1
Exhibit 2.6(a)
ASSET AND STOCK PURCHASE AGREEMENT
dated as of April 20, 1999
by and between
INTERMEDIA PARTNERS OF WEST TENNESSEE, L.P.
and
CHARTER COMMUNICATIONS, LLC
2
TABLE OF CONTENTS
1. DEFINITIONS. ....................................................... 2
1.1. 1992 Cable Act................................................. 2
1.2. Affiliate...................................................... 2
1.3. Agreement...................................................... 2
1.4. Intentionally Omitted.......................................... 2
1.5. Assets......................................................... 2
1.6. Basic Services................................................. 2
1.7. Books and Records.............................................. 2
1.8. Business Day................................................... 3
1.9. Cable Act...................................................... 3
1.10. Cable Business................................................. 3
1.11. Charter Required Consents...................................... 3
1.12. Closing........................................................ 3
1.13. Closing Time................................................... 3
1.14. Communications Act............................................. 3
1.15. Contract....................................................... 3
1.16. Code........................................................... 3
1.17. Environmental Law.............................................. 3
1.18. ERISA.......................................................... 3
1.19. ERISA Affiliate................................................ 3
1.20. Expanded Basic Services........................................ 3
1.21. FCC............................................................ 4
1.22. Governmental Authority......................................... 4
1.23. Hazardous Substances........................................... 4
1.24. HSR Act........................................................ 4
1.25. Intellectual Property.......................................... 4
1.26. IP-IV.......................................................... 4
1.27. IPSE........................................................... 4
1.28. IPWT Required Consents......................................... 4
1.29. IPWT's Cable Business.......................................... 5
1.30. Judgment....................................................... 5
1.31. Kingsport System............................................... 5
1.32. Knowledge...................................................... 5
1.33. Leased Property................................................ 5
1.34. Legal Requirement.............................................. 5
1.35. Lien........................................................... 5
1.36. Litigation..................................................... 6
1.37. Losses......................................................... 6
1.38. MVPD........................................................... 6
1.39. Other Intangibles.............................................. 6
1.40. Other Real Property Interests.................................. 6
1.41. Owned Property................................................. 6
1.42. Party.......................................................... 6
1.43. Pay TV......................................................... 6
1.44. Permitted Liens................................................ 6
-i-
3
1.45. Person......................................................... 7
1.46. Required Consents.............................................. 7
1.47. RMG Assets..................................................... 7
1.48. Six-Month Date................................................. 7
1.49. Systems Contracts.............................................. 7
1.50. Systems Franchises............................................. 7
1.51. Systems Licenses............................................... 7
1.52. Tangible Personal Property..................................... 7
1.53. Taxes.......................................................... 8
1.54. Third Party.................................................... 8
1.55. Transaction Documents.......................................... 8
1.56. Other Definitions.............................................. 8
1.57. Usage.......................................................... 9
2. SALE OF ASSETS AND STOCK............................................. 10
2.1. Sale of Assets and Stock....................................... 10
3. CONSIDERATION........................................................ 10
3.1. Purchase Price................................................. 10
3.2. Allocation of Purchase Price................................... 10
4. EXCLUDED ASSETS AND ASSUMED LIABILITIES.............................. 11
4.1. Excluded Assets................................................ 11
4.2. Charter's Assumed Obligations and Liabilities.................. 12
4.3. Indemnification with respect to RMG Residual Liabilities....... 12
5. IPWT'S REPRESENTATIONS AND WARRANTIES................................ 13
5.1. Organization and Qualification of IPWT, its general
partner and RMG................................................ 13
5.2. Authority and Validity......................................... 13
5.3. No Conflict; Required Consents................................. 14
5.4. Title to the Shares............................................ 14
5.5. Capitalization................................................. 15
5.6. Assets......................................................... 15
5.7. Systems Franchises, Systems Licenses, Systems Contracts and
Other Real Property Interests.................................. 16
5.8. Real Property.................................................. 17
5.9. Environmental.................................................. 17
5.10. Compliance with Legal Requirements............................. 18
5.11. Intellectual Property.......................................... 21
5.12. Financial Statements........................................... 21
5.13. Absence of Certain Changes or Events........................... 21
5.14. Litigation..................................................... 22
5.15. Taxes.......................................................... 22
5.16. Employment Matters............................................. 23
5.17. Systems Information............................................ 27
5.18. Taxpayer Identification Number................................. 27
5.19. Finder and Brokers............................................. 27
5.20. Related Party Transactions..................................... 27
-ii-
4
5.21. Representations and Warranties of RMG in IP-I/Charter Exchange
Agreement...................................................... 28
6. CHARTER'S REPRESENTATIONS AND WARRANTIES............................. 28
6.1. Organization and Qualification of Charter...................... 28
6.2. Authority and Validity......................................... 28
6.3. No Conflict; Required Consents................................. 28
6.4. Finder and Brokers............................................. 29
6.5. Litigation..................................................... 29
6.6. Qualification.................................................. 29
6.7. Securities Law Matters......................................... 29
6.8. Taxpayer Identification Number................................. 29
7. ADDITIONAL COVENANTS................................................. 29
7.1. Access to Premises and Records................................. 29
7.2. Continuity and Maintenance of Operations, Certain Deliveries
and Notice..................................................... 30
7.3. Employees...................................................... 32
7.4. Leased Vehicles; IPWT Other Capital Leases..................... 35
7.5. Required Consents; Franchise Renewal........................... 35
7.6. Title Commitments and Surveys.................................. 38
7.7. HSR Notification............................................... 39
7.8. Sales and Transfer Taxes....................................... 39
7.9. Programming.................................................... 39
7.10. Updated Schedules.............................................. 39
7.11. Use of Name and Logo........................................... 40
7.12. Transitional Billing Services.................................. 40
7.13. Confidentiality and Publicity.................................. 41
7.14. Bulk Transfer.................................................. 42
7.15. Lien Searches.................................................. 42
7.16. Further Assurances............................................. 42
7.17. Post-Closing Cooperation as to Rates........................... 42
7.18. Distant Broadcast Signals...................................... 43
7.19. Environmental Assessment....................................... 43
7.20. Year 2000 Matters.............................................. 45
7.21. Satisfaction of Conditions..................................... 47
7.22. Offers......................................................... 47
7.23. Retention of Books and Records................................. 47
7.24. Taxes.......................................................... 48
7.25. Compliance with Covenants of RMG in IP-I/Charter Exchange
Agreement; Access to Information; Information; No Waivers or
Amendments without Consent..................................... 48
8. CONDITIONS PRECEDENT................................................. 48
8.1. Conditions to Charter's Obligations............................ 48
8.2. Conditions to Obligations of IPWT.............................. 49
-iii-
5
9. THE CLOSING.......................................................... 50
9.1. The Closing; Time and Place.................................... 50
9.2. IPWT's Delivery Obligations.................................... 50
9.3. Charter's Delivery Obligations................................. 51
10. TERMINATION AND DEFAULT.............................................. 52
10.1. Termination Events............................................. 52
10.2. Effect of Termination.......................................... 52
11. SURVIVAL; REMEDIES................................................... 53
11.1. Survival of Representations, Warranties, Covenants and
Agreements..................................................... 53
11.2. Exclusive Remedy............................................... 53
11.3. Nonrecourse.................................................... 53
12. MISCELLANEOUS PROVISIONS............................................. 54
12.1. Parties Obligated and Benefitted............................... 54
12.2. Notices........................................................ 54
12.3. Right to Specific Performance.................................. 54
12.4. Waiver......................................................... 54
12.5. Captions....................................................... 54
12.6. Governing Law.................................................. 54
12.7. Time........................................................... 54
12.8. Late Payments.................................................. 54
12.9. Counterparts................................................... 54
12.10.Entire Agreement............................................... 55
12.11.Severability................................................... 55
▇▇.▇▇.▇▇▇▇▇▇▇▇▇▇▇▇................................................... 55
12.13.Expenses....................................................... 55
12.14.Risk of Loss................................................... 55
▇▇.▇▇.▇▇▇ Consequences............................................... 55
12.16.Commercially Reasonable Efforts................................ 56
-iv-
6
Exhibits:
Exhibit 9.2.1 - ▇▇▇▇ of Sale and Assignment and Assumption Agreement
Schedules:
Schedule 1.33 - Leased Property
Schedule 1.40 - Other Real Property Interests
Schedule 1.41 - Owned Property
Schedule 1.49 - Systems Contracts
Schedule 1.50 - Systems Franchises
Schedule 1.51 - Systems Licenses
Schedule 1.52 - Tangible Personal Property
Schedule 3.2 - Allocation Schedule
Schedule 4.1(a) - Excluded Assets
Schedule 4.1(b) - Exceptions to Excluded Assets
Schedule 4.3 - Credit, Loan or Other Agreements
Schedule 5.3 - IPWT Required Consents
Schedule 5.4 - Title Matters
Schedule 5.5 - Capitalization Matters
Schedule 5.6.1 - IPWT Liens and Permitted Liens
Schedule 5.6.3 - IPWT Other Operators
Schedule 5.7.2 - IPWT Franchise Matters
Schedule 5.7.3 - IPWT Contract Matters
Schedule 5.8 - IPWT Real Property Matters
Schedule 5.9 - IPWT Environmental Matters
Schedule 5.10 - IPWT Compliance with Legal Requirements
Schedule 5.12.1 - IPWT Statements of Income
Schedule 5.12.2 - RMG Statements of Income
Schedule 5.13 - IPWT Changes and Events
Schedule 5.14 - IPWT Litigation
Schedule 5.15.1 - IPWT Tax Matters
Schedule 5.15.2 - RMG Tax Matters
Schedule 5.15.3 - Tax Return Extensions
Schedule 5.15.4 - Joint Venture, Partnership or Other Arrangements
Schedule 5.15.5 - Tax Elections
Schedule 5.15.6 - Tax Sharing Agreements
Schedule 5.15.7 - Consolidated Tax Returns or Reports
Schedule 5.16 - IPWT Plans; Employee Matters
Schedule 5.17.1-A - IPWT Systems Information
Schedule 5.17.1-B - RMG Systems Information
Schedule 5.17.2-A - IPWT Systems
Schedule 5.17.2-B - RMG Systems
Schedule 5.20 - IPWT Related Party Transactions
Schedule 6.3 - Charter Required Consents
Schedule 6.5 - Charter Litigation
Schedule 7.2(a) - Exceptions to Ordinary Course
Schedule 7.2(b) - IPWT's 1999 Capital Budget
-v-
7
Schedule 7.2(c) - IPWT's 1999 Operating Budget
Schedule 7.20.1(b)-A - IPWT Year 2000 High-Level Inventory, Assessment
and Remediation Decisions
Schedule 7.20.1(b)-B - IPSE Year 2000 High-Level Inventory, Assessment
and Remediation Decisions
Schedule 7.20.1(b)-C - RMG Year 2000 High-Level Inventory, Assessment
and Remediation Decisions
Schedule 7.20.1(c)-A - IPWT's Year 2000 Plan
Schedule 7.20.1(c)-B - IPSE's Year 2000 Plan
Schedule 7.20.1(c)-C - RMG's Year 2000 Plan
Schedule 7.25 - Assigned RMG Excluded ▇▇▇▇▇▇
-▇▇-
▇
▇▇▇▇▇ AND STOCK PURCHASE AGREEMENT
THIS ASSET AND STOCK PURCHASE AGREEMENT is made as of April 20, 1999 by
and between InterMedia Partners of West Tennessee, L.P., a California limited
partnership ("IPWT"), and CHARTER COMMUNICATIONS, LLC, a Delaware limited
liability company ("Charter").
RECITALS
A. Following the consummation of certain transactions which will occur
concurrently with the transactions contemplated by this Agreement (each as more
fully described in the Common Agreement (as defined in Recital D below)), IPWT
(i) will own and operate cable television systems which are franchised or hold
other operating authority and operate in and around West Tennessee and
Kingsport, Tennessee as listed on Schedule 5.17.2-A (the "IPWT Systems") and
(ii) will be the beneficial owner of all of the issued and outstanding shares of
the Class A Common Stock, $100 par value per share (the "Shares"), of ▇▇▇▇▇
Media Group, Inc., a Nevada corporation ("RMG").
B. RMG owns and operates cable television systems which are franchised or
hold other operating authority and operate in and around East Tennessee and
Gainesville, Georgia as listed on Schedule 5.17.2-B (the "RMG Systems" and,
collectively with the IPWT Systems, the "Systems"), as well as in and around
Brentwood, Tennessee (the "Brentwood Systems"), and, at Closing, Tennessee LLC,
a Delaware limited liability company ("Tennessee LLC"), will own the RMG Systems
located in and around East Tennessee.
C. This Agreement sets forth the terms and conditions upon which IPWT will
sell or cause to be sold, and Charter will purchase or cause to be purchased (i)
substantially all of the Assets comprising or used or useful in the Cable
Business associated with the IPWT Systems (the "IPWT Assets") and (ii) the
Shares.
D. IPWT, Charter and certain of their respective Affiliates have entered
into that certain Common Agreement (the "Common Agreement") pursuant to which
they have agreed to certain issues common to each of the transfers made pursuant
to this Agreement and to certain other related transactions (each as more fully
described in the Common Agreement). The common issues addressed include revenue
and working capital adjustments, closing conditions, and indemnification for
breaches of representations, warranties, covenants and agreements.
AGREEMENTS
In consideration of the covenants and agreements set forth herein and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Parties hereby agree as follows:
1. DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, the following capitalized terms or terms otherwise defined in this
Section 1 shall have the meanings set forth below:
1.1. 1992 Cable Act. The Cable Television Consumer Protection and
Competition Act of 1992, as amended, and the FCC rules and regulations
promulgated thereunder.
9
1.2. Affiliate. With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. As used in this
Agreement, "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.
Notwithstanding the foregoing, prior to the Closing Date, neither (a) AT&T
Corporation, Tele-Communications, Inc., nor any of their direct or indirect
subsidiaries (collectively, the "AT&T Affiliates"), shall be considered
Affiliates of IPWT for any purpose herein or hereunder; (b) neither ▇▇▇▇ ▇▇▇▇▇,
Vulcan Cable, Inc., Vulcan Cable II, Inc., Marcus Cable Properties, L.L.C. nor
any other Person directly or indirectly controlled by ▇▇▇▇ ▇▇▇▇▇ that is not
engaged in the cable television business (collectively, the "▇▇▇▇▇ Affiliates")
shall be considered Affiliates of Charter for any purpose herein or hereunder;
and (c) InterMedia Partners, a California limited partnership, Brenmor Cable
Partners, L.P. and TCID IP-V, Inc., on the one hand, and InterMedia Partners
Southeast, IPWT, InterMedia Partners IV, L.P., and ▇▇▇▇▇ Media Group, Inc., on
the other hand, shall not be deemed Affiliates of each other.
1.3. Agreement. This Asset and Stock Purchase Agreement.
1.4. Intentionally Omitted
1.5. Assets. All of the assets, privileges, contracts, licenses, permits,
franchises, authorizations, rights, interests, claims and other properties, real
and personal, tangible and intangible, of every type and description (a) which
are owned, leased, held for, used or useful in, or otherwise related to the
Cable Business, (b) in which IPWT, RMG or any of their Affiliates has any right,
title or interest or in which IPWT, RMG or any of their Affiliates acquires any
right, title or interest on or before the Closing Time, and (c) which are not
Excluded Assets. The Assets include the Tangible Personal Property, Owned
Property, Leased Property, Other Real Property Interests, Systems Franchises,
Systems Licenses, Systems Contracts, Books and Records and Other Intangibles,
but not the Shares.
1.6. Basic Services. The lowest tier of service offered to subscribers of
a System.
1.7. Books and Records. All engineering records, files, data, drawings,
blueprints, schematics, reports, lists, plans and procedures and all other 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 with respect to the
Systems, including all reports filed with respect to the Systems by or on behalf
of IPWT, RMG or any of their Affiliates with the FCC and statements of account
filed with respect to the Systems by or on behalf of IPWT, RMG or any of their
Affiliates with the U.S. Copyright Office, but excluding all documents, reports
and records relating to any employee of the IPWT Systems who has not given
consent to disclosure of such documents, reports and records.
1.8. Business Day. Any day other than a Saturday, Sunday or a day on which
the banking institutions in New York, New York, Denver, Colorado, San Francisco,
California or St. Louis, Missouri are required or authorized to be closed.
1.9. Cable Act. The Cable Communications Policy Act of 1984, as amended,
and the FCC rules and regulations promulgated thereunder.
1.10. Cable Business. The cable television businesses and other
revenue-generating businesses and operations relating to the Systems conducted
by IPWT, RMG or any of their Affiliates through the Systems.
10
1.11. Charter Required Consents. Any and all consents, authorizations and
approvals under or in connection with Charter's business or any Contract, Lien
or Legal Requirement by which Charter, any of its Affiliates or their respective
assets are bound, required for Charter to purchase the IPWT Assets and the
Shares and to otherwise perform its obligations under this Agreement and the
Transaction Documents.
1.12. Closing. The closing of the transactions contemplated by this
Agreement.
1.13. Closing Time. 11:59 p.m., Eastern time, on the Closing Date.
1.14. Communications Act. The Communications Act of 1934, as amended, and
the FCC rules and regulations promulgated thereunder.
1.15. Contract. Any contract, mortgage, deed of trust, bond, indenture,
lease, license, note, franchise, certificate, option, warrant, right or other
instrument, document, obligation or agreement, whether written or oral.
1.16. Code. United States Internal Revenue Code of 1986, as amended.
1.17. Environmental Law. Any Legal Requirement relating to pollution or
the protection of public health, safety, welfare or the environment, including
CERCLA, OSHA and RCRA and 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.
1.18. ERISA. The Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder and published
interpretations with respect thereto.
1.19. 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.
1.20. Expanded Basic Services. Any video programming provided over a cable
television system, regardless of service tier, other than Basic Services and Pay
TV.
1.21. FCC. The Federal Communications Commission.
1.22. 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,
body, county, municipality, province, parish or other instrumentality of any of
the foregoing.
1.23. Hazardous Substances. Any pollutant, contaminant, chemical,
industrial, toxic, hazardous or noxious substance or waste which is regulated by
a Governmental Authority, including (a) any petroleum or petroleum compounds
(refined or crude), flammable substances, explosives, radioactive materials or
any other materials or pollutants which pose a significant hazard or potential
significant hazard to the Owned Property or Other Real Property Interests or to
Persons in or about the
11
Owned Property or Other Real Property Interests or cause the Owned Property or
Other Real Property Interests to be in violation of any Legal Requirements; (b)
any "hazardous waste" as defined by the Resource Conservation and Recovery Act
of 1976 (RCRA) (42 U.S.C. ▇▇.▇▇. 6901) and the rules and regulations promulgated
thereunder; (c) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. 9601
et seq.) (CERCLA), as amended, and the rules and regulations promulgated
thereunder; (d) any substance regulated by the Toxic Substances Control Act
(TSCA) (42 U.S.C. ss. 2601 et seq.) or the Insecticide, Fungicide and
Rodenticide Act (IFRA) (7 U.S.C. ss. 136 et seq.), each, as amended, and the
rules and regulations promulgated thereunder; (e) asbestos or
asbestos-containing material of any kind or character; (f) polychlorinated
biphenyls; (g) any substances regulated under the provisions of Subtitle I of
RCRA relating to underground storage tanks; (h) any materials or substances
designated as "hazardous substances" pursuant to the Clean Water Act (33 U.S.C.
ss. 1251 et seq.); (i) "economic poison," as defined in the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. ss. 135 et seq.); (j) any substance the
presence, use, handling, treatment, storage or disposal of which on the Owned
Property or Leased Property is regulated or prohibited by any Environmental Law;
and (k) 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.
1.24. HSR Act. The ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
1.25. Intellectual Property. With respect to the Cable Business, any (a)
trademarks, trade dress, trade names, service marks, logos and other similar
proprietary rights, (b) domain names, (c) copyrights and (d) patents and
patentable know-how, inventions and processes, in each case used in the Cable
Business.
1.26. IP-IV. InterMedia Partners IV, L.P., a California limited
partnership and Affiliate of IPWT.
1.27. IPSE. InterMedia Partners Southeast, a California general
partnership and Affiliate of IPWT.
