EXECUTION COPY
AGREEMENT AND PLAN OF MERGER,
DATED AS OF MAY 11, 1999,
BY AND AMONG
XXX COMMUNICATIONS, INC.,
COX CLASSIC CABLE, INC.
AND
TCA CABLE TV, INC.
TABLE OF CONTENTS
Page
ARTICLE ONE
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE TWO
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.1 Merger . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.2 Conversion of Shares . . . . . . . . . . . . . . . . 3
Section 2.3 Fractional Shares . . . . . . . . . . . . . . . . . 7
Section 2.4 Dissenting Shares of Company Common Stock . . . . . 8
Section 2.5 Exchange of Certificates . . . . . . . . . . . . . . 9
Section 2.6 Stock Options . . . . . . . . . . . . . . . . . . . 12
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF COMPANY . . . . . . . . . . . . . 13
Section 3.1 In General . . . . . . . . . . . . . . . . . . . . . 13
Section 3.2 Organization and Authority; Capitalization and
Ownership of Shares . . . . . . . . . . . . . . . 13
Section 3.3 Governmental Authorization; Noncontravention . . . . 15
Section 3.4 SEC Filings . . . . . . . . . . . . . . . . . . . . 16
Section 3.5 Financial Statements; Undisclosed Liabilities . . . 17
Section 3.6 Material Adverse Changes . . . . . . . . . . . . . . 17
Section 3.7 Information Regarding the Business . . . . . . . . . 18
Section 3.8 Title to and Condition of Assets . . . . . . . . . . 20
Section 3.12 Compliance with Laws . . . . . . . . . . . . . . . . 21
Section 3.13 Tax Matters . . . . . . . . . . . . . . . . . . . . 22
Section 3.14 Real Property . . . . . . . . . . . . . . . . . . . 23
Section 3.15 Environmental Matters . . . . . . . . . . . . . . . 24
Section 3.16 Insurance . . . . . . . . . . . . . . . . . . . . . 24
Section 3.17 Competitors and Overbuilds . . . . . . . . . . . . . 24
Section 3.18 Basic Subscriber Count . . . . . . . . . . . . . . . 25
Section 3.19 Reorganization . . . . . . . . . . . . . . . . . . . 25
Section 3.20 Intellectual Property . . . . . . . . . . . . . . . 26
Section 3.21 Employees, Officers and Directors . . . . . . . . . 27
Section 3.22 Employee Benefits . . . . . . . . . . . . . . . . . 27
Section 3.23 Antitakeover Statutes and Rights Agreement . . . . . 29
Section 3.24 Vote Required . . . . . . . . . . . . . . . . . . . 30
Section 3.25 Year 2000 Compliance . . . . . . . . . . . . . . . . 00
-x-
Xxxxxxx 0.00 Xxxxxxx of Financial Advisor . . . . . . . . . . . . 30
Section 3.27 Contracts . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB . . . . . . 31
Section 4.1 In General . . . . . . . . . . . . . . . . . . . . . 31
Section 4.2 Organization and Authority . . . . . . . . . . . . . 31
Section 4.3 Governmental Authorization; Noncontravention . . . . 32
Section 4.4 Litigation . . . . . . . . . . . . . . . . . . . . . 32
Section 4.5 Finders and Brokers . . . . . . . . . . . . . . . . 33
Section 4.6 Capital Stock . . . . . . . . . . . . . . . . . . . 33
Section 4.7 Transaction Shares . . . . . . . . . . . . . . . . . 33
Section 4.8 SEC Filings . . . . . . . . . . . . . . . . . . . . 34
Section 4.9 Financial Statements . . . . . . . . . . . . . . . . 34
Section 4.10 Reorganization . . . . . . . . . . . . . . . . . . . 34
Section 4.11 Material Adverse Effect . . . . . . . . . . . . . . 35
Section 4.12 Environmental Matters . . . . . . . . . . . . . . . 36
ARTICLE FIVE
COVENANTS AND CONDUCT OF BUSINESS AND
TRANSACTIONS PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . 36
Section 5.1 Covenants of Parent and Merger Sub . . . . . . . . . 36
Section 5.2 Covenants of Company . . . . . . . . . . . . . . . . 36
Section 5.3 Compliance with HSR Act and Rules . . . . . . . . . 39
Section 5.4 Company Shareholders' Meeting . . . . . . . . . . . 40
Section 5.5 No Solicitation . . . . . . . . . . . . . . . . . . 41
Section 5.6 Consents . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.7 Interim Financial Statements . . . . . . . . . . . . 44
Section 5.8 Capital Expenditures . . . . . . . . . . . . . . . . 44
Section 5.9 Affiliates of Parent and Company . . . . . . . . . . 44
Section 5.10 Employee Benefits . . . . . . . . . . . . . . . . . 45
Section 5.11 Proxy Statement . . . . . . . . . . . . . . . . . . 45
Section 5.12 Other Parent Transactions . . . . . . . . . . . . . 47
Section 5.13 Directors' and Officers' Indemnification and
Insurance . . . . . . . . . . . . . . . . . . . . 47
Section 5.14 Registration and Listing of Parent Class A Common
Stock . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.15 Rate and Programming Information . . . . . . . . . . 48
Section 5.16 Classic Cable Division . . . . . . . . . . . . . . . 48
Section 5.17 Warrant . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.18 Donrey Waiver . . . . . . . . . . . . . . . . . . . 48
-ii-
ARTICLE SIX
CONDITIONS OF PARENT'S AND MERGER SUB'S OBLIGATIONS . . . . . . . . 49
Section 6.1 In General . . . . . . . . . . . . . . . . . . . . . 49
Section 6.2 Receipt of Consents . . . . . . . . . . . . . . . . 49
Section 6.3 Performance by Company . . . . . . . . . . . . . . . 49
Section 6.4 Truth of Representations and Warranties . . . . . . 49
Section 6.5 Absence of Proceedings . . . . . . . . . . . . . . . 50
Section 6.6 Tax Opinion . . . . . . . . . . . . . . . . . . . . 50
Section 6.7 Shareholder Approval . . . . . . . . . . . . . . . . 50
Section 6.8 Registration Statement . . . . . . . . . . . . . . . 50
ARTICLE SEVEN
CONDITIONS OF COMPANY'S OBLIGATIONS . . . . . . . . . . . . . . . . 51
Section 7.1 In General . . . . . . . . . . . . . . . . . . . . . 51
Section 7.2 Performance by Parent and Merger Sub . . . . . . . . 51
Section 7.3 Truth of Representations and Warranties . . . . . . 51
Section 7.4 Absence of Proceedings . . . . . . . . . . . . . . . 51
Section 7.5 Tax Opinion . . . . . . . . . . . . . . . . . . . . 52
Section 7.6 Shareholder Approval . . . . . . . . . . . . . . . . 52
Section 7.7 Registration Statement . . . . . . . . . . . . . . . 52
Section 7.8 Listing of Parent Class A Common Stock on NYSE . . . 52
Section 7.9 Exchange Fund . . . . . . . . . . . . . . . . . . . 52
ARTICLE EIGHT
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.1 Closing . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.2 Deliveries and Actions by Company . . . . . . . . . 53
Section 8.3 Deliveries by Parent . . . . . . . . . . . . . . . . 53
Section 8.4 Waiver of Conditions . . . . . . . . . . . . . . . . 54
ARTICLE NINE
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.1 Termination . . . . . . . . . . . . . . . . . . . . 55
Section 9.2 Effect of Termination . . . . . . . . . . . . . . . 56
Section 9.3 Fees and Expenses . . . . . . . . . . . . . . . . . 57
-iii-
ARTICLE TEN
PUBLIC STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.1 Public Statement and Press Releases . . . . . . . . 58
Section 10.2 Injunctive Relief and Survival . . . . . . . . . . . 58
ARTICLE ELEVEN
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 11.1 Amendments; Waivers . . . . . . . . . . . . . . . . 59
Section 11.2 Entire Agreement . . . . . . . . . . . . . . . . . . 59
Section 11.3 Binding Effect: Assignment . . . . . . . . . . . . . 59
Section 11.4 Construction: Counterparts . . . . . . . . . . . . . 59
Section 11.5 Notices . . . . . . . . . . . . . . . . . . . . . . 60
Section 11.6 Governing Law and Venue . . . . . . . . . . . . . . 61
Section 11.7 Further Actions . . . . . . . . . . . . . . . . . . 61
Section 11.8 Gender, Tense, Etc . . . . . . . . . . . . . . . . . 61
Section 11.9 Severability . . . . . . . . . . . . . . . . . . . . 61
Section 11.10 No Third-Party Rights . . . . . . . . . . . . . . . 62
Section 11.11 Nonsurvival of Representations and Warranties . . . 62
Section 11.12 Enforcement . . . . . . . . . . . . . . . . . . . . 62
-iv-
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS:
Exhibit A -- Definitions
Exhibit B -- Form of Rule 145 Affiliate Agreement
Exhibit C -- List of Cable Systems
SCHEDULES:
Schedule 2.1(d) -- Directors of Surviving Corporation
Schedule 3.2(a) -- Company Entities
Schedule 3.2(b) -- Capitalization and Share Ownership
Schedule 3.2(c) -- Investment Interests
Schedule 3.3(b) -- Noncontravention
Schedule 3.6 -- Material Adverse Changes
Schedule 3.7(a) -- Information Regarding the Business
Schedule 3.9 -- Litigation
Schedule 3.12 -- Rate Regulatory Information
Schedule 3.13 -- Tax Matters
Schedule 3.22 -- Employee Benefits
Schedule 4.6 -- Capitalization of Parent and Merger Sub
Schedule 5.2 -- Exceptions to Company's Negative Covenants
-v-
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of May
11, 1999, by and among XXX COMMUNICATIONS, INC., a Delaware corporation
("Parent"), COX CLASSIC CABLE, INC., a Delaware corporation and wholly-owned
Subsidiary of Parent ("Merger Sub"), and TCA CABLE TV, INC., a Texas
corporation (the "Company").
BACKGROUND
A. The boards of directors of Parent, Merger Sub and the Company each have
approved this Agreement and have determined that it is in the best
interests of their respective stockholders for the Company to merge with
and into Merger Sub, upon the terms and subject to the conditions of this
Agreement (the "Merger") (unless the Reverse Merger is required pursuant
to Section 2.1).
B. The parties intend the Merger to be carried out in accordance with the
provisions of Section 368(a) of the Code (as defined herein), in order to
qualify the Merger as a reorganization within the meaning thereof (unless
the Reverse Merger is required pursuant to Section 2.1).
C. Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with
the Merger.
D. Parent and Merger Sub have required, as a condition to their willingness
to enter into this Agreement, that certain shareholders of the Company
enter into the Voting Agreement (as defined herein) concurrently with the
execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, Parent, Merger Sub and
the Company hereby agree as follows:
ARTICLE ONE
DEFINITIONS
Exhibit A to this Agreement sets forth the definitions of certain
capitalized terms used in this Agreement and an index to capitalized terms
defined elsewhere in this Agreement. All such capitalized terms shall have
such meanings as so defined when used in this Agreement.
-1-
ARTICLE TWO
THE MERGER
Section 2.1 Merger.
