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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): May 31, 1996
Century Communications Corp.
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(Exact name of registrant as specified in its charter)
1-9676
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(Commission File Number)
New Jersey 06-1158179
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(State other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
50 Locust Avenue
New Canaan, Connecticut 06840
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(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (203) 972-2000
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(Former name or former address, if changed since last report)
Page 1 of __ Pages
Exhibit Index on Page 4
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Item 2. Acquisition or Disposition of Assets
(a) On May 31, 1996, Century Communications Corp. (the "Company")
acquired from ML Media Partners, L.P. (the "Seller") cable television systems
serving Anaheim, Hermosa Beach/Manhattan Beach, Fairfield and Rohnert
Park/Yountville, California (collectively, the "Systems") for an aggregate
purchase price of approximately $286 million (subject to post-closing
adjustment) in cash. The purchase price was determined by arms'-length
negotiations between the parties and was funded by available bank lines of
credit with Citibank, N.A., as agent. At May 31, 1996, such systems served an
aggregate of approximately 139,000 primary basic subscribers. The Company and
the Seller, through their respective subsidiaries, jointly own (50% each) a
joint venture that operates cable television systems in Puerto Rico.
(b) The assets of the Seller acquired by the Company consisted of those
assets related to the operation of the business of the Systems. The primary
tangible assets acquired were the property, plant and equipment used to provide
cable television services. The Company will continue to use such assets in the
manner in which they were previously used by the Seller.
Item 7. Financial Statements and Exhibits
(a),(b) Financial Statements of Business Acquired/Pro Forma Financial
Information.
It is impracticable for the Company to provide the required financial
statements for the ML California Cable Division of the Seller which includes the
Systems (the "Division") at the time of the filing of this Current Report on
Form 8-K primarily because financial statements for the Division were not
maintained and pro forma financial statements are not currently available. Due
to the complexity of preparing such financial statements and pro forma
information, the Company will require additional time to prepare such material.
The Company presently believes such information can be completed and filed under
cover of an amendment hereto within sixty (60) days after the due date of this
Current Report on Form 8-K.
Reference is made to the Company's Current Report on Form 8-K dated May
15, 1995 with respect to the Company's acquisition of the Systems which contains
further financial information with respect thereto.
(c) Exhibits.
(1) Asset Purchase Agreement, dated November 28, 1994, by and between ML
Media Partners, L.P. and Century Communications Corp.
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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 hereunto duly authorized.
CENTURY COMMUNICATIONS CORP.
By:/s/ Scott N. Schneider
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Name: Scott N. Schneider
Title: Senior Vice President, Treasurer
and Chief Accounting Officer
Date: June 13, 1996
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EXHIBIT INDEX
Exhibit No. Description
(1) Asset Purchase Agreement, dated November 28, 1994, by and between
ML Media Partners, L.P. and Century Communications Corp.
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ASSET PURCHASE AGREEMENT
November 28, 1994
The parties to this agreement are ML Media Partners, L.P., a Delaware
limited partnership (the "Seller"), and Century Communications Corp., a New
Jersey corporation (the "Buyer").
The Seller owns and operates the four cable television systems listed
on schedule 1 (the "Systems") serving the franchised areas listed on schedule
1.1(a). The Systems serve Northern California (the "Northern Systems") and
Southern California (the "Southern Systems"). The Seller desires to sell to the
Buyer all of the assets used in the operations of the Systems, either at one
closing of the Northern Systems and the Southern Systems or at two separate
closings of the Northern Systems and the Southern Systems, and the Buyer desires
to purchase those assets, on the terms and conditions contained in this
agreement.
Accordingly, it is agreed as follows:
1. Sale and Purchase of Assets.
1.1 Sale of Assets to Buyer. At one or two Closings (as defined
in section 3.1), the Seller shall sell and assign to the Buyer, and the
Buyer shall purchase and acquire from the Seller, all of the business of the
Seller relating to the Systems and all of the assets of the Seller used in the
operations of the Systems (excluding the assets referred to in section 1.2).
Except as otherwise provided in section 1.2, the assets of the Systems to be
sold and assigned (collectively, the "Assets") include, but are not limited to,
the following:
(a) all municipal, state and federal franchises, licenses,
permits and authorizations (and applications for any of them) relating to the
operations of the Systems, including, but not limited to, those listed on
schedule 1.1(a);
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(b) all equipment, inventory, supplies, vehicles,
furniture, fixtures and leasehold improvements, improvements on land being
acquired by the Buyer pursuant to section 1.1(c), and all other tangible
personal property, wherever located, which is owned by the Seller and used in
the operations of the Systems, including, but not limited to, the items listed
on schedule 1.1(b);
(c) all real property, including, but not limited to, the
property listed on schedule 1.1(c), and all rights of way, licenses, easements
and related rights of ingress and egress, including, but not limited to, those
listed on schedule 4.13;
(d) all rights of the Seller under leases, commitments and
other agreements relating to the operations of the Systems, to the extent that
those rights relate to the period after the applicable Closing Date (as defined
in section 3.1), including, but not limited to, (i) the leases, commitments and
other agreements listed on schedules 4.13 and 4.14 and (ii) any other leases,
commitments and other agreements relating to the operations of the Systems that
are entered into in accordance with the provisions of section 6.2 between the
date of this agreement and the applicable Closing Date;
(e) all accounts receivable relating to the Systems (the
"Accounts Receivable"), including, but not limited to, accounts receivable from
subscribers and for services or advertising time provided prior to the
applicable Determination Time (as defined in section 2.2(b));
(f) all computer software relating to the accounts of the
Systems, files, logs and other records and data relating to the operations of
the Systems, including, but not limited to, technical information and
engineering data, lists of subscribers, promotional materials and credit and
sales records, other than account books of original entry and general ledgers;
provided, however, that the Buyer shall maintain and make available to the
Seller for a period of six years from the
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applicable Closing Date copies of any such records that the Seller may require
for preparation of its income tax returns or other similar purposes; and
(g) all trademarks, trade names, logos, copyrights and
other intangible personal property relating to the operations of the Systems,
together with the goodwill of the business associated with those trademarks,
trade names, logos and copyrights.
1.2 Excluded Assets. The following assets used in the operations
of the Systems shall be retained by the Seller and shall not be sold or assigned
to the Buyer:
(a) all cash, certificates of deposit, commercial paper,
treasury bills and notes and all other marketable securities;
(b) any lease, commitment or other agreement (i) as to
which consent to assignment is required but has not been obtained or (ii) which
the Buyer does not assume the obligations under pursuant to section 2.2(a);
(c) all programming agreements other than those (i) listed
on schedule 1.2(c) or (ii) entered into in accordance with section 6.2 and which
the Buyer elects in writing to assume;
(d) the account books of original entry and general ledgers
and all partnership and similar records of the Seller, including tax returns;
(e) all furniture, fixtures, equipment, computers and
supplies located at the offices of MultiVision Cable TV Corp. ("MultiVision") in
Greenwich, Connecticut or New York, New York other than any assets specified in
section 1.1(f);
(f) the trade name "MultiVision", the related logo and any
rights in that name and logo and the logo and trademark described on schedule
1.2(f); provided, however, that Buyer may utilize the "MultiVision" name in a
transition period not to exceed 90 days from the applicable Closing Dates;
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(g) all of the employee benefit plans of the Seller; and
(h) any other assets of the Seller not used in the
operations of the Systems.
2. Purchase Price.
2.1 Deposit. Upon execution of this agreement, the Buyer is
delivering to Chemical Bank (the "Escrow Agent") the sum of $5,000,000 (the
"Deposit"), to be held by the Escrow Agent pursuant to the terms of an escrow
agreement in the form of exhibit 2.1 (which is being executed simultaneously
with the execution of this agreement) and subject to the following:
(a) If a Closing under this agreement is not consummated as
a result of a breach by the Buyer of any of its material obligations under this
agreement and the Seller is not in breach of any of its material obligations
under this agreement then, in addition to all other remedies that the Seller may
have under applicable laws as a result of such breach, the Seller shall be
entitled to the Deposit (together with all interest earned thereon); provided,
however, that if a Closing of only the Northern Systems or the Southern Systems
is not so consummated, then the Seller shall be entitled to 50% of the Deposit
(together with all interest earned thereon), unless as a result of such breach
the Seller also terminates this agreement with respect to the sale of all of the
Systems, in which event the Seller shall be entitled to all of the Deposit
(together with all interest earned thereon).
(b) If the purchase of the Assets under this agreement is
not consummated for any reason other than as set forth in section 2.1(a), the
Seller shall not be entitled to the Deposit and, promptly after the termination
of this agreement, the Deposit (together with all interest earned thereon) shall
be paid by the Escrow Agent to the Buyer.
(c) At a Closing of all of the Systems, the Deposit
(together with all interest earned thereon) shall be paid to the Seller as
partial payment of the purchase price for the
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Assets; at a Closing of the Northern Systems or the Southern Systems, 50% of the
Deposit (together with all interest earned thereon) shall be paid to the Seller
as partial payment of the purchase price for the Assets.
(d) The fees and expenses of the Escrow Agent shall be paid
50% by the Seller and 50% by the Buyer.
2.2 Amount of Consideration. As the purchase price for the Assets,
the Buyer shall pay to the Seller a base amount (the "Base Amount") equal to
$286,000,000 for the Systems (or $143,000,000 if only the Northern Systems are
transferred or $143,000,000 if only the Southern Systems are transferred),
subject to adjustment as provided in sections 2.2(b), (c) and (d).
(a) Liabilities of Seller.
(i) Certain Assumed Liabilities. At each Closing, the
Buyer shall assume, and shall agree to pay, perform and discharge and shall
agree to indemnify and hold the Seller harmless from (A) all of the obligations
and liabilities of the Seller as of the applicable Determination Time that
relate to the operations of the Systems transferred at that Closing that would
be required to be reflected on a balance sheet of the Systems transferred at
that Closing as of that Determination Time prepared in accordance with generally
accepted accounting principles applied consistently with prior periods,
including, but not limited to, accounts payable, accrued expenses, taxes payable
(other than income taxes) and obligations to provide cable services after that
Determination Time for which payment has been made prior to that Determination
Time, but only to the extent that such obligations and liabilities are reflected
in the adjustment of the purchase price pursuant to section 2.2(b) (the "Assumed
Liabilities"), and (B) all of the obligations and liabilities of the Seller
relating to the Systems transferred at that Closing arising after and relating
to the period after that Determination Time under those leases, commitments and
other agreements relating to the operations of the Systems transferred
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at that Closing that are assigned to the Buyer pursuant to section 1.1(d) (the
"Contract Liabilities").
(ii) Other Assumed Liabilities. At each Closing, the
Buyer shall assume, and shall agree to pay, perform and discharge, but shall
nevertheless be indemnified therefor by the Seller pursuant to section 9, any
other liabilities or obligations of the Seller relating to the Systems
transferred at that Closing as of that Determination Time that arose in the
ordinary course of the business of the Systems transferred at that Closing,
including, but not limited to, the obligation to defend, and any liability
pursuant to, the litigations set forth on schedule 2.2(a)(ii) ("Other
Liabilities").
(iii) Excluded Liabilities. Buyer shall not assume, and
shall not pay, perform or discharge, (x) the litigations set forth on schedule
2.2(a)(iii), (y) any litigation that arises between the date of this agreement
and the applicable Closing Date, except to the extent, if any, that the Buyer
and the Seller shall, after negotiating in good faith, agree otherwise, and (z)
any other liabilities or obligations as of that Determination Time known to
Seller and not disclosed to Buyer or any other liabilities or obligations as of
that Determination Time that Seller should have known using reasonable care in
operating the Systems ("Excluded Liabilities").
(iv) Potential Refund Liability. Notwithstanding the
foregoing provisions of this section 2.2(a), the Seller shall retain, and shall
satisfy in full, any liability or obligation to provide refunds (the "Potential
Refund Liability") after the applicable Closing Date(s) to subscribers to any of
the Systems (a) with respect to a la carte services and tier services, if any,
provided to subscribers prior to the Closing Date for the transfer of those
Systems, or with respect to any other rates or charges of the Seller affected
thereby, or (b) if any rates charged to basic subscribers during the period
prior to the Closing Date for the transfer of those Systems
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exceeded the amount permitted by applicable law and regulation. The Buyer shall
not make any such refund prior to a final determination (as defined in section
2.2(d)(iii)) without the prior written consent of the Seller.
(b) Working Capital Adjustment.
(i) If the aggregate amount of the Assumed Liabilities
as of the applicable Determination Time(s) (other than accrued vacation pay or
severance pay to the extent the Seller has retained such liabilities or the
Buyer has agreed to assume such liabilities pursuant to section 6.8(a)) exceeds
the aggregate amount of the Current Assets (as defined below) as of the
applicable Determination Time(s), the Base Amount shall be decreased by an
amount equal to that excess.
(ii) If the aggregate amount of the Current Assets as
of the applicable Determination Time(s) exceeds the aggregate amount of the
Assumed Liabilities as of the applicable Determination Time(s) (other than
accrued vacation pay or severance pay to the extent the Seller has retained such
liabilities or the Buyer has agreed to assume such liabilities pursuant to
section 6.8(a)), the Base Amount shall be increased by an amount equal to that
excess.
