Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
November 28, 1994
Date of report (Date of earliest event reported)
ML MEDIA PARTNERS, L.P.
(Exact name of registrant as specified in its governing instruments)
Delaware 0-14871
13-3321085
(State or other jurisdiction of incorporation)
Commission
File Number
(I.R.S. Employer
Identification Number)
World Financial Center - South Tower
New York, New York
10080-6114
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code
(212) 236-6472
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
On November 28, 1994, ML Media Partners, L.P. (the
"Partnership") entered into an agreement
(the "Asset Purchase Agreement") with Century Communications Corp.
("Century") to sell to Century
substantially all of the assets used in the operations of the
Partnership's California cable television systems
serving the Anaheim, Hermosa Beach/Manhattan Beach, Rohnert Park/
Yountville and Fairfield
communities. The base purchase price for the systems will be $286
million, subject to reduction by an
amount equal to 11 times the amount by which the operating cash flow of
the systems (as adjusted in
accordance with the Asset Purchase Agreement) is less than $26 million
for the 12-month period prior
to the closing, and subject to further adjustment as provided in the Asset
Purchase Agreement.
Consummation of the transactions provided for in the Asset Purchase
Agreement is subject to the
satisfaction of certain conditions, including obtaining approvals from
the Federal Communications
Commission and the municipal authorities issuing the franchises for
the systems.
A press release describing the foregoing is attached as an
exhibit hereto and is incorporated herein
by reference.
The Asset Purchase Agreement is also attached as an exhibit hereto.
Reference is made to the
Asset Purchase Agreement for all of the terms of the sale.
Item 7. Financial Statements and Exhibits.
Exhibit 1 - Press Release, dated November 29, 1994, issued
by ML Media Partners, L.P. and
Century Communications Corp.
Exhibit 2 - Asset Purchase Agreement, dated November 28,
1994, between ML Media Partners,
L.P. and Century Communications Corp.
Exhibit 3 - Escrow Agreement, dated November 28, 1994,
among ML Media Partners, L.P.,
Century Communications Corp. and Chemical Bank.
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.
ML MEDIA PARTNERS, L.P.
BY: MEDIA MANAGEMENT PARTNERS, its
general partner
BY: RP MEDIA MANAGEMENT, a general
partner
BY: IMP MEDIA MANAGEMENT, INC.,
its managing general partner
By: /s/ Elizabeth McNey Yates
Elizabeth McNey Yates
Vice President
Dated: December 8, 1994
EXHIBIT INDEX
Exhibit 1 - Press Release, dated November 29, 1994, issued by ML
Media Partners, L.P. and Century
Communications Corp. . . . . . . . . . . . . . . . . page 5
Exhibit 2 - Asset Purchase Agreement, dated November 28, 1994,
between ML Media Partners, L.P.
and Century Communications Corp. . . . . . . . . . . page 7
Exhibit 3 - Escrow Agreement, dated November 28, 1994, among
ML Media Partners, L.P., Century
Communications Corp. and Chemical Bank . . . . . . . page 118
ASSET PURCHASE AGREEMENT
November 28, 1994
The parties to this agreement are ML Media Partners,
L.P., a Delaware limited partnership (the "Seller"), and Century
Communications Corp., a New Jersey corporation (the "Buyer").
The Seller owns and operates the four cable television
systems listed on schedule 1 (the "Systems") serving the
franchised areas listed on schedule 1.1(a). The Systems serve
Northern California (the "Northern Systems") and Southern
California (the "Southern Systems"). The Seller desires to sell
to the Buyer all of the assets used in the operations of the
Systems, either at one closing of the Northern Systems and the
Southern Systems or at two separate closings of the Northern
Systems and the Southern Systems, and the Buyer desires to
purchase those assets, on the terms and conditions contained in
this agreement.
Accordingly, it is agreed as follows:
1. Sale and Purchase of Assets.
1.1 Sale of Assets to Buyer. At one or two
Closings (as defined in section 3.1), the Seller shall sell and
assign to the Buyer, and the Buyer shall purchase and acquire
from the Seller, all of the business of the Seller relating to
the Systems and all of the assets of the Seller used in the
operations of the Systems (excluding the assets referred to in
section 1.2). Except as otherwise provided in section 1.2, the
assets of the Systems to be sold and assigned (collectively, the
"Assets") include, but are not limited to, the following:
(a) all municipal, state and federal
franchises, licenses, permits and authorizations (and
applications for any of them) relating to the operations of the
Systems, including, but not limited to, those listed on schedule
1.1(a);
(b) all equipment, inventory, supplies,
vehicles, furniture, fixtures and leasehold improvements,
improvements on land being acquired by the Buyer pursuant to
section 1.1(c), and all other tangible personal property,
wherever located, which is owned by the Seller and used in the
operations of the Systems, including, but not limited to, the
items listed on schedule 1.1(b);
(c) all real property, including, but not
limited to, the property listed on schedule 1.1(c), and all
rights of way, licenses, easements and related rights of ingress
and egress, including, but not limited to, those listed on
schedule 4.13;
(d) all rights of the Seller under leases,
commitments and other agreements relating to the operations of
the Systems, to the extent that those rights relate to the period
after the applicable Closing Date (as defined in section 3.1),
including, but not limited to, (i) the leases, commitments and
other agreements listed on schedules 4.13 and 4.14 and (ii) any
other leases, commitments and other agreements relating to the
operations of the Systems that are entered into in accordance
with the provisions of section 6.2 between the date of this
agreement and the applicable Closing Date;
(e) all accounts receivable relating to the
Systems (the "Accounts Receivable"), including, but not limited
to, accounts receivable from subscribers and for services or
advertising time provided prior to the applicable Determination
Time (as defined in section 2.2(b));
(f) all computer software relating to the
accounts of the Systems, files, logs and other records and data
relating to the operations of the Systems, including, but not
limited to, technical information and engineering data, lists of
subscribers, promotional materials and credit and sales records,
other than account books of original entry and general ledgers;
provided, however, that the Buyer shall maintain and make
available to the Seller for a period of six years from the
applicable Closing Date copies of any such records that the
Seller may require for preparation of its income tax returns or
other similar purposes; and
(g) all trademarks, trade names, logos,
copyrights and other intangible personal property relating to the
operations of the Systems, together with the goodwill of the
business associated with those trademarks, trade names, logos and
copyrights.
1.2 Excluded Assets. The following assets used
in the operations of the Systems shall be retained by the Seller
and shall not be sold or assigned to the Buyer:
(a) all cash, certificates of deposit,
commercial paper, treasury bills and notes and all other
marketable securities;
(b) any lease, commitment or other agreement
(i) as to which consent to assignment is required but has not
been obtained or (ii) which the Buyer does not assume the
obligations under pursuant to section 2.2(a);
(c) all programming agreements other than
those (i) listed on schedule 1.2(c) or (ii) entered into in
accordance with section 6.2 and which the Buyer elects in writing
to assume;
(d) the account books of original entry and
general ledgers and all partnership and similar records of the
Seller, including tax returns;
(e) all furniture, fixtures, equipment,
computers and supplies located at the offices of MultiVision
Cable TV Corp. ("MultiVision") in Greenwich, Connecticut or New
York, New York other than any assets specified in section 1.1(f);
(f) the trade name "MultiVision", the
related logo and any rights in that name and logo and the logo
and trademark described on schedule 1.2(f); provided, however,
that Buyer may utilize the "MultiVision" name in a transition
period not to exceed 90 days from the applicable Closing Dates;
(g) all of the employee benefit plans of the
Seller; and
(h) any other assets of the Seller not used
in the operations of the Systems.
2. Purchase Price.
2.1 Deposit. Upon execution of this agreement,
the Buyer is delivering to Chemical Bank (the "Escrow Agent") the
sum of $5,000,000 (the "Deposit"), to be held by the Escrow Agent
pursuant to the terms of an escrow agreement in the form of
exhibit 2.1 (which is being executed simultaneously with the
execution of this agreement) and subject to the following:
(a) If a Closing under this agreement is not
consummated as a result of a breach by the Buyer of any of its
material obligations under this agreement and the Seller is not
in breach of any of its material obligations under this agreement
then, in addition to all other remedies that the Seller may have
under applicable laws as a result of such breach, the Seller
shall be entitled to the Deposit (together with all interest
earned thereon); provided, however, that if a Closing of only the
Northern Systems or the Southern Systems is not so consummated,
then the Seller shall be entitled to 50% of the Deposit (together
with all interest earned thereon), unless as a result of such
breach the Seller also terminates this agreement with respect to
the sale of all of the Systems, in which event the Seller shall
be entitled to all of the Deposit (together with all interest
earned thereon).
(b) If the purchase of the Assets under this
agreement is not consummated for any reason other than as set
forth in section 2.1(a), the Seller shall not be entitled to the
Deposit and, promptly after the termination of this agreement,
the Deposit (together with all interest earned thereon) shall be
paid by the Escrow Agent to the Buyer.
(c) At a Closing of all of the Systems, the
Deposit (together with all interest earned thereon) shall be paid
to the Seller as partial payment of the purchase price for the
Assets; at a Closing of the Northern Systems or the Southern
Systems, 50% of the Deposit (together with all interest earned
thereon) shall be paid to the Seller as partial payment of the
purchase price for the Assets.
(d) The fees and expenses of the Escrow
Agent shall be paid 50% by the Seller and 50% by the Buyer.
2.2 Amount of Consideration. As the purchase
price for the Assets, the Buyer shall pay to the Seller a base
amount (the "Base Amount") equal to $286,000,000 for the Systems
(or $143,000,000 if only the Northern Systems are transferred or
$143,000,000 if only the Southern Systems are transferred),
subject to adjustment as provided in sections 2.2(b), (c) and
(d).
(a) Liabilities of Seller.
(i) Certain Assumed Liabilities. At
each Closing, the Buyer shall assume, and shall agree to pay,
perform and discharge and shall agree to indemnify and hold the
Seller harmless from (A) all of the obligations and liabilities
of the Seller as of the applicable Determination Time that relate
to the operations of the Systems transferred at that Closing that
would be required to be reflected on a balance sheet of the
Systems transferred at that Closing as of that Determination Time
prepared in accordance with generally accepted accounting
principles applied consistently with prior periods, including,
but not limited to, accounts payable, accrued expenses, taxes
payable (other than income taxes) and obligations to provide
cable services after that Determination Time for which payment
has been made prior to that Determination Time, but only to the
extent that such obligations and liabilities are reflected in the
adjustment of the purchase price pursuant to section 2.2(b) (the
"Assumed Liabilities"), and (B) all of the obligations and
liabilities of the Seller relating to the Systems transferred at
that Closing arising after and relating to the period after that
Determination Time under those leases, commitments and other
agreements relating to the operations of the Systems transferred
at that Closing that are assigned to the Buyer pursuant to
section 1.1(d) (the "Contract Liabilities").
(ii) Other Assumed Liabilities. At
each Closing, the Buyer shall assume, and shall agree to pay,
perform and discharge, but shall nevertheless be indemnified
therefor by the Seller pursuant to section 9, any other
liabilities or obligations of the Seller relating to the Systems
transferred at that Closing as of that Determination Time that
arose in the ordinary course of the business of the Systems
transferred at that Closing, including, but not limited to, the
obligation to defend, and any liability pursuant to, the
litigations set forth on schedule 2.2(a)(ii) ("Other
Liabilities").
(iii) Excluded Liabilities. Buyer
shall not assume, and shall not pay, perform or discharge, (x)
the litigations set forth on schedule 2.2(a)(iii), (y) any
litigation that arises between the date of this agreement and the
applicable Closing Date, except to the extent, if any, that the
Buyer and the Seller shall, after negotiating in good faith,
agree otherwise, and (z) any other liabilities or obligations as
of that Determination Time known to Seller and not disclosed to
Buyer or any other liabilities or obligations as of that
Determination Time that Seller should have known using reasonable
care in operating the Systems ("Excluded Liabilities").
(iv) Potential Refund Liability.
Notwithstanding the foregoing provisions of this section 2.2(a),
the Seller shall retain, and shall satisfy in full, any liability
or obligation to provide refunds (the "Potential Refund
Liability") after the applicable Closing Date(s) to subscribers
to any of the Systems (a) with respect to a la carte services and
tier services, if any, provided to subscribers prior to the
Closing Date for the transfer of those Systems, or with respect
to any other rates or charges of the Seller affected thereby, or
(b) if any rates charged to basic subscribers during the period
prior to the Closing Date for the transfer of those Systems
exceeded the amount permitted by applicable law and regulation.
The Buyer shall not make any such refund prior to a final
determination (as defined in section 2.2(d)(iii)) without the
prior written consent of the Seller.
(b) Working Capital Adjustment.
(i) If the aggregate amount of the
Assumed Liabilities as of the applicable Determination Time(s)
(other than accrued vacation pay or severance pay to the extent
the Seller has retained such liabilities or the Buyer has agreed
to assume such liabilities pursuant to section 6.8(a)) exceeds
the aggregate amount of the Current Assets (as defined below) as
of the applicable Determination Time(s), the Base Amount shall be
decreased by an amount equal to that excess.
(ii) If the aggregate amount of the
Current Assets as of the applicable Determination Time(s) exceeds
the aggregate amount of the Assumed Liabilities as of the
applicable Determination Time(s) (other than accrued vacation pay
or severance pay to the extent the Seller has retained such
liabilities or the Buyer has agreed to assume such liabilities
pursuant to section 6.8(a)), the Base Amount shall be increased
by an amount equal to that excess.
