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 18, 2000
CABLEVISION SYSTEMS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State of Incorporation)
1-14764 11-3415180
(Commission File Number) (IRS Employer Identification Number)
CSC HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State of Incorporation)
1-9046 11-2776686
(Commission File Number) (IRS Employer Identification Number)
1111 STEWART AVENUE, BETHPAGE, NEW YORK 11714
(Address of Principal Executive Offices)
Registrants' telephone number, including area code:
(516) 803-2300
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ITEM 5. OTHER EVENTS
------------
On April 18, 2000, subsidiaries of Cablevision Systems Corporation
("Cablevision") entered into two definitive agreements with AT&T Corp. ("AT&T")
pursuant to which Cablevision will transfer its cable systems in the greater
Boston metropolitan and Eastern Massachusetts areas to AT&T for cash, cable
systems and securities, as described below.
Under the first agreement, a Cablevision subsidiary will be merged into
an AT&T subsidiary with Cablevision receiving AT&T Common Stock with a market
value equal to $5,000 for each subscriber in those systems, subject to certain
adjustments. Under the second agreement, two Cablevision subsidiaries will
exchange certain cable system assets with AT&T for $284 million in cash, subject
to certain adjustments, and cable systems serving approximately 125,500
subscribers in the northern New York suburbs that AT&T will acquire upon
completion of its merger with MediaOne Group, Inc. ("MediaOne").
The transactions are part of a plan outlined earlier this year by
Cablevision to pursue strategic alternatives for its cable system operations in
the greater Cleveland area, Massachusetts and Kalamazoo, Michigan and to improve
its balance sheet and reduce its debt level. Cablevision anticipates using the
cash proceeds from the transactions to reduce outstanding debt. Cablevision
previously announced its strategic alternatives for the operation of its systems
in Ohio and Kalamazoo, Michigan.
CSC Holdings, Inc. is a wholly owned subsidiary of Cablevision and is
the indirect parent company of the Cablevision subsidiaries that own the greater
Boston metropolitan and Eastern Massachusetts area systems.
Consummation of the sale is subject to the completion of AT&T's merger
with MediaOne and the receipt of required regulatory approvals and third party
consents, including expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA
FINANCIAL INFORMATION AND EXHIBITS
----------------------------------
(a) None.
(b) None.
(c) 99.1 Agreement and Plan of Merger, dated as of April 18,
2000, by and among CSC Holdings, Inc., Cablevision
of Massachusetts, Inc., AT&T Corp. and AT&T CSC,
Inc.
99.2 Asset Exchange Agreement, dated as of April 18,
2000, by and among CSC Holdings, Inc., Cablevision
of Brookline, L.P., Cablevision of Boston, Inc. and
AT&T Corp.
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<PAGE>
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.
CABLEVISION SYSTEMS CORPORATION
By: /s/ Robert S. Lemle
------------------------------------
Name: Robert S. Lemle
Title: Executive Vice President,
General Counsel, Secretary
and Director
Dated: May 5, 2000
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.
CSC HOLDINGS, INC.
By: /s/ Robert S. Lemle
------------------------------------
Name: Robert S. Lemle
Title: Executive Vice President,
General Counsel, Secretary
and Director
Dated: May 5, 2000
4
<PAGE>
EXHIBIT INDEX
99.1 Agreement and Plan of Merger, dated as of April 18, 2000, by
and among CSC Holdings, Inc., Cablevision of Massachusetts,
Inc., AT&T Corp. and AT&T CSC, Inc.
99.2 Asset Exchange Agreement, dated as of April 18, 2000, by and
among CSC Holdings, Inc., Cablevision of Brookline, L.P.,
Cablevision of Boston, Inc. and AT&T Corp.
(Exhibit 99.1)
EXECUTION COPY
--------------
================================================================================
AGREEMENT AND PLAN OF MERGER
DATED
AS OF APRIL 18, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
Article 1. Definitions.................................................... 1
1.01 Certain Definitions................................. 1
1.02 Rules of Construction...............................13
Article 2. The Merger.....................................................14
2.01 The Merger..........................................14
2.02 Common Stock Consideration..........................14
2.03 Adjustments to Prevent Dilution.....................14
2.04 Directors of Surviving Corporation..................15
2.05 Officers of Surviving Corporation...................15
2.06 Surrender and Payment...............................15
2.07 New Name............................................15
2.08 Charter of Surviving Corporation....................15
2.09 By-laws of Surviving Corporation....................15
2.10 Adjustments.........................................15
2.11 Post-Closing Adjustment.............................16
2.12 Sales and Transfer Taxes............................18
Article 3. Representations and Warranties of the Cablevision Entities.....18
3.01 Organization and Authority of the Cablevision
Entities............................................18
3.02 Legal Capacity; Approvals and Consents..............19
3.03 Financial Statements................................20
3.04 Changes in Operation................................20
3.05 Tax Matters.........................................20
3.06 Cablevision Assets..................................22
3.07 CATV Business.......................................24
3.08 Labor Contracts and Actions.........................27
3.09 Employee Benefit Plans..............................27
3.10 Contracts...........................................28
3.11 Legal and Governmental Proceedings and Judgments....28
3.12 Finders and Brokers.................................28
3.13 Securities Law Matters..............................28
3.14 No Vote Required....................................29
Article 4. Representations and Warranties of AT&T.........................29
4.01 Organization and Authority of AT&T Entities.........29
4.02 Legal Capacity: Approvals and Consents.............29
4.03 Legal and Governmental Proceedings and Judgments....30
4.04 Finders and Brokers.................................30
4.05 AT&T Consents.......................................30
4.06 Obtaining Consents..................................30
4.07 AT&T Stock..........................................31
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Page
4.08 SEC Filings.........................................31
4.09 Financial Statements................................32
4.10 Absence of Certain Changes..........................32
4.11 No Vote Required....................................32
4.12 Private Offering....................................32
4.13 Ownership of Merger Sub; No Prior Activities........32
4.14 Tax Matters.........................................32
Article 5. Covenants Pending Closing......................................32
5.01 Business of Cablevision Entities....................32
5.02 Business of AT&T Entities...........................35
5.03 Access to Information...............................35
5.04 Covenants of AT&T...................................36
5.05 Certificate of Merger...............................37
5.06 Excluded Assets and Excluded Liabilities............37
5.07 Upgrade Remedies....................................37
5.08 Holdings Note.......................................37
Article 6. Deliveries at Closing..........................................37
6.01 Deliveries by Holdings..............................37
6.02 Deliveries by AT&T..................................38
Article 7. Conditions to the Obligations of the AT&T Entities.............38
7.01 Waiting Period; Receipt of Consents.................38
7.02 Authority...........................................39
7.03 Performance.........................................39
7.04 Absence of Breach of Warranties and
Representations.....................................39
7.05 No Cablevision Material Adverse Change..............39
7.06 Absence of Proceedings..............................39
7.07 FIRPTA Certificate..................................39
7.08 MediaOne Closing....................................39
Article 8. Conditions to the Obligations of the Cablevision Entities......40
8.01 Waiting Period; Receipt of Consents.................40
8.02 Authority...........................................40
8.03 Performance.........................................40
8.04 Absence of Breach of Representations and
Warranties..........................................40
8.05 Absence of Proceedings..............................41
8.06 No AT&T Material Adverse Change.....................41
Article 9. Covenants......................................................41
9.01 Compliance with Conditions..........................41
9.02 Compliance with HSR Act and Rules...................41
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Page
9.03 Applications for Assignment of Contracts or
CATV Instruments....................................42
9.04 Records, Taxes and Related Matters..................42
9.05 Subscriber Billing Services.........................43
9.06 Covenant Not to Compete.............................43
9.07 Remaining Franchises................................44
9.08 Tax Matters.........................................44
9.09 Allocation of Tax Liabilities and Tax
Indemnification.....................................44
Article 10. Survival of Representations, Warranties, Covenants and Other
Agreements; Indemnification....................................49
10.01 Survival of Representations, Warranties, Covenants
and Other Agreements................................49
10.02 Indemnification by Holdings.........................50
10.03 Indemnification by AT&T. ...........................51
10.04 Third-Party Claims..................................53
Article 11. Further Assurances.............................................53
Article 12. Closing........................................................53
12.01 Closing.............................................53
12.02 Termination.........................................54
12.03 Remedies Upon Default...............................54
Article 13. Miscellaneous..................................................54
13.01 Amendments; Waivers.................................54
13.02 Entire Agreement....................................54
13.03 Cablevision Name....................................55
13.04 Binding Effect; Assignment..........................55
13.05 Construction; Counterparts..........................55
13.06 Notices.............................................55
13.07 Expenses of the Parties.............................57
13.08 Non-Recourse........................................57
13.09 Third Party Beneficiary.............................57
13.10 Governing Law.......................................57
13.11 Press Releases......................................57
13.12 Severability........................................57
13.13 Late Payments.......................................57
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<PAGE>
EXHIBIT A - CATV Systems
EXHIBIT B - [Intentionally Omitted]
EXHIBIT C - Registration Rights Agreement
EXHIBIT D - Form of Opinion of Cablevision's Counsel
EXHIBIT E - Form of Opinion of AT&T's Counsel
EXHIBIT F - Form of Evidence of Transfer or Termination of Excluded
Assets and Excluded Liabilities
EXHIBIT G - Holdings Note
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CABLEVISION'S DISCLOSURE SCHEDULE
Schedule 1.01(a) - CATV Licenses/Franchises
Schedule 1.01(b) - Excluded Assets
Schedule 1.01(c) - Excluded Liabilities
Schedule 1.01(d) - Permitted Encumbrances
Schedule 1.01(e) - 2000 Target Upgrade Miles and MDUs
Schedule 1.01(f) - Upgrade Specifications
Schedule 3.01(b) - Capitalization of CSC MA
Schedule 3.02 - Consents and Approvals
Schedule 3.03 - Liabilities and Obligations Not Reflected in Interim
Financial Statements
Schedule 3.04 - Changes in Operation
Schedule 3.05(a) - Tax Notices and Assessments
Schedule 3.05(c) - Agreements and Waivers Extending the Statutory Period
of Limitation for any Tax Returns
Schedule 3.05(d) - Arrangements or Contracts Treated as a Tax Partnership
Schedule 3.05(e) - Material Tax Elections
Schedule 3.06(b) - Real Property
Schedule 3.06(d) - Environmental Matters
Schedule 3.07(c) - Material Contracts
Schedule 3.07(d) - Notices of Claims or Purported Defaults in CATV
Instruments
Schedule 3.07(e) - Compliance with Communications Act and Documents not
filed with the FCC
Schedule 3.07(f) - Compliance with Copyright Act
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Schedule 3.07(g) - Rate Complaints and Appeals of Rate Orders and
Rate Complaints
Schedule 3.07(h) - Section 626(c)(1) of Communications Act
Schedule 3.07(j) - Head-ends
Schedule 3.07(k) - Overbuilds
Schedule 3.07(1) - Condition of Tangible Personal Property
Schedule 3.09 - Employee Benefit Plans
Schedule 3.10 - Contracts in Default
Schedule 3.11 - Legal Proceedings and Judgments
Schedule 5.01(h)(iii) - Rate Decreases
OTHER
Schedule 1.01(g) - Engineering Firm List
Schedule 7.07 - FIRPTA Certificate
vi
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and
entered into as of April 18, 2000, by and among CSC Holdings, Inc., a Delaware
corporation ("Holdings"), Cablevision of Massachusetts, Inc., a Delaware
corporation ("CSC MA" and, together with Holdings, the "Cablevision Entities"),
and AT&T Corp., a New York corporation ("AT&T"), and AT&T CSC, Inc., a Delaware
corporation ("Merger Sub" and, together with AT&T, the "AT&T Entities").
R E C I T A L S
WHEREAS, CSC MA is a direct wholly owned subsidiary of Holdings and
owns and operates cable television systems serving the communities described in
Exhibit A (the "CATV Systems").
WHEREAS, the respective boards of directors of Holdings, CSC MA, AT&T
and Merger Sub have approved, and deem it advisable and in the best interests of
their respective shareholders to consummate the merger of Merger Sub with and
into CSC MA (the "Merger") on the terms and conditions set forth herein.
WHEREAS, it is intended that, for federal income tax purposes, the
Merger on the terms contemplated by this Agreement, qualify as a
"reorganization" under the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the rules and regulations promulgated
thereunder.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows, each intending to be
legally bound as and to the extent herein provided.
1. DEFINITIONS.
1.01 Certain Definitions. For the purposes of this Agreement, the
following terms shall have the meanings set forth below:
Actual Upgrade Capital Expenditures means actual capital expenditures
made by CSC MA with respect to the CATV Systems in accordance with the Upgrade
Specifications, for (a) coax feeder cable, (b) external drop cable, (c) MDU
wiring, (d) active and passive field electronics and (e) construction of fiber
overlay and nodes, in each case, made during 2000, but only through the earlier
of December 31, 2000 and the Closing Date, and as would be reflected as
additions to fixed assets on the financial statements of the CATV System in
accordance with GAAP.
Adjusted Aerial Average Cost Per Mile has the meaning set forth in
Section 2.11(d).
<PAGE>
Adjusted MDU Average Cost Per Unit has the meaning set forth in Section
2.11(d).
Adjusted Underground Average Cost Per Mile has the meaning set forth in
Section 2.11(d).
Aerial Average Cost Per Mile equals the quotient of Actual Upgrade
Capital Expenditures made on actual aerial plant miles upgraded in the CATV
System during 2000 divided by the number of actual aerial plant miles rebuilt in
the CATV System during 2000, in each case, through the earlier of December 31,
2000 and the Closing Date and in accordance with the Upgrade Specifications.
Aerial Mileage Shortfall means the amount, if any, by which the number
of actual aerial plant miles upgraded in the CATV System during 2000 in
accordance with the Upgrade Specifications is less than the number of aerial
plant miles planned to be upgraded in the CATV System during 2000, as shown in
Schedule 1.01(e) of Cablevision's Disclosure Schedule and, in each case, through
the earlier of December 31, 2000 and the Closing Date.
Affiliate means, as to any Person, any other Person which, directly or
indirectly, controls, or is under common control with, or is controlled by, such
Person. As used in this definition, "control" (including, with its correlative
meanings, controlling," "controlled by" and "under common control with") will
mean possession, directly or indirectly, of the power to direct or cause the
direction of management or policies of a Person (whether through the ownership
of securities, or partnership or other ownership interest, by contract or
otherwise).
Agreement means this Agreement and the Exhibits and Schedules attached
hereto.
Asserted Claim has the meaning set forth in Section 10.04.
Assets means all of the properties, assets, privileges, rights,
interests, claims and goodwill, real and personal, tangible and intangible, of
every type and description of CSC MA, including, without limitation, CSC MA's
leasehold interests or rights to possession, whether owned or leased or
otherwise possessed, primarily used or held for use in or necessary for the CATV
Business, now in existence or hereafter acquired by CSC MA prior to the Closing,
including, without limitation, the CATV Instruments, the Equipment, the Real
Property, the Contracts, the Inventory and the Intangible Property; provided
that the Assets shall exclude the Excluded Assets and any assets disposed of
prior to the Closing in the usual and ordinary course of business and not in
violation of this Agreement.
AT&T has the meaning set forth in the Preamble to this Agreement.
AT&T Common Stock means the common stock, par value $1.00 per share, of
AT&T.
AT&T Designated Subsidiary has the meaning set forth in the Exchange
Agreement.
AT&T Entities has the meaning set forth in the Preamble to this
Agreement.
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AT&T Indemnified Party has the meaning set forth in Section 10.03(a).
AT&T Material Adverse Effect means a material adverse effect on the
assets, financial condition or results of operations of AT&T and its
consolidated Subsidiaries, taken as a whole, other than any such effect
resulting from changes in general economic or political conditions or legal,
governmental, regulatory or competitive factors affecting CATV system operators
or the long-distance telecommunications industry generally.
AT&T Objection has the meaning set forth in Section 2.11(c).
AT&T SEC Documents has the meaning set forth in Section 4.08(a).
AT&T Sellers has the meaning set forth in the Exchange Agreement.
AT&T Special Indemnity Covenants has the meaning set forth in Section
10.03(b).
AT&T Upgrade Objection has the meaning set forth in Section 2.11(d).
AT&T's Counsel means Sherman & Howard L.L.C. or such local, special or
inside counsel as AT&T may select.
AT&T's Average Cost Objection has the meaning set forth in Section
2.11(d).
Average Cost Per Mile Calculations has the meaning set forth in Section
2.11(d).
Basic Subscriber means as at any date of determination thereof, the sum
of (a) the total number of households (exclusive of "second-outlets," as such
term is commonly understood in the cable television industry, and exclusive of
customers billed on a bulk-billing or commercial-account basis) subscribing on
such date to at least the most basic tier of service offered by the CATV
Business and paying the full monthly service fees and charges imposed in respect
of such service (other than disputed items), and (b) the total number of
Equivalent Subscribers on such date who, as to either clause (a) or clause (b),
are not, as of the Closing Date, more than 60 days in arrears in payment for
service, as measured from the date that payment due became a receivable.
Benefit Plans has the meaning set forth in Section 3.09(a).
Blue Sky Law has the meaning set forth in Section 3.13(a).
Business Day means a day other than a Saturday, Sunday, national or New
York State holiday or other day on which commercial banks in New York City are
authorized or required by law to close.
Cablevision Entities has the meaning set forth in the Preamble to this
Agreement.
Cablevision Indemnified Party has the meaning set forth in Section
10.02(a).
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Cablevision Material Adverse Effect means a material adverse effect on
the assets, financial condition or results of operations of the CATV Business,
taken as a whole, other than any such effect resulting from changes in general
economic or political conditions or legal, governmental, regulatory or
competitive factors affecting CATV system operators generally or in the
Commonwealth of Massachusetts.
Cablevision Parent means Cablevision Systems Corporation, a Delaware
corporation.
Cablevision Sellers has the meaning set forth in the Exchange
Agreement.
Cablevision Special Indemnity Covenants has the meaning set forth in
Section 10.02(b).
Cablevision's Counsel means Sullivan & Cromwell or such local, special
or inside counsel as Holdings may select.
Capital Stock of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations or interests, including partnership interests,
whether general or limited, and membership interests, whether managing or
non-managing of such Person.
CATV means cable television, which term also includes satellite master
antenna television not yet converted to cable television service.
CATV Business means the CATV business presently owned and operated by
CSC MA, which consists of the transmission, distribution and local origination
of audio and video signals over the CATV Systems.
CATV Instruments means (a) all franchises or ordinances granted to CSC
MA with respect to the CATV Business by any Governmental Authority listed in
Schedule 1.01(a) of Cablevision's Disclosure Schedule; (b) all permits for wire
crossings over or under highways, railroads and other property; (c) all
construction permits and certificates of occupancy; (d) all pole attachment and
other contracts with utilities; (e) all State, county and municipal permits,
orders, variances, exemptions, approvals, consents, licenses and other
authorizations; (f) all agreements for the purchase, sale, receipt or
distribution of news, data and microwave relay signals, or for satellite
services; and (g) all other approvals, consents and authorizations used or held
for use in the CATV Business.
CATV Licenses means the licenses issued by the FCC used in the CATV
Business as presently conducted by CSC MA, all of which are listed in Schedule
1.01(a) of Cablevision's Disclosure Schedule.
CATV Systems has the meaning set forth in the Preamble to this
Agreement.
Certificate of Merger has the meaning set forth in Section 2.01(b).
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Closing means a meeting for the purpose of concluding the transactions
contemplated by this Agreement held at the place and on the date fixed in
accordance with Section 12.01.
Closing Date; Date of Closing means the date fixed for the Closing in
accordance with Section 12.01.
Code has the meaning set forth in the Preamble to this Agreement.
Combined CATV Business means the CATV Business as defined in this
Agreement together with the Cablevision CATV Business as defined in the Exchange
Agreement.
Common Stock Consideration means a number of shares of AT&T Common
Stock equal to the quotient (rounded upward to the nearest whole number) of (a)
$970,020,000 plus (if a positive number) or minus (if a negative number) the
Working Capital Adjustment plus (if a positive number) or minus (if a negative
number) the Upgrade Adjustment minus the Subscriber Adjustment, if any, and (b)
the Market Value of AT&T Common Stock (subject, in each case, in this
definition, to adjustments to prevent dilution as provided in Section 2.03).
Communications Act has the meaning set forth in Section 3.07(e).
Contract means any contract, mortgage, deed of trust, bond, indenture,
lease, license, note, certificate, option, warrant, right, or other instrument,
document or written agreement relating to the CATV Business to which CSC MA is a
party or by which CSC MA or the assets included within the CATV Business are
bound, excluding any CATV Instrument.
CPA Firm means Deloitte & Touche, certified public accountants, or such
other nationally recognized firm of independent public accountants as to which
AT&T and Holdings may mutually agree.
CSC MA has the meaning set forth in the Preamble to this Agreement.
CSC Subsidiary means any former direct or indirect Subsidiary of CSC
MA.
Current Assets means petty cash, marketable securities, 100% of active
subscriber accounts receivable that are 60 days or less past due and 90% of
active subscriber accounts receivable that are between 61 and 90 days past due
(in each case, measured from the date the accounts became receivable), other
receivables, including advertising, tower rent, marketing cooperative, home
shopping commissions and employee tax receivables, all deposits with utilities,
under leases or related to guides, billing service, postage, the pro rata
portion of any prepaid taxes (as of the Closing Date), all prepaid expenses,
including in respect of pole rental or equipment maintenance agreements that are
liabilities, and in respect of rent, postage, promotional expenditures, guides,
security service or two-way radio and other current assets (excluding
Inventory), each as determined in accordance with GAAP (unless otherwise
specified herein), but excluding the Excluded Assets.
DGCL means Delaware General Corporation Law, as amended.
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DOJ means the United States Department of Justice.
Effective Time has the meaning set forth in Section 2.01(b).
Employees means all current active employees of CSC MA with respect to
the CATV Business.
Encumbrances means liens, charges, encumbrances, security interests,
options, restrictions, demands, preemptive rights, proxies, shareholder
agreements, voting trusts, voting agreements, or any other similar third party
rights other than liens for taxes not yet due and payable.
Engineering Firm means (a) the independent engineering firm selected
from the Engineering Firm List by mutual agreement of AT&T and Holdings, or (b)
the independent engineering firm selected from the Engineering Firm List by
mutual agreement of (i) the independent engineering firm selected from the
Engineering Firm List by AT&T, and (ii) the independent engineering firm
selected from the Engineering Firm List by Holdings.
Engineering Firm List means the independent engineering firms set forth
in Schedule 1.01(g) of the Disclosure Schedules.
Environmental Law means any law or regulation governing the protection
of the environment (including air, water, soil and natural resources) or the
use, storage, handling, release or disposal of any hazardous or toxic substance.
Equipment means all tangible personalty; electronic devices; towers;
trunk and distribution cable; decoders and spare decoders for scrambled
satellite signals; amplifiers; power supplies; conduit; vaults and pedestals;
grounding and pole hardware; installed subscriber's devices (including, without
limitation, drop lines, converters, encoders, transformers behind television
sets and fittings); "head-ends" and "Hubs" (origination, transmission and
distribution system) hardware; tools; inventory; spare parts; maps and
engineering data; vehicles; supplies, tests and closed circuit devices;
furniture and furnishings; and all other tangible personal property and
facilities owned or leased by CSC MA and used in the CATV Business.
Equivalent Subscriber means, as at any date of determination thereof,
the total number of households served by the CATV Business on a bulk-billed
basis and the total number of establishments served on a commercial account
basis, or on a basis less than the standard monthly service fees and charges
imposed by CSC MA, which shall be deemed to be equal to the quotient obtained by
dividing (a) the total fees and charges for basic service billed by CSC MA
during the month including such date on a bulk-billed or commercial account
basis, or on a basis less than the standard monthly service fees and charges
imposed by CSC MA, by (b) the fees and charges for basic service that a Basic
Subscriber of the type described in clause (a) of the definition of such term in
this Section 1.01 was billed during such month, and as to both clauses (a) and
(b) above, excluding any pass-through charge for sales tax, line-itemized
franchise fees, fees charged by the FCC and similar items.
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ERISA means the Employee Retirement Income Security Act of 1974, as the
same has been and may be amended from time to time.
ERISA Affiliate of any entity means any other entity that, together
with such entity, would be considered one employer under Section 4001 of ERISA
or Section 414 of the Code.
Estimated Adjustment Statement has the meaning set forth in Section
2.10.
Estimated Subscriber Adjustment means an amount shown on the Estimated
Adjustment Statement equal to the product of (a) $5,000 multiplied by (b) the
difference, if any, between (i) 356,065 less (ii) the number of Basic
Subscribers of the Combined CATV Business on the Closing Date, multiplied by (c)
0.5421; provided, that, if the product obtained in the foregoing clause is
negative, the Estimated Subscriber Adjustment shall be zero.
Estimated Upgrade Adjustment means an amount shown on the Estimated
Adjustment Statement equal to the sum of (a) the product of the Aerial Mileage
Shortfall times the Aerial Average Cost Per Mile plus (b) the product of the
Underground Mileage Shortfall times the Underground Average Cost Per Mile, plus
(c) the product of the MDU Shortfall times the MDU Average Cost Per Unit.
Estimated Working Capital Adjustment means the positive or negative
amount shown on the Estimated Adjustment Statement as the Working Capital of the
CATV Business as of the Closing Date.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Exchange Agreement means the Asset Exchange Agreement (together with
all exhibits and schedules thereto), dated the date hereof, among Holdings, AT&T
and the other parties thereto, as such agreement may be amended, supplemented,
or otherwise modified in accordance with its terms.
Exchange CATV Business means the "Cablevision CATV Systems" as such
term is defined in the Exchange Agreement.
Excluded Assets means (a) the assets and properties listed in Schedule
1.01(b) of Cablevision's Disclosure Schedule, (b) programming Contracts
(including cable guide Contracts) and retransmission consent Contracts, (c)
insurance policies and rights and claims thereunder up to the self-insured
retention or deductible, (d) Contracts relating to national advertising sales
representation, (e) bonds, letters of credit, surety instruments and other
similar items of the Cablevision Entities, (f) trademarks, trade names, service
marks, service names, logos and similar proprietary rights, (g) Benefit Plans,
(h) any of the following types of agreements if not disclosed on Schedule 3.02
or Schedule 3.07(c) of Cablevision's Disclosure Schedule: (i) any agreement with
any Affiliates of the Cablevision Entities, (ii) any agreement for the provision
of telephony, high speed data or related services in any of the CATV Systems,
and (iii) any agreement with any competitive access provider or local exchange
company or any
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Internet access or on-line services provider with respect to the use or lease of
any Assets, and (i) personnel files.
Excluded Liabilities means, without duplication, (a) all liabilities
relating or arising with respect to the Excluded Assets, (b) all liabilities of
CSC MA that are not taken into account as Liabilities in calculating the Working
Capital Adjustment, and (c) the liabilities of CSC MA in the categories
identified in Schedule 1.01(c) of Cablevision's Disclosure Schedule, except that
the Holdings Note shall not be an Excluded Liability.
FCC means the United States Federal Communications Commission.
Final Adjustment Statement has the meaning set forth in Section
2.11(c).
Final Subscriber Adjustment means an amount shown on the Final
Adjustment Statement equal to the product of (a) $5,000 multiplied by (b) the
difference, if any, between (i) 356,065 less (ii) the number of Basic
Subscribers of the Combined CATV Business on the Closing Date, multiplied by (c)
0.5421; provided, that, if the product obtained in the foregoing clause is
negative, the Final Subscriber Adjustment shall be zero.
Final Upgrade Adjustment means (1) with respect to upgrade work in the
CATV Systems not completed prior to Closing, an amount shown on the Final
Adjustment Statement equal to the sum of (a) the product of the Aerial Mileage
Shortfall times the Aerial Average Cost Per Mile (or if applicable, the Adjusted
Aerial Average Cost Per Mile) plus (b) the product of the Underground Mileage
Shortfall times the Underground Average Cost Per Mile (or if applicable, the
Adjusted Underground Average Cost Per Mile), plus (c) the product of the MDU
Shortfall times the MDU Average Cost Per Unit (or if applicable, the Adjusted
MDU Average Cost Per Unit), (2) with respect to upgrade work in the CATV Systems
completed prior to Closing that did not satisfy the Upgrade Specifications, the
amount of additional expenditures needed with respect to such completed upgrade
work to cause it to satisfy the Upgrade Specifications as determined in
accordance with Section 2.11(d), and (3) any adjustment determined in accordance
with Section 2.11(d) to the Estimated Upgrade Adjustment that is not covered in
clause (1) or (2) above.
Final Working Capital Adjustment means the positive or negative amount
shown on the Final Adjustment Statement as the Working Capital of the CATV
Business as of the Closing Date.
Financial Statements has the meaning set forth in Section 3.03.
FTC means the United States Federal Trade Commission.
GAAP means United States generally accepted accounting principles as in
effect from time to time and consistently applied.
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Governmental Authority means the United States Federal Government, any
state, county, municipal, local or foreign government and any governmental
agency, bureau, commission, authority or body.
Group means, individually and collectively, CSC MA, each CSC
Subsidiary, and each Person for the Taxes of which CSC MA or a CSC Subsidiary is
liable pursuant to Treasury Regulations Section 1.1502-6 or pursuant to any
other similar provision of federal, territorial, State, local or foreign law or
regulations. With respect to any particular Tax, an affiliate of CSC MA will not
be treated as a member of a Group if CSC MA or a CSC Subsidiary has no
liability, directly or indirectly, for that affiliate's liability for such Tax.
For example, all affiliates of CSC MA who are members of CSC Parent's
consolidated federal income tax return are a "Group" for purposes of
representations, covenants and indemnities contained in this Agreement relating
to federal income tax, but an affiliate of CSC MA which files a separate State
income Tax Return in a particular State is not part of a "Group" with respect to
that State's income tax if CSC MA or a CSC Subsidiary has no direct or indirect
liability for such affiliate's State Tax.
Hazardous Substance means any substance listed, defined, designated or
classified as hazardous, toxic or radioactive under any applicable Environmental
Law, including petroleum products.
Holdings has meaning set forth in the Preamble to this Agreement.
Holdings Note means the Note, dated as of April 13, 2000, payable by
CSC MA to Holdings, a copy of which is attached hereto as Exhibit G.
HSR Act and Rules means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and the rules and regulations promulgated thereunder, as from time
to time in effect prior to the Closing.
HSR Report means the Notification and Report Form for certain mergers
and acquisitions mandated by the HSR Act and Rules.
Indemnitee has the meaning set forth in Section 10.04.
Indemnitor has the meaning set forth in Section 10.04.
IRS means the United States Internal Revenue Service.
Intangible Property means the copyrights, patents, trademarks, service
marks and trade names used in the CATV Business excluding the right to use the
names "Cablevision," "Cablevision Systems," "Optimum," "Optimum Cable," "Optimum
TV," or any and all derivatives thereof or any name which may include any of
such terms, and all applications for, or licenses or other rights to use any
thereof, and the value associated therewith, which are owned by CSC MA or an
affiliate thereof and used in the CATV Business.
Interim Financial Statements has the meaning set forth in Section 3.03.
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Inventory means all inventory of CSC MA as defined under GAAP, plus,
without limitation, all supplies, all maintenance equipment, all converters, all
cables and all amplifiers owned by CSC MA on the Closing Date as determined by
CSC MA's inventory control systems and used in the CATV Business.
Judgment means any judgment, writ, order, injunction, award or decree
of or by any court, or judge, justice or magistrate, including any bankruptcy
court or judge, and any order of or by any Governmental Authority.
Law means the common law and any statute, ordinance, code or other law,
rule, regulation, order, technical or other standard, requirement or procedure
enacted, adopted, promulgated, applied or followed by any Governmental
Authority.
Liabilities means accounts payable, accrued expenses and other
liabilities of CSC MA determined in accordance with GAAP, including, without
limitation, accrued vacation and sick time for Employees to be employed by the
CATV Business immediately following the Closing in an amount equal to the
applicable AT&T Entity's obligation to provide for accrued vacation and sick
time for such Employees, except that Excluded Liabilities shall not be included.
Losses has the meaning set forth in Section 10.02(a).
Market Value means the average of the Trading Prices for the twenty
(20) consecutive trading days on the NYSE through and including the date ending
three trading days prior to the Closing Date (e.g., if the Closing Date is April
10, Market Value would be calculated by determining the average of the Trading
Prices of the 20 consecutive trading days ending on April 7, assuming each day
from and including April 7 through April 10 is a trading day).
Material Contracts has the meaning set forth in Section 3.07(c).
MDU means a multiple dwelling unit building.
MDU Average Cost Per Unit equals the quotient of (a) Actual Upgrade
Capital Expenditures made on MDUs upgraded in the CATV System during 2000
divided by (b) the number of actual units within MDUs upgraded in the CATV
System during 2000, in each case, through the earlier of December 31, 2000 and
the Closing Date and in accordance with the Upgrade Specifications.
MDU Shortfall means the amount, if any, by which the number of actual
units within MDUs in the CATV System upgraded during 2000 is less than the
number of units within MDUs planned to be upgraded in the CATV during 2000, as
shown in Schedule 1.01(e) of Cablevision's Disclosure Schedule and, in each
case, through the earlier of December 31, 2000 and the Closing Date.
Merger has the meaning set forth in the Preamble to this Agreement.
Merger Sub has the meaning set forth in the Preamble to this Agreement.
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1992 Cable Act means the Cable Television Consumer Protection and
Competition Act of 1992.
NYSE means the New York Stock Exchange.
Outside Closing Date has the meaning set forth in Section 12.02(e).
Permitted Encumbrances means those Encumbrances set forth in Schedule
1.01(d) of Cablevision's Disclosure Schedule and all other Encumbrances, if any,
which do not materially detract from the value of the tangible property subject
thereto and which do not materially interfere with the present and continued use
of such property in the operation of the CATV Business.
Person means any natural person, Governmental Authority, corporation,
general or limited partner, partnership, limited liability company, joint
venture, trust, association, or unincorporated entity of any kind.
Post-Closing Tax Period has the meaning set forth in Section 9.09(a).
Pre-Closing Tax Period has the meaning set forth in Section 9.09(a).
Preliminary Adjustment Statement has the meaning set forth in Section
2.11(a).
Prime Rate means the annual rate publicly announced from time to time
by Chase Manhattan Bank, N.A. as its prime rate.
Real Property means all realty, fixtures, easements, rights-of-way,
leasehold and other interests in real property, buildings and improvements used
in the CATV Business.
Registration Rights Agreement means the registration rights agreements
substantially in the form of Exhibit C hereto, as the same may be amended,
supplemented or otherwise modified in accordance with its terms.
SEC means the United States Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended.
Split-Tax Period has the meaning set forth in Section 9.09(a).
Subscriber Adjustment means the Estimated Subscriber Adjustment prior
to the preparation of the Final Adjustment Statement pursuant to Section
2.11(c), and thereafter, the Final Subscriber Adjustment.
Statement has the meaning set forth in Section 9.09(e)(ii).
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Subsidiary of any Person means (a) a corporation more than 50% of the
combined voting power of the outstanding Voting Securities of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof, (b) a
partnership of which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, is the general partner and has the power to direct the policies,
management and affairs of the partnership, (c) a limited liability company of
which such Person or one or more Subsidiaries of such Person or such Person and
one or more Subsidiaries of such Person, directly or indirectly, is the managing
member and has the power to direct the policies, management and affairs of the
company, or (d) any other Person (other than a corporation, partnership or
limited liability company) in which such Person, or one or more other
Subsidiaries of such Person or such Person and one or more other Subsidiaries of
such Person, directly or indirectly, has at least a majority ownership and power
to direct the policies, management and affairs thereof.
Systems Area means the geographical area in which the CATV Systems are
operated as described in Exhibit A hereto.
Tax (or Taxes) means (a) all taxes, however denominated, including any
interest, penalties or other additions to tax that may become payable in respect
thereof, imposed by any federal, territorial, State, local or foreign government
or any agency or political subdivision of any such government, which taxes shall
include, without limitation, all income or profits taxes (including, but not
limited to, federal and State income taxes), real property gains taxes, payroll
and employee withholding taxes, unemployment insurance taxes, social security
taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise taxes,
gross receipts taxes, business license taxes, occupation taxes, real and
personal property taxes, stamp taxes, environmental taxes, transfer taxes,
workers' compensation, Pension Benefit Guaranty Corporation premiums and other
governmental charges, and other obligations of the same or of a similar nature
to any of the foregoing, which the Group is required to pay, withhold or
collect, (b) any transferee or secondary liability in respect of any tax
(whether imposed by law, contract or otherwise), and (c) any liability in
respect of any tax as a result of being a member of any affiliated,
consolidated, combined, unitary or similar group. As used in this Agreement, a
material Tax means any Tax in excess of $50,000.
Tax Arbitrator Procedure has the meaning set forth in Section
9.09(e)(iii).
Tax Returns means all reports, estimates, declarations of estimated
tax, information statements and returns relating to, or required to be filed in
connection with, any Taxes, including information returns or reports with
respect to backup withholding and other payments to third parties.
Trading Price on any trading day shall mean the weighted average of the
reported per share prices at which transactions in AT&T Common Stock are
executed on the NYSE during such trading day (weighted based on the number of
shares of AT&T Common Stock traded), as such weighted average price appears on
the Bloomberg screen "Volume At Price" page for AT&T Common Stock.
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Transaction Documents means this Agreement, the Exchange Agreement and
the Registration Rights Agreement and any other documents executed on or prior
to the date hereof that expressly refer to Section 13.02 of this Agreement.
Underground Average Cost Per Mile equals the quotient of Actual Upgrade
Capital Expenditures made on actual underground plant miles upgraded in the CATV
System during 2000 in accordance with the Upgrade Specifications, divided by the
number of actual underground plant miles upgraded in the CATV System during
2000, in each case, through the Closing Date and in accordance with the Upgrade
Specifications.
Underground Mileage Shortfall means the amount, if any, by which the
number of actual underground plant miles upgraded in the CATV System during 2000
in accordance with the Upgrade Specifications, is less than the number of
underground plant miles planned to be upgraded in the CATV System during 2000,
as shown in Schedule 1.01(e) of Cablevision's Disclosure Schedule and, in each
case, through the earlier of December 31, 2000 and the Closing Date.
Upgrade Adjustment means the Estimated Upgrade Adjustment prior to the
preparation of the Final Adjustment Statement pursuant to Section 2.11(d), and
thereafter, the Final Upgrade Adjustment.
Upgrade Specifications means the technical specifications outlined in
Schedule 1.01(f) of Cablevision's Disclosure Schedule.
Valuation Period means the period with reference to which Market Value
is determined.
Voluntarily Discharge; Voluntary Discharge has the meaning set forth in
Section 9.09(e)(v).
Voting Securities of any Person means Capital Stock of such Person
which ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
Wireless Group Tracking Stock means a class of AT&T stock (if created
by AT&T) designed to represent the economic performance of all or a portion of
AT&T's wireless service businesses or related businesses.
Wireless Group Tracking Stock Distribution means AT&T's distribution
(if any) of shares of Wireless Group Tracking Stock to holders of AT&T Common
Stock.
Working Capital means Current Assets minus Liabilities.
Working Capital Adjustment means the Estimated Working Capital
Adjustment prior to the preparation of the Final Adjustment Statement pursuant
to Section 2.11(c), and thereafter, the Final Working Capital Adjustment.
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1.02 Rules of Construction. Unless otherwise expressly provided in this
Agreement, or unless the context clearly requires otherwise, (a) accounting
terms used in this Agreement will have the meanings ascribed to them under GAAP,
(b) words used in this Agreement, regardless of the gender and number used, will
be deemed and construed to include any other gender, masculine, feminine, or
neuter, and any other number, singular or plural, as the context requires, (c)
the word "including" is not limiting, and the word "or" is not exclusive, (d)
the capitalized term "Section" refers to Sections of this Agreement, (e)
references to a particular Section include all subsections thereof, (f)
references to a particular statute or regulation include all amendments thereto,
rules and regulations thereunder and any successor statute, rule or regulation,
or published clarifications or interpretations with respect thereto, in each
case, as from time to time in effect, and (g) references to a Person include
such Person's successors and assigns to the extent not prohibited by this
Agreement. When it is the parties' intent to limit the scope of any defined term
solely to one party, such intent is indicated by referring specifically to one
party or the other.
2. THE MERGER.
2.01 The Merger.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time, Merger Sub shall be merged with and
into CSC MA with CSC MA surviving, and the separate corporate existence
of Merger Sub shall thereupon cease.
(b) Immediately following the Closing, Holdings, AT&T and CSC MA
shall cause a Certificate of Merger with respect to the Merger (the
"Certificate of Merger") to be executed, acknowledged and filed with
the Secretary of State of the State of Delaware as provided in Section
251 of the DGCL. The Merger shall become effective at the time when the
Certificate of Merger has been duly filed with the Secretary of the
State of Delaware or such other time as shall be agreed upon by the
parties and set forth in the Certificate of Merger in accordance with
the DGCL (the "Effective Time"). From and after the Effective Time, CSC
MA shall possess all the rights, powers, privileges and franchises and
be subject to all of the obligations, liabilities, restrictions and
disabilities of CSC MA and of Merger Sub, all as provided under the
DGCL.
2.02 Common Stock Consideration. At the Effective Time, as a result of
the Merger and without any action on the part of any holder of Capital Stock of
any Cablevision Entity or AT&T Entity:
(a) all of the issued and outstanding Capital Stock of CSC MA
immediately prior to the Effective Time will be converted into and
exchanged for the Common Stock Consideration, calculated on the basis
of the Estimated Adjustment Statement and subject to adjustment as
provided in Section 2.03, and the shares of AT&T Common Stock
representing the Common Stock Consideration shall be registered in the
name of Holdings or its nominees (provided that any nominee makes the
securities laws representations set forth in Section 3.13); and
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(b) all of the Capital Stock of Merger Sub issued and outstanding
immediately prior to the Effective Time will be converted into one
share of Capital Stock of CSC MA and CSC MA will become a wholly owned
subsidiary of AT&T.
2.03 Adjustments to Prevent Dilution. Except with respect to a Wireless
Group Tracking Stock Distribution, if AT&T should split or combine the AT&T
Common Stock or pay a stock dividend or other stock distribution in AT&T Common
Stock or otherwise effect any transaction or announce its intention to do any of
the foregoing that changes the AT&T Common Stock into any other securities or
make any other dividend or distribution on the AT&T Common Stock (other than
normal quarterly cash dividends as the same may be adjusted from time to time in
the ordinary course consistent with past practice), and the record date
applicable to such event occurs during the Valuation Period or after the
Valuation Period and prior to the Closing, then the Market Value will be
appropriately adjusted to reflect such split, combination, transaction, dividend
or other distribution. If the record date for a Wireless Group Tracking Stock
Distribution occurs during the 20 consecutive trading day period that otherwise
would be used in determining Market Value (or after the end of such period but
before the Closing), then (a) the 20 consecutive trading day period to be used
in determining Market Value instead will commence on the third trading day after
the record date for the Wireless Group Tracking Stock Distribution, and (b) the
Closing Date will be delayed until the third Business Day after the end of such
delayed 20 consecutive trading day period.
2.04 Directors of Surviving Corporation. At the Effective Time, the
directors of CSC MA shall resign from their positions as such and the directors
of Merger Sub shall, from and after the Effective Time, be the directors of CSC
MA.
2.05 Officers of Surviving Corporation. At the Effective Time, the
officers of CSC MA shall resign from their positions as such and the officers of
Merger Sub shall, from and after the Effective Time, be the officers of CSC MA.
2.06 Surrender and Payment. Upon surrender for cancellation of
certificates formerly representing Capital Stock of CSC MA, AT&T will deliver to
Holdings the Common Stock Consideration referred to in Section 2.02(a)
registered in such names and denominations as Holdings shall reasonably request.
After the Effective Time and until so surrendered, the Capital Stock of CSC MA
shall represent for all purposes only the right to receive the Common Stock
Consideration.
2.07 New Name. From and after the Effective Time, the name of CSC MA
will be "AT&T CSC, Inc." or such other name designated by AT&T.
2.08 Charter of Surviving Corporation. The certificate of incorporation
of Merger Sub in effect at the Effective Time, will, from and after the
Effective Time, be the certificate of incorporation of CSC MA until amended in
accordance with its terms and the DGCL.
2.09 By-laws of Surviving Corporation. The by-laws of Merger Sub in
effect at the Effective Time will, from and after the Effective Time, be the
by-laws of CSC MA, until amended in accordance with their terms and the DGCL.
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2.10 Adjustments. At least three Business Days prior to the Closing
Date, Holdings shall deliver to AT&T a report (the "Estimated Adjustment
Statement"), certified as to completeness and accuracy by Holdings, which shall
include, without limitation, (a) a calculation of the Working Capital of the
CATV Business as of the Closing Date and determined in accordance with GAAP,
except as otherwise required by this Agreement, which statement shall set forth
Holdings' good faith estimate of the Working Capital Adjustment, (b) Holdings'
good faith estimate of the Upgrade Adjustment, as of the Closing Date, and (c)
Holdings' good faith estimate of the Subscriber Adjustment, if any, which
estimate shall be prepared in conformity with the definition of Basic Subscriber
contained herein and shall be based upon the number of Basic Subscribers to be
transferred to AT&T under this Agreement and the Exchange Agreement as of the
Closing Date. Basic Subscribers transferred to AT&T under this Agreement and the
Exchange Agreement shall be deemed to include all Basic Subscribers to the
Combined CATV Business on the Closing Date, irrespective of the lack of approval
or consent of Governmental Authorities to transfer to AT&T any franchises
containing Basic Subscribers.