As used in this agreement, "Current Assets" means the
Accounts Receivable, prepaid expenses and other current assets (excluding cash,
certificates of deposit, commercial paper, treasury bills and notes and all
other marketable securities described in section 1.2(a) and inventory)
determined in accordance with generally accepted accounting principles relating
to the Systems transferred at any Closing, and "Determination Time" with respect
to the Systems transferred at any Closing means the close of business on the day
preceding the Closing of the sale of those Systems. For the purpose of
calculating Current Assets, each Account Receivable shall be valued at 100% of
its face amount if the receivable has been outstanding for 31 days or less, 90%
of its face amount if the receivable has been outstanding for more than 31 days
and 62 days
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or less, 50% of its face amount if the receivable has been outstanding for more
than 62 days and 93 days or less, and 0% of its face value if the receivable
has been outstanding for more than 93 days.
(c) Operating Cash Flow Adjustment.
If the aggregate Operating Cash Flow (as defined below)
of the Systems for the 12-month period(s) ending on the applicable Calculation
Date(s) (as defined below) is less than $26,000,000 (or $13,000,000 if only the
Northern Systems are transferred or $13,000,000 if only the Southern Systems are
transferred), then, subject to the provisos in sections 10.1(e) and 10.2, the
Base Amount shall be reduced by an amount equal to 11 times the shortfall. As
used in this agreement, (1) Operating Cash Flow of the Systems transferred at
any Closing for any 12-month period means an amount equal to the total revenues
of those Systems for that period less all operating expenses of those Systems
for that period other than interest, depreciation and amortization and other
non-cash charges, income taxes and management fees and expenses payable to the
Seller or to MultiVision (for services rendered of the same types as the
services rendered by them through September 30, 1994, except to the extent, if
any, that prior to September 30, 1994 any such services were rendered at the
Systems), determined in a manner consistent with the determination of Operating
Cash Flow as shown on the unaudited statements of operations of the Systems for
the year ended December 31, 1993, subject to adjustment for any A la Carte
Revenue Loss (as defined in section 2.2(d)(i)) and any other loss of revenue or
increase in costs after the date of this agreement to the extent set forth below
in section 2.2(d), and (2) the Calculation Date with respect to the Systems
transferred at any Closing means the last day of the second calendar month
preceding the Determination Time with respect to those Systems if the
Determination Time is on or before the 15th day of the month and the last day of
the calendar month preceding the Determination Time if the Determination Time is
after the 15th
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day of the month. As an example, if the Northern Systems are transferred at a
Closing on February 20, 1995 and the Southern Systems are transferred at a
Closing on June 10, 1995, the Operating Cash Flow of the Northern Systems shall
be determined for the 12-month period ending January 31, 1995 and the Operating
Cash Flow of the Southern Systems shall be determined for the 12-month period
ending April 30, 1995, and the aggregate Operating Cash Flow of the Systems
shall be the sum of those two Operating Cash Flows.
(d) Adjustment for Reduction in Regulated Revenues.
(i) A la Carte. If at any time after the date of this
agreement it is finally determined (as provided below) that the revenues of the
Systems derived from the a la carte services described on schedule 2.2(d)(1),
together with any related reduction of revenues from basic services as a result
of the determination with respect to the revenues from such a la carte services,
for the 12-month period(s) ending on the applicable Calculation Date(s) are
reduced as a result, directly or indirectly, of any action or determination by
the Commission (as defined in section 4.9), any Municipal Authority (as defined
in section 4.9) listed on schedule 2.2(d)(2) or any other Municipal Authority
that prior to the Closing Date commences (or gives official notice or notice to
the Seller of its intention to commence) proceedings to determine whether an a
la carte service constitutes a regulated tier, including, but not limited to,
(1) a determination that any a la carte service should be a regulated tier, (2)
a determination that any a la carte service did not comply with the requirements
for an a la carte service, (3) any restrictions imposed on the price that may be
charged for any a la carte service, or (4) any additional restrictions imposed
on the marketing of any a la carte service (such reduction in revenues from a la
carte services, together with any related reduction in revenues from basic
services, an "A la Carte Revenue Loss"), then the Operating Cash Flow of the
Systems for the 12-
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month period ending on the Calculation Date shall be recalculated to reflect
such A la Carte Revenue Loss (calculated as provided in the last sentence of
section 2.2(d)(ii) below). Notwithstanding the foregoing, the maximum reduction
in Operating Cash Flow from an A la Carte Revenue Loss shall be $2,181,818 (so
that the maximum reduction in the Base Amount resulting from an A la Carte
Revenue Loss shall be $24,000,000); provided, however, that if only the Northern
Systems are transferred, the maximum reduction in Operating Cash Flow shall be
$1,454,545, so that the maximum reduction in the Base Amount resulting therefrom
shall be $16,000,000, and if only the Southern Systems are transferred, the
maximum reduction in Operating Cash Flow shall be $727,273, so that the maximum
reduction in the Base Amount resulting therefrom shall be $8,000,000. The
reduction in Operating Cash Flow resulting from any A la Carte Revenue Loss
shall be an amount equal to the A la Carte Revenue Loss less any related
increase in regulated revenues and less the reduction in programming expenses,
franchise fees, copyright fees and other expenses the amount of which are
calculated and payable based upon a proportional relationship to revenue.
(ii) Basic Cable Rates. For purposes of calculating
Operating Cash Flow, if it is finally determined (as provided below) that the
basic rates reflected in the Form 393's or 1200's filed by the Seller were
calculated incorrectly or were calculated in violation of Existing Governmental
Regulations (as defined below), the Operating Cash Flow shall be recalculated
using such corrected rates. Notwithstanding anything to the contrary in this
agreement, any adjustment to Operating Cash Flow pursuant to section 2.2(d)(i)
or this section 2.2(d)(ii) shall only be made if the reduction continues to
effect Operating Cash Flow following the Closing, and in that event the
adjustment shall be made for the full 12-month period ending on the applicable
Calculation Date regardless of when during such 12-month period such adjustment
became effective.
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(iii) Final Determination. It shall be "finally
determined" that (w) there is a reduction in Operating Cash Flow resulting from
an A la Carte Revenue Loss, (x) the basic rates reflected in the Form 393's or
1200's filed by the Seller were calculated incorrectly or in violation of
Existing Governmental Regulations, (y) a refund is required for purposes of
section 2.2(a)(iv) or (z) any inflationary increase or external cost pass
through referred to in section 2.2(d)(v) is disapproved only after any such
determination is no longer subject to appeal, review, rehearing or
reconsideration by the Commission, any Municipal Authority or any court or after
the Seller agrees in writing to accept such determination.
(iv) Adjustments Regarding Further Rate Regulation. For
purposes of calculating Operating Cash Flow, any loss of revenue or increase in
costs due to the adoption of Additional Governmental Regulations (as defined
below) shall be excluded, including, but not limited to, the following
adjustments: (1) there shall be added to Operating Cash Flow an amount equal to
any reduction in revenue resulting from any Additional Governmental Regulations,
(2) any increase in expenses as a result of any Additional Governmental
Regulations shall not be taken into account, and (3) any additional roll-back in
rates that the Commission or any Municipal Authority may determine is required
to comply with the regulations adopted by it prior to the date of this agreement
shall not be taken into account. As used in this agreement, (a) "Additional
Governmental Regulations" are (1) new laws, regulations, rulings or policies
adopted by the Commission, any Municipal Authority or any other governmental
entity after the date of this agreement, (2) laws, regulations, rulings or
policies adopted after the date of this agreement modifying or amending laws,
regulations, rulings or policies adopted prior to the date of this agreement,
and (3) laws, regulations, rulings or policies adopted after the date of this
agreement which purport to interpret or clarify laws, regulations, rulings or
policies adopted prior to the date of
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this agreement but which are determined by the parties (or, if the parties are
unable to agree by an arbitrator designated by the Buyer and the Seller from the
Judicial Arbitration and Mediation Services in New York, New York (or if they
fail to agree, designated by the Judicial Arbitration and Mediation Services)
pursuant to the rules of the Judicial Arbitration and Mediation Services in New
York, New York) to not only interpret or clarify but to modify or amend laws,
regulations, rulings or policies adopted prior to the date of this agreement,
but excluding laws, regulations, rulings or policies relating to a la carte
services, whether adopted prior to or after the date of this agreement, and (b)
"Existing Governmental Regulations" are (1) laws, regulations, rulings or
policies adopted by the Commission, any Municipal Authority or any other
governmental entity prior to the date of this agreement, (2) laws, regulations,
rulings or policies adopted after the date of this agreement that only interpret
or clarify laws, regulations, rulings or policies adopted prior to the date of
this agreement as determined by the parties (or if the parties are unable to
agree by an arbitrator designated by the Buyer and the Seller from the Judicial
Arbitration and Mediation Services in New York, New York (or if they fail to
agree, designated by the Judicial Arbitration and Mediation Services) pursuant
to the rules of the Judicial Arbitration and Mediation Services in New York, New
York), and (3) laws, regulations, rulings or policies relating to a la carte
services, whether adopted prior to or after the date of this agreement.
(v) Other Adjustments. For purposes of calculating
Operating Cash Flow, (1) if the inflationary increases on regulated services for
which the Systems applied on October 1, 1994 are approved, they shall be deemed
effective (and revenues shall increase accordingly) as of December 1, 1994, with
the increase per channel based on the number of channels currently subject to
regulation, regardless of when such increases actually become effective, and (2)
if any "external
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cost pass throughs" to which the Systems are entitled under Existing
Governmental Regulations, including, but not limited to, programming cost
increases, are approved, they shall be deemed effective immediately upon
incurrence regardless of when the Systems are allowed to pass through such
costs, provided that if the Systems fail to apply for a "pass through" on the
earliest possible date, such "pass through" shall be deemed effective only upon
the date of application. In addition, for purposes of calculating Operating Cash
Flow, there shall also be excluded (1) any additional programming costs incurred
by the Systems resulting from the termination of MultiVision as the manager of
the Systems or the sale of Maryland Cable Corp., which was also managed by
MultiVision, (2) any additional employee benefit, accounting, legal,
administrative or other costs resulting from the termination of MultiVision as
the manager of the Systems or the sale of Maryland Cable Corp. that are (a)
payable to third parties or to additional employees hired at the Systems solely
for the purpose of performing services previously performed by MultiVision, or
(b) incurred at the Systems by employees of the Systems, but only to the extent
agreed upon by the Seller and the Buyer, or if they fail to agree, to the extent
determined by a "big 6" accounting firm designated by the Seller and the Buyer
(or if they fail to agree, by Ernst & Young), and (3) any incremental costs
incurred by the Systems in replacing Don Granger as Vice President-Regional
General Manager of the Southern Systems (or in hiring a person with the same
functional duties and responsibilities) in excess of the compensation paid to
Don Granger on the date of this agreement.
(e) Control of A la Carte Proceedings. Notwithstanding
anything to the contrary in this agreement, within 30 days prior to the first
(or only) closing, the Buyer and the Seller shall negotiate in good faith to
replace the adjustment to Operating Cash Flow resulting from an A la Carte
Revenue Loss provided for in section 2.2(d)(i) with a fixed reduction in the
Base Amount to reflect the risk of an A la Carte
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Revenue Loss based on the facts known with respect thereto at that time, but the
parties shall be under no obligation to reach agreement on such fixed reduction.
If despite their good faith negotiations, the Buyer and the Seller are unable to
agree on a fixed reduction in the Base Amount, the Buyer and the Seller shall
negotiate in good faith the manner in which and by whom any proceeding relating
to an A la Carte Revenue Loss shall be controlled or resolved. If despite their
good faith negotiations, the Buyer and the Seller are unable to agree on the
manner in which and by whom any such proceeding shall be controlled or resolved,
the Buyer and the Seller shall jointly control and resolve any such proceeding
(including the settlement of any such proceeding), and if they become deadlocked
the issue on which they become deadlocked shall be determined by an arbitrator
designated by Buyer and Seller from the Judicial Arbitration and Mediation
Services in New York, New York (or if they fail to agree, designated by the
Judicial Arbitration and Mediation Services) pursuant to the rules of the
Judicial Arbitration and Mediation Services in New York, New York.
(f) Accountants' Determination of Operating Cash Flow.
Within 120 days after the second (or only) Closing, or if only the Northern
Systems or the Southern Systems are transferred pursuant to the agreement,
within 120 days after the termination of this agreement with respect to the
other Systems, the Seller shall cause Deloitte & Touche (the "Accountants") to
prepare and deliver to the Seller and the Buyer a statement of the Current
Assets and Assumed Liabilities as of the applicable Determination Time(s), a
statement of the Operating Cash Flow of the Systems for the 12 month period(s)
ending on the applicable Calculation Date(s), adjusted as required by sections
2.2(c) and (d), and, if any inflationary increases or "external cost pass
throughs" referred to in section 2.2(d)(v) have not yet been approved or finally
determined to be disapproved, assuming such increases or pass throughs had been
approved (subject to recalculation after the Closing pursuant to section
9.5(b)), and
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a statement of the aggregate amount of the adjustments to the Base Amount to be
made pursuant to sections 2.2(b), (c) and (d). The Accountants' statements shall
be final and binding on the parties unless the Seller or the Buyer delivers a
notice to the other disputing any matter within 30 days after delivery of the
statements, stating its position with respect to any disputed matter. If the
Buyer or the Seller delivers such notice, the parties shall seek to resolve the
disputed matter, and if the parties are unable to resolve the disputed matter
within 30 additional days, any accounting dispute shall be determined by a "big
6" accounting firm designated by the Seller and the Buyer (or if they fail to
agree, designated by Ernst & Young), and any dispute with respect to any
adjustment to the Operating Cash Flow of the Systems as of the Calculation
Date(s) required by section 2.2(c) or (d) shall be determined by arbitration in
New York, New York in accordance with the rules of the American Arbitration
Association. The determination of any disputed matter pursuant to the preceding
sentence shall be final and binding on the parties. The fees and expenses of the
Accountants shall be borne 50% by the Buyer and 50% by the Seller and the fees
and expenses of the accounting firm or the arbitration making the determination
on any disputed matter shall be borne by the Seller and the Buyer in proportion
to the amount by which the determination of the matter varies from the positions
of the Buyer and the Seller on the matter.
