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EXHIBIT 10.40
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "AGREEMENT") is made and entered into as
of February 14, 2000 by and between Charter Communications, Inc., a Delaware
corporation (the "COMPANY"), and the holders listed on the signature pages
hereto (each, a "HOLDER").
PRELIMINARY STATEMENT
A. The Company is the manager of, and owns Common Units of, Charter
Communications Holding Company, LLC, a Delaware limited liability company
("CHARTER LLC").
B. Charter LLC and the Holders are parties to a Purchase and
Contribution Agreement, dated as of June 29, 1999 (as amended, the "PURCHASE
AGREEMENT").
C. As of the date hereof, in connection with the closing of the
transactions pursuant to the Purchase Agreement, Charter LLC is issuing Class C
Common Units of Charter LLC ("CLASS C COMMON UNITS") to BCI (USA), LLC and
Xxxxxxx X. Xxxxxxx (collectively, the "BRESNAN HOLDERS") and Blackstone BC
Capital Partners L.P., a Delaware limited partnership, Blackstone BC Offshore
Capital Partners L.P., a Cayman Islands exempted limited partnership and
Blackstone Family Media Partnership III L.P., a Delaware limited partnership
(collectively, the "BLACKSTONE HOLDERS"). The Bresnan Holders and the Blackstone
Holders desire to have the right to exchange such Class C Common Units for
shares of the Company's common stock.
D. As of the date hereof, in connection with the closing of the
transactions pursuant to the Purchase Agreement, CC VIII, LLC, a Delaware
limited liability company ("CC VIII") is issuing Class A Preferred Units of CC
VIII ("CLASS A CC VIII UNITS") to TCID of Michigan, Inc., a Nevada corporation,
and TCI Bresnan LLC, a Delaware limited liability company (collectively, the
"TCI HOLDERS"). The TCI Holders desire to have the right to exchange such Class
A CC VIII Units for shares of the Company's common stock.
E. This Agreement is the Exchange Agreement described in Section
5.16(a) of the Purchase Agreement and supersedes Exhibit F to the Purchase
Agreement.
NOW, THEREFORE, in consideration of the respective covenants and
agreements of the parties and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged by each party), the
parties hereby agree as follows:
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Section 1 Definitions.
1.1. Terms Defined in this Section. For purposes of this Agreement,
the following terms shall have the following meanings:
"AVERAGE TRADING PRICE" means, with respect to any publicly traded
securities, as of any Closing Date, the average for the twenty full Trading Days
preceding such date of:
(i) the last reported sale price, regular way, as reported on the
principal national securities exchange registered under Section 7 of the
Exchange Act (or any successor provision of law) on which such securities are
listed or admitted for trading, or
(ii) if such securities are not listed or admitted for trading on
any national securities exchange, the last reported sale price, regular way, as
reported on the Nasdaq National Market (or any successor system) or, if such
securities are not listed on the Nasdaq National Market, the average of the
highest bid and lowest asked prices on each such Trading Day as reported on the
Nasdaq Stock Market, or
(iii) if such securities are not listed or admitted for trading on
any national securities exchange, the Nasdaq National Market or the Nasdaq Stock
Market, the average of the highest bid and lowest asked prices on each such
Trading Day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization.
For purposes of determining the "Average Trading Price" of any
securities,
(iv) the applicable sale price or bid and asked prices of such
securities on any day prior to any "ex-dividend" date or any similar date
occurring prior to such Closing Date for any dividend or distribution (other
than a dividend or distribution contemplated by clause (B) of paragraph (ii)
below) paid or to be paid with respect to such securities shall be reduced by
the fair value of the per share amount of such dividend or distribution, and
(v) the applicable sale price or bid and asked prices of such
securities on any day prior to (A) the effective date of any subdivision (by
stock split or otherwise) or combination (by reverse stock split or otherwise)
of such securities occurring prior to such Closing Date or (B) any "ex-dividend"
date or any similar date occurring prior to such Closing Date for any dividend
or distribution with respect to such securities to be made in such securities or
securities that are convertible, exchangeable, or exercisable for such
securities shall be appropriately adjusted, as determined in good faith by the
Board of Directors of the Company, to reflect such subdivision, combination,
dividend or distribution.
"BACK-TO-BACK OBLIGATION" means any liability or obligation of
Charter LLC to the Company, the terms of which are substantially equivalent to a
liability or
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obligation of the Company to any third party, as contemplated by Clause (b)
of Article Third of the Certificate of Incorporation.
"BUSINESS DAY" means any day other than a Saturday, Sunday, or other
day on which commercial banking institutions in New York, New York are required
or authorized by law to remain closed.
"CERTIFICATE OF INCORPORATION" means the Restated Certificate of
Incorporation of the Company as in effect on November 12, 1999.
"CLASS A STOCK" means the Class A Stock of the Company as set forth in
the Certificate of Incorporation.
"CLASS B STOCK" means the Class B common stock of the Company as set
forth in the Certificate of Incorporation.
"CLOSING" means the consummation of any exchange of all or a portion
of the Exchangeable Units for shares of Publicly Traded Stock in accordance with
this Agreement.
"CLOSING DATE" means, with respect to any Closing, the day on which
such Closing occurs.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON UNITS" means any Unit denominated "Common", including without
limitation Class A Common Units, Class B Common Units, Class C Common Units, and
any Units denominated "Common" that may be issued by Charter LLC, as set forth
in the LLC Agreement, and any other securities into which such Common Units may
thereafter be changed, converted, or exchanged (other than pursuant to an
exercise of the Exchange Option or a similar option).
