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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): November 18, 1998
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Century Communications Corp.
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(Exact name of registrant as specified in its charter)
0-16899
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(Commission File Number)
New Jersey 06-1158179
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
50 Locust Avenue
New Canaan, CT 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 5. Other Events
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On November 18, 1998, Century Communications Corp. (the
"Company") executed a definitive agreement with TCI Communications, Inc.
("TCIC"), the cable television arm of Tele-Communications, Inc. ("TCI"), to
combine cable systems in Southern California. The Company and TCIC have also
agreed to exchange certain cable systems in Northern and Southern California.
The Company will contribute to the partnership formed by the
parties (the "Partnership") certain systems serving approximately 500,000
customers in the City of Los Angeles, Anaheim, Santa Monica, Sherman Oaks and
other areas around East San Fernando Valley, California. TCIC will contribute
certain systems serving approximately 243,000 customers in and around Los
Angeles County, Arcadia, Hemet, Redlands and Ventura, California. The Company is
expected to own approximately 75% of the Partnership and TCIC is expected to own
approximately 25% of the Partnership. The cable systems contributed by each
party will be valued based upon annualized cash flow of such contributed systems
as of the closing date of the transaction, subject to certain adjustments.
The Company is expected to manage the Partnership in return for a
management fee payable by the Partnership calculated based on a percentage of
the annual total gross revenues of the Partnership, in addition to payment of
certain fees and expenses. However, under the Agreement of Limited Partnership,
the Partnership may not, among other things, without the approval of the TCI
partner or the unanimous vote of all the members of the Partnership committee,
enter into certain transactions with affiliates, issue any Partnership or other
equity interest, permit any subsidiary to issue any equity interest, effectuate
certain mergers or other business combinations or incur in excess of certain
levels of indebtedness.
The Company will also exchange its Northern California cable
systems serving approximately 90,000 customers in the communities of San Pablo,
Benicia, Fairfield and Rohnert Park, California for TCIC's cable systems serving
approximately 94,400 customers in the areas around East San Fernando Valley,
California which are included in the systems described above as contributed by
the Company to the Partnership.
The closing of the foregoing transactions is subject to, among
other things, each party obtaining the required consents (including under the
Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended) and all
appropriate regulatory and other approvals, including from the Federal
Communications Commission and local franchising authorities. There is no
assurance that the Company will obtain such approvals or that such transactions
will be consummated.
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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: Chief Financial Officer, Senior Vice
President and Treasurer
(Principal Accounting Officer)
Date: December 3, 1998
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EXHIBIT INDEX
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Exhibit No. Description
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10.1 Agreement of Limited Partnership of Century - TCI California, L.P.,
dated as of November 18, 1998.
10.2 Asset Contribution Agreement dated as of November
18, 1998, by and among Cablevision of Arcadia/Sierra Madre, Inc., a
Delaware corporation, United Cable Television of Baldwin Park, Inc., a
Colorado corporation, UCTC of Los Angeles County, Inc., a Delaware
corporation, TCI Cablevision of California, Inc., a California
corporation, United Cable Television of Los Angeles, Inc., a California
corporation, TCI California Holdings, LLC, a Colorado limited liability
company, Century Exchange LLC, a Delaware limited liability company,
Century Bay Area Cable Corp., a Delaware corporation, Century Cable of
Northern California, a California corporation, Franem Cable Company, a
California general partnership, Century Cable of Southern California, a
California corporation, Century Southwest Cable Television, Inc., a
Delaware corporation, Century Valley Cable Corp., a Delaware
corporation, Citizens Century Cable Television Venture, a Delaware joint
venture, and Century-TCI California, L.P., a Delaware limited
partnership.
10.3 Asset Exchange Agreement, dated November 18, 1998,
between TCI of East San Fernando Valley, L.P., a Colorado limited
partnership and Century-TCI California, L.P., a Delaware limited
partnership.
STATEMENT OF DIFFERENCES
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The section symbol shall be expressed as............................... 'SS'
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AGREEMENT OF LIMITED PARTNERSHIP OF
CENTURY-TCI CALIFORNIA, L.P., DATED AS
OF NOVEMBER 18, 1998
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AGREEMENT OF LIMITED PARTNERSHIP OF
CENTURY-TCI CALIFORNIA, L.P., DATED AS
OF NOVEMBER 18, 1998
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS
1.1 Terms Defined in this Section.......................................................................1
1.2 Terms Defined Elsewhere in this Agreement..........................................................10
1.3 Terms Generally....................................................................................11
ARTICLE 2 FORMATION AND PURPOSE
2.1 Formation..........................................................................................11
2.2 Name...............................................................................................12
2.3 Principal and Registered Office....................................................................12
2.4 Term...............................................................................................12
2.5 Purposes of Partnership............................................................................12
2.6 Authority of Partnership...........................................................................13
2.7 Limitations on Activities of the Partnership.......................................................14
2.8 Certificate........................................................................................14
2.9 Addresses of the Partners..........................................................................14
2.10 Foreign Qualification.............................................................................14
2.11 Tax Classification................................................................................14
ARTICLE 3 PARTNERSHIP CAPITAL
3.1 Contributions Pursuant to the Contribution Agreement...............................................15
3.2 Additional Capital Contributions...................................................................16
3.3 Other Contributions................................................................................20
3.4 Assumption of Liabilities..........................................................................20
3.5 Return of Contributions............................................................................20
3.6 Financing..........................................................................................20
ARTICLE 4 DISTRIBUTIONS; ALLOCATIONS OF PROFIT AND LOSS
4.1 Distributions......................................................................................21
4.2 Allocations of Net Profit and Net Loss.............................................................22
4.3 Special Provisions Regarding Allocations of Profit and Loss........................................23
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4.4 Tax Allocations: Code Section 704(c)..............................................................25
4.5 Allocation in Event of Transfer....................................................................25
4.6 Alternative Allocations............................................................................26
ARTICLE 5 MANAGEMENT
5.1 Authority of Managing Partner......................................................................26
5.2 Partnership Committee..............................................................................31
5.3 No Management by Limited Partner...................................................................32
5.4 Operating and Capital Expenditure Budgets..........................................................33
5.5 No Personal Liability..............................................................................33
5.6 Management Agreement...............................................................................33
5.7 Tax Matters Partner................................................................................33
5.8 Consolidation......................................................................................35
5.9 Management Prior to Closing........................................................................35
ARTICLE 6 STATUS OF LIMITED PARTNERS
6.1 Limited Liability..................................................................................36
6.2 Return of Distributions of Capital.................................................................36
6.3 Specific Limitations...............................................................................36
6.4 Issuance of Partnership Interests..................................................................36
ARTICLE 7 WITHDRAWAL OF GENERAL PARTNER
7.1 Withdrawal.........................................................................................37
7.2 Removal of Century as Managing Partner.............................................................38
7.3 Effect of Withdrawal or Removal of Managing Partner................................................39
7.4 No Dissolution.....................................................................................39
ARTICLE 8 ASSIGNMENT OF PARTNERSHIP INTERESTS
8.1 Assignments by Century.............................................................................39
8.2 Assignments by Other Partners......................................................................40
8.3 Exceptions.........................................................................................40
8.4 Assignee...........................................................................................40
8.5 Other Consents and Requirements....................................................................41
8.6 Assignment Not In Compliance.......................................................................41
8.7 Division of Partnership Interests..................................................................41
8.8 Substitute Partners................................................................................41
8.9 Consent............................................................................................42
8.10 Covenants of Parents..............................................................................42
8.11 Impact of Code Section 708........................................................................43
ARTICLE 9 RIGHT OF FIRST OFFER
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9.1 Proposed Sale and Negotiations with TCI............................................................45
9.2 Sale to Third Party; Re-offer to TCI...............................................................45
9.3 Seller's Election Not to Sell......................................................................46
ARTICLE 10 OTHER BUSINESSES AND INVESTMENT OPPORTUNITIES
10.1 Prohibited Cross-Interests........................................................................47
10.2 Wireline All Distance Communications Services.....................................................49
10.3 No Other Restrictions.............................................................................50
ARTICLE 11 DISSOLUTION AND LIQUIDATION OF PARTNERSHIP
11.1 Events of Dissolution.............................................................................51
11.2 Liquidation.......................................................................................51
11.3 Distribution in Kind..............................................................................53
11.4 No Action for Dissolution.........................................................................53
11.5 No Further Claim..................................................................................53
ARTICLE 12 INDEMNIFICATION
12.1 General...........................................................................................53
12.2 Exculpation.......................................................................................54
12.3 Persons Entitled to Indemnity.....................................................................54
ARTICLE 13 BOOKS, RECORDS, ACCOUNTING, AND REPORTS
13.1 Books and Records.................................................................................54
13.2 Delivery to Partner and Inspection................................................................55
13.3 Annual Statements.................................................................................55
13.4 Quarterly Financial Statements....................................................................56
13.5 Monthly Statements................................................................................57
13.6 Other Information.................................................................................57
13.7 Tax Matters.......................................................................................57
13.8 Other Filings.....................................................................................58
13.9 Non-Disclosure....................................................................................58
ARTICLE 14 REPRESENTATIONS BY TCI
14.1 Investment Intent.................................................................................59
14.2 Securities Regulation.............................................................................59
14.3 Knowledge and Experience..........................................................................60
14.4 Economic Risk.....................................................................................60
14.5 Binding Agreement.................................................................................60
14.6 Tax Position......................................................................................60
14.7 Information.......................................................................................60
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ARTICLE 15 AMENDMENTS AND WAIVERS
15.1 Amendments to Partnership Agreement...............................................................60
15.2 Waivers...........................................................................................61
ARTICLE 16 MISCELLANEOUS
16.1 Additional Documents..............................................................................61
16.2 Inspection........................................................................................61
16.3 General...........................................................................................61
16.4 Notices, Etc......................................................................................62
16.5 Execution of Papers...............................................................................62
16.6 Disputed Matters..................................................................................62
16.7 No Third-Party Beneficiaries......................................................................63
16.8 @Home Matters.....................................................................................63
16.9 Programming Matters...............................................................................64
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TABLE OF SCHEDULES AND EXHIBIT
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Schedule Description
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Schedule I Addresses of the Partners
Schedule II Partnership Committee Members
Schedule III Five-year Operating Plan
Schedule IV Programming Services
Schedule V Certain Agreements
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Exhibit Description
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Exhibit A Form of Management Agreement
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AGREEMENT OF LIMITED PARTNERSHIP
OF
CENTURY-TCI CALIFORNIA, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP is made and entered into as of
November 18, 1998, by and among Century Exchange LLC, a Delaware limited
liability company, as a general partner and limited partner, and TCI California
Holdings, LLC, a Colorado limited liability company, as a general partner.
PRELIMINARY STATEMENT
TCI, together with its Affiliates, owns and operates certain cable
television systems located in the Territory.
Century, together with its Affiliates, owns and operates certain cable
television systems located in the Territory.
Century also owns certain cable television systems outside the
Territory that are intended to be contributed to the Partnership and exchanged
by the Partnership for certain cable television systems in the Territory that
are owned and operated by an Affiliate of TCI.
Concurrently with the execution and delivery of this Agreement, the
Partners, together with certain of their Affiliates, are entering into the
Contribution Agreement, pursuant to which TCI has agreed to contribute or cause
to be contributed to the Partnership substantially all the assets of certain
cable television systems, subject to certain liabilities being assumed by the
Partnership, and Century has agreed to contribute or cause to be contributed to
the Partnership substantially all the assets of certain cable television systems
and the Orange County Newschannel, subject to certain liabilities being assumed
by the Partnership.
The parties to this Agreement desire to enter into this Agreement to
provide for the formation of the Partnership, the allocation of profits and
losses, cash flow, and other proceeds of the Partnership between the Partners,
the respective rights, obligations, and interests of the Partners to each other
and to the Partnership, and certain other matters.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS
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1.1 Terms Defined in this Section.
For purposes of this Agreement, the following terms shall have the
following meanings (all terms used in this Agreement that are not defined in
this Section 1.1 shall have the meanings set forth elsewhere in this Agreement
as indicated in Section 1.2, except as otherwise provided in this Agreement):
"Act" means the Delaware Revised Uniform Limited Partnership Act.
"Adjusted Capital Account Deficit" means with respect to either
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Fiscal Year, after:
(a) crediting to such Capital Account any amounts that such
Partner is obligated to restore to the Partnership pursuant to Treasury
Regulations Section 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore
pursuant to the penultimate sentences of Treasury Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and
(b) debiting from such Capital Account the items described in
Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5),
and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Treasury Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by, or under common control with such Person. For
purposes of this definition, the term "control" means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of equity interests, by
contract, or otherwise, and the terms "controlled by" and "under common control
with" have meanings corresponding to the meaning of "control." Notwithstanding
the foregoing, neither the Partnership nor any Person controlled by the
Partnership shall be deemed to be an Affiliate of either Partner or of any
Affiliate of either Partner, or vice versa, solely as a result of such Partner's
Partnership Interest.
"Agreement" means this Agreement of Limited Partnership, as it may be
amended from time to time.
"Assignee" means a Person that has acquired a direct beneficial
interest in a Partnership Interest in accordance with the provisions of Article
8 but has not become a substitute Partner in accordance with the provisions of
Section 8.8.
"Business Day" means any day (other than a Saturday or a Sunday) on
which banks are permitted to be open for business in the State of New York.
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"Capital Account" means a separate account to be maintained for each
Partner in accordance with the Code, which, subject to any contrary requirements
of the Code, shall equal such Partner's initial Capital Account balance
immediately after the Closing as provided in Section 3.1(b), increased by: (a)
the amount of money contributed by such Partner to the Partnership, if any; (b)
the fair market value without regard to Code Section 7701(g) of property, if
any, contributed by such Partner to the Partnership (net of liabilities that are
secured by such contributed property or that the Partnership or any other
Partner is considered to assume or take subject to under Code Section 752), but
excluding contributions of property pursuant to the Contribution Agreement; (c)
allocations to the Partner of Net Profit and items of income and gain pursuant
to Article 4; and (d) other additions made in accordance with the Code; and
decreased by (a) the amount of cash distributed to such Partner by the
Partnership; (b) allocations to the Partner of Net Loss and items of loss and
deduction pursuant to Article 4; (c) the fair market value without regard to
Code Section 7701(g) of property distributed to such Partner by the Partnership
(net of liabilities that are secured by such distributed property or that such
Partner is considered to assume or take subject to under Code Section 752); and
(d) other deductions made in accordance with the Code. The foregoing provisions
and the other provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Treasury Regulations under Code
Section 704(b) and, to the extent not inconsistent with the provisions of this
Agreement, shall be interpreted and applied in a manner consistent with such
Treasury Regulations.
"Capital Contributions" means, with respect to either Partner, the
amount of money and the net fair market value of property contributed by such
Partner to the Partnership pursuant to this Agreement. For purposes of this
Agreement, including calculation of the Partners' Capital Accounts, any payment
by a Partner pursuant to Section 3 of the Contribution Agreement with respect to
Closing Adjustments (as defined in the Contribution Agreement) shall not be
deemed to be a Capital Contribution.
"Century" means Century Exchange LLC, a Delaware limited liability
company, or any other Person that succeeds to its Partnership Interest and is
admitted as a Partner in accordance with the provisions of this Agreement.
"Century Appraiser" means an appraiser designated by Century pursuant
to Section 3.2(f)(2).
"Century/New Jersey" means Century Communications Corp., a New Jersey
corporation, and any successor (by merger, consolidation, sale of assets, or
other similar transaction) to all or substantially all of its business and
assets.
"Century/Texas" means Century Communications Corp., a Texas
corporation, and any successor (by merger, consolidation, sale of assets, or
other similar transaction) to all or substantially all of its cable television
business and assets.
"Certificate" means the certificate of limited partnership to be filed
with respect to the Partnership pursuant to the Act.
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"Closing" means the consummation of the contribution of assets to the
Partnership in accordance with Section 9 of the Contribution Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any subsequent federal law of similar import, and, to the extent
applicable, the Treasury Regulations.
"Contribution Agreement" means the Contribution Agreement, dated as of
November 18, 1998, among the Partnership, the Partners, and the other parties
named therein, as it may be amended from time to time in accordance with its
terms.
"Controlled Affiliate" means, with respect to any Person, such Person's
Parent and any other Person that, at such time, is either (a) controlled
directly or indirectly by such Person's Parent and of which such Person's Parent
owns, directly or indirectly, at least fifty percent of the outstanding equity
interests or (b) controlled directly or indirectly by such Person.
Notwithstanding the foregoing, neither Centennial Cellular Corp., Citizens
Utilities Company, nor any Person controlled, directly or indirectly, by
Centennial Cellular Corp. or Citizens Utilities Company shall be deemed to be a
Controlled Affiliate of Century.
"Depreciation" means, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such Fiscal Year, except that if the Gross Asset Value
of an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such Fiscal Year, Depreciation shall be determined in the
manner described in Treasury Regulations Section 1.704-1(b)(2)(iv)(g)(3) or
Treasury Regulations Section 1.704-3(d)(2), as applicable.
"Equity Value" means, with respect to any Partnership Interest, for
purposes of any provision of this Agreement that refers to the Equity Value of
such Partnership Interest, the amount that would be distributed to the holder of
such Partnership Interest in liquidation of the Partnership, with respect to
such Partnership Interest, if the Partnership Value (determined in the manner
specified in such provision) were distributed to the Partners in liquidation in
accordance with Section 11.2(d), without reduction for liabilities pursuant to
Section 11.2(d)(1) or reserves pursuant to Section 11.2(d)(2) except as
specifically provided in this definition of "Partnership Value."
"FCC" means the Federal Communications Commission.
"Fiscal Year" means the fiscal year of the Partnership as required
under Code Section 706.
"General Partner" means Century, in its capacity as a general partner
of the Partnership and not as the limited partner of the Partnership, TCI, and
any other Person admitted as a general partner in accordance with the provisions
of this Agreement.
"Gross Asset Value" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
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(a) The initial Gross Asset Value of any asset contributed by
a Partner to the Partnership shall be the gross fair market value of such asset,
as determined in accordance with Section 3.1(c)(1) or Section 3.1(d), as
applicable;
(b) The Gross Asset Values of all assets of the Partnership
shall be adjusted to equal their respective gross fair market values, as agreed
to by the Partners as of the following times: (1) the acquisition of an
additional interest in the Partnership by any new or existing Partner in
exchange for more than a de minimis Capital Contribution; (2) the distribution
by the Partnership to a Partner of more than a de minimis amount of property of
the Partnership as consideration for an interest in the Partnership; and (3) the
liquidation of the Partnership within the meaning of Treasury Regulations
Section 1.704-1(b)(2)(ii)(g); provided, however, that the adjustments pursuant
to clauses (1) and (2) above shall be made only if the Partners agree that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership;
(c) The Gross Asset Value of any asset of the Partnership
distributed to either Partner shall be the gross fair market value of such asset
on the date of distribution; and
(d) The Gross Asset Value of the assets of the Partnership
shall be increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but
only to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)
and Section 4.3(g); provided, however, that Gross Asset Value shall not be
adjusted pursuant to this paragraph (d) to the extent that the Partners agree
that an adjustment pursuant to paragraph (c) of this definition is necessary or
appropriate in connection with a transaction that would otherwise result in an
adjustment pursuant to this paragraph (d).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to paragraph (a), (b), or (d) of this definition, the Gross Asset Value
of such asset shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing Net Profit and Net
Loss.
"Indebtedness" has the meaning specified below:
(a) if the Partnership is not subject to any loan agreement
that limits the ratio of the Partnership's indebtedness to its cash flow, then
"Indebtedness" has the same meaning as "Debt" as defined in the Credit
Agreement, dated as of June 30, 1994, among CCC - II, Inc., Citibank, N.A., as
managing agent, the Banks (as defined in such Credit Agreement), and the
Co-Agents (as defined in such Credit Agreement), and
(b) if the Partnership is subject to a loan agreement that
limits the ratio of the Partnership's indebtedness to its cash flow, then
"Indebtedness" means any indebtedness that is required to be taken into account
under that loan agreement to which the Partnership is subject that
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includes the most restrictive covenant regarding the ratio of the Partnership's
indebtedness to its cash flow.
"Limited Partner" means Century, in its capacity as a limited partner
of the Partnership and not as the general partner of the Partnership, and any
other Person admitted as a limited partner in accordance with the provisions of
this Agreement.
"Managing Partner" means Century and any General Partner selected as
successor Managing Partner pursuant to Section 7.1(b) or Section 7.2(b).
"Net Profit and Net Loss" means for each Fiscal Year or other period,
an amount equal to the Partnership's taxable income or loss for such Fiscal Year
or other period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Net Profit or Net
Loss shall be added to such taxable income or loss;
(b) Code Section 705(a)(2)(B) expenditures of the Partnership
that are not otherwise taken into account in computing Net Profit or Net Loss
shall be subtracted from such taxable income or loss;
(c) If the Gross Asset Value of any asset of the Partnership
is adjusted pursuant to paragraph (b) or (c) of the definition of Gross Asset
Value, the amount of such adjustment shall be taken into account as gain or loss
from the disposition of such asset for purposes of computing Net Profit or Net
Loss;
(d) Gain or loss resulting from any disposition of property of
the Partnership with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Gross Asset Value of
the property disposed of, notwithstanding that the adjusted tax basis of such
property differs from its Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year or other
period;
(f) Notwithstanding anything to the contrary in the definition
of the terms "Net Profit" and "Net Loss," any items that are specially allocated
pursuant to Section 4.3 of this Agreement shall not be taken into account in
computing Net Profit or Net Loss; and
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(g) For purposes of this Agreement, any deduction for a loss
on a sale or exchange of property of the Partnership that is disallowed to the
Partnership under Code Section 267(a)(1) or Code Section 707(b) shall be treated
as a Code Section 705(a)(2)(B) expenditure.
"Nonrecourse Deductions" means losses, deductions, or Code Section
705(a)(2)(B) expenditures attributable to Partnership Nonrecourse Liabilities.
The amount of Nonrecourse Deductions shall be determined pursuant to Treasury
Regulations Section 1.704-2(c), which provides generally that the amount of
Nonrecourse Deductions for a Fiscal Year shall equal the net increase, if any,
in Partnership Minimum Gain during that Fiscal Year, reduced (but not below
zero) by the aggregate distributions made during that Fiscal Year of proceeds of
a Nonrecourse Liability that are allocable to an increase in Partnership Minimum
Gain.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulations Section 1.752- 1(a)(2).
"Operating Cash Flow Ratio" has the meaning specified below:
(a) if the Partnership is not subject to any loan agreement
that limits the ratio of the Partnership's indebtedness to its cash flow, then
"Operating Cash Flow Ratio" has the same meaning as the "ratio of Total Debt to
EBIDT" for purposes of Section 5.01(i) of the Credit Agreement, dated as of June
30, 1994, among CCC - II, Inc., Citibank, N.A., as managing agent, the Banks (as
defined in such Credit Agreement), and the Co-Agents (as defined in such Credit
Agreement), and
(b) if the Partnership is subject to a loan agreement that
limits the ratio of the Partnership's indebtedness to its cash flow, then
"Operating Cash Flow Ratio" means the ratio of the Partnership's indebtedness to
its cash flow as calculated for purposes of that loan agreement to which the
Partnership is subject that includes the most restrictive covenant regarding the
ratio of the Partnership's indebtedness to its cash flow.
"Ownership Restriction" means any provision of the Communications Act
of 1934, as amended, or any other law subsequently enacted, or any rule,
regulation, or policy of the FCC promulgated thereunder restricting the
ownership and control of communications properties (including cable television
systems, television broadcast stations, radio broadcast stations, telephone
companies, and newspapers), including those relating to cross-ownership and
cross-interest, as those terms are commonly understood in the communications
industry.
"Parent" has the meaning specified below:
(a) so long as either TCIC or Tele-Communications owns a
controlling interest, directly or indirectly, in TCI, "Parent" means, with
respect to TCI, TCIC;
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(b) so long as either Century/Texas or Century/New Jersey owns
a controlling interest, directly or indirectly, in Century, "Parent" means, with
respect to Century, Century/Texas; and
(c) with respect to any other Person (including TCI, if
paragraph (a) of this definition does not apply, and Century, if paragraph (b)
of this definition does not apply), "Parent" means the ultimate parent entity
(as determined in accordance with the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and the rules and regulations promulgated thereunder) of such Person
(or such Person if it is its own ultimate parent entity).
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulations Section 1.704- 2(b)(4), which generally defines "Partner Nonrecourse
Debt" as any Partnership liability to the extent such liability is nonrecourse
and a partner (or related Person) bears the economic risk of loss pursuant to
Treasury Regulations Section 1.752-2.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulations Section 1.704-2(i)(2), which generally defines "Partner
Nonrecourse Debt Minimum Gain" as the Partnership Minimum Gain attributable to
Partner Nonrecourse Debt. The amount of Partner Nonrecourse Debt Minimum Gain
shall be determined in accordance with Treasury Regulations Section
1.704-2(i)(3).
"Partner Nonrecourse Deductions" means losses, deductions, or Code
Section 705(a)(2)(B) expenditures attributable to Partner Nonrecourse Debt. The
amount of Partner Nonrecourse Deductions shall be determined pursuant to
Treasury Regulations Section 1.704-2(i)(2), which provides generally that the
amount of Partner Nonrecourse Deductions for a Fiscal Year shall equal the net
increase, if any, in Partner Nonrecourse Debt Minimum Gain during that Fiscal
Year, reduced (but not below zero) by the proceeds of Partner Nonrecourse Debt
distributed during the Fiscal Year to the partner bearing the economic risk of
loss for such Partner Nonrecourse Debt that are both attributable to such
Partner Nonrecourse Debt and allocable to an increase in Partner Nonrecourse
Debt Minimum Gain.
"Partners" means each General Partner and each Limited Partner.
"Partnership" means the partnership created by this Agreement.
"Partnership Committee" means the Partnership Committee established by
Section 5.2.
"Partnership Interest" means the entire ownership interest of a Partner
in the Partnership at any particular time, including all of its rights and
obligations hereunder and under the Act.
"Partnership Minimum Gain" means the excess of the Partnership
Nonrecourse Liabilities over the adjusted tax basis of property securing such
Partnership Nonrecourse Liabilities. The amount of Partnership Minimum Gain
shall be determined in accordance with Treasury Regulations
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Section 1.704-2(d), which provides generally that the amount of Partnership
Minimum Gain shall be determined by first computing for each Nonrecourse
Liability any gain the Partnership would realize if it disposed of the property
subject to that Nonrecourse Liability for no consideration other than full
satisfaction of such Nonrecourse Liability, and then aggregating the separately
computed gains.
"Partnership Value" means the amount that would be available to be
distributed to the Partners in liquidation of the Partnership, if the
Partnership were liquidated in the following manner:
(a) with respect to each Subsidiary, either the assets of such
Subsidiary would be sold for the fair market value of such assets, and the
Subsidiary would be liquidated in a manner comparable to that described in
paragraphs (b) and (c) below and the definition of "Equity Value," or all equity
interests in such Subsidiary owned, directly or indirectly, by the Partnership
would be sold for the fair market value of such equity interests, whichever
would produce the greater net proceeds to the Partnership;
(b) the assets of the Partnership (other than any equity
interest in any Subsidiary that would have been liquidated under paragraph (a)
above) would be sold for the fair market value of such assets; and
(c) the Partnership would pay any liabilities that would be
required by generally accepted accounting principles to be reflected on a
balance sheet of the Partnership (other than any such liabilities relating to
the operations of the Partnership's business that would be assumed by a
purchaser of the Partnership's assets) and would establish reserves in the
amount of any reserves required by generally accepted accounting principles to
be reflected on a balance sheet of the Partnership.
"Percentage Interest" means (a) as of any date prior to the date on
which the Closing occurs, with respect to Century, seventy-five percent, and,
with respect to TCI, twenty-five percent, and (b) as of any date on or after the
date on which the Closing occurs, with respect to either Partner, a fraction the
numerator of which is the net fair market value of all Capital Contributions
made by such Partner pursuant to the Contribution Agreement and the denominator
of which is the net fair market value of all Capital Contributions made by both
Partners pursuant to the Contribution Agreement, with all such net fair market
values being determined in the manner specified in Section 3.1(b), subject to
subsequent adjustment pursuant to Section 3.2(e) and Section 4.1(d).
"Person" means an individual, partnership, joint venture, association,
corporation, trust, estate, limited liability company, limited liability
partnership, or any other legal entity.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means, at any time, any Person that is controlled by the
Partnership at such time.
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"TCI" means TCI California Holdings, LLC, or any other Person that
succeeds to its Partnership Interest and is admitted as a Partner in accordance
with the provisions of this Agreement.
"TCI Appraiser" means an appraiser designated by TCI pursuant to
Section 3.2(f)(2).
"TCI Members" means the members of TCI.
"TCIC" means TCI Communications, Inc., a Delaware corporation, and any
successor (by merger, consolidation, sale of assets, or other similar
transaction) to all or substantially all of its cable television business and
assets.
"Tele-Communications" means Tele-Communications, Inc., a Delaware
corporation, and any successor (by merger, consolidation, sale of assets, or
other similar transaction) to all or substantially all of its business and
assets.
"Territory" means the following counties in California: Los Angeles,
Orange, San Bernardino, Ventura, San Diego, Riverside, Santa Barbara, and Kern.
"Third Appraiser" means an appraiser designated by the TCI Appraiser
and the Century Appraiser pursuant to Section 3.2(f)(4).
"Treasury Regulations" means the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary all of the
outstanding equity interests of which are owned at such time, directly or
indirectly, by the Partnership.
1.2 Terms Defined Elsewhere in this Agreement.
For purposes of this Agreement, the following terms have the meanings
set forth in the sections indicated:
<TABLE>
<CAPTION>
Term Section
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<S> <C>
@Home Distribution Agreement Section 16.8(c)(2)
Additional Income Tax Amount Section 8.11(a)(2)
Adjusted Prior Value Section 3.2(f)(2)
Adjustment Value Section 3.2(f)(6)
All Distance Services Section 10.2(a)
AT&T Section 10.2(a)
</TABLE>
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<TABLE>
<CAPTION>
Term Section
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<S> <C>
Average Adjustment Value Section 3.2(f)(6)
Capital Call Section 3.2(a)
Century Distribution Agreement Section 16.8(c)(1)
Deemed Distribution Section 4.1(c)(2)
Deferred Assignment Section 8.11(c)
First Assigning Partner Section 8.11(d)
First Offer Notice Section 9.1(a)
Formal Determination Section 10.1(b)
Indemnified Persons Section 12.1
Liquidator Section 11.2(b)
Negotiation Period Section 10.2(b)
Non-Exclusive Service Section 16.8(a)
Notice Section 10.2(a)
Offered Interest Section 9.1(a)
Other Financial Terms Section 9.1(a)
Other Terms Section 9.1(a)
Partnership Territory Section 10.2(a)
Programming Supply Agreement Section 16.9(c)
Purchase Price Section 9.1(a)
Regulatory Allocations Section 4.3(i)
Re-Offer Notice Section 9.2(c)
Second Assigning Partner Section 8.11(d)
Secretary Section 5.7(b)
Seller Section 9.1(a)
SSI Section 16.9(c)
SSI Administrative Fee Section 16.9(c)
Termination Section 8.11(a)(1)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Term Section
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<S> <C>
TCI Systems Section 16.8(a)
</TABLE>
1.3 Terms Generally.
The definitions in Section 1.1 and elsewhere in this Agreement shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context requires, any pronoun includes the corresponding masculine,
feminine, and neuter forms. The words "include," "includes," and "including" are
not limiting. Any reference in this Agreement to a "day" or number of "days"
(without the explicit qualification of "Business") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action or notice
is to be taken or given on or by a particular calendar day, and such calendar
day is not a Business Day, then such action or notice shall be deferred until,
or may be taken or given on, the next Business Day.
ARTICLE 2
FORMATION AND PURPOSE
2.1 Formation.
The Partners hereby form the Partnership as a limited partnership
pursuant to the Act. The rights and liabilities of the Partners shall be
determined pursuant to the Act and this Agreement. To the extent that the rights
or obligations of either Partner are different by reason of any provision of
this Agreement than they would be in the absence of such provision, this
Agreement shall, to the extent permitted by the Act, control.
2.2 Name.
(a) The name of the Partnership is Century-TCI California,
L.P. Except as provided in Section 2.2(b), the business of the Partnership may
be conducted under that name or, upon compliance with applicable laws, any other
name that the Managing Partner deems appropriate or advisable, including any
name that includes the name "Century," except that the Partnership shall not
conduct business under any name that includes the name "Century" without the
approval of Century. The Partnership shall file any assumed name certificates
and similar filings, and any amendments thereto, that the Managing Partner
considers appropriate or advisable.
(b) The Partnership shall not conduct business under the name
"Tele-Communications, Inc.," "TCI," or any variation thereof without the
approval of TCI, except that any asset contributed to the Partnership by TCI may
continue to bear any name borne by such asset at the time of its contribution to
the Partnership for a period of ninety days after its contribution. The parties
agree that "Communications" is not a variation of "Tele-Communications, Inc."
for purposes of this Section 2.2(b).
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2.3 Principal and Registered Office.
The office required to be maintained by the Partnership in the State of
Delaware pursuant to Section 17-104 of the Act shall initially be located at
1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The resident
agent of the Partnership pursuant to Section 17-104 of the Act shall initially
be The Corporation Trust Company. The Partnership may, upon compliance with the
applicable provisions of the Act, change its resident agent from time to time in
the discretion of the Managing Partner. The principal office of the Partnership
shall be located at 50 Locust Avenue, New Canaan, Connecticut 06840, or at such
other place as the Managing Partner shall from time to time designate by written
notice to the Partners. The Partnership may conduct business at such additional
places as the Managing Partner shall deem advisable.
2.4 Term.
The term of the Partnership shall commence on the date of the filing of
the Certificate with the Secretary of State of Delaware and shall continue until
December 31, 2023, unless sooner terminated as provided in this Agreement.
2.5 Purposes of Partnership.
Subject to Section 2.7, the purposes of the Partnership are:
(a) to engage in the business, directly or indirectly through
interests in one or more Subsidiaries, of acquiring, developing, owning,
operating, managing, and selling the cable television systems and other assets
to be contributed to the Partnership by the Partners pursuant to the
Contribution Agreement;
(b) to acquire, develop, own, operate, manage, and sell
additional cable television systems in the Territory and businesses providing
high-speed data service and telephony services in the Territory;
(c) to acquire, develop, own, operate, manage, and sell, or
invest in, businesses in the Territory related to and ancillary to those
referred to above;
(d) to engage in other businesses in the Territory as agreed
to between Century and TCI.
2.6 Authority of Partnership.
The Partnership shall be empowered and authorized, for itself or on
behalf of any Subsidiary, to the extent necessary, appropriate, proper,
advisable, incidental to, or convenient for the furtherance and accomplishment
of the purposes described in Section 2.5:
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(a) to possess, transfer, mortgage, pledge, or otherwise deal
in, and to exercise all rights, powers, privileges, and other incidents of
ownership or possession with respect to securities or other assets held or owned
by the Partnership, and to hold securities or assets in the name of a nominee or
nominees;
(b) to borrow or raise money, and from time to time to issue,
accept, endorse, and execute promissory notes, loan agreements, options, stock
purchase agreements, contracts, documents, checks, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or non-negotiable instruments
and evidences of indebtedness, and to secure the payment of any thereof and of
the interest thereon by mortgage upon or pledge, conveyance, or assignment in
trust of, the whole or any part of the property of the Partnership whether at
the time owned or thereafter acquired and to guarantee the obligations of others
and to sell, pledge, or otherwise dispose of such bonds or other obligations of
the Partnership for its purposes;
(c) to guarantee the obligations of others in connection with
the purchase or acquisition by the Partnership of securities or assets;
(d) to maintain an office or offices in such place or places
as the Managing Partner shall determine and in connection therewith to rent or
acquire office space, engage personnel, and do such other acts and things as may
be necessary or advisable in connection with the maintenance of such office, and
on behalf of and in the name of the Partnership to pay and incur reasonable
expenses and obligations for legal, accounting, investment advisory,
consultative and custodial services, and other reasonable expenses including
taxes, travel, insurance, rent, supplies, interest, salaries and wages of
employees, and all other reasonable costs and expenses incident to the operation
of the Partnership;
(e) to form and own one or more corporations, trusts, or
partnerships (but no entity so formed or owned, while it is a Subsidiary, may do
what the Partnership is prohibited by this Agreement from doing); and
(f) to own, lease, or otherwise acquire any and all assets and
services related to the purposes described in Section 2.5.
2.7 Limitations on Activities of the Partnership.
Notwithstanding any provision of Section 2.5 to the contrary, prior to
the Closing, the Partnership will not engage in any business activities except
as may be appropriate to facilitate the consummation of the transactions to
occur at the Closing in accordance with the Contribution Agreement and the
Exchange Agreement.
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2.8 Certificate.
The Managing Partner shall cause the Certificate to be filed with the
Secretary of State of Delaware and shall cause the Certificate to be filed or
recorded in any other public office where filing or recording is required or is
deemed by the Managing Partner to be advisable.
2.9 Addresses of the Partners.
The respective addresses of the Partners are set forth on Schedule I.
2.10 Foreign Qualification.
The Managing Partner shall take all necessary actions to cause the
Partnership to be authorized to conduct business legally in all appropriate
jurisdictions, including registration or qualification of the Partnership as a
foreign limited partnership in those jurisdictions that provide for registration
or qualification and the filing of a certificate of limited partnership in the
appropriate public offices of those jurisdictions that do not provide for
registration or qualification.
2.11 Tax Classification.
Notwithstanding any other provision of this Agreement, no Partner or
employee of the Partnership, may take any action (including the filing of a U.S.
Treasury Form 8832 Entity Classification Election) that would cause the
Partnership to be characterized as an entity other than a partnership for
federal income tax purposes without the affirmative unanimous consent of the
Partners. A determination of whether any action would cause the Partnership to
be characterized as an entity other than a partnership for federal income tax
purposes will be based upon a declaratory judgment or similar relief obtained
from a court of competent jurisdiction, a favorable ruling from the Internal
Revenue Service, or the receipt of an opinion of counsel reasonably satisfactory
to the Partners.
ARTICLE 3
PARTNERSHIP CAPITAL
3.1 Contributions Pursuant to the Contribution Agreement.
(a) Contributions at Closing. At the Closing, and pursuant to
the terms of the Contribution Agreement:
(1) TCI will contribute or cause to be contributed to
the Partnership, free and clear of any claims, liabilities, security interests,
mortgages, liens, pledges, conditions, charges, or encumbrances of any nature
whatsoever (other than liabilities and liens specified in the
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Contribution Agreement), the assets specified in Section 2 of the
Contribution Agreement as being contributed by TCI; and
(2) Century will contribute or cause to be
contributed to the Partnership, free and clear of any claims, liabilities,
security interests, mortgages, liens, pledges, conditions, charges, or
encumbrances of any nature whatsoever (other than liabilities and liens
specified in the Contribution Agreement), the assets specified in Section 2 of
the Contribution Agreement as being contributed by Century and, if Century so
elects, cash in accordance with Section 2 of the Contribution Agreement.
(b) Capital Account Balances. The Capital Accounts of the
Partners immediately after the Closing shall be as follows:
(1) In the case of Century, (A) the Aggregate Gross
Fair Market Value of the Century Assets (as defined in the Contribution
Agreement) minus (B) the amount of Century Permitted Debt (as defined in the
Contribution Agreement) assumed by the Partnership at the Closing pursuant to
Section 3.1 of the Contribution Agreement.
(2) In the case of TCI, (A) the Aggregate Gross Fair
Market Value of the TCI Assets (as defined in the Contribution Agreement) minus
(B) the amount of TCI Permitted Debt (as defined in the Contribution Agreement)
assumed by the Partnership at the Closing pursuant to Section 3.1 of the
Contribution Agreement.
(c) Allocation of Gross Fair Market Value; Subsequent
Contributions.
(1) TCI and Century will negotiate in good faith to
reach agreement within thirty days after the Closing on the allocation of the
Aggregate Gross Fair Market Value of the Century Assets and the Aggregate Gross
Fair Market Value of the TCI Assets to the assets contributed or to be
contributed to the Partnership by TCI and Century pursuant to Section 3.1(a). If
TCI and Century do not agree on such allocation within ninety days after the
Closing, then such allocation shall be determined by an appraisal to be
conducted by an independent appraisal firm agreed to by Century and TCI and
retained by the Partnership, at the Partnership's expense, with experience in
the valuation and appraisal of assets similar to such asset. Neither TCI nor
Century will take a position that is inconsistent with such allocation, either
as agreed to by them or as determined by such appraiser.
(2) The value of any contribution required to be made
by either Partner under the Contribution Agreement after the Closing, including
any contribution of cash or property pursuant to Section 7.23 of the
Contribution Agreement, is reflected in the Aggregate Gross Fair Market Value of
the Century Assets or the Aggregate Gross Fair Market Value of the TCI Assets,
as applicable, which is reflected in such Partner's Capital Account immediately
after the Closing as provided in Section 3.1(b), and any such contribution shall
be deemed to have been made at Closing and shall not increase such Partner's
Capital Account above the amount provided in Section 3.1(b).
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(d) Determining Fair Market Value of Other Contributed Assets.
Except as otherwise agreed to between the Partners, the fair market value of any
asset contributed by a Partner to the Partnership, other than pursuant to
Section 3.1(a), shall be determined for purposes of this Agreement as follows:
(1) The Partner contributing such asset shall
determine the fair market value of such asset and send a written notice to the
other Partner setting forth its determination.
(2) Within ten Business Days after its receipt of the
contributing Partner's notice pursuant to Section 3.1(d)(1), the other Partner
may send a written notice to the contributing Partner accepting or rejecting the
contributing Partner's determination of the fair market value of such asset. If
the other Partner accepts the contributing Partner's determination, the fair
market value of such asset for purposes of this Agreement shall be as determined
by the contributing Partner.
(3) If the other Partner does not send a written
notice to the contributing Partner accepting the contributing Partner's
determination of the fair market value of any asset within ten Business Days
after its receipt of the contributing Partner's notice pursuant to Section
3.1(d)(1), the fair market value of such asset for purposes of this Agreement
shall be determined by an appraisal to be conducted by an independent appraisal
firm agreed to by Century and TCI and retained by the Partnership, at the
Partnership's expense, with experience in the valuation and appraisal of assets
similar to such asset.
3.2 Additional Capital Contributions.
(a) So long as Century is the Managing Partner, the Managing
Partner may request additional cash Capital Contributions by the Partners
pursuant to this Section 3.2 by delivering a written notice (each such notice, a
"Capital Call") to each other Partner specifying (1) the amount of cash being
requested, (2) the purposes for which the Capital Contributions are required,
(3) the date on which the Capital Contributions are requested to be made (which
shall not be less than fifteen days after the date on which the Managing Partner
delivers the Capital Call to each other Partner), and (4) the bank account of
the Partnership to which the Capital Contributions are to be made.
(b) To the extent that the amount of additional Capital
Contributions requested in all Capital Calls pursuant to this Section 3.2 does
not exceed $10,000,000, each Partner shall make additional Capital Contributions
in cash in accordance with each Capital Call in an amount equal to the product
of the Percentage Interest of such Partner as of the date of the contribution
multiplied by the amount of Capital Contributions requested in such Capital
Call.
(c) To the extent that the amount of additional Capital
Contributions requested in all Capital Calls pursuant to this Section 3.2
exceeds $10,000,000, then each Partner may elect whether or not to make
additional Capital Contributions in response to a Capital Call by delivering
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written notice of its election to the other Partner within ten days after its
receipt of the Capital Call; provided, however, that the Managing Partner must
elect to make additional Capital Contributions in response to any Capital Call.
A Partner that does not deliver a notice of its election to the other Partner
within ten days after its receipt of a Capital Call shall be deemed to have
elected to make additional Capital Contributions in response to the Capital
Call. A Partner that elects to make additional Capital Contributions in response
to a Capital Call shall be obligated to contribute to the Partnership in cash,
in accordance with such Capital Call, an amount equal to the product of the
Percentage Interest of such Partner as of the date of the contribution
multiplied by the amount of Capital Contributions requested in such Capital
Call.
(d) If one Partner elects to make additional Capital
Contributions in response to a Capital Call and the other Partner elects not to
make additional Capital Contributions in response to such Capital Call, then the
Partner that elected to make additional Capital Contributions may also elect, by
delivering written notice of its election to the other Partner within ten days
after the last day for the other Partner's delivery of an election pursuant to
Section 3.2(c), to make an additional Capital Contribution to the Partnership,
in accordance with such Capital Call, up to an amount equal to the product of
the Percentage Interest of the other Partner as of the date of the contribution
multiplied by the amount of Capital Contributions requested in such Capital
Call. A Partner that elects to make additional Capital Contributions pursuant to
this Section 3.2(d) shall be obligated to contribute to the Partnership in cash
the amount specified in its election, in accordance with the Capital Call, in
addition to the amount such Partner is obligated to contribute pursuant to
Section 3.2(c).
(e) If one Partner elects to make an additional Capital
Contribution in response to a Capital Call and the other Partner elects not to
make an additional Capital Contribution in response to such Capital Call
(regardless of whether the contributing Partner also elected to make an
additional Capital Contribution pursuant to Section 3.2(d)) or if a Partner
makes a Capital Contribution pursuant to any other agreement between the
Partners (except as otherwise agreed to between the Partners), then, effective
as of the date on which the contributing Partner makes such Capital
Contribution, the Percentage Interests of each Partner shall be adjusted to
equal (1) the sum of (A) the Equity Value of such Partner's Partnership Interest
plus (B) the amount, if any, of Capital Contributions then being made by such
Partner in response to such Capital Call pursuant to Section 3.2(c) and Section
3.2(d) or pursuant to such agreement between the Partners (taking into account
Section 3.1(d)), divided by (2) the sum of (A) the Equity Value of such
Partner's Partnership Interest plus (B) the Equity Value of the other Partner's
Partnership Interest, plus (C) the amount of Capital Contributions then being
made by the contributing Partner, where the Partnership Value for purposes of
calculating each such Equity Value shall be as agreed to between TCI and Century
pursuant to Section 3.2(f)(1) or, if TCI and Century failed to agree on the
Partnership Value, then the Partnership Value for purposes of calculating each
such Equity Value shall be the Average Adjustment Value determined in accordance
with Section 3.2(f)(6).
(f) The Partnership Value for purposes of calculating each
Equity Value under Section 3.2(e) and Section 4.1(d) shall be determined in
accordance with the following provisions:
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(1) TCI and Century shall negotiate in good faith to
reach an agreement on such Partnership Value within thirty days after the
election by one Partner to make an additional Capital Contribution pursuant to
Section 3.2(c) or the execution of an agreement between the Partners regarding
Capital Contributions to be made by a Partner or non-cash distributions to be
made to a Partner, as applicable.
(2) If TCI and Century fail to agree on such
Partnership Value within the period specified in Section 3.2(f)(1), then either
Partner may elect to commence the valuation process described below by sending
written notice to the other Partner either (A) designating an appraiser to be
retained by the electing Partner to make a determination of the Partnership
Value or (B) if the Partnership Value was previously determined for purposes of
calculating Equity Value of the Partners' Partnership Interests under Section
3.2(e) (either by agreement between TCI and Century or as the Average Adjustment
Value) with respect to any Capital Contribution made no more than one year prior
to the date on which the Capital Contribution with respect to which the Equity
Value of the Partners' Partnership Interests is then being determined is to be
made, electing to use the Adjusted Prior Value as such Partner's Adjustment
Value. If a Partner elects to commence the valuation process pursuant to this
Section 3.2(f)(2), the other Partner shall, within ten Business Days after its
receipt of notice of the electing Partner's election, send a written notice to
the electing Partner either (A) designating an appraiser to be retained by such
other Partner to make a determination of the Partnership Value or (B) if the
condition in clause (B) of the preceding sentence is satisfied, electing to use
the Adjusted Prior Value as such Partner's Adjustment Value. For purposes of
this Section 3.2(f), the "Adjusted Prior Value" means the Partnership Value as
most recently determined for purposes of calculating Equity Value of the
Partners' Partnership Interests under Section 3.2(e), increased by the amount of
Capital Contributions made by the Partners since the date of such determination
and decreased by the amount of distributions to the Partners since the date of
such determination.
(3) Any appraiser designated pursuant to Section
3.2(f)(2) shall be instructed to complete its appraisal within thirty days after
its designation pursuant to Section 3.2(f)(2).
(4) If the difference between TCI's Adjustment Value
and Century's Adjustment Value is greater than three percent of the lower of
such values, then the TCI Appraiser (or TCI, if TCI elected to use the Adjusted
Prior Value as its Adjustment Value) and the Century Appraiser (or Century, if
Century elected to use the Adjusted Prior Value as its Adjustment Value) shall
jointly designate an appraiser to be retained by the Partnership to make a
determination of the Partnership Value. The Third Appraiser shall be instructed
to complete its appraisal within thirty days after its designation.
(5) In making its determination of the Partnership
Value, each appraiser shall:
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(A) assume that the fair market value of the
assets of the Partnership, the fair market value of the assets of any
Subsidiary, or the fair market value of any equity interests in any Subsidiary,
as applicable, is the price at which such assets, as a going concern, or such
equity interests would change hands in a private market transaction between a
single willing buyer and a single willing seller, neither being under any
compulsion to buy or sell and each having reasonable knowledge of all relevant
facts;
(B) assume the sale of all relevant assets
occurred immediately prior to the additional Capital Contribution with respect
to which the Equity Value of the Partners' Partnership Interests is then being
determined;
(C) take into account liabilities of the
Partnership and the Subsidiaries in existence on such date;
(D) assume a sale of the assets of the
Partnership and each Subsidiary for cash; and
(E) use valuation techniques then prevailing
in the cable television industry.
(6) The Partnership Value as determined by the
appraiser designated by a Partner, or, if the Partner so elected pursuant to
Section 3.2(f)(2), the Adjusted Prior Value, shall be such Partner's "Adjustment
Value," the Partnership Value determined by the Third Appraiser, shall be the
Third Appraiser's "Adjustment Value," and the "Average Adjustment Value" shall
be:
(A) If the difference between TCI's
Adjustment Value and Century's Adjustment Value is less than or equal to three
percent of the lower of such values, then the Average Adjustment Value shall be
the average of TCI's Adjustment Value and Century's Adjustment Value;
(B) If Section 3.2(f)(6)(A) does not apply
and the difference between the highest of the three Adjustment Values (including
the Adjustment Value of the Third Appraiser) and the middle of the three
Adjustment Values is equal to the difference between the lowest of the three
Adjustment Values and the middle of the three Adjustment Values, then the
Average Adjustment Value shall be the middle Adjustment Value; and
(C) In all other cases, the Average
Adjustment Value shall be the average of the two closest of TCI's Adjustment
Value, Century's Adjustment Value, and the Third Appraiser's Adjustment Value.
(7) Each appraiser designated pursuant to this
Section 3.2(f) shall be a nationally recognized investment banking firm that is
qualified and experienced in the appraisal of cable television systems and shall
not be an Affiliate of either Partner. The fees and expenses of the
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TCI Appraiser shall be borne by TCI, the fees and expenses of the Century
Appraiser shall be borne by Century, and the fees and expenses of the Third
Appraiser shall be borne by the Partnership, except that, if one Partner elects
to use the Adjusted Prior Value as its Adjustment Value, then the fees and
expenses of the Third Appraiser shall be borne by the other Partner.
3.3 Other Contributions.
Except for Capital Contributions made pursuant to Section 3.1 or
Section 3.2 or as otherwise agreed to by the Partners, no additional Capital
Contributions shall be made by either Partner.
3.4 Assumption of Liabilities.
In accordance with the terms and conditions of the Contribution
Agreement, the Partnership will, at the Closing, assume and undertake to pay,
discharge, and perform, according to their respective terms, those obligations
and liabilities of TCI, Century, and their respective Affiliates that are
specified in Section 4.1 of the Contribution Agreement.
3.5 Return of Contributions.
Neither Partner shall have the right to demand a return of all or any
part of its Capital Contribution during the term of the Partnership, and any
return of the Capital Contribution of either Partner shall be made solely from
the assets of the Partnership and only in accordance with the terms of this
Agreement. No interest shall be paid to either Partner with respect to its
Capital Contribution to the Partnership.
3.6 Financing.
To finance the business of the Partnership, subject to Section
5.1(b)(1) and Section 5.1(c)(9), the Managing Partner may arrange for the
obtaining of loans by the Partnership, including loans made by one or more
Affiliates of the Managing Partner. Any payment by the Partnership to any
Affiliate of the Managing Partner with respect to any such loans made by such
Affiliate shall not be treated as a distribution to the Managing Partner under
this Agreement.
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ARTICLE 4
DISTRIBUTIONS; ALLOCATIONS OF PROFIT AND LOSS
4.1 Distributions.
(a) Amount and Timing of Cash Distributions. All cash of the
Partnership shall be distributed at such times and in such amounts as the
Managing Partner may determine in its sole discretion.
(b) Allocation of Cash Distributions. All distributions of
cash pursuant to Section 4.1(a) and Section 11.2(d)(3) shall be allocated
between the Partners in proportion to their Percentage Interests as of the date
of the distribution.
(c) Tax Withholding.
(1) The Partnership shall seek to qualify for and
obtain exemptions from any provision of the Code or any provision of state,
local, or foreign tax law that would otherwise require the Partnership to
withhold amounts from payments or distributions to the Partners. If the
Partnership does not obtain any such exemption, the Partnership is authorized to
withhold from any payment or distribution to either Partner any amounts that are
required to be withheld pursuant to the Code or any provision of any state,
local, or foreign tax law that is binding on the Partnership.
(2) If the Code or any provision of any state, local,
or foreign tax law that is binding on the Partnership requires that the
Partnership remit to any taxing authority any tax with respect to, or for the
account of, either Partner in its capacity as a Partner, as a result of any
transaction by the Partnership or any Subsidiary (other than a payment or
distribution to a Partner), the Partnership shall, to the extent that
Partnership funds are available therefor, remit the full required amount of such
tax to the taxing authority and shall notify such Partner in writing of the
amount of such tax. The Partnership shall treat the payment of such tax as a
distribution pursuant to Section 4.1(a) (a "Deemed Distribution"), and
substantially simultaneously with the payment of such tax the Partnership shall
cause a distribution of cash to be made to the Partners so as to cause the
distributions pursuant to this Section 4.1(c) (including the Deemed
Distribution) to be in proportion to the Partners' Percentage Interests;
provided, however, that if the Partnership does not have sufficient funds to
make such cash distribution or if the Partnership is prohibited from making such
cash distribution, then each Partner agrees to contribute to the Partnership,
within fifteen Business Days after its receipt of written notice from the
Partnership, the amount of any such tax to the extent it exceeds such Partner's
proportionate share (based on Percentage Interests) of the distributions
pursuant to this Section 4.1(c) (including the Deemed Distribution), together
with interest from the date the Partnership remits such tax until it is paid by
such Partner, at an interest rate equal to that paid by the Partnership with
respect to its senior indebtedness. Interest paid by a Partner pursuant to this
Section 4.1(c) shall not be treated as Capital Contributions for any purposes
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under this Agreement, including calculation of the Partners' Capital Accounts.
The Partnership is further authorized to withhold from any subsequent payment or
distribution to either Partner the amount of such Partner's obligation under the
preceding sentence.
(3) All amounts that are credited against payments or
distributions to which a Partner would otherwise be entitled pursuant to this
Section 4.1(c) shall be treated as amounts distributed to such Partner pursuant
to Section 4.1(a) for all purposes of this Agreement.
(d) Non-Cash Distributions.
(1) Except as specifically agreed to by the Partners,
the Partnership shall not distribute any non-cash asset to either Partner.
(2) The fair market value of any asset distributed in
kind to either Partner shall either be a value agreed to by the Partners or a
value determined by a methodology agreed to by the Partners.
(3) The Partnership shall determine the gain or loss
used in determining Net Profit or Net Loss that would have resulted if any
distributed non-cash asset had been sold for its fair market value, such gain or
loss shall be allocated pursuant to Article 4, and the Partners' Capital
Accounts shall be adjusted to reflect such gain or loss. The amount distributed
and charged to the Capital Account of each Partner receiving an interest in a
distributed asset shall be the fair market value of such interest (net of any
liability secured by such asset that such Partner assumes or takes subject to).
(4) If the Partners agree that any non-cash asset
shall be distributed to either Partner and the distributions of cash and
non-cash assets being made in connection with the distribution of such non-cash
asset are not allocated between the Partners in proportion to their Percentage
Interests as of the date of the distribution, then, except as otherwise agreed
to by the Partners, effective as of the date on which such distributions are
made, the Percentage Interests of each Partner shall be adjusted to equal (A)
the sum of (i) the Equity Value of such Partner's Partnership Interest minus
(ii) the amount of cash and the fair market value of any non-cash asset then
being distributed to such Partner, divided by (B) the sum of (i) the Equity
Value of such Partner's Partnership Interest plus (ii) the Equity Value of the
other Partner's Partnership Interest, minus (iii) the amount of cash and the
fair market value of any non-cash asset then being distributed to the Partners,
where the Partnership Value for purposes of calculating each such Equity Value
shall be as agreed to between TCI and Century pursuant to Section 3.2(f)(1) or,
if TCI and Century failed to agree on the Partnership Value, then the
Partnership Value for purposes of calculating each such Equity Value shall be
the Average Adjustment Value determined in accordance with Section 3.2(f)(6).
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4.2 Allocations of Net Profit and Net Loss.
(a) Allocations of Net Profit and Net Loss. Except as provided
in Section 4.2(b), Net Profit and Net Loss for each Fiscal Year (or portion
thereof) shall be allocated between the Partners in proportion to their
Percentage Interests.
(b) Allocations of Net Profit and Net Loss Following
Dissolution. Notwithstanding Section 4.2(a), following the dissolution of the
Partnership pursuant to Section 11.1, beginning in the Fiscal Year in which such
dissolution occurs or beginning in any Fiscal Year prior to the Fiscal Year in
which such dissolution occurs if the Partnership's Federal income tax return for
such prior Fiscal Year has not yet been required to be filed (not including
extensions), items of income and gain, loss, and deduction shall be allocated
between the Partners so as to cause the credit balances in the Partners' Capital
Accounts to be in proportion to their Percentage Interests.
4.3 Special Provisions Regarding Allocations of Profit and Loss.
(a) Minimum Gain Chargeback. Notwithstanding any other
provision of this Article 4, if there is a net decrease in Partnership Minimum
Gain for any Fiscal Year, each Partner shall be specially allocated items of
Partnership income and gain for such Fiscal Year (and if necessary for
succeeding Fiscal Years) in an amount equal to such Partner's share of the net
decrease in Partnership Minimum Gain, determined in accordance with Treasury
Regulations Section 1.704-2(g); provided, however, that this Section 4.3(a)
shall not apply to the extent the circumstances described in Treasury
Regulations Sections 1.704-2(f)(2), 1.704-2(f)(3), 1.704-2(f)(4), or
1.704-2(f)(5) exist. Allocations made pursuant to the preceding sentence shall
be made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto. The items of Partnership income and gain to be
allocated pursuant to this Section 4.3(a) shall be determined in accordance with
Treasury Regulations Section 1.704-2(f)(6). This Section 4.3(a) is intended to
comply with the minimum gain chargeback requirement in Treasury Regulations
Section 1.704-2(f) and shall be interpreted consistently therewith.
(b) Partner Minimum Gain Chargeback. Notwithstanding any other
provision of this Article 4 except Section 4.3(a), if during any Fiscal Year
there is a net decrease in Partner Nonrecourse Debt Minimum Gain, each Partner
with a share of that Partner Nonrecourse Debt Minimum Gain (determined in
accordance with Treasury Regulations Section 1.704-2(i)(5)) as of the beginning
of such Fiscal Year must be allocated items of Partnership income and gain for
the Fiscal Year (and, if necessary, for succeeding Fiscal Years) equal to that
Partner's share of the net decrease in the Partner Nonrecourse Debt Minimum Gain
(determined in accordance with Treasury Regulations Section 1.704-2(i)(4));
provided, however, that this Section 4.3(b) shall not apply to the extent the
circumstances described in the third and fifth sentences of Treasury Regulations
Section 1.704-2(i)(4) exist. Allocations pursuant to the preceding sentence
shall be made in proportion to the respective amounts required to be allocated
to each Partner pursuant thereto. The items of Partnership income and gain to be
allocated pursuant to this Section 4.3(b) shall be determined in
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accordance with Treasury Regulations Section 1.704-2(i)(4). This Section 4.3(b)
is intended to comply with the minimum gain chargeback requirement in Treasury
Regulations Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(c) Qualified Income Offset. If a Limited Partner unexpectedly
receives any adjustments, allocations, or distributions described in Treasury
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to such Limited Partner in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, the Adjusted
Capital Account Deficit of such Limited Partner as quickly as possible;
provided, however, that an allocation pursuant to this Section 4.3(c) shall be
made if and only to the extent that such Limited Partner would have an Adjusted
Capital Account Deficit after all other allocations provided for in this Article
4 have been tentatively made as if this Section 4.3(c) were not in this
Agreement. Allocations made pursuant to the preceding sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto.
(d) Gross Income Allocation. If a Limited Partner has a
deficit Capital Account at the end of any Fiscal Year that is in excess of the
sum of (1) the amount such Limited Partner is obligated to restore to the
Partnership pursuant to Treasury Regulations Section 1.704-1(b)(2)(ii)(c), (2)
the amount such Limited Partner is deemed to be obligated to restore pursuant to
the penultimate sentence of Treasury Regulations Section 1.704-2(g)(1), and (3)
the amount such Limited Partner is deemed to be obligated to restore pursuant to
the penultimate sentence of Treasury Regulations Section 1.704-2(i)(5), such
Limited Partner shall be specially allocated items of Partnership income and
gain in the amount of such excess as quickly as possible; provided, however,
that an allocation pursuant to this Section 4.3(d) shall be made if and only to
the extent that such Limited Partner would have a deficit Capital Account in
excess of such sum after all other allocations provided for in this Article 4
have been tentatively made as if Section 4.3(c) and this Section 4.3(d) were not
in this Agreement. Allocations made pursuant to the preceding sentence shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any
Fiscal Year or other period shall be specially allocated between the Partners in
proportion to their Percentage Interests.
(f) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Fiscal Year or other period shall be specially allocated to
the Partner that bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable
in accordance with Treasury Regulations Section 1.704-2(i).
(g) Section 754 Adjustment. To the extent any adjustment to
the adjusted tax basis of any asset of the Partnership pursuant to Code Section
734(b) or Code Section 743(b) is required, pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment shall be treated as an item of gain
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(if the adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such gain or loss shall be specially allocated to the
Partners in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such section of the Treasury
Regulations.
(h) Excess Nonrecourse Liabilities. For purposes of
determining a Partner's proportionate share of the "excess nonrecourse
liabilities" of the Partnership within the meaning of Treasury Regulations
Section 1.752-3(a)(3), each Partner's interest in Partnership profits shall be
deemed to be equal to such Partner's Percentage Interest.
(i) Curative Allocations. The allocations set forth in this
Article 4 (other than Section 4.3(g), Section 4.3(h), and this Section 4.3(i))
(the "Regulatory Allocations") are intended to comply with certain requirements
of the Treasury Regulations. The Partners intend that, to the extent possible,
all Regulatory Allocations shall be offset either with other Regulatory
Allocations or with special allocations of other items of Partnership income,
gain, loss, or deduction pursuant to this Section 4.3(i). Therefore,
notwithstanding any other provision of this Article 4 (other than the Regulatory
Allocations), offsetting special allocations of Partnership income, gain, loss,
or deduction shall be made so that, after such offsetting allocations are made,
each Partner's Capital Account balance is, to the extent possible, equal to the
Capital Account balance such Partner would have had if the Regulatory
Allocations were not part of this Agreement and all Partnership items were
allocated pursuant to Section 4.2. In making such offsetting special
allocations, future Regulatory Allocations under Section 4.3(a) and Section
4.3(b) that, although not yet made, are likely to offset Regulatory Allocations
made under Section 4.3(e) and Section 4.3(f), shall be taken into account.
4.4 Tax Allocations: Code Section 704(c).
(a) In accordance with Code Section 704(c) and the Treasury
Regulations thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Partnership shall, solely for tax
purposes, be allocated between the Partners so as to take account of any
variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and its initial Gross Asset Value using the
traditional allocation method described in Treasury Regulations Section
1.704-3(b). If, however, tax allocations made under Code Section 704(c) with
respect to any contributed property are limited by "the ceiling rule" as
described in Treasury Regulations Section 1.704-3(b)(1), the remedial allocation
method as described in Treasury Regulations Section 1.704-3(d) shall be used
with respect to such property.
(b) If the Gross Asset Value of any asset of the Partnership
is adjusted pursuant to paragraph (b) of the definition of Gross Asset Value,
subsequent allocations of income, gain, loss, and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the same
manner as under Code Section 704(c) and the Treasury Regulations thereunder.
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(c) Allocations pursuant to this Section 4.4 are solely for
purposes of federal, state, and local taxes and shall not affect, or in any way
be taken into account in computing, either Partner's Capital Account or share of
Net Profit, Net Loss, other items, or distributions pursuant to any provision of
this Agreement.
4.5 Allocation in Event of Transfer.
If an interest in the Partnership is transferred, the Net Profit and
Net Loss of the Partnership and each item thereof, and all other items
attributable to the transferred interest for such Fiscal Year, shall be divided
and allocated between the transferor and the transferee pursuant to any method
agreed to between the Partners that is permitted by the Treasury Regulations;
provided, however, that (a) except in the case of a transfer from a Partner to
an Affiliate of such Partner, if the Partners are unable to agree on the method
of dividing and allocating such items, such items shall be divided and allocated
between the transferor and the transferee pursuant to the interim closing of the
Partnership books method set forth in Treasury Regulation Section
1.706-1(c)(2)(ii), and (b) in the case of a transfer from a Partner to an
Affiliate of such Partner, if the Partners are unable to agree on the method of
dividing and allocating such items, such items shall be divided and allocated
between the transferor and the transferee pursuant to any method agreed to
between the transferor and the transferee so long as such method (1) does not
change the allocation of Net Profit and Net Loss or any item thereof to the
non-transferor Partner, and (2) does not require an interim closing of the
Partnership books. This Section shall apply for purposes of computing a
Partner's Capital Account and for federal income tax purposes.
4.6 Alternative Allocations.
The Partnership Committee is authorized and directed to allocate items
of income, gain, loss, or deduction arising in any Fiscal Year differently from
the manner that is otherwise provided for in this Agreement if, and to the
extent that, the Partnership Committee determines that the allocation of items
of income, gain, loss, or deduction in the manner otherwise provided for in this
Agreement would cause the credit balances in the Partners' Capital Accounts not
to be in proportion to their Percentage Interests immediately prior to any
distributions pursuant to Section 11.2(d)(3) if the Partnership were dissolved
and terminated on the last day of such Fiscal Year. Any allocation that is made
pursuant to this Section 4.6 shall be deemed to be a complete substitute for any
allocation that is otherwise provided for in this Agreement and no amendment to
this Agreement shall be required.
ARTICLE 5
MANAGEMENT
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5.1 Authority of Managing Partner.
(a) Generally. Except as expressly provided otherwise in this
Agreement, the Managing Partner shall have the exclusive authority to manage the
business, operations, and affairs of the Partnership (including internal
matters) and the exclusive right to exercise all rights incident to the
ownership of all partnership or corporate interests held by the Partnership, and
shall have all authority, rights, and powers conferred by law and those required
or appropriate for the management of the Partnership's business.
(b) Certain Limitations and Restrictions. Notwithstanding any
provision in this Agreement to the contrary, and in addition to any other
consent or approval that may be required by the express terms of this Agreement,
but subject to Section 5.1(e), the Partnership shall not, and the Managing
Partner shall have no authority to cause the Partnership to, do any of the
following without either the unanimous vote of all members of the Partnership
Committee who are present or represented by proxy at a meeting of the
Partnership Committee at which a quorum is present, or, so long as Century is
the Managing Partner, the approval of TCI:
(1) incur or permit any Subsidiary to incur any
Indebtedness if, immediately after the incurring of such Indebtedness, the
Operating Cash Flow Ratio of the Partnership would exceed 6.5 to 1; or
(2) sell or otherwise dispose of, or cause or permit
any Subsidiary to sell or otherwise dispose of, in any one transaction (or
series of mutually contingent transactions), assets of the Partnership or any
Subsidiary having an aggregate value in excess of $50,000,000, except upon the
liquidation and dissolution of the Partnership in accordance with Article 11;
provided, however, that the limitations of this paragraph shall not apply to any
pledging of assets by any Person to secure any indebtedness of such Person
permitted by this Agreement or to any disposition of assets upon the exercise of
any rights granted by such a pledge; or
(3) merge with or consolidate into any Person, or
cause or permit any Subsidiary to merge with or consolidate into any Person
(except that, without the approval of the Partnership Committee, (A) a
Subsidiary may merge with another Subsidiary so long as the survivor of such
merger is a Subsidiary; (B) a Wholly-Owned Subsidiary may merge with the
Partnership; and (C) a Subsidiary may merge with a Person other than a
Subsidiary as a means of effecting any acquisition or disposition of assets that
is otherwise permitted by this Agreement so long as the consummation of such
acquisition or disposition would not have adverse tax consequences to TCI or the
TCI Members); or
(4) purchase or otherwise acquire, or cause or permit
any Subsidiary to purchase or otherwise acquire, any assets, business, equity
interest in another Person, if, after giving effect to the such purchase or
other acquisition, the aggregate value of all property purchased or otherwise
acquired by the Partnership and all Subsidiaries in any period of twelve
consecutive calendar months would exceed $50,000,000; provided, however, that
the limitations of this
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paragraph shall not apply to any acquisition of assets by a Wholly-Owned
Subsidiary from the Partnership or from another Wholly-Owned Subsidiary or to
the contribution of assets to the Partnership pursuant to the Contribution
Agreement; or
(5) enter into any transaction with either Partner or
any Affiliate of either Partner or permit any Subsidiary to enter into any
transaction with either Partner or any Affiliate of either Partner if the
transaction contemplates payments to or by the Partnership in any twelve month
period in excess of $1,000,000, in the aggregate; provided, however, that the
limitations of this paragraph shall not apply to any loan described in Section
5.1(c)(9), and TCI agrees not to withhold unreasonably its approval of any
transaction that requires its approval under this Section 5.1(b)(5); or
(6) issue any Partnership Interest or other equity
interest in the Partnership or any option, warrant, or other instrument
convertible into or evidencing the right to acquire (whether or not for
additional consideration) any Partnership Interest or other equity interest in
the Partnership; or
(7) permit any Subsidiary to issue any equity
interest in such Subsidiary or any option, warrant, or other instrument
convertible into or evidencing the right to acquire (whether or not for
additional consideration) any equity interest in such Subsidiary, other than an
equity interest or option, warrant, or other instrument issued to the
Partnership or to a Wholly-Owned Subsidiary; or
(8) commence, institute, or settle, or permit any
Subsidiary to commence, institute, or settle, any claim or lawsuit (or series of
related claims or lawsuits) on behalf of the Partnership or any Subsidiary
(except as provided in the Contribution Agreement with respect to claims arising
thereunder), or confess a judgment against the Partnership or any Subsidiary,
not in the ordinary course of business and for any amount in excess of
$5,000,000 or involving the potential granting of equitable relief that, if
granted, would have a material adverse effect on the business of the Partnership
and the Subsidiaries, taken as a whole; provided, however, that notwithstanding
any other provision in this Agreement to the contrary, (A) TCI may, without the
separate consent of Century or Century's representatives, cause the Partnership
to make a good faith claim against Century and its Affiliates pursuant to the
indemnification provisions of the Contribution Agreement or against Century and
its Affiliates pursuant to the Management Agreement described in Section 5.6,
and provided, further, that without the separate consent of TCI, Century may not
cause the Partnership to waive any such claim against Century and its Affiliates
pursuant to the indemnification provisions of the Contribution Agreement or
against Century and its Affiliates pursuant to the Management Agreement
described in Section 5.6, and (B) Century may, without the separate consent of
TCI or TCI's representatives, cause the Partnership to make a good faith claim
against TCI and its Affiliates pursuant to the indemnification provisions of the
Contribution Agreement or the Exchange Agreement; or
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(9) purchase, redeem, retire, or otherwise acquire
any Partnership Interests or other equity interest in the Partnership, except
for the purchase, redemption, retirement, or other acquisition of any equity
interest where the terms of such interest, as approved in accordance with
Section 5.1(b)(6), permit or require such purchase, redemption, retirement, or
other acquisition.
