Document:

EXHIBIT 10.05

 

LEVERAGED RECAPITALIZATION AGREEMENT

 

December 13, 2001

 

 

The parties to
this agreement are Century/ML Cable Venture, a New York joint venture (“Buyer”),
ML Media Partners, L.P., a Delaware limited partnership (“Seller”), Century
Communications Corp., a Texas corporation (“Century”), Adelphia Communications
Corporation, a Delaware corporation (“Adelphia”), and Highland Holdings (“Highland”),
a Pennsylvania general partnership in which members of the Rigas family are
partners.

 

Seller and
Century, a wholly owned indirect subsidiary of Adelphia, each hold a 50%
interest in Buyer and are parties to an Amended and Restated Joint Venture
Agreement dated January 1, 1994 with respect to Buyer (the “Joint Venture
Agreement”).  Buyer owns and operates cable
television systems in Puerto Rico and also owns all of the outstanding stock of
Century-ML Cable Corporation (the “‘Subsidiary”), a Delaware corporation that
owns and operates cable television systems in Puerto Rico. The cable television
systems owned by Buyer and by the Subsidiary are referred to collectively as
the “Systems.”

 

A dispute has
arisen between Adelphia, Century and Seller with respect to various matters
relating to Buyer and an action (the “Action”) entitled ML Media Partners, L.P.
v. Century Communications Corp., Adelphia Communications Corp. and Arahova Communications,
Inc. is now pending in the Supreme Court of the State of New York, County
of New York.  Simultaneously with the
execution and delivery of the agreement, Buyer and Seller are entering into a Stipulation
of Settlement (the “Settlement Agreement”) with respect to the Action that
contemplates the redemption by Buyer of Seller’s 50% interest in Buyer (“Seller’s
Interest”) or, if for any reason Buyer fails to consummate the redemption of
Seller’ s Interest, the purchase of the Seller’s Interest by Adelphia on the
terms set forth in this agreement.

 

Accordingly,
it is agreed as follows:

 

1.             Sale
and Redemption of Seller’s Interest; Certain Events Upon Default.

 

1.1           Redemption.  At the closing referred to in section 3,
Seller shall sell, assign and transfer Seller’s Interest to Buyer, and Buyer
shall redeem, purchase and accept Seller’s Interest from Seller, for the purchase
price determined in accordance with section 2 of this agreement.

 

1.2           Adelphia
Purchase Obligation.  If for any
reason Buyer fails to consummate the redemption of Seller’s Interest on or
before September 30, 2002 (or, if any of the events referred to in section 3.3
shall have occurred, on or before the Accelerated Closing Date referred to in
section 3.3), on October 1, 2002 (or, if any of the events referred to in
section 3.3 shall have occurred, on the first business day after the
Accelerated Closing

 

 

Date), Adelphia shall purchase Seller’s
Interest for the purchase price determined in accordance with section 2 and
otherwise on the same terms as the purchase was to have been made by Buyer,
except that Adelphia’s obligation to purchase Seller’s Interest shall not be
subject to the conditions in section 9.1 and shall be absolute and
unconditional (except for satisfaction of the condition in section 9.1(a) only
with respect to the representations and warranties in the first sentence of
section 4.1 and in section 4.3 and the condition in section 9.1(d)).

 

1.3           Nature
of Adelphia Obligation; Remedies.  Adelphia
shall be obligated to consummate the purchase under section 1.2 regardless of
the reason for Buyer’s failure to consummate the purchase and notwithstanding
that any condition to Buyer’s obligation to redeem Seller’s Interest under
section 9.1 shall not have been satisfied (except that Adelphia shall not be
obligated to consummate the purchase if the condition in section 9.1(a) only
with respect to the representations and warranties in the first sentence of
section 4.1 and in section 4.3 or the condition in section 9.l(d) has not been
satisfied) and notwithstanding that there then exists any injunction
prohibiting Buyer or Adelphia from consummating the redemption or purchase of
Seller’s Interest.  If for any reason
(other than as set forth in the preceding sentence) Adelphia shall fail to
consummate the purchase under section 1.2, the provisions of section 1.4 shall
apply and, in addition, Seller may pursue all of its rights and remedies, at
law or in equity, including, but not limited to, (a) its right to damages
resulting from the breach (without any obligation to take any action to
mitigate those damages), (b) its rights and remedies under the Consent Order
entered August 3, 2000 (which, under the terms of the Settlement Agreement, shal1
be terminated as of the Closing Date and shall be suspended from this date
until September 30, 2002 (or, if any of the events referred to in section 3.3
shall have occurred, until the day following the Accelerated Closing Date), and
(c) its rights and remedies with respect to the claims asserted by it in the
Action or arising after commencement of the Action, and none of Adelphia,
Buyer, Century or Highland shall assert that the scope of Seller’s remedies are
limited by any election of remedies or comparable theory under applicable law.

 

1.4           Termination of
Adelphia’s Service as Manager Upon Default. 
If Buyer fails to redeem Seller’s Interest on or before September 30, 2002 and
Adelphia fails for any reason (other than as set forth in the first sentence of
section 1.3) to purchase Seller’s Interest on October 1, 2002, as required by
section 1.2, on October 2, 2002, Seller automatically shall become the manager
of the Systems without any further action by Adelphia, Century or Seller.  If, however, any of the events referred to in
section 3.3 shall have occurred and Buyer shall have failed to redeem Seller’s
Interest on the Accelerated Closing Date and Ade1phia shall have failed for any
reason (other than as set forth in the first sentence of section 1.3) to
purchase Seller’s Interest on the next business day after the Accelerated
Closing Date, on the following business day Seller automatically shall become
the manager of the Systems without any further action by Adelphia, Century or
Seller. Accordingly, Adelphia hereby resigns as manager of the Systems
effective as of the date that Seller becomes entitled to be the manager of the
Systems in accordance with this section 1.4; Adelphia may not under any
circumstances or for any reason seek to revoke its resignation or otherwise
take any action to hinder or delay the transfer of management responsibility to
Seller in accordance with this provision.

 

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1.5           Provisions
Applicable to Transfer of Management. 
If pursuant to section 1.4 Seller becomes the manager of the Systems,
Seller shall have all of the rights, powers and authority with respect to the
management of the Systems that Century had pursuant to section 8.3 and Adelphia
and Century shall cooperate with Seller, shall take all necessary action to
assure a smooth and immediate transition to Seller as manager (including, but
not limited to, arranging for prompt delivery to Seller of all financial and
accounting information and systems, all bank account authorizations, and all
agreements relating to the Systems), and shall use their best efforts to
continue to make available to Buyer the programming discounts and discounts on
purchases of equipment, materials and services (including, but not limited to,
insurance) that are available to Adelphia. In addition, notwithstanding
anything to the contrary in the Joint Venture Agreement, Seller shall have the
sole right (without any consent or other action by Adelphia or Century) to take
all action and determine the terms of and execute all documents relating to (a)
financing for the Systems (including, but not limited to, any new borrowings or
the repayment of any existing borrowings), (b) the sale
of the assets of the Systems, or (c) any other matter relating to Seller’s
realization of the amounts to which it is entitled pursuant to the agreement.
Seller shall be entitled to a management fee determined on the same basis and
payable in the same manner as the management fee payable to Adelphia during the
period of its service as manager, together with
reimbursement of expenses to the extent provided for in the Joint Venture
Agreement.

 

2.             Purchase
Price.

 

2.1           Purchase
Price.  Subject to section 2.2, the
purchase price for Seller’s Interest shall be $275 million if the closing is on
or before June 28, 2002, and shall increase at the rate of $1.6 million per
month if the closing is held on July 31, 2002, August 30, 2002 or September 30,
2002. The purchase price shall be payable at the closing by wire transfer of
immediately available funds to an account designated by Seller in writing at
least two business days prior to the Closing Date (as defined below).

 

2.2           Adjustment of
Purchase Price Upon Certain Transactions.

 

(a)           The
purchase price provided for in section 2.1 shall be subject to increase if (i)
pursuant to a transaction initiated or an agreement executed prior to the
Closing Date, there is any change in control of Adelphia (i.e., any transaction
that results in control of Adelphia by any individual, entity or group other
than the Rigas family) or Adelphia and its subsidiaries sell in one or more
transactions all or substantially all of the assets then held by them, or the
assets and business of cable systems serving more than 50% of the aggregate
number of subscribers of the cable systems then owned by them, or (ii) pursuant
to a transaction initiated or an agreement or agreements executed prior to or
within one year after the Closing Date, direct or indirect ownership of a 10% or
greater interest in the Systems is acquired by a party other than Adelphia or
Highland or any direct or indirect affiliate or subsidiary of Adelphia or
Highland, regardless of the form of the transaction (i.e., whether pursuant to
a sale of the interests in the Joint Venture or the stock of the Subsidiary,

 

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the sale by Buyer or the Subsidiary of all or
substantially all of the assets of the Systems, the contribution of the
interests in the Joint Venture or the assets of the Systems to another entity
and the sale of interests in that entity, or otherwise).  Promptly after execution of the agreement or
agreements relating to any transaction referred to in this section 2.2(a)
(referred to as the “Transaction”), Adelphia shall give Seller notice of the
Transaction or proposed Transaction and shall furnish to Seller complete and
accurate information with respect to the terms of the Transaction or proposed
Transaction, together with copies of all agreements and other documents
executed in connection with the Transaction.

 

(b)           If
the consideration payable in connection with any Transaction reflects either a
higher multiple of Operating Cash Flow of the entity or entities that are the
subject of the sale or of the Systems than the multiple of Operating Cash Flow
reflected in the purchase price provided for in section 2.1 of this agreement
or a higher per-subscriber price than the per-subscriber price reflected in the
purchase price provided for in section 2.1 of this agreement, the purchase
price payable for Seller’s Interest shall be increased by an amount equal to
the greater of:

 

(i)            $55,000,000, the
agreed-upon adjusted Operating Cash Flow of the Systems for the year ended
December 31, 2000 multiplied by the excess of the multiple of Operating Cash
Flow reflected in the consideration payable in connection with Transaction over
the multiple of Operating Cash Flow reflected in the purchase price provided
for in section 2.1; and

 

(ii)           the number of
subscribers to the Systems as of December 31, 2001 multiplied by the excess of
the per-subscriber price reflected in the consideration payable in connection
with Transaction over the per subscriber price reflected in the purchase price
provided for in section 2.1.

