1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 2001.
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
Securities Exchange Act of 1934
For the Transition Period From ______ to ______.
.
Commission File Numbers:
333-75415
333-75415-03
CC V Holdings, LLC*
(formerly known as Avalon Cable LLC)
CC V Holdings Finance, Inc.*
(formerly known as Avalon Cable Holdings Finance, Inc.)
------------------------------------------------------
(Exact names of registrants as specified in their charters)
Delaware 13-4029965
Delaware 13-4029969
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12444 Powerscourt Drive - Suite 100
St. Louis, Missouri 63131
------------------------------------ ------
(Address of principal executive offices) (Zip Code)
(314) 965-0555
--------------
(Registrants' telephone number, including area code)
Indicate by check mark whether the registrants: (1) have filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No
-- --
2
Indicate the number of shares outstanding of each of the issuers' classes of
common stock, as of the latest practicable date:
All of the issued and outstanding shares of capital stock of CC V
Holdings Finance, Inc. are held by CC V Holdings, LLC. All of the
limited liability company membership interests of CC V Holdings,
LLC are held by Charter Communications Holdings, LLC, a reporting
company under the Exchange Act. There is no public trading market
for any of the aforementioned limited liability company
membership interests or shares of capital stock.
* CC V Holdings, LLC and CC V Holdings Finance, Inc. meet the conditions set
forth in General Instruction (H) (1)(a) and (b) of Form 10-Q and are therefore
filing this Form with the reduced disclosure format.
3
CC V HOLDINGS, LLC
CC V HOLDINGS FINANCE, INC.
---------------------------
FORM 10-Q - FOR THE QUARTER ENDED March 31, 2001
INDEX
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Page
Part I. Financial Information -----
---------------------
Item 1. Financial Statements - CC V Holdings, LLC and Subsidiaries. 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. 10
Part II. Other Information
-----------------
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K. 14
Signatures. 15
Note: Separate financial statements of CC V Holdings Finance, Inc. have not been
presented as this entity had no operations and substantially no assets or
equity. Accordingly, management has determined that such financial statements
are not material.
4
PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements.
CC V Holdings, LLC and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
March 31, 2001 December 31, 2000
-------------- -----------------
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 10,856 $ 11,232
Accounts receivable, less allowance for doubtful
accounts of $1,416 and $1,948, respectively 9,136 12,464
Prepaid expenses and other 1,010 1,021
---------- ----------
Total current assets 21,002 24,717
========== ==========
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated
depreciation of $125,970 and $140,234, respectively 640,438 712,186
Franchises, net of accumulated amortization of $249,274 and
$245,433, respectively 3,250,617 3,812,341
---------- ----------
3,891,055 4,524,527
---------- ----------
OTHER ASSETS 7,400 4,358
---------- ----------
$3,919,457 $4,553,602
========== ==========
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 148,051 $ 221,469
Payable to manager -- 896,277
---------- ----------
Total current liabilities 148,051 1,117,746
---------- ----------
LONG-TERM DEBT 1,141,594 1,058,224
OTHER LONG-TERM LIABILITIES 10,294 13,691
MINORITY INTEREST 643,685 640,526
MEMBER'S EQUITY - 100 units issued and outstanding 1,975,833 1,723,415
---------- ----------
$3,919,457 $4,553,602
========== ==========
The accompanying notes are an integral part of these consolidated statements.
- -----------
4
5
CC V Holdings, LLC and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands)
Three Months Ended Three Months Ended
March 31, 2001 March 31, 2000
------------------- -------------------
REVENUES $ 121,061 $ 85,093
------------------- -------------------
OPERATING EXPENSES:
Operating, general and administrative 65,147 45,171
Depreciation and amortization 116,135 71,894
Corporate expense charges - related parties 1,951 688
------------------- -------------------
183,233 117,753
------------------- -------------------
Loss from operations (62,172) (32,660)
OTHER INCOME (EXPENSE):
Interest expense (25,829) (22,425)
Interest income 1 --
Other, net (110) 11
------------------- -------------------
(25,938) (22,414)
Loss before minority interest (88,110) (55,074)
Minority interest (3,159) (1,552)
------------------- -------------------
Net loss $ (91,269) $ (56,626)
=================== ===================
The accompanying notes are an integral part of these consolidated statements.
5
6
CC V Holdings, LLC and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
Three Months Ended Three Months Ended
March 31, 2001 March 31, 2000
------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (91,269) $ (56,626)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization 116,135 71,894
Minority interest in loss of subsidiary 3,159 1,552
Non-cash interest expense 3,620 3,655
Changes in assets and liabilities, net of effects from dispositions:
Accounts receivable 2,021 (9,144)
Prepaid expenses and other (3,968) 1,441
Accounts payable and accrued expenses (36,045) 13,032
Payables to manager of cable systems - related parties 10,484 7,210
Other operating activities (3,398) --
------------------ ------------------
Net cash provided by operating activities 739 33,014
------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (69,042) (16,931)
Other investing activities (4) --
------------------ ------------------
Net cash used in investing activities (69,046) (16,931)
------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt 1,030,000 181,000
Repayments of long-term debt (950,135) (127,128)
Loans to related parties -- (42,000)
Payments for debt issuance costs (4,246) --
Other (7,688) --
------------------ ------------------
Net cash provided by financing activities 67,931 11,872
------------------ ------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS (376) 27,955
CASH AND CASH EQUIVALENTS, beginning of period 11,232 6,806
------------------ ------------------
CASH AND CASH EQUIVALENTS, end of period $ 10,856 $ 34,761
================== ==================
NON-CASH TRANSACTIONS:
Contribution from parent of intercompany receivable recorded as
equity contribution $ 394,801 $ --
================== ==================
Transfer of cable systems to other Charter Holdings
subsidiaries $ 578,448 $ --
================== ==================
Payment by parent company of long-term debt recorded as equity
contribution
$ -- $ 159,910
================== ==================
Contribution of cable systems to the Company $ -- $ 13,006
================== ==================
The accompanying notes are an integral part of these consolidated statements.
6
7
CC V HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except where indicated)
1. Organization
On November 15, 1999, Charter Communications Holding Company, LLC (Charter
Holdco), a direct subsidiary of Charter Communications, Inc. (Charter), acquired
all of the equity interests of Avalon Cable, LLC (now known as CC V Holdings or
the Company) and Avalon Cable Holdings Finance, Inc. Effective January 1, 2000,
these acquired interests were transferred to Charter Communications Holdings,
LLC (Charter Holdings), a wholly owned subsidiary of Charter Holdco.
Effective in December 2000, Charter Holdings contributed all of its equity
interests in CC VIII, LLC (Bresnan) to CC V Holdings, resulting in CC V Holdings
becoming the parent of Bresnan. The Company accounted for the contribution of
Bresnan as a reorganization of entities under common control in a manner similar
to a pooling of interests. Accordingly, the accounts of Bresnan are included in
the consolidated financial statements from February 15, 2000, the date Bresnan
was first acquired by Charter Holdco. The accompanying consolidated financial
statements include the accounts of CC V Holdings, its wholly owned subsidiaries,
and the accounts of Bresnan since February 15, 2000 (the date acquired by
Charter Holdco). CC V Holdings is a Delaware limited liability company. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
Effective on January 2, 2001, the Company entered into certain cable
system swap transactions with other subsidiaries of Charter Holdings. Such cable
systems swaps were effected in order to increase operational efficiency by
swapping systems into the subsidiaries, which are physically located closest to
them. The Company accounted for the systems transferred into the Company from
other Charter Holdings subsidiaries as a reorganization of entities under common
control in a manner similar to a pooling of interests. Accordingly, beginning on
November 15, 1999, the date the Company was acquired by Charter Holdco, the
consolidated financial statements of CC V Holdings include the accounts of four
systems that were transferred into the Company from other Charter Holdings
subsidiaries. Also, on January 2, 2001, the Company transferred five of its
systems to other Charter Holdings as part of the swap transactions. The
disposition of such systems by the Company was recorded as a non-cash
transaction with related parties in the three months ended March 31, 2001.
As of March 31, 2001, the Company owns and operates cable systems serving
approximately 907,000 (unaudited) customers. The Company currently offers a full
array of traditional analog cable services and advanced bandwidth services such
as digital television, interactive video programming, Internet access through
television-based service, dial-up telephone modems and high speed cable modems,
and video-on-demand. The Company operates primarily in the states of Michigan,
Minnesota and Wisconsin and in the New England area.
2. Responsibility for Interim Financial Statements
The accompanying consolidated financial statements of the Company have
been prepared in accordance with the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
7
8
The accompanying consolidated financial statements are unaudited; however,
in the opinion of management, such statements include all adjustments, which
consist of only normal recurring adjustments, necessary for a fair presentation
of the results for the periods presented. Interim results are not necessarily
indicative of results for a full year. For further information, see the
Company's Annual Report on Form 10-K for the year ended December 31, 2000.
3. Acquisitions
In February 2000, Charter Holdings acquired certain cable systems for
$13.0 million and contributed those assets to the Company, increasing equity by
$13.0 million. The systems acquired serve approximately 6,000 (unaudited)
customers located in Minnesota at December 31, 2000. In September 2000, Bresnan
acquired cable systems for a purchase price of $13.2 million. These systems
acquired serve approximately 7,100 (unaudited) customers located in Minnesota at
December 31, 2000. These acquisitions were accounted for using the purchase
method of accounting, and, accordingly, results of operations of the acquired
systems have been included in the accompanying consolidated financial statements
from the date of acquisition. The purchase price was allocated to assets
acquired and liabilities assumed based on their fair values, including amounts
assigned to franchises of $21.5 million.
In February 2000, Charter Holdco acquired the cable systems of Bresnan and
immediately transferred its equity in these cable systems to Charter Holdings
(the "Bresnan Acquisition"). In December 2000, Charter Holdings contributed all
of its equity interests in Bresnan to CC V Holdings (the "Bresnan/Avalon
Combination"), increasing equity by $1.4 billion (See Note 1). Charter Holdco
acquired these cable systems for a purchase price of approximately $1.1 billion,
net of cash acquired, excluding debt assumed of $963.0 million and equity issued
by Charter Holdco and preferred equity issued by a subsidiary of Charter
Holdings of $384.6 million and $629.5 million, respectively. Charter Holdco
allocated the purchase price to assets acquired and liabilities assumed based on
their relative fair values, including amounts assigned to franchises of $2.8
billion. In connection with the Bresnan/Avalon Combination, the company with the
preferred equity became a subsidiary of the Company.
Unaudited pro forma operating results as though the 2000 acquisitions
discussed above, the Bresnan/Avalon Combination, the dispositions of five cable
systems to other Charter Holdings subsidiaries as discussed in Note 1, with
adjustments to give effect to amortization of franchises, interest expense and
certain other adjustments are as follows:
Three Months Ended
March 31,
2000
----
Revenues..................................... $120,061
Loss from operations......................... (38,967)
Net loss..................................... (70,258)
The unaudited pro forma financial information presented for
comparative purposes and does not purport to be indicative of the results of
operations had these transactions been completed as of the assumed date
or which may be obtained in the future.
8
9
4. Long term debt
In connection with the Bresnan/Avalon combination in January 2001, all
amounts due under the Avalon credit facilities were repaid using borrowings from
the Bresnan credit facilities and the Avalon credit facilities were terminiated.
In addition, the Bresnan credit facilities were amended and restated to, among
other things, increase borrowing availability by $550 million.
Long term debt consists of the following:
March 31, December 31,
2001 2000
----------- ------------
CCVIII Operating credit facility
(Bresnan) $1,005,000 $712,400
CCV Holdings (Avalon) senior
discount notes 135,677 131,273
Avalon credit facility -- 213,000
Other 917 1,551
---------- ----------
$1,141,594 $1,058,224
========== ==========
5. Litigation
In connection with the Company's acquisition of Mercom, Inc. (Mercom),
former Mercom shareholders holding approximately 731,894 Mercom common shares
(approximately 15.3% of all outstanding Mercom common shares) gave notice of
their election to exercise appraisal rights as provided by Delaware law. On July
2, 1999, former Mercom shareholders holding 535,501 shares of Mercom common
stock filed a petition for appraisal of stock in the Delaware Chancery Court.
With respect to 209,893 of the total number of shares for which the Company
received notice, the notice provided to the Company was received from beneficial
holders of Mercom shares who were not holders of record. The Company believes
that the notice with respect to these shares did not comply with Delaware law
and is ineffective.
The Company cannot predict at this time the effect of the elections to
exercise appraisal rights on the Company since the Company does not know the
extent to which these former Mercom shareholders will continue to pursue
appraisal rights under Delaware law or choose to abandon these efforts and seek
to accept the consideration payable in the Mercom merger. If these former Mercom
shareholders continue to pursue their appraisal rights, and if a Delaware court
were to find that the fair value of the Mercom common shares, exclusive of any
element of value arising from the acquisition of Mercom, exceeded $12.00 per
share, the Company would have to pay the additional amount for each Mercom
common share subject to the appraisal proceedings together with a fair rate of
interest. The Company could be ordered by the Delaware court also to pay
reasonable attorney's fees and the fees and expenses of experts for the
shareholders. In addition, the Company would have to pay its own litigation
costs. The Company has already provided for the consideration of $12.00 per
Mercom common share due under the terms of the merger with Mercom with respect
to these shares but has not provided for any additional amounts or costs. The
Company can provide no assurance as to what a Delaware court would find in any
appraisal proceeding or when this matter will be resolved. Accordingly, the
Company cannot assure that the ultimate outcome would have no material adverse
impact on the consolidated financial condition or results of operations of the
Company.
9
10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Cautionary Statement Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of the
Securities Exchange Act of 1934, as amended, and of the Securities Act of 1933,
as amended, and is subject to the safe harbors created by those acts. The
Company's actual results could differ materially from those discussed herein,
and its current business plans could be altered in response to market conditions
and other factors beyond the Company's control. The forward-looking statements
within this Form 10-Q are identified by words such as "believes," "anticipates,"
"expects," "intends," "may," "will" and other similar expressions. However,
these words are not the exclusive means of identifying such statements. In
addition, any statements that refer to expectations, projections or other
characterizations of future events or circumstances are forward-looking
statements. The Company undertakes no obligation to release publicly the results
of any revisions to these forward-looking statements that may be made to reflect
events or circumstances occurring subsequent to the filing of this Form 10-Q
with the SEC.
Important factors that could cause actual results to differ materially
from the forward-looking statements contained herein include, but are not
limited to, the following:
o general economic and business conditions, both nationally and in the regions
where the Company operates;
o anticipated capital expenditures for planned upgrades and the ability to
fund these expenditures;
o technology changes;
o the Company's ability to effectively compete in a highly competitive
environment;
o changes in business strategy or development plans;
o beliefs regarding the effects of governmental regulation on the Company's
business;
o the ability to attract and retain qualified personnel; and
o liability and other claims asserted against the Company.
Readers are urged to review and consider carefully the various disclosures
made by the Company in this Report and in the Company's other reports filed with
the SEC that attempt to advise interested parties of the risks and factors that
may affect the Company's business.
10
11
Results of Operations
The following table summarizes amounts and the percentages of total
revenues for certain items for the periods indicated (dollars in thousands):
Three Months Ended Three Months Ended
March 31, 2001 March 31, 2000
----------------------- --------------------
Amount % Amount %
------ --- ------ ---
Statement of Operations:
Revenues $ 121,061 100.0 $ 85,093 100.0
---------- ------ --------- -------
Operating expenses:
Operating, general and administrative 65,147 53.8 45,171 53.1
Depreciation and amortization 116,135 95.9 71,894 84.5
Corporate expense charges - related parties 1,951 1.6 688 .1
---------- ------ --------- -------
183,233 151.3 117,753 137.7
---------- ------ --------- -------
Loss from operations (62,172) (51.3) (32,660) (37.7)
Other income (expense):
Interest expense (25,829) (21.3) (22,425) (26.4)
Interest income 1 -- -- --
Other, net (110) (0.1) 11 .1
---------- ------ --------- -------
(25,938) (21.4) (22,414) (26.3)
---------- ------ --------- -------
Loss before minority interest (88,110) (72.7) (55,074) (64.0)
Minority interest (3,159) (2.6) (1,552) (1.8)
---------- ------ --------- -------
Net loss $ (91,269) (75.3) $ (56,626) (65.8)
========== ====== ========== =======
Other financial data is as follows for the periods indicated
(dollars in thousands, except Average Monthly Revenue per Basic Customer):
Three Months Ended Three Months Ended
March 31, 2001 March 31, 2000
-------------------- ------------------
EBITDA (a) $ 53,853 $ 39,245
Adjusted EBITDA (b) 55,804 39,933
Homes Passed (at period end) (c) 1,396,271 1,616,630
Basic Customers (at period end) (d) 959,018 1,097,705
Basic Penetration (at period end) (e) 68.7% 67.9%
- ----------
11
12
(a) EBITDA represents earnings (loss) before interest, income taxes,
depreciation and amortization. EBITDA is presented because it is a widely
accepted financial indicator of a cable company's ability to service
indebtedness. However, EBITDA should not be considered as an alternative to
income from operations or to cash flows from operating, investing or financing
activities, as determined in accordance with generally accepted accounting
principles. EBITDA should also not be construed as an indication of a company's
operating performance or as a measure of liquidity. In addition, because EBITDA
is not calculated identically by all companies, the presentation here may not be
comparable to other similarly titled measures of other companies. Management's
discretionary use of funds depicted by EBITDA may be limited by working capital,
debt service and capital expenditure requirements and by restrictions related to
legal requirements, commitments and uncertainties.
(b) Adjusted EBITDA means EBITDA before corporate expense charges and other
income (expense). Adjusted EBITDA is presented because it is a widely accepted
financial indicator of a cable company's ability to service indebtedness.
However, adjusted EBITDA should not be considered as an alternative to income
from operations or to cash flows from operating, investing or financing
activities, as determined in accordance with generally accepted accounting
principles. Adjusted EBITDA should also not be construed as an indication of a
company's operating performance or as a measure of liquidity. In addition,
because adjusted EBITDA is not calculated identically by all companies, the
presentation here may not be comparable to other similarly titled measures of
other companies. Management's discretionary use of funds depicted by adjusted
EBITDA may be limited by working capital, debt service and capital expenditure
requirements and by restrictions related to legal requirements, commitments and
uncertainties.
(c) Homes passed are the number of living units, such as single residence homes,
apartments and condominium units, passed by the cable distribution network in a
given cable system service area.
(d) Basic customers are customers who receive basic cable service.
(e) Basic penetration represents basic customers as a percentage of homes
passed.
Comparison of Results
As a result of the Bresnan/Avalon combination, the Company's financial
statements were restated beginning on the date of Charter Holdco's acquisition
of Bresnan, February 15, 2000. In addition, on January 2, 2001, the Company
transferred five of its cable systems to other Charter Holdings subsidiaries in
the cable system swap transactions discussed in Note 1 to the interim unaudited
financial statements. Therefore, the financial results for the periods presented
above are not comparable as the March 31, 2000 period only includes Bresnan
results for approximately 1 1/2 months, beginning February 15, 2000 and the
March 31, 2001 period does not include the results of the five cable systems
transferred to other Charter Holdings subsidiaries.
Revenues. Revenues increased $36.0 million, or 42.3%, to $121.1 million
for the three months ended March 31, 2001, from $85.1 million for the three
months ended March 31, 2000. The increase in revenues primarily resulted from
the Bresnan/Avalon combination. Increases in digital and cable modem customers
also contributed to the increase as a result of increased marketing efforts and
strong demand for these services. These increases were partially offset by
decreased revenues due to the transfer of five cable systems to other Charter
Holdings subsidiaries on January 2, 2001.
Operating, general and administrative expenses. Operating, general and
administrative expenses increased $19.9 million, or 44.0%, to $65.1 million for
the three months ended March 31, 2001, from $45.2 million for the three months
ended March 31, 2000. The increase was primarily due to the Bresnan/Avalon
combination as well as continued inflationary increases in license fees paid for
programming coupled with an increased number of channels available to
subscribers. These increases were partially offset by decreased
12
13
operating expenses due to the transfer of five cable systems to other Charter
Holdings subsidiaries on January 2, 2001.
