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HomeMy WebLinkAbout02792 - MEDIAONE TIME WARNER PALMER FRANCHISE RESOLUTION NO. 21770 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, EXTENDING THE CABLE TELEVISION FRANCHISE GRANTED TO PALMER CABLEVISION UNDER AGREEMENT NO. A2792 THROUGH JANUARY 2, 2008. WHEREAS, the provision of cable services are a critical service for many Palm Springs residents and the public at large; and WHEREAS, provision of cable services necessitates an agreement for use of public right-or-way between the City of Palm Springs ("Grantor") and all cable providers; and WHEREAS, Grantor entered in a cable franchise agreement ("Franchise Agreement') with Palmer Cablevision on or about November 15, 1989; and WHEREAS, the Franchise with Palmer Cablevision has transferred several times to different cable operators throughout the years; and WHEREAS, Time-Warner ("Grantee") is the current holder of the cable television franchise; and WHEREAS, Grantee has filed timely notice of intent to renew its Franchise Agreement with Grantor; and WHEREAS, on or about December 15, 2004, the City Council adopted Resolution No. 21159 extending the term of the Franchise Agreement through December 31, 2005 to allow the parties to complete the renewal process and to negotiate the terms and conditions of a new franchise; and WHEREAS, on or about December 7, 2005 the City Council adopted Resolution 21471 extending the term of the Franchise Agreement through December 31, 2006 to allow the parties to continue the franchise renewal process and to negotiate the terms and conditions of a new franchise; and WHEREAS, a new state law dealing with cable communications, AB 2987, was passed on August 31, 2006 and is effective on January 1, 2007; and WHEREAS, certain aspects of the new law require action by certain state agencies and will impact the City's franchise renewal process; and WHEREAS: The City is willing to extend the franchise in order to continue to consider the renewal request made by Time-Warner pursuant to 47 USC 546, to the earlier of(a) Resolution No.21770 Page 2 January 2, 2008, (b) the date when Time-Wamer is issued a renewed local franchise, or ' (c) the effective date of any state franchise issued to Time-Warner pursuant to AB 2987; and WHEREAS, the City is willing to extend the franchise to the date as indicated above so long as Time-Warner abides by the terms and conditions of all franchise commitments during any such extension, and neither Time-Wamer nor the City is otherwise prejudiced by the extension. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, as follows: Section 1. Extension of the Term of the Franchise Agreement The Grantor hereby agrees and consents to extend the current Franchise Agreement, granted to Grantee pursuant to Agreement 2792, to the earlier of(a)January 2, 2008, (b) the date when Time-Wamer is issued a renewed local franchise, or (c)the effective date of any state franchise issued to Time-Warner pursuant to AB 2987. Section 2. Terms and Conditions of Extension of the Agreement. The Grantor's consent to the extension, described above, is subject to, and conditioned upon, the following terms and conditions, all of which are hereby incorporated in the , Franchise Agreement: A. All terms and conditions of the existing Franchise Agreement shall remain in full force and effect during the extension period. B. The extension shall have no adverse effect on Grantee's compliance, nor shall the extension be grounds for any change or modification in the remaining terms, conditions and obligations of the Franchise Agreement. Further, the extension of the franchise agreement will not affect, diminish, impair or supersede the binding nature of the existing ordinances, resolutions and agreements applicable to operation of the cable system. C. The Grantor's consent to extend the Franchise Agreement, as set forth herein, shall not be construed, in any manner whatsoever, to constitute a waiver or release of any rights that the Grantor may have under the Franchise Agreement, whether those rights arose before or after the change in control to Grantee, and the fact that such deficiencies may have existed prior to the change in control shall not be a defense against correction of the deficiencies or non-compliance. D. Both parties hereby reserve all rights under applicable provisions of the Cable Communications Policy Act of 1984 (The "Cable Act"), including, without limitation, Sections 626 and 635. Nothing herein shall be deemed or construed , as a waiver, release or surrender of any right that either party may have under the Cable Act or any applicable law. Resolution No.21770 Page 3 ADOPTED THIS 15"day of November, 2106, David H. Ready, City M r ATTEST: as Thompson, City Clerk CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss_ CITY OF PALM SPRINGS ) I, JAMES THOMPSON, City Clerk of [he City of Palm Springs, hereby certify that Resolution No. 21770 is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on the 15w day of November, 2006, by the following vote: AYES: Councilmember McCulloch, Councilmember Pougnet, Mayor Pro Tern Foat, and Mayor Oden. NOES: None. ABSENT: Councilmember Mills. ABSTAIN: None. mes Thompson, City Clerk City of Palm Springs, California MediaOne Cable TV (originally Palmer) • • Franchise to Time Warner Cable Application for Transfer AGREEMENT#2792 Federal Communications Commission R19506, 4-21-99 Washington,DC 20554 FCC 394 3oso-os73 APPLICATION FOR FRANCHISE AUTHORITY CONSENT TO ASSIGNMENT OR TRANSFER OF CONTROL OF CABLE TELEVISION FRANCHISE FOR FRANCHISE AUTHORITY USE ONLY SECTION I. GENERAL INFORMATION DATE 3/1/99 1 Community Unit Identification Number. CA1378 2 Application for: ® Assignment of Franchise ❑ Transfer of Control 3. Franchising Authority Palm S irin s, City of 4 Identify community where the system/franchise that is the subject of the assignment or transfer of control is located' City of Palm Springs, California 5. Date system was acquired or(for system's constructed by the transferor/assignor)the date on N/A which service was provided to the first subscriber in the franchise area 6 Proposed effective date of closing of the transaction assigning or transferring ownership of the As soon as practicable system to transferee/assignee. 7 Attach as an Exhibit a schedule of any and all additional information or material fled with this Exhibit No. application that is identified in the franchise as required to be provided to the franchising N/A authority when requesting its approval of the type of transaction that is the subject of this application. PART I - TRANSFEROR/ASSIGNOR 1 Indicate the name, mailing address, and telephone number of the transferor/assignor Legal name of Transferor/Assignor(if individual, list last name first) MediaOnc Enterprises, Inc Assumed name used for doing business (if any) MediaOnc Mailing street address or P O Box 188 Inverness Dncc West City 13tate ZIP Code Telephone No (include area code) Englewood CO 80112 303/858-3502 2 (a) Attach as an Exhibit a copy of the contract or agreement that provides for the assignment or Exhibit No transfer of control (including any exhibits or schedules thereto necessary in order to I understand the terms thereof) If there is only an oral agreement, reduce the terms to writing and attach. (Confidential trade, business, pricing or marketing information, or other information not otherwise publicly available, may be redacted) (b) Does the contract submitted in response to(a) above embody the full and complete agreement ® Yes ❑ No between the transferor/assignor and the transferee/assignee? Exhibit I contains the complete agreement, except for confidential trade, business, pricing or marketing If No, explain in an Exhibit. information or other information not otherwise publicly available Exhibit No that has been redacted in accordance with Item 2(a) N/A FCC 394(Page 1) September 1996 PART II -TRANSFEREE/ASSIGNEE 1. a Indicate the name, mailing address, and telephone number of the transferee/assignee. Legal name of Transferee/Assignee(if individual, list last name first) Summit Cable Services of Georgia,Inc. Assumed name used for doing business(if any) Time Warner Cable Mailing street address or P.O. Box 75 Rockefeller Plaza City :State ZIP Code Telephone No. (include area code) New York NY 10019 212/484-8000 b Indicate the name, mailing address, and telephone number of person to contact, if other than transferee/assignee. Name of contact person (list last name first) Jim Fellhauer,President, San Diego Division Firm or company name(if any) Time Warner Cable Mailing street address or P.O. Box 8949 Ware Court City State ZIP Code Telephone No. (include area code) San Diego CA 92121 619/695-3110 (c) Attach as an Exhibit the name, mailing address, and telephone number of each additional Exhibit No. person who should be contacted, if any. N/A d Indicate the address where the s stem's records will be maintained. Street address 8949 Ware Court City State ZIP Code San Diego "A 92121 2. Indicate on an attached exhibit any plans to change the current terms and conditions of service and Exhibit No. operations of the system as a consequence of the transaction for which approval is sought N/A 8)(TH'2 ClITY COUNCIL LtIY R F S N40o FCC 394(Page 2) C / September 1996 A) 7`-Z 0 SECTION II. TRANSFEREE'S/ASSIGNEE'S LEGAL QUALIFICATIONS 1 Transferee/Assignee is: ® Corporation a. Jurisdiction of incorporation: Delaware d. Name and address of registered agent in jurisdiction b Date of incorporation 12/12/85 Corporation Trust Company 1209 Orange St. Wilmington,DE 19801 c. For profit or not-for-profit* ❑ Limited Partnership a Jurisdiction in which formed c. Name and address of registered agent in jurisdiction: b. Date of formation ❑ General Partnership a Jurisdiction whose laws govern formation. b. Date of formation ❑ Individual ❑ Other Describe in an Exhibit Exhibit No. N/A 2. List the transferee/assignee, and, if the transferee/assignee is not a natural person, each of its officers, directors, stockholders beneficially holding more than 5%of the outstanding voting shares, general partners, and limited partners holding an equity interest of more than 5% Use only one column for each individual or entity. Attach additional pages if necessary. (Read carefully-the lettered items below refer to corresponding lines in the following table.) (a) Name, residence, occupation or principal business, and principal place of business. (If other than an individual, also show name, address and citizenship of natural person authorized to vote the voting securities of the applicant that it holds.) List the applicant first, officers, next, then directors and, thereafter, remaining stockholders and/or partners. (b) Citizenship. (c) Relationship to the transferee/assignee(e g , officer, director, etc ) (d) Number of shares or nature of partnership interest (e) Number of votes (f) Percentage of votes (a) SEE EXHIBIT NO. 11 (b) (c) (d) (e) (f) FCC 394(Page 3) September 1996 3. If the applicant is a corporation or a limited partnership, is the transferee/assignee formed under the laws ❑ Yes ® No of, or duly qualified to transact business in, the State or other jurisdiction in which the system operates? If the answer is No, explain in an Exhibit. Exhibit No. III 4. Has the transferee/assignee had any interest in or in connection with an applicant which has been ❑ Yes ® No dismissed or denied by any franchise authority? If the answer if Yes, describe circumstances in an Exhibit. Exhibit No. N/A 5. Has an adverse finding been made or an adverse final action been taken by any court or administrative ❑ Yes ® No body with respect to the transferee/assignee in a civil, criminal or administrative proceeding, brought under the provisions of any law or regulation related to the following any felony, revocation, suspension or involuntary transfer of any authorization (including cable franchises)to provide video programming services; mass media related antitrust or unfair competition; fraudulent statements to another government unit, or employment discrimination? If the answer is Yes, attach as an Exhibit a full description of the persons and matter(s) involved, Exhibit No. including an identification of any court or administrative body and any proceeding (by dates and file N/A numbers, if applicable), and the disposition of such proceeding 6 Are there any documents, instruments, contracts or understandings relating to ownership or future ❑ Yes ® No ownership rights with respect to any attributable interest as described in Question 2 (including, but not limited to, non-voting stock interests, beneficial stock ownership interests, options, warrants, debentures)? If Yes, provide particulars in an Exhibit. 7. Do documents, instruments, agreements or understandings for the pledge of stock of the ❑ Yes ❑ No transferee/assignee, as security for loans or contractual performance, provide that. (a)voting rights will remain with the applicant, even in the event of default on the obligation, (b) in the event of default, there N/A will be either a private or public sale of the stock; and (c) prior to the exercise of any ownership rights by a purchaser at a sale described in (b), any prior consent of the FCC and/or of the franchising authority, if required pursuant to federal, state or local law or pursuant to the terms of the franchise agreement will be obtained? If No, attach as an Exhibit a full explanation Exhibit No SECTION III TRANSFEREE'S/ASSIGNEE'S FINANCIAL QUALIFICATIONS 1 The transferee/assignee certifies that it has sufficient net liquid assets on hand or available from ® Yes ❑ No committed resources to consummate the transaction and operate the facilities for three months. 2 Attach as an Exhibit the most recent financial statements, prepared in accordance with generally Exhibit No. accepted accounting principles, including a balance sheet and income statement for at least one full year, IV for the transferee/assignee or parent entity that has been prepared in the ordinary course of business, if any such financial statements are routinely prepared Such statements, if not otherwise publicly available, may be marked CONFIDENTIAL and will be maintained as confidential by the franchise authority and its agents to the extent permissible under local law SECTION IV. TRANSFEREE'S/ASSIGNEE'S TECHNICAL QUALIFICATIONS Set forth in an Exhibit a narrative account of the transferee's/assignee's technical qualifications, experience Exhibit No. and expertise regarding cable television systems, including, but not limited to, summary information about V appropriate management personnel that will be involved in the system's management and operations, The transferee/assignee may, but need not;list a representative sample of cable system currently or formerly owned or operated. FCC 394(Page 4) September 1996 SECTION V-CERTIFICATIONS Part I -Transferor/Assignor All the statements made in the application and attached exhibits are considered material representations, and all the Exhibits are a material part hereof and are incorporated herein as if set out in full in the application. E nterprises, Inc I CERTIFY that the statements in this application are true, Signature MediaOne Enter ^ complete and correct to the best of my knowledge and belief and i are made in good faith. Z:� Dale WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE February 19, 1999 PUNISHABLE BY FINE AND/OR IMPRISONMENT. U S. CODE, Print full name TITLE 18, SECTION 1001. Douglas D.Holmes Check appropriate classification: Individual General Partner aX Corporate Officer(Indicate Title) 11 Other, Explain Executive Vice President Part II -Transferee/Assignee All the statements made in the application and attached Exhibits are considered material representations, and all the Exhibits are a material part hereof and are incorporated herein as If set out in full in the application. The transferee/assignee certifies that he/she. (a) Has a current copy of the FCC's Rules governing cable television systems. (b) Has a current copy of the franchise that Is the subject of this application, and of any applicable state laws or local ordinances and related regulations (c) Will use its best efforts to comply with the terms of the franchise and applicable state laws or local ordinances and related regulations,and to effect changes, as promptly as practicable, in the operation system, if any changes are necessary to cure any violations thereof or defaults thereunder presently in effect or ongoing. Signature I CERTIFY that the statements in this application are true, complete and correct to the best of my knowledge and belief and are made in good faith. Dale WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE PUNISHABLE BY FINE AND/OR IMPRISONMENT. U.S. CODE, Print full name TITLE 18, SECTION 1001. Check appropriate classification: Individual General Partner Corporate Officer(Indicate Title) Other.Explain: - FCC 394 (Page 5) September 1996 • • SECTION V - CERTIFICATIONS Part I -Transferor/Assignor All the statements made in the application and attached exhibits are considered material representations, and all the Exhibits are a material part hereof and are incorporated herein as if set out in full in the application. Signature I CERTIFY that the statements in this application are true, complete and correct to the best of my knowledge and belief and are made in good faith. Date WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE PUNISHABLE BY FINE AND/OR IMPRISONMENT, US, CODE, Print full name TITLE 18, SECTION 1001 Check appropriate classification: ❑ Individual ❑ General Partner ❑ Corporate Officer ❑ Other. Explain: (Indicate Title) Part II -Transferee/Assignee All the statements made in the application and attached Exhibits are considered material representations, and all the Exhibits are a material part hereof and are incorporated herein as if set out in full in the application. The transferee/assignee certifies that he/she' (a) Has a current copy of the FCC's Rules governing cable television systems. (b) Has a current copy of the franchise that is the subject of this application, and of any applicable state laws or local ordinances and related regulations (c) Will use its best efforts to comply with the terms of the franchise and applicable state laws or local ordinances and related regulations, and to effect changes, as promptly as practicable, in the operation system, if any changes are necessary to cure any violations thereof or defaults thereunder presently in effect or ongoing Summit Cable Services of Georgia, Inc. Sgnature I CERTIFY that the statements in this application are true, complete and correct to the best of my knowledge and belief and are made in good faith jLz"�� op Date WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE March 1. 1999 PUNISHABLE BY FINE AND/OR IMPRISONMENT U.S. CODE, Print full name TITLE 18, SECTION 1001 David E. O'Hayre Check appropriate classification: ❑ Individual ❑ General Partner ® Corporate Officer ❑ Other. Explain: (Indicate Title) Vice President INDEX OF EXHIBITS Asset Exchange Agreement I Ownership Identification H Qualification III Financial Statements IV Technical Qualifications V Execution Copy ASSET EXCHANGE AGREEMENT dated as of February 1, 1999 between MEDIAONE ENTERPRISES, INC. and SUMMIT CABLE SERVICES OF GEORGIA, INC. TABLE OF CONTENTS Page ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1.1 Terms Defined in this Section. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1.2 Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 1.3 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ARTICLE 2 EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 2.1 Exchange of MediaOne Assets and TimeWamer Assets . . . . . . . 10 Section 2.2 MediaOne Assumed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 2.3 Time Warner Assumed Liabilities. . . . . . . . . . . . . . . . . . . . . . . 13 Section 2.4 Closing Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Section 2.5 Subscriber Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Section 2.6 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . I . . . . . . . . 15 Section 2.7 Capital Budget Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . 15 Section 2.8 Total Revenue Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 2.9 Closing Adjustment Calculation. . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 2.10 Post-Closing Allocations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Section 2.11 Post-Closing MDU Subscriber Adjustment . . . . . . . . . . . . . . . . . 17 ARTICLE 3 RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IS Section 3.1 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 3.2 Use of Names and Logos. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Section 3 3 Transfer Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1? Section 3.4 Transfer Taxes and Fees. . . . . . . . . . . . . . . . . . . . . . . . . Section 3.5 Further Assurances. '. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Section 3.6 Use of Qualified Intermediaries. . . . . . . . . . . . . . . . . . . . . . . . . . 23 ARTICLE 4 MEDIAONE'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . 24 Section 4.1 Organization and Qualification of MediaOne. . . . . . . . . . . . . . . 24 Section 4.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Section 4.3 No Conflict; Required Consents. . . . . . . . . . . . . . . . . . . . . . . . . 25 Section 4.4 Assets; Title, Condition, and Sufficiency. . . . . . . . . . . . . . . . . . . 25 Section 4.5 MediaOne Systems Franchises, Systems Licenses, Systems Contracts, Owned Property and Real Property Interests. . . . . . . 25 Section 4.6 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Section 4.7 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 4.8 Cable Operations. . '. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 4.9 Tax Returns; Other Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 4.10" MediaOne Systems Information. . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 4.11 Compliance with Legal Requirements. . . . . . . . . . . . . . . . . . . . . 28 -i- 0 Section 4.12 Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Section 4.13 Financial Statements; No Adverse Change. . . . . . . . . . . . . . . . . . 31 Section 4.14 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.15 Environmental. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Section 4.16 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Section 4.17 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Section 4.18 Taxpayer Identification Number. . . . . . . . . . . . . . . . . . . . . . . . . 33 Section 4.19 Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 ARTICLE 5 TIME WARNER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 33 Section 5.1 Organization and Qualification of Time Warner. . . . . . . . . . . . 34 Section 5.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Section 5.3 No Conflict; Required Consents. . . . . . . . . . . . . . . . . . . . . . . . . 34 Section 5.4 Assets; Title, Condition, and Sufficiency. . . . . . . . . . . . . . . . . . . 34 Section 5.5 Time Warner Systems Franchises, Systems Licenses, Systems Contracts, Owned Property and Real Property Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Section 5.6 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Section 5.7 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Section 5.8 Cable Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Section 5.9 Tax Returns: Other Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Section 5.10 Time Warner Systems Information. . . . . . . . . . . . . . . . . . . . . . . 36 Section 5.11 Compliance with Legal Requirements. . . . . . . . . . . . . . . . . . . . . 37 Section 5.12 Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Section 5.13 Financial Statements; No Adverse Change. . . . . . . . . . . . . . . . . . 40 Section 5.14 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Section 5.15 Environmental. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4l Section 5.16 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Section 5.17 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Section 5.18 Taxpayer Identification Number. . . . . . . . . . . . . . . . . . . . . . . . . 42 Section5.19 Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 ARTICLE 6 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Section 6.1 Certain Affirmative Covenants of Transferor. . . . . . . . . . . . . . . 43 Section 6.2 Certain Negative Covenants of Transferor. . . . . . . . . . . . . . . . . 45 Section 6.3 Certain Covenants of Transferee. . . . . . . . . . . . . . . . . . . . . . . . . . 46 Section 6.4 Confidentiality and Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Section 6.5 Title Insurance Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Section 6.6 Leased Vehicles and other Capital Leases. . . . . . . . . . . . . . . . . . 48 Section 6.7 Programming. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Section 6.8 Post-Closing Obtaining of Consents. . . . . . . . . . . . . . . . . . . . . . 48 Section 6.9 Subscriber Billing Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Section,6.10" Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Section 6.11 Cooperation upon Inquiries as to Rates. . . . . . . . . . . . . . . . . . . . 49 -ii- 0 • Section 6.12 Certain Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Section 6.13 Franchise Expirations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Section 6.14 Year 2000 Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Section 6.15 Updated Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Section 6.16 Internet Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Section 6.17 Nonconsent Franchises. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Section 6.18 Environmental Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Section 6.19 Assumption of Social Contract. . . . . . . . . . . . . . . . . . . . . . . . . . 55 Section 6.20 Knowledge of Breach of Representations. . . . . . . . . . . . . . . . . . 56 Section 6.21 Certain Multiple Dwelling Unit Agreements . . . . . . . . . . . . . . . . 56 ARTICLE 7 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Section 7.1 Conditions to MediaOne's Obligations. . . . . . . . . . . . . . . . . . . 56 Section 7.2 Conditions to Time Warner's Obligations . . . . . . . . . . . . . . . . . . 58 Section 7.3 Optional Closing Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . 60 ARTICLE 8 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Section 8.1 Closing; Time and Place. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Section 8.2 Time Warner's Obligations. 2 Section 8.3 MediaOne's Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 ARTICLE 9 TERMINATION AND DEFAULT . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Section 9.1 Termination Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Section 9.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 ARTICLE 10 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Section 10.1 Indemnification by Time Warner. . . . . . . . . . . . . . . . . . . . . . . . 65 Section 10.2 Indemnification by MediaOne. . . . . . . . . . . . . . . . . . . . . . . . . . 66 Section 10.3 Procedure for Certain Indemnified Claims. . . . . . . . . . . . . . . . . 67 Section 10.4 Determination of Indemnification Amounts and Related Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Section 10.5 Time and Manner of Certain Claims. . . . . . ... . . . . . . . . . . . . . 68 Section 10.6 Other Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 ARTICLE 11 MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 11.1 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 11.2 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 11.3 Waivers. . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 11.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 11.5 Entire Agreement; Prior Representations; Amendments. . . . . . . 71 Section 11.6 Specific Performance; Other Rights and Remedies. . . . . . . . . . . 71 -iii Section 11.7 Binding Effect; Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Section 11.3 Headings and Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Section 11.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Section 11.10 Goveming Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Section 11.11 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Section 11.12 Third Parties; Joint Ventures. . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Section 11.13 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Section 11.14 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Section 11.15 Risk of Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Section 11.16 Tax Consequences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 11.17 Commercially Reasonable Efforts. . . . . . . . . . . . . . . . . . . . . . . 75 Section 11.1S Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 -iv- 0 ASSET EXCHANGE AGREEMENT THIS ASSET EXCHANGE AGREEMENT ("Agreement") is made and entered into as of February 1, 1999 by and between MediaOne Enterprises, Inc., a Rhode Island corporation ("MediaOne"), whose taxpayer identification number is 05-0203820 and Summit Cable Services of Georgia, Inc., a Delaware corporation ("Time Warner"), whose taxpayer identification number is 58-1215333. RECITALS A. MediaOne owns and operates the cable television systems (the "MediaOne Systems") identified in Exhibit A hereto. B. Time Warner owns and operates cable television systems (the "Time Warner Systems") identified in Exhibit B hereto. C. This Agreement sets forth the terms and conditions on which MediaOne will convey or cause to be conveyed to Time Warner substantially all of the assets of the MediaOne Systems, and Time Warner will convey or cause to be conveyed to MediaOne substantially all of the assets of the Time Warner Systems, in such a manner as to effect a like-kind exchange of such assets under Section 1031 of the United States Internal Revenue Code. AGREEMENT In consideration of the mutual covenants and promises set forth in this Agreement, MediaOne and Time Warner agree as follows: ARTICLE 1 DEFINITIONS Section 1.I Terms Defined in this Section. In addition to terms defined elsewhere in this Agreement, the following terms with initial capital letters, when used in this Agreement, will have the meanings set forth below: "Affiliate"means, 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, but in no event will Time Warner or MediaOne be deemed to be an Affiliate of the other. "Assets" means the MediaOne Assets or the Time Warner Assets, as the context requires. "Assumed Liabilities" means the MediaOne Assumed Liabilities or the Time Warner Assumed Liabilities, as the context requires. 0 "Business Day" means any day other than a Saturday or Sunday or a day on which banks in Denver, Colorado are closed. "CPST Television Service"means those video programming services identified as such on Schedules 4.10 and 5.10, as applicable. "Cable Act" means Title VI of the Communications Act, 47 USC § 521, et seq. "Closing Date" means the date on which the Closing occurs. "Closing Time" means 11:59 P.M., local time in the location of each System, on the Closing Date. "Code" means the Internal Revenue Code of 1986. "Communications Act" means the Communications Act of 1934. "Contract" means any written contract, mortgage, deed of trust, bond, indenture, lease, license, note, franchise, certificate, option, warrant, right or other instrument, document, obligation or agreement, and any oral obligation, right or agreement. "Copyright Act" means the Copyright Act of 1976. "Deposits" means all monies which are on deposit with third parties as of the Closing Time for the account of Transferor, or as security for such party's performance of its obligations (other than any deposits which are Excluded Assets or the full benefit of which will not be available to Transferee following Closing), including deposits on real property leases and deposits for utilities. "ERISA" means the Employee Retirement Income Security Act of 1974. "ERISA Affiliate" means, as to any Person, any trade or business, whether or not incorporated, which together with such Person would be deemed a single employer within the meaning of Section 4001 of ERISA. "Environmental Law" means any Legal Requirement concerning the protection of public health, safety, welfare or the environment, including Legal Requirements relating to emissions, discharges, releases or threatened releases of Hazardous Substances into the environment, air (including both ambient and within buildings and other structures), surface water, ground water or land or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances. "Excluded Assets"means the MediaOne Excluded Assets or the Time Warner Excluded Assets, as the context requires. "FAA"means the Federal Aviation Administration. -2- 0 • "FCC" means the Federal Communications Commission. "GAAP" means generally accepted accounting principles applicable to the telecommunications industry, consistently applied, including the statements and interpretations of the U.S. Financial Accounting Standards Board. "Governmental Authority" means (i) the United States of America, (ii) any state, commonwealth, territory or possession of the United States of America and any political subdivision thereof(including counties, municipalities, provinces, parishes and the like), (iii) any foreign (as to the United States of America) sovereign entity and any political subdivision thereof and (iv) any court, tribunal, department, commission, board, bureau, agency, authority or instrumentality of any of the foregoing. "Hazardous Substances" means (i) any"hazardous waste" as defined by the Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C.A. §§ 6901 et sec.); (ii) any "hazardous substance" as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1950 (CERCLA) (42 U.S.C.A. §§ 9601 et seed.); (iii) any substance regulated by fhe Toxic Substances Control Act (TSCA) (42 U.S.C. § 2601 et seq.); (iv) asbestos or asbestos-containing material of any kind or character; (v) polychlorinated biphenyls; (vi) any substances regulated under the provisions of Subtitle I of RCRA relating to underground storage tanks; (vii) any substance the presence, use, treatment, storage or disposal of which on the Owned or Leased Property is prohibited by any Legal Requirement; and (viii) any other substance which by any Legal Requirement requires special"handling, reporting or notification of any Governmental Authority in its collection, storage, use, treatment or disposal. "HSR Act" means the Hart-S cott-Rodino Antitrust Improvements Act of 1976. "Individual Subscriber" means, as of anv Subscriber Determination Date. an subscriber of a System (i) who has been billed for CPST Television Service for the month during %�hich such Subscriber Determination Date occurs at the published regular monthly subscriber rate for CPST Television Service as of such Subscriber Determination Date, provided, that such rate is equal to or greater than the regular monthly subscriber rate for such CPST Television Service set forth on Schedule 4.10 or Schedule 5.10, as applicable, (ii) who has paid for CPST Television Service at the published regular monthly subscriber rate for CPST Television Service for at least one full month, (iii) who is not pending disconnection for any reason and (iv) who is not 60 days or more in arrears in payment for service, except amounts which are past due pending the resolution of a bona fide dispute or past due amounts less than $10, as measured from the first day of the billing cycle for which service was provided. "Judgment" means any judgment, writ, order, injunction, award or decree of or by any Governmental Authority. "Leased Property" means MediaOne Leased Property or Time Warner Leased Property, as the context requires. -3- • • "Legal Requirement" means applicable common law and any statute, ordinance, code, law, rule, regulation, order, technical or other written standard, requirement or procedure enacted, adopted, promulgated, applied or followed by any Governmental Authority, including any Judgment. "Lien" means any security agreement, financing statement filed with any Governmental Authority, conditional sale or other title retention agreement, any lease, consignment or bailment given for purposes of security, any right of first refusal, equitable interest, lien, mortgage, indenture,pledge, option, encumbrance, adverse interest, constructive trust or other trust, claim, attachment, exception to or defect in title or other ownership interest (including reservations, rights of entry, possibilities of reverter, encroachments, easements, rights-of-way, restrictive covenants, leases and licenses) of any kind, which otherwise constitutes an interest in or claim against property, whether arising pursuant to any Legal Requirement, any Contract or otherwise. "Litigation" means any claim, action, suit, proceeding, arbitration, investigation, hearing or other activity or procedure that could result in a Judgment, and any notice of any of the foregoing. "Losses" means any claims, losses, liabilities, damages, Liens, penalties, costs and expenses, including interest which may be; imposed in connection therewith, expenses of investigation, reasonable fees and disbursements of counsel and other experts and the cost to any Person making a claim or seeking indemnification under this Agreement with respect to funds expended by such Person by reason of the occurrence of any event with respect to which indemnification is sought, but will in no event include incidental or consequential damages. "Material MediaOne Contracts"means all MediaOne Real Property Interests, MediaOne Systems Franchises, MediaOne Systems Licenses and MediaOne Systems Contracts listed on Schedules 2.1(b)(ii)(A). iiil A . (iv)(A) and fv A). "Material Time Warner Contracts"means all Time Warner Real Property-Interests, Time Warner Systems Franchises, Time Warner Systems Licenses and Time Warner Systems Contracts listed on Schedules 2.1(bb)(ii)(13)., (iii)(B). (iv)(B) and v B . "MediaOne Required Consents" means any and all