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EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
ENSTAR IV/PBD SYSTEMS VENTURE,
AS SELLER,
AND
MULTIMEDIA ACQUISITION CORP.,
AS BUYER
Dated as of September 29, 2000
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LIST OF EXHIBITS AND SCHEDULES
Exhibits
A Form of Deposit Escrow Agreement
B Form of Indemnity Escrow Agreement
C Form of ▇▇▇▇ of Sale and Assignment and Assumption Agreement
D Form of Opinion of Seller's Counsel
E Form of Opinion of Seller's FCC Counsel
F Form of Opinion of Buyer's Counsel
Schedules
1.1 Permitted Encumbrances
2.1(b)(i) Programming and Retransmission Consent Agreements Being Assigned
2.1(b)(viii) Excluded Assets
4.3 Required Consents
4.4 Financial Statements
4.6(a) Owned Real Property
4.6(b) Leased Real Property
4.7(b) Personal Property Leases
4.8 Governmental Authorizations
4.9 Agreements
4.10 Pole Attachment Agreements; Related Agreements
4.10A Agreements Not Delivered
4.11 Retransmission Consent and Must-Carry; Rate Regulation
4.14(a) System Plans
4.16 Environmental Matters
4.17 Bonds; Guaranties; Letters of Credit
4.18 Information on the System and Subscribers
6.16 Rebuild Specifications and Budget
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TABLE OF CONTENTS
PAGE
1. DEFINITIONS.............................................................................................1
1.1 Terms Defined in this Section..................................................................1
1.2 Other Definitions..............................................................................8
2. SALE OF ASSETS; ASSUMPTION OF CERTAIN LIABILITIES.......................................................9
2.1 Sales of Assets................................................................................9
2.2 Assumed Liabilities...........................................................................10
3. CLOSING................................................................................................11
3.1 Purchase Price................................................................................11
3.2 Manner and Time of Closing and Payment........................................................11
3.3 Adjustment of Purchase Price..................................................................11
3.4 Instrument of Assignment and Assumption.......................................................14
3.5 Deposit Escrow Agreement......................................................................14
3.6 Purchase Price Allocation.....................................................................14
4. REPRESENTATIONS AND WARRANTIES OF SELLER...............................................................14
4.1 Organization, Qualification and Power.........................................................14
4.2 Capacity; Due Authorization; Enforceability...................................................14
4.3 Absence of Conflicting Agreements.............................................................15
4.4 Financial Statements; Absence of Undisclosed Liabilities; Accounts Receivable.................15
4.5 Absence of Certain Changes....................................................................15
4.6 Real Property; Leases; Condemnation...........................................................16
4.7 Personal Property.............................................................................16
4.8 Governmental Authorizations...................................................................16
4.9 Agreements....................................................................................17
4.10 Pole Attachment Agreements; Related Agreements................................................17
4.11 Retransmission Consent and Must-Carry; Rate Regulation; Copyright Compliance..................18
4.12 Litigation....................................................................................18
4.13 Compliance with Laws..........................................................................18
4.14 Employee Benefit Plans........................................................................19
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TABLE OF CONTENTS
(CONTINUED)
PAGE
4.15 Labor Relations; Employees....................................................................19
4.16 Environmental Matters.........................................................................19
4.17 Bonds; Letters of Credit......................................................................20
4.18 Information on the System and Subscribers.....................................................20
4.19 Broker; Brokers' Fees.........................................................................20
5. REPRESENTATIONS AND WARRANTIES OF BUYER................................................................20
5.1 Organization, Qualification and Power.........................................................20
5.2 Capacity; Due Authorization; Enforceability...................................................21
5.3 Absence of Conflicting Agreements.............................................................21
5.4 Litigation....................................................................................21
5.5 Financial Capability..........................................................................21
5.6 Brokers.......................................................................................21
6. COVENANTS OF SELLER AND BUYER..........................................................................22
6.1 Continuity and Maintenance of Operations......................................................22
6.2 Access to Seller; Confidentiality.............................................................22
6.3 Notification..................................................................................23
6.4 No Public Announcement........................................................................23
6.5 Regulatory Filings............................................................................24
6.6 Employees; Employee Benefits..................................................................24
6.7 Required Consents.............................................................................25
6.8 Use of Transferor's Name......................................................................26
6.9 Delivery of Subscriber Information............................................................27
6.10 Tax Matters...................................................................................27
6.11 Further Assurances; Satisfaction of Covenants.................................................27
6.12 Environmental Reports; Title Commitments......................................................27
6.13 Limited Partner Consents......................................................................29
6.14 Acquisition Proposals.........................................................................30
6.15 Noncompetition Agreement......................................................................30
6.16 Poplar Bluff Rebuild..........................................................................30
6.17 Performance of Settlement Agreement...........................................................32
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TABLE OF CONTENTS
(CONTINUED)
PAGE
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS............................................................33
7.1 Representations and Warranties of Seller......................................................33
7.2 Covenants.....................................................................................33
7.3 Material Consents.............................................................................33
7.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.........................................................................33
7.5 Judgment......................................................................................33
7.6 Delivery of Certificates and Documents........................................................33
7.7 Opinion of Seller's Counsel...................................................................34
7.8 Opinion of Seller's FCC Counsel...............................................................34
7.9 Partner Consents..............................................................................34
7.10 Aggregate Subscriber Total....................................................................34
7.11 Enstar Purchase Agreement.....................................................................34
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS...........................................................34
8.1 Representations and Warranties of Buyer.......................................................34
8.2 Covenants.....................................................................................35
8.3 Material Consents.............................................................................35
8.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.........................................................................35
8.5 Judgment......................................................................................35
8.6 Partner Consents..............................................................................35
8.7 Aggregate Subscriber Total....................................................................35
8.8 Enstar Purchase Agreement.....................................................................35
8.9 Delivery of Certificates and Documents........................................................35
8.10 Opinion of Buyer's Counsel....................................................................36
8.11 Payment for Assets............................................................................36
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION............................................36
9.1 Survival of Representations and Warranties....................................................36
9.2 Indemnification...............................................................................36
9.3 Assertion of Claims...........................................................................37
9.4 Notice of and Right to Defend Third Party Claims..............................................37
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TABLE OF CONTENTS
(CONTINUED)
PAGE
9.5 Limitations of Liability......................................................................38
9.6 Indemnity Escrow Agreement....................................................................38
10. TERMINATION............................................................................................38
10.1 Termination...................................................................................38
10.2 Breakup Fee; Acquisition Proposals............................................................39
10.3 Reimbursement of Expenses.....................................................................40
10.4 Surviving Obligations.........................................................................40
10.5 Attorney's Fees...............................................................................40
11. EXPENSES...............................................................................................41
12. ENTIRE AGREEMENT.......................................................................................41
13. PARTIES OBLIGATED AND BENEFITED........................................................................41
14. NOTICES................................................................................................41
15. AMENDMENTS AND WAIVERS.................................................................................42
16. SEVERABILITY...........................................................................................42
17. SECTION HEADINGS AND TERMS.............................................................................43
18. COUNTERPARTS...........................................................................................43
19. GOVERNING LAW; CONSENT IN JURISDICTION.................................................................43
20. SPECIFIC PERFORMANCE...................................................................................43
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made as of the 29th day of September, 2000, is
by and between Multimedia Acquisition Corp., a Pennsylvania corporation
("Buyer"), and Enstar IV/PBD Systems Venture, a Georgia general partnership
("Seller").
W I T N E S S E T H:
WHEREAS, Seller owns and operates a cable television System
(as hereinafter defined) serving areas in and around Poplar Bluff, Missouri, as
more particularly described in Schedule 4.18 hereto;
WHEREAS, Seller has agreed to convey to Buyer substantially
all of its assets comprising or used or usable in connection with its operation
of the System, upon the terms and conditions set forth herein;
WHEREAS, Buyer has agreed to assume certain specified
liabilities of Seller, upon the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the representations and
warranties and the mutual covenants and agreements herein contained, and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Seller and Buyer do hereby agree as follows:
1. Definitions.
1.1 Terms Defined in this Section. In addition to the terms defined
elsewhere in this Agreement, the following terms shall have the following
meanings when used herein with initial capital letters:
"Accounts Receivable" means the sum of 99% of the book value
of all subscriber accounts receivable that are outstanding as of the Closing
Date and no part of which other than $5.00 is more than sixty (60) days past due
(with an account being past due one day after the first day of the period to
which the applicable billing relates); plus 95% of the book value of all
advertising and other accounts receivable that are outstanding as of the Closing
Date and no part of which other than $5.00 is more than ninety (90) days from
the invoice date.
"Affiliate" means, 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.
"Basic Cable Service" means the tier of cable television
service that includes the retransmission of local broadcast signals as defined
by the Cable Act.
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"Business Day" means any day other than Saturday, Sunday or a
day on which banking institutions in New York, New York are required or
authorized to be closed.
"Cable Act" means Title VI of the Communications Act of 1934,
as amended, 47 U.S.C. Sections 151 et seq., all other provisions of the Cable
Communications Policy Act of 1984 and the provisions of the Cable Television
Consumer Protection and Competition Act of 1992, and the provisions of the
Telecommunications Act of 1996 amending Title VI of the Communications Act of
1934, in each case as amended and in effect from time to time.
"Charter" means Charter Communications, Inc., a Delaware
Corporation.
"City" means the City of Poplar Bluff, Missouri.
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder as in effect from time to
time.
"Communications Act" means the Communications Act of 1934, as
amended by the Cable Communications Policy Act of 1984, the Cable Television
Consumer Protection and Competition Act of 1992 and the provisions of the
Telecommunications Act of 1996 amending Title VI of the Communications Act of
1934, and as may be further amended, and the rules and regulations, policies and
published decisions of the FCC thereunder, as in effect from time to time.
"Compensation Arrangement" means any plan or compensation
arrangement, other than an Employee Plan or a Multiemployer Plan, whether
written or unwritten, which provides to employees or former employees of Seller
or any ERISA Affiliate any compensation or other benefits, whether deferred or
not, in excess of base salary or wages and excluding overtime pay, and
including, but not limited to, any bonus (including any bonus given to motivate
employees to work for Seller through the Closing), incentive plan, stock rights
plan, deferred compensation arrangement, stock purchase plan, severance pay plan
and any other perquisites and employees fringe benefit plans.
"Deposit Amount" means the amount of $750,000, being deposited
by Buyer with the Escrow Agent pursuant to the Deposit Escrow Agreement to
secure Buyer's performance of its covenants and obligations hereunder.
"Deposit Escrow Agreement" means the Deposit Escrow Agreement
among Buyer, Seller and the Escrow Agent, substantially in the form of Exhibit
A.
"Employee" means any person employed by Seller.
"Employee Plan" means any pension, retirement, profit-sharing,
deferred compensation, vacation, severance, bonus, incentive, medical, vision,
dental, disability, life insurance or any other employee benefit plan as defined
in Section 3(3) of ERISA (other than a Multiemployer Plan) to which Seller or
any of its ERISA Affiliates contributes or has any
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obligation to contribute or to which Seller or any of its ERISA Affiliates
sponsors, maintains or otherwise has liability.
"Encumbrance" means any mortgage, lien, security interest,
security agreement, conditional sale or other title retention agreement, pledge,
option, charge, assessment, restriction, encumbrance, adverse interest, adverse
claim, voting agreement, restriction on transfer or any exception to or defect
in title.
"Enstar" means Enstar Communications Corporation, a Georgia
corporation.
"Environmental Claim" means any claim or charge of a violation
of or noncompliance with any Environmental Law.
"Environmental Laws" means any and all federal, state or local
laws, statutes, rules, regulations, ordinances, orders, decrees and other
binding obligations: (i) related to releases or threatened releases of any
Hazardous Substance to soil, surface water, groundwater, air or any other
environmental media; (ii) governing the use, treatment, storage, disposal,
transport or handling of Hazardous Substances; or (iii) related to the
protection of the environment and human health. Such Environmental Laws shall
include, but are not limited to, RCRA, CERCLA, EPCRA, the Clean Air Act, the
Clean Water Act, the Safe Drinking Water Act, the Toxic Substances Control Act,
the Endangered Species Act and any other federal, state or local laws, statutes,
ordinances, rules, orders, permit conditions, licenses or any terms or
provisions thereof related to clauses (i), (ii) or (iii) above.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations thereunder, as in effect from
time to time.
"ERISA Affiliate" means, with respect to Seller, (i) any
corporation which at, or at any time before, the Closing Date is or was a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Code) as Seller; (ii) any partnership, trade or business (whether
or not incorporated) which, at or any time before, the Closing Date is or was
under common control (within the meaning of Section 414(c) of the Code) with
Seller; (iii) any entity, which at, or at any time before, the Closing Date is
or was a member of the same affiliated service group (within the meaning of
Section 414(m) of the Code) as either Seller, any corporation described in
clause (i) or any partnership, trade or business described in clause (ii); and
(iv) any entity which at any time before the Closing Date is or was required to
be aggregated with Seller under Section 414(o) of the Code.
"Escrow Agent" means The Bank of New York, or any other bank
reasonably acceptable to Seller and Buyer.
"Expanded Basic Service" means the tier of cable television
service offered separately from Basic Cable Service and for a charge in addition
to that charged for Basic Cable Service, and that can only be purchased by
subscribers that also receive Basic Cable Service, but
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not including any a la carte programming tier or other programming offered on a
per channel or per program basis.
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"Franchise" means all franchise agreements and similar
governing agreements, instruments and resolutions and franchise-related statutes
and ordinances that are necessary or required in order to operate the System and
to provide cable television services in the System.
"Franchise Area" means, with respect to any Franchise, the
geographic area in which Seller is authorized to operate the System pursuant to
such Franchise.
"Franchise Renewal" means an extension or renewal of the
Poplar Bluff Franchise on terms and conditions satisfactory to Buyer in its
reasonably exercised discretion.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"General Partner" means each of Enstar Income Program IV-1,
L.P. and Enstar Income Program IV-2, L.P.
"Governmental Authority" means (i) the United States of
America or (ii) any state of the United States of America and any political
subdivision thereof, including counties, municipalities and the like.
