**EXHIBIT2.2**

 

[*] Confidential treatmenthas been requested for the information indicated pursuant to Rule 24b-2 of theSecurities Exchange Act of 1934, as amended. The copy on file as an exhibitomits the information subject to the confidentiality request. Such omittedinformation has been filed separately with the Commission.

 

**EXECUTION COPY**

 

 

**ASSET PURCHASE AGREEMENT**

 

**between**

 

**VERIZON MEDIA VENTURES INC.**

 

**and**

 

**KNOLOGY NEW MEDIA, INC.**

 

**July 15, 2003**

 

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**TABLE OF CONTENTS**

 
| ARTICLE I Definitions and  Interpretation           |
|-----------------------------------------------------|
| 1.1                                                 | Definitions. |
| 1.2                                                 | Interpretation |
|                                                |   |
| ARTICLE II Purchase and  Sale of Acquired Assets    |
| 2.1                                                 | Acquired Assets  Subject to Agreement |
| 2.2                                                 | Excluded Assets |
| 2.3                                                 | Third-Party  Consents |
| 2.4                                                 | License. |
|                                                |   |
| ARTICLE III Assumption  of Liabilities              |
| 3.1                                                 | Assumption of Liabilities |
| 3.2                                                 | Excluded  Liabilities |
|                                                |   |
| ARTICLE IV Consideration                            |
| 4.1                                                 | Consideration |
| 4.2                                                 | Payment  of Cash Payments |
| 4.3                                                 | Adjustments to Cash  Payments |
| 4.4                                                 | Final  Adjustment Amount. |
| 4.5                                                 | Allocation of Cash Payments |
|                                                |   |
| ARTICLE V Representations  and Warranties of Seller |
| 5.1                                                 | Organization, Standing and Power |
| 5.2                                                 | Authority |
| 5.3                                                 | No Breach or Conflict |
| 5.4                                                 | Material  Consents |
| 5.5                                                 | Accounts  Receivable |
| 5.6                                                 | Tangible Assets |
| 5.7                                                 | Claims, Litigation and Disputes |
| 5.8                                                 | Acquired  Contracts |
| 5.9                                                 | Compliance  With Laws |
| 5.10                                                | Taxes, Fees and Utilities |
| 5.11                                                | Franchises  and Permits. |
| 5.12                                                | Financial  Statements. |
| 5.13                                                | Employees and Related  Matters. |
| 5.14                                                | Environmental  Matters |
| 5.15                                                | Brokerage Fees |
| 5.16                                                | Exclusive  Dealing |
| 5.17                                                | Title to and  Condition of Real Property |
| 5.18                                                | Intellectual  Property and Trademarks |
| 5.19                                                | Systems. |
| 5.20                                                | Conduct  of Business in Ordinary Course of Business |

 

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| 5.21                                                | Letters of Credit, Bonds, Etc.                           |
|-----------------------------------------------------|----------------------------------------------------------|
| 5.22                                                | No Material Adverse Effect                               |
| 5.23                                                | Condition and  Suitability of Assets                     |
| 5.24                                                | Disclaimer                                               |
|                                                |                                                     |
| ARTICLE VI Representations  and Warranties of Buyer |
| 6.1                                                 | Organization,  Standing and Power                        |
| 6.2                                                 | Authority                                                |
| 6.3                                                 | No  Breach or Conflict                                   |
| 6.4                                                 | Third-Party Consents                                     |
| 6.5                                                 | Claims, Litigation and Disputes                          |
| 6.6                                                 | Financing                                                |
| 6.7                                                 | Brokerage Fees                                           |
| 6.8                                                 | Qualification                                            |
| 6.9                                                 | Buyer’s Investigation                               |
|                                                |                                                     |
| ARTICLE VII Seller’s  Covenants                |
| 7.1                                                 | Access                                                   |
| 7.2                                                 | Conduct of Business  Pending Closing                     |
| 7.3                                                 | Further  Assurances                                      |
| 7.4                                                 | Confidentiality                                          |
| 7.5                                                 | Limitations  on Use of Certain Information and Marketing |
| 7.6                                                 | Affiliate  Agreements                                    |
| 7.7                                                 | Risk of Loss                                             |
| 7.8                                                 | Third-Party Consents.                                    |
| 7.9                                                 | Interim Financial  Statements                            |
| 7.10                                                | Transfer of Unique  Inventory                            |
| 7.11                                                | Cooperation  Regarding Request for Franchise Renewal     |
| 7.12                                                | Payroll Taxes                                            |
| 7.13                                                | Buyer’s Audit and  Examination                      |
| 7.14                                                | Accounts Receivable                                      |
| 7.15                                                | Obligations  Pursuant to Transition Services Agreement   |
|                                                |                                                     |
| ARTICLE VIII Covenants  of Buyer                    |
| 8.1                                                 | Third-Party Consents.                                    |
| 8.2                                                 | Discharge of Assumed  Liabilities                        |
| 8.3                                                 | Confidentiality                                          |
| 8.4                                                 | Access                                                   |
| 8.5                                                 | Bonds, Letters of Credit, Etc.                           |
| 8.6                                                 | Further Assurances                                       |
| 8.7                                                 | Intellectual  Property                                   |
| 8.8                                                 | Vehicles                                                 |
| 8.9                                                 | Payroll Taxes                                            |
| 8.10                                                | Obligations Pursuant to  Transition Services Agreement   |
|                                                |                                                     |
| ARTICLE IX Conditions to  Seller’s Obligations |
| 9.1                                                 | Buyer’s  Representations and Warranties             |

 

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| 9.2                                               | Buyer’s  Covenants                                            |
|---------------------------------------------------|--------------------------------------------------------------------|
| 9.3                                               | Consents                                                           |
| 9.4                                               | Buyer’s  Deliveries                                           |
| 9.5                                               | No Proceedings                                                     |
|                                              |                                                               |
| ARTICLE X Conditions to  Buyer’s Obligations |
| 10.1                                              | Seller’s  Representations and Warranties                      |
| 10.2                                              | Seller’s  Covenants                                           |
| 10.3                                              | Consents                                                           |
| 10.4                                              | Seller’s  Deliveries                                          |
| 10.5                                              | No Proceedings                                                     |
| 10.6                                              | Statutes, Proceedings, Etc.                                        |
| 10.7                                              | FIRPTA  Affidavit                                                  |
| 10.8                                              | Florida  System Closing                                            |
|                                              |                                                               |
| ARTICLE XI Closing and  Termination               |
| 11.1                                              | Closing.                                                           |
| 11.2                                              | Termination                                                        |
| 11.3                                              | Effect  of Termination.                                            |
|                                              |                                                               |
| ARTICLE XII Seller’s  Deliveries at Closing  |
| 12.1                                              | Bring-Down  Certificate                                            |
| 12.2                                              | Secretary’s  Certificate                                      |
| 12.3                                              | Ancillary  Agreements                                              |
|                                              |                                                               |
| ARTICLE XIII Buyer’s  Deliveries at Closing  |
| 13.1                                              | Cash Payment                                                       |
| 13.2                                              | Bring-Down  Certificate                                            |
| 13.3                                              | Secretary’s  Certificate                                      |
| 13.4                                              | Buyer Ancillary Agreements                                         |
|                                              |                                                               |
| ARTICLE XIV Tax Matters                           |
| 14.1                                              | Filing of  Returns                                                 |
| 14.2                                              | Access to Books and Records                                        |
| 14.3                                              | Indemnification for Taxes.                                         |
| 14.4                                              | Transaction  Taxes                                                 |
| 14.5                                              | Tax Prorations                                                     |
| 14.6                                              | Tax Refunds                                                        |
|                                              |                                                               |
| ARTICLE XV Indemnification                        |
| 15.1                                              | Survival of  Representations, Warranties and Covenants.            |
| 15.2                                              | Indemnification.                                                   |
| 15.3                                              | Limitations  on Liability.                                         |
| 15.4                                              | Defense of  Claims.                                                |
| 15.5                                              | No  Indemnifiable Claims Resulting From Governmental Entity Action |
| 15.6                                              | Infringement.                                                      |
| 15.7                                              | Inapplicability  to Taxes                                          |

 

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| ARTICLE XVI  Miscellaneous |
|----------------------------|
| 16.1                       | Expenses |
| 16.2                       | Governing Law |
| 16.3                       | Notices |
| 16.4                       | Definition  of Agreement |
| 16.5                       | Headings, Gender |
| 16.6                       | Counterparts; Third  Party Beneficiaries |
| 16.7                       | Intentionally  Omitted |
| 16.8                       | Modifications |
| 16.9                       | Schedules |
| 16.10                      | Assignment and Binding  Effect |
| 16.11                      | Public  Announcements; Confidentiality |
| 16.12                      | Right to Specific  Performance |
| 16.13                      | Bulk Sales Laws |

 

INDEX OF SCHEDULES*

 
| Schedule 1.1-A        | Seller’s Knowledge                                                  |
|-----------------------|--------------------------------------------------------------------------|
| Schedule 1.1-B        | Target Florida  Subscriber Number and  Target Florida Subscriber Revenue |
| Schedule 1.1-C        | Scripts                                                                  |
| Schedule 2.1(c)       | Equipment                                                                |
| Schedule 2.1(d)(ii)   | Equipment Leases                                                         |
| Schedule 2.1(d)(iii)  | Pole Attachment and  Conduit Agreements                                  |
| Schedule 2.1(d)(iv)   | Bulk Agreements                                                          |
| Schedule 2.1(d)(vi)   | Advertising Agreements                                                   |
| Schedule 2.1(d)(viii) | Programming Agreements                                                   |
| Schedule 2.1(d)(x)    | Other Contracts                                                          |
| Schedule 2.2(d)       | Bonds and Insurance                                                      |
| Schedule 2.2(f)       | Inter-Unit Services  Assets                                              |
| Schedule 2.2(m)       | Seller’s Back Office  Systems                                       |
| Schedule 2.2(n)       | Other Excluded Assets                                                    |
| Schedule 5.4          | Material Consents                                                        |
| Schedule 5.5(i)       | Accounts Receivable                                                      |
| Schedule 5.5(ii)      | Pro Forma Working  Capital Statement                                     |
| Schedule 5.6          | Tangible Assets                                                          |
| Schedule 5.7          | Claims, Litigation and  Disputes                                         |
| Schedule 5.8          | Acquired Contracts                                                       |
| Schedule 5.9          | Compliance with Laws                                                     |
| Schedule 5.10         | Taxes, Fees and  Utilities                                               |
| Schedule 5.11(a)      | Franchises and Permits                                                   |
| Schedule 5.11(b)      | Franchises and Permits                                                   |
| Schedule 5.12(a)(i)   | Copies of the Financial  Statements                                      |
| Schedule 5.12(a)(ii)  | Financial Statements                                                     |
| Schedule 5.12(b)      | No Undisclosed  Liabilities                                              |
| Schedule 5.12(c)      | Inter-Unit Services and  Related Allocations                             |

 

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| Schedule 5.13(a)     | Employee Benefit Plans                                           |
|----------------------|------------------------------------------------------------------|
| Schedule 5.13(b)     | Employee Benefit  Plans–Pending Actions, Claims or Lawsuits |
| Schedule 5.13(c)     | Employees and Employee  Matters                                  |
| Schedule 5.13(d)     | List of Employees and  Independent Contractors                   |
| Schedule 5.13(e)     | Employee Related  Matters                                        |
| Schedule 5.17(b)     | Leased Real Property                                             |
| Schedule 5.17(c)(i)  | Leased Real  Property–Identification and Parties            |
| Schedule 5.17(e)     | Easements                                                        |
| Schedule 5.18        | Intellectual Property  Infringements                             |
| Schedule 5.19(a)     | Systems                                                          |
| Schedule 5.19(b)     | System Information                                               |
| Schedule 5.19(c)(i)  | Franchise Pole  Attachment and Conduit Lease Fees                |
| Schedule 5.19(c)(ii) | Adjustments to Franchise  Pole Attachment and Conduit Lease Fees |
| Schedule 5.19(d)     | Request for Signal  Carriage                                     |
| Schedule 5.19(e)     | Fiber                                                            |
| Schedule 5.19(f)     | Commitments                                                      |
| Schedule 5.20        | Ordinary Course of  Business–Exceptions                     |
| Schedule 5.21        | Letters of Credit,  Bonds, Etc.                                  |
| Schedule 5.22        | No Material Adverse  Effect                                      |
| Schedule 7.2         | Conduct of Business  Pending Closing                             |
| Schedule 9.3         | Required Consents                                                |

 

INDEX OF EXHIBITS*
| Exhibit A | Assumption Agreement                                                                                        |
|-----------|-------------------------------------------------------------------------------------------------------------|
| Exhibit B | Bill of Sale and  Assignment Agreement                                                                      |
| Exhibit C | Intellectual Property  Agreement                                                                            |
| Exhibit D | Employee Matters  Agreement                                                                                 |
| Exhibit E | California Manhole  Access Agreement                                                                        |
| Exhibit F | Transition Services  Agreement                                                                              |
| Exhibit G | Affiliate Lease  Agreement                                                                                  |
| Exhibit H | Form of Tower  Agreements                                                                                   |
| Exhibit I | Brand Phaseout License  Agreement                                                                           |
| Exhibit J | Aging Report as of June  23, 2003 for the Florida System and as of June 30, 2003 for the California  System |
| Exhibit K | Retention Adjustments  for Florida System                                                                   |

 

INDEX OF ANNEXES*

 

Annex I      Geographical Areas of theSystems

 

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* All schedules,exhibits, and annexes have been omitted but will be furnished to the Securitiesand Exchange Commission upon request.

 

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ASSET PURCHASE AGREEMENT

 

This AssetPurchase Agreement (this “Agreement”) is made and entered into this 15thday of July, 2003, by and between Verizon Media Ventures Inc., a Delawarecorporation (“Seller”), and Knology New Media, Inc., a Delaware corporation(“Buyer”).  (Each of Buyer and Sellershall be referred to herein individually as a “Party” and collectively as the“Parties”).

 

W I T N E S S E T H

 

WHEREAS, Sellerowns and operates certain cable television franchises and cable televisionsystems serving the geographical areas listed on Annex I hereto together withcertain related assets and rights;

 

WHEREAS, Sellerdesires to sell, convey, transfer and assign to Buyer, and Buyer desires toacquire from Seller, the assets owned by Seller and used or held for use in theBusiness (as such term is defined herein), other than the Excluded Assets (assuch term is defined herein), and, in connection therewith, Buyer has agreed toassume certain liabilities of Seller relating to the Business, all on the termsand conditions set forth herein; and

 

WHEREAS, inconnection with the transactions contemplated by this Agreement and in order toinduce Buyer to enter into this Agreement, Seller shall, and shall cause itsAffiliates to, as applicable, enter into the Ancillary Agreements (as such termis defined herein) with Buyer.

 

NOW THEREFORE, theParties hereto agree as follows:

 

# ARTICLE I

 

# Definitions andInterpretation

 

## 1.1Definitions.

 

“AccountsReceivable” means all accounts receivable resulting from the operations of theSystems, both billed and accrued, but excluding any accounts which have beenfully written off.

 

“AccountsReceivable Settlement Amount” means (a) the face amount of all AccountsReceivable that are not past due as of the Closing Date, plus (b) 93% for theFlorida System and 98% for the California System, of the face amount of allAccounts Receivable that are between 1 and 30 days past due as of the ClosingDate, plus (c) 69% for the Florida System and 98% for the California System, ofthe face amount of all Accounts Receivable that are between 31 and 60 days pastdue as of the Closing Date, less the face value of all Accounts Receivablewhich have been billed but relate to services to be rendered following theClosing Time, in all cases, with the number of days past due being determinedfrom the last day of the period for which the applicable billing relates;provided, however, that any such Accounts Receivable shall be excluded fromsuch amount if such Accounts Receivable (i) relates to customers whose serviceis pending disconnection for reason of non-payment on the Closing Date or (ii)arose from billings that were not made in the ordinary course of businessconsistent with past practices.  For thesake

 

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of clarity, the AccountsReceivable Settlement Amount will not include any amounts which are 61 days ormore past due.

 

“Acquired Assets”is defined in ***Section 2.1***

 

“AcquiredContracts” is defined in ***Section 2.1(d).***

 

“AcquiredIntellectual Property” means (i) Proprietary Business Information, (ii) JointlyOwned Proprietary Business Information, (iii) Scripts listed on ***Schedule 1.1-C*** thatare used exclusively in the Business and which Seller has the right to conveywithout the consent of, or the payment of compensation or other considerationto, any Person, (iv) all microcode embedded in the Equipment that was conveyedto Seller at the time it purchased the Equipment and which Seller has the rightto convey with the Equipment without the consent of, or the payment ofcompensation or other consideration to, any Person and (v) all Intellectual Propertytransferred to Buyer as part of or pursuant to the assignment of any licenselisted on Subsection (c) of ***Schedule 9.3***, if any.

 

“Acquired Records”means all the files, books, records (including service, production,maintenance, customer and vendor records), and ledgers or other similarinformation (in any form or medium) used or held for use in the Business,including manuals, correspondence, price lists, customer lists, mailing lists,purchasing materials and records, papers, construction and engineering maps anddata, schematics and blueprints, and other similar data, except for thematerials, data or information retained by Seller pursuant to ***Section 2.2***, providedthat, “Acquired Records” shall be deemed to include any and all constructionand engineering maps applicable to areas which are outside the geographicalarea actually served by the applicable System, but are contiguous to thegeographical area actually served by the applicable System.

 

“Actual FloridaSubscriber Number” means the number of Equivalent Basic Subscribers and DataSubscribers served in the aggregate by the Florida System as of the FloridaMeasurement Date.

 

“Actual FloridaSubscriber Revenue” means the Monthly Revenue for the calendar month ending onthe Florida Measurement Date.

 

“Affiliate” meansany Person who, directly or indirectly, controls, is controlled by or is undercommon control with the relevant Party.

 

“Affiliate LeaseAgreement” means the Lease Agreement between Affiliates of Seller and Buyer,dated as of the Closing Date, in substantially the form of Exhibit G.

 

“Aging Report” and“Aging Reports” mean those certain reports regarding the aging of AccountsReceivable that are provided by Seller to Buyer pursuant to this Agreement, insubstantially the form of Exhibit J, which sets forth the Aging Reportas of June 23, 2003 for the Florida System and the Aging Report as of June 30,2003 for the California System.

 

“Agreement” isdefined in the introductory paragraph and ***Section 16.4*** of this Agreement.

 

2

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“AncillaryAgreements” means the Assumption Agreement, the Bill of Sale and AssignmentAgreement, the Employee Matters Agreement, the Intellectual Property Agreement,the Affiliate Lease Agreement, the Tower Agreements, the Transition ServicesAgreement and the California Manhole Access Agreement, as applicable to eachSystem.

 

“AssumedLiabilities” is defined in ***Section 3.1***.

 

“AssumptionAgreement” means the Assumption Agreement of Buyer, dated as of the ClosingDate, in substantially the form of Exhibit A.

 

“Basic CableService” means the tier of cable television service that includes at least theretransmission of local broadcast signals as defined in the Cable Act whichdefines “cable television service” specifically as “(A) the one-waytransmission to subscribers of (i) video programming, or (ii) other programmingservice, and (B) subscriber interaction, if any, which is required for theselection or use of such video programming or other programming service.”

 

“Basket Amount” isdefined in ***Section 15.3(d)***.

 

“Bill of Sale andAssignment Agreement” means the Bill of Sale and Assignment Agreement ofSeller, dated as of the Closing Date, in substantially the form of Exhibit B.

 

“Brand PhaseoutLicense Agreement” means the Brand Phaseout License Agreement dated as of theClosing Date, in substantially the form of Exhibit I.

 

“Bulk Agreements”are defined in ***Section 2.1(d)(iv)***.

 

“Business” meansthe business of owning and operating the Systems, as such business is conductedon the date hereof and as of each applicable Closing Date.

 

“BusinessNon-Statutory Intellectual Property” is defined in the Intellectual PropertyAgreement.

 

“BusinessStatutory Intellectual Property” is defined in the Intellectual PropertyAgreement.

 

“Buyer” is definedin the introductory paragraph of this Agreement.

 

“Buyer AncillaryAgreements” is defined in ***Section 6.2***.

 

“Cable Act” meansTitle VI of the Communications Act of 1934, as amended, 47 U.S.C. Sections 151 etseq., all other provisions of the Cable Communications Policy Act of1984 and the provisions of the Cable Television Consumer Protection andCompetition Act of 1992, and the provisions of the Telecommunications Act of1996, amending Title VI of the Communications Act of 1934, in each case asamended and the rules and regulations, policies and published decisions of theFCC thereunder, as in effect from time to time.

 

3

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“CaliforniaManhole Access Agreement” means the Manhole and Handhole License Agreementbetween an Affiliate of Seller and Buyer, dated as of the Closing Date for thesale of the California System, in substantially the form of Exhibit E.

 

“CaliforniaMeasurement Date” means the last day of the calendar month immediately precedingthe Closing Date of the sale of the California System.

 

“CaliforniaSystem” means the cable television system serving the geographical areaidentified under section A of Annex I hereto and operating pursuant to theapplicable Franchise.

 

“California SystemPayment” is defined in ***Section 4.2(b)***.

 

“Closing”,“Closing Date” and “Closing Time” are defined in ***Section 11.1***.

 

“Code” means theUnited States Internal Revenue Code of 1986, as amended.

