CABLE TELEVISION
.'
'uJ
Robert J ,~':ei'.yes '" .
Municipal Affairs Manager
\v~'
veriZJl!l
Reply to:
600 Hidden Ridge,HQE02E65
(972)718-6648
Fax: (972)-719-7948
Verizon
Communications
Corporation
March 7 I 2002
Mr. William Horne
City Manager
Clearwater City Hall, 3rd Floor
112 S. Osceola Avenue
Clearwater, FL 33756
(727) 562-4040
COpy
Subject:
Cable Television Franchise Transfer Request
Dear Mr. Horne,
Verizon Media Ventures Inc. ("Verizon"), is pleased to announce that it has reached
an agreement with Adelphia Communications Corporation ("Adelphia") to sell the
cable system serving Clearwater, Florida.
Adelphia is one of the largest cable television operators in the country, serving more
than 5 million subscribers. Additional information about Adelphia is provided in the
attached documents. We believe that the financial resources and expertise of
Adelphia will bring cable customers in your community the best possible cable
service, as well as, expanded choices in products and services.
We request the consent of your community to transfer the cable television franchise
and system from Verizon to Adelphia PineHas County, LLC, a wholly-owned
subsidiary of Adelphia. Adelphia Communications Corporation will execute an
Assignment and Assumption Agreement to assign its rights under the Purchase
Agreement to Adelphia Pinellas County, LLC. Such transfers are routine in the
industry and are allowed under Section 16.9 of the attached Asset Purchase
Agreement. This wholly-owned Adelphia subsidiary, Adelphia Pinellas County, LLC,
is identified as the Transferee in the accompanying FCC Form 394 application.
Adelphia Communications Corporation will have ultimate control of the franchise and
related assets. (Please see the attached structure chart.) We therefore request
your consent forthe transaction described in the application.
Page 2
Enclosed are an original and two copies of Federal Communications Commission
("FCC") Form 394, "Application for Franchise Authority Consent to Assignment or
Transfer of Control of Cable Television Franchise", which consists of the following
sections:
I. General Information: Transferor/Assignor (Part I); Transferee/Assignee (Part II)
II. Transferee's/Assignee's Legal Qualifications
III. Transferee's/ Assignee's Financial Qualifications
IV. Transferee's/Assignee's Technical Qualifications
V. Certification: Transferor/Assignor (Part I); Transferee/Assignee (Part II)
We recognize that under Section 617(e) of the Cable Television Consumer
Protection and Competition Act of 1992 (47 U.S.C.A. 9537), the franchise authority
shall have up to 120 days from the date of filing of this form, complete with all
exhibits and any information required by the franchise agreement or applicable state
or local law, to act upon such request. If the franchise authority fails to render a final
decision on such request within 120 days, such request shall be deemed granted
unless the requesting party and the franchise authority agree to an extension of
time.
We believe the enclosed materials provide you with the information necessary to
make a speedy determination on our request for the transfer of the franchise to
Adelphia. The information contained within the Form 394 establishes that Adelphia
Pinellas County LLC, as the transferee/assignee, satisfies the requisite legal, technical
and financial qualifications. Accordingly, Verizon believes that to the extent consent is
required, it should be granted. If you find the enclosed information acceptable,
please place approval of the transfer on the next community meeting agenda.
We have enclosed a proposed form of resolution that we request you adopt, or use
as a model for a resolution by which you would grant such consent. To the extent
that you desire to change the form of resolution - and we understand and appreciate
that you might - we would like to be involved in that process to ensurethat the final
language of the resolution is acceptable to all parties.
We look forward to meeting with you personally to answer any questions you may
have, and to work with you to obtain swift transfer approval and welcome Adelphia
as the cable television provider in your community. If you have any questions,
please call Robert J. Hayes, Municipal Affairs Manager, at Verizon at 972-718-6648,
or Randall D. Fisher, Vice President and General Counsel, at Adelphia at 814-274-
9830.
Page 2
Page 3
Sincerely,
~.~
Robert J.Hayes
Verizon Municipal Affairs Manager
Page 3
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RESOLUTION NO.
RESOLUTION OF THE OF
APPROVING THE TRANSFER OF THE CABLE TELEVISION FRANCHISE
WHEREAS, Verizon Media Ventures Inc. ("Franchisee"), owns, operates and
maintains a cable television system (the "System") in the of
(the "Franchise Authority"), pursuant to a cable television franchise
agreement (the "Franchise"), and Franchisee is the duly authorized holder of the
F ranch ise;
WHEREAS, Franchisee and Adelphia Communications Corporation
("Adelphia") are parties to an Asset Purchase Agreement (the "Agreement"),
pursuant to which the System and the Franchise will be transferred (the "Transfer")
from Franchisee to Adelphia Pinellas County, LLC (the "Transferee"), an affiliate of
Adelphia, at the consummation of the transaction contemplated by the Agreement
(the "Closing"); and
WHEREAS, Franchisee and Transferee have requested consent by the
franchise Authority to the Transfer in accordance with the requirements of the
Franchise and have filed an FCC Form 394 with the Franchise Authority; and
WHEREAS, the Franchise Authority has investigated the qualifications of
Transferee and finds it to be a suitable transferee;
NOW THEREFORE BE IT RESOLVED BY THE FRANCHISE AUTHORITY AS
FOLLOWS:
SECTION 1. The Franchise Authority hereby consents to and approves,
subject to applicable law, the assignment by Franchisee of its right, title and interest
in the Franchise to Transferee, and the assumption by Transferee of the obligations
of Franchisee under the Franchise from and after the Closing.
SECTION 2. The Franchise Authority confirms that: (a) the Franchise was
properly granted or transferred to Franchisee; (b) the Franchise supersedes all other
agreements between the parties; (c) the Franchise represents the entire
understanding of the parties and the Franchisee has no obligations to the Franchise
Authority other than those specifically stated in the franchise; and (d) Franchisee is
materially in compliance with the provisions of the Franchise and there exists no
fact or circumstance known to the Franchise Authority which constitutes or which,
with the passage of time or the giving of notice or both, would constitute a material
default or breach under the Franchise or would allow the Franchise Authority to
cancel or terminate the rights thereunder, except upon the expiration of the full term
of the Franchise.
SECTION 3. Transferee may transfer the System and/or the Franchise, or
control related thereto, to any entity controlling, controlled by, or under common
control with Adelphia.
SECTION 4. The Franchise Authority hereby consentsto and approves the
assignment, mortgage, pledge, or other encumbrance, if any, of the. Franchise, the
System, or assets relating thereto, as collateral for a loan.
SECTION 5. This Resolution shall be deemed effective for purposes of the
Transfer upon the Closing of the Transfer.
SECTION 6. The Franchise Authority releases Franchisee, effective upon the
Closing, from all obligations and liabilities under the Franchise that accrue on and
after the Closing; provided that Transferee shall be responsible for any obligations
and liabilities under the Franchise that accrue on and after the Closing.
SECTION 7. This Resolution shall have the force of a continuing agreement
with Franchisee and Transferee, and Franchise Authority shall not amend or
otherwise alter this Resolution without the consent of Franchisee and Transferee.
PASSED, ADOPTED AND APPROVED this day of
2002.
By:
ATTEST:
Clerk
*************
I, the undersigned, being the duly appointed, qualified and acting (Clerk) of the
of , hereby certify that the foregoing Resolution No.
is a true, correct and accurate copy as duly and lawfully passed and adopted
by the governing body of the on the day of
,2002.
Clerk
Federal Communications Commission
Washington, DC 20554
c
- -
....., WI
III
Approved by OMB
3060-0573
FCC 394
APPLICATION FOR FRANCHISE AUTHORITY
CONSENT TO ASSIGNMENT OR TRANSFER OF CONTROL
OF CABLE TELEVISION FRANCHISE
FOR FRANCHISE AUTHORITY USE ONLY
SECTION I. GENERAL INFORMATION
DATE
03/07/02
1. Community Unit Identification Number:
FL1192
2. Application for:
~ Assignment of Franchise
o Transfer of Control
3. Franchising Authority: Cit of Clearwater, Florida
4. Identify community where the system/franchise that is the subject of the assignment or transfer of control is located:
Cit of Clearwater, Florida
5. Date system was acquired or (for system's constructed by the transferor/assignor) the date on
which service was provided to the first subscriber in the franchise area:
6. Proposed effective date of closing of the transaction assigning or transferring ownership
of the system to transferee/assignee:
04/02/96
When all closing
conditions are met.
Anticipate no later than
120 da s from this filin .
7. Attach as an Exhibit a schedule of any and all additional information or material filed with this
application that is identified in the franchise as required to be provided to the franchising
authority when requesting its approval of the type of transaction that is the subject of this
application.
Exhibit No
N/A
PART I - TRANSFEROR/ASSIGNOR
1. Indicate the name, mailing address, and telephone number of the transferor/assignor.
Legal name of Transferor/Assignor (if individual, list last name first)
Verizon Media Ventures Inc
Assumed name used for doing business (if any)
Verizon Media Ventures Inc.
Mailing street address or P.O. Box
6665 N. Macarther Blvd. - Mailcode HQK02B75
City
Irvin
State
TX
Telephone No. (include area code)
972-718-6648
2.(a) Attach as an Exhibit a copy of the contract or agreement that provides for the assignment or
transfer of control (including any exhibits or schedules thereto necessary in order to understand the
terms thereof). If there is only an oral agreement, reduce the terms to writing and attach.
(Confidential trade, business, pricing or marketing information, or other information not otherwise
publicly available. may be redacted).
Exhibit No.
1
(b) Does the contract submitted in response to (a) above embody the full and complete agreement
between the transferor/assignor and the transferee/assignee?
[Kl Yes D No
If No, explain in an Exhibit.
Exhibit No.
NIA
FCC 394 (Page 1)
September 1996
PART II - TRANSFEREE/ASSIGNEE
1.(a) Indicate the name, mailing address, and telephone number of the transferee/assignee.
Legal name of TransfereelAssignee (if individual, list last name first)
Adel hia Pinellas Count , LLC
Assumed name used for doing business (if any)
Mailing street address or P.O. Box
1 North Main Street
City
Couders ort
State
PA
ZIP Code
16915
Telephone No. (include area code)
814 274-9830
(b) Indicate the name, mailing address, and telephone number of person to contact, if other than transferee/assignee.
Name of contact person (list last name first)
Fisher, Randall D.
Firm or company name (if any)
Adel hia Communications Cor
Mailing street address or P.O. Box
1 North Main Street
City
Couders ort
oration
State
PA
ZIP Code
16915
Telephone No. (include area code)
814 274-9830
(c) Attach as an Exhibit the name, mailing address, and telephone number of each additional person who
should be contacted, if any.
(d) Indicate the address where the system's records will be maintained.
Street address
1 North Main Street
City State
Couders ort P A
ZIP Code
16915
2 Indicate on an attached exhibit anv D'?ns to change the current terms and conditions of service and
operations of the system as a consequence of the transaction for which approval is sought.
FCC 394 (Page 2)
September 1996
Exhibit No.
N/A
Exhibit No
2
SECTION II. TRANSFEREE'S/ASSIGNEE'S LEGAL QUALIFICATIONS
1. Transferee/Assignee is:
o
Corporation
a. Jurisdiction of incorporation:
d. Name and address of registered agent in
jurisdiction:
b. Date of incorporation:
c. For profit or not-for-profit:
o
Limited Partnership a. Jurisdiction in which formed:
c. Name and address of registered agent in
iurisdiction:
b. Date of formation:
o General Partnership a. Jurisdiction whose laws govern formation:
b. Date of formation:
D Individual
V
L::.J
Other. Describe in an Exhibit.
I EXhib; No.
2. List the transfereelassignee, and, if the transferee/assignee is not a natural person, each of its officers, directors, stockholders
beneficially holding more than 5% of the outstanding voting shares, general partners, and limited partners holding an equity
interest of more than 5%. Use only one column for each individual or entity. Attach additional pages if necessary. (Read
carefully - the lettered items below refer to corresponding lines in the following table.)
(a) Name, residence, occupation or principal business, and principal place of business. (If other than an individual, also show
name, address and citizenship of natural person authorized to vote the voting securities of the applicant that it holds.) List the
applicant first, officers, next, then directors and, thereafter, remaining stockholders andlor partners.
(b) Citizenship.
(c) Relationship to the transferee/assignee (e.g., officer, director, etc.)
(d) Number of shares or nature of partnersihp interest.
(e) Number of votes.
(f) Percentage of votes.
(a)
(Please see attached)
(b)
(c)
(d)
(e)
(f)
FCC 394 (Page 3)
September 1996
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Has an adverse finding been made or an adverse final action been taken by any court or
administrative body with respect to the transfereelassignee in a civil, criminal or administrative
proceeding, brought under the provisions of any law or regulation related to the following: any
felony; revocation, suspension or involuntary transfer of any authorization (including cable
franchises) to provide video programming services; mass media related antitrust or unfair
competition; fraudulent statements to another government unit; or employment discrimination?
If the answer is Yes, attach as an Exhibit a full description of the persons and matter(s) involved,
including an identification of any court or administrative body and any proceeding (by dates and file
numbers, if applicable), and the disposition of such proceeding.
Are there any documents, instruments, contracts or understandings relating to ownership or future
ownership rights with respect to any attributaole interest as described in Question 2 (including, but
not limited to, non-voting stock interests, beneficial stock ownership interests, options, warrants,
debentures)?
If Yes, provide particulars in an Exhibit.
7. Do documents, instruments, agreements or understandings for the pledge of stock of the D Yes ~ No
transfereelassignee, as security for loans or contractual performance, provide that: (a) voting rights
will remain with the applicant, even in the event of default on the obligation; (b) in the event of
default, there will be either a private or public sale of the stock; and (c) prior to the exercise of any
ownership rights by a purchaser at a sale described in (b), any prior consent of the FCC andlor of the
franchising authority, if required pursuant to federal, state or local law or pursuant to the terms of
the franchise agreement will be obtained?
Federal Communications Commission
Washington, DC 20554
Approved By OMB
3060-0573
3.
If the applicant is a corporation or a limited partnership, is the transferee/assignee formed under the
laws of, or duly qualified to transact business in, the State or other jurisdiction in which the system
operates?
If the answer is No, explain in an Exhibit
4.
Has the transfereelassignee had any interest in or in connection with an applicant which has been
dismissed or denied by any franchise authority?
If the answer is Yes, describe circumstances in an Exhibit.
5.
6.
If No, attach as an Exhibit a full explanation.
SECTION III. TRANSFEREE'S/ASSIGNEE'S FINANCIAL QUALIFICATIONS
1.
The transferee/assignee certifies that it has sufficient net liquid assets on hand or available from
committed resources to consummate the transaction and operate the facilities for three months.
Attach as an Exhibit the most recent financial statements, prepared in accordance with generally
accepted accounting principals, including a balance sheet and income statement for at least one full
year, for the transfereelassignee or parent entity that I:las been prepared in the ordinary course of
business, if any such financial statements are routinely prepared. Such statements, if not otherwise
pUblicly available, may be marked CONFIDENTIAL and will be maintained as confidential by the
franchise authority and its agents to the extent pennissible under local law.
2.
SECTION IV. TRANSFEREE'S/ASSIGNEE'S TECHNICAL QUALIFICATIONS
Set forth in an Exhibit a narrative account of the transferee'slassignee's technical qualifications, experience
and expertise regarding cable television systems, including, but not limited to, summary infonnation about
appropriate management personnel that will be involved in the system's management and operations. The
transferee/assignee may, but need not, list a representative sample of cable systems currently or fonnerly
owned or operated.
FCC 394 (Page 4)
September 1996
DYes D No
N/A
I Exhibit No.
IN/A
DYes 0 No
Exhibit No.
N/A
DYes IKJ No
Exhibit No.
N/A
DYes [K] No
Exhibit No.
4
o Yes D No
Exhibit No.
5
Exhibit No.
6
SECTION V - CERTIFICATIONS
Part I - Transferor/Assignor
All the statements made in the application and attached exhibits are considered material representations, and all the Exhibits
are a material part hereof and are incorporated herein as if set out in full in the application.
Signature
Verizon Media Ventures Inc,
I CERTIFY that the statements in this application are true,
complete and correct to the best of my knowledge and belief and
are made in good faith.
Print full name
Anna Marie Moran - Vice President - General Manager
WILLFUL FALSE STATEMENTS MADE ON THIS FORM A
PUNISHABLE BY FINE AND/OR IMPRISONMENT. U,S,
TITLE 18, SECTION 1001.
Check appropriate classification:
D . Individual D
General Partner
o
Corporate Officer
(Indicate Title)
D
Other.. Explain:
Part II - Transferee/Assignee
All the statements made in the application and attached Exhibits are considered material representations, and all the Exhibits
are a material part hereof and are incorporated herein as if set out in full in the application.
The transferee/assignee certifies that he/she:
(a) Has a current copy of the FCC's Rules governing cable television systems.
(b) Has a current copy of the franchise that is the subject of this application, and of any applicable state laws or local
ordinances and related regulations.
(c) Will use its best efforts to comply with the terms of the franchise and applicable state laws or local ordinances and related
regulations, and to effect changes, as promptly as practicable, in the operation system, if any changes are necessary to cure
any violations thereof or defaults thereunder presently in effect or ongoing.
I CERTIFY that the statements in this application are true,
complete and correct to the best of my knowledge and belief and
are made in good faith.
Signature Adelohia Pinellas County. LLC
.~. . ;/ tJ /J (\ L--' /J
.jIV.J:A,49ld4..,lV IV I ,..0WU~./v
'Z'l ~D 0 1..
WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE
PUNISHABLE BY FINE AND/OR IMPRISONMENT. U.S. CODE,
TITLE 18, SECTION 1001.
Date
Randall 0, Fisher
Check appropriate classification:
D Individual D
General Partner
D
Corporate Officer
(Indicate Title)
fJ
Other. Explain:
Vice President of
ACC Operations, Inc.,
the Member
FCC .394 (Page 5)
September 1996
FCC 394
APPLICATION FOR FRANCHISE AUTHORITY
CONSENT TO ASSIGNMENT OR TRANSFER OF CONTROL
OF CABLE TELEVISION FRANCHISE
March 7, 2002
EXHIBIT 1
(Part I, Q. 2a)
[Attach as an Exhibit a copy of the contract or agreement that provides for the assignment
or transfer of control (including any exhibits or schedules thereto necessary in order to
understand the terms thereof). If there is only an oral agreement, reduce the terms to
writing and attach. (Confidential trade, business, pricing or marketing information, or
other information not otherwise publicly available, may be redacted).]
Attached is a copy of the Asset Purchase Agreement between Verizon Media Ventures
Inc, and Adelphia Communications Corporation (dated December 17,2001) including
Exhibits, Confidential information has been redacted.
VERIZ()N MEDIA VENTURES INC.
Page
ARTICLE I . Definitions and Interpretation :...... ~.;....., ..~..... ,'" .....;.; .....,... ............. :..... ..... ...... ..1
1.1 DefinItIons .~....,.. ....,... .........,. ....:...... ..,...... ........... ........,... ......;. ..............:...... ..,...... .......... ..1
1.2 Interpretation.,...,......:. ............. ...... ..........,. ........ ............. "".' ... .~:...........,.. .... ......... ........ 10
ARTICLE U TheAcqUlred Assets ........... ..., .... .".... ;" ... ....... .... ...... ............ .......;. ,. ........... ...,.. 10
2.1 AssetsSubject to Agreement................... .......... ......... .......... ........... ............. ... ..... ...,... 10
2.2 Excluded Assets ...,......, ......... .......... .................... ......... ... ..,.... ........... .......... ".'''. ,........... 12
2.3 Third Party Consents .............. ....... ~...............:................................. ..~.. .................... ,.. .13
2.4 LIcense.... ............. ........ ........... ........ ...................... ......... ......... ..,...... ....... .... .....:.......... .14
. ARTICLE ill Assumption of Liabilities ........;.....~.....:.............:.......,.........................,..........14
3.1 Assumption of Liabilities ...... ...... ....... ...... ,........ ....~............ ............. ..;....... ,.. .......... .,.... 14
3.2 Excluded Liabilities..........:.... ......... .... .......... :.... ......... ........ .... ......... ....,....... ;........~ ...... ..14
.ARTICLE IV.. Consideration ............ ..;............... ..... ......... ................. ....... ... .'........... .,'.... ... '....... 15
4.1 Consideration .. .......... ............. .................: ......... ............. .... ............ .......... ........,. .,....... 15
4.2 AdJustments..........,... ...~. ..... .,..,.... .... .;.................. ........ ..... ,. ....... ;...... ........... ...,'.......... ,.15
.4.3 Final Adjustment ..:..;,................................ ........ ......;.......:...... ......,..;......... ................... 16
4.4 Purchase Price Allocations ............................... .......................................... ................. 17
ARTICLES Representations and Warranties of Verizon .,.....................,..........................:.17
5.1 Organization, Standing and Power ...........................,............................;.. ................... 17
.5.2 Authority........>'. ........... ................ ............ ........... .........; ......... .......... ........... ........... ...;. .17
5.3 No Breach or Conflict ...,....., ........ .......,.... .,...... ..... ..~........... .;.. ..................... ...,u......; ," 18
5.4 Material Consents,..............,... ..... ........... ........~.... ............... ..... .......,.. ........... ,...... ........... .18
5.5 Receivables ............... ............. .......... ......... ........:... ........ ....... ,. ................,..... .."..... ....... 18
5.6 Tangible Assets ~. ...... ..... ..,....... ..... ............ ....... .,.... .......... .,..~.. ....,..........;..... ............ ...:.. 18
5.7 Claims, Litigation and Disputes ......................~......;..... ..,.....,.......,.....,........................ 19
5.8 Acquired Contracts ....... ......... ...... ......... ..,....................... ....... .............. ,.... ........, ....:..... 19
5.9 Compliance With Laws ..... ....................... ........ .............,.. ...... .......... ........... ...~.... ..:..... 19
, .5.10.. Taxes, Fees' aIld Utilities .;................................. ...............;.......,.............~...........,........ 19
5.11 : .FraIlchises.,:......~. ,....... ............. .........~.."..... ................ ..... .......... ...,..;... .......... ........ ......... 20.