Depreciation and amortization expense. Depreciation and amortization
expense increased $44.2 million, or 61.5%, to $116.1 million for the three
months ended March 31, 2001, from $71.9 million for the three months ended March
31, 2000. The increase was the result of greater capital expenditures for
upgrade and rebuild activities in 2001 as well as the Bresnan/Avalon
combination, which increased the carrying value of property, plant and equipment
and franchises. These increases were partially offset by decreases due to the
transfer of five cable systems to other Charter Holdings subsidiaries on January
2, 2001.
Corporate expense charges - related parties. These charges for the three
months ended March 31, 2001 and 2000, represent costs incurred by Charter
Investment, Inc. and Charter Communications, Inc. on our behalf.
Interest expense. Interest expense increased by $3.4 million, or 15.2%, to
$25.8 million for the three months ended March 31, 2001, from $22.4 million for
the three months ended March 31, 2000. The increase was primarily due to an
increase in weighted average debt outstanding in the quarter ended March 31,
2001 compared to the quarter ended March 31, 2000 due to the Bresnan/Avalon
combination. These increases were partially offset by decreases due to the
transfer of five cable systems to other Charter Holdings subsidiaries on January
2, 2001.
Minority interest. Minority interest represents the accretion of the
preferred membership units in an indirect subsidiary of Charter Holdings issued
to certain Bresnan sellers. These membership units are exchangeable on a
one-for-one basis for shares of Class A common stock of Charter Communications,
Inc.
Net loss. Net loss increased by $34.6 million for the three months ended
March 31, 2001, compared to the three months ended March 31, 2000 as a result of
the combination of factors discussed above.
13
14
PART II. OTHER INFORMATION.
Item 5. Other Information
Effective on January 2, 2001, the Company entered into certain cable
system swap transactions with other subsidiaries of Charter Holdings. Such cable
systems swaps were effected in order to increase operational efficiency by
swapping systems into the subsidiaries, which are physically located closest to
them. The Company accounted for the systems transferred into the Company from
other Charter Holdings subsidiaries as a reorganization of entities under common
control in a manner similar to a pooling of interests. Accordingly, beginning on
November 15, 1999, the date the Company was acquired by Charter Holdco, the
consolidated financial statements of CC V Holdings include the accounts of four
systems that were transferred into the Company from other Charter Holdings
subsidiaries. Also, on January 2, 2001, the Company transferred five of its
systems to other Charter Holdings subsidiaries as part of the swap transactions.
The disposition of such systems by the Company was recorded as a non-cash
transaction with related parties in the three months ended March 31, 2001. Had
the dispositions of such systems occurred on January 1, 2000, revenues, loss
from operations and net loss for the year ended December 31, 2000 would have
been $435.1 million, $(133.3) million and $(256.2) million, respectively.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits (listed by numbers corresponding to the exhibit table in
Item 601 of Regulation S-K):
10.30 (a), (b), & (c) Swap Agreements
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended March 31,
2001.
14
15
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
CC V HOLDINGS, LLC
Dated May 23, 2001 By: CHARTER COMMUNICATIONS, INC.,
----------------------------
its Manager
By: /s/ Kent D. Kalkwarf
------------------------------------------
Name: Kent D. Kalkwarf
Title: Executive Vice President and
Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer) of Charter
Communications, Inc. (Manager)
and CC V Holdings, LLC
CC V HOLDINGS FINANCE, INC.
Dated May 23, 2001 By: /s/ Kent D. Kalkwarf
------------------------------------------
Name: Kent D. Kalkwarf
Title: Executive Vice President and
Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)
15
1
EXHIBIT 10.30(a)
ASSET EXCHANGE AGREEMENT
DATED AS OF JANUARY 2, 2001
AMONG
HOMETOWN TV, INC.,
ON THE ONE HAND
AND
CHARTER COMMUNICATIONS ENTERTAINMENT I, LLC,
CHARTER CABLE PARTNERS, LLC,
ON THE OTHER HAND
2
ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT (the "Agreement") is made as of January 2,
2001, by and between Hometown TV, Inc. ("PARTY A") and each of Charter
Communications Entertainment I, LLC and Charter Cable Partners, LLC
(collectively, "PARTY B"), with reference to the following facts and
circumstances:
RECITALS
A. PARTY A owns and operates all or part of cable television systems that
are franchised and/or hold other authority to operate in and around the
municipalities listed on SCHEDULE 4.8-A.
B. PARTY B owns and operates all or part of cable television systems that
are franchised and/or hold other authority to operate in and around the
municipalities listed on SCHEDULE 4.8-B. PARTY B is comprised of two entities
both of which are single-member limited liability companies, and such entities
will be treated for federal income tax purposes as disregarded entities with
respect to Charter Communications Holding Company, LLC under Treasury Regulation
ss. 301.7701-3(b)(1)(ii).
C. The parties desire to exchange the aforesaid systems in such a manner
as to effect, to the extent reasonably possible, a like-kind exchange of such
assets under Section 1031 of the United States Internal Revenue Code, as amended
(the "Code").
AGREEMENTS
Accordingly, the parties hereby agree as follows:
1. DEFINITIONS. In addition to the terms defined elsewhere in this Agreement,
the following capitalized terms or terms otherwise defined in this Article 1
shall have the meanings set forth below:
1.1 Agreement. The term "Agreement" shall mean and refer to this Asset
Exchange Agreement.
1.2 Assets. The term "Assets" shall mean and refer to all of the assets,
privileges, contracts, licenses, permits, franchises, authorizations, rights,
interests, claims and other properties, real and personal, tangible and
intangible, of every type and description which are owned, leased, held for use
or used in such Party's Cable Business. Assets shall include Tangible Personal
Property, Owned Property, Leased Property, Other Real Property Interests,
Systems Franchises, Systems Licenses, Systems Contracts, Books and Records and
Other Intangibles. Reference to PARTY A Assets shall be deemed to refer to the
Assets of PARTY A, and reference to PARTY B Assets shall be deemed to refer to
the Assets of PARTY B.
1.3 Books and Records. The term "Books and Records" shall mean and refer
to all engineering records, files, data, drawings, blueprints, schematics,
reports, lists, plans and procedures and all other files of correspondence,
lists, records and reports concerning such Party's Cable Business, including
subscribers and prospective subscribers of such Party's
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Systems, signal and program carriage and dealings with Governmental Authorities
with respect to such Party's Systems, including all reports filed with respect
to such Party's Systems by or on behalf of such Party with the FCC and
statements of account filed with respect to such Party's Systems by or on behalf
of such Party with the U.S. Copyright Office, but excluding all documents,
reports and records relating to any employee of such Party's Systems who has not
given consent to disclosure of such documents, reports and records. Reference to
PARTY A Books and Records shall be deemed to refer to the Books and Records of
PARTY A, and reference to PARTY B Books and Records shall be deemed to refer to
the Books and Records of PARTY B, in each case, as included among such Party's
Assets.
1.4 Business Day. The term "Business Day" shall mean and refer to any day
other than a Saturday, Sunday or a day on which the banking institutions in St.
Louis, Missouri, are required or authorized to be closed.
1.5 Cable Business. The term "Cable Business" shall mean and refer to the
cable television business and other revenue-generating businesses and related
operations conducted by such Party through such Party's Systems. Reference to
PARTY A Cable Business shall be deemed to refer to the Cable Business of PARTY
A, and reference to PARTY B Cable Business shall be deemed to refer to the Cable
Business of PARTY B.
1.6 Closing. The term "Closing" shall mean and refer to the closing of the
exchange transactions contemplated by this Agreement.
1.7 Closing Time. The term "Closing Time" shall mean and refer to 11:59
p.m., Central Time, on the Closing Date.
1.8 Communications Act. The term "Communications Act" shall mean and refer
to the Communications Act of 1934, as amended, and the FCC rules and regulations
promulgated thereunder.
1.9 Contract. The term "Contract" shall mean and refer to any contract,
mortgage, deed of trust, bond, indenture, lease, license, note, franchise,
certificate, option, warrant, right or other instrument, document, obligation or
agreement, whether written or oral.
1.10 FCC. The term "FCC" shall mean and refer to the Federal Communications
Commission.
1.11 Governmental Authority. The term "Governmental Authority" shall mean
and refer to the United States of America, any state, commonwealth, territory or
possession of the United States of America and any political subdivision or
quasi-governmental authority of any of the same, including any court, tribunal,
department, commission, board, bureau, agency, body, county, municipality,
province, parish or other instrumentality of any of the foregoing.
1.12 Intellectual Property. The term "Intellectual Property" shall mean and
refer to, with respect to any Cable Business, any (a) trademarks, trade dress,
trade names, service marks, logos and other similar proprietary rights, (b)
domain names, (c) copyrights and (d)
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patents and patentable know-how, inventions and processes, in each case used in
such Cable Business.
1.13 Judgment. The term "Judgment" shall mean and refer to any judgment,
writ, order, injunction, award or decree of any court, judge, justice or
magistrate, including any bankruptcy court or judge or the arbitrator in any
binding arbitration, and any order of or by any Governmental Authority.
1.14 Leased Property. The term "Leased Property" shall mean and refer to
the leaseholds of real property included among such Party's Assets and described
as such Party's Leased Property on SCHEDULE 1.14. Reference to PARTY A Leased
Property shall be deemed to refer to the Leased Property of PARTY A, and
reference to PARTY B Leased Property shall be deemed to refer to the Leased
Property of PARTY B, in each case, as included among such Party's Assets.
1.15 Legal Requirement. The term "Legal Requirement" shall mean and refer
to any applicable common law and any statute, ordinance, code or other law,
rule, regulation, order, technical or other written standard, requirement or
procedure enacted, adopted, promulgated, applied or followed by any Governmental
Authority, including any Judgment.
1.16 Lien. The term "Lien" shall mean and refer to any security interest,
security agreement, financing statement filed with any Governmental Authority,
conditional sale or other title retention agreement, any lease, consignment or
bailment given for purposes of security, any mortgage, lien (including any lien
for Taxes), indenture, pledge, option, encumbrance, adverse interest,
constructive trust or other trust, claim, attachment, exception to, defect in,
or other condition adversely affecting title or other ownership interest
(including reservations, rights of entry, possibilities of reverter,
encroachments, protrusions, easements, rights-of-way, rights of first refusal,
restrictive covenants, leases and licenses) of any kind, which constitutes an
interest in or claim against property, whether arising pursuant to any Legal
Requirement, Systems License, Systems Franchise, Systems Contract or otherwise.
1.17 Losses. The term "Losses" shall mean and refer to any claims, losses,
liabilities, damages, penalties, costs and expenses, including interest that may
be imposed in connection therewith, expenses of investigation, reasonable fees
and disbursements of counsel and other experts, and, as applicable, the cost to
any Person making a claim or seeking indemnification under this Agreement with
respect to funds expended by such Person by reason of the occurrence of any
event or the existence or assertion of any Liens (other than Permitted Liens)
with respect to which indemnification is sought.
1.18 Other Intangibles. The term "Other Intangibles" shall mean and refer
to all intangible assets, other than such Party's Systems Franchises, Systems
Licenses and Systems Contracts, including subscriber lists, claims, and
Intellectual Property, if any, included among such Party's Assets. Reference to
PARTY A Other Intangibles shall be deemed to refer to the Other Intangibles of
PARTY A, and reference to PARTY B Other Intangibles shall be deemed to refer to
the Other Intangibles of PARTY B, in each case, as included among such Party's
Assets.
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1.19 Other Real Property Interests. The term "Other Real Property
Interests" shall mean and refer to the easements and rights of access (other
than those relating to multiple dwelling units) and other interests in real
property held by such Party in connection with such Party's Cable Business, but
not including such Party's Leased Property or such Party's Owned Property.
Reference to PARTY A Other Real Property Interests shall be deemed to refer to
the Other Real Property Interests of PARTY A, and reference to PARTY B Other
Real Property Interests shall be deemed to refer to the Other Real Property
Interests of PARTY B, in each case, as included among such Party's Assets.
1.20 Owned Property. The term "Owned Property" shall mean and refer to the
fee interests in the real property included among such Party's Assets and
described as such Party's Owned Property on SCHEDULE 1.20 and all improvements
and towers thereon and appurtenances thereto. Reference to PARTY A Owned
Property shall be deemed to refer to the Owned Property of PARTY A, and
reference to PARTY B Owned Property shall be deemed to refer to the Owned
Property of PARTY B, in each case, as included among such Party's Assets.
1.21 Party. The term "Party" shall mean and refer to either PARTY A, or
PARTY B, or each of the entities constituting PARTY A or PARTY B, in each
instance as the context requires.
1.22 Permitted Liens. The term "Permitted Liens" shall mean and refer to
(a) Liens for Taxes, assessments and governmental charges, in each case not yet
due and payable, (b) zoning laws or ordinances or any similar Legal
Requirements, (c) rights reserved to any Governmental Authority to regulate the
affected property, (d) as to Leased Property or Tangible Personal Property that
is leased, the interests of the lessors thereof, and (e) as to Owned Property,
Leased Property and Other Real Property Interests, any easements, rights-of-way,
servitudes, conditions, covenants, restrictions and minor imperfections or
irregularities in title, in each case, which are reflected in the public records
and which do not individually or in the aggregate interfere with the right or
ability of the applicable Party to own, use, enjoy or operate the Owned
Property, Leased Property or Other Real Property Interests in the manner
currently used or to convey good, marketable and indefeasible fee simple title
to the same; provided that "Permitted Liens" will not include any Lien which
could prevent or inhibit in any way (other than as permitted under clause (e))
the conduct of the business of the affected System, and provided further that
classification of any Lien as a "Permitted Lien" will not affect any liability
which a Party may have for any such Lien, including pursuant to any indemnity
obligation under this Agreement.
1.23 Person. The term "Person" shall mean and refer to any natural person,
Governmental Authority, corporation, general or limited partnership, limited
liability company, joint venture, trust, association or unincorporated entity of
any kind.
1.24 Required Consents. The term "Required Consents" shall mean and refer
to any and all consents, authorizations and approvals under or in connection
with such Party's Systems Franchises and Systems Licenses required for (a) such
Party to transfer its Assets to the other Party pursuant to this Agreement, (b)
the other Party to operate such Party's Systems and to own, lease, use and
operate such Party's Assets and Systems at the places
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and in the manner in which such Party's Assets are used and such Party's Systems
are operated as of the date of this Agreement and as of the Closing, or (c) the
other Party to assume and perform such Party's Systems Franchises and Systems
Licenses. Reference to PARTY A Required Consents shall be deemed to refer to the
Required Consents for PARTY A, and reference to PARTY B Required Consents shall
be deemed to refer to the Required Consents for PARTY B.
1.25 System. The term "System" shall mean and refer to all or part of any
cable television distribution system owned or leased by a Party, or in which a
Party has other rights of use, that are used by such Party to serve its
customers within the municipalities set forth on SCHEDULE 4.8-A (for PARTY A)
and SCHEDULE 4.8-B (for PARTY B). Reference to PARTY A Systems shall be deemed
to refer to the Systems of PARTY A, and reference to PARTY B Systems shall be
deemed to refer to the Systems of PARTY B.
1.26 Systems Contracts. The term "Systems Contracts" shall mean and refer
to all Contracts (other than such Party's Systems Franchises and Systems
Licenses) that are included among such Party's Assets, including the lease
agreements for such Party's Tangible Personal Property, pole attachment
agreements, underground conduit agreements, crossing agreements, retransmission
consent agreements, multiple dwelling, bulk billing or commercial service
agreements and the Contracts documenting such Party's Leased Property described
on SCHEDULE 1.14. Reference to PARTY A Systems Contracts shall be deemed to
refer to the Systems Contracts of PARTY A, and reference to PARTY B Systems
Contracts shall be deemed to refer to the Systems Contracts of PARTY B, in each
case, as included among such Party's Assets.
1.27 Systems Franchises. The term "Systems Franchises" shall mean and refer
to the franchises, permits and similar authorizations included among such
Party's Assets (other than such Party's Systems Licenses) described on SCHEDULE
1.27, and all rights and benefits of such Party, including the rights and
benefits arising under Section 626 of the Communications Act (47 U.S.C. 546) to
the extent applicable to such Party's Systems Franchises. Reference to PARTY A
Systems Franchises shall be deemed to refer to the Systems Franchises of PARTY
A, and reference to PARTY B Systems Franchises shall be deemed to refer to the
Systems Franchises of PARTY B, in each case, as included among such Party's
Assets.
1.28 Systems Licenses. The term "Systems Licenses" shall mean and refer to
the intangible cable television channel distribution rights, cable television
relay service (CARS), business radio and other licenses, earth station
registrations, authorizations, consents or permits issued by the FCC or any
other Governmental Authority included among such Party's Assets and described on
SCHEDULE 1.28 (other than such Party's Systems Franchises and Systems Contracts)
and all rights and benefits of such Party pertaining thereto. Reference to PARTY
A Systems Licenses shall be deemed to refer to the Systems Licenses of PARTY A,
and reference to PARTY B Systems Licenses shall be deemed to refer to the
Systems Licenses of PARTY B, in each case, as included among such Party's
Assets.
1.29 Tangible Personal Property. The term "Tangible Personal Property"
shall mean and refer to all tangible personal property included among such
Party's Assets, including towers (other than towers on such Party's Owned
Property which are fixtures
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thereon and a part thereof), tower equipment, aboveground and underground cable,
distribution systems, headend amplifiers, line amplifiers, microwave equipment,
converters, testing equipment, motor vehicles, office equipment, computers and
billing equipment, furniture, fixtures, supplies, inventory and other physical
assets relating to the Systems. Reference to PARTY A Tangible Personal Property
shall be deemed to refer to the Tangible Personal Property of PARTY A, and
reference to PARTY B Tangible Personal Property shall be deemed to refer to the
Tangible Personal Property of PARTY B, in each case, as included among such
Party's Assets.
1.30 Taxes. The term "Taxes" shall mean and refer to levies and assessments
of any kind or nature imposed by any Governmental Authority, including all
income, sales, use, ad valorem, value added, franchise, severance, net or gross
proceeds, withholding, payroll, employment, excise or property taxes and levies
or assessments related to unclaimed property, together with any interest thereon
and any penalties, additions to tax or additional amounts applicable thereto.
For purposes of determining any Tax cost or Tax benefit to any Person, such
amount will be the actual cost or benefit recognized by such Person at the time
of actual payment of the additional Tax or actual receipt of the Tax benefit. In
the event that any Loss, payment or other amount is required to be determined on
an after-Tax basis, such payment or other amount will be determined without
regard to any Tax cost or Tax benefit not actually recognized at the time of the
determination, and appropriate adjustments will be made when and to the extent
that such Tax cost or Tax benefit is actually recognized.
1.31 Other Definitions. The following terms have the meanings set forth in
the sections indicated in the table below:
Term Section
- ---- -------
Closing Date 8.1
Code Recital C
commercially reasonable efforts 10.9
Exchange 2.1
Exchange Groups 2.2
Matching Franchise 5.1.1
PARTY A First Paragraph
PARTY A Matching Franchise 5.1.2
PARTY A Retained Franchise 5.1.1
PARTY A System Value 3.1
PARTY B First Paragraph
PARTY B Matching Franchise 5.1.1
PARTY B Retained Franchise 5.1.2
PARTY B System Value 3.1
Primary Transfer 5.1.3
Retained Franchise 5.1.1
Subsequent Transfer 5.1.4
Taking 10.8
Transfer Tax Returns 5.2
Transfer Taxes 5.2
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1.32 Usage. The definitions in Article 1 shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. All references herein to Articles, Sections, Exhibits and
Schedules shall be deemed to be references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. All Exhibits and Schedules attached hereto shall be deemed incorporated
herein as if set forth in full herein and, unless otherwise defined therein, all
terms used in any Exhibit or Schedule shall have the meaning ascribed to such
term in this Agreement. The words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation." The words "hereof,"
"herein," and "hereunder," and words of similar import, when used in this
Agreement, shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise expressly provided herein, any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein. All
accounting terms not otherwise defined in this Agreement will have the meanings
ascribed to them under generally acceptable accounting principles as in effect
from time to time in the United States, consistently applied.
2. EXCHANGE.
2.1 Exchange of Assets. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing, PARTY A and PARTY B agree to exchange
simultaneously the PARTY A Assets for the PARTY B Assets, free and clear of all
Liens (except Permitted Liens) (the "Exchange"). PARTY A and PARTY B agree to
use all reasonable efforts to structure the Exchange in such a way that, to the
extent reasonably possible, it will be a tax free exchange of like-kind assets
under Section 1031 of the Code.