As used in this agreement, "Current
Assets" means the Accounts Receivable, prepaid expenses and other
current assets (excluding cash, certificates of deposit,
commercial paper, treasury bills and notes and all other
marketable securities described in section 1.2(a) and inventory)
determined in accordance with generally accepted accounting
principles relating to the Systems transferred at any Closing,
and "Determination Time" with respect to the Systems transferred
at any Closing means the close of business on the day preceding
the Closing of the sale of those Systems. For the purpose of
calculating Current Assets, each Account Receivable shall be
valued at 100% of its face amount if the receivable has been
outstanding for 31 days or less, 90% of its face amount if the
receivable has been outstanding for more than 31 days and 62 days
or less, 50% of its face amount if the receivable has been
outstanding for more than 62 days and 93 days or less, and 0% of
its face value if the receivable has been outstanding for more
than 93 days.
(c) Operating Cash Flow Adjustment.
If the aggregate Operating Cash Flow (as
defined below) of the Systems for the 12-month period(s) ending
on the applicable Calculation Date(s) (as defined below) is less
than $26,000,000 (or $13,000,000 if only the Northern Systems are
transferred or $13,000,000 if only the Southern Systems are
transferred), then, subject to the provisos in sections 10.1(e)
and 10.2, the Base Amount shall be reduced by an amount equal to
11 times the shortfall. As used in this agreement, (1) Operating
Cash Flow of the Systems transferred at any Closing for any 12-
month period means an amount equal to the total revenues of those
Systems for that period less all operating expenses of those
Systems for that period other than interest, depreciation and
amortization and other non-cash charges, income taxes and
management fees and expenses payable to the Seller or to
MultiVision (for services rendered of the same types as the
services rendered by them through September 30, 1994, except to
the extent, if any, that prior to September 30, 1994 any such
services were rendered at the Systems), determined in a manner
consistent with the determination of Operating Cash Flow as shown
on the unaudited statements of operations of the Systems for the
year ended December 31, 1993, subject to adjustment for any A la
Carte Revenue Loss (as defined in section 2.2(d)(i)) and any
other loss of revenue or increase in costs after the date of this
agreement to the extent set forth below in section 2.2(d), and
(2) the Calculation Date with respect to the Systems transferred
at any Closing means the last day of the second calendar month
preceding the Determination Time with respect to those Systems if
the Determination Time is on or before the 15th day of the month
and the last day of the calendar month preceding the
Determination Time if the Determination Time is after the 15th
day of the month. As an example, if the Northern Systems are
transferred at a Closing on February 20, 1995 and the Southern
Systems are transferred at a Closing on June 10, 1995, the
Operating Cash Flow of the Northern Systems shall be determined
for the 12-month period ending January 31, 1995 and the Operating
Cash Flow of the Southern Systems shall be determined for the 12-
month period ending April 30, 1995, and the aggregate Operating
Cash Flow of the Systems shall be the sum of those two Operating
Cash Flows.
(d) Adjustment for Reduction in Regulated
Revenues.
(i) A la Carte. If at any time after
the date of this agreement it is finally determined (as provided
below) that the revenues of the Systems derived from the a la
carte services described on schedule 2.2(d)(1), together with any
related reduction of revenues from basic services as a result of
the determination with respect to the revenues from such a la
carte services, for the 12-month period(s) ending on the
applicable Calculation Date(s) are reduced as a result, directly
or indirectly, of any action or determination by the Commission
(as defined in section 4.9), any Municipal Authority (as defined
in section 4.9) listed on schedule 2.2(d)(2) or any other
Municipal Authority that prior to the Closing Date commences (or
gives official notice or notice to the Seller of its intention to
commence) proceedings to determine whether an a la carte service
constitutes a regulated tier, including, but not limited to, (1)
a determination that any a la carte service should be a regulated
tier, (2) a determination that any a la carte service did not
comply with the requirements for an a la carte service, (3) any
restrictions imposed on the price that may be charged for any a
la carte service, or (4) any additional restrictions imposed on
the marketing of any a la carte service (such reduction in
revenues from a la carte services, together with any related
reduction in revenues from basic services, an "A la Carte Revenue
Loss"), then the Operating Cash Flow of the Systems for the 12-
month period ending on the Calculation Date shall be recalculated
to reflect such A la Carte Revenue Loss (calculated as provided
in the last sentence of section 2.2(d)(ii) below).
Notwithstanding the foregoing, the maximum reduction in Operating
Cash Flow from an A la Carte Revenue Loss shall be $2,181,818 (so
that the maximum reduction in the Base Amount resulting from an A
la Carte Revenue Loss shall be $24,000,000); provided, however,
that if only the Northern Systems are transferred, the maximum
reduction in Operating Cash Flow shall be $1,454,545, so that the
maximum reduction in the Base Amount resulting therefrom shall be
$16,000,000, and if only the Southern Systems are transferred,
the maximum reduction in Operating Cash Flow shall be $727,273,
so that the maximum reduction in the Base Amount resulting
therefrom shall be $8,000,000. The reduction in Operating Cash
Flow resulting from any A la Carte Revenue Loss shall be an
amount equal to the A la Carte Revenue Loss less any related
increase in regulated revenues and less the reduction in
programming expenses, franchise fees, copyright fees and other
expenses the amount of which are calculated and payable based
upon a proportional relationship to revenue.
(ii) Basic Cable Rates. For purposes
of calculating Operating Cash Flow, if it is finally determined
(as provided below) that the basic rates reflected in the Form
393's or 1200's filed by the Seller were calculated incorrectly
or were calculated in violation of Existing Governmental
Regulations (as defined below), the Operating Cash Flow shall be
recalculated using such corrected rates. Notwithstanding
anything to the contrary in this agreement, any adjustment to
Operating Cash Flow pursuant to section 2.2(d)(i) or this section
2.2(d)(ii) shall only be made if the reduction continues to
effect Operating Cash Flow following the Closing, and in that
event the adjustment shall be made for the full 12-month period
ending on the applicable Calculation Date regardless of when
during such 12-month period such adjustment became effective.
(iii) Final Determination. It shall be
"finally determined" that (w) there is a reduction in Operating
Cash Flow resulting from an A la Carte Revenue Loss, (x) the
basic rates reflected in the Form 393's or 1200's filed by the
Seller were calculated incorrectly or in violation of Existing
Governmental Regulations, (y) a refund is required for purposes
of section 2.2(a)(iv) or (z) any inflationary increase or
external cost pass through referred to in section 2.2(d)(v) is
disapproved only after any such determination is no longer
subject to appeal, review, rehearing or reconsideration by the
Commission, any Municipal Authority or any court or after the
Seller agrees in writing to accept such determination.
(iv) Adjustments Regarding Further Rate
Regulation. For purposes of calculating Operating Cash Flow, any
loss of revenue or increase in costs due to the adoption of
Additional Governmental Regulations (as defined below) shall be
excluded, including, but not limited to, the following
adjustments: (1) there shall be added to Operating Cash Flow an
amount equal to any reduction in revenue resulting from any
Additional Governmental Regulations, (2) any increase in expenses
as a result of any Additional Governmental Regulations shall not
be taken into account, and (3) any additional roll-back in rates
that the Commission or any Municipal Authority may determine is
required to comply with the regulations adopted by it prior to
the date of this agreement shall not be taken into account. As
used in this agreement, (a) "Additional Governmental Regulations"
are (1) new laws, regulations, rulings or policies adopted by the
Commission, any Municipal Authority or any other governmental
entity after the date of this agreement, (2) laws, regulations,
rulings or policies adopted after the date of this agreement
modifying or amending laws, regulations, rulings or policies
adopted prior to the date of this agreement, and (3) laws,
regulations, rulings or policies adopted after the date of this
agreement which purport to interpret or clarify laws,
regulations, rulings or policies adopted prior to the date of
this agreement but which are determined by the parties (or, if
the parties are unable to agree by an arbitrator designated by
the Buyer and the Seller from the Judicial Arbitration and
Mediation Services in New York, New York (or if they fail to
agree, designated by the Judicial Arbitration and Mediation
Services) pursuant to the rules of the Judicial Arbitration and
Mediation Services in New York, New York) to not only interpret
or clarify but to modify or amend laws, regulations, rulings or
policies adopted prior to the date of this agreement, but
excluding laws, regulations, rulings or policies relating to a la
carte services, whether adopted prior to or after the date of
this agreement, and (b) "Existing Governmental Regulations" are
(1) laws, regulations, rulings or policies adopted by the
Commission, any Municipal Authority or any other governmental
entity prior to the date of this agreement, (2) laws,
regulations, rulings or policies adopted after the date of this
agreement that only interpret or clarify laws, regulations,
rulings or policies adopted prior to the date of this agreement
as determined by the parties (or if the parties are unable to
agree by an arbitrator designated by the Buyer and the Seller
from the Judicial Arbitration and Mediation Services in New York,
New York (or if they fail to agree, designated by the Judicial
Arbitration and Mediation Services) pursuant to the rules of the
Judicial Arbitration and Mediation Services in New York, New
York), and (3) laws, regulations, rulings or policies relating to
a la carte services, whether adopted prior to or after the date
of this agreement.
(v) Other Adjustments. For purposes of
calculating Operating Cash Flow, (1) if the inflationary
increases on regulated services for which the Systems applied on
October 1, 1994 are approved, they shall be deemed effective (and
revenues shall increase accordingly) as of December 1, 1994, with
the increase per channel based on the number of channels
currently subject to regulation, regardless of when such
increases actually become effective, and (2) if any "external
cost pass throughs" to which the Systems are entitled under
Existing Governmental Regulations, including, but not limited to,
programming cost increases, are approved, they shall be deemed
effective immediately upon incurrence regardless of when the
Systems are allowed to pass through such costs, provided that if
the Systems fail to apply for a "pass through" on the earliest
possible date, such "pass through" shall be deemed effective only
upon the date of application. In addition, for purposes of
calculating Operating Cash Flow, there shall also be excluded (1)
any additional programming costs incurred by the Systems
resulting from the termination of MultiVision as the manager of
the Systems or the sale of Maryland Cable Corp., which was also
managed by MultiVision, (2) any additional employee benefit,
accounting, legal, administrative or other costs resulting from
the termination of MultiVision as the manager of the Systems or
the sale of Maryland Cable Corp. that are (a) payable to third
parties or to additional employees hired at the Systems solely
for the purpose of performing services previously performed by
MultiVision, or (b) incurred at the Systems by employees of the
Systems, but only to the extent agreed upon by the Seller and the
Buyer, or if they fail to agree, to the extent determined by a
"big 6" accounting firm designated by the Seller and the Buyer
(or if they fail to agree, by Ernst & Young), and (3) any
incremental costs incurred by the Systems in replacing Don
Granger as Vice President-Regional General Manager of the
Southern Systems (or in hiring a person with the same functional
duties and responsibilities) in excess of the compensation paid
to Don Granger on the date of this agreement.
(e) Control of A la Carte Proceedings.
Notwithstanding anything to the contrary in this agreement,
within 30 days prior to the first (or only) closing, the Buyer
and the Seller shall negotiate in good faith to replace the
adjustment to Operating Cash Flow resulting from an A la Carte
Revenue Loss provided for in section 2.2(d)(i) with a fixed
reduction in the Base Amount to reflect the risk of an A la Carte
Revenue Loss based on the facts known with respect thereto at
that time, but the parties shall be under no obligation to reach
agreement on such fixed reduction. If despite their good faith
negotiations, the Buyer and the Seller are unable to agree on a
fixed reduction in the Base Amount, the Buyer and the Seller
shall negotiate in good faith the manner in which and by whom any
proceeding relating to an A la Carte Revenue Loss shall be
controlled or resolved. If despite their good faith negotia-
tions, the Buyer and the Seller are unable to agree on the manner
in which and by whom any such proceeding shall be controlled or
resolved, the Buyer and the Seller shall jointly control and
resolve any such proceeding (including the settlement of any such
proceeding), and if they become deadlocked the issue on which
they become deadlocked shall be determined by an arbitrator
designated by Buyer and Seller from the Judicial Arbitration and
Mediation Services in New York, New York (or if they fail to
agree, designated by the Judicial Arbitration and Mediation
Services) pursuant to the rules of the Judicial Arbitration and
Mediation Services in New York, New York.
(f) Accountants' Determination of Operating
Cash Flow. Within 120 days after the second (or only) Closing,
or if only the Northern Systems or the Southern Systems are
transferred pursuant to the agreement, within 120 days after the
termination of this agreement with respect to the other Systems,
the Seller shall cause Deloitte & Touche (the "Accountants") to
prepare and deliver to the Seller and the Buyer a statement of
the Current Assets and Assumed Liabilities as of the applicable
Determination Time(s), a statement of the Operating Cash Flow of
the Systems for the 12 month period(s) ending on the applicable
Calculation Date(s), adjusted as required by sections 2.2(c) and
(d), and, if any inflationary increases or "external cost pass
throughs" referred to in section 2.2(d)(v) have not yet been
approved or finally determined to be disapproved, assuming such
increases or pass throughs had been approved (subject to
recalculation after the Closing pursuant to section 9.5(b)), and
a statement of the aggregate amount of the adjustments to the
Base Amount to be made pursuant to sections 2.2(b), (c) and (d).
The Accountants' statements shall be final and binding on the
parties unless the Seller or the Buyer delivers a notice to the
other disputing any matter within 30 days after delivery of the
statements, stating its position with respect to any disputed
matter. If the Buyer or the Seller delivers such notice, the
parties shall seek to resolve the disputed matter, and if the
parties are unable to resolve the disputed matter within 30
additional days, any accounting dispute shall be determined by a
"big 6" accounting firm designated by the Seller and the Buyer
(or if they fail to agree, designated by Ernst & Young), and any
dispute with respect to any adjustment to the Operating Cash Flow
of the Systems as of the Calculation Date(s) required by section
2.2(c) or (d) shall be determined by arbitration in New York, New
York in accordance with the rules of the American Arbitration
Association. The determination of any disputed matter pursuant
to the preceding sentence shall be final and binding on the
parties. The fees and expenses of the Accountants shall be borne
50% by the Buyer and 50% by the Seller and the fees and expenses
of the accounting firm or the arbitration making the
determination on any disputed matter shall be borne by the Seller
and the Buyer in proportion to the amount by which the
determination of the matter varies from the positions of the
Buyer and the Seller on the matter.