 

“CollectiveBargaining Agreements” mean (i) that certain Collective Bargaining Agreementbetween Seller and the Communications Workers of America on behalf of Local9586 and (ii) that certain Collective Bargaining Agreement between Seller andthe International Brotherhood of Electrical Workers Local 824.

 

“Combined FloridaAdjustment” is defined in ***Section 4.3(a)(iii)***.

 

“CommunicationsAct” means the Communications Act of 1934, as amended, inter alia, by the CableCommunications Policy Act of 1984, the Cable Television Consumer Protection andCompetition Act of 1992 and the Telecommunications Act of 1996, as such statutemay be amended from time to time.

 

“Consents” meansall of the consents, notices, filings or approvals of Governmental Entities orother third parties necessary (i) for the execution, delivery and performanceby Seller of this Agreement and the Ancillary Agreements, (ii) to transferthe Acquired Assets to Buyer and otherwise to consummate the transactionscontemplated hereby and by the Ancillary Agreements and (iii) for Buyer toassume the Franchises and the other Acquired Contracts.

 

“Contract” meansany contract, agreement, lease, license, commitment or other legally bindingagreement.

 

“Court Order”means any judgment, decree, injunction, order, writ or ruling of anyGovernmental Entity or arbitrator.

 

“Current Assets”is defined in ***Section 4.3(b).***

 

“CurrentLiabilities” is defined in ***Section 4.3(c).***

 

“CustomerProprietary Information” means that portion of Proprietary Business Informationthat comprises personal information of a customer of the Business that wasprovided by such customer in connection with the Business and all informationabout such customer’s subscription and account, including, without limitation,such customer’s name, mailing address,

 

4

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email address, telephonenumber, category of subscription services, and billing and payment information.

 

“Data Service”means the provision of cable modem high-speed internet access by the Business.

“Data Subscribers” (or“DSs”) means [ * ].

 

“DCO” means adistrict cable office applicable to each System.

 

“DSL Services”means digital subscriber line internet access services, which are offered byAffiliates of Seller.

 

“Employee” meanseach active employee, full-time or part-time, of Seller (or an Affiliate ofSeller) who, as of the date of this Agreement, has performed (during the12-month period immediately preceding the date of this Agreement (or the periodof the employee’s employment with Seller and its Affiliates, if less)) amajority of such employee’s services in connection with or for the benefit ofthe Systems, including all persons covered by the Collective BargainingAgreements, (other than employees based at the Wentzville, Missouri call centerand employees based in Irving, Texas and in New York).  The term “active employee” shall include anyemployee who is on military leave, maternity/paternity leave, other approvedleave of absence, short-term disability, long term disability, workers’compensation, or layoff with recall or other return rights.

 

“Employee BenefitPlan” means any of the following arrangements (whether formal or informal, andwhether written or unwritten) under which an employer has any liability toprovide benefits or compensation to or on behalf of any employee, or the spouseor dependents of any employee:

 

(a)                                  anyemployee benefit plan within the meaning of ***Section 3(3***) of ERISA, and

 

(b)                                 anyother profit-sharing, deferred compensation, incentive compensation, bonus,commission, stock option, stock purchase, medical, dental or life insurance,severance pay, unemployment benefit, vacation pay, savings, dependent care,scholarship, accident, disability, weekly income, salary continuation or othercompensation or fringe benefit plan, program or agreement.

 

“Employee Matters Agreement”means the Employee Matters Agreement between Seller and Buyer, executed by theParties as of the date hereof in the form of Exhibit D.

 

“End Date” isdefined in ***Section 11.2****.*

 

“EnvironmentalLaws” means the Comprehensive Environmental Response, Compensation, andLiability Act, the Emergency Planning and Community Right-to-Know Act, theFederal Water Pollution Control Act, the Clean Air Act, the Air PollutionControl Act, the Toxic Substances Control Act, the Resource Conservation andRecovery Act, the Hazardous

 

5

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Materials TransportationAct, the Federal Insecticide, Fungicide and Rodenticide Act, as well as allother federal, state or local Laws, regulations or requirements, or suchportions thereof, that are similar to the above-referenced Laws or thatotherwise govern chemicals, products, materials or wastes that pose risks tothe environment or the public welfare.

 

“Equipment” isdefined in ***Section 2.1(c)***.

 

“Equivalent BasicSubscribers” (or “EBSs”)  means [ * ].

 

“ERISA” means theEmployee Retirement Income Security Act of 1974, as amended, and the rules andregulations promulgated thereunder.

 

“ERISA Affiliate”means any entity that with the subject Person is:

###  

### (a) a member of a controlled group of corporationswithin the meaning of Section 414(b) of the Code;

###  

### (b) a member of a group of trades or businesses undercommon control within the meaning of Section 414(c) of the Code;

###  

### (c) a member of an affiliated service group within themeaning of Section 414(m) of the Code; or

###  

### (d) a member of a group of organizations required tobe aggregated under Section 414(o) of the Code.

 

“Escrow Amount” isdefined in ***Section 4.2(a)***.

 

“EstimateStatement” is defined in ***Section 4.3(e)***.

 

“Excluded Assets”is defined in ***Section 2.2***.

 

“ExcludedLiabilities” is defined in ***Section 3.2***.

 

“Excluded Marks”means all Trademarks and related registrations and applications forregistration owned by Seller or an Affiliate of Seller, or licensed to Selleror an Affiliate of Seller by any Person, and any derivations of the foregoing,and may include marks subject to the Brand Phaseout License Agreement; it beingunderstood and agreed that Excluded Marks are Excluded Assets.

 

“Expanded BasicCable Service” means video programming service that includes premiercast®level of services, as described on ***Schedule 5.19(b)***.

 

“Expiration Date”is defined in ***Section 15.1(a)***.

 

“FCC” means theFederal Communications Commission.

 

“Final AdjustmentAmount” is defined in ***Section 4.4(a)***.

 

6

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“Final Allocation”is defined in ***Section 4.5.***

 

“Final Closing”means the last Closing of the transactions contemplated by this Agreement.

 

“Final Statement”is defined in ***Section 4.4(a)***.

 

“FinancialStatements” is defined in ***Section 5.12***.

 

“FloridaMeasurement Date” means the last day of the calendar month immediatelypreceding the Closing Date of the sale of the Florida System.

 

“Florida RevenueAdjustment” is defined in ***Section 4.3(a)(ii)***.

 

“Florida SubscriberAdjustment” is defined in ***Section 4.3(a)(i)***.

 

“Florida System”means the cable television system serving the geographical areas identifiedunder section B of Annex I hereto and operating pursuant to the applicableFranchises.

 

“Florida SystemPayment” is defined in ***Section 4.2(c)***.

 

“Franchises” meansall municipal, county or other local franchises or ordinances and applicationsauthorizing the construction, installation, maintenance and operation of theSystems, including all written amendments thereto and modifications thereof.

 

“FranchisingAuthorities” means all municipal and county authorities which have issuedFranchises or before which are pending any Franchise applications relating tothe operation of the Systems.

 

“GAAP” meansUnited States generally accepted accounting principles.

 

“GovernmentalEntity” means any court, administrative agency, regulatory agency or body orcommission or other governmental authority or instrumentality, domestic orforeign, including any Franchising Authority.

 

“Homes PassedConstructed”****means single family residences, vacant lots, individualdwellings in multiple dwelling units, and commercial establishments that can beserved through the Systems via plant extensions or other minor construction.

 

“IndemnifiableLosses” is defined in ***Section 15.3(a)***.

 

“IndemnificationPayment” is defined in ***Section 15.3(a)***.

 

“IndemnifyingParty” is defined in ***Section 15.3(a)***.

 

“Indemnitee” isdefined in ***Section 15.3(a)***.

 

“IndependentAccountants” is defined in ***Section 4.4(b)***.

 

7

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“InitialAllocation” is defined in ***Section 4.5***.

 

“IntellectualProperty” means all Statutory Intellectual Property and Non-StatutoryIntellectual Property.

 

“IntellectualProperty Agreement” means the Intellectual Property Agreement between Sellerand Buyer, dated as of the Closing Date, in substantially the form of ExhibitC.

 

“Interim FinancialStatements” is defined in ***Section 7.9***.

 

“Inter-UnitServices” means all of the services or assets provided to, or costs incurred onbehalf of, the Business by Affiliates of Seller in connection with the Businessor relating to the Acquired Assets, including back-office and administrativesupport services, and services provided pursuant to (i) the Verizon Tariff, FCCNo. 10, section 4, effective January 25, 2001, for broadband video services,(ii) the Verizon Tariff, FCC No. 14, section 20, effective May 2, 2001, foroptical networking services, (iii) real estate lease agreements, and (iv) poleattachment and conduit occupancy lease or licensing agreements.

 

“Inventory” meansall inventory located on the Leased Real Property and all operating inventoryowned by Seller, wherever located, including raw materials, work in progress,recycled materials, finished products, packaging materials, supplies, spareparts, inventory acquired on or before the Closing Time from Verizon LogisticsInc., other inventory of every kind and nature existing for the Systems, and,in each case, used or held for use in the Business.

 

“Jointly OwnedProprietary Business Information” is defined in the Intellectual PropertyAgreement.

 

“Law” means anyfederal, state, provincial, local or foreign law, statute, rule, regulation orordinance of any Governmental Entity, excluding the Franchises (but not any suchLaw related to the Franchises).

 

“Leased RealProperty”means the leasehold interests in all real property, which realproperty is located in the geographical areas identified on Annex I hereto,used or held for use in the Business.

 

“Leases” means,collectively, the lease agreements pursuant to which leasehold estates andinterests in the Leased Real Property have been granted.

 

“LicensedIntellectual Property” is defined in the Intellectual Property Agreement.

 

“Lien” means anylien, charge, mortgage, option, security interest, restriction or otherencumbrance affecting title.

 

“Marketable Homes”means that portion of Homes Passed Constructed that can be served through theSystems without incurring substantial per unit expenses for any extension ormodification of any System, other than any expenses typically associated withinstallation of inside wiring or a “drop” and, for the avoidance of doubt, notincluding existing multiple

 

8

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dwelling units requiringa Bulk Agreement or a Right of Entry Agreement or other existing residentialareas for which Seller does not have access rights.

 

“Material AcquiredContracts” is defined in ***Section 5.8***.

 

“Material AdverseEffect” means a material adverse effect on the condition (financial orotherwise) or operations of the Business, the Systems or the Acquired Assets,taken as a whole, or any material adverse effect on the ability of Seller orits Affiliates, as applicable, to consummate the transactions contemplated by thisAgreement or the Ancillary Agreements, but shall specifically exclude any suchmaterial adverse effect resulting directly from the announcement of thisAgreement or the pendancy of the transactions contemplated hereby.

 

“Monthly Revenue”means an amount equal to (x) total recurring monthly Data Service revenues(excluding non-recurring revenues, which would include, but not be limited to,installation fees) for the Florida System for the calendar month ending on theFlorida Measurement Date, plus (y) the total recurring monthly cable televisionservice revenues (i.e., Basic Cable Service and Expanded Basic Cable Service,but excluding non-recurring revenues, which would include, but not be limitedto, installation fees) for the Florida System for the calendar month ending onthe Florida Measurement Date, minus (z) the retention adjustments for thecorresponding period (calculated in a manner consistent with Exhibit K, whichsets forth the Monthly Revenue and related adjustments for 2003); provided, however,that no revenue shall be included with respect to any customer in amulti-dwelling unit or commercial establishment that obtains service on a“bulk-rate” basis if the contracting party to the Bulk Agreement relating tosuch multi-dwelling unit or commercial establishment notifies Buyer or Sellerin writing (including by fax or email) that it does not intend to accept theassignment of such Bulk Agreement to Buyer.

 

“MaterialConsents” is defined in ***Section 5.4***.

 

“Measurement Date”means the California Measurement Date or the Florida Measurement Date, asapplicable.

 

“New York Courts”is defined in ***Section 16.2***.

 

“Non-DisclosureAgreement” means that Confidentiality Letter Agreement by and between Sellerand GLA, dated October 16, 2001.

 

“Non-Statutory IntellectualProperty” means all unpatented inventions (whether or not patentable), tradesecrets, know-how and proprietary information, including but not limited to (inwhatever form or medium), discoveries, ideas, compositions, formulas, Software,Software documentation, database, drawings, designs, plans, proposals,specifications, photographs, samples, models, processes, procedures, data,information, manuals, reports, financial, marketing and business data, andpricing and cost information, correspondence and notes, and any rights orlicenses in the foregoing which may be sublicensed to any Person who is not anAffiliate of Seller without the payment of compensation or other considerationto any Person.

 

“Normal BusinessLevel” is defined in ***Section 7.7(b)****.*

 

9

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“Notice ofDisagreement” is defined in ***Section 4.4(a)***.

 

“Parties” and“Party” are defined in the introductory paragraph of this Agreement.

 

“PBGC” means thePension Benefit Guaranty Corporation.

 

“Periodic Taxes”is defined in ***Section 14.5***.

 

“Permit” means anypermit, license, consent, franchise, approval or authorization (or anyamendment thereto or modification thereof) from any Governmental Entity,including the Franchises, and any satellite, business radio and other FCClicenses.

 

“Permitted Liens”means:

###  

### (a) mechanics’, carriers’, workmen’s, repairmen’s andother like Liens imposed by law arising or incurred in the ordinary course ofbusiness consistent with past practices,

###  

### (b) Liens for Taxes that are not yet due and payableor that are being contested in good faith,

###  

### (c) such other immaterial imperfections in title,charges, easements, restrictions and encumbrances which do not detract from thevalue of or interfere with the present use of the assets to which they relate,

###  

### (d) retention of title agreements with suppliersentered into in the ordinary course of business, or

###  

### (e) other Liens that are released concurrently with orprior to the Closing**.**

 

“Person” means anyindividual, corporation, partnership, joint venture, trust, limited liabilitycompany, business association or other entity.

 

“Pole Attachmentand Conduit Agreements” is defined in ***Section 2.1(d)(iii)***.

 

“Prepaid Expenses”means all prepaid expenses as of the Closing Date relating to the operation ofthe Business to the extent the benefit of such prepaid expenses can be realizedby Buyer within 12 months after the Closing Date (which prepaid expenses shallbe prorated between Seller and Buyer as of the Closing Date on the basis of theperiod covered by the respective prepayment); provided, however,that notwithstanding anything herein to the contrary, Prepaid Expenses shallnot include (A) prepaid expenses which relate to Inter-Unit Services (otherthan (i) as provided in the Transition Services Agreement and (ii) the PoleAttachment and Conduit Agreements), (B) prepaid expenses which relate tosupplies and Inventory, (C) prepaid insurance expenses, (D) prepaid wages,salaries, payroll taxes and expenses, benefits, perquisites and other compensationrelated expenses and (E) prepaid expenses which relate to the Excluded Assets.

 

“Pro Forma WorkingCapital Statement” means the statement dated June 30, 2003 and set forth on ***Schedule 5.5(ii)***,which contains the calculation of the (i) the Current Assets

 

10

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contemplated by ***Section 4.3(b)***,including without limitation the Accounts Receivable Settlement Amount, minus(ii) the Current Liabilities contemplated by *Section 4.3(c)*, in each casereasonably estimated by Seller, in good faith, to be the calculation as of suchdate that would be included in the Final Statement if the Closing had occurredon that date.

 

“ProprietaryBusiness Information” is defined in the Intellectual Property Agreement.

 

“ProrationPeriods” is defined in ***Section 14.5***.

 

“RequiredConsents” is defined in ***Section 9.3***.

 

“Right of EntryAgreements”****means all agreements used or held for use in the Businesswith owners or owners’ representatives of multiple-dwelling units that authorizethe provision of cable service to such multiple-dwelling units.

 

“Seller” isdefined in the introductory paragraph of this Agreement.

 

“Seller AncillaryAgreements” is defined in ***Section 5.2***.

 

“Seller BenefitPlans” is defined in ***Section 5.13(a)***.

 

“Seller’sKnowledge” (or any similar phrase) means the actual knowledge (after reasonableinquiry) of the individuals listed on ***Schedule 1.1-A***.

 

“Software” meansall software, in object, human-readable or source code form, as such softwareexists as of the Closing, including to the extent such exist: programs,applications, databases, data files, components or elements thereof; and allversions, upgrades, updates, enhancements and error corrections of all of theforegoing and documentation therefor.

 

“StatutoryIntellectual Property” means all United States and foreign patents and patentapplications of any kind, United States and foreign works of authorship,mask-works, copyrights, and copyright and mask work registrations andapplications for registration, and any rights or licenses in the foregoing.

 

“System” and“Systems” mean, individually or collectively, as applicable or as the contextrequires, the California System and/or the Florida System.

 

“System CashPayment” is defined in ***Section 4.2***.

 

“Target FloridaSubscriber Number” means the target number of Equivalent Basic Subscribers andData Subscribers in the aggregate specified on ***Schedule 1.1-B*** for the Florida System as ofthe Florida Measurement Date.

 

“Target FloridaSubscriber Revenue” means the target Monthly Revenue specified on ***Schedule 1.1-B*** forthe Florida System for the calendar month ending on the Florida MeasurementDate.

 

“Tax Indemnitee”is defined in ***Section 14.3(c)***.

 

11

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“Tax Indemnitor”is defined in ***Section 14.3(c)***.

 

“Tax Returns”means all federal, state, local and foreign tax returns, reports, forms,certificates and declarations of estimated tax reports, including attachments,schedules, workpapers and amendments.

 

“Tax Records”means all Tax Returns and workpapers related thereto.

 

“Tax” and “Taxes”means (i) all federal, state, provincial, local and foreign taxes, charges,fees, levies and other assessments, including any income, alternative orminimum, business and occupation, gross receipts, disability, unemploymentcompensation, social security, sales, use, ad valorem, value-added, transfer,franchise, profits, withholding, wage, payroll, employment, excise, stamp, realand personal property, environmental or other tax, together with all interest,penalties and additions with respect thereto, and (ii) any transferee liabilityin respect of any items described in clause (i) above.

 

“Third Party” or“Third Parties” means any Person other than Seller, Buyer or any of theirrespective Affiliates.

 

“Third PartyClaim” is defined in ***Section 15.4(a)***.

 

“Third PartyIntellectual Property” means any and all Intellectual Property owned by anyPerson, other than Seller, including (Affiliates of Seller), without regard asto whether Seller has any rights therein or the right to assign such rights toBuyer.

 

“Total CashPayment” is defined in ***Section 4.1***.

 

“Total Losses” isdefined in ***Section 7.7(b).***

 

“Tower Agreements”means the License Agreement (Tower Site) between Verizon Florida Inc. andBuyer, dated as of the Closing Date, in substantially the form of Exhibit Hfor the tower sites used in the Business.

 

“Trademarks” meanstrademarks, tradenames, applications for trademark registration, service marks,applications for service mark registration, logos, domain names, registrationsand applications for registrations pertaining thereto, and all goodwillassociated therewith.

 

“Transaction Tax”is defined in ***Section 14.4***.

 

“TransitionServices Agreement” means the Transition Services Agreement, by and betweenBuyer and Seller, dated as of the Closing Date, in substantially the form of ExhibitF.

 

1.2 Interpretation.  When a reference is made in this Agreementto a Section, recital, Schedule, Annex or Exhibit, such reference shall be to aSection, recital, Schedule, Annex or Exhibit of this Agreement unless otherwiseindicated.  The headings contained inthis Agreement are for reference purposes only and shall not affect in any waythe meaning or interpretation of this Agreement.  Whenever the words “included”, “includes” or “including” are usedin this Agreement, they shall be deemed to be followed by the phrase “withoutlimitation.” When used

 

12

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in this Agreement, theword “primarily” shall be deemed to be followed by the phrase “or exclusively.”All accounting terms not defined in this Agreement shall have the meaningsdetermined by GAAP.  Unless otherwiseindicated, all references to dollars refer to United States dollars.  The Parties acknowledge that both Partieshave participated in the drafting and preparation of this Agreement and theAncillary Agreements and agree that any rule of construction to the effect thatambiguities are to be construed against the drafting party shall not be appliedto the construction or interpretation of this Agreement or the AncillaryAgreements.

 

# ARTICLE II

 

# Purchase and Saleof Acquired Assets

 

2.1 AcquiredAssets Subject to Agreement. Effective as of the applicable Closing and upon the terms and subject tothe conditions of this Agreement, Seller shall sell, assign, transfer, conveyand deliver to Buyer, and Buyer shall purchase, assume and acquire from Seller,all right, title and interest in, to and under the Acquired Assets (as definedhereafter) as the same shall exist at the Closing Time for the applicableSystem.  “Acquired Assets” shall mean,as to the System or Systems that are being conveyed to Buyer at such ClosingTime, all properties, assets and rights, tangible and intangible, of everykind, nature and description, whether real, personal or mixed, that are used orheld for use in the Business (in each case, other than the Excluded Assets)including:

 

### (a) Accounts Receivable.  All Accounts Receivable.

###  

### (b) Inventory. All Inventory.

###  

### (c) Equipment. All equipment and other personal property used or held for use in theBusiness (the “Equipment”), including (without limiting the generality of theforegoing) (i) the Equipment described on ***Schedule 2.1(c),***(ii) all microcode embedded in theEquipment that was conveyed to Seller at the time it purchased the Equipmentand which Seller has the right to convey with the Equipment without the consentof, or the payment of compensation or other consideration to, any Person, and(iii) all other: spare and origination equipment, transmission and electronicequipment; set-top boxes; distribution equipment, including trunk, coaxial andoptical fiber cable, and drop lines; amplifiers; power supplies, conduit,vaults, pedestals, grounding and pole hardware; routers; customer devices,including converters, encoders and taps; installer and technician equipment,including vehicles; tower equipment; tools and test equipment; cable dataterminals; lab and test equipment;****supplies and office equipment, includingfurniture, personal computers and telephone desk sets; telephone numbers(including toll free numbers); microwave transmission and reception equipment;and subscriber terminal equipment.