"COMPANY'S SEC REPORTS" means all forms, reports, and similar
documents filed by the Company with the SEC.
"CONVERTIBLE SECURITIES" means (subject to Section 2.3(b)(7)) options,
warrants, and other similar instruments issued by the Company that are
exercisable or convertible for shares of common stock of the Company.
"EXCHANGEABLE UNITS" means (i) any Class C Common Units acquired by
the Bresnan Holders or the Blackstone Holders under the Purchase Agreement; (ii)
any Class A CC VIII Units acquired by the TCI Holders under the Purchase
Agreement; (iii) any Class C Common Units acquired by the TCI Holders upon the
exchange of Class A CC VIII Units for such Class C Common Units; (iv) any
securities of the Company distributed on, with respect to, or in exchange for
the Class C Common Units referred to in clauses (i) or (iii) as a unit dividend,
unit split or reclassification, and any other securities into which such
Exchangeable Units may thereafter be changed, converted or exchanged (other than
pursuant to an exercise of the Exchange Option or a similar option); and (v) any
securities of CC VIII distributed on, with respect to, or in exchange
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for the Class A CC VIII Units referred to in clause (ii) as a unit dividend,
unit split or reclassification, and any other securities into which such
Exchangeable Units may thereafter be changed, converted or exchanged (other than
pursuant to an exercise of the Exchange Option or a similar option).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, or any
successor federal statute, and the rules and regulations of the SEC promulgated
thereunder, in each case as amended from time to time.
"EXCHANGE OPTION" means the right and option of any Holder to exchange
such Holder's Exchangeable Units for Publicly Traded Stock pursuant to Section
2.1.
"EXCHANGING HOLDER" means any Holder exercising its Exchange Option
with respect to its Exchangeable Units.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States of America, applied in a manner consistent
with that used in the preparation of the financial statements included in the
Company's SEC Reports.
"GOVERNMENTAL AUTHORITY" means any federal, state, or local
governmental authority, including any court or administrative or regulatory
agency.
"HOLDER GROUP" the Blackstone Holders, the TCI Holders or the Bresnan
Holders, as the case may be.
"INVESTMENT BANKER'S OPINION" means the opinion of an investment
banking or valuation firm of nationally recognized standing that is not
affiliated with the Company.
"LLC ACT" means the Delaware Limited Liability Company Act, 6 Del. C.
Section 18-101 et seq., as the same may be amended from time to time.
"LLC AGREEMENT" means that certain Amended and Restated Limited
Liability Agreement for Charter LLC, dated the same date as this Agreement, as
amended from time to time (provided that any amendment that results in the
deletion or renumbering of any section specifically referenced herein shall
result in an automatic modification to this Agreement to delete or renumber such
section reference, as appropriate).
"MEMBER" means each Person who is listed on Schedule A to the LLC
Agreement as a Member, and any additional or substitute Member admitted to
Charter LLC in accordance with the terms of the LLC Agreement.
"MEMBERSHIP INTEREST" means a Member's entire limited liability
company interest in Charter LLC including the Member's right to share in income,
gains, losses, deductions, credits, or similar items of, and to receive
distributions from, Charter LLC pursuant to the LLC Agreement and the LLC Act.
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"MIRROR SECURITY" means any equity security issued by Charter LLC and
held by the Company, the terms of which are substantially equivalent to a
security of the Company issued to any third party, as contemplated by Clause (b)
of Article Third of the Certificate of Incorporation.
"PERSON" means any individual, corporation, partnership, limited
partnership, limited liability partnership, limited liability company, trust,
association, organization, or other entity.
"PREFERRED UNITS" mean any Units denominated "Preferred" including the
Class A Preferred Units, as set forth in the LLC Agreement.
"PUBLICLY TRADED STOCK" means (i) the Class A Stock of the Company, if
it is nationally traded or (ii) any other series of common stock of the Company
that is publicly traded on the Closing Date except that, if more than one class
or series of shares of common stock of the Company is publicly traded on the
Closing Date, "Publicly Traded Stock" means:
(x) if more than one class or series of shares of common stock of
the Company is publicly traded on the Closing Date but only one class or series
of shares of common stock of the Company is nationally traded on the Closing
Date, then "Publicly Traded Stock" means shares of that class or series of
common stock of the Company that is nationally traded on the Closing Date; and
(y) if more than one class or series of shares of common stock of
the Company is nationally traded on the Closing Date, then "Publicly Traded
Stock" means shares of that class or series of common stock of the Company that
the holders of Class A Stock of the Company as of the closing of the Purchase
Agreement (the "CURRENT STOCKHOLDERS") hold together with all such rights and
preferences as the Current Stockholders are entitled to receive; provided that
if the Current Stockholders are entitled to elect whether they shall retain the
Class A Stock or exchange such stock for one or more different classes or series
of shares of common stock of the Company that are nationally traded, the Holders
shall elect at such time as the Current Stockholders are required to elect on
comparable terms and conditions, which classes or series of Company stock the
Holders will be entitled to receive in the event such Holder exercises its
Exchange Option. In the event the Current Stockholders are entitled to make such
an election as described in the preceding sentence, the Company shall provide
the Holders with the same notice and information as required to be provided to
the Current Stockholders in connection with the election and the Holders shall
be required to provide written notice to the Company of such election within the
same time period as required of the Current Stockholders. In the event any
Holder fails to make a required election in the applicable time period, such
Holder shall irrevocably be deemed to have elected to receive the security which
the holders of a majority of the shares of Class A Stock to receive in such an
election.