5.12 . . financiaLStatements.. ....uo.............. .......... .......... .......,.. .;................ ...,........~ ,....... ~,... ,..,. .21
5; 13,<El11ploy~aridRelated f\.1atters .....................:.. ......... ..~. .;;;...,........;. .,.. ..,.... ...:;..:... ...... 21...
5.14 ."Environmental. Matters.....;..... ........~...........,....... ............ .................. ........;... .......... "',' 23
5 .15 ..Brokerage. Fees .,.................... ...... ............. ......... ... ........ ...'....... .....;..... ....... ..... ...... .;......,...23
5.16 ..Free Service Liability ...... ...... ...... ........... ....... ... .............. ........... ;.... ......... ......,.:... .;...... 23
5.17 . . Local .Office....... ....:............... .............. ..... ......... ............ .~... ............ .....,...... ...,....... ..:... 23
.5.18 Poh;Attachments,..................... ..................:........ ............ ". .......... .... .....;...., ... .........:....... 23
5.19 . Restorati()n<.:. ..,. ........:..........,.., .....~....................... .................... .......... ..., ................,. ...... .24
.5.20 · Right of First Refilsal ou......... ..................ou.................... ......... ,......., ..,...... ....ou.. ....... .... .24
. .5 .21 The Syst~l11.................. .;..... ,," ....................................................... ..;....... ,............. ~ .... ..:. 24
..... .. ......... . :... .... ...... .. .... ...... . . ... <. .. ... ....... . ..... ...... 26
. 5.22 .'. Investment Purpose .......................,~.......ou...........................,.......,......u......".............. ...
5 ~23 .. l)isclaimer ........., ..,n.............. ....... ........ ................... ......... ,................... ......... ;.~. .......,....27
ARTlc:LEVI.. ... Representations. and W mantles. of Adelphia.............n..........~............;.......,.... 27
6.1'.' .'Orgaruzation, Standing and Power ou...............................:.,............ .....................:~'7.;.. ~7
A. .h.' . . ".. .
.. ut... onty .~,...... .,~... ...... ........ ~,... ....~.......,... ........;... '" ..... ........... .......... ........... ,..........~..~.....,... 27.
~o Breac11orConflict. .......... ........ ..;............,........,..,............... ~......n.... ..;..... ..... .............. 28
Third.. Party. Consents... ....................,. ..;..........;......... ................................... .... ,: ..... ,.... ,.28
Claims, Litigation and Disputes ,. ........... .... ....... ............ ........... ...... ............ ....... ..... ......... 28
Brokerage Fees ............... ................. .....;.,................ .......... ,.................... ....,. .... ...,.... ~......... 28
Qualification ..... ........... ...........~.................. ........~. ............... .~.. .... ......., ......... ............. ~ ......... 28
Adelphia's Investigation ...... ~,.. .............. ........... ... ......... ...,...... .......... ........,. ,...... ,.. ...,.... 28
6.9 Adelphia and the Adelphia Common Shares ..............................;.....................,....~.~... 29
ARTICLEVn: Verizon's Covenants...... ........,.... ........... ........ .................. ............ .....;.. .......... 30
7.1 Access................................... ......,. .............. ........... .......... ..,..... ........ .......... ......,... ...... .,.. 30
7.2 Conduct of Business Pending Closing ..................................................................,..... 30
7.3 HSR Act .........................~....... ...... .............. .....,.......,.... ..................... ...:;... ............, ...,;... 32
7.4 . Third-Party Consents................... ............ .......... ............. ....... ..~:.... ........... ~.. ........ ........ ~. 32
7.5 Further Assurances .............. ......... ...... .,...... ......... ........ ..........'. .......... ........... .................. 33
7.6 Confidentiality.... ............ ....... ...,............. :.. ............................. ........... .............~.............. 33
7.7 Schedule Updates ..~.. ..... ;;... .~...... .............. ........... ........................ ~... ..;........... ......... ........ 33
7.8 Agreements with Affiliates ................,....................... ............~.............~.. ................,.. .33 .
7.9 Bonds ami Letters of Credit.................,......................................~.................................. 34 .
7.1 O. Non..Competition ....... .... ...,;. .......:.. ........... ....................... ...... ......;... ........... ................. 35
ARTICLE VIII Covenants of Adelphia ....................................................,.........................:' 35
8.1 .. HSR.. Act;........... ..,..,.. ............ ...... ................. ...................... .... ...... ... ........... ......... "'..." 35
8.2 Third-Party Consents........... ......~... ........... ............. ........... ...... .,........ ........... '................. ..36
8.3 Discharge of Assumed Liabilities,......... ............. ....... ........;.. ............................ ........... 36
8.4 Confidentiality .... .................... ........ ...................... ........ .................... ........ ,........... ..........,36
8 .5 Access... ....;................;........................... ....... .......... ........................ ......... ............. .....;........... 36
8.6 Bonds, Letters of Credit, Etc ............ ........ ............... ......... .... ... ...:.......... ......... .... ..~. ..........37
8.7 Further Assurances .... ...... ................. ..................... .................. ........... .......... ......... .........37
8.8 Intellectual Property ...... ........ ....;.........,..;:.. ........... ............. .;.... ......... ........... ..........., ......37
8.9: Vehicles ... ........,. ........ ..... ..... ........ .... ..................... ......... ........ ........... ......... ................... 37
8.11 Gulf Power Case.................. ........... ........... .... ........ ......, .......... .;........ ........... ........ ......... 37
8.12 Operation Deficit Payments .... ...... .............. ....... ........... ....... ...... ......... .,..;...... .,............... 37
8.13. . . Registration of Adelphia Common Shares...,.....~..........................:..........................ou...39
. . AR'n9W IXCollditions .to..Verizon's. Obligations .;..........................~...~.. ......,. .......... :.... ."" 49
. 9.1 ...... Adelphia's Representations and Warranties ..........;...................................~................. 40
.9.2. Adelphia 'sCovenants .......... ;..........; ......... .......,...... ....... .......... ........... ......... ........ ............. 40
9 .3. .Consent~ .... ............ .;.".,......... ........... ............ ...;..... ........ .................;.... ........... ......,.....;.....40.
'. 9.4 The Adelphia's Deliveries ..:.................... ........................................... ...,......;........;........AO
9.5 . .. ... .No.Proceedings.................... .................... .;. ........ .....:.......................... ........ ................ .... ...40
ARTISLE X . Conditions to Obligations........... ....... ..................................................... .:......... .41
10.1 ... Yerizon's Representations and Warranties .....................................................................41
10.2 Verizon's Covenants.........;.. .:... ................ ............:......................... ..~............ ............. ,,~;, 41
10.3 . Consents ............. ............................................... .......... ..:..... ...:......... ................... ....... ............ 41
1.0.4 V... '.D..I' . .. '. ...... .". .... ... ..,'41.
.. .. enzon s ...e Ivenes ............ ..;........ ................... '~""'"''''''''''.''''''''''''''''''' ...................
10:5 No Proceedings.............. ....... .......;... .:....... ..........:.... .............. ... ~.... ..... ............ ......;... ........42
ARTICLEXI CI . ....d.T . . . .>.... ..... ..... ....... ......
. ... .... .. . ... . ... .i dos~ngan ... emunatIOIl.........,..............."...............,...........,~..................;.....42,
11.1 ClOSing ,........,..;..;......... .....;... ........; ......;.... ;...... .... ....... ......,.;.. ......,.. ...,...,... ........... ,...... 42
" , ' -' , , "- " . . .
II 2 T. t...... .... . .4
. . 1 ernuna Ion .....,.................. ......,..... .......... ..;.... .......,..,.. :....,. .;;~.;.. ;.........:.. ............ ..,...... . 3
11.3 Effect of Temunation ..,....,.....ou.......................,............,....... ..........................;..,...:.... 43
ARTICLE xn. . Verizon's Deliveries at Closing...............ou.......;.,..........,...................;;......... 44
12 1 B. D C'fi . 44
. nng- own.. erti Icate ......;..............;...... ................. ............ ......... ........ ..."........;... ",' .
12 2 S '..C.. 'fi 44
. . ecretary s erti Icate.. ........... ....;... ............. .........,.................,........ ......"... ..".:........... .
12.3 V erizoD Ancillary. Agreements.................;......;.., ......... ~...;;.. '............ ....,.;.................... 44
12.4 Other Agreements........................ ....,......... ;....... ........... ......... ........ ........,.,.... ....... .......... 44
1.2 6 G. d S. . d' . .. .C. 'fi . 44
. 00 . .. . tan lng. eItllcates... ......... .......... ........... ,....;. ...,......., ..~....... .~......... ........., .......
12 7. FCC 0.' . 44
. ..... .. pinion..... ......... .................... ........... .........; ...,......... .... ......... .... .,................ ........., .
12.8 Opinion of Counsel ...........;. ........ ;...... .... .......... ........... .......... ........ ."...,.... ",'" "," ........44
ARTICLE XillAdelphia'sDeliveries at Closing .......~....................,......................,~....,....... 44
13.1 The Payment............................... ... ..>. .~...... .,...... .......... ......;; ..... ........ ............ ........... ...... 44
13 2 B. . D. C 'fi 44
. nng- own ert! Icate ............... ............ ....,.... ........... ........ ............ .....,.. ..~..,...........;.. .
13 3 S ., .C. 'fi 44
. . ecretary s ertl .Icate......... ........... ............ ........ .........;.. ........ ......, ....,......... ........... ....;. ..
13 4 Ad I hi A.. '11 A 45
. . e pa . nClary . greements.....................,................................,........,..................
13.5 Other. Agreements.:.,......~.......,..... ...;........; ..... ...., .......... ........... ...;.... ...,........ .......... ........ 45
13 6 Opinion of Counsel .. ............................................ 45
ARTICLE XNTax Matter~.~~d.A~~~~.~. ::::::::::: :::::::::::: ::::::: :::::...... ..;...;.............. .......... ... .;.. 45
14.1 . Filirigof Returns .........; .......... ............ ...... ..... ...,;... ...,.... ................... ...,....,... ....;;.........,. 45
14.2 Access to Books and Records ....................................................,.;.............................. 45
14.3 Indemnification for Taxes..... ...... .............. ....;... ......... ............ .......... ,........ ,"'" ..:.... .,.... 45
14.4 Transaction Taxes ....... ........... .......... ..... ............ ...................... ........ ........ .......... ,. ........ 47
1 ~.5Tax Prorations. ,.... ....,..... .,..:.......; ................., ..;;.... .....,... .........., ..;.;... ........... ,'" ," .......;;. 47
14.6 Tax Refunds and Tax Treatment .;....;...............................,............. .............................47
ARTICLE XV Indemnification....... ...... ..;........... ........ .......... ........,..................... ,. ............;..048
15.1 SurvivatofRepresentations, Warranties and Covenants ..............................,............048
15.2 Indemnification ......... ;....... ...;............ ...... .......... ..................... .......... ........., ................: 49
153 Limitations on Liability......;.....no. ...,......... ............ ...... ............ ........ ............ ........... ...;.. 49
15.4 Pefenseof Claims ..... ..:.......,........; .......... ........... ........... ......... .......:; ......... ...,.... ;;.. ........ 51
15,5 No IndemnifiableClairnsResultirigFrom Governmental Entity ..
. Acti()n ,........ ..... ....;. ;;...;. ....~..'... ',,' ,", ..,.......... .......................... ,.............;. ...... .; ... ........ ...:.... 53
IIlfringement ... ................ .~...... ..................... ........................................ ........................... 53
Securities Indemnity ...... ..:................................... ,;................... ..;;.............., ................. 53
15,8 . ... Inapplicability to Taxes....... ......... ..............,........ ..~...;.......... .......... .......... ....".~..;,..... ,..54.
AR TICLEXVI Miscellaneous.......,......... ............ .................. .... ,..;......................................... .-54
16.1 Expenses..... ..... ..... ............,.. ................... :............ .....,.,..............,........;:...... "".. ......;..... 54
16.2 .Governing Law... ........:........ .... .......... ..........;......... ..................,... .,........,.. ".......,.. ......... 54
16.3 . N otice~,... ...; .;;:.......,' ........ .,............;.. ....;..... "'"',''' .;.......,................. ~..... .................... n.~. 54
16.4 ...... ... Denriitionof Agreement..... .....,..., ,........... ........ .....~:...... ...;....... .... '.... ..;...~... ................. 55
16 5 H. .d' .... G . .d. ...... .......... ... . .. ... . ...... ...... ......... . ......55
,. . ..ea. .1Dgs, en er...n..................... ........;.,. ..................,..,."..............,........ .,......~..... ......
16.6 .Counterparts; Third. Party Beneficiaries.;. ........... ................. ........... ........... .~..... ......,. .;56.
16.7 . ...iEntire AgreelIlent ......... ........ ..... ~..; ........n... om.................".... ~... ..... .,. .....;;.. ,........,.. .,. ..... 56
.. .. .16.8.. . ... ..Modifications....n...,~..........................:..,...............,...........................~;.......,................. 56
16. 9.. .A....... ..... dB; .d'. .E". .. .. .... .. H . ... .. ..... .... ....... ......... ........ ...56
. . ... s~lgDlnent an. m mg. uecL........,.........,.......~.................................,.....~~....~".... ...
Schedule .1.1
Schedule 2. 1 (d) (i)
Schedule 2.1 (d)(ii)
Schedule 2.I(d)(iii) .
Schedule 2.1 (d)(vii)
Schedule 2. 1 (d)(ix)
Schedule 2,2(h)
Schedule 5.3
Schedule 5.4
Schedule 5.6
Schedule 5.7
Schedule 5.8
Schedule 5.9
Schedule 5.10
Schedule 5.11 '
Schedule 5.12
Schedule 5.l3a
Schedule 5.13b
Schedule 5.l3c
Schedule 5,16
Schedule 5.17
Schedule 5.18
Schedule 5.19
Schedule 5.20
Schedule 5.21
Sl:hedule7.2
Sched~le7.8(b),
Schedule 9.3,
Verizon'sKnowledge
Real Estate Leases
Equipment Leases
..Pole Attachment and Conduit Agreements
Franchises
. Other Contracts
Excluded Assets
No Breach or Conflict
MateriarConsents.
Tangible Assets
Claims, Litigation and Disputes
Acquired Contracts
Compliance with Laws
Taxes, Fees and Utilities
Franchises
Financial Statements
Employee Benefit Plans
Employee Benefit Plans-- Pending Actions, Chums or Lawsuits
Employee Matters
Free Service Liability
Local Offices
Pole Attachments
Restoration
Right of First Refusal
The System
Conduct of Business Pending Closing
Tariff RateS. '
Required Consents
LeaSe Agreement .. ..... ....... .... ... . .. ... ...., .. ..
Pole Attachment and Conduit Occupancy Licensing. Agreeijlent
FCCOpinion
Opinion of Counsel forVerizon
Opinion of Counsel for Adelphia
Transition Services Agreefilent
This Asset Purchase Agreement .. (this "Agreement") is made and entered into this
17th day of December, 2001, by. and between Verizon Media V enturesInc.,a Delaware
corporation ("Verizon") and.. Adelphia Communications Corporation, .a.Delawarecorporation
("Adelphia"). Adelphia and Verizon shatl be referred. to herein individually as a "Party" and
collectively as the "Pauties".
WHEREAS, Verizon owns and operates the cable television system
approximately 58,000 subscribers in the geographical areas listed on Annex I hereto;
WHEREAS, Verizon desires to sell, convey, transfer and assign toAdelphia,' and
Adelphia desires to acquire from Verizon, the assets relating to the Business (as such term is
defined herein) described herein and, in connection therewith, Adelphia has agreed tqassume
certain liabilities of Veriz()nrelating to the Business, all on the terms and conditions set forth
herein.
NOW THEREFORE, the Parties hereto agree as follows:
"1984 Act" is defined in Section 5.21 (b )(i).
j'Accounts Receivable;' means the aggregate accounts receivable exclusively related to
the System on Verizon's booksasoftheClosing Date.
"Adelphia ApcilIatyAgreements" is defined in Section. 6.2.
ltAdelphia COmmon Shares" means shares of Class Acommon stock, par value $0.01 per
share, of Adelphia. .
"Adelphia PerShareValue"means the closing price of an AdelphiaCommon Share,as
quoted on the NASDAQ National Market, as reported in the Wall Street Journal (NY morning
edition), for the full trading day that is three trading days prior to the Closing Date.
"Adjustment Amount" is defined in Section 4.2(b).
"Affiliate" means any Person who, directly or indirectly, controls, is controlled by oris
under common control with the relevant Party.
"Agreement"is defined in the introductory paragraph of this Agreement.
"Allocation". is defined inSectio1l4.4.
"Ancillary Agreements" means the Assumption Agreement, the Bill ofSale~nd
Assignment Agreement, the Intellectual Property Agreement, the Transition Services Agreement
and the Employee Matters Agreement. . .
"Assumption Agreement". means the. Assumption. Agreement of Adelphia, dated. as of the
Closing Date, in substantially the fOrInofExhibit A. .
"Bill of Sale and Assignment Agreeinent" means the Bill of Sale and Assignment
Agreement of Verizon, dated as of the Closing pate,. in substantiall ytheform of ExhibitB.
"BusinessNon~Statutory Intellectual Property'" means the. Non-$tatutoryIntellectuaI
Property, excluding. Proprietary Business Information, which. is used in and required for use in
.. the Bllsiness..as.ofthe Closing Date and. is:. (i) owned by.Verizon asoftheClosiItg..Date;or(ii)
owned byanyPersonandlicensed to Verizonwiththe rightofVerizon to grant sublicenses to
any other Person who is not ail Affiliate of Verizon, without the payment of compensation or
, other consideration to ally Person. .. . .. .. . ... . ., .... ... . . .
"Code" means the United States Internal Revenue Code of 1986, as amended;.
"Commission" means the United StatesSecuritiesand Exchange Commission.
"Contract" means any written contract, agreement, lease, license, commitment or other
legally binding written agreement.
"Court Order" means any judgment, decree,injunction, order,writ()rruling of any
Governmental Entity or arbitrator.
"Copyright Act" is defined in Section 5.21 (b )(i).
"Customer" means any Person who is subscribing to billable video or data services
provided by the System.
"Customer Discount" . means, in the event the number of Equivalent Basic Subscribers. for
th. e s.y... ste.m... . on.. the. . dater.. h. at is~.our. bU~.in.e. ss d~.YS .prio. rto .the. CI..O.. s..... n. .D.. a.t.e. i.S......1. e..s..s. ..t.h. .....~..... '......... .. . ... .... .........e
number equal to the product of (1) the dIfference between mmUs the~of
Equivalent Basic Subscribers for the System on such date, multiph by(ii)_. '
"Employee" means each active employee, tull-timeorpart-time~ofVerizon(or.an
Affiliate of Verizon) who, as of the date of this Agreement, is determined by Verizonto have..
perfonned {during the 12-month period immediately preceding the date of this Agreement (or the
period of the employee's employment with Verizonand its Affiliates, if less)) substantially all of
such employee's services in connection with or for the benefit of the System (other than
employees based. at the Wentzville, Miss()uri call center). Subject to the provisions of the
Employee Matters Agreement, the tenn "active employee" shall include anyemplo}'ee wh()is on
!lliIitary leave, maternity/paternity leave, . other approved leave. ofabsen~e,.~~~~-:t~IlI1dis~1:Jility,
19n9tennJiisability, workers'. compensation, or Iayoffwith Tefall or otherretutnrights<:. ..
"Employee Matters Agreement" means the Employee Matters Agreement between
Verizon and Adelphia, executed byVerizon and Adelphia as of the date hereof in thefoon of
Exhibit D.
"Environmental Laws" means .. the .. Comprehensive . Environmental. Response,
Compensation, and Liability Act, the Emergency Planning and Community Right-to-Know Act,
. the Water Pollution Control Act, the Air Pollution Control Act, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Resource Conservation and Recovery
Act, the Occupational Safety and Health Act as well as all other. federal, state or .locallaws,
regulations or requirements that are similar to the above-referenced laws or that otherwise
govern chemicals, products, materials or wastes that pose risks to human health or safety, or the
environment.