###  

### (d) Acquired Contracts.  All of the Contracts and Permits used orheld for use in the Business, including the following (the “AcquiredContracts”):

####  

#### (i)                                     AllLeases with Third Parties (and interests in all Leased Real Propertythereunder);

####  

#### 13

#### 

####  

#### (ii)                                  Allleases relating to the Equipment described in ***Section 2.1(c)***, including those equipmentleases set forth on ***Schedule 2.1(d)(ii)***(which is a list of such leases that require expenditures by Seller in excessof $[ * ] annually or at one time);

####  

#### (iii)                               Allpole attachment and conduit agreements with Third Parties used or held for usein the Business, which are set forth on ***Schedule 2.1(d)(iii)*** (the “Pole Attachment and ConduitAgreements”);

####  

#### (iv)                              Allagreements with customers of the Business, including the bulk agreements withthe parties set forth on ***Schedule 2.1(d)(iv)*** (the “Bulk Agreements”) and allRight of Entry Agreements for multi-dwelling units and other bulk customers ofthe Business, for Data Services and video services;

####  

#### (v)                                 Allunfilled service orders for services to customers or prospective customers ofthe Business;

####  

#### (vi)                              Allagreements with advertisers entered into in the ordinary course of business(and ***Schedule 2.1(d)(vi)***contains a narrative description of any arrangement whereby Seller has agreedto barter or provide a discount with respect to goods or services in exchangefor advertising);

####  

#### (vii)                           AllFranchises;

####  

#### (viii)                        Allprogramming contracts, affiliation agreements, retransmission consentagreements and similar agreements with Third Parties set forth on ***Schedule 2.1(d)(viii)***;

####  

#### (ix)                                Alleasements and State and county highway crossing, rights of way and access withThird Parties, railroad crossing and right of way permits used or held for usein the Systems, in each case, other than those relating to the Pole Attachmentand Conduit Agreements, the Pole Attachment and Conduit Occupancy LicensingAgreements with Verizon Florida Inc. and the tariffs listed on ***Schedule 5.12(c)***;

####  

#### (x)                                   Allother agreements with Third Parties used or held for use in the Business,including those set forth on ***Schedule 2.1(d)(x)*** (which is a list of such otheragreements which require expenditures in excess of $[ * ] annually or at onetime); and

####  

#### (xi)                                Allletters of intent and agreements under negotiation with potential customers ofthe Business (including potential bulk customers).

###  

### (e) Acquired Records.  All Acquired Records.

###  

### (f) Prepaid Assets.  All Prepaid Expenses and all rights to deposits with ThirdParties, to the extent contemplated by ***Section 4.3(d)***.

 

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2.2 Excluded Assets.  Notwithstanding anything contained in ***Section 2.1*** hereof tothe contrary, the term “Excluded Assets” shall consist of the followingproperties, assets and rights of Seller:

 

### (a) Cash. Cash, cash equivalents, on hand or in banks owned by Seller (or itsAffiliates), certificates of deposit, bank or savings and loan accounts,U.S.  government securities, any othermarketable securities of any kind or nature or notes receivable.

###  

### (b) Claims. Claims or other rights of Seller against Third Parties relating to theBusiness and arising out of transactions occurring prior to the Closing Time,unless such claims or rights relate to (i) Third-Party warranties associatedwith the Acquired Assets, (ii) damage incurred by the Acquired Assets or (iii)the Assumed Liabilities.

###  

### (c) Intellectual Property and Trademarks.  Except for the Acquired IntellectualProperty and except and to the extent set forth in the Intellectual PropertyAgreement, all Intellectual Property and Trademarks of Seller or its Affiliates(including any Excluded Marks) and any Third Party Intellectual Property,Software and any rights or licenses in the foregoing.

###  

### (d) Bonds and Insurance.  Subject to ***Section 4.3(d)***, all of the bonds andinsurance policies furnished by Seller pursuant to any Franchise, PoleAttachment and Conduit Agreement, or other Permit, authorization or agreement,a list of which as of the date hereof is set forth on ***Schedule 2.2(d)***.

###  

### (e) Tax Refunds and Insurance Claims.  Rights to any (i) Tax refunds or credits forTax periods (or portions thereof) ending on or prior to the Closing Date, and(ii) insurance claims or rights to payment arising with respect to the AcquiredAssets associated with the applicable System on or before the Closing Date,except as provided in ***Section 7.7*** to the extent that such Acquired Assets werenot adequately repaired or replaced prior to the Closing Date.

###  

### (f) Inter-Unit Services.  The assets, properties and rights owned byAffiliates of Seller including (i) those listed on ***Schedule 2.2(f)***, (ii) those used in theoperation of the Systems through the provision of Inter-Unit Services by suchAffiliate, and (iii) any Contracts pursuant to which Inter-Unit Services areprovided.

###  

### (g) Corporate Documents.  The charter, bylaws, minute books, corporateseal, stock certificates, Tax Records, general ledger and other recordsrelating to the existence or governance of Seller in any jurisdiction, TaxRecords and all records relating to the Excluded Assets.

###  

### (h) Rights under Agreements.  All rights of Seller and its Affiliatesunder this Agreement, the Ancillary Agreements, and the certificates and otherdocuments delivered to Seller by Buyer in connection with the transactionscontemplated by this Agreement and the Ancillary Agreements.

###  

### (i) Records of Sale.  All records prepared in connection with the sale of the Systems,including bids received from Third Parties and analyses relating to theSystems.

###  

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### (j) Excluded Liabilities.  All rights related to the ExcludedLiabilities.

###  

### (k) Programming Agreements.  All of Seller’s NCTC contracts and all ofSeller’s programming contracts, affiliation agreements, retransmission consentagreements and similar agreements with Third Parties not listed on ***Schedule 2.1(d)(viii)***.

###  

### (l) Lutheran License.  Any and all rights in or related to that certain LutheranResidence Microwave License, license number WPQ730.

###  

### (m) Back Office Systems.  The back office systems provided to Sellerpursuant to a Contract with a Third Party and that are described on ***Schedule 2.2(m)***.

###  

### (n) Other Excluded Assets.  All tangible assets of Seller that arelocated outside the geographical areas identified on Annex I hereto and allother tangible assets which are, in all such cases, listed or described on ***Schedule 2.2(n)***, andany assets of any Seller Benefit Plan.

 

2.3 Third-Party Consents.  Nothing in this Agreement shall be construedas an attempt by Seller to assign any Contract or to transfer any Permit to theextent that such Contract or Permit is not assignable without the necessaryconsent, authorization or approval of the other party or parties thereto(including any Governmental Entity). For the avoidance of confusion, the foregoing sentence shall not beinterpreted to impose any obligation on Seller with respect to the assignmentor transfer of any Contract, Permit or other agreement other than the AcquiredContracts.  If any Closing isconsummated notwithstanding the absence of one or more Consents, at such timeas such Consent has been obtained, or any requisite filing or notice has beenmade or delivered, as applicable, such Contract or Permit shall be assigned ortransferred to Buyer automatically without any other conveyance or other actionby Buyer.

 

## 2.4 License.

 

### (a) Seller shall execute and deliver to Buyer on theClosing Date the Intellectual Property Agreement pursuant to which Seller shallgrant to Buyer a limited license on the terms and conditions set forth thereinfor Licensed Intellectual Property.

###  

### (b) Except for the Acquired Intellectual Property andexcept to the extent as expressly provided in the Intellectual PropertyAgreement, the Transition Services Agreement or the Brand Phaseout LicenseAgreement, (i) no rights or licenses, express or implied, to use or possess anyIntellectual Property, including Third Party Intellectual Property, or anySoftware are transferred to Buyer and (ii) nothing shall constitute or beconstrued as a license by Seller under any Intellectual Property now orhereafter owned, obtained or licensable by Seller or any Affiliate of Seller orunder any Third Party Intellectual Property.

 

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ARTICLE III

 

# Assumption ofLiabilities

 

3.1 Assumption ofLiabilities.  Upon the terms andsubject to the conditions of this Agreement, Buyer shall assume, pay, performand discharge when due, effective as of the applicable Closing, only thefollowing liabilities, responsibilities and obligations relating to theAcquired Assets corresponding to the applicable System or Systems that are thesubject of such Closing (other than the Excluded Liabilities) (the “AssumedLiabilities”):

###  

### (a) Acquired Contracts.  All of Seller’s liabilities,responsibilities and obligations under the Acquired Contracts, except to theextent such liabilities (x) relate to any period prior to such ClosingTime and are not Current Liabilities assumed pursuant to ***Section 3.1(b)*** or (y) are the result of anybreach or default of Seller thereunder***.***

###  

### (b) Current and Accrued Liabilities.  All Current Liabilities, to the extent andonly up to the amount included in the calculation of Current Liabilitiespursuant to ***Section 4.3***and ***Section 4.4*** and, forthe avoidance of doubt, excluding all liabilities, losses, expenses, damages,costs or other amounts arising out of or relating to litigation pending,existing or threatened as of the applicable Closing Time, and any othercontingent or unknown liability existing as of the applicable Closing Time.

###  

### (c) Operating Liabilities.  All liabilities, responsibilities,obligations, costs and expenses with respect to claims arising in any way withrespect to or as a result of the operation of the applicable System if and onlyto the extent that they relate to Buyer’s ownership of the Acquired Assets orarising out of its operation of the Business, in each case, after theapplicable Closing Time, including, without limitation, any and all franchisefees, pole attachment and conduit rentals (other than amounts reflected in item3 of ***Schedule 5.10*** thataccrue prior to the Closing Date for the Florida System), copyright fees, Taxesor tort claims arising out of the operation of the Business or the ownership ofthe corresponding Acquired Assets, in each case, after the applicable ClosingTime (except for Taxes, which shall be assumed for periods commencing after theapplicable Closing Date in accordance with ***Section 14.5***, other than Transaction Taxes, which shallbe assumed in accordance with ***Section 14.4***).

###  

### (d) Employee Matters.  All liabilities, responsibilities and obligations required to beassumed or performed specifically by Buyer pursuant to the Employee MattersAgreement.

 

3.2 ExcludedLiabilities.  Except for theAssumed Liabilities identified in ***Section 3.1,*** Buyer shall not assume, and Seller shallretain and shall pay, perform and discharge when due, all liabilities,responsibilities and obligations of Seller (the “Excluded Liabilities”).

 

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ARTICLE IV

 

# Consideration

 

4.1 Consideration. The total consideration to be paid by Buyer to Seller for the AcquiredAssets shall be (i) the payment to Seller of cash in an amount equal to$15,000,000 (the “Total Cash Payment”), subject to the adjustments required by ***Section 4.3*** hereof,and (ii) the assumption by Buyer of the Assumed Liabilities.

 

4.2 Payment of CashPayments.  Subject to thesatisfaction or waiver of the conditions set forth in **Article X**, Buyer shall paythe Total Cash Payment as adjusted pursuant to ***Section 4.3***, if applicable, to Seller asfollows:

 

(a)                                  Thesum of $[ * ] will be paid immediately after the execution anddelivery of this Agreement by wire transfer of immediately available funds toan escrow account designated by Seller (together with all interest whichaccrues thereon from the date hereof, through and until the date upon which theEscrow Amount is applied to a System Cash Payment or is distributed inaccordance with ***Section 11.3(b)***,collectively, the “Escrow Amount”) to be held in escrow by Seller againstpayment of the Total Cash Payment and as security for the performance by Buyerof its obligations under this Agreement. Seller shall not withdraw, transfer or encumber any funds in the escrowaccount or, without the prior written consent of Buyer, modify the manner inwhich such funds are invested, and the Escrow Amount shall be held in trustuntil it is either applied as provided in ***Section 13.1*** hereof or distributed in accordance with ***Section 11.3(b)***hereof.  Seller shall invest the EscrowAmount in either a money market mutual fund or in direct obligations of theUnited States of America, obligations for which the full faith and credit ofthe United States of America is pledged to provide for the payment ofprincipal.  Seller shall cause copies ofthe monthly statements with respect to the Escrow Account to be transmitted toBuyer.

 

(b)                                 $[* ]****(the“California System Payment”) (as adjusted pursuant to ***Section 4.3***) will be paid on the Closing Dateof the California System by wire transfer of immediately available funds to anaccount designated by Seller in writing.

 

(c)                                  $[* ]******(the “Florida SystemPayment”) (as adjusted pursuant to ***Section 4.3***) will be paid on the Closing Date of theFlorida System by wire transfer of immediately available funds to an accountdesignated by Seller in writing.  Uponthe Closing related to the Florida System, the Escrow Amount will be refundedto Buyer.

 

Each of the CaliforniaSystem Payment and the Florida System Payment shall also be referred to as a“System Cash Payment”.

 

4.3 Adjustments to Cash Payments.  Each System Cash Payment will be adjusted asfollows:

 

### (a) The Florida System Payment shall be adjusted asset forth in this ***Section 4.3(a)***.  If the Combined Florida Adjustment is anegative number, then the Florida

###  

### 18

### 

###  

### System Paymentshall be reduced by that amount.  If theCombined Florida Adjustment is a positive number, then the Florida SystemPayment shall be increased by that amount.

####  

#### (i)                                     [* ].

####  

#### (ii)                                  [* ].

####  

#### (iii)                               [* ].

###  

### (b) Each System Cash Payment shall be increased by anamount (if any) equal to the value, as of the applicable Closing Time, of(i) the Accounts Receivable Settlement Amount, (ii) all PrepaidExpenses made to Third Parties, and (iii) the amount of any monies thatare on deposit with Third Parties as security for Seller’s performance of theAcquired Contracts (which such deposits, to the extent not replaced byundertakings of Buyer as contemplated by ***Section 8.5,*** will be deemed Acquired Assets), in eachcase, related to the applicable System and to the extent such amounts will betreated as Acquired Assets (clause (i), (ii) and (iii) collectively, the“Current Assets”).

###  

### (c) Each System Cash Payment shall be decreased by anamount (if any) equal to the value, as of the applicable Closing Time, of theaccrued expenses, prepaid income, accounts payable and accrued currentliabilities related to the applicable System that are incurred in the ordinarycourse, consistent with past practice (except, in all cases, for Tax itemswhich are governed by ***Article XIV*** hereof) and to the extent such amounts willbe treated as Assumed Liabilities (the “Current Liabilities”).

###  

### (d) All values and amounts used to adjust a SystemCash Payment pursuant to this ***Section 4.3*** shall be determined in accordance with GAAP,to reflect the principle that, except as qualified in this ***Section 4.3***, all income and expensesattributable to the applicable System for the period prior to the Closing Timeapplicable to such System are for the account of Seller, and all income andexpenses attributable to the applicable System for the period after the ClosingTime applicable to such System are for the account of Buyer.

###  

### (e) Seller shall prepare and deliver to Buyer, atleast ten business days prior to each Closing Date, a statement (each, an“Estimate Statement”) showing in reasonable detail the amount reasonablyestimated by Seller, in good faith, to be the net amount, if any, of theadjustments provided for in this ***Section 4.3***.  Theapplicable System Cash Payment paid by Buyer shall be the estimated amount setforth in the related Estimate Statement and shall be adjusted after theapplicable Closing, if necessary, pursuant to ***Section 4.4***.

##  

## 4.4 FinalAdjustment Amount.

###  

### (a) Within 45 days after each Closing Date, Sellershall prepare and deliver to Buyer a statement (each, a “Final Statement”),setting forth Seller’s good faith determination of the actual adjustment to theapplicable System Cash Payment (each, a “Final Adjustment Amount”).  The Final Adjustment Amount in respect ofeach System Cash Payment shall be calculated in a manner consistent with thePro Forma Working

###  

### 19

### 

###  

### Capital Statementas set forth on ***Schedule 5.5(ii)***.  Each of Seller and Buyer shall provide theother Party with access during normal business hours to any books, records,working papers or other information in its possession after each Closing Timereasonably necessary or useful in the preparation of the Final Statement andthe calculation of the Final Adjustment Amount for the applicable System CashPayment.  Each Final Statement shallbecome final and binding upon all Parties hereto on the 16th day followingdelivery thereof (without counting such day of delivery) to Buyer unless Buyergives written notice of a good faith disagreement with such Final Statement (a“Notice of Disagreement”) to Seller prior to such date.  Any Notice of Disagreement shall specify inreasonable detail the nature of any disagreement so asserted and relate solelyto the review of the applicable Final Statement and the calculation of theapplicable Final Adjustment Amount.

###  

### (b) If a Notice of Disagreement is delivered by Buyeras required pursuant to ***Section 4.4(a)***, then the applicable Final Statementshall become final and binding upon all parties hereto on the earlier of (x)the date Seller and Buyer resolve in writing any differences they may have withrespect to all matters specified in the Notice of Disagreement and (y) the dateall disputed matters are finally resolved in writing by an independent publicaccounting firm (the “Independent Accountants”).  During the 30-day period following the delivery of a Notice ofDisagreement, Seller and Buyer shall seek in good faith to resolve anydifferences which they may have with respect to any matter specified in theNotice of Disagreement and each shall provide the other with reasonable accessto any books, records, working papers or other information reasonably necessaryor useful in the preparation or calculation of (i) the Final Adjustment Amount,(ii) the Final Statement, or (iii) the Notice of Disagreement.  At the end of such 30-day period if therehas been no resolution of the matters specified in the Notice of Disagreement,Seller and Buyer shall make a written submission of any and all matters arisingunder this ***Section 4.4***that remain in dispute to the Independent Accountants for review andresolution.  The Independent Accountantsshall be PriceWaterhouseCoopers or, if such firm is unable or unwilling to act,such other nationally  recognizedindependent public accounting firm as shall be agreed upon by Seller andBuyer.  The Independent Accountantsshall render a decision resolving the matters submitted to the IndependentAccountants within 30 days following submission thereto (or as soon thereafteras reasonably practicable).  The feesand expenses of the Independent Accountants incurred pursuant to this Agreementshall be shared equally by Buyer and Seller.

###  

### (c) If as a result of any adjustments made pursuant tothis ***Section 4.4***, Buyer isfinally determined to owe any amount to Seller, Buyer shall within threebusiness days pay such amount to Seller, and if Seller is finally determined toowe any amount to Buyer, Seller shall within three business days pay suchamount to Buyer.  Any such paymentsshall be made by federal wire transfer of immediately available funds to anaccount designated in writing by the Party receiving payment and shall bearinterest from the applicable Closing Date at the rate of 6% per annum.

 

4.5 Allocation ofCash Payments.  No later than 90days subsequent to the Closing Date for each System, Buyer shall provide Sellerwith the allocation of the appropriate portions of the System Cash Payment,Assumed Liabilities and other relevant items (including, for example,

 

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adjustments to the SystemCash Payment) to individual assets (including the Intellectual PropertyAgreement) or classes of assets in the manner prescribed under Section 1060 ofthe Code (the “Initial Allocation”).  IfSeller objects to such Initial Allocation within 60 days of receipt of suchallocation, Buyer and Seller shall attempt in good faith to resolve theirdifferences; provided, however, that if such differences are not resolvedwithin 60 days from the date of Seller’s objection, the disputed items shall beresolved by the Independent Accountants specified in ***Section 4.4(b)***.  In resolving such difference, the Independent Accountants shalluse solely materials provided by the parties hereto and shall not conduct itsown investigation.  The allocation withrespect to each System as either agreed to by the parties hereto or thusdetermined by the Independent Accountants (if applicable) shall be the “FinalAllocation”.  Buyer and Seller (andtheir Affiliates) agree to use the Final Allocations in preparing and filingall required forms under Section 1060 of the Code and all other Tax Returns andneither Buyer nor Seller (nor their Affiliates) will take any position beforeany Governmental Entity or in any judicial proceeding that is in any wayinconsistent with such Final Allocation unless otherwise required by Law.  Each of Buyer and Seller (and theirAffiliates) shall notify the other within 15 business days if it receiveswritten notice that any Tax authority proposes any allocation that is differentfrom the Final Allocation.

 

ARTICLE V

 

# Representations and Warranties of Seller

 

Seller represents and warrants to Buyer as follows:

 

5.1 Organization,Standing and Power.  Seller is acorporation duly organized, validly existing and in good standing under thelaws of the State of Delaware.  Sellerhas the requisite power and authority to own, lease, use, operate and transferits properties, including the Acquired Assets, and to conduct the Business ascurrently conducted.  Seller isqualified or registered to do business and is in good standing in the States ofCalifornia, Texas and Florida, and these three states are the only states inwhich the ownership of the Systems and the Acquired Assets or operation of theBusiness makes such qualification necessary.

 

5.2 Authority.  Seller has all corporate power and authoritynecessary to execute this Agreement and the Ancillary Agreements to which it isor will be a party (the “Seller Ancillary Agreements”) and to consummate thetransactions contemplated thereby and by this Agreement.  The execution and delivery of this Agreementand the consummation of the transactions contemplated hereby by Seller havebeen duly authorized by all necessary corporate action, and the execution andperformance of the Seller Ancillary Agreements by Seller will be authorized byall necessary corporate action prior to the Closing.  This Agreement constitutes, and upon execution of each of theSeller Ancillary Agreements such agreements will constitute, valid and bindingobligations of Seller, enforceable against Seller in accordance with theirrespective terms, such enforcement subject to bankruptcy, insolvency,reorganization, moratorium, or similar Laws of general application affecting creditors’rights and the application of general principles of equity.