2.3 Payment of Purchase Price. The aggregate
purchase price for the Assets shall be paid as follows:
the Systems, the Buyer shall deliver or cause to
be delivered to
the Escrow Agent, by wire transfer of federal reserve funds, an
amount equal to $5,000,000 (the "Indemnity Escrow Amount"), to be
held by the Escrow Agent in an interest bearing account (the
"Indemnity Escrow Account") pursuant to an escrow agreement
substantially in the form of exhibit 2.3(a) (the "Indemnity
Escrow Agreement"), which funds shall be paid in whole or in part
in accordance with the terms of the Indemnity Escrow Agreement to
(i) the Buyer if it is determined that the Buyer is entitled to
indemnification payments under section 9.2 of this agreement, or
(ii) the Seller to the extent the Buyer is not determined to be
entitled to any such payments; at each Closing of the transfer of
only the Northern Systems or Southern Systems, the Buyer shall
deliver $2,500,000 to the Escrow Agent.
(b) At each Closing, if there has not been a
final determination with respect to the Potential Refund
Liability, the Buyer shall deliver or cause to be delivered to
the Escrow Agent, by wire transfer of federal reserve funds, an
amount equal to the Potential Refund Liability for the Systems
transferred at that Closing (the "Potential Refund Amount"), as
agreed to by the Buyer and the Seller (or if they fail to agree
as determined by Deloitte & Touche), to be held by the Escrow
Agent in an interest bearing account (the "Potential Refund
Escrow Account") pursuant to an escrow agreement substantially in
the form of exhibit 2.3(b) (the "Potential Refund Escrow
Agreement"), which funds shall be paid in whole or in part in
accordance with the terms of the Potential Refund Escrow
Agreement to (i) the Buyer and Seller jointly to the extent
required to pay any actual refund liability, or (ii) the Seller
to the extent the Potential Refund Amount exceeds the actual
refund liability.
(c) At each Closing, if there has not been a
final determination with respect to an A la Carte Revenue Loss
for all of the Northern Systems or all of the Southern Systems,
the Buyer shall deliver or cause to be delivered to the Seller a
letter of credit substantially in the form of exhibit 2.3(c) (the
"Letter of Credit") issued to the Seller, in an amount equal to
11 times the maximum possible further reduction (determined in
accordance with section 10.1(e) and after giving effect to any
reduction in Operating Cash Flow from an A la Carte Revenue Loss
for those Systems reflected in the payment at the Closing) in
Operating Cash Flow from an A la Carte Revenue Loss for the
Systems transferred at that Closing (the "Letter of Credit
Amount"). The Seller shall have the right to draw on the Letter
of Credit if and to the extent it is determined that the Seller
is entitled to any payments under section 9.5 of this agreement,
by delivery of a certificate executed by the Buyer and the Seller
to that effect or by delivery of a final non-appealable court
order to that effect. If it is determined that the Seller does
not have the right to draw the full Letter of Credit Amount, the
Seller shall return the Letter of Credit to the Buyer promptly
after making any drawing to which it is entitled. The Buyer and
the Seller shall each pay 50% of any fees and expenses incurred
in connection with the Letter of Credit.
(d) If there is only one Closing, at that
Closing, the Buyer shall pay to the Seller, by wire transfer of
federal reserve funds, an amount which, together with the payment
to the Seller pursuant to section 2.1(c), the Indemnity Escrow
Amount, the Potential Refund Amount, if any, and the Letter of
Credit Amount, if any, equals the Base Amount plus (or minus) the
estimated amount (determined in accordance with section 2.4) of
the increase (or decrease) in the Base Amount pursuant to
sections 2.2(b), (c) and (d). If there is more than one Closing,
at the first Closing, the Buyer shall pay to the Seller, by wire
transfer of federal reserve funds, an amount which, together with
the payment to the Seller pursuant to section 2.1(c), the
Indemnity Escrow Amount, the Potential Refund Amount, if any, and
the Letter of Credit Amount, if any, for that Closing, equals 11
times the estimated Operating Cash Flow of the Systems
transferred at that Closing as of the applicable Calculation Date
(determined in accordance with sections 2.2 and 2.4) plus (or
minus) the estimated amount (determined in accordance with
section 2.4) of the increase (or decrease) in the Base Amount
pursuant to section 2.2(b) with respect to those Systems;
provided, however, that the estimated Operating Cash Flow of the
Northern Systems shall not exceed $13,000,000 and the estimated
Operating Cash Flow of the Southern Systems shall not exceed
$13,000,000, and at the second Closing, the Buyer shall pay to
the Seller, by wire transfer of federal reserve funds, an amount
which, together with the payment to the Seller pursuant to
section 2.1(c) at that Closing, the Indemnity Escrow Amount for
that Closing, the Potential Refund Amount, if any, for that
Closing and the Letter of Credit Amount, if any, for that
Closing, equals the remainder of the Base Amount (based on the
estimated Operating Cash Flow of the Systems transferred at that
Closing as of the applicable Calculation Date and disregarding
(1) the separate maximums on Operating Cash Flow for the Northern
Systems and the Southern Systems and considering only the
$286,000,000 maximum Base Amount, and (2) the separate maximums
on the reduction in Operating Cash Flow resulting from an A la
Carte Revenue Loss for the Northern Systems and the Southern
Systems and considering only the $24,000,000 maximum reduction
for all of the Systems), plus (or minus) the estimated amount
(determined in accordance with section 2.4) of the increase or
decrease in the Base Amount pursuant to section 2.2(b) with
respect to the Systems transferred at the second Closing, but in
no event shall the Buyer pay to the Seller an aggregate Base
Amount in excess of $286,000,000.
(e) Not later than 10 days after the final
determination of the Current Assets and Assumed Liabilities as of
the Determination Time(s) and the Operating Cash Flow of the
Systems for the 12 month period(s) ending on the Calculation
Date(s) pursuant to section 2.2(f), the Buyer shall pay to the
Seller or the Seller shall pay to the Buyer (by wire transfer of
federal reserve funds or by delivery of bank or certified checks
in immediately available funds) the amount payable as a result of
the difference between the estimates and the final
determinations.
(f) Together with any drawing by Seller on
the Letter of Credit, Buyer shall pay to Seller an amount equal
to interest on the amount drawn from the applicable Closing Date
at a rate equal to LIBOR plus 1-1/2 percent, as in effect from
time to time.
2.4 Estimate of Adjustments. The Seller shall
prepare and submit to the Buyer, not later than five days prior
to the date of each Closing, a written estimate of the Operating
Cash Flow of the Systems to be transferred at that Closing deter-
mined pursuant to sections 2.2(c) and (d) and the amount of the
adjustments to the Base Amount based on the Current Assets and
Assumed Liabilities of the Systems to be transferred at that
Closing under section 2.2(b); such estimates shall be determined
based upon the books and records of the Systems to be transferred
at that Closing and the adjustments to Operating Cash Flow
required by sections 2.2(c) and (d). The estimate submitted to
the Buyer prior to each Closing shall be accompanied by (a)
statements setting forth in reasonable detail (and any back-up
reasonably requested by the Buyer for) the calculation of Current
Assets and Assumed Liabilities of the Systems to be transferred
at that Closing as of the applicable Determination Date and of
the Operating Cash Flow of the Systems to be transferred at that
Closing as of the applicable Calculation Date and the estimate of
the resulting amount payable at the Closing, and (b) a
certificate signed by the general partner of the Seller
confirming that the estimates were calculated in accordance with
the terms of this section 2. The amount payable at each Closing
shall be based upon that estimate.
3. Closing.
3.1 Date of Closing. The consummation of the
transactions contemplated by this agreement shall occur at one or
more closing (the "Closings") at the New York offices of
Proskauer Rose Goetz & Mendelsohn (or at such other place as may
be mutually agreeable to the Buyer and the Seller). A Closing
shall be held on a date designated by the Seller that shall be at
least five days after the Seller delivers a notice to the Buyer
that the condition specified in section 7.3(c) has been fulfilled
and the condition specified in section 7.3(a) with respect to the
Northern Systems, the Southern Systems or all of the Systems has
been fulfilled (provided that the Closing shall only be
consummated if at the Closing all of the other conditions to the
Closing are also satisfied). The Seller shall have the right to
deliver a notice of closing in accordance with the preceding
sentence at any time after such conditions have been fulfilled;
in addition, if the conditions to the second Closing have not
been satisfied by the outside Closing Date, the Seller may elect
not to consummate the first Closing. Each date on which a
Closing is held is referred to in this agreement as the "Closing
Date." At each Closing, the parties shall execute and deliver
the documents referred to in section 8.
3.2 Outside Date for the Closing. If no Closing
has occurred on or prior to June 30, 1995, either party may
terminate its obligations under this agreement by notice to the
other. Upon such termination, neither of the parties shall have
any liability or obligation to the other under this agreement
except for any liability resulting from its breach of this
agreement.
4. Representations and Warranties by the Seller.
The Seller represents and warrants to the Buyer as
follows:
4.1 Seller's Organization and Authority. The
Seller is a limited partnership duly organized, validly existing
and in good standing under the law of the State of Delaware and
has the full power and authority to enter into and perform its
obligations under this agreement and to own and operate the
Systems. The Seller is duly qualified to do business as a
foreign limited partnership and is in good standing in the State
of California.
4.2 Authorization of Agreement. The execution,
delivery and performance of this agreement by the Seller have
been duly authorized by all necessary partnership action, and
this agreement constitutes a valid and binding obligation of the
Seller enforceable against the Seller in accordance with its
terms, except as may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights
in general and subject to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
4.3 Consents of Third Parties. Subject to
receipt of the consents and approvals referred to in schedule
4.3, the execution, delivery and performance of this agreement by
the Seller will not (i) conflict with the certificate of limited
partnership or partnership agreement of the Seller, and will not
conflict with, or result in a breach or termination of or
constitute a default under, any lease, agreement, commitment or
other instrument, or any order, injunction, judgment or decree,
to which the Seller is a party or by which the Seller is bound,
or to which any of the Assets is subject, except for conflicts,
breaches, terminations or defaults that in the aggregate would
not have a material adverse effect on the business, financial
condition or operations of the Systems taken as a whole (or the
Northern Systems taken as a whole if only the Northern Systems
are transferred or the Southern Systems taken as a whole if only
the Southern Systems are transferred) (a "Material Adverse
Effect"); (ii) result in the creation of any lien, claim, charge
or encumbrance ("Lien") upon any of the Assets, except for Liens
that in the aggregate would not have a Material Adverse Effect;
or (iii) violate any federal or state law or regulation relating
to the Seller or any of the Assets, or violate any local rule or
regulation relating to the Seller or any of the Assets, except
for violations of local rules or regulations that in the
aggregate would not have a Material Adverse Effect. No consent,
approval or authorization of, or designation, declaration or
filing with, any governmental authority is required on the part
of the Seller in connection with the execution, delivery and
performance of this agreement, except for the filings and
consents referred to in section 6.1 and consents the absence of
which would not have a Material Adverse Effect.
4.4 Title to Assets. (a) Except for the Liens
set forth on schedule 4.4 (which shall be satisfied at the
Closing) and except for property leased pursuant to leases and
agreements listed on schedule 4.13, the Seller has, and at the
Closing the Buyer will receive, good and marketable title to all
of the Assets, free and clear of all Liens (except for the lien,
if any, of current taxes not yet due and except in the case of
the real property listed on schedule 1.1(c) for easements,
covenants, conditions and restrictions that do not have a
material adverse effect on the use of the real property or
materially detract from the value of the real property)
(collectively "Permitted Liens"). All of the Assets that are
used in the business of the Systems that consist of tangible
personal property are in operating condition and repair, ordinary
wear and tear excepted, given the age of such properties and the
uses to which they are put.
(b) All of the real property owned by the
Seller and used in the operations of the System is listed on
schedule 1.1(c). The real property and the improvements located
thereon and the continuation of the business presently being
conducted thereon do not violate existing zoning laws, except for
violations that do not have a material adverse effect on the use
of the real property or materially detract from the value of the
real property. The real property is served by utilities and
services necessary for the normal and intended use of the real
property by the Seller and none of the improvements on the real
property encroaches upon the property of others, except for
encroachments that do not have a material adverse effect on the
use of the real property or materially detract from the value of
the real property. No condemnation of any such real property has
occurred, is pending or, to the best of the Seller's knowledge,
is threatened. To the best of the Seller's knowledge, the
buildings and other structures on the real property are in
operating condition and repair, ordinary wear and tear excepted,
given the age of such properties and the uses to which they are
put.
4.5 Financial Statements. The Seller has
previously delivered to the Buyer (i) unaudited statements of
selected assets and the current liabilities of the Northern
Systems, the Southern Systems and all of the Systems as of
December 31, 1993, together with the related statements of
operations for the year then ended, and (ii) unaudited statements
of selected assets and current liabilities of the Northern
Systems, the Southern Systems and all of the Systems as of
September 30, 1994, together with the related statements of
operations for the nine-month period then ended. The foregoing
statements of operations have been prepared in accordance with
generally accepted accounting principles applied on a consistent
basis and fairly present in all material respects the results of
operations of the Systems for the periods indicated.