(c) Additional Limitations and Restrictions. Notwithstanding
any provision in this Agreement to the contrary, and in addition to any other
consent or approval that may be required by the express terms of this Agreement,
the Partnership shall not, and the Managing Partner shall have no authority to
cause the Partnership to, do any of the following without either the unanimous
vote of all members of the Partnership Committee who are present or represented
by proxy at a meeting of the Partnership Committee at which a quorum is present,
or, so long as Century is the Managing Partner, the approval of TCI:
(1) sell or otherwise dispose of, or cause or permit
any Subsidiary to sell or otherwise dispose of, any assets of the Partnership or
any Subsidiary, if such sale or other disposition would result in the allocation
of income or gain to TCI pursuant to Section 4.4 and Code Section 704(c), except
upon the liquidation and dissolution of the Partnership in accordance with
Article 11; provided, however, that the limitations of this paragraph shall not
apply to any pledging of assets by any Person to secure any indebtedness of such
Person permitted by this Agreement (but such limitations shall nevertheless
apply to any disposition of assets upon the exercise of any rights granted by
such a pledge); or
(2) liquidate or dissolve except in accordance with
Article 11; or
(3) issue any Partnership Interest or other equity
interest in the Partnership or any option, warrant, or other instrument
convertible into or evidencing the right to acquire (whether or not for
additional consideration) any Partnership Interest or other equity interest in
the Partnership, except on terms that are fair, from an economic standpoint, to
the Partnership and the Partners; or
(4) admit any additional Partners to the Partnership
except in accordance with Section 6.4 or Section 8.8; or
(5) convert the Partnership to corporate form or to
any other form of business organization; or
(6) purchase, redeem, retire, or otherwise acquire
any Partnership Interests or other equity interest in the Partnership, except
for the purchase, redemption, retirement, or other acquisition of any equity
interest where the terms of such interest, as approved in accordance with
Section 5.1(b)(6) or Section 5.1(c)(3), permit or require such purchase,
redemption, retirement, or other acquisition; or
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(7) merge with or consolidate into any Person, or
cause or permit any Subsidiary to merge with or consolidate into any Person,
unless the terms under which any equity interest in the Partnership or any
Subsidiary is issued to any Person (other than the Partnership or any
Wholly-Owned Subsidiary) are fair, from an economic standpoint, to the
Partnership and the Partners; or
(8) enter into any transaction with either Partner or
any Affiliate of either Partner or permit any Subsidiary to enter into any
transaction with either Partner or any Affiliate of either Partner if the
transaction is not on terms that are no less favorable to the Partnership or
Subsidiary than could have been obtained in a comparable arm's-length
transaction with a Person that is not a Partner or an Affiliate of a Partner;
provided, however, that the limitations shall not apply to any loan described in
Section 5.1(c)(9); or
(9) incur or permit any Subsidiary to incur any
Indebtedness to any Affiliate of the Managing Partner unless (A) the financial
terms of such Indebtedness are the same as either (1) the financing obtained by
such Affiliate of the Managing Partner the proceeds of which are used to fund
its loan to the Partnership by which such Indebtedness is created, or (2) any
similar financing obtained by the Partnership from any Person that is not an
Affiliate of the Managing Partner, and (B) such Indebtedness would not result in
any adverse tax consequences to TCI or the TCI Members; or
(10) except as provided in Section 10.2, enter into
any transaction with either Partner or any Affiliate of either Partner or permit
any Subsidiary to enter into any transaction with either Partner or any
Affiliate of either Partner pursuant to which such Partner or its Affiliate
would be authorized or permitted to use the Partnership's cable television
system distribution facilities to engage in any business that is ancillary to
the ownership or operation of cable television systems, including the ancillary
businesses of providing high-speed data service and telephony services described
in Section 2.5, unless the Partnership Committee failed to approve unanimously a
resolution authorizing the Partnership or a Subsidiary to engage in such
business at a meeting at which all members of the Partnership Committee
designated by such Partner voted in favor of such resolution; or
(11) commence any bankruptcy or insolvency
proceeding, acquiesce in the appointment of a referee, trustee, custodian, or
liquidator, or admit to the material allegations of a petition filed against the
Partnership in any bankruptcy proceeding; or
(12) amend the Management Agreement described in
Section 5.6 (and TCI agrees not to withhold unreasonably its approval of any
amendment that requires its approval under this Section 5.1(c)(12)); or
(13) engage in any business not described in Section
2.5 or engage in any business outside the Territory.
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(d) Consideration of Certain Transactions. The Managing
Partner will consult with the Partnership Committee before entering into any
agreement or causing any Subsidiary to enter into any agreement providing for
any material transaction outside the ordinary course of the Partnership's
business, but the Managing Partner shall not be required under this Section
5.1(d) or otherwise (except as specifically provided in Section 5.1(b) or
Section 5.1(c)) to obtain the approval of the Partnership Committee in
connection with any such transaction.
(e) Expiration of Certain Approval Rights. The limitations in
Section 5.1(b) shall not apply at any time if:
(1) TCI's Percentage Interest is less than five
percent at such time, and
(2) either:
(A) more than six months have elapsed since
TCI's Percentage Interest fell below five percent, unless at such time (1) TCI
and Century have agreed on an additional Capital Contribution to be made by TCI
that would cause TCI's Percentage Interest to be at least five percent, and the
agreement between TCI and Century with respect to such additional Capital
Contribution is in full force and effect, and (2) if the additional Capital
Contribution contemplated by such agreement would consist of any cable
television system to be acquired by TCI, TCI shall have entered into a letter of
intent, memorandum of understanding, or other similar document with respect to
its acquisition of such cable television system; or
(B) more than nine months have elapsed since
TCI's Percentage Interest fell below five percent, unless at such time (1) TCI
and Century have agreed on an additional Capital Contribution to be made by TCI
that would cause TCI's Percentage Interest to be at least five percent, and the
agreement between TCI and Century with respect to such additional Capital
Contribution is in full force and effect, and (2) if the additional Capital
Contribution contemplated by such agreement would consist of any cable
television system to be acquired by TCI, TCI shall have entered into a binding,
definitive agreement with respect to its acquisition of such cable television
system, and such binding, definitive agreement shall be in full force and
effect.
5.2 Partnership Committee.
(a) Membership. The Partnership shall have a Partnership
Committee consisting of five individual representatives of the Partners. Three
members of the Partnership Committee shall be designated from time to time by
Century in its sole discretion. Two members of the Partnership Committee shall
be designated from time to time by TCI in its sole discretion. The members of
the Partnership Committee, as designated by Century and TCI, as of the date of
this Agreement, are set forth on Schedule II.
(b) Removal and Replacement of Members.
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(1) Each Partner shall use its good faith efforts to
designate its representatives as promptly as is reasonably practicable so that
the Partnership Committee shall at all times contain the number of members
provided for in Section 5.2(a).
(2) Any member of the Partnership Committee
designated pursuant to Section 5.2(a) may be removed and replaced at any time,
and from time to time, by the Partner that originally designated such member in
accordance with Section 5.2(a). No member shall be removed from office, with or
without cause, without the consent of the Partner that designated him.
(3) The Partnership shall reimburse each member of
the Partnership Committee for expenses, including travel and legal expenses,
reasonably incurred in connection with such member's performance of his duties
as a member of the Partnership Committee.
(c) Meetings of the Partnership Committee. The Partnership
Committee shall hold one regular meeting each quarter at such time and place as
shall be determined by the Partnership Committee. Special meetings of the
Partnership Committee may be called at any time by any member upon not less than
three Business Days' prior notice. Except as otherwise determined by the
Partnership Committee, all special and regular meetings of the Partnership
Committee shall be held at the principal office of the Partnership. Members of
the Partnership Committee may participate in any meeting of the Partnership
Committee by means of conference telephone or similar communications equipment
through which all persons participating in the meeting can hear each other, and
such participation shall constitute presence in person at the meeting.
(d) Procedural Matters.
(1) Each member shall have one vote in all matters
presented to the Partnership Committee for decision or approval. Except as
otherwise expressly provided in this Agreement, all actions of the Partnership
Committee shall require the affirmative vote of a majority of the Partnership
Committee.
(2) Unless waived in writing by all of the members
(before or after a meeting) at least three Business Days' prior notice of any
meeting shall be given to each member. Such notice shall state the purpose for
which such meeting has been called.
(3) Any action required or permitted to be taken by
the Partnership Committee may be taken without a meeting if all members of the
Partnership Committee consent in writing to such action. Such consent shall have
the same effect as a vote of the Partnership Committee.
(4) At all meetings of the Partnership Committee, a
majority of the members of the Partnership Committee, including at least one
member designated by TCI, shall constitute a quorum for the transaction of
business, except that, if notice was given of two prior
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meetings called for the purpose of taking the same action (as specified in the
notices) and no member designated by TCI attended or was represented by proxy at
either of the meetings called by such notices, but a quorum would have been
present at each of such meetings had a member designated by TCI attended or been
represented by proxy, then at any subsequent meeting called for the purpose of
taking the same action, a majority of the members of the Partnership Committee
(without regard to whether any member designated by TCI is present or
represented by proxy) shall constitute a quorum for the transaction of business.
In determining the number of meetings called for the purpose of taking any
action under this Section 5.2(d)(4), any meeting adjourned for lack of a quorum
and each adjournment of such meeting shall be considered a separate meeting, so
long as a quorum would have been present had a member designated by TCI attended
or been represented by proxy.
(5) A member of the Partnership Committee may give
his proxy to another member of the Partnership Committee with respect to any
matter to be voted on at a meeting of the Partnership Committee so long as such
proxy is in writing and signed by the member who gave it.
(6) The Partnership Committee shall cause to be kept
a book of minutes of all of its meetings in which there shall be recorded the
time and place of each such meeting, whether regular or special, and if special,
by whom called, the notice thereof given, the names of those present, and the
proceedings thereof.
5.3 No Management by Limited Partner.
Except as expressly provided in this Agreement, no Limited Partner, in
its capacity as a limited partner of the Partnership, shall take part in or
interfere in any manner with the control, conduct, or operation of the
Partnership or have any right or authority to act for or bind the Partnership or
to vote on matters relating to the Partnership.
5.4 Operating and Capital Expenditure Budgets.
A five-year operating plan for the Partnership is attached to this
Agreement as Schedule III for informational purposes only. After consultation
with TCI, the Managing Partner shall prepare and distribute to each Partner for
informational purposes only an operating budget and a capital expenditure budget
for the Partnership for each Fiscal Year.
5.5 No Personal Liability.
Neither General Partner shall have any personal liability for the
repayment of the Capital Contributions of any other Partner, but each General
Partner shall return to the Partnership any distributions received by such
General Partner in excess of those to which such General Partner is entitled
under this Agreement.
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5.6 Management Agreement.
At the Closing, the Partnership and Century (or an Affiliate of Century
designated by Century) shall enter into a Management Agreement substantially in
the form of Exhibit A. Century (or an Affiliate of Century designated by
Century) shall be entitled to the payments and reimbursements set forth in such
Management Agreement, as it may be amended from time to time in accordance with
its terms.
5.7 Tax Matters Partner.
(a) Century is hereby designated as the Tax Matters Partner of
the Partnership, as provided in Treasury Regulations pursuant to Code Section
6231 and analogous provisions of state and local law. Each Partner, by the
execution of this Agreement, consents to such designation of the Tax Matters
Partner and agrees to execute, certify, acknowledge, deliver, swear to, file,
and record at the appropriate public offices such documents as may be necessary
or appropriate to evidence such consent.
(b) To the extent and in the manner provided by applicable law
and Treasury Regulations, the Tax Matters Partner shall furnish the name,
address, profits interest, and taxpayer identification number of each Partner
and any Assignee to the Secretary of the Treasury or his delegate (the
"Secretary").
(c) The Tax Matters Partner shall notify each Partner of any
audit that is brought to the attention of the Tax Matters Partner by notice from
the Internal Revenue Service or any state or local taxing authority and shall
forward to each Partner copies of any written notices, correspondence, reports,
or other documents received by the Tax Matters Partner in connection with such
audit within ten Business Days following its receipt thereof from the Internal
Revenue Service or other state or local taxing authority. The Tax Matters Member
shall provide TCI with reasonable advance notice of administrative proceedings
with the Internal Revenue Service or any state or local taxing authority,
including any closing conference with the examiner and any appeals conference.
(d) The Tax Matters Partner shall give the Partners thirty
days' advance written notice of its intent to initiate judicial review, file a
request for administrative adjustment on behalf of the Partnership, extend the
period of limitations for making assessments of any tax against a Partner with
respect to any Partnership item, or enter into any agreement with the Internal
Revenue Service or any state or local taxing authority that would result in the
settlement of any alleged tax deficiency or other tax matter, or to any
adjustment of taxable income or loss or any item included therein, affecting the
Partnership or either Partner.
(e) Subject to the foregoing provisions of this Section 5.7,
the Tax Matters Partner is hereby authorized, upon thirty days' advance written
notice to TCI, to take any of the actions specified below:
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(1) to enter into any settlement with the Internal
Revenue Service or the Secretary or any state or local taxing authority with
respect to any tax audit or judicial review, in which agreement the Tax Matters
Partner may expressly state that such agreement shall bind the other Partners,
except that such settlement agreement shall not bind either Partner that (within
the time prescribed pursuant to the Code and Treasury Regulations thereunder)
files a statement with the Secretary or such state or local taxing authority
providing that the Tax Matters Partner shall not have the authority to enter
into a settlement agreement on the behalf of such Partner;
(2) if a notice of a final administrative adjustment
at the Partnership level of any item required to be taken into account by a
Partner for tax purposes (a "final adjustment") is mailed to the Tax Matters
Partner, to seek judicial review of such final adjustment, including the filing
of a petition for readjustment with the Tax Court, the District Court of the
United States for the district in which the Partnership's principal place of
business is located, or elsewhere as allowed by law, or the United States Court
of Federal Claims;
(3) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(4) to file a request for an administrative
adjustment with the Secretary at any time and, if any part of such request is
not allowed by the Secretary, to file a petition for judicial review with
respect to such request;
(5) to enter into an agreement with the Internal
Revenue Service or any state or local taxing authority to extend the period for
assessing any tax that is attributable to any item required to be taken into
account by a Partner for tax purposes, or an item affected by such item; and
(6) to take any other action on behalf of the
Partners (with respect to the Partnership) or the Partnership in connection with
any administrative or judicial tax proceeding to the extent permitted by
applicable law or Treasury Regulations.
(f) The Tax Matters Partner shall consult in good faith with
TCI before taking any of the actions specified in Section 5.7(e).
(g) The Partnership shall indemnify and reimburse the Tax
Matters Partner for all reasonable expenses (including legal and accounting
fees) incurred pursuant to this Section 5.7 in connection with any
administrative or judicial proceeding with respect to the tax liability of the
Partners. The payment of all such reasonable expenses shall be made before any
distributions are made to the Partners. The taking of any action and the
incurring of any expense by the Tax Matters Partner in connection with any such
proceeding, except to the extent provided herein or required by law, is a matter
in the sole discretion of the Tax Matters Partner and the provisions on
limitations of liability of a General Partner and indemnification set forth in
Article 12 shall be fully applicable to Century in its capacity as the Tax
Matters Partner.
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(h) Any Partner that receives a notice of an administrative
proceeding under Code Section 6223 relating to the Partnership shall promptly
notify the Tax Matters Partner of the treatment of any Partnership item on such
Partner's federal income tax return that is or may be inconsistent with the
treatment of that item on the Partnership's return.
(i) Either Partner that enters into a settlement agreement
with the Secretary with respect to any Partnership item shall notify the Tax
Matters Partner of such agreement and its terms within sixty days after its
date, and the Tax Matters Partner shall notify the other Partners of the
settlement agreement within thirty days of such notification.
5.8 Consolidation.
It is the express intent and agreement of the Partners that Century
controls the Partnership for purposes of consolidating the operations of the
Partnership with Century/New Jersey, under generally accepted accounting
principles and applicable Securities and Exchange Commission rules, regulations,
and guidelines and that the limitations provided for in Section 5.1(b) and
elsewhere in this Agreement are designed to provide TCI with protection as a
minority partner, but are not intended to affect such control by Century. This
Section 5.8 shall not be construed as affecting in any way the rights of TCI
under this Agreement.
5.9 Management Prior to Closing.
Notwithstanding any other provision of this Agreement, prior to the
Closing, all authority to manage the business, operations, and affairs of the
Partnership shall be vested in both Partners jointly, to be exercised only as
agreed to between the Partners, and neither Partner, including the Managing
Partner, shall have any right or authority individually to act for or bind the
Partnership, other than as expressly delegated to such Partner by agreement
between the Partners, except that Century shall have authority on behalf of the
Partnership to take any actions that are necessary or appropriate to permit the
Partnership to obtain, effective as of and subject to the Closing, the financing
contemplated by Section 7.22 of the Contribution Agreement.
ARTICLE 6
STATUS OF LIMITED PARTNERS
6.1 Limited Liability.
No Limited Partner, in its capacity as a limited partner of the
Partnership, shall be bound by or personally liable for the expenses,
liabilities, or obligations of the Partnership. In no event shall any Limited
Partner, in its capacity as a limited partner of the Partnership, be required to
make up a deficiency in its Capital Account upon the dissolution and termination
of the Partnership.
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6.2 Return of Distributions of Capital.
A Limited Partner may, under certain circumstances, be required by law
to return to the Partnership, for the benefit of the Partnership's creditors,
amounts previously distributed. No Limited Partner shall be obligated by this
Agreement to pay those distributions to or for the account of the Partnership or
any creditor of the Partnership. However, if any court of competent jurisdiction
holds that, notwithstanding the provisions of this Agreement, any Limited
Partner must return or pay over any part of those distributions, the obligation
shall be that of such Limited Partner alone and not of any other Partner. Any
payment returned to the Partnership by a Partner or made directly by a Partner
to a creditor of the Partnership shall be deemed a Capital Contribution by such
Partner.
6.3 Specific Limitations.
No Limited Partner shall have the right or power to: (a) withdraw or
reduce its Capital Contribution except as a result of the dissolution of the
Partnership or as otherwise provided by law or in this Agreement, (b) bring an
action for partition against the Partnership or any assets of the Partnership,
(c) cause the termination and dissolution of the Partnership, except as set
forth in this Agreement, or (d) demand or receive property other than cash in
return for its Capital Contribution. Except as otherwise set forth in this
Agreement or in any agreement permitted to be entered into under this Agreement
with respect to the purchase, redemption, retirement, or other acquisition of
Partnership Interests, no Limited Partner shall have priority over any other
Limited Partner either as to the return of its Capital Contribution or as to Net
Profit, Net Loss, or distributions. Other than upon the termination and
dissolution of the Partnership as provided by this Agreement, there has been no
time agreed upon when the Capital Contribution of any Limited Partner will be
returned.
6.4 Issuance of Partnership Interests.
Subject to obtaining the approval required under Section 5.1(b)(6) and
Section 5.1(c)(3) and in accordance with the terms thereof, the Managing Partner
may issue additional Partnership Interests to any Person and may admit to the
Partnership as additional Partners the Persons acquiring such Partnership
Interests, if such Persons were not previously admitted as Partners. The Persons
acquiring such Partnership Interests shall have the rights and be subject to the
obligations attributable to such Partnership Interests in the form issued to
them. A Person admitted as a new Partner shall only be entitled to distributions
and allocations of Net Profit and Net Loss attributable to the period beginning
on the effective date of its admission to the Partnership, and the Partnership
shall attribute Net Profit and Net Loss to the period before the effective date
of the admission of a new Partner and to the period beginning on the effective
date of the admission of a new Partner by any method agreed to between the
Partners that is permitted by the Treasury Regulations; provided, however, that
(a) upon the issuance of a Partnership Interest to a Person other than a Partner
or an Affiliate of a Partner, if the Partners are unable to agree on the method
of attributing Net Profit and Net Loss to such periods, the Partnership shall
attribute Net Profit and Net Loss to such periods by the interim closing of the
Partnership books method set forth in Treasury Regulation Section
1.706-1(c)(2)(ii), and (b) upon the issuance of a Partnership Interest to a
Partner or an Affiliate of a Partner, if the
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Partners are unable to agree on the method of attributing Net Profit and Net
Loss to such periods, the Partnership shall attribute Net Profit and Net Loss to
such periods pursuant to any method agreed to between the Partnership and the
new Partner so long as such method (1) does not change the allocation of Net
Profit and Net Loss or any item thereof to any Partner other than the new
Partner and its Affiliates and (2) does not require an interim closing of the
Partnership books.
ARTICLE 7
WITHDRAWAL OF GENERAL PARTNER
7.1 Withdrawal.
(a) Century may retire or withdraw from the Partnership only
with the prior written consent of TCI.
(b) If Century withdraws from the Partnership while it is the
Managing Partner, the Partnership shall dissolve in accordance with the
provisions of Article 11, unless, within ninety days after the withdrawal of
Century:
(1) TCI elects to continue the business of the
Partnership and elects to become the successor Managing Partner; or
(2) Either:
(A) if Century withdrew from the Partnership
with the prior written consent of TCI, TCI and Century elect to continue the
business of the Partnership and either (i) agree to appoint an existing General
Partner to be the successor Managing Partner or (ii) agree to admit a new
General Partner and to the appoint such new General Partner to be the successor
Managing Partner; or
(B) if Century withdrew from the Partnership
without the prior written consent of TCI, TCI elects to continue the business of
the Partnership and either (i) elects to appoint an existing General Partner to
be the successor Managing Partner or (ii) elects to admit an Assignee of part of
its Partnership Interest as a new General Partner and to appoint such new
General Partner to be the successor Managing Partner.
(c) Any successor Managing Partner appointed pursuant to
Section 7.1(b) (including TCI) shall be entitled to exercise all rights and
shall have all duties and obligations of the Managing Partner under this
Agreement. The appointment of a successor Managing Partner pursuant to Section
7.1(b) shall be effective as of the date of the withdrawal of Century, subject
to the receipt of all necessary governmental approvals and other material
third-party consents.
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(d) If Century withdrew from the Partnership without the prior
written consent of TCI, then, if TCI so elects, subject to the receipt of all
necessary governmental approvals and other material third-party consents, all of
the members of the Partnership Committee designated by Century shall be removed
and Century shall have no further right to designate any representatives.
(e) No successor to Century as Managing Partner may retire or
withdraw from the Partnership.
(f) For purposes of this Agreement, the term "withdrawal"
means the happening of any event described in Section 17-402(a) of the Act
(other than subsections (c) and (d) thereof).
(g) TCI may retire or withdraw from the Partnership only with
the prior written consent of Century.
7.2 Removal of Century as Managing Partner.
(a) The provisions of Section 7.2(b) shall apply if:
(1) a court of competent jurisdiction finds that
Century has engaged in conduct while acting as Managing Partner that constitutes
either (A) a felony involving moral turpitude that resulted in material harm to
the Partnership or TCI or (B) fraud against the Partnership or TCI, and
(2) the finding described in Section 7.2(a) has not
been reversed, stayed, enjoined, set aside, annulled, or suspended, and is not
the subject of any pending request for judicial review, reconsideration, appeal,
or stay, and
(3) the time for filing any further request for
judicial review, reconsideration, appeal, or stay of the finding described in
Section 7.2(a) has expired.
(b) If each of the conditions specified in Section 7.2(a) is
satisfied, then, if TCI so elects by written notice to Century, upon the receipt
of all necessary governmental approvals and other material third-party consents,
(1) all of the members of the Partnership Committee
designated by Century shall be removed and Century shall have no further right
to designate any representatives; and
(2) Century shall be removed as Managing Partner and
either (as specified by TCI in its election pursuant to this Section 7.2(b)):
(A) TCI shall become the successor Managing
Partner; or
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(B) an existing General Partner appointed by
TCI shall become the successor Managing Partner; or
(C) an Assignee of part of TCI's Partnership
Interest shall be admitted as a new General Partner and shall become the
successor Managing Partner.
(c) Any successor Managing Partner appointed pursuant to
Section 7.2(b) (including TCI) shall be entitled to exercise all rights and
shall have all duties and obligations of the Managing Partner under this
Agreement. The appointment of a successor Managing Partner pursuant to Section
7.2(b) shall be effective as of the date of the removal of Century as Managing
Partner.
7.3 Effect of Withdrawal or Removal of Managing Partner.
If the Partnership is continued pursuant to Section 7.1 following the
withdrawal of Century, or if Century is removed as Managing Partner pursuant to
Section 7.2, then the entire Partnership Interest of Century shall be converted
to that of a Limited Partner unless such conversion would have adverse tax
consequences to TCI or the TCI Members. The withdrawal or removal of any
Managing Partner shall not alter the allocations and distributions to be made to
the Partners pursuant to this Agreement.
7.4 No Dissolution.
The withdrawal of a General Partner other than the Managing Partner
shall not cause the dissolution of the Partnership or alter the allocations and
distributions to be made to the Partners pursuant to this Agreement.
ARTICLE 8
ASSIGNMENT OF PARTNERSHIP INTERESTS
8.1 Assignments by Century.
Except as provided in Section 8.3, Century shall not assign (whether by
sale, exchange, gift, contribution, distribution, or other transfer, including a
pledge or other assignment for security purposes) all or any part of its
interest in the Partnership without the prior written consent of TCI.
8.2 Assignments by Other Partners.
Except as provided in Section 8.3, a Partner may not assign (whether by
sale, exchange, gift, contribution, distribution, or other transfer, including a
pledge or other assignment for security purposes) all or any part of its
Partnership Interest without the prior written consent of the Managing Partner.
Notwithstanding the consent of the Managing Partner to any assignment by a
Partner of all
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or any part of its Partnership Interest, the rights of any Assignee shall be
subject at all times to the limitations set forth in Section 8.4.
8.3 Exceptions.
The provisions of Section 8.1 and Section 8.2 shall not apply and no
consent of the Managing Partner or TCI, as applicable, shall be required for:
(a) any assignment of Partnership Interests by Century that is
permitted by Article 9; or
(b) an assignment by a Partner or an Assignee of a Partner to
a Controlled Affiliate of such Partner; or
(c) in the case of an assignment by TCI or an Assignee of TCI,
an assignment to any Person controlled directly or indirectly by
Tele-Communications and of which Tele-Communications owns, directly or
indirectly, at least fifty percent of the outstanding equity interests; or
(d) in the case of an assignment by Century or an Assignee of
Century, an assignment to any Person controlled directly or indirectly by
Century/New Jersey and of which Century/New Jersey owns, directly or indirectly,
at least fifty percent of the outstanding equity interests; or
(e) an assignment by TCI pursuant to Section 7.1(b)(2)(B) or
Section 7.2(b)(2)(C) to a Person who will become a successor Managing Partner.
8.4 Assignee.
If the provisions of this Article 8 have been complied with, an
Assignee shall be entitled to receive distributions of cash or other property,
and allocations of Net Profit and Net Loss and of items of income, deduction,
gain, loss, or credit, from the Partnership attributable to the assigned
Partnership Interests from and after the effective date of the assignment, and
shall have the right to receive a copy of the quarterly and annual financial
statements required herein to be provided the Partners, but an Assignee shall
have no other rights of a Partner herein, such as rights to any other
information, an accounting, inspection of books or records, or voting as a
Partner on matters required by law, unless and until such Assignee is admitted
as a substitute Partner pursuant to the provisions of Section 8.8. The
Partnership and the Managing Partner shall be entitled to treat the assignor as
the absolute owner of the Partnership Interests in all respects, and shall incur
no liability for distributions, allocations of Net Profit or Net Loss, or
transmittal of reports and notices required to be given to Partners that are
made in good faith to the assignor until the effective date of the assignment,
or, in the case of the transmittal of reports (other than the financial
statements referred to above) or notices, until the Assignee is so admitted as a
substitute Partner. The effective date of
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an assignment shall be the first day of the calendar month following the month
in which the Managing Partner has received an executed instrument of assignment
in compliance with this Article 8 or such other date specified in the executed
instrument of assignment. The Assignee shall be deemed an Assignee on the
effective date, and shall be only entitled to distributions and allocations of
Net Profit and Net Loss attributable to the period beginning on the effective
date of assignment. The Partnership shall attribute Net Profit and Net Loss to
the period before the effective date of assignment and to the period beginning
on the effective date of assignment as provided in Section 4.5. Each Assignee
will inherit the balance of the Capital Account, as of the effective date of
assignment, of the assignor with respect to the Partnership Interests assigned.
8.5 Other Consents and Requirements.
Any assignment of any Partnership Interests in the Partnership must be
in compliance with any requirements imposed by any state securities
administrator having jurisdiction over the assignment and the United States
Securities and Exchange Commission and must not cause the Partnership or any
Subsidiary to be in violation of any Ownership Restriction.
8.6 Assignment Not In Compliance.
Any assignment in contravention of any of the provisions of this
Article 8 shall be void and of no effect, and shall neither bind nor be
recognized by the Partnership.
8.7 Division of Partnership Interests.
The several rights and obligations inherent in the Capital Account and
the Percentage Interest attributable to a Partner's Partnership Interest are
indivisible except in equal proportions, such that the assignment of a specified
percentage of a Partner's Partnership Interest may only represent an equal
percentage of the total Capital Account and the Percentage Interest that were
attributable to such Partner's Partnership Interest prior to the assignment.
8.8 Substitute Partners.
An Assignee may not become a substitute Partner unless all of the
following conditions are first satisfied:
(a) A duly executed and acknowledged written instrument of
assignment shall have been filed with the Partnership, specifying the
Partnership Interests being assigned and setting forth the intention of the
assignor that the Assignee succeed to the assignor's interest as a substitute
Partner;
(b) The Assignee shall be an Accredited Investor;
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(c) The assignor and Assignee shall have executed and
acknowledged any other instruments that the Managing Partner deems necessary or
desirable for substitution, including the written acceptance and adoption by the
Assignee of the provisions of this Agreement and shall have executed,
acknowledged, and delivered to the Managing Partner a special power of attorney
as provided in Section 16.5(b);
(d) Except in the case of an assignment permitted by Section
8.3, the non-assigning Partner shall have consented in writing to the admission
of the Assignee as a substitute Partner, the granting of which may be withheld
by the non-assigning Partner in its sole and absolute discretion;
(e) The Assignee shall have paid to the Partnership a transfer
fee sufficient to cover all reasonable expenses connected with the substitution;
and
(f) The assignment to the Assignee shall have complied with
the other provisions of this Article 8.
8.9 Consent.
Each Partner consents to the admission of substitute Partners by the
Managing Partner and to any Assignee of its Partnership Interests becoming a
substituted Partner in accordance with the terms and conditions of this
Agreement.
8.10 Covenants of Parents.
(a) By executing this Agreement, TCIC agrees that it will not
cause or permit to occur any transaction or series of transactions unless, after
giving effect to such transaction or series of transactions, at least fifty
percent of all the outstanding equity interests in TCI would be owned, directly
or indirectly, by one of the following Persons, and TCI would be controlled,
directly or indirectly, by one of the following Persons:
(1) TCIC; or
(2) Tele-Communications; or
(3) any other Person that directly or indirectly owns
either:
(A) cable television systems serving at
least one million subscribers (excluding cable television systems owned directly
or indirectly by the Partnership) that were owned, directly or indirectly, by
TCIC prior to the transaction or series of transactions; or
(B) substantially all the cable television
systems that were owned, directly or indirectly, by TCIC prior to the
transaction or series of transactions.
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(b) By executing this Agreement, Century/Texas agrees that,
except for a transaction permitted by Article 9, it will not cause or permit to
occur any transaction or series of transactions unless, after giving effect to
such transaction or series of transactions, at least fifty percent of all the
outstanding equity interests in Century would be owned, directly or indirectly,
by one of the following Persons, and Century would be controlled, directly or
indirectly, by one of the following Persons:
(1) Century/Texas; or
(2) Century/New Jersey; or
(3) any other Person that directly or indirectly owns
either:
(A) cable television systems serving at
least one million subscribers (excluding cable television systems owned directly
or indirectly by the Partnership) that were owned, directly or indirectly, by
Century/Texas prior to the transaction or series of transactions; or
(B) substantially all the cable television
systems that were owned, directly or indirectly, by Century/Texas prior to the
transaction or series of transactions.
8.11 Impact of Code Section 708.
(a) If the assignment by a Partner of all or part of its
Partnership Interest results in the Termination of the Partnership, the Partner
causing such Termination (as determined in accordance with this Section 8.11)
will indemnify the other Partner for its Additional Income Tax Amount and
reimburse the Partnership for any reasonable fees and expenses of accountants
and attorneys that are incurred by the Partnership as a result of such
Termination. For purposes of this Section 8.11:
(1) "Termination" means, with respect to the
Partnership, a technical termination of the Partnership under Code Section
708(b)(1)(B); and
(2) "Additional Income Tax Amount" means, with
respect to any Partner, an amount equal to the excess of (A) the net present
value on the date of Termination of the federal and state income tax benefit
attributable to such Partner's shares of the Partnership's future tax
depreciation expense (taking into account all allocations made with respect to
depreciable property under Code Section 704(c)), computed without regard to Code
Section 168(i)(7) over (B) the net present value on the date of Termination of
the federal and state income tax benefit attributable to such Partner's shares
of the Partnership's future tax depreciation expense (taking into account all
allocations made with respect to depreciable property under Code Section
704(c)), computed with regard to Code Section 168(i)(7). In determining a
Partner's "Additional Income Tax Amount," net present value shall be calculated
using a discount rate equal to the interest rate paid by the
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Partnership on the date of Termination with respect to its senior indebtedness
and the highest federal and California corporate income tax rates in effect on
the date of Termination shall apply.
(b) Except as provided in Section 8.11(c) and Section 8.11(d),
the Partner whose assignment of all or part of its Partnership Interest resulted
in the Termination of the Partnership shall be treated as the Partner causing
such Termination for purposes of Section 8.11(a).
(c) If a Partner desires to assign all or part of its
Partnership Interest in a transaction that, if consummated at one time, would
result in the Termination of the Partnership, such Partner may elect (1) to
assign immediately as much of its Partnership Interest as may then be assigned
without resulting in the Termination of the Partnership and (2) to assign the
remaining portion of its Partnership Interest that it desires to assign as soon
thereafter as such subsequent assignment would not result in the Termination of
the Partnership. If a Partner notifies the other Partner that it has elected to
assign all or part of its Partnership Interest in accordance with this Section
8.11(c), specifying in its notice the portion of its Partnership Interest to be
assigned immediately in accordance with clause (1) of the preceding sentence and
the portion of its Partnership Interest to be assigned subsequently in
accordance with clause (2) of the preceding sentence (the assignment of such
portion, the "Deferred Assignment"), then, if the other Partner assigns all or
any part of its Partnership Interest prior to the Deferred Assignment by the
notifying Partner and the Deferred Assignment therefore results in the
Termination of the Partnership, the other Partner and not the notifying Partner
shall be treated as the Partner causing such Termination for purposes of Section
8.11(a).
(d) If a Partner (the "First Assigning Partner") fails to
notify another Partner (the "Second Assigning Partner") in writing of an
assignment of any part of its Partnership Interest (including any assignment of
a direct or indirect ownership interest in the First Assigning Partner to which
Section 8.11(e) applies), and an assignment by the Second Assigning Partner of
any part of its Partnership Interest (including any assignment of a direct or
indirect ownership interest in the Second Assigning Partner to which Section
8.11(e) applies) after the assignment by the First Assigning Partner and before
the Second Assigning Partner has notice of the prior assignment by the First
Assigning Partner results in a Termination of the Partnership that would not
have occurred if the assignment by the First Assigning Partner had not occurred,
then the First Assigning Partner and not the Second Assigning Partner shall be
treated as the Partner causing such Termination for purposes of Section 8.11(a).
(e) Each Partner agrees that, solely for purposes of this
Section 8.11, any assignment of a direct or indirect ownership interest in a
Partner that has the same effect as an assignment of such Partner's Partnership
Interest for purposes of determining whether a Termination of the Partnership
has occurred shall be treated as an assignment of such Partner's Partnership
Interest. Each Partner shall notify the Partnership and the other Partner in
writing not less than five days prior to any assignment of its Partnership
Interest (including any assignment of a direct or indirect ownership interest in
such Partner to which this Section 8.11(e) applies).
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ARTICLE 9
RIGHT OF FIRST OFFER
9.1 Proposed Sale and Negotiations with TCI.
(a) If, at any time after the fifth anniversary of the
Closing, Century or any Affiliate of Century (such Person, the "Seller")
proposes to assign (whether by sale, exchange, gift, contribution, distribution,
or other transfer) all of Century's Partnership Interest or all of the
outstanding equity interests in one or more Persons (including Century) that
collectively own, directly or indirectly, all of Century's Partnership Interest
(other than an assignment permitted by Section 8.3(b), Section 8.3(d), or
Section 8.10(b)), then Century shall send a written notice (the "First Offer
Notice") to TCI specifying the Partnership Interest or other equity interests
proposed to be sold (the "Offered Interest") and the following terms of the
sale: (1) purchase price and any adjustments thereto, including any adjustments
based on the number of customers or operating cash flow (the "Purchase Price"),
(2) other financial terms, such as the type and structure of consideration to be
paid (which shall not include consideration other than cash or promissory notes)
and the timing of payments (the "Other Financial Terms"), and (3) any other
material terms, such as any non-standard representations, covenants, or closing
conditions, any material limitations on the purchaser's right to
indemnification, and the "upset date" (the "Other Terms").
(b) Within ten Business Days after its receipt of the First
Offer Notice, TCI shall send a written notice to Century specifying whether TCI
desires to begin negotiations with the Seller concerning a purchase by TCI of
the Offered Interest on the terms specified in the First Offer Notice. If TCI
sends a timely notice to Century pursuant to this Section 9.1(b) specifying that
TCI desires to begin such negotiations, TCI and the Seller will undertake in
good faith to reach a binding, definitive agreement for the purchase and sale of
the Offered Interest, incorporating the terms specified in the First Offer
Notice, with any changes thereto that may be agreed to between TCI and the
Seller, and any other terms and conditions that may be agreed to between TCI and
the Seller. If TCI and the Seller reach a binding, definitive agreement for the
purchase and sale of the Offered Interest, such agreement shall govern the
rights and obligations of TCI and the Seller with respect to the purchase and
sale of the Offered Interest, and the Seller shall be permitted to consummate
the sale of the Offered Interest substantially in accordance with terms of such
agreement.
9.2 Sale to Third Party; Re-offer to TCI.
(a) If TCI does not send a timely written notice to Century
pursuant to Section 9.1(b) specifying that TCI desires to begin negotiations
with the Seller concerning a purchase by TCI of the Offered Interest, or if TCI
and the Seller commence such negotiations but are unable to enter into a
binding, definitive agreement for the sale of the Offered Interest within ninety
days after TCI's notice to Century pursuant to Section 9.1(b), then the Seller
may undertake to sell the Offered Interest to any Person in accordance with this
Section 9.2.
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(b) The Seller may agree to sell the Offered Interest to any
Person so long as (1) the terms and conditions of such sale are not materially
different from the terms specified in the First Offer Notice and (2) the
binding, definitive agreement between the Seller and the purchaser of the
Offered Interest is entered into within one year after (A) if TCI elected to
commence negotiations pursuant to Section 9.1(b), the sixtieth day after TCI's
receipt of the First Offer Notice, or (B) in all other events, the tenth
Business Day after TCI's receipt of the First Offer Notice. For purposes of this
Section 9.2, the terms and conditions of a proposed sale of the Offered Interest
will be materially different from the terms specified in the First Offer Notice
if, and only if, (1) the Purchase Price is less than that specified in the First
Offer Notice, or (2) the Other Financial Terms are different from those
specified in the First Offer Notice, or (3) any of the Other Terms are different
from those specified in the First Offer Notice in any respect that materially
reduces the value of the transaction to the Seller.
(c) If the Seller desires to sell the Offered Interest to any
Person on terms and conditions that are materially different from the terms
specified in the First Offer Notice, then Century may send a written notice (the
"Re-Offer Notice") to TCI specifying all material terms and conditions on which
the Seller proposes to sell the Offered Interest (which terms shall not include
the receipt by the Seller of consideration other than cash or promissory notes)
and including an offer from the Seller to sell the Offered Interest to TCI on
such terms and conditions. TCI may accept the offer included in the Re-Offer
Notice by sending a written notice of acceptance to Century within three
Business Days after TCI's receipt of the Re-Offer Notice, and such offer and
acceptance shall constitute a binding agreement between TCI and the Seller
concerning the sale of the Offered Interest on the terms and conditions
specified in the Re-Offer Notice. If Century sends a Re-Offer Notice and TCI
does not timely accept the offer included in the Re-Offer Notice, the Seller may
agree to sell the Offered Interest to any Person on the terms and conditions
specified in the Re-Offer Notice so long as the binding, definitive agreement
between the Seller and the purchaser of the Offered Interest is entered into
within sixty days after TCI's receipt of the Re-Offer Notice.
(d) The Seller shall be permitted to consummate the sale of
the Offered Interest substantially in accordance with terms of any agreement
entered into pursuant to this Section 9.2. If any agreement entered into
pursuant to this Section 9.2 is terminated prior to the sale of the Offered
Interest, then the terms of this Article 9 shall apply to any subsequent
proposal to sell such Offered Interest.
(e) If the Seller proposes to undertake to sell the Offered
Interest in accordance with this Section 9.2 through an auction or similar
process, TCI agrees that neither TCI nor any of its Controlled Affiliates will
participate in such auction or similar process. The provisions of Section 9.1
and Section 9.2 shall apply to any proposed sale by the Seller of the Offered
Interest through an auction or similar process.
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9.3 Seller's Election Not to Sell.
Subject to the terms of any binding agreement entered into pursuant to
this Article 9 and the Seller's obligation to negotiate with TCI in good faith
pursuant to Section 9.1(b), the Seller may, at any time and in its sole
discretion, terminate its efforts to sell the Offered Interest and rescind any
notice or offer delivered to TCI pursuant to this Article 9. If the Seller
terminates its efforts to sell the Offered Interest, the terms of this Article 9
shall apply to any subsequent efforts by the Seller to sell such Offered
Interest.
ARTICLE 10
OTHER BUSINESSES AND INVESTMENT OPPORTUNITIES
10.1 Prohibited Cross-Interests.
(a) Each Partner agrees that, during the term of this
Agreement, neither such Partner nor any Controlled Affiliate of such Partner
shall, directly or indirectly, acquire any interest in any business or in any
Person if the acquisition of such interest would cause the Partnership or any
Subsidiary to be in violation of any Ownership Restriction.
(b) If, during the term of this Agreement, there is a Formal
Determination that either Partner's holding of a Partnership Interest causes the
Partnership or any Subsidiary to be in violation of any Ownership Restriction,
then the following provisions of this Section 10.1(b) shall apply. For purposes
of this Section 10.1(b), a "Formal Determination" means (1) an agreement between
Century and TCI, (2) a written determination by the FCC (including a
determination by staff employees of the FCC acting under delegated authority),
regardless of whether such determination is subject to administrative or
judicial review, reconsideration, or appeal (except to the extent that, so long
as a stay of any enforcement action by the FCC against the Partnership or any
Subsidiary as a result of any such violation of an Ownership Restriction is
effective, the Partner that caused the violation specifies that any such
determination will not constitute a Formal Determination during the pendency of
any review, reconsideration, or appeal), or (3) a decision of any court of
competent jurisdiction, regardless of whether such decision is subject to
administrative or judicial review, reconsideration, or appeal (except to the
extent that Century and TCI agree that any such decision will not constitute a
Formal Determination during the pendency of any review, reconsideration, or
appeal). Century and TCI will use their respective good faith efforts, after
consultation with legal counsel, to reach an agreement as to whether either
Partner's holding of a Partnership Interest causes the Partnership or any
Subsidiary to be in violation of any Ownership Restriction.
(1) The Partnership will use reasonable efforts to
obtain a stay of any enforcement action by the FCC against the Partnership or
any Subsidiary as a result of any such violation of an Ownership Restriction
(and the agreement of the Partners shall be required for the Partnership to act
otherwise), and the Partners will cooperate reasonably with the Partnership in
such
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efforts, to the extent necessary to prevent such violation from having a
material adverse effect on the Partnership and the Subsidiaries before it is
cured. For purposes of this Section 10.1(b), a material adverse effect on the
Partnership and the Subsidiaries includes the loss of any license or licenses
issued by the FCC that, in the aggregate, are material to the conduct of the
business of the Partnership and the Subsidiaries, the imposition of any fines or
forfeitures that, in the aggregate, are material in amount, and limitations on
the ability of the Partnership or any Subsidiary to conduct its business in the
ordinary course consistent with its past practices.
(2) The Partnership and the Partners will cooperate
reasonably with each other and negotiate in good faith with the FCC to obtain a
determination by the FCC (including a determination by staff employees of the
FCC acting under delegated authority) that certain actions proposed to be taken
by a Partner or its Affiliates would cure any such violation of an Ownership
Restriction. The actions proposed to be taken by a Partner or its Affiliates to
cure such violation may be those that, in such Partner's judgment, are least
detrimental to such Partner and its Affiliates, and may include the divestiture
of any asset or the restructuring of any investment.
(3) If there is a Formal Determination that TCI's
holding of a Partnership Interest causes the Partnership or any Subsidiary to be
in violation of any Ownership Restriction, TCI agrees to take all reasonable
actions necessary to cure any such violation of an Ownership Restriction;
provided, however, that:
(A) if the Partnership and the Partners
receive a determination by the FCC (including a determination by staff employees
of the FCC acting under delegated authority) that certain actions proposed to be
taken by TCI or its Affiliates would cure such violation, then, if TCI and its
Affiliates take such actions, TCI shall not be required to take any other action
under this Section 10.1(b) to cure such violation until such time, if any, that
there is a subsequent Formal Determination that such actions did not cure such
violation; and
(B) TCI shall not be required to take any
action to cure such violation prior to the time that such violation would have a
material adverse effect on the Partnership and the Subsidiaries.
(4) The actions that TCI may be required to take
pursuant to Section 10.1(b)(3) (it being agreed by TCI that the following
actions shall be deemed reasonable for purposes of Section 10.1(b)(3)), subject
to the limitations in Section 10.1(b)(3)(A) and Section 10.1(b)(3)(B), shall
include, to the extent necessary to cure such violation, executing amendments to
this Agreement to eliminate any right of TCI under this Agreement (other than
its right to allocations of income, its right to distributions, its rights under
Section 5.1(c)(1), and its right to approve any other action by the Partnership
and the Subsidiaries if such action (A) in the case of an action that does not
uniquely affect either Partner, such as an acquisition or disposition of assets
or a financing, would have material adverse economic effect on TCI or (B) in the
case of an action that uniquely affects either Partner, such as a transaction
between the Partnership and an Affiliate of a Partner, would have an adverse
economic effect on TCI).
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(5) If there is a Formal Determination that Century's
holding of a Partnership Interest causes the Partnership or any Subsidiary to be
in violation of any Ownership Restriction, Century will use its best efforts to
cure any such violation; provided, however, that:
(A) if the Partnership and the Partners
receive a determination by the FCC (including a determination by staff employees
of the FCC acting under delegated authority) that certain actions proposed to be
taken by Century or its Affiliates would cure such violation, then, if Century
and its Affiliates take such actions, Century shall not be required to take any
other action under this Section 10.1(b) to cure such violation until such time,
if any, that there is a subsequent Formal Determination that such actions did
not cure such violation;
(B) Century shall not be required to take
any action to cure such violation prior to the time that such violation would
have a material adverse effect on the Partnership and the Subsidiaries; and
(C) Century shall not be required by this
Section 10.1(b)(5) to convert the Partnership Interest of Century to that of a
Limited Partner or to eliminate any right of Century under this Agreement.
(c) Neither Partner will approve the acquisition, directly or
indirectly, by the Partnership or any Subsidiary of any interest in any business
or in any Person if such Partner has actual knowledge that consummating such
acquisition would cause either Partner or any Affiliate of either Partner to be
in violation of any Ownership Restriction; provided that if the Managing Partner
desires to cause the Partnership or a Subsidiary to acquire assets or an
interest in a business or any Person, and the Managing Partner does not have
actual knowledge that such acquisition would cause the Partnership or a
Subsidiary, either Partner or any Affiliate of either Partner to be in violation
of any Ownership Restriction, then the Managing Partner shall provide prior
written notice to TCI of such proposed acquisition at least 30 days prior to
entering into a binding agreement to effect such acquisition and if TCI notifies
the Managing Partner within fifteen days of receiving such notice that such
acquisition would cause the Partnership or a Subsidiary or TCI to be in
violation of any Ownership Restriction, the Managing Partner shall not proceed
with such acquisition without first complying with this Section 10.1(c) again,
it being understood that if TCI does not so notify the Managing Partner within
such fifteen day period then the Managing Partner shall be presumed not to have
knowledge that such acquisition would cause the Partnership or a Subsidiary,
either Partner or any Affiliate of either Partner to be in violation of any
Ownership Restriction.
10.2 Wireline All Distance Communications Services.
(a) The Partnership will deliver a notice in writing (a
"Notice") to AT&T Corp. ("AT&T") if the Partnership desires to offer consumer
residential wireline all-distance communications services ("All Distance
Services") in the Territory or in any other geographic area
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served by a cable television system owned by the Partnership or any of its
Subsidiaries (collectively, with the Territory, the "Partnership Territory")
accessible from the Partnership's hybrid fiber coaxial infrastructure. AT&T will
deliver a Notice to the Partnership if AT&T desires to offer All Distance
Services in the Partnership Territory accessible from the hybrid fiber coaxial
infrastructure of an operator of a cable television system or an operator of a
multichannel video programming service. Any Notice or other notice to AT&T
pursuant to this Section 10.2 shall be sent in the manner specified in Section
16.4 to AT&T Corp., Attention: Vice President-Law and Secretary, 295 North Maple
Avenue, Basking Ridge, New Jersey 07920, or to such other address as AT&T shall
have furnished to the Partnership in writing.
(b) The Partnership and AT&T will negotiate in good faith for
a period of 90 days from the receipt of a Notice (a "Negotiation Period")
regarding the terms and conditions upon which the Partnership and AT&T would
offer, promote and make available All Distance Services in the Partnership
Territory accessible from the Partnership's hybrid fiber coaxial infrastructure.
The Partnership and AT&T acknowledge that this Section 10.2 constitutes a
statement of their good faith intention to negotiate during the Negotiation
Period with respect to All Distance Services in the Partnership Territory
accessible from the Partnership's hybrid fiber coaxial infrastructure and does
not itself constitute an agreement, agreement to agree, or a binding commitment
by any party with respect thereto. Any agreements between the Partnership and
AT&T with respect to the offer of All Distance Services in the Partnership
Territory accessible from the Partnership's hybrid fiber coaxial infrastructure
shall be set forth in a definitive agreement and any other necessary
documentation with respect thereto, subject to the conditions expressed therein.
(c) There will be only one Negotiation Period pursuant to this
Section 10.2. The obligations of the Partnership and AT&T under this Section
10.2 will terminate on the earliest to occur of the following: (i) if a
Negotiation Period ends without the Partnership and AT&T having executed and
delivered a definitive agreement with respect to All Distance Services; (ii) if
the Agreement and Plan of Restructuring and Merger dated as of June 23, 1998
among affiliates of TCI and AT&T, as the same may be amended, terminates prior
to the closing thereunder; or (iii) on the fifth anniversary of the date on
which the Closing occurs.
(d) Nothing in this Section 10.2 will require the Partnership
to terminate any agreement or arrangement that is described on Schedule V before
the end of the current term thereof or to take any action that would constitute
a breach or default by the Partnership in the performance of its obligations
under any such agreement or arrangement. Nothing in this Section 10.2 will
require AT&T to terminate any existing agreement or arrangement before the end
of the current term thereof or to take any action that would constitute a breach
or default by AT&T in the performance of its obligations under any such
agreement or arrangement.
10.3 No Other Restrictions.
Except as specifically provided above in this Article 10, nothing in
this Agreement shall limit the ability of either Partner, or any partner,
Affiliate, Controlled Affiliate, agent, or representative
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of either Partner, to engage in or possess an interest in other business
ventures of any nature or description, independently or with others, whether
currently existing or hereafter created and whether or not competitive with or
advanced by the business of the Partnership. Neither the Partnership nor the
other Partner shall have any rights in or to the income or profits derived
therefrom, nor shall either Partner have any obligation to the other Partner
with respect to any such enterprise or related transaction.
ARTICLE 11
DISSOLUTION AND LIQUIDATION OF PARTNERSHIP
11.1 Events of Dissolution.
The Partnership shall be dissolved upon the happening of any of the
following events:
(a) the failure of the Partners to select a successor Managing
Partner in accordance with the provisions of Section 7.1(b) after the withdrawal
of Century as Managing Partner;
(b) the expiration of the term of the Partnership as set forth
in Section 2.4;
(c) the sale, exchange, involuntary conversion, or other
disposition or transfer of all or substantially all of the assets of the
Partnership;
(d) subject to any restriction in any agreement to which the
Partnership is a party, an election to liquidate and dissolve the Partnership
made by Century with the approval of TCI;
(e) the termination of the Contribution Agreement in
accordance with its terms prior to the Closing; or
(f) subject to any provision of this Agreement that limits or
prevents dissolution, the happening of any event that, under applicable law,
causes the dissolution of a limited partnership.
11.2 Liquidation.
(a) Upon dissolution of the Partnership for any reason, the
Partnership shall immediately commence to wind up its affairs. A reasonable
period of time shall be allowed for the orderly termination of the Partnership
business, discharge of its liabilities, and distribution or liquidation of the
remaining assets so as to enable the Partnership to minimize the normal losses
attendant to the liquidation process.
(b) Liquidation of the assets of the Partnership shall be
managed on behalf of the Partnership by the "Liquidator," which shall be (1) if
the Partnership is being liquidated pursuant to
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Section 11.1(a), a liquidating trustee selected by the Partners other than a
Partner that has withdrawn and (2) in all other events, the Managing Partner.
The Liquidator shall be responsible for soliciting offers to purchase the
entirety of the Partnership's assets (including equity interests in other
Persons) or portions or clusters of assets of the Partnership.
(c) The Liquidator shall cause a full accounting of the assets
and liabilities of the Partnership to be taken and a statement thereof to be
furnished to each Partner within thirty days after the distribution of all of
the assets of the Partnership.
(d) The property and assets of the Partnership and the
proceeds from the liquidation thereof shall be applied in the following order of
priority:
(1) first, to payment of the debts and liabilities of
the Partnership, in the order of priority provided by law (including any loans
by either Partner to the Partnership) and payment of the expenses of
liquidation;
(2) second, to setting up of such reserves as the
Liquidator may deem reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Partnership or any obligation or liability not
then due and payable; provided, however, that any such reserve shall be paid
over by the Liquidator to an escrow agent, to be held by such escrow agent for
the purpose of disbursing such reserves in payment of such liabilities, and, at
the expiration of such escrow period as the Liquidator shall deem advisable, to
distribute the balance thereafter remaining in the manner hereinafter provided;
and
(3) finally, to payment to the Partners, in
accordance with Section 4.1(b). The distributions pursuant to this Section
11.2(d)(3) shall, to the extent possible, be made prior to the later of the end
of the Fiscal Year in which the dissolution occurs or the ninetieth day after
the date of dissolution, or such other time period which may be permitted under
Treasury Regulations Section 1.704-1(b)(2)(ii)(b).
(e) If in the course of the liquidation and dissolution of the
Partnership pursuant to this Article 11, the Liquidator determines that a sale
by all the Partners to any Person of their Partnership Interests, instead of a
sale by the Partnership and the Subsidiaries of their respective assets, would
more efficiently effect the liquidation of the Partners' economic interests in
the Partnership or would reduce negative tax consequences to the Partners and
the Partnership, but would not adversely affect the rights and obligations of
either Partner (including the tax consequences to either Partner), then each
Partner agrees to sell its Partnership Interest to such Person, and the
Liquidator shall have the authority, pursuant to the power of attorney granted
in Section 16.5(b), to execute, acknowledge, deliver, swear to, file, and record
all agreements, instruments, and other documents that may be necessary or
appropriate to effect the sale of such Partner's Partnership Interest.
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(f) Following the dissolution of the Partnership pursuant to
Section 11.1, the Partners will use commercially reasonable efforts to structure
the liquidation of the Partnership in a manner that minimizes negative tax
consequences to the Partners and the Partnership to the extent doing so would
not materially adversely affect either Partner (except to the extent such
Partner is adequately compensated by the other Partner for such adverse effect).
Any structure agreed to by the Partners pursuant to this Section 11.2(f) shall
supersede the other provisions of this Article 11 to the extent it is
inconsistent with such other provisions, but nothing in this Section 11.2(f)
shall modify or otherwise affect the other provisions of this Article 11 if the
Partners are unable to agree on such a structure.
11.3 Distribution in Kind.
The distribution to either Partner of a non-cash asset in connection
with the liquidation of the Partnership shall be subject to Section 4.1(d). The
fair market value of any non-cash asset distributed in connection with the
liquidation of the Partnership shall be determined by an independent appraiser
(any such appraiser must be nationally recognized as an expert in valuing the
type of asset involved) selected by the Liquidator.
11.4 No Action for Dissolution.
The Partners acknowledge that irreparable damage would be done to the
goodwill and reputation of the Partnership if either Partner should bring an
action in court to dissolve the Partnership under circumstances where
dissolution is not required by Section 11.1. This Agreement has been drawn
carefully to provide fair treatment of all parties and equitable payment in
liquidation of the Partnership Interests of the Partners. Accordingly, except
where liquidation and dissolution are required by Section 11.1, each Partner
hereby waives and renounces its right to initiate legal action to seek
dissolution or to seek the appointment of a receiver or trustee to liquidate the
Partnership.
11.5 No Further Claim.
Upon dissolution, each Limited Partner shall look solely to the assets
of the Partnership for the return of its investment, and if the property of the
Partnership remaining after payment or discharge of the debts and liabilities of
the Partnership, including debts and liabilities owed to one or more of the
Partners, is insufficient to return the aggregate capital contributions of a
Limited Partner, such Limited Partner shall have no recourse against any other
Partner.
ARTICLE 12
INDEMNIFICATION
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12.1 General.
The Partnership shall indemnify, defend, and hold harmless the Managing
Partner, the Managing Partner's officers, directors, shareholders, employees,
and agents, the employees, officers, and agents of the Partnership, the members
of the Partnership Committee, and either Partner that has designated a member of
the Partnership Committee (but only to the extent such Partner suffers any
liability, loss, or damage as a result of the actions of such member of the
Partnership Committee) (all indemnified persons being referred to as
"Indemnified Persons" for purposes of this Article 12), from any liability,
loss, or damage incurred by the Indemnified Person by reason of any act
performed or omitted to be performed by the Indemnified Person in connection
with the business of the Partnership, including costs and attorneys' fees (which
attorneys' fees may be paid as incurred) and any amounts expended in the
settlement of any claims of liability, loss, or damage; provided, however, that,
if the liability, loss, damage, or claim arises out of any action or inaction of
an Indemnified Person, indemnification under this Section 12.1 shall be
available only if (a) either (1) the Indemnified Person, at the time of such
action or inaction, determined, in good faith, that its or his course of conduct
was in, or not opposed to, the best interests of the Partnership, or (2) in the
case of inaction by the Indemnified Person, the Indemnified Person did not
intend its or his inaction to be harmful or opposed to the best interests of the
Partnership, and (b) the action or inaction did not constitute fraud, gross
negligence, breach of fiduciary duty (which shall not be construed to encompass
mistakes in judgment or any breach of any Indemnified Person's duty of care that
did not constitute gross negligence), or willful misconduct by the Indemnified
Person; and provided, further, however, that indemnification under this Section
12.1 shall be recoverable only from the assets of the Partnership and not from
any assets of the Partners. The Partnership may pay for insurance covering
liability of the Indemnified Persons for negligence in operation of the
Partnership's affairs.
12.2 Exculpation.
No Indemnified Person shall be liable, in damages or otherwise, to the
Partnership or to either Partner for any loss that arises out of any act
performed or omitted to be performed by it or him pursuant to the authority
granted by this Agreement if (a) either (1) the Indemnified Person, at the time
of such action or inaction, determined, in good faith, that its or his course of
conduct was in, or not opposed to, the best interests of the Partnership, or (2)
in the case of inaction by the Indemnified Person, the Indemnified Person did
not intend its or his inaction to be harmful or opposed to the best interests of
the Partnership, and (b) the conduct of the Indemnified Person did not
constitute fraud, gross negligence, breach of fiduciary duty (which shall not be
construed to encompass mistakes in judgment or any breach of any Indemnified
Person's duty of care that did not constitute gross negligence), or willful
misconduct by such Indemnified Person.
12.3 Persons Entitled to Indemnity.
Any Person who is within the definition of "Indemnified Person" at the
time of any action or inaction in connection with the business of the
Partnership shall be entitled to the benefits of this Article 12 as an
"Indemnified Person" with respect thereto, regardless of whether such Person
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continues to be within the definition of "Indemnified Person" at the time of his
or its claim for indemnification or exculpation hereunder.
ARTICLE 13
BOOKS, RECORDS, ACCOUNTING, AND REPORTS
13.1 Books and Records.
The Partnership shall maintain at its principal office all of the
following:
(a) A current list of the full name and last known business or
residence address of each Partner together with the Capital Contributions and
Partnership Interest of each Partner;
(b) A copy of the Certificate, this Agreement, and any and all
amendments to either thereof, together with executed copies of any powers of
attorney pursuant to which any certificate or amendment has been executed;
(c) Copies of the Partnership's federal, state, and local
income tax or information returns and reports;
(d) The audited financial statements of the Partnership for
the six most recent Fiscal Years; and
(e) The Partnership's books and records for at least the
current and past three Fiscal Years and any necessary supporting information for
any tax or information returns and reports for any prior taxable year for which
the statute of limitations has not expired (taking into account any extensions).
13.2 Delivery to Partner and Inspection.
(a) Upon the request of a Partner, the Managing Partner shall
promptly deliver to the requesting Partner, at the expense of the Partnership, a
copy of the information required to be maintained by Section 13.1 except for
Section 13.1(e).
(b) Each Partner, or its duly authorized representative, has
the right, upon reasonable request, to inspect and copy during normal business
hours any of the Partnership records.
13.3 Annual Statements.
(a) The Managing Partner shall cause to be prepared for each
Partner at least annually, at Partnership expense, audited financial statements
of the Partnership and a consolidated audited financial statement for the
Partnership and the Subsidiaries (other than any Subsidiary the
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financial statements of which cannot, under generally accepted accounting
principles, be consolidated with the financial statements of the Partnership),
along with supplemental information for the Partnership and each Subsidiary
included in the consolidated financial statements, all prepared in accordance
with generally accepted accounting principles and accompanied by a report
thereon containing the opinion of a nationally recognized accounting firm chosen
by the Managing Partner. The financial statements will include a balance sheet,
statement of income or loss, statement of cash flows, and statement of Partners'
equity, including appropriate notes required by generally accepted accounting
principles. The supplemental information will consist of a consolidating balance
sheet and a consolidating statement of operations and Partners' equity for the
preceding Fiscal Year. The Partnership shall distribute the financial statements
or portions thereof to each Partner as follows:
(1) the Managing Partner shall distribute to each
Partner a statement setting forth the net income or loss of the Partnership for
each Fiscal Year within forty-five days after the close of such Fiscal Year;
(2) the Managing Partner shall distribute to each
Partner the balance sheet, statement of income or loss, statement of cash flows,
and statement of Partners' equity (including appropriate notes required by
generally accepted accounting principles) to be included in the financial
statements for each Fiscal Year within forty-five days after the close of such
Fiscal Year;
(3) the Managing Partner shall distribute to each
Partner a preliminary draft of the complete financial statements for each Fiscal
Year as soon as practicable after the close of such Fiscal Year; and
(4) the Managing Partner shall distribute to each
Partner the complete audited financial statements for each Fiscal Year as soon
as practicable after the close of such Fiscal Year and, in any event, by March
15 of the year following such Fiscal Year.
(b) The Managing Partner shall have prepared at least
annually, at Partnership expense, Partnership information necessary for the
preparation of each Partner's federal and state income tax returns. The
Partnership shall send the information described in this paragraph to each
Partner within seventy-five days after the end of each Fiscal Year and shall use
commercially reasonable efforts to send such information to each Partner within
sixty-five days after the end of each Fiscal Year.
(c) The Managing Partner shall also cause to be distributed to
each Partner, within ten days after delivery to the Partnership, any audited
financial statements that are prepared with respect to any Subsidiary the
financial statements of which are not consolidated with the financial statements
of the Partnership.
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(d) The Managing Partner, shall distribute to each Partner,
promptly after they become available, copies of the Partnership's federal,
state, and local income tax or information returns for each taxable year.
13.4 Quarterly Financial Statements.
(a) At the close of each of the first three quarters of any
Fiscal Year, the Managing Partner shall cause to be distributed to each Partner
a quarterly report covering each fiscal quarter of the operations of the
Partnership and each Subsidiary, consisting of unaudited financial statements
(comprising a balance sheet, a statement of income or loss, and a statement of
cash flows), and a statement of other pertinent information regarding the
Partnership and each such Subsidiary and their activities. The Managing Partner
shall cause copies of the statements and other pertinent information (including
a summarized statement of operations data of the Partnership that complies with
the requirements of APB Opinion No. 18 and Rule 4-08(g) of Regulation S-X under
the Securities Act) to be distributed to each Partner within thirty days after
the close of the fiscal quarter to which the statements relate. The Managing
Partner shall also cause to be distributed to each Partner, within ten days
after delivery to the Managing Partner, any quarterly report that is prepared
with respect to any Subsidiary the operating results of which are not included
in the quarterly report of the Partnership.
(b) The Managing Partner shall also distribute to each Partner
(1) a preliminary draft of a statement setting forth the net income or loss of
the Partnership for each calendar quarter within twenty-one days after the close
of such calendar quarter, and (2) a final statement setting forth the net income
or loss of the Partnership for each calendar quarter (including each Partner's
share of all items of income, gain, loss, and deduction of the Partnership for
such calendar quarter and the Fiscal Year to date) within thirty days after the
close of such calendar quarter.
(c) The Managing Partner shall also distribute to each
Partner, at least five Business Days before the due date for each Federal
estimated tax payment required to be made by a calendar year corporate taxpayer,
a statement reflecting all information concerning Partnership income, gain,
loss, and deduction that is reasonably necessary to enable such Partner or any
Affiliate of such Partner to calculate its estimated tax payments.
13.5 Monthly Statements.
The Managing Partner shall cause to be distributed to each Partner a
monthly report covering each calendar month of the operations of the Partnership
and each Subsidiary, consisting of unaudited statements of income and loss for
the Partnership and each Subsidiary. The Managing Partner shall cause copies of
the statements to be distributed to each Partner as soon as practicable and, in
any event, within thirty days after the close of the calendar month covered by
such report. The Managing Partner shall also cause to be distributed to each
Partner, within ten days after delivery to the Managing Partner, any monthly
report that is prepared with respect to any Subsidiary the operating results of
which are not included in the monthly report of the Partnership.
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13.6 Other Information.
The Partnership shall provide to each Partner any other information and
reports relating to any cable television systems or other businesses owned by,
and the financial condition of, the Partnership, each Subsidiary, and any other
Person in which the Partnership owns, directly or indirectly, a partnership or
other equity interest, the Partner may reasonably request. The Partnership shall
distribute to each Partner, promptly after the receipt thereof by the
Partnership, any financial or other information with respect to any Person in
which the Partnership owns, directly or indirectly, a partnership or other
equity interest, but which is not a Subsidiary, that is received by the
Partnership or any Subsidiary with respect to any equity interest of the
Partnership or any Subsidiary in such Person.
13.7 Tax Matters.
The Partnership shall be treated as a partnership for federal and state
income tax and franchise tax purposes. The Partnership, at Partnership expense,
shall prepare and timely file with the appropriate authorities all tax returns
or reports for the Partnership required to be filed by the Partnership. The
Managing Partner shall cause a draft of any material federal or California
income tax return required to be filed by the Partnership to be sent to each
Partner for review at least thirty Business Days prior to filing, and the
Managing Partner shall afford each Partner a reasonable opportunity to comment
on any such return prior to filing. The Managing Partner shall cause the
workpapers supporting allocations of Partnership income, gain, loss, and
deduction pursuant to Code Section 704(c) to be sent to each Partner for review
at least thirty Business Days prior to the filing of the Partnership's federal
income tax return containing such Code Section 704(c) allocations, and the
Managing Partner shall afford each Partner a reasonable opportunity to comment
on any such workpapers prior to the filing of such income tax return.
13.8 Other Filings.
The Partnership shall also prepare and timely file, with appropriate
federal and state regulatory and administrative bodies, all reports required to
be filed by the Partnership with those entities under then current applicable
laws, rules, and regulations. The reports shall be prepared on the accounting or
reporting basis required by the regulatory bodies. Upon written request, each
Partner shall be provided with a copy of any of the reports without expense to
the requesting Partner.