2.3 Payment of Purchase Price. The aggregate purchase price for
the Assets shall be paid as follows:
(a) At the Closing of the transfer of all of the Systems,
the Buyer shall deliver or cause to be delivered to the Escrow Agent, by wire
transfer of federal reserve funds, an amount equal to $5,000,000 (the "Indemnity
Escrow Amount"), to be held by the Escrow Agent in an interest bearing account
(the "Indemnity Escrow Account") pursuant to an escrow agreement substantially
in the form of exhibit 2.3(a) (the "Indemnity Escrow Agreement"), which funds
shall be paid in whole or in part
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in accordance with the terms of the Indemnity Escrow Agreement to (i) the Buyer
if it is determined that the Buyer is entitled to indemnification payments under
section 9.2 of this agreement, or (ii) the Seller to the extent the Buyer is not
determined to be entitled to any such payments; at each Closing of the transfer
of only the Northern Systems or Southern Systems, the Buyer shall deliver
$2,500,000 to the Escrow Agent.
(b) At each Closing, if there has not been a final
determination with respect to the Potential Refund Liability, the Buyer shall
deliver or cause to be delivered to the Escrow Agent, by wire transfer of
federal reserve funds, an amount equal to the Potential Refund Liability for the
Systems transferred at that Closing (the "Potential Refund Amount"), as agreed
to by the Buyer and the Seller (or if they fail to agree as determined by
Deloitte & Touche), to be held by the Escrow Agent in an interest bearing
account (the "Potential Refund Escrow Account") pursuant to an escrow agreement
substantially in the form of exhibit 2.3(b) (the "Potential Refund Escrow
Agreement"), which funds shall be paid in whole or in part in accordance with
the terms of the Potential Refund Escrow Agreement to (i) the Buyer and Seller
jointly to the extent required to pay any actual refund liability, or (ii) the
Seller to the extent the Potential Refund Amount exceeds the actual refund
liability.
(c) At each Closing, if there has not been a final
determination with respect to an A la Carte Revenue Loss for all of the Northern
Systems or all of the Southern Systems, the Buyer shall deliver or cause to be
delivered to the Seller a letter of credit substantially in the form of exhibit
2.3(c) (the "Letter of Credit") issued to the Seller, in an amount equal to 11
times the maximum possible further reduction (determined in accordance with
section 10.1(e) and after giving effect to any reduction in Operating Cash Flow
from an A la Carte Revenue Loss for those Systems reflected in the payment at
the Closing) in Operating Cash Flow from an A la Carte Revenue Loss for the
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Systems transferred at that Closing (the "Letter of Credit Amount"). The Seller
shall have the right to draw on the Letter of Credit if and to the extent it is
determined that the Seller is entitled to any payments under section 9.5 of this
agreement, by delivery of a certificate executed by the Buyer and the Seller to
that effect or by delivery of a final non-appealable court order to that effect.
If it is determined that the Seller does not have the right to draw the full
Letter of Credit Amount, the Seller shall return the Letter of Credit to the
Buyer promptly after making any drawing to which it is entitled. The Buyer and
the Seller shall each pay 50% of any fees and expenses incurred in connection
with the Letter of Credit.
(d) If there is only one Closing, at that Closing, the
Buyer shall pay to the Seller, by wire transfer of federal reserve funds, an
amount which, together with the payment to the Seller pursuant to section
2.1(c), the Indemnity Escrow Amount, the Potential Refund Amount, if any, and
the Letter of Credit Amount, if any, equals the Base Amount plus (or minus) the
estimated amount (determined in accordance with section 2.4) of the increase (or
decrease) in the Base Amount pursuant to sections 2.2(b), (c) and (d). If there
is more than one Closing, at the first Closing, the Buyer shall pay to the
Seller, by wire transfer of federal reserve funds, an amount which, together
with the payment to the Seller pursuant to section 2.1(c), the Indemnity Escrow
Amount, the Potential Refund Amount, if any, and the Letter of Credit Amount, if
any, for that Closing, equals 11 times the estimated Operating Cash Flow of the
Systems transferred at that Closing as of the applicable Calculation Date
(determined in accordance with sections 2.2 and 2.4) plus (or minus) the
estimated amount (determined in accordance with section 2.4) of the increase (or
decrease) in the Base Amount pursuant to section 2.2(b) with respect to those
Systems; provided, however, that the estimated Operating Cash Flow of the
Northern Systems shall not exceed $13,000,000 and the estimated Operating Cash
Flow of the Southern Systems shall not exceed
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$13,000,000, and at the second Closing, the Buyer shall pay to the Seller, by
wire transfer of federal reserve funds, an amount which, together with the
payment to the Seller pursuant to section 2.1(c) at that Closing, the Indemnity
Escrow Amount for that Closing, the Potential Refund Amount, if any, for that
Closing and the Letter of Credit Amount, if any, for that Closing, equals the
remainder of the Base Amount (based on the estimated Operating Cash Flow of the
Systems transferred at that Closing as of the applicable Calculation Date and
disregarding (1) the separate maximums on Operating Cash Flow for the Northern
Systems and the Southern Systems and considering only the $286,000,000 maximum
Base Amount, and (2) the separate maximums on the reduction in Operating Cash
Flow resulting from an A la Carte Revenue Loss for the Northern Systems and the
Southern Systems and considering only the $24,000,000 maximum reduction for all
of the Systems), plus (or minus) the estimated amount (determined in accordance
with section 2.4) of the increase or decrease in the Base Amount pursuant to
section 2.2(b) with respect to the Systems transferred at the second Closing,
but in no event shall the Buyer pay to the Seller an aggregate Base Amount in
excess of $286,000,000.
(e) Not later than 10 days after the final determination of
the Current Assets and Assumed Liabilities as of the Determination Time(s) and
the Operating Cash Flow of the Systems for the 12 month period(s) ending on the
Calculation Date(s) pursuant to section 2.2(f), the Buyer shall pay to the
Seller or the Seller shall pay to the Buyer (by wire transfer of federal reserve
funds or by delivery of bank or certified checks in immediately available funds)
the amount payable as a result of the difference between the estimates and the
final determinations.
(f) Together with any drawing by Seller on the Letter of
Credit, Buyer shall pay to Seller an amount equal to interest on the amount
drawn from the applicable Closing Date
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at a rate equal to LIBOR plus 1 1/2%, as in effect from time to time.
2.4 Estimate of Adjustments. The Seller shall prepare and submit
to the Buyer, not later than five days prior to the date of each Closing, a
written estimate of the Operating Cash Flow of the Systems to be transferred at
that Closing determined pursuant to sections 2.2(c) and (d) and the amount of
the adjustments to the Base Amount based on the Current Assets and Assumed
Liabilities of the Systems to be transferred at that Closing under section
2.2(b); such estimates shall be determined based upon the books and records of
the Systems to be transferred at that Closing and the adjustments to Operating
Cash Flow required by sections 2.2(c) and (d). The estimate submitted to the
Buyer prior to each Closing shall be accompanied by (a) statements setting forth
in reasonable detail (and any back-up reasonably requested by the Buyer for) the
calculation of Current Assets and Assumed Liabilities of the Systems to be
transferred at that Closing as of the applicable Determination Date and of the
Operating Cash Flow of the Systems to be transferred at that Closing as of the
applicable Calculation Date and the estimate of the resulting amount payable at
the Closing, and (b) a certificate signed by the general partner of the Seller
confirming that the estimates were calculated in accordance with the terms of
this section 2. The amount payable at each Closing shall be based upon that
estimate.
3. Closing.
3.1 Date of Closing. The consummation of the transactions
contemplated by this agreement shall occur at one or more closings (the
"Closings") at the New York offices of Proskauer Rose Goetz & Mendelsohn (or at
such other place as may be mutually agreeable to the Buyer and the Seller). A
Closing shall be held on a date designated by the Seller that shall be at least
five days after the Seller delivers a notice to the Buyer that the condition
specified in section 7.3(c) has been fulfilled and the condition specified in
section 7.3(a) with respect to the
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Northern Systems, the Southern Systems or all of the Systems has been fulfilled
(provided that the Closing shall only be consummated if at the Closing all of
the other conditions to the Closing are also satisfied). The Seller shall have
the right to deliver a notice of closing in accordance with the preceding
sentence at any time after such conditions have been fulfilled; in addition, if
the conditions to the second Closing have not been satisfied by the outside
Closing Date, the Seller may elect not to consummate the first Closing. Each
date on which a Closing is held is referred to in this agreement as the "Closing
Date." At each Closing, the parties shall execute and deliver the documents
referred to in section 8.
3.2 Outside Date for the Closing. If no Closing has occurred on or
prior to June 30, 1995, either party may terminate its obligations under this
agreement by notice to the other. Upon such termination, neither of the parties
shall have any liability or obligation to the other under this agreement except
for any liability resulting from its breach of this agreement.
4. Representations and Warranties by the Seller.
The Seller represents and warrants to the Buyer as follows:
4.1 Seller's Organization and Authority. The Seller is a limited
partnership duly organized, validly existing and in good standing under the law
of the State of Delaware and has the full power and authority to enter into and
perform its obligations under this agreement and to own and operate the Systems.
The Seller is duly qualified to do business as a foreign limited partnership and
is in good standing in the State of California.
4.2 Authorization of Agreement. The execution, delivery and
performance of this agreement by the Seller have been duly authorized by all
necessary partnership action, and this agreement constitutes a valid and binding
obligation of the
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Seller enforceable against the Seller in accordance with its terms, except as
may be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights in general and subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
4.3 Consents of Third Parties. Subject to receipt of the consents
and approvals referred to in schedule 4.3, the execution, delivery and
performance of this agreement by the Seller will not (i) conflict with the
certificate of limited partnership or partnership agreement of the Seller, and
will not conflict with, or result in a breach or termination of or constitute a
default under, any lease, agreement, commitment or other instrument, or any
order, injunction, judgment or decree, to which the Seller is a party or by
which the Seller is bound, or to which any of the Assets is subject, except for
conflicts, breaches, terminations or defaults that in the aggregate would not
have a material adverse effect on the business, financial condition or
operations of the Systems taken as a whole (or the Northern Systems taken as a
whole if only the Northern Systems are transferred or the Southern Systems taken
as a whole if only the Southern Systems are transferred) (a "Material Adverse
Effect"); (ii) result in the creation of any lien, claim, charge or encumbrance
("Lien") upon any of the Assets, except for Liens that in the aggregate would
not have a Material Adverse Effect; or (iii) violate any federal or state law or
regulation relating to the Seller or any of the Assets, or violate any local
rule or regulation relating to the Seller or any of the Assets, except for
violations of local rules or regulations that in the aggregate would not have a
Material Adverse Effect. No consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority is required
on the part of the Seller in connection with the execution, delivery and
performance of this agreement, except for the filings and
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consents referred to in section 6.1 and consents the absence of which would not
have a Material Adverse Effect.
4.4 Title to Assets. (a) Except for the Liens set forth on
schedule 4.4 (which shall be satisfied at the Closing) and except for property
leased pursuant to leases and agreements listed on schedule 4.13, the Seller
has, and at the Closing the Buyer will receive, good and marketable title to all
of the Assets, free and clear of all Liens (except for the lien, if any, of
current taxes not yet due and except in the case of the real property listed on
schedule 1.1(c) for easements, covenants, conditions and restrictions that do
not have a material adverse effect on the use of the real property or materially
detract from the value of the real property) (collectively "Permitted Liens").
All of the Assets that are used in the business of the Systems that consist of
tangible personal property are in operating condition and repair, ordinary wear
and tear excepted, given the age of such properties and the uses to which they
are put.
(b) All of the real property owned by the Seller and used in
the operations of the System is listed on schedule 1.1(c). The real property and
the improvements located thereon and the continuation of the business presently
being conducted thereon do not violate existing zoning laws, except for
violations that do not have a material adverse effect on the use of the real
property or materially detract from the value of the real property. The real
property is served by utilities and services necessary for the normal and
intended use of the real property by the Seller and none of the improvements on
the real property encroaches upon the property of others, except for
encroachments that do not have a material adverse effect on the use of the real
property or materially detract from the value of the real property. No
condemnation of any such real property has occurred, is pending or, to the best
of the Seller's knowledge, is threatened. To the best of the Seller's knowledge,
the buildings and other structures on the real property are in
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operating condition and repair, ordinary wear and tear excepted, given the age
of such properties and the uses to which they are put.
4.5 Financial Statements. The Seller has previously delivered to
the Buyer (i) unaudited statements of selected assets and the current
liabilities of the Northern Systems, the Southern Systems and all of the Systems
as of December 31, 1993, together with the related statements of operations for
the year then ended, and (ii) unaudited statements of selected assets and
current liabilities of the Northern Systems, the Southern Systems and all of the
Systems as of September 30, 1994, together with the related statements of
operations for the nine-month period then ended. The foregoing statements of
operations have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis and fairly present in all material
respects the results of operations of the Systems for the periods indicated.
