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Exhibit 2.7(a)
PURCHASE AND SALE AGREEMENT
By and Among
THE SELLERS LISTED ON
THE SIGNATURE PAGES HERETO,
INTERLINK COMMUNICATIONS PARTNERS, LLLP
and
CHARTER COMMUNICATIONS, INC.
Dated as of April 26, 1999
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS........................................................1
ARTICLE II PURCHASE AND SALE OF PURCHASED INTERESTS.........................10
2.1 PURCHASE AND SALE OF PURCHASED INTERESTS..............................10
2.2 PURCHASE PRICE........................................................11
2.3 PAYMENT OF PURCHASE PRICE.............................................11
2.4 ADJUSTMENTS AND PRORATIONS............................................11
2.5 INDEMNITY ESCROW......................................................15
ARTICLE III CLOSING.........................................................16
3.1 CLOSING DATE..........................................................16
3.2 DEFAULT; SPECIFIC PERFORMANCE.........................................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS........................16
4.1 TITLE TO PURCHASED INTERESTS..........................................17
4.2 ENFORCEABILITY OF AGREEMENT...........................................17
4.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS............................17
4.4 STOCK OF CERTAIN CORPORATE PARTNERS OF THE COMPANY....................18
4.5 BROKERS' FEES.........................................................20
4.6 ORGANIZATION AND QUALIFICATION........................................20
4.7 AUTHORITY RELATIVE TO THIS AGREEMENT..................................20
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................21
5.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES..........................21
5.2 ORGANIZATIONAL DOCUMENTS..............................................21
5.3 EFFECT OF AGREEMENT...................................................21
5.4 CAPITALIZATION........................................................22
5.5 AUTHORITY RELATIVE TO THIS AGREEMENT..................................23
5.6 FINANCIAL STATEMENTS..................................................23
5.7 UNDISCLOSED LIABILITIES...............................................24
5.8 TAX RETURNS AND AUDITS................................................24
5.9 FRANCHISES AND NECESSARY CONTRACTS....................................25
5.10 MATERIAL AGREEMENTS AND OBLIGATIONS.................................26
5.11 SYSTEMS' CAPACITY, CUSTOMERS AND RATES..............................27
5.12 EMPLOYEES...........................................................28
5.13 ABSENCE OF CERTAIN DEVELOPMENTS.....................................29
5.14 REAL PROPERTY.......................................................30
5.15 TITLE TO ASSETS; PERSONAL PROPERTY..................................31
5.16 COMPLIANCE WITH LAWS................................................31
5.17 TRANSACTIONS........................................................33
5.18 LITIGATION AND LEGAL PROCEEDINGS....................................34
5.19 BROKERS' FEES.......................................................34
5.20 PLANS; ERISA........................................................34
5.21 INSURANCE, SURETY BONDS, DAMAGES....................................36
5.22 ENVIRONMENTAL LAWS..................................................37
5.23 NO OTHER COMMITMENT TO SELL.........................................37
5.24 YEAR 2000...........................................................37
5.25 TRADEMARKS, PATENTS AND COPYRIGHTS..................................38
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER..........................38
6.1 ORGANIZATION..........................................................38
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6.2 AUTHORITY RELATIVE TO THIS AGREEMENT..................................38
6.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS............................39
6.4 FINANCIAL CAPABILITY..................................................39
6.5 LITIGATION............................................................39
6.6 NO VIOLATION OF FCC CROSS OWNERSHIP RULES.............................40
6.7 INVESTMENT INTENT; SOPHISTICATED BUYER................................40
6.8 FINDERS' AND BROKERS' FEES............................................40
ARTICLE VII COVENANTS.......................................................40
7.1 ACCESS................................................................40
7.2 ENVIRONMENTAL ASSESSMENT..............................................41
7.3 INTERIM PERIOD OPERATIONS.............................................41
7.4 DELIVERY OF DOCUMENTS TO BUYER........................................43
7.5 NO IMPAIRMENT OF TITLE................................................44
7.6 NO AMENDMENT TO ORGANIZATIONAL DOCUMENTS..............................45
7.7 FRANCHISE RENEWALS; REQUIRED CONSENTS; HSR FILINGS....................45
7.8 NOTIFICATION..........................................................47
7.9 REASONABLE EFFORTS; ADDITIONAL ACTIONS................................47
7.10 TAX MATTERS.........................................................48
7.11 RESTRUCTURING.......................................................50
7.12 YEAR 2000 REMEDIATION PROGRAM.......................................51
7.13 EXCULPATION AND INDEMNIFICATION.....................................51
7.14 CREDIT FACILITY.....................................................51
7.15 ADMISSION OF BUYER AS A SUBSTITUTE LIMITED PARTNER..................52
7.16 PUBLICITY...........................................................52
7.17 SERVICES PROVIDED BY AND TO ALLIANCE................................52
7.18 CONVEYANCE OF CERTAIN INTERESTS OWNED BY THE COMPANY PRIOR TO
CLOSING ............................................................52
ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ALL PARTIES.........52
8.1 ORDERS PROHIBITING CONSUMMATION OF TRANSACTIONS.......................53
8.2 HSR ACT...............................................................53
ARTICLE IX CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS......................53
9.1 COMPLIANCE WITH AGREEMENT.............................................53
9.2 CORRECTNESS OF REPRESENTATIONS AND WARRANTIES.........................53
9.3 NO ADVERSE CHANGE IN BUSINESS OR PROPERTIES...........................53
9.4 CERTIFICATE OF OFFICER................................................54
9.5 PROCEEDINGS AND DOCUMENTS.............................................54
9.6 OPINION OF COUNSEL....................................................54
9.7 OPINION OF FCC COUNSEL................................................54
9.8 CONSENTS..............................................................54
9.9 PURCHASE OF PARTNERSHIP INTERESTS OF RAP..............................54
ARTICLE X CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS......................55
10.1 CORRECTNESS OF REPRESENTATIONS AND WARRANTIES.......................55
10.2 COMPLIANCE WITH AGREEMENT...........................................55
10.3 CERTIFICATE OF OFFICER..............................................55
10.4 PROCEEDINGS AND DOCUMENTS...........................................55
10.5 OPINION OF COUNSEL..................................................55
10.6 SALE OF PARTNERSHIP INTERESTS OF RAP................................55
ARTICLE XI RIGHTS TO TERMINATE; BREACH;.....................................56
11.1 TERMINATION.........................................................56
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ARTICLE XII INDEMNIFICATION.................................................57
12.1 INDEMNIFICATION BY SELLERS WITH RESPECT TO THE COMPANY..............57
12.2 INDEMNIFICATION BY SELLERS FOR SELLER BREACHES......................59
12.3 INDEMNIFICATION BY BUYER............................................60
12.4 EFFECT OF MATERIALITY QUALIFIERS....................................60
12.5 NOTICE AND RIGHT TO DEFEND THIRD PARTY CLAIMS.......................60
12.6 EXCLUSIVE REMEDY; LIMITATION OF LIABILITY...........................61
ARTICLE XIII MISCELLANEOUS..................................................61
13.1 SELLER LIABILITY SEVERAL AND NOT JOINT..............................61
13.2 APPOINTMENT OF SELLERS' REPRESENTATIVE..............................61
13.3 EXPENSES............................................................62
13.4 KNOWLEDGE...........................................................62
13.5 ASSIGNMENT..........................................................62
13.6 SUCCESSORS..........................................................62
13.7 ENTIRE AGREEMENT....................................................62
13.8 THIRD PARTIES.......................................................63
13.9 AMENDMENTS IN WRITING...............................................63
13.10 GOVERNING LAW.......................................................63
13.11 INTERPRETATION......................................................63
13.12 CERTAIN PROVISIONS RELATING TO R&A MANAGEMENT LLC'S 401(K) PLAN.....63
13.13 NOTICES.............................................................65
13.14 SEVERABILITY........................................................66
13.15 COUNTERPARTS........................................................66
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THIS PURCHASE AND SALE AGREEMENT is made and entered into as of April 26,
1999 by and among the sellers listed on the signature pages hereto as of the
date hereof (collectively, "Sellers"), and InterLink Communications Partners,
LLLP, a Colorado registered limited liability limited partnership (the
"Company"), and Charter Communications, Inc., a Delaware corporation ("Buyer").
WHEREAS, Sellers, directly or indirectly, collectively own all of the
outstanding partnership interests in the Company and an affiliate of the
Company, Greenwich Street (RAP) Partners I, L.P., owns a limited partnership
interest (the "RAP Interest") in ▇▇▇▇▇▇ Acquisition Partners, L.L.L.P. ("RAP");
WHEREAS, the Company and its subsidiaries own and operate cable television
systems and businesses in respect thereof serving customers in various areas
throughout the United States (which areas of service are hereinafter
collectively referred to as the "Service Areas");
WHEREAS, Sellers, severally and not jointly, in reliance upon the
representations and warranties of Buyer, desire to sell to Buyer, and Buyer, in
reliance upon the representations and warranties of Sellers and the Company,
desires to purchase from Sellers, (i) all of the outstanding partnership
interests of the Company other those described in clause (ii), and (ii) all of
the issued and outstanding stock of certain corporations that own the remaining
partnership interests of the Company, on the terms and subject to the conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1.1 "1992 Act" means the Cable Television Consumer Protection and
Competition Act of 1992, as amended.
1.2 "Accrued Vacation Pay" means the obligation of the Company to its
employees for accrued vacation pay through the Closing Date.
1.3 "Additional Financial Statements" means (i) as to monthly statements,
the Company's unaudited Statement of Operations for each monthly period after
the period ended December 31, 1998, and (ii) as to quarterly statements, the
Company's unaudited Balance Sheet and related Statements of Operations and
Statements of Changes in Financial Position for each quarterly period after the
period ended December 31, 1998.
1.4 "Affiliate" has the meaning given to such term in the Securities
Exchange Act of 1934, as amended.
1.5 "Assets" means collectively all of the Company's business, assets,
properties and rights used or useful by the Company in conducting its Business.
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1.6 "Audited Financial Statements" has the meaning set forth in Section
5.6.
1.7 "Basic Customers" means (i) all bona fide Non-Delinquent CATV
customers of the Systems (i.e., the first connections) that have paid in full,
on a nondiscounted basis (other than senior citizen discounts and seasonal
customer discounts), for at least one Monthly Billing Period for the services
ordered by the respective customer, and to whom the respective System is
rendering its basic (or expanded basic, as the case may be) CATV service
(whether or not in conjunction with any tiered or premium services) at that
System's then applicable monthly rate therefor, plus (ii) all Basic Customer
Equivalents.
1.8 "Basic Customer Equivalents" means equivalent bona fide Non-Delinquent
CATV customers of the Systems that are commercial establishments and
multi-dwelling units (e.g., bars, taverns, apartment buildings, dormitories,
hospitals, etc.) that are billed on a bulk basis for basic (or expanded basic)
service, which have paid in full the charges for at least one Monthly Billing
Period. The number of Basic Customer Equivalents shall be deemed to be equal to
the quotient that is derived from dividing: (a) the gross basic (or, if
applicable, expanded basic) ▇▇▇▇▇▇▇▇ to all such commercial establishments,
multi-dwelling units, or other customers that are billed on a bulk basis for
basic (or expanded basic) service (but excluding ▇▇▇▇▇▇▇▇ from a la carte tiers
or premium services, installation or other non-recurring charges, converter
rental, any fees or charges for any outlet or connection other than the first
outlet or connection in any single family household or (with respect to a bulk
account, in any residential unit, e.g., an individual apartment or rental unit),
pass-through charges for sales taxes, line-itemized franchise fees, fees charged
by the FCC and the like) attributable to such commercial establishment,
multi-dwelling unit or other customer during the most recent Monthly Billing
Period ended prior to the date of calculation (but excluding ▇▇▇▇▇▇▇▇ in excess
of a single Monthly Billing Period's charge) by (b) the rate charged by the
respective System to individual homes as of December 31, 1998, for basic service
(or, (i) if the respective commercial establishment, multi-dwelling unit or
other customer also takes expanded basic service, then by the rate charged by
that System to individual homes as of December 31, 1998, for basic and expanded
basic service and (ii) if the respective commercial establishment,
multi-dwelling unit or other customer takes services which are neither expanded
basic or basic services, then by a rate which is an equivalent retail rate for
such service), exclusive of any charges for the additional services, franchise
fees, taxes, etc. which are excluded from the calculation of gross basic (or, if
applicable, expanded basic) ▇▇▇▇▇▇▇▇ set forth in clause (a) above, such rate to
be not less than the respective System's standard rate for such service.
1.9 "Basic Customer Threshold" has the meaning set forth in Section
2.4(a).
1.10 "Basic Services" means the lowest tier of CATV programming sold to
customers of the Systems for which such customers pay a fixed monthly fee,
excluding Expanded Basic Services, a la carte tiers, premium services,
pay-per-view television and any charges for additional outlets and installation
fees and any revenues derived from the rental of converters, remote control
devices and other like charges for equipment.
1.11 "Business" means the provision of CATV and related ancillary services
by the Company Group through the Systems in and around the Service Areas.
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1.12 "Buyer" has the meaning set forth in the first paragraph of this
Agreement.
1.13 "Buyer Confidentiality Agreement" means the Confidentiality Agreement
between Buyer and the Company dated as of January 18, 1999.
1.14 "CARS" means CATV relay service.
1.15 "CATV" means cable television.
1.16 "Charter Plan" has the meaning set forth in Section 13.12.
1.17 "Charter Transfer Plan" has the meaning set forth in Section
13.12(c).
1.18 "Closing" has the meaning set forth in Section 3.1.
1.19 "Closing Adjustment Certificate" means the certificate to be
delivered by the Company to Buyer, not less than five business days prior to the
Closing Date, pursuant to Section 2.4(c).
1.20 "Closing Date" has the meaning set forth in Section 3.1.
1.21 "Closing Escrow Agreement" means an indemnification escrow agreement
substantially in the form of Exhibit 2.5 hereto.
1.22 "Communications Act" means the Communications Act of 1934, as
amended.
1.23 "Company Group" means the Company and each of its Subsidiaries.
1.24 "Company's 401(k) Plan" has the meaning set forth in Section 13.12.
1.25 "Computer Systems" means any hardware or software embedded systems,
equipment and cable plant, or headend, building and other facilities used in
connection with the Business, including any firmware, application programs,
billing systems, operating systems, user interfaces, files and databases, that
are date dependent or which process date related data, and that might be
adversely affected by the advent or changeover to the year 2000 or by the advent
or changeover to any leap year.
1.26 "Contract" means any contract, mortgage, deed of trust, bond,
indenture, lease, license, permit, note, Franchise, certificate, option,
warrant, right or other instrument, document, obligation or agreement, whether
written or oral.
1.27 "Continuing Employees" has the meaning set forth in Section 13.12.
1.28 "Credit Facility" means loans to the Company in the maximum principal
amount of $350 million pursuant to a Second Amended and Restated Credit
Agreement dated as of February 1, 1999 among the Company, The First National
Bank of Chicago, individually and as
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Administrative Agent, Bank of Montreal, individually and as Syndication Agent,
and the lenders party thereto.
1.29 "DeMinimis Agreements" means (i) the Company Group's written or
verbal agreements with customers (other than bulk customers) entered into in the
ordinary course of business for the provision of CATV service at the standard
rates charged by the respective System for such service, and (ii) Contracts that
are not Material Agreements because those Contracts involve payments of less
than $25,000 individually over the life of such Contracts and less than $250,000
in the aggregate for all such Contracts over the life of such Contracts.
1.30 "Disbursement Agent" means R&A Management, LLC, a Colorado limited
liability company.
1.31 "Effective Time" means the time on which the Closing has been
consummated on the Closing Date.
1.32 "Encumbrances" means, collectively, all debts, claims, liabilities,
obligations, taxes, liens, mortgages, security interests and other encumbrances
of any kind, character or description, whether accrued, absolute, contingent or
otherwise (and whether or not reflected or reserved against in the balance
sheets, books of account and records of the Company).
1.33 "Environmental Law" means any applicable federal, state, or local
law, statute, standard, ordinance, rule, regulation, code, license, permit,
authorization, approval, and any consent order, administrative or judicial
order, judgment, decree, injunction, or settlement agreement between any member
of the Company Group and a governmental entity relating to the protection,
preservation or restoration of the environment (including, without limitation,
air, water, land, plant and animal life or any other natural resource).
1.34 "Environmental Permit" means any permit, license, approval, consent
or other authorization required by any applicable Environmental Law.
1.35 "Escrow Agent" means U.S. Bank, National Association.
1.36 "Expanded Basic Services" means an optional tier of video services
offered by any member of the Company Group to its customers under various
different names, as such term is commonly used in the CATV industry.
1.37 "FAA" means the Federal Aviation Administration.
1.38 "FCC" means the Federal Communications Commission.
1.39 "FCC Licenses" means all licenses, permits, earth station
registrations and other authorizations issued by the FCC and used in conjunction
with the operation of any System or the Business.
1.40 "Final Closing Certificate" means the certificate to be delivered by
Buyer to Disbursement Agent within ninety (90) days after the Closing Date
pursuant to Section 2.4(d).
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1.41 "Franchise" means, with respect to any System, the respective
franchise agreement (or, in lieu thereof, the respective license, consent,
permit, approval or authorization) entered into, issued or otherwise granted by
any state or local (e.g., city, county, parish, town or village) governmental
body, for the construction, installation or operation of that System, together
with all relevant instruments, resolutions and franchise-related statutes and
ordinances.
1.42 "GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
1.43 "General Partner" means ▇▇▇▇▇▇, Co., a Colorado corporation, which is
the sole general partner of the Company.
1.44 "Governmental Authority" has the meaning set forth in Section 4.3(b).
1.45 "Greenwich Street" means Greenwich Street (RAP) Partners I, L.P.
1.46 "Hazardous Substance" means any substance or material, whether solid,
liquid or gas, listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, under any Environmental Law,
whether by type or by quantity; Hazardous Substance includes, without
limitation, any toxic waste, pollutant, contaminant, hazardous substance, toxic
substance, hazardous waste, special waste, industrial substance or petroleum or
any derivative or by-product thereof, radon, radioactive material, asbestos,
asbestos-containing material, urea formaldehyde foam installation, lead and
polychlorinated biphenyl classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated under any Environmental Law.
1.47 "Homes Passed" means all single family homes, and all residential
units in multi-dwelling units, capable of being serviced by any System without
further trunk or feeder line construction.
1.48 "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
1.49 "Improvements" means all buildings, structures, CATV towers and
fixtures, and other improvements now or hereafter actually or constructively
attached to the Real Estate, and all modifications, additions, restorations or
replacements of the whole or any part thereof.
1.50 "Indemnifiable Damages" means any and all liabilities in respect of
losses, suits, proceedings, demands, judgments, damages, expenses and costs
(including, without limitation, reasonable counsel fees and costs and expenses)
incurred in the investigation, defense or settlement of any claims covered by
the indemnification set forth in this Agreement, other than special, incidental,
punitive or consequential damages. For avoidance of doubt, "Indemnifiable
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Damages" does not include any liability that has been fully accrued, accounted
for and satisfied by means of the Final Closing Certificate described in Section
2.4(d).
1.51 "Indemnification Provisions" has the meaning set forth in Section
7.13.
1.52 "Indemnitee" has the meaning set forth in Section 12.5.
1.53 "Indemnitor" has the meaning set forth in Section 12.5.
1.54 "ING Media C Corp." has the meaning set forth in Section 4.4.
1.55 "InterLink Equity Value" has the meaning set forth in Section 2.2.
1.56 "InterLink Indemnity Fund" means a portion of the Purchase Price
equal to $20,000,000, to be deposited by Buyer at the Closing with the Escrow
Agent pursuant to the Closing Escrow Agreement, plus accrued interest thereon,
in order to fund the indemnification obligations of the Sellers under Section
12.1 hereof.
1.57 "Legal Proceedings" has the meaning set forth in Section 5.18.
1.58 "License" means that certain License Agreement between the
Disbursement Agent and an Affiliate of Buyer, dated the Closing Date.
1.59 "Material Adverse Effect" means any effect that is or is reasonably
likely to be materially adverse to the Assets, the Business or the results of
operations or financial condition of the Company Group, taken as a whole, except
for effects due to general economic conditions or changes in regulatory and
competitive conditions affecting the CATV industry generally.
1.60 "Material Agreement" means any Contract of any nature (other than one
required to be listed by Section 5.9) to which any member of the Company Group
is a party, or by which any member of the Company Group or any of their
properties is bound, which (i) by its terms obligates the Company Group to pay
more than $25,000, (ii) in the aggregate with all such Contracts obligates the
Company Group to pay more than $250,000, (iii) provides for the provision of
internet access or internet services to the Company Group's customers, or (iv)
restricts or prohibits a member of the Company Group or any Affiliate of the
Company Group from engaging in any business anywhere in the world.
1.61 "Monthly Billing Period" means the respective monthly period (whether
such period is a calendar month or, as in the case of any System that engages in
cycle billing, any other monthly period) to which any System-generated customer
▇▇▇▇ for CATV services relates.
