Preview of our top selling Asset Exchange Agreement
COX Communications - Asset Exchange Agreement
EXHIBIT 10.19
================================================================================
ASSET EXCHANGE AGREEMENT
BY AND AMONG
HERITAGE CABLEVISION OF SOUTH EAST MASSACHUSETTS, INC.
HERITAGE CABLEVUE, INC., TCI CABLEVISION OF ST. BERNARD, INC.,
TCI OF COUNCIL BLUFFS, INC., TCI OF VIRGINIA, INC.,
UA-COLUMBIA CABLEVISION OF MASSACHUSETTS, INC.,
UNITED CABLE TELEVISION OF SARPY COUNTY, INC.,
UNITED CABLE TELEVISION OF SCOTTSDALE, INC.,
AND
TCI AMERICAN CABLE HOLDINGS, L.P.,
AND
COXCOM, INC.
DATED
DECEMBER 31, 1996
================================================================================
TABLE OF CONTENTS
Page
---- 1. Definitions...................................................................................... 1
1.1. Additional System Agreement............................................................... 2
1.2. Additional System Closing Date............................................................ 2
1.3. Affiliate................................................................................. 2
1.4. Annualized Cash Flow...................................................................... 2
1.5. Assets.................................................................................... 2
1.6. Basic Cable Service....................................................................... 2
1.7. Business Day.............................................................................. 2
1.8. Cable Act................................................................................. 2
1.9. Closing................................................................................... 2
1.10. Communications Act........................................................................ 3
1.11. Compensation Arrangement.................................................................. 3
1.12. Contracts................................................................................. 3
1.13. Contribution.............................................................................. 3
1.14. Cox....................................................................................... 3
1.15. CPST or Cable Programming Services Tier................................................... 3
1.16. Employee Plan............................................................................. 3
1.17. Encumbrance............................................................................... 4
1.18. Environmental Law......................................................................... 4
1.19. Equivalent Billing Unit................................................................... 4
1.20. ERISA..................................................................................... 5
1.21. FAA....................................................................................... 5
1.22. FCC....................................................................................... 5
1.23. Franchises................................................................................ 5
1.24. GAAP...................................................................................... 5
1.25. Governmental Authority.................................................................... 5
1.26. Governmental Permits...................................................................... 5
1.27. Hazardous Substances...................................................................... 5
1.28. HSR Act................................................................................... 6
1.29. Intangibles............................................................................... 6
1.30. Legal Requirement......................................................................... 6
1.31. Material Adverse Effect................................................................... 6
1.32. Multiemployer Plan........................................................................ 6
1.33. Permitted Encumbrances.................................................................... 6
1.34. Person.................................................................................... 7
1.35. Quad Cities Rebuild....................................................................... 7
1.36. Quarterly Cash Flow....................................................................... 7
1.37. Real Property............................................................................. 7
1.38. Required Consents......................................................................... 7
1.39. Service Areas............................................................................. 7
1.40. System or Systems......................................................................... 8
1.41. System Material Adverse Effect............................................................ 8
1.42. Tangible Personal Property................................................................ 8
1.43. TCI....................................................................................... 8
1.44. Other Definitions......................................................................... 8
2. Exchange of Assets............................................................................... 9
2.1. Exchange.................................................................................. 9
2.2. Inclusion of Assets....................................................................... 9
2.3. Value of Exchanged Assets................................................................. 9
3. Additional Consideration......................................................................... 10
3.1. Valuation Differential.................................................................... 10
3.2. Adjustments to Cash Consideration......................................................... 10
3.3. Determination of Adjustments to Cash Consideration........................................ 12
3.4. Additional System Adjustments............................................................. 13
4. Assumed Liabilities and Excluded Assets.......................................................... 14
4.1. Assignment and Assumption................................................................. 14
4.2. Excluded Assets........................................................................... 14
5. Representations and Warranties of TCI Subsidiaries and TCI, L.P.................................. 16
5.1. Organization, Standing and Authority...................................................... 16
5.2. Authorization and Binding Obligation...................................................... 16
5.3. No Consents; Absence of Conflicting Agreements............................................ 17
5.4. Governmental Permits...................................................................... 17
5.5. Real Property............................................................................. 18
5.6. Tangible Personal Property................................................................ 19
5.7. Contracts................................................................................. 19
