<PAGE>
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BETWEEN
TCA CABLE PARTNERS,
COX SOUTHWEST HOLDINGS, L.P.,
COX COMMUNICATIONS LOUISIANA, L.L.C.,
COXCOM, INC.,
COX TELCOM PARTNERS, INC.,
COX COMMUNICATIONS, INC.
AND
CEBRIDGE ACQUISITION CO. LLC
DATED
OCTOBER 31, 2005
<PAGE>
TABLE OF CONTENTS
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1. DEFINED
TERMS.........................................................................................
2
2. SALE
AND PURCHASE OF TRANSFERRED
ASSETS................................................................
17
2.1
Agreement
to Sell and
Purchase................................................................
17
2.2
Excluded
Assets...............................................................................
18
2.3
Deposit
Escrow................................................................................
20
2.4
Purchase
Price................................................................................
20
2.5
Allocation
of Purchase
Price..................................................................
20
2.6
Adjustments to the Purchase
Price.............................................................
21
2.7
Assumption
of Assumed
Liabilities.............................................................
25
2.8
Cox Name;
Affiliated
Services.................................................................
25
2.9
Rights of
First
Refusal.......................................................................
26
3.
REPRESENTATIONS AND WARRANTIES OF
SELLERS..............................................................
26
3.1
Organization, Standing and
Authority..........................................................
26
3.2
Authorization and Binding
Obligation..........................................................
27
3.3 Absence of
Conflicting Terms;
Consents........................................................
27
3.4
Governmental
Permits..........................................................................
28
3.5
Financial
Statements..........................................................................
29
3.6
Personal
Property.............................................................................
29
3.7
Real
Property.................................................................................
30
3.8
Contracts.....................................................................................
30
3.9
Certain
Information on
Systems................................................................
32
3.10
Taxes, Returns and
Reports....................................................................
32
3.11
Employee Benefit
Plans........................................................................
33
3.12
Labor
Relations...............................................................................
33
3.13
Legal Proceedings/Compliance with
Laws........................................................
33
3.14
Environmental
Matters.........................................................................
34
3.15
FCC
and Copyright
Compliance..................................................................
34
3.16
Intellectual
Property.........................................................................
35
3.17
Conduct of Business in Ordinary
Course........................................................
36
3.18
Transactions with
Affiliates..................................................................
36
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3.19
Bonds; Letters of
Credit......................................................................
36
3.20
Brokers of
Sellers............................................................................
36
3.21
Acquired
Companies............................................................................
36
3.22
Sufficiency of Transferred
Assets.............................................................
38
3.23
Accounts
Receivable...........................................................................
38
3.24
Overbuilds....................................................................................
38
4.
REPRESENTATIONS AND WARRANTIES OF
BUYER................................................................
38
4.1
Organization, Standing and
Authority..........................................................
38
4.2
Authorization and Binding
Obligation..........................................................
38
4.3
Absence of
Conflicting
Agreements.............................................................
39
4.4
Buyer
Qualification...........................................................................
39
4.5
Availability of
Funds.........................................................................
39
4.6
Brokers of
Buyer..............................................................................
40
5. SPECIAL
COVENANTS OF THE
PARTIES.......................................................................
40
5.1
Conduct of
the Business of the Systems Prior to
Closing....................................... 40
5.2
Financial
and Operational
Information.........................................................
43
5.3
Consents
and Replacement
Agreements...........................................................
44
5.4
HSR Act
Filing................................................................................
47
5.5
Transfer
Taxes,
Etc...........................................................................
47
5.6
Bonds,
Letters of Credit,
Etc.................................................................
48
5.7
Transition
Services; Intellectual
Property....................................................
48
5.8
Covenants
Regarding Employee
Matters..........................................................
48
5.9
Environmental
Investigations..................................................................
50
5.10
Risk
of
Loss..................................................................................
52
5.11
Subscriber
Information........................................................................
52
5.12
Cure..........................................................................................
53
5.13
Disclosure....................................................................................
53
5.14
No
Other Representations or
Warranties........................................................
53
5.15
Access to Books and
Records...................................................................
54
5.16 Programming
Agreements........................................................................
55
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5.17
Cooperation; Commercially Reasonable
Efforts..................................................
56
5.18
Non-Competition,
Non-Solicitation.............................................................
56
5.19
No
Shop.......................................................................................
57
5.20
Cooperation with
Financing....................................................................
57
5.21
Title Commitments; Surveys; Lien
Searches.....................................................
58
5.22
Inventory.....................................................................................
58
5.23
Assets Owned by Parent's Affiliates other than
Sellers........................................ 58
5.24
Update of Certain
Schedules...................................................................
58
5.25
Transition
Planning...........................................................................
59
6.
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND SELLERS TO
CLOSE...................................... 59
6.1
Conditions
Precedent to Obligations of Buyer to
Close......................................... 59
6.2
Conditions
Precedent to Obligations of Sellers to
Close....................................... 60
7. CLOSING
AND CLOSING
DELIVERIES.........................................................................
61
7.1
Closing.......................................................................................
61
7.2
Deliveries
by
Sellers.........................................................................
62
7.3
Deliveries
by
Buyer...........................................................................
63
8.
TERMINATION............................................................................................
64
8.1
Method of
Termination.........................................................................
64
8.2
Rights
Upon
Termination.......................................................................
65
8.3
Other
Termination
Provisions..................................................................
66
9.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION.........................................
67
9.1
Representations, Warranties and
Covenants.....................................................
67
9.2
Indemnification by
Sellers....................................................................
67
9.3
Indemnification by
Buyer......................................................................
68
9.4
Procedure
for
Indemnification.................................................................
68
9.5
Limitation
on Indemnification; Exclusive Remedy; Time
Period.................................. 69
10.
MISCELLANEOUS..........................................................................................
70
10.1
Primary and Secondary
Transfers...............................................................
70
10.2
Notices.......................................................................................
72
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10.3
No
Assignment; Benefit and Binding
Effect.....................................................
73
10.4
Bulk
Transfer.................................................................................
73
10.5
Governing
Law.................................................................................
73
10.6
Waiver of Jury
Trial..........................................................................
73
10.7
Submission to Jurisdiction;
Venue.............................................................
73
10.8
Headings......................................................................................
74
10.9
Gender and
Number.............................................................................
74
10.10
Entire
Agreement..............................................................................
74
10.11
Further
Assurances............................................................................
74
10.12
Waiver of
Compliance;
Consents................................................................
74
10.13
Severability..................................................................................
74
10.14
Counterparts..................................................................................
75
10.15
No Third
Party
Beneficiaries..................................................................
75
10.16
Construction..................................................................................
75
10.17
Public
Announcements..........................................................................
75
10.18
No
Personal
Liability.........................................................................
75
10.19
Expenses......................................................................................
75
10.20
Guarantee.....................................................................................
75
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<PAGE>
EXHIBITS AND SCHEDULES
The following exhibits and schedules have been omitted pursuant to
Item
601(b)(2) of Regulation S-K and will be provided to the Commission
upon request.
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Exhibit A
Required Programming Agreement
Exhibit B
Deposit Escrow Agreement
Exhibit C
Transition Services Agreement
Exhibit D
Intellectual Property License Agreement
Exhibit E
Bill of Sale
Exhibit F
Assumption Agreement
Exhibit G
Management
Agreement
Exhibit H
Outsourcing Agreement
Schedule A-1
California System
Schedule A-2
MAC System
Schedule A-3
North Carolina System
Schedule A-4
West Texas System
Schedule C
CNC Governmental Permits
Schedule E
TCAC Governmental Permits
Schedule G
CTT Governmental Permits
Schedule 1.51(a)
Seller Knowledgeable Individuals
Schedule 1.51(b)
Buyer Knowledgeable Individuals
Schedule 1.56
Master Carrier Agreements
Schedule 1.57
Master CBI Agreements
Schedule 1.64
Certain Advertising Sales Representation Agreements
Schedule 1.65
Non-Exclusive Pole Attachment Agreements
Schedule 1.66
Non-Exclusive Retransmission Agreements
Schedule 1.75(a)
Programmer Optional Programming Agreements
Schedule 1.75(b)
Certain Programmer Optional Programming Agreements
Schedule 1.86
Severance Maximum
Schedule 1.100
Non-Exclusive Contracts
Schedule 1.101
Transferred Domain Names
Schedule 1.102
Transferred Motor Vehicles
Schedule 1.103
2005 Operating Cash Flow Methodology
Schedule 2.1.8
Certain Transferred Assets
Schedule 2.2
Certain Excluded Assets
Schedule 2.6.1(i)
Budgeted Capital Expenditures
Schedule 2.6.1(ii)(E) Real
Property Capitalized Leases
Schedule 2.7.5
Other Assumed Liabilities
Schedule 2.8.2
Affiliate Services
Schedule 2.8.3
Retained Telecommunications Authorizations
Schedule 2.9
The RGU Adjustment Factor
Schedule 3.3
Certain Sellers' Consents
Schedule 3.4(a)
All Governmental Permits
Schedule 3.4(b)
Exceptions to Governmental Permits
Schedule 3.4(c)
Non-exclusive and excluded Governmental Permits
Schedule 3.7
Real Property
Schedule 3.8.1
Binding Effect of Material Transferred Contracts
Schedule 3.8.2
Real Property Leases
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Schedule 3.8.3
Material Exclusive Retransmission Consent Agreements
Schedule 3.8.4
Material Exclusive Pole Attachment Agreements
Schedule 3.8.5
Material Exclusive Programming Agreements
Schedule 3.8.6
Material Exclusive Cox Media Agreements
Schedule 3.8.7
Certain Other Transferred Contracts
Schedule 3.8.8
Certain Included Contracts
Schedule 3.8.9
Material Non-Exclusive Retransmission Consent Agreements
Schedule 3.8.10
Non-Exclusive Cox Media Agreements
Schedule 3.8.11
Material Master CBI Agreements
Schedule 3.8.12
Master Carrier Agreements
Schedule 3.9(a)
Systems Information (Plant Miles)
Schedule 3.9(b)
Systems Information (Bandwidth)
Schedule 3.9(c)
Systems Information (Subscribers)
Schedule 3.11
Employee Benefit Plans
Schedule 3.13.1
Legal Proceedings
Schedule 3.13.2
Compliance with Legal Rules
Schedule 3.15.1
FCC Compliance
Schedule 3.15.2
Certain Franchising Authorities Matters
Schedule 3.16.1
Intellectual Property
Schedule 3.16.3
Intellectual Property Licenses
Schedule 3.17
Conduct of Systems
Schedule 3.18
Affiliate Transactions
Schedule 3.19
Bonds; Letters of Credit
Schedule 3.21.3
Capitalization of Acquired Companies
Schedule 3.21.5
Assets and Liabilities
Schedule 3.22
Sufficiency of Assets
Schedule 3.24
Overbuilds
Schedule 4.4
Buyer Qualification
Schedule 4.6
Brokers of
Buyers
Schedule 5.1
Conduct of Systems prior to Closing
Schedule 5.1.2(viii) Rate
Increases
Schedule 5.3
Consents
Schedule 5.8.5
Sellers' Severance Benefits Plan
Schedule 5.22
Minimum Inventory Commitment
Schedule 6.1.5
Required Consents
</TABLE>
vi
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET
PURCHASE AGREEMENT is dated October 31, 2005, by and among TCA
Cable Partners, a Delaware general partnership ("TCAP"), Cox
Southwest Holdings,
L.P., a Texas limited partnership ("CSWH"), Cox Communications
Louisiana,
L.L.C., a Delaware limited liability company ("CCL"), CoxCom, Inc.,
a Delaware
corporation ("COXCOM"), and Cox Telcom Partners, Inc., a Delaware
corporation
("CTP") (TCAP, CSWH, CCL, CoxCom and CTP each a "SELLER" and
collectively, the
"SELLERS"), and Cox Communications, Inc., a Delaware corporation
("PARENT"), on
the one hand, and Cebridge Acquisition Co. LLC, a Delaware limited
liability
company ("BUYER"), on the other hand.