 

(c)           For
the purpose of this section 2.2:

 

(i)            the multiple of
Operating Cash Flow of the Systems reflected in the base purchase price
provided for in section 2.1 shall be deemed to be 10;

 

(ii)           the per subscriber
price reflected in the purchase price provided for in section 2.1 shall be deemed
to be the base purchase price pursuant to section 2.1 divided by the number of
subscribers to the Systems as of December 31, 2001;

 

(iii)          the
multiple of Operating Cash Flow reflected in the consideration payable in any
Transaction referred to in clause (i) of section 2.2(a) shall be calculated on
the basis of the consolidated Operating Cash Flow of Adelphia and its
subsidiaries for the twelve-month period ending on the last day of Adelphia’s
fiscal quarter immediately preceding the execution of the agreement or
agreements relating to the Transaction;

 

(iv)          the multiple of Operating
Cash Flow reflected in the consideration payable in any Transaction referred to
in clause (ii) of section 2.2(a) shall be

 

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calculated on
the basis of the consolidated Operating Cash Flow of the Systems and any other
systems included in the Transaction for the twelve-month period ending on the
last day of the fiscal quarter of the Systems immediately preceding the
execution of an agreement or agreements relating to that Transaction;

 

(v)           the per-subscriber
price reflected in the consideration payable in any Transaction referred to in
clause (i) of section 2.2(a) shall be calculated on the basis of the number of
subscribers of Adelphia or, if the Transaction does not involve a sale of
Adelphia or a change in control of Adelphia, of the number of subscribers of
the cable systems involved in the Transaction, on the last day of Adelphia’ s
fiscal quarter immediately preceding the execution of the agreement or
agreements relating to that Transaction;

 

(vi)          the per-subscriber price
reflected in the consideration payable in any Transaction referred to in clause
(ii) of section 2.2(a) shall be calculated on the basis of the number of subscribers
of the Systems and any other systems included in the Transaction as of the last
day of the fiscal quarter of the Systems immediately preceding the execution of
the agreement or agreements relating to that Transaction;

 

(vii)         Operating Cash Flow shall
be determined without taking into account any extraordinary items;

 

(viii)        the consideration payable
in connection with any Transaction referred to in clause (i) of section 2.2(a)
shall be deemed to be an amount equal to the sum of (A) the cash payable
(whether denominated as purchase price, working capital adjustment, payment for
covenant-not-to-compete or otherwise), (B) the fair market value of any other
consideration received (any common shares received from a purchaser that is a
public company to be valued at the average closing price of the purchaser’s
common stock for the 10 trading days immediately prior to the date of execution
of the sale agreement), (C) the amount of all indebtedness of Adelphia and its
subsidiaries for money borrowed, and (D) the amount, if any, of negative
working capital as of the last day of the twelve month period ending on the
last day of Adelphia’s fiscal quarter immediately preceding the initiation of,
or the execution of the agreement relating to, the transaction, less (x) the
amount, if any, of positive working capital as of the last day of the twelve
month period ending on the last day of Adelphia’s fiscal quarter immediately
preceding the initiation of, or the execution of the agreement relating to, the
Transaction, and less (y) the fair market value of any other assets of Adelphia
and its subsidiaries not used in the operations of Buyer’s cable television
systems;

 

(ix)           if the Transaction
referred to in clause (ii) of section 2.2(a) is a sale, the consideration payable
in connection with the Transaction shall be deemed to be an amount equal to the
sum of (A) the cash payable (whether denominated as purchase price, working
capital adjustment payment for covenant-not-to compete, or otherwise), (B) the
fair market value of any other consideration received (any common shares of a
purchaser that is a public company to be valued at the average closing price of
the purchaser’s common stock for the 10 trading days immediately prior to the
date of execution of the sale agreement), (C) the amount of all indebtedness
for money borrowed of the entities acquired or, if the Transaction is a sale of
the assets, the amount of all indebtedness for money 

 

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borrowed
assumed by the buyer, and (D) if the Transaction is a sale of interests or
stock, the amount, if any, of negative working capital of the entity as of the
last day of the twelve month period ending on the last day of Buyer’s fiscal
quarter immediately preceding the initiation of, or the execution of the
agreement relating to, the Transaction, less the amount, if any, of positive
working capital of the entity as of the last day of the twelve month period
ending on the last day of Buyer’s fiscal quarter immediately preceding the initiation
of, or the execution of the agreement relating to, the Transaction;

 

(x)            if the Transaction
referred to in clause (ii) of section 2.2(a) is a contribution to another
entity and the sale of interests in that entity, the consideration payable in connection
with the Transaction shall be deemed to be an amount equal to (A) the sum of
the cash payable for the interests plus the fair market value of any other
consideration received for the interests times a fraction, of which the
numerator is 100 and the denominator is the percentage interest in the entity
acquired for such consideration, plus (B) the amount of indebtedness for money
borrowed or negative working capital of the entity, and minus (C) the positive
working capital of the entity.

 

(xi)           If the interests in the
Joint Venture or assets of the Systems are sold, directly or indirectly,
together with interests in or assets of other cable systems owned by Adelphia
and its subsidiaries or if the interests in the Joint Venture or assets of the
Systems are contributed to an entity, together with interests in or assets of
other cable systems owned by Adelphia and its subsidiaries, the consideration
payable in connection with the Transaction shall be determined for all of the
systems as provided in clause (ix) or (x) and the multiple of Operating Cash
Flow or per subscriber price in the Transaction shall be deemed to be the
multiple of Operating Cash Flow or per subscriber price for the sale of the
interests in the Joint Venture or the assets of the Systems; provided, however,
that Seller may elect, within 30 days after notice from Adelphia of the terms
of the Transaction and the multiple of Operating Cash Flow or per subscriber
price in the Transaction, to determine the multiple of Operating Cash Flow or the
per subscriber price for the interests in the Joint Venture or the assets of
the Systems in the following manner: KPMG Peat Marwick LLP (the “Accountants”)
shall determine the fair market value of the interests in the Joint Venture or
the assets of the Systems, as the case may be, and the fair market value of
each other cable system (or entity) owned by Adelphia and its subsidiaries
included in the Transaction and the aggregate consideration payable in
connection with the Transaction (determined as provided above) shall be
allocated among the Systems and the other systems included in the Transaction
in proportion to their respective fair market values as determined by the
Accountants, and the multiple of Operating Cash Flow or the per subscriber
price for the Systems shall be determined based on the amount of consideration
allocated to the Systems and the Operating Cash Flow of the Systems or the
number of subscribers of the Systems. Adelphia shall timely provide to Seller
and to the Accountants all financial and other information reasonably requested
in connection with the determinations pursuant to this clause (xi).

 

(xii)          the term “Operating Cash
Flow” means total gross revenues from the operations of the applicable systems
less all expenses of operating those systems other than interest, depreciation
and amortization, other non-cash expenses, income taxes, capital expenditures
and management fees (revenues and expenses to be determined in

 

6

 

accordance with
generally accepted accounting principles applied consistently with the audited
financial statements of the Joint Venture and the Subsidiary for the year ended
December 31, 2000); and

 

(xiii)         the
number of subscribers to any cable systems shall be deemed to equal the sum of
(A) the number of persons who subscribe for the basic level of programming
service provided by the systems and have paid a bill for at least two month’s
service charge for such service at that system’s standard rate and have no bill
that is unpaid sixty days after its due date, plus (B) the number of bulk rate
equivalent subscribers relating to the systems (with respect to each such system,
the number of bulk rate equivalent subscribers shall equal the quotient of (x)
the aggregate monthly bulk rate revenues for that system for basic service,
excluding any amount payable with respect to additional service (any charges
not specifically allocated to be allocated among the services provided on the
basis of the standard service charges in that system for the services
provided), divided by (y) the standard rate for basic service for that system.

 

(d)           The amount of any
adjustment of the purchase price pursuant to this section 2.2 shall be
determined by agreement between Buyer and Seller, or, if they are unable to
agree within thirty days after the closing of the Transaction, by the
Accountants. The Accountants’ determination of any adjustment of the purchase
price, including the determination pursuant to section 2.2(c)(ix) shall be
final and binding on Buyer and Seller and the
Accountants’ fees shall be paid 50% by each of Adelphia and
Seller. Each party shall furnish to the Accountants all such information as may
reasonably be necessary and shall otherwise cooperate to enable the Accountants
to make the determination pursuant to this section 2.2 at the earliest
practicable date.

 

(e)           If the closing of any
Transaction referred to in section 2.2(a) occurs prior to the closing under
this agreement, at the closing under this agreement Buyer shall pay to Seller
the purchase price for Seller’s Interest as provided in section 2.1 together
with any additional amount payable to Seller under this section 2,2; if the closing
of any Transaction referred to in section 2.2(a) occurs after the closing under
this agreement, any additional amount payable to the Seller under this section
2.2 shall be paid by wire transfer of immediately available funds within five
days after the closing of that Transaction.

 

2.3           Escrow Deposit.

 

(a) Within
five days following the execution of this agreement, Highland shall deposit
into escrow with First Union National Bank (the “Escrow Agent”), as escrow
agent, the sum of $10 million in cash (the amount deposited together with all
interest earned thereon being referred to below as the “Escrow Deposit”),
pursuant to an Escrow Agreement in the form of exhibit 2.3 (the “Escrow
Agreement”).

 

(b)           The
Escrow Deposit shall be held and disbursed in accordance with the Escrow
Agreement and the following terms;

 

7

 

(i)            If the purchase of
Seller’s Interest is consummated, Seller shall cause the Escrow Agent to pay
the Escrow Deposit to (or as directed by) Highland.

 

(ii)           If
for any reason Buyer fails to redeem Seller’s Interest on or before September
30,2002 (or, if any of the events referred to in section 3.3 shall have
occurred, on or before the Accelerated Closing Date), and Adelphia fails for
any reason (other than as set forth in the first sentence of section
1.3) to purchase Seller’s Interest on October 1, 2002 (or, if any of the events
referred to in section 3.3 shall have occurred, on or before the next business
day after the Accelerated Closing Date), as required by section 1.2, Seller
shall be entitled, as partial payment of its damages, to the amount of the
Escrow Deposit, which shall be paid to Seller as provided in section
2.3(b)(iv).  The payment of the Escrow
Deposit to Seller as provided in this section 2.3(b) shall be in addition to
all other rights and remedies that Seller may have under this agreement and
under applicable law as a result of the failure by Buyer or Adelphia to purchase
Seller’s Interest in accordance with the terms of this agreement.

 

(iii)          Notwithstanding
anything to the contrary in section 2.3(b)(ii), if the purchase of Seller’s
Interest is not consummated by Buyer or Adelphia solely as a result of the
failure of the condition in section 9.1(d) and Buyer and Adelphia shall have
duly performed their obligations under this agreement (including, but not
limited to, their obligations under sections 8.2 and 8.5), Highland shall be
entitled to the amount of the Escrow Deposit.

 

(iv)          Promptly
following the occurrence of an event that results in the entitlement of Seller
or Highland to the Escrow Deposit, Seller shall give instructions to the Escrow
Agent to disburse the amount of the Escrow Deposit to the party entitled
thereto, and within five days after receipt of Seller’s instructions, the
Escrow Agent shall pay the amount of the Escrow Deposit in the manner directed
by Seller.

 

(v)           The
Escrow Agent shall be absolutely and unconditionally obligated to disburse the
Escrow Deposit pursuant to Seller’s instructions (notwithstanding the receipt
of contrary instructions from Buyer, Adelphia or Highland or anyone acting on
behalf of any of them). Neither Buyer, nor Adelphia or Highland, nor anyone
acting on behalf of any of them, shall give any instructions to, or otherwise
communicate with, the Escrow Agent and each of them shall proceed exclusively
against Seller with respect to any claim that it may have arising out of the
instructions given by Seller to the Escrow Agent or the payment by the Escrow
Agent of the Escrow Deposit in the manner directed by Seller.

 

2.4           Pledge
of Interest.  As collateral security
for the performance by Adelphia of its obligation under section 1.2 of this
agreement, upon execution of this agreement Century is granting to Seller a
security interest in its 50% interest in Buyer, pursuant to a Security and
Pledge Agreement in the form of exhibit 2.4.

 

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2.5           Additional
Security.

 

(a)           If Buyer makes any
borrowing permitted by section 8.8 of this agreement, simultaneously with the
borrowing, at Adelphia’s election, (i) Buyer shall cause the Lenders (as
defined in section 8.8) to deposit the proceeds of the borrowing with the
Escrow Agent, to be held by it pursuant to the Escrow Agreement (any amounts so
deposited and all interest earned on that amount being referred to below as the
“Loan Escrow”), or (ii) Adelphia shall deliver or cause to be delivered to the
Escrow Agent an unconditional irrevocable letter of credit in favor of the
Escrow Agent (in the form of exhibit 2.5), issued by a bank with capital and
surplus in excess of $500 million, in the full amount of the borrowing.

 

(b)           If
a Loan Escrow is deposited with the Escrow Agent, Buyer may from time to time
thereafter give notice to Seller that it has made or committed to make capital
expenditures for the Systems for which it desires to utilize a portion of the
Loan Escrow (any such notice to be accompanied by appropriate documentation relating
to those expenditures), and Buyer may concurrently give instructions to the
Escrow Agent to pay to it a portion of the Loan Escrow equal to the amount of
those expenditures, but the aggregate amount of the Loan Escrow that may be
paid to Buyer with respect to capital expenditures may not exceed $25 million.
Within three days after receipt of instructions from Buyer in accordance with
this provision, the Escrow Agent shall pay to Buyer the amount requested by
Buyer.