"Equipment" is defined in Section2.1(c)~
"Equivalent Basic Subscribers" shall. mean the number obtained by. adding
(i) the number of first outlet residential non-seasonal subscribers for ~asic
cable television service of the System who have paid the applicable connection and
installation fee and have made at least one monthly payment for service anhe applicable
monthly rate for basic service and whose accounts. are . not more. than. 60 days past due
fro. m thefirs.t. da.y.o.fthe...month ..f;. o.r.....w..... hi.'chservice was rendered(or.,ifmo.f..ethan....60days
.' -', " .
past due, who owe less than $10.00), . . .. . .
, . (ii) .. the resultobtainedby dividing the aggregatepf the gross monthly billing
(excluding installation,connection, relocation and disconnection fees and miscellaneous
rental charges for equipment such as remote control devices and converters) from
business and commercial accounts, residential bulk units, hotels/motelsandother
conunercial establishments who have paid the applic::ableconnection fee. and who have
mad.... e.. a. t. Ie..... as. t.....o.D..e.... mo.nt.hly.... p.......aym..... en.....t..fi.o.. r.. .se....,rv.. ..ic.e.at. th....eaP. pli.c..a.b.le..... month.....l.y........r~t.ea.....n.d... w.. h.....o..s. e
accounts are . DOt more thaIl60 days past due from the first day()f the m.onth for which
such service was rendered, by $30.20, which represents the average monthly service
charge in effect for a first outlet residential connection for expanded basic cable
television service, plus .
"ElUSA" means the Employee RetirelIlenflncomeSecurityAct of1974,asamended, and
the rules and regulations promulgated thereunder.
"ERISAAffiliatei'means any entity tbat with the subject Person is: (3;) a member ora
controlled group of corporations within the meaning of Section 414(b) of the Code; (b) a
member of a group of trades or businesses undercommon control within the meaning of Section
414(<:) of the Code; (c) a member of an affiliated service group within the meaning of Section
414(m) of the Code; or (d) a member of a group of organizations required to be aggregated under
Section414(o) of the Code, .
"Estimate Statement" isdefinedin Section 4.2(c).
. "Exchange Act" means the United States Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Exchange Act Reports" means Ade1phia'sAnnual Report on FormlO~K for the fiscal
year ended December 31,2000, Adelphia'sQuarterly ReportonForm lO-Qforthe qUai!ers
ended March 31, 2001; June 30,2001 and September 30, 2001, all reports filedbyAdelphia on
Form 8-K after December3l, 2000,andall.documents filed by Adelphia with the Commission
pursuant to SectionJ3(a), 13(c)or 15(d) of the Exchange Act onor prior to the date hereof orth~
Closing Date, as the case may be.
"ExdudedLiabilities" is defined inSectioIl3.2.
"Excluded Marks" means all Trademarks and related registrations aIid applications Jor
registrlitionowned by Verizon or an Affiliate of Verizon, or licensed to Verizon or an Affiliate
ofV.erizon b. yany Person, and any derivations9f th.e ~. orego..ing.
. .- '-,', .- - : ," .
"GAAP"means United States generally accepted accounting principles.
"Governmental Entity" means any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign,
means the Hart-Scott-Rodino Antitrust Improvements
"Intellectual Property" means all Statutory Intellectual
Intellectual Property.
N on-S tatutory
"Intellectual Property. Agreement" means the Intellectual Property...Agreernentbetween
Verizon and Adelphia, dated asof the <::losing Date, in sub~tantially the form of Exhibit C.
patents or patent applications claiming a filingdate on Qraftefthe Closing
(b) copyrights in copyrightable subject matter..having .acreation date on Or
after the Closing Date;
(e) Intellectual Property developed or acquired by Verizon or any of its
Affiliates after the Closing Date;
(g) Third Party Intellectual Property (other than thatex:presslyinclude~ in
Business Non-Statutory Intellectual Property or Business Statutory Intellectual Property).
"Material Acquired Contracts" is defined in Section 5.8.
"Material Adverse Effect" means withrespect to the System a material adverse effect on
the financial condition or business operations of the System or the Acquired Assets, taken as a
, whole.
(a) mechanics', carriers', workmen's, repairmen'sand other likeLiensimposed
by law arising or incurred in the ordinary cOUrse of business consistent with past
practices,
(c) such other imperfections in title, charges, easements, restrictions and
encumbrance~which do not,.materially detract. from the value ofpf materially interfere
with the present use of the assets to which they relate,
(d) retention of title agreements with suppliers entered into in the ordinary
course of business, or
other Liens thatare released concurrently with or prior to the Closing.
"Software" means all software, in object, human-readable or source code fonn,as such
software exists as of the Closing, inc1udingto the extent such exist: programs,applications,
datab~es, datafiles,compon~nts or elements thereof; and all versions, upgrades, updates,
enhancements and error corrections of all of the foregoing and documentationtherefor.
"Stahltory Intellectual Property" means all United States and foreign patents and patent'
applications of any kind, United States and foreign works of authorship,mask-1,Vorks,copyrights,
and.. copyright and Jnask . work registrations and .. applications for registration,and.. any rights or
licenses in the foregoing.
"System" means the cable television system serving the geographical areas identified on
Annex I hereto.
"Tariffs" means,collectively, the Verizon Tariff,FCC No. lO,section 4,effective
January 25, 2001, for broadband video services and the Verizon Tariff, FCC No. 14, section 20,
effective May 2,2001, for optical networking services.
. ''TaX Indemnitee" is defined in Section 14.3(c).
.... E~ecutjo1l Copy
Confidential 0,,",, Proprietary
"Third Party Intellectual Property" means any and all. Intellectual property. owned by any
Person, otherthanVerizon,inc1udingAffiliates of Verizon, without regard as to whether Verizon
has any rights therein or the right to assign such rights to Adelphia.
"Trademarks".. means trademarks, tradenames, applications for trademark registration;
service marks, applications for service mark registration, domain names, registrations and
applications for registrations pertaining thereto, and all goodwill associated therewith. .
"VerizonAncillary Agreements" isdetined in SectionS.2.
"Verizon BenetitPlans" isdetined in Section 5. 13(a).
"Verizon's Knowledge" (or any similar phrase) means the actual knowledge (after
reasonable inquiry) of the individuals listed on Schedule 1.1.
1.2 ... InterpretatiOl1'. When a reference is made in this Agreement toa Section,
Schedule, Annex or Exhibit, such. reference shall be toa Section, Schedule, Annex or Exhibit of
.this. AgreeIIlent. .unl~ss otherwise indicated.. ... The. headings. contained in this. Agreement ... are. for
reference purposes only and shall not affect in any way the meaningorinterpretation of this
Agreement . Whenever the words "included, "includes" or "inc111ding"are used in this ..
Agreement, they shall be deemed to be followed by the phrase "without limitation."Whenused
in this Agreement, the word "primarily" shall be deemed to be followed by the phrase "or
exclusively. II All accounting terms not defined in this Agreement shall have the meanings
determined by GAAP. Unless otherwise indicated, all references to dollars refer to United States
d. o.I...lar.so.. ..The. Part. ies. adco. ow....ledge . t.hatbo.. th .P..arties.... have. .....p... art.. i..c..i......p. a...te....d...........i.n....th. e.... ...dl".a...~...t..in..g............an.......d..
prepar.ation "of ..... thiliAgreeIDent. . an4the. AncillaryAgreements;u14agreet~ataI1Yrule.Of., .
construction to the:effectthatambiguities are. to. be construed against the. drafting party shall <not
be applied to the construction or interpretation of this Agreement .orthe AncillaryAgreements.
\lerizon and either (i}held.. solely for. use in the operation ofthe.Systelll or (ii) held fof multiple
uses including use in the operation of the System and that can r~asonably. be divided into a pan
pertaining exclusively to System use and a partpertaining to non..Systemus~,pr()vided that such
divisiondoes not adversely affecttherespectiv~ JunctioningoHheparts, in any ofthe follOWing
(in each case, other than the Excluded Assets): .
(a)
(e) Equipment. All equipment and other personal property (the
"Equipment"), including:headendequipment" origination equipment, transmission and
electronicequipmeIlt; distribuHon equipment, including trunk, distribution . and drop lines;
amplifiers; powersupplies~conduit, vaults, pedestals, grounding and pole hardware;
routers; customer. devices, including converters, encoders and taps; installer. and
technician equipment. including vehicles, tools and test equipment; cable data terminals;
and office eqUipment.
All of the following Contracts and Permits (the
Verizon's real estate leases with third partiesseHorthonSchedule
(ii). V erizon's~q\li}Jment leases (excl~ding Software) with thirdparties~
including those,equipment.leases set .forth'on Schedule.. 2.1 (d)(ii) (which is alist
of such leasesthat require annual or one-time expenditures by Yerizon in excess
of$25,000); '.
(ix).. Allother Contracts used by Verizon. primllrily. in. itsopenition of
the System, inclu~ing those set forth on Schedule 2.1 (d)(ix), (which is a list of
such other Contracts which. require annual or one-time expenditures by Verizon in
excess of $25,000).
2~2 Excluded Assets. Notwithstanding. anything contained in Section 2.1 hereof to
the contrary, the term "Excluded ASsets"shaU consist of the following properties, assets and
rightsofVerizon:
(a) . Cash. Cash or cash equivalents, on hand or in banks, owned byVerizon,
certificates of deposit, bank or savings and loan accounts, u.s. government securities,
any other marketable securities of any kind or nature or notes receivable.
(h) . AssetsNot Used Primarily forSvstem. All assetsofVerizonthat are (i)
not held solely for use in the operationoftheSyst~mor (ii) heldJormultiple Uses
including use. in the operation of the System and that cannotreasonably be divided into a
part pertaining exclusively to System use and a part pertaining to non-System use without
such division having an adverse affect on the respective functioning of the parts,
including those assets listed on Schedule 2.2(h) and any assets of anyVerizonBenefit
Plan, except as provided otherwise in the Employee Matters Agreement.
(i) . . Rillhts under Agreements. All rights of Verizon and its Affiliates under
this Agreement, the Ancillary Agreements, the Lease Agreements, the Pole Attachment
and Conduit Occupancy Licensing Agreements and the certificates. and other documents
delivered by Adelphia in connection with the transactions contemplated by this
Agreement and the Ancillary Agreements.
(j) Records of Sale. All records prepared in connection with the sale of the
System, including bids received from third parties and analyses relating to the System. '
(I) ... .. Proi!ramminll Agreements. All of V erizon 'sprogramIriing contracts,
affiliation agreements, retransmission consent agreements aIld similar agreements. .
. .
2.3. Third-PartvConsents. .. Nothing inthisAgreementshaIlbeconstrued as an
attempt by Verizon to assign any Contract or to transfer anyPennit to the extent that such
Contract or Permit is not aSsignable without the necessary consent, authorization or approval of
the other party or parties thereto (including any Governmental Entityt If the Closing is
consummated rtotvvithstanding the absence of one or more Material Consents or any other
conseIlt, authorization orapproval, at such time as such Material Consent or other consent,
authqrizationorapprqval hll$ t>eenobtained,orany.. requisite Jiling .0rnoticehCiS. beell IDa~e or
delivered, ll$applicable;suchContract ... or. PemUt shall be ...assigned ()f transferred to Adelphia
automatically without. any other conveyance or other action by Adelphia..Following the Closing
and . for a period of 12. months thereafter, the Parties. shall. use their commercially reasonable
efforts, and shall cooperate with each other.. to obtain promptly . any such consent, .authorization
or approval; provided, however, Verizon shall not be required topayany cOIDpepsationorother ,
consideration therefor. During this 12-monthtimeperiod and pending or in the. abse.nce of any
such consent, authorization..or. approval, the . Parties shall.. cooperate with .each.....other in.any
reaso.n. able and la. wful arrangements...toprovide .toAd.elp. hiatheb... ene.fit.san. ..d liabi..lities .ofuseof
such Acquired Contract... .
(a). .. Verizonshallexecuteand deliver to Adelphia on. the Closing Date the
Intellectual Property Agreement pursuant to which Verizon shall grant to Adelphia a
limited license on the terms and conditions set forth therein for Licensed Intellectual
Property.
(b) . Except and to the extent expressly provided in the Intellectual Property
Agreement or transfeITed pursuant to an Acquired Contract, if any, and subject to Section
2.3, (i) no rights or licenses, express or implied, to use or possessanylntellectual
Property, including Third Party Intellectual Property, or any Software are transferred to
Adelphia and (ii) nothing shall constitute. or be construed as a license by Verizon under
any Intellectual Property now Or hereafter owned, obtained or licensable byVerizon or
any Affiliate of V erizon or under any Third Party Intellectual Property.
ARTICLE ill
3.1.... . Assumpti?nof Liabilities. Upon the terms and subject to the conditions . of this
. Agreement, Adelphia shall assume, pay, perform and discharge when due, effective as of the
Closing, the following liabilities, responsibilities and obligations(the "Assumed Liabilities"):
(a) Acquired Contracts. All of Verizon's liabilities, responsibilities and
obligations under the Acquired Contracts pertaining to, . or to be satisfied or performed, in
the periodonor after the Closing Date. . .. .
(b) Current and Accrued Liabilities. All of Verizon's accounts payable
relating to the operation of the System remaining unpaid on the Closing Date and accrued
current liabilities as of the Closing Date to the extent such liabilities are included in the
calculation required by Section 4.2(b).
'<. ...... . ..(c). . QpcratingLlabilities.Allliabtlities, . respqnsibiliti~s,obligations, costs and
'expenses with respect to claims arising in any way with respedto .or as a result of the
operation of the System on orafter the Closing Date,including(i} any and aU franchise
fees, pole attachment and ccmduit rentals, copyright fees, Taxes or tort claims arising ollt
of or attributable to the operation of the System or the ownership of the Acquired Assets
on or after the Closing Date and (ii) any and all termination or similar fees, costs or
liabilities relatingto anY Contracts covered by Section 2.2(1),
4.1 Consideration. Except as provided in the next sentence, the. total consideration to
be paid by Adelphia to Verizon for the Acquired Assets shall be (i . which shall
consist oCa number of Adelphia Common Shares issued at the Closing-equ t
divided bytheAd~lphia Per Share Value, subject to the adjustments required by Section . an
Section8.ll(d) (if applicable) hereof, and(ii) the assumption by Adelphiaof thc:Assumed
Liabil.i.ties.. N. Qt~.it~.standi.n....g.the. p.recedi.ng s.ent.e..nce, A.. de. l.p.hia.m~.......in...'ts.. di. .....s.....c~r~t~.o.......Il.} m.~e... .a. '
cash payment, 10 heuof Adelphla Common Shares,' equal to~nmlInedlately
available funds asconsideration~subject to the adjustments required by Section 4.2 and Section
8.ll(d) (if applicable)hereof, forthe Acquired Assets andthe other transactions contemplated by
this Agreement. The payment toVerizonof Adelphia Common Shares or cash, as the case may
be, is herein referred to as the "Payment."
. Adiustments. The value of the Payment shall be:
(a). Increased by anamountequalto the sum of (i) anymoniestelatingto the
System that are on deposit with third partiesas security for Veri;zon's performance of the
AcquiredContracts as. of the Closing Date provided such deposits will be treated as
AcquiredAssets, and (ii) the.value of the Accounts Receivable and the prepaid expenses
related to the System (including prepaid pole, conduit and manhole . rentals, utility
charges,. water and sewer charges, municipal garbage and. rubbish removal charges, and
similar charg~s, but excluding prepaid expenses relating toanyContracts that will not be
assumed by Adelphia or relate to Excluded Assets). .
.. . (b).. .. Red~cedbyan amount equal to the sum of (i}theCustomer Discount(if
applicable), (ii) the accrued expenses, prepaid income, amounts payable and accrued
cUfl:eIltli~bilities (including.. accrned.. but unpaid pole, . conduit~d'rnClnhol~r~n~als,>~ees
..payableuncier.the Franchises, and. copyright. royalty payments,'t,urexcludirig,inallcases,
Tax items governed by Section 14.5) related to the System, inc1udedintheAssumed
Liabilities and to be paid after the Closing Date butthatrelatetotheperiodprior to the
Closing Date, (iii) any monies. held by Verizonasrefundablecustomer deposits
(including refundable deposits from customers for converters, encoders, decoders . and any
related equipment), liability for which will be assumed by Adelphia, (iv) the . amount of
service charges that have been prepaid by Customers prior to the Closing Date butthat .
. relate to the period after the Closing Date. and (v) the pro. rata share of accrued but
unpaid, ..as of the . Closing Date, rentals, utility charges, water and sewer charges,
municipal garbage and rubbish removal charges, rents and other custOIoarily'proratable
items (}fVerizon included in the Assumed Liabilities. '
The net amo~ntof theincreasesandlor reductions to . the total value . of the Payment . (the
"Adjustment Amount") shall be detennined in. accordance..\VithGAAp. and,. where
applicable, to refl~ct the principle that, except as qualified in. this Section. 4.2, all income
and expenses attribUtable to the System. fortheperiod>befor~ 12:01 a.m. (Eastern
Standard Time) on the morning of the Closing Date are for the account of Verizon, and
allincome and expenses attributable to the System for the period 011 or after 12:01 a.m.
(Eastern Standard Time) on the morning of the Closing Date are for the account of
Adelphia.;
(c) . Verizon shall prepare and deliver to Adelphia, at least five business days
prior to the Closing Date, a statement (the "Estimate Statement") showing in reasonable
detail the amount reasonably estimated byVerizon, ingood faith, to be the net amount, if
any, of the adjustments provided for in this Section 4.2 and,ifapplicable, Section
B.II(d).
Within 45 days after the Closing Date, Verizon shall prepare. and deliver
to Adelphia a statement (the "Final Statement"), setting forth Verizon'sgood faith
determination of theactual Adjustment Amount (the "Final AdjustmentAmount").Each
of Verizon and Adelphia shall provide the other Party with access during normal business
hours. to . any books, records,' working papers. or other information. in. its. possession after
the Closing reasonably necessary or useful in the preparation of the Final Statementand
the calCUlation of the Final Adjustment Amount. The Final StatemeIlt shall becoIl1efinal
and binding. upon aU.Parties hereto on the 45th day following delivery. thereof (without
counting such dayofddivery) to Adelphia unless Adelphia gives written notice of
disagreement withthe Final Statement (anNotice of Disagreement") toVerizon prior to
such date. Any Notice of Disagreement shall specify in reasonable detail the nature of
. any disagreement so asserted and relate solely to the review of the Filial Statementand
the calculation of the Final Adjustment Amount.
'. (b) '... . IfaNotice of Disagreement is deliveredbyAdelphiainatimelymanner,
then.. the Final Statement shall become final. and bindingup()n allpartie~her~toonthe
ecirlierof (x) 'the date Verizon and Adelphia resolve in. writing. any differences they may
have with respect to all matters specified in the Notice of Disagreement and (y) the date
all disputed matters are finally resolved in writingby an independent public accounting
firm (the "Independent Accountants").During the30~day period following the delivery
ofa Notice of Disagreement, Verizon and Adelphia shall seek in good faithtotesolve
any differences which tbeymay have with respect to any matterspecifiedintl1eNoticeof
Disagreement and each shall provide' the other with reasonable access to. any books,
. records, working. papers or other' information. reasonably. necessary or .useful in.. the
preparation or calculation of (i) the Final Adjustment Amount, (ii)the Final Statement, or
(iii)the Notice of Disagreement. At the end ofsuch30-day period iftberehasbeennQ
resolution of the matters specified in the Notice of Disagreement, VerizonandAdelphia
shall submit any and all matters arising under thisSection 4.3.which remain in dispute to
thelIidependeIlt AccouIltants for review and. resolution; The IndependentAccountants
. , . .
shallbeK}>MG,L~Por,.if suchfinn is unable orunwilli~g tQact,s~ch other nationally
recognized independent public accQuntingfinn as shall be agreed upon by Verizonand
Adelphia... The.. Independent Accountants shall render a decision . resolving the matters
submitted tothe Independent Accountants within 30 days following submission thereto
(or as soon. thereafter as reasonably practicable). The fees. and expenses .ofthe
Independent Accountants incurred pursuant to this Agreement shall be shared equally by
Adelphia and Verizon.
(c) lfas a result of any adjustments made pursuant to this Section 4.3,
Adelphia is finally detennined to owe an amount to Verizon, Adelphia shall within three
business days pay cash equal to such amount to Verizon; provided, however, that if
Adelphiais .. required to. pay. more. than $100'000 pursuant to this S~ction 4.3,. Adelphia
may pay such amount in . non-restricted, freely-tradable. AdelphiaCommon. Shares instead
of cash. Further, if as a result of any adjustments made pursuant to this Section 4.3,
Verizon is finallydetennined to owe an amount to Adelphia, Verizon shall within three
business days pay cash equal to such amount to Adelphia.