RECITALS:
A. Sellers
own and operate the cable television systems serving the
communities identified on SCHEDULE A-1 (the "CALIFORNIA SYSTEM"),
SCHEDULE A-2
(the "MAC SYSTEM"), SCHEDULE A-3 (the "NORTH CAROLINA System") and
SCHEDULE A-4
(the "WEST TEXAS SYSTEM") (the California System, the MAC System,
the North
Carolina System and the West Texas System, each, a "SYSTEM" and
collectively,
the "SYSTEMS").
B. Sellers
desire to sell, and Buyer desires to buy, certain of the
Sellers' assets used exclusively in the operation of the Systems
for the price
and on the terms and conditions hereinafter set forth.
C. Cox
North Carolina Telcom, L.L.C., a Delaware limited liability
company
("CNC"), holds the Governmental Permits set forth on SCHEDULE C
hereto.
D. CoxCom
holds all the issued and outstanding membership interests of
CNC
(the "CNC INTERESTS").
E. TCA
Communications, L.L.C., a Texas limited liability company
("TCAC"),
holds the Governmental Permits set forth on SCHEDULE E hereto.
F. CoxCom
holds all the issued and outstanding membership interests of
TCAC (the "TCAC INTERESTS").
G. Cox
Texas Telcom, L.P., a Delaware limited partnership ("CTT"),
holds
the Governmental Permits set forth on SCHEDULE G hereto.
H. CoxCom
holds all the issued and outstanding limited partnership
interests of CTT and CTP holds all the issued and outstanding
general
partnership interests of CTT (collectively, the "CTT
INTERESTS").
I. CoxCom
and CTP desire to sell, and Buyer desires to buy from CoxCom
and
CTP all of the CNC Interests, TCAC Interests and CTT Interests as
part of the
Transferred Assets hereunder and on the terms and conditions
hereinafter set
forth.
J. As
further inducement for Buyer to enter into this Agreement,
pursuant
to Section 10.20, Parent is guaranteeing all of the obligations of
Sellers under
this Agreement.
<PAGE>
AGREEMENTS:
In
consideration of the above recitals and the covenants and
agreements
contained herein, Buyer and Sellers agree as follows:
1. DEFINED
TERMS
The
following terms shall have the following meanings in this
Agreement:
1.1
"ACCOUNTS RECEIVABLE" means the sum of (a) Advertising Accounts
Receivable, (b) Cable Accounts Receivable, (c) Commercial Accounts
Receivable
and (d) National Advertising Accounts Receivable.
1.2
"ACCRUED VACATION" means with respect to any Sellers Employee
who
becomes a Transferred Employee, the accrued vacation and personal
days to which
such Transferred Employee is entitled under the plans or policies
of Sellers or
Sellers' Affiliates as of the Adjustment Time.
1.3
"ACQUIRED COMPANY" means CNC, CTT or TCAC, as the case may be.
1.4
"ADJUSTMENT TIME" means 11:59 p.m. on the day prior to the
Closing
Date.
1.5
"ADVERTISING ACCOUNTS RECEIVABLE" means the rights of a Seller
or
Acquired Company to payment relating to the Systems for advertising
time
relating to the Systems for local or regional accounts provided by
such Seller
or Acquired Company prior to the Adjustment Time.
1.6
"AFFILIATE" means with respect to a Person, any Person directly
or
indirectly controlling, controlled by or under common control with
such other
Person. For purposes of this definition, the term "control" means
the
possession, directly or indirectly, of the power to direct or cause
the
direction of the management and policies of a Person, whether
through the
ownership of voting securities or partnership interests, by
contract or
otherwise.
1.7
"AGREEMENT" means this Asset Purchase Agreement.
1.8 "BASIC
CABLE TELEVISION SERVICE" means the lowest tier of video
programming offered by a System consistent with Section 76.901(a)
of the FCC's
regulations, 47 C.F.R. Section 76.901(a).
1.9 "BASIC
SUBSCRIBER" means (a) with respect to residential single unit
accounts, each customer with a subscription to Basic Cable
Television Service,
(b) with respect to residential bulk accounts, each customer with a
primary
outlet served pursuant to a subscription to Basic Cable Television
Service and
(c) with respect to commercial accounts, each customer with a
subscription to
Basic Cable Television Service, in each case excluding Delinquent
Accounts and
Excluded Subscribers.
2
<PAGE>
1.10
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday
and
Friday that is not a day on which national banking institutions in
either
Atlanta, Georgia or New York, New York are authorized or obligated
by law or
executive order to be closed.
1.11
"CABLE ACCOUNTS RECEIVABLE" means the rights of a Seller or
Acquired
Company to payment relating to the Systems for residential and
commercial video
services, residential telephony services and residential high speed
internet
services provided by such Seller or Acquired Company prior to the
Adjustment
Time.
1.12
"CLOSING" means the consummation of the transactions contemplated
by
this Agreement in accordance with the provisions of Article 7.
1.13
"CLOSING DATE" means the date on which the Closing occurs.
1.14
"CODE" means the Internal Revenue Code of 1986, as amended, and
the
regulations thereunder, or any subsequent legislative enactment
thereof, each as
in effect from time to time.
1.15
"COMMERCIAL ACCOUNTS RECEIVABLE" means the rights of a Seller
or
Acquired Company to payment relating to the Systems for commercial
telephony
services and commercial high speed internet services provided by
such Seller or
Acquired Company prior to the Adjustment Time.
1.16
"COMMUNICATIONS ACT" means the Communications Act of 1934,
including
the Cable Communications Policy Act of 1984, the Cable Television
Consumer
Protection and Competition Act of 1992 and the Telecommunications
Act of 1996,
each as amended, and the FCC's rules, regulations and published
policies and
decisions thereunder, each as in effect from time to time.
1.17
"CONSENT" means any consent, permit, waiver, authorization,
approval
or filing of, to or with any Governmental Authorities or other
Persons that
Sellers or Buyer is required to obtain for Buyer to own and operate
the
Transferred Assets, the Systems and the Acquired Companies on and
after the
Closing Date.
1.18
"CONTRACT" means any contract, agreement, indenture, note,
bond,
mortgage, loan, instrument, lease or license (other than a
Franchise or
Governmental Permit).
1.19
"DELINQUENT ACCOUNT" means a customer account that (a) has
physically
been disconnected or (b) has a past due balance in excess of $25
(excluding late
charges and amounts subject to a bona fide dispute) for more than
ninety (90)
days from the first day of the billing period for which the bill
relates.
1.20
"DIGITAL SUBSCRIBER" means (a) with respect to residential
single
unit accounts, each customer with a subscription to any digital
tier offered by
a System, (b) with respect to residential bulk accounts, each
customer with a
primary outlet served pursuant to a subscription to digital video
programming
offered by a System and (c) with respect to commercial accounts,
each customer
with a subscription to digital video programming offered by a
System, in each
case excluding Delinquent Accounts and Excluded Subscribers.
3
<PAGE>
1.21
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan, within
the
meaning of Section 3(3) of ERISA, and each written stock option,
stock
appreciation right, restricted stock, stock purchase, stock unit,
incentive,
bonus, profit-sharing, savings, deferred compensation, health,
medical, dental,
life insurance, disability, accident, supplemental unemployment or
retirement,
severance or benefits continuation or fringe benefit plan, program
or agreement
that provides benefits to Sellers Employees, including any
Multiemployer Plan.
1.22
"ENCUMBRANCE" means any lien, encumbrance, pledge, mortgage, deed
of
trust, security interest, charge, option, right of first refusal,
easement,
proxy, voting trust or agreement or transfer restriction under any
shareholder
or similar agreement.
1.23
"ENVIRONMENTAL LAW" means any Legal Rule relating to the
handling,
treatment, transportation or disposal of Hazardous Substances, the
protection of
the environment, natural resources or human health and safety as it
relates to
environmental protection, including, but not limited to, the
Comprehensive
Environmental Response, Compensation and Liability Act, the
Resource
Conservation and Recovery Act, the Clean Water Act, the Clean Air
Act, the
Natural Environmental Policy Act and any and all analogous state
and local laws.
1.24
"EQUIPMENT" means all electronic and optical devices, trunk and
distribution, service drop, coaxial and optical fiber cable,
amplifiers, power
supplies, conduit, vaults and pedestals, grounding and pole
hardware, customer
devices (including converters, encoders, transformers behind
television sets and
fittings), headend hardware and electronics (including, without
limitation,
origination, earth stations, antenna equipment transmission and
distribution
systems located on the premises of any of the Real Property, in
vehicles or at
repair facilities or on loan to any other system (other than the
Systems) of
Sellers and their Affiliates), test and measurement equipment,
tools,
construction equipment, vehicles, construction trailers, splicing
tools, fiber
splicing trailers, analog and digital studio equipment, computers,
monitoring
equipment of any kind, generators, equipment associated with the
provisioning
and routing of VoIP and high speed internet, office machines, TV
sets and spares
of any of the foregoing located at any of the Systems or in any
vehicles, with
respect to each of the foregoing listed items, owned, leased or
held for use by
a Seller or Acquired Company and used exclusively in connection
with the
ownership and operation of one or more of the Systems, plus such
additions
thereto and deletions therefrom between the date of this Agreement
and the
Closing Date as permitted by this Agreement.
1.25
"EQUITY INTERESTS" mean any and all shares, interests, or other
equivalent interests (however designated) in the equity of any
Person, including
capital stock, partnership interests and membership interests, and
including any
rights, options or warrants with respect thereto.
1.26
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended, and the regulations thereunder, as in effect from time to
time.
1.27
"EXCLUDED SUBSCRIBER" means, with respect to any residential
single
unit account, residential bulk unit account or commercial account,
an account
that both has not passed Sellers' credit scoring in accordance with
Sellers'
customary policies and has not made at least one (1) monthly
payment in full.
4
<PAGE>
1.28
"EXCLUSIVE COX BUSINESS SERVICES AGREEMENT" means any agreement
of
any Seller or any Seller's Affiliate for the provision of video,
data and/or
telephony services sold to a commercial customer in connection with
the
operation of one or more of the Systems which does not also apply
to the
operation of any other cable television system that is not being
sold pursuant
to the terms of this Agreement and that is owned or operated by any
Seller or
Seller's Affiliate.
1.29
"EXCLUSIVE COX MEDIA AGREEMENT" means any agreement of any Seller
or
any Seller's Affiliate for the provision of advertising sales and
services or
advertising sales representation in connection with the operation
of one or more
of the Systems which does not also apply to the operation of any
other cable
television system that is not being sold pursuant to the terms of
this Agreement
and that is owned or operated by any Seller or Seller's
Affiliate.
1.30
"EXCLUSIVE FCC LICENSE" means any FCC License that is used in
the
operation of one or more of the Systems, that is not used in
connection with the
operation of any other cable system that is not being sold pursuant
to the terms
of this Agreement and that is owned or operated by any Seller or
Seller's
Affiliate; provided, however, the term "Exclusive FCC License"
shall not include
any Telecommunications Authorization.