1.62 "Nassau" has the meaning set forth in Section 4.4.
1.63 "Necessary Contract" means any Contract to which any member of the
Company Group is a party and which is necessary for any member of the Company
Group's (i) use of any tower, office or headend site, (ii) pole attachments,
(iii) rights-of-way, (iv) service to any
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residential development or any commercial or residential dwelling unit, (v)
material licenses and easements, or (vi) operation of the Business or the
Systems.
1.64 "Neutral Accounting Firm" shall mean KPMG Peat Marwick.
1.65 "Non-Delinquent" means a customer who does not have a past due
balance of more than two (2) Monthly Billing Periods (except as otherwise set
forth on Schedule 1.1(A) with respect to the bulk accounts itemized thereon)
from the first day of the initial Monthly Billing Period to which a ▇▇▇▇ relates
(except for past due amounts representing late fees and other minimal ancillary
charges) totaling $5.00 or less.
1.66 "Omega Agreement" means the Asset Purchase and Sale Agreement by and
among Cable Brazil, Inc., Cardinal Telecable Corporation, See-More TV
Corporation, Hoosier Hills Cable T.V. Co., Omega Cable TV of ▇▇▇▇▇ Co. and the
Company.
1.67 "Outside Date" has the meaning set forth in Section 11.1(a)(ii).
1.68 "Partnership Agreement" means the Second Amended and Restated
Agreement of Limited Partnership of the Company dated September 1, 1997, as
amended to date.
1.69 "Permitted Encumbrances" means (a) materialmen's, mechanic's,
carriers', or other like liens arising in the ordinary course of business, or
deposits to obtain the release of such liens, securing obligations aggregating
less than $250,000, (b) liens for current taxes not yet due and payable; (c)
imperfections of title that do not interfere with the use or detract from the
value of such property; (d) liens to be released at or prior to Closing; and (e)
in the case of the Real Estate owned or real property leased by any member of
the Company Group, (i) such leases for real property, (ii) municipal and zoning
ordinances, (iii) such rights of way as do not interfere with the use or detract
from the value of the property, (iv) standard (printed) title insurance
exceptions and (v) easements for public utilities, recorded building and use
restrictions and covenants which do not materially interfere with the present
use of or materially detract from the value of the property, and other minor
encumbrances.
1.70 "Person" means an individual, corporation, limited liability company,
partnership, sole proprietorship, association, joint venture, joint stock
company, trust, incorporated organization, or governmental agency or other
entity.
1.71 "Premium Customer" means a Basic Customer who subscribes to and has
been (or is to be) charged for any optional single channel or a la carte service
for which there is a specified charge.
1.72 "Purchase Price" has the meaning set forth in Section 2.2.
1.73 "Purchase Price Adjustment Holdback" means a portion of the Purchase
Price equal to Two Million Five Hundred Thousand Dollars ($2,500,000 ) to be
paid by Buyer to Disbursement Agent at the Closing and retained by Disbursement
Agent as described in Section 2.3.
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1.74 "Purchase Price Allocation Schedule" means a schedule, to be
delivered by the Company (on behalf of the Sellers) to Buyer at least five (5)
days prior to the Closing, containing (a) each Seller's percentage interest in
the Company, (b) each Seller's indirect percentage interest in RAP for purposes
of certain allocations under this Agreement, the RAP Agreement and the RAP
Indemnity Agreement, and (c) the portion of the Purchase Price to be delivered
to each Seller at the Closing.
1.75 "Purchased Interests" means, collectively, (1) the partnership
interests of the Company owned by Sellers, and (2) all of the issued and
outstanding stock of WS, ING Media C Corp., and Nassau (each of which is a
limited partner of the Company), any options to purchase assets owned by such
corporations which are held by their respective shareholders, and any
outstanding indebtedness of such corporations held by their respective
shareholders, all to be purchased by Buyer pursuant to this Agreement.
1.76 "RAP" means ▇▇▇▇▇▇ Acquisition Partners, L.L.L.P., a Colorado
registered limited liability limited partnership.
1.77 "RAP Agreement" means the Purchase and Sale Agreement by and among
the RAP Sellers, RAP, and Buyer dated as of the date hereof.
1.78 "RAP Equity Value" has the meaning ascribed to that term in the RAP
Agreement.
1.79 "RAP Indemnity Agreement" means the RAP Indemnity Agreement among the
parties hereunder and under the RAP Agreement, delivered pursuant to the RAP
Agreement and attached as an exhibit thereto.
1.80 "RAP Indemnity Fund" means the sum of Twenty Million Dollars
($20,000,000) pursuant to the RAP Agreement to be deposited with the Escrow
Agent by the Buyer (or guaranteed by letters of credit provided by one or more
sellers under the RAP Agreement) pursuant to the RAP Indemnity Agreement in
order to fund the indemnification obligations, under Section 2.1 of the RAP
Indemnity Agreement, of (i) the RAP Sellers, and (ii) the Sellers with respect
to the indirect interest in RAP owned by the Company. A portion of the purchase
price under the RAP Agreement shall be deposited by Buyer with the Escrow Agent
reflecting the RAP Sellers' pro rata portion of the RAP Equity Value, and a
portion of the Purchase Price hereunder shall be deposited by Buyer with the
Escrow Agent reflecting the Company's pro rata portion of the RAP Equity Value
arising out of the Company's indirect interest in RAP.
1.81 "RAP Purchase Price Adjustment Holdback" means the sum of Two Million
Dollars ($2,000,000) pursuant to the RAP Agreement to be paid by Buyer to
Disbursement Agent at the Closing and retained by Disbursement Agent as
described in Section 2.3 of the RAP Agreement. A portion of the purchase price
under the RAP Agreement shall be paid by Buyer to Disbursement Agent reflecting
the pro rata portion of the RAP Purchase Price Adjustment Holdback with respect
to the aggregate interest in RAP owned by the sellers that are parties to the
RAP Agreement, and a portion of the Purchase Price hereunder shall be paid by
Buyer to
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Disbursement Agent reflecting the pro rata portion of the RAP Purchase Price
Adjustment Holdback with respect to the interest in RAP owned indirectly by the
Company.
1.82 "RAP Sellers" has the meaning given the term "Sellers" in the RAP
Agreement.
1.83 "Real Estate" means each parcel of real property owned by a member of
the Company Group at the date hereof together with any other parcels of real
property acquired by a member of the Company Group between the date hereof and
the Closing Date.
1.84 "Required Consents" means those approvals and consents set forth on
Schedule 5.3 separately designated as consents required for Closing.
1.85 "▇▇▇▇▇▇ Transfer Plan" has the meaning set forth in Section 13.12(c).
1.86 "▇▇▇▇▇ Agreement" means the Asset Purchase and Sale Agreement dated
as of July 1, 1998 between ▇▇▇▇▇ Cable Communications, Inc. and the Company.
1.87 Section 12.1(c) Damages" has the meaning set forth in Section
12.1(c).
1.88 "Sellers" has the meaning set forth in the first paragraph of this
Agreement.
1.89 "Service Areas" has the meaning set forth in the third paragraph of
this Agreement.
1.90 "Services Agreement" has the meaning set forth in Section 7.17.
1.91 "Signals" has the meaning set forth in Section 5.16(b).
1.92 "Subsidiaries" means, with respect to any Person, any Affiliate
directly or indirectly controlled by such Person.
1.93 "System" means all of the assets, property and business constituting
any CATV system of the Company Group, or to be acquired by the Company Group
under the Omega Agreement, each of which Systems (together with the respective
Service Areas served thereby) is described in Schedule 1.1(B) hereto.
1.94 "Tax" and "Taxes" means all federal, state, local, foreign or other
taxing authority gross income, gross receipts, gains, profits, net income,
franchise, sales, use, ad valorem, property, value added, recording, business
license, possessory interest, payroll, withholding, excise, severance, transfer,
employment, alternative or add-on minimum, stamp, occupation, premium,
environmental or windfall profits taxes, and other taxes, charges, fees, levies,
imposts, customs, duties, licenses or other assessments, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any Governmental Authority.
1.95 "Tax Return" means any return, report, statement, information
statement and the like required to be filed with any Governmental Authority with
respect to Taxes.
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1.96 "Third Party" means any Person other than the Company, Buyer, Sellers
or any Affiliate of Buyer.
1.97 "Third Party Systems" means Computer Systems of any supplier,
distributor, partner, customer or technology infrastructure provider used in
connection with the Business, including, without limitation, such Computer
Systems of electric utilities, telephone companies and offsite data processors
with whom any member of the Company Group has an ongoing or anticipated
contractual or commercial relationship.
1.98 "Threshold Amount" has the meaning set forth in Section 12.1(b).
1.99 "Unaudited Financial Statements" has the meaning set forth in Section
5.6.
1.100 "Vehicles" means the vehicles utilized by the Company in the
operation of the Business as set forth on Schedule 1.1(C).
1.101 "WS" has the meaning set forth in Section 4.4.
1.102 "Year 2000 Ready" or "Year 2000 Readiness" means that the Computer
Systems are designed to be used prior to, during and after the calendar year
2000 A.D., and that such item can successfully manipulate, interpret, accept,
generate or otherwise process date-dependent or date-related data without
generating incorrect or abnormal results, or experiencing a loss or disruption
of functionality due to an inability to correctly handle dates in, or relating
to, the 21st century, including, without limitation, correctly calculating leap
years.
1.103 "Year 2000 Remediation Program" means an enterprise-wide program
implemented by the Company and affecting all members of the Company Group, to
make Year 2000 Ready Computer Systems and other items related to Business. Such
Year 2000 Remediation Program must (i) include a plan for implementing solutions
recommended by vendors, distributors and manufacturers of the Computer Systems,
and (ii) be conducted by Persons with qualifications or experience related to
Year 2000 Readiness and such Persons must have organized an enterprise wide
program management office that reports to, or an enterprise wide program
management structure with oversight by, executive level management.
1.104 "Year Disbursement Amount" has the meaning set forth in Section 2.5.
The plural of any term defined in the singular, and the singular of any
term defined in the plural, shall have a meaning correlative to such defined
term.
ARTICLE II
PURCHASE AND SALE OF PURCHASED INTERESTS
2.1 Purchase and Sale of Purchased Interests.
On the terms and subject to the conditions set forth in this Agreement,
each Seller hereby severally and not jointly agrees to sell to Buyer, and Buyer
hereby agrees to purchase from each
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Seller, the Purchased Interests owned by such Seller, as listed opposite the
name of such Seller on Schedule 2.1 hereof.
2.2 Purchase Price.
The aggregate purchase price payable by the Buyer for the Purchased
Interests (the "Purchase Price") shall be equal to the sum of (x) Eight Hundred
Seventeen Million Dollars ($817,000,000), as adjusted pursuant to Sections
2.4(a) and (b), minus the aggregate principal amount of the Company's
outstanding indebtedness on the Closing Date pursuant to the Credit Facility
(the "InterLink Equity Value"), plus (y) the Company's pro rata portion of the
RAP Equity Value arising out of the Company's indirect interest in RAP.
2.3 Payment of Purchase Price.
The Purchase Price, less (i) the InterLink Indemnity Fund, (ii) the pro
rata portion of the RAP Indemnity Fund with respect to the interest in RAP owned
indirectly by the Company, (iii) the Purchase Price Adjustment Holdback, and
(iv) the pro rata portion of the RAP Purchase Price Adjustment Holdback with
respect to the interest in RAP owned indirectly by the Company, will be paid at
the Closing to the Sellers (by federal wire transfer of immediately available
funds to accounts of Sellers designated in writing to Buyer by the Company (on
behalf of Sellers) at least five (5) business days prior to the Closing) in
accordance with the Purchase Price Allocation Schedule. Concurrently with such
payment, (i) Buyer shall deposit the Purchase Price Adjustment Holdback with the
Disbursement Agent for use and disbursement in accordance with Sections 2.4(f)
and 2.4(g), and (ii) Buyer shall deposit the InterLink Indemnity Fund pursuant
to Section 2.5. Buyer shall be entitled to rely exclusively on the Purchase
Price Allocation Schedule and shall have no responsibility to determine whether
the Purchase Price Allocation Schedule was properly prepared. The aggregate
consideration to Sellers pursuant to clause (x) of Section 2.2 (other than
consideration for Purchased Interests relating to WS, ING and Nassau), and any
liabilities of the Company Group (other than the proportionate amount of
liabilities allocable to the interests in the Company held by WS, ING and
Nassau), in connection with the transactions contemplated hereby shall be
allocated between the tangible assets and Franchises by allocating an amount to
the tangible assets of the Company Group equal to the adjusted basis for federal
income tax purposes of such tangible assets (other than the proportionate amount
of tangible assets relating to the interests in the Company held by WS, ING and
Nassau), and the remainder to the Franchises of the Company Group. The portion
of the Purchase Price attributable to clause (y) of Section 2.2 shall be
allocated to the interests of the Company Group in RAP and to the tangible
assets and Franchises of RAP in accordance with Section 2.3 of the RAP
Agreement. The parties shall not take any tax position inconsistent with such
allocation.
2.4 Adjustments and Prorations.
The InterLink Equity Value shall be adjusted as follows (with a
corresponding adjustment to be made to the Purchase Price hereunder), with all
such adjustments being effective as of the Effective Time:
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(a) The InterLink Equity Value shall be reduced if the number of
Basic Customers is less than the applicable number set forth on Schedule
2.4(A) for the month on which the Closing Date occurs (as adjusted below,
the "Basic Customer Threshold"), by the applicable amount set forth on
Schedule 2.4(A) (for the month in which the Closing occurs) for each Basic
Customer less than the applicable Basic Customer Threshold.
Notwithstanding anything herein to the contrary, in the event that any
commercial establishments or multi-dwelling units that are served pursuant
to a right of entry agreement on December 31, 1998 are subsequently served
pursuant to a bulk agreement, the applicable Basic Customer Threshold
shall be reduced by the number of individual retail customers served
pursuant to such right of entry agreement on the date of conversion to a
bulk agreement, and shall be increased by the number of Basic Customer
Equivalents represented by such bulk agreement.
(b) The InterLink Equity Value shall be increased at Closing if, as
of the Effective Time, the current assets of the Company Group exceed the
current liabilities of the Company Group by the amount by which such
current assets exceed current liabilities. The InterLink Equity Value
shall be decreased at Closing, if, as of the Effective Time, the current
liabilities of the Company Group exceed the current assets of the Company
Group by the amount by which such current liabilities exceed current
assets. Except as otherwise specified herein, current assets and current
liabilities shall be determined in accordance with GAAP with all normal
year end adjustments for GAAP purposes having been completed or posted as
of the Effective Time. Notwithstanding anything else contained herein, for
purposes of making the calculations hereunder:
(i) Without limiting the applicability of GAAP with respect to
other items, current assets shall include (a) cash and cash
equivalents, (b) marketable securities, (c) customer and
advertising accounts receivable determined pursuant to
subsection (iii) below, (d) non-customer deposits and advance
payments, (e) prepaid expenses, and (f) other current assets;
provided, however, that current assets shall not include
inventory.
(ii) Customer accounts receivable of the Company Group shall
be included as current assets in an amount for the Company's
customer accounts receivable for services rendered on or prior
to the Closing Date by the Company Group, equal to 99% of the
face amount of the receivables which, as of the Effective
Time, are sixty (60) days or less past due from the first day
of the respective Monthly Billing Period to which a ▇▇▇▇
relates. Payments for any advertising accounts receivable of a
member of the Company Group as current assets shall include
only an amount for any Company Group member's advertising
accounts receivable for advertising run on or prior to the
Closing Date, equal to 95% of all advertising receivables that
are less than 90 days past due from the date of the applicable
invoice;
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(iii) Without limiting the applicability of GAAP with respect
to other items, current liabilities shall include (a) the
amount of customer deposits (and any interest thereon that a
member of the Company Group is required to refund or credit
its customers) and customer prepayments; (b) Accrued Vacation
Pay for those employees who are employees on the Closing Date;
(c) deferred revenue; (d) accruals for franchise fees, pole
rental fees, other rental or similar charges or payments
payable in respect of any Company Group Contracts not being
terminated pursuant hereto, payrolls, payroll taxes, insurance
premiums to the extent that such insurance is not being
terminated pursuant hereto, sales and use taxes payable in
respect of CATV service and equipment furnished in connection
with the operation of the Systems, power and utility charges,
real and personal property taxes and rentals, applicable
copyright or other fees, sales and service charges, taxes and
similar items, in each case relating to periods on or prior to
the Closing Date; and (e) other current liabilities; provided,
however, that current liabilities shall not include (i) the
current portion of any long-term debt, (ii) deferred taxes,
and (iii) the obligations to pay access fees in connection
with the Hidden Bay complex, and any other obligations to pay
access fees in connection with right of entry agreements or
bulk agreements that the Company becomes obligated to pay
after the date hereof, but only to the extent that Buyer has
been informed of such obligations and has granted its consent
in writing to the payment of such access fees.
(iv) Cash flow of the Company Group on the Closing Date shall
be allocated one-half prior to the Effective Time and one-half
after the Effective Time.
(c) The Company shall deliver to Buyer, not less than five (5)
business days prior to the Closing Date, a certificate (the "Closing
Adjustment Certificate") signed by an executive officer of the General
Partner, which shall set forth the Company's reasonable good faith
estimates of the respective amounts of the adjustments set forth in
Sections 2.4(a), and (b), above, as of the Effective Time. The Closing
Adjustment Certificate shall be in form and substance reasonably
acceptable to Buyer, and the Company shall therewith deliver to Buyer a
copy of such supporting evidence as shall be appropriate hereunder and as
Buyer may reasonably request. At the Closing, there will be a settlement
between Buyer and Disbursement Agent with respect to the adjustments set
forth in Sections 2.4(a) and (b) above, with all such adjustments made or
estimated by Disbursement Agent and Buyer and the amounts determined by
Buyer and Disbursement Agent pursuant to the provisions of this Section
2.4 shall be paid to Buyer or Sellers, as appropriate by an increase or
decrease in the InterLink Equity Value, as appropriate on the Closing
Date, with a final settlement within ninety (90) days after the Closing
Date (as provided in Section 2.4(d) below).
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(d) Within ninety (90) days after the Closing Date, Buyer shall
deliver to Disbursement Agent a certificate (the "Final Closing
Certificate") to be signed by an executive officer of Buyer setting forth
any changes to the adjustments made as of the Closing pursuant to Sections
2.4(a) and (b), together with a copy of such supporting evidence as shall
be appropriate hereunder and as Disbursement Agent may reasonably request.
If Disbursement Agent shall conclude that the Final Closing Certificate
does not accurately reflect the changes to be made to the closing
adjustments pursuant to this Section 2.4, Disbursement Agent shall, within
thirty (30) days after its receipt of the Final Closing Certificate,
provide to Buyer its written statement (together with any supporting
documentation as Buyer may reasonably request) of any discrepancy or
discrepancies believed to exist. Disbursement Agent's representatives
shall be permitted reasonable access by Buyer to all personnel, books,
records, billing service reports and other documents reasonably deemed
necessary or appropriate by Disbursement Agent for the determination of
the adjustments and pro rations. Buyer's representatives shall be
permitted reasonable access by Disbursement Agent and the General Partner
to all personnel, books, records, billing service reports and other
documents reasonably deemed necessary or appropriate by Buyer for the
determination of the adjustments and pro rations.
(e) Buyer and Disbursement Agent shall attempt jointly to resolve
any discrepancies within thirty (30) days after receipt of Disbursement
Agent's discrepancy statement, which resolution, if achieved, shall be
binding upon all parties to this Agreement and not subject to dispute or
review. If Buyer and Disbursement Agent cannot resolve the discrepancies
to their mutual satisfaction within such thirty (30) day period, Buyer and
Disbursement Agent shall, within the following ten (10) days, jointly
designate the Neutral Accounting Firm to review the Final Closing
Certificate together with Disbursement Agent's discrepancy statement and
any other relevant documents. The cost of retaining the Neutral Accounting
Firm shall be borne 50% by the Disbursement Agent (on behalf of the
Sellers) and 50% by Buyer. The Neutral Accounting Firm shall report its
conclusions in writing to Buyer and Disbursement Agent and such
conclusions as to adjustments pursuant to this Section 2.4 shall be
conclusive on all parties to this Agreement and not subject to dispute or
review.
(f) The Disbursement Agent will hold the Purchase Price Adjustment
Holdback in a segregated, interest bearing account until the adjustments
required by Sections 2.4(a) and (b) have been determined, and will
disburse the Purchase Price Adjustment Holdback in accordance with Section
2.4(g).