2.2 Method of Exchange. The Exchange is to occur as follows: (A) PARTY A
Tangible Personal Property and PARTY B Tangible Personal Property are being
exchanged each for the other; (B) PARTY A Owned Property, PARTY A Leased
Property, and PARTY A Other Real Property Interests and PARTY B Owned Property,
PARTY B Leased Property, and PARTY B Other Real Property Interests are being
exchanged each for the other; and (C) PARTY A Systems Contracts, PARTY A Systems
Franchises, PARTY A Systems Licenses, and PARTY A Other Intangibles and PARTY B
Systems Contracts, PARTY B Systems Franchises, PARTY B Systems Licenses, and
PARTY B Other Intangibles are being exchanged each for the other. In each case,
the assets described in this Section 2.2 shall be exchanged each for the other
in "Exchange Groups" as defined under Treasury Regulations Sections 1.1031(a)-2
and 1.1031(j)-1, and in each case to the maximum extent permitted by Section
1031 of the Code and the regulations promulgated thereunder. Liabilities assumed
or taken subject to by each Party are being exchanged each for the other to the
maximum extent permitted under Section 1031 of the Code and regulations
thereunder.
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3. CONSIDERATION.
3.1 For the purposes of this Agreement, the aggregate gross value and the
value of each Exchange Group of the PARTY A Assets comprising all of the PARTY A
Systems shall be as set forth on SCHEDULE 3.1-A ("PARTY A System Value"), and
the aggregate gross value and the value of each Exchange Group of the PARTY B
Assets comprising all of the PARTY B Systems shall be as set forth on SCHEDULE
3.1-B ("PARTY B System Value").
4. REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants to the
other Party, as follows:
4.1 Organization and Qualification. Such Party is duly formed, validly
existing and in good standing under the laws of its jurisdiction of
formation/incorporation. As of the Closing Date, such Party has all requisite
power and authority to own, lease and use such Party's Assets owned, leased or
used by it and to conduct its Cable Business as it is currently being conducted
by it. As of the date of this Agreement, such Party is duly qualified to do
business and is in good standing under the laws of each jurisdiction in which
the ownership, leasing or use of such Party's Assets owned, leased or used by it
or the nature of its activities undertaken in connection with such Party's
Systems makes such qualification necessary.
4.2 Authority and Validity. Such Party has all requisite entity power and
authority to execute and deliver, to perform its obligations under, and to
consummate the transactions contemplated by this Agreement. The execution and
delivery by such Party of, its performance under, and its consummation of the
transactions contemplated by this Agreement have been duly and validly
authorized by all necessary entity action by or on behalf of such Party. This
Agreement has been duly and validly executed and delivered by such Party and
constitutes valid and legally binding agreement of such Party, enforceable
against it in accordance with the terms hereof, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to the enforcement of
creditors' rights generally or by principles governing the availability of
equitable remedies.
4.3 No Violation. Assuming all Required Consents have been obtained, the
execution and delivery by each Party of, its performance under, and its
consummation of the transactions contemplated by this Agreement do not and will
not: (a) violate any provision of the organizational documents of such Party;
(b) violate any provision of any Legal Requirement applicable to such Party; (c)
require any consent, approval or authorization of, or filing of any certificate,
notice, application, report or other document with, any Governmental Authority
or other Person; or (d) (i) violate, result in a breach of or constitute a
default under, (ii) permit or result in the termination, suspension or
modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of such Party under, or (iv) result in the
creation or imposition of any Lien under, any Systems Contract, Systems
Franchise, Systems License, or other instrument evidencing any of the Assets of
such Party or by which such Party or any of its assets is bound or affected,
provided, however, that no breach of any of the foregoing representations will
be deemed to
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have occurred if such occurrence does not have a material adverse effect on the
Assets being transferred pursuant hereto, or preclude the transfer thereof.
4.4 Systems Contracts. Such Party has delivered to the other Party true
and complete copies of all such Party's Systems Contracts (including each
Contract relating to such Party's Leased Property and Other Real Property
Interests), including any amendments thereto (or, in the case of oral Contracts,
true and complete written summaries thereof), and each document evidencing such
Party's ownership of its Owned Property.
4.5 Compliance with Legal Requirements. Such Party has used commercially
reasonable efforts to comply in all material respects with all the applicable
Legal Requirements.
4.6 Absence of Certain Changes or Events. Since the date of the execution
of this Agreement, there has been no material adverse change in, nor has any
event or events (other than any affecting the cable television industry
generally) occurred that, individually or in the aggregate, could reasonably be
expected to result in a material adverse change in such Party's Assets, Cable
Business, operations, condition (financial or otherwise) or results of
operations of its Systems, taken as a whole.
4.7 Tax Returns; Other Reports. Such Party has duly and timely filed in
correct form all federal, state, local and foreign Tax returns and other Tax
reports required to be filed by it, and has timely paid all Taxes which have
become due and payable, whether or not so shown on any such return or report,
the failure of which to be filed or paid could affect or result in the
imposition of a Lien upon its Assets or create any transferee or other liability
upon the other Party, except such amounts as are being contested diligently and
in good faith and are not in the aggregate material. Except as set forth on
SCHEDULE 4.7, such Party has not received any notice of, nor does such Party
have any knowledge of, any deficiency, assessment or audit, or proposed
deficiency, assessment or audit from any taxing Governmental Authority which
could affect, or result in the imposition of a Lien upon, any of its Assets or
transferee or other liability upon the other Party.
4.8 Systems Information. SCHEDULES 4.8-A and 4.8-B set forth a materially
true and accurate description, on a System-by-System basis, of the following
information relating to each Party's Systems as of the date of this Agreement:
(a) the approximate number of aerial and underground miles of plant
included in such Party's Assets and served by each headend;
(b) the approximate number of single family homes and residential
multiple dwelling units passed by each such System;
(c) the MHZ capacity and channel capacity of each headend; and
(d) the number of subscribers served by each such System.
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5. ADDITIONAL COVENANTS.
5.1 Required Consents. If less than all of the Required Consents for the
transfer of Systems Franchises are obtained as of the Closing Date, then the
following will occur:
5.1.1 With respect to each PARTY A Systems Franchise for which a
Required Consent necessary for the transfer thereof has not been obtained as of
the Closing Date (such Systems Franchise and the PARTY A Assets pertaining
thereto, hereinafter, a "PARTY A Retained Franchise"), the parties will
negotiate in good faith to reach agreement on a PARTY B Systems Franchise (such
Systems Franchise and the PARTY B Assets pertaining thereto, hereinafter, a
"PARTY B Matching Franchise") that is to the greatest extent possible, like kind
to PARTY A Retained Franchise for purposes of Section 1031 of the Code and the
applicable exchange. A PARTY B Matching Franchise may also be a PARTY B Retained
Franchise. For purposes of this Section 5.1, a "Retained Franchise" means either
a PARTY A Retained Franchise or a PARTY B Retained Franchise or both, as the
context requires, and a "Matching Franchise" means either a PARTY A Matching
Franchise or a PARTY B Matching Franchise or both, as the context requires.
5.1.2 Similarly, with respect to each PARTY B Systems Franchise for
which a PARTY B Required Consent necessary for the transfer thereof has not been
obtained as of the Closing Date (such Systems Franchise and the PARTY B Assets
pertaining thereto, hereinafter, a "PARTY B Retained Franchise"), the parties
will negotiate in good faith to reach agreement on a PARTY A Systems Franchise
(such Systems Franchise and the PARTY A Assets pertaining thereto, hereinafter,
a "PARTY A Matching Franchise") that is to the greatest extent possible, like
kind to PARTY B Retained Franchise for purposes of Section 1031 of the Code and
the applicable exchange. A PARTY A Matching Franchise may also be a PARTY A
Retained Franchise.
5.1.3 At the Closing, PARTY A and PARTY B shall transfer, convey and
assign (the "Primary Transfer") all of the PARTY A Assets other than any PARTY A
Retained Franchises and PARTY A Matching Franchises and all of the PARTY B
Assets other than any PARTY B Retained Franchises and PARTY B Matching
Franchises.
5.1.4 Following the Closing of the Primary Transfer, the parties will
continue to use commercially reasonable efforts to obtain on an expedited basis
the Required Consents for all PARTY A Retained Franchises and PARTY B Retained
Franchises. Pending such Required Consents being obtained, each of PARTY A
Retained Franchises and PARTY B Retained Franchises shall continue to be subject
to the arrangement set forth in Article 7 hereof, and shall be transferred,
conveyed, or assigned as contemplated herein as soon as practicable following
the obtaining of such Required Consents (such transfer hereinafter referred to
as a "Subsequent Transfer").
5.1.5 All references in this Agreement to the Closing and the Closing
Date will mean the Closing and Closing Date of the Primary Transfer except as
specifically provided otherwise in this Section 5.1.5. Without limiting the
foregoing, all representations and warranties (except as to those Required
Consents that have not been obtained) made in connection with the Retained
Franchises and the Matching Franchises will be made as of the Closing Date
rather than the date of the Subsequent Transfer, the other covenants in Article
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5 will not apply to the Retained Franchises or the Matching Franchises following
the Closing Date.
5.2 Sales and Transfer Taxes. All sales, use or excise Taxes arising from
or payable by reason of the transfer of each Party's Assets ("Transfer Taxes")
and all transfer and similar taxes or assessments, including transfer fees and
similar assessments for or under Systems Franchises, Systems Licenses and
Systems Contracts, arising from or payable by reason of the conveyance of each
Party's Assets will be borne equally by each Party. Tax Returns required to be
filed with respect to Transfer Taxes ("Transfer Tax Returns") shall be prepared
and filed by the Party that has the primary responsibility under applicable law
for filing such Transfer Tax Returns.
5.3 Further Assurances. At or after the Closing, each Party at the request
of the other Party, will promptly execute and deliver, or cause to be executed
and delivered, to the other Party all such documents and instruments, in
addition to those otherwise required by this Agreement, in form and substance
reasonably satisfactory to the other Party as the other Party may reasonably
request in order to carry out or evidence the terms of this Agreement or to
collect any accounts receivable or other claims included in the Assets
transferred to the other Party. Without limiting the generality of the
foregoing, PARTY A and PARTY B will take, or cause to be taken, all actions
consistent with the terms of this Agreement, including execution and delivery of
any documents or instruments, as the other may reasonably request to effect the
qualification of the transactions contemplated hereby as a like-kind exchange
under Section 1031 of the Code.
5.4 Satisfaction of Conditions. Each Party will use its commercially
reasonable efforts to satisfy, or to cause to be satisfied, the conditions to
the obligations of the other Party to consummate the transactions contemplated
by this Agreement, as set forth in Article 6.
6. CONDITIONS PRECEDENT.
6.1 Conditions to Each Party's Obligations. The obligations of each Party
to consummate the transactions contemplated by this Agreement will be subject to
the satisfaction, at or before the Closing, of the following conditions, one or
more of which may be waived by such Party:
6.1.1 Accuracy of Representations and Warranties. The representations
and warranties of each Party in this Agreement, without giving effect to any
materiality qualifications contained therein, are true, complete and accurate on
and as of the Closing with the same effect as if made at and as of the Closing,
except to the extent that all misstatements, omissions and inaccuracies, in the
aggregate, do not have a material adverse effect on the other Party's Assets,
Cable Business, the operations, condition (financial or otherwise) or results of
operations of the Systems taken as a whole, or on the ability of the other Party
to perform its obligations under this Agreement.
6.1.2 Deliveries. Each Party shall have delivered the items and
documents required to be delivered by and pursuant to this Agreement, including
those required to be delivered by each Party to the other Party under Section
8.2.
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13
6.1.3 Legal Proceedings. No Legal Requirement of any Governmental
Authority (including any temporary Legal Requirement) shall be in effect which
would prevent or make illegal the consummation of any of the transactions
contemplated by this Agreement.
6.1.4 Consents.
(a) Except as provided in Section 5.1, Required Consents
relating to each Party's Systems Franchises shall have been obtained in form and
substance reasonably satisfactory to the other Party, or the consent of the
appropriate Governmental Authority shall be deemed to have been received in
accordance with Section 617 of the Communications Act (47 U.S.C. ss.537).
(b) Each Party shall have received evidence, in form and
substance reasonably satisfactory to it, that the other Party's Required
Consents relating to the other Party's Systems Licenses and Systems Contracts
have been obtained.
6.1.5 No Material Adverse Damage. There shall not have occurred any
damage to such Party's Assets that has materially and adversely affected, or
could reasonably be expected to materially and adversely affect, the cash flow
therefrom.
7. PRE-CLOSING MANAGEMENT ARRANGEMENT.
Pending the Closing, each Party hereby agrees that the other shall be
entitled to receive and retain any and all revenues from the operation of the
Cable Business of the other Party to be transferred pursuant hereto including,
without limitation, subscriber payments and advertising revenue, and shall be
responsible for all expenses and expenditures respecting or pertaining to such
Cable Business. Thus, each PARTY A entity shall be entitled to receive and
retain all revenues from the operation of the PARTY B Cable Business being
transferred to it, and shall be responsible for all expenses and expenditures
respecting or pertaining to such Cable Business; provided, however, that
management fees shall be limited, and shall be paid and expensed only as
allowed, by the credit agreement to which such PARTY B entity is party to or
otherwise bound, and each PARTY B entity shall be entitled to receive and retain
all revenues from the operation of the PARTY A Cable Business being transferred
to it, and shall be responsible for all expenses and expenditures respecting or
pertaining to such Cable Business; provided, however, that management fees shall
be limited, and shall be paid and expensed only as allowed, by the credit
agreement to which such PARTY A entity is party to or otherwise bound.
8. THE CLOSING.
8.1 The Closing; Time and Place. Subject to the terms and conditions of
this Agreement, the Closing shall be held at a place, date and time as mutually
agreed upon by the Parties; provided that such day shall be a Business Day (the
"Closing Date"). The transactions to be consummated at Closing shall be deemed
to have been consummated as of the Closing Time.
8.2 Delivery Obligations. At the Closing, each Party will deliver or cause
to be delivered to the other Party the following:
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14
8.2.1 Bill of Sale and Assumption Agreement. The Bill of Sale and
Assumption Agreement in the form mutually acceptable, transferring such Party's
Assets as contemplated hereunder.
8.2.2 Deeds. Quitclaim deeds in recordable form conveying each parcel
of such Party's Owned Property, and assignments of leases and easements in
recordable form, with respect to such Party's Leased Property and Other Real
Property Interests, each as contemplated hereunder.
8.2.3 Other. Such other documents and instruments as may be necessary
to effect the intent of this Agreement and to consummate the transactions
contemplated hereby.
9. TERMINATION AND DEFAULT.
9.1 Termination Events. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
9.1.1 At any time, by the mutual agreement of PARTY A and PARTY B;
9.1.2 By either PARTY A or PARTY B at any time, if the other is in
material breach or default of any of the other's covenants, agreements or other
obligations herein;
9.1.3 By either PARTY A or PARTY B upon written notice to the other,
with respect to any transfers that have not been completed on or before six (6)
months after the date of this Agreement; or
9.1.4 By either PARTY A or PARTY B if an injunction, restraining
order or decree of any nature of any Governmental Authority of competent
jurisdiction is issued that prohibits the consummation of any of the
transactions contemplated hereby and such injunction, restraining order or
decree is final and nonappealable; provided, however, that the party seeking to
terminate this Agreement pursuant to this clause has used commercially
reasonable efforts to have such injunction, order or decree vacated or denied.
9.2 Effect of Termination. Except as set forth in Section 9.1.3, if this
Agreement is terminated pursuant to Section 9.1, all obligations of the Parties
under this Agreement will terminate, except for the obligations set forth in
Section 10.7.
10. MISCELLANEOUS PROVISIONS.
10.1 Parties Obligated and Benefited. Subject to the limitations set forth
below, this Agreement will be binding upon each of the Parties and their
respective assigns and successors in interest and will inure solely to the
benefit of the Parties and their respective assigns and successors in interest,
and no other Person will be entitled to any of the benefits conferred by this
Agreement.
10.2 Waiver. This Agreement or any of its provisions may not be waived
except in writing. The failure of any Party to enforce any right arising under
this Agreement on one
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15
or more occasions will not operate as a waiver of that or any other right on
that or any other occasion.
10.3 Captions. The section and other captions of this Agreement are for
convenience only and do not constitute a part of this Agreement.
10.4 Counterparts. This Agreement may be executed in counterparts, each of
which will be deemed an original.
10.5 Entire Agreement. This Agreement (including the Schedules and Exhibits
referred to in this Agreement, which are incorporated in and constitute a part
of this Agreement) contains the entire agreement of the Parties with respect to
the subject matter hereof and supersedes all prior oral or written agreements
and understandings with respect to such subject matter. This Agreement may not
be amended or modified except by a writing signed by all of the parties hereto.
10.6 Severability. Any term or provision of this Agreement that is invalid
or unenforceable will be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining rights
of the Person intended to be benefited by such provision or any other provisions
of this Agreement.
10.7 Expenses. Except as otherwise expressly provided in this Agreement,
each Party will pay all of its expenses, including attorneys' and accountants'
fees, in connection with the negotiation of this Agreement, the performance of
its obligations and the consummation of the transactions contemplated by this
Agreement.
10.8 Risk of Loss. At all times prior to the Closing Time, the risk of any
loss or damage to each Party's Assets resulting from fire, theft or other
casualty (except reasonable wear and tear) or the risk that all or any part of
or interest in each Party's Assets is taken or condemned as a result of a
Governmental Authority's exercise of its powers of eminent domain, or if a
Governmental Authority having such power informs a Party that it intends to
condemn all or any part of such Party's Assets (such event being called, in
either case, a "Taking"), shall remain with the current owner of such Assets,
and such owner shall be entitled to receive and retain all insurance or
condemnation proceeds paid or payable as a result of any loss, damage or
condemnation of its Assets. With respect to any Party's Assets that are damaged
or taken and therefore are not to be transferred pursuant hereto, the Parties
agree to adjust the values of the Assets to be exchanged pursuant hereto so as
to comply with the requirements of Section 1031 of the Code and the applicable
exchange; such adjustment shall occur according to the mechanism set forth in
Section 5.1 with the necessary changes thereto.
10.9 Commercially Reasonable Efforts. For purposes of this Agreement,
"commercially reasonable efforts" will not be deemed to require a Party to
undertake extraordinary or unreasonable measures, including the payment of
amounts in excess of normal and usual filing fees and processing fees, if any,
or other payments with respect to any Contract that are significant in the
context of such Contract (or significant on the aggregate basis as to all
Contracts).
[The remainder of this page intentionally left blank]
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16
The parties have executed this Agreement as of the day and year first above
written.
HOMETOWN TV, INC.