For purposes of this definition of "Publicly Traded Stock", a class or
series of common stock is "nationally traded" if it is (A) registered under
Section 12 of the Exchange Act (or any successor provision of law), and (B)
listed for trading on any
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national securities exchange registered under Section 7 of the Exchange Act (or
any successor provision of law) or on the Nasdaq National Market (or any
successor system).
"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreements entered into by the Company and the Holders as of the date hereof.
"SEC" means the Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act or the Exchange Act.
"SEC REPORTS" means any form, report or similar document filed by the
Company with the SEC.
"SECURITIES ACT" means the Securities Act of 1933, or any successor
federal statute, and the rules and regulations of the SEC promulgated
thereunder, in each case as amended from time to time.
"TRADING DAY" means, with respect to any security, a day on which the
principal national securities exchange on which such security is listed or
admitted to trading, or the Nasdaq National Market or the Nasdaq Stock Market,
as applicable, if such security is not listed or admitted to trading on any
national securities exchange, is open for the transaction of business (unless
such trading shall have been suspended for the entire day) or, if such security
is not listed or admitted to trading on any national securities exchange, the
Nasdaq National Market or the Nasdaq Stock Market, any Business Day.
"UNITS" means units of Membership Interest issued by Charter LLC to
its Members which entitle the Members to the rights set forth in the LLC
Agreement.
1.2. Terms Defined Elsewhere in this Agreement. For purposes of this
Agreement, the following terms have the meanings set forth in the sections
indicated:
Term Section
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Agreement Preliminary Statement
Xxxxx Put Agreement Section 3
Blackstone Holders Preliminary Statement
Bresnan Holders Preliminary Statement
CC VIII Preliminary Statement
Charter LLC Preliminary Statement
Class A CC VIII Units Preliminary Statement
Class C Common Units Preliminary Statement
Company Introductory Paragraph
Current Stockholders Definition of Publicly Traded Stock
Exchange Value Section 2.3(a)
Holder Preliminary Statement
One-for-One Conditions Section 2.2(a)
TCI Holders Preliminary Statement
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1.3. Terms Generally. The definitions in this Agreement shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context requires, any pronoun includes the corresponding masculine, feminine,
and neuter forms. The words "include," "includes," and "including" are not
limiting. Any reference in this Agreement to a "day" or number of "days"
(without the explicit qualification of "Business") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action or notice
is to be taken or given on or by a particular calendar day, and such calendar
day is not a Business Day, then such action or notice shall be deferred until,
or may be taken or given on, the next Business Day.
Section 2 Exchange.
2.1. Right to Exchange.
(a) Subject to the terms and conditions of this Agreement, the
Company hereby grants to each Holder the right and option, exercisable from time
to time, on one or more occasions, to exchange all or any portion of its
Exchangeable Units for shares of Publicly Traded Stock; provided, however, if
the One-for-One Conditions (as defined in Section 2.2) are not satisfied as of
the Closing Date for a proposed exchange, the Holder shall not be able to
exercise its Exchange Option in connection with such exchange unless the Holder
is delivering a written notice of exercise with respect to all remaining
Exchangeable Units held by such Holder or unless the aggregate market value of
the Exchangeable Units proposed to be exchanged by such Holder exceeds
$10,000,000.
(b) Any Holder shall exercise its Exchange Option by delivering
written notice of exercise to the Company, specifying the portion of such
Holder's Exchangeable Units to be exchanged.
(c) Subject to Section 2.6, upon its receipt of notice pursuant
to Section 2.1(b), the Company shall be obligated to acquire the Exchangeable
Units specified in such notice and deliver to the Exchanging Holder the number
of shares of Publicly Traded Stock required to be delivered under Section 2.2 or
Section 2.3, and the Exchanging Holder shall be obligated to assign and transfer
to the Company such Exchangeable Units on the terms and conditions specified in
this Agreement.
(d) Notwithstanding anything to the contrary herein, each
Holder's right to exchange its Exchangeable Units pursuant to this Agreement and
the Company's obligation to effectuate such exchange shall be conditioned on the
Company's becoming reasonably satisfied that the issuance of Publicly Traded
Stock to the Holder in such exchange complies with applicable securities laws.
If in connection with a proposed exchange, the Company is not reasonably
satisfied that the issuance of such Publicly Traded Stock to the Holder complies
with applicable securities laws, such proposed exercise of the Exchange Option,
upon written notice by the Company to the Holder, shall be deemed to have never
been effected.