"Governmental Authorizations" means, collectively, all
Franchises and other authorizations, agreements, Licenses and permits for and
with respect to the construction and operation of the System obtained from any
Governmental Authority.
"Hazardous Substance" means any substance, hazardous material
or other substance or compound regulated under Environmental Laws, including,
without limitation, petroleum or any refined product or fraction or derivative
thereof.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder, as in effect
from time to time.
"Indemnity Escrow Agreement" means the Indemnity Escrow
Agreement among Buyer, Seller and the Escrow Agent, substantially in the form of
Exhibit B.
"Indemnity Fund" means the aggregate amount of $750,000, being
deposited by Buyer with the Escrow Agent pursuant to the Indemnity Escrow
Agreement in accordance with Section 9.6 and the terms of the Indemnity Escrow
Agreement, to provide funds for the payment of any indemnification to which any
Buyer Indemnitee shall be entitled under Section 9 hereof.
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"Knowledge of Seller" or "Seller's Knowledge" means the actual
knowledge of the chief financial officer of Enstar or the general manager of the
System.
"Leases" means the Personal Property Leases and the Real
Property Leases.
"Legal Requirement" means any statute, ordinance, code, law,
rule, regulation, permit or permit condition, administrative or judicial decree,
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.
"License" means any license, permit or other authorization
(other than a Franchise) issued by a Governmental Authority, including, but not
limited to, the FCC, used or useful in the operation of the System (including
but not limited to TV translator station licenses, microwave licenses (including
but not limited to Cable Television Relay Services "CARS") and TVRO earth
station registrations).
"Limited Partner" means each of the limited partners of each
General Partner.
"Limited Partner Consents" means the written consents of the
Limited Partners that are necessary for the consummation of the transactions
contemplated by this Agreement by Seller in accordance with the terms hereof,
which shall be in form and substance satisfactory to Seller.
"Material Adverse Effect" means a material adverse effect on
any of the business, financial condition, results of operations, assets or
liabilities of Seller or the System.
"Material Consents" means the Required Consents designated as
Material Consents in Schedule 4.3.
"Multiemployer Plan" means a plan, as defined in Section 3(37)
or 4001(a)(3) of ERISA, to which Seller or any trade or business that would be
considered a single employer with Seller under Section 4001(b)(1) of ERISA
contributed, contributes or is required to contribute.
"Outside Closing Date" means May 31, 2001.
"Partner Consents" means, collectively, the Limited Partner
Consents and the written consents of the General Partners that are necessary for
the consummation of the transactions contemplated by this Agreement by Seller in
accordance with the terms hereof, which shall be in form and substance
satisfactory to Seller.
"Past Practices" means the practices used since November 12,
1999, in the System and in any cable system directly or indirectly controlled by
Charter that is of comparable size to the System and is located in a geographic
area comparable to that in which the System is located.
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"Permitted Encumbrances" means the following: (i) statutory
landlord's liens and liens for current taxes, assessments and governmental
charges not yet due and payable (or being contested in good faith); (ii) zoning
laws and ordinances and similar Legal Requirements; (iii) rights reserved to any
Governmental Authority to regulate the affected property; (iv) as to interests
in Real Property, any easements, rights-of-way, servitudes, permits,
restrictions and minor imperfections or irregularities in title that are
reflected in the public records and that do not individually or in the aggregate
materially interfere with the right or ability to own, use, lease or operate the
Real Property as presently utilized; and (v) Encumbrances set forth in Schedule
1.1, provided that such Encumbrances set forth in Schedule 1.1 do not
individually or in the aggregate materially interfere with Buyer's right to own,
use, lease or operate the Assets subject to such Encumbrances.
"Person" means any natural person, corporation, partnership,
trust, unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
"Poplar Bluff Franchise" means the Franchise issued by the
City of Poplar Bluff, Missouri.
"Real Property" means all of the fee and leasehold estates
and, to the extent of the interest, title, and rights of Seller therein, the
following: buildings and other improvements thereon, easements, licenses, rights
to access, rights-of-way and other real property interests that are owned or
held by Seller and used or held for use in the business or operations of the
System, plus such additions thereto (including the new headend site being
acquired by Seller with respect to the Rebuild) and less such deletions
therefrom arising between the date hereof and the Closing Date in accordance
with this Agreement.
"Related Agreements" means all written agreements,
instruments, affidavits, certificates and other documents, other than this
Agreement, that are executed and delivered by Buyer or Seller pursuant to this
Agreement or in connection with Buyer's purchase of the Assets or any other
transactions contemplated by this Agreement, regardless of whether such
agreements, instruments, affidavits, certificates and other documents are
expressly referred to in this Agreement.
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment or into or out of any Real
Property (owned, leased or used by easement), including the movement of
contaminants through or in the air, soil, surface water or groundwater above, in
or below any parcel of Real Property.
"Remedial Action" means any and all actions required to (i)
clean up, remove, treat or in any other way address contaminants in the indoor
or outdoor environment, (ii) prevent the Release or threat of Release or
minimize the further Release of contaminants so they do not migrate or endanger
public health or welfare of the indoor or outdoor environment or (iii) perform
pre-remedial studies and investigations and post-remedial monitoring and care.
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"Required Consents" means any consent of any Governmental
Authority or other Person under any License, Franchise, Agreement or other
instrument which is necessary as a condition to the transfer or assignment of
any such License, Franchise, Agreement or other instrument or as a condition to
the consummation of the transaction contemplated by this Agreement and the
Related Agreements.
"SEC" means the United States Securities and Exchange
Commission.
"Settlement Agreement" means the Global Class Action
Settlement Agreement (and any other settlement agreement, as the case may be)
pursuant to the class action lawsuit titled ▇▇▇▇▇▇▇, et al. v. Charter
Communications Holding Company, LLC, et al., Civil Action No. 99-L-48, Third
Judicial Circuit, Madison County, Illinois, and related litigation,
substantially in the form of the draft Global Class Action Settlement Agreement
with respect to such lawsuit dated July 28, 2000.
"Subscriber" means an active customer of the System who
subscribes for Basic Cable Service in a single household (excluding "second
connections", as such term is commonly understood in the cable television
industry, and any account duplication), commercial establishment or in a
multi-unit dwelling (including motels and hotels), and has paid the applicable
full non-discounted rate for at least one month's Basic Cable Service (including
deposit and installation charges consistent with Seller's past practice);
provided, however, that the number of customers in a multi-unit dwelling or
commercial establishment that obtains service on a "bulk-rate" basis shall be
determined by dividing the gross bulk-rate revenue for Basic Cable Service and
Expanded Basic Service (but not revenues from tier or premium services,
installation or converter rental) attributable to such multi-unit dwelling or
commercial establishment in the System by the subscription rate for individual
households within the System for the higher level of Basic Cable Service and
Expanded Basic Service offered by the System. For purposes of this definition,
an "active customer" shall mean any customer: (i) who has not given or been
given notice of termination and who, consistent with Seller's policies, should
not have been given notice of termination; provided, that the number of
subscribers referred to in this clause (i) shall be net of the number of
prospective subscribers whose connection to the System is pending; (ii) who has
become a subscriber only pursuant to customary marketing promotions conducted in
the ordinary course of business consistent with Past Practices, excluding any
customers who became subscribers as a result of any such promotions conducted
within the preceding thirty (30) days; and (iii) whose account does not have an
outstanding balance (other than an amount of $5.00 or less) more than 60 days
past due (with an account being past due one day after the first day of the
period to which the applicable billing relates).
"System" means the cable television system serving the
community of Poplar Bluff, Missouri.
"Taxes" or "Tax" means and includes, without limitation, all
net income, capital gains, gross income, gross receipt, property, franchise,
sales, use, excise, withholding and other taxes, assessments, levies, fees,
duties, tariffs and other charges of any kind imposed upon Seller or any of the
Assets, as applicable, by federal, foreign, state or local law, together with
any
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interest and any penalties, or additions to tax and additional amounts, validly
imposed with respect to such taxes.
"Transferable Franchise Area" means any Franchise Area with
respect to which (A) any Required Consent necessary under a Franchise in
connection with the consummation of the transactions contemplated by this
Agreement shall have been obtained or shall have been deemed obtained by
operation of law in accordance with the provisions of the Cable Act, or (B) no
Required Consent is necessary under a Franchise in connection with the
consummation of the transactions contemplated by this Agreement.
"Voting Period" means the period during which the Limited
Partners are entitled to vote to approve or disapprove the transactions
contemplated by this Agreement, pursuant to Section 6.13.
"WARN Act" means the Worker Adjustment Retraining and
Notification Act.
1.2 Other Definitions. The following terms are defined in the Sections
indicated:
Term Section
---- -------
Adjusted Purchase Price 3.1
Agreements 4.9(a)(iv)
Acquisition Proposal 6.14
Assets 2.1(a)
Assumed Liabilities 2.2
▇▇▇▇ of Sale and Assignment
and Assumption Agreement 3.4
Breakup Fee 10.2(a)
Broker 4.19
Buyer Preamble
Buyer Acquisition Proposal 6.14
Claim 9.3(b)
Closing 3.2
Closing Date 3.2
Completion Date 6.16(c)
Confidential Information 6.2(b)
Copyright Act 4.11(b)
DOJ 6.2(b)
Enstar Purchase Agreement 7.11
Environmental Defects 6.12(c)
Environmental Reports 6.12(a)(i)
Excluded Assets 2.1(b)
Financial Statements 4.4
FTC 6.2(b)
Holdback 6.16(b)
Indemnitee 9.4
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Term Section
---- -------
Indemnitor 9.4
Indemnity Period 9.1
Interest 6.14
Personal Property Leases 4.7(b)
Pole Attachment Agreements 4.10
Post-Closing Certificate 3.3(b)
Pre-Closing Certificate 3.3(a)
Purchase Price 3.1
Real Estate Inspection Period 6.12(a)(i)
Real Property Leases 4.6(b)
Rebuild 6.16(a)
Seller Preamble
Seller's Health Plans 6.6(b)
Surveys 6.12(a)(i)
System Plans 4.14(a)
Target Date 6.16(a)
Title Commitments 6.12(a)(i)
Title Company 6.12(a)(i)
Title Defect 6.12(b)
Transferred Employee 6.6(a)
2. Sale of Assets; Assumption of Certain Liabilities.
2.1 Sales of Assets.
(a) Subject to the terms, provisions and conditions contained
in this Agreement, and on the basis of the representations and warranties herein
set forth, on the Closing Date, Seller agrees to sell, assign, transfer, convey
and deliver to Buyer, and Buyer agrees to purchase and acquire from Seller, all
right, title and interest of Seller in the Assets (as defined herein), free and
clear of all Encumbrances other than Permitted Encumbrances. The "Assets" shall
mean all of the assets (tangible and intangible, real and personal), owned,
leased or otherwise held by Seller and used or usable in connection with the
operation of the System; provided, that the Assets shall not include any of the
"Excluded Assets," as defined in Section 2.1(b). Except as expressly set forth
in this Agreement, the Assets will be conveyed to Buyer on an "AS IS, WHERE IS"
basis without representations or warranties of any kind or manner whatsoever.
The Assets shall include, without limitation, the following:
(i) all of Seller's rights under the Agreements,
Franchises, Licenses and other Governmental Authorizations and any other
instruments relating to operation of the System, and all intangibles relating to
operation of the System, including, but not limited to, all claims and goodwill,
if any, with respect to the operation of the System;
(ii) all tangible personalty, electronic devices, trunk
and distribution cable, amplifiers, power supplies, conduit, vaults and
pedestals, grounding and pole hardware,
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subscriber devices (including, without limitation, converters, traps, decoders,
switches, and fittings), "headend" (origination, signal processing and
transmission) equipment, facilities, vehicles, inventories, supplies and other
personal property used or usable in the operation of the System;
(iii) all realty, towers, fixtures, leasehold and other
interests in Real Property;
(iv) all accounts receivable of Seller relating to its
operation of the System; and
(v) all business, operational, maintenance, tax and
financial (relating primarily to the System or the Assets) and engineering
records, files, data, drawings, blueprints, schematics and maps, if any, of the
System and reports and records concerning suppliers, customers, subscribers and
others customary to the management and operation of the System.
(b) Notwithstanding the foregoing, the Assets shall not
include, and Buyer shall not acquire any interest in or to, any of the following
(the "Excluded Assets"):
(i) programming and retransmission consent agreements of
Seller other than those listed on Schedule 2.1(b)(i);
(ii) insurance policies of Seller and rights and claims
thereunder;
(iii) bonds, letters of credit, surety instruments and
other similar items and any stocks, bonds, certificates of deposit and similar
investments of Seller;
(iv) cash and cash equivalents and notes receivable of
Seller;
(v) Seller's trademarks, trade names, service marks,
service names, logos and similar proprietary rights, subject to Section 6.8;
(vi) Seller's minute books and other books and records
related to internal matters and financial relationships with Seller's lenders
and affiliates;
(vii) all Employee Plans, Multiemployer Plans and
Compensation Arrangements;
(viii) the assets and properties set forth in Schedule
2.1(b)(viii), including the digital ad insertion equipment listed thereon which
is located at the headend for the System; and
(ix) installment sale agreements and other agreements
under which Buyer would be obligated to pay the deferred purchase price of
property, except any such agreements that are listed in Schedule 4.9 hereto and
except any such agreements permitted to be entered into by Seller pursuant to
Section 6.1(b)(viii).
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2.2 Assumed Liabilities. Subject to the terms, provisions and
conditions contained in this Agreement, and on the basis of the representations
and warranties herein set forth on the Closing Date, Buyer agrees to pay,
discharge and perform the following to the extent related to the Assets received
by Buyer (the "Assumed Liabilities"):
(i) liabilities and obligations under any Agreements,
Governmental Authorizations, Licenses and other instruments included within the
Assets and accruing and relating to the period from and after the Closing Date;
(ii) liabilities and obligations of Seller to the extent
there is a reduction in the Purchase Price pursuant to Section 3.3(a)(ii) with
respect thereto; and
(iii) liabilities and obligations arising out of Buyer's
ownership or operation of the System from and after the Closing Date, except to
the extent that any such liability or obligation relates to any of the Excluded
Assets.