 

5.3 No Breach orConflict.  Subject to the receipt ofthe Material Consents, neither the execution, delivery and performance of thisAgreement and the Seller Ancillary Agreements, nor

 

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the consummation of thetransactions contemplated hereby and thereby, will (a) cause Seller tomaterially breach any Law or Court Order that is applicable to the Systems,(b) conflict with or result in a violation of Seller’s Certificate ofIncorporation or Bylaws, (c) conflict with or result in a breach,termination, cancellation or acceleration (with the giving of notice, the lapseof time, or the happening of any further event or condition) of any right,obligation or benefit of or under (i) any Material Acquired Contract, Franchiseor any material Permit used or held for use in the Business or (ii) anyEmployee Benefit Plan that could result in liability to Buyer, or(d) result in the creation of any Lien (other than a Permitted Lien), orgive to others any interest or rights, in or with respect to any of theAcquired Assets.

 

5.4 Material Consents.  ***Schedule 5.4***contains a list of (i) all Consents required in respect of MaterialAcquired Contracts, and (ii) all Consents required from GovernmentalEntities (the “Material Consents”).

 

5.5 Accounts Receivable.  Except as disclosed on ***Schedule 5.5(i)***, all of the AccountsReceivable related to the Business (including the Accounts Receivable set forthin the Pro Forma Working Capital Statement) (a) are reflected and properlyrecorded on the books and records of the Business; (b) represent salesactually made in the ordinary course of business consistent with past practicefor goods or services delivered or rendered in bona fide arm’s-lengthtransactions with Third Parties; (c) constitute to Seller’s Knowledge validundisputed claims, except for any disputes or claims arising in the ordinarycourse of business and consistent with past experience, (d) are not subjectto any assertions of material set-off, reduction, counterclaim, claim ordispute; (e)  have not been extended or rolled over in order to make themcurrent; (f) are current (except as set forth in the Aging Report provided toBuyer prior to entering into this Agreement and any subsequent Aging Reportsdelivered by Seller pursuant to ***Section 7.9***); and (g) are or will be represented inthe ordinary course by one or more invoices, each of which has been generated,and provides for payment to be made, in the name of Seller.  The Accounts Receivable data set forth inthe Aging Reports and the Pro Forma Working Capital Statement is true andcorrect in all material respects and has been prepared consistent with pastpractice.

 

5.6 Tangible Assets.  Except as set forth on ***Schedule 5.6***, all of the tangible Acquired Assets with avalue in excess of $[ * ] individually or $[ * ] in theaggregate and that are used in the operation of the Systems are in goodoperating condition and repair, normal wear and tear excepted.  Except as set forth on ***Schedule 5.6***, Seller has not receivedany written notice within the past 12 months of a material violation of anyordinance, regulation or building, zoning or other similar Law with respect tosuch assets.  Seller has good and marketabletitle to (or, in the case of Acquired Assets that are leased, valid leaseholdinterests in) the tangible Acquired Assets free and clear of all Liens otherthan Permitted Liens.  The amount ofPermitted Liens (other than Liens for Taxes that are not yet due and payable orthat are being contested in good faith) does not exceed $[ * ] in theaggregate.

 

5.7 Claims, Litigationand Disputes.  Except as set forthon ***Schedule 5.7***,******there is no existingor pending claim, litigation, action, charge, arbitration, legal proceeding or,to Seller’s Knowledge, grievance or investigation, before any arbitrator,mediator or Governmental Entity or, to Seller’s Knowledge, threatened againstSeller, which, if adversely determined, would or would reasonably be expected toadversely affect (i) Seller’s (or any of its Affiliates’) ability toperform its obligations hereunder or under the Seller Ancillary Agreements,(ii) the rights

 

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granted under theAcquired Contracts, (iii) the financial condition or business operations of theSystems or (iv) the ownership, use, maintenance or operation of the AcquiredAssets, including the Systems, or the conduct of the Business by Seller orBuyer.

 

5.8 Acquired Contracts.  ***Schedule 5.8***sets forth a true and complete list of all Material Acquired Contracts.  Seller has provided to Buyer true, correctand complete copies of all Material Acquired Contracts, except for anycontracts subject to disclosure restrictions for which Seller was not given theright to provide to Buyer.  Except asset forth on ***Schedule 5.8***,(i) each Material Acquired Contract is valid, binding upon Seller and in fullforce and effect, and (ii) neither Seller nor, to Seller’s Knowledge, anyother party to any Material Acquired Contract is in material breach thereof ordefault thereunder and there does not exist any event, occurrence, condition,or act that, with the giving of notice, the lapse of time, or the happening ofany further event or condition, would become a material breach or default bySeller under any Material Acquired Contract. As of the date hereof neither Seller nor any Affiliate of Seller hasreceived any written notice of the intention of any party to terminate anyMaterial Acquired Contract.  The term“Material Acquired Contract” means the (a) Pole Attachment and ConduitAgreements, (b) the Bulk Agreements and Right of Entry Agreements,(c) Seller’s programming agreements which constitute Acquired Contractspursuant to ***Section 2.1(d)(viii)***,(d) any other Acquired Contract that provides for the payment of aggregatefuture annual payments or other consideration over the current term of suchAcquired Contract to or from Seller in excess of $[ * ] and (e) anyAcquired Contract, the loss of which would or would reasonably be expected tohave a Material Adverse Effect.

 

5.9 Compliance With Laws.  Except as disclosed on ***Schedule 5.9***, the Systems and the Businesscomply, in all material respects, with all Laws applicable to the Systems.  Except as disclosed on ***Schedule 5.9***, neither Seller nor anyAffiliate of Seller has received any written notice within the past 12 monthsrelating to violations or alleged violations or defaults under any applicableLaw or Court Order and, to Seller’s Knowledge, no event or circumstance hasoccurred that with notice, lapse of time, or both would constitute a materialviolation or event of default thereunder.

 

5.10 Taxes, Fees and Utilities.  Except as disclosed on ***Schedule 5.10***, and with regard to the Systemsand the Acquired Assets:

 

### (a) (i) all material Tax Returns required to be filedby Seller prior to the Closing Date have or will have been timely filed, allsuch Tax Returns were or will be true, correct and complete in all materialrespects when filed, and all Taxes shown as due and payable on such Tax Returnshave been or will be paid by Seller when required by applicable Law, (ii) thereare no Tax Liens upon any of the Acquired Assets except for Permitted Liens,(iii) Seller is not a “foreign person” within the meaning of Section 1445(b)(2)of the Code, (iv) none of the Acquired Assets is “tax exempt use property”within the meaning of Section 168(h) of the Code, (v) none of the AcquiredAssets is subject to a lease made pursuant to Section 168(f)(8) of the InternalRevenue Code of 1954, and (vi) no claim has ever been made by a taxingauthority in a jurisdiction where Seller does not currently file Tax Returnsthat Seller is or may be subject to taxation by such jurisdiction in respect ofthe income, assets or operation of the Business.

###  

### 23

### 

###  

### (b) Seller has paid in full any and all franchise feesand material license fees, business permit costs, pole attachment fees,unemployment and worker’s compensation insurance contributions and utilitybills required to be paid.

##  

## 5.11 Franchises andPermits.

###  

### (a) ***Schedule 5.11(a)*** contains a true and complete list ofall Franchises and material Permits required to operate the Business as it isoperated on the date hereof and as would reasonably be expected to be requiredas of the Closing Time.  Except as setforth on ***Schedule 5.11(a)***or contained in the Franchises, the Franchises are subject to no conditions orrestrictions other than such as may exist by virtue of acts of the UnitedStates Congress, the rules and regulations of federal regulatory agencies orlaws and rules adopted by the various local governing authorities of thejurisdictions in which the Systems are located.  Other than orders, actions, proceedings or investigations generallyapplicable to the cable television industry in the United States or in thejurisdictions in which the Systems are located, there are no proceedingspending which would materially and adversely affect the validity of theFranchises or the terms and provisions thereof.  Except as disclosed on ***Schedule 5.11(a)***, (i) the Systems and the otherAcquired Assets are being operated and the Business is being conducted, incompliance with all Franchises in all material respects, (ii) neitherSeller nor any of its Affiliates has received any written notice from aFranchising Authority threatening any enforcement action with respect to anyFranchise, stating that the Systems are in noncompliance with the terms of anyFranchise (including that the provision of Data Services is prohibited by theterms of such Franchise) or stating that such Franchise will not be renewed,(iii) no Franchising Authority currently has any right to purchase aSystem or any portion thereof, (iv) no Franchise is, to Seller’s Knowledge, underconsideration to be revoked or adversely modified in any material respect and(v) there are no undisclosed material obligations with respect to anyFranchise, other than those set forth in the Franchises.

###  

### (b) Except as set forth on ***Schedule 5.11(b)***, (i) Seller holds allFranchises and material Permits necessary to operate the Systems in the mannerin which they are operated on the date hereof and (ii) the Franchises andmaterial Permits are valid, binding and enforceable in accordance with theirrespective terms or by operation of Law. Seller has provided to Buyer true, correct and complete copies of suchFranchises and other material Permits.

##  

## 5.12 FinancialStatements.

###  

### (a) ***Schedule 5.12(a)(i)*** sets forth true and complete copiesof the unaudited statements of operations of each of the Systems for the yearended December 31, 2002, and the quarter ended March 31, 2003 (the “FinancialStatements”).  The Financial Statementswere prepared in good faith using reasonable allocations and assumptions fromthe books and records of account of Seller, which books and records are kept inthe normal course of business and in accordance with GAAP.  Except as disclosed on ***Schedule 5.12(a)(ii)***, the FinancialStatements fairly and accurately reflect in all material respects the operatingresults of the Systems for the periods indicated.  However, without limiting the representations in the precedingsentence, since Buyer is not acquiring

###  

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### significantelements of support to the Systems that are contained in the Inter-UnitServices that are listed on ***Schedule 5.12(c)***, and since Buyer may operate under newprogramming contracts and since the Systems do not represent all of theoperations of Seller, the Financial Statements may not be representative of theoperating results of the Systems during future periods.

###  

### (b) Except as disclosed in the Financial Statements oron ***Schedule 5.12(b)*** orexcept for liabilities and obligations incurred in the ordinary course ofbusiness since March 31, 2003, the Systems and the Business do not have anymaterial undisclosed liability or obligation, whether accrued, absolute, fixedor contingent, which would become Assumed Liabilities pursuant to ***Section 3.1***.

###  

### (c) ***Schedule 5.12(c)*** sets forth (i) all Inter-UnitServices and (ii) the allocations relating to all Inter-Unit Services thatare included in the Financial Statements.

###  

### (d) The financial records of the Business areauditable.

##  

## 5.13 Employeesand Related Matters.

###  

### (a) ***Schedule 5.13(a)*** sets forth a complete and correct listof all Employee Benefit Plans maintained or contributed to by Seller or anyERISA Affiliate in respect of or for the benefit of Employees (the “SellerBenefit Plans”).  Seller has made availableto Buyer true, complete and correct copies of the Seller Benefit Plandocuments, summary plan descriptions and all related documents.

####  

#### (i)                                     EachSeller Benefit Plan has been maintained and operated in all material respectsin compliance with applicable Law, including the Code and ERISA, and inaccordance with the terms of such plan. Each Seller Benefit Plan intended to qualify under Section 401 of theCode (and each related trust intended to be exempt from federal income taxationunder Section 501 of the Code) has received a favorable determination letterfrom the Internal Revenue Service (or an application for such a letter ispending or will be filed within the applicable remedial amendment period).

####  

#### (ii)                                  NoSeller Benefit Plan is (A) a multiemployer plan, as defined in Section 3(37) ofERISA or (B) a multiple employer plan subject to Sections 4063 or 4064 ofERISA.

####  

#### (iii)                               Allcontributions (including all employer contributions and employee salaryreduction contributions) required to have been made under any of the SellerBenefit Plans or by Law (without regard to any waivers granted under Section412 of the Code) to any funds or trusts established thereunder or in connectiontherewith have been made by the due date thereof (including any validextension), and all contributions for any period ending on or before theapplicable Closing Date which are not yet due will be paid by the required duedate.  No accumulated fundingdeficiencies (whether or not waived) exist in any Seller Benefit Plan subject toSection 412 of the Code or Section 302 of ERISA.

####  

#### 25

#### 

####  

#### Neither Seller norany ERISA Affiliate thereof has provided, or is required to provide, securityto any Seller Benefit Plan under Section 401(a)(29) of the Code.

####  

#### (iv)                              Noevent has occurred nor shall any event occur as a result of the transactionscontemplated by this Agreement which will result in the imposition upon Buyeror any Affiliates of Buyer of any material liability directly or indirectlyattributable to or relating to the Seller Benefit Plans or any other EmployeeBenefit Plan maintained or sponsored by, or contributed to by, Seller or anyERISA Affiliate thereof.

####  

#### (v)                                 Noliability under Subtitle C or D of Title IV of ERISA has been or is expected tobe incurred by Seller or any ERISA Affiliate thereof with respect to anyongoing, frozen or terminated “single-employer plan”, within the meaning ofSection 4001(a)(15) of ERISA, currently or formerly maintained by Seller or anERISA Affiliate thereof.  No notice of a“reportable event”, within the meaning of Section 4043 of ERISA for which the30-day reporting requirement has not been waived or extended, other thanpursuant to PBGC Regulation Section 4043.66, has been required to be filed forany Seller Benefit Plan within the 12-month period ending on the date hereof orwill be required to be filed in connection with the transactions contemplatedby this Agreement.  Neither Seller norany ERISA Affiliate thereof has engaged in a transaction described in Section4069 of ERISA.

###  

### (b) Except as set forth on ***Schedule 5.13(b)***, there are no pendingactions, claims or lawsuits which have been asserted or instituted against theSeller Benefit Plans, the assets of any of the trusts under such plans or theplan sponsor or the plan administrator, or against any fiduciary of the SellerBenefit Plans with respect to the operation of such plans (other than routinebenefit claims), nor to Seller’s Knowledge are there any facts which could formthe basis for any such claim or lawsuit.

###  

### (c) Seller has delivered to Buyer true, correct andcomplete copies of the Collective Bargaining Agreements, which are the onlycollective bargaining agreements that relate to the Acquired Assets or theBusiness.Except as set forth on ***Schedule 5.13(c)***, (i) none of the Employees isrepresented by a labor union or labor organization; (ii) neither Seller nor anyAffiliate thereof is subject or is a party to any collective bargainingagreement covering any Employee; (iii) there are no labor strikes, slowdowns,work stoppages or lockouts currently pending or, to Seller’s Knowledge,threatened by or with respect to any Employees; (iv) to Seller’s Knowledge,during the 12 months preceding the date of this Agreement, there have not beenany labor union organizational campaigns by or directed at any Employees; (v)there is no unfair practice complaint pending with respect to any Employees or,to Seller’s Knowledge, threatened before the National Labor Relations Board orany other Governmental Entity; (vi) there is no grievance arising under anycollective bargaining agreement pending against or involving Seller or itsAffiliates with respect to any Employees, (vii) to Seller’s Knowledge norepresentation petition with respect to any Employee has been filed with theNational Labor Relations Board; and (viii) Seller has not experienced anyprimary work stoppage during the past five years.

###  

### 26

### 

###  

### (d) ***Schedule 5.13(d)*** contains a list of (i) all ofEmployees and their salary and bonus and other monetary compensation as ofMarch 31, 2003 (including an indication as to whether any such Employee ison leave) and (ii) all independent contractors (other than independentcontractors who have only worked at the Wentzville, Missouri call center, inIrving, Texas or in New York) who performed services for the Business for thethree months ended March 31, 2003.

###  

### (e) Except as set forth on ***Schedule 5.13(e)***, (i) there is no employmentor employment related agreement with any Employee and none is being negotiated,(ii) there is no existing, or to Seller’s Knowledge, threatened litigationinvolving any Employee, (iii) there is no existing, or to Seller’s Knowledge,threatened charge involving any Employee filed with any Governmental Entity,(iv) there is no existing, or to Seller’s Knowledge, threatened internalcharge, claim, action suit, complaint, arbitration, inquiry, proceeding orinvestigation involving any Employee filed in writing and (v) neither Sellernor any Affiliate thereof is a party to, or otherwise bound by, any consentdecree with, or citation by, any Governmental Entity relating to any Employeeor any employment practice.

 

5.14 Environmental Matters.  The operation of the Business, including onthe Leased Real Property, has been and is currently being conducted in fullcompliance with (i) all Environmental Laws and (ii) all environmental, healthand safety Permits required under all applicable Environmental Laws to conductthe Business as it is being conducted, except for any noncompliance that has nothad, would not have, or would not reasonably be expected to have, a MaterialAdverse Effect.  All such Permits are infull force and effect.  Within the last12 months:  (i) no notice, notification,demand, request for information, citation, summons or order has been issuedwith respect to the Business or its assets or operations, (ii) no writtencomplaint has been filed, (iii) no material penalty has been assessed and (iv)to Seller’s Knowledge, no investigation or review is pending or threatened by anyGovernmental Entity with respect to any alleged failure to have anyenvironmental, health or safety Permit required under any applicableEnvironmental Law, in each case, in connection with the operation of theBusiness.

 

5.15 Brokerage Fees. Except for [ * ], whose fee will be paid by Seller pursuant to aseparate agreement, no acting on behalf of Seller is entitled to any brokerageor finder’s fee or commission in connection with the transactions contemplatedby this Agreement.

 

5.16 Exclusive Dealing.  Neither Seller nor any of its Affiliates is a party to anycurrently effective agreement involving, directly or indirectly, the sale ortransfer of any securities issued by Seller, the Acquired Assets (other thanInventory in the ordinary course), or any of the Systems to any Person otherthan Buyer.

##  

## 5.17 Titleto and Condition of Real Property.

###  

### (a) Seller does not own any fee title in any realproperty used or held for use in the Business.

###  

### 27

### 

###  

### (b) Except as disclosed on ***Schedule 5.17(b)***, as to all of the LeasedReal Property, Seller holds a valid leasehold interest in such property, notsubject or subordinate to any Lien, except for Permitted Liens.

 

### (c) ***Schedule 5.17(c)(i)***identifies all the Leased Real Propertyand the parties to each of the Leases. To Seller’s Knowledge, all of the Leased Real Property is zoned so as topermit the current use of such property. To Seller’s Knowledge, all buildings, improvements (and the structuralelements and mechanical systems thereof), fixtures, machinery, equipment andsystems that are a part of, or located on, the Leased Real Property are in goodcondition and repair and in good working order, ordinary wear and tearexcepted, and except, in each case, where a failure to be in such conditionwould not reasonably be expected to be material to the operation of theSystems, assuming Buyer continues to conduct the business and operations of theSystems as currently conducted.

###  

### (d) Seller has made available to Buyer true andcomplete copies of all Leases (including any and all amendments ormodifications).

###  

### (e) Except as disclosed on ***Schedule 5.17(e)***, (i) Seller is in compliancein all respects with the easements on the Leased Real Property, and, (ii) toSeller’s Knowledge, no event or circumstance has occurred that with notice,lapse of time, or both would constitute an event of default thereunder bySeller, in each case except for any noncompliance or default which has not hadand would not, or would not reasonably be expected to, have a Material AdverseEffect.

 

5.18 Intellectual Property and Trademarks.

 

### (a) Except as set forth in ***Schedule 5.18***, Seller has not receivedany written notice that it has infringed any rights with respect to theIntellectual Property or Trademarks of any Third Party as a result of Seller’sconduct of the Business.

###  

### (b) Seller owns or otherwise possesses all rightsnecessary to transfer all its rights in and to the Acquired IntellectualProperty.  The Acquired IntellectualProperty, the Licensed Intellectual Property, the Third Party IntellectualProperty and the Excluded Marks are all of the Intellectual Property used bySeller to conduct the Business.

###  

### (c) To Seller’s Knowledge, no Person ismisappropriating, violating or infringing upon, or since July 15, 2001, hasviolated or infringed upon, any of the Acquired Intellectual Property not ownedby a Third Party.

 

(d) Seller has one or more privacy policies governing the collectionand use of information by Seller and its Affiliates, including CustomerProprietary Information.  To Seller’sKnowledge, Seller has not collected or used any such information, including anyCustomer Proprietary Information, in any manner in violation of any suchprivacy policies.

 

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## 5.19 Systems.

###  

### (a) ***Schedule 5.19(a)*** sets forth a true and accuratestatement, on a System-by-System basis, as of the date(s) set forth in saidSchedule, of the following information with respect to each of the Systems:

####  

#### (i)                                     theapproximate number of aerial and underground miles of plant included in theAcquired Assets and served by each DCO;

####  

#### (ii)                                  theapproximate number of Homes Passed Constructed and Marketable Homes for eachSystem;

####  

#### (iii)                               theapproximate miles of plant operating at the applicable MHz capacity and channelcapacity of each headend;

####  

#### (iv)                              thenumber of EBSs and DSs served by the Systems by subscriber type;

####  

#### (v)                                 thearchitecture for the California System, and the HFC architecture for theFlorida System, in each case, as applicable, including the node size, fibercounts and return paths; and

####  

#### (vi)                              thetowers used in the Systems and whether or not such towers are leased or owned.

###  

### (b) ***Schedule 5.19(b)*** sets forth a true and accuratedescription of the following information relating to the Systems, on aSystem-by-System basis, as of the date of this Agreement:

####  

#### (i)                                     (A)a description of the Data Services (none of which is provided on a “bulk-rate”basis to any customer, whether in a multiple-dwelling unit, hotel, commercialestablishment or otherwise, and all of which are provided and billed directlyto customers on an individual basis), Basic Cable Service, Expanded Basic CableService, pay TV and a la carte services available from the Systems, (B) a ratecode table showing all rate codes including retail rates and discounts as ofJune 23, 2003, (C) retail rate cards for each of December 31, 2002 and March31, 2003, and (D) subscriber counts by tier of service for each of December 31,2002 and March 31, 2003; and

####  

#### (ii)                                  thestations and signals carried by the System, the channel position of each suchsignal and station and all FCC restricted frequencies utilized by each System.