1.31
"EXCLUSIVE GOVERNMENTAL PERMIT" means any Franchise, Exclusive
FCC
License and Exclusive Telecommunications Authorization and any
other material
license, permit or authorization used exclusively in the operation
of one or
more of the Systems granted or issued to any Seller or Acquired
Company by any
Governmental Authority, including all amendments thereto and
renewals or
modifications thereof.
1.32
"EXCLUSIVE POLE ATTACHMENT AGREEMENT" means any pole attachment
agreement, conduit agreement or similar license or right of any
Seller or
Acquired Company to use utility poles related to the operation of
one or more of
the Systems which does not also apply to the operation of any other
cable
television system that is not being sold pursuant to the terms of
this Agreement
and that is owned or operated by any Seller or Seller's
Affiliate.
1.33
"EXCLUSIVE PROGRAMMING AGREEMENT" means any programming agreement
or
programming carriage obligation of any Seller or Acquired Company
related to the
operation of one or more of the Systems which does not also apply
to the
operation of any other cable television system that is not being
sold pursuant
to the terms of this Agreement and that is owned or operated by any
Seller or
Seller's Affiliate.
1.34
"EXCLUSIVE RETRANSMISSION CONSENT AGREEMENT" means any
retransmission
consent agreement, must carry notice or other related broadcast
right or
obligation of any Seller or Acquired Company related to the
operation of one or
more of the Systems which does not also apply to the operation of
any other
cable television system that is not being sold pursuant to the
terms of this
Agreement and is owned or operated by any Seller or Seller's
Affiliate.
1.35
"EXCLUSIVE TELECOMMUNICATIONS AUTHORIZATION" means any FCC
Telecommunications Authorization or State Telecommunications
Authorization that
authorizes any Seller or Seller's Affiliate to provide
international, interstate
or intrastate Telecommunications Services over a System, that is
not being used
in connection with the
5
<PAGE>
operation of any other cable system that is not being sold pursuant
to the terms
of this Agreement and that is owned or operated by any Seller or
Seller's
Affiliate; provided, however, the term "Exclusive
Telecommunications
Authorization" shall not include any Franchise or FCC License.
1.36 "FCC"
means the Federal Communications Commission.
1.37 "FCC
LICENSE" means any license, permit, registration or
authorization granted or issued by the FCC to any Seller or
Acquired Company and
used in the operation of one or more of the Systems, including all
amendments
thereto and renewals or modifications thereof; provided, however,
the term "FCC
License" shall not include any Franchise or Telecommunications
Authorization.
1.38 "FCC
TELECOMMUNICATIONS AUTHORIZATION" means an authorization
granted
or issued by the FCC to provide Telecommunications Services.
1.39
"FRANCHISE" means any franchise, permit, license, resolution,
contract, certificate, agreement or similar authorization, or any
renewal
thereof, issued by a Franchising Authority authorizing the
construction and
operation of a System; provided, however, the term "Franchise"
shall not include
any FCC License or Telecommunications Authorization.
1.40
"FRANCHISING AUTHORITY" means any Governmental Authority which
has
issued a Franchise.
1.41
"GAAP" means United States generally accepted accounting
principles
and practices as in effect from time to time.
1.42
"GOVERNMENTAL AUTHORITY" means the United States government or
any
state, or other political subdivision thereof or any entity
exercising
executive, legislative, judicial, regulatory or administrative
functions on
their behalf.
1.43
"GOVERNMENTAL PERMIT" means any Franchise, FCC License and
Telecommunications Authorization used in the operation of one or
more of the
Systems granted or issued to any Seller or Acquired Company by any
Governmental
Authority and any other material license, permit or authorization
used in the
operation of one or more of the Systems granted or issued to any
Seller or
Acquired Company by any Governmental Authority, including all
amendments thereto
and renewals or modifications thereof.
1.44
"HAZARDOUS SUBSTANCE" means any pollutant, contaminant, waste,
hazardous or toxic substance, constituent, or material, including
petroleum
products and their derivatives, or other substances regulated under
or pursuant
to Environmental Law.
1.45 "HIGH
SPEED DATA SUBSCRIBER" means a residential primary outlet
served pursuant to a subscription to any level of residential high
speed data
service, excluding Delinquent Accounts and Excluded
Subscribers.
1.46 "HSR
ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, and the regulations promulgated by the Federal Trade
Commission with
respect thereto, as amended and in effect from time to time.
6
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1.47
[INTENTIONALLY OMITTED]
1.48
"INDEPENDENT ACCOUNTING FIRM" means (a) an independent
certified
public accounting firm in the United States of national recognition
(other than
a firm which then serves as the independent auditor for any of
Sellers or Buyer
or any of their respective Affiliates) mutually acceptable to
Sellers and Buyer
or (b) if Sellers and Buyer are unable to agree upon such a firm,
then Sellers,
collectively, and Buyer shall each select a representative from one
such firm
and those two individuals shall select a third firm, in which event
"Independent
Accounting Firm" shall mean such third firm.
1.49 "INITIAL
ADJUSTMENT STATEMENT" means the unaudited statement of the
Current Adjustment and the Operating Cash Flow Adjustment,
delivered by Sellers
to Buyer pursuant to Section 2.6.3.
1.50
"INTELLECTUAL PROPERTY" means all right, title and interest in
or
relating to intellectual property, whether protected, created or
arising under
the laws of the United States or any other jurisdiction, including:
(i) all
patents and applications therefor, including all continuations,
divisionals, and
continuations-in-part thereof and patents issuing thereon, along
with all
reissues, reexaminations and extensions thereof (collectively,
"PATENTS"); (ii)
all trademarks, service marks, trade names, service names, brand
names, trade
dress rights, logos, corporate names, trade styles, logos and other
source or
business identifiers and general intangibles of a like nature,
together with the
goodwill associated with any of the foregoing, along with all
applications,
registrations, renewals and extensions thereof; (iii) all Internet
domain names;
(iv) all copyrights and all mask work, database and design rights,
whether or
not registered or published, all registrations and recordations
thereof and all
applications in connection therewith, along with all reversions,
extensions and
renewals thereof (collectively, "COPYRIGHTS"); (iv) trade secrets
("TRADE
SECRETS") and (v) all other intellectual property rights arising
from or
relating to Technology.
1.51
"KNOWLEDGE" means, with respect to Sellers, the actual
knowledge,
after due inquiry, of the individuals set forth on SCHEDULE
1.51(a), and with
respect to Buyer, the actual knowledge, after due inquiry, of the
individuals
set forth on SCHEDULE 1.51(b).
1.52
"LEGAL RULES" mean any applicable statute, ordinance, code or
other
law, rule, regulation, order, or other written standard,
requirement, policy or
procedure enacted, adopted, promulgated, applied or followed, by
any
Governmental Authority applicable to the Transferred Assets or any
of the
Systems.
1.53
"LEASED REAL PROPERTY" means leasehold interests in real estate
held
by any Seller or Acquired Company and used exclusively in
connection with the
ownership and operation of one or more of the Systems as of the
date of this
Agreement, plus such additions thereto and deletions therefrom
between the date
of this Agreement and the Closing Date as permitted by this
Agreement.
1.54
"LIABILITY" means debts, losses, Taxes, fines, penalties or
obligations (whether direct or indirect, known or unknown, asserted
or
unasserted, absolute or contingent, accrued or unaccrued, matured
or unmatured,
determined or undeterminable, disputed or undisputed,
7
<PAGE>
liquidated or unliquidated, or due or to become due, and whether in
contract,
tort, strict liability or otherwise) and all costs, expenses,
damages,
liabilities, losses, claims, judgments or settlements, including,
without
limitation, reasonable attorney and professional fees, imposed on
or otherwise
suffered by a Person related to the foregoing.
1.55
"LICENSED INTELLECTUAL PROPERTY" means all Intellectual Property
used
in connection with the business or operations of one or more of the
Systems,
other than Transferred Intellectual Property.
1.56
"MASTER CARRIER AGREEMENT" means (a) a master carrier agreement
pursuant to which one or more Sellers or Seller's Affiliates lease
network
capacity (either as a lessor or lessee) and/or provide or use
related
Telecommunications Services listed on SCHEDULE 1.56 or (b) such
other agreement
listed on SCHEDULE 1.56.
1.57
"MASTER CBI AGREEMENT" means a master Cox Business Internet
agreement
listed on SCHEDULE 1.57.
1.58
"MATERIAL ADVERSE EFFECT" means any change, event or effect (1)
that
has been or would reasonably be likely to be materially adverse to
the business,
properties, liabilities, operations, assets or condition (financial
or
otherwise) of the Systems, taken as a whole, other than any of the
following:
(a) matters affecting the cable television industry generally
(including,
without limitation, (i) any federal or state governmental actions,
including
without limitation, proposed or enacted legislation or regulations
or (ii)
accounting or litigation matters) that do not affect the
Systems
disproportionately from similarly situated participants in the
cable industry;
(b) matters relating to or arising from local, regional or national
economic
conditions (including, without limitation, financial and capital
markets) that
do not affect the Systems disproportionately from similarly
situated
participants in the cable industry; (c) matters relating to or
arising from the
announcement or pendency of the transaction contemplated by this
Agreement; (d)
actions taken by Buyer or its Affiliates; (e) any changes in
competition
affecting the Systems; and (f) consequences of the taking of any
action
contemplated or required by this Agreement; or (2) that would
prevent Sellers
from performing their obligations hereunder and consummating the
transactions
contemplated hereby.
1.59
"MATERIAL LEASED REAL PROPERTY" means the Leased Real Property
that
is the subject of a Material Real Property Lease.
1.60
"MATERIAL REAL PROPERTY LEASE" means a Real Property Lease (a)
that
requires rent or other payments annually in excess of $50,000, (b)
the subject
of which is a headend, or (c) the subject of which is a call
center.
1.61
"MATERIAL TRANSFERRED CONTRACT" means each (a) Material Real
Property
Lease, (b) material Exclusive Pole Attachment Agreement, (c)
material Exclusive
Programming Agreement, (d) material Exclusive Retransmission
Consent Agreement
and (e) any other Contract that requires payment annually in excess
of $250,000
and has a remaining stated term of longer than twelve (12) months
from the date
of this Agreement and which cannot be terminated on sixty (60)
days' notice or
less without the payment of any penalty.
8
<PAGE>
1.62
"MULTIEMPLOYER PLAN" means a plan, as defined in ERISA Section
3(37)
or 4001(a)(3), to which Sellers or any trade or business which
would be
considered a single employer with Sellers under Section 4001(b)(1)
of ERISA or
part of the same "controlled group" as the Sellers under Section
302(d)(8)(C) of
ERISA, contributed, contributes or is required to contribute that
provides
benefits to Sellers Employees.
1.63
"NATIONAL ADVERTISING ACCOUNTS RECEIVABLE" means the rights of
a
Seller or Acquired Company to payment relating to the Systems for
advertising
time for accounts established or managed through National Cable
Communications,
KMAY (NBC), Cabletyme or CTV provided by such Seller or Acquired
Company prior
to the Adjustment Time.
1.64
"NON-EXCLUSIVE COX MEDIA AGREEMENT" means (a) an agreement that
applies to advertising sales for advertising both on cable
television systems
that are included within the Systems and on cable television
systems that are
not being sold pursuant to the terms of this Agreement and which
are owned or
operated by any Seller or Seller's Affiliate and (b) an advertising
sales
representation agreement or other agreement listed on SCHEDULE
1.64.