13.9 Non-Disclosure.
Each Partner agrees that, except as otherwise consented to by the other
Partner, all non-public information furnished to it or to which it has access
pursuant to this Agreement (including information relating to any dispute or the
resolution thereof pursuant to Section 16.6) will be kept confidential and will
not be disclosed by such Partner, or by any of its agents, representatives, or
employees, in any manner whatsoever, in whole or in part, except that:
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(a) each Partner shall be permitted to disclose such
information to those of its agents, representatives, and employees who need to
be familiar with such information in connection with such Partner's investment
in the Partnership,
(b) each Partner shall be permitted to disclose such
information to its Affiliates,
(c) each Partner shall be permitted to disclose information to
the extent required by law, including federal or state securities laws or
regulations, or by the rules and regulations of any stock exchange or
association on which securities of such Partner or any of its Affiliates are
traded, so long as such Partner shall have first afforded the Partnership with a
reasonable opportunity to contest the necessity of disclosing such information,
(d) each Partner shall be permitted to disclose information to
the extent necessary for the enforcement of any right of such Partner arising
under this Agreement,
(e) each Partner shall be permitted to disclose information to
a permitted Assignee, so long as (1) such Partner shall first have provided to
the other Partner written notice thereof and of the identity of the Person to
whom the disclosure is to be made and (2) such Person agrees (in a writing which
provides the Partnership with an independent right of enforcement) to be bound
by the provisions of this Section 13.9,
(f) each Partner shall be permitted to disclose information
that is or becomes generally available to the public other than as a result of a
disclosure by such Partner, its agents, representatives, or employees, and
(g) each Partner shall be permitted to disclose information
that becomes available to such Partner on a nonconfidential basis from a source
(other than the Partnership, any other Partner, or their respective agents,
representatives, and employees) that, to the best of such Partner's knowledge,
is not prohibited from disclosing such information to such Partner by a legal,
contractual, or fiduciary obligation to the Partnership or any other Partner.
ARTICLE 14
REPRESENTATIONS BY TCI
TCI represents and warrants to, and agrees with, Century and the
Partnership as follows:
14.1 Investment Intent.
It is acquiring its Partnership Interest with the intent of holding the
same for investment for its own account and without the intent or a view to
participating directly or indirectly in, or for resale in connection with, any
distribution of such Partnership Interest within the meaning of the Securities
Act or any applicable state securities laws, and it does not intend to divide
its participation with
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others, nor to resell, assign, or otherwise dispose of all or any part of its
Partnership Interest. In making such representation, TCI acknowledges that a
purchase now with an intent to resell by reason of any foreseeable specific
contingency, some predetermined event, or an anticipated change in market value
or in the condition of the Partnership would represent a purchase with an intent
inconsistent with the foregoing representation.
14.2 Securities Regulation.
(a) It acknowledges and agrees that the Partnership Interest
is being issued and sold in reliance on the exemption from registration
contained in Section 4(2) of the Securities Act and exemptions contained in
applicable state securities laws, and that it cannot and will not be sold or
transferred except in a transaction that is exempt under the Securities Act and
those state acts or pursuant to an effective registration statement under those
acts or in a transaction that is otherwise in compliance with the Securities Act
and those state acts.
(b) It understands that it has no contract right for the
registration under the Securities Act of the Partnership Interest for public
sale and that, unless such Partnership Interest is registered or an exemption
from registration is available, such Partnership Interest may be required to be
held indefinitely.
14.3 Knowledge and Experience.
It has such knowledge and experience in financial, tax, and business
matters as to enable it to evaluate the merits and risks of its investment in
the Partnership and to make an informed investment decision with respect
thereto.
14.4 Economic Risk.
It is able to bear the economic risk of an investment in its
Partnership Interest.
14.5 Binding Agreement.
This Agreement is and will remain its valid and binding agreement,
enforceable in accordance with its terms (subject, as to the enforcement of
remedies, to any applicable bankruptcy, insolvency, or other laws affecting the
enforcement of creditor's rights).
14.6 Tax Position.
Unless it provides prior written notice to the Partnership, it will not
take a position on its federal income tax return, on any claim for refund, or in
any administrative or legal proceedings that is inconsistent with any
information return filed by the Partnership or with the provisions of this
Agreement.
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14.7 Information.
It has received all documents, books, and records pertaining to an
investment in the Partnership requested by it. It has had a reasonable
opportunity to ask questions of and receive answers concerning the Partnership,
and all such questions have been answered to its satisfaction.
ARTICLE 15
AMENDMENTS AND WAIVERS
15.1 Amendments to Partnership Agreement.
(a) This Agreement may only be modified or amended with the
consent of Century and TCI, except that, so long as Century is the Managing
Partner, this Agreement may be amended from time to time by the Managing Partner
without the consent or approval of TCI:
(1) to reflect the rights and obligations of any
Person admitted as a Partner upon the issuance of Partnership Interests pursuant
to Section 6.4 and any change in the rights and obligations of any existing
Partner upon the issuance to any Person (including any existing Partner) of
Partnership Interests pursuant to Section 6.4; or
(2) to change the Partnership's principal office or
other place of business.
(b) TCI may elect at any time to cause this Agreement to be
amended to convert the Partnership Interest of TCI to that of a Limited Partner
or to eliminate any right of TCI under this Agreement.
(c) The Managing Partner shall cause to be prepared and filed
any amendment to the Certificate that may be required to be filed under the Act
as a consequence of any amendment to this Agreement.
15.2 Waivers.
The observance or performance of any term or provision of this
Agreement may be waived (either generally or in a particular instance, and
either retroactively or prospectively) by the party entitled to the benefits of
such term or provision.
ARTICLE 16
MISCELLANEOUS
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16.1 Additional Documents.
At any time and from time to time after the date of this Agreement,
upon the request of the other Partner, each Partner shall do and perform, or
cause to be done and performed, all such additional acts and deeds, and shall
execute, acknowledge, and deliver, or cause to be executed, acknowledged, and
delivered, all such additional instruments and documents, as may be required to
best effectuate the purposes and intent of this Agreement.
16.2 Inspection.
Each Partner shall have the right at reasonable times to inspect the
books and records of the Partnership.
16.3 General.
This Agreement: (a) shall be binding on the executors, administrators,
estates, heirs, and legal successors of the Partners; (b) be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to conflicts of law principles thereunder; (c) may be executed in more than one
counterpart as of the day and year first above written; and (d) together with
the Contribution Agreement contains the entire contract between the Partners as
to the subject matter of this Agreement. The waiver of any of the provisions,
terms, or conditions contained in this Agreement shall not be considered as a
waiver of any of the other provisions, terms, or conditions of this Agreement.
16.4 Notices, Etc.
All notices and other communications required or permitted hereunder
shall be in writing and shall be deemed effectively given upon personal
delivery, confirmation of telex or telecopy, or receipt (which may be evidenced
by a return receipt if sent by registered mail), addressed (a) if to either
Partner, at the address of such Partner set forth on Schedule I or at such other
address as such Partner shall have furnished to the Partnership in writing, (b)
if to the Partnership, at 50 Locust Avenue, New Canaan, Connecticut 06840.
16.5 Execution of Papers.
(a) The Partners agree to execute such instruments, documents,
and papers as the Managing Partner deems necessary or appropriate to carry out
the intent of this Agreement.
(b) Each Partner, including each additional and substituted
Partner, by the execution of this Agreement, irrevocably constitutes and
appoints the Liquidator its true and lawful attorney-in-fact with full power and
authority in its name, place, and stead to execute, acknowledge, deliver, swear
to, file, and record all agreements, instruments, and other documents that may
be
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necessary or appropriate to effect the sale of such Partner's Partnership
Interest pursuant to Section 11.2(e).
(c) The power of attorney granted pursuant to Section 16.5(b)
shall be deemed to be a power coupled with an interest, in recognition of the
fact that each of the Partners under this Agreement will be relying upon the
power of the Liquidator to act as contemplated by this Agreement in any filing
and other action by it on behalf of the Partnership, and shall survive the
bankruptcy, death, adjudication of incompetence or insanity, or dissolution of
any Person hereby giving such powers and the transfer or assignment of all or
any part of such Person's Partnership Interest; provided, however, that in the
event of an assignment by a Partner, the powers of attorney given by the
transferor shall survive such assignment only until such time as the Assignee
shall have been admitted to the Partnership as a substituted Partner and all
required documents and instruments shall have been duly executed, filed, and
recorded to effect such substitution.
(d) Each Partner agrees to be bound by any actions taken by
the Liquidator acting in good faith pursuant to the power of attorney granted
pursuant to Section 16.5(b) that are consistent with and subject to the
provisions of this Agreement and hereby waives any and all defenses that may be
available to contest, negate, or disaffirm any action of the Liquidator taken in
good faith under the power of attorney granted pursuant to Section 16.5(b) that
are consistent with and subject to the provisions of this Agreement.
16.6 Disputed Matters.
If a dispute arises out of or relates to this Agreement or any alleged
breach thereof, the Partners will attempt in good faith to resolve such dispute
through negotiation.
16.7 No Third-Party Beneficiaries.
This Agreement is not intended to, and shall not be construed to,
create any right enforceable by any Person not a party hereto, including any
member of either Partner or any creditor of the Partnership or of either of the
Partners.
16.8 @Home Matters.
(a) With respect to the cable television systems contributed
to the Partnership by TCI and the cable television systems transferred to the
Partnership pursuant to the Exchange Agreement between an Affiliate of TCI and
the Partnership (collectively, the "TCI Systems"), the Partnership will (i)
comply with the Cable Parent Exclusivity Provisions in accordance with the terms
thereof, as if the TCI Systems continued to be operated by a Controlled
Affiliate of TCIC following the contribution or transfer of the TCI Systems to
the Partnership and (ii) except as otherwise required by clause (i), manage the
TCI Systems in accordance with the provisions of the Century Distribution
Agreement. For purposes of the foregoing and notwithstanding anything in the
@Home Distribution Agreement to the contrary, compliance with the Cable Parent
Exclusivity
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Provisions shall not prohibit the provision by the Partnership (including to
subscribers located in the service areas of the TCI Systems) of any Internet
Service which is not a High Speed Residential Internet Service (any such
service, a "Non-Exclusive Service"), whether or not such Non-Exclusive Service
entails the provision of an Internet Backbone Service; provided, however, that
if the provision of such Non-Exclusive Service entails the provision of, or
connection to, an Internet Backbone Service, the foregoing shall be conditioned
upon the Partnership having complied with the provisions of Section 4 of the
Century Distribution Agreement.
(b) TCI will promptly furnish the Partnership with a copy of
any amendment to the @Home Distribution Agreement that amends or changes the
Cable Parent Exclusivity Provisions. If the Cable Parent Exclusivity Provisions
of the @Home Distribution Agreement are amended and (1) such provisions as so
amended do not conform in all material respects to the Cable Parent Exclusivity
Provisions as in effect for purposes of this Agreement prior to such amendment,
and (2) the Partnership did not give its prior written consent to such amendment
(which consent shall be deemed to have been given to the extent that the
Partnership has agreed to substantially similar terms with respect to any of its
cable television systems other than the TCI Systems), and (3) the Partnership
reasonably determines that its compliance with such provisions as so amended
would have a material adverse effect on the operation of the TCI Systems, and
(4) the Partnership gives written notice to such effect to TCI, including a
detailed explanation of such material adverse effect, within twenty days after
the Partnership's receipt of the amendment to such provisions, then TCI, by
written notice delivered to the Partnership within twenty days after its receipt
of the Partnership's notice pursuant to clause (4), shall elect either (A) to
terminate the Partnership's obligations under Section 16.8(a) or (B) to require
that the Partnership's obligations under Section 16.8(a) continue, but such
amendment shall not be given effect for purposes of the definition of "Cable
Parent Exclusivity Provisions" in Section 16.8(c)(3). If TCI furnishes the
Partnership with a copy of an amendment to the @Home Distribution Agreement but
all of the conditions set forth in clauses (1) through (4) of the second
sentence of this Section 16.8(b) are not satisfied with respect to such
amendment, then the definition of "Cable Parent Exclusivity Provisions" in
Section 16.8(c)(3) shall be amended to be the definition set forth in such
amendment.
(c) For purposes of this Section 16.8:
(1) "Century Distribution Agreement" means the @Home
Network Distribution Agreement, dated May 1, 1998, between At Home Corporation
and Century/Texas;
(2) "@Home Distribution Agreement" means,
collectively, the Master Distribution Agreement Term Sheet and the Term Sheet
for Form of LCO Agreement, each of which are exhibits to the letter agreement,
dated as of May 15, 1997, among At Home Corporation and Tele-Communications,
Inc., Comcast Corporation, Cox Enterprises, Inc., Kleiner, Perkins, Caulfield &
Byers and certain of their respective affiliates, as each such term sheet has
been amended by the letter agreement, dated as of October 2, 1997, as amended as
of October 10, 1997, among the parties to the May 15, 1997 letter agreement and
Cablevision Systems Corporation and certain of its affiliates; provided, that,
subject to Section 16.8(b), the term "@Home Distribution Agreement" will
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include any definitive agreement entered into by the parties with respect to the
distribution of the @Home service as contemplated by the May 15, 1997 letter
agreement.
(3) "Cable Parent Exclusivity Provisions" has the
meaning assigned to it in the @Home Distribution Agreement, as amended by any
amendment to the Cable Parent Exclusivity Provisions that is required to be
given effect pursuant to Section 16.8(b).
(4) "Controlled Affiliate," "Internet Service," and
"Internet Backbone Service" have the meanings assigned to them in the @Home
Distribution Agreement; and
(5) "High Speed Residential Internet Service" has the
meaning assigned to it in the Century Distribution Agreement.
16.9 Programming Matters.
(a) Following the Closing, the Partnership will continue to
carry Starz! and Encore (including Encore Plex) on the cable television systems
contributed to the Partnership by TCI on the terms and conditions applicable to
such systems at the time of the Closing, and the Partnership will use
commercially reasonable efforts to carry Starz! and Encore (including Encore
Plex) on the cable television systems contributed to the Partnership by Century
and the cable television systems transferred to the Partnership pursuant to the
Exchange Agreement between an Affiliate of TCI and the Partnership.
(b) To the extent that, as of the Closing, any programming
service listed on Schedule IV is carried on any of the cable television systems
contributed to the Partnership by TCI, the Partnership will continue to carry
such service on such systems until the termination of TCI's present affiliation
agreement for such service, on the terms and conditions applicable to such
systems at the time of the Closing.
(c) After the Closing, if requested by the Partnership, TCI
agrees that it will cause its Affiliate, Satellite Services, Inc. ("SSI"), to
enter into an agreement (the "Programming Supply Agreement") to provide
programming to the Partnership, in consideration of an annual fee equal to 1.5%
(the "SSI Administrative Fee") of the annual cost of any programming purchased
by the Partnership through SSI. The other terms and conditions of the
Programming Supply Agreement will be negotiated between SSI and the Partnership
and will be no less favorable to the Partnership in the aggregate than the terms
and conditions of similar programming supply agreements then in effect between
SSI and similarly situated SSI affiliates. In order for the Partnership to
obtain a favorable provision in the Programming Supply Agreement that was made
available to a similarly situated SSI affiliate, SSI may require that the
Partnership accept the other terms and conditions upon which such favorable
provision was made available to such similarly situated SSI affiliate, so long
as the terms and conditions offered to the Partnership are not less favorable to
the Partnership in the aggregate than the terms and conditions of the
programming supply agreement with such similarly situated SSI affiliate. In no
event will the "most favored nation" provisions of this Section
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16.9(c) be applicable to the SSI Administrative Fee, which is a fixed percentage
fee that will change only as mutually agreed to by the Partnership and SSI. For
purposes of this Section 16.9(c), a "similarly situated SSI affiliate" is a
Person that meets each of the following criteria:
(1) such Person has entered into a programming supply
agreement with SSI; and
(2) TCI or an Affiliate of TCI owned an equity
interest in such Person on that date such programming supply agreement was
entered into; and
(3) the equity interest in such Person that was owned
by TCI and its Affiliates, collectively, on that date such programming supply
agreement was entered into, expressed as a percentage of all outstanding equity
interests in such Person, was not more than five percent greater than TCI's
Percentage Interest on the date of the Partnership's request pursuant to this
Section 16.9(c); and
(4) the number of subscribers served by the cable
television systems that were owned by such Person on that date such affiliation
agreement was entered into was not more than five percent greater than the
number of subscribers served by the cable television systems owned, directly or
indirectly, by the Partnership on the date of the Partnership's request pursuant
to this Section 16.9(c).
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IN WITNESS WHEREOF, the Partners have hereunto set their hands as of
the day first heretofore mentioned.
CENTURY EXCHANGE LLC
By: Century Southwest Cable Television, Inc., its
manager
By: _____________________________________________
Name:
Title:
TCI CALIFORNIA HOLDINGS, LLC
By: TCI Cablevision of California, Inc., its manager
By: _____________________________________________
Name:
Title:
FOR PURPOSES OF SECTION 8.10(a) ONLY:
TCI COMMUNICATIONS, INC.
By: _____________________________________________
Name:
Title:
FOR PURPOSES OF SECTION 8.10(B) AND ARTICLE
9 ONLY:
CENTURY COMMUNICATIONS CORP., A TEXAS
CORPORATION
By: _____________________________________________
Name:
Title:
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FOR PURPOSES OF SECTION 10.2, SECTION 10.3,
AND SECTION 16.3 ONLY:
AT&T CORP.
By: _____________________________________________
Name:
Title:
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SCHEDULE I
TO
AGREEMENT OF LIMITED PARTNERSHIP
ADDRESSES OF THE PARTNERS
Century Exchange, LLC
c/o Century Communications Corp.
50 Locust Avenue
New Canaan, Connecticut 06840
TCI California Holdings, LLC
c/o Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
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SCHEDULE II
TO
AGREEMENT OF LIMITED PARTNERSHIP
INITIAL MEMBERS OF THE PARTNERSHIP COMMITTEE
1. Members designated by Century pursuant to Section 5.2(a):
Leonard Tow
Bernard P. Gallagher
Scott N. Schneider
2. Members designated by TCI pursuant to Section 5.2(a):
Leo J. Hindery, Jr.
William R. Fitzgerald
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SCHEDULE III
TO
AGREEMENT OF LIMITED PARTNERSHIP
FIVE-YEAR OPERATING PLAN
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SCHEDULE IV
TO
AGREEMENT OF LIMITED PARTNERSHIP
PROGRAMMING SERVICES
American Movie Classics
American Sports Classics or its successor
Animal Planet
Bravo
Discovery Channel
DMX
ESPN
Fox News
Home and Garden
Home Shopping Network (the home shopping service)
Home Team Sports
MSNBC
Showtime
The Movie Channel
Romance Classics
The Learning Channel
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SCHEDULE V
TO
AGREEMENT OF LIMITED PARTNERSHIP
CERTAIN AGREEMENTS
1. Facilities Agreement among Century Cable of Southern California,
Century Cable of Northern California, Century Southwest Cable
Television, and TCG Los Angeles.
2. TCG Express Master Agreement among Century Cable of Southern
California, Century Cable of Northern California, Century Southwest
Cable Television, and TCG Los Angeles.
3. Letter, dated November 23, 1994, from J. Curt Hockemeier to Robert E.
Braden.
4. @Home Network Distribution Agreement, dated May 1, 1998, between At
Home Corporation and Century Communications Corp.
5. Any agreement to which Century or the Partnership is or becomes a party
pursuant to which Century or the Partnership agrees to license fiber
optic facilities to or from a third party which agreement is not
prohibited by the provisions of Section 10.2.
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EXECUTION COPY
ASSET CONTRIBUTION AGREEMENT
DATED AS OF NOVEMBER 18, 1998
AMONG
CABLEVISION OF ARCADIA/SIERRA MADRE, INC.,
UNITED CABLE TELEVISION OF BALDWIN PARK, INC.,
UCTC OF LOS ANGELES COUNTY, INC.,
TCI CABLEVISION OF CALIFORNIA, INC.,
UNITED CABLE TELEVISION OF LOS ANGELES, INC.,
TCI CALIFORNIA HOLDINGS, LLC
AND
CENTURY EXCHANGE LLC,
CENTURY BAY AREA CABLE CORP.,
CENTURY CABLE OF NORTHERN CALIFORNIA,
FRANEM CABLE COMPANY,
CENTURY CABLE OF SOUTHERN CALIFORNIA,
CENTURY SOUTHWEST CABLE TELEVISION, INC.,
CENTURY VALLEY CABLE CORP.,
CITIZENS CENTURY CABLE TELEVISION VENTURE,
AND
CENTURY-TCI CALIFORNIA, L.P.
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ASSET CONTRIBUTION AGREEMENT
----------------------------
THIS ASSET CONTRIBUTION AGREEMENT ("Agreement") is made and
entered into effective as of the 18th day of November, 1998, by and among
Cablevision of Arcadia/Sierra Madre, Inc., a Delaware corporation ("CVA/SM"),
United Cable Television of Baldwin Park, Inc., a Colorado corporation
("Baldwin"), UCTC of Los Angeles County, Inc., a Delaware corporation ("UCTC"),
TCI Cablevision of California, Inc., a California corporation ("TCI
California"), United Cable Television of Los Angeles, Inc., a California
corporation ("UCT LA"), TCI California Holdings, LLC, a Colorado limited
liability company ("TCI LLC"), Century Exchange LLC, a Delaware limited
liability company ("Century Exchange"), Century Bay Area Cable Corp., a Delaware
corporation ("Century BA"), Century Cable of Northern California, a California
corporation ("Century CNC"), Franem Cable Company, a California general
partnership ("Franem"), Century Cable of Southern California, a California
corporation ("Century CSC"), Century Southwest Cable Television, Inc., a
Delaware corporation ("Century SCT"), Century Valley Cable Corp., a Delaware
corporation ("Century VCC"), Citizens Century Cable Television Venture, a
Delaware joint venture ("Citizens"), and Century-TCI California, L.P., a
Delaware limited partnership (the "Partnership").
RECITALS
A. CVA/SM, Baldwin, UCTC, UCT LA and TCI California are each a
"TCI Party" and are collectively referred to herein as the "TCI Parties" or
"TCI"; provided that from and after the Closing Date, the definition of "TCI
Parties" and "TCI" shall also include TCI LLC. Century BA, Century CNC, Franem,
Century CSC, Century SCT, Century VCC and Citizens are each a "Century Party"
and are collectively referred to herein as the "Century Parties" or "Century";
provided that from and after the Closing Date, the definition of "Century
Parties" and "Century" shall also include Century Exchange.
B. Century owns and operates (or in the case of the Riverside
System, if the Riverside Closing occurs prior to Closing, will own and operate
as of the Closing Date) the cable television systems which are franchised or
hold other operating authority and operate in the communities in the Territory
(as defined in the Partnership Agreement) listed on EXHIBIT A and the Century
Exchange Systems (the systems listed on EXHIBIT A together with the Century
Exchange Systems and, if the Riverside Closing occurs prior to Closing, the
Riverside System, being referred to herein as the "Century Systems"). EXHIBIT A
lists each Century System, the headends for such System, the franchises served
by each headend and the owner of each Century System.
C. TCI owns and operates cable television systems which are
franchised or hold other operating authority and operate in the communities in
the Territory listed on EXHIBIT B (the "TCI Systems"). EXHIBIT B lists each TCI
System, the headends for such System, the franchises served by each headend and
the owner of each TCI System.
D. Century Exchange desires to contribute the Century Assets to
the Partnership and TCI LLC desires to contribute the TCI Assets to the
Partnership.
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E. This Agreement amends and restates in its entirety the
original Asset Contribution Agreement dated as of November 18, 1998 among the
parties hereto.
AGREEMENTS
In consideration of the mutual covenants and promises set forth herein, the
parties agree as follows:
SECTION 1. DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following
capitalized terms or terms otherwise defined in this Section 1 shall have the
meanings set forth below:
1.1 1992 Cable Act. The Cable Television Consumer Protection and
Competition Act of 1992, as amended, and the FCC rules and regulations
promulgated thereunder.
1.2 Affiliate. With respect to any Person, any Person controlling,
controlled by or under common control with such Person; "control" means the
ownership, directly or indirectly, of voting securities representing the right
generally to elect a majority of the directors (or similar officials) of a
Person or the possession, by contract or otherwise, of the authority to direct
the management and policies of a Person.
1.3 Annualized Cash Flow. As of any date of determination, four times
Cash Flow for the most recent three full calendar months ended prior to such
date.
1.4 Assets. The Century Assets or the TCI Assets, as the context
requires.
1.5 Basic Services. The lowest tier of cable television service offered
to subscribers of a System that includes the retransmission of local broadcast
signals as defined by the 1992 Cable Act.
1.6 Business Day. Any day other than a Saturday, Sunday or a day on
which the banking institutions in Denver, Colorado or New York, New York are
required or authorized to be closed.
1.7 Cable Act. The Cable Communications Policy Act of 1984, as amended,
and the FCC rules and regulations promulgated thereunder.
1.8 Cable Business. Century's Cable Business or TCI's Cable Business,
as the context requires.
1.9 Cash Flow. For any period (a) for any TCI System, the "Operating
Income/Loss Before Corporate Overhead" of such System as reported on such
System's profit and loss statement for such period and (b) for any Century
System, the "Net Operating Income and Loss" of such
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System as reported on such System's profit and loss statement for such period,
in each case without taking into account any interest income or nonrecurring
items of income, gain or expense and as further adjusted for the matters
identified on SCHEDULE 1.9, it being agreed that Cash Flow and the line items
identified above for any System shall continue to be calculated in a manner
consistent with that used for such System as of the date of this Agreement.
1.10 Century Assets. All assets, properties, privileges, rights,
interests and claims, real and personal, tangible and intangible, of every type
and description that are owned, leased, held for use or used in connection with
Century's Cable Business and in which Century or any Affiliate of Century has
any right, title or interest or acquires any right, title or interest on or
before the Closing, including Century Tangible Personal Property, Century Owned
Real Property, Century Leased Property, Century Other Real Property Interests,
Century System Franchises, Century System Licenses, Century System Contracts,
Century Books and Records and Century Other Intangibles.
1.11 Century Books and Records. All engineering records, files, data,
drawings, blueprints, schematics, reports, lists, plans and processes and all
other files of correspondence, lists, records and reports concerning Century's
Cable Business, including subscribers and prospective subscribers of the Century
Systems, signal and program carriage and dealings with Governmental Authorities,
including all reports filed by or on behalf of Century with the FCC and
statements of account filed by or on behalf of Century with the U.S. Copyright
Office.
1.12 Century Exchange Systems. The Century Systems to be transferred by
the Partnership to Affiliates of TCI under the Exchange Agreement.
1.13 Century Leased Property. All leasehold interests in real property
that are held for use or used in connection with Century's Cable Business which
Century or any Affiliate of Century has, or acquires prior to Closing, including
those described as Century Leased Property on SCHEDULE 1.12.
1.14 Century Other Intangibles. All intangible assets other than Century
System Franchises, Century System Licenses and Century System Contracts,
including subscriber lists, accounts receivable, claims (excluding any claims
relating to Century Excluded Assets), patents, copyrights and going concern
value, if any, that are owned, held for use or used in connection with Century's
Cable Business and in which Century or any Affiliate of Century has, or acquires
prior to Closing, any right, title or interest.
1.15 Century Other Real Property Interests. All easements and rights of
access (other than those relating to multiple dwelling units) and other
interests in real property that are held for use or used in connection with
Century's Cable Business and in which Century or any Affiliate of Century has,
or acquires prior to Closing, any right, title or interest, including those
interests described as Century Other Real Property Interests on SCHEDULE 1.14,
but not including Century Leased Property or Century Owned Property.
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1.16 Century Owned Property. All fee interests in real property that are
held for use or used in connection with Century's Cable Business which Century
or any Affiliate of Century has, or acquires prior to Closing, including those
described as Century Owned Property on SCHEDULE 1.15 and all improvements
thereon.
1.17 Century Required Consents. Any and all consents, authorizations and
approvals required for (a) Century to transfer the Century Assets to the
Partnership; (b) the Partnership to operate the Century Systems and to own,
lease, use and operate the Century Assets and the Century Systems at the places
and in the manner in which the Century Assets are used and the Century Systems
are operated as of the date of this Agreement and as of the Closing; (c) the
Partnership to assume and perform the Century System Franchises, the Century
System Licenses, the leases and other documents evidencing Century Leased
Property and Century Other Real Property Interests and the Century System
Contracts, including those consents, authorizations and approvals required under
the Century System Franchises, the Century System Licenses, the leases and other
documents evidencing Century Leased Property and Century Other Real Property
Interests and the Century System Contracts; (d) the Partnership to transfer the
Assets of the Century Exchange Systems to TCI East San Fernando Valley, L.P.
("TCI ESF") pursuant to the Exchange Agreement; (e) TCI ESF to operate the
Century Exchange Systems and to own, lease, use and operate the Assets of the
Century Exchange Systems and the Century Exchange Systems at the places and in
the manner in which such Assets are used and the Century Exchange Systems are
operated as of the date of this Agreement and as of the Closing; and (f) TCI ESF
to assume and perform the Century System Franchises, the Century System
Licenses, the leases and other documents evidencing Century Leased Property and
Century Other Real Property Interests and the Century System Contracts, insofar
as they relate to the Century Exchange Systems, including those consents,
authorizations and approvals required under such Century System Franchises, such
Century System Licenses, such leases and other documents evidencing Century
Leased Property and Century Other Real Property Interests and such Century
System Contracts.
1.18 Century System Contracts. All pole line agreements, underground
conduit agreements, crossing agreements, multiple dwelling, bulk billing or
commercial service agreements, leased channel access agreements and other
Contracts (other than Century System Franchises and Century System Licenses)
held for use or used in connection with Century's Cable Business and to which
Century or any Affiliate of Century is, or becomes prior to Closing, a party or
bound, including those described on SCHEDULE 1.17.
1.19 Century System Franchises. All franchise agreements, operating
permits or similar governing agreements, instruments, resolutions, statutes,
ordinances, approvals, authorizations and permits obtained from any franchising
authority in connection with Century's Cable Business, including those listed on
SCHEDULE 1.18, including all amendments and modifications thereto and all
renewals thereof.
1.20 Century System Licenses. The intangible cable television channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, copyright notices and other
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licenses, authorizations, consents or permits issued by the FCC or any other
Governmental Authority in connection with Century's Cable Business (other than
Century System Franchises, Century System Contracts and Century Other Real
Property Interests), including those described on SCHEDULE 1.19.
1.21 Century Tangible Personal Property. All tangible personal property
that is owned, leased, held for use or used in connection with Century's Cable
Business and in which Century or any Affiliate of Century has, or acquires prior
to Closing, any right, title or interest, including towers, tower equipment,
aboveground and underground cable, distribution systems, headend amplifiers,
line amplifiers, microwave equipment, converters, testing equipment, motor
vehicles, office equipment, computers and billing equipment, furniture,
fixtures, supplies, inventory and other physical assets, the principal items of
which, including all motor vehicles, are described on SCHEDULE 1.20.
1.22 Century's Cable Business. The cable television business and other
income-generating businesses related to the Century Systems conducted by Century
through the Century Systems, including, but not limited to, the business and
operations of the Orange County Newschannel.
1.23 Closing Time. 12:01 A.M., Pacific Time, on the Closing Date.
1.24 Communications Act. The Communications Act of 1934, as amended, and
the FCC rules and regulations promulgated thereunder.
1.25 Contract. Any contract, mortgage, deed of trust, bond, indenture,
lease, license, note, franchise, certificate, option, warrant, right or other
instrument, document, obligation or agreement, whether written or oral.
1.26 Equivalent Basic Subscribers (or "EBSs"). As of any date of
determination and for each franchise area served by a System, the sum of (a) the
total number of private residential customer accounts that are billed by
individual unit for at least Basic Services (regardless of whether such accounts
are in single-family homes or in individually billed units in apartment
buildings and other multi-unit buildings) (exclusive of (i) "second connects"
and "additional outlets" as such terms are commonly understood in the cable
television industry, and (ii) accounts that are not charged or are charged less
than the standard monthly service fees and charges then in effect for such
System for Basic Services) and (b) the quotient of (i) the total monthly
billings for sales of Basic Services and Expanded Basic Services by such System
for such franchise area during the most recent billing period ended prior to the
date of calculation to commercial, bulk-billed and other accounts not billed by
individual unit (whether on a discounted or non-discounted basis) and to private
residential customer accounts that are billed by individual unit but pay less
than the standard monthly service fees charged for Basic Services, but excluding
billings in excess of a single month's charges for any account, divided by (ii)
the standard monthly combined rate (without discount of any kind) charged by
such System for such franchise area to individually billed subscribers for the
highest level of Basic Services and Expanded Basic Services offered by such
system in effect during such billing
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period, which monthly rate will not be less than the applicable rates specified
in SCHEDULE 5.14 (in the case of Century) or SCHEDULE 6.14 (in the case of TCI).
For purposes of calculating the number of EBSs, there will be excluded (i) all
accounts billed by individual unit that are, and all billings to any commercial,
bulk-billed and other accounts not billed by individual unit that are, more than
60 days past due in the payment of any amount in excess of the lesser of $5.00
or the standard rate charged for Basic Services at the time of determination,
(ii) any accounts billed by individual unit and all commercial, bulk-billed and
other accounts not billed by individual units that, as of the date of
calculation, have not paid in full the charges for at least one full month of
the subscribed service, (iii) that portion of the billings to all accounts
billed by individual unit included in clause (b) above and any commercial,
bulk-billed and other accounts not billed by individual unit representing an
installation or other non-recurring charge, a charge for equipment or for any
outlet or connection other than the first outlet or first connection in any
individually billed unit or, with respect to a bulk account, in any residential
unit (e.g., an individual apartment or rental unit), a charge for any tiered
service other than Expanded Basic Services (whether or not included within Pay
TV), any charge for Pay TV or a pass-through charge for sales taxes,
line-itemized franchise fees, fees charged by the FCC and the like, and (iv) any
individually billed unit and all billings to any commercial, bulk-billed or
other accounts not billed by individual unit that was solicited within the 60
day period preceding the Closing Date to purchase such services by promotions or
offers of discounts other than those ordinarily made by the party for which the
determination of EBSs is being made. For purposes of this definition, payments
on account of monthly billings will be deemed due on the first day of the period
for which the service to which such billings relate is provided.
1.27 Environmental Law. Any Legal Requirement concerning the protection
of public or employee health, safety, welfare or the environment, including
Legal Requirements relating to emissions, discharges, releases or threatened
releases of Hazardous Substances into the environment, air (including both
ambient and within buildings and other structures), surface water, ground water
or land or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Substances.
1.28 ERISA. The Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder and published
interpretations with respect thereto.
1.29 ERISA Affiliate. As to any Person, any trade or business, whether
or not incorporated, which together with such Person would be deemed a single
employer as determined under Section 4001(a)(14) of ERISA.
1.30 Exchange. The exchange transaction contemplated by the asset
exchange agreement of even date herewith between TCI ESF and the Partnership
(the "Exchange Agreement"), to be consummated at the closing thereunder.
1.31 Expanded Basic Services. Any level of video programming service
greater than Basic Services provided over a cable television System, regardless
of service tier, other than Basic Services, any new product tier and Pay TV.
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1.32 FCC. The Federal Communications Commission.
1.33 Financial Statements. Century's Financial Statements or TCI's
Financial Statements, as the context requires.
1.34 GAAP. Generally accepted accounting principles as in effect from
time to time.
1.35 Governmental Authority. The United States of America, any state,
commonwealth, territory or possession of the United States of America and any
political subdivision or quasi-governmental authority of any of the same,
including any court, tribunal, department, commission, board, bureau, agency,
county, municipality, province, parish or other instrumentality of any of the
foregoing.
1.36 Hazardous Substances. (a) Any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. 'SS''SS'6901 et
seq.), as amended, and the rules and regulations promulgated thereunder; (b) any
"hazardous substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (15 U.S.C. 'SS''SS'9601 et seq.)
(CERCLA), as amended, and the rules and regulations promulgated thereunder; (c)
any substance regulated by the Toxic Substances Control Act (TSCA) (15 U.S.C.
'SS''SS'2601 et seq.), or the Insecticide, Fungicide and Rodenticide Act (IFRA)
(7 U.S.C. 'SS''SS'136 et seq.), each as amended, and the rules and regulations
promulgated thereunder; (d) asbestos or asbestos-containing material of any kind
or character; (e) polychlorinated biphenyls; (f) any substances regulated under
the provisions of Subtitle I of RCRA relating to underground storage tanks; (g)
any substance the presence, use, handling, treatment, storage or disposal of
which on real property is prohibited by any Environmental Law; and (h) any other
substance which by any Environmental Law requires special handling, reporting or
notification of any Governmental Authority in its collection, storage, use,
treatment or disposal.
1.37 HSR Act. The Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
1.38 Judgment. Any judgment, writ, order, injunction, award or decree of
any court, judge, justice or magistrate, including any bankruptcy court or judge
or the arbitrator in any binding arbitration, and any order of or by any
Governmental Authority.
1.39 Knowledge. The actual knowledge of a particular matter of one or
more of the principal corporate personnel of such party involved in the
transactions contemplated by this Agreement, or the general manager or one or
more of the managers of such party's Systems.
1.40 Leased Property. The Century Leased Property or TCI Leased
Property, as the context requires.
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1.41 Legal Requirement. Applicable common law and any statute,
ordinance, code or other law, rule, regulation, order, technical or other
written standard, requirement, policy or procedure enacted, adopted,
promulgated, applied or followed by any Governmental Authority, including any
Judgment and all judicial decisions applying common law or interpreting any
other Legal Requirement, in each case, as amended.
1.42 Lien. Any security interest, security agreement, financing
statement filed with any Governmental Authority, conditional sale or other title
retention agreement, any lease, consignment or bailment given for purposes of
security, any mortgage, lien, indenture, pledge, option, encumbrance, adverse
interest, constructive trust or other trust, claim, attachment, exception to,
defect in or other condition affecting title or other ownership interest
(including but not limited to reservations, rights of entry, possibilities of
reverter, encroachments, protrusions, easements, rights-of-way, rights of first
refusal, restrictive covenants, leases and licenses) of any kind, which
constitutes an interest in or claim against property, whether arising pursuant
to any Legal Requirement, System License, System Franchise, System Contract or
otherwise.
1.43 Litigation. Any written claim, action, suit, proceeding,
arbitration or hearing.
1.44 Losses. Any claims, losses, liabilities, damages, penalties, costs
and expenses, including interest that may be imposed in connection therewith,
expenses of investigation, reasonable fees and disbursements of counsel and
other experts, and the cost to any Person making a claim or seeking
indemnification under this Agreement with respect to funds expended by such
Person by reason of the occurrence of any event or the existence or assertion of
any Liens (other than Permitted Liens) with respect to which indemnification is
sought, except Losses incurred by a Person or on behalf of a Person in asserting
any claim for indemnification against a party where it is ultimately determined
(including by agreement of the parties) that such Person is not entitled to
indemnification from such party (before giving effect to the limitations on such
indemnification obligations set forth in Sections 11.6 and 11.7).
1.45 Non-TV Products and Services. (A) local or long distance wireline
telephony services, (B) data (other than data provided incidental to, or
integrated with, television programming (such as interactive services) and high
speed broadband internet access and other services now or hereafter provided by
At Home Corporation), (C) internet access services (other than high speed
broadband internet access and other services now or hereafter offered by At Home
Corporation and other than internet access services that are provided incidental
to, or integrated with, television programming), (D) video (other than cable,
broadcast or any other television programming, including any substantially
similar successor services that may replace these types of services), e.g.,
video telecommunications services, and (E) wireless telecommunications products
and services (other than cable, broadcast or any other television programming,
including any substantially similar successor services that may replace these
types of services). Notwithstanding anything to the contrary in this definition,
"Non-TV Products and Services" does not include (x) cable, broadcast or other
television programming, or (y) high speed broadband communication internet
access or services now or hereafter provided by At Home Corporation.
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1.46 Other Real Property Interests. The Century Other Real Property
Interests or the TCI Other Real Property Interests, as the context requires.
1.47 Owned Property. Century Owned Property or TCI Owned Property,
as the context requires.
1.48 Pay TV. A la carte tiers or premium programming services selected
by and sold to subscribers on a per channel or per program basis.
1.49 Permitted Lien. Any (a) Lien securing Taxes, assessments and
governmental charges not yet due and payable, (b) zoning law or ordinance or any
similar Legal Requirement, (c) right reserved to any Governmental Authority to
regulate the affected property or to acquire the affected property for fair
value, whether upon condemnation or pursuant to any Franchise or ordinance, (d)
as to Owned Property and Other Real Property Interests, any Lien not securing
indebtedness or arising out of the obligation to pay money that does not
individually or in the aggregate interfere with the right or ability to own, use
or operate the Owned Property or Other Real Property Interests as they are being
used or operated or materially diminish the value of such Owned Property or
Other Real Property Interests, (e) in the case of Owned Property and Leased
Property, any lease or sublease by TCI or Century in favor of a third party that
is disclosed in the Schedules to this Agreement, and (f) in the case of Leased
Property, (i) the rights of any lessor and (ii) any Lien granted by any lessor
of Leased Property; provided that "Permitted Lien" will not include any Lien
securing a debt or claim (other than inchoate materialmen's, mechanics',
workmen's, repairmen's or other like Liens arising in the ordinary course of
business or any Lien described in clause (f) above) or any Lien which could
prevent or impair in any way the conduct of the business of the affected System
as it is currently being conducted, and provided further that the classification
of any Lien as a "Permitted Lien" will not affect any liability which TCI may
have under this Agreement for any such Lien with respect to the contribution of
the TCI Systems or which Century may have under this Agreement for any such Lien
with respect to the contribution of the Century Systems, including pursuant to
any indemnity obligation under this Agreement.
1.50 Person. Any natural person, Governmental Authority, corporation,
general or limited partnership, limited liability company, joint venture, trust,
association or unincorporated entity of any kind.
1.51 Required Consents. The Century Required Consents or the TCI
Required Consents, as the context requires.
1.52 System. Any of the Century Systems or the TCI Systems, as the
context requires.
1.53 System Contracts. The Century System Contracts or the TCI System
Contracts, as the context requires.
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1.54 System Franchises. The Century System Franchises or the TCI System
Franchises, as the context requires.
1.55 System Licenses. The Century System Licenses or the TCI System
Licenses, as the context requires.
1.56 Tangible Personal Property. The Century Tangible Personal Property
or the TCI Tangible Personal Property, as the context requires.
1.57 Taxes. All levies and assessments of any kind or nature imposed by
any Governmental Authority, including all income, sales, use, ad valorem, value
added, franchise, severance, net or gross proceeds, withholding, payroll,
employment, excise or property taxes and levies or assessments related to
unclaimed property, together with any interest thereon and any penalties,
additions to tax or additional amounts applicable thereto.
1.58 TCI Assets. All assets, properties, privileges, rights, interests
and claims, real and personal, tangible and intangible, of every type and
description that are owned, leased, held for use or used in connection with
TCI's Cable Business and in which TCI or any Affiliate of TCI has any right,
title or interest or acquires any right, title or interest on or before the
Closing, including TCI Tangible Personal Property, TCI Owned Real Property, TCI
Leased Property, TCI Other Real Property Interests, TCI System Franchises, TCI
System Licenses, TCI System Contracts, TCI Books and Records and TCI Other
Intangibles, but excluding any TCI Excluded Assets.
1.59 TCI Books and Records. All engineering records, files, data,
drawings, blueprints, schematics, reports, lists, plans and processes and all
other files of correspondence, lists, records and reports concerning TCI's Cable
Business, including subscribers and prospective subscribers of the TCI Systems,
signal and program carriage and dealings with Governmental Authorities,
including all reports filed by or on behalf of TCI with the FCC and statements
of account filed by or on behalf of TCI with the U.S. Copyright Office.
1.60 TCI Leased Property. All leasehold interests in real property that
are held for use or used in connection with TCI's Cable Business which TCI or
any Affiliate of TCI has, or acquires prior to Closing, including those
described as TCI Leased Property on SCHEDULE 1.58.
1.61 TCI Other Intangibles. All intangible assets other than TCI System
Franchises, TCI System Licenses and TCI System Contracts, including subscriber
lists, accounts receivable, claims (excluding any claims relating to TCI
Excluded Assets), patents, copyrights and going concern value, if any, that are
owned, held for use or used in connection with TCI's Cable Business and in which
TCI or any Affiliate of TCI has, or acquires prior to Closing, any right, title
or interest.
1.62 TCI Other Real Property Interests. All easements and rights of
access (other than those relating to multiple dwelling units) and other
interests in real property that are held for use or used in connection with
TCI's Cable Business and in which TCI or any Affiliate of TCI has, or
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acquires prior to Closing, any right, title or interest, including those
interests described as TCI Other Real Property Interests on SCHEDULE 1.60, but
not including TCI Leased Property or TCI Owned Property.
1.63 TCI Owned Property. All fee interests in real property that are
held for use or used in connection with TCI's Cable Business which TCI or any
Affiliate of TCI has, or acquires prior to Closing, including those described as
TCI Owned Property on SCHEDULE 1.61 and all improvements thereon.
1.64 TCI Required Consents. Any and all consents, authorizations and
approvals required for (a) TCI to transfer the TCI Assets to the Partnership;
(b) the Partnership to operate the TCI Systems and to own, lease, use and
operate the TCI Assets and the TCI Systems at the places and in the manner in
which the TCI Assets are used and the TCI Systems are operated as of the date of
this Agreement and as of the Closing; and (c) the Partnership to assume and
perform the TCI System Franchises, the TCI System Licenses, the leases and other
documents evidencing TCI Leased Property or TCI Other Real Property Interests
and the TCI System Contracts, including those consents, authorizations and
approvals required under the TCI System Franchises, the TCI System Licenses, the
leases and other documents evidencing TCI Leased Property and TCI Other Real
Property Interests and the TCI System Contracts.
1.65 TCI System Contracts. All pole line agreements, underground conduit
agreements, crossing agreements, multiple dwelling, bulk billing or commercial
service agreements, leased channel access agreements and other Contracts (other
than TCI System Franchises and TCI System Licenses) held for use or used in
connection with TCI's Cable Business and to which TCI or any Affiliate of TCI
is, or becomes prior to Closing, a party or bound, including those described on
SCHEDULE 1.63.
1.66 TCI System Franchises. All franchise agreements, operating permits
or similar governing agreements, instruments, resolutions, statutes, ordinances,
approvals, authorizations and permits obtained from any franchising authority in
connection with TCI's Cable Business, including those listed on SCHEDULE 1.64,
including all amendments and modifications thereto and all renewals thereof.
1.67 TCI System Licenses. The intangible cable television channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, copyright notices and other licenses, authorizations, consents
or permits issued by the FCC or any other Governmental Authority in connection
with TCI's Cable Business (other than TCI System Franchises, TCI System
Contracts and TCI Other Real Property Interests), including those described on
SCHEDULE 1.65.
1.68 TCI Tangible Personal Property. All tangible personal property that
is owned, leased, held for use or used in connection with TCI's Cable Business
and in which TCI or any Affiliate of TCI has, or acquires prior to Closing, any
right, title or interest, including towers, tower equipment, aboveground and
underground cable, distribution systems, headend amplifiers, line amplifiers,
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microwave equipment, converters, testing equipment, motor vehicles, office
equipment, computers and billing equipment, furniture, fixtures, supplies,
inventory and other physical assets, the principal items of which, including all
motor vehicles, are described on SCHEDULE 1.66.
1.69 TCI's Cable Business. The cable television business and other
income-generating businesses related to the TCI Systems conducted by TCI through
the TCI Systems.
1.70 Third Party. With respect to TCI, any Person other than TCI and its
Affiliates and, with respect to Century, any Person other than Century and its
Affiliates.
1.71 Transaction Documents. The instruments and documents described in
Sections 9.2 and 9.3 which are to be executed and delivered by or on behalf of
Century or TCI in connection with this Agreement or the transactions
contemplated hereby; provided, that for purposes of Section 11, "Transaction
Documents" does not include the Management Agreement or any Retained Franchise
Management Agreement, it being agreed that the parties' indemnification rights
and obligations with respect to the matters covered by such agreements and other
rights and obligations with respect thereto shall be as specified in those
agreements..
1.72 Other Definitions. The following terms are defined in the
Sections or Recitals indicated:
<TABLE>
<CAPTION>
Term Section or Recital
---- ------------------
<S> <C>
ACT 5 4.2
Action 11.5
Agreement First Paragraph
Aggregate Gross Fair Market Value of the Century Assets 3.1(a)
Aggregate Gross Fair Market Value of the TCI Assets 3.1(a)
Antitrust Division 7.7
Assumed Obligations and Liabilities 4.1
Baldwin First Paragraph
Cash Flow Multiple 3.1(c)
CBA 7.3(a)
Century Recital A
Century BA First Paragraph
Century Balance Sheet 5.10
Century Cash Flow Multiple 3.1(a)
Century Claimed Damages 11.7
Century Closing Adjustment 3.2
Century CNC First Paragraph
Century CSC First Paragraph
Century Exchange First Paragraph
Century Excluded Assets 4.3
</TABLE>
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<TABLE>
<S> <C>
Century Parties Recital A
Century Permitted Debt 3.1(c)
Century Plans 5.13(b)
Century SCT First Paragraph
Century Systems Recital B
Century Title Policies 9.3(c)
Century VCC First Paragraph
Century's Financial Statements 5.10
Citizens First Paragraph
Closing 9.1
Closing Adjustments 3.2
Closing Date 9.1
Code 5.13(b)
"commercially reasonable efforts" 12.18
Competitive Activities 5.18(a)
Copyright Act 5.8(a)
Cost of Service Election 5.8(d)
CSG Contract 7.26
CVA/SM First Paragraph
Estoppel Certificate 7.5(b)
Exchange Agreement 1.30
FAA 5.8(c)
Final Adjustment Certificate 3.3(b)
Franem First Paragraph
FTC 7.7
Hired Employee 7.3(g)
Hiring Party 7.3(g)
Indemnified Party 11.5
Indemnifying Party 11.5
Initial Adjustment Certificate 3.3(a)
Management Agreement 9.3(k)
Outside Closing Date 10.1(b)
Partnership First Paragraph
Partnership Agreement 3.1(a)
Primary Transfer 7.23(a)
Prime Rate 12.10
Rate Determination 3.4(a)
Retained Employees 7.3(a)
Retained Franchise Management Agreement 7.23(c)
Retained Franchises 7.23(a)
Riverside Agreement 4.2
Riverside Closing 9.1
Riverside System 4.2
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Subsequent Transfer 7.23(b)
Surveys 7.6
Survival Period 11.1
Taking 12.16
TCI Recital A
TCI/AT&T Transaction 7.5(a)
TCI Balance Sheet 6.10
TCI California First Paragraph
TCI Cash Flow Multiple 3.1(a)
TCI Claimed Damages 11.6
TCI Closing Adjustment 3.2
TCI ESF 1.17
TCI Excluded Assets 4.2
TCI LLC First Paragraph
TCI Parties Recital A
TCI Permitted Debt 3.1(c)
TCI Plans 6.13(b)
TCI Systems Recital C
TCI Title Policies 9.2(c)
TCI's Financial Statements 6.10
Title Commitments 7.6
Title Company 7.6
Title Defect 7.6
Total Permitted Debt 3.1(c)
Transitional Billing Services 7.12
UCT LA First Paragraph
UCTC First Paragraph
Upgrade Deductions 3.2(f)
WARN 5.13(a)
</TABLE>
1.73 Accounting Terms. All accounting terms not otherwise defined in
this Agreement will have the meanings ascribed to them under GAAP.
SECTION 2. CONTRIBUTION
2.1 Agreement to Contribute.
(a) Subject to the terms and conditions set forth in this
Agreement, at the Closing,
(i) immediately prior to the contribution described in
Section 2.1(a)(iii),each of CVA/SM, Baldwin, UCTC, UCT LA and TCI California
will contribute, through one or more intermediate transfers, the TCI Assets of
such Person to TCI LLC, free and clear of all Liens (except Permitted Liens);
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(ii) immediately prior to the contribution described in
Section 2.1(a)(iv), each of Century BA, Century CNC, Franem, Century CSC,
Century SCT, Century VCC and Citizens will contribute the Century Assets of
such Person to Century Exchange, free and clear of all Liens (except Permitted
Liens);
(iii) TCI LLC will contribute the TCI Assets to the
Partnership, free and clear of all Liens (except Permitted Liens), and
(iv) Century Exchange will contribute the Century Assets
to the Partnership, free and clear of all Liens (except Permitted Liens).
(b) Century shall have the option of contributing cash to the
Partnership at the Closing in an amount sufficient to cause the ratio of the
Aggregate Gross Fair Market Value of the Century Assets to the sum of the
Aggregate Gross Fair Market Value of the Century Assets plus the Aggregate Gross
Fair Market Value of the TCI Assets to equal 75%.
SECTION 3. PARTNERSHIP CONTRIBUTIONS AND CLOSING ADJUSTMENTS
3.1 Gross Value of Contributions; Assumption of Debt.
(a) For purposes of this Agreement and that Agreement of Limited
Partnership of Century-TCI California, L.P., dated of even date herewith (the
"Partnership Agreement"), the "Aggregate Gross Fair Market Value of the TCI
Assets" means an amount equal to the Annualized Cash Flow of the TCI Systems as
of the Closing Date, multiplied by the cash flow multiple for the TCI Systems
set forth on SCHEDULE 1.9 (the "TCI Cash Flow Multiple"), and plus or minus the
TCI Closing Adjustments, as applicable; and the "Aggregate Gross Fair Market
Value of the Century Assets" means an amount equal to the Annualized Cash Flow
of the Century Systems as of the Closing Date, multiplied by the cash flow
multiple for the Century Systems set forth on SCHEDULE 1.9 (the "Century Cash
Flow Multiple"), and plus or minus the Century Closing Adjustments, as
applicable and plus the amount of any cash contributed by Century pursuant to
Section 2.1. Solely for purposes of calculating the Aggregate Gross Fair Market
Value of the Century Assets and the Aggregate Gross Fair Market Value of the TCI
Assets, the Annualized Cash Flow of the Century Systems, the Annualized Cash
Flow of the TCI Systems, the Century Closing Adjustments, and the TCI Closing
Adjustments shall be deemed to be the estimates thereof set forth in the
parties' Initial Adjustment Certificates or otherwise agreed to between Century
and TCI prior to Closing pursuant to Section 3.3(a).
(b) The Capital Accounts (as defined in the Partnership
Agreement) of TCI LLC and Century Exchange shall be credited on the Closing Date
by an amount equal to the Net Fair Market Value of the Assets to be contributed
by them, Net Fair Market Value being defined as the Aggregate Gross Fair Market
Value of such Assets minus the Permitted Debt assumed by the Partnership with
respect to such Assets, determined as set forth below in Section 3.1(c).
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(c) Prior to Closing, Century shall pick a cash flow multiple
between 5 1/2 and 6 1/2 (the "Cash Flow Multiple"). At the Closing, the
Partnership shall assume an aggregate amount of indebtedness from TCI LLC and
Century Exchange equal to the Cash Flow Multiple times the aggregate Annualized
Cash Flow of TCI and Century as estimated in the parties' Initial Adjustment
Certificates or otherwise agreed to between Century and TCI prior to Closing
pursuant to Section 3.3(a), (the "Total Permitted Debt"). The Total Permitted
Debt shall be allocated between TCI LLC and Century Exchange based on the
relative amounts of the Aggregate Gross Fair Market Value of the TCI Assets and
the Aggregate Gross Fair Market Value of the Century Assets, with the amount of
debt to be assumed by the Partnership at the Closing from TCI LLC being referred
to herein as the "TCI Permitted Debt" and the amount of debt to be assumed by
the Partnership at the Closing from Century Exchange being referred to herein as
the "Century Permitted Debt."
3.2 Closing Adjustments. The adjustments provided for below in this
Section 3.2 shall be made as of Closing with respect to each of TCI and Century
(the net amount of such adjustments being referred to herein as the "TCI Closing
Adjustment" as made with respect to TCI and as the "Century Closing Adjustment"
as made with respect to Century and as the "Closing Adjustments" as made with
respect to either or both TCI and Century). The Closing Adjustments as
preliminarily determined as of the Closing Date shall be taken into account in
determining Aggregate Gross Fair Market Value, as specified in Section 3.1 Upon
final determination of the Closing Adjustments, contribution shall be made by
TCI LLC or Century Exchange to the Partnership in accordance with Section
3.3(c).
(a) Appropriate adjustments on a pro rata basis as of the Closing
Time will be made with respect to each of TCI and Century for all prepaid
expenses other than inventory (but only to the extent the full benefit of such
prepaid expenses will be realizable by the Partnership within 12 months after
the Closing Date), and for all accrued expenses (including real and personal
property taxes), copyright fees and franchise or license fees or charges,
prepaid income, subscriber prepayments and, subject to paragraph (e) below,
accounts receivable related to such party's Cable Business, all as determined in
accordance with GAAP consistently applied and to reflect the principle that all
expenses and income attributable to such party's Cable Business for the period
through and including the Closing Time are for the account of such party, and
all expenses and income attributable to such party's Cable Business for the
period after the Closing Time are for the account of the Partnership.
(b) All advance payments to, or funds of third parties on deposit
with, TCI or Century as of the Closing Time and relating to such party's Cable
Business, including advance payments and deposits (including any accrued
interest on such deposits) by subscribers served by such party's Cable Business
for converters, encoders, decoders, cable television service and related sales,
shall be assumed by, and credited to the account of, the Partnership.
(c) There shall be credited to the Partnership the economic value
of all accrued vacation time that the Partnership credits after the Closing Time
to the employees of TCI and Century that are hired by the Partnership pursuant
to Section 7.3(g), where economic value is the
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amount equal to the cash compensation that would be payable to each such
employee at his or her level of compensation on the Closing Date for a period
equal to such employee's credited accrued vacation.
(d) All deposits relating to the business and operations of each
party's Systems that are held by third parties as of the Closing Time for the
account of such party or as security for such party's performance of its
obligations, including deposits on leases and deposits for utilities, will be
credited to the account of such party in their full amounts and will become the
property of the Partnership; provided that no adjustment will be made for any
deposits the full benefit of which for contractual or other reasons cannot be
made available to the Partnership within 12 months following the Closing Time.
(e) Neither TCI nor Century will receive credit for any of its
(i) accounts receivable resulting from cable television service sales any
portion of which is 60 days or more past due as of the Closing Time, (ii)
accounts receivable resulting from advertising sales any portion of which is 120
days or more past due as of the Closing Time; provided, that each party shall
receive credit for advertising accounts receivable from national and regional
representation accounts that are assigned to the other party at Closing in an
amount equal to 100% of the face amount of such accounts receivable regardless
of the age thereof, or (iii) accounts receivable from customers whose accounts
are inactive or whose service is pending disconnection for any reason as of the
Closing Time. For purposes of making "past due" calculations under this
paragraph, the billing statements of a System will be deemed to be due and
payable on the first day of the period during which the service to which such
billing statements relate is provided.
(f) There shall be debited to the accounts of TCI and Century, an
amount equal to the upgrade deduction for each party specified on SCHEDULE 1.9
(the "Upgrade Deductions"); provided that the Upgrade Deduction for each party
shall be reduced by the aggregate amount of all capital expenditures made by
such party during the period from November 1, 1997 through the Closing Date
relating to upgrades and rebuilds of System plant capacity and associated items
(including headend sites and headend equipment to expand channel capacity).
(g) There shall be credited to the accounts of TCI and Century
all capital expenditures made by such party relating to the launch of digital or
internet services, including the purchase of digital converters but not
including digital converters purchased in the ordinary course of business to
replace lost, stolen or defective digital converters.
(h) There shall be credited to the accounts of TCI and Century,
an amount equal to the aggregate amount of all capital expenditures reasonably
estimated by the other party to be incurred by the Partnership after Closing to
assure that the Computer and Other Systems received by it are Year 2000 Ready;
provided that the amount so estimated shall be subject to the dispute resolution
procedures set forth in Section 3.3.
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(i) The adjustments provided for in this Section 3.2 will be made
without duplication. In addition, none of the adjustments provided for in this
Section 3.2 will be made with respect to any Excluded Assets or with respect to
any item of income or expense related to an Excluded Asset.
3.3 Calculation of Adjustments.
(a) Each of TCI and Century will estimate in good faith the
Annualized Cash Flow and Closing Adjustments with respect to its Systems and set
forth the same, together with a detailed statement of the calculation thereof in
a certificate (the "Initial Adjustment Certificate") executed by an authorized
representative of such party and delivered to the other party at least 10
Business Days prior to the Closing. Each Initial Adjustment Certificate will be
accompanied by appropriate documentation, including an accounts receivable
detail with relevant aging information as of the Closing Time, in summary form,
supporting the determination of the Annualized Cash Flow or Closing Adjustments
proposed in such certificate. Following receipt of such Initial Adjustment
Certificate, the recipient shall have five Business Days to review such schedule
and supporting information and to notify the preparer of such Initial Adjustment
Certificate of any disagreements with the preparer's estimates of its Annualized
Cash Flow or Closing Adjustments. If the recipient provides a notice of
disagreement with the preparer's estimates of such amounts within such five
Business Day period, TCI and Century shall negotiate in good faith to resolve
any such dispute and to reach an agreement prior to the Closing on such
estimated amounts as of the Closing Time. The estimates so agreed upon by TCI
and Century or (if the parties do not reach such an agreement on such estimated
amounts set forth in the Initial Adjustment Certificate prior to the Closing
Date or if the recipient fails to provide a notice of disagreement with the
preparer's estimates of such amounts within the time provided) the estimates of
such Annualized Cash Flow and Closing Adjustments set forth in the Initial
Adjustment Certificate shall be the basis for determining the Aggregate Gross
Fair Market Value of the Century Assets and the Aggregate Gross Fair Market
Value of the TCI Assets. All disagreements that may exist with respect to the
Initial Adjustment Certificate shall be resolved in connection with the
preparation of the Final Adjustment Certificate pursuant to paragraph (b) below.
(b) Within 90 days after the Closing, each of TCI and Century
will deliver to the other a certificate (the "Final Adjustment Certificate")
showing in full detail its final determination of the Annualized Cash Flow and
Closing Adjustments with respect to its Systems, which certificate will be
accompanied by appropriate documentation supporting the amounts proposed in such
certificate, including an accounts receivable detail with relevant aging
information as of the Closing Time, and which will be executed by an officer of
such party. Each recipient party will review the other's Final Adjustment
Certificate and will give written notice to the preparing party of any
objections it has to the calculations shown in such certificate within 30 days
after its receipt thereof. TCI and Century will endeavor in good faith to
resolve any such objections within 30 days after the receipt by the parties of
each other's objections. If any objections or disputes have not been resolved at
the end of such 30-day period, the disputed portions of the Annualized Cash
Flows or the Closing Adjustments will be determined within the following 30 days
by a partner in a major accounting firm
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with substantial cable television audit experience which is not the auditor of
either Century or TCI (or any Affiliate of either of them) and the determination
of such auditor will be final and will be binding upon all parties. If Century
and TCI cannot agree with respect to the selection of an auditor, Century and
TCI will each select an auditor and those two auditors will select a third
auditor whose determination will be final and will be binding upon all parties.
Century and TCI will bear equally the expenses arising in connection with an
auditor's determination of disputed amounts.
(c) After the Annualized Cash Flow of the Century Systems, the
Annualized Cash Flow of the TCI Systems, the Century Closing Adjustments, and
the TCI Closing Adjustments are finally determined pursuant to this Section 3.3,
the parties will calculate the "Adjusted Aggregate Gross Fair Market Value of
the TCI Assets" which shall be the same as the Aggregate Gross Fair Market Value
of the TCI Assets except that the Annualized Cash Flow of the TCI Systems and
the TCI Closing Adjustments, as finally determined, shall be used in such
calculations instead of the estimates at Closing, and the "Adjusted Aggregate
Gross Fair Market Value of the Century Assets" which shall be the same as the
Aggregate Gross Fair Market Value of the Century Assets except that the
Annualized Cash Flow of the Century Systems and the Century Closing Adjustments,
as finally determined, shall be used in such calculations instead of the
estimates at Closing. Within 15 Business Days thereafter, Century or TCI shall
contribute cash to the Partnership as provided in this Section 3.3(c):
(i) If the Adjusted Aggregate Gross Fair Market Value of
the Century Assets divided by the sum of the Adjusted Aggregate Gross Fair
Market Value of the Century Assets plus the Adjusted Aggregate Gross Fair Market
Value of the TCI Assets is less than Century's Percentage Interest (as
determined pursuant to the Partnership Agreement), then Century shall contribute
cash to the Partnership in an amount necessary to cause the sum of the amount of
such cash plus the Adjusted Aggregate Gross Fair Market Value of the Century
Assets divided by the sum of such cash plus the Adjusted Aggregate Gross Fair
Market Value of the Century Assets plus the Adjusted Aggregate Gross Fair Market
Value of the TCI Assets to equal Century's Percentage Interest.
(ii) If the Adjusted Aggregate Gross Fair Market Value
of the TCI Assets divided by the sum of the Adjusted Aggregate Gross Fair Market
Value of the Century Assets plus the Adjusted Aggregate Gross Fair Market Value
of the TCI Assets is less than TCI's Percentage Interest (as determined pursuant
to the Partnership Agreement), then TCI shall contribute cash to the Partnership
in an amount necessary to cause the sum of the amount of such cash plus the
Adjusted Aggregate Gross Fair Market Value of the TCI Assets divided by the sum
of such cash plus the Adjusted Aggregate Gross Fair Market Value of the Century
Assets plus the Adjusted Aggregate Gross Fair Market Value of the TCI Assets to
equal TCI's Percentage Interest.
(d) Each of Century and TCI will provide to the other reasonable
access to all records in its possession which were used in the preparation of
its Initial Adjustment Certificate and Final Adjustment Certificate.
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3.4 Post-Closing Rate Adjustments.
(a) If at any time after the final determination of Annualized
Cash Flows and Closing Adjustments pursuant to this Agreement, it is determined
pursuant to a final non-appealable order of, or pursuant to a final settlement
with, the FCC or other Governmental Authority (a "Rate Determination"), that (i)
any rates charged to subscribers of any Systems for services or equipment at any
time during the three month period used to calculate Annualized Cash Flow were
not allowable under rules and regulations promulgated by the FCC under the
Communications Act, or any authoritative interpretation thereof, and (ii) that
the rates to be charged by such Systems following the Closing Date must be
reduced, then Annualized Cash Flow for the affected party will be recalculated
to reflect the allowable rate for such time period (after taking into account as
an offset any other rate increases that are available to the affected Systems at
the time) and the party whose Systems' rates were decreased will promptly pay to
the Partnership the amount of the decrease in Annualized Cash Flow multiplied by
the TCI Cash Flow Multiple in the case of the TCI Systems or multiplied by the
Century Cash Flow Multiple in the case of the Century Systems; provided that
this Section 3.4(a) will not require any duplicative adjustments with respect to
adjustments made under the terms set forth in SCHEDULE 1.9. Upon the happening
of an event specified in this Section 3.4(a), the parties will negotiate in good
faith for a period of 60 days to reach agreement on the amount of the required
adjustment; provided that if TCI and Century are not able to agree on the amount
of the adjustment to be made pursuant to this Section 3.4(a) within such time
frame, any disputed amounts will be determined in the manner set forth in
Section 3.3(b) with respect to disputes involving the Annualized Cash Flow and
Closing Adjustments. Upon agreement or final determination of the required
adjustment, the party responsible for payment pursuant to this Section 3.4(a)
shall promptly make such payment to the Partnership.
(b) If pursuant to a Rate Determination that occurred prior to
Closing any rates charged to subscribers of any Systems for services or
equipment at any time during the three month period used to calculate Annualized
Cash Flow were required to be reduced and following Closing there is another
Rate Determination pursuant to which such rates are permitted to be raised
following Closing, then Annualized Cash Flow for the affected party will be
recalculated using an adjusted Annualized Cash Flow that reflects the increased
rate that would have been permissible for such time period (after taking into
account as an offset any other rate decreases that are applicable to the
affected Systems at the time) and the Partnership will pay to the party whose
Systems' rates were increased the amount of the increase in Annualized Cash Flow
multiplied by the TCI Cash Flow Multiple in the case of the TCI Systems or
multiplied by the Century Cash Flow Multiple in the case of the Century Systems;
provided that this Section 3.4(b) will not require any duplicative adjustments
with respect to adjustments made under the terms set forth in SCHEDULE 1.9. Upon
the happening of an event specified in this Section 3.4(b), the parties will
negotiate in good faith for a period of 60 days to reach agreement on the amount
of the required adjustment; provided that if TCI and Century are not able to
agree on the amount of the payment to be made pursuant to this Section 3.4(b)
within such time frame, any disputed amounts will be determined in the manner
set forth in Section 3.3(b) with respect to disputes involving the Annualized
Cash Flow and Closing
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Adjustments. Upon agreement or final determination of the required adjustment,
the Partnership shall promptly make any payment that is required of it
hereunder.
SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS
4.1 Assumed Obligations and Liabilities. As of the Closing Time, the
Partnership will assume and after the Closing Time, the Partnership will pay,
discharge and perform the following (the "Assumed Obligations and Liabilities"):
(a) those obligations and liabilities accruing and relating to periods after the
Closing Time under or with respect to the Assets assigned and transferred to the
Partnership at the Closing; (b) those obligations and liabilities of TCI and
Century to customers of their respective Cable Businesses for (i) subscriber
deposits related to the Systems held by TCI or Century as of the Closing Time in
the amount for which TCI or Century received credit under Section 3.2 and (ii)
customer, advertising and other advance payments held by TCI or Century as of
the Closing Time in the amount for which TCI or Century received credit under
Section 3.2; (c) all other obligations and liabilities accruing and relating to
the Cable Businesses prior to the Closing Time in respect of which TCI or
Century received a credit pursuant to Section 3.2; (d) the TCI Permitted Debt
and the Century Permitted Debt and (e) all other obligations and liabilities
accruing and relating to periods after the Closing Time and arising out of the
Partnership's ownership of the Assets or operation of the Systems after the
Closing Time, except to the extent that such obligations or liabilities relate
to any TCI Excluded Asset or Century Excluded Asset. All obligations and
liabilities, contingent, fixed or otherwise, arising out of or relating to the
Assets or the Systems other than the Assumed Obligations and Liabilities will
remain and be the obligations and liabilities solely of TCI or Century, as the
case may be, including any obligation, liability or claim relating to or arising
pursuant to (x) rate refunds to subscribers of their Systems with respect to
rates charged to such subscribers during periods through and including the
Closing Time, (y) litigation commenced prior to, or related to an event
occurring at any time prior to the Closing Time, or (z) any TCI Excluded Asset
or Century Excluded Asset.
