EXHIBIT 2.4
LOWER DELAWARE/MARYLAND
================================================================================
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
AMERICAN CABLE TV INVESTORS 5, LTD.
AND
MEDIACOM LLC
DATED AS OF
DECEMBER 24, 1996
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TABLE OF CONTENTS
PAGE
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ARTICLE I................................................................... 1
I. Definitions............................................................ 1
Accountants............................................................ I
Accounts Receivable.................................................... 1
Ad Insertion Agreement................................................. 1
Adjustment Time........................................................ 1
Affiliate.............................................................. 1
Alternative Transaction................................................ 1
Angola Consent......................................................... 2
Assets................................................................. 2
Assumed Liabilities.................................................... 2
Basic Services......................................................... 2
Basic Subscriber Rate.................................................. 2
Best of Seller's Knowledge............................................. 2
Business............................................................... 2
Business Day........................................................... 2
Buyer.................................................................. 2
Buyer Financial Statement.............................................. 3
Cable Act.............................................................. 3
Closing................................................................ 3
Closing Date........................................................... 3
Code................................................................... 3
Communications Act..................................................... 3
Commitment............................................................. 3
Consents............................................................... 3
Copyright Act.......................................................... 3
Deposit................................................................ 3
Employer............................................................... 3
Employer Plans......................................................... 3
Encumbrance............................................................ 3
Environmental Law...................................................... 3
Equipment.............................................................. 4
Equivalent Basic Subscribers........................................... 4
ERISA.................................................................. 4
Escrow Agent........................................................... 4
Escrow Agreement....................................................... 4
Exchange Act........................................................... 5
Excluded Assets........................................................ 5
Excluded Liabilities................................................... 5
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Exhibits............................................................... 5
Expanded Basic Services................................................ 5
FCC.................................................................... 5
Final Adjustments Report............................................... 5
Franchise Areas........................................................ 5
GAAP................................................................... 5
General Partner........................................................ 5
Governmental Authority................................................. 5
Governmental Permits................................................... 5
Hazardous Substances................................................... 6
Homes Passed........................................................... 6
HSR Act................................................................ 6
Initial Termination Date............................................... 6
Intangibles............................................................ 6
IRS.................................................................... 6
Legal Requirement...................................................... 6
Limited Partners....................................................... 6
Management Agreement................................................... 6
Material Adverse Change in the Financial Markets....................... 7
Ocean Pines Consent.................................................... 7
Partnership Agreement.................................................. 7
Pay TV................................................................. 7
Permitted Encumbrances................................................. 7
Person................................................................. 7
Preliminary Adjustments Report......................................... 7
Prime Rate............................................................. 7
Purchase Price......................................................... 7
Real Property.......................................................... 7
Regulatory Requirement................................................. 8
Remediation............................................................ 8
Required Consents...................................................... 8
Schedules.............................................................. 8
Sea Colony Consent..................................................... 8
SEC.................................................................... 8
Securities Act......................................................... 8
Seller................................................................. 8
Seller Contracts....................................................... 8
Seller Financial Statements............................................ 8
Service Area........................................................... 8
System................................................................. 8
Taking................................................................. 8
Tax Return............................................................. 9
Taxes.................................................................. 9
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TCI.................................................................... 9
Telecom Act............................................................ 9
Termination Date....................................................... 9
▇▇▇▇▇▇▇ Properties Consent............................................. 9
Units.................................................................. 9
WARN Act............................................................... 9
ARTICLE II.................................................................. 9
2. Purchase and Sale of Assets............................................ 9
2.1 Purchase and Sale of Assets.................................. 9
2 2 Time and Place of Closing.................................... 10
ARTICLE III................................................................. 10
3. Consideration.......................................................... 10
3.1 Consideration for the Assets................................. 10
3.2 Purchase Price Prorations.................................... 10
3.3 Purchase Price Adjustments................................... 11
3.4 Preliminary and Final Settlements............................ 17
3.5 Disputed Liabilities......................................... 18
3.6 Allocation of Purchase Price................................. 19
ARTICLE IV.................................................................. 19
4. Assumed Liabilities and Excluded Assets................................ 19
4.1 Assignment and Assumption.................................... 19
4.2 Excluded Assets.............................................. 20
ARTICLE V................................................................... 20
5. Representations and Warranties of Seller............................... 20
5.1 Organization and Qualification............................... 20
5.2 Authority and Validity....................................... 21
5.3 Consents and Approvals; No Violation......................... 21
5.4 Complete Systems............................................. 22
5.5 Title........................................................ 22
5.6 Real Property................................................ 22
5.7 Environmental Matters........................................ 23
5.8 Compliance with Law; Governmental Permits.................... 24
5.9 Seller Contracts............................................. 25
5.10 Copyright Compliance......................................... 25
5.11 Financial Statements......................................... 25
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5.12 Legal Proceedings............................................ 26
5.13 Employment Matters........................................... 26
5.14 System Information........................................... 27
5.15 Finders and Brokers.......................................... 28
5.16 Tax Matters.................................................. 28
5.17 Inventory.................................................... 28
5.18 Insurance.................................................... 28
5.19 Accounts Receivable.......................................... 28
5.20 Restoration.................................................. 28
5.21 Equipment.................................................... 28
5.22 Microwave Replacement........................................ 28
ARTICLE VI.................................................................. 29
6. Buyer's Representations and Warranties................................. 29
6.1 Organization and Qualification............................... 29
6.2 Authority and Validity....................................... 29
6.3 No Breach or Violation....................................... 29
6.4 Litigation................................................... 30
6.5 Financial Statements......................................... 30
6.6 Adequate Financing........................................... 30
6.7 Finders and Brokers.......................................... 30
6.8 Qualification of Buyer....................................... 30
ARTICLE VII................................................................. 31
7. Additional Covenants................................................... 31
7.1 Access to Premises and Records............................... 31
7.2 Continuity and Maintenance of Operations; Financial
Statements................................................... 31
7.3 Employee Matters............................................. 33
7.4 Franchise Extensions......................................... 34
7.5 Environmental Report......................................... 34
7.6 Consents..................................................... 35
7.7 HSR Notification............................................. 36
7.8 Notification of Certain Matters.............................. 36
7.9 Risk of Loss; Condemnation................................... 37
7.10 Adverse Changes.............................................. 37
7.11 Action by Limited Partners................................... 37
7.12 No Solicitation.............................................. 38
7.13 Sales and Transfer Taxes and Fees............................ 39
7.14 Commercially Reasonable Efforts.............................. 39
7.15 Title Insurance.............................................. 39
7.16 Non-Competition.............................................. 39
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7.17 Financing Commitment......................................... 40
7.18 Forms 394.................................................... 40
7.19 UCC Lien and Judgment Searches............................... 40
7.20 Seller Financial Statements.................................. 40
7.21 Ad Insertion Agreement....................................... 41
ARTICLE VIII................................................................ 41
8. Conditions Precedent to Obligations of Buyer........................... 41
8.1 HSR Act...................................................... 41
8.2 Governmental or Legal Action................................. 41
8.3 Accuracy of Representations and Warranties................... 41
8.4 Performance of Agreements.................................... 41
8.5 No Material Adverse Change................................... 41
8.6 Consents and Extensions...................................... 42
8.7 Transfer Documents........................................... 42
8.8 Opinions of Seller's Counsel................................. 42
8.9 Discharge of Liens........................................... 42
8.10 Extension of Ad Insertion Agreement.......................... 42
8.11 Opinion of Seller's FCC Counsel.............................. 42
8.12 Additional Documents and Acts................................ 42
8.13 Certificates................................................. 42
ARTICLE IX.................................................................. 43
9. Conditions Precedent to Obligations of Seller.......................... 43
9.1 HSR Act...................................................... 43
9.2 Governmental or Legal Actions................................ 43
9.3 Accuracy of Representations and Warranties................... 43
9.4 Performance of Agreements.................................... 43
9.5 Consents..................................................... 43
9.6 Opinions of Buyer's Counsel.................................. 43
9.7 Limited Partner Approval..................................... 43
9.8 Payment of Purchase Price.................................... 44
9.9 Assumption of Liabilities.................................... 44
9.10 Closing of Another System.................................... 44
9.11 Additional Documents and Acts................................ 44
9.12 Certificates................................................. 44
9.13 Fairness Opinion............................................. 44
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ARTICLE X................................................................... 44
10. Termination............................................................ 44
10.1 Events of Termination........................................ 44
10.2 Manner of Exercise........................................... 46
10.3 Effect of Termination........................................ 46
10.4 Liquidated Damages........................................... 48
ARTICLE XI.................................................................. 48
11. Nature and Survival of Representations, Warranties and Agreements...... 48
11.1 Nature of Representations, Warranties and Agreements......... 48
11.2 Survival of Representations and Warranties................... 48
11.3 Time Limitations............................................. 48
11.4 Limitations as to Amount..................................... 49
ARTICLE XII................................................................. 49
12. Indemnification........................................................ 49
12.1 Rights to Indemnification.................................... 49
12.2 Procedure for Indemnification................................ 50
12.3 Deposit...................................................... 51
ARTICLE XIII................................................................ 51
13. Miscellaneous.......................................................... 51
13.1 Parties Obligated and Benefitted............................. 51
13.2 Press Releases and Confidentiality........................... 51
13.3 Notices...................................................... 52
13.4 Waiver....................................................... 53
13.5 Captions..................................................... 53
13.6 CHOICE OF LAW................................................ 53
13.7 Nonrecourse.................................................. 53
13.8 Terms........................................................ 53
13.9 Rights Cumulative............................................ 53
13.10 Further Actions.............................................. 53
13.11 Time......................................................... 54
13.12 Expenses..................................................... 54
13.13 Specific Performance......................................... 54
13.14 Additional Remedies.......................................... 54
13.15 Waiver of Remedies........................................... 54
13.16 Schedules.................................................... 55
13.17 Counterparts................................................. 55
vi
13.18 Entire Agreement............................................ 55
13.19 Severability................................................ 55
CONTENTS OF OMITTED EXHIBITS
Exhibit A Geographic Areas of Seller's Business
Exhibit B Escrow Agreement
Exhibit C Form of Engagement Letter
Exhibit D Form for Opinion of Seller's Counsel
Exhibit E Form for Opinion of Buyer's Counsel
Exhibit F Form of Opinion of Seller's FCC Counsel
CONTENTS OF OMITTED SCHEDULES
Schedule 1.1 Subscriber Rates
Schedule 1.2 Consents
Schedule 1.3 Equipment
Schedule 1.4 Franchise Areas
Schedule 1.5 Governmental Permits
Schedule 1.6 Permitted Encumbrances
Schedule 1.7 Real Property
Schedule 1.8 Seller Contracts
Schedule 1.9 System
Schedule 4.2 Excluded Assets
Schedule 5.3(b) Violations of Partnership Agreement and Legal Requirements
Schedule 5.4 Complete Systems
Schedule 5.5 Encumbrances on Seller's Title
Schedule 5.9 Seller Contracts
Schedule 5.12 Legal Proceedings
Schedule 5.13(c) Employment Matters
Schedule 5.13(d) Employees
Schedule 5.13(e) Employer Plans
Schedule 5.14 System Information
Schedule 5.16 Taxes
Schedule 6.3(a) Consents to be Obtained or Waived by Closing Date
Registrants agree to furnish supplementally a copy of such Exhibits and
Schedules to the Commission upon request.
vii
ASSET PURCHASE AGREEMENT
------------------------
This Asset Purchase Agreement ("AGREEMENT") is made as of the 24th day
of December, 1996, by and between AMERICAN CABLE TV INVESTORS 5, LTD., a
Colorado limited partnership ("SELLER"), and MEDIACOM LLC, a New York limited
liability company ("BUYER").
RECITALS
--------
A. Seller is engaged in the business of providing cable television
service to subscribers in and around the geographic areas set forth on Exhibit
A.
B. Buyer desires to purchase and Seller desires to sell the assets
of Seller designated in this Agreement used or held for use in connection with
that business, upon the terms and subject to the conditions set forth in this
Agreement.
Accordingly, the parties agree as follows:
ARTICLE I
1. DEFINITIONS.
"ACCOUNTANTS" shall have the meaning set forth in Section 3.4.
"ACCOUNTS RECEIVABLE" shall mean all accounts receivable of Seller
representing amounts earned by Seller in connection with its operation of the
Business through the Adjustment Time.
"AD INSERTION AGREEMENT" shall have the meaning set forth in Section
7.21.
"ADJUSTMENT TIME" shall have the meaning set forth in Section 3.2.
"AFFILIATE" shall mean, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person, with
"control" for such purpose meaning the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting interests,
by contract or otherwise.
"ALTERNATIVE TRANSACTION" shall mean any transaction which could
result in the transfer of control over, or ownership of, all or substantially
all the Assets, including (a) any merger or consolidation of Seller in which
another Person or group of Persons acquires 50% or
more of the partnership interests in Seller or the equity interests of the
surviving entity, as the case may be, (b) any tender offer or exchange offer for
partnership interests in Seller which, if consummated, would result in a Person
or group of Persons (other than the existing partners in such entities as of the
date of this Agreement) owning 50% or more of the partnership interests in
Seller or (c) any sale or other disposition of all or substantially all the
Assets.
"ANGOLA CONSENT" shall mean the consent of Angola-by-the-Bay Property
Owners Association Inc. (or any successor thereto) to permit the transfer to
Buyer of the Agreement to Construct, Maintain and Operate a Cable Television
System, dated September 8, 1975, between Angola-by-the-Bay Property Owners
Association Inc. and CATV Sussex Limited Partnership, as assigned to Seller.
"ASSETS" shall mean all properties, privileges, rights, interests and
claims, real and personal, tangible and intangible, of every type and
description that are owned, leased, used or held for use in the Business in
which Seller has any right, title or interest or in which Seller acquires any
right, title or interest on or before the Closing Date, including Accounts
Receivable, Governmental Permits, Intangibles, Seller Contracts, Equipment and
Real Property but excluding any Excluded Assets and any Assets disposed of by
Seller in the ordinary course of business prior to the Closing Date.
"ASSUMED LIABILITIES" shall have the meaning set forth in Section 4.1.
"BASIC SERVICES" shall mean the lowest tier of cable television
programming sold to subscribers of the System for which a subscriber served by
the System pays a fixed monthly fee to Seller, excluding Expanded Basic
Services, Pay TV and any charges for additional outlets and installation fees
and revenues derived from the rental of converters, remote control devices and
other like charges for equipment.
"BASIC SUBSCRIBER RATE" shall mean, for the System, the predominant
monthly fees and charges derived from the provision of Basic Services to single
family households, as of June 30, 1996, as set forth on SCHEDULE 1.1.
"BEST OF SELLER'S KNOWLEDGE" shall mean the actual knowledge of Seller
after reasonable inquiry of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇.
"BUSINESS" shall mean the cable television business conducted by
Seller through the System in and around the Franchise Areas.
"BUSINESS DAY" shall mean any day other than Saturday, Sunday or a day
on which banking institutions in Denver, Colorado or New York, New York are
required or authorized to be closed.
"BUYER" shall mean the Person identified as such in the preamble to
this Agreement.
2
"BUYER FINANCIAL STATEMENT" shall have the meaning set forth in
Section 6.5.
"CABLE ACT" shall have the meaning set forth in Section 5.8.
"CLOSING" shall mean the consummation of the transactions contemplated
by this Agreement, as described in Article II.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMUNICATIONS ACT" shall have the meaning set forth in Section
5.8(c).
"COMMITMENT" shall have the meaning set forth in Section 7.17.
"CONSENTS" shall mean any registration with, consent or approval of,
notice to, or action by any Person or Governmental Authority required to permit
the transfer of the Assets to Buyer or permit Seller to perform any of its other
obligations under this Agreement, as set forth on SCHEDULE 1.2.
"COPYRIGHT ACT" shall mean Title 17 of the United States Code, as
amended, and all rules and regulations thereunder.
"DEPOSIT" shall have the meaning set forth in Section 3.1.
"EMPLOYER" shall have the meaning set forth in Section 5.13(a).
"EMPLOYER PLANS" shall have the meaning set forth in Section 5.13(e).
"ENCUMBRANCE" shall mean any mortgage, lien, security interest,
security agreement, conditional sale or other title retention agreement,
limitation, pledge, option, charge, assessment, restrictive agreement,
restriction, encumbrance, adverse interest, restriction on transfer or any
exception to or defect in title or other ownership interest (including
reservations, rights of way, possibilities of reverter, encroachments,
easements, rights of entry, restrictive covenants, leases and licenses).
"ENVIRONMENTAL LAW" shall mean any Legal Requirement relating to
pollution or protection of public health, safety or welfare or the environment,
including those relating to emissions, discharges, releases or threatened
releases of Hazardous Substances into the environment (including ambient air,
surface water, ground water or land), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Substances.
3
"EQUIPMENT" shall mean all electronic devices, trunk and distribution
coaxial and optical fiber cable, amplifiers, power supplies, conduit, vaults and
pedestals, grounding and pole hardware, subscriber's devices (including
converters, encoders, transformers behind television sets and fittings), headend
hardware (including origination, earth stations, transmission and distribution
system), test equipment, vehicles and other tangible personal property owned,
leased, used or held for use by Seller in connection with the Business,
including the items described on SCHEDULE 1.3.
