇▇▇▇▇ Assets.
5.16 Finders and Brokers. ▇▇▇▇▇ has not employed any financial
-------------------
advisor, broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement for which TCI could be liable.
-24-
SECTION 6. TCI'S REPRESENTATIONS AND WARRANTIES
TCI represents and warrants to ▇▇▇▇▇ as of the date of this
Agreement and as of the Closing, as follows:
6.1 Organization and Qualification of TCI. TCI is a corporation
-------------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Maryland and has all requisite corporate power and authority to own,
lease and use the TCI Assets owned, leased or used by it and to conduct the TCI
Cable Business as it is currently conducted. TCI is duly qualified to do
business and is in good standing under the laws of each jurisdiction in which
the ownership, leasing or use of the TCI Assets owned, leased or used by it or
the nature of its activities in connection with the TCI Systems makes such
qualification necessary, except in any such jurisdiction where the failure to be
so qualified and in good standing would not have a material adverse effect on
the ownership or operation of the TCI Cable Business, the TCI Assets or TCI
Systems or on the ability of TCI to perform its obligations under this
Agreement.
6.2 Authority and Validity. TCI has all requisite corporate power
----------------------
and authority to execute and deliver, to perform its obligations under,
and to consummate the transactions contemplated by, this Agreement and the
Transaction Documents to which TCI is a party. Subject to the approval of the
Board of Directors of TCI, the execution and delivery by TCI of, the performance
by TCI of its obligations under, and the consummation by TCI of the transactions
contemplated by, this Agreement and the Transaction Documents to which TCI is a
party have been duly and validly authorized by all action by or on behalf of
TCI. This Agreement has been, and when executed and delivered by TCI the
Transaction Documents will be, duly and validly executed and delivered by TCI
and the valid and binding obligations of TCI, enforceable against TCI in
accordance with their terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to the enforcement of creditors' rights generally
or by principles governing the availability of equitable remedies.
6.3 No Conflict; Required Consents. Except for the TCI
------------------------------
Required Consents, all of which are listed on SCHEDULE 6.3, and the ▇▇▇▇▇
Required Consents and the notification and expiration or earlier termination of
the waiting period under the HSR, the execution and delivery by TCI, the
performance of TCI under, and the consummation by TCI of the transactions
contemplated by, this Agreement and the Transaction Documents to which TCI is a
party do not and will not: (a) violate any provision of its charter or bylaws;
(b) violate any Legal Requirement; (c) require any consent, approval or
authorization of, or filing of any certificate, notice, application, report or
other document with, any Governmental Authority or other Person; or (d) (i)
violate or result in a breach of or a default under (without regard to
requirements of notice, lapse of time or elections of other Persons or any
combination thereof), (ii) permit or result in the termination, suspension or
modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of TCI under, (iv) result in the creation
or imposition of any Lien under any TCI System
-25-
Contract or any TCI System Contract or other instrument evidencing any of the
TCI Assets or by which TCI or any of its assets is bound or affected, except for
purposes of this clause (d) such violations, conflicts, breaches, defaults,
terminations, suspensions, modifications and accelerations as would not,
individually or in the aggregate, have a material adverse effect on any TCI
System, the TCI Cable Business or TCI or on the ability of TCI to perform its
obligations under this Agreement or the Transaction Documents to which TCI is a
party.
6.4 Assets.
------
6.4.1 TCI has exclusive, good and marketable title to
(or, in the case of Assets that are leased, valid leasehold interests in) the
TCI Assets (other than TCI Owned Real Property, TCI Leased Property and TCI Real
Property Interests, as to which representations and warranties in SECTION 6.6
apply). The TCI Assets are free and clear of all Liens, except (a) Permitted
Liens and (b) Liens described on SCHEDULE 6.4, all of which will be terminated,
released or, in the case of the rights of first refusal listed on SCHEDULE 6.4,
waived, as appropriate, at or prior to the Closing. Except as described on
SCHEDULE 1.63, the TCI Tangible Personal Property is in good operating condition
and repair (ordinary wear and tear excepted).
6.4.2 Except for items included in the TCI Excluded
Assets, the TCI Assets constitute all the assets necessary to permit ▇▇▇▇▇ to
conduct the TCI Cable Business and to operate the TCI Systems substantially as
they are being conducted and operated on the date of this Agreement and in
compliance in all material respects with all applicable Legal Requirements, TCI
System Franchises and TCI System Contracts and to perform all of the ▇▇▇▇▇
Assumed Obligations and Liabilities.
6.4.3 Except as described in SCHEDULE 6.4, as of the date
of this Agreement, to the Knowledge of TCI, no third party has been granted or
applied for a cable television franchise or is providing or intending to provide
cable television services in any of the communities or unincorporated areas
currently served by the TCI Cable Business.
6.5 TCI System Franchises, TCI System Licenses, TCI System
------------------------------------------------------
Contracts and TCI Real Property Interests.
-----------------------------------------
6.5.1 Except for the TCI Excluded Assets and except as
described on SCHEDULES 1.55, 1.57, 1.60, 1.61 and 1.62, TCI is not bound or
affected by any of the following that relate primarily or in whole to the TCI
Cable Business: (a) leases of real or personal property; (b) franchises for the
construction or operation of cable television systems or System Contracts of
substantially equivalent effect; (c) other licenses, authorizations, consents or
permits of the FCC or any other Governmental Authority; (d) material easements
or rights of access; (e) pole line agreements, underground conduit agreements,
crossing agreements or bulk or commercial service agreements; or (f) System
Contracts relating to the operations of the TCI Cable Business other than those
described in any other clause of this SECTION 6.5.1 which contemplate payments
by or to TCI
-26-
in any 12-month period exceeding $10,000 individually or $30,000 in the
aggregate or that are not terminable by TCI without cost or penalty on not more
than 90 days prior written notice.
6.5.2 Complete and correct copies of the TCI System
Franchises and TCI System Licenses have been delivered by TCI to ▇▇▇▇▇. The TCI
System Franchises and TCI System Licenses are currently in full force and
effect, are not in default and are valid under all applicable Legal Requirements
according to their terms. There is no legal action, governmental proceeding or
investigation, pending or to TCI's Knowledge threatened, to terminate, suspend
or modify any TCI System Franchise or TCI System License and TCI is in
compliance with the material terms and conditions of all the TCI System
Franchises and TCI System Licenses and with other material applicable
requirements of all Governmental Authorities (including the FCC and the Register
of Copyrights) relating to the TCI System Franchises and TCI System Licenses,
including all requirements for notification, filing, reporting, posting and
maintenance of logs and records.
6.5.3 Complete and correct copies of all material TCI
System Contracts (including Contracts relating to the TCI Leased Property and
the TCI Real Property Interests described on SCHEDULE 1.57) have been provided
to ▇▇▇▇▇. Such documents constitute the entire agreement with the other party.
Each such TCI System Contract is in full force and effect and constitutes the
valid, legal, binding and enforceable obligation of TCI and TCI is not and to
TCI's Knowledge, each other party thereto is not, in breach or default of any
material terms or conditions thereunder.
6.6 Real Property. All the Assets consisting of TCI Owned
-------------
Property, TCI Leased Property and material TCI Real Property Interests are
described on SCHEDULES 1.55, 1.57 and 1.58. Except as otherwise disclosed on
SCHEDULES 1.55, 1.57 and 1.58, TCI holds good, marketable and indefeasible fee
simple title to the TCI Owned Property and has the valid and enforceable right
to use and possess such TCI Owned Property, subject only to the Permitted Liens;
and TCI has valid and enforceable leasehold interests in all TCI Leased Property
and, with respect to TCI Real Property Interests, has valid and enforceable
rights to use all TCI Real Property Interests subject only to Permitted Liens.
Except for routine repairs, all of the material improvements, leasehold
improvements and the premises of the TCI Owned Property and the premises demised
under the leases and other documents evidencing the TCI Leased Property are in
good condition and repair and are suitable for the purposes used. Each parcel
of TCI Owned Property and each parcel of TCI Leased Property and any
improvements thereon and their current use (a) has access to and over public
streets or private streets for which TCI has a valid right of ingress and
egress, (b) conforms in its current use and occupancy to all material zoning
requirements without reliance upon a variance issued by a Governmental Authority
or a classification of the parcel in question as a nonconforming use and (c)
conforms in all material respects in its current use to all restrictive
covenants, if any, or other Liens affecting all or part of such parcel.
-27-
6.7 Environmental.
-------------
6.7.1 To TCI's Knowledge, the TCI Owned Property and TCI
Leased Property comply in all material respects with and has previously been
operated in compliance in all material respects with all Environmental Laws. TCI
has not, either directly or indirectly, (a) generated, stored, used, treated,
handled, discharged, released or disposed of any Hazardous Substances at, on,
under, in or about, to or from or in any other manner affecting, any TCI Owned
Property or TCI Leased Property, (b) transported any Hazardous Substances to or
from any TCI Owned Property or TCI Leased Property or (c) undertaken or caused
to be undertaken any other activities relating to the TCI Owned Property or TCI
Leased Property, which could reasonably give rise to any liability under any
Environmental Law and, to TCI's Knowledge, no other present or previous owner,
tenant, occupant or user of any TCI Owned Property or TCI Leased Property or any
other Person has committed or suffered any of the foregoing. To TCI's Knowledge,
(i) no release of Hazardous Substances outside the TCI Owned Property or TCI
Leased Property has entered or threatens to enter any TCI Owned Property or TCI
Leased Property, nor (ii) is there any pending or threatened litigation based on
Environmental Laws which arises from any condition of the land adjacent to or
immediately surrounding any TCI Owned Property or TCI Leased Property. No
litigation based on Environmental Laws which relates to any TCI Owned Property
or TCI Leased Property or any operations or conditions on it (A) has been
asserted or conducted in the past or is currently pending against or with
respect to TCI or, to TCI's Knowledge, any other Person, or (B) to TCI's
Knowledge, is threatened or contemplated.
6.7.2 To TCI's Knowledge, other than as described on
SCHEDULE 6.7, (a) no aboveground or underground storage tanks are currently or
have been located on any TCI Owned Property or TCI Leased Property, (b) no TCI
Owned Property or TCI Leased Property has been used at any time as a gasoline
service station or any other facility for storing, pumping, dispensing or
producing gasoline or any other petroleum products or wastes and (c) no building
or other structure on any TCI Owned Property or TCI Leased Property contains
asbestos, asbestos-containing material or material presumed to be asbestos-
containing material under environmental law.
6.7.3 TCI has provided ▇▇▇▇▇ with complete and correct
copies of (a) all studies, reports, surveys or other written materials in TCI's
possession or, to TCI's Knowledge to which it has access, relating to the
presence or alleged presence of Hazardous Substances at, on, under or affecting
the TCI Owned Property or TCI Leased Property, (b) all notices or other
materials in TCI's possession or, to TCI's Knowledge to which it has access,
that were received from any Governmental Authority having the power to
administer or enforce any Environmental Laws relating to current or past
ownership, use or operation of the TCI Owned Property or TCI Leased Property or
activities at the TCI Owned Property or TCI Leased Property and (c) all
materials in TCI's possession or, to TCI's Knowledge to which it has access,
relating to any litigation, allegation by any private third party concerning any
Environmental Law.
-28-
6.8 Compliance with Legal Requirements.
----------------------------------
6.8.1 The ownership, leasing and use of the TCI Assets as
they are currently owned, leased and used and the conduct of the TCI Cable
Business and the operation of the TCI Systems as they are currently conducted
and operated do not violate or infringe in any material respect any Legal
Requirements currently in effect (other than Legal Requirements described in
SECTION 6.8.4, as to which the representations and warranties set forth in that
subsection will apply). TCI has received no notice of any violation by TCI or
the TCI Cable Business of any Legal Requirement applicable to the operation of
the TCI Cable Business as currently conducted, or the TCI Systems as currently
operated and to its Knowledge, there is no existing fact, circumstance or
condition that could reasonably form the basis for an allegation of any such
violation.