All other obligations and liabilities of Seller, including (a) obligations with
respect to the Excluded Assets, (b) any obligations under the Agreements assumed
by Buyer relating to the time period prior to or on the Closing Date and (c) any
claims or pending litigation or proceedings relating to the operation of the
System prior to or on the Closing Date shall remain the obligations and
liabilities of Seller.
3. Closing.
3.1 Purchase Price. The aggregate purchase price payable for the Assets
shall be Five Million Five Hundred Twenty Two Thousand Four Hundred Dollars
($5,522,400), as adjusted at the Closing pursuant to Section 3.3(a) (the
"Purchase Price"), and as further adjusted post-Closing pursuant to Sections
3.3(b), 3.6, 6.16(b) and 6.17 (as so adjusted, the "Adjusted Purchase Price").
3.2 Manner and Time of Closing and Payment. The closing of the
transactions contemplated herein (the "Closing") shall take place at 9:00 a.m.
at the offices of ▇▇▇▇ Marks & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, or at such other time and location mutually determined by Seller and
Buyer, on the last Business Day of the calendar month that is at least five (5)
Business Days after the satisfaction or waiver of all conditions set forth in
Sections 7.3, 7.4, 7.9, 8.3, 8.4 and 8.6 hereof, but, subject to Section 11.1(b)
hereof, no later than the Outside Closing Date (such date on which the Closing
actually occurs, the "Closing Date"). At Closing, (a) Buyer shall deliver to
Seller the Purchase Price (as adjusted pursuant to Section 3.3(a)), less (i) the
amount of the Deposit Amount and all interest and other earnings accrued thereon
and (ii) the amount of the Indemnity Fund, in immediately available funds by
wire, inter-bank or intra-bank transfer, in accordance with Seller's written
instructions, to be delivered to Buyer at least three (3) Business Days prior to
Closing; (b) Buyer and Seller shall cause the Escrow Agent to deliver to Seller
the Deposit Amount and all interest and other earnings accrued thereon, in
accordance with the terms of the Deposit Escrow Agreement, which amount shall be
credited against the Purchase Price; and (c) Buyer shall deliver the Indemnity
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Fund to the Escrow Agent, in accordance with the terms of the Indemnity Escrow
Agreement and the Escrow Agent's instructions.
3.3 Adjustment of Purchase Price.
(a) The Purchase Price shall be subject to adjustment, as of
11:59 p.m. (New York City time) on the Closing Date, to, among other things,
reflect, in accordance with GAAP, the principle that all revenues and refunds,
and all costs, expenses and liabilities, attributable to the operation of the
System for any period prior to such time on the Closing Date are for the account
of Seller, and all revenues and refunds, and all costs, expenses and liabilities
(other than liabilities and obligations under contracts or other obligations of
Seller that Buyer does not assume) attributable to the operation of the System
from and after such time on the Closing Date are for the account of Buyer. The
adjustments to be made to the Purchase Price pursuant to this Section 3.3(a)
shall consist of the following:
(i) an increase in the Purchase Price by an amount equal
to the sum of:
(A) all prepaid items relating to the ownership or
operation of the Assets or the System and for which Buyer will receive a benefit
after the Closing, which prepaid items shall be prorated between Seller and
Buyer as of the Closing Date on the basis of the period covered by the
respective prepayment, and shall be deemed to include, without limitation, all
such prepaid items attributable to: real and personal property taxes and
assessments levied against the Assets; real and personal property rentals; pole
rentals; and power and utility charges;
(B) the amount of the Accounts Receivable; and
(C) the amount by which the Purchase Price is
increased pursuant to Section 6.16(b).
(ii) a decrease in the Purchase Price by an amount equal
to the sum of:
(A) the amount of all subscriber prepayments, credit
balances and deposits held by Seller as of the Closing Date with respect to the
System;
(B) all accrued and unpaid expenses relating to the
ownership or operation of the Assets and the System, including accrued and
unpaid franchise fees (which accrued and unpaid expenses shall be prorated
between Seller and Buyer as of the Closing Date on the basis of the period to
which the respective expense relates, and shall be deemed to include, without
limitation, accrued and unpaid expenses of the kind itemized in Section
3.3(a)(i)(A) above);
(C) in the event that the total number of
Subscribers on the Closing Date is less than 6,100, the product of (I) $900 and
(II) the number of Subscribers by which the actual number of Subscribers on the
Closing Date is less than 6,100;
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(D) with respect to Transferred Employees, accrued
obligations for vacation and sick days, subject to Section 6.6(c); and
(E) any amounts by which the Purchase Price is
decreased pursuant to Section 6.12(a), (b) or (c).
Seller shall deliver to Buyer, not less than seven (7) Business Days prior to
the Closing Date, a certificate signed by Seller (the "Pre-Closing
Certificate"), which shall specify Seller's good faith best estimate of the
adjustments to the Purchase Price required under this Section 3.3(a) above,
calculated as of the Closing Date and prepared consistent with GAAP. The
Pre-Closing Certificate shall be accompanied by reasonably detailed
documentation supporting the calculations set forth therein. Buyer shall have
the right to challenge the content of the Pre-Closing Certificate within four
(4) Business Days following delivery if Buyer believes, in good faith, that it
is in error. Buyer and Seller shall use good faith efforts to resolve any
disputes with respect to the Pre-Closing Certificate prior to the Closing Date.
If any such dispute is not resolved prior to the Closing, the amount of the
Purchase Price paid to Seller at Closing shall be based on the adjustments to
the Purchase Price set forth in the Pre-Closing Certificate.
(b) Within 120 days after the Closing Date, Buyer shall
deliver to Seller a certificate signed by Buyer (the "Post-Closing
Certificate"), which shall set forth Buyer's final adjustments to the Purchase
Price to be made pursuant to Sections 3.3(a) and any additional adjustments to
be made pursuant to Sections 3.6, 6.16(b) and 6.17, together with such
documentation as may be necessary to support Buyer's determination thereof; and,
thereafter, Buyer shall provide Seller with such other documentation relating to
the Post-Closing Certificate as Seller may reasonably request. If Seller wishes
to dispute the final adjustments to the Purchase Price to be made pursuant to
Sections 3.3(a), 3.6, 6.16(b) and 6.17, as reflected in the Post-Closing
Certificate, Seller shall, within thirty (30) days after its receipt of the
Post-Closing Certificate, serve Buyer with a written description of the disputed
items together with such documentation as Buyer may reasonably request. If
Seller notifies Buyer of its acceptance of the amounts set forth in the
Post-Closing Certificate, or if Seller fails to deliver its report of any
proposed adjustments within the thirty (30)-day period specified in the
preceding sentence, the amounts set forth in the Post-Closing Certificate shall
be conclusive, final and binding on Buyer and Seller as of the last day of such
thirty (30)-day period. If Buyer and Seller cannot resolve any dispute within
thirty (30) days after Buyer's receipt of Seller's written objection, Buyer and
Seller, shall, within the ten (10) days following expiration of such thirty
(30)-day period, appoint KPMG or such other independent public accounting firm
of national reputation as is agreed upon by the parties to resolve the dispute,
provided such firm is not the auditor for either Buyer or Seller. The cost of
retaining such firm shall be borne one-half by Buyer and one-half by Seller.
Such firm shall report its determination in writing to Buyer and Seller, and
such determination shall be conclusive and binding on Buyer and Seller and shall
not be subject to further dispute or review.
(c) If, as a result of any resolution reached by Buyer and
Seller, or any determination made by an accounting firm, in either case pursuant
to Section 3.3(b), Buyer is finally determined to owe any amount to Seller, or
Seller is finally determined to owe any
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amount to Buyer,the obligor shall pay such amount to the other party hereto
within three (3) Business Days of such determination. Notwithstanding the
foregoing, Buyer shall pay to Seller or Seller shall pay to Buyer, as the case
may be, the amount due such other party with respect to any item that is not in
dispute within three (3) Business Days of the date on which a dispute no longer
exists, in immediately available funds to an account or accounts specified in
writing by the obligee. Seller acknowledges and agrees that any amount
determined to be payable to Buyer pursuant to Section 3.3(b) shall be paid by
Seller and shall not be limited by nor disbursed from the Indemnity Fund.
3.4 Instrument of Assignment and Assumption. At the Closing, Buyer and
Seller will execute and deliver a ▇▇▇▇ of Sale and Assignment and Assumption
Agreement, in the form of Exhibit C (the "▇▇▇▇ of Sale and Assignment and
Assumption Agreement").
3.5 Deposit Escrow Agreement. Concurrent with the execution hereof
Buyer and Seller shall execute and deliver the Deposit Escrow Agreement, and
Buyer shall deposit the Deposit Amount with the Escrow Agent in accordance with
the terms thereof.
3.6 Purchase Price Allocation. Buyer and Seller will use good faith
efforts to agree on the allocation of the Purchase Price payable to Seller among
the Assets. As soon as practicable following the date hereof, Buyer shall
deliver to Seller a proposed allocation. Buyer and Seller shall file the form
required to be filed under Section 1060 of the Code consistent with such agreed
upon allocation.
4. Representations and Warranties of Seller.
Seller hereby represents and warrants to Buyer that the following
statements are true and correct.
4.1 Organization, Qualification and Power.
(a) Seller is a general partnership duly organized, validly
existing and in good standing under the laws of the State of Georgia, with full
power and authority to own, lease or license its properties and assets and to
carry on the business in which it is engaged in the manner in which such
business is now carried on.
(b) Enstar is a corporation, duly incorporated, validly
existing and in good standing under the laws of the State of Georgia, with full
power and authority to carry on the business in which it is engaged in the
manner in which such business is now carried on. Enstar is the sole general
partner of each of the General Partners.
4.2 Capacity; Due Authorization; Enforceability. Subject to obtaining
the Partner Consents all requisite general partnership action required to be
taken by Seller for the execution, delivery and performance by Seller of this
Agreement and all Related Agreements to which it is a party have been duly
taken. Seller has the full legal capacity and legal right, power and authority
to enter into this Agreement and the Related Agreements and to consummate the
transactions contemplated hereby and thereby. Enstar has the full legal capacity
and legal right,
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power and authority to execute this Agreement and any of the Related Agreements
to which Seller is a party on behalf of each General Partner. Subject to
obtaining the Partner Consents, this Agreement has been duly executed and
delivered by Seller, and this Agreement and each of the Related Agreements to
which Seller is a party, upon execution and delivery, will be a legal, valid and
binding obligation of Seller, enforceable in accordance with its respective
terms, except in each case to the extent that such enforcement may be subject to
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws of
general application affecting the rights and remedies of creditors or secured
parties, and that the availability of equitable remedies including specific
performance and injunctive relief may be subject to equitable defenses and the
discretion of the court before which any proceeding therefor may be brought.
4.3 Absence of Conflicting Agreements.
(a) The execution and delivery of this Agreement and the
Related Agreements to which Seller is a party and the consummation of the
transactions contemplated hereby and thereby (provided that all of the Required
Consents and the Limited Partner Consents and General Partner Consents are
obtained and the applicable waiting period(s) under the HSR Act shall have
expired or been terminated) will not (a) violate Seller's general partnership
agreement; (b) violate any Legal Requirement applicable to Seller, the Assets or
the System; (c) conflict with or result in any breach of or default under any
contract, note, mortgage or agreement to which Seller is a party or by which
Seller is bound.
(b) Except for the Required Consents listed in Schedule 4.3,
the Partner Consents and the expiration or termination of the applicable waiting
period(s) under the HSR Act, no approval, consent, authorization or act of or
any declaration, filing, application, registration or other action with any
Person or any foreign, federal, state or local court or Governmental Authority
is necessary for the consummation of the transactions contemplated in this
Agreement and the Related Agreements in accordance with the terms hereof and
thereof.
4.4 Financial Statements; Absence of Undisclosed Liabilities; Accounts
Receivable. Seller has delivered to Buyer true and correct copies of the
financial statements identified in Schedule 4.4 (collectively, the "Financial
Statements"). The Financial Statements are in accordance with the books and
records of Seller and have been prepared in accordance with GAAP. The Financial
Statements present fairly the financial condition and results of operations of
Seller at the respective dates thereof and throughout the respective periods
covered thereby subject, in the case of unaudited financial statements, to
normal year-end accruals and audit adjustments and to the absence of footnotes
thereto.
4.5 Absence of Certain Changes. Since December 31, 1999, Seller has
operated the System in the ordinary course of business and has not:
(a) made any sale, assignment, lease or other transfer of
assets used or usable in connection with the System other than in the ordinary
course of business (unless such assets were unnecessary or obsolete);
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(b) made or promised any material increase in the salary or
other compensation payable or to become payable to any Employee of Seller other
than in the ordinary course of business or as contemplated under any employment
arrangement currently in effect; or
(c) experienced any occurrence or been involved in any
transaction which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
4.6 Real Property; Leases; Condemnation.
(a) Schedule 4.6(a) contains a list of the parcels of Real
Property owned by Seller and included in the Assets, or being acquired by Seller
as the new headend site with respect to the Rebuild, which site shall be
included in the Assets. Seller has good title to each such parcel of Real
Property and all buildings, structures and other improvements thereon, in each
case free and clear of all Encumbrances other than Permitted Encumbrances.
(b) Schedule 4.6(b) contains a list of the leases under which
Seller is lessee of any Real Property owned by any third party ("Real Property
Leases"). Copies of all written Real Property Leases listed in Schedule 4.6(b)
have been delivered to Buyer. Such Real Property Leases are in full force and
effect.
4.7 Personal Property.
(a) Seller owns and has good title to all of the tangible
personal properties and intangible properties included within the Assets.
(b) Schedule 4.7(b) contains a list, as of the date hereof, of
each lease or other agreement or right, under which Seller is lessee of, or
holds or operates, any machinery, equipment, vehicle or other tangible personal
property owned by a third party ("Personal Property Leases") other than any such
Personal Property Lease involving, individually, payments of $25,000 or less or
that is terminable on sixty (60) days' notice or less.