"EQUIVALENT BASIC SUBSCRIBERS" shall mean, with respect to each
Franchise Area, as of any date, the number of active customers for Basic
Services either in a single household, a commercial establishment or a multi-
unit dwelling (including a hotel unit); provided, however, that the number of
customers in a commercial establishment or multi-unit dwelling that obtain
service on a "bulk-rate" basis shall be determined for each Franchise Area by
dividing the gross bulk-rate ▇▇▇▇▇▇▇▇ for Basic Services and Expanded Basic
Services (but excluding ▇▇▇▇▇▇▇▇ from a la carte tiers or premium services,
installation or other non-recurring charges, converter rental or any outlet or
connection other than the first outlet or connection, pass-through charges for
sales taxes, line-itemized franchise fees, fees charged by the FCC and the like)
attributable to such commercial establishment or multi-unit dwelling during the
most recent billing period ended prior to the date of calculation (but excluding
▇▇▇▇▇▇▇▇ in excess of a single month's charge) by the rate charged at the date
of determination to individual households for the highest level of Basic
Services and Expanded Basic Services offered in the Franchise Area, such rate
not to be less than the rate for such Franchise Area set forth on SCHEDULE 1.1
(excluding ▇▇▇▇▇▇▇▇ from a la carte tiers or premium services, installation or
other non-recurring charges, converter rental, pass-through charges for sales
taxes, line-itemized franchise fees, fees charged by the FCC and the like). For
purposes of this definition, (i) an "active customer" shall mean, as of any
date, any person, commercial establishment or multi-unit dwelling that is paying
for and receiving Basic Services from the System in that Franchise Area who has
an account that is not more than 60 days past due (except for past due amounts
of $10.00 or less, provided such account is otherwise current) but excluding any
person, commercial establishment or multi-unit dwelling that as of the date of
calculation has not paid in full the charges for at least one month of the
services ordered or who has been obtained as a subscriber by offers made,
promotions conducted or discounts given outside of the ordinary course of
business, or whose account has been compromised or written off other than in the
ordinary course of business consistent with past practices for reasons such as
interrupted service but not for the purpose of making it qualify as an "active
customer," and (ii) the number of days a customer account is past due shall be
calculated from the first day of the period for which the applicable billing
relates.
"ERISA" shall have the meaning set forth in Section 5.13(b).
"ESCROW AGENT" shall have the meaning set forth in Section 3.1.
"ESCROW AGREEMENT" shall have the meaning set forth in Section 3.1.
4
"EXCHANGE ACT" shall mean the Securities and Exchange Act of 1934, as
amended.
"EXCLUDED ASSETS" shall have the meaning set forth in Section 4.2.
"EXCLUDED LIABILITIES" shall have the meaning set forth in Section
4.1(b).
"EXHIBITS" shall mean the exhibits prepared and delivered pursuant to
this Agreement.
"EXPANDED BASIC SERVICES" shall mean any video programming provided
over the System, regardless of service tier, other than Basic Services, any new
product tier and video programming offered on a per channel or per program
basis, for which a subscriber served by the System pays a fixed monthly fee to
Seller, excluding Pay TV and any charges for additional outlets and installation
fees and revenues derived from the rental of converters, remote control devices
and other like charges for equipment.
"FCC" shall have the meaning set forth in Section 5.8(c).
"FINAL ADJUSTMENTS REPORT" shall have the meaning set forth in Section
3.4(b).
"FRANCHISE AREAS" shall mean those areas in which Seller is authorized
under one or more Governmental Permits issued by the applicable franchising
authorities to provide cable television service to subscribers located in such
areas through the ownership and operation of the System, as set forth on
SCHEDULE 1.4.
"GAAP" shall mean generally accepted accounting principles as in
effect in the United States of America on the date of this Agreement.
"GENERAL PARTNER" shall mean IR-TCI Partners V, L.P., the general
partner of Seller.
"GOVERNMENTAL AUTHORITY" shall mean any of the following: (a) the
United States of America; (b) any state, commonwealth, territory or possession
of the United States of America and any political subdivision thereof (including
counties, municipalities and the like); or (c) any agency, authority or
instrumentality of any of the foregoing, including any court, tribunal,
department, bureau, commission or board.
"GOVERNMENTAL PERMITS" shall mean all franchises, authorizations,
permits, licenses, easements, registrations, leases, variances and similar
rights obtained from any Governmental Authority which authorize or are required
in connection with the operation of the Business, as described on SCHEDULE 1.5.
5
"HAZARDOUS SUBSTANCES" shall mean any pollutant, contaminant,
chemical, industrial, toxic, hazardous or noxious substance or waste which is
regulated by any Governmental Authority, including, but not limited to (a) any
petroleum or petroleum compounds (refined or crude), flammable substances,
explosives, radioactive materials or any other materials or pollutants which
pose a hazard or potential hazard to the Real Property or to Persons in or about
the Real Property or cause the Real Property to be in violation of any Legal
Requirement of any Governmental Authority, (b) asbestos or any asbestos-
containing material of any kind or character, (c) polychlorinated biphenyls
("PCBS"), as regulated by the Toxic Substances Control Act, 15 U.S.C. (S) 2601
et seq., (d) any materials or substances designated as "hazardous substances"
-- ---
pursuant to the Clean Water Act, 33 U.S.C. (S) 1251 et seq., (e) "chemical
-- ---
substance," "new chemical substance" or "hazardous chemical substance or
mixture" as defined in the Toxic Substances Control Act, referred to above, (f)
"hazardous substances" pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. (S) 9601 et seq. and (g) "hazardous
-- ---
waste" pursuant to the Resource Conservation and Recovery Act, 42 U.S.C. (S)
6901 et seq.
-- ---
"HOMES PASSED" shall mean, with respect to the System and as of June
30, 1996, the total of (a) the number of single family residences capable of
being serviced without further line construction, (b) the number of units in
multi-family residential buildings capable of being serviced without further
line construction and not then governed by bulk-service agreements and (c) the
number of bulk service agreements regardless of the number of units serviced or
the equivalent billing units.
"HSR ACT" shall have the meaning set forth in Section 7.6.
"INITIAL TERMINATION DATE" shall mean June 30, 1997.
"INTANGIBLES" shall mean all general intangibles, including subscriber
lists, claims (excluding any claims relating to Excluded Assets), patents,
copyrights and goodwill, if any, owned, used or held for use by Seller in
connection with the Business.
"IRS" shall mean the Internal Revenue Service.
"LEGAL REQUIREMENT" shall mean any statute, ordinance, code, law,
rule, regulation, order or other requirement, standard or procedure enacted,
adopted or applied by any Governmental Authority, including judicial decisions
applying common law or interpreting any other Legal Requirement.
"LIMITED PARTNERS" shall mean the Persons who own or hold units of
limited partnership interests in Seller.
"MANAGEMENT AGREEMENT" shall mean the agreement related to the
operation of the System and the other cable systems owned by Seller between
Seller and TCI Cablevision Associates, Inc. (formerly known as ▇▇▇▇▇▇▇ &
Associates, Inc.).
6
"Material Adverse Change in the Financial Markets" shall mean
a change in the U.S. financial markets that has a material adverse effect,
generally, on the ability to obtain debt or equity financing.
"Ocean Pines Consent" shall mean the consent of Ocean Pines
Association (or any successor thereto) to permit the transfer to Buyer of the
Agreement for the Construction and Operation of a Cable Television System, dated
February 1, 1978, between Triad CATV, Inc. and Ocean Pines Association, as
assigned to Seller.
"Partnership Agreement" shall mean the Amended and Restated
Limited Partnership Agreement of Seller, dated as of January 1, 1987, by and
between IR-TCI Partners V, L.P. (formerly known as IR-▇▇▇▇▇▇▇ Partners V, L.P.),
as the general partner, and ▇▇▇▇▇ ▇. ▇▇▇▇▇, as the initial limited partner.
"Pay TV' shall mean premium programming services selected by
and sold to subscribers of the System for monthly fees in addition to the fee
for Basic Services.
"Permitted Encumbrances" shall mean the following: (a) liens
for taxes, assessments and governmental charges not yet due and payable; (b)
zoning laws and ordinances and similar Legal Requirements; (c) rights reserved
to any Governmental Authority to regulate the affected property; (d) as to
leased Assets, interests of lessors and Encumbrances affecting the interests of
the lessors; (e) the Encumbrances described on Schedule 1.6; and (0 any liens,
easements, rights-of-way, servitudes, permits, leases, restrictions and
imperfections or irregularities in title that do not in any material respect,
individually or in the aggregate, affect or impair the value or use of the
affected Asset as it is currently being used by Seller.
"Person" shall mean any natural person, corporation,
partnership, trust, unincorporated organization, association, limited liability
company, Governmental Authority or other entity.
"Preliminary Adjustments Report" shall have the meaning set
forth in Section 3.4(a).
"Prime Rate" shall mean the rate of interest quoted from time
to time in The Wall Street Journal as the prime rate.
"Purchase Price" shall have the meaning set forth in Section
3.1.
"Real Property" shall mean all Assets consisting of interests
in real property (including, to the extent applicable, improvements, fixtures
and appurtenances), including fee and leasehold interests, as described on
Schedule 1.7.
7
"Regulatory Requirement" shall mean any filing required
pursuant to the Securities Act, the Exchange Act, the HSR Act, state securities
laws (including, but not limited to, state "blue sky" laws) and state corporate
laws (including, but not limited to, takeover statutes).
"Remediation" shall have the meaning set forth in Section 7.5.
"Required Consents" shall mean the Consents designated as such
on Schedule 1.2 by an asterisk.
"Schedules" shall mean the schedules prepared and delivered
pursuant to this Agreement.
"Sea Colony Consent" shall mean an agreement between Seller
and Sea Colony Associates, Inc. (or any successor thereto), assignable to Buyer,
to provide Basic Services to the Units with an expiration date no earlier than
the second anniversary of the Closing Date.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Seller" shall mean the Person indicated as such in the
preamble to this Agreement.
"Seller Contracts" shall mean all contracts, agreements and
leases, other than those that are Governmental Permits, to which Seller is a
party and pertain to the ownership, operation or maintenance of the Assets or
the Business, including those described on Schedule 1.8.
"Seller Financial Statements" shall have the meaning set forth
in Section 5.11.
"Service Area" shall mean any area within a Franchise Area
where businesses, residences, multi-family dwellings, hotels, motels, trailers
and other users are capable of being serviced with terrestrial cable television
services without further line construction as of the Closing Date excluding
those areas where TCI is providing terrestrial cable television services by
means of cable, microwave, fiber optics, satellite receivers or broadcasts as of
the Closing Date.
"System" shall mean a cable television reception and
distribution system operated in the conduct of the Business, consisting of one
or more headends, subscriber drops and associated electronic and other
equipment, and which is, or is capable of being without modification, operated
as an independent system without interconnections to other systems, as set forth
on Schedule 1.9.
"Taking" shall have the meaning set forth in Section 7.7(b).
8
"Tax Return" shall mean any return, report, information return
or other document (including any related or supporting information) filed or
required to be filed with any taxing authority in connection with the
determination, assessment, collection, administration or imposition of any
Taxes.
"Taxes" shall mean all taxes, charges, fees, liens, imposts,
duties or other assessments including, but not limited to, income, withholding,
excise, employment, property, sales, franchise, use and gross receipt taxes,
imposed by the United States or any state, county, local or foreign government
or any subdivision thereof. Such term shall also include any interest, penalties
or additions attributable to such assessments.
"TCI" shall mean TCI Communications, Inc., a Delaware
corporation.
"Telecom Act" shall have the meaning set forth in Section
5.8(e).
"Termination Date" shall mean July 22, 1997; provided however,
Seller shall have the right upon five days notice to Buyer, to extend the
Termination Date to a date designated in such notice, which date shall in no
event be later than September 22, 1997; provided further, Seller shall have the
right, upon five days notice to Buyer to further extend the Termination Date to
a date designated in such notice, which date shall in no event be later than
December 19, 1997.
"▇▇▇▇▇▇▇ Properties Consent" shall mean the consent of
Pot-Nets, Inc. (or any successor thereto) to permit the transfer to Buyer of the
Agreement Granting a Cable Television Franchise, dated as of November 20, 1973,
by and between CATY Sussex Company and Pot-Nets, Inc., as assigned to Seller.
"Units" shall mean the number of Equivalent Basic Subscribers
attributable to the units of Sea Colony determined in accordance with the
definition of "Equivalent Basic Subscribers".
"WARN Act" shall mean the Worker Adjustment and Retraining
Notification Act.
ARTICLE II
2. Purchase and Sale of Assets.
2.1 Purchase and Sale of Assets. Subject to the satisfaction
of the conditions to each party's obligations set forth in Articles VIII and IX
(or, with respect to any condition not satisfied, the waiver thereof by the
party or parties for whose benefit the condition exists), Seller shall sell,
assign, transfer and deliver to Buyer all of Seller's right, title and interest
in, and Buyer shall purchase, acquire, accept and pay for, the Assets.
9
2.2 Time and Place of Closing. Subject to the terms and
conditions of this Agreement, the Closing shall take place at 10:00 a.m. New
York City time on a date specified by notice from Seller or Buyer to the other
(but shall not in any event be prior to the satisfaction or waiver of the
conditions to Closing as set forth in Articles VIII and IX or no later than ten
Business Days after satisfaction or waiver of all conditions to Closing as set
forth in Articles VIII and IX), in New York, New York at the offices of ▇▇▇▇,
Scholer, Fierman, ▇▇▇▇ & Handler, LLP. or at such other time or place as the
parties may agree; provided, however, the date specified in such notice shall
not be less than 10 nor more than 30 days after the date of such notice (unless
the Termination Date would occur within such 10-day period, in which event
Seller or Buyer shall have the right to designate any date prior to the
Termination Date as the date of Closing); provided, further, that if Seller
gives Buyer notice designating a date for Closing prior to June 23, 1997 and
Buyer has not yet obtained the Commitment, Buyer shall have the right to
designate the date for Closing, which shall be on or prior to June 23, 1997.
ARTICLE III
3. Consideration.
3.1 Consideration for the Assets. The aggregate
consideration for the Assets shall consist of (i) an amount equal to
$43,100,000, subject to proration as set forth in Section 3.2 and adjustment as
set forth in Section 3.3 (the "Purchase Price") and (ii) the assumption by Buyer
of the Assumed Liabilities. The Purchase Price shall be payable as follows: (a)
$1,077,500 (the "Deposit"), payable concurrently with the execution and delivery
of this Agreement in cash by means of wire or interbank transfer in immediately
available funds to the account of The Chase Manhattan Bank (the "Escrow Agent"),
to be held, administered and distributed for the respective benefits of the
parties hereto in accordance with the terms of this Agreement and the Escrow
Agreement among Seller, Buyer and the Escrow Agent dated the date of this
Agreement (the "Escrow Agreement") in the form set forth as Exhibit B attached
hereto, and (b) $42,022,500, as adjusted by the prorations and adjustments set
forth in the Preliminary Adjustments Report but subject to Sections 3.3(c), (d)
and (e) and to the last sentence of Section 3.4(a), payable by Buyer to Seller,
or Seller's designee, at Closing in cash by means of wire or interbank transfer
in immediately available funds. At Closing, Seller and Buyer shall direct the
Escrow Agent to release any interest, earnings and gains then accrued on the
Deposit to Buyer, or Buyer's designee, in accordance with the terms of the
Escrow Agreement and Escrow Agent shall retain the Deposit, in accordance with
the terms of the Escrow Agreement, for the satisfaction of indemnification
claims by Buyer against Seller, if any, pursuant to Article XII.
3.2 Purchase Price Prorations. (a) All revenues (other than
Accounts Receivable being purchased by Buyer hereunder) and all expenses arising
from the operations of the Business up until 12:01 a.m. on the Closing Date (the
"Adjustment Time"), including, but not limited to, pole rental fees, rental or
other charges payable in respect of the Seller Contracts, sales and use taxes
payable with respect to cable television service and equipment (which shall not
include sales or use taxes arising out of the consummation of the transaction
contemplated
10
hereunder), power and utility charges, real and personal property taxes and
assessments levied against the Assets, applicable franchise, copyright or other
fees, sales and service charges, wages, payroll taxes and payroll expenses
(including accrued vacation pay except to the extent a Purchase Price adjustment
in Buyer's favor is made under Section 3.3) of employees of Employer who
primarily perform services in connection with the operation of the Business who
are employed by Buyer as of the Closing, and other prepaid and deferred items
shall be prorated between Buyer and Seller as of the Adjustment Time in
accordance with GAAP and the principle that Seller shall receive all revenues
(other than Accounts Receivable being purchased by Buyer hereunder) and shall be
responsible for all expenses, costs and liabilities allocable to the period
prior to the Adjustment Time and Buyer shall receive all revenues and shall be
responsible for all expenses, costs and liabilities allocable to the period
after the Adjustment Time.
(b) The amount of each item of revenue prorated under
subsection (a) above, to a party which has not received, and under the terms of
this Agreement will not receive, such revenue shall be deemed a charge against
the other party. The amount of any item of cost or expense prorated under
subsection (a) above to a party which has not paid, and under the terms of this
Agreement will not pay, such cost or expense shall be deemed a charge against
such party. If the aggregate charges allocated to Seller as set forth in this
Section 3.2(b) exceed the aggregate charges allocated to Buyer as set forth in
this Section 3.2(b), the Purchase Price shall be decreased by an amount equal to
the difference between the aggregate charges allocated to Seller and the
aggregate charges allocated to Buyer. If the aggregate charges allocated to
Buyer as set forth in this Section 3.2(b) exceed the aggregate charges allocated
to Seller as set forth in this Section 3.2(b), the Purchase Price shall be
increased by an amount equal to the difference between the aggregate charges
allocated to Buyer and the aggregate charges allocated to Seller.
3.3 Purchase Price Adjustments. (a) The Purchase Price shall
be increased by an amount equal to the aggregate of the following:
(i) (a) 100% of the face amount of all Accounts
Receivable which, as of the Closing Date, are outstanding for a period of not
more than 30 days after their respective invoice dates and (b) 85% of the face
amount of all Accounts Receivable which, as of the Closing Date, are outstanding
for a period of more than 30 days but not more than 60 days after their
respective invoice dates; and
(ii) to the extent not included in the
prorations to the Purchase Price as set forth in Section 3.2, the dollar amount
of all advance payments to, or deposits with, third parties relating to the
Business which, as of the Closing Date, are for the account of Seller or are
security for Seller's performance of its obligations under any agreement
relating to the Business or any Assets, including, but not limited to, deposits
made with lessors and deposits for utilities.
(b) The Purchase Price shall be decreased by an amount
equal to the sum of (i) the dollar amount of the remaining balance, as of the
Closing Date, of all advance payments to, or monies of third parties on deposit
with, Seller relating to the Business, including
11
advance payments and deposits by customers served by the Business for
converters, encoders, decoders, cable service and related sales, (ii) the dollar
amount of accrued vacation pay of employees of Employer identified on Schedule
5.13(d) who are employed by Buyer as of the Closing and (iii) if the average of
the aggregate number of Equivalent Basic Subscribers served by the System
(excluding the Units) as of the Closing Date and as of the first day of the
month for the eleven months prior to the month during which the Closing occurs
(the "Subscriber Average") is less than 27,582, an amount equal to (x) the
difference between 27,582 and the Subscriber Average times (y) $1,507.