consents, authorizations and approvals required under the Material MediaOne Contracts listed on Schedule 4.3. "MediaOne Social Contract" means the Social Contract between MediaOne of Delaware, Inc., formerly Continental Cablevision, Inc., and the FCC, effective August 1, 1995 (FCC 95-335), as amended August 21, 1996, and as the same may be amended from time to time. "Owned Property" means the MediaOne Owned Property or Time Warner Owned Property, as the context requires. "Permitted Lien" means any(i) Lien securing Taxes, assessments and governmental charges not yet due and payable, (ii) zoning law or ordinance or any similar Legal Requirement, (iii) right reserved to any Governmental Authority to regulate the affected property, (iv) as to -4- Owned Property and other Real Property Interests, any Lien (other than Liens securing indebtedness or arising out of the obligation to pay money) which does not individually or in the aggregate with one or more other Liens interfere with the right or ability to own, use or operate the Owned Property or Real Property Interests as they are currently being used or operated and (v) in the case of Leased Property, the rights of any lessor or any Lien granted by any lessor of Leased Property; provided that "Permitted Liens" will not include any Lien securing a debt or claim(other than inchoate materialmen's, mechanics', workmen's, repairmen's or other like Liens arising in the ordinary course of business or any Lien described in clause (v) above) which could prevent or inhibit in any way the conduct of the business of the affected System as it is currently being conducted. Classification of any Lien as a"Permitted Lien" will not affect any liability which Time Warner or MediaOne may otherwise have under this Agreement, including pursuant to any indemnity obligation under this Agreement. "Person"means any human being, Governmental Authority, corporation, limited liability company, partnership,joint venture, trust, association or unincorporated entity of any kind. "Real Property Interests" means the MediaOne Real Property Interests or Time Warner Real Property Interests, as the context requires. "Required Consents" means the MediaOne Required Consents or Time Warner Required Consents, as the context requires. "Subscriber Determination Date" means any date as of which the number of Individual Subscribers and Subscriber Equivalents is to be determined under the terms of this Agreement. "Subscriber Equivalent" means an equivalent to an Individual Subscriber, the number of Subscriber Equivalents served by a System being equal, as of any Subscriber Determination Date, to (A) the quotient of the aggregate billings of that System for basic and CPST Television Service provided by that System, during the month in which such Subscriber Determination Datc occurs, to subscribers that are not Individual Subscribers, divided by (B) the published regular monthly subscriber rate for basic and CPST Television Service as of such Subscriber Determination Date unless such rate, for any Subscriber Determination Date which occurs after December 31, 1998, is less than the regular monthly subscriber rate for basic and CPST Television Service �s shown on Schedule 4.10 or Schedule 5.10, as applicable, in which case the divisor will be such scheduled rate. For purposes of the foregoing there will be excluded all (a) billings representing fees for installation or other non-recurring charge (including late charges), a charge for equipment or for any outlet or connection other than the first outlet or first connection in any single family household or, with respect to a bulk account in any residential unit (e.R., an individual apartment or rental unit), a charge for any"new product tier," or a pass-through charge for sales, taxes, franchise fees and charges and the like and (b) billings to any bulk account or discounted family household (1) which has not been a subscriber of that System and paid for CPST Television Service for at least one month, (2) which is 60 days or more in arrears in payment for services, except with respect to amounts which are past due pending the resolution of a bona fide dispute or past due amounts less than $10, as measured from the first day of the month for which service was received or (3) which is pending disconnection for any reason. -5- 0 "System" means any of the MediaOne Systems or the Time Warner Systems, as the context requires. "Systems Contracts" means the MediaOne Systems Contracts or Time Warner Systems Contracts, as the context requires. "Systems Franchises" means the MediaOne Systems Franchises or Time Warner Systems Franchises, as the context requires. "Systems Licenses" means the MediaOne Systems Licenses or Time Warner Systems Licenses, as the context requires. "Tangible Personal Property" means the MediaOne Tangible Personal Property or Time Warner Tangible Personal Property, as the context requires. "Taxes" means all levies and assessments of any kind or nature imposed by any Governmental Authority, including all income, sales, use, ad valorem, value added, franchise, severance, net or gross proceeds, withholding, payroll, employment, F.I.C.A., excise or property taxes, together with any interest thereon and any penalties, additions to tax or additional amounts applicable thereto. "Time Warner Required Consents" means any and all consents, authorizations and approvals required under those Material Time Warner Contracts listed on Schedule 5.3. "Time Warner Social Contract" means the Social Contract between Time Warner Entertainment Company, L.P., TWI Cable Inc. and Time Warner Entertainment- Advance/Newhouse Partnership, or any subsidiary, division or affiliate thereof, and the FCC, effective November 30, 1995 (FCC 95-478), as the same may be amended from time to time. "Transaction Documents" means the instruments and documents described in Sections 8.2 and 8.3 which are being executed and delivered by or on behalf of MediaOne or Time Warner, as the case may be, or any Affiliate of either of them in connection with this Agreement or the transactions contemplated hereby. "Transferee"means MediaOne or Time Warner, as applicable, insofar as the term refers to the party to this Agreement that will receive Assets from the other party to this Agreement. "Transferor"means MediaOne or Time Warner, as applicable, insofar as the term refers to the party to this Agreement that will transfer Assets to the other party to this Agreement. -6- Section 1_2 Othe®finitions. The following terms are de coed in the Sections indicated: Term Section 200 &Under Contracts 6.21 1031 Exchange 2.1(a)(i) AAA 11.6(b) Advertising Accounts Receivable 2.4(b)(ii) Affiliation Agreement 6.16 Approved Leave of Absence 3.1(a) CARS 2.1(b)(iv) Cash Purchase Price 2.1(a)(ii) Closing 8.1 Closing Adjustment Amount 2.9(a) Computer and Other Systems 6.14(a) Consent Based Termination 2.11(a) Closing Date Subscribers 2.5 Dispute 11.6(b) EEO 4.11(b) Environmental Reports 6.18 Eligible Accounts Receivable 2.4(a)(ii) Final Adjustment Certificate 2.9(b) Franchise Matter 10.3 Hired Employees 3.1(h) Indemnitee 10.3 Indemnitor 10.3 Initial Adjustment Certificate 2.9(a) Management Agreement 6.1 1(b) Measurement Period 2.8 MediaOne Assets 2.1(b) MediaOne Assumed Liabilities 2.2 MediaOne Counsel Opinion 7.2(f) MediaOne Estoppel Certificates 6.1(k) MediaOne Excluded Assets 2.1(c) MediaOne Expiring Franchise 7.2(n) MediaOne FCC Counsel Opinion 7.2(e) MediaOne Leased Property 4.12 MediaOne Leases 4.12 MediaOne Owned Property 2.1(b)(ii) MediaOne Plans 4.6 MediaOne Pole Agreements 7.3(d)(ii) MediaOne Real Property Interests 2.1(b)(ii) MediaOne Systems Recital A MediaOne Systems Contracts 2.1(b)(v) MediaOne System Employees 4.14(a) -7 • • MediaOne Systems Financial Statements 4.13(a) MediaOne Systems Franchises 2.1(b) (iii) MediaOne Systems Licenses 2.1(b)(iv) MediaOne Tangible Personal Property 2.1(b)(i) MediaOne Title Policies 8.3(h) Minimum Damage Requirement 10.4(a) Minimum Expected Revenue 2.8 Nonconsent Franchise 6.17(a) Other Employees 4.14(d) Other Relinquished Property Agreements 3.6(f Other Replacement Property Agreements 3.6(g) Outside Closing Date 8.1 Plan Enhancements 6.14(d) Plan Enhancement Costs 6.14(d) Post-Closing Required Consent 6.8 Pre-Closing Month Subscribers 7.1(m) Prior Year Subscribers 2.5 Proprietary Rights 3.2 Rate Regulatory Matter 6.11(d) Recalculated Subscriber Adjustment Amount 2.11(a) Remaining Y2K Compliance Costs 6.14(o Required Inventory Level 2.4(0 Revision Date 2.11(a) Section 1.3 Senior Managers 4.14(d) ServiceCo 6.16 Surveys 6.5 III.G Liability 2.3 Taking 11.15(c) Time Warner Assets 2.1(b) Time Warner Assumed Liabilities 2.3 Time Warner Counsel Opinions 7.1(0 Time Warner Estoppel Certificates 6.1(k) Time Warner Excluded Assets 2.1(c) Time Warner Expiring Franchise 7.1(n) Time Warner FCC Counsel Opinion 7.1(e) Time Warner Leased Property 5.12 Time Warner Leases 5.12 Time Warner Owned Property 2.1(b)(ii) Time Warner Pole Agreements 7.3(d)(i) Time Warner Plans 5.6 Time Warner Real Property Interests 2.1(b)(ii) Time Warner Systems Recital B Time Warner Systems Contracts 2.1(b)(v) ,Time Warner System Employees 5.14(a) Time Warner Systems Financial Statements 5.13(a) -8- Time Warner Systems Franchises 2.1(b)(iii) Time Warner Systems Licenses 2.1(b)(iv) Time Warner Tangible Personal Property 2.1(b)(i) Time Warner Title Policies 8.2(f) Title Commitments 6.5 Title Company 6.5 Title Defect 6.5 Total Revenue 2.8 Total Revenue Adjustment 2.8 Transitional Billing Services 6.9(c) Variance 2.8 WARN 4.14(b) Year 2000 Adjustment Amount 6.14(f) Year 2000 Compliant 6.14(a) Year 2000 Compliance 6.14(a) Year 2000 Remediation Program 6.14(a) Year 2000 Remediation Plan 6.14(c) Section 1_3 Rules of Construction. Unless otherwise expressly provided in this Agreement, (a) accounting terms used in this Agreement will have the meaning ascribed to them under GAAP; (b) words used in this Agreement, regardless of the gender and number used, will be deemed and construed to include any other gender, masculine, feminine, or neuter, and any other number, singular or plural, as the context requires; (c) the word "including" is not limiting, and the word "or" is not exclusive; (d) the capitalized term "Section"refers to sections of this Agreement; (e) references to a particular Section include all subsections thereof, (f) references to a particular statute or regulation include all amendments thereto, rules and regulations thereunder and any successor statute, rule or regulation, or published clarifications or interpretations with respect thereto, in each case as from time to time in effect; (g) references to a Person include such Person's successors and assigns to the extent not prohibited by this Ag_=reement, and (h) references to a "day" or number of"days" (without the explicit qualification `Business") will be interpreted as a reference to a calendar day or number of calendar days. "Knowledge" and words of similar import, when used with reference to a party, mean the actual knowledge of a particular matter of(i) with respect to Time Warner, Bonnie Blecha, Vice President, Investments; Donald Smith, Vice President, Operations; and Dorothy Johnson, Systems Manager and, with respect to tax and environmental matters, those individuals employed by Time Warner or its Affiliates who are responsible for tax and environmental matters pertaining to the Time Warner Systems and (ii) with respect to MediaOne, Stewart Lowenstein, Executive Director of Business Development; James Petro, Vice President Outer Markets; Robert Rubey, General Manager and, with respect to tax and environmental matters, those individuals employed by MediaOne or its Affiliates who are responsible for tax and environmental matters pertaining to the MediaOne Systems. -9- ARTICLE 2 EXCHANGE Section 2_1 Exchange of MediaOne. Assets and TimeWamer Assets (a) Exchange Covenant. Subject to the terms and conditions set forth in this Agreement, at Closing: (i) MediaOne and Time Warner agree to exchange simultaneously the Time Warner Assets for the MediaOne Assets free and clear of all Liens (except Permitted Liens). Each of MediaOne and Time Warner acknowledge that the parties to this Agreement desire and intend to effect their respective transfers and acquisitions of the Time Warner Assets or the MediaOne Assets, as the case may be, pursuant to this Agreement as one or more exchanges of like-kind properties under Section 1031 of the Code (a "1031 Exchange"). (ii) MediaOne will pay to Time Warner, in immediately available funds, (the "Cash Purchase Price") at Closing. (iii) Time Warner or MediaOne, as appropriate, will pay to the other cash in an amount equal to the net positive or negative amount of customary prorations and allocations between Time Warner and MediaOne of current liabilities and current assets relating to the Time Warner Assets on the one hand and the MediaOne Assets on the other, as specified in Sections 2.4 and 2.9. (b) MediaOne and Time Warner Assets. "MediaOne Assets" and "Time Warner Assets" mean all of the assets and properties, real and personal, tangible and intangible, owned, leased, licensed or used by MediaOne or Time Warner respectively, in the operation of the Nledia0ne Systems or the Time '�G arner Systems as of the Closing Time that are not MediaOne Excluded Assets or Time Warner Excluded Assets, including the following: (i) Tangible Personal Property. All tangible personal property, including towers, tower equipment, aboveground and underground cable, distribution systems, headend equipment, line amplifiers, microwave equipment, converters, testing equipment, motor vehicles, office equipment, furniture, fixtures, supplies, inventory and other physical assets, owned, leased, licensed or used by MediaOne in the operation of the MediaOne Systems (the "MediaOne Tangible Personal Property") including the items described on Schedule 2.1(b)(i)(A), or by Time Warner in the operation of the Time Warner Systems (the "Time Warner Tangible Personal Property") including the items described on Schedule 2.1(b)(i)(M. (ii) Real Property. All fee interests in real property, all of which are described as MediaOne Owned Property on Schedule 2.1(b)(ii)(A) or Time Warner Owned Property on Schedule 2.1(b)(ii)(Bl (the"MediaOne Owned Property" and the "Time Warner Owned Property" respectively) and all improvements thereon, and all the leases, easements, rights of access and other interests in real property, including those described on Schedule -10- 0 i 1(b)(ii)(A) (the "MediaOne Real Property Interests") and on Schedule 2 1(b)(ii)(B) (the "Time Warner Real Property Interests"). (iii) Franchises. All franchises and similar authorizations or,similar permits issued by any Governmental Authority, all of which are described on Schedule 2.1(bl(iii)(A) (the "MediaOne Systems Franchises") and on Schedule 2 1(b)(iii)(B) (the "Time Warner Systems Franchises"). (iv) Licenses. All cable television relay service ("CARS"), business radio licenses and other licenses, authorizations, consents or permits issued by the FCC or any other Governmental Authority, all of which are described on Schedule 2 1(b)(iv)(A) (the "MediaOne Systems Licenses") and on Schedule 2.1(b)(iv)(B) (the "Time Warner Systems Licenses"). (v) Contracts. All pole line and joint line agreements, underground conduit agreements, crossing agreements, bulk or MDU service agreements, commercial service agreements, retransmission consent agreements, commercial leased access agreements and other Contracts, including those described on Schedule 2 1(b)(v)(A) (the "MediaOne Systems Contracts") and on Schedule 2 1(b)(v)(B) (the "Time Warner Systems Contracts"). (vi) Accounts Receivable and Current Assets. All subscriber, trade and other accounts receivable (including advertising accounts receivable) and pre-paid expense items. (vii) Books and Records. All engineering records, files, data, drawings, blueprints, schematics, reports, lists, plans and processes and all files of correspondence, lists, records and reports concerning subscribers and prospective subscribers of the MediaOne or Time Warner Systems, signal and program carriage and dealings with Governmental Authorities, including all reports filed by or on behalf of either party with the FCC and statements of account filed by or on behalf of either party with the U.S. Copyright Office. (c) MediaOne and Time Warner Excluded Assets. "MediaOne Excluded Assets" and "Time Warner Excluded Assets" means all: (i) cable programming services contracts (including cable guide contracts but excluding system specific programming agreements listed on Schedule 2.1(b)(v)(A) with respect to MediaOne or on Schedule 2 1 b)(v)(B)with respect to Time Warner) and any payments received or to be received with respect thereto, and retransmission consent contracts (other than those listed on Schedule 2.1 b v A with respect to MediaOne or on Schedule 2 1(b)(v)(Bl with respect to Time Warner), provided, however, that Time Warner and MediaOne may designate, by written notice given to the other within 45 days of the date of this Agreement, any or all of the other party's retransmission consent agreements listed on Schedule 2 1(b)(v)(A) or(B)to be, in the case of designation by Time Warner, MediaOne Excluded Assets and, in the case of designation by MediaOne, Time Warner Excluded Assets; (ii) vehicle leases (it being understood and agreed that the vehicles covered by such leases will be transferred to Transferee at Closing free and clear of any obligations or Liens under such leases in accordance with Section 6.6 hereof); (iii) all employee benefit plans of any nature and their assets; (iv) insurance policies and rights and claims thereunder(except as otherwise provided in,Section 11.15(a); (v) bonds, letters of credit, -11- surety instruments and other similar items and any stocks, bonds, certificates of deposit and similar investments; (vi) cash and cash equivalents; (vii) patents, copyrights, trademarks, trade names, service marks, service names, logos and similar proprietary rights (subject to Section 3.2); (viii) contracts for subscriber billing services and any equipment leased with respect to the provision of services under such contracts (subject to Section 6.9); (ix) any software licensed under contracts described on Schedule 2.1(b)(v)(A) with respect to MediaOne or Schedule 2 1(b)(v)(B) with respect to Time Warner; (x) all contracts relating to national advertising sales representation, including contracts with National Cable Communications or Cable Networks, Inc.; (xi) rights or obligations under any agreement governing or evidencing an obligation of Transferor for borrowed money; (xii) rights under any contract, license, authorization, agreement or commitment other than those creating or evidencing Transferor's Assumed Liabilities; (xiii) subscriber deposits and advance payments held by Transferor as of the Closing Time for which an adjustment is made in favor of Transferee pursuant to Section 2.4; (xiv) the assets described on Schedule 2 1(c)(i)with respect to MediaOne or on Schedule 2.1(c)(ii) with respect to Time Warner; (xv) files relating to assets of Transferor described in Section 2.1(b)(vii) that are located in Transferor's corporate or division headquarters, provided that copies of such files are transferred to Transferee at Closing; (xvi) the account books of original entry, general ledgers, and financial records used in connection with the Systems, provided, however, that Transferor will, at Transferee's request, provide copies of, or information contained in, such books, records and ledgers (other than information pertaining to programming agreements) to the extent reasonably requested by the Transferee after the Closing Date; and (xvii) Transferor's obligations pursuant to the Master Affiliation Agreements between each Transferor and ServiceCo, except as set forth in Section 6.16. In addition, (A) MediaOne will retain as Excluded Assets all commercial accounts relating to the provision of music services through DMX, Inc. (or its parent or any of their respective successors and assigns) via direct broadcast satellite, (B) Transferor will retain as Excluded Assets all assets used primarily in the provision of direct satellite television programming to subscribers and (C) subject to Section 2.4(f), Transferor will retain as Excluded Assets all upgrade and rebuild related inventory. Section 2.2 MediaOne Assumed Liabilities. After Closing, MediaOne will assume, pay, discharge and perform the following (the "MediaOne Assumed Liabilities"): (i) obligations and liabilities attributable to periods after the Closing Time under or with respect to the Time Warner Systems Franchises, Time Warner Systems Licenses, Time Warner Real Property Interests or Time Warner Systems Contracts; (ii) obligations and liabilities of Time Warner only to the extent that there is an adjustment in favor of MediaOne with respect thereto pursuant to Section 2.4; and (iii) all other obligations and liabilities attributable to periods after the Closing Time and arising out of or relating to the ownership of the Time Warner Assets or operation of the Time Warner Systems after Closing, except to the extent that such obligations or liabilities relate to any Time Warner Excluded Asset. All obligations and liabilities arising out of or relating to the Time Warner Assets or the Time Warner Systems other than the MediaOne Assumed Liabilities will remain and be the obligations and liabilities solely of Time Warner, including any obligation or liability with respect to periods through and including the Closing Time (x) for payment of franchise fees pertaining to the Time Warner Systems; (y) for the refund of monies to subscribers of the Time Warner Systems, other than any refunds referred to in Section 2.4(c)(i); and (z) described in Sections 3.1(d), (f), (g), (h) and 6) with respect to Time Warner's employees. -12- 0 • Section 2.3 Time Warner Assumed Liabilities. After Closing, Time Warner will assume, pay, discharge and perform the following (the "Time Warner Assumed Liabilities"): (i) obligations and liabilities attributable to periods after the Closing Time tinder or with respect to the MediaOne Systems Franchises, MediaOne Systems Licenses, MediaOne Real Property Interests or MediaOne Systems Contracts; (ii) obligations and liabilities of MediaOne only to the extent that there is an adjustment in favor of Time Warner with respect thereto pursuant to Section 2.4; (iii) all other obligations and liabilities, attributable to periods after the Closing Time and arising out of or relating to the ownership of the MediaOne Assets or operation of the MediaOne Systems after Closing, except to the extent that such obligations or liabilities relate to any MediaOne Excluded Asset; and: (iv) all obligations and liabilities attributable to periods after the Closing Time and that arise out of acts, events and circumstances occurring after the Closing Time under or with respect to the MediaOne Social Contract insofar as it applies to the MediaOne Systems and only to the extent applicable,to the MediaOne Systems, including any liability pursuant to Section III.G of the MediaOne Social Contract ("III.G Liability") due to Time Warner's failure to fully and timely perform the infrastructure upgrade requirements of the MediaOne Social Contract applicable to the MediaOne Systems, regardless of whether such III.G Liability relates to periods before or after the Closing Time. All obligations and liabilities arising out of or relating to the MediaOne Assets or the MediaOne Systems other than the Time Warner Assumed Liabilities will remain and be the obligations and liabilities solely of MediaOne, including any obligation or Iiability with respect to periods through and including the Closing Time (x) for payment of franchise fees pertaining to,the MediaOne Systems; (y) for the refund of monies to subscribers of the MediaOne Systems, other than any refunds referred to in subsection 2.3(iv) above or in Section 2.4(c)(i); and (z) described in Sections 3.1(d), (0, (g), (h) and (J)with respect to MediaOne's employees. Section 2.4 Closing Adjustments. MediaOne or Time Warner, as appropriate, will pay to the other the net amount in favor of the other of the adjustments and prorations described in this Section 2.4, which adjustments will be made without duplication of any amount. (a) Eligible Accounts Receivable. (i) Transferor will be entitled to an amount equal to the sum of(A) 100% of the face amount of all Eligible Accounts Receivable of the MediaOne or Time Warner Systems that are 30 or fewer days past due as of theiClosing Date plus (B) 80% of the face amount of all Eligible Accounts Receivable of such systems that are more than 30 but less than 60 days past due as of the Closing Date plus (C) 50% of the face amount of all Eligible Accounts Receivable of such systems that are more than 60 days but less than 90 days past due as of the Closing Date. (ii) "Eligible Accounts Receivable" of a System means accounts receivable resulting from the provision of(A) cable,television service or (B) Road Runner high speed data service to that System's subscribers as of the Closing Date and that relate to periods of time prior to the Closing Date. For purposes of making "past due" calculations under this paragraph, the billing statements of a System will be deemed to be due and payable on the first day of the period during which the service to which such billing statements relate is provided. -13- (b) Advertising Accounts Receivable. (i) Transferor will be entitled to an amount equal to all Advertising Accounts Receivable that are 90 or fewer days past due as of the Closing Date. (ii) "Advertising Accounts Receivable" of a System means accounts receivable representing amounts owed to Transferor in connection with commercial advertising that is cablecast on a System. (c) Advance Payments and Deposits. Transferee will be entitled to an amount equal to the aggregate of(i) all outstanding deposits of subscribers of Transferor's Systems for . converters, decoders and similar items and (ii) all payments received by Transferor prior to the Closing Date for services to be rendered to subscribers of Transferor's Systems after the Closing Date or for other services to be rendered by Transferee to other third parties after the Closing Time for cable television commercials or other services or rentals, to the extent all obligations of Transferor relating thereto are assumed by Transferee at Closing. Transferee will be entitled to an amount equal to the aggregate of all Deposits relating to Transferor's Systems. (d) Income and Expenses. As of the Closing Date, all income and expenses calculated in accordance with GAAP relating to Transferor's Systems and their operations will be prorated in accordance with GAAP, so that, with respect to Transferor's Systems, all income and expenses for periods prior to the Closing Date will be for the account of Transferor and all income and expenses for periods after the Closing Date will be for the account of Transferee. Without limiting the generality of the foregoing, the following expenses will be prorated as described in the preceding sentence: (i) all payments and charges under or with respect to Systems Franchises, Systems Licenses, S}stems Contracts, Real Properq Interests and OWN ned Property , (ii) general property taxes, special assessments and ad valorem taxes levied or assessed against any Assets; (iii) sales and use taxes, if any, payable with respect to cable television service and related sales to System subscribers, except for Taxes arising from the transfer of Assets pursuant to this Agreement; (iv) charges for utilities and other goods or services furnished to each, System; and (v) copyright fees based on signal carriage by each System. Neither party will prorate any item of income or expense which relates to any Excluded Assets of Transferor, all of which will remain and be solely for the account of Transferor. -14- 0 (e) Year 2000 Adjustment Amount. Transferee will be entitled to an amount equal to the Year 2000 Adjustment Amount of Transferor. (f) Inventory Adjustment. At Closing, Transferor will transfer to Transferee inventory sufficient for the operation of the Systems in the ordinary course for a period of 30 days after Closing(the "Required Inventory Level"). To the extent Transferor's inventory at Closing is below the Required Inventory Level, Transferor will pay to Transferee, as part of the Closing Adjustment Amount, the difference between the value of the actual inventory level at the Closing Date and the Required Inventory Level. Transferee will be provided the opportunity to observe the physical inventory count performed by Transferor on or prior to the Closing Date and to inspect, test or otherwise examine the actual inventory. Any disputes regarding the Required Inventory Level will be governed by the procedures set forth in Section 2.9(b). At Closing, Transferee, at Transferee's option, may purchase, at the cost to Transferor, all,but not less than all rebuild and upgrade inventory in a System, which is excluded from the MediaOne Assets or the TimeWamer Assets, as the case may be, pursuant to Section 2.1(c). Section 2.5 Subscriber Adjustment. If the number of Individual Subscribers and Subscriber Equivalents in Transferor's Systems as of the last Business Day of the calendar month preceding Closing (the "Closing Date Subscribers") is less than 99% of the number of Individual Subscribers and Subscriber Equivalents as of the last Business Day of the twelfth calendar month preceding the Closing Date (the"Prior Year Subscribers"), (A) Transferor, where Transferor is MediaOne will pay, as an adjustment to the Cash Purchase Price, to Transferee an amount equal toor(B) Transferor, where Transferor is Time Warne will pay, as an adjustment to the Cas Purchase Price, to Transferee an amount equal toibm each case multiplied by the difference between(i) 99% of the number of the Prior Year's Subscribers and (ii) the number of Closing Date Subscribers to the extent such number is not less than 95% of the Prior Year's Subscribers. Section 2.6 Intentionally Omitted. Section 2.7 a ital Budget Reimbursement. I -15- Section 2.8 Total Revenue Adjustment. If either MediaOne or Time Warner is entitled to an adjustment pursuant to this Section 2.8 and also Section 2.5, such party shall receive only the greater of such adjustments. Section 2.9 Closing Adjustment Calculation. (a) Estimated Closing Adjustment Amount. The adjustments and prorations contemplated by Section 2.4 (the "Closing Adjustment Amount"), as they relate to Transferor's Systems, will be estimated in good faith by Transferor with respect to Transferor's Systems and set forth, together with a detailed statement of the calculation thereof, in a certificate (the "Initial Adjustment Certificate") executed by an authorized representative of Transferor, and delivered to Transferee at least 10 days prior to Closing; provided, however, that a certificate setting forth the number of Individual Subscribers and a calculation of the Subscriber Equivalents as of each Subscriber Determination Date shall be prepared by Transferor and delivered to Transferee at least one Business Day prior to Closing. Each Initial Adjustment Certificate will be accompanied by appropriate documentation, in summery form, supporting the adjustments proposed in such -16- certificate. An estimate of the losing Adjustment Amount will be made by Transferor based on the Initial Adjustment Certificates. At Closing, the party against whose favor the estimated Closing Adjustment Amount is so determined will pay to the other the estimated Closing Adjustment Amount. (b) Final Closing Adjustment Amount. Within 120 days after Closing, Transferee will deliver to Transferor a certificate (the'"Final Adjustment Certificate") showing in such detail as shall be reasonably satisfactory to Transferor the final determination of the Closing Adjustment Amount with respect to Transferor's Systems, which certificate will be accompanied by appropriate documentation supporting the adjustments proposed in such certificate, including a Schedule setting forth detailed accounts receivable information, including relevant aging information as of the Closing Time and a calculatiorrof the Individual Subscribers and Subscriber Equivalents as of the Closing Date, and which will be executed by an authorized representative of Transferee. Each party will provide to the other reasonable access to all records in its possession which were used in the preparation of the Initial and Final Adjustment Certificates. Transferor will review Transferee's Final Adjustment Certificate and will give written notice to Transferee of any objections it has to the calculations shown in such certificate within 30 days after its receipt thereof. Time Warner and MediaOne will endeavor in good faith to resolve any such objections within 30 days after the receipt by the parties of each other's objections. If any objections or disputes have not been resolved at the end of such 30-day period, the disputed portion of the Closing Adjustment Amount will be determined within the following 30 days by a partner in a major accounting firm withi,substantial cable television audit experience which is not the auditor of either MediaOne or TimeiWamer, and the determination of such auditor(based solely on presentations by MediaOne ;and Time Warner and not by any independent review conducted by such auditor) will be final and will be binding upon both parties. If MediaOne and Time Warner cannot agree, with respect to selection of an auditor, MediaOne and Time Warner each will select an auditor and those two auditors will select a third auditor whose determination will be final and will be binding upon both parties. MediaOne and Time Warner will bear equally the expenses incurred in connection with such determination. The payment required as a result of the determination of all disputed amounts, whether by agreement of the parties or by an auditor's determination, will be made by the party responsible therefor to the other party within 15 Business Days after the final determination is made. Section 2.10 Post-Closing Allocations. MediaOne and Time Warner will each use commercially reasonable efforts to reach agreement on the allocated value of each class of the MediaOne Assets and the Time Warner Assets. Each of MediaOne and Time Warner will file all tax returns and schedules thereto, including those returns and forms required by Section 1060 of the Code, consistent with any such agreed-upon allocations, unless otherwise required by applicable Legal Requirements. In the event the parties do not reach agreement on such allocations, MediaOne and Time Warner will each reflect the assets acquired by such party pursuant hereto on its books for tax reporting purposes in accordance with such party's own determination of such allocations. Section 2.11 Post-Closing MDT Subscriber Adjustment. -17- • i (a) One year after the Closing Date (the "Revision Date"), Transferor shall pay to Transferee an amount, if any, equal to the Recalculated Subscriber Adjustment Amount. The "Recalculated Subscriber Adjustment Amount" shall be the difference between (A) the adjustment amount determined pursuant to Section 2.5 but recalculated on the Revision Date to exclude all Individual Subscribers and Subscriber Equivalents receiving service pursuant to 200 & Under Contracts at the Closing which are terminated prior to the Revision Date (other than by the Transferee) because of the failure of Transferor to obtain a valid consent for transfer of such 200 &Under Contract to Transferee at Closing (a"Consent-Based Termination") and to whom Transferee is not providing any level of cable television service as of the Revision Date, and (B) the adjustment amount determined pursuant to Section 2.5 of this Agreement as at and for the purposes of Closing (whether or not such amount is actually paid by Transferor under the terms of this Agreement). In determining the Recalculated Subscriber Adjustment Amount, no Individual Subscribers or Subscriber Equivalents receiving service pursuant to a 200 & Under Contract which expires by its own terms prior to the Revision Date or is cancellable at will upon notice to the cable service provider, whether or not such 200 &Under Contract is terminated pursuant to a Consent-Based Termination, shall be excluded from the calculation of Individual Subscribers and Subscriber Equivalents. (b) Transferee will notify Transferor promptly upon receipt of notice from any Person of any intended or consummated Consent-Based Termination. If Transferor so desires, it may bring a claim against any Person who makes a Consent-Based Termination in the same fashion as if Transferor were an Indemnitor; provided, however, that no such action shall affect the determination of the Recalculated Subscriber Adjustment Amount with respect to any 200 & Under Contract unless there shall have been issued a final, non-appealable order from a court or, in the case of binding arbitration, arbitrator, reversing or otherwise declaring invalid the Consent- Based Termination of such 200 & Under Contract. ARTICLE 3 RELATED MATTERS Section 3.1 Employees. (a) As soon as practicable, but no later than 30 days before the anticipated Closing Date, Transferee or its Affiliates will make written offers of employment commencing immediately after the Closing Date (or irmmediately after termination of employment as provided in Section 3.1(c) for employees on Approved Leave of Absence) to all of Transferor's Other Employees listed on Schedule 4.14(d)(2) or 5.14(d)(2) (as applicable), who remain employees of Transferor as of the date of such offer including employees on Approved Leave of Absence as of the Closing Date, but not including any employees on long-term disability as of the Closing Date, and not including any employee whose employment was previously terminated by Transferee or its Affiliates. As used in this Agreement, employees on "Approved Leave of Absence" means employees absent from work as of the Closing Date and unable to perform their regular job duties by reason of illness or injury under approved plans or policies of the Transferor (other than employees absent for less than eight days due to short term illness or injury not requiring written approval by the Transferor) or otherwise absent from work under approved or unpaid leave -18- policies of Transferor. All such offers shall be conditioned on the Other Emplovees either being in active service as of the Closing Date or, for those on an Approved Leave of Absence as of the Closing Date, conditioned on such Other Employee's return to active service within 12 weeks after the Closing Date or, if earlier, on the first Business Day following expiration of the Other Employee's Approved Leave of Absence. Transferee will be entitled to alter the terms and conditions of employment in the aforementioned offers of employment, provided, however, that such employment will be at a location within 35 miles of each Other Employee's job location immediately before the Closing Date and will include base compensation at least equal to the Other Employee's rate of base compensation immediately before the Closing Date. Such employment offers may be contingent on satisfaction,of the Transferee's pre-employment drug screening, criminal background, motor vehicles record and identity check. Each of MediaOne and Time Warner shall use its commercially reasonable efforts to resolve all known employee performance and pending disciplinary cases affecting employees of its Systems before the Closing at its own expense. (b) Transferee or its Affiliates may, but is not required to, make emplovment offers to Transferor's Senior Managers, Transferee or its Affiliates will make any such offers no later than 30 days before the anticipated Closing Date. Any such offers shall be for employment commencing immediately after the Closing Date, or immediately after termination of employment as provided in Section 3.1(c) for Senior Managers on Approved Leave of Absence. Transferor agrees to cooperate in all reasonable respects to allow Transferee to evaluate and interview the Senior Managers. Such cooperation will include allowing Transferee to contact the Senior Managers during normal business hours and making personnel records of the Senior Managers available to Transferee. (c) As of the Closing Date, Transferor will terminate the employment of all employees of its Systems, other than (i) any Senior Managers who have not received or accepted offers from the Transferee and whom it desires to retain and (ii) Other Employees on Approved Lease of Absence. Transferor will terminate the employment of any Other Employees or Senior Managers (who have received and accepted offers from Transferee) who are on Approved Leave of Absence on the earlier of(1) the first Business Day following expiration of the Approved Leave of Absence or(2) the date any such employee who is receiving workers' compensation benefits is released to return to work, in each case if such expiration or release occurs within 12 weeks after the Closing Date. Transferor will pay to all employees of its Systems all compensation, including salaries, commissions,bonuses, deferred compensation, severance, " golden parachute or other change of control payments, insurance, vacation, sick pay and other compensation or benefits to which such employees are entitled under employment contracts or the policies and procedures of Transferor or otherwise required by law for periods through and including the Closing Date, including, without limitation, all amounts, if any, payable on account of the termination of their employment. (d) Following the Closing Date, if Transferee or its Affiliates hires a Senior Manager of Transferor's Systems who received severance pay under Transferor's severance plan, Transferee will immediately notify Transferor and will reimburse Transferor for the amount (if any)by which the number of weeks of severance pay exceeds the number of weeks between the Senior Manager's termination date and the date the:Senior Manager is hired by Transferee or its -19- 0 Affiliates. For example, if the Senior Manager received severance pay equal to 24 weeks of base pay and is hired 10 weeks after termination, Transferee will reimburse Transferor an amount equal to the remaining 14 weeks of base pay. (e) Transferor will be responsible for the maintenance and distribution of benefits accrued under any employee benefit plan (as defined in ERISA) maintained by Transferor pursuant to the provisions of any Legal Requirement and of such plans. Except as expressly provided in this Section 3.1, Transferee will not assume any obligation or liability for any such accrued benefits or any fiduciary or administrative responsibility to account for or dispose of any such accrued benefits under any employee benefit plans maintained by Transferor. (f) All claims and obligations under, pursuant to or in connection with any welfare, medical, insurance, disability or other employee benefit plans of Transferor or arising under any Legal Requirement affecting employees of Transferor incurred through and including the Closing Date or resulting from or arising from events or occurrences occurring or commencing through and including the Closing Date (and, for employees on an Approved Leave of Absence, until their termination as set forth in Section 3.1(c)) will remain the responsibility of Transferor, whether or not such employees are hired by Transferee after Closing. Except as expressly provided in this Section 3.1, Transferee will not have or assume any obligation or liability under or in connection with any such plan maintained by Transferor. (g) Except as expressly provided in this Section 3.1, Transferor will remain solely responsible for, and will indemnify and hold harmless Transferee from and against all Losses arising from or with respect to, all salaries and all severance, vacation, medical, sick, holiday, continuation coverage and other compensation or benefits to which Transferor's employees may be entitled, whether or not such employees may be hired by Transferee, as a result of their employment by Transferor, the termination of their employment by Transferor, the consummation of the transactions contemplated hereby or pursuant to any applicable Legal Requirement (including without limitation the Worker Adjustment Retraining and tiotification Act) or otherwise relating to their employment by Transferor through and including the employees' termination of employment pursuant to Section 3.1(c). (h) Notwithstanding anything to the contrary in this Section 3.1, Transferee will (i) permit Transferor's employees who becomes its or its Affiliate's employees pursuant to this Section 3.1 (the "Hired Employees") and the Hired Employees' dependents to participate in Transferee's employee benefit plans to the same extent as its similarly situated employees and their dependents; (ii) give each Hired Employee credit for his or her past service with Transferor (including past service with any prior owner or operator of a System) for purposes of eligibility to participate, benefit eligibility and vesting trader its employee benefit and other plans; and (iii) not subject any Hired Employee to any limitations, except those already set forth in existing applicable employee benefit plans including any group health and disability plans, regarding benefits for pre-existing conditions. (i) Transferor will retain full responsibility and liability for offering and providing "continuation coverage" of any "qualified beneficiary" who is covered by a "group health plan" sponsored or contributed to by Transferor and who has experienced a "qualifying -20- event" or is receiving "continuation coverage" through and includi nlZ1Se Closin- Date (and, for Other Employees on an Approved Leave of Absence, until their termination as set forth in Section 3.1(c)). From the date of this Agreement through the period ending 120 days after the Closing Date, Transferee will not take any actions that would alter its medical or dental plans from the provisions in effect on the date of this Agreement in a manner that would provide incentive for Hired Employees to elect continuation coverage under Transferor's medical or dental plans in lieu of coverage under its medical or dental plans, unless such modifications will apply equally to the Hired Employees and other employees covered by its medical and dental plans. As used in this Section 3.1(i), "continuation coverage," "qualified beneficiary," "group health plan," and "qualifying event" all will have the meanings given such terms under Code Section 4980B. (j) To permit Transferor to make distributions to any Hired Employee of the balance of the Hired Employee's 401(k) account in its 401(k) savings plans, if any, as soon as legally permitted, Transferee will use reasonable efforts to notify Transferor of the date of the termination of each Hired Employee's employment'with Transferee or its Affiliates, if the Hired Employee authorizes Transferee to give such notice'. Transferee will use reasonable efforts to provide this information to Transferor in writing not later than 30 days following the date of termination of each Hired Employee's employment. To facilitate the foregoing, Transferee will, within a reasonable time following the Closing Date, include a notice in the personnel file (whether computerized or hard copy) relating to each Hired Employee with a 401(k) account in Transferor's 401(k) savings plan requiring the appropriate manager or supervisor who closes such employee personnel file upon termination of such employee's employment to provide Transferor with such notice of the date of termination, if the Hired Employee authorizes such notice at the time the Hired Employee terminates employment. Alternatively, Transferee may set up another procedure in lieu of putting a notice in each Hired Employee's personnel file that will reasonably comply with the requirements of this paragraph. Notwithstanding the foregoing, Transferee will not be obligated to affirmatively provide this information to Transferor, and will only be obligated to verify each Hired Employee's termination of employment upon TransCeior's request, if the Hired Employee does not authorize the release of this information to Transferor. Furthermore, Transferee is undertaking only the obligation to take reasonable measures to establish a system that is intended to result in notification to Transferor of employment terminations as described above and will not be liable for any failure of such notification so long as it has undertaken such activity in good faith. (k) If Transferee discharges any Hired Employee without "cause" (as defined in the applicable severance plan) within six months after Closing and such Hired Employee would have been entitled to severance pursuant to Transferor's severance plan if such Hired Employee had been discharged without "cause"by Transferor prior to the Closing Date, then Transferee will pay severance benefits to such Hired Employee equal to the amount payable to such Hired Employee under Transferee's severance plan counting the period of employment with both Transferee and Transferor for purposes of calculating such benefits. (1) Neither of MediaOne or Time Warner will, after the date hereof, increase the number of Employees in the MediaOne Systems or the Time Warner Systems, as the case may be, provided, however, that this clause shall not prevent either MediaOne or Time Warner -211 from hiring Persons to fill positions vacant as of the date hereof or to replace Employees whose employment is terminated between the date hereof and the Closing and further that either party may employ Persons to perform functions normally performed by Employees if such Persons are employed on a contract basis and the party receiving the System in which such Person is employed shall have no obligation, pursuant to such contract to continue to employ such Person after the Closing Date. (m) Each of MediaOne and Time Warner agrees to cooperate with the other party and to exchange all information required to implement the provisions of this Section 3.1. (n) Nothing in this Section 3.1 or elsewhere in this Agreement will be deemed to make any employee of the parties a third party beneficiary of this Agreement. Section 3.2 Use of Names and Logos. For a period of 90 days after Closing, Transferee will be entitled to use the trademarks, trade names, service marks, service names, logos and similar proprietary rights of Transferor to the extent incorporated in or on the Assets (collectively, the "Proprietary Rights"), provided that (i) Transferee acknowledges that the Proprietary Rights belong to Transferor, and that Transferee acquires no rights therein during or pursuant to such 90-day period; (ii) all such Assets will be used in a manner consistent with the use made by Transferor of such Assets prior to Closing; and (iii) Transferee will exercise reasonable efforts to remove all Proprietary Rights from the Assets as soon as reasonably practicable following Closing. Notwithstanding the foregoing, Transferee will not be required to remove or discontinue using any such Proprietary Rights that are affixed to converters or other items located in customer homes or properties such that prompt removal is impracticable for Transferee; provided, however, that such Proprietary Rights will be removed or discontinued promptly upon the return of such converters or other items to Transferee's possession. Section 3.3 Transfer Laws. MediaOne and Time Warner each waives compliance b%- the other with Legal Requirements relating to bulk transfers applicable to the transactions contemplated hereby. Section 3.4 Transfer Taxes and Fees. All sales, use, transfer and similar taxes or assessments, including transfer fees and similar assessments for Franchises, Licenses and Contracts, arising from or payable by reason of the conveyance of the Time Warner Assets and the MediaOne Assets, will be paid by Transferor, except that Transferee will pay all sales, use, transfer and similar Taxes arising from or payable by reason of the transfer of any vehicles from Transferor to Transferee. Section 3.5 Further Assurance;;. At or after Closing, each of MediaOne and Time Warner, at the request of the other, will promptly execute and deliver, or cause to be executed and delivered, to the other all such documents and instruments, in addition to those otherwise required by this Agreement, in form and substance reasonably satisfactory to the other as the other may reasonably request in order to carry out or evidence the terms of this Agreement. Without limiting the generality of the foregoing, each of MediaOne and Time Warner will take, or cause to be taken, all actions consistent with the terms of this Agreement, including execution and delivery of any documents or instruments, as the other may reasonably request to effect the -22- 0 qualification of the transactions contemplated hereby as a like-kind exchange under Section 1031 of the Code and will adhere to Section 1060 of the Code relating to allocations. Section 3.6 Use of Qualified Intermediaries. (a) MediaOne and Time Warner each desire to exchange the MediaOne Assets and the Time Warner Assets in a 1031 Exchange and to have the flexibility to effectuate such 1031 Exchange with one or more"qualified intermediaries," as defined in Section 103 1(k)- l(g)(4) of the Treasury Regulations, provided, however, that nothing in this Section will operate or be construed to permit MediaOne or Time Warner to delay Closing if the conditions set forth in Sections 7.1 and 7.2 have been satisfied or waived or to require either to act as an accommodation party. (b) To facilitate the completion of one or more such 1031 Exchanges, MediaOne or Time Warner, as the case may be, may assign to one or more qualified intermediaries: (i) its rights (including any and all rights under this Agreement) with respect to the transfer of all or a portion of its Assets (to be treated as `relinquished property," as defined in Section 1.1031(k)-1(a) of the Treasury Regulations, in connection with one or more such 1031 Exchanges) to the other and/or (ii) their respective rights to receive all or a portion of the other's Assets (to be treated as "replacement property", as defined in Section 1.1031(k)-1(a) of the Treasury Regulations, in connection with one or more such 1031 Exchanges), from the other. (c) .Time Warner and MediaOne will cooperate in all reasonable respects with each other in attempting to implement the 1031 Exchanges, provided, however that if such 1031 Exchange(s) take place, (i) neither party will assume any responsibility for the tax consequences to the other arising out of such 1031 Exchange(s); (ii) if either party assigns this Agreement to a qualified intermediary, any consents or approvals required by this Agreement to be obtained by such party from the other will be obtained from the, other to the same extent as if the assignin^_ party had never assigned this Agreement to the qualified intermediary, and an} notices to be given to the assigning party will be given to the assigning party to the same extent as if the assigning party had never assigned this Agreement to the qualified intermediary; and (iii) assignment(s) by either to a qualified intermediay will not limit or modify any obligations or liabilities of either party set forth in this Agreement, and, notwithstanding any such assignment(s), the assigning party will remain directly and primarily bound by all conditions, representations, warranties and covenants contained in this Agreement and all remedies related thereto to the same extent as if such party had never assigned this Agreement to a qualified intermediary. (d) Without limiting the generality of the foregoing, to implement any such 1031 Exchange, MediaOne and Time Warner may;enter into a written contract with a qualified intermediary pursuant to which: (i) the qualified intermediary will agree to acquire all or a portion of the MediaOne or Time Warner Assets from MediaOne or Time Warner and transfer all or a portion of the MediaOne or Time Warner Assets to Time Warner or MediaOne, as the case may be, and to acquire and transfer to such party replacement property designated by MediaOne or Time Warner in accordance with Section 1.1031(k)-1(g)(4)(iii)(B) of the Treasury Regulations under Section 1031 of the Code; (ii) this Agreement will be assigned to the qualified -23- intermediary; (iii) at Closing, the qualified intermediary may direct MediaOne or Time Warner to directly transfer the MediaOne or Time Warner Assets, as the case may be, to the other and after consummation of the transactions contemplated by this Section, the qualified intermediary may reassign the Agreement to the original party. (e) If MediaOne or Time Warner assigns to a qualified intermediary its rights under this Agreement to dispose of the relinquished property and/or to acquire the replacement property, such party will notify the other that it has done so and will furnish to the other a copy of the applicable assignment within five (5) days after execution thereof. (f) Time Warner and PdlediaOne may assign to a qualified intermediary one or more agreements ("Other Relinquished Property Agreements") to dispose of assets other than those which are the subject of this Agreement to one or more parties other than MediaOne or Time Warner. Time Warner and MediaOne acknowledge that each contemplates that it may assign Other Relinquished Property Agreements to the same qualified intermediary to which it assigns its rights under this Agreement, or to a different qualified intermediary, and that the proceeds received by such qualified intermediary may be used to purchase a portion of the MediaOne or Time Warner Assets, as the case may be. Time Warner's and MediaOne's intention in connection with any such assignment of Other Relinquished Property Agreements to a qualified intermediary would be to cause all or a portion of proceeds from the sale of the assets subject to the Other Relinquished Property Agreements to be used by the qualified intermediary to purchase a portion of the MediaOne or Time Warner Assets, as the case may be, pursuant to a like-kind exchange under Section 1031 of the Code. (g) MediaOne and Time Warner may assign to a qualified intermediary one or more agreements ("Other Replacement Property Agreements") to acquire assets other than those which are subject to this Agreement from one or more parties other than Time Warner or MediaOne. MediaOne and Time Warner acknowledge that each contemplates that it may assign Other Replacement Property Agreements to one or more of the same qualified intermediaries to which it assigns its rights under this Agreement, and that any cash proceeds received by any such qualified intermediary from the disposition of the Media One Assets or the Time Warner Assets, as the case may be,may be used to acquire the property which is the subject of one or more Other Replacement Property Agreements pursuant to a like-kind exchange under Section 1031 of the Code. ARTICLE 4 MEDIAONE' REPRESENTATIONS AND WARRANTIE MediaOne represents and warrants to Time Warner, as of the date of this Agreement and as of Closing, as follows: Section 4.1 Organization and Qualification of MediaOne. MediaOne is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation, and has all requisite power and authority to own and lease the MediaOne Assets and to conduct -24- 0 its activities as such activities are currently conducted. MediaOne is duly qualified to do business as a foreign corporation and is in good standing in all jurisdictions in which the ownership or leasing of the MediaOne Assets or the nature of its activities in connection with the MediaOne Systems makes such qualification necessary. Section 4.2 Authority. MediaOne has all requisite corporate power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby by MediaOne have been duly and validly authorized by all necessary corporate action on the part of MediaOne. This Agreement has been duly and validly executed and delivered by MediaOne and is the valid and binding obligation of MediaOne, enforceable against MediaOne in accordance with its terms. Section 4.3 No Conflict: Required Consents. Except as described on Schedule 4.3, and subject to compliance with the HSR Act, the execution, delivery and performance by MediaOne of this Agreement do not and will not: (i) conflict with or violate any provision of the Certificate of Incorporation or Bylaws of MediaOne; (ii) violate any provision of any Legal Requirement; (iii) conflict with, violate, result in a breach of, constitute a default under or give rise to any third party's right(s) of first refusal or right of termination (without regard to requirements of notice, lapse of time, or elections of other Persons, or any combination thereof), or accelerate or permit the acceleration of the performance required by, any Material MediaOne Contract; (iv) result in the creation or imposition of any Lien against or upon any of the MediaOne Assets other than a Permitted Lien; or(v) require, in the case of any Material MediaOne Contract, any consent, approval or authorization of, or filing of any certificate, notice, application, report or other document with, any Governmental Authority or other Person. Section 4.4 Assets: Title. Condition. and Sufficienev. (a) MediaOne olti,ns all of the MediaOne Assets (other than ,MediaOne Assets that are leased), free and clear of all Liens, except (i) Liens described on Schedule 4.4, all of which will be terminated, released or, in the case of the rights of first refusal, waived, as appropriate, at Closing and (ii) Permitted Liens. MediaOne has valid leasehold interests in all leased MediaOne Assets. Except as described on Schedule 2.1(b)(i)(Al, the MediaOne Tangible Personal Property is in good condition and repair, ordinary wear and tear excepted. (b) Except for items included in the MediaOne Excluded Assets, the MediaOne Assets are all of the assets necessary to permit Time Warner to operate the MediaOne Systems substantially as they are being operated on the date of this Agreement and in compliance with all applicable Legal Requirements and requirements of Contracts the obligations under which are included in the Time Warner Assumed,Liabilities. Section 4.5 MediaOne Systems Franchises Systems Licenses Systems Contracts Owned Property and Real Pro eeM Interests. (a) Except as described on Schedules 2.1(b)(ii)(A), iii A , (iv)(A) or y A or 2.1 c i , MediaOne is not bound or affected by any of the following that relate wholly or -25- primarily to the MediaOne Assets or the MediaOne Systems: (i) leases of real or personal property; (ii) franchises, and similar authorizations and permits for the construction or operation of cable television systems, or Contracts of substantially equivalent effect; (iii) other licenses, authorizations, consents or permits of the FCC or any other Governmental Authority; (iv) crossing agreements or rights of access; (v) easements with respect to headends, towers and other transmission facilities or easements with respect to feeder lines servicing more than 1,000 subscribers; (vi) pole line and joint line agreements or underground conduit agreements; (vii) multiple-dwelling unit agreements or bulk service agreements for buildings that have in excess of 200 dwelling units; (viii) system specific programming agreements; or (ix) any Contract other than those described in any other clause of this Section 4.5(a) which individually provides for payments by or to MediaOne in any twelve-month period exceeding $20,000 individually. (b) MediaOne has provided to Time Warner true and complete copies of each of the Material MediaOne Contracts (together with any notices alleging continuing non-compliance with the requirements of any MediaOne Systems Franchise, and including in each case any amendments thereto, and in the case of oral MediaOne Real Property Interests listed on Schedule 2.1(b)(ii)(A)or oral MediaOne Systems Contracts listed on Schedule 2 1(b)(v)(A), true and complete written summaries thereof) and of each document evidencing MediaOne's ownership of the MediaOne Owned Property. Except as described in Schedule 4.5: (i) MediaOne is in compliance in all material respects with each of the Material MediaOne Contracts; (ii) MediaOne has fulfilled when due, or has taken all action necessary to enable it to fulfill when due, all of its obligations under each of the Material MediaOne Contracts; and (iii) there has not occurred any material default by MediaOne and, to the knowledge of MediaOne, there has not occurred any material default (without regard to lapse of time or the giving of notice, or both) by any Person, under any of the Material MediaOne Contracts. Section 4.6 Employee Benefits "MediaOne Plans" shall mean each employee benefit plan (as defined in Section 3(3) of ERISA), or any multiemployer plan (as defined in Section 3(37) of ERISA) with respect to which MediaOne or any of its ERISA Affiliates has any liability or in which any employees or agents, or any former employees or agents, of MediaOne or any of its ERISA Affiliates participate. The MediaOne Plans in which any employee of a MediaOne System participates are set forth in Schedule 4.6. None of MediaOne, any of its ERISA Affiliates, any MediaOne Plan other than a.multiemployer plan (as defined in Section 3(37) of ERISA), or to the knowledge of MediaOne, any MediaOne Plan that is a multiemployer plan (as defined in Section 3(37) of ERISA) is in material violation of any provision of ERISA. No material "reportable event" (as defined in Section 4043(c)(1), (2), (3), (5), (6), (7), (10) and (13) of ERISA), non-exempt"prohibited transaction" (as defined in Section 406 of ERISA), "accumulated funding deficiency" (as defined in Section 302 of ERISA) or "withdrawal liability" (as determined under Section 4201 et. seq. of ERISA) has occurred or exists and is continuing with respect to any MediaOne Plan other than a multiemployer plan (as defined in Section 3(37) of ERISA), or to the knowledge of MediaOne, any MediaOne Plan that is a multiemployer plan (as defined in Section 3(37) of ERISA). After the Closing, none of Time Warner or any of its respective ERISA Affiliates will be required, under ERISA, the Code or any collective bargaining agreement, to establish, maintain or continue any MediaOne Plan currently maintained by MediaOne or any of its ERISA Affiliates. -26- 0 Section 4.7 Litigation. Except as set forth,in Schedule 4.7: (i) there is no Litigation pending or, to MediaOne's knowledge, threatened, by or before any Governmental Authority or private arbitration tribunal, against MediaOne which could adversely affect the financial condition or operations of the MediaOne Systems, the MediaOne Assets or the ability of MediaOne to perform its obligations under this Agreement, or which seeks or could result in the modification, revocation, termination, suspension or other limitation of any of the Material MediaOne Contracts; and (ii) there is no Judgment requiring MediaOne to take any action of any kind with respect to the MediaOne Assets or the operation of the MediaOne Systems, or to which MediaOne (with respect to the MediaOne Systems), the MediaOne Systems or the MediaOne Assets are subject or by which they are bound or affected. Section 4.8 Cable Operations. Except as described on Schedule 4.8 and other than SMATV system operators serving fewer than 500 Subscribers or direct broadcast satellite services, MediaOne is the only Person providing wireline cable television services or multipoint multichannel distribution service or other multichannel video programming services or, to the knowledge of MediaOne, intending to provide any such services in the service area of the MediaOne Systems. Except as described in Schedule 4.8, no Person other than MediaOne has been granted, or to the knowledge of MediaOne, has a current application pending for a wireline cable television franchise operation in any of the communities or unincorporated areas presently served by the MediaOne Systems. Section 4.9 Tax Returns: Other Reports. With respect to the MediaOne Systems, MediaOne has timely filed in proper form all federal, state, local and foreign tax returns and other reports required to be filed, and has timely paid all Taxes which have become due and payable, whether or not so shown on any such return or report, the failure to file or pay which could affect or result in the imposition of a Lien upon the MediaOne Assets. MediaOne has received no notice of, and MediaOne has no knowledge of, any deficiency or assessment or proposed deficiency or assessment from any Governmental Authority which could affect or result in the imposition of a Lien upon the MediaOne Assets. Except as described on Schedule 4.9, there are no pending or ongoing property, sales and use, or franchise fee or tax audits relating to the MediaOne Systems, and MediaOne has not received any property, sales and use, or franchise fee or tax audit notice with respect thereto. Section 4.10 MediaOne Systems Information. Schedule 4.10 sets forth a true and complete description in all material respects of the following information: (a) as of December 31, 1997, the number of miles of plant, aerial and underground and the technical capacity of such plant expressed in MHz, included in the MediaOne Assets; (b) as of the date set forth on such Schedule, the number of subscribers served by the MediaOne Systems as reflected in MediaOne's billing system records for such date; -27= (c) as ofthedate set forth on such Schedule, the number of single family homes and residential dwelling units passed by each of the MediaOne Systems as reflected in MediaOne's billing system records for such date; (d) as of date set forth on such Schedule, a description of basic and•optional or tier services available from each of the MediaOne Systems, the rates charged by MediaOne for each and the number of subscribers receiving each optional or tier service, each as reflected in MediaOne's billing system records for such date; (e) the stations and signals carried by each of the MediaOne Systems and the channel position of each such signal and station; (f) the channel capacity of each of the MediaOne Systems; (g) with respect to each commercial establishment (e.g., hotel or motel) or multiple dwelling unit (e.g., apartment, condominium or cooperative building) served by the MediaOne Systems that pays a bulk rate for cable television service, the name and address of, and the number of units in, each such commercial establishment or multiple dwelling unit; and (h) a list of the cities, towns, townships, villages, boroughs and counties served by each of the MediaOne-Systems. Section 4.11 Compliance with Legal Requirements. (a) Except as set forth in Schedule 4.11, and except with respect to those matters covered by Sections 4.11(b), (c), (d) and (f), which matters are covered exclusively by such sections, the operation of the MediaOne Systems as it is currently conducted does not violate or infringe in any material respect any Legal Requirement currently in effect. MediaOne has received no notice of any violation by MediaOne or the NlediaOne Systems of am Legal Requirement applicable to the operation o F the MediaOne Systems, as currently conducted. (b) Except as set forth in Schedule 4.11, and subject to the limitations set forth in Section 4.11(d) and (f): with respect to the MediaOne Systems, MediaOne is in compliance in all material respects with the Communications Act and the Cable Act, including requirements of those Acts specifically referred to herein; there have been submitted to the FCC all material required filings, including cable television registration statements, annual reports and aeronautical frequency usage notices, to utilize all frequencies currently used in the frequency bands 108-137 and 225-400 MHz in the manner currently used that are required under the rules and regulations of the FCC; the operation of the MediaOne Systems has been and is in material compliance with the rules and regulations of the FCC, and MediaOne has not received notice from the FCC of any violation of its rules .and regulations with respect to the MediaOne Systems; MediaOne is and since 1991 has been with respect to the MediaOne Systems certified as in compliance with the FCC's equal employment opportunity ("EEO") rules and has received no written notices with respect to non-compliance with EEO rules; the MediaOne Systems are in compliance with all signal leakage criteria prescribed by the FCC; MediaOne has filed all FCC Forms 320 for the MediaOne Systems for the last two reporting periods, and all such Forms 320 -28- 0 • show "passing" or"satisfactory" signal leakage scores; for each semi-annual reporting period since 1995-1, MediaOne has filed with the United States Copyright Office all required Statements of Account in proper form, and has paid when due all required copyright royalty fee payments, relating to the MediaOne Systems' carriage of television and radio broadcast signals; and MediaOne is otherwise in compliance with the requirements of the compulsory copyright license described in Section 111 of the Copyright Act and with all applicable rules and regulations of the Copyright Office. MediaOne has provided to Time Warner true and complete copies of all reports and filings for the past year, made or filed pursuant to FCC and Copyright Office rules and regulations by MediaOnc with respect to the MediaOne Systems and will provide to Time Warner, upon Time Warner's request, all other past reports and filings made or filed pursuant to FCC and Copyright Office rules and regulations by MediaOne with respect to the MediaOne Systems within the past five (5) years. MediaOne holds all licenses, registrations or permits from the FCC for business radio, satellite earth receiving facilities and CARS microwave facilities, that are necessary or appropriate to carry on the business of the MediaOne Systems as conducted on the date hereof. Each of the MediaOne Systems Licenses is in full force and effect and has not been revoked, canceled; encumbered or adversely affected in any manner. The MediaOne Systems have provided all required subscriber privacy notices to new subscribers at the time of installation and to all subscribers on an annual basis, and the MediaOne Systems have taken commercially reasonable steps to prevent unauthorized access to personally identifiable information. The MediaOne Systems have provided all customer notices required by the Cable Act, including customer service, notices of availability of basic service, and equipment compatibility. All notifications to the FAA have been made with respect to the antenna structures which are being used in connection with the operation of the MediaOne Systems, and all such antenna structures that require registration with the FCC have been so registered by MediaOne. MediaOne has not received any request for commercial leased access with respect to the MediaOne Systems. There are no complaints or other proceedings instituted before the FCC concerning commercial leased access, program access, or any other aspect of the MediaOne Systems' operations. (c) Except as provided in Schedule 4.11, with respect to the MediaOne Systems, MediaOne is in compliance in all material respects with the must carry and retransmission consent provisions of the Cable Act, including, (i) duly and timely notifying "local commercial television stations" of inadequate signal strength or increased copyriglrt liability, if applicable, (ii) to the extent now required, duly and timely notifying non-commercial educational stations of the location of the cable sykem's principal headend, (iii) duly and timely notifying subscribers of the channel alignment on the MediaOne Systems, (iv) duly and timely notifying "local commercial and noncommercial television stations" of the broadcast signals carried on the MediaOne Systems and their charnel positions, (v) maintaining the requisite public file identifying broadcast signal carriage, (vi) carrying the broadcast signals after June 1, 1993, on the MediaOne Systems for all "local commercial television stations"which elected must carry status and, if required, up to two "qualified low power stations", (vii) complying with applicable channel placement