2.11 Post-Closing Adjustment.
(a) Within 90 days after the Closing Date, Holdings shall prepare,
or cause to be prepared, and deliver to AT&T a report (the "Preliminary
Adjustment Statement"), certified as to completeness and accuracy by
Holdings, showing in detail the final determination of the Working
Capital Adjustment, the Upgrade Adjustment and the Subscriber
Adjustment, which may be zero. AT&T shall cooperate in providing to
Holdings all relevant books, records and personnel of the CATV Business
in order to facilitate the preparation of the Preliminary Adjustment
Statement.
(b) During the succeeding 30-day period, AT&T shall have the right
to examine the Preliminary Adjustment Statement and all records used to
prepare the Preliminary Adjustment Statement.
(c) In the event AT&T does not agree that the Working Capital
Adjustment or the Subscriber Adjustment (which may be zero) each as
reflected in the Preliminary Adjustment Statement, have been determined
in accordance with the definitions of such terms, AT&T shall so inform
Holdings in writing ("AT&T Objection"), setting forth a reasonably
specific description of the basis of the AT&T Objection on or before
the last day of the 30-day period referred to in Section 2.11(b). In
the event of an AT&T Objection, AT&T and Holdings shall attempt to
resolve the differences underlying the AT&T Objection within 20 days of
Holdings' receipt thereof. If Holdings and AT&T are unable to resolve
all their differences within such 20-day period, they shall refer their
remaining differences to the CPA Firm, which shall, acting as an expert
and not as an arbitrator, determine on the basis of the definitions of
Working Capital Adjustment and Subscriber Adjustment and such other
standards as such CPA Firm deems applicable and only with respect to
the remaining differences so submitted, whether and to what extent, if
any, the Preliminary Adjustment Statement requires modification. The
CPA Firm will base its determination only on evidence brought to it by
the parties and shall not conduct an audit. The CPA Firm shall deliver
its written determination to AT&T and Holdings no later than
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the 20th Business Day after the remaining differences underlying the
AT&T Objection are referred to the CPA Firm. The CPA Firm's
determination shall be conclusive and binding upon the parties. The
fees and disbursements of the CPA Firm shall be allocated between AT&T
and Holdings in the same proportion that the aggregate amount of any
disputed items submitted to the CPA Firm that are unsuccessfully
disputed by each (as finally determined by the CPA Firm) bears to the
total amount of any disputed items so submitted. AT&T and Holdings
shall make readily available to the CPA Firm all relevant books and
records and any work papers relating to the Preliminary Adjustment
Statement and all other items reasonably requested by the CPA Firm.
(d) In the event AT&T does not agree that the Actual Upgrade
Capital Expenditures have been made in accordance with the Upgrade
Specifications, or if AT&T believes that the Aerial Average Cost Per
Mile, Underground Average Cost Per Mile, or MDU Cost Per Unit
calculations (collectively, the "Average Cost Per Mile Calculations")
utilized in determining the Estimated Upgrade Adjustment are not
calculated correctly or not sufficient to cover the cost of upgrading
the Aerial Underground or Mileage Shortfall, AT&T shall so inform
Holdings in writing ("AT&T Upgrade Objection"), setting forth a
specific description of the basis of such AT&T Upgrade Objection on or
before the last day of the 30-day period referred to in Section 2.11(b)
hereof. In the event of an AT&T Upgrade Objection, AT&T and Holdings
shall attempt to resolve the differences underlying the AT&T Upgrade
Objection within 20 days of Holdings' receipt thereof. If Holdings and
AT&T are unable to resolve all their differences within such 20-day
period, they shall refer their remaining differences to the Engineering
Firm, who shall, acting as an expert and not as an arbitrator,
determine on the basis of, as applicable, the Upgrade Specifications
and site samplings, Aerial Mileage Shortfall, Actual Upgrade Capital
Expenditures, Underground Mileage Shortfall, MDU Shortfall, Upgrade
Specifications and available comparable cost data the amount, if any,
of the Final Upgrade Adjustment, including the amount, if any, by which
the Average Cost Per Mile Calculations should be adjusted to cause
satisfaction of the Upgrade Specifications. The Engineering Firm shall
deliver its written determination to AT&T and Holdings no later than
the 20th Business Day after the remaining differences underlying the
AT&T Upgrade Objection are referred to the Engineering Firm. The
Engineering Firm's determination shall be conclusive and binding upon
the parties. If the Engineering Firm determines that the Aerial Average
Cost Per Mile should be adjusted, the amount to which it is adjusted
will be the "Adjusted Aerial Average Cost Per Mile." If the Engineering
Firm determines that the Underground Average Cost Per Mile should be
adjusted, the amount to which it is adjusted will be the "Adjusted
Underground Average Cost Per Mile." If the Engineering Firm determines
that the MDU Average Cost Per Unit should be adjusted, the amount to
which it is adjusted will be the "Adjusted MDU Average Cost Per Unit."
The fees and disbursements of the Engineering Firm shall be allocated
between AT&T and Holdings in the same proportion that the aggregate
amount of any disputed items submitted to the Engineering Firm that are
unsuccessfully disputed by each (as finally determined by the
Engineering Firm) bears to the total amount of any disputed items so
submitted. AT&T and Holdings shall make readily available to the
Engineering Firm all relevant books and records and any work papers
relating to the Actual Upgrade Capital Expenditures and all other items
reasonably requested by the Engineering Firm. Notwithstanding the
foregoing, if an AT&T Upgrade
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Objection involves only issues about the proper financial treatment
under GAAP of any items, then such dispute will be resolved by the CPA
Firm pursuant to the procedures in Section 2.11(c) (with such changes
as may be necessary to permit resolution by the CPA Firm).
(e) The "Final Adjustment Statement" shall be (i) the Preliminary
Adjustment Statement in the event that (A) no AT&T Objection or AT&T
Upgrade Objection is delivered to Holdings in the period set forth in
this Section 2.11(c) or 2.11(d) or (B) Holdings and AT&T so agree; or
(ii) the Preliminary Adjustment Statement, as modified by one or more
of (A) the agreement of Holdings and AT&T, (B) the determination of the
CPA Firm or (C) the determination of the Engineering Firm.
(f) If the Common Stock Consideration calculated on the basis of
the Final Adjustment Statement is greater than the Common Stock
Consideration calculated on the basis of the Estimated Adjustment
Statement, AT&T shall pay to Holdings an amount equal to such excess.
If the Common Stock Consideration calculated on the basis of the Final
Adjustment Statement is less than the Common Stock Consideration
calculated on the basis of the Estimated Adjustment Statement, Holdings
shall pay to AT&T an amount equal to such excess.
(g) Any amount payable pursuant to this Section 2.11 shall be paid
by one or more federal wire transfers of immediately available funds in
New York, New York (pursuant to wiring instructions which shall be
delivered to Holdings or AT&T (as the case may be)) on or before the
fifth Business Day following the determination of the Final Adjustment
Statement pursuant to Section 2.11, together with interest on such
amount from the Closing Date to the date of payment at the Prime Rate.
2.12 Sales and Transfer Taxes. Subject to the provisions of Section
9.09 hereof (other than Section 9.09(b) which is subject to this Section), AT&T,
on the one hand, and Holdings, on the other hand, shall each be responsible for
one-half of any sales and use Taxes and transfer Taxes (including, without
limitation, real estate transfer Taxes), if any, arising from the Merger.
3. REPRESENTATIONS AND WARRANTIES OF THE CABLEVISION ENTITIES.
To induce the AT&T Entities to enter into this Agreement, each
Cablevision Entity represents and warrants to the AT&T Entities as follows:
3.01 Organization and Authority of the Cablevision Entities.
(a) Each Cablevision Entity is duly organized, validly existing
and in good standing under the laws of the State of Delaware and has
all corporate power and authority necessary to carry on its business as
presently conducted. Each of the Cablevision Entities is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where such qualification is necessary except for those
jurisdictions where the failure to be so qualified or in good standing,
individually or in the aggregate, has not had and would not
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reasonably be expected to have a Cablevision Material Adverse Effect.
(b) The authorized Capital Stock of CSC MA and the number of
shares of such capital stock issued and outstanding is set forth on
Schedule 3.01(b) of Cablevision's Disclosure Schedule. All issued and
outstanding shares of Capital Stock in CSC MA have been duly authorized
and are validly issued, fully paid and nonassessable and are owned
beneficially and of record by Holdings, free and clear of any
Encumbrances. Other than pursuant to this Agreement, there are no
preemptive or other outstanding rights, options, warrants, conversion
rights, stock appreciation rights, redemption rights, repurchase
rights, agreements, arrangements or commitments to issue or sell any
shares of Capital Stock or other securities of CSC MA or any securities
or obligations convertible or exchangeable into or exercisable for, or
giving any Person a right to subscribe for or acquire, any securities
of CSC MA, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. CSC MA has no outstanding bonds,
debentures, notes or other obligations the holders of which have the
right to vote (or to convert into or be exercised or exchanged for
securities having the right to vote) with the stockholders of CSC MA on
any matter. There are no voting trusts, proxies, or other commitments
or understandings, restrictions or arrangements of any kind in favor of
any Person with respect to the voting of, or the right to participate
in dividends or other earnings on, any securities or other ownership
interests of CSC MA.
(c) On the date of this Agreement and continuing through the
Closing Date, CSC MA has and shall have no Subsidiaries.
3.02 Legal Capacity; Approvals and Consents.
(a) Authority and Binding Effect. Each Cablevision Entity has all
requisite corporate power and authority to execute, deliver and perform
the Transaction Documents to which it is a party and to approve, adopt
and consummate the Merger to which it is a party. Each Cablevision
Entity has duly taken all corporate and shareholder actions necessary
to authorize the execution, delivery and performance of the Transaction
Documents to which it is a party. Without limiting the foregoing, any
actions of the directors or stockholders of a Cablevision Entity
required to approve and adopt the Transaction Documents to which it is
a party have been duly taken in accordance with the requirements of the
DGCL and no further action of the directors or stockholders of a
Cablevision Entity is required in order to consummate the Merger. The
Transaction Documents to which it is a party have been duly executed
and delivered by each Cablevision Entity and each is the valid and
binding obligation of such Cablevision Entity enforceable in accordance
with its terms, except as such enforceability may be affected by laws
of bankruptcy, insolvency, reorganization and creditors' rights
generally and by the availability of equitable remedies.
(b) No Breach. Subject only to obtaining the consents and
approvals set forth in Schedule 3.02 of Cablevision's Disclosure
Schedule, the execution, delivery and performance of the Transaction
Documents to which it is a party does not, and will not, contravene the
relevant organizational documents of any Cablevision Entity, and does
not,
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and will not: (i) conflict with or result in a breach or violation by a
Cablevision Entity of or constitute a default by a Cablevision Entity
under or result in the termination, suspension, modification or
impairment of any CATV Instrument, Law, Judgment or Contract to which a
Cablevision Entity is a party or by which the CATV Business, a
Cablevision Entity, any of its Assets or the capital stock of CSC MA is
subject or bound or may be affected; or (ii) create or impose any
Encumbrance upon any of the Assets or the Capital Stock of CSC MA other
than a Permitted Encumbrance, except in each case, under clause (i)
above, for any conflict, breach, violation, default or termination,
suspension, modification or impairment which would not, individually or
in the aggregate, reasonably be expected to have a Cablevision Material
Adverse Effect.
(c) Required Consents. Except for the parties listed in Schedule
3.02 of Cablevision's Disclosure Schedule, there are no parties whose
approval or consent, or with whom the filing of any certificate,
notice, application, report or other document, is legally or
contractually required or otherwise is necessary in connection with the
execution, delivery or performance of any Transaction Document by a
Cablevision Entity, except where failure to obtain such consent or
approval or failure to make such filing would not reasonably be
expected to have a Cablevision Material Adverse Effect or materially
adversely affect the ability of the Cablevision Entities to consummate
the transactions contemplated hereby.
(d) Obtaining Consents. No Cablevision Entity is aware of, or has
reason to believe there is, any reason relating to any Cablevision
Entity that any Governmental Authority or other party whose consent is
required or contemplated hereunder would refuse to consent to the
transfer of the CATV Instruments or any rights of a Cablevision Entity
thereunder or would condition the granting of any such consent on the
performance by any Cablevision Entity or AT&T Entity of any material
obligation not expressly set forth herein, except such conditions as
may affect the cable television industry generally in the United States
or in the Commonwealth of Massachusetts.
3.03 Financial Statements. Holdings has delivered to AT&T true and
complete copies of the balance sheet of CSC MA at September 30, 1999 and the
statements of income of CSC MA for the years ending December 31, 1998, 1997 and
1996 (the "Financial Statements"). The Financial Statements were prepared in
accordance with GAAP except for footnotes and certain items that would require
reclassification and certain expenses, in each case, as described in the
Financial Statements and present fairly in all material respects the financial
position and results of operations of CSC MA at September 30, 1999 and for the
period then ended. Holdings has also provided to AT&T an income statement for
the nine months ended September 30, 1999 (the "Interim Financial Statements"),
which Interim Financial Statements were prepared in accordance with the
practices customarily followed by Holdings in preparing its interim statements,
consistently applied, and, subject to normal year-end adjustments and the
procedures followed in interim statements, present fairly in all material
respects the results of operation of CSC MA for the period indicated and is
stated on a basis generally consistent with the above-described income
statement included in the Financial Statements. Except as set forth in Schedule
3.03 of Cablevision's Disclosure Schedule, CSC MA does not have any liability or
obligation, whether accrued or unaccrued, contingent or otherwise that is not
reflected or
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reserved against in the September 30, 1999 balance sheet, except for such
liabilities or obligations arising in the ordinary course of business consistent
with past practice and except for liabilities and obligations that are either
Excluded Liabilities or taken into account as Liabilities in the Working Capital
Adjustment.
3.04 Changes in Operation. Since September 30, 1999 and except as set
forth on Schedule 3.04 of Cablevision's Disclosure Schedule, there has not been
any change in the financial condition, properties, business or results of
operations of the CATV Business or any event or development or combination of
events or developments that, individually or in the aggregate, has had or would
reasonably be expected to have a Cablevision Material Adverse Effect.
3.05 Tax Matters.
(a) All Persons within the Group have duly filed all material Tax
Returns required to be filed by the Persons within the Group with any
taxing authority on or prior to the date hereof, and the information
contained in such Tax Returns is true, complete and accurate in all
material respects. All Persons within the Group have timely paid all
Taxes that have become due or payable (whether or not shown on any Tax
Return) and have adequately reserved for in accordance with GAAP
(either individually or a member of a consolidated group) all Taxes
that have accrued but are not yet due or payable. Except as set forth
in Schedule 3.05(a) of Cablevision's Disclosure Schedule, no Person
within the Group has received any notice or assessment to the effect
that there is any unpaid Tax due or claimed to be due from such Person
in respect of such Tax Returns; nor has any such Person received any
notice of the assertion or threatened assertion of any Encumbrances
with respect to any Assets on account of any unpaid Taxes; and no
audits of such Tax Returns by any Governmental Authority are pending
or, so far as any Cablevision Entity knows, threatened.
(b) No Person within the Group has knowledge of any facts on the
basis of which taxing authorities could have a likelihood of
successfully asserting deficiencies or claims with respect to such Tax
Returns. All Persons within the Group have withheld or collected and
paid over to the appropriate taxing authorities or are properly holding
for such payment all Taxes required by law to be withheld or collected.
There are no material liens for Taxes upon the assets of any Person
within the Group other than liens for current Taxes not yet due and
payable and liens for Taxes that are being contested in good faith by
appropriate proceedings.
(c) Except as set forth on Schedule 3.05(c) to Cablevision's
Disclosure Schedule, 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, CSC MA or any CSC Subsidiary.
(d) Except as set forth on Schedule 3.05(d) to Cablevision's
Disclosure Schedule, none of CSC MA or any CSC Subsidiary is involved
in or subject to any joint venture,
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partnership or other arrangement or contract which is treated as a
partnership for federal, State, local or foreign income tax purposes.
(e) All material elections with respect to Taxes affecting CSC MA
or any CSC Subsidiary as of the date hereof are set forth in on
Schedule 3.05(e) to Cablevision's Disclosure Schedule.
(f) Neither CSC MA nor any CSC Subsidiary has filed a consent
pursuant to the collapsible corporation provisions of Section 341(f) of
the Code (or any corresponding provision of State, local or foreign
income tax law). No member of the Group is a party to any safe harbor
lease within the meaning of Section 168(f)(8) of the Code, as in effect
prior to amendment by the Tax Equity and Fiscal Responsibility Act of
1982. No Person within the Group is, as of the date hereof, a "United
States real property holding corporation" within the meaning of Section
897 of the Code. As of the date hereof, neither CSC MA nor any CSC
Subsidiary has agreed, nor, to the knowledge of Holdings are they
required, to make any adjustment under Code Section 481(a) (or any
other similar provision of territorial, State, local or foreign law or
regulations) by reason of a change in accounting method or otherwise,
where such adjustment would require a positive adjustment to the
taxable income of CSC MA or any CSC Subsidiary for a taxable period
ending after the Closing Date. No member of the Group has entered into
any compensatory agreements with respect to the performance of services
which payment thereunder would result in a nondeductible expense to the
Group pursuant to Section 280G of the Code or an excise tax to the
recipient of such payment pursuant to Section 4999 of the Code. No
member of the Group has made any payments since December 31, 1999, and
is not a party to an agreement that could require it to make any
payments (including any deemed payment of compensation upon exercise of
an option), that would not be fully deductible by reason of Section
162(m) of the Code.
(g) Neither CSC MA nor any CSC Subsidiary has net operating losses
or other tax attributes presently subject to limitation under Code
Section 382, 383 or 384 or any other similar provision of territorial,
State, local or foreign law or regulations.
(h) Since September 30, 1999, no Person within the Group has
incurred or accrued any liability for any Taxes except for Taxes
incurred or accrued in the ordinary course of business of such Persons.
(i) Neither CSC MA nor any CSC Subsidiary has assumed the Tax
liability of any other Person under contract nor is CSC MA or its
Assets subject to a claim under any contract entered into by any Person
within the Group who assumed the Tax liability of any other Person
under contract.
(j) Each Person within the Group has disclosed on its federal
income Tax Returns all positions taken therein that could give rise to
a substantial understatement of federal income Tax within the meaning
of Section 6662 of the Code.
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(k) There have not been, and prior to the Closing Date there will
not be, any distributions, contributions or other restructurings of CSC
MA which could preclude it from qualifying as a "party to a
reorganization" within the meaning of Section 368(b) of the Code in the
Merger.
(l) Neither Holdings nor any of its affiliates has taken or agreed
to take any action, nor do its executive officers have any actual
knowledge of any fact or circumstance, that would prevent the Merger
from qualifying as a "reorganization" within the meaning of Section
368(a) of the Code.
(m) None of the liabilities of CSC MA as of the date of Closing
and immediately after the Closing, including intercompany debt, were
created or transferred in anticipation of, contemplation of, or as part
of the transactions contemplated by this Agreement. Further, none of
the liabilities of CSC MA as of the date of Closing or immediately
after the Closing will have original issue discount, nor will any
original issue discount be created as a result of the transaction
pursuant to Treas. Reg. 1.1502-13(g) or any provision of the Code,
regulations thereunder, or under any State, local or foreign tax
jurisdiction. The tax basis of each of the liabilities of CSC MA as of
the date of Closing and immediately after the Closing will be equal to
the principal amount of each of the liabilities of CSC MA as of the
date of the Closing and immediately after the Closing.
3.06 Cablevision Assets.
(a) Title; Encumbrances. CSC MA has, or will have at Closing: (i)
good and marketable title to all of its Equipment and Real Property
owned in fee and (ii) the right and authority (subject to the required
consents specified herein) in all of its title and interest in and to
the other property or rights included in the Assets, in each instance
free and clear of any Encumbrances except Permitted Encumbrances.
(b) Real Property. Schedule 3.06(b) of Cablevision's Disclosure
Schedule sets forth a list of all Real Property owned or leased by CSC
MA in connection with the operation of the CATV Business as presently
conducted. Except as set forth in Schedule 3.06(b) of Cablevision's
Disclosure Schedule, CSC MA has title in fee simple to all such Real
Property except for leases, easements and other interests not
constituting ownership in fee and CSC MA has valid and enforceable
leasehold interests in such Real Property leased by CSC MA.
(c) Assets. The Assets include all assets used by CSC MA to
conduct the CATV Business as it is presently being conducted in all
material respects, except for Excluded Assets and, together with the
assets comprising the Exchange CATV Business, include all assets used
by Holdings and its affiliates to conduct the Combined CATV Business as
it is presently being conducted in all material respects, except for
Excluded Assets and "Excluded Assets" as defined in the Exchange
Agreement.
(d) Environmental Matters. Except as disclosed in Schedule 3.06(d)
of Cablevision's Disclosure Schedule, or as would not reasonably be
expected, individually or
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in the aggregate, to have a Cablevision Material Adverse Effect: (i)
the Assets comply with applicable Environmental Laws; (ii) to the
knowledge of the Cablevision Entities, the Assets are not the subject
of any court order, administrative order or decree arising under any
Environmental Law; and (iii) the Assets have not been used by CSC MA
for the generation, storage, discharge or disposal of any Hazardous
Substances except as permitted under applicable Environmental Laws.
Except as set forth in Schedule 3.06(d) of Cablevision's Disclosure
Schedule, CSC MA has not received any written notice from any
Governmental Authority alleging that the Assets are in violation of any
Environmental Law, and no claim based on any applicable Environmental
Law has been asserted to CSC MA in writing in the past or is currently
pending or, to the knowledge of the Cablevision Entities, threatened
with respect to any Real Property. Except as set forth in Schedule
3.06(d) of Cablevision's Disclosure Schedule, to each Cablevision
Entity's knowledge, (i) no aboveground or underground storage tanks
containing Hazardous Substances or hazardous waste are currently
located at any of the Real Property, or have been located at any of the
Real Property during the time such Real Property was owned or leased by
CSC MA, and (ii) no Real Property has been used as a gasoline service
station or any other facility for storing, pumping, dispensing or
producing gasoline or other petroleum products or wastes during the
time such Real Property was owned or leased by CSC MA. The Cablevision
Entities have made available to AT&T true and complete copies of all
(i) environmental audits, investigations, studies or reports with
respect to any Assets that have been performed by or at the direction
or on behalf of the Cablevision Entities or that are in their
possession, (ii) notices or other materials in the Cablevision
Entities' possession from Governmental Authorities having the power to
administer or enforce any applicable Environmental Laws relating to
current or past ownership, use or operation of or activities at the
Assets and (iii) materials in the Cablevision Entities' possession
relating to any claim, allegation or action by any Person (other than
any Governmental Authorities) with respect to the Assets under any
applicable Environmental Law. For the purposes of this Section 3.06,
"hazardous waste" will have the meaning set forth in the Comprehensive
Response, Compensation and Liability Act of 1980 and the applicable law
of the Commonwealth of Massachusetts.
3.07 CATV Business.
(a) As of December 31, 1999, the CATV Business included not less
than 193,034 Basic Subscribers.
(b) Since September 30, 1999, the CATV Business has been operated
in the ordinary course of business in all material respects, and no
material assets previously used therein have been disposed of except in
the ordinary course of business.
(c) Schedule 3.07(c) of Cablevision's Disclosure Schedule contains
a complete list of all Material Contracts in effect on the date of this
Agreement. As used in this Section 3.07(c), the term "Material
Contracts" means any of the following to the extent relating to the
CATV Business to which CSC MA is a party or by which CSC MA or the
Assets are bound and to the extent not terminable on 30 days' or less
notice without liability: (i) any pole attachment agreements, (ii) any
conduit agreements, (iii) any real estate leases, (iv)
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any agreement creating a partnership or joint venture, (v) any
agreement (or group of related agreements) under which CSC MA has
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money or any capitalized lease obligation or under which it has imposed
a security interest on any of its assets, tangible or intangible, (vi)
any noncompetition or similar agreement restricting activities by CSC
MA, (vii) any agreement for any billing system arrangements for any of
the CATV Systems that is not terminated or terminable with respect to
the CATV Systems upon Closing, (viii) any agreement under which the
consequences of a default or termination could be reasonably expected
to have a Cablevision Material Adverse Effect, or (ix) any other
agreement (or group of related agreements) the performance of which
involves consideration in excess of $100,000 in any calendar year.
(d) The CATV Licenses and the cable franchises and ordinances used
in the CATV Business are listed in Schedule 1.01(a) of Cablevision's
Disclosure Schedule and comprise all of the CATV Licenses and cable
franchises and ordinances necessary to operate the CATV Business in the
ordinary course. CSC MA is in compliance in all material respects with
the terms and conditions of all such CATV Licenses and cable franchises
and ordinances. CSC MA holds, or will hold at Closing, all of the CATV
Licenses and all of the cable franchises and ordinances used in the
CATV Business reasonably necessary to enable it to operate the CATV
Business as presently conducted in all material respects. CSC MA holds,
or will hold at Closing, all of the CATV Instruments (other than cable
franchises and ordinances, as to which the representation and warranty
in the preceding sentence will apply), except all such CATV Instruments
the failure of which to hold would not reasonably be expected to have a
Cablevision Material Adverse Effect. CSC MA is in compliance with the
terms and conditions of all CATV Instruments (other than cable
franchises and ordinances, as to which the compliance representation
and warranty in the second sentence of this Section 3.07(d) will apply)
except where such noncompliance would not reasonably be expected to
have a Cablevision Material Adverse Effect. Except as disclosed in
Schedule 3.07(d) of Cablevision's Disclosure Schedule, CSC MA has not
received any notice of any claimed or purported default in any CATV
Instruments and there are no proceedings pending, or, to the knowledge
of the Cablevision Entities, threatened, to cancel, modify or change
any such CATV Instruments.
(e) Except as set forth in Schedule 3.07(e) of Cablevision's
Disclosure Schedule, the CATV Business is conducted by CSC MA in
material compliance with all applicable laws, regulations and other
requirements of Governmental Authorities, CATV Instruments, CATV
Licenses and Contracts, including, but not limited to, compliance in
all material respects with the Communications Act of 1934, as amended,
and the rules and regulations promulgated thereunder (collectively, the
"Communications Act"). Except as set forth in Schedule 3.07(e) of
Cablevision's Disclosure Schedule, CSC MA has submitted to the FCC all
filings, including, but not limited to, cable television registration
statements, annual reports and aeronautical frequency usage notices,
that are required under the rules and regulations of the FCC; and the
CATV Business is in compliance with all signal leakage criteria
prescribed by the FCC for each relevant reporting period. CSC MA has
made available to AT&T correct and complete copies of all reports and
filings for the past year, made or filed pursuant to FCC rules and
regulations.
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(f) Except as set forth in Schedule 3.07(f) of Cablevision's
Disclosure Schedule, CSC MA has filed all semi-annual statements of
account and paid all compulsory licensing fees required by Section 111
of the Copyright Act of 1976, and the rules, regulations and orders of
the Copyright Office of the Library of Congress promulgated thereunder
with respect to the CATV Business, for the three years preceding the
date of the Agreement. To the knowledge of CSC MA, the conduct of the
CATV Business does not infringe in any material respect upon the
patents, trademarks, copyrights, trade names or other intellectual
property rights, domestic or foreign, of any Person, and, to the
knowledge of the Cablevision Entities, no Person has asserted any claim
to any Cablevision Entity with respect to any such infringement.
(g) Schedule 3.07(g) of Cablevision's Disclosure Schedule
identifies all material rate complaints and all appeals of material
local rate orders or material rate complaints with respect to the CATV
Business which, to any Cablevision Entity's knowledge, are pending at
the FCC. Except as set forth in Schedule 3.07(g) of Cablevision's
Disclosure Schedule, as of the date of this Agreement: (i) CSC MA has
not received any written or, to the knowledge of any Cablevision
Entity, oral notice from any Governmental Authority with respect to an
intention to enforce customer service standards pursuant to the
Communications Act, (ii) CSC MA has not agreed with any Governmental
Authority to establish customer service standards for any CATV System
that exceeds the customer service standards promulgated pursuant to the
Communications Act, and (iii) CSC MA has not, with respect to any CATV
System, made any election with respect to any cost of service
proceeding (other than a network upgrade cost of service proceeding)
conducted in accordance with Part 76.922 of Title 47 of the Code of
Federal Regulations or any similar proceeding with respect to any of
their CATV Systems, and CSC MA has not entered into any "social
contract" or other proposed resolution with the FCC with respect to
rates charged for CATV services in the CATV Systems and none of them is
currently negotiating or anticipating entering into the same.
(h) Except as set forth in Schedule 3.07(h) of Cablevision's
Disclosure Schedule, as of the date of this Agreement: (i) no
Cablevision Entity has received, and no Cablevision Entity has notice
that it will receive, from any Governmental Authority, a preliminary
assessment that a CATV Instrument should not be renewed as provided in
Section 626(c)(1) of the Communications Act, (ii) the Cablevision
Entities have timely filed notices of renewal in accordance with the
Communications Act and all Governmental Authorities with respect to
each CATV Instrument expiring within 30 months of the date of this
Agreement and such notices of renewal have been filed pursuant to the
renewal procedures established by Section 626(a) of the Communications
Act, and (iii) no Governmental Authority has commenced, or given
written notice that it intends to commence, a proceeding to revoke or
suspend a CATV Instrument.
(i) Holdings has previously made available to AT&T complete and
correct copies of all CATV Instruments and Contracts that are material
to the CATV Business.
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(j) Schedule 3.07(j) of Cablevision's Disclosure Schedule sets
forth with respect to the CATV Business the approximate number of plant
miles (aerial and underground) for each head-end, the approximate
bandwidth capability of each head-end, the stations and signals carried
by each head-end and the channel position of each such signal and
station, which information is true and correct in all material
respects, in each case, as of the applicable dates specified therein
and subject to any qualifications set forth therein. Holdings has
delivered to AT&T channel lineups and the monthly rates charged for
each class of service in the CATV Systems, which information is true
and correct in all material respects, in each case, as of the
applicable dates specified therein and subject to any qualifications
set forth therein. Except as described in Schedule 3.07(j) of
Cablevision's Disclosure Schedule, each CATV System is providing all
channels, stations and signals reflected as being carried on the CATV
Systems on Schedule 3.07(j) of Cablevision's Disclosure Schedule.
(k) Except as described in Schedule 3.07(k) of Cablevision's
Disclosure Schedule, there is no overbuild of the CATV Systems at
present, nor, to the knowledge of any Cablevision Entity, is any
overbuild pending.
(l) Except as set forth in Schedule 3.07(l) to Cablevision's
Disclosure Schedule, the tangible personal property included in the
Assets are in operating condition and repair (ordinary wear and tear
excepted) and are suitable for continued use in the manner in which
presently used in all material respects.
(m) To the knowledge of the Cablevision Entities, each parcel of
owned or leased Real Property and any improvements thereon (i) has
access to and over public streets or private streets for which CSC MA
has a valid right of ingress and egress, and (ii) conforms in its
current use and occupancy to all zoning requirements without reliance
upon a variance issued by a Governmental Authority or a classification
of the parcel in question as a nonconforming use, other than, in the
case of clauses (i) and (ii), exceptions or conformities that,
individually or in the aggregate, do not materially detract from the
value of the Real Property or which do not materially interfere with
the present and continued use of such Real Property in the operation of
the CATV Business.
3.08 Labor Contracts and Actions.
(a) CSC MA is not a party to any contract with any labor
organization, nor has CSC MA agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective
bargaining unit been certified as representing any of the Employees
with respect to the operation of the CATV Business.
(b) CSC MA is not experiencing any strikes, work stoppages,
significant grievance proceedings or, to the knowledge of any
Cablevision Entity, claims of unfair labor practices filed with respect
to the operation of the CATV Business.
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3.09 Employee Benefit Plans.
(a) All "employee benefit plans" within the meaning of Section
3(3) of ERISA covering Employees, other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA, and other benefit plans,
contracts or arrangements covering Employees (collectively, the
"Benefit Plans") are listed in Schedule 3.09 of Cablevision's
Disclosure Schedule. True and complete copies of all Benefit Plans and
all amendments thereto have been provided or made available to AT&T.
Schedule 3.09 of Cablevision's Disclosure Schedule also lists all
multiemployer plans covering Employees.
(b) All Benefit Plans, to the extent subject to ERISA, are in
substantial compliance with ERISA. There is no material pending or, to
the knowledge of any Cablevision Entity, threatened litigation relating
to the Benefit Plans. No Cablevision Entity has engaged in a
transaction with respect to any Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, could subject
a Cablevision Entity to a tax or penalty imposed by either Section 4975
of the Code or Section 502(i) of ERISA in an amount that would be
material.
(c) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by any Cablevision Entity with
respect to any ongoing, frozen or terminated "single-employer plan,"
within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by it, or the single-employer plan of any ERISA
Affiliate of any Cablevision Entity. No Cablevision Entity has incurred
and none expects to incur any withdrawal liability with respect to a
multiemployer plan under Subtitle E of Title IV of ERISA. No notice of
a "reportable event," within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been
required to be filed for any Benefit Plan subject to Title IV of ERISA
or by any ERISA Affiliate of any Cablevision Entity within the 12-month
period ending on the date hereof.
(d) Neither any Benefit Plan nor any single-employer plan of an
ERISA Affiliate of a Cablevision Entity has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412
of the Code or Section 302 of ERISA and no ERISA Affiliate has an
outstanding funding waiver. No Cablevision Entity has provided, nor is
it required to provide, security to any Benefit Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
3.10 Contracts. Except as set forth in Schedule 3.10 of Cablevision's
Disclosure Schedule, there are no defaults by any Cablevision Entity under the
Contracts (nor has any Cablevision Entity received written notice of a
threatened default or notice of default) which would reasonably be expected,
individually or in the aggregate, to have a Cablevision Material Adverse Effect,
and no Cablevision Entity knows of any default by any other party to a Contract
which would reasonably be expected, individually or in the aggregate, to have a
Cablevision Material Adverse Effect.
3.11 Legal and Governmental Proceedings and Judgments. Except as may
affect the cable television industry generally in the United States or in the
Commonwealth of
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Massachusetts, or as set forth in Schedule 3.11 of Cablevision's Disclosure
Schedule, there is no legal action or proceeding, pending or, so far as is known
to any Cablevision Entity, any investigation pending or threatened against any
Cablevision Entity, the CATV Business or the Assets, nor is there any Judgment
outstanding against CSC MA or to or by which CSC MA, any of the Assets or the
CATV Business is subject or bound, which (a) results in any modification,
termination, suspension, impairment or reformation of any CATV Instrument or
Contract or any right or privilege thereunder in a manner that would reasonably
be expected to have a Cablevision Material Adverse Effect, or (b) materially
adversely affects the ability of any Cablevision Entity to consummate any of the
transactions contemplated hereby.
3.12 Finders and Brokers. Holdings has employed Bear Stearns & Co. Inc.
and Merrill Lynch & Co. as its brokers in the sale provided herein and will pay
and discharge the claim thereof for commission or expense reimbursement in
connection therewith. No Cablevision Entity has entered into any other contract,
arrangement or understanding with any Person or firm, nor is it aware of any
claim or basis for any claim based upon any act or omission of Holdings or any
of its affiliates, which may result in the obligation of AT&T or CSC MA to pay
any finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby.
3.13 Securities Law Matters.
(a) Holdings (i) understands that the Common Stock Consideration
has not been registered under the Securities Act or under any state
securities law or Blue Sky Law of any jurisdiction ("Blue Sky Law") and
that the Common Stock Consideration is being offered and sold in
reliance upon federal and State exemptions for transactions not
involving a public offering; (ii) is an "accredited investor" as that
term is defined under Rule 501 promulgated under the Securities Act;
(iii) has received the AT&T SEC Documents and has had the opportunity
to obtain additional information as desired in order to evaluate the
merits and risks inherent in holding the Common Stock Consideration;
(iv) is able to bear the economic risk in holding the Common Stock
Consideration; and (v) is acquiring the Common Stock Consideration
solely for investment and not with a view to the distribution or resale
thereof; provided that, in each case, Holdings may sell all or part of
the Common Stock Consideration pursuant to an effective registration
statement or an exemption from registration under the Securities Act or
may enter into transactions that have the effect of "monetizing" or
hedging its ownership of the Common Stock Consideration pursuant to an
effective registration statement or an exemption from registration
under the Securities Act. The term "solely for investment" used in this
Section has the meaning given to that term for purposes of determining
the availability of an exemption from registration under Section 4(2)
of the Securities Act.
(b) Holdings will not sell, assign, transfer or otherwise dispose
of the Common Stock Consideration without registration under the
Securities Act and under applicable Blue Sky Law unless an exemption
from registration thereunder is available. Holdings acknowledges that
the stock certificates evidencing such Common Stock Consideration will
bear a legend to the effect of the foregoing.
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(c) AT&T understands that Holdings and its Affiliates intend to,
and nothing in this Section 3.13 shall restrict in any way Holdings' or
its Affiliates' ability to, issue securities which may be convertible
into or exchangeable for all or a portion of the Common Stock
Consideration.
3.14 No Vote Required. No vote of the holders of any class or series of
capital stock of Cablevision Parent is required to approve this Agreement and
the transactions contemplated hereby.
4. REPRESENTATIONS AND WARRANTIES OF AT&T.
To induce the Cablevision Entities to enter into this Agreement, AT&T
represents and warrants to the Cablevision Entities as follows:
4.01 Organization and Authority of AT&T Entities. Each of the AT&T
Entities is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization and has all corporate power
and authority necessary to carry on its business as presently conducted. Each of
the AT&T Entities is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where such qualification is necessary
except for those jurisdictions where the failure to be so qualified or in good
standing, individually or in the aggregate, has not had and would not reasonably
be expected to have, an AT&T Material Adverse Effect.
4.02 Legal Capacity: Approvals and Consents.
(a) Authority and Binding Effect. Each AT&T Entity has all
requisite corporate power and authority to execute, deliver and perform
the Transaction Documents to which it is a party, and the transactions
contemplated hereby and thereby, and to approve, adopt and consummate
the Merger to which it is a party. Each AT&T Entity has duly taken all
corporate and shareholder actions necessary to authorize the execution,
delivery and performance of the Transaction Documents to which it is a
party. Without limiting the foregoing, any actions of the directors or
stockholders of any AT&T Entity required to approve and adopt the
Transaction Documents to which it is a party have been duly taken in
accordance with the requirements of the DGCL and no further action of
the directors or stockholders of any AT&T Entity is required in order
to consummate the Merger. The Transaction Documents have been duly
executed and delivered by each AT&T Entity that is a party thereto and
are the valid and binding obligations of each AT&T Entity that is a
party thereto enforceable in accordance with their respective terms,
except as such enforceability may be affected by laws of bankruptcy,
insolvency, reorganization and creditors' rights generally and by the
availability of equitable remedies.
(b) No Breach or Violation. The execution, delivery and
performance of the Transaction Documents do not and will not (i)
contravene, conflict with, or result in any violation or breach of any
provision of the certificate of incorporation or bylaws of an AT&T
Entity; or (ii) conflict with or result in a breach or violation by any
AT&T Entity of
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or constitute a default by any AT&T Entity under any Law, Judgment or
Contract to which any AT&T Entity is a party or by which any AT&T
Entity is subject or bound or may be affected, except for any
contravention, conflict, breach, violation or default that would not,
individually or in the aggregate, reasonably be expected to have an
AT&T Material Adverse Effect.
4.03 Legal and Governmental Proceedings and Judgments. Except as may
affect the cable television industry generally in the United States or in the
State of New York, there is no legal action or proceeding pending or, to the
knowledge of any AT&T Entity, threatened against or otherwise involving any AT&T
Entity, nor are there any Judgments outstanding against any AT&T Entity or to or
by which any AT&T Entity is, or may be, subject or bound which materially
adversely affect the ability of the AT&T Entities to consummate the transactions
contemplated hereby.
4.04 Finders and Brokers. No AT&T Entity has entered into any contract,
arrangement or understanding with any Person, and is not aware of any claim or
basis for any claim based upon any act or omission of any AT&T Entity or any of
its affiliates, which may result in the obligation of any Cablevision Entity to
pay any finder's fees, brokerage or agent's commissions or other like payments
in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
4.05 AT&T Consents. Assuming that all of the consents referenced in
Schedule 3.02 of Cablevision's Disclosure Schedule have been obtained, other
than approval and filings as required under the HSR Act and Rules, the federal
securities laws or State securities laws or the rules or regulations of any
exchange on which the AT&T Common Stock is listed or quoted, no consent, order,
authorization, waiver, approval or any other action by, or registration,
declaration or filing with, any third party or Governmental Authority is
required for AT&T to execute and deliver the Transaction Documents, other than
such consents, orders, authorizations, approvals or other actions that, if not
received, would not materially adversely affect the ability of the AT&T Entities
to consummate the transactions contemplated hereby.
4.06 Obtaining Consents. No AT&T Entity is aware of, or has any reason
to believe there is, any reason relating to any AT&T Entity that any
Governmental Authority or other party whose consent is required or contemplated
hereunder would refuse to consent to the transfer of the CATV Instruments or any
rights of any Cablevision Entity thereunder or would condition the granting of
any such consent on the performance by any Cablevision Entity or AT&T Entity of
any material obligation not expressly set forth herein, except such conditions
as may affect the cable television industry generally in the United States or in
the Commonwealth of Massachusetts.
4.07 AT&T Stock.
(a) The Common Stock Consideration has been duly authorized and,
when issued and delivered in accordance with the terms of this
Agreement, will have been validly issued and will be fully paid and
nonassessable and the issuance thereof is not subject to any preemptive
or other similar right.
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(b) As of the date hereof, the authorized capital stock of AT&T
consists of (a) 6,000,000,000 shares of AT&T Common Stock and (b)
100,000,000 shares of preferred stock, $1.00 par value per share. All
of the outstanding shares of capital stock of AT&T are duly authorized,
validly issued, fully paid and nonassessable, and no class of capital
stock of AT&T is entitled to preemptive rights. As of the close of
business on February 29, 2000, 3,194,755,604 shares of AT&T Common
Stock and no shares of AT&T preferred stock were issued and
outstanding. Except as disclosed in the AT&T SEC Documents, all
outstanding shares of capital stock of the Significant Subsidiaries (as
defined for purposes of Regulation S-X under the Exchange Act) of AT&T
are owned by AT&T or a direct or indirect wholly owned subsidiary of
AT&T, free and clear of all Encumbrances. As of the close of business
on February 29, 2000, there were outstanding employee options to
acquire no more than 165,178,946 shares of Capital Stock of AT&T.
Except as disclosed in AT&T SEC documents, there are no other options
or rights to acquire Capital Stock or Voting Securities of AT&T
(collectively, "AT&T Securities") and there are no other securities of
AT&T convertible into or exchangeable for shares of Capital Stock or
Voting Securities of AT&T.
4.08 SEC Filings.
(a) AT&T has delivered or made available to Holdings (i) AT&T's
annual report on Form 10-K for its fiscal year ended December 31, 1998,
including all amendments thereto; and (ii) all of its other reports,
statements, schedules and registration statements filed with the SEC
pursuant to the Exchange Act since December 31, 1998 (the documents, as
amended, referred to in this Section 4.08(a) collectively, the "AT&T
SEC Documents").
(b) As of its filing date, each AT&T SEC Document complied as to
form in all material respects with the applicable requirements of the
Exchange Act and the rules and regulations of the SEC thereunder,
except as the same may have been corrected, updated or superceded by
means of a subsequent filing with the SEC prior to the date of this
Agreement.
(c) As of its filing date, each AT&T SEC Document filed pursuant
to the Exchange Act did not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading, except as the same may have been
corrected, updated or superceded by means of a subsequent filing with
the SEC prior to the date of this Agreement.
4.09 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of AT&T
included in the AT&T SEC Documents fairly present, in all material respects, in
conformity with GAAP (except as may be indicated in the notes thereto), the
consolidated financial position of AT&T and its consolidated Subsidiaries as of
the dates thereof and their consolidated results of operations, changes in
stockholder's equity and cash flows for the periods then ended (subject to the
omission of notes
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and to normal year-end adjustments in the case of any unaudited consolidated
interim financial statements).
4.10 Absence of Certain Changes. Since September 30, 1999, except as
set forth in the AT&T SEC Documents, there has not been any change in the
financial condition, properties, business or results of operations of AT&T and
the AT&T Subsidiaries or any event or development or combination of events or
developments that, individually or in the aggregate, has had or would reasonably
be expected to have an AT&T Material Adverse Effect.
4.11 No Vote Required. No vote of the holders of any class or series of
Capital Stock of AT&T is necessary to approve this Agreement and the
transactions contemplated hereby.
4.12 Private Offering. Based on the representations set forth in
Section 3.13, the offer, issuance and delivery to Holdings pursuant to the terms
of this Agreement of the Common Stock Consideration is exempt from registration
under the Securities Act.
4.13 Ownership of Merger Sub; No Prior Activities. Merger Sub was
formed by AT&T solely for the purpose of engaging in the Merger and it has not
engaged in any other activities. As of the date hereof and the Effective Time,
all of the Capital Stock of Merger Sub is and will be owned directly by AT&T,
and there are (a) no other shares of Capital Stock or other voting securities of
Merger Sub, (b) no securities of Merger Sub convertible into or exchangeable for
shares of Capital Stock or other voting securities of Merger Sub, and (c) no
options or other rights to acquire from Merger Sub, and no obligations of Merger
Sub to issue, any Capital Stock, other voting securities or securities
convertible into or exchangeable for Capital Stock or other voting securities of
Merger Sub.