4.8 Governmental Authorizations.
(a) Identified in Schedule 4.8 are all of the Governmental
Authorizations held by Seller and issued in connection with the System or the
operation thereof or held by Seller or issued by any Governmental Authority with
respect to the System authorizing Seller to install, construct, own or operate a
cable television system within the jurisdiction of the issuing body or authority
thereof. Copies of all the Governmental Authorizations listed in Schedule 4.8
have been delivered to Buyer. Except as set forth in Schedule 4.8 or as may
otherwise be disclosed pursuant to Section 4.8(b), each such Governmental
Authorization is in full force and effect. Except as set forth in Schedule 4.8,
to Seller's Knowledge, a written request for renewal has been timely filed
pursuant to Section 626(a) of the Cable Act with the proper Governmental
Authority with respect to any Franchise expiring within thirty (30) months after
the date of this representation.
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(b) Not more than thirty (30) days following the date of this
Agreement, Seller shall have delivered to Buyer a true and complete description
of any material noncompliance with the terms of, or material default under, any
Governmental Authorization by Seller of which Seller has Knowledge as of the
date of such delivery.
(c) On the Closing Date, Seller shall be in compliance in all
material respects with the terms of all Governmental Authorizations to which it
is a party or by which it is bound or affected, and there shall be no material
uncured defaults thereunder; provided, that the foregoing representation and
warranty shall not apply to the Poplar Bluff Franchise in the event that the
Franchise Renewal shall have been obtained.
4.9 Agreements.
(a) Except as set forth in Schedule 4.9, as of the date as of
this Agreement, with respect to the Assets or operation of the System, Seller is
not a party to or bound by:
(i) any contract for the purchase, sale or lease of real
property or any option to purchase or sell real property;
(ii) any installment sale agreement or liability for the
deferred purchase price of property with respect to any of the Assets involving
payments exceeding $25,000 individually;
(iii) any multiple dwelling unit agreement (covering
fifty (50) or more units), written agreement with subscribers for cable
television service or written hotel and motel agreement, except for such
agreements as have been entered into in the ordinary course of business; or
(iv) any other contract, agreement, commitment,
understanding or instrument, including any retransmission consent agreement,
that is material to Seller, the System or the Assets, other than those
instruments referred to in Sections 4.6(b), 4.7(b) and 4.10 and other than
agreements and instruments involving payments, individually, of $25,000 or less
or that are terminable on sixty (60) days' notice or less (collectively, with
such other agreements described in clauses (a)(i) through (iii), and the Pole
Attachment Agreements and other agreements and instruments referred to in
Sections 4.6(b), 4.7(b) and 4.10, as well as such Agreements as are not required
to be listed in any Schedule hereto, the "Agreements"). Seller has delivered to
Buyer copies of all Agreements that are identified in Schedule 4.9. All of the
Agreements are in full force and effect.
(b) Seller is in compliance in all material respects with the
terms of all Agreements to which it is a party or by which it is bound or
affected, and there are no material uncured defaults thereunder.
4.10 Pole Attachment Agreements; Related Agreements. Schedule 4.10
contains a list, as of the date hereof, of all contracts, agreements and
understandings (other than the Governmental Authorizations listed in Schedule
4.8 and the Agreements described in
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Section 4.9) with respect to the Assets or System to which Seller is a party or
by which it is bound relating to: (i) the use of any public utility facilities
including, without limitation, all pole line, joint pole or master contracts for
pole attachment rights and the use of conduits (herein called "Pole Attachment
Agreements"), (ii) the use of any microwave or satellite transmission facilities
or (iii) the sale of cablecast time to third parties for advertising or other
purposes. Except as set forth in Schedule 4.10A, Seller has delivered to Buyer
copies of all Pole Attachment Agreements and other agreements and instruments
referred to in Schedule 4.10.
4.11 Retransmission Consent and Must-Carry; Rate Regulation; Copyright
Compliance.
(a) Set forth in Schedule 4.11 is a list of the stations
within the System that have elected "must-carry" or retransmission consent
status pursuant to the Cable Act. Seller has delivered to Buyer copies of all
retransmission consent agreements and copies of all must-carry election notices
that are in Seller's possession. To Seller's Knowledge, each station carried by
the System is carried pursuant to a retransmission consent agreement,
"must-carry" election or other programming agreement.
(b) Seller has filed with the Copyright Office all required
statements of account with respect to the System that were required to have been
filed since July 1, 1999 in accordance with the Copyright Act of 1976 and
regulations promulgated pursuant thereto (collectively referred to herein as the
"Copyright Act"), and Seller has paid all royalty fees payable with respect to
the System since July 1, 1999. Seller has delivered to Buyer copies of all
Statements of Account referred to in this Section 4.11(b).
(c) Seller has not, since November 12, 1999, received any
written notice that, and Seller has no Knowledge that since January 1, 1999, it
or the System: (i) is not or has not been in compliance in all material respects
with the Communications Act and all applicable rules of the FCC, except for such
compliance which would not be reasonably expected to have a Material Adverse
Effect; or (ii) has not made all material filings required to be made by it with
the FCC in connection with the System or provided all material notices to
customers of the System required under the Communications Act and the FCC's
rules and regulations, other than such filings and notices, the failure of which
to be made or provided would not be reasonably expected to have a Material
Adverse Effect. Schedule 4.11 sets forth the cable television service rates
charged in the System. Seller has not, since November 12, 1999, received any
notice that any of such rates are not permitted rates under the rules and
regulations of the FCC. Schedule 4.11 also sets forth a list, as of the date
hereof, of all pending rate complaints on file at the FCC with respect to the
System.
4.12 Litigation. Except as set forth in Schedule 4.12, and except as
may be disclosed pursuant to Section 4.8(b), there is no claim, legal action,
arbitration or other legal, governmental, administrative or tax proceeding or
any order, complaint, decree or judgment pending, or to Seller's Knowledge
threatened, against or relating to Seller or the System other than (i) FCC and
other proceedings generally affecting the cable television industry and not
specific to Seller; and (ii) routine collection actions with respect to the
payment by subscribers
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for services rendered by Seller and other proceedings and actions arising in the
ordinary course of business that are covered by Seller's insurance policies.
4.13 Compliance with Laws. Except as may be disclosed pursuant to
Section 4.8(b) or Section 4.12, Seller has not, since November 12, 1999,
received any notice of any claim by any Governmental Authority, and Seller has
no Knowledge that it has not been or is not in compliance with any Legal
Requirement applicable to it, the System or the Assets.
4.14 Employee Benefit Plans.
(a) All Employee Plans and Compensation Arrangements providing
benefits to Employees or Employees of the System whose employment terminated
since November 12, 1999 ("System Plans") are listed in Schedule 4.14(a). Except
as disclosed in Schedule 4.14(a), there is no new Employee Plan or Compensation
Arrangement or any amendment to an existing Employee Plan or Compensation
Arrangement that will affect the benefits of Employees or former Employees of
the System and that is to become effective after the date of this Agreement.
(b) Each Employee Plan and Compensation Arrangement has been
established, maintained, operated and administered in accordance with its own
terms and, where applicable, ERISA, the Code, and any other applicable Legal
Requirement.
(c) To Seller's Knowledge no lien has arisen under Section 412
of the Code or Section 302 of ERISA in favor of any System Plan.
4.15 Labor Relations; Employees.
(a) Seller is not a party to any collective bargaining
agreement or other contract with any labor organization regarding any of the
Employees of the System; Seller has not recognized any union or other collective
bargaining representative of any group of Employees of the System; and no union
or other collective bargaining representative has been certified as representing
any of the Employees of the System.
(b) There currently is no (i) unfair labor practice charge or
complaint against Seller involving any Employee of the System pending before the
National Labor Relations Board, any state labor relations board or any court or
tribunal, (ii) grievance or other claim involving any Employee of the System
pending before any Governmental Authority against Seller, or (iii) arbitration
proceeding arising out of or under any collective bargaining agreement pending
before any Governmental Authority against Seller involving any Employee of the
System;
(c) Except with respect to ongoing disputes of a routine
nature or involving immaterial amounts, Seller has paid in full to all of its
Employees providing services to the System all wages, salaries, commissions,
bonuses, benefits and other compensation due and payable to such Employees.
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4.16 Environmental Matters. Except as set forth in Schedule
4.16, and except for any such noncompliance of an insubstantial nature that has
been remedied as required by applicable Environmental Laws: (a) Seller's
operations with respect to the System have complied and comply in all material
respects with all applicable Environmental Laws; (b) Seller has not used the
Real Property for the manufacture, transportation, treatment, storage or
disposal of Hazardous Substances except for gasoline and diesel fuel and such
use of Hazardous Substances (in cleaning fluids, solvents and other similar
substances) customary in the construction, maintenance and operation of a cable
television system and in amounts or under circumstances that would not
reasonably be expected to give rise to material liability for Remedial Action,
and (c) to Seller's Knowledge, the Real Property complies and has complied in
all material respects with all applicable Environmental Laws. Except as set
forth in Schedule 4.16, to Seller's Knowledge, no underground storage tank is
located under any of the Real Property, and to Seller's Knowledge, none of the
Real Property has been used as a gasoline service station or any other facility
for storing, pumping, dispensing or producing gasoline or any other petroleum
products or wastes. Seller has delivered to Buyer copies of all assessments,
studies, reports and surveys relating to the environmental condition of the Real
Property, including but not limited to the presence or alleged presence of
Hazardous Substances at or on the Real Property, that are in the possession or
under the control of Seller. To Seller's Knowledge, no ambient asbestos is
present at the Real Property.
4.17 Bonds; Letters of Credit. Schedule 4.17 sets forth a list
of all franchise, construction, fidelity, performance and other bonds,
guaranties in lieu of bonds and letters of credit posted by Seller in connection
with its operation of the System.
4.18 Information on the System and Subscribers.
(a) Schedule 4.18 sets forth a materially accurate statement,
as of the date(s) set forth in said Schedule, of the following information with
respect to the System:
(i) the total number of Subscribers served;
(ii) the bandwidth capacity specified in MHz; and
(iii) the channel line-up and rate card.
(b) Seller has made available to Buyer all existing system
engineering drawings and "as built" maps with respect to the System that are in
the possession of Seller and that have been requested by Buyer or its
representatives for review.
4.19 Broker; Brokers' Fees. Except for ▇▇▇▇▇▇ & Associates, Inc., which
has been retained by and whose fee shall be paid by Seller, neither Seller nor
any Person acting on its behalf has dealt with any broker or finder in
connection with the transactions contemplated by this Agreement or incurred any
liability for any finders' or brokers' fees or commissions in connection with
the transactions contemplated by this Agreement. Seller agrees to indemnify
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and hold harmless Buyer against any fee, commission, loss or expense arising out
of any claim by any other broker or finder employed or alleged to have been
employed by Seller.
5. Representations and Warranties of Buyer.
Buyer represents and warrants to Seller that the following statements
are true and correct:
5.1 Organization, Qualification and Power. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Pennsylvania, with full power and authority to own, lease or license its
properties and assets and to carry on the business in which it is engaged in the
manner in which such business is now carried on. On the Closing Date, Buyer will
be duly qualified to do business in all jurisdictions where the ownership and
operation of the Assets and System requires such qualification.
5.2 Capacity; Due Authorization; Enforceability. All requisite
corporate action required to be taken by Buyer for the execution, delivery and
performance by Buyer of this Agreement and all Related Agreements to which Buyer
is a party have been duly performed. Buyer has the full legal capacity and legal
right, power and authority to enter into this Agreement and the Related
Agreements and to consummate the transactions contemplated hereby and thereby.
This Agreement has been duly executed and delivered by Buyer and is, and this
Agreement and each of the Related Agreements to which Buyer is a party, upon
execution and delivery, will be, a legal, valid and binding obligation of Buyer,
enforceable in accordance with its respective terms, except in each case to the
extent that such enforcement may be subject to applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws of general application
affecting the rights and remedies of creditors or secured parties, and that the
availability of equitable remedies including specific performance and injunctive
relief may be subject to equitable defenses and the discretion of the court
before which any proceeding therefor may be brought.
5.3 Absence of Conflicting Agreements. The execution and delivery of
this Agreement and the Related Agreements to which Buyer is a party and the
consummation of the transactions contemplated hereby and thereby (provided all
of the Required Consents are obtained and the applicable waiting period(s) under
the HSR Act shall have expired or been terminated) will not (a) violate Buyer's
certificate of incorporation or bylaws; (b) violate any Legal Requirement
applicable to Buyer, the Assets on the System; (c) conflict with or result in a
breach of or default under any contract, note, mortgage or agreement to which
Buyer is a party or by which Buyer is bound.
5.4 Litigation. There is no claim, legal action, arbitration or other
legal, governmental, administrative or tax proceeding, or any order, complaint,
decree or judgment pending, or, to Buyer's knowledge, threatened, that would
prevent, limit, delay or otherwise interfere with Buyer's ability to consummate
the transactions contemplated by this Agreement in accordance with the terms
hereof.
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5.5 Financial Capability. Buyer has the financial capability, including
to obtain financing, necessary to consummate the transactions contemplated in
this Agreement, in accordance with the terms hereof, including payment of the
Purchase Price.
5.6 Brokers. Neither Buyer nor any Person acting on its behalf has
dealt with any broker or finder in connection with the transactions contemplated
by this Agreement or incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
6. Covenants of Seller and Buyer.
6.1 Continuity and Maintenance of Operations.
(a) Except as Buyer may otherwise agree in writing, until the
Closing Seller shall operate the System in the ordinary course of business
consistent with Past Practices and shall:
(b) (i) maintain and repair the Assets in the ordinary course
of business consistent with its year 2000 budgets, and at Closing the Assets
will be in substantially the same condition as they are in as of the date
hereof, subject to ordinary wear and tear;
(ii) maintain its inventory and other supplies and spare
parts at levels consistent with its year 2000 budgets;
(iii) subject to Section 6.16(a), make capital
expenditures substantially in accordance with its year 2000 capital budget;
(iv) use commercially reasonable efforts to comply with
Legal Requirements applicable to the System;
(v) not conduct promotional activities inconsistent with
Past Practices;
(vi) continue its procedures for disconnection and
discontinuance of service to subscribers whose accounts are delinquent, in
accordance with Past Practices; and
(vii) not enter into installment sale agreements and
other agreements under which Buyer would be obligated to pay the deferred
purchase price of property, which agreements collectively will involve aggregate
payments in excess of $25,000 following the Closing Date.