obligations and (viiii) obtaining retransmission consent for all commercial broadcast signals carried on the MediaOne Systems after October 5, 1993, except for the signals carried pursuant to a must carry election. No oral or written notices have been received from the FCC, the United States Copyright Office, any local or other television station or system or from any other person or entity, station or Governmental Authority claiming to have -29- a right of objection challenging or questioning the right of MediaOne or the MediaOne Systems to carry or furnish, or not to carry or furnish, any of the signals or any other station or service to any subscriber. MediaOne has not received with respect to any of the MediaOne Systems any notification of any petition or submission that is currently pending before the FCC to modify any television market or for a waiver of any rules or regulations of the FCC as they apply to such MediaOne System. MediaOne has provided copies of all written requests it has received for network nonduplication, syndicated exclusivity, and sports blackout protection which are applicable to the MediaOne Systems. (d) MediaOne has used commercially reasonable efforts to establish rates charged and a la carte packages provided to subscribers of the MediaOne Systems, effective as of September 2, 1993, that would be allowable under the Cable Act and, as applicable, effective as of August 1, 1995, under the MediaOne Social Contract. Without limiting the generality of the foregoing, MediaOne has used actual or accrued programming costs in establishing rates charged on regulated tiers of service provided to subscribers of the MediaOne Systems. Notwithstanding the foregoing, MediaOne makes no representation or warranty that the rates charged to subscribers would be allowable under any rules or regulations of the FCC or any authoritative interpretation thereof promulgated after the date of Closing. MediaOne has provided to Time Warner true and complete copies of all MediaOne Social Contract rate 1:orms (and any associated Forms 1200, any successive Forms 1210, and Forms 1205 for 1996,� 1997 and 1998) that have been prepared with respect to the MediaOne Systems, copies of all correspondence with any Governmental Authority relating to rate regulation generally or specific rates charged to subscribers of the MediaOne Systems, including copies of any complaints filed with the FCC with respect to any rates charged to subscribers of the MediaOne Systems since FCC approval of the MediaOne Social Contract, and any other documentation supporting an exemption from the rate regulation provisions of the Cable Act claimed by MediaOne with respect to the MediaOne Systems. Schedule 4.11(d) sets forth a list of(i) all rate complaints with respect to any rates which have been filed with the FCC for the MediaOne Systems that have not been deemed invalid, (ii) those franchising authorities that have been cenified upon filing FCC Form 32S or have filed FCC Form 328 with the FCC for certification to regulate any of the MediaOne Systems' rates and (iii) all letters of inquiry from the FCC received by MediaOne since September 1, 1993 with regard to rate regulation to the extent that disclosure thereof on Schedule 4.11(d) would not violate any Legal Requirement. Except as set forth on Schedule 4.11(d), a request for renewal has been timely filed under Section 626(a) of the Cable Act with the proper Governmental Authority with respect to each MediaOne Systems Franchise expiring within 30 months after the date of this Agreement. (e) MediaOne has provided to Time Warner a true and complete copy of the MediaOne Social Contract. With respect to the MediaOne Systems, MediaOne has completed or satisfied the following requirements of the MediaOne Social Contact: As of December 1997, MediaOne has completed the upgrade of 612.61 miles of the MediaOne Svstems to 550 MHz and 682.64 miles of the MediaOne Systems to 750 MHz. -30- ® • (f) MediaOne has used reasonable good faith efforts to comply in all material respects with any customer service standards applicable to it with respect to the MediaOne Systems. MediaOne has received no written notice with respect to the MediaOne Systems from any Governmental Authority with respect to an intention to enforce customer service standards pursuant to the Cable Act and MediaOne has not agreed with any Governmental Authority to establish customer service standards that exceed the FCC standards promulgated pursuant to the Cable Act. Section 412 Real Property. Except under leases described on Schedule 2 1L2(ii)(A) (the "MediaOne Leases"), MediaOne does not hold or use under lease or lease to others any real property relating to the'MediaOne Systems. Except for the MediaOne Owned Property described on Schedule 2.1(b)(ii)(A), MediaOne has no other ownership interest in real property relating to the MediaOne Systems. The MediaOne Owned Property and Real Property Interests include all leases, fee interests, material easements, access agreements and other real property interests necessary to operate the MediaOne Systems as currently conducted. Except for routine repairs, all of the improvements, leasehold improvements and the premises of the MediaOne Owned Property identified on Schedule 2.1(b)(ii)(A) and the premises demised under the MediaOne Leases identified on Schedule 2.1(b)(ii)(A)(the "MediaOne Leased Property") are in good condition and repair and are suitable for the purposes used. The current use and occupancy of the MediaOne Owned Property identified on Schedule 2 1(b)(ii)(A) and the MediaOne Leased Property identified on Schedule 2.1(b)(ii)(A) do not,constitute nonconforming uses under any applicable Legal Requirement in the nature of a zoning law or ordinance. Each parcel of MediaOne Owned Property identified on Schedule 2 1(b)(ii)(A) and, to MediaOne's knowledge, each parcel of MediaOne Leased Property identified on Schedule 2.1(b)(ii)(A) (i) has access to and over public streets, or private streets for which MediaOne has a valid right of ingress and egress, (ii) conforms in its current use to all material zoning requirements without reliance upon a variance issued by,a Governmental Authority or a classification of the parcel in question as a nonconforming use and (iii) conforms in its use to all restrictive covenants, if any, or other encumbrances,affecting all or part of such parcel. Each Person upon, under or across whose property any of the MediaOne Assets are located, maintained, installed or operated (other than drop lines to customer dwellings) has granted to MediaOne such easements, licenses or rights of way as are necessary for the location, maintenance, installation and operation of such MediaOne Assets upon, under or across such property, except where the failure to have any such easements, licenses or rights of way would not have a material,adverse effect on the operation of the MediaOne,Systems as currently conducted. Section 4.13 Financial Statements: No Adverse Change. (a) MediaOne has provided to Time Warner financial statements for the MediaOne Systems consisting of balance sheets and income statements of operations as of and for the 12 months ended December 31, 1997 and for the six months ended June 30, 1998 (the "MediaOne Systems Financial Statements"). The MediaOne Systems Financial Statements fairly present in all material respects the financial condition and the results of operations of the MediaOne Systems as of the date and for the period indicated therein, as adjusted to reflect the assumptions described therein, which assumptions are reasonable in all material respects. -31- (b) Since December 31, 1997 (i) there has been no material adverse change in the MediaOne Assets or the financial condition or operations of MediaOne, the MediaOne Systems or the MediaOne Assets and (ii) the financial condition and operations of the MediaOne Systems have not been materially and adversely affected as a result of any fire, explosion, accident, casualty, labor trouble, flood, drought, riot, storm, condemnation, or act of God or public force or otherwise. Section4.14 ,Employees. (a) There are no collective bargaining agreements applicable to any persons employed by MediaOne or any Affiliate of MediaOne that render services in connection with the MediaOne Systems ("MediaOne System Employees"), and neither MediaOne nor any Affiliate'of MediaOne has any duty to bargain with any labor organization with respect to any such persons. There are not pending any unfair labor practice charges against MediaOne or any Affiliate of MediaOne, or any demand for recognition, or any other request or demand from a labor organization for representative status, with respect to any MediaOne System Employees. (b) MediaOne has complied in all material respects with all applicable Legal Requirements relating to the employment of labor, including, the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101, et seq. ("WARN"), ERISA, continuation coverage requirements with respect to group health plans and those relating to wages, hours, collective bargaining, unemployment insurance, worker's compensation, equal employment opportunity, age, sex, race and disability discrimination, immigration control and the payment and withholding of Taxes. MediaOne is not a party to any material labor or employment dispute involving any of its employees who render services in connection with the MediaOne Systems. (c) Except as described on Schedule 4.14(c), MediaOne has no employment agreements, either written or oral, ��ith any MediaOne System Employee. and none of the employment agreements listed on Schedule 4.14(c) require Time Warner to emploc any person after Closing. (d) Schedule 4.14(d)('a lists the name, position and date of hire of all MediaOne System Employees who are second-level supervisors or above and non-System related divisional or regional headquarters staff i("Senior Managers") and indicates whether the Senior Manager is on Approved Leave of Absence and the expected return date (if known). Schedule 4.14 d 2 lists the name, position and date of hire of all other MediaOne System Employees ("Other Employees") and indicates whether the Other Employee is subject to a collective bargaining agreement or represented by a labor organization, is on Approved Leave of Absence and the expected return date (if known). MediaOne will update Schedule 4.14(d)(1) and Schedule 4.14(d)(2) as necessary through the Closing. Section 4.15 Environmental. (a) MediaOne has received no notice that it is the subject of any "Superfund" evaluation or investigation, or that it is the subject of any investigation or proceeding of any Governmental Authority evaluating whether any remedial action is necessary to respond to any -32- 0 release of Hazardous Substances on or in connection with the MediaOne Owned Property or the MediaOne Leased Property. (b) MediaOne is in material compliance with all Legal Requirements with respect to pollution or protection of the environment, including Legal Requirements relating to actual or threatened emissions, discharges or releases of Hazardous Substances into ambient air, surface water, ground water, land or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances, insofar as they relate to the MediaOne Owned Property or the MediaOne Leased Property. Media0ne has received no notice of, and has no knowledge of circumstances relating to, any past, present or future events, conditions, circumstances, activities, practices or incidents (including but not limited to the presence, use, generation, manufacture, disposal, release or threatened release of any Hazardous Substances from or on the MediaOne Owned Property or the MediaOne Leased Property), which could interfere with or prevent continued compliance, or which are reasonably likely to give rise to any liability, based upon or related to the processing, distribution, use, treatment, storage, disposal, transport or handling, or the emission, discharge, release.orxhreatened release into the environment, of any Hazardous Substance from or attributable to the MediaOne Owned Property or the MediaOne Leased Property, (c) MediaOne has provided to Time Warner copies of all environmental assessments or other environmental studies of or relating to the MediaOne Assets and/or Systems. Section 4.16 Accounts Receivable. All of the accounts receivable that are the subject of the adjustments provided in Section 2.4 have arisen from bona fide transactions in the ordinary course of the business of the MediaOne Systems, consistent with past practices, and are fully collectible in accordance with their terms„subject to no offset or reduction of any nature except for a reserve for uncollectible accounts. Section 4,17 Transactions with Affiliates. Except as set forth on Schedule 4.17, with respect to the MediaOne Systems, MediaOne is not a party to any Contract or any other arrangement of any kind whatsoever with any Affiliate. Section 4.18 Taxoayer Identification Number. MediaOne's U.S. Taxpayer Identification Number is as set forth in the introductory paragraph of this Agreement. Section 4.19 Bonds. Schedule 4.19 contains a list of all franchise, construction, fidelity, performance or other bonds and copies of all letters of credit posted by MediaOne or its Affiliates in connection with its Systems or its Assets. ARTICLE 5 TIME WARNER'S REPRESENTATIONS AND WARRANTIES -33-' Time Warner represents and warrants to MediaOne, as of the date of this Agreement and as of Closing, as follows: Section 5.1 Orzanization and Cualification of Time Warner. Time Warner is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite power and authority to own and lease the Time Warner Assets and to conduct its activities as such activities are currently conducted. Time Warner is duly qualified to do business as a foreign corporation and is in good standing in all jurisdictions in which the ownership or leasing of the Time Warner Assets or the nature of its activities in connection with the Time Warner Systems makes such qualification necessary. Section 5.2 Authority. Time Warner has all requisite corporate power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby by Time Warner have been duly and validly authorized by all necessary corporate action on the part of Time Warner. This Agreement has been duly and validly executed and delivered by Time Warner and is the valid and binding obligation of Time Warner, enforceable against Time Wainer in accordance with its terms. Section 5.3 No Conflict: Required Consents. Except as described on Schedule 5.3, and subject to compliance with the HSR Act, the execution, delivery and performance by Time Warner of this Agreement do not and will not: (i) conflict with or violate any provision of the Certificate of Incorporation or Bylaws of'rime Warner; (ii) violate any provision of any Legal Requirement; (iii) conflict with, violate, result in a breach of, constitute a default under or give rise to any third party's right(s) of first refusal or right of termination (without regard to requirements of notice, lapse of time, or elections of other Persons, or any combination thereof), or accelerate or permit the acceleration of the performance required by, any Material Time Warner Contract; (iv) result in the creation or imposition of any Lien other than a Permitted Lien against or upon any of the Time Warner Assets; or (v) require, in the case of any Material Time Wainer Contract, any consent, approval or authorization of, or filing of any certificate, notice, application, report or other document with, any Governmental Authority or other Person. Section 5.4 Assets: Title. Condition. and Sufficiency. (a) Time Wamer owns all of the Time Warner Assets (other than Time Warner Assets that are leased), free and clear of all Liens, except (i) Liens described on Schedule 5_4, all of which will be terminated, released or, in the case of the rights of first refusal, waived, as appropriate, at Closing and(if) Permitted Liens. Time Warner has valid leasehold interests in all leased Time Warner Assets. Except as described on Schedule 2.1 b{ )(i)(m, the Time Warner Tangible Personal Property is in good condition and repair, ordinary wear and tear excepted. (b) Except for items included in the Time Warner Excluded Assets, the Time Warner Assets are all of the assets necessary to permit MediaOne to operate the Time Warner Systems substantially as they are being operated on the date of this Agreement and in compliance with all applicable Legal Requirements and requirements of Contracts the obligations under which are included in the MediaOne Assumed Liabilities. -34- 0 s Section 5.5 Time Wamer Svstems Franchises Svstems Licenses, Systems Contracts Owned Propertv and Real Property Interests. (a) Except as described on Schedules 2.1(b)(ii)(B), iii B , CivxB or LKKM or 2.1 c ii , Time Warner is not bound or affected by any of the following that relate wholly or primarily to the Time Warner Assets or the Time Warner Systems: (i) leases of real or personal property; (h) franchises, and similar authorizations and permits for the construction or operation of cable television systems, or Contracts of substantially equivalent effect; (iii) other licenses, authorizations, consents or permits of the FCC or any other Governmental Authority; (iv) crossing agreements or rights of access; (v) easements with respect to headends, towers and other transmission facilities or easements with respect to feeder lines servicing more than 1,000 subscribers; (vi) pole line and joint line agreements or underground conduit agreements; (vii) multiple-dwelling unit agreements or bulk service agreements for buildings that have in excess of 200 dwelling units; (viii) system specific programming agreements; or (ix) any Contract other than those described in any other clause of this Section 5.5(a) which individually provides for payments by or to Time Warner in any twelve-month period exceeding 520,000 individually. (b) Time Warner has provided to MediaOne true and complete copies of each of the Material Time Warner Contracts (together with any notices alleging continuing non-compliance with the requirements of any Time Warner Systems Franchise, and including in each case any amendments thereto, and in the case of oral Time Warner Real Property Interests listed on Schedule 2.1(b)(ii)(B) or oral Time Warner Systems Contracts listed on Schedule 2.1(b)(v)(13), true and complete written summaries thereof) and of each document evidencing Time Warner's ownership of the Time Warner Owned Property. Except as described in Schedule 5.5: (i) Time Warner is in compliance in all material respects with each of the Material Time Warner Contracts; (ii) Time Warner has fulfilled when due, or has taken all action necessary to enable it to fulfill when due, all of its obligations under each of the Material Time Warner Contracts; and (iii) there has not occurred any material default by Time Warner and, to the knowledge of Time Warner, there has not occurred any material default (without regard to lapse of time or the giving of notice, or both) by any Person, under any of the Material Time Warner Contracts. Section 5.6 Employee Benefits. "Time Warner Plans" shall mean each employee benefit plan (as defined in Section 3(3) of ERISA), or any multiemployer plan (as defined in Section 3(37) of ERISA) with respect to which Time Warner or any of its ERISA Affiliates has any liability or in which any employees or agents, or any former employees or agents, of Time Warner or any of its ERISA Affiliates participate. The Time Warner Plans in which any employee of a Time Warner System participates are set forth in Schedule 5.6. None of Time Warner, any of its,ERISA Affiliates, any Time Warner Plan other than a multiemployer plan (as defined in Section 3(37) of ERISA), or to the knowledge of Time Warner, any Time Warner Plan that is a multiemployer plan (as defined in Section!3(37) of ERISA) is in material violation of any provision of ERISA. No material "reportable event" (as defined in Sections 4043(c)(1), (2), (3), (5), (6), (7), (10) and (13) of ERISA), non-exempt "prohibited transaction" (as defined in Section 406 of ERISA), "accumulated funding deficiency" (as defined in Section 302 of ERISA) or"withdrawal liability" (as determined under Section 4201 et. seq. of ERISA) has occurred or -35' 0 exists and is continuing with respect to any Time Warner Plan other than a multiemployer plan (as defined in Section 3(37) of ERISA), or to the knowledge of Time Warner, any Time Warner Plan that is a multiemployer plan (as defined in Section 3(37) of ERISA). After the Closing, none of MediaOne or any of its respective ERISA Affiliates will be required, under ERISA, the Code or any collective bargaining agreement, to establish, maintain or continue any Time Warner Plan currently maintained by Time Warner or any of its ERISA Affiliates. Section 5.7 Litigation. Except as set forth in Schedule 5.7: (i) there is no Litigation pending or, to Time Warner's knowledge, threatened, by or before any Governmental Authority or private arbitration tribunal, against Time Warner which could adversely affect the financial condition or operations of the Time Warner Systems, the Time Warner Assets or the ability of Time Warner to perform its obligations under this Agreement, or which seeks or could result in the modification, revocation, termination, suspension or other limitation of any of the Material Time Warner Contracts; and (ii) there is no Judgment requiring Time Warner to take any action of any kind with respect to the Time Warner Assets or the operation of the Time Warner Systems, or to which Time Warner (with respect to the Time Warner Systems), the Time Warner Systems or the Time Warner Assets are subject-or by which they are bound or affected. Section 5.8 Cable Operations. Except as described on Schedule 5.8 and other than SMATV system operators.serving fewer than 500 subscribers or direct broadcast satellite services, Time Warner is the only Person providing wireline cable television services or multipoint multichannel distribution service or other multichannel video programming services, or to the knowledge of Time Warner, intending to provide any such services, in the service area of the Time Warner Systems. Except as described on Schedule 5.8, no Person other than Time Warner has been granted or, to the knowledge of Time Warner, has a current application pending for a wireline cable television franchise operation in any of the communities or unincorporated areas presently served by the Time Warner Systems. Section 5.9 Tax Retums Other Reports. With respect to the Time blamer Systems. Time Warner has timely filed in proper form all federal, state, local and foreign tax returns and other reports required to be filed, and has timely paid all Taxes which have become due and payable, whether or not so shown on any such return or report, the failure to file or pay which could affect or result in the imposition of a Lien upon the Time Warner Assets. Time Warner has received no notice of, and Time Warner has no knowledge of, any deficiency or assessment or proposed deficiency or assessment from any Governmental Authority which could affect or result in the imposition of a Lien upon the Time Warner Assets. Except as described on Schedule 5.9, there are no pending or ongoing property, sales and use, or franchise fee or tax audits relating to the Time Warner Systems, and Time Warner has not received any property, sales and use, or franchise fee or tax audit notice. Section 5.10 Time Warner Systems Information. Schedule 5.10 sets forth a true and complete description in all material respects of the following information. (a) as of December 31, 1997, the number of miles of plant, aerial and underground and the technical capacity of such plant expressed in MHz, included in the Time Warner Assets; -36- 0 (b) as of the date set forth on such Schedule, the number of subscribers served by the Time Warner Systems as reflected in Time Warner's billing system records for such date; (c) as of the date set forth on such Schedule, the number of single family homes and residential dwelling units passed by each of the Time Warner Systems as reflected in Time Warner's billing system records for such date; (d) as of the date set forth on such]Schedule, a description of basic and optional or tier services available from each of the Time Warner Systems, the rates charged by Time Warner for each and the number of subscribers receiving each optional or tier service, each as reflected in Time Warner's billing system records for such date; (e) the stations and signals carried by each of the Time Warner Systems and the channel position of each such signal and station; (f) the channel capacity of each of the Time Warner Systems; (g) with respect to each commercial establishment (e.g., hotel or motel) or multiple dwelling unit (e.g., apartment, condominium or cooperative building) served by the Time Warner Systems that pays a bulk rate for cable;television service, the name and address of, and the number of units in, each such commercial establishment or multiple dwelling unit; and (h) a list of the cities, towns, townships, villages, boroughs and counties served by each of the Time Warner Systems. Section 5.11 Compliance with Legal Requirements. (a) Except as set forth in Schedule 5.11, and except with respect to those matters covered by Sections 5.11(b), (c), (d) and (f), which matters are covered exclusively by such sections, the operation of the Time Warner Systems as it is currently conducted does not violate or infringe in any material respect any Legal,Requirement currently in effect. Time Warner has received no notice of any violation by Time Warner or the Time Warner Systems of any Legal Requirement applicable to the operation of the Time Warner Systems, as currently conducted. (b) Except as set forth in Schedule 5.11, and subject to the limitations set forth in Section 5.11(d) and (f): with respect to the Time;Warner Systems, Time Warner is in compliance in all material respects with the Communications Act and the Cable Act, including requirements of those Acts specifically referred to herein; there have been submitted to the FCC all material required filings, including cable television registration statements, annual reports and aeronautical frequency usage notices, to utilize all frequencies currently used in the frequency bands 108-137 and 225-400 MHz in the manner currently used that are required under the rules and regulations of the FCC; the operation of the Time Warner Systems has been and is in material compliance with the rules and regulations of the FCC, and Time Warner has not received notice from the FCC of any violation of its rules and regulations with respect to the -37 0 0 Time Warner Systems; Time Warner is and since 1991 has been with respect to the Time Warner Systems certified as in compliance with the FCC's EEO rules and has received no written notices with respect to non-compliance with EEO rules; the Time Warner Systems are in compliance with all signal leakage criteria prescribed by the FCC; Time Warner has filed all FCC Forms 320 for the Systems for the last two reporting periods, and all such Forms 320 show "passing" or "satisfactory" signal leakage scores; for each semi-annual reporting period since 1995-1, Time Warner has filed with the United States Copyright Office all required Statements of Account in proper form, and has paid when due all required copyright royalty fee payments, relating to the Time Warner System's carriage of television and radio broadcast signals; and Time Warner is otherwise in compliance with the requirements of the compulsory copyright license described in Section 111 of the Copyright Act and with all applicable rules and regulations of the Copyright Office. Time Warner has provided to MediaOne true and complete copies of all reports and filings for the past year, made or filed pursuant to FCC and Copyright Office rules and regulations by Time Warner with respect to the Time Warner Systems and will provide to MediaOne, upon MediaOne's request, all other past reports and filings made or filed pursuant to FCC and Copyright Office rules and regulations by Time Warner with respect to the Time Warner Systems within the past five (5) years. Time Warner holds all licenses, registrations or permits from the FCC for business radio, satellite earth receiving facilities and CARS microwave facilities, that are necessary or appropriate to carry on the business of the Time Warner Systems as conducted on the date hereof. Each of the Time Warner Systems Licenses is in full force and effect and has not been revoked, canceled, encumbered or adversely affected in any manner. The Time Warner Systems have provided all required subscriber privacy notices to new subscribers at the time of installation and to all subscribers on an annual basis, and the Time Warner Systems have taken commercially reasonable steps to prevent unauthorized access to personally identifiable information. The Time Warner Systems have provided all customer notices required by the Cable Act, including customer service, notices of availability of basic service, and equipment compatibility. All notifications to the FAA have been made with respect to the antenna structures which are being used in connection with the operation of the Time Warner Systems, and all such antenna structures that require registration with the FCC have been so registered by Time Warner. Time Warner has not received any request for commercial leased access with respect to the Time Warner Systems. There are no complaints or other proceedings instituted before the FCC concerning commercial leased access, program access, or any other aspect of the Time Warner Systems' operations. (c) Except as provided in Schedule 5.11, with respect to the Time Warner Systems, Time Warner is in compliance in all material respects with the must carry and retransmission consent provisions of the Cable Act, including, (i) duly and timely notifying "local commercial television stations" of inadequate signal strength or increased copyright liability, if applicable, (ii) to the extent now required, duly and timely notifying non-commercial educational stations of the location of the cable system's principal headend, (iii) duly and timely notifying subscribers of the channel alignment on the Time Warner Systems, (iv) duly and timely notifying "local commercial and noncommercial television stations" of the broadcast signals carried on the Time Warner Systems and their channel positions, (v) maintaining the requisite public file identifying broadcast signal carriage, (vi) carrying the broadcast signals after June 1, 1993, on the Time Warner Systems for all "local commercial television stations"which elected must carry status and, if required, up to two "qualified low power stations", (vii) complying with -38- applicable channel placeme0nt obligations and (viii) obtaining retrans�ion consent for all commercial broadcast signals carried on the Time Warner Systems after October 5, 1993, except for the signals carried pursuant to a must carry election. No oral or written notices have been received from the FCC, the United States Copyright Office, any local or other television station or system or from any other person or entity, station or Governmental Authority claiming to have a right of objection challenging or questioning the right of Time Warner or the Time Warner Systems to carry or furnish, or not to carry or famish, any of the signals or any other station or service to any subscriber. Except as provided in Schedule 5.11, Time Warner has not received with respect to any of the Time Warner Systems any'notification of any petition or submission that is currently pending before the FCC to modify any television market or for a waiver of any rules or regulations of the FCC as they apply to such Time Warner System. Time Warner has provided copies of all written requests it has received for network nonduplication, syndicated exclusivity, and sports blackout,protection which are applicable to the Time Warner Systems. (d) Time Warner has used commercially reasonable efforts to establish rates charged and a la carte packages provided to subscribers of the Time Warner Systems, effective as of September 2, 1993, that would be allowable under the Cable Act, and, as applicable, effective as of November 30, 1995, under the Time Warner Social Contract. Without limiting the generality of the foregoing, Time Wainer has used actual or accrued programming costs in establishing rates charged on regulated tiers of service provided to subscribers of the Time Warner Systems. Notwithstanding the foregoing, Time Warner makes no representation or warranty that the rates charged to subscribers would be allowable under any rules or regulations of the FCC or any authoritative interpretation thereof promulgated after the date of Closing. Time Warner has provided to MediaOne true and complete copies of all Time Warner Social Contract rate Forms (and any associated Forms 1200, any successive Forms 1210, and Forms 1205 for 1996, 1997 and 1998) that have been prepared with respect to the Time Warner Systems, copies of all correspondence with any Governmental Authority relating to rate regulation generally or specific rates charged to subscribers of the Time Wamer Systems, including copies of any complaints filed with the FCC with respect to any rates charged to subscribers of the Time Warner Systems since FCC approval of the Time Warner Social Contract, and any other documentation supporting an exemption from the rate regulation provisions of the Cable Act claimed by Time Warner with respect to the Time Warner Systems. Schedule 5.11(d) sets forth a list of(i) all rate complaints with respect to any rates which have been filed with the FCC for the Time Wainer Systems that have not been deemed invalid, (ii) those franchising authorities that have been certified upon filing FCC Form 328 or-have filed FCC Form 328 with the FCC for certification to regulate any of the Time Warner Systems' rates and (iii) all letters of inquiry from the FCC received by Time Warner since September'1, 1993 with regard to rate regulation to the extent that disclosure thereof on Schedule 5.11(d) would not violate any Legal Requirement. Except as set forth on Schedule 5.11(d), a request for renewal has been timely filed under Section 626(a) of the Cable Act with the proper Governmental Authority with respect to each Time Warner Systems Franchise expiring within 30',months after the date of this Agreement. (e) Intentionally Omitted. (f) Time-Warner has used reasonable good faith efforts to comply in all material respects with any customer service standards applicable to it with respect to the Time -39- Warner Systems. Time Warner has received no written notice with respect to the Time Warner Systems from any Governmental Authority with respect to an intention to enforce customer service standards pursuant to the Cable Art and Time Warner has not agreed with any Governmental Authority to establish customer service standards that exceed the FCC standards promulgated pursuant to the Cable Act. Section 5.12 Real Property. Except under leases described on Schedule 2.1(bb)(ii)(Bl (the "Time Warner Leases"), Time Warner does not hold or use under lease or lease to others any real property relating to the Time Warner Systems. Except for the Time Warner Owned Property described on Schedule 2.1(b)(H)M), Time Warner has no other ownership interest in real property relating to the Time Warner Systems. The Time Warner Owned Property and Real Property Interests include all leases, fee interests, material easements, access agreements and other real property interests necessary to operate the Time Warner Systems as currently conducted. Except for routine repairs, all of the improvements, leasehold improvements and the premises of the Time Warner Owned Property identified on Schedule 2.1(b)(ii)(B) and the premises demised under the Time Warner Leases identified on Schedule 2.1(b)(ii)(Bl(the "Time Warner Leased Property") are in good condition and repair and are suitable for the purposes used. Except as described in such Schedule, the current use and occupancy of the Time Warner Owned Property identified on Schedule 2.1 b ii and the Time Warner Leased Property identified on Schedule 2.1(b)(ii)(B) do not constitute nonconforming uses under any applicable Legal Requirement in the nature of a zoning law or ordinance. Each parcel of Time Warner Owned Property identified on Schedule 2.1 b ii and, to Time Warner's knowledge, each parcel of Time Warner Leased Property identified on Schedule 2.1(b)(ii)(Bl (i) has access to and over public streets, or private streets for which Time Warner has a valid right of ingress and egress, (ii) conforms in its current use to all material zoning requirements without reliance upon a variance issued by a Governmental Authority or a classification of the parcel in question as a nonconforming use and (iii) conforms in its use to all restrictive covenants, if any, or other encumbrances affecting all or part of such parcel. Each Person upon, under or across whose property any of the Time Warner Assets are located, maintained, installed or operated (other than drop lines to customer dwellings) has granted to Time Warner such easements, licenses or rights of way as are necessary for the location, maintenance, installation and operation of such Time Warner Assets upon, under or across such.property, except where the failure to have any such easements, licenses or rights of way would not have a material adverse effect on the operation of the Time Warner Systems as currently conducted. Section 5.13 Financial Statements: No Adverse Change. (a) Time Warner has provided to MediaOne financial statements for the Time Warner Systems consisting of trial balances and statements of operations as of and for the 12 months ended December 31, 1997 and for the six months ended June 30, 1998 (the "Time Warner Systems Financial Statements"). The Time Warner Systems Financial Statements fairly present in all material respects the financial condition and the results of operations of the Time Warner Systems as of the date and for