 

The Systems arecapable of providing all channels, stations and signals reflected as beingcarried on such Systems on ***Schedule 5.19(b)***.

###  

### (c) Franchise and Pole Attachment Fees.  The rates for all franchise fees payablewith respect to the Franchises and the rates for fees payable with respect tothe Pole Attachment and Conduit Agreements are set forth on ***Schedule 5.19(c)(i)***as of such dates as are set forth thereon. Except as disclosed on ***Schedule 5.19(c)(ii)***, neither Seller nor

###  

### 29

### 

###  

### any Affiliate ofSeller has been notified in writing by any Governmental Entity or other Personregarding any material adjustment to the amount of franchise fees or poleattachment fees to be paid by Seller to such Governmental Entity or thirdparty.

###  

### (d) Request for Signal Carriage.  Except as disclosed on ***Schedule 5.19(d)***, neither Seller nor anyAffiliate of Seller has received any FCC order within the last 12 monthsrequiring any System to carry a television broadcast signal or to terminatecarriage of a television broadcast signal and, to Seller’s Knowledge, notelevision broadcast station has filed a written complaint with the FCC withinthe last 12 months claiming that Seller carried or refused to carry atelevision broadcast signal in violation of the requirements of the FCC’smandatory broadcast signal carriage rules.

###  

### (e) Fibers. The fiber identified on ***Schedule 5.19(e)*** constitutes a description of all of thefiber owned by Seller and used or held for use in the Business as of March 31,2003.  Since March 31, 2003, there havebeen only changes in the ordinary course of business in such fiber.  Such fiber, together with fiber used underthe tariffs related to the Inter-Unit Services set forth on ***Schedule 5.12(c)***,currently constitute all of the fiber necessary to permit Buyer to conduct theoperation of the Systems substantially as it is currently being conducted.  All of the fiber identified on ***Schedule 5.19(e)*** issingle-mode fiber.

###  

### (f) Commitments.  Except as described on ***Schedule 5.19(f)***, (i) there are no unfulfilledbinding material commitments for capital improvements obligated to be made inconnection with the Systems, (ii) no commitment to any FranchisingAuthority or other Governmental Entity has been made to maintain a local officein any location and (iii) no commitment has been made to any FranchisingAuthority or other Governmental Entity to pay franchise fees or other amountsto any such authority after the date hereof in excess of the amounts set forthin the Franchises.

 

5.20                          Conduct of Business in OrdinaryCourse of Business.  Except asdisclosed on ***Schedule 5.20***since December 31, 2002, Seller has conducted the Business in the ordinarycourse of business, and has not (i) made any material increase in compensationpayable or to become payable, or benefits provided or to become provided, toany of the Employees, or any material change in personnel policies, insurancebenefits or other compensation arrangements affecting the Employees, in eachcase other than in the ordinary course of business, (ii) made any sale,assignment, lease or other transfer of, or incurred any indebtedness or Lien(other than a Permitted Lien) with respect to, any of the Acquired Assets(other than Inventory), other than obsolete assets no longer usable in theoperation of the Business or other assets sold or disposed of in the ordinarycourse of business with suitable replacements being obtained therefor asreasonably necessary or advisable for the continued operation of the Business,or (iii) made any offers to existing or prospective customers inconsistentwith the disclosure set forth on ***Schedule 5.19(b)***.

 

5.21                          Letters of Credit, Bonds, Etc..  ***Schedule 5.21*** comprises a list of all letters of creditand franchise, construction, fidelity, performance, surety or other bonds, orguarantees in lieu of bonds, posted or required to be posted by Seller or itsAffiliates in connection with the operation of the Business.

 

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5.22                          No Material Adverse Effect.  Except for those events, developments orstatements of facts described on ***Schedule 5.22***, since December 31, 2002, there has notbeen any event or circumstance which has had, or would or would reasonably beexpected to have, a Material Adverse Effect.

 

5.23                          Condition and Suitability of Assets.  Except for the Excluded Assets, theInter-Unit Services set forth on ***Schedule 5.12(c),***and the Employees, the Acquired Assetsconstitute all of the assets necessary to conduct the Business.

 

5.24                          Disclaimer. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THISAGREEMENT AND THE EXHIBITS AND SCHEDULES HERETO, OR IN INSTRUMENTS ORCERTIFICATES DELIVERED AT THE CLOSING AND THE ANCILLARY AGREEMENTS, NEITHERSELLER NOR ANY OF ITS AFFILIATES MAKES ANY OTHER EXPRESS OR IMPLIEDREPRESENTATION OR WARRANTY WITH RESPECT TO THE BUSINESS, THE ACQUIRED ASSETS OROTHERWISE WITH RESPECT TO ANY OTHER INFORMATION PROVIDED TO BUYER, WHETHER ONBEHALF OF SELLER OR ITS AFFILIATES, INCLUDING AS TO (A) MERCHANTABILITY ORFITNESS FOR ANY PARTICULAR USE OR PURPOSE, (B) THE OPERATION OF THE BUSINESS BYBUYER AFTER THE CLOSING IN ANY MANNER, OR (C) THE PROBABLE SUCCESS ORPROFITABILITY OF THE OWNERSHIP, USE OR OPERATION OF THE ACQUIRED ASSETS BYBUYER AFTER THE CLOSING.  Neither Sellernor any other Person will have or be subject to any liability orindemnification obligation to Buyer or any other Person resulting from thedistribution to Buyer, or Buyer’s use of, any such information, including theConfidential Offering Memorandum prepared by Goldman Sachs & Co. relatingto the Business and any information, document or material made available toBuyer in “data rooms,” management presentations, functional “break out”discussions, site visits, responses to questions submitted by or on behalf ofBuyer, whether orally or in writing, or in any other form in expectation of thetransactions contemplated by this Agreement.

 

ARTICLE VI

 

# Representationsand Warranties of Buyer

 

Buyer representsand warrants to Seller as follows:

 

6.1 Organization, Standing and Power.  Buyer is a corporation duly organized,validly existing and in good standing under the Laws of the State of Delaware,has the requisite power and authority to conduct its business as currentlyconducted and as contemplated by this Agreement, and to own, lease, operate orhold the Acquired Assets.  Buyer is dulyqualified or registered and in good standing in Delaware, which state is theonly state in which the character of the properties owned or leased by Buyermakes such qualification necessary.

 

6.2 Authority. Buyer has all corporate power and authority necessary to execute thisAgreement and the Ancillary Agreements to which it is or will be a party (the“Buyer Ancillary Agreements”) and to consummate the transactions contemplatedthereby and by this Agreement.

 

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The execution and deliveryof this Agreement and the consummation of the transactions contemplated herebyhave been duly authorized by all necessary corporate action of Buyer, and theexecution and performance of the Buyer Ancillary Agreements will be authorizedby all necessary corporate action prior to Closing.  This Agreement constitutes, and upon execution each of the BuyerAncillary Agreements such agreements will constitute, valid and bindingobligations of Buyer, enforceable against Buyer in accordance with their respectiveterms, such enforcement subject to bankruptcy, insolvency, reorganization,moratorium, or similar Laws of general application affecting creditors’ rightsand the application of general principles of equity.

 

6.3 No Breach or Conflict.  The execution, delivery and performance ofthis Agreement and the Buyer Ancillary Agreements and consummation of thetransactions contemplated thereby and by this Agreement will not (a) causeBuyer to breach any Law or Court Order, (b) conflict with or result in a violationof the Certificate of Incorporation or Bylaws of Buyer, or (c) conflict with orresult in a material breach of any of the terms, conditions or provisions ofany material Contract or material Permit to which Buyer is a party or by whichit may be bound, or constitute a default thereunder.

 

6.4 Third-PartyConsents.  Subject to obtaining anysuch consent, each Person whose consent to the execution, delivery orperformance of this Agreement and the Ancillary Agreements by Buyer is legallyor contractually required has been or will be obtained.

 

6.5 Claims,Litigation and Disputes.  Except foractions, proceedings or investigations affecting the cable television industryin general, there is no claim or litigation or investigative proceeding pendingor, to the knowledge of Buyer, threatened against Buyer which would materiallyaffect Buyer’s ability to perform its obligations hereunder and under theAncillary Agreements.

 

6.6 Financing. Buyer has adequate financing from cash on hand and capital commitmentsto enable it to fulfill its obligations under this Agreement and the AncillaryAgreements.  Buyer will have sufficientfinancial resources to operate the Systems after the Closing Time.

 

6.7 Brokerage Fees.  Except [ * ], no Person or other entity acting on behalf of Buyeris entitled to any brokerage or finder’s fee or commission in connection withthe transactions contemplated by this Agreement or the Ancillary Agreements.

 

6.8 Qualification.  Buyer believes that it will qualify as atransferee of the Franchises and Permits listed on ***Schedule 5.11(a)*** that are to be assigned toBuyer pursuant to this Agreement; provided, however, that nothing in this ***Section 6.8*** shall beconstrued as a representation or warranty that the transfer of any suchFranchise or Permit will actually be approved by any Franchising Authority orany other Governmental Entity.

 

6.9 Buyer’s Investigation.  Buyer represents that it is a sophisticated entity that wasadvised by knowledgeable counsel and financial advisors and hereby acknowledgesthat it has conducted an investigation of the physical plants of the Systemswhich investigation included evaluation of the condition and performance ofsuch physical plants.  Buyeracknowledges that Seller makes no warranty, express or implied, as to thecondition of the Acquired Assets except

 

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as expressly set forth inthis Agreement.  Buyer has not reliedupon, and Seller shall not be liable for or bound in any manner by, any expressor implied verbal or written information, warranties, guarantees, promises,statements, inducements, representations or opinions pertaining to the Systemsor the Acquired Assets, except as may be contained in this Agreement and theExhibits and Schedules hereto and certificates delivered hereunder.

 

ARTICLE VII

 

# Seller’s Covenants

 

Except and to theextent Buyer may otherwise permit in writing, Seller covenants and agrees asfollows:

 

7.1 Access.  Betweenthe date of this Agreement and the Closing for each System, Seller shall giveto Buyer, its officers, agents, employees, counsel, accountants, engineers andother representatives, reasonable access to the premises and books and recordsrelating to such System and, to the extent permitted by Law, cause Seller’semployees to furnish to Buyer such information related to such System as Buyershall from time to time reasonably request for the purposes of preparing forthe transition of such System to Buyer or any other reasonable purpose relatingto the transactions contemplated by this Agreement; *provided, however*, that anysuch investigation shall be conducted (a) during normal business hours and (b)in such a manner as not to interfere with the operation of such System.  Notwithstanding the foregoing, (i) noenvironmental sampling or other testing may be performed without Seller’s priorwritten consent, which consent may be given or withheld in Seller’s solediscretion, and (ii) Buyer will not contact any employee, customer or supplierof Seller with respect to this Agreement without the prior written consent ofSeller, which consent shall not be unreasonably withheld.  Buyer acknowledges that any information madeavailable to Buyer pursuant to this ***Section 7.1*** is subject to the terms of theNon-Disclosure Agreement and ***Section 8.3***.

 

7.2 Conduct of Business Pending Closing.  Except as contemplated on ***Schedule 7.2***, untilthe Closing for a System, Seller shall continue to operate such System andconduct the Business in the ordinary course of business, consistent with pastpractice or in accordance with the current operating budget for the Business(as disclosed to Buyer).  Seller shalluse commercially reasonable efforts to preserve a business relationship withthe customers of the Business, Governmental Entities, employees and othershaving business relations with Seller in connection with the Systems.  Without limiting the scope of the foregoing,with respect to each System that has not been the subject of a Closing, Sellershall:

###  

### (a) Use, preserve and maintain such System and theother Acquired Assets on a basis consistent with past practice and keep theAcquired Assets, in all material respects, in good working condition, ordinarywear and tear excepted;

###  

### (b) Except in connection with changes in insuranceimplemented by Verizon Communications Inc. for itself and its Affiliates,continue to maintain the insurance covering the Acquired Assets in effect as ofthe date of this Agreement;

###  

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### (c) Pay all debts and obligations incurred by it inthe operation of such System in the ordinary course of business consistent withpast practice;

###  

### (d) Not commit any act or omit to do any act, norpermit any act or omission to act, which effectuates or may cause an amendmentto, or a breach or termination of, any of the Material Acquired Contracts;

###  

### (e) Maintain the books, accounts and records withrespect to the Acquired Assets and such System in the usual manner and on abasis consistent with past practice;

###  

### (f) Not enter into any agreement or agreements (ordiscussions regarding any such agreement)****for the sale of any of the AcquiredAssets, except for sales of Equipment provided that any item of Equipment soldshall be replaced with an item of Equipment of like value and quality;

###  

### (g) Not decrease any of the rates for customers of theBusiness; *provided*,*however*,that this Agreement shall not preclude Seller from (i) seeking usual andordinary rate increases, (ii) decreasing rates required by applicable Laws orin connection with marketing programs conducted consistent with any practiceset forth on ***Schedule 5.19(b)***;

###  

### (h) Bill and collect from customers of such System ona basis consistent with past practices;

###  

### (i) Promptly inform Buyer in writing of any event thatwould be reasonably expected to result in a Material Adverse Effect;

###  

### (j) Maintain Inventory and spare equipment for suchSystem in a manner adequate to support customer service levels;

###  

### (k) Maintain capital expenditures in the ordinarycourse of business and as necessary to comply with all Franchises and materialPermits;

###  

### (l) Not create, assume or permit to exist any Lienupon any Acquired Assets except for Permitted Liens;

###  

### (m) Continue to engage advertisers of the Business ina manner that is consistent with past practice;

###  

### (n) Not agree or commit to take any actioninconsistent with the foregoing; and

###  

### (o) Timely notify and, atBuyer’s timely request, discuss all planned material sales and marketingprograms, including without limitation, all new sales offers, discount plans orcustomer retention plans.  Nothingherein is intended to limit the provisions of subsection (g) herein, or to giveBuyer the right to make or prevent any such decision or plan.

 

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7.3 Further Assurances.  Subject to the terms and conditions of this Agreement, Sellershall use all commercially reasonable efforts to take, or cause to be taken,all actions, and to do, or cause to be done, all things necessary, proper oradvisable under applicable Laws and regulations to consummate and makeeffective the transactions contemplated by this Agreement, the AncillaryAgreements and the other documents and instruments to be delivered pursuanthereto.

 

7.4 Confidentiality.  Seller covenants and agrees that it will not make use of ordivulge, or permit any of its agents or employees to make use of or divulge,any Proprietary Business Information except as contemplated in ***Section 7.2(g)***,******as permitted by theIntellectual Property Agreement or as contemplated by ***Section 14.2***.  The obligations contained in this ***Section 7.4*** are in addition to andindependent of the obligations contained in the Non-Disclosure Agreement.  Seller covenants and agrees that, except aspermitted by the Transition Services Agreement, Seller shall not retain anyAcquired Records in its possession.

###  

### 7.5 Limitations on Useof Certain Information and Marketing.

###  

### (a) Following the Closing of a System, Seller will notuse, or allow its Affiliates to use, the Customer Proprietary Informationrelating to such System for any purpose other than as provided in theIntellectual Property Agreement; provided, however, that this provision willnot restrict any of Seller’s Affiliates’ use of their own customer proprietaryinformation, which may consist, in part, of the same or similar information tosuch Customer Proprietary Information.

###  

### (b) From the date hereof until the earlier of one yearfrom the Closing of the Florida System or the date of the termination of thisAgreement with respect to the Florida System:

####  

#### (i)                                     Sellerwill cause its Affiliates not to specifically target the Data Subscribers ofthe Florida System with any sales, promotions or other marketing activities forthe DSL Services; provided, however, that this provision will not precludeSeller’s Affiliates from any sales, promotions or other marketing activitiespromoting the DSL Services or any other service in the geographical areas underSection B of Annex I hereto so long as such activities do not specificallytarget the customers of the Florida System.

####  

#### (ii)                                  Seller will cause its Affiliates not to offer pricing (either retail,promotional, or special discounts) for DSL Service that is specific to thegeographical areas under Section B of Annex I hereto and that is lower thansuch Affiliate’s pricing in its adjacent Florida markets.

####  

#### (iii)                               Sellerwill cause its Affiliates not to allow the Data Subscribers to establish theircurrent verizon.net e-mail address as their e-mail address for DSL Service.

 

7.6 Affiliate Agreements.  Seller shall terminate, on or before theClosing Time for each System, without any charge or liability to Buyer, allContracts and other arrangements between

 

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Seller and any Affiliateof Seller that relate to the Inter-Unit Services set forth on ***Schedule 5.12(c)*** andare used in connection with such System, except as otherwise contemplated bythe Transition Services Agreement.

##  

## 7.7 Risk of Loss.

 

### (a)          Therisk of any loss, damage or impairment, confiscation or condemnation of any ofthe Acquired Assets of a System from any cause whatsoever, including, withoutlimitation, any loss or damage to, or impairment of the operations, financialcondition or results of operations related to the foregoing, shall be borne bySeller at all times prior to the Closing Time for such System.  Seller shall promptly notify Buyer in theevent of any loss, damage or impairment, confiscation or condemnation of any ofthe Acquired Assets from any cause whatsoever (other than incidental lossincurred and consistent with past experience in connection with conducting theBusiness) prior to the Closing Time for such Acquired Assets.  Such notice shall report the loss or damageincurred, the cause thereof (if known) and the insurance coverage relatedthereto.

 

### (b)         Inthe event of any damage or destruction of any Acquired Assets prior to theClosing Time for such Acquired Assets, with respect to which the actual cost torepair or replace such Acquired Assets and to restore the services providedthereby to their levels immediately prior to such event (the “Normal BusinessLevel”) (collectively, the “Total Losses”) is reasonably estimated to be morethan the Basket Amount, and if such Acquired Assets have not been repaired,restored or replaced to their prior condition and the affected System’s normaland usual transmission and the Normal Business Level resumed by the ClosingDate for such Acquired Assets, Buyer may elect at its option:

####  

#### (i)                                     toconsummate the Closing (assuming all conditions set forth in **Articles IX**and **X**have been met or waived by the applicable Party) and complete the restorationand replacement of such damaged Acquired Assets after the Closing Date, inwhich event (A) Seller shall deliver to Buyer all insurance proceedsreceived from a Third Party, if any, received in respect of such Total Losses,to the extent such proceeds were not already expended by Seller in connectionwith remedying such Total Losses (such expenditure to be in reasonable anddocumented amounts) and (B) Seller shall reimburse Buyer for allreasonable and documented expenses and costs relating to the Total Losses, tothe extent not covered by the insurance proceeds from Third Parties remitted inthe preceding clause (i); provided that Seller shall not be obligated to paymore than the Basket Amount pursuant to this ***Section 7.7(b)(i)(B);***or

####  

#### (ii)                                  todelay the Closing until such Acquired Assets are repaired or restored to theirprior condition and the affected System’s normal and usual transmission and theNormal Business Level resumed; provided, that in no event may the Closing bedelayed beyond the End Date pursuant to this ***Section 7.7(b)***; and provided, further, that,to the extent such Acquired Assets are not so repaired or restored as of theClosing, Seller shall remit to Buyer the amounts contemplated byclause (i) above.

 

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The exercise byBuyer of any of its rights, pursuant to clause (b)(i) and/or (b)(ii) aboveshall not constitute a waiver of any conditions to Closing or of any otherrights or remedies available to Buyer pursuant to this Agreement.

 

### (c)          Inthe event of any damage or destruction of any Acquired Assets prior to theClosing Time for such Acquired Assets or any other event with respect to whichthe cost to repair, restore and cover the Total Losses is reasonably estimatedto be less than the Basket Amount, Seller shall promptly take all actionsnecessary to repair and restore the Acquired Assets to their prior condition bythe Closing Date for such Acquired Assets so as to resume the affected System’snormal and usual transmission and the Normal Business Level; provided, thatSeller shall not be obligated to pay more than the sum of (x) the BasketAmount and (y) all insurance proceeds received from a Third Party, if any,in respect of such Total Losses pursuant to this ***Section 7.7(c)***.  The exercise by Buyer of any of its rights pursuant to this ***Section 7.7(c)*** shallnot constitute a waiver of any conditions to Closing or of any other rights orremedies available to Buyer pursuant to this Agreement.

##  

## 7.8 Third-Party Consents.

###  

### (a) Seller shall give all notices to GovernmentalEntities and any other Person required to be given by it under the MaterialAcquired Contracts or otherwise in connection with the transactions contemplatedhereby.  In order to facilitate theorderly assignment and transfer of all rights, privileges and Franchisesnecessary to own and operate the Business, and to facilitate the securing ofall Consents by any Governmental Entity, Seller shall proceed after theexecution of this Agreement, to prepare, file and prosecute each request andapplication therefor together with such information as may be necessary andappropriate to effect such approvals. As soon as practicable after Buyer provides all such information,materials and certifications to Seller but in no event later than ten businessdays after receipt of all such information, materials and certifications,Seller shall submit the appropriate FCC Form 394 to the Franchising Authoritiesor other Governmental Entity, as applicable. Seller shall on a timely basis cooperate and work with Buyer to obtainall other Consents from the appropriate third party.  Seller shall consult with Buyer and provide Buyer and its agentswith the opportunity for review and comment with respect to all notices,filings and submissions made in connection with securing any Consents fromGovernmental Entities or other Persons.