4.2 TCI Excluded Assets. "TCI Excluded Assets" means all: (a)
programming (including cable guide Contracts) and retransmission consent
Contracts of TCI (other than those listed on SCHEDULE 1.63 (TCI System
Contracts) and not designated as a TCI Excluded Asset; (b) TCI Plans; (c)
insurance policies of TCI and rights and claims thereunder (except as otherwise
provided in Section 12.16); (d) bonds, letters of credit, surety instruments and
other similar items and any stocks, bonds, certificates of deposit and similar
investments of TCI; (e) cash and cash equivalents and notes receivable of TCI;
(f) TCI's trademarks, trade names, service marks, service names, logos and
similar proprietary rights, subject to Section 7.11; (g) subscriber billing
Contracts and related leased equipment and software of TCI, even if listed on
any Schedule to this Agreement but subject to Section 7.12; (h) all contracts
and related accounts receivable for providing DMX service to commercial accounts
via direct broadcast satellite even if listed on any Schedule to this Agreement;
(i) all TCI Contracts relating to national advertising sales representation,
including Contracts with National Cable Communications or Cable Networks, Inc.;
(j) all agreements pursuant to which TCI has created, incurred, assumed or
guaranteed indebtedness for borrowed money or under which any Lien securing such
indebtedness has been or may be imposed on any TCI Asset
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other than intercompany agreements evidencing TCI Permitted Debt; (k) any
claims, rights or choses in action of TCI related to the period prior to the
Closing Time (other than customer and advertising accounts receivable),
including, without limitation, any Litigation and the proceeds thereof and any
claims, rights and interest in and to any refunds of federal, state or local
franchise, income or other taxes or payments of any nature for the periods prior
to the Closing Time, including copyright fees; (l) any books and records that
TCI is required by any Legal Requirement to retain and any books of account, tax
reports and returns and the like related to the TCI Systems; provided that
copies of such books and records will be made available to the Partnership for a
period of three years (and six years in the case of tax reports and returns and
underlying books and records, although in the case of underlying books and
records, the parties acknowledge that they are not retained for periods for
which an IRS field examination has been completed) from the Closing Date upon
reasonable request; (m) TCI's corporate records and other books and records
related to internal corporate matters and financial relationships with TCI's
lenders and affiliates; (n) any employment, union, collective bargaining,
compensation, bonus, deferred compensation, noncompetition, confidentiality,
consulting, agency or management agreements of TCI other than those listed on
SCHEDULE 1.63; (o) all documents, reports and records relating to the employees
of the TCI Systems; provided that copies of such books and records will be made
available to the Partnership for a period of three years from the Closing Date
upon reasonable request by the Partnership accompanied by a waiver and release
from the employee whose records are sought in form and substance reasonably
satisfactory to TCI; (p) any agreement, right, asset or property owned, leased
or held by TCI or its affiliates that is not used or held for use primarily in
connection with the operation of the TCI Systems; (q) TCI's rights under the
@Home Distribution Agreement (as defined in the Partnership Agreement), it being
agreed that the parties' rights and obligations with respect thereto shall be as
specified in the Partnership Agreement; (r) any assets, properties, privileges,
rights, interests and claims, real and personal, tangible and intangible, of
every type and description related to the Riverside, California cable television
system (the "Riverside System") that Century is acquiring from American Cable TV
Investors 5, Ltd. ("ACT 5"), pursuant to that certain Asset Purchase Agreement
dated as of August 12, 1998, by and between Act 5, as seller and Century
Communications Corp., a Texas corporation, as buyer, relating to the cable
television system servicing the Riverside, California, area (the "Riverside
Agreement"), even if listed on any Schedule to this Agreement; and (s) rights,
assets and properties described on SCHEDULE 4.2.
4.3 Century Excluded Assets. "Century Excluded Assets" means all: (a)
programming (including cable guide Contracts) and retransmission consent
Contracts of Century (other than those listed on SCHEDULE 1.17 (Century System
Contracts) and not designated as a Century Excluded Asset; (b) Century Plans;
(c) insurance policies of Century and rights and claims thereunder (except as
otherwise provided in Section 12.16); (d) bonds, letters of credit, surety
instruments and other similar items and any stocks, bonds, certificates of
deposit and similar investments of Century; (e) cash and cash equivalents and
notes receivable of Century; (f) Century's trademarks, trade names, service
marks, service names, logos and similar proprietary rights, subject to Section
7.11; (g) subscriber billing Contracts and related leased equipment and software
of Century, even if listed on any Schedule to this Agreement but subject to
Section 7.12; (h) all Century Contracts relating to national advertising sales
representation; (i) all agreements pursuant to which Century has created,
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incurred, assumed or guaranteed indebtedness for borrowed money or under which
any Lien securing such indebtedness has been or may be imposed on any Century
Asset other than intercompany agreements evidencing Century Permitted Debt; (j)
any claims, rights or choses in action of Century related to the period prior to
the Closing Time (other than customer and advertising accounts receivable),
including, without limitation, any Litigation and the proceeds thereof and any
claims, rights and interest in and to any refunds of federal, state or local
franchise, income or other taxes or payments of any nature for the periods prior
to the Closing Time, including copyright fees; (k) any books and records that
Century is required by any Legal Requirement to retain and any books of account,
tax reports and returns and the like related to the Century Systems; provided
that copies of such books and records will be made available to the Partnership
for a period of three years (and six years in the case of tax reports and
returns and underlying books and records, although in the case of underlying
books and records, the parties acknowledge that they are not retained for
periods for which an IRS field examination has been completed) from the Closing
Date upon reasonable request; (l) Century's corporate minute books and other
books and records related to internal corporate matters and financial
relationships with Century's lenders and affiliates; (m) any employment, union,
collective bargaining, compensation, bonus, deferred compensation,
noncompetition, confidentiality, consulting, agency or management agreements of
Century other than those listed on SCHEDULE 1.17; (n) any agreement, right,
asset or property owned, leased or held by Century that is not used or held for
use primarily in connection with the operation of the Century Systems; (o) all
documents, reports and records relating to the employees of the Century Systems;
provided that copies of such books and records will be made available to the
Partnership for a period of three years from the Closing Date upon reasonable
request by the Partnership accompanied by a waiver and release from the employee
whose records are sought in form and substance reasonably satisfactory to
Century; (p) the @Home Distribution Agreement dated as of May 1, 1998 by and
between At Home Corporation and Century Communications Corp.; and (q) rights,
assets and properties described on SCHEDULE 4.3.
SECTION 5. CENTURY'S REPRESENTATIONS AND WARRANTIES
Century represents and warrants to TCI and the Partnership as of the
date of this Agreement (or, if a different date is specified in this Section 5
or in the Century Schedules, as of such specified date) as follows:
5.1 Organization and Qualification of Century. Century Exchange is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware; Century BA is a corporation duly
organized, validly existing and in good standing under the laws of Delaware;
Century CNC is a corporation duly organized, validly existing and in good
standing under the laws of the State of California; Franem is a California
general partnership, the general partner of which is Citizens; Century CSC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California; Century SCT is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware; Century
VCC is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware; and Citizens is a joint venture, the
venturers of which are Century Telecommunications Venture Corp. and Citizens
Cable Company, each of which is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Delaware. Each Century Party (a) has all requisite corporate,
partnership or limited liability company power and authority to own, lease and
use the Century Assets and to conduct Century's Cable Business as it is
currently conducted and (b) is duly qualified to do business and is in good
standing under the laws of each jurisdiction in which the ownership, leasing or
use of the Century Assets owned, leased or used by it or the nature of its
activities in connection with the Century Systems makes such qualification
necessary, except in any such jurisdiction where the failure to be so qualified
and in good standing would not have a material adverse effect on the ownership
or operation of Century's Cable Business, the Century Assets or Century Systems
or on the ability of any of them to perform its obligations under this
Agreement. The U.S. taxpayer identification numbers of the Century Parties are
listed on SCHEDULE 5.1.
5.2 Authority and Validity. Each Century Party has all requisite
corporate, partnership or limited liability company power and authority to
execute and deliver, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Transaction Documents to
which it is a party. The execution and delivery by each Century Party, the
performance by each of them under, and the consummation by each of them of the
transactions contemplated by, this Agreement and the Transaction Documents to
which they are a party have been duly and validly authorized by all required
corporate, partnership or limited liability company action by or on behalf of
them. This Agreement has been, and when executed and delivered by the Century
Parties the Transaction Documents will be, duly and validly executed and
delivered by each applicable Century Party and the valid and binding obligations
of each of them, enforceable against each of them in accordance with their
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to the enforcement of creditors' rights generally or by principles governing the
availability of equitable remedies.
5.3 No Conflict; Required Consents. Except for, and subject to receipt
of, the Century Required Consents, all of which are listed on SCHEDULE 5.3, the
TCI Required Consents, and the notification and expiration or earlier
termination of the waiting period under the HSR Act, the execution and delivery
by each of the Century Parties, the performance of each of them under, and the
consummation of the transactions contemplated by, this Agreement and the
Transaction Documents to which each is a party do not and will not: (a) conflict
with or violate any provision of its charter, bylaws, partnership or limited
liability company agreement; (b) violate any provision of any Legal Requirement;
(c) require any consent, approval or authorization of, or filing of any
certificate, notice, application, report or other document with, any
Governmental Authority or other Person; or (d) (i) conflict with, violate,
result in a breach of or constitute a default under (without regard to
requirements of notice, lapse of time or elections of other Persons or any
combination thereof), (ii) permit or result in the termination, suspension or
modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of Century under, (iv) result in the
creation or imposition of any Lien under any Century System Franchise, Century
System License or any Century System Contract or other instrument evidencing any
of the Century Assets or by which it or any of its assets is bound or affected,
except for purposes of clauses (c) and
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(d) such consents, approvals, authorizations and filings that, if not obtained
or made, would not, and such violations, conflicts, breaches, defaults,
terminations, suspensions, modifications and accelerations as would not,
individually or in the aggregate, have a material adverse effect on any Century
System, Century's Cable Business or on its ability to perform its obligations
under this Agreement or the Transaction Documents to which it is a party.
5.4 Assets.
(a) Century has good and valid title to (or, in the case of
Assets that are leased, valid leasehold interests in) the Century Assets or in
the case of the Riverside System, if the Riverside Closing occurs prior to the
Closing, will have such good and valid title as of the Closing Date (other than
Century Owned Property, Century Leased Property and Century Other Real Property
Interests, as to which representations and warranties in Section 5.6 apply). The
Century Assets are free and clear of all Liens, except (i) Permitted Liens and
(ii) Liens described on SCHEDULE 5.4, all of which Liens on SCHEDULE 5.4 will be
terminated, released or, in the case of the rights of first refusal listed on
SCHEDULE 5.4, waived, as appropriate, at or prior to the Closing. SCHEDULE 1.20
lists the principal items of Century Tangible Personal Property as of the date
specified on such Schedule, or if no date is specified, as of the date of this
Agreement. Except as described on SCHEDULE 1.20 (Century Tangible Personal
Property), the Century Tangible Personal Property is in good operating condition
and repair (ordinary wear and tear excepted).
(b) Except for items included in the Century Excluded Assets, the
Century Assets constitute all the assets necessary to permit the Partnership to
conduct Century's Cable Business and to operate the Century Systems
substantially as they are being conducted and operated on the date of this
Agreement and in compliance in all material respects with all applicable Legal
Requirements, Century System Contracts, Century System Licenses and Century
System Franchises and to perform all of the Assumed Obligations and Liabilities
as they relate to the Century Systems.
5.5 Century System Franchises, Century System Licenses, Century System
Contracts and Century Other Real Property Interests.
(a) Except for the agreements listed on SCHEDULES 1.12 (Century
Leased Property), 1.14 (Century Other Real Property Interests), 1.17 (Century
System Contracts), 1.18 (Century System Franchises) and 1.19 (Century System
Licenses), or as described on SCHEDULE 4.3 (Century Excluded Assets) or
otherwise included in the definition of Century Excluded Assets, Century is not
bound or affected by any of the following that relate primarily or in whole to
Century's Cable Business: (i) leases of real or personal property; (ii)
franchises for the construction or operation of cable television systems or
Contracts of substantially equivalent effect; (iii) other licenses,
authorizations, consents or permits of the FCC or any other Governmental
Authority; (iv) material easements, rights of access, underground conduit
agreements, crossing agreements or other interests in real property; (v) pole
line or attachment agreements; (vi) multiple dwelling unit agreements, including
bulk agreements, and commercial service agreements; provided that only a listing
of the addresses of such units is attached, it being acknowledged by TCI that
written
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agreements do not exist with respect to all such units; (vii) agreements
pursuant to which the Century Systems receive or provide advertising sales
representation services; (viii) agreements pursuant to which a Century System
has constructed or agreed to construct for third parties an institutional
network or otherwise provides to third parties telecommunications services other
than one-way video; (ix) agreements pursuant to which the Systems receive or
have contracted to receive any Non- TV Products and Services; (x) construction
and development agreements (other than installation agreements where services
are provided in the ordinary course of business on an as-needed basis); or (xi)
Contracts relating to the operation of Century's Cable Business other than those
described in any other clause of this Section which contemplate payments by or
to Century in any 12-month period exceeding $25,000 individually or $150,000 in
the aggregate or that have a remaining term of two years or more as of the
Closing Date. Except as described on the Schedules to this Agreement, no
Affiliate of Century is a party to any documents listed on such Schedules.
(b) Complete and correct copies of the Century System Franchises
and Century System Licenses have been delivered by Century to TCI. Except as set
forth on SCHEDULE 1.18 (Century System Franchises), the Century System
Franchises contain all of the commitments and obligations of Century to the
applicable Governmental Authority granting such Franchises with respect to the
construction, ownership and operation of the Century Systems. The Century System
Franchises and Century System Licenses are currently in full force and effect
and are valid and enforceable under all applicable Legal Requirements according
to their terms. There is no legal action, governmental proceeding or, to
Century's Knowledge, investigation, pending or to Century's Knowledge
threatened, to terminate, suspend or modify any Century System Franchise or any
Century System License and Century is in material compliance with the terms and
conditions of all the Century System Franchises and Century System Licenses and
with other applicable requirements of all Governmental Authorities (including
the FCC and the Register of Copyrights) relating to the Century System
Franchises and Century System Licenses, including all requirements for
notification, filing, reporting, posting and maintenance of logs and records.
All areas served by the Century Systems are served pursuant to one of the
Century Franchises except as set forth on SCHEDULE 1.18.
(c) Except as set forth on SCHEDULE 1.14, complete and correct
copies of all Century System Contracts required to be listed on Century's
Schedules (including all Contracts relating to Leased Property and Other Real
Property Interests described on SCHEDULE 1.14) have been provided to TCI. Such
documents constitute the entire agreement with the other party. Except as set
forth on SCHEDULE 1.14, each such Century System Contract is in full force and
effect and constitutes the valid, legal, binding and enforceable obligation of
Century and Century is not and to Century's Knowledge, each other party thereto
is not in breach or default of any material terms or conditions thereunder.
5.6 Real Property. All Century Assets consisting of Century Owned
Property, Century Leased Property and material Century Other Real Property
Interests are described on SCHEDULES 1.12 (Century Leased Property), 1.14
(Century Other Real Property Interests) and 1.15 (Century Owned Property),
including address and use for each such real property interest. Except as
otherwise
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disclosed on SCHEDULE 1.15 (Century Owned Property), Century holds title to the
Century Owned Property free and clear of all Liens or in the case of the
Riverside System, if the Riverside Closing occurs prior to the Closing, will
hold such title as of the Closing Date (except (i) Permitted Liens and (ii)
Liens described on SCHEDULE 5.4, all of which Liens on SCHEDULE 5.4 will be
terminated, released or, in the case of the rights of first refusal listed on
SCHEDULE 5.4, waived, as appropriate, at or prior to the Closing) and has the
valid and enforceable right to use and possess such Century Owned Property, or
in the case of the Riverside System, if the Riverside Closing occurs prior to
the Closing, will have such right(s) as of the Closing Date, subject only to the
above-referenced Liens. Except as otherwise disclosed on SCHEDULES 1.12 (Century
Leased Property) and 1.14 (Century Other Real Property Interests), Century has
valid and enforceable leasehold interests in all Century Leased Property and,
with respect to Century Other Real Property Interests, has valid and enforceable
rights to use such Century Other Real Property Interests, or in the case of the
Riverside System, if the Riverside Closing occurs prior to the Closing, will
have such right(s) as of the Closing Date, in each case subject only to the
above-referenced Liens. Except as disclosed on SCHEDULE 1.20 and except for
ordinary wear and tear and routine repairs, all of the material improvements,
leasehold improvements and the premises of the Century Owned Property and the
premises demised under the leases and other documents evidencing the Century
Leased Property are in good condition and repair and are suitable for the
purposes used. Each parcel of Century Owned Property and each parcel of Century
Leased Property and any improvements thereon and their current use (x) has
access to and over public streets or private streets for which Century has a
valid right of ingress and egress, (y) conforms in its current use and occupancy
to all material zoning requirements without reliance upon a variance issued by a
Governmental Authority or a classification of the parcel in question as a
nonconforming use and (z) conforms in its current use to all restrictive
covenants, if any, or other Liens affecting all or part of such parcel. Except
where the failure of the representations made in this sentence to be true and
correct would not have a material adverse effect on the Century Assets or
Century's Cable Business, all buildings, towers, guy wires and anchors, headend
equipment, earth- receiving dishes and related facilities used in the operations
of the Century Systems and included in the Century Assets are located entirely
on Century Owned Property or Century Leased Property or other real property in
which Century has a Century Other Real Property Interest and are maintained,
placed and located in accordance with the provisions of all applicable Legal
Requirements, deeds, leases, licenses, permits or other legally enforceable
arrangements.
5.7 Environmental.
(a) To Century's Knowledge, the Century Owned Property and
Century Leased Property comply in all material respects with and have previously
been operated in compliance in all material respects with all Environmental
Laws. Except as disclosed on SCHEDULE 5.7, Century has not, either directly or
indirectly (i) generated, stored, used, treated, handled, discharged, released
or disposed of any Hazardous Substances at, on, under, in or about, to or from
or in any other manner affecting, any Century Owned Property or Century Leased
Property, (ii) transported any Hazardous Substances to or from any Century Owned
Property or Century Leased Property or (iii) undertaken or caused to be
undertaken any other activities relating to the Century Owned Property or
Century Leased Property, which could reasonably give rise to any liability under
any Environmental Law
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and, to Century's Knowledge, no other present or previous owner, tenant,
occupant or user of any Century Owned Property or Century Leased Property or any
other Person has committed or suffered any of the foregoing. To Century's
Knowledge, no release of Hazardous Substances outside the Century Owned Property
or Century Leased Property has entered or threatens to enter any Century Owned
Property or Century Leased Property, nor is there any pending or threatened
Litigation based on Environmental Laws which arises from any condition of the
land adjacent to or immediately surrounding any Century Owned Property or
Century Leased Property. No Litigation based on Environmental Laws which relates
to any Century Owned Property or Century Leased Property or any operations or
conditions on it (y) has been asserted or conducted in the past or is currently
pending against or with respect to Century or, to Century's Knowledge, any other
Person or (z) to Century's Knowledge, is threatened or contemplated.
(b) Except as disclosed on SCHEDULE 5.7, to Century's Knowledge,
(i) no aboveground or underground storage tanks are currently or have been
located on any Century Owned Property or Century Leased Property, (ii) no
Century Owned Property or Century Leased Property has been used at any time as a
gasoline service station or any other facility for storing, pumping, dispensing
or producing gasoline or any other petroleum products or wastes and (iii) no
building or other structure on any Century Owned Property or Century Leased
Property contains asbestos, asbestos-containing material or material presumed to
be asbestos-containing material under any Environmental Law.
(c) Century has provided TCI with complete and correct copies of
(i) all studies, reports, surveys or other written materials in Century's
possession relating to the presence or alleged presence of Hazardous Substances
at, on, under or affecting the Century Owned Property or Century Leased
Property, (ii) all notices (other than general notices made by general
publication) or other materials in Century's possession that were received from
any Governmental Authority having the power to administer or enforce any
Environmental Laws relating to current or past ownership, use or operation of
the Century Owned Property or Century Leased Property or activities at the
Century Owned Property or Century Leased Property and (iii) all materials in
Century's possession relating to any Litigation or allegation by any private
third party concerning any Environmental Law.
5.8 Compliance with Legal Requirements.
(a) The ownership, leasing and use of the Century Assets as they
are currently owned, leased and used and the conduct of Century's Cable Business
and the operation of the Century Systems as they are currently conducted and
operated do not violate or infringe in any material respect any Legal
Requirements currently in effect (other than Legal Requirements described in
Sections 5.7, 5.8(d) and 5.13, as to which the representations and warranties
set forth in those subsections shall apply), including (i) the Communications
Act, (ii) Section 111 of the U.S. Copyright Act of 1976 and the applicable U.S.
Copyright Office rules and regulations promulgated thereunder (the "Copyright
Act") and (iii) all other applicable Legal Requirements relating to the
construction, maintenance, ownership and operation of the Century Assets, the
Century Systems and Century's Cable Business. Except as disclosed on SCHEDULE
5.8 Century has received no written
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notice of any violation by Century or Century's Cable Business of any Legal
Requirement applicable to the operation of Century's Cable Business as currently
conducted, or the Century Systems as currently operated and to Century's
Knowledge, there is no existing fact, circumstance or condition that could
reasonably form the basis for a finding by any Governmental Authority of any
such violation.
(b) A valid request for renewal has been duly and timely filed
under Section 626 of the Communications Act with the proper Governmental
Authority with respect to all Century System Franchises that have expired prior
to or will expire within 36 months after the date of this Agreement.
(c) Except as set forth in SCHEDULE 5.8, (i) no written notices
or demands have been received from the FCC, from any television station, or from
any other Person or Governmental Authority (A) challenging the right of the
Century Systems to carry any television broadcast station or deliver the same or
(B) claiming that any Century System has failed to carry a television broadcast
station required to be carried pursuant to the Communications Act or has failed
to carry a television broadcast station on a channel designated by such station
consistent with the requirements of the Communications Act; (ii) all necessary
Federal Aviation Administration ("FAA") approvals have been obtained with
respect to the height and location of towers used in connection with the
operation of the Century Systems and are listed in SCHEDULE 5.8, and such towers
are being operated in compliance in all material respects with applicable FCC
and FAA rules; and (iii) Century has received no written notice from any
Governmental Authority with respect to an intention to enforce customer service
standards pursuant to the 1992 Cable Act and except as set forth in its System
Franchises, Century has not agreed with any Governmental Authority to establish
customer service standards that exceed the FCC standards promulgated pursuant to
the 1992 Cable Act.
(d) Notwithstanding the foregoing, to Century's Knowledge, each
Century System is in compliance in all material respects with the provisions of
the 1992 Cable Act as such Legal Requirements relate to the rates and other fees
charged to subscribers of Century's Cable Business. Century has used reasonable
good faith efforts to establish rates charged to subscribers, effective since
September 1, 1993, that are or were allowable under the 1992 Cable Act and any
authoritative interpretation thereof now or then in effect, to the extent such
rates are or were subject to regulation at such time by any Governmental
Authority, including any local franchising authority and/or the FCC.
Notwithstanding the foregoing, Century makes no representation or warranty that
any of its rates that are not subject to rate regulation would be allowable if
such rates were subject to regulation and makes no representation or warranty
that the rates charged to subscribers would be allowable under any rules and
regulations of the FCC or any authoritative interpretation thereof, promulgated
after the Closing Date. Century has delivered to TCI complete and correct copies
of all FCC Forms and other information reasonably requested by TCI relating to
rate regulation generally or specific rates charged to subscribers with respect
to the Century Systems. Except as set forth on SCHEDULE 5.8, Century has not
made any election with respect to any cost of service proceeding conducted in
accordance with Part 76.922 of Title 47 of the Code of Federal Regulations or
any similar proceeding with respect to any of the Century Systems (a "Cost of
Service Election").
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Except as set forth in SCHEDULE 5.8, Century has not entered into and is not
subject to any so-called social contract or proposed resolution with the FCC or
any local franchise authority with respect to rates charged for cable television
services in the Century Systems and is not currently negotiating or anticipating
entering into or being subject to the same. Except as otherwise described on
SCHEDULE 5.8, as of the date of this Agreement, (i) to the Knowledge of Century,
there are no outstanding or unresolved proceedings or investigations (other than
those affecting the cable industry generally) dealing with or otherwise
affecting the rates that any cable television system included in the Century
Systems can charge (whether for programming, equipment, installation, service or
otherwise) including appeals, (ii) no cable television system included in the
Century Systems is subject to any currently effective order issued by a
Governmental Authority that reduced the rates that it may charge (whether for
programming, equipment, installation, service, or otherwise), (iii) no local
franchising authority has been certified by the FCC as a rate regulating
authority with respect to any of the Century Systems, and (iv) there is no
unresolved complaint pending with respect to the CPST tier of any Century System
and no rate order with respect to the Century Systems that is being appealed.
(e) The Century Systems that serve more than 10,000 subscribers
will have emergency alert capability as required by the FCC prior to January 1,
1999 or such later date as may hereafter be specified by the FCC.
5.9 Patents, Trademarks and Copyrights. Century has deposited with the
U.S. Copyright Office all statements of account and other documents and
instruments, and has paid all royalties, supplemental royalties, fees and other
sums to the U.S. Copyright Office under the Copyright Act with respect to the
business and operations of the Century Systems as are required to obtain, hold
and maintain the compulsory license for cable television systems prescribed in
Section 111 of the Copyright Act. To Century's Knowledge, there is no inquiry,
claim, action or demand pending before the U.S. Copyright Office or from any
other Person which questions the copyright filings or payments made by Century
with respect to the Century Systems. Century has delivered to TCI complete and
correct copies of all current reports and filings for the past three years, made
or filed pursuant to copyright rules and regulations with respect to Century's
Cable Business. Century does not possess any patent, patent right, trademark or
copyright related to or material to the operation of the Century Systems and
Century is not a party to any license or royalty agreement with respect to any
such patent, patent right, trademark or copyright, except for licenses
respecting program material and obligations under the Copyright Act applicable
to cable television systems generally. The Century Systems and Century's Cable
Business have been operated in such a manner so as not to violate or infringe
upon the rights, or give rise to any rightful claim of any Person for copyright,
trademark, service mark, patent or license infringement or the like.
5.10 Financial Statements; Undisclosed Liabilities; Absence of Certain
Changes or Events. Century has delivered to TCI complete and correct copies of
its (a) unaudited balance sheets of Century and related statements of income,
stockholders' equity and cash flows for and as of the fiscal year ended May 31,
1997, including all notes and schedules thereto and (b) unaudited balance sheets
and the related unaudited statements of income for each quarter ending after May
31, 1997 (all of
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such financial statements and notes being hereinafter referred to as "Century's
Financial Statements"). Century's Financial Statements are in accordance with
the books and records of Century, were prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby, and, except as may
be described therein, present fairly the financial condition of Century with
respect to the Century Systems at the dates and for the periods indicated,
subject, in the case of unaudited Century Financial Statements, only to standard
year-end adjustments and the omission of footnotes. The unaudited Balance Sheet
as of February 28, 1998 of Century is herein called "Century Balance Sheet." At
the date of the Century Balance Sheet, Century had no material liabilities with
respect to the Century Systems required by GAAP to be reflected or reserved
against therein that were not fully reflected or reserved against on the Century
Balance Sheet, other than liabilities as set forth on SCHEDULE 5.10. Except as
set forth on SCHEDULE 5.10, since November 30, 1997: (x) Century has not
incurred any obligation or liability (contingent or otherwise) with respect to
the Systems, except normal trade or business obligations incurred in the
ordinary course of business, the performance of which will not, to Century's
Knowledge, individually or in the aggregate, have a material adverse effect on
the financial condition of Century or the results of operations of Century's
Cable Business; (y) there has been no material adverse change in the Century
Assets comprising any Century System or in the business, condition, financial or
otherwise, or liabilities of Century's Cable Business or any Century System and,
to Century's Knowledge, no fact or condition exists or is contemplated or
threatened which would result in such a change in the future; and (z) Century's
Cable Business has been conducted only in the ordinary course of business
consistent with past practice. For the purpose of this Agreement, the impact of
general economic conditions (including changes in capital and financial
markets), governmental legislation and regulations and other events which affect
the cable industry as a whole in the State of California or the United States,
shall not be considered in determining whether there has been a material adverse
change in the business, condition, financial or otherwise or liabilities of
Century's Cable Business or any Century System or the Century Assets.
5.11 Litigation. Except as set forth in SCHEDULE 5.11: (a) there is no
Litigation pending or, to Century's Knowledge, threatened, and to Century's
Knowledge, there is no investigation pending or threatened, by or before any
Governmental Authority or private arbitration tribunal against Century which, if
adversely determined, would materially adversely affect the financial condition
or operations of Century's Cable Business, Century Systems, the Century Assets
or the ability of Century to perform its obligations under this Agreement, or
which, if adversely determined, would result in the modification, revocation,
termination, suspension or other limitation of any of the Century System
Franchises, Century System Licenses, Century System Contracts or leases or other
documents evidencing the Century Leased Property or the Century Other Real
Property Interests; and (b) there is not in existence any Judgment requiring
Century to take any action of any kind with respect to the Century Assets or the
operation of the Century Systems, or to which Century (with respect to the
Century Systems), the Century Systems or the Century Assets are subject or by
which they are bound or affected.
5.12 Tax Returns; Other Reports. Century has duly and timely filed in
correct form all federal, state, local and foreign Tax returns and other Tax
reports required to be filed by Century,
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and has timely paid all Taxes which have become due and payable, whether or not
so shown on any such return or report, the failure of which to be filed or paid
could adversely affect or result in the imposition of a Lien upon the Century
Assets or that could impose on the Partnership any transferee liability for any
Taxes due or to become due from Century, except such amounts as are being
contested diligently and in good faith and are not in the aggregate material.
Century has received no notice of, nor does Century have any Knowledge of, any
deficiency, assessment or audit, or proposed deficiency, assessment or audit
from any taxing Governmental Authority which could affect or result in the
imposition of a Lien upon the Century Assets.
5.13 Employment Matters.
(a) SCHEDULE 5.13(A) contains a complete and correct list of the
names and positions of all employees engaged principally in Century's Cable
Business as of the date set forth on SCHEDULE 5.13(A). Century has complied in
all material respects with all applicable Legal Requirements relating to the
employment of labor, including, the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. 'SS'2101, et seq. ("WARN"), ERISA, continuation
coverage requirements with respect to group health plans and those relating to
wages, hours, collective bargaining, unemployment insurance, worker's
compensation, equal employment opportunity, age and disability discrimination,
immigration control and the payment and withholding of Taxes.
(b) Each employee benefit plan (as defined in Section 3(3) of
ERISA) or any multi-employer plan (as defined in Section 3(37) of ERISA) with
respect to which Century or any of its ERISA Affiliates has any liability or in
which any employees or agents, or any former employees or agents, of Century or
any of its ERISA Affiliates participate is set forth in SCHEDULE 5.13 (the
"Century Plans"). Except as disclosed on SCHEDULE 5.13(A), neither Century, any
of its ERISA Affiliates nor any Century Plan is in material violation of any
provision of the United States Internal Revenue Code, as amended (the "Code") or
ERISA. No "reportable event" (as defined in Section 4043 of ERISA) has occurred
and is continuing with respect to any Century Plan and no "prohibited
transaction" (as defined in Section 406 of ERISA) has occurred with respect to
any Century Plan which reasonably could result in material liability to Century
or any of its ERISA Affiliates. No material "accumulated funding deficiency" or
"withdrawal liability" (as defined in Section 302 of ERISA) exists with respect
to any of the Century Plans. After the Closing, the Partnership will not be
required, under ERISA, the Code or any collective bargaining agreement, to
establish, maintain or continue any Plan currently maintained by Century or any
of its ERISA Affiliates.
(c) Except as set forth on SCHEDULE 5.13, there are no union or
collective bargaining agreements applicable to any Person employed by Century
that renders services in connection with the Century Systems and Century has no
duty to bargain with any labor organization with respect to any such Person.
There are not pending any unfair labor practice charges against Century, any
demand for recognition or any other effort of or request or demand from, a labor
organization for representative status with respect to any Person employed by
Century that renders services in connection with the Century Systems. Except as
described on SCHEDULE 5.13, Century
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has no employment Contracts, either written or oral, with any employee of the
Century Systems and none of the employment Contracts or other agreements listed
on SCHEDULE 5.13 requires Century or will require the Partnership to employ any
Person after the Closing Time.
5.14 Century Systems Information. SCHEDULE 5.14 sets forth a materially
true and accurate description of the following information relating to Century's
Cable Business, as of the date specified in SCHEDULE 5.14 or, if no date is
specified, as of August 20, 1998:
(a) the approximate number of miles (both underground and aerial)
of plant included in the Century Assets;
(b) the number of Equivalent Basic Subscribers (including the
number that are individually billed and the number that are bulk-billed) served
by the Century Systems for each Century System service area (by franchise area
or community);
(c) the approximate number of single family homes and residential
dwelling units passed by the Century Systems;
(d) a description of basic and optional or tier services
available from the Century Systems, the rates charged by Century for each and
the number of customers receiving each optional or tier service;
(e) the stations and signals carried by the Century Systems and
the channel position of each such signal and station and the basis for carriage
of all television broadcast signals; and
(f) the cities, towns, villages, townships, boroughs, counties or
other communities served by the Century Systems (with or without the requirement
of a franchise).
5.15 Accounts Receivable. Century's accounts receivable for its Cable
Business are actual and bona fide receivables representing obligations for the
total dollar amount of such receivables, as shown on the books of Century, that
resulted from the regular course of Century's Cable Business. Such receivables
are subject to no offset or reduction of any nature, except for a reserve for
uncollectible amounts consistent with the reserve established by Century in
Century's Financial Statements and those credits or reductions to such accounts
made in the ordinary course of business.
5.16 Bonds; Letters of Credit. Except as set forth on SCHEDULE 5.16,
there are no franchise, construction, fidelity, performance, or other bonds,
guaranties in lieu of bonds or letters of credit posted by Century in connection
with its operation or ownership of any of the Century Systems or Century Assets.
5.17 Finders and Brokers. Century has not employed any financial
advisor, broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or
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commission in connection with the transactions contemplated by this Agreement
for which TCI or the Partnership could be liable.
5.18 Wireless Business; @Home.
(a) At the time of Closing and immediately thereafter, the
Partnership will not be engaged in any "Competitive Activities." For purposes of
this Section 5.18, the term "Competitive Activities" means to bid on, acquire
or, directly or indirectly, own, manage, operate, join, control or finance, or
participate in the management, operation, control or financing of, or be
connected as a principal, agent, representative, consultant, beneficial owner of
an interest in any Person or otherwise with, or use or permit its name to be
used in connection with, any business or enterprise which (1) engages in the
bidding for an acquisition of any wireless business license or engages in any
wireless business, or (2) provides, offers, promotes or brands wireless
telecommunications services; provided, however, that in no event shall the term
"Competitive Activities" include any video entertainment distribution business
delivered by wireline, microwave or satellite, LMDS or otherwise.
(b) At the time of Closing and immediately thereafter, the
Partnership will not be engaged in, or have any ownership interest in any entity
engaged in, the business of providing an Internet Backbone Service (as defined
in the Partnership Agreement). The Century Assets do not include any equity
interest in any Person that owns or conducts an Internet Backbone Service.
SECTION 6. TCI'S REPRESENTATIONS AND WARRANTIES
TCI represents and warrants to Century and the Partnership as of the
date of this Agreement (or, if a different date is specified in this Section 6
or in the TCI Schedules, as of such specified date) as follows.
6.1 Organization and Qualification of TCI. CVA/SM is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; Baldwin is a corporation duly organized, validly existing and in good
standing under the laws of the State of Colorado; UCTC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; TCI California and UCT LA are corporations duly organized, validly
existing and in good standing under the laws of the State of California; and TCI
LLC is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Colorado. Each of CVA/SM, Baldwin, UCTC,
UCT LA, TCI California and TCI LLC (a) has all requisite corporate or limited
liability company power and authority to own, lease and use the TCI Assets
owned, leased or used by it and to conduct that portion of TCI's Cable Business
owned by it as it is currently conducted and (b) is duly qualified to do
business and is in good standing under the laws of each jurisdiction in which
the ownership, leasing or use of the TCI Assets owned, leased or used by it or
the nature of its activities in connection with the TCI Systems makes such
qualification necessary, except in any such jurisdiction where the failure to be
so qualified and in good standing would not have a material adverse effect on
the ownership or operation of TCI's Cable
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Business, the TCI Assets or TCI Systems or on the ability of any of them to
perform its obligations under this Agreement. The U.S. taxpayer identification
numbers of the TCI Parties are listed on SCHEDULE 6.1.
6.2 Authority and Validity. Each of CVA/SM, Baldwin, UCTC, UCT LA, TCI
California and TCI LLC has all requisite corporate or limited liability company
power and authority to execute and deliver, to perform its obligations under,
and to consummate the transactions contemplated by, this Agreement and the
Transaction Documents to which it is a party. The execution and delivery by each
of CVA/SM, Baldwin, UCTC, UCT LA, TCI California and TCI LLC, the performance by
each of them under, and the consummation by each of them of the transactions
contemplated by, this Agreement and the Transaction Documents to which they are
a party have been duly and validly authorized by all required corporate or
limited liability company action by or on behalf of them. This Agreement has
been, and when executed and delivered by each of CVA/SM, Baldwin, UCTC, UCT LA,
TCI California and TCI LLC the Transaction Documents will be, duly and validly
executed and delivered by each of them and the valid and binding obligations of
each of them, enforceable against each of them in accordance with their terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to the enforcement of creditors' rights generally or by principles governing the
availability of equitable remedies.
6.3 No Conflict; Required Consents. Except for, and subject to receipt
of, the TCI Required Consents, all of which are listed on SCHEDULE 6.3, the
Century Required Consents, and the notification and expiration or earlier
termination of the waiting period under the HSR Act, the execution and delivery
by each of CVA/SM, Baldwin, UCTC, UCT LA, TCI California and TCI LLC, the
performance of each of them under, and the consummation of the transactions
contemplated by, this Agreement and the Transaction Documents to which each is a
party do not and will not: (a) conflict with or violate any provision of its
charter or bylaws or limited liability company agreement; (b) violate any
provision of any Legal Requirement; (c) require any consent, approval or
authorization of, or filing of any certificate, notice, application, report or
other document with, any Governmental Authority or other Person; or (d) (i)
conflict with, violate, result in a breach of or constitute a default under
(without regard to requirements of notice, lapse of time or elections of other
Persons or any combination thereof), (ii) permit or result in the termination,
suspension or modification of, (iii) result in the acceleration of (or give any
Person the right to accelerate) its performance under, (iv) result in the
creation or imposition of any Lien under any TCI System Franchise, TCI System
License or any TCI System Contract or other instrument evidencing any of the TCI
Assets to which it is a party or by which it or any of its assets is bound or
affected, except for purposes of clauses (c) and (d) such consents, approvals,
authorizations and filings, that, if not obtained or made, would not, and such
violations, conflicts, breaches, defaults, terminations, suspensions,
modifications and accelerations as would not, individually or in the aggregate,
have a material adverse effect on any TCI System, TCI's Cable Business or on its
ability to perform its obligations under this Agreement or the Transaction
Documents to which it is a party.
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6.4 Assets.
(a) TCI has good and valid title to (or, in the case of Assets
that are leased, valid leasehold interests in) the TCI Assets (other than TCI
Owned Property, TCI Leased Property and TCI Other Real Property Interests, as to
which representations and warranties in Section 6.6 apply). The TCI Assets are
free and clear of all Liens, except (i) Permitted Liens and (ii) Liens described
on SCHEDULE 6.4, all of which Liens on SCHEDULE 6.4 will be terminated, released
or, in the case of the rights of first refusal listed on SCHEDULE 6.4, waived,
as appropriate, at or prior to the Closing. SCHEDULE 1.66 lists the principal
items of TCI Tangible Personal Property as of the date specified on such
Schedule, or if no date is specified, as of the date of this Agreement. Except
as described on SCHEDULE 1.66 (TCI Tangible Personal Property), the TCI Tangible
Personal Property is in good operating condition and repair (ordinary wear and
tear excepted).
(b) Except for items included in the TCI Excluded Assets, the TCI
Assets constitute all the assets necessary to permit the Partnership to conduct
TCI's Cable Business and to operate the TCI Systems substantially as they are
being conducted and operated on the date of this Agreement and in compliance in
all material respects with all applicable Legal Requirements, TCI System
Contracts, TCI System Licenses and TCI System Franchises and to perform all of
the Assumed Obligations and Liabilities as they relate to the TCI Systems.
(c) Except as disclosed on SCHEDULE 6.4, to the Knowledge of TCI,
no third party has been granted or applied for a cable television franchise or
is providing or intending to provide multichannel video programming, other than
programming by direct broadcast satellite, in any of the communities or
unincorporated areas currently served by TCI's Cable Business.
6.5 TCI System Franchises, TCI System Licenses, TCI System Contracts and
TCI Other Real Property Interests.
(a) Except for the agreements listed on SCHEDULES 1.58 (TCI
Leased Property), 1.60 (TCI Other Real Property Interests), 1.63 (TCI System
Contracts), 1.64 (TCI System Franchises) and 1.65 (TCI System Licenses) or as
described on SCHEDULE 4.2 (TCI Excluded Assets) or otherwise included in the
definition of TCI Excluded Assets, TCI is not bound or affected by any of the
following that relate primarily or in whole to TCI's Cable Business: (i) leases
of real or personal property; (ii) franchises for the construction or operation
of cable television systems or Contracts of substantially equivalent effect;
(iii) other licenses, authorizations, consents or permits of the FCC or any
other Governmental Authority; (iv) material easements, rights of access,
underground conduit agreements, crossing agreements or other interests in real
property; (v) pole line or attachment agreements; (vi) multiple dwelling unit
agreements, including bulk agreements, and commercial service agreements;
provided that only a listing of the addresses of such units is attached, it
being acknowledged by Century that written agreements do not exist with respect
to all such units; (vii) agreements pursuant to which the TCI Systems receive or
provide advertising sales representation services; (viii) agreements pursuant to
which a TCI System has constructed or agreed to construct for third parties an
institutional network or otherwise provide to third parties
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telecommunications services other than one-way video; (ix) agreements pursuant
to which the Systems receive or have contracted to receive any Non-TV Products
and Services; (x) construction and development agreements (other than
installation agreements where services are provided in the ordinary course of
business on an as-needed basis); or (xi) Contracts relating to the operation of
TCI's Cable Business other than those described in any other clause of this
Section which contemplate payments by or to TCI in any 12-month period exceeding
$25,000 individually or $150,000 in the aggregate or that have a remaining term
of two years or more as of the Closing Date. Except as described on the
Schedules to this Agreement, no Affiliate of TCI is a party to any documents
listed on such Schedules.
(b) Except as set forth on SCHEDULE 1.63, complete and correct
copies of the TCI System Franchises and TCI System Licenses have been delivered
by TCI to Century. Except as set forth on SCHEDULE 1.64 (TCI System Franchises),
the TCI System Franchises contain all of the commitments and obligations of TCI
to the applicable Governmental Authority granting such Franchises with respect
to the construction, ownership and operation of the TCI Systems. The TCI System
Franchises and TCI System Licenses are currently in full force and effect and
are valid and enforceable under all applicable Legal Requirements according to
their terms. There is no legal action, governmental proceeding or, to TCI's
Knowledge, investigation, pending or to TCI's Knowledge threatened, to
terminate, suspend or modify any TCI System Franchise or TCI System License and
TCI is in material compliance with the terms and conditions of all the TCI
System Franchises and TCI System Licenses and with other applicable requirements
of all Governmental Authorities (including the FCC and the Register of
Copyrights) relating to the TCI System Franchises and TCI System Licenses,
including all requirements for notification, filing, reporting, posting and
maintenance of logs and records. All areas served by the TCI Systems are served
pursuant to one of the TCI Franchises except as set forth on SCHEDULE 1.64.
(c) Except as disclosed on SCHEDULES 1.58, 1.60, 1.63 AND 1.64,
complete and correct copies of all TCI System Contracts required to be listed on
TCI's Schedules (including all Contracts relating to Leased Property and Other
Real Property Interests described on SCHEDULES 1.58 AND 1.60) have been provided
to Century. Such documents constitute the entire agreement with the other party.
Except as disclosed on SCHEDULES 1.58, 1.60, 1.63 AND 1.64, each such TCI System
Contract is in full force and effect and constitutes the valid, legal, binding
and enforceable obligation of TCI and TCI is not and to TCI's Knowledge, each
other party thereto is not in breach or default of any material terms or
conditions thereunder.
6.6 Real Property. All TCI Assets consisting of TCI Owned Property, TCI
Leased Property and material TCI Other Real Property Interests are described on
SCHEDULES 1.58 (TCI Leased Property), 1.60 (TCI Other Real Property Interests)
and 1.61 (TCI Owned Property), including address and use for each such real
property interest. Except as otherwise disclosed on SCHEDULE 1.61 (TCI Owned
Property), TCI holds title to the TCI Owned Property free and clear of all Liens
(except (i) Permitted Liens and (ii) Liens described on SCHEDULE 6.4, all of
which Liens on SCHEDULE 6.4 will be terminated, released or, in the case of the
rights of first refusal listed on SCHEDULE 6.4, waived, as appropriate, at or
prior to the Closing) and has the valid and enforceable
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right to use and possess such TCI Owned Property, subject only to the
above-referenced Liens. Except as otherwise disclosed on SCHEDULES 1.58 (TCI
Leased Property) and 1.60 (TCI Other Real Property Interests); TCI has valid and
enforceable leasehold interests in all TCI Leased Property and, with respect to
TCI Other Real Property Interests, has valid and enforceable rights to use all
TCI Other Real Property Interests subject, in each case subject only to the
above-referenced Liens. Except as disclosed on SCHEDULE 1.66, and except for
ordinary wear and tear and routine repairs, all of the material improvements,
leasehold improvements and the premises of the TCI Owned Property and the
premises demised under the leases and other documents evidencing the TCI Leased
Property are in good condition and repair and are suitable for the purposes
used. Each parcel of TCI Owned Property and each parcel of TCI Leased Property
and any improvements thereon and their current use (x) has access to and over
public streets or private streets for which TCI has a valid right of ingress and
egress, (y) conforms in its current use and occupancy to all material zoning
requirements without reliance upon a variance issued by a Governmental Authority
or a classification of the parcel in question as a nonconforming use and (z)
conforms in its current use to all restrictive covenants, if any, or other Liens
affecting all or part of such parcel. Except where the failure of the
representations made in this sentence to be true and correct would not have a
material adverse effect on the TCI Assets or TCI's Cable Business, all
buildings, towers, guy wires and anchors, headend equipment, earth-receiving
dishes and related facilities used in the operations of the TCI Systems and
included in the TCI Assets are located entirely on TCI Owned Property or TCI
Leased Property or other real property in which TCI has a TCI Other Real
Property Interest and are maintained, placed and located in accordance with the
provisions of all applicable Legal Requirements, deeds, leases, licenses,
permits or other legally enforceable arrangements.
6.7 Environmental.
(a) To TCI's Knowledge, the TCI Owned Property and TCI Leased
Property comply in all material respects with and has previously been operated
in compliance in all material respects with all Environmental Laws. Except as
disclosed on SCHEDULE 6.7, TCI has not either directly or indirectly (i)
generated, stored, used, treated, handled, discharged, released or disposed of
any Hazardous Substances at, on, under, in or about, to or from or in any other
manner affecting, any TCI Owned Property or TCI Leased Property, (ii)
transported any Hazardous Substances to or from any TCI Owned Property or TCI
Leased Property or (iii) undertaken or caused to be undertaken any other
activities relating to the TCI Owned Property or TCI Leased Property, which
could reasonably give rise to any liability under any Environmental Law and, to
TCI's Knowledge, no other present or previous owner, tenant, occupant or user of
any TCI Owned Property or TCI Leased Property or any other Person has committed
or suffered any of the foregoing. To TCI's Knowledge, no release of Hazardous
Substances outside the TCI Owned Property or TCI Leased Property has entered or
threatens to enter any TCI Owned Property or TCI Leased Property, nor is there
any pending or threatened Litigation based on Environmental Laws which arises
from any condition of the land adjacent to or immediately surrounding any TCI
Owned Property or TCI Leased Property. No Litigation based on Environmental Laws
which relates to any TCI Owned Property or TCI Leased Property or any operations
or conditions on it (y) has been asserted or
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conducted in the past or is currently pending against or with respect to TCI or,
to TCI's Knowledge, any other Person, or (z) to TCI's Knowledge, is threatened
or contemplated.
(b) Except as disclosed on SCHEDULE 6.7, to TCI's Knowledge, (i)
no aboveground or underground storage tanks are currently or have been located
on any TCI Owned Property or TCI Leased Property, (ii) no TCI Owned Property or
TCI Leased Property has been used at any time as a gasoline service station or
any other facility for storing, pumping, dispensing or producing gasoline or any
other petroleum products or wastes and (iii) no building or other structure on
any TCI Owned Property or TCI Leased Property contains asbestos,
asbestos-containing material or material presumed to be asbestos-containing
material under any Environmental Law.
(c) TCI has provided Century with complete and correct copies of
(i) all studies, reports, surveys or other written materials in TCI's possession
relating to the presence or alleged presence of Hazardous Substances at, on,
under or affecting the TCI Owned Property or TCI Leased Property, (ii) all
notices (other than general notices made by general publication) or other
materials in TCI's possession that were received from any Governmental Authority
having the power to administer or enforce any Environmental Laws relating to
current or past ownership, use or operation of the TCI Owned Property or TCI
Leased Property or activities at the TCI Owned Property or TCI Leased Property
and (iii) all materials in TCI's possession relating to any Litigation or
allegation by any private third party concerning any Environmental Law.
6.8 Compliance with Legal Requirements.
(a) The ownership, leasing and use of the TCI Assets as they are
currently owned, leased and used and the conduct of TCI's Cable Business and the
operation of the TCI Systems as they are currently conducted and operated do not
violate or infringe in any material respect any Legal Requirements currently in
effect (other than Legal Requirements described in Sections 6.7, 6.8(d) and
6.13, as to which the representations and warranties set forth in those
subsections shall apply), including (i) the Communications Act, (ii) Section 111
of the Copyright Act and (iii) all other applicable Legal Requirements relating
to the construction, maintenance, ownership and operation of the TCI Assets, the
TCI Systems and TCI's Cable Business. Except as disclosed on SCHEDULE 6.8, TCI
has received no written notice of any violation by TCI or TCI's Cable Business
of any Legal Requirement applicable to the operation of TCI's Cable Business as
currently conducted, or the TCI Systems as currently operated and to TCI's
Knowledge, there is no existing fact, circumstance or condition that could
reasonably form the basis for a finding by any Governmental Authority of any
such violation.
(b) A valid request for renewal has been duly and timely filed
under Section 626 of the Communications Act with the proper Governmental
Authority with respect to all TCI System Franchises that have expired prior to
or will expire within 36 months after the date of this Agreement.
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(c) Except as set forth in SCHEDULE 6.8, (i) no written notices
or demands have been received from the FCC, from any television station, or from
any other Person or Governmental Authority (A) challenging the right of the TCI
Systems to carry any television broadcast station or deliver the same or (B)
claiming that any TCI System has failed to carry a television broadcast station
required to be carried pursuant to the Communications Act or has failed to carry
a television broadcast station on a channel designated by such station
consistent with the requirements of the Communications Act; (ii) all necessary
FAA approvals have been obtained with respect to the height and location of
towers used in connection with the operation of the TCI Systems and are listed
in SCHEDULE 6.8, and such towers are being operated in compliance in all
material respects with applicable FCC and FAA rules; and (iii) TCI has received
no written notice from any Governmental Authority with respect to an intention
to enforce customer service standards pursuant to the 1992 Cable Act and except
as set forth in its System Franchises, TCI has not agreed with any Governmental
Authority to establish customer service standards that exceed the FCC standards
promulgated pursuant to the 1992 Cable Act.
(d) Notwithstanding the foregoing, to TCI's Knowledge, each TCI
System is in compliance in all material respects with the provisions of the 1992
Cable Act as such Legal Requirements relate to the rates and other fees charged
to subscribers of TCI's Cable Business. TCI has used reasonable good faith
efforts to establish rates charged to subscribers, effective since September 1,
1993, that are or were allowable under the 1992 Cable Act and any authoritative
interpretation thereof now or then in effect, to the extent such rates are or
were subject to regulation at such time by any Governmental Authority, including
any local franchising authority and/or the FCC. Notwithstanding the foregoing,
TCI makes no representation or warranty that any of its rates that are not
subject to rate regulation would be allowable if such rates were subject to
regulation and makes no representation or warranty that the rates charged to
subscribers would be allowable under any rules and regulations of the FCC or any
authoritative interpretation thereof, promulgated after the Closing Date. TCI
has delivered to Century complete and correct copies of all FCC Forms and other
information reasonably requested by Century relating to rate regulation
generally or specific rates charged to subscribers with respect to the TCI
Systems. Except as set forth on SCHEDULE 6.8, TCI has not made any Cost of
Service Election with respect to any of the TCI Systems. Except as set forth in
SCHEDULE 6.8, TCI has not entered into and is not subject to any so-called
social contract or proposed resolution with the FCC or any local franchising
authority with respect to rates charged for cable television services in the TCI
Systems and is not currently negotiating or anticipating entering into or being
subject to the same. Except as otherwise described on SCHEDULE 6.8, as of the
date of this Agreement, (i) to the Knowledge of TCI, there are no outstanding or
unresolved proceedings or investigations (other than those affecting the cable
industry generally) dealing with or otherwise affecting the rates that any cable
television system included in the TCI Systems can charge (whether for
programming, equipment, installation, service or otherwise) including appeals,
(ii) no cable television system included in the TCI Systems is subject to any
currently effective order issued by a Governmental Authority that reduced the
rates that it may charge (whether for programming, equipment, installation,
service, or otherwise), (iii) no local franchising authority has been certified
by the FCC as a rate regulating authority with respect to any of the TCI
Systems, and
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(iv) there is no unresolved complaint pending with respect to the CPST tier of
any TCI System and no rate order with respect to the TCI Systems is being
appealed.
(e) The TCI Systems that serve more than 10,000 subscribers will
have emergency alert capability as required by the FCC prior to January 1, 1999
or such later date as may hereafter be specified by the FCC.
6.9 Patents, Trademarks and Copyrights. TCI has deposited with the U.S.
Copyright Office all statements of account and other documents and instruments,
and has paid all royalties, supplemental royalties, fees and other sums to the
U.S. Copyright Office under the Copyright Act with respect to the business and
operations of the TCI Systems as are required to obtain, hold and maintain the
compulsory license for cable television systems prescribed in Section 111 of the
Copyright Act. To TCI's Knowledge, there is no inquiry, claim, action or demand
pending before the U.S. Copyright Office or from any other Person which
questions the copyright filings or payments made by TCI with respect to the TCI
Systems. TCI has delivered to Century complete and correct copies of all current
reports and filings for the past three years, made or filed pursuant to
copyright rules and regulations with respect to TCI's Cable Business. TCI does
not possess any patent, patent right, trademark or copyright related to or
material to the operation of the TCI Systems and TCI is not a party to any
license or royalty agreement with respect to any such patent, patent right,
trademark or copyright, except for licenses respecting program material and
obligations under the Copyright Act applicable to cable television systems
generally. The TCI Systems and TCI's Cable Business have been operated in such a
manner so as not to violate or infringe upon the rights, or give rise to any
rightful claim of any Person for copyright, trademark, service mark, patent or
license infringement or the like.
6.10 Financial Statements; Undisclosed Liabilities; Absence of Certain
Changes or Events. TCI has delivered to Century complete and correct copies of
(a) an unaudited balance sheet for each TCI System as of December 31, 1997 and
an unaudited statement of operations for the year ended December 31, 1997 for
each TCI System, including all notes and Schedules thereto and (b) an unaudited
balance sheet for each TCI System as of June 30, 1998 and the related unaudited
statement of operations for the period ended June 30, 1998 (all of such
financial statements and notes being hereinafter referred to as "TCI's Financial
Statements"). TCI's Financial Statements are in accordance with the books and
records of TCI, were prepared in accordance with GAAP, applied on a consistent
basis throughout the periods covered thereby, present fairly the financial
condition of TCI with respect to the TCI Systems at the dates and for the
periods indicated, subject, in the case of unaudited TCI Financial Statements,
only to standard year-end adjustments and the omission of footnotes. The
unaudited balance sheets of the TCI Systems as of June 30, 1998 are herein
collectively called the "TCI Balance Sheet." At the date of the TCI Balance
Sheet, TCI had no material liabilities with respect to the TCI Systems required
by GAAP to be reflected or reserved against therein that were not fully
reflected or reserved against on the TCI Balance Sheet, other than liabilities
as set forth on SCHEDULE 6.10. Except as set forth on SCHEDULE 6.10, since the
date of the TCI Balance Sheet: (x) TCI has not incurred any obligation or
liability (contingent or otherwise) with respect to the TCI Systems, except
normal trade or business obligations incurred in the ordinary
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course of business, the performance of which will not, to TCI's Knowledge,
individually or in the aggregate, have a material adverse effect on the
financial condition of TCI or the results of operations of TCI's Cable Business;
(y) there has been no material adverse change in the TCI Assets comprising any
TCI System or in the business, condition, financial or otherwise, or liabilities
of TCI's Cable Business or any TCI System and, to TCI's Knowledge, no fact or
condition exists or is contemplated or threatened which would result in such a
change in the future; and (z) TCI's Cable Business has been conducted only in
the ordinary course of business consistent with past practice. For the purpose
of this Agreement, the impact of general economic conditions (including changes
in capital and financial markets), governmental legislation and regulations and
other events which affect the cable industry as a whole in the State of
California or the United States, shall not be considered in determining whether
there has been a material adverse change in the business, condition, financial
or otherwise or liabilities of TCI's Cable Business or any TCI System or the TCI
Assets.
6.11 Litigation. Except as set forth in SCHEDULE 6.11: (a) there is no
Litigation pending or, to TCI's Knowledge, threatened, and, to TCI's Knowledge,
there is no investigation pending or threatened, by or before any Governmental
Authority or private arbitration tribunal against TCI which, if adversely
determined, would materially adversely affect the financial condition or
operations of TCI's Cable Business, TCI Systems, the TCI Assets or the ability
of TCI to perform its obligations under this Agreement, or which, if adversely
determined, would result in the modification, revocation, termination,
suspension or other limitation of any of the TCI System Franchises, TCI System
Licenses, TCI System Contracts or leases or other documents evidencing the TCI
Leased Property or the TCI Other Real Property Interests; and (b) there is not
in existence any Judgment requiring TCI to take any action of any kind with
respect to the TCI Assets or the operation of the TCI Systems, or to which TCI
(with respect to the TCI Systems), the TCI Systems or the TCI Assets are subject
or by which they are bound or affected.
6.12 Tax Returns; Other Reports. TCI has duly and timely filed in
correct form all federal, state, local and foreign Tax returns and other Tax
reports required to be filed by TCI, and has timely paid all Taxes which have
become due and payable, whether or not so shown on any such return or report,
the failure of which to be filed or paid could adversely affect or result in the
imposition of a Lien upon the TCI Assets or that could impose on the Partnership
any transferee liability for any taxes, penalties or interest due or to become
due from TCI, except such amounts as are being contested diligently and in good
faith and are not in the aggregate material. TCI has received no notice of, nor
does TCI have any Knowledge of, any deficiency, assessment or audit, or proposed
deficiency, assessment or audit from any taxing Governmental Authority which
could affect or result in the imposition of a Lien upon the TCI Assets.
6.13 Employment Matters.
(a) SCHEDULE 6.13(A) contains a complete and correct list of the
names and positions of all employees engaged principally in TCI's Cable Business
as of the date set forth on SCHEDULE 6.13(A). TCI has complied in all material
respects with all applicable Legal Requirements
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relating to the employment of labor, including, WARN, ERISA, continuation
coverage requirements with respect to group health plans and those relating to
wages, hours, collective bargaining, unemployment insurance, worker's
compensation, equal employment opportunity, age and disability discrimination,
immigration control and the payment and withholding of Taxes.
(b) Each employee benefit plan (as defined in Section 3(3) of
ERISA) or any multi-employer plan (as defined in Section 3(37) of ERISA) with
respect to which TCI or any of its ERISA Affiliates has any liability or in
which any employees or agents, or any former employees or agents, of TCI or any
of its ERISA Affiliates participate is set forth in SCHEDULE 6.13 (the "TCI
Plans"). Neither TCI, any of its ERISA Affiliates nor any TCI Plan is in
material violation of any provision of the Code or ERISA. No "reportable event"
(as defined in Section 4043 of ERISA) has occurred and is continuing with
respect to any TCI Plan and no "prohibited transaction" (as defined in Section
406 of ERISA) has occurred with respect to any TCI Plan which reasonably could
result in material liability to TCI or any of its ERISA Affiliates. No material
"accumulated funding deficiency" or "withdrawal liability" (as defined in
Section 302 of ERISA) exists with respect to any of the TCI Plans. After the
Closing Time, the Partnership will not be required, under ERISA, the Code or any
collective bargaining agreement, to establish, maintain or continue any Plan
currently maintained by TCI or any of its ERISA Affiliates.
(c) Except as set forth on SCHEDULE 6.13, there are no union or
collective bargaining agreements applicable to any Person employed by TCI that
renders services in connection with the TCI Systems and TCI has no duty to
bargain with any labor organization with respect to any such Person. There are
not pending any unfair labor practice charges against TCI, any demand for
recognition or any other effort of or request or demand from, a labor
organization for representative status with respect to any Person employed by
TCI that renders services in connection with the TCI Systems. Except as
described on SCHEDULE 6.13, TCI has no employment Contracts, either written or
oral, with any employee of the TCI Systems and none of the employment Contracts
listed on SCHEDULE 6.13 requires TCI or will require the Partnership to employ
any Person after the Closing Time.
6.14 TCI Systems Information. SCHEDULE 6.14 sets forth a materially true
and accurate description of the following information relating to TCI's Cable
Business as of the date specified in SCHEDULE 6.14 or, if no date is specified,
as of August 20, 1998:
(a) the approximate number of miles (both underground and
aerial) of plant included in the TCI Assets;
(b) the number of Equipment Basic Subscribers (including the
number that are individually billed and the number that are bulk-billed) served
by the TCI Systems for each TCI System service area (by franchise area or
community);
(c) the approximate number of single family homes and residential
dwelling units passed by the TCI Systems;
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(d) a description of basic and optional or tier services
available from the TCI Systems, the rates charged by TCI for each and the number
of customers receiving each optional or tier service;
(e) the stations and signals carried by the TCI Systems and the
channel position of each such signal and station and the basis for carriage of
all television broadcast signals; and
(f) the cities, towns, villages, townships, boroughs, counties or
other communities served by the TCI Systems (with or without the requirement of
a franchise).
6.15 Accounts Receivable. TCI's accounts receivable for its Cable
Business are actual and bona fide receivables representing obligations for the
total dollar amount of such receivables, as shown on the books of TCI, that
resulted from the regular course of TCI's Cable Business. Such receivables are
subject to no offset or reduction of any nature, except for a reserve for
uncollectible amounts consistent with the reserve established by TCI in TCI's
Financial Statements and those credits or reductions to such accounts made in
the ordinary course of business.
6.16 Bonds; Letters of Credit. Except as set forth on SCHEDULE 6.16,
there are no franchise, construction, fidelity, performance, or other bonds,
guaranties in lieu of bonds or letters of credit posted by TCI in connection
with its operation or ownership of any of the TCI Systems or TCI Assets.
6.17 Finders and Brokers. TCI has not employed any financial advisor,
broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement for which Century or the Partnership
could be liable.
SECTION 7. ADDITIONAL COVENANTS
7.1 Access to Premises and Records. Between the date of this Agreement
and the Closing Date each of TCI and Century will give to the other and its
representatives full access during normal business hours to all the premises and
books and records of its Cable Business and to all its Assets and Systems'
personnel and will furnish to the other and its representatives all such
documents, financial information and other information regarding its Cable
Business and its Assets as the other from time to time reasonably may request;
provided that no investigation by TCI or Century will affect or limit the scope
of any of the representations, warranties, covenants and indemnities of the
other party in this Agreement or in any Transaction Document or limit such
party's liability for breach of any of the foregoing.
7.2 Continuity and Maintenance of Operations; Certain Deliveries and
Notices. Except as the other party may otherwise consent in writing, between the
date of this Agreement and the Closing, TCI with respect to TCI's Cable
Business, the TCI Systems and the TCI Assets and Century with respect to
Century's Cable Business, the Century Systems and the Century Assets:
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(a) will conduct its Cable Business and operate its Systems only
in the usual, regular and ordinary course and consistent with past practices,
including continuing to make ordinary marketing, advertising and promotional
expenditures and continuing its current policies and procedures for
disconnection and discontinuance of service to subscribers whose accounts are
delinquent or terminated, and, to the extent consistent with such conduct and
operation, will use its commercially reasonable efforts to (i) preserve its
current business intact in all material respects, including preserving existing
relationships with franchising authorities, suppliers, customers and others
having business dealings with its Systems, and (ii) keep available the services
of its employees and agents providing services in connection with the Cable
Business;
(b) will maintain its Assets in good repair, order and condition,
ordinary wear and tear excepted; will maintain equipment and inventory for its
Systems at not less than normal historical levels consistent with past
practices; will maintain in full force and effect policies of insurance with
respect to its Cable Business consistent with its past practices; and will
maintain its books, records and accounts with respect to its Assets and the
operation of its Systems in the usual, regular and ordinary manner on a basis
consistent with past practices;
(c) except with respect to Excluded Assets, will not (i) modify,
terminate, renew, suspend, abrogate or enter into any System Contract or other
instrument that would be included in its Assets, other than in the ordinary
course of business; provided that the other party's consent, not to be
unreasonably withheld or delayed, will be required to modify, terminate, renew,
suspend, abrogate or enter into any System Franchise (except as required or
expressly permitted by another provision of this Agreement), any agreement
regarding Non-TV Products and Services or any other agreement that contemplates
payments to or by the transferring party in any 12-month period exceeding
$250,000 individually; (ii) take or omit to take any action that would result in
the condition set forth in Section 8.1(a) with respect to TCI or Section 8.2(a)
with respect to Century not being satisfied at any time prior to the Closing;
(iii) engage in any marketing, subscriber installation, disconnection or
collection practices other than in the ordinary course of business consistent
with its past practices; (iv) make any Cost of Service Election; (v) enter into
any agreement with or commitment to any competitive access providers with
respect to the System; (vi) sell, transfer or assign any portion of its Assets
other than sales in the ordinary course of business and assets sold or disposed
of and replaced by other assets of comparable utility and value or permit the
creation of a Lien, other than a Permitted Lien, on any Asset; or (vii) engage
in any hiring or employee compensation practices that are inconsistent with past
practices except for changes in such practices implemented by such party and its
Affiliates on a company-wide basis;
(d) will promptly deliver to the other true and complete copies
of all quarterly financial statements and all monthly and quarterly operating
reports with respect to the operation of the Cable Business prepared in the
ordinary course of business by or for such party at any time from the date of
this Agreement until the Closing;
(e) will give or cause to be given to the other and its counsel,
accountants and other representatives, as soon as reasonably possible but in any
event seven (7) Business Days prior
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to the date of submission to the appropriate Governmental Authority, copies of
all FCC Forms 1200, 1205, 1210, 1215, 1220, 1225, 1235 and 1240 or any other FCC
forms required to be filed with any Governmental Authority under the 1992 Cable
Act with respect to rates and prepared with respect to any of its Systems, such
forms to be reasonably satisfactory in form and substance to the other;
(f) will duly and timely file a valid notice of renewal under
Section 626 of the Cable Act with the appropriate Governmental Authority with
respect to any System Franchise that will expire within 36 months after any date
between the date of this Agreement and the Closing Date;
(g) will promptly notify the other of any fact, circumstance,
event or action by it or otherwise (i) which if known at the date of this
Agreement would have been required to be disclosed by it in or pursuant to this
Agreement or (ii) the existence, occurrence or taking of which would result in
the condition set forth in Section 8.1(a) with respect to TCI or Section 8.2(a)
with respect to Century not being satisfied at any time prior to the Closing,
and, with respect to clause (ii), will use its commercially reasonable efforts
to remedy the same, subject to Section 12.16; and
(h) will consult the other prior to decreasing or increasing the
rate charged for any level of Basic Services, Expanded Basic Services or Pay TV
and prior to adding, deleting, retiering or repackaging any programming
services; provided that the other's consent is not required for any such action.
7.3 Employees.
(a) The Partnership may, but shall have no obligation to employ
or offer employment to any employee of TCI's or Century's Cable Business, except
for those employees of Century covered under the collective bargaining agreement
identified on SCHEDULE 5.13, as discussed below. Not more than 60 days after the
date of this Agreement, TCI shall provide to Century on behalf of the
Partnership a list of all active employees of the TCI Systems as of a recent
date, showing then-current positions and indicating which of such employees TCI
desires to retain as its employees (the "Retained Employees"). Within 30 days
after receipt of this list, Century on behalf of the Partnership will provide to
TCI in writing a list of employees that the Partnership may desire to employ
following the Closing (subject to the satisfaction of the Partnership's
conditions for employment), which list shall not include any Retained Employees.
At the Closing, TCI and Century shall terminate as of the Closing Time the
employment of all its employees who were employed incidental to the conduct of
its Cable Business other than Retained Employees and any other employees not
hired by the Partnership that such party determines to retain. With respect to
Century employees covered under the terms of any collective bargaining agreement
("CBA"), the Partnership agrees to hire all such employees, effective as of the
Closing Time unless the hiring of such a CBA covered employee would cause the
displacement of another employee. If such displacement would be caused by the
hiring of a CBA covered individual effective as of the Closing Time, the
Partnership will hire the individual who is most qualified, without regard to
CBA
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coverage. The Partnership further agrees to assume the terms, conditions and
obligations of the collective bargaining agreement of Century that is listed on
SCHEDULE 5.13.
(b) Each of TCI and Century will pay to all employees of its
Cable Business all compensation, including salaries, commissions, bonuses,
deferred compensation, severance, insurance, accrued vacation in excess of the
amount the other party assumes pursuant to Section 7.3(g), sick pay and other
compensation or benefits to which they are entitled for periods through and
including the Closing Time, including, without limitation, all amounts, if any,
payable on account of the termination of their employment as of the Closing Time
by such party at Closing. TCI agrees to cooperate in all reasonable respects
with Century on behalf of the Partnership to allow such party to evaluate and
interview employees of the Cable Business in order to make hiring decisions.
Such cooperation shall include but not be limited to allowing Century to contact
employees during normal business hours and making personnel records available
upon employee authorization.
(c) Each of TCI and Century will be responsible for the
maintenance and distribution of benefits accrued under any employee benefit plan
(as defined in ERISA) maintained by such party pursuant to the provisions of any
Legal Requirement and of such plans. The Partnership will not assume any
obligation or liability for any such accrued benefits or any fiduciary or
administrative responsibility to account for or dispose of any such accrued
benefits under any employee benefit plans maintained by TCI or Century.