(g) If, after such adjustments, (i) the aggregate InterLink Equity
Value is increased from that delivered at the Closing (treating amounts in
the InterLink Indemnity Fund and the Purchase Price Adjustment Holdback as
having been delivered at the Closing to Sellers), then Buyer shall pay the
Disbursement Agent (for the benefit of the Sellers) such increase in the
InterLink Equity Value in immediately available funds within three (3)
business days of such determination and the Disbursement Agent shall pay
the amount delivered by Buyer, together with the Purchase Price Adjustment
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Holdback, to Sellers in accordance with the percentages set forth on the
Purchase Price Allocation Schedule, (ii) the aggregate InterLink Equity
Value is reduced from that delivered at the Closing (treating amounts in
the InterLink Indemnity Fund and the Purchase Price Adjustment Holdback as
having been delivered at the Closing to Sellers) by an amount that is less
than or equal to the Purchase Price Adjustment Holdback, then the
Disbursement Agent shall pay to Buyer, out of the Purchase Price
Adjustment Holdback, the reduction in the InterLink Equity Value, in
immediately available funds within three (3) business days of such
determination and shall pay any remaining portion of the Purchase Price
Adjustment Holdback to Sellers pro rata in accordance with the percentages
set forth on the Purchase Price Allocation Schedule, or (iii) the
aggregate InterLink Equity Value is reduced from that delivered at the
Closing (treating amounts in the InterLink Indemnity Fund and the Purchase
Price Adjustment Holdback as having been delivered at the Closing to
Sellers) by an amount that is in excess of the Purchase Price Adjustment
Holdback, then each Seller will pay to the Disbursement Agent its pro rata
share of such excess, based on the percentages indicated on the Purchase
Price Allocation Schedule, and the Disbursement Agent shall pay such
excess amount, together with the Purchase Price Adjustment Holdback, to
Buyer in immediately available funds within ten (10) business days of such
determination. The Sellers hereby agree to be bound by Section 2.4(g)(iii)
of the RAP Agreement (and each other provision of the RAP Agreement
referring to the "InterLink Sellers," to the extent applicable to the
InterLink Sellers) and to pay their pro rata share of any amounts required
to be paid under Section 2.4(g)(iii) thereof.
2.5 Indemnity Escrow.
At the Closing, Buyer shall deposit with the Escrow Agent (i) the pro rata
portion of the RAP Indemnity Fund reflecting the pro rata portion of the
interest in RAP owned indirectly by the Company pursuant to the RAP Indemnity
Agreement, and (ii) the InterLink Indemnity Fund pursuant to the Closing Escrow
Agreement. All amounts in the InterLink Indemnity Fund in excess of the sum of
(a) $10,000,000, and (b) the amount of all pending claims made by Buyer for
indemnification pursuant to Section 12.1, shall be paid to Disbursement Agent
(for the benefit of Sellers) at the close of business on the first business day
after the date which is six months after the Closing Date. The remainder of the
InterLink Indemnity Fund, if any, less the amount of all pending claims made by
Buyer for indemnification pursuant to Section 12.1 (the "Year Disbursement
Amount"), shall be paid to Disbursement Agent (for the benefit of Sellers) at
the close of business on the first business day after the date which is one year
after the Closing Date. The Disbursement Agent shall disburse to Sellers, in
accordance with the percentages set forth on the Purchase Price Allocation
Schedule, any amount of the InterLink Indemnity Fund released pursuant to this
Section 2.5. Except as to claims arising from breaches of Sections 5.4, 5.8 and
(to the extent set forth in Section 12.1(b)) 5.22, release of any amounts from
the InterLink Indemnity Fund shall relieve Sellers of obligations under Section
12.1 to the extent of the amounts so released. Sellers expressly agree that any
post-Closing Date adjustments under Section 2.4 shall be paid in the manner
provided in Section 2.4(g) and, unless Buyer so elects (in its sole and absolute
discretion), any amounts owed by Sellers under such sections shall not be paid
from the InterLink Indemnity Fund.
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ARTICLE III
CLOSING
3.1 Closing Date.
Subject to the satisfaction of the terms and conditions of this Agreement,
the closing of the transactions contemplated hereby (the "Closing") shall occur
at 10:00 a.m. Mountain Time, at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP in Denver,
Colorado on September 2, 1999, or, if later, as soon as practicable (and in any
event within five (5) business days) following the satisfaction or waiver of the
parties' conditions to the Closing, or such other date as may be mutually
agreeable to the Company and Buyer (the "Closing Date"). At any time after
September 2, 1999, Buyer may demand a Closing upon five (5) days' written notice
waiving all of Buyer's conditions to Closing provided that the conditions to
Closing set forth in Articles VIII and X have been satisfied or waived (other
than conditions to be satisfied at the Closing).
3.2 Default; Specific Performance.
If Sellers or the Company shall fail or refuse to consummate the
transactions set forth in this Agreement on or prior to the Closing Date in
breach of this Agreement, or otherwise breach any other material obligation
hereunder, then, in addition to any other remedies available to Buyer, Buyer
may, at its option, invoke any equitable remedies it may have to enforce the
sale of the Purchased Interests hereunder or such other material provision,
including, without limitation, an action or suit for specific performance. Each
Seller acknowledges that in the event of such Seller's breach of its obligations
hereunder, Buyer will suffer irreparable harm and such Seller hereby irrevocably
waives the defense that Buyer has an adequate remedy at law. If Buyer shall fail
or refuse to consummate the transactions set forth in this Agreement on or prior
to the Closing Date in breach of this Agreement or otherwise breach any other
material obligation hereunder, then, in addition to any other remedies available
to Sellers, any Seller may, at its option, invoke any equitable remedies it may
have to enforce the purchase of the Purchased Interests hereunder, including,
without limitation, an action or suit for specific performance. Buyer
acknowledges that in the event of Buyer's breach of its obligations hereunder,
Sellers will suffer irreparable harm and Buyer hereby irrevocably waives the
defense that Sellers have an adequate remedy at law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF
SELLERS
Each Seller hereby, severally and not jointly, represents and warrants (as
of the date of this Agreement, except where a prior or future date is indicated)
as follows, and acknowledges that Buyer is relying on such representations and
warranties in connection with the purchase of the Purchased Interests:
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4.1 Title to Purchased Interests.
Such Seller owns, beneficially and of record, all of the Purchased
Interests identified opposite such Seller's name on Schedule 2.1, free and clear
of all liens and encumbrances other than, (i) liens securing obligations under
the Credit Facility, and (ii) if applicable, any liens or encumbrances that will
be terminated or otherwise released prior to the Closing. Upon the Closing, the
Buyer will have valid title to all of the Purchased Interests identified
opposite such Seller's name on Schedule 2.1, free and clear of all liens and
encumbrances, other than any liens or encumbrances created by the Buyer or
arising through Buyer, and other than pledges required by the Credit Facility
(which the lenders are required to release in accordance with the terms of the
Credit Facility and associated pledge documents).
4.2 Enforceability of Agreement.
This Agreement has been duly and validly executed and delivered by such
Seller and constitutes a legal, valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium and other
similar laws or principles affecting the rights of creditors generally and
except for limitations imposed by general principles of equity.
4.3 No Conflict; Required Filings and Consents.
(a) Except as set forth on Schedule 4.3 hereto (and assuming
compliance with the HSR Act), the execution and delivery of this Agreement
by such Seller does not, and the performance by such Seller of its
obligations under this Agreement will not, (i) conflict with or violate
the operating agreement, agreement of limited partnership, certificate of
limited partnership, certificate of incorporation, by-laws or equivalent
organizational documents of such Seller, (ii) assuming receipt of consents
described in Schedule 4.3 or 5.3 hereto, and except as set forth in
Section 4.3(b)(i), conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to such Seller or by which any
property or asset of such Seller is bound or affected or (iii) result in
any breach or violation of, or constitute any default (or an event which
with notice or lapse of time or both would become a default) under, or
give rise to any right of termination, cancellation or acceleration of any
obligation or the loss of a material benefit under, any Contract to which
such Seller is a party or by which such Seller or any property or asset of
such Seller is bound, except as would not impair such Seller's ability to
perform its obligations under this Agreement.
(b) The execution and delivery of this Agreement by such Seller does
not, and the performance of this Agreement by such Seller will not,
require such Seller to obtain or make any consent, approval, authorization
or permit of, or filing with, or notification to, any governmental or
regulatory authority, domestic or foreign, including, without limitation,
any governmental administrative agency or franchising authority (each a
"Governmental Authority"), except for the matters disclosed in Schedule
4.3 hereto or except (i) for applicable requirements, if any, of (A)
federal or state securities or "blue sky" laws, (B) the Communications
Act, and (C) state and local Governmental
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Authorities, including Franchise authorities listed on Schedule 5.3
hereto, and (ii) as required under the HSR Act.
4.4 Stock of Certain Corporate Partners of the Company.
The Purchased Interests include all of the issued and outstanding stock of
the following partners of the Company: (i) ING Media C Corp. ("ING"), WS
InterLink Corp. ("WS"), and Nassau InterLink Corp. ("Nassau"). Each of Sellers
who are shareholders of ING, WS, or Nassau hereby severally (and not jointly)
represents and warrants to Buyer, as follows with respect to the entity of which
it is a shareholder:
(a) Each of ING, WS, and Nassau is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation and has the full corporate power and authority to own, lease
and operate its properties and to carry on its business as it presently is
being conducted. True and complete copies of the certificates of
incorporation and bylaws of such corporations have been delivered to
Buyer. Except as set forth on Schedule 4.4(A) hereto there are no
outstanding subscriptions, options, warrants or rights of any kind to
acquire any stock or other equity interests in, or any assets of, ING, WS,
or Nassau and there are no obligations that require such entities to issue
any such options, warrants, or rights. There are no existing arrangements
that require or permit any interests in ING, WS or Nassau to be voted by,
or at the discretion of, anyone other than their respective shareholders,
and there are no restrictions of any kind on the transfer of any interests
in such entities, except as set forth in the certificate of incorporation
or bylaws of such entity or in the Partnership Agreement, as the case may
be. Schedule 4.4(A) sets forth all of the holders of outstanding stock of
each of ING, WS or Nassau.
(b) Each of ING, WS, and Nassau has no Subsidiaries, and the
partnership interests in the Company owned by each such entity constitutes
the only property, investment or other asset owned, used or held by each
such entity. None of ING, WS, or Nassau has any employees nor any
obligations or liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known, whether due or to become
due and regardless of when asserted), arising out of transactions entered
into at or prior to the Closing, or any action or inaction at or prior to
the Closing, or any state of facts existing at or prior to the Closing.
(c) Except as set forth on Schedule 4.4(C), there is no claim,
litigation, proceeding or governmental investigation pending or, to the
knowledge of the shareholders of ING, WS, or Nassau, threatened; or any
order, injunction or decree outstanding, against ING, WS, or Nassau or any
of their properties or assets, and none of such shareholders knows of any
basis for future claims, litigations, proceedings or investigations
against such entities or any of their properties or assets. ING, WS, or
Nassau are not in violation of any law, regulation or ordinance, or any
other requirement of any Governmental Authority, and no notice has been
received by any of such entity or any of their officers, or employees
alleging any such violation. There is no claim,
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litigation, proceeding or governmental investigation pending or, to the
knowledge of the shareholders of ING, WS, or Nassau, threatened, or any
order, injunction or decree outstanding, against any such entity, or any
of their Affiliates that would prevent the consummation of the
transactions contemplated by this Agreement.
(d) Each of ING, WS, and Nassau has timely filed all material
federal, state, local and foreign Tax Returns required to be filed by it
through the date hereof and shall timely file all Tax Returns required to
be filed at or before the Closing. Such reports and returns are and will
be true, correct and complete in all material respects. Each of ING, WS,
and Nassau has paid and discharged all Taxes due from it, other than such
taxes that are being contested in good faith by appropriate proceedings
and are adequately reserved as shown in the audited consolidated balance
sheet of such entity dated December 31, 1998. Neither the IRS nor any
other taxing authority or agency, domestic or foreign, is now asserting
or, to the knowledge of any shareholder of ING, WS, or Nassau, threatening
to assert against any of ING, WS, or Nassau any material deficiency or
material claim for additional Taxes. Moreover, no shareholder of ING, WS,
or Nassau has knowledge of any facts on the basis of which taxing
authorities could assert material deficiencies or material claims
described in the preceding sentence. Each of ING, WS, and Nassau has
withheld or collected and paid over to the appropriate Governmental
Entities or is properly holding for such payment all Taxes required by law
to be withheld or collected. None of ING, WS, or Nassau has any liability
for the Taxes of any Person pursuant to Section 1.1502-6 of the Treasury
Regulations promulgated under the Code or comparable provisions of any
taxing authority in respect of a consolidated or combined Tax Return.
There are no liens for Taxes upon the assets of any of ING, WS, or Nassau
other than (i) liens for current Taxes not yet due and payable, (ii) liens
for Taxes that are being contested in good faith by appropriate
proceedings and (iii) other liens which, in the aggregate, are not
material.
(e) Each of ING, WS, and Nassau has had and will continue to have
through the Closing Date the federal tax status (i.e., partnership or C
corporation) such entity reported on its December 31, 1997 federal Tax
Returns, except as results from any actions taken pursuant to this
Agreement. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Returns required to
be filed by, or which include or are treated as including, any of ING, WS,
or Nassau.
(f) Except as set forth on Schedule 4.4(F), none of ING, WS, or
Nassau is involved in or subject to any joint venture, partnership or
other arrangement or contract which is treated as a partnership for
federal, state, local or foreign income tax purposes, except for the
Company.
(g) No consent to the application of section 341(f)(2) of the Code
has been filed with respect to any property or assets held, acquired, or
to be acquired by any of ING, WS, or Nassau.
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(h) Except as set forth on Schedule 4.4(H), there are no tax sharing
agreements or similar arrangements with respect to or involving any of
ING, WS, or Nassau.
(i) Except as set forth in Schedule 4.4(I), none of ING, WS, or
Nassau was included or is includable in any consolidated or unitary Tax
Return with any entity.
(j) None of ING, WS, or Nassau has agreed to or is required to make
any material adjustment under section 481(a) of the Code.
(k) None of ING, WS, Nassau, or the Company has entered into any
compensatory agreements with respect to the performance of services which
payment thereunder would result in a non-deductible expense to ING, WS, or
Nassau pursuant to Section 280G of the Code or an excise Tax to the
recipient of such payment pursuant to Section 4999 of the Code.
4.5 Brokers' Fees.
Neither such Seller nor anyone authorized to act on his or its behalf has
retained any broker, finder or agent or agreed to pay any brokerage fee,
finder's fee or commission with respect to the transactions contemplated by this
Agreement.
4.6 Organization and Qualification.
Such Seller, if not a natural person, is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its formation and has
the requisite power and authority and all necessary governmental approvals to
own, lease and operate its properties and to carry on its business as it is now
being conducted, except where the failure to be so organized, existing or in
good standing or to have such power, authority and governmental approvals would
not materially interfere with such Seller's ability to enter into this Agreement
and perform its obligations hereunder.
4.7 Authority Relative to this Agreement.
Such Seller, if not a natural person, has all necessary power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by such Seller and the consummation by such
Seller of the transactions contemplated hereby have been duly and validly
authorized by all necessary individual or entity action and no other individual
or entity action on the part of such Seller is necessary to authorize this
Agreement or to consummate the transactions contemplated hereby.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby, the Company hereby represents and warrants
(as of the date of this Agreement, except where a prior or future date is
indicated, but giving effect to the transactions contemplated by the Omega
Agreement as if consummated as of the date hereof) to Buyer as follows:
5.1 Organization and Qualification; Subsidiaries.
(a) Each member of the Company Group is a partnership, limited
liability company or corporation duly organized, validly existing and/or
in good standing under the laws of the jurisdiction of its incorporation
or organization. Each member of the Company Group has the requisite power
and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted except for those which would not, in the aggregate, be material.
Each member of the Company Group is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for failures which, in the aggregate would not
be material.
(b) A complete and correct list of the members of the Company Group,
which list sets forth the amount of capital stock of or other equity
interests in such member owned by the Company, directly or indirectly,
together with holdings of all other equity holders (if applicable), is set
forth on Schedule 5.1(B).
5.2 Organizational Documents.
The Company has heretofore delivered to Buyer a complete and correct copy
of each of the agreement of limited partnership, operating agreement, limited
liability company certificate, certificate of limited partnership, certificate
of incorporation and bylaws, or equivalent organizational documents, each as
amended to date, of each member of the Company Group. Such organizational
documents are in full force and effect and constitute all of the organizational
documents relating to the members of the Company Group. No member of the Company
Group is in violation of any provision of its agreement of limited partnership,
certificate of limited partnership, operating agreement, certificate of
incorporation, bylaws or equivalent organizational documents, as applicable.
5.3 Effect of Agreement.
(a) All approvals and consents required under (i) any of the Company
Group's Franchises, FCC Licenses, Necessary Contracts or Material
Agreements, and (ii) any applicable government regulations, in any such
case, in order for the consummation of the sale of the Purchased Interests
to Buyer pursuant to this Agreement are listed in
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Schedule 5.3 hereto, with Franchise and FCC approvals identified as such.
Other than as set forth on Schedule 5.3, the execution and delivery of
this Agreement by Sellers and the Company does not, and the performance of
this Agreement by Sellers and the Company will not, require any member of
the Company Group to obtain or make any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental
Authority, except (i) for applicable requirements, if any, of federal or
state securities or "blue sky" laws, and (ii) as required under the HSR
Act.
(b) Subject to obtaining the requisite approvals and consents listed
in Schedule 5.3 hereto, neither the execution, delivery and performance by
Sellers and the Company of this Agreement nor the consummation of the
transactions contemplated hereby, alone or in conjunction with any other
event (such as a voluntary or involuntary termination of employment), will
(i) conflict with, or result in a breach of the terms of, or constitute a
default under, or a violation of, or give rise to any termination right
under, amendment or extension of, or a loss of any benefit under, any
Material Agreements, Franchises and Necessary Contracts, (ii) result in
the violation of any law, rule, regulation, order, writ, judgment, decree,
determination or award presently in effect or having applicability to a
member of the Company Group (except to the extent of violations which,
individually or in the aggregate would not be material), (iii) conflict
with or violate the certificate of incorporation, by-laws, operating
agreement or partnership agreement of any member of the Company Group, or
(iv) result in any payment becoming due to any employee, former employee,
officer, director, or consultant, or any of their dependents (other than
(1) the signing bonuses or stay put bonuses permitted pursuant to Section
7.3(e) hereof, or (2) any benefits under the severance plans listed on
Schedule 5.20, of each Company Group member or any ERISA Affiliates; (v)
increase any benefits otherwise payable under any Plan; or (vi) result in
the acceleration of the time of payment or vesting of any benefits under
any Plan except as disclosed on Schedule 5.20. Subject to obtaining such
approvals and consents, such execution, delivery, performance or
consummation will not give to others any rights of termination,
acceleration or cancellation in or with respect to, or a loss of any
material benefit under, any Material Agreement of (or relating to the
Business of) the Company Group.
5.4 Capitalization.
The Purchased Interests to be sold to Buyer pursuant to this Agreement, as
identified on Schedule 2.1 hereto, constitute all outstanding partnership
interests of the Company. The Company owns, directly or through one or more
Subsidiaries, free and clear of all liens and encumbrances, and free and clear
of any other limitation or restriction (other than liens securing obligations
under the Credit Facility), all of the outstanding general partner interests,
limited partner interests, and all other outstanding equity interests of each
Subsidiary of the Company. Other than as included in the Purchased Interests,
there are no (i) options, warrants or other rights or Contracts obligating any
member of the Company Group to issue or sell any shares of capital stock of, or
other equity interests in, any member of the Company Group or to pay cash in
lieu thereof, (ii) equity equivalents, stock appreciation rights, performance
shares, interests in the
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ownership or earnings of any member of the Company Group or other similar rights
issued by a Company Group member or (iii) outstanding obligations of any member
of the Company Group to purchase, redeem or otherwise acquire any equity
interest therein. Greenwich Street owns, beneficially and of record, its
interest in RAP as set forth on Schedule 2.1 of the RAP Agreement, free and
clear of all liens and encumbrances (other than liens securing obligations under
the Credit Facility).
5.5 Authority Relative to this Agreement.
The Company has all necessary power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
partnership action and no other partnership proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes a legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium and similar laws or principles affecting the rights of
creditors generally and except for limitations imposed by general principles of
equity.
5.6 Financial Statements.
Attached hereto as Schedule 5.6 are copies of (i) the Company's Balance
Sheet at December 31, 1998 and related Statement of Operations and Statement of
Changes in Financial Position of the Company for its fiscal year then ended,
which have been audited by the Company's independent certified public accountant
(the "Audited Financial Statements") and (ii) all completed monthly unaudited
statements of operations, together with month-end balance sheets, for the months
of January, and February, 1999 (the "Unaudited Financial Statements"). The
Audited Financial Statements and Unaudited Financial Statements (i) were
prepared in conformity with GAAP consistently applied, and (ii) present fairly
the financial position of the Company at the dates indicated and the results of
operations of the Company and changes in financial position for the periods
indicated, subject to normal quarterly and year-end audit adjustments (none of
which are expected to be material in amount) and footnotes. The Additional
Financial Statements to be delivered pursuant to Section 7.4(ii) that are for
quarterly periods will (i) be prepared in conformity with GAAP applied
consistently with the Audited Financial Statements, and (ii) present fairly the
financial position of the Company at the dates indicated and the results of
operations of the Company and changes in financial position for the periods
indicated, subject to normal year-end and quarter-end audit adjustments (none of
which are expected to be material in amount), and footnotes. The Additional
Financial Statements to be delivered pursuant to Section 7.4(ii) that are for
monthly periods will (i) be prepared in conformity with generally accepted
accounting principles applied consistently with the Audited Financial
Statements, and (ii) present fairly the results of operations of the Company for
the periods indicated, subject to normal year-end and quarter-end audit
adjustments (none of which
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are expected to be material in amount) and footnotes. Whenever references are
made throughout this Agreement to Audited Financial Statements, it will be
understood that all notes and exhibits are included therein, except as herein
otherwise expressly provided.