(a) Structure of the Merger. Except as otherwise provided in this
Section 2.1(a), and subject to the terms and conditions of this Agreement,
the Company shall be merged with and into Merger Sub in accordance with the
DGCL and the TBCA, the separate existence of the Company shall cease, and
Merger Sub shall be the Surviving Corporation. Upon the consummation of the
Merger on the terms and conditions of this Agreement, the Surviving
Corporation shall succeed to all the rights, assets, liabilities and
obligations of the Company and Merger Sub in accordance with the provisions
of the DGCL and the TBCA. In the event that all of the conditions set forth
in Article Six and Article Seven (excluding conditions that, by their terms,
cannot be satisfied until the Closing Date) have been satisfied or waived in
accordance with the terms of this Agreement, other than (i) the condition set
forth in Section 6.6 that Parent shall have received the tax opinion
referenced therein, or (ii) the condition set forth in Section 7.5 that the
Company shall have received the tax opinion referenced therein, then, subject
to the other terms and conditions of this Agreement, the parties acknowledge
and agree that Merger Sub shall be merged with and into the Company in
accordance with the DGCL and the TBCA, the separate existence of Merger Sub
shall cease, and the Company shall be the Surviving Corporation (the "Reverse
Merger"). The parties acknowledge and agree that promptly upon the
determination that the Reverse Merger is required pursuant to this Section
2.1(a), the parties shall amend and restate this Agreement in its entirety on
the same terms and conditions as set forth herein, other than such terms and
conditions that relate to the form of the Merger and the tax implications
with respect thereto, which shall be revised accordingly.
(b) Consummation of Merger. At the Closing, the parties shall
cause the Merger to be consummated by duly filing with (i) the Secretary of
State of Delaware a properly executed certificate of merger in accordance
with the provisions of the DGCL and (ii) the Secretary of State of Texas
properly executed articles of merger in accordance with the provisions of the
TBCA. Such certificate of merger and articles of merger shall collectively
be referred to herein as the "Certificate of Merger." In accordance with the
DGCL, the TBCA and the terms of the Certificate of Merger, the Merger shall
be effective at the time and date which is (A) the later of (i) the date and
time of the filing of the certificate of merger with the Secretary of State
of Delaware (or such other time as may be specified in such certificate as
may be permitted by law) and (ii) the date and time of the filing of the
articles of merger with the Secretary of State of Texas (or such other time
as may be specified in such articles as may be permitted by law) or (B) such
other time and date as Parent and the Company may agree (such time and date
-2-
being hereinafter referred to respectively as the "Effective Time" and the
"Effective Date").
(c) Certificate of Incorporation and Bylaws. The certificate of
incorporation of Merger Sub, as in existence immediately prior to the
Effective Time, shall be the certificate of incorporation of the Surviving
Corporation from and after the Effective Time unless and until amended in
accordance with its terms and as provided by law. The bylaws of Merger Sub,
as in effect immediately prior to the Effective Time, shall be the bylaws of
the Surviving Corporation from and after the Effective Time unless and until
amended in accordance with their terms and the terms of the certificate of
incorporation of the Surviving Corporation and as provided by law.
(d) Directors and Officers. The initial directors of the
Surviving Corporation shall be as set forth on Schedule 2.1(d) from and after
the Effective Time, and the officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation
from and after the Effective Time, all such persons to serve as directors or
hold office in accordance with the certificate of incorporation and bylaws of
the Surviving Corporation until their respective successors are duly elected
and qualified.
Section 2.2 Conversion of Shares. As of the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger
Sub, the Company or the holder of any shares of Company Common Stock or any
shares of common stock of Merger Sub:
(a) Conversion of Stock of Merger Sub. Each share of common stock
of Merger Sub issued and outstanding immediately prior to the Effective Time
shall remain outstanding as one share of common stock of the Surviving
Corporation.
(b) Cancellation of Stock. Each share of Company Common Stock
that is owned by the Company or any other Company Entity, as treasury stock
or otherwise ("Excluded Shares"), shall automatically be canceled and retired
and shall cease to exist and no consideration shall be delivered in exchange
therefor.
(c) Consideration for Company Common Stock. Subject to Section
2.4, each issued and outstanding share of Company Common Stock (other than
Dissenting Shares and Excluded Shares) shall, at the election of the holder
thereof, be converted into (i) the right to receive 0.3709 of a fully paid
and nonassessable share of Parent Class A Common Stock (the "Preferred Per
Share Stock Amount") and the right to receive $31.25 in cash, without
interest (the "Preferred Per Share Cash Amount"), or (ii) the right to
receive 0.7418 of a fully paid and nonassessable share of Parent Class A
Common Stock (the "All Stock Amount"), subject to adjustment as provided in
-3-
Section 2.2(h), or (iii) the right to receive $62.50 in cash, without
interest (the "All Cash Amount"), subject to adjustment as provided in
Section 2.2(g). As of the Effective Time, all such shares of Company Common
Stock shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to have any
rights with respect thereto, except the right to receive, upon surrender of
such certificate in accordance with Section 2.5 the Preferred Per Share Stock
Amount and the Preferred Per Share Cash Amount or the All Stock Amount or All
Cash Amount as adjusted in accordance with Section 2.2(g) and Section 2.2(h).
The consideration to be received in the Merger under this Article Two for one
share of Company Common Stock shall be referred to herein as the
"Consideration."
(d) Maximum Parent Shares and Maximum Cash Amount. The aggregate
maximum number of shares of Parent Class A Common Stock into which shares of
Company Common Stock may be converted pursuant to this Section 2.2 shall be
19,212,620 (the "Maximum Parent Shares"). The aggregate maximum amount of
cash into which shares of Company Common Stock may be converted pursuant to
this Section 2.2 shall be $1,618,675,000 (the "Maximum Cash Amount").
(e) Available Elections. Each record holder (or beneficial owner
through appropriate and customary documentation and instructions) of shares
of Company Common Stock shall be entitled either (i) to elect to receive the
Preferred Per Share Cash Amount and the Preferred Per Share Stock Amount for
each such share of Company Common Stock (a "Preferred Election"), or (ii) to
elect to receive the All Stock Amount for each such share of Company Common
Stock (an "All Stock Election"), or (iii) to elect to receive the All Cash
Amount for each such share of Company Common Stock (an "All Cash Election")
or (iv) to indicate that such record holder has no preference as to the
Preferred Election, the All Stock Election or the All Cash Election with
respect to such holder's shares of Company Common Stock (a "Non-Election,"
and any Preferred Election, All Stock Election, All Cash Election or
Non-Election shall be referred to herein as an "Election"); provided,
however, that no holder of Dissenting Shares shall be entitled to make an
Election. The All Cash Elections and the All Stock Elections are subject to
adjustment in accordance with the provisions of Sections 2.2(g) and 2.2(h).
All such Elections shall be made on a form furnished by Parent for that
purpose (a "Form of Election") and reasonably satisfactory to the Company.
If more than one certificate which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (a "Certificate")
shall be surrendered for the account of the same holder, the number of shares
of Parent Class A Common Stock, if any, to be issued to such holder in
exchange for the Certificates which have been surrendered shall be computed
on the basis of the aggregate number of shares of Company Common Stock
represented by all of the Certificates surrendered for the account of such
holder. Holders of record of shares of Company Common Stock who hold such
-4-
shares of Company Common Stock as nominees, trustees or in other
representative capacities (each, a "Representative") may submit multiple
Forms of Election, provided that such Representative certifies that each such
Form of Election covers all shares of Company Common Stock held by such
Representative for a particular beneficial owner.
(f) Preferred Elections and Non-Elections. All holders of shares
of Company Common Stock who have made the Preferred Election or the
Non-Election shall receive the Preferred Per Share Stock Amount and the
Preferred Per Share Cash Amount in respect of each share of Company Common
Stock held by them. The Maximum Cash Amount, minus the amount of cash to be
paid to holders of shares of Company Common Stock who have made the Preferred
Election or the Non-Election minus an amount reasonably reserved by Parent to
pay amounts determined to be owing to the holders of Dissenting Shares shall
be referred to hereinafter as the "Remaining Cash Amount," and the Maximum
Parent Shares minus the number of shares of Parent Class A Common Stock to be
issued to holders of shares of Company Common Stock who have made the
Preferred Election or the Non-Election shall be referred to hereinafter as
the "Remaining Parent Shares".
(g) Excess All Cash Elections. If the aggregate amount of cash
that would be payable pursuant to All Cash Elections would exceed the
Remaining Cash Amount, then:
(i) Each share of Company Common Stock with respect to which an
All Stock Election shall have been made shall be converted into the right
to receive the All Stock Amount; and
(ii) Each share of Company Common Stock with respect to which an
All Cash Election shall have been made shall be converted into the right
to receive:
(A) the amount in cash, without interest, equal to the
product of (1) the All Cash Amount and (2) a fraction (the "Cash
Fraction"), the numerator of which shall be the Remaining Cash Amount
and the denominator of which shall be the aggregate amount of cash
that would be payable pursuant to All Cash Elections but for the
limitation on such amount set forth in Section 2.2(d) above; and
(B) that percentage of a share of Parent Class A Common
Stock equal to the product of (1) the All Stock Amount and (2) a
fraction equal to one minus the Cash Fraction.
(h) Excess All Stock Elections. If the aggregate number of shares
of Parent Class A Common Stock that would be issuable pursuant to All Stock
Elections would exceed the Remaining Parent Shares, then:
-5-
(i) Each share of Company Common Stock with respect to which an
All Cash Election shall have been made shall be converted into the right
to receive the All Cash Amount; and
(ii) Each share of Company Common Stock with respect to which an
All Stock Election shall have been made shall be converted into the right
to receive:
(A) the number of shares of Parent Class A Common Stock
equal to the product of (1) the All Stock Amount and (2) a fraction
(the "Stock Fraction"), the numerator of which shall be the Remaining
Parent Shares and the denominator of which shall be the aggregate
number of shares of Parent Class A Common Stock that would be
issuable pursuant to All Stock Elections but for the limitation on
such number set forth in Section 2.2(d) above; and
(B) the amount in cash, without interest, equal to the
product of (1) the All Cash Amount and (2) a fraction equal to one
minus the Stock Fraction.
(i) Exchange Agent. Prior to the mailing of the Proxy Statement,
Parent shall appoint First Chicago Trust Company of New York (or if First
Chicago Trust Company of New York is unwilling or unable to act or to act
upon commercially reasonable terms, any other bank or trust company mutually
acceptable to the Company and Parent) to act as exchange agent (the "Exchange
Agent") for the payment of the Consideration.
(j) Making of Elections. Elections shall be made by holders of
shares of Company Common Stock by delivering the Form of Election to the
Exchange Agent. To be effective, a Form of Election must be properly
completed, signed and submitted to the Exchange Agent by no later than 5:00
p.m. (New York City time) on the last Business Day prior to the Company
Shareholders' Meeting, if the Effective Time is reasonably expected by the
Company and Parent to occur at least three but no more than five Business
Days following such Company Shareholders' Meeting (the "Election Deadline")
(provided that if the Effective Time is not reasonably expected to occur at
least three but no more than five Business Days following the Company
Shareholders' Meeting, Parent and the Company shall agree to a later date and
time, reasonably expected to be at least four Business Days prior to the
Effective Time as the Election Deadline (and shall reset such date if
necessary so that the Election Deadline is at least three Business Days
before the Effective Time) and shall publish appropriate advance notice of
such Election Deadline). Parent will have the discretion, which it may
delegate in whole or in part to the Exchange Agent, to determine whether
Forms of Election have been properly completed, signed and submitted or
revoked and to disregard immaterial defects in Forms of Election. The good
faith decision of Parent (or the Exchange Agent) in such matters shall be
conclusive and binding. Neither Parent nor the Exchange Agent will be under
-6-
any obligation to notify any Person of any defect in a Form of Election
submitted to the Exchange Agent. A Form of Election with respect to
Dissenting Shares shall not be valid. The Exchange Agent shall also make all
computations contemplated by this Section 2.2 and all such computations shall
be conclusive and binding on the holders of shares of Company Common Stock in
the absence of manifest error. Any Form of Election may be changed or
revoked prior to the Election Deadline.