(d) All claims and obligations under, pursuant to or in
connection with any welfare, medical, insurance, disability or other employee
benefit plans of either TCI or Century arising under any Legal Requirement
affecting employees of such party incurred through and including the Closing
Time or resulting from or arising from events or occurrences occurring or
commencing through and including the Closing Time will remain the responsibility
of such party, whether or not such employees are hired by the Partnership after
the Closing Time. The Partnership will not have or assume any obligation or
liability under or in connection with any such plan maintained by TCI or
Century.
(e) Each of TCI and Century will remain solely responsible for,
and will indemnify and hold harmless the other and the Partnership from and
against all Losses arising from or with respect to, all salaries and all
severance, accrued vacation in excess of the amount included in the adjustments
calculated pursuant to Section 3.2(c), medical, sick, holiday, continuation
coverage and other compensation or benefits to which its employees may be
entitled, whether or not such employees may be hired by the Partnership, as a
result of their employment by it through and including the Closing Time, the
termination of their employment as of the Closing Time by such party at Closing,
the obligation, if any, to notify and/or bargain with any labor organization,
the consummation of the transactions contemplated hereby or pursuant to any
applicable Legal Requirement (including without limitation WARN) or otherwise
relating to their employment through and including the Closing Time.
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(f) Each of TCI and Century will retain full responsibility and
liability for offering and providing "continuation coverage" of any "qualified
beneficiary" who is covered by a "group health plan" sponsored or contributed to
by such party and who has experienced a "qualifying event" or is receiving
"continuation coverage" through and including the Closing Date. "Continuation
coverage," "qualified beneficiary," "group health plan," and "qualifying event"
shall have the meanings given such terms under Code Section 4980B.
(g) Notwithstanding anything to the contrary herein, the
Partnership (the "Hiring Party") shall (i) credit each employee of TCI or
Century who becomes an employee of the Hiring Party as of the Closing Time (a
"Hired Employee") with the amount of accrued vacation for which such Hiring
Party received credit pursuant to Section 3, such amount not to exceed the
accrued by him or her as an employee of TCI or Century through and including the
Closing Time or the amount of accrued vacation permitted to be accrued by
employees of the Hiring Party in accordance with the Hiring Party's standard
practices; (ii) permit each Hired Employee to participate in the Hiring Party's
employee benefit plans to the same extent as similarly situated employees of the
Hiring Party and their dependents; (iii) give each Hired Employee credit for his
or her past service with TCI or Century at the Closing Time (including past
service with any prior owner or operator of such party) for purposes of
eligibility and vesting under the Hiring Party's employee benefit and other
plans to the same extent as other similarly situated employees of the Hiring
Party; and (iv) not subject any Hired Employee to any waiting periods or
limitations on benefits for pre-existing conditions under the Hiring Party's
employee benefit plans, including any group health and disability plans, except
to the extent such employees were subject to such limitations under TCI's or
Century's employee benefit plans.
(h) If the Hiring Party discharges without cause within 90 days
after the Closing any Hired Employee and such Hired Employee would have been
entitled to severance payments pursuant to TCI's or Century's severance benefits
plan if such Hired Employee had been discharged without cause at Closing by TCI
or Century as of the Closing Time, then the Hiring Party shall pay severance
benefits to such Hired Employee in accordance with TCI's or Century's severance
benefit plan to the extent such plan would have paid severance to such Hired
Employee.
(i) Nothing in this Section 7.3 or elsewhere in this Agreement
shall be deemed to make any employee of the parties a third party beneficiary of
this Agreement.
7.4 Leased Vehicles; Other Capital Leases. Each of TCI and Century will
pay the remaining balances on any leases for vehicles included in its Tangible
Personal Property and will deliver valid and good title to such vehicles free
and clear of all Liens (other than Permitted Liens) to the Partnership at the
Closing.
7.5 Required Consents, Estoppel Certificates, Franchise Renewal.
(a) Each of TCI and Century will use its commercially reasonable
efforts to obtain in writing as promptly as possible and at its expense, all of
its Required Consents in form and
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substance reasonably satisfactory to the other, and will deliver to the other
copies of such Required Consents promptly after they are obtained by such party;
provided however that each of TCI and Century will afford the other the
opportunity to review, approve and revise the form of Required Consent prior to
delivery to the party whose consent is sought. Each of TCI and Century will
cooperate with the other in its efforts to obtain its Required Consents;
provided, that in the case of System Franchises, neither the other nor the
Partnership will be required to accept or agree or accede to any modifications
or amendments to, or the imposition of any condition to the transfer of, any of
the System Franchises that in either case, would make, or are reasonably likely
to make, the underlying System Franchise materially more onerous in any respect
or that would materially reduce in any respect, or are reasonably likely to
materially reduce in any respect, the benefits available under the System
Franchise in respect of which the consent relates and in the case of System
Licenses, System Contracts or leases or documents evidencing Leased Property or
Other Real Property Interests, neither party will be required to accept or agree
or accede to any modifications or amendments to, or the imposition of any
condition to the transfer of, any of them that in either case would be material
to the transactions contemplated by this Agreement. TCI shall make the decision
as to whether the foregoing standard is met with respect to the Century Required
Consents and Century shall make such decision with respect to the TCI Required
Consents. Notwithstanding the foregoing, as soon as practicable after the date
of this Agreement, but in any event no later than 45 days after the date of this
Agreement, TCI and Century will cooperate with each other to complete, execute
and deliver, or cause to be completed, executed and delivered to the appropriate
Governmental Authority, a request for such Governmental Authority's consent to
transfer each System Franchise as to which such consent is required. Century
acknowledges that the applications for consent to transfer the TCI System
Franchises may contain, if necessary under the terms of any TCI System Franchise
and if requested by TCI, an application for such consent to transfer from the
applicable Governmental Authority with respect to the merger of AT&T Corp. and
TeleCommunications, Inc. (the "TCI/AT&T Transaction"). In the alternative,
Century acknowledges that TCI may file a request for consent and FCC Form 394
for the TCI/AT&T Transaction with applicable Governmental Authorities with
respect to the transactions contemplated by this Agreement but prior to Closing.
(b) Each of TCI and Century will use its commercially reasonable
efforts to obtain a certificate executed by the lessor of each parcel of Leased
Property substantially in the form of EXHIBIT 7.5(B), the substance of which may
be included as part of the consent obtained pursuant to Section 7.5(a) (an
"Estoppel Certificate").
(c) Each of TCI and Century will use commercially reasonable
efforts to obtain and cooperate with the other party to obtain renewals or
extensions of any System Franchise for which a valid notice of renewal pursuant
to the formal renewal procedures established by Section 626 of the Cable Act has
not been timely delivered to the appropriate Governmental Authority for a period
expiring no earlier than three years after the Closing Date without the
imposition of any conditions or other modifications that would make, or are
reasonably likely to make, the underlying instrument materially more onerous in
any respect or that would materially reduce in any respect, or are reasonably
likely to materially reduce in any respect, the benefits available under the
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instrument in respect of which the renewal or extension relates. TCI shall make
the decision as to whether the foregoing standard is met with respect to the
Century System Franchises and Century shall make such decision with respect to
the TCI System Franchises.
(d) Notwithstanding Section 7.5(a), neither TCI nor Century will
have any further obligation to obtain Required Consents: (i) with respect to
license agreements relating to pole attachments where the licensing party will
not, after the assigning party's exercise of commercially reasonable efforts,
consent to an assignment of such license agreement but requires that the
Partnership enter into a new agreement with such licensing authority, in which
case the Partnership shall use its commercially reasonable efforts to enter into
such agreement prior to the Closing or as soon as practicable thereafter and the
party to the license agreement will cooperate with and assist the Partnership in
obtaining such agreements; provided however that the Partnership's commercially
reasonable efforts shall not require it to take any action of the type that such
party is not required to take pursuant to this Section 7.5; and (ii) for any
business radio license which such party reasonably expects can be obtained
within 120 days after the Closing and so long as a temporary authorization is
available to the Partnership under FCC rules with respect thereto.
7.6 Title Commitments and Surveys. Century and TCI each will provide to
the other, within 60 days after the date of this Agreement, (a) current
commitments to issue title insurance policies on the 1992 CLTA owner's form
("Title Commitments") by an agent writing for Old Republic Insurance Company,
Chicago Title Insurance Company or another nationally recognized title insurance
company (the "Title Company") and containing policy limits and other terms
reasonably acceptable to the other, and, legible photocopies of all recorded
items described as exceptions therein, committing to insure fee simple title in
the Partnership to each parcel of the Owned Property and access to such Owned
Real Property included in its Assets, subject only to Permitted Liens, and (b)
surveys of each parcel of Owned Property used in connection with the Century
Exchange Systems, in such form as is necessary to obtain the title insurance to
be issued pursuant to the Title Commitments with the standard printed exceptions
relating to survey matters deleted (the "Surveys"), certified to the Partnership
and to the Title Company issuing a Title Commitment. The cost to obtain such
Title Commitments and Surveys and other documents required by the Title Company
to issue such policies and Surveys shall be paid by the Partnership; provided
however that (x) each of TCI and Century shall pay for the cost to delete or
insure over any Title Defects relating to its Owned Property and (y) the
Partnership will pay the premiums and charges for any additional endorsements it
requests with respect to any Title Policy other than the endorsements to delete
the standard survey exceptions from such Title Policy and to delete or insure
over any Title Defects. If Century or TCI notifies the other within 30 days
following its receipt of both the Title Commitments and the Surveys of any Lien
(other than a Permitted Lien or a Lien set forth in SCHEDULES 5.4 or 6.4, as
applicable) or other matter affecting title to Owned Property of the other which
prevents access to or which could prevent or impede in any way the use or
operation of any parcel of Owned Property for the purposes for which it is
currently used or operated by the other (each a "Title Defect"), the other will
exercise commercially reasonable efforts to (i) remove such Title Defect, or
(ii) with the consent of the objecting party, cause the Title Company to commit
to insure over each such Title Defect prior to the Closing. If such Title Defect
cannot be removed prior
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to Closing or the Title Company does not commit to insure over such Title Defect
prior to Closing and if the objecting party elects to waive such Title Defect
and proceed towards consummation of the transaction in accordance with this
Agreement in its reasonable discretion, the Partnership and the party that owns
such property shall enter into a written agreement at Closing containing the
commitment of the party that owns such property to use commercially reasonable
efforts to remedy the Title Defect following Closing on terms satisfactory to
the Partnership in its reasonable discretion. Any decisions to be made by the
Partnership pursuant to this Section shall be made by TCI with respect to
Century Owned Property and by Century with respect to TCI Owned Property.
7.7 HSR Notification. As soon as practicable but in any event no later
than 60 days after the date of this Agreement, Century and TCI will each
complete and file, or cause to be completed and filed, any notification and
report required to be filed under the HSR Act and each such filing shall request
early termination of the waiting period imposed by the HSR Act. Century and TCI
shall use their commercially reasonable efforts to respond as promptly as
reasonably practicable to any inquiries received from the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division") for additional information or documentation and to
respond as promptly as reasonably practicable to all inquiries and requests
received from any other Governmental Authority in connection with antitrust
matters. Century and TCI shall use their respective commercially reasonable
efforts to overcome any objections which may be raised by the FTC, the Antitrust
Division or any other Governmental Authority having jurisdiction over antitrust
matters. Notwithstanding the foregoing, neither Century nor TCI shall be
required to make any significant change in the operations or activities of the
business (or any material assets employed therein) of such party or any of its
Affiliates, if a party determines in good faith that such change would be
materially adverse to the operations or activities of the business (or any
material assets employed therein) of such party or any of its Affiliates having
significant assets, net worth or revenue. Each of Century and TCI will
coordinate with the other with respect to its filings and will cooperate to
prevent inconsistencies between their respective filings and will furnish to
each other such necessary information and reasonable assistance as the other may
reasonably request in connection with its preparation of necessary filings or
submissions under the HSR Act.
7.8 Taxes, Fees and Expenses. All sales, use or excise Taxes arising
from or payable by reason of the transfer to the Partnership of any of the TCI
Assets or the Century Assets will be paid by the Partnership. All transfer and
similar Taxes or assessments, including transfer and recording fees and similar
assessments for or under System Franchises, System Licenses and System
Contracts, arising from or payable by reason of the conveyance of the TCI Assets
or the Century Assets will be paid by TCI with respect to the TCI Assets and by
Century with respect to the Century Assets.
7.9 Programming. The Partnership will execute and deliver such documents
as may be reasonably requested by Century or TCI to comply with the requirements
of their respective programming Contracts and channel line-up requirements with
respect to acquisitions and divestitures of cable television systems. The
Partnership will not be required to make any payments to TCI's or Century's
programmers in the fulfillment of its obligations under this Section 7.9.
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7.10 Schedules and Exhibits.
(a) Schedule and Exhibit references contained in this Agreement
are for convenience only and matters disclosed pursuant to one section,
subsection or other provision of this Agreement are deemed disclosed for all
purposes of this Agreement. All matters disclosed and agreements listed on any
Schedule or Exhibit to the Exchange Agreement that relate to the Century
Exchange Systems, and all matters disclosed and agreements listed on any
Schedule or Exhibit to the Riverside Agreement that relate to the Riverside
System, are hereby incorporated by reference into the appropriate Schedules and
Exhibits to this Agreement and are deemed disclosed for all purposes of this
Agreement. Without limiting the foregoing, if the Riverside Closing occurs prior
to the Closing, the assets acquired by Century pursuant to the Riverside
Agreement are Century Assets for all purposes hereunder.
(b) Not less than ten Business Days prior to Closing, each of TCI
and Century will deliver to the other revised copies of each of the Schedules
prepared by it and delivered to the other party on the date of this Agreement,
except for SCHEDULES 5.14 and 6.14 or SCHEDULES 5.13(A) and 6.13(A), in each
case updated and marked to show any changes occurring between the date of this
Agreement and the date of delivery; provided however that for purposes of such
party's representations and warranties and covenants in this Agreement, all
references to the Schedules will mean the version of the Schedules attached to
this Agreement as of the date of signing, and provided further that if the
effect of any such updates to Schedules is to disclose any one or more
additional properties, privileges, rights, interests or claims acquired or
arising after the date of this Agreement as Assets, the Partnership will have
the right (to be exercised by written notice to the party that owns such Assets
at or before Closing) to cause any one or more of such items to be designated as
and deemed to constitute Excluded Assets for all purposes under this Agreement
unless such items are Contracts that were not required to be scheduled or that
were entered into after the date of this Agreement in accordance with the terms
of this Agreement. Without changing the result set forth in the preceding
sentence that a party's updated Schedules do not serve to update such party's
representations and warranties, the updated Schedules delivered pursuant to this
Section shall be accompanied by an officer's certificate of the party delivering
such Schedules, certifying that the information set forth in such Schedules is
true and accurate in all material respects as of the date of delivery thereof
and that all information required to be given in the Schedules "as of the date
of this Agreement" has been updated to the date of delivery of the updated
Schedules or other date permitted to be specified in such Schedules.
7.11 Use of Names and Logos. For a period of 90 days after the Closing,
the Partnership will be entitled to use the trademarks, trade names, service
marks, service names, logos and similar proprietary rights of TCI and Century to
the extent incorporated in or on the Assets transferred to it at the Closing,
provided that the Partnership will exercise reasonable efforts to remove all
such names, marks, logos and similar proprietary rights of TCI and Century from
the Assets by such earlier date as reasonably practicable following the Closing.
In addition, with respect to the Century Exchange Systems, the Partnership may
grant TCI or its Affiliates the right to use the trademarks, trade names,
service marks, service names, logos and similar proprietary rights of Century
for a
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period of 90 days after the Closing in a manner consistent with this Section.
Notwithstanding the foregoing, the Partnership will not be required to remove or
discontinue using any such name or mark that is affixed to converters or other
items in or to be used in customer homes or properties, or as are used in
similar fashion making such removal or discontinuation impracticable for the
Partnership.
7.12 Transitional Billing Services. Century and TCI will each provide to
the Partnership, upon request, access to and the right to use its billing system
computers, software and related fixed assets in connection with the Systems
acquired by it for a period of up to 90 days following the Closing to allow for
conversion of existing billing arrangements ("Transitional Billing Services").
The Partnership will notify each of Century and TCI at least 10 days prior to
the Closing as to whether it desires Transitional Billing Services from them.
All Transitional Billing Services that are requested by the Partnership will be
provided on terms and conditions reasonably satisfactory to each party; provided
however that the amount to be paid by the Partnership will not exceed the cost
to the TCI or Century of providing such Transitional Billing Services. Each of
TCI and Century will notify the Partnership at least 45 days prior to the
Closing of the cost to such party of providing such Transitional Billing
Services.
7.13 Confidentiality and Publicity.
(a) Each of Century and TCI will use commercially reasonable
efforts to assure that any non-public information that such party may obtain
from the other in connection with this Agreement with respect to the other's
Cable Business and Systems (it being understood and agreed that all proprietary
information of the transferring party that is included among the Assets of such
transferring party shall become the proprietary information of the Partnership
at Closing) will be kept confidential and such party will not disclose, and will
cause its employees, consultants, advisors and agents not to disclose, any such
information to any other Person (other than its directors, officers and
employees and representatives of its advisers and lenders whose knowledge
thereof is necessary in order to facilitate the consummation of the transactions
contemplated hereby) or use, and will cause its employees, consultants, advisors
and agents not to use, such information to the detriment of the other; provided
that (i) such party may use and disclose any such information once it has been
publicly disclosed (other than by such party in breach of its obligations under
this Section) or which rightfully has come into the possession of such party
(other than from the other party) and (ii) to the extent that such party may, in
the reasonable opinion of its counsel, be compelled by Legal Requirements to
disclose any of such information, such party may disclose such information if it
will have used all reasonable efforts, and will have afforded the other the
opportunity, to obtain an appropriate protective order or other satisfactory
assurance of confidential treatment, for the information compelled to be
disclosed. The obligation of Century and TCI to hold information in confidence
pursuant to this Section will be satisfied if such party exercises the same care
with respect to such information as it would exercise to preserve the
confidentiality of its own similar information. In the event of termination of
this Agreement, each of Century and TCI will use all reasonable efforts to cause
to be delivered to the other, and retain no copies of, any documents, work
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papers and other materials obtained by such party or on its behalf from the
other, whether so obtained before or after the execution hereof.
(b) Neither party will issue (or cause the Partnership to issue)
any press release or make any other public announcement or any oral or written
statement to its or the other party's employees concerning this Agreement and
the transactions contemplated hereby, except as required by applicable Legal
Requirements, without the prior written consent and approval of the other, which
consent and approval may not be unreasonably withheld.
7.14 Bulk Transfers. The Partnership waives compliance by Century and
TCI with Legal Requirements relating to bulk transfers applicable to the
transactions contemplated hereby.
7.15 Lien Searches. Prior to Closing, each of Century and TCI will
obtain at its expense and deliver to the other, the results of a lien search
conducted by a professional search company of records in the offices of the
secretaries of state in each state and county clerks in each county where there
exists any of its Owned Property or Tangible Personal Property, and in the state
and county where such party's principal offices are located, including copies of
all financing statements or similar notices or filings (and any continuation
statements) discovered by such search company, which lien search will be current
as of a date that is no more than 30 days prior to Closing.
7.16 Further Assurances. At and after the Closing, each of the parties
will promptly execute and deliver, or cause to be executed and delivered, to the
other parties all such documents and instruments, in addition to those otherwise
required by this Agreement, in form and substance reasonably satisfactory to the
other parties as they may reasonably request in order to carry out or evidence
the terms of this Agreement or to collect on behalf of the Partnership any
accounts receivable or other claims included in the Century Assets or the TCI
Assets.
7.17 Consents. If and to the extent Century or TCI shall have waived
satisfaction of the condition to Closing set forth in Section 8.1(e) or Section
8.2(e), respectively, subsequent to the Closing but subject to Section 7.23,
each of TCI with respect to the TCI Systems and the TCI Assets and Century with
respect to the Century Systems and the Century Assets will continue to use
commercially reasonable efforts to obtain in writing as promptly as possible any
Required Consent which was not obtained on or before the Closing and will
deliver copies of the same, reasonably satisfactory in form and substance, to
the other. The obligations set forth in this Section will survive the Closing
and will not be merged in the consummation of the transactions contemplated
hereby.
7.18 Cooperation as to Rates and Fees.
(a) Each of TCI and Century shall diligently pursue any current
rate proceedings and shall make available to the other party upon request copies
of any documents, correspondence or notices sent by or received by such party in
connection with the current rate proceedings or any rate regulatory matter with
respect to its Systems instituted after the date of this Agreement.
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(b) Prior to Closing, without the prior consent of the other
party, neither TCI nor Century shall settle any rate proceeding with respect to
its Systems if such settlement would (i) impose upon the Partnership any
liability, or (ii) adversely affect the rates to be charged by the Partnership
during the post-Closing time period unless such party compensates the
Partnership therefor in the manner agreed by the parties, or if the parties do
not agree, as determined by an independent auditor in accordance with the
procedures established in Section 3.3(b).
(c) After the Closing, each of Century and TCI will be
responsible for and follow to conclusion any rate order of any Governmental
Authority or proceeding with respect to rates charged by it in Systems owned by
it immediately prior to the Closing and will cooperate with and assist the
Partnership by providing, upon reasonable request, all information in its
possession (and not previously made available to the Partnership) relating
directly to the rates charged for cable services that the Partnership may
reasonably require to justify such rates in response to any inquiry, order or
requirements of any Governmental Authority.
(d) If either TCI or Century is required following Closing
pursuant to any Legal Requirement, settlement or otherwise to reimburse to any
subscribers of the Systems owned by it prior to Closing, any subscriber payments
previously made by them, including fees for cable television service, late fees
and similar payments, the Partnership party agrees that it will make such
reimbursement through its billing system on terms specified by the transferor
party and the transferor party will pay the Partnership for all such payments
made by the Partnership following Closing and all reasonable expenses incurred
by the Partnership in connection therewith. Without limiting the foregoing, the
Partnership will provide the transferor party with all information in its
possession that is reasonably required by the transferor party in connection
with such reimbursement.
(e) If either TCI or Century is permitted following Closing
pursuant to any Legal Requirement, settlement or otherwise to pass through to
subscribers of the Systems owned by it prior to Closing, the amount of any
"franchise fees on franchise fees" or other amounts that it is required to pay
with respect to the period prior to Closing, the Partnership agrees that it will
collect such amounts as specified by the transferor party from subscribers of
the Systems of the transferor party and will promptly remit such amounts to the
transferor party.
7.19 Satisfaction of Conditions. Each party will use its commercially
reasonable efforts to satisfy, or to cause to be satisfied, the conditions to
the obligations of the other party to consummate the transactions contemplated
by this Agreement, as set forth in Section 8, with "commercially reasonable
efforts" being determined with respect to any particular matter as set forth
elsewhere in this Agreement.
7.20 Offers. Neither Century nor TCI will offer its Assets or Cable
Business for sale, entertain offers for such Assets or Cable Business or
otherwise negotiate for the sale of such Assets or Cable Business or make
information about such Assets or Cable Business available to any third party in
connection with the possible sale of such Assets or Cable Business prior to the
Closing Date or the date this Agreement is terminated in accordance with its
terms.
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7.21 Environmental Reports. TCI may obtain at its expense, such
environmental assessments and reports with respect to the Century real property
as it may determine and Century may obtain at its expense, such environmental
assessments and reports with respect to the TCI real property as it may
determine. Upon request, each of TCI and Century shall give the other and all
environmental engineers and consultants acting on the other's behalf such access
during normal business hours to the sites and facilities relating to the other's
Systems as is reasonably required to permit such engineers and consultants to
conduct the physical on-site inspections and prepare the environmental surveys
and assessments with respect to such sites and facilities as the requesting
party shall reasonably request. If (a) TCI's or Century's environmental
investigation reveals a matter that would be a material breach of the other's
representations given with respect to environmental matters, without taking into
account the Knowledge limitations in such representations, or (b) if following
TCI's or Century's investigation of any environmental matter or condition
disclosed by the other party (the "transferor") on its schedules to this
Agreement or in the environmental reports provided by the transferor to the
party that commissioned the investigation (the "transferee"), the transferee
reasonably believes that any such environmental matter or condition could give
rise to liability on the part of the transferee following Closing, then in
either case the transferor shall remediate the problem in a manner reasonably
satisfactory to the transferee prior to Closing.
7.22 Partnership Financing. The parties agree that at the Closing, the
Partnership shall assume from TCI LLC, the TCI Permitted Debt and from Century
Exchange, the Century Permitted Debt. Century shall use commercially reasonable
efforts to secure such financing for the Partnership as shall be necessary for
it to refinance the TCI Permitted Debt and the Century Permitted Debt. Such
financing shall be obtained by the Partnership on such terms as Century shall
deem commercially reasonable. TCI shall cause any Liens securing the TCI
Permitted Debt and Century shall cause any Liens securing the Century Permitted
Debt to be released in connection with the refinancing of such debt. Century
will consult with TCI regarding Century's efforts to secure such financing and
TCI will cooperate with Century in its efforts to secure such financing.
7.23 Franchise Consents. If by the date that is 210 days after the date
of this Agreement but subject to the last proviso of Section 9.1 (i) the
aggregate number of TCI EBSs located in areas that are served without a
franchise or that are served pursuant to TCI System Franchises that either do
not require consent or as to which Required Consents have been obtained is at
least 95% of the number of EBSs for all TCI Systems (it being agreed that 95%
for this purpose is 231,190 EBSs); (ii) the aggregate number of Century EBSs
located in areas that are served without a franchise or that are served pursuant
to Century System Franchises that either do not require consent or as to which
all required consents have been obtained, but excluding areas served by the
Century Exchange Systems and, if the Riverside Agreement is terminated without
Century acquiring the Riverside System, excluding areas served by the Riverside
System, is at least 95% of the number of EBSs for all Century Systems, other
than the Century Exchange Systems and, if the Riverside Agreement is terminated
without Century acquiring the Riverside System, other than the Riverside System
(it being agreed that 95% for this purpose is 476,212 EBSs if the Riverside
Closing has occurred at the time of determination and 458,302 EBSs if the
Riverside Agreement is terminated without Century acquiring the Riverside
System); (iii) all conditions precedent to the obligations of the parties have
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been satisfied or waived by the applicable parties (other than any condition
that all Required Consents for System Franchises have been obtained and any
conditions precedent that are to be satisfied at Closing by delivery of
documents), and (iv) the System Franchises for which consents have not then been
obtained do not, and applicable Legal Requirements do not, in the reasonable
judgment of the party transferring such System Franchises, prohibit the actions
contemplated by this Section 7.23, then the following shall occur:
(a) Closing shall occur with respect to, and Century and TCI
shall transfer, convey and assign to the Partnership (the "Primary Transfer")
all of the TCI Assets and all of the Century Assets other than any System
Franchises for which Required Consents have not been obtained (such excepted
System Franchises, including any Assets that are located in the franchise area
for such franchises and that relate exclusively to such franchises, are referred
to herein as the "Retained Franchises").
(b) Following the Closing of the Primary Transfer, the parties
shall continue to use commercially reasonable efforts to obtain Required
Consents for any Retained Franchises in accordance with the terms of this
Agreement. Within 10 Business Days of obtaining a Required Consent for a
Retained Franchise, the owner of such System Franchise shall transfer, convey
and assign such System Franchise to the Partnership (a "Subsequent Transfer"),
free and clear of all Liens other than Permitted Liens. The conditions to
closing shall not apply to any Subsequent Transfer of a Retained Franchise other
than the delivery of appropriate transfer documents.
(c) Century and TCI shall negotiate in good faith to reach
agreement at the Closing on a management agreement pursuant to which the
Partnership will manage all Retained Franchises, which management agreement
shall also contain any required signal sharing arrangements (the "Retained
Franchise Management Agreement"). The Retained Franchise Management Agreement
shall provide that the Partnership will bear all expenses relating to the
Retained Franchises and the operation thereof (including any expenses related to
defending any challenges raised with respect to a Retained Franchise or the
transactions described in this Section as applied to such Retained Franchise)
and will receive the net cash flow from the Retained Franchises as its
management fee. The Retained Franchise Management Agreement shall provide that
its term will continue with respect to each Retained Franchise until there is a
Subsequent Transfer of such Retained Franchise, or such Retained Franchise is
revoked as a result of the transactions described in this Section or a court
orders the termination of the Retained Franchise Management Agreement with
respect to such Retained Franchise. If the Retained Franchise Management
Agreement is terminated with respect to a Retained Franchise prior to its
Subsequent Transfer, then (i) if such termination is due to the revocation of
the Retained Franchise, the Partnership shall use reasonable commercial efforts
to obtain a replacement franchise, or (ii) if such termination is due to a final
court ordering the termination of the Retained Franchise Management Agreement
with respect to such Retained Franchise, the Partnership, TCI and Century shall
negotiate in good faith to reach some other structure that will allow the
Partnership to continue to receive the benefits of the Retained Franchise. If
such termination occurs within one year of the Closing Date and the Partnership
is unable to obtain a replacement franchise or the parties are unable to
negotiate
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a structure that will allow the Partnership to continue to receive the benefits
of the Retained Franchise, TCI and Century will negotiate in good faith the
amount of the cash contribution that TCI or Century (or both) is required to
make to the Partnership to maintain the partnership interests of TCI and Century
at the percentages in effect at the time of such termination, based upon the
circumstances of the termination and the value of the Retained Franchise at the
time of loss. If such termination occurs thereafter, no further adjustments
shall be made unless an action or proceeding regarding termination is pending as
of the first anniversary of the Closing Date.
(d) All references in this Agreement to the Closing and the
Closing Date will mean the Closing and Closing Date of the Primary Transfer and
the contribution value determination to be made pursuant to the Partnership
Agreement and Section 3.1 hereof and Closing Adjustments pursuant to Section 3
will be made as of the Closing Date for the Retained Franchises as if they were
transferred on the Closing Date. In addition, the Partnership will become liable
for the Assumed Obligations and Liabilities with respect to the Retained
Franchises as of the Closing Date rather than the Subsequent Transfer date. All
representations and warranties (except as to those Required Consents that have
not been obtained) made in connection with the Retained Franchises will be made
as of the Closing Date rather than the Subsequent Transfer date. Neither Century
nor TCI shall receive any capital account credit with respect to any transfer by
it of property or cash pursuant to this Section 7.23 following Closing.
(e) If the provisions of this Section 7.23 become operative, the
parties agree to use commercially reasonable efforts and act in good faith in
taking such actions and negotiating such additional provisions or other
agreements, including amendments to this Agreement, as may be necessary or
appropriate to carry out the intent of this Section 7.23.
(f) Notwithstanding anything to the contrary in this Section
7.23, no System Franchise related to the Century Exchange Systems or the
Riverside System may be a Retained Franchise (unless in the case of the
Riverside System Century is the owner of such System) and it is a condition to
TCI's obligation to close under this Agreement that all Required Consents for
the System Franchises related to the Century Exchange Systems have been
obtained.
7.24 Year 2000 Matters.
(a) Certain Defined Terms. For purposes of this Section 7.24,
the following terms shall have the following meanings:
(i) "Computer and Other Systems" means any level of
hardware or software, equipment and cable plant, or building and other
facilities used in connection with the business of the Systems by TCI or Century
and which will be used in connection with the business of the systems by the
Partnership which are date dependent or which process date data, including any
microcode, firmware, application programs, user interfaces, files and databases,
and which might be adversely affected by the advent or changeover to the Year
2000 or to the advent or changeover to any leap year.
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(ii) "Year 2000 Ready" or "Year 2000 Readiness" means
that the referenced component, system, software, equipment or other item is
designed to be used prior to, during and after the calendar year 2000 A.D., and
that such component, system, software, equipment or other item will operate at
all levels, including microcode, firmware, application programs, user
interfaces, files and databases, during each such time period without error or
interruption relating to, or the product of, date data which represents or
references different centuries or more than one century or leap year.
(iii) "Year 2000 Remediation Program" means an
enterprise-wide program to make Year 2000 Ready all material components,
systems, software, equipment, facilities and other items related to the subject
entity's business. Such Year 2000 Remediation Program must be conducted by
persons with experience in issues related to Year 2000 Readiness and such
persons must have organized an enterprise-wide program management office which
reports to executive level management and the board of directors or other
governing body of such entity.
(b) Year 2000 Readiness Covenants. Prior to the Closing Date,
each of TCI and Century shall establish and maintain a Year 2000 Remediation
Program. Pursuant to such Year 2000 Remediation Program, all material Computer
and Other Systems included in such party's Assets will be evaluated, remediated
and tested an expedited basis.
If the Closing Date occurs on or before June 1, 1999, each party
shall deliver to the other on the Closing Date a certificate, signed by an
authorized officer who is responsible for the Year 2000 Remediation Program of
such party stating that the Computer and Other Systems have been fully and
accurately inventoried and stating that the material Computer and Other Systems
have been appropriately and professionally assessed and tested so that, upon
completion of the implementation plan specified by such party and approved by
the other party, the material Computer and Other Systems are reasonably expected
to be Year 2000 Ready. If the Closing Date occurs after June 1, 1999, each party
shall deliver to the other on the Closing Date a certificate signed by an
authorized officer who is responsible for the Year 2000 Remediation Program of
such party, stating that the material Computer and Other Systems are Year 2000
Ready.
(c) Cooperation and Information Sharing. Each of TCI and Century
will use commercially reasonable efforts to cooperate with each other and the
Partnership at any time prior to June 30, 2000 regarding its or the other's Year
2000 Remediation Program as such program relates to the Computer and Other
Systems to be received by the Partnership. Such cooperation shall consist of
providing the other party or the Partnership with any non-confidential
information possessed by such party and reasonably requested by the other party
or the Partnership regarding the Year 2000 Readiness of any material component
of such party's Computer and Other Systems.
7.25 Riverside System.
(a) If the Riverside Closing occurs prior to the Closing, TCI
agrees that it will provide necessary arrangements or services required by
Century in order to operate the Systems
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acquired by Century pursuant to the Riverside Agreement until Closing on terms
to be mutually agreed upon by the parties.
(b) If the Riverside Closing has not occurred at the time of
Closing, (i) the Partnership agrees that it will manage the Riverside Systems
following Closing on the terms and conditions on which TCI or its Affiliate
manages the Riverside System and (ii) the Closing shall occur without Century
contributing the Riverside System, Century shall have no further right or
obligation to contribute the Riverside System to the Partnership pursuant to
this Agreement and all references in this Agreement to the Century Systems or
the Century Assets shall not apply to the Riverside System or its Assets.
7.26 CSG. The Partnership agrees that it will become a party to the
Restated and Amended CSG Master Subscriber Management System Agreement dated
August 10, 1997 as in effect on the date hereof (the "CSG Contract") with
respect to the TCI Systems and will continue to be a party to such CSG Contract
unless and until each of TCI and Century unanimously agree otherwise.
SECTION 8. CONDITIONS PRECEDENT
8.1 Conditions to Century's Obligations. The obligations of Century to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction at or before the Closing of the following conditions, any of which
may be waived by Century.
(a) Accuracy of Representations and Warranties. The
representations and warranties of TCI in this Agreement and in any Transaction
Document, if specifically qualified by materiality, are true in all respects
and, if not so qualified, are true in all material respects, in each case at and
as of the Closing with the same effect as if made at and as of the Closing.
(b) Performance of Agreements. TCI has performed in all material
respects all obligations and agreements and complied in all material respects
with all covenants in this Agreement and in any Transaction Document to be
performed and complied with by it at or before the Closing.
(c) Deliveries. TCI has delivered the items and documents
required to be delivered by it pursuant to this Agreement, including those
required under Section 9.2.
(d) Legal Proceedings. No action, suit or proceeding is pending
or threatened by or before any Governmental Authority and no Legal Requirement
has been enacted, promulgated or issued or become or deemed applicable to any of
the transactions contemplated by this Agreement by any Governmental Authority,
which would (i) prohibit the Partnership's ownership or operation of all or a
material portion of any TCI System, TCI's Cable Business or the TCI Assets, (ii)
compel the Partnership to dispose of or hold separately all or a material
portion of any TCI System, TCI's Cable Business or the TCI Assets as a result of
any of the transactions contemplated by this
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Agreement, (iii) if determined adversely to the Partnership's interest,
materially impair the ability of the Partnership to realize the benefits of the
transactions contemplated by this Agreement or have a material adverse effect on
the right of the Partnership to exercise full rights of ownership of the TCI
Systems or (iv) prevent or make illegal the consummation of any transactions
contemplated by this Agreement.
(e) Consents. Century has received evidence, in form and
substance reasonably satisfactory to it, that the following TCI Required
Consents have been obtained, such consents to be on the terms specified in
Section 7.5: TCI Required Consents for the TCI System Franchises, the TCI System
Licenses, and any TCI Leased Property or TCI Other Real Property Interest on
which a headend, tower or other reception site is located. In addition, the
Century Required Consents for the Century System Franchises and Century System
Licenses shall have been obtained. If a TCI Required Consent for a headend,
tower or other reception site has not been obtained as of the Closing and
Century is not willing to waive such condition, TCI shall have the option of
replacing the affected site with a comparable site that is reasonably acceptable
to Century.
(f) No Material Adverse Change. There has not been any material
adverse change in the TCI Assets or the financial condition or operations of
TCI's Cable Business or the TCI Systems since the date of this Agreement. In
making the determination required by the preceding sentence, the last sentence
of Section 6.10 shall be applicable.
(g) HSR Act. All filings required under the HSR Act have been
made and the applicable waiting period has expired or been earlier terminated.
(h) Franchise Renewals. Any TCI System Franchise required to be
renewed or extended pursuant to the provisions of Section 7.5(c) shall have been
renewed or extended for not less than the applicable period without the
imposition of any conditions or other modifications that make, or are reasonably
likely to make, the underlying instrument materially more onerous in any respect
or that would materially reduce in any respect, or are reasonably likely to
materially reduce in any respect, the benefits available under the instrument in
respect of which the renewal or extension relates.
(i) Exchange. All of the conditions to the obligations of the
Century Affiliates who are party to the Exchange Agreement to consummate the
Exchange shall have been satisfied or waived (other than those based on acts to
be performed or conditions to exist at Closing) by them in accordance with the
terms of the Exchange Agreement and the TCI Affiliates who are party to the
Exchange Agreement shall stand ready, willing and able to consummate the
Exchange in accordance with the terms and conditions set forth in the Exchange
Agreement.
(j) Partnership Financing. The Partnership shall have secured
financing in accordance with the terms of Section 7.22 to enable it to refinance
the TCI Permitted Debt and the Century Permitted Debt immediately after the
Closing.
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(k) Retransmission Consents. With respect to any retransmission
consent agreements for broadcast signals carried on the Systems on the date of
this Agreement and on the date of the Closing that are included as part of the
TCI Excluded Assets or the Century Excluded Assets, all required retransmission
consents for continued carriage of such broadcast signals by the Partnership
have been obtained on terms and conditions reasonably acceptable to the
Partnership.
(l) Retained Franchise Management Agreements. If Section 7.23 has
become operative, the parties shall have reached agreement on the Retained
Franchise Management Agreements and other agreements contemplated thereby.
8.2 Conditions to TCI's Obligations. The obligations of TCI to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction at or before the Closing of the following conditions, any of which
may be waived by TCI.
(a) Accuracy of Representations and Warranties. The
representations and warranties of Century in this Agreement and in any
Transaction Document, if specifically qualified by materiality, are true in all
respects and, if not so qualified, are true in all material respects, in each
case at and as of the Closing with the same effect as if made at and as of the
Closing.
(b) Performance of Agreements. Century has performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants in this Agreement and in any Transaction Document to
be performed and complied with by it at or before the Closing.
(c) Deliveries. Century and the Partnership have delivered the
items and documents required to be delivered by it pursuant to this Agreement,
including those required under Section 9.3.
(d) Legal Proceedings. No action, suit or proceeding is pending
or threatened by or before any Governmental Authority and no Legal Requirement
has been enacted, promulgated or issued or become or deemed applicable to any of
the transactions contemplated by this Agreement by any Governmental Authority,
which would (i) prohibit the Partnership's ownership or operation of all or a
material portion of any Century System, Century's Cable Business or the Century
Assets, (ii) compel the Partnership to dispose of or hold separately all or a
material portion of any Century System, Century's Cable Business or Century
Assets as a result of any of the transactions contemplated by this Agreement,
(iii) if determined adversely to the Partnership's interest, materially impair
the ability of the Partnership to realize the benefits of the transactions
contemplated by this Agreement or have a material adverse effect on the right of
the Partnership to exercise full rights of ownership of the Century Systems or
(iv) prevent or make illegal the consummation of any transactions contemplated
by this Agreement.
(e) Consents. TCI has received evidence, in form and substance
reasonably satisfactory to it, that the following Century Required Consents have
been obtained, such consents
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to be on the terms specified in Section 7.5: Century Required Consents for the
Century System Franchises, the Century System Licenses, and any Century Leased
Property or Century Other Real Property Interest on which a headend, tower or
other reception site is located. In addition, the TCI Required Consents for the
TCI System Franchises and TCI System Licenses shall have been obtained. If a
Century Required Consent for a headend, tower or other reception site has not
been obtained as of the Closing and TCI is not willing to waive such condition,
Century shall have the option of replacing the affected site with a comparable
site that is reasonably acceptable to TCI.
(f) No Material Adverse Change. There has not been any material
adverse change in the Century Assets or the financial condition or operations of
Century's Cable Business or the Century Systems since the date of this
Agreement. In making the determination required by the preceding sentence, the
last sentence of Section 5.10 shall be applicable.
(g) HSR Act. All filings required under the HSR Act have been
made and the applicable waiting period has expired or been earlier terminated.
(h) Franchise Renewals. Any Century System Franchise required to
be renewed or extended pursuant to the provisions of Section 7.5(c) shall have
been renewed or extended for not less than the applicable period without the
imposition of any conditions or other modifications that make, or are reasonably
likely to make, the underlying instrument materially more onerous in any respect
or that would materially reduce in any respect, or are reasonably likely to
materially reduce in any respect, the benefits available under the instrument in
respect of which the renewal or extension relates.
(i) Exchange. All of the conditions to the obligations of the TCI
Affiliates who are party to the Exchange Agreement to consummate the Exchange
shall have been satisfied or waived (other than those based on acts to be
performed at Closing) by them in accordance with the terms of the Exchange
Agreement and the Century Affiliates who are party to the Exchange Agreement
shall stand ready, willing and able to consummate the Exchange in accordance
with the terms and conditions set forth in the Exchange Agreement.
(j) Partnership Financing. The Partnership shall have secured
financing in accordance with the terms of Section 7.22 to enable it to refinance
the TCI Permitted Debt and the Century Permitted Debt immediately after the
Closing.
(k) Retransmission Consents. With respect to any retransmission
consent agreements for broadcast signals carried on the Systems on the date of
this Agreement and on the date of the Closing that are included as part of the
TCI Excluded Assets or the Century Excluded Assets, all required retransmission
consents for continued carriage of such broadcast signals by the Partnership
have been obtained on terms and conditions reasonably acceptable to the
Partnership.
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(l) Retained Franchise Management Agreements. If Section 7.23 has
become operative, the parties shall have reached agreement on the Retained
Franchise Management Agreements and other agreements contemplated thereby.
SECTION 9. THE CLOSING
9.1 The Closing; Time and Place. Subject to Section 7.23, the closing of
the transactions contemplated by this Agreement (the "Closing") will take place
at a date (the "Closing Date"), location and time mutually determined by TCI and
Century, which Closing Date shall be within ten days after the date on which all
conditions set forth in Sections 8.1 and 8.2 (other than those based on acts to
be performed at the Closing) have either been satisfied or waived in writing by
the party entitled to the benefit of such condition; provided that if closing of
the Riverside Agreement (the "Riverside Closing") has not occurred at such time,
the Closing shall be delayed until the earlier of the Riverside Closing or
termination of the Riverside Agreement.
9.2 TCI's Delivery Obligations. At the Closing, TCI will deliver or
cause to be delivered to the Partnership the following.
(a) Bill of Sale and Assignment. The executed Bill of Sale and
Assignment in the form of EXHIBIT 9.2(A), and such other instruments of
transfer, or assignment, in form and substance mutually satisfactory to the
parties, as Century may reasonably require to further document the transfer and
assignment of the TCI Assets to the Partnership.
(b) Deeds. A California "grant deed" in a form reasonably
acceptable to Century (and complying with applicable state laws) with respect to
each parcel of TCI Owned Property, duly executed and acknowledged and in
recordable form, warranting only to defend title to such TCI Owned Property in
the peaceable possession of the Partnership against all Persons claiming by,
through or under TCI, subject however, to any Permitted Liens and any Title
Defects insured over pursuant to Section 7.6, and in form sufficient to permit
the applicable Title Company to issue the TCI Title Policies referred to in
paragraph (c) below to the Partnership, together with any title affidavit
reasonably required by the title insurer provided any such title affidavit shall
not expand the aforesaid limited or special warranty of TCI.
(c) Title Policies. A policy of title insurance issued by an
eligible Title Company for each parcel of TCI Owned Property, updated to the
Closing Date, containing such endorsements as are required or permitted by
Section 7.6, and otherwise consistent with the form and substance prescribed by
Section 7.6 and the Title Commitments contemplated thereby (the "TCI Title
Policies"), or the irrevocable written commitment of the Title Company to
deliver the TCI Title Policies, provided that with respect to each Title Defect
affecting the TCI Owned Property, either (i) the TCI Title Policy relating to
the affected parcel of TCI Owned Property shall not contain an exception for
such Title Defect; or (ii) if Century has consented as provided in Section 7.6,
such TCI Title Policy shall contain an endorsement insuring over such Title
Defect; or (iii) if, in lieu of a TCI Title Policy satisfying either of the two
preceding requirements, Century has agreed to accept a
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written agreement of TCI as contemplated in the last sentence of Section 7.6,
TCI shall have executed and delivered such an agreement.
(d) Estoppel Certificates. Each TCI Estoppel Certificate obtained
pursuant to Section 7.5(b).
(e) Lien Releases. Evidence reasonably satisfactory to Century
that all Liens (other than Permitted Liens) affecting or encumbering the TCI
Assets have been terminated, released or waived, as appropriate, or original,
executed instruments in form reasonably satisfactory to Century effecting such
terminations, releases or waivers and evidence reasonably satisfactory to
Century that all Liens securing the TCI Permitted Debt will be released upon the
refinancing of such debt.
(f) Vehicle Titles. Title certificates to all vehicles included
among the TCI Assets, endorsed for transfer of valid and good title to the
Partnership, free and clear of all Liens (other than Permitted Liens), and
separate bills of sale therefor or other transfer documentation, if required by
the laws of the States in which such vehicles are titled.
(g) Evidence of Authorization Actions. Evidence reasonably
satisfactory to Century that TCI has taken all action necessary to authorize the
execution of this Agreement and the Transaction Documents and the consummation
of the transactions contemplated hereby.
(h) FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate
certifying that TCI is not a foreign person within the meaning of Section 1445
of the Code reasonably satisfactory in form and substance to Century.
(i) Officer's Certificate. A certificate executed by an executive
officer of the managing member of TCI LLC dated the Closing Date, reasonably
satisfactory in form and substance to Century certifying that the conditions
specified in Sections 8.1(a) and 8.1(b) have been satisfied.
(j) Documents and Records. All TCI Books and Records, including a
list of all pending subscriber hook-ups, disconnect and repair orders, supply
orders and any other lists reasonably necessary to the operation of the TCI
Systems. Delivery of the foregoing will be deemed made to the extent such TCI
Books and Records are then located at any of the offices included in the TCI
Owned Property or TCI Leased Property.
(k) Other. Such other documents and instruments as may be
reasonably necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby, including a signature page to the Retained
Franchise Management Agreement, if applicable.
9.3 Century's Delivery Obligations. At the Closing, Century will
deliver or cause to be delivered to the Partnership the following.
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(a) Bill of Sale and Assignment. The executed Bill of Sale and
Assignment in the form of EXHIBIT 9.2(A), and such other instruments of transfer
or assignment, in form and substance mutually satisfactory to Century and TCI,
as TCI may reasonably require to further document the transfer and assignment of
the Century Assets to the Partnership.
(b) Deeds. A California "grant deed" in a form reasonably
acceptable to TCI (and complying with applicable state laws) with respect to
each parcel of Century Owned Property, duly executed and acknowledged and in
recordable form, warranting only to defend title to such Century Owned Property
in the peaceable possession of the Partnership against all Persons claiming by,
through or under Century, subject however, to any Permitted Liens and any Title
Defects insured over pursuant to Section 7.6 and in form sufficient to permit
the applicable Title Company to issue the Century Title Policies referred to in
paragraph (c) below to the Partnership together with any title affidavit
reasonably required by the title insurer provided any such title affidavit shall
not expand the aforesaid limited or special warranty of Century.
(c) Title Policies. A policy of title insurance by an eligible
Title Company for each parcel of Century Owned Property, updated to the Closing
Date, containing such endorsements as are required or permitted by Section 7.6,
deleting the survey exception for Century Owned Property used in connection with
the Century Exchange Systems and otherwise consistent with the form and
substance prescribed by Section 7.6 and the Title Commitments contemplated
thereby (the "Century Title Policies"), or the irrevocable written commitment of
the Title Company to deliver the Century Title Policies, provided that with
respect to each Title Defect affecting the Century Owned Property, either (i)
the Century Title Policy relating to the affected parcel of Century Owned
Property shall not contain an exception for such Title Defect; or (ii) if TCI
has consented as provided in Section 7.6, such Century Title Policy shall
contain an endorsement insuring over such Title Defect; or (iii) if, in lieu of
a Century Title Policy satisfying either of the two preceding requirements, TCI
has agreed to accept a written agreement of Century as contemplated in the last
sentence of Section 7.6, Century shall have executed and delivered such an
agreement.
(d) Estoppel Certificates. Each Century Estoppel Certificate
obtained pursuant to Section 7.5(b).
(e) Lien Releases. Evidence reasonably satisfactory to TCI that
all Liens (other than Permitted Liens) affecting or encumbering the Century
Assets have been terminated, released or waived, as appropriate, or original,
executed instruments in form reasonably satisfactory to TCI effecting such
terminations, releases or waivers and evidence reasonably satisfactory to TCI
that all Liens securing the Century Permitted Debt will be released upon the
refinancing of such debt..
(f) Vehicle Titles. Title certificates to all vehicles included
among the Century Assets, endorsed for transfer of valid and good title to the
Partnership free and clear of all liens (other than Permitted Liens) and
separate bills of sale therefor or other transfer documentation, if required by
the laws of the States in which such vehicles are titled.
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(g) Evidence of Authorization Actions. Evidence reasonably
satisfactory to TCI that Century has taken all action necessary to authorize the
execution of this Agreement and the Transaction Documents and the consummation
of the transactions contemplated hereby.
(h) FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate
certifying that Century is not a foreign person within the meaning of Section
1445 of the Code reasonably satisfactory in form and substance to TCI.
(i) Officer's Certificates. A certificate executed by an
executive officer of Century dated the Closing Date, reasonably satisfactory in
form and substance to TCI certifying that the conditions specified in Sections
8.2(a) and 8.2(b) have been satisfied.
(j) Documents and Records. All Century Books and Records,
including a list of all pending subscriber hook-ups, disconnect and repair
orders, supply orders and any other lists reasonably necessary to the operation
of the Century Systems. Delivery of the foregoing will be deemed made to the
extent such Century Books and Records are then located at any of the offices
included in the Century Owned Property or Century Leased Property.
(k) Management Agreement. An original signature page of Century
to the management agreement attached to the Partnership Agreement as an Exhibit
(the "Management Agreement").
(l) Other. Such other documents and instruments as may be
reasonably necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby, including a signature page to the Retained
Franchise Management Agreement, if applicable.
9.4 The Partnership's Delivery Obligations. At the Closing, except as
otherwise provided below, the Partnership will deliver or cause to be delivered
the following.
(a) Assumption Agreements. Assumption Agreements in the form
of EXHIBIT 9.4(A) with respect to the TCI Assets and the Century Assets.
(b) Management Agreement. An original signature page of the
Partnership to the Management Agreement.
(c) Other. Such other documents and instruments as may be
reasonably necessary to effect the intent of this Agreement and to consummate
the transactions contemplated hereby, including any documents requested under
Section 7.9 and a signature page to the Retained Franchise Management Agreement,
if applicable.
9.5 Post-Closing Refinancing of the TCI and Century Permitted Debt. As a
condition subsequent to the obligations of TCI and Century under this Agreement,
immediately after the Closing, the Partnership shall pay (i) the TCI Permitted
Debt to TCI by wire transfer of immediately
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available funds in accordance with wire transfer instructions provided by TCI
and (ii) the Century Permitted Debt to Century or to such other Persons as
designated by Century by wire transfer of immediately available funds in
accordance with wire transfer instructions provided by Century.
SECTION 10. TERMINATION AND DEFAULT
10.1 Termination Events. This Agreement may be terminated prior to
Closing and the transactions contemplated hereby may be abandoned:
(a) at any time by the mutual agreement of Century and TCI;
(b) prior to the Primary Transfer, by either Century or TCI at
any time (if such party itself is not then in material breach of any of its
covenants, agreements or other obligations contained in this Agreement), if the
other is in material breach or default of any of its covenants, agreements or
other obligations herein or if any of its representations herein if specifically
qualified by materiality, is not true in all respects or, if qualified by
materiality, is not true in all material respects when made or when otherwise
required by this Agreement to be true, if the non-breaching party provides the
breaching party with prompt written notice that provides a reasonably detailed
explanation of the facts and circumstances surrounding such breach or default;
provided that such party shall have no right to terminate if (i) the breaching
Party cures such breach or default within 30 days after its receipt of such
written notice, unless such breach or default cannot be cured within such 30-day
period; or (ii) the breach or default is capable of being cured prior to the
first anniversary of the date of this Agreement (the "Outside Closing Date") and
the breaching party commences to cure such breach or default within such 30-day
period and diligently continues to take all action reasonably necessary to cure
such breach or default prior to the Outside Closing Date and such breach or
default is cured prior to the Outside Closing Date; or
(c) prior to the Primary Transfer, by either Century or TCI, by
written notice to the other party, if the Exchange Agreement has been terminated
prior to any closing thereunder in accordance with its terms; or
(d) as otherwise provided in this Agreement; or
(e) by any party, if the Closing has not occurred by the Outside
Closing Date for any reason other than a material breach or a material default
by the terminating party of its respective covenants, agreements or other
obligations under this Agreement, if any of its representations herein, if
specifically qualified by materiality, is not true in all respects or, if
qualified by materiality, is not true in all material respects when made or when
otherwise required by this Agreement to be true.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, all obligations of the parties under this Agreement will
terminate, except for the obligations set forth in Sections 7.14 and 12.15.
Notwithstanding the preceding sentence, termination of this Agreement pursuant
to Sections 10.1(b) or 10.1(c) or 10.1(e) or 12.16 will not limit or impair any
remedies that
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either of TCI or Century may have with respect to a breach or default by the
other of its covenants, agreements or obligations under this Agreement prior to
Closing.
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
11.1 Survival of Representations and Warranties. The representations and
warranties of TCI and Century in this Agreement and in the Transaction Documents
and the covenants of TCI, Century and the Partnership in this Agreement and the
Transaction Documents to be performed prior to or at Closing will survive until
the first anniversary of the Closing Date except that (a) all such
representations and warranties with respect to Taxes, rates, Environmental Laws,
ERISA, employment matters or copyright matters will survive until 60 days after
the expiration of the applicable statute of limitations (including any
extensions) for such Taxes, rates, Environmental Laws, ERISA, employment matters
or copyright matters, respectively, and (b) the representations and warranties
as to title to the Assets in Sections 5.4(a) and 6.4(a), respectively, and as to
title to Owned Property set forth in Sections 5.6 and 6.6, respectively, and in
the deeds delivered with respect to Owned Property will survive the Closing and
the delivery of such deeds and will continue in full force and effect without
limitation with the understanding that, notwithstanding any language contained
in any such deed, the representations and warranties as to title to Owned
Property set forth in Sections 5.6 and 6.6, respectively, will not be merged
into any such deed or other Transaction Document. The periods of survival of the
representations and warranties and covenants to be performed prior to or at
Closing prescribed by this Section 11.1 are referred to as the "Survival
Period." The liabilities of each party under its respective representations and
warranties and its respective covenants to be performed prior to or at the
Closing, will expire as of the expiration of the applicable Survival Period;
provided however that such expiration will not include, extend or apply to any
such representation or warranty or covenant, the breach of which has been
asserted by a party in a written notice to the other party before such
expiration or about which a party has given the other party written notice
before such expiration indicating that facts or conditions exist that, with the
passage of time or otherwise, can reasonably be expected to result in a breach
(and describing such potential breach in reasonable detail). The covenants and
agreements of each party in this Agreement and in the Transaction Documents to
be performed after the Closing will survive the Closing and will continue in
full force and effect in accordance with their respective terms. The Survival
Periods and other provisions of this Section shall apply to the Retained
Franchises as if they were transferred on the Closing Date.
11.2 Indemnification by TCI. From and after the Closing, TCI will
indemnify, defend and hold harmless the Partnership and its Affiliates, and the
partners, members, shareholders, officers, directors, employees, agents,
successors and assigns and any Person claiming by or through any of them, as the
case may be, from and against any and all Losses arising out of or resulting
from (a) any breach of any representation or warranty made by TCI in this
Agreement or any Transaction Document or any covenant of TCI in this Agreement
or the Transaction Documents to be performed prior to or at the Closing; (b) any
breach of any post-Closing covenant, agreement or obligation of TCI contained in
this Agreement or any Transaction Document; (c) any act or omission of TCI with
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respect to, or any event or circumstance related to, the ownership or operation
of the TCI Assets or the conduct of TCI's Cable Business, which act, omission,
event or circumstance occurred or existed prior to or at the Closing Time,
without regard to whether a claim with respect to such matter is asserted before
or after the Closing Time, including any matter described on SCHEDULE 6.11; (d)
any liability or obligation with respect to the TCI Systems not included in the
Assumed Obligations and Liabilities; (e) any Title Defect relating to any TCI
Owned Property that is not deleted as an exception in, or insured over by, the
applicable TCI Title Policy; (f) any claim that the transactions contemplated by
this Agreement with respect to the TCI Systems violate WARN or any Legal
Requirement or any bulk transfer or fraudulent conveyance laws of any
jurisdiction; (g) any claim relating to "continuation coverage" under Code
Section 4980B with respect to former employees of TCI at and after the Closing
Time or that the Partnership is deemed to be a successor employer of TCI under
Code Section 4980B; (h) any claim by a third party relating to the presence,
generation, removal or transportation of a Hazardous Substance on or from any of
the TCI Owned Property or TCI Leased Property through and including the Closing
Time, including the costs, in response to a third-party claim, of removal or
clean-up of such Hazardous Substance and other compliance with the provisions of
any Environmental Laws (whether before or after Closing); or (i) any rate refund
or credit, penalty and/or interest payment with respect thereto ordered by any
Governmental Authority with respect to the TCI Systems for periods through and
including the Closing Time.
In the event that an indemnified item arises under both clause (a) and under one
or more of clauses (b) through (i) of this Section, Century's and the
Partnership's rights to pursue its claim under clauses (b) through (i), as
applicable, will exist notwithstanding the expiration of the Survival Period
applicable to such claim under clause (a).
11.3 Indemnification by Century. From and after the Closing, Century
will indemnify, defend and hold harmless the Partnership and its Affiliates and
the partners, members, shareholders, officers, directors, employees, agents,
successors and assigns and any Person claiming by or through any of them, as the
case may be, from and against any and all Losses arising out of or resulting
from (a) any breach of any representation or warranty made by Century in this
Agreement or any Transaction Document or any covenant of Century in this
Agreement or any Transaction Document to be performed prior to or at the
Closing; (b) any breach of any post-Closing covenant, agreement or obligation of
Century contained in this Agreement or any Transaction Document; (c) any act or
omission of Century with respect to, or any event or circumstance related to,
the ownership or operation of the Century Assets or the conduct of Century's
Cable Business, which act, omission, event or circumstance occurred or existed
prior to or at the Closing Time, without regard to whether a claim with respect
to such matter is asserted before or after the Closing Time, including any
matter described on SCHEDULE 5.11; (d) any liability or obligation with respect
to the Century Systems not included in the Assumed Obligations and Liabilities;
(e) any Title Defect relating to any Century Owned Property that is not deleted
as an exception in, or insured over by, the applicable Century Title Policy; (f)
any claim that the transactions contemplated by this Agreement with respect to
the Century Systems violate WARN or any similar Legal Requirement or any bulk
transfer or fraudulent conveyance laws of any jurisdiction; (g) any claim
relating to "continuation coverage" under Code Section 4980B with respect to
former employees of Century at and after the Closing Time or that
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the Partnership is deemed to be a successor employer of Century under Code
Section 4980B; (h) any claim by a third party relating to the presence,
generation, removal or transportation of a Hazardous Substance on or from any of
the Century Owned Property or Century Leased Property through and including the
Closing Time, including the costs, in response to a third-party claim, of
removal or clean-up of such Hazardous Substance and other compliance with the
provisions of any Environmental Laws (whether before or after Closing); or (i)
any rate refund or credit, penalty and/or interest payment with respect thereto
ordered by any Governmental Authority with respect to the Century Systems for
periods through and including the Closing Time.
In the event that an indemnified item arises under both clause (a) and under one
or more of clauses (b) through (i) of this Section, the Partnership's and TCI's
rights to pursue its claim under clauses (b) through (i), as applicable, will
exist notwithstanding the expiration of the Survival Period applicable to such
claim under clause (a).
11.4 Indemnification by the Partnership. From and after the Closing, the
Partnership will indemnify, defend and hold harmless TCI and Century and their
shareholders, members and partners and their respective Affiliates and the
members, shareholders, partners, officers, directors, employees, agents,
successors and assigns of them and any other Person claiming by or through any
of them, as the case may be, from and against any and all Losses arising out of
or resulting from (a) any breach of any covenant, agreement or obligation of the
Partnership contained in this Agreement; or (b) the failure of the Partnership
to perform the Assumed Obligations and Liabilities.
11.5 Third Party Claims. Promptly after the receipt by either party of
notice of any claim, action, suit or proceeding by any third party
(collectively, an "Action"), which Action is subject to indemnification under
this Agreement, such party (the "Indemnified Party") will give reasonable
written notice to the party from whom indemnification is claimed (the
"Indemnifying Party"). The Indemnified Party will be entitled, at the sole
expense and liability of the Indemnifying Party, to exercise full control of the
defense, compromise or settlement of any such Action unless the Indemnifying
Party, within a reasonable time after the giving of such notice by the
Indemnified Party, (a) admits in writing to the Indemnified Party the
Indemnifying Party's liability to the Indemnified Party for such Action under
the terms of this Section 11, (b) notifies the Indemnified Party in writing of
the Indemnifying Party's intention to assume such defense, (c) provides evidence
reasonably satisfactory to the Indemnified Party of the Indemnifying Party's
ability to pay the amount, if any, for which the Indemnified Party may be liable
as a result of such Action and (d) retains legal counsel reasonably satisfactory
to the Indemnified Party to conduct the defense of such Action. The other party
will cooperate with the party assuming the defense, compromise or settlement of
any such Action in accordance with this Agreement in any manner that such party
reasonably may request. If the Indemnifying Party so assumes the defense of any
such Action, the Indemnified Party will have the right to employ separate
counsel and to participate in (but not control) the defense, compromise or
settlement of the Action, but the fees and expenses of such counsel will be at
the expense of the Indemnified Party unless (x) the Indemnifying Party has
agreed to pay such fees and expenses, (y) any relief other than the payment of
money damages is sought against the Indemnified Party or (z) the Indemnified
Party will have been advised by its counsel that
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there may be one or more defenses available to it which are different from or
additional to those available to the Indemnifying Party, and in any such case
that portion of the fees and expenses of such separate counsel that are
reasonably related to matters covered by the indemnity provided in this Section
11 will be paid by the Indemnifying Party. No Indemnified Party will settle or
compromise any such Action for which it is entitled to indemnification under
this Agreement without the prior written consent of the Indemnifying Party,
unless the Indemnifying Party has failed, after reasonable notice, to undertake
control of such Action in the manner provided in this Section 11.5. No
Indemnifying Party will settle or compromise any such Action (A) in which any
relief other than the payment of money damages is sought against any Indemnified
Party or (B) in the case of any Action relating to the Indemnified Party's
liability for any Tax, if the effect of such settlement would be an increase in
the liability of the Indemnified Party for the payment of any Tax for any period
beginning after the Closing Date, unless the Indemnified Party consents in
writing to such compromise or settlement.
11.6 Limitations on Indemnification - TCI. TCI will not be liable with
respect to any matter or claim for which indemnification could be sought
pursuant to Section 11.2(a) for (a) any Losses of or to Century, the Partnership
or any other Person entitled to indemnification from TCI or (b) any Losses
incidental to or relating to or resulting from any of the foregoing (the items
described in clauses (a) and (b) collectively being referred to for purposes of
this Section 11 as "TCI Claimed Damages") unless the amount of TCI Claimed
Damages for which TCI would, but for the provisions of this Section, be liable
exceeds, on an aggregate basis, $250,000, in which case TCI will be liable for
all such TCI Claimed Damages, which will be due and payable within 15 days after
TCI's receipt of a statement therefor. TCI will not have any liability under
Section 11.2(a) to the extent that the aggregate amount of Losses otherwise
subject to its indemnification obligation thereunder exceeds $25,000,000. The
limitations set forth in this Section 11.6 do not apply to (i) the Closing
Adjustments to the extent they are included in the calculation of Closing
Adjustments pursuant to Section 3.2 and 3.3; or (ii) any claim made pursuant to
Sections 11.2(b)-(i), including, without limitation, any Losses related to any
liability or obligation for late fees; any liability or obligation with respect
to paying franchise fees on franchise fees; subscriber refunds; or TCI
litigation listed in the Schedules to this Agreement.
11.7 Limitations on Indemnification - Century. Century will not be
liable with respect to any matter or claim for which indemnification could be
sought pursuant to Section 11.3(a) for (a) any Losses of or to TCI, the
Partnership or any other Person entitled to indemnification from Century or (b)
any Losses incidental to or relating to or resulting from any of the foregoing
(the items described in clauses (a) and (b) collectively being referred to for
purposes of this Section 11 as "Century Claimed Damages") unless (1) with
respect to any Century Claimed Damages that relate to Century Systems other than
the Century Exchange Systems the amount of such Century Claimed Damages for
which Century would, but for the provisions of this Section, be liable exceeds,
on an aggregate basis, $250,000, in which case Century will be liable for all
such Century Claimed Damages, which will be due and payable within 15 days after
Century's receipt of a statement therefor, and (2) with respect to any Century
Claimed Damages that relate to the Century Exchange Systems, the amount of such
Century Claimed Damages for which Century would, but for the
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provisions of this Section, be liable exceeds, on an aggregate basis, $250,000,
in which case Century will be liable for all such Century Claimed Damages, which
will be due and payable within 15 days after Century's receipt of a statement
therefor. Century will not have any liability under Section 11.3(a) to the
extent that the aggregate amount of Losses otherwise subject to its
indemnification obligations thereunder that relate to Century Systems other than
the Century Exchange Systems exceeds $80,000,000 or to the extent that the
aggregate amount of Losses otherwise subject to its indemnification obligations
thereunder that relate to the Century Exchange Systems exceeds $10,000,000. The
limitations set forth in this Section 11.7 do not apply to (i) the Closing
Adjustments to the extent they are included in the calculation of Closing
Adjustments pursuant to Section 3.2 or 3.3; or (ii) any claim made pursuant to
Section 11.3(b)-(i), including, without limitation, any Losses related to any
liability or obligation for late fees; any liability or obligation with respect
to paying franchise fees on franchise fees; subscriber refunds, or Century
litigation listed in the Schedules to this Agreement.
11.8 Other Indemnification. The provisions of Sections 11.1, 11.6 and
11.7 will be applicable to any claim for indemnification made under any other
provision of this Agreement and all references in Sections 11.1, 11.6 and 11.7
to Sections 11.2, 11.3 and 11.4 will be deemed to be references to such other
provisions of this Agreement.
SECTION 12. MISCELLANEOUS PROVISIONS
12.1 Parties Obligated and Benefited.
(a) Subject to the limitations set forth below, this Agreement
will be binding upon the parties and their respective assigns and successors in
interest and will inure solely to the benefit of the parties and their
respective assigns and successors in interest, and no other Person will be
entitled to any of the benefits conferred by this Agreement. Without the prior
written consent of the other parties, no party will assign any of its rights
under this Agreement or delegate any of its duties under this Agreement,
provided that a party may, without the prior written consent of the other party,
assign all of its rights and obligations under this Agreement to an Affiliate of
such party; provided such assignee can make all of the representations and
warranties applicable to the assigning party hereunder (other than those
relating to jurisdiction of incorporation), the assigning party can provide
reasonable assurances that the assignee can otherwise perform the covenants,
agreements and obligations applicable to the assigning party hereunder and such
assignment would not materially delay or hinder the consummation of the
transactions contemplated by this Agreement.
(b) The TCI Parties are all of the members of TCI LLC as of the
date of this Agreement. Immediately prior to closing, the TCI Parties will
transfer the TCI Assets, their rights and obligations under this Agreement and
their membership interests in TCI LLC to one or more Affiliates of the TCI
Parties and such Affiliates will then transfer the TCI Assets and their rights
and obligations under this Agreement to TCI LLC. Upon completion of such
transfers, CVA/SM, Baldwin, UCTC, UCT LA and TCI California will be released
from all liabilities and obligations
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under this Agreement, effective as of the Closing Date; provided that TCI LLC
has assumed all such liabilities and obligations for the benefit of the
Partnership.
(c) Century BA, Century CNC, Franem, Century CSC, Century SCT,
Century VCC and Citizens are all of the members of Century Exchange as of the
date of this Agreement. Immediately prior to closing, the Century Parties will
transfer the Century Assets, their rights and obligations under this Agreement
and their membership interests in Century Exchange to one or more Affiliates of
the Century Parties and such Affiliates will then transfer the Century Assets
and their rights and obligations under this Agreement to Century Exchange. Upon
completion of such transfers, Century BA, Century CNC, Franem, Century CSC,
Century SCT, Century VCC and Citizens will be released from all liabilities and
obligations under this Agreement, effective as of the Closing Date; provided
that Century Exchange has assumed all such liabilities and obligations for the
benefit of the Partnership.
(d) Century BA and Century CNC shall be responsible for the
payment of any amounts that the Partnership is required to pay to TCI ESF or any
other Person with respect to the Century Exchange Systems, including, without
limitation, the Partnership's expenses and any indemnification obligations,
whether pursuant to the Exchange Agreement or any agreement entered into in
connection with the Exchange Agreement or otherwise in connection with the
transfer by the Partnership to TCI ESF of the Century Exchange Systems;
provided, that Century BA and Century CNC shall not be liable for the payment of
any amounts that are the responsibility of TCI ESF and provided further that to
the extent Century BA and CNC pay the Partnership any such amount, the
Partnership shall be liable for the further payment of such amount.