(e) Notwithstanding anything to the contrary herein, in the event
that a Holder's exchange of its Exchangeable Units pursuant to this Agreement
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would result in a violation of the ownership restrictions of the Communications
Act of 1934, as amended, and the Ownership Rules (as defined in the LLC
Agreement), the violation shall be remedied, as determined in the Company's sole
discretion, by (i) the Holder selling a sufficient number of shares of Publicly
Traded Stock to cure the violation; (ii) the Company taking such actions with
respect to its business or operations as are necessary to cure the violation,
provided that in no event shall the Company be obligated to take such actions;
or (iii) if proposed by a Holder, such Holder taking actions with respect to its
business or operations as are necessary to cure the violation; provided, however
that the Company shall not unreasonably withhold its consent to any remedy
proposed by a Holder that will adequately and promptly address the violation and
would not require the Company or any of its subsidiaries to divest any of its
properties or assets or to cease any of its business activities or to forego any
opportunity to acquire or expand any properties, assets or business activities
or otherwise adversely affect the Company's or Charter LLC's business,
operations or financial condition in any way or result in any significant
financial expense or tax disadvantage to the Company or Charter LLC. In the
event that the FCC lowers the permissible attribution percentages under its
Ownership Rules (as defined in the LLC Agreement), if requested by the Holder,
the Company will reasonably cooperate in good faith to assist the Holder in
taking appropriate and timely action to seek to insulate the Holder's interest
in the Company to the extent required (including, subject to the qualification
set forth below, issuing preferred non-voting stock on substantially the same
terms as the Publicly Traded Stock to the Holder in exchange for its Publicly
Traded Stock or permitting the Holder to form a special purpose corporation), or
the Holder, at its option, may take any other actions with respect to its
business necessary to comply with the new rules; provided that in no event shall
the Company or any of its subsidiaries be required to divest any of its
properties or assets or to cease any of its business activities or to forego any
opportunity to acquire or expand any properties, assets or business activities
or take any any action that would otherwise adversely affect the Company's or
Charter LLC's business, operations or financial condition in any way or result
in any significant financial expense or tax disadvantage to the Company or
Charter LLC in order to achieve such insulation; provided that if such
insulation is not achieved, the Holder shall divest the number of shares of
Publicly Traded Stock as is necessary to remedy the applicable FCC rule or
regulation at issue.
2.2. Exchange Ratio. The Exchanging Holder shall receive one share of
Publicly Traded Stock for each Exchangeable Unit being exchanged pursuant to
Section 2.1(a); provided, however, that if at the Closing Date, the One-for-One
Conditions (as defined below) are not satisfied, the number of shares of
Publicly Traded Stock that the Exchanging Holder will receive in exchange for
each Exchangeable Unit shall be determined pursuant to Section 2.3. On any date,
the "One-for-One Conditions" shall be deemed satisfied, if, on such date:
(a) Clause (b) of Article Third and Clauses (a)(ii) and (b)(iii)
of Article Fourth of the Company's Certificate of Incorporation have not been
amended so as to substantively modify the provisions thereof, and the Company is
in compliance in all material respects with those provisions;
(b) Sections 3.5.4 (to the extent the Section is applicable
because the Company is required to request Charter LLC to redeem its Units under
the
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Company's Certificate of Incorporation), 3.6.1, 3.6.4(b), 3.6.4(c) and 5.1.7 of
the LLC Agreement have not then been amended so as to substantively modify the
provisions thereof, and Charter LLC is in compliance in all material respects
with those provisions; and
(c) with respect to the Class A Preferred CC VIII Units, in
addition to the requirements set forth in (a) and (b) above, Section 3.6.3 of
the limited liability company agreement of CC VIII has not then been amended so
as to substantively modify the provisions thereof, and CC VIII is in compliance
in all material respects with those provisions.
2.3. Exchange Ratio if the One-For-One Conditions are not Satisfied;
Effective Number of Exchangeable Units.
(a) If the One-For-One Conditions are not satisfied as of the
Closing Date, the number of shares of Publicly Traded Stock to be issued in
exchange for any Exchangeable Units pursuant to this Agreement shall be that
number of shares with an aggregate Exchange Value as of the Closing Date equal
to the fair market value of such Exchangeable Units as of the Closing Date,
determined in accordance with Section 2.3(b). The "EXCHANGE VALUE" of each share
of Publicly Traded Stock issued at any Closing pursuant to this Agreement shall
be the Average Trading Price of such Publicly Traded Stock.
(b) The fair market value of any Exchangeable Unit shall be the
fair market value of all Common Units held by the Company as of the Closing Date
divided by the total number of Common Units held by the Company. For purposes of
this Section 2.3(b):
(1) Subject to adjustment as provided below in this Section
2.3(b) the fair market value of all of the Common Units held by the Company as
of the Closing Date shall be deemed to equal the aggregate value of all
outstanding shares of Publicly Traded Stock, with each such share being valued
at the Average Trading Price of a share of Publicly Traded Stock as of the
Closing Date.
(2) If on the Closing Date there are outstanding any
Convertible Securities (other than a Convertible Security for which the Company
holds a Mirror Security) for which the exercise price per share of Publicly
Traded Stock is less than the Average Trading Price of a share of Publicly
Traded Stock as of such Closing Date, then the fair market value of the
Company's Common Units as of the Closing Date shall be increased by the amount
by which the aggregate exercise price of all such Convertible Securities is less
than the aggregate value of all shares of Publicly Traded Stock issuable upon
the exercise or conversion thereof, with each such issuable share being valued
at the Average Trading Price of a share of Publicly Traded Stock as of the
Closing Date.
(3) If on the Closing Date the Company has any indebtedness,
liabilities, or obligations that would be required by GAAP to be reflected on an
unconsolidated balance sheet of the Company as of the Closing Date (other than
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deferred taxes, obligations for which there exists a Back-to-Back Obligation or
liabilities or obligations for which the Company is entitled to reimbursement
from Charter LLC), the fair market value of the Company's Common Units as of the
Closing Date shall be increased by the amount of such liability or obligation as
of the Closing Date, determined in accordance with GAAP.