5.8. Complete System........................................................................... 20
5.9. Trademarks, Trade Names and Copyrights.................................................... 20
5.10. Information on TCI Systems................................................................ 21
5.11. Financial Statements...................................................................... 22
5.12. Employee Benefit Plans.................................................................... 22
5.13. Labor Relations........................................................................... 23
5.14. Tax Returns; Other Reports................................................................ 23
5.15. Claims and Legal Actions.................................................................. 24
5.16. Environmental Matters..................................................................... 24
5.17. Compliance with Laws...................................................................... 25
5.18. Conduct of Business in Ordinary Course.................................................... 25
5.19. FCC and Copyright Compliance.............................................................. 25
5.20. Accounts Receivable....................................................................... 27
5.21. Competitive Activity...................................................................... 27
5.22. Cure...................................................................................... 27
6. Representations and Warranties of Cox............................................................ 27
6.1. Organization, Standing and Authority...................................................... 27
6.2. Authorization and Binding Obligation...................................................... 28
6.3. No Consents; Absence of Conflicting Agreements............................................ 28
6.4. Governmental Permits...................................................................... 29
6.5. Real Property............................................................................. 29
6.6. Tangible Personal Property................................................................ 30
6.7. Contracts................................................................................. 31
6.8. Complete System........................................................................... 31
6.9. Trademarks, Trade Names and Copyrights.................................................... 31
6.10. Information on Cox Systems................................................................ 32
6.11. Financial Statements...................................................................... 33
6.12. Employee Benefit Plans.................................................................... 33
6.13. Labor Relations........................................................................... 34
6.14. Tax Returns; Other Reports................................................................ 34
6.15. Claims and Legal Actions.................................................................. 35
6.16. Environmental Matters..................................................................... 35
6.17. Compliance with Laws...................................................................... 36
6.18. Conduct of Business in Ordinary Course.................................................... 36
6.19. FCC and Copyright Compliance.............................................................. 36
6.20. Accounts Receivable....................................................................... 38
6.21. Competitive Activity...................................................................... 38
6.22. Cure...................................................................................... 38
6.23. Additional System(s)...................................................................... 38
7. Pre-Closing Covenants............................................................................ 38
7.1. Access to Premises and Records............................................................ 38
7.2. Continuity and Maintenance of Operations.................................................. 39
7.3. Employee Benefit Matters.................................................................. 41
7.4. Broker's Fees............................................................................. 42
7.5. Required Consents and Estoppel Certificates............................................... 42
7.6. Title Commitments and Surveys............................................................. 44
7.7. Environmental Investigations.............................................................. 44
7.8. HSR Notification.......................................................................... 45
7.9. No Shop................................................................................... 46
7.10. Notification of Certain Matters........................................................... 46
7.11. Risk of Loss; Condemnation................................................................ 46
7.12. Lien and Judgment Searches................................................................ 47
7.13. Transfer Taxes, Fees and Expenses......................................................... 47
7.14. Noncompetition; Nonsolicitation........................................................... 47
7.15. Cooperation; Satisfaction of Conditions................................................... 47
7.16. Confidentiality........................................................................... 48
7.17. Publicity................................................................................. 48
7.18. Billing Services.......................................................................... 48
7.19. Delivery of Financial Information......................................................... 49
7.20. Capital Expenditures...................................................................... 49
7.21. Franchise Renewals........................................................................ 49
7.22. Use of Transferor's Name.................................................................. 49
7.23. Completion of the Contribution............................................................ 50
7.24. Certain Post-Closing Covenants............................................................ 50
7.25. Updated Schedules......................................................................... 50
7.26. Leased Vehicles........................................................................... 50
7.27. DCR/DMX................................................................................... 50
7.28. Additional System(s)...................................................................... 51
7.29. Interim Financial Statements.............................................................. 51
7.30. Iowa Microwave Interconnect............................................................... 51
8. Closing.......................................................................................... 52
9. Conditions to Closing............................................................................ 52