4.6 Absence of Certain Changes. Since September
30, 1994, the Seller has operated the Systems in the ordinary
course, and, except as set forth on schedule 4.6, the Seller has
not;
(a) entered into any material transaction or
incurred any material liability or obligation relating to the
Systems that was entered into or incurred other than in the
ordinary course of its business;
(b) sold or transferred any of the assets
relating to the Systems other than in the ordinary course of its
business;
(c) granted or agreed to grant any bonus or
any increase in any rate or rates of salaries or compensation to
employees of the Systems (other than as required by minimum wage
laws, regularly scheduled bonuses or increases in the ordinary
course of business or one-time bonuses to induce employees to
remain with the Seller through the Closing Date);
(d) had any actual or, to the best of the
Seller's knowledge, threatened employee strike, work stoppage or
lockout of employees of the Systems;
(e) failed to maintain inventories and
supplies at levels sufficient to operate the business in the
ordinary course for 60 days (except where past practice is to
maintain less than 60 days' inventory of any items), nor made any
purchase commitments relating to the Systems other than in the
ordinary course of its business and substantially consistent with
its past practice;
(f) through the date of this agreement,
suffered any damage, destruction or loss (whether or not covered
by insurance) that has materially adversely affected the Assets
or any other change, event or condition which has had a Material
Adverse Effect; or
(g) created or assumed any mortgage, pledge,
lien or encumbrance upon any of the Assets (other than Permitted
Liens) that will survive the Closing.
4.7 Easements; Crossing Permits; Etc. The Seller
has such easements, highway, railroad and canal crossing permits
and other rights of ingress and egress ("Permits") as are
reasonably necessary for the conduct of the business of the
Systems as it is now being conducted, except where the failure to
have any such Permit would not have a Material Adverse Effect.
To the best of the knowledge of the Seller, the Seller is not in
violation or default of any Permit in any respect that would have
a Material Adverse Effect.
4.8 Pole Attachment Agreements. The Seller is in
possession of all pole attachment agreements reasonably necessary
for the conduct of the business of the Systems as it is now being
conducted. The Seller is not in violation or default of any pole
attachment agreement in any respect that would have a Material
Adverse Effect.
4.9 Franchises; Cable Act. (a) The franchises,
licenses and authorizations listed on schedule 1.1(a)
(collectively, the "Franchises") are the only franchises, and the
only material licenses or authorizations, of any federal, state
or local governmental or regulatory body (including, without
limitation, the Federal Communications Commission (the
"Commission") and the municipal or county authorities that have
issued the Franchises (the "Municipal Authorities")) that are
necessary in the conduct of the business of the Systems, all of
which are currently held by Seller. The Seller has complied with
all of the terms and conditions of all of the Franchises except
where noncompliance would not have a Material Adverse Effect and
except that no representation is made in this sentence with
respect to the provision in the Franchises which requires
compliance with Federal law, which is covered by the following
sentence. To the best of the Seller's knowledge, the Seller is
not in violation of the provisions of the Cable Consumer
Protection and Competition Act of 1992 (the "1992 Act") and the
rules, regulations and policies of the Commission thereunder
except where such violations would not, individually or in the
aggregate, have a Material Adverse Effect and except that no
representation is made with respect to the rate regulation
provisions of the 1992 Act, as those provisions are the subject
of an adjustment to the Base Amount pursuant to sections 2.2(c)
and (d). Except as set forth on schedule 4.9(a), no proceeding
(administrative, judicial or otherwise) is pending or, to the
best of Seller's knowledge, threatened, to revoke, suspend,
modify, limit or deny renewal of any of the Franchises. All
reports, applications, financial statements and other documents
required to be filed by the Seller with respect to the Systems
have been filed, except where the failure to file would not have
a Material Adverse Effect. To the best of Seller's knowledge,
the Forms 1200, 1205, 1210 and 1215 filed by the Seller are
correct in all material respects.
(b) Without limiting the generality of
section 4.9(a) and except as set forth in schedule 4.9(a), (x)
the Franchises are in full force and effect and there are no
applications by Seller pending or, to the best of the knowledge
of Seller, threatened before any governmental agency relating to
the business or operations of the Systems, other than proceedings
which affect the cable television industry generally, (y) since
January 1, 1993 Seller has not received any written communication
from the Commission with respect to compliance or non-compliance
with the Cable Communications Policy Act of 1984 (the "1984 Act")
or the 1992 Act including, without limitation, with respect to
rates being charged to subscribers or with respect to compliance
with the rules or regulations of the Commission; and Seller has
not received any written communications from any Municipal
Authorities with respect to compliance with the Franchises, the
1984 Act or the 1992 Act, and (z) Seller is and the operation of
Systems has been and is in compliance with the Franchises and all
rules and regulations of the Commission and with the provisions
of the National Electrical Safety Code, the rules and regulations
of the Federal Aviation Administration (the "FAA"), the
provisions of both the 1984 Act and the 1992 Act (and has
submitted and filed all filings required under the 1984 Act and
the 1992 Act), and all other applicable laws and regulations,
except in each case where non-compliance would not have a
Material Adverse Effect and except that this representation as it
relates to the 1992 Act is subject to the same limitations as set
forth in section 4.9(a). Without limiting the foregoing and
except as set forth on schedule 4.9(a), Seller has filed all
necessary FAA Tower Clearance Applications and received all
necessary Determinations of No Hazard or No Filing Required,
cable television registration statements and annual reports and
all necessary FCC Aeronautical Frequency Notifications, and filed
all necessary Forms 395A, 393, 1200, 1205 and 1210, and received
all necessary EEO Certificates, and received all necessary earth
station, business, radio and CARS licenses. True and correct
copies of all material filings by Seller with the Commission and
the Municipal Authorities during the immediately preceding one
year period have previously been delivered to the Buyer, are
listed on schedule 4.9(b) and are incorporated into the schedules
hereto as if fully set forth therein.
(c) Except as set forth on schedule 4.9(c),
all of the broadcast signals carried by the Systems are carried
pursuant to the must-carry provisions of Section 614 of the 1992
Act and the regulations promulgated thereunder and no
broadcasting station has requested its consent to the re-
transmission of its signal by the Systems in accordance with
Section 325 of the Communications Act of 1934, as amended, and
the regulations promulgated thereunder. Except as set forth on
schedule 4.9(c), to the best of the Seller's knowledge, all of
the broadcast television signals entitled to be carried pursuant
to said must-carry provisions are in fact carried by the Systems
and all such signals are positioned as required by applicable law
and regulation.
4.10 System Data. (a) As of September 30, 1994,
the Northern Systems consisted of 1,331 linear miles of plant and
there were at least 97,000 "Homes Passed" by the Northern Systems
and the Southern Systems consisted of 980 linear miles of plant
and there were at least 119,000 "Homes Passed" by the Southern
Systems. Except as set forth on schedule 4.10, to the best of
Seller's knowledge, no other person is operating a cable
television system servicing customers within the franchise areas
of any of the Systems.
As used in this agreement, "Homes Passed" includes
each single family residence or dwelling unit within a building
containing multiple dwelling units that is located within 150
feet of the activated trunk or feeder cable of a System, plus
commercial and other buildings (including hotels) actually served
by the Systems, but does not include dwelling units within
multiple dwelling unit buildings containing more than four
dwelling units to which the Seller does not have a right of
access.
(b) Schedule 4.10 sets forth as of October
1, 1994 the channel line-up for basic cable service ("Basic
Service"), all tiers of Cable Programming Service, as defined in
the 1992 Cable Act (each a "Tier Service"), all a la carte
services and all video programming offered by the Systems on a
per channel basis ("Pay or Premium Channels"), the regular basic
monthly subscription rate for Basic Service to a single household
subscriber (the "Basic Rate"), the monthly subscription rate for
each a la carte service (the "A la Carte Rates", or individually
an "A la Carte Rate"), and the regular monthly subscription rate
for each of the Tier Services (the "Tier Rates", or individually,
a "Tier Rate"), the monthly subscription rates for each premium
or pay channel, and the installation rates and charges for
equipment and services other than those specified in this
subsection.
(c) "Basic Subscriber" means a bona fide
cable television subscriber to the Systems (first connection
only) for Basic Service, at the Basic Rate who is receiving
service from the Systems and has rendered payment at the full
Basic Rate (or who receives a senior citizen discount) for at
least one full month service. As of September 30, 1994, the
number of Basic Subscribers was approximately 73,400 for the
Northern Systems and 61,600 for the Southern Systems. A true and
correct aging of the accounts receivable of the Systems as of
October 31, 1994 is attached to schedule 4.10(c). In computing
the number of Basic Subscribers, Subscriber Equivalents shall be
taken into account. "Subscriber Equivalent" means an equivalent
to a Basic Subscriber, the number of Subscriber Equivalents
served by the Systems being equal to the quotient of (i) the
aggregate revenues earned by the Systems for Basic Service
provided by the Systems during the last full month ending on or
prior to such date from bulk billings to residential multiple
dwelling units and other subscribers that are billed for such
service on a bulk basis divided by (ii) the System's regular
monthly basic rate for Basic Service. For purposes of the
foregoing there shall be excluded all revenues earned from
billings to any bulk account or discounted family household that
has not been an active subscriber of the Systems for at least one
month.
(d) "Tier Subscriber" means a bona fide
cable television subscriber to the Systems who is a Basic
Subscriber and who has subscribed to and is receiving service of
one of the Tier Services and has rendered payment in full at the
full Tier Rate for the particular Tier Service for at least one
full month of service. As of September 30, 1994, the number of
Tier Subscribers was approximately as follows: None.
(e) As of September 30, 1994, the number of
Pay Units was approximately 31,364 for the Northern Systems and
36,125 for the Southern Systems. Pay Units shall mean the
aggregate number of bona fide subscriptions to pay or premium
television services, i.e., Home Box Office, Cinemax, Showtime,
etc., in respect of which payment at the full rate for such pay
service has been rendered for at least one month service.
(f) "A la Carte Subscriber" means a bona
fide cable television subscriber to the Systems who is a Basic
Subscriber and who has subscribed to and is receiving service of
one or more of the a la carte services and has rendered payment
in full at the full A la Carte Rate or packaged rate for the
particular a la carte service(s) for at least one full month of
service. As of September 30, 1994, the numbers of A la Carte
Subscribers were approximately as follows:
A la carte basic service packages
Northern Systems - 69,271
Southern Systems - 57,768
A la carte services, not in packages
Northern Systems - 1,193
Southern Systems - 582
A la carte Encore units, not in packages
(all Southern Systems) - 111
4.11 Copyright Matters. (a) Except for amounts
reflected as accounts payable on the statement of Current Assets
and Liabilities as of the applicable Determination Time, the
Seller has deposited with the United States Copyright Office (the
"Copyright Office") all statements of account and other documents
and instruments, and paid all royalties, supplemental royalties,
fees and other sums to the United States Copyright Office
required under the Copyright Act with respect to the business and
operations of the Systems as are required to obtain, hold and
maintain the compulsory copyright license for cable television
systems prescribed in Section 111 of the Copyright Act,
including, without limitation, the payment of all copyright fees
which may be required in respect of events occurring or for
periods of time prior to the Closing in accordance with the
decision in Cablevision v. M.P.A.A.
(b) The Systems are in compliance with the
Copyright Act except where non-compliance would not have a
Material Adverse Effect. In connection with the Systems, the
Seller is entitled to hold and does now hold the compulsory
copyright license described in Section 111 of the Copyright Act,
which compulsory copyright license is in full force and effect
and has not been revoked, cancelled, encumbered or materially
adversely affected in any manner.
(c) The carriage, transmission or use of the
signals of the Systems has not subjected and does not subject any
System or the Seller to any Commission or other sanctions or any
suits or actions, including, without limitation, suits or actions
for copyright infringement, except those that may be applicable
to a majority of cable systems in the United States.
(d) Except as set forth on schedule 4.11,
during the 12 months preceding the date of this agreement, the
Seller has received no written communication from the Copyright
Office with respect to the underpayment or nonpayment of any
fees, royalties or other sums.
4.12 Litigation; Compliance with Laws. Except as
set forth on schedule 4.12 and except for proceedings (both
administrative and judicial) affecting the cable television
industry in general, there is no litigation, proceeding or
governmental investigation pending or, to the best of Seller's
knowledge, threatened, or any order, injunction or decree
outstanding, against the Seller or the Assets, and there is no
claim pending or, to the best of Seller's knowledge, threatened,
against the Seller or the Assets, which, if adversely determined
in a manner or amount that can be reasonably foreseen, might have
a Material Adverse Effect. There is no violation by Seller that
would have a Material Adverse Effect of any law, regulation or
ordinance or any other requirement of any governmental body or
court (except that the only representation with respect to the
provisions of the 1992 Act and the rules, regulations and
policies of the Commission thereunder is set forth in section
4.9).
4.13 List of Agreements, etc. Schedules 4.13 and
4.14 together contains a complete list of the following that
specifically relate to the Systems: (a) all commitments and other
agreements for the purchase of any materials, supplies or
equipment, other than commitments and other agreements that
involve an expenditure by the Seller of less than $100,000 for
any one commitment; (b) all leases or other rental agreements
under which the Seller is either lessor or lessee; (c) all
employment or consulting agreements to which the Seller is a
party; (d) all agreements for the retransmission by any of the
Systems of the signals of local television stations; (e) all
collective bargaining agreements to which the Seller is a party;
(f) all programming agreements and all pole attachment
agreements; and (g) all other agreements, commitments and
understandings (written or oral), other than subscriber
agreements, that require payment by the Seller of more than
$100,000 individually and cannot be terminated by their terms on
less than 60 days' notice without liability.
4.14 Employee Benefit Plans; ERISA; Labor
Relations.
(a) Except as set forth on schedule 4.14,
the Seller has operated the Systems in compliance with all
applicable laws relating to the employment of labor, including,
without limitation, the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and those relating to wages,
hours, collective bargaining, unemployment insurance, workers'
compensation, equal employment opportunity and the payment and
withholding of taxes, including income and social security taxes,
except where non-compliance would not have a Material Adverse
Effect.