(c) Except as required by law and except as budgeted by
Seller, after the date of this Agreement, Seller will not, without giving prior
written notice to Buyer, change customer rates for any tier of service or
charges for remote or installation, make channel additions, channel
substitutions, change the channel lineups or implement any retiering or
repackaging of cable television programming offered by the System, or change
billing, collection or installation practices.
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6.2 Access to Seller; Confidentiality.
(a) Upon reasonable advance notice, Seller shall afford to the
officers, employees and authorized representatives of Buyer and to the employees
and authorized representatives of Buyer's equity and financing sources
reasonable access during normal business hours to the System and to its offices,
properties and business and financial records (including computer files,
retrieval programs and similar documentation) that relate to the System and the
operation thereof.
(b) Until Closing Buyer (i) shall use reasonable efforts to
cause its directors, officers, employees and representatives and the employees,
representatives and agents of Buyer's equity and financing sources to hold in
strict confidence all information furnished to any of them by Seller in
connection with the transactions contemplated by this Agreement that is not
otherwise available to the public (the "Confidential Information"), and (ii)
shall not, without the prior written consent of Seller, release or disclose any
Confidential Information to any other person, except (A) to the extent required
by applicable law, (B) as necessary in connection with filings, approvals and
rulings to be obtained from any governmental agency, including, but not limited
to, the Federal Trade Commission ("FTC"), the Antitrust Division of the
Department of Justice ("DOJ"), the SEC and the Internal Revenue Service (it
being understood that any such filing may include the filing of a copy of this
Agreement), (C) to Buyer's equity and financing sources and its directors,
officers, employees or representatives who are informed by Buyer of the
confidential nature of the Confidential Information, (D) as necessary to obtain
consents to the transfer of any Franchise or otherwise necessary for the
consummation of the transactions contemplated by this Agreement, and (E) as
otherwise permitted by the remainder of this Section 6.2(b). In the event Buyer
or any person to whom Buyer transmits Confidential Information pursuant to this
Agreement becomes legally compelled to disclose any of the Confidential
Information, Buyer shall provide Seller with prompt notice so that Seller may
seek a protective order or other appropriate remedy or waive compliance with the
provisions of this Section 6.2(b), or both. In the event that such protective
order or other remedy is not obtained, or that Seller waives compliance with the
provisions of this Section 6.2(b), Buyer shall furnish only that portion of the
Confidential Information which is legally required.
(c) Following the Closing, upon reasonable notice by Buyer,
Seller shall afford to Buyer's officers, employees, accountants and other
authorized representatives, reasonable access to Seller's business and financial
records and accountants that relate to the System to enable Buyer to obtain
information and data reasonably required in connection with the preparation of
Buyer's financial statements and any regulatory filings relating to the System.
6.3 Notification.
(a) Each party shall promptly notify the other of any action,
suit, proceeding or investigation that is instituted or threatened against such
party to restrain, prohibit or otherwise challenge the legality or propriety of
any transaction contemplated by this Agreement.
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(b) If Buyer or Seller acquires actual knowledge before the
Closing Date that a material breach of any of Seller's or Buyer's (as the case
may be) representations or warranties has occurred, the party acquiring such
actual knowledge shall provide prompt written notice to the other describing
such breach. Notwithstanding the foregoing, no notice or information delivered
by or to any party shall affect the other party's right to rely on any
representation or warranty made by such party or relieve such party of any
obligations under this Agreement as the result of a breach of any of its
representations and warranties.
6.4 No Public Announcement. Prior to the Closing Date, neither party
shall, without the approval of the other, make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as and to the extent that such party shall be so obligated by law, in which case
the other party shall be advised and the parties shall use their reasonable
efforts to cause a mutually agreeable release or announcement to be issued.
6.5 Regulatory Filings. As soon as may be reasonably practicable, but
in no event later than thirty (30) days after the date hereof, Buyer and Seller
shall file or cause to be filed with the FTC and DOJ such Notifications and
Report Forms relating to the transactions contemplated hereby as are required by
the pre-merger notification rules issued under the HSR Act. Buyer and Seller
shall: (i) promptly supply each other with any information provided in response
to any requests for additional information made by either of such agencies, and
(ii) use all reasonable efforts to cause the waiting period under the HSR Act to
terminate or expire at the earliest possible date. Buyer and Seller shall share
equally all filing fees associated with any Notification and Report Form
required to be filed in connection with this Agreement.
6.6 Employees; Employee Benefits.
(a) Subject to the following sentence, effective as of and
contingent upon the Closing, Buyer shall make offers of employment to such
Employees who render services to the System as Buyer shall determine, in its
sole and absolute discretion (each Employee who accepts Buyer's offer of
employment and who becomes an employee of Buyer effective as of the Closing
hereinafter called a "Transferred Employee"). Not less than thirty (30) days
prior to the Closing, Buyer shall notify Seller in writing of the Employees to
whom Buyer intends offer employment, and Buyer shall make offers of employment
to such Employees in accordance with the preceding sentence. Prior to Closing
Seller shall take all actions reasonably necessary to comply with the WARN Act,
if applicable, and any applicable comparable state laws. Seller shall pay when
required all compensation and shall provide all benefits to its respective
Employees as are required, and, except as set forth in Section 6.6(b), Seller
shall retain liability for all obligations and liabilities owed to its Employees
that relate to periods prior to the Closing Date.
(b) Buyer shall offer group health plan coverage to all
Transferred Employees and their spouses and eligible dependents who are covered
on the Closing Date under a group health plan maintained or contributed to by
Seller, and such coverage shall be the same, and shall be subject to the same
terms and conditions, as Buyer provides to similarly situated employees,
provided that such coverage shall be effective as of the Closing and that no
pre-existing condition limitation shall be applied to any such Transferred
Employees, their spouses and
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eligible dependents unless, and only to the same extent that, such persons are
subject to pre-existing condition limitations under Seller's group health plan.
Seller shall have full responsibility and liability for offering and providing
"continuation coverage" to any "covered employee" who is an Employee, and to any
"qualified beneficiary" of such Employee, and who is covered by a "group health
plan" sponsored or contributed to by Seller (all such group health plans of
Seller individually and collectively called "Seller's Health Plans") to the
extent that such continuation coverage is required to be provided by Seller
under Code Section 4980B, and the regulations promulgated thereunder, as a
result of a "qualifying event" experienced by such covered employee or qualified
beneficiary with respect to or in connection with the transactions contemplated
by this Agreement. "Continuation coverage," "covered employee," "qualified
beneficiary," "qualifying event" and "group health plan" all shall have the
meanings given such terms under Section 4980B of the Code and Section 601 et
seq. of ERISA.
(c) Seller has delivered to Buyer separately descriptions of
Seller's vacation and sick leave policies. Within ten (10) days following
Buyer's delivery to Seller of the notices referred to in Section 6.6(a)
(regarding the Employees to whom Buyer intends to make offers of employment),
Seller shall provide to Buyer a list of the accrued vacation and sick leave of
each of its Employees to whom Buyer has indicated it intends to offer
employment. Each Transferred Employee shall be credited under Buyer's vacation
and sick leave policy with the full amount of vacation leave accrued by such
Transferred Employee but unused as of the Closing Date under the vacation
policies of Seller applicable to such Transferred Employee.
(d) From the date of this Agreement through the date that is
one (1) year following the Closing, without Buyer's consent, neither Seller,
Charter nor any of Charter's subsidiaries will solicit the employment of persons
who are employees of the System as of the date hereof or who become employees of
the System prior to Closing, other than (i) any such employee who does not
accept Buyer's offer of employment; and (ii) any Transferred Employee whose
employment is terminated by Buyer following the Closing.
6.7 Required Consents.
(a) Following the execution hereof, until the Closing Date,
Seller shall use commercially reasonable efforts, and Buyer shall cooperate in
good faith with Seller, to obtain all Required Consents, including Required
Consents under the Franchises, Licenses and Agreements. Seller and Buyer shall
prepare and file, or cause to be prepared and filed, within fifteen (15) days
after the date hereof (subject to extension for a period of up to an additional
ten (10) days, if reasonably necessary for a party to complete its application),
all applications (including FCC Forms 394 or other appropriate forms, to the
extent Seller determines they are necessary or appropriate) required to be filed
with the FCC and any other Governmental Authority that are necessary for the
assignment to Buyer, in connection with the consummation of the transactions
contemplated by this Agreement, of the Governmental Authorizations. The parties
shall also make appropriate requests, as soon as practicable after the date
hereof, for any Required Consent required under any Agreement. Notwithstanding
subsection (c)(i) hereof, and subject to subsection (c)(ii) hereof, nothing in
this Section 6.7 shall require the expenditure or payment of any funds (other
than in respect of normal and usual attorneys' fees, filing fees or
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other normal costs of doing business) or the giving of any other consideration
by Buyer or Seller, provided that Seller shall be liable for all obligations or
liabilities under each Governmental Authorization or Agreement during the period
prior to the Closing Date.
(b) Seller shall also use commercially reasonable efforts to
cause each such Required Consent relating to a Franchise or Agreement to include
provisions that permit (i) Buyer to grant a security interest in such Franchise
or Agreement to its lender(s) providing financing to Buyer with respect to the
transaction contemplated hereby, and (ii) Buyer to transfer such Franchise or
Agreement to any Affiliate of Buyer that agrees in writing as a condition to
such transfer to be bound by any and all obligations of Buyer in connection
therewith; provided, that Seller shall have no additional obligation with
respect to obtaining such provisions if the inclusion of such provisions would
cause such Required Consent to be unreasonably withheld, delayed or otherwise
conditioned.
(c) (i) Buyer agrees that if in connection with the process of
obtaining any Required Consent, a Governmental Authority or other Person
purports to require any condition or any change to a Franchise, License or
Agreement to which such Required Consent relates that would be applicable to
either Buyer or Seller as a requirement for granting such Required Consent,
which condition or change involves a monetary payment or commitment to such
Governmental Authority or other Person, either Buyer or Seller may elect, in its
sole discretion, to satisfy such monetary payment or commitment, in which case,
Buyer and Seller will accept any condition or change in the License or Agreement
to which such Required Consent relates to the extent provided herein.
(ii) Subject to the terms of subsection (i) above, Seller
shall not agree, without Buyer's prior written consent, which consent Buyer
shall grant or withhold in its reasonably exercised discretion, to any adverse
change (other than immaterial, non-monetary changes) to the terms of any
Governmental Authorization or Agreement as a condition to obtaining any Required
Consent to the assignment of such Governmental Authorization or Agreement to
Buyer. If in connection with the obtaining of any Required Consent, a
Governmental Authority or other third party seeks to impose any condition or
adverse change to any Governmental Authorization or Agreement to which such
Required Consent relates that would be applicable to Buyer as a requirement for
granting such Required Consent, Seller shall promptly notify Buyer of such fact
and Seller shall not agree to such condition or adverse change unless Buyer
shall, in its reasonably exercised discretion, consent to such condition or
change in writing.
(d) Buyer shall promptly furnish to any Governmental Authority
or other Person from which a Required Consent is requested such accurate and
complete information regarding Buyer and its Affiliates, including financial
information relating to the cable and other media operations of Buyer and its
Affiliates, as a Governmental Authority or other Person may reasonably require
in connection with obtaining any Required Consent.
(e) It is understood and agreed that nothing herein shall
prevent Buyer or its Affiliates (or their employees, agents, representatives and
any other Person acting on behalf of
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Buyer and its Affiliates) from making statements or inquiries to, attending
meetings of, making presentations to, or from responding to requests initiated
by, Governmental Authorities or other Persons from which a Required Consent is
sought or from which Buyer is negotiating for a Franchise Renewal and Buyer
shall use commercially reasonable efforts to apprise Seller of all such
requests.
6.8 Use of Transferor's Name. For a period of 180 days after the
Closing Date, Buyer may continue (but only to the extent reasonably necessary)
to operate the System using the name "Enstar" and all derivations and
abbreviations of such name and related trade names and marks in use in the
System on the Closing Date, such use to be in a manner consistent with the way
in which Seller has used the marks. Within 180 days after the Closing Date,
Buyer will discontinue using and will dispose of all items of stationery,
business cards and literature bearing such name or marks. Notwithstanding the
foregoing, Buyer will not be required to remove or discontinue using any such
name or ▇▇▇▇ that is affixed to converters or other items in or to be used in
customer homes or properties, or as are used in similar fashion making such
removal or discontinuation impracticable for Buyer.
6.9 Delivery of Subscriber Information. Between the date of this
Agreement and the Closing Date, promptly after the preparation thereof, Seller
shall deliver to Buyer true, correct and complete copies of (i) quarterly
financial information, including a balance sheet, a statement of income and
expenses and a statement of cash flows (ii) quarterly statements of capital
expenditures with respect to the System and (iii) monthly subscriber counts for
the System prepared by Seller for its internal use.
6.10 Tax Matters. All transfer, documentary, sales, use, stamp,
registration and other Taxes and fees (including any penalties and interest),
incurred in connection with the transactions consummated pursuant to this
Agreement with respect to the Assets conveyed by Seller shall be shared equally
by Buyer and Seller. Buyer and Seller will cooperate in all reasonable respects
to prepare and file all necessary federal, state and local tax returns, tax
information returns, reports and estimates and other documentation with respect
to all such transfer, documentary, sales, use, stamp, registration and other
Taxes and fees.
6.11 Further Assurances; Satisfaction of Covenants. Seller and Buyer
each shall execute such documents and other papers and take or cause to be taken
such further action as may be reasonably required to carry out the provisions
hereof and to consummate and make effective the transactions contemplated
hereby. Seller and Buyer shall each use commercially reasonable efforts to
satisfy each of its covenants and obligations under this Agreement and to
satisfy each condition to Closing it is required to satisfy hereunder.