(c)(i) If as of the Closing Date Seller has obtained
the Sea Colony Consent, then no adjustment shall be made to the Purchase Price
other than as provided for in Sections 3.2 and 3.3(a) and (b); provided,
however, that if the weighted average rate charged under such agreement for the
provision of Basic Services (the "Closing Rate") is less than $13.09 per unit of
Sea Colony per month, the Purchase Price shall be decreased by an amount equal
to (x) $1,534,126 (the "Sea Colony Adjustment") minus (y) the Units calculated
using the Closing Rate times $1,507.
(ii) If as of the Closing Date, (x) Seller has not
obtained the Sea Colony Consent and (y) Seller has received written notice from
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Associates, Inc. (or any successor thereto) that Buyer will not
be permitted to provide Basic Services to the Units after the Closing Date (a
"Sea Colony Notice"), then the Purchase Price shall be decreased by an amount
equal to the Sea Colony Adjustment.
(iii) If as of the Closing Date Seller (x) has not
obtained the Sea Colony Consent, (y) has not received a Sea Colony Notice and
(z) is not providing Basic Services to the Units, then the Purchase Price shall
be decreased by an amount equal to the Sea Colony Adjustment and at Closing
Buyer shall place into escrow an amount equal to the Sea Colony Adjustment.
(iv) If as of the Closing Date Seller (x) has not
obtained the Sea Colony Consent, (y) has not received a Sea Colony Notice and
(z) is providing Basic Services to the Units, then at Closing Seller shall place
into escrow a portion of the Purchase Price equal in amount to the Sea Colony
Adjustment.
(v) Any funds placed into escrow pursuant to
paragraph (iii) or (iv) of this Section 3.3(c) shall be released (together with
any interest earned thereon) as follows:
(x) if Buyer does not provide, or ceases to provide, Basic Services to
the Units prior to the first anniversary of the Closing Date and does not
commence or recommence providing such services for a continuous period of 180
days, then on the 181st day:
(i) to Seller, an amount equal to 50% of any revenue
attributable to the provision of cable services to the Units for the period from
the Closing Date to the date Buyer ceases providing such services; and
12
(ii) the balance to Buyer;
provided, that if within 180 days after the first date on which Buyer does not
provide, or ceases to provide, Basic Services to the Units, Buyer commences or
recommences providing such services to the Units, then on the fifth Business Day
after Buyer commences or recommences providing such services:
(A) to Buyer, an amount equal to 50% of any loss in revenue
to Buyer attributable to cable services to the Units for the period from the
date Buyer does not provide or ceases to provide Basic Services to the Units to
the date of commencement of such services based on an amount per month equal to
the average monthly revenue received or accrued (in accordance with GAAP) by
Seller for the Units for the twelve months prior to Closing (the "Units
Revenue"); and
(B) the balance to Seller;
provided, further, that if the rate charged by Buyer for the provision of Basic
Services (the "New Rate") is less than $13.09 per unit of Sea Colony per month,
then on the fifth Business Day after such agreement:
(1) to Buyer, an amount equal to 50% of any loss in revenue
attributable to cable services to the Units for the period from the date Buyer
does not provide or ceases to provide Basic Services to the Units to the date of
commencement of such services based on an amount per month equal to the Unit
Revenue plus an amount equal to (a) the Sea Colony Adjustment minus (b) the
Units calculated using the New Rate times $1,507; and
(2) the balance to Seller;
(y) if Buyer enters into a written agreement to provide Basic Services
to the Units, then on the fifth Business Day after such agreement:
(i) to Buyer, an amount equal to 50% of any loss in revenue
to Buyer attributable to cable services to the Units for the period from the
date Buyer does not provide or ceases to provide Basic Services to the Units to
the date of commencement of such services based on an amount per month equal to
the Units Revenue; and
(ii) the balance to Seller;
provided, however, that if the New Rate charged under Buyer's agreement for the
provision of Basic Services is less than $13.09 per unit of Sea Colony per
month, then on the fifth Business Day after such agreement:
(A) to Buyer, an amount equal to 50% of any loss in revenue
attributable to cable services to the Units for the period from the date Buyer
does not provide or ceases to provide
13
Basic Services to the Units to the date of commencement of such services based
on an amount per month equal to the Units Revenue plus an amount equal to (a)
the Sea Colony Adjustment minus (b) the Units calculated using the New Rate
times $1,507; and
(B) the balance to Seller; or
(z) if Buyer commences or recommences providing Basic Services to the
Units without having entered into an agreement therefor and, on the first
anniversary of the Closing Date, is regularly so providing such services, then,
on the first anniversary of the Closing Date:
(i) to Buyer, an amount equal to 50% of any loss in revenue
to Buyer attributable to cable services to the Units for the period from the
date Buyer does not provide or ceases to provide Basic Services to the Units to
the date of commencement or recommencement of such services based on an amount
per month equal to the Units Revenue; and
(ii) the balance to Seller;
provided, however, that if the New Rate actually charged by Buyer for the
provision of Basic Services is less than $13.09 per Unit of Sea Colony per
month, then
(A) to Buyer, 50% of any loss in revenue to Buyer
attributable to cable services to the Units for the period from the date Buyer
does not provide or ceases to provide Basic Services to the Units to the date of
commencement or recommencement of such services based on an amount per month
equal to the Units Revenue, plus an amount equal to (a) the Sea Colony
Adjustment minus (b) the Units calculated using the New Rate times $1,507; and
(B) the balance to Seller.
(vi) If the Subscriber Average calculated as of the
earlier of the Closing Date and April 30, 1997 is greater than 27,582, then any
adjustment to the Purchase Price and any amount to be placed into escrow by
Seller or Buyer pursuant to paragraphs (iii) and (iv) of this Section 3.3(c)
shall be decreased by an amount equal to the difference between 27,582 and the
Subscriber Average calculated as of the earlier of the Closing Date and April
30, 1997, times $1,507.
(vii) If (A) the Purchase Price is adjusted pursuant
to paragraph (ii) of this Section 3.3(c) or any portion of the escrow funds are
released to Buyer pursuant to Section 3.3(c)(v)(x)(ii) and (B)(i) on or prior to
the first anniversary of the Closing Date Buyer enters into a written agreement
to commence or recommence providing Basic Services to the Units or (ii) on the
first anniversary of the Closing Date Buyer is in fact regularly providing such
services (whether or not pursuant to an agreement), then Buyer shall pay to
Seller an amount equal to (i)(a) the amount of the Sea Colony Adjustment or (b)
if the New Rate is less than $13.09 per unit of Sea Colony per month, an amount
equal to the Units calculated using the New Rate times $1,507 minus (ii) 50% of
any loss in revenue to Buyer attributable to cable services to the Units
14
for the period from the date Buyer does not provide or ceases to provide Basic
Services to the Units to the date of commencement of such services based on an
amount per month equal to the Units Revenue; such payment shall be made to
Seller in cash (by means of interbank transfer in immediately available funds)
within 10 Business Days of commencement of such services but in no event later
than the first anniversary of the Closing Date.
(d) If as of the Closing Date Seller has not
obtained the ▇▇▇▇▇▇▇ Properties Consent, then at Closing Seller shall place into
escrow a portion of the Purchase Price equal to (a) the average number of
Equivalent Basic Subscribers that are the subject of the ▇▇▇▇▇▇▇ Properties
Consent included in the Subscriber Average times (b) $1,507 (the "▇▇▇▇▇▇▇
Properties Adjustment"). The ▇▇▇▇▇▇▇ Properties Adjustment shall be released
from escrow (together with any interest earned thereon) as follows:
(x) if Buyer does not provide, or ceases to provide, Basic Services to
the ▇▇▇▇▇▇▇ Properties Subscribers and does not commence or recommence providing
such services for a continuous period of 45 days, then on the 46th day:
(i) to Seller, an amount equal to 50% of any revenue
attributable to the provision of cable services to the subscribers that are the
subject of the ▇▇▇▇▇▇▇ Properties Consent (the "▇▇▇▇▇▇▇ Properties Subscribers")
from the Closing Date to the date Buyer ceases providing such services; and
(ii) the balance to Buyer;
(y) if Seller obtains the ▇▇▇▇▇▇▇ Properties Consent or Buyer enters
into a written agreement to provide Basic Services to the ▇▇▇▇▇▇▇ Properties
Subscribers, then on the fifth Business Day after the date of such agreement:
(i) to Buyer, an amount equal to 50% of any loss in revenue
attributable to cable services to the ▇▇▇▇▇▇▇ Properties Subscribers for the
period from the date Buyer does not provide or ceases to provide Basic Services
to the ▇▇▇▇▇▇▇ Properties Subscribers to the date of commencement of such
services based on an amount per month equal to the average monthly revenue
received or accrued (in accordance with GAAP) by Seller for the ▇▇▇▇▇▇▇
Properties Subscribers for the twelve months prior to Closing (the "▇▇▇▇▇▇▇
Revenue") and
(ii) the balance to Seller; or
(z) if not theretofor released, then on the date which is the first
anniversary of the Closing, to Seller.
If (A) any portion of the ▇▇▇▇▇▇▇ Properties Adjustment is released from escrow
to Buyer pursuant to Section 3.3(d)(x)(ii) and (B)(i) on or prior to the first
anniversary of the Closing Buyer enters into a written agreement to commence
providing Basic Services to the ▇▇▇▇▇▇▇ Properties Subscribers or (ii) on the
first anniversary of the Closing Date Buyer is in fact
15
regularly providing such services (whether or not pursuant to an agreement),
then Buyer shall pay to Seller an amount equal to (i) the ▇▇▇▇▇▇▇ Properties
Adjustment minus (ii) 50% of any loss of revenue attributable to cable services
to the ▇▇▇▇▇▇▇ Properties Subscribers for the period from the date Buyer does
not provide or ceases to provide such services to the date of commencement or
recommencement of such services based on an amount per month equal to the
▇▇▇▇▇▇▇ Revenue.
(e) If as of the Closing Date Seller has not
obtained the Angola Consent, then at Closing Seller shall place into escrow a
portion of the Purchase Price equal to (a) the average number of Equivalent
Basic Subscribers that are the subject of the Angola Consent included in the
Subscriber Average times (b) $1,507 (the "Angola Adjustment"). The Angola
Adjustment shall be released from escrow (together with any interest earned
thereon) as follows:
(x) if Buyer does not provide, or ceases to provide, Basic Services to
the Angola Subscribers and does not commence or recommence providing such
services for a continuous period of 45 days, then on the 46th day:
(i) to Seller, an amount equal to 50% of any revenue
attributable to the provision of cable services to the subscribers that are the
subject of the Angola Consent (the "Angola Subscribers") from the Closing Date
to the date Buyer does ceases providing such services; and
(ii) the balance to Buyer;
(y) if Seller obtains the Angola Consent or Buyer enters into a
written agreement to provide Basic Services to the Angola Subscribers, then on
the fifth Business Day after the date of such agreement:
(i) to Buyer, an amount equal to 50% of any loss in revenue
attributable to cable services to the Angola Subscribers for the period from the
date Buyer does not provide or ceases to provide Basic Services to the Angola
Subscribers to the date of commencement of such services based on an amount per
month equal to the average monthly revenue received or accrued (in accordance
with GAAP) by Seller for the Angola Subscribers for the twelve months prior to
Closing (the "Angola Revenue"); and
(ii) the balance to Seller; or
(z) if not theretofor released, then on the date which is the first
anniversary of the Closing, to Seller.
If (A) any portion of the Angola Adjustment is released from escrow to Buyer
pursuant to Section 3.3(e)(x)(ii) and (B)(i) on or prior to the first
anniversary of the Closing Buyer enters into a written agreement to commence
providing Basic Services to the Angola Subscribers or (ii) on or prior to the
first anniversary of the Closing Date Buyer is in fact regularly providing such
16
services (whether or not pursuant to an agreement), then Buyer shall pay to
Seller an amount equal to (i) the Angola Adjustment minus (ii) 50% of any loss
of revenue attributable to cable services to the Angola Subscribers for the
period from the date Buyer does not provide or ceases to provide such services
to the date of commencement or recommencement of such services based on an
amount per month equal to the Angola Revenue.
3.4 Preliminary and Final Settlements. Preliminary and final
adjustments to the Purchase Price will be determined as follows:
(a) At least ten Business Days prior to the Closing
Date, Seller will deliver to Buyer a report (the "Preliminary Adjustments
Report"), prepared in good faith and on a reasonable basis, setting forth in
reasonable detail Seller's estimate as of the Closing Date of the prorations set
forth in Section 3.2 and the adjustments set forth in Section 3.3. The
Preliminary Adjustments Report shall be certified by an authorized officer of
the general partner of the General Partner to have been prepared in good faith
and on a reasonable basis. Seller shall provide Buyer with such information as
Buyer may reasonably request to verify the proposed prorations and adjustments.
If Buyer gives notice to Seller that it reasonably believes that any of the
proposed prorations or adjustments are materially incorrect and the parties are
unable to resolve the dispute prior to Closing, the disputed amount shall be
deposited with the Escrow Agent, to be administered and distributed in
accordance with the terms of this Agreement and the Escrow Agreement, pending
final resolution of the adjustments pursuant to Section 3.4(b).
(b) Within 60 days after the Closing Date, Seller
will deliver to Buyer a report (the "Final Adjustments Report"), prepared in
good faith and on a reasonable basis, setting forth in reasonable detail the
final determination of the prorations set forth in Section 3.2 and the
adjustments set forth in Section 3.3. The Final Adjustments Report shall make
such changes to the Preliminary Adjustments Report as are necessary to cover
those prorations or adjustments which (i) were estimated or were not calculated
as of the Closing Date in the Preliminary Adjustments Report and (ii) were
adjusted in the Preliminary Adjustments Report and which require subsequent
adjustment. The Final Adjustments Report shall be certified by an authorized
officer of the general partner of the General Partner to be true, complete and
correct as of the date it is delivered.
Buyer shall provide Seller with reasonable access to all
records which Buyer has in its possession and which are necessary for Seller to
prepare the Final Adjustments Report. Seller shall provide Buyer with reasonable
access to all records which Seller has in its possession which are necessary for
Buyer to review and verify the Final Adjustments Report.
(c) Within 30 days after receipt of the Final
Adjustments Report, Buyer shall review the Final Adjustments Report and notify
Seller whether or not Buyer accepts all or any of the prorations and adjustments
set forth on the Final Adjustments Report. If Buyer accepts the Final
Adjustments Report with respect to all prorations and adjustments contained
therein, Buyer or Seller, as appropriate, shall, within ten Business Days of
such acceptance, make the following payments: (i) if the Purchase Price
calculated based on the Final Adjustments
17
Report is greater than the Purchase Price calculated based on the Preliminary
Adjustments Report, Buyer shall pay such difference to Seller in cash by wire or
interbank transfer in immediately available funds, or (ii) if the Purchase Price
calculated based on the Final Adjustments Report is less than the Purchase Price
calculated based on the Preliminary Adjustments Report, Seller shall pay such
difference to Buyer in cash by wire or interbank transfer in immediately
available funds. In the event any payment required by this Section 3.4(c) is not
made when due, Seller or Buyer, as appropriate, shall make the payment required
by this Section 3.4(c) with interest accruing from the date such payment was due
at the Prime Rate plus 5%.
(d) If Buyer in good faith objects to any prorations
and/or adjustments set forth on the Final Adjustments Report, Buyer shall give
notice thereof to Seller within 30 days after receipt of the Final Adjustments
Report, specifying in reasonable detail the nature and extent of such
disagreement and Buyer and Seller shall have a period of 30 days from Seller's
receipt of such notice in which to resolve such disagreement. If such notice of
objection is not received by Seller within 30 days after receipt of the Final
Adjustments Report, it shall be deemed that Buyer has accepted the Final
Adjustments Report with respect to all items set forth therein and within ten
Business Days after the expiration of such 30-day period Buyer or Seller, as
appropriate, shall make the payments described in Section 3.4(c). Any disputed
amounts which cannot be agreed to by the parties within 30 days from Seller's
receipt of Buyer's notice of objection to any of the adjustments set forth in
the Final Adjustments Report shall be determined by a nationally recognized
accounting firm selected by Buyer and Seller which has not been employed by
Buyer or Seller for two years prior to the date hereof (the "Accountants") in
accordance with the engagement letter set forth on Exhibit C attached hereto
with such changes as may be requested by the Accountants and approved by Seller
and Buyer. The engagement of and the determination by the Accountants shall be
binding on and shall be nonappealable by Seller and Buyer. In the event that (a)
the Purchase Price calculated based on the determination of the Accountants is
less than the Purchase Price calculated based on the Final Adjustments Report,
the fees and expenses payable to the Accountants shall be paid by Seller or (b)
the Purchase Price calculated based on the determination of the Accountants is
greater than or equal to the Purchase Price calculated based on the Final
Adjustments Report, the fees and expenses payable to the Accountants shall be
paid by Buyer. Within ten Business Days after the determination by the
Accountants of all disputed prorations and/or adjustments, Buyer or Seller, as
appropriate, shall make the payments described in Section 3.4(c) as if the
determinations of the Accountants were included in the Final Adjustments Report.
In the event any payment required by this Section 3.4(d) is not made when due,
Seller or Buyer, as appropriate, shall make the payment required by this Section
3.4(d) with interest accruing from the date such payment was due at the Prime
Rate plus 5%.
3.5 Disputed Liabilities. If a proration or adjustment to
the Purchase Price is made in Buyer's favor for any liability assumed by Buyer
but is in good faith being contested by Seller as of the Closing Date, and if
Buyer is relieved of this liability, Buyer shall pay to Seller or its designee
in cash (by means of wire or interbank transfer in immediately available funds)
an amount equal to the unpaid portion of this liability within five Business
Days after the date
18
Buyer receives written notice and such additional documentation as Buyer may
reasonably request, all in form and substance reasonably acceptable to Buyer,
that it is relieved of this liability. In the event any payment required by this
Section 3.5 is not made by Buyer when due, Buyer shall make the payment required
by this Section 3.5 with interest accruing from the date such payment was due at
the Prime Rate plus 5%.