4.14 Tax Matters. Neither AT&T nor any of its affiliates has taken or
agreed to take any action, nor do its executive officers have any actual
knowledge of any fact or circumstance, that would prevent the Merger from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code.
5. COVENANTS PENDING CLOSING.
5.01 Business of Cablevision Entities. From the date hereof to the
Closing Date, and except as otherwise consented to or approved by AT&T in
writing (which consent shall not be unreasonably withheld), the Cablevision
Entities covenant and agree as follows:
(a) Business in Ordinary Course. Except as otherwise provided
herein, CSC MA shall conduct the CATV Business in the ordinary course
(including, without limitation, to rebuild the total number of plant
miles in the CATV System planned to be upgraded during the 2000 fiscal
year in Schedule 1.01(e) of Cablevision's Disclosure Schedule in
accordance with the Upgrade Specifications), consistent with past
practices and will not engage in any material transaction, including,
without limitation, entering into or amending in any material respect
any CATV Instrument or Contract or making any material advance or
expenditure, other than in the ordinary course of business, nor change
in any material respect its business policies or practices. CSC MA
shall use its
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reasonable commercial efforts to preserve the CATV Business intact, to
retain the services of its present employees and agents, and preserve
its business relationships with, and the goodwill of, its customers,
suppliers and others and use commercially reasonable efforts to
maintain in full force and effect policies of insurance with respect to
the CATV Business consistent in all material respects with past
practices. The Cablevision Entities shall pay before delinquent all
taxes and other charges upon or against CSC MA or any of their
respective properties or income, file when due all tax returns and
other reports required by Governmental Authorities and pay when due all
liabilities except those which it chooses to contest in good faith and
by appropriate proceedings.
(b) Books and Records. CSC MA shall maintain its books, accounts
and records in the usual, regular and ordinary manner.
(c) Litigation During Interim Period. Holdings will advise AT&T in
writing promptly of the assertion, commencement or threat of any claim,
litigation, labor dispute, proceeding or investigation in which the
CATV Business or CSC MA may be affected and which (i) would reasonably
be expected to have a Cablevision Material Adverse Effect, (ii)
involves exposures reasonably likely to exceed $5,000,000, or (iii)
relates to the transactions contemplated hereby. In addition, Holdings
will use reasonable commercial efforts to advise AT&T in writing
promptly of the commencement of litigation or other proceeding against
CSC MA or the CATV Business or Holdings' receipt of written notice of
any such matter which is likely to exceed $1,000,000 of exposure
affecting CSC MA or the CATV Business.
(d) Material Contracts. Holdings shall promptly deliver to AT&T
copies of (i) all CATV Instruments and (ii) all Contracts that are, in
the case of each of clauses (i) and (ii), entered into prior to the
Closing and that would have been required to be disclosed in
Cablevision's Disclosure Schedule if signed prior to the date of this
Agreement.
(e) Financial Information. Holdings will promptly deliver to AT&T
copies of its monthly management reports on operations with respect to
the operation of the CATV Business prepared in the ordinary course of
business.
(f) 626 Filings. CSC MA will timely file a notice of renewal under
Section 626 of the Cable Act with the appropriate Governmental
Authority with respect to any CATV Instrument that will expire within
30 months after any date between the date of this Agreement and the
Closing Date.
(g) Franchise Renewals. Each Cablevision Entity will consult with
AT&T concerning any proceedings for or negotiations with respect to any
cable television franchise relating to the CATV Business that is
subject to renewal between the date of this Agreement and the Closing
Date.
(h) Negative Covenants. The Cablevision Entities will not, with
respect to the CATV Business:
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(i) make any election with respect to any cost of service
proceeding other than a network upgrade cost of service proceeding
conducted in accordance with Part 76.922 of Title 47 of the Code of
Federal Regulations or any similar proceeding with respect to any CATV
System;
(ii) except as contemplated by this Agreement, sell, transfer
or assign any of the Assets necessary or useful for the operation of
the CATV Business or permit the creation of an Encumbrance (other than
a Permitted Encumbrance) on any of the Assets, except, in each case, in
the ordinary course of business;
(iii) except as disclosed in Schedule 5.01(h)(iii) of
Cablevision's Disclosure Schedule, decrease the rate charged for any
level of services, in each case, except to the extent required under
the 1992 Cable Act or any other Law; provided, however, that if rates
are decreased in order to so comply, Holdings will provide AT&T with
copies of any FCC forms (even if not filed with any Governmental
Authority) that CSC MA used to determine that the new rates were
required;
(iv) convert any CATV Systems to any billing system or
otherwise change in any material respect billing arrangements for any
of the CATV Systems;
(v) except as contemplated by this Agreement, enter into any
Contract of any kind relating to the CATV Business that individually or
in the aggregate call for payments or otherwise involve expenditures to
or by CSC MA in excess of $100,000 in any year, except for (A) the
renewal of Contracts that would, but for such renewal, terminate in
accordance with their terms prior to Closing, (B) any Contract that
would by its terms be terminable without termination fee or cost not
later than 60 days after Closing, and (C) any Contract that is part of
the implementation of Schedule 1.01(e) of Cablevision's Disclosure
Schedule, and that (1) is terminable on 30 days' or less notice without
further cost or obligation to the counterparty or (2) does not require
further performance by CSC MA after the Closing Date;
(vi) enter into, modify or amend any Contract for any fiber
or fiber capacity lease or use arrangements in any of the Cablevision
CATV Systems;
(vii) (A) sell or pledge or agree to sell or pledge any
Capital Stock owned by it in any Subsidiary of CSC MA, (B) amend or
propose to amend the Certificate of Incorporation or by-laws of CSC MA,
(C) split, combine or reclassify CSC MA's outstanding Capital Stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of Capital Stock
of CSC MA or declare, set aside or pay any dividend or other
distribution payable in cash, stock or property (except cash dividends
in the ordinary course consistent with past practice), or (D) directly
or indirectly redeem, purchase or otherwise acquire or agree to redeem,
purchase or otherwise acquire any shares of Capital Stock of CSC MA;
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(viii) except as contemplated by this Agreement, (A) issue,
deliver or sell or agree to issue, deliver or sell any additional
shares of, or rights of any kind to acquire any shares of, Capital
Stock of CSC MA, or any option, rights or warrants to acquire, or
securities convertible into, shares of Capital Stock of CSC MA or any
stock appreciation rights or similar rights, (B) create, assume or
incur any additional indebtedness for borrowed money, except pursuant
to credit facilities in effect as of the date hereof, or (C) acquire or
agree to acquire by merging or consolidating with, or by purchasing a
substantial equity interest in, or by any other manner, any business or
any corporation, partnership, association or other business
organization or division thereof, except that CSC MA may acquire
Assets, or interests therein, in the ordinary course of business;
(ix) take any action that would or would reasonably be
expected to prevent or materially impair the ability of any Cablevision
Entity or AT&T Entity to consummate the transactions contemplated by
the Transaction Documents; provided, that neither Holdings nor CSC MA
shall be in breach of this Section 5.01(h)(ix) if a Governmental
Authority takes any action (including the issuance of any order or
entering of any consent decree or similar Judgment) that would prevent
or materially impair the ability of any Cablevision Entity or AT&T
Entity to consummate the transactions contemplated by the Transaction
Documents; and provided, further, that at the time that Holdings or CSC
MA becomes aware that any Governmental Authority has taken any action
described in the immediately preceding proviso, Holdings shall promptly
notify AT&T of such action and AT&T may (if it so elects by giving
written notice to Holdings within ten days after receipt of such
notice) terminate this Agreement under Section 12.02 hereof;
(x) take any action that would make any representation or
warranty of any Cablevision Entity hereunder inaccurate in any material
respect as of the Closing; or
(xi) agree to do any of the foregoing.
5.02 Business of AT&T Entities. From the date hereof to the Closing
Date, and except as otherwise consented to or approved by Holdings in writing
(which consent shall not be unreasonably withheld) the AT&T Entities covenant
that AT&T will advise the Cablevision Entities in writing promptly of the
assertion, commencement or threat of any claim, litigation, labor dispute,
proceeding or investigation in which AT&T or any of its affiliates is a party
and which (a) would reasonably be expected to have an AT&T Material Adverse
Effect, or (b) relates to the transactions contemplated hereby.
5.03 Access to Information.
(a) Access by AT&T. Between the date of this Agreement and the
Closing, AT&T and its agents shall have reasonable access during normal
business hours to all of the properties, books, reports, records, CATV
Instruments and Contracts of the Cablevision Entities with respect to
the CATV Business, and Holdings shall furnish
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AT&T with all information it may reasonably request; provided that no
investigation pursuant to this Section 5.03(a) shall affect or be
deemed to modify any representation or warranty made by any Cablevision
Entity. All information obtained by AT&T pursuant to this Agreement and
in connection with the negotiation hereof shall be used by AT&T solely
for purposes related to this Agreement and the Merger and, in the case
of nonpublic information, shall, except as may be required for the
performance of this Agreement or by Law, be kept in strict confidence
by AT&T in accordance with the terms of the Confidentiality Agreement
dated October 8, 1999 between AT&T and Cablevision Parent.
(b) Access by Holdings. Prior to Closing, AT&T will cooperate with
Holdings and its agents in connection with reasonable due diligence by
Holdings with respect to its investment in the AT&T Common Stock,
subject to applicable law. Subsequent to the Closing, AT&T shall
preserve and give to Holdings and its agents reasonable access during
normal business hours to all of the books, reports, records, CATV
Instruments and Contracts from files and records of the Cablevision
Entities at the time of Closing, for the purposes of the preparation of
tax returns, the preparation of the Preliminary Adjustment Statement,
the defense of any claims asserted or which may be asserted with
respect to which a Cablevision Entity is the Indemnitor as contemplated
by the Agreement, or other proper business purposes.
5.04 Covenants of AT&T. From and after the date of this Agreement until
the Closing Date, AT&T shall not, nor shall it permit any AT&T Subsidiary to:
(a) take any action that would or would reasonably be expected to
prevent or materially impair the ability of any Cablevision Entity or
AT&T Entity to consummate the transactions contemplated by the
Transaction Documents; provided, that neither AT&T nor any AT&T
Subsidiary shall be in breach of this Section 5.04(i) if a Governmental
Authority takes any action (including the issuance of any order or
entering of any consent decree or similar Judgment) that would prevent
or materially impair the ability of any Cablevision Entity or AT&T
Entity to consummate the transactions contemplated by the Transaction
Documents; and provided, further, that at the time that AT&T or any
AT&T Subsidiary becomes aware that a Governmental Authority has taken
any action described in the immediately preceding proviso, AT&T shall
promptly notify Holdings of such action and Holdings may (if it so
elects by giving written notice to AT&T within ten days after receipt
of such notice) terminate this Agreement under Section 12.02 hereof;
(b) take any action that would make any representation or warranty
of any AT&T Entity hereunder inaccurate in any material respect as of
the Closing; or
(c) agree or commit to do any of the foregoing.
5.05 Certificate of Merger. The Cablevision Entities and the AT&T
Entities covenant and agree to file or cause to be filed, the Certificate of
Merger as provided in Section 2.01(b).
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5.06 Excluded Assets and Excluded Liabilities. Prior to the Effective
Time, CSC MA shall (a) sell, transfer, assign, distribute or otherwise convey to
another Person or terminate the Excluded Assets, and (b) pay, transfer,
extinguish or otherwise relieve itself of its obligation to pay the Excluded
Liabilities, in each case, in a manner that does not allow for any post-Closing
liability, cost or obligation (in the case of Excluded Liabilities) or right (in
the case of Excluded Assets) on the part of AT&T or CSC MA.
5.07 Upgrade Remedies. The parties agree that notwithstanding any
covenant by the Cablevision Entities in this Agreement to accomplish the planned
upgrade activities, the Upgrade Adjustment mechanism provided for in this
Agreement shall be the sole consequence and remedy with respect to a failure to
comply with such covenant.
5.08 Holdings Note. The Cablevision Entities will not modify,
amend or supplement the Holdings Note.
6. DELIVERIES AT CLOSING.
6.01 Deliveries by Holdings. At the Closing, Holdings will
deliver or cause to be delivered to AT&T:
(a) A certificate signed by a principal officer of Holdings, dated
as of the Closing, representing and certifying as to the matters set
forth in Sections 7.03 and 7.04.
(b) An opinion of Cablevision's Counsel, substantially in the form
of Exhibit D hereto.
(c) Evidence in form and substance reasonably satisfactory to AT&T
that receipt of the required consents and approvals listed in Schedule
3.02 of Cablevision's Disclosure Schedule and required as conditions to
the transactions contemplated hereunder have been obtained and remain
in effect.
(d) A certificate, dated the Closing Date, signed by a Secretary
or an Assistant Secretary of each Cablevision Entity certifying that
attached thereto are true, complete and correct copies of (i) such
Cablevision Entity's certificate of incorporation and by-laws, (ii) a
specimen of the stock certificate of CSC MA, and (iii) the resolutions
duly adopted by the board of directors (and, if applicable, the
stockholders) of each Cablevision Entity authorizing the execution and
delivery of the Transaction Documents to which such Cablevision Entity
is a party and approving and adopting this Agreement.
(e) The stock certificates and corporate record books of CSC MA.
(f) The Registration Rights Agreement in the form of Exhibit C
hereto.
(g) The Evidence of Transfer or Termination of Excluded Assets and
Excluded Liabilities in the form of Exhibit F hereto.
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6.02 Deliveries by AT&T. At the Closing, AT&T will deliver or
cause to be delivered to Holdings:
(a) The Common Stock Consideration as provided in Section 2.02.
(b) A certificate signed by a principal officer of AT&T, dated as
of the Closing, representing and certifying as to the matters set forth
in Sections 8.03 and 8.04.
(c) An opinion of AT&T's Counsel, substantially in the form of
Exhibit E hereto.
(d) A certificate, dated the Closing Date, signed by the Secretary
or an Assistant Secretary of each AT&T Entity certifying that attached
thereto are true, complete and correct copies of (i) such AT&T Entity's
certificate of incorporation and by-laws, (ii) a specimen of the stock
certificate for the AT&T Common Stock, and (iii) resolutions duly
adopted by the board of directors (and, if applicable, the
stockholders) of each AT&T Entity authorizing the execution and
delivery of the Transaction Documents to which such AT&T Entity is a
party and approving and adopting this Agreement.
(e) The Registration Rights Agreement in the form of Exhibit C
hereto.
7. CONDITIONS TO THE OBLIGATIONS OF THE AT&T ENTITIES.
The obligations of the AT&T Entities to complete the transactions
provided for herein are subject to the fulfillment of all of the following
conditions any of which may be waived in writing by AT&T.
7.01 Waiting Period; Receipt of Consents.
(a) The waiting period, if any, under the HSR Act and Rules, as
the same may have been extended, shall have expired or been terminated
without action taken to prevent the consummation of the transactions
contemplated hereby.
(b) All of the approvals and consents described in Schedule 3.02
of Cablevision's Disclosure Schedule marked with an asterisk or a
dollar sign in Schedule 3.02 of Cablevision's Disclosure Schedule shall
have been obtained and shall be in full force and effect; provided that
this condition, to the extent it relates to required approvals and
consents of Governmental Authorities for cable franchises, will be
deemed to be satisfied when (i) with respect to cable franchises which
represent, in aggregate, not less than 90% of the Basic Subscribers of
the CATV Systems, such approvals and consents (A) have been received,
or (B) are deemed to have been received in accordance with Section 617
of the Communications Act (47 U.S.C. Section 537), or (C) are not
required under the applicable CATV Instrument, and (ii) any applicable
waiting period (including extensions thereof) has expired with respect
to the FCC Form 394 filed in connection
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with the requests for consent to the transfer of the cable franchises
for which required approvals and consents have not then been obtained.
7.02 Authority. All actions under the documents governing the
Cablevision Entities necessary to authorize (a) the execution and delivery of
the Transaction Documents by the Cablevision Entities and the performance by
them of their obligations hereunder and thereunder, and (b) the consummation of
the transactions contemplated hereby, shall have been duly and validly taken by
the Cablevision Entities and shall be in full force and effect on the Closing
Date.
7.03 Performance. The Cablevision Entities shall have performed in all
material respects their agreements and covenants under the Transaction Documents
(including, without limitation, their covenants in Article 5 of this Agreement
to the extent such are required to be performed at or prior to the Closing).
7.04 Absence of Breach of Warranties and Representations. The
representations and warranties of the Cablevision Entities contained in this
Agreement, without regard to any references based on "Material Adverse Change"
or "materiality" contained therein, shall be true and correct in all respects
when made and on and as of the Closing Date with the same force and effect as if
made on and as of such date, except (a) to the extent that such representations
and warranties describe a condition at a specified time or on a specified date
(in which event such representations and warranties shall be true and correct in
all material respects at such specified time or date or when made, as
applicable) or are affected by the conclusion of the transactions permitted or
contemplated hereby or the conduct of the CATV Business in accordance with
Article 5 hereof between the date hereof and the Closing Date, or (b) where the
failure of such representations and warranties to be true and correct,
individually or in the aggregate, does not have, has not had and would not
reasonably be expected to have, a material adverse effect on the Cablevision
Entities' ability to consummate the transaction contemplated hereby or a
Cablevision Material Adverse Effect.
7.05 No Cablevision Material Adverse Change. Since September 30, 1999
and except as set forth on Schedule 3.04 of Cablevision's Disclosure Schedule,
there has not been any change in the financial condition, properties, business
or results of operations of the CATV Business or any event or development or
combination of events or developments that, individually or in the aggregate,
has had or would reasonably be expected to have a Cablevision Material Adverse
Effect.
7.06 Absence of Proceedings. No Judgment shall have been issued, and no
action or proceeding shall have been instituted by, any Governmental Authority
enjoining or preventing the consummation of the transactions contemplated
hereby.
7.07 FIRPTA Certificate. Holdings shall have delivered to AT&T a
certification of Holdings' non-foreign status in the form attached as
Schedule 7.07.
7.08 MediaOne Closing. The closing of the merger pursuant to the
Agreement and Plan of Merger, dated as of May 6, 1999, as amended, by and among
AT&T Corp., Meteor Acquisition Inc. and MediaOne Group, Inc. shall have
occurred.
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8. CONDITIONS TO THE OBLIGATIONS OF THE CABLEVISION ENTITIES.
The obligations of the Cablevision Entities to complete the
transactions provided for herein are subject to the fulfillment of all of the
following conditions, any of which may be waived in writing by Holdings.
8.01 Waiting Period; Receipt of Consents.
(a) The waiting period, if any, under the HSR Act and Rules, as
the same may have been extended, shall have expired or been terminated
without action taken to prevent the consummation of the transactions
contemplated hereby.
(b) All of the approvals and consents described in Schedule 3.02
of Cablevision's Disclosure Schedule marked with an asterisk in
Schedule 3.02 of Cablevision's Disclosure Schedule shall have been
obtained and shall be in full force and effect; provided that this
condition, to the extent it relates to required approvals and consents
of Governmental Authorities for cable franchises, will be deemed to be
satisfied when (i) with respect to cable franchises which represent, in
the aggregate, not less than 90% of the Basic Subscribers of the CATV
Systems, such approvals and consents (A) have been received, or (B) are
deemed to have been received in accordance with Section 617 of the
Communications Act (47 U.S.C. Section 537), or (C) are not required
under the applicable CATV Instrument, and (ii) any applicable waiting
period (including extensions thereof) has expired with respect to the
FCC Form 394 filed in connection with the requests for consent to the
transfer of the cable franchises for which required approvals and
consents have not then been obtained.
8.02 Authority. All actions under the documents governing the AT&T
Entities necessary to authorize (a) the execution and delivery of the
Transaction Documents by the AT&T Entities and the performance by them of their
obligations hereunder and thereunder and (b) the consummation of the
transactions contemplated hereby, shall have been duly and validly taken by the
AT&T Entities and shall be in full force and effect on the Closing Date.
8.03 Performance. The AT&T Entities shall have performed in all
material respects their agreements and covenants under the Transaction Documents
(including, without limitation, their covenants in Article 5 of this Agreement
to the extent such are required to be performed at or prior to the Closing).
8.04 Absence of Breach of Representations and Warranties. The
representations and warranties of the AT&T Entities contained in this Agreement,
without regard to any references based on "Material Adverse Change" or
"materiality" contained therein, shall be true and correct in all respects when
made and on and as of the Closing Date with the same effect as if made on and as
of such date, except (a) to the extent such representations and warranties
describe a condition at a specified time or on a specified date (in which event
such representations and warranties shall be true and correct in all material
respects at such specified time or date or when made, as applicable) or are
affected by the conclusion of the transactions permitted or
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contemplated hereby, or (b) where the failure of such representations and
warranties to be true and correct, individually or in the aggregate, does not
have, has not had and would not reasonably be expected to have, a material
adverse effect on the AT&T Entities' ability to consummate the transactions
contemplated by this Agreement or an AT&T Material Adverse Effect.
8.05 Absence of Proceedings. No Judgment shall have been issued, and no
action or proceeding shall have been instituted by, any Governmental Authority
enjoining or preventing the consummation of the transactions contemplated
hereby.
8.06 No AT&T Material Adverse Change. Since September 30, 1999 and
except as set forth in the AT&T SEC Documents, there has not been any change in
the financial condition, properties, business or results of operations of AT&T
and the AT&T Subsidiaries or any event or development or combination of events
or developments that, individually or in the aggregate, has had or would
reasonably be expected to have an AT&T Material Adverse Effect.
9. COVENANTS.
9.01 Compliance with Conditions. Each of the parties hereto covenants
and agrees with the other to exercise reasonable commercial efforts to perform,
comply with and otherwise satisfy each and every one of the conditions to be
satisfied hereunder, and each party shall use reasonable commercial efforts to
notify promptly the other if it shall learn that any conditions to performance
of either party will not be fulfilled.
9.02 Compliance with HSR Act and Rules.
(a) Each of the parties hereto will use its reasonable commercial
efforts to comply promptly with any applicable requirements under the
HSR Act and Rules relating to filing and furnishing of information to
the FTC and the Antitrust Division of the DOJ, the parties' actions to
include, without limitation, (i) filing or causing to be filed the HSR
Report required to be filed by them, or by any other Person that is
part of the same "person" (as defined in the HSR Act and Rules) or any
of them, and taking all other action required by the HSR Act or Rules;
(ii) coordinating the filing of such HSR Reports (and exchanging mutual
information required to be disclosed therein) so as to present both HSR
Reports to the FTC and the DOJ at the time selected by the mutual
agreement of Holdings and AT&T, and to avoid substantial errors or
inconsistencies between the two in the description of the transaction;
and (iii) using their reasonable commercial efforts to comply with any
additional request for documents or information made by the FTC or the
DOJ or by a court and assisting the other parties to so comply.
(b) Notwithstanding anything herein to the contrary, in the event
that the consummation of the transactions contemplated hereby is
challenged by the FTC or the DOJ or any agency or instrumentality of
the federal government by an action to stay or enjoin such
consummation, then either AT&T or Holdings shall have the right to
terminate this Agreement unless the other of such parties, at its sole
cost and expense, elects to contest such action, in which case the
noncontesting party shall cooperate with
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the contesting party and assist the contesting party, as reasonably
requested, to contest such action until such time as either party
terminates this Agreement under this Section 9.02 or Article 12. In the
event that such a stay or injunction is granted (preliminary or
otherwise), then either AT&T or Holdings may terminate this Agreement
by prompt written notice to the other. If any other form of equitable
relief affecting any party is granted to the FTC, the DOJ or other such
agency or instrumentality, then such party may terminate this Agreement
by prompt written notice to the other party. To effectuate the intent
of the foregoing provisions of this Section 9.02, the parties agree to
exchange requested or required information in making the filings and in
complying as above provided, and the parties agree to take all
necessary steps to preserve the confidentiality of the information set
forth in any filings including, without limitation, limiting disclosure
of exchanged information to counsel for the nondisclosing party.
9.03 Applications for Assignment of Contracts or CATV Instruments. In
order to secure requisite consents or approvals of the transfer of control to
AT&T of any Contracts or CATV Instruments, the AT&T Entities (with respect to
CATV Instruments) and the Cablevision Entities (with respect to Contracts) shall
proceed as promptly as practicable and in good faith and using reasonable
commercial efforts, to prepare, file and prosecute such application or
applications as may be necessary to obtain each such consent or approval. AT&T
and Holdings shall use reasonable commercial efforts to promptly assist each
other and shall take such prompt and affirmative actions as may be reasonably
necessary in obtaining such approvals and shall cooperate with each other in the
preparation, filing and prosecution of such applications as may be reasonably
necessary, and agree to furnish all information required by the approving
entity, and to be represented at such meetings or hearings as may be scheduled
to consider such applications. Without limiting in any respect the foregoing,
each party agrees to file mutually acceptable applications to all appropriate
Governmental Authorities for all consents or approvals required to consummate
the transactions hereunder within 45 days after the date of this Agreement. AT&T
further agrees that it will not, without the prior written consent of Holdings,
take any action to amend or that would amend or modify any application filed as
provided in this Section 9.03 after the date that such application is accepted
as complete.
9.04 Records, Taxes and Related Matters.
(a) The Cablevision Entities and the AT&T Entities shall each make
their respective books and records (including work papers in the
possession of their respective accountants) available for inspection by
the other party, or by its duly authorized representatives, for
reasonable business purposes at all reasonable times during normal
business hours, for a seven-year period after the Closing Date with
respect to all transactions of the CATV Business occurring prior to or
relating to the Closing, and the historical financial condition,
assets, liabilities, results of operation and cash flows of the CATV
Business for any period prior to the Closing. As used in this Section
9.04, the right of inspection includes the right to make copies at the
requesting party's expense for reasonable business purposes.
(b) Holdings and AT&T each agrees that it shall take no action
and, (i) in the case of AT&T, shall not cause or permit an affiliate or
Subsidiary, including,
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following the Closing, CSC MA or a CSC Subsidiary, and (ii) in the case
of Holdings, shall not cause or permit an affiliate or Subsidiary of
Cablevision Parent or Holdings, including Cablevision Parent, to take
any action which would cause the Merger to fail to qualify as a
"reorganization" within the meaning of Section 368(a) of the Code and
that it and its respective affiliates shall file all Tax Returns in a
manner consistent with the qualification of the Merger as a
"reorganization" within the meaning of Section 368(a) of the Code.
(c) Following the Closing, Cablevision Parent and Holdings
will give access to AT&T, its counsel, accountants and other authorized
representatives during normal business hours to Cablevision Parent's
and Holdings' materials, books, records and documents which relate to
the operations of CSC MA or any CSC Subsidiary for any reasonable
business purpose (including the preparation of Tax reports and Returns
and the preparation of financial statements). Such access will be
subject to the generally applicable document retention policies of
Cablevision Parent and Holdings and reasonable advance written notice,
conducted in a manner that is not disruptive of Cablevision Parent and
Holdings. AT&T will have the right to make copies of such materials at
its own expense.
9.05 Subscriber Billing Services. Holdings will provide or cause to be
provided to AT&T, upon request, customer billing services, at a cost to AT&T
equal to Holdings' cost, and otherwise on terms and conditions reasonably
satisfactory to each party, and access to and the right to use its billing
system computers, software and related fixed assets in connection with the CATV
Systems acquired by AT&T for a period of up to 120 days following the Closing to
allow for conversion of existing billing arrangements. AT&T will notify
Cablevision at least 30 days prior to the expected Closing Date as to whether it
desires such transitional billing services from Cablevision.
9.06 Covenant Not to Compete. Holdings covenants and agrees that for a
period of three years after Closing (or, if the maximum period permitted by law
is less than three years, such shorter maximum period), Holdings will not, and
will cause its Subsidiaries, Cablevision Parent and all Subsidiaries of
Cablevision Parent not to, directly or indirectly, acquire, manage, operate or
control, any terrestrial video cable television system, multichannel multipoint
distribution system, satellite master antenna system or local multipoint
distribution system within the Systems Area (or, if the maximum area permitted
by law is smaller than the Systems Area, such smaller maximum area).
Notwithstanding anything contained herein, (a) the ownership of securities of
any company that is "publicly held" that do not constitute more than 5% of the
voting rights or equity interests of such entity shall not constitute a
violation of this covenant and (b) this Section 9.06 shall not be construed to
restrict ownership, acquisition, management, operation or control of entities
with respect to the direct broadcast satellite business or wireless services
business or ownership, acquisition, management, operation or control of licenses
relating to the foregoing, regardless of the services provided by such entities
or the spectrum utilized by them. The parties hereto each acknowledges that in
view of the uniqueness of the subject matter of this Section 9.06, a breach of
the provisions of this Section 9.06 may result in irreparable injury and the
parties would not have an adequate remedy at law for money damages in the event
that this Section 9.06 were not performed in accordance
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with its terms. Therefore the parties hereto agree that each party shall be
entitled to specific enforcement of the terms of this Section 9.06 in addition
to any other remedy to which a party may be entitled at law or in equity.
9.07 Remaining Franchises. In the event that a Closing under this
Agreement occurs without the receipt of all consents and approvals to transfer
all franchises, the AT&T Entities and the Cablevision Entities covenant and
agree to act in good faith to obtain the approval or consent of any Governmental
Authorities that have not consented to the transfer of any franchises included
in the CATV Business.
9.08 Tax Matters.
(a) All Persons within the Group shall, as of the Closing Date,
terminate all tax allocation agreements or tax sharing agreements with
respect to CSC MA and any CSC Subsidiary and shall ensure that such
agreements are of no further force or effect as to CSC MA and any CSC
Subsidiary on and after the Closing Date and there shall be no
liability of CSC MA or any CSC Subsidiary under any such agreement.
(b) Holdings will ensure that the federal consolidated return
group of which Cablevision Parent is the common parent will not make an
election under Treas. Reg. ss.1.1502-76(b)(2)(ii) (or similar provision
for territorial, State, local or foreign law or regulations) to ratably
allocate income of CSC MA or any CSC Subsidiary without the consent of
AT&T, which consent shall not be unreasonably withheld.
(c) Holdings will not, and will ensure that Cablevision Parent
does not, and will cause CSC MA, and any CSC Subsidiary not to, take
any of the following actions without the consent of AT&T, which consent
shall not be unreasonably withheld: (i) make, revoke, or amend any Tax
election relating to the taxation of CSC MA or a CSC Subsidiary, other
than an election made in the ordinary course of business of CSC MA or a
CSC Subsidiary; (ii) execute any waiver of restrictions on assessment
or collection of any Taxes of CSC MA or a CSC Subsidiary, or (iii)
enter into or amend any agreement or settlement with any Tax authority
with respect to Taxes of CSC MA or a CSC Subsidiary or with respect to
any other Person within the Group if such agreement or settlement would
affect the Tax liability of CSC MA or a CSC Subsidiary.
9.09 Allocation of Tax Liabilities and Tax Indemnification.
(a) Payment of Taxes. Holdings will pay all Taxes of CSC MA and
each CSC Subsidiary that may be due after the Closing Date that are
allocable to taxable periods ending prior to or on the Closing Date
("Pre-Closing Tax Periods"). If, with respect to any Tax, the taxable
period of CSC MA or any CSC Subsidiary begins before and ends after the
Closing Date (a "Split-Tax Period"), the Tax (whether based on income,
capital, ownership of property or otherwise) of CSC MA or such CSC
Subsidiary for such Split-Tax Period will be allocated to (i) Holdings
for the portion of such period up to and including the Closing Date,
and (ii) AT&T, as the direct or indirect owner of CSC MA or such CSC
Subsidiary for the portion of the period subsequent to
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the Closing Date. Taxes for a Split-Tax Period will be allocated
between the portion of the period up to and including the Closing Date
and the portion of the period following the Closing Date on the basis
of a closing of the books as of the Closing Date (treating any
transactions outside the ordinary course of business on the Closing
Date occurring subsequent to the Closing as occurring after the Closing
Date and treating any transactions outside the ordinary course of
business that occur on the Closing Date but before the Closing, and
treating all transactions related to this Agreement and the Exchange
Agreement (including any other transactions undertaken in connection or
in contemplation of such agreements) as occurring prior to the
Closing), except that any such Tax imposed annually based on ownership
of assets or similar Tax will be prorated based on the assessment year
for the Tax for the period prior to and including the Closing Date and
the period thereafter. Any credits relating to a taxable period that
begins before and ends after the Closing Date will be taken into
account based on a deemed closing of the books on the Closing Date,
except that any credit provided on an annual basis without regard to
activities during the period will be prorated based on the relative
number of days in the period prior to and including the Closing Date
and the number of days in the period following the Closing Date. All
determinations necessary to give effect to the foregoing allocations
will be made in a manner consistent with prior practice of the Persons
within the Group. Holdings shall be entitled to all refunds or credits
of Taxes of CSC MA and any CSC Subsidiary for Pre-Closing Tax Periods
and for the portion of refunds or credits with respect to Taxes of CSC
MA and any CSC Subsidiary for a Split-Tax Period allocable to the
portion of the period that runs through the Closing Date. AT&T shall
pay to Holdings the amounts described in the preceding sentence
promptly following receipt of such refund or the determination of the
amount of the credit. AT&T shall be entitled to all refunds or credits
of taxes of CSC MA and any CSC Subsidiaries for the Split-Tax Period
allocable to the portion of the period following the Closing Date and
for the portion of all refunds or credits of taxes of CSC MA and any
CSC Subsidiaries attributable to loss earned in a tax year beginning
after the Closing Date ("Post-Closing Tax Period") but which is carried
back to a Pre-Closing Tax Period or Split-Tax Period. Holdings shall
pay to AT&T the amounts described in the preceding sentence promptly
following receipt of such refund or the determination of the amount of
the credit.
(b) Payment of Taxes Related to the Transactions. Except as
specified in Section 2.12, Holdings will pay all Taxes arising from or
relating to the transactions contemplated by this Agreement.
(c) Indemnification for Taxes. Notwithstanding any limitations on
liability elsewhere in this Agreement, and without limiting the rights
of the parties under Article 10, from and after the Closing Date,
Holdings (or any successor in interest) will protect, defend, indemnify
and hold harmless AT&T, CSC MA and any CSC Subsidiary from any and all
Taxes which are imposed on CSC MA or any CSC Subsidiary in respect of
its income, business, property or operations or for which CSC MA or any
CSC Subsidiary may otherwise be liable (A) for any taxable period
ending prior to the Closing Date and for any Pre-Closing Tax Period,
(B) in respect of any Split-Tax Period to the extent of all Taxes
allocated to Cablevision Parent and Holdings pursuant to
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Section 9.09(a), (C) by reason of the several liability of CSC MA and
any CSC Subsidiary pursuant to Treasury Regulations section 1.1502-6 or
any analogous State, local or foreign law or regulation or by reason of
CSC MA or any CSC Subsidiary having been a member of any consolidated,
combined or unitary group on or prior to the Closing Date, (D) as a
result of CSC MA and any CSC Subsidiary ceasing to be a member of the
affiliated group (within the meaning of Section 1504(a) of the Code)
that includes Cablevision Parent or Holdings, (E) in respect of any
Post-Closing Tax Period, attributable to events, transactions, sales,
deposits, services or rentals occurring, received or performed in a
Pre-Closing Tax Period, (F) in respect of any Post-Closing Tax Period,
attributable to any change in accounting method employed by CSC MA, or
any CSC Subsidiary during any of its four previous taxable years, (G)
in respect of any Post-Closing Tax Period, attributable to any items
of income or gain of a partnership reporting CSC MA or any CSC
Subsidiary as a partner, to the extent such items are properly
attributable to periods of the partnership ending on or before the
Closing Date with such items calculated as if a closing of the
partnership books occurred on the Closing Date, (H) as a result of any
discharge of indebtedness or deemed discharge of indebtedness resulting
from any capital contributions by Holdings (or an affiliate of
Holdings) to CSC MA or any CSC Subsidiary of any intercompany
indebtedness owed by CSC MA or any CSC Subsidiary to Holdings (or an
affiliate of Holdings), and (I) except as specified in Section 2.12,
with respect to any Tax arising from or relating to the transactions
contemplated by this Agreement.
(d) Returns for Pre-Closing Tax Periods. Holdings will file or
cause to be filed when due all Tax Returns of CSC MA and any CSC
Subsidiary for all tax periods of CSC MA and any CSC Subsidiary ending
on or before the Closing Date that are filed on a consolidated,
combined, or unitary basis by Cablevision Parent or Holdings. Such Tax
Returns will be prepared in a manner consistent with past practice and,
on such Tax Returns, no material positions will be taken, material
elections made, or material methods adopted that are inconsistent with
positions taken, elections made, or methods used in preparing similar
Tax Returns in prior periods without the consent of AT&T which consent
will not be unreasonably withheld. Holdings will furnish to AT&T copies
of such Tax Returns of CSC MA and any CSC Subsidiary, on a separate
company basis, within 30 days following the filing date. Holdings will
prepare and send to AT&T as promptly as practicable, but at least five
Business Days prior to the due date thereof (including extensions), all
other Tax Returns that are required to be filed by CSC MA or any CSC
Subsidiary for all Pre-Closing Tax Periods, and Holdings will file or
cause to be filed when due such other Tax Returns. Such Tax Returns
will be prepared in a manner consistent with past practice and, on such
Tax Returns, no material positions will be taken, material elections
made, or material methods adopted that are inconsistent with positions
taken, elections made, or methods used in preparing similar Tax Returns
in prior periods without the consent of AT&T, which consent will not be
unreasonably withheld. For purposes of this paragraph, "material" shall
mean any action resulting in a Tax liability in excess of $50,000.
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(e) Returns for Split-Tax Periods and Post-Closing Periods.
(i) AT&T will prepare and file all Tax Returns of CSC MA and
any CSC Subsidiary for all Post-Closing Tax Periods.
(ii) With respect to any Tax Return for a Split-Tax Period,
at least 30 days before the due date (including extensions) of such Tax
Return, AT&T will deliver to Holdings a copy of such Tax Return and a
statement setting forth the amount of Taxes for which Holdings is
responsible pursuant to this Agreement (the "Statement"). Holdings will
have the right to review and approve or disapprove such Tax Return and
the Statement prior to the filing of such Tax Return. Such a Tax Return
will not be filed prior to the due date thereof unless Holdings has
previously indicated its approval or disapproval of such Tax Return. If
Holdings disapproves of any information in such Tax Return or
Statement, it will describe such dispute with reasonable detail in a
written notice delivered to AT&T within 10 business days after its
receipt of the Statement and Tax Return, and failure to deliver a such
notice will be deemed approval of the Tax Return and Statement by
Holdings. Holdings and AT&T will negotiate and attempt to resolve in
good faith any issue described in such notice from Cablevision Parent
with respect to its review of such Tax Returns and Statement.
(iii) In the event the parties are unable to resolve any
dispute within ten days following the delivery of Holdings' notice of
disapproval of a Tax Return and Statement pursuant to Section
9.09(e)(ii), the matters in dispute will be resolved pursuant to
Section 9.09(e)(viii) (the "Tax Arbitrator Procedure"). If the dispute
is not resolved before five Business Days prior to the due date
(including extensions) for the filing of the Tax Return in question,
then AT&T may file such Tax Return in the manner it deems reasonable
and without Holdings' consent. However, notwithstanding the filing of
such Tax Return, the amount of Taxes for which Holdings is responsible
under this Agreement with respect to the matter(s) in dispute will be
as determined by agreement of the parties or by the Tax Arbitrator
Procedure.
(iv) Not later than (A) five Business Days before the due
date for the payment of Taxes with respect to such Tax Return, and (B)
if later than the date specified in (A), in the event of a dispute,
five Business Days after notice to Holdings of resolution thereof
pursuant to agreement of the parties or determination under the Tax
Arbitrator Procedure, Holdings will pay to AT&T an amount equal to the
Taxes shown on the Statement (or otherwise determined by agreement of
the parties or the Tax Arbitrator Procedure) as being the
responsibility of Holdings under this Agreement.
(v) Whenever any taxing authority sends a notice of an audit,
initiates an examination of CSC MA or any CSC Subsidiary, or otherwise
asserts a claim, makes an assessment or disputes the amount of Taxes
for any Pre-Closing Tax Period, regardless of whether such claim also
involves or disputes the amount of Taxes for a taxable period ending
after the Closing Date, AT&T will promptly inform Holdings, and
Holdings will have the right to control (including control over whether
and in what manner to settle, compromise or abandon (in each case, to
"Voluntarily
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Discharge," and each such action a "Voluntary Discharge")), at its own
cost, any resulting proceedings and to determine whether and when to
settle any such claim, assessment or dispute. If requested by Holdings,
AT&T will execute or cause to be executed powers of attorney or other
documents necessary to enable Holdings and Cablevision Parent to
control such proceeding. Whenever any taxing authority sends a notice
of an audit, initiates an examination of CSC MA or any CSC Subsidiary
or otherwise asserts a claim, makes an assessment or disputes the
amount of Taxes for any taxable period ending after the Closing,
Holdings will promptly inform AT&T. AT&T will have the right to control
(including control over whether and in what manner to settle,
compromise or abandon (in each case, to "Voluntarily Discharge", and in
each case, a "Voluntary Discharge")), at its own cost, any resulting
proceedings and to determine whether and when to settle any such claim,
assessment or dispute. If requested by AT&T, Holdings will execute or
cause to be executed powers of attorney or other documents necessary to
enable AT&T to control such proceedings.
(vi) In the event that AT&T settles, compromises or abandons
a Tax claim, assessment or dispute which Holdings believes, in good
faith, has an adverse impact on a taxable period the Taxes for which
Holdings is liable or responsible under this Agreement, then Holdings
may request that the extent to which AT&T Voluntarily Discharged such
proceeding in a manner which created excessive Tax liability for which
Holdings is responsible under this Agreement be determined by the Tax
Arbitrator Procedure, and Holdings' obligation to indemnify AT&T will
be reduced to the extent that any amount is determined to represent an
excessive Voluntary Discharge of liability as a result of such Tax
Arbitrator Procedure.
(vii) In the event that Cablevision Parent or Holdings
settles, compromises or abandons a Tax claim, assessment or dispute
which AT&T believes, in good faith, has an adverse impact on a taxable
period the Taxes for which AT&T is liable or responsible under this
Agreement, then AT&T may request that the extent to which Cablevision
Parent or Holdings Voluntarily Discharged such proceeding in a manner
which created excessive Tax liability for the period for which AT&T is
responsible under this Agreement be determined by the Tax Arbitrator
Procedure, and AT&T's obligation to indemnify Cablevision Parent and
Holdings will be reduced to the extent that any amount is determined to
represent an excessive Voluntary Discharge of liability as a result of
such Tax Arbitrator Procedure. In the event Cablevision Parent or
Holdings settles, compromises or abandons a tax claim, assessment or
dispute which AT&T believes, in good faith, has an adverse impact on a
taxable period ending after the Closing Date, then AT&T may request
that the extent to which Cablevision Parent or Holdings Voluntarily
Discharged such proceeding in a manner that created excessive Tax
liability for the taxable period ending after the Closing Date be
determined by the Tax Arbitrator Procedure, and Holdings will
immediately pay such excessive Tax liability to AT&T.
(viii) The Tax Arbitrator Procedure will be as described in
this Section 9.09(e)(viii). If a matter is to be determined by the Tax
Arbitrator Procedure, Holdings and AT&T will attempt to jointly select
a public accounting firm or law firm
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with recognized tax expertise to resolve the dispute. If they cannot
agree on the selection of a single firm for this purpose within ten
Business Days after a party initiates the Tax Arbitrator Procedure,
then Holdings and AT&T will each select an arbitrator and those two
arbitrators will select a third arbitrator. The arbitrators will make
written determinations, and the determination of the arbitrator who
finds an amount which is neither the highest nor the lowest amount
found by any of the three arbitrators will be final and will be binding
upon all parties. If two of the three, or all three arbitrators agree
on an amount, then that amount will be final and binding upon the
parties. The fees and disbursements of the tax arbitrator(s) shall be
allocated between AT&T and Holdings in the same proportion that the
aggregate amount of any disputed items submitted to the Tax Arbitrator
Procedure that are unsuccessfully disputed by each (as finally
determined by the Tax Arbitrator Procedure) bears to the total amount
of any disputed items so submitted. AT&T and Holdings shall, and
Holdings shall cause Cablevision Parent to, make readily available to
the tax arbitrator(s) all relevant books and records and any work
papers relating to the disputed Taxes and all other items reasonably
requested by the tax arbitrator.
(ix) Holdings and AT&T will cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this Agreement, and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation
will include the retention and (upon the other party's reasonable
request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding, and making
employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder. Holdings agrees (A) to retain all books and records that it
has with respect to Tax matters pertinent to CSC MA and any CSC
Subsidiary relating to any taxable period beginning before the Closing
Date until the expiration of the statute of limitations (and, to the
extent notified by AT&T, any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) to give AT&T reasonable
written notice prior to transferring, destroying or discarding any such
books and records and, if AT&T so requests, Holdings will allow the
other party to take possession of such books and records.
(x) AT&T and Holdings further agree, upon request, to use
commercially reasonable efforts to obtain any certificate, waiver 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 upon AT&T, Holdings, Cablevision Parent or any of their
respective affiliates in connection with the transactions contemplated
by this Agreement or the operations of CSC MA or any CSC Subsidiary.