1.28. IPWT Required Consents. Any and all consents, authorizations and
approvals under or in connection with the Assets (including the Systems
Franchises, Systems Licenses, and Systems Contracts) or any Contract, Lien or
Legal Requirement by which IPWT, RMG, any of their Affiliates or any of their
respective Assets are bound, required (a) for IPSE to distribute the Kingsport
System to IP-IV, (b) for IP-IV to contribute the Kingsport System and the Shares
to IPWT, (c) for IPWT to transfer the IPWT Assets and the Shares to Charter
pursuant to this Agreement and to otherwise perform its obligations under this
Agreement and the Transaction Documents, (d) for Charter to operate the IPWT
Systems and to own, lease, use and operate the IPWT Assets and the IPWT Systems
at the places and in the manner in which the IPWT Assets are used and the IPWT
Systems are operated as of the date of this Agreement and as of the Closing, (e)
for Charter to own and hold the Shares or (f) for Charter to assume and perform
the Systems Franchises, the Systems Licenses, the Systems Contracts and the
Assumed Obligations and Liabilities relating to the IPWT Systems and the IPWT
Assets.
1.29. IPWT's Cable Business. The cable television and other
revenue-generating businesses and operations related to the IPWT Systems.
12
1.30. 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.
1.31. Kingsport System. Those cable television systems which are
franchised or hold other operating authority and operate in and around
Kingsport, Tennessee, which are being transferred to Charter pursuant to this
Agreement.
1.32. Knowledge. (a) in the case of any System, the actual knowledge of a
particular matter with respect to any such System of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ or the general
manager or one or more of the managers of such System, (b) in the case of the
Shares, the actual knowledge of a particular matter with respect to the Shares
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and
(c) in the case of Charter, the actual knowledge of a particular matter of
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
1.33. Leased Property. The leaseholds of real property included among the
Assets and described as Leased Property on Schedule 1.33.
1.34. 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.
1.35. 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 (including any lien for Taxes), indenture, pledge, option,
encumbrance, adverse interest, constructive trust or other trust, claim,
attachment, exception to, defect in, or other condition adversely 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 against property, whether
arising pursuant to any Legal Requirement, Systems License, Systems Franchise,
Systems Contract or otherwise.
1.36. Litigation. Any claim, action, suit, proceeding, arbitration,
investigation or hearing that could result in a Judgment, any other activity or
procedure that could reasonably be expected to result in a Judgment, or any
notice of any of the foregoing.
1.37. Losses. Any claims, losses, liabilities, damages, 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, as applicable, 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 or the existence or
assertion of any Liens (other than Permitted Liens) with respect to which
indemnification is sought.
1.38. MVPD. A distributor of cable television services, multichannel multi
point distribution service, direct broadcast satellite service or television
receive-only satellite programming, who makes available for purchase, by
subscribers or customers, multiple channels of video programming, other than
Persons distributing such services only to multiple dwelling unit or other
commercial customers (including hotels, motels, resorts, hospitals, dormitories,
prisons, restaurants, bars and similar establishments).
13
1.39. Other Intangibles. All intangible assets, other than the Systems
Franchises, Systems Licenses and Systems Contracts, including subscriber lists,
claims (excluding any claims relating to Excluded Assets), and Intellectual
Property, if any, included among the Assets.
1.40. Other 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 IPWT, RMG or any of their Affiliates in connection with
the Cable Business, including those interests described as Other Real Property
Interests on Schedule 1.40, but not including Leased Property or Owned Property.
1.41. Owned Property. The fee interests in the real property included
among the Assets and described as Owned Property on Schedule 1.41 and all
improvements and towers thereon and appurtenances thereto.
1.42. Party. Charter or IPWT, as the context requires.
1.43. Pay TV. Premium programming services selected by and sold to
subscribers on a per channel or per program basis.
1.44. Permitted Liens. (a) Liens for Taxes, assessments and governmental
charges, in each case not yet due and payable, (b) zoning laws or ordinances or
any similar Legal Requirements, (c) rights reserved to any Governmental
Authority to regulate the affected property, (d) Liens described on Schedule
5.6.1, (e) as to Leased Property or Tangible Personal Property that is leased,
the interests of the lessors thereof, and (f) as to Owned Property, Leased
Property and Other Real Property Interests, any easements, rights-of-way,
servitudes, conditions, covenants, restrictions and minor imperfections or
irregularities in title, in each case, which are reflected in the public records
and which do not individually or in the aggregate interfere with the right or
ability of the applicable Party to own, use, enjoy or operate the Owned
Property, Leased Property or Other Real Property Interests in the manner
currently used or to convey good, marketable and indefeasible fee simple title
to the same; provided that "Permitted Liens" will not include any Lien which
could prevent or inhibit in any way (other than as permitted under clause (f))
the conduct of the business of the affected System, and provided further that
classification of any Lien as a "Permitted Lien" will not affect any liability
which a Party may have for any such Lien, including pursuant to any indemnity
obligation under this Agreement.
1.45. Person. Any natural person, Governmental Authority, corporation,
general or limited partnership, limited liability company, joint venture, trust,
association or unincorporated entity of any kind.
1.46. Required Consents. The Charter Required Consents or the IPWT
Required Consents, as the context requires.
1.47. RMG Assets. The assets comprising or used or useful in the Cable
Business associated with the RMG Systems.
1.48. Six-Month Date. The date that is six months after the Closing Date.
1.49. Systems Contracts. All Contracts (other than Systems Franchises and
Systems Licenses) that are included among the Assets, including the lease
agreements for Tangible Personal Property, pole attachment agreements,
underground conduit agreements, crossing agreements,
14
retransmission consent agreements, multiple dwelling, bulk billing or commercial
service agreements and other Contracts described on Schedule 1.49 and the
Contracts documenting Leased Property and Other Real Property Interests
described on Schedules 1.33 and 1.40.
1.50. Systems Franchises. The franchises, permits and similar
authorizations included among the Assets (other than Systems Licenses) described
on Schedule 1.50, and all rights and benefits of IPWT, RMG and their Affiliates
pertaining thereto, including the rights and benefits arising under Section 626
of the Communications Act (47 U.S.C. 546) to the extent applicable to Systems
Franchise.
1.51. Systems Licenses. The intangible cable television channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, earth station registrations, authorizations, consents or permits
issued by the FCC or any other Governmental Authority included among the Assets
and described on Schedule 1.51 (other than the Systems Franchises and Systems
Contracts) and all rights and benefits of IPWT, RMG and their Affiliates
pertaining thereto.
1.52. Tangible Personal Property. All tangible personal property included
among the Assets, including towers (other than towers on Owned Property which
are fixtures thereon and a part thereof), tower equipment, aboveground and
underground cable, distribution systems, headend amplifiers, line amplifiers,
microwave equipment, converters, testing equipment, motor vehicles, office
equipment, computers and billing equipment, furniture, fixtures, supplies,
inventory and other physical assets, the principal items of which are identified
and described on Schedule 1.52.
1.53. Taxes. 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. For purposes of
determining any Tax cost or Tax benefit to any Person, such amount will be the
actual cost or benefit recognized by such Person at the time of actual payment
of the additional Tax or actual receipt of the Tax benefit. In the event that
any Loss, payment or other amount is required to be determined on an after-Tax
basis, such payment or other amount will be determined without regard to any Tax
cost or Tax benefit not actually recognized at the time of the determination,
and appropriate adjustments will be made when and to the extent that such Tax
cost or Tax benefit is actually recognized.
1.54. Third Party. Any Person other than IPWT, RMG and their Affiliates or
Charter and its Affiliates.
1.55. Transaction Documents. The Common Agreement and all instruments and
documents described in Sections 9.2 and 9.3 which are being executed and
delivered by or on behalf of Charter or IPWT in connection with this Agreement
or the transactions contemplated hereby.
1.56. Other Definitions. The following terms have the meanings set forth
in the sections indicated in the table below:
Term Section
---- -------
Adjusted Value 3.1
Agent's Fees 5.19
▇▇▇▇▇ Affiliates 1.2
ALTA 7.6
Antitrust Division 7.7
15
AT&T Affiliates 1.2
Base Value 3.1
Brentwood Systems Recital B
Charter First Paragraph
Charter's Assumed Obligations and Liabilities 4.2
Closing Date 9.1
commercially reasonable efforts 12.16
Common Agreement Recital D
Computer and Other Systems 7.20.1(a)
Confidential Information 7.13.1
Copyright Act 5.11
Cost of Service Election 5.10.4
Excluded Assets 4.1
FTC 7.7
Hired Employee 7.3.6(a)
IPWT First Paragraph
IPWT Assets Recital C
IPWT Retained Franchise 7.5.5(a)
IPWT Systems Recital A
New Properties 7.10(b)
Nonrecourse 11.3
Operating Agreements 7.5.5(c)
Phase I Assessment 7.19.1
Phase II Assessment 7.19.1
Post-Closing Y2K Budget 7.20.3(e)
Primary Transfer 7.5.5(d)
Replacement Cost Estimate 12.14
RMG Recital A
RMG Systems Recital B
Shares Recital A
Subsequent Transfer 7.5.5(e)
Surveys 7.6
Survival Period 11.1
Systems Recital B
System Employees 7.3.1
Taking 12.14
Third Party Testing 7.20.2(c)
Title Commitments 7.6
Title Company 7.6
Title Defect 7.6
Transitional Billing Services 7.12
WARN 5.16.1
Year 2000 High-Level Inventory, Assessment
and Remediation Decisions 7.20.1(b)
Year 2000 Plan 7.20.1(c)
Year 2000 Ready or Year 2000 Readiness 7.20.1(d)
Year 2000 Remediation Program 7.20.1(e)
1.57. Usage. The definitions in Article 1 shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the
16
corresponding masculine, feminine and neuter forms. All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed to be references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement unless
the context shall otherwise require. All Exhibits and Schedules attached hereto
shall be deemed incorporated herein as if set forth in full herein and, unless
otherwise defined therein, all terms used in any Exhibit or Schedule shall have
the meaning ascribed to such term in this Agreement. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. Unless otherwise expressly
provided herein, any agreement, instrument or statute defined or referred to
herein or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. 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, consistently applied.
2. SALE OF ASSETS AND STOCK.
2.1. Sale of Assets and Stock. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, IPWT will sell to
Charter, and Charter will purchase from IPWT, all of the IPWT Assets and the
Shares, in each case free and clear of all Liens (except Permitted Liens).
3. CONSIDERATION.
3.1. Purchase Price. For purposes of this Agreement, the base purchase
price for the IPWT Assets and the Shares, collectively, shall be eight hundred
seventy-two million seven hundred thousand dollars ($872,700,000), less: (a) the
principal amount of the outstanding indebtedness and the accrued interest
thereon owed by RMG to IP-IV at the time of the Closing,(b) the liquidation
value of then outstanding Series A Voting Preferred Stock of RMG plus accrued
and unpaid dividends through the Closing and purchase price of the Class B
Common Stock of RMG as specified in the TCID IP-V/Charter Stock Purchase
Agreement (as defined in the Common Agreement), (c) the amount paid for the
Tennessee LLC Interest under the RMG Purchase Agreement (as defined in the
Common Agreement), (d) the amount necessary to make the deposits described in
Section 2.1(b)(vi) of the Common Agreement; and (e) the amount of any
liabilities, which are required to be included on the balance sheet of RMG
prepared in accordance with GAAP and not otherwise included in the adjustments
(the "Base Value"). The Base Value shall be adjusted in accordance with the
provisions of the Common Agreement (as adjusted, the "Adjusted Value"). At the
Closing, Charter (or its permitted assignees) will pay to IPWT (or its permitted
assignees) an amount in cash equal to the Adjusted Value as determined pursuant
to the Common Agreement, which payment shall then be deemed made pursuant and
subject to this Agreement. Preliminary and final determinations of the Adjusted
Value will be made in accordance with the Common Agreement.
3.2. Allocation of Purchase Price. The aggregate amount of the Final
Adjusted Value of the Systems and Charter's Assumed Obligations and Liabilities
("the Purchase Consideration") shall be allocated among the Systems in
accordance with a schedule (the "Allocation Schedule") to be prepared by Charter
and delivered within ninety (90) days after determination of such Final Adjusted
Value under the Common Agreement to IPWT for the approval of IPWT. IPWT and
Charter shall cooperate and use commercially reasonable efforts to reach a
mutually satisfactory agreement regarding the Allocation Schedule. The final
Allocation Schedule, determined in the manner described in this Section
17
3.2, shall comply with the provisions of Section 1060 of the Code and each of
IPWT and Charter shall timely file any forms required to be filed under Section
1060 of the Code and any corresponding provision of state of local Tax law in
accordance with the final Allocation Schedule. Charter and IPWT each agree (i)
to reflect the Systems on their respective books for tax reporting purposes in
accordance with the Allocation Schedule, (ii) to file all Tax Returns and
determine all Taxes (including, without limitation, for purposes of Section 1060
of the Code) in accordance with and based upon the Allocation Schedule and (iii)
not to take any position inconsistent with such Allocation Schedule in any audit
or judicial or administrative proceeding or otherwise.
4. EXCLUDED ASSETS AND ASSUMED LIABILITIES.
4.1. Excluded Assets. "Excluded Assets" means, with respect to the IPWT
Assets: (a) the Letter Agreement dated June 1, 1996 between Bravo Company and
InterMedia Partners; the Affiliation Agreement dated April, 1999 among Viewer's
Choice LLC, InterMedia Partners, InterMedia Partners Southeast, InterMedia
Partners of West Tennessee, L.P. and ▇▇▇▇▇ Media Group, Inc.; and the
Affiliation Agreement dated February 24, 1999 between FX Networks, LLC and
InterMedia Management, Inc.; (b) except as set forth on Schedule 4.1(b), 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 IPWT or any of
its ERISA Affiliates (other than RMG) has any liability or in which any
employees or agents, or any former employees or agents, of IPWT or any of its
ERISA Affiliates (other than RMG) participate; (c) except as provided in Section
12.14, all insurance policies and rights and claims thereunder with respect to
the IPWT Assets; (d) all bonds, letters of credit, surety instruments and other
similar items with respect to the IPWT Assets; (e) all cash and cash
equivalents, including cash relating to subscriber prepayments and deposits, and
notes receivable of IPWT; (f) except as set forth on Schedule 4.1(b) and subject
to Section 7.11, all Intellectual Property held by IPWT or any of its Affiliates
(other than RMG); (g) the On/Line Operating and License Agreement between US
Computer Services dba Cable Data and InterMedia Partners, a California limited
partnership dated as of October 3, 1996 (other than RMG); (h) except for any
items for which the purchase price payable under Section 2.1(b)(iv) of the
Common Agreement is increased or the Adjusted Value is increased under Section
2.2 of the Common Agreement, 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 IPWT Systems prior to the Closing Time; (i) all
account books of original entry, general ledgers, financial records, minute
books, stock ledgers, organizational documents and, to the extent not included
in the Books and Records, personnel files and records, in each case used in
connection with the IPWT Systems; (j) the Amended and Restated Management
Agreement for Advertising Sales Business between InterMedia Capital Partners IV,
a California limited partnership, and TCI Cable Management Corporation, a
Colorado corporation doing business as TCI Media Services, dated as of January
1, 1998; (k) to the extent licensed pursuant to a master license agreement or
not otherwise transferable, all software of IPWT or any Affiliate of IPWT (other
than RMG) and licenses relating to Third Party software; (l) the Warrant
Purchase Agreement dated as of January 1, 1999 between At Home Corporation and
InterMedia Management, Inc., on behalf of InterMedia Partners, Inc., a
California limited partnership, InterMedia Partners IV, L.P. and InterMedia
Partners of Kentucky, L.P., and the Distribution Agreement dated as of January
1, 1999 between At Home Corporation, InterMedia Partners, L.P., a California
limited partnership, InterMedia Partners IV, L.P. and InterMedia Partners VI,
L.P.; (m) except for the IP-I/Charter Exchange Agreement (as defined in the
Common Agreement), and except as set forth on Schedule 4.1(b), all Contracts
between IPWT, RMG or IPSE, on the one hand, and any Affiliate thereof, on the
other hand; and (q) other rights, assets and properties described on Schedule
4.1(a). There are no "Excluded Assets" with respect to RMG, except for those
listed on Schedule 4.1(a) and the following: the Amended and Restated Management
Agreement for Advertising Sales Business between InterMedia Capital Partners IV,
a California limited partnership, and TCI Cable Management Corporation, a
Colorado corporation doing business as TCI Media Services, dated as of January
1, 1998; the Warrant Purchase Agreement dated as of January 1, 1999 between At
Home Corporation and InterMedia Management, Inc., on behalf of InterMedia
Partners, Inc., a California limited partnership, InterMedia Partners IV, L.P.
and InterMedia Partners of Kentucky, L.P., and the Distribution Agreement dated
as of January 1, 1999 between At Home Corporation, InterMedia Partners, L.P., a
California limited partnership, InterMedia Partners IV, L.P. and InterMedia
Partners VI, L.P.; Letter Agreement dated June 1, 1996 between Bravo Company and
InterMedia Partners; Affiliation Agreement dated April, 1999 among Viewer's
Choice LLC, InterMedia Partners, InterMedia Partners Southeast, InterMedia
Partners of West Tennessee, L.P. and ▇▇▇▇▇ Media Group, Inc.; Affiliation
Agreement dated February 24, 1999 between FX Networks, LLC and InterMedia
Management, Inc.;
18
Encore Media Group, LLC Affiliation Agreement dated January 26, 1999, between
Encore and InterMedia Management, Inc.; WTBS Retransmission Consent Agreement
with SSI; and Programming Transport Agreement between National Digital
Television Center Inc., a Colorado corporation d/b/a Headend in the Sky, and
InterMedia Management, Inc., a California corporation providing for the
transmission by HITS to such systems of compressed and encrypted digital
programming signals and other services, dated November 18, 1997. IPWT (or an
affiliate thereof) shall cause RMG to be released of all liability, after
closing, arising from all of the forementioned contracts and those listed on
Schedule 4.1(a).
4.2. Charter's Assumed Obligations and Liabilities. At the Closing and
effective as of the Closing Time, Charter will assume and after the Closing
Date, Charter will pay, discharge and perform the following (collectively,
"Charter's Assumed Obligations and Liabilities"): (a) those obligations and
liabilities with respect to the ownership, use or operation of the IPWT Assets
accruing and relating to periods after the Closing Time which were assigned and
transferred to Charter at the Closing; (b) those obligations and liabilities for
subscriber prepayments and deposits related to the IPWT Systems existing at the
Closing Time; (c) other obligations and liabilities of IPWT only to the extent
that the Adjusted Value of the Systems was decreased with respect thereto
pursuant to Section 2.2 of the Common Agreement; and (d) all other obligations
and liabilities accruing and relating to periods after the Closing Time and
arising out of Charter's ownership, use or operation of the IPWT Assets
(including those items listed or described on Schedule 4.1(b)) or its operation
of, or the conduct of business through, the IPWT Systems after the Closing
(including with respect to late fees that may be charged by Charter after the
Closing to subscribers of the IPWT Systems), except to the extent that such
obligations or liabilities relate to any Excluded Asset. All obligations and
liabilities arising out of or relating to the IPWT Assets, the IPWT Systems or
IPWT's Cable Business other than Charter's Assumed Obligations and Liabilities
will remain and be the obligations and liabilities solely of IPWT including any
obligation, liability or claims relating to or arising pursuant to (w) Taxes
(including franchise fees) arising out of or relating to the IPWT Assets and
with respect to periods or portions thereof ending on or prior to the Closing
Date, (x) refunds of rates, charges or late fees arising out of or relating to
the IPWT Assets and with respect to periods through and including the Closing
Date, (y) Litigation arising out of or relating to the IPWT Assets and
commenced, or related to an event occurring, on or prior to the Closing Date, or
(z) credit, loan or other agreements arising out of or relating to the IPWT
Assets and pursuant to which IPWT or IPSE 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 IPWT Asset. Notwithstanding
anything to the contrary contained in this paragraph, for purposes of the Common
Agreement Charter's Assumed Obligations and Liabilities shall include all
obligations and liabilities of RMG other than those related to the Brentwood
Systems and the Residual Liabilities.