5.7 Undisclosed Liabilities.
No member of the Company Group has any material liabilities or
obligations, whether accrued, absolute, contingent or otherwise, and whether due
or to become due, and the Company does not know of any basis for any claim
against any member of the Company Group for any such liabilities or obligations,
except (i) to the extent set forth in this Agreement or in the Schedules hereto,
including the Audited Financial Statements attached hereto, (ii) liabilities
under the DeMinimis Agreements, or (iii) liabilities, debts or obligations
incurred in the ordinary course of business of the Company since December 31,
1998, none of which individually or in the aggregate will have a Material
Adverse Effect.
5.8 Tax Returns and Audits.
(a) Each member of the Company Group has timely filed all material
federal, state, local and foreign Tax Returns required to be filed by it
through the date hereof and shall timely file all Tax Returns required to
be filed at or before the Closing. Such reports and returns are and will
be true, correct and complete in all material respects. Each member of the
Company Group has paid and discharged all Taxes due from it, other than
such taxes that are being contested in good faith by appropriate
proceedings and are adequately reserved as shown in the audited
consolidated balance sheet of such entity dated December 31, 1998. Neither
the Internal Revenue Service (the "IRS") nor any other taxing authority or
agency, domestic or foreign, is now asserting or, to the knowledge of any
member of the Company Group, threatening to assert against any member of
the Company Group any material deficiency or material claim for additional
Taxes. Moreover, no member of the Company Group has knowledge of any facts
on the basis of which taxing authorities could assert material
deficiencies or material claims described in the preceding sentence. Each
member of the Company Group has withheld or collected and paid over to the
appropriate Governmental Authorities or is properly holding for such
payment all Taxes required by law to be withheld or collected. No member
of the Company Group has any liability for the Taxes of any Person (other
than a member of the Company Group) pursuant to Section 1.1502-6 of the
Treasury Regulations promulgated under the Code or comparable provisions
of any taxing authority in respect of a consolidated or combined Tax
Return. There are no liens for Taxes upon the assets of any member of the
Company Group other than (i) liens for current Taxes not yet due and
payable, (ii) liens for Taxes that are being contested in good faith by
appropriate proceedings and (iii) other liens which, in the aggregate, are
not material.
(b) Each member of the Company Group has had and will continue to
have through the Closing Date the federal tax status (i.e., partnership or
C corporation) such entity reported on its December 31, 1997 federal Tax
Returns, except as results from any
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actions taken pursuant to this Agreement. There are no outstanding
agreements or waivers extending the statutory period of limitation
applicable to any Tax Returns required to be filed by, or which include or
are treated as including, any member of the Company Group.
(c) Except as set forth on Schedule 5.8, no Member of the Company
Group is involved in or subject to any joint venture, partnership or other
arrangement or contract which is treated as a partnership for federal,
state, local or foreign income tax purposes (a "Tax Partnership"), except
for a Tax Partnership which is a Subsidiary.
(d) No consent to the application of section 341(f)(2) of the Code
has been filed with respect to any property or assets held, acquired, or
to be acquired by any member of the Company Group.
(e) Except as set forth on Schedule 5.8, there are no tax sharing
agreements or similar arrangements with respect to or involving any member
of the Company Group.
(f) Except as set forth in Schedule 5.8, no member of the Company
Group was included or is includable in any consolidated or unitary Tax
Return with any entity other than a Tax Return filed that includes only
members of the Company Group.
(g) No member of the Company Group has agreed to or is required to
make any material adjustment under section 481(a) of the Code.
(h) Except as set forth in Schedule 5.8, no member of the Company
Group has entered into any compensatory agreements with respect to the
performance of services which payment thereunder would result in a
non-deductible expense to such company pursuant to Section 280G of the
Code or an excise Tax to the recipient of such payment pursuant to Section
4999 of the Code.
5.9 Franchises and Necessary Contracts.
Each member of the Company Group has validly and legally obtained and duly
holds the Franchises, the FCC Licenses and the Necessary Contracts. Attached
hereto as Schedule 5.9(A) is a true and accurate list of each Franchise held by
the Company Group (including the member of the Company Group holding each
Franchise, the Franchising Authority which granted each Franchise, the stated
expiration date of each Franchise, and the System to which the Franchise
applies), each pending application relating to any Franchise, and a list of any
System or portion thereof which does not, for the reason set forth on such
Schedule, require a franchise authorizing the installation, construction,
development, ownership or operation of the same, which list is true, correct and
complete. No member of the Company Group is providing CATV service in any area
other than as set forth on Schedule 5.9(A). Attached hereto as Schedule 5.9(B)
is a true and accurate list of each FCC License (including the expiration date
thereof) and each Necessary Contract. The Company Group is in compliance (and
the operations of the Systems and the Assets are being conducted in compliance)
in all material respects with the provisions of all Franchises, FCC Licenses and
the Necessary Contracts, all of the Franchises, the FCC Licenses
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and Necessary Contracts are in full force and effect, and there are no pending
(or to Company's knowledge, threatened) modifications, amendments (other than
extensions of the term) or revocations by the issuers of the Franchises, the FCC
Licenses or any other third parties with respect to the Necessary Contracts. The
Company does not have any knowledge of any material breach of any Franchise or
Necessary Contract by any other parties thereto. Except as disclosed in Schedule
5.9(C) or as specifically contained in the Franchises, the Necessary Contracts,
or other Material Agreements, no promises or commitments which are to be
fulfilled after the Closing Date have been made with respect to capital
improvements relating to the Systems. Except as described on Schedule 5.9(C),
the Company Group holds all of the Franchises and material FCC Licenses
necessary to operate the Business in the manner in which it is currently being
operated. The Company Group has received no notice, either formal or informal,
that any Franchise or FCC License would not be renewed in the ordinary course
and is aware of no basis for the denial, revocation or modification of any
Franchise or FCC License. Pursuant to subsections (a) through (g) of Section 626
of the Cable Communications Policy Act of 1984, as amended, the Company Group
has timely submitted proposals for renewal of all Franchises having a remaining
term of thirty-six (36) months or less as of the date hereof, and has provided
Buyer with copies of all proposals for renewal, preliminary assessments and
franchisor determinations described in subsection (c) of said Section 626.
5.10 Material Agreements and Obligations.
(a) Schedule 5.10(A) hereto lists the Material Agreements. Except
for those contracts listed on the Schedules hereto, the DeMinimis
Agreements, and the Credit Facility, no member of the Company Group is a
party to any written or oral contract with respect to the Systems that is
not cancelable without penalty upon thirty (30) days' notice or less,
including any:
(i) bonus, incentive, pension, profit sharing, retirement,
hospitalization, insurance, or other plan providing for
deferred or other compensation to employees, or any other
employee benefit or "fringe benefit" plan, including, without
limitation, vacation, sick leave, medical or other insurance
plans or any union collective bargaining or any other contract
with any labor union;
(ii) employment contract for any Person on a full-time,
part-time, consulting or other basis;
(iii) agreement or indenture relating to the borrowing of
money or to mortgaging, pledging or otherwise placing a lien
on any asset or group of assets of any member of the Company
Group;
(iv) guarantee of any obligation;
(v) lease or agreement under which it is lessee or lessor, or
holds or operates any property, real or personal, owned by any
other party, except
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for any lease under which the aggregate annual rental payments
do not exceed $25,000;
(vi) Contract or group of related Contracts with the same
party or any group of affiliated parties which requires or may
in the future require aggregate consideration by or to any
member of the Company Group in excess of $25,000;
(vii) Contract in effect between any member of the Company
Group and any Seller (or an Affiliate thereof) or any of the
officers, directors or Affiliates of any member of the Company
Group;
(viii) obligations of any member of the Company Group to make
payments to any Seller (or an Affiliate thereof) or any
Affiliate of any member of the Company Group;
(ix) loans by any member of the Company Group to any Seller
(or any Affiliate thereof) or any of the officers, directors
or Affiliates of each member of the Company Group.
(b) Each member of the Company Group has, in all material respects,
performed all obligations required to be performed by it and is not in
material default under, or in material breach of, or in receipt of any
claim of material default under, any Material Agreement; and the Company
does not have any knowledge of any material breach by the other parties to
any Material Agreement.
(c) There is no term or provision of any Contract not included on
the Schedules hereto to which any member of the Company Group is a party
or by which it or any of its properties is bound that would have a
Material Adverse Effect. There is no term or provision of any federal or
state judgment, decree or order applicable to or binding upon any member
of the Company Group, the enforcement of which would have a Material
Adverse Effect.
5.11 Systems' Capacity, Customers and Rates.
(a) Schedule 5.11(A) hereto lists, as of December 31, 1998 (or as of
the respective date therein specified), (i) the system bandwidth for each
System, (ii) programming offered, (iii) approximate linear miles of aerial
and underground plant (i.e., main trunk and distribution or feeder cable);
provided, that for purposes of this subsection (iii), the term
"approximate" shall allow a variance of plus or minus 10% from the number
of linear miles of aerial and underground plant set forth on Schedule
5.11(A), (iv) the approximate number of Homes Passed, (v) the total number
of retail and bulk equivalent basic customers (including an approximate
breakdown of the number of retail customers among Franchises) as reported
by Cable Data, (vi) the aggregate number of premium units subscribed to by
the Company Group's Premium Subscribers, (vii) subscriber rates for all
services including basic and premium services, tier services,
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additional outlets and converter rental charges in and for each of the
Service Areas, (viii) the community unit identification number ("CUID
Number") for each franchise community; (ix) a list of all free, discount
or other promotional service obligations (other than those free, discount
or other promotional service obligations which are regularly offered or
arise in the ordinary course of business); and (x) the Signals carried by
each System and the channel position of each such Signal and, with respect
to TV station signals, whether carried pursuant to must-carry requirements
or retransmission consent, which information is true and correct, in all
material respects. Except where specifically indicated on Schedule
5.11(A), each of the respective channel lineups set forth in Schedule
5.11(A) is capable of being viewed in its entirety by each Subscriber in
the applicable System (subject to ordinary course service interruptions).
(b) Except as set forth in Schedule 5.11(B), all reports or other
documents, payments (including, without limitation, all franchise fees and
FCC regulatory fees) or submissions required to be filed by the Company
Group with respect to any Franchise or the Business have, in all material
respects, been duly and timely filed and/or paid with the appropriate
authority and were correct in all material respects when filed.
5.12 Employees.
(a) The Company is not aware that any officer, executive employee or
any group of employees of the Company Group has or have any plans to
terminate his, her or their employment with the Company Group. Each member
of the Company Group has complied in all material respects with all
applicable laws relating to the employment of labor, including provisions
thereof relating to wages, hours, equal opportunity, collective bargaining
and the payment of social security and other taxes, and except as set
forth in Schedule 5.12 hereto, no member of the Company Group has received
any notice of any claim at the date of this Agreement and during the
preceding three years that it has not complied in any material respect
with any laws relating to the employment of employees or that it is liable
for any arrearages of wages or any taxes or penalties for failure to
comply with any laws. No member of the Company Group has written policies
and/or employee handbooks or manuals except those set forth in Schedule
5.12.
(b) Except as set forth in Schedule 5.12 hereto, no member of the
Company Group is, and during the 12 months prior to the date of this
Agreement no member of the Company Group has been, involved in any labor
discussion with any unit or group seeking to become the bargaining unit
for any of its employees. Except as set forth in Schedule 5.12 hereto, no
member of the Company Group is a party to any collective bargaining
agreement and there are no unfair labor practice or arbitration
proceedings pending with respect to any member of the Company Group or, to
the knowledge that the Company, threatened and there are no facts or
circumstances known to the Company that could reasonably be expected to
give rise to such a claim. To the knowledge of the Company, there are no
organizational efforts presently underway or threatened involving any
employees of the Company Group or any of the employees performing work for
the Company but provided by an outside employment agency, if any. Within
the last 12
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months, there has been no work stoppage, strike or other consorted
activity by any employees of the Company Group.
(c) Except as set forth in the Schedule 5.12 and as to those
employees (if any) represented by a labor organization, all employees of
the Company Group are employed at-will. Except as set forth in Schedule
5.12, completion of the transactions contemplated by this Agreement will
not result in any payment or increased payment becoming due from any
member of the Company Group to any officer, director, or employee of, or
consultant to, a member of the Company Group.
(d) No member of the Company is a party to any agreement for the
provision of labor from any outside agency except as set forth in Schedule
5.12. To the knowledge of the Company, at the date of this Agreement and
during the preceding three years, there have been no claims by employees
of such outside agencies, if any, with regard to employees assigned to
work for the Company Group, and no claims by any governmental agency with
regard to such employees except as set forth in Schedule 5.12.
5.13 Absence of Certain Developments.
Except as set forth on Schedule 5.13 hereto, and except for the
transactions contemplated by this Agreement, no Company Group member has,
insofar as the Systems or the Assets are concerned, since December 31, 1998:
(i) except for borrowings under the Credit Facility in the
ordinary course of business, borrowed any amount or incurred
or become subject to any liabilities (absolute or contingent)
except liabilities incurred in the ordinary course of
business;
(ii) mortgaged or pledged any of its assets, tangible or
intangible, or subjected them to any lien, charge or other
encumbrance, except Permitted Encumbrances and liens securing
indebtedness under the Credit Facility;
(iii) sold, assigned or transferred any of its tangible
assets, except in the ordinary course of business, or canceled
any debts or claims (other than unpaid subscriber debts and
claims in the ordinary course of business);
(iv) suffered any substantial losses other than consistent
with recent operating history;
(v) except in the ordinary course of business, waived or
released any material right or claim;
(vi) made any changes in employee compensation or personnel
policies, including the establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit
sharing, option, stock purchase or other Plan (as defined
below), declared, paid or committed to
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pay a bonus or additional salary or compensation to any Person
(other than the stay put bonuses or signing bonuses permitted
pursuant to Section 7.3(e) hereof), or made any other increase
in the compensation payable to or to become payable to any
executive officers of any member of the Company Group, except
in the ordinary course of business and consistent with past
practices;
(vii) entered into any other transaction other than in the
ordinary course of business;
(viii) amended or terminated any Contract listed in any
Schedule hereto, except in the ordinary course of business and
except for Contracts that have expired by their own terms;
(ix) suffered any material damage, destruction or casualty
loss, whether or not covered by insurance; or
(x) has suffered a Material Adverse Effect, or has had any
event or events occur that, individually or in the aggregate,
are reasonably likely to result in a Material Adverse Effect;
(xi) materially changed any of its accounting principles or
practices, or revalued such Assets or Systems for financial
reporting, property tax or other purposes;
(xii) entered into any Contract or understanding to do any of
the foregoing.
5.14 Real Property.
Schedule 5.14 hereto contains a legal description of each parcel of Real
Estate owned by the Company Group together with a description of the type of use
of each such parcel. The Company has furnished to Buyer a copy of any title
insurance policy or other evidence of title issued with respect to each owned
parcel of Real Estate owned by the Company Group in the possession of the
Company Group. Except for any Permitted Encumbrances, the Company or a
Subsidiary thereof is the sole owner (both legal and equitable) of, and has good
and marketable title in fee simple absolute to, each parcel of Real Estate
listed on Schedule 5.14 and all buildings, structures and improvements thereon,
and the unfettered right to occupy the leased property free and clear of any
options to lease or purchase. The location and use (i.e., headend, tower or
office site) of each real property leased by the Company Group is identified on
Schedule 5.9(B). All of the Real Estate, and all of the real property leased by
the Company Group, utilized as a headend, office or tower site has unfettered
access to public roads or streets and all utilities and services necessary for
the proper conduct and operation of the Systems. The Real Estate and all of the
real property leased by the Company Group complies and is operated in material
compliance with all applicable laws. There are no defects in the physical
condition of the Real Estate or the improvements located on the Real Estate
which could impair or prevent the current
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or proposed use thereof by the Company Group. No member of the Company Group has
received any notice from any governmental body (a) requiring it to make any
material repairs or changes to the Real Estate or the improvements located on
the Real Estate or (b) giving notice of any material governmental actions
pending. There is no action, proceeding or litigation pending (or, to the best
knowledge of the Company, contemplated or threatened): (i) to take all or any
portion of the Real Estate, or any interest therein, by eminent domain; or (ii)
to modify the zoning of, or other governmental rules or restrictions applicable
to, the Real Estate or the use or development thereof in any manner which could
impair or prevent the current or proposed use thereof by the Company Group.
There are no contracts or other obligations outstanding for the sale, exchange
or transfer of any of the Real Estate.
5.15 Title to Assets; Personal Property.
A member of the Company Group is the sole owner (both legal and equitable)
of and has good and marketable title to the Assets constituting personal
property, tangible and intangible, free and clear of all mortgages, liens,
security interests, charges, claims, restrictions and other encumbrances of
every kind other than with respect to the liens securing the Company Group's
indebtedness and the Permitted Encumbrances. The material items of machinery,
equipment and other tangible assets included in the Assets are in satisfactory
operating condition, reasonable wear and tear excepted, and conform, in all
material respects, to all applicable ordinances, rules, regulations and
technical standards, including the rules, regulations and technical standards of
the FCC and the local franchise authorities, and all applicable building, zoning
and other laws. As of the Closing, the amount of Assets constituting inventory
of set-top cable boxes will be adequate to cover usage projected by the budget
provided to Buyer for thirty days after the Closing Date for each of the
following types of boxes: (i) standard analog, (ii) advanced analog, and (iii)
digital.
5.16 Compliance with Laws.
(a) The operations of the Systems have been, and are being,
conducted in material compliance with all applicable laws, rules,
regulations and other requirements of all federal, state, county or local
governmental authorities or agencies.
(b) (i) The Company Group is permitted under all applicable
Franchises and FCC rules, regulations and orders to distribute the
transmissions (whether television, satellite, radio or otherwise) of video
programming or other information that the Systems make available to
customers of the Systems (the "Signals") presently being carried to such
customers and to utilize all carrier frequencies generated by the
operations of the Systems, and are licensed to operate all the facilities
required by law to be licensed, including without limitation, any business
radio and any CARS system being operated as part of the Systems; and (ii)
other than requests for network nonduplication and syndex protection and
sports league (e.g., NBA, NHL, MLB) blackout requests, no written requests
or orders have been received by any member of the Company Group during the
three years preceding the date of this Agreement from the FCC, the United
States Copyright Office, any local or other television station or system
or from any other Person
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(x) challenging or questioning the legal right of a member of the Company
Group to distribute the Signals, own or operate any System or to own,
operate or use any FCC licensed or registered facility owned, operated
and/or used by the Company Group in conjunction with the Company Group's
operation of any System or (y) requiring any System to carry a television
broadcast signal or to terminate carriage of a television broadcast signal
with which the Company Group has not complied, and (iii) except as
disclosed in Schedule 5.16(B), the Company Group has complied with all
written and bona fide requests or demands received from television
broadcast stations to carry or to terminate carriage of a television
broadcast signal on a System, including, without limitation, all
retransmission consent agreements to which any member of the Company Group
is a party.
(c) The Company Group is in compliance with the applicable
Cumulative Leakage Index and Equal Employment Opportunity requirements of
the FCC.
(d) The Company Group has deposited with the United States Copyright
Office all statements of account and other documents and instruments, and
has paid all such royalties, supplemental royalties, fees and other sums
to the United States Copyright Office with respect to the business and
operations of the Systems as are required under the Copyright Act to
obtain, hold and maintain the compulsory license for CATV systems
prescribed in Section 111 of the Copyright Act. The Company Group and the
Systems are in material compliance with the Copyright Act and the rules
and regulations of the Copyright Office. The Company Group and the Systems
are entitled to hold and do hold the compulsory copyright license
described in Section 111 of the Copyright Act, which compulsory copyright
license is in full force and effect and has not been revoked, canceled,
encumbered or adversely affected in any manner. The carriage, transmission
or use of the Signals has not and does not subject the Systems or any
Company Group member to any FCC proceedings or any suits or actions,
including without limitation, suits or actions for copyright infringement.
(e) All necessary FAA and FCC approvals and registrations have been
obtained and/or filed with respect to the height and location of those
towers owned by the Company or the appropriate member of the Company
Group, and those towers are being operated in material compliance with
applicable FCC and FAA rules.
(f) There is no inquiry, claim, action or demand pending before the
United States Copyright Office or the Copyright Royalty Tribunal which
questions the copyright filings or payments made by any Company Group
member with respect to the Systems other than routine inquiries or
proposed corrections. The Company will provide Buyer with copies of any
and all additional inquiries, claims, actions or demands during the period
between the date of this Agreement and the Closing Date.