3.6 Allocation of Purchase Price. The Purchase Price shall
be allocated among the classes of assets set forth in Section 1060 of the Code
and the regulations thereunder in the manner agreed to by the parties prior to
the Closing. After the Closing, Seller shall cooperate with Buyer in the
preparation, execution and filing with the IRS of all information returns and
supplements thereto required to be filed by the parties under Section 1060 of
the Code relating to the allocation of such consideration, and Seller and Buyer
agree to file Form 8594 (or any substitute therefor) when required by applicable
law.
ARTICLE IV
4. Assumed Liabilities and Excluded Assets.
4.1 Assignment and Assumption. (a) Seller will assign, and
Buyer will assume and perform, all liabilities and obligations of Seller arising
out of the conduct of the Business, but excluding the Excluded Liabilities
(collectively, the "Assumed Liabilities"). Without limiting the generality of
the foregoing, the Assumed Liabilities shall include the following liabilities
and obligations of Seller: (A) Seller's obligations to subscribers of the
Business for (i) refunds of subscriber deposits held by Seller as of the Closing
Date in respect of which a Purchase Price adjustment is made in Buyer's favor
under Section 3.3(b), (ii) refunds of subscriber advance payments held by Seller
as of the Closing Date for services to be rendered by the System after the
Closing Date, in respect of which a Purchase Price adjustment is made in Buyer's
favor under Section 3.3(b) and (iii) the delivery of cable television service to
customers of the System after the Closing Date in a manner consistent with past
practice; (B) obligations and liabilities in respect of which a Purchase Price
adjustment in Buyer's favor is made under Section 3.3 including, but not limited
to, accrued but unpaid real and personal property taxes related to the Assets
which correspond to a period of time prior to the Adjustment Time, expenses
accrued under Governmental Permits and Seller Contracts which correspond to a
period of time prior to the Adjustment Time and certain accrued vacation pay;
(C) obligations accruing and relating to periods on or after the Adjustment Time
under Governmental Permits and Seller Contracts; and (D) any taxes accrued from
or after the Adjustment Time in connection with the ownership of the Assets and
the ownership of the Assets and the operation of the Business.
(b) Buyer will not assume or have any responsibility
for any liabilities or obligations of Seller which arise out of, result from, or
relate to, (i) the Excluded Assets or (ii) the conduct of the Business prior to
the Adjustment Time (except to the extent a Purchase Price adjustment in Buyer's
favor was made under Section 3.3(b)) (collectively, the "Excluded Liabilities").
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4.2 Excluded Assets. Excluded from the assets which will be
transferred from Seller to Buyer pursuant to this Agreement (collectively, the
"Excluded Assets") are all assets not specifically identified in this Agreement
as being transferred from Seller to Buyer. Without limiting the foregoing,
"Excluded Assets" shall include all Seller's right, title and interest in, to
and under the following: (a) all programming agreements relating to the
Business; (b) all insurance policies and rights and claims thereunder (except as
otherwise provided in Section 7.9(a)); (c) all bonds, letters of credit, surety
instruments and other similar items and any cash surrender value thereunder; (d)
all cash, cash equivalents and securities; (e) all trademarks, trade names,
service marks, service names, logos and similar proprietary rights used in the
Business, provided that Buyer shall have the right to use such proprietary
rights for the period commencing on the Closing Date and expiring 120 days after
the Closing Date; (f) any contracts, licenses, authorizations, agreements or
commitments which are not assumed by Buyer pursuant to this Agreement; (g) the
Management Agreement; (h) any asset or properties owned or leased by Seller that
are not used in the Business; (i) all subscriber deposits and advance payments
held by Seller as of the Closing Date in connection with the operation of the
Business for which a Purchase Price adjustment is made in Buyer's favor under
Section 3.3(b); (j) all claims, rights and interests in and to any refund for
federal, state or local franchise, income or other taxes or fees (including, but
not limited to copyright fees) of any nature relating to the operation of the
Business prior to the Closing Date; (k) the account books of original entry,
general ledgers and financial records used in connection with the Business,
provided that for a period of three years after the Closing Date, Buyer shall
have access to and the right to copy, at its expense, during usual business
hours upon reasonable prior notice to Seller, portions of such books and records
that are relevant to Buyer's ownership and operation of the System; (1) the
retransmission consent agreements relating to the carriage of WMAR, WBAL, WTTG
and WJZ; and (in) those properties, rights and interests set forth on Schedule
4.2.
ARTICLE V
5. Representations and Warranties of Seller.
Except with respect to Sections 5.1(b), 5.2(b) and 5.3(c), as
to which TCI and the General Partner, severally as to itself only, and not
Seller, represent and warrant to Buyer, Seller represents and warrants to Buyer
as follows:
5.1 Organization and Qualification. (a) Seller is a limited
partnership duly organized, validly existing and in good standing under the laws
of the state of Colorado and has all requisite partnership power and authority
to own, lease and use the Assets as they are currently owned, leased and used
and to conduct the Business as it is currently conducted. Seller is duly
qualified or licensed to do business and is in good standing under the laws of
each jurisdiction where the Assets are located and the Business is conducted,
except any such jurisdiction where the failure to be so qualified or licensed
and in good standing would not have a material adverse effect on the validity,
binding effect or enforceability of this Agreement, or on the ability of Seller
to perform its obligations under this Agreement.
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(b) Each of TCI and the General Partner is a
corporation or limited partnership, as the case may be, duly organized, validly
existing and in good standing under the laws of its state of incorporation or
formation.
5.2 Authority and Validity. (a) Seller has full
partnership power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby by
Seller have been duly and validly authorized by all necessary action on the part
of Seller (other than, with respect to the sale of the Assets, the approval of
such transaction contemplated by this Agreement by the Limited Partners). The
General Partner has taken all necessary action so that it may recommend that the
Limited Partners approve the transactions contemplated by this Agreement. This
Agreement has been duly and validly executed and delivered by Seller and
constitutes a valid and binding obligation of Seller enforceable in accordance
with its terms. Except for the approval by the Limited Partners, no further
partnership action on the part of Seller is required in connection with the
consummation of the transactions contemplated by this Agreement.
(b) Each of TCI and the General Partner has all
requisite corporate or partnership, as the case may be, power and authority to
execute, deliver and perform its obligations under this Agreement. The execution
and delivery by each of TCI and the General Partner of, and the performance by
each of TCI and the General Partner of its respective obligations under, this
Agreement have been duly authorized by all requisite corporate or partnership
action, as the case may be, of TCI and the General Partner, as the case may be,
and no other corporate or partnership proceedings, as the case may be, on the
part of TCI or the General Partner, as the case may be, are necessary to
authorize the execution and delivery of this Agreement or the performance of
TCI's or the General Partner's respective obligations hereunder. This Agreement
has been duly and validly executed and delivered by each of TCI and the General
Partner and constitutes a valid and binding agreement of each of TCI and the
General Partner, enforceable in accordance with its terms.
5.3 Consents and Approvals; No Violation. (a) Except for
(i) the Consents, (ii) filings, consents or other actions which, if not made or
obtained, would not have a material adverse effect on any of the Assets material
to the Business, the System, the Business, Seller's ability to perform its
obligations under this Agreement or Buyer's ability to conduct the Business
after the Closing in substantially the same manner in which it is currently
conducted by Seller, (iii) the consent of the Limited Partners with respect to
the transactions contemplated by this Agreement and (iv) the Regulatory
Requirements, no consent, waiver, action, approval or authorization of, or
filing, registration or qualification with, any Person or Governmental Authority
is required to be made or obtained by Seller in connection with the execution,
delivery and performance of this Agreement by Seller.
(b) Except as set forth on Schedule 5.3(b), the
execution, delivery and performance of this Agreement by Seller do not and will
not: (a) violate or conflict with any provision of its Certificate of Limited
Partnership or the Partnership Agreement; (b) violate any
21
Legal Requirement; or (c) (i) violate, conflict with or constitute a breach of
or default under (without regard to requirements of notice, passage of time or
elections of any Person), (ii) permit or result in the termination, suspension
or modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of Seller under, or (iv) result in the
creation or imposition of any Encumbrance under, any Seller Contract or any
other instrument evidencing any of the Assets or any instrument or other
agreement to which Seller is a party or by which Seller or any of its assets is
bound or affected, except such violations, conflicts, breaches, defaults,
terminations, suspensions, modifications, and accelerations which would not,
individually or in the aggregate, have a material adverse effect on the Assets,
taken as a whole, the System, the Business, or Seller's ability to perform its
obligations under this Agreement or Buyer's ability to conduct the Business
after the Closing in substantially the same manner in which it is currently
conducted by Seller.
(c) The execution, delivery and performance of this
Agreement by each of TCI and the General Partner do not and will not violate or
conflict with any provision of TCI's or the General Partner's respective
Certificate of Incorporation or By-Laws or Certificate of Limited Partnership or
partnership agreement, as the case may be.
5.4 Complete Systems. Except as set forth on Schedule
5.4, the Assets represent all assets, properties, franchises, licenses, permits,
consents, certificates, authorities, operating rights, leases, contracts (with
the exception of programming contracts and retransmission consents included in
the Excluded Assets which Buyer acknowledges may need to be replaced in order
for Buyer to continue to operate the Business), agreements, commitments and
arrangements owned or used by Seller in the Business and reasonably necessary
for the conduct of the Business in the ordinary course in the same manner as
that in which the Business is currently conducted by Seller.
5.5 Title. Except as set forth on Schedule 5.5 and for
the Permitted Encumbrances, Seller has, and on the Closing Date will have and
will transfer to Buyer, good and marketable title to the Assets. The Assets on
the Closing Date will be free and clear of all Encumbrances of any kind or
nature, other than Permitted Encumbrances.
5.6 Real Property. (a) All the Assets consisting of
interests in Real Property that are material to the conduct of the Business are
described on Schedule 1.7. Seller has valid leasehold interests in Real Property
leased by Seller under written leases or subleases, correct and complete copies
of which have been made available to Buyer.
(b) All easements, rights-of-way and other rights
which are necessary in any material respect for Seller's current use of any Real
Property are valid and in full force and effect, and, since July 1, 1992 and, to
the Best of Seller's Knowledge with respect to all periods prior thereto, Seller
has not received any written notice with respect to the termination or breach of
any of those rights.
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(c) Seller has not given or received any written
notice of the termination of any lease for Real Property. All leases and
subleases pursuant to which any of the Real Property is occupied or used are
valid, subsisting, binding and enforceable in accordance with their respective
terms and there are no existing defaults thereunder or events that with notice
or lapse of time or both would constitute defaults thereunder. To the Best of
Seller's Knowledge, subject to the receipt of any necessary Consents, the
consummation of the transactions contemplated by this Agreement will not result
in any termination of any lease for Real Property.
(d) There is no condemnation, eminent domain,
expropriation or similar proceedings pending or, to the Best of Seller's
Knowledge, threatened against any of the Real Property which, if adversely
determined, would have a material adverse effect on the Assets, the Business or
the System.
(e) There are not pending or, to the Best of Seller's
Knowledge, threatened, any special assessments or any pending proceedings for
changes in the zoning with respect to the Real Property or any part thereof and
Seller has not received any notice of the desire of any public authority or
other entity to take or use any Real Property or any part thereof. All
structures on the Real Property are structurally sound and in good operating
condition and repair (reasonable wear and tear excepted). Each parcel of Real
Property has access (either direct or by an easement included among the Assets)
to all public roads, utilities, and other services necessary for the operation
of the System with respect to such parcel. Seller has complied with all notices
or orders to correct violations of Legal Requirements issued by any Governmental
Authority having jurisdiction against or affecting any of the Real Property.
5.7 Environmental Matters. (a) Except as set forth on
Schedule 5.7 and except for any adverse environmental condition(s) which may be
identified in any environmental report prepared and delivered pursuant to
Section 7.5, to the Best of Seller's Knowledge, Seller's use of the Real
Property complies in all material respects with all Environmental Laws. Seller
has not received written notice or, to the Best of Seller's Knowledge, oral
notice of any claim or investigation based on Environmental Laws which relates
to any Real Property or any operations conducted by Seller on such Real
Property.
(b) Seller has provided Buyer with complete and
correct copies of (i) all studies, reports, samplings, test results, surveys,
submissions, correspondence or other materials in the possession of Seller, TCI
or any of TCI's direct or indirect wholly-owned subsidiaries relating to the
presence or alleged presence of Hazardous Substances at, on or affecting the
Real Property, (ii) all notices or other materials in the possession of Seller,
or TCI or any of TCI's direct or indirect wholly-owned subsidiaries that were
received from any Governmental Authority having the power to administer or
enforce any Environmental Laws relating to current or past ownership, use or
operation of the Real Property or activities at the Real Property and (iii) all
materials in the possession of Seller, TCI or any of TCI's direct or indirect
wholly-owned subsidiaries relating to any claim, allegation or action by any
private third party under any Environmental Law.
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(c) Except for any adverse environmental condition(s)
which may be identified in any Phase I environmental report prepared and
delivered pursuant to Section 7.5, Seller does not know or have any reason to
know of: (i) the presence, release or threatened release of any Hazardous
Substances in, on, to, from or under the Real Property; (ii) the use, treatment,
storage, disposal or transportation of Hazardous Substance in, on, to, from or
under the Real Property; (iii) any judicial or administrative proceedings
regarding Hazardous Substances or Environmental Laws in connection with the Real
Property or, to the Best of Seller's Knowledge, any threat thereof; or (iv) any
other matter relating to Hazardous Substances or threats to public health or the
environment in connection with the Real Property.
5.8 Compliance with Law; Governmental Permits. (a) Except
as set forth on Schedule 5.8, the ownership, leasing and use of the Assets as
they are currently owned, leased and used by Seller and the conduct of the
Business as it is currently conducted by Seller, do not violate any Legal
Requirement, which violation(s), individually or in the aggregate, reasonably
could be expected to have a material adverse effect on the Assets, taken as a
whole, the System or the Business. Seller has not received any notice claiming a
material violation by Seller or the Business of any Legal Requirement applicable
to Seller or the Business as it is currently conducted and, to the Best of
Seller's Knowledge, no basis exists for any person to claim that such a
violation exists.
(b) Schedule 1.5 lists all Governmental Permits that
are material to the conduct of the Business as it is currently conducted by
Seller. Complete and correct copies of all such Governmental Permits as
currently in effect have been, or prior to Closing will be, made available to
Buyer. All such Governmental Permits are currently in full force and effect.
There is no action, proceeding or investigation pending or, to the Best of
Seller's Knowledge, threatened, relating to the termination, suspension or
modification of any such Governmental Permit and Seller is in compliance in all
material respects with the terms and conditions of all Governmental Permits and
no other Governmental Permits are required in connection with the operation of
the Business in the manner in which it is currently conducted by Seller.
(c) The operation of the System has been, and is, in
compliance in all material respects with the Communications Act of 1934, as
amended (as so amended, the "Communications Act"), and the rules and regulations
of the Federal Communications Commission (the "FCC"), except that, as to any
rate regulation thereunder (other than with respect to the operation of the
System in Unincorporated Sussex County, Delaware) the foregoing is limited to
the Best of Seller's Knowledge. Seller has delivered, or prior to Closing will
deliver, to Buyer complete and correct copies of all reports and filings for the
past three years made or filed pursuant to the Communications Act or FCC rules
and regulations with respect to the Business.
(d) To the Best of Seller's Knowledge, the operation
of the System has been, and is, in compliance in all material respects with the
Cable Television Consumer Protection and Competition Act of 1992 (the "Cable
Act"), and the rules and regulations of the FCC promulgated thereunder.
24
(e) To the Best of Seller's Knowledge, the operation
of the System has been, and is, in compliance in all material respects with the
Telecommunications Act of 1996 (the "Telecom Act"), and the rules and
regulations of the FCC promulgated thereunder.
(f) With the exception of Delaware Public Service
Commission, as of the date of this Agreement no Governmental Authority has
notified Seller of its application to be certified to regulate rates or its
attempt to regulate rates with respect to the System.
(g) The rates charged by the System as of the date of
this Agreement are in compliance in all material respects with current FCC rate
regulations.
5.9 Seller Contracts. Schedule 1.8 lists each Seller
Contract, as of the date of this Agreement, that is (i) material to the conduct
of the Business as it is now conducted, (ii) involves annual payments in excess
of $l0,000 or (iii) is not terminable without material penalty on 90 days'
notice or less. Complete and correct copies of the Seller Contracts as currently
in effect have been made available to Buyer. Neither Seller nor, to the Best of
Seller's Knowledge, any other party to any Seller Contract is in any material
respect in breach of the performance of its obligations under any Seller
Contract. Except as set forth on Schedule 5.9, Seller has not received any
written notice with respect to termination of any Seller Contract that is
material to the conduct of the Business as it is now conducted.
5.10 Copyright Compliance. Seller has deposited with the
United States Copyright Office all statements of account and other documents and
instruments, and paid all royalties, supplemental royalties, fees and other sums
to the United States Copyright Office, required under the Copyright Act with
respect to the Business and operations of the System as are required to obtain,
hold and maintain the compulsory copyright license for cable television systems
prescribed in Section 111 of the Copyright Act and the rules and regulations of
the United States Copyright Office promulgated thereunder. Seller and the System
are in material compliance with the Copyright Act. Seller and the System are
entitled to hold and do now hold the compulsory copyright license described in
Section 111 of the Copyright Act, which compulsory copyright license is in full
force and effect and has not been revoked, canceled, encumbered or materially
adversely affected in any manner. Seller has made available to Buyer complete
and correct copies of all reports and filings, and all reports and filings for
the past three years, made or filed pursuant to the Copyright Act with respect
to the Business. Seller has not received any notice to the effect that the
conduct of the Business as currently conducted infringes on the rights of any
Person in any copyright or other intellectual property right, except as to
potential copyright liability arising from the performance, exhibition or
carriage of any music on the System relating to claims made by music licensing
organizations (such as ASCAP, BMI and SESAC) that operators of cable television
systems are responsible for payment of music performing rights license fees for
certain music cablecast on such systems.
