UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 26, 1999
RIFKIN ACQUISITION PARTNERS, L.L.L.P.
RIFKIN ACQUISITION CAPITAL CORP.
(Exact name of registrants as specified in their charter)
Colorado
Colorado
333-3084
333-3084
84-1317717
84-1341424
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
360 South Monroe Street, Suite 600, Denver, Colorado
80209
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (303) 333-1215
No Change
(Former name or former address, if changed since last report.)
Item 5. Other Events.
Effective April 26, 1999, Rifkin Acquisition Partners, L.L.L.P.., a
Colorado registered limited liability limited partnership ( "RAP"),
Charter Communications, Inc., a Delaware corporation ("Charter") and the
holders (the "RAP Sellers") of approximately 72.5% of the partnership
interests in RAP (the "RAP Interests") entered into a Purchase and Sale
Agreement (the "RAP Agreement"), pursuant to which Charter agreed to
purchase all of the RAP Interests owned by the Sellers. Also on such
date, pursuant to an additional Purchase and Sale Agreement by and among
Charter, InterLink Communications Partners, LLLP, a Colorado registered
limited liability limited partnership ("InterLink") and the holders (the
"InterLink Sellers") of the partnership interests of InterLink (the
"InterLink Interests"), Charter agreed to purchase all of the InterLink
Interests, either (i) directly from certain holders or (ii) indirectly
by purchasing all of the issued and outstanding stock of certain
corporations that own the remaining InterLink Interests. By agreeing to
acquire InterLink, Charter also agreed to indirectly acquire the
remaining approximately 27.5% of the outstanding partnership interests
in RAP, which is currently held directly by Greenwich Street (RAP)
Partners I, L.P. ("Greenwich"), an indirect wholly-owned subsidiary of
InterLink.
The Agreements set forth the terms and conditions of the proposed
acquisition of the RAP Interests and the InterLink Interests by Charter
and both Agreements are subject to certain customary conditions,
including, without limitation, regulatory approval under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976. A copy of each of the two
Agreements is included herein as Exhibit 2.1 and 2.2. Such documents
are incorporated by reference into this Item 5, and the foregoing
description of such documents is qualified in its entirety by reference
to such Exhibits.
Item 7. Financial Statements and Exhibits.
(a) Not applicable
(b) Not applicable.
(c) Exhibits.
2.1 Purchase and Sale Agreement dated April 26, 1999 by and among Rifkin
Acquisition Partners, L.L.L.P. ("RAP"), Charter Communications, Inc., a
Delaware corporation ("Charter") and the holders of certain partnership
interests in RAP.
2.2 Purchase and Sale Agreement dated April 26, 1999 by and among
InterLink Communications Partners, LLLP ("InterLink"), Charter and the
holders of the partnership interests in InterLink.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RIFKIN ACQUISITION PARTNERS, L.L.L.P.
By: /s/Dale D. Wagner May 7, 1999
Dale D. Wagner
Its: Vice President, Secretary &
Assistant Treasurer (Principal
Financial and Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit No.
Exhibit Description
Page
2.1
Purchase and Sale Agreement dated April 26, 1999 by and among Rifkin
Acquisition Partners, L.L.L.P. ("RAP"), Charter Communications, Inc., a
Delaware corporation ("Charter") and the holders of certain partnership
interests in RAP.
2.2
Purchase and Sale Agreement dated April 26, 1999 by and among InterLink
Communications Partners, LLLP ("InterLink"), Charter and the holders of
the partnership interests in InterLink.
<PAGE>
Exhibit 2.1
<PAGE>
Certain information herein (which is indicated by inclusion of blank
spaces) has been omitted and the Company has filed with the Securities
and Exchange Commission pursuant to a confidential treatment request
under the Freedom of Information Act.
<PAGE>
PURCHASE AND SALE AGREEMENT
by and among
THE SELLERS LISTED ON
THE SIGNATURE PAGES HERETO,
RIFKIN ACQUISITION PARTNERS, L.L.L.P.
and
CHARTER COMMUNICATIONS, INC.