(g) Copies of all aeronautical frequency notices filed with the FCC
with respect to the Systems have been delivered to Buyer.
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(h) Schedule 5.16(H) sets forth a list of all Governmental
Authorities that are certified to regulate rates of the Systems pursuant
to the Communications Act and FCC Regulations as of the date of this
Agreement. Except as set forth on Schedule 5.16(H), no rate complaints are
pending with the FCC against the Systems, no Company Group member has
received any written (or to the Company's knowledge other) notice from any
Governmental Authority that it has any obligation or liability to rollback
its rates for Basic or Expanded Basic Service or otherwise to refund to
customers of the Systems any portion of the revenue received by the
Company Group from such customers (excluding revenue with respect to
deposits for converters, encoders, decoders and related equipment and
other prepaid items) that has not been resolved. The Company Group has
made a good faith effort to set its rates in accordance with applicable
statutory provisions, rules, regulations and orders and is aware of no
basis for rollbacks or refunds. The Company has delivered to Buyer
complete and correct copies of all FCC forms relating to rate regulation
of the Systems filed with any Governmental Authority, copies of all
correspondence with any Governmental Authority relating to such rate
regulation and any other documentation justifying the rates charged to
customers of, or otherwise supporting an exemption from the rate
regulation provisions of the Communications Act claimed with respect to,
any of the Systems. The customer records of the Systems contain the names,
addresses and payment histories of, and services delivered to, all Persons
known by the Company to be receiving any CATV service from any member of
the Company Group with respect to the Systems.
(i) Except as set forth on Schedule 5.16(I), as of the date of this
Agreement, (i) no construction programs relating to the provision or
proposed provision of CATV service have been undertaken by any Person in
any of the Service Areas and, to the Company's knowledge, without
investigation but upon inquiry of its regional managers and as should
reasonably be known to a reasonable CATV operation, no such construction
programs are proposed or threatened to be undertaken, (ii) no franchise or
other applications or requests of any Person to provide CATV service in
the Service Areas have been filed or to the Company's knowledge are
threatened or proposed; (iii) there is no other CATV or other video
services provider (excluding DBS providers) within any of the Service
Areas which is providing or, to the Company's knowledge, has applied for a
franchise or otherwise intends to provide CATV services or other video
services (excluding DBS services) to any of the Service Areas in
competition with any of the Systems. Except as set forth in Schedule
5.16(I), no Company Group member is a party to any agreement restricting
the ability of any Third Party to operate CATV systems or any other video
programming distribution business within any of the Service Areas.
5.17 Transactions.
Except as disclosed on Schedule 5.17 hereto, since December 31, 1998, no
member of the Company Group has entered into any transaction outside the
ordinary course of its business, and there has not been any material change in
the manner in which the Company Group conducts its business. Since December 31,
1998, there has not been any Material Adverse Effect.
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5.18 Litigation and Legal Proceedings.
Set forth on Schedule 5.18 hereto is a complete and accurate list and
description of all suits, claims, actions and administrative, arbitration or
other similar proceedings relating to the Company Group (including proceedings
concerning labor disputes or grievances, civil rights discrimination cases and
affirmative action proceedings) and all governmental investigations pending or,
to the knowledge of the Company, threatened, in each case to which any member of
the Company Group is a party, or against its properties or business, and each
judgment, order, injunction, decree or award relating to a member of the Company
Group or the Assets (whether rendered by a court or administrative agency, or by
arbitration pursuant to a grievance or other procedure) to which a member of the
Company Group is a party that is unsatisfied or requires continuing compliance
therewith (such suits, actions, claims, judgments, orders, injunctions, decrees
and awards are herein referred to as "Legal Proceedings"). To the Company's
knowledge, there are no facts or circumstances that would give rise to any
material claims against the Systems or the Assets, other than such claims as may
be applicable to the CATV industry generally. The foregoing warranty
specifically excludes matters undertaken by or pending before Congress, the FCC,
the Copyright Royalty Tribunal or any state governmental authority in any state
in which any System is located which would have applicability to CATV systems in
general but to which no Company Group member is expressly a party.
5.19 Brokers' Fees.
Neither, the General Partner nor any member of the Company Group has
employed any broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated by
this Agreement.
5.20 Plans; ERISA.
(a) Existence of Plans. For purposes of this Agreement, the term
"Plans" shall mean (i) all "employee benefit plans" (as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), of which any member of the Company Group, or
any member of the same controlled group as a member of the Company Group
within the meaning of Section 4001(a)(14) of ERISA (an "ERISA Affiliate")
is or ever was a sponsor or participating employer or as to which a member
of the Company Group or any of their ERISA Affiliates makes contributions
or is required to make contributions, and (ii) any similar employment,
severance or other arrangement or policy of any of the Company Group
members or any of their ERISA Affiliates (whether written or oral)
providing for health, life, vision or dental insurance coverage (including
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits or retirement
benefits, fringe benefits, or for profit sharing, deferred compensation,
bonuses, stock options, stock appreciation or other forms of incentive
compensation or post-retirement insurance, compensation or benefits.
Except as disclosed on Schedule 5.20, neither a member of the Company
Group nor any of their respective ERISA Affiliates maintains or sponsors
(or ever maintained or sponsored), or makes or is required to make
contributions to, any Plans. None of the Plans is or was a
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"multi-employer plan," as defined in Section 3(37) of ERISA. None of the
Plans is or was a "defined benefit pension plan" within the meaning of
Section 3(35) of ERISA. None of the Plans provides or provided
post-retirement medical or health benefits. None of the Plans is or was a
"welfare benefit fund," as defined in Section 419(e) of the Code, or an
organization described in Sections 501(c)(9) or 501(c)(20) of the Code. No
member of the Company Group or any ERISA Affiliate is or was a party to
any collective bargaining agreement. Except as disclosed on Schedule 5.20,
no member of the Company Group or any ERISA Affiliate has announced or
otherwise made any commitment to create or amend any Plan. Notwithstanding
any statement or indication in this Agreement to the contrary, except as
disclosed on Schedule 5.20, there are no Plans which the Company will not
be able to terminate immediately after the Closing in accordance with
their terms and ERISA. The Company has made available to Buyer true and
complete copies of: (i) each of the Plans and any related funding
agreements thereto (including insurance contracts) including all
amendments, all of which are legally valid and binding and in full force
and effect and there are no defaults thereunder, (ii) the currently
effective Summary Plan Description pertaining to each of the Plans, as
applicable, (iii) the three (3) most recent annual reports for each of the
Plans (including all related schedules), (iv) the most recent Internal
Revenue Service determination or opinion letter, as applicable, for each
Plan which is intended to constitute a qualified plan under Section 401 of
the Code and each amendment to each of the foregoing documents, and (v)
for each unfunded Plan, financial statements which shall fairly present
the financial condition and the results of operations of such Plan in
accordance with GAAP, consistently applied, as of such dates.
(b) Penalties. To the Company's knowledge, no member of the Company
Group or any of their respective ERISA Affiliates is subject to any
material liability, tax or penalty whatsoever to any Person or agency
whomsoever as a result of engaging in a prohibited transaction under ERISA
or the Code, and no member of the Company Group or any of their respective
ERISA Affiliates has any knowledge of any circumstances which reasonably
might result in any material liability, tax or penalty, including but not
limited to, a penalty under Section 502 of ERISA, as a result of a breach
of any duty under ERISA or under other applicable laws. Each Plan which is
required to comply with the provisions of Sections 4980B and 4980C of the
Code, or with the requirements referred to in Section 4980D of the Code,
has complied in all material respects. No event has occurred which could
subject any Plan to tax under Section 511 of the Code.
(c) Qualification. Each of the Plans which is intended to be a
qualified plan under Section 401(a) of the Code has received a favorable
determination or opinion letter from the Internal Revenue Service, and has
been operated in all material respects in accordance with its terms and
with the provisions of the Code. All of the Plans have been administered
and maintained in substantial compliance with ERISA, the Code and all
other applicable laws. All contributions required to be made to each of
the Plans under the terms of that Plan, ERISA, the Code or any other
applicable laws have been timely made. Each Plan intended to meet the
requirements for tax-favored treatment under Subchapter B of Chapter 1 of
the Code meet such requirements. Except as set forth in Schedule 5.20, the
Company Group members have not made any payments, are not
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obligated to make any payments, and are not parties to any Contract or
Plan that under certain circumstances, considered either individually or
in the aggregate, could require any of them to make any payments, that are
not deductible as a result of the provisions set forth in Section 280G of
the Code or the treasury regulations thereunder or would result in an
excise tax to the recipient of any such payment under Section 4999 of the
Code. The Audited Financial Statements and the Unaudited Financial
Statements properly reflect all amounts required to be accrued as
liabilities to date under each of the Plans. Except as disclosed on
Schedule 5.20 or as set forth in Section 13.12, the execution and
performance of this Agreement will not (i) result in any obligation or
liability (with respect to accrued benefits or otherwise) of any member of
the Company Group or Buyer to any Plan, or any present or former employee
of a member of the Company Group, (ii) be a trigger event under any Plan
that will result in any payment (whether of severance pay or otherwise)
becoming due to any present or former employee, officer, director,
shareholder, contractor, or consultant, or any of their dependents, or
(iii) accelerate the time of payment or vesting, or increase the amount,
of compensation due to any employee, officer, director, shareholder,
contractor, or consultant of a member of the Company Group. With respect
to any insurance policy which provides, or has provided, funding for
benefits under any Plan, (I) there is and will be no liability of the any
member of the Company Group or Buyer in the nature of a retroactive or
retrospective rate adjustment, loss sharing arrangement, or actual or
contingent liability as of the Closing Date, nor would there be any such
liability if such insurance policy were terminated as of the Closing Date,
and (II) no insurance company issuing any such policy is in receivership,
conservatorship, bankruptcy, liquidation, or similar proceeding, and, to
the knowledge of the Company, no such proceedings with respect to any
insurer are imminent.
(d) Litigation. Other than routine claims for benefits under the
Plans, there are no pending, or, to the best knowledge of the Company
Group, threatened, investigations, proceedings, claims, lawsuits,
disputes, actions, audits or controversies involving the Plans, or the
fiduciaries, administrators, or trustees of any of the Plans or the
Company, any Subsidiary or any of their respective ERISA Affiliates as the
employer or sponsor under any Plan, with any of the IRS, the Department of
Labor, the PBGC, any participant in or beneficiary of any Plan or any
other Person whomsoever. The Company Group knows of no reasonable basis
for any such claim, lawsuit, dispute, action or controversy.
5.21 Insurance, Surety Bonds, Damages.
Set forth on Schedule 5.21 hereto is a correct list of all insurance
policies and surety bonds of the Company Group now in effect, including the
names of the insureds and their addresses. The premiums on such insurance
policies and bonds have been currently paid, and such policies and bonds are
valid, outstanding and enforceable, in full force and effect and insure against
risks and liabilities and provide for coverage to the extent and in a manner
required of or deemed reasonably appropriate and sufficient by the Company. The
Company Group will
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maintain coverage of similar kinds and amounts and will pay the premium for such
coverage through the Closing Date.
5.22 Environmental Laws.
Except as set forth in Schedule 5.22: (i) each member of the Company Group
is in material compliance with all Environmental Laws; (ii) no member of the
Company Group has received, since January 1, 1994, any order, directions or
notices relating to any release or threatened release of any Hazardous
Substance, or alleging a violation of any Environmental Law and no government
agency has submitted to any member of the Company Group any request for
information pursuant to any Environmental Law relating to the Systems; (iii) to
the best of the Company's knowledge, there are no material Environmental Permits
required under any Environmental Law in connection with the operation of the
Systems; and (iv) there has been no generation, use, treatment, disposal, or
actual or threatened release of any Hazardous Substance by the Company Group or,
to the Company's knowledge (without any obligation of further investigation), by
any other party at, in, under, or about any of the real property currently or
formerly owned, leased, occupied or used by any member of the Company Group.
Except as set forth on Schedule 5.22, no Company Group member has received,
since January 1, 1994, any notification pursuant to any Environmental Laws that:
(i) any work, repairs, construction or capital expenditures are required to be
made in respect of any of the Assets as a condition of continued compliance with
any Environmental Laws; or (ii) any currently held material Environmental Permit
relating to the Systems is about to be made subject to materially different
limitations or conditions, or is about to be revoked, withdrawn or terminated.
The Company has provided Buyer with complete and correct copies of all studies,
reports or surveys in the possession of the General Partner or any Company Group
member relating to the presence or alleged presence of Hazardous Substances at,
on or affecting the Real Estate or leased or occupied real property.
5.23 No Other Commitment to Sell.
No part of the Systems or any of the Assets is directly or indirectly
subject in any manner to any written or oral commitment or any arrangement for
the sale, transfer, assignment, or disposition thereof, in whole or in part,
except (i) as provided in any of the Company's Franchises or in the general
security provisions of any of the Company's debt instruments, (ii) the sale any
Asset in the ordinary course of business which has been or will be replaced by
the Company on or before the Closing Date with a replacement Asset of equal or
greater value, or (iii) as otherwise set forth in Schedule 5.23 hereto.
5.24 Year 2000.
The Company Group has used diligent efforts to ensure that its Computer
Systems are Year 2000 Ready and that there shall be no Material Adverse Effect
on the Company by reason of the advent of the year 2000. Without limiting the
generality of the foregoing, the Company Group has (A) with respect to its own
Computer Systems, (i) initiated a review and assessment of all Computer Systems;
(ii) developed the Year 2000 Remediation Program delivered to Buyer; (iii) has
complied in all material respects with the Year 2000 Remediation Program
delivered to
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Buyer, and (iv) has taken all steps to date such that it reasonably expects to
complete the Year 2000 Remediation Program by December 31, 1999, and (B) with
respect to Third Party Systems, has no reason to believe, after due inquiry,
that such Third Party Systems will adversely impact the Year 2000 Readiness of
the Computer Systems.
5.25 Trademarks, Patents and Copyrights.
Each member of the Company Group owns or possesses adequate licenses or
other valid rights, title and interest to use all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, copyrights,
service marks, trade secrets, applications for trademarks and for service marks,
know-how and other proprietary rights and information (collectively,
"Intellectual Property") used or held for use in connection with the business of
each member of the Company Group as currently conducted or as contemplated to be
conducted, except for Intellectual Property owned by the Disbursement Agent and
to be licensed to Buyer pursuant to the License. The Company is unaware of any
assertion or claim challenging the validity of any of the foregoing (or any
basis therefor). To the knowledge of the Company, the conduct of the business of
each member of the Company Group as currently conducted does not infringe,
either directly or indirectly, any patent, patent right, license, trademark,
trademark right, trade name, trade name right, service ▇▇▇▇ or copyright of any
Third Party. To the knowledge of the Company, there are no infringements of any
proprietary rights owned by or licensed by or to each member of the Company
Group. The Disbursement Agent owns all right, title and interest in the
trademarks "Cablevision Communications," "Total TV" and "Total Web," including
without limitation all intellectual property therein, which trademarks will be
licensed to the Company pursuant to the License, covering a period of 180 days
from the Closing Date.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Sellers to enter into this Agreement and to consummate
the transactions contemplated hereby, Buyer hereby represents (as of the date of
this Agreement) and warrants as follows:
6.1 Organization.
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has the power and authority
to own and use its properties and to transact the business in which it is
engaged and to acquire the Purchased Interests pursuant to this Agreement.
6.2 Authority Relative to this Agreement.
Buyer has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Buyer and the consummation by Buyer of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of
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Buyer are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Buyer and, assuming the due authorization, execution
and delivery by the other parties hereto, constitutes a legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
6.3 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and all other
instruments or documents executed by Buyer in connection herewith and the
consummation of the transactions contemplated hereby will not (i) conflict
with or violate the certificate of incorporation, or bylaws of Buyer, (ii)
conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Buyer or by which any property or asset of Buyer is
bound or affected or (iii) result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, any Contract to which Buyer is a party or by which Buyer
or any property or asset of Buyer is bound except, in the case of clauses
(ii) and (iii), for any such conflicts, violations, breaches, defaults or
other occurrences that would not prevent or delay consummation of the
Closing, or otherwise prevent Buyer from performing its obligations under
this Agreement.
(b) The execution and delivery of this Agreement by Buyer does not,
and the performance of this Agreement by Buyer will not, require Buyer to
obtain or make any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, except (i) for
applicable requirements, if any, of (A) federal or state securities or
"blue sky" laws, (B) the Communications Act, and (C) state and local
governmental authorities, including state and local Franchise authorities,
(ii) as required under the HSR Act and (iii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Closing or
otherwise prevent Buyer from performing its obligations under this
Agreement.
6.4 Financial Capability.
Buyer has the financial ability to purchase the Purchased Interests in
accordance with terms of this Agreement. Buyer has available and will have
available as of the Closing Date funds sufficient to pay the Purchase Price in
accordance with Section 2.2.
6.5 Litigation.
There is no claim, action or proceeding pending or threatened against
Buyer of which Buyer has received notice which if determined adversely would
prevent or delay the consummation of the transactions contemplated by this
Agreement, and no judgement, order or decree has been entered nor any such
liability incurred having such effect.
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6.6 No Violation of FCC Cross Ownership Rules.
On the Closing Date, Buyer will not be in violation of any FCC
restrictions regarding the ownership of competing media and related businesses
that materially adversely affect the ability of Buyer to own the Business.
6.7 Investment Intent; Sophisticated Buyer.
Buyer (a) is an informed sophisticated entity with sufficient knowledge
and experience in investing so as to be able to evaluate the risks and merits of
its investment in securities of the Company to be acquired pursuant hereto, (b)
is financially able to bear the risks of investing in the Company, (c) has had
an opportunity to discuss the business, management and financial affairs of the
Company Group with the management of the Company Group, (d) is acquiring such
securities for its own account for the purpose of investment and not with a view
to or for sale in connection with any distribution thereof, (e) understands that
(i) such securities have not been registered under the Securities Act, (ii) such
securities must be held indefinitely unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from such registration, (f) has
no present need for liquidity in connection with its purchase of such
securities, (g) understands that the purchase of such securities involves a high
degree of risk, and (h) acknowledges that the purchase of such securities is
consistent with its general investment objectives.
6.8 Finders' and Brokers' Fees.
Except for the fees of Communications Equities Associates, which will be
paid solely by Buyer, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transaction provided for in this Agreement based upon arrangements made by or on
behalf of Buyer.
ARTICLE VII
COVENANTS
7.1 Access.
Between the date of this Agreement and the Closing Date, the Company
shall, and shall cause the General Partner and each other member of the Company
Group and their respective officers and employees to, (i) give Buyer and its
respective officers, employees, accountants, counsel, financing sources and
other agents and representatives full access, during normal business hours, to
all buildings, offices, properties, plants and other facilities and to all
contracts, internal reports, data processing files and records, Federal, state,
local and foreign tax returns and records, commitments, books, records and
affairs of the Company Group, whether located on the premises of the Company or
at another location; (ii) furnish promptly to Buyer a copy of each report,
schedule, registration statement and other document filed or received by any
member of the Company Group during such period pursuant to the requirements of
Federal securities laws or regulations; (iii) permit Buyer to make such
inspections as it may reasonably require; (iv) cause its officers and employees
and the other Company Group officers and employees to
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furnish Buyer such financial, operating, technical and product data and other
information with respect to the business and properties of the Company Group as
Buyer from time to time may reasonably request, including without limitation
financial statements and schedules; (v) allow Buyer the opportunity to interview
such employees and other personnel and Affiliates of the Company Group as they
may reasonably request; and (vi) cooperate with Buyer and its Affiliates and
representatives in arranging for an orderly transition in connection with the
transfer of control of the Company; provided, however, that no investigation
pursuant to this Section 7.1 shall affect or be deemed to modify any
representation or warranty made by the Company herein. Materials furnished to
Buyer pursuant to this Section 7.1 may be used by Buyer for strategic and
integration planning purposes relating to accomplishing the transactions
contemplated hereby. Prior to the Closing, any information provided to Buyer or
its representatives pursuant to this Agreement shall be held by Buyer and its
representatives in confidence in accordance with and subject to the terms of the
Buyer Confidentiality Agreement.
7.2 Environmental Assessment.
Buyer shall have the right to commission, at Buyer's cost and expense, a
so-called "Phase I" environmental site assessment of the Company Group's assets
(a "Phase I Assessment"), provided that no such Phase I Assessment shall be
commenced more than forty-five days after the date hereof. If the Phase I
Assessment indicates that a so-called "Phase II" assessment (a "Phase II
Assessment") or other additional testing or analysis of the Real Estate or other
leased or occupied real property is advisable, then, subject to any enforceable
and reasonably nonnegotiable restrictions placed thereon by a Third Party owner
or lessor of any real property involved, Buyer may elect to cause its agents to
conduct such testing and analysis, provided, however, that to the extent
reasonably requested by the Company, (i) such testing shall be conducted under
the Company's reasonable oversight and in a manner that does not materially
interfere with the Business, and (ii) Buyer shall provide reasonable assurance
that tested property will not be damaged or, if damaged, will be repaired at
Buyer's expense. The Company shall use its commercially reasonable efforts to
comply with any reasonable request for information made by Buyer or its agents
in connection with any such investigation. The Company covenants that any
response to any such request for information will be complete and correct in all
material respects. The Company will afford Buyer and its agents access to all
operations of the Company at all reasonable times and in a reasonable manner in
connection with any such investigation subject to any reasonably required
approval of the Company's landlords, which approval the Company will use its
commercially reasonable efforts to obtain.