5.11 Financial Statements. (a) Seller has delivered to
Buyer correct and complete copies of certain financial information for the
System for the years ended December 31, 1995 and December 31, 1994 and the nine-
month period ended September 30, 1996 (collectively,
25
the "Seller Financial Statements"). Except for the absence of footnote
disclosures, cash flow statements and statements of equity and except for
estimated, annualized or projected financial information, the Seller Financial
Statements fairly present, in all material respects, the results of operations
of the System for the respective periods ended on such dates, all in conformity
with GAAP consistently applied with full allocations of all costs, expenses and
overhead associated with operating the System, and with respect to the Seller
Financial Statements for the nine-month period ended September 30, 1996, subject
to normal year-end adjustments (none of which are expected to be material in
amount). Seller has delivered correct and complete copies of balance sheets and
capital expenditure reports for the System as of December 31, 1994, December 31,
1995 and September 30, 1996, each prepared in the ordinary course of business.
(b) Since the latest date of the Seller Financial
Statements (i) the Business has been operated only in the ordinary course and
(ii) there has been no material adverse change in, and no event has occurred
which, so far as reasonably can be foreseen, is likely, individually or in the
aggregate, to result in any material adverse change in the results of operations
of the Business, other than any change arising out of matters of a general
economic nature or matters (including, but not limited to, competition caused by
or arising from direct broadcast satellite, the Multichannel Multipoint
Distribution Service, legislation, rule making and regulation) affecting the
cable television industry (national or regional) in general.
5.12 Legal Proceedings. Except as set forth on Schedule
5.12, and except for any judgments, orders, actions, suits, proceedings or
investigations as may affect the cable television industry (national or
regional) generally, there is no judgment or order outstanding, or any action,
suit, proceeding or investigation by or before any Governmental Authority or any
arbitrator pending or, to the Best of Seller's Knowledge, threatened, involving
or affecting any of the Assets or the Business which, if adversely determined,
would have a material adverse effect on the Assets or the Business or would
materially impair the ability of Seller to perform its obligations under this
Agreement.
5.13 Employment Matters. (a) Seller does not employ any
individuals in connection with the operation of the Business and does not, and
is not obligated to, maintain or contribute to any employee benefit plan, as
defined in Section 3(3) of ERISA. All individuals managing the operations of the
Business are employees of TCI or its Affiliates (other than Seller) (the
"Employer"). The Employer is reimbursed for employee-related expenses relating
to the operations of the Business by Seller under the Management Agreement or
the Partnership Agreement.
(b) To the Best of Seller's Knowledge, Employer has
complied in all material respects with all Legal Requirements relating to the
employment of labor and those relating to wages, hours, collective bargaining,
unemployment compensation, worker's compensation, equal employment opportunity,
age and disability discrimination, immigration control and the payment and
withholding of taxes with respect to employees of Employer who primarily perform
services in connection with the operation of the Business.
26
(c) Employer is not a party to any contract with any
labor organization, and Employer has not recognized or agreed to recognize any
union or other collective bargaining unit with respect to employees of Employer
who primarily perform services in connection with the operation of the Business.
To the Best of Seller's Knowledge after reasonable inquiry of Employer, and
except as set forth on Schedule 5.13(c), no union or other collective bargaining
unit has been certified as representing any of the employees engaged in the
operation of the Business, and, to the Best of Seller's Knowledge after
reasonable inquiry of Employer, Employer has not received any request from any
party for recognition as a representative of employees engaged in the operation
of the Business for collective bargaining purposes. Neither Seller nor Employer
is party to any agreement, oral or written, express or implied, that would
require Buyer to employ any individual after the Closing Date.
(d) Schedule 5.13(d) sets forth a true and complete
list of all individuals employed by Employer who primarily perform services with
respect to the operation of the Business together with their position and salary
as of the date of this Agreement and their date of hire by Employer. Neither
Seller nor Employer is a party to any written employment contract, agreement,
commitment or arrangement with any individual identified on Schedule 5.13(d).
(e) Except for those plans described on Schedule
5.13(e) and in the TCI Employee Handbook dated February, 1995 (the "Employer
Plans"), which are sponsored by the Employer, or to which the Employer
contributes or is obligated to contribute, the employees of Employer who
primarily perform services with respect to the operation of the Business do not
receive benefits under any bonus, deferred compensation, pension,
profit-sharing, retirement, severance pay, insurance, stock purchase, stock
option, or other fringe benefit plan, arrangement or practice, or any other
employee benefit plan, as defined in Section 3(3) of ERISA.
(f) Seller has not incurred or taken any action, and
to the Best of Seller's Knowledge, no action or event has occurred, that could
cause Seller to incur any material liability (i) under Section 412 of the Code
or Title IV of ERISA with respect to any Employer Plan that is a single-employer
plan, within the meaning of Section 4001(a)(15) of ERISA, (ii) on account of a
partial or complete withdrawal from any Employer Plan that is a multiemployer
plan, within the meaning of Section 3(37) of ERISA, or on account of any unpaid
contributions to any such multiemployer plan, or (iii) for any tax or penalty
under Section 4975 of the Code or Section 502(i) of ERISA on account of any
prohibited transaction, within the meaning of Section 4975 of the Code or
Section 406 of ERISA, with respect to any Employer Plan.
5.14 System Information. The number of Equivalent Basic
Subscribers served by the System, the number of subscribers served by the System
taking Expanded Basic Services and the bandwidth of the System, the approximate
number of Homes Passed by the System and the approximate number of miles of
plant included in the Assets, each as of June 30, 1996, are as set forth on
Schedule 5.14. Approximately twenty-eight percent of miles of plant included in
the System are built to at least 450 MHz. As of the date of this Agreement,
there are no pending complaints by subscribers or other users of the System.
27
5.15 Finders and Brokers. Except for its engagement of
▇▇▇▇▇▇▇ & Associates, L.P. to assist Seller in the solicitation of offers to
purchase the Assets and except for a disposition fee payable by Seller to an
Affiliate pursuant to its Partnership Agreement, Seller has not employed any
financial advisor, broker or finder or incurred any liability for any financial
advisory, brokerage, finder's or similar fee or commission in connection with
the transactions contemplated by this Agreement.
5.16 Tax Matters. Except as set forth on Schedule 5.16,
(a) all Tax Returns required to be filed by Seller before the Closing with
respect to the Business or the Assets have been or will be filed on or before
the Closing and (b) all Taxes shown as due or payable before the Closing on such
Tax Returns have been or will be paid when required by law. To the Best of
Seller's Knowledge, there are no outstanding deficiencies or assessments of tax,
interest or penalties which could be imposed on Buyer or could reasonably be
expected to constitute or result in a lien on the Assets in Buyer's hands.
5.17 Inventory. The inventory of the System has been
maintained at adequate levels for the operation of the Business (for an ordinary
cycle of thirty days) consistent with the past practices of Seller.
5.18 Insurance. Seller has maintained insurance policies
in the ordinary course of business which when taken together provide insurance
coverage for the Assets and the operations of the Business as is customary for
similar businesses similarly situated.
5.19 Accounts Receivable. The Accounts Receivable arose
from bona fide transactions in the ordinary course of business and reflect
credit terms consistent with the past practices of Seller.
5.20 Restoration. No property of any Person has been
damaged, destroyed, disturbed or removed in the process of construction or
maintenance of the System, which has not been, or will not be, prior to the
Closing, repaired, restored or replaced and as to which an adequate reserve has
not been established by Seller.
5.21 Equipment. The Equipment is and will be at Closing in
adequate condition and repair to operate the business as currently conducted
(reasonable wear and tear excepted).
5.22 Microwave Replacement. As of the date of this
Agreement, Seller has completed the replacement of all AML microwave
transmissions with fiber plant.
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ARTICLE VI
6. Buyer's Representations and Warranties.
Buyer represents and warrants to Seller as follows:
6.1 Organization and Qualification. Buyer is a limited
liability company, duly organized, validly existing and in good standing under
the laws of its state of formation and has all requisite limited liability
company power and authority to carry on its business as currently conducted and
to own, lease, use and operate its assets. Buyer is duly qualified or licensed
to do business and is in good standing under the laws of each jurisdiction in
which the character of the properties owned, leased or operated by it or the
nature of the activities conducted by it makes such qualification necessary,
except where the failure to be so qualified or licensed and in good standing
would not have a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the ability of Buyer to perform its
respective obligations under this Agreement.
6.2 Authority, and Validity. Buyer has all requisite
limited liability company power and authority to execute, deliver and perform
its obligations under this Agreement. The execution and delivery by Buyer of,
the performance by Buyer of its obligations under, and the consummation by Buyer
of the transactions contemplated by, this Agreement have been duly authorized by
all requisite limited liability company action of Buyer and no other limited
liability company proceedings on the part of Buyer are necessary to authorize
the execution and delivery of this Agreement or the performance of Buyer's
obligations hereunder. This Agreement has been duly and validly executed and
delivered by Buyer and constitutes a valid and binding agreement of Buyer
enforceable in accordance with its terms.
6.3 No Breach or Violation. (a) Except for (i) any
consents that will be obtained by Buyer or waived on or prior to the Closing
Date and are identified on Schedule 6.3(a), (ii) filings and consents which, if
not made or obtained, would not have a material adverse effect on Buyer's
ability to perform its obligations under this Agreement and (iii) the Regulatory
Requirements, no consent, waiver, approval or authorization of, or filing,
registration or qualification with, any Governmental Authority is required to be
made or obtained by Buyer in connection with the execution, delivery and
performance of this Agreement by Buyer.
(b) The execution, delivery and performance of this
Agreement by Buyer do not and will not: (a) violate or conflict with any
provision of Buyer's Articles of Organization or operating agreement, (b)
violate any Legal Requirement; or (c) (i) violate, conflict with or constitute a
breach of or default under (without regard to requirements of notice, passage of
time or elections of any Person), (ii) permit or result in the termination,
suspension or modification of, (iii) result in the acceleration of (or give any
Person the right to accelerate) the performance of Buyer under, or (iv) result
in the creation or imposition of any Encumbrance under, any material contract,
agreement, arrangement, commitment or plan to which Buyer is a
29
party or by which Buyer or any of its assets is bound or affected, except such
violations, conflicts, breaches, defaults, terminations, suspensions,
modifications and accelerations as would not, individually or in the aggregate,
have a material adverse effect on Buyer's ability to perform its obligations
under this Agreement.
6.4 Litigation. (a) There are no claims, actions, suits,
proceedings or investigations pending or, to the best of Buyer's knowledge,
threatened, in any court or before any governmental agency or instrumentality,
or before any arbitrator, by or against or affecting or relating to Buyer or any
of its Affiliates which, if adversely determined, would restrain or enjoin the
consummation of the transactions contemplated by this Agreement or declare
unlawful the transactions or events contemplated by this Agreement or cause any
of such transactions to be rescinded.
(b) There are no judgments, injunctions, orders or
other judicial or administrative mandates outstanding against or affecting Buyer
or any of its Affiliates which would materially hinder or delay the consummation
of the transactions contemplated by this Agreement.
6.5 Financial Statements. Buyer has delivered to Seller
copies of its unaudited financial statements for the period March 12, 1996
through June 30, 1996 ("Buyer Financial Statement"). The Buyer Financial
Statement fairly present, in conformity with GAAP consistently applied except as
may be noted therein, the assets, liabilities and financial condition of Buyer
as of the date thereof and the results of operations and cash flows or changes
in financial position, as applicable, of Buyer for the period ended on such
date, subject to normal year-end adjustments (none of which are expected to be
material in amount), other adjustments noted therein and the absence of
footnotes.
6.6 Adequate Financing. Although as of the date of this
Agreement Buyer does not have a Commitment, Buyer has no reason to believe that
on or prior to June 23, 1997 it will not have received binding commitments
pursuant to which one or more lenders or investors will have agreed to loan or
contribute to Buyer, all funds necessary to satisfy all its obligations under
this Agreement and with respect to the transactions contemplated by this
Agreement, including its obligations to purchase the Assets and to pay the
Purchase Price to Seller.
6.7 Finders and Brokers. Buyer has not employed any
financial advisor, broker or finder or incurred any liability for any financial
advisory, brokerage, finder's or similar fee or commission in connection with
the transactions contemplated by this Agreement for which Seller will in any way
have any liability.
6.8 Qualification of Buyer. Buyer knows of no reason why
it cannot be the transferee of the assignable licenses and permits from Seller
necessary for it to own and operate the Business in the manner in which it is
currently conducted by Seller.
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ARTICLE VII
7. Additional Covenants.
7.1 Access to Premises and Records. Between the date of
execution and delivery of this Agreement and the Closing Date, Seller will give
Buyer and its representatives (including its auditors, accountants, lenders and
potential investors), during normal business hours and with reasonable prior
notice, access to the books and records of the Business, the Assets, the manager
of the System and the employees of Employer listed on Schedule 5.13(d) and will
furnish to Buyer and its representatives such information regarding the Business
and the Assets as Buyer may from time to time reasonably request; provided, that
Buyer shall have access to the employees of Employer listed on Schedule 5.13(d),
other than the manager of the System, solely for purposes of determining which
employees Buyer intends to offer employment as of the Closing Date.
7.2 Continuity and Maintenance of Operations; Financial
Statements. Except as to actions which Buyer has been advised and to which it
has consented in writing and except as specifically permitted or required by
this Agreement or required by any Legal Requirement, Seller shall:
(a) Operate the Business in the ordinary course
consistent with past practices and will use commercially reasonable efforts to
cause Employer to keep available the services of the employees of the Employer
who are primarily involved in the operation of the Business and to preserve any
beneficial business relationships with customers, suppliers and others having
business dealings with Seller relating to the Business;
(b) Maintain the Assets in adequate condition to
operate the Business as currently conducted, subject to normal wear and tear,
consistent with past practice;
(c) Maintain adequate inventories of spare Equipment
consistent with past practice;
(d) Maintain all bonds and insurance as in effect on
the date of this Agreement;
(e) Keep all of its business books, records and files
in the ordinary course of business in accordance with past practices;
(f) Continue to implement its procedures for
disconnection and discontinuance of service to subscribers whose accounts are
delinquent in accordance with those in effect on the date of this Agreement;
(g) Not sell, transfer or assign any Assets other
than in the ordinary course of business;
31
(h) Use commercially reasonable efforts not to permit
any material amendment to, or cancellation of, any of the Governmental Permits
or Seller Contracts;
(i) Not enter into any contract or commitment for the
acquisition of goods or services relating to the System or the Business
involving an expenditure (i) less than or equal to $40,000 other than in the
ordinary course of business consistent with past practice or (ii) in excess of
$40,000 without Buyer's written consent which may not be unreasonably withheld;
provided, that Buyer shall be deemed to have consented thereto if Buyer has not
given Seller written notice of its refusal to give consent, setting forth the
reason for such refusal, within five Business Days of Buyer's receipt of
Seller's written request for consent;
(j) Not take or omit to take any action that would
cause Seller to be in breach of any of its representations or warranties in this
Agreement in any material respect, provided, however, that the foregoing shall
not preclude Seller from engaging a financial advisor to render an opinion as to
the fairness, from a financial point of view, of the transactions contemplated
by this Agreement;
(k) Pay, consistent with past practice, all accounts
payable and other debts, liabilities and obligations of the System and the
Business;
(1) Report and write off Accounts Receivable in
accordance with past practices;
(m) Not create, assume or permit to exist any
Encumbrance (other than Permitted Encumbrances);
(n) Comply in all material respects with all
applicable Legal Requirements;
(o) Maintain service quality of the Business at a
level at least consistent with past practices.
(p) Use commercially reasonable efforts to cause
Employer not to increase the compensation or change any benefits available to
employees who work in the Business except as required pursuant to existing
written agreements or except in the ordinary course of business consistent with
past practice;
(q) Use commercially reasonable efforts to cause
Employer to withhold and pay when due all Taxes relating to the employees of the
Business and shall withhold and pay when due all Taxes relating to the Assets,
the Business and/or the System;
(r) File with the FCC all reports required to be
filed under applicable FCC rules and regulations, and otherwise comply with all
Legal Requirements with respect to the System; and
32
(s) Not implement any new marketing program, policy
or practices, or implement any rate change, retiering or repackaging, except in
the ordinary course of business consistent with past practices.
Seller shall deliver to Buyer, promptly after such statements
and reports become available to Seller, correct and complete copies of unaudited
monthly and quarterly income statements and operating reports for the Business
that are prepared by or for Seller at any time between the date of this
Agreement and the Closing; provided, that Seller shall not be required to make
and shall not be deemed to make any representation or warranty concerning the
accuracy of the contents of any such information delivered to Buyer.
Seller shall deliver to Buyer, promptly after execution
thereof, correct and complete copies of each Seller Contract entered into by
Seller after the date of this Agreement; upon such delivery each such agreement
which has been entered into by Seller in compliance with the provisions of
Section 7.2(i) shall be deemed to be included on Schedule 1.8 for all purposes
of this Agreement; provided, however, that any contract or commitment for which
Buyer's consent is required pursuant to Section 7.2(i) shall not be deemed to be
included on Schedule 1.8 if Buyer has reasonably withheld its consent thereto.
Buyer shall deliver to Seller promptly after such statements
and reports become available to Buyer, correct and complete copies of Buyer's
audited financial statements for the fiscal year ended December 31, 1996, which
statements and the notes thereto shall fairly present the assets, liabilities
and financial condition of Buyer as of the date thereof and the results of
operations and cash flows or changes in financial position, as applicable, of
Buyer for the period ended on such date, all in conformity with GAAP
consistently applied, except as may be noted therein. Unless the Closing occurs
on or before June 30, 1997, Buyer shall deliver to Seller promptly when
available correct and complete copies of Buyer's unaudited financial statements
for the three-months ended March 30, 1997 and each fiscal quarter thereafter
which are available prior to Closing, which statements and the notes thereto
shall fairly present the assets, liabilities and financial condition of Buyer as
of the date thereof and the results of operations and cash flows or changes in
financial position, as applicable, of Buyer for the period ended on such date,
all in conformity with GAAP consistently applied, except as may be noted
therein.