 

(c)           If an irrevocable
letter of credit is delivered to the Escrow Agent as provided in section
2.5(a), Buyer may from time to time thereafter give notice to Seller and the
Escrow Agent that Buyer has made or committed to make capital expenditures for
the Systems (any such notice to be accompanied by appropriate documentation
relating to those expenditures), and, upon Adelphia’s request, the Escrow Agent
shall exchange or have amended the letter of credit held by it for a letter of
credit (in the same form) or an amendment in the amount of the original letter
of credit less the amount of those capital expenditures, but the aggregate
amount by which the letter of credit may be reduced with respect to capital
expenditures may not exceed $25 million.

 

(d)           If pursuant to section
2.3 Seller becomes entitled to the Escrow Deposit, simultaneously with the
payment of the Escrow Deposit, the Escrow Agent shall pay to the Lenders the
amount of the Loan Escrow to be applied to the repayment of the borrowing(s);
if, however, an irrevocable letter of credit has been delivered to the Escrow
Agent by or on behalf of Adelphia, the Escrow Agent shall be instructed by
Seller immediately to draw on the letter of credit and promptly pay the
proceeds to the Lenders in repayment of the borrowing(s).

 

(e)           If the purchase of Seller’s Interest is
consummated, the Escrow Agent shall pay the amount of the Loan Escrow to (or as
directed by) Buyer, or, if the Escrow Agent is then holding a letter of credit
delivered by Adelphia, the Escrow Agent shall return the Letter of Credit to
Adelphia.

 

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(f)            Upon
receipt by Seller of notice of any default with respect to indebtedness
incurred in accordance with section 8.8, Seller may instruct the Escrow Agent
to pay to the Lenders the amount of the Loan Escrow, or, if Adelphia shall have
delivered or caused to be delivered to the Escrow Agent a letter of credit as
provided in section 2.5(a), Seller may immediately instruct the Escrow Agent to
draw on the letter of credit and pay the proceeds to the Lenders in repayment
of the indebtedness. In either event, Highland, Adelphia and Century jointly
and severally immediately shall pay to Buyer an amount equal to the excess of
the aggregate amount due to the Lenders and the amount paid to the Lenders from
the Loan Escrow or from the proceeds of the letter of credit, and that amount
promptly shall be paid by the Buyer to the Lenders; to the extent of the amount
of the capital expenditures funded pursuant to section 2.5(b) or 2.5(c), the
amount paid to Buyer by Adelphia, Highland or Century shall be deemed to be a
loan from Highland, Adelphia or Century, without interest, repayable upon a sale of
the interests in the Buyer or the assets of the Systems.

 

(g)           In
no event shall Seller instruct the Escrow Agent to draw on or otherwise utilize
any letter of credit delivered pursuant to section 2.5(a) except as Seller is
so permitted by section 2.3(d) or section 2.3(f).

 

3.             Closing.

 

3.1           Date
of Closing.

 

(a)           The
closing under this agreement shall take place at the offices of Proskauer Rose
LLP, 1585 Broadway, New York, New York 10036 on September 30, 2002 (or, if
applicable, on the Accelerated Closing Date), subject to the satisfaction of
the closing conditions as provided in this agreement; provided, however, that
Buyer or Highland may elect to hold the closing on June 28, 2002,
July 31, 2002 or August 30, 2002, by notice to Seller given at least 20 days
prior to the proposed date of the closing.

 

(b)           If
for any reason Buyer fails to consummate the redemption of Seller’s Interest on
or before the date of the closing provided for in section 3.1 (or, if any of
the events referred to in section 3.3 shall have occurred, on or before the
Accelerated Closing Date), the closing under this agreement shall be held at
the time provided for in section 1.2.

 

(c)           The
date on which the closing occurs is referred to as the “Closing Date.”

 

3.2           Time
of the Essence.  Time is of the
essence with respect to the performance by Buyer, Adelphia, Century and
Highland of all of their respective obligations under this agreement,
including, but not limited to, their respective obligations to consummate the
redemption and purchase of Seller’s Interest on the dates provided for in
section 3.1 and the obligation of Highland to make the Escrow Deposit within
five days following execution of this agreement.

 

10

 

3.3           Acceleration
of the Closing Date.  Notwithstanding
the provisions of section 3.1, the closing of the redemption or purchase under
this agreement shall be held on the tenth business day after the occurrence of
any of the following events (or the expiration of the waiting period under the
HSR Act (as defined in. section 8.2), if later) (the “Accelerated Closing Date”),
subject to satisfaction of the condition in section 9.1(a) (but only with
respect to the representations and warranties in the first sentence of section
4.1 and in section 4.3):

 

(a)           the
closing of any Transaction referred to in section 2.2(a);

 

(b)           the
occurrence with respect to (i) any indebtedness of Adelphia or its subsidiaries
for borrowed money in excess of $50,000,000, (ii) any indebtedness incurred
pursuant to sections 8.3(a)(ii) or 8.8, or (iii) the Senior Secured Notes
referred to in section 8.15 of
either (i) a payment default (and continuation of such payment default until
the expiration of any applicable grace period), or (ii) any other default (and
continuation of such default until the expiration of any applicable grace
period) and the receipt of notice from the lenders that as a result of such
default the lenders have taken or intend to take any action to accelerate the
indebtedness or otherwise pursue their rights and remedies with respect to the
indebtedness;

 

(c)           the
revocation by the Puerto Rico Telecommunications Regulatory Board (the “TRB”)
or the City of San Juan of any franchise for the Systems;

 

(d)           notice
from Seller that it has elected to accelerate the date of the closing as a
result of the failure by Adelphia or any of its subsidiaries duly to perform on
a timely basis any of their respective obligations under this agreement
(including, but not limited to, any of their respective obligations under
section 8.2, 8.3(a), (b), (c) or (d), 8.6(a) (but only with respect to the
conditions in sections 9.1(c) and (d) and 9.2(c) and (d)) or 8.7(a) or (b) and,
if the failure is subject to cure, the continuation of the failure for ten days
after notice (other than the failure to deliver financial information pursuant
to section 8.7(a) or (b) with respect to which Adelphia reasonably establishes
that it has made and is continuing to make reasonable efforts to deliver such
information as promptly as practicable, but this exception shall not apply
after any such failure has occurred on three separate occasions); or

 

(e)           the
failure by Highland to make the Escrow Deposit within five days following
execution of this agreement as required by section 2.3.

 

4.             Representations
and Warranties by Seller.  Seller
represents and warrants to Buyer, Century, Highland and Adelphia as follows:

 

11

 

4.1           Authority of Seller.  Seller and its general partner each has the
full power and authority to enter into and perform this agreement in accordance
with its terms and the execution, delivery and performance of this agreement by
Seller and its general partner each have been duly authorized by all necessary
partnership action of Seller and its general partner, as appropriate. Seller is
not bound by any contractual or other obligation that would be violated by its
execution, delivery or performance of this agreement. This agreement
constitutes the valid and binding obligation of Seller enforceable against it
in accordance with its terms.

 

4.2           No
Conflicts.  Subject to receipt of the
consents and approvals referred to in sections 8.1 and 8.2, the execution,
delivery and performance of this agreement by Seller and the sale of Seller’s
Interest by Seller pursuant to this agreement will not violate any provision of
law applicable to Seller, or any order, judgment or decree to which Seller is a
party or by which Seller or any of its business or assets is bound or subject,
and will not result in the creation of any lien, charge of encumbrance upon
Seller’s Interest or any of the assets or properties of Buyer.

 

4.3           Ownership
of the Interest.  Immediately prior
to the closing Seller will be the record and beneficial owner of Seller’s
Interest, free and clear of any claim, lien, security interest or
other-encumbrance, and at the closing Buyer will receive good and valid title
to Seller’s Interest, free and clear of any claim, lien, security interest or
other encumbrance, in each case except for encumbrances under the Joint Venture
Agreement and except that Seller’s Interest has been pledged as additional
security for the Senior Secured Notes due 2002 issued by Buyer (together, the “Permitted
Liens”).  Except for Seller’s Interest,
Seller has no equity interest in Buyer.

 

5.             Representations
and Warranties by Buyer.  Buyer
represents and warrants to Seller as follows:

 

5.1           Authority of Buyer.  Buyer has the full power and authority to enter
into and perform this agreement in accordance with its terms and the execution,
delivery and performance of this agreement by Buyer have been duly authorized
by all necessary action of Buyer; Buyer is not bound by any contractual or
other obligation that would be violated by its execution, delivery or performance
of this agreement; and this agreement constitutes the valid and binding
obligation of Buyer enforceable against it in accordance with its terms.

 

5.2           No
Conflicts. Subject to receipt of the consents and approvals referred to in
sections 8.1 and 8.2, the execution, delivery and performance of this agreement
by Buyer and the acquisition of Seller’s Interest by Buyer will not violate any
provision of law applicable to Buyer, or any order, judgment or decree to which
Buyer is a party or by which Buyer or any of its business or assets is bound or
subject.

 

6.             Representations
and Warranties by Highland.  Highland
represents and warrants to Seller as follows:

 

6.1           Authority
of Highland.  Highland has the full
power and authority to enter into and perform this agreement in accordance with
its terms and the execution,

 

12

 

delivery and performance of this agreement by
Highland have been duly authorized by all necessary partnership action of
Highland; Highland is not bound by any contractual or other obligation that
would be violated by its execution, delivery or performance of this agreement;
and this agreement constitutes the valid and binding obligation of High1and
enforceable against it in accordance with its terms.

 

6.2           No
Conflicts.  The execution, delivery
and performance of this agreement by Highland will not violate any provision of
law applicable to Highland, or any order, judgment or decree to which Highland
is a party or by which Highland or any of its business or assets is bound or
subject.

 

6.3           Financial
Capability.  Highland has the
financial capability, including existing borrowing capacity, to perform its
obligations under section 8.8 and to enable Buyer to consummate the
transactions contemplated by this agreement.

 

7.             Representations
and Warranties by Adelphia and Century. 
Adelphia and Century represent and warrant to Seller as follows:

 

7.1           Authoritv
of Adelphia and Century.  Each of
Adelphia and Century has the full power and authority to enter into and perform
this agreement in accordance with its terms and the execution, delivery and
performance of this agreement by each of Adelphia and Century have been duly
authorized by all necessary corporate action of Adelphia and Century; neither
Adelphia nor Century is bound by any contractual or other obligation that would
be violated by its execution, delivery or performance of this agreement; and
this agreement constitutes the valid and binding obligation of Adelphia and
Century enforceable against each of Adelphia and Century in accordance with its
terms.

 

7.2           No
Conflicts.  Subject to receipt of the
consents and approvals referred to in sections 8.1 and 8.2, the execution,
delivery and performance of this agreement by Adelphia and Century will not
violate any provision of law applicable to either Adelphia or Century, or any
order, judgment or decree to which Adelphia or Century is a party or by which
Adelphia or Century or any of Adelphia’ s or Century’s business or assets is
bound or subject.

 

7.3           Financial
Capability.  Adelphia has the financial
capability, including existing borrowing capacity, to consummate the purchase
and perform its other obligations under this agreement.