the period indicated therein, as adjusted to reflect the assumptions described therein, which assumptions are reasonable in all material respects. -40- (b) Since December 31, 1997 (i) there has been no material adverse change in the Time Warner Assets or the financial condition or operations of Time Warner, the Time Warner Systems or the Time Warner Assets and (ii) the financial condition and operations of the Time Warner Systems have not been materially and adversely affected as a result of any fire, explosion, accident, casualty, labor trouble, flood, drought, riot, storm, condemnation, or act of God or public force or otherwise. MediaOne acknowledges and agrees that portions of the Time Warner Systems have been overbuilt, and that any penetration by such overbuilders of the areas served by the Time Warner Systems will not constitute, at any time, a material adverse change in the Time Warner Assets or the financial condition or,operations of Time Warner, the Time Wamer.Systems or the Time Warner Assets, subject to the satisfaction of the conditions set forth in Section 7.1. Section 5.14 Employ. (a) Except as described on Schedule 5.14, there are no collective bargaining agreements applicable to any persons employed by Time Warner or any Affiliate of Time Warner that render services in connection with the Time Warner Systems ("Time Warner System Employees"), and neither Time Warner nor any Affiliate of Time Warner has any duty to bargain with any labor organization with respect to any such'persons. There are not pending any unfair labor practice charges against Time Warner or any Affiliate of Time Warner, or any demand for recognition, or any other request or demand from a labor organization for representative status, with respect to any Time Warner System Employees. (b) Time Warner has complied in'all material respects with all applicable Legal Requirements relating to the employment of labor, including WARN, ERISA, continuation coverage requirements with respect to group health plans and those relating to wages, hours, collective bargaining, unemployment insurance, worker's compensation, equal employment opportunity, age, sex, race and disability discrimination, immigration control and the payment and withholding of Taxes. Time Warner is not a party to any material labor or employment dispute involving any of its employees who render services in connection with the Time Warner Systems. (c) Except as described on Schedule 5.14(c), Time Warner has no employment agreements, either written or oral, with any Time Warner System Employee and none of the employment agreements listed on Schedule 5 14(c) require MediaOne to employ any person after Closing. (d) Schedule 5.14(d)(1) lists the name,position and date of hire of all Time Warner System Employees who are Senior Managers and indicates whether the Senior Manager is on Approved Leave of Absence and the expected'return date (if known). Schedule 5.14(d)(2) lists the name, position and date of hire of all of the Time Warner System employees who are Other Employees and indicates whether the Other Employee is subject to a collective bargaining agreement or represented by a labor organization, is on Approved Leave of Absence and the expected return date (if known). Time Warner will update Schedule 5.14(d)(1) and Schedule 5.14 d 2 as necessary through the Closing. -41 Section 5.15 Environmental. (a) Time Warner has received no notice that it is the subject of any "Superfund" evaluation or investigation, or that it is the subject of any investigation or proceeding of any Governmental Authority evaluating whether any remedial action is necessary to respond to any release of Hazardous Substances on or in connection with the Time Warner Owned Property or the Time Warner Leased Property. (b) Time Warner is in material compliance with all Legal Requirements with respect to pollution or protection of the environment, including Legal Requirements relating to actual or threatened emissions, discharges or releases of Hazardous Substances into ambient air, surface water, ground water, land or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances, insofar as they relate to the Time Warner Owned Property or the Time Warner Leased Property. Time Warner has received no notice of, and has no knowledge of circumstances relating to, any past, present or future events, conditions, circumstances, activities, practices or incidents (including the presence, use, generation, manufacture, disposal, release or threatened release of any Hazardous Substances from or on the Time Warner Owned Property or the Time Warner Leased Property), which could interfere with or prevent continued compliance, or which are reasonably likely to give rise to any liability, based upon or related to the processing, distribution, use, treatment, storage, disposal, transport. or handling, or the emission, discharge, release or threatened release into the environment, of any Hazardous Substance from or attributable to the Time Warner Owned Property or the Time Warner Leased Property. (c) Time Warner has provided to MediaOne copies of all environmental assessments or other environmental studies of or relating to the Time Warner Assets and/or Systems. Section 5.16 Accounts Receivable. All of the accounts receivable that are the subject of the adjustments provided in Section 2.4 have arisen from bona fide transactions in the ordinary course of the business of the Time Warner Systems, consistent with past practices, and are fully collectible in accordance with their terms, subject to no offset or reduction of any nature except for a reserve for uncollectible accounts. Section 5.17 Transactions with Affiliates. Except as set forth on Schedule 5.17, with respect to the Time Warner Systems, Time Warner is not a party to any Contract or any other arrangement of any kind whatsoever with any Affiliate. Section 5.18 Taxpayer Identification Number. Time Warner's U.S. Taxpayer Identification Number is as set forth in the introductory paragraph of this Agreement. Section 5.19 Bonds. Schedule 5.19 contains a list of all franchise, construction, fidelity, performance or other bonds and copies of all letters of credit posted by Time Warner or its Affiliates in connection with its Systems or its Assets. -42- ® • ARTICLE 6 COVENANTS Section 6.1 Certain Affirmative Covenants of Transferor. Except as Transferee may otherwise consent in writing, between the date of this Agreement and the Closing Time, Transferor, with respect to each of Transferor's Systems and Transferor's Assets, will: (a) operate or cause to be operated that System only in the usual, regular and ordinary course and in accordance with applicable Legal Requirements (including completing line extensions, placing conduit or cable in new developments, fulfilling installation requests and continuing work on existing construction projects) and, to the extent consistent with such operation, use its commercially reasonable efforts to (i) preserve the current business organization of that System intact, including preserving existing relationships with Governmental Authorities, suppliers, customers and others having business dealings with that System, unless Transferee requests otherwise, (ii) use reasonable efforts to keep available the services of its employees providing services in connection with that System and (iii) continue normal marketing, advertising and promotional expenditures with respect to that System; (b) perform all of its obligations under all of the Systems Franchises, Systems Licenses and Systems Contracts without material breach or default, and in material compliance with all Legal Requirements; (c) maintain or cause to be maintained (i) those Assets in good condition and repair, ordinary wear excepted, and (ii) in full force and effect all existing policies of insurance with respect to those Assets and the operation of that System, in such amounts and with respect to such risks as are customarily maintained by operators of cable television systems of the size and in the geographic location of that System; (d) use commercially reasonable,efforts to complete the System rebuilds described in Schedules 2.7 (Al and(B), as applicable, and MediaOne shall use commercially reasonable efforts to secure all rights from third parties necessary to complete such rebuilds, including the upgrade of the cable plant currently described in Schedule 4.10 as having the technical capacity of 330 MHz and 400 MHz; (e) maintain or cause to be maintained its books, records and accounts with respect to those Assets and the operation of that System in the usual, regular and ordinary manner on a basis consistent with past practices; (f) (i) give or cause to be given to Transferee, and its counsel, accountants and other representatives, reasonable access during normal business hours to that System, its Owned Property, its Leased Property, all of its Assets, its books and records and that System's personnel; and (ii) furnish or cause to be furnished to Transferee and such representatives all such additional documents, financial information and other information as the other from time to time reasonably may request; provided that no investigation will affect or limit the scope of any of the representations and warranties, and provided further that in no event will any programming -43- records or documents relating thereto be provided other than the retransmission consent agreements and system specific programming agreements set forth on Schedules 2.1(b)(v)(A) and 2 1(b)(v)(B); (g) as soon as practicable, but in any event no later than 30 days after the date of this Agreement, complete and file, or cause to be completed and filed, any notification and report required to be filed under the HSR Act and each such filing will request early termination of the waiting period imposed by the HSR Act. The parties will use commercially reasonable efforts to respond as promptly as practicable to any inquiries or requests received from the FTC, the Department of Justice and any other Governmental Authority for additional information or documentation in connection with antitrust matters. To the extent deemed necessary by MediaOne and Time Warner, each of the parties will use good faith efforts to negotiate the scope and content of any such inquiries or requests in such a way as to ensure that compliance therewith would be commercially reasonable. Notwithstanding anything to the contrary in this Agreement, no party shall be required by a Governmental Authority with jurisdiction over antitrust matters to modify the transaction or to make any adverse changes in the operations or activities of the business (or any assets employed therein) of such party or any of its Affiliates. If either party determines after using good faith efforts to negotiate the scope and content of any such inquiries, requests or proposed modifications to the transaction that responding to such inquiries, requests, or proposed modifications is commercially unreasonable, then the party shall give notice to the other party of the reasons why it considers responding to the inquiries, requests, or proposed modifications to be commercially unreasonable. Five business days after providing such notice, the party giving notice will not have any obligation to provide any additional information or documentation and may terminate this Agreement. Each of the parties will cooperate to prevent inconsistencies between their respective filings and will furnish to each other such necessary information and reasonable assistance as the other may easonably request in connection with its preparation of necessary filings or submissions under the HSR Act. Each Party %%ill pay its own filing fees in comiection \v ith any required filing pursuant to the HSP. .�c,. (h) within 20 days after provision, pursuant to Section 6.3(a), of all necessary documentation to allow Transferor to file:FCC Forms 394 with each of Transferor's Systems Franchises which are Required Consents, File all such FCC Forms 394 at Transferor's expense, and in any event, use its commercially reasonable efforts to obtain in writing as promptly as possible the Required Consents and any other consent, authorization or approval required to be obtained by Transferor in connection with the transactions contemplated hereunder, including without limitation any consents required pursuant to Transferor's 200 & Under Contracts, and deliver to Transferee copies of such Required Consents and such other consents, authorizations or approvals, in each case in form and substance reasonably satisfactory to Transferee; provided, however, that Transferor will afford Transferee the opportunity to review, approve and revise the form of Required Consent and such other consents prior to delivery to the party whose consent is sought and Transferor will not accept or agree or accede to any modifications or amendments to, or any conditions to the transfer of, any of the Systems Franchises, Systems Licenses, Systems Contracts, 200 &Under Contracts or Real Property Interests of Transferor's Systems that are not approved in writing by Transferee, which approval will not be unreasonably withheld. Transferor agrees, upon reasonable prior notice, to allow appropriate representatives of -44- 0 0 Transferee to attend meetings and hearings before applicable Governmental Authorities in connection with the transfer of any Systems License or Systems Franchise; (i) deliver to Transferee on a mutually agreed upon schedule true and complete copies of all monthly and quarterly financial statements and operating reports and any reports with respect to the operation of that System prepared by or for Transferor at any time from the date hereof until Closing, and any other similar materials which Transferee may reasonably request; 0) except as otherwise provided in this Agreement, promptly notify Transferee of any circumstance, event or action by Transferor or otherwise (i) which, if known at the date of this Agreement, would have been required to be disclosed in or pursuant to this Agreement or (ii) the existence, occurrence or taking of which would result in any of its representations and warranties in this Agreement or in any Transaction Document not being true and correct in all material respects when made or at Closing, and, with respect to clause (ii), use its commercially reasonable efforts to remedy the same; (k) use its commercially reasonable efforts to obtain certificates in form reasonably acceptable to Transferee, executed by the lessor of each of the MediaOne Leases under which MediaOne is a lessee and which is preceded by an asterisk on Schedule 2 1(b)(ii)(A), in the case of MediaOne (the "MediaOne Estoppel Certificates"), and by the lessor of each of the Time Warner Leases under which Time Wamer is a lessee and which is preceded by an asterisk on Schedule 2.1(b)(ii)(B), in the case of Time Warner (the "Time Warner Estoppel Certificates"), each certifying that the respective real property lease has not been modified except as shown and is in full force and effect and that the parties are not in default thereunder, and stating the amount of the rent payable thereunder; (1) give or cause to be given to Transferee, and its counsel, accountants and other representatives, as soon as reasonably possible but in any c�ent prior to the date of submission to the appropriate Governmental Authority, copies of all FCC Forms 1200, 1205, 1210, 1215, 1220 and 1240 or any other FCC Forms required under the regulations of the FCC promulgated under the Cable Act that are prepared with respect to that System; and before such Forms are filed, the parties will consult in good faith concerning the contents of such forms; and (m) use commercially reasonable!efforts to establish or cause to be established rates charged and a la carte packages provided to subscribers of that System, as of the Closing Date, that would be allowable under the regulations',of the FCC promulgated under the Cable Act and the Transferee's Social Contract, as applicable. Section 6.2 Certain Negative Covenants of Transferor. Except as Transferee may otherwise consent in writing, or as contemplated by.this Agreement, between the date of this Agreement and Closing, Transferor with respect to Transferor's Systems and Transferor's Assets will not: (a) modify, terminate, renew, suspend or abrogate any Systems Contract other than in the ordinary course of business; -45 (b) modify, terminate, renew, suspend or abrogate any Systems Franchise (except as contemplated in Sections 6.13, 7.1(n) and 7.2(n)), Real Property Interest described in Schedule 2.1(b)(ii) or Systems License; (c) enter into any contract or commitment of any kind relating to the Systems (except as contemplated by Section 6.1(n)) which would be binding on Transferee after Closing and which (i) would involve an aggregate expenditure in excess of$50,000; (ii) would have a term in excess of two years unless terminable without payment or penalty upon thirty (30) days' (or fewer) notice; or(iii) is not being entered into in the usual regular and ordinary course and in accordance with past practices; (d) enter into any transaction or take any action that would result in any of its representations and warranties in this Agreement or in any Transaction Document not being true and correct in all material respects when made or at Closing; (e) grant or agree to grant to any employee of the Systems any increase in (i) wages or bonuses except in the ordinary course of business and consistent with past practices or (ii) any severance, profit sharing, retirement, deferred compensation, insurance or other compensation or benefits, except in the ordinary course of business; (0 sell, assign, transfer or otherwise dispose of any of the Assets except in the ordinary course of business and except for (i) the disposition of obsolete or worn-out equipment or(ii) dispositions with respect to which such Assets are replaced with assets of at least equal value; or (g) mortgage, pledge or subject to any material Lien that would survive the Closing any of its Assets or the Systems other than Permitted Liens. Section 6.3 Certain Covenants of Transferee. (a) By no later than 30 days from the date of this Agreement, Transferee and Transferor will provide each other with all necessary documentation to allow filing of FCC Forms 394 with respect to Transferor's Systems Franchises in accordance with Section 6.1(h). Preparation of such Forms 394 and accompanying materials will be primarily the responsibility of Transferee, with both Transferor and Transferee cooperating in the preparation and filing of such Forms 394. (b) Subject to Section 6.1(h), Transferee will use its commercially reasonable efforts to cooperate with Transferor in obtaining the Required Consents and any other consent, authorization or approval required to be obtained by Transferor including, to the extent commercially reasonable, the attendance of appropriate representatives of Transferee at meetings and hearings before applicable Governmental Authorities in connection with the transfer of any Systems License or Systems Franchise and by providing appropriate financial statements, insurance certificates and surety bonds required to obtain such Required Consents. Section 6.4 Confidentiality and Publicity. -46- 0 (a) Any non-public information that either party may obtain from the other in connection with this Agreement will be confidential and, unless and until the Closing occurs, such party will not disclose any such information to any other Person (other than its and its Affiliates' directors, officers and employees, and representatives of its advisers and lenders whose knowledge thereof is necessary in order to facilitate the consummation of the transactions contemplated hereby) or use such information to the',detriment of the other; provided that (i) such party may use and disclose any such information once it has been publicly disclosed (other than by such party in breach of its obligations under this Section) or which rightfully has come into the possession of such party (other than from the other party) and (ii) to the extent that such party may, in the reasonable judgment of its counsel, be compelled by Legal Requirements to disclose any of such information, such party may disclose such information if it has used commercially reasonable efforts, and has afforded the other the opportunity, to obtain an appropriate protective order, or other satisfactory assurance of confidential treatment, for the information compelled to be disclosed. In the event of termination of this Agreement, (i) the obligation set forth in this Section will continue for a period of two years after such termination, and (ii) each party will use commercially reasonable efforts to cause to be delivered to the other, and will retain no copies of, any documents, work papers or other materials obtained by such party or on its behalf from the other, whether so obtained before or after the execution of this Agreement. (b) Time Warner and MediaOne each will consult with and cooperate with the other with respect to the content and timing of all press releases and other public announcements, and any oral or written statements to MediaOne System Employees and Time Warner System Employees concerning this Agreement and the transactions contemplated hereby. Except as required by applicable Legal Requirements, neither Time Warner nor MediaOne will make any such release, announcement or statement without the prior written consent and approval of the other. Time Warner and MediaOne will each respond promptly to any such request for consent and approval. Section 6.5 Title Insurance Commitments. Transferor will provide to Transferee, within 60 days from the date hereof, (i) commitments to issue title insurance policies ("Title Commitments") to be issued by a nationally recognized title insurance company (a"Title Company",) and containing, to the extent available, legible photocopies of all recorded items described'as exceptions therein, committing to insure fee or leasehold title, as applicable, in Transferee to each parcel of Transferor's Owned Property or Leased Property marked by a double asterisk on Schedule 2.1(b)(ii)(A) or Schedule 2.1(b)(ii)(Bl, as applicable, by ALTA Form B (1997 Rev.) owner's or leasehold policies, as applicable, of title insurance and (ii) surveys of each parcel of Transferor's Owned Property or the Leased Property marked by a triple asterisk on Schedule 2.1(b)(ii)(A) and Schedule 2.1(b)(ii)(B) (`Surveys"), in such form as is necessary to obtain the title insurance to be issued pursuant to the Title Commitments with the standard printed exceptions relating to survey matters deleted, certified to Transferee and to the Title Company with respect to that Owned or Leased Property. The cost to obtain such Title Commitments and Surveys and other documents required by the Title Company to issue such policies and Surveys will be borne by Transferee and the cost to delete or insure over any Title Defects (as defined below)•will be home by Transferor. If Transferee notifies Transferor within 30 days following delivery to Transferee of both the Title Commitments and the Surveys of any -47 0 Lien (other than a Permitted Lien or a Lien set forth in Schedules 4.4 or 5_4 as applicable) or other matter affecting title to Transferor's Owned or Leased Property which prevents access to or which could prevent or impede in any way the use or operation of any parcel of Owned or Leased Property for the purposes for which it is currently used or operated by Transferor (each a "Title Defect"), Transferor will exercise commercially reasonable efforts to (i) remove such Title Defect, or(ii) with the consent of Transferee, cause the Title Company to commit to insure over each such Title Defect prior to Closing. If such Title Defect cannot be removed prior to Closing or the Title Company does not commit to insure over such Title Defect prior to Closing and if acceptable to Transferee in its reasonable discretion, Transferee and Transferor will enter into a written agreement containing Transferor's commitment to use commercially reasonable efforts for 180 days following Closing to remedy the Title Defect following Closing on terms satisfactory to Transferee, in its reasonable discretion. Section 6.6 Leased Vehicles and other Capital Leases. Transferor will pay the remaining balances on any leases for vehicles included in its Tangible Personal Property and any other capital leases and will deliver title to such vehicles and Tangible Personal Property free and clear of all Liens to Transferee at Closing. Section 6.7 Programming. Each party will execute and deliver such documents and take such action as may be reasonably requested by the other party to enable such other party to comply with the requirements of its programming agreements with respect to divestitures and acquisitions of cable television systems; provided, however, that neither party will be required hereunder to provide specific programming or channels or to assume any liability with respect to or in connection with the other's programming agreements. Section 6.8 Post-Ciosine Obtaining of Consents. Subsequent to Closing, Transferor, with respect to its Required Consents, will continue to use commercially reasonable efforts to obtain in writing as promptly as possible any such Required Consent and am other consent. authorization or approval required to be obtained by Transferor in connection with the transactions contemplated hereunder which was not obtained on or before Closing (a "Post-Closing Required Consent") in form and substance reasonably satisfactory to Transferee. A true and complete copy of any such Post-Closing Required Consent will be delivered to Transferee promptly after it has been obtained. In the event that Transferor fails to obtain a Post-Closing Required Consent within 180 days after Closing, Transferee will have the right to obtain any such Post-Closing Required Consent on such terms and conditions as Transferee deems necessary in its sole discretion, and Transferor will reimburse Transferee for all commercially reasonable payments, costs or expenses incurred by Transferee in obtaining such Post-Closing Required Consent. Section 6.9 Subscriber Billing Services. (a) At least sixty days prior to the anticipated Closing Date, Transferee will notify Transferor if Transferee wishes to assume at Closing any of the Contracts with billing services providers marked with an asterisk on Schedule 6.9. Transferor shall use commercially reasonable efforts to secure any necessary consent in connection with such transfer; provided, however, that no such consent will be a Required Consent. Any billing services Contracts for -48- 0 0 which consent to transfer is obtained shall be transferred at Closing to the Transferee and shall be considered, for all purposes hereof, part of the MediaOne Assets or the Time Warner Assets, as the case may be. (b) Transferor shall complete the billing systems conversions listed on Schedule 6.9 prior to Closing. (e) In any area served by Transferor's Systems which does not receive billing services pursuant to a Contract transferred at Closing in accordance with Section 6.9(a), above, Transferor will provide to Transferee, upon written request received by Transferor no later than 30 days prior to Closing, subscriber billing services in connection with Transferor's Systems for a period of up to 180 days following Closing to allow for conversion of existing or replacement billing arrangements ("Transitional Billing Services"). Transferor, upon written request by Transferee at Closing, shall extend such Transitional',Billing Services for up to 180 additional days; provided, however, that, if such Transitional Billing Services require the consent of any third party, which consent is not obtained, Transferor will not be required to provide such extended Transitional Billing Services. Transferor will use commercially reasonable efforts to obtain any such consent. All Transitional Billing Services will be provided on terms and conditions reasonably satisfactory to both parties and at the actual out-of-pocket cost to Transferor. Section 6.10 Intentionallv Omitted. Section 6.11 Cooperation upon Inquiries as to Rates. (a) For a period of twelve (12) months after Closing, Transferor will cooperate with and assist Transferee by providing, upon request, all information in Transferor's possession (and not previously provided to Transferee) relating directly to the rates set forth in Schedules 4.10 or 5.10 and/or any rate increases after the date(s) set forth in such Schedules, as applicable, or on any of the FCC Forms identified in Sections 4.I t(d) and 5.1 l(d), that Transferee may reasonably require to justify such rates in response to any inquiry, order or requirement of any Governmental Authority or any Rate Regulatory Matter (as defined below) instituted before or after the date of this Agreement. (b) If at any time prior to Closing, any Govemmental Authority commences a Rate Regulatory Matter with respect to a Transferor's System, Transferor will (i) promptly notify Transferee, and (ii) keep Transferee informed as to the progress of any such proceeding. Without the prior consent of Transferee, which consent shall not be unreasonably withheld, Transferor will not settle any such Rate Regulatory Matter, either before or after Closing, if the (a) Transferee would bear any liability under such settlement, or (b) such settlement would reduce the rates permitted to be charged by Transferee after Closing below the rates set forth on Schedules 4.10 or 5.10, as applicable. Notwithstanding anything to the contrary herein, after Closing Transferee will have the right, at its own expense, to assume control of the defense of any pending Rate Regulatory Matter, to the extent, and only to the extent, that it relates to a System transferred to Transferee. If Transferee elects to assume control of the defense of any such Rate Regulatory Matter, Transferor will have the right to participate, at its expense, in the -49-I 0 defense of such matter. Notwithstanding the provisions set forth in Article 10 of this Agreement, Transferee may settle any such Rate Regulatory Matter only upon Transferor's prior written consent, which consent will not be unreasonably withheld, if Transferor will bear any liability with respect to such settlement in accordance with Article 10 hereof or otherwise. (c) If at any time after Closing, any Governmental Authority commences a Rate Regulatory Matter with respect to a System transferred to Transferee involving any time period prior to Closing, Transferee will (i) promptly notify Transferor, and (ii) keep Transferor informed as to the progress of any such proceeding. Transferor will have the right to participate, at its expense, in the defense of such matter. Notwithstanding the provisions set forth in Article 10 of this Agreement, Transferee may settle any such Rate Regulatory Matter only upon Transferor's prior written consent, which consent will not be unreasonably withheld, if Transferor will bear any liability with respect to such settlement in accordance with Article 10 hereof or otherwise. (d) For purposes hereof, "Rate Regulatory Matter" means any proceeding or investigation with respect to a System arising out of or related to the Cable Act (other than those affecting the cable television industry gen.erally), the MediaOne Social Contract or the Time Warner Social Contract, as applicable, dealing with, limiting or affecting the rates which can be charged by such System for programming, equipment, installation, service or otherwise. (e) If Transferor is required following Closing pursuant to any Rate Regulatory Matter or any other Legal Requirement, settlement or otherwise to reimburse any subscribers of Transferor's Systems any subscriber payments previously made by it, including fees for cable television service, late fees and similar payments, Transferee will, at Transferor's request, make such reimbursement through Transferee's billing system on terms specified by Transferee. In such event, Transferor will pay to Transferee all such payments made by Transferee through its billing system. Without limiting the foregoing, Transferee will provide to Transferor all infonnation in its possession that is reasonably required by Transferor in connection with such reimbursement. Section 6.12 Certain Notices. Transferor, with respect to its Systems, will cause to be timely filed a request for renewal under Section 626 of the Cable Act with the proper Governmental Authority with respect to cable franchises that will expire within 36 months after any date between the date of this Agreement and Closing Date. Section 6.13 Franchise Expirations. Prior to Closing, Transferor will use its commercially reasonable efforts to obtain renewals or valid extensions of Systems Franchises that are scheduled to expire on or prior to December 31, 2000 on terms reasonably satisfactory to Transferee. Transferor agrees, upon reasonable prior notice, to allow appropriate representatives of Transferee to attend meetings and hearings before applicable Governmental Authorities in connection with the renewal or extension of any Systems License or Systems Franchise. Transferee will use its commercially reasonable efforts,to cooperate with Transferor in obtaining such renewals or valid extensions including, to the extent commercially reasonable, the attendance by appropriate'representatives of Transferee at meetings and hearings before applicable Governmental Authorities. -50- 0 Section 6.14 Year 2000 Matters. (a) For purposes of this Section, the following terms will have the following meanings: "Computer and Other Systems" means any level of hardware or software, equipment and cable plant, or building and other facilities, including microcode, firmware, operating systems, applications,programs, user interfaces, files and databases, used in connection with Transferor's Systems and Assets which are date dependent or which process date data. "Year 2000 Compliant" or "Year 2000 Compliance" means that the Computer and Other Systems accurately process date/time data, including recording, storing, calculating, functioning, operating, sorting, comparing, and presenting calendar dates (including Leap Year dates and September 9, 1999) falling before, on, during, and after (and, if applicable, spans of time including) January 1, 2000. "Year 2000 Compliant" and "Year 2000 Compliance" will also mean that the Computer and Other Systems will process any information dependent on or relating to such dates without loss of functionality, data integrity, and performance. "Year 2000 Remediation Program" means a program to make Year 2000 Compliant all Computer and Other Systems, conducted by persons with experience in issues related to Year 2000 Compliance who report to executive level management. (b) Each of Time Warner and MediaOne has established a Year 2000 Remediation Program. From and after the date of this Agreement, Transferor shall continue to evaluate, remediate and/or replace, and test its Computer and Other Systems in accordance with its Year 2000 Remediation Program and otherwise in a manner consistent with its other material computer systems and equipment. (c) No later than 30 days after the date of this Agreement, Transferor shall submit to Transferee a plan ("Year 2000 Remediation Plan") identifying all material components included within its Computer and Other Systems and which require Year 2000 remediation or replacement, the anticipated date by which each such material component will be Year 2000 Compliant„and the anticipated cost of making each such material component Year 2000 Compliant, in each case consistent with its Year 2000 Remediation Program and with the Year 2000 compliance standards in effect with respect to Transferor's other material computer systems and equipment. Time Warner's Year 2000 Remediation Plan is attached hereto as Schedule 6.14. MediaOne's Year 2000 Remediation Plan, when delivered, will be attached hereto as an amendment to Schedule 6.14. Transferor shall not be required to include within its Year 2000 Remediation Plan any information or documents which are subject to confidentiality restrictions or which are privileged pursuant to the corporate self-evaluative privilege, attomey-client privileges or otherwise. From and after submission'Of the Year 2000 Remediation Plan to Transferee, subject to subsection (d) below, Transferor shall continue its Year 2000 Remediation Program in accordance with its Year 2000 Remediation Plan. -51- (d) Transferee shall have a period of 30 days after receipt of Transferor's Year 2000 Remediation Plan in which to notify Transferor of any enhancements Transferee wishes Transferor to make to such Plan ("Plan Enhancements"). From and after receipt of any such Plan Enhancements, Transferor shall conduct its Year 2000 Remediation Program in accordance with its Year 2000 Remediation Plan and the Plan Enhancements; provided, however, that Transferee shall reimburse Transferor at Closing for all out-of-pocket costs and internal labor costs incurred by Transferor directly in connection with the Plan Enhancements ("Plan Enhancement Costs"). If Closing does not occur for any reason, Transferee shall promptly reimburse to Transferor all Plan Enhancement Costs incurred by Transferor through the effective date of termination of this Agreement. (e) Each party will use commercially reasonable efforts in connection with each of the Year 2000 remediation activities contemplated by its Year 2000 Remediation Plan and the applicable Plan Enhancements including without limitation ordering necessary equipment and materials in sufficient time to remediate in accordance with the schedule for remediation set forth in its Year 2000 Remediation Plan. (f) At least 10 days prior to Closing, Transferor shall deliver to Transferee a reasonably detailed estimate of the out-of-pocket and internal labor costs and expensesthat Transferor reasonably expects Transferee to incur after Closing to complete the remediation and/or replacement activities specified in Transferor's Year 2000 Remediation Plan, but excluding any Plan Enhancement Costs ("Remaining