1.65
"NON-EXCLUSIVE POLE ATTACHMENT AGREEMENT" means a pole
attachment
agreement granting rights to both cable television systems included
within the
Systems and cable television systems that are not being sold
pursuant to the
terms of this Agreement and which are owned or operated by any
Seller or
Seller's Affiliate and that are listed on SCHEDULE 1.65.
1.66
"NON-EXCLUSIVE RETRANSMISSION CONSENT AGREEMENT" means a
retransmission consent agreement granting rights to both cable
television
systems included within the Systems and cable television systems
that are not
being sold pursuant to the terms of this Agreement and which are
owned or
operated by any Seller or Seller's Affiliate and that are listed on
SCHEDULE
1.66.
1.67
"OTHER REAL PROPERTY INTEREST" means any interest in real
property
(other than Owned Real Property, Leased Real Property or Excluded
Real Property)
held by any Seller or Acquired Company and used exclusively in
connection with
the ownership and operation of one or more of the Systems as of the
date of this
Agreement, including easements, licenses, rights to access and
rights-of-way,
plus such additions thereto and deletions therefrom between the
date of this
Agreement and the Closing Date as permitted under this
Agreement.
1.68
"OWNED REAL PROPERTY" means fee simple interests in a parcel of
real
estate and the buildings and improvements thereon (other than
Excluded Real
Property) owned by any Seller or Acquired Company and used
exclusively in
connection with the ownership and operation of one or more of the
Systems as of
the date of this Agreement, plus such additions thereto and
deletions therefrom
between the date of this Agreement and the Closing Date as
permitted under this
Agreement. The term "Owned Real Property" does not include any
Other Real
Property Interests or Leased Real Property.
1.69
"PERMITTED ENCUMBRANCES" mean any of the following liens or
encumbrances: (a) landlord's liens for sums not yet due or being
diligently
contested in good faith; (b) liens for current Taxes, assessments
and
governmental charges not yet due or being contested in good faith
by appropriate
proceedings; (c) liens arising out of judgments or awards against a
Seller or
9
<PAGE>
Acquired Company with respect to which at the time there shall be a
prosecution
for appeal or there shall be a proceeding to review or the time
limit has not
yet run for such an appeal or review with respect to such judgment
or award; (d)
liens of carriers, warehousemen, mechanics, laborers, and
materialmen and other
similar statutory liens incurred in the ordinary course of business
for sums not
yet due or being diligently contested in good faith; (e) liens
(other than
Encumbrances imposed by ERISA) incurred in the ordinary course of
business in
connection with worker's compensation and unemployment insurance or
similar
laws; (f) with respect to Real Property, leases, easements, rights
to access,
rights-of-way, mineral rights or other similar reservations,
restrictions or
defects of title, in each such instance any of which either
individually or in
the aggregate, do not materially affect the operations of any
System as
currently operated; (g) liens, liabilities or encumbrances which
are, or are
related to, Assumed Liabilities including, without limitation,
liens on leased
Personal Property and Leased Real Property; (h) leasehold interests
in real
property leased to third parties by a Seller; and (i) restrictions
set forth in,
or rights granted to Franchising Authorities or other Governmental
Authorities
as set forth in, the Franchises, Governmental Permits or Legal
Rules.
1.70
"PERSON" means any individual, corporation, limited liability
company, partnership, company, sole proprietorship, joint venture,
trust,
estate, association, organization, Governmental Authority or other
entity.
1.71
"PERSONAL PROPERTY" means all of the tangible and intangible
personal
property (other than personal property specifically listed on
SCHEDULE 2.2)
owned or leased by a Seller or Acquired Company and used
exclusively in
connection with the ownership and operation of one or more of the
Systems as of
the date of this Agreement, including, without limitation,
Exclusive
Governmental Permits, Transferred Contracts, Petty Cash, Accounts
Receivable,
Equipment, Subscriber Information, customer lists and billing
records for the
Systems, Transferred Intellectual Property, Transferred Motor
Vehicles, office
furnishings and office equipment, plus such additions thereto and
deletions
therefrom between the date of this Agreement and the Closing Date
as permitted
under this Agreement.
1.72
"PETTY CASH" means petty cash at locations in the Systems in an
amount not to exceed $100,000.00 in the aggregate.
1.73
"POST-CLOSING ADJUSTMENT STATEMENT" means the unaudited statement
of
the Current Adjustment and the Operating Cash Flow Adjustment
delivered by Buyer
to Sellers pursuant to Section 2.6.3(ii).
1.74
"PROGRAMMER" means the party to the Programmer Optional
Programming
Agreements, other than one of the Sellers or an Affiliate of one of
the Sellers.
1.75
"PROGRAMMER OPTIONAL PROGRAMMING AGREEMENTS" mean those
programming
agreements for the programming networks listed on SCHEDULE 1.75(a)
and SCHEDULE
1.75(b) unless a Programmer who is a party to a Programmer Optional
Programming
Agreement elects not to exercise its option to require Buyer to
assume such
programming agreement.
1.76
"PURCHASED INTERESTS" mean the CNC Interests, CTT Interests and
TCAC
Interests.
10
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1.77 "REAL
PROPERTY" means the Owned Real Property, Leased Real Property
and Other Real Property Interests.
1.78 "REAL
PROPERTY LEASE" means a lease agreement the subject of which is
Leased Real Property.
1.79
"REQUIRED PROGRAMMING AGREEMENT" means an affiliation agreement
with
Cox Communications Louisiana, LLC substantially in the form
attached hereto as
EXHIBIT A.
1.80
"REVENUE GENERATING UNITS" or "RGUS" mean the sum of (a) Basic
Subscribers, (b) Digital Subscribers, (c) High Speed Data
Subscribers and (d)
Telephony Subscribers.
1.81
"SELLERS EMPLOYEES" mean those employees of any Seller or any
Acquired Company who work primarily at or for one or more of the
Systems or any
Acquired Company.
1.82
"SEPARATED ADVERTISING SALES RIGHTS" mean those rights and
obligations relating to one or more of the Systems which arise
under a
Non-Exclusive Cox Media Agreement, subject to the terms and
conditions of such
Non-Exclusive Cox Media Agreement.
1.83
"SEPARATED CARRIER RIGHTS" mean those rights and obligations
relating
to one or more of the Systems which arise under a Master Carrier
Agreement,
subject to the terms and conditions of such Master Carrier
Agreement.
1.84
"SEPARATED CBI RIGHTS" mean those rights and obligations relating
to
one or more of the Systems which arise under a Master CBI
Agreement, subject to
the terms and conditions of such Master CBI Agreement.
1.85
"SEPARATED RETRANSMISSION RIGHTS" mean those retransmission
consent
rights and obligations relating to one or more of the Systems which
arise under
a Non-Exclusive Retransmission Consent Agreement, subject to the
terms and
conditions of such Non-Exclusive Retransmission Consent
Agreement.
1.86
"SEVERANCE MAXIMUM" means the amount set forth on SCHEDULE
1.86.
1.87
"SOFTWARE" means any and all (i) computer programs, including any
and
all software implementations of algorithms, models and
methodologies, whether in
source code or object code; (ii) databases and compilations,
including any and
all data and collections of data, whether machine readable or
otherwise; (iii)
descriptions, flow-charts and other work product used to design,
plan, organize
and develop any of the foregoing, screens, user interfaces, report
formats,
firmware, development tools, templates, menus, buttons and icons;
and (iv) all
documentation, including user manuals and other training
documentation related
to any of the foregoing, in each case used in connection with the
business or
operations of one or more of the Systems, other than Transferred
Intellectual
Property, but including, without limitation, the proprietary
software set forth
on schedule A to the Intellectual Property License Agreement.
1.88
"STATE CONSENT" means any Consent of a State Regulatory
Authority
required for (a) the sale of any Transferred Asset (including
without limitation
a State Telecommunications Authorization) used in the provision
of
Telecommunications Services by any of the Systems or
11
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(b) the replacement by Buyer of the Telecommunications
Authorizations set forth
on SCHEDULE 2.8.3, as contemplated in Section 5.3.1(iii) of this
Agreement.
1.89
"STATE REGULATORY AUTHORITY" means any state Governmental
Authority
with authority over the provision of Telecommunications
Service.
1.90
"STATE TELECOMMUNICATIONS AUTHORIZATION" means an authorization
granted or issued by a State Regulatory Authority to provide
Telecommunications
Services.
1.91
"SUBSCRIBER INFORMATION" means personally identifiable
information
pertaining to customers, including, without limitation (a) names,
(b) telephone
numbers, (c) e-mail addresses, where available (d) billing
addresses, (e) credit
card numbers and expiration dates (for those subscribers who
currently pay their
monthly bills through automatic credit card payments) and (f) bank
account
numbers and routing numbers (for those subscribers who currently
pay their
monthly bills through automatic withdrawals from their bank
accounts).
1.92 "TAX
RETURN" means any return, report or statement required to be
filed with respect to any Tax (including any schedules or
attachments thereto,
and any amendment thereof), including any information return, claim
for refund,
amended return or declaration of estimated Tax, and including,
where permitted
or required, combined, consolidated or unitary returns for any
group of entities
that includes Sellers, any of their subsidiaries, or any of their
Affiliates.
1.93
"TAXES" mean all federal, state, local or foreign income,
franchise,
sales, use, ad valorem, value added, net or gross proceeds, gains,
profits,
capital, withholding, payroll, employment, unemployment, social
security,
workers' compensation, license, excise or real or personal property
taxes,
customs, duties, fees and charges or levies of any kind, together
with any
interest thereon and any penalties, additions to tax or additional
amounts
applicable thereto, and any liability in respect of any items
described above
payable by reason of contract, assumption, transferee liability,
operation of
law, Treasury Regulations Section 1.1502-6(a) (or any predecessor
or successor
thereof or any analogous or similar provision under law) or
otherwise.
1.94
"TAXING AUTHORITY" means the Internal Revenue Service of the
United
States and any other Governmental Authority responsible for the
administration
of any Tax.
1.95
"TECHNOLOGY" means, collectively, all Software, information,
designs,
formulae, algorithms, procedures, methods, techniques, ideas,
know-how, research
and development, technical data, programs, subroutines, tools,
materials,
specifications, processes, inventions (whether patentable or
unpatentable and
whether or not reduced to practice), apparatus, creations,
improvements, works
of authorship and other similar materials, and all recordings,
graphs, drawings,
reports, analyses, and other writings, and other tangible
embodiments of the
foregoing, in any form whether or not specifically listed herein,
and all
related technology, that are used in, incorporated in, embodied in,
displayed by
or relate to, or are used in connection with the foregoing.
1.96
"TELECOMMUNICATIONS AUTHORIZATION" means any FCC
Telecommunications
Authorization or State Telecommunications Authorization that
authorizes any
Seller or a Seller's Affiliate to provide international, interstate
or
intrastate Telecommunications Services over a
12
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System; provided, however, the term "Telecommunications
Authorization" shall not
include any Franchise or FCC License.
1.97
"TELECOMMUNICATIONS SERVICE" shall have the meaning set forth
in
Section 3(46) of the Communications Act as of the date of this
Agreement, 47
U.S.C. Section 153(46).
1.98
"TELEPHONY SUBSCRIBER" means a residential primary outlet
served
pursuant to a subscription to any level of circuit-switched or VoIP
telephony
service, excluding Delinquent Accounts and Excluded
Subscribers.
1.99
"TRANSFERRED ASSETS" mean such tangible and intangible assets
owned
or leased by any Seller which are to be sold and transferred to
Buyer pursuant
to Section 2.1.