Dated as of April 26, 1999
<PAGE>
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. 10
2.3 PAYMENT OF PURCHASE PRICE. 10
2.4 ADJUSTMENTS AND PRORATIONS. 11
2.5 INDEMNITY ESCROW. 14
ARTICLE III CLOSING 14
3.1 CLOSING DATE. 14
3.2 DEFAULT; SPECIFIC PERFORMANCE. 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS 15
4.1 TITLE TO PURCHASED INTERESTS. 15
4.2 ENFORCEABILITY OF AGREEMENT. 15
4.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. 16
4.4 BROKERS' FEES. 16
4.5 ORGANIZATION AND QUALIFICATION. 16
4.6 AUTHORITY RELATIVE TO THIS AGREEMENT. 17
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY 17
5.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. 17
5.2 ORGANIZATIONAL DOCUMENTS. 17
5.3 EFFECT OF AGREEMENT. 18
5.4 CAPITALIZATION. 18
5.5 AUTHORITY RELATIVE TO THIS AGREEMENT. 19
5.6 FINANCIAL STATEMENTS. 19
5.7 UNDISCLOSED LIABILITIES. 20
5.8 TAX RETURNS AND AUDITS. 20
5.9 FRANCHISES AND NECESSARY CONTRACTS. 21
5.10 MATERIAL AGREEMENTS AND OBLIGATIONS. 22
5.11 SYSTEMS' CAPACITY, CUSTOMERS AND RATES. 23
5.12 EMPLOYEES. 24
5.13 ABSENCE OF CERTAIN DEVELOPMENTS. 25
5.14 REAL PROPERTY. 26
5.15 TITLE TO ASSETS; PERSONAL PROPERTY. 26
5.16 COMPLIANCE WITH LAWS. 27
5.17 TRANSACTIONS. 29
5.18 LITIGATION AND LEGAL PROCEEDINGS. 29
5.19 BROKERS' FEES. 29
5.20 PLANS; ERISA. 29
5.21 INSURANCE, SURETY BONDS, DAMAGES. 31
5.22 ENVIRONMENTAL LAWS. 32
5.23 NO OTHER COMMITMENT TO SELL. 32
5.24 YEAR 2000. 32
5.25 TRADEMARKS, PATENTS AND COPYRIGHTS. 33
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER 33
6.1 ORGANIZATION. 33
6.2 AUTHORITY RELATIVE TO THIS AGREEMENT. 33
6.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. 34
6.4 FINANCIAL CAPABILITY. 34
6.5 LITIGATION. 34
6.6 NO VIOLATION OF FCC CROSS OWNERSHIP RULES. 35
6.7 INVESTMENT INTENT; SOPHISTICATED BUYER. 35
6.8 FINDERS' AND BROKERS' FEES. 35
ARTICLE VII COVENANTS 35
7.1 ACCESS. 35
7.2 ENVIRONMENTAL ASSESSMENT. 36
7.3 INTERIM PERIOD OPERATIONS. 36
7.4 DELIVERY OF DOCUMENTS TO BUYER. 38
7.5 NO IMPAIRMENT OF TITLE. 39
7.6 NO AMENDMENT TO ORGANIZATIONAL DOCUMENTS. 39
7.7 FRANCHISE RENEWALS; REQUIRED CONSENTS; HSR FILINGS. 39
7.8 NOTIFICATION. 41
7.9 REASONABLE EFFORTS; ADDITIONAL ACTIONS. 41
7.10 TAX MATTERS. 42
7.11 RESTRUCTURING. 44
7.12 YEAR 2000 REMEDIATION PROGRAM. 45
7.13 EXCULPATION AND INDEMNIFICATION. 45
7.14 CREDIT FACILITY; SENIOR SUBORDINATED NOTES. 46
7.15 ADMISSION OF BUYER AS A SUBSTITUTE LIMITED PARTNER. 46
7.16 PUBLICITY. 46
7.17 SERVICES PROVIDED BY AND TO ALLIANCE. 46
ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ALL
PARTIES 46
8.1 ORDERS PROHIBITING CONSUMMATION OF TRANSACTIONS. 47
8.2 HSR ACT. 47
ARTICLE IX CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS 47
9.1 COMPLIANCE WITH AGREEMENT. 47
9.2 CORRECTNESS OF REPRESENTATIONS AND WARRANTIES. 47
9.3 NO ADVERSE CHANGE IN BUSINESS OR PROPERTIES. 47
9.4 CERTIFICATE OF OFFICER. 48
9.5 PROCEEDINGS AND DOCUMENTS. 48
9.6 OPINION OF COUNSEL. 48
9.7 OPINION OF FCC COUNSEL. 48
9.8 CONSENTS. 48
9.9 PURCHASE OF INTERESTS UNDER INTERLINK AGREEMENT. 48
9.10 SERVICES AGREEMENT. 48
ARTICLE X CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS 49
10.1 CORRECTNESS OF REPRESENTATIONS AND WARRANTIES. 49
10.2 COMPLIANCE WITH AGREEMENT. 49
10.3 CERTIFICATE OF OFFICER. 49
10.4 PROCEEDINGS AND DOCUMENTS. 49
10.5 OPINION OF COUNSEL. 49
10.6 SALE OF INTERESTS UNDER INTERLINK AGREEMENT. 49
10.7 SERVICES AGREEMENT. 50
ARTICLE XI RIGHTS TO TERMINATE; BREACH 50
11.1 TERMINATION. 50
ARTICLE XII [INTENTIONALLY OMITTED] 51
ARTICLE XIII MISCELLANEOUS 51
13.1 SELLER LIABILITY SEVERAL AND NOT JOINT. 51
13.2 APPOINTMENT OF SELLERS' REPRESENTATIVE. 51
13.3 EXPENSES. 51
13.4 KNOWLEDGE. 52
13.5 ASSIGNMENT. 52
13.6 SUCCESSORS. 52
13.7 ENTIRE AGREEMENT. 52
13.8 THIRD PARTIES. 52
13.9 AMENDMENTS IN WRITING. 52
13.10 GOVERNING LAW.
53
13.11 INTERPRETATION.
53
13.12 CERTAIN PROVISIONS RELATING TO R&A MANAGEMENT LLC'S 401(K) PLAN.
53
13.13 NOTICES.
54
13.14 SEVERABILITY.
55
13.15 COUNTERPARTS.
55
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 Rifkin Acquisition Partners,
L.L.L.P., a Colorado registered limited liability limited
partnership (the "Company"), and Charter Communications,
Inc., a Delaware corporation ("Buyer").