4.6 Absence of Certain Changes. Since September 30, 1994, the
Seller has operated the Systems in the ordinary course, and, except as set forth
on schedule 4.6, the Seller has not;
(a) entered into any material transaction or incurred any
material liability or obligation relating to the Systems that was entered into
or incurred other than in the ordinary course of its business;
(b) sold or transferred any of the assets relating to the
Systems other than in the ordinary course of its business;
(c) granted or agreed to grant any bonus or any increase in
any rate or rates of salaries or compensation to employees of the Systems (other
than as required by minimum wage laws, regularly scheduled bonuses or increases
in the ordinary course of business or one-time bonuses to induce employees to
remain with the Seller through the Closing Date);
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(d) had any actual or, to the best of the Seller's
knowledge, threatened employee strike, work stoppage or lockout of employees of
the Systems;
(e) failed to maintain inventories and supplies at levels
sufficient to operate the business in the ordinary course for 60 days (except
where past practice is to maintain less than 60 days' inventory of any items),
nor made any purchase commitments relating to the Systems other than in the
ordinary course of its business and substantially consistent with its past
practice;
(f) through the date of this agreement, suffered any
damage, destruction or loss (whether or not covered by insurance) that has
materially adversely affected the Assets or any other change, event or condition
which has had a Material Adverse Effect; or
(g) created or assumed any mortgage, pledge, lien or
encumbrance upon any of the Assets (other than Permitted Liens) that will
survive the Closing.
4.7 Easements; Crossing Permits; Etc. The Seller has such
easements, highway, railroad and canal crossing permits and other rights of
ingress and egress ("Permits") as are reasonably necessary for the conduct of
the business of the Systems as it is now being conducted, except where the
failure to have any such Permit would not have a Material Adverse Effect. To the
best of the knowledge of the Seller, the Seller is not in violation or default
of any Permit in any respect that would have a Material Adverse Effect.
4.8 Pole Attachment Agreements. The Seller is in possession of all
pole attachment agreements reasonably necessary for the conduct of the business
of the Systems as it is now being conducted. The Seller is not in violation or
default of any pole attachment agreement in any respect that would have a
Material Adverse Effect.
4.9 Franchises; Cable Act. (a) The franchises, licenses and
authorizations listed on schedule 1.1(a)
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(collectively, the "Franchises") are the only franchises, and the only material
licenses or authorizations, of any federal, state or local governmental or
regulatory body (including, without limitation, the Federal Communications
Commission (the "Commission") and the municipal or county authorities that have
issued the Franchises (the "Municipal Authorities")) that are necessary in the
conduct of the business of the Systems, all of which are currently held by
Seller. The Seller has complied with all of the terms and conditions of all of
the Franchises except where noncompliance would not have a Material Adverse
Effect and except that no representation is made in this sentence with respect
to the provision in the Franchises which requires compliance with Federal law,
which is covered by the following sentence. To the best of the Seller's
knowledge, the Seller is not in violation of the provisions of the Cable
Consumer Protection and Competition Act of 1992 (the "1992 Act") and the rules,
regulations and policies of the Commission thereunder except where such
violations would not, individually or in the aggregate, have a Material Adverse
Effect and except that no representation is made with respect to the rate
regulation provisions of the 1992 Act, as those provisions are the subject of an
adjustment to the Base Amount pursuant to sections 2.2(c) and (d). Except as set
forth on schedule 4.9(a), no proceeding (administrative, judicial or otherwise)
is pending or, to the best of Seller's knowledge, threatened, to revoke,
suspend, modify, limit or deny renewal of any of the Franchises. All reports,
applications, financial statements and other documents required to be filed by
the Seller with respect to the Systems have been filed, except where the failure
to file would not have a Material Adverse Effect. To the best of Seller's
knowledge, the Forms 1200, 1205, 1210 and 1215 filed by the Seller are correct
in all material respects.
(b) Without limiting the generality of section 4.9(a) and
except as set forth in schedule 4.9(a), (x) the Franchises are in full force and
effect and there are no
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applications by Seller pending or, to the best of the knowledge of Seller,
threatened before any governmental agency relating to the business or operations
of the Systems, other than proceedings which affect the cable television
industry generally, (y) since January 1, 1993 Seller has not received any
written communication from the Commission with respect to compliance or
non-compliance with the Cable Communications Policy Act of 1984 (the "1984 Act")
or the 1992 Act including, without limitation, with respect to rates being
charged to subscribers or with respect to compliance with the rules or
regulations of the Commission; and Seller has not received any written
communications from any Municipal Authorities with respect to compliance with
the Franchises, the 1984 Act or the 1992 Act, and (z) Seller is and the
operation of Systems has been and is in compliance with the Franchises and all
rules and regulations of the Commission and with the provisions of the National
Electrical Safety Code, the rules and regulations of the Federal Aviation
Administration (the "FAA"), the provisions of both the 1984 Act and the 1992 Act
(and has submitted and filed all filings required under the 1984 Act and the
1992 Act), and all other applicable laws and regulations, except in each case
where non-compliance would not have a Material Adverse Effect and except that
this representation as it relates to the 1992 Act is subject to the same
limitations as set forth in section 4.9(a). Without limiting the foregoing and
except as set forth on schedule 4.9(a), Seller has filed all necessary FAA Tower
Clearance Applications and received all necessary Determinations of No Hazard or
No Filing Required, cable television registration statements and annual reports
and all necessary FCC Aeronautical Frequency Notifications, and filed all
necessary Forms 395A, 393, 1200, 1205 and 1210, and received all necessary EEO
Certificates, and received all necessary earth station, business, radio and CARS
licenses. True and correct copies of all material filings by Seller with the
Commission and the Municipal Authorities during the immediately preceding one
year period have previously been delivered to the Buyer, are
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listed on schedule 4.9(b) and are incorporated into the schedules hereto as if
fully set forth therein.
(c) Except as set forth on schedule 4.9(c), all of the
broadcast signals carried by the Systems are carried pursuant to the must-carry
provisions of Section 614 of the 1992 Act and the regulations promulgated
thereunder and no broadcasting station has requested its consent to the re-
transmission of its signal by the Systems in accordance with Section 325 of the
Communications Act of 1934, as amended, and the regulations promulgated
thereunder. Except as set forth on schedule 4.9(c), to the best of the Seller's
knowledge, all of the broadcast television signals entitled to be carried
pursuant to said must-carry provisions are in fact carried by the Systems and
all such signals are positioned as required by applicable law and regulation.
4.10 System Data. (a) As of September 30, 1994, the Northern
Systems consisted of 1,331 linear miles of plant and there were at least 97,000
"Homes Passed" by the Northern Systems and the Southern Systems consisted of 980
linear miles of plant and there were at least 119,000 "Homes Passed" by the
Southern Systems. Except as set forth on schedule 4.10, to the best of Seller's
knowledge, no other person is operating a cable television system servicing
customers within the franchise areas of any of the Systems.
As used in this agreement, "Homes Passed" includes each single
family residence or dwelling unit within a building containing multiple dwelling
units that is located within 150 feet of the activated trunk or feeder cable of
a System, plus commercial and other buildings (including hotels) actually served
by the Systems, but does not include dwelling units within multiple dwelling
unit buildings containing more than four dwelling units to which the Seller does
not have a right of access.
(b) Schedule 4.10 sets forth as of October 1, 1994 the
channel line-up for basic cable service ("Basic
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Service"), all tiers of Cable Programming Service, as defined in the 1992 Cable
Act (each a "Tier Service"), all a la carte services and all video programming
offered by the Systems on a per channel basis ("Pay or Premium Channels"), the
regular basic monthly subscription rate for Basic Service to a single household
subscriber (the "Basic Rate"), the monthly subscription rate for each a la carte
service (the "A la Carte Rates", or individually an "A la Carte Rate"), and the
regular monthly subscription rate for each of the Tier Services (the "Tier
Rates", or individually, a "Tier Rate"), the monthly subscription rates for each
premium or pay channel, and the installation rates and charges for equipment and
services other than those specified in this subsection.
(c) "Basic Subscriber" means a bona fide cable television
subscriber to the Systems (first connection only) for Basic Service, at the
Basic Rate who is receiving service from the Systems and has rendered payment at
the full Basic Rate (or who receives a senior citizen discount) for at least one
full month service. As of September 30, 1994, the number of Basic Subscribers
was approximately 73,400 for the Northern Systems and 61,600 for the Southern
Systems. A true and correct aging of the accounts receivable of the Systems as
of October 31, 1994 is attached to schedule 4.10(c). In computing the number of
Basic Subscribers, Subscriber Equivalents shall be taken into account.
"Subscriber Equivalent" means an equivalent to a Basic Subscriber, the number of
Subscriber Equivalents served by the Systems being equal to the quotient of (i)
the aggregate revenues earned by the Systems for Basic Service provided by the
Systems during the last full month ending on or prior to such date from bulk
billings to residential multiple dwelling units and other subscribers that are
billed for such service on a bulk basis divided by (ii) the System's regular
monthly basic rate for Basic Service. For purposes of the foregoing there shall
be excluded all revenues earned from billings to any bulk account or discounted
family household that
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has not been an active subscriber of the Systems for at least one month.
(d) "Tier Subscriber" means a bona fide cable television
subscriber to the Systems who is a Basic Subscriber and who has subscribed to
and is receiving service of one of the Tier Services and has rendered payment in
full at the full Tier Rate for the particular Tier Service for at least one full
month of service. As of September 30, 1994, the number of Tier Subscribers was
approximately as follows: None.
(e) As of September 30, 1994, the number of Pay Units was
approximately 31,364 for the Northern Systems and 36,125 for the Southern
Systems. Pay Units shall mean the aggregate number of bona fide subscriptions to
pay or premium television services, i.e., Home Box Office, Cinemax, Showtime,
etc., in respect of which payment at the full rate for such pay service has been
rendered for at least one month service.
(f) "A la Carte Subscriber" means a bona fide cable
television subscriber to the Systems who is a Basic Subscriber and who has
subscribed to and is receiving service of one or more of the a la carte services
and has rendered payment in full at the full A la Carte Rate or packaged rate
for the particular a la carte service(s) for at least one full month of service.
As of September 30, 1994, the numbers of A la Carte Subscribers were
approximately as follows:
A la carte basic service packages
Northern Systems - 69,271
Southern Systems - 57,768
A la carte services, not in packages
Northern Systems - 1,193
Southern Systems - 582
A la carte Encore units, not in packages
(all Southern Systems) - 111
4.11 Copyright Matters. (a) Except for amounts reflected as
accounts payable on the statement of Current Assets and Liabilities as of the
applicable Determination Time, the Seller has deposited with the United States
Copyright Office (the
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"Copyright Office") all statements of account and other documents and
instruments, and paid all royalties, supplemental royalties, fees and other sums
to the United States Copyright Office required under the Copyright Act with
respect to the business and operations of the Systems as are required to obtain,
hold and maintain the compulsory copyright license for cable television systems
prescribed in Section 111 of the Copyright Act, including, without limitation,
the payment of all copyright fees which may be required in respect of events
occurring or for periods of time prior to the Closing in accordance with the
decision in Cablevision v. M.P.A.A.
(b) The Systems are in compliance with the Copyright Act
except where non-compliance would not have a Material Adverse Effect. In
connection with the Systems, the Seller is entitled to hold and does now hold
the compulsory copyright license described in Section 111 of the Copyright Act,
which compulsory copyright license is in full force and effect and has not been
revoked, cancelled, encumbered or materially adversely affected in any manner.
(c) The carriage, transmission or use of the signals of the
Systems has not subjected and does not subject any System or the Seller to any
Commission or other sanctions or any suits or actions, including, without
limitation, suits or actions for copyright infringement, except those that may
be applicable to a majority of cable systems in the United States.
(d) Except as set forth on schedule 4.11, during the 12
months preceding the date of this agreement, the Seller has received no written
communication from the Copyright Office with respect to the underpayment or
nonpayment of any fees, royalties or other sums.
4.12 Litigation; Compliance with Laws. Except as set forth on
schedule 4.12 and except for proceedings (both administrative and judicial)
affecting the cable television industry in general, there is no litigation,
proceeding or governmental investigation pending or, to the best of Seller's
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knowledge, threatened, or any order, injunction or decree outstanding, against
the Seller or the Assets, and there is no claim pending or, to the best of
Seller's knowledge, threatened, against the Seller or the Assets, which, if
adversely determined in a manner or amount that can be reasonably foreseen,
might have a Material Adverse Effect. There is no violation by Seller that would
have a Material Adverse Effect of any law, regulation or ordinance or any other
requirement of any governmental body or court (except that the only
representation with respect to the provisions of the 1992 Act and the rules,
regulations and policies of the Commission thereunder is set forth in section
4.9).
4.13 List of Agreements, etc. Schedules 4.13 and 4.14 together
contains a complete list of the following that specifically relate to the
Systems: (a) all commitments and other agreements for the purchase of any
materials, supplies or equipment, other than commitments and other agreements
that involve an expenditure by the Seller of less than $100,000 for any one
commitment; (b) all leases or other rental agreements under which the Seller is
either lessor or lessee; (c) all employment or consulting agreements to which
the Seller is a party; (d) all agreements for the retransmission by any of the
Systems of the signals of local television stations; (e) all collective
bargaining agreements to which the Seller is a party; (f) all programming
agreements and all pole attachment agreements; and (g) all other agreements,
commitments and understandings (written or oral), other than subscriber
agreements, that require payment by the Seller of more than $100,000
individually and cannot be terminated by their terms on less than 60 days'
notice without liability.
4.14 Employee Benefit Plans; ERISA; Labor Relations.
(a) Except as set forth on schedule 4.14, the Seller has
operated the Systems in compliance with all applicable laws relating to the
employment of labor, including,
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without limitation, the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and those relating to wages, hours, collective bargaining,
unemployment insurance, workers' compensation, equal employment opportunity and
the payment and withholding of taxes, including income and social security
taxes, except where non-compliance would not have a Material Adverse Effect.