1.100
"TRANSFERRED CONTRACTS" mean any of the following Contracts
(other
than any Contracts that are Excluded Assets) that are either (a) in
effect on
the date of this Agreement (other than those that expire by their
terms and are
not renewed prior to the Closing) or (b) entered into by either any
Seller or
any Acquired Company between the date of this Agreement and the
Closing Date as
permitted under this Agreement:
i. Exclusive Pole Attachment Agreements;
ii. Exclusive Retransmission Consent Agreements;
iii. Exclusive Programming Agreements;
iv. Exclusive Cox Media Agreements;
v. Exclusive Cox Business Services Agreements; and
vi. any of the following Contracts to which any Seller or
Acquired
Company is a party and which relates exclusively to either the
Transferred
Assets or the business or operations of one or more of the
Systems:
A. personal property leases;
B. Real Property Leases;
C. tower leases (for which a Seller is a lessor or lessee);
D. subscription agreements with customers for cable, internet
and telephony services provided by the Systems (other than
Exclusive Cox
Business Services Agreements);
E. maintenance agreements;
F. railroad crossing agreements;
G. Other Real Property Interest agreements; and
13
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H. other agreements
vii. non-exclusive Contracts listed on SCHEDULE 1.100.
1.101
"TRANSFERRED INTELLECTUAL PROPERTY" means (i) all Seller-owned
internet domain names set forth on SCHEDULE 1.101 that are used
exclusively in
connection with the business or operations of one or more of the
Systems and
(ii) the right to use the company name "TCA Communications, L.L.C."
in full, but
not any abbreviation or derivation thereof.
1.102
"TRANSFERRED MOTOR VEHICLES" means the motor vehicles used
exclusively in connection with the ownership and operation of one
or more of the
Systems (it being understood that at or prior to Closing, Sellers
shall, at
their expense, discharge any operating or capitalized master lease
agreements or
lease agreements relating to vehicles used exclusively in
connection with the
business or operations of one or more of the Systems), including
those motor
vehicles described in SCHEDULE 1.102, except as the vehicles listed
thereon may
be changed, replaced, or disposed of from time to time in the
ordinary course of
business consistent with past practices after the date hereof.
1.103
"2005 OPERATING CASH FLOW" shall mean for the period from January
1
through December 31, 2005, an amount equal to the following:
i. As such amounts are set forth in the December 31, 2005
Audited
Financial Statement (as defined in Section 5.2.1 below), the
revenues of the
Systems less cost of services (excluding depreciation and
amortization) and
selling, general and administrative expenses (excluding
depreciation and
amortization); plus
ii. The sum of the following items:
A. general corporate overhead expense, allocated to the
Systems;
B. local overhead expense from regional offices of the Sellers
or their Affiliates, for services provided to one or more of the
Systems;
C. non-recurring items of an unusual nature and amounts in
connection with: (1) the transactions contemplated by this
Agreement, including,
without limitation, incentive bonuses and like items and the
restructuring in
the MAC System; (2) Hurricane Rita and other natural disasters; and
(3) amounts
incurred in respect of long-term incentive plans, unit appreciation
plans and
like items; and
D. amounts associated with:
(1) adjustments to reflect the difference between the
programming rates allocated to the Systems by Parent and the actual
effective
contractual rates associated with premium programming services
provided by the
Systems;
(2) up to Five Million Dollars ($5,000,000.00) of the
sum of:
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(aa) adjustments to reflect the amount of indirect
costs capitalized in connection with the construction of cable
transmission and
distribution facilities and capitalized installation services based
on a change
from the rate applicable to Parent and its subsidiaries, taken as a
whole, to
that applicable to the Systems considered as a stand-alone entity;
and
(bb) adjustments for recognition of changes in the
materiality standard in respect of recognition of programming
incentives, taking
into account the difference in size between the Systems considered
as a
stand-alone entity compared to Parent and its subsidiaries, taken
as a whole.
With respect to the foregoing allocations, adjustments and the like
in clause
(ii) (A) - (D) above, such allocations, adjustments and the like
shall be made
in a manner consistent with the methodology and practices used in
determining
similar allocations, adjustments and the like for 2004, as
illustrated in
SCHEDULE 1.103 attached hereto.
With respect to the foregoing, any reference to a System or Systems
shall
include any cable system included in such System to the extent
relevant.
1.104
"2005 OPERATING CASH FLOW TARGET" shall mean Two Hundred
Fifty-Seven
Million Nine Hundred Thousand Dollars ($257,900,000.00).
1.105
"WARN ACT" means the Worker Adjustment and Retraining
Notification
Act, as amended and as in effect from time to time.
1.106 List
of Additional Definitions. The following is a list of
additional terms used in this Agreement and a reference to the
Section hereof in
which such term is defined:
<TABLE>
<CAPTION>
Term
Section
----
-------
<S>
<C>
Acquisition Transaction
5.19.1
Additional New Court TV Analog Subscribers
5.16.4
Antitrust Division
5.4
Audited Financial Statements
3.5
Assumed Liabilities
2.7.1
Assumption Agreement
7.2.2
Bill of Sale
7.2.1
Brokerage Services
3.20
Buyer
Preamble
Buyer Indemnified Parties
9.2
California System
Recitals
Cap
9.5.2
CCL
Preamble
Claimant
9.4.1
CNC
Recitals
CNC Interests
Recitals
COBRA
5.8.3
</TABLE>
15
<PAGE>
<TABLE>
<S>
<C>
Copyright Act
3.15.3
Copyright Filings
3.15.3
Copyrights
1.50
Court TV Minimum
5.16.4
CoxCom
Preamble
CSWH
Preamble
CTT
Recitals
CTT Interests
Recitals
CTP
Preamble
Current Adjustment
2.6.1
Current New Court TV Analog Subscribers
5.16.4
December 31, 2005 Audited Financial Statements
5.2.1
Deductible
9.5.1
Deposit
2.3
Deposits
2.6.1
Deposit Escrow Agreement
2.3
Designated Area
5.18.1
Direct Claim
9.4.1
Eligible Employees
5.8.1
End Date
8.1.3
Environmental Firm
5.9.1
Escrow Agent
2.3
Excluded Assets
2.2
Excluded Real Property
2.2.15
Exclusion Notice
5.8.1
Financial Statements
3.5
Financing Commitments
4.5
Franchise Right of First Refusal
2.9
FTC
5.4
Indemnifying Party
9.4.1
Intellectual Property License Agreement
5.7
MAC System
Recitals
Management Agreement
10.1.3
North Carolina System
Recital
Operating Cash Flow Adjustment
2.6.2
Outsourcing Agreement
10.1.4
Patents
1.50
Pre-Closing Covenants
9.1
Prepaid Expenses
2.6.1
Programming Assumption Agreements
5.16.1
Projections
5.14.1
Purchase Price
2.4
Real Property Capitalized Leases
2.6.1(ii)(E)
Related Agreements
3.2
Related Franchise Assets
10.1.1
Related Telecommunications Assets
10.1.1
</TABLE>
16
<PAGE>
<TABLE>
<S>
<C>
Reorganization Plan
5.8.7
Representatives
5.19.1
Required Action
5.9.1
Required Consents
6.1.5
Resale Certificates
5.5.3
Restricted Business
5.18.1
Retained Franchises
10.1.1
Retained Taxes
9.2.4
Retained Telecommunications Operation
10.1.1
Sellers
Preamble
Sellers Indemnified Parties
9.3
Severance Excess
5.8.7
Intellectual Property License Agreement
5.7
SEC
3.5
Subsequent Transfer
10.1.2
Survival Period
9.1
Systems
Recitals
TCAC
Recitals
TCAC Interests
Recitals
TCAP
Preamble
Third Party Claim
9.4.1
Telcom Entities
3.4.1(ii)
Trade Secrets
1.50
Transfer Taxes
5.5.1
Transferred Employees
5.8.1
Transition Services Agreement
5.7
Unaudited Financial Statements
3.5
West Texas System
Recitals
</TABLE>
2. SALE
AND PURCHASE OF TRANSFERRED ASSETS
2.1
Agreement to Sell and Purchase. Subject to the terms and
conditions
set forth in this Agreement, Sellers hereby agree to sell, transfer
and deliver
to Buyer at Closing, and Buyer agrees to purchase from Sellers at
Closing, all
of the Transferred Assets listed below, free and clear of any
Encumbrances,
other than Permitted Encumbrances:
2.1.1 The Personal Property;
2.1.2 The Exclusive Governmental Permits (other than any
Exclusive
Governmental Permit set forth on SCHEDULE 2.2);
2.1.3 The Real Property;
2.1.4 Subject to Section 2.2.2, all books and records relating
to
the operation of the Systems and the Transferred Assets, including
without
limitation copies of the Transferred Contracts and all
correspondence and
memoranda relating thereto, Subscriber Information, customer
records and all
records required by the Franchising Authorities to be kept by
the
17
<PAGE>
Systems and the minute books and similar company records of the
Acquired
Companies (provided that Sellers may retain copies of company
records of the
Acquired Companies);
2.1.5 Prepaid Expenses and Deposits;
2.1.6 In accordance with and subject to the terms and conditions
set
forth in Section 5.16, the Required Programming Agreement and the
Programmer
Optional Programming Agreements, each solely with respect to the
Systems;
2.1.7 In accordance with and subject to the terms and conditions
set
forth in Section 5.3, the Separated Retransmission Rights, the
Separated Carrier
Rights, the Separated CBI Rights and the Separated Advertising
Sales Rights;
2.1.8 The assets listed in SCHEDULE 2.1.8;
2.1.9 The Purchased Interests;
2.1.10 The right to use the company name "TCA Communications,
L.L.C." in full, but not any abbreviation or derivation thereof;
and
2.1.11 The goodwill and going concern value generated by
Sellers
with respect to the Systems; and
2.1.12 Such other assets owned by Sellers and not specifically
set
forth above, used exclusively in the conduct of the business and
operations of
the Systems as conducted as of the date hereof by Sellers, other
than Excluded
Assets or those assets set forth on or described in SCHEDULE
3.22.