WHEREAS, Sellers collectively own all of the
outstanding partnership interests in the Company, with the
exception of a limited partnership interest owned by
Greenwich Street (RAP) Partners I, L.P., a Subsidiary of
InterLink Communications Partners, LLLP ("InterLink"), which
interest Buyer will be indirectly purchasing pursuant to a
Purchase and Sale Agreement dated as of the date hereof (the
"InterLink Agreement") among InterLink, the general and
limited partners of InterLink, and Buyer;
WHEREAS, the Company and its subsidiaries own and
operate cable television systems and businesses in respect
thereof serving customers in various areas in the States of
Georgia, Illinois, and Tennessee (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, all of the outstanding
partnership interests of the Company owned by Sellers, 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.
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) billings 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 billings 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 billings 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) billings 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.
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 $145 million pursuant to an
Amended and Restated Credit Agreement dated as of March 1,
1996 among the Company, First Union National Bank of North
Carolina, as Administrative Agent, Bankers Trust Company, 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).
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 "Governmental Authority" has the meaning set forth
in Section 4.3(b).
1.44 "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.
1.45 "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.
1.46 "HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
1.47 "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.
1.48 "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 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).
1.49 "Indemnification Provisions" has the meaning set
forth in Section 7.13.
1.50 "Indemnity Fund" means the sum of
Dollars ($ ) to be deposited by Buyer or
guaranteed by the Letter(s) of Credit 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 and the InterLink
Sellers under the RAP Indemnity Agreement. Such $
amount shall be deposited by Buyer with the Escrow Agent, and
shall be comprised of (a) a portion of the purchase price
under the InterLink Agreement reflecting the InterLink
Sellers' pro rata portion of the RAP Equity Value, and (b) a
portion of the Purchase Price hereunder (and Letter(s) of
Credit) reflecting the Sellers' pro rata interest in the RAP
Equity Value.
1.51 "Indenture" means the Indenture, dated as of
January 15, 1996, by and among the Company and Rifkin
Acquisition Capital Corp., as Issuers, certain subsidiary
guarantors and Marine Midland Bank, as Trustee.
1.52 "InterLink" means InterLink Communications
Partners, LLLP, a Colorado registered limited liability
limited partnership.
1.53 "InterLink Agreement" has the meaning set forth in
the Recitals.
1.54 "InterLink Sellers" has the meaning given the term
"Sellers" in the InterLink Agreement.
1.55 "Legal Proceedings" has the meaning set forth in
Section 5.18.
1.56 "Letter(s) of Credit" means one or more letter(s)
of credit delivered to the Escrow Agent at the Closing, in
form and substance reasonably satisfactory to Buyer (such
that Buyer is in substantially the same position as if cash
had been deposited by Buyer into the Indemnity Fund),
guaranteeing one or more Sellers' payment of their aggregate
pro rata allocation of the Indemnity Fund.
1.57 "License" means that certain License Agreement
between the Disbursement Agent and an Affiliate of Buyer,
dated the Closing Date.
1.58 "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.
1.59 "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.
1.60 "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 bill for CATV services relates.
1.61 "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 residential
development or any commercial or residential dwelling unit,
(v) material licenses and easements, or (vi) operation of the
Business or the Systems.
1.62 "Neutral Accounting Firm" shall mean KPMG Peat
Marwick.
1.63 "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
bill relates (except for past due amounts representing late
fees and other minimal ancillary charges) totaling $5.00 or
less.
1.64 "Outside Date" has the meaning set forth in Section
11.1(a)(ii).
1.65 "Partnership Agreement" means the Second Amended
and Restated Agreement of Limited Partnership of the Company,
dated August 31, 1995, as amended.
1.66 "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 $250,000, (b) liens for current taxes not yet due and
payable; (c) imperfections of title that do not interfere
with the use or detract from the value of such property; (d)
liens to be released at or prior to Closing; and (e) in the
case of the Real Estate owned or real property leased by any
member of the Company Group, (i) such leases for real
property, (ii) municipal and zoning ordinances, (iii) such
rights of way as do not interfere with the use or detract
from the value of the property, (iv) standard (printed) title
insurance exceptions and (v) easements for public utilities,
recorded building and use restrictions and covenants which do
not materially interfere with the present use of or
materially detract from the value of the property, and other
minor encumbrances.
1.67 "Person" means an individual, corporation, limited
liability company, partnership, sole proprietorship,
association, joint venture, joint stock company, trust,
incorporated organization, or governmental agency or other
entity.
1.68 "Premium Customer" means a Basic Customer who
subscribes to and has been (or is to be) charged for any
optional single channel or a la carte service for which there
is a specified charge.
1.69 "Purchase Price" has the meaning set forth in
Section 2.2.
1.70 "Purchase Price Adjustment Holdback" means the sum
of Dollars ($ ) to be paid
by Buyer to Disbursement Agent at the Closing and retained by
Disbursement Agent as described in Section 2.3. Such $
shall be paid by Buyer to Disbursement Agent, and shall be
comprised of (a) a portion of the purchase price under the
InterLink Agreement reflecting the pro rata portion of the
aggregate percentage interest in the RAP Equity Value
indirectly owned by the InterLink Sellers, and (b) a portion
of the Purchase Price hereunder reflecting the Sellers' pro
rata interest in the RAP Equity Value.