7.3 Interim Period Operations.
From the date hereof until the Closing, the Company shall use its
commercially reasonable efforts to operate pursuant to the terms of the budget
previously provided by the Company to Buyer. The Company shall proceed with the
capital expenditure projects set forth on Schedule 7.3(A) in accordance with the
capital expenditure budget provided to Buyer. Notwithstanding anything herein to
the contrary, neither the Sellers nor the Company shall be liable to Buyer for
any delays in connection with such capital expenditure projects due to factors
outside their control including, but not limited to, weather delays, material
shortages, and labor
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strikes. From the date hereof until the Closing, except as otherwise
contemplated by this Agreement or with Buyer's prior consent, not to be
unreasonably withheld, the General Partner and each member of the Company Group
shall carry on its business in the ordinary course consistent with past practice
and use commercially reasonable efforts to preserve intact its business
organizations and material relationships with Third Parties. Without limiting
the generality of the foregoing, the General Partner and each member of the
Company Group shall not without the prior written consent of Buyer, which
consent shall not be unreasonably withheld:
(a) make any material capital expenditures, as determined in
accordance with GAAP, except for capital expenditures referred to in
Schedule 7.3(A) hereto;
(b) agree or commit to dispose of any material assets out of the
ordinary course of business where the proceeds of disposition or the net
book value of the relevant assets exceed $50,000;
(c) merge or consolidate with any Person, acquire any stock or other
ownership interest in any Person or, with the exception of the transaction
contemplated by the Omega Agreement, the assets of any business as an
entirety;
(d) except as required by law, adopt, amend, modify, spin-off,
transfer or assume any of the assets or liabilities of, terminate or
partially terminate any benefit plan;
(e) (i) except in the ordinary course of business consistent with
past practice, (x) make any change in the compensation payable or to
become payable to any officer, director, employee, agent, Affiliate or
consultant, or (y) enter into any severance, termination or other similar
agreement, (ii) enter into or amend any employment agreement, (iii) make
any loans to any of its officers, directors, employees, agents, Affiliates
or consultants, (iv) make any material change in its existing borrowing or
lending arrangements for or on behalf of any of such Persons, or (v)
otherwise enter into any transactions with or make any payment to or for
any Affiliate of any member of the Company Group (other than payment of
management fees consistent with past practice), in each case whether
contingent on consummation of the transactions contemplated hereby or
otherwise. Notwithstanding anything provided herein to the contrary, this
Section 7.3(e) shall not apply with respect to signing bonuses, stay put
bonuses or similar items paid directly or indirectly by Sellers (including
through a resulting adjustment to the InterLink Equity Value under Section
2.4);
(f) declare, set aside or pay any dividend or other distribution
other than a cash distribution, in respect of the equity of any member of
the Company Group (other than any such dividend or distribution paid to
another member of the Company Group), or redeem or otherwise acquire any
of its respective securities;
(g) issue, sell, deliver or agree or commit to issue, sell or
deliver (whether through the issuance or granting of options, warrants,
commitments, subscription, rights to purchase or otherwise) any stock of
any class or any other securities or partnership
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interests of any member of the Company Group or amend any of the terms of
any securities of any member of the Company Group outstanding on the date
hereof ;
(h) except as previously disclosed to Buyer, change the rates or
marketing practices applicable to any System without notifying Buyer;
(i) enter into any Contract or Contracts relating to the Business
that individually or in the aggregate call for payments, or otherwise
involving expenditures, over their terms in excess of $100,000, except in
the ordinary course of business consistent with past practice, and except
for the renewal of any such Contract that would, but for such renewal,
terminate in accordance with its terms prior to Closing;
(j) enter into, or amend in any material respect, any Contract with
@Home or any other party providing for Internet access to the Company
Group's customers;
(k) engage in any line of business, or enter into any Contract,
unrelated to the Business;
(l) incur any debt not having market terms for bank debt and that is
not repayable without penalty or premium within six months of the Closing
Date;
(m) become a guarantor or surety of any indebtedness of any other
Person;
(n) take any action that could reasonably be expected to cause the
condition described in Section 9.2 to become untrue; or
(o) take, or agree in writing or otherwise to take, any of the
foregoing actions or any actions.
7.4 Delivery of Documents to Buyer.
The Company covenants that, to the extent that it has not already done so,
the Company will insofar as practicable deliver or otherwise make available to
Buyer for inspection, at the locations where the General Partner or the Company
Group maintains such information, the following within thirty (30) days after
the date hereof, or as specifically delineated below:
(i) the Company's most recently prepared managerial reports
and customer accounting records, which shall include a
customer accounts receivable aging report summarizing,
respectively, customers whose accounts are at least one, two,
and three or more Monthly Billing Periods overdue, for the
last (or then most recently concluded) regular Monthly Billing
Period. The Company further covenants to deliver to Buyer the
monthly customer accounting records within 20 days after the
end of each calendar month prior to the Closing and to deliver
the managerial reports as soon as practicable.
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(ii) Copies of the Additional Financial Statements as soon as
possible after completion, but in any case, within forty-five
(45) days of the end of the period covered by any such
Additional Financial Statement.
(iii) Copies of such as-built engineering drawings as the
Company has in its possession for the Systems, or, if not
available, such design maps and plant drawings and as-built
engineering drawings as the Company has in its possession will
be made available to Buyer for inspection and at the Closing
will be left on site at the respective System office for
Buyer.
(iv) Copies of any and all bonds in force with regard to the
Systems and the Company Group.
(v) Copies of all written Contracts and other documents listed
in the Schedules hereto, including any and all contracts in
force with any union or collective bargaining unit
representing any employee of any member of the Company Group
together with a certificate of a duly authorized executive
officer, certifying that to the best of such officer's
knowledge the copies so delivered are true and complete in all
material respects.
(vi) Copies of any required Registration Statements filed with
the FCC pursuant to 47 C.F.R. ss.76.12.
(vii) The Initial Notice of Identity and Signal Carriage, and
all subsequent statements of account filed with the Copyright
Office within the past three years and all Notices of Change
of Identity or Signal Carriage filed within the past three
years shall be made available for inspection by Buyer or its
representatives upon reasonable notice.
(viii) Copies of radio licenses, earth station licenses and
CARS licenses.
(ix) Copies of must carry elections and retransmission consent
agreements subject to any confidentiality restrictions
contained in such agreements;
To the extent that any of the items referred to above are received or
filed after a date which is 30 days from the date hereof, the Company covenants
to deliver such items to Buyer as soon as practicable after receipt or filing.
7.5 No Impairment of Title.
From the date hereof until the Closing, no Seller shall sell, dispose of,
mortgage, pledge or otherwise encumber any of the Purchased Interests, except as
required under the current terms of the Credit Facility.
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7.6 No Amendment to Organizational Documents.
From the date hereof until the Closing, the Company shall not, and shall
not permit any other member of the Company Group to amend, in any material
respect, the agreement of limited partnership, certificate of limited
partnership, certificate of incorporation, bylaws or other organizational
documents of such entity.
7.7 Franchise Renewals; Required Consents; HSR Filings.
(a) Until the Closing, the Company shall, and shall cause each other
member of the Company Group to, timely file valid requests for renewal of
the Franchises in accordance with Section 626 of the Communications Act
(47 USC ss. 546) and shall use its diligent, good faith, commercially
reasonable efforts to renew on substantially the same terms any Franchise
that will expire within thirty-six (36) months after the date hereof in
accordance with its terms.
(b) The Company will use, and will cause each member of the Company
Group to use, its diligent, good faith, commercially reasonable efforts to
(i) obtain in writing as promptly as possible and at its expense, all of
the Required Consents and any other consent, authorization or approval
required to be obtained in connection with the transactions contemplated
by this Agreement, and deliver to Buyer copies of such Required Consents
and such other consents, authorizations or approvals promptly after they
are obtained; and (ii) give any required written notice in connection with
the transactions; provided, that the Company will afford Buyer the
opportunity to review, approve and revise the form of letter or
application proposed to request the Required Consent or the form of
written notice prior to delivery to the Third Party or the Affiliate of a
party whose consent is sought or to whom notification is required. The
Company and Buyer will, and the Company will cause each member of the
Company Group to, cooperate with and assist each other in obtaining all
Required Consents and no party shall intentionally take any action or
steps or refrain from taking any action or steps where the result would
prejudice or jeopardize the obtaining of any Required Consent. Without
limiting the generality of the foregoing, the Company and Buyer agree to
attend City Council or similar meetings and hearings before local and
county administrative bodies. If, in connection with the process of
obtaining any Required Consent, a Governmental Authority makes a bona fide
claim that any amount is owed by the franchise holder as a result of a
default under, or breach of, the corresponding Franchise by a member of
the Company Group or any predecessor in interest, the Company Group shall
satisfy all outstanding monetary obligations in respect of any such bona
fide default or breach except to the extent any member of the Company
Group is contesting such claim in good faith. No member of the Company
Group will accept or agree or accede to any material modifications or
amendments to, or the imposition of any material condition to the transfer
of, any of the Franchises, FCC Licenses or Necessary Contracts that are
not acceptable to Buyer. Notwithstanding the foregoing, as soon as
practicable after the date of this Agreement (and in no event more than
twenty (20) business days hereafter), the Buyer will deliver to the
Company, and the Company will cause each member of the
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Company Group to deliver to Buyer, its portion, complete and executed, of
requests or applications for approval of the transfer of control or
assignment of the Franchises, FCC Licenses and Necessary Contracts, and as
soon as practicable thereafter (but in no event more than ten (10)
business days) the Company shall deliver, or cause to be delivered, to the
appropriate Governmental Authority, (i) a FCC Form 394 with respect to
each Franchise other than to any Governmental Authority that the parties
have agreed will not initially receive FCC Form 394; provided, that if
either party subsequently requests that FCC Form 394 be completed,
executed and delivered to any such Governmental Authority that did not
initially receive a FCC Form 394 with respect to any Franchise, then each
party will deliver to the other its portion, completed and executed, of
appropriate FCC Form 394, and the Company shall deliver, or cause to be
delivered, the completed FCC Form 394 to such Governmental Authority as
soon as practicable but in any event within fifteen (15) business days
after a party has made such request; and (ii) such other FCC forms as are
necessary to obtain the FCC's consent to the assignment or transfer of
control of the FCC Licenses. Without the prior consent of the other party,
neither party shall agree with any Governmental Authority to extend or to
toll the time limits applicable to such Governmental Authority's
consideration of any FCC Form 394 filed with such Governmental Authority.
The foregoing notwithstanding, neither party (nor their respective
employees, agents, representatives or any other Person acting on behalf of
a party) shall be precluded 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 consent is sought, and each party shall apprise the other of all
such requests.
(c) Each of the Company and Buyer, to the extent required, shall
file (or shall cause its ultimate parent entity to file, if applicable) as
soon as practicable (but in any event within thirty (30) days) following
the date of this Agreement, the appropriate notifications required under
the HSR Act in connection with the transactions contemplated by this
Agreement. The Company or Buyer, as the case may be, shall promptly inform
the other of any material communication from the FCC, the Federal Trade
Commission, the Department of Justice or any other Governmental Authority
regarding any matter related to any antitrust or trade regulatory laws of
any Governmental Authority ("Antitrust Laws") as they bear upon the
purchase and sale of the Purchased Interests under this Agreement. If
Buyer or any member of the Company Group receives a request for additional
information or documentary material from any such Governmental Authority
with respect to the transactions contemplated hereby, such party will
endeavor in good faith and will use commercially reasonable efforts to
make or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in compliance
with such request. Buyer and the Company shall, and shall cause their
filing affiliates to, use their respective commercially reasonable efforts
to overcome any objections that may be raised by the Federal Trade
Commission, the Department of Justice or any other Governmental Authority
having jurisdiction over antitrust matters. The Company and Buyer shall,
and shall cause their respective filing affiliates to, cooperate to
prevent inconsistencies between their respective filings and between their
respective responses to all such inquiries and responses, and will furnish
to
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each other such necessary information and reasonable assistance as the
other may reasonably request in connection with its preparation of
necessary filings or submissions under the HSR Act. Notwithstanding the
foregoing, no party shall be required to make any significant change in
the operations or activities of the business (or any material assets
employed therein) of such party or any of its Affiliates, if a party
determines in good faith that such change would be materially adverse to
the operations or activities of the business (or any material assets
employed therein) of such party or any of its Affiliates having
significant assets, net worth or revenue. The Company and Buyer shall
split equally the applicable filing fees under the HSR Act.
7.8 Notification.
The General Partner and each member of the Company Group, on the one
hand, and Buyer, on the other hand, shall:
(a) prior to the Closing, in the event of the occurrence of any fact
or circumstance that would cause or constitute a breach of any of its
representations and warranties set forth herein, give notice thereof to
the other party;
(b) promptly notify the other party of any material notice or other
material communication from any Governmental Authority received by it in
connection with the transactions contemplated by this Agreement.
7.9 Reasonable Efforts; Additional Actions.
Buyer, the Company and, with respect to Sections 9.1, 9.2, and 9.5, each
Seller (as to those matters reasonably within such Seller's control), shall use,
and the Company shall cause each member of the Company Group to use,
commercially reasonable efforts to cause all conditions in Articles VIII, IX and
X to be satisfied and the Closing contemplated hereby to occur. Buyer and each
Seller that is a party to the RAP Agreement (or that controls a party to the RAP
Agreement), to the extent within such Seller's control, shall use commercially
reasonable efforts to cause the transactions contemplated by the RAP Agreement
to be consummated. Without limiting the foregoing, subject to the terms and
conditions of this Agreement, (i) Buyer, the Company and (as to those matters
reasonably within such Seller's control) each Seller shall use and the Company
shall cause each member of the Company Group to use, all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations, or
to remove any injunctions or other impediments or delays, and to consummate the
transactions contemplated by this Agreement and (ii) in any vote of the
Company's limited partners necessary to authorize any action contemplated
hereby, including without limitation the restructurings described in Section
7.11, Sellers agree to vote their Purchased Interests in favor of such action.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement or to vest Buyer with full
title in and to the Purchased Interests and all properties, assets, rights,
approvals, immunities and Franchises of the Company Group, Sellers and the
proper officers, members, partners and directors of each Person that is a party
to this Agreement shall take all such necessary action.
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7.10 Tax Matters.
(a) Cooperation on Tax Matters.
(i) Buyer and Sellers shall reasonably cooperate in connection
with the preparation and filing of any Tax Return with respect to
members of the Company Group.
(ii) Buyer and the Company further agree, upon request, to use
commercially reasonable efforts to obtain any certificate or other
document from any Governmental Authority or any other Person as may
be necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including Taxes with respect to the transactions
contemplated hereby).
(iii) Buyer and the Company, on one hand, and Sellers, on the
other hand, agree that if any of them receives any notice of an
audit or examination from any Governmental Authority with respect to
Taxes of any Company Group member for any taxable period or portion
thereof ending on or prior to the Closing Date, then the recipient
of such notice shall, within three (3) business days of the receipt
thereof, notify and provide copies of such notice to the other
party, as the case may be, in accordance with the notice provisions
of Section 13.13.
(iv) The Disbursement Agent (on behalf of Sellers) shall
prepare and file all federal and state income tax returns of the
Company Group for all periods ending on or prior to the Closing
Date, and Buyer agrees to cause each Company Group member to execute
each such return applicable to it, except as provided below in this
paragraph. The Disbursement Agent (on behalf of Sellers) shall cause
each such return to be prepared and, together with all related work
papers, delivered to Buyer for review at least 15 business days
prior to the due date for filing of such return. Such returns shall
be prepared in accordance with assumptions and practices for returns
filed by the Company Group in recent years with respect to the
timing of income, deductions, gains and losses to the extent that
such assumptions and practices affect the inclusion of such items in
pre-Closing versus post-Closing taxable periods. If Buyer (x)
reasonably determines that any such return does not comply with the
previous sentence, or that the execution of any such return would
likely subject the applicable Company Group member or the Person
executing the return on behalf of the Company Group to civil or
criminal penalties, and (y) within five business days after receipt
of such return, provides written notice of such determination and
the specific reasons for such determination to the Disbursement
Agent, then such return shall be forwarded to the Neutral Accounting
Firm for review. The Neutral Accounting Firm shall report its
conclusions to the Disbursement Agent and Buyer within seven
business days after receipt of such return indicating whether it
concurs with all or part of Buyer's determination and, if so,
specifying the changes to such return needed to comply with the
requirements of this paragraph and to avoid civil
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or criminal penalties. Buyer shall cause the appropriate Company
Group member to promptly execute such return without any changes
thereto (if the Neutral Accounting Firm does not indicate that
changes are needed) or with the changes specified by the Neutral
Accounting Firm (if the Neutral Accounting Firm indicates that
changes are needed). The conclusions of the Neutral Accounting Firm
shall be conclusive and binding on all parties to this Agreement and
shall not be subject to dispute or review. The cost of retaining the
Neutral Accounting Firm to review any return shall be borne 50% by
the Disbursement Agent (on behalf of the Sellers) and 50% by Buyer.
(b) Section 754 Elections; Allocation of Purchase Price.
(i) To the extent not already in effect, each Company Group
member that is treated as a partnership for federal income tax
purposes shall timely file an election under Section 754 of the Code
so that such entities shall be able to adjust the tax basis of their
assets (collectively, the "Partnership Assets") under Section 743(b)
of the Code as a result of the transactions contemplated herein.
(ii) The aggregate amount described in the penultimate
sentence of Section 2.3 shall be allocated among the Partnership
Assets in an allocation agreement (the "Allocation Agreement") to be
prepared in accordance with Section 2.3 hereof and the rules under
Sections 743(b), 751, 755 and 1060 of the Code. Buyer shall deliver
a draft of the Allocation Agreement to the Company at least thirty
(30) days prior to the Closing Date for approval and consent, and
Buyer and the Company shall mutually agree upon the Allocation
Agreement prior to the Closing Date. Neither Buyer nor the Company
shall unreasonably withhold its approval and consent with respect to
the Allocation Agreement. Buyer and Sellers agree that the
Allocation Agreement shall be amended to reflect any post-Closing
adjustments determined under Section 2.4 of this Agreement. Unless
otherwise required by applicable law, Buyer, Sellers and the Company
Group agree to act, and cause their respective affiliates to act, in
accordance with the computations and allocations contained in the
Allocation Agreement in any relevant Tax Returns or similar filings
(including any forms or reports required to be filed pursuant to
Section 1060 of the Code ("1060 Forms")), to cooperate in the
preparation of any 1060 Forms, to file such 1060 Forms in the manner
required by applicable law and to not take any position inconsistent
with such Allocation Agreement upon examination of any tax refund or
refund claim, in any litigation or otherwise.
(c) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest but excluding any income tax) incurred in connection with the
transactions consummated pursuant to this Agreement shall be borne equally
by Buyer and the Disbursement Agent (on behalf of Sellers). If and to the
extent that such Taxes and fees are included in current liabilities
pursuant to Section 2.4, Seller's share of such Taxes and fees shall be
paid by the
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Company Group. Buyer and Sellers will cooperate in all reasonable respects
to prepare and file all necessary Tax Returns and other documentation with
respect to all such transfer, documentary, sales, use, stamp, registration
and other Taxes and fees.
(d) Tax Elections. From and after the date of this Agreement, the
Company and each Company Group Member shall not without the prior written
consent of the Buyer (which consent shall not be unreasonably withheld)
make, or cause or permit to be made, any Tax election that would bind the
Company or Buyer in any material respect.
(e) Contests.
(i) In the case of an audit or administrative proceeding that
relates to taxable periods ending on or before the Closing Date with
respect to any income Tax Return of the Company, Disbursement Agent
(on behalf of Sellers) shall assume, defend and control the conduct
of such audit or proceeding. In the event that issues relating to a
potential adjustment are required to be dealt with in the same
proceeding as separate issues relating to a potential adjustment for
which the Buyer would be liable, Buyer shall have the right, at its
expense, to control the audit or proceeding with respect to the
latter issues.
(ii) Buyer shall not enter into any compromise or agree to
settle any claim pursuant to any Tax audit or proceeding which would
bind the Company for any pre-Closing period without the written
consent of the Disbursement Agent, which consent shall not be
unreasonably withheld or delayed. Sellers shall not enter into any
compromise or agree to settle any claim pursuant to any Tax audit or
proceeding which would bind the Company or Buyer for any
post-Closing period without the written consent of Buyer, which
consent shall not be unreasonably withheld or delayed. Buyer and
Sellers agree to cooperate, and Buyer agrees to cause the Company
Group to cooperate, in the defense against or compromise of any
claim in any audit or proceeding, at the expense (excluding general
and administrative expenses) of the defending party.