4.3. Indemnification with respect to RMG Residual Liabilities. Following
the Closing, RMG, Charter and their Affiliates shall be entitled to
indemnification as set forth in the Common Agreement for any Losses attributable
to or arising from any RMG Residual Liabilities. "RMG Residual Liabilities"
shall mean all obligations and liabilities of RMG attributable to or arising out
of any period prior to the Closing to the extent that no adjustment was made
pursuant to Section 2.1(b)(iv) or Section 2.2 of the Common Agreement, including
any obligation, liability or claims relating to or arising pursuant to (v) the
Excluded Assets, (w) Taxes (including franchise fees) with respect to periods or
portions thereof ending on or prior to the Closing Date, (x) refunds of rates,
charges or late fees with respect to periods through and including the Closing
Date, (y) Litigation commenced, or relating to an event occurring, on or prior
to the Closing Date, or (z) other than as set forth on Schedule 4.3, credit,
loan or other agreements pursuant to which RMG 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 RMG Asset.
19
5. IPWT'S REPRESENTATIONS AND WARRANTIES.
IPWT represents and warrants to Charter as of the date of this Agreement
and as of the Closing, as follows:
5.1. Organization and Qualification of IPWT, its general partner and RMG.
5.1.1. IPWT is a limited partnership, duly formed, validly existing
and in good standing under the laws of the State of California. IPWT has all
requisite power and authority to own, lease and use the Assets owned, leased or
used by it and to conduct its Cable Business as it is currently being conducted
by it. As of the date of this Agreement, IPWT is 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.
5.1.2. InterMedia Capital Management, LLC, the sole general partner
of IPWT, is a limited liability company, duly formed, validly existing, and in
good standing under the laws of the State of Delaware, and has all requisite
power and authority to own all of its assets and to conduct its business as
currently conducted. InterMedia Capital Management, LLC is duly qualified to do
business and in good standing under the laws of each jurisdiction in which the
nature of its activities or its ownership, lease or use of its assets makes such
qualification necessary.
5.1.3. RMG is a corporation, duly formed, validly existing and in
good standing under the laws of the State of Nevada. RMG has all requisite power
and authority to own, lease and use the Assets owned, leased or used by it and
to conduct its Cable Business as it is currently being conducted by it. As of
the date of this Agreement, RMG is 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.
5.2. Authority and Validity.
5.2.1. IPWT has all requisite power and authority to execute and
deliver, and to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Transaction Documents to
which it is a party. The execution and delivery by IPWT of, the performance of
IPWT under, and the consummation by IPWT of the transactions contemplated by,
this Agreement and the Transaction Documents to which IPWT is a party have been
duly and validly authorized by all action by or on behalf of IPWT. This
Agreement has been, and when executed and delivered by IPWT the Transaction
Documents to which IPWT is a party will be, duly and validly executed and
delivered by IPWT and the valid and binding obligations of IPWT, enforceable
against IPWT 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.
5.2.2. IPSE and IP-IV, respectively, have all requisite corporate
power and authority to execute and deliver, to perform their obligations under,
and to consummate the transactions contemplated by, the IPSE Distribution
Agreement and the IP-IV Contribution Agreement (each as defined in the Common
Agreement), respectively. The execution and delivery by IPSE and IP-IV of,
20
their performance under, and their consummation of the transactions contemplated
by the IPSE Distribution Agreement and the IP-IV Contribution Agreement,
respectively, have been duly and validly authorized by all action by or on
behalf of IPSE and IP-IV, respectively.
5.3. No Conflict; Required Consents. Except as set forth on Schedule 5.3,
and assuming any consents referenced on Schedule 6.3 have been obtained and the
expiration or earlier termination of the waiting period under the HSR Act has
occurred, (x) the execution and delivery by IPWT, the performance of IPWT under,
and the consummation by IPWT of the transactions contemplated by, this
Agreement, the IP-IV/IPWT Contribution Agreement and the Transaction Documents
to which IPWT is a party and (y) the execution and delivery by IPSE and IP-IV
of, their performance under, and their consummation of the transactions
contemplated by, the IPSE Distribution Agreement and the IP-IV/IPWT Contribution
Agreement, respectively, do not and will not: (a) conflict with or violate any
provision of the organizational documents of IPSE, IP-IV, IPWT or RMG; (b)
violate any provision of any Legal Requirement; (c) require any consent,
approval or authorization of, or filing of any certificate, notice, application,
report or other document with, any Governmental Authority or other Person; or
(d) (i) conflict with, violate, result in a breach of or constitute a default
under (without regard to requirements of notice, lapse of time or elections of
other Persons or any combination thereof), (ii) permit or result in the
termination, suspension or modification of, (iii) result in the acceleration of
(or give any Person the right to accelerate) the performance of, IPSE, IP-IV,
IPWT or RMG, as the case may be, under, or (iv) result in the creation or
imposition of any Lien under any Systems Contract, Systems Franchise, Systems
License, or other instrument evidencing any of the Assets or by which IPSE,
IP-IV, IPWT or RMG, as the case may be, or any of their assets is bound or
affected, except for purposes of clauses (c) and (d) such consents, approvals,
authorizations and filings that, if not obtained or made, would not, and such
violations, conflicts, breaches, defaults, terminations, suspensions,
modifications and accelerations as would not, individually or in the aggregate,
have an adverse effect on any System, the Cable Business, IPWT or RMG, or on the
ability of IPWT to perform its obligations under this Agreement or the
Transaction Documents to which IPWT is a party.
5.4. Title to the Shares. IPWT is the record and beneficial owner and
holder of, and has good title to, the Shares, free and clear of all Liens other
than Permitted Liens. Except as set forth in Schedule 5.4, there are no existing
agreements, options, warrants, rights, calls or commitments of any character to
which IPWT or any Affiliate is a party or by which it is bound providing for the
repurchase or redemption of the Shares.
5.5. Capitalization. The authorized capital stock of RMG consists of three
thousand two hundred eighty-five (3,285) shares of Class A Common Stock, $100
par value per share, all of which are issued and outstanding and held of record
by IPWT, three hundred sixty-five (365) shares of Class B Common Stock, $100 par
value per share, all of which are issued and outstanding, and twelve thousand
(12,000) shares of Series A Voting Preferred Stock, $1,000 par value per share,
all of which are issued and outstanding. The Shares have been duly authorized,
validly issued and are fully paid and nonassessable, with no preemptive rights.
Except as set forth in Schedule 5.5, there are no (i) existing agreements,
options, warrants, rights, calls or commitments of any character to which RMG or
any Affiliate is a party or by which it is bound providing for the issuance of
any additional shares of RMG's capital stock or for the repurchase or redemption
of the Shares, (ii) outstanding securities or other instruments convertible into
or exchangeable for the Shares and no commitments to issue such securities or
instruments or (iii) voting trust, voting agreement or other agreement, proxy or
understanding with respect to the voting of the Shares.
21
5.6. Assets.
5.6.1. IPWT, IPSE or RMG, as the case may be, has good and
marketable title to (or, in the case of Assets that are leased, valid leasehold
interests in) the Assets. None of the AT&T Affiliates has any right, title or
interest in or to any of the Assets. The Assets are free and clear of all Liens,
except Permitted Liens and rights of first refusal which will be waived by the
Person holding such right at or prior to Closing. All of the Liens described on
Schedule 5.6.1 (except for those marked with an asterisk on Schedule 5.6.1) will
be terminated, released or, in the case of rights of first refusal (except for
those listed on Schedule 5.6.1), waived, as appropriate, at or prior to Closing.
Except as described on Schedule 1.52, the Tangible Personal Property, as an
integrated system and in its component parts, is in good operating condition and
repair (ordinary wear and tear and routine failures excepted) and is usable and
adequate for the operation of the Cable Business.
5.6.2. Except for items included in the Excluded Assets, the Assets
constitute substantially all the assets necessary (a) to conduct the Cable
Business as it is being conducted on the date of this Agreement and in
compliance with all applicable Legal Requirements, (b) to operate the Systems as
they are being operated on the date of this Agreement and in compliance with all
applicable Legal Requirements and (c) to perform all of the Assumed Obligations
and Liabilities.
5.6.3. Except as described on Schedule 5.6.3, and other than direct
broadcast satellite and satellite master antenna television, with respect to
each area in which the Systems currently provide cable television service: (i)
no Person is operating a cable television system or other non-satellite MVPD
other than a System in such area; (ii) no local franchising authority has
awarded a cable television franchise in such area to any Person other than IPWT,
IPSE or RMG, as the case may be; and (iii) to the Knowledge of IPWT, no MVPD has
applied for a cable television franchise to serve such area.
5.7. Systems Franchises, Systems Licenses, Systems Contracts and Other
Real Property Interests.
5.7.1. Except as described on Schedules 1.33, 1.40, 1.49, 1.50 and
1.51, and except for the Excluded Assets, neither IPWT nor IPSE (but only to the
extent related primarily or in whole to the Cable Business) nor RMG is bound or
affected by any of the following: (a) leases of real property or capital leases
of personal property; (b) operating leases of personal property that are
terminable upon more than thirty (30) days' notice and that contemplate annual
lease payments in excess of twenty thousand dollars ($20,000); (c) franchises
for the construction or operation of cable television systems or System
Contracts of substantially equivalent effect; (d) licenses, authorizations,
consents or permits of the FCC; (e) other licenses, authorizations, consents or
permits of any other Governmental Authority, individually or in the aggregate,
material to the Systems; (f) easements or rights of access, individually or in
the aggregate, material to the Systems; (g) pole attachment agreements,
underground conduit agreements, crossing agreements, retransmission consent
agreements, or bulk or commercial service agreements, individually or in the
aggregate, material to the Systems; (h) any Contract under which RMG has
borrowed or loaned any money or issued any note, bond, indenture or other
evidence of indebtedness or directly or indirectly guaranteed the indebtedness,
liabilities or obligations of others; or (i) in the case of IPWT or IPSE, any
Systems Contract and, in the case of RMG, any Systems Contract or other
Contract, other than those described in any other clause of this Section 5.7.1
which contemplate payments by or to IPWT, IPSE or RMG, as the case may be, in
any twelve (12) month period exceeding twenty-five thousand dollars ($25,000)
under any single contract or one hundred thousand dollars ($100,000) in the
aggregate.
22
5.7.2. Complete and correct copies of the Systems Franchises and
Systems Licenses have been provided to Charter. Except as set forth on Schedule
5.7.2, (a) the Systems Franchises contain all of the commitments and obligations
of IPWT, IPSE or RMG, as the case may be, to the applicable Governmental
Authority granting such Franchises with respect to the construction, ownership
and operation of the Systems, and (b) other than as set forth in the Systems
Franchises, neither IPWT, IPSE nor RMG has made any commitment to any local
franchising authority to make any material expenditure or capital addition or
betterment to any System or the Assets that will not be fulfilled or satisfied
prior to the Closing Time. The Systems Franchises and Systems Licenses are
currently in full force and effect, are not in default and are valid under all
applicable Legal Requirements according to their terms. No event has occurred
that, with notice or lapse of time or both, would constitute a breach, violation
or default by IPWT, IPSE or RMG, as the case may be, and to IPWT's Knowledge, no
event has occurred that, with notice or lapse of time or both, would constitute
a breach, violation or default by any other Person, of any material obligations
under any such Systems Franchises or Systems Licenses. Except for routine
filings with Governmental Authorities and as described on Schedule 5.7.2, there
are no applications relating to any Systems Franchise or Systems License pending
before any Governmental Authority which are material to any System or the Cable
Business. Except where a request for renewal has been timely filed under Section
626(a) of the Cable Act, since December 31, 1998, no Systems Franchise or
Systems License has been surrendered by IPWT, IPSE or RMG or has expired or
otherwise terminated without the issuance of a replacement Systems Franchise or
Systems License. There is no legal action, governmental proceeding or
investigation pending or, to IPWT's Knowledge, threatened to terminate, suspend
or modify any Systems Franchise or Systems License. Except as set forth on
Schedule 5.7.2, IPWT, IPSE or RMG, as the case may be, is, or will be as of the
Closing Date, in material compliance with the terms and conditions of all the
Systems Franchises and Systems Licenses and other applicable requirements of all
Governmental Authorities (including the FCC and the U.S. Copyright Office)
relating to the Systems Franchises and Systems Licenses, including all
requirements for notification, filing, reporting, posting and maintenance of
logs and records.
5.7.3. IPWT has delivered to Charter true and complete copies of all
Systems Contracts (including each Contract relating to Leased Property and Other
Real Property Interests), including any amendments thereto (or, in the case of
oral Contracts, true and complete written summaries thereof) and each document
evidencing the ownership of IPWT, IPSE or RMG, as the case may be, of the Owned
Property. Except as described in Schedule 5.7.3, IPWT, IPSE or RMG, as the case
may be, has fulfilled when due, or has taken all action necessary to enable it
to fulfill when due, all of its obligations under each of its Contracts and, to
the Knowledge of IPWT, there has not occurred any default (without regard to
requirements of notice, lapse of time, elections of other Persons, or any
combination thereof) by any other Person of any material obligations under any
of its or RMG's Contracts or Other Real Property Interests.
5.8. Real Property. All the Assets consisting of Owned Property, Leased
Property and material Other Real Property Interests (and, with respect to RMG,
all other material real property interests of RMG) are described on Schedules
1.33, 1.40, and 1.41. Except for ordinary wear and tear and routine repairs and
as set forth on Schedule 5.8, all of the 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 (a) has access to
and over public streets or private streets for which IPWT, IPSE or RMG, as the
case may be, has a valid right of ingress and egress, (b) except as set forth on
Schedule 1.33 or 1.40, 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
23
question as a nonconforming use, (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 (of record, with respect to Owned Property, or of record
or as set forth in an agreement listed on Schedule 1.33 or 1.40, with respect to
Leased Property or Other Real Property Interests), and (d) is available for
immediate use in the conduct of the business or operations of the Systems. There
are no pending condemnation, expropriation, eminent domain or similar
proceedings of which either IPWT, IPSE or RMG has received notice or IPWT has
Knowledge affecting, in any material respect, all or any portion of the Owned
Property, Leased Property, or Other Real Property Interests. IPWT, IPSE or RMG,
as the case may be, has good and marketable title to each such parcel of real
property included in the Owned Property and in all buildings, structures and
improvements thereon, in each case free and clear of all Liens except for
Permitted Liens.
5.9. Environmental.
5.9.1. Except as described on Schedule 5.9, IPWT, IPSE and RMG, as
the case may be, is in material compliance with (i) with respect to IPWT and
IPSE, all Environmental Laws insofar as they relate to Owned Property or Leased
Property and (ii) with respect to RMG, all Environmental Laws. Except as
described on Schedule 5.9, neither IPWT, IPSE nor RMG has received any notice
of, and IPWT has no Knowledge of, any alleged, actual, or potential
responsibility for, or any inquiry regarding, (i) any release or threatened
release of any Hazardous Substances from or on Owned Property or Leased Property
(and, with respect to RMG, any other property or assets of RMG), or (ii) any
material violation of any Environmental Laws associated with Owned Property or
Leased Property (and, with respect to RMG, any other property or assets of RMG).
Except as described on Schedule 5.9, to IPWT's Knowledge, IPSE's and IPWT's
operations on their Other Real Property Interests (and RMG's operations on its
Other Real Property Interests or otherwise) do not violate any Environmental
Laws in any material respect, and IPWT, IPSE or RMG, as the case may be, has
received no notice of any such violation. Except as described on Schedule 5.9,
neither IPWT, IPSE nor RMG has received any notice of, and IPWT has no Knowledge
of, circumstances relating to, any past, present or future events, conditions,
circumstances, activities, practices or incidents (including the presence, use,
generation, manufacture, disposal, release or threatened release of any
Hazardous Substances from or on Owned Property or Leased Property), which could
interfere with or prevent continued compliance, or which are reasonably likely
to give rise to any liability, based upon or related to the processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge, release or threatened release into the environment, of any
Hazardous Substance from or attributable to Owned Property or Leased Property
(and, with respect to RMG, any other property or assets of RMG).
5.9.2. Except as described on Schedule 5.9, to IPWT's Knowledge, (a)
no aboveground or underground storage tanks are currently or have been located
on any Owned Property or Leased Property (or, with respect to RMG, on any other
property or assets of RMG) and (b) no Owned Property or Leased Property (or,
with respect to RMG, any other property or assets of RMG) 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.
5.9.3. Complete and correct copies of (a) all studies, reports,
surveys or other similar written materials in the possession of IPWT, IPSE or
RMG or to which any of them, to the Knowledge of IPWT, has access relating to
the presence or alleged presence of Hazardous Substances at, on, under or
affecting the Owned Property or Leased Property (or, with respect to RMG, any
other property or assets of RMG), (b) all notices (other than general notices
made by general publication) in the possession of either of IPWT, IPSE or RMG or
to which IPWT, to its Knowledge, has access that were
24
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, with respect to RMG, any
other property or assets of RMG) or activities at the Owned Property or Leased
Property (or, with respect to RMG, any other property or assets of RMG) and (c)
all notices and related materials in the possession of IPWT, IPSE or RMG or to
which any of them, to the Knowledge of IPWT, has access relating to any
Litigation concerning any Environmental Law to which IPWT, IPSE or RMG, as the
case may be, is a party or written allegation by any private Third Party
concerning any Environmental Law and IPWT, IPSE or RMG, as the case may be, have
been provided to Charter (other than those materials constituting
attorney-client privileged communications).
5.10. Compliance with Legal Requirements.
5.10.1. Except as set forth on Schedule 5.10, the operation of each
System as currently conducted does not violate or infringe any Legal Requirement
currently in effect in any material respect (other than Legal Requirements
described in Sections 5.9, 5.10.3 and 5.10.4, as to which the representations
and warranties set forth in those subsections will apply) or the grounding
requirements of the National Electrical Safety Code, and RMG in the conduct of
its business does not otherwise violate or infringe any Legal Requirement in any
material respect. Except as set forth on Schedule 5.10, neither IPWT, IPSE nor
RMG has received any notice of, and IPWT has no Knowledge of, any material
violation by IPWT, IPSE or RMG or any System of any Legal Requirement applicable
to the installation, ownership and operation of the Systems as currently
conducted, and knows of no basis for the allegation of any such violation.
5.10.2. Except as set forth on Schedule 5.10, without limiting the
generality of the foregoing, since IPWT or RMG, as the case may be, acquired
such Systems: IPWT or RMG, as the case may be, has submitted to the FCC all
filings, including cable television registration statements, annual reports and
aeronautical frequency usage notices and paid all regulatory fees, that are
required under the rules and regulations of the FCC; the operation of the
Systems has been and is in material compliance with the rules and regulations of
the FCC, and neither IPWT nor RMG has received any notice from the FCC of any
violation of its rules and regulations; IPWT or RMG, as the case may be, is and
since 1986 (or since its acquisition, if later) has been certified as in
compliance with the FCC's equal employment opportunity rules; the Systems are in
material compliance with all signal leakage criteria prescribed by the FCC; and
for each relevant semi-annual reporting period since its or RMG's, as the case
may be, acquisition of a System, IPWT, IPSE or RMG, as the case may be, have
timely filed with the United States Copyright Office all required Statements of
Account in true and correct form, has paid when due all required copyright
royalty fee payments in correct amount, relating to the Systems' carriage of
television broadcast signals and is otherwise in material compliance with all
applicable rules and regulations of the Copyright Office. Except as set forth on
Schedule 5.10, IPWT has no Knowledge, with respect to any System acquired since
January 1, 1996, of any previous owner's failure to comply with the copyright
licensing requirements with respect to such System or any written claim or
inquiry from any Person which questions such System's failure to comply. IPWT
has delivered to Charter copies (with respect to all of the Systems) of: (i) all
reports, filings and correspondence made or filed with the FCC or pursuant to
the FCC rules and regulations for the past year; and (ii) all reports, filings
and correspondence made or filed with the Copyright Office or pursuant to
Copyright Office rules and regulations for the past three years. Except as set
forth on Schedule 5.10, (i) a request for renewal has been timely filed under
Section 626(a) of the Cable Act with the proper Governmental Authority with
respect to each Franchise expiring within thirty-six (36) months after the date
of this Agreement; and (ii) neither IPWT, IPSE nor RMG has received
25
written notice from any Governmental Authority that it has determined or intends
to deny renewal of any Systems Franchise to which it is a party.