(4) If on the Closing Date the Company has outstanding any
publicly traded equity securities (other than Publicly Traded Stock, Convertible
Securities required to be taken into account under Section 2.3(b)(2) and
publicly traded equity securities for which the Company holds a Mirror
Security), the fair market value of the Company's Common Units as of the Closing
Date shall be increased by the aggregate value of all such outstanding
securities as of the Closing Date, with such securities being valued at the
Average Trading Price of such securities as of the Closing Date.
(5) If on the Closing Date the Company has outstanding any
equity securities (such as the Class B Stock) (other than Publicly Traded Stock,
other publicly traded equity securities, Convertible Securities required to be
taken into account under Section 2.3(b)(2) and equity securities for which the
Company holds a Mirror Security), the fair market value of the Company's Common
Units as of the Closing Date shall be increased, without duplication, by the
aggregate market value of all such outstanding securities as of the Closing
Date. For purposes of this Section 2.3(b)(5):
(A) to the extent practicable, the market value of such
securities shall be the amount that would be distributed with respect to such
securities (or, if greater, any securities of the Company for which such
securities may be converted or exchanged) upon the liquidation of the Company if
the amount that would be distributed to the holders of the Publicly Traded Stock
upon such liquidation were equal to the aggregate value of all outstanding
shares of Publicly Traded Stock, with each such share being valued at the
Average Trading Price of a share of Publicly Traded Stock as of the Closing Date
(for example, a share of any class of common stock of the Company (such as the
Class B Stock) that has the same rights to liquidating distributions as a share
of Publicly Traded Stock shall be deemed to have a market value equal to the
Average Trading Price of a share of such Publicly Traded Stock, and a share of
non-convertible, non-participating preferred stock of the Company that is
entitled to a preference over the common stock of the Company upon liquidation
of the Company shall be deemed to have a market value equal to its liquidation
preference);
(B) if the market value of such securities cannot
practicably be determined under Section 2.3(b)(5)(A), the market value of such
securities shall be determined in good faith by the Board of Directors of the
Company; provided, however, that if the aggregate value of all such securities
exceeds $100,000,000, then the Board of Director's determination of the market
value of such securities shall be made in reliance on, and shall be supported
by, an Investment Banker's Opinion obtained by the Company not more than three
months prior to the Closing Date; and
(C) the value of any securities valued pursuant to
Section 2.3(b)(5)(B) shall be determined without regard to any discount or
premium
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for liquidity, control, minority interest, lack of marketability, restrictions
on transfer, or any other market factor.
(6) If on the Closing Date the Company has any assets (other
than the Company's Common Units, Back-to-Back Obligations, Mirror Securities,
goodwill or deferred tax assets), including cash, cash equivalents, or assets
used in the conduct of any business, then the fair market value of the Company's
Common Units as of the Closing Date shall be reduced by the fair market value of
such assets as determined in good faith by the Board of Directors of the
Company; provided, however, that if the aggregate value of all such assets
(other than cash and cash equivalents) exceeds $100,000,000, then the Board of
Director's determination of the fair market value of such assets shall be made
in reliance on, and shall be supported by, an Investment Banker's Opinion
obtained by the Company not more than three months prior to the Closing Date.
(7) Any exchange rights granted by the Company that entitle
the holder to exchange Common Units or Class A Preferred CC VIII Units for
shares of common stock of the Company pursuant to this Agreement or on valuation
terms substantially similar to those provided in 2.2 and 2.3, shall not be
deemed to be Convertible Securities or other equity securities of the Company
for purposes of Section 2.3(b)(2) or Section 2.3(b)(5).
(8) Without limiting the foregoing, for purposes of Section
2.3, (i) any outstanding securities of the Company with respect to which the
Company holds a Mirror Security shall be deemed to be of equal and offsetting
value to such Mirror Security and (ii) any obligation of the Company with
respect to which there exists a Back-to-Back Obligation or a contractual
reimbursement obligation from Charter LLC or any subsidiary thereof shall be
deemed to be of equal and offsetting value to such Back-to-Back Obligation or
reimbursement obligation.
(c) If the One-for-One Condition described in Section 2.2(c) is
not met, the number of Exchangeable Units that are Class A Preferred CC VIII
Units will be deemed to be such number that would have been issued to the TCI
Holders had such condition been met.
2.4. Time and Place of Closing.
(a) The Closing shall be held at the offices of Irell & Xxxxxxx
LLP in Los Angeles, California, on the date specified below:
(1) if the Exchanging Holder has requested registration for
sale to the public pursuant to the Registration Rights Agreement of the shares
of Publicly Traded Stock to be received by it at the Closing through the
exercise of its Exchange Option, then, at the Exchanging Holder's election, the
Closing shall take place following the effectiveness of the Company's
registration statement with respect to such shares and immediately prior to the
closing of the Exchanging Holder's sale of such shares in accordance with the
plan of distribution described in the registration statement; and
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(2) in all other cases, the Closing shall take place on the
tenth Business Day after the Exchanging Holder delivers its notice pursuant to
Section 2.1(b), or at such other time and place as the Exchanging Holder and the
Company may agree.
(b) The Exchanging Holder and the Company will cooperate so as
to permit all documents required to be delivered at or in connection with the
Closing to be delivered by mail, delivery service, or courier without requiring
either party or its representatives to be physically present at the Closing.