12.2 Notices. Any notice, request, demand, waiver or other communication
required or permitted to be given under this Agreement will be in writing and
will be deemed to have been duly given only if delivered in person or by first
class, prepaid, registered or certified mail, or sent by courier or, if receipt
is confirmed, by telecopier:
To TCI at:
c/o Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111
Attention: William R. Fitzgerald
Telecopy: (303) 267-6672
With a copy similarly addressed to the attention of Legal
Department:
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To Century at:
Century Communications Corp.
50 Locust Avenue
New Canaan, Connecticut 06840
Attention: Office of the President
Telecopy: (203) 972-2013
With a copy to:
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Washington, D.C. 20036
Attention: Leonard J. Baxt, Esq.
Telecopy: (202) 776-2222
Any party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section. All notices
will be deemed to have been received on the date of delivery, which in the case
of deliveries by telecopier will be the date of the sender's confirmation.
12.3 Right to Specific Performance. The parties acknowledge that the
unique nature of the Assets to be contributed by them pursuant to this Agreement
renders money damages an inadequate remedy for the breach by the parties of
their obligations under this Agreement, and the parties agree that in the event
of such breach, the parties will upon proper action instituted by either of
them, be entitled to a decree of specific performance of this Agreement.
12.4 Waiver. This Agreement or any of its provisions may not be waived
except in writing. The failure of any party to enforce any right arising under
this Agreement on one or more occasions will not operate as a waiver of that or
any other right on that or any other occasion.
12.5 Captions. The section and other captions of this Agreement are for
convenience only and do not constitute a part of this Agreement.
12.6 CHOICE OF LAW. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES
UNDER IT WILL BE GOVERNED BY AND CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH
THE LAWS OF THE STATE OF COLORADO, WITHOUT REGARD TO THE CONFLICTS OF LAWS
RULES OF COLORADO.
12.7 Terms. Terms used with initial capital letters or otherwise defined
in this Agreement will have the meanings specified, applicable to both singular
and plural forms, for all purposes of
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this Agreement. The word "include" and derivatives of that word are used in this
Agreement in an illustrative sense rather than limiting sense.
12.8 Rights Cumulative. All rights and remedies of each of the parties
under this Agreement will be cumulative, and the exercise of one or more rights
or remedies will not preclude the exercise of any other right or remedy
available under this Agreement or applicable law.
12.9 Time. Time is of the essence under this Agreement. If the last day
permitted for the giving of any notice or the performance of any act required or
permitted under this Agreement falls on a day which is not a Business Day, the
time for the giving of such notice or the performance of such act will be
extended to the next succeeding Business Day.
12.10 Late Payments. If either party fails to pay the other any amounts
when due under this Agreement, the amounts due will bear interest from the due
date to the date of payment at the annual rate publicly announced from time to
time by The Bank of New York as its prime rate (the "Prime Rate") plus 2%,
adjusted as and when changes in the Prime Rate are made.
12.11 Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed an original.
12.12 Entire Agreement. Except for the Exchange Agreement, this
Agreement (including the Transaction Documents and the Schedules and Exhibits
referred to in this Agreement, which are incorporated in and constitute a part
of this Agreement) contains the entire agreement of the parties and supersedes
all prior oral or written agreements and understandings with respect to the
subject matter. This Agreement may not be amended or modified except by a
writing signed by the parties.
12.13 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law of public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to either party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner
that is not invalid, illegal or against public policy, to the end that the
transactions contemplated hereby are fulfilled to the greatest extent possible.
12.14 Construction. This Agreement has been negotiated by the parties
and their respective legal counsel, and legal or equitable principles that might
require the construction of this Agreement or any provision of this Agreement
against the party drafting this Agreement will not apply in any construction or
interpretation of this Agreement.
12.15 Expenses. Except as otherwise expressly provided in this Agreement
(which expenses the parties shall pay as so provided), each party will pay all
of its expenses, including
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attorneys' and accountants' fees, in connection with the negotiation of this
Agreement, the performance of its obligations and the consummation of the
transactions contemplated by this Agreement.
12.16 Risk of Loss. The risk of any loss or damage to the Century Assets
or TCI Assets resulting from fire, theft or other casualty (except reasonable
wear and tear) will be borne by Century or TCI, respectively, at all times
through and including the Closing. If any such loss or damage is sufficiently
substantial so as to preclude and prevent resumption of normal operations of any
material portion of a System or the replacement or restoration of the lost or
damaged property within twenty days or, if earlier, prior to the Outside Closing
Date, Century or TCI as appropriate, will immediately notify the other in
writing of that fact and the other, at any time within 10 days after receipt of
such notice, may elect by written notice to the notifying party to either (a)
waive such defect and proceed toward consummation of the transaction in
accordance with terms of this Agreement or (b) terminate this Agreement. If the
other elects to so terminate this Agreement, both parties will stand fully
released and discharged of any and all obligations under this Agreement. If the
other elects to consummate the transactions contemplated by this Agreement
notwithstanding such loss or damage and does so, all insurance proceeds payable
as a result of the occurrence of the event resulting in such loss or damage (to
the extent not used to replace or restore such lost or damaged property), except
for any proceeds from business interruption insurance relating to the loss of
revenue for the period through and including the Closing Date, will be delivered
by the notifying party to the other or the rights to such proceeds will be
assigned by the notifying party to the other if not yet paid over to the
notifying party, and the notifying party will pay to the other an amount equal
to the difference between the amount of such insurance costs and the full
replacement cost of the damaged or lost Assets.
If, prior to the Closing, any part of or interest in any material
Century Assets or any material TCI Assets is taken or condemned as a result of
the exercise of the power of eminent domain, or if a Governmental Authority
having such power informs Century or TCI that it intends to condemn all or any
part of any material Assets of such party (such event being called, in either
case, a "Taking"), then the other party may terminate this Agreement. If the
other party does not elect to terminate this Agreement, then (i) the other party
will have the sole right, in the name of the party, if the other party so
elects, to negotiate for, claim, contest and receive all damages with respect to
the Taking, (ii) the party will be relieved of its obligation to convey to the
party the Assets or interests that are the subject of the Taking, (iii) at the
Closing the party will assign to the other party all of the party's rights to
all damages payable with respect to the Taking and (iv) following the Closing,
the party will give the other party such further assurances of such rights and
assignment with respect to the Taking as the other party may from time to time
reasonably request.
12.17 Tax Consequences. No party to this Agreement makes any
representation or warranty, express or implied, with respect to the Tax
implications of any aspect of this Agreement on any other party to this
Agreement, and all parties expressly disclaim any such representation or
warranty with respect to any Tax consequences arising under this Agreement. Each
party has relied solely on its own Tax advisors with respect to the Tax
implications of this Agreement.
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12.18 Commercially Reasonable Efforts. For purposes of this Agreement,
unless a different standard is expressly provided with respect to any particular
matter "commercially reasonable efforts" will not be deemed to require a party
to undertake extraordinary measures, including the initiation or prosecution of
legal proceedings or the payment of amounts in excess of normal and usual filing
fees and processing fees, if any.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
CABLEVISION OF ARCADIA/SIERRA MADRE, INC.
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
UNITED CABLE TELEVISION OF BALDWIN PARK, INC.
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
UCTC OF LOS ANGELES COUNTY, INC.
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
TCI CABLEVISION OF CALIFORNIA, INC.
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
UNITED CABLE TELEVISION OF LOS ANGELES, INC.
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
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TCI CALIFORNIA HOLDINGS, LLC
By: TCI Cablevision of California, Inc.,
its managing member
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
CENTURY EXCHANGE LLC
By: Century Southwest Cable Television, Inc.,
its manager
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
CENTURY BAY AREA CABLE CORP.
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
CENTURY CABLE OF NORTHERN CALIFORNIA
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
FRANEM CABLE COMPANY
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
CENTURY CABLE OF SOUTHERN CALIFORNIA
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
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CENTURY SOUTHWEST CABLE TELEVISION, INC.
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
CENTURY VALLEY CABLE CORP.
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
CITIZENS CENTURY CABLE TELEVISION VENTURE
By: Century Telecommunications Venture Corp.,
a venturer
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
CENTURY-TCI CALIFORNIA, L.P.
By: Century Exchange LLC
By: Century Southwest Cable Television, Inc.,
it manager
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
and
By: TCI California Holdings, LLC
By: TCI Cablevision of California, Inc.,
its managing member
By:----------------------------------
Name:--------------------------------
Title:-------------------------------
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
SECTION 1. DEFINITIONS...................................................................................2
1.1 1992 Cable Act................................................................................2
1.2 Affiliate.....................................................................................2
1.3 Annualized Cash Flow..........................................................................2
1.4 Assets........................................................................................2
1.5 Basic Services................................................................................2
1.6 Business Day..................................................................................2
1.7 Cable Act.....................................................................................2
1.8 Cable Business................................................................................2
1.9 Cash Flow.....................................................................................2
1.10 Century Assets................................................................................3
1.11 Century Books and Records.....................................................................3
1.12 Century Exchange Systems......................................................................3
1.13 Century Leased Property.......................................................................3
1.14 Century Other Intangibles.....................................................................3
1.15 Century Other Real Property Interests.........................................................3
1.16 Century Owned Property........................................................................4
1.17 Century Required Consents.....................................................................4
1.18 Century System Contracts......................................................................4
1.19 Century System Franchises.....................................................................4
1.20 Century System Licenses.......................................................................4
1.21 Century Tangible Personal Property............................................................5
1.22 Century's Cable Business......................................................................5
1.23 Closing Time..................................................................................5
1.24 Communications Act............................................................................5
1.25 Contract......................................................................................5
1.26 Equivalent Basic Subscribers (or "EBSs")......................................................5
1.27 Environmental Law.............................................................................6
1.28 ERISA.........................................................................................6
1.29 ERISA Affiliate...............................................................................6
1.30 Exchange......................................................................................6
1.31 Expanded Basic Services.......................................................................6
1.32 FCC...........................................................................................7
1.33 Financial Statements..........................................................................7
1.34 GAAP..........................................................................................7
1.35 Governmental Authority........................................................................7
1.36 Hazardous Substances..........................................................................7
1.37 HSR Act.......................................................................................7
1.38 Judgment......................................................................................7
1.39 Knowledge.....................................................................................7
</TABLE>
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<S> <C> <C>
1.40 Leased Property...............................................................................7
1.41 Legal Requirement.............................................................................8
1.42 Lien..........................................................................................8
1.43 Litigation....................................................................................8
1.44 Losses........................................................................................8
1.45 Non-TV Products and Services..................................................................8
1.46 Other Real Property Interests.................................................................9
1.47 Owned Property................................................................................9
1.48 Pay TV........................................................................................9
1.49 Permitted Lien................................................................................9
1.50 Person........................................................................................9
1.51 Required Consents.............................................................................9
1.52 System........................................................................................9
1.53 System Contracts..............................................................................9
1.54 System Franchises............................................................................10
1.55 System Licenses..............................................................................10
1.56 Tangible Personal Property...................................................................10
1.57 Taxes........................................................................................10
1.58 TCI Assets...................................................................................10
1.59 TCI Books and Records........................................................................10
1.60 TCI Leased Property..........................................................................10
1.61 TCI Other Intangibles........................................................................10
1.62 TCI Other Real Property Interests............................................................10
1.63 TCI Owned Property...........................................................................11
1.64 TCI Required Consents........................................................................11
1.65 TCI System Contracts.........................................................................11
1.66 TCI System Franchises........................................................................11
1.67 TCI System Licenses..........................................................................11
1.68 TCI Tangible Personal Property...............................................................11
1.69 TCI's Cable Business.........................................................................12
1.70 Third Party..................................................................................12
1.71 Transaction Documents........................................................................12
1.72 Other Definitions............................................................................12
1.73 Accounting Terms.............................................................................14
SECTION 2. CONTRIBUTION.................................................................................14
2.1 Agreement to Contribute......................................................................14
SECTION 3. PARTNERSHIP CONTRIBUTIONS AND CLOSING ADJUSTMENTS............................................15
3.1 Gross Value of Contributions; Assumption of Debt.............................................15
3.2 Closing Adjustments..........................................................................16
3.3 Calculation of Adjustments...................................................................18
3.4 Post-Closing Rate Adjustments................................................................20
</TABLE>
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<S> <C> <C>
SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS......................................................21
4.1 Assumed Obligations and Liabilities..........................................................21
4.2 TCI Excluded Assets..........................................................................21
4.3 Century Excluded Assets......................................................................22
SECTION 5. CENTURY'S REPRESENTATIONS AND WARRANTIES.....................................................23
5.1 Organization and Qualification of Century....................................................23
5.2 Authority and Validity.......................................................................24
5.3 No Conflict; Required Consents...............................................................24
5.4 Assets.......................................................................................25
5.5 Century System Franchises, Century System Licenses, Century System
Contracts and Century Other Real Property Interests..........................................25
5.6 Real Property................................................................................26
5.7 Environmental................................................................................27
5.8 Compliance with Legal Requirements...........................................................28
5.9 Patents, Trademarks and Copyrights...........................................................30
5.10 Financial Statements; Undisclosed Liabilities; Absence of Certain
Changes or Events............................................................................30
5.11 Litigation...................................................................................31
5.12 Tax Returns; Other Reports...................................................................31
5.13 Employment Matters...........................................................................32
5.14 Century Systems Information..................................................................33
5.15 Accounts Receivable..........................................................................33
5.16 Bonds; Letters of Credit.....................................................................33
5.17 Finders and Brokers..........................................................................33
5.18 Wireless Business; @Home.....................................................................34
SECTION 6. TCI'S REPRESENTATIONS AND WARRANTIES.........................................................34
6.1 Organization and Qualification of TCI........................................................34
6.2 Authority and Validity.......................................................................35
6.3 No Conflict; Required Consents...............................................................35
6.4 Assets.......................................................................................36
6.5 TCI System Franchises, TCI System Licenses, TCI System Contracts and
TCI Other Real Property Interests............................................................36
6.6 Real Property................................................................................37
6.7 Environmental................................................................................38
6.8 Compliance with Legal Requirements...........................................................39
6.9 Patents, Trademarks and Copyrights...........................................................41
6.10 Financial Statements; Undisclosed Liabilities; Absence of Certain
Changes or Events............................................................................41
6.11 Litigation...................................................................................42
6.12 Tax Returns; Other Reports...................................................................42
</TABLE>
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<S> <C> <C>
6.13 Employment Matters...........................................................................42
6.14 TCI Systems Information......................................................................43
6.15 Accounts Receivable..........................................................................44
6.16 Bonds; Letters of Credit.....................................................................44
6.17 Finders and Brokers..........................................................................44
SECTION 7. ADDITIONAL COVENANTS.........................................................................44
7.1 Access to Premises and Records...............................................................44
7.2 Continuity and Maintenance of Operations; Certain Deliveries and Notices.....................44
7.3 Employees....................................................................................46
7.4 Leased Vehicles; Other Capital Leases........................................................48
7.5 Required Consents, Estoppel Certificates, Franchise Renewal..................................48
7.6 Title Commitments and Surveys................................................................50
7.7 HSR Notification.............................................................................51
7.8 Taxes, Fees and Expenses.....................................................................51
7.9 Programming..................................................................................51
7.10 Schedules and Exhibits.......................................................................52
7.11 Use of Names and Logos.......................................................................52
7.12 Transitional Billing Services................................................................53
7.13 Confidentiality and Publicity................................................................53
7.14 Bulk Transfers...............................................................................54
7.15 Lien Searches................................................................................54
7.16 Further Assurances...........................................................................54
7.17 Consents.....................................................................................54
7.18 Cooperation as to Rates and Fees.............................................................54
7.19 Satisfaction of Conditions...................................................................55
7.20 Offers.......................................................................................55
7.21 Environmental Reports........................................................................56
7.22 Partnership Financing........................................................................56
7.23 Franchise Consents...........................................................................56
7.24 Year 2000 Matters............................................................................58
7.25 Riverside System.............................................................................59
7.26 CSG..........................................................................................60
SECTION 8. CONDITIONS PRECEDENT.........................................................................60
8.1 Conditions to Century's Obligations..........................................................60
8.2 Conditions to TCI's Obligations..............................................................62
SECTION 9. THE CLOSING..................................................................................64
9.1 The Closing; Time and Place..................................................................64
9.2 TCI's Delivery Obligations...................................................................64
9.3 Century's Delivery Obligations...............................................................65
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9.4 The Partnership's Delivery Obligations.......................................................67
9.5 Post-Closing Refinancing of the TCI and Century Permitted Debt...............................67
SECTION 10. TERMINATION AND DEFAULT............................................................................68
10.1 Termination Events...........................................................................68
10.2 Effect of Termination........................................................................68
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION..............................................................................69
11.1 Survival of Representations and Warranties...................................................69
11.2 Indemnification by TCI.......................................................................69
11.3 Indemnification by Century...................................................................70
11.4 Indemnification by the Partnership...........................................................71
11.5 Third Party Claims...........................................................................71
11.6 Limitations on Indemnification - TCI.........................................................72
11.7 Limitations on Indemnification - Century.....................................................72
11.8 Other Indemnification........................................................................73
SECTION 12. MISCELLANEOUS PROVISIONS.....................................................................73
12.1 Parties Obligated and Benefited..............................................................73
12.2 Notices......................................................................................74
12.3 Right to Specific Performance................................................................75
12.4 Waiver.......................................................................................75
12.5 Captions.....................................................................................75
12.6 Choice of Law................................................................................75
12.7 Terms........................................................................................75
12.8 Rights Cumulative............................................................................76
12.9 Time.........................................................................................76
12.10 Late Payments................................................................................76
12.11 Counterparts.................................................................................76
12.12 Entire Agreement.............................................................................76
12.13 Severability.................................................................................76
12.14 Construction.................................................................................76
12.15 Expenses.....................................................................................76
12.16 Risk of Loss.................................................................................77
12.17 Tax Consequences.............................................................................77
12.18 Commercially Reasonable Efforts..............................................................78
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LIST OF SCHEDULES AND EXHIBITS
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SCHEDULES
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Schedule 1.9 Cash Flow Adjustments
Schedule 1.12 Century Leased Property
Schedule 1.14 Century Other Real Property Interests
Schedule 1.15 Century Owned Property
Schedule 1.17 Century System Contracts
Schedule 1.18 Century System Franchises
Schedule 1.19 Century System Licenses
Schedule 1.20 Century Tangible Personal Property
Schedule 1.58 TCI Leased Property
Schedule 1.60 TCI Other Real Property Interests
Schedule 1.61 TCI Owned Property
Schedule 1.63 TCI System Contracts
Schedule 1.64 TCI System Franchises
Schedule 1.65 TCI System Licenses
Schedule 1.66 TCI Tangible Personal Property
Schedule 4.2 TCI Excluded Assets
Schedule 4.3 Century Excluded Assets
Schedule 5.1 Century Taxpayer I.D. Numbers
Schedule 5.3 Century Required Consents
Schedule 5.4 Century Liens and Permitted Liens
Schedule 5.7 Century Environmental Matters
Schedule 5.8 Century Rate Regulation Matters
Schedule 5.10 Century Financial Statements; Century Changes or
Events
Schedule 5.11 Century Litigation
Schedule 5.13(a) Century Employees
Schedule 5.13 Century Plans; Employee Matters
Schedule 5.14 Century Systems Information
Schedule 5.16 Century Bonds
Schedule 6.1 TCI Taxpayer I.D. Numbers
Schedule 6.3 TCI Required Consents
Schedule 6.4 TCI Liens and Permitted Liens
Schedule 6.7 TCI Environmental Matters
Schedule 6.8 TCI Rate Regulation Matters
Schedule 6.10 TCI Financial Statements; TCI Changes or Events
Schedule 6.11 TCI Litigation
Schedule 6.13(a) TCI Employees
Schedule 6.13 TCI Plans; Employee Matters
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Schedule 6.14 TCI Systems Information
Schedule 6.16 TCI Bonds
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EXHIBITS
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Exhibit A Century Systems
Exhibit B TCI Systems
Exhibit 7.5(b) Form of Estoppel Certificate
Exhibit 9.2(a) Form of Bill of Sale and Assignment
Exhibit 9.4(a) Form of Assumption Agreement
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EXECUTION COPY
ASSET EXCHANGE AGREEMENT
DATED AS OF NOVEMBER 18, 1998
AMONG
TCI OF EAST SAN FERNANDO VALLEY, L.P.
AND
CENTURY-TCI CALIFORNIA, L.P.
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ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT ("Agreement") is made and entered into
effective as of the 18th day of November, 1998, by and between TCI of East San
Fernando Valley, L.P., a Colorado limited partnership ("TCI") and Century-TCI
California, L.P., a Delaware limited partnership (the "Partnership").
RECITALS
A. Century owns and operates cable television systems which are
franchised or hold other operating authority and operate in and around San
Pablo, Benicia, Fairfield and Rohnert Park, California and the other communities
in California listed on EXHIBIT A (the "Century Systems"). EXHIBIT A lists each
Century System, the headends for such System, the franchises served by such
System and the owner of such System. Pursuant to a Contribution Agreement dated
of even date herewith among the Partnership, Century Exchange LLC ("Century
Exchange"), certain of its Affiliates, and certain Affiliates of TCI (the
"Contribution Agreement"), Century Exchange has agreed to contribute
substantially all the assets of the Century Systems to the Partnership.
B. TCI owns and operates cable television systems which are franchised
or hold other operating authority and operate in and around East San Fernando
Valley, California and the other communities in California listed on EXHIBIT B
(the "TCI Systems"). EXHIBIT B lists each TCI System, the headends for such
System, the franchises served by such System and the owner of such System.
C. This Agreement sets forth the terms and conditions on which the
Partnership will convey to TCI substantially all of the assets held for use or
used in connection with Century's Cable Business and TCI will convey to the
Partnership substantially all of the assets held for use or used in connection
with TCI's Cable Business, all in such a manner as to effect, to the extent
reasonably possible, a like-kind exchange of such assets under Section 1031 of
the United States Internal Revenue Code, as amended (the "Code").
D. This Agreement amends and restates in its entirety the original
Asset Exchange Agreement dated as of November 18, 1998 among the parties hereto.
AGREEMENTS
In consideration of the mutual covenants and promises set forth
herein, the parties agree as follows:
SECTION 1. DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following
capitalized terms or terms otherwise defined in this Section 1 shall have the
meanings set forth below:
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1.1 1992 Cable Act. The Cable Television Consumer Protection and
Competition Act of 1992, as amended, and the FCC rules and regulations
promulgated thereunder.
1.2 Affiliate. With respect to any Person, any Person controlling,
controlled by or under common control with such Person; "control" means the
ownership, directly or indirectly, of voting securities representing the right
generally to elect a majority of the directors (or similar officials) of a
Person or the possession, by contract or otherwise, of the authority to direct
the management and policies of a Person.
1.3 Annualized Cash Flow. As of any date of determination, four times Cash
Flow for the most recent three full calendar months ended prior to such date.
1.4 Assets. The Century Assets or the TCI Assets, as the context requires.
1.5 Basic Services. The lowest tier of cable television service offered to
subscribers of a System that includes the retransmission of local broadcast
signals as defined by the 1992 Cable Act.
1.6 Business Day. Any day other than a Saturday, Sunday or a day on which
the banking institutions in Denver, Colorado or New York, New York are required
or authorized to be closed.
1.7 Cable Act. The Cable Communications Policy Act of 1984, as amended, and
the FCC rules and regulations promulgated thereunder.
1.8 Cable Business. Century's Cable Business or TCI's Cable Business, as
the context requires.
1.9 Cash Flow. For any period (a) for any TCI System, the "Operating
Income/Loss Before Corporate Overhead" of such System as reported on such
System's profit and loss statement for such period and (b) for any Century
System, the "Net Operating Income and Loss" of such System as reported on such
System's profit and loss statement for such period, in each case without taking
into account any interest income or nonrecurring items of income, gain or
expense and as further adjusted for the matters identified on SCHEDULE 1.9, it
being agreed that Cash Flow and the line items identified above for any System
shall continue to be calculated in a manner consistent with that used for such
System as of the date of this Agreement.
1.10 Century. The Partnership and those predecessors in interest with
respect to the Century Systems that are Affiliates of Century Communications
Corp., a Texas corporation.
1.11 Century Assets. All assets, properties, privileges, rights, interests
and claims, real and personal, tangible and intangible, of every type and
description that are owned, leased, held for use or used in connection with
Century's Cable Business that are to be contributed to the Partnership pursuant
to the Contribution Agreement, including Century Tangible Personal Property,
Century
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Owned Real Property, Century Leased Property, Century Other Real Property
Interests, Century System Franchises, Century System Licenses, Century System
Contracts, Century Books and Records and Century Other Intangibles, but
excluding any Century Excluded Assets.
1.12 Century Books and Records. All engineering records, files, data,
drawings, blueprints, schematics, reports, lists, plans and processes and all
other files of correspondence, lists, records and reports concerning Century's
Cable Business, including subscribers and prospective subscribers of the Century
Systems, signal and program carriage and dealings with Governmental Authorities,
including all reports filed by or on behalf of Century with the FCC and
statements of account filed by or on behalf of Century with the U.S. Copyright
Office.
1.13 Century Leased Property. All leasehold interests in real property that
are held for use or used in connection with Century's Cable Business and that
are to be contributed to the Partnership pursuant to the Contribution Agreement,
including those described as Century Leased Property on SCHEDULE 1.12.
1.14 Century Other Intangibles. All intangible assets other than Century
System Franchises, Century System Licenses and Century System Contracts,
including subscriber lists, accounts receivable, claims (excluding any claims
relating to Century Excluded Assets), patents, copyrights and going concern
value, if any, that are owned, held for use or used in connection with Century's
Cable Business and that are to be contributed to the Partnership pursuant to the
Contribution Agreement.
1.15 Century Other Real Property Interests. All easements and rights of
access (other than those relating to multiple dwelling units) and other
interests in real property that are held for use or used in connection with
Century's Cable Business and that are to be contributed to the Partnership
pursuant to the Contribution Agreement, including those interests described as
Century Other Real Property Interests on SCHEDULE 1.14, but not including
Century Leased Property or Century Owned Property.
1.16 Century Owned Property. All fee interests in real property that are
held for use or used in connection with Century's Cable Business and that are to
be contributed to the Partnership pursuant to the Contribution Agreement,
including those described as Century Owned Property on SCHEDULE 1.15 and all
improvements thereon.
1.17 Century Required Consents. Any and all consents, authorizations and
approvals required for (a) the Partnership to transfer the Century Assets to
TCI; (b) TCI to operate the Century Systems and to own, lease, use and operate
the Century Assets and the Century Systems at the places and in the manner in
which the Century Assets are used and the Century Systems are operated as of the
date of this Agreement and as of the Closing; and (c) TCI to assume and perform
the Century System Franchises, the Century System Licenses, the leases and other
documents evidencing Century Leased Property and Century Other Real Property
Interests and the Century System Contracts, including those consents,
authorizations and approvals required under the Century System
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Franchises, the Century System Licenses, the leases and other documents
evidencing Century Leased Property and Century Other Real Property Interests and
the Century System Contracts.
1.18 Century System Contracts. All pole line agreements, underground
conduit agreements, crossing agreements, multiple dwelling, bulk billing or
commercial service agreements, leased channel access agreements and other
Contracts (other than Century System Franchises and Century System Licenses)
held for use or used in connection with Century's Cable Business and that are to
be contributed to the Partnership pursuant to the Contribution Agreement,
including those described on SCHEDULE 1.17.
1.19 Century System Franchises. All franchise agreements, operating permits
or similar governing agreements, instruments, resolutions, statutes, ordinances,
approvals, authorizations and permits obtained from any franchising authority in
connection with Century's Cable Business, including those listed on SCHEDULE
1.18, including all amendments and modifications thereto and all renewals
thereof.
1.20 Century System Licenses. The intangible cable television channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, copyright notices and other licenses, authorizations, consents
or permits issued by the FCC or any other Governmental Authority in connection
with Century's Cable Business (other than Century System Franchises, Century
System Contracts and Century Other Real Property Interests), including those
described on SCHEDULE 1.19.
1.21 Century Tangible Personal Property. All tangible personal property
that is owned, leased, held for use or used in connection with Century's Cable
Business and that are to be contributed to the Partnership pursuant to the
Contribution Agreement, including towers, tower equipment, aboveground and
underground cable, distribution systems, headend amplifiers, line amplifiers,
microwave equipment, converters, testing equipment, motor vehicles, office
equipment, computers and billing equipment, furniture, fixtures, supplies,
inventory and other physical assets, the principal items of which, including all
motor vehicles, are described on SCHEDULE 1.20.
1.22 Century's Cable Business. The cable television business and other
income-generating businesses related to the Century Systems conducted by Century
through the Century Systems.
1.23 Closing Time. 12:01 A.M., Pacific Time, on the Closing Date.
1.24 Communications Act. The Communications Act of 1934, as amended, and
the FCC rules and regulations promulgated thereunder.
1.25 Contract. Any contract, mortgage, deed of trust, bond, indenture,
lease, license, note, franchise, certificate, option, warrant, right or other
instrument, document, obligation or agreement, whether written or oral.
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1.26 Contribution. The transactions contemplated by the Contribution
Agreement to be consummated at the closing thereunder.
1.27 Equivalent Basic Subscribers (or "EBSs"). As of any date of
determination and for each franchise area served by a System, the sum of (a) the
total number of private residential customer accounts that are billed by
individual unit for at least Basic Services (regardless of whether such accounts
are in single-family homes or in individually billed units in apartment
buildings and other multi-unit buildings) (exclusive of (i) "second connects"
and "additional outlets" as such terms are commonly understood in the cable
television industry, and (ii) accounts that are not charged or are charged less
than the standard monthly service fees and charges then in effect for such
System for Basic Services) and (b) the quotient of (i) the total monthly
billings for sales of Basic Services and Expanded Basic Services by such System
for such franchise area during the most recent billing period ended prior to the
date of calculation to commercial, bulk-billed and other accounts not billed by
individual unit (whether on a discounted or non-discounted basis) and to private
residential customer accounts that are billed by individual unit but pay less
than the standard monthly service fees charged for Basic Services, but excluding
billings in excess of a single month's charges for any account, divided by (ii)
the standard monthly combined rate (without discount of any kind) charged by
such System for such franchise area to individually billed subscribers for the
highest level of Basic Services and Expanded Basic Services offered by such
system in effect during such billing period, which monthly rate will not be less
than the applicable rates specified in SCHEDULE 5.14 (in the case of the
Partnership) or SCHEDULE 6.14 (in the case of TCI). For purposes of calculating
the number of EBSs, there will be excluded (i) all accounts billed by individual
unit that are, and all billings to any commercial, bulk-billed and other
accounts not billed by individual unit that are, more than 60 days past due in
the payment of any amount in excess of the lesser of $5.00 or the standard rate
charged for Basic Services at the time of determination, (ii) any accounts
billed by individual unit and all commercial, bulk-billed and other accounts not
billed by individual units that, as of the date of calculation, have not paid in
full the charges for at least one full month of the subscribed service, (iii)
that portion of the billings to all accounts billed by individual unit included
in clause (b) above and any commercial, bulk-billed and other accounts not
billed by individual unit representing an installation or other non-recurring
charge, a charge for equipment or for any outlet or connection other than the
first outlet or first connection in any individually billed unit or, with
respect to a bulk account, in any residential unit (e.g., an individual
apartment or rental unit), a charge for any tiered service other than Expanded
Basic Services (whether or not included within Pay TV), any charge for Pay TV or
a pass-through charge for sales taxes, line-itemized franchise fees, fees
charged by the FCC and the like, and (iv) any individually billed unit and all
billings to any commercial, bulk-billed or other accounts not billed by
individual unit that was solicited within the 60 day period preceding the
Closing Date to purchase such services by promotions or offers of discounts
other than those ordinarily made by the party for which the determination of
EBSs is being made or its predecessor. For purposes of this definition, payments
on account of monthly billings will be deemed due on the first day of the period
for which the service to which such billings relate is provided.
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1.28 Environmental Law. Any Legal Requirement concerning the protection of
public or employee health, safety, welfare or the environment, including Legal
Requirements relating to emissions, discharges, releases or threatened releases
of Hazardous Substances into the environment, air (including both ambient and
within buildings and other structures), surface water, ground water or land or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances.
1.29 ERISA. The Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder and published
interpretations with respect thereto.
1.30 ERISA Affiliate. As to any Person, any trade or business, whether or
not incorporated, which together with such Person would be deemed a single
employer as determined under Section 4001(a)(14) of ERISA.
1.31 Expanded Basic Services. Any level of video programming service
greater than Basic Services provided over a cable television System, regardless
of service tier, other than Basic Services, any new product tier and Pay TV.
1.32 FCC. The Federal Communications Commission.
1.33 Financial Statements. Century's Financial Statements or TCI's
Financial Statements, as the context requires.
1.34 GAAP. Generally accepted accounting principles as in effect from time
to time.
1.35 Governmental Authority. The United States of America, any state,
commonwealth, territory or possession of the United States of America and any
political subdivision or quasi-governmental authority of any of the same,
including any court, tribunal, department, commission, board, bureau, agency,
county, municipality, province, parish or other instrumentality of any of the
foregoing.
1.36 Hazardous Substances. (a) Any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. 'SS''SS'6901
et seq.), as amended, and the rules and regulations promulgated thereunder; (b)
any "hazardous substance" as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (15 U.S.C. 'SS''SS'9601 et
seq.) (CERCLA), as amended, and the rules and regulations promulgated
thereunder; (c) any substance regulated by the Toxic Substances Control Act
(TSCA) (15 U.S.C. 'SS''SS'2601 et seq.), or the Insecticide, Fungicide and
Rodenticide Act (IFRA) (7 U.S.C. 'SS''SS'136 et seq.), each as amended, and the
rules and regulations promulgated thereunder; (d) asbestos or asbestos-
containing material of any kind or character; (e) polychlorinated biphenyls;
(f) any substances regulated under the provisions of Subtitle I of RCRA relating
to underground storage tanks; (g) any substance the presence, use, handling,
treatment, storage or disposal of which on real property is prohibited by any
Environmental Law; and (h) any other substance which by any Environmental Law
requires special
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handling, reporting or notification of any Governmental Authority in its
collection, storage, use, treatment or disposal.
1.37 HSR Act. The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
1.38 Judgment. Any judgment, writ, order, injunction, award or decree of
any court, judge, justice or magistrate, including any bankruptcy court or judge
or the arbitrator in any binding arbitration, and any order of or by any
Governmental Authority.
1.39 Knowledge. The actual knowledge of a particular matter of one or more
of the principal corporate personnel of such party involved in the transactions
contemplated by this Agreement, or the general manager or one or more of the
managers of such party's Systems.
1.40 Leased Property. The Century Leased Property or TCI Leased Property,
as the context requires.
1.41 Legal Requirement. Applicable common law and any statute, ordinance,
code or other law, rule, regulation, order, technical or other written standard,
requirement, policy or procedure enacted, adopted, promulgated, applied or
followed by any Governmental Authority, including any Judgment and all judicial
decisions applying common law or interpreting any other Legal Requirement, in
each case, as amended.
1.42 Lien. Any security interest, security agreement, financing statement
filed with any Governmental Authority, conditional sale or other title retention
agreement, any lease, consignment or bailment given for purposes of security,
any mortgage, lien, indenture, pledge, option, encumbrance, adverse interest,
constructive trust or other trust, claim, attachment, exception to, defect in or
other condition affecting title or other ownership interest (including but not
limited to reservations, rights of entry, possibilities of reverter,
encroachments, protrusions, easements, rights-of-way, rights of first refusal,
restrictive covenants, leases and licenses) of any kind, which constitutes an
interest in or claim against property, whether arising pursuant to any Legal
Requirement, System License, System Franchise, System Contract or otherwise.
1.43 Litigation. Any written claim, action, suit, proceeding, arbitration
or hearing.
1.44 Losses. Any claims, losses, liabilities, damages, penalties, costs and
expenses, including interest that may be imposed in connection therewith,
expenses of investigation, reasonable fees and disbursements of counsel and
other experts, and the cost to any Person making a claim or seeking
indemnification under this Agreement with respect to funds expended by such
Person by reason of the occurrence of any event or the existence or assertion of
any Liens (other than Permitted Liens) with respect to which indemnification is
sought, except Losses incurred by a Person or on behalf of a Person in asserting
any claim for indemnification against a party where it is ultimately determined
(including by agreement of the parties) that such Person is not entitled to
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indemnification from such party (before giving effect to the limitations on such
indemnification obligations set forth in Sections 11.5 and 11.6).
1.45 Non-TV Products and Services. (A) local or long distance wireline
telephony services, (B) data (other than data provided incidental to, or
integrated with, television programming (such as interactive services) and high
speed broadband internet access and other services now or hereafter provided by
At Home Corporation), (C) internet access services (other than high speed
broadband internet access and other services now or hereafter offered by At Home
Corporation and other than internet access services that are provided incidental
to, or integrated with, television programming), (D) video (other than cable,
broadcast or any other television programming, including any substantially
similar successor services that may replace these types of services), e.g.,
video telecommunications services, and (E) wireless telecommunications products
and services (other than cable, broadcast or any other television programming,
including any substantially similar successor services that may replace these
types of services). Notwithstanding anything to the contrary in this definition,
"Non-TV Products and Services" does not include (x) cable, broadcast or other
television programming, or (y) high speed broadband communication internet
access or services now or hereafter provided by At Home Corporation.
1.46 Other Real Property Interests. The Century Other Real Property
Interests or the TCI Other Real Property Interests, as the context requires.
1.47 Owned Property. Century Owned Property or TCI Owned Property, as the
context requires.
1.48 Pay TV. A la carte tiers or premium programming services selected by
and sold to subscribers on a per channel or per program basis.
1.49 Permitted Lien. Any (a) Lien securing Taxes, assessments and
governmental charges not yet due and payable, (b) zoning law or ordinance or any
similar Legal Requirement, (c) right reserved to any Governmental Authority to
regulate the affected property or to acquire the affected property for fair
value, whether upon condemnation or pursuant to any Franchise or ordinance, (d)
as to Owned Property and Other Real Property Interests, any Lien not securing
indebtedness or arising out of the obligation to pay money that does not
individually or in the aggregate interfere with the right or ability to own, use
or operate the Owned Property or Other Real Property Interests as they are being
used or operated or materially diminish the value of such Owned Property or
Other Real Property Interests, (e) in the case of Owned Property and Leased
Property, any lease or sublease by TCI or Century in favor of a third party that
is disclosed in the Schedules to this Agreement, and (f) in the case of Leased
Property, (i) the rights of any lessor and (ii) any Lien granted by any lessor
of Leased Property; provided that "Permitted Lien" will not include any Lien
securing a debt or claim (other than inchoate materialmen's, mechanics',
workmen's, repairmen's or other like Liens arising in the ordinary course of
business or any Lien described in clause (f) above) or any Lien which could
prevent or impair in any way the conduct of the business of the affected System
as it is currently being conducted, and provided further that the classification
of any Lien as a "Permitted
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Lien" will not affect any liability which TCI may have under this Agreement for
any such Lien with respect to the exchange of the TCI Systems or which the
Partnership may have under this Agreement for any such Lien with respect to the
exchange of the Century Systems, including pursuant to any indemnity obligation
under this Agreement.
1.50 Person. Any natural person, Governmental Authority, corporation,
general or limited partnership, limited liability company, joint venture, trust,
association or unincorporated entity of any kind.
1.51 Required Consents. The Century Required Consents or the TCI Required
Consents, as the context requires.
1.52 System. Any of the Century Systems or the TCI Systems, as the context
requires.
1.53 System Contracts. The Century System Contracts or the TCI System
Contracts, as the context requires.
1.54 System Franchises. The Century System Franchises or the TCI System
Franchises, as the context requires.
1.55 System Licenses. The Century System Licenses or the TCI System
Licenses, as the context requires.
1.56 Tangible Personal Property. The Century Tangible Personal Property or
the TCI Tangible Personal Property, as the context requires.
1.57 Taxes. All levies and assessments of any kind or nature imposed by any
Governmental Authority, including all income, sales, use, ad valorem, value
added, franchise, severance, net or gross proceeds, withholding, payroll,
employment, excise or property taxes and levies or assessments related to
unclaimed property, together with any interest thereon and any penalties,
additions to tax or additional amounts applicable thereto.
1.58 TCI Assets. All assets, properties, privileges, rights, interests and
claims, real and personal, tangible and intangible, of every type and
description that are owned, leased, held for use or used in connection with
TCI's Cable Business and in which TCI or any Affiliate of TCI has any right,
title or interest or acquires any right, title or interest on or before the
Closing, including TCI Tangible Personal Property, TCI Owned Real Property, TCI
Leased Property, TCI Other Real Property Interests, TCI System Franchises, TCI
System Licenses, TCI System Contracts, TCI Books and Records and TCI Other
Intangibles, but excluding any TCI Excluded Assets.
1.59 TCI Books and Records. All engineering records, files, data, drawings,
blueprints, schematics, reports, lists, plans and processes and all other files
of correspondence, lists, records and reports concerning TCI's Cable Business,
including subscribers and prospective subscribers of the
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TCI Systems, signal and program carriage and dealings with Governmental
Authorities, including all reports filed by or on behalf of TCI with the FCC and
statements of account filed by or on behalf of TCI with the U.S. Copyright
Office.
1.60 TCI Leased Property. All leasehold interests in real property that are
held for use or used in connection with TCI's Cable Business which TCI or any
Affiliate of TCI has, or acquires prior to Closing, including those described as
TCI Leased Property on SCHEDULE 1.58.
1.61 TCI Other Intangibles. All intangible assets other than TCI System
Franchises, TCI System Licenses and TCI System Contracts, including subscriber
lists, accounts receivable, claims (excluding any claims relating to TCI
Excluded Assets), patents, copyrights and going concern value, if any, that are
owned, held for use or used in connection with TCI's Cable Business and in which
TCI or any Affiliate of TCI has, or acquires prior to Closing, any right, title
or interest.
1.62 TCI Other Real Property Interests. All easements and rights of access
(other than those relating to multiple dwelling units) and other interests in
real property that are held for use or used in connection with TCI's Cable
Business and in which TCI or any Affiliate of TCI has, or acquires prior to
Closing, any right, title or interest, including those interests described as
TCI Other Real Property Interests on SCHEDULE 1.60, but not including TCI Leased
Property or TCI Owned Property.
1.63 TCI Owned Property. All fee interests in real property that are held
for use or used in connection with TCI's Cable Business which TCI or any
Affiliate of TCI has, or acquires prior to Closing, including those described as
TCI Owned Property on SCHEDULE 1.61 and all improvements thereon.
1.64 TCI Required Consents. Any and all consents, authorizations and
approvals required for (a) TCI to transfer the TCI Assets to the Partnership;
(b) the Partnership to operate the TCI Systems and to own, lease, use and
operate the TCI Assets and the TCI Systems at the places and in the manner in
which the TCI Assets are used and the TCI Systems are operated as of the date of
this Agreement and as of the Closing; and (c) the Partnership to assume and
perform the TCI System Franchises, the TCI System Licenses, the leases and other
documents evidencing TCI Leased Property or TCI Other Real Property Interests
and the TCI System Contracts, including those consents, authorizations and
approvals required under the TCI System Franchises, the TCI System Licenses, the
leases and other documents evidencing TCI Leased Property and TCI Other Real
Property Interests and the TCI System Contracts.
1.65 TCI System Contracts. All pole line agreements, underground conduit
agreements, crossing agreements, multiple dwelling, bulk billing or commercial
service agreements, leased channel access agreements and other Contracts (other
than TCI System Franchises and TCI System Licenses) held for use or used in
connection with TCI's Cable Business and to which TCI or any Affiliate of TCI
is, or becomes prior to Closing, a party or bound, including those described on
SCHEDULE 1.63.
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1.66 TCI System Franchises. All franchise agreements, operating permits or
similar governing agreements, instruments, resolutions, statutes, ordinances,
approvals, authorizations and permits obtained from any franchising authority in
connection with TCI's Cable Business, including those listed on SCHEDULE 1.64,
including all amendments and modifications thereto and all renewals thereof.
1.67 TCI System Licenses. The intangible cable television channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, copyright notices and other licenses, authorizations, consents
or permits issued by the FCC or any other Governmental Authority in connection
with TCI's Cable Business (other than TCI System Franchises, TCI System
Contracts and TCI Other Real Property Interests), including those described on
SCHEDULE 1.65.
1.68 TCI Tangible Personal Property. All tangible personal property that is
owned, leased, held for use or used in connection with TCI's Cable Business and
in which TCI or any Affiliate of TCI has, or acquires prior to Closing, any
right, title or interest, including towers, tower equipment, aboveground and
underground cable, distribution systems, headend amplifiers, line amplifiers,
microwave equipment, converters, testing equipment, motor vehicles, office
equipment, computers and billing equipment, furniture, fixtures, supplies,
inventory and other physical assets, the principal items of which, including all
motor vehicles, are described on SCHEDULE 1.66.
1.69 TCI's Cable Business. The cable television business and other
income-generating businesses related to the TCI Systems conducted by TCI through
the TCI Systems.
1.70 Third Party. With respect to TCI, any Person other than TCI and its
Affiliates and, with respect to the Partnership, any Person other than the
Partnership and its Affiliates (including Century).
1.71 Transaction Documents. The instruments and documents described in
Sections 9.2 and 9.3 which are to be executed and delivered by or on behalf of
Century or TCI in connection with this Agreement or the transactions
contemplated hereby.
1.72 Other Definitions. The following terms are defined in the Sections or
Recitals indicated:
<TABLE>
<CAPTION>
Term Section or Recital
---- ------------------
<S> <C>
Action 11.4
Adjustment Amount 3.2(j)
Agreement First Paragraph
Antitrust Division 7.7
Cash Consideration 3.1
Cash Flow Multiple 3.1
Century Assumed Obligations and Liabilities 4.3
</TABLE>
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<TABLE>
<S> <C>
Century Balance Sheet 5.10
Century Damages 11.5
Century Exchange Recital A
Century Excluded Assets 4.4
Century Plans 5.13(b)
Century Systems Recital A
Century Title Policies 9.3(d)
Century's Financial Statements 5.10
Closing 9.1
Closing Date 9.1
Code Recital C
"commercially reasonable efforts" 12.18
Contribution Agreement Recital A
Copyright Act 5.8(a)
Cost of Service Election 5.8(d)
Estoppel Certificate 7.5(b)
FAA 5.8(c)
Final Adjustment Certificate 3.3(b)
FTC 7.7
Hired Employee 7.3(g)
Hiring Party 7.3(g)
Indemnified Party 11.4
Indemnifying Party 11.4
Initial Adjustment Certificate 3.3(a)
Outside Closing Date 10.1(b)
Partnership First Paragraph
Prime Rate 12.10
Pro Rata Adjustments 3.2(a)
Qualified Intermediary 3.1
Rate Determination 3.4(a)
Retained Employees 7.3(a)
Surveys 7.6
Survival Period 11.1
Taking 12.16
TCI First Paragraph
TCI Assumed Obligations and Liabilities 4.1
TCI/AT&T Transaction 7.5(a)
TCI Balance Sheet 6.10
TCI Damages 11.6
TCI Excluded Assets 4.2
TCI Plans 6.13(b)
TCI Systems Recital C
TCI Title Policies 9.2(d)
</TABLE>
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<TABLE>
<S> <C>
TCI's Financial Statements 6.10
Title Commitments 7.6
Title Company 7.6
Title Defect 7.6
Transferee Party 7.19(d)
Transferor Party 7.19(d)
Transitional Billing Services 7.12
Upgrade Deductions 3.2(f)
WARN 5.13(a)
</TABLE>
1.73 Accounting Terms. All accounting terms not otherwise defined in this
Agreement will have the meanings ascribed to them under GAAP.
SECTION 2. EXCHANGE
2.1 Exchange.
(a) Subject to the terms and conditions set forth in this Agreement,
at the Closing, TCI and the Partnership will exchange simultaneously the TCI
Assets for the Century Assets, free and clear of all Liens (except Permitted
Liens). TCI and the Partnership agree to use all reasonable efforts to structure
the transaction in such a way that it will be a tax-free exchange of like-kind
assets under Section 1031 of the Code, the regulations promulgated thereunder
and judicial and administrative interpretations thereof.
(b) To the maximum extent permitted by Section 1031 of the Code, the
regulations promulgated thereunder and judicial and administrative
interpretations thereof, in such exchange: (i) the TCI Tangible Personal
Property and the Century Tangible Personal Property will be exchanged each for
the other; (ii) the TCI Owned Property, TCI Leased Property and TCI Other
Property Interests and Century Owned Property, Century Leased Property and
Century Other Real Property Interests will be exchanged each for the other; and
(iii) the TCI System Contracts, TCI System Franchises, TCI System Licenses and
TCI Other Intangibles and the Century System Contracts, Century System
Franchises, Century System Licenses and Century Other Intangibles will be
exchanged each for the other.
SECTION 3. CONSIDERATION
3.1 Value of Assets; Cash Consideration. Annualized Cash Flow for the TCI
Systems and for the Century Systems will be determined as of the Closing Date
and the party with the lower Annualized Cash Flow as of the Closing Date will
pay to the other party or its designee at the Closing in accordance with Section
3.3 by wire transfer, in immediately available funds, an amount equal to the
difference between the Annualized Cash Flows of the parties multiplied by the
cash flow multiple set forth on SCHEDULE 1.9 (the "Cash Flow Multiple"), subject
to adjustment as provided in Section 3.2 (the "Cash Consideration"). If the
party to whom payment is to be made has
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transferred its rights under this agreement to a Qualified Intermediary (as
defined in Treas, Reg. 'SS'1.1031(k)-1(g)), the party making such payment will
make it in accordance with the terms of the Qualified Intermediary agreement
governing such assignment.
3.2 Adjustments to Cash Consideration. The following amounts shall be
calculated as of the Closing Time with respect to each of TCI and the
Partnership (the "Pro Rata Adjustments"):
(a) Appropriate adjustments on a pro rata basis as of the Closing Time
will be made with respect to each of TCI and the Partnership for all prepaid
expenses other than inventory (but only to the extent the full benefit of such
prepaid expenses will be realizable by the other party within 12 months after
the Closing Date), and for all accrued expenses (including real and personal
property taxes), copyright fees and franchise or license fees or charges,
prepaid income, subscriber prepayments and, subject to paragraph (e) below,
accounts receivable related to such party's Cable Business, all as determined in
accordance with GAAP consistently applied and to reflect the principle that all
expenses and income attributable to such party's Cable Business for the period
through and including the Closing Time are for the account of such party, and
all expenses and income attributable to such party's Cable Business for the
period after the Closing Time are for the account of the other party.
(b) All advance payments to, or funds of third parties on deposit
with, TCI or the Partnership as of the Closing Time and relating to such party's
Cable Business, including advance payments and deposits (including any accrued
interest on such deposits) by subscribers served by such party's Cable Business
for converters, encoders, decoders, cable television service and related sales,
shall be assumed by, and credited to the account of, the other party.
(c) There shall be credited to each party the economic value of all
accrued vacation time that such party credits after the Closing Time to the
employees of the other party that are hired by such party pursuant to Section
7.3(g), where economic value is the amount equal to the cash compensation that
would be payable to each such employee at his or her level of compensation on
the Closing Date for a period equal to such employee's credited accrued
vacation.
(d) All deposits relating to the business and operations of each
party's Systems that are held by third parties as of the Closing Time for the
account of such party or as security for such party's performance of its
obligations, including deposits on leases and deposits for utilities, will be
credited to the account of such party in their full amounts and will become the
property of the other party; provided that no adjustment will be made for any
deposits the full benefit of which for contractual or other reasons cannot be
made available to the other party within 12 months following the Closing Time.
(e) Neither TCI nor the Partnership will receive credit for any of its
(i) accounts receivable resulting from cable television service sales any
portion of which is 60 days or more past due as of the Closing Time, (ii)
accounts receivable resulting from advertising sales any portion of which is 120
days or more past due as of the Closing Time; provided, that each party shall
receive
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credit for advertising accounts receivable from national and regional
representation accounts that are assigned to the other party at Closing in an
amount equal to 100% of the face amount of such accounts receivable regardless
of the age thereof, or (iii) accounts receivable from customers whose accounts
are inactive or whose service is pending disconnection for any reason as of the
Closing Time. For purposes of making "past due" calculations under this
paragraph, the billing statements of a System will be deemed to be due and
payable on the first day of the period during which the service to which such
billing statements relate is provided.
(f) There shall be debited to the accounts of TCI and the Partnership,
an amount equal to the upgrade deduction for each party specified on SCHEDULE
1.9 (the "Upgrade Deductions"); provided that the Upgrade Deduction for each
party shall be reduced by the aggregate amount of all capital expenditures made
by such party (and, in the case of the Partnership, all capital expenditures
made by Century) during the period from November 1, 1997 through the Closing
Date relating to upgrades and rebuilds of System plant capacity and associated
items (including headend sites and headend equipment to expand channel
capacity).
(g) There shall be credited to the accounts of TCI and Century all
capital expenditures made by such party relating to the launch of digital or
internet services, including the purchase of digital converters but not
including digital converters purchased in the ordinary course of business to
replace lost, stolen or defective digital converters.
(h) There shall be credited to the account of the other party an
amount equal to the aggregate amount of all capital expenditures reasonably
estimated by the other party to be incurred by it after Closing to assure that
the Computer and Other Systems received by it are Year 2000 Ready; provided that
the amount so estimated shall be subject to the dispute resolution procedures
set forth in Section 3.3.
(i) The adjustments provided for in this Section 3.2 will be made
without duplication. In addition, none of the adjustments provided for in this
Section 3.2 will be made with respect to any Excluded Asset or with respect to
any item of income or expense related to an Excluded Asset.
(j) The Cash Consideration to be paid pursuant to Section 3.1 shall be
increased or decreased, as applicable, by the net amount of the Pro Rata
Adjustments calculated under this Section 3.2 (the "Adjustment Amount").
3.3 Calculation of Adjustments.
(a) Each party will estimate in good faith with respect to its
Systems, and set forth, together with a detailed statement of the calculation
thereof, the Annualized Cash Flow and Pro Rata Adjustments with respect to its
Cable Business in a certificate (the "Initial Adjustment Certificate") executed
by an authorized representative of such party and delivered to the other party
at least 10 Business Days prior to the Closing. Each Initial Adjustment
Certificate will be
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accompanied by appropriate documentation, including an accounts receivable
detail with relevant aging information as of the Closing Time, in summary form,
supporting the determination of the Annualized Cash Flow and Pro Rata
Adjustments proposed in such certificate. Following receipt of such Initial
Adjustment Certificate, the recipient shall have five Business Days to review
such schedule and supporting information and to notify the preparer of such
Initial Adjustment Certificate of any disagreements with the preparer's
estimates of its Annualized Cash Flow or Pro Rata Adjustments. If the recipient
provides a notice of disagreement with the preparer's estimates of such amounts
within such five Business Day period, TCI and the Partnership shall negotiate in
good faith to resolve any such dispute and to reach an agreement prior to the
Closing on such estimated amounts as of the Closing Time. The estimates so
agreed upon by TCI and the Partnership or (if the parties do not reach such an
agreement on such estimated amounts set forth in the Initial Adjustment
Certificate prior to the Closing Date or if the recipient fails to provide a
notice of disagreement with the preparer's estimates of such amounts within the
time provided) the estimates of such Annualized Cash Flow and Pro Rata
Adjustments set forth in the Initial Adjustment Certificate shall be the basis
for preliminarily determining the Cash Consideration to be paid pursuant to
Section 3.1 and the preliminary adjustment to be made to Cash Consideration on
the Closing Date in respect of the Adjustment Amount. All disagreements that may
exist with respect to the Initial Adjustment Certificate shall be resolved in
connection with the preparation of the Final Adjustment Certificate pursuant to
paragraph (b) below.
(b) Within 90 days after the Closing, each party will deliver to the
other a certificate (the "Final Adjustment Certificate") showing in full detail
its final determination of Annualized Cash Flow and the Pro Rata Adjustments
with respect to its Systems, which certificate will be accompanied by
appropriate documentation supporting the amounts proposed in such certificate,
including an accounts receivable detail with relevant aging information as of
the Closing Time, and which will be executed by an officer of such party. Each
party will review the other's Final Adjustment Certificate and will give written
notice to the other party of any objections it has to the calculations shown in
such certificate within 30 days after its receipt thereof. TCI and the
Partnership will endeavor in good faith to resolve any such objections within 30
days after the receipt by the parties of each other's objections. If any
objections or disputes have not been resolved at the end of such 30-day period,
the disputed portions of Annualized Cash Flow or the Pro Rata Adjustments will
be determined within the following 30 days by a partner in a major accounting
firm with substantial cable television audit experience which is not the auditor
of either the Partnership or TCI (or any Affiliate of either of them) and the
determination of such auditor will be final and will be binding upon all
parties. If the Partnership and TCI cannot agree with respect to the selection
of an auditor, the Partnership and TCI will each select an auditor and those two
auditors will select a third auditor whose determination will be final and will
be binding upon all parties. The Partnership and TCI will bear equally the
expenses arising in connection with an auditor's determination of disputed
amounts, and payment of the final amount owed pursuant to this Section 3 (after
taking into account any adjustments or payments made or paid at Closing) will be
made by the party responsible therefor to the other party in immediately
available funds within 15 Business Days after the final determination is made.
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(c) Each party will provide to the other reasonable access to all
records in its possession which were used in the preparation of its Initial
Adjustment Certificate and Final Adjustment Certificate.
3.4 Post-Closing Rate Adjustments.
(a) If at any time after the final determination of Cash Consideration
pursuant to this Section 3, it is determined pursuant to a final non-appealable
order of, or pursuant to a final settlement with, the FCC or other Governmental
Authority (a "Rate Determination"), that (i) any rates charged to subscribers of
any Systems for services or equipment at any time during the three month period
used to calculate Annualized Cash Flow were not allowable under rules and
regulations promulgated by the FCC under the Communications Act, or any
authoritative interpretation thereof, and (ii) that the rates to be charged by
such Systems following the Closing Date must be reduced, then the Cash
Consideration to be paid pursuant to this Section 3 will be recalculated using
an adjusted Annualized Cash Flow that reflects the allowable rate for such time
period (after taking into account as an offset any other rate increases that are
available to the affected Systems at the time); provided that this Section
3.4(a) will not require any duplicative adjustments with respect to adjustments
made under the terms set forth in SCHEDULE 1.9. Upon the happening of an event
specified in this Section 3.4(a), the parties will negotiate in good faith for a
period of 60 days to reach agreement on the amount of the required adjustment;
provided that if TCI and the Partnership are not able to agree on the amount of
the adjustment to Cash Consideration to be made pursuant to this Section 3.4(a)
within such time frame, any disputed amounts will be determined in the manner
set forth in Section 3.3(b) with respect to disputes involving the Annualized
Cash Flow and Pro Rata Adjustments. Upon agreement or final determination of the
required adjustment, the party responsible for payment pursuant to this Section
3.4(a) shall promptly make such payment to the other.
(b) If pursuant to a Rate Determination that occurred prior to Closing
any rates charged to subscribers of any Systems for services or equipment at any
time during the three month period used to calculate Annualized Cash Flow were
required to be reduced and following Closing there is another Rate Determination
pursuant to which such rates are permitted to be raised following Closing, then
the Cash Consideration to be paid pursuant to this Section 3 will be
recalculated using an adjusted Annualized Cash Flow that reflects the increased
rate that would have been permissible for such time period (after taking into
account as an offset any other rate decreases that are applicable to the
affected Systems at the time); provided that this Section 3.4(b) will not
require any duplicative adjustments with respect to adjustments made under the
terms set forth in SCHEDULE 1.9. Upon the happening of an event specified in
this Section 3.4(b), the parties will negotiate in good faith for a period of 60
days to reach agreement on the amount of the required adjustment; provided that
if TCI and the Partnership are not able to agree on the amount of the adjustment
to Cash Consideration to be made pursuant to this Section 3.4(b) within such
time frame, any disputed amounts will be determined in the manner set forth in
Section 3.3(b) with respect to disputes involving the Annualized Cash Flow and
Pro Rata Adjustments. Upon agreement or final determination of the
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required adjustment, the party responsible for payment pursuant to this Section
3.4(b) shall promptly make such payment to the other.
SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS
4.1 TCI Assumed Obligations and Liabilities. As of the Closing Time, TCI
will assume and after the Closing Time, TCI will pay, discharge and perform the
following (the "TCI Assumed Obligations and Liabilities"): (a) those obligations
and liabilities accruing and relating to periods after the Closing Time under or
with respect to the Century Assets assigned and transferred to TCI at the
Closing; (b) those obligations and liabilities of Century and the Partnership to
customers of Century's Cable Business for (i) subscriber deposits related to the
Century Systems held by the Partnership as of the Closing Time in the amount for
which TCI received credit under Section 3.2 and (ii) customer, advertising and
other advance payments held by the Partnership as of the Closing Time in the
amount for which TCI received credit under Section 3.2; (c) all other
obligations and liabilities accruing and relating to Century's Cable Business
prior to the Closing Time in respect of which TCI received a credit pursuant to
Section 3.2; and (d) all other obligations and liabilities accruing and relating
to periods after the Closing Time and arising out of TCI's ownership of the
Century Assets or operation of the Century Systems after the Closing Time,
except to the extent that such obligations or liabilities relate to any Century
Excluded Asset. All obligations and liabilities, contingent, fixed or otherwise,
arising out of or relating to the Century Assets or the Century Systems other
than the TCI Assumed Obligations and Liabilities will remain and be the
obligations and liabilities solely of the Partnership or, if not assumed by the
Partnership, Century, including any obligation, liability or claim relating to
or arising pursuant to (x) rate refunds to subscribers of the Century Systems
with respect to rates charged to such subscribers during periods through and
including the Closing Time, (y) litigation commenced prior to, or related to an
event occurring at any time prior to the Closing Time, or (z) any Century
Excluded Asset.
4.2 TCI Excluded Assets. "TCI Excluded Assets" means all: (a) programming
(including cable guide Contracts) and retransmission consent Contracts of TCI
(other than those listed on SCHEDULE 1.63 (TCI System Contracts) and not
designated as a TCI Excluded Asset); (b) TCI Plans; (c) insurance policies of
TCI and rights and claims thereunder (except as otherwise provided in Section
12.16); (d) bonds, letters of credit, surety instruments and other similar items
and any stocks, bonds, certificates of deposit and similar investments of TCI;
(e) cash and cash equivalents and notes receivable of TCI; (f) TCI's trademarks,
trade names, service marks, service names, logos and similar proprietary rights,
subject to Section 7.11; (g) subscriber billing Contracts and related leased
equipment and software of TCI, even if listed on any Schedule to this Agreement
but subject to Section 7.12; (h) all contracts and related accounts receivable
for providing DMX service to commercial accounts via direct broadcast satellite
even if listed on a Schedule to this Agreement; (i) all TCI Contracts relating
to national advertising sales representation, including Contracts with National
Cable Communications or Cable Networks, Inc.; (j) all agreements pursuant to
which TCI has created, incurred, assumed or guaranteed indebtedness for borrowed
money or under which any Lien securing such indebtedness has been or may be
imposed on any TCI Asset; (k) any claims, rights or choses in action of TCI
related to the period prior to the Closing Time (other than customer
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and advertising accounts receivable), including, without limitation, any
Litigation and the proceeds thereof and any claims, rights and interest in and
to any refunds of federal, state or local franchise, income or other taxes or
payments of any nature for the periods prior to the Closing Time, including
copyright fees; (l) any books and records that TCI is required by any Legal
Requirement to retain and any books of account, tax reports and returns and the
like related to the TCI Systems; provided that copies of such books and records
will be made available to the Partnership for a period of three years (and six
years in the case of tax reports and returns and underlying books and records,
although in the case of underlying books and records, the parties acknowledge
that they are not retained for periods for which an IRS field examination has
been completed) from the Closing Date upon reasonable request; (m) TCI's
partnership records and other books and records related to internal partnership
matters and financial relationships with TCI's lenders and affiliates; (n) any
employment, union, collective bargaining, compensation, bonus, deferred
compensation, noncompetition, confidentiality, consulting, agency or management
agreements of TCI other than those listed on SCHEDULE 1.63; (o) all documents,
reports and records relating to the employees of the TCI Systems; provided that
copies of such books and records will be made available to the Partnership for a
period of three years from the Closing Date upon reasonable request by the
Partnership accompanied by a waiver and release from the employee whose records
are sought in form and substance reasonably satisfactory to TCI; (p) any
agreement, right, asset or property owned, leased or held by TCI or its
affiliates that is not used or held for use primarily in connection with the
operation of the TCI Systems; (q) TCI's rights under the @Home Distribution
Agreement (as defined in the limited partnership agreement of the Partnership),
it being agreed that the parties' rights and obligations with respect thereto
shall be as specified in such partnership agreement and (r) rights, assets and
properties described on SCHEDULE 4.2.
4.3 Century Assumed Obligations and Liabilities. As of the Closing Time,
the Partnership will assume and after the Closing Time, the Partnership will
pay, discharge and perform the following (the "Century Assumed Obligations and
Liabilities"): (a) those obligations and liabilities accruing and relating to
periods after the Closing Time under or with respect to the TCI Assets assigned
and transferred to the Partnership at the Closing; (b) those obligations and
liabilities of TCI to customers of TCI's Cable Business for (i) subscriber
deposits related to the TCI Systems held by TCI as of the Closing Time in the
amount for which the Partnership received credit under Section 3.2 and (ii)
customer, advertising and other advance payments held by TCI as of the Closing
Time in the amount for which the Partnership received credit under Section 3.2;
(c) all other obligations and liabilities accruing and relating to TCI's Cable
Business prior to the Closing Time in respect of which the Partnership received
a credit pursuant to Section 3.2; and (d) all other obligations and liabilities
accruing and relating to periods after the Closing Time and arising out of the
Partnership's ownership of the TCI Assets or operation of the TCI Systems after
the Closing Time, except to the extent that such obligations or liabilities
relate to any TCI Excluded Asset. All obligations and liabilities, contingent,
fixed or otherwise, arising out of or relating to the TCI Assets or the TCI
Systems other than the Century Assumed Obligations and Liabilities will remain
and be the obligations and liabilities solely of TCI including any obligation,
liability or claim relating to or arising pursuant to (x) rate refunds to
subscribers of the TCI Systems with respect to rates charged to such subscribers
during periods through and including the Closing Time, (y) litigation
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commenced prior to, or related to an event occurring at any time prior to the
Closing Time, or (z) any TCI Excluded Asset.
4.4 Century Excluded Assets. "Century Excluded Assets" means all: (a)
programming (including cable guide Contracts) and retransmission consent
Contracts of the Partnership (other than those listed on SCHEDULE 1.17 (Century
System Contracts) and not designated as a Century Excluded Asset); (b) Century
Plans; (c) insurance policies of Century and rights and claims thereunder
(except as otherwise provided in Section 12.16); (d) bonds, letters of credit,
surety instruments and other similar items and any stocks, bonds, certificates
of deposit and similar investments of the Partnership; (e) cash and cash
equivalents and notes receivable of the Partnership; (f) Century's trademarks,
trade names, service marks, service names, logos and similar proprietary rights,
subject to Section 7.11; (g) subscriber billing Contracts and related leased
equipment and software of the Partnership, even if listed on any Schedule to
this Agreement but subject to Section 7.12; (h) all Century Contracts relating
to national advertising sales representation; (i) all agreements pursuant to
which the Partnership has created, incurred, assumed or guaranteed indebtedness
for borrowed money or under which any Lien securing such indebtedness has been
or may be imposed on any Century Asset; (j) any claims, rights or choses in
action of Century related to the period prior to the Closing Time (other than
customer and advertising accounts receivable), including, without limitation,
any Litigation and the proceeds thereof and any claims, rights and interest in
and to any refunds of federal, state or local franchise, income or other taxes
or payments of any nature for the periods prior to the Closing Time, including
copyright fees; (k) any books and records that Century is required by any Legal
Requirement to retain and any books of account, tax reports and returns and the
like related to the Century Systems; provided that copies of such books and
records will be made available to TCI for a period of three years (and six years
in the case of tax reports and returns and underlying books and records,
although in the case of underlying books and records, the parties acknowledge
that they are not retained for periods for which an IRS field examination has
been completed) from the Closing Date upon reasonable request; (l) Century's
corporate minute books and other books and records related to internal corporate
matters and financial relationships with Century's lenders and affiliates; (m)
any employment, union, collective bargaining, compensation, bonus, deferred
compensation, noncompetition, confidentiality, consulting, agency or management
agreements of the Partnership other than those listed on SCHEDULE 1.17; (n) any
agreement, right, asset or property owned, leased or held by Century that is not
used or held for use primarily in connection with the operation of the Century
Systems; (o) all documents, reports and records relating to the employees of the
Century Systems; provided that copies of such books and records will be made
available to TCI for a period of three years from the Closing Date upon
reasonable request by TCI accompanied by a waiver and release from the employee
whose records are sought in form and substance reasonably satisfactory to the
Partnership; (p) the @ Home Distribution Agreement dated as of May 1, 1998 by
and between At Home Corporation and Century Communications Corp.; (q) all assets
related to Century's Cable Business that are not required to be contributed by
Century Exchange to the Partnership under the Contribution Agreement; and (r)
rights, assets and properties described on SCHEDULE 4.4.
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SECTION 5. THE PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES
The Partnership represents and warrants to TCI as of the date of this
Agreement (or, if a different date is specified in this Section 5 or in the
Century Schedules, as of such specified date) as follows:
5.1 Organization and Qualification of the Partnership. The Partnership is a
limited partnership duly organized and validly existing under the laws of the
State of Delaware. The Partnership (a) has all requisite partnership power and
authority to own, lease and use the Century Assets and to conduct Century's
Cable Business as it is currently conducted and (b) at Closing will be duly
qualified to do business and be in good standing under the laws of each
jurisdiction in which the ownership, leasing or use of the Century Assets or the
nature of its activities in connection with the Century Systems makes such
qualification necessary, except in any such jurisdiction where the failure to be
so qualified and in good standing would not have a material adverse effect on
the ownership or operation of Century's Cable Business, the Century Assets or
Century Systems or on the ability of the Partnership to perform its obligations
under this Agreement. The Partnership's taxpayer identification number will be
delivered at Closing.