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10. SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND OTHER
AGREEMENTS; INDEMNIFICATION.
10.01 Survival of Representations, Warranties, Covenants and Other
Agreements. All representations, warranties, covenants and agreements (other
than the covenants and agreements which by their terms are to be performed after
the Closing Date, including, without limitation, the covenants set forth in
Section 9.04(b) hereof) made by the Cablevision Entities and the AT&T Entities
in this Agreement shall survive the Closing for a period of six months, and
shall thereafter terminate, except that Section 3.06(d) shall survive the
Closing for a period of two years and Sections 3.01(b), 3.05, 3.06(a), 4.07(a),
4.14 and 5.06 shall survive until 30 days after the expiration of the applicable
statute of limitations periods. Covenants and agreements to be performed by
their terms following the Closing Date shall survive in accordance with their
terms. Notwithstanding the foregoing, the limitations on survival shall not
apply to Holdings' indemnity with respect to Excluded Liabilities or AT&T's
indemnity with respect to Liabilities.
10.02 Indemnification by Holdings.
(a) Indemnity. Subject to Section 10.01, following the
Closing, Holdings agrees to indemnify, defend and hold harmless AT&T,
its affiliates and its respective shareholders, directors, officers,
partners, employees, agents, successors and assigns (a "Cablevision
Indemnified Party"), from and against all losses, damages, liabilities,
deficiencies or obligations, including, without limitation, all claims,
actions, suits, proceedings, demands, judgments, assessments, fines,
interest, penalties, costs and expenses (including, without limitation,
settlement costs and reasonable legal fees) (collectively, "Losses") to
which they may become subject as a direct result of (i) the Excluded
Liabilities, (ii) any and all misrepresentations or breaches of a
representation or warranty of the Cablevision Entities herein or the
nonperformance or breach of any covenants or agreements of the
Cablevision Entities contained herein, or (iii) the ownership and
operation of the Assets and the CATV Business before the Closing. Any
notice of a claim for indemnification pursuant to Section 10.02(a)(ii)
must be made in writing prior to the expiration or termination of the
applicable representation, warranty, covenant or agreement under
Section 10.01.
(b) Payment. Any obligations of Holdings under the provisions
of this Article 10 shall be paid in cash promptly to a Cablevision
Indemnified Party by Holdings and shall represent a retrospective
adjustment to the Common Stock Consideration. The amount of such
payment (and adjustment) shall be equal to the amount of the Loss
incurred by the Cablevision Indemnified Party on account of the matter
for which indemnification is required hereunder less any payments made
or to be made to the Cablevision Indemnified Party under any insurance,
indemnity or similar policy or arrangement. Notwithstanding anything
contained herein to the contrary, the indemnification provided above in
Section 10.02(a)(ii) shall not apply: (i) to misrepresentations or
breaches of representations or warranties of the Cablevision Entities
or the nonperformance or breach of any of the covenants or agreements
of the Cablevision Entities (other than any nonperformance or breach of
the Cablevision Special Indemnity Covenants (as defined below)) until
after the aggregate of all such
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amounts subject to indemnification or payment (as a result of such
misrepresentation, breach or nonperformance by the Cablevision
Entities) by Holdings under this Section 10.02(b)(i) (and excluding any
amounts attributable to any nonperformance or breaches of the
Cablevision Special Indemnity Covenants) and by the Cablevision Sellers
under Section 10.02(b)(i) of the Exchange Agreement (and excluding any
amounts attributable to any nonperformance or breaches of the
Cablevision Special Indemnity Covenants thereunder) exceeds $9,000,000
and shall only apply to amounts above $9,000,000; and (ii) to the
nonperformance or breach between the date hereof and the Closing Date
of any of the covenants or agreements of the Cablevision Entities set
forth in Sections 5.01(a) through (g), 5.01(h)(i) through (viii),
5.01(h)(xi) (as applied to agreements to do any matters in Section
5.01(h)(i) through (viii)) and 5.03(a) (the "Cablevision Special
Indemnity Covenants") until after the aggregate of all such amounts
subject to indemnification or payment (as a result of the
nonperformance or breach of the Cablevision Special Indemnity
Covenants) under this Section 10.02(b)(ii) and Section 10.02(b)(ii) of
the Exchange Agreement exceeds $250,000 and shall only apply to amounts
above $250,000; provided, that in the event a claim arises with respect
to an item covered by both Section 10.02(b)(i) and Section
10.02(b)(ii), the $9,000,000 threshold shall apply to the claim under
Section 10(b)(i) and the $250,000 threshold shall apply to the claim
under Section 10.02(b)(ii), without duplication. The maximum aggregate
amount that Holdings and its Affiliates will be required to pay under
this Section 10.02 and under Section 10.02 of the Exchange Agreement in
respect of all claims by all parties under both agreements is
$90,000,000. Notwithstanding the preceding, neither the minimum nor
maximum limits specified in this Section 10.02 will apply to the
indemnity with respect to Excluded Liabilities, Taxes or the obligation
to pay post-Closing adjustments pursuant to Section 2.11 and the
maximum $90,000,000 limit specified in this Section 10.02 shall not
apply to claims under Section 5.01(h)(ii).
(c) Sole Remedy. In no event will a claim to be indemnified
by the Cablevision Sellers under the Exchange Agreement be entitled to
indemnification by Holdings under this Agreement. AT&T further
acknowledges and agrees that, should the Closing occur, its sole and
exclusive remedy with respect to any misrepresentation or breach of the
representations and warranties of the Cablevision Entities herein or
the nonperformance or breach of any covenants or agreements of the
Cablevision Entities herein (other than covenants or agreements which
by their terms are to be performed after the Closing Date) shall be
pursuant to the indemnification provisions set forth in this Section
10.02. In furtherance of the foregoing, AT&T hereby waives, from and
after the Closing, to the fullest extent permitted under applicable
Law, any and all rights, claims and causes of action it may have
against Holdings and its affiliates relating to the subject matter of
this Agreement arising under or based upon any federal, State, local or
foreign statute, Law, ordinance, rule or regulation or otherwise
(except pursuant to the indemnification provisions set forth in this
Article 10 and Article 10 under the Exchange Agreement and except for
its right to seek another remedy under Section 9.06).
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10.03 Indemnification by AT&T.
(a) Indemnity. Subject to Section 10.01, following the
Closing, AT&T agrees to indemnify, defend and hold harmless Holdings,
its affiliates and its respective shareholders, directors, officers,
partners, employees, agents, successors and assigns (an "AT&T
Indemnified Party"), from and against all Losses to which they may
become subject as a direct result of (i) any and all misrepresentations
or breaches of a representation or warranty of the AT&T Entities herein
or the nonperformance or breach of any covenants or agreements of the
AT&T Entities contained herein, (ii) the Liabilities and (iii)
ownership and operation of the Assets and the CATV Business after the
Closing. Any notice of a claim for indemnification pursuant to Section
10.03(a)(i) must be made in writing prior to the expiration or
termination of the applicable representation, warranty, covenant or
agreement under Section 10.01.
(b) Payment. Any obligations of AT&T under the provisions of
this Article 10 shall be paid promptly in cash to an AT&T Indemnified
Party by AT&T in cash and shall represent a retrospective adjustment to
the Common Stock Consideration. The amount of such payment (and
adjustment) shall be equal to the amount of the Loss incurred by the
AT&T Indemnified Party on account of the matter for which
indemnification is required hereunder less any payments made or to be
made to the AT&T Indemnified Party under any insurance, indemnity or
similar policy or arrangement. Notwithstanding anything contained
herein to the contrary, the indemnification provided above in Section
10.03(a)(ii) shall not apply: (i) to misrepresentations or breaches of
representations or warranties of the AT&T Entities or the
nonperformance or breach of any of the covenants or agreements of the
AT&T Entities (other than any nonperformance or breach of the AT&T
Special Indemnity Covenants (as defined below)) until after the
aggregate of all amounts subject to indemnification or payment (as a
result of such misrepresentation, breach or nonperformance by the AT&T
Entities) by AT&T under this Section 10.03(b)(i) (and excluding any
amounts attributable to any nonperformance or breaches of the AT&T
Special Indemnity Covenants) and by the AT&T Sellers and any AT&T
Designated Subsidiary (if applicable) under Section 10.03(b)(i) of the
Exchange Agreement (and excluding any amounts attributable to any
nonperformance or breach of the AT&T Special Indemnity Covenants
thereunder) exceeds $9,000,000 and shall only apply to amounts above
$9,000,000, and (ii) to the nonperformance or breach between the date
hereof and the Closing Date of any of the covenants or agreements of
the AT&T Entities set forth in Sections 5.02 and Section 5.03(b) (the
"AT&T Special Indemnity Covenants") until after the aggregate of all
such amounts subject to indemnification or payment (as a result of the
nonperformance or breach of the AT&T Special Indemnity Covenants) under
this Section 10.03(b)(ii) and Section 10.03(b)(ii) of the Exchange
Agreement exceeds $250,000 and shall only apply to amounts above
$250,000; provided, that in the event a claim arises with respect to an
item covered by both Section 10.03(b)(i) and Section 10.03(b)(ii), the
$9,000,000 threshold shall apply to the claim under Section 10.03(b)(i)
and the $250,000 threshold shall apply to the claim under Section
10.03(b)(ii), without duplication. The maximum aggregate amount that
AT&T and its Affiliates will be required to pay under this Section
10.03 and under Section
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10.03 of the Exchange Agreement in respect of all claims by all parties
under both agreements is $90,000,000. Notwithstanding the preceding,
neither the minimum nor maximum limits specified in this Section will
apply to the indemnity with respect to Liabilities, Taxes or the
obligation to pay post-Closing adjustments pursuant to Section 2.11.
(c) Sole Remedy. In no event will a claim to be indemnified
by the AT&T Sellers and any AT&T Designated Subsidiary (if applicable)
under the Exchange Agreement be entitled to indemnification by AT&T
under this Agreement. Holdings further acknowledges and agrees that,
should the Closing occur, its sole and exclusive remedy with respect to
any misrepresentation or breach of the representations and warranties
of the AT&T Entities herein or the nonperformance or breach of any
covenants or agreements of the AT&T Entities herein (other than
covenants or agreements which by their terms are to be performed after
the Closing Date) shall be pursuant to the indemnification provisions
set forth in this Section 10.03. In furtherance of the foregoing,
Holdings hereby waives, from and after the Closing, to the fullest
extent permitted under applicable Law, any and all rights, claims and
causes of action it may have against AT&T and its affiliates relating
to the subject matter of this Agreement arising under or based upon any
federal, State, local or foreign statute, Law, ordinance, rule or
regulation or otherwise (except pursuant to the indemnification
provisions set forth in this Article 10 and Article 10 under the
Exchange Agreement and except for its right to seek another remedy
under Section 9.06).
10.04 Third-Party Claims. If any claim ("Asserted Claim") covered by
the foregoing indemnities is asserted against any indemnified party
("Indemnitee"), it shall be a condition to the obligations under this Article
that Indemnitee shall promptly give the indemnifying party ("Indemnitor") notice
thereof in accordance with Section 13.06. The failure to give such prompt notice
will not relieve Indemnitor of its indemnity obligations hereunder with respect
thereto, except to the extent that Indemnitor is materially prejudiced by such
failure. Indemnitee shall give Indemnitor an opportunity to control negotiations
toward resolution of such claim without the necessity of litigation, and, if
litigation ensues, to defend the same with counsel reasonably acceptable to
Indemnitee, at Indemnitor's expense, and Indemnitee shall extend reasonable
cooperation in connection with such defense. If Indemnitor fails to assume
control of the negotiations prior to litigation or to defend such action within
a reasonable time, Indemnitee shall be entitled, but not obligated, to assume
control of such negotiations or defense of such action, and Indemnitor shall be
liable to Indemnitee for its expenses reasonably incurred in connection
therewith, which Indemnitor shall promptly pay. Neither Indemnitor nor
Indemnitee shall settle, compromise, or make any other disposition of any
Asserted Claims that would or might result in any liability to Indemnitee or
Indemnitor, respectively, under this Article 10 without the written consent of
Indemnitee or Indemnitor, respectively, which shall not be unreasonably
withheld. In addition, Indemnitor will not settle, compromise or make any other
disposition of any Asserted Claim unless (a) such settlement or compromise
includes as an unconditional term thereof the giving by the claimant or
plaintiff to Indemnitee of a release from all liability with respect to such
Asserted Claim, (b) injunctive or other equitable relief would not be imposed
against Indemnitee as a result thereof, or (c) such settlement or compromise
would not increase the liability of Indemnitee for the payment of any Tax for
any period.
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11. FURTHER ASSURANCES.
From time to time after the Closing, each party will execute and
deliver such other instruments of conveyance and transfer, fully cooperate with
the other party and take such other actions as the other party reasonably may
request to effect the purposes and intent of this Agreement.
12. CLOSING.
12.01 Closing. The Closing shall take place contemporaneously with the
closing of the transactions under the Exchange Agreement, at the offices of
Holdings' outside counsel at 12:01 a.m., local time, on the tenth Business Day
after all the conditions to Closing as provided in Articles 7 and 8 (other than
deliveries or other actions to be taken at the Closing) and all the conditions
to the closing of the Exchange Agreement as provided in Articles 7 and 8 thereof
(other than deliveries or other actions to be taken at the closing under the
Exchange Agreement) have been satisfied (or waived by the party entitled to the
benefit thereto) (the "Closing Date"). At the Closing, the parties hereto shall
execute and deliver all instruments and documents as shall be necessary in the
reasonable opinion of counsel for the respective parties to consummate the
transactions contemplated herein.
12.02 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) at any time, by the mutual written agreement of AT&T and
Holdings;
(b) by AT&T, upon and effective as of the date of written notice
to Holdings, pursuant to the termination provisions of Section
5.01(h)(ix);
(c) by Holdings, upon and effective as of the date of written
notice to AT&T, pursuant to the termination provisions of Section
5.04(i);
(d) by Holdings, upon and effective as of the date of written
notice to AT&T, pursuant to the termination provisions of Section 9.03;
(e) by Holdings or AT&T, upon written notice to the other, if the
Closing has not occurred prior to April 18, 2001 (the "Outside Closing
Date"), for any reason other than a material breach or default by such
party or its affiliates of their respective covenants, agreements or
other obligations under this Agreement; or
(f) by Holdings or AT&T upon the termination of the Exchange
Agreement in accordance with its terms for any reason other than a
material breach or default by such party or any of its affiliates of
their respective covenants, agreements or other obligations under the
Exchange Agreement.
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12.03 Remedies Upon Default. Termination of this Agreement under
Section 12.02 (b) through (f) will not impair any remedies any party may have
with respect to the breach by any of the other parties of their respective
obligations under this Agreement. Notwithstanding a party's right to pursue
remedies for breach of contract upon termination of this Agreement in accordance
with Section 12.02, no remedies for breaches of representations and warranties
will be available if this Agreement is terminated in accordance with Section
12.02.
13. MISCELLANEOUS.
13.01 Amendments; Waivers. This Agreement cannot be changed or
terminated orally and no waiver of compliance with any provision or condition
hereof and no consent provided for herein shall be effective unless evidenced by
an instrument in writing duly executed by the party hereto sought to be charged
with such waiver or consent. No waiver of any term or provision hereof shall be
construed as a further or continuing waiver of such term or provision or any
other term or provision. Any condition to the performance of any party hereto
which may legally be waived at or prior to the Closing may be waived in writing
at any time by the party or parties entitled to the benefit thereof.
13.02 Entire Agreement. This Agreement sets forth the entire
understanding and agreement of the parties and supersedes any and all prior
agreements, memoranda, arrangements and understandings relating to the subject
matter hereof other than the Confidentiality Agreement referred to in Section
5.03(a) and 5.03(b), the Exchange Agreement and the Registration Rights
Agreement and any other agreement or document executed on or prior to the date
of this Agreement that expressly refers to this Section 13.02. No
representation, warranty, promise, inducement or statement of intention has been
made by any party which is not contained in this Agreement, and no party shall
be bound by, or be liable for, any alleged representation, promise, inducement
or statement of intention not contained herein or therein.
13.03 Cablevision Name. The parties agree that Holdings and its
affiliates shall retain the right to use the names "Cablevision," "Cablevision
Systems," "Optimum," "Optimum Cable," "Optimum TV" or any and all derivations
thereof and after the Closing, AT&T shall remove or delete the names
"Cablevision," "Cablevision Systems," "Optimum," "Optimum Cable," "Optimum TV"
or any and all derivations thereof from the Assets as soon as reasonably
practicable but in any event by the 120th day following the Closing. From and
after the 120th day following the Closing, Holdings and its affiliates shall
retain all of their right, title and interest in and to the names "Cablevision,"
"Cablevision Systems," "Optimum," "Optimum Cable," "Optimum TV" and any and all
derivations thereof. Notwithstanding the foregoing, nothing in this Section
13.03 will require any party to remove or discontinue using any such name or
mark that is affixed to converters or other items in or to be used in consumer
homes or properties, or as are used in a similar fashion making such removal or
discontinuation impracticable.
13.04 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement may not be assigned by any party without the
prior written consent of the other parties hereto; provided, however, any party
may assign any or all of its rights or obligations under this
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Agreement to any Person that is a wholly owned subsidiary of such party; but
only if such assignment will not give rise to any material requirements for
additional required consents, and will not, in the reasonable judgment of the
other party, delay the Closing or affect the tax treatment of the Merger. No
assignment will relieve an assigning party of its agreements and obligations
hereunder. Notwithstanding the foregoing, Holdings will not, directly or
indirectly, sell, convey, transfer or otherwise dispose of all or substantially
all of its assets (in one transaction or a series of related transactions) to
any Person, or liquidate or dissolve unless in connection with such transaction
the obligations of Holdings under this Agreement are assumed in writing by
either (a) the Person that acquires or succeeds to all or substantially all of
Holdings' assets or (b) Cablevision Systems Corporation.
13.05 Construction; Counterparts. The Article and Section headings of
this Agreement are for convenience of reference only and do not form a part
hereof and do not in any way modify, interpret or construe the intentions of the
parties. This Agreement may be executed in one or more counterparts, and all
such counterparts shall constitute one and the same instrument.
13.06 Notices. All notices and communications hereunder shall be in
writing and shall be deemed to have been duly given to a party when delivered in
person, faxed (with confirmation) or three Business Days after such notice is
enclosed in a properly sealed envelope, certified or registered, and deposited
(postage and certification or registration prepaid) in a post office or
collection facility regularly maintained by the United States Postal Service, or
one Business Day after delivery to a nationally recognized overnight courier
service, and addressed as follows:
If to Holdings or any other Cablevision Entity:
c/o Cablevision Systems Corporation
1111 Stewart Avenue
Bethpage, New York 11714
Telephone: (516) 803-2300
Facsimile: (516) 803-2577
Attention: General Counsel
copies to: Cablevision Systems Corporation
1111 Stewart Avenue
Bethpage, New York 11714
Telephone: (516) 803-2300
Facsimile: (516) 803-2577
Attention: General Counsel
and
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Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Facsimile: (212) 558-3588
Attention: John P. Mead
If to AT&T or any other AT&T Entity:
c/o AT&T Broadband & Internet Services
9197 Peoria Street
Englewood, Colorado 80112
Telephone: (720) 875-4723
Facsimile: (720) 875-5396
Attention: Carol O'Keeffe
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920
Attention: Marilyn Wasser, Esq.
Corporate Secretary
Telephone: (908) 221-6600
Facsimile: (908) 221-6618
copies to: Sherman & Howard L.L.C.
633 17th Street, Suite 3000
Denver, Colorado 80202
Telephone: (303) 299-8134
Facsimile: (303) 298-0940
Attention: Arlene S. Bobrow, Esq.
Any party may change its address for the purpose of notice by giving notice in
accordance with the provisions of this Section 13.06.
13.07 Expenses of the Parties. Except as otherwise provided herein, all
expenses incurred by or on behalf of the parties hereto in connection with the
authorization, preparation and consummation of this Agreement, including,
without limitation, all fees and expenses of agents, representatives, counsel
and accountants employed by the parties hereto in connection with the
authorization, preparation, execution and consummation of this Agreement shall
be borne solely by Holdings, in the case of all such items incurred by the
Cablevision Entities, or by AT&T, in the case of all such items incurred by the
AT&T Entities.
13.08 Non-Recourse. No partner, officer, director, shareholder or other
holder of an ownership interest of or in any party to this Agreement shall have
any personal liability in respect of any such party's obligations under this
Agreement by reason of his or its status as such partner, officer, director,
shareholder or other holder.
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13.09 Third Party Beneficiary. This Agreement is entered into only for
the benefit of the parties and their respective successors and assigns, and
nothing hereunder shall be deemed to constitute any person a third party
beneficiary to this Agreement except as expressly provided to the contrary in
Article 10.
13.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF THE STATE
OF NEW YORK.
13.11 Press Releases. No press release or other public information
relating to the purchase and sale contemplated in this Agreement shall be made
or disclosed by any party hereto without the consent of the other parties;
provided, however, that any party may disclose such information if reasonably
deemed to be required by law by the legal counsel for such party; and provided,
further, that such party shall notify the other as soon as reasonably
practicable prior to the issuance of such press release.
13.12 Severability. If any provision of this Agreement is finally
determined to be illegal, void or unenforceable, such determination shall not,
of itself, nullify this Agreement, which shall continue in full force and effect
subject to the conditions and provisions hereof.
13.13 Late Payments. If either party fails to pay the other any amounts
when due under this Agreement, the amounts due will bear interest from the due
date to the date of payment at Prime Rate plus 2%, adjusted as and when changes
in the Prime Rate are made; provided, that this Section 13.13 shall not relieve
any party from any responsibility or liability for any breach of this Agreement.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CSC HOLDINGS, INC.
By: /s/ William J. Bell
---------------------------------
Name: William J. Bell
Title: Vice Chairman
CABLEVISION OF MASSACHUSETTS, INC.
By: /s/ William J. Bell
---------------------------------
Name: William J. Bell
Title: Vice Chairman
AT&T CORP.
By: /s/ Daniel Somers
---------------------------------
Name: Daniel Somers
Title: Senior Executive Vice
President
AT&T CSC, INC.
By: /s/ Daniel Somers
---------------------------------
Name: Daniel Somers
Title: President
60
(Exhibit 99.2)
EXECUTION COPY
================================================================================
ASSET EXCHANGE AGREEMENT
DATED
AS OF APRIL 18, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
Article 1. Definitions................................................... 2
1.01 Certain Definitions.......................... 2
1.02 Rules of Construction........................20
Article 2. Exchange of Assets; Cash Consideration.........................21
2.01 Exchange of Assets; Cash Consideration........21
2.02 Additional Deliveries.........................22
2.03 Estimated Adjustment Statements...............23
2.04 Holdings' Post-Closing Adjustment.............23
2.05 AT&T's Post-Closing Adjustment................25
2.06 Post-Closing Adjustment of Cash
Consideration.................................27
2.07 Assumption of Liabilities.....................28
2.08 Sales and Transfer Taxes......................28
2.09 Allocations...................................28
Article 3. Representations and Warranties of the Cablevision Entities.....29
3.01 Organization and Authority of the
Cablevision Entities..........................29
3.02 Legal Capacity; Approvals and Consents........29
3.03 Financial Statements..........................30
3.04 Changes in Operation..........................30
3.05 Tax Matters...................................30
3.06 Cablevision Assets............................31
3.07 CATV Business.................................32
3.08 Labor Contracts and Actions...................36
3.09 Employee Benefit Plans........................36
3.10 Contracts.....................................37
3.11 Legal and Governmental Proceedings and
Judgments.....................................37
3.12 Finders and Brokers...........................37
3.13 No Vote Required..............................37
Article 4. Representations and Warranties of the AT&T Parties.............37
4.01 Organization and Authority of the AT&T
Entities......................................38
4.02 Legal Capacity; Approvals and Consents........38
4.03 Financial Statements..........................39
4.04 Changes in Operation..........................39
4.05 Tax Matters...................................39
4.06 AT&T Assets...................................40
4.07 CATV Business.................................41
4.08 Labor Contracts and Actions...................44
4.09 Employee Benefit Plans........................44
4.10 Contracts.....................................45
4.11 Legal and Governmental Proceedings and
Judgments.....................................45
i
<PAGE>
4.12 Finders and Brokers...........................45
4.13 No Vote Required..............................45
4.14 AT&T Designated Subsidiary....................45
Article 5. Covenants Pending Closing......................................47
5.01 Business of the Cablevision Entities..........47
5.02 Business of the AT&T Entities.................50
5.03 AT&T Limitations Pending Closing of
AT&T/MediaOne Merger..........................52
5.04 Rebuild of AT&T CATV Systems..................53
5.05 Access to Information.........................54
5.06 Upgrade Remedies..............................55
Article 6. Deliveries at Closing..........................................55
6.01 Deliveries by Holdings........................55
6.02 Deliveries by AT&T............................56
Article 7. Conditions to the Obligations of the AT&T Parties..............57
7.01 Waiting Period; Receipt of Consents...........57
7.02 Authority.....................................57
7.03 Performance...................................57
7.04 Absence of Breach of Warranties and
Representations...............................57
7.05 No Cablevision Material Adverse Change........58
7.06 Absence of Proceedings........................58
7.07 FIRPTA Certificate............................58
7.08 MediaOne Closing..............................58
Article 8. Conditions to the Obligations of the Cablevision Entities......58
8.01 Waiting Period; Receipt of Consents...........58
8.02 Authority.....................................59
8.03 Performance...................................59
8.04 Absence of Breach of Representations and
Warranties....................................59
8.05 No AT&T Material Adverse Change...............59
8.06 Absence of Proceedings........................59
8.07 FIRPTA Certificate............................59
Article 9. Covenants......................................................60
9.01 Compliance with Conditions....................60
9.02 Compliance with HSR Act and Rules.............60
9.03 Applications for Assignment of Contracts or
CATV Instruments..............................61
9.04 Records and Related Matters...................61
9.05 Subscriber Billing Services and Call Center
Services......................................62
9.06 Covenant Not to Compete.......................62
9.07 Remaining Franchises..........................63
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Article 10. Survival of Representations, Warranties, Covenants and
Other Agreements; Indemnification..............................65
10.01 Survival of Representations, Warranties,
Covenants and Other Agreements................65
10.02 Indemnification by the Cablevision Sellers....65
10.03 Indemnification by the AT&T Sellers and the
AT&T Designated Subsidiary....................67
10.04 Third Party Claims............................68
Article 11. Further Assurances.............................................69
Article 12. Closing........................................................69
12.01 Closing.......................................69
12.02 Termination...................................69
12.03 Remedies Upon Default.........................70
Article 13. Miscellaneous..................................................70
13.01 Amendments; Waivers...........................70
13.02 Entire Agreement..............................70
13.03 Names.........................................71
13.04 Binding Effect; Assignment....................71
13.05 Construction; Counterparts....................72
13.06 Notices.......................................72
13.07 Expenses of the Parties.......................73
13.08 Non-Recourse..................................73
13.09 Third Party Beneficiary.......................74
13.10 Governing Law.................................74
13.11 Press Releases................................74
13.12 Severability..................................74
13.13 Late Payments.................................74
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EXHIBIT A - AT&T CATV Systems
EXHIBIT B - Cablevision CATV Systems
EXHIBIT C-1 - Cablevision Assumption Agreement-- Exchange 1
EXHIBIT C-2 - Cablevision Assumption Agreement-- Exchange 2
EXHIBIT D-1 - AT&T Assumption Agreement-- Exchange 1
EXHIBIT D-2 - AT&T Assumption Agreement-- Exchange 2
EXHIBIT E - Cablevision Bill of Sale and General Assignment
EXHIBIT F - AT&T Bill of Sale and General Assignment
EXHIBIT G - Form of Opinion of Cablevision's Counsel
EXHIBIT H - Form of Opinion of AT&T's Counsel
EXHIBIT I - Form of Supplement
iv
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CABLEVISION'S DISCLOSURE SCHEDULE
Schedule 1.01(a) - CATV Licenses/Franchises
Schedule 1.01(b) - Excluded Assets
Schedule 1.01(c) - Permitted Encumbrances
Schedule 1.01(d) - 2000 Target Upgrade Miles and MDUs
Schedule 1.01(e) - Upgrade Specifications
Schedule 3.02 - Consents and Approvals
Schedule 3.04 - Changes in Operation
Schedule 3.05 - Tax Notices and Assessments
Schedule 3.06(b) - Real Property
Schedule 3.06(d) - Environmental Matters
Schedule 3.07(c) - Material Contracts
Schedule 3.07(d) - Notice of Claims or Purported Defaults in CATV
Instruments
Schedule 3.07(e) - Compliance with Communications Act and Documents not
filed with the FCC
Schedule 3.07(f) - Compliance with Copyright Act
Schedule 3.07(g) - Rate Complaints and Appeals of Rate Orders and Rate
Complaints
Schedule 3.07(h) - Section 626(c)(1) of Communications Act
Schedule 3.07(j) - Head-ends
Schedule 3.07(k) - Overbuilds
Schedule 3.07(l) - Condition of Tangible Personal Property
Schedule 3.09(a) - Employee Benefit Plans
Schedule 3.10 - Contracts in Default
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Schedule 3.11 - Legal Proceedings and Judgments
Schedule 5.01(h)(iii) - Rate Decreases
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AT&T'S DISCLOSURE SCHEDULE
Schedule 1.01(a) - CATV Licenses/Franchises
Schedule 1.01(b) - Excluded Assets
Schedule 1.01(c) - Permitted Encumbrances
Schedule 1.01(d) - 2000 Target Upgrade Miles and MDUs
Schedule 1.01(e) - Upgrade Specifications
Schedule 4.02 - Consents and Approvals
Schedule 4.04 - Changes in Operation
Schedule 4.05 - Tax Notices and Assessments
Schedule 4.06(b) - Real Property
Schedule 4.06(d) - Environmental Matters
Schedule 4.07(c) - Material Contracts
Schedule 4.07(d) - Notice of Claims or Purported Defaults in CATV
Instruments
Schedule 4.07(e) - Compliance with Communications Act and Documents not
filed with the FCC
Schedule 4.07(f) - Compliance with Copyright Act
Schedule 4.07(g) - Rate Complaints and Appeals of Rate Orders and Rate
Complaints
Schedule 4.07(h) - Section 626(c)(1) of the Communications Act
Schedule 4.07(j) - Head-ends
Schedule 4.07(k) - Overbuilds
Schedule 4.07(l) - Condition of Tangible Personal Property
Schedule 4.09 - Employee Benefit Plans
Schedule 4.10 - Contracts in Default
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Schedule 4.11 - Legal Proceedings and Judgments
Schedule 5.02(h)(iii) - Rate Decreases
OTHER
Schedule 1.01(f) - Engineering Firm List
Schedule 2.01(c) - Exchange of Assets
Schedule 7.07 - Cablevision FIRPTA Certificate
Schedule 8.07 - AT&T FIRPTA Certificate
viii
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ASSET EXCHANGE AGREEMENT
This Asset Exchange Agreement (this "Agreement") is made and entered
into as of April 18, 2000, by and among CSC Holdings, Inc., a Delaware
corporation ("Holdings"), Cablevision of Brookline, L.P., a Delaware limited
partnership ("CSC Brookline"), Cablevision of Boston, Inc., a Delaware
corporation ("CSC Boston" and, together with CSC Brookline, the "Cablevision
Sellers" and, together with CSC Brookline and Holdings, the "Cablevision
Entities"), and AT&T Corp., a New York corporation ("AT&T").
R E C I T A L S
WHEREAS, upon consummation of the AT&T/MediaOne Merger, MediaOne of New
York, Inc., a New York corporation ("AT&T Sub I" ), and MediaOne of Greater New
York, Inc., a Rhode Island corporation ("AT&T Sub II" and, together with AT&T
Sub I, the "AT&T Sellers" and, together with AT&T Sub I and AT&T, the "AT&T
Entities"), will be indirect wholly owned subsidiaries of AT&T and will own and
operate cable television systems serving the communities described in Exhibit A
(the "AT&T CATV Systems").
WHEREAS, CSC Brookline and CSC Boston are subsidiaries of Holdings and
own and operate cable television systems serving the communities described in
Exhibit B (the "Cablevision CATV Systems").
WHEREAS, the boards of directors of Holdings, CSC Brookline, CSC Boston
and AT&T have approved, and deem it advisable and in the best interests of their
respective shareholders to consummate, the transactions contemplated hereby.
WHEREAS, this Agreement sets forth the terms and conditions on which
the Cablevision Sellers will convey to the AT&T Sellers or the other AT&T
Subsidiary designated by AT&T (the "AT&T Designated Subsidiary" and,
collectively with the AT&T Entities, the "AT&T Parties") substantially all of
the assets of the Cablevision CATV Systems and AT&T will cause the AT&T Sellers
to convey to the Cablevision Sellers substantially all of the assets of the AT&T
CATV Systems and AT&T will cause the AT&T Sellers or qualified intermediaries
acting on behalf of the AT&T Sellers or the AT&T Designated Subsidiary to
deliver to the Cablevision Sellers the Exchange 1 Cash Consideration and the
Cablevision Sellers will deliver to the AT&T Sellers or the AT&T Designated
Subsidiary the Exchange 2 Cash Consideration, in transactions intended to
qualify, to the extent reasonably possible, as tax-free exchanges of like-kind
assets under Section 1031 of the Code (collectively, the "Exchange
Transaction").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows, each intending to be
legally bound as and to the extent herein provided.
<PAGE>
1. DEFINITIONS.
1.01 Certain Definitions. For the purposes of this Agreement, the
following terms shall have the meanings set forth below:
Affiliate means, as to any Person, any other Person which, directly or
indirectly, controls, or is under common control with, or is controlled by, such
Person; provided that, notwithstanding the foregoing, for all purposes of this
Agreement and the other Transaction Documents, (i) neither Cablevision Systems
Corporation nor any of its Subsidiaries shall be deemed to be an Affiliate of
the AT&T Sellers or the AT&T Parties, (ii) neither AT&T nor any of its
Subsidiaries shall be deemed to be an Affiliate of the Cablevision Sellers or
the Cablevision Entities, and (iii) no member of the Liberty Media Group shall
be deemed to be an Affiliate of the AT&T Sellers or the AT&T Parties. As used in
this definition, "control" (including, with its correlative meanings,
"controlling," "controlled by" and "under control with") will mean possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies of a Person (whether through the ownership of securities,
or partnership or other ownership interest, by contract or otherwise).
Agreement means this Agreement and the Exhibits and Schedules attached
hereto.
Appraiser has the meaning set forth in Section 2.09.
Asserted Claim has the meaning set forth in Section 10.04.
AT&T has the meaning set forth in the Preamble to this Agreement.
AT&T Actual Upgrade Capital Expenditures means actual capital
expenditures made by the AT&T Sellers with respect to the AT&T CATV Systems in
accordance with the AT&T Upgrade Specifications, for (a) coax feeder cable, (b)
external drop cable, (c) MDU wiring, (d) active and passive field electronics
and (e) construction of fiber overlay and nodes, in each case, made prior to
Closing and as would be reflected as additions to fixed assets on the financial
statements of the AT&T CATV Systems in accordance with GAAP.
AT&T Aerial Mileage Shortfall means the amount, if any, by which the
number of actual aerial plant miles upgraded in the AT&T CATV Systems prior to
Closing in accordance with the AT&T Upgrade Specifications, is less than the
number of aerial plant miles planned to be upgraded in the AT&T CATV Systems
during 2000, as shown in Schedule 1.01(d) of AT&T's Disclosure Schedule.
AT&T Assets means all of the properties, assets, privileges, rights,
interests, claims and goodwill, real and personal, tangible and intangible, of
every type and description of the AT&T Sellers, including, without limitation,
each AT&T Seller's leasehold interests or rights to possession, whether owned or
leased or otherwise possessed, primarily used or held for use in or necessary
for the AT&T CATV Business, now in existence or hereafter acquired by an AT&T
Seller prior to the Closing, including, without limitation, the AT&T CATV
Instruments, the AT&T Equipment, the AT&T Real Property, the AT&T Contracts, the
AT&T Inventory and the
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AT&T Intangible Property; provided that the AT&T Assets shall exclude the AT&T
Excluded Assets and any assets disposed of prior to the Closing in the usual and
ordinary course of business and not in violation of this Agreement.
AT&T Assumed Liabilities means (a) those obligations, liabilities and
commitments accruing after the Closing Date under or with respect to the
Cablevision Assets assigned and transferred to the AT&T Sellers or the AT&T
Designated Subsidiary, as applicable, at the Closing; (b) other obligations and
liabilities of the Cablevision Sellers only to the extent that such obligations
and liabilities constituted Cablevision Current Liabilities in calculating
Cablevision Working Capital; and (c) all other obligations and liabilities
accruing and relating to periods after the Closing Date and arising out of the
AT&T Sellers' or the AT&T Designated Subsidiary's ownership, use or operation of
the Cablevision Assets after the Closing Date, except to the extent that such
obligations or liabilities relate to any Cablevision Excluded Asset.
AT&T Assumption Agreements means the AT&T Assumption Agreements
attached as Exhibits D-1 and D-2 hereto.
AT&T Benefit Plans has the meaning set forth in Section 4.09(a).
AT&T CATV Business means the CATV business presently owned and operated
by the AT&T Sellers, which consists of the transmission, distribution and local
origination of audio and video signals over the AT&T CATV Systems.
AT&T CATV Instruments means (a) all franchises or ordinances granted to
the AT&T Sellers with respect to the AT&T CATV Business by any Governmental
Authority listed in Schedule 1.01(a) of AT&T's Disclosure Schedule; (b) all
permits for wire crossings over or under highways, railroads, and other
property; (c) all construction permits and certificates of occupancy; (d) all
pole attachment and other contracts with utilities; (e) all State, county and
municipal permits, orders, variances, exemptions, approvals, consents, licenses
and other authorizations; (f) all agreements for the purchase, sale, receipt or
distribution of news, data and microwave relay signals, or for satellite
services; and (g) all other approvals, consents and authorizations used or held
for use in the AT&T CATV Business.
AT&T CATV Licenses means the licenses issued by the FCC used in the
AT&T CATV Business as presently conducted by the AT&T Sellers, all of which are
listed in Schedule 1.01(a) of AT&T's Disclosure Schedule.
AT&T CATV Systems has the meaning set forth in the Preamble to this
Agreement.
AT&T Contract means any contract, mortgage, deed of trust, bond,
indenture, lease, license, note, certificate, option, warrant, right, or other
instrument, document or written agreement relating to the AT&T CATV Business to
which an AT&T Seller is a party or by which an AT&T Seller or the assets
included within the AT&T CATV Business are bound, excluding any AT&T CATV
Instrument.
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AT&T Current Assets means, with respect to the AT&T CATV Systems, petty
cash, marketable securities, 100% of active subscriber accounts receivable that
are 60 days or less past due and 90% of active subscriber accounts receivable
that are between 61 and 90 days past due (in each case measured from the date
the accounts became receivable), other receivables, including advertising, tower
rent, marketing cooperative, home shopping commissions and employee tax
receivables, all deposits with utilities, under leases or related to guides,
billing service, postage, the pro rata portion of any prepaid taxes (as of the
Closing Date), all prepaid expenses, including in respect of pole rental or
equipment maintenance agreements that are liabilities, and in respect of rent,
postage, promotional expenditures, guides, security service or two-way radio and
other current assets (excluding AT&T Inventory), each as determined in
accordance with GAAP (unless otherwise specified herein), but excluding the AT&T
Excluded Assets.
AT&T Current Liabilities means, with respect to the AT&T CATV Systems,
accounts payable, accrued expenses and other current liabilities of the AT&T
Sellers determined in accordance with GAAP including, without limitation,
accrued vacation and sick time for AT&T Employees to be employed by the AT&T
CATV Business immediately following the Closing in an amount equal to the
applicable Cablevision Entity's obligation to provide for accrued vacation and
sick time for such AT&T Employees, except that the current portion of any
indebtedness for borrowed money shall not be included.
AT&T Designated Subsidiary has the meaning set forth in the Preamble to
this Agreement.
AT&T Employees means all current active employees of the AT&T Sellers
with respect to the AT&T CATV Business.
AT&T Entities has the meaning set forth in the Preamble to this
Agreement.
AT&T Equipment means all tangible personalty, electronic devices,
towers, trunk and distribution cable, decoders and spare decoders for scrambled
satellite signals, amplifiers, power supplies, conduit, vaults and pedestals,
grounding and pole hardware, installed subscriber's devices (including, without
limitation, drop lines, converters, encoders, transformers behind television
sets and fittings), "head-ends" and "Hubs" (origination, transmission and
distribution system) hardware, tools, inventory, spare parts, maps and
engineering data, vehicles, supplies, tests and closed circuit devices,
furniture and furnishings, and all other tangible personal property and
facilities owned or leased by an AT&T Seller and used in the AT&T CATV Business.
AT&T Equivalent Subscriber means, as at any date of determination
thereof, the total number of households served by the AT&T CATV Business on a
bulk-billed basis and the total number of establishments served on a commercial
account basis, or on a basis less than the standard monthly service fees and
charges imposed by the AT&T Sellers, which shall be deemed to be equal to the
quotient obtained by dividing (a) the total fees and charges for basic service
billed by the AT&T Sellers during the month including such date on a bulk-billed
or commercial account basis, or on a basis less than the standard monthly
service fees and charges imposed by the AT&T Sellers, by (b) the fees and
charges for basic service that a Basic Subscriber of the AT&T CATV Business of
the type described in clause (a) of the definition of such term in this
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Section 1.01 was billed during such month, and as to both clauses (a) and (b)
above, excluding any pass-through charge for sales tax, line-itemized franchise
fees, fees charged by the FCC and similar items.
AT&T Estimated Adjustment Statement has the meaning set forth in
Section 2.03(b).
AT&T Estimated Subscriber Adjustment means an amount shown on the AT&T
Estimated Adjustment Statement equal to the product of (a) $5,000 multiplied by
(b) the difference between (i) 124,908 less (ii) the number of Basic Subscribers
of the AT&T CATV Business on the Closing Date; provided that, if the product
obtained in the foregoing clause is negative, the AT&T Estimated Subscriber
Adjustment shall be zero.
AT&T Estimated Upgrade Adjustment means an amount shown on the AT&T
Estimated Adjustment Statement equal to the sum of (a) the product of the AT&T
Aerial Mileage Shortfall times the AT&T 550 Aerial Adjustment plus (b) the
product of the AT&T Underground Mileage Shortfall times the AT&T 550 Underground
Adjustment, plus (c) the product of the AT&T MDU Shortfall times the AT&T 550
MDU Cost Per Unit Adjustment.
AT&T Estimated Working Capital Adjustment means the positive or
negative amount shown on the AT&T Estimated Adjustment Statement as the AT&T
Working Capital of the AT&T CATV Business as of the Closing Date.
AT&T Excluded Assets means (a) the assets and properties listed in
Schedule 1.01(b) of AT&T's Disclosure Schedule, (b) programming AT&T Contracts
(including cable guide AT&T Contracts) and retransmission consent AT&T
Contracts, (c) insurance policies and rights and claims thereunder up to the
self-insured retention or deductible, (d) AT&T Contracts relating to national
advertising sales representation, (e) bonds, letters of credit, surety
instruments and other similar items of the AT&T Entities, (f) trademarks, trade
names, service marks, service names, logos and similar proprietary rights, (g)
AT&T Benefit Plans, (h) any of the following types of agreements if not
disclosed on Schedule 4.02 or Schedule 4.07(c) of AT&T's Disclosure Schedule:
(i) any agreement with any Affiliate of the AT&T Entities; (ii) any agreement
with any member of the Liberty Media Group; (iii) any agreement for the
provision of telephony, high speed data or related services in any of the AT&T
CATV Systems; and (iv) any agreement with any competitive access provider or
local exchange company or any Internet access or on-line services provider with
respect to the use or lease of any AT&T Assets; (i) the MediaOne Social Contract
and (j) personnel files.
AT&T Final Adjustment Statement has the meaning set forth in Section
2.05(d).
AT&T Final Subscriber Adjustment means an amount shown on the AT&T
Final Adjustment Statement equal to the product of (a) $5,000 multiplied by (b)
the difference, if any, between (i) 124,908 less (ii) the number of Basic
Subscribers of the AT&T CATV Business on the Closing Date; provided that, if the
product obtained in the foregoing clause is negative, the AT&T Final Subscriber
Adjustment shall be zero.
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AT&T Final Upgrade Adjustment means (1) with respect to upgrade work in
the AT&T CATV Systems not completed prior to Closing, an amount shown on the
AT&T Final Adjustment Statement equal to the sum of (a) the product of the AT&T
Aerial Mileage Shortfall times AT&T 550 Aerial Adjustment, plus (b) the product
of the AT&T Underground Mileage Shortfall times AT&T 550 Underground Adjustment,
plus (c) the product of the AT&T MDU Shortfall times the AT&T 550 MDU Cost Per
Unit Adjustment, and (2) with respect to upgrade work in the AT&T CATV Systems
completed prior to Closing that did not satisfy the AT&T Upgrade Specifications,
the amount of additional expenditures needed with respect to such completed
upgrade work to cause it to satisfy the AT&T Upgrade Specifications as
determined in accordance with Section 2.05(d), less the AT&T 750 Aerial
Adjustment Delta and the AT&T 750 Underground Adjustment Delta associated with
such completed upgrade work, and (3) any adjustment determined in accordance
with Section 2.05(d) to the AT&T Estimated Upgrade Adjustment that is not
covered by clause (1) or (2).