4.4 Purchase Price Allocations. No later than 90 days subsequent to the Closing
Date,Verizon shall provide Adelphia with the allocation of the Payment, the Assumed Liabilities
and other relevantiteI11s (including, for example, adjustments to the Payment) to individual
assets (includingthe Intellectual Property Agreement) or classes of assets within the meaning of
Section 10600f the Code (the"Allocation") and shall cooperate with Adelphiainpreparing
Form 8594 for filing by each~ If Adelphiaand Verizon agree to anAllocation, Adelphiaand
Verizoncovenant and agree that (i) such Allocation shalL be conclusive and final for all
purposes, and (ii) neitherAdelphia nor V erizonwilltakeany position before an yGovemmental
Entity or in any judicial proceeding that is in any way inconsistent with such Allocation unless
otherwise required by Law. Notwithstanding the foregoing, if Adelphiaand Verizon cannot
agree to an Allocation, Adelphia and Verizon covenant and agree to file and cause their
respective Affiliates to file all Tax Returns and schedules thereto consistent with each of
Adelphia and Verizon's respective good faith allocations, unless other",:ise required by Law.
Agreetnent.Th~executionanddelivery . of this Agreement andth~YerizonAnci1lary
.AgreeIIlents,and the. consummation ..ofthe transactions contemplated hereby and thereby. by
Verizon, have been duly authorized by all necessary corporate action. This Agreement
constitutes, . and upon execution of each of the. Verizon Ancillary Agreements such. agreements
c()nstitute or will constitute, valid and binding. obligations of Verizon, enforceable against
Verizon .in accordance with .their respective terms, such enforcement subject to bankruptcy,
insolvency, reorganization, . moratorium, or similar Jaws of general application affecting
creditors' rights and theappl,ication of general principles of equity.
5.3 No Breach or Conflict. Except as would not have a Material Adverse Effect, and
subJecno the receipt of the approvals described on Schedule S.3,neither the execution, deliyery
aIldperfonnance . of this Agreement and theVerizonAncillary Agreements, nor the
consummation ()f the transactions contemplated hereby and thereby, will (a}causeVerizon to
breach any Law or Court Order that is applicable to the System, (b) conflict with or result in a
. violation of Verizon's Certificate of Incorporation or. Bylaws,. (c) conflict with. or result in a
breachofany Material AcquiredContraet or (d) result in the creation of any Lien other than a
Permitted Lien, or give to others any interest or rights, in or with respect to any of the Acquired
Assets. .
5:4 Material Consents. Schedule 5.4 contains a list of (i) Acquired Contracts
pursuant to whichaPerson'sconsent tathe execution, delivery or performance of this Agreement
by. Verizonislegally()r contractually required, ... and (ii) each Govemmental. Entity which must
. consent to the execution, delivery or performance of this Agreement. by.. Verizon, except where
the failure to obtain any such consent of such Person or Governmental Entity would not have a
Material Adverse Effect or would Ilottnaterially adversely effect the ability ofVerizon to
consummate the transactions contemplated hereunder (the "Material Consents").
5.5 Receivables. All Accounts Receivable were created in the ordinary course of
business of the System consistent with past practice. Verizon has good and marketable title to
the Accounts Receivable. .
5.7ClaiIns. Litigation and Disputes.E~cept as set forth on Schedule 5.7, and except
for actions, proceedings or investigations aff~cting th~ cable television industry in general, there
isno claim, litigation, action or legal.proceedingpendingbefore a Governmental Entity or, to
Verizon's Knowledge, threatenedagainstVerizon, adversely affecting (i)Verizon's ability to
perform its obligations hereunder, (ii)the rights granted under the Acquired Contracts, (iii) the
financial condition or business operations of the System, or (iv) the ownership, use, maintenance
or operation of the Acquired Assets and the System, that in any such case if determined
adversely toVerizon, would reasonably be expected to have a Mat.erial Adverse Effect or
materially adversely effect Verizon'sabilityto consummate the transactions contemplated
hereby.
5.8 ... Acquired Contracts. Except as set forthon Schedule 5.8 or except as would not
have a Material AdyerseEffect, (i) to Verizon's Knowledge, each Material Acquired Contract is
valid,. bindinguponVerizon and in full force and effect, and (ii) neither Verizon, nor, to
Verizon's Knowledge, any other party to any Material Acquired Contract is in breach thereof or .
default thereunder and there does not exist, to Verizon's Knowledge, any event, occurrence,
condition, or act that, with the giving of notice, the lapse of time, or the happening of any further.
event or condition, would become a breach or default under any Material Acquired Contract As
of the date hereof, to Verizon's Knowledge, Verizon has not received any written notice of the
intention of any party to tenninateany Material Acquired Contract The term "Material
Acquired Contract" means the (i) Franchises, (ii)Pole Attachmentand Conduiti\greements,and
(iii) any other Acquired Contract that provides. foraggre gate future. annual payments to ... or from
Verizon in excess of $500,000. ... . . ..
. :,', .
5.9 . Compliance With Laws. ' Except as disc1osedon Schedule 5.9, the System is in
compliance with all Laws applicable to the System, except in any such case where the failure to
...bein compliancewouldnot have a Material Adverse Effect. To Verizon'sKnowledge, Verizon
has not received any written notice within the past 12 months relating to violations or alleged
violations or defaults under any applicable Law or Court Order,where the failure to cure could
resultin a Material Adverse Effect. For the purposes of this Section 5.9, thetenn"Laws" shall
bede~mednot to include (i) Laws applicable to Taxes (which are thesubjectofSecti(}n 5.10),
(ii).La.......... ...w. s....a..p....p.l.i....c..,.a..b....l..e.,..t...o.....~. ..e Verizo~. Be.n.. .e.fi..tP.....I..an. .....s.......in...c.l......u. d....i.n. .g.. E. R... IS......^..an.. d.......~.h.e.(~.9d...e. '. ....(w.'..,.....h......i.c.h.............a.r...e.>t.h.... e
subject of SectionS.13),. (Hi) EnvironmentalJ..a.ws (which are the subject of Section 5.14), 'arid
(iv).the Rules. and Regulations of the FCC and the FAA..the Copyright Act, the 1984.A.ct,and
the Cable Television Consumer Protection and Competition Act of 1992 (which are the subject
of Section 5.21).
for any Taxesbave been asserted in writing orassessed.aga.instVerizoIl.... that remain
unpaid and would have a Material Adverse Effect; (iii) Verizonhas withheld all required
federal, state and local payroll taxes relating to the System required to be withheld and
bas remitted or will remitallamountsrequiredto be remitted to the appropriate taxing
authorities; (iv) there are no Tax Liens upon the System except for statutory liens
covering Taxes not yet due and payable; and (v) Verizonis nota"foreign person" within
the meaning of Section 1445(b )(2) of the Code.
(b) . Veriz()n has paid in JullanYandalllicense fees, fees owed under the
Franchises, business permit costs, pole attachment fees, unemployment and worker's
compensation insurance contribUtions and utility bills required to be paid, except where
failure to pay such fees, costs or bills wouldnothaveaMaterial Adverse Effect.
(c) There are no Un assessed tax deficiencies proposed or threatened. against
Verizon,nor.are there any agreements, waivers, or other arrangements providing for
extension of time with respect to the assessment or collection of any Taxes against
V erizonor any actions, suits, proceedings,. investigations or claims now. pending against
Verizon withrespectto any Taxes, orany matter under discussion with anyfederal,state,
local or foreign authority relating to any Taxes.
I
(d) . None of the Acquired Assets is property that Verizon is required to treat as
being owned by any Other person pursuant to the so,:-called "safe harbor lease II provisions
of former section 168(t)(8)of the Code.
(a) Listed and identified onSchedale 2(d)(vii) attached hereto are all. of the
Franchises presently heldbyV erizonfor the System, and. the political entity or authority
which has granted each Franchise. Except as disclosed on Schedule 5;11 or as would not
,have a Material Adverse Effect: . (i) to Verizon's Knowledge, allgovemmental
authorizations. necessary or.. required for. thecon~truction,. maintenance and . operation. of
the System have been obtained by. Verizon;...(ii)theFranchisesare.yalidlyexisting~
.l~gally. enf()rceCible .0bligati()11s. ofVerizon and,to. V erizon'sKn?wledg~; <are/validly..
existing, legally enIorceabie obligations ()fthe. other parties. thereto, .inaccordancewith
their terms; and (iii) Verizon. is validly and lawfully operating the System under the
provisions of the Franchises. '
. .
(b) .. . Each of the Franchises expires on the dates set forth on. Schedule 5.J 1.
Except asdisc10sed on Schedule 5.1101' as wouldnothave a Material Adverse Effect:
(ilyerizon has duly complied. with all of the tenns and conditions of the Franchises and
has notdoneorperformedany act which would invalidate or impair its rights under, or
give to the granting authority the right to terminate,theFranchises;and(ii) toVerizon's '
Knowledge,there. is no pending assertion or claim.. by.. the. franchising authority of any
Franchise that operations . pursuant to any Franchisehave"7en iInproperly . conducted or ,.
maintained,. or,.. toV enzon's . Knowledge, any facts or circumstances that might give rise
,to any.such assertion or chum; .
5.12 Financial Statements. Attached to Sc;hedule 5.J2are true and complete copies of
the.. unaudited statements of operations of the System for. the year ended December .31, 2000,
which were prepared from the books and records of account of VerizonkepUn thenonnal COurse
of business (the "Financial Statements"). ExcepLas disclosed on Schedule 5.12, the Financial
Statements fairly reflect in all material respects the operating results .0ftheSystem for the
peri04s indicated. Since the System represents only a portion of the operations of Verizonand
since Verizon materially relied on Inter-Unit Services in operating the System, the Financial
Statements are basedontheextensive. use of estimates . and allocations. Verizon believes. these
estimates and. allocations have been. perfonned on. a reasonable .basis.. However,. since .A.delphia '
is not acquiring significant elements of support to the System that are contained in the Inter-Unit
Services, Adelphia will operate under new programming contracts and other conditions that will
significantly impact the future operations of, and revenues relating to, the System, and since the
System represents only a portion of the operations of V erizon, the Financial Statements may. not
be representative of the operating results of the System during Juture periods. 'Theamounts
recorded by Verizon for. aS$etimpainne:mts in connection with the System . are not indicative of
the value of the assets in the context of the opera.tion of the System by Adelphiaas a going
concern. Except as disclosed on Schedule 5.12, from December 31, 2000to the date hereof,
there has been no material adverse change in. the. financial. condition. of the System.
. ' ,', .
(a) Schedule 5.l3a sets forth a complete and correct list, as of thedateheredf,
of all Employee Benefit Plans maintained or contributed to by Verizonorany ERISA
Affiliate in respect of or for the benefit of Employees (the"Verizon Benefit Plans").
V erizon has made available. to Adelphia true, complete and correct copies of the' Verizon
BenefitPlan documents, summary plan descriptions and all related documents.
. . ,
(i)...... ....EachVerizon.BenefitPlan has been maintwned.andoperated. in
allmat~ricU,respe<;ts.~n. compliance with applicable Law, inc:luding the: Fode .and
ERISA,and in a.ccordancewith the tenns of such plan. EachVerizonBenefit
Plan intended to qualify under Section 401 of the Code (and each related trust
intended to be exempt from federal income taXation under Sectiol150 1 of the
Code) has received a fav. arable determination letter [rOln the Internal Revenue
.. - - ',.
Service (or an application for such a letter is pending or will be filed within the
applicableremedialarnendment period).
....... ... ........ . Execution Copy
Confidelltial.andProprietary
of the VerizonBenefitPlansor by Law (without fegardloany waiversgfanted
under Section 412 of the Code) to 3DY funds or trusts. established thereunder Or in
connection therewith have b~en made by the due date thereof (including any valid
extension), and ail contributions for any period ending on or beforelhe Closing
Date which are not yet due. will be paid by the required due date. . No. accumulated
funding deficiencies (whether or not waived) exist in any Verizon Benefit Plan
subjectto Section 4120f the Code or Section 302 of ERISA. Neither Verizon nor
any ERISA Affiliate thereof has provided, oris required to provide, security to
any VerizonBenefit Plan under Section 401 (a)(29) of the Code.
(iv) Except as specifically provided in the Employee Matters
Agreement, no event. has occurred nor shall any event occur. as a result of the
transaCtions . contemplated by this Agreement. which will result in the imposition
upon Adelphiaor any Affiliates of Adelphiaof any material liability directly or
indirectly attributable to or relating to the Verizon Benefit Plans or any other
Employee.BenefitPlanmaintained or sponsored by, or contributed toby, Verizon
oranyERISA Affiliate thereof.
(v) No liabilityunderSubtitleC orD of Title NofERISAhas been or
is expected to be incurred by Verizon with respect to any ongoing, frozen or
terminated "single-employer plan". within the meaning of Section 4oo1(a)(15) of
ERISA,currentlyor JormerlYIIlaintained by Verizon or an ERISA Affiliate
thereof. No notice ofa "reportable event", within the meaning of Section 4043 of
ERISA for which the 30-day reporting requirement has not been waived Or
extended, other than pursuant to PBGCRegulationSection 4043.66; has been
required tobefileclfor anyVerizon Benefit Planwithinthe12-month period
ending on the date hereof or will be required to be.. filed in. connection with the
transactions contemplated by this Agreement. NeitherVerizon nor any ERISA
Affiliate thereof has engaged in a transaction described in Section 4069 of
ERISA.
. . .
(b.) Except as .set forth on Schedule 5. 13b , there are no pending actions,
'... clainis.or . lawsuits which have been asserted or instituted against. the V ~~~oIlBenefit
. Plans;, the assets of any of the trusts under such plans or the plan sponsor or the plan
administrator, or against any fiduciary of the Verizon Benefit.. Plans with respect to . the
operation of such plans (other than .routine benefit claims), nor to..Verizon's Knowledge
are there any facts which could form the basis for any such claim or lawsuit. '
. (c),E~ceptas setforthonScheduleS.13c, (i)none of the Employees are
represented l,>y. a labor union or labor organization; (ii) Verizon. is not subject. and is not a
party to any collective bargaining agreement covering any Employee; (iii) there are no
labor strikes, slowdowns, work stoppages or lockoutscurrentl ypending or, to V erizon' s
Knowledge, threatened against VerizonwithrespecttoanyEmploy~s; (iv) to Verizon's
Knowledge, during the 12 months preceding the date of thisAgre~Illent, there have not
been any Jabor union organizational campaigns by or directed at any Employees; (v)
there is nounfa4'practice complaintpendingagiunst Verizon with respect tOL any
Employees or, to Verizon' s Knowledge,threaten~d before the<N ational.. Labor Relations.
Boardor.cmy otherGovemmentalEntity; . and (vi) there ..is. no grievance. regarding. unfair
labor practices or collective bargaining pending against or involving Verizon with respect
to any Employees.
5.14 Environmental Matters... The.operatIons conductedbyVerizon on itsleased.real
properties related exclusively to theSystc:marecurrently. being conducted under aU
environmental, health and safety permits, licenses and other authorizations required under aU
applicable Environmental Laws to carry onthe Business as it is being conducted, except for such
permits, licenses and other authorizations,. the Jailure of which to. obtain would not reasonably be
expectedtobave a Material Adverse Effect. . All n,ecessary. permits, lic.enses and authorizations
are in full Jorce and effect. The operations conducted byVerizon have been andcurrentIyare
beingconduct~d in cOlnpliance with applicable Environmental Laws, except ~ would not have a
Material Adverse Effect. To Verizon's Knowledge: (i) no written notice, notification,demand,
request for information, citation, summons or order has been issued to Verizon with respect to
any such properties, (ii) no written complaint has been filed against Vc:rizon,(iii) no material
penalty has been assessed, (iv) no investigation or review.is pending or threatened by any
Governmental Entity with respect to any alleged failure byVerizon to have any enviromnental,
health or safety permit, license or other authorization required . under any applicable
Environmental Lawin connection . with the operation of the System; and (v) no investigation or
review is pending or threatened by any Governmental Entity with respect to. an alleged violation
by Verizon of any applicable En,viromnentalLaw inconnectionwith the Business. .
5.15 Brokerage. Fees; Except for Goldnian Sachs & Co., whoseJee will be paid by
V erizonpursuantto a~eparate agreement, no Person acting onbehalfof yerizon is entitled to
any brokerage or finder's fee or commission in connectioriwith the transactions contemplated by
this Agreement.. .
5.16, Free Service Liability: Except as set forth on ScheduleS.16 or as required byany
franchise agreement relating to the Business; there is no free service liability to Customers
existing with respect to the Business. Except with respect to deposits for. conveI1ers, encoders,
decodersandrelatedequipment, and any other prepaid income item which is or will be reflected
. inth~~djustIn~ntc.~ntemplatedbY Section. 4.2,yerizOllhas .110. obligation or liability for ... the
refuIld of a II late rial amount of money to its Custoniers~ . ..., . .
.... ~xecutionCopy
Confidential and Proprietary
5..19 . Restoration. . Except as set forthon.Schedule S.19 or as would liot .have .aMateriaI
Adverse Effect there is,.(i) no restoration,repaving~ repair or other work required to be made by
Verizon to any street,sidewalk or abutting or adjacent area pursuant to the requirements of any
Law relating to the installation, (:onstruction or operationof the Business, or (ii) no property of
any Person that .has been damaged, destroyed, disturbed or removed in the process of
construction or maintenance of the Business which has notbeen, or will not be, prior to Closing,
repaired, restored or replaced, or, jf not repaired, restored or replaced, for which an adequate
reserve has not been accrued byVeriZon prior to Closing.
5.20 Rie:htofFirstRefusaL Exceptas set forth on ScheduleS.20, no Person has any
option, warrant or right of first refusal to purchase either the Business or any of the Acquired
Assets, . .
(a) The information as to the mileageoftrunk and feederplant of the System,
the channel capacity of the System and the dwelling units passed by the System set forth
on Schedule 5.211s alltrue and correct in all material respects. The. System, when
loaded with the number of television channels (picture and sound) currently offered in the
Businessperfonntothe standards required by the FCC Rules and Regulations. There are
no less than 3,300. miles of energized cable plant.
(b) Except as set forth in Schedule 5.21 or to the extent that any failure to
perfoIm any of the actions or comply with any of the requirements set forth.belowwould
not have a Material Adverse Effect:
(i) Verizonhas complied with all notification and reporting provisions
and all other provisions of the FCC Rules and Regulations applicable to the
System; the System has been and is being operated incompliance with the
Communications Act of 1934, as amended, including the amendmentseffected by
the CableCoinmunicationsPolicyAct of 1984 (the "1984 Act"), the Cable
, Television Consumer Protection and Competition. Act .of.l 9Q2.arid ..the Copyright
Act of 1976, ..a$. . amended (the' "Copyright ..Act"),anclwith.aIIRulesand
RegulationsoftheFCC and the U.S. Copyright Office. Without limiting the
generality of the foregoing, all of the performance tests on the System described
in Section 76.60 1. of the FCC Rules and Regulations have been made by Verizon;
the.System currently meets the technical standards set forth in the FCC Rules and.
Regulations, including the leakage limits containedinSection76.6Q5(a)(U); and
. Vetizonhas delivered toAdelphia a copy of the most recent FCC Forms 320 filed
with the FCC (Basic Signal Leakage PerforrnanceReport)by Verizon.Copiesof
the most recenfsignalleakagetestsconducted on the Systeminaccordance with
Section 76.611 of the FCC Rules and Regulations and copies of the most recent
. "proof of performance" tests on the System have been delivered to Adelphiaby
Verizon (the ':ProofofPerfonnance Tests"). Each ofthesignaUeakage tests and
the.ProofofPerformanceTests (i) was conducted in accordance with the testing
pr~edures set forth in Sections 76.601 and 76;609 of the. FCC Rules and
Ex~cutio,,~opy
Confide;('tiIll and Proprietary
Regulations and (ii)evidencedthat the System meets or exceeds all of the
techIlical standards set forth ill Section 76.605 of the FCC Rules and ReguJations.
The System is . being operated in compliance. with the provisions of Sections
76.610 . through 76.619 of .the FCC .Rules and Regulations .(midband ..and
superbandsignalcarriage); appropriate authorization from the FCC has been
obtained for the use of all aeronautical frequencies in use in the System; the
System is . presently. being operated in compliance with such . aeronautical
authorization;Verizon has provided privacy notices to Customers of the System
in accordance with the requirements of Section 631(a)(l) of the 1984 Act; and
the System is incompliance with the requirements of. Sections 76.92 (Network
Non-Duplication Protection) and 76.151 (Syndicated Program Exclusivity) of the
FCC Rules and Regulations. .
(ii) Thernonthlyrates charged by Verizon for each service provided
by Verizon to Custo'mers are set forth on ScheduleS.21. To the extent required
by applicable Law, such rates were calculated in good faith in accordance with the
FCC Rules and Regulations as of the date of their respective calculations.
,(Hi) Verizon holds all material FCC licenses, permits and
authorizations necessary to operate the System. in the manner. in . which they. are
operated on the date hereof and such FCC licenses, permits or authoriZations. are
listed on Schedule 5.21. Each of the licenses, pennits and authorizations li~ted on
Schedule 5.21 is in full Jorce and effect, has been validly issued or assigned to
Verizon, . accuratel y lists the current. param~ters . of the facility licensed and is not
subjecttoany special conditions or limitations not specifically set forth therein,
All licensed facilities operated by Verizon are being operated in accordance with
the operating parameters of the relevantFCC license.