 

7.4           Financial
Statements.  The consolidated balance
sheet of Buyer and the Subsidiary as of September 30, 2001 (the “Balance Sheet”)
and the consolidated statement of operations of Buyer and the Subsidiary for
the nine months ended September 30, 2001 (the “Statement of Operations”) and
the consolidated statement of cash flows of Buyer and the Subsidiary for the
nine months ended September 30, 2001 attached to this agreement have been
prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the financial position of Buyer and the
Subsidiary as of that date and the results of operations and cash flows of
Buyer and the Subsidiary for the period then ended.  The Balance Sheet and the Statement of
Operations accurately and

 

13

 

completely reflect the financial position and
results of the operations of the Joint Venture as of the date thereof and for
the nine-month period then ended based on management of the Systems by Century
in accordance with the terms of the Joint Venture Agreement.  Without limiting the generality of the
preceding sentence, the Balance Sheet and Statement of Operations accurately
and completely reflect, (a) reimbursement for equipment and supplies provided
by Adelphia or Century or their respective affiliates (or jointly purchased by
Adelphia or Century or their respective affiliates and the Joint Venture)
during the term of the Joint Venture in amounts equal to the out-of-pocket
purchase price paid by Century, Adelphia or any of their respective affiliates
upon the purchase of those items of equipment and supplies (without any mark-up
and passing along to Buyer its proportionate share (based on the percentage of
such equipment or supplies acquired by the Buyer) of all related discounts,
allowances, and credits and the fair market value of any property or services
provided by the supplier, as required by the Joint Venture Agreement), and (b)
charges to the Systems during the term of the Joint Venture of the same rates
for programming as Adelphia or Century obtained for other systems owned or
managed by Adelphia, Century or an affiliate, as required by the Joint Venture
Agreement.

 

8.             Further
Agreements of the Parties.

 

8.1           Regulatory
Filings.  Within 30 days after the
date of the agreement, the parties shall duly file with the Federal
Communications Commission (the “FCC”) and the TRB the necessary applications
(including FCC Forms 394 or other appropriate forms) requesting consent to the
extent required to the transactions contemplated by this agreement and the
parties shall cooperate with each other in connection with the preparation and
filing of the applications and shall prosecute the applications in good faith
and with due diligence. Each party shall bear its own costs and expenses
(including the fees and disbursements of its counsel) in connection with the
preparation of the portion of any application to the FCC or TRB to be prepared
by it and in connection with the processing of that application.

 

8.2           Hart-Scott-Rodino
Act.  Within 30 days after the date of this agreement, the
parties shall duly file with each of the Department of Justice and the Federal
Trade Commission any reports or notifications that may be required to be filed
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
“HSR Act”), in connection with the transactions contemplated by this agreement
(including Adelphia’s contingent obligation to purchase Seller’s Interest
pursuant to section 1.2), and each of the parties shall cooperate with the
others in connection with the preparation and filing of the reports or notifications,
shall furnish to the others all such information in its possession as may be
necessary for the completion of the reports or notifications to be filed by the
other, and shall promptly comply with all requests for further documents and
information made by the Department of Justice or the Federal Trade Commission.
Seller shall pay one-half and Highland shall pay one-half of the fees payable
to governmental authorities in connection with the filings relating to the
redemption of Seller’s Interest and Adelphia shall pay the fees payable in
connection with the filings relating to Adelphia’s contingent obligation to
purchase the Seller’s Interest pursuant to section 1.2.

 

14

 

8.3           Management of the
Systems.

 

(a)           Subject to the
provisions of section 1.4, during the period from the date of this agreement
through the Closing Date, Century shall have the right, power, and authority to
manage and control all of the business, affairs, assets, and properties of Buyer
and the Subsidiary, and is authorized and empowered to carry out and implement
any and all of the purposes of Buyer, subject to the limitations set forth
below in this section 8.3.  Subject to
any limitations specifically set forth in this agreement, Century is authorized
and directed on behalf of Buyer and the Subsidiary to take such necessary and
appropriate actions to (i) carry out the management activities, including, but
not limited to, the actions described in section 7.3(a)(1)-(14) of the Joint Venture
Agreement (except that Century shall not be required to submit any budgets for
approval under section 7.3(a)(9)); (ii) incur indebtedness (the “Cap Ex
Indebtedness”) from any lenders (the “Cap Ex Lenders”) in an amount not to
exceed $25 million (less any amount by which the borrowing pursuant to section
8.8 exceeds $275 million) for capita! expenditures for the Systems and grant
mortgages and security interests and execute and deliver such other documents
and agreements as necessary in connection with such financings (provided that
Century shall give notice to Seller that it has made or committed to make such
capital expenditures and provides appropriate documentation relating to those
expenditures at the time it gives such notice), all subject to section 2.5 and
8.8 of this agreement; (iii) incur other indebtedness to the extent permitted
by and in accordance with sections 2.5 and 8.8 of this agreement and grant
mortgages and security interests and execute and deliver such other documents
and agreements as necessary in connection with any such financings, subject to
the terms of sections 2.5 and 8.8 of this agreement; (iv) increase the amount
of the management fee payable under section 7.3(b) of the Joint Venture
Agreement to ten percent of the total Net Gross Revenues of the Systems subject
to that certain Letter Agreement dated the date hereof between Adelphia and
Buyer; and (v) enter into, make and perform such contracts, agreements and
other undertakings as may be deemed necessary or advisable for the conduct of
the business of Buyer and the Subsidiary. Upon incurring any Cap Ex
Indebtedness, Buyer shall promptly furnish to Seller reasonable information and
copies of the documentation with respect to the capital expenditures for the
Systems paid for with the proceeds of the borrowing.

 

(b)           Upon
any default on the Cap Ex Indebtedness, (i) Adelphia and Buyer within two
business days shall notify Seller of the default and furnish to Seller
information in reasonable detail with respect to the nature of the default, and
(ii) Highland, Adelphia and Century within two business days shall lend to the
Buyer, without interest, the amount required to prepay the Cap Ex Indebtedness
(including, but not limited to, principal, accrued interest and accrued fees),
and (iii) the Buyer shall apply the proceeds of such loan to payoff the Cap Ex
Indebtedness; the loan shall be due upon a sale of the interests in the Buyer
or the assets of the Systems.

 

(c)           Notwithstanding
the above provisions, Century shall not take any of the following actions
without the unanimous consent of the members of the management board of Buyer
and the board of directors of the Subsidiary:

 

(i)            dissolve Buyer or the
subsidiary;

 

15

 

(ii)           authorize,
issue or enter into any agreement providing for the issuance (contingent or
otherwise) of any equity securities of Buyer, or notes or debt securities of
Buyer containing equity features (including, without limitation, any notes or
debt securities convertible into or exchangeable for equity securities, any
notes or debt securities issued in connection with the issuance of equity
securities or any notes or debt securities containing profit participation
features);

 

(iii)          merge
or consolidate Buyer with any other partnership, corporation, association,
joint venture or similar entity except for a merger or consolidation with the
Subsidiary;

 

(iv)          sell,
transfer, assign, lease or otherwise dispose of any of the assets of Buyer and
the Subsidiary except in the ordinary course of business;

 

(v)           purchase
or acquire property or assets in any transaction not in the ordinary course of
business, except for property or assets to be utilized in the upgrade, rebuild
or expansion of the Systems of Buyer and the Subsidiary; or

 

(vi)          incur,
assume or become liable for any indebtedness other than indebtedness permitted
by sections 8.3(a) and 8.8.

 

(d)           As manager of the
Systems, Century shall:

 

(i)            not
later than April l, 2002, effect a rate increase for the Systems;

 

(ii)           not
later than January 31, 2002, approve the 2002 operating budget for the Systems;
and

 

(iii)          not
later than January 31, 2002, adopt a bonus plan for Paco Toste Santana, Nestor
H. Cardona and Gabriel Palerm-Cruz under which the amounts payable to such
employees are based solely on the operations of the Systems (and not the
operations of other systems owned by Adelphia).

 

(e)           The
foregoing provisions of this section 8.3 shall amend the provisions of sections
7.3 and 7.4 of the Joint Venture Agreement.

 

(f)            From
the date of this agreement through the Closing Date, there shall be no payments
by Buyer or the Subsidiary to Century, Adelphia or any of their respective
affiliates in an aggregate amount that would be material to ML Media, except
for (i) payments of management fees in accordance with the Joint Venture
Agreement, as amended by this agreement, and reimbursement of out-of-pocket
expenses in managing the Systems to the extent reimbursable pursuant to section
7.3(c) of the Joint Venture Agreement, (ii) reimbursement for equipment and
supplies in amounts equal to the purchase price paid by Century, Adelphia or
any of their respective affiliates upon the purchase of

 

16

 

those items of equipment and supplies
(without any mark-up and passing along to Buyer its proportionate share (based
on the percentage of such equipment and supplies acquired by the Buyer) of all
related discounts, allowances, and credits and the fair market value of any property or services
provided by the supplier, as required by the Joint Venture Agreement), and (iii)
payments for programming in amounts resulting from a good faith allocation by
Adelphia among the systems owned or managed by Century or Adelphia of Adelphia’s
out-of-pocket cost of that programming. .

 

8.4           Expenses.

 

(a)           Except
as provided in sections 2.2(d), 8.2, 12.2 and in this section 8.4, each party
shall bear its own expenses incurred in connection with the negotiation and
preparation of this agreement and in connection with all obligations required
to be performed by it under this agreement.

 

(b)           At
the closing, Highland shall pay to Seller $1.1 million to reimburse Seller for
legal fees and expenses of Proskauer Rose LLP.

 

(c)           Simultaneously
with the execution of this agreement, the Buyer is paying the fees payable to
Baer Marks, LLP in connection with the previous efforts to sell the interests
in the Buyer.

 

8.5           Indemnification
Upon Default.  If the closing does
not occur and if Buyer, Adelphia, Century or Highland defaults in the performance
of any of its obligations under this agreement, Adelphia, Century and Highland
jointly and severally shall indemnify and hold harmless Seller against all
loss, liability, damage or expense incurred by Seller as a result of that
default, including, but not limited to, legal fees and expenses and other
out-of-pocket costs incurred by Seller in connection with any dispute as to the
default and in connection with the enforcement of (or the taking or
contemplating of steps to enforce) its rights under this agreement, the
Security and Pledge Agreement referred to in section 2.4, and under any other
agreement executed in connection with the execution and delivery of this
agreement.

 

8.6           Other
Action; Further Assurances.

 

(a)           Each
party shall use its best efforts to cause the fulfillment at the earliest
practicable date of all conditions to the obligations of the parties to
consummate the sale and purchase of Seller’s Interest under this agreement.

 

(b)           At
any time and from time to time after the closing, each party shall, without
further consideration, execute and deliver to the other such other instruments
and take such other action as the other may reasonably request to carry out the
transactions contemplated by this agreement.

 

17

 

8.7           Reports.

 

(a)           During
the period through the Closing Date, Century shall provide to Seller, in
accordance with the following schedule, the monthly subscriber connection
reports, monthly operating statements, quarterly financial plans and budgets,
and quarterly analysis of actual operating results required by section 8.5(a)
of the Joint Venture Agreement and additional information as follows:

 

(i)            Monthly
reports or statements shall be provided by the 35th day following the end of
each month (or the next succeeding business day, if the 35th day is a Saturday,
Sunday or legal holiday).  Such monthly
reports or statements that are currently being provided (as indicated on
schedule 8.7(a)(i)) shall be in a form substantially similar to the reports
currently being provided by Century. In addition, Century shall provide the
additional information indicated on schedule 8.7(a)(i). The monthly reporting
information for the last month of each quarter shall be provided in the quarterly
report, but that information shall be set forth separately from the cumulative
quarterly information.

 

(ii)           Quarterly
financial plans and budgets required by section 8.5(a) of the Joint Venture
Agreement shall be provided by the 45th day following the end of each quarter
(or the next succeeding business day, if the 45th day is a Saturday, Sunday or
legal holiday).  Such plans and budgets
shall be in a form substantially similar to the plans and budgets currently
being provided by Century.

 

(iii)          Century shall use its best efforts to provide to Seller
by the 35th day following the end of each quarter the quarterly analysis of
actual operating statements required by section 8.5(a) of the Joint Venture
Agreement, but under no circumstances shall any such statement be provided
later than the 45th day following the end of the quarter.

 

(iv)          Century
shall use its best efforts to provide to Seller within 35 days after the end of
each of the first three fiscal quarters of each year the unaudited financial
statements and accompanying information required by section 8.3 of the Joint
Venture Agreement, reviewed by the Buyer’s accountants to the extent required
by rules of the Securities and Exchange Commission, but under no circumstances
shall any such statement and accompanying information be provided later than
the 45th day after the end of the quarter.