AT&T Final Working Capital Adjustment means the positive or negative
amount shown on the AT&T Final Adjustment Statement as the AT&T Working Capital
of the AT&T CATV Business as of the Closing Date.
AT&T Financial Statements has the meaning set forth in Section 4.03.
AT&T 550 Aerial Adjustment equals $22,480 per mile.
AT&T 550 MDU Cost Per Unit Adjustment equals $125 per unit within MDUs
in the AT&T CATV Systems.
AT&T 550 Underground Adjustment equals $31,163 per mile.
AT&T Indemnified Party has the meaning set forth in Section 10.03(a).
AT&T Intangible Property means the copyrights, patents, trademarks,
service marks and trade names used in the AT&T CATV Business excluding the right
to use the name "AT&T" or any and all derivatives thereof or any name which may
include any of such terms, and all applications for, or licenses or other rights
to use any thereof, and the value associated therewith, which are owned by an
AT&T Seller or an affiliate thereof and used in the AT&T CATV Business.
AT&T Interim Financial Statements has the meaning set forth in Section
4.03.
AT&T Inventory means all inventory of the AT&T Sellers as defined under
GAAP, plus, without limitation, all supplies, all maintenance equipment, all
converters, all cables and all amplifiers owned by an AT&T Seller on the Closing
Date as determined by the AT&T Sellers' inventory control systems and used in
the AT&T CATV Business.
AT&T Matching Franchise has the meaning set forth in Section 9.07(a).
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AT&T Material Adverse Effect means a material adverse effect on the
assets, financial condition or results of operations of the AT&T CATV Business,
taken as a whole, other than any such effect resulting from changes in general
economic or political conditions or legal, governmental, regulatory or
competitive factors affecting CATV system operators generally or in the State of
New York.
AT&T Material Contracts has the meaning set forth in Section 4.07(c).
AT&T MDU Shortfall means the amount, if any, by which the number of
actual units within MDUs in the AT&T CATV Systems upgraded prior to Closing is
less than the number of units within MDUs planned to be upgraded in the AT&T
CATV Systems during 2000, as shown in Schedule 1.01(d) of AT&T's Disclosure
Schedule.
AT&T Objection has the meaning set forth in Section 2.04(c).
AT&T Parties has the meaning set forth in the Preamble to this
Agreement.
AT&T Permitted Encumbrances means those Encumbrances set forth in
Schedule 1.01(c) of AT&T's Disclosure Schedule and all other Encumbrances, if
any, which do not materially detract from the value of the tangible property
subject thereto and which do not materially interfere with the present and
continued use of such property in the operation of the AT&T CATV Business.
AT&T Preliminary Adjustment Statement has the meaning set forth in
Section 2.05(a).
AT&T Real Property means all realty, fixtures, easements,
rights-of-way, leasehold and other interests in real property, buildings and
improvements used in the AT&T CATV Business.
AT&T Retained Franchise has the meaning set forth in Section 9.07(b).
AT&T Sellers has the meaning set forth in the Preamble to this
Agreement.
AT&T 750 Aerial Adjustment Delta equals $160 per mile, but only with
respect to the areas referred to in part (a) of the definition of "AT&T Upgrade
Specifications."
AT&T 750 Underground Adjustment Delta equals $539 per mile, but only
with respect to the areas referred to in part (a) of the definition of "AT&T
Upgrade Specifications."
AT&T Special Indemnity Covenants has the meaning specified in Section
10.03(b).
AT&T Subscriber Adjustment means the AT&T Estimated Subscriber
Adjustment prior to the preparation of the AT&T Final Adjustment Statement
pursuant to Section 2.05(c), and thereafter, the AT&T Final Subscriber
Adjustment.
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AT&T Systems Area means the geographical area in which the AT&T CATV
Systems are operated as described in Exhibit A hereto.
AT&T Underground Mileage Shortfall means the amount, if any, by which
the number of actual underground plant miles upgraded in the AT&T CATV Systems
prior to Closing in accordance with the AT&T Upgrade Specifications, is less
than the number of underground plant miles planned to be upgraded in the AT&T
CATV Systems during 2000, as shown in Schedule 1.01(d) of AT&T's Disclosure
Schedule.
AT&T Upgrade Adjustment means the AT&T Estimated Upgrade Adjustment
prior to the preparation of the AT&T Final Adjustment Statement pursuant to
Section 2.05(e), and thereafter, the AT&T Final Upgrade Adjustment.
AT&T Upgrade Objection has the meaning set forth in Section 2.04(d).
AT&T Upgrade Specifications means (a) with respect to the areas listed
as being "in walk out only" status in Schedule 1.01(e) of AT&T's Disclosure
Schedule, the "New York Upgrade Architecture -Built to Cablevision
Specifications" outlined in Schedule 1.01(e) of AT&T's Disclosure Schedule, and
(b) with respect to the areas listed as being "design complete," "in prelim
design" or "walk out sent to design house" status in Schedule 1.01(e) of AT&T's
Disclosure Schedule, the "New York Upgrade Architecture -Built to MediaOne
Specifications" outlined in Schedule 1.01(e) of AT&T's Disclosure Schedule.
AT&T Working Capital means AT&T Current Assets minus AT&T Current
Liabilities.
AT&T Working Capital Adjustment means the AT&T Estimated Working
Capital Adjustment prior to the preparation of the AT&T Final Adjustment
Statement pursuant to Section 2.05(c), and thereafter, the AT&T Final Working
Capital Adjustment.
AT&T's Counsel means Sherman & Howard L.L.C. or such local, special or
inside counsel as AT&T may select.
AT&T/MediaOne Merger means the merger contemplated pursuant to the
Agreement and Plan of Merger, dated as of May 6, 1999, as amended, by and among
AT&T Corp., Meteor Acquisition Inc. and MediaOne Group, Inc.
Basic Subscriber means as at any date of determination thereof, the sum
of (a) the total number of households (exclusive of "second outlets," as such
term is commonly understood in the cable television industry, and exclusive of
customers billed on a bulk-billing or commercial-account basis) subscribing on
such date to at least the most basic tier of service offered by the CATV
Business and paying the full monthly service fees and charges imposed in respect
of such service (other than disputed items), and (b) the total number of
Cablevision Equivalent Subscribers or AT&T Equivalent Subscribers (as the case
may be) on such date who, as to either clause (a) or clause (b), are not, as of
the Closing Date, more than 60 days in arrears in payment for service, as
measured from the date that payment due became a receivable.
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Business Day means a day other than a Saturday, Sunday, national or New
York State holiday or other day on which commercial banks in New York City are
authorized or required by law to close.
Cablevision Actual Upgrade Capital Expenditures means actual capital
expenditures made by the Cablevision Sellers with respect to the Cablevision
CATV Systems in accordance with the Cablevision Upgrade Specifications, for (a)
coax feeder cable, (b) external drop cable, (c) MDU wiring, (d) active and
passive field electronics and (e) construction of fiber overlay and nodes, in
each case made during 2000, but only through the earlier of December 31, 2000
and the Closing Date; and as would be reflected as additions to fixed assets on
the financial statements of the Cablevision CATV System in accordance with GAAP.
Cablevision Adjusted Aerial Average Cost Per Mile has the meaning set
forth in Section 2.04(d).
Cablevision Adjusted MDU Average Cost Per Unit has the meaning set
forth in Section 2.04(d).
Cablevision Adjusted Underground Average Cost Per Mile has the meaning
set forth in Section 2.04(d).
Cablevision Aerial Average Cost Per Mile equals the quotient of
Cablevision Actual Upgrade Capital Expenditures made on actual aerial plant
miles upgraded in the Cablevision CATV System during 2000 divided by the number
of actual aerial plant miles rebuilt in the Cablevision CATV System during 2000,
in each case, through the earlier of December 31, 2000 and the Closing Date and
in accordance with the Cablevision Upgrade Specifications.
Cablevision Aerial Mileage Shortfall means the amount, if any, by which
the number of actual aerial plant miles upgraded in the Cablevision CATV System
during 2000 in accordance with the Cablevision Upgrade Specifications, is less
than the number of aerial plant miles planned to be upgraded in the Cablevision
CATV System during 2000, as shown in Schedule 1.01(d) of Cablevision's
Disclosure Schedule and, in each case, through the earlier of December 31, 2000
and the Closing Date.
Cablevision Assets means all of the properties, assets, privileges,
rights, interests, claims and goodwill, real and personal, tangible and
intangible, of every type and description of the Cablevision Sellers, including,
without limitation, the Cablevision Sellers' leasehold interests or rights to
possession, whether owned or leased or otherwise possessed, primarily used or
held for use in or necessary for the Cablevision CATV Business, now in existence
or hereafter acquired by the Cablevision Sellers prior to the Closing,
including, without limitation, the Cablevision CATV Instruments, the Cablevision
Equipment, the Cablevision Real Property, the Cablevision Contracts, the
Cablevision Inventory and the Cablevision Intangible Property; provided that the
Cablevision Assets shall exclude the Cablevision Excluded Assets and any assets
disposed of prior to the Closing in the usual and ordinary course of business
and not in violation of this Agreement.
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Cablevision Assumed Liabilities means (a) those obligations,
liabilities and commitments accruing after the Closing Date under or with
respect to the AT&T Assets assigned and transferred to the Cablevision Sellers
at the Closing; (b) other obligations and liabilities of the AT&T Sellers only
to the extent that such obligations and liabilities constituted AT&T Current
Liabilities in calculating AT&T Working Capital; and (c) all other obligations
and liabilities accruing and relating to periods after the Closing Date and
arising out of the Cablevision Sellers' ownership, use or operation of the AT&T
Assets after the Closing Date, except to the extent that such obligations or
liabilities relate to any AT&T Excluded Asset.
Cablevision Assumption Agreements means the Cablevision Assumption
Agreements attached as Exhibits C-1 and C-2 hereto.
Cablevision Average Cost Per Mile Calculations has the meaning set
forth in Section 2.04(d).
Cablevision Benefit Plans has the meaning set forth in Section 3.09(a).
Cablevision CATV Business means the CATV business presently owned and
operated by the Cablevision Sellers, which consists of the transmission,
distribution and local origination of audio and video signals over the
Cablevision CATV Systems.
Cablevision CATV Instruments means (a) all franchises or ordinances
granted to the Cablevision Sellers with respect to the Cablevision CATV Business
by any Governmental Authority listed in Schedule 1.01(a) of Cablevision's
Disclosure Schedule; (b) all permits for wire crossings over or under highways,
railroads, and other property; (c) all construction permits and certificates of
occupancy; (d) all pole attachment and other contracts with utilities; (e) all
State, county and municipal permits, orders, variances, exemptions, approvals,
consents, licenses and other authorizations; (f) all agreements for the
purchase, sale, receipt or distribution of news, data and microwave relay
signals, or for satellite services; and (g) all other approvals, consents and
authorizations used or held for use in the Cablevision CATV Business.
Cablevision CATV Licenses means the licenses issued by the FCC used in
the Cablevision CATV Business as presently conducted by the Cablevision Sellers,
all of which are listed in Schedule 1.01(a) of Cablevision's Disclosure
Schedule.
Cablevision CATV Systems has the meaning set forth in the Preamble to
this Agreement.
Cablevision Contract means any contract, mortgage, deed of trust, bond,
indenture, lease, license, note, certificate, option, warrant, right, or other
instrument, document or written agreement relating to the Cablevision CATV
Business to which the Cablevision Sellers are parties or by which the
Cablevision Sellers or the assets included within the Cablevision CATV Business
are bound, excluding any Cablevision CATV Instrument.
Cablevision Current Assets means, with respect to the Cablevision CATV
Systems, petty cash, marketable securities, 100% of active subscriber accounts
receivable that are 60 days or less past due and 90% of active subscriber
accounts receivable that are between 61 and 90 days past
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due (in each case measured from the date the accounts became receivable), other
receivables, including advertising, tower rent, marketing cooperative, home
shopping commissions and employee tax receivables, all deposits with utilities,
under leases or related to guides, billing service, postage, the pro rata
portion of any prepaid taxes (as of the Closing Date), all prepaid expenses,
including in respect of pole rental or equipment maintenance agreements that are
liabilities, and in respect of rent, postage, promotional expenditures, guides,
security service or two-way radio and other current assets (excluding
Cablevision Inventory), each as determined in accordance with GAAP (unless
otherwise specified herein), but excluding the Cablevision Excluded Assets.
Cablevision Current Liabilities means, with respect to the Cablevision
CATV Systems, accounts payable, accrued expenses and other current liabilities
of the Cablevision Sellers determined in accordance with GAAP, including,
without limitation, accrued vacation and sick time for Cablevision Employees to
be employed by the Cablevision CATV Business immediately following the Closing
in an amount equal to the applicable AT&T Party's obligation to provide for
accrued vacation and sick time for such Cablevision Employees, except that the
current portion of any indebtedness for borrowed money shall not be included.
Cablevision Employees means all current active employees of Cablevision
Sellers with respect to the Cablevision CATV Business.
Cablevision Entities has the meaning set forth in the Preamble to this
Agreement.
Cablevision Equipment means all tangible personalty; electronic
devices; towers; trunk and distribution cable; decoders and spare decoders for
scrambled satellite signals; amplifiers; power supplies; conduit; vaults and
pedestals; grounding and pole hardware; installed subscriber's devices
(including, without limitation, drop lines, converters, encoders, transformers
behind television sets and fittings); "head-ends" and "Hubs" (origination,
transmission and distribution system) hardware; tools; inventory; spare parts;
maps and engineering data; vehicles; supplies, tests and closed circuit devices;
furniture and furnishings; and all other tangible personal property and
facilities owned or leased by the Cablevision Sellers and used in the
Cablevision CATV Business.
Cablevision Equivalent Subscriber means, as at any date of
determination thereof, the total number of households served by the Cablevision
CATV Business on a bulk-billed basis and the total number of establishments
served on a commercial account basis, or on a basis less than the standard
monthly service fees and charges imposed by the Cablevision Sellers, which shall
be deemed to be equal to the quotient obtained by dividing (a) the total fees
and charges for basic service billed by the Cablevision Sellers during the month
including such date on a bulk-billed or commercial account basis, or on a basis
less than the standard monthly service fees and charges imposed by the
Cablevision Sellers, by (b) the fees and charges for basic service that a Basic
Subscriber of the Cablevision CATV Business of the type described in clause (a)
of the definition of such term in this Section 1.01 was billed during such
month, and as to both clauses (a) and (b) above, excluding any pass-through
charge for sales tax, line-itemized franchise fees, fees charged by the FCC and
similar items.
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Cablevision Estimated Adjustment Statement has the meaning set forth in
Section 2.03(a).
Cablevision Estimated Subscriber Adjustment means an amount shown on
the Cablevision Estimated Adjustment Statement equal to the product of (a)
$5,000 multiplied by (b) the difference between (i) 356,065 less (ii) the number
of Basic Subscribers of the Combined CATV Business on the Closing Date,
multiplied by (c) 0.4579; provided that, if the product obtained in the
foregoing clause is negative, the Cablevision Estimated Subscriber Adjustment
shall be zero.
Cablevision Estimated Upgrade Adjustment means an amount shown on the
Cablevision Estimated Adjustment Statement equal to the sum of (a) the product
of the Cablevision Aerial Mileage Shortfall times the Cablevision Aerial Average
Cost Per Mile plus (b) the product of the Cablevision Underground Mileage
Shortfall times the Cablevision Underground Average Cost Per Mile, plus (c) the
product of the Cablevision MDU Shortfall times the Cablevision MDU Average Cost
Per Unit.
Cablevision Estimated Working Capital Adjustment means the positive or
negative amount shown on the Cablevision Estimated Adjustment Statement as the
Cablevision Working Capital of the Cablevision CATV Business as of the Closing
Date.
Cablevision Excluded Assets means (a) the assets and properties listed
in Schedule 1.01(b) of Cablevision's Disclosure Schedule; (b) programming
Cablevision Contracts; (including cable guide Cablevision Contracts) and
retransmission consent Cablevision Contracts; (c) insurance policies and rights
and claims thereunder up to the self-insured retention or deductible, (d)
Cablevision Contracts relating to national advertising sales representation; (e)
bonds, letters of credit, surety instruments and other similar items of the
Cablevision Entities; (f) trademarks, trade names, service marks, service names,
logos and similar proprietary rights; (g) Cablevision Benefit Plans; (h) any of
the following agreements if not disclosed on Schedule 3.02 or Schedule 3.07(c)
of Cablevision's Disclosure Schedule: (i) any agreement with any Affiliates of
the Cablevision Entities, (ii) any agreement for the provision of telephony,
high speed data or related services in any of the Cablevision CATV Systems, and
(iii) any agreement with any competitive access provider or local exchange
company or any Internet access or on-line services provider with respect to the
use or lease of any Cablevision Assets; and (i) personnel files.
Cablevision Final Adjustment Statement has the meaning set forth in
Section 2.04(e).
Cablevision Final Subscriber Adjustment means an amount shown on the
Cablevision Final Adjustment Statement equal to the product of (a) $5,000
multiplied by (b) the difference, if any, between (i) 356,065 less (ii) the
number of Basic Subscribers of the Combined CATV Business on the Closing Date,
multiplied by (c) 0.4579; provided that, if the product obtained in the
foregoing clause is negative, the Cablevision Final Subscriber Adjustment shall
be zero.
Cablevision Final Upgrade Adjustment means (1) with respect to upgrade
work in the Cablevision CATV Systems not completed prior to Closing, an amount
shown on the Cablevision
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Final Adjustment Statement equal to the sum of (a) the product of the
Cablevision Aerial Mileage Shortfall times the Cablevision Aerial Average Cost
Per Mile (or if applicable, the Cablevision Adjusted Aerial Average Cost Per
Mile) plus (b) the product of the Cablevision Underground Mileage Shortfall
times the Cablevision Underground Average Cost Per Mile (or if applicable, the
Cablevision Adjusted Underground Average Cost Per Mile), plus (c) the product of
the Cablevision MDU Shortfall times the Cablevision MDU Average Cost Per Unit
(or if applicable, the Cablevision Adjusted MDU Average Cost Per Unit) and (2)
with respect to upgrade work in the Cablevision CATV Systems completed prior to
Closing that did not satisfy the Cablevision Upgrade Specifications, the amount
of additional expenditures needed with respect to such completed upgrade work to
cause it to satisfy the Cablevision Upgrade Specifications as determined in
accordance with Section 2.04(d) and (3) any adjustment determined in accordance
with Section 2.04(d) to the Cablevision Estimated Upgrade Adjustment that is not
covered by clause (1) or (2).
Cablevision Final Working Capital Adjustment means the positive or
negative amount shown on the Cablevision Final Adjustment Statement as the
Cablevision Working Capital of the Cablevision CATV Business as of the Closing
Date.
Cablevision Financial Statements has the meaning set forth in Section
3.03.
Cablevision Indemnified Party has the meaning set forth in Section
10.02(a).
Cablevision Intangible Property means the copyrights, patents,
trademarks, service marks and trade names used in the Cablevision CATV Business
excluding the right to use the names "Cablevision," "Cablevision Systems,"
"Optimum," "Optimum Cable," "Optimum TV," or any and all derivatives thereof or
any name which may include any of such terms, and all applications for, or
licenses or other rights to use any thereof, and the value associated therewith,
which are owned by the Cablevision Sellers or an affiliate thereof and used in
the Cablevision CATV Business.
Cablevision Interim Financial Statements has the meaning set forth in
Section 3.03.
Cablevision Inventory means all inventory of the Cablevision Sellers as
defined under GAAP, plus, without limitation, all supplies, all maintenance
equipment, all converters, all cables and all amplifiers owned by the
Cablevision Sellers on the Closing Date as determined by the Cablevision
Sellers' inventory control systems and used in the Cablevision CATV Business.
Cablevision Matching Franchise has the meaning set forth in Section
9.07(b).
Cablevision Material Adverse Effect means a material adverse effect on
the assets, financial condition or results of operations of the Cablevision CATV
Business, taken as a whole, other than any such effect resulting from changes in
general economic or political conditions or legal, governmental, regulatory or
competitive factors affecting CATV system operators generally or in the
Commonwealth of Massachusetts.
Cablevision Material Contracts has the meaning set forth in Section
3.07(c).
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Cablevision MDU Average Cost Per Unit equals the quotient of (a)
Cablevision Actual Upgrade Capital Expenditures made on MDUs upgraded in the
Cablevision CATV System during 2000 divided by (b) the number of actual units
within MDUs upgraded in the Cablevision CATV System during 2000, in each case
through the earlier of December 31, 2000 and the Closing Date and in accordance
with the Cablevision Upgrade Specifications.
Cablevision MDU Shortfall means the amount, if any, by which the number
of actual units within MDUs in the Cablevision CATV System upgraded during 2000
is less than the number of units within MDUs planned to be upgraded in the
Cablevision CATV during 2000, as shown in Schedule 1.01(d) of Cablevision's
Disclosure Schedule and, in each case, through the earlier of December 31, 2000
and the Closing Date.
Cablevision Objection has the meaning set forth in Section 2.05(c).
Cablevision Permitted Encumbrances means those Encumbrances set forth
in Schedule 1.01(c) of Cablevision's Disclosure Schedule and all other
Encumbrances, if any, which do not materially detract from the value of the
tangible property subject thereto and which do not materially interfere with the
present and continued use of such property in the operation of the Cablevision
CATV Business.
Cablevision Preliminary Adjustment Statement has the meaning set forth
in Section 2.04(a).
Cablevision Real Property means all realty, fixtures, easements,
rights-of-way, leasehold and other interests in real property, buildings and
improvements used in the Cablevision CATV Business.
Cablevision Retained Franchise has the meaning set forth in Section
9.07(a).
Cablevision Sellers has the meaning set forth in the Preamble to this
Agreement.
Cablevision Special Indemnity Covenants has the meaning specified in
Section 10.02(b).
Cablevision Subscriber Adjustment means the Cablevision Estimated
Subscriber Adjustment prior to the preparation of the Cablevision Final
Adjustment Statement pursuant to Section 2.04(c), and thereafter, the
Cablevision Final Subscriber Adjustment.
Cablevision Systems Area means the geographical area in which the
Cablevision CATV Systems are operated as described in Exhibit B hereto.
Cablevision Underground Average Cost Per Mile equals the quotient of
Cablevision Actual Upgrade Capital Expenditures made on actual underground plant
miles upgraded in the Cablevision CATV System during 2000 in accordance with the
Cablevision Upgrade Specifications, divided by the number of actual underground
plant miles upgraded in the Cablevision CATV System during 2000, in each case,
through the earlier of December 31, 2000 and the Closing Date and in accordance
with the Cablevision Upgrade Specifications.
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Cablevision Underground Mileage Shortfall means the amount, if any, by
which the number of actual underground plant miles upgraded in the Cablevision
CATV System during 2000 in accordance with the Cablevision Upgrade
Specifications, is less than the number of underground plant miles planned to be
upgraded in the Cablevision CATV System during 2000, as shown in Schedule
1.01(d) of Cablevision's Disclosure Schedule and, in each case, through the
earlier of December 31, 2000 and the Closing Date.
Cablevision Upgrade Adjustment means the Cablevision Estimated Upgrade
Adjustment prior to the preparation of the Cablevision Final Adjustment
Statement pursuant to Section 2.04(e), and thereafter, the Cablevision Final
Upgrade Adjustment.
Cablevision Upgrade Objection has the meaning set forth in Section
2.05(d).
Cablevision Upgrade Specifications means the technical specifications
outlined in Schedule 1.01(e) of Cablevision's Disclosure Schedule.
Cablevision Working Capital means Cablevision Current Assets minus
Cablevision Current Liabilities.
Cablevision Working Capital Adjustment means the Cablevision Estimated
Working Capital Adjustment prior to the preparation of the Cablevision Final
Adjustment Statement pursuant to Section 2.04(e), and thereafter, the
Cablevision Final Working Capital Adjustment.
Cablevision's Counsel means Sullivan & Cromwell or such local, special
or inside counsel as Holdings may select.
Capital Stock of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations or interests, including partnership interests,
whether general or limited, and membership interests, whether managing or
non-managing of such Person.
CATV means cable television, which term also includes satellite master
antenna television not yet converted to cable television service.
Closing means a meeting for the purpose of concluding the transactions
contemplated by this Agreement held at the place and on the date fixed in
accordance with Section 12.01.
Closing Date; Date of Closing means the date fixed for the Closing in
accordance with Section 12.01.
Code means the United States Internal Revenue Code of 1986, as amended.
Combined CATV Business means the Cablevision CATV Business as defined
in this Agreement together with the CATV Business as defined in the Merger
Agreement.
Communications Act has the meaning set forth in Section 3.07(e).
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Confidentiality Agreement has the meaning set forth in Section 5.04(a).
Copyright Act has the meaning set forth in Section 3.07(f).
Cost of Service Election has the meaning set forth in Section 3.07(g).
CPA Firm means Deloitte & Touche, certified public accountants, or such
other nationally recognized firm of independent public accountants as to which
AT&T and Holdings may mutually agree.
CSC Boston has the meaning set forth in the Preamble to this Agreement.
CSC Brookline has the meaning set forth in the Preamble to this
Agreement.
DGCL means Delaware General Corporation Law, as amended.
DOJ means the United States Department of Justice.
Encumbrances means liens, charges, encumbrances, security interests,
options, restrictions, demands, preemptive rights, proxies, shareholder
agreements, voting trusts, voting agreements, or any other similar third party
rights other than liens for taxes not yet due and payable.
Engineering Firm means (a) the independent engineering firm selected
from the Engineering Firm List by mutual agreement of AT&T and Holdings; or (b)
the independent engineering firm selected from the Engineering Firm List by
mutual agreement of (i) the independent engineering firm selected from the
Engineering Firm List by AT&T, and (ii) the independent engineering firm
selected from the Engineering Firm List by Holdings.
Engineering Firm List means the independent engineering firms set forth
in Schedule 1.01(f) of the Disclosure Schedules.
Environmental Law means any law or regulation governing the protection
of the environment (including air, water, soil and natural resources) or the
use, storage, handling, release or disposal of any hazardous or toxic substance.
ERISA means the Employee Retirement Income Security Act of 1974, as the
same has been and may be amended from time to time.
ERISA Affiliate of any entity means any other entity that, together
with such entity, would be considered one employer under Section 4001 of ERISA
or Section 414 of the Code.
Exchange 1 means the Exchange in which CSC Boston will be involved, as
further described in Schedule 2.01(c) of the Disclosure Schedules.
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Exchange 2 means the Exchange in which CSC Brookline will be involved,
as further described in Schedule 2.01(c) of the Disclosure Schedules.
Exchange 1 Cash Consideration means:
(a) $193,470,000.00;
(b) plus (if a positive number) or minus (if a negative number),
the Cablevision Working Capital Adjustment multiplied by .8944;
(c) minus (if applicable), the Cablevision Upgrade Adjustment
multiplied by .8944;
(d) minus the Cablevision Subscriber Adjustment, if any,
multiplied by .8944;
(e) plus (if a negative number) or minus (if a positive number),
the AT&T Working Capital Adjustment multiplied by .8592;
(f) plus (if applicable) the AT&T Upgrade Adjustment multiplied by
.8592; and
(g) plus the AT&T Subscriber Adjustment, if any, multiplied by
.8592.
Exchange 2 Cash Consideration means:
(a) $1,900,000.00;
(b) plus (if a positive number) or minus (if a negative number),
the AT&T Working Capital Adjustment multiplied by .1408;
(c) minus (if applicable), the AT&T Upgrade Adjustment multiplied
by .1408;
(d) minus the AT&T Subscriber Adjustment, if any, multiplied by
.1408;
(e) plus (if a negative number) or minus (if a positive number),
the Cablevision Working Capital Adjustment multiplied by .1056;
(f) plus (if applicable), the Cablevision Upgrade Adjustment
multiplied by .1056; and
(g) plus the Cablevision Subscriber Adjustment, if any, multiplied
by .1056.
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If the Exchange 2 Cash Consideration is a negative number, appropriate
adjustments shall be made herein to provide for the payment of such amount by
the AT&T Sellers or the AT&T Designated Subsidiary, as applicable, to CSC
Brookline.
Exchanges has the meaning set forth in Section 2.01(c).
FCC means the United States Federal Communications Commission.
FTC means the United States Federal Trade Commission.
GAAP means United States generally accepted accounting principles as in
effect from time to time and consistently applied.
Governmental Authority means the United States Federal Government, any
state, county, municipal, local or foreign government and any governmental
agency, bureau, commission, authority or body.
Hazardous Substance means any substance listed, defined, designated or
classified as hazardous, toxic or radioactive under any applicable Environmental
Law, including petroleum products.
Holdings has the meaning set forth in the Preamble to this Agreement.
HSR Act and Rules means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and the rules and regulations promulgated thereunder, as from time
to time in effect prior to the Closing.
HSR Report means the Notification and Report Form for certain mergers
and acquisitions mandated by the HSR Act and Rules.
Indemnitee has the meaning set forth in Section 10.04.
Indemnitor has the meaning set forth in Section 10.04.
IRS means the United States Internal Revenue Service.
Judgment means any judgment, writ, order, injunction, award or decree
of or by any court, or judge, justice or magistrate, including any bankruptcy
court or judge, and any order of or by any Governmental Authority.
Law means the common law and any statute, ordinance, code or other law,
rule, regulation, order, technical or other standard, requirement or procedure
enacted, adopted, promulgated, applied or followed by any Governmental
Authority.
Liberty Media Group means Liberty Media Corporation and any of its
direct or indirect Affiliates or Subsidiaries.
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LMDS has the meaning set forth in Section 9.06(a).
Losses has the meaning set forth in Section 10.02(a).
MDU means a multiple dwelling unit building.
MediaOne Social Contract means the Social Contract released on August
3, 1995 (FCC 95-335) between Continental Cablevision (predecessor to MediaOne)
and the FCC, and the Social Contract Amendment released on August 23, 1996 (FCC
96-358), as amended, revised, extended or supplemented from time to time.
MediaOne Social Contract Extension has the meaning set forth in Section
5.04.
Merger has the meaning set forth in the Merger Agreement.
Merger Agreement means the Agreement and Plan of Merger (together with
all exhibits and schedules thereto), dated the date hereof, among Holdings, AT&T
and the other parties thereto, as such agreement may be amended, supplemented,
or otherwise modified in accordance with its terms.
MMDS has the meaning set forth in Section 9.06(a).
1992 Cable Act means the Cable Television Consumer Protection and
Competition Act of 1992.
Operating Agreements has the meaning set forth in Section 9.07(c).
Outside Closing Date has the meaning set forth in Section 12.02(e).
Person means any natural person, Governmental Authority, corporation,
general or limited partner, partnership, limited liability company, joint
venture, trust, association, or unincorporated entity of any kind.
Primary Transfer has the meaning set forth in Section 9.07(d).
Prime Rate means the annual rate publicly announced from time to time
by Chase Manhattan Bank, N.A. as its prime rate.
SEC means the United States Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended.
SMATV has the meaning set forth in Section 9.06(a).
Subsequent Transfer has the meaning set forth in Section 9.07(e).
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Subsidiary of any Person means (a) a corporation more than 50% of the
combined voting power of the outstanding Voting Securities of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof, (b) a
partnership of which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, is the general partner and has the power to direct the policies,
management and affairs of the partnership, (c) a limited liability company of
which such Person or one or more Subsidiaries of such Person or such Person and
one or more Subsidiaries of such Person, directly or indirectly, is the managing
member and has the power to direct the policies, management and affairs of the
company, or (d) any other Person (other than a corporation, partnership or
limited liability company) in which such Person, or one or more other
Subsidiaries of such Person or such Person and one or more other Subsidiaries of
such Person, directly or indirectly, has at least a majority ownership and power
to direct the policies, management and affairs thereof; provided that,
notwithstanding the foregoing, for all purposes of this Agreement and the
Transaction Documents, (i) neither Cablevision Systems Corporation nor any of
its Subsidiaries shall be deemed to be a Subsidiary of AT&T, and (ii) no member
of the Liberty Media Group shall be deemed to be a Subsidiary of AT&T.
Supplement means the Supplement to this Agreement attached as Exhibit I
hereto.
Tax (or Taxes) means all taxes, however denominated, including any
interest, penalties or other additions to tax that may become payable in respect
thereof, imposed by any federal, territorial, State, local or foreign government
or any agency or political subdivision of any such government, which taxes shall
include, without limitation, all income or profits taxes (including, but not
limited to, federal and State income taxes), real property gains taxes, payroll
and employee withholding taxes, unemployment insurance taxes, social security
taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise taxes,
gross receipts taxes, business license taxes, occupation taxes, real and
personal property taxes, stamp taxes, environmental taxes, transfer taxes,
workers' compensation, Pension Benefit Guaranty Corporation premiums and other
governmental charges, and other obligations of the same or of a similar nature
to any of the foregoing, which an AT&T Seller or a Cablevision Seller is
required to pay, withhold or collect.
Tax Returns means all reports, estimates, declarations of estimated
tax, information statements and returns relating to, or required to be filed in
connection with, any Taxes, including information returns or reports with
respect to backup withholding and other payments to third parties.
Transaction Documents means this Agreement, the Merger Agreement and
the Registration Rights Agreement (as defined in the Merger Agreement) and any
other documents executed on or prior to the date hereof that expressly refer to
Section 13.02 of this Agreement.
Upgrade Contract has the meaning set forth in 5.04.
Voting Securities of any Person means Capital Stock of such Person
which ordinarily has voting power for the election of directors (or persons
performing similar functions) of such
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Person, whether at all times or only so long as no senior class of securities
has such voting power by reason of any contingency.
1.02 Rules of Construction. Unless otherwise expressly provided in this
Agreement, or unless the context clearly requires otherwise, (a) accounting
terms used in this Agreement will have the meanings ascribed to them under GAAP,
(b) words used in this Agreement, regardless of the gender and number used, will
be deemed and construed to include any other gender, masculine, feminine, or
neuter, and any other number, singular or plural, as the context requires, (c)
the word "including" is not limiting, and the word "or" is not exclusive, (d)
the capitalized term "Section" refers to sections of this Agreement, (e)
references to a particular Section include all subsections thereof, (f)
references to a particular statute or regulation include all amendments thereto,
rules and regulations thereunder and any successor statute, rule or regulation,
or published clarifications or interpretations with respect thereto, in each
case as from time to time in effect, and (g) references to a Person include such
Person's successors and assigns to the extent not prohibited by this Agreement.
When it is the parties' intent to limit the scope of any defined term solely to
one party, such intent is indicated by referring specifically to one party or
the other.
2. EXCHANGE OF ASSETS; CASH CONSIDERATION.
2.01 Exchange of Assets; Cash Consideration. At the Closing, upon the
terms and conditions set forth in this Agreement:
(a) The applicable Cablevision Sellers shall convey, transfer,
assign and deliver to the applicable AT&T Sellers or the AT&T
Designated Subsidiary, and the applicable AT&T Sellers or the AT&T
Designated Subsidiary shall acquire, accept and receive, all of the
applicable Cablevision Sellers' right, title and interest in and to the
Cablevision Assets, such transaction to be effective as of 12:01 a.m.
Eastern time on the Closing Date (except as otherwise agreed by the
parties). If the AT&T Designated Subsidiary is designated to acquire,
accept or receive all of a Cablevision Seller's right, title and
interest in and to the Cablevision Assets owned by such Cablevision
Seller, AT&T shall cause the AT&T Designated Subsidiary to become a
party to this Agreement immediately prior to the Closing by executing
the Supplement to this Agreement in the form of Exhibit I hereto.
(b) The applicable AT&T Sellers shall convey, transfer, assign and
deliver to the applicable Cablevision Sellers, and the applicable
Cablevision Sellers shall acquire, accept and receive, all of the
applicable AT&T Sellers' right, title and interest in and to the AT&T
Assets, such transaction to be effective as of 12:01 a.m. Eastern time
on the Closing Date (except as otherwise agreed by the parties).
(c) Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing, the applicable AT&T Sellers and the AT&T
Designated Subsidiary (if applicable) on the one hand, and the
applicable Cablevision Sellers, on the other hand, will exchange
simultaneously the AT&T Assets for the Cablevision Assets, in the
manner described in Schedule 2.01(c) of the Disclosure Schedules, free
and clear of all Encumbrances (except Permitted Encumbrances) (the
"Exchanges"). The AT&T Sellers
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and the Cablevision Sellers agree to use all reasonable efforts to
structure the Exchanges in such a way that to the maximum extent
reasonably possible they will be tax free exchanges of like-kind assets
under Section 1031 of the Code, including any party's assignment of its
rights under this Agreement to a "qualified intermediary" engaged by
such party or its Affiliate to effectuate a deferred like-kind exchange
under Section 1031 of the Code.
(d) Each of the Exchanges described in Schedule 2.01(c) of the
Disclosure Schedules is to occur as follows: (i) the tangible personal
property included in the AT&T Assets and the tangible personal property
included in the Cablevision Assets are being exchanged each for the
other in "Exchange Groups" as defined under Internal Revenue
Regulations Sections 1.1031(a)-2 and 1.1031(j)-1(b)(2); (ii) the owned
AT&T Real Property, the leased AT&T Real Property and the other AT&T
Real Property interests and the owned Cablevision Real Property, the
leased Cablevision Real Property and other Cablevision Real Property
interests are being exchanged each for the other; and (iii) the AT&T
Contracts, AT&T CATV Instruments and AT&T Intangible Property and the
Cablevision Contracts, Cablevision CATV Instruments, and Cablevision
Intangible Property are being exchanged each for the other, in each
case in such a manner as to make the exchange non-taxable to the
maximum extent permitted by Section 1031 of the Code and the
regulations promulgated thereunder. Liabilities assumed or taken
subject to by each party are being exchanged each for the other to the
maximum extent permitted under Section 1031 of the Code and regulations
thereunder.
(e) At the Closing, the AT&T Sellers will pay or cause payment by
one or more qualified intermediaries (as contemplated by Schedule
2.01(c) of the Disclosure Schedules) to the Cablevision Sellers by one
or more federal wire transfers of immediately available funds in New
York, New York pursuant to wiring instructions which shall be delivered
to AT&T at least three Business Days prior to the expected Closing
Date, an amount in cash equal in the aggregate of the Exchange 1 Cash
Consideration as preliminarily determined based on the information
delivered pursuant to Section 2.03.
(f) At the Closing, the Cablevision Sellers will pay or cause
payment by one or more qualified intermediaries to the AT&T Sellers or
the AT&T Designated Subsidiary by one or more federal wire transfers of
immediately available funds in New York, New York pursuant to wiring
instructions which shall be delivered to Holdings at least three
Business Days prior to the expected Closing Date, an amount in cash
equal in the aggregate to the Exchange 2 Cash Consideration as
preliminarily determined based on the information delivered pursuant to
Section 2.03.
(g) At the Closing, each of the parties will cause such other
transfers by qualified intermediaries acting on their behalf as
described in Schedule 2.01(c) of the Disclosure Schedules (to the
extent not covered by the transfers described in (e) and (f) of this
Section 2.01).
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2.02 Additional Deliveries.
(a) In consideration for the transfer of the AT&T Assets and the
Exchange 1 Cash Consideration pursuant to Section 2.01, and the other
covenants, agreements, representations and warranties contained herein,
the applicable Cablevision Sellers shall at Closing assume and agree to
pay, discharge and perform the Cablevision Assumed Liabilities as and
when due in accordance with the Cablevision Assumption Agreements
attached as Exhibits C-1 and C-2 hereto.
(b) In consideration for the transfer of the Cablevision Assets
and the Exchange 2 Cash Consideration pursuant to Section 2.01, and the
other covenants, agreements, representations and warranties contained
herein, the applicable AT&T Sellers or the AT&T Designated Subsidiary,
as applicable, shall at Closing assume and agree to pay, discharge and
perform the AT&T Assumed Liabilities as and when due in accordance with
the AT&T Assumption Agreements attached as Exhibits D-1 and D-2 hereto.
2.03 Estimated Adjustment Statements. At least three Business Days
prior to the Closing Date:
(a) Holdings shall deliver to AT&T a report (the "Cablevision
Estimated Adjustment Statement"), certified as to completeness and
accuracy by Holdings, which shall include, separately stated for the
Cablevision CATV Business in each of the Exchanges, without limitation,
(i) a calculation of the Working Capital of the Cablevision CATV
Business as of the Closing Date and determined in accordance with GAAP,
except as otherwise required by this Agreement, which statement shall
set forth Holdings' good faith estimate of the Cablevision Working
Capital Adjustment, (ii) Holdings' good faith estimate of the
Cablevision Upgrade Adjustment, as of the Closing Date, and (iii)
Holdings' good faith estimate of the Cablevision Subscriber Adjustment,
if any, which estimate shall be prepared in conformity with the
definition of Basic Subscriber contained herein and shall be based upon
the number of Basic Subscribers to be transferred to AT&T under this
Agreement and the Merger Agreement as of the Closing Date (Basic
Subscribers transferred to AT&T under this Agreement and the Merger
Agreement shall be deemed to include all Basic Subscribers to the
Combined CATV Business on the Closing Date, irrespective of the lack of
approval or consent of Governmental Authorities to transfer to AT&T any
franchises containing Basic Subscribers); and
(b) AT&T shall deliver to Holdings a report (the "AT&T Estimated
Adjustment Statement"), certified as to completeness and accuracy by
AT&T, which shall include, separately stated for the AT&T CATV Business
in each of the Exchanges, without limitation, (i) a calculation of the
Working Capital of the AT&T CATV Business as of the Closing Date and
determined in accordance with GAAP, except as otherwise required by
this Agreement, which statement shall set forth AT&T's good faith
estimate of the AT&T Working Capital Adjustment, (ii) AT&T's good faith
estimate of the AT&T Upgrade Adjustment, as of the Closing Date, and
(iii) AT&T's good faith estimate of the
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AT&T Subscriber Adjustment, if any, which estimate shall be prepared in
conformity with the definition of Basic Subscriber contained herein and
shall be based upon the number of Basic Subscribers to be transferred
to Holdings under this Agreement as of the Closing Date (Basic
Subscribers transferred to Holdings under this Agreement shall be
deemed to include all Basic Subscribers to the AT&T CATV Business on
the Closing Date, irrespective of the lack of approval or consent of
Governmental Authorities to transfer to Holdings franchises containing
such Basic Subscribers).
2.04 Holdings' Post-Closing Adjustment.
(a) Within 90 days after the Closing Date, Holdings shall prepare,
or cause to be prepared, and deliver to AT&T a report (the "Cablevision
Preliminary Adjustment Statement"), certified as to completeness and
accuracy by Holdings, showing in detail the final determination of the
Cablevision Working Capital Adjustment, the Cablevision Upgrade
Adjustment and the Cablevision Subscriber Adjustment, which may be
zero. AT&T shall cooperate in providing to Holdings all relevant books,
records and personnel of the Cablevision CATV Business in order to
facilitate the preparation of the Cablevision Preliminary Adjustment
Statement.
(b) During the succeeding 30-day period, AT&T shall have the right
to examine the Cablevision Preliminary Adjustment Statement and all
records used to prepare the Cablevision Preliminary Adjustment
Statement.
(c) In the event AT&T does not agree that the Cablevision Working
Capital Adjustment or the Cablevision Subscriber Adjustment (which may
be zero) each as reflected in the Cablevision Preliminary Adjustment
Statement, have been determined in accordance with the definitions of
such terms, AT&T shall so inform Holdings in writing ("AT&T
Objection"), setting forth a reasonably specific description of the
basis of the AT&T Objection on or before the last day of the 30-day
period referred to in Section 2.04(b) hereof. In the event of an AT&T
Objection, AT&T and Holdings shall attempt to resolve the differences
underlying the AT&T Objection within 20 days of Holdings' receipt
thereof. If Holdings and AT&T are unable to resolve all their
differences within such 20-day period, they shall refer their remaining
differences to the CPA Firm, who shall, acting as an expert and not as
an arbitrator, determine on the basis of the definitions of Cablevision
Working Capital Adjustment and Cablevision Subscriber Adjustment and
such other standards as such CPA Firm deems applicable and only with
respect to the remaining differences so submitted, whether and to what
extent, if any, the Cablevision Preliminary Adjustment Statement
requires modification. The CPA Firm will base its determination only on
evidence brought to it by the parties and shall not conduct an audit.
The CPA Firm shall deliver its written determination to AT&T and
Holdings no later than the 20th Business Day after the remaining
differences underlying the AT&T Objection are referred to the CPA Firm.
The CPA Firm's determination shall be conclusive and binding upon the
parties. The fees and disbursements of the CPA Firm shall be allocated
between AT&T and Holdings in the same proportion that the aggregate
amount of any disputed items submitted to the CPA Firm that are
unsuccessfully disputed by each (as finally determined by the CPA Firm)
bears to the total amount of any disputed items so
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submitted. AT&T and Holdings shall make readily available to the CPA
Firm all relevant books and records and any work papers relating to the
Cablevision Preliminary Adjustment Statement and all other items
reasonably requested by the CPA Firm.