7.3 Employee Matters. (a) Buyer may offer employment upon
such terms and conditions of employment as Buyer may establish, to certain of
the employees of Employer who primarily perform services with respect to the
operation of the Business as of the Closing Date; provided, that if, prior to
the date which is 180 days after the Closing Date, Buyer terminates the
employment of any employee listed on Schedule 5.13(d) employed by Buyer as of
the Closing Date other than "for cause" as described in the Summary Plan
Description of Telecommunications Inc. Severance Pay Plan effective July 1, 1996
(the "Severance Plan"), Buyer shall pay to such terminated employee the
severance benefit payments which such employee would have been entitled to
receive had it been terminated by Employer as of the Closing Date in an amount
and upon such terms as set forth in the Severance Plan (but in no event more
than six months' severance benefits for any employee); provided, further, Buyer
shall
33
not be required to make any such severance payments with respect to any employee
who is hired by TCI or any of its direct or indirect wholly-owned subsidiaries
(including Employer) within 45 Business Days of his termination of employment by
Buyer. Not later than March 24, 1997, Buyer shall deliver to Seller a notice
containing the names of employees of the Business to whom Buyer intends to offer
employment on the Closing Date (the "Employee List"); provided, that (i) if the
Closing has not occurred, Buyer may deliver to Seller a notice updating the
Employee List on the date which is 150 days after the date of this Agreement and
(ii) if the Termination Date is extended by Seller, Buyer may deliver to Seller
a notice no later than 60 Business Days prior to the extended Termination Date
updating the Employee List; provided, however, that any notice delivered by
Buyer updating the Employee List shall not be deemed effective if the Closing
occurs fewer than 60 Business Days after delivery to Seller of such updated
Employee List. TCI shall cause Employer to terminate the employment of all such
employees hired by Buyer as of the Adjustment Time. Seller shall undertake to
provide to all affected employees and any other necessary persons any notice
that may be required under the WARN Act. Except as provided herein, Employer
shall retain all liabilities arising prior to the Adjustment Time relating to
employees, including severance obligations.
(b) For the period commencing on the date of this
Agreement and expiring on the date which is 180 days after the Closing Date, TCI
shall not, and shall cause its direct and indirect wholly-owned subsidiaries
including Employer not to, solicit, or offer employment to, any employee of
Employer set forth on Schedule 5.13(d) who primarily performs services with
respect to the operation of the Business as of the date of this Agreement;
provided, however, that after the Closing Date, each of TCI and its direct and
indirect wholly-owned subsidiaries including Employer may hire any such employee
that Buyer does not employ as of the Closing Date or whose employment Buyer
terminates after the Closing Date.
(c) Nothing in this Section 7.3 or elsewhere in this
Agreement is intended to confer upon any employee of Employer or his or her
legal representative or heirs any rights as a third party beneficiary or
otherwise or any remedies of any nature or kind whatsoever under or by reason of
this Agreement, or the transactions contemplated hereby, including, but not
limited to, any rights of employment or continued employment. All rights and
obligations created by this Agreement are solely between the parties hereto.
7.4 Franchise Extensions. Seller covenants and agrees
that, as soon as practicable following the execution of this Agreement, it will
apply to the applicable Governmental Authority for an extension (the
"Extensions") of each franchise described on Schedule 1.5 with an expiration
date prior to June 30, 2000. Each such Extension shall have an expiration date
no earlier than June 30, 2000 and shall otherwise be on substantially the terms
and conditions of the current franchises, subject to modifications customarily
imposed by Governmental Authorities, but which shall not impose any conditions
or obligations which are materially more burdensome than contained in the
current franchise.
7.5 Environmental Report. (a) Buyer may cause to be
prepared and delivered at its expense within 60 days after the date of this
Agreement, a Phase I environmental
34
report for the Real Property. Seller shall cooperate with Buyer and permit
access to such Real Property during normal business hours in order for Buyer or
its representatives to inspect such property and the related environmental
records in the possession of Seller, as necessary for the preparation of the
Phase I environmental report. Buyer shall deliver to Seller a copy of any such
environmental report within five Business Days of receipt of such report by
Buyer. If such environmental report discloses one or more adverse environmental
conditions which require remediation under applicable Environmental Law, Seller
shall assume full responsibility for remediation of each such environmental
condition(s) to the extent required by applicable Environmental Law (the
"Remediation") and shall bear all expenses incurred in connection therewith;
provided, that Seller shall not be obligated to spend more than $200,000 in
connection with the Remediation. Buyer shall give Seller notice confirming that
Buyer has delivered to Seller all environmental reports to be prepared pursuant
to this Section 7.5, and Seller shall notify Buyer within twenty Business Days
after its receipt of such notice if Seller concludes, in its reasonable
judgment, that it is or will be unable to complete the Remediation for $200,000
or less (the "Remediation Notice"). If Seller gives a Remediation Notice, then
Buyer may terminate this Agreement pursuant to Section 10.1 (c)(vii) by notice
to Seller given within five Business Days of the Remediation Notice; provided,
that if within five Business Days after receipt by Seller of Buyer's notice of
termination pursuant to Section 10. l(c)(vii), Seller gives notice to Buyer that
Seller agrees to bear all costs of Remediation in excess of $200,000, such
termination shall be void ab initio and this Agreement shall be deemed not to
have been terminated. If Buyer does not terminate this Agreement pursuant to
Section 10.1 (c)(vii) within such five Business Day period, (i) Buyer shall be
deemed to have assumed all liabilities and obligations in connection with the
Remediation as of the Closing Date, (ii) Buyer shall receive a credit at the
Closing in the amount of $200,000 less the aggregate of all amounts paid by
Seller to third parties in connection with the Remediation and (iii) after the
Closing Date Seller shall have no obligation or liability with respect to the
Remediation or otherwise in connection with any condition referred to in any
report prepared and/or delivered pursuant to this Section 7.5.
(b) If Seller concludes, in its reasonable judgment, that
the cost of the Remediation will not exceed $200,000 or Seller agrees to bear
any costs of Remediation in excess of $200,000, then Seller shall have the sole
right to direct the Remediation; provided, that if Buyer agrees to bear any
costs of Remediation in excess of $200,000, then from and after the Closing
Buyer may assume responsibility for overseeing the Remediation.
(c) In the event that Seller assumes full responsibility
for the Remediation and such Remediation has not been completed prior to the
Closing, then from and after the Closing and until Seller and Buyer shall have
agreed that Remediation has been completed, Buyer shall cooperate with Seller
and permit access to the Real Property to Seller and its representatives during
normal business hours in order for the Remediation to be completed.
7.6 Consents. Seller will use commercially reasonable
efforts to obtain, as soon as practicable and at its expense, all the Consents
and the Extensions, in form and substance reasonably satisfactory to Buyer;
provided, that "commercially reasonable efforts" for purposes of this Section
7.6 shall not require Seller or Buyer to undertake extraordinary or unreasonable
35
measures to obtain such approvals and consents, including, but not limited to,
the initiation or prosecution of legal proceedings or the payment of fees in
excess of normal and usual filing and processing fees. Concurrently with the
execution and delivery of this Agreement, Buyer is delivering to Seller "highly
confident" letters of Chase Manhattan Bank, N.A. with respect to Buyer's equity
and its debt financing and after the date hereof shall deliver to Seller such
other materials requested by Seller appropriate for Seller to use in connection
with seeking the Consents and the Extensions. Buyer will use commercially
reasonable efforts to assist Seller in its efforts to obtain all the Consents
and the Extensions, and in connection therewith will consent to such
modifications to any agreement that is the subject of the Ocean Pines Consent,
▇▇▇▇▇▇▇ Properties Consent, Sea Colony Consent or Angola Consent or any
Governmental Permit that Ocean Pines Association, Inc. (or its successor), Pot
Nets, Inc. (or its successor), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Associates Inc., as successor to
Sea Colony, Inc. (or its successor), Angola-by-the-Bay Property Owners
Association Inc. (or its successor) or a Governmental Authority, as the case may
be, may request as a condition to (i) the transfer of such agreement or
Governmental Permit to Buyer and/or (ii) obtaining extension of the term of such
Governmental Permit, provided, however, that Buyer will not be required to agree
to any modifications to a Governmental Permit unless they are customarily
imposed by Governmental Authorities issuing cable television franchises as a
condition to obtaining the consent to the transfer of such franchises and do not
impose upon Buyer any conditions or obligations which are materially more
burdensome than are presently contained in any such Governmental Permit; and
provided, further, that Buyer will not be required to agree to any modifications
to any agreement that is the subject of the Ocean Pines Consent, ▇▇▇▇▇▇▇
Properties Consent, Sea Colony Consent or Angola Consent that will impose upon
Buyer any conditions or obligations which are materially more burdensome than
presently contained in any such agreement, provided, that any change in rates
charged for Basic Services contained in the Sea Colony Consent which is
reflected in a purchase price adjustment pursuant to Section 3.3 shall not be
deemed to be a condition or obligation which is materially more burdensome.
7.7 HSR Notification. As soon as practicable after the execution of
this Agreement and if required by applicable Legal Requirements, Seller and
Buyer will each complete and file, or cause to be completed and filed, any
notification and report required to be filed under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act"). Each of the
parties will take any additional action that may be necessary, proper or
advisable, will cooperate to prevent inconsistencies between their respective
filings and will furnish to each other such necessary information and reasonable
assistance as the other may reasonably request in connection with its
preparation of necessary filings or submissions under the HSR Act. Buyer and
Seller shall use commercially reasonable efforts (including the filing of a
request for early termination) to obtain the early termination of the waiting
period under the HSR Act.
7.8 Notification of Certain Matters. Each party will promptly notify
the other of any fact, event, circumstance or action the existence or occurrence
of which would cause any of such party's representations or warranties under
this Agreement not to be true in any material respect.
36
7.9 Risk of Loss; Condemnation. (a) Seller will bear the risk of any
loss or damage to the Assets resulting from fire, theft or other casualty
(except reasonable wear and tear) at all times prior to the Closing. If any such
loss or damage is so substantial as to prevent normal operation of any material
portion of the System, Seller shall promptly notify Buyer of that fact and
Buyer, at any time within 10 days after receipt of such notice, may elect by
written notice to Seller either (i) to waive such defect and proceed toward
consummation of the acquisition of the Assets in accordance with this Agreement
or (ii) to terminate this Agreement pursuant to Section 10.1(c)(v). If Buyer
elects to consummate the acquisition of the Assets notwithstanding such loss or
damage and does so, there will be no adjustment in the Purchase Price on account
of such loss or damage but all insurance proceeds payable as a result of the
occurrence of the event resulting in such loss or damage (to the extent not
previously applied by Seller with respect to such loss or damage) will be
delivered by Seller to Buyer or the rights to such proceeds will be assigned by
Seller to Buyer if not yet paid over to Seller.
(b) If, prior to the Closing, any part of a material Asset or an
interest in a material Asset is taken or condemned as a result of the exercise
of the power of eminent domain, or if a Governmental Authority having such power
informs Seller or Buyer that it intends to condemn all or any part of a material
Asset (such event being referred to, in either case, as a "Taking"), then Buyer
may terminate this Agreement pursuant to Section l0.1(c)(vi). If Buyer does not
elect to terminate this Agreement then (a) if the Closing occurs, Buyer shall
have the sole right, in the name of Seller, if Buyer so elects, to negotiate
for, claim, contest and receive all damages with respect to the Taking, (b)
Seller shall be relieved of its obligation to convey to Buyer the Asset or
interests that are the subject of the Taking and (c) at the Closing Seller shall
assign to Buyer all of Seller's rights (including the right to receive payment
of damage) with respect to such Taking and shall pay to Buyer all damages
previously paid to Seller with respect to the Taking.
7.10 Adverse Changes. Seller shall promptly notify Buyer in writing
of any materially adverse developments affecting the Assets, the System or the
Business which become known to Seller, including, but not limited to, (i) any
damage, destruction or loss (whether or not covered by insurance) materially and
adversely affecting any of the Assets, the System or the Business, (ii) any
notice of violation, forfeiture or complaint under any material Governmental
Permits or (iii) anything which, if not corrected prior to the Closing Date,
will prevent Seller from fulfilling any condition to Closing described in
Article VIII.
7.11 Action by Limited Partners. (a) If required by applicable Legal
Requirements and the Partnership Agreement to consummate the transactions
contemplated by this Agreement, or if the Seller otherwise elects to do so, the
Seller, acting through the General Partner, shall in accordance with the
applicable Legal Requirements and the Partnership Agreement: (i) within a
reasonable period of time (as determined by the General Partner) after the
execution and delivery of this Agreement, duly call, give notice of, convene and
hold a special meeting (the "Special Meeting") of the Limited Partners for the
purpose of approving the transactions contemplated by this Agreement; and (ii)
subject to its fiduciary duties (as determined by the General Partner after
consultation with independent counsel), include in any
37
proxy statement the determination and recommendation of the General Partner to
the effect that the General Partner, having determined that this Agreement and
the transactions contemplated hereby are in the best interests of Seller and the
Limited Partners, has approved this Agreement and such transactions and
recommends that the Limited Partners vote in favor of the sale of the Assets to
Buyer pursuant to this Agreement.
(b) As soon as practicable after the execution and delivery of
this Agreement, Seller shall file with the SEC under the Exchange Act, and shall
use commercially reasonable efforts to clear with the SEC and mail to the
Limited Partners no later than February 15, 1997, a proxy statement with respect
to the Special Meeting (the "Proxy Statement"). Buyer shall furnish to Seller
the information relating to Buyer as reasonably requested by Seller required by
the Exchange Act to be set forth in the Proxy Statement. Seller agrees that the
Proxy Statement shall comply in all material respects with the Exchange Act and
the rules and regulations thereunder; provided, however, that no agreement is
made by Seller with respect to information supplied by Buyer expressly for
inclusion in the Proxy Statement. Buyer and its counsel shall be given a
reasonable opportunity to review the Proxy Statement prior to the filing of the
definitive Proxy Statement with the SEC.
7.12 No Solicitation. (a) Each of Seller and the General Partner
shall not, and shall cause its respective employees, agents and representatives
(including, but not limited to, any investment banker, attorney or accountant
retained by Seller) not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal with respect to any
Alternative Transaction, engage in any negotiations concerning, or provide to
any other Person any information or data relating to, the Business, the System,
the Assets or Seller for the purposes of, or have any discussions with any
Person relating to, or otherwise cooperate in any way with or assist or
participate in, facilitate or encourage, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any effort
or attempt by any other Person to seek or to effect an Alternative Transaction,
or agree to or endorse any Alternative Transaction; provided, however, that
nothing contained in this Section 7.12 shall prohibit Seller or the General
Partner from making any disclosure to the Limited Partners that, in the judgment
of the General Partner based upon the advice of independent counsel, is required
under applicable Legal Requirements; and provided, further, that (i) Seller or
the General Partner may, upon the unsolicited request of a third party, furnish
information or data (including, but not limited to, confidential information or
data) relating to the Business, the System, the Assets or Seller for the
purposes of facilitating an Alternative Transaction and participate in
negotiations with a Person making (or who may reasonably be expected to make) an
unsolicited proposal regarding an Alternative Transaction and (ii) following
receipt of a proposal for an Alternative Transaction, Seller or the General
Partner may terminate this Agreement pursuant to Section 10.1(b)(ii).
(b) TCI shall not, and shall cause its Affiliates which it
controls not to, make a proposal to Seller regarding an Alternative Transaction.
The restriction set forth in this Section 7.12(b) shall terminate on the earlier
of (i) the Closing or (ii) termination of this Agreement.
38
7.13 Sales and Transfer Taxes and Fees. Buyer and Seller shall each
pay 50 percent of any state or local sales, use, transfer, excise, documentary
or license taxes or fees or any other charge (including filing fees) imposed by
any Governmental Authority as a consequence of the transfer of any Assets
pursuant to this Agreement. Seller shall timely file any sales tax returns
required to be filed with any Governmental Authority as a consequence of the
transfer of any Assets pursuant to this Agreement. Buyer shall cooperate as
reasonably requested in the preparation and filing of any submission or
application necessary to obtain any clearance relating to, or, if available,
exemption from, any Taxes or fees described in this Section 7.13.
7.14 Commercially Reasonable Efforts. (a) Seller shall use
commercially reasonable efforts to take all steps within its power, and will
cooperate with Buyer, to cause to be fulfilled those of the conditions to
Buyer's obligations to consummate the transactions contemplated by this
Agreement that are dependent upon its actions, and to execute and deliver such
instruments and take such other reasonable actions as may be necessary or
appropriate in order to carry out the intent of this Agreement and consummate
the transactions contemplated hereby.
(b) Buyer shall use commercially reasonable efforts to take all
steps within its power, and will cooperate with Seller, to cause to be fulfilled
those of the conditions to Seller's obligations to consummate the transactions
contemplated by this Agreement that are dependent upon its actions and to
execute and deliver such instruments and take such other reasonable actions as
may be necessary or appropriate in order to carry out the intent of this
Agreement and consummate the transactions contemplated hereby.
7.15 Title Insurance. Seller shall cooperate with Buyer if Buyer
elects to obtain title insurance policies on any Real Property owned in fee or
leased. Buyer shall have the sole responsibility for obtaining and paying for
such policies. The parties agree that the obtaining of title insurance on any
Real Property shall not be a condition to the obligation of Buyer to consummate
the transactions contemplated hereby.
7.16 Non-Competition. For the period commencing on the Closing Date
and expiring on the fifth anniversary thereof, each of Seller, the General
Partner and TCI hereby covenants and agrees that it shall not, and TCI hereby
covenants and agrees that it shall cause its direct and indirect wholly-owned
subsidiaries not to, directly or indirectly, compete with Buyer in the provision
of terrestrial cable television video services by means of cable, microwave,
fiber optics, satellite receivers or broadcasts all of which being directed to
the delivery of terrestrial cable television video services to businesses,
residences, multi-family dwellings, hotels, motels, trailers and other users, in
any Service Area in which the Business operates on the Closing Date. For the
period commencing on the Closing Date and expiring on the fifth anniversary
thereof, each of Seller, the General Partner and TCI further covenants that it
shall not, and TCI further covenants that it shall cause its direct and indirect
wholly-owned subsidiaries not to, directly or indirectly, manage, operate, join,
control, participate, or become interested in, or be connected with (as a
consultant, partner, stockholder or investor) any such terrestrial cable
television video service that would compete with Buyer in the provision of cable
television service within any
39
portion of the geographical area described above, except as a passive investor
or stockholder holding less than five percent of the outstanding voting stock or
equity interest in any corporation or other entity.