Federal Tax ID #: 14-1749551
By: _______________________________________
Title: ____________________________________
CHARTER COMMUNICATIONS ENTERTAINMENT I, LLC
Federal Tax ID #: 43-1720016
By: _______________________________________
Title: ____________________________________
CHARTER CABLE PARTNERS, LLC
Federal Tax ID #: 75-2775562
By: _______________________________________
Title: ____________________________________
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TABLE OF CONTENTS
Page
----
1. DEFINITIONS...........................................................1
1.1 Agreement....................................................1
1.2 Assets.......................................................1
1.3 Books and Records............................................1
1.4 Business Day.................................................2
1.5 Cable Business...............................................2
1.6 Closing......................................................2
1.7 Closing Time.................................................2
1.8 Communications Act...........................................2
1.9 Contract.....................................................2
1.10 FCC..........................................................2
1.11 Governmental Authority.......................................2
1.12 Intellectual Property........................................2
1.13 Judgment.....................................................3
1.14 Leased Property..............................................3
1.15 Legal Requirement............................................3
1.16 Lien.........................................................3
1.17 Losses.......................................................3
1.18 Other Intangibles............................................3
1.19 Other Real Property Interests................................4
1.20 Owned Property...............................................4
1.21 Party........................................................4
1.22 Permitted Liens..............................................4
1.23 Person.......................................................4
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Page
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1.24 Required Consents............................................4
1.25 System.......................................................5
1.26 Systems Contracts............................................5
1.27 Systems Franchises...........................................5
1.28 Systems Licenses.............................................5
1.29 Tangible Personal Property...................................5
1.30 Taxes........................................................6
1.31 Other Definitions............................................6
1.32 Usage........................................................7
2. EXCHANGE..............................................................7
2.1 Exchange of Assets...........................................7
2.2 Method of Exchange...........................................7
3. CONSIDERATION.........................................................8
4. REPRESENTATIONS AND WARRANTIES........................................8
4.1 Organization and Qualification...............................8
4.2 Authority and Validity.......................................8
4.3 No Violation.................................................8
4.4 Systems Contracts............................................9
4.5 Compliance with Legal Requirements...........................9
4.6 Absence of Certain Changes or Events.........................9
4.7 Tax Returns; Other Reports...................................9
4.8 Systems Information..........................................9
5. ADDITIONAL COVENANTS.................................................10
5.1 Required Consents...........................................10
5.2 Sales and Transfer Taxes....................................11
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19
Page
----
5.3 Further Assurances..........................................11
5.4 Satisfaction of Conditions..................................11
6. CONDITIONS PRECEDENT.................................................11
6.1 Conditions to Each Party's Obligations......................11
6.1.1 Accuracy of Representations and Warranties.........11
6.1.2 Deliveries.........................................11
6.1.3 Legal Proceedings..................................12
6.1.4 Consents...........................................12
6.1.5 No Material Adverse Damage.........................12
7. PRE-CLOSING MANAGEMENT ARRANGEMENT...................................12
8. THE CLOSING..........................................................12
8.1 The Closing; Time and Place.................................12
8.2 Delivery Obligations........................................12
8.2.1 Bill of Sale and Assumption Agreement..............13
8.2.2 Deeds..............................................13
8.2.3 Other..............................................13
9. TERMINATION AND DEFAULT..............................................13
9.1 Termination Events..........................................13
9.2 Effect of Termination.......................................13
10. MISCELLANEOUS PROVISIONS.............................................13
10.1 Parties Obligated and Benefited.............................13
10.2 Waiver......................................................13
10.3 Captions....................................................14
10.4 Counterparts................................................14
10.5 Entire Agreement............................................14
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20
Page
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10.6 Severability................................................14
10.7 Expenses....................................................14
10.8 Risk of Loss................................................14
10.9 Commercially Reasonable Efforts.............................14
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List of Schedules
Schedule 1.14 Leased Property
Schedule 1.20 Owned Property
Schedule 1.27 Systems Franchises
Schedule 1.28 Systems Licenses
Schedule 3.1-A PARTY A System Value
Schedule 3.1-B PARTY B System Value
Schedule 4.7 Tax Returns Deficiency/Audit Notice
Schedule 4.8-A PARTY A Systems
Schedule 4.8-B PARTY B Systems
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22
SCHEDULE 4.8-A
Hometown TV, Inc. ("PARTY A")
HOMETOWN TV, INC.
HEADEND SYSTEM FRANCHISE AUTHORITY STATE
- ------- ------ ------------------- -----
Berlin Hometown Berlin NY
Berlin Hometown Petersburg NY
23
SCHEDULE 4.8-B
Charter Communications Entertainment I, LLC and Charter Cable Partners, LLC
(collectively, "PARTY B")
CHARTER COMMUNICATIONS ENTERTAINMENT I, LLC (RECEIVING ASSETS ONLY)
CHARTER CABLE PARTNERS, LLC
HEADEND SYSTEM FRANCHISE AUTHORITY STATE
- ------- ------ ------------------- -----
Eau Claire Eau Claire WI Cadott WI
1
EXHIBIT 10.30(b)
ASSET EXCHANGE AGREEMENT
DATED AS OF JANUARY 2, 2001
AMONG
CHARTER VIDEO ELECTRONICS, INC.,
ON THE ONE HAND
AND
CHARTER CABLE PARTNERS, LLC,
CHARTER COMMUNICATIONS VI, LLC,
ON THE OTHER HAND
2
ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT (the "Agreement") is made as of January
2, 2001, by and between Charter Video Electronics, Inc. ("PARTY A") and each of
Charter Cable Partners, LLC and Charter Communications VI, LLC (collectively,
"PARTY B"), with reference to the following facts and circumstances:
RECITALS
A. PARTY A owns and operates all or part of cable television systems
that are franchised and/or hold other authority to operate in and around the
municipalities listed on SCHEDULE 4.8-A.
B. PARTY B owns and operates all or part of cable television systems
that are franchised and/or hold other authority to operate in and around the
municipalities listed on SCHEDULE 4.8-B. PARTY B is comprised of two entities
both of which are single-member limited liability companies, and such entities
will be treated for federal income tax purposes as disregarded entities with
respect to Charter Communications Holding Company, LLC under Treasury Regulation
ss. 301.7701-3(b)(1)(ii).
C. The parties desire to exchange the aforesaid systems in such a
manner as to effect, to the extent reasonably possible, a like-kind exchange of
such assets under Section 1031 of the United States Internal Revenue Code, as
amended (the "Code").
AGREEMENTS
Accordingly, the parties hereby agree as follows:
1. DEFINITIONS. In addition to the terms defined elsewhere in this Agreement,
the following capitalized terms or terms otherwise defined in this Article 1
shall have the meanings set forth below:
1.1 Agreement. The term "Agreement" shall mean and refer to this Asset
Exchange Agreement.
1.2 Assets. The term "Assets" shall mean and refer to all of the
assets, privileges, contracts, licenses, permits, franchises, authorizations,
rights, interests, claims and other properties, real and personal, tangible and
intangible, of every type and description which are owned, leased, held for use
or used in such Party's Cable Business. Assets shall include Tangible Personal
Property, Owned Property, Leased Property, Other Real Property Interests,
Systems Franchises, Systems Licenses, Systems Contracts, Books and Records and
Other Intangibles. Reference to PARTY A Assets shall be deemed to refer to the
Assets of PARTY A, and reference to PARTY B Assets shall be deemed to refer to
the Assets of PARTY B.
1.3 Books and Records. The term "Books and Records" shall mean and
refer to all engineering records, files, data, drawings, blueprints, schematics,
reports, lists, plans and procedures and all other files of correspondence,
lists, records and reports concerning such Party's Cable Business, including
subscribers and prospective subscribers of such Party's
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3
Systems, signal and program carriage and dealings with Governmental Authorities
with respect to such Party's Systems, including all reports filed with respect
to such Party's Systems by or on behalf of such Party with the FCC and
statements of account filed with respect to such Party's Systems by or on behalf
of such Party with the U.S. Copyright Office, but excluding all documents,
reports and records relating to any employee of such Party's Systems who has not
given consent to disclosure of such documents, reports and records. Reference to
PARTY A Books and Records shall be deemed to refer to the Books and Records of
PARTY A, and reference to PARTY B Books and Records shall be deemed to refer to
the Books and Records of PARTY B, in each case, as included among such Party's
Assets.
1.4 Business Day. The term "Business Day" shall mean and refer to any
day other than a Saturday, Sunday or a day on which the banking institutions in
St. Louis, Missouri, are required or authorized to be closed.
1.5 Cable Business. The term "Cable Business" shall mean and refer to
the cable television business and other revenue-generating businesses and
related operations conducted by such Party through such Party's Systems.
Reference to PARTY A Cable Business shall be deemed to refer to the Cable
Business of PARTY A, and reference to PARTY B Cable Business shall be deemed to
refer to the Cable Business of PARTY B.
1.6 Closing. The term "Closing" shall mean and refer to the closing of
the exchange transactions contemplated by this Agreement.
1.7 Closing Time. The term "Closing Time" shall mean and refer to 11:59
p.m., Central Time, on the Closing Date.
1.8 Communications Act. The term "Communications Act" shall mean and
refer to the Communications Act of 1934, as amended, and the FCC rules and
regulations promulgated thereunder.
1.9 Contract. The term "Contract" shall mean and refer to any contract,
mortgage, deed of trust, bond, indenture, lease, license, note, franchise,
certificate, option, warrant, right or other instrument, document, obligation or
agreement, whether written or oral.
1.10 FCC. The term "FCC" shall mean and refer to the Federal
Communications Commission.
1.11 Governmental Authority. The term "Governmental Authority" shall
mean and refer to the United States of America, any state, commonwealth,
territory or possession of the United States of America and any political
subdivision or quasi-governmental authority of any of the same, including any
court, tribunal, department, commission, board, bureau, agency, body, county,
municipality, province, parish or other instrumentality of any of the foregoing.
1.12 Intellectual Property. The term "Intellectual Property" shall mean
and refer to, with respect to any Cable Business, any (a) trademarks, trade
dress, trade names, service marks, logos and other similar proprietary rights,
(b) domain names, (c) copyrights and (d)
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4
patents and patentable know-how, inventions and processes, in each case used in
such Cable Business.
1.13 Judgment. The term "Judgment" shall mean and refer to any
judgment, writ, order, injunction, award or decree of any court, judge, justice
or magistrate, including any bankruptcy court or judge or the arbitrator in any
binding arbitration, and any order of or by any Governmental Authority.
1.14 Leased Property. The term "Leased Property" shall mean and refer
to the leaseholds of real property included among such Party's Assets and
described as such Party's Leased Property on SCHEDULE 1.14. Reference to PARTY A
Leased Property shall be deemed to refer to the Leased Property of PARTY A, and
reference to PARTY B Leased Property shall be deemed to refer to the Leased
Property of PARTY B, in each case, as included among such Party's Assets.
1.15 Legal Requirement. The term "Legal Requirement" shall mean and
refer to any applicable common law and any statute, ordinance, code or other
law, rule, regulation, order, technical or other written standard, requirement
or procedure enacted, adopted, promulgated, applied or followed by any
Governmental Authority, including any Judgment.
1.16 Lien. The term "Lien" shall mean and refer to any security
interest, security agreement, financing statement filed with any Governmental
Authority, conditional sale or other title retention agreement, any lease,
consignment or bailment given for purposes of security, any mortgage, lien
(including any lien for Taxes), indenture, pledge, option, encumbrance, adverse
interest, constructive trust or other trust, claim, attachment, exception to,
defect in, or other condition adversely affecting title or other ownership
interest (including reservations, rights of entry, possibilities of reverter,
encroachments, protrusions, easements, rights-of-way, rights of first refusal,
restrictive covenants, leases and licenses) of any kind, which constitutes an
interest in or claim against property, whether arising pursuant to any Legal
Requirement, Systems License, Systems Franchise, Systems Contract or otherwise.
1.17 Losses. The term "Losses" shall mean and refer to any claims,
losses, liabilities, damages, penalties, costs and expenses, including interest
that may be imposed in connection therewith, expenses of investigation,
reasonable fees and disbursements of counsel and other experts, and, as
applicable, the cost to any Person making a claim or seeking indemnification
under this Agreement with respect to funds expended by such Person by reason of
the occurrence of any event or the existence or assertion of any Liens (other
than Permitted Liens) with respect to which indemnification is sought.
1.18 Other Intangibles. The term "Other Intangibles" shall mean and
refer to all intangible assets, other than such Party's Systems Franchises,
Systems Licenses and Systems Contracts, including subscriber lists, claims, and
Intellectual Property, if any, included among such Party's Assets. Reference to
PARTY A Other Intangibles shall be deemed to refer to the Other Intangibles of
PARTY A, and reference to PARTY B Other Intangibles shall be deemed to refer to
the Other Intangibles of PARTY B, in each case, as included among such Party's
Assets.
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5
1.19 Other Real Property Interests. The term "Other Real Property
Interests" shall mean and refer to the easements and rights of access (other
than those relating to multiple dwelling units) and other interests in real
property held by such Party in connection with such Party's Cable Business, but
not including such Party's Leased Property or such Party's Owned Property.
Reference to PARTY A Other Real Property Interests shall be deemed to refer to
the Other Real Property Interests of PARTY A, and reference to PARTY B Other
Real Property Interests shall be deemed to refer to the Other Real Property
Interests of PARTY B, in each case, as included among such Party's Assets.
1.20 Owned Property. The term "Owned Property" shall mean and refer to
the fee interests in the real property included among such Party's Assets and
described as such Party's Owned Property on SCHEDULE 1.20 and all improvements
and towers thereon and appurtenances thereto. Reference to PARTY A Owned
Property shall be deemed to refer to the Owned Property of PARTY A, and
reference to PARTY B Owned Property shall be deemed to refer to the Owned
Property of PARTY B, in each case, as included among such Party's Assets.
1.21 Party. The term "Party" shall mean and refer to either PARTY A, or
PARTY B, or each of the entities constituting PARTY A or PARTY B, in each
instance as the context requires.
1.22 Permitted Liens. The term "Permitted Liens" shall mean and refer
to (a) Liens for Taxes, assessments and governmental charges, in each case not
yet due and payable, (b) zoning laws or ordinances or any similar Legal
Requirements, (c) rights reserved to any Governmental Authority to regulate the
affected property, (d) as to Leased Property or Tangible Personal Property that
is leased, the interests of the lessors thereof, and (e) as to Owned Property,
Leased Property and Other Real Property Interests, any easements, rights-of-way,
servitudes, conditions, covenants, restrictions and minor imperfections or
irregularities in title, in each case, which are reflected in the public records
and which do not individually or in the aggregate interfere with the right or
ability of the applicable Party to own, use, enjoy or operate the Owned
Property, Leased Property or Other Real Property Interests in the manner
currently used or to convey good, marketable and indefeasible fee simple title
to the same; provided that "Permitted Liens" will not include any Lien which
could prevent or inhibit in any way (other than as permitted under clause (e))
the conduct of the business of the affected System, and provided further that
classification of any Lien as a "Permitted Lien" will not affect any liability
which a Party may have for any such Lien, including pursuant to any indemnity
obligation under this Agreement.
1.23 Person. The term "Person" shall mean and refer to any natural
person, Governmental Authority, corporation, general or limited partnership,
limited liability company, joint venture, trust, association or unincorporated
entity of any kind.
1.24 Required Consents. The term "Required Consents" shall mean and
refer to any and all consents, authorizations and approvals under or in
connection with such Party's Systems Franchises and Systems Licenses required
for (a) such Party to transfer its Assets to the other Party pursuant to this
Agreement, (b) the other Party to operate such Party's Systems and to own,
lease, use and operate such Party's Assets and Systems at the places
- 4 -
6
and in the manner in which such Party's Assets are used and such Party's Systems
are operated as of the date of this Agreement and as of the Closing, or (c) the
other Party to assume and perform such Party's Systems Franchises and Systems
Licenses. Reference to PARTY A Required Consents shall be deemed to refer to the
Required Consents for PARTY A, and reference to PARTY B Required Consents shall
be deemed to refer to the Required Consents for PARTY B.
1.25 System. The term "System" shall mean and refer to all or part of
any cable television distribution system owned or leased by a Party, or in which
a Party has other rights of use, that are used by such Party to serve its
customers within the municipalities set forth on SCHEDULE 4.8-A (for PARTY A)
and SCHEDULE 4.8-B (for PARTY B). Reference to PARTY A Systems shall be deemed
to refer to the Systems of PARTY A, and reference to PARTY B Systems shall be
deemed to refer to the Systems of PARTY B.
1.26 Systems Contracts. The term "Systems Contracts" shall mean and
refer to all Contracts (other than such Party's Systems Franchises and Systems
Licenses) that are included among such Party's Assets, including the lease
agreements for such Party's Tangible Personal Property, pole attachment
agreements, underground conduit agreements, crossing agreements, retransmission
consent agreements, multiple dwelling, bulk billing or commercial service
agreements and the Contracts documenting such Party's Leased Property described
on SCHEDULE 1.14. Reference to PARTY A Systems Contracts shall be deemed to
refer to the Systems Contracts of PARTY A, and reference to PARTY B Systems
Contracts shall be deemed to refer to the Systems Contracts of PARTY B, in each
case, as included among such Party's Assets.
1.27 Systems Franchises. The term "Systems Franchises" shall mean and
refer to the franchises, permits and similar authorizations included among such
Party's Assets (other than such Party's Systems Licenses) described on SCHEDULE
1.27, and all rights and benefits of such Party, including the rights and
benefits arising under Section 626 of the Communications Act (47 U.S.C. 546) to
the extent applicable to such Party's Systems Franchises. Reference to PARTY A
Systems Franchises shall be deemed to refer to the Systems Franchises of PARTY
A, and reference to PARTY B Systems Franchises shall be deemed to refer to the
Systems Franchises of PARTY B, in each case, as included among such Party's
Assets.
1.28 Systems Licenses. The term "Systems Licenses" shall mean and refer
to the intangible cable television channel distribution rights, cable television
relay service (CARS), business radio and other licenses, earth station
registrations, authorizations, consents or permits issued by the FCC or any
other Governmental Authority included among such Party's Assets and described on
SCHEDULE 1.28 (other than such Party's Systems Franchises and Systems Contracts)
and all rights and benefits of such Party pertaining thereto. Reference to PARTY
A Systems Licenses shall be deemed to refer to the Systems Licenses of PARTY A,
and reference to PARTY B Systems Licenses shall be deemed to refer to the
Systems Licenses of PARTY B, in each case, as included among such Party's
Assets.
1.29 Tangible Personal Property. The term "Tangible Personal Property"
shall mean and refer to all tangible personal property included among such
Party's Assets, including towers (other than towers on such Party's Owned
Property which are fixtures
- 5 -
7
thereon and a part thereof), tower equipment, aboveground and underground cable,
distribution systems, headend amplifiers, line amplifiers, microwave equipment,
converters, testing equipment, motor vehicles, office equipment, computers and
billing equipment, furniture, fixtures, supplies, inventory and other physical
assets relating to the Systems. Reference to PARTY A Tangible Personal Property
shall be deemed to refer to the Tangible Personal Property of PARTY A, and
reference to PARTY B Tangible Personal Property shall be deemed to refer to the
Tangible Personal Property of PARTY B, in each case, as included among such
Party's Assets.
1.30 Taxes. The term "Taxes" shall mean and refer to levies and
assessments of any kind or nature imposed by any Governmental Authority,
including all income, sales, use, ad valorem, value added, franchise, severance,
net or gross proceeds, withholding, payroll, employment, excise or property
taxes and levies or assessments related to unclaimed property, together with any
interest thereon and any penalties, additions to tax or additional amounts
applicable thereto. For purposes of determining any Tax cost or Tax benefit to
any Person, such amount will be the actual cost or benefit recognized by such
Person at the time of actual payment of the additional Tax or actual receipt of
the Tax benefit. In the event that any Loss, payment or other amount is required
to be determined on an after-Tax basis, such payment or other amount will be
determined without regard to any Tax cost or Tax benefit not actually recognized
at the time of the determination, and appropriate adjustments will be made when
and to the extent that such Tax cost or Tax benefit is actually recognized.
1.31 Other Definitions. The following terms have the meanings set forth
in the sections indicated in the table below:
Term Section
- ---- -------
Closing Date 8.1
Code Recital C
commercially reasonable efforts 10.9
Exchange 2.1
Exchange Groups 2.2
Matching Franchise 5.1.1
PARTY A First Paragraph
PARTY A Matching Franchise 5.1.2
PARTY A Retained Franchise 5.1.1
PARTY A System Value 3.1
PARTY B First Paragraph
PARTY B Matching Franchise 5.1.1
PARTY B Retained Franchise 5.1.2
PARTY B System Value 3.1
Primary Transfer 5.1.3
Retained Franchise 5.1.1
Subsequent Transfer 5.1.4
Taking 10.8
Transfer Tax Returns 5.2
Transfer Taxes 5.2
- 6 -
8
1.32 Usage. The definitions in Article 1 shall apply equally to both
the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. All references herein to Articles, Sections, Exhibits and
Schedules shall be deemed to be references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. All Exhibits and Schedules attached hereto shall be deemed incorporated
herein as if set forth in full herein and, unless otherwise defined therein, all
terms used in any Exhibit or Schedule shall have the meaning ascribed to such
term in this Agreement. The words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation." The words "hereof,"
"herein," and "hereunder," and words of similar import, when used in this
Agreement, shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise expressly provided herein, any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein. All
accounting terms not otherwise defined in this Agreement will have the meanings
ascribed to them under generally acceptable accounting principles as in effect
from time to time in the United States, consistently applied.
2. EXCHANGE.
2.1 Exchange of Assets. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing, PARTY A and PARTY B agree to
exchange simultaneously the PARTY A Assets for the PARTY B Assets, free and
clear of all Liens (except Permitted Liens) (the "Exchange"). PARTY A and PARTY
B agree to use all reasonable efforts to structure the Exchange in such a way
that, to the extent reasonably possible, it will be a tax free exchange of
like-kind assets under Section 1031 of the Code.