(b) Except as set forth on schedule 4.14, since January 1,
1993, (i) the Seller has not been a party to any contract, agreement or other
commitment with any labor organization, and has not agreed to recognize any
union or other collective bargaining unit, with respect to employees of the
Systems, nor has any union or other collective bargaining unit been certified as
representing any of the Systems' employees, nor, to the best of the Seller's
knowledge, has there been any effort by the employees of the Systems to seek
recognition of any union as the collective bargaining agent, and (ii) the Seller
has not experienced any strikes, work stoppages, significant grievance
proceedings or claims of unfair labor practices filed or, to the best of the
knowledge of the Seller, threatened to be filed against the Seller by employees
of the Systems.
(c) Except as set forth on schedule 4.14, the Seller does
not maintain or sponsor, nor is it required to make any contribution to, any
formal or informal pension, profit-sharing, thrift or other retirement plan,
medical, hospitalization, vision, dental, life, disability or other insurance or
benefit plan, deferred compensation, bonus, fringe benefit, savings or other
incentive plan, severance plan or other similar plan, agreement, arrangement or
understanding with respect to employees of the Systems (each a "Benefit Plan"),
whether or not such plan is or is intended to be subject to the provisions of
ERISA or qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), including, without limitation, an "employee benefit plan"
within
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the meaning of Section 3(3) of ERISA, or any "multi-employer plan" within the
meaning of Section 3(37) of ERISA.
(d) Neither Seller, nor any Affiliated Company (as
hereinafter defined) has incurred any liability to the Pension Benefit Guaranty
Corporation ("PBGC") or any employee benefit plan on account of any failure to
meet the contribution requirements of such plan, minimum funding requirements or
prohibited transactions under applicable laws, termination of a single employer
plan, partial or complete withdrawal from a multi-employer plan, or the
insolvency, reorganization or termination of any multi-employer plan. The terms
used in this section 4.14(d) shall have the meanings assigned thereto in the
applicable provisions of ERISA and the Code, and the term "Affiliated Company"
shall mean every corporation or trade or business, whether or not incorporated,
which is from time to time a member of a controlled group or a group under
common control with Seller within the meaning of Section 414(b), (c), (m) or (o)
of the Code or Section 4001(b)(1) of ERISA.
(e) The Seller has delivered to the Buyer true and complete
copies of the documents which constitute the MultiVision Cable TV Corp. 401(k)
Plan (the "401(k) Plan"). The 401(k) Plan complies in all material respects with
all applicable provisions of ERISA and the Code.
(f) The 401(k) Plan has received a favorable determination
letter from the Internal Revenue Service ("IRS") with respect to its
qualification under the Code and, to the Seller's knowledge, the IRS has not
taken any action to revoke any such letter. To the Seller's knowledge, nothing
has occurred which would adversely affect the qualified status of the 401(k)
Plan.
4.15 Status of Agreements. Except as set forth on schedule 4.15,
the Seller is not in default and, to the best of Seller's knowledge, no other
party is in default under any agreement referred to in section 4.13 or 4.14
where the default would have a Material Adverse Effect, and, to the best of
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Seller's knowledge, there is no other event which, with or without due notice or
lapse of time or both, would constitute such a default or event of default.
4.16 Insurance and Bonds. The Seller currently has, or there
exists for the Seller's benefit, in full force and effect
(a) the casualty and liability insurance set forth on
schedule 4.16(a), which covers and insures the Seller, the Systems and the
Assets, against risks in such amounts usually and customarily insured against in
the cable television industry, subject to reasonable deductibles, including,
without limitation, (i) fire and extended coverage insurance on all of the
Assets in amounts typical for such insurance in the cable television industry,
and on the business of the Systems, covering property damage and loss of income
by fire or other casualty, and (ii) adequate insurance protection against all
liabilities, claims and risks arising in the ordinary course of business
customarily included within a form of comprehensive liability coverage, and
(b) the performance, surety and other bonds set forth on
schedule 4.16(b), which represent all such bonds required under the Franchises,
except where the requirement has been waived by the grantor or other party to
any such Franchise or except where the failure to have such bonds would not have
a Material Adverse Effect.
4.17 Environmental Matters. For purposes of this section 4.17,
"Substances" are defined as any toxic or hazardous wastes, substances, products,
chemicals, pollutants of any kind (including, without limitation, petroleum and
petroleum products, natural gas, liquified natural, petroleum, and synthetic
gas, asbestos, flammables, explosives, radioactive materials and radon) and an
"Operating Site" is defined as any real property or facility owned, leased or
used by the Seller in connection with the operation of the Systems. Except as
set forth on schedule 4.17, (i) there is and has been no treatment, storage,
disposal, handling, or release by the Seller or, to the best of the
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Seller's knowledge, any other person or entity of any Substances, at, on, under,
or from any Operating Site which would have a Material Adverse Effect; (ii) to
the best of the Seller's knowledge, there are no aboveground or underground
tanks and there are no PCBs, urea formaldehyde, paint containing lead or
mercury, or asbestos-containing materials in quantities that would have a
Material Adverse Effect located at, on or under any Operating Site; (iii) the
Seller has received no written notice of any formal assertion by any
governmental or regulatory agency that the Seller or a predecessor business,
operator, landowner or occupant may be a responsible party in connection with
any Substance treatment, storage, disposal or release from any Operating Site,
and the Seller has no knowledge of any pending or threatened claims; (iv)
neither the Seller nor, to the best of the Seller's knowledge, any person acting
on behalf of the Seller has released any other person from any claims the Seller
might have, or have had, for any matter relating to the presence, handling,
treatment, storage, disposal, or release of Substances at the Operating Sites;
(v) no claim, lien, or other encumbrance has been, or is, imposed on any of the
assets of the Seller or any Operating Site under any environmental laws; and
(vi) the Seller has obtained all permits, licenses, registrations,
identification numbers, and other approvals and authorizations, and has made all
reports and notifications required under any environmental laws in connection
with operations of the Systems and every Operating Site, and is in compliance
with all applicable environmental laws, except in each case where any failure
would not have a Material Adverse Effect.
Schedule 4.17 also contains a list and brief description of all
filings by the Seller with, notifications and reportings by the Seller to,
notices, requests for information, orders, directives, or correspondence to the
Seller from, complaints received by or asserted by, orders issued by, agreements
with, and reports to or by all governmental authorities administering
environmental laws, within three years
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prior to the date of this agreement, including, but not limited to, notice
letters, inspection and investigation reports, notices of exceedance or
violation or possible or probable exceedance or violation, notices of
deficiency, audit reports, filings made, corrective or response actions ordered
or taken, and citations received by the Seller.
Schedule 4.17 also contains a list and brief description of any
samples taken and analyses performed by the Seller, including the results of
such analyses, at, on, under, or of any Operating Site, and any Substances at,
on, or under any Operating Site.
Schedule 4.17 also contains a list and brief description of all
audits, investigations, and assessments conducted by the Seller or at the
Seller's request or conducted by others and in the possession of the Seller or
of which the Seller is aware regarding actual or potential environmental
conditions, obligations, liability, and compliance regarding or in connection
with the Systems and any Operating Site.
Except as set forth on schedule 4.17, to the best of the Seller's
knowledge, no Operating Site has been designated or identified as a wetland or
wetland transition zone or as a habitat for an endangered or threatened species.
4.18 Corporate and Personnel Data. Seller has previously delivered
to Buyer a true and correct list, as of August 31, 1994, of the titles of all
officers and directors of the Seller employed within the Systems and the current
salaries of all persons employed by the Seller within the Systems.
4.19 Franchise Fees Certifications. Except as set forth on
schedule 4.19, the Seller has paid all required franchise fees relating to the
Systems and has received no notices from Municipal Authorities regarding
underpayment or nonpayment of franchise fees. The current franchise fees are as
set forth in the Franchises. Schedule 4.19 sets forth those Municipal
Authorities that have commenced a proceeding of the type described in section
2.2(d)(i) or filed the requisite
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certification with the Commission under Section 623(a)(3) of the 1992 Act
enabling them to regulate the rates for Basic Service and the Seller has no
knowledge that any other Municipal Authority intends to commence such a
proceeding or so file.
4.20 Transactions with Affiliates. Except as set forth on schedule
4.20, the Seller is not engaged in any material transaction relating to the
Systems with any of its shareholders, directors, officers, employees or any
entity affiliated with any of the foregoing.
5. Representations and Warranties by the Buyer.
The Buyer represents and warrants to the Seller as follows:
5.1 The Buyer's Organization. The Buyer is a corporation duly
organized, validly existing and in good standing under the law of the State of
New Jersey and has the full corporate power and authority to enter into and
perform this agreement in accordance with its terms.
5.2 Authorization of Agreement. The execution, delivery and
performance of this agreement by the Buyer have been duly authorized by all
necessary corporate action of the Buyer and this agreement constitutes the valid
and binding obligation of the Buyer enforceable against it in accordance with
its terms, except as may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights in general and subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
5.3 Consents of Third Parties. The execution, delivery and
performance of this agreement by the Buyer will not (i) conflict with the
certificate of incorporation or by-laws of the Buyer and will not conflict with
or result in the breach or termination of, or constitute a default under, any
lease, agreement, commitment or other instrument, or any order, injunction,
judgment or decree to which the Buyer is a party or by which the Buyer is bound,
or (ii) violate any law or
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regulation of any jurisdiction as such law or regulation relates to the Buyer.
No consent, approval or authorization of, or designation, declaration or filing
with, any governmental authority is required on the part of the Buyer in
connection with the execution, delivery and performance of this agreement,
except for the filings and consents referred to in section 6.1.
5.4 Litigation. There is no claim, litigation, proceeding or
governmental investigation pending or, to the best of Buyer's knowledge,
threatened, or any order, injunction or decree outstanding, against the Buyer or
any of its affiliates that would prevent the consummation of the transactions
contemplated by this agreement.
5.5 Financial Capability. The Buyer has cash on hand or lines of
credit or firm commitments from financial institutions to provide financing in
amounts sufficient to pay the purchase price for the Assets.
6. Further Agreements of the Parties.
6.1 Filings with the Commission and Municipal Authorities;
Hart-Scott-Rodino Act. (a) As soon as practicable, but in no event later than 30
days after the date of this agreement, (1) the parties shall file with the
Commission and any Municipal Authorities from which consent to the transactions
contemplated by this agreement must be obtained an application or applications
requesting consent to such transactions, (2) the parties shall file with the
franchise authorities in Anaheim, Villa Park and Orange County an application to
extend or renew the franchises for those Systems until January 25, 2012, August
20, 2011 and July 5, 2012, respectively (the "Southern Extensions"), and (3) the
parties shall file with the franchise authorities in Rohnert Park, Sonoma County
and Solano County applications to extend or renew the franchises for those
Systems until December 31, 2011, August 19, 2008 and October 30, 2009,
respectively (the "Northern Extensions"); the parties shall take with due
diligence all reasonable steps necessary to expedite the processing of the
application or applications and to secure such
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consents or approvals and the foregoing extensions or renewals. Each party shall
bear its own costs and expenses (including the fees and disbursements of its
counsel) in connection with the preparation of the portion of any such
application to be prepared by it and in connection with the processing of that
application. The Seller shall not be required to make any payment to obtain the
consent of any Municipal Authority or to obtain the Southern Extensions or
Northern Extensions.
(b) Within 30 days after the execution of this agreement,
the Seller and the Buyer shall, in cooperation with the other, file in
connection with the transactions contemplated by this agreement any reports or
notifications that may be required to be filed by them under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), with each
of the Department of Justice and the Federal Trade Commission, and each of the
Seller and the Buyer shall comply promptly with all requests for further
documents and information made by the Department of Justice or the Federal Trade
Commission, and shall furnish to the other all such information in its
possession as may be necessary for the completion of the reports or
notifications to be filed by the other.
6.2 Operations of the System. From the date of this agreement
through the applicable Closing Date:
(a) the Seller may terminate the services of MultiVision as
the manager of the Systems but the Seller shall continue to operate the business
of the Systems in the ordinary course;
(b) the Seller shall use reasonable efforts (i) to preserve
the business of the Systems and Assets intact and to preserve the goodwill and
business of the subscribers, advertisers, suppliers and others having business
relations with the Systems, and (ii) to retain the services of the employees of
the Systems; and
(c) the Seller shall (i) not enter into any transaction or
incur any liability or obligation that, if entered
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into or incurred prior to the date of this agreement, would have to be listed on
schedule 4.13, except that the Seller may enter into (A) any programming
agreements (and the Seller shall notify the Buyer that it entered into any such
agreement and the Buyer may elect in writing whether or not to assume any such
agreement at the Closing) or (B) any leases or rental agreements for personal
property requiring payment by the Seller of less than $25,000 individually; (ii)
not sell, lease, hypothecate, transfer or otherwise dispose of any of the assets
relating to the Systems, other than assets that have worn out or been replaced
with other assets of equal or greater value or assets that are no longer needed
in the operation of the Systems; (iii) not grant or agree to grant any increase
in the rates of salaries or compensation payable to employees of the Systems
(other than as required by law and regularly scheduled increases in the ordinary
course of business); (iv) not grant or agree to grant any bonus to any employee
of the Systems whose total annual compensation after the increase would be at an
annual rate in excess of $30,000 (other than bonuses in the ordinary course of
business or one-time bonuses to induce employees to remain with the Seller
through the Closing Date); (v) not provide for any new pension, retirement or
other employment benefits for employees of the Systems or any increase in any
existing benefits (other than as required by law); (vi) maintain the Systems'
inventory at levels sufficient to operate the business in the ordinary course
for 60 days (except where the past practice is to maintain less than 60 days'
inventory of any items); (vii) not change the rates charged for Basic Service or
Tier Service, except after not less than 15 days (or, in the case of a required
reduction, such lesser or greater period as is required to comply with any
applicable law, rule, regulation or order) prior written notice to the Buyer
setting forth the basis therefor and the computations thereof; or (viii) make
routine capital expenditures substantially consistent with its past practices in
the ordinary course of business necessary to maintain the Systems and provide
services within
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areas presently served by the Systems, but Seller shall not be required to incur
any capital expenditures for line extensions beyond those required by the terms
of any Franchise or for technological upgrades of the Systems, including, but
not limited to, the upgrade to 54 channels in Hermosa Beach or the upgrade to 54
channels in Rohnert Park, unless Buyer shall reimburse Seller for the costs of
such upgrades as such costs are incurred (and regardless of whether or not the
Systems are transferred to Buyer pursuant to this agreement).