7.17 Financing Commitment. No later than June 23, 1997, Buyer shall
have obtained, and delivered to Seller a true and correct copy of, a commitment
(in form and substance satisfactory to Seller in its reasonable judgment) of a
reputable financial institution to provide to Buyer the funds necessary (at any
time to and including December 19, 1997) which together with Buyer's then
existing resources enable it to satisfy all of Buyer's obligations under this
Agreement and with respect to the transactions contemplated by this Agreement,
including its obligation to purchase the Assets and to pay the Purchase Price,
with funding subject only to (a) the satisfaction of the conditions to Closing
set forth in Article VIII, (b) there having occurred no Material Adverse Change
in the Financial Markets after the date of such commitment and (c) there having
occurred no material adverse change in the financial condition of Buyer after
the date of such commitment (the "Commitment"). Without limiting the foregoing,
the Commitment shall not be subject to any condition with respect to equity
funding (except a condition, if any, which such financial institution has
confirmed, in writing to Seller, has been satisfied prior to the Initial
Termination Date).
7.18 Forms 394. Unless Seller and Buyer agree to waive filing of
Forms 394 with respect to a Governmental Authority, (i) within 15 Business Days
after the date of this Agreement, Seller shall deliver to Buyer all information
available to Seller necessary for Buyer to prepare Forms 394 and (ii) within 15
Business Days after the necessary information has been supplied by Seller, Buyer
shall prepare, in form and substance reasonably satisfactory to Seller, and
Seller shall file, Forms 394 with the applicable Governmental Authorities.
7.19 UCC Lien and Judgment Searches. Seller shall deliver to Buyer a
copy of all UCC lien and judgment searches which Seller has obtained and any
bringdowns thereto which Seller may obtain prior to Closing in connection with
the transactions contemplated by this Agreement.
7.20 Seller Financial Statements. Seller agrees that from and after
the date of this Agreement it shall, at Buyer's cost and expense (i) use its
commercially reasonable efforts to make promptly available to Buyer, upon
Buyer's request, such financial statements, financial statement schedules and
other financial information relating to the System and the Business, in form and
substance reasonably satisfactory to Seller and Buyer, which Buyer may be
required to include in any registration statement, report or other document
which Buyer may file with the SEC or any applicable state securities commission,
and shall direct KPMG Peat Marwick to cooperate in connection therewith and (ii)
use its commercially reasonable efforts to obtain promptly for Buyer, upon
Buyer's request, any consent, report, opinion or letter of KPMG Peat Marwick, in
form and substance reasonably satisfactory to Seller and Buyer, required to be
filed by Buyer under applicable regulations of the SEC or any applicable state
securities commission in connection therewith.
40
7.21 Ad Insertion Agreement. No later than 90 days after the date of
this Agreement, Buyer shall give Seller written notice of whether it intends to
assume the Letter Agreement, dated February 1, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ and American Cable Television of Lower Delaware (the "Ad Insertion
Agreement").
ARTICLE VIII
8. Conditions Precedent to Obligations of Buyer.
The obligations of Buyer under this Agreement are subject to the
satisfaction at or prior to the Closing of each of the following conditions, any
one or more of which may be waived by Buyer, in its sole discretion.
8.1 HSR Act. If required under applicable Legal Requirements, all
filings required under the HSR Act shall have been made and the applicable
waiting period shall have expired or been earlier terminated without the receipt
of any objection or the commencement or threat of any litigation by a
Governmental Authority of competent jurisdiction to restrain the consummation of
the transactions contemplated by this Agreement.
8.2 Governmental or Legal Action. No action, suit or proceeding shall
be pending or threatened by any Governmental Authority and no Legal Requirement
shall have been enacted, promulgated or issued or deemed applicable to any of
the transactions contemplated by this Agreement by any Governmental Authority
that would (a) prohibit Buyer's ownership or operation of all or a material
portion of the System, the Business or the Assets or (b) prevent or make illegal
the consummation of the transactions contemplated by this Agreement.
8.3 Accuracy of Representations and Warranties. The representations
and warranties of Seller contained in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of the Closing
Date, with the same effect as though made on and as of the Closing Date, except
for such changes permitted or contemplated by the terms of this Agreement and
except insofar as any of such representations and warranties relate solely to a
particular date or period, in which case they shall be true and correct in all
material respects on such Closing Date with respect to such date and period.
8.4 Performance of Agreements. Seller shall have performed in all
material respects all obligations and agreements and complied, or caused to be
complied with, all covenants and conditions required by this Agreement to be
performed or complied with by Seller at or prior to the Closing Date.
8.5 No Material Adverse Change. During the period from the date of
this Agreement through and including the Closing Date, there shall not have
occurred any material adverse change in the business, financial condition or
operations of the Assets, taken as a whole,
41
the System or the Business, other than any change arising out of matters of a
general economic nature or matters (including, but not limited to, competition
caused by or arising from the Multichannel Multipoint Distribution Service,
direct broadcast satellite, legislation, rule making and regulation) affecting
the cable television industry (national or regional) generally, and Seller shall
not have sustained any material loss or damage to the Assets or the System,
whether or not insured, that materially affects the ability of Seller to conduct
the Business in a manner consistent with past practice.
8.6 Consents and Extensions. Seller shall have delivered to Buyer
evidence, in form and substance reasonably satisfactory to Buyer, that all the
Required Consents and Extensions have been obtained or given.
8.7 Transfer Documents. Seller shall have delivered to Buyer
customary bills of sale, deeds, assignments and other instruments of transfer
sufficient to convey good and marketable title to the Assets in accordance with
the terms of this Agreement, in form and substance reasonably satisfactory to
Buyer.
8.8 Opinions of Seller's Counsel. Buyer shall have received the
opinion or opinions of ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP, counsel for
Seller, dated the Closing Date, substantially in the form of Exhibit D.
8.9 Discharge of Liens. Seller shall have secured the termination or
removal of all Encumbrances of any nature on the Assets, other than Permitted
Encumbrances.
8.10 Extension of Ad Insertion Agreement. In the event that Buyer
gives notice to Seller in accordance with Section 7.21 of its intention to
assume the Ad Insertion Agreement, such agreement shall have been extended on
terms similar to those contained in the existing agreement for a period of one
year from the Closing Date.
8.11 Opinion of Seller's FCC Counsel. Buyer shall have received the
opinion of ▇▇▇▇, Raywid & ▇▇▇▇▇▇▇▇▇, FCC counsel for Seller, dated the Closing
Date, substantially in the form of Exhibit F.
8.12 Additional Documents and Acts. Seller shall have delivered or
caused to be delivered to Buyer all other documents required to be delivered
pursuant to this Agreement and done or caused to be done all other acts or
things reasonably requested by Buyer to evidence compliance with the conditions
set forth in this Article VIII.
8.13 Certificates. Seller shall have furnished Buyer with such other
certificates of Seller and others, dated as of the Closing Date, to evidence
compliance with the conditions set forth in this Article VIII, as may be
reasonably requested by Buyer.
42
ARTICLE IX
9. Conditions Precedent to Obligations of Seller.
The obligations of Seller under the Agreement are subject to the
satisfaction, at or prior to the Closing Date, of each of the following
conditions, any one or more of which may be waived by Seller in its sole
discretion.
9.1 HSR Act. If required under applicable Legal Requirements, all
filings required under the HSR Act shall have been made and the applicable
waiting period shall have expired or been earlier terminated without the receipt
of any objection or the commencement or threat of any litigation by a
Governmental Authority of competent jurisdiction to restrain the consummation of
the transactions contemplated by this Agreement.
9.2 Governmental or Legal Actions. No action, suit or proceeding
shall be pending or threatened by any Governmental Authority and no Legal
Requirement shall have been enacted, promulgated or issued or deemed applicable
to any of the transactions contemplated by this Agreement by any Governmental
Authority that would (a) prohibit Buyer's ownership or operation of all or any
material portion of the System, the Business or the Assets or (b) prevent or
make illegal the consummation of the transactions contemplated by this
Agreement.
9.3 Accuracy of Representations and Warranties. The representations
and warranties of Buyer contained in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing
Date, with the same effect as though made on and as of the Closing Date, except
for such changes permitted or contemplated by the terms of this Agreement and
except insofar as any of such representations and warranties relate solely to a
particular date or period, in which case they shall be true and correct in all
material respects on such Closing Date with respect to such date and period.
9.4 Performance of Agreements. Buyer shall have performed in all
material respects all obligations and agreements and complied, or caused to be
complied with, all covenants and conditions required by this Agreement to be
performed or complied with by Buyer at or prior to the Closing Date.
9.5 Consents. All Required Consents shall have been obtained or
given.
9.6 Opinions of Buyer's Counsel. Seller shall have received the
opinion or opinions of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., outside
counsel for Buyer, dated the Closing Date, substantially in the form of Exhibit
E.
9.7 Limited Partner Approval. The transactions contemplated by this
Agreement shall have been approved by the affirmative vote of or consent by the
Limited
43
Partners to the extent required by the Partnership Agreement or if Seller
otherwise elects as permitted by Section 7.11.
9.8 Payment of Purchase Price. Buyer shall have paid to Seller the
Purchase Price as set forth in Section 3.1.
9.9 Assumption of Liabilities. Buyer shall have delivered to Seller
a customary assumption of liabilities agreement in form and substance reasonably
acceptable to Buyer and Seller which is sufficient to cover Buyer's obligations
as set forth in Section 4.1.
9.10 Closing of Another System. In the event that, subsequent to the
date of this Agreement but prior to the Closing Date, Seller and Buyer enter
into an agreement for the sale by Seller of any cable television system to Buyer
other than the System, the closing of the sale of such other system shall have
occurred or shall occur contemporaneously with the Closing hereunder.
9.11 Additional Documents and Acts. Buyer shall have delivered or
caused to be delivered to Seller all other documents required to be delivered
pursuant to this Agreement and done all other acts or things reasonably
requested by Seller to evidence compliance with the conditions set forth in this
Article IX.
9.12 Certificates. Buyer shall have furnished Seller with such other
certificates of Buyer and others, dated as of the Closing Date, to evidence
compliance with the conditions set forth in this Article IX, as may be
reasonably requested by Seller.
9.13 Fairness Opinion. Seller shall have received an opinion, in form
and substance reasonably satisfactory to Seller, from its financial advisors as
to the fairness, from a financial point of view, of the transactions
contemplated by this Agreement.
ARTICLE X
10. Termination.
10.1 Events of Termination. This Agreement and the transactions
contemplated by this Agreement may be terminated at any time prior to the
Closing:
(a) by the mutual written consent of Buyer and Seller;
(b) by Seller:
(i) if the consummation of the transactions contemplated by
this Agreement by Seller would violate any nonappealable final order, decree or
judgment of any Governmental Authority having competent jurisdiction;
44
(ii) following receipt by Seller or the General Partner of an
unsolicited proposal for an Alternative Transaction to the extent that the
General Partner determines in good faith on the basis of advice of independent
counsel that such action is necessary or appropriate in order for the General
Partner to act in a manner that is consistent with its fiduciary obligations
under applicable law;
(iii) if any representation or warranty of Buyer made herein is
untrue in any material respect (other than a change permitted or contemplated by
this Agreement) and such breach is not cured within 10 days of Buyer's receipt
of a notice from Seller that such breach exists or has occurred;
(iv) if Buyer shall have defaulted in any material respect in
the performance of any material obligation under this Agreement and such breach
is not cured within 30 days of Buyer's receipt of a notice from Seller that such
default exists or has occurred;
(v) if the conditions to Seller's obligations to consummate
the Closing as set forth in Article IX cannot reasonably be satisfied on or
before the Termination Date;
(vi) on any date from June 23, 1997 to and including the
Initial Termination Date, if Buyer has not obtained the Commitment required by
Section 7.17, and at any time thereafter if the Commitment is terminated; or
(vii) within five Business Days of the date which is 60 days
from the date of this Agreement, if Seller has not obtained the Ocean Pines
Consent, or within five Business Days the date which is 90 days from the date of
this Agreement, if Seller has not obtained the Ocean Pines Consent.
(c) by Buyer:
(i) if the consummation of the transactions contemplated by
this Agreement by Buyer would violate any nonappealable final order, decree or
judgment of any Governmental Authority having competent jurisdiction;
(ii) if any representation or warranty of Seller made herein is
untrue in any material respect (other than due to a change permitted or
contemplated by this Agreement) and such breach is not cured within 10 days of
Seller's receipt of a notice from Buyer that such breach exists or has occurred;
(iii) if Seller shall have defaulted in any material respect in
the performance of any material obligation under this Agreement and such breach
is not cured within 30 days of Seller's receipt of a notice from Buyer that such
default exists or has occurred;
(iv) if the conditions to Buyer's obligations to consummate the
Closing as set forth in Article VIII cannot reasonably be satisfied on or before
the Termination Date;
45
(v) within 10 days after receipt by Buyer of a notice from Seller
that the loss or damage to the Assets resulting from fire, theft or other
casualty is so substantial as to prevent normal operation of any material
portion of the System, as contemplated by Section 7.9(a);
(vi) following a Taking, as contemplated by the first sentence of
Section 7.9(b);
(vii) if Seller notifies Buyer that, in its reasonable judgment, the
cost of the Remediation will exceed $200,000, as contemplated by Section 7.5(a);
provided, that Seller has not agreed to bear all costs of the Remediation in
excess of $200,000; or
(viii) within five Business Days of the date which is 90 days from the
date of this Agreement, if Seller has not obtained the Ocean Pines Consent.
(d) Unless the Closing shall have theretofore taken place, by
either party after the Termination Date, provided that the terminating party is
not otherwise materially in default or breach of this Agreement.
10.2 Manner of Exercise. In the event of the termination of this
Agreement by either Buyer or Seller, pursuant to Section 10.1, notice thereof
shall forthwith be given to the other party and this Agreement shall terminate
and the transactions contemplated hereunder shall be abandoned without further
action by Buyer or Seller.
10.3 Effect of Termination. (a) Subject to paragraphs (b), (c), (d) and
(e) of this Section 10.3, in the event of the termination of this Agreement
pursuant to Section 10.1 and prior to the Closing, all obligations of the
parties hereunder shall terminate, except for the respective obligations of the
parties under Section 13.12; provided, however, that no termination of this
Agreement shall (i) except as set forth in paragraphs (b), (c), (d) and (e) of
this Section 10.3 and Section 10.4, relieve a defaulting or breaching party from
any liability to the other party or parties hereto for or in respect of such
default or (ii) result in the rescission of any transaction theretofore
consummated hereunder. For purposes of this Section 10.3 and Section 10.4, the
failure to obtain the Commitment on or prior to June 23, 1997 or the termination
of the Commitment at any time thereafter shall be deemed to be a breach or
default by Buyer of its obligations under this Agreement.
(b) If this Agreement is terminated by Seller pursuant to Section
10. 1(b)(ii), (i) Buyer shall be entitled to an immediate return of the Deposit
and (ii) Seller shall simultaneously with such notice of termination (which
notice of termination shall not be effective unless and until such payment is
made and action is taken) take all action required under the Escrow Agreement to
cause the Deposit (together with all interest earned thereon) to be released to
Buyer and pay to Buyer a termination fee of $1,077,500; provided, that if Seller
terminates this Agreement pursuant to 10.1(b)(ii) with respect to an unsolicited
proposal for an Alternative Transaction proposed by a person who submitted a
written proposal prior to the date
46
of this Agreement to purchase the System pursuant to the competitive auction
conducted by ▇▇▇▇▇▇▇ & Associates, L.P., then the amount of such termination fee
shall be $2,155,000. Any such termination fee shall be liquidated damages and
not a penalty, and upon receipt thereof and the Deposit Buyer shall be precluded
from exercising any other right or remedy available under this Agreement or
applicable law.
(c) If this Agreement is terminated for any reason other than
pursuant to Section 10.l(b)(ii), Section l0.l(b)(iii), Section l0.l(b)(iv) or
Section l0.1(b)(vi) and Buyer is not otherwise in default or breach of this
Agreement, Buyer shall be entitled to the immediate return of the Deposit
(together with all interest earned thereon), and Seller shall promptly (but in
no event more than two Business Days after the date of termination of this
Agreement) take all action required under the Escrow Agreement to cause the
Deposit (together with all interest earned thereon) to be released to Buyer.
(d) If this Agreement is terminated by Seller pursuant to Section
10.1 (b)(vi) on or prior to the Initial Termination Date, and if prior to such
termination, (i) there has occurred a Material Adverse Change in the Financial
Markets since the date of this Agreement and (ii) Seller has received written
notice from Buyer that its failure to have the Commitment was due solely to such
Material Adverse Change in the Financial Markets (which notice shall state with
particularity the events which constitute such change), then Seller's damages
for the termination of this Agreement shall be limited to $3,026,700. In any
action or proceeding to determine damages for termination of this Agreement,
Buyer shall have the burden to prove that the provisions of this paragraph (d)
are applicable to such termination.
(e) If (i) this Agreement is extended by Seller beyond the Initial
Termination Date and is subsequently terminated by Seller pursuant to Section
l0.1(b)(vi) and (ii) at any time after the Initial Termination Date but prior to
the Closing the Commitment is terminated solely because there has been a
Material Adverse Change in the Financial Markets following the Initial
Termination Date, Seller's damages shall be limited to $3,026,700; provided,
that if prior to such termination (x) all conditions to Closing set forth in
Articles VIII and IX, other than Section 9.10, have been satisfied and (y) Buyer
has given written notice to Seller stating that Buyer is prepared to consummate
the transactions contemplated by this Agreement and requesting that Seller waive
the condition to Closing set forth in Section 9.10 (the "Waiver Notice"), then
Seller shall be deemed to have waived all damages hereunder for termination of
this Agreement if thereafter the conditions to Closing set forth in Article VIII
have been satisfied and Buyer is unable to consummate the transactions
contemplated by this Agreement solely because the Commitment was terminated by
the issuing financial institution after the date of the Waiver Notice and the
Commitment was so terminated solely because a "material adverse change," as
defined (on commercially reasonable terms, but specifically excluding any
material adverse change of or relating to the Buyer or its business or financial
condition) in the Commitment, occurred after the date of the Waiver Notice. In
any action or proceeding to determine damages for termination of this Agreement,
Buyer shall have the burden to prove that the provisions of this paragraph (e)
are applicable to such termination.