2.2 Method of Exchange. The Exchange is to occur as follows: (A) PARTY
A Tangible Personal Property and PARTY B Tangible Personal Property are being
exchanged each for the other; (B) PARTY A Owned Property, PARTY A Leased
Property, and PARTY A Other Real Property Interests and PARTY B Owned Property,
PARTY B Leased Property, and PARTY B Other Real Property Interests are being
exchanged each for the other; and (C) PARTY A Systems Contracts, PARTY A Systems
Franchises, PARTY A Systems Licenses, and PARTY A Other Intangibles and PARTY B
Systems Contracts, PARTY B Systems Franchises, PARTY B Systems Licenses, and
PARTY B Other Intangibles are being exchanged each for the other. In each case,
the assets described in this Section 2.2 shall be exchanged each for the other
in "Exchange Groups" as defined under Treasury Regulations Sections 1.1031(a)-2
and 1.1031(j)-1, and in each case to the maximum extent permitted by Section
1031 of the Code and the regulations promulgated thereunder. Liabilities assumed
or taken subject to by each Party are being exchanged each for the other to the
maximum extent permitted under Section 1031 of the Code and regulations
thereunder.
- 7 -
9
3. CONSIDERATION.
3.1 For the purposes of this Agreement, the aggregate gross value and
the value of each Exchange Group of the PARTY A Assets comprising all of the
PARTY A Systems shall be as set forth on SCHEDULE 3.1-A ("PARTY A System
Value"), and the aggregate gross value and the value of each Exchange Group of
the PARTY B Assets comprising all of the PARTY B Systems shall be as set forth
on SCHEDULE 3.1-B ("PARTY B System Value").
4. REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants to
the other Party, as follows:
4.1 Organization and Qualification. Such Party is duly formed, validly
existing and in good standing under the laws of its jurisdiction of
formation/incorporation. As of the Closing Date, such Party has all requisite
power and authority to own, lease and use such Party's Assets owned, leased or
used by it and to conduct its Cable Business as it is currently being conducted
by it. As of the date of this Agreement, such Party is duly qualified to do
business and is in good standing under the laws of each jurisdiction in which
the ownership, leasing or use of such Party's Assets owned, leased or used by it
or the nature of its activities undertaken in connection with such Party's
Systems makes such qualification necessary.
4.2 Authority and Validity. Such Party has all requisite entity power
and authority to execute and deliver, to perform its obligations under, and to
consummate the transactions contemplated by this Agreement. The execution and
delivery by such Party of, its performance under, and its consummation of the
transactions contemplated by this Agreement have been duly and validly
authorized by all necessary entity action by or on behalf of such Party. This
Agreement has been duly and validly executed and delivered by such Party and
constitutes valid and legally binding agreement of such Party, enforceable
against it in accordance with the terms hereof, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to the enforcement of
creditors' rights generally or by principles governing the availability of
equitable remedies.
4.3 No Violation. Assuming all Required Consents have been obtained,
the execution and delivery by each Party of, its performance under, and its
consummation of the transactions contemplated by this Agreement do not and will
not: (a) violate any provision of the organizational documents of such Party;
(b) violate any provision of any Legal Requirement applicable to such Party; (c)
require any consent, approval or authorization of, or filing of any certificate,
notice, application, report or other document with, any Governmental Authority
or other Person; or (d) (i) violate, result in a breach of or constitute a
default under, (ii) permit or result in the termination, suspension or
modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of such Party under, or (iv) result in the
creation or imposition of any Lien under, any Systems Contract, Systems
Franchise, Systems License, or other instrument evidencing any of the Assets of
such Party or by which such Party or any of its assets is bound or affected,
provided, however, that no breach of any of the foregoing representations will
be deemed to
- 8 -
10
have occurred if such occurrence does not have a material adverse effect on the
Assets being transferred pursuant hereto, or preclude the transfer thereof.
4.4 Systems Contracts. Such Party has delivered to the other Party true
and complete copies of all such Party's Systems Contracts (including each
Contract relating to such Party's Leased Property and Other Real Property
Interests), including any amendments thereto (or, in the case of oral Contracts,
true and complete written summaries thereof), and each document evidencing such
Party's ownership of its Owned Property.
4.5 Compliance with Legal Requirements. Such Party has used
commercially reasonable efforts to comply in all material respects with all the
applicable Legal Requirements.
4.6 Absence of Certain Changes or Events. Since the date of the
execution of this Agreement, there has been no material adverse change in, nor
has any event or events (other than any affecting the cable television industry
generally) occurred that, individually or in the aggregate, could reasonably be
expected to result in a material adverse change in such Party's Assets, Cable
Business, operations, condition (financial or otherwise) or results of
operations of its Systems, taken as a whole.
4.7 Tax Returns; Other Reports. Such Party has duly and timely filed in
correct form all federal, state, local and foreign Tax returns and other Tax
reports required to be filed by it, and has timely paid all Taxes which have
become due and payable, whether or not so shown on any such return or report,
the failure of which to be filed or paid could affect or result in the
imposition of a Lien upon its Assets or create any transferee or other liability
upon the other Party, except such amounts as are being contested diligently and
in good faith and are not in the aggregate material. Except as set forth on
SCHEDULE 4.7, such Party has not received any notice of, nor does such Party
have any knowledge of, any deficiency, assessment or audit, or proposed
deficiency, assessment or audit from any taxing Governmental Authority which
could affect, or result in the imposition of a Lien upon, any of its Assets or
transferee or other liability upon the other Party.
4.8 Systems Information. SCHEDULES 4.8-A and 4.8-B set forth a
materially true and accurate description, on a System-by-System basis, of the
following information relating to each Party's Systems as of the date of this
Agreement:
(a) the approximate number of aerial and underground miles of
plant included in such Party's Assets and served by each headend;
(b) the approximate number of single family homes and residential
multiple dwelling units passed by each such System;
(c) the MHZ capacity and channel capacity of each headend; and
(d) the number of subscribers served by each such System.
- 9 -
11
5. ADDITIONAL COVENANTS.
5.1 Required Consents. If less than all of the Required Consents for
the transfer of Systems Franchises are obtained as of the Closing Date, then the
following will occur:
5.1.1 With respect to each PARTY A Systems Franchise for which a
Required Consent necessary for the transfer thereof has not been obtained as of
the Closing Date (such Systems Franchise and the PARTY A Assets pertaining
thereto, hereinafter, a "PARTY A Retained Franchise"), the parties will
negotiate in good faith to reach agreement on a PARTY B Systems Franchise (such
Systems Franchise and the PARTY B Assets pertaining thereto, hereinafter, a
"PARTY B Matching Franchise") that is to the greatest extent possible, like kind
to PARTY A Retained Franchise for purposes of Section 1031 of the Code and the
applicable exchange. A PARTY B Matching Franchise may also be a PARTY B Retained
Franchise. For purposes of this Section 5.1, a "Retained Franchise" means either
a PARTY A Retained Franchise or a PARTY B Retained Franchise or both, as the
context requires, and a "Matching Franchise" means either a PARTY A Matching
Franchise or a PARTY B Matching Franchise or both, as the context requires.
5.1.2 Similarly, with respect to each PARTY B Systems Franchise
for which a PARTY B Required Consent necessary for the transfer thereof has not
been obtained as of the Closing Date (such Systems Franchise and the PARTY B
Assets pertaining thereto, hereinafter, a "PARTY B Retained Franchise"), the
parties will negotiate in good faith to reach agreement on a PARTY A Systems
Franchise (such Systems Franchise and the PARTY A Assets pertaining thereto,
hereinafter, a "PARTY A Matching Franchise") that is to the greatest extent
possible, like kind to PARTY B Retained Franchise for purposes of Section 1031
of the Code and the applicable exchange. A PARTY A Matching Franchise may also
be a PARTY A Retained Franchise.
5.1.3 At the Closing, PARTY A and PARTY B shall transfer, convey
and assign (the "Primary Transfer") all of the PARTY A Assets other than any
PARTY A Retained Franchises and PARTY A Matching Franchises and all of the PARTY
B Assets other than any PARTY B Retained Franchises and PARTY B Matching
Franchises.
5.1.4 Following the Closing of the Primary Transfer, the parties
will continue to use commercially reasonable efforts to obtain on an expedited
basis the Required Consents for all PARTY A Retained Franchises and PARTY B
Retained Franchises. Pending such Required Consents being obtained, each of
PARTY A Retained Franchises and PARTY B Retained Franchises shall continue to be
subject to the arrangement set forth in Article 7 hereof, and shall be
transferred, conveyed, or assigned as contemplated herein as soon as practicable
following the obtaining of such Required Consents (such transfer hereinafter
referred to as a "Subsequent Transfer").
5.1.5 All references in this Agreement to the Closing and the
Closing Date will mean the Closing and Closing Date of the Primary Transfer
except as specifically provided otherwise in this Section 5.1.5. Without
limiting the foregoing, all representations and warranties (except as to those
Required Consents that have not been obtained) made in connection with the
Retained Franchises and the Matching Franchises will be made as of the Closing
Date rather than the date of the Subsequent Transfer, the other covenants in
Article
- 10 -
12
5 will not apply to the Retained Franchises or the Matching Franchises following
the Closing Date.
5.2 Sales and Transfer Taxes. All sales, use or excise Taxes arising
from or payable by reason of the transfer of each Party's Assets ("Transfer
Taxes") and all transfer and similar taxes or assessments, including transfer
fees and similar assessments for or under Systems Franchises, Systems Licenses
and Systems Contracts, arising from or payable by reason of the conveyance of
each Party's Assets will be borne equally by each Party. Tax Returns required to
be filed with respect to Transfer Taxes ("Transfer Tax Returns") shall be
prepared and filed by the Party that has the primary responsibility under
applicable law for filing such Transfer Tax Returns.
5.3 Further Assurances. At or after the Closing, each Party at the
request of the other Party, will promptly execute and deliver, or cause to be
executed and delivered, to the other Party all such documents and instruments,
in addition to those otherwise required by this Agreement, in form and substance
reasonably satisfactory to the other Party as the other Party may reasonably
request in order to carry out or evidence the terms of this Agreement or to
collect any accounts receivable or other claims included in the Assets
transferred to the other Party. Without limiting the generality of the
foregoing, PARTY A and PARTY B will take, or cause to be taken, all actions
consistent with the terms of this Agreement, including execution and delivery of
any documents or instruments, as the other may reasonably request to effect the
qualification of the transactions contemplated hereby as a like-kind exchange
under Section 1031 of the Code.
5.4 Satisfaction of Conditions. Each Party will use its commercially
reasonable efforts to satisfy, or to cause to be satisfied, the conditions to
the obligations of the other Party to consummate the transactions contemplated
by this Agreement, as set forth in Article 6.
6. CONDITIONS PRECEDENT.
6.1 Conditions to Each Party's Obligations. The obligations of each
Party to consummate the transactions contemplated by this Agreement will be
subject to the satisfaction, at or before the Closing, of the following
conditions, one or more of which may be waived by such Party:
6.1.1 Accuracy of Representations and Warranties. The
representations and warranties of each Party in this Agreement, without giving
effect to any materiality qualifications contained therein, are true, complete
and accurate on and as of the Closing with the same effect as if made at and as
of the Closing, except to the extent that all misstatements, omissions and
inaccuracies, in the aggregate, do not have a material adverse effect on the
other Party's Assets, Cable Business, the operations, condition (financial or
otherwise) or results of operations of the Systems taken as a whole, or on the
ability of the other Party to perform its obligations under this Agreement.
6.1.2 Deliveries. Each Party shall have delivered the items and
documents required to be delivered by and pursuant to this Agreement, including
those required to be delivered by each Party to the other Party under Section
8.2.
- 11 -
13
6.1.3 Legal Proceedings. No Legal Requirement of any Governmental
Authority (including any temporary Legal Requirement) shall be in effect which
would prevent or make illegal the consummation of any of the transactions
contemplated by this Agreement.
6.1.4 Consents.
(a) Except as provided in Section 5.1, Required Consents
relating to each Party's Systems Franchises shall have been obtained in form and
substance reasonably satisfactory to the other Party, or the consent of the
appropriate Governmental Authority shall be deemed to have been received in
accordance with Section 617 of the Communications Act (47 U.S.C. ss.537).
(b) Each Party shall have received evidence, in form and
substance reasonably satisfactory to it, that the other Party's Required
Consents relating to the other Party's Systems Licenses and Systems Contracts
have been obtained.
6.1.5 No Material Adverse Damage. There shall not have occurred
any damage to such Party's Assets that has materially and adversely affected, or
could reasonably be expected to materially and adversely affect, the cash flow
therefrom.
7. PRE-CLOSING MANAGEMENT ARRANGEMENT.
Pending the Closing, each Party hereby agrees that the other shall be
entitled to receive and retain any and all revenues from the operation of the
Cable Business of the other Party to be transferred pursuant hereto including,
without limitation, subscriber payments and advertising revenue, and shall be
responsible for all expenses and expenditures respecting or pertaining to such
Cable Business. Thus, each PARTY A entity shall be entitled to receive and
retain all revenues from the operation of the PARTY B Cable Business being
transferred to it, and shall be responsible for all expenses and expenditures
respecting or pertaining to such Cable Business; provided, however, that
management fees shall be limited, and shall be paid and expensed only as
allowed, by the credit agreement to which such PARTY B entity is party to or
otherwise bound, and each PARTY B entity shall be entitled to receive and retain
all revenues from the operation of the PARTY A Cable Business being transferred
to it, and shall be responsible for all expenses and expenditures respecting or
pertaining to such Cable Business; provided, however, that management fees shall
be limited, and shall be paid and expensed only as allowed, by the credit
agreement to which such PARTY A entity is party to or otherwise bound.
8. THE CLOSING.
8.1 The Closing; Time and Place. Subject to the terms and conditions of
this Agreement, the Closing shall be held at a place, date and time as mutually
agreed upon by the Parties; provided that such day shall be a Business Day (the
"Closing Date"). The transactions to be consummated at Closing shall be deemed
to have been consummated as of the Closing Time.
8.2 Delivery Obligations. At the Closing, each Party will deliver or
cause to be delivered to the other Party the following:
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14
8.2.1 Bill of Sale and Assumption Agreement. The Bill of Sale and
Assumption Agreement in the form mutually acceptable, transferring such Party's
Assets as contemplated hereunder.
8.2.2 Deeds. Quitclaim deeds in recordable form conveying each
parcel of such Party's Owned Property, and assignments of leases and easements
in recordable form, with respect to such Party's Leased Property and Other Real
Property Interests, each as contemplated hereunder.
8.2.3 Other. Such other documents and instruments as may be
necessary to effect the intent of this Agreement and to consummate the
transactions contemplated hereby.
9. TERMINATION AND DEFAULT.
9.1 Termination Events. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
9.1.1 At any time, by the mutual agreement of PARTY A and PARTY
B;
9.1.2 By either PARTY A or PARTY B at any time, if the other is
in material breach or default of any of the other's covenants, agreements or
other obligations herein;
9.1.3 By either PARTY A or PARTY B upon written notice to the
other, with respect to any transfers that have not been completed on or before
six (6) months after the date of this Agreement; or
9.1.4 By either PARTY A or PARTY B if an injunction, restraining
order or decree of any nature of any Governmental Authority of competent
jurisdiction is issued that prohibits the consummation of any of the
transactions contemplated hereby and such injunction, restraining order or
decree is final and nonappealable; provided, however, that the party seeking to
terminate this Agreement pursuant to this clause has used commercially
reasonable efforts to have such injunction, order or decree vacated or denied.
9.2 Effect of Termination. Except as set forth in Section 9.1.3, if
this Agreement is terminated pursuant to Section 9.1, all obligations of the
Parties under this Agreement will terminate, except for the obligations set
forth in Section 10.7.
10. MISCELLANEOUS PROVISIONS.
10.1 Parties Obligated and Benefited. Subject to the limitations set
forth below, this Agreement will be binding upon each of the Parties and their
respective assigns and successors in interest and will inure solely to the
benefit of the Parties and their respective assigns and successors in interest,
and no other Person will be entitled to any of the benefits conferred by this
Agreement.
10.2 Waiver. This Agreement or any of its provisions may not be waived
except in writing. The failure of any Party to enforce any right arising under
this Agreement on one
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15
or more occasions will not operate as a waiver of that or any other right on
that or any other occasion.
10.3 Captions. The section and other captions of this Agreement are for
convenience only and do not constitute a part of this Agreement.
10.4 Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed an original.
10.5 Entire Agreement. This Agreement (including the Schedules and
Exhibits referred to in this Agreement, which are incorporated in and constitute
a part of this Agreement) contains the entire agreement of the Parties with
respect to the subject matter hereof and supersedes all prior oral or written
agreements and understandings with respect to such subject matter. This
Agreement may not be amended or modified except by a writing signed by all of
the parties hereto.
10.6 Severability. Any term or provision of this Agreement that is
invalid or unenforceable will be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining rights
of the Person intended to be benefited by such provision or any other provisions
of this Agreement.
10.7 Expenses. Except as otherwise expressly provided in this
Agreement, each Party will pay all of its expenses, including attorneys' and
accountants' fees, in connection with the negotiation of this Agreement, the
performance of its obligations and the consummation of the transactions
contemplated by this Agreement.
10.8 Risk of Loss. At all times prior to the Closing Time, the risk of
any loss or damage to each Party's Assets resulting from fire, theft or other
casualty (except reasonable wear and tear) or the risk that all or any part of
or interest in each Party's Assets is taken or condemned as a result of a
Governmental Authority's exercise of its powers of eminent domain, or if a
Governmental Authority having such power informs a Party that it intends to
condemn all or any part of such Party's Assets (such event being called, in
either case, a "Taking"), shall remain with the current owner of such Assets,
and such owner shall be entitled to receive and retain all insurance or
condemnation proceeds paid or payable as a result of any loss, damage or
condemnation of its Assets. With respect to any Party's Assets that are damaged
or taken and therefore are not to be transferred pursuant hereto, the Parties
agree to adjust the values of the Assets to be exchanged pursuant hereto so as
to comply with the requirements of Section 1031 of the Code and the applicable
exchange; such adjustment shall occur according to the mechanism set forth in
Section 5.1 with the necessary changes thereto.
10.9 Commercially Reasonable Efforts. For purposes of this Agreement,
"commercially reasonable efforts" will not be deemed to require a Party to
undertake extraordinary or unreasonable measures, including the payment of
amounts in excess of normal and usual filing fees and processing fees, if any,
or other payments with respect to any Contract that are significant in the
context of such Contract (or significant on the aggregate basis as to all
Contracts).
[The remainder of this page intentionally left blank]
- 14 -
16
The parties have executed this Agreement as of the day and year first
above written.
CHARTER VIDEO ELECTRONICS, INC.