Y2K Compliance Costs"). At Closing, Transferor will pay to Transferee as an adjustment to the Purchase Price an amount equal to Remaining Y2K Compliance Costs or, if Closing occurs after July 3, 1999, 125% of the Remaining Y2K Compliance Costs (the "Year 2000 Adjustment Amount"). (g) If Closing is scheduled to occur after July 3, 1999, and if all other conditions to Closing have been met or are capable of being satisfied. but Transferor has not met its obhaations, in all material respects, pursuant to this Section 6.14, Transferee mad require that the Closing be delayed for 30 days. If, at the end of such 30-day period, Transferor still has not met its obligations, in all material respects, pursuant to this Section 6.14, Transferee shall have the right to terminate this Agreement at any time. (h) In order to ensure Transferor's Year 2000 Remediation Plan as modified by any Plan Enhancements is compatible with Transferee's expected operation of Transferor's Computer and Other Systems after the Closing Date, and that Transferor is complying with the requirements of such Plan and any Plan Enhancements, Transferor will provide to Transferee monthly reports on the operation of Transferor's Year 2000 Remediation Program, and on the status of its compliance with Transferor's Year 2000 Remediation Plan as modified by any Plan Enhancements including detailed updates on progress with respect to remediation of individual items thereon as requested. Between the date hereof and the Closing Date, Transferee shall have the right, at its own expense, to conduct such audits, inventories and surveys of Transferor's Computer and Other Systems as shall be reasonably necessary to determine such compatibility and confirm such compliance; provided, however, that such audits, inventories and surveys shall not disrupt the day to day dperations of any System and shall be scheduled at the same time as Transferor's Year 2000 Remediation Plan activities and otherwise as Transferor shall reasonably -52- 0 • agree. After the Closing Date, each of Time Warner and MediaOne shaII use commercially reasonable efforts to cooperate with the other concerning their respective Year 2000 Remediation Programs, including (i) the delivery of any non-confidential and non-privileged information requested by the other party concerning the Year 2000 Compliance of any material component of its Computer and Other Systems, and (ii) the transfer to the other party of any necessary equipment and materials, if any, for the remediation of Computer and Other Systems transferred by it to the other party, and (iii) the use of commercially reasonable efforts to allow and require its vendors and third-party service providers to assist and cooperate with the other party in connection with the remediation of Computer and Other Systems transferred to the other party. (i) Nothing contained in this Section 6.14 or elsewhere in this Agreement shall constitute any representation, warranty, covenant or guarantee that the Computer and Other Systems of either Party will be Year 2000 Compliant at the Closing Date or thereafter. i Section 6.15 Updated Schedules. Each of MediaOne and Time Warner will, prior to Closing, supplement the Schedules to this Agreement with additional information that, if existing or known to it on the date of this Agreement, would have been required to be included in one or more Schedules to this Agreement. For purposes of determining the satisfaction of any of the conditions to the obligations of Time Warner and MediaOne in Sections 7.1 and 7.2 and the liability of MediaOne or Time Warner following Closing for breaches of its representations and warranties under this Agreement, the Schedules to this Agreement will be deemed to include only (a) the information contained therein on the date of this Agreement and (b) information added to the Schedules by written supplements to this Agreement delivered prior to Closing by the party making such amendment that (i) are accepted in writing by the other party or (ii) reflect actions permitted by this Agreement to be taken prior to Closing. Section 6.16 Internet Services. Each of MediaOne and Time Warner acknowledges that (i) the MediaOne Systems presently are subject to a Master Affiliation Agreement between IvlediaOne Group, Inc. and ServiceCo, LLC, a Delaware limited liabihty company ("Scn iceco and (ii) the Time Warner Systems presently are subject to a Master Affiliation Agreement between TWI Cable, Inc. and ServiceCo (each an `IAffiliation Agreement'). Pursuant to the terms of their respective Affiliation Agreements, each of MediaOne and Time Warner are permitted to delete any cable systems upon the sale of such system. MediaOne agrees that, effective upon the Closing Date, it will cause its Affiliation Agreement with ServiceCo to be amended to (i) delete the MediaOne Systems from the Schedule 1 list of"Systems", and (ii) add the Time Warner Systems to Schedule I of its Affiliation Agreement for the remainder of the term of such agreement. Time Warner agrees that, effective upon the Closing Date, it will cause its Affiliation Agreement with ServiceCo to be amended to (a) delete the Time Warner Systems from the Schedule I list of"Systems", and (b) add the MediaOne Systems to Schedule 1 of its Affiliation Agreement for the remainder of the term of such agreement. Section 6.17 Nonconsent Franchises. I (a) If any Required Consent with respect to the transfer of a Systems Franchise has not been obtained on or prior to the'Closing Date (such Systems Franchise, a "Nonconsent Franchise"), the parties will continue to use their respective commercially -53- reasonable efforts after Closing to obtain such Required Consent(s) as promptly as practicable after Closing, and will otherwise treat any Nonconsent Franchise in accordance with the terms of this Section. Notwithstanding the absence, of a Required Consent with respect to a Systems Franchise, unless either party reasonably determines that such assignment would violate the terms of the applicable Nonconsent Franchise, any Systems Contract, Systems License or Legal Requirement or subject Transferee to liability under such Nonconsent Franchise, Systems Contract, Systems License or otherwise, Transferor will assign to Transferee at Closing all Systems Contracts and Systems Licenses :relating solely to, and all Tangible Personal Property, Owned Property and Real Property Interests located within the areas covered by, any Nonconsent Franchises, but Transferor will retain ownership of and legal title to any Nonconsent Franchises. To the extent not assigned at Closing, such Systems Contracts, Systems Licenses, Tangible Personal Property, Owned Property and Real Property Interests will be assigned simultaneously with the assignment of the Nonconsent Franchise, free and clear of all liens (except Permitted Liens). (b) Transferor and Transferee will execute and deliver a management agreement at Closing with respect to each such Nonconsent Franchise (the "Management Agreement"). Each Management Agreement will incorporate the following terms and such other terms as the parties will reasonably agree upon, acting in good faith: (i) Transferee will manage and operate the Nonconsent Franchise and the area, subscribers and Assets covered thereby in accordance with good business practices in the cable television industry and will use its commercially reasonable efforts to perform all actions necessary or appropriate to the management of the Nonconsent Franchise and its operation; (ii) Transferee will bear the expenses relating to such management and operations and retain the revenues derived therefrom, the net cash flow from the management and operation of such Nonconsent Franchise, or otherwise derived from or relating to such Nonconsent Franchise, being Transferee's sole compensation for managing and operating the Nonconsent Franchise and the area, subscribers and Assets covered thereby; (iii) Transferee will indemnify Transferor against Losses suffered or incurred by Transferor resulting from Transferee's material breach of the Nlanagemeut Agreement or Transferee's gross negligence or willful misconduct; (iv) the Management Agreement will automatically terminate upon subsequent transfer of the Nonconsent Franchise to Transferee; and (v) the term of the Management Agreement will be no more than five (5) years. Upon receipt of consent to transfer the Nonconsent Franchise, the same will be assigned to Transferee, free and clear of all Liens except Permitted Liens. (c) During the period Transferee is operating the Nonconsent Franchise under a Management Agreement, Transferor will not transfer legal title to, mortgage, pledge or otherwise encumber, any Nonconsent Franchise without the prior written consent of Transferee. (d) The parties agree to cooperate in the negotiation, execution and delivery of such signal sharing or similar agreements on commercially reasonable terms as may be necessary or appropriate due to the existence of a Nonconsent Franchise and any nontransfer of Tangible Personal Property or Owned Property associated therewith. (e) In the event that, on the fifth anniversary of the Closing Date, the Required Consent with respect to any Nonconsent Franchise has not been obtained, the parties will use -54- 0 commercially-reasonable efforts to negotiate a new management agreement or agree to other arrangements with respect to such Nonconsent Franchise. (f) In the event that either party reasonably determines that the provisions contemplated by clauses (a) through (e) of this Section 6.17 would violate the terms of the applicable Nonconsent Franchise, any Systems Contract which constitutes a Material MediaOne Contract or Material Time Warner Contract, any Systems License or any Legal Requirement or subjects Transferee or Transferor to liability under the foregoing, Transferor and Transferee shall cooperate with each other and use their respective commercially reasonable efforts to enter into such other arrangements that, to the extent feasible, prevent any violation of the terms of such Nonconsent Franchise, Systems Contract, Systems License or Legal Requirement yet preserve the intent of the parties as set forth in this Agreement with respect to the terms and conditions of the transactions contemplated thereby. Section 6.18 Environmental Reports. Transferee may elect, no later than 60 days after the date of this Agreement, to cause to be performed, at Transferee's expense, Phase I environmental site assessments of Transferor's Owned Property or Leased Property, to be performed by a nationally recognized environmental firm reasonably satisfactory to Transferee and Transferor. If the results of those assessments would cause a reasonable party to perform further investigation or testing, Transferee will cause to be performed Phase II environmental site assessments by the same firm, the cost of which Phase II environmental site assessments will be shared equally by Transferee and Transferor("Environmental Reports"). Such firm will complete the Phase I audits and any Phase II audits, and Transferee will deliver the Environmental Reports to Transferor, within 120 days of the date of this Agreement. If the Environmental Reports reveal that remediation action is required by Environmental Laws and the estimated remediation cost for all parcels of Transferor's Owned Property and Leased Property in the aggregate exceeds $5,000,000, then either party will have the right to terminate this Agreement. If the Environmental Reports reveal that remediation action is required b% Environmental Laws and (i) the estimated remediation cost for all parcels of Real Propei-t% ill the aggregate exceeds $150,000 but is not more than$5;000,000 or (ii) the estimated remediation cost for all parcels of Real Property in the aggregate exceeds 55,000,000 and neither party has terminated this Agreement, then Transferor will use,commercially reasonable efforts to perform such remediation action as soon as reasonably practicable in accordance with all Environmental Laws.. Section 6.19 Assumption of Social Contract. Time Warner has elected, subject to the FCC concurrence, to have the provisions of the Time Warner Social Contract apply after Closing to the MediaOne Systems; provided, however, that if the FCC does not concur with the foregoing, Time Warner will elect, subject to the FCC's concurrence, to have the provisions of the MediaOne Social Contract apply after Closing to the MediaOne Systems. No later than 60 days after the date hereof, each party will request such concurrence from the FCC. Each party will thereafter use its commercially reasonable efforts to obtain the FCC's concurrence thereto prior to Closing. Time Warner will not agree to any modification of the MediaOne Social Contract that improves any costs or obligations on MediaOne. After the Closing, Time Warner will post and maintain any bond required pursuant to the MediaOne SociaLContract with respect to IILG Liability. -55- Section 6.20 Knowledge of Breach of Representations. If either party has knowledge or obtains knowledge on or prior to the Closing Date that a representation or warranty of the other party is untrue, the first party will so notify in writing the second party of such circumstance. Each party covenants to the other that it will use commercially reasonable efforts to reach a resolution satisfactory to both parties of any such circumstance. Section 6.21 Certain Multiple Dwelling Unit Agreements. Not later than 45 days from the date of this Agreement, Transferor will provide to Transferee true and complete copies of each multiple-dwelling unit agreement and bulk service agreement with respect to buildings that have 200 or fewer units (the "200 &Under Contracts"), including in each case any amendments thereto together with a list setting forth each of Transferor's 200 & Under Contracts and indicating whether any consent is required to transfer such Contract to Transferee at Closing as part of the Assets. ARTICLE 7 CONDITIONS PRECEDENT Section 7.1 Conditions to MediaOne's Obliszations. The obligations of MediaOne to consummate the transactions contemplated by this Agreement will be subject to the following conditions, which may be waived by MediaOne: (a) Accuracy of Representations and Warranties. The representations and warranties of Time Warner in this Agreement and in any Transaction Document to which Time Warner is a party, if qualified by a reference to materiality, are true and, if not so qualified, are true in all material respects at and as of Closing with the same effect as if made at and as of Closing, except for changes, if any, pen-rutted or contemplated by this Agreement and except to the extent a different date is specified therein, in which case such representation and warranty will be true and correct as of such date. (b) Performance of Agreements. Time Warner has performed in all material respects all obligations and agreements and has complied in all material respects with all covenants in this Agreement and in any Transaction Document to be performed and complied with by it at or before Closing. (c) Officer's Certificate. MediaOne has received a certificate executed by an executive officer of Time Warner, dated as of Closing, reasonably satisfactory in form and substance to MediaOne, certifying that the conditions specified in Sections 7.1(a) and (b) have been satisfied (d) Legal Proceedings. There is no Legal Requirement, and no Judgment has been entered and not vacated by any Governmental Authority of competent jurisdiction in any Litigation or arising therefrom, which (i) enjoins, restrains, makes illegal or prohibits consummation of the transactions contemplated by this Agreement or by any Transaction -56- Document or(ii) requires separation or divestiture by MediaOne of al any significant portion of the Time Warner Assets after Closing, and there is no Litigation pending or threatened seeking, or which if successful would have the effect of, any of the foregoing. (e) Opinion of FCC Counselof FCC Counsel. MediaOne has received an opinion of Bryan Cave, special FCC counsel to Time Warner, dated as of Closing, in the form of Exhibit 7.1(e) ("Time Warner FCC Counsel Opinion"). (fl Time Warner Counsel Opinions. MediaOne has received the opinions of Mary Carroll Huey, counsel to Time Warner, dated as of Closing, in the form of Exhibit 7.1(fl (the "Time Warner Counsel Opinions"). (g) HSR Act Waiting Period. The waiting period under the HSR Act with respect to the transactions contemplated by this Agreement has expired or been terminated. (h) Consents. MediaOne has received evidence, in form and substance reasonably satisfactory to it, that all of the Time Warner Required Consents have been obtained. (i) No Material Adverse Material Adverse Change. There has been no material adverse change in the Time Warner Assets, or the financial condition or operations of the Time Warner Systems since the date of this,Agreement. 0) Title Defects. With respect to the Time Warner Systems, there exists no Title Defect which the Title Company has not deleted from the Title Commitments or, with the consent of MediaOne, committed to insure over with regard to any Real Property Interests for which title insurance was obtained, except as otherwise agreed pursuant to Section 6.5. (k) Em ironmental Assessments If any Environmental Reports performed with respect to the Time Wainer Owned Property or the Time Warner Leased Propert} rep Cal that remediation action is reasonably likely to be required by Environmental Laws and the estimated remediation cost with respect to any such remediation action for all such parcels in the aggregate (i) is at least $150,000 but is not more than 55,000,000 or (ii) exceeds 55,000,000 and neither MediaOne nor Time Warner has terminated this Agreement, then in each case, Time Warner has performed such remediation action to the reasonable satisfaction of MediaOne. (1) Documents and Records. Time Warner has made available to MediaOne (i) all existing blueprints, schematics, working drawings,plans, specifications, projections, statistics, engineering records, System construction and as-built maps and (ii) all customer lists, files and records used by Time Warner or the Time Warner Entity in connection with the operation of the Time Warner Systems, including a list of all pending subscriber hook-ups, disconnect and repair orders supply orders, and any other lists reasonably necessary to the operation of the Time Warner Systems. Delivery of,the foregoing will be deemed made to the extent such lists, files and records are then located at any of the offices included in the Time Warner Owned Property or Real Property Interests. -57- 0 0 (m) Individual Subscribers and Subscriber Equivalents. The number of Individual Subscribers and Subscriber Equivalents in the Time Warner Systems as of the last Business Day of the calendar month preceding the Closing Date (the "Pre-Closing Month Subscribers") is not less than 95% of the number of Individual Subscribers and Subscriber Equivalents in the Time Warner Systems as of the last Business Day of the thirteenth'calendar month preceding the Closing Date (the "Thirteenth Month Subscribers"). (n) Franchise Expirations. The Time Warner Systems Franchises listed on Schedule 7.1(o) that are scheduled to expire on or prior to December 31, 1999 (each, a "Time Warner Expiring Franchise") will have been renewed or extended on terms reasonably satisfactory to MediaOne. Notwithstanding the foregoing, this condition shall be deemed satisfied with respect to any Time Warner Expiring Franchise for which Time Warner obtains an extension if such extension provides that the Time Warner Expiring Franchise will expire on or after the later of(i) June 30, 2000 or (ii) one year after the scheduled expiration of such Time Warner Expiring Franchise as of the date of this Agreement, provided that there are no other material changes to the terms and conditions of such Time Warner Expiring Franchise. (o) Maximum Total Revenue Adjustment. Any Total Revenue Adjustment payable by Time Warner to MediaOne shall be less than $5,000,000. Section 7.2 Conditions to Time Warner's Obligations. The obligations of Time Warner to consummate the transactions contemplated by this Agreement will be subject to the following conditions, which may be waived by Time Warner: (a) Accuracy of Representations and Warranties. The representations and warranties of MediaOne in this Agreement and in any Transaction Document to which MediaOne is a party, if qualified by a reference to materiality, are true and, if not so qualified, are true in all material respects at and as of Closing with the same effect as if made at and as of Closing, except for changes, if any, permitted or contemplated by this Agreement and except to the extent a different date is specified therein, in which case such representation and warranty will be true and correct as of such date. (b) Performance of Agreements. MediaOne has performed in all material respects all obligations and agreements and complied in all material respects with all covenants in this Agreement and in any Transaction Document to be performed and complied with by it at or before Closing. (c) Officer's Certificate. Time Warner has received a certificate executed by an executive officer of MediaOne, dated as of Closing, reasonably satisfactory in form and substance to Time Warner, certifying that the conditions specified in Sections 7.2(a) and (b) have been satisfied. (d) Legal Proceedings. There is no Legal Requirement, and no Judgment has been entered and not vacated by any Governmental Authority of competent jurisdiction in any Litigation or arising therefrom, which (i) enjoins, restrains, makes illegal or prohibits consummation of the transactions contemplated hereby or by any Transaction Document or (ii) -58- 0 • requires separation or divestiture by Time Warner of all or any significant portion of the MediaOne Assets after Closing, and there is no Litigation pending or threatened seeking, or which if successful would have the effect of, any of the foregoing. (e) Opinion of FCC Counsel. Time Warner has received an opinion of Cole, Raywid and Braverman, special FCC counsel to MediaOne, dated as of Closing, in the form of Exhibit_7.2(e) ("MediaOne FCC Counsel Opinion").! (f) MediaOne Counsel Onion. Time Warner has received an opinion of James Shaughnessy, Esq., counsel to MediaOne, dated as of Closing, in the form of Exhibit 7.2 (the "MediaOne Counsel Opinion"). (g) HSR Act Waiting Period. The waiting period under the HSR Act with respect to the transactions contemplated by this Agreement has expired or been terminated. (h) Consents. Time Warner has received evidence, in form and substance reasonably satisfactory to it, that all of the MediaOne Required Consents have been obtained. (i) No Material Adverse Change. There has been no material adverse change in the MediaOne Assets or the financial condition or operations of the MediaOne Systems since the date of this Agreement. (j) Title Defects. With respect to the MediaOne Systems, there exist no Title Defect which the Title Company has not deleted from the Title Commitments or, with the consent of Time Warner, committed to insure over with regard to any Real Property Interests for which title insurance was obtained, except as otherwise agreed pursuant to Section 6.5 . (k) Environmental Assessments. If any Envirornnental Reports performed with respect to the MediaOne Owned Property or the MediaOne Leased Property re%eal that remediation action-is reasonably likely to be required by Environmental Laws and the estimated remediation cost with respect to any such remediation action for all such parcels in the aggregate (i) is at least$150,000 but is not more than $5,000,000 or (ii) exceeds $5,000,000 and neither MediaOne nor Time Warner has terminated this Agreement, then in each case, MediaOne has performed such remediation action to the reasonable satisfaction of Time Warner. (1) Documents and Records. MediaOne has made available to Time Warner (i) all existing blueprints, schematics, working drawings, plans, specifications, projections, statistics, engineering records, System construction;and as-built maps relating to the MediaOne Systems and(ii) all customer lists, files and records used by MediaOne in connection with the operation of the MediaOne Systems, including a list of all pending subscriber hook-ups, disconnect and repair orders, supply orders and any other lists reasonably necessary to the operation of the MediaOne Systems. Availability of the foregoing will be deemed made to the extent such lists, files and records are then located at any of the offices included in the MediaOne Owned Property or Real Property Interests. 59 (m) Individual Subscribers and Subscriber Equivalents. The Pre-Closing Month Subscribers of MediaOne are not less than 95% of the Thirteenth Month Subscribers of MediaOne. (n) Franchise Expirations. The MediaOne Systems Franchises listed on Schedule 7.2(0) that are scheduled to expire on or prior to December 31, 1999 (each, a "MediaOne Expiring Franchise") will have been renewed or extended on terms reasonably satisfactory to Time Warner. Notwithstanding the foregoing, this condition shall be deemed satisfied with respect to any MediaOne Expiring Franchise for which lvlediaOne obtains an extension if such extension provides that the MediaOne Expiring Franchise will expire on or after the later of(i) June 30, 2000 or (ii) one year after the scheduled expiration of such MediaOne Expiring Franchise as of the date of this Agreement, provided that there are no other material changes to the terms and conditions of such MediaOne Expiring Franchise. (o) Maximum Total Revenue Adjustment. Any Total Revenue Adjustment payable by MediaOne to Time Warner shall be less than $5,000,000. (p) FCC Concurrence. The FCC will have taken all necessary action to permit Time Warner to have either the provisions of the Time Warner Social Contract or the MediaOne Social Contract apply after Closing to the MediaOne Systems. (q) Billing Conversions. MediaOne shall have completed in all material respect the billing systems conversions set forth on Schedule 6.9. Section 7.3 Optional Closing Conditions. Notwithstanding anything to the contrary in Sections 7.1 and 7.2, Sections 7.1(h) and 7.2(h) shall be deemed to have been satisfied if(i) the following Required Consents have been obtained, (ii) all of the MediaOne Required Consents and Time Warner Required Consents designated by two asterisks on Schedules 4 3 and _. as appropriate, to this Agreement have been obtained and (iit) either party notifies the other In writing of its willingness to close without all Required Consents having been obtained: (a) Systems Licenses i. all Time Warner Required Consents required under the Time Warner Systems Licenses will have been obtained; ii. all MediaOne Required Consents required under the MediaOne Systems Licenses will have been obtained; (b) Franchise Consents. i. a sufficient number of Time Warner Required Consents required under the Time Warner Systems Franchises will have been obtained such that the aggregate number of Individual Subscribers and Subscriber Equivalents covered by Time Warner Systems Franchises (A) as to which Time Warner Required Consents have been obtained in accordance with the terms of Section 6.1(h) plus (B) that do not require Time Warner Required Consents, -60- ® • will equal at least 95% of the aggregate number of Individual Subscribers and Subscriber Equivalents covered by all Time Warner Systems Franchises as of the last full month immediately preceding any such determination; ii. a sufficient number of MediaOne Required Consents required under the MediaOne Systems Franchises will have been obtained such that the aggregate number of Individual Subscribers and Subscriber Equivalents covered by MediaOne Systems Franchises (A) as to which MediaOne Required Consents have obtained in accordance with the terms of Section 6.1(h) plus (B) that do not require MediaOne Required Consents, will equal at least 95% of the aggregate number of Individual Subscribers and Subscriber Equivalents covered by all MediaOne Systems Franchises as of the last full month immediately preceding any such determination; iii. MediaOne and Time Warner will have entered into the arrangements contemplated by Section 6.17 with respect to any Nonconsent Franchises. I (c) Pole Attachment Consents. i. a sufficient number of Time Warner Required Consents required under pole line and joint line agreements included in the Time Warner Systems Contracts (collectively, the "Time Warner Pole Agreements") will have been obtained such that the aggregate number of poles attached pursuant to the Time Warner Pole Agreements (A) as to which Time Warner Required Consents have been obtained in accordance with the terms of Section 6.1(h) and (B) that do not require Time Warner Required Consents, will equal at least 70% of the aggregate number of poles attached pursuant to all of the Time Warner Pole Agreements; and ii. a sufficient number of MediaOne Required Consents required under pole line and joint line agreements included in the NledtaOne Systems Contracts (collectively, the "MediaOne Pole Agreements") will have been obtained such that the aggregate number of poles attached pursuant to the MediaOne Pole Agreements (A) as to which MediaOne Required Consents have been obtained in accordance with the terms of Section 6.1(h) and (B) that do not require MediaOne Required Consents, will equal at least 70% of the aggregate number of poles attached pursuant to all of the MediaOne Pole Agreements. ARTICLE 8 CLOSING Section 8.1 losin • Time and Place. The closing of the transactions contemplated by this Agreement("Closing") will take place at a time and location mutually determined by Time Warner and MediaOne on the third Business Day of the calendar month following the month during which all conditions set forth in Sections 7.1 and 7.2 have either been satisfied or waived in writing by the party entitled to the benefit of each such condition unless such conditions have -61-� not been so satisfied or waived by the fifth Business Day preceding the last Business Day of such calendar month, in which case the Closing will take place on the third Business Day of the next calendar month (unless the parties otherwise agree). In no event will the Closing occur later than January 3, 2000 (the "Outside Closing Date"). Section 8.2 Time Warner's Obligations. At Closing, Time Warner will deliver or cause to be delivered to MediaOne the following: (a) Cash Purchase Price. The Cash Purchase Price, if any, payable to MediaOne after adjustment pursuant to Sections 2.5, 2.7 and 2.8 by wire transfer of immediately available funds to the account designated by MediaOne. (b) Closing Adjustment Amount. The agreed estimated Closing Adjustment Amount, if it favors MediaOne, by wire transfer of immediately available funds to the account designated by MediaOne. (c) Bill of Sale and Assi"nment and Assumption Agreement. The executed Bill of Sale and Assignment and Assumption Agreements in the form of Exhibit 8.2(c), with such modifications, if any, as may be necessary or advisable to cause such forms to be effective under applicable law. (d) Vehicle Titles. Title certificates to all vehicles included among the Time Warner Assets, endorsed for transfer of title to MediaOne, and separate bills of sale therefor, if required by the laws of the States in which such vehicles are titled. (e) Deeds. Special warranty deeds, in form and substance reasonably satisfactory to MediaOne, conveying to MediaOne, subject only to the exceptions reflected on the Time Warner Title Policies, each parcel of the Time Warner Owned Property. (f) Title Policies. ALTA Form B (1997 Rev.) owner's and leasehold policies of title insurance, insuring MediaOne's fee or leasehold title in each parcel of the Time Warner Owned Property or Leased Property marked by an asterisk on Schedule 2.1(b)(i)(B) endorsed to delete or modify to the satisfaction of MediaOne the standard printed exceptions and any Title Defects (the "Time Warner Title Policies"), or the irrevocable written commitment of the Title Company to deliver the Time Warner Title Policies. (g) Officer's Certificate. The certificate described in Section 7.1(c); (h) Time Warner FCC Counsel Opinion. The Time Warner FCC Counsel Opinion. (i) Time Warner Counsel Opinion. The Time Warner Counsel Opinions. 0) Estoppel Certificates. Any Time Warner Estoppel Certificates obtained pursuant to Section 6.1(k).• -62- (k) Lien Pleases. Evidence satisfactory to Media(Jne that all Liens (other than Permitted Liens) affecting or encumbering the Time Warner Assets have been terminated, released or waived, as appropriate, or original, executed instruments in form satisfactory to MediaOne effecting such terminations, releases or waivers. (1) FIRPTA Certificate. A FIRPTA Non-Foreign Seller Certificate certifying that Time Warner is not a foreign person within the meaning of Section 1445 of the Code, satisfactory in form and substance to MediaOne. (m) Other. Such other documents and instruments as may be necessary to effect the intent of this Agreement and consummate the transactions contemplated hereby. Section 8.3 MediaOne's Obligations. At Closing, except as otherwise provided below, MediaOne will deliver or cause to be delivered to Time Warner the following: (a) Cash Purchase Price. The Cash Purchase Price, if any, payable to Time Warner-after adjustment pursuant to Sections 2.5, 2.7 and 2.8 by wire transfer of immediately available funds to the account designated by Time Warner. (b) Closing Adjustment Amount. The agreed estimated Closing Adjustment Amount, if it favors Time Wagner, by wire transfer of immediately available funds to the account designated by Time Warner. (c) Bill of Sale and Assignment and Assumption Agreements. The executed Bill of Sale and Assignment and Assumption Agreements in the form of Exhibit S.3(c), with such modifications, if any, as may be necessary or advisable to cause such forms to be effective under applicable law. (d) Vehicle Titles. Title certificates to all �chides included among the MediaOne Assets, endorsed for transfer of title to Time Warner, and separate bills of sale therefor, if required by the laws of the States in which such vehicles are titled. (e) Deeds. Special warranty deeds, in form and substance reasonably satisfactory to Time Warner, conveying to Time Warner, subject only to the exceptions reflected on the MediaOne Title Policies, each parcel of the MediaOne Owned Property. (f) Title Policies. ALTA Form B (1997 Rev.) owner's and leasehold policies of title insurance, insuring Time Warner's fee or leasehold title in each parcel of the MediaOne Owned Property and Leased Property marked by an asterisk on Schedule 2.1(b)(ii)W, endorsed to delete or modify to the satisfaction of Time Warner the standard printed exceptions and any Title Defects (the "MediaOne Title Policies"), or the irrevocable written commitment of the Title Company to deliver the MediaOne Title Policies. (g) Officer's Certificate. The certificate described in Section 7.2(c). (h) MediaOne FCC Counsel Opinion. The MediaOne FCC Counsel Opinion. -63-I • • (i) MediaOne Counsel Opinion. The MediaOne Counsel Opinion. 