###  

### (b) Seller shall thereafter use its commerciallyreasonable efforts to obtain all Consents as expeditiously as possible and, tothe extent not obtained by the applicable Closing, Seller shall continue to useits commercially reasonable efforts to obtain such Consents for six monthsafter the applicable Closing.  Duringthis six-month time period and pending or in the absence of any such Consent,the Parties shall cooperate with each other in any reasonable and lawfularrangements to provide to Buyer the benefits and liabilities of use of suchAcquired Contract.  Without Buyer’sprior written consent, no such Consent shall (at such time or in the future)impose any additional adverse restrictions or obligations on Buyer or includeany adverse change to the terms or benefits of the underlying instrument otherthan immaterial restrictions, obligations or changes.

###  

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### 

###  

### If,notwithstanding their commercially reasonable efforts, Buyer and Seller areunable to obtain such Consents, Seller shall not be liable to Buyer for breachof the covenants set forth in this ***Section 7.7*** (but Buyer shall have no obligation toeffect such Closing unless the condition set forth in ***Section 10.3*** hereof shall have been satisfiedor waived).  Notwithstanding anything tothe contrary contained in this Agreement, nothing herein shall require Sellerto pay any funds (other than its usual or customary attorneys fees, consultingfees, filing fees or other normal costs of doing business) or to give any otherconsideration in order to obtain any Consent, *provided, however*, thatSeller and Buyer shall equally share all reasonable or customary fees imposedby Franchising Authorities or any other Governmental Entity incurred inconnection with obtaining the consents for the Franchises.

###  

### (c) Seller shall cooperate fully with Buyer inobtaining any necessary Consents, including helping to arrange and facilitateBuyer’s negotiations with Franchising Authorities or any other GovernmentalEntity and other third parties with respect to the Consents.

 

7.9 Interim Financial Statements.  Not later than 20 days after the end of eachmonth following the date hereof and through and until the Closing for suchSystem, Seller shall prepare and deliver to Buyer updated Aging Reports and theunaudited statements of operations for each of the Systems, each as of the endof and for each calendar month following the date hereof (collectively, the“Interim Financial Statements”) and such Interim Financial Statements will beprepared in good faith using reasonable allocations and assumptions from thebooks and records of account of Seller, which books and records are kept in thenormal course of business and in accordance with GAAP.

 

7.10                          Transfer of Unique Inventory.  On or before the Closing Time related toeach System, Seller shall cause Verizon Logistics Inc. to transfer to Sellerthe ownership of the inventory owned by Verizon Logistics Inc. that is usableprimarily by Seller in the operation of the System that is the subject of theClosing.

 

7.11                          Cooperation Regarding Request forFranchise Renewal.  If there isreasonably insufficient time after the applicable Closing for Buyer to submit a written renewal notice to the appropriateFranchising Authority requesting the commencement of a proceeding pursuant to47 USC §546(a) with respect to a Franchise, Seller shall submit such notice tothe appropriate Franchising Authority prior to the applicable Closing, if Buyerreasonably requests Seller to do so and making such a request is reasonablynecessary to preserve the Business.

 

7.13                          Payroll Taxes. For purposes of payroll taxes with respect to all employees of Sellerthat become employees of Buyer, Seller shall not act in a manner inconsistentwith Buyer’s treatment of the transactions contemplated hereby as a transactiondescribed in Treasury Regulation Sections 31.3121(a)(1)-I(b)(2) and31.3306(b)(1)-(1)(b)(2).

 

7.13                          Buyer’s Audit and Examination.  Seller acknowledges that after the datehereof, Buyer will undertake (at Buyer’s sole expense), through its outsideauditors (which are Deloitte & Touche) and through its officers, employeesand other representatives (collectively, the “Buyer Representatives”), a fullaudit and examination of the Systems, including, without

 

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limitation, thefinancial condition and results of operations, Acquired Assets, AssumedLiabilities, Excluded Assets and Excluded Liabilities associated with theSystems.  Seller shall (and shall causeits officers, employees, counsel, accountants and other representatives to)cooperate with the Buyer Representatives, at Buyer’s expense, in connectionwith such audit and examination.  For areasonable period of time after each Closing Date, Seller agrees to provideBuyer’s Representatives with access to Seller’s records pertaining to theSystem that was the subject of such Closing, provided that the review of suchrecords is reasonably necessary in connection with Buyer’s audit.

 

7.14                          Accounts Receivable.  Seller will write off an entire Customer Account if such CustomerAccount contains an Account Receivable which is 61 days or more past due, withthe number of days past due being determined on the last day of the period forwhich the applicable billing relates; provided, however, that the Seller willnot write off an Account Receivable with an amount which is 61 days or morepast due provided such amount does not relate to Basic Cable Service.

 

7.15                          Obligations Pursuant to TransitionServices Agreement.  Sellercovenants that it will perform the pre-Closing obligations of Seller that areset forth in the Transition Services Agreement in the manner set forth therein.

 

ARTICLE VIII

 

# Covenants of Buyer

 

Except and to theextent Seller may otherwise permit in writing, Buyer covenants and agrees asfollows:

 

## 8.1 Third-Party Consents.

###  

### (a) As soon as practicable after the date hereof butin no event later than ten days following any request by Seller (which requestshall specify the information required), Buyer shall provide to Seller all ofthe information, materials and certifications required in order to complete theappropriate FCC Form 394 for each Franchising Authority or other GovernmentalEntity and other information required by the Franchising Authorities or otherGovernmental Entity.  Buyer shall on atimely basis cooperate and work with Seller to request the Consents from theappropriate third party.

###  

### (b) Buyer shall thereafter use its commerciallyreasonable efforts to obtain all Consents as expeditiously as possible and, tothe extent not obtained by the applicable Closing, Buyer shall continue to useits commercially reasonable efforts to obtain such Consents for six monthsafter the applicable Closing.  Duringthis six-month time period and pending or in the absence of any such consent,authorization or approval, the Parties shall cooperate with each other in anyreasonable and lawful arrangements to provide to Buyer the benefits andliabilities of use of such Acquired Contract. Buyer shall use commercially reasonable efforts to satisfy the concerns,if any, of any Franchising Authorities or other Governmental Entity or otherthird parties as to Buyer’s ability to perform pursuant to the Franchises andthe other Acquired Contracts, excluding any

###  

### 39

### 

###  

### concerns relatingto Seller’s operation of the Systems.  If,notwithstanding their commercially reasonable efforts, Buyer and Seller areunable to obtain such Consents, Buyer shall not be liable to Seller for breachof the covenants set forth in this ***Section 8.1*** (but Seller shall have no obligation toeffect the Closing unless the condition set forth in ***Section 9.3*** hereof shall have been satisfiedor waived).  Notwithstanding anything tothe contrary contained in this Agreement, nothing herein shall require Buyer topay any funds (other than its usual or customary attorneys fees, consultingfees, filing fees or other normal costs of doing business) or to give any otherconsideration in order to obtain any Consent or to agree to any materiallyadverse modification to the terms or rights of any Franchise, Permit or MaterialAcquired Contract in connection with obtaining any Consent, *provided,however*, that Seller and Buyer shall equally share all reasonable orcustomary fees imposed by Franchising Authorities or any other GovernmentalEntity incurred in connection with obtaining the consents for the Franchises.

###  

### (c) Buyer shall cooperate fully with Seller inobtaining any necessary Consents.  Buyershall use its commercially reasonable efforts to attend such meetings as Sellermay reasonably request in connection with obtaining the Consents, and Buyershall provide such financial information as third parties may reasonablyrequest in connection with the review of the requested Consent.  Buyer acknowledges that it may need to enterinto direct agreements with Franchising Authorities, other GovernmentalEntities or other third parties.  Buyershall bear any and all costs arising with respect to the performance of theFranchises post-Closing (other than any costs arising as a result ofnoncompliance by Seller with any Franchise prior to the applicable Closing) inaccordance with the terms of any Franchises, including any amendments ormodifications executed or assumed by Buyer or under the terms of any Consentsgranted by any Franchising Authority or other Governmental Entity.

 

8.2 Discharge of Assumed Liabilities.  From and after the Closing Time for aSystem, Buyer shall pay, perform and discharge the Assumed Liabilities relatingto such System as they become due, including, without limitation, the dischargeand performance when due of each and every obligation of Seller to be satisfiedor performed on or after such Closing Time under the Acquired Contracts andwhich constitutes an Assumed Liability. Buyer shall not, without Seller’s consent, which shall not beunreasonably withheld, renew or extend (by action or inaction) any AcquiredContract, other than any Bulk Agreement or Right of Entry Agreement, unlessSeller has been released from all of its obligations under such AcquiredContract by all parties to such Acquired Contract.

 

8.3 Confidentiality.  Buyer covenants and agrees that until fiveyears after the date of the Final Closing, it will not, directly or indirectly,except in connection with the transactions contemplated hereby or in conductingthe business of operating the Systems as proposed to be conducted by Buyer, orto the extent required by Law, regulatory process or proceeding or Court Order(provided prior timely notice has been provided to Seller to permit Seller tolimit such disclosure or to seek appropriate protective orders), make use of ordivulge, or permit any of its agents or employees to make use of or divulge,nonpublic information concerning the business, financial or other affairs of orany of the methods of doing business used by Seller or any of its Affiliatesexcept as otherwise permitted in the Intellectual Property Agreement, theTransition Services Agreement or as contemplated by ***Section 14.2***.  The obligations contained in this

 

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***Section 8.3*** are in addition to andindependent of the obligations contained in the Non-Disclosure Agreement and inthe Intellectual Property Agreement. Notwithstanding the foregoing, this ***Section 8.3*** shall not restrict Buyer’s use of anyAcquired Asset, Buyer’s use of any financial statements relating to theBusiness prepared by the Buyer’s auditor or otherwise restrict Buyer’s abilityto comply with Federal securities laws.

 

8.4 Access.  Subject to ***Section 7.4*** and ***Section 14.2***, Seller shall, for a period ofthree years from the Final Closing, have access to, and the right to copy, atits expense, for bona fide business purposes and during usual business hoursupon reasonable prior notice to Buyer, all books and records relating to theoperation of the Systems prior to the Closing, to the extent such books andrecords were transferred to Buyer. Buyer shall retain and preserve all such books and records for suchthree year period.  Buyer may discard ordestroy any such books or records, provided that Buyer shall so notify Sellerand allow Seller, within 30 days of such notification, to elect to takepossession of such books and records.

 

8.5 Bonds, Letters ofCredit, Etc.  Buyer shall usecommercially reasonable efforts, and execute and deliver all commerciallyreasonable documents, to ensure that as of the Closing Time for a System, Buyerhas in place the bonds, letters of credit, indemnity agreements and similarinstruments listed on ***Schedule 5.21*** applicable to such System.

 

8.6 Further Assurances.  Subject to the terms and conditions of thisAgreement, Buyer will use all commercially reasonable efforts to take, or causeto be taken, all actions, and to do, or cause to be done, all things necessary,proper or advisable under applicable Laws and regulations to consummate andmake effective the transactions contemplated by this Agreement, the AncillaryAgreements and the other documents and instruments to be delivered pursuanthereto.

 

8.7 Intellectual Property.  Subject to the rights and licenses expresslygranted to Buyer pursuant to the Intellectual Property Agreement, Buyer shallpromptly return or destroy and shall not use any Intellectual Property,including any Third Party Intellectual Property, Software or Excluded Marks, ofwhich Buyer acquires possession in connection with the Acquired Assets andwhich is not Acquired Intellectual Property.

 

8.8 Vehicles. Promptly after the Closing for each System, Buyer shall file theappropriate vehicle title applications and registrations to change the name ofthe titled owner on each vehicle title certificate and change the motor vehicleregistration (with respect to license plate information) on each vehicle beingtransferred to Buyer from Seller at such Closing pursuant to thisAgreement.  Buyer agrees that it shallremove and destroy Seller’s existing license plates from all vehicles receivedupon the earlier of receipt of new license plates or 60 days following theapplicable Closing.

 

8.9 Payroll Taxes. For purposes of payroll taxes with respect to all employees of Seller thatbecome employees of Buyer, Buyer shall treat the transactions contemplatedhereby as a transaction described in Treasury Regulation Sections31.3121(a)(1)-1(b)(2) and 31.3306(b)(1)-1(b)(2).

 

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8.10                          Obligations Pursuant to Transition ServicesAgreement.  Buyer covenants that itwill perform the pre-Closing obligations of Buyer that are set forth in theTransition Services Agreement in the manner set forth therein.

 

ARTICLE IX

 

# Conditions toSeller’s Obligations

 

The obligation ofSeller to consummate each Closing shall be subject to the fulfillment, prior toor at such Closing, of each of the following conditions unless waived by Sellerin writing:

 

9.1 Buyer’s Representations and Warranties.  Each representation and warranty made byBuyer in ***Article VI***hereto as they relate only to the System or Systems that are the subject of theapplicable Closing shall be true and correct in all material respects on and asof such Closing Date (disregarding for such purposes any qualifications as to“materiality” or “Material Adverse Effect” set forth in such representationsand warranties) with the same effect as though each such representation orwarranty had been made or given on and as of such Closing Date, other than (i)representations and warranties made as of a specific date, which shall be trueand correct as of such specific date, and (ii) any breach of a representationor warranty that does not materially and adversely impact Buyer’s ability toconsummate the transactions contemplated hereby.

 

9.2 Buyer’s Covenants.  Buyer shall have performed and complied, inall material respects, with all of the covenants set forth herein andattributable to the System or Systems that are the subject of the applicableClosing which are to be performed or complied with by it before or as of suchClosing Time.

 

9.3 Consents.  The Material Consents listed on ***Schedule 9.3***(the “Required Consents”) that are attributable to the System or Systemssubject to the applicable Closing shall have been obtained; provided, thatSeller shall not have the benefits of this condition in respect of any RequiredConsent that is waived by Buyer pursuant to ***Section 10.3*** if the failure to obtainsuch Required Consent would not result in any material liability to Seller orwould not cause Seller to materially violate any Law.

 

9.4 Buyer’s Deliveries.  Buyer shall have executed and delivered to Seller the BuyerAncillary Agreements, the Brand Phaseout License Agreement and the otherdocuments and items referred to in ***Article XIII*** hereof.

 

9.5 No Proceedings.  No action, suit or proceeding which has areasonable likelihood of success is pending or threatened by or before anyGovernmental Entity to enjoin, restrain, prohibit or obtain substantial damagesin respect of the transfer of the applicable System or Systems that are thesubject of the applicable Closing or the Acquired Assets as contemplated bythis Agreement or the Ancillary Agreements, or which would or would bereasonably likely to prevent or make illegal the consummation of anytransactions contemplated by this Agreement.

 

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ARTICLE X

 

# Conditions toBuyer’s Obligations

 

The obligation ofBuyer to consummate each Closing shall be subject to the fulfillment, prior toor at such Closing, of each of the following conditions unless waived by Buyerin writing:

 

10.1                          Seller’s Representations andWarranties.  Each representationand warranty made by Seller in ***Article V*** hereof as they relate only to the System orSystems that are the subject of the applicable Closing shall be true andcorrect on and as of such Closing Date (disregarding for such purposes anyqualifications as to “materiality” or “Material Adverse Effect” set forth insuch representations or warranties) with the same effect as though each suchrepresentation and warranty had been made or given on and as of such ClosingDate other than (i) representations and warranties made as of a specific date,which shall be true and correct as of such specific date, and (ii) any breachof a representation or warranty that individually or in the aggregate, has nothad, or would or would not reasonably be expected to have, a Material AdverseEffect with respect to such System (as though it were the entire Business).

 

10.2                          Seller’s Covenants.  Seller shall have performed and complied, in all materialrespects, with all of the covenants set forth herein and attributable to theSystem or Systems that are the subject of the applicable Closing which are tobe performed by or complied with by it before or as of such Closing Time.

 

10.3                          Consents.  TheRequired Consents that are attributable to the System or Systems that are thesubject of the applicable Closing shall have been obtained in form andsubstance reasonably satisfactory to Buyer.

 

10.4                          Seller’s Deliveries.  Seller shall have executed or shall havecaused its Affiliates to execute, as applicable, and delivered to Buyer theSeller Ancillary Agreements, the Brand Phaseout License Agreement and the otherdocuments referred to in ***Article XII*** hereof.

 

10.5                          No Proceedings. No action, suit or proceeding which has a reasonable likelihood ofsuccess is pending or threatened by or before any Governmental Entity toenjoin, restrain, prohibit or obtain substantial damages in respect of thetransfer of the System or Systems that are the subject of the applicableClosing or the Acquired Assets as contemplated by this Agreement or theAncillary Agreements, or which would or would be reasonably likely to preventor make illegal the consummation of any transactions contemplated by thisAgreement or the Ancillary Agreements.

 

10.6                          Statutes, Proceedings, Etc.  No statute, rule, regulation, executiveorder, judgment, decree or injunction shall have been enacted or promulgated fromand after the date hereof and no action or proceeding shall have been broughtby any Franchising Authority or other Governmental Entity, or shall be pendingwhich would or would reasonably be expected to (i) prevent Buyer fromholding or operating the Acquired Assets that are the subject of the applicableClosing to provide multi-channel video services, cable programming services orData Services or (ii) impose material limitations on the ability of Buyereffectively to acquire, hold or

 

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operate the Systemthat is the subject of the applicable Closing and conduct the business of suchSystem.

 

10.7                          FIRPTA Affidavit.  Seller shall have furnished Buyer with a certificate stating thatSeller is not a “foreign” person within the meaning of Section 1445 of theCode, which certificate shall set forth all information required by, andotherwise be executed in accordance with, Treasury Regulation Section1.1445-2(b)(2).

 

10.8                          Florida System Closing.  The Closing related to the Florida Systemshall not occur unless the Closing related to the California System hasoccurred prior thereto, or is occurring simultaneously therewith.

 

ARTICLE XI

 

# Closing andTermination

##  

11.1                          Closing.

###  

### (a) Upon receipt of the Required Consents relating toa particular System, Seller shall designate by written notice to Buyer the datefor the closing (each, a “Closing”) of the sale and transfer of the AcquiredAssets and Assumed Liabilities associated with that System; *provided*,*however*,that the date of such Closing must be at least 10 days after the date of thewritten notice to Buyer setting the date of such Closing.  Subject to the satisfaction or waiver of theconditions set forth in ***Articles IX*** and ***X*** as applicable to each System, each Closing will takeplace on the date established in accordance with this ***Section 11.1(a)***.  The Closings will take place at the officesof Verizon Communications Inc. located at 600 Hidden Ridge, Irving, Texas75038, at 10:00 a.m.  Dallas, Texas timeon such date.  The date on which theClosing occurs for any particular System is referred to herein as the “ClosingDate” for such System.

###  

### (b) Upon the receipt of the Required Consents thatapply to a particular System and the satisfaction or waiver of all conditionsset forth in ***Articles IX***and ***X*** with respect tosuch System, the Parties shall promptly proceed with the Closing of the saleand transfer of the Acquired Assets and Assumed Liabilities associated withsuch System in accordance with this ***Section 11.1***, regardless of the status of the conditionsset forth in ***Articles IX***and ***X*** that apply to theother System.  The Parties acknowledgeand agree that the sale and transfer of each System, and the payment of therelated System Cash Payment, shall be independent of the sale and transfer ofthe other System and its related System Cash Payment.  Notwithstanding anything in ***Section 11.2***, each Closing shall be independent of theother Closing (except as otherwise contemplated by ***Section 10.8***) and, upon consummation, shallbe final regardless of the status or timing of the Closing of the remainingSystem (including whether such other Closing occurs).

###  

### (c) Seller and Buyer shall meet on the date precedingthe Closing Date for each System at the offices of Seller to conduct apre-Closing at which all deliveries to be made at Closing will be reviewed bythe parties and placed in escrow.  At11:59 p.m. in the

###  

### 44

### 

###  

### jurisdiction inwhich the corresponding System operates on the date preceding the Closing Date,Seller shall terminate its operation of such System.  At 12:01 a.m. (the “Closing Time”) in the jurisdiction in whichthe System operates on the Closing Date, Buyer shall commence operation of theSystem.  At 10:00 a.m. on the ClosingDate Dallas, Texas time, all instruments and payments held in escrow shall bedistributed and disbursed to Buyer by wire transfer, and Buyer shall make theSystem Cash Payment or System Cash Payments, as applicable, to Seller by wiretransfer of immediately available funds, and the applicable Closing shall beconsummated.

 

11.2                          Termination. This Agreement (and the transactions contemplated hereby) may not beterminated as to a System except as follows:

###  

### (a)          Uponthe mutual written consent of Seller and Buyer;

###  

### (b)         BySeller, if Buyer is in material breach of this Agreement and such breach hasnot been cured within 10 days following the delivery of notice thereof toBuyer;

###  

### (c)          ByBuyer, if Seller is in material breach of this Agreement and such breach hasnot been cured within 10 days following the delivery of notice thereof toSeller; or

###  

### (d)         Byeither Party, if the Closing for such System has not occurred on or beforeMarch 31, 2004 (the “End Date”).