5.10.3. Except as set forth on Schedule 5.10 and as otherwise
provided in this Section, each of IPWT, IPSE and RMG has used commercially
reasonable efforts to comply in all material respects with the provisions of the
Cable Act and the 1992 Cable Act pertaining to the carriage of television
broadcast signals, as such Legal Requirements relate to the operation of the
Systems. Each of IPWT, IPSE and RMG has complied in all material respects with
the must carry and retransmission consent provisions of the 1992 Cable Act,
including (i) duly and timely notifying "local commercial television stations"
of inadequate signal strength or increased copyright liability, if applicable,
(ii) duly and timely notifying non-commercial educational stations of the
location of the System's principal headend, (iii) duly and timely notifying
subscribers of changes in the channel alignment on the Systems, (iv) duly and
timely notifying "local commercial and non-commercial television stations" of
the broadcast signals carried on the Systems and their channel positions, (v)
maintaining the requisite public file identifying broadcast signal carriage,
(vi) carrying the broadcast signals after June 1, 1993, on the Systems for all
"local commercial television stations" which elected must carry status and, if
required, up to two "qualified low power stations" and (vii) obtaining
retransmission consents for all broadcast signals carried on the Systems after
October 5, 1993, except for the non-exempt signals carried pursuant to a must
carry election. No must carry complaint is pending against any System at the
FCC, nor, to IPWT's Knowledge, is any threatened except as set forth in Schedule
5.10. IPWT has delivered to Charter copies of any pending petitions that IPWT,
IPSE or RMG has on file with the FCC, including requests for market
modifications or petitions for special relief or any market modification
requests or special relief petitions affecting any System that have been served
on IPWT, IPSE or RMG, as the case may be. The FCC has not issued any decision
with respect to a must carry complaint finding any System in violation of the
must carry rules except as set forth on Schedule 5.10.
5.10.4. Each of IPWT, IPSE and RMG has used commercially reasonable
efforts to establish rates charged and a la carte packages provided to
subscribers, effective as of September 1, 1993, that would be allowable under
rules and regulations promulgated by the FCC under the 1992 Cable Act, and any
authoritative interpretation thereof, whether or not such rates or packages were
subject to regulation at that date by any Governmental Authority, including any
state regulatory agency, local franchising authority and/or the FCC.
Notwithstanding the foregoing, IPWT makes no representation or warranty that
either the rates charged to subscribers or the a la carte packages provided
would be allowable under any rules and regulations of the FCC, or any
authoritative interpretation thereof, promulgated after the date of the Closing.
IPWT has delivered to Charter complete and correct copies of the most recent FCC
Forms 328, 329, 393, 1200, 1205, 1210, 1215, 1220, 1235 and 1240 and other FCC
rate forms (collectively, the "FCC Rate Forms") filed with the local franchising
authority and/or the FCC and will deliver as soon as available all such FCC
forms that are prepared with respect to the Systems, (ii) all historical FCC
Rate Forms with respect to any System in which there is currently a rate issue
pending, including any accounting order or any rate order on appeal, (iii)
copies of all complaints, petitions, answers, responses and other filings made
with or by any Governmental Authority in connection with any rate orders issued
by such Governmental Authority or any appeal therefrom, and (iv) any
documentation supporting an exemption from the rate regulation provisions of the
1992 Cable Act claimed by IPWT, IPSE or RMG, as the case may be, with respect to
the Systems. Except as set forth on Schedule 5.10, neither IPWT, IPSE nor RMG
has made an 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 (a "Cost of Service Election") with respect to any of the
Systems.
1
26
5.10.5. Except as set forth on Schedule 5.10, all necessary FAA
approvals have been obtained and all necessary FCC tower registrations have been
filed with respect to the height and location of towers used in connection with
the operation of the Systems, and such towers are being operated in compliance
in all material respects with applicable FCC and FAA rules. The ownership,
height (with and without appurtenances), location (address, latitude, longitude
and ground elevation), structure type and FCC call signs of each tower used in
connection with the operation of the Systems are correctly described on Schedule
5.10. To the extent applicable, IPWT has delivered to Charter true and correct
copies of the FAA final determinations that are available and FCC registrations
for all such towers.
5.11. Intellectual Property. Except for Intellectual Property which
constitutes Excluded Assets and the Intellectual Property described on Schedule
4.1(b), neither IPWT, IPSE nor RMG possesses any Intellectual Property related
to or material to the operation of the Systems and neither IPWT, IPSE nor RMG is
a party to any license or royalty agreement with respect to any such
Intellectual Property, except for licenses respecting program material, licenses
incidental to any Systems Contracts and obligations under the Copyright Act of
1976, as amended, including all rules, regulations, orders and policies of the
U.S. Copyright Office thereunder (the "Copyright Act") applicable to cable
television systems generally. To the Knowledge of IPWT, the Systems and the
Cable Business have been operated, and RMG has otherwise operated its business,
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.
5.12. Financial Statements.
5.12.1. The unaudited statements of income of West Tennessee
Systems, the Dickson, Joelton and Lynchburg Systems and the Kingsport Systems
for the years ended December 31, 1997 and 1998, attached hereto as Schedule
5.12.1, are in accordance with the books and records of IPWT, IPSE or RMG, as
appropriate, 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 operating results of
the West Tennessee Systems, the Dickson, Joelton and Lynchburg Systems and the
Kingsport Systems on a System-by-System basis, for the periods indicated,
subject only to standard year-end adjustments and the omission of footnotes
thereto. The unaudited statements of income of RMG for the years ended December
31, 1997 and 1998, together with the unaudited balance sheet of RMG as of
December 31, 1998, attached hereto as Schedule 5.12.2, are in accordance with
the books and records of RMG and were prepared in accordance with generally
accepted accounting principles, except as may be described therein, applied on a
consistent basis throughout the periods covered thereby. Within thirty (30) days
of the date hereof, IPWT will deliver to Charter unaudited statements of income
of RMG (excluding the Brentwood System) for the years ended December 31, 1997
and 1998. Except as may be described therein, (i) such unaudited statements of
income present fairly the operating results of RMG for the periods indicated,
and (ii) such unaudited balance sheet presents fairly the financial condition,
assets and liabilities, and shareholders' equity of RMG as of December 31, 1998,
subject, in each case, only to standard year-end adjustments and the omission of
footnotes thereto.
5.13. Absence of Certain Changes or Events. Except as set forth on
Schedule 5.13, since December 31, 1998, there has been no (i) material adverse
change in, nor has any event or events (other than any affecting the cable
television industry generally) occurred that, individually or in the aggregate,
are reasonably likely to result in a material adverse change in the Assets, the
Cable Business, the operations, condition (financial or otherwise) or results of
operations of the Systems, taken as a whole and (ii) material change in
accounting principles or practices with respect to the
27
Systems or revaluation by IPWT, IPSE or RMG, as the case may be, of the Assets
for financial reporting, property tax or other purposes. From December 31, 1998
to the date of this Agreement, the Cable Business has been conducted only in the
usual, regular and ordinary course, except as disclosed on Schedule 5.13 and
except where the failure to conduct business in such manner would not have a
material adverse effect on the Assets, the Cable Business, the operations,
condition (financial or otherwise) or results of operations of the Systems taken
as a whole or on the ability of IPWT to perform its obligations under this
Agreement.
5.14. Litigation. Except as set forth on Schedule 5.14: (a) there is no
Litigation pending or, to IPWT's Knowledge, threatened against IPWT, IPSE, RMG
or any of their Affiliates which, if adversely determined, would (i) materially
and adversely affect the financial condition or operations of the Cable
Business, any of the Systems, the Assets, RMG or the ability of IPWT to perform
its obligations under this Agreement or (ii) result in the modification,
revocation, termination, suspension or other limitation of any of the Systems
Franchises, Systems Licenses, or Systems Contracts; and (b) there is not in
existence any Judgment requiring IPWT, IPSE, RMG or any of their Affiliates to
take any action of any kind with respect to the Assets, the operation of any of
the Systems or, with respect to RMG, the operation of RMG's business, or to
which IPWT or IPSE (with respect to the Systems) or RMG (with respect to its
property and assets), any of the Systems or the Assets are subject or by which
they are bound or affected, that has not been fully complied with by IPWT, IPSE
or RMG, as the case may be.
5.15. Taxes.
5.15.1. Each of IPWT and IPSE 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 it, 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 affect or result in the imposition of a Lien
upon the Assets or create any transferee or other liability upon Charter, except
such amounts as are being contested diligently and in good faith and are not in
the aggregate material. Except as set forth on Schedule 5.15.1, neither IPWT nor
IPSE has received any notice of, nor does IPWT 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, any of the Assets or transferee or other liability
upon Charter.
5.15.2. RMG has timely filed all federal, state, local and foreign
Tax returns and other Tax reports required to be filed by it through the date
hereof and shall timely file all Tax returns and Tax reports required to be
filed at or before the Closing. Except as set forth on Schedule 5.15.2, such
reports and returns are and will be true, correct and complete in all material
respects and RMG has paid and discharged all Taxes due from it, other than such
taxes that are being contested in good faith by appropriate proceedings and are
adequately reserved as shown on its unaudited balance sheet dated December 31,
1998. Neither the Internal Revenue Service (the "IRS") nor any other taxing
authority or agency, domestic or foreign, is now asserting by notice to IPWT or
RMG or, to the knowledge of IPWT, threatening to assert against RMG, any
deficiency or material claim for additional Taxes. Moreover, neither IPWT nor
RMG has knowledge of any facts on the basis of which taxing authorities could
assert deficiencies or claims described in the preceding sentence. RMG has
withheld or collected and paid over to the appropriate taxing authorities or is
properly holding for such payment all Taxes required by law to be withheld or
collected. RMG does not have any liability for the Taxes of any person pursuant
to Section 1.1502-6 of the Treasury Regulations promulgated under the Code or
comparable provisions of any taxing authority in respect of a consolidated or
combined Tax Return, except with respect to an entity which has merged or
dissolved into RMG. There are no material Liens for Taxes upon the assets of RMG
other than Liens for current Taxes not yet due and payable and
28
Liens for Taxes set forth on Schedule 5.15.2 that are being contested in good
faith by appropriate proceedings.
5.15.3. Except as set forth on Schedule 5.15.3, there are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any Tax Returns required to be filed by, or which include or are
treated as including, RMG.
5.15.4. Except as set forth on Schedule 5.15.4, RMG is not involved
in or subject to any joint venture, partnership or other arrangement or contract
which is treated as a partnership for federal, state, local or foreign income
tax purposes (a "Tax Partnership").
5.15.5. All material elections with respect to Taxes affecting RMG
as of the date hereof are set forth in Schedule 5.15.5. No consent to the
application of section 341(f)(2) of the Code has been filed with respect to any
property or assets held, acquired, or to be acquired by RMG.
5.15.6. Except as set forth on Schedule 5.15.6, there are no tax
sharing agreements or similar arrangements with respect to or involving RMG.
5.15.7. Except as set forth in Schedule 5.15.7, RMG was not included
or includable in any consolidated or unitary Tax return or report, other than
Tax returns or reports that included only RMG and entities which have since
merged or dissolved into RMG.
5.15.8. RMG has not agreed to and is not required to make any
material adjustment under section 481(a) of the Code.
5.15.9. RMG has not entered into any compensatory agreements with
respect to the performance of services which payment thereunder would result in
a non-deductible expense to such company pursuant to Section 280G of the Code or
an excise Tax to the recipient of such payment pursuant to Section 4999 of the
Code.
5.16. Employment Matters.
5.16.1. Each of IPWT, IPSE and RMG 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. ss. 2101, et seq. ("WARN"), continuation coverage requirements with
respect to group health plans and those relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal employment
opportunity, age, sex, race and disability discrimination, immigration control
and the payment and withholding of Taxes.
5.16.2. There are no Liens against the Assets under Section 412(n)
of the Code or Sections 302(f) or 4068 of ERISA. At the Closing, Charter and its
ERISA Affiliates will have no obligation to contribute to, or any liability in
respect of, (i) any employee benefit plan within the meaning of Section 3(3) of
ERISA, or (ii) any similar employment, severance or other arrangement or policy
(whether written or oral) providing for insurance coverage (including
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, fringe benefits or
retirement benefits, or for profit sharing, deferred compensation, bonuses,
stock options, stock appreciation or other forms of incentive compensation or
post-retirement insurance, compensation or benefits, sponsored or maintained by
IPWT, IPSE, RMG or any of their ERISA Affiliates, or to which IPWT, IPSE, RMG or
any of their ERISA Affiliates was obligated to contribute. Neither IPWT, IPSE
nor RMG will, in connection with the transactions contemplated by
29
this Agreement, cease to provide any group health plan coverage to its employees
in a manner which would cause Charter or any of its ERISA Affiliates to be
deemed a successor employer of IPWT, IPSE or RMG, as the case may be, within the
meaning of Proposed Treasury Regulations Section 54.4980B-9 Q&A8(c). With
respect to any multi- employer plan within the meaning of Section 3(37) of
ERISA, or any plan subject to Title IV of ERISA, to which IPWT, IPSE, RMG or any
of their ERISA Affiliates is or ever was obligated to contribute, (a) there has
been no material "reportable event" described in Sections 4043(c)(1), (2), (3),
(5), (6), (7), (10), or (13) of ERISA, (b) no "accumulated funding deficiency"
(as defined in Section 302 of ERISA) or "withdrawal liability" (as determined
under Section 4201 et seq. of ERISA) has occurred, exists or is continuing with
respect to any such plan other than a multi- employer plan (as defined in
Section 3(37) of ERISA), or, to the Knowledge of IPWT, IPSE, RMG or any of their
ERISA Affiliates, with respect to any such plan which is a multi-employer plan
(as defined in Section 3(37) of ERISA), (c) no such plan has been terminated
other than in accordance with ERISA or at a time when such plan was not
sufficiently funded, and (d) there has been no (i) withdrawal by IPWT, IPSE, RMG
or any of their ERISA Affiliates that is a substantial employer from a
single-employer plan and that has two or more contributing sponsors at least two
of whom are not under common control, as referred to in Section 4063(b) of
ERISA, or (ii) cessation by IPWT, IPSE, RMG or any of their ERISA Affiliates of
operations at a facility causing more than twenty percent (20%) of plan
participants to be separated from employment, as referred to in Section 4062(e)
of ERISA. With respect to any plan maintained, sponsored by, or contributed to
by IPWT, IPSE or RMG, as the case may be, which is intended to comply with the
provisions of Section 401(k) of the Code, and from which any similar plan
maintained or sponsored by Charter or any of its ERISA Affiliates accepts a
plan-to-plan transfer under Section 7.3.3, (I) such plan has received a
favorable determination letter from Internal Revenue Service, and none of IPWT,
IPSE, RMG nor any of their ERISA Affiliates has any Knowledge of any fact which
could adversely affect the qualified status of such plan, and (II) such plan has
been administered and maintained in material compliance with ERISA, the Code and
all other applicable laws.
5.16.3. Except as set forth on Schedule 5.16, there are no
collective bargaining agreements applicable to any Person employed by IPWT or
IPSE, as the case may be, that renders services in connection with the Systems,
or to any Person employed by RMG, and neither IPWT, IPSE nor RMG has a duty to
bargain with any labor organization with respect to any such Person. Except as
set forth on Schedule 5.16, there are not pending any unfair labor practice
charges against IPWT, IPSE or RMG, any demand for recognition or any other
request or demand from a labor organization for representative status with
respect to any Person employed by IPWT or IPSE that renders services in
connection with the Systems or with respect to any Person employed by RMG.
Except as described on Schedule 5.16, neither IPWT or IPSE, with respect to any
employee of the Systems, nor RMG, with respect to any of employees of RMG, has
employment agreements, either written or oral, with any such employee and none
of the employment agreements listed on Schedule 5.16 requires IPWT, IPSE or RMG,
or will require Charter or any Affiliate of Charter, to employ any Person after
the Closing.
30
5.16.4. With respect to RMG and RMG Plans (as defined below):
(a) Except as is disclosed on Schedule 5.16, (i) neither RMG
nor any of its ERISA Affiliates maintains or sponsors (or ever maintained or
sponsored), or makes or is required to make contributions to, any RMG Plans,
(ii) none of the RMG Plans is or was a "multi-employer plan," as defined in
Section 3(37) of ERISA, (iii) none of the RMG Plans is or was a "defined benefit
pension plan" within the meaning of Section 3(35) of ERISA, (iv) none of the RMG
Plans provides or provided post-retirement medical or health benefits (except as
required by Section 4980B of the Code or similar Laws), (v) none of the RMG
Plans is or was a "welfare benefit fund," as defined in Section 419(e) of the
Code, or an organization described in Sections 501(c)(9) or 501(c)(20) of the
Code, and (vi) neither RMG nor any RMG ERISA Affiliate has announced or
otherwise made any commitment to create or amend any RMG Plan. There is no RMG
Plan which RMG will not be able to terminate immediately after the Closing in
accordance with its terms and ERISA. RMG has delivered to Charter true and
complete copies of: (i) each of the RMG Plans and any related funding agreements
thereto (including insurance contracts) including all amendments, (ii) the
currently effective Summary Plan Description pertaining to each of the RMG
Plans, (iii) the most recent annual report for each of the RMG Plans (including
all relevant schedules), and (iv) the most recent Internal Revenue Service
determination letter for each RMG Plan which is intended to constitute a
qualified RMG Plan under Section 401 of the Code, (v) the most recently filed
PBGC Form 1, if applicable, (vi) for each funded RMG Plan, financial statements
consisting of (A) the consolidated statement of assets and liabilities of such
RMG Plan as of its most recent valuation date, and (B) the statement of changes
in fund balance and in financial position or the statement of changes in net
assets available for benefits under such RMG Plan for the most recently-ended
plan year, which such financial statements shall fairly present the financial
condition and the results of operations of such RMG Plan in accordance with GAAP
as of such dates, and (vii) each amendment to each of the foregoing documents.
(b) Neither RMG nor any RMG ERISA Affiliate is subject to any
liability, tax or penalty whatsoever to any person or agency whomsoever as a
result of engaging in a prohibited transaction under ERISA or the Code, and
neither RMG nor any RMG ERISA Affiliate has any knowledge of any circumstances
which reasonably might result in any liability, tax or penalty, including, but
not limited to, a penalty under Section 502 of ERISA, as a result of a breach of
any duty under ERISA or under other laws. There has been no failure of any RMG
Plan which is required to comply with the provisions of Sections 4980B and 4980C
of the Code, or with the requirements referred to in Section 4980D(a) of the
Code, to comply. No event has occurred which could subject any RMG Plan to tax
under Section 511 of the Code.
(c) Each of the RMG Plans which is intended to be a qualified
plan under Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service. There has been no failure to
administer any of the RMG Plans in material compliance with the terms of such
RMG Plan, ERISA, the Code and all other applicable laws. All contributions
required to be made to each of the RMG Plans under the terms of that RMG Plan,
ERISA, the Code or any other applicable laws have been timely made. The
financial statements of RMG attached hereto as Schedule 5.12 properly reflect
all amounts required to be accrued as liabilities to date under each of the RMG
Plans. Each RMG Plan intended to meet the requirements for tax-favored treatment
under Subchapter B of Chapter 1 of the Code meets such requirements. Except as
set forth on Schedule 5.16, there is no contract, agreement or benefit
arrangement covering any employee of RMG which, individually or collectively,
could give rise to the payment of any amount which would constitute an "excess
parachute payment" (as defined in Section 280G of the Code). Except as set forth
on Schedule 5.16, the execution and performance of this Agreement will not (i)
result in any obligation or liability (with respect to accrued benefits or
otherwise) of RMG to any RMG Plan, or any present or former
31
employee of RMG or IPWT, (ii) be a trigger event under any RMG Plan that will
result in any payment (whether of severance pay or otherwise) becoming due to
any present or former employee, officer, director, shareholder, contractor, or
consultant, or any of their dependents, or (iii) accelerate the time of payment
or vesting, or increase the amount, of compensation due to any employee,
officer, director, shareholder, contractor, or consultant of RMG or IPWT. With
respect to any insurance policy which provides, or has provided, funding for
benefits under any RMG Plan, (I) there is and will be no liability of RMG or
Charter in the nature of a retroactive or retrospective rate adjustment, loss
sharing arrangement, or actual or contingent liability as of the Closing Date,
nor would there be any such liability if such insurance policy were terminated
as of the Closing Date, and (II) no insurance company issuing any such policy is
in receivership, conservatorship, bankruptcy, liquidation, or similar
proceeding, and, to the knowledge of the RMG, no such proceedings with respect
to any insurer are imminent.