(k) Failed or Defective Elections. For the purposes hereof, a
holder of shares of Company Common Stock who does not submit a Form of
Election which is received by the Exchange Agent prior to the Election
Deadline (including a holder who submits and then revokes his or her Form of
Election and does not resubmit a Form of Election which is timely received by
the Exchange Agent) shall be deemed to have made a Non-Election. If any Form
of Election is defective in any manner such that the Exchange Agent cannot
reasonably determine the election preference of the shareholder submitting
such Form of Election, the purported Cash Election or Stock Election set
forth therein shall be deemed to be of no force and effect and the
shareholder making such purported Cash Election or Stock Election shall, for
purposes hereof, be deemed to have made a Non-Election.
(l) Delivery of Forms of Election. A Form of Election shall be
included with or mailed contemporaneously with each copy of the Proxy
Statement mailed to shareholders of the Company in connection with the
Company Shareholders' Meeting. Each of Parent and the Company shall use its
reasonable best efforts to mail or otherwise make available the Form of
Election to all persons who become holders of shares of Company Common Stock
during the period between the record date for the Company Shareholders'
Meeting and the Election Deadline.
(m) Adjustment of Consideration. Upon consummation of the Stock
Split, the Preferred Per Share Stock Amount shall automatically be increased
to 0.7418, the All Stock Amount shall automatically be increased to 1.4836
and the Maximum Parent Shares shall automatically be increased to 38,425,240.
If between the date hereof and the Effective Time, the outstanding shares of
Parent Class A Common Stock shall be changed into a different number of
shares by reason of any reclassification, recapitalization, split-up,
combination or exchange of shares (other than the Stock Split), or any
dividend payable in stock or other securities shall be declared thereon with
a record date within such period, the Consideration shall be adjusted
accordingly to provide to the holders of Company Common Stock the same
economic effect as contemplated by this Agreement prior to such
reclassification, recapitalization, split-up, combination, exchange or
dividend.
Section 2.3 Fractional Shares. No fractional shares of Parent Class
A Common Stock shall be issued in the Merger. In lieu of any such fractional
-7-
securities, each holder of shares of Company Common Stock who would otherwise
have been entitled to a fraction of a share of Parent Class A Common Stock
upon surrender of Certificates for exchange pursuant to this Agreement will
be paid an amount in cash (without interest) equal to such holder's
proportionate interest in the net proceeds from the sale or sales in the open
market by the Exchange Agent, on behalf of all such holders, of the aggregate
fractional shares of Parent Class A Common Stock issued pursuant to this
Article Two. As soon as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (a) the number of whole shares
of Parent Class A Common Stock delivered to the Exchange Agent by Parent over
(b) the aggregate number of whole shares of Parent Class A Common Stock to be
distributed to holders of shares of Company Common Stock (such excess, the
"Excess Shares"), and the Exchange Agent, as agent for the former holders of
shares of Company Common Stock, shall sell the Excess Shares at the
prevailing prices on the NYSE. The sale of the Excess Shares by the Exchange
Agent shall be executed on the NYSE through one or more member firms of the
NYSE. Parent shall pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including the expenses and compensation of
the Exchange Agent, incurred in connection with such sale of the Excess
Shares. Until the net proceeds of such sale have been distributed to the
former holders of Company Common Stock, the Exchange Agent shall hold such
proceeds in trust for such former holders of Company Common Stock (the
"Fractional Securities Fund"). As soon as practicable after the
determination of the amount of cash to be paid to the former holders of
Company Common Stock in lieu of any fractional interests, the Exchange Agent
shall make available in accordance with this Agreement such amounts to such
former shareholders.
Section 2.4 Dissenting Shares of Company Common Stock.
Notwithstanding any provision of this Agreement to the contrary, shares of
Company Common Stock that are issued and outstanding immediately prior to the
Effective Time and that are held by shareholders who have not voted such
shares of Company Common Stock in favor of the adoption of this Agreement and
approval of the Merger and who shall have properly exercised their right to
dissent from the Merger in accordance with, and shall have complied with all
other applicable requirements of, Articles 5.11, 5.12 and 5.13 of the TBCA
(the "Dissenting Shares") shall not be converted into the right to receive
the Consideration or any cash in lieu of fractional shares of Parent Class A
Common Stock, as provided herein, at or after the Effective Time, but instead
shall become the right to receive such consideration as may be determined to
be due to the holder of such Dissenting Shares pursuant to the TBCA, unless
and until the holder of such Dissenting Shares shall have failed to comply
with the requirements of Articles 5.11, 5.12 and 5.13 of the TBCA or shall
have effectively withdrawn or lost such right to dissent from the Merger and
demand payment of the "fair value" of the Dissenting Shares held by such
holder. If after the Effective Time, such holder of Dissenting Shares shall
have so failed to comply with the requirements of Articles 5.11, 5.12 and
-8-
5.13 of the TBCA or shall have effectively withdrawn or lost such right to
dissent from the Merger and demand payment of the "fair value" of the
Dissenting Shares held by such holder, then, as of the Effective Time or the
occurrence of such event, whichever last occurs, such holder's Dissenting
Shares shall be converted into and represent solely the right to receive the
Consideration without any interest thereon, as provided in Section 2.5
hereof. The Company shall give Parent prompt notice of any demands received
by the Company for appraisal of shares, and Parent shall have the right to
participate in all negotiations and proceedings with respect to such demands.
Except with the prior written consent of Parent or as may otherwise be
required by applicable law, the Company shall not make any payment with
respect to, or settle or offer to settle, any such demands.
Section 2.5 Exchange of Certificates.
(a) Exchange Agent and Exchange Fund. Prior to the Effective
Time, Parent shall retain the Exchange Agent to exchange the Certificates
that immediately prior to the Effective Time represented outstanding shares
(other than Excluded Shares and Dissenting Shares) of Company Common Stock
for the Consideration. At the Effective Time, Parent will make available to
the Exchange Agent the Consideration (the "Exchange Fund").
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, Parent will cause the Exchange Agent to send to each
holder of record of shares of Company Common Stock whose shares were
converted pursuant to Section 2.2 into the right to receive the Consideration
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as Parent and the Exchange Agent shall
reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, and such other
documents as may reasonably be required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor (A) a
certificate representing that number of whole shares of Parent Class A Common
Stock that the holder is entitled to receive under this Article Two, and (B)
a check in the amount (after giving effect to any required tax withholding)
of the cash portion of the Consideration that the holder is entitled to
receive under this Article Two and any unpaid dividends (other than stock
dividends), and the Certificate so surrendered shall immediately be canceled.
No interest will be paid or accrued with respect to any consideration
deliverable upon due surrender of the Certificates. In the event of a
transfer of ownership of Company Common Stock that is not registered in the
transfer records of Company, payment may be made to a transferee if the
Certificate representing such Company Common Stock is presented to the
-9-
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have
been paid. Until surrendered as contemplated by this Section 2.5, each
Certificate (other than Certificates representing Dissenting Shares) shall be
deemed at any time after the Effective Time for all purposes to represent
only the right to receive upon such surrender the certificate representing
shares of Parent Class A Common Stock and any dividend or distribution in
respect of those shares and the cash portion, if any, of the Consideration.
In the case of Certificates representing Dissenting Shares, each Certificate
representing Dissenting Shares shall be deemed at any time after the
Effective Time for all purposes to represent only the right to receive the
fair value of such Dissenting Shares pursuant to the TBCA.
(c) No Further Ownership Rights in Company Common Stock. The
payment to be made to holders of Certificates upon the surrender for exchange
of shares of Company Common Stock in accordance with the terms hereof shall
be deemed to have been made in full satisfaction of all rights pertaining to
such shares of Company Common Stock, and (except with respect to Dissenting
Shares) following the Effective Time, there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
shares of Company Common Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Section 2.5, subject to applicable law in the
case of Certificates representing Dissenting Shares. From and after the
Effective Time, holders of Certificates shall cease to have any rights as
shareholders of the Company, except as provided by law.
(d) Lost, Stolen or Destroyed Certificates. If any Certificates
shall have been lost, stolen or destroyed, then payment shall be made in
accordance with this Section 2.5 in exchange for such lost, stolen or
destroyed Certificates, upon the delivery to the Exchange Agent of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and an indemnity in form reasonably satisfactory to the
Surviving Corporation (and, if required by the Surviving Corporation in the
case of a Certificate representing more than 10,000 shares of Company Common
Stock, the posting by such Person of a bond, in such reasonable amount as the
Surviving Corporation may direct, as an indemnity) against any claim that may
be made against the Exchange Agent or the Surviving Corporation or otherwise
with respect to such Certificate.
(e) Termination of Exchange Fund and Fractional Securities Fund.
Any portion of the Exchange Fund made available to the Exchange Agent
pursuant to Section 2.5(a) or the Fractional Securities Fund that remains
undistributed to holders of Certificates for one year after the Effective
Time shall be delivered by the Exchange Agent to Parent, upon demand, and any
holders of Certificates who have not theretofore complied with this Section
-10-
2.5 shall thereafter only look to Parent for payment of their claim.
Notwithstanding the foregoing, neither Parent, the Company nor the Surviving
Corporation shall be liable to any former holder of shares of Company Common
Stock for any cash held by Parent or the Exchange Agent for payment pursuant
to this Section 2.5 delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. Any amounts remaining unclaimed
by the holders of Certificates five years after the Effective Time (or such
earlier date, immediately prior to such time when the amounts would otherwise
escheat to or become property of any Governmental Authority) shall become, to
the extent permitted by applicable law, the property of Parent free and clear
of any claims or interest of any Person previously entitled thereto.
(f) Rule 145 Affiliates. Certificates surrendered for exchange by
any Person constituting a Rule 145 Affiliate of the Company shall not be
exchanged for the Consideration until Parent has received a written agreement
from such Person as provided in Section 5.9.
(g) Distributions with Respect to Unexchanged Shares. Whenever a
dividend or other distribution is declared by Parent in respect of Parent
Class A Common Stock and the record date for that dividend or other
distribution is at or after the Effective Time, that declaration shall
include dividends or other distributions in respect of all shares of Parent
Class A Common Stock issuable under this Agreement. No dividends or other
distributions in respect of the Parent Class A Common Stock shall be paid to
any holder of any unsurrendered Certificate until such Certificate is
surrendered for exchange in accordance with this Article Two. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be issued or paid to the holder of the certificates representing whole
shares of Parent Class A Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time and a payment date
on or prior to the date of issuance of such whole shares of Parent Class A
Common Stock and not previously paid, less the amount of any withholding
taxes which may be required thereon, and (ii) at the appropriate payment
date, the amount of dividends or other distributions payable with respect to
such whole shares of Parent Class A Common Stock with a record date after the
Effective Time but with a payment date subsequent to surrender, less the
amount of any withholding taxes which may be required thereon. For purposes
of dividends or other distributions in respect of shares of Parent Class A
Common Stock, all shares of Parent Class A Common Stock to be issued pursuant
to the Merger shall be deemed issued and outstanding as of the Effective
Time.
-11-
Section 2.6 Stock Options.