 

(v)           Century
shall use its best efforts to provide to Seller within 70 days after the end of
each fiscal year the audited financial statements and accompanying information
required by section 8.3 of the Joint Venture Agreement but under no
circumstances shall any such
statement and accompanying information be provided later than the 90th day
after the end of the fiscal year.

 

(b)           If
any of the financial statements and accompanying information referred to in
section 8.7(a)(i)-(iv) cannot be provided by the 35th day following the end of
the first three fiscal quarters or if any of the financial statements and
accompanying 

 

18

 

information referred to in section 8.7(a)(v)
cannot be provided by the 70th day following the end of the fiscal year, on the
35th or 70th day, as the case may be, Century shall provide such preliminary
information as is then available and thereafter, until the final statement and
information is provided, Century shall supplement the preliminary information with
additiona1 preliminary information as it becomes available and shall otherwise
assist Seller in the preparation of the reporting information relating to that
financial statement to the extent necessary to enable Seller to satisfy its
obligations as a public reporting entity.

 

(c)           Not
later than December 31, 2001 Adelphia shall provide the information listed on
the requests attached as exhibit 8.7(c), and Adelphia and Century shall cooperate
in all other reasonable respects with Seller and Buyer’s accountants to
finalize the audited financial
statements of Buyer for the year ended December 31, 2000 and to prepare
quarterly and annual financial statements for Buyer for 2001, to enable Seller
to prepare the corresponding financial statements required to be filed by
Seller as a public reporting entity.  Such
financial statements shall be prepared in accordance with the terms of the
Joint Venture Agreement (including, but not limited to, proper treatment of
payments to Adelphia and its affiliates) and generally accepted accounting
principles consistently applied.

 

(d)           Adelphia
and Century shall respond reasonably promptly to all reasonable requests from
Seller at any time prior to the closing for information with respect to Buyer
and the Subsidiary and the operations of the Systems that relates to the
information provided to Seller pursuant to section 8.7(a).

 

(e)           The
foregoing provisions of this section 8.7 shall amend the provisions of sections
8.3 and 8.5 of the Joint Venture Agreement.

 

8.8           Borrowing:
Certain Obligations of Highland, Adelphia and Century.

 

(a)           Highland
shall arrange for and obtain, in the name of Buyer, debt financing from one or
more lenders (the “Lenders”) in an amount (not to exceed $300 million less any
Cap Ex Indebtedness incurred pursuant to section 8.3(a)(ii)) sufficient to
enable Buyer to consummate the redemption of Seller’s Interest on or before
September 30, 2002, or, if any of the events referred to in section 3.3 shall
have occurred, on the Accelerated Closing Date. No such indebtedness may be
incurred prior to the Closing Date, however, unless the full amount borrowed is
paid directly by the Lenders to the Escrow Agent to be held by the Escrow Agent
in accordance with section 2.5 of this agreement (the terms of which are incorporated
in the Escrow Agreement) or Ade1phia delivers a letter of credit to Seller in
accordance with section 2.5. Any indebtedness incurred in accordance with this
section 8.8 and any Cap Ex Indebtedness incurred pursuant to section 8.3(a)(ii)
shall be guaranteed by Adelphia and may be secured by a pledge of Century’s
interest in the Buyer and the stock of the Subsidiary and a security interest
in the assets of Buyer and the Subsidiary, provided that (i) such pledge and
security interest shall serve solely as security for the indebtedness incurred
in accordance with this provision and shall not secure any other indebtedness
or obligation of Buyer or any indebtedness or other obligation of Adelphia,
Century, Highland, any of their respective affiliates, or anyone else, (b) true
and complete copies of all loan agreements, promissory notes, security agreements
and all other documents relating to the borrowing are provided to Seller
simultaneously with the borrowing, and (iii)

 

19

 

the loan agreement, promissory notes,
security agreements and other documents provide that a copy of any notice of
default given to Buyer, Adelphia, Century or Highland must simultaneously be
given to Seller.

 

(b)           Highland,
Adelphia and Century jointly and severally shall provide Buyer with all funds
necessary to enable Buyer to pay interest when due on any indebtedness incurred
as permitted by this provision.

 

(c)           On
and after the Closing Date, Highland shall guarantee all debt service
associated with the financing to purchase Seller’s Interest from Seller.

 

8.9           Consent:
Certain Obligations of Adelphia.  Each
of Adelphia and Century consents to the purchase by Buyer of Seller’s Interest
in accordance with the terms of this agreement.

 

8.10         Allocation
of Income and Expense.  During the period
commencing on the date hereof and ending on the Closing Date all items of
income, gain, loss and deduction associated with the operations of Buyer during
such period shall be allocated to Century. No distributions of cash or property
shall be made by Buyer to Century or Seller prior to the closing.

 

8.11         Closing
Structure.  Century, Adelphia and
Highland shall have the right to restructure the transactions contemplated
hereby such that, immediately prior to and in connection with the closing,
Buyer shall merge with and into the Subsidiary and thereafter the Subsidiary at
the closing shall redeem all of the stock of the Subsidiary held by Seller in
consideration of the payment to Seller of the purchase price set forth in
section 2 of this agreement.  Immediately
after the c1osing, Buyer or if the foregoing merger has occurred, the
Subsidiary, will be recapitalized so that Century has a 40% equity interest in
Buyer or the Subsidiary, as appropriate, and Highland has a 60% equity interest
in Buyer or the Subsidiary, as appropriate.

 

8.12         Indemnification
by Adelphia and Buyer.  Adelphia and
Buyer have represented to Seller that the redemption by Buyer of Seller’s
Interest is not subject to Puerto Rico tax. Accordingly, Buyer shall not withhold
any taxes from the payment to Seller of the purchase price for Seller’s
Interest (including any payment resulting from an adjustment of the purchase price
under section 2.2) and none of Adelphia, Century, Highland nor Buyer shall at
any time seek to collect from Seller (or any of its partners) any tax with
respect to the redemption of Seller’s Interest from Seller. Adelphia and Buyer
jointly and severally shall indemnify and hold Seller (and its partners)
harmless from any liability for Puerto Rico taxes with respect to
the sale of Seller’s Interest to Buyer or Adelphia or the other transactions
contemplated by this agreement.

 

8.13         Opinions.  Upon execution of this agreement (a) Buyer
and Adelphia are delivering to Seller an opinion of their counsel, Buchanan
Ingersoll Professional Corporation, in the form of exhibit 8.13(a), and (b)
Seller is delivering to Buyer and Adelphia an opinion of its counsel, Proskauer
Rose LLP, in the form of exhibit 8.13(b).

 

20

 

8.14         Certain
Obligations.  Pursuant to an Assumption
Agreement in the form of exhibit 8.14, at the closing Highland shall assume,
and shall agree to indemnify and hold harmless Seller with respect to, all
obligations of Seller pursuant to the letter agreement dated June 27, 2001
between Seller and Blackstone Management Associates III, L.L.C.

 

8.15         Indemnification
Regarding Senior Secured Notes.  Adelphia,
Century and Highland jointly and severally shall indemnify and hold harmless
Seller against all loss, liability, damage and expense associated with the
Senior Secured Notes and incurred by Seller as a result of the transactions contemplated
hereby. If, as a result of an event of default under the Senior Secured Notes
the Senior Secured Notes are accelerated, or if the closing under this
agreement does not occur by October 1, 2002, then Adelphia and the Buyer shall immediately
notify Seller and Highland, Adelphia and Century shall lend to the Buyer,
without interest, the amount required to prepay the Senior Secured Notes
(including, but not limited to, principal, accrued interest, accrued fees and
any Make-Whole Amount), and the Buyer shall apply the proceeds of such loan to
pay off the Senior Secured Notes; the loan shall be due upon a sale of the
interests in the Buyer or the assets of the Systems.

 

8.16         No Solicitation.

 

(a)           Seller shall
immediately cease any discussions or negotiations with any parties other than
Buyer, Century, Adelphia and Highland that may be ongoing with respect to an
Alternative Transaction (as hereinafter defined).  Seller shall not, and shall not authorize or
permit any of its general partners, officers, directors or employees or any investment
banker, financial advisor, attorney, accountant or other representative retained
by it to, directly or indirectly, (i) solicit, initiate or encourage (including
by way of furnishing information), or take any other action to facilitate, any
inquiries or the making of any proposal that may lead to an Alternative
Transaction or (ii) participate in any discussions or negotiations regarding
any proposed Alternative Transaction, except that if, at any time prior to the redemption
of the Seller’s Interest pursuant to this agreement, Seller receives a Third Party
Proposal (as defined herein), Seller may (subject to compliance with section
8.16(c)), in response to the Third Party Proposal, (A) furnish information in
Seller’s possession with respect to Buyer to the person making such Third Party
Proposal pursuant to a confidentiality agreement that is at least as protective
of Buyer’s interests as is the confidentiality agreement previously utilized in
connection with Buyer’s previous sale efforts and (B) participate in
negotiations regarding such an Alternative Transaction. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
the preceding sentence by any director, officer or employee of Seller or any investment banker, financial advisor,
attorney, accountant or other representative of Seller, acting on behalf of
Seller, shall be deemed to be a breach of this section 8.16(a) by Seller.  For purposes of this agreement, (i) a “Third
Party Proposal” means a bona fide, unsolicited proposal from a third party
to acquire directly or indirectly (regardless of the form of the transaction)
all of the equity interests of Buyer or all or substantially all of the assets
of the assets of the Systems, which proposal did not result from a breach of
this section 8.16(a) and which proposal Seller determines in good faith is
reasonably likely to result in a Superior Proposal (as defined in section
8.16(d)) and (ii) an “Alternative Transaction” means any direct or
indirect acquisition or purchase of assets of the Systems outside the ordinary
course of business or of any outstanding equity interests of 

 

21

 

Buyer or the Subsidiary, or any transaction
that if consummated would result in any person beneficially owning equity interests
of Buyer, or any merger, consolidation, business combination, sale of
substantially all the assets, recapitalization, liquidation, dissolution or
similar transaction involving Buyer or the Subsidiary, other than the
transaction contemplated by this agreement.

 

(b)           None
of the parties hereto shall enter into any letter of intent, agreement in
principle or acquisition agreement with respect to an Alternative Transaction unless
Century and ML Media shall have simultaneously terminated this agreement
pursuant to section 8.16(e).

 

(c)           In
addition to the obligations of Seller set forth in paragraph (a) of this
section 8.16, Seller shall immediately advise Adelphia and Highland orally and
in writing of any request for information or of any proposal or any inquiry
regarding any Alternative Transaction, the material terms and conditions of
such request, proposal or inquiry and the identity of the person making such
request, proposal or inquiry. Seller will keep Adelphia, Century and Highland
fully informed of the status and details (including amendments or proposed
amendments) of any such request, proposal or inquiry.

 

(d)           If
Seller receives a Third Party Proposal that constitutes a Superior Proposal,
Seller, Century and Buyer shall cooperate in all reasonable respects with any
due diligence requests from the offeror and Seller, Century and Buyer shall
negotiate in good faith an acquisition agreement with respect to the Superior
Proposal.  For purposes of this
agreement, a “Superior Proposal” means any Third Party Proposal that does
not result in disparate or unequal treatment of either Seller or Century and that
Seller determines in good faith to be more favorable to Seller than the
transactions contemplated by this agreement (taking into account all relevant
considerations, including relevant legal, financial, regulatory and other aspects
of the proposal and the third party and the conditions to and prospects for
completion of such proposal), unless Century determines in good faith that such
Proposal is not reasonably likely to be consummated (taking into account such
considerations).