##  

11.3                          Effect of Termination.

###  

### (a) Upon the termination of this Agreement inaccordance with ***Section 11.2***hereof with respect to a System or Systems, and except as set forth in ***Section 11.3(c)***below, the Parties shall be relieved of any further obligations or liabilityunder this Agreement with respect to the System or Systems that are the subjectof a termination except that:

####  

#### (i)                                     inthe case of a termination of this Agreement prior to any Closing occurring,only (1) the confidentiality obligations contained in ***Section 7.4*** (with respect only to confidentialinformation regarding Buyer) and ***Section 8.3*** (with respect only to confidentialinformation regarding Seller), (2) the confidentiality obligations under theNon-Disclosure Agreement, and (3) the expense allocation provisions under ***Section 16.1*** shallsurvive such termination; provided, that, nothing herein shall relieve anyParty from its obligations for a breach of this Agreement occurring prior tosuch termination.

####  

#### (ii)                                  inthe case of a termination of this Agreement after one but not both Closingshave been consummated, this Agreement shall terminate only insofar as itrelates to the System for which a Closing did not occur and the followingobligations with respect to such terminated System shall continue to apply:  (1) the confidentiality obligationscontained in ***Section 7.4***(with respect only to confidential information regarding Buyer) and ***Section 8.3*** (withrespect only to confidential information regarding Seller), (2) theconfidentiality obligations under the Non-Disclosure Agreement, and (3) theexpense allocation

####  

#### 45

#### 

####  

#### provisions under ***Section 16.1***;provided, that, except as provided in Section 11.3(b), nothing herein shallrelieve any party from its obligations in respect of any breach of thisAgreement occurring prior to such termination.

###  

### (b) Upon any termination pursuant to ***Section 11.2(b)***,Seller shall be entitled to retain the entire Escrow Amount as reimbursementfor its out-of-pocket expenses incurred in connection with this Agreement andthe transactions contemplated hereby, and upon any termination pursuant to ***Section 11.2(a)***,***(c)***or***(d)***, Buyer shall beentitled to the entire Escrow Amount and Seller shall promptly, and in anyevent within two business days following such termination, return the EscrowAmount to Buyer (by wire transfer of immediately available funds to an accountdesignated by Buyer).  Notwithstandinganything to the contrary set forth in Section 15.3, the retention of the EscrowAmount by Seller shall be liquidated damages to Buyer in respect of all claimsand shall be the sole and exclusive remedy available to Seller upon such atermination.  In the event the Partiesdisagree as to whether a proper termination has occurred, Seller will not beentitled to retain or be obligated to repay the Escrow Amount until any suchdisagreement is resolved by the Parties in good faith.

###  

### (c) Notwithstanding anything to the contrary containedherein, the provisions of this ***Section 11.3***, ***Article XV*** and ***Article XVI*** shall survive any termination of thisAgreement.

#  

ARTICLE XII

 

# Seller’sDeliveries at Closing

 

At each applicableClosing or at both Closings (as specified herein), Seller shall deliver thefollowing to Buyer:

 

12.1                          Bring-Down Certificate.  A bring-down certificate executed by anexecutive officer of Seller certifying that the conditions specified in ***Sections 10.1***, ***10.2,******10.3*** and, to suchexecutive officer’s knowledge after reasonable inquiry, ***10.5***, have been satisfied, which shall bedelivered at both Closings.

 

12.2                          Secretary’s Certificate.  A certificate executed on behalf of Sellerby Seller’s Secretary or Assistant Secretary certifying as to the incumbency,and authenticating the signatures of, officers executing this Agreement andcertificates delivered hereunder on behalf of Seller, and certifying as to theadoption and continuing effect of appropriate resolutions authorizing Seller’sexecution, delivery and performance of this Agreement and the AncillaryAgreements, which shall be delivered at both Closings.

 

12.3                          Ancillary Agreements.  The applicable Ancillary Agreements and theBrand Phaseout License Agreement, duly executed by Seller or the appropriateAffiliate of Seller, as the case may be, which shall be delivered at eachapplicable Closing.

 

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ARTICLE XIII

 

# Buyer’s Deliveriesat Closing

 

At each applicableClosing or at both Closings (as specified herein), Buyer shall deliver thefollowing to Seller:

 

13.1                          Cash Payment. The applicable System Cash Payment or System Cash Payments as specifiedin ***Section 4.2(b)*** and/or***(c)*** hereof shall bedelivered at the applicable Closing.  Ifthe California System closes prior to the Florida System, none of the EscrowAmount shall be returned to Buyer at the Closing of such System and the EscrowAmount shall remain in escrow and shall be returned to Buyer at the Closing ofthe Florida System (unless the Closing of the Florida System does not occurbecause of a termination of this Agreement in respect of such Closing, in whichcase ***Section 11.3(b)*** shallapply).  If the Systems closesimultaneously or if the Florida System closes prior to the California System,the Escrow Amount shall be returned to Buyer at Closing.  Seller shall provide Buyer with a bankstatement with respect to the Escrow Amount at least 5 days prior to anyClosing, which bank statement shall disclose the aggregate amount of principaland interest which comprise the Escrow Amount.

 

13.2                          Bring-Down Certificate.  A bring-down certificate executed by anexecutive officer of Buyer certifying that the conditions specified in ***Sections 9.1*** and ***9.2*** have beensatisfied, which shall be delivered at both Closings.

 

13.3                          Secretary’s Certificate.  A certificate executed on behalf of Buyer byan authorized signatory of Buyer certifying as to the incumbency, andauthenticating the signatures of, officers executing this Agreement andcertificates delivered hereunder on behalf of Buyer, and certifying as to theadoption and continuing effect of appropriate resolutions authorizing Buyer’s execution,delivery and performance of this Agreement and the Ancillary Agreements, whichshall be delivered at both Closings.

 

13.4                          Buyer Ancillary Agreements.  The applicable Ancillary Agreements dulyexecuted by Buyer and a duly executed Brand Phaseout License Agreement, whichshall be delivered at each applicable Closing.

 

ARTICLE XIV

 

# Tax Matters

 

14.1                          Filing of Returns.  In connection with the preparation and filing of Tax Returns asof and after the applicable Closing Date, Buyer and Seller shall cooperate andexchange information as reasonably required to accomplish the matterscontemplated by this ***Article XIV***.

 

14.2                          Access to Books and Records.  After the applicable Closing Date, uponreasonable notice, and subject to ***Section 7.4*** and ***Section 8.3*** hereof (as applicable to each Party), eachParty will give to the representatives, employees, counsel and accountants ofthe other Party, access, during normal business hours, to records relating toperiods prior to or including the applicable Closing Date, and will permit suchpersons to examine and copy such records, in

 

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each case to theextent reasonably requested by the other Party in connection with and for thepurpose of Tax and financial reporting matters, audits, legal proceedings,governmental investigations and other business purposes relating to thetransfer of the Systems and any Acquired Assets (including such financialinformation and any receipts evidencing payment of Taxes as may be requested bySeller to substantiate any claim for Tax credits or refunds); *provided*,*however*,that nothing herein will obligate any Party to take actions that wouldunreasonably disrupt the normal course of its business or violate the terms ofany Contract to which it is a party or to which any of its assets issubject.  Seller and Buyer willcooperate with each other in the conduct of any Tax audit or similarproceedings involving or otherwise relating to the Systems (or the incometherefrom or assets thereof) with respect to any Tax and each will execute anddeliver such powers of attorney and other documents as are necessary to carryout the intent of this ***Section 14.2***. and ***Section 14.3***. Notwithstanding any confidentiality obligation to the contraryhereunder, each Party (and each employee, representative or other agent of suchParty) may disclose to any and all Persons, the Federal income tax treatmentand Federal income tax structure of the transaction contemplated by thisAgreement as well as all materials of any kind (including opinions or other taxanalyses) that are provided to such Party relating to such Federal income taxtreatment and Federal income tax structure. This exception to confidentiality is exclusively limited to the Federalincome tax treatment and Federal income tax structure of the transactionscontemplated by this Agreement and does not include any Intellectual Propertyor Proprietary Business Information that does not specifically relate to theFederal income tax treatment and Federal income tax structure of thetransactions contemplated by this Agreement.

##  

14.3                          Indemnification for Taxes.

###  

### (a) In accordance with the provisions of ***Article III***, andsubject to ***Section 14.4***and***Section 14.5***, Selleragrees to indemnify and hold harmless Buyer, its Affiliates, successors andpermitted assigns from and against any and all Indemnifiable Losses incurred orsuffered by Buyer arising from (i) any Taxes (other than Taxes that are AssumedLiabilities) of Seller or its Affiliates or Taxes attributable to theoperations of the Systems or ownership of the Acquired Assets for all Taxperiods (or portions thereof) ending on or prior to the applicable ClosingDate, (ii) any breach of the representations contained in ***Section 5.10(a)*** or (iii) the failure ofSeller to perform any of the agreements or undertakings made by Seller in this ***Article XIV***.

###  

### (b) In accordance with the provisions of ***Article III***, andsubject to ***Section 14.4 andSection 14.5***, Buyer agrees to indemnify and hold harmlessSeller, its Affiliates, successors and permitted assigns from and against anyand all Indemnifiable Losses incurred or suffered by Seller arising from (i)any Taxes that are Assumed Liabilities of Buyer or its Affiliates or Taxesattributable to the operations of the Systems or ownership of the AcquiredAssets for all Tax periods (or portions thereof) ending after the applicableClosing Date, or (ii) the failure of Buyer to perform any of the agreements orundertakings made by Buyer in this ***Article XIV***.

###  

### (c) Any Party seeking indemnification under this ***Article XIV*** (the “TaxIndemnitee”) shall give the other Party (the “Tax Indemnitor”) written noticeof any audit, proposed adjustment or assessment, or proceeding by a Taxauthority involving Taxes for which the Tax Indemnitee intends to seekindemnification no later than 20 business days

###  

### 48

### 

###  

### after receipt ofnotice of such proceeding by the Tax Indemnitee; *provided*, *however*,that the failure of the Tax Indemnitee to so notify the Tax Indemnitor shallnot preclude any indemnity hereunder unless and to the extent that such failurehas materially and adversely affected the Tax Indemnitor’s contest rights withrespect to the proceeding.  At its cost,the Tax Indemnitor shall have the right to control and settle such proceeding; *provided*,*however*,that to the extent the Tax Indemnitor is not liable under this ***Article XIV*** for theentire amount of the Tax relating to such proceeding, at the Tax Indemnitee’soption, (i) the Tax Indemnitor shall have the right to control theproceeding at its cost and to settle such proceeding with the written approvalof the Tax Indemnitee (which approval shall not be unreasonably withheld), (ii)the Tax Indemnitee shall have the right to control the proceeding at its costand to settle such proceeding with the written approval of the Tax Indemnitor(which approval shall not be unreasonably withheld), or (iii) the TaxIndemnitor and Tax Indemnitee shall jointly control and share the cost andmutually agree on a settlement of such proceeding.

###  

### (d) Neither Party shall be entitled to indemnificationrelating to Taxes unless the claim for indemnification is asserted in writingwithin one year following the final determination of (including the expirationof the time to appeal) any audit examination, investigation or other proceedingrelating to the Taxes for which indemnification is sought.

###  

### (e) Notwithstanding anything to the contrary in thisAgreement, the obligations imposed by this ***Article XIV*** shall survive until the expiration of 60days following the expiration of the applicable statute of limitations forassessment and collection of each Tax; *provided*, *however*, that in the eventthat a notice of claim for indemnity pursuant to this ***Article XIV*** is made during such period,indemnity with respect to such claim shall survive until such time as the claimis finally resolved.

 

14.4                          Transaction Taxes.  Notwithstanding any other provision in this Agreement, [ * ] pay[ * ] of any sales, use, stamp, transfer, documentary, registration, businessand occupation and other similar taxes (including related penalties (civil orcriminal), additions to tax and interest) imposed by any Governmental Entitywith respect to the transfer of the Systems and any Acquired Assets to Buyer butnot including any income, capital gains, gross profits or other similar taxesbased on the income or receipts of such Party (“Transaction Taxes”), regardlessof whether the Tax authority seeks to collect such taxes from Seller or Buyer.  Buyer shall also be responsible for (i)administering the payment of such Transaction Taxes, (ii) defending or pursuingany proceedings related thereto, and (iii) paying any expenses relatedthereto.  Seller shall give promptwritten notice to Buyer of any proposed adjustment or assessment of anyTransaction Taxes with respect to the transactions contemplated hereby and inthe Ancillary Agreements.  In anyproceedings, whether formal or informal, Seller shall permit Buyer to participatein the defense of such proceeding with respect to such Transaction Taxes, andshall take all actions and execute all documents required to allow suchparticipation.

 

14.5                          Tax Prorations. Notwithstanding any other provision in this Agreement, as to the Systemsand other Acquired Assets acquired by Buyer, Seller and Buyer shall apportionthe liability for real and personal property taxes, ad valorem taxes, franchisefees or taxes or other similar periodic Taxes (“Periodic Taxes”) for all Taxperiods including but not beginning or

 

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ending on theapplicable Closing Date (all such periods of time being hereinafter called“Proration Periods”).  The PeriodicTaxes described in this ***Section 14.5*** shall be apportioned between Seller andBuyer as of the applicable Closing Date, with Buyer liable for that portion ofthe Periodic Taxes equal to the Periodic Tax for the Proration Periodmultiplied by a fraction, the numerator of which is the number of daysremaining in the applicable Proration Period including and after the applicableClosing Date, and the denominator of which is the total number of days coveredby such Proration Period.  Seller shallbe liable for that portion of the Periodic Taxes for a Proration Period forwhich Buyer is not liable under the preceding sentence.  Buyer and Seller shall pay or be reimbursedfor real and personal property taxes (including instances in which suchproperty taxes have been paid before the applicable Closing Date) on this proratedbasis.  If a payment on a tax bill isdue after the applicable Closing, the Party that is legally required to makesuch payment shall make such payment and promptly forward an invoice to theother party for its pro rata share, if any. If the other Party does not pay the invoice within 30 calendar days ofreceipt, the amount of such payment shall bear interest at the rate of 6% perannum.  The Party responsible for payinga Tax described in this ***Section 14.5***shall be responsible for administeringthe payment of (and any reimbursement for) such Tax.  For purposes of this ***Section 14.5***, the Proration Period for ad valorem taxesand real and personal property taxes shall be the fiscal period for which suchtaxes were assessed by the Tax jurisdiction.

 

14.6                          Tax Refunds. Any Tax refunds (including any interest related thereto) received byBuyer, its Affiliates or successors relating to Tax periods (or portionsthereof) ending on or prior to the applicable Closing Date shall be for theaccount of Seller, and Buyer shall pay over to Seller any such amount within 5business days of receipt thereof.  Buyershall, if Seller so reasonably requests and at Seller’s direction and expense,file or cause its Affiliates to file for and obtain any Tax refunds with respectto Tax periods or portions thereof ending prior to the applicable Closing Date.

 

ARTICLE XV

 

# Indemnification

##  

15.1                          Survival of Representations,Warranties and Covenants.

###  

### (a) All covenants in this Agreement shall survive eachClosing and remain in full force and effect indefinitely (or unless any suchcovenant by its terms terminates as of an earlier date).  The representations and warranties containedin ***Section 5.1, Section 5.2,***the last sentence of ***Section******5.6, Section 5.15,******Section 6.1, Section 6.2***and***Section 6.7*** will survive each Closing andremain in full force and effect indefinitely. Except as otherwise provided in this Agreement, each of the otherrepresentations and warranties contained in ***Article V*** and ***Article VI*** as applicable to each System willterminate, without further action, on the date which is 18 months following theapplicable Closing Date for such System except for ***Section 5.14***, which representations andwarranties shall terminate, without further action, on the date which is threeyears following the applicable Closing Date for such System (as applicable, the“Expiration Date”).

###  

### 50

### 

###  

### (b) This ***Article XV*** will survive any termination of thisAgreement and the indemnification contained in this ***Article XV*** will survive the applicableClosing for a System and shall remain in effect:

 

#### (i)                                     indefinitely,with respect to any indemnifiable claim related to the breach of any covenantor the breach of any representation or warranty which pursuant to ***Section 15.1(a)***survives indefinitely,

####  

#### (ii)                                  indefinitely,with respect to any indemnifiable claim arising under or related toIndemnifiable Losses pursuant to ***Sections 15.2(a)(iii)*** or pursuant to ***Sections 15.2(b)(iii)***;and

####  

#### (iii)                               untilthe applicable Expiration Date for any indemnifiable claims that are notspecified in any of the preceding clauses.

 

Unless a claim forindemnification with respect to any alleged breach of any representation orwarranty is asserted by notice given as herein provided that identifies aparticular breach and the underlying facts relating thereto, which notice isgiven within the applicable period of survival for such representation orwarranty, such claim may not be pursued and is irrevocably waived after suchtime.  Without limiting the generalityor effect of the foregoing, no claim for indemnification with respect to anyrepresentation or warranty will be deemed to have been properly made except (i)to the extent it is based upon a Third Party Claim made or, brought prior tothe expiration of the survival period for such representation or warranty, or(ii) to the extent based on Indemnifiable Losses incurred by an Indemniteeprior to the expiration of the survival period for such representation orwarranty.  For purposes of clarity,claims asserted in writing before the applicable period of survival for suchrepresentation or warranty terminates shall be deemed timely made regardless ofwhether litigation or arbitration proceedings are commenced by such date.  Notwithstanding anything to the contrary inthis Agreement, if either party makes a claim for indemnification in writingand in accordance with the terms of this Agreement with respect to any allegedbreach under Section 15.2(a)(i) or Section 15.2(b)(i) prior to the ExpirationDate as provided by Section 15.1(a), the indemnification contained in this ***Article XV*** withrespect to such claim shall remain in effect for so long as the Indemniteesuffers Indemnifiable Losses as the result of such claim.

##  

15.2                          Indemnification.

###  

### (a) Following the Closing of the California System andthe Florida System, as applicable, and subject to the other sections of this ***Article XV***, Sellerwill indemnify, defend and hold harmless Buyer and its Affiliates and theirrespective directors, officers, and agents from and against all IndemnifiableLosses, in each case relating to the System that is the subject of a Closingand relating to, resulting from or arising out of:

####  

#### (i)                                     anyinaccuracy in any of the representations and warranties made by Seller in ***Article V*** of thisAgreement;

####  

#### (ii)                                  abreach by Seller of any covenant or agreement of Seller contained in thisAgreement, the Intellectual Property Agreement, the Employee

####  

#### 51

#### 

####  

#### Matters Agreementor the Transition Services Agreement; provided, however that any claim for apre-Closing breach of a covenant contained in ***Section 7.2*** of this Agreement must be broughtby Buyer within 18 months after the Closing Date; and

####  

#### (iii)                               anyof the Excluded Liabilities.

###  

### (b) Following the Closing of the California System andthe Florida System, as applicable, and subject to the other sections of this ***Article XV***, Buyerwill indemnify, defend and hold harmless Seller and its Affiliates and theirrespective directors, officers and agents from and against all IndemnifiableLosses, in each case relating to the System that is the subject of a Closingand relating to, resulting from or arising out of:

####  

#### (i)                                     anyinaccuracy in any of the representations or warranties made by Buyer in ***Article VI*** of thisAgreement,

####  

#### (ii)                                  abreach by Buyer of any covenant or agreement of Buyer contained in thisAgreement, the Intellectual Property Agreement, the Employee Matters Agreementor the Transition Services Agreement; and

####  

#### (iii)                               anyof the Assumed Liabilities.

###  

### (c) Payments made under ***Article XIV*** or this ***Section 15.2*** shall be treated by Buyer andSeller as purchase price adjustments and Buyer and Seller shall file all TaxReturns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shallnot be indemnified or reimbursed for any Tax consequences arising from thereceipt or accrual of an indemnity payment hereunder including any Taxconsequences arising from adjustments to the basis of any asset resulting froman adjustment to the System Cash Payment, or any additional or reduced Taxesresulting from any such basis adjustment.

##  

15.3                          Limitations on Liability.

###  

### (a) For purposes of this Agreement:

####  

#### (i)                                     “IndemnificationPayment” means any amount of Indemnifiable Losses required to be paid pursuantto this Agreement,

####  

#### (ii)                                  “Indemnitee”means any Person or entity entitled to indemnification under this Agreement,

####  

#### (iii)                               “IndemnifyingParty” means any Person or entity required to provide indemnification underthis Agreement, and

####  

#### (iv)                              “IndemnifiableLosses” means any losses, liabilities, damages, costs and expenses (includingreasonable out-of-pocket attorneys’ fees and expenses) actually incurred inconnection with any actual or threatened (provided that any such threats are inwriting) actions, suits, demands, assessments,

####  

#### 52

#### 

####  

#### judgments andsettlements, in any such case (x) reduced by the amount of insurance proceedsactually recovered from any Person or entity with respect thereto and (y)excluding any such losses, liabilities, damages, costs and expenses to theextent that the underlying liability or obligation is the result of the grossnegligence or willful misconduct of the Indemnitee.