47
(f) Subject to Section 10.4, if this Agreement is terminated
(i) pursuant to Section 10.1 (b)(vi) or (ii) for any reason other than pursuant
to Section 10.1 (b)(vi) or pursuant to Section 10. 1(b)(ii), and Buyer is in
default or breach of this Agreement, then in either such case the Deposit shall
continue to be held by Escrow Agent in accordance with the terms of the Escrow
Agreement pending final resolution of any claims for damages arising from
Buyer's default or breach of this Agreement or as otherwise directed by Seller
and Buyer.
10.4 Liquidated Damages. Provided that Seller is not in material
default of this Agreement, in the event of (i) the breach or default by Buyer of
its obligations under this Agreement and (ii) the termination of this Agreement
prior to the Closing pursuant to Section l0.l(b)(iii), (iv) or (vi) (but subject
to Section 10.3(e)), Seller shall have the option, upon notice from Seller to
Buyer given as provided in the Escrow Agreement, to receive as liquidated
damages, and not as a penalty, the Deposit. In the event Seller elects to
receive the Deposit (together with all interest earned thereon) as liquidated
damages as set forth in this Section 10.4, Buyer shall promptly (but in no event
more than five Business Days after receipt of such notice of termination) take
all action required under the Escrow Agreement to cause the Deposit (together
with all interest earned thereon) to be released to Seller. If Seller elects to
receive the Deposit as liquidated damages as set forth in this Section 10.4,
Seller shall, upon receipt of the Deposit (together with all interest earned
thereon), be precluded from exercising any other right or remedy available under
this Agreement or applicable law.
ARTICLE XI
11. Nature and Survival of Representations,
Warranties and Agreements.
11.1 Nature of Representations, Warranties and Agreements. Neither
party will be deemed to have made any representation, warranty, covenant or
agreement except as set forth in this Agreement. Without limiting the generality
of the foregoing, neither party will be liable or bound in any manner by any
express or implied representation, warranty, covenant or agreement that is made
by any employee, agent or other Person representing or purporting to represent
such party.
11.2 Survival of Representations and Warranties. The representations
and warranties of Seller and Buyer in this Agreement and in the documents and
instruments to be delivered by Seller and Buyer pursuant to this Agreement shall
survive the Closing only as and to the extent set forth in this Article XI.
11.3 Time Limitations. If the Closing occurs, except as set forth
below, Seller shall have no liability to Buyer with respect to any
representation or warranty or any covenant, agreement or obligation to the
extent required to be performed or complied with prior to the Closing Date,
unless on or before the first anniversary of the Closing Date Seller is given
written notice by Buyer asserting a claim with respect thereto and specifying
the factual basis of that
48
claim in reasonable detail to the extent then known by Buyer. If the Closing
occurs, Buyer shall have no liability to Seller with respect to any
representation or warranty or any covenant, agreement or obligation to the
extent required to be performed or complied with prior to the Closing Date,
unless on or before the first anniversary of the Closing Date Buyer is given
written notice by Seller of a claim with respect thereto and specifying the
factual basis of that claim in reasonable detail to the extent then known by
Seller. A claim with respect to any covenants to be performed or complied with
by Buyer or Seller after the Closing Date may be asserted at any time.
Notwithstanding the foregoing, indemnification claims for the breach of the
representations in Sections 5.5 and 5.16 and indemnification claims arising from
any third party claim asserted against Buyer arising from the Excluded
Liabilities may be made by Buyer at any time.
11.4 Limitations as to Amount. (a) If the Closing occurs, Seller
shall have no liability (for indemnification or otherwise) with respect to any
failure or breach of any representation or warranty or any covenant, agreement
or obligation to the extent required to be performed on or prior to the Closing
Date until the total of all damages with respect to all such failures or
breaches exceeds in the aggregate $50,000, and then only for damages in excess
of $50,000.
(b) If the Closing occurs, Buyer shall have no liability (for
indemnification or otherwise) with respect to any failure or breach of any
representation or warranty or any covenant, agreement, or obligation to the
extent required to be performed on or before the Closing Date until the total of
all damages with respect to all such failures or breaches exceeds in the
aggregate $50,000, and then only for damages in excess of $50,000.
(c) If the Closing occurs, Seller's aggregate liability (for
indemnification or otherwise) with respect to any failure or breach of any
representation or warranty or any covenant, agreement or obligation to the
extent required to be performed on or prior to the Closing Date shall be limited
to Buyer's right to make an indemnification claim against Seller under Article
XII and shall be further limited as set forth in Section 12.3.
ARTICLE XII
12. Indemnification.
12.1 Rights to Indemnification. Subject to the limitations set forth
in Sections 11.3 and 11.4, Seller agrees to indemnify and hold harmless Buyer
against any loss, liability, claim, damage or expense (including, but not
limited to, reasonable attorneys' fees, accountants' fees and disbursements)
arising from (a) any claim for brokerage or agent's or finder's commissions or
compensation in respect of the transactions contemplated by this Agreement by
any Person purporting to act on behalf of Seller, (b) any claim that Buyer is
liable for the Excluded Liabilities and (c) Seller's failure or breach of any
representation, warranty, covenant, agreement or obligation made or required to
be performed by Seller under this
49
Agreement (and specifically excluding any representation, warranty, covenant,
agreement or obligation of TCI or the General Partner, as to which Seller shall
have no obligations to Buyer). Subject to the limitations set forth in Sections
11.3 and 11.4, Buyer agrees to indemnify and hold harmless Seller against any
loss, liability, claim, damage or expense (including, but not limited to,
reasonable attorneys' fees, accountants' fees and disbursements) arising from
(a) any claim for brokerage or agent's or finder's commissions or compensation
in respect of the transactions contemplated by this Agreement by any Person
purporting to act on behalf of Buyer, (b) the failure to perform the obligations
of the Assumed Liabilities, (c) Buyer's failure or breach of any representation,
warranty, covenant, agreement or obligation made or required to be performed by
Buyer under this Agreement and (d) if Buyer has the right to terminate this
Agreement pursuant to Section 7.5(a) and does not give notice to terminate this
Agreement pursuant to Section 10.1 (c)(vii), then after the Closing any claim
with respect to any environmental condition disclosed or any report prepared and
delivered pursuant to Section 7.5.
12.2 Procedure for Indemnification. Promptly after receipt by an
indemnified party under Section 12.1 of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party under such section, give notice to the
indemnifying party of the commencement thereof, but the failure so to notify the
indemnifying party shall not relieve it of any liability that it may have to any
indemnified party except to the extent the indemnifying party demonstrates that
the defense of such action is prejudiced thereby. In case any such action shall
be brought against an indemnified party and it shall promptly give notice to the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, within
ten Business Days of receipt of such notice, to assume the defense thereof with
counsel of its choice and reasonably satisfactory to such indemnified party and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such section for any fees of other
counsel or any other expenses, in each case subsequently incurred by such
indemnified party in connection with the defense thereof, other than reasonable
costs of investigation. If an indemnifying party assumes the defense of such
action, (a) no compromise or settlement thereof may be effected by the
indemnifying party without the indemnified party's consent unless (i) there is
no finding or admission of any violation of law or any violation of the rights
of the indemnified party and no effect on any other claims that may be made
against the indemnified party and (ii) the sole relief provided is monetary
damages that are paid in full by the indemnifying party and (b) the indemnifying
party shall have no liability with respect to any compromise or settlement
thereof effected without its consent (which shall not be unreasonably withheld).
If notice is given to an indemnifying party of the commencement of any action
and it does not, within ten Business Days after the indemnified party's notice
is given, give notice to the indemnified party of its election to assume the
defense thereof, the indemnifying party shall be bound by any determination made
in such action or any compromise or settlement thereof effected by the
indemnified party. Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that an action
may adversely affect it or its Affiliates other than as a result of monetary
damages, such indemnified party may, by notice to the indemnifying party, assume
the exclusive right to
50
defend, compromise or settle such action, but the indemnifying party shall not
be bound by any determination of an action so defended or any compromise or
settlement thereof effected without its consent (which shall not be unreasonably
withheld).
12.3 Deposit. Buyer acknowledges and agrees that recourse against the
Deposit up to an aggregate amount of $1,077,500 is its sole and exclusive remedy
in the event of a claim against Seller with respect to any representation or
warranty or any covenant, agreement or obligation, whether for indemnification
pursuant to Article XI or this Article XII or otherwise; provided, however, that
this limitation shall not apply to claims by Buyer for (i) breaches of
covenants, agreements or obligations to be performed or complied with by Seller
after the Closing Date, (ii) breaches of representations or warranties set forth
in Sections 5.5 and 5.16 and (iii) third party claims asserted against Buyer
arising from the Excluded Liabilities for which Buyer acknowledges and agrees
that its first recourse shall be against the Deposit, to the extent there are
funds available.
ARTICLE XIII
13. Miscellaneous.
13.1 Parties Obligated and Benefitted. (a) Subject to the limitations
set forth in clauses (b) and (c) below, this Agreement will be binding upon the
parties and their respective assigns and successors in interest and will inure
solely to the benefit of the parties and their respective assigns and successors
in interest, and no other Person will be entitled to any of the benefits
conferred by this Agreement.
(b) Without the prior written consent of the other parties, no
party will assign any of its rights under this Agreement or delegate any of its
duties under this Agreement; provided, that Buyer may assign this Agreement to
any Affiliate or subsidiary of Buyer without Seller's consent; provided,
however, that notwithstanding such assignment Buyer shall remain obligated to
Seller pursuant to the terms and conditions of this Agreement.
13.2 Press Releases and Confidentiality. Except as required by
applicable law based on the advice of counsel, neither party shall make any
public announcement, press release or Form 8-K filing under the Exchange Act
with the SEC or any other filing with any other regulatory agency with respect
to the transactions contemplated by this Agreement, without the prior written
approval of the other party. Prior to the Closing Date (or at any time if the
Closing does not occur), Buyer shall, and shall cause its members, officers,
directors, employees, lenders, potential investors, auditors, accountants and
representatives to, keep confidential and not disclose to any Person (other than
its members, officers, directors, employees, lenders, potential investors,
auditors, accountants and representatives) or use any information relating to
Seller, the General Partner, Tele-Communications, Inc., TCI or any of TCI's
direct or indirect wholly-owned subsidiaries and (except in connection with the
transactions contemplated hereby, including, but not limited to, efforts to
obtain from Governmental Authorities and third parties
51
Extensions and Required Consents to the transactions contemplated hereby and the
operation of the Business) all non-public information obtained by Buyer pursuant
to this Agreement. Prior to and following the Closing, Seller shall, and shall
cause its officers, employees and representatives to, keep confidential and not
disclose to any Person or use any information relating to Buyer and (except in
connection with preparing Tax returns, conducting proceedings relating to Taxes
or the Excluded Liabilities and, prior to the Closing Date, as required in the
conduct of the Business or as permitted by Section 7.12) any non-public
information relating to the Business. Buyer agrees to the inclusion of a
description of the transactions contemplated by this Agreement in a letter to
the Limited Partners. This Section 13.2 shall not be violated by disclosure
pursuant to court order or as otherwise required by law, on condition that
notice of the requirement for such disclosure is given to the other party hereto
prior to making any disclosure and the party subject to such requirement
cooperates as the other may reasonably request in resisting it.
13.3 Notices. All notices, consents, approvals, demands, requests and
other communications required or desired to be given hereunder must be given in
writing, shall refer to this Agreement, and shall be sent by registered or
certified mail, return receipt requested, by hand delivery, by facsimile or by
overnight courier service, addressed to the parties hereto at their addresses
set forth below, or such other addresses as they may designate by like notice:
To Seller:
American Cable TV Investors 5, Ltd.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇, Scholer, Fierman,
▇▇▇▇ & Handler, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
To Buyer at:
Mediacom LLC
▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
52
With a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice from a party hereto may be given by such party's respective
attorneys. Any notice or other communications made hereunder shall be deemed to
have been given (i) if delivered personally, by overnight courier service or by
facsimile, on the date received, or (ii) if by registered or certified mail,
return receipt requested, five business days after mailing.
13.4 Waiver. This Agreement or any of its provisions may not be
waived except in writing. The failure of any party to enforce any right arising
under this Agreement on one or more occasions will not operate as a waiver of
that or any other right on that or any other occasion.
13.5 Captions. The article and section captions of this Agreement are
for convenience only and do not constitute a part of this Agreement.
13.6 CHOICE OF LAW. THIS AGREEMENT AND THE LEGAL RELATIONS BETWEEN
THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
IN THAT STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
13.7 Nonrecourse. Notwithstanding anything in this Agreement to the
contrary, in any action brought by reason of this Agreement or the transactions
contemplated hereby, no judgment shall be sought or obtained against any of the
general or limited partners of Seller or enforced against any of such partners
or any of their assets.
13.8 Terms. Terms used with initial capital letters will have the
meanings specified, applicable to both singular and plural forms, for all
purposes of this Agreement. The word "include" and derivatives of that word are
used in this Agreement in an illustrative sense rather than a limiting sense.
13.9 Rights Cumulative. Except as set forth in Section 10.4, all
rights and remedies of each of the parties under this Agreement will be
cumulative, and the exercise of one or more rights or remedies will not preclude
the exercise of any other right or remedy available under this Agreement or
applicable law.
13.10 Further Actions. Seller and Buyer will execute and deliver to
the other, from time to time at or after the Closing, for no additional
consideration and at no additional cost
53
to the requesting party, such further assignments, certificates, instruments,
records, or other documents, assurances or things as may be reasonably necessary
to give full effect to this Agreement and to allow each party fully to enjoy and
exercise the rights accorded and acquired by it under this Agreement.
13.11 Time. If the last day permitted for the giving of any notice or
the performance of any act required or permitted under this Agreement falls on a
day which is not a Business Day, the time for the giving of such notice or the
performance of such act will be extended to the next succeeding Business Day.
13.12 Expenses. Except as otherwise expressly provided in this
Agreement, each party will pay all of its expenses, including attorneys' and
accountants' fees, in connection with the negotiation of this Agreement, the
performance of its obligations and the consummation of the transactions
contemplated by this Agreement.
13.13 Specific Performance. Seller and Buyer agree that irreparable
damages would occur if any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that Seller and Buyer shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, in addition to any other remedy to which they are entitled
at law or in equity; provided, however, that Seller shall not be entitled to
enforce specifically the terms and provisions hereof if Buyer would be required,
as a result of such enforcement, to accept financing on terms which are not
commercially reasonable in order to fund the Purchase Price. Buyer acknowledges
and agrees that financing terms similar to those existing under its senior debt
facility agented by The Chase Manhattan Bank are deemed to be commercially
reasonable.
13.14 Additional Remedies. Buyer, TCI and the General Partner agree
that irreparable harm would occur if any of the obligations of TCI or the
General Partner set forth in Sections 7.3 and 7.16 were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that Buyer shall be entitled to an injunction or injunctions
to prevent breaches of Sections 7.3 and 7.16 and to enforce specifically the
terms and provisions of Sections 7.3 and 7.16 in any court of the United States
or any state having jurisdiction, in addition to any other remedy to which they
are entitled at law or in equity. Buyer shall be entitled to any remedy
available at law or in equity with respect to a breach by TCI or the General
Partner of its respective representations, warranties or covenants in this
Agreement.
13.15 Waiver of Remedies. Each of Seller and Buyer hereby waives any
claim for damages and any right to bring any action, cause of action, suit,
demand or damage in law or equity which it may have against the other arising
from termination of this Agreement pursuant to Section 10.(b)(vii) or 10.1
(c)(viii); provided, however, that neither Seller nor Buyer shall be precluded
from bringing any action or suit arising from any default or breach of this
Agreement.
54
13.16 Schedules. Any disclosure made on a Schedule to this Agreement
will be deemed included on any other Schedule to which such disclosure may be
pertinent.
13.17 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original.
13.18 Entire Agreement. This Agreement (including the Schedules and
Exhibits referred to in this Agreement, which are incorporated in and constitute
a part of this Agreement) contains the entire agreement of the parties and
supersedes all prior oral or written agreements and understandings with respect
to the subject matter. This Agreement may not be amended or modified except by a
writing signed by the parties.
13.19 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.
55
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the day and year first above written.
SELLER: AMERICAN CABLE TV INVESTORS 5, LTD.
By: IR-TCI Partners V, L.P.,
its general partner
By: TCI Ventures Five, Inc.,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
BUYER: MEDIACOM LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: its Manager
With respect to Sections 5.1(b), 5.2(b), 5.3(c),
7.3, 7.12(b), 7.16 and 13.14 only:
TCI COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Exec. Vice President
With respect to Sections 5.1(b), 5.2(b), 5.3(c),
7.12(a), 7.16 and 13.14 only:
IR-TCI PARTNERS V, L.P.
By: TCI Ventures Five, Inc., its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
List of Schedules and Exhibits
Pursuant to
Asset Purchase Agreement
of American Cable TV Investors 5, Ltd.
for AMERICAN CABLE TV OF LOWER DELAWARE/MARYLAND
EXHIBITS
Exhibit A Geographic Areas of Seller's Business
Exhibit B Escrow Agreement
Exhibit C Form of Engagement Letter
Exhibit D Form of Opinion of Seller's Counsel
Exhibit E Form of Opinion of Buyer's Counsel
Exhibit F Form of Opinion of Seller's FCC Counsel
SCHEDULES
Schedule 1.1 Subscriber Rates
Schedule 1.2 Consents
Schedule 1.3 Equipment
Schedule 1.4 Franchise Areas
Schedule 1.5 Governmental Permits
Schedule 1.6 Permitted Encumbrances
Schedule 1.7 Real Property
Schedule 1.8 Seller Contracts
Schedule 1.9 System
Schedule 4.2 Excluded Assets
Schedule 5.3(b) Violations of Partnership Agreement and Legal Requirements
Schedule 5.4 Complete Systems
Schedule 5.5 Encumbrances on Seller's Title
Schedule 5.7 Environmental
Schedule 5.8 Compliance with Law
Schedule 5.9 Seller Contracts
Schedule 5.12 Legal Proceedings
Schedule 5.13(c) Employment Matters
Schedule 5.13(d) Employees
Schedule 5.13(e) Employer Plans
Schedule 5.14 System Information
Schedule 5.16 Taxes
Schedule 6.3(a) Consents to be Obtained or Waived by Closing Date