(a) Non-Employee Directors Stock Options. Each non-employee
director who holds outstanding stock options (the "Director Options") under
the Amended and Restated Non- Employee Directors' Stock Option Plan (the
"Directors Plan") shall be entitled to elect either (i) to receive at the
Effective Time from the Surviving Corporation an amount in cash equal to the
product of (A) the number of shares of Company Common Stock previously
subject to the Director Option and (B) the excess of the All Cash Amount over
the exercise price per share of Company Common Stock previously subject to
the Director Option or (ii) to have the holder's Director Options be assumed
by Parent and each such Director Option deemed to constitute an option to
acquire, generally on the same terms and conditions as were applicable under
such Director Option prior to the Effective Time, the number of shares of
Parent Class A Common Stock (using the All Stock Amount) as the holder of
such Director Option would have been entitled to receive pursuant to the
Merger in respect of such Director Option had such holder exercised such
Director Option in full immediately prior to the Effective Time, at the
exercise price per share equal to the exercise price per share applicable to
such Director Option; provided, that the number of shares of Parent Class A
Common Stock that may be purchased upon exercise of any such Director Options
shall not include any fractional shares and, upon exercise of any such
Director Options, a cash payment shall be made for any fractional shares
based upon the last sale price per share of Parent Class A Common Stock on
the trading day immediately preceding the date of exercise. Within ten
Business Days after the Effective Time, Parent shall cause to be delivered to
each holder of an outstanding Director Option an appropriate notice setting
forth such holder's rights pursuant thereto, and such Director Options (as
adjusted to the extent provided herein) shall continue in effect on the terms
and conditions specified in the Directors Plan. Parent shall or shall cause
the Surviving Corporation to assume the Directors Plan, and to make any
amendments thereto as may be necessary or appropriate to implement the
provisions of this Section 2.6(a). Parent shall cause Parent Class A Common
Stock subject to Director Options to be registered under the Securities Act.
Parent has reserved sufficient shares of Parent Class A Common Stock to
satisfy its obligations under this Section 2.6(a).
(b) Employee Stock Options. Each employee of the Company Entities
holding stock options (the "Stock Options") under the Company Amended and
Restated Incentive Stock Option Plan (the "Option Plan") outstanding at the
Effective Time shall be entitled to elect either (i) to receive at the
Effective Time from the Surviving Corporation an amount in cash equal to the
product of (A) the number of shares of Company Common Stock previously
subject to the Stock Option and (B) the excess of the All Cash Amount over
the exercise price per share of Company Common Stock previously subject to
the Stock Option or (ii) to receive at the Effective Time an award of
restricted stock under the Parent's Long Term Incentive Plan ("LTIP") for the
-12-
number of shares of Parent Class A Common Stock to which the holder would be
entitled if the shares of Company Common Stock previously subject to the
Stock Option were converted into the right to receive the All Stock Amount
and reduced by the number of shares of Parent Class A Common Stock having the
fair market value as of the Effective Time equal to the aggregate exercise
price of the Stock Option to which the shares of Company Common Stock were
previously subject. The restricted stock issued hereunder shall be vested at
the end of a three year period beginning on the date of issuance, subject to
acceleration of vesting upon death or disability.
(c) Other Stock Option Arrangements. The Company shall use its
reasonable best efforts to obtain the written consent of each employee of a
Company Entity who has an agreement pursuant to which Company Common Stock is
to be issued on or after the Effective Time as a bonus upon achievement of
certain performance targets. Such written consent shall permit the
substitution of Parent Class A Common Stock for Company Common Stock, in the
same proportion as the All Stock Amount bears to the number of shares of
Company Common Stock to which such employee would have been entitled with
such other reasonable changes as the Company shall determine necessary to
reflect the terms of the transactions contemplated hereby.
(d) Consents. The form of any consent required under this Section
2.6, which may be contingent on the payments or awards provided herein, must
be reasonably satisfactory to Parent. The Company shall provide to Parent
copies of such consents at least ten Business Days prior to the Closing Date.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF COMPANY
Section 3.1 In General. The Company, subject to the disclosures set
forth in the Schedules hereto, makes the representations and warranties set
forth below in this Article Three to Parent and Merger Sub to induce Parent
and Merger Sub to enter into this Agreement.
Section 3.2 Organization and Authority; Capitalization and Ownership
of Shares.
(a) Company Entities. The Company is a corporation duly formed,
validly existing and in good standing under the laws of the State of Texas.
Schedule 3.2(a) sets forth a list of all Subsidiaries of the Company
(together with the Company, the "Company Entities") and their respective
jurisdictions of organization and identifies the Company's direct or indirect
percentage ownership interest therein. Each of the Company Entities is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all corporate, partnership or other
-13-
similar powers required to carry on its business as now conducted, other than
such exceptions as, individually or in the aggregate, have not had and would
not reasonably be expected to have a Company Material Adverse Effect. Each
of the Company Entities is duly qualified to do business as a foreign
corporation or other foreign legal entity and is in good standing in each
jurisdiction where such qualification is necessary, with such exceptions,
individually or in the aggregate, as have not had and would not reasonably be
expected to have a Company Material Adverse Effect. The Company has all
requisite power and authority to execute and deliver this Agreement and the
Voting Agreement and all of the other agreements, documents, instruments and
certificates contemplated by, and executed and delivered by it pursuant to,
this Agreement (its "Related Agreements") and perform its obligations under
this Agreement, the Voting Agreement and its Related Agreements. The
execution, delivery and performance by the Company of this Agreement, the
Voting Agreement and its Related Agreements have been duly authorized by the
Company, and the board of directors of the Company has recommended approval
and adoption of this Agreement and the Merger by the Company's shareholders.
This Agreement and the Voting Agreement are, and each of the Company's
Related Agreements will be at Closing, a valid and binding agreement of the
Company enforceable against it in accordance with its terms, except as the
same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting generally the enforcement of creditors'
rights and remedies and general principles of equity, including any
limitations on the availability of the remedy of specific performance or
injunctive relief regardless of whether specific performance or injunctive
relief is sought in a proceeding at law or in equity. Complete and correct
copies of each Company Entity's articles or certificate of incorporation and
bylaws or other applicable governing instruments, all as amended to date, and
of the stock ledgers of each Company Entity have been delivered or made
available to Parent.
(b) Capitalization and Share Ownership. The authorized capital
stock of the Company consists of (i) 120,000,000 shares of Company Common
Stock, of which 49,862,277 shares were outstanding as of the close of
business on the day prior to the date hereof, (ii) 60,000 shares of Series A
Junior Participating Preferred Stock, par value $1.00 per share ("the Series
A Preferred Stock"), of which no shares were outstanding as of the close of
business on the day prior to the date hereof, and (iii) 4,940,000 shares of
preferred stock, par value $1.00 per share, of which no shares were
outstanding as of the close of business on the day prior to the date hereof.
All outstanding shares are duly authorized, validly issued, fully paid and
nonassessable, and no class of capital stock of the Company is entitled to
preemptive rights. There are no options, warrants or other rights to acquire
capital stock (or securities convertible into or exercisable or exchangeable
for capital stock) from the Company, other than (w) the issuance of up to a
maximum of 3,250,000 shares of Company Common Stock pursuant to the Directors
Plan and the Option Plan and other Stock Option arrangements, (x) the
-14-
issuance of up to a maximum of 60,000 shares of Series A Preferred Stock
pursuant to the Company Rights Agreement, (y) the issuance of up to a maximum
of 600,000 shares of Company Common Stock pursuant to the Warrant issued to
the Xxxxxxxx Group, Inc. pursuant to the Financial Advisory Agreement dated
as of May 1, 1996 between Xxxxxxxx Group, Inc. and the Company (the
"Warrant") and (z) the Contracts set forth on Schedule 3.2(b). From the
close of business on the day prior to the date hereof until the execution of
this Agreement, the Company has not issued any capital stock or any options,
warrants or other rights to acquire capital stock (or securities convertible
into or exercisable or exchangeable for capital stock) other than the
issuance of shares of Company Common Stock pursuant to options referred to in
clause (w) above that were outstanding as of the close of business on the day
prior to the date hereof. Except as set forth on Schedule 3.2(b), all
outstanding shares of capital stock of, or other equity or voting interest
in, the Company Entities (other than the Company) are owned by the Company or
another Company Entity, free and clear of all Liens (other than Permitted
Stock Restrictions and such liens as are described in clause (d) of the
definition of "Permitted Liens"), and no Person has any right to acquire any
shares of capital stock of, or other equity or voting interest in, any of the
Company Entities (other than the Company).
(c) No Other Subsidiaries. Except as set forth in Schedule
3.2(c), none of the Company Entities owns or has the right or obligation to
acquire voting securities or other ownership interests in any other Person,
other than the Company Entities (the "Investment Interests"). Such
Investment Interests are owned free and clear of any and all Liens, other
than Permitted Liens and Liens arising (i) pursuant to the constituent
documents of such entities in which the Company Entities own such Investment
Interests and (ii) the other agreements relating thereto listed on Schedule
3.7(a).
Section 3.3 Governmental Authorization; Noncontravention.
(a) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions
contemplated hereby require no action by or in respect of, or filing with,
any Governmental Authority, other than: (i) notices to, or consents or
waivers from, the relevant Franchising Authorities in respect of the
Franchises (the "Franchise Consents"), and the FCC in connection with a
change of control of the holder of the FCC licenses of the Company Entities
or the assignment of such FCC Licenses ("License Consents"); (ii) the filing
of a certificate of merger with respect to the Merger with the Secretary of
State of Delaware and appropriate documents with the relevant authorities of
other states in which Merger Sub is qualified to do business; (iii) the
filing of articles of merger with respect to the Merger with the Secretary of
State of Texas; (iv) compliance with any applicable requirements of the HSR
Act; (v) compliance with any applicable requirements of the Securities Act,
-15-
the Exchange Act, and any other applicable securities laws, whether state or
foreign; and (vi) any actions or filings the absence of which, individually
or in the aggregate, would not reasonably be expected to have a Company
Material Adverse Effect or materially impair or delay the ability of the
Company to consummate the transactions contemplated by this Agreement.
(b) Except as set forth on Schedule 3.3(b), the execution,
delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated hereby do not
and will not: (i) contravene, conflict with or result in any violation or
breach of any provision of the articles of incorporation or bylaws of the
Company; (ii) assuming compliance with the matters referred to in Section
3.3(a), contravene, conflict with or result in a violation or breach of any
provision of any applicable law, statute, ordinance, rule, regulation,
judgment, injunction, order, or decree; (iii) require any consent or other
action by any Person under, constitute a default (or an event that, with or
without notice or lapse of time or both, would constitute a default) under,
or cause or permit the termination, cancellation, acceleration, triggering or
other change of any right or obligation or the loss of any benefit to which
any Company Entity is entitled under (A) any provision of any agreement or
other instrument binding upon any Company Entity or (B) any license,
franchise, permit, certificate, approval or other similar authorization held
by, or affecting, or relating in any way to, the assets or business of, any
Company Entity; or (iv) result in the creation or imposition of any Lien on
any asset of any Company Entity, other than such exceptions in the case of
clauses (ii), (iii) and (iv) as would not be, individually or in the
aggregate, reasonably expected to have a Company Material Adverse Effect or
materially impair or delay the ability of the Company to consummate the
transactions contemplated by this Agreement.
(c) Notwithstanding anything to the contrary in this Section 3.3,
the execution, delivery and performance by the Company of this Agreement and
the consummation by the Company of the transactions contemplated hereby do
not require the consent or other approval of any other Person under, or
require any other action by or in respect of, the Partnership Agreements or
the Management Agreements.
Section 3.4 SEC Filings.
(a) The Company has filed all reports (including proxy statements)
and registration statements required to be filed with the SEC since October
31, 1998 (collectively, the "Company SEC Reports").
(b) As of its filing date, each Company SEC Report complied as to
form in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be.
-16-
(c) As of its filing date, each Company SEC Report filed pursuant
to the Exchange Act did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made,
not misleading.
(d) Each Company SEC Report that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the Securities Act,
as of the date such registration statement or amendment became effective, did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading.