2.2
Excluded Assets. Notwithstanding anything set forth in this
Agreement
to the contrary, the Transferred Assets shall exclude the following
assets
(collectively, the "EXCLUDED ASSETS"):
2.2.1 Except for any Petty Cash, any Seller's cash on hand as of
the
Adjustment Time and all other cash, checks, drafts or cash
equivalents in any
Seller's bank, savings or lockbox accounts, including, without
limitation,
customer advance payments and deposits; any and all bonds, surety
instruments,
insurance policies and all rights and claims thereunder (except as
specifically
provided herein), letters of credit or other similar items,
including, without
limitation those listed on SCHEDULE 3.19, and any cash surrender
value in regard
thereto, and any stocks, bonds, certificates of deposit and similar
investments
(other than the Purchased Interests);
2.2.2 Any books and records that any Seller is required by law
to
retain (provided that copies of such books and records will be made
available to
Buyer) or is otherwise prohibited by law to disclose and any
correspondence,
memoranda, books of account, Tax reports and Tax Returns (other
than Tax reports
and Tax Returns filed by the Acquired Companies and in possession
of a Seller or
an Affiliate of Seller) and the like related to the Systems and all
files
related to the Systems that are located at Parent's headquarters in
Atlanta,
Georgia, and Sellers' corporate minute books and other books and
records related
to internal company matters and financial relationships with
Sellers' lenders
and Affiliates;
18
<PAGE>
2.2.3 Any claims, rights and interest in and to any refunds of
federal, state or local franchise, income or other Taxes or fees of
any nature
whatsoever for periods prior to the Adjustment Time including,
without
limitation, fees paid to the United States Copyright Office or any
choses in
action owned by Sellers relating to such refunds;
2.2.4 All programming agreements (other than the Required
Programming Agreement, the Exclusive Programming Agreements and, if
applicable,
the Programmer Optional Programming Agreements) of any Seller or
any Affiliate
of any Seller, including those relating to or benefiting the
Systems;
2.2.5 All retransmission consent agreements (other than
Exclusive
Retransmission Consent Agreements) of any Seller or any Affiliate
of any Seller,
including those relating to or benefiting the Systems including,
without
limitation, all rights under Non-Exclusive Retransmission
Agreements (other than
Separated Retransmission Rights);
2.2.6 All pole attachment agreements (other than Exclusive Pole
Attachment Agreements) of any Seller or any Affiliate of any
Seller, including
those relating to or benefiting the Systems;
2.2.7 All corporate names, trademarks, trade names, domain
names,
service marks, service names, logos and similar proprietary rights
of any Seller
(including, without limitation, any use of the names "Cox" or "TCA"
or any
derivations thereof) whether or not used in the business or
operations of the
Systems (other than the company name "TCA Communications, L.L.C."),
except for
the Transferred Intellectual Property;
2.2.8 Any and all assets and rights of any Seller that are not
used
exclusively in connection with, or do not relate exclusively to,
the ownership
and operation of one or more of the Systems, except for those
assets or rights
specifically set forth on SCHEDULE 2.1.8;
2.2.9 All rights to receive fees or services from any Seller or
any
Affiliate of any Seller and any contracts, agreements or other
arrangements
between any Seller and an Affiliate of any Seller, other than
pursuant to
Transferred Contracts, Accounts Receivable or the Related
Agreements;
2.2.10 All equipment, Software and agreements related to any
Seller's customer billing systems whether or not used exclusively
or otherwise
in the business of one or more of the Systems;
2.2.11 Any Employee Benefit Plan and its related assets;
2.2.12 All rights and licenses to Software, including without
limitation, the Software owned, developed or used by Cox Media,
L.L.C. used in
connection with the operation of the Systems, other than pursuant
to and in
accordance with the terms and conditions set forth in the
Intellectual Property
License Agreement;
2.2.13 All Governmental Permits (other than Exclusive
Governmental
Permits) of any Seller or any Seller's Affiliate, including those
relating to or
benefiting the Systems; and
19
<PAGE>
2.2.14 Licensed Intellectual Property.
2.2.15 The (i) real property (the "Excluded Real Property") and
(ii)
other assets listed on SCHEDULE 2.2.
2.3
Deposit Escrow. Within three Business Days of the execution and
delivery of this Agreement by Sellers and Buyer, Buyer shall
deliver a cash
deposit in U.S. Dollars in an amount equal to Thirty-Five Million
Dollars
($35,000,000.00) (the "DEPOSIT") to an escrow agent selected by
Sellers and
reasonably acceptable to Buyer ("ESCROW AGENT") to secure the
timely performance
and fulfillment of Buyer's obligations under this Agreement. The
Deposit shall
be held in an account and applied pursuant to the terms of that
certain Deposit
Escrow Agreement, substantially in the form attached hereto as
EXHIBIT B (the
"DEPOSIT ESCROW AGREEMENT"), with such changes requested by Escrow
Agent and
mutually acceptable to Buyer and Sellers, each acting reasonably,
to be executed
by Buyer, Sellers and Escrow Agent concurrently with the delivery
of the
Deposit. Notwithstanding anything to the contrary set forth herein,
Sellers
shall have the right to terminate this Agreement if Buyer fails to
deliver the
Deposit timely as provided for herein. The Deposit will be invested
as provided
in the Deposit Escrow Agreement. At the Closing, the amount of the
Deposit,
together with interest thereon, shall be delivered to Sellers and
credited
against the Purchase Price. In the event the transactions
contemplated hereby
are not consummated or in the event of a termination of this
Agreement, the
Deposit, together with interest thereon, shall be paid in
accordance with
Section 8.2 hereof.
2.4
Purchase Price. The purchase price for the Transferred Assets shall
be
Two Billion Five Hundred Fifty Million Dollars ($2,550,000,000.00)
(the
"PURCHASE PRICE"), which amount shall be adjusted as provided in
Section 2.6
below. At the Closing, Buyer shall deliver to Sellers, via wire
transfer(s) of
immediately available funds in U.S. Dollars in accordance with
Sellers' written
instructions provided at least two (2) Business Days prior to the
Closing, the
Purchase Price (a) reduced by the amount of the Deposit, together
with interest
thereon, delivered to Sellers on the Closing Date pursuant to
Section 2.3,
above, and (b) subject to adjustment on the Closing Date as
provided in Section
2.6, below.
2.5
Allocation of Purchase Price. Sellers and Buyer agree to use
good
faith efforts to agree to an allocation of the aggregate purchase
consideration
among the Transferred Assets (and among the assets of each of CNC
and TCAC and
the Purchased Interests in CTT) in a manner consistent with Section
1060 of the
Code and the United States Treasury Regulations promulgated
thereunder within
sixty (60) days after the Closing Date and, if Sellers and Buyer
reach such
agreement, then Sellers and Buyer agree (i) to file all income Tax
forms and
returns (including IRS Form 8594 or any successor form) in
accordance with such
allocation, (ii) to update such Tax forms or returns in accordance
with the
methods used in making the allocation to the extent necessary to
reflect
purchase price adjustments, and (iii) not to take any position
before any taxing
authority that is inconsistent with such allocation. If Sellers and
Buyer shall
not have agreed on such allocation by the sixtieth (60th) day
following the
Closing Date, then Sellers and Buyer shall have no further
obligations pursuant
to this Section 2.5, and each of Sellers and Buyer shall make its
own
determination of such allocation for financial and tax reporting
purposes. For
purposes of this Section 2.5, the Transferred Assets shall include
the covenant
not to compete in Section 5.18.
20
<PAGE>
2.6
Adjustments to the Purchase Price. The Purchase Price shall be
subject
to adjustment, as of the Adjustment Time, as follows:
2.6.1 The Purchase Price shall be subject to:
(i) an increase in the Purchase Price by an amount equal to
the sum of:
(A) 100% of the face amount of all Cable Accounts
Receivable that are outstanding as of the Adjustment Time, no part
of which is
outstanding more than thirty (30) days from the first day of the
period to which
any outstanding bill relates;
(B) 91% of the face amount of all Cable Accounts
Receivable that, as of the Adjustment Time, any part of which is
outstanding
more than thirty (30) days from the first day of the period to
which any
outstanding bill relates but no part of which is outstanding more
than sixty
(60) days from the first day of the period to which any outstanding
bill
relates;
(C) 55% of the face amount of all Cable Accounts
Receivable that, as of the Adjustment Time, any part of which is
outstanding
more than sixty (60) days from the first day of the period to which
any
outstanding bill relates but no part of which is outstanding more
than ninety
(90) days from the first day of the period to which any outstanding
bill
relates;
(D) 100%
of the face amount of all Commercial Accounts
Receivable that are outstanding as of the Adjustment Time, no part
of which is
outstanding more than sixty (60) days from the first day of the
period to which
any outstanding bill relates;
(E) 75% of the face amount of all Commercial Accounts
Receivable that, as of the Adjustment Time, any part of which is
outstanding
more than sixty (60) days from the first day of the period to which
any
outstanding bill relates but no part of which is outstanding more
than ninety
(90) days from the first day of the period to which any outstanding
bill
relates;
(F) 50% of the face amount of all Commercial Accounts
Receivable that, as of the Adjustment Time, any part of which is
outstanding
more than ninety (90) days from the first day of the period to
which any
outstanding bill relates but no part of which is outstanding more
than one
hundred twenty (120) days from the first day of the period to which
any
outstanding bill relates;
(G) 100% of the face amount of all Advertising Accounts
Receivable that are outstanding, as of the Adjustment Time, no part
of which is
outstanding more than one hundred twenty (120) days from the first
day of the
period to which any outstanding bill relates;
(H) 10% of the face amount of all Advertising Accounts
Receivable that, as of the Adjustment Time, no part of which is
outstanding more
than one hundred twenty (120) days from the first day of the period
to which any
outstanding bill relates;
21
<PAGE>
(I) 100% of the face amount of all National Advertising
Accounts Receivable that are, as of the Adjustment Time,
outstanding;
(J) all normal and customary prepaid expenses relating
to the ownership or operation of any of the Transferred Assets or
Acquired
Companies, and for which it is reasonably expected that Buyer will
receive a
benefit within twelve (12) months following the Closing, which
prepaid expenses
shall be prorated between Sellers and Buyer as of the Adjustment
Time in
accordance with GAAP, and which prepaid expenses, by way of
example, shall
include: real and personal property taxes and assessments levied
against the
Transferred Assets; real and personal property rentals (other than
capitalized
leases); pole rentals; power and utility charges; applicable
franchise,
copyright or other business and license fees, sales and service
charges; and
similar items (such expenses, the "PREPAID EXPENSES");
(K) the outstanding amount of all deposits relating to
the Systems paid by any Seller or Affiliate of any Seller prior to
the
Adjustment Time (the "DEPOSITS");
(L) an amount equal to the excess of capital
expenditures (excluding customer premise equipment) made with
respect to the
Systems during the portion of the applicable period set forth on
SCHEDULE
2.6.1(i) that occurs before the Adjustment Time, in the aggregate,
over the
amount of the aggregate budgeted capital expenditures (excluding
customer
premise equipment) for the Systems set forth on SCHEDULE 2.6.1(i)
for such
portion of said period, on a prorated basis, but only to the extent
that Buyer
has approved such excess expenditures; provided, however, in the
event that
Buyer does not approve such expenditure, Sellers, notwithstanding
anything to
the contrary set forth in this Agreement, shall not be obligated to
make any
such expenditure;
(M) Petty Cash; and
(N) an amount equal to the Severance Excess, if any;
(ii) a decrease in the Purchase Price by an amount equal to
the sum of:
(A) all customer advance payments and deposits from
customers relating to the Systems paid to any Seller and retained
by any Seller
subsequent to the Closing;
(B) all normal and customary accrued and unpaid expenses
of the kind itemized in Section 2.6.1(i)(J) above relating to the
ownership or
operation of any of the Transferred Assets or Acquired Companies,
which accrued
and unpaid expenses shall be prorated between Sellers and Buyer as
of the
Adjustment Time in accordance with GAAP;
(C) an amount, if any, equal to the monetary amount of
the type of Permitted Encumbrance contemplated in clause (d) of the
definition
of Permitted Encumbrance;
(D) all Accrued Vacation of the Transferred Employees as
of the Adjustment Time; and
22
<PAGE>
(E) An amount equal to the net book value of the
liability, as of the Adjustment Time, under the real property
capitalized leases
listed on SCHEDULE 2.6.1(ii)(E) (the "REAL PROPERTY CAPITALIZED
LEASES"),
determined in accordance with GAAP (it being understood and agreed
that Buyer
shall assume all obligations under such leases relating to the
period after the
Adjustment Time); and
(F) an amount equal to the deficit of capital
expenditures (excluding customer premise equipment) made with
respect to the
Systems during the portion of the applicable period set forth on
SCHEDULE
2.6.1(i) that occurs before the Adjustment Time, in the aggregate,
below the
amount of the aggregate budgeted capital expenditures (excluding
customer
premise equipment) for the Systems set forth on Schedule 2.6.1(i)
for such
portion of said period, on a prorated basis;
(G) the amount set forth in Section 2.9, if applicable.