(d) In the event AT&T does not agree that the Cablevision Actual
Upgrade Capital Expenditures have been made in accordance with the
Cablevision Upgrade Specifications, or that the Cablevision Aerial
Average Cost Per Mile, Cablevision Underground Average Cost Per Mile,
or Cablevision MDU Cost Per Unit calculations (collectively, the
"Cablevision Average Cost Per Mile Calculations") utilized in
determining the Cablevision Estimated Upgrade Adjustment are calculated
correctly or are sufficient to cover the cost of upgrading the
Cablevision Aerial Mileage Shortfall or the Cablevision Underground
Mileage Shortfall, AT&T shall so inform Holdings in writing ("AT&T
Upgrade Objection"), setting forth a specific description of the basis
of such AT&T Upgrade Objection on or before the last day of the 30-day
period referred to in Section 2.11(b) hereof. In the event of an AT&T
Upgrade Objection, AT&T and Holdings shall attempt to resolve the
differences underlying the AT&T Upgrade Objection within 20 days of
Holdings' receipt thereof. If Holdings and AT&T are unable to resolve
all their differences within such 20-day period, they shall refer their
remaining differences to the Engineering Firm, who shall, acting as an
expert and not as an arbitrator, determine on the basis of, as
applicable, the Cablevision Upgrade Specifications and site samplings,
Cablevision Aerial Mileage Shortfall, Cablevision Actual Upgrade
Capital Expenditures, Cablevision Underground Mileage Shortfall,
Cablevision MDU Shortfall, Cablevision Upgrade Specifications and
available comparable cost data the amount, if any, of the Cablevision
Final Upgrade Adjustment, including the amount, if any, by which the
Cablevision Average Cost Per Mile Calculations should be adjusted to
cause satisfaction of Cablevision Upgrade Specifications. The
Engineering Firm shall deliver its written determination to AT&T and
Holdings no later than the 20th Business Day after the remaining
differences underlying the AT&T Upgrade Objection are referred to the
Engineering Firm. The Engineering Firm's determination shall be
conclusive and binding upon the parties. If the Engineering Firm
determines that the Cablevision Aerial Average Cost Per Mile should be
adjusted, the amount to which it is adjusted will be the "Cablevision
Adjusted Aerial Average Cost Per Mile." If the Engineering Firm
determines that the Cablevision Underground Average Cost Per Mile
should be adjusted, the amount to which it is adjusted will be the
"Cablevision Adjusted Underground Average Cost Per Mile." If the
Engineering Firm determines that the Cablevision MDU Average Cost Per
Unit should be adjusted, the amount to which it is adjusted will be the
"Cablevision Adjusted MDU Average Cost Per Unit." The fees and
disbursements of the Engineering Firm shall be allocated between AT&T
and Holdings in the same proportion that the aggregate amount of any
disputed items submitted to the Engineering Firm that are
unsuccessfully disputed by each (as finally determined by the
Engineering Firm) bears to the total amount of any disputed items so
submitted. AT&T and Holdings shall make readily available to the
Engineering Firm all relevant books and records and any work papers
relating to the Cablevision Actual Upgrade Capital Expenditures and all
other items reasonably requested by the Engineering Firm.
Notwithstanding the foregoing, if an AT&T Upgrade Objection involves
only issues about the proper financial treatment under GAAP of any
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items, then such dispute will be resolved by the CPA Firm pursuant to
the procedures in Section 2.05(c) (with such changes as may be
necessary to permit resolution by the CPA Firm).
(e) The "Cablevision Final Adjustment Statement" shall be (i) the
Cablevision Preliminary Adjustment Statement in the event that (A) no
AT&T Objection or AT&T Upgrade Objection is delivered to Holdings in
the period set forth in this Section 2.04(d) or (B) Holdings and AT&T
so agree; or (ii) the Cablevision Preliminary Adjustment Statement, as
modified by one or more of (A) the agreement of Holdings and AT&T or
(B) the determination of the CPA Firm or (C) the determination of the
Engineering Firm.
2.05 AT&T's Post-Closing Adjustment.
(a) Within 90 days after the Closing Date, AT&T shall prepare, or
cause to be prepared, and deliver to Holdings a report (the "AT&T
Preliminary Adjustment Statement"), certified as to completeness and
accuracy by AT&T, showing in detail the final determination of the AT&T
Working Capital Adjustment, the AT&T Upgrade Adjustment and the AT&T
Subscriber Adjustment, which may be zero. Holdings shall cooperate in
providing to AT&T all relevant books, records and personnel of the AT&T
CATV Business in order to facilitate the preparation of the AT&T
Preliminary Adjustment Statement.
(b) During the succeeding 30-day period, Holdings shall have the
right to examine the AT&T Preliminary Adjustment Statement and all
records used to prepare the AT&T Preliminary Adjustment Statement.
(c) In the event Holdings does not agree that the AT&T Working
Capital Adjustment or the AT&T Subscriber Adjustment (which may be
zero), each as reflected in the AT&T Preliminary Adjustment Statement,
have been determined in accordance with the definitions of such terms,
Holdings shall so inform AT&T in writing ("Cablevision Objection"),
setting forth a reasonably specific description of the basis of the
Cablevision Objection on or before the last day of the 30-day period
referred to in Section 2.05(b) hereof. In the event of a Cablevision
Objection, Holdings and AT&T shall attempt to resolve the differences
underlying the Cablevision Objection within 20 days of Holdings'
receipt thereof. If AT&T and Holdings are unable to resolve all their
differences within such 20-day period, they shall refer their remaining
differences to the CPA Firm, who shall, acting as an expert and not as
an arbitrator, determine on the basis of the definition of AT&T Working
Capital Adjustment and AT&T Subscriber Adjustment and such other
standards as such CPA Firm deems applicable and only with respect to
the remaining differences so submitted, whether and to what extent, if
any, the AT&T Preliminary Adjustment Statement requires modification.
The CPA Firm will base its determination only on evidence brought to it
by the parties and shall not conduct an audit. The CPA Firm shall
deliver its written determination to Holdings and AT&T no later than
the 20th Business Day after the remaining differences underlying the
Cablevision Objection are referred to the CPA Firm. The CPA Firm's
determination shall
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be conclusive and binding upon the parties. The fees and disbursements
of the CPA Firm shall be allocated between Holdings and AT&T in the
same proportion that the aggregate amount of any disputed items
submitted to the CPA Firm that are unsuccessfully disputed by each (as
finally determined by the CPA Firm) bears to the total amount of any
disputed items so submitted. Holdings and AT&T shall make readily
available to the CPA Firm all relevant books and records and any work
papers relating to the AT&T Preliminary Adjustment Statement and all
other items reasonably requested by the CPA Firm.
(d) In the event Holdings does not agree that the AT&T Actual
Upgrade Capital Expenditures have been made in accordance with the AT&T
Upgrade Specifications, or that the AT&T Estimated Upgrade Adjustment
was calculated correctly, Holdings shall so inform AT&T in writing
("Cablevision Upgrade Objection"), setting forth a specific description
of the basis of such Cablevision Upgrade Objection on or before the
last day of the 30-day period referred to in Section 2.11(b) hereof. In
the event of Cablevision Upgrade Objection, AT&T and Holdings shall
attempt to resolve the differences underlying Cablevision Upgrade
Objection within 20 days of AT&T's receipt thereof. If Holdings and
AT&T are unable to resolve all their differences within such 20-day
period, they shall refer their remaining differences to the Engineering
Firm, who shall, acting as an expert and not as an arbitrator,
determine on the basis of, as applicable, the AT&T Upgrade
Specifications and site samplings, AT&T Aerial Mileage Shortfall, AT&T
Underground Mileage Shortfall, AT&T MDU Shortfall, AT&T Upgrade
Specifications and available comparable cost data the amount, if any,
of the AT&T Final Upgrade Adjustment; provided that in making such
determination, the Engineering Firm will exclude from the costs for
which AT&T is responsible, the amount of the AT&T 750 Aerial Adjustment
Delta and the AT&T 750 Underground Adjustment Delta calculated with
respect to all completed and uncompleted upgrade work in the AT&T CATV
Systems. The Engineering Firm shall deliver its written determination
to AT&T and Holdings no later than the 20th Business Day after the
remaining differences underlying the Cablevision Upgrade Objection are
referred to the Engineering Firm. The Engineering Firm's determination
shall be conclusive and binding upon the parties. The fees and
disbursements of the Engineering Firm shall be allocated between AT&T
and Holdings in the same proportion that the aggregate amount of any
disputed items submitted to the Engineering Firm that are
unsuccessfully disputed by each (as finally determined by the
Engineering Firm) bears to the total amount of any disputed items so
submitted. AT&T and Holdings shall make readily available to the
Engineering Firm all relevant books and records and any work papers
relating to the AT&T Actual Upgrade Capital Expenditures and all other
items reasonably requested by the Engineering Firm. Notwithstanding the
foregoing, if a Cablevision Upgrade Objection involves only issues
about the proper financial treatment under GAAP of any items, then such
dispute will be resolved by the CPA Firm pursuant to the procedures in
Section 2.05(c) (with such changes as may be necessary to permit
resolution by the CPA Firm).
(e) The "AT&T Final Adjustment Statement" shall be (i) the AT&T
Preliminary Adjustment Statement in the event that (A) no Cablevision
Objection or Cablevision's Specification Objection is delivered to AT&T
in the period set forth in this Section 2.05(d) or (B) AT&T and
Holdings so agree; or (ii) the AT&T Preliminary
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Adjustment Statement, as modified by one or more of (A) the agreement
of AT&T and Holdings or (B) the determination of the CPA Firm or (C)
the determination of the Engineering Firm.
2.06 Post-Closing Adjustment of Cash Consideration.
(a) If the Exchange 1 Cash Consideration calculated based on the
Cablevision Final Adjustment Statement and the AT&T Final Adjustment
Statement relating to Exchange 1 exceeds the Exchange 1 Cash
Consideration paid at Closing, then the applicable AT&T Seller shall
pay CSC Boston an amount equal to such excess. If the Exchange 1 Cash
Consideration paid at Closing exceeds the Exchange 1 Cash Consideration
calculated based on the Cablevision Final Adjustment Statement and the
AT&T Final Adjustment Statement relating to Exchange 1, then CSC Boston
shall pay the applicable AT&T Seller an amount equal to such excess.
(b) If the Exchange 2 Cash Consideration calculated based on the
Cablevision Final Adjustment Statement and the AT&T Final Adjustment
Statement relating to Exchange 2 exceeds the Exchange 2 Cash
Consideration paid at Closing, then CSC Brookline shall pay the
applicable AT&T Sellers or the AT&T Designated Subsidiary, as
applicable, an amount equal to such excess. If the Exchange 2 Cash
Consideration paid at Closing exceeds the Exchange 2 Cash Consideration
calculated based on the Cablevision Final Adjustment Statement and the
AT&T Final Adjustment Statement relating to Exchange 2, then the
applicable AT&T Sellers or the AT&T Designated Subsidiary, as
applicable, shall pay CSC Brookline an amount equal to such excess.
(c) Any amount payable pursuant to this Section 2.06 shall be paid
by one or more federal wire transfers of immediately available funds in
New York, New York (pursuant to wiring instructions which shall be
delivered to Holdings or AT&T (as the case may be)) on or before the
fifth Business Day following the determination of the Cablevision Final
Adjustment Statement and the AT&T Final Adjustment Statement pursuant
to Section 2.04 and 2.05, together with interest on such amount from
the Closing Date to the date of payment at the Prime Rate.
2.07 Assumption of Liabilities. At the Closing Date, (a) each of the
AT&T Sellers or the AT&T Designated Subsidiary, as applicable, shall assume,
with respect to the portion of the Cablevision CATV Business transferred to such
Person in the Exchanges, the AT&T Assumed Liabilities in accordance with the
AT&T Assumption Agreements attached hereto as Exhibits D-1 and D-2, and all
liabilities and obligations for the operation of the Cablevision CATV Business
after the Closing Date and (b) each of the Cablevision Sellers shall assume,
with respect to the portion of the AT&T CATV Business transferred to such Person
in the Exchanges, the Cablevision Assumed Liabilities in accordance with the
Cablevision Assumption Agreements attached hereto as Exhibits C-1 and C-2, and
all liabilities and obligations for the operation of the AT&T CATV Business
after the Closing Date. Except for the AT&T Assumed Liabilities, all obligations
and liabilities of the Cablevision Sellers or arising out of or relating to the
Cablevision Assets, including all long-term indebtedness classified as such in
accordance with GAAP (and the portion thereof classified as current in
accordance with GAAP) shall remain and be the obligations and liabilities solely
of the Cablevision Sellers. Except for the Cablevision Assumed
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Liabilities, all obligations and liabilities of the AT&T Seller or arising out
of or relating to the AT&T Assets, including all long-term indebtedness
classified as such in accordance with GAAP (and the portion thereof classified
as current in accordance with GAAP) shall remain and be the obligations and
liabilities solely of the AT&T Sellers.
2.08 Sales and Transfer Taxes. AT&T, on the one hand, and Holdings, on
the other hand, shall each be responsible for one-half of all sales and use
Taxes and transfer Taxes (including, without limitation, real estate transfer
Taxes), if any, arising from the transfer of the Cablevision Assets and the
transfer of the AT&T Assets.
2.09 Allocations. The assets of each party are being exchanged for the
assets of another party in an exchange that is intended, in each case, to be
nontaxable to the maximum extent permitted by Section 1031 of the Code.
Following the Closing, the parties agree to jointly hire an appraiser (the
"Appraiser") to prepare, not later than 90 days after the Closing, a written
report regarding the value to be allocated to the tangible personal property
included in the AT&T Assets and the Cablevision Assets pursuant to Internal
Revenue Service regulations relating to like-kind exchanges of assets under
Section 1031 of the Code. The fees of the Appraiser will be split equally
between AT&T and Holdings. The parties agree that for purposes of Sections 1031
and 1060 of the Code and the regulations thereunder, each will report the
transactions contemplated by this Agreement in accordance with the values
determined by the Appraiser. Each party promptly will give the other notice of
any disallowance or challenge of asset values by the Internal Revenue Service or
any state or local tax authority or any taxing Governmental Authority.
3. REPRESENTATIONS AND WARRANTIES OF THE CABLEVISION ENTITIES.
To induce the AT&T Entities and the AT&T Designated Subsidiary (if
applicable) to enter into this Agreement, each Cablevision Entity represents and
warrants to the AT&T Entities and the AT&T Designated Subsidiary (if applicable)
as follows:
3.01 Organization and Authority of the Cablevision Entities. Each
Cablevision Entity is duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all corporate, partnership or
other similar power and authority necessary to carry on its business as
presently conducted. Each of the Cablevision Entities is duly qualified to do
business and is in good standing in each jurisdiction where such qualification
is necessary except for those jurisdictions where the failure to be so qualified
or in good standing, individually or in the aggregate, has not had and would not
reasonably be expected to have a Cablevision Material Adverse Effect.
3.02 Legal Capacity; Approvals and Consents.
(a) Authority and Binding Effect. Each Cablevision Entity has all
requisite corporate, partnership or other similar power and authority
to execute, deliver and perform the Transaction Documents to which it
is a party and to approve, adopt and consummate the Merger to which it
is a party. Each Cablevision Entity has duly taken all corporate,
shareholder, partnership or other similar actions necessary to
authorize the
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execution, delivery and performance of the Transaction Documents to
which it is a party. Without limiting the foregoing, any actions of the
directors or stockholders of any Cablevision Entity required to approve
and adopt the Transaction Documents to which it is a party have been
duly taken in accordance with the requirements of the DGCL and no
further action of the directors or stockholders of any Cablevision
Entity is required in order to consummate the Merger. The Transaction
Documents to which it is a party have been duly executed and delivered
by each Cablevision Entity and each is the valid and binding obligation
of such Cablevision Entity enforceable in accordance with its terms,
except as such enforceability may be affected by laws of bankruptcy,
insolvency, reorganization and creditors' rights generally and by the
availability of equitable remedies.
(b) No Breach. Subject only to obtaining the consents and
approvals set forth in Schedule 3.02 of Cablevision's Disclosure
Schedule, the execution, delivery and performance of the Transaction
Documents to which it is a party does not, and will not, contravene the
relevant organizational documents of any Cablevision Entity, and does
not, and will not: (i) conflict with or result in a breach or violation
by a Cablevision Entity of or constitute a default by a Cablevision
Entity under or result in the termination, suspension, modification or
impairment of any Cablevision CATV Instrument, Law, Judgment, or
Cablevision Contract to which a Cablevision Entity is a party or by
which the Cablevision CATV Business, a Cablevision Entity or any of the
Cablevision Assets is subject or bound or may be affected; or (ii)
create or impose any Encumbrance upon any of the Cablevision Assets
other than a Cablevision Permitted Encumbrance, except in each case
under clause (i) above, for any conflict, breach, violation, default or
termination, suspension, modification or impairment which would not,
individually or in the aggregate, reasonably be expected to have a
Cablevision Material Adverse Effect.
(c) Required Consents. Assuming that all of the consents
referenced in Schedule 4.02 of AT&T's Disclosure Schedule have been
obtained, except for the parties listed in Schedule 3.02 of
Cablevision's Disclosure Schedule, there are no parties whose approval
or consent, or with whom the filing of any certificate, notice,
application, report or other document, is legally or contractually
required or otherwise is necessary in connection with the execution,
delivery or performance of any Transaction Document by a Cablevision
Entity, except where failure to obtain such consent or approval or
failure to make such filing would not reasonably be expected to have a
Cablevision Material Adverse Effect or materially adversely affect the
ability of the Cablevision Entities to consummate the transactions
contemplated hereby.
(d) Obtaining Consents. No Cablevision Entity is aware of, or has
reason to believe there is, any reason relating to any Cablevision
Entity that any Governmental Authority or other party whose consent is
required or contemplated hereunder would refuse to consent to the
transfer of the Cablevision CATV Instruments or any rights of any
Cablevision Entity thereunder or would condition the granting of any
such consent on the performance by any Cablevision Entity or AT&T Party
of any material obligation not expressly set forth herein, except such
conditions as may affect the cable television industry generally in the
United States or in the Commonwealth of Massachusetts.
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3.03 Financial Statements. Holdings has delivered to AT&T true and
complete copies of the balance sheet of each Cablevision Seller at September 30,
1999 and the statements of income of each Cablevision Seller for the years
ending December 31, 1998, 1997 and 1996 (the "Cablevision Financial
Statements"). The Cablevision Financial Statements were prepared in accordance
with GAAP except for footnotes and certain items that would require
reclassification and certain expenses, in each case as described in the
Cablevision Financial Statements and present fairly in all material respects the
financial position and results of operations of each Cablevision Seller at
September 30, 1999 and for the period then ended. Holdings has also provided to
AT&T an income statement for the nine months ended September 30, 1999 (the
"Cablevision Interim Financial Statements"), which Cablevision Interim Financial
Statements were prepared in accordance with the practices customarily followed
by Holdings in preparing its interim statements, consistently applied, and,
subject to normal year-end adjustments and the procedures followed in interim
statements, present fairly in all material respects the results of operations of
each Cablevision Seller for the period indicated and is stated on a basis
generally consistent with the above-described income statement included in the
Cablevision Financial Statements.
3.04 Changes in Operation. Since September 30, 1999 and except as set
forth on Schedule 3.04 of Cablevision's Disclosure Schedule, there has not been
any change in the financial condition, properties, business or results of
operations of the Cablevision CATV Business or any event or development or
combination of events or developments that, individually or in the aggregate,
has had or would reasonably be expected to have a Cablevision Material Adverse
Effect.
3.05 Tax Matters. Each Cablevision Seller has duly filed all Tax
Returns required to be filed by such Cablevision Seller on or prior to the date
hereof and the information contained in such Tax Returns is true, complete and
accurate in all material respects. All material taxes, fees and assessments that
are shown on such Tax Returns as due or payable by such Cablevision Seller on or
before the date hereof and that might result in an Encumbrance upon any of the
Cablevision Assets have been duly paid. Except as set forth in Schedule 3.05 of
Cablevision's Disclosure Schedule, no Cablevision Seller has received any notice
or assessment to the effect that there is any unpaid tax, interest, penalty or
addition to tax due or claimed to be due from any Cablevision Seller in respect
of such Tax Returns; no Cablevision Seller has received any notice of the
assertion or threatened assertion of any Encumbrances with respect to any
Cablevision Assets on account of any unpaid taxes; and no audits of such Tax
Returns by any Governmental Authority are pending or, so far as each Cablevision
Seller knows, threatened. None of the Cablevision Assets are treated as
interests in entities that are treated as partnerships or corporations for
federal income tax purposes.
3.06 Cablevision Assets.
(a) Title; Encumbrances. Each Cablevision Seller has, or will have
at Closing: (i) good and marketable title to all of its Cablevision
Equipment and Cablevision Real Property owned in fee and (ii) the right
and authority (subject to the required consents specified herein) in
all of its title and interest in and to the other property or
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rights included in the Cablevision Assets, in each instance free and
clear of any Encumbrances except Cablevision Permitted Encumbrances.
(b) Real Property. Schedule 3.06(b) of Cablevision's Disclosure
Schedule sets forth a list of all Cablevision Real Property owned or
leased by the Cablevision Sellers in connection with the operation of
the Cablevision CATV Business as presently conducted. Except as set
forth in Schedule 3.06(b) of Cablevision's Disclosure Schedule, each
Cablevision Seller has title in fee simple to all such Cablevision Real
Property except for leases, easements and other interests not
constituting ownership in fee and each Cablevision Seller has valid and
enforceable leasehold interests in such Cablevision Real Property
leased by such Cablevision Seller.
(c) Assets. The Cablevision Assets include all assets used by the
Cablevision Sellers to conduct the Cablevision CATV Business as it is
presently being conducted in all material respects, except for
Cablevision Excluded Assets, and together with the Assets comprising
the CATV Business as defined in the Merger Agreement, include all
assets used by Holdings and its affiliates to conduct the Combined CATV
Business as it is presently being conducted in all material respects,
except for Cablevision Excluded Assets and "Excluded Assets" as defined
in the Merger Agreement.
(d) Environmental Matters. Except as disclosed in Schedule 3.06(d)
of Cablevision's Disclosure Schedule, or as would not reasonably be
expected, individually or in the aggregate, to have a Cablevision
Material Adverse Effect: (i) the Cablevision Assets comply with
applicable Environmental Laws; (ii) to the knowledge of the Cablevision
Entities, the Cablevision Assets are not the subject of any court
order, administrative order or decree arising under any Environmental
Law; and (iii) the Cablevision Assets have not been used by the
Cablevision Sellers for the generation, storage, discharge or disposal
of any Hazardous Substances except as permitted under applicable
Environmental Laws. Except as set forth in Schedule 3.06(d) of
Cablevision's Disclosure Schedule, no Cablevision Seller has received
any written notice from any Governmental Authority alleging that the
Cablevision Assets are in violation of any Environmental Law, and no
claim based on any applicable Environmental Law has been asserted to
any Cablevision Seller in writing in the past or is currently pending
or, to the knowledge of the Cablevision Entities, threatened with
respect to any Cablevision Real Property. Except as set forth in
Schedule 3.06(d) of Cablevision's Disclosure Schedule, to each
Cablevision Entity's knowledge, (i) no aboveground or underground
storage tanks containing Hazardous Substances or hazardous waste are
currently located at any of the Cablevision Real Property, or have been
located at any of the Cablevision Real Property during the time such
Cablevision Real Property was owned or leased by the Cablevision
Sellers, and (ii) no Cablevision Real Property has been used as a
gasoline service station or any other facility for storing, pumping,
dispensing or producing gasoline or other petroleum products or wastes
during the time such Cablevision Real Property was owned or leased by
the Cablevision Sellers. The Cablevision Entities have made available
to AT&T true and complete copies of all (i) environmental audits,
investigations, studies or reports with respect to any Cablevision
Assets that have been performed by or at the direction or on behalf of
the Cablevision Entities or that are in their possession,
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(ii) notices or other materials in the Cablevision Entities' possession
from Governmental Authorities having the power to administer or enforce
any applicable Environmental Laws relating to current or past
ownership, use or operation of or activities at the Cablevision Assets,
and (iii) materials in the Cablevision Entities' possession relating to
any claim, allegation or action by any Person (other than any
Governmental Authorities) with respect to the Cablevision Assets under
any applicable Environmental Law. For the purposes of this Section
3.06, "hazardous waste" will have the meaning set forth in the
Comprehensive Response, Compensation and Liability Act of 1980 and the
applicable law of the Commonwealth of Massachusetts.
3.07 CATV Business.
(a) As of December 31, 1999, the Cablevision CATV Business
included not less than 163,031 Basic Subscribers.
(b) Since September 30, 1999, the Cablevision CATV Business has
been operated in the ordinary course in all material respects, and no
material assets previously used therein have been disposed of except in
the ordinary course of business.
(c) Schedule 3.07(c) of Cablevision's Disclosure Schedule contains
a complete list of all Cablevision Material Contracts in effect on the
date of this Agreement. As used in this Section 3.07(c), the term
"Cablevision Material Contracts" means any of the following to the
extent relating to the Cablevision CATV Business to which a Cablevision
Seller is a party or by which a Cablevision Seller or the Cablevision
Assets are bound and to the extent not terminable on 30 days' or less
notice without liability: (i) any pole attachment agreements, (ii) any
conduit agreements, (iii) any real estate leases, (iv) any agreement
creating a partnership or joint venture, (v) any agreement (or group of
related agreements) under which a Cablevision Seller has created,
incurred, assumed, or guaranteed any indebtedness for borrowed money or
any capitalized lease obligation or under which it has imposed a
security interest on any of its assets, tangible or intangible, (vi)
any noncompetition or similar agreement restricting activities by a
Cablevision Seller, (vii) any agreement for any billing system
arrangements for any of the Cablevision CATV Systems that is not
terminated or terminable with respect to the Cablevision CATV Systems
upon Closing, (viii) any agreement under which the consequences of a
default or termination could be reasonably expected to have a
Cablevision Material Adverse Effect, or (ix) any other agreement (or
group of related agreements) the performance of which involves
consideration in excess of $100,000 in any calendar year.
(d) The Cablevision CATV Licences and the cable franchises and
ordinances used in the Cablevision CATV Business are listed in Schedule
1.01(a) of Cablevision's Disclosure Schedule and comprise all of the
Cablevision CATV Licences and the cable franchises and ordinances
necessary to operate the Cablevision CATV Business in the ordinary
course. The Cablevision Sellers are in compliance in all material
respects with the terms and conditions of all such Cablevision CATV
Licenses and cable franchises and ordinances. The Cablevision Sellers
hold, or will hold at Closing, all of the Cablevision
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CATV Licenses and all of the cable franchises and ordinances used in
the Cablevision CATV Business reasonably necessary to enable it to
operate the Cablevision CATV Business as presently conducted in all
material respects. The Cablevision Sellers hold, or will hold at
Closing, all of the Cablevision CATV Instruments (other than cable
franchises and ordinances, as to which the representation and warranty
in the preceding sentence will apply), except all such Cablevision CATV
Instruments the failure of which to hold would not reasonably be
expected to have a Cablevision Material Adverse Effect. The Cablevision
Sellers are in compliance with the terms and conditions of all
Cablevision CATV Instruments (other than cable franchises and
ordinances as to which the compliance representation and warranty in
the second sentence of this Section 3.07(d) will apply), except where
such non-compliance would not reasonably be expected to have a
Cablevision Material Adverse Effect. Except as disclosed in Schedule
3.07(d) of Cablevision's Disclosure Schedule, no Cablevision Seller has
received any notice of any claimed or purported default in any
Cablevision CATV Instruments and there are no proceedings pending, or,
to the knowledge of the Cablevision Entities, threatened, to cancel,
modify or change any such Cablevision CATV Instruments.
(e) Except as set forth in Schedule 3.07(e) of Cablevision's
Disclosure Schedule, the Cablevision CATV Business is conducted by the
Cablevision Sellers in material compliance with all applicable laws,
regulations and other requirements of Governmental Authorities,
Cablevision CATV Instruments, Cablevision CATV Licenses and Cablevision
Contracts, including, but not limited to, compliance in all material
respects with the Communications Act of 1934, as amended, and the rules
and regulations promulgated thereunder (collectively, the
"Communications Act"). Except as set forth in Schedule 3.07(e) of
Cablevision's Disclosure Schedule, each Cablevision Seller has
submitted to the FCC all filings, including, but not limited to, cable
television registration statements, annual reports and aeronautical
frequency usage notices, that are required under the rules and
regulations of the FCC; and the Cablevision CATV Business is in
compliance with all signal leakage criteria prescribed by the FCC for
each relevant reporting period. Each of the Cablevision Sellers has
made available to AT&T correct and complete copies of all reports and
filings for the past year, made or filed pursuant to FCC rules and
regulations.
(f) Except as set forth in Schedule 3.07(f) of Cablevision's
Disclosure Schedule, each of the Cablevision Sellers has filed all
semi-annual statements of account and paid all compulsory licensing
fees required by Section 111 of the Copyright Act of 1976, and the
rules, regulations and orders of the Copyright Office of the Library of
Congress promulgated thereunder (collectively, the "Copyright Act"),
with respect to the Cablevision CATV Business, for the three years
preceding the date of the Agreement. To the knowledge of the
Cablevision Entities, the conduct of the Cablevision CATV Business does
not infringe in any material respect upon the patents, trademarks,
copyrights, trade names or other intellectual property rights, domestic
or foreign, of any Person, and, to the knowledge of the Cablevision
Entities, no Person has asserted any claim to any Cablevision Entity
with respect to any such infringement.
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(g) Schedule 3.07(g) of Cablevision's Disclosure Schedule
identifies all material rate complaints and all appeals of material
local rate orders or material rate complaints with respect to the
Cablevision CATV Business which, to any Cablevision Entity's knowledge,
are pending at the FCC. Except as set forth in Schedule 3.07(g) of
Cablevision's Disclosure Schedule, as of the date of this Agreement:
(i) no Cablevision Seller has received any written or, to the knowledge
of any Cablevision Entity, oral notice from any Governmental Authority
with respect to an intention to enforce customer service standards
pursuant to the Communications Act, (ii) no Cablevision Seller has
agreed with any Governmental Authority to establish customer service
standards for any Cablevision CATV System that exceeds the customer
service standards promulgated pursuant to the Communications Act, (iii)
no Cablevision Seller has, with respect to any Cablevision CATV System,
made any election with respect to any cost of service proceeding (other
than a network upgrade cost of service proceeding) conducted in
accordance with Part 76.922 of Title 47 of the Code of Federal
Regulations or any similar proceeding with respect to any of its
Cablevision CATV Systems (a "Cost of Service Election"), and (iv) no
Cablevision Seller has entered into any "social contract" or other
proposed resolution with the FCC with respect to rates charged for CATV
services in the Cablevision CATV Systems and none of them is currently
negotiating or anticipating entering into the same.
(h) Except as set forth in Schedule 3.07(h) of Cablevision's
Disclosure Schedule, as of the date of this Agreement: (i) no
Cablevision Entity has received, and no Cablevision Entity has notice
that it will receive, from any Governmental Authority, a preliminary
assessment that a Cablevision CATV Instrument should not be renewed as
provided in Section 626(c)(1) of the Communications Act, (ii) the
Cablevision Sellers have timely filed notices of renewal in accordance
with the Communications Act and all Governmental Authorities with
respect to each Cablevision CATV Instrument expiring within 30 months
of the date of this Agreement and such notices of renewal have been
filed pursuant to the renewal procedures established by Section 626(a)
of the Communications Act, and (iii) no Governmental Authority has
commenced, or given written notice that it intends to commence, a
proceeding to revoke or suspend a Cablevision CATV Instrument.
(i) Holdings has previously made available to AT&T complete and
correct copies of all Cablevision CATV Instruments and Cablevision
Contracts that are material to the Cablevision CATV Business.
(j) Schedule 3.07(j) of Cablevision's Disclosure Schedule sets
forth, with respect to the Cablevision CATV Business, the approximate
number of plant miles (aerial and underground) for each head-end, the
approximate bandwidth capability of each head-end, the stations and
signals carried by each head-end and the channel position of each such
signal and station, which information is true and correct in all
material respects, in each case as of the applicable dates specified
therein and subject to any qualifications set forth therein. Holdings
has delivered to AT&T channel lineups and the monthly rates charged for
each class of service in the Cablevision CATV Systems, which
information is true and correct in all material respects, in each case
as of the applicable dates specified
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therein and subject to any qualifications set forth therein. Except as
described in Schedule 3.07(j) of Cablevision's Disclosure Schedule,
each Cablevision CATV System is providing all channels, stations and
signals reflected as being carried on the Cablevision CATV Systems on
Schedule 3.07(j) of Cablevision's Disclosure Schedule.
(k) Except as described in Schedule 3.07(k) of Cablevision's
Disclosure Schedule, there is no overbuild of the Cablevision CATV
Systems at present, nor, to the knowledge of any Cablevision Entity, is
any overbuild pending.
(l) Except as set forth in Schedule 3.07(l) to Cablevision's
Disclosure Schedule, the tangible personal property included in the
Cablevision Assets is in operating condition and repair (ordinary wear
and tear excepted) and is suitable for continued use in the manner in
which presently used in all material respects.
(m) To the knowledge of the Cablevision Entities, each parcel of
owned or leased Cablevision Real Property and any improvements thereon
(i) has access to and over public streets or private streets for which
the Cablevision Sellers have a valid right of ingress and egress, and
(ii) conforms in its current use and occupancy to all zoning
requirements without reliance upon a variance issued by a Governmental
Authority or a classification of the parcel in question as a
nonconforming use, other than, in the case of clauses (i) and (ii),
exceptions or conformities that, individually or in the aggregate, do
not materially detract from the value of the Cablevision Real Property
or which do not materially interfere with the present and continued use
of such Cablevision Real Property in the operation of the Cablevision
CATV Business.
3.08 Labor Contracts and Actions.
(a) No Cablevision Seller is a party to any contract with any
labor organization, nor has any Cablevision Seller agreed to recognize
any union or other collective bargaining unit, nor has any union or
other collective bargaining unit been certified as representing any of
the Cablevision Employees with respect to the operation of the
Cablevision CATV Business.
(b) No Cablevision Seller is experiencing any strikes, work
stoppages, significant grievance proceedings or, to the knowledge of
any Cablevision Entity, claims of unfair labor practices filed with
respect to the operation of the Cablevision CATV Business.
3.09 Employee Benefit Plans.
(a) All "employee benefit plans" within the meaning of Section
3(3) of ERISA covering Cablevision Employees, other than "multiemployer
plans" within the meaning of Section 3(37) of ERISA, and other benefit
plans, contracts or arrangements covering Cablevision Employees
(collectively, the "Cablevision Benefit Plans") are listed in Schedule
3.09(a) of Cablevision's Disclosure Schedule. True and complete copies
of all Cablevision Benefit Plans and all amendments thereto have been
provided or made
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available to AT&T. Schedule 3.09(a) of Cablevision's Disclosure
Schedule also lists all multiemployer plans covering Cablevision
Employees.
(b) All Cablevision Benefit Plans, to the extent subject to ERISA,
are in substantial compliance with ERISA. There is no material pending
or, to the knowledge of any Cablevision Entity, threatened litigation
relating to the Cablevision Benefit Plans. No Cablevision Entity has
engaged in a transaction with respect to any Cablevision Benefit Plan
that, assuming the taxable period of such transaction expired as of the
date hereof, could subject a Cablevision Entity to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of ERISA
in an amount that would be material.
(c) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by any Cablevision Entity with
respect to any ongoing, frozen or terminated "single-employer plan,"
within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by it, or the single-employer plan of any ERISA
Affiliate of any Cablevision Entity. No Cablevision Entity has incurred
and none expects to incur any withdrawal liability with respect to a
multiemployer plan under Subtitle E of Title IV of ERISA. No notice of
a "reportable event," within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been
required to be filed for any Cablevision Benefit Plan subject to Title
IV of ERISA or by any ERISA Affiliate of any Cablevision Entity within
the 12-month period ending on the date hereof.
(d) Neither any Cablevision Benefit Plan nor any single-employer
plan of an ERISA Affiliate of a Cablevision Entity has an "accumulated
funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA and no ERISA Affiliate
has an outstanding funding waiver. No Cablevision Entity has provided,
nor is it required to provide, security to any Cablevision Benefit Plan
or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code.
3.10 Contracts. Except as set forth in Schedule 3.10 of Cablevision's
Disclosure Schedule, there are no defaults by any Cablevision Entity under the
Cablevision Contracts (nor has any Cablevision Entity received written notice of
a threatened default or notice of default) which would reasonably be expected,
individually or in the aggregate, to have a Cablevision Material Adverse Effect,
and no Cablevision Entity knows of any default by any other party to a
Cablevision Contract which would reasonably be expected, individually or in the
aggregate, to have a Cablevision Material Adverse Effect.
3.11 Legal and Governmental Proceedings and Judgments. Except as may
affect the cable television industry generally in the United States or in the
Commonwealth of Massachusetts, or as set forth in Schedule 3.11 of Cablevision's
Disclosure Schedule, there is no legal action or proceeding, pending or, so far
as is known to any Cablevision Entity, any investigation pending or threatened
against any Cablevision Entity, the Cablevision CATV Business or the Cablevision
Assets, nor is there any Judgment outstanding against any Cablevision Seller or
to or by which any Cablevision Seller, any of the Cablevision Assets or the
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Cablevision CATV Business is subject or bound, which (a) results in any
modification, termination, suspension, impairment or reformation of any
Cablevision CATV Instrument or Cablevision Contract or any right or privilege
thereunder in a manner that would reasonably be expected to have a Cablevision
Material Adverse Effect, or (b) materially adversely affects the ability of any
Cablevision Entity to consummate any of the transactions contemplated hereby.
3.12 Finders and Brokers. Holdings has employed Bear Stearns & Co. Inc.
and Merrill Lynch & Co. as its brokers in the sale provided herein and will pay
and discharge the claim thereof for commission or expense reimbursement in
connection therewith. No Cablevision Entity has entered into any other contract,
arrangement or understanding with any Person or firm, nor is it aware of any
claim or basis for any claim based upon any act or omission of Holdings or any
of its affiliates, which may result in the obligation of AT&T to pay any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby.
3.13 No Vote Required. No vote of the holders of any class or series of
capital stock of Cablevision Systems Corporation is required to approve this
Agreement and the transactions contemplated hereby.
4. REPRESENTATIONS AND WARRANTIES OF THE AT&T PARTIES.
To induce the Cablevision Entities to enter into this Agreement, each
AT&T Entity (and to the extent set forth in Section 4.14 hereof, the AT&T
Designated Subsidiary) represents and warrants to the Cablevision Entities as
follows:
4.01 Organization and Authority of the AT&T Entities. Each AT&T Entity
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has all corporate power and
authority necessary to carry on its business as presently conducted. Each of the
AT&T Entities is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where such qualification is necessary
except for those jurisdictions where the failure to be so qualified or in good
standing, individually or in the aggregate, has not had and would not reasonably
be expected to have, an AT&T Material Adverse Effect.
4.02 Legal Capacity; Approvals and Consents.
(a) Authority and Binding Effect. Each AT&T Entity has all
requisite corporate power and authority to execute, deliver and perform
the Transaction Documents to which it is a party, and to approve, adopt
and consummate the Merger to which it is a party. Each AT&T Entity has
duly taken all corporate and shareholder actions necessary to authorize
the execution, delivery and performance of the Transaction Documents to
which it is a party. Without limiting the foregoing, any actions of the
directors or stockholders of any AT&T Entity required to approve and
adopt the Transaction Documents to which it is a party have been duly
taken in accordance with the requirements of the DGCL and no further
action of the directors or stockholders of any AT&T Entity is required
in order to consummate the Merger. The Transaction
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Documents to which it is a party have been duly executed and delivered
by each AT&T Entity and each is the valid and binding obligation of
such AT&T Entity enforceable in accordance with its terms, except as
such enforceability may be affected by laws of bankruptcy, insolvency,
reorganization and creditors' rights generally and by the availability
of equitable remedies.
(b) No Breach. Subject only to obtaining the consents and
approvals set forth in Schedule 4.02 of AT&T's Disclosure Schedule, the
execution, delivery and performance of the Transaction Documents to
which it is a party does not, and will not, contravene the relevant
organizational documents of any AT&T Entity, and does not, and will
not: (i) conflict with or result in a breach or violation by any AT&T
Entity of or constitute a default by any AT&T Entity under or result in
the termination, suspension, modification or impairment of any AT&T
CATV Instrument, Law, Judgment, or AT&T Contract to which any AT&T
Entity is a party or by which the AT&T CATV Business, any AT&T Party or
any of the AT&T Assets is subject or bound or may be affected; or (ii)
create or impose any Encumbrance upon any of the AT&T Assets other than
an AT&T Permitted Encumbrance, except in each case under clause (i)
above, for any conflict, breach, violation, default or termination,
suspension, modification or impairment which would not, individually or
in the aggregate, reasonably be expected to have an AT&T Material
Adverse Effect.
(c) Required Consents. Assuming that all of the consents
referenced in Schedule 3.02 of Cablevision's Disclosure Schedule have
been obtained, except for the parties listed in Schedule 4.02 of AT&T's
Disclosure Schedule, there are no parties whose approval or consent, or
with whom the filing of any certificate, notice, application, report or
other document, is legally or contractually required or otherwise is
necessary in connection with the execution, delivery or performance of
any Transaction Document by an AT&T Entity, except where failure to
obtain such consent or approval or failure to make such filing would
not reasonably be expected to have an AT&T Material Adverse Effect or
materially adversely affect the ability of the AT&T Parties to
consummate the transactions contemplated hereby.
(d) Obtaining Consents. No AT&T Entity is aware of, or has reason
to believe there is, any reason relating to any AT&T Entity that any
Governmental Authority or other party whose consent is required or
contemplated hereunder would refuse to consent to the transfer of the
AT&T CATV Instruments or any rights of an AT&T Entity thereunder or
would condition the granting of any such consent on the performance by
any AT&T Party or any Cablevision Entity of any material obligation not
expressly set forth herein, except such conditions as may affect the
cable television industry generally in the United States or in the
State of New York.
4.03 Financial Statements. AT&T has delivered to Holdings true and
complete copies of the balance sheet of each AT&T Seller at September 30, 1999
and the statements of income of each AT&T Seller for the years ending December
31, 1998, 1997 and 1996 (the "AT&T Financial Statements"). The AT&T Financial
Statements were prepared in accordance with GAAP except for footnotes and
certain items that would require reclassification and certain expenses, in each
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case as described in the AT&T Financial Statements and present fairly in all
material respects the results of operations of each AT&T Seller at September 30,
1999 and for the period then ended. AT&T has also provided to Holdings an income
statement for the nine months ended September 30, 1999 (the "AT&T Interim
Financial Statements"), which AT&T Interim Financial Statements were prepared in
accordance with the practices customarily followed by AT&T in preparing its
interim statements, consistently applied, and, subject to normal year-end
adjustments and the procedures followed in interim statements, present fairly in
all material respects the results of operations of each AT&T Seller for the
period indicated and is stated on a basis generally consistent with the
above-described income statement included in the AT&T Financial Statements.
4.04 Changes in Operation. Since September 30, 1999 and except as set
forth on Schedule 4.04 of AT&T's Disclosure Schedule, there has not been any
change in the financial condition, properties, business or results of operations
of the AT&T CATV Business or any event or development or combination of events
or developments that, individually or in the aggregate, has had or would
reasonably be expected to have an AT&T Material Adverse Effect.
4.05 Tax Matters. Each AT&T Seller has duly filed all Tax Returns
required to be filed by such AT&T Seller on or prior to the date hereof and the
information contained in such Tax Returns is true, complete and accurate in all
material respects. All material taxes, fees and assessments that are shown on
such Tax Returns as due or payable by such AT&T Seller on or before the date
hereof and that might result in an Encumbrance upon any of the AT&T Assets have
been duly paid. Except as set forth in Schedule 4.05 of AT&T's Disclosure
Schedule, no AT&T Seller has received any notice or assessment to the effect
that there is any unpaid tax, interest, penalty or addition to tax due or
claimed to be due from any AT&T Seller in respect of such Tax Returns; no AT&T
Seller has received any notice of the assertion or threatened assertion of any
Encumbrances with respect to any AT&T Assets on account of any unpaid taxes; and
no audits of such Tax Returns by any Governmental Authority are pending or, so
far as each AT&T Seller knows, threatened. None of the AT&T Assets are treated
as interests in entities that are treated as partnerships or corporations for
federal income tax purposes.
4.06 AT&T Assets.
(a) Title; Encumbrances. Each AT&T Seller has, or will have at
Closing: (i) good and marketable title to all of its AT&T Equipment and
AT&T Real Property owned in fee and (ii) the right and authority
(subject to the required consents specified herein) in all of its title
and interest in and to the other property or rights included in the
AT&T Assets, in each instance free and clear of any Encumbrances except
AT&T Permitted Encumbrances.
(b) Real Property. Schedule 4.06(b) of AT&T's Disclosure Schedule
sets forth a list of all AT&T Real Property owned or leased by the AT&T
Sellers in connection with the operation of the AT&T CATV Business as
presently conducted. Except as set forth in Schedule 4.06(b) of AT&T's
Disclosure Schedule, an AT&T Seller has title in fee simple to all such
AT&T Real Property except for leases, easements and
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other interests not constituting ownership in fee and each AT&T Seller
has valid and enforceable leasehold interests in such AT&T Real
Property leased by such AT&T Seller.
(c) Assets. The AT&T Assets include all assets used by the AT&T
Sellers to conduct the AT&T CATV Business as it is presently being
conducted in all material respects, except for AT&T Excluded Assets.