1.71 "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 pro rata percentage
interest in the RAP Equity Value, (b) the portion of the
Purchase Price, expressed in dollars, to be delivered to each
Seller at the Closing and (c) the pro rata percentage
interest of each InterLink Seller in the RAP Equity Value.
1.72 "Purchased Interests" means, collectively, the
partnership interests of the Company owned by Sellers, to be
purchased by Buyer pursuant to this Agreement.
1.73 "RAM" means Rifkin Acquisition Management, L.P., a
Colorado limited partnership, the general partner of the
Company.
1.74 "RAP Equity Value" has the meaning set forth in
Section 2.2.
1.75 "RAP Indemnity Agreement" means the RAP Indemnity
Agreement attached hereto as Exhibit 1.75 hereto, providing
for certain indemnities of the parties hereunder and under
the InterLink Agreement.
1.76 "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.
1.77 "Required Consents" means those approvals and
consents set forth on Schedule 5.3 separately designated as
consents required for Closing.
1.78 "Rifkin Transfer Plan" has the meaning set forth in
Section 13.12(c).
1.79 "RT" means RT Investments Corp., a Colorado
corporation, the general partner of RAM.
1.80 "Sellers" has the meaning set forth in the first
paragraph of this Agreement.
1.81 "Senior Subordinated Notes" means $125 million of
senior subordinated notes issued by the Company and Rifkin
Acquisition Capital Corp. pursuant to the Indenture, together
with a $3.0 million promissory note containing equivalent
rights issued by the Company to Monroe M. Rifkin.
1.82 "Service Areas" has the meaning set forth in the
third paragraph of this Agreement.
1.83 "Services Agreement" has the meaning set forth in
Section 7.17.
1.84 "Signals" has the meaning set forth in Section
5.16(b).
1.85 "Subsidiaries" means, with respect to any Person,
any Affiliate directly or indirectly controlled by such
Person.
1.86 "System" means all of the assets, property and
business constituting any CATV system of the Company Group,
each of which Systems (together with the respective Service
Areas served thereby) is described in Schedule 1.1(B) hereto.
1.87 "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.
1.88 "Tax Return" means any return, report, statement,
information statement and the like required to be filed with
any Governmental Authority with respect to Taxes.
1.89 "Third Party" means any Person other than the
Company, Buyer, Sellers or any Affiliate of Buyer.
1.90 "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.
1.91 "Unaudited Financial Statements" has the meaning
set forth in Section 5.6.
1.92 "Vehicles" means the vehicles utilized by the
Company in the operation of the Business as set forth on
Schedule 1.1(C).
1.93 "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.
1.94 "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.
1.95 "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 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 Buyer for the
Purchased Interests (the "Purchase Price") shall be equal to
the product of (x)
Dollars ($ ), 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 and the Senior Subordinated
Notes (the "RAP Equity Value"), times (y) the aggregate
percentage interest in the RAP Equity Value represented by
the Purchased Interests set forth on the Purchase Price
Allocation Schedule, expressed as a decimal.
2.3 Payment of Purchase Price.
The Purchase Price, less (i) the Sellers' pro rata
portion of the Indemnity Fund (excluding amounts guaranteed
by the Letter(s) of Credit) and (ii) the Sellers' pro rata
portion of the Purchase Price Adjustment Holdback, will be
paid at the Closing to 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 and those Sellers delivering
the Letter(s) of Credit shall deposit the Indemnity Fund and
deliver the Letter(s) of Credit 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 (i) consideration to
Sellers in connection with the transactions contemplated
hereby, (ii) consideration to the InterLink Sellers pursuant
to clause (y) of Section 2.2 of the InterLink Agreement, and
(iii) any continuing liabilities of the Company, shall be
allocated between the tangible assets and Franchises of the
Company by allocating an amount to the tangible assets of the
Company equal to the adjusted basis for federal income tax
purposes of such tangible assets, and the remainder to the
stock of Subsidiaries and Franchises. The parties shall not
take any tax position inconsistent with such allocation.
2.4 Adjustments and Prorations.
The RAP Equity Value shall be adjusted as follows (with
a corresponding adjustment to be made to the Purchase Price
hereunder and under the InterLink Agreement), with all such
adjustments being effective as of the Effective Time:
(a) The RAP Equity Value shall be reduced if the number
of Basic Customers is less than (as adjusted
below, the "Basic Customer Threshold"), by an amount equal to
$ for each Basic Customer less than the 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 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 RAP 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 RAP 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 bill 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;
(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) any
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 RT, 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
RAP 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).
(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, RAM and RT 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 InterLink
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 RAP
Equity Value is increased from that delivered at the Closing
(treating the cash amounts in the Indemnity Fund and the
Purchase Price Adjustment Holdback as having been delivered
at the Closing to Sellers and the InterLink Sellers), then
Buyer shall pay the Disbursement Agent (for the benefit of
Sellers and the InterLink Sellers) such increase in the RAP
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 Holdback, to Sellers and the
InterLink Sellers in accordance with the percentages set
forth on the Purchase Price Allocation Schedule, (ii) the
aggregate RAP Equity Value is reduced from that delivered at
the Closing (treating the cash amounts in the Indemnity Fund
and the Purchase Price Adjustment Holdback as having been
delivered at the Closing to Sellers and the InterLink
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 RAP 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 and the
InterLink Sellers pro rata in accordance with the percentages
set forth on the Purchase Price Allocation Schedule, or (iii)
the aggregate RAP Equity Value is reduced from that delivered
at the Closing (treating the cash amounts in the Indemnity
Fund and the Purchase Price Adjustment Holdback as having
been delivered at the Closing to Sellers and the InterLink
Sellers) by an amount that is in excess of the Purchase Price
Adjustment Holdback, then each Seller and each InterLink
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 five (5) business days of such
determination.