6.8.2 A valid request for renewal has been duly and
timely filed under Section 626 of the Communications Act with the proper
Governmental Authority with respect to all TCI Systems Franchises that have
expired prior to or will expire within 36 months after the date of this
Agreement.
6.8.3 TCI has complied and the TCI Cable Business is in
compliance, in all material respects, with the specifications set forth in Part
76, Subpart K of the rules and regulations of the FCC, Section 111 of the U.S.
Copyright Act of 1976 and the applicable rules and regulations thereunder and
the applicable rules and regulations of the U.S. Copyright Office, the Register
of Copyrights, the Copyright Royalty Tribunal and the Communications Act,
including provisions of any thereof pertaining to signal leakage, to utility
pole make ready and to grounding and bonding of cable television systems (in
each case as the same is currently in effect), and all other applicable Legal
Requirements relating to the construction, maintenance, ownership and operation
of the TCI Assets, the TCI Systems and the TCI Cable Business.
6.8.4 Notwithstanding the foregoing, to TCI's Knowledge,
each TCI System is in compliance in all material respects with the provisions of
the 1992 Cable Act as such Legal Requirements relate to the operation of the TCI
Cable Business; provided however that TCI does not hereby make any
representation about rates charged to subscribers, other than the representation
about rates charged to subscribers set forth below. TCI has complied in all
material respects with the must carry and retransmission consent provisions of
the 1992 Cable Act as they relate to the TCI Systems. TCI has used reasonable
good faith efforts to establish rates charged to subscribers, effective since
September 1, 1993, that are or were allowable under the 1992 Cable Act and any
authoritative interpretation thereof now or then in effect, whether or not such
rates are or were subject to regulation at that date by any Governmental
Authority, including any local franchising authority and/or the FCC, unless such
rates were not subject to regulation pursuant to a specific exemption from rate
regulation contained in the 1992 Cable Act other than the failure of any
franchising authority to have been certified to regulate rates. Notwithstanding
the foregoing, TCI makes no representation or warranty that the rates charged to
subscribers (a) are allowable under any rules and regulations of the FCC or any
authoritative interpretation thereof or (b) would be allowable
-29-
under any rules and regulations of the FCC or any authoritative interpretation
thereof, promulgated after the date of the Closing. TCI has delivered to ▇▇▇▇▇
complete and correct copies of all FCC Forms 393, 1200, 1205, 1210, 1215, 1220,
1225, 1235 and 1240 filed with respect to the TCI Systems, copies of all other
FCC Forms filed by TCI and of all correspondence with any Governmental Authority
relating to rate regulation generally or specific rates charged to subscribers
with respect to TCI Systems, including copies of any complaints filed with the
FCC with respect to any rates charged to subscribers of the TCI Systems, and any
other documentation supporting an exemption from the rate regulation provisions
of the 1992 Cable Act claimed by TCI with respect to any of the TCI Systems. As
of the date of this Agreement, TCI has received no notice from any Governmental
Authority with respect to an intention to enforce customer service standards
pursuant to the 1992 Cable Act and TCI has not agreed with any Governmental
Authority to establish customer service standards that exceed the customer
service standards promulgated pursuant to the 1992 Cable Act. Except as
specified in SCHEDULE 6.8, TCI has not made any Cost of Service Election with
respect to any of the TCI Systems. Except as specified in SCHEDULE 6.8, TCI has
not entered into or is not subject to any so-called social contract or proposed
resolution with the FCC with respect to rates charged for cable television
services in the TCI Systems and is not currently negotiating or anticipating
entering into or being subject to the same.
6.9 Patents, Trademarks and Copyrights. TCI has timely and
----------------------------------
accurately made all requisite filings and payments with the Register of
Copyrights with respect to the TCI Cable Business. TCI has delivered to ▇▇▇▇▇
complete and correct copies of all current reports and filings for the past
three years, made or filed pursuant to copyright rules and regulations with
respect to the TCI Business. TCI does not possess any patent, patent right,
trademark or copyright related to or material to the operation of the TCI
Systems and TCI is not a party to any license or royalty agreement with respect
to any such patent, trademark or copyright, except for licenses respecting
program material and obligations under the Copyright Act of 1976 applicable to
cable television systems generally. The TCI Systems and the TCI Cable Business
have been operated in such a manner so as not to violate or infringe upon the
rights, or give rise to any rightful claim of any Person for copyright,
trademark, service ▇▇▇▇, patent or license infringement or the like.
6.10 Financial Statements; Undisclosed Liabilities; Absence of
---------------------------------------------------------
Certain Changes or Events. TCI has delivered to ▇▇▇▇▇ complete and correct
-------------------------
copies of its unaudited financial statements for the TCI Systems, including
balance sheets and related statements of income for and as of the year ended
December 31, 1995 and as of and for the 6-month period ended June 30, 1996 (all
of such financial statements being hereinafter referred to as "TCI's Financial
Statements"). TCI's Financial Statements are in accordance with the books and
records of TCI, were prepared in accordance with generally accepted accounting
principles, applied on a consistent basis throughout the periods covered
thereby, present fairly the financial condition of TCI at the dates and for the
periods indicated, subject, in the case of unaudited TCI Financial Statements,
only to standard year-end adjustments and the omission of footnotes. The
unaudited Balance Sheet as of June 30, 1996 of TCI is herein called the "TCI
Balance Sheet." At the date of the TCI Balance Sheet, TCI had no material
liabilities required by generally accepted accounting principles to be reflected
or reserved against therein that
-30-
were not fully reflected or reserved against on the TCI Balance Sheet, other
than liabilities as set forth on SCHEDULE 6.10. Except as set forth on SCHEDULE
6.10, since the date of the TCI Balance Sheet with respect to the TCI Cable
Business: (a) TCI has not incurred any obligation or liability (contingent or
otherwise), except normal trade or business obligations incurred in the ordinary
course of business, the performance of which, to TCI's Knowledge, would be
reasonably likely to, individually or in the aggregate, have a material adverse
effect on the financial condition or results of operations of the TCI Cable
Business; (b) there has been no material adverse change in the business,
condition, financial or otherwise, or liabilities of the TCI Cable Business
(except any change affecting the United States cable industry as a whole,
including any change arising from (i) legislation, litigation, rulemaking or
regulation or (ii) competition caused by or arising from other multiple channel
distribution services); and (c) the TCI Cable Business has been conducted only
in the ordinary course of business consistent with past practice.
6.11 Litigation. Except as set forth in SCHEDULE 6.11: (a)
----------
there is no Litigation pending or, to TCI's Knowledge, threatened, by or before
any Governmental Authority or private arbitration tribunal against TCI which, if
adversely determined, would materially adversely affect the financial condition
or operations of the TCI Cable Business, the TCI Systems, the TCI Assets or the
ability of TCI to perform its obligations under this Agreement, or which, if
adversely determined, would result in the modification, revocation, termination,
suspension or other limitation of any of the TCI System Franchises, TCI System
Licenses, TCI System Contracts or leases or other documents evidencing the TCI
Leased Property or the TCI Real Property Interests; and (b) there is not in
existence any Judgment requiring TCI to take any action of any kind with respect
to the TCI Assets or the operation of the TCI Systems, or to which TCI (with
respect to the TCI Systems), the TCI Systems or the TCI Assets are subject or by
which they are bound or affected.
6.12 Tax Returns; Other Reports. TCI has duly and timely filed
--------------------------
in correct form all federal, state, local and foreign Tax returns and other Tax
reports required to be filed by TCI, and has timely paid all Taxes which have
become due and payable, whether or not so shown on any such return or report,
the failure of which to be filed or paid could adversely affect the TCI Assets
or result in the imposition of a Lien upon the TCI Assets, except such amounts
as are being contested diligently and in good faith and are not in the aggregate
material. Except as specifically identified on SCHEDULE 6.12, TCI has received
no notice of, nor does TCI have any Knowledge of, any deficiency, assessment or
audit, or proposed deficiency, assessment or audit from any taxing Governmental
Authority which could affect or result in the imposition of a Lien upon the TCI
Assets.
6.13 Employment Matters.
------------------
6.13.1 SCHEDULE 6.13 contains a complete and correct list
of the names and positions of all employees engaged in the TCI Cable Business as
of the date set forth on SCHEDULE 6.13. TCI has complied in all material
respects with all applicable Legal Requirements relating to the employment of
labor, including the Worker Adjustment and Retraining Notification Act, 29
U.S.C. (S) 2101, et seq. ("WARN"), ERISA, continuation coverage requirements
with respect to group health
-31-
plans and those relating to wages, hours, collective bargaining, unemployment
insurance, worker's compensation, equal employment opportunity, age and
disability discrimination, immigration control and the payment and withholding
of Taxes.
6.13.2 Each employee benefit plan (as defined in Section
3(3) of ERISA) or any multiemployer plan (as defined in Section 3(37) of ERISA)
with respect to which TCI or any of its ERISA Affiliates has any liability or in
which any employees or agents, or any former employees or agents, of TCI or any
of its ERISA Affiliates participate is set forth in SCHEDULE 6.13 (the "TCI
Plans"). Neither TCI, any of its ERISA Affiliates nor any TCI Plan is in
material violation of any provision of the Code or ERISA. No "reportable event"
(as defined in Section 4043 of ERISA) has occurred and is continuing with
respect to any TCI Plan and no "prohibited transaction" (as defined in Section
406 of ERISA) has occurred with respect to any TCI Plan which could reasonably
result in material liability to TCI or any of its ERISA Affiliates. No material
"accumulated funding deficiency" or "withdrawal liability" (as defined in
Section 302 of ERISA) exists with respect to any of the TCI Plans. After the
Closing, ▇▇▇▇▇ will not be required, under ERISA, the Code or any collective
bargaining agreement, to establish, maintain or continue any Plan currently
maintained by TCI or any of its ERISA Affiliates.
6.13.3 Except as set forth on SCHEDULE 6.13, there are no
collective bargaining agreements applicable to any Person employed by TCI that
renders services in connection with the TCI Systems and TCI has no duty to
bargain with any labor organization with respect to any such Person. There are
not pending any unfair labor practice charges against TCI, any demand for
recognition or any other effort of or request or demand from, a labor
organization for representative status with respect to any Person employed by
TCI that renders services in connection with the TCI Systems. Except as
described on SCHEDULE 6.13, TCI has no employment agreements, either written or
oral, with any employee of the TCI Systems and none of the employment agreements
listed on SCHEDULE 6.13 requires TCI or will require ▇▇▇▇▇ to employ any Person
after the Closing.
6.14 TCI Systems Information. SCHEDULE 6.14 sets forth a
-----------------------
materially true and accurate description of the following information relating
to the TCI Cable Business as of the date(s) indicated in such Schedule (provided
that such date is no earlier than two months prior to the date of this
Agreement):
(a) the approximate number of miles of plant included in
the TCI Assets;
(b) the number of subscribers and EBSs served by the TCI
Systems for each TCI System Franchise;
(c) the number of single family homes and residential
dwelling units passed by the TCI Systems;
-32-
(d) a description of basic and optional or tier
services available from the TCI Systems, the rates charged by TCI for each and
the number of subscribers (and, if such information is available, EBSs)
receiving each optional or tier service;
(e) the stations and signals carried by the TCI
Systems and the channel position of each such signal and station; and
(f) the cities, towns, villages, townships,
boroughs and counties served by the TCI Systems.
6.15 Bonds. Except as set forth on SCHEDULE 6.15, as of the
-----
date of this Agreement, there are no franchise, construction, fidelity,
performance, or other bonds or letters of credit posted by TCI in connection
with its operation or ownership of any of the TCI Systems or TCI Assets.
6.16 Finders and Brokers. TCI has not employed any financial
-------------------
advisor, broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement for which ▇▇▇▇▇ could be liable.