The adjustment provided for in this Section 2.6.1 is referred to
herein as the
"CURRENT ADJUSTMENT."
2.6.2 If the 2005 Operating Cash Flow is less than the 2005
Operating Cash Flow Target, then the Purchase Price shall be
reduced by an
amount equal to ten (10) times the amount of the difference between
the 2005
Operating Cash Flow Target and the 2005 Operating Cash Flow. If
2005 Operating
Cash Flow equals or exceeds the 2005 Operating Cash Flow Target,
there shall be
no adjustment hereunder. The adjustment, if any, provided for
herein shall be
referred to as the "OPERATING CASH FLOW ADJUSTMENT."
2.6.3 For purposes of determining the adjustments to the
Purchase
Price to be made as of the Adjustment Time pursuant to Sections
2.6.1 and 2.6.2
above, Sellers and Buyer shall proceed as follows:
(i) At least seven (7) Business Days prior to the Closing,
Sellers will deliver to Buyer the Initial Adjustment Statement,
showing in
reasonable detail a preliminary good faith estimate of the Current
Adjustment
and the Operating Cash Flow Adjustment, together with such
documentation as may
reasonably support Sellers' calculations set forth therein. Not
less than five
(5) Business Days prior to the Closing Date, Buyer shall provide
Sellers with
any good faith objections to the Initial Adjustment Statement in
writing,
together with such documentation as may reasonably support Buyer's
good faith
objections. After considering Buyer's objections, Sellers shall
make such
revisions to the Initial Adjustment Statement as are mutually
acceptable to the
parties and shall deliver a revised Initial Adjustment Statement
not less than
one (1) day prior to the Closing Date, and the Purchase Price shall
be adjusted
on the Closing Date in accordance with such revised Initial
Adjustment
Statement. Any disagreements that may continue to exist with
respect to the
Initial Adjustment Statement shall be resolved in connection with
the
Post-Closing Adjustment Statement pursuant to Section 2.6.3(iv)
below.
Notwithstanding the foregoing, in the event Buyer disputes in good
faith the
amount of the Operating Cash Flow Adjustment, and the amount in
dispute exceeds
Five Million Dollars ($5,000,000.00), the amount in dispute shall
be excluded
from the Initial Adjustment Statement and the disputed amount shall
be resolved
pursuant to and in accordance with the provisions set forth in
Section 2.6.3(iv)
below; which procedures shall commence immediately
23
<PAGE>
following Closing. In the event any portion of such disputed amount
is resolved
in favor of Sellers pursuant to Section 2.6.3(iv), in addition to
paying such
amount resolved in favor of Sellers, Buyer shall pay interest to
Sellers on the
amount of such disputed amount resolved in favor of Sellers at the
rate of 12%
per annum accruing from the Closing Date until the amount is paid
to Sellers. In
the event any portion of an amount included in the Initial
Adjustment Statement
is ultimately resolved in favor of Buyer pursuant to Section
2.6.3(iv), in
addition to paying such amount resolved in favor of Buyer, Sellers
shall pay
interest to Buyer on the amount of such disputed amount resolved in
favor of
Buyer at the rate of 12% per annum accruing from the Closing Date
until the
amount is paid to Buyer. Such amounts shall be paid within three
(3) Business
Days of receipt of the determination under Section 2.6.3(iv)
below.
(ii) Within ninety (90) days after the Closing Date, Buyer
shall deliver to Sellers the Post-Closing Adjustment Statement
which shall set
forth Buyer's determination of the Current Adjustment and the
Operating Cash
Flow Adjustment, together with such documentation as may reasonably
support
Buyer's calculations set forth therein and such other documentation
relating to
such Post-Closing Adjustment Statement as Sellers may reasonably
request.
(iii) If Sellers shall in good faith conclude that the
Post-Closing Adjustment Statement does not accurately reflect the
adjustments to
be made to the Purchase Price as of the Adjustment Time pursuant to
Sections
2.6.1 and 2.6.2, Sellers shall, within sixty (60) days after their
receipt of
the Post-Closing Adjustment Statement, provide to Buyer a written
statement of
any discrepancies believed in good faith to exist, together with
such
documentation as may reasonably support Sellers' calculations set
forth therein
and such other documentation relating to such statement as Buyer
may reasonably
request.
(iv) Buyer
and Sellers shall use good faith efforts to jointly
resolve the discrepancies within thirty (30) days of Buyer's
receipt of Sellers'
written statement of discrepancies, which resolution, if achieved,
shall be in
writing and binding upon all parties to this Agreement and not
subject to
dispute or judicial review. If Buyer and Sellers do not resolve
the
discrepancies to their mutual satisfaction within such 30-day
period, Buyer and
Sellers shall, within the following ten (10) days, jointly engage
the
Independent Accounting Firm to review the Post-Closing Adjustment
Statement,
together with Sellers' discrepancy statement and any other relevant
documents
requested by the Independent Accounting Firm. The Independent
Accounting Firm
shall report its conclusions as to the adjustments to be made to
the Purchase
Price as of the Adjustment Time pursuant to Sections 2.6.1 and
2.6.2, which
report shall be in writing, conclusive, final and binding on all
parties to this
Agreement and not subject to dispute or judicial review. After
final resolution
of all disputes with respect to the Post-Closing Adjustment
Statement pursuant
to the procedures set forth above, no party shall have the right to
raise
further adjustments or make any other claim in its favor. If, after
adjustment
as appropriate with respect to the amount of the aforesaid
adjustments paid or
credited at the Closing, Buyer, on the one hand, or Sellers, on the
other hand,
are determined to owe an amount to the other pursuant to the terms
of this
Section 2.6.3(iv), the appropriate party shall pay such amount to
the other
within three (3) Business Days after receipt of such determination.
The cost of
retaining the Independent Accounting Firm shall be borne one-half
by Buyer and
one-half by Sellers.
24
<PAGE>
2.7
Assumption of Assumed Liabilities. Pursuant to the Assumption
Agreement, Buyer shall assume, and shall pay, perform and discharge
when due,
the following Liabilities (the "ASSUMED LIABILITIES"):
2.7.1 Accrued Vacation to the extent such Liabilities are taken
into
account in the determination of the Current Adjustment;
2.7.2 all severance obligations, if any, to Transferred
Employees
arising out of the termination of employment after the Closing as
set forth in
Section 5.8.5;
2.7.3 Liabilities accrued or relating to periods from and after
the
Adjustment Time arising out of Buyer's ownership, leasing or use of
the
Transferred Assets, the Acquired Companies or operation of the
Systems,
including, without limitation, those Liabilities arising under any
Transferred
Contract or Exclusive Governmental Permit accrued or relating to
periods from
and after the Adjustment Time;
2.7.4 all Liabilities of Sellers taken into account in the
determination of the Current Adjustment; and
2.7.5 the Liabilities set forth on SCHEDULE 2.7.5.
Except as expressly set forth in this Agreement, Buyer will not
assume any other
Liabilities of Sellers or related to the Systems or the Transferred
Assets. The
Acquired Companies shall have no Liabilities other than Liabilities
accruing or
arising after the Adjustment Time under the Contracts set forth on
SCHEDULE
3.21.5. For the avoidance of doubt, no Retained Taxes shall be
Assumed
Liabilities.
2.8 Cox Name; Affiliated Services.
2.8.1 Buyer acknowledges and agrees that the names "Cox,"
"TCA" and any derivations thereof are Excluded Assets, other than
the name "TCA
Communications, L.L.C." After Closing, Buyer shall remove or delete
the names
"Cox," "TCA" and any derivations thereof from the Transferred
Assets as soon as
reasonably practicable, but in any event, by the one hundred
eightieth (180th)
day following Closing. Until such removal or deletion in accordance
with the
preceding sentence, in order to facilitate the transition of
ownership of the
Systems pursuant to the transactions contemplated by this
Agreement, said names
and derivations thereof may remain on the tangible assets included
in the
Transferred Assets. As soon as reasonably practicable following the
Closing,
Buyer shall cause the company name of each of the Acquired
Companies other than
TCA Communications, L.L.C. to be changed to a name which is not
confusingly
similar with, and which does not use as part of its name, the name
"Cox" or
"TCA" or any variation, abbreviation or derivation thereof;
provided, however,
Buyer may continue to use the name "TCA Communications, L.L.C." as
the company
name of said Acquired Company. Notwithstanding the foregoing, Buyer
shall not be
required to remove or discontinue using said names and derivations
thereof as
same may appear on identification tags or on converters, modems or
similar items
while in customers' homes or properties making such removal or
discontinuation
impracticable for Buyer.
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2.8.2 Buyer acknowledges and agrees that (a) the services
currently provided for the Systems by Sellers and their Affiliates,
including,
without limitation, customary corporate overhead services provided
by the
corporate, division or regional offices of Parent or any Affiliate
thereof and
those described on SCHEDULE 2.8.2, shall cease to be provided to
the Systems or
Buyer effective as of the Closing by Sellers and their Affiliates
and (b) after
Closing, Sellers and their Affiliates shall no longer provide such
services for
the Systems other than pursuant to and in accordance with the terms
and
conditions set forth in the Transition Services Agreement and the
Exclusive Cox
Media Agreements.
2.8.3 Buyer acknowledges and agrees that Sellers will not be
assigning or transferring any of their Telecommunications
Authorizations listed
in SCHEDULE 2.8.3 that authorize (i) interstate and
international
telecommunications services; and (ii) the telecommunications
operations of
Sellers or their Affiliates in the States of Louisiana, Oklahoma,
California,
Missouri, Mississippi and New Mexico.
2.9 Rights
of First Refusal. In the event any Franchising Authority or
other Person deriving rights from or through such Franchising
Authority
exercises any right of first refusal, option or similar right to
acquire such
Franchise and the related assets pursuant to and in accordance with
such
Franchise (a "FRANCHISE RIGHT OF FIRST REFUSAL"), then (a) such
Franchise and
related assets shall not constitute Transferred Assets; (b) Buyer
shall
cooperate with Sellers in dealing with the applicable Franchising
Authority or
other Person exercising the Franchise Right of First Refusal; (c)
the Purchase
Price shall be reduced by an amount equal to the number of RGUs
covered by the
underlying Franchise that was subject to the Franchise Right of
First Refusal,
multiplied by the amount per RGU set forth on SCHEDULE 2.9; and (d)
Sellers
shall be entitled to proceeds received as a result of such
Franchise Right of
First Refusal and if Buyer shall receive such proceeds, it shall
immediately
remit the same to Sellers.
3.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers,
jointly and severally, represent and warrant to Buyer as
follows:
3.1
Organization, Standing and Authority.
3.1.1 TCAP is a general partnership validly existing under the
laws
of the State of Delaware. CSWH is a limited partnership validly
existing and in
good standing under the laws of the State of Texas. CCL is a
limited liability
company validly existing and in good standing under the laws of the
State of
Delaware. CoxCom is a corporation validly existing and in good
standing under
the laws of the State of Delaware. CTP is a corporation validly
existing and in
good standing under the laws of the State of Delaware. Each Seller
is qualified
to conduct business in each jurisdiction in which the property
related to the
Systems owned, leased or operated by it requires it to be so
qualified except
where its failure to be so qualified has not had and would not
reasonably be
expected to have a material adverse effect on such operations. Each
Seller has
the requisite partnership, limited liability company or corporate,
as
applicable, power and authority (a) to own, lease and use the
Transferred Assets
as currently owned, leased and used by it and (b) to conduct the
business and
operations of the Systems as currently conducted by it.