2.5 Indemnity Escrow.
At the Closing, Buyer shall deposit with the Escrow
Agent the Indemnity Fund pursuant to the Closing Escrow
Agreement. All amounts in the Indemnity Fund in excess of
the sum of (a) $ , and (b) the amount of
all pending claims made by Buyer for indemnification pursuant
to Section 2.1 of the RAP Indemnity Agreement, shall be paid
to Disbursement Agent (for the benefit of the Sellers and the
InterLink 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 Indemnity Fund, if any,
less the amount of all pending claims made by Buyer for
indemnification pursuant to Section 2.1 of the RAP Indemnity
Agreement (the "Year Disbursement Amount"), shall be paid to
Disbursement Agent (for the benefit of the Sellers and the
InterLink 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 and the InterLink Sellers, in accordance with the
percentages set forth on the Purchase Price Allocation
Schedule, any amount of the 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 2.1(b) of the RAP Indemnity Agreement) 5.22, release
of any amounts from the Indemnity Fund shall relieve Sellers
and the InterLink Sellers of obligations under Section 2.1 of
the RAP Indemnity Agreement 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 and the InterLink Sellers under such sections shall
not be paid from the Indemnity Fund. Any one or more Sellers
may elect to deliver at the Closing the Letter(s) of Credit,
in which case (1) such Sellers' allocable share of the
Indemnity Fund shall be released to them at Closing, and (2)
any amount to be paid from the Indemnity Fund pursuant to
Article XII shall be paid proportionately (based on the
relative aggregate percentage interests of the Sellers
delivering the Letter(s) of Credit) from the cash portion of
the Indemnity Fund and from draws upon the Letter(s) of
Credit.
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 Baker & Hostetler 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:
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, 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 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,
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
Authorities, including Franchise authorities listed on
Schedule 5.3 hereto, and (ii) as required under the HSR Act.
4.4 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.
4.5 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.
4.6 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.
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) 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 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, with the exception of the limited partnership
interest owned by Greenwich Street (RAP) Partners I, L.P., a
Subsidiary of InterLink. 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
or as otherwise allocated from the Purchase Price on the
Purchase Price Allocation Schedule, 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 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.
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 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 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 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, the Credit
Facility, and the Senior Subordinated Notes, 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 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,
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 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 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 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 (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.
(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.
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, RT, RAM 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 "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 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 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 RAM, RT 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 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 mark 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 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.
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 RAM, RT 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 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
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, RT, RAM 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,
RT, RAM 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, 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 RAP 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 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 RT, RAM 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.
(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. Section 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.
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 Section 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), Buyer
will deliver to the Company, and the Company will cause each
member of the 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 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.
RT, RAM, 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 InterLink Agreement (or that controls a party
to the InterLink Agreement), to the extent within such
Seller's control, shall use commercially reasonable efforts
to cause the transactions contemplated by the InterLink
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.
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 Sellers 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 for all periods ending on or prior to the Closing
Date, and Buyer agrees to cause the Company to execute each
such return, 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 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 Company or the
Person executing the return on behalf of the Company 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 or criminal penalties.
Buyer shall cause the Company 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 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 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 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 InterLink (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 InterLink Sellers or (iii)
any of the direct or indirect owners of the Sellers or
InterLink Sellers.
7.12 Year 2000 Remediation Program.
The Company shall, and shall cause RAM, RT 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 13 of the Company's Partnership
Agreement, with respect to the indemnification of RAM, 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; Senior Subordinated Notes.
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 Closing, Buyer will comply with the terms of
the Credit Facility and the Indenture, including, but not
limited to, the giving of any required notice of change of
control of the Company and offer to repurchase to each holder
of the Senior Subordinated Notes within 30 days of the
Closing Date, in accordance with the terms of the Senior
Subordinated Notes. 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) 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 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").
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:
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.
9.4 Certificate of Officer.
The Company shall deliver to Buyer a certificate of an
authorized executive officer of RT 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 Baker & Hostetler 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, & Braverman 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 Interests under InterLink Agreement.
The transactions contemplated by the InterLink 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.
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 &
Manella 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 Interests under InterLink Agreement.
Buyer and the InterLink Sellers shall have consummated,
or will simultaneously consummate, the transactions
contemplated by the InterLink Agreement, except that this
condition shall not apply if one or more InterLink Sellers
have failed to deliver their interests in breach of the
InterLink Agreement and Buyer and the remaining InterLink
Sellers have consummated, or will simultaneously consummate,
the transactions contemplated thereby.
10.7 Services Agreement.
Buyer shall have executed and delivered the Services
Agreement.
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 other, 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 InterLink 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, InterLink, the Sellers and the InterLink
Sellers are not in material breach of this Agreement or the
InterLink 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.
(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
[INTENTIONALLY OMITTED]
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.