(c) Notwithstanding Section 2.4(a), if on the date on which the
Closing would otherwise be required to take place pursuant to Section 2.4(a)
there shall be in effect any order of or by any Governmental Authority that
prohibits, enjoins or makes unlawful the Closing, then the Closing shall be
postponed until a date, to be set by the Company on at least five Business Days'
written notice to the Exchanging Holder, as soon as practicable after such order
ceases to be in effect.
2.5. Closing Deliveries.
(a) Company's Deliveries. At the Closing, the Company will
deliver to the Exchanging Holder certificates evidencing the shares of Publicly
Traded Stock to be issued at the Closing.
(b) Exchanging Holder's Deliveries. At the Closing, the
Exchanging Holder will deliver to the Company the following:
(1) Certificate Evidencing Exchangeable Units. (a) If the
Exchangeable Units are then certificated, one or more certificates evidencing
the portion of the Exchanging Holder's Exchangeable Units to be transferred and
assigned at the Closing, and (b) duly executed assignments in form and substance
sufficient to effectuate the transfer of the portion of the Exchanging Holder's
Exchangeable Units to be transferred to the Company.
(2) Title Representations. A certificate to the effect that
the Exchanging Holder owns all Exchangeable Units to be exchanged at the
Closing, both of record and beneficially, free and clear of all liens,
encumbrances or adverse interests of any kind or nature whatsoever (including
any restriction on the right to vote, sell, or otherwise dispose of the
Exchangeable Units), other than those arising under applicable state and federal
securities laws and those arising under the organizational documents of Charter
LLC or the Company, and, upon the transfer of such Exchangeable Units pursuant
to this Agreement, the Company will receive good title to the Exchangeable
Units, free and clear of all liens, encumbrances, and adverse interests other
than those arising under the organizational documents of Charter LLC or the
Company.
(3) Investment Representations. A certificate to the effect
that:
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(A) Except as may be described in any registration statement
filed with the SEC under the Securities Act (including such registration
statement filed pursuant to the Registration Rights Agreement) with respect to
any of the shares of Publicly Traded Stock to be acquired at the Closing, it is
acquiring such shares with the intent of holding such shares for investment for
its own account and without the intent or a view to participating directly or
indirectly in, or for resale in connection with, any distribution of such shares
within the meaning of the Securities Act of any applicable state securities
laws.
(B) It acknowledges and agrees that shares of Publicly
Traded Stock are being issued to it in reliance on the exemption from
registration contained in Section 4(2) of the Securities Act and exemptions
contained in applicable state securities laws, and that they cannot be sold or
transferred except in a transaction that is exempt under the Securities Act and
those state acts or pursuant to an effective registration statement under those
acts or in a transaction that is otherwise in compliance with the Securities Act
and those state acts.
(C) It is an "accredited investor" within the meaning
assigned to such term under Regulation D promulgated pursuant to the Securities
Act (including an indication of the basis for such representation).
2.6. Exchanging Holder's Right to Rescind Exercise of Exchange Option.
(a) Any Exchanging Holder may elect to rescind its exercise of
its Exchange Option, in whole or in part, if:
(1) the Closing is postponed pursuant to Section 2.4(c) for
more than thirty days after the date on which the Closing would otherwise have
been required to take place, or
(2) The Exchanging Holder requested registration pursuant to
the Registration Rights Agreement of the shares of Publicly Traded Stock to be
received by it at the Closing, and the registration statement covering such
shares was withdrawn, such shares were withdrawn from inclusion in such
registration statement or such shares were excluded from such registration
statement in accordance with the terms of the Registration Rights Agreement.
(b) Any Exchanging Holder shall elect to rescind the exercise
of its Exchange Option pursuant to Section 2.6(a) by delivering written notice
of its election to the Company prior to the Closing. In the event of such a
rescission, the Exchangeable Units subject to the rescinded exchange shall be
deemed not to have been exchanged.
(c) An election by any Exchanging Holder to rescind the
exercise of its Exchange Option pursuant to Section 2.6(a), on one or more
occasions, shall not impair the Exchanging Holder's rights under this Agreement
to exercise its Exchange Option on any future occasion.
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Section 3 Exchange at Election of Company. The Company shall have the
right, by notice to any Holder at any time after the expiration of the Put
Period (as defined in the Put Agreement entered into by and between Xxxx Xxxxx
and the Holders as of the date hereof) (the "XXXXX PUT AGREEMENT") to require
such Holder to exchange its Exchangeable Units as to which such Holder has not
exercised its Put Option under the Xxxxx Put Agreement for Publicly Traded Stock
as provided in this Agreement; provided, however, that the Company will not be
entitled to require any Holder of a Holder Group to exchange their Exchangeable
Units provided in this Section 3 unless (x) such exchange can be accomplished in
a manner that does not cause aggregate adverse tax or economic consequences to
such Holder Group (taking into account any compensation to be provided to such
entities) in excess of One Million Dollars ($1,000,000); (y) the Company
receives the written consent of the applicable Holder Group; or (z) the Company
indemnifies such Holder Group from such adverse tax or economic consequences
specified in clause (x) above in a manner reasonably satisfactory to such Holder
Group.
Section 4 Other Covenants.