Federal Tax ID #: 39-1029927
By:________________________________________
Title:_____________________________________
CHARTER CABLE PARTNERS, LLC
Federal Tax ID #: 75-2775562
By:________________________________________
Title:_____________________________________
CHARTER COMMUNICATIONS VI, LLC
Federal Tax ID #: 43-1854208
By:________________________________________
Title:_____________________________________
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TABLE OF CONTENTS
Page
----
1. DEFINITIONS......................................................................................1
1.1 Agreement...............................................................................1
1.2 Assets..................................................................................1
1.3 Books and Records.......................................................................1
1.4 Business Day............................................................................2
1.5 Cable Business..........................................................................2
1.6 Closing.................................................................................2
1.7 Closing Time............................................................................2
1.8 Communications Act......................................................................2
1.9 Contract................................................................................2
1.10 FCC.....................................................................................2
1.11 Governmental Authority..................................................................2
1.12 Intellectual Property...................................................................2
1.13 Judgment................................................................................3
1.14 Leased Property.........................................................................3
1.15 Legal Requirement.......................................................................3
1.16 Lien....................................................................................3
1.17 Losses..................................................................................3
1.18 Other Intangibles.......................................................................3
1.19 Other Real Property Interests...........................................................4
1.20 Owned Property..........................................................................4
1.21 Party...................................................................................4
1.22 Permitted Liens.........................................................................4
1.23 Person..................................................................................4
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18
Page
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1.24 Required Consents.......................................................................4
1.25 System..................................................................................5
1.26 Systems Contracts.......................................................................5
1.27 Systems Franchises......................................................................5
1.28 Systems Licenses........................................................................5
1.29 Tangible Personal Property..............................................................5
1.30 Taxes...................................................................................6
1.31 Other Definitions.......................................................................6
1.32 Usage...................................................................................7
2. EXCHANGE.........................................................................................7
2.1 Exchange of Assets......................................................................7
2.2 Method of Exchange......................................................................7
3. CONSIDERATION....................................................................................8
4. REPRESENTATIONS AND WARRANTIES...................................................................8
4.1 Organization and Qualification..........................................................8
4.2 Authority and Validity..................................................................8
4.3 No Violation............................................................................8
4.4 Systems Contracts.......................................................................9
4.5 Compliance with Legal Requirements......................................................9
4.6 Absence of Certain Changes or Events....................................................9
4.7 Tax Returns; Other Reports..............................................................9
4.8 Systems Information.....................................................................9
5. ADDITIONAL COVENANTS.............................................................................10
5.1 Required Consents.......................................................................10
5.2 Sales and Transfer Taxes................................................................11
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Page
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5.3 Further Assurances......................................................................11
5.4 Satisfaction of Conditions..............................................................11
6. CONDITIONS PRECEDENT.............................................................................11
6.1 Conditions to Each Party's Obligations..................................................11
6.1.1 Accuracy of Representations and Warranties.....................................11
6.1.2 Deliveries.....................................................................11
6.1.3 Legal Proceedings..............................................................12
6.1.4 Consents.......................................................................12
6.1.5 No Material Adverse Damage.....................................................12
7. PRE-CLOSING MANAGEMENT ARRANGEMENT...............................................................12
8. THE CLOSING......................................................................................12
8.1 The Closing; Time and Place.............................................................12
8.2 Delivery Obligations....................................................................12
8.2.1 Bill of Sale and Assumption Agreement..........................................13
8.2.2 Deeds..........................................................................13
8.2.3 Other..........................................................................13
9. TERMINATION AND DEFAULT..........................................................................13
9.1 Termination Events......................................................................13
9.2 Effect of Termination...................................................................13
10. MISCELLANEOUS PROVISIONS.........................................................................13
10.1 Parties Obligated and Benefited.........................................................13
10.2 Waiver..................................................................................13
10.3 Captions................................................................................14
10.4 Counterparts............................................................................14
10.5 Entire Agreement........................................................................14
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Page
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10.6 Severability............................................................................14
10.7 Expenses................................................................................14
10.8 Risk of Loss............................................................................14
10.9 Commercially Reasonable Efforts.........................................................14
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List of Schedules
Schedule 1.14 Leased Property
Schedule 1.20 Owned Property
Schedule 1.27 Systems Franchises
Schedule 1.28 Systems Licenses
Schedule 3.1-A PARTY A System Value
Schedule 3.1-B PARTY B System Value
Schedule 4.7 Tax Returns Deficiency/Audit Notice
Schedule 4.8-A PARTY A Systems
Schedule 4.8-B PARTY B Systems
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SCHEDULE 4.8-A
Charter Video Electronics, Inc. ("PARTY A")
CHARTER VIDEO ELECTRONICS, INC.
HEADEND SYSTEM FRANCHISE AUTHORITY STATE
------- ------ ------------------- -----
Rhinelander Rhinelander WI Argonne WI
Rhinelander Rhinelander Bradley WI
Rhinelander Rhinelander Cassian WI
Rhinelander Rhinelander WI Crandon city WI
Rhinelander Rhinelander WI Crandon town WI
Rhinelander Rhinelander Crescent WI
Rhinelander Rhinelander Lincoln WI
Rhinelander Rhinelander Monico WI
Rhinelander Rhinelander Newbold WI
Rhinelander Rhinelander Nokomis WI
Rhinelander Rhinelander Pelican WI
Rhinelander Rhinelander Pine Lake WI
Rhinelander Rhinelander WI Rhinelander WI
Rhinelander Rhinelander Stella WI
Rhinelander Rhinelander WI Tomahawk WI
Rhinelander Rhinelander Town of Wabeno WI
Rhinelander Rhinelander Woodboro WI
23
SCHEDULE 4.8-B
Charter Cable Partners, LLC and Charter Communications VI, LLC
(collectively, "PARTY B")
CHARTER CABLE PARTNERS, LLC
HEADEND SYSTEM FRANCHISE AUTHORITY STATE
------- ------ ------------------- -----
Ashland Eau Claire WI Bayfield WI
Ashland Eau Claire WI Bayfield WI
Ladysmith Eau Claire WI Bruce WI
Dresser Eau Claire WI Dresser WI
Park Falls Eau Claire WI Eisenstein WI
Ladysmith Eau Claire WI Flambeau WI
Ladysmith Eau Claire WI Grant (Ladysmith) WI
Hayward/Stone Lake Eau Claire WI Hayward WI
Hayward/Stone Lake Eau Claire WI Hayward WI
Ladysmith Eau Claire WI Ladysmith WI
Park Falls Eau Claire WI Lake WI
Dresser Eau Claire WI Osceola WI
Park Falls Eau Claire WI Park Falls WI
Hayward/Stone Lake Eau Claire WI Sand Lake WI
Spooner Eau Claire WI Spooner WI
Dresser Eau Claire WI St Croix Falls WI
Hayward/Stone Lake Eau Claire WI Stone Lake WI
Ladysmith Eau Claire WI Tony WI
Ashland Eau Claire WI Washburn WI
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CHARTER COMMUNICATIONS VI, LLC
HEADEND SYSTEM FRANCHISE AUTHORITY STATE
- ------- ------ ------------------- -----
Oscoda Oscoda/Ausable Alabaster MI
Oscoda Oscoda/Ausable Alcona MI
Oscoda Oscoda/Ausable Ausable MI
Oscoda Oscoda/Ausable Baldwin MI
Oscoda Oscoda/Ausable Caledonia MI
Oscoda Oscoda/Ausable East Tawas MI
Oscoda Oscoda/Ausable Grant MI
Oscoda Oscoda/Ausable Greenbush MI
Oscoda Oscoda/Ausable Harrisville Township MI
Oscoda Oscoda/Ausable Harrisville City MI
Oscoda Oscoda/Ausable Hawes MI
Oscoda Oscoda/Ausable Lincoln MI
Oscoda Oscoda/Ausable Lost Lake Woods MI
Oscoda Oscoda/Ausable Oscoda MI
Oscoda Oscoda/Ausable Ossineke MI
Oscoda Oscoda/Ausable Plainfield MI
Oscoda Oscoda/Ausable Tawas City MI
Oscoda Oscoda/Ausable Tawas Township MI
Oscoda Oscoda/Ausable Wilbur MI
- ii -
1
EXHIBIT 10.30 (c)
ASSET EXCHANGE AGREEMENT
DATED AS OF JANUARY 2, 2001
AMONG
CC VIII OPERATING, LLC,
ON THE ONE HAND
AND
CHARTER COMMUNICATIONS ENTERTAINMENT I, LLC,
CHARTER CABLE PARTNERS, LLC,
FALCON TELECABLE, A CALIFORNIA LIMITED PARTNERSHIP,
CHARTER COMMUNICATIONS VI, LLC,
ON THE OTHER HAND
2
ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT (the "Agreement") is made as of January
2, 2001, by and between CC VIII Operating, LLC ("PARTY A") and each of Charter
Communications Entertainment I, LLC, Charter Cable Partners, LLC, Falcon
Telecable, a California Limited Partnership, and Charter Communications VI, LLC,
(collectively, "PARTY B"), with reference to the following facts and
circumstances:
RECITALS
A. PARTY A owns and operates all or part of cable television systems
that are franchised and/or hold other authority to operate in and around the
municipalities listed on SCHEDULE 4.8-A.
B. PARTY B owns and operates all or part of cable television systems
that are franchised and/or hold other authority to operate in and around the
municipalities listed on SCHEDULE 4.8-B. PARTY B is comprised of four entities
all of which are single-member limited liability companies, and such entities
will be treated for federal income tax purposes as disregarded entities with
respect to Charter Communications Holding Company, LLC under Treasury Regulation
ss. 301.7701-3(b)(1)(ii).
C. The parties desire to exchange the aforesaid systems in such a
manner as to effect, to the extent reasonably possible, a like-kind exchange of
such assets under Section 1031 of the United States Internal Revenue Code, as
amended (the "Code").
AGREEMENTS
Accordingly, the parties hereby agree as follows:
1. DEFINITIONS. In addition to the terms defined elsewhere in this Agreement,
the following capitalized terms or terms otherwise defined in this Article 1
shall have the meanings set forth below:
1.1 Agreement. The term "Agreement" shall mean and refer to this Asset
Exchange Agreement.
1.2 Assets. The term "Assets" shall mean and refer to all of the
assets, privileges, contracts, licenses, permits, franchises, authorizations,
rights, interests, claims and other properties, real and personal, tangible and
intangible, of every type and description which are owned, leased, held for use
or used in such Party's Cable Business. Assets shall include Tangible Personal
Property, Owned Property, Leased Property, Other Real Property Interests,
Systems Franchises, Systems Licenses, Systems Contracts, Books and Records and
Other Intangibles. Reference to PARTY A Assets shall be deemed to refer to the
Assets of PARTY A, and reference to PARTY B Assets shall be deemed to refer to
the Assets of PARTY B.
1.3 Books and Records. The term "Books and Records" shall mean and
refer to all engineering records, files, data, drawings, blueprints, schematics,
reports, lists, plans and procedures and all other files of correspondence,
lists, records and reports concerning such
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3
Party's Cable Business, including subscribers and prospective subscribers of
such Party's Systems, signal and program carriage and dealings with Governmental
Authorities with respect to such Party's Systems, including all reports filed
with respect to such Party's Systems by or on behalf of such Party with the FCC
and statements of account filed with respect to such Party's Systems by or on
behalf of such Party with the U.S. Copyright Office, but excluding all
documents, reports and records relating to any employee of such Party's Systems
who has not given consent to disclosure of such documents, reports and records.
Reference to PARTY A Books and Records shall be deemed to refer to the Books and
Records of PARTY A, and reference to PARTY B Books and Records shall be deemed
to refer to the Books and Records of PARTY B, in each case, as included among
such Party's Assets.
1.4 Business Day. The term "Business Day" shall mean and refer to any
day other than a Saturday, Sunday or a day on which the banking institutions in
St. Louis, Missouri, are required or authorized to be closed.
1.5 Cable Business. The term "Cable Business" shall mean and refer to
the cable television business and other revenue-generating businesses and
related operations conducted by such Party through such Party's Systems.
Reference to PARTY A Cable Business shall be deemed to refer to the Cable
Business of PARTY A, and reference to PARTY B Cable Business shall be deemed to
refer to the Cable Business of PARTY B.
1.6 Closing. The term "Closing" shall mean and refer to the closing of
the exchange transactions contemplated by this Agreement.
1.7 Closing Time. The term "Closing Time" shall mean and refer to 11:59
p.m., Central Time, on the Closing Date.
1.8 Communications Act. The term "Communications Act" shall mean and
refer to the Communications Act of 1934, as amended, and the FCC rules and
regulations promulgated thereunder.
1.9 Contract. The term "Contract" shall mean and refer to any contract,
mortgage, deed of trust, bond, indenture, lease, license, note, franchise,
certificate, option, warrant, right or other instrument, document, obligation or
agreement, whether written or oral.
1.10 FCC. The term "FCC" shall mean and refer to the Federal
Communications Commission.
1.11 Governmental Authority. The term "Governmental Authority" shall
mean and refer to the United States of America, any state, commonwealth,
territory or possession of the United States of America and any political
subdivision or quasi-governmental authority of any of the same, including any
court, tribunal, department, commission, board, bureau, agency, body, county,
municipality, province, parish or other instrumentality of any of the foregoing.
1.12 Intellectual Property. The term "Intellectual Property" shall mean
and refer to, with respect to any Cable Business, any (a) trademarks, trade
dress, trade names, service
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4
marks, logos and other similar proprietary rights, (b) domain names, (c)
copyrights and (d) patents and patentable know-how, inventions and processes, in
each case used in such Cable Business.
1.13 Judgment. The term "Judgment" shall mean and refer to any
judgment, writ, order, injunction, award or decree of any court, judge, justice
or magistrate, including any bankruptcy court or judge or the arbitrator in any
binding arbitration, and any order of or by any Governmental Authority.
1.14 Leased Property. The term "Leased Property" shall mean and refer
to the leaseholds of real property included among such Party's Assets and
described as such Party's Leased Property on SCHEDULE 1.14. Reference to PARTY A
Leased Property shall be deemed to refer to the Leased Property of PARTY A, and
reference to PARTY B Leased Property shall be deemed to refer to the Leased
Property of PARTY B, in each case, as included among such Party's Assets.
1.15 Legal Requirement. The term "Legal Requirement" shall mean and
refer to any applicable common law and any statute, ordinance, code or other
law, rule, regulation, order, technical or other written standard, requirement
or procedure enacted, adopted, promulgated, applied or followed by any
Governmental Authority, including any Judgment.
1.16 Lien. The term "Lien" shall mean and refer to any security
interest, security agreement, financing statement filed with any Governmental
Authority, conditional sale or other title retention agreement, any lease,
consignment or bailment given for purposes of security, any mortgage, lien
(including any lien for Taxes), indenture, pledge, option, encumbrance, adverse
interest, constructive trust or other trust, claim, attachment, exception to,
defect in, or other condition adversely affecting title or other ownership
interest (including reservations, rights of entry, possibilities of reverter,
encroachments, protrusions, easements, rights-of-way, rights of first refusal,
restrictive covenants, leases and licenses) of any kind, which constitutes an
interest in or claim against property, whether arising pursuant to any Legal
Requirement, Systems License, Systems Franchise, Systems Contract or otherwise.
1.17 Losses. The term "Losses" shall mean and refer to any claims,
losses, liabilities, damages, penalties, costs and expenses, including interest
that may be imposed in connection therewith, expenses of investigation,
reasonable fees and disbursements of counsel and other experts, and, as
applicable, the cost to any Person making a claim or seeking indemnification
under this Agreement with respect to funds expended by such Person by reason of
the occurrence of any event or the existence or assertion of any Liens (other
than Permitted Liens) with respect to which indemnification is sought.
1.18 Other Intangibles. The term "Other Intangibles" shall mean and
refer to all intangible assets, other than such Party's Systems Franchises,
Systems Licenses and Systems Contracts, including subscriber lists, claims, and
Intellectual Property, if any, included among such Party's Assets. Reference to
PARTY A Other Intangibles shall be deemed to refer to the Other Intangibles of
PARTY A, and reference to PARTY B Other Intangibles shall be deemed to refer to
the Other Intangibles of PARTY B, in each case, as included among such Party's
Assets.
- 3 -
5
1.19 Other Real Property Interests. The term "Other Real Property
Interests" shall mean and refer to the easements and rights of access (other
than those relating to multiple dwelling units) and other interests in real
property held by such Party in connection with such Party's Cable Business, but
not including such Party's Leased Property or such Party's Owned Property.
Reference to PARTY A Other Real Property Interests shall be deemed to refer to
the Other Real Property Interests of PARTY A, and reference to PARTY B Other
Real Property Interests shall be deemed to refer to the Other Real Property
Interests of PARTY B, in each case, as included among such Party's Assets.
1.20 Owned Property. The term "Owned Property" shall mean and refer to
the fee interests in the real property included among such Party's Assets and
described as such Party's Owned Property on SCHEDULE 1.20 and all improvements
and towers thereon and appurtenances thereto. Reference to PARTY A Owned
Property shall be deemed to refer to the Owned Property of PARTY A, and
reference to PARTY B Owned Property shall be deemed to refer to the Owned
Property of PARTY B, in each case, as included among such Party's Assets.
1.21 Party. The term "Party" shall mean and refer to either PARTY A, or
PARTY B, or each of the entities constituting PARTY A or PARTY B, in each
instance as the context requires.
1.22 Permitted Liens. The term "Permitted Liens" shall mean and refer
to (a) Liens for Taxes, assessments and governmental charges, in each case not
yet due and payable, (b) zoning laws or ordinances or any similar Legal
Requirements, (c) rights reserved to any Governmental Authority to regulate the
affected property, (d) as to Leased Property or Tangible Personal Property that
is leased, the interests of the lessors thereof, and (e) as to Owned Property,
Leased Property and Other Real Property Interests, any easements, rights-of-way,
servitudes, conditions, covenants, restrictions and minor imperfections or
irregularities in title, in each case, which are reflected in the public records
and which do not individually or in the aggregate interfere with the right or
ability of the applicable Party to own, use, enjoy or operate the Owned
Property, Leased Property or Other Real Property Interests in the manner
currently used or to convey good, marketable and indefeasible fee simple title
to the same; provided that "Permitted Liens" will not include any Lien which
could prevent or inhibit in any way (other than as permitted under clause (e))
the conduct of the business of the affected System, and provided further that
classification of any Lien as a "Permitted Lien" will not affect any liability
which a Party may have for any such Lien, including pursuant to any indemnity
obligation under this Agreement.
1.23 Person. The term "Person" shall mean and refer to any natural
person, Governmental Authority, corporation, general or limited partnership,
limited liability company, joint venture, trust, association or unincorporated
entity of any kind.
1.24 Required Consents. The term "Required Consents" shall mean and
refer to any and all consents, authorizations and approvals under or in
connection with such Party's Systems Franchises and Systems Licenses required
for (a) such Party to transfer its Assets to the other Party pursuant to this
Agreement, (b) the other Party to operate such Party's Systems and to own,
lease, use and operate such Party's Assets and Systems at the places
- 4 -
6
and in the manner in which such Party's Assets are used and such Party's Systems
are operated as of the date of this Agreement and as of the Closing, or (c) the
other Party to assume and perform such Party's Systems Franchises and Systems
Licenses. Reference to PARTY A Required Consents shall be deemed to refer to the
Required Consents for PARTY A, and reference to PARTY B Required Consents shall
be deemed to refer to the Required Consents for PARTY B.
1.25 System. The term "System" shall mean and refer to all or part of
any cable television distribution system owned or leased by a Party, or in which
a Party has other rights of use, that are used by such Party to serve its
customers within the municipalities set forth on SCHEDULE 4.8-A (for PARTY A)
and SCHEDULE 4.8-B (for PARTY B). Reference to PARTY A Systems shall be deemed
to refer to the Systems of PARTY A, and reference to PARTY B Systems shall be
deemed to refer to the Systems of PARTY B.
1.26 Systems Contracts. The term "Systems Contracts" shall mean and
refer to all Contracts (other than such Party's Systems Franchises and Systems
Licenses) that are included among such Party's Assets, including the lease
agreements for such Party's Tangible Personal Property, pole attachment
agreements, underground conduit agreements, crossing agreements, retransmission
consent agreements, multiple dwelling, bulk billing or commercial service
agreements and the Contracts documenting such Party's Leased Property described
on SCHEDULE 1.14. Reference to PARTY A Systems Contracts shall be deemed to
refer to the Systems Contracts of PARTY A, and reference to PARTY B Systems
Contracts shall be deemed to refer to the Systems Contracts of PARTY B, in each
case, as included among such Party's Assets.
1.27 Systems Franchises. The term "Systems Franchises" shall mean and
refer to the franchises, permits and similar authorizations included among such
Party's Assets (other than such Party's Systems Licenses) described on SCHEDULE
1.27, and all rights and benefits of such Party, including the rights and
benefits arising under Section 626 of the Communications Act (47 U.S.C. 546) to
the extent applicable to such Party's Systems Franchises. Reference to PARTY A
Systems Franchises shall be deemed to refer to the Systems Franchises of PARTY
A, and reference to PARTY B Systems Franchises shall be deemed to refer to the
Systems Franchises of PARTY B, in each case, as included among such Party's
Assets.
1.28 Systems Licenses. The term "Systems Licenses" shall mean and refer
to the intangible cable television channel distribution rights, cable television
relay service (CARS), business radio and other licenses, earth station
registrations, authorizations, consents or permits issued by the FCC or any
other Governmental Authority included among such Party's Assets and described on
SCHEDULE 1.28 (other than such Party's Systems Franchises and Systems Contracts)
and all rights and benefits of such Party pertaining thereto. Reference to PARTY
A Systems Licenses shall be deemed to refer to the Systems Licenses of PARTY A,
and reference to PARTY B Systems Licenses shall be deemed to refer to the
Systems Licenses of PARTY B, in each case, as included among such Party's
Assets.