9.1. Conditions to the Obligations of Transferee and Transferor................................ 52
9.2. Conditions to the Obligations of Transferee............................................... 52
9.3. Conditions to Obligations of Transferor................................................... 55
9.4. Waiver of Conditions...................................................................... 55
10. Primary and Secondary Transfers.................................................................. 55
10.1. Primary Transfer.......................................................................... 55
10.2. Subsequent Transfers...................................................................... 56
10.3. Management Agreements..................................................................... 56
10.4. Construction.............................................................................. 56
10.5. Cash Consideration........................................................................ 56
10.6. Termination of Management Agreement or Revocation of Retained Franchise................... 57
11. Termination...................................................................................... 57
11.1. Events of Termination..................................................................... 57
11.2. Liabilities in Event of Termination....................................................... 57
11.3. Procedure Upon Termination................................................................ 57
12. Survival; Indemnification........................................................................ 57
12.1. Survival of Representations and Warranties................................................ 57
12.2. Indemnification by Transferor............................................................. 58
12.3. Indemnification by Transferee............................................................. 59
12.4. Procedure for Indemnification............................................................. 59
12.5. Limitations on Liability.................................................................. 60
12.6. Special Indemnification relating to the Additional System(s).............................. 61
12.7. Release of TCI Subsidiaries............................................................... 61
13. Miscellaneous.................................................................................... 61
13.1. Parties Obligated and Benefitted.......................................................... 61
13.2. Notices................................................................................... 61
13.3. Right to Specific Performance; Remedies................................................... 62
13.4. Waiver.................................................................................... 63
13.5. Captions.................................................................................. 63
13.6. Choice of Law............................................................................. 63
13.7. Terms..................................................................................... 63
13.8. Rights Cumulative......................................................................... 63
13.9. Further Actions........................................................................... 63
13.10. Time of the Essence....................................................................... 63
13.11. Late Payments............................................................................. 63
13.12. Counterparts.............................................................................. 64
13.13. Entire Agreement.......................................................................... 64
13.14. Severability.............................................................................. 64
13.15. Construction.............................................................................. 64
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS - --------
A List of TCI Systems and Franchises Related to the TCI Systems B List of Cox Systems and Franchises Related to the Cox Systems C Excluded Assets D Form of Noncompetition and Nonsolicitation Agreement E Form of Opinion of TCI's General Counsel F Form of Opinion of Counsel for Cox G Form of Assumption Agreement H Form of Management Agreement
SCHEDULES - ---------
1.17 Combined Basic Cable Service and CPST Rates for EBU Calculation 1.31A TCI Contested Taxes and Assessments 1.31B Cox Contested Taxes and Assessments 3.2.6 Capital Expenditures 3.2.7 Equivalent Billing Unit Information for Closing Adjustments
5.1 TCI Incorporation and Joint Ventures 5.3 TCI Required Consents 5.4 TCI Governmental Permits 5.5 TCI Real Property 5.6 TCI Tangible Personal Property 5.7 TCI Contracts 5.9 TCI Trademarks, Trade Names and Copyrights 5.10.1 TCI System Information 5.10.3 TCI Rate Information 5.10.4 TCI Channel Line-up Information 5.10.5 TCI Access Issues 5.10.6 TCI Bonds, Surety Instruments and Letters of Credit 5.10.7 TCI MDS, MMDS or SMATV Operations 5.11 TCI Financial Statements 5.12 TCI Employee Benefit Plans 5.13 TCI Employees 5.14 TCI Tax Matters 5.15 TCI Litigation 5.16 TCI Environmental Matters 5.17 TCI Notice of Noncompliance 5.18 TCI Exceptions to Conduct of Business in Ordinary Course 5.19 TCI FCC Compliance 5.21 TCI Competition
6.1 Cox Incorporation and Joint Ventures 6.3 Cox Required Consents 6.4 Cox Governmental Permits 6.5 Cox Real Property 6.6 Cox Tangible Personal Property 6.7 Cox Contracts 6.9 Cox Trademarks, Trade Names and Copyrights 6.10.1 Cox System Information 6.10.3 Cox Rate Information 6.10.4 Cox Channel Line-up Information 6.10.5 Cox Access Issues 6.10.6 Cox Bonds, Surety Instruments and Letters of Credit 6.10.7 Cox MDS, MMDS or SMATV Operations 6.11 Cox Financial Statements 6.12 Cox Employee Benefit Plans 6.13 Cox Employees 6.14 Cox Tax Matters 6.15 Cox Litigation 6.16 Cox Environmental Matters 6.17 Cox Notice of Noncompliance 6.18 Cox Exceptions to Conduct of Business in Ordinary Course 6.19 Cox FCC Compliance 6.21 Cox Competition
7.2A TCI Exceptions to Operations in Ordinary Course 7.2B Cox Exceptions to Operations in Ordinary Course 9.2.6 Aggregate Minimum Number of Equivalent Billing Units
ASSET EXCHANGE AGREEMENT
------------------------
This Asset Exchange Agreement (this "Agreement") is dated this 31st day of December, 1996, by and among Heritage Cablevision of South East Massachusetts, Inc., a Massachusetts corporation, Heritage Cablevue, Inc., a Delaware corporation, TCI Cablevision of St. Bernard, Inc., a Louisiana corporation, TCI of Council Bluffs, Inc., an Iowa corporation, TCI of Virginia, Inc., a Virginia corporation, UA-Columbia Cablevision of Massachusetts, Inc., a Massachusetts corporation, United Cable Television of Sarpy County, Inc., a Nebraska corporation, United Cable Television of Scottsdale, Inc., an Arizona corporation, (each individually a "TCI Subsidiary" and collectively, the "TCI Subsidiaries") and TCI American Cable Holdings, L.P., a Colorado Limited Partnership ("TCI, L.P."), and CoxCom, Inc., a Delaware corporation. Capitalized terms used herein shall have the meaning set forth in Section 1 below or as otherwise defined herein.