Section 3.5 Financial Statements; Undisclosed Liabilities.
(a) The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company included in the
Company SEC Reports fairly present, in all material respects, in conformity
with GAAP applied on a consistent basis (except as may be indicated in the
notes thereto) the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and their consolidated
results of operations and cash flows for the periods then ended (subject to
normal year-end adjustments in the case of any unaudited interim financial
statements).
(b) There are no liabilities or obligations of the Company or any
other Company Entity of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances that could be reasonably
expected to result in such a liability or obligation, other than:
(i) liabilities or obligations disclosed and provided for in
the Company Balance Sheet or in the notes thereto or in Company SEC
Reports filed prior to the date hereof;
(ii) liabilities or obligations incurred in the ordinary course
of business consistent with past practices since January 31, 1999; or
(iii) liabilities or obligations that, individually or in
the aggregate have not had and would not reasonably be expected to have a
Company Material Adverse Effect.
Section 3.6 Material Adverse Changes. Except as disclosed in
Schedule 3.6, and except as contemplated or permitted by this Agreement,
since January 31, 1999 the business of each Company Entity has been operated
in the ordinary course and consistent with past practices and there has not
occurred:
-17-
(a) any Company Material Adverse Effect;
(b) any salary or compensation increases to any employee of the
Company Entities or any changes to or creation of any Benefit Plan, except in
the ordinary course of business consistent with past practices;
(c) any material amendment or any termination of any Franchise or
System Right;
(d) any increase in indebtedness for borrowed money incurred by
any Company Entity, nor any incurrence of any other obligation or liability
(fixed or contingent) except in the ordinary course of business and
consistent with past practices;
(e) any proceeding with respect to a merger, consolidation,
liquidation or reorganization of any Company Entity other than such
proceedings relating to this Agreement or other than a reincorporation or a
holding company merger that results in the Company's shareholders owning all
of the equity interests in the surviving corporation;
(f) any loan or advance in excess of $100,000 made by any Company
Entity to any Person (other than a Company Entity), including any of their
respective officers, directors, employees and Affiliates;
(g) any change in the prices or pricing policies with respect to
any of the services of the Company Entities, except in the ordinary course of
business; or
(h) any agreement by any of the Company Entities to take any of
the actions described in the foregoing.
Section 3.7 Information Regarding the Business.
(a) In General. Schedule 3.7(a) to this Agreement sets forth:
(i) a listing of all franchises, ordinances and the like
pursuant to which a Governmental Authority has granted any of the Company
Entities permission to provide cable television services to subscribers
within a given area ("Franchises"), all FCC licenses and all business
licenses (except for those business licenses of a nature generally and
routinely required to be obtained and maintained by businesses operating
in any state or jurisdiction in which such Company Entity conducts
business), material easements, material permits or other material
evidences of approval of third parties or any Governmental Authority or
administrative body (the "System Rights") held by any of the Company
Entities, to which any of the Company Entities is a party, or to or by
which any of the Company Entities is subject or bound, as of the date
hereof;
-18-
(ii) the approximate total number of miles of fully completed
and operational trunk and distribution cable, the approximate number of
miles of aerial plant and the approximate number of miles of underground
plant of each Cable System as of the date hereof;
(iii) the approximate number of homes passed by each Cable
System as of the date hereof as provided in the Company Entities'
regularly prepared monthly subscriber reports; and
(iv) the bandwidth capacity(ies) of each Cable System specified
in MHz as of the date hereof and the approximate number of plant miles
corresponding to each bandwidth.
True and complete copies of all the documents referenced in Schedule 3.7(a)
have been delivered or made available by the Company to Parent (including all
amendments and modifications thereto).
(b) Status of Franchises and System Rights. With such exceptions
as, individually or in the aggregate, have not had, and would not reasonably
be expected to have, a Company Material Adverse Effect, (i) each of the
Franchises and System Rights is valid, in full force and effect and
enforceable in accordance with its terms (except, in each such case, as may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting generally the enforcement of creditors' rights and
remedies and general principles of equity, including limitations on the
availability of the remedy of specific performance or injunctive relief
regardless of whether performance or injunctive relief is sought in a
proceeding at law or in equity); (ii) such Company Entity as is a party
thereto has fulfilled when due, or has taken all action necessary to enable
it to fulfill when due, all of its obligations under the Franchises and
System Rights; (iii) there has not occurred any breach by such Company Entity
as is a party thereto or by any other party thereto, under any of the
Franchises or System Rights; (iv) neither such Company Entity as is a party
thereto nor any other party thereto, is in arrears in the performance or
satisfaction of its obligations under any of the Franchises or System Rights
and no waiver or indulgence has been granted any of the parties thereto; (v)
none of the Governmental Authorities that has issued any Franchise or System
Right has notified any of the Company Entities in writing (A) of its intent
to modify, revoke, terminate or fail to renew any such Franchise or System
Right, now or in the future, or (B) that any of the Company Entities is in
violation of the terms of any such Franchise or System Right, and no action
has been threatened with respect thereto; and (vi) there is not pending any
proceeding, application, petition, objection or other pleading with any
Governmental Authority that questions the validity of any Franchise or System
Right or which presents a substantial risk that, if accepted or granted,
would result in the revocation, cancellation, suspension or any adverse
modification of any Franchise or System Right. No Person (including any
-19-
Governmental Authority) has any right to acquire any interest in the business
of the Company Entities or the Assets (including any right of first refusal
or similar right), other than rights of condemnation or eminent domain
afforded by law or upon the termination of or default under any Franchise.
Section 3.8 Title to and Condition of Assets.
(a) Title to Assets. Except for Permitted Liens and for such
exceptions that individually or in the aggregate have not had and would not
reasonably be expected to have a Company Material Adverse Effect, the Company
Entities have good and marketable title to all of the Assets, free and clear
of all Liens.
(b) Condition of Tangible Personal Property. To the knowledge of
the Company, the Tangible Personal Property is in good operating condition
and repair, ordinary wear and tear excepted. The Tangible Personal Property
has been constructed and maintained and has been and is being operated in
accordance with all applicable Legal Requirements, Franchises, System Rights
and Contracts, except for such noncompliance that, individually or in the
aggregate, has not had and would not reasonably be expected to have a Company
Material Adverse Effect.
Section 3.9 Litigation; Judgments, etc. As of the date hereof,
except as is disclosed in Schedule 3.9, except for proceedings affecting the
cable television industry generally, and except for lawsuits being defended
by the Company's insurance carriers for which there is adequate coverage,
there are no lawsuits or legal proceedings pending or to the Company's
knowledge threatened against, and no judgments or orders outstanding against
or otherwise specifically related to, any Company Entity or any Company
Entity's officers, directors or shareholders, in each case which individually
or in the aggregate have had or could reasonably be expected to have a
Company Material Adverse Effect or could materially and adversely affect the
ability of the Company to perform its obligations under this Agreement.
Section 3.10 Labor Contracts. As of the date hereof, there are no
collective bargaining agreements, and no contracts or agreements with labor
unions, relating to, involving or affecting the employees of the Company
Entities to which any Company Entity is a party or by which it is bound, and
no Company Entity has any obligation to bargain with any labor organization
with respect to any such persons.
Section 3.11 Finders and Brokers. Except for the agreement (the
"Advisor Agreement") with Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
(the "Advisor") pursuant to which Parent and/or the Company is obligated to
pay fees to the Advisor upon consummation of the Closing hereunder, a copy of
which has been delivered or made available to Parent, or will be delivered to
Parent promptly upon execution, (i) no Company Entity has entered into any
-20-
contract, arrangement or understanding with any Person which may result in an
obligation of Parent or any Company Entity to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with
the negotiations leading up to this Agreement or the consummation of the
transactions contemplated by this Agreement, and (ii) to the knowledge of the
Company, there is no claim or basis for any claim for payment of any finder's
fees, brokerage or agent's commissions or like payment in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
Section 3.12 Compliance with Laws.
(a) In General.
(i) Except with respect to the regulatory status of the Company
Entities under, or the Company Entities' compliance with, the FCC rules
implementing the rate regulation provisions of the Communications Act (as
to which the Company Entities make no representations and warranties in
this Agreement other than in Section 3.12(b)), the Company Entities have
complied with, and are in compliance with, and the Company Entities have
constructed, maintained and operated, and are constructing, maintaining
and operating, their respective businesses in compliance with, all
applicable laws, including the Communications Act, the Copyright Act of
1976, as amended (the "Copyright Act"), the rules, regulations and
policies of the FCC, the U.S. Copyright Office and the Register of
Copyrights (in each case as the same are currently in effect), except for
such noncompliance that, individually or in the aggregate, has not had and
would not reasonably be expected to have a Company Material Adverse Effect.
Except as set forth on Schedule 3.12, a request for renewal has been filed
timely under Section 626(a) of the Communications Act with the proper
Governmental Authority with respect to all Franchises expiring within 36
months after the date hereof.
(ii) With such exceptions as, individually or in the aggregate,
have not had and would not reasonably be expected to have a Company
Material Adverse Effect, all reports, notices, forms and filings, and all
fees and payments, required to be given to, filed with, or paid to, any
Governmental Authority by any Company Entity under all applicable laws
have been timely and properly given and made by such Company Entity and
are complete and accurate, in each case as required by applicable law,
including (A) all cable television registration statements, periodic
reports and aeronautical frequency usage notices, (B) reports and filings
required by the FAA, and (C) for each relevant semiannual reporting period,
with the U.S. Copyright Office, all required Statements of Account in true
and correct form and copyright royalty fee payments in correct amounts
relating to the carriage of television broadcast signals and other
programming.
-21-
(iii) With such exceptions as, individually or in the
aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect, no Company Entity has received any written
notice from any Governmental Authority or any other Person that it or its
business, or any Company Entity's ownership and operation of its business,
is in violation of any applicable law.
(b) Rate Regulation Information. Schedule 3.12 contains an
accurate description of each Company Entity's business under the FCC rules
implementing the rate regulation provisions of the Communications Act,
described by FCC community unit, that sets forth (i) whether the local
franchising authority has been certified to regulate the rates for the basic
tier and equipment, (ii) whether any complaints have been filed subjecting
such business' rates for cable programing services to regulation by the FCC
in such community unit and, if so, the date of the first such complaint for
each rate increase, (iii) the actions that have been taken in anticipation of
or response to regulation for each community unit, including rate changes
initiated and forms filed with the local franchising authorities or the FCC,
as the case may be, and (iv) the status of the regulatory response. The
Company has delivered or made available to Parent (A) complete and correct
copies of all FCC Forms 1200, 1210, 1220, 1235, 1240 and 1205 (including
channel listings indicating going forward channels and the date such channels
were added) filed between November 1, 1994 and the date hereof with the local
franchising authorities and/or the FCC with respect to each Company Entity's
business, (B) complete and correct copies of all local franchising authority
accounting orders or other local franchising authority rate orders, (C)
complete and correct copies of all FCC rate orders, (D) complete and correct
copies of all local franchising authority actions taken with respect to the
most recent rate increase, and (E) complete and correct copies of all
material correspondence from and/or to any Governmental Authority from
November 1, 1994 through the date hereof in connection with the foregoing or
relating to rate regulation generally or specific rates charged to
subscribers to each Company Entity's business.
Section 3.13 Tax Matters.