(d) The present value of all accrued benefits under any RMG
Plans subject to Title IV of ERISA shall not, as of the Closing Date, exceed the
value of the assets of such RMG Plans allocated to such accrued benefits, based
upon the applicable provisions of the Code and ERISA, and each such RMG Plan
shall be capable of being terminated as of the Closing Date in a "standard
termination" under Section 4041(b) of ERISA. The transactions contemplated
hereunder, including without limitation the termination of any RMG Plans at or
prior to the Closing, shall not result in any such withdrawal or other liability
under any applicable laws.
(e) Other than routine claims for benefits under the RMG
Plans, there are no pending, or, to the best knowledge of RMG, threatened,
investigations, proceedings, claims, lawsuits, disputes, actions, audits or
controversies involving the RMG Plans, or the fiduciaries, administrators, or
trustees of any of the RMG Plans or RMG or any RMG ERISA Affiliate as the
employer or sponsor under any RMG Plan, with any of the Internal Revenue
Service, the Department of Labor, the Pension Benefit Guaranty Corporation, any
participant in or beneficiary of any RMG Plan or any other person whomsoever. To
the Knowledge of RMG, there is no reasonable basis for any such claim, lawsuit,
dispute, action or controversy.
For purposes of this Section 5.16.4, the term "RMG Plans"
shall mean (i) all "employee benefit plans" (as such term is defined in Section
3(3) of ERISA, of which RMG or any ERISA Affiliate of RMG (an "RMG ERISA
Affiliate") is or ever was a sponsor or participating employer or as to which
RMG or any RMG ERISA Affiliate makes contributions or is required to make
contributions, and (ii) any similar employment, severance or other arrangement
or policy of RMG or of any RMG ERISA Affiliate providing for insurance coverage
(including self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits or retirement
benefits, or for profit sharing, deferred compensation, bonuses, stock options,
stock appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits.
5.17. Systems Information.
5.17.1. Schedules 5.17.1-A and 5.17.1-B set forth a materially true
and accurate description, on a System-by-System basis, of the following
information relating to the IPWT Systems, the Kingsport System and the RMG
Systems, respectively, as of December 31, 1998:
(a) the approximate number of aerial and underground miles of
plant included in the Assets and served by each headend;
32
(b) the approximate number of single family homes and
residential multiple dwelling units passed by each System;
(c) the MHZ capacity and channel capacity of each headend; and
(d) the number of subscribers served by each System and a
description of the calculation methodology used by IPWT, IPSE or RMG, as the
case may be, to calculate such subscribers.
5.17.2. Schedules 5.17.2-A and 5.17.2-B set forth a materially true
and accurate description of the following information relating to the IPWT
Systems, the Kingsport System and the RMG Systems, respectively, as of the date
of this Agreement:
(a) a description of the Basic Services, the Expanded Basic
Services, Pay TV and a la carte services available from each System, and the
rates charged by IPWT, IPSE or RMG, as the case may be, therefor, including all
rates, tariffs and other charges for cable television or other services provided
by each System;
(b) the stations and signals carried by each System and the
channel position of each such signal and station; and
(c) the cities, towns, villages, boroughs and counties served
by each System.
5.17.3. Each System is capable of providing all channels, stations
and signals reflected as being carried on such System on Schedules 5.17.1-A and
5.17.1-B.
5.18. Taxpayer Identification Number. The U.S. Taxpayer Identification
Number for IPWT is ▇▇-▇▇▇▇▇▇▇.
5.19. Finder and Brokers. Neither IPWT, IPSE nor RMG has entered into any
Contract with any person which will result in the obligation of Charter to pay
any finder's fees, brokerage or agent's commissions or other like payments
(collectively, "Agent's Fees") in connection with the negotiations leading to
this Agreement or the consummation of the transactions contemplated hereby.
5.20. Related Party Transactions. Set forth on Schedule 5.20 hereto, are
the Contracts, agreements, arrangements or understandings between IPWT, IPSE,
RMG and any of their Affiliates and between IPWT, IPSE, RMG and any AT&T
Affiliates; provided, however, with respect to IPWT, such Contracts, agreements,
arrangements or understandings are set forth only to the extent included in or
related to the Assets.
5.21. Representations and Warranties of RMG in IP-I/Charter Exchange
Agreement. The representations and warranties made by RMG in the IP-I/Charter
Exchange Agreement (as defined in the Common Agreement) are true, complete and
accurate in all respects. This Section 5.21 shall not survive the "Closing"
under the IP-I/Charter Exchange Agreement.
33
6. CHARTER'S REPRESENTATIONS AND WARRANTIES. Charter represents and
warrants to IPWT as of the date of this Agreement and as of the Closing as
follows:
6.1. Organization and Qualification of Charter. Charter is a limited
liability company duly formed, validly existing and in good standing under the
laws of the State of Delaware. Charter has all requisite power and authority to
own, lease and use the assets owned, leased or used by it and to conduct its
business as it is currently being conducted by it. As of the date of this
Agreement, Charter 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 its business makes such qualification necessary.
6.2. Authority and Validity. Charter 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. The execution and delivery by Charter of, its performance under, and
its consummation of the transactions contemplated by, this Agreement and the
Transaction Documents have been duly and validly authorized by all action by or
on behalf of Charter. This Agreement has been, and when executed and delivered
by Charter the Transaction Documents will be, duly and validly executed and
delivered by Charter and the valid and binding obligations of Charter,
enforceable against it 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 as set forth on Schedule 6.3,
and assuming any consents referenced on Schedule 5.3 have been obtained and the
expiration or earlier termination of the waiting period under the HSR Act has
occurred, the execution and delivery by Charter of, its performance under, and
its consummation of the transactions contemplated by, this Agreement and the
Transaction Documents do not and will not: (a) conflict with or violate any
provision of the organizational documents of Charter; (b) violate any provision
of any Legal Requirement; (c) require any consent, approval or authorization of,
or filing of any certificate, notice, application, report or other document
with, any Governmental Authority or other Person; or (d) (i) conflict with,
violate, result in a breach of or constitute a default under (without regard to
requirements of notice, lapse of time or elections of other Persons or any
combination thereof), (ii) permit or result in the termination, suspension or
modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of Charter under, or (iv) result in the
creation or imposition of any Lien under any instrument or other agreement to
which Charter is a party or by which Charter or any of its assets is bound or
affected, except for purposes of clauses (c) and (d) such consents, approvals,
authorizations and filings that, if not obtained or made, would not, and such
violations, conflicts, breaches, defaults, terminations, suspensions,
modifications and accelerations as would not, individually or in the aggregate,
have an adverse effect on its ability to perform its obligations under this
Agreement or the Transaction Documents.
6.4. Finder and Brokers. Charter has not entered into any Contract with
any person which will result in the obligation of IPWT to pay any Agent's Fees
in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
6.5. Litigation. Except as set forth on Schedule 6.5, there is no
Litigation pending or, to Charter's Knowledge, threatened against Charter or any
Affiliate of Charter which, if adversely determined, would materially and
adversely affect the ability of Charter to perform its obligations under this
Agreement.
34
6.6. Qualification. Charter knows of no facts which would disqualify it
from holding the Shares under any Legal Requirement.
6.7. Securities Law Matters. Charter understands and acknowledges that
none of the Shares has been registered or qualified under the federal or
applicable state securities laws and the Shares are being sold to and purchased
by Charter in reliance upon applicable exemptions from such registration and
qualification requirements. Charter is an "accredited investor" within the
meaning of the federal securities laws and acknowledges it has been furnished
with or afforded access to, and has had the opportunity to ask questions and
receive answers concerning, all information pertaining to the Shares. The Shares
are being acquired by Charter for investment only and not with a view to any
public distribution thereof. Charter understands that the Shares are "restricted
securities" within the meaning of the federal securities laws and agrees that it
will not offer to sell or otherwise dispose of any of the Shares in violation of
the registration and qualification requirements of the federal and applicable
state securities laws. All certificates to be delivered at Closing evidencing
ownership of the Shares will contain appropriate legends incorporating these
applicable securities laws restrictions.
6.8. Taxpayer Identification Number. The U.S. Taxpayer Identification
Number for Charter is ▇▇-▇▇▇▇▇▇▇.
7. ADDITIONAL COVENANTS.
7.1. Access to Premises and Records. Between the date of this Agreement
and the Closing Date, IPWT (a) will, and will cause IPSE and RMG to, give
Charter and its counsel, accountants and other representatives reasonable access
during normal business hours and upon reasonable advance notice to (i) all
premises and books and records of the Cable Business, (ii) all Assets and the
personnel engaged in the management or operation of the Systems and (iii) all
other books and records of RMG; and (b) will, and will cause RMG to, furnish to
Charter and such representatives all such documents, financial information and
other information regarding the Cable Business, the Assets and RMG as Charter
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.
7.2. Continuity and Maintenance of Operations, Certain Deliveries and
Notice. Except as set forth on Schedule 7.2(a) or in the 1999 operating budgets
set forth on Schedule 7.2(b) or as Charter may otherwise consent in writing,
between the date of this Agreement and the Closing, IPWT with respect to the
Cable Business, the Systems and the Assets:
7.2.1. will, and will cause IPSE and RMG to, conduct the Cable
Business in good faith and operate the Systems only in the usual, regular and
ordinary course (including making routine capital expenditures and operating
substantially in accordance with the 1999 capital and operating budgets with
respect to each such System (copies of which are set forth on Schedule 7.2(b)),
completing ongoing and planned line extensions, placing conduit or cable in new
developments, fulfilling installation requests, completing disconnection work
orders and disconnecting and discontinuing service to customers whose accounts
are delinquent) and, to the extent consistent with such conduct and 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 the Systems, (b) keep available the services of its employees and
agents providing services in connection with the Cable Business, (c) continue
budgeted marketing, advertising and promotional expenditures with respect to the
Cable
35
Business, (d) enter into written agreements with respect to all multiple
dwelling unit and bulk billed accounts having greater than 200 individual units,
and (e) operate the Cable Business in material compliance with all Legal
Requirements;
7.2.2. will, and will cause IPSE and RMG to, maintain the Assets in
good operating repair, order and condition, ordinary wear and tear excepted;
will, and will cause IPSE and RMG to, maintain equipment and inventory for the
Systems at normal historical levels consistent with its past practices (as
adjusted to account for abnormally high inventory levels related to periodic
rebuild activity); will, and will cause IPSE and RMG to, maintain in full force
and effect policies of insurance with respect to the Cable Business in such
amounts and with respect to such risks as are currently in effect for the
Systems; and will, and will cause IPSE and RMG to, maintain its books, records
and accounts with respect to the Assets and the operation of the Systems in the
usual, regular and ordinary manner on a basis consistent with its past
practices;
7.2.3. will not, and will cause IPSE and RMG not to, outside the
ordinary course of business or to the extent inconsistent with past practice or
the 1999 operating budget included in Schedule 7.2(b), (a) modify, terminate,
renew, suspend or abrogate any System Contract (other than retransmission
consent System Contracts, System Contracts evidencing Leased Property or Other
Real Property Interests and lease agreements for Tangible Personal Property) or,
with respect to RMG, any other material Contract; (b) modify, terminate, renew,
suspend or abrogate any retransmission consent System Contract, System
Franchise, System Contract evidencing Leased Property or Other Real Property
Interests, lease agreements for Tangible Personal Property or System License
except for renewals (other than renewals of System Franchises) on terms that are
not materially different from those which currently exist and renewals of System
Franchises as otherwise required or permitted under this Agreement; (c) engage
in any marketing, subscriber installation, collection or disconnection
practices; (d) make any Cost of Service Election; (e) other than as set forth on
Schedule 7.2(a), enter into any agreement with or commitment to any competitive
access provider and/or local exchange company or any internet access or on-line
services provider with respect to the use or lease of any of the Assets; (f)
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 (other than
Permitted Liens) on any of the Assets; (g) decrease the rate charged for any
level of Basic Services, Expanded Basic Services or any Pay TV or, except as
expressly permitted by Schedule 7.2(a), add, delete, retier or repackage any
analog programming services, in each case except to the extent required under
the 1992 Cable Act or any other Legal Requirement; provided, however, that if
rates are decreased in order to so comply, IPWT will provide Charter with copies
of any FCC forms (even if not filed with any Governmental Authority) used to
determine that the new rates were required; (h) convert any of the Systems to
any billing system or otherwise change billing arrangements for any of the
Systems; (i) with respect to IPWT or IPSE, enter into any Contract of any kind
relating to the Cable Business to be assumed by Charter hereunder or, with
respect to RMG, enter into any Contract of any kind that individually or in the
aggregate call for payments pursuant to such Contract's terms or otherwise
involving expenditures in excess of one hundred thousand dollars ($100,000)
(with respect to IPWT or IPSE) or twenty-five thousand dollars ($25,000) (with
respect to RMG), except for the renewal of Contracts that would, but for such
renewal, terminate in accordance with their terms prior to Closing; (j) except
pursuant to or required by plans, agreements or arrangements already in effect
on the date hereof, make any material increase in compensation or benefits
payable or to become payable to employees or make any material change in
personnel policies; (k) take any action with respect to the grant or increase of
severance or termination pay payable after the Closing Date; (l) with respect to
IPWT or IPSE, engage in any material transaction with respect to the Cable
Business or, with respect to RMG, engage in any material transaction; or (m)
agree to do any of the foregoing; provided, however, that no provision of this
Section 7.2.3 shall be interpreted to prohibit or restrict in any way RMG's
right, in its full and absolute
36
discretion, to take whatever actions it deems appropriate with respect to the
interests it holds in AVR of Tennessee, L.P. and Hyperion of Tennessee, L.P.
provided such actions do not expand RMG's liability beyond that which is set
forth in that certain Purchase Agreement between RMG and Hyperion
Telecommunications, Inc. dated as of February 11, 1999, a copy of which has been
delivered to Charter;
7.2.4. will, and will cause IPSE and RMG to, promptly deliver to
Charter (i) true and complete copies of all monthly statements of income and
such other information with respect to the Systems or the operation of the Cable
Business in a format consistent with the form of report attached hereto as
Schedule 7.2(c) for the period from January 1, 1999, through the Closing, and if
the Closing occurs as of the end of a month, as soon as practicable after
Closing and (ii) such financial information reasonably requested by Charter;
7.2.5. will, and will cause IPSE and RMG to, give or cause to be
given to Charter, as soon as reasonably possible but in any event within five
(5) Business Days after the date of submission to the appropriate Governmental
Authority, copies of all FCC Forms 1200, 1205, 1210, 1215, 1220, 1225, 1235 and
1240 or any other FCC forms required to be filed with any Governmental Authority
under the 1992 Cable Act with respect to rates and prepared with respect to any
of the Systems;
7.2.6. will, and will cause IPSE and RMG to, 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 thirty-six (36) months after any date between the date of the Agreement
and the Closing Date;
7.2.7. will, and will cause IPSE and RMG to, promptly notify Charter
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 of IPWT in Section 8.2.1 (with respect to
the representations and warranties of Charter) or the condition of Charter in
Section 8.1.1 (with respect to the representations and warranties of IPWT) not
being satisfied at any time prior to or on the Closing, and, with respect to
clause (b), use its commercially reasonable efforts to remedy the same and to
satisfy such condition to the other Party's obligation to consummate the
transactions contemplated by this Agreement;
7.2.8. will, and will cause IPSE and RMG to, use its commercially
reasonable efforts to challenge and contest any Litigation brought against or
otherwise involving IPWT, IPSE or RMG that could result in the imposition of
Legal Requirements that could cause the conditions to the Closing not to be
satisfied; and
7.2.9. will, and will cause IPSE and RMG to, cause its appropriate
Affiliates to be bound by and comply with the provisions of this Section 7.2 to
the extent such Affiliates own, operate or manage any of the Assets or Systems.
37
7.3. Employees.
7.3.1. Except as set forth in this Section 7.3.1, Charter may, but
shall have no obligation to (i) in the case of IPWT, employ or offer employment
to any employee of IPWT's Cable Business and (ii) in the case of RMG, cause RMG
to retain any employee. Within thirty (30) days after the date of execution of
this Agreement, IPWT shall, and shall cause RMG to, provide to Charter a list of
all employees of the Systems and any other employees of RMG (other than those
related to the Brentwood Systems) (collectively the "System Employees") as of a
recent date, showing the original hire date, the then-current positions and
rates of compensation and whether the employee is subject to an employment
agreement, a collective bargaining agreement or represented by a labor
organization. Within sixty (60) days after the date of execution of this
Agreement (but in no event less than thirty (30) days after receipt of such
list), or such other date as the Parties may agree, Charter will provide to IPWT
in writing a list of the System Employees Charter or its Affiliates will employ
following the Closing, subject only to the evaluations permitted by this
Section. IPWT agrees, and shall cause its appropriate Affiliates, to cooperate
in all reasonable respects with Charter to allow Charter or its Affiliates to
evaluate the System Employees to make hiring decisions. In this regard, Charter
shall have the opportunity to make such appropriate prehire investigation of
each of the System Employees, as it deems necessary, including, subject to
obtaining the consent of such System Employee, the right to review personnel
files and conduct background checks and the right to interview such employees
during normal working hours so long as such interviews are conducted after
notice to IPWT, IPSE or RMG, as appropriate, and do not unreasonably interfere
with IPWT's, IPSE's or RMG's operations. IPWT will, and will cause IPSE and RMG
to, use its good faith efforts to obtain the consent of each of its System
Employees to allow Charter to review personnel files and to conduct background
checks in connection with the foregoing. Charter or its Affiliates may, if it
wishes, condition any offer of employment upon the employee's passing a
pre-placement physical examination (including drug screening test) and the
completion of a satisfactory background check. Charter shall bear the expense of
such examination but IPWT shall, and shall cause IPSE and RMG to, upon
reasonable notice, cooperate in the scheduling of such examinations so long as
the examinations do not unreasonably interfere with IPWT's, IPSE's or RMG's
operations. RMG shall terminate, as of the Closing Date, any RMG employee which
Charter (or, with respect to the Brentwood Systems, IP-I or its Affiliates) has
determined not to retain. As of the Closing Date, Charter shall have no
obligation to IPWT, IPSE or RMG or their Affiliates, or to IPWT's, IPSE's or
RMG's employees, with regard to any employee it has determined not to hire or
retain, as the case may be, and IPWT and IPSE shall indemnify and hold Charter
and RMG harmless (pursuant to the Common Agreement) with respect to any Losses
incurred by RMG, Charter or its Affiliates with respect to employees terminated
pursuant to the preceding sentence. Notwithstanding any of the foregoing,
Charter agrees not to solicit for employment, without the written consent of
IPWT, IPSE or RMG, as appropriate, any employee of IPWT, IPSE or RMG whose
position is System manager or higher.
7.3.2. To the extent not included in the calculation of the Base
Value or the Adjusted Value in accordance with the terms of the Common
Agreement, IPWT will, and will cause IPSE and RMG to, pay to all of their
respective Systems Employees all compensation, including salaries, commissions,
bonuses, deferred compensation, severance (to the extent applicable), insurance,
vacation (except for accrued vacation time (not to exceed four weeks) and sick
time (not to exceed ten (10) days) included in the calculation of the Adjusted
Value, and other compensation or benefits to which they are entitled for periods
prior to the Closing, including all amounts, if any, payable on account of the
termination of their employment.
7.3.3. IPWT or its appropriate Affiliates, will be responsible for
maintenance and distribution of benefits accrued under any employee benefit plan
(as defined in ERISA) maintained by
▇▇
▇▇▇▇, ▇▇▇▇, ▇▇▇, or its appropriate Affiliate, pursuant to the provisions of
such plan and any Legal Requirements. Charter will not 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 IPWT, IPSE, RMG or any of their Affiliates.