5.2 Authority and Validity. The Partnership has all requisite partnership
power and authority to execute and deliver, to perform its obligations under,
and to consummate the transactions contemplated by, this Agreement and the
Transaction Documents to which it is a party. The execution and delivery by the
Partnership, the performance by the Partnership under, and the consummation by
the Partnership of the transactions contemplated by, this Agreement and the
Transaction Documents to which it is a party have been duly and validly
authorized by all required partnership action by or on behalf of the
Partnership. This Agreement has been, and when executed and delivered by the
Partnership, the Transaction Documents will be, duly and validly executed and
delivered by the Partnership and the valid and binding obligations of the
Partnership, enforceable against the Partnership in accordance with their terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to the enforcement of creditors' rights generally or by principles governing the
availability of equitable remedies.
5.3 No Conflict; Required Consents. Except for, and subject to receipt of,
the Century Required Consents, all of which are listed on SCHEDULE 5.3, the TCI
Required Consents, any Consents necessary to consummate the Contribution, and
the notification and expiration or earlier termination of the waiting period
under the HSR Act, the execution and delivery by the Partnership, the
performance of the Partnership under, and the consummation of the transactions
contemplated by, this Agreement and the Transaction Documents to which the
Partnership is a party do not and will not: (a) conflict with or violate any
provision of its partnership agreement; (b) violate any provision of any Legal
Requirement; (c) require any consent, approval or authorization of, or filing of
any certificate, notice, application, report or other document with, any
Governmental Authority or other Person; or (d) (i) conflict with, violate,
result in a breach of or constitute a default under (without regard to
requirements of notice, lapse of time or elections of other Persons or any
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combination thereof), (ii) permit or result in the termination, suspension or
modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) its performance under, (iv) result in the creation or
imposition of any Lien under any Century System Franchise, Century System
License or any Century System Contract or other instrument evidencing any of the
Century Assets to which Century is party or by which Century or any of its
assets is bound or affected and which will be assigned to the Partnership,
except for purposes of clauses (c) and (d) such consents, approvals,
authorizations and filings that, if not obtained or made, would not, and such
violations, conflicts, breaches, defaults, terminations, suspensions,
modifications and accelerations as would not, individually or in the aggregate,
have a material adverse effect on any Century System, Century's Cable Business
or on its ability to perform its obligations under this Agreement or the
Transaction Documents to which it is a party.
5.4 Assets.
(a) Century has, and at the Closing the Partnership will have, good
and valid title to (or, in the case of Assets that are leased, valid leasehold
interests in) the Century Assets (other than Century Owned Real Property,
Century Leased Property and Century Other Real Property Interests, as to which
representations and warranties in Section 5.6 apply). The Century Assets are
free and clear of all Liens, except (i) Permitted Liens and (ii) Liens described
on SCHEDULE 5.4, all of which Liens on SCHEDULE 5.4 will be terminated, released
or, in the case of the rights of first refusal listed on SCHEDULE 5.4, waived,
as appropriate, at or prior to the Closing. SCHEDULE 1.20 lists the principal
items of Century Tangible Personal Property as of the date specified on such
Schedule, or if no date is specified, as of the date of this Agreement. Except
as described on SCHEDULE 1.20 (Century Tangible Personal Property), the Century
Tangible Personal Property is in good operating condition and repair (ordinary
wear and tear excepted).
(b) Except for items included in the Century Excluded Assets, the
Century Assets constitute all the assets necessary to permit TCI to conduct
Century's Cable Business and to operate the Century Systems substantially as
they are being conducted and operated on the date of this Agreement and in
compliance in all material respects with all applicable Legal Requirements,
Century System Contracts, Century System Licenses and Century System Franchises
and to perform all of the TCI Assumed Obligations and Liabilities.
(c) Except as disclosed on SCHEDULE 5.4, to the Knowledge of Century,
no third party has been granted or applied for a cable television franchise or
is providing or intending to provide multichannel video programming, other than
programming by direct-broadcast satellite in any of the communities or
unincorporated areas currently served by Century's Cable Business.
5.5 Century System Franchises, Century System Licenses, Century System
Contracts and Century Other Real Property Interests.
(a) Except for the agreements listed on SCHEDULES 1.12 (Century Leased
Property), 1.14 (Century Other Real Property Interests), 1.17 (Century System
Contracts), 1.18
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(Century System Franchises) and 1.19 (Century System Licenses), or as described
on SCHEDULE 4.4 (Century Excluded Assets) or otherwise included in the
definition of Century Excluded Assets, Century is not bound or affected by any
of the following that relate primarily or in whole to Century's Cable Business:
(i) leases of real or personal property; (ii) franchises for the construction or
operation of cable television systems or Contracts of substantially equivalent
effect; (iii) other licenses, authorizations, consents or permits of the FCC or
any other Governmental Authority; (iv) material easements, rights of access,
underground conduit agreements, crossing agreements or other interests in real
property; (v) pole line or attachment agreements; (vi) multiple dwelling unit
agreements, including bulk agreements, and commercial service agreements;
provided that only a listing of the addresses of such units is attached, it
being acknowledged by TCI that written agreements do not exist with respect to
all such units; (vii) agreements pursuant to which the Century Systems receive
or provide advertising sales representation services; (viii) agreements pursuant
to which a Century System has constructed or agreed to construct for third
parties an institutional network or otherwise provides to third parties
telecommunications services other than one-way video; (ix) agreements pursuant
to which the Systems receive or have contracted to receive any Non-TV Products
and Services; (x) construction and development agreements (other than
installation agreements where services are provided in the ordinary course of
business on an as-needed basis); or (xi) Contracts relating to the operation of
Century's Cable Business other than those described in any other clause of this
Section which contemplate payments by or to Century in any 12-month period
exceeding $25,000 individually or $150,000 in the aggregate or that have a
remaining term of two years or more as of the Closing Date. Except as described
on the Schedules to this Agreement, no Affiliate of the Partnership (other than
Century) is a party to any documents listed on such Schedules.
(b) Complete and correct copies of the Century System Franchises and
Century System Licenses have been delivered by the Partnership to TCI. Except as
set forth on SCHEDULE 1.18 (Century System Franchises), the Century System
Franchises contain all of the commitments and obligations of Century to the
applicable Governmental Authority granting such Franchises with respect to the
construction, ownership and operation of the Century Systems. The Century System
Franchises and Century System Licenses are currently in full force and effect
and are valid and enforceable under all applicable Legal Requirements according
to their terms. There is no legal action, governmental proceeding or, to
Century's Knowledge, investigation, pending or to Century's Knowledge
threatened, to terminate, suspend or modify any Century System Franchise or any
Century System License and Century is in material compliance with the terms and
conditions of all the Century System Franchises and Century System Licenses and
with other applicable requirements of all Governmental Authorities (including
the FCC and the Register of Copyrights) relating to the Century System
Franchises and Century System Licenses, including all requirements for
notification, filing, reporting, posting and maintenance of logs and records.
All areas served by the Century Systems are served pursuant to one of the
Century Franchises except as set forth on SCHEDULE 1.18.
(c) Except as set forth on SCHEDULE 1.14, complete and correct copies
of all Century System Contracts required to be listed on Century's Schedules
(including all Contracts
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relating to Leased Property and Other Real Property Interests described on
SCHEDULE 1.14) have been provided to TCI. Such documents constitute the entire
agreement with the other party. Each such Century System Contract is in full
force and effect and constitutes the valid, legal, binding and enforceable
obligation of Century, and Century is not and to Century's Knowledge, each other
party thereto is not in breach or default of any material terms or conditions
thereunder.
5.6 Real Property. All Century Assets consisting of Century Owned Property,
Century Leased Property and material Century Other Real Property Interests are
described on SCHEDULES 1.12 (Century Leased Property), 1.14 (Century Other Real
Property Interests) and 1.15 (Century Owned Property), including address and use
for each such real property interest. Except as otherwise disclosed on SCHEDULE
1.15 (Century Owned Property), Century holds (and at the Closing, the
Partnership will hold) title to the Century Owned Property free and clear of all
Liens (except (i) Permitted Liens and (ii) Liens described on SCHEDULE 5.4, all
of which Liens on SCHEDULE 5.4 will be terminated, released or, in the case of
the rights of first refusal listed on SCHEDULE 5.4, waived, as appropriate, at
or prior to the Closing) and Century has (and at the Closing, the Partnership
will have) the valid and enforceable right to use and possess such Century Owned
Property, subject only to the above-referenced Liens. Except as otherwise
disclosed on SCHEDULES 1.12 (Century Leased Property) and 1.14 (Century Other
Real Property Interests), Century has (and at the Closing, the Partnership will
have) valid and enforceable leasehold interests in all Century Leased Property
and, with respect to Century Other Real Property Interests, has valid and
enforceable rights to use such Century Other Real Property Interests, in each
case subject only to the above-referenced Liens. Except for ordinary wear and
tear and routine repairs, all of the material improvements, leasehold
improvements and the premises of the Century Owned Property and the premises
demised under the leases and other documents evidencing the Century Leased
Property are in good condition and repair and are suitable for the purposes
used. Each parcel of Century Owned Property and each parcel of Century Leased
Property and any improvements thereon and their current use (x) has access to
and over public streets or private streets for which Century has (and at the
Closing, the Partnership will have) a valid right of ingress and egress, (y)
conforms in its current use and occupancy to all material zoning requirements
without reliance upon a variance issued by a Governmental Authority or a
classification of the parcel in question as a nonconforming use and (z) conforms
in its current use to all restrictive covenants, if any, or other Liens
affecting all or part of such parcel. Except where the failure of the
representations made in this sentence to be true and correct would not have a
material adverse effect on the Century Assets or Century's Cable Business, all
buildings, towers, guy wires and anchors, headend equipment, earth-receiving
dishes and related facilities used in the operations of the Century Systems and
included in the Century Assets are located entirely on Century Owned Property or
Century Leased Property or other real property in which Century has a Century
Other Real Property Interest and are maintained, placed and located in
accordance with the provisions of all applicable Legal Requirements, deeds,
leases, licenses, permits or other legally enforceable arrangements.
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5.7 Environmental.
(a) To Century's Knowledge, the Century Owned Property and Century
Leased Property comply in all material respects with and have previously been
operated in compliance in all material respects with all Environmental Laws.
Except as disclosed on SCHEDULE 5.7, Century has not, either directly or
indirectly (i) generated, stored, used, treated, handled, discharged, released
or disposed of any Hazardous Substances at, on, under, in or about, to or from
or in any other manner affecting, any Century Owned Property or Century Leased
Property, (ii) transported any Hazardous Substances to or from any Century Owned
Property or Century Leased Property or (iii) undertaken or caused to be
undertaken any other activities relating to the Century Owned Property or
Century Leased Property, which could reasonably give rise to any liability under
any Environmental Law and, to Century's Knowledge, no other present or previous
owner, tenant, occupant or user of any Century Owned Property or Century Leased
Property or any other Person has committed or suffered any of the foregoing. To
Century's Knowledge, no release of Hazardous Substances outside the Century
Owned Property or Century Leased Property has entered or threatens to enter any
Century Owned Property or Century Leased Property, nor is there any pending or
threatened Litigation based on Environmental Laws which arises from any
condition of the land adjacent to or immediately surrounding any Century Owned
Property or Century Leased Property. No Litigation based on Environmental Laws
which relates to any Century Owned Property or Century Leased Property or any
operations or conditions on it (y) has been asserted or conducted in the past or
is currently pending against or with respect to Century or, to Century's
Knowledge, any other Person or (z) to Century's Knowledge, is threatened or
contemplated.
(b) Except as disclosed on SCHEDULE 5.7, to Century's Knowledge, (i)
no aboveground or underground storage tanks are currently or have been located
on any Century Owned Property or Century Leased Property, (ii) no Century Owned
Property or Century Leased Property has been used at any time as a gasoline
service station or any other facility for storing, pumping, dispensing or
producing gasoline or any other petroleum products or wastes and (iii) no
building or other structure on any Century Owned Property or Century Leased
Property contains asbestos, asbestos-containing material or material presumed to
be asbestos-containing material under any Environmental Law.
(c) The Partnership has provided TCI with complete and correct copies
of (i) all studies, reports, surveys or other written materials in Century's
possession relating to the presence or alleged presence of Hazardous Substances
at, on, under or affecting the Century Owned Property or Century Leased
Property, (ii) all notices (other than general notices made by general
publication) or other materials in Century's possession that were received from
any Governmental Authority having the power to administer or enforce any
Environmental Laws relating to current or past ownership, use or operation of
the Century Owned Property or Century Leased Property or activities at the
Century Owned Property or Century Leased Property and (iii) all materials in
Century's possession relating to any Litigation or allegation by any private
third party concerning any Environmental Law.
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5.8 Compliance with Legal Requirements.
(a) The ownership, leasing and use of the Century Assets as they are
currently owned, leased and used and the conduct of Century's Cable Business and
the operation of the Century Systems as they are currently conducted and
operated do not violate or infringe in any material respect any Legal
Requirements currently in effect (other than Legal Requirements described in
Sections 5.7, 5.8(d) and 5.13, as to which the representations and warranties
set forth in those subsections shall apply), including (i) the Communications
Act, (ii) Section 111 of the U.S. Copyright Act of 1976 and the applicable U.S.
Copyright Office rules and regulations promulgated thereunder (the "Copyright
Act") and (iii) all other applicable Legal Requirements relating to the
construction, maintenance, ownership and operation of the Century Assets, the
Century Systems and Century's Cable Business. Except as disclosed on SCHEDULE
5.8, Century has received no written notice of any violation by Century or
Century's Cable Business of any Legal Requirement applicable to the operation of
Century's Cable Business as currently conducted, or the Century Systems as
currently operated and to Century's Knowledge, there is no existing fact,
circumstance or condition that could reasonably form the basis for a finding by
any Governmental Authority of any such violation.
(b) A valid request for renewal has been duly and timely filed under
Section 626 of the Communications Act with the proper Governmental Authority
with respect to all Century System Franchises that have expired prior to or will
expire within 36 months after the date of this Agreement.
(c) Except as set forth in SCHEDULE 5.8, (i) no written notices or
demands have been received from the FCC, from any television station, or from
any other Person or Governmental Authority (A) challenging the right of the
Century Systems to carry any television broadcast station or deliver the same or
(B) claiming that any Century System has failed to carry a television broadcast
station required to be carried pursuant to the Communications Act or has failed
to carry a television broadcast station on a channel designated by such station
consistent with the requirements of the Communications Act; (ii) all necessary
Federal Aviation Administration ("FAA") approvals have been obtained with
respect to the height and location of towers used in connection with the
operation of the Century Systems and are listed in SCHEDULE 5.8, and such towers
are being operated in compliance in all material respects with applicable FCC
and FAA rules; and (iii) Century has received no written notice from any
Governmental Authority with respect to an intention to enforce customer service
standards pursuant to the 1992 Cable Act and except as set forth in its System
Franchises, Century has not agreed with any Governmental Authority to establish
customer service standards that exceed the FCC standards promulgated pursuant to
the 1992 Cable Act.
(d) Notwithstanding the foregoing, to Century's Knowledge, each
Century System is in compliance in all material respects with the provisions of
the 1992 Cable Act as such Legal Requirements relate to the rates and other fees
charged to subscribers of Century's Cable Business. Century has used reasonable
good faith efforts to establish rates charged to subscribers, effective since
September 1, 1993, that are or were allowable under the 1992 Cable Act and any
authoritative
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interpretation thereof now or then in effect, to the extent such rates are or
were subject to regulation at such time by any Governmental Authority, including
any local franchising authority and/or the FCC. Notwithstanding the foregoing,
the Partnership makes no representation or warranty that any of its rates that
are not subject to rate regulation would be allowable if such rates were subject
to regulation and make no representation or warranty that the rates charged to
subscribers would be allowable under any rules and regulations of the FCC or any
authoritative interpretation thereof, promulgated after the Closing Date. The
Partnership has delivered to TCI complete and correct copies of all FCC Forms
and other information reasonably requested by TCI relating to rate regulation
generally or specific rates charged to subscribers with respect to the Century
Systems. Except as set forth on SCHEDULE 5.8, Century has not made any election
with respect to any cost of service proceeding conducted in accordance with Part
76.922 of Title 47 of the Code of Federal Regulations or any similar proceeding
with respect to any of the Century Systems (a "Cost of Service Election").
Except as set forth in SCHEDULE 5.8, Century has not entered into and is not
subject to any so-called social contract or proposed resolution with the FCC or
any local franchise authority with respect to rates charged for cable television
services in the Century Systems and is not currently negotiating or anticipating
entering into or being subject to the same. Except as otherwise described on
SCHEDULE 5.8, as of the date of this Agreement, (i) to the Knowledge of Century,
there are no outstanding or unresolved proceedings or investigations (other than
those affecting the cable industry generally) dealing with or otherwise
affecting the rates that any cable television system included in the Century
Systems can charge (whether for programming, equipment, installation, service or
otherwise) including appeals, (ii) no cable television system included in the
Century Systems is subject to any currently effective order issued by a
Governmental Authority that reduced the rates that it may charge (whether for
programming, equipment, installation, service, or otherwise), (iii) no local
franchising authority has been certified by the FCC as a rate regulating
authority with respect to any of the Century Systems, and (iv) there is no
unresolved complaint pending with respect to the CPST tier of any Century System
and no rate order with respect to the Century Systems that is being appealed.
(e) The Century Systems that serve more than 10,000 subscribers will
have emergency alert capability as required by the FCC prior to January 1, 1999
or such later date as may hereafter be specified by the FCC.
5.9 Patents, Trademarks and Copyrights. Century has deposited with the U.S.
Copyright Office all statements of account and other documents and instruments,
and has paid all royalties, supplemental royalties, fees and other sums to the
U.S. Copyright Office under the Copyright Act with respect to the business and
operations of the Century Systems as are required to obtain, hold and maintain
the compulsory license for cable television systems prescribed in Section 111 of
the Copyright Act. To Century's Knowledge, there is no inquiry, claim, action or
demand pending before the U.S. Copyright Office or from any other Person which
questions the copyright filings or payments made by Century with respect to the
Century Systems. The Partnership has delivered to TCI complete and correct
copies of all current reports and filings for the past three years, made or
filed pursuant to copyright rules and regulations with respect to Century's
Cable Business. Century does not possess any patent, patent right, trademark or
copyright related to or material to the
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operation of the Century Systems and Century is not a party to any license or
royalty agreement with respect to any such patent, patent right, trademark or
copyright, except for licenses respecting program material and obligations under
the Copyright Act applicable to cable television systems generally. The Century
Systems and Century's Cable Business have been operated in such a manner so as
not to violate or infringe upon the rights, or give rise to any rightful claim
of any Person for copyright, trademark, service mark, patent or license
infringement or the like.
5.10 Financial Statements; Undisclosed Liabilities; Absence of Certain
Changes or Events. The Partnership has delivered to TCI complete and correct
copies of (a) unaudited balance sheets of the Century Systems and related
statements of income, stockholders' equity and cash flows for the Century
Systems and as of the fiscal year ended May 31, 1997, including all notes and
schedules thereto and (b) unaudited balance sheets of the Century Systems and
the related unaudited statements of income of the Century Systems for each
quarter ending after May 31, 1997 (all of such financial statements and notes
being hereinafter referred to as "Century's Financial Statements"). Century's
Financial Statements are in accordance with the books and records of Century,
were prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby, and, except as may be described therein, present
fairly the financial condition of Century at the dates and for the periods
indicated, subject, in the case of unaudited Century Financial Statements, only
to standard year-end adjustments and the omission of footnotes. The unaudited
Balance Sheet as of February 28, 1998 of Century is herein called "Century
Balance Sheet." At the date of the Century Balance Sheet, Century had no
material liabilities with respect to the Systems required by GAAP to be
reflected or reserved against therein that were not fully reflected or reserved
against on the Century Balance Sheet, other than liabilities as set forth on
SCHEDULE 5.10. Except as set forth on SCHEDULE 5.10, since November 30, 1997:
(x) neither Century nor the Partnership has incurred any obligation or liability
(contingent or otherwise) with respect to the Systems, except normal trade or
business obligations incurred in the ordinary course of business, the
performance of which will not, to Century's Knowledge, individually or in the
aggregate, have a material adverse effect on the financial condition of Century
or the results of operations of Century's Cable Business; (y) there has been no
material adverse change in the Century Assets comprising any Century System or
in the business, condition, financial or otherwise, or liabilities of Century's
Cable Business or any Century System and, to Century's Knowledge, no fact or
condition exists or is contemplated or threatened which would result in such a
change in the future; and (z) Century's Cable Business has been conducted only
in the ordinary course of business consistent with past practice. For the
purpose of this Agreement, the impact of general economic conditions (including
changes in capital and financial markets), governmental legislation and
regulations and other events which affect the cable industry as a whole in the
State of California or the United States, shall not be considered in determining
whether there has been a material adverse change in the business, condition,
financial or otherwise or liabilities of Century's Cable Business or any Century
System or the Century Assets.
5.11 Litigation. Except as set forth in SCHEDULE 5.11: (a) there is no
Litigation pending or, to Century's Knowledge, threatened, and to Century's
Knowledge, there is no investigation pending or threatened, by or before any
Governmental Authority or private arbitration tribunal against Century which, if
adversely determined, would materially adversely affect the financial
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condition or operations of Century's Cable Business, Century Systems, the
Century Assets or the ability of the Partnership to perform its obligations
under this Agreement, or which, if adversely determined, would result in the
modification, revocation, termination, suspension or other limitation of any of
the Century System Franchises, Century System Licenses, Century System Contracts
or leases or other documents evidencing the Century Leased Property or the
Century Other Real Property Interests; and (b) there is not in existence any
Judgment requiring Century to take any action of any kind with respect to the
Century Assets or the operation of the Century Systems, or to which Century
(with respect to the Century Systems), the Century Systems or the Century Assets
are subject or by which they are bound or affected.
5.12 Tax Returns; Other Reports. Century has duly and timely filed in
correct form all federal, state, local and foreign Tax returns and other Tax
reports required to be filed by Century, and has timely paid all Taxes which
have become due and payable, whether or not so shown on any such return or
report, the failure of which to be filed or paid could adversely affect or
result in the imposition of a Lien upon the Century Assets or that could impose
on TCI any transferee liability for any taxes, penalties or interest due or to
become due from Century, except such amounts as are being contested diligently
and in good faith and are not in the aggregate material. Century has received no
notice of, nor does Century have any Knowledge of, any deficiency, assessment or
audit, or proposed deficiency, assessment or audit from any taxing Governmental
Authority which could affect or result in the imposition of a Lien upon the
Century Assets.
5.13 Employment Matters.
(a) SCHEDULE 5.13(a) contains a complete and correct list of the names
and positions of all employees engaged principally in Century's Cable Business
as of the date set forth on SCHEDULE 5.13(a). Century has complied in all
material respects with all applicable Legal Requirements relating to the
employment of labor, including, the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. 'SS'2101, et seq. ("WARN"), ERISA, continuation
coverage requirements with respect to group health plans and those relating to
wages, hours, collective bargaining, unemployment insurance, worker's
compensation, equal employment opportunity, age and disability discrimination,
immigration control and the payment and withholding of Taxes.
(b) Each employee benefit plan (as defined in Section 3(3) of ERISA)
or any multi-employer plan (as defined in Section 3(37) of ERISA) with respect
to which Century or any of its ERISA Affiliates has any liability or in which
any employees or agents, or any former employees or agents, of Century or any of
its ERISA Affiliates participate is set forth in SCHEDULE 5.13 (the "Century
Plans"). Except as disclosed on SCHEDULE 5.13(a), neither Century, any of its
ERISA Affiliates nor any Century Plan is in material violation of any provision
of the Code or ERISA. No "reportable event" (as defined in Section 4043 of
ERISA) has occurred and is continuing with respect to any Century Plan and no
"prohibited transaction" (as defined in Section 406 of ERISA) has occurred with
respect to any Century Plan which reasonably could result in material liability
to Century or any of its ERISA Affiliates. No material "accumulated funding
deficiency" or "withdrawal liability" (as defined in Section 302 of ERISA)
exists with respect to any
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of the Century Plans. After the Closing, TCI will not be required, under ERISA,
the Code or any collective bargaining agreement, to establish, maintain or
continue any Plan currently maintained by Century or any of its ERISA
Affiliates.
(c) Except as set forth on SCHEDULE 5.13, there are no union or
collective bargaining agreements applicable to any Person employed by Century
that renders services in connection with the Century Systems and Century has no
duty to bargain with any labor organization with respect to any such Person.
There are not pending any unfair labor practice charges against Century, any
demand for recognition or any other effort of or request or demand from, a labor
organization for representative status with respect to any Person employed by
Century that renders services in connection with the Century Systems. Except as
described on SCHEDULE 5.13, Century has no employment Contracts, either written
or oral, with any employee of the Century Systems and none of the employment
Contracts or other agreements listed on SCHEDULE 5.13 requires Century or will
require TCI to employ any Person after the Closing Time.
5.14 Century Systems Information. SCHEDULE 5.14 sets forth a materially
true and accurate description of the following information relating to Century's
Cable Business, as of the date specified in SCHEDULE 5.14, or, if no date is
specified, as of August 20, 1998:
(a) the approximate number of miles (both underground and aerial) of
plant included in the Century Assets;
(b) the number of Equivalent Basic Subscribers (including the number
that are individually billed and the number that are bulk-billed) served by the
Century Systems for each Century System service area (by franchise area or
community);
(c) the approximate number of single family homes and residential
dwelling units passed by the Century Systems;
(d) a description of basic and optional or tier services available
from the Century Systems, the rates charged by Century for each and the number
of customers receiving each optional or tier service;
(e) the stations and signals carried by the Century Systems and the
channel position of each such signal and station and the basis for carriage of
all television broadcast signals; and
(f) the cities, towns, villages, townships, boroughs, counties or
other communities served by the Century Systems (with or without the requirement
of a franchise).
5.15 Accounts Receivable. Century's accounts receivable for its Cable
Business are actual and bona fide receivables representing obligations for the
total dollar amount of such receivables, as shown on the books of Century, that
resulted from the regular course of Century's Cable Business.
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Such receivables are subject to no offset or reduction of any nature, except for
a reserve for uncollectible amounts consistent with the reserve established by
Century in Century's Financial Statements and those credits or reductions to
such accounts made in the ordinary course of business.
5.16 Bonds; Letters of Credit. Except as set forth on SCHEDULE 5.16, there
are no franchise, construction, fidelity, performance, or other bonds,
guaranties in lieu of bonds or letters of credit posted by Century in connection
with its operation or ownership of any of the Century Systems or Century Assets.
5.17 Finders and Brokers. Century has not employed any financial advisor,
broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement for which TCI could be liable.
SECTION 6. TCI'S REPRESENTATIONS AND WARRANTIES
TCI represents and warrants to the Partnership as of the date of this
Agreement (or, if a different date is specified in this Section 5 or in the TCI
Schedules, as of such specified date) as follows.
6.1 Organization and Qualification of TCI. TCI is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Colorado and has all requisite partnership power and authority to own,
lease and use the TCI Assets owned, leased or used by it and to conduct TCI's
Cable Business as it is currently conducted. TCI is duly qualified to do
business and is in good standing under the laws of each jurisdiction in which
the ownership, leasing or use of the TCI Assets or the nature of its activities
in connection with the TCI Systems makes such qualification necessary, except in
any such jurisdiction where the failure to be so qualified and in good standing
would not have a material adverse effect on the ownership or operation of TCI's
Cable Business, the TCI Assets or TCI Systems or on the ability of TCI to
perform its obligations under this Agreement. TCI's U.S. taxpayer identification
number is 84-1021491.
6.2 Authority and Validity. TCI has all requisite partnership power and
authority to execute and deliver, to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement and the Transaction
Documents to which TCI is a party. The execution and delivery by TCI, the
performance by TCI under, and the consummation by TCI of the transactions
contemplated by, this Agreement and the Transaction Documents to which TCI is a
party have been duly and validly authorized by all required partnership action
by or on behalf of TCI. This Agreement has been, and when executed and delivered
by TCI the Transaction Documents will be, duly and validly executed and
delivered by TCI and the valid and binding obligations of TCI, enforceable
against TCI in accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect relating to the enforcement of creditors' rights
generally or by principles governing the availability of equitable remedies.
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6.3 No Conflict; Required Consents. Except for, and subject to receipt of,
the TCI Required Consents, all of which are listed on SCHEDULE 6.3, and the
Century Required Consents and the notification an9d expiration or earlier
termination of the waiting period under the HSR Act, the execution and delivery
by TCI, the performance of TCI under, and the consummation of the transactions
contemplated by, this Agreement and the Transaction Documents to which TCI is a
party do not and will not: (a) conflict with or violate any provision of its
charter or bylaws; (b) violate any provision of any Legal Requirement; (c)
require any consent, approval or authorization of, or filing of any certificate,
notice, application, report or other document with, any Governmental Authority
or other Person; or (d) (i) conflict with, violate, result in a breach of or
constitute a default under (without regard to requirements of notice, lapse of
time or elections of other Persons or any combination thereof), (ii) permit or
result in the termination, suspension or modification of, (iii) result in the
acceleration of (or give any Person the right to accelerate) the performance of
TCI under, (iv) result in the creation or imposition of any Lien under any TCI
System Franchise, TCI System License or any TCI System Contract or other
instrument evidencing any of the TCI Assets or by which TCI or any of its assets
is bound or affected, except for purposes of clauses (c) and (d) such consents,
approvals, authorizations and filings, that, if not obtained or made, would not,
and such violations, conflicts, breaches, defaults, terminations, suspensions,
modifications and accelerations as would not, individually or in the aggregate,
have a material adverse effect on any TCI System, TCI's Cable Business or on the
ability of TCI to perform its obligations under this Agreement or the
Transaction Documents to which TCI is a party.
6.4 Assets.
(a) TCI has good and valid title to (or, in the case of Assets that
are leased, valid leasehold interests in) the TCI Assets (other than TCI Owned
Real Property, TCI Leased Property and TCI Other Real Property Interests, as to
which representations and warranties in Section 6.6 apply). The TCI Assets are
free and clear of all Liens, except (i) Permitted Liens and (ii) Liens described
on SCHEDULE 6.4, all of which Liens on SCHEDULE 6.4 will be terminated, released
or, in the case of the rights of first refusal listed on SCHEDULE 6.4, waived,
as appropriate, at or prior to the Closing. SCHEDULE 1.66 lists the principal
items of TCI Tangible Personal Property as of the date specified on such
Schedule, or if no date is specified, as of the date of this Agreement. Except
as described on SCHEDULE 1.66 (TCI Tangible Personal Property), the TCI Tangible
Personal Property is in good operating condition and repair (ordinary wear and
tear excepted).
(b) Except for items included in the TCI Excluded Assets, the TCI
Assets constitute all the assets necessary to permit the Partnership to conduct
TCI's Cable Business and to operate the TCI Systems substantially as they are
being conducted and operated on the date of this Agreement and in compliance in
all material respects with all applicable Legal Requirements, TCI System
Contracts, TCI System Licenses and TCI System Franchises and to perform all of
the Century Assumed Obligations and Liabilities.
(c) Except as disclosed on SCHEDULE 6.4, to the Knowledge of TCI, no
third party has been granted or applied for a cable television franchise or is
providing or intending to provide
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multichannel video programming, other than programming by direct broadcast
satellite, in any of the communities or unincorporated areas currently served by
TCI's Cable Business.
6.5 TCI System Franchises, TCI System Licenses, TCI System Contracts and
TCI Other Real Property Interests.
(a) Except for the agreements listed on SCHEDULES 1.58 (TCI Leased
Property), 1.60 (TCI Other Real Property Interests), 1.63 (TCI System
Contracts), 1.64 (TCI System Franchises) and 1.65 (TCI System Licenses) or as
described on SCHEDULE 4.2 (TCI Excluded Assets) or otherwise included in the
definition of TCI Excluded Assets, TCI is not bound or affected by any of the
following that relate primarily or in whole to TCI's Cable Business: (i) leases
of real or personal property; (ii) franchises for the construction or operation
of cable television systems or Contracts of substantially equivalent effect;
(iii) other licenses, authorizations, consents or permits of the FCC or any
other Governmental Authority; (iv) material easements, rights of access,
underground conduit agreements, crossing agreements or other interests in real
property; (v) pole line or attachment agreements; (vi) multiple dwelling unit
agreements, including bulk agreements, and commercial service agreements;
provided that only a listing of the addresses of such units is attached, it
being acknowledged by the Partnership that written agreements do not exist with
respect to all such units; (vii) agreements pursuant to which the TCI Systems
receive or provide advertising sales representation services; (viii) agreements
pursuant to which a TCI System has constructed or agreed to construct for third
parties an institutional network or otherwise provide to third parties
telecommunications services other than one-way video; (ix) agreements pursuant
to which the Systems receive or have contracted to receive Non-TV Products and
Services; (x) construction and development agreements (other than installation
agreements where services are provided in the ordinary course of business on an
as-needed basis); or (xi) Contracts relating to the operation of TCI's Cable
Business other than those described in any other clause of this Section which
contemplate payments by or to TCI in any 12-month period exceeding $25,000
individually or $150,000 in the aggregate or that have a remaining term of two
years or more as of the Closing Date. Except as described on the Schedules to
this Agreement, no Affiliate of TCI is a party to any documents listed on such
Schedules.
(b) Except as set forth on SCHEDULE 1.63, complete and correct copies
of the TCI System Franchises and TCI System Licenses have been delivered by TCI
to the Partnership. Except as set forth on SCHEDULE 1.64 (TCI System
Franchises), the TCI System Franchises contain all of the commitments and
obligations of TCI to the applicable Governmental Authority granting such
Franchises with respect to the construction, ownership and operation of the TCI
Systems. The TCI System Franchises and TCI System Licenses are currently in full
force and effect and are valid and enforceable under all applicable Legal
Requirements according to their terms. There is no legal action, governmental
proceeding or, to TCI's Knowledge, investigation, pending or to TCI's Knowledge
threatened, to terminate, suspend or modify any TCI System Franchise or TCI
System License and TCI is in material compliance with the terms and conditions
of all the TCI System
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Franchises and TCI System Licenses and with other applicable requirements of all
Governmental Authorities (including the FCC and the Register of Copyrights)
relating to the TCI System Franchises and TCI System Licenses, including all
requirements for notification, filing, reporting, posting and maintenance of
logs and records. All areas served by the TCI Systems are served pursuant to one
of the TCI Franchises except as set forth on SCHEDULE 1.64.
(c) Except as disclosed on SCHEDULE 1.63, complete and correct copies
of all TCI System Contracts required to be listed on TCI's Schedules (including
all Contracts relating to Leased Property and Other Real Property Interests
described on SCHEDULE 1.60) have been provided to the Partnership. Such
documents constitute the entire agreement with the other party. Except as
disclosed on SCHEDULE 1.63, each such TCI System Contract is in full force and
effect and constitutes the valid, legal, binding and enforceable obligation of
TCI and TCI is not and to TCI's Knowledge, each other party thereto is not in
breach or default of any material terms or conditions thereunder.
6.6 Real Property. All TCI Assets consisting of TCI Owned Property, TCI
Leased Property and material TCI Other Real Property Interests are described on
SCHEDULES 1.58 (TCI Leased Property), 1.60 (TCI Other Real Property Interests)
and 1.61 (TCI Owned Property), including address and use for each such real
property interest. Except as otherwise disclosed on SCHEDULE 1.61 (TCI Owned
Property), TCI holds title to the TCI Owned Property free and clear of all Liens
(except (i) Permitted Liens and (ii) Liens described on SCHEDULE 6.4, all of
which Liens on SCHEDULE 6.4 will be terminated, released or, in the case of the
rights of first refusal listed on SCHEDULE 6.4, waived, as appropriate, at or
prior to the Closing) and has the valid and enforceable right to use and possess
such TCI Owned Property, subject only to above-referenced Liens. Except as
otherwise disclosed on SCHEDULES 1.58 (TCI Leased Property) and 1.60 (TCI Other
Real Property Interests); TCI has valid and enforceable leasehold interests in
all TCI Leased Property and, with respect to TCI Other Real Property Interests,
has valid and enforceable rights to use all TCI Other Real Property Interests
subject, in each case subject only to the above-referenced Liens. Except for
ordinary wear and tear and routine repairs, all of the material improvements,
leasehold improvements and the premises of the TCI Owned Property and the
premises demised under the leases and other documents evidencing the TCI Leased
Property are in good condition and repair and are suitable for the purposes
used. Each parcel of TCI Owned Property and each parcel of TCI Leased Property
and any improvements thereon and their current use (x) has access to and over
public streets or private streets for which TCI has a valid right of ingress and
egress, (y) conforms in its current use and occupancy to all material zoning
requirements without reliance upon a variance issued by a Governmental Authority
or a classification of the parcel in question as a nonconforming use and (z)
conforms in its current use to all restrictive covenants, if any, or other Liens
affecting all or part of such parcel. Except where the failure of the
representations made in this sentence to be true and correct would not have a
material adverse effect on the TCI Assets or TCI's Cable Business, all
buildings, towers, guy wires and anchors, headend equipment, earth-receiving
dishes and related facilities used in the operations of the TCI Systems and
included in the TCI Assets are located entirely on TCI Owned Property or TCI
Leased Property or other real property in which TCI has a TCI Other Real
Property Interest and are maintained, placed and located in accordance with the
provisions of all applicable Legal Requirements, deeds, leases, licenses,
permits or other legally enforceable arrangements.
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6.7 Environmental.
(a) To TCI's Knowledge, the TCI Owned Property and TCI Leased Property
comply in all material respects with and has previously been operated in
compliance in all material respects with all Environmental Laws. Except as
disclosed on SCHEDULE 6.7, TCI has not either directly or indirectly (i)
generated, stored, used, treated, handled, discharged, released or disposed of
any Hazardous Substances at, on, under, in or about, to or from or in any other
manner affecting, any TCI Owned Property or TCI Leased Property, (ii)
transported any Hazardous Substances to or from any TCI Owned Property or TCI
Leased Property or (iii) undertaken or caused to be undertaken any other
activities relating to the TCI Owned Property or TCI Leased Property, which
could reasonably give rise to any liability under any Environmental Law and, to
TCI's Knowledge, no other present or previous owner, tenant, occupant or user of
any TCI Owned Property or TCI Leased Property or any other Person has committed
or suffered any of the foregoing. To TCI's Knowledge, no release of Hazardous
Substances outside the TCI Owned Property or TCI Leased Property has entered or
threatens to enter any TCI Owned Property or TCI Leased Property, nor is there
any pending or threatened Litigation based on Environmental Laws which arises
from any condition of the land adjacent to or immediately surrounding any TCI
Owned Property or TCI Leased Property. No Litigation based on Environmental Laws
which relates to any TCI Owned Property or TCI Leased Property or any operations
or conditions on it (y) has been asserted or conducted in the past or is
currently pending against or with respect to TCI or, to TCI's Knowledge, any
other Person, or (z) to TCI's Knowledge, is threatened or contemplated.
(b) Except as disclosed on SCHEDULE 6.7, to TCI's Knowledge, (i) no
aboveground or underground storage tanks are currently or have been located on
any TCI Owned Property or TCI Leased Property, (ii) no TCI Owned Property or TCI
Leased Property has been used at any time as a gasoline service station or any
other facility for storing, pumping, dispensing or producing gasoline or any
other petroleum products or wastes and (iii) no building or other structure on
any TCI Owned Property or TCI Leased Property contains asbestos,
asbestos-containing material or material presumed to be asbestos-containing
material under any Environmental Law.
(c) TCI has provided the Partnership with complete and correct copies
of (i) all studies, reports, surveys or other written materials in TCI's
possession relating to the presence or alleged presence of Hazardous Substances
at, on, under or affecting the TCI Owned Property or TCI Leased Property, (ii)
all notices (other than general notices made by general publication) or other
materials in TCI's possession that were received from any Governmental Authority
having the power to administer or enforce any Environmental Laws relating to
current or past ownership, use or operation of the TCI Owned Property or TCI
Leased Property or activities at the TCI Owned Property or TCI Leased Property
and (iii) all materials in TCI's possession relating to any Litigation or
allegation by any private third party concerning any Environmental Law.
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6.8 Compliance with Legal Requirements.
(a) The ownership, leasing and use of the TCI Assets as they are
currently owned, leased and used and the conduct of TCI's Cable Business and the
operation of the TCI Systems as they are currently conducted and operated do not
violate or infringe in any material respect any Legal Requirements currently in
effect (other than Legal Requirements described in Sections 6.7, 6.8(d) and
6.13, as to which the representations and warranties set forth in those
subsections shall apply), including (i) the Communications Act, (ii) Section 111
of the Copyright Act and (iii) all other applicable Legal Requirements relating
to the construction, maintenance, ownership and operation of the TCI Assets, the
TCI Systems and TCI's Cable Business. Except as disclosed on SCHEDULE 6.8, TCI
has received no written notice of any violation by TCI or TCI's Cable Business
of any Legal Requirement applicable to the operation of TCI's Cable Business as
currently conducted, or the TCI Systems as currently operated and to TCI's
Knowledge, there is no existing fact, circumstance or condition that could
reasonably form the basis for a finding by any Governmental Authority of any
such violation.
(b) A valid request for renewal has been duly and timely filed under
Section 626 of the Communications Act with the proper Governmental Authority
with respect to all TCI System Franchises that have expired prior to or will
expire within 36 months after the date of this Agreement.
(c) Except as set forth in SCHEDULE 6.8, (i) no written notices or
demands have been received from the FCC, from any television station, or from
any other Person or Governmental Authority (A) challenging the right of the TCI
Systems to carry any television broadcast station or deliver the same or (B)
claiming that any TCI System has failed to carry a television broadcast station
required to be carried pursuant to the Communications Act or has failed to carry
a television broadcast station on a channel designated by such station
consistent with the requirements of the Communications Act; (ii) all necessary
FAA approvals have been obtained with respect to the height and location of
towers used in connection with the operation of the TCI Systems and are listed
in SCHEDULE 6.8, and such towers are being operated in compliance in all
material respects with applicable FCC and FAA rules; and (iii) TCI has received
no written notice from any Governmental Authority with respect to an intention
to enforce customer service standards pursuant to the 1992 Cable Act and except
as set forth in its System Franchises, TCI has not agreed with any Governmental
Authority to establish customer service standards that exceed the FCC standards
promulgated pursuant to the 1992 Cable Act.
(d) Notwithstanding the foregoing, to TCI's Knowledge, each TCI System
is in compliance in all material respects with the provisions of the 1992 Cable
Act as such Legal Requirements relate to the rates and other fees charged to
subscribers of TCI's Cable Business. TCI has used reasonable good faith efforts
to establish rates charged to subscribers, effective since September 1, 1993,
that are or were allowable under the 1992 Cable Act and any authoritative
interpretation thereof now or then in effect, to the extent such rates are or
were subject to regulation at such time by any Governmental Authority, including
any local franchising authority and/or the
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FCC. Notwithstanding the foregoing, TCI makes no representation or warranty that
any of its rates that are not subject to rate regulation would be allowable if
such rates were subject to regulation and makes no representation or warranty
that the rates charged to subscribers would be allowable under any rules and
regulations of the FCC or any authoritative interpretation thereof, promulgated
after the Closing Date. TCI has delivered to the Partnership complete and
correct copies of all FCC Forms and other information reasonably requested by
the Partnership relating to rate regulation generally or specific rates charged
to subscribers with respect to the TCI Systems. Except as set forth on SCHEDULE
6.8, TCI has not made any Cost of Service Election with respect to any of the
TCI Systems. Except as set forth in SCHEDULE 6.8, TCI has not entered into and
is not subject to any so-called social contract or proposed resolution with the
FCC or any local franchising authority with respect to rates charged for cable
television services in the TCI Systems and is not currently negotiating or
anticipating entering into or being subject to the same. Except as otherwise
described on SCHEDULE 6.8, as of the date of this Agreement, (i) to the
Knowledge of TCI, there are no outstanding or unresolved proceedings or
investigations (other than those affecting the cable industry generally) dealing
with or otherwise affecting the rates that any cable television system included
in the TCI Systems can charge (whether for programming, equipment, installation,
service or otherwise) including appeals, (ii) no cable television system
included in the TCI Systems is subject to any currently effective order issued
by a Governmental Authority that reduced the rates that it may charge (whether
for programming, equipment, installation, service, or otherwise), (iii) no local
franchising authority has been certified by the FCC as a rate regulating
authority with respect to any of the TCI Systems, and (iv) there is no
unresolved complaint pending with respect to the CPST tier of any TCI System and
no rate order with respect to the TCI Systems that is being appealed.
(e) The TCI Systems that serve more than 10,000 subscribers will have
emergency alert capability as required by the FCC prior to January 1, 1999 or
such later date as may hereafter be specified by the FCC.
6.9 Patents, Trademarks and Copyrights. TCI has deposited with the U.S.
Copyright Office all statements of account and other documents and instruments,
and has paid all royalties, supplemental royalties, fees and other sums to the
U.S. Copyright Office under the Copyright Act with respect to the business and
operations of the TCI Systems as are required to obtain, hold and maintain the
compulsory license for cable television systems prescribed in Section 111 of the
Copyright Act. To TCI's Knowledge, there is no inquiry, claim, action or demand
pending before the U.S. Copyright Office or from any other Person which
questions the copyright filings or payments made by TCI with respect to the TCI
Systems. TCI has delivered to the Partnership complete and correct copies of all
current reports and filings for the past three years, made or filed pursuant to
copyright rules and regulations with respect to TCI's Cable Business. TCI does
not possess any patent, patent right, trademark or copyright related to or
material to the operation of the TCI Systems and TCI is not a party to any
license or royalty agreement with respect to any such patent, patent right,
trademark or copyright, except for licenses respecting program material and
obligations under the Copyright Act applicable to cable television systems
generally. The TCI Systems and TCI's Cable Business have been operated in such a
manner so as not to violate or
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infringe upon the rights, or give rise to any rightful claim of any Person for
copyright, trademark, service mark, patent or license infringement or the like.
6.10 Financial Statements; Undisclosed Liabilities; Absence of Certain
Changes or Events. TCI has delivered to the Partnership complete and correct
copies of (a) an unaudited balance sheet for each TCI System as of December 31,
1997 and an unaudited statement of operations for the year ended December 31,
1997 for each TCI System, including all notes and Schedules thereto and (b) an
unaudited balance sheet for each TCI System as of June 30, 1998 and the related
unaudited statement of operations for the period ended June 30, 1998 (all of
such financial statements and notes being hereinafter referred to as "TCI's
Financial Statements"). TCI's Financial Statements are in accordance with the
books and records of TCI, were prepared in accordance with GAAP, applied on a
consistent basis throughout the periods covered thereby, present fairly the
financial condition of TCI at the dates and for the periods indicated, subject,
in the case of unaudited TCI Financial Statements, only to standard year-end
adjustments and the omission of footnotes. The unaudited Balance Sheets of the
TCI Systems as of June 30, 1998 are herein collectively called the "TCI Balance
Sheet." At the date of the TCI Balance Sheet, TCI had no material liabilities
with respect to the Systems required by GAAP to be reflected or reserved against
therein that were not fully reflected or reserved against on the TCI Balance
Sheet, other than liabilities as set forth on SCHEDULE 6.10. Except as set forth
on SCHEDULE 6.10, since the date of the TCI Balance Sheet: (x) TCI has not
incurred any obligation or liability (contingent or otherwise) with respect to
the Systems, except normal trade or business obligations incurred in the
ordinary course of business, the performance of which will not, to TCI's
Knowledge, individually or in the aggregate, have a material adverse effect on
the financial condition of TCI or the results of operations of TCI's Cable
Business; (y) there has been no material adverse change in the TCI Assets
comprising any TCI System or in the business, condition, financial or otherwise,
or liabilities of TCI's Cable Business or any TCI System and, to TCI's
Knowledge, no fact or condition exists or is contemplated or threatened which
would result in such a change in the future; and (z) TCI's Cable Business has
been conducted only in the ordinary course of business consistent with past
practice. For the purpose of this Agreement, the impact of general economic
conditions (including changes in capital and financial markets), governmental
legislation and regulations and other events which affect the cable industry as
a whole in the State of California or the United States, shall not be considered
in determining whether there has been a material adverse change in the business,
condition, financial or otherwise or liabilities of TCI's Cable Business or any
TCI System or the TCI Assets.
6.11 Litigation. Except as set forth in SCHEDULE 6.11: (a) there is no
Litigation pending or, to TCI's Knowledge, threatened, and, to TCI's Knowledge,
there is no investigation pending or threatened, by or before any Governmental
Authority or private arbitration tribunal against TCI which, if adversely
determined, would materially adversely affect the financial condition or
operations of TCI's Cable Business, TCI Systems, the TCI Assets or the ability
of TCI to perform its obligations under this Agreement, or which, if adversely
determined, would result in the modification, revocation, termination,
suspension or other limitation of any of the TCI System Franchises, TCI System
Licenses, TCI System Contracts or leases or other documents evidencing the TCI
Leased Property or the TCI Other Real Property Interests; and (b) there is not
in existence
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any Judgment requiring TCI to take any action of any kind with respect to the
TCI Assets or the operation of the TCI Systems, or to which TCI (with respect to
the TCI Systems), the TCI Systems or the TCI Assets are subject or by which they
are bound or affected.
6.12 Tax Returns; Other Reports. TCI has duly and timely filed in correct
form all federal, state, local and foreign Tax returns and other Tax reports
required to be filed by TCI, and has timely paid all Taxes which have become due
and payable, whether or not so shown on any such return or report, the failure
of which to be filed or paid could adversely affect or result in the imposition
of a Lien upon the TCI Assets or that could impose on the Partnership any
transferee liability for any taxes, penalties or interest due or to become due
from TCI, except such amounts as are being contested diligently and in good
faith and are not in the aggregate material. TCI has received no notice of, nor
does TCI have any Knowledge of, any deficiency, assessment or audit, or proposed
deficiency, assessment or audit from any taxing Governmental Authority which
could affect or result in the imposition of a Lien upon the TCI Assets.
6.13 Employment Matters.
(a) SCHEDULE 6.13(a) contains a complete and correct list of the
names and positions of all employees engaged principally in TCI's Cable Business
as of the date set forth on SCHEDULE 6.13(a). TCI has complied in all material
respects with all applicable Legal Requirements relating to the employment of
labor, including, WARN, ERISA, continuation coverage requirements with respect
to group health plans and those relating to wages, hours, collective bargaining,
unemployment insurance, worker's compensation, equal employment opportunity, age
and disability discrimination, immigration control and the payment and
withholding of Taxes.
(b) Each employee benefit plan (as defined in Section 3(3) of ERISA)
or any multi-employer plan (as defined in Section 3(37) of ERISA) with respect
to which TCI or any of its ERISA Affiliates has any liability or in which any
employees or agents, or any former employees or agents, of TCI or any of its
ERISA Affiliates participate is set forth in SCHEDULE 6.13 (the "TCI Plans").
Neither TCI, any of its ERISA Affiliates nor any TCI Plan is in material
violation of any provision of the Code or ERISA. No "reportable event" (as
defined in Section 4043 of ERISA) has occurred and is continuing with respect to
any TCI Plan and no "prohibited transaction" (as defined in Section 406 of
ERISA) has occurred with respect to any TCI Plan which reasonably could result
in material liability to TCI or any of its ERISA Affiliates. No material
"accumulated funding deficiency" or "withdrawal liability" (as defined in
Section 302 of ERISA) exists with respect to any of the TCI Plans. After the
Closing Time, the Partnership will not be required, under ERISA, the Code or any
collective bargaining agreement, to establish, maintain or continue any Plan
currently maintained by TCI or any of its ERISA Affiliates.
(c) Except as set forth on SCHEDULE 6.13, there are no union or
collective bargaining agreements applicable to any Person employed by TCI that
renders services in connection with the TCI Systems and TCI has no duty to
bargain with any labor organization with respect to any such Person. There are
not pending any unfair labor practice charges against TCI, any demand
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for recognition or any other effort of or request or demand from, a labor
organization for representative status with respect to any Person employed by
TCI that renders services in connection with the TCI Systems. Except as
described on SCHEDULE 6.13, TCI has no employment Contracts, either written or
oral, with any employee of the TCI Systems and none of the employment Contracts
listed on SCHEDULE 6.13 requires TCI or will require the Partnership to employ
any Person after the Closing Time.
6.14 TCI Systems Information. SCHEDULE 6.14 sets forth a materially true
and accurate description of the following information relating to TCI's Cable
Business as of the date specified in SCHEDULE 6.14 or, if no date is specified,
as of August 20, 1998:
(a) the approximate number of miles (both underground and aerial) of
plant included in the TCI Assets;
(b) the number of Equipment Basic Subscribers (including the number
that are individually billed and the number that are bulk-billed) served by the
TCI Systems for each TCI System service area (by franchise area or community);
(c) the approximate number of single family homes and residential
dwelling units passed by the TCI Systems;
(d) a description of basic and optional or tier services available
from the TCI Systems, the rates charged by TCI for each and the number of
customers receiving each optional or tier service;
(e) the stations and signals carried by the TCI Systems and the
channel position of each such signal and station and the basis for carriage of
all television broadcast signals; and
(f) the cities, towns, villages, townships, boroughs, counties or
other communities served by the TCI Systems (with or without the requirement of
a franchise).
6.15 Accounts Receivable. TCI's accounts receivable for its Cable Business
are actual and bona fide receivables representing obligations for the total
dollar amount of such receivables, as shown on the books of TCI, that resulted
from the regular course of TCI's Cable Business. Such receivables are subject to
no offset or reduction of any nature, except for a reserve for uncollectible
amounts consistent with the reserve established by TCI in TCI's Financial
Statements and those credits or reductions to such accounts made in the ordinary
course of business.
6.16 Bonds; Letters of Credit. Except as set forth on SCHEDULE 6.16, there
are no franchise, construction, fidelity, performance, or other bonds,
guaranties in lieu of bonds or letters of credit posted by TCI in connection
with its operation or ownership of any of the TCI Systems or TCI Assets.
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6.17 Finders and Brokers. TCI has not employed any financial advisor,
broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement for which the Partnership could be
liable.
SECTION 7. ADDITIONAL COVENANTS
7.1 Access to Premises and Records. Between the date of this Agreement and
the Closing Date each party will give to the other and its representatives, and
the Partnership will cause Century to give to TCI and its representatives, full
access during normal business hours to all the premises and books and records of
its Cable Business and to all its Assets and Systems' personnel and will furnish
to the other and its representatives all such documents, financial information
and other information regarding its Cable Business and its Assets as the other
from time to time reasonably may request; provided that no investigation by TCI
or the Partnership will affect or limit the scope of any of the representations,
warranties, covenants and indemnities of the other party in this Agreement or in
any Transaction Document or limit such party's liability for breach of any of
the foregoing.
7.2 Continuity and Maintenance of Operations; Certain Deliveries and
Notices. Except as the other party may otherwise consent in writing, between the
date of this Agreement and the Closing, TCI with respect to TCI's Cable
Business, the TCI Systems and the TCI Assets and Century with respect to
Century's Cable Business, the Century Systems and the Century Assets:
(a) will conduct its Cable Business and operate its Systems only in
the usual, regular and ordinary course and consistent with past practices,
including continuing to make ordinary marketing, advertising and promotional
expenditures and continuing its current policies and procedures for
disconnection and discontinuance of service to subscribers whose accounts are
delinquent or terminated, and, to the extent consistent with such conduct and
operation, will use its commercially reasonable efforts to (i) preserve its
current business intact in all material respects, including preserving existing
relationships with franchising authorities, suppliers, customers and others
having business dealings with its Systems, and (ii) keep available the services
of its employees and agents providing services in connection with the Cable
Business;
(b) will maintain its Assets in good repair, order and condition,
ordinary wear and tear excepted; will maintain equipment and inventory for its
Systems at not less than normal historical levels consistent with past
practices; will maintain in full force and effect policies of insurance with
respect to its Cable Business consistent with its past practices; and will
maintain its books, records and accounts with respect to its Assets and the
operation of its Systems in the usual, regular and ordinary manner on a basis
consistent with past practices;
(c) except with respect to Excluded Assets, will not (i) modify,
terminate, renew, suspend, abrogate or enter into any System Contract or other
instrument that would be included in its Assets, other than in the ordinary
course of business; provided that the other party's consent, not
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to be unreasonably withheld or delayed, will be required to modify, terminate,
renew, suspend, abrogate or enter into any System Franchise (except as required
or expressly permitted by another provision of this Agreement), any agreement
regarding Non-TV Products and Services or any other agreement that contemplates
payments to or by the transferring party in any 12-month period exceeding
$250,000 individually; (ii) take or omit to take any action that would result in
the condition set forth in Section 8.1(a) with respect to TCI or Section 8.2(a)
with respect to the Partnership not being satisfied at any time prior to the
Closing; (iii) engage in any marketing, subscriber installation, disconnection
or collection practices other than in the ordinary course of business consistent
with its past practices; (iv) make any Cost of Service Election; (v) enter into
any agreement with or commitment to any competitive access providers with
respect to the System; (vi) sell, transfer or assign any portion of its Assets
other than sales in the ordinary course of business and assets sold or disposed
of and replaced by other assets of comparable utility and value or permit the
creation of a Lien, other than a Permitted Lien, on any Asset; (vii) engage in
any hiring or employee compensation practices that are inconsistent with past
practices except for changes in such practices implemented by such party and its
Affiliates (or, in the case of the Partnership, by Century and its Affiliates)
on a company-wide basis; or (viii) take any actions that would cause the
transactions contemplated hereby to fail to qualify as a like-kind exchange
under Section 1031 of the Code;
(d) will promptly deliver to the other true and complete copies of all
quarterly financial statements and all monthly and quarterly operating reports
with respect to the operation of the Cable Business prepared in the ordinary
course of business by or for such party at any time from the date of this
Agreement until the Closing;
(e) will give or cause to be given to the other and its counsel,
accountants and other representatives, as soon as reasonably possible but in any
event seven (7) Business Days prior to the date of submission to the appropriate
Governmental Authority, copies of all FCC Forms 1200, 1205, 1210, 1215, 1220,
1225, 1235 and 1240 or any other FCC forms required to be filed with any
Governmental Authority under the 1992 Cable Act with respect to rates and
prepared with respect to any of its Systems, such forms to be reasonably
satisfactory in form and substance to the other;
(f) will duly and timely file a valid notice of renewal under Section
626 of the Cable Act with the appropriate Governmental Authority with respect to
any System Franchise that will expire within 36 months after any date between
the date of this Agreement and the Closing Date;
(g) will promptly notify the other of any fact, circumstance, event or
action by it or otherwise (i) which if known at the date of this Agreement would
have been required to be disclosed by it in or pursuant to this Agreement or
(ii) the existence, occurrence or taking of which would result in the condition
set forth in Section 8.1(a) with respect to TCI or Section 8.2(a) with respect
to the Partnership not being satisfied at any time prior to the Closing, and,
with respect to clause (ii), will use its commercially reasonable efforts to
remedy the same, subject to Section 12.16; and
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(h) will consult the other prior to decreasing or increasing the rate
charged for any level of Basic Services, Expanded Basic Services or Pay TV and
prior to adding, deleting, retiering or repackaging any programming services;
provided that the other's consent is not required for any such action.
7.3 Employees.
(a) Each party may, but shall have no obligation to employ or offer
employment to any employee of the other party's Cable Business. Not more than 60
days after the date of this Agreement, each party shall provide to the other a
list of all active employees of their respective Systems as of a recent date,
showing then-current positions and indicating which of such employees such party
desires to retain as its employees (the "Retained Employees"). Within 30 days
after receipt of this list, the party receiving such list will provide to the
other in writing a list of employees that such party or its Affiliates may
desire to employ following the Closing (subject to the satisfaction of such
party's conditions for employment), which list shall not include any Retained
Employees. At the Closing, each party shall terminate as of the Closing Time the
employment of all its employees who were employed incidental to the conduct of
such party's Cable Business other than Retained Employees and any other
employees not hired by the other party that such party determines to retain.
(b) Each party will pay to all employees of its Cable Business all
compensation, including salaries, commissions, bonuses, deferred compensation,
severance, insurance, accrued vacation in excess of the amount the other party
assumes pursuant to Section 7.3(g), sick pay and other compensation or benefits
to which they are entitled for periods through and including the Closing Time,
including, without limitation, all amounts, if any, payable on account of the
termination of their employment as of the Closing Time by such party at Closing.
Each party agrees to cooperate in all reasonable respects with the other party
to allow such party to evaluate and interview employees of the Cable Business in
order to make hiring decisions. Such cooperation shall include but not be
limited to allowing the other party to contact employees during normal business
hours and making personnel records available.
(c) Each party will be responsible for the maintenance and
distribution of benefits accrued under any employee benefit plan (as defined in
ERISA) maintained by such party pursuant to the provisions of any Legal
Requirement and of such plans. Neither party will assume any obligation or
liability for any such accrued benefits or any fiduciary or administrative
responsibility to account for or dispose of any such accrued benefits under any
employee benefit plans maintained by the other party.
(d) All claims and obligations under, pursuant to or in connection
with any welfare, medical, insurance, disability or other employee benefit plans
of either party or arising under any Legal Requirement affecting employees of
such party incurred through and including the Closing Time or resulting from or
arising from events or occurrences occurring or commencing through and including
the Closing Time will remain the responsibility of such party, whether or not
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such employees are hired by the other party after the Closing Time. Neither
party will have and assume any obligation or liability under or in connection
with any such plan maintained by the other party.
(e) Each party will remain solely responsible for, and will indemnify and
hold harmless the other from and against all Losses arising from or with respect
to, all salaries and all severance, accrued vacation in excess of the amount
included in the adjustments calculated pursuant to Section 3.2(c), medical,
sick, holiday, continuation coverage and other compensation or benefits to which
its employees may be entitled, whether or not such employees may be hired by the
other party, as a result of their employment by it through and including the
Closing Time, the termination of their employment as of the Closing Time by such
party at Closing, the obligation, if any, to notify and/or bargain with any
labor organization, the consummation of the transactions contemplated hereby or
pursuant to any applicable Legal Requirement (including without limitation WARN)
or otherwise relating to their employment through and including the Closing
Time.
(f) Each party will retain full responsibility and liability for offering
and providing "continuation coverage" of any "qualified beneficiary" who is
covered by a "group health plan" sponsored or contributed to by such party and
who has experienced a "qualifying event" or is receiving "continuation coverage"
through and including the Closing Time. "Continuation coverage," "qualified
beneficiary," "group health plan," and "qualifying event" shall have the
meanings given such terms under Code Section 4980B.
(g) Notwithstanding anything to the contrary herein, each party (a
"Hiring Party") shall (i) credit each employee of the other party who becomes an
employee of such Hiring Party as of the Closing Time (a "Hired Employee") with
the amount of accrued vacation for which such Hiring Party received credit
pursuant to Section 3, such amount not to exceed the amount of accrued vacation
permitted to be accrued by employees of the Hiring Party in accordance with the
Hiring Party's standard practices; (ii) permit each Hired Employee to
participate in the Hiring Party's employee benefit plans to the same extent as
similarly situated employees of the Hiring Party and their dependents; (iii)
give each Hired Employee credit for his or her past service with the other party
at the Closing Time (including past service with any prior owner or operator of
such party) for purposes of eligibility and vesting under the Hiring Party's
employee benefit and other plans to the same extent as other similarly situated
employees of the Hiring Party; and (iv) not subject any Hired Employee to any
waiting periods or limitations on benefits for pre-existing conditions under the
Hiring Party's employee benefit plans, including any group health and disability
plans, except to the extent such employees were subject to such limitations
under the other party's employee benefit plans.
(h) If the Hiring Party discharges without cause within 90 days after the
Closing any Hired Employee and such Hired Employee would have been entitled to
severance payments pursuant to the other party's severance benefits plan (or, if
TCI is the Hiring Party, Century's severance benefits plan) if such Hired
Employee had been discharged without cause at Closing by the other party or its
predecessor as of the Closing Time, then the Hiring Party shall pay severance
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benefits to such Hired Employee in accordance with the other party's severance
benefit plan (or, if TCI is the Hiring Party, Century's severance benefits plan)
to the extent such plan would have paid severance to such Hired Employee.
(i) Nothing in this Section 7.3 or elsewhere in this Agreement shall be
deemed to make any employee of the parties a third party beneficiary of this
Agreement.
7.4 Leased Vehicles; Other Capital Leases. Each party will pay the
remaining balances on any leases for vehicles included in its Tangible Personal
Property and will deliver valid and good title to such vehicles free and clear
of all Liens (other than Permitted Liens) to the other party at the Closing.
7.5 Required Consents, Estoppel Certificates, Franchise Renewal.
(a) Each party will use its commercially reasonable efforts to obtain
in writing as promptly as possible and at its expense, all of its Required
Consents in form and substance reasonably satisfactory to the other party, and
will deliver to the other party copies of such Required Consents promptly after
they are obtained by such party; provided however that each party will afford
the other party the opportunity to review, approve and revise the form of
Required Consent prior to delivery to the party whose consent is sought. Each
party will cooperate with the other party in its efforts to obtain its Required
Consents; provided that (i) in the case of System Franchises, neither party will
be required to accept or agree or accede to any modifications or amendments to,
or the imposition of any condition to the transfer of, any of the System
Franchises that in either case, would make, or are reasonably likely to make,
the underlying System Franchise materially more onerous in any respect or that
would materially reduce, or are reasonably likely to materially reduce, the
benefits available under the System Franchise in respect of which the consent
relates and (ii) in the case of System Licenses, System Contracts or leases or
documents evidencing Leased Property or Other Real Property Interests, neither
party will be required to accept or agree or accede to any modifications or
amendments to, or the imposition of any condition to the transfer of, any of
them that in either case, would be material to the transactions contemplated by
this Agreement. Notwithstanding the foregoing, as soon as practicable after the
date of this Agreement, but in any event no later than 45 days after the date of
this Agreement, the parties will cooperate with each other to complete, execute
and deliver, or cause to be completed, executed and delivered to the appropriate
Governmental Authority, a request for such Governmental Authority's consent to
transfer each System Franchise as to which such consent is required. The
Partnership acknowledges that the applications for consent to transfer the
System Franchises may contain, if necessary under the terms of any System
Franchise and if requested by TCI, an application for such consent to transfer
from the applicable Governmental Authority with respect to the merger of AT&T
Corp. and Tele-Communications, Inc. (the "TCI/AT&T Transaction"). In the
alternative, the Partnership acknowledges that TCI may file a request for
consent and FCC Form 394 for the TCI/AT&T Transaction with applicable
Governmental Authorities with respect to the transactions contemplated by this
Agreement but prior to Closing.
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(b) Each party will use its commercially reasonable efforts to obtain
a certificate executed by the lessor of each parcel of Leased Property
substantially in the form of EXHIBIT 7.5(b), the substance of which may be
included as part of the consent obtained pursuant to Section 7.5(a) (an
"Estoppel Certificate").
(c) Each party will use commercially reasonable efforts to obtain and
cooperate with the other party to obtain renewals or extensions of any System
Franchise for which a valid notice of renewal pursuant to the formal renewal
procedures established by Section 626 of the Cable Act has not been timely
delivered to the appropriate Governmental Authority for a period expiring no
earlier than three years after the Closing Date without the imposition of any
conditions or other modifications that would make, or are reasonably likely to
make, the underlying instrument materially more onerous or that would materially
reduce, or are reasonably likely to materially reduce, the benefits available
under the instrument in respect of which the renewal or extension relates.
(d) Notwithstanding Section 7.5(a), no party will have any further
obligation to obtain Required Consents: (i) with respect to license agreements
relating to pole attachments where the licensing party will not, after the
assigning party's exercise of commercially reasonable efforts, consent to an
assignment of such license agreement but requires that the proposed assignee
enter into a new agreement with such licensing authority, in which case the
proposed assignee shall use its commercially reasonable efforts to enter into
such agreement prior to the Closing or as soon as practicable thereafter and the
party to the license agreement will cooperate with and assist the other party in
obtaining such agreements; provided however that the proposed assignee's
commercially reasonable efforts shall not require it to take any action of the
type that such party is not required to take pursuant to this Section 7.5; and
(ii) for any business radio license which such party reasonably expects can be
obtained within 120 days after the Closing and so long as a temporary
authorization is available to the other party under FCC rules with respect
thereto.
7.6 Title Commitments and Surveys. The Partnership and TCI each will
provide to the other, within 60 days after the date of this Agreement, (a)
current commitments to issue title insurance policies on the 1992 CLTA owner's
form ("Title Commitments") by an agent writing for Old Republic Insurance
Company, Chicago Title Insurance Company or another nationally recognized title
insurance company (the "Title Company") and containing policy limits and other
terms reasonably acceptable to the other, and, legible photocopies of all
recorded items described as exceptions therein, committing to insure fee simple
title in the other party to each parcel of the Owned Property and access to such
Owned Real Property included in its Assets, subject only to Permitted Liens, and
(b) surveys of each parcel of Owned Property, in such form as is necessary to
obtain the title insurance to be issued pursuant to the Title Commitments with
the standard printed exceptions relating to survey matters deleted (the
"Surveys"), certified to the other party and to the Title Company issuing a
Title Commitment. The cost to obtain such Title Commitments and Surveys and
other documents required by the Title Company to issue such policies and Surveys
shall be split equally between the Partnership and TCI; provided however that
(x) each party shall pay for the cost to delete or insure over any Title Defects
relating to its Owned Property and (y) the
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requesting party will pay the premiums and charges for any additional
endorsements such party requests with respect to any Title Policy other than the
endorsements to delete the standard survey exceptions from such Title Policy and
to delete or insure over any Title Defects. If Century or TCI notifies the other
within 30 days following its receipt of both the Title Commitments and the
Surveys of any Lien (other than a Permitted Lien or a Lien set forth in
SCHEDULES 5.4 or 6.4, as applicable) or other matter affecting title to Owned
Property of the other which prevents access to or which could prevent or impede
in any way the use or operation of any parcel of Owned Property for the purposes
for which it is currently used or operated by the other (each a "Title Defect"),
the other will exercise commercially reasonable efforts to (i) remove such Title
Defect, or (ii) with the consent of the objecting party, cause the Title Company
to commit to insure over each such Title Defect prior to the Closing. If such
Title Defect cannot be removed prior to Closing or the Title Company does not
commit to insure over such Title Defect prior to Closing and if the objecting
party elects to waive such Title Defect and proceed towards consummation of the
transaction in accordance with this Agreement in its reasonable discretion, the
objecting party and the other party shall enter into a written agreement at
Closing containing the other party's commitment to use commercially reasonable
efforts to remedy the Title Defect following Closing on terms satisfactory to
the objecting party, in its reasonable discretion.
7.7 HSR Notification. As soon as practicable but in any event no later than
60 days after the date of this Agreement, Century and TCI will each complete and
file, or cause to be completed and filed, any notification and report required
to be filed under the HSR Act and each such filing shall request early
termination of the waiting period imposed by the HSR Act. The parties shall use
their commercially reasonable efforts to respond as promptly as reasonably
practicable to any inquiries received from the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "Antitrust
Division") for additional information or documentation and to respond as
promptly as reasonably practicable to all inquiries and requests received from
any other Governmental Authority in connection with antitrust matters. The
parties shall use their respective commercially reasonable efforts to overcome
any objections which may be raised by the FTC, the Antitrust Division or any
other Governmental Authority having jurisdiction over antitrust matters.