SECTION 7. ADDITIONAL COVENANTS
7.1 Access to Premises and Records. Between the date of this
------------------------------
Agreement and the Closing Date each party will give to the other and its
counsel, accountants and other representatives full access during normal
business hours upon reasonable notice to all the premises and books and records
of its Cable Business and to all its Assets and Systems' personnel; and will
furnish to the other and such representatives all such documents, financial
information and other information regarding its Cable Business and its Assets as
the other from time to time reasonably may request; provided that no
investigation will affect or limit the scope of any of the representations,
warranties, covenants and indemnities of the other in this Agreement or in any
Transaction Document or limit liability for any breach of any of the foregoing.
Additionally, each party shall deliver to the other within one week of the date
of this Agreement substantially all the information and material, described in
the due diligence guideline sheets attached as Exhibit 7.1.
7.2 Continuity and Maintenance of Operations; Certain
-------------------------------------------------
Deliveries and Notices. Except as the other party may otherwise consent in
----------------------
writing, between the date of this Agreement and the Closing, each of TCI, with
respect to the TCI Cable Business, the TCI Systems and the TCI Assets, and
▇▇▇▇▇, with respect to the ▇▇▇▇▇ Cable Business, the ▇▇▇▇▇ Systems and the ▇▇▇▇▇
Assets:
7.2.1 will conduct its Cable Business and operate its
Systems only in the usual, regular and ordinary course and consistent with past
practices (including making capital expenditures and fulfilling installation
requests) and, to the extent consistent with such conduct and
-33-
operation, use its commercially reasonable efforts to (a) preserve its current
business intact in all material respects, including preserving existing
relationships with franchising authorities, suppliers, customers and others
having business dealings with those Systems, unless the other party requests
otherwise, (b) keep available the services of its employees and agents providing
services in connection with its Cable Business and (c) continue making
marketing, advertising and promotional expenditures with respect to its Cable
Business consistent with past practices;
7.2.2 will maintain its Assets in good repair, order and
condition, ordinary wear and tear excepted; will maintain equipment and
inventory for those Systems at historical levels consistent with past practices;
will maintain in full force and effect, policies of insurance with respect to
its Cable Business, in such amounts and with respect to such risks as
customarily maintained by operators of cable television systems of the size and
geographic location of its Systems; and will maintain its books, records and
accounts with respect to its Assets and the operation of its Systems in the
usual, regular and ordinary manner on a basis consistent with past practices.
Neither party will permit any of its officers, directors, shareholders, agents
or employees to, pay any of its subscriber accounts receivable in the Systems
(other than for their own residences) prior to the Closing Date. Each party
will continue to implement its procedures for disconnection and discontinuance
of service to subscribers whose accounts are delinquent in accordance with those
in effect on the date of this Agreement;
7.2.3 will not (a) modify in any material respect,
terminate, suspend or abrogate any System Contract, other than retransmission
consent, multiple dwelling, bulk billing or commercial service Contracts, other
than in the ordinary course of business (other than those constituting Excluded
Assets), (b) modify, terminate, suspend or abrogate any retransmission consent,
multiple dwelling, bulk billing or commercial service Contract, System
Franchise, lease or document evidencing Leased Property or Real Property
Interests or System License (except on terms that are not materially different
or other than with respect to those constituting Excluded Assets), (c) take or
omit to take any action that would result in the condition as set forth in
SECTION 8.1.1, with respect to TCI, or SECTION 8.2.1, with respect to ▇▇▇▇▇, not
to be satisfied at any time through or at the Closing; (d) engage in any
marketing, subscriber installation, collection disconnection practices that are
inconsistent with its past practices; (e) change the rate charged for any level
of Basic Service, Expanded Basic Service, or any Pay TV or add, delete, retier
or repackage any programming services except in the ordinary course of business
or to the extent required under the 1992 Cable Act or any other Legal
Requirement; provided however if rates are changed, the party changing the rates
will provide the other with copies of any FCC forms (even if not filed with any
Governmental Authority) that such party used to determine that the new rates
were allowable, (f) make any Cost of Service Election, (g) enter into any
agreement with or commitment to any competitive access providers with respect to
any System, (h) sell, transfer or assign any portion of the Assets other than
sales in the ordinary course of business or permit the creation of a Lien on any
Asset, other than a Permitted Lien or any Lien which will be released at or
prior to Closing, (i) take any actions that would cause the transactions
contemplated hereby to fail to qualify as a like-kind exchange under Section
1031 of the Code, (j) engage in any hiring or employee compensation practices
that are inconsistent with past
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practices except for changes in such practices implemented by such party and its
Affiliates on a company-wide basis, or (k) enter into any contract or commitment
or incur any indebtedness or other liability or obligation of any kind relating
to any System involving an expenditure in excess of $25,000, other than
contracts or commitments which are cancellable on 30 days' notice or less
without penalty;
7.2.4 will promptly deliver to the other true and
complete copies of all monthly and quarterly financial statements and operating
reports and any reports with respect to the operation of the Cable Business
prepared by or for such party at any time from the date of this Agreement until
the Closing;
7.2.5 will give or cause to be given to the other as soon
as reasonably possible but in any event prior to the date of submission to the
appropriate Governmental Authority, copies of all FCC Forms 1200, 1205, 1210,
1215, 1220, 1225, 1235 and 1240 or any other FCC forms required to be filed with
any Governmental Authority under the 1992 Cable Act with respect to rates and
prepared with respect to any of its Systems, and make a good faith effort to
address any specific concerns raised by the other with respect to such
documents;
7.2.6 will duly and timely file a valid notice of renewal
under Section 626 of the Cable Act with the appropriate Governmental Authority
with respect to any System Franchise that will expire within 36 months after any
date between the date of this Agreement and the Closing Date; and
7.2.7 will promptly notify the other of any fact,
circumstance, event or action by it or otherwise (a) which, if known at the date
of this Agreement, would have been required to be disclosed by it in or pursuant
to this Agreement or (b) the existence, occurrence or taking of which would
result in the condition as set forth in SECTION 8.1.1, with respect to TCI, or
SECTION 8.2.1, with respect to ▇▇▇▇▇, not to be satisfied, and, with respect to
clause (b), use its commercially reasonable efforts to remedy the same.
7.3 Employees.
---------
7.3.1 Each party may, but will have no obligation to
employ or offer employment to any employee of the other party's Cable Business.
Not less than 30 days after the date of this Agreement, each party will provide
to the other a list of all active employees of their respective Systems
excluding all employees subject to a collective bargaining agreement or
represented by a labor organization, if any, as of a recent date, showing then-
current positions and rates of compensation and indicating which of such
employees such party desires to retain as its employees (the "Retained
Employees"). Within 45 days after receipt of this list, the party receiving such
list will provide to the other in writing a list of employees such party or its
Affiliates may desire to employ following the Closing (subject to the
satisfaction of such party's conditions for employment), which list will not
include any Retained Employees. As of the Closing Date, each party will
terminate the
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employment of all its employees who were employed incidental to the conduct of
such party's Cable Business other than Retained Employees.
7.3.2 Each party will pay to all employees employed in
its respective Cable Business all compensation, including salaries, commissions,
bonuses, deferred compensation, severance, insurance, vacation (except for
accrued vacation included in the adjustments calculated pursuant to SECTIONS 3.2
and 3.3), sick pay and other compensation or benefits to which they are entitled
for periods through and including the Closing Date, including all amounts, if
any, payable on account of the termination of their employment. Each party
agrees to cooperate in all reasonable respects with the other party to allow
such party to evaluate and interview employees of the Cable Business in order to
make hiring decisions.
7.3.3 Each party will be responsible for the maintenance
and distribution of benefits accrued under any employee benefit plan (as defined
in ERISA) maintained by such party pursuant to the provisions of any Legal
Requirement and of such plans. Neither party will assume any obligation or
liability for any such accrued benefits or any fiduciary or administrative
responsibility to account for or dispose of any such accrued benefits under any
employee benefit plans maintained by the other party.
7.3.4 All claims and obligations under, pursuant to or in
connection with any welfare, medical, insurance, disability or other employee
benefit plans of either party or arising under any Legal Requirement affecting
employees of such party incurred on or before the Closing Date or resulting from
or arising from events or occurrences occurring or commencing on or before the
Closing Date will remain the responsibility of such party, whether or not such
employees are hired by the other party after the Closing. Neither party will
have or assume any obligation or liability under or in connection with any such
plan maintained by the other party.
7.3.5 Each party will remain solely responsible for, and
will indemnify and hold harmless the other from and against all Losses arising
from or with respect to, all salaries and all severance, vacation (except for
accrued vacation included in the adjustments calculated pursuant to SECTIONS 3.2
and 3.3), medical, sick, holiday, continuation coverage and other compensation
or benefits to which its employees (whether or not hired by the other) may be
entitled, as a result of their employment by it through and including the
Closing Time, the termination of their employment at the Closing Time, the
obligation, if any, to notify and/or bargain with any labor organization, the
consummation of the transactions contemplated hereby or pursuant to any
applicable Legal Requirement (including WARN) or otherwise relating to their
employment through and including the Closing Time.
7.3.6 Each party will retain full responsibility and
liability for offering and providing "continuation coverage" of any "qualified
beneficiary" who is covered by a "group health plan" sponsored or contributed to
by such party and who has experienced a "qualifying event" or is receiving
"continuation coverage" on or prior to the Closing Date. "Continuation
coverage,"
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"qualified beneficiary," "group health plan," and "qualifying event" all will
have the meanings given such terms under Code Section 4980B. Each party will
indemnify, defend, and hold harmless the other party and its ERISA Affiliates,
from and against any act or omission of such party which relates to
"continuation coverage" or because such party is deemed to be a successor
employer to the other party.
7.3.7 Notwithstanding anything to the contrary herein,
each party will (a) credit each employee of the other party (other than a
Retained Employee) who is offered employment by such Party prior to the Closing
Date and becomes an employee of a party after the Closing Time (a "Hired
Employee") the lesser of the amount of vacation accrued by him or her as an
employee of such party through and including the Closing or the amount of
accrued vacation permitted to be accrued by employees of the party that will
employ the Hired Employee after the Closing in accordance with such party's
standard practices; (b) permit each Hired Employee to participate in such
party's employee benefit plans to the same extent as similarly situated
employees of such party and their dependents; (c) give each Hired Employee
credit for his or her past service with the party employing him or her at the
Closing Time (including past service with any prior owner or operator of such
party) for purposes of eligibility and vesting under the employing party's
employee benefit and other plans to the same extent as other similarly situated
employees of such party; and (d) not subject any Hired Employee to any waiting
periods or limitations on benefits for pre-existing conditions under such
party's employee benefit plans, including any group health and disability plans,
except to the extent such employees were subject to such limitations under the
other party's employee benefit plans.
7.3.8 If ▇▇▇▇▇ discharges without cause within 30 days
after the Closing any TCI Hired Employee and such Hired Employee would have been
entitled to severance payments pursuant to TCI's severance benefits plan if such
Hired Employee had been discharged without cause by TCI at the Closing Time,
then ▇▇▇▇▇ will pay severance benefits to such Hired Employee in accordance with
TCI's severance benefit plan to the extent such plan would have paid severance
to such Hired Employee. If TCI discharges without cause within 30 days after the
Closing any ▇▇▇▇▇ Hired Employee and such Hired Employee would have been
entitled to severance payments pursuant to ▇▇▇▇▇' ▇▇▇▇▇▇▇▇▇ benefits plan if
such Hired Employee had been discharged without cause by ▇▇▇▇▇ at the Closing
Time, then TCI will pay severance benefits to such Hired Employee in accordance
with ▇▇▇▇▇' ▇▇▇▇▇▇▇▇▇ benefit plan to the extent such plan would have paid
severance to such Hired Employee.
7.3.9 Nothing in this Section 7.3 or elsewhere in this
Agreement will be deemed to make any employee of the parties a third party
beneficiary of this Agreement.
7.4 Leased Vehicles; Other Capital Leases. Each party will
-------------------------------------
pay the remaining balances on any leases for vehicles or capital leases included
in its Tangible Personal Property and will deliver title to such vehicles and
other Tangible Personal Property free and clear of all Liens (other than
Permitted Liens) to the other party at the Closing.