6.3 Expenses. The Buyer and Seller shall each bear its own
expenses incurred in connection with the negotiation and preparation of this
agreement and in connection with all obligations required to be performed by it
under this agreement, except where specific expenses have been otherwise
allocated by this agreement.
6.4 Access to Information. Prior to the applicable Closing, the
Buyer and its representatives may make such reasonable investigation of the
property, assets and businesses of the Seller relating to the Systems, and the
Seller shall give to the Buyer and to its counsel, accountants and other
representatives, upon reasonable notice, reasonable access during normal
business hours throughout the period prior to the Closing to all of the assets,
books, commitments, agreements, records and files of the Seller relating to the
Systems and the Seller shall furnish to the Buyer during that period all
documents and copies of documents and information concerning the businesses and
affairs of the Systems as the Buyer reasonably may request. The Buyer shall
hold, and shall cause its representatives to hold, all such information and
documents and all other information and documents delivered pursuant to this
agreement confidential and, if the purchase and sale contemplated by this
agreement is not consummated for any reason, shall return to the Seller all such
information and documents and any copies as soon as practicable, and shall not
disclose any such information (that has not previously been disclosed by a party
other than the Buyer) to any
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third party unless required to do so pursuant to a request or order under
applicable laws and regulations or pursuant to a subpoena or other legal
process. The Buyer's obligations under this section shall survive the
termination of this agreement.
6.5 Consents; Assignment of Agreements and Assets. The Seller
shall use reasonable efforts (but shall not be required to make any payment),
and the Buyer shall assist the Seller in all reasonable respects, to obtain
prior to the Closing (a) all consents and approvals of third parties required
for the transfer to the Buyer of any of the Assets (whether or not listed on
schedule 4.3), including, but not limited to, the agreements referred to in
section 1.1(d), without any conditions materially adverse to the Buyer, and (b)
with respect to all leases, commitments and other agreements to be assumed by
the Buyer that also relate to cable television systems that are not to be
acquired by the Buyer, amendments that provide the Buyer with only the rights
and obligations under those leases, agreements and other commitments that relate
to the Systems to be acquired by the Buyer. If, with respect to any lease,
commitment or agreement to be assigned to the Buyer, a required consent to its
assignment is not obtained by the Closing (and, accordingly, pursuant to section
1.2, that lease, commitment or agreement is excluded from the sale to the
Buyer), (1) the Seller shall keep it in effect and shall use its reasonable
efforts to give the Buyer the benefit of it to the same extent as if it had been
assigned, and the Buyer shall perform the Seller's obligations under the
agreement relating to the benefit obtained by the Buyer, and (2) the Seller and
the Buyer shall continue to use reasonable efforts to obtain such consent, at
which time the lease, commitment or agreement shall be assigned by the Seller to
the Buyer. Nothing in this agreement shall be construed as an attempt to assign
any agreement or other instrument that is by its terms nonassignable without the
consent of the other party. The Seller shall use reasonable efforts (but shall
not be required to make any payment) to cause _______ ("Cabledata") to
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permit the Buyer to assume the agreement between the Seller and Cabledata for a
period designated by the Buyer up to six months after the Closing Date. If the
Seller is unable to obtain Cabledata's agreement to the foregoing, the Seller
shall cooperate with the Buyer in all reasonable respects to enable the Buyer to
duplicate the information on the Cabledata billing system and otherwise so that
the Buyer will be able to begin operations of the Systems on the Closing Date
without the Cabledata billing system; any costs incurred in doing the foregoing
shall be borne by the Buyer.
6.6 Sales Taxes. The Buyer and the Seller shall each pay 50% of
any state or local sales and use taxes payable in connection with the sale of
the Assets, and any documentary transfer taxes or recording fees assessed in
connection with a sale of any parcel of the Real Property shall be paid by the
party who customarily pays such taxes or fees in the location of such parcel of
Real Property.
6.7 No Control. Between the date of this agreement and the
Closing, the Buyer shall not, directly or indirectly, control, supervise or
direct, or attempt to control, supervise or direct, the operations of any of the
Systems, but such operations shall be solely the responsibility of the Seller,
and, subject to the provisions of section 6.2, shall be in its complete
discretion.
6.8 Employees. (a) Employment. The Buyer may determine to which of
the Seller's employees who perform services for the Systems the Buyer wishes to
offer employment and shall so notify the Seller at least 30 days prior to the
Closing Date. The Buyer shall pay severance to any employee of the Seller who
performs services at the Systems (but not any employees of MultiVision in
Greenwich, Connecticut) if (a) the Buyer does not employ such employee on the
Closing Date, or (b) such employee's employment by the Buyer is terminated by
the Buyer within 180 days after the Closing Date under circumstances where the
Seller would be required under its severance policy to pay severance, in
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either case in accordance with the Seller's general severance policy described
on schedule 4.14, and Seller shall pay any severance obligation to any employee
above the general severance policy. In addition, Buyer shall provide accrued
vacation to any employee of the Seller that it employs, but Buyer shall have no
obligation to make any payment in lieu of vacation pay (and the Seller shall
make any such payment) to (a) any employee of the Systems that it does not
employ, (b) any employee who does not take his or her accrued vacation, or (c)
any employee whose employment is terminated without him or her having taken the
accrued vacation. The Buyer shall give each of the employees of the Systems that
it employs past service credit for purposes of eligibility and vesting under all
employee benefit plans for employees of the Buyer at or after the Closing (and
past service credit for all purposes, including the amount of benefits, under
the severance and vacation policies of the Buyer).
(b) Medical Benefits. The employees of the Systems
participate in the MultiVision medical plan. As of the Closing Date, the Buyer
shall provide all employees of the Systems who become employees of the Buyer
("Covered Employees") (and their dependents) with medical benefit coverage under
plan(s) maintained or established by the Buyer. The Buyer shall cause its
plan(s) to waive any pre-existing condition exclusions and waiting periods
(except to the extent that such exclusions would have then applied or waiting
periods were not satisfied under MultiVision's medical plan) and to credit or
otherwise consider any monies paid (or accrued) under MultiVision's medical plan
by Covered Employees (or their dependents) prior to the Closing Date toward any
deductibles, co-pays or other maximums under its plan(s) during the first plan
year after the Closing Date. The Buyer shall be responsible for satisfying its
obligations under Section 601 et seq. of ERISA and Section 4980B of the Internal
Revenue Code to provide continuation coverage ("COBRA") to any Covered Employee
in accordance with law and shall provide COBRA coverage to any employees or
former employees
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of the Systems not employed by the Buyer on the Closing Date to the extent
required by COBRA and the Buyer shall provide COBRA coverage to the MultiVision
employees in Greenwich, Connecticut, terminated by MultiVision on September 30,
1994, all subject to the proviso that such coverage shall only be to the extent
of the Buyer's then existing medical coverage.
(c) MultiVision 401(k) Plan. If the Seller decides, in its
sole discretion, to terminate the 401(k) Plan in its entirety, the Buyer shall
permit the employees of the Systems who participate in the 401(k) Plan and who
become employees of the Buyer as of the Closing Date to rollover (whether by
direct trustee to trustee rollover or by indirect rollover) their eligible
rollover distributions from the 401(k) Plan to the Century Communications Corp.
Retirement Investment Plan, in accordance with Section 4.8 therein.
6.9 Insurance. The Seller shall maintain all insurance policies
currently in effect with respect to the Systems (or purchase policies providing
similar coverage) until the Closing Date.
6.10 Notice of Adverse Changes. Between the date of this agreement
and the Closing Date, the Seller shall promptly notify the Buyer in writing of
any materially adverse developments affecting the Systems which become known to
the Seller, including, without limitation, (i) any change in the condition,
financial or otherwise, of the Systems that could have a Material Adverse
Effect, (ii) any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting any of the Systems, or (iii) any
notice of any violation, forfeiture, or complaint under any of the Franchises
that might have a Material Adverse Effect.
6.11 Delivery of Financial Information. Promptly after the
preparation thereof, the Seller shall deliver to the Buyer copies of any cash
flow statements, financial reports, subscriber counts and other operational data
regularly prepared by the Seller for its internal use, which shall be prepared
based
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on the books and records of the Systems. The Seller also shall provide the Buyer
on a periodic basis with reports of capital expenditures made with respect to
the Systems. At the request and sole cost and expense of the Buyer, the Seller
shall cause its independent accountants to prepare separate audited financial
statements for the Northern Systems and the Southern Systems.
6.12 Property Tax Claim. The Seller, the Buyer and seven other
cable operators in Orange County, California are parties to pending litigation
against the Orange County Tax Assessor and share the cost of the litigation.
Promptly after the Closing, the Buyer shall replace the Seller as a party to the
litigation, and shall bear the portion of the cost of the litigation after the
Closing previously borne by the Seller. The Seller shall remain responsible for
and pay its portion of the costs of the litigation incurred during the period
prior to the Closing. The Buyer may elect to terminate its participation (on its
own behalf and on behalf of the Seller) in the litigation at any time, but the
Buyer shall give notice of its election to the Seller so that the Seller may
elect to reenter the litigation on its own behalf. The Buyer shall pay to the
Seller or cause the tax assessor to pay to the Seller any refund of property
taxes (including possessory interests) resulting from the litigation or
otherwise, including, but not limited to, any refund resulting from any
settlement of property taxes with Napa, Sonoma, Los Angeles, Solano or Orange
Counties, that is payable with respect to the period through the Determination
Time.
6.13 Repayment of Bank Debt. If there is one Closing, at the
Closing, the Seller shall cause a portion of the purchase price for the Assets
to be applied to repay in full the Seller's indebtedness that is secured by the
Assets, and shall cause the lenders to deliver UCC-3 termination statements and
satisfactions of mortgages releasing any liens on the Assets. If there are two
Closings, at the first Closing, the Seller shall cause a portion of the purchase
price for the Assets to be transferred at the Closing to be applied to repay a
portion of
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the Seller's indebtedness that is secured by the Assets, and shall cause the
lenders to deliver UCC-3 termination statements and satisfaction of mortgages
releasing any liens on the Assets to be transferred at the Closing.
6.14 Covenant Against Competition and Disclosure. To accord to the
Buyer the full value of its purchase, the Seller shall not, and shall cause I.
Martin Pompadur not to (i) for a period of five years after the Closing Date,
directly or indirectly, engage or become interested in (as owner, stockholder,
partner, manager, employee or consultant) the operation of any cable television
system, MMDS System, SMATV System, over-the-air or subscription television
system or service, pay television system of any kind or nature, whether now or
hereafter created, and/or multi-point distribution system, and any other system
for the transmission of both video and audio signals, other than over so-called
"free" television broadcast over-the-air to a receiver for which no charge is
made and other than a direct broadcast satellite service (a "Competing System")
located within the municipalities or counties serviced by the Systems
transferred to the Buyer, provided, however, that nothing in this clause (i)
shall prohibit Mr. Pompadur from rendering services to or having any interest in
any entity if Mr. Pompadur has no responsibility for the operation of, and
provides no services to, a Competing System or (ii) disclose to anyone, or use
in competition with the Systems transferred to the Buyer, any information with
respect to any confidential or secret aspect of the operations of the Systems.
The Seller acknowledges that the remedy at law for breach of the provisions of
this section 6.14 will be inadequate and that, in addition to any other remedy
the Buyer may have, it will be entitled to an injunction restraining any such
breach or threatened breach. If any court construes the covenant in this section
6.14, or any part thereof, to be unenforceable because of its duration of the
area covered thereby, the court shall have the power to reduce the duration or
area to the extent necessary so that the provision is
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enforceable, and such provision, as reduced, shall then be enforceable.
6.15 Litigations. The Seller shall retain, and shall bear all
costs of defending and any amounts payable with respect to, the litigations
entitled Roger Woods v. ML Media Partners, L.P. and ML Media Partners, L.P. v.
Interactive Cable Systems, Inc. With respect to the Woods litigation, the Buyer
agrees that the Seller may in its sole discretion determine to settle the
litigation at any time, and that if the Seller settles or loses the litigation,
the Buyer will assume the lease with Mr. Woods on the terms determined by the
court (or no worse terms than the terms upheld by the California Court of
Appeals if the Seller settles the litigation). With respect to the Interactive
litigation, the Buyer also agrees that the Seller may in its sole discretion
determine to settle the litigation at any time, in which event the Systems may
lose access to the apartment complex subject to the litigation; provided,
however, that the Buyer may elect to assume the defense of this litigation at
any time and that prior to any settlement the Seller shall notify the Buyer of
the proposed settlement, and the Buyer may again elect, by notice to Seller
within 10 days, to assume the defense of the litigation (if the Buyer assumes
the defense of the litigation the Buyer shall indemnify the Seller against any
further loss, liability, damage or expense relating to the litigation). If the
Interactive litigation is adversely determined or settled, the Operating Cash
Flow for the 12 month period(s) ending on the applicable Calculation Date(s)
shall be recalculated to exclude any revenue and any expenses, including, but
not limited to, operating expenses and legal expenses relating to the
litigation, resulting from cable service to the apartment complex; if such
recalculation occurs after payment of the purchase price for the Assets and
would have reduced the purchase price for the Assets, the Seller shall refund to
the Buyer the amount of the reduction.