 

(e)           This
agreement shall be terminated by Seller, Adelphia, Highland and Century if, prior
to the redemption of Seller’s Interest, (i) Seller, Century and Buyer execute a
binding acquisition agreement with respect to a Third Party Proposal that
constitutes a Superior Proposal, and (ii) Seller pays (or causes the third
party to pay) to Highland upon the date of such termination a termination fee
in the amount of $14 million in immediately available funds.

 

9.             Conditions
Precedent to Closing.

 

9.1           Conditions
Precedent to the Obligations of Buyer. 
The obligations of Buyer under this agreement are subject to the
fulfillment, at or prior to the closing, of each of the following conditions
(any of which may be waived in writing by Buyer):

 

22

 

(a)           all
representations and warranties of Seller under this agreement shall be true and
correct in all material respects at and as of the time of the closing with the
same effect as though those representations and warranties had been made at and
as of that time;

 

(b)           Seller
shall have performed and complied in all material respects with all obligations,
covenants and conditions required by this agreement to be performed or complied
with by it prior or at the closing;

 

(c)           the
FCC and the TRB shall each have given all requisite approvals, without any
condition or qualification materially adverse to Buyer, the Subsidiary,
Highland or Adelphia or to the proposed operations of the Systems, to the
extent required to the transactions contemplated by this agreement, and such
approvals shall be in full force and effect and the time for rehearing, reconsideration,
review or appeal under applicable law and regulations shall have expired
without any request for rehearing, reconsideration, review or appeal pending;
and

 

(d)           all
applicable waiting periods under the HSR Act with respect to the transactions
contemplated by this agreement shall have expired.

 

9.2           Conditions
Precedent to the Obligations of Seller. 
The obligations of Seller under this agreement are subject to the
fulfil1ment, at or prior to the closing, of each of the following conditions (any
of which may be waived in writing by Seller):

 

(a)           all
representations and warranties of Buyer, Century, Highland and Adelphia under
this agreement (other than the representation and warranty in section 7.4)
shall be true in all material respects at and as of the time of the Closing
with the same effect as though those representations and warranties had been
made at and as of that time;

 

(b)           each
of Buyer, Century, Highland and Adelphia shall have performed and complied in
all material respects with all obligations, covenants and conditions (other
than the covenant in section 8.3(e)) required by this agreement to be
performed or complied with by it prior to or at the closing;

 

(c)           the
FCC and the TRB shall have given all requisite approvals, without any condition
or qualification materially adverse to Seller, to the extent required to the
transactions contemplated by this agreement, and such approvals shall be in full
force and effect and the time for rehearing, reconsideration, review or appeal
under applicable law and regulations shall have expired without any request for
rehearing, reconsideration, review or appeal pending; and

 

(d)           all
applicable waiting periods under the HSR Act with respect to the transactions
contemplated by this agreement shall have expired.

 

23

 

10.           Transactions
at the Closing.

 

10.1         Documents
to be Delivered by Seller.  At the
closing, Seller shall deliver to Buyer the following:

 

(a)           an
instrument of transfer in the form of exhibit 10.1(a) to vest in Buyer valid
title to Seller’s Interest, free and clear of any lien, claim, security
interest or other encumbrance (other than the Permitted Liens);

 

(b)           a
General Release in the form of exhibit 10.1(b); and

 

(c)           the
non-competition agreement in the form of exhibit 10.1(c).

 

10.2         Documents
to be Delivered by Buyer.   At the
closing, Buyer shall deliver the following:

 

(a)           wire
transfer of the purchase price to an account designated by Seller; and

 

(b)           a General Release in
the form of exhibit 10.2(b).

 

10.3         Documents
to be Delivered by Highland.  At the
closing, Highland shall deliver the Assumption Agreement provided for in
section 8.14.

 

10.4         Settlement
Agreement.  At the closing, Seller
and Adelphia shall execute a Stipulation of Discontinuance with Prejudice of
the Action, as provided in the Settlement Agreement

 

10.5         Other
Agreements.  At the closing, the
parties shall execute and deliver all other documents and agreements required
by this agreement to be executed and delivered at the closing.

 

11.           Survival
of Representations and Warranties; Indemnification.

 

11.1         Survival.  All representations and warranties shall
survive the closing under this agreement notwithstanding any investigation at
any time by any party, and shall not be considered waived by any party’s
consummation of the transactions contemplated by this agreement with knowledge
of any breach or misrepresentation (including, but not limited to, Seller’s
knowledge of a breach of warranty or misrepresentation in section 7.4).

 

11.2         Indemnification.

 

(a)           Adelphia,
Century and Highland shall jointly and severally indemnify and hold harmless
Seller against all loss, liability, damage or expense (including reasonable
fees and expenses of counsel, whether involving a third party or the parties to
this

 

24

 

agreement) Seller may suffer, sustain or
become subject to as a result of any breach of any warranty of Adelphia, Century
and Highland contained in this agreement or any misrepresentation by Adelphia,
Century or Highland in this agreement.

 

(b)           Seller
shall indemnify and hold harmless Adelphia, Century and Highland against all
loss, liability, damage or expense (including reasonable fees and expenses of
counsel, whether involving a third party or the parties to this agreement)
Adelphia, Century and Highland may suffer, sustain or become subject to as a
result of any breach of any warranty of Seller contained in this agreement or
any misrepresentation by Seller in this agreement.

 

(c)           Notwithstanding
anything to the contrary in this Agreement, Adelphia, Century and Highland
shall not be liable to Seller for misrepresentation or breach of warranty
unless the aggregate losses to Seller from all such misrepresentations and
breaches of warranty (taking account of its 50% interest in Buyer) exceed the
sum of $5,000,000, in which event Adelphia, Century and Highland shall be
liable for the full amount of the loss, liability, damage and expense incurred
by Seller.

 

11.3         Exclusive
Remedy.  If the closing occurs, the
parties’ right to indemnification pursuant to this section 11 shall be their
sole and exclusive remedy after the closing for breach of warranty or
misrepresentation in this agreement.

 

12.           Miscellaneous.

 

12.1         Notices.  Any notice or other communication under this
agreement shall be in writing and shall be considered given when delivered
personally, one day after delivery by recognized overnight courier or four days
after mailing by registered mail, return receipt requested, to the parties at
the addresses set forth below (or at such other address as a party may specify
by notice to the other).

 

If to Buyer, to it at:

 

Adelphia
Communications Corporation

Main at Water
Street

Coudersport, PA  16915

Attention: Timothy J. Rigas

 

with a copy to:

 

Adelphia Communications Corporation

Main at Water Street

Coudersport, PA  16915

Attention: Colin Higgin

 

25

 

Buchanan
Ingersoll Professional Corporation

One Oxford
Centre

301 Grant
Street, 20th Floor

Pittsburgh, PA
15219-1410

Attention:
Bruce I. Booken

 

If to Adelphia, Century or Highland, to it at:

 

Adelphia Communications Corporation

Main at Water Street

Coudersport, PA 16915

Attention: Timothy J. Rigas

 

with a copy to:

 

Adelphia Communications Corporation

Main at Water Street

Coudersport, PA 16915

Attention: Colin Higgin

 

Buchanan Ingersoll Professional Corporation

One Oxford Centre

301 Grant Street, 20th Floor

Pittsburgh, PA 15219-1410

Attention: Bruce 1. Booken

 

If to Seller, to it at:

 

ML Media Partners, L. P.

444 Madison Avenue

Suite 703

New York, NY 10022

Attn:  Elizabeth McNey Yates

 

with a copy to:

 

Proskauer Rose LLP

1585 Broadway

New York, NY 10036

Attn: Bertram A. Abrams, Esq.

 

12.2         Finders.  Each of the parties represents and warrants
to the other that it has not retained or dealt with any broker or finder in
connection with the transactions contemplated by this agreement, except that
the Seller has retained Waller Capital Corp. and Buyer has retained Daniels
& Associates.  At the closing, (a)
Highland shall pay the fee of Waller Capital Corp. pursuant to that certain
agreement between Seller and Waller Capital

 

26

 

Corp. and the unexecuted amendment to that
agreement between them, and (b) Highland shall pay, or cause Buyer to pay, the
fee payable to Daniels & Associates pursuant to the unexecuted retention
agreement with Daniels & Associates.

 

12.3         Entire
Agreement: No Oral Change.  This
agreement and any agreement among the parties executed pursuant to or in
connection with this agreement contain a complete statement of all the
arrangements among the parties with respect to its subject matter, supersedes
any previous agreements between them relating to the subject matter, and cannot
be waived, changed or terminated orally.

 

12.4         Disclaimers.  Adelphia and Highland acknowledge that they
are fully familiar with the financial condition and the business and assets of
the Systems, that they have made an independent determination of the value of
those Systems and of Seller’s Interest in Buyer and are not relying on any
representation or warranty or other statement of fact by Seller or anyone
acting on Seller’s behalf, and that, subject to the satisfaction of any
applicable conditions in section 9.1, their obligation to consummate the
purchase of Seller’s Interest and pay to Seller the purchase price provided for
in this agreement is absolute and will not be affected by any event that occurs
or circumstance that exists at any time after execution of this agreement. In
addition, Adelphia and Highland each covenants that it will not institute any
litigation or take any other action to prevent, or that would have the effect
of preventing, Seller from enforcing its rights or remedies under this
agreement or under any agreement now or hereafter executed pursuant to or in
connection with this agreement, including, but not limited to, any agreement
that provides security for the performance by Adelphia or Highland of its
obligations under this agreement.

 

12.5         Governing
Law; Jurisdiction.  This agreement
shall be governed by and construed in accordance with the law of the State of
New York applicable to agreements made and to be performed in New York. The
courts of the State of New York and the United States District Court for the
Southern District of New York shall have jurisdiction over the parties with
respect to any dispute or controversy between them arising under or in
connection with this agreement. A summons or complaint in any such action or
proceeding may be served by mail in accordance with section 12.1.

 

12.6         Separability.  If any provision of this agreement is invalid
or unenforceable the balance of this agreement shall remain in effect.

 

12.7         Assignment.  No party may assign any of its rights or
delegate any of its obligations under this agreement without the consent of the
other except that each of Highland and Adelphia may assign its rights hereunder
to any of its subsidiaries or affiliates without restriction or such consent;
any such assignment shall not release Highland or Adelphia, as appropriate,
from its obligation under this agreement.

 

12.8         Specific
Performance.  Adelphia, Highland and
Century acknowledge that Seller would be irreparably damaged if any of them
were to breach any of their respective obligations under sections 1.4, 1.5, 2.5
or 8.8(a) or (b) of this agreement and that money damages would not be an
adequate remedy for any such breach. Accordingly, if any

 

27

 

of Adelphia, Highland or Century breaches any
of its obligations under any of those provisions of this agreement, Seller
shall be entitled, in addition to any other remedies that it may have, to
enforcement of those provisions of this agreement by a decree of specific
performance, which it may obtain on an expedited basis (time being of the essence
with respect to the performance of Adelphia’s, Highland’s or Century’s
obligations under this agreement) without the necessity of showing actual damage
and without any bond or other security being required.

 

	
  CENTURY CABLE VENTURE

  
	
   

  
	
   

  
	
  By:

  	
  ML MEDIA PARTNERS,
  L.P.

  
	
  By:

  	
  MEDIA
  MANAGEMENT PARTNERS,

  
	
   

  	
  its general partner

  
	
  By:

  	
  RP MEDIA
  MANAGEMENT, a general partner

  
	
  By :

  	
  IMP MEDIA
  MANAGEMENT, INC., a genera1 partner

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Elizabeth McNey Yates

  	
   

  
	
   

  	
   

  
	
  and

  
	
   

  	
   

  
	
  By:

  	
  CENTURY
  COMMUNICATIONS CORP.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Timothy
  J. Rigas

  	
   

  
	
   

  	
   

  
	
  ML MEDIA
  PARTNERS, L.P.