(iii) The members of the Company Group shall not take a
position on any Tax Return with respect to such entity's federal tax
status (i.e., partnership, S corporation or C corporation) different
than that which such entity reported on its 1997 federal Tax
Returns.
7.11 Restructuring.
The Company agrees to cooperate, and to cause each member of the Company
Group to cooperate, with Buyer, at Buyer's cost and expense (other than general
and administrative expenses), prior to the Effective Time in restructuring the
legal form or ownership of any member of the Company Group, changing the form of
equity ownership of any member of the Company Group, permitting Buyer or any of
its Affiliates to purchase interests in, or assets of, Subsidiaries of the
Company from either the Company or a Subsidiary of the Company or effecting
other restructurings of the transactions contemplated herein; provided, however,
that
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such cooperation may be withheld if and to the extent the Company reasonably
determines that such cooperation would likely have an adverse effect (including,
without limitation, with respect to Taxes, but excluding any effect for which
Buyer agrees to provide reasonable compensation) on (i) the Company or RAP
(unless all conditions to Closing under Articles VIII, IX and X have or will be
satisfied or waived prior to the effective time of any proposed restructurings
and such restructurings would be effected on the Closing Date), (ii) any of the
Sellers or RAP Sellers or (iii) any of the direct or indirect owners of the
Sellers or RAP Sellers.
7.12 Year 2000 Remediation Program.
The Company shall, and shall cause the General Partner and each other
member of the Company Group and their respective officers and employees to: (i)
until the Closing Date, use diligent, commercially reasonable efforts to
implement the Year 2000 Remediation Program by the Closing Date, (ii) assist and
cooperate with Buyer in the refinement and implementation of the Year 2000
Remediation Program, (iii) assist and cooperate with Buyer in developing and
implementing plans for Buyer to continue the Year 2000 Remediation Program after
the Closing Date, and (iv) implement all solutions identified as reasonably
necessary to members of the Company Group by vendors, distributors and
manufacturers of the Computer Systems and Third Party Systems in order to ensure
Year 2000 Readiness, except for those solutions that the vendor cannot provide
by the Closing Date.
7.13 Exculpation and Indemnification.
Buyer shall ensure that the Company's obligations provided for in Section
11 of the Company's Partnership Agreement, with respect to the indemnification
of the General Partner, the limited partners of the Company, the members of the
Company's Advisory Committee, and any of their respective partners and
Affiliates (the "Indemnification Provisions") shall continue in effect, and
shall not be amended or eliminated, for a period of at least five years
following the Closing Date. During such five year period, neither the Buyer nor
any of its successors or assigns shall permit any other Person to acquire
effective control of the Company unless (i) such Person undertakes that it will
not permit the Indemnification Provisions to be amended or eliminated during
such period or (ii) Buyer assumes such obligations during such period. Neither
the Company nor any of its successors or assigns will transfer all or the
majority of its assets to any one or more Persons in a single transaction or
series of related transactions (including but not limited to any transfer in
connection with the liquidation or termination of the Company or any merger or
consolidation involving the Company), unless either Buyer or such transferee
agrees to assume and be responsible for the obligations of the Company under the
Indemnification Provisions during the five year period commencing on the Closing
Date. At the Closing, Buyer will assume the obligations of Sellers under the
Company's Partnership Agreement.
7.14 Credit Facility.
The Company, upon Buyer's request and with Buyer's assistance, will use
commercially reasonable efforts, at Buyer's expense, to obtain any consents of
lenders under the Credit Facility that are necessary to permit the Company to
keep the Credit Facility in place following the Closing. Following the
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Closing, Buyer will comply with the terms of the Credit Facility. If the Credit
Facility is required to be prepaid, Buyer agrees to do so at the Closing.
7.15 Admission of Buyer as a Substitute Limited Partner.
Each party will take such action as is required on its part pursuant to
the Company's Partnership Agreement in order that, upon the Closing, Buyer will
be admitted as a Substitute Limited Partner (as defined in the Company's
Partnership Agreement) under the provisions of the Company Partnership
Agreement.
7.16 Publicity.
Except as required by applicable law, prior to the Closing (i) the Company
and Buyer shall consult with and cooperate with the other prior to the Closing
Date with respect to the content and timing of all press releases and other
public announcements concerning this Agreement and the transactions contemplated
hereby and (ii) neither the Company nor Buyer shall make any such release or
announcement without the prior written consent and approval of the other, which
consent and approval shall not be unreasonably withheld. After the Closing Date,
except as required by applicable law, (i) the Disbursement Agent and Buyer shall
consult with and cooperate with the other with respect to the content and timing
of all press releases and other public announcements concerning this Agreement
and the transactions contemplated hereby and (ii) neither the Disbursement Agent
nor Buyer shall make any such release or announcement without the prior written
consent and approval of the other, which consent and approval shall not be
unreasonably withheld.
7.17 Services Provided by and to Alliance.
At the Closing, the Company will execute and deliver, and will cause
Alliance Communications, LLC to execute and deliver, a Services Agreement
substantially in the form of Exhibit 7.17 (the "Services Agreement").
7.18 Conveyance of Certain Interests Owned by the Company prior to
Closing.
Buyer and the Company agree that prior to the Closing, the Company shall
convey (i) its membership interests in Alliance Communications, LLC, and (ii)
its direct and indirect ownership interests in R&A Management, LLC to a Person
designated by the Company and that such ownership interests shall not be
acquired by the Buyer as a result of the acquisition of the Purchased Interests.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ALL PARTIES
The obligations of each of the parties to consummate the transaction
contemplated hereby are subject to the conditions that:
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8.1 Orders Prohibiting Consummation of Transactions.
At the Closing Date, there shall exist no applicable law, rule,
regulation, order, judgment or injunction the effect of which is to prohibit
consummation of the transactions contemplated by this Agreement, other than any
rule, regulation or order relating to Franchises, which shall be governed by
Section 9.8 hereof.
8.2 HSR Act.
All necessary pre-merger notification filings required under the HSR Act
will have been made with the Federal Trade Commission and the United States
Department of Justice and the prescribed waiting periods (and any extensions
thereof) will have expired or been terminated.
ARTICLE IX
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
All obligations of Buyer under this Agreement are subject to the
fulfillment (or waiver in whole or in part by Buyer in writing) on or before the
Closing Date (or such earlier date as may be specified), of each of the
following conditions:
9.1 Compliance with Agreement.
The Company and Sellers shall have performed and complied in all material
respects with all of their obligations under this Agreement to be performed by
them at or prior to Closing and there shall be no material uncured default of
the Company or Sellers under any term of this Agreement. Without limiting the
generality of the foregoing, all Purchased Interests shall have been tendered
for sale to Buyer, using instruments of conveyance in form and substance
reasonably satisfactory to Buyer, accompanied by all certificates, if any exist,
representing certificated Purchased Interests.
9.2 Correctness of Representations and Warranties.
Each of the representations and warranties of the Company and Sellers set
forth in this Agreement shall be true and correct in all respects on the Closing
Date (without giving effect to the materiality or Material Adverse Effect
qualifiers set forth therein) with the same force and effect as if such
representations and warranties had been made on and as of such date (except to
the extent such representations and warranties expressly speak as of an earlier
date (other than the general qualifiers in the lead in to Articles IV, V and
VI)), except for such failures to be true and correct that would not in the
aggregate have a Material Adverse Effect.
9.3 No Adverse Change in Business or Properties.
Since December 31, 1998, there shall not have been a Material Adverse
Effect.
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9.4 Certificate of Officer.
The Company shall deliver to Buyer a certificate of an authorized
executive officer of the General Partner dated the Closing Date, certifying as
to the fulfillment of the conditions set forth in Sections 9.1, 9.2 and 9.3
above, together with a certified authorizing resolution and incumbency
certificate.
9.5 Proceedings and Documents.
All Company Group and Seller corporate and other proceedings, taken in
connection with the transactions contemplated hereby and all documents incident
thereto shall be reasonably satisfactory in form and substance to Buyer and its
counsel.
9.6 Opinion of Counsel.
Buyer shall have received from ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, a favorable opinion
of such counsel, dated as of the Closing Date, substantially in the form of
Exhibit 9.6 hereto.
9.7 Opinion of FCC Counsel.
Buyer shall have received from Seller's FCC counsel, Cole, Raywid, &
▇▇▇▇▇▇▇▇▇ LLP, a favorable opinion of such counsel, dated as of the Closing
Date, substantially in the form of Exhibit 9.7 hereto.
9.8 Consents.
All consents, waivers, approvals or authorizations of franchisors,
Governmental Authorities and other Third Parties that are Required Consents in
connection with the change of control of the Company to Buyer and the other
transactions contemplated by this Agreement shall have been obtained in
substantially the form set forth in Exhibit 9.8 hereto, and the Company shall
have delivered to Buyer copies of all such consents and approvals so obtained;
provided, however, that with respect to Franchise approvals, this condition
shall have been deemed to have been met if the Franchises with respect to which
such consents, waivers, approvals or authorizations which have not been obtained
do not cover more than five percent (5%) of the customers of the Company Group,
taken as a whole.
9.9 Purchase of Partnership Interests of RAP.
The transactions contemplated by the RAP Agreement shall have been
consummated, or will be consummated simultaneously with the transactions
contemplated hereunder.
9.10 Services Agreement.
Alliance Communications, LLC shall have executed and delivered the
Services Agreement.
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ARTICLE X
CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS
All obligations of Sellers under this Agreement are subject to fulfillment
(or waiver in whole or in part by Sellers in writing) on or before the Closing
Date (or such earlier date as may be specified) of each of the following
conditions:
10.1 Correctness of Representations and Warranties.
Each of the representations and warranties of Buyer set forth in this
Agreement shall be true and correct in all respects on the Closing Date (without
giving effect to the materiality or Material Adverse Effect qualifiers set forth
therein) with the same force and effect as if such representations and
warranties had been made on and as of such date (except to the extent such
representations and warranties specifically speak as of an earlier date), except
for such failures to be true and correct that would not in the aggregate
materially impair Buyer's ability to perform its obligations hereunder or
subject any Seller to any material liability or loss of benefit.
10.2 Compliance with Agreement.
Buyer shall have performed and complied in all material respects with all
of its obligations under this Agreement to be performed by it at or prior to
Closing and there shall be no material uncured default of the Buyer under any
term of this Agreement.
10.3 Certificate of Officer.
Buyer shall have delivered to Sellers a certificate of an executive
officer dated the Closing Date, certifying as to the fulfillment of the
conditions set forth in Sections 10.1 and 10.2 above, together with a certified
authorizing resolution and incumbency certificate.
10.4 Proceedings and Documents.
All Buyer corporate and other proceedings taken in connection with the
transactions contemplated hereby and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Disbursement Agent, the
Company and the Company's counsel.
10.5 Opinion of Counsel.
Seller shall have received from Buyer's counsel, Irell & ▇▇▇▇▇▇▇ LLP, a
favorable opinion of such counsel, dated as of the Closing Date, substantially
in the form of Exhibit 10.5 hereto.
10.6 Sale of Partnership Interests of RAP.
Buyer and the RAP Sellers shall have consummated, or will simultaneously
consummate, the transactions contemplated by the RAP Agreement, except that this
condition shall not apply if one or more RAP Sellers have failed to deliver
their interests in breach of the RAP Agreement
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and Buyer and the remaining RAP Sellers have consummated, or will simultaneously
consummate, the transactions contemplated thereby.
ARTICLE XI
RIGHTS TO TERMINATE; BREACH;
11.1 Termination.
(a) This Agreement may be terminated prior to the Closing:
(i) at any time by mutual consent of the Disbursement Agent
(on behalf of Sellers) and Buyer;
(ii) by either the Disbursement Agent (on behalf of Sellers)
or Buyer by written notice to the others, if the Closing has
not occurred on or prior to December 31, 1999 (the "Outside
Date"); provided further that (x) Buyer shall only be
permitted to terminate this Agreement under this paragraph
(ii) if Buyer is not in material breach of this Agreement or
the RAP Agreement and no prior breach of either such agreement
by Buyer has materially contributed to the delay in the
consummation of the Closing, and (y) the Disbursement Agent
(on behalf of Sellers) shall only be permitted to terminate
this Agreement under this paragraph (ii) if the Company, RAP,
the Sellers and RAP Sellers are not in material breach of this
Agreement or the RAP Agreement and no prior breach of either
such agreement by any such Person has materially contributed
to the delay in the consummation of the Closing;
(iii) by Buyer, upon a breach of one or more representations
or warranties of Company or Sellers herein (without giving
effect to the materiality or Material Adverse Effect
qualifiers set forth therein) such as would, in the aggregate,
have a Material Adverse Effect, or upon any material breach of
any covenant or agreement on the part of the Company or any
Seller set forth in this Agreement, in each case that has not
been cured within 30 days following receipt by the Company of
written notice of such breach;
(iv) by the Disbursement Agent (on behalf of Sellers), upon a
breach of one or more representations or warranties of Buyer
herein (without giving effect to the materiality or Material
Adverse Effect qualifiers set forth therein) such as would, in
the aggregate, materially impair Buyer's ability to perform
its obligations hereunder, or subject any Seller to any
material liability or loss of benefit, or upon any material
breach of any covenant or agreement on the part of Buyer set
forth in this Agreement, in each case that has not been cured
within 30 days following receipt by Buyer of written notice of
such breach.
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(b) In the event either the Disbursement Agent or Buyer shall
terminate this Agreement pursuant to Section 11.1(a), the
terminating party shall give prompt written notice thereof to the
other parties hereto, and this Agreement shall thereupon terminate,
without further action by any of the parties hereto. If the
Agreement is terminated as provided herein:
(i) except as otherwise provided herein, the termination of
this Agreement shall not relieve any party of any liability
for breach of this Agreement prior to the date of termination;
and
(ii) all filings, applications and other submissions relating
to the assignment of the Purchased Interests made pursuant to
this Agreement shall, to the extent practicable, be withdrawn
from the agency or other Person to which made.
ARTICLE XII
INDEMNIFICATION
12.1 Indemnification by Sellers With Respect to the Company.
From and after the Closing, subject to (a), (b), and (c) below, Sellers
shall indemnify Buyer against and hold it harmless from any and all
Indemnifiable Damages which Buyer may suffer or incur by reason of (i) the
Company's breach of any of the Company's representations and warranties
contained in this Agreement or any document, certificate or agreement delivered
pursuant hereto; or (ii) the Company's breach prior to the Closing of any of the
Company's covenants or agreements contained in this Agreement or any document,
certificate or agreement delivered by the Company pursuant hereto. However,
notwithstanding anything contained in this Agreement to the contrary, if Buyer
makes any claim for damages, Buyer will use reasonable efforts to mitigate the
amount and nature thereof in accordance with customary industry maintenance
procedures. Notwithstanding anything to the contrary herein, the foregoing
obligation of Sellers to indemnify Buyer shall be subject to and limited by each
of the following qualifications:
(a) All representations and warranties made by the Company in this
Agreement (or any document, certificate or agreement delivered pursuant
hereto) shall survive the Closing hereunder for a period of one year
thereafter other than (a) the representations and warranties set forth in
Section 5.8, which shall survive for the duration of the applicable
statute of limitations, (b) the representations and warranties set forth
in Section 5.22, which shall survive the Closing for a period of two years
thereafter, and (c) the representations and warranties set forth in
Section 5.4, which shall survive indefinitely. The period of survival of
the respective representations and warranties provided for in this Section
is referred to herein as the "Indemnity Period." No claim for
indemnification for breach of a representation or warranty may be asserted
after the expiration of the Indemnity Period of such representation or
warranty; 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 or warranty (or a series of facts stated in
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the written assertion of the claim which would support such breach) shall
extend the Indemnity Period for such representation or warranty with
respect to such claim through the date such claim is conclusively
resolved. No investigation by either party shall relieve the other party
from any liability for any misrepresentation or breach of warranty made by
such other party in this Agreement or any related agreement.
(b) Other than with respect to a breach of Section 5.4 or 5.8, (i)
Sellers shall have no liability to Buyer on or account of any
Indemnifiable Damages provided in Section 12.1 unless and until such
damages in the aggregate exceed Two Million Five Hundred Thousand Dollars
($2,500,000) (the "Threshold Amount"), in which event Buyer shall be
entitled to all (subject to clause (ii) below in this paragraph) of the
Indemnifiable Damages from the first dollar; and (ii) the total liability
of Sellers for their indemnity obligation under this Section 12.1 shall be
limited in all respects to, and shall be payable solely from, and to the
extent of, the InterLink Indemnity Fund and Buyer's sole and exclusive
remedy shall be recourse to the InterLink Indemnity Fund upon and subject
to Buyer's compliance with the terms and conditions of the Closing Escrow
Agreement; provided, however, that (1) if Section 12.1(c) Damages have
been paid from the InterLink Indemnity Fund, and if the amount remaining
in the InterLink Indemnity Fund is as a result insufficient to satisfy
claims payable under this Section 12.1(b), then the Sellers shall pay pro
rata to the Disbursement Agent and the Disbursement Agent shall pay to
Buyer the lesser of (x) the amount of 12.1(c) Damages paid from the
InterLink Indemnity Fund, and (y) the amount by which claims under this
Section 12.1(b) exceed the InterLink Indemnity Fund, and (2) upon release
of the Year Disbursement Amount, each Seller shall thereafter continue to
be severally obligated to satisfy claims for breaches of Section 5.22
brought during the relevant Indemnity Period, in an aggregate amount no
greater than the portion of the Year Disbursement Amount actually received
by such Seller.
(c) With respect to any indemnification sought for a breach of
Sections 5.4 and 5.8, each Seller shall be obligated to indemnify Buyer in
respect of its Indemnifiable Damages pro rata in accordance with the
percentages set forth on the Purchase Price Allocation Schedule.
Notwithstanding paragraph (b) above, such indemnification for breaches of
Section 5.4 and 5.8 (i) shall not be subject to the Threshold Amount set
forth in (b) (i) above and (ii) shall not be limited by the amount of the
InterLink Indemnity Fund. In the event Sellers are obligated to indemnify
Buyer in respect of Indemnifiable Damages for breaches of Section 5.4 or
5.8 ("Section 12.1(c) Damages"), such obligation will be paid first from
the InterLink Indemnity Fund to the extent of any amounts remaining in the
InterLink Indemnity Fund, and if insufficient funds remain in the
Indemnity Fund, then each Seller shall be obligated for, and shall pay to
the Disbursement Agent, its pro rata share of such shortfall, and the
Disbursement Agent shall pay the amount of the shortfall to Buyer.
(d) With respect to any claim for indemnification hereunder that may
reasonably be covered by the indemnification provisions set forth in the
▇▇▇▇▇ Agreement or Omega Agreement, Buyer will use commercially reasonable
efforts to pursue claims
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under those agreements before pursuing a claim hereunder; provided,
however, that (i) during its pendency, any such claim shall be deemed a
pending claim for purposes of determining the amount of the InterLink
Indemnity Fund to be released pursuant to Section 2.5 hereof, (ii) with
respect to any claim brought hereunder for Indemnifiable Damages not fully
recovered under the ▇▇▇▇▇ Agreement or the Omega Agreement, the date on
which such claim is first made (whether under the ▇▇▇▇▇ Agreement, the
Omega Agreement or hereunder) shall determine whether such claim has been
brought during the applicable Indemnity Period, and (iii) Buyer shall
provide the Disbursement Agent with a copy of any claim for
indemnification made on or after the Closing Date under the ▇▇▇▇▇
Agreement or the Omega Agreement at the time such claim is first made.
(e) Each Seller makes, constitutes and appoints the Disbursement
Agent as its true and lawful attorney-in-fact, and authorizes it to take
any and all such actions with regard to the disposition and settlement of
any claims for indemnification pursuant to this Section 12.1, on behalf of
such Sellers and grants to Disbursement Agent full power and authority to
do and perform each and every act as the Disbursement Agent may deem
necessary or advisable to carry out fully the intent of the foregoing as
such Seller might or could do personally.
12.2 Indemnification by Sellers for Seller Breaches.
From and after the Closing, each Seller shall indemnify Buyer against and
hold it harmless from any and all Indemnifiable Damages which Buyer may suffer
or incur by reason of (i) inaccuracy of any of the representations or warranties
of such Seller contained in Article IV of this Agreement; or (ii) such Seller's
breach of any of its covenants or agreements contained in this Agreement or any
document, certificate or agreement delivered by such Seller pursuant hereto.
Notwithstanding anything contained in this Section 12.2 to the contrary, if
there is a claim for damages, Buyer will use commercially reasonable efforts to
mitigate the amount and nature of such damages in accordance with customary
industry maintenance procedures. The foregoing obligation of each Seller to
indemnify Buyer shall be subject to and limited by each of the following
qualifications:
(a) Each of the representations, warranties, covenants and
agreements made by such Seller in this Agreement or in any documents or
instruments delivered by such Seller pursuant hereto shall survive the
Closing for a period of one (1) year thereafter, other than the
representations and warranties set forth in Section 4.1, which shall
survive indefinitely. Any claims made by Buyer pursuant to this Section
12.2 shall not be subject to the Threshold Amount. In addition, each
Seller shall be directly liable for all amounts required to be paid by
such Seller under this Section 12.2, and such amounts shall not be paid
from, nor subject to the limits of, the InterLink Indemnity Fund.