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3.1.2 Parent is a corporation validly existing and in good
standing
under the laws of the State of Delaware. Parent is qualified to
conduct its
business in each jurisdiction in which it is required it to be so
qualified
except where its failure to be so qualified has not had and would
not reasonably
be expected to have a material adverse effect on such operations.
Parent has the
corporate power and authority (a) to own, lease and use its
properties and
assets as currently owned, leased and used by it and (b) to conduct
its business
and operations as currently conducted by it.
3.2
Authorization and Binding Obligation. Each Seller and Parent has
the
partnership, limited liability company or corporate, as applicable,
power and
authority to execute and deliver this Agreement and all other
agreements,
instruments and certificates contemplated by this Agreement
(collectively, the
"RELATED AGREEMENTS") and to carry out and perform all of its other
obligations
under the terms of this Agreement and the Related Agreements. The
execution and
delivery of, and performance of the obligations contained in, this
Agreement and
the Related Agreements and the transactions contemplated hereby and
thereby have
been, or solely with respect to the Related Agreements as of the
Closing will
be, duly authorized by all necessary partnership, limited liability
company or
corporate, as applicable, action on the part of each Seller and
Parent and their
respective directors, partners, managers, members or stockholders.
This
Agreement has been, and all Related Agreements as of the Closing
will be, duly
executed and delivered by each Seller and Parent, and this
Agreement
constitutes, and the Related Agreements will, as of the Closing,
constitute, the
valid and legally binding obligation of each Seller and Parent,
enforceable
against each of them in accordance with their terms, except as
enforceability
may be limited by bankruptcy, insolvency or similar laws affecting
the
enforcement of creditors' rights generally, and as the remedy of
specific
performance and injunctive and other forms of equitable relief may
be subject to
equitable defenses and to the discretion of the court before which
any
proceeding thereunder may be brought.
3.3
Absence of Conflicting Terms; Consents. Except for the expiration
or
termination of any applicable waiting period under the HSR Act or
as set forth
on SCHEDULE 3.3 or as would not impair the ability of each Seller
to perform its
obligations under this Agreement and the Related Agreements, the
execution,
delivery and performance by each Seller of this Agreement and by
each Seller of
the Related Agreements to which it is a party (with or without the
giving of
notice, the lapse of time, or both): (a) do not require the Consent
of, notice
to, or filing with, any Governmental Authority or with respect to
any Exclusive
Governmental Permit; (b) will not conflict with any provision of
the certificate
of formation, certificate of limited partnership or certificate of
incorporation
of any Seller or Acquired Company, as applicable, or the limited
liability
company operating agreement, partnership agreement or bylaws of any
Seller or
Acquired Company, as applicable; (c) assuming receipt of all
Consents listed in
SCHEDULE 3.3, will not in any material way conflict with, result in
a material
breach or violation of, or constitute a material default under any
material
Legal Rule applicable to Sellers or to the Systems with respect to
the
Transferred Assets or to the Acquired Companies; (d) assuming
receipt of all
Consents listed in SCHEDULE 3.3, will not conflict in any material
way with,
constitute grounds for termination of, result in a material breach
of, result in
loss of a material benefit of, constitute a material default under,
or
accelerate or permit the acceleration of any performance required
by the terms
of any Exclusive Governmental Permit; (e) assuming receipt of all
Consents
listed in SCHEDULE 5.3, will not result in the creation upon the
Transferred
Assets or the assets of any of the Acquired Companies of any
Encumbrances other
than Permitted Encumbrances; and (f)
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assuming receipt of all Consents listed in SCHEDULE 5.3, will not
constitute
grounds for termination of, result in a material breach of,
constitute a
material default under, or accelerate or permit the acceleration of
any
performance required by the terms of any Material Transferred
Contract.
Notwithstanding the foregoing, Sellers make no representation or
warranty
regarding any of the foregoing that may result from the specific
legal or
regulatory status of Buyer or any of its Affiliates or as a result
of any other
facts that specifically relate to the business or activities in
which Buyer or
any of its Affiliates is or proposes to be engaged. Except as set
forth in
SCHEDULE 3.3, no Person has any right to acquire any interest in
any of the
Systems or the Transferred Assets (including any right of first
refusal, option
to buy or similar right) as a result of Sellers' execution,
delivery or
performance of this Agreement or any of the transactions
contemplated hereby.
3.4
Governmental Permits.
3.4.1 With respect to Governmental Permits:
(i) SCHEDULE 3.4(a) lists all Governmental Permits in
existence as of the date of this Agreement that (a) are held by a
Seller,
Acquired Company or an Affiliate of any Seller or Acquired Company
for use in
connection with the operation of the Systems and (b) except as set
forth on
SCHEDULE 3.4(b), are necessary for Sellers or any Acquired Company
to provide
the services now provided by Sellers or any Acquired Company in the
geographic
areas served by the Systems. Sellers have delivered or made
available true and
complete copies of all Governmental Permits that are or are
required to be set
forth on SCHEDULE 3.4(a), except for such Governmental Permits that
are issued
or granted by virtue of publication of official notice of the
issuing
Governmental Authority.
(ii) CNC, CTT, TCAC, Cox Louisiana Telcom LLC, Cox Missouri
Telcom LLC and Cox Oklahoma Telecom LLC (collectively, the "TELCOM
ENTITIES")
hold all State Telecommunications Authorizations necessary to
provide the
Telecommunications Services now provided in the geographic areas
served by the
Systems. Sellers and their Affiliates do not provide any services
in the
geographic areas served by the Systems that require State
Telecommunications
Authorization in California, New Mexico and Mississippi.
(iii) SCHEDULE 3.4(c) identifies all of the Governmental
Permits that are not Exclusive Governmental Permits or that are
otherwise
Excluded Assets.
3.4.2 Each of the Governmental Permits is in full force and
effect
in accordance with its terms. No legal action or other formal
proceeding or
investigation is pending or, to Sellers' Knowledge, threatened, to
revoke,
terminate, suspend, or cancel any of the Governmental Permits or to
impose any
material forfeiture or penalty with respect to any of the
Governmental Permits.
The applicable Seller and the operation of the Systems by such
Seller and the
applicable Telecom Entities are in material compliance with the
terms and
conditions of the Governmental Permits.
3.4.3 During the two (2) year period preceding the date hereof,
no
Seller has received written correspondence from any Governmental
Authority
stating that any of the Governmental Permits will not be renewed in
the ordinary
course; however, Sellers make no
28
<PAGE>
representation or warranty that an Exclusive Governmental Permit
will be renewed
or that a particular Governmental Authority will not impose
significant
conditions upon any renewal. A valid request for renewal has been
duly and
timely filed by Sellers under Section 626 of the Communications Act
with the
proper Franchising Authority with respect to any Franchise that has
expired
prior to, or will expire within thirty (30) months after, the date
of this
Agreement.
3.5
Financial Statements. Sellers have delivered or made available
to
Buyer a copy of the (a) audited combined balance sheets with
respect to the
Systems in the aggregate, as of December 31, 2004 and 2003, and the
related
combined statements of operations, invested equity, and cash flows
for each of
the two years in the period ended December 31, 2004 (collectively,
the "AUDITED
FINANCIAL STATEMENTS"), and (b) unaudited combined balance sheets
with respect
to the Systems in the aggregate, as of June 30, 2005, and the
related combined
statement of operations for the six months then ended (the
"UNAUDITED FINANCIAL
STATEMENTS")(the Audited Financial Statements and the Unaudited
Financial
Statements, collectively, the "FINANCIAL STATEMENTS"). The Audited
Financial
Statements (y) have been prepared based on the separate accounting
records
maintained by the Sellers and applicable Affiliates of Sellers and
(z) fairly
present, in all material respects, the combined financial position
of the
Systems in the aggregate as of December 31, 2004 and 2003, and the
combined
results of their operations and their cash flows for each of the
two years in
the period ended December 31, 2004, in conformity with GAAP
consistently applied
and comply with the requirements of Regulations S-X of the
Securities and
Exchange Commission (the "SEC"). The Unaudited Financial Statements
(aa) have
been prepared based on the separate accounting records maintained
by the Sellers
and applicable Affiliates of Sellers, (bb) fairly present, in all
material
respects, the combined financial position of the Systems in the
aggregate as of
June 30, 2005, and the combined results of their operations for the
six months
then ended prepared in accordance with GAAP on a basis consistent
with the most
recent Audited Financial Statements, which does not include a
combined statement
of invested equity, a combined statement of cash flows or
additional information
and footnote disclosures required by GAAP for complete financial
statements. In
the opinion of the Sellers (yy) all adjustments considered
necessary for the
fair presentation of the Unaudited Financial Statements have been
made and (zz)
all such adjustments are of a normal recurring nature. To Sellers'
Knowledge,
the revenues of the Systems less direct expenses (excluding
depreciation and
amortization) and operating expenses (excluding depreciation and
amortization)
of the Systems for the period January 1 through September 30, 2005
was at least
$188,000,000.00, calculated based upon Sellers' consistent
application of the
internal policies, procedures and methodologies as applied in
calculating the
historical data contained in the Confidential Descriptive
Memorandum delivered
to Buyer in June 2005 and in preparing the Long Range Plan
referenced in the
Confidential Descriptive Memorandum made available to Buyer in the
data room
established by Sellers in connection with the transaction
contemplated by this
Agreement.
3.6
Personal Property. Each Seller (a) that owns any material item
of
tangible personal property has good and valid title thereto and (b)
that leases
any material item of tangible personal property has a valid
leasehold interest
therein (subject to expiration of such lease in accordance with its
terms), in
each case of clause (a) and (b) above, free and clear of all
Encumbrances, other
than Permitted Encumbrances. All material items of Equipment and
other tangible
personal property included in the Transferred Assets are, in the
aggregate (and
with due consideration for reasonable wear and tear and the age of
each specific
item of Equipment or
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other tangible personal property), in good operating condition and
repair. Each
Seller has the valid and enforceable right to use all material
intangible
personal property included in the Transferred Assets as it is
currently used.
3.7 Real
Property. SCHEDULE 3.7 lists the street address or other means
of
identification for all Owned Real Property in existence as of the
date of this
Agreement. Each Seller (a) that owns a fee estate in an Owned Real
Property
parcel has good and indefeasible title thereto and (b) that leases
Material
Leased Real Property has a valid leasehold interest therein
(subject to
expiration of such lease in accordance with its terms), in each
case of clause
(a) and (b) above, free and clear of all encumbrances, other than
Permitted
Encumbrances.
3.8
Contracts.
3.8.1 Except as set forth on SCHEDULE 3.8.1, all of the
Material
Transferred Contracts are valid and binding on the Seller or
Acquired Company
that is a party thereto, and are in full force and effect and
legally
enforceable in accordance with their terms upon the Seller or
Acquired Company
which is a party thereto, and to Sellers' Knowledge, upon the other
parties
thereto, except to the extent such enforceability may be limited by
applicable
bankruptcy, insolvency or similar laws affecting the rights of
creditors
generally, and as the remedy of specific performance and injunctive
and other
forms of equitable relief may be subject to equitable defenses and
to the
discretion of the court before which any proceeding thereof may be
brought. No
Seller or Acquired Company is in material default under any
Material Transferred
Contract nor, to Sellers' Knowledge, is any other party thereto in
material
default under any Material Transferred Contract. Except as set
forth on
SCHEDULES 3.8.1 through 3.8.7, as of the date hereof there is no
Material
Transferred Contract.
3.8.2 SCHEDULE 3.8.2 lists all Material Real Property Leases.
3.8.3 SCHEDULE 3.8.3 lists