(b) Except as set forth on schedule 4.14,
since January 1, 1993, (i) the Seller has not been a party to any
contract, agreement or other commitment with any labor
organization, and has not agreed to recognize any union or other
collective bargaining unit, with respect to employees of the
Systems, nor has any union or other collective bargaining unit
been certified as representing any of the Systems' employees,
nor, to the best of the Seller's knowledge, has there been any
effort by the employees of the Systems to seek recognition of any
union as the collective bargaining agent, and (ii) the Seller has
not experienced any strikes, work stoppages, significant
grievance proceedings or claims of unfair labor practices filed
or, to the best of the knowledge of the Seller, threatened to be
filed against the Seller by employees of the Systems.
(c) Except as set forth on schedule 4.14,
the Seller does not maintain or sponsor, nor is it required to
make any contribution to, any formal or informal pension, profit-
sharing, thrift or other retirement plan, medical,
hospitalization, vision, dental, life, disability or other
insurance or benefit plan, deferred compensation, bonus, fringe
benefit, savings or other incentive plan, severance plan or other
similar plan, agreement, arrangement or understanding with
respect to employees of the Systems (each a "Benefit Plan"),
whether or not such plan is or is intended to be subject to the
provisions of ERISA or qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"),
including, without limitation, an "employee benefit plan" within
the meaning of Section 3(3) of ERISA, or any "multi-employer
plan" within the meaning of Section 3(37) of ERISA.
(d) Neither Seller, nor any Affiliated
Company (as hereinafter defined) has incurred any liability to
the Pension Benefit Guaranty Corporation ("PBGC") or any employee
benefit plan on account of any failure to meet the contribution
requirements of such plan, minimum funding requirements or
prohibited transactions under applicable laws, termination of a
single employer plan, partial or complete withdrawal from a
multi-employer plan, or the insolvency, reorganization or
termination of any multi-employer plan. The terms used in this
section 4.14(d) shall have the meanings assigned thereto in the
applicable provisions of ERISA and the Code, and the term
"Affiliated Company" shall mean every corporation or trade or
business, whether or not incorporated, which is from time to time
a member of a controlled group or a group under common control
with Seller within the meaning of Section 414(b), (c), (m) or (o)
of the Code or Section 4001(b)(1) of ERISA.
(e) The Seller has delivered to the Buyer
true and complete copies of the documents which constitute the
MultiVision Cable TV Corp. 401(k) Plan (the "401(k) Plan"). The
401(k) Plan complies in all material respects with all applicable
provisions of ERISA and the Code.
(f) The 401(k) Plan has received a favorable
determination letter from the Internal Revenue Service ("IRS")
with respect to its qualification under the Code and, to the
Seller's knowledge, the IRS has not taken any action to revoke
any such letter. To the Seller's knowledge, nothing has occurred
which would adversely affect the qualified status of the 401(k)
Plan.
4.15 Status of Agreements. Except as set forth
on schedule 4.15, the Seller is not in default and, to the best
of Seller's knowledge, no other party is in default under any
agreement referred to in section 4.13 or 4.14 where the default
would have a Material Adverse Effect, and, to the best of
Seller's knowledge, there is no other event which, with or
without due notice or lapse of time or both, would constitute
such a default or event of default.
4.16 Insurance and Bonds. The Seller currently
has, or there exists for the Seller's benefit, in full force and
effect
(a) the casualty and liability insurance set
forth on schedule 4.16(a), which covers and insures the Seller,
the Systems and the Assets, against risks in such amounts usually
and customarily insured against in the cable television industry,
subject to reasonable deductibles, including, without limitation,
(i) fire and extended coverage insurance on all of the Assets in
amounts typical for such insurance in the cable television
industry, and on the business of the Systems, covering property
damage and loss of income by fire or other casualty, and (ii)
adequate insurance protection against all liabilities, claims and
risks arising in the ordinary course of business customarily
included within a form of comprehensive liability coverage, and
(b) the performance, surety and other bonds
set forth on schedule 4.16(b), which represent all such bonds
required under the Franchises, except where the requirement has
been waived by the grantor or other party to any such Franchise
or except where the failure to have such bonds would not have a
Material Adverse Effect.
4.17 Environmental Matters. For purposes of this
section 4.17, "Substances" are defined as any toxic or hazardous
wastes, substances, products, chemicals, pollutants of any kind
(including, without limitation, petroleum and petroleum products,
natural gas, liquified natural, petroleum, and synthetic gas,
asbestos, flammables, explosives, radioactive materials and
radon) and an "Operating Site" is defined as any real property or
facility owned, leased or used by the Seller in connection with
the operation of the Systems. Except as set forth on schedule
4.17, (i) there is and has been no treatment, storage, disposal,
handling, or release by the Seller or, to the best of the
Seller's knowledge, any other person or entity of any Substances,
at, on, under, or from any Operating Site which would have a
Material Adverse Effect; (ii) to the best of the Seller's
knowledge, there are no aboveground or underground tanks and
there are no PCBs, urea formaldehyde, paint containing lead or
mercury, or asbestos-containing materials in quantities that
would have a Material Adverse Effect located at, on or under any
Operating Site; (iii) the Seller has received no written notice
of any formal assertion by any governmental or regulatory agency
that the Seller or a predecessor business, operator, landowner or
occupant may be a responsible party in connection with any
Substance treatment, storage, disposal or release from any
Operating Site, and the Seller has no knowledge of any pending or
threatened claims; (iv) neither the Seller nor, to the best of
the Seller's knowledge, any person acting on behalf of the Seller
has released any other person from any claims the Seller might
have, or have had, for any matter relating to the presence,
handling, treatment, storage, disposal, or release of Substances
at the Operating Sites; (v) no claim, lien, or other encumbrance
has been, or is, imposed on any of the assets of the Seller or
any Operating Site under any environmental laws; and (vi) the
Seller has obtained all permits, licenses, registrations,
identification numbers, and other approvals and authorizations,
and has made all reports and notifications required under any
environmental laws in connection with operations of the Systems
and every Operating Site, and is in compliance with all
applicable environmental laws, except in each case where any
failure would not have a Material Adverse Effect.
Schedule 4.17 also contains a list and brief
description of all filings by the Seller with, notifications and
reportings by the Seller to, notices, requests for information,
orders, directives, or correspondence to the Seller from,
complaints received by or asserted by, orders issued by,
agreements with, and reports to or by all governmental
authorities administering environmental laws, within three years
prior to the date of this agreement, including, but not limited
to, notice letters, inspection and investigation reports, notices
of exceedance or violation or possible or probable exceedance or
violation, notices of deficiency, audit reports, filings made,
corrective or response actions ordered or taken, and citations
received by the Seller.
Schedule 4.17 also contains a list and brief
description of any samples taken and analyses performed by the
Seller, including the results of such analyses, at, on, under, or
of any Operating Site, and any Substances at, on, or under any
Operating Site.
Schedule 4.17 also contains a list and brief
description of all audits, investigations, and assessments
conducted by the Seller or at the Seller's request or conducted
by others and in the possession of the Seller or of which the
Seller is aware regarding actual or potential environmental
conditions, obligations, liability, and compliance regarding or
in connection with the Systems and any Operating Site.
Except as set forth on schedule 4.17, to the best
of the Seller's knowledge, no Operating Site has been designated
or identified as a wetland or wetland transition zone or as a
habitat for an endangered or threatened species.
4.18 Corporate and Personnel Data. Seller has
previously delivered to Buyer a true and correct list, as of
August 31, 1994, of the titles of all officers and directors of
the Seller employed within the Systems and the current salaries
of all persons employed by the Seller within the Systems.
4.19 Franchise Fees Certifications. Except as
set forth on schedule 4.19, the Seller has paid all required
franchise fees relating to the Systems and has received no
notices from Municipal Authorities regarding underpayment or
nonpayment of franchise fees. The current franchise fees are as
set forth in the Franchises. Schedule 4.19 sets forth those
Municipal Authorities that have commenced a proceeding of the
type described in section 2.2(d)(i) or filed the requisite
certification with the Commission under Section 623(a)(3) of the
1992 Act enabling them to regulate the rates for Basic Service
and the Seller has no knowledge that any other Municipal
Authority intends to commence such a proceeding or so file.
4.20 Transactions with Affiliates. Except as set
forth on schedule 4.20, the Seller is not engaged in any material
transaction relating to the Systems with any of its shareholders,
directors, officers, employees or any entity affiliated with any
of the foregoing.
5. Representations and Warranties by the Buyer.
The Buyer represents and warrants to the Seller as
follows:
5.1 The Buyer's Organization. The Buyer is a
corporation duly organized, validly existing and in good standing
under the law of the State of New Jersey and has the full
corporate power and authority to enter into and perform this
agreement in accordance with its terms.
5.2 Authorization of Agreement. The execution,
delivery and performance of this agreement by the Buyer have been
duly authorized by all necessary corporate action of the Buyer
and this agreement constitutes the valid and binding obligation
of the Buyer enforceable against it in accordance with its terms,
except as may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights in
general and subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in
equity or at law).
5.3 Consents of Third Parties. The execution,
delivery and performance of this agreement by the Buyer will not
(i) conflict with the certificate of incorporation or by-laws of
the Buyer and will not conflict with or result in the breach or
termination of, or constitute a default under, any lease,
agreement, commitment or other instrument, or any order,
injunction, judgment or decree to which the Buyer is a party or
by which the Buyer is bound, or (ii) violate any law or
regulation of any jurisdiction as such law or regulation relates
to the Buyer. No consent, approval or authorization of, or
designation, declaration or filing with, any governmental
authority is required on the part of the Buyer in connection with
the execution, delivery and performance of this agreement, except
for the filings and consents referred to in section 6.1.
5.4 Litigation. There is no claim, litigation,
proceeding or governmental investigation pending or, to the best
of Buyer's knowledge, threatened, or any order, injunction or
decree outstanding, against the Buyer or any of its affiliates
that would prevent the consummation of the transactions
contemplated by this agreement.
5.5 Financial Capability. The Buyer has cash on
hand or lines of credit or firm commitments from financial
institutions to provide financing in amounts sufficient to pay
the purchase price for the Assets.
6. Further Agreements of the Parties.
6.1 Filings with the Commission and Municipal
Authorities; Hart-Scott-Rodino Act. (a) As soon as practicable,
but in no event later than 30 days after the date of this
agreement, (1) the parties shall file with the Commission and any
Municipal Authorities from which consent to the transactions
contemplated by this agreement must be obtained an application or
applications requesting consent to such transactions, (2) the
parties shall file with the franchise authorities in Anaheim,
Villa Park and Orange County an application to extend or renew
the franchises for those Systems until January 25, 2012, August
20, 2011 and July 5, 2012, respectively (the "Southern
Extensions"), and (3) the parties shall file with the franchise
authorities in Rohnert Park, Sonoma County and Solano County
applications to extend or renew the franchises for those Systems
until December 31, 2011, August 19, 2008 and October 30, 2009,
respectively (the "Northern Extensions"); the parties shall take
with due diligence all reasonable steps necessary to expedite the
processing of the application or applications and to secure such
consents or approvals and the foregoing extensions or renewals.
Each party shall bear its own costs and expenses (including the
fees and disbursements of its counsel) in connection with the
preparation of the portion of any such application to be prepared
by it and in connection with the processing of that application.
The Seller shall not be required to make any payment to obtain
the consent of any Municipal Authority or to obtain the Southern
Extensions or Northern Extensions.
(b) Within 30 days after the execution of
this agreement, the Seller and the Buyer shall, in cooperation
with the other, file in connection with the transactions
contemplated by this agreement any reports or notifications that
may be required to be filed by them under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), with each of
the Department of Justice and the Federal Trade Commission, and
each of the Seller and the Buyer shall comply promptly with all
requests for further documents and information made by the
Department of Justice or the Federal Trade Commission, and shall
furnish to the other all such information in its possession as
may be necessary for the completion of the reports or
notifications to be filed by the other.
6.2 Operations of the System. From the date of
this agreement through the applicable Closing Date:
(a) the Seller may terminate the services of
MultiVision as the manager of the Systems but the Seller shall
continue to operate the business of the Systems in the ordinary
course;
(b) the Seller shall use reasonable efforts
(i) to preserve the business of the Systems and Assets intact and
to preserve the goodwill and business of the subscribers,
advertisers, suppliers and others having business relations with
the Systems, and (ii) to retain the services of the employees of
the Systems; and
(c) the Seller shall (i) not enter into any
transaction or incur any liability or obligation that, if entered
into or incurred prior to the date of this agreement, would have
to be listed on schedule 4.13, except that the Seller may enter
into (A) any programming agreements (and the Seller shall notify
the Buyer that it entered into any such agreement and the Buyer
may elect in writing whether or not to assume any such agreement
at the Closing) or (B) any leases or rental agreements for
personal property requiring payment by the Seller of less than
$25,000 individually; (ii) not sell, lease, hypothecate, transfer
or otherwise dispose of any of the assets relating to the
Systems, other than assets that have worn out or been replaced
with other assets of equal or greater value or assets that are no
longer needed in the operation of the Systems; (iii) not grant or
agree to grant any increase in the rates of salaries or
compensation payable to employees of the Systems (other than as
required by law and regularly scheduled increases in the ordinary
course of business); (iv) not grant or agree to grant any bonus
to any employee of the Systems whose total annual compensation
after the increase would be at an annual rate in excess of
$30,000 (other than bonuses in the ordinary course of business or
one-time bonuses to induce employees to remain with the Seller
through the Closing Date); (v) not provide for any new pension,
retirement or other employment benefits for employees of the
Systems or any increase in any existing benefits (other than as
required by law); (vi) maintain the Systems' inventory at levels
sufficient to operate the business in the ordinary course for 60
days (except where the past practice is to maintain less than 60
days' inventory of any items); (vii) not change the rates charged
for Basic Service or Tier Service, except after not less than 15
days (or, in the case of a required reduction, such lesser or
greater period as is required to comply with any applicable law,
rule, regulation or order) prior written notice to the Buyer
setting forth the basis therefor and the computations thereof; or
(viii) make routine capital expenditures substantially consistent
with its past practices in the ordinary course of business
necessary to maintain the Systems and provide services within
areas presently served by the Systems, but Seller shall not be
required to incur any capital expenditures for line extensions
beyond those required by the terms of any Franchise or for
technological upgrades of the Systems, including, but not limited
to, the upgrade to 54 channels in Hermosa Beach or the upgrade to
54 channels in Rohnert Park, unless Buyer shall reimburse Seller
for the costs of such upgrades as such costs are incurred (and
regardless of whether or not the Systems are transferred to Buyer
pursuant to this agreement).