RECITALS
--------
A. The TCI Subsidiaries listed on Exhibit A own and operate the cable
--------- television systems (the "TCI Systems") listed on Exhibit A, providing cable
--------- television service to customers pursuant to the Franchises (as defined below) listed opposite each such system on Exhibit A.
---------
B. Cox owns and operates cable television systems (the "Cox Systems") listed on Exhibit B, each providing cable television service to customers
--------- pursuant to the Franchises (as defined below) listed opposite each such system on Exhibit B.
---------
C. Prior to Closing, the TCI Subsidiaries will contribute the TCI Assets to TCI, L.P..
D. TCI, L.P., and Cox desire to exchange on the Closing Date the assets of the TCI Systems and the assets of the Cox Systems in a transaction intended to qualify as a tax-free exchange of like-kind assets pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"), on the terms and conditions set forth herein.
AGREEMENT
---------
In consideration of the above recitals and the mutual agreements stated in this Agreement, the parties agree as follows:
1. Definitions. All defined terms in this Agreement apply equally to
----------- both the TCI Subsidiaries and Cox. When it is the parties' intent to limit the scope of any defined term solely to one party, such intent is indicated by referring specifically to one party or the other (and in such instances "TCI Subsidiaries" may be shortened to "TCI"), e.g., "TCI Service Area" or "Cox
- - Assets." The term "Transferor" shall refer equally to TCI, L.P., and Cox insofar as the term refers to such party in its capacity of transferring assets to the other party. The term "Transferee" shall refer equally to TCI, L.P. and Cox insofar as the term refers to such party in its capacity of receiving assets from the other party. Wherever practicable and appropriate, all disclosures on Exhibits and Schedules contemplated by this Agreement shall be specified on a System by System basis.
1.1. Additional System Agreement. The asset purchase agreement
--------------------------- pursuant to which the Additional System(s) is purchased.
1.2. Additional System Closing Date. The closing date of the purchase
------------------------------ of the Additional System(s) pursuant to the Additional System Agreement.
1.3. Affiliate. With respect to any Person, any other Person
--------- controlling, controlled by or under common control with such Person, with "control" for such purpose meaning 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 voting interests, by contract or otherwise.
1.4. Annualized Cash Flow. The Quarterly Cash Flow for the calendar
-------------------- quarter immediately preceding the date of delivery of the Cash Flow Certificate, multiplied by four.
1.5. Assets. All properties, privileges, rights, interests and
------ claims, real and personal, tangible and intangible, of every type and description that are owned, leased, held or used principally in the cable television business activities conducted by the TCI Subsidiaries or Cox, as applicable through the Systems in and around the Service Areas, in which the TCI Subsidiaries or Cox as applicable, have any right, title or interest or in which they acquire any right, title or interest on or before the Closing Date, including Real Property, Tangible Personal Property, Governmental Permits, Contracts, Intangibles and accounts receivable, but excluding any Excluded Assets. Notwithstanding the foregoing, if the Additional System is acquired on or prior to the Closing Date or, if the Additional System is identified within 45 days after the Closing Date and the Additional System Closing Date occurs on or before the Outside Additional System Closing Date, then the Additional System shall be deemed to be a Cox System and the assets of such Additional System shall be "Cox Assets," subject to the express limitations contained herein.
1.6. Basic Cable Service. The tier of cable television service which
------------------- includes the retransmission of local broadcast signals as defined by the Cable Act.
1.7. Business Day. Any day other than Saturday, Sunday or a day on
------------ which banking institutions in New York, New York or Denver, Colorado are required or authorized to be closed.
1.8. Cable Act. The Cable Communications Policy Act of 1984 as
--------- amended by the Cable Television Consumer Protection and Competition Act of 1992, as may be further amended, and the rules and regulations thereunder, as in effect from time to time.
1.9. Closing. The consummation of the transactions contemplated by
------- this Agreement, as described in Section 8, the date of which is referred to as the "Closing Date."
1.10. Communications Act. The Communications Act of 1934, as amended,
------------------ and the rules and regulations thereunder, as in effect from time to time.