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7.5 Required Consents, Etc.
----------------------
7.5.1 Each party will use its commercially reasonable
efforts to obtain in writing as promptly as possible and at its expense, all the
Required Consents and any other consent, authorization or approval required to
be obtained by such party in connection with the transactions contemplated by
this Agreement, reasonably satisfactory in form and substance to the other, and
deliver to the other copies of such Required Consents and such other consents,
authorizations or approvals promptly after they are obtained by such party;
provided, however, that each party will afford the other party the opportunity
to review, approve and revise the form of Required Consent prior to delivery to
the party whose consent is sought. The Required Consents will be proposed in a
form that provides confirmation from the third party of the continued existence
of and the absence of defaults under the applicable System Contract, System
Franchise, System License or other document. Each party will cooperate with the
other party to obtain all Required Consents, but neither party will be required
to accept or agree or accede to any modifications or amendments to, or the
imposition of any condition to the transfer of (in each case other than
inconsequential matters with no adverse effect on the party acquiring the
affected System), any of the System Franchises, System Licenses, System
Contracts or leases or documents evidencing Leased Property or Real Property
Interests that are not acceptable to the other in its sole discretion.
Notwithstanding the foregoing, as soon as practicable after the date of this
Agreement, the parties will cooperate with each other to complete, execute and
deliver, or cause to be completed, executed and delivered to the appropriate
Governmental Authority, an FCC Form 394 with respect to each System Franchise as
to which such Form 394 is required.
7.5.2 Each party will use its commercially reasonable
efforts to obtain for each lease that has not been recorded in the public
records, execution of a document suitable for recording in the public records
and sufficient after recording to constitute a memorandum of lease.
7.5.3 Notwithstanding the foregoing, no party will have
any further obligation to obtain Required Consents: (a) with respect to license
agreements relating to pole attachments where the licensing party will not
consent to an assignment of such license agreement but requires that the
proposed assignee enter into a new agreement with such licensing authority, in
which case such party will use its commercially reasonable efforts to enter into
such agreement prior to the Closing or as soon as practicable thereafter and the
party to the license agreement will cooperate with and assist the other party in
obtaining such agreements; provided however that the proposed assignee's
commercially reasonable efforts will not require it to take any action of the
type that such party is not required to take pursuant to SECTION 7.5.1; and (b)
for any business radio license which such party reasonably expects can be
obtained within 120 days after the Closing and so long as a temporary
authorization is available to the other party under FCC rules with respect
thereto.
7.6 Title Commitments and Surveys. ▇▇▇▇▇ and TCI each will
-----------------------------
provide to the other, within 45 days after the date of this Agreement, (a)
current commitments to issue title insurance policies on the 1992 ALTA owner's
or lessee form, as appropriate (or its local equivalent in any state
-38-
in which ALTA policies are not available) ("Title Commitments") issued by or on
behalf of a title insurance company reasonably satisfactory to the other (the
"Title Company"), and containing policy limits and other terms reasonably
acceptable to the other, and legible photocopies of all recorded items described
as exceptions therein, committing to insure (i) each parcel of the Owned
Property and easements that provide access to such Owned Property included in
its Assets, subject only to Permitted Liens and (ii) a leasehold interest in
each parcel of Leased Property for those parcels of Leased Property used for
headend or tower sites and on easements which provide access to such Leased
Property, and (b) surveys of each such parcel of Owned Property or Leased
Property in such form as is necessary to obtain the title insurance to be issued
pursuant to the Title Commitments with the standard printed exceptions relating
to survey matters deleted (the "Surveys"), certified to the other and to the
Title Company issuing the Title Commitment. The cost to obtain such Title
Commitments and Surveys and other documents required by the Title Company to
issue such policies and Surveys will be paid by the party that owns or leases
such property prior to Closing. If ▇▇▇▇▇ or TCI notifies the other within 20
days of its receipt of both the Title Commitments and the Surveys of any Lien
(other than a Permitted Lien or a Lien set forth in SCHEDULES 5.4 or 6.4, as
applicable) or other matter affecting title to Owned Property or Leased Property
of the other which or prevents access to or which could prevent or impede in any
way the use or operation of any parcel of Owned Property or Leased Property for
the purposes for which it is currently used or operated by the other (each a
"Title Defect"), the other will exercise commercially reasonable efforts to
remove or, with the consent of the objecting party (not to be unreasonably
withheld), cause the Title Company to commit to insure over, each such Title
Defect prior to the Closing.
7.7 HSR Notification. As soon as practicable after the
----------------
execution of this Agreement, but in any event no later than 30 days after such
execution, ▇▇▇▇▇ and TCI will each complete and file, or cause to be completed
and filed, any notification and report required to be filed under the HSR Act
and each such filing will request early termination of the waiting period
imposed by the HSR Act. The parties will use their reasonable best efforts to
respond as promptly as reasonably practicable to any inquiries received from the
Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") for additional information or
documentation and to respond as promptly as reasonably practicable to all
inquiries and requests received from any other Governmental Authority in
connection with antitrust matters. The parties will use their respective
reasonable best efforts to overcome any objections which may be raised by the
FTC, the Antitrust Division or any other Governmental Authority having
jurisdiction over antitrust matters. Each of the parties will cooperate to
prevent inconsistencies between their respective filings and will furnish to
each other such necessary information and reasonable assistance as the other may
reasonably request in connection with its preparation of necessary filings or
submissions under the HSR Act. Notwithstanding the foregoing, no party will be
required to make any significant change in the operations or activities of the
business (or any material assets employed therein) of such party or any of its
Affiliates, if a party determines in good faith that such change would be
materially adverse to the operations or activities of the business (or any
material assets employed therein) of such party or any of its Affiliates having
significant assets, net worth or revenue. Notwithstanding anything to the
contrary in this Agreement if either party determines in its reasonable
-39-
business judgment that a request for additional data and information in
connection with the HSR Act is unduly burdensome, such party may terminate this
Agreement by notifying the other party.
7.8 No Shopping. Neither ▇▇▇▇▇ nor TCI, nor their shareholders
-----------
nor any agent or representative of any of them will, during the period
commencing on the date of this Agreement and ending with the earlier to occur of
the Closing or the termination of this Agreement, directly or indirectly (a)
solicit or initiate the submission of proposal or offers from any Person for,
(b) participate in any discussions pertaining to, or (c) furnish any information
to any Person other than ▇▇▇▇▇ or TCI relating to any direct or indirect
acquisition or purchase of all or any portion of the Systems.
7.9 Lien and Judgment Searches. Not more than 20 nor fewer
--------------------------
than 10 days prior to the expected Closing Date, ▇▇▇▇▇, at its expense, will
provide TCI with (a) the results of a lien search conducted by a professional
search company of records in the offices of the secretaries of state in each
state and county clerks in each county where there exist tangible Assets, and in
the state and county where ▇▇▇▇▇' principal offices are located, including
copies of all financing statements or similar notices or filings (and any
continuation statements) discovered by such search company and (b) the results
of a search of the dockets of the clerk of each federal and state court sitting
in the city, county or other applicable political subdivision where the
principal office or any material assets of ▇▇▇▇▇ may be located, with respect to
judgments, orders, writs or decrees against or affecting ▇▇▇▇▇ or any of the
▇▇▇▇▇ Assets. Not more than 20 nor fewer than 10 days prior to the expected
Closing Date, TCI, at its expense, will provide ▇▇▇▇▇ with (a) the results of a
lien search conducted by a professional search company of records in the offices
of the secretaries of state in each state and county clerks in each county where
there exist tangible Assets, and in the state and county where TCI' principal
offices are located, including copies of all financing statements or similar
notices or filings (and any continuation statements) discovered by such search
company and (b) the results of a search of the dockets of the clerk of each
federal and state court sitting in the city, county or other applicable
political subdivision where the principal office or any material assets of TCI
may be located, with respect to judgments, orders, writs or decrees against or
affecting TCI or any of the TCI Assets.
7.10 Transfer Taxes. All sales, use or excise Taxes arising
--------------
from or payable by reason of the transfer of any of the TCI Assets and the ▇▇▇▇▇
Assets will be shared equally by TCI and ▇▇▇▇▇. All transfer and similar Taxes
or assessments, including transfer fees and similar assessments for or under
System Franchises, System Licenses and System Contracts, arising from or payable
by reason of the conveyance of the TCI Assets and the ▇▇▇▇▇ Assets will be
shared equally by TCI and ▇▇▇▇▇.
7.11 Distant Broadcast Signals. Unless otherwise restricted or
-------------------------
prohibited by any Governmental Authority or applicable Legal Requirement, if
requested by the party to which a System will be transferred under this
Agreement, the transferor of such System will delete prior to the Closing Date
any distant broadcast signals which the transferee determines will result in
-40-
unacceptable liability on the part of the transferee for copyright payments with
respect to continued carriage of such signals after the Closing.
7.12 Letter to P rogrammers. On or before the Closing Date,
----------------------
▇▇▇▇▇ will transmit a letter in the form of EXHIBIT 7.12 to all programmers from
which Seller purchases programming for the Systems and provide TCI with a copy
of each such letter. On or before the Closing Date, TCI will transmit a letter
in the form of EXHIBIT 7.12 to all programmers from which Seller purchases
programming for the Systems and provide ▇▇▇▇▇ with a copy of each such letter.
7.13 Supplemental Schedules. Not later than ten Business Days
----------------------
prior to the expected Closing Date, each party will deliver to the other revised
copies of each of the Schedules prepared by it, which will have been updated and
marked to show any changes occurring between the date of this Agreement and the
date of delivery; provided that for purposes of such party's representations and
warranties and covenants in this Agreement, all references to the Schedules will
mean the version of the Schedules attached to this Agreement on the date of
signing, and provided further that if the effect of any such updates to
Schedules is to disclose any one or more additional properties, privileges,
rights, interests or claims as Assets, the party to whom such Assets would
otherwise be transferred at the Closing, at or before Closing, will have the
right (to be exercised by written notice to the other party) to cause any one or
more of such items to be designated as and deemed to constitute Excluded Assets
for all purposes under this Agreement.
7.14 Use of Names and Logos. For a period of 90 days after the
----------------------
Closing, ▇▇▇▇▇ and TCI will be entitled to use the trademarks, trade names,
service marks, service names, logos and similar proprietary rights of the other
and all derivations and abbreviations of such name and related marks to the
extent incorporated in or on the Assets transferred to it at the Closing. Each
will exercise reasonable efforts to remove all such names, marks, logos and
similar proprietary rights of the other from the Assets by such earlier date as
reasonably practicable following the Closing; provided, however, neither ▇▇▇▇▇
nor TCI will be required to remove or discontinue using any such trade name or
▇▇▇▇ that is affixed to converters or other items in or to be used in subscriber
homes or properties, or as are used in a similar fashion making such removal of
discontinuation impracticable for ▇▇▇▇▇ and TCI
7.15 Transitional Billing Services. ▇▇▇▇▇ and TCI will each
-----------------------------
provide to the other, upon request, access to and the right to use its billing
system computers, software and related fixed assets in connection with the
Systems acquired by the other for a period of up to 90 days following the
Closing to allow for conversion of existing billing arrangements ("Transitional
Billing Services"). Each party will notify the other at least 10 days prior to
the Closing as to whether it desires Transitional Billing Services from the
other. All Transitional Billing Services, if any, that are requested by a party
will be provided on terms and conditions reasonably satisfactory to each party;
provided, however, that the amount to be paid by the party receiving
Transitional Billing Services will not exceed the cost to the other party of
providing such Transitional Billing Services. Each party will
-41-
notify the other, at least 20 days prior to the expected Closing Date, of the
cost to such party of providing such Transitional Billing Services.
7.16 Satisfaction of Conditions. Each party will use its best
--------------------------
efforts to satisfy, or to cause to be satisfied, the conditions to the
obligations of the other party to consummate the transactions contemplated by
this Agreement, as set forth in SECTION 8; provided that neither party will be
required to agree to any increase in the amounts payable with respect to, or any
modification that makes more burdensome in any material respect, any of the
liabilities it will be assuming pursuant to this Agreement.