1.29 Tangible Personal Property. The term "Tangible Personal Property"
shall mean and refer to all tangible personal property included among such
Party's Assets, including towers (other than towers on such Party's Owned
Property which are fixtures
- 5 -
7
thereon and a part thereof), tower equipment, aboveground and underground cable,
distribution systems, headend amplifiers, line amplifiers, microwave equipment,
converters, testing equipment, motor vehicles, office equipment, computers and
billing equipment, furniture, fixtures, supplies, inventory and other physical
assets relating to the Systems. Reference to PARTY A Tangible Personal Property
shall be deemed to refer to the Tangible Personal Property of PARTY A, and
reference to PARTY B Tangible Personal Property shall be deemed to refer to the
Tangible Personal Property of PARTY B, in each case, as included among such
Party's Assets.
1.30 Taxes. The term "Taxes" shall mean and refer to levies and
assessments of any kind or nature imposed by any Governmental Authority,
including all income, sales, use, ad valorem, value added, franchise, severance,
net or gross proceeds, withholding, payroll, employment, excise or property
taxes and levies or assessments related to unclaimed property, together with any
interest thereon and any penalties, additions to tax or additional amounts
applicable thereto. For purposes of determining any Tax cost or Tax benefit to
any Person, such amount will be the actual cost or benefit recognized by such
Person at the time of actual payment of the additional Tax or actual receipt of
the Tax benefit. In the event that any Loss, payment or other amount is required
to be determined on an after-Tax basis, such payment or other amount will be
determined without regard to any Tax cost or Tax benefit not actually recognized
at the time of the determination, and appropriate adjustments will be made when
and to the extent that such Tax cost or Tax benefit is actually recognized.
1.31 Other Definitions. The following terms have the meanings set forth
in the sections indicated in the table below:
Term Section
---- -------
Closing Date 8.1
Code Recital C
commercially reasonable efforts 10.9
Exchange 2.1
Exchange Groups 2.2
Matching Franchise 5.1.1
PARTY A First Paragraph
PARTY A Matching Franchise 5.1.2
PARTY A Retained Franchise 5.1.1
PARTY A System Value 3.1
PARTY B First Paragraph
PARTY B Matching Franchise 5.1.1
PARTY B Retained Franchise 5.1.2
PARTY B System Value 3.1
Primary Transfer 5.1.3
Retained Franchise 5.1.1
Subsequent Transfer 5.1.4
Taking 10.8
Transfer Tax Returns 5.2
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8
Term Section
---- -------
Transfer Taxes 5.2
1.32 Usage. The definitions in Article 1 shall apply equally to both
the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. All references herein to Articles, Sections, Exhibits and
Schedules shall be deemed to be references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. All Exhibits and Schedules attached hereto shall be deemed incorporated
herein as if set forth in full herein and, unless otherwise defined therein, all
terms used in any Exhibit or Schedule shall have the meaning ascribed to such
term in this Agreement. The words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation." The words "hereof,"
"herein," and "hereunder," and words of similar import, when used in this
Agreement, shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise expressly provided herein, any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein. All
accounting terms not otherwise defined in this Agreement will have the meanings
ascribed to them under generally acceptable accounting principles as in effect
from time to time in the United States, consistently applied.
2. EXCHANGE.
2.1 Exchange of Assets. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing, PARTY A and PARTY B agree to
exchange simultaneously the PARTY A Assets for the PARTY B Assets, free and
clear of all Liens (except Permitted Liens) (the "Exchange"). PARTY A and PARTY
B agree to use all reasonable efforts to structure the Exchange in such a way
that, to the extent reasonably possible, it will be a tax free exchange of
like-kind assets under Section 1031 of the Code.
2.2 Method of Exchange. The Exchange is to occur as follows: (A) PARTY
A Tangible Personal Property and PARTY B Tangible Personal Property are being
exchanged each for the other; (B) PARTY A Owned Property, PARTY A Leased
Property, and PARTY A Other Real Property Interests and PARTY B Owned Property,
PARTY B Leased Property, and PARTY B Other Real Property Interests are being
exchanged each for the other; and (C) PARTY A Systems Contracts, PARTY A Systems
Franchises, PARTY A Systems Licenses, and PARTY A Other Intangibles and PARTY B
Systems Contracts, PARTY B Systems Franchises, PARTY B Systems Licenses, and
PARTY B Other Intangibles are being exchanged each for the other. In each case,
the assets described in this Section 2.2 shall be exchanged each for the other
in "Exchange Groups" as defined under Treasury Regulations Sections 1.1031(a)-2
and 1.1031(j)-1, and in each case to the maximum extent permitted by Section
1031 of the Code and the regulations promulgated thereunder. Liabilities assumed
or taken subject to by each Party are being exchanged each for the other to the
maximum extent permitted under Section 1031 of the Code and regulations
thereunder.
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3. CONSIDERATION.
3.1 For the purposes of this Agreement, the aggregate gross value and
the value of each Exchange Group of the PARTY A Assets comprising all of the
PARTY A Systems shall be as set forth on SCHEDULE 3.1-A ("PARTY A System
Value"), and the aggregate gross value and the value of each Exchange Group of
the PARTY B Assets comprising all of the PARTY B Systems shall be as set forth
on SCHEDULE 3.1-B ("PARTY B System Value").
4. REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants to
the other Party, as follows:
4.1 Organization and Qualification. Such Party is duly formed, validly
existing and in good standing under the laws of its jurisdiction of
formation/incorporation. As of the Closing Date, such Party has all requisite
power and authority to own, lease and use such Party's Assets owned, leased or
used by it and to conduct its Cable Business as it is currently being conducted
by it. As of the date of this Agreement, such Party is duly qualified to do
business and is in good standing under the laws of each jurisdiction in which
the ownership, leasing or use of such Party's Assets owned, leased or used by it
or the nature of its activities undertaken in connection with such Party's
Systems makes such qualification necessary.
4.2 Authority and Validity. Such Party has all requisite entity power
and authority to execute and deliver, to perform its obligations under, and to
consummate the transactions contemplated by this Agreement. The execution and
delivery by such Party of, its performance under, and its consummation of the
transactions contemplated by this Agreement have been duly and validly
authorized by all necessary entity action by or on behalf of such Party. This
Agreement has been duly and validly executed and delivered by such Party and
constitutes valid and legally binding agreement of such Party, enforceable
against it in accordance with the terms hereof, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to the enforcement of
creditors' rights generally or by principles governing the availability of
equitable remedies.
4.3 No Violation. Assuming all Required Consents have been obtained,
the execution and delivery by each Party of, its performance under, and its
consummation of the transactions contemplated by this Agreement do not and will
not: (a) violate any provision of the organizational documents of such Party;
(b) violate any provision of any Legal Requirement applicable to such Party; (c)
require any consent, approval or authorization of, or filing of any certificate,
notice, application, report or other document with, any Governmental Authority
or other Person; or (d) (i) violate, result in a breach of or constitute a
default under, (ii) permit or result in the termination, suspension or
modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of such Party under, or (iv) result in the
creation or imposition of any Lien under, any Systems Contract, Systems
Franchise, Systems License, or other instrument evidencing any of the Assets of
such Party or by which such Party or any of its assets is bound or affected,
provided, however, that no breach of any of the foregoing representations will
be deemed to
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have occurred if such occurrence does not have a material adverse effect on the
Assets being transferred pursuant hereto, or preclude the transfer thereof.
4.4 Systems Contracts. Such Party has delivered to the other Party true
and complete copies of all such Party's Systems Contracts (including each
Contract relating to such Party's Leased Property and Other Real Property
Interests), including any amendments thereto (or, in the case of oral Contracts,
true and complete written summaries thereof), and each document evidencing such
Party's ownership of its Owned Property.
4.5 Compliance with Legal Requirements. Such Party has used
commercially reasonable efforts to comply in all material respects with all the
applicable Legal Requirements.
4.6 Absence of Certain Changes or Events. Since the date of the
execution of this Agreement, there has been no material adverse change in, nor
has any event or events (other than any affecting the cable television industry
generally) occurred that, individually or in the aggregate, could reasonably be
expected to result in a material adverse change in such Party's Assets, Cable
Business, operations, condition (financial or otherwise) or results of
operations of its Systems, taken as a whole.
4.7 Tax Returns; Other Reports. Such Party has duly and timely filed in
correct form all federal, state, local and foreign Tax returns and other Tax
reports required to be filed by it, and has timely paid all Taxes which have
become due and payable, whether or not so shown on any such return or report,
the failure of which to be filed or paid could affect or result in the
imposition of a Lien upon its Assets or create any transferee or other liability
upon the other Party, except such amounts as are being contested diligently and
in good faith and are not in the aggregate material. Except as set forth on
SCHEDULE 4.7, such Party has not received any notice of, nor does such Party
have any knowledge of, any deficiency, assessment or audit, or proposed
deficiency, assessment or audit from any taxing Governmental Authority which
could affect, or result in the imposition of a Lien upon, any of its Assets or
transferee or other liability upon the other Party.
4.8 Systems Information. SCHEDULES 4.8-A and 4.8-B set forth a
materially true and accurate description, on a System-by-System basis, of the
following information relating to each Party's Systems as of the date of this
Agreement:
(a) the approximate number of aerial and underground miles of
plant included in such Party's Assets and served by each headend;
(b) the approximate number of single family homes and residential
multiple dwelling units passed by each such System;
(c) the MHZ capacity and channel capacity of each headend; and
(d) the number of subscribers served by each such System.
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5. ADDITIONAL COVENANTS.
5.1 Required Consents. If less than all of the Required Consents for
the transfer of Systems Franchises are obtained as of the Closing Date, then the
following will occur:
5.1.1 With respect to each PARTY A Systems Franchise for which a
Required Consent necessary for the transfer thereof has not been obtained as of
the Closing Date (such Systems Franchise and the PARTY A Assets pertaining
thereto, hereinafter, a "PARTY A Retained Franchise"), the parties will
negotiate in good faith to reach agreement on a PARTY B Systems Franchise (such
Systems Franchise and the PARTY B Assets pertaining thereto, hereinafter, a
"PARTY B Matching Franchise") that is to the greatest extent possible, like kind
to PARTY A Retained Franchise for purposes of Section 1031 of the Code and the
applicable exchange. A PARTY B Matching Franchise may also be a PARTY B Retained
Franchise. For purposes of this Section 5.1, a "Retained Franchise" means either
a PARTY A Retained Franchise or a PARTY B Retained Franchise or both, as the
context requires, and a "Matching Franchise" means either a PARTY A Matching
Franchise or a PARTY B Matching Franchise or both, as the context requires.
5.1.2 Similarly, with respect to each PARTY B Systems Franchise
for which a PARTY B Required Consent necessary for the transfer thereof has not
been obtained as of the Closing Date (such Systems Franchise and the PARTY B
Assets pertaining thereto, hereinafter, a "PARTY B Retained Franchise"), the
parties will negotiate in good faith to reach agreement on a PARTY A Systems
Franchise (such Systems Franchise and the PARTY A Assets pertaining thereto,
hereinafter, a "PARTY A Matching Franchise") that is to the greatest extent
possible, like kind to PARTY B Retained Franchise for purposes of Section 1031
of the Code and the applicable exchange. A PARTY A Matching Franchise may also
be a PARTY A Retained Franchise.
5.1.3 At the Closing, PARTY A and PARTY B shall transfer, convey
and assign (the "Primary Transfer") all of the PARTY A Assets other than any
PARTY A Retained Franchises and PARTY A Matching Franchises and all of the PARTY
B Assets other than any PARTY B Retained Franchises and PARTY B Matching
Franchises.
5.1.4 Following the Closing of the Primary Transfer, the parties
will continue to use commercially reasonable efforts to obtain on an expedited
basis the Required Consents for all PARTY A Retained Franchises and PARTY B
Retained Franchises. Pending such Required Consents being obtained, each of
PARTY A Retained Franchises and PARTY B Retained Franchises shall continue to be
subject to the arrangement set forth in Article 7 hereof, and shall be
transferred, conveyed, or assigned as contemplated herein as soon as practicable
following the obtaining of such Required Consents (such transfer hereinafter
referred to as a "Subsequent Transfer").
5.1.5 All references in this Agreement to the Closing and the
Closing Date will mean the Closing and Closing Date of the Primary Transfer
except as specifically provided otherwise in this Section 5.1.5. Without
limiting the foregoing, all representations and warranties (except as to those
Required Consents that have not been obtained) made in connection with the
Retained Franchises and the Matching Franchises will be made as of the Closing
Date rather than the date of the Subsequent Transfer, the other covenants in
Article
- 10 -
12
5 will not apply to the Retained Franchises or the Matching Franchises following
the Closing Date.
5.2 Sales and Transfer Taxes. All sales, use or excise Taxes arising
from or payable by reason of the transfer of each Party's Assets ("Transfer
Taxes") and all transfer and similar taxes or assessments, including transfer
fees and similar assessments for or under Systems Franchises, Systems Licenses
and Systems Contracts, arising from or payable by reason of the conveyance of
each Party's Assets will be borne equally by each Party. Tax Returns required to
be filed with respect to Transfer Taxes ("Transfer Tax Returns") shall be
prepared and filed by the Party that has the primary responsibility under
applicable law for filing such Transfer Tax Returns.
5.3 Further Assurances. At or after the Closing, each Party at the
request of the other Party, will promptly execute and deliver, or cause to be
executed and delivered, to the other Party all such documents and instruments,
in addition to those otherwise required by this Agreement, in form and substance
reasonably satisfactory to the other Party as the other Party may reasonably
request in order to carry out or evidence the terms of this Agreement or to
collect any accounts receivable or other claims included in the Assets
transferred to the other Party. Without limiting the generality of the
foregoing, PARTY A and PARTY B will take, or cause to be taken, all actions
consistent with the terms of this Agreement, including execution and delivery of
any documents or instruments, as the other may reasonably request to effect the
qualification of the transactions contemplated hereby as a like-kind exchange
under Section 1031 of the Code.
5.4 Satisfaction of Conditions. Each Party will use its commercially
reasonable efforts to satisfy, or to cause to be satisfied, the conditions to
the obligations of the other Party to consummate the transactions contemplated
by this Agreement, as set forth in Article 6.
6. CONDITIONS PRECEDENT.
6.1 Conditions to Each Party's Obligations. The obligations of each
Party to consummate the transactions contemplated by this Agreement will be
subject to the satisfaction, at or before the Closing, of the following
conditions, one or more of which may be waived by such Party:
6.1.1 Accuracy of Representations and Warranties. The
representations and warranties of each Party in this Agreement, without giving
effect to any materiality qualifications contained therein, are true, complete
and accurate on and as of the Closing with the same effect as if made at and as
of the Closing, except to the extent that all misstatements, omissions and
inaccuracies, in the aggregate, do not have a material adverse effect on the
other Party's Assets, Cable Business, the operations, condition (financial or
otherwise) or results of operations of the Systems taken as a whole, or on the
ability of the other Party to perform its obligations under this Agreement.
6.1.2 Deliveries. Each Party shall have delivered the items and
documents required to be delivered by and pursuant to this Agreement, including
those required to be delivered by each Party to the other Party under Section
8.2.
- 11 -
13
6.1.3 Legal Proceedings. No Legal Requirement of any Governmental
Authority (including any temporary Legal Requirement) shall be in effect which
would prevent or make illegal the consummation of any of the transactions
contemplated by this Agreement.
6.1.4 Consents.
(a) Except as provided in Section 5.1, Required Consents
relating to each Party's Systems Franchises shall have been obtained in form and
substance reasonably satisfactory to the other Party, or the consent of the
appropriate Governmental Authority shall be deemed to have been received in
accordance with Section 617 of the Communications Act (47 U.S.C. ss.537).
(b) Each Party shall have received evidence, in form and
substance reasonably satisfactory to it, that the other Party's Required
Consents relating to the other Party's Systems Licenses and Systems Contracts
have been obtained.
6.1.5 No Material Adverse Damage. There shall not have occurred
any damage to such Party's Assets that has materially and adversely affected, or
could reasonably be expected to materially and adversely affect, the cash flow
therefrom.
7. PRE-CLOSING MANAGEMENT ARRANGEMENT.
Pending the Closing, each Party hereby agrees that the other shall be
entitled to receive and retain any and all revenues from the operation of the
Cable Business of the other Party to be transferred pursuant hereto including,
without limitation, subscriber payments and advertising revenue, and shall be
responsible for all expenses and expenditures respecting or pertaining to such
Cable Business. Thus, each PARTY A entity shall be entitled to receive and
retain all revenues from the operation of the PARTY B Cable Business being
transferred to it, and shall be responsible for all expenses and expenditures
respecting or pertaining to such Cable Business; provided, however, that
management fees shall be limited, and shall be paid and expensed only as
allowed, by the credit agreement to which such PARTY B entity is party to or
otherwise bound, and each PARTY B entity shall be entitled to receive and retain
all revenues from the operation of the PARTY A Cable Business being transferred
to it, and shall be responsible for all expenses and expenditures respecting or
pertaining to such Cable Business; provided, however, that management fees shall
be limited, and shall be paid and expensed only as allowed, by the credit
agreement to which such PARTY A entity is party to or otherwise bound.
8. THE CLOSING.
8.1 The Closing; Time and Place. Subject to the terms and conditions of
this Agreement, the Closing shall be held at a place, date and time as mutually
agreed upon by the Parties; provided that such day shall be a Business Day (the
"Closing Date"). The transactions to be consummated at Closing shall be deemed
to have been consummated as of the Closing Time.
8.2 Delivery Obligations. At the Closing, each Party will deliver or
cause to be delivered to the other Party the following:
- 12 -
14
8.2.1 Bill of Sale and Assumption Agreement. The Bill of Sale and
Assumption Agreement in the form mutually acceptable, transferring such Party's
Assets as contemplated hereunder.
8.2.2 Deeds. Quitclaim deeds in recordable form conveying each
parcel of such Party's Owned Property, and assignments of leases and easements
in recordable form, with respect to such Party's Leased Property and Other Real
Property Interests, each as contemplated hereunder.
8.2.3 Other. Such other documents and instruments as may be
necessary to effect the intent of this Agreement and to consummate the
transactions contemplated hereby.
9. TERMINATION AND DEFAULT.
9.1 Termination Events. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
9.1.1 At any time, by the mutual agreement of PARTY A and PARTY
B;
9.1.2 By either PARTY A or PARTY B at any time, if the other is
in material breach or default of any of the other's covenants, agreements or
other obligations herein;
9.1.3 By either PARTY A or PARTY B upon written notice to the
other, with respect to any transfers that have not been completed on or before
six (6) months after the date of this Agreement; or
9.1.4 By either PARTY A or PARTY B if an injunction, restraining
order or decree of any nature of any Governmental Authority of competent
jurisdiction is issued that prohibits the consummation of any of the
transactions contemplated hereby and such injunction, restraining order or
decree is final and nonappealable; provided, however, that the party seeking to
terminate this Agreement pursuant to this clause has used commercially
reasonable efforts to have such injunction, order or decree vacated or denied.
9.2 Effect of Termination. Except as set forth in Section 9.1.3, if
this Agreement is terminated pursuant to Section 9.1, all obligations of the
Parties under this Agreement will terminate, except for the obligations set
forth in Section 10.7.
10. MISCELLANEOUS PROVISIONS.
10.1 Parties Obligated and Benefited. Subject to the limitations set
forth below, this Agreement will be binding upon each of the Parties and their
respective assigns and successors in interest and will inure solely to the
benefit of the Parties and their respective assigns and successors in interest,
and no other Person will be entitled to any of the benefits conferred by this
Agreement.
10.2 Waiver. This Agreement or any of its provisions may not be waived
except in writing. The failure of any Party to enforce any right arising under
this Agreement on one
- 13 -
15
or more occasions will not operate as a waiver of that or any other right on
that or any other occasion.
10.3 Captions. The section and other captions of this Agreement are for
convenience only and do not constitute a part of this Agreement.
10.4 Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed an original.