  
	
   

  	
   

  
	
  By:

  	
  MEDIA
  MANAGEMENT PARTNERS,

  
	
   

  	
  its general partner

  
	
  By:

  	
  RP MEDIA
  MANAGEMENT, a

  
	
   

  	
  general partner

  
	
  By:

  	
  IMP MEDIA
  MANAGEMENT, INC., a general

  
	
   

  	
  partner

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Elizabeth McNey Yates

  	
   

  
	
   

  
	
   

  
	
  HIGHLAND
  HOLDINGS

  
	
   

  	
   

  
	
  By:

  	
  /s/ Timothy
  J. Rigas

  	
   

  
				

 

28

 

	
  ADELPHIA
  COMMUNICATIONS CORPORATION

  
	
   

  
	
  By:

  	
  /s/ Timothy
  J. Rigas

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  CENTURY
  COMMUNICATIONS CORP.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Timothy
  J. Rigas

  	
   

  

 

29EXHIBIT 10.08

 

 

EMPLOYMENT
AGREEMENT

 

 

AGREEMENT,
made and entered into by and between Adelphia Communications Corporation, a
Delaware corporation (together with its successors and assigns permitted under
this Agreement, the “Company”), and Vanessa Wittman (the “Executive”) as of May
8, 2003.  The Company and the Executive
are sometimes each individually referred to in this Agreement as a “Party” and
are sometimes collectively referred to herein as the Parties.

 

WHEREAS,
the Company wishes to employ the Executive as Executive Vice President and
Chief Financial Officer of the Company, and the Executive desires to be so
employed by the Company in accordance with the terms and conditions of this
Agreement (“Agreement”).

 

NOW,
THEREFORE, in consideration of the promises and mutual covenants contained
herein and for other good and valuable consideration, the receipt of which is
mutually acknowledged, the Company and the Executive agree as follows:

 

1.             Definitions.

 

(a)             “Affiliates” shall mean with
respect to the Company, (i) any entity that directly or indirectly, through one
or more intermediaries, controls, or is controlled by, or is under common
control with the Company or (ii) any entity in which the Company owns an equity
interest, either directly or indirectly.

 

(b)           “Base Salary” shall have the meaning
set forth in Section 4 of this Agreement.

 

(c)           “Board” shall mean the Board of
Directors of the Company.

 

(d)           “Cause” shall mean:

 

(i)            the Executive is indicted for,
pleads nolo contendere to, or is convicted of a felony, or other crime
involving theft, fraud, dishonesty or moral turpitude; or

 

(ii)           the Executive engages in willful
misconduct that results in any material harm to the Company; or

 

(iii)          the Executive commits any material
breach of the Company’s Code of Ethics; or

 

 

(iv)          Executive’s repeated failure to carry
out the lawful duties of his position despite specific instruction to do so;

 

(v)           a breach by the Executive of any of
the representations and warranties set forth in Section 14(b) of this Agreement;
or

 

(vi)          the Executive breaches any other
material term of this Agreement which breach has not been cured by the
Executive within 20 days following written notice delivered by the Company in
accordance with the provisions of Section 22 of this Agreement.

 

(e)           “Code of Ethics” shall mean the Code
of Business Conduct and Ethics adopted by the Board which is in effect at the
applicable period of time, provided that a copy of such Code of Ethics has been
delivered to the Executive prior to such applicable period of time.

 

(f)            “Committee” shall mean the
Compensation Committee of the Board or any other committee of the Board
performing similar functions.

 

(g)           “Disability” shall mean the Executive’s
inability to substantially perform his duties and responsibilities under this
Agreement by reason of any physical or mental impairment that would entitle
Executive to long-term disability benefits under the Company’s long-term
disability plan then in place.

 

(h)           “Effective Date” shall mean the date
on which the Executive first commences employment with the Company.

 

(i)            “Good Reason” shall mean any of the
following events, if such events occur without Executive’s express consent:

 

(i)            there is a material reduction in
Executive’s Base Salary or target Incentive Bonus;

 

(ii)           Executive is demoted or removed from
the position of Executive Vice President and Chief Financial Officer;

 

(iii)          Executive is relocated by the Company
to a principal place of employment that is more then 50 miles from 5619 DTC
Pkwy, Greenwood Village, Colorado; or

 

(iv)          there is any other material breach of
this Employment Agreement which is not cured by the Company within 30 days
following written notice delivered by the Executive in accordance with the
provisions of Section 22 of this Agreement.

 

(j)            “Term” shall mean the period
commencing on the Effective Date and ending on the date Executive’s employment
is terminated, in accordance with the provisions of Section 9 of this
Agreement.

 

2

 

(k)           Use of the terms “He, his, she, her”
are intended for convenience only and are deemed to be gender neutral.

 

2.             Employment.  The Company hereby employs the Executive, and
the Executive hereby accepts such terms of employment, on the terms and
conditions set forth herein.  The
Executive’s principal place of employment shall be the Company’s executive
offices located at 5619 DTC Pkwy, Greenwood Village, Colorado, though Executive
acknowledges that he may be required to travel from time to time for business
reasons.

 

3.             Position,
Duties and Responsibilities.

 

(a)           During the Term, the Executive shall
serve as Executive Vice President and Chief Financial Officer of the Company,
with such duties and responsibilities as are customarily incident to his
position.  The Executive shall perform
such duties and carry out such responsibilities as may be determined from time
to time by the Chief Executive Officer or the President and Chief Operating
Officer.  The Executive shall devote all
of his business time, attention and skill to the performance of such duties and
responsibilities, and shall use his best efforts to promote the interests of
the Company and its Affiliates.

 

(b)           The Executive shall not be precluded
from (i) serving on the boards of directors other companies that do not compete
with the Company, trade associations and/or charitable organizations, subject
to the reasonable approval of the Chief Executive Officer, (ii) engaging in
charitable activities and community affairs, and (iii) managing his personal
investments and affairs, provided that such activities do not materially
interfere with the proper performance of his duties and responsibilities to the
Company.  Notwithstanding the foregoing,
the Executive shall not engage in any business activity which is in violation
of the Code of Ethics.

 

4.             Base Salary.  During the Term, the Executive shall be paid
an annualized salary of $475,000, subject to periodic review, which amount may
be increased but not decreased (the “Base Salary”).

 

5.             Annual Bonuses.  The Executive shall be eligible for an annual
performance-based cash bonus (“Incentive Bonus”) which shall be determined by
and paid based upon minimum, target and maximum performance goals to be set by
the Compensation Committee, which shall include such criteria as the
Compensation Committee shall deem appropriate. 
The Executive’s target Incentive Bonus for any year shall be 80 percent
of Executive’s Base Salary.  The
Incentive Bonus shall be prorated for less than a full year of employment to
the extent set forth in this Agreement. 
The Incentive Bonus shall be paid following the end of each fiscal year
in accordance with Company policy as in effect from time to time.

 

6.             Performance Retention Plan.  The Executive shall be eligible to
participate in the Company’s Performance Retention Plan (the “PRP”).  The initial terms of the Executive’s
participation include a grant of 200 percent of the base salary indicated in
paragraph 4.  Grants under the PRP will
be administered in accordance with the terms of the Plan, including proration
of the grant for the first employment year.

 

3

 

7.             Other Employee Benefit Programs.

 

(a)           During the Term, the Executive shall
be entitled to participate in all employee pension and welfare benefit plans
and programs made available to the Company’s senior-level executives or to its
employees generally, as such plans or programs may be in effect from time to
time, including, without limitation, pension, profit sharing, savings and other
retirement plans or programs, medical, dental, hospitalization, short-term and
long-term disability and life insurance plans, accidental death and
dismemberment protection, travel accident insurance, and any other pension or
retirement plans or programs and any other employee welfare benefit plans or
programs that may be sponsored by the Company from time to time, including any
plans that supplement the above-listed types of plans or programs, whether
funded or unfunded, but excluding any plans providing for severance.

 

(b)           The Executive shall be entitled to 4
weeks paid vacation per year to be taken in accordance with the Company
vacation policy.

 

8.             Reimbursement
of Business and Other Expenses; Perquisites.

 

(a)           The Executive is authorized to incur
reasonable expenses in carrying out his duties and responsibilities under this
Agreement in accordance with Company policy including, but not limited to,
expenses for travel and entertainment. 
The Company shall promptly reimburse Executive for all business expenses
incurred in connection with carrying out the business of the Company, provided
the Executive shall account for and substantiate all such expenses in
accordance with the Company’s policies for its senior executives.

 

(b)           During the Term, the Executive shall
be entitled to participate in all of the Company’s executive fringe benefits in
accordance with the terms and conditions of such arrangements as are in effect
from time to time for the Company’s senior-level executives.

 

9.             Termination of Employment.  Notwithstanding any other provision of this
Agreement, the Executive’s employment shall be terminated upon the first
occurrence of any event set forth below. 
All rights and obligations of the parties shall terminate as of the
effective date of such termination except as expressly set forth in this
Agreement.

 

(a)           Death or Disability.  The Executive’s employment shall terminate
automatically upon the Executive’s death or Disability during the Term.  The effective date of termination shall be
the date of Executive’s death or Disability, as the case may be.  In the event of the Executive’s death or
Disability, the Executive (or his estate) shall be entitled to the following:

 

(i)            accrued and unpaid Base Salary
through the date of death or Disability;

 

(ii)           any accrued and unpaid Incentive
Bonus, for the calendar year prior to the death or Disability and any other
accrued and unpaid amounts earned by Executive prior to the date of his death
or Disability;

 

4

 

(iii)          a prorata portion of the annual
Incentive Bonus for the year in which Executive’s death or Disability
occurs.  For this purpose, the Incentive
Bonus for the year in which Executive’s death or Disability occurs shall be
calculated at year end following such death or Disability, based upon the
actual achievement of the performance goals in effect for such year.  The amount of the Incentive Bonus Executive
would otherwise be entitled to for such year shall then be multiplied by a
fraction, the numerator of which shall be the number of days in the calendar
year which have elapsed as of the date of Executive’s death or Disability and
the denominator of which is 365; and

 

(iv)          all vested benefits accrued under any
benefit plans, programs or arrangements in which the Executive participated
during the Term, and an amount equal to such reasonable and necessary business
expenses incurred by the Executive prior to the effective date of the
termination which had not previously been reimbursed pursuant to Section 8.

 

(b)           Termination for Cause or
Termination by Executive Without Good Reason.  The Executive may terminate his employment
voluntarily without Good Reason upon sixty (60) days’ prior written notice to
the Company.  In such event, the
effective date of termination shall be the sixtieth day following the date such
notice is given.  The effective date of
any termination of Executive’s employment for Cause shall be determined in
accordance with the provisions of Section 1(d) and Section 22 of this
Agreement.  In the event Executive is
terminated for Cause, or he terminates his employment voluntarily without Good
Reason, he shall be entitled to:

 

(i)            accrued, unpaid Base Salary through
the effective termination date; and

 

(ii)           all vested benefits accrued under any
benefit plans, programs or arrangements in which the Executive participated
during the Term; and an amount equal to such reasonable and necessary business
expenses incurred by the Executive prior to the effective date of the
termination which had not previously been reimbursed pursuant to Section 8.

 

(c)           Other Termination of Employment by
the Company or by Executive for Good Reason.  In the event the Executive’s employment is
terminated (x) by the Company other than for death, Disability or Cause or (y)
by the Executive for Good Reason, the Executive shall be entitled to receive
the following payments and benefits:

 

(i)            accrued and unpaid Base Salary
through the termination date;

 

(ii)           any accrued and unpaid Incentive
Bonus for the calendar year prior to the date of termination and any other
accrued and unpaid amounts earned by Executive prior to the effective date of
such termination;

 

(iii)          a pro rata portion of the Incentive
Bonus which would have been earned by the Executive in accordance with the
Incentive Bonus Plan for the year in which the termination occurs.  For this purpose, the Incentive Bonus for the
year in which the termination occurs shall be calculated at year end, based
upon the actual achievement of the performance goals

 

5

 

in effect for such
year.  The amount of the Incentive Bonus
Executive would otherwise be entitled to shall be multiplied by a fraction, the
numerator of which shall be the number of days in the calendar year which have
elapsed as of the date of the termination and the denominator of which is 365;

 

(iv)          all vested benefits accrued under any
benefit plans, programs or arrangements in which the Executive participated
during the Term, and an amount equal to such reasonable and necessary business
expenses incurred by the Executive prior to the effective date of the
termination which had not previously been reimbursed pursuant to Section 8; and

 

(v)           continued payment of an amount equal
to the Base Salary for a period of two years; and

 

(vi)          payment of COBRA premiums equal to any
Company-paid health insurance premiums for a period of one year.