7.17 Confidentiality and Publicity.
-----------------------------
7.17.1 Each party will keep confidential any non-public
information that such party may obtain from the other in connection with this
Agreement with respect to the other's Cable Business and Systems and, unless and
until the Closing occurs, such party will not disclose, and will cause its
employees, consultants, advisors and agents not to disclose, any such
information to any other Person (other than its directors, officers and
employees and representatives of its advisers and lenders whose knowledge
thereof is necessary in order to facilitate the consummation of the transactions
contemplated hereby) or use, and will cause its employees, consultants, advisors
and agents not to use, such information to the detriment of the other; provided
that (a) such party may use and disclose any such information once it has been
publicly disclosed (other than by such party in breach of its obligations under
this Section) or which rightfully has come into the possession of such party
(other than from the other party) and (b) to the extent that such party may, in
the reasonable opinion of its counsel, be compelled by Legal Requirements to
disclose any of such information, such party may disclose such information if it
will have used all reasonable efforts, and will have afforded the other the
opportunity, to obtain an appropriate protective order or other satisfactory
assurance of confidential treatment, for the information compelled to be
disclosed. The obligation by either party to hold information in confidence
pursuant to this Section will be satisfied if such party exercises the same care
with respect to such information as it would exercise to preserve the
confidentiality of its own similar information. In the event of termination of
this Agreement, each party will use all reasonable efforts to cause to be
delivered to the other, and retain no copies of, any documents, work papers and
other materials obtained by such party or on its behalf from the other, whether
so obtained before or after the execution hereof.
7.17.2 Neither party will issue any press releases or
make any other public announcement, or, except as permitted in SECTION 7.17.1,
any oral or written statements to ▇▇▇▇▇' or TCI's employees concerning this
Agreement and the transactions contemplated hereby, except as required by
applicable Legal Requirements, without the prior written consent and approval of
the other, which consent and approval may not be unreasonably withheld.
-42-
7.18 Bulk Transfers. ▇▇▇▇▇ and TCI each waives compliance by
--------------
the other with Legal Requirements relating to bulk transfers applicable to the
transactions contemplated hereby.
7.19 Allocation of Value to Exchanged Assets. TCI and ▇▇▇▇▇
---------------------------------------
will, no later than 60 days after the Closing, deliver to the other a written
estimate of the value to be allocated by it to each of the exchange groups
pursuant to Internal Revenue Service regulations relating to like-kind exchanges
of assets under Section 1031 of the Code. The parties will use reasonable good
faith efforts to agree within 90 days after the Closing on the final values to
be allocated to each such exchange group. If such an agreement is reached, TCI
and ▇▇▇▇▇, for purposes of Sections 1031 and 1060 of the Code and the
regulations thereunder, will report the transactions contemplated by this
Agreement in accordance with such agreed upon values. If an agreement can not
be reached on such values, each party will make its own good faith determination
of the values to be allocated to each such exchange group and will report such
values in accordance with Sections 1031 and 1060 of the Code and the regulations
thereunder. Liabilities assumed or taken subject to by each party are being
exchanged each for the other to the maximum extent permitted under Section 1031
of the Code and regulations thereunder. Each party promptly will give the other
notice of any disallowance or challenge of asset values by the Internal Revenue
Service or any state or local tax authority.
7.20 Environmental Reports. Within 60 days after the execution
---------------------
of this Agreement, each party will, at its expense, obtain and deliver to the
other party for each parcel of the delivering party's (a) Owned Property or (b)
any Leased Property which is used for a headed or tower site, a current Phase I
Environmental Site Assessment ("Environmental Report") prepared by a nationally
known environmental engineering firm reasonably satisfactory to the other party
in accordance with ASTM Standard E 1527-93 and certified to the other party.
Each Environmental Report will include, in addition to the process described in
E 1527-93, such soil and groundwater sampling and other testing as will enable
the environmental engineers to determine if Hazardous Substances are detected
and to provide an estimate of the cost to remove and dispose of the Hazardous
Substances or otherwise remediate the property in accordance with all applicable
Environmental Laws.
7.21 Board Approvals. On or before the Due Diligence Date, the
---------------
Boards of Directors of TCI and ▇▇▇▇▇ will have been presented with resolutions
for the approval of the transactions contemplated by this Agreement and will
have approved or disapproved such transactions.
7.22 Further Assurances. At or after the Closing, each of ▇▇▇▇▇
------------------
and TCI at the request of the other, will promptly execute and deliver, or cause
to be executed and delivered, to the other all such documents and instruments,
in addition to those otherwise required by this Agreement, in form and substance
reasonably satisfactory to the other as the other may reasonably request in
order to carry out or evidence the terms of this Agreement or to collect any
accounts receivable or other claims included in the ▇▇▇▇▇ Assets or the TCI
Assets. Without limiting the generality of the foregoing, ▇▇▇▇▇ and TCI will
take, or cause to be taken, all actions consistent with the terms of this
Agreement, including execution and delivery of any documents or instruments, as
the other may
-43-
reasonably request to effect the qualification of the transactions contemplated
hereby as a like-kind exchange under Section 1031 of the Code.
7.23 Consents. Subsequent to the Closing, each of TCI, with
--------
respect to the TCI Systems and TCI Assets, and ▇▇▇▇▇, with respect to the ▇▇▇▇▇
Systems and ▇▇▇▇▇ Assets, will continue to use commercially reasonable efforts
to obtain in writing as promptly as possible any consent, authorization or
approval required to be obtained by it in connection with the transactions
contemplated under this Agreement which was not obtained on or before the
Closing and will deliver copies of the same, reasonably satisfactory in form and
substance, to the other. The obligations set forth in this Section will survive
the Closing and will not be merged in the consummation of the transactions
contemplated hereby.
7.24 Post-Closing Cooperation upon Inquiries as to Rates. After
---------------------------------------------------
the Closing, each party will be responsible for and follow to conclusion any
rate order of any Governmental Authority or proceeding with respect to rates
charged by it in Systems owned by it immediately prior to the Closing and will
cooperate with and assist the other by providing, upon reasonable request, all
information in that party's possession (and not previously made available to the
requesting party) relating directly to the rates charged for cable services that
the requesting party may reasonably require to justify such rates in any filing
or in response to any inquiry, order or requirements of any Governmental
Authority.
7.25 Idaho Springs Extension/Renewal. Promptly after the
-------------------------------
execution of this Agreement, ▇▇▇▇▇ shall use commercially reasonable efforts,
and TCI shall cooperate with and assist ▇▇▇▇▇ in all reasonable respects
(including, without limitation, attendance at City meetings and hearings and
filing and signing any and all applications, statements or documents required;
provided, however, such applications, statements or documents shall not require
TCI to undertake any obligations which are not reasonable and customary for
similarly situated franchises of the same duration), to have the franchise with
the City of Idaho Springs (the "Idaho Springs Franchise") either (i) extended
for a term of at least three years, or (ii) renewed for a term of at least three
years on terms which are reasonable and customary for renewals of similarly
situated franchises of the same duration.
7.26 Microwave Compliance. Within 30 days of the date of this
--------------------
Agreement, TCI shall conduct microwave proof-of-performance tests in accordance
with the memorandum dated October 7, 1996, from ▇▇▇▇▇▇▇ ▇▇▇▇▇ to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
a copy of which is attached hereto as EXHIBIT 7.26 (the "Microwave Memorandum").
TCI shall promptly deliver to ▇▇▇▇▇ all documentation and results from the
tests. If the tests reveal that the microwave systems fail to comply with FCC
rules and regulations, TCI shall promptly take, and shall complete prior to the
Closing Time, all action needed to bring such systems into compliance with such
rules and regulations.
-44-
SECTION 8. CONDITIONS PRECEDENT
8.1 Conditions to ▇▇▇▇▇' Obligations. The obligations of
--------------------------------
▇▇▇▇▇ to consummate the transactions contemplated by this Agreement will be
subject to the satisfaction, at or before the Closing, of the following
conditions, which may be waived by ▇▇▇▇▇:
8.1.1 Accuracy of Representations and Warranties. The
------------------------------------------
representations and warranties of TCI in this Agreement and in any Transaction
Document, if specifically qualified by materiality, are true in all respects
and, if not so qualified, are true in all material respects at and as of the
Closing with the same effect as if made at and as of the Closing, except for
changes permitted or contemplated by this Agreement.
8.1.2 Performance of Agreements. TCI has performed in all
-------------------------
material respects all obligations and agreements and complied in all material
respects with all covenants in this Agreement and in any Transaction Document to
be performed and complied with by it at or before the Closing.
8.1.3 Deliveries. TCI has delivered the items and
----------
documents required to be delivered by it pursuant to this Agreement, including
those required under SECTION 9.2.
8.1.4 Legal Proceedings. No Litigation is pending or
-----------------
threatened by or before any Governmental Authority and no Legal Requirement has
been enacted, promulgated or issued or become or deemed applicable to any of the
transactions contemplated by this Agreement by any Governmental Authority, which
would (a) prohibit ▇▇▇▇▇' ownership or operation of all or a material portion of
any TCI System, the TCI Cable Business or the TCI Assets, (b) compel ▇▇▇▇▇ to
dispose of or hold separate all or a material portion of any TCI System, the TCI
Cable Business or the TCI Assets as a result of any of the transactions
contemplated by this Agreement, (c) if determined adversely to ▇▇▇▇▇' interest,
materially impair the ability of ▇▇▇▇▇ to realize the benefits of the
transactions contemplated by this Agreement (including the ability to transfer
the ▇▇▇▇▇ Assets and acquire the TCI Assets pursuant to a like-kind exchange
under Section 1031 of the Code) or have a material adverse effect on the right
of ▇▇▇▇▇ to exercise full rights of ownership of the TCI Assets or (d) prevent
or make illegal the consummation of any transactions contemplated by this
Agreement.
8.1.5 Consents. ▇▇▇▇▇ has received evidence, in form and
--------
substance reasonably satisfactory to it, that the TCI Required Consents marked
with an asterisk on SCHEDULE 6.3 have been obtained or given (or deemed to have
been given) and are in full force and effect.
8.1.6 No Material Adverse Change. There has not been any
--------------------------
material adverse change in the TCI Assets or the financial condition or
operations of the TCI Cable Business or the TCI Systems since the date of this
Agreement other than any change arising out of general economic conditions in
the United States or any change affecting the United States cable industry as
-45-
a whole, including any change arising from (a) legislation, litigation,
rulemaking or regulation or (b) competition caused by or arising from other
multiple channel distribution services.
8.1.7 Title Defects. With respect to each Title Defect
-------------
affecting the TCI Systems, either (a) the Title Company has agreed to delete
such Title Defect from the Title Commitments or, with the consent of ▇▇▇▇▇ (not
to be unreasonably withheld), insure over it by endorsement or (b) the parties
will have entered into a written agreement containing TCI's commitment to remedy
the Title Defect on terms satisfactory to ▇▇▇▇▇, in its reasonable discretion.
8.1.8 Environmental Assessments. The Environmental
-------------------------
Reports, environmental audits or assessments covering the TCI Owned Property or
the TCI Leased Property do not indicate the presence thereon, or the likelihood
of presence thereon, of Hazardous Substances of a kind or in a quantity as could
reasonably be expected to give rise to a material risk of liability.
8.1.9 TCI Subscribers. The TCI Systems are serving at
---------------
least 24,386 EBSs as of the Closing Date.
8.1.10 ▇▇▇▇▇ Subscribers. As of the Closing Date (a) the
-----------------
▇▇▇▇▇ Systems are serving at least 24,747 EBSs or (b) TCI has waived its right
to an adjustment from ▇▇▇▇▇ pursuant to SECTION 3.2.1 except to the extent of
the adjustment applicable if the number of EBSs of the ▇▇▇▇▇ Systems were
24,747.