With respect to the litigation entitled Kirk v. ML Media, which
the Buyer shall assume on the applicable Closing
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Date, the Seller shall from time to time pay to the Buyer an aggregate amount up
to $50,000 to reimburse the Buyer for legal fees and expenses reasonably
incurred by the Seller with respect to that litigation.
6.16 Free Services. Within 30 days after the date of this
agreement, the Seller shall deliver to the Buyer a list of all free services
provided by the Seller in relation to the Systems and the persons to whom such
services are provided.
6.17 Notice to Municipal Authorities. Prior to a Closing with
respect to any Systems, the Seller shall notify the Municipal Authorities that
issued the Franchises for those Systems that Potential Refund Liabilities are
the Seller's responsibility and that any other refund liabilities are the
Buyer's responsibility.
6.18 Purchase of Inventory. (a) At a Closing, the Seller shall
deliver to the Buyer a schedule setting forth the items of inventory relating to
the Systems to be transferred at that Closing of which the Seller has in excess
of a 60-day supply. The Buyer shall have the option, exercisable by notice given
to the Seller at any time within 20 days after the Closing, to pay to the Seller
an amount to be agreed upon by the Buyer and the Seller with respect to any of
the items of inventory on that schedule. If the Buyer does not elect to make a
payment to the Seller with respect to any such items of inventory, or the Buyer
and the Seller are unable to agree on the amount of that payment within 10 days,
then the Seller shall have the right, exercisable by notice given to the Buyer
at any time within 90 days after the Closing, to require the Buyer to (1)
execute any documents reasonably requested by the Seller to effect the sale of
any of such items to any third party designated by the Seller on any terms
determined by the Seller, and (2) provide access to the purchaser to pick up the
items purchased. The Buyer shall effect any such sales and the Seller shall be
entitled to all proceeds from such sales.
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(b) Within 10 days after the date of this agreement, the Seller
shall deliver to the Buyer a schedule setting forth the items of inventory
relating to all of the Systems of which the Seller expects to have in excess of
a 60-day supply at the Closing for each System. Within 50 days after its receipt
of that statement, the Buyer shall notify the Seller as to which items of
inventory, if any, it then intends to purchase at a Closing under section
6.18(a), but in no event shall the Buyer be obligated to make any such
purchases.
6.19 List of Employees. Within 30 days after the date of this
agreement, the Seller shall deliver to the Buyer a true and correct list, as of
October 31, 1994, of the titles of all officers and directors of the Seller
employed within the Systems and the salaries of all persons employed by the
Seller within the Systems.
6.20 Underground Storage Tank. Within 30 days after the execution
of this agreement, the Seller shall have an investigation undertaken with
respect to the underground storage tank believed to be located at the Hermosa
Beach office site (and, if such investigation is inconclusive, such other
testing as the Seller and the Buyer mutually shall determine to be reasonably
necessary). If such investigation (or testing) indicates that Substances have
been released from the tank and are present in the soil in quantities that
violate applicable environmental laws or that there is any other violation of
applicable environmental laws caused by or related to the tank, the Seller shall
have the tank removed from the site and shall take whatever remedial actions are
necessary to cause the site to be in compliance with applicable environmental
laws; provided, that if the Seller receives a written estimate indicating that
the aggregate cost of such testing, removal and remediation would exceed
$200,000, the Buyer and the Seller shall negotiate an allocation between them of
the costs in excess of $200,000 (provided that neither the Seller nor the Buyer
shall have any obligation to agree to incur any such excess costs). If the
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Buyer and the Seller are unable to agree on an allocation of the excess costs
within 15 days after the Buyer receives a copy of the written estimate, then
either party may terminate this agreement by written notice to the other given
within 15 days thereafter; provided, however, that if within 10 days after the
date of the notice of termination the other party agrees to pay any amount to
remove the tank and remedy the site in excess of $200,000, then the notice of
termination shall be null and void.
6.21 Further Assurances. At any time and from time to time after a
Closing, each of the parties shall, without further consideration, execute and
deliver to the other such additional instruments and shall take such other
action as the other may request to carry out the transactions contemplated by
this agreement. For a period of three years after a Closing, each party shall
grant the other reasonable access during normal business hours upon reasonable
prior notice to the books and records of that party for the purpose of complying
with any applicable law or governmental rule or request relating to the period
during which the other party operated the Systems.
7. Conditions Precedent to Closing.
7.1 Conditions Precedent to the Obligations of the Buyer. The
Buyer's obligation to consummate the purchase under this agreement of the
Systems to be transferred at any Closing is subject to the fulfillment, at or
prior to the Closing, of each of the following conditions (any of which may be
waived in writing by the Buyer):
(a) the representations and warranties of the Seller under
this agreement with respect to the Systems to be transferred on the Closing Date
shall be true at and as of the Closing Date with the same effect as though those
representations and warranties had been made again at and as of that time, with
such exceptions as do not individually or in the aggregate have a Material
Adverse Effect;
(b) the Seller shall have performed and complied in all
material respects with all obligations, covenants
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and conditions with respect to the Systems to be transferred on the Closing Date
required by this agreement to be performed or complied with by it prior to or at
the Closing;
(c) the Seller shall have duly received, if the Southern
Systems are being transferred, the Southern Extensions, and if the Northern
Systems are being transferred, the Northern Extensions, without any condition,
qualification or change in the terms of any such Franchise that would have a
material adverse effect on the business, financial condition or operations of
any System;
(d) the Buyer shall have been furnished with a certificate
of the general partner of the Seller, dated the Closing Date, in form and
substance reasonably satisfactory to the Buyer, certifying to the fulfillment of
the conditions set forth in sections 7.1(a) and (b);
(e) the Seller shall have delivered the documents and
instruments described in sections 8.1 and 8.3; and
(f) from the date of this agreement to the Closing Date,
there shall have been no fire, flood, explosion or earthquake or other act of
God that results in a material adverse change in the business or assets (taken
as a whole) of the Systems as of the Closing Date.
7.2 Conditions Precedent to the Obligations of the Seller. The
Seller's obligation to consummate the sale under this agreement of the Systems
to be transferred at any Closing is subject to the fulfillment, at or prior to
the Closing, of each of the following conditions (any of which may be waived in
writing by the Seller):
(a) payment by the Buyer of the amount payable at that
Closing in accordance with section 2.3;
(b) the representations and warranties of the Buyer under
this agreement shall be true at and as of the Closing Date with the same effect
as though those representations and warranties had been made again at and as of
that time, with such exceptions as do not in the aggregate have a material
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adverse effect on the ability of the Buyer to consummate the transactions
contemplated by this agreement;
(c) the Buyer shall have performed and complied in all
material respects with all obligations, covenants and conditions with respect to
the Systems to be transferred on the Closing Date required by this agreement to
be performed or complied with by the Buyer prior to or at the Closing;
(d) the Seller shall have been furnished with a certificate
of an officer of the Buyer, dated the Closing Date, in form and substance
reasonably satisfactory to the Seller, certifying to the fulfillment of the
conditions set forth in sections 7.2(b) and (c); and
(e) The Buyer shall have delivered the documents and
instruments described in sections 8.2 and 8.3.
7.3 Conditions Precedent to Each Party's Obligations. The
respective obligations of the Buyer and the Seller to consummate the
transactions contemplated by this agreement at any Closing are subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:
(a)(i) The Commission and the Municipal Authorities shall have
given all requisite approvals and consents to the assignment to the Buyer of the
Franchises (and related FCC licenses) for the Systems to be transferred on the
Closing Date (or no such approvals or consents shall be required), without any
condition, qualification or change that would have a material adverse effect on
the business, financial condition or operations of any System or that would be
materially adverse to the Seller or the Buyer. Where a Franchise requires that
the applicable Municipal Authority approve or consent to its assignment to the
Buyer, the approval or consent shall be deemed to have been obtained when (i)
the Municipal Authority has taken all actions necessary to consent to the
transfer (including, but not limited to, the passage of all necessary
resolutions, orders, ordinances, agreements or similar actions) and such consent
is final and effective, or (ii) the Municipal Authority, pursuant to the 1992
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Act and applicable Commission rules, either fails to act or elects to take no
action within 120 days of receiving an application for assignment of the
franchise on FCC Form 394.
(ii) The required consents of the FCC shall be deemed
obtained when they have become Final Orders. For purposes of this agreement,
"Final Order" shall mean action by the Commission (a) which has not been
vacated, reversed, stayed, set aside, annulled or suspended, and (b) with
respect to which no appeal, request for stay, or petition for rehearing,
reconsideration or review by any party or by the Commission on its motion, is
pending, and as to which the time for filing any such appeal, request, petition,
or similar document for the reconsideration or review by the Commission on its
own motion under the express provisions of the Communications Act of 1934 and
the rules and regulations of the Commission, has expired (or if any such appeal,
request, petition or similar document has been filed, a Commission order has
been upheld in a proceeding pursuant thereto and no additional review or
reconsideration may be sought).
(b) There shall not be in effect an injunction or
restraining order issued by a court of competent jurisdiction in an action or
proceeding against the consummation of the transactions contemplated by this
agreement and no action or proceeding brought by any governmental authority
shall be pending that may result in a judgment, decree or order that would
prevent or make unlawful the consummation of the transactions under this
agreement.
(c) All applicable waiting periods under the HSR Act with
respect to the transactions contemplated by this agreement shall have expired or
been terminated.
8. Transactions at the Closings.
8.1 Documents to be Delivered by the Seller. At each Closing, the
Seller shall deliver to the Buyer the following:
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(a) bills of sale, assignments, deeds or other instruments
of transfer and assignment transferring to the Buyer the Assets relating to the
Systems to be transferred at that Closing, all in form and substance reasonably
satisfactory to the Buyer and its counsel;
(b) a copy of resolutions of the general partner of the
Seller authorizing the execution, delivery and performance of this agreement by
the Seller, and a certificate of the general partner of the Seller dated the
Closing Date, that such resolutions were duly adopted and are in full force and
effect on the Closing Date;
(c) the certificate referred to in section 7.1(d);
(d) copies of all consents and approvals received pursuant
to section 6.5 relating to the Systems to be transferred at that Closing; and
(e) an opinion of Proskauer Rose Goetz & Mendelsohn,
counsel to the Seller, in substantially the form of exhibit 8.1(e)(1), and an
opinion of Wiley, Rein & Fielding, FCC counsel to the Seller, in substantially
the form of exhibit 8.1(e)(2).
8.2 Documents to be Delivered by the Buyer. At each Closing, the
Buyer shall deliver to the Seller the following:
(a) wire transferred funds in the amount provided in
section 2.3(d) (and the Seller shall also deliver to the Escrow Agent wire
transferred funds in the amounts provided in section 2.3(a) and, if applicable,
section 2.3(b));
(b) instruments, in form and substance reasonably
satisfactory to the Seller and its counsel, pursuant to which the Buyer shall
assume the Assumed Liabilities, Contract Liabilities and Other Liabilities with
respect to the Systems to be transferred at that Closing as provided in section
2.2(a);
(c) a copy of resolutions of the Buyer authorizing the
execution, delivery and performance of this
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agreement by the Buyer, and a certificate of the secretary or an assistant
secretary of the Buyer, dated the Closing Date, that such resolutions were duly
adopted and are in full force and effect on the Closing Date;
(d) the certificate referred to in section 7.2(d);
(e) an opinion of Leavy Rosensweig & Hyman, counsel to the
Buyer, in substantially the form of exhibit 8.2(e); and
(f) if applicable, the Letter of Credit.
8.3 Documents to be Delivered by the Seller and the Buyer. At the
first (or only) Closing, the Seller and the Buyer shall each execute the
Indemnity Escrow Agreement and, if applicable, the Potential Refund Escrow
Agreement.
9. Survival of Representations and Warranties; Indemnification.
9.1 Survival. All representations and warranties by the Seller and
the Buyer in this agreement shall survive the Closing. The Seller shall not,
however, have any liability for misrepresentation or breach of warranty,
covenant or agreement with respect to the transfer of any System except to the
extent that notice of a claim is asserted in writing and delivered to the Seller
not later than 12 months after the Closing Date for the transfer of that System.
The consummation by the Seller or the Buyer of the purchase and sale
contemplated by this agreement with knowledge of a misrepresentation or breach
of warranty by the other party shall be considered a waiver of any claim with
respect to that misrepresentation or breach of warranty.
9.2 Indemnification. Subject to sections 9.1 and 9.3, the Seller
shall indemnify and hold harmless the Buyer against all loss, liability, damage
or expense (including the reasonable fees and expenses of counsel) (together,
"Losses"), that the Buyer may suffer, sustain or become subject to as a result
of (a) any misrepresentations by the Seller or breach by the Seller of any
warranties, covenants or other agreements
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contained in this agreement, (b) the failure by the Seller to perform any of its
obligations under this agreement, (c) any Other Liabilities or Excluded
Liabilities, (d) any Potential Refund Liability, or (e) any claims asserted or
any penalties payable as a result of the Seller's failure to carry any broadcast
signal in violation of the must-carry provisions of Section 614 of the 1992 Act
and the regulations promulgated thereunder; provided, however, that the Seller
shall not be liable for misrepresentations or breach of any warranty, covenant
or agreement under this agreement, unless the aggregate amount of the Losses
incurred as a result of all such misrepresentations and breaches of warranty,
covenant or agreement exceeds the sum of $250,000 (or $125,000 if only the
Northern Systems or the Southern Systems are transferred), in which event the
Seller shall be liable for the full amount of such Losses. In calculating any
damage to the Buyer (a) the Seller shall receive credit for any reduction in
cash tax liability and (b) no amount shall be included except for the Buyer's
actual out-of-pocket costs and expenses. The Buyer shall indemnify and hold
harmless the Seller against all Losses that the Seller may suffer, sustain or
become subject to as a result of (a) any misrepresentation by the Buyer or
breach by the Buyer of any warranties, covenants or other agreements contained
in this agreement, (b) any Assumed Liabilities or Contract Liabilities, or (c)
any claim asserted against the Seller by [Teleport] resulting from the Buyer's
unwillingness to assume the agreements between the Seller and [Teleport].