In the event that IPWT determines that the transactions contemplated by this
Agreement will not permit a distribution to be made to a Hired Employee (as
defined below) from IPWT's or IPSE's tax qualified plan in accordance with
Section 401(k)(10) of the Code then Charter may accept a plan-to-plan transfer
of Hired Employees' plan benefits to its own tax qualified plan. If there is no
plan-to-plan transfer, in order to permit IPWT or IPSE or their appropriate
Affiliates to make distributions to any former System Employee of IPWT or IPSE
who becomes a Hired Employee of Charter of the balance of such employee's 401(k)
account in IPWT's or IPSE's or their Affiliate's tax qualified plan, if any, as
soon as legally permitted, Charter shall notify IPWT of the date of termination
of such employee's employment with Charter for any reason.
7.3.4. To the extent not included in the calculation of the Base
Value or the Adjusted Value in accordance with the terms of the Common
Agreement, all claims and obligations under, pursuant to or in connection with
any welfare, medical, insurance, disability or other employee benefit plans of
IPWT, RMG or any of their Affiliates or arising under any Legal Requirement
affecting employees of IPWT, RMG or any of their Affiliates 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 IPWT or its appropriate Affiliate (other than RMG), whether or
not such employees are hired by Charter as of or after the Closing. Charter will
not have or assume any obligation or liability under or in connection with any
such plan of IPWT, RMG or any Affiliate of IPWT or RMG, as appropriate.
7.3.5. To the extent not included in the calculation of the Base
Value or the Adjusted Value in accordance with the terms of the Common
Agreement, IPWT and IPSE will remain solely responsible for all indemnities in
the Common Agreement, and all salaries and all severance, vacation (except for
accrued vacation time and sick time included in the calculation of the Adjusted
Value), medical, holiday, continuation coverage and other compensation or
benefits to which the employees of IPWT, IPSE, RMG or their Affiliates may be
entitled, whether or not such employees may be hired by Charter, IP-I or any
Affiliate of Charter, as a result of their employment by IPWT, IPSE or RMG, or
any Affiliate of IPWT, IPSE or RMG, as appropriate, on or prior to the Closing
Date, the termination of their employment on or prior to the Closing Date, the
consummation of the transactions contemplated hereby or pursuant to any
applicable Legal Requirement or otherwise relating to their employment prior to
the Closing Date. Any liability under WARN with regard to any employee
terminated on or prior to the Closing Date, or not hired by Charter or retained
by RMG on or after the Closing Date, shall, as a matter of contract between the
parties, be the responsibility of IPWT, IPSE or their Affiliates (other than
RMG) to the extent not included in the calculation of the Base Value or the
Adjusted Value in accordance with the terms of the Common Agreement,. Charter
and its Affiliates shall cooperate with IPWT, IPSE, RMG and their Affiliates, if
requested, in the giving of WARN notices.
39
7.3.6. Notwithstanding anything to the contrary herein, Charter
shall (or, following the Closing, shall cause RMG to):
(a) credit each System Employee who is offered on or prior to
the Closing employment by Charter and becomes an employee of Charter after the
Closing Date or who remains a System Employee of RMG after the Closing Date (a
"Hired Employee") the amount of vacation time (to a maximum of four (4) weeks)
and sick time (to a maximum of ten (10) days) accrued by him or her as a System
Employee of IPWT, RMG or IPSE, as appropriate, through and including the Closing
Date to the extent the Adjusted Value is decreased pursuant to Section 2.2(c) of
the Common Agreement in the case of System Employees who become employees of
Charter or its Affiliates or RMG; provided, however, that if any Hired Employee
has accrued vacation time and/or sick time in excess of four (4) weeks or ten
(10) days, respectively, then IPWT shall pay to such employee the amount of such
excess and neither Charter nor RMG shall assume any liability or obligation in
respect of such excess;
(b) permit each Hired Employee to participate in Charter's
employee benefit plans to the same extent as similarly situated employees of
Charter and their dependents are permitted to participate;
(c) give each Hired Employee credit for such employee's past
service with IPWT, IPSE or RMG, as appropriate, and their Affiliates as of the
Closing Date (including past service with any prior owner or operator of the
Systems or the Cable Business) for purposes of eligibility and vesting under
Charter's employee benefit and other plans to the same extent as other similarly
situated employees of Charter;
(d) not subject any Hired Employee to any waiting periods or
limitations on benefits for pre-existing conditions under Charter's employee
benefit plans, including any group health and disability plans, except to the
extent such employees were subject to such limitations under the employee
benefit plans of IPWT, IPSE, RMG or any of their Affiliates; and
(e) credit each Hired Employee under any group health plan for
any deductible amount previously met by such Hired Employee as of the Closing
Date under any of the group health plans of IPWT, IPSE, RMG or any of their
Affiliates.
7.3.7. If Charter or RMG discharges any Hired Employee without cause
within one hundred twenty (120) days after Closing, then Charter shall pay
severance benefits to such Hired Employee in accordance with IPWT's, IPSE's or
RMG's severance benefit plan, as the case may be. For purposes of this Section
7.3.7, "cause" shall have the meaning set forth in Charter's employment
policies, procedures or agreements applicable to Charter's employees who are
situated similarly to the discharged Hired Employee.
7.3.8. If IPWT, IPSE or RMG has, or acquires, a duty to bargain with
any labor organization, then IPWT will, and will cause IPSE or RMG to, as
appropriate, (i) give prompt written notice of such development to Charter,
including notice of the date and place of any negotiating sessions as they are
planned or contemplated and permit Charter to have a representative present at
all negotiating sessions with such labor organization and at all meetings
preparatory thereto (including making Charter's representative a representative
of IPWT's, IPSE's or RMG's delegation if required by the labor organization) and
(ii) not, without Charter's written consent, enter into any Contract with such
labor organization that purports to bind Charter, including any successor clause
or other clause which would have this purpose or effect. IPWT acknowledges and
agrees that Charter has not agreed to be bound, and will not be bound, without
an explicit assumption of such liability or responsibility by
40
Charter, by any provision of any collective bargaining agreement or similar
Contract with any labor organization to which IPWT, IPSE, RMG or any of their
Affiliates are or may become bound.
7.3.9. Nothing in this Section 7.3 or elsewhere in this Agreement
shall be deemed to make any employee of the Systems a third party beneficiary of
this Agreement.
7.3.10. Notwithstanding any other provision of this Agreement, in
respect of wages paid with respect to the 1999 calendar year to employees of
IPWT or IPSE who after the Closing become employees of Charter, the Parties
agree to comply, and to cause their respective Affiliates to comply, with the
alternative procedure set forth in Section 5 of Revenue Procedure 96-60 and
shall cooperate, and shall cause their respective affiliates to cooperate, with
each other in complying with such procedures.
7.4. Leased Vehicles; IPWT Other Capital Leases. To the extent not
included in the calculation of the Base Value or the Adjusted Value in
accordance with the terms of the Common Agreement, except for leases described
in Schedule 4.1(b), IPWT or IPSE will pay the remaining balances on any leases
for vehicles or capital leases included in the Tangible Personal Property and
will deliver title to such vehicles and other Tangible Personal Property to
Charter at the Closing, free and clear of all Liens. At the Closing, RMG will
have good and marketable title to its vehicles and Tangible Personal Property,
free and clear of all Liens.
41
7.5. Required Consents; Franchise Renewal.
7.5.1. Each Party will use its commercially reasonable efforts to
(i) obtain in writing as promptly as possible and at its expense, all of the
Required Consents and any other consent, authorization or approval required to
be obtained by such Party or its Affiliates in connection with the transactions
contemplated by this Agreement, and deliver to the other Party copies of such
Required Consents and such other consents, authorizations or approvals promptly
after they are obtained by such Party and (ii) give any required written notice
in connection with the transactions; provided, that each Party will afford the
other Party the opportunity to review, approve and revise the form of letter or
application proposed to request the Required Consent or form of written notice
prior to delivery to the Third Party or the Affiliate of a Party whose consent
is sought or to whom such notification is required. All documents delivered or
filed with any Governmental Authority or any Person by or on behalf of such
Party pursuant to this Section 7.5.1, when so delivered or filed, will be
correct, current and complete in all material respects. Each Party will
cooperate with the other Party to obtain all Required Consents and no Party
shall intentionally take any action or steps that would prejudice or jeopardize
the obtaining of any Required Consent. IPWT will, and will cause IPSE and RMG
to, not accept or agree or accede to any modifications or amendments to, or the
imposition of any condition to the transfer of, any of the System Franchises,
System Licenses or System Contracts of the Cable Business that are not
acceptable to Charter. Notwithstanding the foregoing, as soon as practicable
after the date of this Agreement (and in no event more than fifteen (15)
Business Days hereafter), each Party will cooperate with the other to complete,
execute and deliver, or cause to be completed, executed and delivered, to the
appropriate Governmental Authority, a FCC Form 394 with respect to each System
Franchise other than any such Governmental Authority that the Parties have
agreed will not initially receive FCC Form 394; provided, that if either Party
subsequently requests that FCC Form 394 be completed, executed and delivered to
any appropriate Governmental Authority that did not initially receive a FCC Form
394 for any System Franchise, then the Parties will cooperate to complete,
execute and deliver a FCC Form 394 to such Governmental Authority as soon as
practicable but in any event within fifteen (15) Business Days after a Party has
made such request. Without the prior consent of the other Party, neither Party
shall agree with any Governmental Authority to extend or to toll the time limits
applicable to such Governmental Authority's consideration of any FCC Form 394
filed with such Governmental Authority.
7.5.2. Each Party will use commercially reasonable efforts to obtain
and cooperate with the other Party to obtain a renewal or extension of any
System Franchise (for a period expiring no earlier than three years after the
Closing Date) for which a valid notice of renewal pursuant to the formal renewal
procedures established by Section 626 of the Cable Act has not been timely
delivered to the appropriate Governmental Authority and no written confirmation
has been received from such Governmental Authority that the procedures
established by Section 626 nonetheless will be applicable with respect to the
renewal or extension of such System Franchise.
7.5.3. Notwithstanding the provisions of Section 7.5.1, no Party
will have any further obligation to obtain Required Consents: (a) with respect
to license agreements relating to pole attachments where the licensing authority
will not consent to an assignment of such license agreement but requires that
Charter enter into a new agreement with such licensing authority, in which case
Charter shall use its commercially reasonable efforts to enter into such
agreement prior to Closing or as soon as practicable thereafter and IPWT will
cooperate with and assist Charter in obtaining such agreements; (b) for any
business radio license or any private operational fixed service (POFS) microwave
license which IPWT reasonably expects can be obtained within one hundred twenty
(120) days after the Closing and so long as a conditional temporary
authorization (for a business radio license) or a special temporary
authorization (for a POFS license) is obtained by Charter under FCC
42
rules with respect thereto; (c) with respect to Contracts evidencing Leased
Property, if, with the consent of Charter, IPWT obtains and makes operational
prior to Closing substitute Leased Property that is reasonably satisfactory to
Charter; (d) with respect to Contracts evidencing leased Tangible Personal
Property that is material to the Cable Business, if, with the consent of
Charter, IPWT obtains and makes operational prior to Closing substitute Tangible
Personal Property that is reasonably satisfactory to Charter; and (e) with
respect to Contracts which are not identified with an asterisk (*) on Schedule
5.3 or 6.3, respectively, if IPWT uses its commercially reasonable efforts to
obtain the Required Consent of the other party to such Contract but fails to
obtain such consent on or prior to Closing.
7.5.4. If and to the extent that IPWT and Charter, or either of
them, fails to obtain all Required Consents identified with an asterisk (*) on
Schedule 5.3 or 6.3 (except IPWT Required Consents for the transfer of Systems
Franchises which shall be governed by Section 7.5.5) on or prior to the Closing
(whether or not Charter or IPWT shall have waived satisfaction of the condition
to Closing set forth in Section 8.1.5 or Section 8.2.5, respectively),
subsequent to the Closing, IPWT with respect to the Systems and Assets will
continue to use commercially reasonable efforts to obtain in writing as promptly
as possible such Required Consents and will deliver copies of the same,
reasonably satisfactory in form and substance, to Charter. The obligations set
forth in this Section will survive the Closing and will not be merged in the
consummation of the transactions contemplated hereby.
7.5.5. If less than all of the Required Consents for the transfer of
Systems Franchises are obtained as of the Closing Date, then subject to the
conditions set forth in Section 4.1(c) of the Common Agreement, the following
will occur:
(a) The Parties shall negotiate in good faith to reach
agreement on one or more operating agreements pursuant to which Charter will
operate any IPWT Assets located in the franchise area for the System Franchise
for which a Required Consent has not been obtained ("Retained Franchise") and
will receive the economic benefits of such operation to the extent not
prohibited under the terms thereof, or other compensation as may be agreed upon,
which operating agreements shall also contain any required signal sharing
arrangements that the Parties, each acting in good faith, may determine to be
necessary (the "Operating Agreements").
(b) At the Closing, IPWT shall transfer, convey and assign
(the "Primary Transfer") the Shares and all of the IPWT System Assets other than
any Retained Franchises.
(c) Following the Closing of the Primary Transfer, the parties
will continue to use commercially reasonable efforts to obtain on an expedited
basis the Required Consents for all Retained Franchises. The Operating
Agreements will contain mutually acceptable terms regarding the post-Closing
exchange or transfer (a "Subsequent Transfer") of the Retained Franchises after
the receipt or failure to receive the Required Consents applicable to such
Retained Franchises.
(d) All references in this Agreement to the Closing and the
Closing Date will mean the Closing and Closing Date of the Primary Transfer
except as specifically provided otherwise in this Section 7.5.5(d). Without
limiting the foregoing, all representations and warranties (except as to those
Required Consents that have not been obtained) made in connection with the
Retained Franchises will be made as of the Closing Date rather than the date of
the Subsequent Transfer, the other covenants in Article 7 will not apply to the
Retained Franchises following the Closing Date, and the Survival Period
applicable under Article 11 for all such representations, warranties and
covenants will accrue from the Closing Date; provided, that the parties will
negotiate in good faith to include appropriate covenants in the Operating
Agreements that will apply to the Retained
43
Franchises following Closing. The closing conditions in Article 8 will not apply
to any Retained Franchise transfer; provided, that the parties will negotiate in
good faith to include appropriate conditions to the later transfer of the
Retained Franchises in the Operating Agreements. Notwithstanding the foregoing,
the adjustments provided for in Article 3 will be made as of the Closing Date
for the Retained Franchises.
(e) If the provisions of this Section 7.5.5 become operative,
the parties agree to use commercially reasonable efforts and act in good faith
in taking such actions and negotiating such additional provisions or other
agreements, including amendments to this Agreement, as may be necessary or
appropriate to carry out the intent of this Section 7.5.5, including keeping
franchise transfers effective.
7.6. Title Commitments and Surveys. Charter will have the option to
obtain, at its own expense, (i) commitments of title insurance ("Title
Commitments") issued by a nationally recognized title insurance company selected
by Charter (the "Title Company") and containing policy limits and other terms
reasonably acceptable to Charter, and photocopies of all recorded items
described as exceptions therein committing to insure (a) fee title in Charter to
each parcel of Owned Property and (b) a leasehold interest in Charter in each
parcel of Leased Property that is the site of a System headend or tower, by
American Land Title Association ("ALTA") (1992) owner's or lessee's policies of
title insurance, and (ii) current ALTA as-built surveys (in accordance with the
Minimum Standard Detail Requirements for Land Title Surveys jointly established
and adopted by ALTA and the American Congress on Surveying and Mapping in 1992)
of each such parcel of Owned Property or Leased Property with monuments placed
at all major corners of the property boundary unless already marked and showing
the location and identification by recorded instrument number of all easements
or rights-of-way burdening or benefiting the property in question and all other
documents and matters referenced as exceptions on the Title Commitment, the
location of all apparent easements and rights-of-way, flood zone designation,
setback lines, if applicable, the location of all substantial visible
improvements on such property and the location of all adjoining streets and
indication of access to a public way such as curb cuts and driveways, in such
form as is reasonably satisfactory to Charter and 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 parties and the Title Company issuing a Title Commitment. If Charter
notifies IPWT within twenty (20) days of this Agreement or, if later, of its
receipt of both the Title Commitments and the Surveys of any Lien (other than a
Permitted Lien) or other matter affecting title to Owned Property or Leased
Property which renders (or presents a material risk of rendering) title to any
parcel of Owned Property not good and marketable or prevents or materially
interferes with (or presents a material risk of preventing or interfering with)
the use of any parcel of Owned Property or Leased Property for the purposes for
which it is currently used or intended to be used by IPWT (each a "Title
Defect"), IPWT will exercise commercially reasonable efforts to remove or, with
the consent of Charter, 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 thirty (30) days after such execution,
Charter and IPWT will each complete and file, or cause to be completed and filed
at its own cost and expense, any notification and report required to be filed
under the HSR Act with respect to the transactions contemplated by this
Agreement and each such filing shall request early termination of the waiting
period imposed by the HSR Act. The Parties shall use their respective
commercially reasonable 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
44
received from any other Governmental Authority in connection with antitrust
matters. The Parties shall use their respective commercially reasonable 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 Party will cooperate to prevent inconsistencies between their
respective filings and between their respective responses to all such inquiries
and responses, 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 shall 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.
7.8. Sales and Transfer Taxes. All sales, use or excise Taxes arising from
or payable by reason of the transfer of any of the Assets ("Transfer Taxes")
will be shared equally by IPWT and Charter. 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 Assets and the Shares also will be shared
equally by IPWT and Charter. Tax Returns required to be filed in respect of
Transfer Taxes ("Transfer Tax Returns") shall be prepared and filed by the Party
that has the primary responsibility under applicable law for filing such
Transfer Tax Returns. If neither Party has primary responsibility for filing a
Transfer Tax Return, then Charter shall be responsible for preparing and filing
any such Transfer Tax Return.
7.9. Programming. Charter will execute and deliver such documents and take
such action as may be reasonably requested by IPWT to enable IPWT, IPSE and RMG
to comply with the requirements of their programming agreements with respect to
divestitures and acquisitions of cable television systems; provided, however,
that neither Charter nor, following the Closing, RMG, will be required to
provide specific programming or channels or to assume any liability with respect
to or in connection with the programming agreements of IPWT, IPSE or any of
their Affiliates, except to the extent included on Schedule 4.1(b).
7.10. Updated Schedules.
(a) Schedule and exhibit references contained in this Agreement are
for convenience only and any matter disclosed pursuant to one section,
subsection or other provision of this Agreement, are deemed disclosed for all
purposes of this Agreement, as long as the disclosure with respect to such
matter provides a truthful, accurate and adequate description of all relevant
aspects of such matter.
(b) Not less than ten (10) Business Days prior to Closing, IPWT will
deliver to Charter revised copies of each of its Schedules, except for Schedule
5.16 as it relates to matters addressed in Sections 5.16.1 and 5.16.2
(regardless of whether the original Schedule is as of a certain date) which
shall have been updated and marked to show any changes occurring between the
date of this Agreement and the date of delivery; provided, however, that such
updates are for informational purposes only, and for purposes of determining
whether IPWT's representations, warranties and covenants in this Agreement are
true and correct at Closing, all references to the Schedules will mean the
version of the Schedules attached to this Agreement on the date of signing.
Notwithstanding the foregoing, if the effect of any such updates to Schedules is
to disclose any one or more additional properties, privileges, rights, interests
or claims, in each case acquired after the date of this Agreement ("New
Properties") as Assets that would have been (if owned on the date of this
Agreement) required
45
by this Agreement to have been disclosed by IPWT in its original Schedules or
that were acquired by IPWT, IPSE or RMG after the date of this Agreement in
breach of this Agreement, then Charter, at or before Closing, will have the
right (to be exercised by written notice to IPWT) to cause any one or more of
such New Properties to be designated as and deemed to constitute Excluded Assets
of IPWT or IPSE for all purposes under this Agreement. If such right is not
exercised by Charter and if Charter waives the applicable condition to Closing
provided in Section 8.1.1 or 8.1.2, Charter shall be deemed to have accepted
such new disclosure with respect to such New Properties and it shall be deemed
incorporated by reference into the Schedules. Notwithstanding anything to the
contrary contained in this Agreement, and except as set forth in the preceding
sentence with respect to New Properties, the waiver of any condition to Closing
by a Party who has knowledge of a breach by the other Party will not be deemed a
waiver of any rights and remedies with respect to such breach under this
Agreement or the Common Agreement.