6.12 Environmental Reports; Title Commitments.
(a) (i) Buyer shall be entitled to obtain, at its own expense,
during the period of sixty (60) days after the date hereof (the "Real Estate
Inspection Period") (A) commitments of title insurance ("Title Commitments")
issued by a nationally-recognized title insurance company selected by Buyer and
reasonably acceptable to Seller (a "Title Company"), committing to insure
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fee title to the parcels of Real Property owned by Seller and leasehold title to
those parcels of Real Property leased by Seller, by ALTA (1992) owner's policies
of title insurance, (B) surveys of said parcels of Real Property, in such form
as is necessary to obtain the title insurance to be issued pursuant to the Title
Commitments, with the standard printed exceptions relating to survey matters
deleted ("Surveys"), certified to Buyer and to the Title Company issuing the
Title Commitment with respect to that parcel of Real Property, and (C) Phase I
environmental reports concerning the owned or leased Real Property, which shall
be performed by environmental consulting or engineering firms reasonably
acceptable to Buyer and Seller (together with any Phase II report,
"Environmental Reports"). Buyer shall deliver to Seller true and complete copies
of all such Title Commitments, Surveys and Environmental Reports within five (5)
Business Days after Buyer's receipt thereof.
(ii) If any Phase I Environmental Report discloses a
potential presence of Hazardous Substances or a violation of any Environmental
Law that is sufficiently material to reasonably warrant a Phase II study, or
shall otherwise recommend performance of a Phase II study, then Buyer shall have
the right (subject to the provisions of this Paragraph (a)(ii)) beyond such 60
day period, to obtain a Phase II report with respect to the subject parcel of
Real Property, in which event the Real Estate Inspection Period shall be
extended accordingly (but not more than 45 days) with respect to such parcel of
Real Property. Any such Phase II report shall be ordered promptly after receipt
and analysis of the respective Phase I report. If Buyer proposes to undertake a
Phase II environmental study on any parcel of Real Property, Buyer shall provide
to Seller a plan for such proposed study prior to commencing the same, and
Seller shall have the right (which Seller shall exercise by written notice to
Buyer within ten (10) Business Days after receipt of Buyer's proposal) to deny
by Buyer's request to perform such Phase II environmental study on such Real
Property. If Seller refuses to allow such Phase II study, Buyer may terminate
this Agreement by written notice to Seller within ten (10) Business Days
following Seller's refusal, or Buyer may elect to close notwithstanding such
refusal. If Buyer elects to close notwithstanding such refusal, (A) Buyer may
not thereafter terminate this Agreement based on Title Defects or Environmental
Defects of the applicable parcel of Real Property, (B) Buyer shall not have any
recourse against Seller based on such Title Defects or Environmental Defects
except as provided in clause (C) of this sentence, and (C) if within six (6)
months after Closing, Buyer incurs environmental remediation expenses in respect
of Environmental Defects at the site(s) for which Seller refuses to allow a
Phase II study, Seller will reimburse Buyer for the reasonable costs of such
remediation; provided, that (I) in no event shall the aggregate amount of
reimbursement by Seller under this clause (C) and any remediation costs incurred
by Seller prior to Closing in respect of Environmental Defects and Title Defects
(other than monetary Encumbrances that Seller is required to remove regardless
of the amount thereof) exceed $35,000 in the aggregate, and (II) this clause (C)
shall be inapplicable if a Purchase Price reduction is made under Subsection (b)
or (c) of this Section 6.12.
(b) In the event that a Title Commitment or Survey reveals the
existence of any matter that renders title to the subject Real Property to be
other than as represented herein (a "Title Defect"), and Buyer requests in
writing, within ten (10) days following Buyer's receipt of the relevant Title
Commitment or Survey, that Seller remedy the same, then Seller shall use
commercially reasonable efforts to either cure the Title Defect or cause the
Title Company to
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insure over it; provided, that Seller shall not be obligated to expend more than
an aggregate amount of $35,000 for remediation of all Title Defects and
Environmental Defects required to be remedied hereunder (other than monetary
Encumbrances that Seller is required to remove regardless of the amount
thereof); and if it is reasonably expected that the cost of such remediation
together with the actual or estimated expense of remedying Environmental Defects
will exceed $35,000 in the aggregate, Seller shall have no obligation to
undertake such remediation. Seller's decision regarding whether to undertake
remediation shall be made by written notice to Buyer within ten (10) Business
Days after all Title Defects and Environmental Defects are disclosed to Seller.
If under such circumstances Seller elects to not undertake such remediation,
Buyer may, by notice to Seller given within ten (10) Business Days after
Seller's election to not remediate, terminate this Agreement, or Buyer may, by
notice to Seller given within ten (10) Business Days after Seller's election to
not remediate, elect to close notwithstanding such election. If Buyer elects to
close notwithstanding such election, (i) Buyer may not thereafter terminate this
Agreement based on Title Defects or Environmental Defects; (ii) Buyer shall have
no recourse against Seller based on any such Title Defects or Environmental
Defects (including any claim for indemnification pursuant to Section 10 hereof);
and (iii) at Closing the Purchase Price shall be reduced by $35,000; provided,
that there shall be no such reduction in the Purchase Price under this
Subsection (b) if there is a Purchase Price reduction under Subsection (c)
below.
(c) In the event that an Environmental Report reveals the
presence of Hazardous Substances on the Real Property that could reasonably
result in liability to the owner or user thereof or reveals noncompliance with
any Environmental Law (either, an "Environmental Defect"), and Buyer requests in
writing, within ten (10) days following Buyer's receipt of the relevant
Environmental Report, that Seller remedy the same, Seller shall use commercially
reasonable efforts to cure any such Environmental Defect; provided, that Seller
shall not be obligated to expend more than an aggregate of $35,000 for
remediation of all Environmental Defects and Title Defects (other than monetary
Encumbrances that Seller is required to remove regardless of the amount
thereof); and, if it is reasonably expected that the cost of such remediation
together with the actual or estimated cost of remedying Title Defects (other
than monetary Encumbrances that Seller is required to remove regardless of the
amount thereof) will exceed $35,000 in the aggregate, Seller shall have no
obligation to undertake such remediation. Seller's decision as to whether to
undertake remediation shall be made by written notice to Buyer within ten (10)
Business Days after all Title Defects and Environmental Defects are disclosed to
Seller. If under such circumstances Seller elects to not remediate, Buyer may,
by notice to Seller given within ten (10) Business Days after Seller's election
to not remediate, proceed to close notwithstanding such election. If Buyer
elects to close notwithstanding such election, (i) Buyer may not thereafter
terminate this Agreement based on Title Defects or Environmental Defects; (ii)
Buyer shall have no recourse against Seller based on Title Defects or
Environmental Defects (including any claim for indemnification pursuant to
Section 10 hereof); and (iii) at Closing the Purchase Price shall be reduced by
$35,000; provided, that there shall be no such reduction in the Purchase Price
under this Subsection (c) if there is a Purchase Price reduction under
Subsection (b) above.
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(d) After the Real Estate Inspection Period (as it may be
extended pursuant to Subsection (a)(ii) hereof) Buyer shall not be entitled to
terminate this Agreement based on Title Defects or Environmental Defects, nor
shall Buyer be entitled to make any claim for indemnification pursuant to
Section 9 hereof based on Title Defects or Environmental Defects.
(e) Buyer shall indemnify Seller and hold Seller harmless from
and against any losses incurred by Seller relating to damage to Real Property in
connection with Buyer's obtaining any Environmental Reports.
6.13 Limited Partner Consents. As soon as reasonably practicable
following the execution hereof, the General Partners shall file with the SEC
proposed proxy materials relating to the General Partners' solicitation of the
Limited Partner Consents. Each General Partner shall use reasonable efforts (i)
to have such proxy materials cleared by the SEC (if applicable) so as to enable
it to disseminate definitive proxy materials to its respective Limited Partners,
(ii) to disseminate such materials, upon receipt of SEC clearance, to its
respective Limited Partners and (iii) thereafter to obtain the Limited Partner
Consents. Seller shall give Buyer prompt notice when the Limited Partner
Consents have been obtained and when any material development has occurred that
causes substantial doubt as to whether the Limited Partner Consents will be
obtained.
6.14 Acquisition Proposals. If, prior to obtaining all the Limited
Partner Consents, any Seller or any Person acting on behalf of Seller receives a
solicitation from a third party regarding an Acquisition Proposal (as defined
herein), which Acquisition Proposal the General Partners intend to submit to
their respective Limited Partners for their approval, Seller shall, within five
(5) Business Days following receipt of such solicitation, notify Buyer in
writing of the price and other material terms of such Acquisition Proposal, and
Buyer shall be entitled, within five (5) Business Days following receipt of such
notification, to submit an Acquisition Proposal in response to the third party's
Acquisition Proposal (a "Buyer Acquisition Proposal"), which Buyer Acquisition
Proposal shall contain all the terms and conditions of this Agreement other than
the Purchase Price. For purposes hereof, an "Acquisition Proposal" means any
bona fide proposed (i) asset acquisition or exchange or similar transaction
providing for any third party's acquisition of any of the Assets or the System
or (ii) acquisition of partnership interests, merger, consolidation, exchange of
partnership or other equity interests or similar transaction that would result
in the acquisition by any third party of a percentage of the Interests (as
defined herein) in Seller sufficient to give such third party voting control
over Seller. For purposes hereof, an "Interest" in Seller means an interest in
the capital and profits of Seller or a General Partner that is acquired by the
making of a capital contribution to Seller or as otherwise provided under the
limited or general partnership agreement applicable to Seller or such General
Partner, as the case may be.
6.15 Noncompetition Agreement. Charter agrees, on behalf of itself and
its direct and indirect subsidiaries, that prior to the third anniversary of the
Closing Date it will not, without the written consent of Buyer, directly or
indirectly, own, manage, operate or control, engage or participate in the
ownership, management, operation or control of or be connected as a shareholder,
partner, manager, agent or otherwise with any business or company any part of
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which operates hardwire cable television systems (or which obtains or holds any
franchises therefor) within any of the Franchise Areas. Notwithstanding the
foregoing, nothing in this provision shall be construed to prohibit the
following: (i) the ownership of a company's securities that constitute less than
ten percent (10%) of the outstanding voting stock of such company or does not
otherwise constitute control over such company, (ii) the operation by Charter or
any of its subsidiaries that are bound by this provision of cable television
systems (or the holding of franchises therefor) in those geographical areas
included in the Franchise Area for which Charter or any such subsidiary holds a
cable franchise on the date hereof or (iii) the direct or indirect ownership,
management, operation or control by Charter or any of its subsidiaries that are
bound by this provision of any cable business as the result of a transaction in
which the subscribers involved that are located within the Franchise Area
constitute a minority of the subscribers involved in such transaction.
6.16 Poplar Bluff Rebuild.
(a) Seller shall continue its rebuild of the System such that
the System shall be two-way capable with 860 MHz cable plant, and otherwise
shall be substantially in accordance with the specifications set forth in
Schedule 6.16 (the "Rebuild"). For so long as Seller is responsible for the
Rebuild in accordance with the provisions of this Section 6.16, Seller shall
consult with Buyer on an on-going basis with respect to the rebuild plan, budget
and costs, and keep Buyer apprised of the progress made toward completion of the
Rebuild. Seller shall use its reasonable best efforts to complete the Rebuild by
January 31, 2001 (the "Target Date"). The completion of the Rebuild shall not be
a condition precedent to Closing hereunder.
(b) The Purchase Price otherwise payable to Seller shall be
increased, pursuant to Section 3.3(a)(i)(C), by the amount of Seller's
reasonable costs and expenses incurred in connection with its construction of
the Rebuild consistent with the budget and specifications set forth on Schedule
6.16 (as modified from time to time by written agreement between Buyer and
Seller); provided, however, that if the Rebuild is not completed as of the
Closing Date, then:
(i) $1,000,000 of the Rebuild costs otherwise
reimbursable to Seller at Closing in accordance with the foregoing shall be
withheld by Buyer (the "Holdback") and paid to Seller within five (5) Business
Days following the completion of the Rebuild as set forth in Section 6.16(d)
below, subject to the provisions of Section 6.16(c) below;
(ii) With Buyer's cooperation, Seller shall continue to
use its reasonable best efforts to complete the Rebuild as soon as practicable
following Closing, subject to Buyer's right to undertake completion of the
Rebuild pursuant to the terms of subsection (c) below, and
(iii) Buyer shall reimburse Seller on a monthly basis for
all of Seller's reasonable costs for the Rebuild consistent with the budget and
specifications set forth on Schedule 6.16 (as modified from time to time by
written agreement between Buyer and Seller) not previously reimbursed by Buyer.
Such reimbursement shall be made within five (5) Business Days after Seller's
delivery to Buyer of appropriate documentation with respect thereto.
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In no event shall the aggregate amount reimbursed by Buyer to Seller with
respect to the Rebuild, either at Closing or thereafter, exceed $4,000,000
unless Buyer and Seller otherwise agree in writing.
(c) If the Rebuild is not completed as of the later of the
Closing or the Target Date, Seller shall in good faith provide, in writing,
reasonable assurances to Buyer regarding the date by which the Rebuild shall be
completed (the "Completion Date"), such assurances to be provided within five
(5) Business Days following Seller's receipt of a written request therefor from
Buyer. By written notice to Seller following Buyer's receipt of such assurances
(or following the expiration of such five (5) Business-Day period if Seller has
not provided such assurances), Buyer may elect to undertake the completion of
the Rebuild so long as the Completion Date is more than 30 days following the
date of Buyer's notice to Seller (it being agreed that if Seller fails to
provide such assurances to Buyer, such Completion Date is presumed to be more
than 30 days following the date of Buyer's notice to Seller). Upon Buyer's
election to complete the Rebuild:
(i) Seller shall be relieved of the obligation to
complete the Rebuild. Seller and Enstar shall, at Buyer's request, assign to
Buyer their rights under any construction and other contracts entered into by
Seller or Enstar relating to the Rebuild, and Buyer shall have no further
reimbursement obligations to Seller other than with respect to Rebuild costs
incurred prior to the date Seller receives Buyer's written notice of election;
and
(ii) Buyer may contract with third parties for such labor
and other services, and equipment and other materials necessary or appropriate
to complete expeditiously the Rebuild consistent with the specifications annexed
hereto as Schedule 6.16 (as modified from time to time by written agreement
between Buyer and Seller). Upon the completion by Buyer of the Rebuild, if
Buyer's costs and expenses in completing the Rebuild exceed the difference
between (i) $4,000,000 and (ii) the sum of the Holdback plus the aggregate
amount of Buyer's reimbursements paid to Seller, Buyer shall deduct the amount
of such excess from the Holdback and remit the balance to Seller.