0) Estoppel Certificates. Any MediaOne Estoppel Certificates obtained pursuant to Section 6.1(k). (k) Lien Releases. Evidence satisfactory to Time Warner that all Liens (other than Permitted Liens) affecting or encumbering the MediaOne Assets have been terminated, released or waived, as appropriate, or original, executed instruments in form satisfactory to Time Warner effecting such terminations, releases or waivers. (1) FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate certifying that MediaOne is not a foreign person within the meaning of Section 1445 of the Code, reasonably satisfactory in form and substance to Time Warner. (m) Other. Such other documents and instruments as may be necessary to effect the intent of this Agreement and consummate the transactions contemplated hereby. ARTICLE 9 TERMINATION AND DEFAULT Section 9.1 Termination Events. This Agreement may be terminated and the transactions contemplated hereby may be abandoned: (a) at any time, by the mutual agreement of MediaOne and Time Warner; (b) by either INlediaOne or Time Warner, at any time, if the other is in material breach or default of its respective covenants, agreements, representations, or other obligations herein or in any Transaction Document and such breach or default has not been cured within 30 days after receipt of written notice or such longer period or as may be reasonably required to cure such default; provided, however, if any covenant, agreement, representation or other obligation in this Agreement is qualified by a reference to materiality, such qualifier will be used without duplication. (c) by either MediaOne or Time Warner, upon written notice to the other, if any of the conditions to its obligations set forth in Sections 7.1 and 7.2, respectively, have not been satisfied on or before the Outside Closing Date, for any reason other than a material breach or default by such party of its respective covenants, agreements, or other obligations hereunder, or any of its representations herein not being true and accurate in all material respects when made or when otherwise required by this Agreement to be true and accurate in all material respects. (d) by either MediaOne or Time Warner, upon written notice to the other, if any of the conditions to its'obligations set forth in Sections 7.1 or 7.2, respectively, have not been satisfied on or before July 1, 2000. -64- 0 0 (e) by either MediaOne or Time Warner, upon written notice to the other, pursuant to Sections 6.1(g), 6.14(g) or 11.15. Section 9.2 Effect of Termination. If this Agreement is terminated pursuant to Section 9.1, all obligations of the parties hereunder will terminate, except for the obligations set forth in Sections 6.4, 11.1 and 11.2. Termination of this Agreement pursuant to Sections 9.1(b) or (c) will not limit or impair any remedies that either Time Warner or MediaOne may have with respect to a breach or default by the other of its covenants, agreements or obligations hereunder. ARTICLE 10 INDEMNIFICATION Section 10.1 Indemnification by Time Wainer. From and after Closing, Time Warner will indemnify and hold harmless MediaOne and its,Affiliates, partners, officers, employees, agents and representatives, and any Person claiming'by or through any of them, as the case may be, from and against any and all Losses arising out of or resulting from: (a) any representations and warranties made by Time Warner in this Agreement or in any Transaction Document not being true and accurate in all respects, when made or at Closing, provided that indemnification under this paragraph is sought within the time periods and in the manner stated in Section 10.5; (b) any failure by Time Warner to perform in all respects any of its covenants, agreements, or obligations in this Agreement or in any Transaction Document; (c) other than with respect to MedhaOne Assumed Liabilities, the o%�ncrship or operation of the Time Warner Assets or the Time,Warner Systems prior to the Closing Time; (d) all liabilities of Time Warner or relating to the Time Warner Systems that are not MediaOne Assumed Liabilities; (e) except as may constitute MediaOne Assumed Liabilities, any rate refund liability.to subscribers of the Time Warner Systems arising out of or attributable to rates for cable service to subscribers charged by Time Warner prior to the Closing Time and any losses arising out of or attributable to Time Warner's failure to fully and timely perform its obligations under the Time Warner Social Contract that are required to be performed prior to the Closing Time; (f) the Time Warner Assumed Liabilities; (g) except as otherwise provided pursuant to Section 6.17, all commercially reasonable payments, costs or expenses incurred by MediaOne in obtaining any Post-Closing Required Consents that is a Time Warner Required Consent; -65 0 (h) any claim by a Governmental Authority that, other than with respect to the transactions contemplated by this Agreement, Time Warner or any of its Affiliates, in connection with any pre-Closing reorganization, change in control, acquisition or other transfer of any Time Warner Systems Franchise, has failed to obtain any necessary consent or approval required by any such Time Warner Systems Franchise:; (i) any and all Taxes imposed on or with respect to the Time Warner Assets or the operation or activities of the Time )Varner Systems for any pre-Closing period; 0) any and all Taxes imposed on or with respect to the MediaOne Assets or the operation or activities of the MediaOne Systems for any post-Closing period; (k) fees for which Time Warner is liable pursuant to Section 11.2; and (1) claims, including for the cost of remediation, resulting from actual or threatened emissions, discharges or releases of Hazardous Substances originating from the Time Warner Leased Property located at 923 Elnora Drive, Marietta, Georgia into ambient air, surface or ground water or land; provided, however, that Time Warner shall have no indemnification obligation under this Section 10.1(1) for: (i) claims attributable to changes after the Closing Date in applicable Environmental Laws or in enforcement policies of applicable Governmental Authorities; and (ii) claims resulting, directly or indirectly, from any act or omission of MediaOne. If, by reason of the claim of any third party relating to any of the matters subject to such indemnification, a Lien is placed or made upon any of the properties or assets owned or leased by MediaOne or any other Indemnitee under this Section, in addition to any indemnity obligation of Time Warner under this Section, Time Warner will furnish a bond sufficient to obtain the prompt release thereof within 10 days after receipt from MediaOne of notice thereof Section 10.2 Indemnification by MediaOne. From and after Closing, MediaOne will indemnify and hold harmless Time Warner, its Affiliates, officers and directors, employees, agents and representatives, and any Person claiming by or through any of them, as the case may be, from and against any and all Losses arising out of or resulting from: (a) any representations and warranties made by MediaOne in this Agreement or in any Transaction Document not being true and accurate in all respects when made or at Closing, provided that indemnification under this paragraph is sought within the time periods and in the manner stated in Section 10.5; (b) any failure by MediaOne to perform in all respects any of its covenants, agreements, or obligations in this Agreement or in any Transaction Document; (c) other than with respect to Time Warner Assumed Liabilities, the ownership or operation of the MediaOne Assets or the MediaOne Systems prior to the Closing Time; -66- 0 0 (d) all liabilities of MediaOne or relating to the MediaOne Systems that are not Time Warner Assumed Liabilities; (e) except as may constitute Time Warner Assumed Liabilities, any rate refund liability to subscribers of the MediaOne Systems arising out of or attributable to rates for cable service to subscribers charged by MediaOne prior to the Closing Time and any losses arising out of or attributable to MediaOne's failure to fully and timely perform its obligations under the MediaOne Social Contract that are required to be performed prior to the Closing Time; (f) the MediaOne Assumed Liabilities; (g) except as otherwise provided in Section 6.17, all commercially reasonable payments, costs or expenses incurred by Time Warner in obtaining any Post-Closing Required Consent that is a MediaOne Required Consent; (h) any claim by a Governmental Authority that, other than with respect to the transactions contemplated by this Agreement, MediaOne or any of its Affiliates, in connection with any pre-Closing reorganization, change in control or acquisition or other transfer of any MediaOne Systems Franchise, has failed to obtain any necessary consent or approval required by any such MediaOne Systems Franchise; (i) any and all Takes imposed on or with respect to the MediaOne Assets or the operation or activities of the MediaOne Systems for any pre-Closing period; 0) any and all Taxes imposed on or with respect to the Time Warner Assets or the operation or activities of the Time Warner Systems for any post-Closing period; and (k) fees for which MediaOne is liable pursuant to Section 11.'_'. If, by reason of the claim of any third party relating to any of the matters subject to such indemnification, a Lien is placed or made upon any of the properties or assets owned or leased by Time Warner or any other Indemnitee under this Section, in addition to any indemnity obligation of MediaOne under this Section, MediaOne will furnish a bond sufficient to obtain the prompt release thereof within 10 days after receipt from Time Warner of notice thereof. Section 10.3 Procedure for Certain Indemnified Claims. Promptly after receipt by a party entitled to indemnification hereunder(the "Indemniee") of written notice of the assertion or the commencement of any Litigation with respect to any matter referred to in Sections 10.1 or 10.2 or the assertion by any Governmental Authority of a claim of noncompliance under any Franchise relating, in whole or in part, to any pre-Closing period (a "Franchise Matter"), the Indemnitee will give written notice thereof to the party from whom indemnification is sought pursuant hereto (the "Indemnitor") and thereafter will keep the Indemnitor reasonably informed with respect thereto provided, however, that failure'Iof the Indemniee to give the Indemnitor notice as provided herein will not relieve the Indemnitor of its obligations hereunder, except to the extent that such failure to give notice will prejudice any defense or claim available to the Indemnitor. The Indemnitor will be entitled to assume the defense of any such Litigation or -67-I 0 Franchise Matter with counsel reasonably satisfactory to the Indemnitee, at the Indemnitor's sole expense. If the Indemnitor assumes the defense of any Litigation or Franchise Matter, it will not settle the Litigation or Franchise Matter unless the settlement will include as an unconditional term thereof the giving by the claimant or the plaintiff of a release of the Indemnitee, satisfactory to the Indemnitee, from all liability with respect to such Litigation or Franchise Matter. If the Indemnitor does not assume the defense of any Litigation or Franchise Matter, the Indemnitor will nevertheless provide reasonable cooperation to the Indemnitee in the defense of such Litigation or Franchise Matter, and any settlement of such Litigation or Franchise Matter will be on terms reasonable satisfactory to the Indemnitor. Section 10.4 Determination of Indemnification Amounts and Related Matters. (a) Time Warner and MediaOne will have no liability under Sections 10.1(a) and 10.2(a), respectively, unless, and only to the extent that the aggregate amount of Losses otherwise subject to its indemnification obligations thereunder exceeds $150,000 (the "Minimum Damage Requirement"); provided that the Minimum Damage Requirement will not apply to any Losses resulting from or arising out of(i) the failure by Time Warner or MediaOne, as applicable, to pay any tax or franchise or other fee to any Governmental Authority when due or any other breach of such party's representations, warranties, covenants or agreements with respect to tax matters contained in this Agreement, and (ii) the failure by Time Warner or MediaOne as applicable to pay any copyright payments, including interest and penalties thereon, when due or any other breach of such parties' representations, warranties, covenants or agreements with respect to copyright payments contained in this Agreement. Time Warner and MediaOne will have no liability under Sections 10.1(a) and 10.2(a), respectively, to the extent that the aggregate amount of Losses otherwise subject to its indemnification obligations hereunder exceeds $15,000,000. (b) Amounts payable by the Indemnitor to the Indemnitee in respect of any Losses under Sections 10.1 or 10._ will be payable by the Indemnitor as incurred by the Indemnitee, and will bear interest at the rate per annum publicly announced from time to time by The Bank of New York as its prime rate plus 2% from the date the Losses for which indemnification is sought were incurred by the Indemnitee until the date of payment of indemnification by the Indemnitor. Section 10.5 Time and Manner of Certain Claims. The indemnification obligations and remedies set forth in this Article 10 are intended to be the sole and exclusive remedy of the parties with respect to the matters for which indemnification may be sought pursuant to Sections 10.1 or 10.2 or elsewhere in this Agreement. The representations and warranties of MediaOne and Time Warner in this Agreement and any Transaction Document will survive Closing for a period of 24 months. Notwithstanding the foregoing, (i) the liability of the parties will extend beyond the 24-month period following Closing with respect to any claim which has been asserted in a written notice before the expiration of such 24-month period, (ii) all such representations and warranties with respect to any federal, state or local taxes (Sections 4.9 and 5.9), with respect to any FCC or Copyright matters (Sections 4.11 and 5.11) and with respect to any environmental matters (Sections 4.15 and 5.15) will survive until the expiration of the applicable statute of limitations, (iii) the representations, covenants and agreements of the parties -68- in this Agreement and in the Transaction Documents with respect to title to Assets will survive Closing and will continue in full force and effect without limitation, (iv) the indemnity obligations of Time Warner pursuant to Section 10.1(1) will survive Closing and will continue in fall force and effect for a period ending five years after the Closing Date; and (v) other covenants and agreements that by their terns cannot be performed within 24 months will survive until fully performed. Section 10.6 Other Indemnification. The provisions of Sections 10.3, 10.4 and 10.5 will be applicable to any claim for indemnification made under any other provision of this Agreement, and all references in Sections 10.3, 10.4'and 10.5 to Sections 10.1 and 10.2 will be deemed to be references to such other provisions of this Agreement. ARTICLE 11 MISCELLANEOUS PROVISIONS Section 11.1 Expenses. Except as otherwise provided in Section 11.2 and 11.14 or elsewhere in this Agreement, each of the parties will pay its own expenses (including any expenses related to such parly's use of a qualified intermediary) and the fees and expenses of its counsel, accountants, and other experts in connection with this Agreement. Section 11.2 Brokers. Time Warner will indemnify and hold MediaOne harmless from and against any and all Losses arising from any employment by it of, or services rendered to it by, any finder, broker, agency or other intermediary, in connection with the transactions contemplated hereby, or any allegation of any such employment or services. MediaOne will indemnify and hold Time Warner harmless from and against any and all Losses arising from any employment by it of, or services rendered to it by, any finder, broker, agency or other intermediary, in connection with the transactions contemplated hereby, or any allegation of any such employment or services. Notwithstanding anything to the contrary in this Section 11.2. the parties will share equally in the fees charged by Waller Capital in conjunction with this transaction. Section 11.3 Waivers. No action taken pursuant to this Agreement, including any investigation by or on behalf of any party hereto, will be deemed to constitute a waiver by the party taking the action of compliance with any representation, warranty, covenant or agreement contained herein or in any Transaction Document. The waiver by any party hereto of any condition or of a breach of another provision of this Agreement or any Transaction Document will be in writing and will not operate or be construed as a waiver of any other condition or subsequent breach. The waiver by any party of any,of the conditions precedent to its obligations under this Agreement will not preclude it from seeking redress for breach of this Agreement other than with respect to the condition so waived. Section 11.4 Notices. All notices, requests, demands, applications, services of process and other communications which are required to b or may be given under this Agreement or any Transaction Document will be in writing and will be deemed to have been duly given if sent by telecopy or facsimile transmission, answer back,requested, or delivered by courier or mailed, -69 0 certified first class mail, postage prepaid, return receipt requested, to the parties at the following addresses: To Time Warner: c/o Time Warner Cable 290 Harbor Drive Stamford, CT 06902-6732 ATTN: Bonnie J. Blecha Fax: (203) 328-4828 Phone: (203) 328-0623 Copies: Legal Department Time Warner Cable 290 Harbor Drive Stamford, CT 06902-6732 ATTN: Marc Apfelbaum, Esq. Fax: (203) 328-4804 Phone: (203) 328-0631 Copies: Holland &Hart LLP 55.5 Seventeenth Street Suite 3200 P.O. Box 3309 Denver, CO 80202 80201 (mail) ATTN: Davis O. O'Connor, Esq. Fax: (303) 295-8261 Phone: (303) 295-8081 To MediaOne: c/o MediaOne 188 Inverness Drive West Englewood, CO 80112 ATTN: Executive Vice President -- Strategy and Business Development Fax: (303) 858-3468 Phone: (303) 858-3400 Copies: Legal Department MediaOne Group, Inc. 188 Inverness Drive West Englewood, CO 80112 ATTN: General Counsel Fax: (303) 858-5834 Phone: (303) 858-3400 -70- 0 0 or to such other address as any party will have furnished to the other by notice given in accordance with this Section. Such notice will be effective, (i) if delivered in person or by courier, upon actual receipt by the intended recipient, or(ii) if sent by telecopy or facsimile transmission, confirmation of transmission received;or(iii) if mailed, upon the earlier of five days after deposit in the mail and the date of delivery as shown by the return receipt therefor. Section 11.5 Entire Agreement; Prior Representations; Amendments. This Agreement embodies the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior representations, agreements and understandings, oral or written, with respect thereto. Notwithstanding any representations which may have been made by either party in connection with the transactions contemplated by this Agreement, each party acknowledges that (i) it has not relied on any representation by the other party with respect to such transactions, the Assets, or the System except those contained in this Agreement, the Schedules or the Exhibits hereto and (ii) its execution of this Agreement specifically precludes any negligent misrepresentation or other claims by it based on any representation made by the other party which is not contained in this Agreement, the Schedules or the Exhibits hereto. This Agreement may not be modified orally, but only by an agreement in writing signed by the party or parties against whom any waiver, change, amendment, modification or discharge may be sought to be enforced. Section 1I.6 Specific Performance: Other Rights and Remedies. (a) The parties recognize that their rights under this Agreement are unique and, accordingly, the parties will, in addition to such other remedies as may be available to any of them at law or in equity, have the right to enforce their rights hereunder by actions for injunctive relief and specific performance to the extent permitted by applicable law so long as the party seeking such relief is prepared to consummate the transactions contemplated hereby and the transactions will be accomplished in a manner that',qualifies as a like-kind exchange under Section 1031 of the. Code. The parties agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach of the provisions of this Agreement and hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate. The parties waive any requirement for security or the posting of any bond or other surety in connection with any temporary or permanent award or injunctive, mandatory or other equitable relief. (b) In the event of any claim, dispute and controversy of any nature between MediaOne and Time Warner arising out of or in connection with this Agreement, or the negotiation, execution, delivery, performance, nonperformance or breach thereof(collectively, a "Dispute"), MediaOne and Time Warner will consult and negotiate with each other in good faith and otherwise use their respective commercially reasonable efforts to settle such Dispute within a 45-day period after the Dispute first arises. Such 45-day period will commence with respect to any Dispute on the date written notice invoking the provisions of this Section 11.6(b) is first given by one party to the other with respect to such Dispute. If the Dispute is not resolved or settled within such 45-day period then, upon written notice by either party to the other, the Dispute will be resolved by binding arbitration in Denver, Colorado or New York, New York in accordance with Title 9 of the U.S. Code (United States Arbitration Act) and the Commercial Arbitration Rules of the American Arbitration Association ("AAA"), as they may be amended I -71r 0 from time to time and as modified by this Agreement or decision of a majority of the arbitrators. The party requesting arbitration will select the location of the arbitration. MediaOne and Time Warner intend that arbitration be the sole remedy available as to matters arbitrable hereunder. An arbitration award rendered by the arbitrators will be final and binding on MediaOne and Time Warner and may be filed with any court having jurisdiction over MediaOne and Time Warner or their property as a basis of declaratory or other judgment and of the issuance of execution. (c) Unless otherwise agreed, any party requesting arbitration hereunder will do so within 15 days after the expiration of 45-day negotiation period, and failure by either party to request arbitration within such period will thereafter bar such Dispute in any forum whatsoever. When a party timely requests arbitration hereunder, the Dispute will be resolved by a panel of three neutral arbitrators to be se lected as follows: the party requesting the arbitration will, incident to giving the notice of arbitration, also notify the other party of the name of an arbitrator selected from a list of qualified persons supplied by the AAA, and the other party will, within 20 days after receipt of such notice, notify the party requesting arbitration of the name of an arbitrator it has selected from such list. The two arbitrators will, within 20 days after notification of the identity of the second arbitrator, choose a third arbitrator. (d) The Commercial Arbitration Rules of the AAA and decisions by a majority of the arbitration panel will detennine the rules governing admissibility of evidence and the rules of procedure and discovery. The action of a majority of the arbitration panel will govern all actions by the panel, and the arbitrators will render their decision promptly but in no event more than 60 days after the conclusion of submission of evidence. The arbitration award will be in writing and will specify factual and legal basis for the award. Either parry may make application to the arbitration panel seeking, injunctive relief to maintain the status quo until such time as the arbitration award is rendered or the Dispute is otherwise resolved. The arbitration panel will have the authority to award any remedy or relief that a court of the State of Colorado or the State of New York could order or grant, including specific performance of any obligation created under the Agreement, issuance of an injunction or money damages, but excluding punitive, incidental or consequential damages. (e) Each party will pay the fees and expenses of the arbitrator selected by it and one-half of the reasonable fees and expenses of the third arbitrator. All other fees and expenses of each party incurred in connection with the arbitration will be paid as determined by the arbitrators. Section 11.7 Binding Effect: Benefits. This Agreement will inure to the benefit of and will be binding upon the parties hereto and their respective heirs, legal representatives, successors, and permitted assigns. Neither MediaOne nor Time Warner will assign this Agreement or delegate any of its duties hereunder to any other Person without the prior written consent of the other; provided, however, that (i) pursuant to Section 3.6, each of MediaOne and Time Warner may assign this Agreement to one or more qualified intermediaries for the purposes of one or more 1031 Exchanges and (ii) either party may assign this Agreement to an Affiliate that has, in the other party's reasonable estimation, the financial capability to perform the duties and fulfill the obligations of such party as set forth in this Agreement if, following the filing of the FCC Forms 394 contemplated by Section 6.1(h), such assignment would not require the filing of any new FCC Form 394 in connection therewith or any extension of the 120-day review -72- 0 period with respect to any previously filed FCC Form 394. For purposes of this Section, any change in control of MediaOne or Time Warner will not constitute an assignment by it of this Agreement. Section 11.8 Headings and Schedules. The section and other headings contained in this Agreement are for reference purposes,only and will not affect the meaning or interpretation of this Agreement. Reference to Schedules will, unless otherwise indicated, refer to the Schedules attached to this Agreement, which will be incorporated in and constitute a part of this Agreement by such reference. Section 11.9 Counterparts. This Agreement may be executed in any number of counterparts, each of which, when executed, will be deemed to be an original and all of which together will be deemed to be one and the same instrument. Section 11.10 Governing Law. THE VALIDITY, PERFORMANCE, AND ENFORCEMENT OF THIS AGREEMENT AND ALL TRANSACTION DOCUMENTS, UNLESS EXPRESSLY PROVIDED TO THE CONTRARY, WILL BE GOVERNED BY THE LAWS OF-THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE. Section 11.11 Severabilitv. Any term or provision of this Agreement which is invalid or unenforceable will be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining rights of the Person intended to be benefited by such provision or any other provisions of this Agreement. Section 11.12 Third Parties: Joint Ventures. This Agreement constitutes an agreement solely among the parties hereto, and, except as otherwise provided herein, is not intended to and will not confer any rights, remedies, obligations, or liabilities, legal or equitable, including any right of employment, on any Person other than the parties hereto and their respective successors. or assigns, or otherwise constitute any Person.a third party beneficiary under or by reason of this Agreement. Nothing in this Agreement, expressed or implied, is intended to or will constitute the parties hereto partners or participants in a joint venture. ,Section 11.13 Construction. This Agreement has been negotiated by MediaOne and Time Warner and their respective legal counsel, and legal or equitable principles that might require,the construction of this Agreement or any provision of this Agreement against the party drafting this Agreement will not apply in any construction or interpretation of this Agreement. Section 71.14 Attorneys' Fees. If any Litigation between Time Warner and MediaOne :with respect to this Agreement or the transactions contemplated hereby will be resolved or adjudicated by a Judgment of any court, the party prevailing under such Judgment will be entitled, as part of such Judgment, to recover from the other party its reasonable attorneys' fees and costs and expenses of litigation. Section1L15 RiskofLoss. 73_ (a) Transferor will bear the risk of any loss or damaged Transferor's Assets resulting from fire, theft or other casualty (except reasonable wear and tear) at all times prior to Closing through and including the Closing Date. In the event any such loss or damage occurs, Transferor will use its commercially reasonable efforts to replace or restore such loss,or damaged property as soon as practicable. If any such loss or damage is equal to or greater than $5,000,000 and is sufficiently substantial so as to preclude and prevent resumption of normal operations of any material portion of a System by the Outside Closing Date, Transferor will immediately notify Transferee in writing of that fact (which notice will specify with particularity the loss or damage incurred, the cause thereof if known or reasonably ascertainable, and the insurance coverage related thereto), and Transferee, at any time within ten (10) days after receipt of such notice, may elect by written notice to Transferor, to either(i) waive such defect and proceed toward consummation in accordance with terms of this Agreement or (ii) terminate this Agreement. If Transferee elects so to terminate this Agreement, Transferor will be discharged of any and all obligations hereunder. If Transferee elects to consummate the transactions contemplated by this Agreement notwithstanding such loss or damage and does so, there will be no adjustment in the consideration payable to or by Transferee on account of such loss or damage, but all insurance proceeds paid or payable as a result of the occurrence of the event resulting in such loss or damage (to the extent not already expended by Transferor to restore or replace the lost or damaged Assets) except for any proceeds from business interruption insurance relating to the loss of revenue for the period through and including the Closing Date, will be delivered by Transferor to Transferee, or the rights to such proceeds will be assigned by Transferor to Transferee if not yet paid to Transferor. Transferor will pay any deductible required and/or the self-insured portion of any such loss with respect to all such insurance proceeds. (b) If any such loss or damage is less than 55,000,000 and is not sufficiently substantial so as to preclude and prevent resumption of normal operations of any material portion of a System by the Outside Closing Date, Transferor will have the right to postpone Closing until the Outside Closing Date and make reasonable attempts to repair, replace or restore the lost or damaged Assets. On the Outside Closing Date, or such earlier date as the panics ma} agree, this Agreement will remain in force and effect and the parties will, subject to satisfaction or waiver of the conditions set forth in Article 7, proceed to Closing. If the loss or damage to the Assets has not been repaired, replaced or restored to the reasonable satisfaction of Transferee as of the Outside Closing Date, this Agreement will remain in force and effect and the Cash Purchase Price will be reduced or increased, as applicable, by an amount equal to the cost to Transferee, as mutually agreed by Transferor and Transferee, to complete such repair, replacement or restoration. (c) If, prior to Closing, any material part of or interest in Transferor's Assets is taken or condemned as a result of the exercise of the power of eminent domain, or if a Governmental Authority having such power informs Transferor that it intends to condemn or take all or any of Transferor's Assets (such event being called, in either case, a "Taking"), then Transferee may terminate this Agreement. If Transferee does not elect to terminate this Agreement, then (i) Transferee will have the sole right, in the name of Transferor, if Transferee so elects, to negotiate for, claim contest and receive all damages with respect to the Taking, (ii) Transferor will be relieved of its obligation to convey to Transferee Transferor's Assets or interests that are the subject of the Taking, (iii) at Closing, Transferor will assign to Transferee -74- 0 0 all of Transferor's rights to all payments payable with respect to such Taking and will pay to Transferee all payments previously paid to Transferor with respect to the Taking, and (iv) following Closing, Transferor will give Transferee such further assurances of such rights and assignment with respect to the Taking as Transferee may from time to time reasonably request. Section 11.16 Tax Consequences. No party to this Agreement makes any representation or warranty, express or implied, with respect to the tax implications of any aspect of this Agreement on any other party to this Agreement, and all parties expressly disclaim any such representation or warranty with respect to any tax consequences arising under this Agreement. Each party has relied solely on its own tax advisors with respect to the tax implications of this Agreement. Section l l.17 Commercially Reasonable Efforts. For purposes of this Agreement, "commercially reasonable efforts"will not be deemed to require a party to undertake extraordinary measures, including the initiation or prosecution of legal proceedings or the payment of amounts in excess of normal and usual filing fees and processing fees, if any. Section 11.18 Time. Time is of the essence under this Agreement. If the last day for the giving of any notice or the performance of any act required or permitted under this Agreement is a day that is not a Business Day, the time for the giving of such notice or the performance of such act will be extended to the next succeeding Business Day. _75_ • MediaOne and Time Warner have executed this Agreement as of the date first written above. SUMMIT CABLE SERVICES OF GEORGIA, INC. By: Name: t}JI Title: t)IGE MEDIAONE ENTERPRISES, INC. By: Name: Title: Palm DcseNSummu MediaOne and Time Warner have executed this Agreement of the date first written above. SUMMIT CABLE SERVICES OF GEORGIA, INC. By: Name: Title: MEDIAONE ENTERPRISES, INC. By: �41z" Name: Title: ► Doti . Palm De WS=Mlt Palmer Cablevision 15 yr. CATV Franchise AGREEMENT #2792 MO 4485, 11-15-89 CABLE TELEVISION FRANCHISE AGREEMENT AN AGREEMENT GRANTING A NON—EXCLUSIVE FRANCHISE TO PALMER CABLEVISION TO OPERATE A CABLE TELEVISION SYSTEM IN THE CITY OF PALM SPRINGS AND SETTING FORTH CONDITIONS ACCOMPANYING THE GRANTING OF THE FRANCHISE. TABLE OF CONTENTS Page SECTION 1 : GRANT OF FRANCHISE . . . . . . . . . . . . . 2 SECTION 2 : REGULATORY ORDINANCE . . . . . . . . . . . . 4 SECTION 3 : GENERAL REQUIREMENTS . . . . . . . . . . . . 5 SECTION 4 : CONSTRUCTION AND SERVICE REQUIREMENTS. . . . 8 SECTION 5 : SYSTEM DESIGN AND PERFORMANCE REQUIREMENTS . . . . . . . . . . . . . . . . 9 SECTION 6 : SERVICES AND PROGRAMMING . . . . . . . . . . 10 SECTION 7: SUPPORT FOR LOCAL CABLE USAGE. . . . . . . . 11 SECTION 8: REGULATION . . . . . . . . . . . . . . . . . 12 SECTION 9 : FORCE MAJEURE : GRANTEE 'S INABILITY TO PERFORM . . . . . . . . . . . . . . . . . 14 SECTION 10: MISCELLANEOUS. . . . . . . . . . . . . . . . 15 EXHIBIT A: OWNERSHIP EXHIBIT B: PEG ACCESS FACILITIES AND CHANNELS EXHIBIT C: CABLE SYSTEM TECHNICAL OBJECTIVES EXHIBIT D: SCHEDULE OF GRANTEE COMMITMENTS A G R E E M E N T THIS AGREEMENT, made and entered into this f - day of 1980, at Palm Springs, California, by and between the City of Palm Springs , a municipal corporation of the State of California, ( "Grantor") , and Palmer CableVision ("Grantee" ) , a division of Palmer Communications Incorporated. W I T N E S S E T H WHEREAS, the City of Palm Springs, pursuant to Ordinance No. 1295, is authorized to grant one or more non-exclusive revocable franchises to operate, construct, maintain and recon- struct a cable television system within the City; and WHEREAS, Palmer CableVision has requested that it be granted a cable television system franchise; and WHEREAS, the City Council has reviewed the request and, after public hearings, has determined that it is in the best interest of the City and its residents to grant a cable tele- vision system franchise to Palmer CableVision. NOW THEREFORE, the City (hereinafter also known as the Grantor) hereby grants a cable television system franchise to Palmer CableVision (hereinafter the Grantee) in accordance with the provisions of Ordinance No. 1295, and this Agreement. - 2 - 1 . GRANT OF FRANCHISE 1.1 Grant. Palmer CableVision, with ownership as indicated in Exhibit A, in hereby granted, subject to the terms and condi- tions of this Agreement and Ordinance No . 1295, a franchise, and the authority, right and privilege to construct, reconstruct, operate and maintain a cable, television system within the streets and public ways within the City of Palm Springs. 1. 2 Right of Grantor to Issue Franchise. Grantee acknow- ledges and accepts the right of Grantor to issue this franchise . 1.3 Effective Date of Franchise. This Franchise Agreement shall become effective pece 1zer 1 1989 . The insurance policies and any security required herein shall be filed within sixty (60) days of the effective date . 1 .4 Duration . The term of the franchise shall be fifteen (15) years from the effective date of this Agreement, after which time it shall expire and be of no force and effect. Renewal shall be in accordance with applicable law. 1 . 5 Franchise Not Exclusive. This franchise shall not be construed as any limitation upon the right of Grantor, through its proper officers, to grant to other persons or corporations rights, privileges or authority materially similar to or different from the rights, privileges and authority herein set forth, in the same or other streets and public ways or public places or other places the Grantee is entitled to occupy by franchise, permit, or otherwise, provided, however„ that such additional grants shall not operate to materially reduce„ modify, revoke or terminate any rights granted to, or any obligations assumed by or imposed upon, Grantee_ herein. - 3 - 1 .6 Conflict wih Cable Ordinance. In the event of any conflict between the provisions or meanings of the terms of this Agreement and the terms of City of Palm Springs Cable Communica- tions Regulatory Ordinance, Ordinance No. 1295, in effect on the effective date of this Agreement, the latter shall prevail . 1. 7 Awareness of the State of the Law. Both Grantor and Grantee are fully aware of the current state of cable regulatory law, and recent federal court decisions that may affect the regulatory authority of Grantor. Grantor and Grantee affirm, by executing this Agreement, that this Agreement is entered into voluntarily and in good faith by both parties, with each party agreeing to fulfill its obligations throughout the term of the franchise. 1 . 8 Applicable Law. This franchise is subject to applicable Federal and State law, including the Cable Communications Policy Act of 1984 . Nothing contained in this franchise shall be con- strued so as to require the commission of any act in violation of such applicable Federal and State law. In the event of any conflict between this franchise and applicable Federal and State law which would render this agreement or performance thereof illegal or unlawful, the latter shall prevail. 1 . 9 Franchise Service Area . The franchised service area shall be the City of Palm Springs as now or in the future consti- tuted. Grantee' s initial cable television service area shall be that geographic area outlined in the map attached as Schedule 1 to this Agreement. At the time Grantee determines it desires to expand its service area within the City, it shall file an amended Schedule 1 with the Grantor that outlines the new service area of Grantee . 4 - 2 . REGULATORY ORDINANCE 2.1 The City' s cable television regulatory ordinance, Ordinance No. 1295, including without limitation the definitions contained therein, is incorporated herein as if fully set forth. - 5 - 3 . GENERAL REQUIREMENTS 3 .1 Governing. Requirements . Grantee shall comply with the requirements of this Agreement and Ordinance No. 1295 . 3. 2 Franchise Fee . The Grantee shall pay to the Grantor an annual franchise fee of five percent (5%) of Gross Annual Receipts, commencing 1989, and payable quarterly, as indicated in Exhibit D. 3. 3 Recovery of Franchise Costs . (a) As provided for in Ordinance No . 