9.3 Limitation on Liability. Notwithstanding anything to the
contrary in this agreement, the aggregate liability of the Seller to the Buyer
for indemnification or otherwise under this agreement shall be limited solely to
the funds held in the Indemnity Escrow Account and the Buyer shall have no other
recourse against the Seller with respect to such indemnity obligations or
otherwise arising under this agreement; provided, however, that the Seller shall
make any payment based
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on the final determination of the adjustments to the Base Amount pursuant to
section 2.3(e) or with respect to the Potential Refund Liability and shall
reimburse Buyer for any payments by Buyer to third parties with respect to any
Excluded Liabilities or for any payments by Buyer in lieu of vacation pay
pursuant to section 6.8(a), in each case without regard to the "basket" in
section 9.2 or the limitation in this section 9.3.
9.4 Conditions of Indemnification for Third Party Claims. The
obligations and liabilities of the parties under this agreement with respect to,
as a result of, or relating to claims of third parties (individually, a "Third
Party Claim" and collectively "Third Party Claims"), shall be subject to the
following terms and conditions:
(a) The party entitled to be indemnified hereunder (the
"Indemnified Party") shall give the party obligated to provide the indemnity
(the "Indemnifying Party") prompt notice of any Third Party Claim, and the
Indemnifying Party may undertake the defense of that claim by representatives
chosen by it. Any such notice of a Third Party Claim shall identify with
reasonable specificity the basis for the Third Party Claim, the facts giving
rise to the Third Party Claim, and the amount of the Third Party Claim (or, if
such amount is not yet known, a reasonable estimate of the amount of the Third
Party Claim). The Indemnified Party shall make available to the Indemnifying
Party copies of all relevant documents and records in its possession.
(b) If the Indemnifying Party, within 30 days after notice
of any such Third Party Claim, fails to assume the defense in accordance with
section 9.4(a), the Indemnified Party shall (upon further notice to the
Indemnifying Party) have the right to undertake the defense, compromise or
settlement of the Third Party Claim, subject to the right of the Indemnifying
Party to assume the defense of such Third Party Claim at any time prior to
settlement, compromise or final determination thereof; provided, however, that
at the time of the assumption of defense
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the Indemnifying Party shall reimburse the Indemnified Party for its reasonable,
actual, documented out-of-pocket expenses incurred prior to the assumption of
defense by the Indemnifying Party.
(c) Anything in this section 9.4 to the contrary
notwithstanding, (i) the Indemnifying Party shall not, without the written
consent of the Indemnified Party, settle or compromise any Third Party Claim or
consent to the entry of judgment which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnified Party of
an unconditional release from all liability in respect of the Third Party Claim;
and (ii) if there is a reasonable probability that a claim may materially and
adversely affect the Indemnified Party other than as a result of money damages
or other money payments, the Indemnified Party shall have the right, at its own
cost and expense, to participate in the defense of the Third Party Claim
(control of the defense to remain with the Indemnifying Party).
9.5 Post-Closing Payments. (a) If after a Closing it is finally
determined (as defined in section 2.2(d)(iii)), that the Base Amount for the
Systems that are transferred to the Buyer at that Closing would have been
reduced as a result of an A la Carte Revenue Loss as provided in section 2.2(d)
by an amount less than the Letter of Credit Amount, then the Seller shall be
entitled to draw on the Letter of Credit in an amount equal to the sum of (a)
that difference, less if all of the Systems are transferred (b) the difference,
if any, between $260,000,000 and what the Base Amount would have been if the
Buyer had not made the election pursuant to the proviso in section 10.1(e) or
10.2.
(b) If after a Closing it is finally determined that (1)
the basic rates reflected in the Form 393's or 1200's filed by the Seller
referred to in section 2.2(d)(ii) were calculated incorrectly or in violation of
Existing Governmental Regulations, (2) any inflationary increase or
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external cost "pass-through" referred to in section 2.2(d)(v) is disapproved, or
(3) any increase in rates for basic service or tier service implemented by
Seller pursuant to section 6.2 were not valid, then the Operating Cash Flow
shall be recalculated and the Seller shall refund to the Buyer any reduction in
the Base Amount as a result of the recalculation.
10. Termination.
10.1 Termination. Except with respect to provisions which
expressly survive termination and the payment of any amount owed by one party to
the other for the prior performance of certain obligations under this agreement,
this agreement may be terminated:
(a) by written agreement of the Buyer and the Seller;
(b) by the Buyer or the Seller by notice to the other, if
at any time any event shall have occurred or any state of facts shall exist that
renders any of the conditions to the obligations of the other party provided in
this agreement impossible to fulfill;
(c) by the Buyer as provided in section 11;
(d) by the Buyer or the Seller as provided in section 6.20;
or
(e) by the Seller, by notice to the Buyer, given within 30
days after the end of any calendar month prior to the first Closing, if as of
the last day of that calendar month the Operating Cash Flow of the Systems for
the 12-month period ending on that day was less than $23,181,818, or by the
Seller by notice to the Buyer given after the applicable Calculation Date if the
Operating Cash Flow of the Systems for the 12-month period ending on the
Calculation Date was less than $23,636,363 (taking into account, for this
purpose only, the maximum possible reduction in Operating Cash Flow resulting
from a possible A la Carte Revenue Loss, which shall be an amount equal to
$2,181,818 reduced by $1,454,545 for the Northern Systems and/or $727,273 for
the Southern Systems for which there has been a final
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determination that there will be no A La Carte Revenue Loss for all of those
Systems (or if there has been a final determination that the maximum reduction
from an A la Carte Revenue Loss for all of those Systems is less than $1,454,545
or $727,273, as the case may be, the difference in those amounts)); provided,
however, that if within 15 days after the date of the notice of termination from
the Seller the Buyer agrees that the Base Amount shall not be reduced below
$260,000,000 regardless of the Operating Cash Flow of the Systems for the
12-month period ending on the Calculation Date(s), then the notice of
termination shall be null and void.
10.2 Termination of Second Closing. The parties' obligations with
respect to any Systems not transferred at a first Closing may be terminated by
the Seller, by notice to the Buyer, given within 30 days after the end of any
calendar month after the first Closing and prior to the second Closing, if as of
the last day of that calendar month the sum of the Operating Cash Flow of the
Systems transferred at the first Closing for the 12-month period ending on the
applicable Calculation Date and the Operating Cash Flow for the remaining
Systems for the 12-month period ending on the last day of that calendar month
was less than $23,181,818 (including, for this purpose only, the maximum
reduction in Operating Cash Flow resulting from a possible A la Carte Revenue
Loss determined as set forth in section 10.1(e)); provided, however, that (1)
the Seller may not give such notice if the Buyer previously agreed pursuant to
the proviso in section 10.1(e) that the Base Amount shall not be reduced below
$260,000,000, and (2) if within ten days after the date of the notice of
termination from the Seller the Buyer agrees that the Base Amount shall not be
reduced below $260,000,000 regardless of the Operating Cash Flow of the Systems
to be transferred at the second Closing, then the notice of termination shall be
null and void.
10.3 Liability. The termination of this agreement under section
10.1(b) or (c) or under section 6.20
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shall not relieve any party of any liability for breach of this agreement prior
to the date of termination.
11. Risk of Loss; Damage to Facilities. The risk of loss or damage to
any of the Assets shall be on the Seller prior to the Determination Time and
thereafter shall be on the Buyer. If any of the Assets is damaged or destroyed
prior to the Determination Time (any such event being referred to as an "Event
of Loss"), the Seller shall, at its expense, use reasonable efforts to replace
or repair the item with comparable property of like value and quality as soon as
possible before the Determination Time. If any Event of Loss prior to the
Determination Time shall materially affect the operations of the Systems and
repair or replacement cannot be accomplished by the Closing Date but can be
accomplished within 120 days after that date, the Closing Date shall be
postponed for up to that 120-day period; if, however, the repair or replacement
cannot be accomplished within that 120-day period, the Buyer may elect by
written notice to the Seller within 20 days after the Buyer has received notice
that an Event of Loss has occurred and that repair and replacement cannot be so
completed:
(a) to fulfill its obligations under this agreement, close
the transaction on the Closing Date designated by the Seller in accordance with
section 3.1 and accept the Assets as is (in which event, any insurance proceeds
payable to the Seller with respect to the Event of Loss shall be assigned to the
Buyer, except to the extent the Seller has applied such proceeds to repair,
replace or restore the property); or
(b) to terminate this agreement without liability.
If the date of the Closing is postponed beyond the time specified in
section 3.2, the parties shall amend their application or applications to the
Commission to request an extension on the date of Closing.
12. Miscellaneous.
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12.1 Notices. Any notice or other communication under this
agreement shall be in writing and shall be considered given when delivered
personally or by facsimile machine, one day after being given to a nationally
recognized overnight delivery service or four days after being mailed by
registered mail, return receipt requested, to the parties at the addresses set
forth below (or at such other address as a party may specify by notice to the
other):
if to the Buyer, to it at:
50 Locust Avenue
New Canaan, Connecticut 06840
Att: President
Fax: (203) 972-2013
with a copy to:
Leavy Rosensweig & Hyman
11 East 44th Street
New York, New York 10017
Att: David Z. Rosensweig, Esq./General Counsel
Fax: (212) 983-2537
if to the Seller, to it at:
ML Media Partners, L.P.
350 Park Avenue
New York, New York 10022
Att: I. Martin Pompadur
Fax: (212) 980-8374
with a copy to:
Proskauer Rose Goetz & Mendelsohn
1585 Broadway
New York, New York 10036
Att: Lawrence H. Budish, Esq.
Fax: (212) 969-2900
12.2 Finders. Each of the Buyer and the Seller represents and
warrants to the other that it has not retained or dealt with any broker or
finder in connection with the transactions contemplated by this agreement except
for Daniels &
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Associates and Merrill Lynch & Co., and Seller shall be responsible for any fee
payable to each of them.
12.3 Entire Agreement. This agreement, including the schedules and
exhibits, contains a complete statement of all the arrangements between the
parties with respect to its subject matter, supersedes any previous agreement
among them relating to that subject matter, and cannot be changed or terminated
orally. Except as specifically set forth in this agreement, there are no
representations or warranties by either party in connection with the
transactions contemplated by this agreement.
12.4 Headings. The section headings of this agreement are for
reference purposes only and are to be given no effect in the construction or
interpretation of this agreement.
12.5 Governing Law. This agreement shall be governed by and
construed in accordance with the law of the State of New York applicable to
agreements made and to be performed in New York.
12.6 Separability. If any provision of this agreement is invalid
or unenforceable, the balance of this agreement shall remain in effect.
12.7 Publicity. Except as required by applicable law, no party
shall issue any press release or other public statement regarding the
transactions contemplated by this agreement without consulting with the other
party and obtaining the other party's approval of the contents of the press
release or public statement. Each party acknowledges that the other is a
publicly held entity and is subject to the disclosure requirements of the
Federal securities laws.
12.8 Jurisdiction. The courts of the State of New York in New York
County and the United States District Court for the Southern District of New
York shall have jurisdiction over the parties with respect to any dispute or
controversy between them arising under or in connection with this agreement and,
by execution and delivery of this agreement, each of the parties to this
agreement submits to the jurisdiction of those courts,
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including, but not limited to, the in personam and subject matter jurisdiction
of those courts, waives any objection to such jurisdiction on the grounds of
venue or forum non conveniens, the absence of in personam or subject matter
jurisdiction and any similar grounds, consents to service of process by mail (in
accordance with section 12.1) or any other manner permitted by law, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this agreement. These consents to jurisdiction shall not be deemed to
confer rights on any person other than the parties to this agreement.
12.9 Assignment. No party may assign any of its rights or delegate
any of its duties under this agreement, by operation of law or otherwise,
without the consent of the other; provided, however, that the Buyer may at any
time prior to the parties' making the filings referred to in section 6.1(a)
assign its rights and obligations hereunder to one or more entities that
directly or indirectly control, are controlled by, or are under common control
with the Buyer without the consent of the Seller so long as the Buyer remains
responsible for its obligations under this agreement and the assignee makes the
representations and warranties in sections 5.1 through 5.4.
12.10 Counterparts. This agreement may be executed in any number
of counterparts which together shall constitute one and the same instrument.
CENTURY COMMUNICATIONS CORP.
By:__________________________________
ML MEDIA PARTNERS, L.P.
By: MEDIA MANAGEMENT PARTNERS, its
general partner
By: RP MEDIA MANAGEMENT, a general
partner
By: IMP MEDIA MANAGEMENT, INC., its
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managing general partner
By:
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The undersigned, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, agrees to be bound by the
restrictive covenant set forth in section 6.14 of the above agreement to the
same extent as if he were a party to such agreement.
--------------------------------
I. Martin Pompadur
Dated: November 28, 1994
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