###  

### (b) Intentionally Omitted.

###  

### (c) As between Seller and any Affiliate of Seller, onthe one hand, and Buyer and any Affiliate of Buyer, on the other hand, theremedies, rights and obligations set forth in this ***Article XV***, *** Section 14.3***(Indemnification for Taxes), and ***Sections 11.2*** and ***11.3*** (Termination) will be the exclusive remedies,rights and obligations with respect to the liabilities and obligations referredto in ***Section 15.2(a)(i) and15.2(b)(i)*** and any breach of the representations or warrantiesset forth in this Agreement.  Withoutlimiting the foregoing, as a material inducement to entering into thisAgreement, to the fullest extent permitted by Law, each of the Parties waivesany claim or cause of action that it otherwise might assert, and any breach ofthe representations or warranties set forth in this Agreement, except forclaims or causes of action brought under and subject to the terms andconditions of this ***Article XV***,***Section 14.3***(Indemnification for Taxes), and ***Sections 11.2*** and ***11.3*** (Termination).

###  

### (d) Except as provided by ***Section 15.7***, notwithstanding any otherprovision of this Agreement or of any applicable Law, no Indemnitee will beentitled to indemnification for a claim against an Indemnifying Party forIndemnifiable Losses arising out of or relating to any inaccuracy ofrepresentations or warranties under ***Sections 15.2(a)(i)*** or ***15.2(b)(i)*** until the aggregate amount ofIndemnifiable Losses incurred by the Indemnitee exceeds [ * ] of the Total CashPayment (all amounts up to and including such amount, the “Basket Amount”);provided however, that in the event the aggregate amount of IndemnifiableLosses incurred by the Indemnitee exceeds the Basket Amount, then theIndemnifying Party shall not be liable for the Basket Amount but shall beliable for the Indemnifiable Losses incurred by the Indemnitee that exceed theBasket Amount but subject to ***Section 15.3(e)***;******provided, however***,***until the Florida System closes, the Basket Amountshall be limited to $[ * ] and shall only apply to Indemnifiable Losses relatedto the California System.

###  

### (e) Notwithstanding any other provision of thisAgreement, the indemnification obligations of Seller under ***Section 15.2(a)(i)*** or the indemnificationobligation of Buyer under ***Section 15.2(b)(i)*** will not exceed an amount equal to [* ] of the Total Cash Payment, respectively (the “Cap Limitation”); provided,however, until the Florida System closes, the Cap Limitation shall be limitedto $[ * ] and shall only apply to Indemnifiable Losses related to theCalifornia System.  Either Party shallbe obligated to provide indemnification for all Indemnifiable Losses that maybe asserted pursuant to ***Sections 15.2(a)(ii)***, ***15.2(a)(iii)***, ***15.2(b)(ii)*** and ***15.2(b)(iii)***, as applicable.

###  

### (f) No Indemnifying Party shall be liable to orobligated to indemnify any Indemnitee hereunder for any punitive or exemplarydamages, or any unforeseeable consequential, special or multiple damages,except to the extent such damages have been

###  

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### recovered by athird person (including a Governmental Entity) and are the subject of a ThirdParty Claim for which indemnification is available under the express terms ofthis ***Article XV***.

###  

### (g) Seller and Buyer shall cooperate with each otherwith respect to resolving any claim or liability with respect to which oneParty is obligated to indemnify the other Party hereunder, including by makingcommercially reasonable efforts to mitigate or resolve any such claim orliability.

##  

15.4                          Defense of Claims.

###  

### (a) If any Indemnitee receives notice of the assertionof any claim or of the commencement of any action or proceeding by any Personor Governmental Entity that is not a party to this Agreement (a “Third PartyClaim”) against such Indemnitee, with respect to which an Indemnifying Party isobligated to provide indemnification under this Agreement, the Indemnitee willgive such Indemnifying Party reasonably prompt written notice thereof, but inany event not later than 10 calendar days after receipt of notice of such ThirdParty Claim; *provided*, *however*, that the failure of the Indemniteeto notify the Indemnifying Party shall only relieve the Indemnifying Party fromits obligation to indemnify the Indemnitee pursuant to this ***Article XV*** to theextent that the Indemnifying Party is materially prejudiced by such failure(whether as a result of the forfeiture of substantive rights or defenses orotherwise).  Upon receipt ofnotification of a Third Party Claim, the Indemnifying Party shall be entitled,upon written notice to the Indemnitee, to assume the investigation and defensethereof.  Whether or not theIndemnifying Party elects to assume the investigation and defense of any ThirdParty Claim, the Indemnitee shall have the right to employ separate counsel andto participate in the investigation and defense thereof; *provided*, *however*,that the Indemnitee shall pay the fees and disbursements of such separatecounsel unless (i) the employment of such separate counsel has beenspecifically authorized in writing by the Indemnifying Party, (ii) theIndemnifying Party has failed to assume the defense of such Third Party Claimwithin a reasonable time after receipt of notice thereof, or (iii) the namedparties to the proceeding in which such claim, demand, action or cause ofaction has been asserted include both the Indemnifying Party and suchIndemnitee and, in the reasonable judgment of counsel to such Indemnitee, thereexists one or more defenses that may be available to the Indemnitee that arenot available to or are in conflict with those available to the IndemnifyingParty.  Notwithstanding the foregoing,the Indemnifying Party shall not be liable for the fees and disbursements ofmore than one counsel for all Indemnified Parties in connection with any oneproceeding or any similar or related proceedings arising from the same generalallegations or circumstances.  Withoutthe prior written consent of the Indemnitee, the Indemnifying Party will notenter into any settlement of any Third Party Claim that would lead to liabilityor create any financial or other obligation on the part of the Indemniteeunless such settlement includes as an unconditional term thereof the release ofthe Indemnitee from all liability in respect of such Third Party Claim.  If a settlement offer solely for moneydamages is made by the applicable third party claimant (which offer providesfor a full and unconditional release of the Indemnitee), and the IndemnifyingParty notifies the Indemnitee in writing of the Indemnifying Party’swillingness to accept the settlement offer and pay the amount called for bysuch offer

###  

### 54

### 

###  

### without reservation of any rights or defenses againstthe Indemnitee, the Indemnitee may continue to contest such claim, free of anyparticipation by the Indemnifying Party, and the amount of any ultimateliability with respect to such Third Party Claim that the Indemnifying Partyhas an obligation to pay hereunder shall be limited to the lesser of (A) theamount of the settlement offer that the Indemnitee declined to accept plus theIndemnifiable Losses of the Indemnitee relating to such Third Party Claimthrough the date of its rejection of the settlement offer or (B) the aggregateIndemnifiable Losses of the Indemnitee with respect to such claim.

###  

### (b) Any claim by an Indemnitee on account of an IndemnifiableLoss that does not result from a Third Party Claim will be asserted by givingthe Indemnifying Party reasonably prompt written notice thereof, but in anyevent not later than 30 calendar days after the incurrence thereof, and theIndemnifying Party will have a period of 30 calendar days within which torespond in writing to such claim.  Ifthe Indemnifying Party does not so respond within such 30 calendar day period,the Indemnifying Party will be deemed to have rejected such claim, in whichevent the Indemnitee will be free to pursue such remedies as may be availableto the Indemnitee on the terms and subject to the provisions of this ***Article XV***.

###  

### (c) If, after the making of any IndemnificationPayment, the amount of the Indemnifiable Loss to which such payment relates isreduced by recovery, settlement or otherwise under any insurance coverage, orpursuant to any claim, recovery, settlement or payment by or against any otherentity, the amount of such reduction (less any costs, expenses, premiums orTaxes incurred in connection therewith) will promptly be repaid by theIndemnitee to the Indemnifying Party. Upon making any Indemnification Payment, the Indemnifying Party will, tothe extent of such Indemnification Payment, be subrogated to all rights of theIndemnitee against any third party that is not an Affiliate of the Indemniteein respect of the Indemnifiable Loss to which the Indemnification Paymentrelates; provided that (i) the Indemnifying Party shall then be in compliancewith its obligations under this Agreement in respect of such IndemnifiableLoss, and (ii) until the Indemnitee recovers full payment of itsIndemnifiable Loss, all claims of the Indemnifying Party against any such thirdparty on account of said Indemnification Payment will be subrogated andsubordinated in right of payment to the Indemnitee’s rights against such thirdparty.  Without limiting the generalityor effect of any other provision of this ***Article XV***, each such Indemnitee and Indemnifying Partywill duly execute upon request all instruments reasonably necessary to evidenceand perfect the above-described subrogation and subordination rights.

###  

### (d) The Indemnifying Party shall, upon presentation ofappropriate invoices containing reasonable detail, reimburse the Indemnitee forall expenses incurred in connection with any Third Party Claim, as suchexpenses are incurred by such Indemnitee; *provided, however,* that such expensesshall be refunded to the extent that such expenses arose primarily from thegross negligence, bad faith or willful misconduct of such Indemnitee.

 

15.5                          No Indemnifiable Claims ResultingFrom Governmental Entity Action. Buyer has no indemnifiable or otherwise compensable claim that any ofSeller’s representations or

 

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warranties in ***Article V*** isinaccurate, or that any covenant or agreement has been breached, if such claimis predicated on any new Law or any action or order enacted or taken by aGovernmental Entity after the Closing of the System to which such claim relatesand that is effective retroactively for periods of time prior to such Closing;provided that Seller had no Knowledge of such Law, action or order prior tosuch Closing.

##  

15.6                          Infringement.

###  

### (a) Notwithstanding anything in this Agreement to thecontrary, Seller shall have no obligation to defend, indemnify or hold harmlessBuyer or any of its Affiliates from damages, costs or expenses resulting fromany obligation, suit or proceeding based upon any claim that any activitysubsequent to the applicable Closing Time engaged in by Buyer, a customer ofBuyer’s or anyone claiming under Buyer constitutes direct or contributoryinfringement, misuse or misappropriation of or inducement to infringe any ThirdParty Intellectual Property.

###  

### (b) Buyer shall defend, indemnify and hold harmlessSeller and any of its Affiliates from and against any and all IndemnifiableLosses resulting from any obligation, proceeding or suit based upon any claimalleging or asserting direct or contributory infringement, misuse ormisappropriation of or inducement to infringe by, Seller or any of itsAffiliates of any Third Party Intellectual Property to the extent that suchclaim is based on, or would not have arisen but for, activity conducted orengaged in subsequent to the applicable Closing Time by Buyer, a customer ofBuyer’s or anyone claiming under Buyer.

 

15.7                          Inapplicability to Taxes.  This ***Article XV*** shall not apply with respect to Tax matters,including indemnification of the Parties for Taxes, which liability shall begoverned by ***Article XIV***hereof.

 

ARTICLE XVI

 

# Miscellaneous

 

16.1                          Expenses. Except as otherwise expressly provided for elsewhere in this Agreement,each Party hereto shall pay its own expenses and costs relating to thenegotiation, execution and performance of this Agreement.  Except as provided in ***Section 7.8*** and ***Section 8.1***, Seller and Buyer shall each bearall of its cost and expense incurred in securing the appropriate Consents inrespect of the assignment of the Acquired Contracts.

 

16.2                          Governing Law. This Agreement shall be governed by the Laws of the State of New Yorkregardless of the Laws that might otherwise govern under applicable conflictsof law principles.  Buyer and Sellerirrevocably submit to the exclusive jurisdiction of any New York state courtand any United States Federal court located in New York (collectively the “NewYork Courts”) for the purposes of any suit, action or other proceeding arisingout of this Agreement or any of the Ancillary Agreements or any transaction contemplatedhereby or thereby.  Buyer and Sellerfurther agree that service of any process, summons or notice at the addressesset forth in

 

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***Section 16.3*** shall be effectiveservice of process for any action, suit or proceeding in New York with respectto any matters to which they have submitted to jurisdiction as set forthabove.  Buyer and Seller irrevocably andunconditionally waive any objection to the laying of venue of any action, suitor proceeding arising out of this Agreement or any of the Ancillary Agreementsor the transactions contemplated hereby or thereby in the New York Courts andhereby further irrevocably and unconditionally waive and agree not to plead orclaim in any such court that any such action, suit or proceeding brought in anysuch court has been brought in an inconvenient forum.  Except to the extent required to enforce any order (including anyorder for injunctive relief, award or judgment of or by the New York Courts),Buyer and Seller agree not to pursue any legal action against the other Partyin respect of the transactions contemplated hereby or by the AncillaryAgreements or in any manner related thereto other than in the New York Courts.

 

16.3                          Notices.  Allnotices, requests, demands and other communications hereunder shall be inwriting and shall be deemed to have been duly given when personally deliveredor transmitted by facsimile, or five days after mailed, certified or registeredmail, with postage prepaid addressed as follows (or to such other person oraddress as the Party to receive such notice may have designated from time totime by notice in writing pursuant hereto):

 
| If to Seller:   |                             |
|-----------------|----------------------------------|
|            |                             |
|            | Verizon Media Ventures  Inc.     |
|            | c/o Verizon  Communications Inc. |
|            | 1095 Avenue of the Americas      |
|            | New York, New York  10036   |
|            | Attn:                            | Executive Director – |
|            |                             | Corporate Development |
|            | Fax Number: (212)  597-2741      |
|            |                             |
| With a copy to: |                             |
|            |                             |
|            | Verizon Communications  Inc.     |
|            | 1095 Avenue of the  Americas     |
|            | New York, New York  10036   |
|            | Attn:                            | Associate General  Counsel – |
|            |                             | Strategic Transactions |
|            | Fax Number: (212)  764-2432      |
|            |                             |
| If to Buyer:    |                             |
|            |                             |
|            | Knology New Media, Inc.          |
|            | 1241 O.G. Skinner Drive          |
|            | West Point,  Georgia  31833 |
|            | Attn:                            | General Counsel |
|            | Fax Number: (706)  645-0148      |

 

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| With a copy to: |                               |
|-----------------|------------------------------------|
|            |                               |
|            | Morris, Manning &  Martin, LLP |
|            | 3343 Peachtree Road,  N.E.         |
|            | 1600 Atlanta Financial  Center     |
|            | Atlanta, Georgia  30326       |
|            | Attn:  James Walker, IV, Esq. |
|            | Fax Number: (404)  365-9532        |

 

16.4                          Definition of Agreement.  Unless the context clearly otherwiserequires, as used herein, the term “Agreement” means this Agreement and theSchedules, Annex and Exhibits hereto. The words “herein”, “hereof” and “hereunder” and other words of similarimport refer to this Agreement as a whole and not to any particular Article,Section, Paragraph or other subdivision.

 

16.5                           Headings, Gender.  The headings to Articles and Sections of this Agreement are forreference only and shall not be used in construing or interpreting theprovisions hereof or otherwise affect the meaning hereof.  The use of the neuter pronoun “it” shallalso refer to, as appropriate, the masculine and/or feminine gender.  The use of the singular herein shall, whereappropriate, be deemed to include the plural and vice versa.

 

16.6                           Counterparts; Third Party Beneficiaries.  This Agreement may be executed in one ormore counterparts, each of which shall be deemed an original but all of whichtogether shall constitute one and the same instrument.  No provision of this Agreement, other thanas expressly provided in the indemnification provisions of ***Articles XIV*** and ***XV***, is intended to (i) confer upon any Personother than the Parties hereto and their successors and permitted assigns, anyrights or remedies hereunder, (ii) relieve or discharge the obligation orliability of any third party or (iii) give any third party any right ofsubrogation or action against Seller or Buyer.

 

16.7                          Intentionally Omitted.

 

16.8                          Modifications. Any modification, amendment or waiver of or with respect to anyprovision of this Agreement or any agreement, instrument or document deliveredpursuant hereto shall not be effective unless it shall be in writing and signedby Seller and Buyer and shall designate specifically the terms and provisionsso modified.

 

16.9                          Schedules. Any matter disclosed on any Schedule hereto shall be deemed to bedisclosed on any other Schedule hereto to which such matter, on its face,clearly applies.

 

16.10                    Assignmentand Binding Effect.  ThisAgreement shall be binding upon and inure to the benefit of the Parties heretoand their respective successors and permitted assigns, but (except as providedfor in this ***Section 16.10***)neither this Agreement nor any of the rights, interests or obligationshereunder shall be assigned by any Party without the prior written consent ofthe others.  Notwithstanding theprevious sentence, any Party may assign this Agreement or any AncillaryAgreement, or any interest herein or therein, (a) in connection with a changeof control, merger or reorganization of such Party or a sale of all orsubstantially all of such Party’s stock, membership interests or assets or (b)to any Affiliate of such Party, provided that the assignee of such Party agreesin writing to be bound by the provisions of this Agreement.  For the sake of clarity, and withoutlimitation, Buyer and its permitted transferees may transfer

 

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(i) the obligationto purchase the California System and any Ancillary Agreement to any subsidiaryof Buyer, to Knology, Inc. or to any direct or indirect subsidiary of Knology,Inc., and may transfer separately (ii) the obligation to purchase the FloridaSystem and any Ancillary Agreement to any subsidiary of Buyer, to Knology, Inc.or to any direct or indirect subsidiary of Knology, Inc., provided that eachsuch transferee agrees in writing to be bound by the provisions of thisAgreement and any applicable Ancillary Agreement.  Subject to the foregoing, this Agreement shall be binding uponand shall inure to the benefit of the Parties hereto, their respectivesuccessors and assigns.

##  

16.11                    Public Announcements;Confidentiality.

###  

### (a) Except for communications by Seller to customersof the Business and contemplated by ***Section 7.2(g)***, and subject to ***Section 7.8,***Seller and Buyer will consultwith each other before issuing or prior to the issuance by any Affiliate of,and will provide each other the opportunity to review and comment upon, anypress release or other public statements (or relevant portions thereof)relating to the transactions contemplated by this Agreement and shall notissue, and shall ensure that their respective Affiliates shall not issue, anysuch press release or make any such public statement prior to suchconsultation, except as may be required by applicable Law, court process or byobligations pursuant to any listing agreement with any national securitiesexchange.  Each Party also agrees thatit will not, directly or indirectly, except to the extent required by Law orCourt Order (provided prior timely notice has been provided to the other Partyto permit such Party to limit such disclosure or to seek appropriate protectiveorders), make use of or divulge, or permit any of its agents, employees orAffiliates to make use of or divulge, any terms or conditions of this Agreementor the Ancillary Agreements.  Theobligations contained in this ***Section 16.11(a)*** are in addition to and independent ofthe obligations contained in the Non-Disclosure Agreement.

###  

### (b) Notwithstanding anything to the contrary in thisAgreement, the Ancillary Agreements, the Non-Disclosure Agreement, or any otheragreement relating to the transactions contemplated by such agreements, anyParty to this Agreement (and each employee, representative, or other agent of anyParty to this Agreement) may disclose to any and all persons, withoutlimitation of any kind, the tax treatment and tax structure of the transactionscontemplated by this Agreement and the Ancillary Agreements, and all materialsof any kind (including opinions or other tax analyses) related to such taxtreatment and tax structure; provided that this sentence shall not permit anyperson to disclose the name of, or other information that would identify, anyParty to such transactions or to disclose confidential commercial informationregarding such transactions; provided further that this sentence shall not beeffective with respect to any person until the earliest of the date of a publicannouncement (if any) of discussions relating to any such transaction involvingsuch person, the date of a public announcement (if any) of any such transactioninvolving such person or the date of the execution of a definitive agreement toenter into any such transaction involving such person, it being understood thatthere are no limits at any time on the ability of any Party to consult its ownindependent tax advisor regarding the tax treatment or tax structure of thetransaction.

 

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16.12                    Rightto Specific Performance.  TheParties acknowledge that the unique nature of the transactions contemplated bythis Agreement may render money damages an inadequate remedy for the breach byeither Party of its obligations under this Agreement.  Each Party agrees that in the event of such breach, (i) thenon-breaching Party may, upon proper action instituted by it, be entitled toseek a decree of specific performance of this Agreement, and (ii) such rightsare cumulative and in addition to any other remedy to which the Parties may beentitled at law or equity.

 

16.13                    Bulk SalesLaws.  Buyer and Seller waivecompliance with applicable Laws under any version of Article 6 of the UniformCommercial Code adopted by any state or any similar Law relating to the sale ofinventory, equipment or other assets in bulk in connection with the sale of theSystems.

 

***[Remainder of page intentionally left blank.  Signature page follows.]***

 

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IN WITNESSWHEREOF, the Parties, acting through their duly authorized representatives,have executed this Agreement as of the date first above written.

 
|   | VERIZON MEDIA VENTURES  INC. |
|--------|------------------------------|
|   |                         |
|   |                         |
|   | By:                          | /s/ | John P. Fitgerald |   |
|   | Name:                        |   | John P. Fitzgerald |   |
|   | Title:                       |  Executive  Director |   |
|   |                         |
|   |                         |
|   | KNOLOGY NEW MEDIA, INC.      |
|   |                         |
|   |                         |
|   | By:                          | /s/ | Rodger L. Johnson |   |
|   | Name:                        |   | Rodger L. Johnson |   |
|   | Title:                       |  President and CEO |   |
|        |                              |  |  |  |  |  |

 

Verizon Communications Inc. hereby joins in thisAgreement for the limited purpose of guaranteeing payment when due by Seller ofamounts agreed by Seller, or finally determined, to be due from Seller pursuantto (a) Seller’s obligations, if any, to make payments as adjustments to aSystem Cash Payment upon the terms and conditions set forth in***Section 4.4***and (b)****Seller’s indemnification obligationscontained in ***Section 14.3***and ***Article XV*** upon theterms and conditions set forth in ***Section 14.3*** and ***Article XV*** therein.

 
|   | VERIZON COMMUNICATIONS  INC. |
|--------|------------------------------|
|   |                         |
|   |                         |
|   | By:                          | /s/ | Marianne Drost |   |
|   | Name:                        |   | Marianne Drost |   |
|   | Title:                       |   |   |
|        |                              |  |  |  |  |  |

 

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