(d) Environmental Matters. Except as disclosed in Schedule 4.06(d)
of AT&T's Disclosure Schedule, or as would not reasonably be expected,
individually or in the aggregate, to have an AT&T Material Adverse
Effect: (i) the AT&T Assets comply with applicable Environmental Laws;
(ii) to the knowledge of the AT&T Entities, the AT&T Assets are not the
subject of any court order, administrative order or decree arising
under any Environmental Law; and (iii) the AT&T Assets have not been
used by the AT&T Sellers for the generation, storage, discharge or
disposal of any Hazardous Substances except as permitted under
applicable Environmental Laws. Except as set forth in Schedule 4.06(d)
of AT&T's Disclosure Schedule, no AT&T Seller has received any written
notice from any Governmental Authority alleging that the AT&T Assets
are in violation of any Environmental Law, and no claim based on any
applicable Environ mental Law has been asserted to any AT&T Seller in
writing in the past or is currently pending or, to the knowledge of the
AT&T Entities, threatened with respect to any AT&T Real Property.
Except as set forth in Schedule 4.06(d) of AT&T's Disclosure Schedule
to each AT&T Entity's knowledge, (i) no aboveground or underground
storage tanks containing Hazardous Substances or hazardous waste are
currently located at any of the AT&T Real Property, or have been
located at any of the AT&T Real Property during the time such AT&T Real
Property was owned or leased by the AT&T Sellers, and (ii) no AT&T Real
Property has been used as a gasoline service station or any other
facility for storing, pumping, dispensing or producing gasoline or
other petroleum products or wastes during the time such AT&T Real
Property was owned or leased by the AT&T Sellers. The AT&T Entities
have made available to Holdings true and complete copies of all (i)
environmental audits, investigations, studies or reports with respect
to any AT&T Assets that have been performed by or at the direction or
on behalf of the AT&T Parties or that are in their possession, (ii)
notices or other materials in the AT&T Entities' possession from
Governmental Authorities having the power to administer or enforce any
applicable Environmental Laws relating to current or past ownership,
use or operation of or activities at the AT&T Assets and (iii)
materials in the AT&T Entities' possession relating to any claim,
allegation or action by any Person (other than any Governmental
Authority) with respect to the AT&T Assets under any applicable
Environmental Law. For the purposes of this Section 4.06, "hazardous
waste" will have the meaning set forth in the Comprehensive Response,
Compensation and Liability Act of 1980 and the applicable law of the
State of New York.
4.07 CATV Business.
(a) As of December 31, 1999, the AT&T CATV Business included not
less than 124,908 Basic Subscribers.
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(b) Since September 30, 1999, the AT&T CATV Business has been
operated in the ordinary course in all material respects, and no
material assets previously used therein have been disposed of except in
the ordinary course of business.
(c) Schedule 4.07(c) of AT&T's Disclosure Schedule contains a
complete list of all AT&T Material Contracts in effect on the date of
this Agreement. As used in this Section 4.07(c), the term "AT&T
Material Contracts" means any of the following to the extent relating
to the AT&T CATV Business to which an AT&T Seller is a party or by
which an AT&T Seller or the AT&T Assets are bound and to the extent not
terminable on 30 days' or less notice without liability: (i) any pole
attachment agreements, (ii) any conduit agreements, (iii) any real
estate leases, (iv) any agreement creating a partnership or joint
venture, (v) any agreement (or group of related agreements) under which
an AT&T Seller has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or any capitalized lease obligation or
under which it has imposed a security interest on any of its assets,
tangible or intangible, (vi) any noncompetition or similar agreement
restricting activities by an AT&T Seller, (vii) any agreement for any
billing system arrangements for any of the AT&T CATV Systems that is
not terminated or terminable with respect to the AT&T CATV Systems upon
Closing, (viii) any agreement under which the consequences of a default
or termination could be reasonably expected to have an AT&T Material
Adverse Effect, or (ix) any other agreement (or group of related
agreements) the performance of which involves consideration in excess
of $100,000 in any calendar year.
(d) The AT&T CATV Licenses and the cable franchises and ordinances
used in the AT&T CATV Business are listed in Schedule 1.01(a) of AT&T's
Disclosure Schedule and comprise all of the AT&T CATV Licences and the
cable franchises and ordinances necessary to operate the AT&T CATV
Business in the ordinary course. The AT&T Sellers are in compliance in
all material respects with the terms and conditions of such AT&T CATV
Licenses and cable franchises and ordinances. The AT&T Sellers hold, or
will hold at Closing, all of the AT&T CATV Licenses and all of the
cable franchises and ordinances used in the AT&T CATV Business
reasonably necessary to enable it to operate the AT&T CATV Business as
presently conducted in all material respects. The AT&T Sellers hold, or
will hold at Closing, all of the AT&T CATV Instruments (other than
cable franchises and ordinances, as to which the representation and
warranty in the preceding sentence will apply), except all such AT&T
CATV Instruments the failure of which to hold would not reasonably be
expected to have an AT&T Material Adverse Effect. The AT&T Sellers are
in compliance with the terms and conditions of all AT&T CATV
Instruments (other than cable franchises and ordinances, as to which
the compliance representation and warranty in the second sentence of
this Section 4.07(d) will apply), except where such non-compliance
would not reasonably be expected to have an AT&T Material Adverse
Effect. Except as disclosed in Schedule 4.07(d) of AT&T's Disclosure
Schedule, no AT&T Seller has received any notice of any claimed or
purported default in any AT&T CATV Instruments and there are no
proceedings pending, or, to the knowledge of the AT&T Entities,
threatened, to cancel, modify or change any such AT&T CATV Instruments.
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(e) Except as set forth in Schedule 4.07(e) of AT&T's Disclosure
Schedule, the AT&T CATV Business is conducted by the AT&T Sellers in
material compliance with all applicable laws, regulations and other
requirements of Governmental Authorities, AT&T CATV Instruments, AT&T
CATV Licenses and AT&T Contracts, including, but not limited to,
compliance in all material respects with the Communications Act. Except
as set forth in Schedule 4.07(e) of AT&T's Disclosure Schedule, each
AT&T Seller has submitted to the FCC all filings, including, but not
limited to, cable television registration statements, annual reports
and aeronautical frequency usage notices, that are required under the
rules and regulations of the FCC; and the AT&T CATV Business is in
compliance with all signal leakage criteria prescribed by the FCC for
each relevant reporting period. Each of the AT&T Sellers has made
available to Holdings correct and complete copies of all reports and
filings for the past year, made or filed pursuant to FCC rules and
regulations.
(f) Except as set forth in Schedule 4.07(f) of AT&T's Disclosure
Schedule, each of the AT&T Sellers has filed all semi-annual statements
of account and paid all compulsory licensing fees required by Section
111 of the Copyright Act with respect to the AT&T CATV Business, for
the three years preceding the date of the Agreement. To the knowledge
of the AT&T Entities, the conduct of the AT&T CATV Business does not
infringe in any material respect upon the patents, trademarks,
copyrights, trade names or other intellectual property rights, domestic
or foreign, of any Person, and, to the knowledge of the AT&T Entities,
no Person has asserted any claim to any AT&T Party with respect to any
such infringement.
(g) Schedule 4.07(g) of AT&T's Disclosure Schedule identifies all
material rate complaints and all appeals of material local rate orders
or material rate complaints with respect to the AT&T CATV Business
which, to any AT&T Entity's knowledge, are pending at the FCC. Except
as set forth in Schedule 4.07(g) of AT&T's Disclosure Schedule, as of
the date of this Agreement: (i) no AT&T Seller has received any written
or, to the knowledge of any AT&T Entity, oral notice from any
Governmental Authority with respect to an intention to enforce customer
service standards pursuant to the Communications Act, (ii) no AT&T
Seller has agreed with any Governmental Authority to establish customer
service standards for any AT&T CATV System that exceeds the customer
service standards promulgated pursuant to the Communications Act, (iii)
no AT&T Seller has, with respect to any AT&T CATV System, made any Cost
of Service Election, and (iv) except for the MediaOne Social Contract,
no AT&T Seller has entered into any "social contract" or other proposed
resolution with the FCC with respect to rates charged for CATV services
in the AT&T CATV Systems and none of them is currently negotiating or
anticipating entering into the same.
(h) Except as set forth in Schedule 4.07(h) of AT&T's Disclosure
Schedule, as of the date of this Agreement: (i) no AT&T Entity has
received, and no AT&T Entity has notice that it will receive, from any
Governmental Authority, a preliminary assessment that an AT&T CATV
Instrument should not be renewed as provided in Section 626(c)(1) of
the Communications Act, (ii) the AT&T Sellers have timely filed notices
of renewal in accordance with the Communications Act and all
Governmental
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Authorities with respect to each AT&T CATV Instrument expiring within
30 months of the date of this Agreement and such notices of renewal
have been filed pursuant to the renewal procedures established by
Section 626(a) of the Communications Act, and (iii) no Governmental
Authority has commenced, or given written notice that it intends to
commence, a proceeding to revoke or suspend an AT&T CATV Instrument.
(i) AT&T has previously made available to Holdings complete and
correct copies of all AT&T CATV Instruments and AT&T Contracts that are
material to the AT&T CATV Business.
(j) Schedule 4.07(j) of AT&T's Disclosure Schedule sets forth,
with respect to the AT&T CATV Business, the approximate number of plant
miles (aerial and underground) for each head-end, the approximate
bandwidth capability of each head-end, the stations and signals carried
by each head-end and the channel position of each such signal and
station, which information is true and correct in all material
respects, in each case as of the applicable dates specified therein and
subject to any qualifications set forth therein. AT&T has delivered to
Holdings channel lineups and the monthly rates charged for each class
of service in the AT&T CATV Systems, which information is true and
correct in all material respects, in each case as of the applicable
dates specified therein and subject to any qualifications set forth
therein. Except as described in Schedule 4.07(j) of AT&T's Disclosure
Schedule, each AT&T CATV System is providing all channels, stations and
signals reflected as being carried on the AT&T CATV Systems on Schedule
4.07(j) of AT&T's Disclosure Schedule.
(k) Except as described in Schedule 4.07(k) of AT&T's Disclosure
Schedule, there is no overbuild of the AT&T CATV Systems at present,
nor, to the knowledge of any AT&T Entity, is any overbuild pending.
(l) Except as set forth in Schedule 4.07(l) of AT&T's Disclosure
Schedule, the tangible personal property included in the AT&T Assets
are in operating condition and repair (ordinary wear and tear excepted)
and are suitable for continued use in the manner in which presently
used in all material respects.
(m) To the knowledge of the AT&T Entities, each parcel of owned or
leased AT&T Real Property and any improvements thereon (i) has access
to and over public streets or private streets for which the AT&T
Sellers have a valid right of ingress and egress, and (ii) conforms in
its current use and occupancy to all zoning requirements without
reliance upon a variance issued by a Governmental Authority or a
classification of the parcel in question as a nonconforming use, other
than, in the case of clauses (i) and (ii), exceptions or conformities
that, individually or in the aggregate, do not materially detract from
the value of the AT&T Real Property or which do not materially
interfere with the present and continued use of such AT&T Real Property
in the operation of the AT&T CATV Business.
4.08 Labor Contracts and Actions.
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(a) No AT&T Seller is a party to any contract with any labor
organization, nor has any AT&T Seller agreed to recognize any union or
other collective bargaining unit, nor has any union or other collective
bargaining unit been certified as representing any of the AT&T
Employees with respect to the operation of the AT&T CATV Business.
(b) No AT&T Seller is experiencing any strikes, work stoppages,
significant grievance proceedings or, to the knowledge of any AT&T
Entity, claims of unfair labor practices filed with respect to the
operation of the AT&T CATV Business.
4.09 Employee Benefit Plans.
(a) All "employee benefit plans" within the meaning of Section
3(3) of ERISA covering AT&T Employees, other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA, and other benefit plans,
contracts or arrangements covering AT&T Employees (collectively, the
"AT&T Benefit Plans") are listed in Schedule 4.09 of AT&T's Disclosure
Schedule. True and complete copies of all AT&T Benefit Plans and all
amendments thereto have been provided or made available to Holdings.
Schedule 4.09 of AT&T's Disclosure Schedule also lists all
multiemployer plans covering AT&T Employees.
(b) All AT&T Benefit Plans, to the extent subject to ERISA, are in
substantial compliance with ERISA. There is no material pending or, to
the knowledge of any AT&T Entity, threatened litigation relating to the
AT&T Benefit Plans. No AT&T Entity has engaged in a transaction with
respect to any AT&T Benefit Plan that, assuming the taxable period of
such transaction expired as of the date hereof, could subject an AT&T
Entity to a tax or penalty imposed by either Section 4975 of the Code
or Section 502(i) of ERISA in an amount that would be material.
(c) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by any AT&T Entity with respect to
any ongoing, frozen or terminated "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by it, or the single-employer plan of any ERISA Affiliate of
any AT&T Entity. No AT&T Entity has incurred and none expects to incur
any withdrawal liability with respect to a multiemployer plan under
Subtitle E of Title IV of ERISA. No notice of a "reportable event,"
within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be
filed for any AT&T Benefit Plan subject to Title IV of ERISA or by any
ERISA Affiliate of any AT&T Entity within the 12-month period ending on
the date hereof.
(d) Neither any AT&T Benefit Plan nor any single-employer plan of
an ERISA Affiliate of an AT&T Entity has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412
of the Code or Section 302 of ERISA and no ERISA Affiliate has an
outstanding funding waiver. No AT&T Entity has provided, nor is it
required to provide, security to any AT&T Benefit Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
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4.10 Contracts. Except as set forth in Schedule 4.10 of AT&T's
Disclosure Schedule, there are no defaults by any AT&T Entity under the AT&T
Contracts (nor has any AT&T Entity received written notice of a threatened
default or notice of default) which would reasonably be expected, individually
or in the aggregate, to have an AT&T Material Adverse Effect, and no AT&T Entity
knows of any default by any other party to an AT&T Contract which would
reasonably be expected, individually or in the aggregate, to have an AT&T
Material Adverse Effect.
4.11 Legal and Governmental Proceedings and Judgments. Except as may
affect the cable television industry generally in the United States or in the
State of New York, or as set forth in Schedule 4.11 of AT&T's Disclosure
Schedule, there is no legal action or proceeding, pending or, so far as is known
to any AT&T Entity, any investigation pending or threatened against any AT&T
Entity, the AT&T CATV Business or the AT&T Assets, nor is there any Judgment
outstanding against any AT&T Seller or to or by which any AT&T Seller, any of
the AT&T Assets or the AT&T CATV Business is subject or bound, which (a) results
in any modification, termination, suspension, impairment or reformation of any
AT&T CATV Instrument or AT&T Contract or any right or privilege thereunder in a
manner that would reasonably be expected to have an AT&T Material Adverse
Effect, or (b) materially adversely affects the ability of any AT&T Entity to
consummate any of the transactions contemplated hereby.
4.12 Finders and Brokers. No AT&T Entity has entered into any contract,
arrangement or understanding with any Person, and no AT&T Entity is aware of any
claim or basis for any claim based upon any act or omission of any AT&T Entity
or any of its affiliates, which may result in the obligation of any Cablevision
Entity to pay any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
4.13 No Vote Required. No vote of the holders of any class or series of
capital stock of AT&T is necessary to approve this Agreement and the
transactions contemplated hereby.
4.14 AT&T Designated Subsidiary. If the AT&T Designated Subsidiary
becomes a party to this Agreement, by executing a Supplement to this Agreement
in the form of Exhibit I attached hereto, the AT&T Designated Subsidiary shall
represent and warrant to the Cablevision Entities as follows:
(a) Organization and Authority of the AT&T Designated Subsidiary.
The AT&T Designated Subsidiary is duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization and
has all corporate or partnership power and authority necessary to carry
on its business as presently conducted. The AT&T Designated Subsidiary
is duly qualified to do business and is in good standing in each
jurisdiction where such qualification is necessary except for those
jurisdictions where the failure to be so qualified or in good standing,
individually or in the aggregate, has not had and would not reasonably
be expected to have, an AT&T Material Adverse Effect.
(b) Authority and Binding Effect. The AT&T Designated Subsidiary
has all requisite corporate or partnership power and authority to
execute, deliver and perform the
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Transaction Documents to which it is a party. The AT&T Designated
Subsidiary has duly taken all corporate and shareholder or partnership
and partner actions necessary to authorize the execution, delivery and
performance of the Transaction Documents to which it is a party.
Without limiting the foregoing, any actions of the directors or
stockholders or partners of the AT&T Designated Subsidiary required to
approve and adopt the Transaction Documents to which it is a party have
been duly taken in accordance with the requirements of the corporation
or partnership laws of its jurisdiction of organization. The
Transaction Documents to which it is a party have been duly executed
and delivered by the AT&T Designated Subsidiary and each is the valid
and binding obligation of the AT&T Designated Subsidiary enforceable in
accordance with its terms, except as such enforceability may be
affected by laws of bankruptcy, insolvency, reorganization and
creditors' rights generally and by the availability of equitable
remedies.
(c) No Breach. The execution, delivery and performance of the
Transaction Documents to which it is a party does not, and will not,
contravene the relevant organizational documents of the AT&T Designated
Subsidiary, and does not, and will not: (i) conflict with or result in
a breach or violation by the AT&T Designated Subsidiary of or
constitute a default by the AT&T Designated Subsidiary under or result
in the termination, suspension, modification or impairment of any Law,
Judgment, or Contract to which the AT&T Designated Subsidiary is a
party or by which the AT&T Designated Subsidiary is subject or bound or
may be affected; or (ii) create or impose any Encumbrance upon any of
the AT&T Assets other than an AT&T Permitted Encumbrance, except in
each case under clause (i) above, for any conflict, breach, violation,
default or termination, suspension, modification or impairment which
would not, individually or in the aggregate, reasonably be expected to
have an AT&T Material Adverse Effect.
(d) Required Consents . Assuming that all of the consents
referenced in Schedule 3.02 of Cablevision's Disclosure Schedule have
been obtained, except for the parties listed in Schedule 4.02 of AT&T's
Disclosure Schedule, there are no parties whose approval or consent, or
with whom the filing of any certificate, notice, application, report or
other document, is legally or contractually required or otherwise is
necessary in connection with the execution, delivery or performance of
any Transaction Document by the AT&T Designated Subsidiary, except
where failure to obtain such consent or approval or failure to make
such filing would not reasonably be expected to have an AT&T Material
Adverse Effect or materially adversely affect the ability of the AT&T
Parties to consummate the transactions contemplated hereby.
(e) Legal and Governmental Proceedings and Judgments. Except as
may affect the cable television industry generally in the United States
or in the State of New York, or as set forth in Schedule 4.11 of AT&T's
Disclosure Schedule, there is no legal action or proceeding pending or,
so far as is known to the AT&T Designated Subsidiary, any investigation
pending or threatened against any AT&T Party nor is there any Judgment
outstanding against any AT&T Party or to or by which any AT&T Party is
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subject or bound, which materially adversely affects the ability of any
AT&T Party to consummate any of the transactions contemplated hereby.
(f) Finders and Brokers. The AT&T Designated Subsidiary has not
entered into any contract, arrangement or understanding with any
Person, and the AT&T Designated Subsidiary is not aware of any claim or
basis for any claim based upon any act or omission of any AT&T Party or
any of its affiliates, which may result in the obligation of any
Cablevision Entity to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with the negotiations
leading to this Agreement.
5. COVENANTS PENDING CLOSING.
5.01 Business of the Cablevision Entities. From the date hereof to the
Closing Date, and except as otherwise consented to or approved by AT&T in
writing (which consent shall not be unreasonably withheld), the Cablevision
Entities covenant and agree as follows:
(a) Business in Ordinary Course. Except as otherwise provided
herein, the Cablevision Sellers shall conduct the Cablevision CATV
Business in the ordinary course (including, without limitation, to
rebuild the total number of plant miles in the Cablevision CATV System
planned to be upgraded during the 2000 fiscal year as described in
Schedule 1.01(d) of Cablevision's Disclosure Schedule in accordance
with the Cablevision Upgrade Specifications), consistent with past
practices and will not engage in any material transaction, including,
without limitation, entering into or amending in any material respect
any Cablevision CATV Instrument or Cablevision Contract or making any
material advance or expenditure, other than in the ordinary course of
business, nor change in any material respect its business policies or
practices. Each Cablevision Seller shall use its reasonable commercial
efforts to preserve the Cablevision CATV Business intact, to retain the
services of its present employees and agents, and preserve its business
relationships with, and the goodwill of, its customers, suppliers and
others and use commercially reasonable efforts to maintain in full
force and effect policies of insurance with respect to the Cablevision
CATV Business consistent in all material respects with past practices.
The Cablevision Entities shall pay before delinquent all taxes and
other charges upon or against the Cablevision Sellers or any of their
respective properties or income, file when due all tax returns and
other reports required by Governmental Authorities and pay when due all
liabilities except those which it chooses to contest in good faith and
by appropriate proceedings.
(b) Books and Records. Each Cablevision Seller shall maintain its
books, accounts and records in the usual, regular and ordinary manner.
(c) Litigation During Interim Period. Holdings will advise AT&T in
writing promptly of the assertion, commencement or threat of any claim,
litigation, labor dispute, proceeding or investigation in which the
Cablevision CATV Business or any Cablevision Seller may be affected and
which (i) would reasonably be expected to have a Cablevision Material
Adverse Effect, (ii) involves exposures reasonably likely to exceed
$5,000,000,
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or (iii) relates to the transactions contemplated hereby. In addition,
Holdings will use reasonable commercial efforts to advise AT&T in
writing promptly after the commencement of litigation or other
proceedings against the Cablevision Sellers or the Cablevision CATV
Business, or Holdings' receipt of written notice of any such matter
which is likely to exceed $1,000,000 of exposure affecting the
Cablevision Sellers or the Cablevision CATV Business.
(d) Material Contracts. Holdings shall promptly deliver to AT&T
copies of (i) all Cablevision CATV Instruments and (ii) all Cablevision
Contracts that are, in the case of each of clauses (i) and (ii),
entered into prior to the Closing and that would have been required to
be disclosed in Cablevision's Disclosure Schedule if signed prior to
the date of this Agreement.
(e) Financial Information. Holdings will promptly deliver to AT&T
copies of its monthly management reports on operations with respect to
the operation of the Cablevision CATV Business prepared in the ordinary
course of business.
(f) 626 Filings. The Cablevision Sellers will timely file a notice
of renewal under Section 626 of the Cable Act with the appropriate
Governmental Authority with respect to any Cablevision CATV Instrument
that will expire within 30 months after any date between the date of
this Agreement and the Closing Date.
(g) Franchise Renewals. Each Cablevision Entity will consult with
AT&T concerning any proceedings for, or negotiations with respect to,
any cable television franchise relating to the Cablevision CATV
Business that is subject to renewal between the date of this Agreement
and the Closing Date.
(h) Negative Covenants. The Cablevision Entities will not, with
respect to the CATV Business:
(i) make any election with respect to any cost of service
proceeding other than a network upgrade cost of service proceeding
conducted in accordance with Part 76.922 of Title 47 of the Code of
Federal Regulations or any similar proceeding with respect to any
Cablevision CATV System;
(ii) except as contemplated by this Agreement, sell, transfer
or assign any of the Cablevision Assets necessary or useful for the
operation of the Cablevision CATV Business or permit the creation of an
Encumbrance (other than a Cablevision Permitted Encumbrance) on any of
the Cablevision Assets, except, in each case, in the ordinary course of
business;
(iii) except as disclosed in Schedule 5.01(h)(iii) of
Cablevision's Disclosure Schedule, decrease the rate charged for any
level of services, in each case except to the extent required under the
1992 Cable Act or any other Law; provided, however, that, if rates are
decreased in order to so comply, Holdings will provide AT&T with copies
of any FCC forms (even if not filed with any
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Governmental Authority) that the Cablevision Sellers used to determine
that the new rates were required;
(iv) convert any Cablevision CATV Systems to any billing
system or otherwise change in any material respect billing arrangements
for any of the Cablevision CATV Systems;
(v) except as contemplated by this Agreement, enter into any
Cablevision Contract of any kind relating to the Cablevision CATV
Business that individually or in the aggregate call for payments or
otherwise involve expenditures to or by the Cablevision Sellers in
excess of $100,000 in any year, except for (A) the renewal of
Cablevision Contracts that would, but for such renewal, terminate in
accordance with their terms prior to Closing, (B) any Cablevision
Contract that would by its terms be terminable without termination fee
or cost not later than 60 days after Closing, and (C) any Cablevision
Contract that is part of the implementation of Schedule 1.01(d) of
Cablevision's Disclosure Schedule, and that (1) is terminable on 30
days' or less notice without further cost or obligation to the
counterparty, or (2) does not require further performance by any
transferee of the Cablevision Seller after the Closing Date;
(vi) enter into, modify or amend any Cablevision Contract for
any fiber or fiber capacity lease or use arrangements in any of the
Cablevision CATV Systems;
(vii) take any action that would, or would reasonably be
expected to, prevent or materially impair the ability of any
Cablevision Entity or AT&T Party to consummate the transactions
contemplated by the Transaction Documents; provided that neither
Holdings nor any Cablevision Seller shall be in breach of this Section
5.01(h)(vii) if a Governmental Authority takes any action (including
the issuance of any order or entering of any consent decree or similar
Judgment) that would prevent or materially impair the ability of any
Cablevision Entity or AT&T Party to consummate the transactions
contemplated by the Transaction Documents; and provided, further, that
at the time that Holdings or any Cablevision Seller becomes aware that
any Governmental Authority has taken any action described in the
immediately preceding proviso, Holdings shall promptly notify AT&T of
such action and AT&T may (if it so elects by giving written notice to
Holdings within ten days after receipt of such notice) terminate this
Agreement under Section 12.02 hereof;
(viii) take any action that would make any representation or
warranty of any Cablevision Entity hereunder inaccurate in any material
respect as of the Closing; or
(ix) agree to do any of the foregoing.
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5.02 Business of the AT&T Entities. From the date hereof to the Closing
Date, and except as otherwise consented to or approved by Holdings in writing
(which consent shall not be unreasonably withheld), the AT&T Entities covenant
and agree as follows:
(a) Business in Ordinary Course. Except as otherwise provided
herein, the AT&T Sellers shall conduct the AT&T CATV Business in the ordinary
course (including, without limitation, to rebuild the total number of plant
miles in the AT&T CATV System planned to be upgraded during the 2000 fiscal year
as described in Schedule 1.01(d) of AT&T's Disclosure Schedule in accordance
with the AT&T Upgrade Specifications) consistent with past practices and will
not engage in any material transaction, including, without limitation, entering
into or amending in any material respect any AT&T CATV Instrument or AT&T
Contract or making any material advance or expenditure, other than in the
ordinary course of business, nor change in any material respect its business
policies or practices. Each AT&T Seller shall use its reasonable commercial
efforts to preserve the AT&T CATV Business intact, to retain the services of its
present employees and agents, and preserve its business relationships with, and
the goodwill of, its customers, suppliers and others and use commercially
reasonable efforts to maintain in full force and effect policies of insurance
with respect to the AT&T CATV Business consistent in all material respects with
past practices. The AT&T Parties shall pay before delinquent all taxes and other
charges upon or against the AT&T Sellers or any of their respective properties
or income, file when due all tax returns and other reports required by
Governmental Authorities and pay when due all liabilities except those which it
chooses to contest in good faith and by appropriate proceedings.
(b) Books and Records. Each AT&T Seller shall maintain its books,
accounts and records in the usual, regular and ordinary manner.
(c) Litigation During Interim Period. AT&T will advise Holdings in
writing promptly of the assertion, commencement or threat of any claim,
litigation, labor dispute, proceeding or investigation in which the AT&T CATV
Business or any AT&T Seller may be affected and which (i) would reasonably be
expected to have an AT&T Material Adverse Effect, (ii) involves exposures
reasonably likely to exceed $5,000,000, or (iii) relates to the transactions
contemplated hereby. In addition, AT&T will use reasonable commercial efforts to
advise Holdings in writing promptly after the commencement of litigation or
other proceedings against AT&T Sellers or the AT&T CATV Business, or AT&T's
receipt of written notice of any such matter which is likely to exceed
$1,000,000 of exposure affecting the AT&T Sellers or the AT&T CATV Business.
(d) Material Contracts. AT&T shall promptly deliver to Holdings
copies of (i) all AT&T CATV Instruments and (ii) all AT&T Contracts that are, in
the case of each of clauses (i) and (ii), entered into prior to the Closing and
that would have been required to be disclosed in AT&T's Disclosure Schedule if
signed prior to the date of this Agreement.
(e) Financial Information. AT&T will promptly deliver to Holdings
copies of its monthly management reports on operations with respect to the
operation of the AT&T CATV Business prepared in the ordinary course of business.
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(f) 626 Filings. The AT&T Sellers will timely file a notice of
renewal under Section 626 of the Cable Act with the appropriate Governmental
Authority with respect to any AT&T CATV Instrument that will expire within 30
months after any date between the date of this Agreement and the Closing Date.
(g) Franchise Renewals. Each AT&T Entity will consult with
Holdings concerning any proceedings for or negotiations with respect to any
cable television franchise relating to the AT&T CATV Business that is subject to
renewal between the date of this Agreement and the Closing Date.
(h) Negative Covenants. The AT&T Entities will not, with respect
to the AT&T CATV Business:
(i) make any election with respect to any cost of service
proceeding other than a network upgrade cost of service proceeding
conducted in accordance with Part 76.922 of Title 47 of the Code of
Federal Regulations or any similar proceeding with respect to any AT&T
CATV System;
(ii) except as contemplated by this Agreement, sell, transfer
or assign any of the AT&T Assets necessary or useful for the operation
of the AT&T CATV Business or permit the creation of an Encumbrance
(other than an AT&T Permitted Encumbrance) on any of the AT&T Assets,
except, in each case, in the ordinary course of business;
(iii) except as disclosed in Schedule 5.02(h)(iii) of AT&T's
Disclosure Schedule, decrease the rate charged for any level of
services, in each case except to the extent required under the 1992
Cable Act or any other Law; provided, however, that if rates are
decreased in order to so comply, AT&T will provide Holdings with copies
of any FCC forms (even if not filed with any Governmental Authority)
that the AT&T Sellers used to determine that the new rates were
required;
(iv) convert any AT&T CATV Systems to any billing system or
otherwise change in any material respect billing arrangements for any
of the AT&T CATV Systems;
(v) except as contemplated by this Agreement, enter into any
AT&T Contract of any kind relating to the AT&T CATV Business that
individually or in the aggregate calls for payments or otherwise
involves expenditures to or by the AT&T Sellers in excess of $100,000
in any year, except for (A) the renewal of AT&T Contracts that would,
but for such renewal, terminate in accordance with their terms prior to
Closing, (B) any AT&T Contract that would by its terms be terminable
without termination fee or cost not later than 60 days after Closing,
and (C) any AT&T Contract that is part of the implementation of
Schedule 1.01(d) of AT&T's Disclosure Schedule, and that (1) is
terminable on 30 days' or less notice without further cost or
obligation to the counterparty, or (2) does not require further
performance by any transferee of AT&T Seller after the Closing Date;
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(vi) enter into, modify or amend any AT&T Contract for any
fiber or fiber capacity lease or high-speed Internet modem services or
use arrangements in any of the AT&T CATV Systems (including, without
limitation, commencing or otherwise launching the "Roadrunner"
high-speed Internet modem service);
(vii) take any action that would or would reasonably be
expected to prevent or materially impair the ability of any AT&T Party
or Cablevision Entity to consummate the transactions contemplated by
the Transaction Documents; provided that neither AT&T nor any AT&T
Subsidiary shall be in breach of this Section 5.02(h)(vii) if a
Governmental Authority takes any action (including the issuance of any
order or entering of any consent decree or similar Judgment) that would
prevent or materially impair the ability of any Cablevision Entity or
AT&T Party to consummate the transactions contemplated by the
Transaction Documents; and provided, further, that at the time that
AT&T or any AT&T Subsidiary becomes aware that a Governmental Authority
has taken any action described in the immediately preceding proviso,
AT&T shall promptly notify Holdings of such action and Holdings may (if
it so elects by giving written notice to AT&T within ten days after
receipt of such notice) terminate this Agreement under Section 12.02
hereof;
(viii) take any action that would make any representation or
warranty of any AT&T Party hereunder inaccurate in any material respect
as of the Closing; or
(ix) agree to do any of the foregoing.
5.03 AT&T Limitations Pending Closing of AT&T/MediaOne Merger.
Notwithstanding anything to the contrary in this Agreement:
(a) It is understood that the AT&T Assets are not currently owned
or controlled by AT&T and will not be unless and until the
AT&T/MediaOne Merger closing occurs. Immediately after the closing of
the AT&T/MediaOne Merger, AT&T will cause each of AT&T Sub I and AT&T
Sub II to become a party to this Agreement by executing the Supplement
to this Agreement in the form of Exhibit I hereto. Effective on the
date of such execution, such entity will be treated as a party to this
Agreement and, as such, will be bound as of such date by any covenants,
agreements or obligations hereunder applicable thereto.
(b) Subject to fiduciary duties and applicable law, to the extent
that AT&T has any contractual or other rights over the operation of the
AT&T Assets prior to the time that the owner of such AT&T Assets
becomes a party to this Agreement pursuant to Section 5.03(a), AT&T
will exercise such rights in a manner consistent with this Agreement to
approximate as closely as possible under such rights the limits that
would be imposed on the owner of the AT&T Assets if the owner of the
AT&T Assets were then bound by this Agreement (including the
pre-Closing covenants hereunder).
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(c) The Cablevision Entities acknowledge and agree that AT&T
expects to cause AT&T Sub I and AT&T Sub II to enter into a merger
prior to Closing, pursuant to which one of such corporations will be
the surviving corporation and succeed by operation of law to all rights
and obligations of both, including those under this Agreement.
5.04 Rebuild of AT&T CATV Systems.
(a) The parties acknowledge that the AT&T Sellers may request an
extension of the deadline under the MediaOne Social Contract with
respect to the date of completion of the upgrade as set forth on
Schedule 1.01(d) of AT&T's Disclosure Schedule for any AT&T CATV System
that requires such extension (the "MediaOne Social Contract
Extension"). The AT&T Sellers shall provide Holdings with a copy of
their proposed request for such MediaOne Social Contract Extension and
any other information that Holdings may reasonably request with respect
to such proposed MediaOne Social Contract Extension. The AT&T Sellers
shall notify Holdings of any written FCC response, progress reports or
other written communications with the FCC with respect to the MediaOne
Social Contract Extension and shall furnish Holdings with copies of any
written communications received from or furnished to the FCC with
respect to the proposed MediaOne Social Contract Extension, including,
without limitation, any proposed FCC response.
(b) The parties further acknowledge that the AT&T Sellers may
enter into a contract with a third party or an AT&T Subsidiary for the
completion of the upgrade as set forth on Schedule 1.01(d) of AT&T's
Disclosure Schedule, provided that with respect to any such contract
that AT&T may propose to continue in effect after Closing, such
contract shall contain terms and conditions that are mutually
acceptable to AT&T and Holdings and are consistent with the AT&T
Upgrade Specifications as set forth on Schedule 1.01(e) of AT&T's
Disclosure Schedule (the "Upgrade Contract"). AT&T shall provide any
proposed Upgrade Contract to Holdings and Holdings shall notify AT&T in
writing within 10 Business Days thereafter of any objection it has to
the terms and conditions of such proposed Upgrade Contract. AT&T and
Holdings shall use their reasonable commercial efforts to resolve any
objection Holdings has to such Upgrade Contract promptly on mutually
acceptable terms. If Holdings does not so notify AT&T of its objection,
it will be deemed to have approved the proposed contract as an Upgrade
Contract.
(c) If as of Closing there is an Upgrade Contract that Holdings
has approved or is deemed to have approved, then the following will
apply:
(i) No AT&T Upgrade Adjustment will be payable at Closing or
pursuant to any post-Closing adjustment procedures under Section
2.05.
(ii) At Closing, Holdings will cause the applicable
Cablevision Seller(s) to pay to the AT&T Sellers the AT&T 750
Aerial Adjustment Delta and the AT&T 750 Underground Adjustment
Delta calculated with respect to the total
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number of miles in the completed portion of the upgrade work in
the AT&T CATV Systems (and any disputes as to such amount will be
resolved in the same manner as a dispute concerning the AT&T
Upgrade Adjustment would be resolved under Section 2.05(d)).
(iii) Following Closing, the applicable Cablevision Seller(s)
will allow reasonable and necessary access to the AT&T CATV
Systems to complete the Upgrade Contract and otherwise cooperate
reasonably in its capacity as the owner of the Systems involved in
the upgrade under the Upgrade Contract.
(iv) AT&T shall provide Holdings with written monthly
progress reports on the upgrade and shall notify Holdings in
writing of final completion of the upgrade in accordance with the
AT&T Upgrade Specifications.
(v) Upon completion of the upgrade in accordance with the
Upgrade Contract, Holdings will cause the applicable Cablevision
Seller(s) to pay to the AT&T Sellers the AT&T 750 Aerial
Adjustment Delta and the AT&T 750 Underground Adjustment Delta
calculated with respect to the portion of the upgrade work in the
AT&T CATV Systems completed after Closing (and any disputes as to
such amount will be resolved in the same manner as a dispute
concerning the AT&T Upgrade Adjustment would be resolved under
Section 2.05(d)).
(d) If as of Closing there is not an Upgrade Contract that
Holdings has approved or is deemed to have approved, then at Closing,
Holdings will cause the applicable Cablevision Seller(s) to pay to the
AT&T Sellers the AT&T 750 Aerial Adjustment Delta and the AT&T 750
Underground Adjustment Delta calculated with respect to the completed
portion of the upgrade work in the AT&T CATV Systems (and any disputes
as to such amount will be resolved in the same manner as a dispute
concerning the AT&T Upgrade Adjustment would be resolved under Section
2.05(d)).
5.05 Access to Information.
(a) Access by AT&T. Between the date of this Agreement and the
Closing, AT&T and its agents shall have reasonable access during normal
business hours to all of the properties, books, reports, records,
Cablevision CATV Instruments and Cablevision Contracts of the
Cablevision Entities with respect to the Cablevision CATV Business, and
Holdings shall furnish AT&T with all information it may reasonably
request; provided that no investigation pursuant to this Section
5.05(a) shall affect or be deemed to modify any representation or
warranty made by any Cablevision Entity. All information obtained by
AT&T pursuant to this Agreement and in connection with the negotiation
hereof shall be used by AT&T solely for purposes related to this
Agreement and the Merger and, in the case of non-public information,
shall, except as may be required for the performance of this Agreement
or by Law, be kept in strict confidence by AT&T in accordance with the
terms of the Confidentiality Agreement dated October 8, 1999 between
AT&T and Cablevision Systems Corporation (the "Confidentiality
Agreement").
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(b) Access by Holdings. Between the date of this Agreement and the
Closing, Holdings and its agents shall have reasonable access during
normal business hours to all of the properties, books, reports,
records, AT&T CATV Instruments and AT&T Contracts of the AT&T Entities
with respect to the AT&T CATV Business, and AT&T shall furnish Holdings
with all information it may reasonably request; provided that no
investigation pursuant to this Section 5.05(b) shall affect or be
deemed to modify any representation or warranty made by any AT&T Party.
All information obtained by Holdings pursuant to this Agreement and in
connection with the negotiation hereof shall be used by Holdings solely
for purposes related to this Agreement and the Merger and, in the case
of non-public information, shall, except as may be required for the
performance of this Agreement or by Law, be kept in strict confidence
by Holdings.
5.06 Upgrade Remedies. The parties agree that notwithstanding any
covenants in this Agreement to accomplish their respective planned upgrade
activities, the AT&T Upgrade Adjustment and the Cablevision Upgrade Adjustment
mechanisms provided for in this Agreement will be the sole consequence and
remedy with respect to a failure to comply with such covenants.
6. DELIVERIES AT CLOSING.
6.01 Deliveries by Holdings. At the Closing, Holdings will deliver or
cause to be delivered to AT&T, AT&T Sellers or the AT&T Designated Subsidiary or
QI-3 (as referenced in Schedule 2.01(c) of the Disclosure Schedules), as
applicable:
(a) The Exchange 2 Cash Consideration as provided in Section
2.01(e) and the transfer from QI-2 to QI-3, as provided in Schedule
2.01(c) of the Disclosure Schedules.
(b) Such warranty deeds in recordable form, bills of sale,
endorsements, and other good and sufficient instruments of conveyance,
transfer and assignment as are necessary to vest in the applicable AT&T
Sellers or the AT&T Designated Subsidiary, as applicable, the right,
title and interest of the applicable Cablevision Entities in accordance
herewith in and to the Cablevision Assets in a form or forms reasonably
satisfactory to AT&T, which shall include, without limitation, a form
or forms of Cablevision Bill of Sale and General Assignment in the form
of Exhibit E hereto.
(c) A certificate signed by a principal officer of the Cablevision
Sellers, dated as of the Closing, representing and certifying as to the
matters set forth in Sections 7.03 and 7.04.
(d) The Assumption Agreements in the forms of Exhibits C-1 and C-2
and Exhibits D-1 and D-2 hereto.
(e) An opinion of Cablevision's Counsel, substantially in the form
of Exhibit G hereto.
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(f) Evidence in form and substance reasonably satisfactory to AT&T
that receipt of the required consents and approvals listed in Schedule
3.02 of Cablevision's Disclosure Schedule and required as conditions to
the transactions contemplated hereunder have been obtained and remain
in effect.
(g) A certificate, dated the Closing Date, signed by a Secretary
or an Assistant Secretary of each Cablevision Entity certifying that
attached thereto are true, complete and correct copies of the
resolutions duly adopted by the board of directors (and, if applicable,
the stockholders) of such Cablevision Entity authorizing the execution
and delivery of the Transaction Documents to which such Cablevision
Entity is a party and approving and adopting this Agreement.
6.02 Deliveries by AT&T. At the Closing, AT&T will deliver or cause to
be delivered to Holdings or Cablevision Sellers or QI-2 (as referenced in
Schedule 2.01(c) of the Disclosure Schedules), as applicable:
(a) The Exchange 1 Cash Consideration as provided in Section
2.01(e) and the transfer from QI-1 to QI-2 and the transfer from QI-3
to CSC Boston, as provided in Schedule 2.01(c) of the Disclosure
Schedules.
(b) Such warranty deeds in recordable form, bills of sale,
endorsements, and other good and sufficient instruments of conveyance,
transfer and assignment as are necessary to vest in the applicable
Cablevision Seller the right title and interest of the AT&T Sellers in
accordance herewith in and to the AT&T Assets in a form or forms
reasonably satisfactory to Holdings, which shall include, without
limitation, a form or forms of AT&T Bill of Sale and General Assignment
in the form of Exhibit F hereto.
(c) A certificate signed by a principal officer of the AT&T
Sellers, dated as of the Closing, representing and certifying as to the
matters set forth in Sections 8.03 and 8.04.
(d) The Assumption Agreements in the forms of Exhibits C-1 and C-2
and Exhibits D-1 and D-2 hereto.
(e) An opinion of AT&T's Counsel, substantially in the form of
Exhibit H hereto.
(f) Evidence in form and substance reasonably satisfactory to
Holdings that the consents and approvals referred to in Schedule 4.02
of AT&T's Disclosure Schedule and required as conditions to the
transactions contemplated hereunder have been obtained and remain in
effect.
(g) A certificate, dated the Closing Date, signed by the Secretary
or an Assistant Secretary of each AT&T Party certifying that attached
thereto are true, complete and correct copies of resolutions duly
adopted by the board of directors (and, if applicable, the
stockholders) of each AT&T Party authorizing the execution and delivery
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of the Transaction Documents to which such AT&T Party is a party and
approving and adopting this Agreement.
7. CONDITIONS TO THE OBLIGATIONS OF THE AT&T PARTIES.
The obligations of the AT&T Parties to complete the transactions
provided for herein are subject to the fulfillment of all of the following
conditions any of which may be waived in writing by AT&T.
7.01 Waiting Period; Receipt of Consents.
(a) The waiting period, if any, under the HSR Act and Rules, as
the same may have been extended, shall have expired or been terminated
without action taken to prevent the consummation of the transactions
contemplated hereby.
(b) All of the approvals and consents described in Schedule 3.02
of Cablevision Disclosure Schedule and marked with $ or * on such
Schedule, and all of the approvals and consents described in Schedule
4.02 of AT&T's Disclosure Schedule, and marked with * on such Schedule,
shall have been obtained and shall be in full force and effect;
provided that this condition, to the extent it relates to required
approvals and consents of Governmental Authorities for cable
franchises, will be deemed to be satisfied when (i) with respect to
cable franchises which represent, in the aggregate, not less than 90%
of the Basic Subscribers of the Cablevision CATV Systems and not less
than 90% of the Basic Subscribers of the AT&T CATV Systems, such
approvals and consents (A) have been received or (B) are deemed to have
been received in accordance with Section 617 of the Communications Act
(47 U.S.C. Section 537) or (C) are not required under the applicable
Cablevision CATV Instrument or AT&T CATV Instrument, as applicable, and
(ii) any applicable waiting period (including extensions thereof) has
expired with respect to the FCC Form 394 filed in connection with the
requests for consent to the transfer of the cable franchises for which
required approvals and consents have not then been obtained.
7.02 Authority. All actions under the documents governing the
Cablevision Entities necessary to authorize (a) the execution and delivery of
the Transaction Documents by the Cablevision Entities and the performance by
them of their obligations hereunder and thereunder and (b) the consummation of
the transactions contemplated hereby, shall have been duly and validly taken by
the Cablevision Entities and shall be in full force and effect on the Closing
Date.
7.03 Performance. The Cablevision Entities shall have performed in all
material respects their agreements and covenants under the Transaction Documents
(including, without limitation, their covenants in Article 5 of this Agreement
to the extent such are required to be performed at or prior to the Closing).