6.3 Expenses. The Buyer and Seller shall each
bear its own expenses incurred in connection with the negotiation
and preparation of this agreement and in connection with all
obligations required to be performed by it under this agreement,
except where specific expenses have been otherwise allocated by
this agreement.
6.4 Access to Information. Prior to the
applicable Closing, the Buyer and its representatives may make
such reasonable investigation of the property, assets and
businesses of the Seller relating to the Systems, and the Seller
shall give to the Buyer and to its counsel, accountants and other
representatives, upon reasonable notice, reasonable access during
normal business hours throughout the period prior to the Closing
to all of the assets, books, commitments, agreements, records and
files of the Seller relating to the Systems and the Seller shall
furnish to the Buyer during that period all documents and copies
of documents and information concerning the businesses and
affairs of the Systems as the Buyer reasonably may request. The
Buyer shall hold, and shall cause its representatives to hold,
all such information and documents and all other information and
documents delivered pursuant to this agreement confidential and,
if the purchase and sale contemplated by this agreement is not
consummated for any reason, shall return to the Seller all such
information and documents and any copies as soon as practicable,
and shall not disclose any such information (that has not
previously been disclosed by a party other than the Buyer) to any
third party unless required to do so pursuant to a request or
order under applicable laws and regulations or pursuant to a
subpoena or other legal process. The Buyer's obligations under
this section shall survive the termination of this agreement.
6.5 Consents; Assignment of Agreements and
Assets. The Seller shall use reasonable efforts (but shall not
be required to make any payment), and the Buyer shall assist the
Seller in all reasonable respects, to obtain prior to the Closing
(a) all consents and approvals of third parties required for the
transfer to the Buyer of any of the Assets (whether or not listed
on schedule 4.3), including, but not limited to, the agreements
referred to in section 1.1(d), without any conditions materially
adverse to the Buyer, and (b) with respect to all leases,
commitments and other agreements to be assumed by the Buyer that
also relate to cable television systems that are not to be
acquired by the Buyer, amendments that provide the Buyer with
only the rights and obligations under those leases, agreements
and other commitments that relate to the Systems to be acquired
by the Buyer. If, with respect to any lease, commitment or
agreement to be assigned to the Buyer, a required consent to its
assignment is not obtained by the Closing (and, accordingly,
pursuant to section 1.2, that lease, commitment or agreement is
excluded from the sale to the Buyer), (1) the Seller shall keep
it in effect and shall use its reasonable efforts to give the
Buyer the benefit of it to the same extent as if it had been
assigned, and the Buyer shall perform the Seller's obligations
under the agreement relating to the benefit obtained by the
Buyer, and (2) the Seller and the Buyer shall continue to use
reasonable efforts to obtain such consent, at which time the
lease, commitment or agreement shall be assigned by the Seller to
the Buyer. Nothing in this agreement shall be construed as an
attempt to assign any agreement or other instrument that is by
its terms nonassignable without the consent of the other party.
The Seller shall use reasonable efforts (but shall not be
required to make any payment) to cause U.S. Computer Services
d/b/a Cabledata ("Cabledata") to permit the Buyer to assume the
On/Line Operating and License Agreement between the Seller and
Cabledata for a period designated by the Buyer up to six months
after the Closing Date. If the Seller is unable to obtain
Cabledata's agreement to the foregoing, the Seller shall
cooperate with the Buyer in all reasonable respects to enable the
Buyer to duplicate the information on the Cabledata billing
system and otherwise so that the Buyer will be able to begin
operations of the Systems on the Closing Date without the
Cabledata billing system; any costs incurred in doing the
foregoing shall be borne by the Buyer.
6.6 Sales Taxes. The Buyer and the Seller shall
each pay 50% of any state or local sales and use taxes payable in
connection with the sale of the Assets, and any documentary
transfer taxes or recording fees assessed in connection with a
sale of any parcel of the Real Property shall be paid by the
party who customarily pays such taxes or fees in the location of
such parcel of Real Property.
6.7 No Control. Between the date of this
agreement and the Closing, the Buyer shall not, directly or
indirectly, control, supervise or direct, or attempt to control,
supervise or direct, the operations of any of the Systems, but
such operations shall be solely the responsibility of the Seller,
and, subject to the provisions of section 6.2, shall be in its
complete discretion.
6.8 Employees. (a) Employment. The Buyer may
determine to which of the Seller's employees who perform services
for the Systems the Buyer wishes to offer employment and shall so
notify the Seller at least 30 days prior to the Closing Date.
The Buyer shall pay severance to any employee of the Seller who
performs services at the Systems (but not any employees of
MultiVision in Greenwich, Connecticut) if (a) the Buyer does not
employ such employee on the Closing Date, or (b) such employee's
employment by the Buyer is terminated by the Buyer within 180
days after the Closing Date under circumstances where the Seller
would be required under its severance policy to pay severance, in
either case in accordance with the Seller's general severance
policy described on schedule 4.14, and Seller shall pay any
severance obligation to any employee above the general severance
policy. In addition, Buyer shall provide accrued vacation to any
employee of the Seller that it employs, but Buyer shall have no
obligation to make any payment in lieu of vacation pay (and the
Seller shall make any such payment) to (a) any employee of the
Systems that it does not employ, (b) any employee who does not
take his or her accrued vacation, or (c) any employee whose
employment is terminated without him or her having taken the
accrued vacation. The Buyer shall give each of the employees of
the Systems that it employs past service credit for purposes of
eligibility and vesting under all employee benefit plans for
employees of the Buyer at or after the Closing (and past service
credit for all purposes, including the amount of benefits, under
the severance and vacation policies of the Buyer).
(b) Medical Benefits. The employees of the
Systems participate in the MultiVision medical plan. As of the
Closing Date, the Buyer shall provide all employees of the
Systems who become employees of the Buyer ("Covered Employees")
(and their dependents) with medical benefit coverage under
plan(s) maintained or established by the Buyer. The Buyer shall
cause its plan(s) to waive any pre-existing condition exclusions
and waiting periods (except to the extent that such exclusions
would have then applied or waiting periods were not satisfied
under MultiVision's medical plan) and to credit or otherwise
consider any monies paid (or accrued) under MultiVision's medical
plan by Covered Employees (or their dependents) prior to the
Closing Date toward any deductibles, co-pays or other maximums
under its plan(s) during the first plan year after the Closing
Date. The Buyer shall be responsible for satisfying its
obligations under Section 601 et seq. of ERISA and Section 4980B
of the Internal Revenue Code to provide continuation coverage
("COBRA") to any Covered Employee in accordance with law and
shall provide COBRA coverage to any employees or former employees
of the Systems not employed by the Buyer on the Closing Date to
the extent required by COBRA and the Buyer shall provide COBRA
coverage to the MultiVision employees in Greenwich, Connecticut,
terminated by MultiVision on September 30, 1994, all subject to
the proviso that such coverage shall only be to the extent of the
Buyer's then existing medical coverage.
(c) MultiVision 401(k) Plan. If the Seller
decides, in its sole discretion, to terminate the 401(k) Plan in
its entirety, the Buyer shall permit the employees of the Systems
who participate in the 401(k) Plan and who become employees of
the Buyer as of the Closing Date to rollover (whether by direct
trustee to trustee rollover or by indirect rollover, as selected
by such employee) their eligible rollover distributions from the
401(k) Plan to a tax-qualified retirement plan sponsored or
maintained by Buyer, in the manner set forth therein and subject
to any waiting period for participation (after taking into
account the recognition of prior service in accordance with
section 6.8(a) of this agreement).
6.9 Insurance. The Seller shall maintain all
insurance policies currently in effect with respect to the
Systems (or purchase policies providing similar coverage) until
the Closing Date.
of this agreement and the Closing Date, the Seller shall promptly
notify the Buyer in writing of any materially adverse
developments affecting the Systems which become known to the
Seller, including, without limitation, (i) any change in the
condition, financial or otherwise, of the Systems that could have
a Material Adverse Effect, (ii) any damage, destruction or loss
(whether or not covered by insurance) materially and adversely
affecting any of the Systems, or (iii) any notice of any
violation, forfeiture, or complaint under any of the Franchises
that might have a Material Adverse Effect.
6.11 Delivery of Financial Information. Promptly
after the preparation thereof, the Seller shall deliver to the
Buyer copies of any cash flow statements, financial reports,
subscriber counts and other operational data regularly prepared
by the Seller for its internal use, which shall be prepared based
on the books and records of the Systems. The Seller also shall
provide the Buyer on a periodic basis with reports of capital
expenditures made with respect to the Systems. At the request
and sole cost and expense of the Buyer, the Seller shall cause
its independent accountants to prepare separate audited financial
statements for the Northern Systems and the Southern Systems.
6.12 Property Tax Claim. The Seller, the Buyer
and seven other cable operators in Orange County, California are
parties to pending litigation against the Orange County Tax
Assessor and share the cost of the litigation. Promptly after
the Closing, the Buyer shall replace the Seller as a party to the
litigation, and shall bear the portion of the cost of the
litigation after the Closing previously borne by the Seller. The
Seller shall remain responsible for and pay its portion of the
costs of the litigation incurred during the period prior to the
Closing. The Buyer may elect to terminate its participation (on
its own behalf and on behalf of the Seller) in the litigation at
any time, but the Buyer shall give notice of its election to the
Seller so that the Seller may elect to reenter the litigation on
its own behalf. The Buyer shall pay to the Seller or cause the
tax assessor to pay to the Seller any refund of property taxes
(including possessory interests) resulting from the litigation or
otherwise, including, but not limited to, any refund resulting
from any settlement of property taxes with Napa, Sonoma, Los
Angeles, Solano or Orange Counties, that is payable with respect
to the period through the Determination Time.
6.13 Repayment of Bank Debt. If there is one
Closing, at the Closing, the Seller shall cause a portion of the
purchase price for the Assets to be applied to repay in full the
Seller's indebtedness that is secured by the Assets, and shall
cause the lenders to deliver UCC-3 termination statements and
satisfactions of mortgages releasing any liens on the Assets. If
there are two Closings, at the first Closing, the Seller shall
cause a portion of the purchase price for the Assets to be
transferred at the Closing to be applied to repay a portion of
the Seller's indebtedness that is secured by the Assets, and
shall cause the lenders to deliver UCC-3 termination statements
and satisfaction of mortgages releasing any liens on the Assets
to be transferred at the Closing.
6.14 Covenant Against Competition and Disclosure.
To accord to the Buyer the full value of its purchase, the Seller
shall not, and shall cause I. Martin Pompadur not to (i) for a
period of five years after the Closing Date, directly or
indirectly, engage or become interested in (as owner,
stockholder, partner, manager, employee or consultant) the
operation of any cable television system, MMDS System, SMATV
System, over-the-air or subscription television system or
service, pay television system of any kind or nature, whether now
or hereafter created, and/or multi-point distribution system, and
any other system for the transmission of both video and audio
signals, other than over so-called "free" television broadcast
over-the-air to a receiver for which no charge is made and other
than a direct broadcast satellite service (a "Competing System")
located within the municipalities or counties serviced by the
Systems transferred to the Buyer, provided, however, that nothing
in this clause (i) shall prohibit Mr. Pompadur from rendering
services to or having any interest in any entity if Mr. Pompadur
has no responsibility for the operation of, and provides no
services to, a Competing System or (ii) disclose to anyone, or
use in competition with the Systems transferred to the Buyer, any
information with respect to any confidential or secret aspect of
the operations of the Systems. The Seller acknowledges that the
remedy at law for breach of the provisions of this section 6.14
will be inadequate and that, in addition to any other remedy the
Buyer may have, it will be entitled to an injunction restraining
any such breach or threatened breach. If any court construes the
covenant in this section 6.14, or any part thereof, to be
unenforceable because of its duration of the area covered
thereby, the court shall have the power to reduce the duration or
area to the extent necessary so that the provision is
enforceable, and such provision, as reduced, shall then be
enforceable.
6.15 Litigations. The Seller shall retain, and
shall bear all costs of defending and any amounts payable with
respect to, the litigations entitled Roger Woods v. ML Media
Partners, L.P. and ML Media Partners, L.P. v. Interactive Cable
Systems, Inc. With respect to the Woods litigation, the Buyer
agrees that the Seller may in its sole discretion determine to
settle the litigation at any time, and that if the Seller settles
or loses the litigation, the Buyer will assume the lease with Mr.