Notwithstanding the foregoing, no party shall be required to make any
significant change in the operations or activities of the business (or any
material assets employed therein) of such party or any of its Affiliates, if a
party determines in good faith that such change would be materially adverse to
the operations or activities of the business (or any material assets employed
therein) of such party or any of its Affiliates having significant assets, net
worth or revenue. Each of the parties will coordinate with the other with
respect to its filings and will cooperate to prevent inconsistencies between
their respective filings and will furnish to each other such necessary
information and reasonable assistance as the other may reasonably request in
connection with its preparation of necessary filings or submissions under the
HSR Act.
7.8 Transfer Taxes. All sales, use or excise Taxes arising from or payable
by reason of the transfer of any of the TCI Assets and the Century Assets will
be shared equally by TCI and the Partnership. All transfer and similar Taxes or
assessments, including transfer and recording fees and similar assessments for
or under System Franchises, System Licenses and System Contracts,
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arising from or payable by reason of the conveyance of the TCI Assets and the
Century Assets will be paid by TCI with respect to the TCI Assets and by the
Partnership with respect to the Century Assets.
7.9 Programming. Each of the Partnership and TCI will execute and deliver
such documents as may be reasonably requested by the other party in order for
the Partnership or TCI to comply with the requirements of its programming
Contracts and channel line-up requirements with respect to acquisitions and
divestitures of cable television systems. Neither party will be required to make
any payments to the other's programmers in the fulfillment of its obligations
under this Section 7.9.
7.10 Schedules and Exhibits.
(a) Schedule and exhibit references contained in this Agreement are
for convenience only and matters disclosed pursuant to one section, subsection
or other provision of this Agreement are deemed disclosed for all purposes of
this Agreement.
(b) Not less than ten Business Days prior to Closing, each party will
deliver to the other revised copies of each of the Schedules prepared by it and
delivered to the other party on the date of this Agreement, except for SCHEDULES
5.14 and 6.14 or SCHEDULES 5.13(a) and 6.13(a), in each case updated and marked
to show any changes occurring between the date of this Agreement and the date of
delivery; provided however that for purposes of such party's representations and
warranties and covenants in this Agreement, all references to the Schedules will
mean the version of the Schedules attached to this Agreement on the date of
signing, and provided further that if the effect of any such updates to
Schedules is to disclose any one or more additional properties, privileges,
rights, interests or claims acquired or arising after the date of this Agreement
as Assets, the party to whom such Assets would otherwise be transferred at the
Closing will have the right (to be exercised by written notice to the other
party at or before Closing) to cause any one or more of such items to be
designated as and deemed to constitute Excluded Assets for all purposes under
this Agreement unless such items are Contracts that were not required to be
scheduled or that were entered into after the date of this Agreement in
accordance with the terms of this Agreement. Without changing the result set
forth in the preceding sentence that a party's updated Schedules do not serve to
update such party's representations and warranties, the updated Schedules
delivered pursuant to this Section shall be accompanied by an officer's
certificate of the party delivering such Schedules, certifying that the
information set forth in such Schedules is true and accurate in all material
respects as of the date of delivery thereof and that all information required to
be given in the Schedules "as of the date of this Agreement" has been updated to
the date of delivery of the updated Schedules or other date permitted to be
specified in such Schedules.
7.11 Use of Names and Logos. For a period of 90 days after the Closing, the
Partnership and TCI will be entitled to use the trademarks, trade names, service
marks, service names, logos and similar proprietary rights of TCI and Century,
respectively, to the extent incorporated in or on the Assets transferred to it
at the Closing, provided that each will exercise reasonable efforts to remove
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all such names, marks, logos and similar proprietary rights of the other from
the Assets by such earlier date as reasonably practicable following the Closing.
Notwithstanding the foregoing, the transferee party will not be required to
remove or discontinue using any such name or mark that is affixed to converters
or other items in or to be used in customer homes or properties, or as are used
in similar fashion making such removal or discontinuation impracticable for the
transferee party.
7.12 Transitional Billing Services. The Partnership and TCI will each
provide to the other, upon request, access to and the right to use its billing
system computers, software and related fixed assets in connection with the
Systems acquired by the other party for a period of up to 90 days following the
Closing to allow for conversion of existing billing arrangements ("Transitional
Billing Services"). Each party will notify the other at least 10 days prior to
the Closing as to whether it desires Transitional Billing Services from the
other party. All Transitional Billing Services that are requested by a party
will be provided on terms and conditions reasonably satisfactory to each party;
provided however that the amount to be paid by the party receiving Transitional
Billing Services will not exceed the cost to the other party of providing such
Transitional Billing Services. Each party will notify the other party at least
45 days prior to the Closing of the cost to such party of providing such
Transitional Billing Services.
7.13 Confidentiality and Publicity.
(a) Each party will use commercially reasonable efforts to assure that
any non-public information that such party may obtain from the other in
connection with this Agreement with respect to the other's Cable Business and
Systems (it being understood and agreed that all proprietary information of the
transferring party that is included among the Assets of such transferring party
shall become the proprietary information of the transferee party at Closing)
will be kept confidential and such party will not disclose, and will cause its
employees, consultants, advisors and agents not to disclose, any such
information to any other Person (other than its directors, officers and
employees and representatives of its advisers and lenders whose knowledge
thereof is necessary in order to facilitate the consummation of the transactions
contemplated hereby) or use, and will cause its employees, consultants, advisors
and agents not to use, such information to the detriment of the other; provided
that (i) such party may use and disclose any such information once it has been
publicly disclosed (other than by such party in breach of its obligations under
this Section) or which rightfully has come into the possession of such party
(other than from the other party) and (ii) to the extent that such party may, in
the reasonable opinion of its counsel, be compelled by Legal Requirements to
disclose any of such information, such party may disclose such information if it
will have used all reasonable efforts, and will have afforded the other the
opportunity, to obtain an appropriate protective order or other satisfactory
assurance of confidential treatment, for the information compelled to be
disclosed. The obligation of either party to hold information in confidence
pursuant to this Section will be satisfied if such party exercises the same care
with respect to such information as it would exercise to preserve the
confidentiality of its own similar information. In the event of termination of
this Agreement, each party will use all reasonable efforts to cause to be
delivered to the other, and retain no copies of, any documents, work papers and
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other materials obtained by such party or on its behalf from the other, whether
so obtained before or after the execution hereof.
(b) Neither party will issue any press release or make any other
public announcement or any oral or written statement to its or the other party's
employees concerning this Agreement and the transactions contemplated hereby,
except as required by applicable Legal Requirements, without the prior written
consent and approval of the other, which consent and approval may not be
unreasonably withheld.
7.14 Bulk Transfers. The Partnership and TCI each waives compliance by the
other with Legal Requirements relating to bulk transfers applicable to the
transactions contemplated hereby.
7.15 Allocation of Value to Exchanged Assets. No later than 60 days after
the Closing, each of TCI and the Partnership will deliver to the other a written
estimate of the value to be allocated by it to each of the exchange groups
pursuant to Internal Revenue Service regulations relating to like-kind exchanges
of assets under Section 1031 of the Code. The parties will use reasonable good
faith efforts to agree within 90 days after the Closing on the final values to
be allocated to each such exchange group. If TCI and the Partnership do not
agree on such allocation within ninety days after the Closing, then such
allocation shall be determined by an appraisal to be conducted by an independent
appraisal firm agreed to by the Partnership and TCI and retained by the
Partnership and TCI, with experience in the valuation and appraisal of similar
assets. TCI and the Partnership, for purposes of Sections 1031 and 1060 of the
Code and the regulations thereunder, will report the transactions contemplated
by this Agreement in accordance with such allocation, either as agreed to by
them or as determined by such appraiser. Liabilities assumed or taken subject to
by each party are being exchanged each for the other to the maximum extent
permitted under Section 1031 of the Code and regulations thereunder. Each party
promptly will give the other notice of any disallowance or challenge of asset
values by the Internal Revenue Service or any state or local tax authority.
7.16 Lien Searches. Prior to Closing, each party will obtain at its expense
and deliver to the other party, the results of a lien search conducted by a
professional search company of records in the offices of the secretaries of
state in each state and county clerks in each county where there exists any of
its Owned Property or Tangible Personal Property, and in the state and county
where such party's principal offices are located, including copies of all
financing statements or similar notices or filings (and any continuation
statements) discovered by such search company, which lien search will be current
as of a date that is no more than 30 days prior to Closing.
7.17 Further Assurances. At and after the Closing, each of the Partnership
and TCI at the request of the other, will promptly execute and deliver, or cause
to be executed and delivered, to the other all such documents and instruments,
in addition to those otherwise required by this Agreement, in form and substance
reasonably satisfactory to the other as the other may reasonably request in
order to carry out or evidence the terms of this Agreement or to collect on
behalf of the transferee party any accounts receivable or other claims included
in the Century Assets or the TCI Assets.
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Without limiting the generality of the foregoing, the Partnership and TCI will
take, or cause to be taken, all actions consistent with the terms of this
Agreement, including execution and delivery of any documents or instruments, as
the other may reasonably request to effect the qualification of the transactions
contemplated hereby as a like-kind exchange under Section 1031 of the Code.
7.18 Consents. If and to the extent the Partnership or TCI shall have
waived satisfaction of the condition to Closing set forth in Section 8.1(e) or
Section 8.2(e), respectively, subsequent to the Closing, each of TCI with
respect to the TCI Systems and the TCI Assets and the Partnership with respect
to the Century Systems and the Century Assets will continue to use commercially
reasonable efforts to obtain in writing as promptly as possible any Required
Consent which was not obtained on or before the Closing and will deliver copies
of the same, reasonably satisfactory in form and substance, to the other. The
obligations set forth in this Section will survive the Closing and will not be
merged in the consummation of the transactions contemplated hereby.
7.19 Cooperation as to Rates and Fees.
(a) Each party shall diligently pursue or cause to be diligently
pursued any current rate proceedings and shall make available to the other party
upon request copies of any documents, correspondence or notices sent by or
received by such party or its Affiliates in connection with the current rate
proceedings or any rate regulatory matter with respect to its Systems instituted
after the date of this Agreement.
(b) Prior to Closing, without the prior consent of the other party,
neither party shall settle or permit to be settled any rate proceeding with
respect to its Systems if such settlement would (i) impose upon the other party
any liability, or (ii) adversely affect the rates to be charged by the other
party during the post-Closing time period unless such party compensates the
other party therefor in the manner agreed by the parties, or if the parties do
not agree, as determined by an independent auditor in accordance with the
procedures established in Section 3.3(b).
(c) After the Closing, each party will be responsible for and follow
to conclusion any rate order of any Governmental Authority or proceeding with
respect to rates charged by it or its Affiliates in Systems owned by it
immediately prior to the Closing and will cooperate with and assist the other by
providing, upon reasonable request, all information in that party's or its
Affiliate's possession (and not previously made available to the requesting
party) relating directly to the rates charged for cable services that the
requesting party may reasonably require to justify such rates in response to any
inquiry, order or requirements of any Governmental Authority.
(d) If either TCI or Century is required following Closing pursuant to
any Legal Requirement, settlement or otherwise to reimburse to any subscribers
of the Systems owned by it prior to Closing, any subscriber payments previously
made by them, including fees for cable television service, late fees and similar
payments, then TCI, with respect to any Century System, or the Partnership, with
respect to any TCI System (in either case, the "Transferee Party"), agrees that
it will make such reimbursement through its billing system on terms specified by
Century, with
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respect to any Century System, or TCI, with respect to any TCI System (in either
case, the "Transferor Party"), and the Transferor Party will pay the Transferee
Party for all such payments made by the Transferee Party following Closing and
all reasonable expenses incurred by the transferee party in connection
therewith. Without limiting the foregoing, the Transferee Party will provide the
Transferor Party with all information in the Transferee Party's possession that
is reasonably required by the Transferor Party in connection with such
reimbursement.
(e) If either TCI or Century is permitted following Closing pursuant
to any Legal Requirement, settlement or otherwise to pass through to subscribers
of the Systems owned by it prior to Closing, the amount of any "franchise fees
on franchise fees" or other amounts that it is required to pay with respect to
the period prior to Closing, the Transferee Party agrees that it will collect
such amounts as specified by the Transferor Party from subscribers of the
Systems of the Transferor Party and will promptly remit such amounts to the
Transferor Party.
7.20 Satisfaction of Conditions. Each party will use its commercially
reasonable efforts to satisfy, or to cause to be satisfied, the conditions to
the obligations of the other party to consummate the transactions contemplated
by this Agreement, as set forth in Section 8, with "commercially reasonable
efforts" being determined with respect to any particular matter as set forth
elsewhere in this Agreement.
7.21 Offers. Neither party will offer its Assets or Cable Business for
sale, entertain offers for such Assets or Cable Business or otherwise negotiate
for the sale of such Assets or Cable Business or make information about such
Assets or Cable Business available to any third party in connection with the
possible sale of such Assets or Cable Business prior to the Closing Date or the
date this Agreement is terminated in accordance with its terms.
7.22 Environmental Reports. TCI may obtain at its expense, such
environmental assessments and reports with respect to the Century real property
as it may determine and the Partnership may obtain at its expense, such
environmental assessments and reports with respect to the TCI real property as
it may determine. Upon request, each of TCI and the Partnership shall give the
other and all environmental engineers and consultants acting on the other's
behalf such access during normal business hours to the sites and facilities
relating to the other's Systems as is reasonably required to permit such
engineers and consultants to conduct the physical on-site inspections and
prepare the environmental surveys and assessments with respect to such sites and
facilities as the requesting party shall reasonably request. If (a) TCI's or the
Partnership's environmental investigation reveals a matter that would be a
material breach of the other's representations given with respect to
environmental matters, without taking into account the Knowledge limitations in
such representations, or (b) if following TCI's or the Partnership's
investigation of any environmental matter or condition disclosed by the other
party (the "transferor") on its schedules to this Agreement or in the
environmental reports provided by the transferor to the party that commissioned
the investigation (the "transferee"), the transferee reasonably believes that
any such environmental matter or condition could give rise to liability on the
part of the transferee
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following Closing, then in either case the transferor shall remediate the
problem in a manner reasonably satisfactory to the transferee prior to Closing.
7.23 Year 2000 Matters.
(a) Certain Defined Terms. For purposes of this Section 7.23, the
following terms shall have the following meanings:
(i) "Computer and Other Systems" means any level of hardware or
software, equipment and cable plant, or building and other facilities used in
connection with the business of the Systems by TCI or Century and which will be
used in connection with the business of the TCI Systems by the Partnership or in
connection with the business of the Century Systems by TCI, which are date
dependent or which process date data, including any microcode, firmware,
application programs, user interfaces, files and databases, and which might be
adversely affected by the advent or changeover to the Year 2000 or to the advent
or changeover to any leap year.
(ii) "Year 2000 Ready" or "Year 2000 Readiness" means that the
referenced component, system, software, equipment or other item is designed to
be used prior to, during and after the calendar year 2000 A.D., and that such
component, system, software, equipment or other item will operate at all levels,
including microcode, firmware, application programs, user interfaces, files and
databases, during each such time period without error or interruption relating
to, or the product of, date data which represents or references different
centuries or more than one century or leap year.
(iii) "Year 2000 Remediation Program" means an enterprise-wide
program to make Year 2000 Ready all material components, systems, software,
equipment, facilities and other items related to the subject entity's business.
Such Year 2000 Remediation Program must be conducted by persons with experience
in issues related to Year 2000 Readiness and such persons must have organized an
enterprise-wide program management office which reports to executive level
management and the board of directors or other governing body of such entity.
(b) Year 2000 Readiness Covenants. Prior to the Closing Date, each of
TCI and Century shall establish and maintain a Year 2000 Remediation Program.
Pursuant to such Year 2000 Remediation Program, all material Computer and Other
Systems included in such party's Assets will be evaluated, remediated and tested
on an expedited basis.
If the Closing Date occurs on or before June 1, 1999, each party shall
deliver to the other on the Closing Date a certificate, signed by an authorized
officer who is responsible for the Year 2000 Remediation Program of such party
stating that the Computer and Other Systems have been fully and accurately
inventoried and stating that the material Computer and Other Systems have been
appropriately and professionally assessed and tested so that, upon completion of
the implementation plan specified by such party and approved by the other party,
the material Computer and Other Systems are reasonably expected to be Year 2000
Ready. If the Closing Date occurs after
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June 1, 1999, each party shall deliver to the other on the Closing Date a
certificate signed by an authorized officer who is responsible for the Year 2000
Remediation Program of such party, stating that the material Computer and Other
Systems are Year 2000 Ready.
(c) Cooperation and Information Sharing. Each of TCI and Century will
use commercially reasonable efforts to cooperate with each other at any time
prior to June 30, 2000 regarding the other's Year 2000 Remediation Program as
such program relates to the Computer and Other Systems to be received by the
other party. Such cooperation shall consist of providing the other party with
any non-confidential information possessed by such party and reasonably
requested by the other party regarding the Year 2000 Readiness of any material
component of such party's Computer and Other Systems.
SECTION 8. CONDITIONS PRECEDENT
8.1 Conditions to the Partnership's Obligations. The obligations of the
Partnership to consummate the transactions contemplated by this Agreement are
subject to the satisfaction at or before the Closing of the following
conditions, any of which may be waived by the Partnership.
(a) Accuracy of Representations and Warranties. The representations
and warranties of TCI in this Agreement and in any Transaction Document, if
specifically qualified by materiality, are true in all respects and, if not so
qualified, are true in all material respects, in each case at and as of the
Closing with the same effect as if made at and as of the Closing.
(b) Performance of Agreements. TCI has performed in all material
respects all obligations and agreements and complied in all material respects
with all covenants in this Agreement and in any Transaction Document to be
performed and complied with by it at or before the Closing.
(c) Deliveries. TCI has delivered the items and documents required to
be delivered by it pursuant to this Agreement, including those required under
Section 9.2.
(d) Legal Proceedings. No action, suit or proceeding is pending or
threatened by or before any Governmental Authority and no Legal Requirement has
been enacted, promulgated or issued or become or deemed applicable to any of the
transactions contemplated by this Agreement by any Governmental Authority, which
would (i) prohibit the Partnership's ownership or operation of all or a material
portion of any TCI System, TCI's Cable Business or the TCI Assets, (ii) compel
the Partnership to dispose of or hold separately all or a material portion of
any TCI System, TCI's Cable Business or the TCI Assets as a result of any of the
transactions contemplated by this Agreement, (iii) if determined adversely to
the Partnership's interest, materially impair the ability of the Partnership to
realize the benefits of the transactions contemplated by this Agreement or have
a material adverse effect on the right of the Partnership to exercise full
rights of ownership of the TCI Systems or (iv) prevent or make illegal the
consummation of any transactions contemplated by this Agreement.
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(e) Consents. The Partnership has received evidence, in form and
substance reasonably satisfactory to it, that the following TCI Required
Consents have been obtained, such consents to be on the terms specified in
Section 7.5: TCI Required Consents for the TCI System Franchises, the TCI System
Licenses, and any TCI Leased Property or TCI Other Real Property Interest on
which a headend, tower or other reception site is located. In addition, the
Century Required Consents for the Century System Franchises and Century System
Licenses shall have been obtained. If a TCI Required Consent for a headend,
tower or other reception site has not been obtained as of the Closing and the
Partnership is not willing to waive such condition, TCI shall have the option of
replacing the affected site with a comparable site that is reasonably acceptable
to the Partnership.
(f) No Material Adverse Change. There has not been any material
adverse change in the TCI Assets or the financial condition or operations of
TCI's Cable Business or the TCI Systems since the date of this Agreement. In
making the determination required by the preceding sentence, the last sentence
of Section 6.10 shall be applicable.
(g) HSR Act. All filings required under the HSR Act have been made and
the applicable waiting period has expired or been earlier terminated.
(h) Franchise Renewals. Any TCI System Franchise required to be
renewed or extended pursuant to the provisions of Section 7.5(c) shall have been
renewed or extended for not less than the applicable period without the
imposition of any conditions or other modifications that make, or are reasonably
likely to make, the underlying instrument materially more onerous or that would
materially reduce, or are reasonably likely to materially reduce, the benefits
available under the instrument in respect of which the renewal or extension
relates.
(i) Contribution. The Contribution shall have been consummated.
8.2 Conditions to TCI's Obligations. The obligations of TCI to consummate
the transactions contemplated by this Agreement are subject to the satisfaction
at or before the Closing of the following conditions, any of which may be waived
by TCI.
(a) Accuracy of Representations and Warranties. The representations
and warranties of the Partnership in this Agreement and in any Transaction
Document, if specifically qualified by materiality, are true in all respects
and, if not so qualified, are true in all material respects, in each case at and
as of the Closing with the same effect as if made at and as of the Closing.
(b) Performance of Agreements. Century has performed in all material
respects all obligations and agreements and complied in all material respects
with all covenants in this Agreement and in any Transaction Document to be
performed and complied with by it at or before the Closing.
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(c) Deliveries. The Partnership has delivered the items and documents
required to be delivered by it pursuant to this Agreement, including those
required under Section 9.3.
(d) Legal Proceedings. No action, suit or proceeding is pending or
threatened by or before any Governmental Authority and no Legal Requirement has
been enacted, promulgated or issued or become or deemed applicable to any of the
transactions contemplated by this Agreement by any Governmental Authority, which
would (i) prohibit TCI's ownership or operation of all or a material portion of
any Century System, Century's Cable Business or the Century Assets, (ii) compel
TCI to dispose of or hold separately all or a material portion of any Century
System, Century's Cable Business or Century Assets as a result of any of the
transactions contemplated by this Agreement, (iii) if determined adversely to
TCI's interest, materially impair the ability of TCI to realize the benefits of
the transactions contemplated by this Agreement or have a material adverse
effect on the right of TCI to exercise full rights of ownership of the Century
Systems or (iv) prevent or make illegal the consummation of any transactions
contemplated by this Agreement.
(e) Consents. TCI has received evidence, in form and substance
reasonably satisfactory to it, that the following Century Required Consents have
been obtained, such consents to be on the terms specified in Section 7.5:
Century Required Consents for the Century System Franchises, the Century System
Licenses, and any Century Leased Property or Century Other Real Property
Interest on which a headend, tower or other reception site is located. In
addition, the TCI Required Consents for the TCI System Franchises and TCI System
Licenses shall have been obtained. If a Century Required Consent for a headend,
tower or other reception site has not been obtained as of the Closing and TCI is
not willing to waive such condition, the Partnership shall have the option of
replacing the affected site with a comparable site that is reasonably acceptable
to TCI.
(f) No Material Adverse Change. There has not been any material
adverse change in the Century Assets or the financial condition or operations of
Century's Cable Business or the Century Systems since the date of this
Agreement. In making the determination required by the preceding sentence, the
last sentence of Section 5.10 shall be applicable.
(g) HSR Act. All filings required under the HSR Act have been made and
the applicable waiting period has expired or been earlier terminated.
(h) Franchise Renewals. Any Century System Franchise required to be
renewed or extended pursuant to the provisions of Section 7.5(c) shall have been
renewed or extended for not less than the applicable period without the
imposition of any conditions or other modifications that make, or are reasonably
likely to make, the underlying instrument materially more onerous or that would
materially reduce, or are reasonably likely to materially reduce, the benefits
available under the instrument in respect of which the renewal or extension
relates.
(i) Contribution. The Contribution shall have been consummated.
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SECTION 9. THE CLOSING
9.1 The Closing; Time and Place. The closing of the transactions
contemplated by this Agreement (the "Closing") will take place at a date (the
"Closing Date"), location and time mutually determined by TCI and the
Partnership, which Closing Date shall be within ten days after the date on which
all conditions set forth in Sections 8.1 and 8.2 (other than those based on acts
to be performed at the Closing) have either been satisfied or waived in writing
by the party entitled to the benefit of such condition.
9.2 TCI's Delivery Obligations. At the Closing, TCI will deliver or cause
to be delivered to the Partnership the following.
(a) Closing Payment. Amounts, if any, payable by TCI to the
Partnership pursuant to Section 3.
(b) Bill of Sale and Assignment and Assumption Agreement. The executed
Bill of Sale and Assignment and the executed Assumption Agreement in the forms
of EXHIBIT 9.2(b)(1), and EXHIBIT 9.2(b)(2), respectively, and such other
instruments of transfer, assignment or assumption, in form and substance
mutually satisfactory to TCI and the Partnership, as the Partnership may
reasonably require to further document the transfer and assignment of the TCI
Assets to the Partnership and TCI's assumption of the TCI Assumed Obligations
and Liabilities.
(c) Deeds. A California "grant deed" in a form reasonably acceptable
to the Partnership (and complying with applicable state laws) with respect to
each parcel of TCI Owned Property, duly executed and acknowledged and in
recordable form, warranting only to defend title to such TCI Owned Property in
the peaceable possession of the Partnership against all Persons claiming by,
through or under TCI, subject however, to any Permitted Liens and any Title
Defects insured over pursuant to Section 7.6, and in form sufficient to permit
the applicable Title Company to issue the TCI Title Policies referred to in
paragraph (d) below to the Partnership, together with any title affidavit
reasonably required by the title insurer provided any such title affidavit shall
not expand the aforesaid limited or special warranty of TCI.
(d) Title Policies. A policy of title insurance by an eligible Title
Company for each parcel of TCI Owned Property, updated to the Closing Date,
containing such endorsements as are required or permitted by Section 7.6,
deleting the survey exception and otherwise consistent with the form and
substance prescribed by Section 7.6 and the Title Commitments contemplated
thereby (the "TCI Title Policies"), or the irrevocable written commitment of the
Title Company to deliver the TCI Title Policies, provided that with respect to
each Title Defect affecting the TCI Owned Property, either (i) the TCI Title
Policy relating to the affected parcel of TCI Owned Property shall not contain
an exception for such Title Defect; or (ii) if the Partnership has consented as
provided in Section 7.6, such TCI Title Policy shall contain an endorsement
insuring over such Title Defect; or (iii) if, in lieu of a TCI Title Policy
satisfying either of the two preceding requirements, the
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Partnership has agreed to accept a written agreement of TCI as contemplated in
the last sentence of Section 7.6, TCI shall have executed and delivered such an
agreement.
(e) Estoppel Certificates. Each TCI Estoppel Certificate obtained
pursuant to Section 7.5(b).
(f) Lien Releases. Evidence reasonably satisfactory to the Partnership
that all Liens (other than Permitted Liens) affecting or encumbering the TCI
Assets have been terminated, released or waived, as appropriate, or original,
executed instruments in form reasonably satisfactory to the Partnership
effecting such terminations, releases or waivers.
(g) Vehicle Titles. Title certificates to all vehicles included among
the TCI Assets, endorsed for transfer of valid and good title to the
Partnership, free and clear of all Liens (other than Permitted Liens), and
separate bills of sale therefor or other transfer documentation, if required by
the laws of the States in which such vehicles are titled.
(h) Evidence of Authorization Actions. Evidence reasonably
satisfactory to the Partnership that TCI has taken all action necessary to
authorize the execution of this Agreement and the Transaction Documents and the
consummation of the transactions contemplated hereby.
(i) FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate
certifying that TCI is not a foreign person within the meaning of Section 1445
of the Code reasonably satisfactory in form and substance to the Partnership.
(j) Officer's Certificate. A certificate executed by an executive
officer of TCI dated as of the Closing Date, reasonably satisfactory in form and
substance to the Partnership certifying that the conditions specified in
Sections 8.1(a) and 8.1(b) have been satisfied.
(k) Documents and Records. All TCI Books and Records, including a list
of all pending subscriber hook-ups, disconnect and repair orders, supply orders
and any other lists reasonably necessary to the operation of the TCI Systems.
Delivery of the foregoing will be deemed made to the extent such TCI Books and
Records are then located at any of the offices included in the TCI Owned
Property or TCI Leased Property.
(l) Other. Such other documents and instruments as may be reasonably
necessary to effect the intent of this Agreement and consummate the transactions
contemplated hereby.
9.3 The Partnership's Delivery Obligations. At the Closing, the Partnership
will deliver or cause to be delivered to TCI the following.
(a) Closing Payments. Amounts, if any, payable by the Partnership to
TCI pursuant to Section 3.
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(b) Bill of Sale and Assignment and Assumption Agreement. The executed
Bill of Sale and Assignment and the executed Assumption Agreement in the forms
of EXHIBIT 9.2(b)(1) and EXHIBIT 9.2(b)(2), respectively, and such other
instruments of transfer, assignment or assumption, in form and substance
mutually satisfactory to the Partnership and TCI, as TCI may reasonably require
to further document the transfer and assignment of the Century Assets to TCI and
the Partnership's assumption of the Century Assumed Obligations and Liabilities.
(c) Deeds. A California "grant deed" in a form reasonably acceptable
to TCI (and complying with applicable state laws) with respect to each parcel of
Century Owned Property, duly executed and acknowledged and in recordable form,
warranting only to defend title to such Century Owned Property in the peaceable
possession of TCI against all Persons claiming by, through or under Century,
subject however, to any Permitted Liens and any Title Defects insured over
pursuant to Section 7.6 and in form sufficient to permit the applicable Title
Company to issue the Century Title Policies referred to in paragraph (d) below
to TCI together with any title affidavit reasonably required by the title
insurer provided any such title affidavit shall not expand the aforesaid limited
or special warranty of the Partnership.
(d) Title Policies. A policy of title insurance by an eligible Title
Company for each parcel of Century Owned Property, updated to the Closing Date,
containing such endorsements as are required or permitted by Section 7.6,
deleting the survey exception and otherwise consistent with the form and
substance prescribed by Section 7.6 and the Title Commitments contemplated
thereby (the "Century Title Policies"), or the irrevocable written commitment of
the Title Company to deliver the Century Title Policies, provided that with
respect to each Title Defect affecting the Century Owned Property, either (i)
the Century Title Policy relating to the affected parcel of Century Owned
Property shall not contain an exception for such Title Defect; or (ii) if TCI
has consented as provided in Section 7.6, such Century Title Policy shall
contain an endorsement insuring over such Title Defect; or (iii) if, in lieu of
a Century Title Policy satisfying either of the two preceding requirements, TCI
has agreed to accept a written agreement of the Partnership as contemplated in
the last sentence of Section 7.6, the Partnership shall have executed and
delivered such an agreement.
(e) Estoppel Certificates. Each Century Estoppel Certificate obtained
pursuant to Section 7.5(b).
(f) Lien Releases. Evidence reasonably satisfactory to TCI that all
Liens (other than Permitted Liens) affecting or encumbering the Century Assets
have been terminated, released or waived, as appropriate, or original, executed
instruments in form reasonably satisfactory to TCI effecting such terminations,
releases or waivers.
(g) Vehicle Titles. Title certificates to all vehicles included among
the Century Assets, endorsed for transfer of valid and good title to TCI free
and clear of all liens (other than Permitted Liens) and separate bills of sale
therefor or other transfer documentation, if required by the laws of the States
in which such vehicles are titled.
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(h) Evidence of Authorization Actions. Certified resolutions of the
governing body of the Partnership or other evidence reasonably satisfactory to
TCI that the Partnership has taken all partnership action necessary to authorize
the execution of this Agreement and the Transaction Documents and the
consummation of the transactions contemplated hereby.
(i) FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate
certifying that the Partnership is not a foreign person within the meaning of
Section 1445 of the Code reasonably satisfactory in form and substance to TCI.
(j) Documents and Records. All Century Books and Records, including a
list of all pending subscriber hook-ups, disconnect and repair orders, supply
orders and any other lists reasonably necessary to the operation of the Century
Systems. Delivery of the foregoing will be deemed made to the extent such
Century Books and Records are then located at any of the offices included in the
Century Owned Property or Century Leased Property.
(k) Evidence of Closing of Contribution. Evidence, satisfactory to
TCI, that the Contribution and all other transactions contemplated by the
Contribution Agreement shall have been consummated and the Century Systems shall
have been transferred to the Partnership.
(l) Other. Such other documents and instruments as may be reasonably
necessary to effect the intent of this Agreement and consummate the transactions
contemplated hereby.
SECTION 10. TERMINATION AND DEFAULT
10.1 Termination Events. This Agreement may be terminated prior to Closing
and the transactions contemplated hereby may be abandoned:
(a) at any time by the mutual agreement of the Partnership and TCI;
(b) by either the Partnership or TCI at any time (if such party itself
is not then in material breach of any of its covenants, agreements or other
obligations contained in this Agreement), if the other is in material breach or
default of any of its covenants, agreements or other obligations herein or if
any of its representations herein if specifically qualified by materiality, is
not true in all respects or, if qualified by materiality, is not true in all
material respects when made or when otherwise required by this Agreement to be
true, if the non-breaching party provides the breaching party with prompt
written notice that provides a reasonably detailed explanation of the facts and
circumstances surrounding such breach or default; provided that such party shall
have no right to terminate if (i) the breaching Party cures such breach or
default within 30 days after its receipt of such written notice, unless such
breach or default cannot be cured within such 30-day period; or (ii) the breach
or default is capable of being cured prior to the first anniversary of the date
of this Agreement (the "Outside Closing Date") and the breaching party commences
to cure such breach or default within such 30-day period and diligently
continues to take all action reasonably
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necessary to cure such breach or default prior to the Outside Closing Date and
such breach or default is cured prior to the Outside Closing Date; or
(c) automatically if the Contribution Agreement has been terminated
prior to any closing thereunder in accordance with its terms; or
(d) as otherwise provided in this Agreement; or
(e) by any party, if the Closing has not occurred by the Outside
Closing Date for any reason other than a material breach or a material default
by the terminating party of its respective covenants, agreements or other
obligations under this Agreement, if any of its representations herein, if
specifically qualified by materiality, is not true in all respects or, if
qualified by materiality, is not true in all material respects when made or when
otherwise required by this Agreement to be true.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, all obligations of the parties under this Agreement will
terminate, except for the obligations set forth in Sections 7.13 and 12.15.
Notwithstanding the preceding sentence, termination of this Agreement pursuant
to Sections 10.1(b) or 10.1(c) or 10.1(d) or 12.16 will not limit or impair any
remedies that any of TCI or the Partnership may have with respect to a breach or
default by the other of its covenants, agreements or obligations under this
Agreement prior to Closing.
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
11.1 Survival of Representations and Warranties. The representations and
warranties of TCI and the Partnership in this Agreement and in the Transaction
Documents and the covenants of TCI and the Partnership in this Agreement and the
Transaction Documents to be performed prior to or at Closing will survive until
the first anniversary of the Closing Date except that (a) all such
representations and warranties with respect to Taxes, rates, Environmental Laws,
ERISA, employment matters or copyright matters will survive until 60 days after
the expiration of the applicable statute of limitations (including any
extensions) for such Taxes, rates, Environmental Laws, ERISA, employment matters
or copyright matters, respectively, and (b) the representations and warranties
as to title to the Assets in Sections 5.4(a) and 6.4(a), respectively, and as to
title to Owned Property set forth in Sections 5.6 and 6.6, respectively, and in
the deeds delivered with respect to Owned Property will survive the Closing and
the delivery of such deeds and will continue in full force and effect without
limitation with the understanding that, notwithstanding any language contained
in any such deed, the representations and warranties as to title to Owned
Property set forth in Sections 5.6 and 6.6, respectively, will not be merged
into any such deed or other Transaction Document. The periods of survival of the
representations and warranties and covenants to be performed prior to or at
Closing prescribed by this Section 11.1 are referred to as the "Survival
Period." The liabilities of each party under its respective representations and
warranties and its respective covenants to be performed prior to or at the
Closing, will expire as of the expiration of the applicable Survival Period;
provided however that such expiration will not include, extend or
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apply to any such representation or warranty or covenant, the breach of which
has been asserted by a party in a written notice to the other party before such
expiration or about which a party has given the other party written notice
before such expiration indicating that facts or conditions exist that, with the
passage of time or otherwise, can reasonably be expected to result in a breach
(and describing such potential breach in reasonable detail). The covenants and
agreements of each party in this Agreement and in the Transaction Documents to
be performed after the Closing will survive the Closing and will continue in
full force and effect in accordance with their respective terms.
11.2 Indemnification by TCI. From and after the Closing, TCI will
indemnify, defend and hold harmless the Partnership and its partners and its and
their respective Affiliates, and the partners, members, shareholders, officers,
directors, employees, agents, successors and assigns and any Person claiming by
or through any of them, as the case may be, from and against any and all Losses
arising out of or resulting from (a) any breach of any representation or
warranty made by TCI in this Agreement or any Transaction Document or any
covenant of TCI in this Agreement or the Transaction Documents to be performed
prior to or at the Closing; (b) any breach of any post-Closing covenant,
agreement or obligation of TCI contained in this Agreement or any Transaction
Document; (c) any act or omission of TCI with respect to, or any event or
circumstance related to, the ownership or operation of the TCI Assets or the
conduct of TCI's Cable Business, which act, omission, event or circumstance
occurred or existed prior to or at the Closing Time, without regard to whether a
claim with respect to such matter is asserted before or after the Closing Time,
including any matter described on SCHEDULE 6.11; (d) any liability or obligation
not included in the Century Assumed Obligations and Liabilities; (e) any Title
Defect relating to any TCI Owned Property that is not deleted as an exception
in, or insured over by, the applicable TCI Title Policy; (f) any claim that the
transactions contemplated by this Agreement violate WARN or any Legal
Requirement or any bulk transfer or fraudulent conveyance laws of any
jurisdiction; (g) any claim relating to "continuation coverage" under Code
Section 4980B with respect to former employees of TCI at and after the Closing
Time or that the Partnership is deemed to be a successor employer of TCI under
Code Section 4980B; (h) any claim by a third party relating to the presence,
generation, removal or transportation of a Hazardous Substance on or from any of
the TCI Owned Property or TCI Leased Property through and including the Closing
Time, including the costs, in response to a third-party claim, of removal or
clean-up of such Hazardous Substance and other compliance with the provisions of
any Environmental Laws (whether before or after Closing); (i) any rate refund or
credit, penalty and/or interest payment with respect thereto ordered by any
Governmental Authority with respect to the TCI Systems for periods through and
including the Closing Time; or (j) the failure of TCI to perform the TCI Assumed
Obligations and Liabilities.
In the event that an indemnified item arises under both clause (a) and under one
or more of clauses (b) through (j) of this Section, the Partnership's rights to
pursue its claim under clauses (b) through (j), as applicable, will exist
notwithstanding the expiration of the Survival Period applicable to such claim
under clause (a).
11.3 Indemnification by the Partnership. From and after the Closing, the
Partnership will indemnify, defend and hold harmless TCI and its partners and
its and their respective Affiliates and
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the partners, members, shareholders, officers, directors, employees, agents,
successors and assigns and any Person claiming by or through any of them, as the
case may be, from and against any and all Losses arising out of or resulting
from (a) any breach of any representation or warranty made by the Partnership in
this Agreement or any Transaction Document or any covenant of the Partnership in
this Agreement or any Transaction Document to be performed prior to or at the
Closing; (b) any breach of any post-Closing covenant, agreement or obligation of
Century contained in this Agreement or any Transaction Document; (c) any act or
omission of Century with respect to, or any event or circumstance related to,
the ownership or operation of the Century Assets or the conduct of Century's
Cable Business, which act, omission, event or circumstance occurred or existed
prior to or at the Closing Time, without regard to whether a claim with respect
to such matter is asserted before or after the Closing Time, including any
matter described on SCHEDULE 5.11; (d) any liability or obligation not included
in the TCI Assumed Obligations and Liabilities; (e) any Title Defect relating to
any Century Owned Property that is not deleted as an exception in, or insured
over by, the applicable Century Title Policy; (f) any claim that the
transactions contemplated by this Agreement violate WARN or any similar Legal
Requirement or any bulk transfer or fraudulent conveyance laws of any
jurisdiction; (g) any claim relating to "continuation coverage" under Code
Section 4980B with respect to former employees of Century at and after the
Closing Time or that TCI is deemed to be a successor employer of Century under
Code Section 4980B; (h) any claim by a third party relating to the presence,
generation, removal or transportation of a Hazardous Substance on or from any of
the Century Owned Property or Century Leased Property through and including the
Closing Time, including the costs, in response to a third-party claim, of
removal or clean-up of such Hazardous Substance and other compliance with the
provisions of any Environmental Laws (whether before or after Closing); (i) any
rate refund or credit, penalty and/or interest payment with respect thereto
ordered by any Governmental Authority with respect to the Century Systems for
periods through and including the Closing Time; or (j) the failure of the
Partnership to perform the Century Assumed Obligations and Liabilities.
In the event that an indemnified item arises under both clause (a) and under one
or more of clauses (b) through (j) of this Section, TCI's rights to pursue its
claim under clauses (b) through (j), as applicable, will exist notwithstanding
the expiration of the Survival Period applicable to such claim under clause (a).
11.4 Third Party Claims. Promptly after the receipt by either party of
notice of any claim, action, suit or proceeding by any third party
(collectively, an "Action"), which Action is subject to indemnification under
this Agreement, such party (the "Indemnified Party") will give reasonable
written notice to the party from whom indemnification is claimed (the
"Indemnifying Party"). The Indemnified Party will be entitled, at the sole
expense and liability of the Indemnifying Party, to exercise full control of the
defense, compromise or settlement of any such Action unless the Indemnifying
Party, within a reasonable time after the giving of such notice by the
Indemnified Party, (a) admits in writing to the Indemnified Party the
Indemnifying Party's liability to the Indemnified Party for such Action under
the terms of this Section 11, (b) notifies the Indemnified Party in writing of
the Indemnifying Party's intention to assume such defense, (c) provides evidence
reasonably satisfactory to the Indemnified Party of the Indemnifying Party's
ability to pay the
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amount, if any, for which the Indemnified Party may be liable as a result of
such Action and (d) retains legal counsel reasonably satisfactory to the
Indemnified Party to conduct the defense of such Action. The other party will
cooperate with the party assuming the defense, compromise or settlement of any
such Action in accordance with this Agreement in any manner that such party
reasonably may request. If the Indemnifying Party so assumes the defense of any
such Action, the Indemnified Party will have the right to employ separate
counsel and to participate in (but not control) the defense, compromise or
settlement of the Action, but the fees and expenses of such counsel will be at
the expense of the Indemnified Party unless (x) the Indemnifying Party has
agreed to pay such fees and expenses, (y) any relief other than the payment of
money damages is sought against the Indemnified Party or (z) the Indemnified
Party will have been advised by its counsel that there may be one or more
defenses available to it which are different from or additional to those
available to the Indemnifying Party, and in any such case that portion of the
fees and expenses of such separate counsel that are reasonably related to
matters covered by the indemnity provided in this Section 11 will be paid by the
Indemnifying Party. No Indemnified Party will settle or compromise any such
Action for which it is entitled to indemnification under this Agreement without
the prior written consent of the Indemnifying Party, unless the Indemnifying
Party has failed, after reasonable notice, to undertake control of such Action
in the manner provided in this Section 11.4. No Indemnifying Party will settle
or compromise any such Action (A) in which any relief other than the payment of
money damages is sought against any Indemnified Party or (B) in the case of any
Action relating to the Indemnified Party's liability for any Tax, if the effect
of such settlement would be an increase in the liability of the Indemnified
Party for the payment of any Tax for any period beginning after the Closing
Date, unless the Indemnified Party consents in writing to such compromise or
settlement.
11.5 Limitations on Indemnification - TCI. TCI will not be liable to the
Partnership with respect to any matter or claim for which indemnification could
be sought pursuant to Sections 11.2(a) for (a) any Losses of or to the
Partnership or any other Person entitled to indemnification from TCI or (b) any
Losses incidental to or relating to or resulting from any of the foregoing (the
items described in clauses (a) and (b) collectively being referred to for
purposes of this Section 11 as "Century Damages") unless the amount of Century
Damages for which TCI would, but for the provisions of this Section, be liable
exceeds, on an aggregate basis, $250,000, in which case TCI will be liable for
all such Century Damages, which will be due and payable within 15 days after
TCI's receipt of a statement therefor. TCI will not have any liability under
Section 11.2(a) to the extent that the aggregate amount of Losses otherwise
subject to its indemnification obligation thereunder exceeds $10,000,000. The
limitations set forth in this Section 11.5 do not apply to (i) the Pro Rata
Adjustments to the extent they are included in the calculation of Pro Rata
Adjustments pursuant to Section 3.2 and 3.3; or (ii) any claim made pursuant to
Sections 11.2(b)-(j), including, without limitation, any Losses related to any
liability or obligation for late fees; any liability or obligation with respect
to paying franchise fees on franchise fees; subscriber refunds; or TCI
litigation listed in the Schedules to this Agreement.
11.6 Limitations on Indemnification - the Partnership. The Partnership will
not be liable to TCI with respect to any matter or claim for which
indemnification could be sought pursuant to
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Section 11.3(a) for (a) any Losses of or to TCI or any other Person entitled to
indemnification from it or (b) any Losses incidental to or relating to or
resulting from any of the foregoing (the items described in clauses (a) and (b)
collectively being referred to for purposes of this Section 11 as "TCI Damages")
unless the amount of TCI Damages for which it would, but for the provisions of
this Section, be liable exceeds, on an aggregate basis, $250,000, in which case
it will be liable for all such TCI Damages, which will be due and payable within
15 days after the Partnership's receipt of a statement therefor. The Partnership
will not have any liability under Section 11.3(a) to the extent that the
aggregate amount of Losses otherwise subject to their indemnification
obligations thereunder exceeds $10,000,000. The limitations set forth in this
Section 11.6 do not apply to (i) the Pro Rata Adjustments to the extent they are
included in the calculation of Pro Rata Adjustments pursuant to Section 3.2 or
3.3; or (ii) any claim made pursuant to Section 11.3(b)-(j), including, without
limitation, any Losses related to any liability or obligation for late fees; any
liability or obligation with respect to paying franchise fees on franchise fees;
subscriber refunds, or the Century litigation listed in the Schedules to this
Agreement.
11.7 Other Indemnification. The provisions of Sections 11.1, 11.5 and 11.6
will be applicable to any claim for indemnification made under any other
provision of this Agreement and all references in Sections 11.1, 11.5 and 11.6
to Sections 11.2 and 11.3 will be deemed to be references to such other
provisions of this Agreement.
SECTION 12. MISCELLANEOUS PROVISIONS
12.1 Parties Obligated and Benefited. Subject to the limitations set forth
below, this Agreement will be binding upon the parties and their respective
assigns and successors in interest and will inure solely to the benefit of the
parties and their respective assigns and successors in interest, and no other
Person will be entitled to any of the benefits conferred by this Agreement.
Without the prior written consent of the other parties, no party will assign any
of its rights under this Agreement or delegate any of its duties under this
Agreement, provided that a party may, without the prior written consent of the
other party (i) assign all of its rights under this Agreement, but not its
obligations, to a Qualified Intermediary and (ii) assign all of its rights and
obligations under this Agreement to an Affiliate of such party; provided that
such Affiliate assignee can make all of the representations and warranties
applicable to the assigning party hereunder (other than those relating to
jurisdiction of incorporation), the assigning party can provide reasonable
assurances that such Affiliate assignee can otherwise perform the covenants,
agreements and obligations applicable to the assigning party hereunder and such
assignment would not materially delay or hinder the consummation of the
transactions contemplated by this Agreement.
12.2 Notices. Any notice, request, demand, waiver or other communication
required or permitted to be given under this Agreement will be in writing and
will be deemed to have been duly given only if delivered in person or by first
class, prepaid, registered or certified mail, or sent by courier or, if receipt
is confirmed, by telecopier:
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To TCI at:
TCI of East San Fernando Valley, L.P.
5619 DTC Parkway
Englewood, Colorado 80111
Attention: William R. Fitzgerald
Telecopy: (303) 267-6672
With a copy similarly addressed to the attention of Legal
Department:
To the Partnership at:
Century Communications Corp.
50 Locust Avenue
New Canaan, Connecticut 06840
Attention: Office of the President
Telecopy: (203) 972-2013
With a copy to:
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Washington, D.C. 20036
Attention: Leonard J. Baxt, Esq.
Telecopy: (202) 776-2222
Any party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section. All notices
will be deemed to have been received on the date of delivery, which in the case
of deliveries by telecopier will be the date of the sender's confirmation.
12.3 Right to Specific Performance. The parties acknowledge that the unique
nature of the Assets to be exchanged by the parties pursuant to this Agreement
renders money damages an inadequate remedy for the breach by the parties of its
obligations under this Agreement, and the parties agree that in the event of
such breach, the parties will upon proper action instituted by either of them,
be entitled to a decree of specific performance of this Agreement.
12.4 Waiver. This Agreement or any of its provisions may not be waived
except in writing. The failure of any party to enforce any right arising under
this Agreement on one or more occasions will not operate as a waiver of that or
any other right on that or any other occasion.
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12.5 Captions. The section and other captions of this Agreement are for
convenience only and do not constitute a part of this Agreement.
12.6 CHOICE OF LAW. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES UNDER IT
WILL BE GOVERNED BY AND CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF
THE STATE OF COLORADO, WITHOUT REGARD TO THE CONFLICTS OF LAWS RULES OF
COLORADO.
12.7 Terms. Terms used with initial capital letters or otherwise defined in
this Agreement will have the meanings specified, applicable to both singular and
plural forms, for all purposes of this Agreement. The word "include" and
derivatives of that word are used in this Agreement in an illustrative sense
rather than limiting sense.
12.8 Rights Cumulative. All rights and remedies of each of the parties
under this Agreement will be cumulative, and the exercise of one or more rights
or remedies will not preclude the exercise of any other right or remedy
available under this Agreement or applicable law.
12.9 Time. Time is of the essence under this Agreement. If the last day
permitted for the giving of any notice or the performance of any act required or
permitted under this Agreement falls on a day which is not a Business Day, the
time for the giving of such notice or the performance of such act will be
extended to the next succeeding Business Day.
12.10 Late Payments. If either party fails to pay the other any amounts
when due under this Agreement, the amounts due will bear interest from the due
date to the date of payment at the annual rate publicly announced from time to
time by The Bank of New York as its prime rate (the "Prime Rate") plus 2%,
adjusted as and when changes in the Prime Rate are made.
12.11 Counterparts. This Agreement may be executed in counterparts, each of
which will be deemed an original.
12.12 Entire Agreement. Except for the Contribution Agreement, this
Agreement (including the Transaction Documents and the Schedules and Exhibits
referred to in this Agreement, which are incorporated in and constitute a part
of this Agreement) contains the entire agreement of the parties and supersedes
all prior oral or written agreements and understandings with respect to the
subject matter. This Agreement may not be amended or modified except by a
writing signed by the parties.
12.13 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law of public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to either party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement
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so as to effect the original intent of the parties as closely as possible in an
acceptable manner that is not invalid, illegal or against public policy, to the
end that the transactions contemplated hereby are fulfilled to the greatest
extent possible.
12.14 Construction. This Agreement has been negotiated by the parties and
their respective legal counsel, and legal or equitable principles that might
require the construction of this Agreement or any provision of this Agreement
against the party drafting this Agreement will not apply in any construction or
interpretation of this Agreement.
12.15 Expenses. Except as otherwise expressly provided in this Agreement or
the Contribution Agreement (which expenses the parties shall pay as so
provided), each party will pay all of its expenses, including attorneys' and
accountants' fees, in connection with the negotiation of this Agreement, the
performance of its obligations and the consummation of the transactions
contemplated by this Agreement.
12.16 Risk of Loss. The risk of any loss or damage to the Century Assets or
TCI Assets resulting from fire, theft or other casualty (except reasonable wear
and tear) will be borne by the Partnership or TCI, respectively, at all times
through and including the Closing. If any such loss or damage is sufficiently
substantial so as to preclude and prevent resumption of normal operations of any
material portion of a System or the replacement or restoration of the lost or
damaged property within twenty days or, if earlier, prior to the Outside Closing
Date, the Partnership or TCI as appropriate, will immediately notify the other
in writing of that fact and the other, at any time within 10 days after receipt
of such notice, may elect by written notice to the notifying party to either (a)
waive such defect and proceed toward consummation of the transaction in
accordance with terms of this Agreement or (b) terminate this Agreement. If the
other elects to so terminate this Agreement, both parties will stand fully
released and discharged of any and all obligations under this Agreement. If the
other elects to consummate the transactions contemplated by this Agreement
notwithstanding such loss or damage and does so, all insurance proceeds payable
as a result of the occurrence of the event resulting in such loss or damage (to
the extent not used to replace or restore such lost or damaged property), except
for any proceeds from business interruption insurance relating to the loss of
revenue for the period through and including the Closing Time, will be delivered
by the notifying party to the other or the rights to such proceeds will be
assigned by the notifying party to the other if not yet paid over to the
notifying party, and the notifying party will pay to the other an amount equal
to the difference between the amount of such insurance costs and the full
replacement cost of the damaged or lost Assets.
If, prior to the Closing, any part of or interest in any material Century
Assets or any material TCI Assets is taken or condemned as a result of the
exercise of the power of eminent domain, or if a Governmental Authority having
such power informs the Partnership or TCI that it intends to condemn all or any
part of any material Assets of such party (such event being called, in either
case, a "Taking"), then the other party may terminate this Agreement. If the
other party does not elect to terminate this Agreement, then (i) the other party
will have the sole right, in the name of the party, if the other party so
elects, to negotiate for, claim, contest and receive all damages with respect to
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the Taking, (ii) the party will be relieved of its obligation to convey to the
party the Assets or interests that are the subject of the Taking, (iii) at the
Closing the party will assign to the other party all of the party's rights to
all damages payable with respect to the Taking and (iv) following the Closing,
the party will give the other party such further assurances of such rights and
assignment with respect to the Taking as the other party may from time to time
reasonably request.
12.17 Tax Consequences. No party to this Agreement makes any representation
or warranty, express or implied, with respect to the Tax implications of any
aspect of this Agreement on any other party to this Agreement, and all parties
expressly disclaim any such representation or warranty with respect to any Tax
consequences arising under this Agreement. Each party has relied solely on its
own Tax advisors with respect to the Tax implications of this Agreement.
12.18 Commercially Reasonable Efforts. For purposes of this Agreement,
unless a different standard is expressly provided with respect to any particular
matter "commercially reasonable efforts" will not be deemed to require a party
to undertake extraordinary measures, including the initiation or prosecution of
legal proceedings or the payment of amounts in excess of normal and usual filing
fees and processing fees, if any.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.
TCI OF EAST SAN FERNANDO VALLEY, L.P.
BY: UNITED CABLE TELEVISION OF LOS ANGELES,
INC., ITS GENERAL PARTNER
By:________________________________________
Name:______________________________________
Title:_____________________________________
CENTURY-TCI CALIFORNIA, L.P.
BY: CENTURY EXCHANGE LLC, ITS MANAGING
PARTNER, BY CENTURY SOUTHWEST CABLE
TELEVISION, INC., ITS MANAGER
By:________________________________________
Name:______________________________________
Title:_____________________________________
and
BY: TCI CALIFORNIA HOLDINGS, LLC, BY TCI
CABLEVISION OF CALIFORNIA, INC., ITS
MANAGING MEMBER
By:________________________________________
Name:______________________________________
Title:_____________________________________
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TABLE OF CONTENTS
<TABLE>
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SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 1992 Cable Act . . . . . . . . . . . . . . . . . . . .2
1.2 Affiliate. . . . . . . . . . . . . . . . . . . . . . .2
1.3 Annualized Cash Flow . . . . . . . . . . . . . . . . .2
1.4 Assets . . . . . . . . . . . . . . . . . . . . . . . .2
1.5 Basic Services . . . . . . . . . . . . . . . . . . . .2
1.6 Business Day . . . . . . . . . . . . . . . . . . . . .2
1.7 Cable Act. . . . . . . . . . . . . . . . . . . . . . .2
1.8 Cable Business . . . . . . . . . . . . . . . . . . . .2
1.9 Cash Flow. . . . . . . . . . . . . . . . . . . . . . .2
1.10 Century. . . . . . . . . . . . . . . . . . . . . . . .2
1.11 Century Assets . . . . . . . . . . . . . . . . . . . .2
1.12 Century Books and Records. . . . . . . . . . . . . . .3
1.13 Century Leased Property. . . . . . . . . . . . . . . .3
1.14 Century Other Intangibles. . . . . . . . . . . . . . .3
1.15 Century Other Real Property Interests. . . . . . . . .3
1.16 Century Owned Property . . . . . . . . . . . . . . . .3
1.17 Century Required Consents. . . . . . . . . . . . . . .3
1.18 Century System Contracts . . . . . . . . . . . . . . .4
1.19 Century System Franchises. . . . . . . . . . . . . . .4
1.20 Century System Licenses. . . . . . . . . . . . . . . .4
1.21 Century Tangible Personal Property . . . . . . . . . .4
1.22 Century's Cable Business . . . . . . . . . . . . . . .4
1.23 Closing Time . . . . . . . . . . . . . . . . . . . . .4
1.24 Communications Act . . . . . . . . . . . . . . . . . .4
1.25 Contract . . . . . . . . . . . . . . . . . . . . . . .4
1.26 Contribution . . . . . . . . . . . . . . . . . . . . .5
1.27 Equivalent Basic Subscribers (or "EBSs") . . . . . . .5
1.28 Environmental Law. . . . . . . . . . . . . . . . . . .6
1.29 ERISA. . . . . . . . . . . . . . . . . . . . . . . . .6
1.30 ERISA Affiliate. . . . . . . . . . . . . . . . . . . .6
1.31 Expanded Basic Services. . . . . . . . . . . . . . . .6
1.32 FCC. . . . . . . . . . . . . . . . . . . . . . . . . .6
1.33 Financial Statements . . . . . . . . . . . . . . . . .6
1.34 GAAP . . . . . . . . . . . . . . . . . . . . . . . . .6
1.35 Governmental Authority . . . . . . . . . . . . . . . .6
1.36 Hazardous Substances . . . . . . . . . . . . . . . . .6
1.37 HSR Act. . . . . . . . . . . . . . . . . . . . . . . .7
1.38 Judgment . . . . . . . . . . . . . . . . . . . . . . .7
1.39 Knowledge. . . . . . . . . . . . . . . . . . . . . . .7
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1.40 Leased Property. . . . . . . . . . . . . . . . . . . .7
1.41 Legal Requirement. . . . . . . . . . . . . . . . . . .7
1.42 Lien . . . . . . . . . . . . . . . . . . . . . . . . .7
1.43 Litigation . . . . . . . . . . . . . . . . . . . . . .7
1.44 Losses . . . . . . . . . . . . . . . . . . . . . . . .7
1.45 Non-TV Products and Services . . . . . . . . . . . . .8
1.46 Other Real Property Interests. . . . . . . . . . . . .8
1.47 Owned Property . . . . . . . . . . . . . . . . . . . .8
1.48 Pay TV . . . . . . . . . . . . . . . . . . . . . . . .8
1.49 Permitted Lien . . . . . . . . . . . . . . . . . . . .8
1.50 Person . . . . . . . . . . . . . . . . . . . . . . . .9
1.51 Required Consents. . . . . . . . . . . . . . . . . . .9
1.52 System . . . . . . . . . . . . . . . . . . . . . . . .9
1.53 System Contracts . . . . . . . . . . . . . . . . . . .9
1.54 System Franchises. . . . . . . . . . . . . . . . . . .9
1.55 System Licenses. . . . . . . . . . . . . . . . . . . .9
1.56 Tangible Personal Property . . . . . . . . . . . . . .9
1.57 Taxes. . . . . . . . . . . . . . . . . . . . . . . . .9
1.58 TCI Assets . . . . . . . . . . . . . . . . . . . . . .9
1.59 TCI Books and Records. . . . . . . . . . . . . . . . .9
1.60 TCI Leased Property. . . . . . . . . . . . . . . . . 10
1.61 TCI Other Intangibles. . . . . . . . . . . . . . . . 10
1.62 TCI Other Real Property Interests. . . . . . . . . . 10
1.63 TCI Owned Property . . . . . . . . . . . . . . . . . 10
1.64 TCI Required Consents. . . . . . . . . . . . . . . . 10
1.65 TCI System Contracts . . . . . . . . . . . . . . . . 10
1.66 TCI System Franchises. . . . . . . . . . . . . . . . 11
1.67 TCI System Licenses. . . . . . . . . . . . . . . . . 11
1.68 TCI Tangible Personal Property . . . . . . . . . . . 11
1.69 TCI's Cable Business . . . . . . . . . . . . . . . . 11
1.70 Third Party. . . . . . . . . . . . . . . . . . . . . 11
1.71 Transaction Documents. . . . . . . . . . . . . . . . 11
1.72 Other Definitions. . . . . . . . . . . . . . . . . . 11
1.73 Accounting Terms . . . . . . . . . . . . . . . . . . 13
SECTION 2. EXCHANGE. . . . . . . . . . . . . . . . . . . . . . . . 13
2.1 Exchange . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3. CONSIDERATION. . . . . . . . . . . . . . . . . . . . . 13
3.1 Value of Assets; Cash Consideration. . . . . . . . . 13
3.2 Adjustments to Cash Consideration. . . . . . . . . . 14
3.3 Calculation of Adjustments . . . . . . . . . . . . . 15
3.4 Post-Closing Rate Adjustments. . . . . . . . . . . . 17
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SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS . . . . . . . . 18
4.1 TCI Assumed Obligations and Liabilities. . . . . . . 18
4.2 TCI Excluded Assets. . . . . . . . . . . . . . . . . 18
4.3 Century Assumed Obligations and Liabilities. . . . . 19
4.4 Century Excluded Assets. . . . . . . . . . . . . . . 20
SECTION 5. THE PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES. . . . 21
5.1 Organization and Qualification of the Partnership. . 21
5.2 Authority and Validity . . . . . . . . . . . . . . . 21
5.3 No Conflict; Required Consents . . . . . . . . . . . 21
5.4 Assets . . . . . . . . . . . . . . . . . . . . . . . 22
5.5 Century System Franchises, Century System Licenses,
Century System Contracts and Century Other Real
Property Interests. . . . . . . . . . . . . . . . . 22
5.6 Real Property. . . . . . . . . . . . . . . . . . . . 24
5.7 Environmental. . . . . . . . . . . . . . . . . . . . 25
5.8 Compliance with Legal Requirements . . . . . . . . . 26
5.9 Patents, Trademarks and Copyrights . . . . . . . . . 27
5.10 Financial Statements; Undisclosed Liabilities;
Absence of Certain Changes or Events . . . . . . . . 28
5.11 Litigation . . . . . . . . . . . . . . . . . . . . . 28
5.12 Tax Returns; Other Reports . . . . . . . . . . . . . 29
5.13 Employment Matters . . . . . . . . . . . . . . . . . 29
5.14 Century Systems Information. . . . . . . . . . . . . 30
5.15 Accounts Receivable. . . . . . . . . . . . . . . . . 30
5.16 Bonds; Letters of Credit . . . . . . . . . . . . . . 31
5.17 Finders and Brokers. . . . . . . . . . . . . . . . . 31
SECTION 6. TCI'S REPRESENTATIONS AND WARRANTIES. . . . . . . . . . 31
6.1 Organization and Qualification of TCI. . . . . . . . 31
6.2 Authority and Validity . . . . . . . . . . . . . . . 31
6.3 No Conflict; Required Consents . . . . . . . . . . . 32
6.4 Assets . . . . . . . . . . . . . . . . . . . . . . . 32
6.5 TCI System Franchises, TCI System Licenses, TCI
System Contracts and TCI Other Real Property
Interests. . . . . . . . . . . . . . . . . . . . . . 33
6.6 Real Property. . . . . . . . . . . . . . . . . . . . 34
6.7 Environmental. . . . . . . . . . . . . . . . . . . . 35
6.8 Compliance with Legal Requirements . . . . . . . . . 36
6.9 Patents, Trademarks and Copyrights . . . . . . . . . 37
6.10 Financial Statements; Undisclosed Liabilities;
Absence of Certain Changes or Events . . . . . . . . 38
6.11 Litigation . . . . . . . . . . . . . . . . . . . . . 38
6.12 Tax Returns; Other Reports . . . . . . . . . . . . . 39
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6.13 Employment Matters . . . . . . . . . . . . . . . . . 39
6.14 TCI Systems Information. . . . . . . . . . . . . . . 40
6.15 Accounts Receivable. . . . . . . . . . . . . . . . . 40
6.16 Bonds; Letters of Credit . . . . . . . . . . . . . . 40
6.17 Finders and Brokers. . . . . . . . . . . . . . . . . 41
SECTION 7. ADDITIONAL COVENANTS. . . . . . . . . . . . . . . . . . 41
7.1 Access to Premises and Records . . . . . . . . . . . 41
7.2 Continuity and Maintenance of Operations; Certain
Deliveries and Notices. . . . . . . . . . . . . . . 41
7.3 Employees. . . . . . . . . . . . . . . . . . . . . . 43
7.4 Leased Vehicles; Other Capital Leases. . . . . . . . 45
7.5 Required Consents, Estoppel Certificates, Franchise
Renewal. . . . . . . . . . . . . . . . . . . . . . . 45
7.6 Title Commitments and Surveys. . . . . . . . . . . . 46
7.7 HSR Notification . . . . . . . . . . . . . . . . . . 47
7.8 Transfer Taxes . . . . . . . . . . . . . . . . . . . 47
7.9 Programming. . . . . . . . . . . . . . . . . . . . . 48
7.10 Schedules and Exhibits . . . . . . . . . . . . . . . 48
7.11 Use of Names and Logos . . . . . . . . . . . . . . . 48
7.12 Transitional Billing Services. . . . . . . . . . . . 49
7.13 Confidentiality and Publicity. . . . . . . . . . . . 49
7.14 Bulk Transfers . . . . . . . . . . . . . . . . . . . 50
7.15 Allocation of Value to Exchanged Assets. . . . . . . 50
7.16 Lien Searches. . . . . . . . . . . . . . . . . . . . 50
7.17 Further Assurances . . . . . . . . . . . . . . . . . 50
7.18 Consents . . . . . . . . . . . . . . . . . . . . . . 51
7.19 Cooperation as to Rates and Fees . . . . . . . . . . 51
7.20 Satisfaction of Conditions . . . . . . . . . . . . . 52
7.21 Offers . . . . . . . . . . . . . . . . . . . . . . . 52
7.22 Environmental Reports. . . . . . . . . . . . . . . . 52
7.23 Year 2000 Matters. . . . . . . . . . . . . . . . . . 53
SECTION 8. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . 54
8.1 Conditions to the Partnership's Obligations. . . . . 54
8.2 Conditions to TCI's Obligations. . . . . . . . . . . 55
SECTION 9. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . 57
9.1 The Closing; Time and Place. . . . . . . . . . . . . 57
9.2 TCI's Delivery Obligations . . . . . . . . . . . . . 57
9.3 The Partnership's Delivery Obligations . . . . . . . 58
SECTION 10. TERMINATION AND DEFAULT . . . . . . . . . . . . . . . 60
10.1 Termination Events . . . . . . . . . . . . . . . . . 60
10.2 Effect of Termination. . . . . . . . . . . . . . . . 61
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SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . 61
11.1 Survival of Representations and Warranties . . . . . 61
11.2 Indemnification by TCI . . . . . . . . . . . . . . . 62
11.3 Indemnification by the Partnership . . . . . . . . . 62
11.4 Third Party Claims . . . . . . . . . . . . . . . . . 63
11.5 Limitations on Indemnification - TCI . . . . . . . . 64
11.6 Limitations on Indemnification - the Partnership . . 64
11.7 Other Indemnification. . . . . . . . . . . . . . . . 65
SECTION 12. MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . 65
12.1 Parties Obligated and Benefited. . . . . . . . . . . 65
12.2 Notices. . . . . . . . . . . . . . . . . . . . . . . 65
12.3 Right to Specific Performance. . . . . . . . . . . . 66
12.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . 66
12.5 Captions . . . . . . . . . . . . . . . . . . . . . . 67
12.6 Choice of Law. . . . . . . . . . . . . . . . . . . . 67
12.7 Terms. . . . . . . . . . . . . . . . . . . . . . . . 67
12.8 Rights Cumulative. . . . . . . . . . . . . . . . . . 67
12.9 Time . . . . . . . . . . . . . . . . . . . . . . . . 67
12.10 Late Payments . . . . . . . . . . . . . . . . . . . 67
12.11 Counterparts. . . . . . . . . . . . . . . . . . . . 67
12.12 Entire Agreement. . . . . . . . . . . . . . . . . . 67
12.13 Severability. . . . . . . . . . . . . . . . . . . . 67
12.14 Construction. . . . . . . . . . . . . . . . . . . . 68
12.15 Expenses. . . . . . . . . . . . . . . . . . . . . . 68
12.16 Risk of Loss. . . . . . . . . . . . . . . . . . . . 68
12.17 Tax Consequences. . . . . . . . . . . . . . . . . . 69
12.18 Commercially Reasonable Efforts . . . . . . . . . . 69
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LIST OF SCHEDULES AND EXHIBITS
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Schedules
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Schedule 1.9 Cash Flow Adjustments
Schedule 1.12 Century Leased Property
Schedule 1.14 Century Other Real Property Interests
Schedule 1.15 Century Owned Property
Schedule 1.17 Century System Contracts
Schedule 1.18 Century System Franchises
Schedule 1.19 Century System Licenses
Schedule 1.20 Century Tangible Personal Property
Schedule 1.58 TCI Leased Property
Schedule 1.60 TCI Other Real Property Interests
Schedule 1.61 TCI Owned Property
Schedule 1.63 TCI System Contracts
Schedule 1.64 TCI System Franchises
Schedule 1.65 TCI System Licenses
Schedule 1.66 TCI Tangible Personal Property
Schedule 4.2 TCI Excluded Assets
Schedule 4.4 Century Excluded Assets
Schedule 5.3 Century Required Consents
Schedule 5.4 Century Liens and Permitted Liens
Schedule 5.7 Century Environmental Matters
Schedule 5.8 Century Rate Regulation Matters
Schedule 5.10 Century Financial Statements; Century Changes or
Events
Schedule 5.11 Century Litigation
Schedule 5.13(a) Century Employees
Schedule 5.13 Century Plans; Employee Matters
Schedule 5.14 Century Systems Information
Schedule 5.16 Century Bonds
Schedule 6.3 TCI Required Consents
Schedule 6.4 TCI Liens and Permitted Liens
Schedule 6.7 TCI Environmental Matters
Schedule 6.8 TCI Rate Regulation Matters
Schedule 6.10 TCI Financial Statements; TCI Changes or Events
Schedule 6.11 TCI Litigation
Schedule 6.13(a) TCI Employees
Schedule 6.13 TCI Plans; Employee Matters
Schedule 6.14 TCI Systems Information
Schedule 6.16 TCI Bonds
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Exhibits
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Exhibit A Century Systems
Exhibit B TCI Systems
Exhibit 7.5(b) Form of Estoppel Certificate
Exhibit 9.2(b)(1) Form of Bill of Sale and Assignment
Exhibit 9.2(b)(2) Form of Assumption Agreement
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