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 RAP
Equity Value set forth on the Purchase Price Allocation
Schedule. Wherever this Agreement refers to the several
liability of the InterLink Sellers or an InterLink Seller's
"pro rata portion" of any amount, such liability or portion
shall be determined based on the respective indirect
percentage interest in the RAP Equity Value of such InterLink
Seller set forth in 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 the Closing Escrow
Agreement regarding Buyer's retention of a portion of the
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 Monroe M. Rifkin,
Kevin B. Allen, Jeffrey D. Bennis, Dale D. Wagner, Peter N.
Smith and Paul Bambei 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 Paul G. Allen,
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 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
Rifkin & 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 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
Rifkin & Associates, Inc. Et Al Defined Contribution Transfer
Plan (the "Rifkin Transfer Plan") of a favorable
determination letter from the Internal Revenue Service,
Charter shall establish a plan similar to the Rifkin Transfer
Plan (the "Charter Transfer Plan"), and an amount in cash
equal to the aggregate value of the account balances in the
Rifkin 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
Rifkin 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.
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
360 South Monroe Street, Suite 600
Denver, Colorado 80209
Attention: Kevin B. Allen
Telecopy: (303) 322-3553
with a complete copy under separate cover (which copy by
itself shall not constitute notice) to:
Stuart G. Rifkin, Esq.
Baker & Hostetler
303 East 17th Avenue, Suite 1100
Denver, Colorado 80110
Telecopy: (303) 861-7805
If to Buyer:
Charter Communications, Inc.
12444 Powerscourt Drive
St. Louis, Missouri 63131
Attention: Jerald L. Kent, President
Telecopy: (314) 965-8793
with a complete copy under separate cover (which copy by
itself shall not constitute notice) to:
Charter Communications, Inc.
12444 Powerscourt Drive
St. Louis, Missouri 63131
Attention: Curtis S. Shaw, Esq.
Senior Vice President & General Counsel
Telecopy: (314) 965-8793
and to:
Irell & Manella LLP
1800 Avenue of the Stars
Suite 900
Los Angeles, California 90067
Attention: Alvin G. Segel, Esq.
Telecopy: (310) 203-7199
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]
<PAGE>
IN WITNESS WHEREOF, the parties hereunto have duly
executed this Agreement.
BUYER:
CHARTER COMMUNICATIONS, INC.
By: ________________________
Name: Curtis S. Shaw
Title: Senior Vice President
COMPANY:
RIFKIN ACQUISITION PARTNERS, L.L.L.P.
By: Rifkin Acquisition Management, L.P., its
General Partner
By: RT Investments Corp., its General Partner
By: ________________________
Kevin B. Allen, Vice President
DISBURSEMENT AGENT:
R&A MANAGEMENT, LLC
By: Rifkin & Associates, Inc., its Manager
By: ________________________
Kevin B. Allen, Chief Executive Officer
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE>
SELLERS:
RIFKIN ACQUISITION MANAGEMENT, L.P.,
By: RT INVESTMENTS CORP., its General Partner
By:
Kevin B. Allen, Vice President
VS&A COMMUNICATIONS PARTNERS II, L.P.
By: VS&A EQUITIES II, L.P.
its General Partner
By:
Jeffrey T. Stevenson, a General Partner
VS&A-RAP, INC.
By:
Jeffrey T. Stevenson, President
GREENWICH STREET (RAP) PARTNERS I, L.P.
By: GSP RAP (GP) ACQUISITION, LLC, its
General Partner
By: INTERLINK COMMUNICATIONS PARTNERS, LLLP,
its Sole Member
By: Rifkin, Co., its General Partner
By:_______________________________________
Kevin B. Allen, Vice President
IEP HOLDINGS I LLC
By: HAMPSHIRE EQUITY PARTNERS, L.P. I
By: LEXINGTON PARTNERS, L.P.,
its General Partner
By: LEXINGTON PARTNERS, INC.,
its General Partner
By:
David H. Morse, Vice President
PAINEWEBBER CAPITAL INC.
By:
Dhananjay Pai, President
PW PARTNERS 1995, L.P.
By: PAINEWEBBER PARTNERS II INC.,
its General Partner
By:
Dhananjay Pai, Vice President
RIFKIN CHILDREN'S TRUST
By:
Monroe M. Rifkin, Co-Trustee
RIFKIN CHILDREN TRUST-II
By:
Monroe M. Rifkin, Co-Trustee
RIFKIN CHILDREN'S TRUST III
By:
Monroe M. Rifkin, Co-Trustee
360 GROUP, INC.
By:
Dale D. Wagner, Treasurer
RIFKIN FAMILY INVESTMENT COMPANY, L.L.L.P.
By: its General Partners
Monroe M. Rifkin, General Partner
Stuart G. Rifkin, General Partner
Bruce A. Rifkin, General Partner
Ruth R. Bennis, General Partner
CHARLES R. MORRIS, III
JEFFREY D. BENNIS
STEPHEN E. HATTRUP
DALE D. WAGNER
<PAGE>
The following lists the omitted schedules to
this agreement and the Company agrees to
submit any omitted schedule to the Commission
upon request.