10.5 Entire Agreement. This Agreement (including the Schedules and
Exhibits referred to in this Agreement, which are incorporated in and constitute
a part of this Agreement) contains the entire agreement of the Parties with
respect to the subject matter hereof and supersedes all prior oral or written
agreements and understandings with respect to such subject matter. This
Agreement may not be amended or modified except by a writing signed by all of
the parties hereto.
10.6 Severability. Any term or provision of this Agreement that is
invalid or unenforceable will be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining rights
of the Person intended to be benefited by such provision or any other provisions
of this Agreement.
10.7 Expenses. Except as otherwise expressly provided in this
Agreement, each Party will pay all of its expenses, including attorneys' and
accountants' fees, in connection with the negotiation of this Agreement, the
performance of its obligations and the consummation of the transactions
contemplated by this Agreement.
10.8 Risk of Loss. At all times prior to the Closing Time, the risk of
any loss or damage to each Party's Assets resulting from fire, theft or other
casualty (except reasonable wear and tear) or the risk that all or any part of
or interest in each Party's Assets is taken or condemned as a result of a
Governmental Authority's exercise of its powers of eminent domain, or if a
Governmental Authority having such power informs a Party that it intends to
condemn all or any part of such Party's Assets (such event being called, in
either case, a "Taking"), shall remain with the current owner of such Assets,
and such owner shall be entitled to receive and retain all insurance or
condemnation proceeds paid or payable as a result of any loss, damage or
condemnation of its Assets. With respect to any Party's Assets that are damaged
or taken and therefore are not to be transferred pursuant hereto, the Parties
agree to adjust the values of the Assets to be exchanged pursuant hereto so as
to comply with the requirements of Section 1031 of the Code and the applicable
exchange; such adjustment shall occur according to the mechanism set forth in
Section 5.1 with the necessary changes thereto.
10.9 Commercially Reasonable Efforts. For purposes of this Agreement,
"commercially reasonable efforts" will not be deemed to require a Party to
undertake extraordinary or unreasonable measures, including the payment of
amounts in excess of normal and usual filing fees and processing fees, if any,
or other payments with respect to any Contract that are significant in the
context of such Contract (or significant on the aggregate basis as to all
Contracts).
[The remainder of this page intentionally left blank]
- 14 -
16
The parties have executed this Agreement as of the day and year first
above written.
CC VIII OPERATING, LLC,
Federal Tax ID #: 38-2558446
By:___________________________________
Title:________________________________
CHARTER COMMUNICATIONS
ENTERTAINMENT I, LLC
Federal Tax ID #: 43-1720016
By:___________________________________
Title:________________________________
CHARTER CABLE PARTNERS, LLC,
Federal Tax ID #: 75-2775562
By:___________________________________
Title:________________________________
FALCON TELECABLE, A CALIFORNIA
LIMITED PARTNERSHIP,
Federal Tax ID #: 95-4455179
By:___________________________________
Title:________________________________
CHARTER COMMUNICATIONS VI, LLC
Federal Tax ID #: 43-1854208
By:___________________________________
Title:________________________________
- 15 -
17
TABLE OF CONTENTS
Page
----
1. DEFINITIONS......................................................................................1
1.1 Agreement...............................................................................1
1.2 Assets..................................................................................1
1.3 Books and Records.......................................................................1
1.4 Business Day............................................................................2
1.5 Cable Business..........................................................................2
1.6 Closing.................................................................................2
1.7 Closing Time............................................................................2
1.8 Communications Act......................................................................2
1.9 Contract................................................................................2
1.10 FCC.....................................................................................2
1.11 Governmental Authority..................................................................2
1.12 Intellectual Property...................................................................2
1.13 Judgment................................................................................3
1.14 Leased Property.........................................................................3
1.15 Legal Requirement.......................................................................3
1.16 Lien....................................................................................3
1.17 Losses..................................................................................3
1.18 Other Intangibles.......................................................................3
1.19 Other Real Property Interests...........................................................4
1.20 Owned Property..........................................................................4
1.21 Party...................................................................................4
1.22 Permitted Liens.........................................................................4
1.23 Person..................................................................................4
- i -
18
Page
----
1.24 Required Consents.......................................................................4
1.25 System..................................................................................5
1.26 Systems Contracts.......................................................................5
1.27 Systems Franchises......................................................................5
1.28 Systems Licenses........................................................................5
1.29 Tangible Personal Property..............................................................5
1.30 Taxes...................................................................................6
1.31 Other Definitions.......................................................................6
1.32 Usage...................................................................................7
2. EXCHANGE.........................................................................................7
2.1 Exchange of Assets......................................................................7
2.2 Method of Exchange......................................................................7
3. CONSIDERATION....................................................................................8
4. REPRESENTATIONS AND WARRANTIES...................................................................8
4.1 Organization and Qualification..........................................................8
4.2 Authority and Validity..................................................................8
4.3 No Violation............................................................................8
4.4 Systems Contracts.......................................................................9
4.5 Compliance with Legal Requirements......................................................9
4.6 Absence of Certain Changes or Events....................................................9
4.7 Tax Returns; Other Reports..............................................................9
4.8 Systems Information.....................................................................9
5. ADDITIONAL COVENANTS............................................................................10
5.1 Required Consents......................................................................10
5.2 Sales and Transfer Taxes...............................................................11
- ii -
19
Page
----
5.3 Further Assurances.....................................................................11
5.4 Satisfaction of Conditions.............................................................11
6. CONDITIONS PRECEDENT............................................................................11
6.1 Conditions to Each Party's Obligations.................................................11
6.1.1 Accuracy of Representations and Warranties....................................11
6.1.2 Deliveries....................................................................11
6.1.3 Legal Proceedings.............................................................12
6.1.4 Consents......................................................................12
6.1.5 No Material Adverse Damage....................................................12
7. PRE-CLOSING MANAGEMENT ARRANGEMENT..............................................................12
8. THE CLOSING.....................................................................................12
8.1 The Closing; Time and Place............................................................12
8.2 Delivery Obligations...................................................................12
8.2.1 Bill of Sale and Assumption Agreement.........................................13
8.2.2 Deeds.........................................................................13
8.2.3 Other.........................................................................13
9. TERMINATION AND DEFAULT.........................................................................13
9.1 Termination Events.....................................................................13
9.2 Effect of Termination..................................................................13
10. MISCELLANEOUS PROVISIONS........................................................................13
10.1 Parties Obligated and Benefited........................................................13
10.2 Waiver.................................................................................13
10.3 Captions...............................................................................14
10.4 Counterparts...........................................................................14
10.5 Entire Agreement.......................................................................14
- iii -
20
Page
----
10.6 Severability...........................................................................14
10.7 Expenses...............................................................................14
10.8 Risk of Loss...........................................................................14
10.9 Commercially Reasonable Efforts........................................................14
- iv -
21
List of Schedules
Schedule 1.14 Leased Property
Schedule 1.20 Owned Property
Schedule 1.27 Systems Franchises
Schedule 1.28 Systems Licenses
Schedule 3.1-A PARTY A System Value
Schedule 3.1-B PARTY B System Value
Schedule 4.7 Tax Returns Deficiency/Audit Notice
Schedule 4.8-A PARTY A Systems
Schedule 4.8-B PARTY B Systems
- v -
22
SCHEDULE 4.8-A
CC VIII Operating, LLC ("PARTY A")
CC VIII OPERATING, LLC
HEADEND SYSTEM FRANCHISE AUTHORITY STATE
------- ------ ------------------- -----
Winchester/ Winsted Northwest Barkhamsted CT
Winchester/ Winsted Northwest Colebrook CT
Winchester/ Winsted Northwest Harwinton CT
Winchester/ Winsted Northwest New Hartford CT
Winchester/ Winsted Northwest West Hartland CT
Winchester/Winsted Northwest Winchester CT
Winchester/ Winsted Northwest Winsted CT
McCook Beatrice, NE Beattie KS
McCook Beatrice, NE Greenleaf KS
McCook Beatrice, NE Hanover KS
Linn Beatrice, NE Linn KS
Linn Beatrice, NE Marshall County KS
Linn Beatrice, NE Marysville KS
Belchertown Belchertown Belcherton MA
Charlton Charlton Brookfield MA
Charlton, Oxford (after upgrade) Charlton Charlton MA
Charlton Charlton E. Brookfield MA
Belchertown Hadley Hadley MA
Hinsdale Berkshire Hinsdale MA
Lanesborough Berkshire Lanesborough MA
Charlton Charlton N. Brookfield MA
West Stockbridge Berkshire West Stockbridge MA
Oscoda Beatrice Adams NE
Oscoda Grand Island Alda NE
Oscoda Alliance Alliance NE
Oscoda Scottsbluff Bayard NE
Oscoda Beatrice Beatrice NE
Oscoda Scottsbluff Bridgeport NE
Oscoda North Platte Broken Bow NE
Oscoda Beatrice Cortland NE
Oscoda Beatrice Firth NE
Oscoda Grand Island Grand Island NE
Oscoda Hastings Hastings NE
Ogallala Ogallala Keith NE
Ogallala Scottsbluff Kimball City NE
Ogallala Scottsbluff Kimball County NE
Ogallala North Platte Lexington NE
McCook North Platte McCook NE
23
HEADEND SYSTEM FRANCHISE AUTHORITY STATE
------- ------ ------------------- -----
McCook Scottsbluff Minatare NE
McCook Scottsbluff Mitchell NE
McCook Scottsbluff Morrill NE
McCook North Platte North Platte NE
Ogallala Ogallala Ogallala NE
McCook North Platte Red Willow NE
McCook Scottsbluff Scotts Bluff City NE
McCook Scottsbluff Scotts Bluff County NE
McCook Grand Island Shelton NE
McCook Sidney Sidney NE
McCook Grand Island St. Paul NE
McCook Beatrice Talmage NE
Chatham Taconic Ancram NY
Chatham Taconic Austerlitz NY
Chatham Taconic Canaan NY
Chatham Taconic Chatham, Town of NY
Chatham Taconic Chatham, Village of NY
Chatham Taconic Copake NY
Chatham Taconic Ghent NY
Chatham Taconic Hillsdale NY
Chatham Taconic New Lebanon NY
Baraboo Baraboo WI Baraboo WI
Belleville Belleville WI Belleville WI
Madison Madison WI Blooming Grove WI
Madison Madison WI Bristol WI
Brooklyn Belleville WI Brooklyn (Dane Co.) WI
Brooklyn Belleville WI Brooklyn (Green Co.) WI
Madison Madison WI Burke WI
Madison Madison WI Cambridge WI
Madison Madison WI Christiana WI
Portage Madison WI Columbia WI
Columbus Madison WI Columbus WI
Columbus Belleville WI Cottage Grove Town WI
Columbus Belleville WI Cottage Grove Village WI
Middleton Belleville WI Cross Plains Town WI
Madison Madison WI Cross Plains Village WI
Madison Madison WI Deerfield Town WI
Madison Madison WI Deerfield Village WI
Madison Madison WI DeForest WI
Harvard Walworth/Fontana Delavan WI
Madison Madison WI Dunkirk WI
Madison Madison WI Dunn WI
Columbus Madison WI Elba WI
Harvard Walworth/Fontana Fontana-on-Geneva Lake WI
- 7 -
24
HEADEND SYSTEM FRANCHISE AUTHORITY STATE
------- ------ ------------------- -----
Harvard Walworth/Fontana Geneva WI
Harvard Walworth/Fontana WI Genoa City WI
Harvard Walworth/Fontana Linn WI
Madison Madison WI Madison WI
Madison Madison WI Maple Bluff WI
Madison Madison WI Marshall WI
Madison Madison WI McFarland WI
Madison Madison WI Medina WI
Madison Madison WI Middleton, City of WI
Middleton Madison WI Middleton Township WI
Madison Madison WI Monona WI
Madison Madison WI Oakland WI
Madison Madison WI Oregon WI
Madison Madison WI Pleasant Springs WI
Portage Madison WI Portage WI
Portage Baraboo WI Reedsburg, City of WI
Portage Baraboo WI Reedsburg, Town of WI
Richland Center Richland Center Richland Center City WI
Richland Center Richland Center Richland Center Town WI
Sauk City Madison Sauk City WI
Sharon Walworth/ Fontana Sharon WI
Madison Madison WI Shorewood Hills WI
Middleton Belleville WI Springfield WI
Madison Madison WI Stoughton WI
Madison Madison WI Sun Prairie, City of WI
Madison Madison WI Sun Prairie, Town of WI
Harvard Walworth/ Fontana Walworth, Town of WI
Harvard Walworth/Fontana Walworth, Village of WI
Madison Madison WI Westport WI
Harvard Walworth/Fontana Williams Bay WI
Madison Madison WI Windsor WI
Madison Baraboo WI Wisconsin Dells WI
- 8 -
25
SCHEDULE 4.8-B
Charter Communications Entertainment I, LLC, Charter Cable Partners, LLC, Falcon
Telecable, a California Limited Partnership, and Charter Communications VI, LLC,
(collectively, "PARTY B"),
CHARTER COMMUNICATIONS ENTERTAINMENT I, LLC (RECEIVING ASSETS ONLY)
CHARTER CABLE PARTNERS, LLC
HEADEND SYSTEM FRANCHISE AUTHORITY STATE
------- ------ ------------------- -----
Eau Claire Eau Claire WI Altoona WI
Onalaska/Tomah Eau Claire WI Angelo WI
Ashland Eau Claire WI Ashland WI
Onalaska/Tomah Eau Claire WI Bangor WI
Onalaska/Tomah Eau Claire WI Bangor WI
Ashland Eau Claire WI Barksdale WI
Onalaska/Tomah Eau Claire WI Barre WI
Onalaska/Tomah Eau Claire WI Barron, City of WI
Onalaska/Tomah Eau Claire WI Barron, Town of WI
Black River Falls Eau Claire WI Black River Falls WI
Eau Claire Eau Claire WI Bloomer WI
Eau Claire Eau Claire WI Boyd WI
Black River Falls Eau Claire WI Brockway WI
Eau Claire Eau Claire WI Brunswick WI
Eau Claire Eau Claire WI Cameron WI
Onalaska/Tomah Eau Claire WI Campbell WI
Onalaska/Tomah Eau Claire WI Chetek City WI
Onalaska/Tomah Eau Claire WI Chetek Town WI
Eau Claire Eau Claire WI Chippewa Falls WI
Eau Claire Eau Claire WI Colfax Town WI
Eau Claire Eau Claire WI Colfax Village WI
Eau Claire Eau Claire WI Cornell WI
Eau Claire Eau Claire WI Cumberland WI
Eau Claire Eau Claire WI Eagle Point WI
Eau Claire Eau Claire WI Eau Claire WI
Ashland Eau Claire WI Eileen WI
Eau Claire Eau Claire WI Elk Mound WI
Onalaska/Tomah Eau Claire WI Greenfield WI
Onalaska/Tomah Eau Claire WI Greenfield (ST. JOSEPH RIDGE) WI
Eau Claire Eau Claire WI Hallie WI
Onalaska/Tomah Eau Claire WI Hamilton WI
Onalaska/Tomah Eau Claire WI Holland WI
Onalaska/Tomah Eau Claire WI Holmen WI
Onalaska/Tomah Eau Claire WI La Crosse WI
Onalaska/Tomah Eau Claire WI La Grange WI
26
HEADEND SYSTEM FRANCHISE AUTHORITY STATE
------- ------ ------------------- -----
Eau Claire Eau Claire WI Lafayette WI
Onalaska/Tomah Eau Claire WI Leon WI
Onalaska/Tomah Eau Claire WI Medary WI
Onalaska/Tomah Eau Claire WI Melrose WI
Eau Claire Eau Claire WI Menomonie City WI
Eau Claire Eau Claire WI Menomonie Town WI
Mindoro Eau Claire WI Mindoro WI
Onalaska/Tomah Eau Claire WI Oakdale WI
Onalaska/Tomah Eau Claire WI Onalaska City WI
Onalaska/Tomah Eau Claire WI Onalaska Town WI
Eau Claire Eau Claire WI Pleasant Valley WI
Eau Claire Eau Claire WI Red Cedar WI
Eau Claire Eau Claire WI Rice Lake City WI
Eau Claire Eau Claire WI Rice Lake Town WI
Eau Claire Eau Claire WI Seymour WI
Spooner Eau Claire WI Shell Lake WI
Onalaska/Tomah Eau Claire WI Sparta City WI
Onalaska/Tomah Eau Claire WI Sparta Town WI
Eau Claire Eau Claire WI Stanley City WI
Eau Claire Eau Claire WI Stanley Town WI
Eau Claire Eau Claire WI Tainter WI
Eau Claire Eau Claire WI Tilden WI
Onalaska/Tomah Eau Claire WI Tomah, City of WI
Onalaska/Tomah Eau Claire WI Tomah, Town of WI
Eau Claire Eau Claire WI Union WI
Onalaska/Tomah Eau Claire WI Warrens WI
Onalaska/Tomah Eau Claire WI West Salem WI
Stockton Eau Claire Altura MN
Stockton Eau Claire Stockton MN
Stockton Eau Claire Rollingstone MN
Stockton Eau Claire Hidden Valley Village MN
Stockton Eau Claire Lewiston MN
Eau Claire Eau Claire Wheaton WI
FALCON TELECABLE, A CALIFORNIA LIMITED PARTNERSHIP
HEADEND SYSTEM FRANCHISE AUTHORITY STATE
------- ------ ------------------- -----
Au Gres Au Gres Akron MI
Au Gres Au Gres Au Gres, City of MI
Au Gres Au Gres Au Gres Township MI
Au Gres Au Gres Sims MI
Unionville Au Gres Unionville MI
- x -
27
HEADEND SYSTEM FRANCHISE AUTHORITY STATE
------- ------ ------------------- -----
Au Gres Au Gres Whitney MI
CHARTER COMMUNICATIONS VI, LLC
HEADEND SYSTEM FRANCHISE AUTHORITY STATE
------- ------ ------------------- -----
Rose City Rose City Cummings MI
Rose City Rose City Goodar MI
Rose City Rose City Hill MI
Rose City Rose City Plainfield MI
Rose City Rose City Rose MI
Rose City Rose City Rose City MI
Oxford Oxford Addison MI
Oxford Almont Almont Township MI
Oxford Almont Almont Village MI
Oxford Attica Arcadia MI
Fenton Fenton Argentine MI
Davison Davison Atlas MI
Oxford Attica Attica MI
Mio Mio/Mentor Twp Big Creek MI
Oxford Oxford Brandon MI
Mio Mio/Mentor Twp Commins MI
Davison Davison Davison MI
Davison Davison Davison Township MI
Fenton Fenton Deerfield Township MI
Oxford North Branch Deerfield Township MI
Whitmore Lake Livingston Dexter MI
Oxford Almont Drydon Township MI
Oxford Almont Drydon Village MI
Mio Mio/Mentor Twp Elmer MI
Fenton Fenton Fenton MI
Fenton Fenton Fenton Township MI
Davison Davison Forest MI
Oxford Mayville/Otter Lake Freemont MI
Davison Davison Goodrich MI
Whitmore Lake Livingston Green Oak MI
Oxford Oxford Hadley MI
Whitmore Lake Livingston Hamburg MI
Highland Park Highland Park Highland Park MI
Oxford Imlay City Imlay MI
Oxford Imlay City Imlay City MI
Oxford Oxford Leonard MI
Fenton Fenton Linden MI
- xi -
28
HEADEND SYSTEM FRANCHISE AUTHORITY STATE
------- ------ ------------------- -----
Oxford Mayville/Otter Lake Marathon MI
Whitmore Lake Livingston Marion MI
Oxford Mayville/Otter Lake Mayville MI
Mio Mio/Mentor Twp Mentor MI
Oxford Oxford Metamora MI
Oxford Oxford Metamora MI
Oxford North Branch North Branch MI
Oxford North Branch North Branch Township MI
Whitmore Lake Livingston Northfield MI
Davison Davison Oregon MI
Oxford Oxford Ortonville MI
Davison Davison Otisville MI
Oxford Mayville/Otter Lake Otter Lake MI
Oxford Oxford Oxford Township MI
Oxford Oxford Oxford Village MI
Whitmore Lake Livingston Pinckney MI
Whitmore Lake Livingston Putnam MI
Davison Davison Richfield MI
Whitmore Lake Livingston Salem MI
Fenton Fenton Tyrone MI
Whitmore Lake Livingston Unadilla MI
Oxford Mayville/ Otter Lake Watertown MI
Whitmore Lake Livingston Webster MI
- xii -