8.1.11 Documents and Records. TCI has delivered to ▇▇▇▇▇
---------------------
all TCI Books and Records, including all customer lists, files and records used
by TCI in connection with the operation of the TCI Systems, and also including a
list of all pending subscriber hook-ups, disconnect and repair orders, supply
orders and any other lists reasonably necessary to the operation of the TCI
Systems. Delivery of the foregoing will be deemed made to the extent such TCI
Books and Records are then located at any of the offices included in the TCI
Owned Property or TCI Leased Property.
8.1.12 Retransmission Consent. With respect to any
----------------------
retransmission consent Contracts for broadcast signals carried on the TCI
Systems on the date of this Agreement and on the date of the Closing that are
included as part of the TCI Excluded Assets, all required retransmission
consents for continued carriage of such broadcast signals have been obtained on
terms and conditions reasonably acceptable to ▇▇▇▇▇. With respect to any
retransmission consent agreements for broadcast signals carried on the ▇▇▇▇▇
Systems on the date of this Agreement and on the date of the Closing that are
included as part of the ▇▇▇▇▇ Excluded Assets, ▇▇▇▇▇ has been relieved of any
obligations under such retransmission consent agreements with respect to the
▇▇▇▇▇ Systems for any period after the Closing.
8.1.13 HSR Act. All filings required under the HSR Act
-------
will have been made and the applicable waiting period will have expired or been
earlier terminated (without receipt
-46-
of any objection or the commencement or threat of any Litigation by a
Governmental Authority to restrain the contemplated transactions).
8.1.14 Brighton/Broomfield Transaction. The transactions
-------------------------------
contemplated by that certain Asset Purchase Agreement dated as of September 13,
1996, between Tele-Vue Systems, Inc. and ▇▇▇▇▇ Cable Income Fund 1-B/C Venture
(the "Brighton/Broomfield Agreement") shall have been consummated (the
"Brighton/Broomfield Transaction"), or all of the conditions to the closing of
the Brighton/Broomfield Transaction shall have been satisfied or waived by the
appropriate parties; provided, however, that if the Brighton/Broomfield
Agreement is terminated then ▇▇▇▇▇ shall have 15 Business Days from that
termination to terminate this Agreement. If ▇▇▇▇▇ does not terminate this
Agreement within that 15 Business Day period then this condition shall be deemed
waived.
8.2 Conditions to TCI's Obligations. The obligations of TCI to
-------------------------------
consummate the transactions contemplated by this Agreement will be subject to
the satisfaction, at or before the Closing, of the following conditions, which
may be waived by TCI.
8.2.1 Accuracy of Representations and Warranties. The
------------------------------------------
representations and warranties of ▇▇▇▇▇ in this Agreement and in any Transaction
Document, if specifically qualified by materiality, are true in all respects
and, if not so qualified, are true in all material respects at and as of the
Closing with the same effect as if made at and as of the Closing, except for
changes permitted or contemplated by this Agreement.
8.2.2 Performance of Agreements. ▇▇▇▇▇ has performed in
-------------------------
all material respects all obligations and agreements and complied in all
material respects with all covenants in this Agreement and in any Transaction
Document to be performed and complied with by it at or before the Closing.
8.2.3 Deliveries. ▇▇▇▇▇ has delivered the items and
----------
documents required to be delivered by it pursuant to this Agreement, including
those required under SECTION 9.3.
8.2.4 Legal Proceedings. No Litigation is pending or
-----------------
threatened by or before any Governmental Authority and no Legal Requirement has
been enacted, promulgated or issued or become or deemed applicable to any of the
transactions contemplated by this Agreement by any Governmental Authority, which
would (a) prohibit TCI's ownership or operation of all or a material portion of
any ▇▇▇▇▇ System, the ▇▇▇▇▇ Cable Business or the ▇▇▇▇▇ Assets, (b) compel TCI
to dispose of or hold separate all or a material portion of any ▇▇▇▇▇ System,
the ▇▇▇▇▇ Cable Business or ▇▇▇▇▇ Assets as a result of any of the transactions
contemplated by this Agreement, (c) if determined adversely to TCI's interest,
materially impair the ability of TCI to realize the benefits of the transactions
contemplated by this Agreement (including the ability to transfer the TCI Assets
and acquire the ▇▇▇▇▇ Assets pursuant to a like-kind exchange under Section 1031
of the Code) or have a material adverse effect on the right of TCI to exercise
full rights of ownership of the ▇▇▇▇▇ Assets or (d) prevent or make illegal the
consummation of any transactions contemplated by this Agreement.
-47-
8.2.5 Consents. TCI has received evidence, in form and
--------
substance reasonably satisfactory to it, that the ▇▇▇▇▇ Required Consents marked
with an asterisk on SCHEDULE 5.3 have been obtained or given (or deemed to have
been given) and are in full force and effect.
8.2.6 No Material Adverse Change. There has not been any
--------------------------
material adverse change in the ▇▇▇▇▇ Assets or the financial condition or
operations of the ▇▇▇▇▇ Cable Business or the ▇▇▇▇▇ Systems since the date of
this Agreement other than any change arising out of general economic conditions
in the United States or any change affecting the United States cable industry as
a whole, including any change arising from (a) legislation, litigation,
rulemaking or regulation or (b) competition caused by or arising from other
multiple channel distribution services.
8.2.7 Title Defects. With respect to each Title Defect
-------------
affecting the ▇▇▇▇▇ Systems, either (a) the Title Company has agreed to delete
such Title Defect from the Title Commitments or, with the consent of TCI (not to
be unreasonably withheld), insure over it by endorsement or (b) the parties will
have entered into a written agreement containing ▇▇▇▇▇' commitment to remedy the
Title Defect on terms satisfactory to TCI, in its reasonable discretion.
8.2.8 Environmental Assessments. The Environmental
-------------------------
Reports, environmental audits or assessments covering the ▇▇▇▇▇ Owned Property
or the ▇▇▇▇▇ Leased Property do not indicate the presence thereon, or the
likelihood of presence thereon, of Hazardous Substances of a kind or in a
quantity as could reasonably be expected to give rise to a material risk of
liability.
8.2.9 ▇▇▇▇▇ Subscribers. The ▇▇▇▇▇ Systems are serving at
-----------------
least 24,747 EBSs as of the Closing Date.
8.2.10 TCI Subscribers. As of the Closing Date (a) the TCI
---------------
Systems are serving at least 24,386 EBSs or (b) ▇▇▇▇▇ has waived its right to an
adjustment from TCI pursuant to SECTION 3.2.1 except to the extent of the
adjustment applicable if the number of EBSs of the TCI System were 24,386.
8.2.11 Documents and Records. ▇▇▇▇▇ has delivered to TCI
---------------------
all ▇▇▇▇▇ Books and Records, including all customer lists, files and records
used by TCI in connection with the operation of the TCI Systems, and also
including a list of all pending subscriber hook-ups, disconnect and repair
orders, supply orders and any other lists reasonably necessary to the operation
of the ▇▇▇▇▇ Systems. Delivery of the foregoing will be deemed made to the
extent such ▇▇▇▇▇ Books and Records are then located at any of the offices
included in the ▇▇▇▇▇ Owned Property or ▇▇▇▇▇ Leased Property.
8.2.12 Retransmission Consent. With respect to any
----------------------
retransmission consent agreements for broadcast signals carried on the ▇▇▇▇▇
Systems on the date of this Agreement and on the date of the Closing that are
included as part of the ▇▇▇▇▇ Excluded Assets, all required retransmission
consents for continued carriage of such broadcast signals have been obtained on
terms
-48-
and conditions reasonably acceptable to TCI. With respect to any
retransmission consent agreements for broadcast signals carried on the TCI
Systems on the date of this Agreement and on the date of the Closing that are
included as part of the TCI Excluded Assets, TCI has been relieved of any
obligations under such retransmission consent agreements with respect to the TCI
Systems for any period after the Closing.
8.2.13 HSR Act. All filings required under the HSR
-------
Act have been made and the applicable waiting period has expired or been earlier
terminated (without receipt of any objection or the commencement or threat of
any Litigation by a Governmental Authority to restrain the contemplated
transactions).
8.2.14 Brighton/Broomfield Transaction. The
-------------------------------
Broomfield/Brighton Trans-action shall have been consummated, or all of the
conditions to the closing of the Brighton/ Broomfield Transaction shall have
been satisfied or waived by the appropriate parties; provided, however, that if
the Broomfield/Brighton Agreement is terminated, then TCI shall have 15 Business
Days from that termination to terminate this Agreement. If TCI does not
terminate this Agreement within that 15 Business Day period, then this condition
shall be deemed waived.
8.2.15 Idaho Springs Extension/Renewal. The Idaho
-------------------------------
Springs Franchise shall have been (i) extended for a term of at least three
years, or (ii) renewed for a term of at least three years on terms which are
reasonable and customary for renewals of similarly situated franchises of the
same duration.
SECTION 9. THE CLOSING
9.1 The Closing; Time and Place. The closing of the
----------------------------
transactions contemplated by this Agreement (the "Closing") will take place at a
date (the "Closing Date") and time mutually determined by TCI and ▇▇▇▇▇, which
Closing Date will be within 15 days after the date on which all conditions set
forth in SECTIONS 8.1 and 8.2 (other than those based on acts to be performed at
the Closing) have either been satisfied or waived in writing by the party
entitled to the benefit of such condition. The Closing will be held at TCI's
counsel's office located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or such other mutually determined location.
9.2 TCI's Delivery Obligations. At the Closing, TCI will
---------------------------
deliver or cause to be delivered to ▇▇▇▇▇ the following:
9.2.1 Closing Payment. Amounts, if any, payable by TCI
---------------
to ▇▇▇▇▇ pursuant to SECTION 3.
9.2.2 ▇▇▇▇ of Sale and Assignment and Assumption
------------------------------------------
Agreement. The executed ▇▇▇▇ of Sale and Assignment and Assumption Agreement in
---------
the forms of EXHIBITS 9.2.2 and 9.3.2.
-49-
9.2.3 Deeds. A special warranty deed in a form reasonably
-----
acceptable to ▇▇▇▇▇ (and complying with applicable state laws) with respect to
each parcel of TCI Owned Property, duly executed and acknowledged and in
recordable form, warranting to defend title to such TCI Owned Property against
all Persons claiming by, through or under TCI, subject however, to any Permitted
Liens and any Title Defects deleted or insured over pursuant to SECTION
8.1.7(a).
9.2.4 Title Policies. Policies of title insurance pursuant
--------------
to the Title Commitments described in SECTION 7.6, updated to the date of the
Closing, and endorsed to delete the standard printed exceptions relating to
survey matters and, to the extent applicable under SECTION 7.6 to insure over
any Title Defects (the "TCI Title Policies") or the irrevocable written
commitment of the Title Company to deliver the TCI Title Policies or TCI's
written commitment contemplated in SECTION 8.1.7(b).
9.2.5 Memorandum of Lease. Each memorandum of lease
-------------------
obtained by TCI pursuant to SECTION 7.5.2.
9.2.6 Lien Releases. Evidence satisfactory to ▇▇▇▇▇ that
-------------
all Liens (other than Permitted Liens) affecting or encumbering the TCI Assets
have been terminated, released or waived, as appropriate, or original, executed
instruments in form satisfactory to ▇▇▇▇▇ effecting such terminations, releases
or waivers.
9.2.7 Vehicle Titles. Title certificates to all vehicles
--------------
included among the TCI Assets, endorsed for transfer of title to ▇▇▇▇▇, and
separate bills of sale therefor or other transfer documentation, if required by
the laws of the States in which such vehicles are titled.
9.2.8 FIRPTA Certificate. FIRPTA Non-Foreign Seller
------------------
Certificate certifying that TCI is not a foreign person within the meaning of
Section 1445 of the Code reasonably satisfactory in form and substance to ▇▇▇▇▇.
9.2.9 Officer's Certificate. A certificate executed by an
---------------------
executive officer of TCI dated the Closing Date, reasonably satisfactory in form
and substance to ▇▇▇▇▇ certifying that the conditions specified in SECTIONS
8.1.1, 8.1.2 and 8.1.9 have been satisfied.