(b) Each such Seller individually, and not jointly, will indemnify
Buyer and hold it harmless with respect to Indemnifiable Damages required
to be paid by such Seller under this Section 12.2. Upon the occurrence of
an event to which an individual Seller's indemnity obligation under this
Section 12.2 applies, Buyer shall seek indemnification
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with respect to such Seller's liability for such event only from such
Seller, and not from any other Seller(s).
12.3 Indemnification by Buyer.
From and after the Closing, Buyer shall indemnify Sellers against and hold
them harmless from any and all Indemnifiable Damages which any of the Sellers
may suffer or incur by reason of (i) Buyer's breach of any of Buyer's
representations and warranties contained in this Agreement or any document,
certificate or agreement delivered by the Buyer pursuant hereto; (ii) Buyer's
breach of any of Buyer's covenants, or agreements contained in this Agreement or
any document, certificate or agreement delivered pursuant hereto; or (iii) any
liability for claims made by third parties against any of the Sellers arising
out of the operation of the Systems by Buyer after the Closing Date. Without
limiting the generality of the foregoing, with respect to the measurement of
Indemnifiable Damages, Sellers shall have the right to be put in the same
financial position as they would have been in had Buyer not breached the
respective representation, warranty, covenant or agreement. The foregoing
obligation of Buyer to indemnify Sellers shall be subject to and limited by the
qualification that each of the representations and warranties made by Buyer in
this Agreement shall survive for a period of one (1) year from and after the
Closing Date, unless a claim shall have been commenced prior to such time in
which case the applicable representations and warranties shall survive with
respect to such claim until such claim has been resolved, and thereafter all
such representations and warranties shall be extinguished, and no action for the
enforcement of the foregoing obligation may be commenced with respect to any
claim made more than one year following the Closing Date.
12.4 Effect of Materiality Qualifiers.
For purposes of this Article XII, the determination of whether any breach
of any representation or warranty in Articles IV, V and VI has occurred, as well
as the determination of the Indemnifiable Damages therefrom, shall be made
without regard to any materiality or Material Adverse Effect qualifiers therein.
12.5 Notice and Right to Defend Third Party Claims.
Promptly upon receipt of notice of any claim, demand or assessment made by
any Third Party or the commencement of any suit, action or proceeding brought by
any Third Party in respect of which indemnity may be sought under any provision
of Article XII hereof, the party seeking indemnification (the "Indemnitee") will
give written notice thereof to the party from whom indemnification is sought
(the "Indemnitor") promptly and in any event within sufficient time to enable
the Indemnitor to respond to such claim, demand, or assessment or answer or
otherwise plead in such suit, action or proceeding. The failure or omission of
such Indemnitee to so notify promptly the Indemnitor of any such Third Party
claim, demand, assessment, suit, action or proceeding shall not relieve such
Indemnitor from any liability which it may have to such Indemnitee in connection
therewith, on account of any indemnity agreement contained in Article XII
hereof, except to the extent that the Indemnitor shall have been actually
prejudiced thereby. In case any Third Party claim, demand or assessment shall be
asserted or Third Party
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suit, action or proceeding commenced against an Indemnitee, and such Indemnitee
shall notify the Indemnitor of the commencement thereof, the Indemnitor shall be
entitled to participate therein, and, to the extent that it may wish, to assume
the defense, conduct or settlement thereof, with counsel reasonably satisfactory
to the Indemnitee by providing the Indemnitee with written notice within 10
business days after the Indemnitor's receipt of the Indemnitee's notice of the
claim, demand, assessment, suit, action or proceeding. After notice from the
Indemnitor to the Indemnitee of its election so to assume the defense, conduct
or settlement thereof within such 10-business day period, 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. The Indemnitee, at Indemnitor's cost and expense, will cooperate with
the Indemnitor in connection with any such claim, and make personnel, books and
records relevant to the claim available to the Indemnitor. Neither party shall
settle such claim, demand, assessment, suit, action or proceeding without the
consent of the other party, which shall not be unreasonably withheld provided
that in no event shall either party be obligated to consent to any settlement
which (i) arises from or is part of any criminal action, suit or proceeding,
(ii) contains a stipulation to, confession of judgment with respect to, or
admission or acknowledgment of, any liability or wrongdoing on the part of such
party, (iii) provides for injunctive relief, or other relief or finding other
than money damages, which is binding on such party, or (iv) does not contain an
unconditional release of such party.
12.6 Exclusive Remedy; Limitation of Liability.
From and after the Closing Date, the sole and exclusive remedy of any
party hereto for any claim arising under this Agreement (or any certificate,
document or agreement delivered pursuant hereto) against any other party shall
be the indemnification rights provided in this Article XII, provided that
nothing herein shall relieve any party from any liability for actual fraud.
Notwithstanding anything to contrary in Sections 12.1 and 12.2, no Seller shall
be liable to Buyer for Indemnifiable Damages in excess of the pro rata portion
of the Purchase Price received by such Seller.
ARTICLE XIII
MISCELLANEOUS
13.1 Seller Liability Several and not Joint.
Buyer acknowledges and agrees that the obligations of the Sellers under
this Agreement are several and not joint, and wherever this Agreement refers to
the several liability of the Sellers or a Seller's "pro rata portion" of any
amount, such liability or portion shall be determined based on the respective
percentage interest of such Seller in the InterLink Equity Value set forth on
the Purchase Price Allocation Schedule.
13.2 Appointment of Sellers' Representative.
Each of Sellers hereby irrevocably appoints Disbursement Agent as the
agent and attorney-in-fact of such Seller, with full power of substitution and
resubstitution to do such things and to take such actions (including without
limitation to execute on such Seller's behalf
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the Closing Escrow Agreement regarding Buyer's retention of a portion of the
InterLink Indemnity Fund in certain circumstances), in the name and on behalf of
such Seller, as this Agreement provides may be done or taken on behalf of
Sellers. Each of Sellers acknowledges and agrees that this appointment and power
of attorney is irrevocable during the term of this Agreement and is coupled with
an interest. Each of Sellers hereby agrees to indemnify and hold harmless
Disbursement Agent for all actions or inactions of Disbursement Agent taken or
not taken in good faith in connection with, and permitted under, this Agreement.
13.3 Expenses.
Except as otherwise provided in this Agreement, each party shall pay its
own expenses, taxes and other costs incident to or resulting from this Agreement
whether or not the transactions contemplated hereby are consummated. Buyer's
costs include, but are not limited to, fees for the filing or recording of
instruments of transfer. The Sellers and Buyer shall each pay one-half of any
sales or use tax arising out of or resulting from this Agreement, with the
Sellers' portion being paid pro rata in accordance with the percentages
indicated on the Purchase Price Allocation Schedule.
13.4 Knowledge.
For purposes of this Agreement, the Company shall be deemed to have
knowledge of and be aware of all facts, circumstances and information of which
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ have knowledge or are aware.
13.5 Assignment.
Neither this Agreement, nor any right hereunder, may be assigned by any of
the parties hereto, except that at any time, Buyer may upon at least seven (7)
days prior written notice to the Company at any time prior to the first filing
of Forms 394 with franchisors assign all of its rights hereunder to an entity
owned and controlled by ▇▇▇▇ ▇. ▇▇▇▇▇, provided, that, notwithstanding any such
assignment, Buyer shall (with such entity) be and remain liable to Sellers for
the performance and fulfillment of all of Buyer's covenants, duties and
obligations hereunder.
13.6 Successors.
This Agreement shall be binding upon and inure to the benefit of Buyer and
its heirs, successors or assigns, and Sellers and their respective heirs,
successors or permitted assigns, subject in all respects to Section 13.5 hereof.
13.7 Entire Agreement.
This Agreement, including the Schedules and Exhibits hereto, constitutes
the entire agreement of the parties, and supersedes all prior documents,
agreements (including, without limitation, that certain letter of intent between
the Company and Buyer dated February 8, 1999), promises, covenants,
arrangements, communications, representations or warranties, whether oral
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or written, by or on behalf of either party hereto or any officer, employee,
representative or agent of either party hereto.
13.8 Third Parties.
Except as specifically set forth or referred to herein, nothing herein
expressed or implied is intended or shall be construed to confer upon or give to
any Person, other than the parties hereto and their permitted successors or
assigns, any rights or remedies under or by reason of this Agreement.
13.9 Amendments in Writing.
The terms of this Agreement may not be amended, modified or waived except
by written agreement among the parties. The failure of any party to enforce any
right arising under this Agreement on one or more occasions will not operate as
a waiver of that or any other right on that or any other occasion.
13.10 Governing Law.
This Agreement shall be construed in accordance with and governed by the
laws of the State of New York, without regard to the conflicts of laws
provisions thereof.
13.11 Interpretation.
The headings of the Articles and Sections of this Agreement are inserted
for convenience of reference only and shall not constitute a part hereof or
affect in any way the meaning or interpretation of this Agreement. Each of the
parties hereto acknowledges that it has actively participated in the
preparation, drafting and review of this Agreement, and each party hereby waives
any claim that this Agreement or any provision hereof (or any Exhibit or
Schedule hereto) is to be construed against the other party hereto as the
draftsperson thereof.
13.12 Certain Provisions Relating to R&A Management LLC's 401(k) Plan.
(a) As of the Closing Date, the Company or any Affiliate thereof
shall cause the account balances in the ▇▇▇▇▇▇ & Associates, Inc. 401(k)
Retirement Savings Plan, a plan qualified and exempt under Sections
401(a), 401(k) and 501(a) of the Internal Revenue Code of 1986, as amended
("Company's 401(k) Plan") of all participants who continue to be employees
of the Company after the Closing Date ("Continuing Employees") to become
fully vested and nonforfeitable. Each Continuing Employee's period of
service with Company or its Affiliates before the Closing shall be counted
in determining eligibility for, and vesting of, benefits under each
employee benefit plan maintained or sponsored by the Company, Buyer or
their Affiliates after the Closing, or to which the Company, Buyer or
their Affiliates contribute after the Closing. Each Continuing Employee
shall be covered as of the Closing under any employee benefit plan
maintained or sponsored by the Company, Buyer or their Affiliates, or to
which the Company, Buyer, or their Affiliates contribute, providing health
care benefits (whether or
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not through insurance) without regard to any waiting period or any
condition or exclusion based on any pre-existing conditions, medical
history, claims experience, evidence of insurability, or genetic factors.
After the Closing, R&A Management, LLC and its Affiliates will continue to
provide continuation coverage under Section 4980B of the Code to
"qualified beneficiaries" who had "qualifying events" (as such terms are
defined in Section 4980B of the Code) on or before the Closing Date.
(b) As soon as reasonably practicable following the Closing Date, an
amount in cash equal to the aggregate value of the account balances in the
Company's 401(k) Plan attributable to Continuing Employees, which account
balances shall include any employer matching contributions in respect of
employee contributions made prior to the Closing Date and shall be valued,
to the extent administratively feasible, so as to include earnings and
losses to a date not more than thirty (30) days prior to the date of
transfer, will be transferred to the Charter Communications, Inc. 401(k)
Plan (the "Charter Plan"), along with corresponding liabilities to Persons
entitled to payment of benefits pursuant to the terms of Company's 401(k)
Plan; provided, however, that Buyer shall have no obligation to cause the
Charter Plan to accept such a transfer if such a transfer (i) would
violate Section 414(l) of the Code, (ii) could not be accomplished unless
the Charter Plan were amended to provide any form of benefit distribution
not available as of the Closing Date under the Charter Plan, or (iii)
would not be commercially reasonable or administratively practicable.
After the aforesaid transfer of account balances, the payment of benefits
under Charter Plan for Continuing Employees shall be the sole
responsibility of Buyer or any Affiliate thereof, and Buyer acknowledges
and warrants to the Company that neither it nor any Affiliate thereof
shall have any responsibility or obligation whatsoever therefor.
(c) As soon as reasonably practicable following the later of the
Closing Date or the date of the receipt by the ▇▇▇▇▇▇ & Associates, Inc.
Et Al Defined Contribution Transfer Plan (the "▇▇▇▇▇▇ Transfer Plan") of a
favorable determination letter from the Internal Revenue Service, Charter
shall establish a plan similar to the ▇▇▇▇▇▇ Transfer Plan (the "Charter
Transfer Plan"), and an amount in cash equal to the aggregate value of the
account balances in the ▇▇▇▇▇▇ Transfer Plan attributable to Continuing
Employees, which account balances shall be valued, to the extent
administratively feasible, so as to include earnings and losses to a date
not more than thirty (30) days prior to the date of transfer, will be
transferred to the Charter Transfer Plan, along with corresponding
liabilities to Persons entitled to payment of benefits pursuant to the
terms of the ▇▇▇▇▇▇ Transfer Plan. After the aforesaid transfer of account
balances, the payment of benefits under the Charter Transfer Plan for
Continuing Employees shall be the sole responsibility of Buyer or any
Affiliate thereof, and Buyer acknowledges and warrants to the Company that
neither it nor any Affiliate thereof shall have any responsibility or
obligation whatsoever therefor.
64
69
13.13 Notices.
All notices hereunder shall be in writing and shall be deemed to have been
delivered on the date of the first attempted delivery by (i) the United States
Postal Service, unless otherwise provided herein, to the respective party if
mailed by certified mail, return receipt requested, or (ii) a reputable
overnight delivery service, to the respective party at its address set forth
below or such other address as either party may designate to the other by
written notice in accordance herewith:
If to Sellers:
R&A Management, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a complete copy under separate cover (which copy by itself shall not
constitute notice) to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer:
Charter Communications, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a complete copy under separate cover (which copy by itself shall not
constitute notice) to:
Charter Communications, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Senior Vice President & General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
65
70
and to:
Irell & ▇▇▇▇▇▇▇, LLP
1800 Avenue of the Stars
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
13.14 Severability.
Any provision hereof which is prohibited or unenforceable shall be
ineffective only to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.
13.15 Counterparts.
This Agreement may be executed in one or more counterparts and each
executed copy shall constitute an original.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
66
71
IN WITNESS WHEREOF, the parties hereunto have duly executed this
Agreement.
BUYER:
CHARTER COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
COMPANY:
INTERLINK COMMUNICATIONS PARTNERS, LLLP
By: ▇▇▇▇▇▇, Co., its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
DISBURSEMENT AGENT:
R&A MANAGEMENT, LLC
By: ▇▇▇▇▇▇ & Associates Inc., its Manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
67
72
SELLERS:
▇▇▇▇▇▇, CO.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
HAMPSHIRE MEDIA PARTNERS II, L.P.
By: LEXINGTON MEDIA PARTNERS II, L.P.,
its General Partner
By: LEXINGTON EQUITY PARTNERS II, INC.,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
HAMPSHIRE EQUITY PARTNERS CAYMAN ▇.▇. ▇▇, L.P.
By: LEXINGTON EQUITY PARTNERS CAYMAN II D.B., L.P.,
its General Partner
By: LEXINGTON EQUITY PARTNERS II, INC.,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
HAMPSHIRE EQUITY PARTNERS CAYMAN II, L.P.
By: LEXINGTON EQUITY PARTNERS CAYMAN II, L.P.,
its General Partner
By: LEXINGTON EQUITY PARTNERS II, INC.,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
68
73
LEXINGTON MEDIA PARTNERS II, L.L.C.
By: LEXINGTON MEDIA PARTNERS II, L.P.,
its Manager
By: LEXINGTON EQUITY PARTNERS II, INC.,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
THE PERMANENT UNIVERSITY FUND OF THE STATE OF TEXAS
By: UNIVERSITY OF TEXAS INVESTMENT MANAGEMENT
COMPANY,
its Investment Manager
By: /s/ Austin M. Long III
-------------------------------
Name: Austin M. Long III
Title: Managing Director Private Markets
THE BOARD OF REGENTS OF THE UNIVERSITY OF TEXAS
SYSTEM
By: UNIVERSITY OF TEXAS INVESTMENT MANAGEMENT
COMPANY,
its Investment Manager
By: /s/ Austin M. Long III
-------------------------------
Name: Austin M. Long III
Title: Managing Director Private Markets
69
74
▇▇▇▇▇▇ ▇▇▇▇▇ & PARTNERS II, L.P.
By: ▇▇▇▇▇▇ ▇▇▇▇▇ & PARTNERS MANAGEMENT II, L.P.,
its General Partner
By: ▇▇▇▇▇▇ ▇▇▇▇▇ & PARTNERS MANAGEMENT II, LLC,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Managing Director
▇▇▇▇▇▇ ▇▇▇▇▇ & PARTNERS DUTCH, L.P.
By: ▇▇▇▇▇▇ ▇▇▇▇▇ & PARTNERS MANAGEMENT II, L.P.,
its General Partner
By: ▇▇▇▇▇▇ ▇▇▇▇▇ & PARTNERS MANAGEMENT II, LLC,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Managing Director
INTERLINK INVESTMENT CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
INTERLINK INVESTMENT II, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Manager
▇▇▇▇▇▇ & ASSOCIATES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman of the Board
70
75
▇▇▇▇▇▇ FAMILY INVESTMENT COMPANY, L.L.L.P.
By: its General Partners
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Partner
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Partner
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Partner
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, General Partner
▇▇▇▇▇▇ CHILDREN TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, Trustee
CRM II LIMITED PARTNERSHIP, LLLP
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Title: GP
71
76
NAS PARTNERS I L.L.C.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Member
NASSAU CAPITAL PARTNERS II, L.P.
By: NASSAU CAPITAL, LLC,
its General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Member
FIRST UNION INVESTORS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
NORWEST EQUITY CAPITAL, LLC
By: ITASCA NEC, LLC,
its Member
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Administrative Member
72
77
DLJ FUND INVESTMENT PARTNERS II, L.P.
By: DLJ LBO PLANS MANAGEMENT CORPORATION,
its General Partner
By: /s/ ▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Vice President
DLJ PRIVATE EQUITY EMPLOYEES FUND, L.P.
By: DLJ LBO PLANS MANAGEMENT CORPORATION,
its General Partner
By: /s/ ▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Vice President
DLJ PRIVATE EQUITY PARTNERS FUND, L.P.
By: WSW CAPITAL INC.,
its General Partner
By: /s/ ▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Vice President
DLJ CAPITAL CORPORATION
By: /s/ ▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Vice President
DLJ CAPITAL PARTNERS I, LLC
By: DLJ LBO PLANS MANAGEMENT CORPORATION,
its Managing Member
By: /s/ ▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Vice President
73
78
CIP INTERLINK L.L.C.
By: CO-INVESTMENT PARTNERS, L.P.,
its Member
By: CIP PARTNERS LLC,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
_____________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Individual Managing Member
PROCIFIC INTERLINK CORPORATION
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇
_______________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Director
____________________________________
INDIANA CABLEVISION MANAGEMENT CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
__________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
__________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
74
79
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
__________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
__________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
75
80
INDEX TO EXHIBITS
Exhibit 2.5 Form of Closing Escrow Agreement
Exhibit 7.17 Form of Services Agreement
Exhibit 9.6 Form of Seller's Counsel Opinion
Exhibit 9.7 Form of Seller's FCC Counsel Opinion
Exhibit 9.8 Form of Consent or Approval to Change of Control
Exhibit 10.5 Form of Buyer's Opinion of Counsel
INDEX OF SCHEDULES
Schedule Title
-------- -----
1.1(A) Slow Pay Bulk Accounts
1.1(B) Description of Systems
1.1(C) Vehicles
2.1 Purchased Interests
2.4(A) Basic Customer Schedule
4.3 Sellers' Required Consents
4.4(A) Outstanding Equity of Certain Corporate Partners
4.4(C) Litigation for Certain Corporate Partners
4.4(F) Ventures of Certain Corporate Partners
4.4(H) Tax Audits for Certain Corporate Partners
4.4(I) Consolidated Returns of Certain Corporate Partners
5.1(B) Subsidiaries
5.3 Company's Required Consents
5.6 Financial Statements
5.8 Taxes
5.9(A) Franchises
5.9(B) Necessary Contracts
5.9(C) Unfulfilled Commitments Under Franchises and Necessary Contracts
5.10(A) Material Agreements
5.11(A) Systems' Capacity, Subscribers and Rates
5.11(B) Unfiled or Untimely Filed Reports
5.12 Labor Matters
5.13 Absence of Certain Developments
5.14 Real Estate
5.16(B) Carriage Noncompliance
5.16(H) Rate Regulating Governmental Authorities
5.16(I) Overbuild and Franchise Competition
5.17 Transactions Outside of Ordinary Course of Business
5.18 Litigation
5.20 Retirement Plans
81
5.21 Insurance Policies and Surety Bonds
5.22 Noncompliance with Environmental Laws
5.23 Sale Commitments
7.3(A) Capital Expenditure Projects
77