4.1. Prior Notice by the Company.
(a) The Company will deliver written notice to the Holders at
least fifteen Business Days prior to:
(1) the fixing of the record date to determine the holders
of shares of common stock of the Company entitled to receive any dividend or
other distribution (other than cash dividends payable out of earnings or earned
surplus and dividends payable solely in shares of common stock) or any right,
including the right to acquire any additional shares of stock of any class;
(2) the fixing of the record date to determine the holders
of shares of common stock of the Company entitled to participate in any capital
reorganization or any reclassification of or change in the outstanding capital
stock of the Company (other than a change resulting solely from a subdivision or
combination of outstanding shares), any consolidation or merger, any sale,
transfer, or disposition of substantially all of the Company's or Charter LLC's
assets as an entirety, or the liquidation, dissolution, or winding up of the
Company;
(3) the consummation of any disposition by the Company of
all or substantially all of its Common Units; or
(4) any "going private" transaction or voluntary delisting
by the Company of its Publicly Traded Stock from the NASDAQ National Market or a
securities exchange on which such Publicly Traded Stock is listed.
(b) Any notice by the Company pursuant to Section 4.1(a) shall
specify the applicable record date and set forth the general nature of the
action to be taken.
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4.2. Investment Banker's Opinions. The Company will promptly notify
each Holder in writing of its decision at any time to retain an investment
banking firm to prepare an Investment Banker's Opinion. Such notice will
identify the assets or securities that are intended to be the subject of such
Investment Banker's Opinion. Within five Business Days after the Company
receives an Investment Banker's Opinion, the Company will deliver to each Holder
a copy of such Investment Banker's Opinion together with any supplementary
material that was prepared or relied upon by the investment banking firm issuing
such Investment Banker's Opinion relating to the subject of such Investment
Banker's Opinion.
4.3. Certain Transactions. The Company will not consolidate with any
Person, merge into any Person, or otherwise sell, convey, transfer, or otherwise
dispose of all or substantially all of its Common Units (in one transaction or a
series of related transactions) to any Person, or liquidate or dissolve unless
the Person that consolidates or merges with the Company or acquires all or
substantially all of the Company's Common Units or, in the case of a triangular
merger or consolidation or other transaction in which a direct or indirect
parent of such consolidating Person has a publicly traded class of equity
securities, such direct or indirect parent, assumes all of the obligations of
the Company under this Agreement.
4.4. Termination. The obligations set forth in Section 4 shall
terminate after all Exchangeable Units held by the Holders have been exchanged
pursuant to this Agreement.
4.5. Reservation of Publicly Traded Stock. The Company shall at all
times reserve and keep available for issuance upon the conversion of
Exchangeable Units pursuant to this Agreement such number of its authorized but
unissued shares of Publicly Traded Stock as will from time to time be sufficient
to permit the exchange of all of the Exchangeable Units which the Holders are
permitted to exchange pursuant to this Agreement.
Section 5 Representations of the Company. The Company represents and
warrants to the Holders as follows:
5.1. Organization, Standing, and Authority. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of Delaware. The Company has all requisite power and authority to execute
and deliver this Agreement and the documents contemplated hereby, and to perform
and comply with all of the terms, covenants, and conditions to be performed and
complied with by the Company hereunder and thereunder. The Company is duly
qualified to transact business in each jurisdiction in which the nature of its
business makes such qualification necessary, except where the failure to be so
qualified would not impair or hinder the ability of the Company to perform its
obligations under this Agreement.
5.2. Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement by the Company have been duly authorized by
all necessary actions on the part of the Company. This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid, and
binding obligation of
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the Company, enforceable against it in accordance with its terms except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally, and by judicial discretion
in the enforcement of equitable remedies.
5.3. Shares Validly Issued. The shares of Publicly Traded Stock to be
issued under this Agreement, when issued, sold, and delivered in accordance with
the terms of this Agreement, will be duly and validly issued, fully paid, and
nonassessable and will be free of restrictions on transfer other than
restrictions on transfer under applicable state and federal securities laws.
Section 6 Miscellaneous.
6.1. Complete Agreement; Modifications. This Agreement constitutes the
parties' entire agreement with respect to the subject matter hereof and
supersedes all other agreements, representations, warranties, statements,
promises and understandings, whether oral or written, with respect to the
subject matter hereof, other than those contained in the Registration Rights
Agreement. This Agreement may not be amended, altered or modified except by a
writing signed by each party hereto.
6.2. Additional Documents. Each party hereto agrees to execute any and
all further documents and writings and to perform such other actions which may
be or become necessary or expedient to effectuate and carry out this Agreement.
6.3. Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be sufficiently given if
delivered in person or transmitted by telecopy or similar means or recorded
electronic communication to the relevant party, addressed as follows (or at such
other address as either party shall have designated by notice as herein provided
to the other party):
If to any Holder: At the address specified for
such holder on the
signature pages hereto
and (if different) at the
address specified in the
records of Charter LLC.
If to the Company: Charter Communications, Inc.
00000 Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxx and Xxxxxx Xxxx
Telecopy: (000) 000-0000
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17
with copies to: Irell & Xxxxxxx LLP
1800 Avenue of the Stars
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Telecopy: (000) 000-0000
Any such notice or other communication shall be deemed to have been given and
received on the day on which it is delivered or telecopied (or, if such day is
not a Business Day or if the notice or other communication is not telecopied
during business hours, at the place of receipt, on the next following Business
Day); provided, however, that any such notice or other communication shall be
deemed to have been given and received on the day on which it is sent if
delivery thereof is refused or if delivery thereof in the manner described above
is not possible because of the intended recipient's failure to advise the
sending party of a change in the intended recipient's address or telecopy
number.
6.4. No Third-Party Benefits. None of the provisions of this Agreement
shall be for the benefit of, or enforceable by, any Person that is not a party
to this Agreement other than those contemplated by Section 6.7.