(iv) All broadcast television signals carried on the System is being
caniedin accordance with the requirements of the Communications Act of J 934,
as .amended, .and FCC regulations promulgated thereunder. The stations that
Verizon is. carrying pursuant tpFCC must-canyrules ~~de?tifieti.onSchedule
$~.1J.V erizonhas.. not received any.. written complaint frornallY bro~dcaster of
television signals regarding Verizon's channel positioning Or such broadcaster's
carriage rights~ .
(c)., Except to the extent thatthefailureto complyorperform anyof the acts
set forth below would not have a Material Adverse Effect: (i) the System is in
compliallce with respect to all notices,> filings and payments ofcopyrighffees rc:quiredby
Section 111. ofthe. CopyiightAct and the United States Copyright Office regulations; . (ii).
Verizon has calculated the copyright fees shown to be due . on all statementsofaccount
require.d to be , filed with the FCC (as amended by any requiredplings andloranY.Qther
co. IT.. ective. . ...s. .up.p.l. e.. m. en.ts. ) ...in acc. ordan. ce... w.... ith th. e. regu.. lat.i.ons of th. ,e.. .U..n. ite...d . Sta.t.e.s
Copyright Office issued pursuant to the Copyright Act; and (iii)Verizonbas not received
any written notices from the United States Copyright Office, or any other Person either
c.. hallenging any copyright filingorpayrIlent,or the failure to. makeanyco.pyri.ghtfiling
. -,' - . - -' ,c' _ . , . _ . , ,', .
. - - -- - . .
(d) . Ex:ceptta the extent that the failure ta camplyor perform any anhe acts
set farth bel .ow wauldnat have a Material Adverse Effect: .(i) Verizan is operating the
System in campliancewiththe Rules and Regulatians.of the FAA; (ii) without limiting
the generality .of the foregaing,the existing towers aftheSystemareobstructianmarked
and lighted in accardance with the Rules and Regulatians .of the FAA and FCC .or are
exempt from such requirements; and (iii) all required authorizatians, inc1udingHazard to
Air Navigation determinatians, far suchtawers have been issued by and pursuant ta the
Rules and Regulations .of the FAA. Capiesof all FAA documents and correspondence
relating to such towers have been made available .or deliveredtoAdelphia. Schedule
,5.21 lists all .of the existing tawers .of the System.
(e) Except assetfarthooSchedule 5.21or to the extent thatthe failure to
camply .or perf arm any .of the acts set farth belowwauld nat have a MaterialAdverse
Effect: (i) there are na unfulfilled written pramises .or commitmentsta any Governmental
Entity far capital impravements which Verizonhas made in cannection with the System;
(ii) there are na written obligations. taCustamers which have arisen .outside of the
.ordinary course aperatianofthe System, except: (A) with respect to depasits made by
Customers; and(B} the .obligation t.o supply services t.o Custamers in the ordinaryc.o':lrse
.of business, pursuant ta any franchises relating t.o the System; and (iii) to V eriz.on' s
Knawledge, no formal writtencamplaints have been made by Customerstrat are not
being addressed in g.oad faith. . . .
(a) . Veriz.on represents andackn.owledges thatit (i) is receiving the Adelphia
Camman Shares hereunder for investmentpurpasesanly, andnat with aview toarfor
resale in cannectian with any distribution, except in accardancewith an effective
registration statement .or an exemptian from the Securities Act and (ii) understands that
until the effectiveness .of the Registration Statement on .or pri.ortatheClosing Date, the
. A(jelphia. Camman Shares being acquired bereunder wil I be' char~cteri7;edas "restricted
.securitiesi'.under the.....~ecurities Act inasmuch as. they .are..beingacquirediri .a.transac~ian
nat invalvingapublic .offering.
........ ..Execution Copy
Confid.~ntiahmdProprjetary
theCqmmission on its EDGAR System, allqfwhich are available to (and hereby deemed
to be delivered to and received by) Verizonoverthe Internet at the Commission's web
site athttp://www.sec.gov,and Oi) has had the opportunity to make detailed inquiry
concemingAdelphia,itsbusiness,its officers and its personnel, and has had answered by
the officers of Adelphia to its own satisfaction all inquiries which it has made.
.. (e) .. Verizon acknowledges that the certificates. for the Adelphia Common
Shares sold hereundershall.bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAW,AND MAYNOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,PLEDGED
OR HYPOTHECATED UNLESS AND, UNTIL REGISTERED UNDER
SAID ACT OR, IN THE OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES,SUCH ... OFFER, SALE, TRANSFER, PLEDGEOR
HYPOTHECATION DOES NOT VIoLATE THE PROVISIONS
THEREOF.
5.23 . Disclaimer. EXCEPT. AS SPECIFICALLY SET FORTH . IN TUIS
AGREEMENT OR IN THE. ANCILLARY AGREEMENTS, VERIZON DOES. NOT
MAKEANYRE~RESENTATION ORWARRi\N'fY AS TOANYMAl'TER,EXPRESS
OR . IMPLIED, INCLUDING ANY EXPRESS OR IMPLIEDW ARRANTXOF
MERCHANTABILITY>ORFITNESSFORAPARTJCULARPURPOSE,W ARRANTY
AGAINST INFRINGEMENTORANYOTHERWARRANTYAS TO THE CONDITION
OR OPERATION OF ANY Ol'THEACQUIREDASSETS~
.6.1 . Organization. Standine: and Power. Adelphia is a corporation, is duly organized,
validly existing and in good standing under the laws of the State. of Delaware, and has the'
requisitepowerandauthorityto conduct its business as currently conducted and as contemplated
by this Agreement,andlo own, lease, operate or hold the Acquired Assets. Adelphia is duly
qualified of registered to do business, andis in>goodstancling, inthe StateofFlorida. .
.. . 6.2 .. ..Authority.Adelphia has all power and authoritynecessarytoexecutelhis
Agreement and the Ancillai}' Agreements to which it isor wiUbea party (the "Adelphia
Ancillary Agreements") and to consummate the transactions contemplated thereby and by this
Agreement The execution and delivery of this Agreement and the AdelphiaAncillary
Agreements, and ... the consummation .... of the transactions contemplated hereby and thereby
(including, but not limited to, the issuance of AdelphiaCoIllIIlonShares toVerizon,if
applicable ),have ..1>eendulyauthorized by all necessary ..action.. of Adelphia. ...This. Agreement
constitutes and, upon execution, each of the Adelphia Ancillary Agreements constitute orwill
constitute. valid. and binding obligations of Adelphia,.enforceableagainstAdelphia in accordance
with their respective terms, such enforcement subjectto bankruptcy, insolvency, reorganization,
moratorium, or similar laws ofgeIieralapplicationaffectingcreditors 'rights and the application
of general. principles of equity.
6.3 No Breach or Conflict. The execution, delivery and performance of this
.. Agreement and the Adelphia Ancillary Agreements and consummation. of the transactions
contemplated thereby and by this Agreement (including, but not limited to, the issuance of
Adelphia Common Shares toVerizon, if applicable) will not (a) cause Adelphia to breach any
Law or Court Order, (b) conflict with or result in a viOlation of the Certificate of Incorporation or
Bylaws. of Adelphia,. or (c) conflict with or result ina breach of any of theterms,conditions or
provisions of any Contract or Permit to which Adelphia is a party or by which it may be bound,
or constitute a default thereunder or result in the creation of any Lien, whichbreach,conflict,
default or creation would materially affect Adelphia's ability to perform its obligations hereunder
or under the AdelphiaAncillary Agreements,
6.4 Third-PartvConsents. Each Person whose consent to the execution, delivery or
performanceofthisAgreement and the AdelphiaAncillary Agreements by Adelphia is legally or
contractually required bas .been obtained.
6.5 ..... Claims. Litie:ation and Disputes. Except for actions, proceedings or investigations
affecting the cable television industry. in general, there is .no claim or. Iitigation. or investigative
proceeding. pending or, to the knowledge of Adelphia, threatened against Adelphia thatwould
materially affect. Adelphia's ability to perform its obligations hereunder. or under. the Adelphia
Ancillary Agreements. .
.." ,. .
6.6 Brokera.ge Fees. No Person or other entity acting on behalf of Adelphia is entitled
to any brokerage or finder's fee or commission in connection with the transactions contemplated
by this Agreement or the Adelphia Ancillary Agreements~
.,- - .'.'.-, .
....... ....... .. 6. ;....7... ...... .. .0.. .. '11. al.i.fi..l.c. at. io.n. . A. ..d. e.lp. .h...l....a. has.. .....n. oreas... ..on.. t. obeli.eve .tha.. t. .i..tw. .... .0. u... I.d.....n.........o.....t.....'........q...u.....al....'......i. f. y... 3.5... 8.. ....
traI1sfere~'of the Franchises.. or. any.. other licenses,.Pennits and .authorizatic>Ds.. to be.'assignedto
AdeJphiapursuanttothis Agreement and to otherwise continue to operate the Business, Should
. .' . .
Adelphia become aware of any facts that would cause it not. to so qualify or be able to operate
the System as currently operated, it will promptly notify Verizon in writing. thereofand. use its
best efforts to prevent any such cllsqualification or failure.
.6.8 . Adelphia's Investigation. Adelphia representsthatit isasophisticated entity that
was advised by knowledgeable counsel and financial advisors and hereby acknowledges that it
has conducted8J}investigation of the physical plants ofthe System, which investigation included
evaluation of the.conditionand performance of such. physical plants. Notwithstanding anything
in this Agreement to the contrary; .Adelphia.acknowledges. that itis accepting>theAcquired
Assets in their. present . condition and locations and.with, their... present operating capabilities;
Adelphia ackno\\,ledgesthat Verizon makes no warranty,~xpres~ or implied, as to the condition
, ,
of. the Acquired Assets except as expressly set forth in this.. Agreement. Adelphiahasnot relied
upon, and Verizonshallnot be liable for or bound in any manner by, any express or implied
verbal . or written infonnation, warranties,guarantees, promises, statements, inducements,
representations or opinions pertaining to theSystemor the Acquired Assets, except as may be
contained in this Agreement and certificates delivered hereunder. To> the extent any member of
Adelphia's management has actual knowledge of any facts relating to any items covered by the
representations and warranties of Verizonin Article V (by reason of Adelphia's due diligence
review of Verizon or otherwise), such knowledge shall be deemed to modify any applicable
representation and warranty of Verizon, including any Schedulesthat relate. thereto.
6.9 Adelphiaarid the Adelphia Common Shares. lithe Payment consists of Adelphia
Common Shares:
(a) The Exchange Act Reports, when they were or are filed with the
Commission, conformed or will confonn ina11 material respects with the applicable
requirements. of the Exchange Act and the applicable nIles and regulations .of the
Commission thereunder. The Exchange Act Reports did not and will Dot,as of their
respective dates,contain an untrue statement of a material fact or omit to state a material
fact necessary in .orderto make the statements therein, in the light of the circumstances
under which they were made, not misleading, Moreover, the copsolidated financial
statements ofAdelphia and its subsidiaries included. ill the Exchange ActReponscomply
as to form. in. all material respects with applicable accounting. requirements and with the
published rules and regulations of the Commission with respect thereto; have. been
prepared in accordance withGAAP applied on a consistent basis thro~ghoutthe periods
involved and fairly present in all material respects the consolidated financial position. of
Adelphia and its subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the.periods then ended.
(b) Since the date of the latest audited financial statements included in the
Exchange Act Reports, (i) Adelphia and its subsidiaries have conducted their operations
only in the ordinary course of business consistent with pastpractice.and(ii) neither
Adelphia porany .of its subsidiaries has s\lstainedany(n?rdoeSJ\~elphi~kI1o\Vofany
fac. ts. or circumstances that could likely give. rise to. any) materiallQSs orjnt~rfere[}cewith ....
its business, .whetherornot. covered. by . insurance,.orCromahylahordisptiteOrcourf or
governmental action,order or decree, otherwise than as set forth the Exchange Act
Reports. Additionally, there has been no material adverse change,oranydevelopment
involving a prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders 'equity or results. of operations of Adelphia
and its ~ubsidiaries,except as setforthintheExchangeActR.eports.
. .
, ,
. . ., - ,
(c) .. The Adelphia CommonShares have beellduly and validly authorized and
reserved for issuance and, when issued to Verizon inaccordaIlce with this Agreement,
will bevalidly.issued,.fully paid and non;-assessable, free. and. clearo! all Liens, and will
confonntothe description of the Adelphia COmmon Shares ,contained in. theExchange
Act Reports. Assuming the accuracy of Verizon's represent~tionsinSectionS.22,none
. '," "',,', ','
ofth~ transactions 90ntempla.tedbythis Agreement will violate or resultinaviolation of
the Exchange Act or the Securities Actor blue sky laws.
(d) . Adelphiahas the authorized . capitalization set forth in.. the Exchange . Act
Reports and all issued shares of capital stock of Adelphia have been duly and validly
authorized and issued, and are fully paid and non-assessable. No vote or consent of
Adelphia's stockholders or noteholdersis required to approve this..Agreement or any of
the Adelphia Ancillary Agreements or JorAdelphia to consummate the transactions and
perfonn its obligations contemplated hereby and thereby~
Executi(Jncopy
Conftde1)titl' andPr?prietary
Except and to the extent Adelphia may otherwise pennit in writing,Verizon covenants
and agrees as follows:
Access. Betwec;:n the date of this Agreement and the Closing, Verizon shall give
to Adelphia, its officers,agehts, employees,counsel,. accountants, engineers . and other
representatives, reasonable access to the premises and books and records relating to the System
and, to the extent permiUedby Law, cause Verizon's employees to furnish to Adelphia such
information related to.the System.asAdelphia.shall from. time to time reasonably request for the
purposes of prepaI"ing for the transition of the System from V erizonto Adelphia;provided,
h.owever, that any such investigation shall be conducted.. (a) dur..ing normal. bus.ine. SShOU.fS. and (b)
in such a . manner as not to. unreasonably interfere . with the. operation. of the System .by Verizon.
Notwithstanding the foregoing, (i) no environmental sampling or other testing maybe perfonned
withoutVerizon'spriorwritten consent, which consent may be given or withheld inVerizon's
sole discretion, and (ii) Adelphia will not contact any employee, customer or supplier of Verizon
with respect to this Agreement without the prior written consent of Verizon~ Adelphia
acknowledges that any information made available to Adelphia pursuant to this Section 7.1 is
subject to the terms of the Non-Disclosure Agreement aJ1d Section 8.4.
. - , - . - . , ,
' .. . - ,- ."
.'...... .......... ..................'.. ....... .. ... ......... .'. .......... ...... . .............. ... '......-" --.. ....... ........ ....... ..... . .....":............. .... ..'..... ........'..
,\.7-2 i.. ..Con~uct.ofBusiness...PendingClosing..Exc:eptasc()nteIIlpla.te~pI) .$cltedule7.2,
until the Closing,Verizon shall continue to operate the System substantially in the manner as
heretofore conducted. Verizon shall use commercially reasonable efforts to preserve the existing
business relationships with its Customers, suppliers, GovemmentalE;ntities, employees and
others having businessrelatioris with Verizon in connection with the System. Without limiting
the scope of the foregoing, Verizon shall:
Execution COpy
Con.fid~ntilll and ProPrietary
(t) Not enter into any agreemenroragreements for the sale of a material
amount of any of the Acquired Assets, except for sales of Equipment provided that,
unless such . item of Equipment . is no Iongernecessary for the. operation of the. System,
any item of Equipment sold shall be replaced with. an item. of Equipment of like value and
quality;
(g) ... Not increase. or decrease any of its Customerrates, conduct any sales,
marketing, amnesty or similar programs,. unless consistent with past practices; provided,
however, that this AgreemenrshaII not preclude Verizonfrom (i) seeking usual and
ordinary rate increases, or (ii)decreasing rates in accordance with applicable Laws orin
connection with marketing programs conducted consistently with past practice;
(i) . Not, without prior consent of Adelphia,grllIltany raises to Employees,
except in the ordinary course of business and iilaccordancewithpast practices and
provided that no across-the-board raises shall exceed the percentage increase for any
other Verizon Communications Inc~ business unit, or amend any existing or enter into
any new collective bargaining agreements with Employees, provided that Verizon and its
Affiliates may, with prior notice to Adelphia and an opportunityby Adelphia to provide
input toVerizon,enter into new collective bargaining agreements or amend existing
collective bargaining agreements with Employees to the extent. the same succeed any
c()Uective bClI"gainingagreementthat expires on or prior to the Closing;
any material respedany Material Acquired
7.3 HSR Act. Verizon agrees to make any appropriate filings of a Notification and
Report Formpursuantto the HSR Act with respect to the transactions contemplated hereby.
Verizon agrees to s~pply promptly any additional information and documentary material that
may be reasonably requested pursuant to the HSR Act or otherwise and will comply promptly
with any reasonablerequestsbyany Governmental Entity for additional information concerning
the transactions contemplated hereby. Verizon agrees to use commercially reasonable efforts to
cooperate and oppose any preliminary injunction sought by any Governmental Entity preventing
the consummationof the transactions contemplated hereby. Verizonagrees that it will make all
filings required by this Section 7.3 on Or before the 70th day following the Franchise Filing
Date; provided, however, that if such dayis a holiday or non-business day,Verizonwillmake
such filings on the first business day following such date. Verizon agrees not tomake anyfilings
pUrsuant to this Section 7.3 prior tothe 70th day following the Franchise Filing Date without the
written consent of Adelphia, andVerizonagrees to coordinate, and cooperate, in good faith with
Adelphia in relation to Adelphia's obligations contained in Section 8.1.
(a) Verizonshall give all notices to Governmental Entities and any other
Person required to be given by itunder the Material Acquired Contracts or otherwise in
connection with the transactions contemplated hereby; provided, however, that yerizon
shall not give any . notices. pursuant to . this. Section ...7.4 prior to the Franchise Filing Date.
In order to facilitate the orderly. assignment and transfer oral1 rights, privileges,
, Franchises and Acquired Contracts necessary to own and operate the System, and to
facilitate the securing of all Material Consents by franchising authorities or any other
GovemmentalEntity necessary for the Closing of the System, Veriion shall proceed
following the execution of this Agreement, to prepare and (after the Franchise Filing
Date) tofil~and prosecute each request and application therefor together with such
information ~lsmaybe necessary and appropriate to · effect sUch approvals.
N9twitbstanding theJoregoing,Verizonshallfileall necessary Form 394s with
appropriate franchising authorities no earlier than the Franchise Filing Date, but within
10. days after the Franchise. Filing Date, provided. that Adelphiahas.. provided all
necessaryinformation, completed its portion of such forms and has delivered them to
Verizonas required by Section 8.2; ... ,
(b) In obtaining Material Consents, (i) Verizonmay agreetoconunercially
reasonablenon~materialchangestothe Acquired Contracts, and (ii)wlth the consent of
Adelphia (which shall not be unreasonably withheld), Verizonmayagree to other
commercially reasonable changes to the Acquired Contracts. N9thing herein shall.
require the expenditure or payment .of any monies (other than inrespectofnormaland
usual filing fees ) 'or the giving of any other. consideration by Verizon in order to obtain
any of such consents.
. . .......ExeclltiqnCopy
COllfuJential.andProf'rietary
. .. . (c). Additionally, V erizonshallusegood faitheffortstoiriclude a provisiohin
eacht~ird-party consent. permitting.. Adelphia to . assign the applicable agreement to an
AffiliateofAdelphiaat any time after the applicable Closing without further consent
from such third-party. If a third party will not agree to such a provision, then Verizon
shall so notify Adelphia,. and Adelphia may discuss the inclusion of the provision with
such third party. In such case, Verizon shall have no further obligation to seek the
inclusion of such a provision in the applicable consent.
7.5 Further Assurances. Subject to the terms and conditions of this Agreement,
Verizon will use all reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable Law to consummate
and make effectivethe.transactions contemplated by.this Agreement,. the Ancillary Agreements
and the other documents and instrurnentstobedelivered pursuant hereto.
7.6 Confidentiality. Verizon acknowledges Adelphia's representations that.Adelphia
would be irreparably damaged if Proprietary Business Information weredisclosed to or utilized
by or on behalf of any Person not aparty to this Agreement { except. andt(). the extent expressly
pennitted pursuanno this Agreement). Verizoncovenants and agrees that fora period of two
years after the dateofthisAgreement, it will not directly or indirectly, except in connection with
the transactions contemplated hereby or to the extent required by Law orCourt Order (provided
prior timely notice has been provided to Adelphia to permit Adelphiato limitsuchdisclosure or
to seek appropriate protective orders) divulge, or permit any of its agents or employees to
divulge, Proprietary Business Infonnation. The obligations contained in this Section 7.6 are in
addition to and independent of the obligations contained in the Non-Disclosure Agreernent
7.7 Schedule Updates. No<laterthan five business days prior to the anticipated
Closing Date (but noearlierthan ten days prior to the anticipated Closing Date),Verizon shall
deliver to Adelphia updated Schedules to this Agreement to reflect. changes occurring following
the date of this Agreement, which updated . Schedules shall be deemed 'to modify the
representations and warranties of Verizon set forth in this Agreement unless such changes would
have a Material Adverse Effect, other than material adverseeffectsrelatingtoor resulting from.