Notwithstanding the prior sentence, Buyer shall not recover from the Holdback
any amounts paid to any third party for equipment or other materials in excess
of what Seller shall offer to charge for the same equipment or other materials
if Seller agrees (within three (3) Business Days after Seller receives written
notice from Buyer describing any equipment or materials it intends to obtain
from third party and the cost and other terms thereof) to provide such equipment
or other materials on terms substantially similar (including delivery date but
excluding cost) to those agreeable to such third party.
(d) The Rebuild shall be considered complete when the System
shall have been rebuilt in accordance with the specifications set forth on
Schedule 6.16 hereto (as modified from time to time by written agreement between
Buyer and Seller).
6.17 Performance of Settlement Agreement. In the event that Seller
enters into the Settlement Agreement, whether before or after the Closing, Buyer
expressly agrees that it shall be bound by the terms of, and shall fully perform
the obligations set forth in, Sections 8.1 through 8.3 of the Settlement
Agreement, insofar as such terms and obligations relate to the
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System. The Purchase Price shall be reduced, pursuant to Section 3.3(b) or
thereafter, by the amount of (i) $20.00 for each claim made under the Settlement
Agreement with respect to the System by a claimant that is a then-current
customer of the System, and (ii) $9.95 for each claim made under the Settlement
Agreement with respect to the System by a claimant that is a former customer of
the System; each of which claims shall have been made in accordance with the
terms of the Settlement Agreement and shall be evidenced by documentation
demonstrating, to Seller's reasonable satisfaction, Buyer's satisfaction of such
claim. Buyer agrees to indemnify and hold harmless Seller and its Affiliates
from and against any and all claims, costs and expenses based on or arising out
of Buyer's failure to fully comply with and perform the obligations set forth in
Sections 8.1 through 8.3 of the Settlement Agreement insofar as related to the
System, provided that Buyer shall have no obligation to indemnify Seller with
respect to any claim by any former customer under Section 8.1.2 of the
Settlement Agreement that shall be paid by Seller or any Affiliate (or any third
party hired by Charter to administer the distribution of benefits) directly to
such former customer. It is expressly agreed and understood that Buyer is not
assuming and shall not be bound by any term or provision of the Settlement
Agreement other than as expressly set forth herein.
7. Conditions Precedent To Buyer's Obligations.
The obligations of Buyer to purchase and accept assignment, transfer
and delivery of the Assets to be sold, assigned, transferred and delivered to
Buyer hereby are subject to the satisfaction or waiver, at or prior to the
Closing Date (as provided herein), of the following conditions:
7.1 Representations and Warranties of Seller. As to the representations
and warranties of Seller set forth in Section 4, (1) each of those
representations and warranties set forth in Section 4 which is expressly stated
to be made solely as of the date of this Agreement or another specified date
shall be true and correct in all respects as of such date, without regard to the
materiality or Material Adverse Effect qualifiers set forth therein, and (2)
each of the other representations and warranties of Seller set forth in Section
4 shall be true and correct in all respects at and as of the time of the Closing
as though made at and as of that time, without regard to the materiality or
Material Adverse Effect qualifiers set forth therein; provided, that for
purposes of each of clauses (1) and (2) above, the representations and
warranties shall be deemed true and correct in all respects to the extent that
the aggregate effect of the inaccuracies in such representations and warranties
as of the applicable times does not constitute a Material Adverse Effect; and
provided, further, that the representations and warranties referred to in this
Section 7.1 shall not include the representations and warranties contained in
Section 4.8(c) with respect to any Governmental Authorization with respect to
which a Franchise Renewal shall have been obtained.
7.2 Covenants. Seller shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by it prior to or at the Closing.
7.3 Material Consents. The Material Consents shall have been obtained.
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7.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. All necessary pre-merger notification
filings required under the HSR Act shall have been made with the FTC and DOJ,
and the prescribed waiting period(s) (and any extensions thereof) will have
expired or been terminated.
7.5 Judgment. There shall not be in effect on the date on which the
Closing is to occur any judgment, decree, order or other prohibition having the
force of law that would prevent or make unlawful the Closing; provided, that the
Buyer shall have used commercially reasonable efforts to prevent the entry of
any such judgment, decree, order or other legal prohibition and to appeal as
expeditiously as possible any such judgment, decree, order or other legal
prohibition that may be entered.
7.6 Delivery of Certificates and Documents. Seller shall have furnished
to Buyer the following:
(a) a certificate of the Secretary or Assistant Secretary of
Enstar as to (i) the general partnership agreement of Seller; (ii) all actions
taken by and on behalf of Seller and the General Partners to authorize the
execution, delivery and performance of this Agreement and the Related Agreements
and (iii) the incumbency of officers signing this Agreement and any Related
Agreement on behalf of Seller;
(b) a certificate of an executive officer of Enstar,
certifying on behalf of Seller that the conditions set forth in Sections 7.1 and
7.2 have been met;
(c) the ▇▇▇▇ of Sale and Assignment and Assumption Agreement,
duly executed by Seller;
(d) the Indemnity Escrow Agreement, duly executed by Seller;
(e) a deed, in form and substance reasonably satisfactory to
Seller and Buyer, conveying title to each parcel of Real Property owned by
Seller to Buyer;
(f) copies of all Material Consents obtained on or prior to
Closing; and
(g) all other documents as are reasonably necessary to
transfer title to the Assets to Buyer.
7.7 Opinion of Seller's Counsel. Seller shall have furnished Buyer with
an opinion letter, dated the Closing Date, of ▇▇▇▇ Marks & ▇▇▇▇▇ LLP, counsel
for Seller, in the form set forth in Exhibit D hereto.
7.8 Opinion of Seller's FCC Counsel. Seller shall have furnished Buyer
with an opinion letter, dated the Closing Date, of ▇▇▇▇, Raywid & ▇▇▇▇▇▇▇▇▇,
L.L.P., FCC counsel for Seller, in the form set forth in Exhibit E hereto.
7.9 Partner Consents. The Partner Consents shall have been obtained.
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7.10 Aggregate Subscriber Total. On the Closing Date the System shall
serve no fewer than 5,800 Subscribers.
7.11 Enstar Purchase Agreement. The closing with respect to the Asset
Purchase Agreement dated as of August 8, 2000, by and among Buyer, Seller and
Enstar Income Program II-1, L.P., Enstar Income Program II-2, L.P., Enstar
Income Program IV-3, L.P., Enstar Income/Growth Program Six-A, L.P., Enstar IX,
Ltd., Enstar XI, Ltd., Enstar Cable of Cumberland Valley and Enstar Cable of
Macoupin County (the "Enstar Purchase Agreement") shall have occurred or shall
be occurring concurrent with the Closing.
8. Conditions Precedent to Seller's Obligations.
Seller's obligation to sell, assign, transfer and deliver the Assets to
Buyer hereunder are subject to the satisfaction or waiver at or prior to the
Closing Date (as provided herein) of the following conditions:
8.1 Representations and Warranties of Buyer. As to the representations
and warranties of Buyer set forth in Section 5, (1) each of those
representations and warranties set forth in Section 5 which is expressly stated
to be made solely as of the date of this Agreement or another specified date
shall be true and correct in all respects as of such date, without regard to the
materiality or Material Adverse Effect qualifiers set forth therein, and (2)
each of the other representations and warranties of Buyer set forth in Section 5
shall be true and correct in all respects at and as of the time of the Closing
as though made at and as of that time, without regard to the materiality or
Material Adverse Effect qualifiers set forth therein; provided that for purposes
of each of clauses (1) and (2) above, the representations and warranties shall
be deemed true and correct in all respects to the extent that the aggregate
effect of the inaccuracies in such representations and warranties as of the
applicable times does not constitute a Material Adverse Effect.
8.2 Covenants. Buyer shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by it prior to or at the Closing.
8.3 Material Consents. The Material Consents issued by Governmental
Authorities shall have been obtained.
8.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. All necessary pre-merger notification
filings required under the HSR Act will have been made with the FTC and DOJ, and
the prescribed waiting period(s) (and any extensions thereof) will have expired
or been terminated.
8.5 Judgment. There shall not be in effect on the date on which the
Closing is to occur any judgment, decree, order or other prohibition having the
force of law that would prevent or make unlawful the Closing; provided that
Seller shall have used commercially reasonable efforts to prevent the entry of
any such judgment, decree, order or other legal
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prohibition and to appeal as expeditiously as possible any such judgment,
decree, order or other legal prohibition that may be entered.
8.6 Partner Consents. The Partner Consents shall have been obtained.
8.7 Aggregate Subscriber Total. On the Closing Date the System shall
serve no fewer than 5,800 Subscribers.
8.8 Enstar Purchase Agreement. The closing with respect to the Enstar
Purchase Agreement shall have occurred or shall be occurring concurrent with the
Closing.
8.9 Delivery of Certificates and Documents. Buyer shall have furnished
to Seller the following:
(a) a certificate of the Secretary or Assistant Secretary of
Buyer as to (i) the certificate of incorporation and bylaws of Buyer, (ii)
resolutions of Buyer authorizing the execution, delivery and performance of this
Agreement and the Related Agreements; and (iii) the incumbency of officers
signing this Agreement and the Related Agreements on behalf of Buyer;
(b) a certificate of legal existence and good standing of
Buyer from the Secretary of State of Buyer's state of organization and a
certificate of foreign qualification of Buyer in any state in which any of the
System or Assets is located;
(c) a certificate of an executive officer of Buyer certifying
that the conditions set forth in Sections 8.1 and 8.2 have been met;
(d) the ▇▇▇▇ of Sale and Assignment and Assumption Agreement,
duly executed by Buyer; and
(e) the Indemnity Escrow Agreement, duly executed by Buyer.
8.10 Opinion of Buyer's Counsel. Buyer shall have furnished Seller with
an opinion letter, dated the Closing Date, of Dow ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, PLLC,
counsel for Buyer, in the form set forth in Exhibit F.
8.11 Payment for Assets. Buyer shall have delivered the Purchase Price
as provided in Section 3.2.
9. Survival of Representations and Warranties; Indemnification.
9.1 Survival of Representations and Warranties. Subject to Section
6.12, the representations and warranties of the parties provided for in this
Agreement shall survive the Closing for a period of six (6) months, except
representations and warranties relating to environmental matters and title to
Real Property, which representations and warranties shall be governed by Section
6.12, and to Taxes, title to Assets other than Real Property and authority,
which representations and warranties shall survive the Closing for the duration
of the applicable
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statute of limitations (the "Indemnity Period"). No claim for indemnification
for breach of a representation or warranty may be asserted after the expiration
of the applicable Indemnity Period; provided, that the written assertion of any
claim by a party against the other hereunder with respect to the breach or
alleged breach of any representation, warranty (or of a series of facts which
would support such breach) shall extend the Indemnity Period with respect to
such claim through the date such claim is conclusively resolved.
9.2 Indemnification.
(a) Subject to the provisions of Sections 9.1 and 9.5, Buyer
agrees to indemnify and hold harmless Seller, after the Closing, from and
against any and all Claims (as defined herein) to the extent such Claims are
based upon, arise out of or are related to (i) a breach of any representation or
warranty, or any failure to perform or comply with any of the covenants,
conditions or agreements of Buyer set forth in this Agreement or in any Related
Agreement, or (ii) the assertion of any Claim or legal action against Seller by
any Person or Governmental Authority based upon, arising out of or relating to
the ownership or operation of the Assets occurring, arising or accruing after
the Closing Date.
(b) Subject to the provisions of Sections 9.1 and 9.5, Seller
agrees to indemnify and hold harmless Buyer, after the Closing, from and against
any and all claims to the extent such claims are based upon, arise out of or
relate to (i) a breach of any representation or warranty, or any failure to
perform or comply with any of the covenants, conditions or agreements of Seller
set forth in this Agreement or in any Related Agreement or (ii) any liability of
Seller arising or accruing on or prior to, or existing on, the Closing Date,
except any such liability for which an adjustment to the Purchase Price is made
pursuant to Section 3.3(a)(ii); or (iii) any obligation or liability of Seller
not assumed by Buyer pursuant to the terms of this Agreement.
9.3 Assertion of Claims.
(a) If Buyer or Seller believes that it has a claim for
indemnification, it shall notify the other promptly in writing describing such
claim with reasonable particularity and containing a reference to the provisions
of this Agreement under which such claim has arisen.
(b) As used in this Section 9 the word "Claim" shall mean any
and all liabilities, obligations, losses, damages, deficiencies, demands,
claims, fines, penalties, interest, assessments, judgments, actions, proceedings
and suits of whatever kind and nature and all costs and expenses relating
thereto (including, without limitation, reasonable attorneys' fees incurred in
connection with the investigation or defense thereof or in asserting rights
hereunder).
(c) Neither this Section 9 nor any other provision of this
Agreement is intended to confer any third party beneficiary rights, including
but not limited to any extension of any statute of limitations pertaining to
suits, actions or proceedings brought by third parties.