7.04 Absence of Breach of Warranties and Representations. The
representations and warranties of the Cablevision Entities contained in this
Agreement, without regard to any references based on a "Material Adverse Change"
or "materiality" contained therein, shall be true
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and correct in all respects when made and on and as of the Closing Date with the
same force and effect as if made on and as of such date, except (a) to the
extent that such representations and warranties describe a condition at a
specified time or on a specified date (in which event such representations and
warranties shall be true and correct in all material respects at such specified
time or date or when made, as applicable) or are affected by the conclusion of
the transactions permitted or contemplated hereby or the conduct of the
Cablevision CATV Business in accordance with Article 5 hereof between the date
hereof and the Closing Date, or (b) where the failure of such representations
and warranties to be true and correct, individually or in the aggregate, does
not have, has not had and would not reasonably be expected to have, a material
adverse effect on the Cablevision Entities' ability to consummate the
transactions contemplated hereby or a Cablevision Material Adverse Effect.
7.05 No Cablevision Material Adverse Change. Since September 30, 1999
and except as set forth in Schedule 3.04 of Cablevision's Disclosure Schedule,
there has not been any change in the financial condition, properties, business
or results of operations of the Cablevision CATV Business or any event or
development or combination of events or developments that, individually or in
the aggregate, has had or would reasonably be expected to have a Cablevision
Material Adverse Effect.
7.06 Absence of Proceedings. No Judgment shall have been issued, and no
action or proceeding shall have been instituted by, any Governmental Authority
enjoining or preventing the consummation of the transactions contemplated
hereby.
7.07 FIRPTA Certificate. Each of the Cablevision Sellers shall have
delivered to the AT&T Sellers a certification of non-foreign status in the form
attached as Schedule 7.07 to Cablevision's Disclosure Schedule.
7.08 MediaOne Closing. The closing of the merger pursuant to the
Agreement and Plan of Merger, dated as of May 6, 1999, as amended, by and among
AT&T Corp., Meteor Acquisition Inc. and MediaOne Group, Inc. shall have
occurred.
8. CONDITIONS TO THE OBLIGATIONS OF THE CABLEVISION ENTITIES.
The obligations of the Cablevision Entities to complete the
transactions provided for herein are subject to the fulfillment of all of the
following conditions, any of which may be waived in writing by Holdings.
8.01 Waiting Period; Receipt of Consents.
(a) The waiting period, if any, under the HSR Act and Rules, as
the same may have been extended, shall have expired or been terminated
without action taken to prevent the consummation of the transactions
contemplated hereby.
(b) All of the approvals and consents described in Schedule 3.02
of Cablevision's Disclosure Schedule and marked with * on such
Schedule, and all of the approvals and consents described in Schedule
4.02 of AT&T's Disclosure Schedule, and
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marked with $ or * on such Schedule, shall have been obtained and shall
be in full force and effect; provided that this condition, to the
extent it relates to required approvals and consents of Governmental
Authorities for cable franchises, will be deemed to be satisfied when
(i) with respect to cable franchises which represent, in the aggregate,
not less than 90% of the Basic Subscribers of the AT&T CATV Systems and
not less than 90% of the Basic Subscribers of the Cablevision CATV
Systems, such approvals and consents (A) have been received or (B) are
deemed to have been received in accordance with Section 617 of the
Communications Act (47 U.S.C. Section 537) or (C) are not required
under the applicable AT&T CATV Instrument or Cablevision CATV
Instrument, as applicable, and (ii) any applicable waiting period
(including extensions thereof) has expired with respect to the FCC Form
394 filed in connection with the requests for consent to the transfer
of the cable franchises for which required approvals and consents have
not then been obtained.
8.02 Authority. All actions under the documents governing the AT&T
Parties necessary to authorize (a) the execution and delivery of the Transaction
Documents by the AT&T Parties and the performance by them of their obligations
hereunder and thereunder and (b) the consummation of the transactions
contemplated hereby, shall have been duly and validly taken by the AT&T Parties
and shall be in full force and effect on the Closing Date.
8.03 Performance. The AT&T Parties shall have performed in all material
respects their agreements and covenants under the Transaction Documents
(including, without limitation, their covenants in Article 5 of this Agreement
to the extent such are required to be performed at or prior to the Closing).
8.04 Absence of Breach of Representations and Warranties. The
representations and warranties of the AT&T Parties contained in this Agreement,
without regard to any references based on "Material Adverse Change" or
"materiality" contained therein, shall be true and correct in all respects when
made and on and as of the Closing Date with the same effect as if made on and as
of such date, except (a) to the extent such representations and warranties
describe a condition at a specified time or on a specified date (in which event
such representations and warranties shall be true and correct in all material
respects at such specified time or date or when made, as applicable) or are
affected by the conclusion of the transactions permitted or contemplated hereby
or the conduct of the AT&T CATV Business in accordance with Article 5 hereof
between the date hereof and the Closing Date, or (b) where the failure of such
representations and warranties to be true and correct, individually or in the
aggregate, does not have, has not had and would not reasonably be expected to
have, a material adverse effect on the AT&T Parties' ability to consummate the
transactions contemplated by this Agreement or an AT&T Material Adverse Effect.
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8.05 No AT&T Material Adverse Change. Since September 30, 1999 and
except as set forth in Schedule 4.04 of AT&T's Disclosure Schedule, there has
not been any change in the financial condition, properties, business or results
of operations of the AT&T CATV Business or any event or development or
combination of events or developments that, individually or in the aggregate,
has had or would reasonably be expected to have an AT&T Material Adverse Effect.
8.06 Absence of Proceedings. No Judgment shall have been issued, and no
action or proceeding shall have been instituted by, any Governmental Authority
enjoining or preventing the consummation of the transactions contemplated
hereby.
8.07 FIRPTA Certificate. Each of the AT&T Sellers shall have delivered
to the Cablevision Sellers a certification of non-foreign status in the form
attached as Schedule 8.07 to AT&T's Disclosure Schedule.
9. COVENANTS.
9.01 Compliance with Conditions. Each of the parties hereto covenants
and agrees with the other to exercise reasonable commercial efforts to perform,
comply with and otherwise satisfy each and every one of the conditions to be
satisfied hereunder, and each party shall use reasonable commercial efforts to
notify promptly the other if it shall learn that any conditions to performance
of either party will not be fulfilled.
9.02 Compliance with HSR Act and Rules.
(a) Each of the parties hereto will use its reasonable commercial
efforts to comply promptly with any applicable requirements under the
HSR Act and Rules relating to filing and furnishing of information to
the FTC and the Antitrust Division of the DOJ, the parties' actions to
include, without limitation, (i) filing or causing to be filed the HSR
Report required to be filed by them, or by any other Person that is
part of the same "person" (as defined in the HSR Act and Rules) or any
of them, and taking all other action required by the HSR Act or Rules;
(ii) coordinating the filing of such HSR Reports (and exchanging mutual
information required to be disclosed therein) so as to present both HSR
Reports to the FTC and the DOJ at the time selected by the mutual
agreement of Holdings and AT&T, and to avoid substantial errors or
inconsistencies between the two in the description of the transaction;
and (iii) using their reasonable commercial efforts to comply with any
additional request for documents or information made by the FTC or the
DOJ or by a court and assisting the other parties to so comply.
(b) Notwithstanding anything herein to the contrary, in the event
that the consummation of the transactions contemplated hereby is
challenged by the FTC or the DOJ or any agency or instrumentality of
the federal government by an action to stay or enjoin such
consummation, then either AT&T or Holdings shall have the right to
termi nate this Agreement unless the other of such parties, at its sole
cost and expense, elects to contest such action, in which case the
noncontesting party shall cooperate with the contesting party and
assist the contesting party, as reasonably requested, to contest such
action until such time as either party terminates this Agreement under
this Section 9.02 or
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Article 12. In the event that such a stay or injunction is granted
(preliminary or otherwise), then either AT&T or Holdings may terminate
this Agreement by prompt written notice to the other. If any other form
of equitable relief affecting any party is granted by the FTC, the DOJ
or other such agency or instrumentality, then such party may terminate
this Agreement by prompt written notice to the other party. To
effectuate the intent of the foregoing provisions of this Section 9.02,
the parties agree to exchange requested or required information in
making the filings and in complying as above provided, and the parties
agree to take all necessary steps to preserve the confidentiality of
the information set forth in any filings including, without limitation,
limiting disclosure of exchanged information to counsel for the
nondisclosing party.
9.03 Applications for Assignment of Contracts or CATV Instruments.
(a) In order to secure requisite consents or approvals of the
assignment to AT&T Sellers or the AT&T Designated Subsidiary, as
applicable, of any Cablevision Contracts or Cablevision CATV
Instruments, the AT&T Entities (with respect to Cablevision CATV
Instruments) and the Cablevision Entities (with respect to Cablevision
Contracts) shall proceed as promptly as practicable and in good faith
and using reasonable commercial efforts, to prepare, file and prosecute
such application or applications as may be necessary to obtain each
such consent or approval. AT&T and Holdings shall use reasonable
commercial efforts to promptly assist each other and shall take such
prompt and affirmative actions as may be reasonably necessary in
obtaining such approvals and shall cooperate with each other in the
preparation, filing and prosecution of such applications as may be
reasonably necessary, and agree to furnish all information required by
the approving entity, and to be represented at such meetings or
hearings as may be scheduled to consider such applications. Without
limiting in any respect the foregoing, each party agrees to file
mutually acceptable applications to all appropriate Governmental
Authorities for all consents or approvals required to consummate the
transactions hereunder within 45 days after the date of this Agreement.
(b) In order to secure requisite consents or approvals of the
assignment to Holdings of any AT&T Contracts or AT&T CATV Instruments,
the Cablevision Entities (with respect to AT&T CATV Instruments) and
the AT&T Entities (with respect to AT&T Contracts) shall proceed as
promptly as practicable and in good faith and using reasonable
commercial efforts, to prepare, file and prosecute such application or
applications as may be necessary to obtain each such consent or
approval. AT&T and Holdings shall use reasonable commercial efforts to
promptly assist each other and shall take such prompt and affirmative
actions as may be reasonably necessary in obtaining such approvals and
shall cooperate with each other in the preparation, filing and
prosecution of such applications as may be reasonably necessary, and
agree to furnish all information required by the approving entity, and
to be represented at such meetings or hearings as may be scheduled to
consider such applications. Without limiting in any respect the
foregoing, each party agrees to file mutually acceptable applications
to all appropriate Governmental Authorities for all consents or
approvals required to consummate the transactions hereunder within 45
days after the date of this Agreement.
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(c) Each party further agrees that it will not, without the prior
written consent of the other party, take any action to amend or that
would amend or modify any application filed as provided in Sections
9.03(a) and 9.03(b) after the date that such application is accepted as
complete.
9.04 Records and Related Matters. The Cablevision Entities and the AT&T
Entities shall each make their respective books and records (including work
papers in the possession of their respective accountants) available for
inspection by the other party, or by its duly authorized representatives, for
reasonable business purposes at all reasonable times during normal business
hours, for a seven-year period after the Closing Date with respect to all
transactions of the Cablevision CATV Business or the AT&T CATV Business (as the
case may be) occurring prior to or relating to the Closing, and the historical
financial condition, assets, liabilities, results of operation and cash flows of
the Cablevision CATV Business or the AT&T CATV Business (as the case may be) for
any period prior to the Closing. As used in this Section 9.04, the right of
inspection includes the right to make copies at the requesting party's expense
for reasonable business purposes.
9.05 Subscriber Billing Services and Call Center Services.
(a) Holdings will provide or cause to be provided to AT&T, upon
request, customer billing services, at a cost to AT&T equal to
Holdings' cost, and otherwise on terms and conditions reasonably
satisfactory to each party, and access to and the right to use its
billing system computers, software and related fixed assets in
connection with the Cablevision CATV Systems acquired by AT&T for a
period of up to 120 days following the Closing to allow for conversion
of existing billing arrangements. AT&T will notify Holdings at least 30
days prior to the expected Closing Date as to whether it desires such
transitional billing services from Holdings.
(b) AT&T will provide or cause to be provided to Holdings, upon
request, customer billing services and call center services, at a cost
to Holdings equal to AT&T's cost, and otherwise on terms and conditions
reasonably satisfactory to each party, and access to and the right to
use its billing system and call center computers, software, systems and
related fixed assets in connection with the AT&T CATV Systems acquired
by Holdings for a period of up to 120 days following the Closing to
allow for conversion of existing billing and call center arrangements.
Holdings will notify AT&T at least 30 days prior to the expected
Closing Date as to whether it desires such transitional billing and
call center services from AT&T.
9.06 Covenant Not to Compete.
(a) Holdings covenants and agrees that for a period of three years
after Closing (or, if the maximum period permitted by law is less than
three years, such shorter maximum period), Holdings will not, and will
cause its Subsidiaries, Cablevision Parent and all Subsidiaries of
Cablevision Parent not to directly or indirectly, acquire, manage,
operate or control, any terrestrial video cable television system,
multichannel multipoint distribution system ("MMDS"), satellite master
antenna system ("SMATV") or local
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multipoint distribution system ("LMDS") within the Cablevision Systems
Area (or, if the maximum area by law is smaller than the Cablevision
Systems Area, such smaller maximum area). Notwithstanding anything
contained herein, (i) the ownership of securities of any company that
is "publicly held" and that do not constitute more than 5% of the
voting rights or equity interests of such entity shall not constitute a
violation of this covenant, and (ii) this Section 9.06(a) shall not be
construed to restrict ownership acquisition, management, operation or
control of entities with respect to the direct broadcast satellite
business or wireless services business or ownership, acquisition,
management, operation or control of licenses relating to the foregoing,
regardless of the services provided by such entities or the spectrum
utilized by them.
In no way limiting the scope of the carve out in the immediately
preceding 9.06(a)(ii), but merely as a single example, Holdings or its
Subsidiaries would be free to provide wireless local loop services that
could include any distance voice and data services (including without
limitation, video services via the Internet).
(b) AT&T covenants and agrees that for a period of three years
after Closing (or, if the maximum period permitted by law is less than
three years, such shorter maximum period), AT&T will not, and will
cause its Subsidiaries not to, directly or indirectly, acquire, manage,
operate or control, any terrestrial video cable television system,
MMDS, SMATV or LMDS within the AT&T Systems Area (or, if the maximum
area by law is smaller than the AT&T Systems Area, such smaller maximum
area). Notwithstanding anything contained herein, (i) the ownership of
securities of any company that is "publicly held" and that do not
constitute more than five percent (5%) of the voting rights or equity
interests of such entity shall not constitute a violation of this
covenant and (ii) this Section 9.06(b) shall not be construed to
restrict ownership, acquisition, management, operation or control of
entities with respect to the direct broadcast satellite business or
wireless services business or ownership, acquisition, management,
operation or control of licenses relating to the foregoing, regardless
of the services provided by such entities or the spectrum utilized by
them.
In no way limiting the scope of the carve out in the immediately
preceding 9.06(b)(ii), but merely as a single example, AT&T or its
Subsidiaries would be free to provide wireless local loop services that
could include any distance voice and data services (including without
limitation, video services via the Internet).
(c) For the avoidance of doubt, notwithstanding anything in
Section 9.06(b), none of AT&T or any of its Subsidiaries or Affiliates
shall be required to propose, negotiate, commit to or effect the sale,
divestiture or disposition of, or any limitation or restriction with
respect to, any property, business, assets, licenses, franchises or
other rights of any current or future member of the Liberty Media Group
in order to comply with Section 9.06(b).
(d) None of AT&T or any AT&T Subsidiary shall act through any
current or future member of the Liberty Media Group in order to in any
way change, limit, circumvent or avoid any of its obligations under
Section 9.06(b).
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(e) The parties hereto each acknowledge that in view of the
uniqueness of the subject matter of this Section 9.06, a breach of the
provisions of this Section 9.06 may result in irreparable injury and
the parties would not have an adequate remedy at law for money damages
in the event that this Section 9.06 were not performed in accordance
with its terms. Therefore the parties hereto agree that each party
shall be entitled to specific enforcement of the terms of this Section
9.06 in addition to any other remedy to which a party may be entitled
at law or in equity.
9.07 Remaining Franchises.
(a) In the event that a Closing under this Agreement occurs
without the receipt of all consents and approvals to transfer all
franchises included in the Cablevision CATV Business, the AT&T Parties
and the Cablevision Entities covenant and agree to act in good faith to
obtain the approval or consent of any Governmental Authorities that
have not consented to the transfer of any franchises included in the
Cablevision CATV Business (a "Cablevision Retained Franchise"). The
parties will negotiate in good faith to reach an agreement on a
franchise included in the AT&T CATV Business that is to the greatest
extent possible like kind to such Cablevision Retained Franchise for
purposes of Section 1031 of the Code and the applicable exchange (an
"AT&T Matching Franchise"). An AT&T Retained Franchise may also be an
AT&T Matching Franchise.
(b) In the event that a Closing under this Agreement occurs
without the receipt of all consents and approvals to transfer all
franchises included in the AT&T CATV Business, the AT&T Parties and the
Cablevision Entities covenant and agree to act in good faith to obtain
the approval or consent of any Governmental Authorities that have not
consented to the transfer of any franchises included in the AT&T CATV
Business (an "AT&T Retained Franchise"). The parties will negotiate in
good faith to reach an agreement on a franchise included in the
Cablevision CATV Business that is to the greatest extent possible like
kind to such AT&T Retained Franchise for purposes of Section 1031 of
the Code and the applicable exchange (a "Cablevision Matching
Franchise"). A Cablevision Retained Franchise may also be a Cablevision
Matching Franchise.
(c) The parties shall negotiate in good faith to reach agreement
on one or more operating agreements pursuant to which the intended
transferee of each Retained Franchise and Matching Franchise will
operate such Retained Franchise and Matching Franchise to the extent
not prohibited under the terms thereof, and for compensation as may be
agreed upon, which operating agreements shall also contain any required
signal sharing arrangements that the parties, each acting in good
faith, may determine to be needed (the "Operating Agreements").
(d) At the Closing, the applicable Cablevision Sellers, on the one
hand, and the applicable AT&T Seller, on the other hand, shall
transfer, convey and assign (the "Primary Transfer") all of the AT&T
Assets other than any AT&T Retained Franchises and AT&T Matching
Franchises and all of the Cablevision Assets other than any Cablevision
Retained Franchises and Cablevision Matching Franchises.
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(e) Following the Closing of the Primary Transfer, the parties
will continue to use commercially reasonable efforts to obtain on an
expedited basis the required consents for all AT&T Retained Franchises
and Cablevision Retained Franchises. The Operating Agreements will
contain mutually acceptable terms regarding the post-Closing exchange
or transfer (each, a "Subsequent Transfer") of the Retained Franchises
and Matching Franchises after the receipt or failure to receive the
required consents applicable to such Retained Franchises and Matching
Franchises.
(f) All references in this Agreement to the Closing and the
Closing Date will mean the Closing and Closing Date of the Primary
Transfer except as specifically provided otherwise in this Section
9.07(f). Without limiting the foregoing, all representations and
warranties (except as to those required consents that have not been
obtained) made in connection with the Retained Franchises and the
Matching Franchises will be made as of the Closing Date rather than the
date of the Subsequent Transfer, the other covenants in Article 5 will
not apply to the Retained Franchises or the Matching Franchises
following the Closing Date, and the Survival Period applicable under
Section 10.01 for all such representations, warranties and covenants
will accrue from the Closing Date; provided that the parties will
negotiate in good faith to include appropriate covenants in the
Operating Agreements that will apply to the Retained Franchises and the
Matching Franchises following Closing. The closing conditions in
Articles 7 and 8 will not apply to any Retained Franchise or Matching
Franchise transfer; provided that the parties will negotiate in good
faith to include appropriate conditions to the later transfer of the
Retained Franchises and the Matching Franchises in the Operating
Agreements. Notwithstanding the foregoing, the adjustments provided for
in Section 2.06 will be made as of the Closing Date for both the
Retained Franchises and the Matching Franchises.
(g) If the provisions of this Section 9.07 become operative, the
parties agree to use commercially reasonable efforts and act in good
faith in taking such actions and negotiating such additional provisions
or other agreements, including amendments to this Agreement, as may be
necessary or appropriate to carry out the intent of this Section 9.07,
including keeping franchise transfers effective.
10. SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND OTHER
AGREEMENTS; INDEMNIFICATION.
10.01 Survival of Representations, Warranties, Covenants and Other
Agreements. All representations, warranties, covenants and agreements (other
than the covenants and agreements which by their terms are to be performed after
the Closing Date) made by the Cablevision Entities and the AT&T Parties in this
Agreement shall survive the Closing for a period of six months, and shall
thereafter terminate, except that Sections 3.06(d) and 4.06(d) shall survive the
Closing for a period of two years and Sections 3.05, 3.06(a), 4.05 and 4.06(a)
shall survive until 30 days after the expiration of the applicable statute of
limitations periods. Covenants and agreements to be performed by their terms
following the Closing shall survive in accordance with their terms.
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10.02 Indemnification by the Cablevision Sellers.
(a) Indemnity. Subject to Section 10.01, following the Closing,
the Cablevision Sellers, jointly and severally, agree to indemnify,
defend and hold harmless AT&T, its affiliates and its respective
shareholders, directors, officers, partners, employees, agents,
successors and assigns (a "Cablevision Indemnified Party"), from and
against all losses, damages, liabilities, deficiencies or obligations,
including, without limitation, all claims, actions, suits, proceedings,
demands, judgments, assessments, fines, interest, penalties, costs and
expenses (including, without limitation, settlement costs and
reasonable legal fees) (collectively, "Losses") to which they may
become subject as a direct result of (i) any and all misrepresentations
or breaches of a representation or warranty of the Cablevision Entities
herein or the nonperformance or breach of any covenants or agreements
of the Cablevision Entities contained herein, (ii) the ownership and
operation of the AT&T Assets and the AT&T CATV Business after the
Closing, including the Cablevision Assumed Liabilities, or (iii) the
ownership and operation of the Cablevision Assets and the Cablevision
CATV Business before the Closing. Any notice of a claim for
indemnification pursuant to Section 10.02(a)(i) must be made in writing
prior to the expiration of the applicable representation, warranty,
covenant or agreement under Section 10.01.
(b) Payment. Any obligations of the Cablevision Sellers under the
provisions of this Article 10 shall be paid in cash promptly to a
Cablevision Indemnified Party by the Cablevision Sellers and shall
represent a retrospective adjustment to the Exchange 1 Cash
Consideration or the Exchange 2 Cash Consideration, as applicable. The
amount of such payment (and adjustment) shall be equal to the amount of
the Loss incurred by the Cablevision Indemnified Party on account of
the matter for which indemnification is required hereunder less any
payments made or to be made to the Cablevision Indemnified Party under
any insurance, indemnity or similar policy or arrangement.
Notwithstanding anything contained herein to the contrary, the
indemnification provided above in Section 10.02(a)(i) shall not apply:
(i) to misrepresentations or breaches of representations or warranties
of the Cablevision Entities or the nonperformance or breach of any of
the covenants or agreements of the Cablevision Entities (other than any
nonperformance or breach of the Cablevision Special Indemnity Covenants
(as defined below)) until after the aggregate of all such amounts
subject to indemnification or payment (as a result of such
misrepresentation, breach or nonperformance of the Cablevision
Entities)(and excluding any amounts attributable to any nonperformance
or breaches of the Cablevision Special Indemnity Covenants hereunder)
by the Cablevision Entities under this Section 10.02(b)(i) and by
Holdings under Section 10.02(b)(i) of the Merger Agreement (and
excluding any amounts attributable to any nonperformance or breaches of
the Cablevision Special Indemnity Covenants thereunder) exceeds
$9,000,000 and shall only apply to amounts above $9,000,000; and (ii)
to the nonperformance or breach between the date hereof and the Closing
Date of any of the covenants or agreements of the Cablevision Entities
set forth in Sections 5.01(a) through (g), 5.01(h)(i) through (vi),
5.01(h)(ix) (as applied to agreements to do any matters in Section
5.01(h)(i) through (vi)), and 5.05(a) (the "Cablevision Special
Indemnity Covenants") until the aggregate of all such amounts
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subject to indemnification or payment (as a result of the
nonperformance or breach of the Cablevision Special Indemnity Covenants
under this Section 10.02(b)(ii), and Section 10.02(b)(ii) of the Merger
Agreement) exceeds $250,000 and shall only apply to amounts above
$250,000; provided, that in the event a claim arises with respect to an
item covered by both Section 10.02(b)(i) and Section 10.02(b)(ii), the
$9,000,000 threshold shall apply to the claim under Section 10.02(b)(i)
and the $250,000 threshold shall apply to the claim under Section
10.02(b)(ii), without duplication. The maximum aggregate amount that
the Cablevision Sellers and their Affiliates will be required to pay
under this Section 10.02 and under Section 10.02 of the Merger
Agreement in respect of all claims by all parties under both agreements
is $90,000,000. Notwithstanding the preceding, (x) neither the minimum
nor maximum limits specified in this Section 10.02 shall apply to the
indemnity with respect to Cablevision Assumed Liabilities, Taxes or the
obligation to pay post-Closing adjustments pursuant to Section 2.04 or
2.05 and (y) the maximum $90,000,000 limit specified in this Section
10.02 shall not apply to claims under Section 5.01(h)(ii).
(c) Sole Remedy. In no event will a claim to be indemnified by the
Cablevision Sellers under the Merger Agreement be entitled to
indemnification by the Cablevision Sellers under this Agreement. AT&T
further acknowledges and agrees that, should the Closing occur, its
sole and exclusive remedy with respect to any misrepresentation or
breach of the representations and warranties of the Cablevision
Entities herein or the nonperformance or breach of any covenants or
agreements of the Cablevision Entities herein (other than covenants or
agreements which by their terms are to be performed after the Closing
Date) shall be against the Cablevision Sellers pursuant to the
indemnification provisions set forth in this Section 10.02. In
furtherance of the foregoing, AT&T hereby waives, from and after the
Closing, to the fullest extent permitted under applicable law, any and
all rights, claims and causes of action it may have against the
Cablevision Sellers and their respective affiliates relating to the
subject matter of this Agreement arising under or based upon any
federal, State, local or foreign statute, law, ordinance, rule or
regulation or otherwise (except pursuant to the indemnification
provisions set forth in this Article 10 and under Article 10 of the
Merger Agreement and except for its right to seek another remedy under
Section 9.06).
10.03 Indemnification by the AT&T Sellers and the AT&T Designated
Subsidiary.
(a) Indemnity. Subject to Section 10.01, following the Closing,
the AT&T Sellers and the AT&T Designated Subsidiary, if applicable,
jointly and severally, agree to indemnify, defend and hold harmless
Holdings, its affiliates and its respective shareholders, directors,
officers, partners, employees, agents, successors and assigns (an "AT&T
Indemnified Party"), from and against all Losses to which they may
become subject as a direct result of (i) any and all misrepresentations
or breaches of a representation or warranty of the AT&T Parties herein
or the nonperformance or breach of any covenants or agreements of the
AT&T Parties contained herein, (ii) the ownership and operation of the
Cablevision Assets and the Cablevision CATV Business after the Closing,
including the AT&T Assumed Liabilities, or (iii) the MediaOne Social
Contract or the ownership and operation of the AT&T Assets and the AT&T
CATV Business
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before the Closing. Any notice of a claim for indemnification pursuant
to Section 10.03(a)(i) must be made in writing prior to the expiration
of the applicable representation, warranty, covenant or agreement under
Section 10.01.
(b) Payment. Any obligations of the AT&T Sellers and the AT&T
Designated Subsidiary under the provisions of this Article 10 shall be
paid promptly in cash to an AT&T Indemnified Party by the AT&T Sellers
and the AT&T Designated Subsidiary and shall represent a retrospective
adjustment to the Exchange 1 Cash Consideration or the Exchange 2 Cash
Consideration, as applicable. The amount of such payment (and
adjustment) shall be equal to the amount of the Loss incurred by the
AT&T Indemnified Party on account of the matter for which
indemnification is required hereunder less any payments made or to be
made to the AT&T Indemnified Party under any insurance, indemnity or
similar policy or arrangement. Notwithstanding anything contained
herein to the contrary, the indemnification provided above in Section
10.03(a)(i) shall not apply: (i) to misrepresentations or breaches of
representations or warranties of the AT&T Parties or the nonperformance
or breach of any of the covenants or agreements of the AT&T Parties
(other than any nonperformance or breach of the AT&T Special Indemnity
Covenants (as defined below)) until after the aggregate of all amounts
subject to indemnification or payment (as a result of such
misrepresentation, breach or nonperformance of the AT&T Parties) by the
AT&T Sellers and the AT&T Designated Subsidiary, if applicable, under
this Section 10.03(b)(i) (and excluding any amounts attributable to any
nonperformance or breaches of the AT&T Special Indemnity Covenants
hereunder) and by AT&T under Section 10.03(b)(i) of the Merger
Agreement (and excluding any amounts attributable to any nonperformance
or breaches of the AT&T Special Indemnity Covenants thereunder) exceeds
$9,000,000 and shall only apply to amounts above $9,000,000; and (ii)
to the nonperformance or breach between the date hereof and the Closing
Date of any of the covenants or agreements of the AT&T Entities set
forth in Sections 5.02(a) through (g), 5.02(h)(i) through (vi),
5.01(h)(ix) (as applied to agreements to do any matters in Section
5.02(h)(i) through (vi)) and 5.05(b) (the "AT&T Special Indemnity
Covenants") until after the aggregate of all such amounts subject to
indemnification or payment (as a result of the nonperformance or breach
of the AT&T Special Indemnity Covenants under this Section 10.03(b)(ii)
and Section 10.03(b)(ii) of the Merger Agreement) exceeds $250,000 and
shall only apply to amounts above $250,000; provided, that in the event
a claim arises with respect to an item covered by both Section
10.03(b)(i) and Section 10.03(b)(ii), the $9,000,000 threshold shall
apply to the claim under Section 10.03(b)(i) and the $250,000 threshold
shall apply to the claim under Section 10.03(b)(ii), without
duplication. The maximum aggregate amount that the AT&T Sellers and the
AT&T Designated Subsidiaries and their Affiliates will be required to
pay under this Section 10.03 and under Section 10.03 of the Merger
Agreement in respect of all claims by all parties under both agreements
is $90,000,000. Notwithstanding the preceding, (x) neither the minimum
nor maximum limits specified in this Section shall apply to the
indemnity with respect to AT&T Assumed Liabilities, Taxes or the
obligation to pay post-Closing adjustments pursuant to Section 2.04 or
2.05 and (y) the maximum $90,000,000 limit specified in this Section
10.03 shall not apply to claims under Section 5.02(h)(ii).
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(c) Sole Remedy. In no event will a claim to be indemnified by the
AT&T Entities under the Merger Agreement be entitled to indemnification
by the AT&T Sellers and the AT&T Designated Subsidiaries under this
Agreement. Holdings further acknowledges and agrees that, should the
Closing occur, its sole and exclusive remedy with respect to any
misrepresentation or breach of the representations and warranties of
the AT&T Parties herein or the nonperformance or breach of any
covenants or agreements of the AT&T Parties herein (other than
covenants or agreements which by their terms are to be performed after
the Closing Date) shall be pursuant to the indemnification provisions
set forth in this Section 10.03. In furtherance of the foregoing,
Holdings hereby waives, from and after the Closing, to the fullest
extent permitted under applicable law, any and all rights, claims and
causes of action it may have against the AT&T Parties and their
respective affiliates relating to the subject matter of this Agreement
arising under or based upon any federal, State, local or foreign
statute, law, ordinance, rule or regulation or otherwise (except
pursuant to the indemnification provisions set forth in this Article 10
and under Article 10 of the Merger Agreement and except for its right
to seek another remedy under Section 9.06).
10.04 Third Party Claims. If any claim ("Asserted Claim") covered by
the foregoing indemnities is asserted against any indemnified party
("Indemnitee"), it shall be a condition to the obligations under this Article 10
that Indemnitee shall promptly give the indemnifying party ("Indemnitor") notice
thereof in accordance with Section 13.06. The failure to give such prompt notice
will not relieve Indemnitor of its indemnity obligations hereunder with respect
thereto, except to the extent that Indemnitor is materially prejudiced by such
failure. Indemnitee shall give Indemnitor an opportunity to control negotiations
toward resolution of such claim without the necessity of litigation, and, if
litigation ensues, to defend the same with counsel reasonably acceptable to
Indemnitee, at Indemnitor's expense, and Indemnitee shall extend reasonable
cooperation in connection with such defense. If Indemnitor fails to assume
control of the negotiations prior to litigation or to defend such action within
a reasonable time, Indemnitee shall be entitled, but not obligated, to assume
control of such negotiations or defense of such action, and Indemnitor shall be
liable to Indemnitee for its expenses reasonably incurred in connection
therewith, which Indemnitor shall promptly pay. Neither Indemnitor nor
Indemnitee shall settle, compromise, or make any other disposition of any
Asserted Claims that would or might result in any liability to Indemnitee or
Indemnitor, respectively, under this Article 10 without the written consent of
Indemnitee or Indemnitor, respectively, which shall not be unreasonably
withheld. In addition, Indemnitor will not settle, compromise or make any other
disposition of any Asserted Claim unless (a) such settlement or compromise
includes as an unconditional term thereof the giving by the claimant or
plaintiff to Indemnitee of a release from all liability with respect to such
Asserted Claim, (b) injunctive or other equitable relief would not be imposed
against Indemnitee as a result thereof, or (c) such settlement or compromise
would not increase the liability of Indemnitee for the payment of any Tax for
any period.
11. FURTHER ASSURANCES.
From time to time after the Closing, each party will execute and
deliver such other instruments of conveyance and transfer, fully cooperate with
the other party and take such other
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actions as the other party reasonably may request to effect the purposes and
intent of this Agreement.
12. CLOSING.
12.01 Closing. The Closing shall take place contemporaneously with the
closing of the transactions under the Merger Agreement, at the offices of
Holdings' outside counsel at 10:00 a.m., local time, on the tenth Business Day
after all the conditions to the Closing as provided in Articles 7 and 8 (other
than deliveries or other actions to be taken at Closing) and all the conditions
to the Closing under the Merger Agreement provided in Articles 7 and 8 thereof
(other than deliveries or other actions to be taken at the Closing under the
Merger Agreement) have been satisfied (or waived by the party entitled to the
benefit thereto) (the "Closing Date"). At the Closing, the parties hereto shall
execute and deliver all instruments and documents as shall be necessary in the
reasonable opinion of counsel for the respective parties to consummate the
transactions contemplated herein.
12.02 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) at any time, by the mutual written agreement of AT&T and
Holdings;
(b) by AT&T, upon and effective as of the date of written notice
to Holdings, pursuant to the termination provision of Section
5.01(h)(vii);
(c) by Holdings, upon and effective as of the date of written
notice to AT&T, pursuant to the termination provisions of 5.02(h)(vii);
(d) by Holdings or AT&T, upon and effective as of the date of
written notice to the other, pursuant to the termination provisions of
Section 9.02;
(e) by Holdings or AT&T, upon written notice to the other, if the
Closing has not occurred prior to April 18, 2001 (the "Outside Closing
Date"), for any reason other than a material breach or default by such
party or its affiliates of their respective covenants, agreements or
other obligations under this Agreement; or
(f) by Holdings or AT&T upon the termination of the Merger
Agreement in accordance with its terms for any reason other than a
material breach or default by such party or any of its affiliates of
their respective covenants, agreements or other obligations under the
Merger Agreement.
12.03 Remedies Upon Default. Termination of this Agreement under
Section 12.02 (b) through (f) will not impair any remedies any party may have
with respect to the breach by any of the other parties of their respective
obligations under this Agreement. Notwithstanding a party's right to pursue
remedies for breach of contract upon termination of this Agreement in accordance
with Section 12.02, no remedies for breaches of representations and warranties
will be available if this Agreement is terminated in accordance with Section
12.02.
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13. MISCELLANEOUS.
13.01 Amendments; Waivers. This Agreement cannot be changed or
terminated orally and no waiver of compliance with any provision or condition
hereof and no consent provided for herein shall be effective unless evidenced by
an instrument in writing duly executed by the party hereto sought to be charged
with such waiver or consent. No waiver of any term or provision hereof shall be
construed as a further or continuing waiver of such term or provision or any
other term or provision. Any condition to the performance of any party hereto
which may legally be waived at or prior to the Closing may be waived in writing
at any time by the party or parties entitled to the benefit thereof.
13.02 Entire Agreement. This Agreement sets forth the entire
understanding and agreement of the parties and supersedes any and all prior
agreements, memoranda, arrangements and understandings relating to the subject
matter hereof other than the Confidentiality Agreement referred to in Section
5.05(a), the Merger Agreement and any other agreement or document executed on or
prior to the date of this Agreement that expressly refers to this Section 13.02.
No representation, warranty, promise, inducement or statement of intention has
been made by any party which is not contained in this Agreement, and no party
shall be bound by, or be liable for, any alleged representation, promise,
inducement or statement of intention not contained herein or therein.
13.03 Names.
(a) The parties agree that Holdings and its affiliates shall
retain the right to use the names "Cablevision," "Cablevision Systems,"
"Optimum," "Optimum Cable," "Optimum TV" or any and all derivations
thereof and after the Closing, AT&T shall remove or delete the names
"Cablevision," "Cablevision Systems," "Optimum," "Optimum Cable,"
"Optimum TV" or any and all derivations thereof from the Cablevision
Assets as soon as reasonably practicable but in any event by the 120th
day following the Closing. From and after the 120th day following the
Closing, Holdings and its affiliates shall retain all of their right,
title and interest in and to the names "Cablevision," "Cablevision
Systems," "Optimum," "Optimum Cable," "Optimum TV" and any and all
derivations thereof. Notwithstanding the foregoing, nothing in this
Section 13.03(a) will require any party to remove or discontinue using
any such name or mark that is affixed to converters or other items in
or to be used in consumer homes or properties, or as are used in a
similar fashion making such removal or discontinuation impracticable.
(b) The parties agree that AT&T and its affiliates shall retain
the right to use the names "AT&T," "MediaOne," "Continental
Cablevision," "U.S. Cablevision," "American Cablesystems" or any and
all derivations thereof and after the Closing, Holdings shall remove or
delete the names "AT&T," "MediaOne," "Continental Cablevision," "U.S.
Cablevision," "American Cablesystems" or any and all derivations
thereof from the AT&T Assets as soon as reasonably practicable but in
any event by the 120th day following the Closing. From and after the
120th day following the Closing,
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AT&T and its affiliates shall retain all of their right, title and
interest in and to the names "AT&T," "MediaOne," "Continental
Cablevision," "U.S. Cablevision," "American Cablesystems" and any and
all derivations thereof. Notwithstanding the foregoing, nothing in this
Section 13.03(b) will require any party to remove or discontinue using
any such name or mark that is affixed to converters or other items in
or to be used in consumer homes or properties, or as are used in a
similar fashion making such removal or discontinuation impracticable.
13.04 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement may not be assigned by any party without the
prior written consent of the other parties hereto; provided, however, that any
party may assign any or all of its rights or obligations under this Agreement to
any Person that is a wholly owned subsidiary of such party; but only if such
assignment will not give rise to any material requirements for additional
required consents, and will not, in the reasonable judgment of the other party,
delay the Closing or affect the tax treatment of the transaction contemplated
herein. In addition, a party may assign any or all of its rights or obligations
under this Agreement to a "qualified intermediary" engaged by such party to
effectuate a deferred like-kind exchange under Section 1031 of the Code, and the
other parties agree in connection with such an assignment to take such actions
and execute such documents as may be reasonably requested by the assigning party
in order to facilitate such party's intent to effectuate a deferred like-kind
exchange. In addition, AT&T may assign the obligation to acquire the Cablevision
Assets owned by CSC Brookline to an AT&T Designated Subsidiary by giving notice
to such effect in accordance with Section 13.06 hereof. No assignment will
relieve an assigning party of its agreements and obligations hereunder.
Notwithstanding the foregoing, after the Closing (i) neither Cablevision Seller
will, directly or indirectly, sell, convey, transfer or otherwise dispose of all
or substantially all of its assets (in one transaction or a series of related
transactions) to any Person, or liquidate or dissolve unless in connection with
such transaction the obligations of such Cablevision Seller under this Agreement
are assumed in writing by either (a) the Person that acquires or succeeds to all
or substantially all of such Cablevision Seller's assets or (b) Cablevision
Systems Corporation and (ii) neither AT&T Seller nor the AT&T Designated
Subsidiary (if applicable) will, directly or indirectly, sell, convey, transfer
or otherwise dispose of all or substantially all of its assets (in one
transaction or a series of related transactions) to any Person, or liquidate or
dissolve unless in connection with such transaction the obligations of such AT&T
Seller or the AT&T Designated Subsidiary, as applicable, under this Agreement
are assumed in writing by either (a) the Person that acquires or succeeds to all
or substantially all of such AT&T Seller's or the AT&T Designated Subsidiary's
assets or (b) AT&T Corp.
13.05 Construction; Counterparts. The Article and Section headings of
this Agreement are for convenience of reference only and do not form a part
hereof and do not in any way modify, interpret or construe the intentions of the
parties. This Agreement may be executed in one or more counterparts, and all
such counterparts shall constitute one and the same instrument.
13.06 Notices. All notices and communications hereunder shall be in
writing and shall be deemed to have been duly given to a party when delivered in
person, faxed (with confirmation) or three Business Days after such notice is
enclosed in a properly sealed envelope, certified or
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registered, and deposited (postage and certification or registration prepaid) in
a post office or collection facility regularly maintained by the United States
Postal Service, or one Business Day after delivery to a nationally recognized
overnight courier service, and addressed as follows:
If to Holdings or any other Cablevision Entity:
c/o Cablevision Systems Corporation
1111 Stewart Avenue
Bethpage, New York 11714
Telephone: (516) 803-2300
Facsimile: (516) 803-2577
Attention: General Counsel
copies to: Cablevision Systems Corporation
1111 Stewart Avenue
Bethpage, New York 11714
Telephone: (516) 803-2300
Facsimile: (516) 803-2577
Attention: General Counsel
and
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Facsimile: (212) 558-3588
Attention: John P. Mead
If to AT&T or any other AT&T Party:
c/o AT&T Broadband
9197 Peoria Street
Englewood, Colorado 80112
Telephone: (720) 875-4723
Facsimile: (720) 875-5396
Attention: Carol O'Keeffe
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920
Attention: Marilyn Wasser, Esq.
Corporate Secretary
Telephone: (908) 221-6600
Facsimile: (908) 221-6618
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copies to: Sherman & Howard L.L.C.
633 17th Street, Suite 3000
Denver, Colorado 80202
Telephone: (303) 299-8134
Facsimile: (303) 298-0940
Attention: Arlene S. Bobrow, Esq.
Any party may change its address for the purpose of notice by giving notice in
accordance with the provisions of this Section 13.06.
13.07 Expenses of the Parties. Except as otherwise provided herein, all
expenses incurred by or on behalf of the parties hereto in connection with the
authorization, preparation and consummation of this Agreement, including,
without limitation, all fees and expenses of agents, representatives, counsel
and accountants employed by the parties hereto in connection with the
authorization, preparation, execution and consummation of this Agreement shall
be borne solely by Holdings, in the case of all such items incurred by the
Cablevision Entities, or by AT&T, in the case of all such items incurred by the
AT&T Entities.
13.08 Non-Recourse. No partner, officer, director, shareholder or other
holder of an ownership interest of or in any party to this Agreement shall have
any personal liability in respect of any such party's obligations under this
Agreement by reason of his or its status as such partner, officer, director,
shareholder or other holder.
13.09 Third Party Beneficiary. This Agreement is entered into only for
the benefit of the parties and their respective successors and assigns, and
nothing hereunder shall be deemed to constitute any person a third party
beneficiary to this Agreement except as expressly provided to the contrary in
Article 10.
13.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS, AND NOT THE LAW OF
CONFLICTS, OF THE STATE OF NEW YORK.
13.11 Press Releases. No press release or other public information
relating to the purchase and sale contemplated in this Agreement shall be made
or disclosed by any party hereto without the consent of the other parties;
provided, however, that any party may disclose such information if reasonably
deemed to be required by law by the legal counsel for such party; and provided
further that such party shall notify the other as soon as reasonably practicable
prior to the issuance of such press release.
13.12 Severability. If any provision of this Agreement is finally
determined to be illegal, void or unenforceable, such determination shall not,
of itself, nullify this Agreement, which shall continue in full force and effect
subject to the conditions and provisions hereof.
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13.13 Late Payments. If either party fails to pay the other any amounts
when due under this Agreement, the amounts due will bear interest from the due
date to the date of payment at the Prime Rate plus 2%, adjusted as when changes
in the Prime Rate are made; provided that this Section 13.13 shall not relieve
any party from any responsibility or liability for any breach of this Agreement.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CSC HOLDINGS, INC.
By: /s/ William J. Bell
---------------------------------
Name: William J. Bell
Title: Vice Chairman
CABLEVISION OF BROOKLINE, L.P.
By: /s/ William J. Bell
---------------------------------
Name: William J. Bell
Title: Vice Chairman
CABLEVISION OF BOSTON, INC.
By: /s/ William J. Bell
---------------------------------
Name: William J. Bell
Title: Vice Chairman
AT&T CORP.
By: /s/ Daniel Somers
---------------------------------
Name: Daniel Somers
Title: Senior Executive Vice
President
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