1295, Grantee, within sixty (60) days after receipt from Grantor of a written itemization, shall reimburse Grantor for its reasonable out-of- pocket costs incurred during the franchise process, not to exceed Seven Thousand Five Hundred Dollars ($7, 500) . (b) During the term of this franchise, if the Grantee initiates a request for approval regarding the transfer of this franchise or change in control of Grantee, the Grantee shall reimburse the Grantor for all reasonable out-of-pocket costs incurred by the Grantor as part of Grantor' s review of the request. Any such costs shall not be charged against any franchise fee due to Grantor during the term of the franchise. 3.4 Payment to Grantor. No acceptance of any. payment shall be construed as an accord that the amount paid is in fact the correct amount, nor shall such acceptance of payment be construed as a release of any claim the Grantor may have for further or additional sums payable under the provisions of this Agreement. All amounts paid shall be subject to audit and recomputation by the Grantor. 6 - 3 . 5 Liability Insurance and Indemnification. Upon the effective date of the franchise, Grantee shall furnish proof that satisfactory liability insurance policies are in force, in the minimum amounts of : Workers ' Compensation -- As required by the State of California. ° Comprehensive General Liability* -- One Million Dollars ($1, 000, 000) per person . ° Comprehensive Automobile Liability* -- One Million Dollars ($1, 000, 000) per occurrence. *Including property damage and general liability. The liability insurance policies shall be maintained throughout the duration of this franchise, with a certificate of coverage naming the City as additional insured filed with the City Clerk of the Grantor. The insurance carriers shall be authorized to do business in California, and subject to Grantor approval . Nothing in this section shall be construed as limiting or reducing the amounts for which Grantee may be held liable, nor in any way limiting the extent of the hold harmless provisions of Section 10 .1. 7 3 . 6 Security. Within sixty (60) days of the effective date of the franchise, Grantee shall deposit into a bank account of Grantor, established by Grantor, the sum of not less than Two Thousand Five Hundred Dollars ($2, 500) as security, or provide an irrevocable letter of credit to Grantor' s benefit, the form of which is subject to the prior approval of the Grantor. This amount shall be maintained throughout the term of the franchise . This security fund shall fully satisfy Sections 6 .1, 6 .2 and 6 . 3 of Ordinance No. 1295. - s - 4 . CONSTRUCTION AND SERVICE REQUIREMENTS 4 .1 General. The Grantee shall meet or exceed all the material construction and service requirements set out in this Agreement. 4 . 2 Construction Schedule . Grantee shall at all times upgrade the portion of its cable system serving Palm Springs in concert with the portions serving Cathedral City and other adjacent jurisdictions . 4 . 3 Right of Inspection. Grantor, at its own expense, shall have the right to inspect all construction, reconstruction or installation wor}: performed subject to the provisions of the franchise and to make such tests as it shall find necessary to ensure compliance with the terms of the franchise and other pertinent provisions of law. 4 .4 Service to City and School Buildings . The Grantee shall provide one (1) connection at no charge and basic service at such connection at no monthly charge, to all City and school buildings within its activated service area . 9 - 5 . SYSTEM DESIGN AND PERFORMANCE REQUIREMENTS 5.1 PEG Access Cablecasting Facilities and Channels . Grantee shall provide support for Public, Educational and Govern- ment (PEG) access facilities, equipment and channels in accordance with the provisions of Exhibit B. 5. 2 Emergency Alert Capability. Within one (1) year of the effective date of this Agreement, Grantee shall provide the system capability to transmit an emergency alert signal to all participating subscribers, in the form of an audio override which permits Grantor to interrupt and cablecast a spoken message on all channels simultaneously in the event of disaster or public emergency. 5 . 3 Technical Standards . The Federal Communications Commission (FCC) Rules and Regulations , Part 76 , Subpart K (Technical Standards) and any amendments thereto, shall apply, to the extent permitted by applicable law. Grantee agrees, however, to utilize the technical standards contained in Exhibit C as system objectives which may be utilized by Grantor as one measure of quality of service. 5 .4 Interconnection to College of the Desert. Grantee shall, within six (6) months of receipt of a request from Grantor, conduct a study to determine the feasibility of receiving and retransmitting live programming originating at the College of the Desert, and interconnecting such programming to the headend of the Warner Cable Communications system serving the City. If an interconnection is determined to be technically and economi- cally feasible, Grantee shall negotiate in good faith with Warner Cable Communications to share the cost of .such and interconnection. - 10 - 6 . SERVICES AND PROGRAMMING 6.1 Reduction of Services . Grantee shall not reduce the number of program services over which Grantee has control without at least thirty (30) days prior written or other reasonable means of notification to the Grantor and to subscribers. 6. 2 Leased Channel Service. Grantee shall offer leased channel service in accordance with applicable law. 7. SUPPORT FOR LOCAL CABLE USAGE 7.1 Grantee Support for Public Cable System Usage. Grantee shall provide the following or equivalent support for public cable usage, as a minimum: (a) Provision and use of the facilities and channels designated in Exhibit B of this Agreement for PEG access use at no charge. (b) Familiarizing cable subscribers with the cable System' s PEG access programming. 7 .2 Compliance with Federal Law. In accepting this franchise, the Grantee agrees that the commitments indicated in Section 7 .1 above shall not be charged against any franchise fees due the Grantor during the term of the franchise unless applicable law so mandates . - 12 - 8 . REGULATION 8 .1 Franchise Regulation. The franchise granted under this Agreement shall be subject to regulation by Grantor in accordance with the provisions of Ordinance No. 1295 . 8. 2 Remedies for Franchise Violations. (a) Grantor reserves the right to impose the following remedies in the event Grantee violates any provision of the franchise, provided that Grantee has not commenced corrective action within thirty (30) days of written notice by certified mail to the general manager of the Grantee . In this event, Grantor may assess damages, not to exceed Fifty Dollars ($50) per day, or per incident, for Grantee' s repeated violation of the franchise or failure to take corrective action with respect to a violation of any provision of the franchise. (b) Grantee may be required to make pro rata rate rebates or payments , starting from the initially reported and documented time of the problem, to affected subscribers for unanticipated outages or material degradation of the quality of service, under the control oi` Grantee, for a period of twenty-four (24) hours or longer. (c) In the event the stated violation is not reasonably curable within sixty (60) days, damages shall not be assessed if the Grantee provides, within the said sixty (60) days, a plan, satisfactory to the Grantor, to remedy the violation and continues to demonstrate good faith in seeking to correct said violation . 13 - (d) In determining which remedy or remedies for Grantee' s violation are appropriate, Grantor shall take into consideration the nature of the violation, the person or persons bearing the impact of the violation, the nature of the remedy required in order to prevent further such violations and such other matters as the Grantor- may deem appropriate . (e) Within ten (10) days after receipt of a written notice of a violation from Grantor, Grantee may request a hearing before a Grantor-designated hearing officer in full public proceeding affording due process. Such hearing shall be held within thirty (30) days of the receipt of the request therefore . 14 - 9 . FORCE MAJEURE: GRANTEE' S INABILITY TO PERFORM 9 .1 In the event Grantee' s performance of any of the terms, conditions, obligations or requirements of this franchise or Ordinance No. 1295 is prevented or impaired due to any cause beyond its reasonable control or not reasonably foreseeable, such inability to perform shall be deemed to be excused and no penalties or sanctions shall be imposed as •a result thereof, provided Grantee has notified Grantor in writing within thirty (30) days of its discovery of the occurrence of such an event. Such causes beyond Grantee's reasonable control or not reasonably foreseeable shall include, but shall not be limited to, acts of God, civil emergencies and labor unrest or strikes. 15 - 10 . MISCELLANEOUS 10 .1 Advance Billing. Grantee may bill subscribers monthly, bi-monthly or annually for basic cable service and billing may be on an advance basis. 10 . 2 Disconnection for Non-Payment. Grantee may terminate service without notice to any subscriber whose account is thirty (30) days or more delinquent or past due. 10 . 3 Termination Refund. If a subscriber terminates service during, or in advance of, any period for which a prepayment has been made, Grantee shall, upon the request of the subscriber, refund the prorated portion of the unused payment. The pro rata calculation shall be at the non- discounted, short rates of Grantee . 10 .4 Basic Rates . Grantor acknowledges that as of the effective date of this Agreement, applicable federal law precludes Grantor from regulating programming services or service rates of Grantee. 10 .5 Release for Prior Operation. In consideration of the mutual covenants hereunder, Grantor, on behalf of itself, its City Council members and its officers, employees, agents and assigns, individually and collectively, releases and discharges Grantee, its officers, directors, shareholders and employees from any and all obligations, liability, actions, causes of action, damages, judgments, debts , costs, expenses, attorneys fees, liens, notes, claims , and demands whatsoever, of any kind, nature, and character now existing, known or unknown, or hereafter becoming known, accrued, or hereafter - 16 - accruing for, from, upon under, on account of, growing or arising out of, or related to Grantee' s ownership, construction, reconstruction, maintenance, and operation of a cable television system within the boundaries of the City prior to the effective date of this Agreement, and any occurrence related thereto, including but not limited to, any liability under Section 4 .2 of Ordinance No. 1295, or any prior or successor section thereto, any any franchise fees to which Grantor may or may not be entitled to by reason of ownership, construction or operation of said cable television system by Grantee within the City prior to the effective date of this Agreement pursuant to municipal, county, state or federal law. For the purposes of this Section, Grantor waives and relinquishes all rights and benefits afforded by Section 1542 of the Civil Code of the State of California and does so acknowledging that the significance of such specific waiver of Section 1542 . Section 1542 states as follows : "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known to him must have materially affected his settlement with the debtor. " 17 - IN WITNESS WHEREOF, Grantor and Grantee have executed this Agreement the date and year first above written . APPROVED AS TO FORM: CITY OF PALM SPRINGS A Municipal Corporation y i City Attorney Date :— ATTEST: C ty "Clerk (SEAL) PALMER CABLEVISION , A DIVIS- ON OF PALMER CO , 'UNICAUrl ONS I-NCO PORATED 7 (Corporate Seal) By: Date: j � 0 EXHIBIT B 1 . PEG Access Channels . No sooner than five (5) years from the effective date of this Agreement, Grantor may request and Grantee shall provide up to a total of five (5) channels or ten percent (10%) of the cable system channel capacity, whichever is less, for PEG use. Grantor may not submit a request for additional channels unless the PEG channels already being utilized each are cablecasting at least one hundred (100) hours per month of unduplicated video programming, of which at least twenty five percent (25%) shall be local in content, and, further, that additional contemplated PEG programming cannot effectively utilize the existing channels during the times they are available. 2 . Provision of Initial PEG Access Equipment and Facilities . No sooner than one (1) year after the effective date of this Agreement, Grantor may request and Grantee shall provide, a grant not to exceed Five Thousand Dollars ($5 , 000) to be utilized, at the discretion of the Grantor, for PEG access equipment and facilities . Operating expenses related to the use of these capital funds shall be the sole responsibility of the Grantor. The funds referred, to in this paragraph and in paragraph 3 below, are intended to conform to the provisions 'of Section 611 of the Cable Communications Policy Act of 1984 , and further are intended to be payments of the type described in Section 622 (g) (2) (B) and (C) of said Act, and not to be or to constitute franchise fees . Grantee shall provide the requested funds no later than sixty (60) days after receipt of Grantor request. 3 . Provision of Future PEG Access Equipment and Facilities. At any time after the seventh (7th) year of the franchise term, Grantor may request and Grantee shall provide additional funds for PEG access equipment and facilities , not-to-exceed Three Thousand Dollars (3 , 000) , under the same conditions appli- cable in paragraph 2 , above . Should Grantee expand its service area in Palm Springs , the future PEG access grant amount shall be increased, the increase to be based on the number of new sub- scribers . 4 . One-Time Only Basis . The grants of paragraphs 2 and 3 , above, shall be provided on a one-time only basis . 5 . PEG Operations . Grantor may negotiate agreements with neighboring jurisdictions served by the same cable system, educational institutions , or others to share operating expenses as appropriate . Grantor and Grantee may negotiate an agreement for management of PEG facilities if so de- sired by both parties. 6 . Title to PEG Equipment . Grantee shall deed to Grantor title to all PEG equipment pro- vided with funding made available in accordance with paragraphs 2 and 3 , above . EXHIBIT C Grantee will utilize its best efforts to meet the following specifications at the mean system temperature of 68 degrees Fahrenheit: 1. Second order beat ratio 2 . Hum 3 . Composite triple beat ratio (CW) 4. Cross modulation ratio (NCTS) 5. Carrier to noise ratio 6. Envelope delay (chrominance and luminance delay inequality) 7. Differential gain 8 . Differential phase . r EXHIBIT D SECTION COMMITMENT DEADLINE 3 . 2 Franchise Fee Payable quarterly by April 30, July 31, October 31, and January 31 for each prior calendar quarter of the franchise term. 3 . 3 Reimbursement Within sixty (60) days of receipt of Franchise of written itemization. Costs 3 . 5 Insurance Within sixty (60) days of the Coverage effective date of the franchise. 3. 6 Security Within sixty (60) days of the effective date of the franchise. 5. 2 Emergency Within one (1) year of the effective Alert date of the franchise. 5 .4 Cablecasting In accordance with Exhibit B. Facilities Support 4P 0 TO WHOM IT MAY CONCERN: RE: Palm Springs Palmer CabieVision Franchise GRANTOR accepts GRANTEE:' s present office location, 41725 Cook Street, Palm Desert, California, as substantially meeting the office location requirements of Ordinance No. 1295. GRANTOR reserves the right to require an office within the City Limits of Palm Springs when and if the number of subscribers increases to a level to warrant a local office. IN WITNESS WHEREOF, GRANTOR and GRANTEE have executed this Agreement the date and year first above written. APPROVED AS TO FORM: CITY OF PALM SPRINGS A Municipal Corporation ItCityriey 17,- City Manager Date: P5 ATTEST: (SEAL) PALMER CABLEVISION, A DIVISION OF PALMER COMM NICATION� INCOIPG AT�F (Corporate Seal y; r Date: Llf73r'. fir`" / r r RESOLUTION NO. 18859 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS APPROVING THE MERGER BETWEEN CONTINENTAL CABLEVISION, INC. AND US WEST, INC. WHEREAS, Colony Communications Inc. dba Continental Cablevision ("Franchise") , is the duly authorized holder of a franchise (as amended to date, the ("Franchise") authorizing the operation and maintenance of a cable television system and authorizing Franchisee to serve the City of Palm Springs ("Franchise Authority") ; and WHEREAS Franchisee is a subsidiary of Continental Cablevision, Inc. ("Continental") ; and WHEREAS Continental and US West, Inc. ("US West") have entered into an Agreement and Plan of Merger dated as of February 27, 1996 (the "Agreement") , subject to, among other considerations, any required approval of the Franchise Authority with respect thereto; and WHEREAS in connection with the merger (the "Merger") contemplated by the Agreement, the parent company Continental will merge with US West or with a wholly owned subsidiary of US West hereunder; and WHEREAS Franchisee will remain in place and continue to hold the Franchise; and WHEREAS US West may thereafter seek to assign or transfer the control related to Continental to an entity controlling, controlled by or under common control with US West; and WHEREAS to the extent the Franchise requires, Continental and US West now seek approval of the transfer of control from Continental to US West; and NOW, THEREFORE, BE IT RESOLVED by the City of Palm Springs as follows: Section 1. The City Council hereby finds that US West has the assets and resources to satisfy its obligations under the Franchise Agreement, at least to the capacity of the existing Franchisee. Section 2. Subject to the terms of this Resolution, the Franchise Authority hereby consents to the transfer of control of the Franchise to US West which Franchise is currently in full force and effect with no outstanding defaults or breaches thereunder. Section 3. This consent is given on the condition that US West has promised to and will fulfill all of the Franchise obligations under the Franchise Agreement, and by accepting the transfer, US West does hereby agree to be bound by said Franchise Agreement. Section 4. The consent herein granted does not constitute and shall not be construed to constitute a waiver of any obligations of Franchisee under the Franchise. ADOPTED this 3rd day of July , 1996 AYES: Members Barnes, Hodges, Oden, Spurgin and Mayor Kleindienst NOES: None ABSENT: None ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By City Clerk City Manager REVIEWED & APPROVED as to form RESOLUTION NO. 18607 RESOLUTION OF THE CITY OF PALM SPRINGS APPROVING THE MERGER AND RELATED TRANSACTIONS BETWEEN PROVIDENCE JOURNAL COMPANY AND CONTINENTAL CABLEVISION, INC. WHEREAS, Colony Cablevision of California, a division of Providence Journal Company, ("Franchisee") is the duly authorized holder of a franchise (as amended to date, the "Franchise") authorizing the operation and maintenance of a cable television system and authorizing Franchisee to serve the City of Palm Springs ("Franchise Authority") ; and WHEREAS, Providence Journal Company ("PJC") and Continental Cablevision, Inc. ("Continental") have entered into an Amended and Restated Agreement and Plan of Merger dated as of November j8, 1994 (the "Agreement") , subject to, among other considerations, any required approval of the Franchise Authority with respect thereto; and WHEREAS, in connection with the merger and other, transactions (the "Transaction") contemplated by the Agreement, the franchise held by Colony Cablevision of California, a division of PJC, will be assigned to King Broadcasting Company which, .in turn, will immediately transfer the franchise to (i) Colony communications, Inc. , a wholly owned subsidiary of PJC which, as a result of the Transaction, will become a wholly owned subsidiary of Continental, or (ii) Continental directly as a result of the merger of King Broadcasting company into Continental. which is also part of the Transaction; and WHEREAS, to the extent the franchise requires, Continental and Pic now seek approval of the Transaction; and WHEREAS, the Transaction is deemed to be in the best interests of the residents of. the City of Palm Springs; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm Springs as follows: Section 1. The City Council hereby finds that Colony Communications and continental each have the assets and resources to satisfy its obligations under the Franchise Agreement, at least to the capacity of the existing Franchise. Section 2. The Franchise Authority hereby consents to the Transaction, which includes the transfer of the Franchise from Pic to King Broadcasting Company and, immediately thereafter, to (i) Colony Communications, Inc. , which as result of the Transaction will become a wholly owned subsidiary of Continental, or (ii) Continental, to the extent that the consent of the Franchise Authority is required by the terms of the Franchise and applicable law, with such consent to be effective as of the closing date of the Transaction. Section 3. This consent is given on the condition that Colony Communications and Continental, whichever shall obtain the franchise, have promised to and will fulfill all of the Franchise obligations under the Franchise Agreement, and by accepting the transfer Colony Communications, or continental, as appropriate, do hereby agree to be bound by said Franchise Agreement. Section 4. The consent herein granted does not constitute and shall not be construed to constitute a waiver of any obligations of Franchisee under the Franchise. ADOPTED THIS 30th day of'. May 1995 AYES: Members Hodges, Kleindienst, Lyons, Reller-Spurgin and Mayor Maryanov NOES: None ABSENT: None ATTEST: CI Y OF PALM SPRING LIFORNIA City C erg k city anager716 REVIEWED & APPROVED as to form_ 06/25/91 16.20 FAX 619 040 2084 MEDIA ONE \ U 001/001 Media% ne-- - I �- This is Broadband. This is the way. June 25, 1997 C Sent Via Fax and U.S.Mail Tom Kanarr Fax#: (760) 322-8320 City Treasurer City of Palm Springs P.O.Box 2743 Palm Springs, CA 92262 Dear Mr.Kanarr: 1 am happy to inform you that MediaOne and Fox Sports West have come to an agreement regarding carnage of Fox Sports West 2, the new network they launched earlier this year. With coverage of teams like the Dodgers, aakers,Mighty Ducks and more, this is a very popular network here in Southern California, and has been in high demand by our customers throughout the Coachella Valley. Effective July 1,MediaOne will be carrying Fox Sports West 2 on channel 29. This will replace the cuirent programming of VH-1 and Comedy Central,which are shared on this channel. Until the completion of the rebuild in each neighborhood, customers will no longer be able to view VH- 1 or Comedy Central. Both networks will be available at the completion of the rebuild, as both VH-1 and Comedy Central are carried full time on channels 52 and 48, respectively- We will be notifying customers of this change in many ways, including electronic messaging on channels 10 and 42, with messages on their bills, and through newspaper advertising, We expect this to be a very positive improvement. As always, if you have any questions, please don't hesitate to call. Sincerely, Bob Rube 41725 Cook Street General Manager Palm Desert, CA 92211 tel / 760-340-1312 fax / 760-340-2384 MediaOnem This is Broadband. This is the way. May 27, 1997 A 4 Mr. Tom Kanarr City Treasurer City of Palm Springs 3200 E. Tahquitz-Canyon Way Palm Springs, CA 92262 Dear Mr. Kanarr, I recently wrote to let you know in advance th CtContincntal uld be undergoing some new and exciting changes. On May 13, Continental Cablevision became MediaOne. MediaOne is a new kind of company that will lead a new industry providing full-scale Broadband services. As a Broadband service provider, MediaOne will deliver superior entertainment, information and communications services that will simplify and enrich our customers' lives. As we become MediaOne,the members of your community will continue to receive the same quality services, products and commitment to education and the community, that they enjoy today. They don't have to do anything differently, except look forward to what MediaOne will soon deliver. We greatly appreciate your continued support as we begin to make our vision a reality. If you have any questions, please contact Jeff Davis at 714-434-3240. Sincerely, 7je H. Ste :;71 Western Region YPresid t rate Legal Aff ' 550 N.Continental Blvd. Suite 250 El Segundo,CA 90245 tel/310.647-3000 YJ i The Providence <<`_. Journal Company 75 Fountain Street, Providence, R1 02902 - (401) 277-7000 VIA FEDERAL EXPRESS January 6, 1993 Ms. Judy Sumich, City Clerk Palm Springs City Hall 3200 E. Tahquitz-McCallum Way Palm Springs, CA 92262 RE: Notification of Closing of Colony Cablevision of California's Purchase of Palmer's Cable System Dear Ms. Sumich: The purpose of this letter is to provide notification that the sale of Palmer Communications Incorporated's Palm Springs, California, cable televisions system to Colony Cablevision of California, a division of Providence Journal Company, closed on December 31, 1992 . Very truly yours, COLONY CABLEVISION OF CALIFORNIA, A DIVISION OF PROVIDENCE JOURNAL COMPANY By: jke.11VJ 0r 1_ Michael B. Isaacs Director of Government Affairs and Public Policy MBI:pal The Providence journal-Bulletin 9 Colony Communications a Providence Journal Broadcasting • King Broadcasting PalmerC o o hV(,�Aori c, ti December 19, 1989 a Mr. Tom Kanarr � Assistant Finance Director City of Palm Springs 3200 E. Tahquitz-McCallum Way Palm Springs, California 92263 Dear Tom: In accordance with our telephone conversation last week, I am submitting payment for the; security deposit required in the Cable Television Franchise Agreement between Palmer CableVision and The City of Palm Springs, dated November 17, 1989 . The deposit is required under Section 3 . 6. Our check in the amount of $2, 500 payable to the City is enclosed. As we discussed, please; see that an interest-bearing certificate is set up to hold this deposit. The interest generated should be returned to Palmer on an annual basis. Thanks for your help. Call me if you have any questions. Sincerely, Jon London Division Controller Enclosure Copy: Mr. Allen Smoot, Director of Aviation Palm Springs Regional Airport, 3400 E. Tahquitz-McCallum Way, Palm Springs, California 92263 Mr. Stephen Merritt, General Manager, Palmer CableVision 41-725 Cook Street, Box 368 Telephone: (619)340-1312 Palmer CableVision/Channel 10 Palm Desert, CA 92261 Telecopier: (619)340.2384 Services of Palmer Communication,Inc- DIDWNEYSAVINGSAND'LOANASSOCIATION - axouutNo 1OA2A29948 I-1�1CCOUNT 5OMMARY ''' � � '' t � ''.'Accohnlnoiriar"JkCITY f7F PALM SPRINGS AS TRl1STFE FpR* I .' >kCAF1E=�PpLMER:VISSpN*>.`' ',J Opening 6amnces12s 5OO«�4 - Dais onssuence'D>1118/9U'� L VCurfen(Rnlo;otEarnmgs 07.800 hPef a'Annum Iditiel;T 3❑4 - UAYS'" ?�Iom�mMazdatyDale Puaa AvadatDeon,pUl/17141 I. ;,Renewal Tenn- Sae AutomeLc ReReWal Sept on -Extended Matudly Date Sea General Section - I Frequency of Compountlinp ' ,DAILY � Mlmmum Addition Allowetls U SMinimum B0lence Regwmment S �44 d0 AddNons Perm Had Until NGT ALLGWEIL See t � Earmnps Sect on -_ .Ebmngs tlletdb110l dates txginning 0111.7W91 end -.'' NATORITY _ . ihereaffer,wnH the rest tlislnbullon on the final maNnN datejl, or close o/tna account, - :�OENERAL This rertties ihel th¢Accou(t{Holderholds aaavings account min the Opening Balance aMfof 1tN lnrtml Term $exgnrg on mglnitial Matu6N-0 e,sMwnh I - - .,_Ibwney Srvlup'i'and Loan Agoclallyr ='1 SPRINGS 1f7.O grh Ttle Account'Holder meg'Qaal'llme to Hlile with itp gonsen[of the Associat on;-''igake aadinons2a.tha belar�b m dvs ='eeemmtm ayamount not lesa'lhan Ne Mmimbrd`Adda on'pmvidod for In Account Summery section above tlntii Hreelose 'd buslhasg ole':th@ tl0te for WhiUt'addNonS are:permMetlas'set Jonh above with'-the conserd d,theAssogiation tha ' Account Hdldnrmay wdhont e%terking(M1e Ma[unN Date d the account make eddib_n to this exeunt in artguntsriot less -,i{nm the Mimmum Atldibonprewdetl lorin AccountSummarysecbon Afle(that data nofuriheraddbpmmayhemederotltis '� No esPpreHanto{thla adcpunt n uoem d 52,5ppaMIl M ecceptetl norshell any verKkauan d mlomjiMrr wMh/e�edC fi ulRrlo ba fetid a,bMgkg Unleeay74,,,d try the%egxibnl era VP Prgydanf of bowlNti'SavLlpe and Loon Aaomabdt. TNIS ACCDUNCIS NOT THIINSFERABIE E7CCFFT OH TIg ROOKS OF THE bBPOSROgY NtSTtitillIX[ __ EARNINGS Flj(ED-RATE AOCOUIJTS Thu account shall meatus-saint „Compountlmg.a nbove set lodh',Such eammg9 shall ha payable on the Eeml „ the rate soar Wldl'.tne Frequency d-- NetNaledcelntlteeccauntufeducadbelowthe Minimum Balance tgs Dhtnbulbn Dotes aimed 1pN,howewen d'_' "stroll lherpetteblpe reducedbrHre role Requlremen¢the Rated Famingson lheremafningbWnce' _ than paM m repuiarsavinpaacounlz,(SeeeW Automatic NerietYalaiMPeultysons) r ;AIfTOMATIC F'ENETYAL Thls account shall a automelkallY renewed a[ttw cbse of tiinlrans m ihe,InitiW L elwity Dale _ ur the MaturlN Dele Qt an renewrel-ur Extended Tdim udess(t)withdrawn wdHm the". 7 yy =dF 9raceDe'lod., a' )et feast l S �Haya poor b en such tlpt4lheAtioclelpn.4(vea.WdHan nabce tithe Aocgml Holder-, aUW thk account Wlltrgl ba renawdd at tha Ra(e'of'Evninge ardfoniM Rol Termset brlh aE�pxe.le such event 1M N`accpunkw111-&Uer 6e ekteMed for eLlM addiaonel tang arltl wch Rate of EaminOs as aef forth Maud mice yr tf�eaaanF: , # Rota d Eami etl-ore regular saw s xcpunt end recaea eammps at the rate Hwn yald:an reguW sarongs sy'wr�n Ttp .., re re WY PerevAl [erm slut hebeaeE on Gro melhadaM rromwr tit.Mkultlng tdtlel Cunent '" Eemlar mnPbe CeoeRti�nedma'dHlerent Iveyy provMetl thataUeeit r 15 ]days PrbrHN AIduKY bdeLra 'nR Amcnt nes wd{ten.notke to fhb Acwunt T Fbltler,seHlrg Ibnh Na changes, JNOE'I If h3nns end coM@ons are charged as pmwtled ebwe this cemrtcale form may be reused plmxled aggro'Inlets FMtges ere nladp In RenawalNWwy Section oron pastevrer In Account SummaN Sechogli --. 1�" PENALTY CLAIIS�i Except a oflwlrWls@ ProYWetl:farcain� the idlowi(g krdtratad proxvony pppy gl_am/wlpiyaw•yt botpra Hra brM 01 tpe term .: '; . 'r AnY wHlMrewal-wNch mducesihe Ilccwnt eelerx:e below the Minimum BeWnc'e,PegwremenL R arry[Marge n the` Term br Rated Gm4gs shall be cdrniaered aaawHhtlrawalof ttnemile•cmuMhalanceandshallbawbJefYbihe perealtY tr L hereui:`Eamings credited-m this amounlpudrg ury Terta;ma�ha withdrawm st uy time Cuxg sudr semi,^_ laenelN Ihttre account b rrnewe0 et Ine:seme eemin4s ralq earn nga durmg,the precetlag tern a cell ea ihn •, -.�dunenCtam,mev.6e.wrthtlrawrj,ateny.tlmawrtnout penaly&grin'the.renewalkrrn.It the renewal brrn rate is wmingY,4t the nccoUnt a{,Ina comnwncemen[of the renewal farm shall.be deemed'mngetl wM ilia pdrralel and pYy t= 4 eemllgs Mr the renewal letm may BeanUMrewn at any t me without penalty&gong such term _, e i l CERTIFICAT OF INSURANCE ISSUE°A 1TE —2—DD/""' - 1-2-90 PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER.THIS CERTIFICATE DOES NOT AMEND, LaMair-Mulock-Condon CO. EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW f 907 Walnut Street Des Moines, IA 50309 EC COMPANIES AFFORDING COVERAGE CEIVE1) COMPANY CODE SUB-GOOF 0 LETTER A Transportation Insurance Company 9 JAN 3 0 .� COMPANY ��' wsuREO 11/ vl ��� LELTER B '' ,��" North River Insurance Company F I Palmer Communications RECEIVED n Incorporated, Etal . LLETMTERNY C 1801 Grand Avenue Des Moines , IA 50308 LETTERNYD JAN091990 COMPANY LETTER E DEPARTMENTQF a — — --- ---- --- — — — ' —AVIATION' COVERAGES - THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY REQUIREMENT,TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. CO POLICY EFFECTIVE POLICY EXPIRATION !LTR TYPE OF INSURANCE POLICY NUMBER DATE(MM/DD/VY) DATE(MM/DD/YY) ALL LIMITS!N THOUSANDS iG GENERAL LIABILITY GENERAL AGGREGATE $ 1,000 X COMMERCIAL GENERAL LIABILITY PRODUCTS-COMP/)PS ACGREGATE $ 1 ,000 III A CLAIMS MADE X OCCUR. GL8-07412630 12-31-89 12-31-90 PERSONAL&ADVERTISING INJURY.$ 1,000 f OWNER'S 8 CONTRACTOR'S PROT EACH OCCURRENCE $ 1,000 FIRE DAMAGE(Any one fire) $ 100 i MEDICAL EXPENSE(Any one person) $ 5 I AUTOMOBILE LIABILITY COMBINED A X ANY AUTO BUA4-07412629 12-31-89 12-31-90 SINGLE $ 1 ,000 LIMIT NG ALL OWNED AUTOS BODILY SCHEDULED AUTOS INJURY $ (Per person) 'w HIRED AUTOS BODILY INJURY $ NON OWNEDAUTOS (Per aocidenl) GARAGE LIABILITY PR OPERTY $ DAMAGE EXCESS LIABILITY EACH AGGREGATE rl B X Umbrella 5234819499 12-31-89 12-31-90 §CCURRENCE $ N, OTHER THAN UMBRELLA FORM 1 ,000 1 ,000 WORKER'S COMPENSATION STATUTORY $ 100 (EACH ACCIDENT) � A AND WC6-07412628 12-31-89 12-31-90 $ 500 (DISEASE—POLICY LIMIT) EMPLOYERS'LIABILITY $ 100 (DISEASE—EACH EMPLOYEE)' OTHER IGN�i I l "DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/RESTRICTIONS/SPECIAL ITEMS ' The City of Palm Springs is an Additional Insured per attached Endorsement CG2012. a (Palmer Cablevision of California) q CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE V City of Palm Springs EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL Ef fD€16N¢ RXX O Attn: Allen F. Smoot MAIL 30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE I, 3400 E. Tahquit-McCallum Way LEFT, amcasrr�w��mrAv�sa[otXw�rx�as�axmxa �sB w� cuxac�wXQa Palm Springs, CA 92263 u���cowrxsta ¢ccgmrs �as � I AUTHORIZED REPRESENTATIVE ACOP,D 25-S (8/88) )f ©ACORD CORPORATION 1988 ►r. POLICY NUMBER: Gli§-.074 ZZ630 #COMMERCIAL GENERAL LIABILITY W P `Imer Communications Incorporated THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. ADDITIONAL INSURED- STATE OR POLITICAL SUBDIVISIONS-PERMITS This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART. (Palmer Cablevision of California) Effective: 12-31-89 SCHEDULE State or Political Subdivision: City of Palm Springs, CA (if no entry appears above, information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement.) WHO IS AN INSURED (Section II)is amended to include as an insured any state or political subdivision shown in the Schedule. subject to the following provisions: 1. This insurance applies only with respect to operations performed by you or on your behalf for which the state or political subdivision has issued a permit. 2. This insurance does not apply to: a. "Bodily injury," "property damage," "personal injury'or"advertising injury" arising out of operations performed for the state or municipality: or b. "Bodily injury" or "property damage" included within the "products-completed operations hazard." 't The limits of liability applicable to such Additional Insured(s) shall not exceed the amounts required by the contract to which the Additional Insureds) i is a party. CG 20.121185 Copyright. Insurance Services Office. Inc.. 1984 0 ACORD TM CERTIFICOE OF LIABILITY INSUROCE DATE(MM/1313 l) 6/1/95 PRODUCER 154 THIS CERTIFICATE IS ISSUED AS AMATTER OF INFORMATION ONLY AND MARSH INC. � CONFERS NO RIGHTS UPON THECERTIFICATE HOLDER.THIS CERTIFICATE 1166 Avenue of the Americas /ll .�,;i;�%� DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. New York, NY 10036-2774 -- INSURERS AFFORDING COVE P INSURED Time Warner Inc.&any Subsidiary Company INSURER A. Travelers Indemnity Of Illinois TIME WARNER ENTERTAINMENT- INSURER B. ARE Insurance Company �;j'y "Al ADVANCEINEWHOUSE PARTNERSHIP INSURER C' Winterthur TIME WARNER CABLE 810 N.FARRELL DR INSURER D CNAContinental Casualty1 PALM SPRINGS CA 92262 INSURER E: \ COVERAGES ZI= BC THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED A13OVE FOR THE POLICY PERIOD INDICATED.NOTWITHSTANDING ANY RE REMENT,TERM OR CONDITION 0 F ANY CONTRACT OR OTHER DOCUM ENT W ITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY P ERTAIR THE INSURANCE AFFORDED BY THE POLIO ES DESCRIBED HEREIN IS SUBJECTTO ALL THE TERMS,EXCLUSIONS AND CONDITIONS 0 F SUCH POLICIES,AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR TYPE OF INSURANCE POLICY NUMBER POLICY EFFECTIVE pOUGY EXPIRATION LIMITS LTR DATE (MMrDDNY) DATE (MMJDDNY) A GENERAL LIABILITY TC2JGLSA26OT3514TIL 6/1101 6/1/02 EACH OCCURRENCE $ 2000000 COMMERCIALGENNERAL TC2SCPP231D7380 611/01 611/02 FIRE-P(Any(Anymefle) $ 1000000 CLAIMS MAD �Op CUR MED-P(Any om person X ) $ 10000 CONTRACTUAL PERSONAIBADVINJURY $ 2000000 EGATE $ GEN'L AGGREGATE LIMIT APPLIES PER GENERALAGGR 6000000 PRODUCTS-COMPIOP AGG $ X POLICY PROJE LOC 3000000 A AUTOMOBILE LIABIILITV COMBINED SINGLE LIMIT X ANYAUTG TC2JCAP260T3483TIL01 6/1/01 6/1/02 (Ea accHma) S 2000000 ALLOIMJEDAUTOS TC2ECAP260T3495TCT01 6/1/01 6/1/02 BODILY INJURY $ SCHEDULED AUTOS TRJCAP120D8731TIL01 6/1/01 6 (PcIPOD-") /1/02 HIRED AUTOS BODILY INJURY $ NON-OWNED AUTOS TC2CAC231 D739 611/01 6/1102 (Per accitlenp PROPERTY DAMAGE (Per accltlenp $ GARAGE LIABILITY AUTOCNLY-EAACCIDENT $ ANYAUTO OTHERTHAN E4 ACC S AUTO ONLY ADS $ B EXCESS LIABILITY EACH OCCURRENCE $ 20000000 CLAIMS BE3091467 6/1101 6/1/02 AGGREGATE S 20000000 X OCCUR MADE MADE $ DEDUCTIBLE $ 17 RETENTION $ $ A --— WORKERS COMPENSATION AND TRJUB120D872A01- _ _ - 6!1/O1 - --611l02--- _ WC STATUTORY LIMITS PTHE- - - q —._--X EMPLOYERS'LIABILITY TC2JUB26GT336601 611101 6/1/02 EL EACH ACCIDENT $ 2000000 E L DISEASE EA EhPLOYEE $ 2000000 EL DISEASE EEL' LIMIT $ 2000000 OTHER TC2JSPS 120D151ATILE)1 6/1/O1 611/02 Occurrence/Aggregate $2M/$6M A Railroad Protective Liability HFP003962699 3/1/99 3/1/02 Replacement Cost Value C All-Rsk Property D RMP247910712 311/99 3/1/02 DESCRIPTION OF OPERATIONSILOCATIONSNEHICLES/EXCLUSIONS ADDED BY ENDORSEMENT/SPECIAL PROVISIONS THE CERTIFICATE HOLDER IS INCLUDED AS AN ADDITIONAL INSURED CERTIFICATE HOLDER 2 ADDIMONAINSURED'INSURER LE71i CANCELLATION CITY OF PALM SPRINGS SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF,THE ISSUING INSURER WILL ENDEAVOR TO MAIL Go DAYS CITY CLERK,J.SUMICH WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT,BUT FN LURE TO DO SO SHALL IMPOSE NO O 13LIGATION OR LIABILITY OF ANY LI ND UPON THE INSURER, P.0.BOX 2743 ITS AGENTS OR REPRESENTATIVES. PALM SPRINGS,CA 92263 I(Auu U ll 1 PROPERTY CASUALTY ACORD 25-S(7/97) ® ACORD CORPORATION 1998 1