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9.4 Notice of and Right to Defend Third Party Claims. Promptly upon
receipt of notice of any Claim or the commencement of any suit, action or
proceeding by a third party in respect of which indemnification may be sought on
account of an indemnity agreement contained in Section 9.2, the party seeking
indemnification (the "Indemnitee") shall give notice in writing to the party
from whom indemnification is sought (the "Indemnitor"). The omission by such
Indemnitee to so notify promptly such Indemnitor of any such Claim or action
shall not relieve such Indemnitor from any liability which it may have to such
Indemnitee in connection therewith. In case any Claim shall be asserted or any
suit, action or proceeding commenced against an Indemnitee, the Indemnitor will
be entitled to participate therein, and, to the extent that it may wish, subject
to Indemnitor's written confirmation of its indemnity obligations hereunder with
respect to such Claim, to assume the defense or conduct the settlement thereof.
Anything herein to the contrary notwithstanding, Indemnitor shall not be
entitled to settle any such suit, action or proceeding without Indemnitee's
consent, which consent shall be not unreasonably withheld. After notice from the
Indemnitor to the Indemnitee of its election so to assume the defense, conduct
or settlement thereof (along with its written confirmation of its indemnity
obligations), the Indemnitor will not be liable to the Indemnitee for any legal
or other expenses subsequently incurred by the Indemnitee in connection with the
defense, conduct or settlement thereof following such notice. The Indemnitee
will reasonably cooperate with the Indemnitor in connection with any such claim
assumed by the Indemnitor to make available to the Indemnitor all Persons and
all pertinent information under the Indemnitee's control.
9.5 Limitations of Liability.
(a) For purposes of this Agreement, Claims for indemnification
for breach of any representation, warranty, covenant or agreement shall not take
into account, give effect to or be qualified by any considerations of
materiality or knowledge which may be expressed in such representation or
warranty.
(b) The amount of any Claim indemnifiable by an Indemnitor
pursuant to Section 9.2 shall be reduced by the amount of any insurance proceeds
and the amount of any tax benefit resulting from the subject matter of such
claim received by the Indemnitee in respect of such claim.
(c) Seller shall not be required to indemnify Buyer under
Section 9.2(b) with respect to Claims arising from breaches of Seller's
representations or warranties hereunder, and Buyer shall not be required to
indemnify Seller under Section 9.2(a) with respect to Claims arising from
Buyer's representations or warranties hereunder, until the aggregate amount of
all such Claims against Seller or Buyer, as the case may be, exceeds the
aggregate amount of $75,000, in which case the indemnifying party shall be
liable for the total amount of all of such Claims starting from the first
dollar. Notwithstanding the foregoing, Buyer shall be indemnified by Seller,
without limitation by the $75,000 threshold set forth in the preceding sentence,
with respect to matters that are or should have been disclosed by Seller
pursuant to Section 4.8(b) that remain uncured as of Closing.
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(d) Seller's aggregate liability to Buyer for Claims arising
from breaches of Seller's representations and warranties hereunder shall be
limited to losses or damages not exceeding the amount of $750,000, except that
such limit shall not apply to Claims arising out of representations and
warranties relating to title to Assets other than Real Property, Taxes and
authority. Buyer's liability to Seller for Claims arising out of breaches of its
representations and warranties hereunder shall be limited to losses or damages
not exceeding the aggregate amount of $750,000.
9.6 Indemnity Escrow Agreement. At the Closing, Buyer, Seller and the
Escrow Agent shall execute the Indemnity Escrow Agreement, in accordance with
which Buyer will deposit the Indemnity Fund with the Escrow Agent on the Closing
Date in order to provide a fund for the payment of any indemnification to which
any Buyer Indemnitee is entitled under this Section 9.
10. Termination.
10.1 Termination. This Agreement may be terminated prior to the Closing
only in accordance with the following:
(a) At any time by mutual consent of Seller and Buyer;
(b) By either Seller or Buyer if the Closing hereunder has not
taken place on or before the Outside Closing Date other than by reason of a
breach or default of any of the covenants or agreements contained in this
Agreement by the party seeking to terminate; provided, that, either party may,
at its sole option, extend such date for an additional three (3) months if as of
such date the conditions to Closing set forth in Sections 7.3 and 8.3 shall have
not been satisfied;
(c) By either Seller or Buyer, at any time, if the other party
is in material breach or material default of its covenants and agreements under
this Agreement and the party in breach or default does not cure such breach or
default within thirty (30) days after written notice thereof is delivered to the
non-terminating party, provided that the terminating party is not also in
material breach or material default hereunder;
(d) By either Seller or Buyer, if the representations and
warranties of the other party (without regard to the materiality or Material
Adverse Effect qualifiers set forth therein) are not true and correct in all
respects (or, with respect to representations and warranties made as of a
specific date, are not true and correct in all respects as of such date), and
such failure is not cured by the Outside Closing Date, provided that all of the
representations and warranties of the terminating party are true and correct in
all respects; provided, that for purposes of this Section 11.1(d), the
representations and warranties of a party shall be deemed true and correct in
all respects to the extent that the aggregate effect of the inaccuracies in such
representations and warranties as of the applicable times does not constitute a
Material Adverse Effect;
(e) By Buyer, pursuant to Section 6.12(a), (b) or (c);
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(f) By Buyer in the event that any of the following shall
occur: (i) as of the date that is one hundred twenty (120) days following the
date hereof, the Limited Partners holding forty percent (40%) or more of the
Interests of either General Partner shall have affirmatively disapproved the
transactions contemplated by this Agreement (unless the Limited Partners holding
fifty percent (50%) or more of the Interests of such General Partner shall have
approved the transactions contemplated hereby); (ii) as of any date, the Limited
Partners holding fifty percent (50%) or more of the Interests of either General
Partner shall have affirmatively disapproved the transactions contemplated by
this Agreement or approved any Acquisition Proposal; or (iii) as of the
termination of the Voting Period applicable to a General Partner, the Limited
Partner Consents with respect to such General Partner shall not have been
obtained; provided, however, that for purposes of clauses (i) and (ii) the
percentage of Interests disapproving the transactions contemplated by this
Agreement or approving an Acquisition Proposal shall not include any
disapprovals or approvals (as the case may be) that shall have been rescinded,
revoked or otherwise withdrawn as of the date of such termination.
10.2 Breakup Fee; Acquisition Proposals.
(a) Seller shall pay to Buyer a breakup fee in the amount of
$250,000 (the "Breakup Fee"), in accordance with the terms of this Section 10.2,
in the event that (i) this Agreement is terminated by Buyer pursuant to Section
10.1(f), (ii) as of the date of such termination either of the General Partner's
respective Limited Partners shall have given their consent to an Acquisition
Proposal submitted by a third party; and (iii) Buyer shall have performed and
complied in all material respects with all covenants and agreements required to
be performed or complied with by it under this Agreement during the period prior
to the first to occur of (x) the date on which the Limited Partners of either
General Partner shall have either disapproved the transactions contemplated by
this Agreement or given their consent to an Acquisition Proposal submitted by a
third party, or (y) the first-occurring date of termination of the Voting Period
applicable to a General Partner during which the Limited Partner Consents with
respect to such General Partner shall not have been obtained. Seller shall pay
the Breakup Fee to Buyer by wire transfer of immediately available funds or by
certified check (in accordance with Buyer's written instructions) within five
(5) Business Days following the date of termination pursuant to Section 10.1(f).
(b) In the event that the Closing does not occur and this
Agreement is terminated solely as a result of the failure to satisfy the
conditions to Closing set forth in Sections 7.9 and 8.6, and within six (6)
months following the termination of the applicable Voting Period, Seller
receives an Acquisition Proposal from a third party, which Acquisition Proposal
the General Partners intend to submit to their respective Limited Partners for
their approval, Seller shall notify Buyer in writing of the price and other
material terms of such Acquisition Proposal, and Buyer shall be entitled, within
five (5) Business Days following such notification, to submit a Buyer
Acquisition Proposal.
10.3 Reimbursement of Expenses. In the event that (i) this Agreement is
terminated by Buyer pursuant to Section 10.1(f), (ii) as of the date of such
termination neither General Partner's Limited Partners shall have given their
consent to an Acquisition Proposal submitted
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by a third party; and (iii) Buyer shall have performed and complied in all
material respects with all covenants and agreements required to be performed or
complied with by it under this Agreement during the period prior to the first to
occur of (x) the date on which the Limited Partners of either General Partner
shall have disapproved the transactions contemplated by this Agreement, or (y)
the first-occurring date of termination of the Voting Period applicable to a
General Partner during which the Limited Partner Consents with respect to such
General Partner shall not have been obtained, such General Partner(s) for which
the Limited Partner Consents shall not have been obtained will reimburse Buyer
for Buyer's actual out-of-pocket costs and expenses incurred in connection with
the negotiation and performance of this Agreement.
10.4 Surviving Obligations. In the event of termination of this
Agreement by either Buyer or Seller pursuant to this Section 10, prompt written
notice thereof shall be given to the other party; and this Agreement shall
terminate without further action by any of the parties hereto, and all
obligations of the parties hereunder with respect to which this Agreement is
terminated shall terminate, except for the obligations set forth in Sections
4.19, 6.4, 10.2, 10.3, 10.5, 11 and 20.
10.5 Attorney's Fees. Notwithstanding any provision in this Agreement
that may limit or qualify a party's remedies, in the event of a default by any
party that results in a lawsuit or other proceeding for any remedy available
under this Agreement, the prevailing party shall be entitled to reimbursement
from the defaulting party of its reasonable legal fees and expenses.
11. Expenses.
Except as otherwise provided in this Agreement, each party shall pay
its own expenses incurred in connection with the authorization, preparation,
execution and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents and other representatives.
12. Entire Agreement.
Buyer and Seller agree that this Agreement, including the Schedules and
all Exhibits hereto and any other written document or instrument delivered in
connection herewith, constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior understandings and
agreements with respect thereto.
13. Parties Obligated and Benefited.
Subject to the limitations set forth below, this Agreement will be
binding upon the parties and their respective assigns and successors in interest
and will inure solely to the benefit of the parties and their respective assigns
and successors in interest, and no other Person will be entitled to any of the
benefits conferred by this Agreement. Without the prior written consent of the
other parties, no party will assign any of its rights under this Agreement or
delegate any of its duties under this Agreement. Notwithstanding the foregoing,
Buyer shall have the right, without
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Seller's prior consent, to assign this Agreement to any Affiliate of Buyer,
unless such assignment will delay the consummation of the transactions
contemplated by this Agreement.
14. Notices.
All notices, requests, consents, and other communications under this
Agreement shall be in writing and shall be delivered in person or mailed by
first-class certified or registered mail, return receipt requested, postage
prepaid, by reputable overnight mail or courier or by telecopier, in either
case, with receipt confirmed, addressed as follows:
If to Seller: Enstar Communications Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President - Treasurer
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.,
Senior Vice President, General Counsel & Secretary
With a copy to: ▇▇▇▇ Marks & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to Buyer: Multimedia Acquisition Corp.
----------- ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
With a copy to: Dow ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, PLLC
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇.▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or at such other address or addresses as may have been furnished in writing by
any party to the others in accordance with the provisions of this Section 14.
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Notices and other communications provided in accordance with this Section 14
shall be deemed delivered upon receipt. The furnishing of any notice or
communication required hereunder may be waived in writing by the party entitled
to receive such notice. Failure or delay in delivering copies of any notice to
persons designated above to receive copies shall in no way adversely affect the
effectiveness of such notice or communication.
15. Amendments and Waivers.
Except as otherwise expressly set forth in this Agreement, any term of
this Agreement may be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of Seller and
Buyer. Any amendment or waiver effected in accordance with this Section 15 shall
be binding upon each party. No waivers of or exceptions to any term, condition
or provision of this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
16. Severability.
If any provision of this Agreement shall be held or deemed to be, or
shall in fact be, invalid, inoperative or unenforceable because of the conflict
of such provision with any constitution or statute or rule of public policy or
for any other reason, such circumstance shall not have the effect of rendering
any other provision or provisions herein contained invalid, inoperative or
unenforceable, but this Agreement shall be reformed and construed as if such
invalid, inoperative or unenforceable provision had never been contained herein
and such provision reformed so that it would be valid, operative and enforceable
to the maximum extent permitted.
17. Section Headings and Terms.
The section headings in this Agreement are for convenience and
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
18. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument, and shall become effective when counterparts which
together contain the signatures of each party hereto shall have been delivered
to Seller and Buyer.
19. Governing Law; Consent in Jurisdiction.
This Agreement shall be governed by and construed and enforced in
accordance with the law (without giving effect to the law governing the
principles of conflicts of law) of the State of New York. Any action to enforce,
arising out of, or relating in any way to, any of the provisions of this
Agreement may be brought and prosecuted in any such court or courts located
within the State of New York as is prohibited by law, and the parties consent to
the jurisdiction of said
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court or courts located within the State of New York and to service of process
by registered mail, return receipt requested, or by any other manner provided by
law. Each party hereto agrees not to assert, by way of motion, as a defense or
otherwise, in any such action, suit or proceeding any claim that it is not
subject personally to the jurisdiction of such court, that the action, suit or
proceeding is brought in an inconvenient forum, that the venue of the action,
suit or proceeding is improper or that this Agreement, or any other agreement or
transaction related hereto or the subject matter thereof or thereof may not be
enforced in or by such court.
20. Specific Performance.
The parties hereto acknowledge that money damages are not an adequate
remedy for violations of this Agreement and that any party may, in its sole
discretion, apply to a court of competent jurisdiction for specific performance
or injunctive or other relief (without the posting of any bond or other
security) as such court may deem just and proper in order to enforce this
Agreement or prevent any violation hereof by any of the parties hereto and, to
the extent permitted by applicable Legal Requirements, each party hereof waives
any objection to the imposition of such relief. Any such specific or equitable
relief granted shall not be exclusive and an Indemnitee shall also be entitled
to seek money damages.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date and year first above written.
BUYER:
-----
MULTIMEDIA ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
SELLER:
------
ENSTAR IV/PBD SYSTEMS VENTURE
By: Enstar Income Program IV-I, L.P., General
Partner
By: Enstar Communications Corporation,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President -
Treasurer
By: Enstar Income Program IV-2, L.P., General
Partner
By: Enstar Communications Corporation,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President -
Treasurer
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Solely for purposes of Sections 6.6(d) and 6.15:
CHARTER COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President -
Treasurer
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