<PAGE>
INDEX TO EXHIBITS
Exhibit 1.75 Form of RAP Indemnity Agreement
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
4.3 Sellers' Required Consents
5.1(B) Company Group
5.3 Company's Required Consents
5.6 Financial Statements
5.8 Taxes
5.9(A) Franchises and CATV Service Areas
5.9(B) Necessary Contracts and FCC Licenses
5.9(C) Unfulfilled Commitments Under Franchises
and Necessary Contracts
5.10(A) Material Agreements
5.11(A) Systems' Capacity, Customers 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
5.21 Insurance Policies and Surety Bonds
5.22 Noncompliance with Environmental Laws
5.23 Sale Commitments
7.3(A) Capital Expenditure Projects
<PAGE>
Exhibit 2.2
<PAGE>
Certain information herein (which is indicated by inclusion of blank
spaces) has been omitted and the Company has filed with the Securities
and Exchange Commission pursuant to a confidential treatment request
under the Freedom of Information Act.
<PAGE>
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
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
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
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
<PAGE>
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
Rifkin 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.
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)
billings 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 billings 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
billings 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)
billings 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.
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 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).
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 Rifkin, 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 Hart-Scott-Rodino 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 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 $ , 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 bill 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 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 bill 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 Brown 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 $250,000,
(b) liens for current taxes not yet due and payable; (c)
imperfections of title that do not interfere with the use or
detract from the value of such property; (d) liens to be released
at or prior to Closing; and (e) in the case of the Real Estate
owned or real property leased by any member of the Company Group,
(i) such leases for real property, (ii) municipal and zoning
ordinances, (iii) such rights of way as do not interfere with the
use or detract from the value of the property, (iv) standard
(printed) title insurance exceptions and (v) easements for public
utilities, recorded building and use restrictions and covenants
which do not materially interfere with the present use of or
materially detract from the value of the property, and other
minor encumbrances.
1.70 "Person" means an individual, corporation, limited
liability company, partnership, sole proprietorship, association,
joint venture, joint stock company, trust, incorporated
organization, or governmental agency or other entity.
1.71 "Premium Customer" means a Basic Customer who
subscribes to and has been (or is to be) charged for any optional
single channel or a la carte service for which there is a
specified charge.
1.72 "Purchase Price" has the meaning set forth in Section
2.2.
1.73 "Purchase Price Adjustment Holdback" means a portion of
the Purchase Price equal to Dollars ($
) to be paid by Buyer to Disbursement Agent at the Closing and
retained by Disbursement Agent as described in Section 2.3.
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 Rifkin 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 ($20,000,000) pursuant to the RAP Agreement to be
deposited with the Escrow Agent by the Buyer (or guaranteed by
letters of credit provided by one or more sellers under the RAP
Agreement) pursuant to the RAP Indemnity Agreement in order to
fund the indemnification obligations, under Section 2.1 of the
RAP Indemnity Agreement, of (i) the RAP Sellers, and (ii) the
Sellers with respect to the indirect interest in RAP owned by the
Company. A portion of the purchase price under the RAP Agreement
shall be deposited by Buyer with the Escrow Agent reflecting the
RAP Sellers' pro rata portion of the RAP Equity Value, and a
portion of the Purchase Price hereunder shall be deposited by
Buyer with the Escrow Agent reflecting the Company's pro rata
portion of the RAP Equity Value arising out of the Company's
indirect interest in RAP.
1.81 "RAP Purchase Price Adjustment Holdback" means the sum
of ($
) 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 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 "Rifkin Transfer Plan" has the meaning set forth in
Section 13.12(c).
1.86 "Scott Agreement" means the Asset Purchase and Sale
Agreement dated as of July 1, 1998 between Scott 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.
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
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) Dollars ($ ),
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:
(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 bill 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;
(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).
(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 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) $ , 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.
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 Baker & Hostetler 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:
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
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, 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.
(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.
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 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 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 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 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
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 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, 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 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 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 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 (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.
(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.
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
"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
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 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
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
mark 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 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.
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 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 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 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.
(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. Section 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.
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 Section 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 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 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.
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 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
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 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
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:
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.
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 Baker & Hostetler 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, & Braverman 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.
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 &
Manella 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 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.
(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 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
Dollars ($ ) (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 Scott Agreement
or Omega Agreement, Buyer will use commercially reasonable
efforts to pursue claims 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
Scott Agreement or the Omega Agreement, the date on which
such claim is first made (whether under the Scott 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 Scott 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 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 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 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 Monroe M. Rifkin, Kevin B. Allen, Jeffrey D.
Bennis, Dale D. Wagner, Peter N. Smith and Stephen E. Hattrup
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 Paul G. Allen, 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 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
Rifkin & 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 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
Rifkin & Associates, Inc. Et Al Defined Contribution
Transfer Plan (the "Rifkin Transfer Plan") of a favorable
determination letter from the Internal Revenue Service,
Charter shall establish a plan similar to the Rifkin
Transfer Plan (the "Charter Transfer Plan"), and an amount
in cash equal to the aggregate value of the account balances
in the Rifkin 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 Rifkin 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.
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
360 South Monroe Street, Suite 600
Denver, Colorado 80209
Attention: Kevin B. Allen
Telecopy: (303) 322-3553
with a complete copy under separate cover (which copy by
itself shall not constitute notice) to:
Stuart G. Rifkin, Esq.
Baker & Hostetler
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203
Telecopy: (303) 861-7805
If to Buyer:
Charter Communications, Inc.
12444 Powerscourt Drive
St. Louis, Missouri 63131
Attention: Jerald L. Kent, President
Telecopy: (314) 965-8793
with a complete copy under separate cover (which copy by
itself shall not constitute notice) to:
Charter Communications, Inc.