Woods on the terms determined by the court (or no worse terms
than the terms upheld by the California Court of Appeals if the
Seller settles the litigation). With respect to the Interactive
litigation, the Buyer also agrees that the Seller may in its sole
discretion determine to settle the litigation at any time, in
which event the Systems may lose access to the apartment complex
subject to the litigation; provided, however, that the Buyer may
elect to assume the defense of this litigation at any time and
that prior to any settlement the Seller shall notify the Buyer of
the proposed settlement, and the Buyer may again elect, by notice
to Seller within 10 days, to assume the defense of the litigation
(if the Buyer assumes the defense of the litigation the Buyer
shall indemnify the Seller against any further loss, liability,
damage or expense relating to the litigation). If the
Interactive litigation is adversely determined or settled, the
Operating Cash Flow for the 12 month period(s) ending on the
applicable Calculation Date(s) shall be recalculated to exclude
any revenue and any expenses, including, but not limited to,
operating expenses and legal expenses relating to the litigation,
resulting from cable service to the apartment complex; if such
recalculation occurs after payment of the purchase price for the
Assets and would have reduced the purchase price for the Assets,
the Seller shall refund to the Buyer the amount of the reduction.
With respect to the litigation entitled Kirk v. ML
Media, which the Buyer shall assume on the applicable Closing
Date, the Seller shall from time to time pay to the Buyer an
aggregate amount up to $50,000 to reimburse the Buyer for legal
fees and expenses reasonably incurred by the Seller with respect
to that litigation.
date of this agreement, the Seller shall deliver to the Buyer a
list of all free services provided by the Seller in relation to
the Systems and the persons to whom such services are provided.
6.17 Notice to Municipal Authorities. Prior to a
Closing with respect to any Systems, the Seller shall notify the
Municipal Authorities that issued the Franchises for those
Systems that Potential Refund Liabilities are the Seller's
responsibility and that any other refund liabilities are the
Buyer's responsibility.
6.18 Purchase of Inventory. (a) At a Closing,
the Seller shall deliver to the Buyer a schedule setting forth
the items of inventory relating to the Systems to be transferred
at that Closing of which the Seller has in excess of a 60-day
supply. The Buyer shall have the option, exercisable by notice
given to the Seller at any time within 20 days after the Closing,
to pay to the Seller an amount to be agreed upon by the Buyer and
the Seller with respect to any of the items of inventory on that
schedule. If the Buyer does not elect to make a payment to the
Seller with respect to any such items of inventory, or the Buyer
and the Seller are unable to agree on the amount of that payment
within 10 days, then the Seller shall have the right, exercisable
by notice given to the Buyer at any time within 90 days after the
Closing, to require the Buyer to (1) execute any documents
reasonably requested by the Seller to effect the sale of any of
such items to any third party designated by the Seller on any
terms determined by the Seller, and (2) provide access to the
purchaser to pick up the items purchased. The purchase price for
the Assets shall be increased by an amount equal to the proceeds
from such sales, payable upon such sale.
(b) Within 10 days after the date of this
agreement, the Seller shall deliver to the Buyer a schedule
setting forth the items of inventory relating to all of the
Systems of which the Seller expects to have in excess of a 60-day
supply at the Closing for each System. Within 50 days after its
receipt of that statement, the Buyer shall notify the Seller as
to which items of inventory, if any, it intends to purchase at a
Closing under section 6.18(a), but in no event shall the Buyer be
obligated to make any such purchases.
6.19 List of Employees. Within 30 days after the
date of this agreement, the Seller shall deliver to the Buyer a
true and correct list, as of October 31, 1994, of the titles of
all officers and directors of the Seller employed within the
Systems and the salaries of all persons employed by the Seller
within the Systems.
6.20 Underground Storage Tank. Within 30 days
after the execution of this agreement, the Seller shall have an
investigation undertaken with respect to the underground storage
tank believed to be located at the Hermosa Beach office site
(and, if such investigation is inconclusive, such other testing
as the Seller and the Buyer mutually shall determine to be
reasonably necessary). If such investigation (or testing)
indicates that Substances have been released from the tank and
are present in the soil in quantities that violate applicable
environmental laws or that there is any other violation of
applicable environmental laws caused by or related to the tank,
the Seller shall have the tank removed from the site and shall
take whatever remedial actions are necessary to cause the site to
be in compliance with applicable environmental laws; provided,
that if the Seller receives a written estimate indicating that
the aggregate cost of such testing, removal and remediation would
exceed $200,000, the Buyer and the Seller shall negotiate an
allocation between them of the costs in excess of $200,000
(provided that neither the Seller nor the Buyer shall have any
obligation to agree to incur any such excess costs). If the
Buyer and the Seller are unable to agree on an allocation of the
excess costs within 15 days after the Buyer receives a copy of
the written estimate, then either party may terminate this
agreement by written notice to the other given within 15 days
thereafter; provided, however, that if within 10 days after the
date of the notice of termination the other party agrees to pay
any amount to remove the tank and remedy the site in excess of
$200,000, then the notice of termination shall be null and void.
6.21 Further Assurances. At any time and from
time to time after a Closing, each of the parties shall, without
further consideration, execute and deliver to the other such
additional instruments and shall take such other action as the
other may request to carry out the transactions contemplated by
this agreement. For a period of three years after a Closing,
each party shall grant the other reasonable access during normal
business hours upon reasonable prior notice to the books and
records of that party for the purpose of complying with any
applicable law or governmental rule or request relating to the
period during which the other party operated the Systems.
7. Conditions Precedent to Closing.
7.1 Conditions Precedent to the Obligations of
the Buyer. The Buyer's obligation to consummate the purchase
under this agreement of the Systems to be transferred at any
Closing is subject to the fulfillment, at or prior to the
Closing, of each of the following conditions (any of which may be
waived in writing by the Buyer):
(a) the representations and warranties of
the Seller under this agreement with respect to the Systems to be
transferred on the Closing Date shall be true at and as of the
Closing Date with the same effect as though those representations
and warranties had been made again at and as of that time, with
such exceptions as do not individually or in the aggregate have a
Material Adverse Effect;
(b) the Seller shall have performed and
complied in all material respects with all obligations, covenants
and conditions with respect to the Systems to be transferred on
the Closing Date required by this agreement to be performed or
complied with by it prior to or at the Closing;
(c) the Seller shall have duly received, if
the Southern Systems are being transferred, the Southern
Extensions, and if the Northern Systems are being transferred,
the Northern Extensions, without any condition, qualification or
change in the terms of any such Franchise that would have a
material adverse effect on the business, financial condition or
operations of any System;
(d) the Buyer shall have been furnished with
a certificate of the general partner of the Seller, dated the
Closing Date, in form and substance reasonably satisfactory to
the Buyer, certifying to the fulfillment of the conditions set
forth in sections 7.1(a) and (b);
(e) the Seller shall have delivered the
documents and instruments described in sections 8.1 and 8.3; and
(f) from the date of this agreement to the
Closing Date, there shall have been no fire, flood, explosion or
earthquake or other act of God that results in a material adverse
change in the business or assets (taken as a whole) of the
Systems as of the Closing Date.
7.2 Conditions Precedent to the Obligations of
the Seller. The Seller's obligation to consummate the sale under
this agreement of the Systems to be transferred at any Closing is
subject to the fulfillment, at or prior to the Closing, of each
of the following conditions (any of which may be waived in
writing by the Seller):
(a) payment by the Buyer of the amount
payable at that Closing in accordance with section 2.3;
(b) the representations and warranties of
the Buyer under this agreement shall be true at and as of the
Closing Date with the same effect as though those representations
and warranties had been made again at and as of that time, with
such exceptions as do not in the aggregate have a material
adverse effect on the ability of the Buyer to consummate the
transactions contemplated by this agreement;
(c) the Buyer shall have performed and
complied in all material respects with all obligations, covenants
and conditions with respect to the Systems to be transferred on
the Closing Date required by this agreement to be performed or
complied with by the Buyer prior to or at the Closing;
(d) the Seller shall have been furnished
with a certificate of an officer of the Buyer, dated the Closing
Date, in form and substance reasonably satisfactory to the
Seller, certifying to the fulfillment of the conditions set forth
in sections 7.2(b) and (c); and
(e) The Buyer shall have delivered the
documents and instruments described in sections 8.2 and 8.3.
7.3 Conditions Precedent to Each Party's
Obligations. The respective obligations of the Buyer and the
Seller to consummate the transactions contemplated by this
agreement at any Closing are subject to the fulfillment, at or
prior to the Closing, of each of the following conditions:
(a)(i) The Commission and the Municipal
Authorities shall have given all requisite approvals and consents
to the assignment to the Buyer of the Franchises (and related FCC
licenses) for the Systems to be transferred on the Closing Date
(or no such approvals or consents shall be required), without any
condition, qualification or change that would have a material
adverse effect on the business, financial condition or operations
of any System or that would be materially adverse to the Seller
or the Buyer. Where a Franchise requires that the applicable
Municipal Authority approve or consent to its assignment to the
Buyer, the approval or consent shall be deemed to have been
obtained when (i) the Municipal Authority has taken all actions
necessary to consent to the transfer (including, but not limited
to, the passage of all necessary resolutions, orders, ordinances,
agreements or similar actions) and such consent is final and
effective, or (ii) the Municipal Authority, pursuant to the 1992
Act and applicable Commission rules, either fails to act or
elects to take no action within 120 days of receiving an
application for assignment of the franchise on FCC Form 394.
(ii) The required consents of the FCC
shall be deemed obtained when they have become Final Orders. For
purposes of this agreement, "Final Order" shall mean action by
the Commission (a) which has not been vacated, reversed, stayed,
set aside, annulled or suspended, and (b) with respect to which
no appeal, request for stay, or petition for rehearing,
reconsideration or review by any party or by the Commission on
its motion, is pending, and as to which the time for filing any
such appeal, request, petition, or similar document for the
reconsideration or review by the Commission on its own motion
under the express provisions of the Communications Act of 1934
and the rules and regulations of the Commission, has expired (or
if any such appeal, request, petition or similar document has
been filed, a Commission order has been upheld in a proceeding
pursuant thereto and no additional review or reconsideration may
be sought).
(b) There shall not be in effect an
injunction or restraining order issued by a court of competent
jurisdiction in an action or proceeding against the consummation
of the transactions contemplated by this agreement and no action
or proceeding brought by any governmental authority shall be
pending that may result in a judgment, decree or order that would
prevent or make unlawful the consummation of the transactions
under this agreement.
(c) All applicable waiting periods under the
HSR Act with respect to the transactions contemplated by this
agreement shall have expired or been terminated.
8. Transactions at the Closings.
8.1 Documents to be Delivered by the Seller. At
each Closing, the Seller shall deliver to the Buyer the
following:
(a) bills of sale, assignments, deeds or
other instruments of transfer and assignment transferring to the
Buyer the Assets relating to the Systems to be transferred at
that Closing, all in form and substance reasonably satisfactory
to the Buyer and its counsel;
(b) a copy of resolutions of the general
partner of the Seller authorizing the execution, delivery and
performance of this agreement by the Seller, and a certificate of
the general partner of the Seller dated the Closing Date, that
such resolutions were duly adopted and are in full force and
effect on the Closing Date;
(c) the certificate referred to in section
7.1(d);
(d) copies of all consents and approvals
received pursuant to section 6.5 relating to the Systems to be
transferred at that Closing; and
(e) an opinion of Proskauer Rose Goetz &
Mendelsohn, counsel to the Seller, in substantially the form of
exhibit 8.1(e)(1), and an opinion of Wiley, Rein & Fielding, FCC
counsel to the Seller, in substantially the form of exhibit
8.1(e)(2).
8.2 Documents to be Delivered by the Buyer. At
each Closing, the Buyer shall deliver to the Seller the
following:
(a) wire transferred funds in the amount
provided in section 2.3(d) (and the Seller shall also deliver to
the Escrow Agent wire transferred funds in the amounts provided
in section 2.3(a) and, if applicable, section 2.3(b));
(b) instruments, in form and substance
reasonably satisfactory to the Seller and its counsel, pursuant
to which the Buyer shall assume the Assumed Liabilities, Contract
Liabilities and Other Liabilities with respect to the Systems to
be transferred at that Closing as provided in section 2.2(a);
(c) a copy of resolutions of the Buyer
authorizing the execution, delivery and performance of this
agreement by the Buyer, and a certificate of the secretary or an
assistant secretary of the Buyer, dated the Closing Date, that
such resolutions were duly adopted and are in full force and
effect on the Closing Date;
(d) the certificate referred to in section
7.2(d);
(e) an opinion of Leavy Rosensweig & Hyman,
counsel to the Buyer, in substantially the form of exhibit
8.2(e); and
(f) if applicable, the Letter of Credit.
8.3 Documents to be Delivered by the Seller and
the Buyer. At the first (or only) Closing, the Seller and the
Buyer shall each execute the Indemnity Escrow Agreement and, if
applicable, the Potential Refund Escrow Agreement.
9. Survival of Representations and Warranties;
Indemnification.
9.1 Survival. All representations and warranties
by the Seller and the Buyer in this agreement shall survive the
Closing. The Seller shall not, however, have any liability for
misrepresentation or breach of warranty, covenant or agreement
with respect to the transfer of any System except to the extent
that notice of a claim is asserted in writing and delivered to
the Seller not later than 12 months after the Closing Date for
the transfer of that System. The consummation by the Seller or
the Buyer of the purchase and sale contemplated by this agreement
with knowledge of a misrepresentation or breach of warranty by
the other party shall be considered a waiver of any claim with
respect to that misrepresentation or breach of warranty.