7.11. Use of Name and Logo. For a period of one hundred eighty (180) days
after the Closing, Charter will be entitled to use the trademarks, trade names,
service marks, service names, logos and similar proprietary rights of IPWT or
IPSE to the extent incorporated in or on the Assets transferred to it at the
Closing on a royalty-free basis, provided that Charter will exercise
commercially reasonable efforts to remove all such names, marks, logos and
similar proprietary rights of the transferor (except to the extent otherwise
permitted by IPWT or IPSE) from the Assets as soon as reasonably practicable,
and in any event within one hundred eighty (180) days, following the Closing.
Notwithstanding the foregoing, nothing in this Section will require Charter to
remove or discontinue using any such name or ▇▇▇▇ that is affixed to converters
or other items in or to be used in customer homes or properties, or as are used
in a similar fashion making such removal or discontinuation impracticable.
7.12. Transitional Billing Services. IPWT will provide Charter, upon
written request delivered a reasonable amount of time in advance and to the
extent reasonably practicable, access to and the right to use its billing system
computers, software and related fixed assets in connection with the Systems for
a period of up to one hundred fifty (150) days following the Closing to allow
for conversion of existing billing arrangements, including billing and related
arrangements regarding internet access services being provided to customers of a
System on the Closing Date ("Transitional Billing Services"). Charter will
notify IPWT at least thirty (30) days prior to the Closing as to whether it
desires Transitional Billing Services from IPWT. All Transitional Billing
Services, if any, that are requested by Charter will be provided on terms and
conditions reasonably satisfactory to each Party; provided, however, that the
amount to be paid by Charter for such Transitional Billing Services will not
exceed the out-of-pocket cost to IPWT of providing such Transitional Billing
Services. IPWT will notify Charter of the cost to IPWT of providing such
Transitional Billing Services within ten (10) Business Days after receiving
Charter's notice requesting the provision of such Transitional Billing Services.
46
7.13. Confidentiality and Publicity.
7.13.1. Prior to the Closing, each Party will keep confidential any
non-public information that such Party may obtain from the other in connection
with this Agreement, and following the Closing, each Party will keep
confidential any non-public information that such Party may obtain from the
other in connection with this Agreement unrelated to the Cable Business, Systems
and Shares transferred by IPWT pursuant to this Agreement as well as any
non-public information in the possession of Charter related to the Cable
Business, Systems and Shares transferred by IPWT to Charter pursuant to this
Agreement (any such information that a Party is required to keep confidential
pursuant to this sentence shall be referred to as "Confidential Information").
Charter will not disclose, and will cause its employees, consultants, advisors
and agents not to disclose, any Confidential 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 controlled Affiliates, directors, officers, employees, consultants, advisors
and agents not to use, such Confidential Information to the detriment of the
other; provided that (i) Charter may use and disclose any such Confidential
Information once it has been publicly disclosed (other than by Charter in breach
of its obligations under this Section) or which rightfully has come into the
possession of Charter (other than from IPWT, IPSE or RMG and other than from
another Person in violation of any duty or obligation of confidentiality) and
(ii) to the extent that Charter may, in the reasonable opinion of its counsel,
be compelled by Legal Requirements to disclose any of such Confidential
Information, Charter may disclose such Confidential 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 Confidential Information compelled to be
disclosed. In the event of termination of this Agreement, Charter will cause to
be delivered to IPWT, IPSE or RMG, and retain no copies of, any documents, work
papers and other materials obtained by Charter or on its behalf from the other,
whether so obtained before or after the execution hereof.
7.13.2. No Party will issue any press releases or make any other
public announcement 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 Party, which consent and approval may
not be unreasonably withheld.
7.13.3. Each Party expressly agrees that, in addition to any other
right or remedy the other may have, such other Party may seek and obtain
specific performance of the covenants and agreements set forth in or made
pursuant to this Section 7.13 and temporary and permanent injunctive relief to
prevent any breach or violation thereof, and that no bond or other security may
be required from such other parties in connection therewith.
7.14. Bulk Transfer. Each Party waives compliance by each other Party with
Legal Requirements relating to bulk transfers applicable to the transactions
contemplated hereby.
7.15. Lien Searches. IPWT will obtain, at its expense, 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 any Owned Property or Tangible Personal Property, and in the state
and county where IPWT's, IPSE's or RMG's principal offices are located,
including copies of all financing statements or similar notices or filings (and
any continuation statements) discovered by such search company.
47
7.16. Further Assurances. At or after the Closing, each Party at the
request of the other Party, will promptly execute and deliver, or cause to be
executed and delivered, to the other Party all such documents and instruments,
in addition to those otherwise required by this Agreement, in form and substance
reasonably satisfactory to the other Party as the other Party 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.
7.17. Post-Closing Cooperation as to Rates.
7.17.1. IPWT will use commercially reasonable efforts to cooperate
with and assist Charter by providing, upon reasonable request, all information
in IPWT's possession (and not previously made available to Charter) relating
directly to the rates set forth on Schedule 5.17.2 or on any of FCC Forms 1200,
1205, 1210, 1220, 1225, 1235 or 1240 or any other FCC Form, that Charter may
reasonably require to justify such rates in response to any inquiry, order or
requirements of any Governmental Authority.
7.17.2. Prior to Closing, IPWT shall not, and shall cause IPSE and
RMG not to, settle or permit to be settled any rate proceeding with respect to
the Systems without the consent of Charter, which consent will not be
unreasonably withheld or delayed, unless the proposed settlement includes
injunctive or other relief that adversely affects the Assets or its ability to
operate such Systems substantially in the manner in which they are operated on
the date of this Agreement (other than changing the rates in question), in which
case consent may be withheld or delayed in Charter's sole discretion.
7.17.3. After the Closing, IPWT will be responsible for and follow
to conclusion any rate order of any Governmental Authority or proceeding with
respect to rates of any of the IPWT Systems charged by it immediately prior to
the Closing; provided, however, that IPWT shall not: (i) agree to any
forward-looking rate adjustment; (ii) submit any refund plan to a Governmental
Authority that would impact any rates charged or impose financial liability on
Charter after the Closing; or (iii) appeal or take any other action with regard
to such proceeding that would impact any rates charged or impose financial
liability on Charter after the Closing, in any case without obtaining the prior
written consent of Charter, which consent shall not be unreasonably withheld.
Each Party will cooperate with and assist the other by providing, upon
reasonable request, all information in its possession (and not previously made
available to the requesting Party) that the requesting Party may reasonably
require to justify rates in response to any inquiry, order or requirements of
any Governmental Authority.
7.17.4. If, following Closing any System is required pursuant to any
Legal Requirement, settlement or otherwise to refund to subscribers any
payments, in whole or in part, made by such subscribers prior to Closing,
including fees for cable television service, equipment charges, late fees and
similar payments, then at the election of Charter and upon IPWT's prior written
consent, which consent shall not be unreasonably withheld: (i) IPWT must fulfill
such refund obligation through a one-time cash payment to subscribers, in which
case IPWT shall provide funds for such payment to Charter, Charter shall
cooperate with IPWT or implement and administer such refund payment through
Charter's billing system, and IPWT shall reimburse Charter for all reasonable
expenses incurred by Charter in connection therewith; (ii) Charter may fulfill
such refund obligation through a cash payment, credit or in-kind or other form
of consideration, at its discretion and subject to any required approval by a
Governmental Authority, and IPWT shall reimburse Charter in the amount of any
payment or in the amount of the cost to Charter of any credit or in-kind or
other form of consideration and all reasonable expenses incurred by Charter in
connection therewith. Without limiting the foregoing,
48
Charter will provide IPWT with all information in Charter's possession that is
reasonably required by IPWT in connection with such reimbursement.
7.17.5. If Charter is permitted following Closing to pass through to
subscribers of the Systems, the amount of any "franchise fees on franchise fees"
paid by IPWT, IPSE or RMG to the appropriate local franchising authority with
respect to the period prior to Closing, Charter agrees that it will collect for
the benefit of IPWT such amounts specified no later than the Six-Month Date as
paid by IPWT, IPSE or RMG and, except as specified below, will promptly remit
such amounts to IPWT; provided, however, that if a local franchising authority
challenges such collection or orders Charter to refund such fees to subscribers,
then Charter shall not remit the fees to IPWT but shall hold such fees in escrow
and the parties will cooperate reasonably and in good faith to challenge such
local franchising authority action. Upon the final resolution of such local
franchising authority action, the escrowed fees shall be released from escrow
and, to the extent not refunded to subscribers, paid over to IPWT. IPWT agrees
to provide Charter with such documentation as necessary to demonstrate its
payment of the "franchise fees on franchise fees" and to enable Charter to
collect the pass through amounts from subscribers.
7.18. Distant Broadcast Signals. Unless otherwise restricted or prohibited
by any Governmental Authority, applicable Legal Requirements or Contract, IPWT
will, and will cause IPSE and RMG to, if requested by Charter, delete prior to
the Closing any distant broadcast signals which Charter determines will result
in unacceptable liability on the part of Charter for copyright payments with
respect to continued carriage of such signals after the Closing; provided,
however, that IPWT may refuse to honor such a request if such deletion could
reasonably be expected to delay or otherwise jeopardize its ability to complete
the transactions contemplated herein.
49
7.19. Environmental Assessment.
7.19.1. IPWT acknowledges and agrees, subject to any enforceable
restrictions placed thereon by a Third Party owner or lessor of any real
property involved, that Charter may commission, at Charter's cost and expense, a
so-called "Phase I" environmental site assessment of the Assets or other
property of RMG (a "Phase I Assessment"). If the Phase I Assessment or any other
information known to IPWT (including information disclosed in connection with
the negotiation of this Agreement or described in the Schedules hereto)
indicates that a so-called "Phase II" assessment or other additional testing or
analysis of the Assets or other property of RMG as Charter may deem appropriate
(a "Phase II Assessment") is advisable, then, subject to any enforceable
restrictions placed thereon by a Third Party owner or lessor of any real
property involved, Charter may elect to cause its agents or representatives to
conduct such testing and analysis. IPWT will use its commercially reasonable
efforts to comply with any reasonable request for information made by Charter or
its agents in connection with any such investigation, but in no event will IPWT
be required under this Section 7.19.1 to disclose any materials constituting
attorney-client privileged communications. IPWT covenants that any response to
any such request for information will be complete and correct in all material
respects. IPWT will afford Charter and its agents or representatives access to
all operations of IPWT, and will cause IPSE and RMG to afford Charter and its
agents or representatives access to all operations of IPSE and RMG, at all
reasonable times and in a reasonable manner in connection with any such
investigation subject to any reasonably required approval of IPWT's, IPSE's or
RMG's landlords, as appropriate, which approval IPWT will, and will cause IPSE
and RMG to, use its commercially reasonable efforts to obtain. Should Charter
commission such an investigation, such investigation will have no effect upon
the representations and warranties made by IPWT to Charter under this Agreement
except that if any Phase I Assessment or Phase II Assessment uncovers an
environmental condition which then comprises a breach of IPWT's representations
or warranties herein and such breach is capable of being cured, IPWT shall be
deemed not to have breached such representation or warranty if IPWT cures such
breach in accordance with the provisions of this Agreement. In the event this
Agreement is terminated or fails to close in accordance with its terms, Charter
agrees to repair any damage or disturbance it causes to the Owned Property or
Leased Property (or, in the case of RMG, other property of RMG) in the course of
such investigative activities by returning such Owned Property or Leased
Property (or, in the case of RMG, other property of RMG) to approximately the
same condition as existed prior to such investigative activities. Charter shall
indemnify, protect, defend and hold IPWT, IPSE, RMG and the Assets (or, in the
case of RMG, other property of RMG) free and harmless from and against any and
all claims, actions, causes of action, suits, proceedings, costs, expenses
(including reasonable attorneys' and consultants' fees and costs), liabilities,
damages, and liens of any type arising directly out of any act or omission of
Charter or any of Charter's representatives on or about the Owned Property or
Leased Property (or, in the case of RMG, other property of RMG) in the course of
such investigative activities. However, neither of the two preceding sentences
shall be interpreted to impose any obligation upon Charter with respect to
Hazardous Substances present at, on, in, under or about, or any conditions
existing on, the Owned Property or Leased Property (or, in the case of RMG,
other property of RMG) at the time of such investigative activities, except to
the extent of Charter's negligence or willful misconduct causes a release of
such Hazardous Substances or otherwise exacerbates any such condition in a
manner that leads to liability under any Environmental Law.
7.19.2. All information collected and generated as a result of the
environmental due diligence authorized by Section 7.19.1 will be subject to the
terms and conditions of Section 7.13 of this Agreement. Charter shall provide to
IPWT copies of all draft and final reports, assessments and other information
composed or compiled by Charter's environmental consultants within five (5)
Business Days after Charter's receipt of copies thereof.
50
7.20. Year 2000 Matters.
7.20.1. Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) "Computer and Other Systems" means any level of hardware
or software, equipment and cable plant, or environmental and security systems
and other facilities used in connection with the Cable Business which are date
dependent or which process date data, including any firmware, embedded systems,
application programs, user interfaces, files and databases, and which might be
adversely affected by any date-related issue or calculation prior to, during or
after January 1, 2000, including any problem related to a leap year.
(b) "Year 2000 High-Level Inventory, Assessment and
Remediation Decisions" means the subject entity's documentation of its Year 2000
inventory, assessment and remediation decisions performed in accordance with its
Year 2000 Plan, consisting of (i) database reports identifying each category of
items inventoried at the subject entity's cable Systems and specifying as
appropriate the manufacturer or vendor and release, version or model number of
each item listed, (ii) risk or critically assessments, (iii) determination and
execution of evaluation approaches with respect to Year 2000 Readiness, (iv)
determination of Year 2000 Readiness based on evaluation approaches employed,
and (v) decisions regarding disposition alternatives (i.e., do nothing, repair,
replace or retire). All such reports have been reviewed at appropriate levels
within the subject entity's organization in accordance with the entity's Year
2000 Plan. Year 2000 High-Level Inventory, Assessment and Remediation Decisions
for IPWT, IPSE and RMG are attached hereto as Schedules 7.20.1(b)-A, 7.20.1(b)-B
and 7.20.1(b)-C, respectively.
(c) "Year 2000 Plan" means the plans adopted in accordance
with IPWT's, IPSE's or RMG's Year 2000 Remediation Program to make Year 2000
Ready by a date no later than August 31, 1999, all of IPWT's, IPSE's or RMG's
respective Computer and Other Systems having a significant impact on IPWT's,
IPSE's or RMG's respective business. Such Year 2000 Plan will include scope of
methodologies and timelines (including objective milestones) for inventory,
assessment, remediation and/or replacement, and testing or evaluation of Third
Party Testing, as applicable, of its Computer and Other Systems having a
significant impact on the Party's business. IPWT's, IPSE's and RMG's Year 2000
Plans are attached hereto as Schedule 7.20.1(c)-A, 7.20.1(c)-B and 7.20.1(c)-C,
respectively.
(d) "Year 2000 Ready" or "Year 2000 Readiness" means that the
referenced component, system, software, equipment or other item is designed or
has been modified to be used prior to, during and after the calendar year 2000
A.D., and that such item will operate at all levels, including microcode,
firmware, application programs, user interfaces, files and databases, during
each such time period without error or interruption relating to, or the product
of, date-related issues or calculations, including date data which represents or
references different centuries or more than one century or leap year.
(e) "Year 2000 Remediation Program" means an enterprise wide
program to make Year 2000 Ready all Computer and Other Systems having a
significant impact on IPWT's, IPSE's or RMG's business, as the case may be. Such
Year 2000 Remediation Program must be conducted by Persons with experience in
issues related to Year 2000 Readiness and such Persons must have organized an
enterprise wide
51
program management office which reports to, or an enterprise wide program
management structure with oversight by, executive level management and the board
of directors (or committee thereof or other governing body of such entity).
7.20.2. Acknowledgments. The Parties acknowledge the following:
(a) IPWT, IPSE, RMG and certain of their Affiliates have
established a Year 2000 Remediation Program.
(b) Charter has reviewed and approved the Year 2000 Plan and
Year 2000 High-Level Inventory, Assessment and Remediation Decisions for each of
IPWT, IPSE and RMG.
(c) Charter acknowledges and agrees with IPWT's, IPSE's and
RMG's preliminary decision to rely on testing of cable plant and related
equipment to be performed by certain cable industry technical and trade
associations, certain critical vendors or other cable operators ("Third Party
Testing"). IPWT, IPSE and RMG will continue to review the progress of such Third
Party Testing plans and results as they become available. Each of IPWT, IPSE and
RMG has developed test methodologies as part of its Year 2000 Plan to address
implementation of additional testing should IPWT, IPSE and/or RMG and Charter
mutually consider such additional testing to be necessary or prudent.
(d) IPWT makes no representation, warranty or guarantee that
its or RMG's Computer and Other Systems will be Year 2000 Ready at the Closing
Date or thereafter.
7.20.3. Covenants. Notwithstanding any other provision set forth in
this Agreement, the Parties agree as follows:
(a) Through the Closing Date, IPWT will, and will cause IPSE
and RMG to, exercise prudent and reasonable care and diligence to take such
actions with respect to the Cable Business when and as required by its approved
Year 2000 Plan.
(b) Through the Closing Date, IPWT will, and will cause IPSE
and RMG to, cooperate with Charter with respect to the nature and results of its
activities relating to its Year 2000 Plan. Such cooperation shall include
providing Charter with any non-confidential information possessed by IPWT or one
of its Affiliates and reasonably requested by Charter regarding the Year 2000
Readiness of any material component of IPWT's, IPSE's or RMG's Computer and
Other Systems having a significant impact on IPWT's, IPSE's or RMG's business.
(c) IPWT shall, and shall cause IPSE and RMG to, deliver to
Charter on or before July 31, 1999, and again on August 31, 1999 (if Closing has
not occurred prior to such date), a statement, certified by an authorized
officer of IPWT, IPSE or RMG, as appropriate, who is responsible for
implementation of its Year 2000 Plan, setting forth in reasonable detail that as
of such date all of the milestones contained in its Year 2000 Plan to be
completed as of such date have been fully completed (or if not, indicating which
such milestones have not been completed and describing the efforts required to
complete the same).
(d) From the date hereof through the Closing Date, Charter
shall have the opportunity to conduct due diligence regarding the Year 2000
Readiness of IPWT's, IPSE's and RMG's Computer and Other Systems having a
significant impact on IPWT's, IPSE's or RMG's business, as the case may be, in
accordance with this Section 7.20.3(d). Charter may conduct a review of the Year
2000 Ready assessment activities with respect to the Computer and Other Systems
having a
52
significant impact on IPWT's, IPSE's or RMG's business, as the case may be,
including inspecting individual headend and office sites and reviewing existing
reports, correspondence and related material regarding the Year 2000 Readiness
of the Computer and Other Systems having a significant impact on IPWT's, IPSE's
or RMG's business, as the case may be. Charter shall conduct no more than three
(3) visits to any site of IPWT, IPSE and RMG, and no single site visit shall
exceed three (3) Business Days. Charter shall give at least five (5) Business
Days written notice prior to any visit to any System facilities and, if Charter
intends during such visit to perform testing at a headend, office or other site
of IPWT, IPSE or RMG, Charter also must provide a description of the scope of
work regarding such testing. If IPWT, IPSE or RMG does not notify Charter in
writing of IPWT's, IPSE's or RMG's objection to such proposed site visit and/or
testing within three (3) Business Days after receipt of such notice, IPWT, IPSE
or RMG, as appropriate, shall be deemed to have consented to the proposed site
visit and any described testing. IPWT shall, and shall cause IPSE and RMG to,
not unreasonably object to Charter's request to perform testing. A
representative of IPWT, IPSE or RMG, as appropriate, shall be present at all
times during any such visit and testing. All activities of Charter regarding its
Year 2000 due diligence shall be conducted to minimize any inconvenience or
interruption of the normal use and enjoyment of the Cable Business and Computer
and Other Systems.