12444 Powerscourt Drive
St. Louis, Missouri 63131
Attention: Curtis S. Shaw, Esq.
Senior Vice President & General Counsel
Telecopy: (314) 965-8793
and to:
Irell & Manella, LLP
1800 Avenue of the Stars
Suite 900
Los Angeles, California 90067
Attention: Alvin G. Segel, Esq.
Telecopy: (310) 203-7199
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]
<PAGE>
IN WITNESS WHEREOF, the parties hereunto have duly executed this
Agreement.
BUYER:
CHARTER COMMUNICATIONS, INC.
By:
Name:
Title:
COMPANY:
INTERLINK COMMUNICATIONS PARTNERS, LLLP
By: Rifkin, Co., its General Partner
By: ________________________
Kevin B. Allen, Vice President
DISBURSEMENT AGENT:
R&A MANAGEMENT, LLC
By: Rifkin & Associates Inc., its Manager
By: ___________________________
Kevin B. Allen, Chief Executive Officer
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE>
SELLERS:
RIFKIN, CO.
By:
Kevin B. Allen, 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:
Name:
Title:
HAMPSHIRE EQUITY PARTNERS CAYMAN D.B. II, 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:
Name:
Title:
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:
Name:
Title:
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:
Name:
Title:
THE PERMANENT UNIVERSITY FUND OF THE STATE OF
TEXAS
By: UNIVERSITY OF TEXAS INVESTMENT MANAGEMENT
COMPANY,
its Investment Manager
By:
Name:
Title:
THE BOARD OF REGENTS OF THE UNIVERSITY OF TEXAS
SYSTEM
By: UNIVERSITY OF TEXAS INVESTMENT MANAGEMENT
COMPANY,
its Investment Manager
By:
Name:
Title:
WILLIS STEIN & PARTNERS II, L.P.
By: WILLIS STEIN & PARTNERS MANAGEMENT II, L.P.,
its General Partner
By: WILLIS STEIN & PARTNERS MANAGEMENT II, LLC,
its General Partner
By:
Name:
Title:
WILLIS STEIN & PARTNERS DUTCH, L.P.
By: WILLIS STEIN & PARTNERS MANAGEMENT II, L.P.,
its General Partner
By: WILLIS STEIN & PARTNERS MANAGEMENT II, LLC,
its General Partner
By:
Name:
Title:
INTERLINK INVESTMENT CORP.
By:
Kevin B. Allen, Vice President
INTERLINK INVESTMENT II, LLC
By:
Kevin B. Allen, Manager
RIFKIN & ASSOCIATES, INC.
By:
Monroe M. Rifkin, Chairman of the Board
RIFKIN FAMILY INVESTMENT COMPANY, L.L.L.P.
By: its General Partners
Monroe M. Rifkin, General Partner
Stuart G. Rifkin, General Partner
Bruce A. Rifkin, General Partner
Ruth R. Bennis, General Partner
MORRIS CHILDREN TRUST
By:
Charles R. Morris, III, Trustee
CRM II LIMITED PARTNERSHIP, LLLP
By:
Name:
Title:
NAS PARTNERS I L.L.C.
By:
Name:
Title: Member
NASSAU CAPITAL PARTNERS II, L.P.
By: NASSAU CAPITAL, LLC,
its General Partner
By:
Name:
Title:
FIRST UNION INVESTORS, INC.
By:
Name:
Title:
NORWEST EQUITY CAPITAL, LLC
By: ITASCA NEC, LLC,
its Member
By:
Name:
Title: Managing Member
DLJ FUND INVESTMENT PARTNERS II, L.P.
By: DLJ LBO PLANS MANAGEMENT CORPORATION,
its General Partner
By:
Name:
Title:
DLJ PRIVATE EQUITY EMPLOYEES FUND, L.P.
By: DLJ LBO PLANS MANAGEMENT CORPORATION,
its General Partner
By:
Name:
Title:
DLJ PRIVATE EQUITY PARTNERS FUND, L.P.
By: WSW CAPITAL INC.,
its General Partner
By:
Name:
Title:
DLJ CAPITAL CORPORATION
By:
Name:
Title:
DLJ CAPITAL PARTNERS I, LLC
By: DLJ LBO PLANS MANAGEMENT CORPORATION,
its Managing Member
By:
Name:
Title:
CIP INTERLINK L.L.C.
By: CO-INVESTMENT PARTNERS, L.P.,
its Member
By: CIP PARTNERS LLC,
its General Partner
By:
Name:
Title: Individual Managing Member
PROCIFIC INTERLINK CORPORATION
By:
Name:
Title:
INDIANA CABLEVISION MANAGEMENT CORP.
By:
Monroe M. Rifkin, President
MONROE M. RIFKIN
KEVIN B. ALLEN
JEFFREY D. BENNIS
STEPHEN E. HATTRUP
BRUCE A. RIFKIN
PETER N. SMITH
DALE D. WAGNER
STUART G. RIFKIN
PAUL A. BAMBEI
LUCILLE A. MAUN
RUTH R. BENNIS
<PAGE>
The following lists the omitted schedules to this agreement
and the Company agrees to submit any omitted schedule to the
Commission upon request
<PAGE>
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
5.21 Insurance Policies and Surety Bonds
5.22 Noncompliance with Environmental Laws
5.23 Sale Commitments
7.3(A) Capital Expenditure Projects