<.a)economiccQnditionsapplicable to jndustry~wide occurrences, or (b) .theexecutio.n.... of... thi.s
Agreerne~totthe .itran~actions....... contemplate4.. "hereby. ......an<t. thar'Yeie.,...~otaihreach.of. ..a
representationol warranty contained in this Agreement on the date hereof.
bonds, letters of credit, indemnity. agreements and similar items necessary inconnec.tionwitb the
AcquiredContrllcts, if any; provided, however, that all such actions contemplated by this
Section 7.9 shall be at Adelphi<.l'S expense> and. Verizon shall not be required to pay any
compensation or other consideration pursuant to this Section 7.9,. ..
7.10 Non-Competition. Verizon and its Affiliates will not fora period of one year
following the Closing. Date, without the express written consent of Adelphia in tbegeographical
areas listed on Annex I hereto engage or participate in a direct marketing or direct mail
advertising campaign directed specifically arid exclusively atsuch geographical areas relating to
a multi-channel, subscription, video broadcast television system business which. specifically
requests or recommends to customers of Adelphia to cancel any broadcast cable television
. service that they may receive from Adelpbia. Nothing in this Section 7.10 shall be deemed to
limit. .the right. of Verizon or any .of its Affiliates . to . enter into a transaction involving a multi- ,
channel, subscription, video broadcast television business or any other cable, wireless or satellite
television.. business outside of. the. geographical areas listed on Annex I hereto or within such
geographical areas except as specifically provided herein. For greater certainty,-nothing in this
Section 7.10 shall prohibit Verizon or. any of its Affiliates from (i) investing in the securities of
any enterprise, entering into any joint venture, partnership or strategic alliance, or from
acquiring, or being acquired by, all or any portion of any Person who provides cable television;
video OJ:' similar services and/or products as long as such Person 's revenues froIIfsuchbusinessas
conducted in the applicable geographical areas listed on Annex I hereto are less than 10%.ofthe
total annual revenues of such Person, or (ii) participating in. or conducting any regional,. state or
national marketing or advertising campaign of any nature not specifically directed at the
applicable geographical locations subject to this Section 7.10.
Except and to the extent Verizonmay otherwise permit in writing, Adelphia covenants
and agrees as follows:
'. ..8.1 HSR Act Adelphia agrees to make any appropriate filiIlgs: ofa~otifi<:ationand
ReportFQrm..pursuantto ..the.HSR Act with.. respect to .the.. transac;ti9nsc()nt9JllPl~tedhereby........
Adelphiaagrees to. supply. prOlnptly any additional infonnationanddocumentarymaterial that
may be reasonably requested pursuant to the HSR Act or otherwise and will comply promptly
with any reasonable requests by any Governmental Entity for additional infonnationconceming
the transactions contemplated hereby. Adelphia agrees to use commercially reasonable efforts to
cooperate and oppose any preliminary injunction sought by any Governmental Eritity preventing
the consummation of the transactions contemplated hereby. Adelphia agrees that it will make all '
filings required by this Section 8.1 on or before the 70th day following the Franchise Filing
Date; provided, however,thatif such day is aholiday ornon-businessday,Adelphi~willmake
such filings on the firs~ business day following such date. Adelphia agreesnottomakeany
. filings pursuant to this Section 8.1 prior to the 70th day followingJheFranchise filing Date
without the. written consent of Verizon and Adelphia agrees to coordinate, and cooperate~ iogood
faith with Verizon in relation to Verizon's obligations contained in Section. 7.3,... . ...
8.2 Third-Partv Consents. Adelphia shall give all notices .to GovemmentalEIltities
and any other Person required to be givenbyitinconnection with the transactions contemplated
hereby; provided, however,thatAdelphia shall not give any notices pursuant to this Section 8.2
prior to the Franchise Filing Date. In order to facilitate the orderly assignmentandtransferof all
rights, privileges, Franchises. and Acquired Contracts, and to facilitate the. securing of all
Material Consents by franchising authoritiesoranyother third party, Adelphia shall cooIJerate in
good faith withVerizon, shall provide reasonable assistance to Verizon in a timely manner to
obtain such consents and shall promptly provideVerizon with such information and>complete
such application forms as may reasonably be requested by Verizon. Without limiting the
forego.ing, Adelphia will provide Verizon with all necessary information, and complete and
deliver their portions. of such. forms within 70 days following. the. date of this Agreement, and
otherwise cooperate..with..Verizon,....to permitVerizon to<file all Form 394s . with'. appropriate
franchising authorities, for which COnsent to transfer a Franchise is required. Adelphia shall
attend such meetings as Verizon may reasonably request in connection with obtaining third-party
consents, and Adelphia shaUprovide such financial information as third parties may reasonably
request. in. connectionwith. the review of transfer requests. Adelphia acknowledges that it may
need to enter into direct agreements with franchising authorities, other Governmental Entities or
other third parties.
8.3. Dischar2e. of Assumed Liabilities.. Adelphia shall pay, perfonn arid discharge the
. Assumed Liabilities as they become due, including the discharge and performance when due of
each and every obligation ofVerizon to be satisfied or performed on or after the Closing pate
under the Acquired Contracts.. . .. .
8.4 . Confidentiality. Adelphia acknowledgesVerizon's representationsthatVerizon
would be irreparably damaged if confidential information concerning the business and affairs of
Verizon anditsAffiliateswereclisclosed to or utilized by or on behalf of any Person not a party
totms Agreement (except. and to the extent expressly permitted pursuant to this Agreement);
Adelphia covenants and agrees that itwill not, directly or indirectIy,ex.cept inconnectionwith
the. tnmsactions contemplated hereby or totheextentrequired by Law or Court Order (provided
prior timely notice bas been provided to Verizon to permitVerizontolimitsufhdisclo~~reqr to
see.k... a.1'. p......r.......o......p.n.. .ate....p....r.o. t..ecti.v. e... ..o.....r. ders.),. II1ak. e.....use...o...f. ordiw....l.g. ..e. '....'...or. p...e.'.rm1..'..... ..'t...<.an.. y. L.o..........,.f.......:.i.,t...s..".....a. g.e...n... t.5... ..0. r. ... .
employees to make use of or . divulge,nonpublic information concerning the business, . financial.
or other affairs of Verizonor any of its Affiliates... The obligations contained in this Section 8.4
are in addition to and independent of the obligations contained in the Non-Disclosure
Agreement,> Notwithstanding the foregoing,neither this Section .8.4 nor the Non-Disclosure
Agreement shall.restrict Adelphia's use of any confidential information.contained inlhe
Acquired Assetsafterthe Closing~
8.5 .. ...Access..... Verizon shall, fora period of seven years. from the Closing Date,.have
accessto, and the right to copy, at its expense, for bona fide business purposes and during usual
business. hours upon reasonable prior notice to Adelphia,aIl books and records relating to the
o.pe.....ra.t.i.o.n.. o.fthe.. ..Syste. ffi. '....A..d.elphia .shall.re. tain. an. d pre. serv... ..eall.suc.b.b.o.ok....s.. and. rec.o...r..d.. .s.~. o..rs.uch
seven year period. Adelphia may discard or. destroy anysuch booksorrecords,provide~ that
... ... .E~eclltion(::opy
ConfidentialllndProprietary
Adelphia shallsonotifyVerizonandallowVerizon, within 30 days of such. notification,t(). elect
to take. possession ofsuchbooksand records... ... . ' ..
8.6.. B()nds..tettersofCredit.Etc....Adelphiashall take all necessary steps,.and execute
and deliver all necessary documents, to ensure that on the Closing Date Adelphia has in place the
bonds, letters of credit, indemnity agreements and similar items necessary in connection with the
Acquired Contracts, if any.
8.7 .. Further Assurances. Subject to the terms and. conditions of this Agreement,
Adelphia willuseallreasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, aU things necessary, proper or advisable under applicable Laws to consummate
and make effective the transactions contemplated by this Agreement, the Ancillary Agreements
and the otherdQcumentsandinstrumentsto b<: delivered pursuant hereto. .
8.8 Intellectual Propeitv.Subject to the rights and licenses expressly granted to
Adelphiapursuanuo the Intellectual Property Agreement, Adelphia shall promptlyretum or
destroy and shall. notpuseanyIntellectual Property, including any Third PartylIltellectual
Property, Software or Excluded Marks, of which Adelphia acquires possession. in connection
with the Acquired Assets. and which is not the subject of an Acquired Contract that has been
rightfully. transferred to Adelphia or for which Adelphia has not separately and directly acquired
rights from the Person who is the owner of such Third PartylntellectualProperty.
8.9 .. . Vehicles. .... Adelphiaagrees to use. commerciall y reasonable efforts to filepromptl y
theappropriatevehic1e titIeapplicationsand registrations to change the name of thetitled owner
on each . vehicle. title certificate and change . the. motor vehicle registration (with respect to license
plateinfonnation) on' each vehicle being transferred to Adelphia from Verizon pursuant to this
Agreement. Adelphia agrees. that it. shall remove and destroy Verizon 's existing license plates.
from all vehicles received uponJheearlier of receipt of new license plates Or 90 days following
theClosing. . .
8.1 0 Gulf Power . Case. If. as a result of the lawsuit styled Federal Communications
Commission and the United States of America.et al. v.Gulf PowerCompanv.etaLAdelphia
recejve~.asettlemel1t'ireimQursemeDtor other similar. payment.....withrespecttothe System
relating t(lanypenod of time prior to the applicable Closing, ihenAdelphiashallpromptly
transfer all such amounts to Verizon.. ,..
.... (bY. IfAdelphiachooses to issue Adelphia Comrnon$hares to Verizonfor any
or all of these payment obligations, the number of shares that shall be issued to Verizon
for any particular payment willbe deterinined by dividing the applicable payment amount
by the applicable Deficit Payment Value (as defined below). For the purposes of this
Section 8.11, the term "Deficit Payment Value" shall mean the closing price of an
Adelphia Common Share, as quoted on the NASDAQ National Market, as reported in the
Wall Street Journal (NY morning edition), for the full trading day that is immediately
priorto the applicable payment date,
(c) Exceptasprovideclby the next sentence, the paymeIltobligations required
by this Section .8.11 . are independent of all other obligations of the Parties contained in
this Agreement and are not subject to set-off for any amounts Verizon may owe Adelphia
pursuant to or as a result of this Agreement. Notwithstanding the preceding sentence, if
at any time the closing conditions set forth in Section 10.5(bJ of thisAgreement cannot
be satisfied, regardless of whether the other conditions set forth in ArtiCle X could be
satisfied at such time, the payment obligations required by this Section shall continue to
accrue, but Adelphia'sobligationto rnakepayments of such accrued amounts shallbe
suspended until the conditions in Section IO.5(b) can either be satisfied or are waived by
Adelphia. In theeyent Adelphia'spaymentobligationsare . no longer suspended, as
contemplated by the previous sentence, AdeIphia shall pay (within five business days
after thereinstatementofthep~yment obligation) all... payments thatw~re due and
payable; but not paid, during the period Adelphia's' payment obligation was suspended. If
this Agreement isterminatedpursuanuo Section 11.2 and, at such time, Adelphia is not
in material breach oftrus Agreement and Adelphia'sobligation tornakeanypayments
required by this Section8.II are suspended, then Adelphia's obligation to inakeany
payments of accrued amounts shall also be tenninated.
(d) All payments made pursuant tothisSection8.11arei1on~refundableunder
all c..ircumst..an.... c.e.s., ..In..the eve..nt...t...h. ..e.C...., lo..s.i.n...g.. Da....t.....e. ,o.cd..a.....te.. .....o.n..........w....h.i.,.Fh...... t....h.....l....S....,:.A....g..f...ee...m.e.n. ....tis
telminatecl,is . ()n, Ii date. other than.. the date a . payment isdueinaccgrdaIlc~~i!h$ection
8..11(D.).(...ii)..,.. AdeIP...h.....l.a :will p. ay.... v.e. riZo.......n...(iIieith. er cas. h.....'.O.. f. ...A~....l.. h, i.3..........'.o.......rnm........:m..... on:.. :S..har...es... as
provided above) a prorated amount with a value equal t~ltipliedbythe
number of days. from the due date of the previous. payment. to. andincluding. the. Closing
Date or date of tennination, as applicable, AddItionally, in the ~vent heClo iog occurs.
.. and Adelphia makes. aggregate payments to Verizon in excess 0 uanno
thisSe~tion8.11, the Payment shall.bedecreasedbyanarnountequaltote...l ference
between e gregateamount receivedbyVerizon pursvanttothisSection 8.11 minus
8.12.. . ReEistrationofAdelphia Common. Shares.. Adelphiasliall.within 40 days after
the Franchise FilingDate,prepareaIldfile withtheU,s. Securities and ~xchangeCommissiona
registration statementon an appropriate form under the Securities Act (the "Registration
Statement") covering the sale by Verizon or its designated Affiliate of all of the Adelphia
Common Shares received by Verizon in connection with any of the trans~ctionscontemplated by
this Agreement. For purposes of this Section 8.12 the term "Adelphia Common Shares" shall
include any securities issuable,. issued or distributed in respect of any of the Adelphia COmmon
Shares, by way of stock dividend orstocksplit.orin connection with a combination of shares,
recapitalization. reorganization.. merger, consolidation or . otherwise.. . Adelphiaagrees .,.to
promptly respond to any request~ or comments made, and supply any infonnation that may be
requested. by the U.S. Securities and Exchange Commission in connection its review or the
Registration Statement. After the U.S. Securities and Exchange Commission has provided
Adelphia \Vith notice that it will not review or has completed its review of the Registration
Statement. Adelphia shalIpromptly (but in no event prior to the Closing and subject to the
receipt of necessary information from Verizon as described below), cause (i) .the Registration
Statement to become effective and to remain continuously effective in order to pennit the
prospectus included therein to be lawfully delivered to purchasers of the Adelp~iaCommon
Shares through the first anniversary of the Closing Date, and (ii) the shares covered by the
Registration Statement to be included for quotation on the NASDAQ National Market System.
Adelphiashall (i) fUrnish Verizon with copies of prospectuses inconformity with the
requirements of the Securities Act,al1dsuch other documents as Yerizonshall reasonably request
asrequir~d underthe.SecuriliesActto keep the Registration Statement effective.inaccordance
with this Section 8.12, and (ii) 'prepare and file such amendments andsupplernents to the
Registration Statement as required. by. Law and as, may benecessaryJo. keep the Registration
Statement effective through the first anniversary of the Closing Date. Adelphia shall bear all
expenses in connection with the procedures described in this Section 8.12 in connection with the
registration of the Adelphia Common Shares pursuant to the Registration Statement, Other than
fees and expenses, if any. of counsel or Other advisers toVerizon or any other selling
shareholder. expenses (including counsel fees) of any underwriter, and any underwriting
discount or commission. or broker's commission payable in connection with any sale of the
Adelphia Common Shares, which shall be borne by V erizonor the relevant selling shareholder.
. If Adelp~ia has. delivered preliminaryorfinal prospectuses.. to Verizon~d .afterhavingdone so
thepr9~I>e~t~s ..mustbeaI1l~Ildedor suppleInented (whether throughin~()rpor~tilJnJ)yr~ference.. or.
otherwise) to comply with the requirements of the Securities Act,. Adelphias}iallpromptly notify.
V~rizon and promptly (but in all events within 20 daysafterprovidingnoticelpr(}vide Yerizon
with revised. prospectuses or make a filing incorporating such <requirednlaterial . in the
Registration Statement and, if requested in order to comply with applicable securities Laws,
Verizon shallimmediatelyceasemaking offers and sales in accordance with Law. If Adelphia is
required to amend or supplement such preliminaryorfinal prospectuses; upon receipt of the
am.ende..d o. r . suP. pl. em. e.ot.... p. rospectu..ses, ,Y... e.riz. Qn's.hall u.s.e. .....the. f. ev..i.se.d.o...f.. su.'.p..plem.ented
prospectus~s. Each holder QfAdelphia C()mmon Shares included. in anyRegistrationStatement
filed pursuant to this Section 8.12 shall furnish to 'Adelphiasucbinformationregarding such
holder and . the distribution proposed by such holder. as Adelphiamay reasonably request in
writing and . as shall be required in comiection with any re~istration, qualification or compliance
under the Securities Act. .. .
The obligation of Verizon tocoilsummate the Closing shall be subject to the fulfillment,
prior to or at the Closing, of each of the following conditions unless waived by Verizon in
writing:
9.1 . .. Adelphia's Reoresentationsand Warranties. Each representation and warranty
made by Adelphia in Article VI hereto that is modified by materiality shall be true and correct in
all. respects, and those. that are not so modified shall be true and correct in all material respects on
and as of the Closing Date with the same effect as though each such representationar warranty
. had been made or given an and as of the Closing Date, other than representations and warranties
made asoCa specific date, which shall be true and correct as of such specific date.
9.2 . Adelphia's Covenants. Adelphia shall have performed and complied in all
material respects with all of the covenants set forth herein which are to be perfonnedor complied
with by it before or as of the Closing Date.
9.4.. ... Adelphia's Deliveries. Adelphiashall have executed and delivered to Vetizon the
AdelphiaAncillaryAgreementsand other documents and items referred to in Article XIII
. hereof.
No action, suitor proceeding (which, in the case of an action suit or
proceeding brought .... by a. non,;,Governmental Entity, has a. reasonable likelihood of
success)ispending before any Governmental Entity to enjoin, restrain, prohibit orobtain
substantial~arnages in respect of the transfer ()f the S ystemascont~mpl~tedby this
Agreement or t~e Ancillary Agreements,orwhich would be reasonably likelYJo. prey. ent..
6iima1ceiUegal thec()l1sumrmition ~fanyttartsactionscontetnplatedbythisAg'feemeIltor .,
the Ancillary Agreements.
beenreceived~ this condition shall nevertheless be Julfilled .andshall not delay the
Closing if such regulatory Governmental Entity withdraws its notice,terminates
the proceeding or action subject to the notice, or fails. to open a fonnal
investigation or commence a proceeding or action Viithin areasonable time
(which in no event shall be.later than 60 days after receipt of the initial notice).
(c) Verizonshalloot have received written notification from a regulatory
GovemmentalEntity indicating that such regulatory Governmental Entity is threatening
to COmrIlence a proceeding or action in relation to the sale of the System ascootemplated
by this Agreement; provided, however, that if a written notification has been received,
this . condition shall nevertheless be . fulfilled .. and shall not delay the Closing if such
regulatory Governmental Entity withdraws its notice, tenninatesthe proceeding or action
subject to the notice,or fails to open. a JOrI1lal investigation or commence a proceeding or
, action within a reasonable time (which in no event shall be later than 60 days after receipt
of the initialnotice).
ARTICLE X
Conditions to Adelphia's Obligations
The obligation ofAdelphia to consummate the Closing shall be subject tothefulfilllI!ent,
prior to or at the Closing, of each of the following conditions unless. waived by Adelphia in
writing:
10.1 Verizon's. Representations and Warranties. Each representation and warranty
made by Verizon. in Article V hereof that is modified by materiality.. shall be true. and correct in
all respects, and those that are not so modifiedshallbe true and correct in all materialrespects,
on and as of the Closing Date with the same effect as though each such representation and
warranty had been made or given on aIld as of the Closing Date other than (i) representations and
warranties made as of a specific date, which shall be true arid correct as of such specific date,and
(ii) any breach ofa representation or warranty that (a) has not, indi viduall y or in the. aggregate,
resulted ina Material Adverse Effect, or (b) is related to or resulted from either (x) economic
. . conditiollS applicable to industry:-wideoccurrences, or (y) the execution of tl1isAgre~m~nt or the
transCictioJ,ls. ~ontemplated...herebyandthat. was not a breach of a ..representationor.warranty
contained in this Agreementon the date hereof.
(a) . No action, suit or proceeding (which, in the. case of an action, suit Or
proceeding brought by a non-GovemmentalEntity, has a reasonable likelihood of
success) is pending before any Governmental Entity to enjoin, restrain, prohibit or obtain
substantial damages in respect of the transfer of the System as contemplated by this
Agreement or the Ancillary Agreements, or which would be reasonably likely to prevent
or make illegal the consummation of any transactions contemplated by this Agreement Or
the AncillaryAgreements;
(b) (i) No action, suit or proceeding is pending, and no order has been
issued, whereby a Govemmental Entity seeks to enjoin, void or prohibit the
transfer of any material assets ofVerizon to Adelphia or any Affiliate of
Adelphia, and
(ii) Adelphia shall not have received written notifi~ation from a
regulatory Governmental Entity indicating that ~uch regulatory Government
Entityisthreatening to commence a proceeding or action seeking toenjoin, void
or prohibit the transfer of any material assets of Verizon to Adelphia or any
Affiliate of Adelphia; provided,however,that if such a written notification has
been received, this condition shall nevertheless be fulfilled and shall not delay' the
Closing if such regulatory.. Governmental Entity withdraws its notice, terminates
the proceeding or action subject to the Ilotice, or fails to open a fonnal
investigation or commenCe a proceeding or action within a reasonable time
(which in no event shall be later than 60 days afterreceiptoftl1e initial notice).