9.2.10 TCI Counsel Opinion. An opinion of ▇▇▇▇ ▇. ▇▇▇▇▇▇,
-------------------
Esq., counsel to TCI, dated the Closing Date, in the form of EXHIBIT 9.2.11 (the
"TCI Counsel Opinion").
9.2.11 Other. Such other documents and instruments as may be
-----
reasonably necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby.
9.3 ▇▇▇▇▇' Delivery Obligations . At the Closing, ▇▇▇▇▇ will
----------------------------
deliver or cause to be delivered to TCI the following:
-50-
9.3.1 Closing Payments. Amounts, if any, payable by ▇▇▇▇▇
----------------
to TCI, pursuant to SECTION 3.
9.3.2 ▇▇▇▇ of Sale and Assignment and Assumption Agreement.
----------------------------------------------------
The executed ▇▇▇▇ of Sale and Assignment and Assumption Agreement in the forms
of EXHIBITS 9.2.2 and 9.3.2.
9.3.3 Deeds. A special warranty deed in a form reasonably
-----
acceptable to TCI (and complying with applicable state laws) with respect to
each parcel of ▇▇▇▇▇ Owned Property, duly executed and acknowledged and in
recordable form, warranting to defend title to such ▇▇▇▇▇ Owned Property against
all Persons claiming by, through or under ▇▇▇▇▇, subject however, to any
Permitted Liens and any Title Defects deleted or insured over pursuant to
SECTION 8.2.7(a).
9.3.4 Title Policies. Policies of title insurance pursuant
--------------
to the Title Commitments described in SECTION 7.6, updated to the Closing and
endorsed to delete the standard printed exceptions relating to survey matters
and, to the extent applicable under SECTION 7.6 to insure over any Title Defects
(the "▇▇▇▇▇ Title Policies") or the irrevocable written commitment of the Title
Company to deliver the ▇▇▇▇▇ Title Policies or ▇▇▇▇▇' written commitment
contemplated in SECTION 8.2.7(b).
9.3.5 Memorandum of Lease. Each memorandum of lease
-------------------
obtained by ▇▇▇▇▇ pursuant to SECTION 7.5.2.
9.3.6 Lien Releases. Evidence satisfactory to TCI that all
-------------
Liens (other than Permitted Liens) affecting or encumbering the ▇▇▇▇▇ Assets
have been terminated, released or waived, as appropriate, or original, executed
instruments in form satisfactory to TCI effecting such terminations, releases or
waivers.
9.3.7 Vehicle Titles. Title certificates to all vehicles
--------------
included among the ▇▇▇▇▇ Assets, endorsed for transfer of title to TCI and
separate bills of sale therefor or other transfer documentation, if required by
the laws of the States in which such vehicles are titled.
9.3.8 FIRPTA Certificate. FIRPTA Non-Foreign Seller
------------------
Certificate certifying that ▇▇▇▇▇ is not a foreign person within the meaning of
Section 1445 of the Code reasonably satisfactory in form and substance to TCI.
9.3.9 Officer's Certificates. A certificate executed by an
----------------------
executive officer of ▇▇▇▇▇ dated the Closing Date, reasonably satisfactory in
form and substance to TCI certifying that the conditions specified in SECTIONS
8.2.1, 8.2.2 and 8.2.9 have been satisfied.
9.3.10 ▇▇▇▇▇ Counsel Opinion. An opinion of ▇▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇, Esq., counsel to ▇▇▇▇▇, dated the Closing Date, in the form of EXHIBIT
9.3.10 (the "▇▇▇▇▇ Counsel Opinion").
-51-
9.3.11 Other. Such other documents and instruments as
-----
may be reasonably necessary to effect the intent of this Agreement and
consummate the transactions contemplated hereby.
SECTION 10. TERMINATION AND DEFAULT
10.1 Termination Events. This Agreement may be terminated and
------------------
the transactions contemplated hereby may be abandoned:
10.1.1 At any time, by the mutual agreement of ▇▇▇▇▇ and TCI;
10.1.2 By either ▇▇▇▇▇ or TCI at any time, if the other is in
material breach or default of any of its covenants, agreements or other
obligations herein or in any Transaction Document, or if any of its
representations herein or in any Transaction Document is not true in all
material respects when made or when otherwise required by this Agreement or any
Transaction Document to be true and such breach or default or the failure to be
true is not cured or waived prior to Closing;
10.1.3 By either ▇▇▇▇▇ or TCI upon written notice to the
other, if any of the conditions to its obligations set forth in SECTIONS 8.1 and
8.2, respectively, are not satisfied on or before May 15, 1997, for any reason
other than a material breach or default by such party of its respective
covenants, agreements or other obligations under this Agreement, or any of its
representations herein not being true and accurate in all material respects when
made or when otherwise required by this Agreement to be true and accurate in all
material respects;
10.1.4 By either ▇▇▇▇▇ or TCI, within 35 days after the date
of this Agreement (the "Due Diligence Date"), if either (a) the results and
findings of such party's investigation of the other's Cable Business and Assets
are not satisfactory in such party's sole discretion or (b) all board of
director approvals are not obtained by such party (for any reason) on or before
the Due Diligence Date; or
10.1.5 As otherwise provided herein.
10.2 Effect of Termination. If this Agreement is terminated
---------------------
pursuant to SECTION 10.1, all obligations of the parties under this Agreement
will terminate, except for the obligations set forth in SECTIONS 7.17 and 12.15.
Termination of this Agreement pursuant to SECTIONS 10.1.2 or 10.1.3 will not
limit or impair any remedies that TCI or ▇▇▇▇▇ may have with respect to a breach
or default by the other of its covenants, agreements or obligations under this
Agreement. Neither party will have any liability in any event upon its exercise
of the termination right pursuant to SECTION 10.1.4.
-52-
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
11.1 Survival of Representations and Warranties. The
------------------------------------------
representations and warranties of TCI and ▇▇▇▇▇ in this Agreement and in the
Transaction Documents will survive until the first anniversary of the Closing
Date, except that (a) all such representations and warranties with respect to
any Taxes, rates, Environmental Law, ERISA, employment matters or copyright
matters will survive until 60 days after the expiration of the applicable
statute of limitations (including any extensions) for such Taxes, rates,
Environmental Law, ERISA, employment matters or copyright matters, respectively
and (b) the representations and warranties as to ownership of the Assets in
SECTIONS 5.4 and 6.4, respectively, and as to ownership of Owned Property set
forth in SECTIONS 5.6 and 6.6, respectively, and in the deed or deeds delivered
with respect to Owned Property will survive the Closing and the delivery of
such deeds and will continue in full force and effect without limitation. The
periods of survival of the representations and warranties prescribed by this
SECTION 11.1 are referred to as the "Survival Period." The liabilities of each
party under its respective representations and warranties will expire as of the
expiration of the applicable Survival Period; provided, however, that such
expiration will not include, extend or apply to any representation or warranty,
the breach of which has been asserted by a party in a written notice to the
other party before such expiration or about which a party has given the other
party written notice before such expiration indicating that facts or conditions
exist that, with the passage of time or otherwise, can reasonably be expected to
result in a breach (and describing such potential breach in reasonable detail).
The covenants and agreements of each party in this Agreement (that are by their
terms intended to be performed after Closing) and in the Transaction Documents
will survive the Closing and will continue in full force and effect without
limitation.
11.2 Indemnification by TCI. From and after the Closing, TCI will
----------------------
indemnify and hold harmless ▇▇▇▇▇ and its shareholders and its and their
respective Affiliates, and the shareholders, officers, directors, employees,
agents, successors and assigns and any Person claiming by or through any of
them, as the case may be, from and against any and all Losses arising out of or
resulting from (a) any breach of any representation or warranty made by TCI in
this Agreement or in the Transaction Documents delivered by TCI, (b) any breach
of any covenant, agreement or obligation of TCI contained in this Agreement or
in the Transaction Documents delivered by TCI, (c) any act or omission of TCI
with respect to, or any event or circumstance related to, the ownership or
operation of the TCI Assets or the conduct of the TCI Cable Business, which act,
omission, event or circumstance occurred or existed prior to or at the Closing
Time, without regard to whether a claim with respect to such matter is asserted
before or after the Closing Time, including any matter described on SCHEDULE
6.11, (d) any liability or obligation not included in the ▇▇▇▇▇ Assumed
Obligations and Liabilities, (e) any Title Defect TCI fails to eliminate as an
exception from a Title Commitment, (f) any claim that the transactions
contemplated by this Agreement violate WARN or any similar Legal Requirement or
any bulk transfer or fraudulent conveyance laws of any jurisdiction, (g) the
presence, generation, removal or transportation of a Hazardous Substance on or
from any of the TCI Owned Property or TCI Leased Property through and including
the Closing Time, including
-53-
the costs of removal or clean-up of such Hazardous Substance and other
compliance with the provisions of any Environmental Laws (whether before or
after Closing), (h) any rate refund or credit, penalty and/or interest payment
with respect thereto ordered by any Governmental Authority with respect to the
TCI Systems for periods through and including the Closing Time or (i) the
failure of TCI to perform the TCI Assumed Obligations and Liabilities.
In the event that an indemnified item arises under both clause (a) and under one
or more of clauses (b) through (i) of this Section, ▇▇▇▇▇' rights to pursue its
claim under clauses (b) through (i), as applicable, will exist notwithstanding
the expiration of the Survival Period applicable to such claim under clause (a).
11.3 Indemnification by ▇▇▇▇▇. From and after the Closing,
------------------------
▇▇▇▇▇ will indemnify and hold harmless TCI and its shareholders and its and
their respective Affiliates and the shareholders, officers, directors,
employees, agents, successors and assigns and any Person claiming by or through
any of them, as the case may be, from and against any and all Losses arising out
of or resulting from (a) any breach of any representation or warranty made by
▇▇▇▇▇ in this Agreement or in the Transaction Documents delivered by ▇▇▇▇▇, (b)
any breach of any covenant, agreement or obligation of ▇▇▇▇▇ contained in this
Agreement or in the Transaction Documents delivered by ▇▇▇▇▇, (c) any act or
omission of ▇▇▇▇▇ with respect to, or any event or circumstance related to, the
ownership or operation of the ▇▇▇▇▇ Assets or the conduct of the ▇▇▇▇▇ Cable
Business, which act, omission, event or circumstance occurred or existed prior
to or at the Closing Time, without regard to whether a claim with respect to
such matter is asserted before or after the Closing Time, including any matter
described on SCHEDULE 5.11, (d) any liability or obligation not included in the
TCI Assumed Obligations and Liabilities, (e) any Title Defect ▇▇▇▇▇ fails to
eliminate as an exception from a Title Commitment, (f) any claim that the
transactions contemplated by this Agreement violate WARN or any similar Legal
Requirement or any bulk transfer or fraudulent conveyance laws of any
jurisdiction, (g) the presence, generation, removal or transportation of a
Hazardous Substance on or from any of the ▇▇▇▇▇ Owned Property or ▇▇▇▇▇ Leased
Property through and including the Closing Time, including the costs of removal
or clean-up of such Hazardous Substance and other compliance with the provisions
of any Environmental Laws (whether before or after Closing), (h) any rate refund
or credit, penalty and/or interest payment with respect thereto ordered by any
Governmental Authority with respect to the ▇▇▇▇▇ Systems for periods through and
including the Closing Time or (i) the failure of ▇▇▇▇▇ to perform the ▇▇▇▇▇
Assumed Obligations and Liabilities.
In the event that an indemnified item arises under both clause (a) and under one
or more of clauses (b) through (i) of this Section, TCI's rights to pursue its
claim under clauses (b) through (i), as applicable, will exist notwithstanding
the expiration of the Survival Period applicable to such claim under clause (a).