2
1.11. Compensation Arrangement. Any plan or compensation arrangement
------------------------ other than an Employee Plan or a Multiemployer Plan, whether written or unwritten, which provides to employees of any of the TCI Subsidiaries or of Cox, as applicable, or any entity related thereto (under the terms of Sections 414(b), (c), (m) or (o) of the Code) any compensation or other benefits, whether deferred or not, in excess of base salary or wages and excluding overtime pay, including, but not limited to, any bonus (including any bonus given to motivate employees to work for any of TCI Subsidiaries or of Cox, as applicable, through Closing), incentive plan, stock rights plan, deferred compensation arrangement, stock purchase plan, severance pay plan and any other perquisites and employee fringe benefit plan.
1.12. Contracts. All pole attachment and conduit agreements, personal
--------- property leases, wire-crossing agreements, subscriber agreements (including multi-dwelling unit and commercial agreements), maintenance agreements, retransmission consent agreements and other agreements, written or oral (including any amendments and other modifications thereto) to which any of the TCI Subsidiaries or Cox, as applicable, is a party and that relate to the Assets or the business and operations of the Systems (other than the Governmental Permits, programming agreements, agreements constituting Real Property and any contracts listed on Exhibit C), and that are (i) in effect on the date hereof or (ii) entered into by the TCI Subsidiaries or Cox, as applicable, in the ordinary course of business and as permitted by this Agreement between the date hereof and the Closing Date.
1.13. Contribution. The contribution by the TCI Subsidiaries of the
------------ TCI Assets to TCI, L.P.
1.14. Cox. CoxCom, Inc. and those corporations to whom it is the
--- successor in interest by merger.
1.15. CPST or Cable Programming Services Tier. The tier of cable
--------------------------------------- television service immediately above Basic Cable Service offered by a System providing for a package of programming that includes satellite-delivered services.
1.16. Employee Plan. Any pension, retirement, profit-sharing, deferred
------------- compensation, vacation, severance, bonus, incentive, medical, vision, dental, disability, life insurance or any other employee benefit plan as defined in Section 3(3) of ERISA (other than a Multiemployer Plan) to which any of the TCI Subsidiaries or Cox, as applicable, or any entity related thereto (under the terms of Sections 414(b), (c), (m) or (o) of the Code) contributes or which any of the TCI Subsidiaries or Cox, as applicable, or any entity related thereto (under the terms of Sections 414(b), (c), (m) or (o) of the Code) sponsors or maintains or by which Transferor or any such entity related to Transferor is otherwise bound.
1.17. Encumbrance. Any mortgage, lien, security interest, security
----------- agreement, conditional sale or other title retention agreement, limitation, pledge, option, charge, assessment, restrictive agreement, restriction, encumbrance, adverse interest, restriction on transfer or any exception to or defect in title or other ownership interest (including reservations, rights of way,
3
possibilities of reverter, encroachments, easements, rights of entry, restrictive covenants, leases and licenses).
1.18. Environmental Law. Any Legal Requirement pertaining to land use,
----------------- air, soil, surface water, groundwater (including protection, cleanup, removal, remediation or damage thereof), public or employee health or safety or any other environmental matter, including, without limitation, the following laws as the same may be amended from time to time: (i) Clean Air Act (42 U.S.C. (S) 7401, et seq.), (ii) Clean Water Act (33 U.S.C. (S) 1251, et seq.), (iii) Resource - -- --- -- --- Conservation and Recovery Act (42 U.S.C. (S) 6901, et seq.), (iv) Comprehensive
-- --- Environmental Response Compensation Liability Act, as amended (42 U.S.C. (S) 9601, et seq.) ("CERCLA"), (v) Safe Drinking Water Act (42 U.S.C. (S) 300f, et
-- --- -- seq.), (vi) Toxic Substance Control Act (15 U.S.C. (S) 2601, et seq.), (vii) - --- -- --- Rivers and Harbors Act (33 U.S.C. (S) 401, et seq.), (viii) Endangered Species
-- --- Act (16 U.S.C. (S) 1531, et seq.), and (ix) Occupational Safety and Health Act
-- --- (29 U.S.C. (S) 651, et seq.), together with any other applicable federal, state
-- --- or local laws relating to emissions, discharges, releases or threatened releases of any Hazardous Substance into ambient air, land, surface water, ground water, personal property or structures, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, discharge or handling of any Hazardous Substance.
1.19. Equivalent Billing Unit. An active customer for Basic Cable
----------------------- Service either in a single household, a commercial establishment or in a multi- unit dwelling (including a hotel unit); provided, however, that the number of customers in a multi-unit dwelling or commercial establishment that obtain service on a "bulk-rate" basis shall be determined on a System by System basis by dividing the gross bulk-...
View agreement details