7.21. Satisfaction of Conditions. Each Party will use its commercially
reasonable 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 Article 8.
7.22. Offers. IPWT (and its directors, officers, employees,
representatives and agents) shall not (and shall cause IPSE and RMG not to),
directly or indirectly, (i) offer the Assets, the Cable Business or the Shares
for sale, (ii) solicit, encourage or entertain offers for such Assets, the Cable
Business or the Shares, (iii) initiate negotiations or discussions for the sale
of such Assets, the Cable Business or the Shares or (iv) make information about
such Assets, the Cable Business or the Shares available to any Third Party in
connection with the possible sale of such Assets, the Cable Business or the
Shares prior to the Closing Date or the date this Agreement is terminated in
accordance with its terms.
7.23. Retention of Books and Records. At or prior to the Closing, each
Party shall make arrangements reasonably satisfactory to the other Party to
deliver all such Party's Books and Records not located at any of the offices
included in its Owned Property or Leased Property. Following the Closing, each
Party shall give access to the other Party, its counsel, accountants and other
authorized representatives during normal business hours to such Party's
materials, books, records and documents which relate to the operations of such
Party's Cable Business prior to the Closing Date as may be reasonably necessary
in connection with any legitimate purpose (including the preparation of tax
reports and returns and the preparation of financial statements). Such access
will be subject to reasonable advance written notice, will be conducted in a
manner that is not disruptive of such Party's business, and will be subject to
any other reasonable limitations imposed by such Party. The requesting Party
shall have the right to make copies of such materials at its own expense. If
either Party proposes to destroy or otherwise dispose of any of its materials,
books, records or documents that related to the operations of its Cable Business
prior to the Closing Date, it will give no less than thirty (30) days' advance
written notice to the other Party so as to permit such other Party to exercise
its rights under this Section 7.23.
7.24. Taxes. IPWT and Charter shall reasonably cooperate in connection
with the preparation and filing of any Tax Return for which the other is
responsible for preparing and filing with respect to the Systems. Charter shall
prepare, and timely file, after obtaining the consent of IPWT
53
(which shall have at least ten (10) business days for review), any RMG Tax
Return for any period, or portion thereof, which includes, but does not end on,
the Closing Date.
7.25. Compliance with Covenants of RMG in IP-I/Charter Exchange Agreement;
Access to Information; Information; No Waivers or Amendments without Consent.
IPWT shall cause RMG to comply with and satisfy all covenants of RMG set forth
in the IP-I/Charter Exchange Agreement which are required to be performed by RMG
prior to the Closing of the transactions contemplated by this Agreement. IPWT
shall cause RMG to provide to Charter any and all information and documents (or
access thereto) provided to RMG by IP-I or Brenmor (each as defined in the
Common Agreement) pursuant to the IP-I/Charter Exchange Agreement. IPWT shall
cause RMG not to agree to amend the IP-I/Charter Exchange Agreement (nor to
waive any rights pursuant thereto) without the consent of Charter, which consent
may be withheld in Charter's sole discretion.
8. CONDITIONS PRECEDENT.
8.1. Conditions to Charter's Obligations. The obligations of Charter to
consummate the transactions contemplated by this Agreement will be subject to
the satisfaction, at or before the Closing, of the following conditions, one or
more of which may be waived by Charter:
8.1.1. Accuracy of Representations and Warranties. The
representations and warranties of IPWT in this Agreement and in the Transaction
Documents, without giving effect to any materiality qualifications contained
therein, are true, complete and accurate on and as of the date hereof and at and
as of the Closing with the same effect as if made at and as of the Closing,
except to the extent that all misstatements, omissions and inaccuracies, in the
aggregate, do not have a material adverse effect on RMG, the Assets, the Cable
Business, the operations, condition (financial or otherwise) or results of
operations of the Systems taken as a whole, or on the ability of IPWT to perform
its obligations under this Agreement.
8.1.2. Performance of Agreements. IPWT shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants in this Agreement and in any Transaction Document to
be performed and complied with by it at or before the Closing.
8.1.3. Deliveries. IPWT shall have delivered the items and documents
required to be delivered by it pursuant to this Agreement, including those
required to be delivered to Charter under Section 9.2.
8.1.4. Legal Proceedings. No Legal Requirement of any Governmental
Authority (including any temporary Legal Requirement) shall be in effect which
would prevent or make illegal the consummation of any of the transactions
contemplated by this Agreement or any Transaction Document.
8.1.5. Consents.
(a) Except as otherwise provided in Section 7.5.5, Required
Consents related to all Systems Franchises shall have been obtained in form and
substance reasonably satisfactory to Charter, or the consent of the appropriate
Governmental Authority shall be deemed to have been received in accordance with
Section 617 of the Communications Act (47 U.S.C. ss.537).
54
(b) Except as otherwise provided in Section 7.5.3, Charter
shall have received evidence, in form and substance reasonably satisfactory to
it, that the Required Consents related to the Systems Licenses and the Systems
Contracts identified with an asterisk (*) on Schedule 5.3 have been obtained.
8.1.6. No Material Adverse Changes. There shall not have been any
material adverse change in the Assets or the condition (financial or otherwise)
or operations of the Cable Business or the Systems, taken as a whole, since
December 31, 1998.
8.1.7. Franchise Renewals. Each Systems Franchise for which (a) a
valid notice of renewal pursuant to the formal renewal procedures established by
Section 626 of the Cable Act has not been timely delivered to the appropriate
Governmental Authority, and (b) with respect to which the appropriate
Governmental Authority has not confirmed in writing that the procedures
established by Section 626 nonetheless shall apply to the renewal or extension
of such Systems Franchise, shall have been renewed or extended for a period
expiring no earlier than three years after the Closing Date.
8.1.8. Common Agreement and Related Closings.
(a) The conditions set forth in Section 4.1 of the Common
Agreement shall have been satisfied or waived.
(b) The transactions contemplated by the IP Agreements and the
Redemption Agreement (each as defined in the Common Agreement) shall have been,
or will be, consummated as set forth in Section 4.4 of the Common Agreement,
except to the extent such Agreements are not consummated as a result of a breach
by Charter or any of its Affiliates of its or their obligation to consummate
such transactions.
8.2. Conditions to Obligations of IPWT. The obligations of IPWT to
consummate the transactions contemplated by this Agreement will be subject to
the satisfaction, at or before the Closing, of the following conditions, one or
more of which may be waived by IPWT:
8.2.1. Accuracy of Representations and Warranties. The
representations and warranties of Charter in this Agreement and in the
Transaction Documents, without giving effect to any materiality qualification
contained therein, are true, complete and accurate on and as of the date hereof
and at and as of the Closing with the same effect as if made at and as of the
Closing, except to the extent that all misstatements, omissions and
inaccuracies, in the aggregate, do not have a material adverse effect on Charter
or on the ability of Charter to perform its obligations under this Agreement.
8.2.2. Performance of Agreements. Charter shall have performed in
all material respects all obligations and agreements and complied in all
material respects with all covenants in this Agreement and in any Transaction
Document to be performed and complied with by it at or before the Closing.
8.2.3. Deliveries. Charter shall have delivered the items and
documents required to be delivered by it pursuant to this Agreement, including
those required to be delivered to IPWT under Section 9.3.
8.2.4. Legal Proceedings. No Legal Requirement of any Governmental
Authority (including any temporary Legal Requirement) shall be in effect which
would prevent or make illegal
55
the consummation of any of the transactions contemplated by this Agreement or
any Transaction Document.
8.2.5. Common Agreement and Related Closings.
(a) The conditions set forth in Section 4.2 of the Common
Agreement shall have been satisfied or waived.
(b) The transactions contemplated by the IP Agreements and the
Redemption Agreement (each as defined in the Common Agreement) shall have been,
or will be, consummated as set forth in Section 4.4 of the Common Agreement,
except to the extent such Agreements are not consummated as a result of a breach
by IPWT or its Affiliates of its or their obligation to consummate such
transactions.
9. THE CLOSING.
9.1. The Closing; Time and Place. Subject to the terms and conditions of
this Agreement, the Closing shall be held in San Francisco, California, or as
otherwise agreed, at a place mutually agreed upon by the Parties at 10:00 a.m.,
local time, on the last calendar day of the calendar month in which the
conditions set forth in Article 8 (other than Sections 8.1.3 and 8.2.3) shall
have been satisfied or waived (provided that each Party shall have at least ten
(10) days' prior notice of the scheduled Closing Date in order to prepare for
the Closing) or at such other place, date and time as may be mutually agreed
upon by the Parties (the "Closing Date"). The transactions to be consummated at
Closing shall be deemed to have been consummated as of the Closing Time. If the
Closing Date is not a Business Day, then the Closing Date shall be the
immediately preceding Business Day.
9.2. IPWT's Delivery Obligations. At the Closing, IPWT will deliver or
cause to be delivered to Charter the following:
9.2.1. ▇▇▇▇ of Sale and Assignment and Assumption Agreement. The
▇▇▇▇ of Sale and Assignment and Assumption Agreement in the form of Exhibit
9.2.1.
9.2.2. Deeds. Special warranty deeds in recordable form conveying to
Charter each parcel of Owned Property, and assignments of leases and easements
in recordable form, with respect to Leased Property and Other Real Property
Interests as to which prior assignments into were recorded in the applicable
real estate records.
9.2.3. Lien Releases. Evidence reasonably satisfactory to Charter
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 reasonably satisfactory to Charter effecting such
terminations, releases or waivers.
9.2.4. Vehicle Titles. Title certificates to all vehicles included
among the Assets, endorsed for transfer of title to Charter, and separate bills
of sale therefor or other transfer documentation, if required by the laws of the
states in which such vehicles are titled.
9.2.5. Evidence of Authorization Actions. Certified resolutions or
other evidence reasonably satisfactory to Charter that IPWT has taken all action
necessary to authorize the execution of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated hereby.
56
9.2.6. FIRPTA Certificate. FIRPTA Non-Foreign IPWT Certificate
certifying that IPWT is not a foreign person within the meaning of Section 1445
of the Code reasonably satisfactory in form and substance to Charter.
9.2.7. Officer's Certificate. Charter will have received a
certificate executed by an executive officer of IPWT dated the date of the
Closing, reasonably satisfactory in form and substance to Charter certifying
that the conditions specified in Sections 8.1.1 and 8.1.2 have been satisfied.
9.2.8. Opinions of Counsel. Opinions of Pillsbury Madison & Sutro
LLP, ▇▇▇▇ & ▇▇▇▇▇▇▇ and Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ PLLC, substantially in the forms
attached as Exhibits C.1, C.3 and C.4 to the Common Agreement.
9.2.9. Stock Certificates. Stock certificates representing the
Shares, accompanied by stock powers duly executed in blank or duly executed
instruments of transfer, and all other documents necessary to transfer to
Charter title to the Shares.
9.2.10. Other. Such other documents and instruments as may be
necessary to effect the intent of this Agreement and to consummate the
transactions contemplated hereby.
9.3. Charter's Delivery Obligations. At the Closing, Charter will deliver
or cause to be delivered to IPWT the following:
9.3.1. Cash Consideration. The Adjusted Value will be paid by
Charter to IPWT in accordance with the Common Agreement.
9.3.2. ▇▇▇▇ of Sale and Assignment and Assumption Agreement. The
▇▇▇▇ of Sale and Assignment and Assumption Agreement in the form of Exhibit
9.2.1.
9.3.3. Evidence of Authorization Actions. Certified resolutions of
Charter or other evidence reasonably satisfactory to IPWT that Charter has taken
all action necessary to authorize the execution of this Agreement and the
Transaction Documents and the consummation of the transactions contemplated
hereby.
9.3.4. Officer's Certificate. IPWT will have received a certificate
executed by an executive officer of Charter dated the date of the Closing,
reasonably satisfactory in form and substance to IPWT certifying that the
conditions specified in Sections 8.2.1 and 8.2.2 have been satisfied.
9.3.5. Opinion of Counsel. Opinion of Irell & ▇▇▇▇▇▇▇ LLP,
substantially in the form of Exhibit C.2 to the Common Agreement
9.3.6. Other. Such other documents and instruments as may be
necessary to effect the intent of this Agreement and to consummate the
transactions contemplated hereby.
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 Charter and IPWT;
57
10.1.2. By either Charter or IPWT at any time, if the other is in
material breach or default of any of the other's covenants, agreements or other
obligations herein or in any Transaction Document and the defaulting Party has
failed to cure such breach within thirty (30) days of its receipt of notice of
such breach from another Party;
10.1.3. By either Charter or IPWT 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 the later of January 15, 2000, or
nine (9) months after the date of this Agreement, for any reason other than an
intentional and 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 Charter or IPWT if an injunction, restraining
order or decree of any nature of any Governmental Authority of competent
jurisdiction is issued that prohibits the consummation of any of the
transactions contemplated hereby and such injunction, restraining order or
decree is final and nonappealable; provided, however, that the Party seeking to
terminate this Agreement pursuant to this clause has used commercially
reasonable efforts to have such injunction, order or decree vacated or denied;
or
10.1.5. As otherwise provided in the Common Agreement.
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 7.13, 7.19 and
12.13. Termination of this Agreement pursuant to Sections 10.1.2, 10.1.3, 10.1.4
or 10.1.5 will not limit or impair any remedies that any of IPWT or Charter may
have pursuant to the terms of this Agreement with respect to a breach or default
by the other of its covenants, agreements or obligations under this Agreement.
11. SURVIVAL; REMEDIES.
11.1. Survival of Representations, Warranties, Covenants and Agreements.
The representations, warranties, covenants and agreements of IPWT and Charter in
this Agreement and in the Transaction Documents will survive Closing for a
period of twelve (12) months after the Closing Date. The period of survival of
the representations, warranties, covenants and agreements prescribed by this
Section 11.1 are referred to as the "Survival Period." The liabilities of each
Party under its respective representations, warranties, covenants and agreements
will expire as of the expiration of the Survival Period; provided, however, that
such expiration will not include, extend or apply to (a) any representation,
warranty, covenant or agreement 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), (b) the Party's obligations under Sections 7.13
and 7.23, or (c) the Party's obligations under Sections 7.16, 7.17.1, 7.17.3 and
7.17.4, but only to the extent reasonably practicable.
11.2. Exclusive Remedy. The Parties hereby agree that the rights set forth
in the Common Agreement shall be each Party's sole and exclusive remedies
against the other Party for any claims
58
arising after the Closing Time and relating to any breaches of the
representations, warranties or covenants contained in this Agreement other than
based on fraud.
11.3. Nonrecourse. The Parties agree that, notwithstanding any other
provision in this Agreement or in any Transaction Document, and any rule of law
or equity to the contrary, to the fullest extent permitted by law, each Party's
obligations and liabilities under this Agreement will be nonrecourse to all
direct and indirect equity holders or other owners of such Party, except to the
extent of distributions to such Persons, directly or indirectly, from such Party
that are required to be returned, directly or indirectly, to such Party pursuant
to applicable provisions of law; provided, however, that the foregoing shall not
limit or abridge any Party's indemnification rights or obligations pursuant to
the Common Agreement. "Nonrecourse" means that the obligations and liabilities
are limited in recourse solely to the assets of the Parties (for those purposes,
any capital contribution obligations of the equity holders or other owners of
such Party, or any negative capital account balances of such Persons will not be
deemed be assets of such Party) and are not guaranteed, directly or indirectly
by, or the primary obligations of, any owner of such Party in such capacity, and
no partner, member or other owner in such capacity of any successor entity
(including any limited liability company or partnership), either directly or
indirectly, will be personally liable in any respect (except to the extent of
(i) such Person's interests in the assets of such Party and (ii) any
distribution which has been received by such Person and is required by
applicable law to be returned, directly or indirectly, to such Party) for any
obligation or liability of such Party under this Agreement.
12. MISCELLANEOUS PROVISIONS.
12.1. Parties Obligated and Benefitted. Subject to the limitations set
forth below, this Agreement will be binding upon each of 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 Parties, no Party will
assign any of its rights under this Agreement or delegate any of its duties
under this Agreement, provided that the appropriate Party may assign any or all
of its rights under this Agreement to an Affiliate, provided that such
assignment will not result in any adverse tax consequences to the other Party,
will not give rise to any material requirements for additional Required
Consents, and will not, in the reasonable judgment of the other Party, delay the
Closing.
12.2. Notices. Any notice, request, demand, waiver or other communication
required or permitted to be given under this Agreement to either Party will be
given as set forth in the Common Agreement.
12.3. Right to Specific Performance. Each Party acknowledges that the
unique nature of the Assets and the Shares to be purchased hereunder pursuant to
this Agreement renders money damages an inadequate remedy and the Parties agree
that either Party shall be entitled to pursue specific performance as a remedy
without the requirement of posting a bond or other security therefor.
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.
59
12.6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (other than its rules of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby).
12.7. 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.
12.8. 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 rate per annum publicly announced from time
to time by the Bank of New York as its prime rate (the "Prime Rate") plus two
(2) percentage points, adjusted as and when changes in the Prime Rate are made.
12.9. Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed an original.
12.10. 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 with respect to the subject matter hereof and
supersedes all prior oral or written agreements and understandings with respect
to such subject matter. This Agreement may not be amended or modified except by
a writing signed by all of the Parties.
12.11. Severability. Any term or provision of this Agreement which is
invalid or unenforceable will be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining rights
of the Person intended to be benefitted by such provision or any other
provisions of this Agreement.
12.12. Construction. This Agreement has been negotiated by the Parties and
their respective legal counsel, and legal or other 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.
12.13. 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.
12.14. Risk of Loss. The risk of any loss or damage to the Assets
resulting from fire, theft or other casualty (except reasonable wear and tear)
will be borne by IPWT at all times prior to the Closing Time. In the event of
any such loss or damage after December 31, 1998, IPWT will immediately notify
Charter in writing of that fact. All insurance proceeds paid or payable as a
result of the occurrence of the event resulting in such loss or damage will be
delivered by IPWT to Charter, or the rights thereto will be assigned if not yet
paid over by the insurer to IPWT. The obligations under this Section 12.14 to
pay or assign insurance proceeds will not apply to the extent that any insurance
proceeds are applied to replace or restore such loss or damage prior to Closing.
If, on or prior to the Closing Date, all or any part of or interest in the
Assets is taken or condemned as a result of a Governmental Authority's exercise
of its powers of eminent domain, or if a Governmental Authority having such
power informs IPWT or any Affiliate of IPWT that it intends to
60
condemn all or any part of the Assets (such event being called, in either case,
a "Taking"), then (i) Charter may elect, in the name of IPWT, IPSE or RMG, as
the case may be, to negotiate for, claim, contest and receive all damages with
respect to the Taking, (ii) IPWT will be relieved of its obligation to convey to
Charter those of the Assets that were the subject of the Taking, (iii) at
Closing, IPWT will assign to Charter all of its rights to damages payable as a
result of the Taking, and will pay Charter all damages previously paid to it in
connection with the Taking, and (iv) following the Closing, IPWT will give to
Charter any further assurances of such rights and assignment with respect to the
Taking as Charter reasonably may request from time to time.
12.15. Tax Consequences. No Party makes any representation or warranty,
express or implied, with respect to the Tax implications of any aspect of this
Agreement on any other Party, and each Party expressly disclaims 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.
12.16. Commercially Reasonable Efforts. For purposes of this Agreement,
"commercially reasonable efforts" will not be deemed to require a Party to
undertake extraordinary or unreasonable measures, including the payment of
amounts in excess of normal and usual filing fees and processing fees, if any or
other payments with respect to any Contract that are significant in the context
of such Contract (or significant on the aggregate basis as to all Contracts).
[The remainder of this page intentionally left blank]
61
The parties have executed this Agreement as of the day and year first
above written.
CHARTER COMMUNICATIONS, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
INTERMEDIA PARTNERS OF WEST TENNESSEE,
L.P.
By InterMedia Capital Management, LLC,
Its general partner
By InterMedia Management, Inc.,
Its managing member
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President and
Chief Executive Officer
[Signature Page to Asset and Stock Purchase Agreement
dated as of April 20, 1999 between IPWT and Charter]