6.5. Waivers Strictly Construed. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (a) no
waiver or extension of time shall be effective unless expressly contained in a
writing signed by the waiving party; and (b) no alteration, modification or
impairment shall be implied by reason of any previous waiver, extension of time,
delay, or omission in exercise or other indulgence.
6.6. Severability. The validity, legality, or enforceability of the
remainder of this Agreement shall not be affected even if one or more of the
provisions of this Agreement shall be held to be invalid, illegal, or
unenforceable in any respect.
6.7. Successors and Assigns. Except as provided herein to the
contrary, this Agreement shall be binding upon and shall inure to the benefit of
the parties, their respective successors (including any successor by merger,
consolidation, or otherwise to all or substantially all of a party's business or
assets) and permitted assigns.
6.8. Assignments. Except for assignments to a Holder's Permitted
Transferee(s) (as defined in the Registration Rights Agreement), the rights of
Holder hereunder shall not be transferable to any party without the written
consent of the Company (which may be withheld by the Company in its sole and
absolute discretion).
6.9. Governing Law. This Agreement shall be governed by the laws of
the State of New York, without regard to any choice of law provisions of that
state or the laws of any other jurisdiction.
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6.10. Headings. The Section headings in this Agreement are inserted
only as a matter of convenience and in no way define, limit, extend, or
interpret the scope of this Agreement or of any particular Section.
6.11. Counterparts. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.12. Costs. All filing fees, transfer taxes, sales taxes, document
stamps, or other similar charges levied by any Governmental Authority in
connection with the exchange of shares of Publicly Traded Stock for Exchangeable
Units pursuant to this Agreement shall be paid by the Holder. Except as
otherwise provided in this Agreement, each party will bear its own costs in
connection with the performance of its obligations under this Agreement.
6.13. Default. In the event of any legal action between the parties
arising out of or in relation to this Agreement, the prevailing party in such
legal action shall be entitled to recover, in addition to any other legal
remedies, all of its costs and expenses, including reasonable attorney's fees,
from the non-prevailing party, regardless of whether such legal action is
prosecuted to completion.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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[COMPANY SIGNATURE PAGE TO
EXCHANGE AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day first heretofore mentioned.
Charter Communications, Inc.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
20
[HOLDER SIGNATURE PAGE TO
EXCHANGE AGREEMENT]
BCI (USA), LLC
By: Bresnan Communications, Inc., its Managing Member
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
NAME OF HOLDER: BCI (USA), LLC
-------------------------
ADDRESS (including fax):
c/o Bresnan Communications, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. XxXxxx and Xxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
21
[HOLDER SIGNATURE PAGE TO
EXCHANGE AGREEMENT]
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxx, individually
NAME OF HOLDER: XXXXXXX X. XXXXXXX
----------------------------
ADDRESS (including fax):
c/o Bresnan Communications, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. XxXxxx and Xxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
22
[HOLDER SIGNATURE PAGE TO
EXCHANGE AGREEMENT]
TCID OF MICHIGAN, INC.
By: /s/ Xxxxx X'Xxxxxx
-------------------------------
Name: Xxxxx X'Xxxxxx
Title: Vice President
NAME OF HOLDER: TCID OF MICHIGAN, INC.
-----------------------------------
ADDRESS (including fax):
c/o AT&T Broadband & Internet Services
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X'Xxxxxx
Telecopier: (000) 000-0000
23
[HOLDER SIGNATURE PAGE TO
EXCHANGE AGREEMENT]
TCI BRESNAN LLC
By: /s/ Xxxxx X'Xxxxxx
------------------------
Name: Xxxxx X'Xxxxxx
Title: Vice President
NAME OF HOLDER: TCI BRESNAN LLC
--------------------------------
ADDRESS (including fax):
c/o AT&T Broadband & Internet Services
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X'Xxxxxx
Telecopier: (000) 000-0000
24
[HOLDER SIGNATURE PAGE TO
EXCHANGE AGREEMENT]
BLACKSTONE BC CAPITAL PARTNERS, L.P.
By: Blackstone Media Management Associates III
L.L.C., its General Partner
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Member
NAME OF HOLDER: BLACKSTONE BC CAPITAL PARTNERS, L.P.
---------------------------------------------
ADDRESS (including fax):
c/o The Blackstone Group
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Telecopier: (000) 000-0000
25
[HOLDER SIGNATURE PAGE TO
EXCHANGE AGREEMENT]
BLACKSTONE FAMILY MEDIA PARTNERSHIP III L.P.
By: Blackstone Media Management Associates
III L.L.C., its General Partner
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Member
NAME OF HOLDER: BLACKSTONE FAMILY MEDIA PARTNERSHIP III L.P.
------------------------------------------------
ADDRESS (including fax):
c/o The Blackstone Group
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Telecopier: (000) 000-0000
26
[HOLDER SIGNATURE PAGE TO
EXCHANGE AGREEMENT]
BLACKSTONE BC OFFSHORE CAPITAL PARTNERS L.P.
By: Blackstone Media Management Associates III L.L.C.,
its Investment General Partner
By: /s/ Xxxx X. Xxxxxxxx
--------------------------
Name: Xxxx X. Xxxxxxxx
Title: Member
NAME OF HOLDER: BLACKSTONE BC OFFSHORE CAPITAL PARTNERS L.P.
--------------------------------------------
ADDRESS (including fax):
c/o The Blackstone Group
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Telecopier: (000) 000-0000