(a) Except as disclosed in Schedule 3.13 and with such
exceptions as, individually or in the aggregate, have not had and would not
reasonably be expected to have a Company Material Adverse Effect, (i) each
Company Entity has filed timely all Tax Returns required to be filed, and all
such Tax Returns are true, correct and complete in all material respects,
(ii) all Tax Returns of each Company Entity filed after the date hereof and
prior to the Closing will be made in accordance with applicable Legal
Requirements and will be consistent with the past practices of such Company
Entity and will be true, correct and complete in all material respects, (iii)
each Company Entity has timely paid and will pay all Taxes which have become
due and payable or which will become due and payable as shown on any Tax
-22-
Return referred to in the foregoing two clauses, and (iv) all Taxes payable
by or with respect to any Company Entity with respect to any taxable period,
or portion thereof, ending on or prior to January 31, 1999 have been fully
paid or adequate provision therefor has been made and reflected on the
financial statements in the Company SEC Reports.
(b) Except as disclosed in Schedule 3.13, and with such exceptions
as, individually or in the aggregate, have not had and would not reasonably
be expected to have a Company Material Adverse Effect, (i) no Company Entity
has received written notice of any proposed or determined Tax deficiency or
assessment from any Taxing Governmental Authority, (ii) there are no audits,
examinations, requests for information or other administrative proceedings
pending with respect to any Company Entity and adequate provision for Taxes
with respect to the audits, examinations or other proceedings set forth on
Schedule 3.13 has been made and reflected on the financial statements in the
Company SEC Reports, (iii) there are no outstanding agreements or waivers by
or with respect to any Company Entity that extend the statutory period of
limitations applicable to any federal, state or local Tax Returns or Taxes
for any period, and (iv) no Company Entity has entered into any closing
agreements or other agreements with any Governmental Authority relating to
the payment of Taxes by such Company Entity which if not timely paid or
discharged may result in the imposition of any Lien on any of the Assets, and
there are no Liens for Taxes on the assets of any Company Entity, except for
Liens arising by operation of law for Taxes not yet due. There will be no
Tax allocation or Tax sharing agreement in effect on the Effective Date under
which any Company Entity may be liable, and no Company Entity is liable for
any unpaid Taxes of any Person (other than the Company Entities) under
Treasury Regulations Section 1.1502-6, or any similar provision of state,
local or foreign law, as a transferee or successor, by contract or otherwise.
(c) The Company has made available to Parent, or within 15 days
following the execution of this Agreement will make available to Parent,
copies of all income Tax Returns filed by the Company Entities after December
31, 1995.
Section 3.14 Real Property. The Company Entities have good and
marketable fee title (in the case of owned real property) and valid leasehold
interests (in the case of leased real property) to or in all material real
property owned, leased or otherwise used in the operation of the business of
the Company Entities (the "Real Property"). Except for such failures as have
not had or are not reasonably expected to have a Company Material Adverse
Effect, all Real Property (including the improvements located thereon) (i) is
in reasonable operating condition and repair consistent with its present use,
(ii) is available for immediate use in the conduct of the business or
operations of the Company Entities, (iii) complies with all applicable
building or zoning codes or restrictive covenants and the regulations of any
Governmental Authority having jurisdiction, and (iv) has full legal and
-23-
practical access to public roads or streets and has all utilities and
services necessary for the proper and lawful conduct and operation of the
business of the Company Entities as presently utilized.
Section 3.15 Environmental Matters.
(a) Except as have not had and would not be reasonably expected to
have, individually or in the aggregate, a Company Material Adverse Effect:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review (or any basis therefor) is pending or, to the
knowledge of the Company, is threatened by any Governmental Authority or
other Person relating to or arising out of any Environmental Law; and
(ii) the Company Entities are and have been in compliance with
all Environmental Laws and all Environmental Permits.
(b) For purposes of this Section 3.15, the terms "Company" and
"Company Entity" shall include any entity that is, in whole or in part, a
predecessor of the Company or any Company Entity.
(c) For purposes of this Section 3.15, (i) "Environmental Laws"
means any federal, state, local or foreign law (including, without
limitation, common law), treaty, judicial decision, regulation, rule,
judgment, order, decree, injunction, permit or governmental restriction or
requirement or any agreement with any Governmental Authority or other third
party, relating to human health and safety, the environment or to pollutants,
contaminants, wastes or chemicals or any toxic, radioactive, ignitable,
corrosive, reactive or otherwise hazardous substances, wastes or materials,
and (ii) "Environmental Permits" means, with respect to any Person, all
permits, licenses, franchises, certificates, approvals and other similar
authorizations of any Governmental Authority relating to or required by
Environmental Laws and affecting, or relating in any way to, the business of
such Person or any of its Subsidiaries as currently conducted.
Section 3.16 Insurance. The Assets and the business of each Company
Entity (other than cable plant) are insured against claims, loss or damage in
amounts generally customary in the cable television industry (or any other
industry in which such Company Entity operates) and consistent with the
Company Entities' past practices. All such policies are with financially
sound insurers and are in full force and effect.
Section 3.17 Competitors and Overbuilds. With such exceptions as,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect, and except for the Cable
-24-
Systems, (i) there are no operating cable television systems in all or any
portion of the areas for which any Company Entity holds a Franchise, (ii) no
Person has been granted by any Franchising Authority or any other
governmental cable television licensing agency, and no Person has submitted a
proposal for the issuance by any Franchising Authority or any other
governmental cable television licensing agency, of any franchise, permit,
license, authorization, contract or right, pursuant to which such Person in
either case is or may become entitled to operate a cable television system or
multi-channel multi-point distribution system, in all or any portion of the
areas for which any Company Entity holds a Franchise, (iii) there are no
multi-point distribution systems or multi-channel multi-point distribution
systems, wireless cable systems or satellite master antenna systems operating
in all or any portion of the areas for which any Company Entity holds a
Franchise, and to the knowledge of the Company, no party intends or is
seeking to construct or operate any of the foregoing and (iv) there has not
been any overbuilding of any Cable System by another cable television system.
Section 3.18 Basic Subscriber Count. The number of Basic Subscribers
was not less than 864,919 as of October 31, 1998, not less than 861,591 as of
January 31, 1999 and not less than 867,050 as of March 31, 1999.
Section 3.19 Reorganization.
(a) The Company will not, and will not cause or permit any Company
Entity to, take any action that would cause the Merger to fail to qualify as
a reorganization within the meaning of Section 368(a) of the Code, and the
Company will report the Merger for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code.
(b) Immediately following the Merger, the Surviving Corporation
will hold at least 90% of the fair market value of the Company's net assets
and at least 70% of the fair market value of the Company's gross assets as of
the beginning of the Company's 1999 fiscal year determined in accordance with
Revenue Procedure 77-37, as amended, taking into account amounts used to pay
Merger expenses, any redemptions or distributions other than regular
dividends, and all other payments or transfers of assets made in connection
with the transactions contemplated by this Agreement.
(c) On the Closing Date, the fair market value of the assets of
the Company transferred to Merger Sub in the Merger will exceed the amount of
liabilities to which such transferred assets are subject and any other
liabilities assumed by Merger Sub in the Merger.
(d) There is no indebtedness existing between Parent and the
Company or between Merger Sub and the Company that was issued, acquired or
will be settled at a discount.
-25-
(e) The Company is not an investment company as defined in
Sections 368(a)(2)(F)(iii) and (iv) of the Code.
(f) The Company is not under the jurisdiction of a court in a
title 11 or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
(g) The liabilities of the Company assumed by Merger Sub and the
liabilities to which the transferred assets of the Company are subject were
incurred in the ordinary course of the business of the Company.
(h) The Company will not cause an extraordinary distribution with
respect to Company Common Stock to occur in connection with the Merger. The
Company also has not participated, and in connection with the Merger, will
not participate, in a redemption or acquisition of the Company Common Stock
made by the Company or a Person related to the Company. Any reference to the
Company includes a reference to any successor or predecessor of the Company,
except that Parent is not treated as a successor of the Company. A
corporation will be treated as related to another corporation if they are
both members of the same affiliated group within the meaning of Section 1504
of the Code (without regard to the exceptions in Section 1504(b) of the Code)
or they are related as described in Section 304(a)(2) of the Code
(disregarding Treasury Regulations Section 1.1502-80(b)), in either case
whether such relationship exists immediately before or immediately after the
acquisition.
(i) The fair market value of the Parent Class A Common Stock and
other consideration received by each holder of the Company Common Stock will
be approximately equal to the fair market value of the Company Common Stock
surrendered in the exchange.
(j) The Company and the holders of the Company Common Stock will
pay their respective expenses, if any, incurred in connection with the
Merger.
Section 3.20 Intellectual Property. With such exceptions as,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect, each of the Company
Entities owns or has a valid license to use each trademark, service xxxx,
trade name, invention, patent, trade secret, copyright, know-how (including
any registrations or applications for registration of any of the foregoing)
or any other similar type of proprietary intellectual property right
(collectively, the "Intellectual Property") necessary to carry on its
business substantially as currently conducted. No Company Entity has
received any notice of infringement of or conflict with, and to the knowledge
of the Company, there are no infringements of or conflicts with, the rights
of any Person with respect to the use of any Intellectual Property that, in
-26-
either such case, individually or in the aggregate, have had or would be
reasonably expected to have, a Company Material Adverse Effect.
Section 3.21 Employees, Officers and Directors. The Company has
delivered or made available, or will deliver or make available within 15 days
after the date hereof, a list, accurate in all material respects, of the
names and positions of each of the officers, directors and employees (in the
case of employees earning at least $25,000 per year) of each Company Entity,
and the annual wage, salary and bonus information for such employees as of
the date hereof.
Section 3.22 Employee Benefits.
(a) List of Benefit Plans. All of the Company Entities' material
Benefit Plans are listed and described in Schedule 3.22 to this Agreement,
and complete and accurate copies of (including any amendments to) any such
written Benefit Plans (or related insurance policies) have been furnished, or
will be made available within 30 days after the date hereof, to Parent,
along with copies of any employee handbooks or similar documents describing
such Benefit Plans. Any material unwritten Benefit Plans also are listed in
Schedule 3.22. Except as disclosed in Schedule 3.22, no Company Entity is a
party to or has in effect or to become effective after the date hereof any
plan arrangement that will become a Benefit Plan (including, but not limited
to, any bonus, cash or deferred compensation, severance, medical, pension,
profit sharing or thrift, stock option, employee stock ownership, life or
group insurance, death benefit, vacation, sick leave, disability or trust
agreement or arrangement), or any amendment to a Benefit Plan.
(b) Reporting. The Company Entities have made available to
Parent, or will make available within 30 days after the date hereof, the
Forms 5500 filed for each of the Benefit Plans (including all attachments and
schedules), actuarial reports, summaries of material modifications, summary
annual reports, and any other employer notices required to be filed or
distributed under ERISA (including governmental filings and descriptions of
material changes to Benefit Plans relating to the Company Entities' Benefit
Plans for the last three plan years, and the current summary plan
descriptions).
(c) Compliance. Each Benefit Plan has been administered in
compliance with its own terms and in compliance with the provisions of ERISA,
the Code, the Age Discrimination in Employment Act and any other applicable
Legal Requirements where individually or in the aggregate the failure to
comply would not reasonably be likely to have a Company Material Adverse
Effect.
(d) Multiemployer Plans. No Company Entity nor any Affiliate of
any Company Entity is contributing to, is required to contribute to, or has
-27-
contributed within the last six years to, any Multiemployer Plan, and no
Company Entity nor any Affiliate of any Company Entity has incurred within
the last six years, or reasonably expects to incur, any "withdrawal
liability," as defined under Section 4201 et seq. of ERISA.
(e) Plan Requirements. At all times on or prior to the Closing,
each Benefit Plan, to the extent such Benefit Plan is intended to be
tax-qualified, satisfies in all material respects all minimum coverage,
minimum participation and non-discrimination requirements, if any, imposed on
such Benefit Plan by the applicable terms of the Code and ERISA.