(c)' Adelphiashallnot have received written notification from a regulatory
Governmental Entity indicating that such regulatory Governmental Entity is threatening
to commence a proceeding or action in relation to the sale of theS ystem as contemplated
by this Agreement;provided,however, thatif a written notification has been received,
this condition shall nevertheless be fulfilled and shall not delay the Closing if such
regulatory ..OovemmentalEntity. withdraws its. notice;. terminates t~eproceedingor. action.
s.... u........b....... ~.....e ct... ..t. oth. e....o.... ..0.. tic..... e.,. .o.r. . f3.l. .'ls to.ope. D.. a fonnal. ..i. nv. e.. sti. g.3ti.o.. 0.. . Of.C. 0.. mrn. .. . ...~oc.e a.. p.. .r...'..o. c.e. e.ding. . .. D.C. '..
actionwithina>reasonable time (which inno event shall be Illterthan60 days lifter receipt
of the initial notice).
n~tice . to!heQtherParty . at least ten days. priort<> the date of the Closing. . The Closing
wIll take place at the offices ofVerizonConunuIlications Inc.locatedatJ095 Avenue of
the Americas, New York, New York, at 10:00 a.m. New York City time on such.date.
The date on which the Closing occursisreferred to herein as the "ClosingDate." Upon
the satisfaction or waiver of the conditions set forth in Articles IX and X, the Parties shall
promptly proceed with the Closing of the transfer of the. Acquired Assets and ASSUmed
Liabilitiesin accordance with this Section 11.1. Notwithstanding the foregoing, in no
event shall the Closing occur prior to the llOthdayafterof the Franchise Filing Date
withoutthe written consent of the Parties.
(b) Verizon and Adelphia shall meet on the date preceding the Closing Date at
the offices of Verizon Communications Inc. to conduct a pre-Closing at which all
deliveries to be made at Closing will be reviewed by the parties and placed in escrow. At
11:59 p.m., Eastern Standard Time, on the date preceding the Closing Date , Verizon shall
terminate its operation of the System. At 12:01 a.m., Eastern Standard Time, on the
Closing Date, Adelphia.shall commence operation of the System. At 10:00 a.m. on the
Closing Date New York.Citytime, all instruments and payments held in escrow shall he
distributed and disbursed to Verizonand Adelphia, and the Closing shall be
consummated.
11.2 Termination. This Agreement (and the transactions contemplated hereby) may
not be terminated except as follows:
(a) Upon the mutual written consent ofVerizonand Adelphia;
(b) ByVerizon,.ifAdelphiais in material breachof.this..Agreernentand such
breach has not been cured within ten days following the delivery of notice thereof to
Adelphia; ,
(c) By Adelphia, if Verizonis in material.breach of this...Agreelllent .andsuch
breach . has . not been cured within ten days following the delivery .of notice thereof to
Verizon; or
I 1.3 Effect of Termination. Upon the termination of this Agreement in accordance
with Section 11.2 hereof, the Parties shall be relieved of any further obligationsorJiabilityunder
this Agreement other than the following sections or obligations which shall survive tennination:
,. (1) confidentiality obligations contained in. Section 7.6 (with. respett6nly to confidential
in.. fonn... atio. n.....re.g. ar. di.n....g'.^. d. e.lph. ia) an.. d.Se..ction 8.4. ..(with. .re.spe.. c.. t o..nly. to.confi. ld...en.t.ial.,..i.nform...ation.
regardingVerizon), (2). Adelphia's. obligations contained in Section 8.11,(3) the confidentiality
obl~gationscontained in the Non-Disclosure Agreement, (4) obligations forb~aches of this
Agreement occurring prior to such tennination,and (5) the provisions of this Section 11.3,
Article 15 and Article 16. .
At Closing, Verizon shall deliver the following to Adelphia:
12.1 Bring-Down Certificate. A bring-down certificate executed by an executive
officer of Verizoncertifying that the conditions specified in Sections 10;1 and 10.2 have been
satisfied.
12.2 Secretary's Certificate. A certificate. executed on behalf of Verizon by V erizon 's
Secretary or Assistant Secretary certifying. as to .the incumbency, .and .authenticating the
signatures of, officers executing this Agreement and certificates delivered hereunder on behalf of
Verizon, and certifying as to the adoption and continuing effect of appropriate resolutions
authorizing V erizon 's execution, delivery and perfonnanceof this Agreement.
The Verizon Ancillary Agreements duly
12.4 Other Agreements. TheI...ease Agreements and the Pole Attachment and.Conduit
Occupancy Licensing Agreements duly executed by the appropriate Affiliate of Verizon.
12.5 Good Standing Certificates. Good Standing CertificatesofVerizon dated not
more than 10 days prior to Closing from the State of Delaware and the State of Florida.
12.6 FCC Opinion. An opinion of Wiley Rein & Fielding LLP, Verizon's FCC
counsel, in the form of Exhibit G.
12.7 Opinion of Counsel. An opinion of Baker Botts L.L.P., counsel to Verizon, in the
fonnof Exhibit Hi
........ .. .... .....~;r:ecuti()n Copy
ConjUle".~oJ (lnd~roprietary
certifying as to the .. adoption. and continuing effect ofappropriateresolutioIlsauth()rizingthe
execution, delivery and perfoImance Of this Agreement by Adelphia. .
13.4 AdelphiaAncillarv
executed by Adelphia.
Agreements duly
13.5 Other A2Teements. The LeaSe Agreements and the Pole Attachment and Conduit
Occupancy Licensing Agreements duly executed by Adelphia.
13.6 Opinion of Counsel. An opinion of Colin Higgin, general counsel to Ade1phia,. in
the form of Exhibit I.
14.1 Filing of Returns. In connection with the preparation and filing of Tax Returns as
of and after the Closing Date,thePartiesshall cooperate and exchangeinfonnationas reasonably
required to accomplish the matters contemplated by this Article XIV.
14.2 . Access to Books and Records. After the Closing, upon reasonable notice, and
subject to Seetion7.6andSeetion8.4hereof (as applicable to each Party), each Party will give
to the representatives, employees, counsel and accountants of the other J>arty ; access, during
nonnal business hours~ to records, and will pennit suchpers?ns to examine and copy such
records, in each case to the extent reasonably requested by the other Party in connection . with
Tax and financial reporting matters, audits, legal proceedings, governmental investigations and
other business purposes (including such financial information and any receipts evidencing
paynientofTaxes as may. be requested to substantiate any claim forTax credits or refunds);
provided, however, that nothing herein will obligate any Party to rake actions that would
unreasonably disrupt the normaL course of its business or violate the terms of any Contract to
which it is a party or to which any of its assets is subject. The Parties will cooperate with e~ch
other in the. conduct of any Tax audit. or similar. proceedings. involvin~ or otherwise ~elating to
: th.. e......... S..... y. s.t...e.m.... ...... (or the. ... ..i.n. c.ome. ... theref...r. om. O.f.. I1S.. s.e. ...t.s.. ...t.he..re. .0. ..f).. . w... 1. .th... . res.,.' p.. .ec. t. t. o. . an......y..:.T. ,.ax... . an. d... .... e. .3.......c........h... .... .w....... . ill......
.', - ,'-', -- - ". '-' " '--' . - -. -, ," - --. --. ".-., '.,' , .-" '-,' .. ."
. execute and deIiversuch. powers .ofattomeyandother documents as areriecessary to carry OUt
theinterit of this Seetion 14.2 and Section 143.. ,
. -' .
.. (a) , . In accordance. with the provisions of Article III, and subject toSeetion
14.5,Verizon agrees to indenmifyand hold harmless Adelphia, its Affiiiates, success.ors
andpermitted assigns fr()mandagainst anyandall Indemnifiable<Lossesincurred Of
suffered by.. Adelphiaarising from ... (i) . any. Taxes ( other than Taxes that are Assumed
Liabilities) of 'I erizon or its Affiliates, orattrlbutat>leto th(::oper~tions of the System Of
ownershipoftheAcquired Assetsfor all Tax periods (or portionsth~reof)ending priorto
the. applicable Closing. Date, (ii) any matericilbreach of the represeritatioris contained in
...... ..~xecution Copy
Confiden~al and PrOPrietary
SectionS.10(a), (c) and (dJ or (iii)the failure of.Verizonto
agreements or undertakings made by Verizcm in this Artic1eXIV.
(b) In . accordance with the provisions of Article .111, and. sUbject. to. Section
14.5, Adelphiaagrees to indemnify and hold harmlessVerizon, its Affiliates, Successors
and permitted assigns from and agaillst any and all Indemrtifiable Losses incurred or
suffered by Verizon. arising from(i} any Taxes that. are Assumed Liabilities,. of Adelphia
or its Affiliates,or attributable to the operations of the. System or ownership of the
AcquiredAssets for all Tax periods (or portions thereof) ending on or after the applicable
Closing Date,or (ii) the failure of Adelphia to perform any of the agreements or
undertakings made by Adelphia in this Article XIV.
(c) .. .Any. Party....seeking.jndemnification under .thisArticleXlV(the "Tax
Indemnitee") shall give the other Party (the "Tax Indemnitor") written notice of any audit,
proposed adjustment or assessment, or proceeding bya Tax. authority involving Taxes for
which the Tax Indemnitee will seek indemnification no later than 20 business days after
receipt of notice of such proceeding by the Tax Indemnitee; provided, however, that the
failure. of the Tax Indemnitee to so notify the Tax Indemnitorshallnot preclude any
indemnity h~reunderunlessand to the extent that such failure has materially and
adversely affected the Tax Indemnitor's contest rights with respect to the proceeding. At
its own cost, the. Tax Indemnitor shall have the right to control and settle such
proceeding; provided, however, that to the extent the Tax Indemnitor is not liable . under
this Article XIV for the entire amount ofth~Tax .relatingto..suchpJ:'oceeding, at the Tax
Indemnitee's option~ (i)theTCi}tIndemnitor shall have the right t()control the proceeding
at its cost and to settle such proceeding with the written approval of the TaxIndemoitee
(which approval shall not be unreasonably withheld), (ii) theTax Indemnitee shall have
the right to control the proceeding at its cost and to settle such proceeding with the
written approval of. the Tax Indemnitor (which approval shall not be unreasonably
withheld), or (iii) the Tax. Indemnitor and Tax Indemnitee shall joindycontrol, share the.
cost and mutually agree ona settlementof such proceeding.
(e) Notwithstanding contrary in
repres.en..t~tions and warranties contained in Section S.10(a), (eX and(dJ and>the
obli&ations jmposedbyArticle XIVshalls\lfViveuntil the expiration of 60 days
,following the ..expiration .of the applicable.. statute of . limitations . for ..' assessment. and
collection of each Tax; prollided, however,that in the event that a notice of claim for
indemnity pursl,lant to this ArticleXIVis made during such period, indemnity with
respecUosuch claim shall.survive until such time as the (:laim is fiIlallyresolved.
,....ExeclltionCopy
ConjidentialandProprietary
14.4 . Transaction Taxes. Adelphia shall bear and be responsibleforpayingany sales,
use, stamp, transfer,dQCum~ntary; registration,business and occupation and other similar taxes
(including. related penalties . (civil or . criminal), additions to tax and interest) imposed by any
Governmental Elltity with respect to. the transfer of the System and any. Acquired Assets to
Adelphia ("Transaction Taxes"), regardless of whether the Tax authority seeks to collect SUch
taxes from Verizon or Adelphia. Adelphiashallalso be responsible for(i) administering the
payment of such Transaction Taxes,. (ii) defending or pursuing any proceedings related thereto,
and (iii) paying any expenses related thereto. Verizon shall give prompt written notice to
Adelphiaof.any proposed. adjustment or assessment of any. Transaction Taxes. with respect to the
transactions contemplated hereby and in the AncillaryAgreements. Inanyproceedings, whether
formal or informal, Verizon shall pennitAdelphiato participate and control the defense of such
proceeding, with respect to such .Transaction .Taxes .and shall. take all actions and execute all
documents required toallo'r\'Sl1chparticipation. . Verizon shall not negotiate a settlement or
compromise of any Transaction Taxes without the written consent of Adelphia, which consent
shall not be unrea.sonablywithheld.
14.5 Tax Prorations.. Asto the System orthe Acquired Assets acquitedbyAdelphia,
Verizon and Adelphia shall apportion the liability for real and personal property taxes, ad
valorem taxes, franchise fees or taxes ("Periodic Taxes") for all TaXable periods including but
not ending on the Closing Date (all such periods of time being hereinafter called "Proration
Periods"). The Periodic Taxes described in this Section 14.5 shall be apportioned between
Verizon and Adelphiaas. of the Closing Date, with Adelphia liable for that portion of the
Periodic Taxes equal to the Periodic Tax for the Proration Period multiplied bya fraction, the
numerator of which is the number of days remaining in the applicableProrCitionPeriod including
and after the ClosingDate,andthe'denomiIlator of which.isthetotal number~fdayscovered by
.. suchProrationPeriod.Verizon shallbe liable for that portion of the Periodic Taxes for a
Proration Period for which.Adelphia is notJiable under the preceding sentence. Adelphia and
Verizon shall payor be reimbursed for real and personal property taxes (including instances in
which such property taxes have been paid before the Closing Date) onthis prorated basis: If a
payment on a tax bill is due after the Closing, the Party that is legally required to make such
payment shall make such payment and promptly forward an invoice to the other party forits pro
rata share, ifany. If the other Party does not pay the invoice within 30 calendar days of receipt,
the ...amount. of such...... payment shall. ..bear ...interestat.....therateof8~peI:annuT~!heParty
.. responsil?le for paying a tax,d~scribedin thisSectjon 14.5 shall be responsible for . adiriinistering
the paymentof(andanyreimbursementfor)suchTax. . For purposes of this Section 14.5,the
ProrCitionPeriod for ad valorem taxes and real and pers()nal property taxes shall be the fiscal
period for which such taxes were assessed by the Tax jurisdiction.
14.6 Tax Refunds and Tax Treatment. Any Tax refunds (inCluding any interest related
thereto) received by Adelphia, its Affiliates or successors relating to Tax periods (or portions
, thereof) ending on ()r before the Closing Date shall be for the account of Verizon, and Adelphia
shallpayovertoVerizon any such am()unt within five business days of receipt thereof.
Adelphiashall,..if Verizon so.requests and atVerizon's direction and..expellse, flle.orcause its
Affiliates tome for. and. obtain any Tax refunds with. respect to Tax periods. or p()Itlons . thereof
. ending on or before the Closing. Date.. Provided that Verizonis notliquidated on or before 'the
~rst anniversary of the Closing. Date,. Adelphia and V erizonagree that this transaction.. shall be
treated as a taxable asset sale for all TaX purposes and no Party shall take a position that is
inconsistent with such sales treatment in any governmental filing, Tax Return or otherwise.
Indemnification
15.1 SUrVival of Representations.W arrantiesal1d Covenants.
(a) The representations and warranties contained in the second sentence of
Section 5.5, and Sections 5.6(b), 5.15 and 6.6 will survive the Closing and remain in full
force and effect indefinitely. The representations and warranties contained inSection
5.14 will SUrVive the Closing and remain infuII force and effect until the fifth anniversary
of the CloSingDate.'Eachof the .other. representations and warranties contained in
Article V and Article VI will terminate, without further action, on the date which is one
yearJollowiIlg the Closing Date (the "Expiration Date").
(b) This. Article XV will sUrVive any termination of this.. Agreement and the
Ancillary Agreements. ThisArtieleXVwill survive the Closing.anclshall remain in
effect:
(i) indefinitely, with respectto anyindemnifiable claim related to the
indemnitycontainedinSeetion IS. 7 or related t<> the breach of any covenant or
the breach of any representation or warranty which pursuant to See/ion 15.1(a)
.suririvesindefinitely;.'. .
(ii) . indefinitely, with respecUo any indemnifiable claim arising under
or related to Excluded Liabilities pursuant to Section 15.2(a)(iii), except for
Excluded Liabilities relating to environmental liabilities, which shall survive for
five years.from the Closing;
(Hi) . . indefinitely, with respect to any indemnifiable claim arising under
or. relat~~. t~ ~$sume4. Liabiliti~sP\Jrsuant to. .~ection .1,5.2(b)(#i);. and .....
.. 'Eiecution Copy
Confidential andJ'roprietary
surVival period for such representation orwarranty, or (y)totheextentbased on
IndemnifiableLossesactually incurred by an Indemnitee prior to the expiration of the
survival period for such representation or warranty . .
(a) Following the Closing andsubjectto the other sectionsofthisArticle XV,
Verizon will indemnify, defend and holdhannless Adelphia and its Affiliates and their
respective directors, officers, and agents from and against all IndemnifiableLosses
relating to, resulting from orarising out of:
(i) any inaccuracy.in any of the representations. and warranties made
by Yerizon in Article. V of this Agreement,
(ii) a breach byVerizon of any covenant or agreement ofVerizon
contained in this Agreement or any Ancillary Agreement, which covenant or
agreement requires performance by Verizon at or after the Closing, and
(iii)
(b). .. Following the Closing and subject to the other sections ofthis Article. XV,
Adelphia will indemnify, defend and hold harmless Verizon and its Affiliates and their
respective. directors; officers, agents, shareholders and partners from and against all
Indemnifiable lpsses relating to, r:esulting from or arising out of:
(i) any inaccuracy in any of the representations or warranties made. by
Adelphia in Article VI of this Agreement, .., ,
Oi) a breach by Adelphiaof any covenant or agreeinentof Adelphia
contained in this Agreement or any Ancillary Agreement, which covenant or
agreement requires performance by Adelphia at. or after the Closing, and
Executi~n....Copy
Conjidentiallfnd Proprietary
(i) "Indemnification Payment" means any amount of Indemnifiable
Losses required to be paidpur~uant to this Agreement,
or entity entitled to
(ii) "Indemnitee" means
indemnification under this Agreement,
(iii) "Indemnifying Party" means any Person or entity required to
provide indemnification under this Agreement, and
(iv) "Indemnifiable Losses" means any losses, liabilities, damages,
costs and expenses (including reasonable out-of-pocket attorneys' fees and
expenses)a:ctually incurred in connection with . any actions,~uits, demands,
asse~sments, judgments and settlements, in any such case reduced by the amount
of insurance proceeds recovered from any Person or entity with respect thereto.
(b) . As between Verizon and any Affiliate of Verizon, on the one hand, and
Adelphiaandany Affiliate of Adelphia, on the other hand, the remedies, rights and
obligations set forth in this Article XV, Section 14.3 (Indemnification for Taxes),
Sections J 1.2 and 11.3 (Termination) and the Ancillary Agreements will be the exclusive
remedies, rights and obligations with respect to the liabilities and obligations referred to
in Section 15.2 andanybreach of the representations, warranties orcovenants set forth in
this Agreement or. the AnciUary . Agreements. Without limiting the . foregoing, as a
material inducement to entering into this Agreement and the AncillaryAgreements, to the
fullest extentperrtIitted by Law, each. of the Parties waives any claim or cause of action
that it otherwiseinight assert, and any breach of the representations, warranties or
covenants setforth in this Agreement, except for claims or causes of action brought under
and subjectto the terms and conditions ofthisArticle X~ Section J4.3(Indemnification
for Taxes), Sections 1J.2 and 11.3 (Termination) and the AncillaryAgreements.
(c) Except as provided by Section J5.8, notwithstanding any other provision
of this Agreement..or.of . anY applicable Law, no .IndemniteewiU. beeqtitled to. make .a
claim again~tanIn<leII1Ilifyi{lgPlJItY fo.r Indemnifiable. Losses arising . outoforrelating to
any inaccuracy of repr~entaiions()rwarrantiesunderSectionsJ 5~2( a)(i) ot15.2(b)(i)
until the aggregate amount f .. maybe asserted for such IndemnifiableLosses
exceeds an amount equal t and only to the extent such amount, if any, (a)
. exceeds an amount equal and (b) is less than' the amount set forth in
SectionJ5.3(d).
... I .
.
,
its indemnification obligation.contained in Section lS.2(a)(ii) ClS.itrelates . to. the
covenantsbyVerizoncontained in the . first sentence of Section 7.8(b) and the last
sentence of Section 7.8(c), and (ii) its reimbursement obligations>containedin the first
sentence of Section 7~8(c)and Section7.8(d)(i).Except as provided in this Section 15.3,
any Party shall be obligated to provide indemnification for aU IndemnifiableLosses that
may be asserted pursuantto Sections 15.2(a)(ii), 15.2(a)(iii), 15.2(b)(ii), and1S.2(b)(iii),
as applicable~
(e) . Except with respect to the indemnification by Verizonof Indemnifiable
Losses relatingto the covenants by Verizon contained in the first sentence of Section
7.8(b) and the last sentence of Section7.8(c), no Indemnifying Party shallbe liable to or
obligated to indemnify any Indemnitee hereunder for any consequential, special,
multiple, punitive.. or exemplary.. damages including damages arising from loss or
interruption of business, profits, business opportunities or goodwill, loss of use of
facilities, loss of. capital,cIaims of customers, or any cost or expense related thereto,
except to the extent such damages have been recovered by a third person (including a
Governmental Entity) and are the subject of a Third Party Claim for which
indemnification is available under the express teonsof this Article XV.