11.4 Third Party Claims. Promptly after the receipt by any party
------------------
of notice of any claim, action, suit or proceeding by any third party
(collectively, an "Action"), which Action is subject to indemnification under
this Agreement, such party (the "Indemnified Party") will give reasonable
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written notice to the party from whom indemnification is claimed (the
"Indemnifying Party"). The Indemnified Party will be entitled, at the sole
expense and liability of the Indemnifying Party, to exercise full control of the
defense, compromise or settlement of any such Action unless the Indemnifying
Party, within a reasonable time after the giving of such notice by the
Indemnified Party, (a) admits in writing to the Indemnified Party the
Indemnifying Party's liability to the Indemnified Party for such Action under
the terms of this SECTION 11, (b) notifies the Indemnified Party in writing of
the Indemnifying Party's intention to assume such defense, (c) provides evidence
reasonably satisfactory to the Indemnified Party of the Indemnifying Party's
ability to pay the amount, if any, for which the Indemnified Party may be liable
as a result of such Action and (d) retains legal counsel reasonably satisfactory
to the Indemnified Party to conduct the defense of such Action. The other party
will cooperate with the party assuming the defense, compromise or settlement of
any such Action in accordance with this Agreement in any manner that such party
reasonably may request. If the Indemnifying Party so assumes the defense of any
such Action, the Indemnified Party will have the right to employ separate
counsel and to participate in (but not control) the defense, compromise or
settlement of the Action, but the fees and expenses of such counsel will be at
the expense of the Indemnified Party unless (i) the Indemnifying Party has
agreed to pay such fees and expenses, (ii) any relief other than the payment of
money damages is sought against the Indemnified Party or (iii) the Indemnified
Party will have been advised by its counsel that there may be one or more
defenses available to it which are different from or additional to those
available to the Indemnifying Party, and in any such case that portion of the
fees and expenses of such separate counsel that are reasonably related to
matters covered by the indemnity provided in this SECTION 11 will be paid by the
Indemnifying Party. No Indemnified Party will settle or compromise any such
Action for which it is entitled to indemnification under this Agreement without
the prior written consent of the Indemnifying Party, unless the Indemnifying
Party has failed, after reasonable notice, to undertake control of such Action
in the manner provided in this SECTION 11.4. No Indemnifying Party will settle
or compromise any such Action (A) in which any relief other than the payment of
money damages is sought against any Indemnified Party or (B) in the case of any
Action relating to the Indemnified Party's liability for any Tax, if the effect
of such settlement would be an increase in the liability of the Indemnified
Party for the payment of any Tax for any period beginning after the Closing
Date, unless the Indemnified Party consents in writing to such compromise or
settlement.
11.5 Limitations on Indemnification - TCI. TCI will not be
------------------------------------
liable for indemnification arising solely under SECTION 11.2(A) for (a) any
Losses of or to ▇▇▇▇▇ or any other Person entitled to indemnification from TCI
or (b) any Losses incidental to or relating to or resulting from any of the
foregoing (the items described in clauses (a) and (b) collectively being
referred to for purposes of this SECTION 11 as "▇▇▇▇▇ Damages") unless the
amount of ▇▇▇▇▇ Damages for which TCI would, but for the provisions of this
Section, be liable exceeds, on an aggregate basis, $250,000, in which case TCI
will be liable for all such ▇▇▇▇▇ Damages, which will be due and payable within
15 days after TCI's receipt of a statement therefor.
11.6 Limitations on Indemnification - ▇▇▇▇▇. ▇▇▇▇▇ will not be
--------------------------------------
liable for indemnification arising solely under SECTION 11.3(A) for (a) any
Losses of or to TCI or any other
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Person entitled to indemnification from ▇▇▇▇▇ or (b) any Losses incidental to or
relating to or resulting from any of the foregoing the items described in
clauses (a) and (b) collectively being referred to for purposes of this Section
as "TCI Damages") unless the amount of TCI Damages for which ▇▇▇▇▇ would, but
for the provisions of this Section, be liable exceeds, on an aggregate basis,
$250,000, in which case ▇▇▇▇▇ will be liable for all such TCI Damages, which
will be due and payable within 15 days after ▇▇▇▇▇' receipt of a statement
therefor.
SECTION 12. MISCELLANEOUS PROVISIONS
12.1 Parties Obligated and Benefited. Subject to the limitations
-------------------------------
set forth below, this Agreement will be binding upon the parties and their
respective assigns and successors in interest and will inure solely to the
benefit of the parties and their respective assigns and successors in interest,
and no other Person will be entitled to any of the benefits conferred by this
Agreement. Without the prior written consent of the other party, neither party
may assign any of its rights under this Agreement or delegate any of its duties
under this Agreement, provided that a party may, without the consent of any
other party, assign or delegate its rights or obligations under this Agreement
to any of its Affiliates, and such assignee will be substituted for such party
under this Agreement as though it were the original party to this Agreement, so
long as such assignment and substitution do not affect the other party's ability
to effect the transactions under this Agreement pursuant to Section 1031 of the
Code.
12.2 Notices. Any notice, request, demand, waiver or other
-------
communication required or permitted to be given under this Agreement will be in
writing and will be deemed to have been duly given only if delivered in person
or by first class, prepaid, registered or certified mail, or sent by courier or,
if receipt is confirmed, by telecopier:
To TCI at:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy similarly addressed to the attention of Legal Department,
and
With a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To Seller at:
c/▇ ▇▇▇▇▇ Intercable, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy similarly addressed to the attention of Legal Department.
Any party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this SECTION 12.2. All
notices will be deemed to have been received on the date of delivery, which in
the case of deliveries by telecopier will be the date of the sender's
confirmation.
12.3 Attorney's Fees. In the event of any action or suit based
---------------
upon or arising out of any alleged breach by any part of any representation,
warranty, covenant or agreement contained in this Agreement, the prevailing
party will be entitled to recover reasonable attorney's fees and other costs of
such action or suit from the other party.
12.4 Waiver. This Agreement or any of its provisions may not be
------
waived except in writing. The failure of any party to enforce any right arising
under this Agreement on one or more occasions will not operate as a waiver of
that or any other right on that or any other occasion.
12.5 Captions. The section and other captions of this Agreement
--------
are for convenience only and do not constitute a part of this Agreement.
12.6 CHOICE OF LAW. THIS AGREEMENT AND THE RIGHTS OF THE
-------------
PARTIES UNDER IT WILL BE GOVERNED BY AND CONSTRUED IN ALL RESPECTS
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IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO, WITHOUT REGARD TO THE
CONFLICTS OF LAWS RULES OF COLORADO.
12.7 Terms. Terms used with initial capital letters or
-----
otherwise defined in this Agreement will have the meanings specified, applicable
to both singular and plural forms, for all purposes of this Agreement. The word
"include" and derivatives of that word are used in this Agreement in an
illustrative sense rather than limiting sense.
12.8 Rights Cumulative. All rights and remedies of each of the
-----------------
parties under this Agreement will be cumulative, and the exercise of one or more
rights or remedies will not preclude the exercise of any other right or remedy
available under this Agreement or applicable law.
12.9 Time. Time is of the essence under this Agreement. If the
----
last day permitted for the giving of any notice or the performance of any act
required or permitted under this Agreement falls on a day which is not a
Business Day, the time for the giving of such notice or the performance of such
act will be extended to the next succeeding Business Day.
12.10 Late Payments. If either party fails to pay the other any
-------------
amounts when due under this Agreement, the amounts due will bear interest from
the due date to the date of payment at the annual rate publicly announced from
time to time by The Bank of New York as its prime rate (the "Prime Rate") plus
2%, adjusted as and when changes in the Prime Rate are made.
12.11 Counterparts. This Agreement may be executed in
------------
counterparts, each of which will be deemed an original.
12.12 Entire Agreement. This Agreement (including the
----------------
Transaction Documents and the Schedules and Exhibits referred to in this
Agreement, which are incorporated in and constitute a part of this Agreement)
contains the entire agreement of the parties and supersedes all prior oral or
written agreements and understandings with respect to the subject matter. This
Agreement may not be amended or modified except by a writing signed by the
parties.
12.13 Severability. Any term or provision of this Agreement which
------------
is invalid or which is invalid or unenforceable will be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining rights of the Person intended to be benefitted by
such provision or any other provisions of this Agreement.
12.14 Construction. This Agreement has been negotiated by the
------------
parties and their respective legal counsel, and legal or equitable principles
that might require the construction of this Agreement or any provision of this
Agreement against the party drafting this Agreement will not apply in any
construction or interpretation of this Agreement.
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12.15 Expenses. Except as otherwise expressly provided in this
--------
Agreement, each party will pay all of its expenses, including attorneys' and
accountants' fees, in connection with the negotiation of this Agreement, the
performance of its obligations and the consummation of the transactions
contemplated by this Agreement.
12.16 Risk of Loss.
------------
12.16.1 The risk of any loss or damage to the ▇▇▇▇▇ Assets
or TCI Assets resulting from fire, theft or other casualty (except reasonable
wear and tear) will be borne by ▇▇▇▇▇ or TCI, respectively, with respect to
their Assets, at all times through and including the Closing Time. If any such
loss or damage is sufficiently substantial so as to preclude and prevent
resumption of normal operations of any material portion of a System or the
replacement or restoration of the lost or damaged property within 30 days from
the occurrence of the event resulting in such loss or damage, ▇▇▇▇▇ or TCI as
appropriate, will immediately notify the other in writing of that fact and the
other, at any time within 10 days after receipt of such notice, may elect by
written notice to the notifying party to either (a) waive such defect and
proceed toward consummation of the transaction in accordance with terms of this
Agreement or (b) terminate this Agreement. If the other elects to so terminate
this Agreement, both parties will stand fully released and discharged of any and
all obligations under this Agreement. If the other elects to consummate the
transactions contemplated by this Agreement notwithstanding such loss or damage
and does so, all insurance proceeds payable as a result of the occurrence of the
event resulting in such loss or damage (to the extent not used to replace or
restore such lost or damaged property), except for any proceeds from business
interruption insurance relating to the loss of revenue for the period through
and including the Closing Date, will be delivered by the notifying party to the
other or the rights to such proceeds will be assigned by the notifying party to
the other if not yet paid over to the notifying party.
12.16.2 If, prior to the Closing, any part of or interest in
the ▇▇▇▇▇ Assets or the TCI Assets is taken or condemned as a result of the
exercise of the power of eminent domain, or if a Governmental Authority having
such power informs ▇▇▇▇▇ or TCI that it intends to condemn all or any part of or
interest in such party's Assets (such event being called, in either case, a
"Taking" and the party who currently owns the Assets subject to the Taking being
called the "Condemned Party"), and such Taking involves a material part of or
interest in the Assets, then the other party may terminate this Agreement. If
the other party does not elect or have the right to terminate this Agreement,
then (a) the other party will have the sole right, in the name of the Condemned
Party, if the other party so elects, to negotiate for, claim, contest and
receive all damages with respect to the Taking, (b) the Condemned Party will be
relieved of its obligation to convey to the other party the Assets or interests
that are the subject of the Taking, (c) at the Closing the Condemned Party will
assign to the other party all of the party's rights to all damages payable with
respect to the Taking and (d) following the Closing, the Condemned Party will
give the other party such further assurances of such rights and assignment with
respect to the taking as the other party may from time to time reasonably
request.
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12.17 Tax Consequences. No party to this Agreement makes any
----------------
representation or warranty, express or implied, with respect to the Tax
implications of any aspect of this Agreement on any other party to this
Agreement, and all parties expressly disclaim any such representation or
warranty with respect to any Tax consequences arising under this Agreement.
Each party has relied solely on its own Tax advisors with respect to the Tax
implications of this Agreement.
12.18 Commercially Reasonable Efforts. For purposes of this
-------------------------------
Agreement, "commercially reasonable efforts" will not be deemed to require a
party to undertake extraordinary measures, including the initiation or
prosecution of legal proceedings or the payment of amounts in excess of normal
and usual filing fees and processing fees, if any.
The parties have executed this Agreement as of the day and year first
above written.
UNITED CATV, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------
Title: Vice President
--------------
▇▇▇▇▇ COMMUNICATIONS OF COLORADO, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
----------------
Title: President
---------
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