(f) Audits. No Company Entity has knowledge of the existence of
any governmental inspection, investigation, audit or examination of any
Benefit Plan or of any facts that would lead them to believe that any such
governmental inspection, investigation, audit or examination is pending or
threatened, and there exists no action, suit or claim (other than routine
claims for benefits) with respect to any Benefit Plan pending or, to the
knowledge of the Company, threatened against any such plan or arrangement,
where in any event the liability that would reasonably be expected to result
would have a Company Material Adverse Effect.
(g) Retiree Coverage. No Company Entity nor any Affiliate of any
Company Entity sponsors, maintains or contributes to any Benefit Plan that
provides medical or death benefit coverage to former employees of the Company
Entities, except to the extent required by Section 4980B of the Code, and
other than arrangements between any Company Entity and individual employees
that will not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(h) Qualification Standards. With respect to each Benefit Plan:
(i) each Benefit Plan that is intended to be tax-qualified, and each
amendment thereto, is the subject of a favorable determination letter, and,
to the knowledge of any Company Entity, no plan amendment that is not the
subject of a favorable determination letter would reasonably be expected to
result in revocation of a Benefit Plan's letter; (ii) no Benefit Plan is
subject to Code Section 412, Section 302(a)(2) of ERISA or Title IV of
ERISA; and (iii) no condition or event exists or is expected to occur that
could subject, directly or indirectly, any Company Entity or any Affiliate of
any Company Entity to any liability, contingent or otherwise, or the
imposition of any lien on the assets of any Company Entity or any Affiliate
of any Company Entity under the Code or, whether to the Internal Revenue
Service or any other Person.
(i) Accelerated Payment; Enhanced Benefits. Except as
specifically disclosed on Schedule 3.22, neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including, without limitation, stay
-28-
bonuses, severance, or unemployment compensation) becoming due to any
director or employee of any Company Entity; (ii) result in the accrual by an
employee of any Company Entity of a right to receive greater benefits upon
termination of employment on or subsequent to the Closing Date; (iii) result
in the acceleration of vesting under any Benefit Plan; or (iv) materially
increase any benefits otherwise payable under any Benefit Plan.
(j) Stock Options. Except for stock options issued and
outstanding under (i) the Directors Plan and the Option Plan, as both are
defined in Section 2.6 and (ii) the Contracts set forth on Schedule 3.2(b),
there are no currently outstanding stock options or other rights extended to
employees, directors or independent contractors of any Company Entity or any
Affiliate of any Company Entity that, in their current form and without
regard to the transactions contemplated by this Agreement, would grant to
such Persons the ability to purchase or otherwise receive stock in any of the
Company Entities at any time.
(k) Employee Agreements. The Company has delivered or made
available to Parent (i) copies of all employment agreements with officers and
employees of any of the Company Entities involving payments in excess of
$100,000, (ii) copies of any material severance agreements and plans of the
Company Entities with or relating to their employees; and (iii) copies of all
material plans and agreements of the Company Entities with or relating to
their employees; that contain change in control provisions. Schedule 3.22
sets forth a list of all employee agreements described in this Section
3.22(k).
Section 3.23 Antitakeover Statutes and Rights Agreement.
(a) The Company has taken all action necessary to exempt the
Merger and this Agreement and the transactions contemplated hereby from the
restrictions of Part 13 of the TBCA. No other Texas antitakeover or similar
Texas statute or regulation applies or purports to apply to this Agreement or
any of the transactions contemplated hereby. No "control share acquisition,"
"fair price," "moratorium" or other antitakeover laws or regulations enacted
under Texas or federal laws apply to this Agreement or any of the
transactions contemplated hereby.
(b) The Company and the board of directors of the Company have
taken all necessary action, without the payment of any consideration to the
holders of rights under the Company Rights Agreement or to any other Person,
to (i) render the Company Rights Agreement inapplicable to the Merger and the
other transactions contemplated by this Agreement and the Voting Agreement,
and (ii) provide that (A) neither Parent nor any Parent Subsidiary, including
Merger Sub, shall be deemed an "Acquiring Person" (as defined in the Company
Rights Agreement) as a result of the execution, delivery and performance of
this Agreement, the Voting Agreement or any of the transactions contemplated
-29-
hereby or thereby, and (B) no "Distribution Date" (as defined in the Company
Rights Agreement) shall be deemed to have occurred as a result of this
Agreement or any of the transactions contemplated hereby.
Section 3.24 Vote Required. The only vote of the holders of any class
or series of capital stock of the Company necessary to approve this Agreement
and the transactions contemplated hereby is the affirmative vote of the
holders of two-thirds of the outstanding shares of Company Common Stock (the
"Company Shareholders' Approval").
Section 3.25 Year 2000 Compliance. All computer software programs,
including all source code, object code and documentation related thereto,
hardware, databases, and embedded control systems (collectively, the
"Computer Systems") used by any Company Entity are Year 2000 Compliant,
except where the failure to be Year 2000 Compliant would not reasonably be
expected to have a Company Material Adverse Effect. For purposes of this
Agreement, "Year 2000 Compliant" means that the Computer Systems (i)
accurately process date and time data (including calculating, comparing, and
sequencing) from, into, and between the twentieth and twenty-first centuries,
the years 1999 and 2000, and leap year calculations and (ii) operate
accurately with other software and hardware that use standard date format (4
digits) for representation of the year.
Section 3.26 Opinion of Financial Advisor. The Company has received an
opinion of the Advisor to the effect that, as of the date hereof, from a
financial point of view, the Consideration is fair to the holders of Company
Common Stock.
Section 3.27 Contracts. No Company Entity is a party to or bound by
(a) any "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC except as disclosed in the Company SEC Reports) or
any agreement, contract or commitment that would be such a "material
contract" but for the exception for contracts entered into in the ordinary
course of business, or (b) any non-competition agreement or any other
agreement or obligation which materially limits or will materially limit any
Company Entity (or after the Merger, Parent, Merger Sub or any Affiliate
thereof) from engaging in the business of providing cable television,
telephony or data transmission services. With such exceptions as,
individually or in the aggregate, have not had, and would not be reasonably
expected to have, a Company Material Adverse Effect, (i) each of the
contracts, agreements and commitments of the Company Entities is valid and in
full force and effect and (ii) none of the Company Entities has violated any
provision of, or committed or failed to perform any act which, with or
without notice, lapse of time or both, would constitute a default under the
provisions of any such contract, agreement or commitment. To the knowledge
of the Company, no counterparty to any such contract, agreement or commitment
has violated any provision of, or committed or failed to perform any act
-30-
which, with or without notice, lapse of time or both would constitute a
default or other breach under the provisions of, such contract, agreement or
commitment, except for defaults or breaches which, individually or in the
aggregate, have not had, or would not reasonably be expected to have a
Company Material Adverse Effect. None of the Company Entities is a party to,
or otherwise a guarantor of or liable with respect to, any interest rate,
currency or other swap or derivative transaction, other than any such
transactions which are not material to the business of the Company. The
Company has delivered or made available to Parent a copy of each agreement
described in items (a) and (b) above.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 4.1 In General. Parent and Merger Sub, subject to the
disclosures set forth in the Schedules hereto, each makes the following
representations and warranties set forth below in this Article Four to the
Company to induce the Company to enter into this Agreement.
Section 4.2 Organization and Authority. Each of Parent and Merger
Sub is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and is qualified to do business, and
is in good standing, as a foreign corporation where such qualification is
necessary, except where the failure to be so qualified would not have a
Parent Material Adverse Effect. Each of Parent and Merger Sub has all
requisite power and authority to own and operate its respective properties
and to carry on its respective businesses as now conducted. Each of Parent
and Merger Sub has all requisite power and authority to execute and deliver
this Agreement, the Voting Agreement (as to Parent only) and all of the other
agreements, documents, instruments and certificates contemplated by, and
executed and delivered by it pursuant to, this Agreement (its "Related
Agreements"), and perform its obligations under this Agreement, the Voting
Agreement (as to Parent only) and its Related Agreements. The execution,
delivery and performance by each of Parent and Merger Sub of this Agreement,
the Voting Agreement (as to Parent only) and its Related Agreements have been
duly authorized by each of Parent and Merger Sub and this Agreement and the
Voting Agreement (as to Parent only) are, and at the Closing its Related
Agreements will be, a valid and binding agreement of each of Parent and
Merger Sub enforceable against each of Parent and Merger Sub in accordance
with its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting generally
the enforcement of creditors' rights and remedies and general principles of
equity, including any limitations on the availability of the remedy of
specific performance or injunctive relief regardless of whether specific
performance or injunctive relief is sought in a proceeding at law or in
equity. Complete and correct copies of each of Parent's and Merger Sub's
-31-
certificate of incorporation and bylaws, all as amended to date, have been
delivered or made available to the Company.
Section 4.3 Governmental Authorization; Noncontravention.
(a) Subject to the receipt by the Company of the Franchise
Consents and the License Consents, the execution, delivery and performance by
each of Parent and Merger Sub of this Agreement and the consummation by each
of Parent and Merger Sub of the transactions contemplated hereby require no
action by or in respect of, or filing with, any Governmental Authority, other
than: (i) the filing of a certificate of merger with respect to the Merger
with the Secretary of State of Delaware and appropriate documents with the
relevant authorities of other states in which Merger Sub is qualified to do
business; (ii) the filing of articles of merger with respect to the Merger
with the Secretary of State of Texas; (iii) compliance with any applicable
requirements of the HSR Act; (iv) compliance with any applicable requirements
of the Securities Act, the Exchange Act and any other applicable securities
laws, whether state or foreign; and (v) any actions or filings the absence of
which, individually or in the aggregate, would not be reasonably expected to
have a Parent Material Adverse Effect or materially impair or delay the
ability of Parent or Merger Sub to consummate the transactions contemplated
by this Agreement.
(b) The execution, delivery and performance by each of Parent and
Merger Sub of this Agreement and the consummation by each of Parent and
Merger Sub of the transactions contemplated hereby do not and will not: (i)
contravene, conflict with, or result in any violation or breach of any
provision of the certificate of incorporation or bylaws of either Parent or
Merger Sub; (ii) assuming compliance with the matters referred to in Section
4.3(a), contravene, conflict with or result in a violation or breach of any
provision of any law, rule, regulation, judgment, injunction, order or
decree; and (iii) require any consent or other action by any Person under,
constitute a default under (or an event that, with or without notice or lapse
of time or both, would constitute a default), or cause or permit the
termination, cancellation, acceleration, triggering or other change of any
right or obligation or the loss of any benefit to which Parent or Merger Sub
is entitled under (A) any provision of any agreement or other instrument
binding upon Parent or Merger Sub or (B) any license, franchise, permit,
certificate, approval or other similar authorization held by, or affecting,
or relating in any way to, the assets or business of Parent or Merger Sub,
other than such exceptions in the case of clauses (ii) and (iii) as would not
be, individually or in the aggregate, reasonably expected to have a Parent
Material Adverse Effect or materially impair the ability of Parent or Merger
Sub to consummate the transactions contemplated by this Agreement.
Section 4.4 Litigation. As of the date hereof, except as is
disclosed in the Parent SEC Reports filed prior to the date hereof, except
-32-
for proceedings affecting the cable television, broadband distribution or
programming industries generally, and except for lawsuits defended by the
Company's insurance carriers for which there is adequate coverage, there are
no lawsuits or legal proceedings pending, or to Parent's knowledge
threatened, against Parent or any of its Subsidiaries which could materially
and adversely affect the ability of Parent or Merger Sub to perform its
obligations under this Agreement, nor are there any judgments or orders
outstanding against Parent or any of its Subsidiaries that could have such
effect.