 

(d)           PRP.  The Executive’s right to payments, if any,
under the PRP upon termination of employment shall be governed by the terms of
the PRP.

 

(e)           Release.  The Company may require the Executive to
execute a general release in favor of the Company and its affiliates as a
condition to the payment of any amounts described in this Section 9.

 

10.           Restrictive
Covenants.

 

(a)           The Executive agrees that any right to
receive any further payments or benefits hereunder will cease if the Executive
breaches any of the provisions of Section 10(b) through 10(d) below.

 

(b)           Noncompetition; Nonsolicitation.
By and in consideration of the substantial compensation and benefits to be
provided by the Company hereunder, and further in consideration of the
Executive’s exposure to the proprietary information of the Company, the
Executive agrees that he shall not, during the Term and for at least 12 months
following termination of employment for any reason, without the express prior
written approval of the Company, (i) directly or indirectly perform services
for, as an employee, consultant or otherwise, any digital broadcast service
provider which competes with the Company in the principal geographic locations
where the Company is then doing business, (ii) directly or indirectly, in one
or a series of transactions, recruit, solicit or otherwise induce or influence
any proprietor, partner, stockholder, lender, director, officer, employee,
sales agent, joint venturer, investor, lessor, supplier, customer, agent,
representative or any other person which has a business relationship with the
Company, or had a business relationship with the Company within the 12 month
period preceding the date of the incident in question, to discontinue, reduce
or modify such employment, agency or business relationship with the Company, or
(iii) employ or seek to employ, or cause any other person to employ or seek to
employ, any person or agent who is then (or was at any time within six months
prior to the date of Executive’s termination of employment) employed or
retained by the Company.

 

6

 

(c)           Confidential Information.
During the Term and at all times thereafter, the Executive agrees that he will
not divulge to anyone (other than the Company or any persons employed or
designated by the Company or the Executive’s financial or legal advisors) any
knowledge or information of a confidential nature relating to the business of
the Company or any of its Affiliates (unless ascertainable from public or
published information or trade sources), as well as any information of a
confidential nature obtained from customers, clients or other third parties,
including, without limitation, all types of trade secrets and confidential
commercial information, and the Executive further agrees not to disclose,
publish or make use of any such knowledge or information without the prior
written consent of the Company; provided, however, that the Executive may
disclose any such information if required by a court order or other similar
request.

 

(d)           Cooperation.  The Executive agrees to cooperate with the
Company, during the Term and at all times thereafter, by being reasonably
available to testify on behalf of the Company or any Affiliate in any action,
suit, or proceeding, whether civil, criminal, administrative, or investigative,
and to assist the Company, or any Affiliate, in any such action, suit or
proceeding, by providing information and meeting and consulting at mutually
agreeable times and places with the Board or its representatives or counsel, or
representatives or counsel to the Company, or any Affiliate, as reasonably
requested.  The Company agrees to
reimburse the Executive for all expenses actually incurred by the Executive in
connection with his provision of testimony or assistance.

 

(e)           The Executive agrees that any breach
of the terms of this Section 10 would result in irreparable injury and damage
to the Company for which the Company would have no adequate remedy at law; the
Executive therefore also agrees that in the event of said breach or any
reasonable threat of breach, the Company shall be entitled to an immediate
injunction and restraining order from any court of competent jurisdiction to
prevent such breach and/or threatened breach and/or continued breach by the
Executive and/or any and all persons and/or entities acting for and/or with the
Executive.  The terms of this paragraph
shall not prevent the Company from pursuing any other available remedies for
any breach or threatened breach hereof, including, but not limited to, remedies
available under this Agreement and the recovery of damages.

 

(f)            The provisions of this Section 10
shall survive any termination of this Agreement and the Term, and the existence
of any claim or cause of action by the Executive against the Company, whether
predicated on this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of the covenants and agreements of this Section.

 

11.           Assignability; Binding Nature.  This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors, heirs (in
the case of the Executive) and assigns. No rights or obligations of the Company
under this Agreement may be assigned or transferred by the Company except that
such rights or obligations may be assigned or transferred pursuant to a merger
or consolidation in which the Company is not the continuing entity, or the sale
or liquidation of all or substantially all of the assets of the Company,
provided that the assignee or transferee is the successor to all or
substantially all of the business and assets of the Company and such assignee
or transferee assumes the liabilities, obligations and duties of the Company,
as contained in this Agreement, either contractually or as a matter of
law.  The Company further agrees that, in
the event of a sale or reorganization transaction as described in the preceding
sentence, it shall take whatever action it legally can in order to cause such
assignee or transferee to

 

7

 

expressly assume the
liabilities, obligations and duties of the Company hereunder.  No rights or obligations of the Executive
under this Agreement may be assigned or transferred by the Executive other than
his rights to payments hereunder, which may be transferred only by will or
operation of law.

 

12.           Intangible Property.  The Executive will not at any time during or
after the Term have or claim any right, title or interest in any trade name,
trademark, or copyright belonging to or used by the Company and shall not have
or claim any right, title or interest in any material or matter of any sort
prepared for or used in connection with the advertising, promotion or business
of the Company, whatever the Executive’s involvement with such matters may have
been, and whether procured, produced, prepared, or published in whole or in
part by the Executive, it being the intention of the Parties that the Executive
shall and hereby does, recognize that the Company now has and shall hereafter
have and retain the sole and exclusive rights in any and all such trade names,
trademarks, copyrights (all the Executive’s work in this regard being a work
for hire for the Company under the copyright laws of the United States),
material and matter as described above.

 

13.           Insurance.  If the Company desires at any time or from
time to time during the Term to apply in its own name or otherwise for life,
health, accident or other insurance covering the Executive, the Company may do
so and may take out such insurance for any sum which the Company may deem
necessary to protect its interests.  The
Executive will have no right, title or interest in or to such insurance, but
will, nevertheless, assist the Company in procuring and maintaining the same by
submitting from time to time to the usual customary medical, physical, and
other examinations and signing such applications, statements and other
instruments as may reasonably be required by the insurance company or companies
issuing such policies.

 

14.           Representations.  (a) 
The Company represents and warrants that it is fully authorized and
empowered to enter into this Agreement, and the performance of the Company’s
obligations under this Agreement will not violate any agreement between it and
any other person, firm or organization.

 

(b)  The Executive represents and
warrants that he is duly authorized to enter into this Agreement.  The Executive represents and warrants that he
has not made, and will not make, except with the prior written approval of the
Chief Executive Officer, any contractual or other commitments that may be
reasonably expected to conflict with or prevent his performance in any material
respect of any portion of this Agreement or conflict with the full enjoyment in
any material respect by the Company of the rights herein granted.  Without limiting the generality of the
foregoing, the Executive represents that he is not subject to any
noncompetition, confidentiality or similar agreement with any prior employer
which would conflict with the performance of his duties as contemplated by this
Agreement.

 

15.           Entire Agreement.  This Agreement contains the entire
understanding and agreement between the Parties concerning the subject matter
hereof.  This Agreement supersedes all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, between the Parties with respect thereto, which shall
remain in force and effect in accordance with its terms.

 

8

 

16.           Amendment or Waiver.  No provision in this Agreement may be amended
unless such amendment is agreed to in writing and signed by the Executive and
an authorized officer or director of the Company.  No waiver by either Party of any breach by
the other Party of any condition or provision contained in this Agreement to be
performed by such other Party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same or any prior or subsequent
time.  Any waiver must be in writing and
signed by the Executive or an authorized officer or director of the Company, as
the case may be.

 

17.           Severability.  In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, in whole or in part, the remaining provisions of this Agreement shall
be unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.

 

18.           Survival.  The respective rights and obligations of the
Parties hereunder shall survive any termination of the Executive’s employment
to the extent necessary to the intended preservation of such rights and
obligations.

 

19.           No Mitigation.  Without limiting any other provision hereof
and except as expressly set forth herein, the Company agrees that any income
and other employment benefits received by the Executive from any and all
sources other than the Company before, during or after the Term shall in no way
reduce or otherwise affect the Company’s obligation to make payments and afford
benefits hereunder.

 

20.           Governing Law/Jurisdiction.

 

THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO ITS CONFLICT OF LAWS RULES TO THE EXTENT SUCH LAWS ARE NOT
PREEMPTED BY FEDERAL BANKRUPTCY LAW.

 

The parties hereby
(i) submit to the exclusive jurisdiction of the courts of the State of Colorado
and the U.S. federal courts sitting in Colorado, provided that until the
consummation of the Plan, the United States Bankruptcy Court for the Southern
District of New York (“Bankruptcy Court”) shall have exclusive jurisdiction for
any action or proceeding relating to this Agreement, (ii) consent that any
such action or proceeding may be brought in any such venue, (iii) waive any
objection that any such action or proceeding, if brought in any such venue, was
brought in any inconvenient forum and agree not to claim the same, (iv) agree
that any judgment in any such action or proceeding may be enforced in other
jurisdictions, (v) consent to service of process at the address set forth in
Section 22 hereof, and (vi) to the extent applicable, waive their respective rights
to a jury trial of any claim or cause of action based on or arising out of this
agreement or any dealings between them relating to the subject matter of this
agreement.

 

21.           Withholding.  All amounts required to be paid by the
Company shall be subject to reduction in order to comply with applicable
Federal, state and local tax withholding requirements, except as expressly
provided herein.  All amounts shall also
be subject to reduction

 

9

 

for such additional
amounts as may be agreed to by Executive (i.e., payment of the employee
portion of any insurance premiums).

 

22.           Notices.  Any notice given to a Party shall be in
writing and shall be deemed to have been given when (a) delivered by hand (with
written confirmation of receipt), (b) sent by telecopier (with written
confirmation of receipt), provided
that a copy is also mailed by registered or certified mail, return receipt
requested, or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the
appropriate address and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as Party may designate by notice to the other
Party):

 

	
  If to the
  Company:

  	
  Adelphia Communications
  Corporation 

  
	
   

  	
  One North Main Street

  
	
   

  	
  Coudersport, PA   16915

  
	
   

  	
  Attention: General
  Counsel

  
	
   

  	
   

  
	
  If to the
  Executive:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  With a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

In addition, any
notice of termination by the Company for Cause, or by the Executive for Good
Reason (a “Notice of Termination”) shall be set forth in a writing delivered in
the manner set forth in this Section 22 which (i) indicates the specific
termination provision in this Agreement, (ii) to the extent applicable, sets forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated and
(iii) if the effective date of termination is other than the date of receipt of
such notice, specifies the termination date (which date shall be not more than
thirty days after the giving of such notice). 
The failure by the Executive or the Company to set forth in the Notice
of Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive’s or the
Company’s rights hereunder.

 

23.           Headings.  The headings of the sections contained in
this Agreement are for convenience only and shall not be deemed to control or
affect the meaning or construction of any provision of this Agreement.

 

24.           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

10

 

IN WITNESS
WHEREOF, the undersigned have executed this Agreement as of the Effective Date.

 

	
   

  	
  ADELPHIA COMMUNICATIONS
  CORPORATION

  
	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/ David Brunick

  	
   

  
	
   

  	
  Name: David Brunick

  
	
   

  	
  Title: Senior Vice
  President – Human Resources

  
	
   

  
	
   

  
	
   

  	
  /s/ Vanessa Wittman

  	
   

  
	
   

  	
  Vanessa Wittman

  

 

11

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