9.2 Indemnification. Subject to sections 9.1 and
9.3, the Seller shall indemnify and hold harmless the Buyer
against all loss, liability, damage or expense (including the
reasonable fees and expenses of counsel) (together, "Losses"),
that the Buyer may suffer, sustain or become subject to as a
result of (a) any misrepresentations by the Seller or breach by
the Seller of any warranties, covenants or other agreements
contained in this agreement, (b) the failure by the Seller to
perform any of its obligations under this agreement, (c) any
Other Liabilities or Excluded Liabilities, (d) any Potential
Refund Liability, or (e) any claims asserted or any penalties
payable as a result of the Seller's failure to carry any
broadcast signal in violation of the must-carry provisions of
Section 614 of the 1992 Act and the regulations promulgated
thereunder; provided, however, that the Seller shall not be
liable for misrepresentations or breach of any warranty, covenant
or agreement under this agreement, unless the aggregate amount of
the Losses incurred as a result of all such misrepresentations
and breaches of warranty, covenant or agreement exceeds the sum
of $250,000 (or $125,000 if only the Northern Systems or the
Southern Systems are transferred), in which event the Seller
shall be liable for the full amount of such Losses. In
calculating any damage to the Buyer (a) the Seller shall receive
credit for any reduction in cash tax liability and (b) no amount
shall be included except for the Buyer's actual out-of-pocket
costs and expenses. The Buyer shall indemnify and hold harmless
the Seller against all Losses that the Seller may suffer, sustain
or become subject to as a result of (a) any misrepresentation by
the Buyer or breach by the Buyer of any warranties, covenants or
other agreements contained in this agreement or (b) any Assumed
Liabilities or Contract Liabilities.
9.3 Limitation on Liability. Notwithstanding
anything to the contrary in this agreement, the aggregate
liability of the Seller to the Buyer for indemnification or
otherwise under this agreement shall be limited solely to the
funds held in the Indemnity Escrow Account and the Buyer shall
have no other recourse against the Seller with respect to such
indemnity obligations or otherwise arising under this agreement;
provided, however, that the Seller shall make any payment based
on the final determination of the adjustments to the Base Amount
pursuant to section 2.3(e) or with respect to the Potential
Refund Liability and shall reimburse Buyer for any payments by
Buyer to third parties with respect to any Excluded Liabilities
or for any payments by Buyer in lieu of vacation pay pursuant to
section 6.8(a), in each case without regard to the "basket" in
section 9.2 or the limitation in this section 9.3.
9.4 Conditions of Indemnification for Third Party
Claims. The obligations and liabilities of the parties under
this agreement with respect to, as a result of, or relating to
claims of third parties (individually, a "Third Party Claim" and
collectively "Third Party Claims"), shall be subject to the
following terms and conditions:
(a) The party entitled to be indemnified
hereunder (the "Indemnified Party") shall give the party
obligated to provide the indemnity (the "Indemnifying Party")
prompt notice of any Third Party Claim, and the Indemnifying
Party may undertake the defense of that claim by representatives
chosen by it. Any such notice of a Third Party Claim shall
identify with reasonable specificity the basis for the Third
Party Claim, the facts giving rise to the Third Party Claim, and
the amount of the Third Party Claim (or, if such amount is not
yet known, a reasonable estimate of the amount of the Third Party
Claim). The Indemnified Party shall make available to the
Indemnifying Party copies of all relevant documents and records
in its possession.
(b) If the Indemnifying Party, within 30
days after notice of any such Third Party Claim, fails to assume
the defense in accordance with section 9.4(a), the Indemnified
Party shall (upon further notice to the Indemnifying Party) have
the right to undertake the defense, compromise or settlement of
the Third Party Claim, subject to the right of the Indemnifying
Party to assume the defense of such Third Party Claim at any time
prior to settlement, compromise or final determination thereof;
provided, however, that at the time of the assumption of defense
the Indemnifying Party shall reimburse the Indemnified Party for
its reasonable, actual, documented out-of-pocket expenses
incurred prior to the assumption of defense by the Indemnifying
Party.
(c) Anything in this section 9.4 to the
contrary notwithstanding, (i) the Indemnifying Party shall not,
without the written consent of the Indemnified Party, settle or
compromise any Third Party Claim or consent to the entry of
judgment which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the Indemnified
Party of an unconditional release from all liability in respect
of the Third Party Claim; and (ii) if there is a reasonable
probability that a claim may materially and adversely affect the
Indemnified Party other than as a result of money damages or
other money payments, the Indemnified Party shall have the right,
at its own cost and expense, to participate in the defense of the
Third Party Claim (control of the defense to remain with the
Indemnifying Party).
9.5 Post Closing Payments. (a) If after a
Closing it is finally determined (as defined in section
2.2(d)(iii)), that the Base Amount for the Systems that are
transferred to the Buyer at that Closing would have been reduced
as a result of an A la Carte Revenue Loss as provided in section
2.2(d) by an amount less than the Letter of Credit Amount, then
the Seller shall be entitled to draw on the Letter of Credit in
an amount equal to the sum of (a) that difference, less if all of
the Systems are transferred (b) the difference, if any, between
$260,000,000 and what the Base Amount would have been if the
Buyer had not made the election pursuant to the proviso in
section 10.1(e) or 10.2.
(b) If after a Closing it is finally
determined that (1) the basic rates reflected in the Form 393's
or 1200's filed by the Seller referred to in section 2.2(d)(ii)
were calculated incorrectly or in violation of Existing
Governmental Regulations, (2) any inflationary increase or
external cost "pass-through" referred to in section 2.2(d)(v) is
disapproved, or (3) any increase in rates for basic service or
tier service implemented by Seller pursuant to section 6.2 were
not valid, then the Operating Cash Flow shall be recalculated and
the Seller shall refund to the Buyer any reduction in the Base
Amount as a result of the recalculation.
10. Termination.
10.1 Termination. Except with respect to
provisions which expressly survive termination and the payment of
any amount owed by one party to the other for the prior
performance of certain obligations under this agreement, this
agreement may be terminated:
(a) by written agreement of the Buyer and
the Seller;
(b) by the Buyer or the Seller by notice to
the other, if at any time any event shall have occurred or any
state of facts shall exist that renders any of the conditions to
the obligations of the other party provided in this agreement
impossible to fulfill;
(c) by the Buyer as provided in section 11;
(d) by the Buyer or the Seller as provided
in section 6.20; or
(e) by the Seller, by notice to the Buyer,
given within 30 days after the end of any calendar month prior to
the first Closing, if as of the last day of that calendar month
the Operating Cash Flow of the Systems for the 12-month period
ending on that day was less than $23,181,818, or by the Seller by
notice to the Buyer given after the applicable Calculation Date
if the Operating Cash Flow of the Systems for the 12-month period
ending on the Calculation Date was less than $23,636,363 (taking
into account, for this purpose only, the maximum possible
reduction in Operating Cash Flow resulting from a possible A la
Carte Revenue Loss, which shall be an amount equal to $2,181,818
reduced by $1,454,545 for the Northern Systems and/or $727,273
for the Southern Systems for which there has been a final
determination that there will be no A La Carte Revenue Loss for
all of those Systems (or if there has been a final determination
that the maximum reduction from an A la Carte Revenue Loss for
all of those Systems is less than $1,454,545 or $727,273, as the
case may be, the difference in those amounts)); provided,
however, that if within 15 days after the date of the notice of
termination from the Seller the Buyer agrees that the Base Amount
shall not be reduced below $260,000,000 regardless of the
Operating Cash Flow of the Systems for the 12-month period ending
on the Calculation Date(s), then the notice of termination shall
be null and void.
10.2 Termination of Second Closing. The parties'
obligations with respect to any Systems not transferred at a
first Closing may be terminated by the Seller, by notice to the
Buyer, given within 30 days after the end of any calendar month
after the first Closing and prior to the second Closing, if as of
the last day of that calendar month the sum of the Operating Cash
Flow of the Systems transferred at the first Closing for the 12-
month period ending on the applicable Calculation Date and the
Operating Cash Flow for the remaining Systems for the 12-month
period ending on the last day of that calendar month was less
than $23,181,818 (including, for this purpose only, the maximum
reduction in Operating Cash Flow resulting from a possible A la
Carte Revenue Loss determined as set forth in section 10.1(e));
provided, however, that (1) the Seller may not give such notice
if the Buyer previously agreed pursuant to the proviso in section
10.1(e) that the Base Amount shall not be reduced below
$260,000,000, and (2) if within ten days after the date of the
notice of termination from the Seller the Buyer agrees that the
Base Amount shall not be reduced below $260,000,000 regardless of
the Operating Cash Flow of the Systems to be transferred at the
second Closing, then the notice of termination shall be null and
void.
10.3 Liability. The termination of this
agreement under section 10.1(b) or (c) or under section 6.20
shall not relieve any party of any liability for breach of this
agreement prior to the date of termination.
11. Risk of Loss; Damage to Facilities. The risk of
loss or damage to any of the Assets shall be on the Seller prior
to the Determination Time and thereafter shall be on the Buyer.
If any of the Assets is damaged or destroyed prior to the
Determination Time (any such event being referred to as an "Event
of Loss"), the Seller shall, at its expense, use reasonable
efforts to replace or repair the item with comparable property of
like value and quality as soon as possible before the
Determination Time. If any Event of Loss prior to the
Determination Time shall materially affect the operations of the
Systems and repair or replacement cannot be accomplished by the
Closing Date but can be accomplished within 120 days after that
date, the Closing Date shall be postponed for up to that 120-day
period; if, however, the repair or replacement cannot be
accomplished within that 120-day period, the Buyer may elect by
written notice to the Seller within 20 days after the Buyer has
received notice that an Event of Loss has occurred and that
repair and replacement cannot be so completed:
(a) to fulfill its obligations under this
agreement, close the transaction on the Closing Date designated
by the Seller in accordance with section 3.1 and accept the
Assets as is (in which event, any insurance proceeds payable to
the Seller with respect to the Event of Loss shall be assigned to
the Buyer, except to the extent the Seller has applied such
proceeds to repair, replace or restore the property); or
(b) to terminate this agreement without
liability.
If the date of the Closing is postponed beyond the time
specified in section 3.2, the parties shall amend their
application or applications to the Commission to request an
extension on the date of Closing.
12. Miscellaneous.
12.1 Notices. Any notice or other communication
under this agreement shall be in writing and shall be considered
given when delivered personally or by facsimile machine, one day
after being given to a nationally recognized overnight delivery
service or four days after being mailed by registered mail,
return receipt requested, to the parties at the addresses set
forth below (or at such other address as a party may specify by
notice to the other):
if to the Buyer, to it at:
50 Locust Avenue
New Canaan, Connecticut 06840
Att: President
Fax: (203) 972-2013
with a copy to:
Leavy Rosensweig & Hyman
11 East 44th Street
New York, New York 10017
Att: David Z. Rosensweig, Esq./General Counsel
Fax: (212) 983-2537
if to the Seller, to it at:
ML Media Partners, L.P.
350 Park Avenue
New York, New York 10022
Att: I. Martin Pompadur
Fax: (212) 980-8374
with a copy to:
Proskauer Rose Goetz & Mendelsohn
1585 Broadway
New York, New York 10036
Att: Lawrence H. Budish, Esq.
Fax: (212) 969-2900
12.2 Finders. Each of the Buyer and the Seller
represents and warrants to the other that it has not retained or
dealt with any broker or finder in connection with the
transactions contemplated by this agreement except for Daniels &
Associates and Merrill Lynch & Co., and Seller shall be
responsible for any fee payable to each of them.
12.3 Entire Agreement. This agreement, including
the schedules and exhibits, contains a complete statement of all
the arrangements between the parties with respect to its subject
matter, supersedes any previous agreement among them relating to
that subject matter, and cannot be changed or terminated orally.
Except as specifically set forth in this agreement, there are no
representations or warranties by either party in connection with
the transactions contemplated by this agreement.
12.4 Headings. The section headings of this
agreement are for reference purposes only and are to be given no
effect in the construction or interpretation of this agreement.
12.5 Governing Law. This agreement shall be
governed by and construed in accordance with the law of the State
of New York applicable to agreements made and to be performed in
New York.
12.6 Separability. If any provision of this
agreement is invalid or unenforceable, the balance of this
agreement shall remain in effect.
12.7 Publicity. Except as required by applicable
law, no party shall issue any press release or other public
statement regarding the transactions contemplated by this
agreement without consulting with the other party and obtaining
the other party's approval of the contents of the press release
or public statement. Each party acknowledges that the other is a
publicly held entity and is subject to the disclosure
requirements of the Federal securities laws.
12.8 Jurisdiction. The courts of the State of New
York in New York County and the United States District Court for
the Southern District of New York shall have jurisdiction over
the parties with respect to any dispute or controversy between
them arising under or in connection with this agreement and, by
execution and delivery of this agreement, each of the parties to
this agreement submits to the jurisdiction of those courts,
including, but not limited to, the in personam and subject matter
jurisdiction of those courts, waives any objection to such
jurisdiction on the grounds of venue or forum non conveniens, the
absence of in personam or subject matter jurisdiction and any
similar grounds, consents to service of process by mail (in
accordance with section 12.1) or any other manner permitted by
law, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this agreement. These consents to
jurisdiction shall not be deemed to confer rights on any person
other than the parties to this agreement.
12.9 Assignment. No party may assign any of its
rights or delegate any of its duties under this agreement, by
operation of law or otherwise, without the consent of the other;
provided, however, that the Buyer may at any time prior to the
parties' making the filings referred to in section 6.1(a) assign
its rights and obligations hereunder to one or more entities that
directly or indirectly control, are controlled by, or are under
common control with the Buyer without the consent of the Seller
so long as the Buyer remains responsible for its obligations
under this agreement and the assignee makes the representations
and warranties in sections 5.1 through 5.4.
12.10 Counterparts. This agreement may be
executed in any number of counterparts which together shall
constitute one and the same instrument.
CENTURY COMMUNICATIONS CORP.
By:__________________________________
<PAGE>
ML MEDIA PARTNERS, L.P.
By: MEDIA MANAGEMENT PARTNERS, its
general partner
By: RP MEDIA MANAGEMENT, a general
partner
By: IMP MEDIA MANAGEMENT, INC., its
managing general partner
By:__________________________________
The undersigned, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
agrees to be bound by the restrictive covenant set forth in
section 6.14 of the above agreement to the same extent as if he
were a party to such agreement.
________________________________
I. Martin Pompadur
Dated: November 28, 1994