(f) The Parties shall Cooperate with each other with.respectto resolving any
cIaimor liability with respecUo which one Party isobligated to indemnifytheother Party
hereunder, including by making commercially reasonable efforts to mitigate or resolve
any such cla.imor liability.
(a) . If any Indemnitee receives notice of the assertion of any claimorof.the
commencement of any action or proceeding byany Person or GovemmentalEntitythatis
not a party to this Agreement (a ''Third Party Claim") against such> Indemnitee, with
respect to which an Indemnifying Party is obligated to provide indemnification under this
Agreement, the Indemnitee will give such Indemnifying Party reasonably prompt written .
notice thereof, but in any event notIater than 10 calendar days after receipt of notice of
such Thirdrarty Claim; provided, however,> that the . failure()fthe~demnit~~()l1otifythe
Inde.mnifyillg .,.PaI1y:.shall,J>nly. relieve the ..Indelll11ifying..,..p~y, fromits,qobligatio~l...to
indemnify the Indeinnitee.pursuantto this Article XV to the extent that the Indemnifying
Party is materially prejudiced by such failure (whether asaresult of the forfeiture of
substantiverights or defenses or otherwise). Upon receipt ofnotificationofaThirdParty
Claim,the Indemnifying Party shall be entitled, upon written notice to the Indemnitee; to ..'
assume thejnvestigation and defense thereof. Whether or not the . IndemnifyiIlg Party
elects to assume the investigation and defense of any Third Party Claim, the Indemnitee
shallhayethe right to employ separate counsel and to. participate.in the . investigation and
defense thereof; provided,. however, that the Indemnitee shall pay the fees. and
disbursements of. such.. separate . counsel unless ... (i) .theemploYIlleIlt of such separate
counsel has been specifically authorized in writing by the Indemnifying Party.. (ii)the
Indemnifying Party has failed to assume the defense of such Third Party Claim within a
reasonable time after receipt. of notice thereof. or.(iii) the named parties to the pr()ceeding
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in which such claim, demand~.action or cause of action hasbeenllSsertedinc16d~both the
Indemnifying Party and such Indemnitee and, int~ereasonable judgment of counsel to
such Iridemnitee, there exists one or more defenses that maybe available. to the
Iridemnitee that . are . in conflict with those available to the Indemnifying Party.
Notwithstanding the foregoing, the Indemnifying Party shall not be liable for the fees and
disbursements of more than one counsel for aHIridenmified PartiesinconIlection with any
one proceeding or any similar or related proceedings arising from. the same general
allegations or circumstances. Without the prior written consent of the Indemnitee, the
Indemnifying Party will not enter into any settlement of any Third Party Claim that would
lead to liability o(create anyflnancial Or other obligation on the part of the Indemnitee
unless such settlement inc1udesasan unconditionaltenn thereof the release of the
Indemnitee from all liability in respect of such Third Party Claim. If a settlement offer
solelyJor money damages is made by the applicable third part yc1aimant, and the
Indemnifying Party notifies the Indemnitee in writing of the Indemnifying Party's
willingness to . accept the settlement offer and pay the amount called for by.. such offer
without reservation of any rights or defenses against the Indemnitee, the Indemnitee may
continue to contest such claim, free of any participation by the Indemnifying Party,and
the .. amount of . any ultimate liability with. respect. to. such Third Party Claim ... that the
Indemnifying Party has an obligation to pay hereunder shall be li!TIited to the lesser of (A)
the amount oLthe settlement offer that the Indemnitee declined to accept plus the
Indemnifiable Losses of the. Indemnitee relating. to. such Third Party Claim through. the _
date of its rejection of the settlement offeror(B) the aggregate Iridemnifiable Losses of
the Indemnitee with respect to such claim.
. . ,,-.,
(b) ... .. Any claim by an Indetnniteeon account of an Indernnifiable Loss that
does not result Jroma Third Party Claim will.be asserted by giving .the Indemnifying
Party reasonably prompt written notice thereof, but in any event not later than 30
calendar days after the incurrence thereof, and the Indemnifying Party will have a period
of 30 calendar days within which to respond in writing to such claim. If the
Indemnifying Party does not so respond within such 30 calendar day period, the
Indemnifying Party will be deemed to have rejected such claim, in which. event the
In. .d. e..mn. ... it. e.e.......w..,...i..l.l.. b...efr.e. e. ..to. p.. ...u..rs.u...e.... su...c...h..... r.e.m. e.di.e... s...as... m.. a.ybeavailableto...t. h..e Indemnitee 9D
.. . . .
the te~sllIl~subjc:cttoJl1~~r(),,-isionsof thisArti~le XV. ..
.... <Execution COpy
Confulentia(and Proprfetary.
IndemnifyingParty against any such third party onaccountof~aidIndenmification
Pa~ent. will be subrogated. and .. subordinate<i in . right . of payment to the Indemnitee 's
rights against such third party. Without limiting the generality or effect of any Other
provision of this ArlicleXV, each such Indemnitee and Indemnifying Party will duly
execute upon request all instruments reasonably necessary to evidence and perfect the
above.,.described subrogation and. subordination rights.
15.5 No Indemnifiable Claims Resultin~ From Governmental Entitv Action. Adelphia
has no indemnitiable or otherwise compensable claim that any of Verizon'srepresentations or
warranties in Article V is inaccurate, or that any covenant or agreement has been breached, if
such claim is predicated on any Law enacted..or. issued by a Governmental Entity after the
Closing and that is effective retroactively for periods oftime prior to the Closing.
(a) Notwithstanding anything in this Agreement tathe contrary; Verizon shall
have no obligation to defend, indemnify or hold harmless Adelphia or any of its Affiliates
from damages, costs or expenses resulting frornanyobligation, suit C>f proceeding based
... upon any claim that any activity. subsequent to the. Closing Date engaged in by Adelphia,
a customer of Adelphia'sor . anyone claiming under Adelphia constitutes director
contributory infringement, misuse or misappropriation of orinducement to infringe: any
Third Party Intellectual Property.
(b) .. Adelphiashall defend, indemnify andhold hannlessVerizon and any of
its Affiliates. from and against any and all Indemnifiable Losses resulting from any
obligation, proceeding or suit based upon any'c1aima1legingor asserting direct or
contributory infringement; misuse or misappropriation of or inducement to infringe by,
Verizon arany of its Affiliates of any Third Party IntellectualPropertyto the. extent that
such claim is based on, or would not have arisen but for, activity conducted or engaged in
subsequent to the Closing Date by Adelphia, a customer of Adelphia's or anyone
claiming underAdelphia.
-". ".'.' . ',,'
(a) Adelphia shall indemnifyandholdhairnIessVerizoI1, each of its Affiliates
holding AdeIphia Common Shares obtained hereunder and each other person who
controls Verizon within the meaning of the Securities Act against any In<iemnifiable
Losses, to which any such Indemnitee may become subject under the Securitie& Act, the
Securities and Exchange Act of 1934, as amended, or any other applicable securities
Law, insofar as such Indemnifiable Losses arise out of or are based tiponanyuntrue
statement or alleged untrue statement of any material fact contained in the Registration
Statement, any prelilI1inaryprospect1.1s, final prospectus orsummaryprospectus contained
,therein, orany amendment or supplementthereto. or any omission or allegedorrllssion to
state therein a material fact 'required to. be stated therein or necessary to make the,
statementS.therein notlI1isleading; provided, however, that Ac:te1phia shall notbe liable in
any such case to the extent that any. such IndemnifiableLosses arise out of or is based
solely. upon . an untrue . statement or alleged untruestatementoroinissionor.alleged
omission made in the Registration.. Statement, .any.such prelirninar~prospectus, .final
.. prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity. with information furnished. to Adelphiaby or .on. . behalf. of . Verizon or any
Affiliate of Verizon for use in the preparation thereof. .
(b) Verizon shall indemnify and hold harmless Adelphia,eachdirector of
Adelphia, each officerofAdelphia that signs the Registration Statement and each other
person if any, who controls Adelphiawithin the meaning of the SecuritiesAct,with
respect to any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any omission
or alleged omission to state therein a material fact required to be stated therein or
necessary to make. the statements therein not misleading, but only to the extent that such
statement or alleged. statement or omission was made in. reliance upon and in conformity
with written informationfurriishedto Adelphia by or on behalf ofVerizon specifically fOr
use in the preparation of the Registration Statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement.
15.8 Inapplicability to Taxes. Except as provided expressly in this Article .XV,this
Article XV shall not apply with respect to indemnification of the Parties for Taxes, which
liability shall be subject toArticleXIV hereof.
16.1 Expenses, Except as otherwise expressly provided for elsewhere in this
Agreement, each Party hereto. shall pay. its own expenses and costs relating to . the negotiation,
execution and perfonnance of this Agreement. Verizon and Adelphia shall each bear all of its
own costs and expenses incurred in securing the appropriate governmental. approvals 10 the
assignment of the AcquiredContracts. Adelphia, shall pay all HSR Act filing fees~. . .
VerizonMedia Ventures Inc.
Clo VerizonCommuIiications Inc.
1095.. A venue of the Americas
NewYork,New'york 10036
Attn: · Executive Director -'-
...Corporate Development
Fax Number: (212)597-2741
With a copy to:
Verizon Communications Inc.
1095 A venue of the Americas
New York., New York 10036
Atto: Associate General Counsel-
Strategic Transactions
FaxNumber: (212) 764..2432
Adelphia Communications Corporation
One North Main Street
Coudersport,Pennsylvania ,16915~ II
Attn: Colin Higgin
Fax:Nuinber:(814) 274-6586
, 16.6. Countetparts:Third Party Beneficiaries. This Agreementmaybeex~uted in one
or more counterparts, each. of which. shall. be deemed an original but. all of which together shaH
constitute one and the. same instrument. No provision of this Agreeme~t, other than as expressly
provided inthe indemnificati()n provisions of Articles XIV and XV, is intended to (i) confer upon.
any Person other than the Parties hereto and their successors and permitted assigns, any rights or
remedies herel1nder,(ii)relieveor discharge the obligation or liability of any third party or (iii)
give any third party any right of subrogation or action against any Party.
16.7 Entire Asrreement. This Agreement, the Ancillary Agreements, the Non-
Disclosure Agreement, the Lease AgreementsandthePole Attachment and Conduit Occupancy
Licensing Agreements, embody the entire agreement and understanding between Verizon and
Adelphia withrespect to the subject matter hereOf and supersede all priora~reements and
understandings related to the subject matter hereof. There are no representations, warranties;
covenants, promises Or agreements on the part of any Party to the other hereto which are not
explicitly set forth herein.
.... .i.ExecutionCopy
Con.fid~ntial antJProprietary
16.8 Modifications. Any modification, amendmentor waiver of or withrespect to any
provision ofthisAgreementor any agreement; instrument. or docurnentdelivered pursuant hereto
shall not be effective unless it shall be in writing and signed by Verizon and Adelphia and shall
designate specifically the terms and provisions so modified.
16.9 . . AssimmentandBinding:EffecLThis Agreement shall be binding upon and inure
to the benefit of the Parties hereto and their respective successors and permitted assigns, but
(except as provided for in this Section 16.9)neither this Agreement nor any of therigl1ts,
interests or obligations hereunder shall be assigned by AdelphiaorVerizon without the prior
written consent of the other. Notwithstanding the previous sentence, (i) Verizon may assign this
Agreement or any interest herein (a) iiLconnection with a change of control, merger or
reorganization of Verizon or a sale of all or substantially all of Verizon's assets or (b) to any
AffiliateofVerizon, provided thattheassigneeofVerizon agrees in writing to be bound by the
provisions of this Agreement, and(ii) Adelphia may assign this Agreement or any interest herein
to any Affiliate ofAdelphia provided that Adelphia shall continue lobe responsible for the
obligations containe(}iIl this Agreemeritand the Ancillary AgreeIIl. ents;
, - .-- - .' -'- , . '- - - ,- -"-.' ",.
. - --- ,,-,.-. '. - ., '-...-, - ,-, .
. ".- .
16..11' POblicAnnouncements: Confidentiality. V erizonand Adelphiawill consultwith
.eachotherbeforeissui.ng or prior to the issuance by any Affiliate of, and. will provide each o. th.er
< the opportunity to review and comment upon, any press release or other public statements (or
. relevant portions thereof) relating to the transactions contemplated by this Agreement and shall
not issue,and shall ensure that theirrespective Affiliates shall not issue, any such press release or
make~anysuchpublic statement prior to such consultation, except as may l>erequired by
applicable.. Law ,'icourtprocess or.. by obligations. pursuant ... to .. any. listing agreement with. any
natiol1als~curitiesexchange. Each Party also agrees that it will not; directly or indirectly, except
to,theexterit required by Law or Court Order (providc:~ priortimely notice has been provided to
., .
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Conjidentialan.d Proprietary
the otherPartytopennit such Party to limit such disclosure or toseek appropriate protective
orders), make use of or divulge; or permit any of its agentS, employees or Affiliates to make USe
of ordivulge,any tenns or conditions of this Agreement or the Ancillary Agreements. The
obligations contained in t~is. Section 16~11. are in addition to and independent of the obligations
contained in the Non"Disc1osureAgreement
16;12 Right to Specific Performance. The Parties acknowledgethatthe uniquenature.of
the transactions contemplated by this Agreement may render money damages an inadequate
remedy for the breach by either Party of its obligations under this Agreement. Each Party agrees
thatin the event. of such breach, (i) the non-breaching Party may, upon proper action instituted
by it, be entitled to. seek.a decree of specific performance of this Agreement, and (ii) such rights
are cumtllative and in addition to any other remedy to which the Parties maybe entitled at law or
equity.
16.13 Bulk Sales Laws. The Parties waive compliance with applicableJaws under any
version of Article 6 of the Uniform Commercial Code adopted by any state or any similar law
relating to thesaIe of inventory, equipment or other assets in bulk in connection with thesaIe of
theSystem.
[Remainder of page. intentionally left blank.. Signature pages follow.]
IM\III~ WH~ot. lbOPII'Ii<s. f><lina "",,\111& 1l1o~ aul~ ""thC1lzed
~..,;i."" 13vcOdi:- ibi~ ".....1\..".. oflll/lcl&" firsl.1>Cl'It wn\l....
~.
By:.. .. ....... .. .. ... . ... ......... .... . ...
=-_.:. ~y,,~
~
AllW}Il#.COMWuN1CAnQNS C01tPOllAnON .
'&~
NlIIlc:
Title:
-
---
V21170)(WEDlA vENTURES INC.
AlliUHlA CONMUNlc.\UONS CQJtPOJAnON
:~~.~
~
-;
. .. ... ..E~eCutionCopy
Conjidentitll antl ProPrietary
.CityofClearwater
City of SLPetersburg
City of Ounedin
City of OldsII1ar
City of Tarpon Springs
City of Safety Harbor
City of SeminQle
City of Largo
Pinellas County.
. This ASSUMPTION AGREEMENT(th~"Agreement")isente(ed into as of[.],
2oo[e] (the "Effective Date") by and between VerizonMediaVenturesJnc.,apelaware
("Seller"), and Adelphia Communications COIporation,aDelawarecorporation
WHEREAS, pursuant to .that certain Asset Purchase Agreement (the "Asset
Purchase Agreement"), dated as of December 17, 2001, by and between SellerandBuyer,Buyer
has agreed to assume, pay, perform and discharge when due,the.AssumedLiabilities; and
WHEREAS, all capitalized terms not otherwise defined herein shall have the
respective meanings ascribed thereto in the Asset Purchase Agreement.
.. Nbw, THEREFORE, in consideration of the premises, the tennsandconditions
setforth herein aild in the Asset Purchase Agreement, the mutualbenefits to be gained by the
performance hereofand other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereto agree that, as of the EffectiveDate,Buyer
hereby assumes and agrees to pay, perfonnand discharge when due, the AssUlned Liabilities.
This Agreement shall be governed by, and construed in accordance with; the J~ws
of the State of New York without giving effect to principles of conflict of laws. This Agreement
may be executed in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and thesame instrument.
ADELPHIA COMMUNICATIONS CORPORATION
This BILL .OF SALE. AND. ASSIGNMENT AGREEMENT. (this "Bill of Sale"),
is entered into as of[e],2oo[e], by and between VerizonMediaVenturesJnc., a Delaware
corporation (the "Seller"), for the benefit of Adelphia Communications. Corporation, aDelaware
corporation (the "Buyer"). .
WIT N E SSE T H:
WHEREAS, pursuant to that certain Asset Purchase Agreement (the "Asset
Purchase Agreement"), dated as of December 17,2001, by and between Seller and Buyer, Seller
has . agreed to sell, assign, transfer, convey and deliver to Buyer for the consideration specified
therein, and Buyer has agreed to purchase, assume and acquire from Seller all of Seller's right,
title and interest in, to and under the Acquired Assets as the same shall existoD the dateberc:of;
. and . ..' ... ...
WHEREAS, all capitalized tenns not otherwisedetined herein shall have the
respectivemeanings~cribed thereto in the Asset Purchase Agreement.
NOW, THEREFORE, in. consideration of the premises,thle consideration
specified in the Asset Purchase. Agreement, the assumption of the Assumed Liabilities pursuant
to the Asset Purchase Agreement and other good and valuable consideration, the receipt 'and
sufficiency of which are hereby acknowledged,.. Seller herebysells,assigns,transfers,conveys
and delivers to Buyer, all oCSeller's right, title and interest in,toand under the Acquired Assets
as. the. same shall exist on the date .hereof.
EXCEPT ASSPECIFICALL Y SET FORTH INJlIEASSETPURCHASE
AGREEMENT OR llf THE ANCILLARY AGREEMENTS, SELLER DOES NOT MAKE
ANYREPRESENTATIONORW ARRANTYAS TO ANY. MATTER, EXPRESS OR
IMPLIED,INCLUDING ANY EXPRESS OR IMPLIED WARRANTY OF
MERCHANTABILITY OR .FITNESS FOR A<PARTICULAR PURPOSE, .WARRANTY
. - -, - .
AGAINST INFRINGEMENTORANY.OTHERW ARRANTY AS TO THE CONDITION .OR
OPERATION or ANY OFTHE A~QUIREDASSETS.
VERIZONMEDIA VENTURES INC.
By:
Name:
Title:
..AI>ELPHIA COMMUNICA nONS CORPORATION
FCC 394
APPLICATION FOR FRANCHISE AUTHORITY
CONSENT TO ASSIGNMENT OR TRANSFER OF CONTROL
OF CABLE TELEVISION FRANCHISE
March 7, 2002
EXHIBIT 2
(Part II, Q. 2)
[Indicate on an attached exhibit any plans to change the current terms and conditions of
service and operations of the system as a consequence of the transaction for which
approval is sought.]
Adelphia does not currently have any plans to change the service and operations of the
system,
FCC 394
APPLICATION FOR FRANCHISE AUTHORITY
CONSENT TO ASSIGNMENT OR TRANSFER OF CONTROL
OF CABLE TELEVISION FRANCHISE
March 7, 2002
EXHIBIT 3
(Section II, Q. 1)
[Section II, TRANSFEREE'S/ASSIGNEE'S LEGAL QUALIFICATIONS. If Other,
Describe in an Exhibit.]
Assignee is a limited liability company formed in Delaware on August 11, 1998. Its
registered agent in Delaware is Corporation Service Company, 2711 Centerville
Road, Suite 400, Wilmington, DE 19808.
FCC 394
APPLICATION FOR FRANCHISE AUTHORITY
CONSENT TO ASSIGNMENT OR TRANSFER OF CONTROL
OF CABLE TELEVISION FRANCHISE
March 7, 2002
EXHIBIT 4
(Section II, Q. 7)
[Do documents, instruments, agreements or understandings for the pledge of stock of the
transferee/assignee, as security for loans or contractual performance, provide that; (a)
voting rights will remain with the applicant, even in the event of default on the
obligation; (b) in the event of default, there will be either a private or public sale of the
stock; and (c) prior to the exercise of any ownership rights by a purchaser at a sale
described in (b), any prior consent of the FCC and/or of the franchising authority, if
required pursuant to federal, state or local law or pursuant to the terms of the franchise
agreement will be obtained?]
The answer is in the negative because there are no documents, instruments,
agreements or understandings for the pledge of Adelphia stock, or the stock of its
subsidiaries, as security for loans or contractual performance.
FCC 394
APPLICATION FOR FRANCHISE AUTHORITY
CONSENT TO ASSIGNMENT OR TRANSFER OF CONTROL
OF CABLE TELEVISION FRANCHISE
March 7, 2002
EXHIBIT 5
(Section III, Q. 2)
[Attach as an Exhibit the most recent financial statements, prepared in accordance with
generally accepted accounting principals, including a balance sheet and income statement
for at least one full year, for the transferee/assignee or parent entity that have been
prepared in the ordinary course of business, if any such financial statements are routinely
prepared. Such statements, if not otherwise publicly available, may be marked
CONFIDENTIAL and will be maintained as confidential by the franchise authority and
its agents to the extent permissible under local law.]
Attached are the Form 10-K for 2000 and the Form 10-Q for the third quarter 2001 filed
with the Securities and Exchange Commission by Adelphia Communications
Corporation,