Section 4.5 Finders and Brokers. Parent has not entered into any
contract, arrangement or understanding with any Person which will result in
the obligation of any Company Entity or any shareholder of the Company to pay
any finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement and the Related
Agreements or the consummation of the transactions contemplated hereby or
thereby.
Section 4.6 Capital Stock.
(a) Parent. The authorized capital stock of Parent is as set
forth on Schedule 4.6. All of the outstanding shares of capital stock of
Parent are duly authorized, validly issued, fully paid and nonassessable. As
of the close of business on March 31, 1999, the number of shares of capital
stock of Parent issued and outstanding and the number of shares held in the
treasury of Parent are as set forth on Schedule 4.6. Except as disclosed in
the Parent SEC Reports, all outstanding shares of capital stock of the
Significant Subsidiaries (as defined for purposes of Regulation S-X under the
Exchange Act) of Parent are owned by Parent or a direct or indirect
wholly-owned Subsidiary of Parent, free and clear of all liens, charges,
encumbrances, claims and options of any nature. As of the close of business
on March 31, 1999, there were outstanding options to acquire no more than the
number of shares of Parent capital stock set forth on Schedule 4.6.
(b) Merger Sub. The authorized capital stock of Merger Sub is as
set forth on Schedule 4.6. All of the outstanding shares of capital stock of
Merger Sub are duly authorized, validly issued, fully paid and nonassessable.
As of the date of this Agreement, the number of shares of capital stock of
Merger Sub issued and outstanding and the number of shares held in the
treasury of Merger Sub are as set forth on Schedule 4.6. As of the date of
this Agreement, there were no outstanding options to acquire shares of
capital stock of Merger Sub.
Section 4.7 Transaction Shares. The shares of Parent Class A Common
Stock to be issued pursuant to Article Two will, when issued, be duly
authorized, validly issued, fully paid and nonassessable, free and clear of
-33-
all Liens; provided, however, that such shares of Parent Class A Common Stock
shall be subject to Permitted Stock Restrictions.
Section 4.8 SEC Filings.
(a) Parent has filed all reports (including proxy statements) and
registration statements required to be filed with the SEC since December 31,
1998, (collectively, the "Parent SEC Reports").
(b) As of its filing date, each Parent SEC Report complied as to
form in all material respects with the applicable requirements of the
Securities Act and Exchange Act, as the case may be.
(c) As of its filing date, each Parent SEC Report filed pursuant
to the Exchange Act did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made,
not misleading.
(d) Each Parent SEC Report that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the Securities Act,
as of the date such registration statement or amendment became effective, did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading.
Section 4.9 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Parent
included in the Parent SEC Reports fairly present, in all material respects,
in conformity with GAAP applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of
Parent and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited interim
financial statements).
Section 4.10 Reorganization.
(a) Neither Parent nor Merger Sub will take any action that would
cause the Merger to fail to qualify as a reorganization within the meaning of
Section 368(a) of the Code, and Parent and Merger Sub will report the Merger
for federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code.
(b) Immediately prior to the Merger, Parent will be in control of
Merger Sub, within the meaning of Section 368(c) of the Code.
-34-
(c) Following the Merger, Parent will cause the Surviving
Corporation to continue the historic business of the Company or use a
significant portion of the Company's historic business assets in a business,
in each case within the meaning of Treasury Regulations Section 1.368-1(d).
(d) Parent has no present plan or intention, following the Merger,
to liquidate the Surviving Corporation or merge the Surviving Corporation
with or into another corporation, or to sell, transfer or otherwise dispose
of the stock of the Surviving Corporation or the assets of the Surviving
Corporation except for dispositions made in the ordinary course of business
and transfers described in Section 368(a)(2)(C) of the Code.
(e) Neither Parent nor Merger Sub is an investment company as
defined in Sections 368(a)(2)(F)(iii) and (iv) of the Code.
(f) Following the Merger, the Surviving Corporation will not issue
additional shares of its stock that would result in Parent losing control of
the Surviving Corporation within the meaning of Section 368(c) of the Code.
(g) Parent will not, in connection with the Merger, repurchase or
redeem any of the Parent Class A Common Stock issued to holders of the
Company Common Stock either directly or through a related party, and Parent
and its related parties will not, in connection with the Merger, otherwise
effect such a redemption or acquire Company Common Stock for consideration
other than the consideration to be issued to the holders of Company Common
Stock in the Merger (nor have they done so). Any reference to Parent
includes a reference to any successor or predecessor of Parent, except that
the Company is not treated as a predecessor of Parent. A corporation will be
treated as related to another corporation if they are both members of the
same affiliated group within the meaning of Section 1504 of the Code (without
regard to the exceptions in Section 1504(b) of the Code) or they are related
as described in Section 304(a)(2) of the Code (disregarding Treasury
Regulations Section 1.1502-80(b)), in either case whether such relationship
exists immediately before or immediately after the acquisition.
(h) The fair market value of the Parent Class A Common Stock and
other consideration received by each holder of the Company Common Stock will
be approximately equal to the fair market value of the Company Common Stock
surrendered in the exchange.
(i) Parent and Merger Sub will pay their respective expenses, if
any, incurred in connection with the Merger.
(j) No stock of Merger Sub will be issued in the Merger.
Section 4.11 Material Adverse Effect. Since December 31, 1998, there
has not been any Parent Material Adverse Effect.
-35-
Section 4.12 Environmental Matters.
(a) Except as have not and would not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review (or any basis therefor) is pending or, to the
knowledge of Parent, is threatened by any Governmental Authority or other
Person relating to or arising out of any Environmental Law; and
(ii) Parent and Merger Sub are and have been in compliance with
all Environmental Laws and all Environmental Permits.
(b) For purposes of this Section 4.12, the term "Parent" shall
include any entity that is, in whole or in part, a predecessor of Parent.
ARTICLE FIVE
COVENANTS AND CONDUCT OF BUSINESS AND
TRANSACTIONS PRIOR TO CLOSING
Section 5.1 Covenants of Parent and Merger Sub. From the date hereof
through the Closing, without the prior written consent of the Company (which
will not be unreasonably withheld or delayed), unless otherwise required or
permitted by any other provision of this Agreement or any Related Agreement,
(a) neither Parent nor Merger Sub shall take any action that would cause the
representations and warranties made by Parent and Merger Sub in this
Agreement not to be true, correct and accurate, in all material respects
(determined as provided in Section 7.3), as of the Closing, and (b) Parent
shall promptly notify the Company of any failure of Parent or Merger Sub to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by either of them prior to the Closing.
Section 5.2 Covenants of Company.
(a) Company's Negative Covenants. From the date hereof through
the Closing, without the prior written consent of Parent (which will not be
unreasonably withheld or delayed), except for such rate increases as the
Company Entities may implement under applicable Legal Requirements and except
as set forth on Schedule 5.2 or unless otherwise required or permitted by any
other provision of this Agreement or any Related Agreement, the Company shall
not, and shall cause the other Company Entities not to:
(i) take any action which would cause the representations and
warranties made by the Company in this Agreement not to be true, correct
-36-
and accurate, in all material respects (determined as provided in Section
6.4) as of the Closing;
(ii) modify in any material respect, terminate, renew for a
period extending past the Termination Date, suspend or abrogate any
material Contract; provided, however, that the Company Entities shall be
entitled, in the ordinary course of business, to enter into new contracts,
agreements, commitments, arrangements or understandings which would involve
payments by any of the Surviving Corporation or any Company Entity not in
excess of $500,000 individually or $10,000,000 in the aggregate;
(iii) (A) terminate any Franchise or material System Right or
(B) modify in any material respect, renew for a period extending past the
Termination Date, suspend or abrogate any Franchise or material System
Right;
(iv) except as required by applicable Legal Requirements, change
any policy regarding any marketing, subscriber installation or collection
practices that are inconsistent in any material respect with such practices
of the Company Entities for the periods covered by the Company SEC Reports;
(v) dispose of any Assets, except for sales of non-material
assets in the ordinary course of business and consistent with past
practices (including practices during the periods covered by the Company
SEC Reports);
(vi) grant or agree to grant any increase in the rates of
salaries or compensation payable to employees of the Company Entities
(other than as required by law and regularly scheduled bonuses and
increases in the ordinary course of business);
(vii) amend its articles of incorporation or bylaws or other
applicable governing instrument;
(viii) split, combine, subdivide or reclassify any shares of its
capital stock or other equity interests or declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof), other than regular quarterly cash dividends not in
excess of $0.08 per share per quarter, in respect of its capital stock, or
redeem, repurchase or otherwise acquire or offer to redeem, repurchase or
otherwise acquire any of its securities or any securities of the Company or
any other Company Entity, except for dividends paid by any Company Entity
that is, directly or indirectly, wholly-owned by the Company;
(ix) adopt a plan or agreement of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other material reorganization;
-37-
(x) issue, deliver or sell, or authorize the issuance, delivery
or sale of, any shares of its capital stock of any class or other equity
interests or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such capital stock or other
equity interests, other than the issuance of shares of Company Common Stock
upon the exercise of stock options in accordance with their present terms;
(xi) amend any existing Benefit Plan or establish or adopt any
new Benefit Plan (other than as required by Legal Requirements or done in
the ordinary course of business);
(xii) enter into any new, or amend in any material respect any
existing, employment, severance or consulting agreement, sales agency or
other Contract with respect to the performance of personal services, except
(A) any such new agreement providing for cash compensation of less than
$100,000 per annum entered into in the ordinary course of business; and (B)
any individuals hired on an at-will basis to replace current employees or
to service customer contracts that commence after the date hereof;
(xiii) except for capital expenditures, which shall be governed
by Section 5.8, acquire (by merger, consolidation, acquisition of stock or
assets or otherwise), directly or indirectly, any assets, other than (A)
pursuant to agreements in effect as of the date hereof, or (B) assets
having a fair market value not exceeding $5,000,000 in the aggregate (and
not involving Basic Subscribers in the aggregate of 1,500 or more);
(xiv) incur, assume or guarantee any indebtedness for borrowed
money other than in the ordinary course of business and in amounts and on
terms consistent with past practices; or
(xv) enter into or amend in any material respect (A) any joint
venture, partnership or other similar arrangement (other than joint
ventures, partnerships or similar arrangements involving, in the aggregate,
no more than 1,500 Basic Subscribers), (B) any agreement for the provision
by one or more third parties of telephony, data or other services through
the facilities of one or more of the Cable Systems of any Company Entity,
which is exclusive or which cannot be terminated within six months of the
Effective Time without any penalty, or (C) any agreement providing for the
right to use the facilities of one or more of the Cable Systems of the
Company Entities, which is exclusive or which cannot be terminated within
six months of the Effective Time without any penalty.
(b) Company's Affirmative Covenants. From the date hereof through
the Closing, unless otherwise required or permitted by any other provision of
this Agreement or any Related Agreement, the Company shall and shall cause
the other Company Entities to:
-38-
(i) in all material respects operate the business of each of the
Company Entities in the ordinary course of business;
(ii) use reasonable efforts to preserve the goodwill and
business of the subscribers, customers, advertisers, employees, suppliers
and others having business relations with the Company Entities;
(iii) continue to construct Governmental Authority-required line
extensions and otherwise construct and maintain cable plant for the Cable
Systems in the ordinary course of business consistent with past practices,
and deliver to Parent a copy of each Company Entity's monthly capital
expenditures reports;
(iv) maintain or enhance all casualty and liability insurance
relating to the business of each of the Company Entities as in effect on
the date of this Agreement;
(v) file with the FCC all material reports required to be filed
under applicable FCC rules and regulations, and otherwise comply in all
material respects with all Legal Requirements;
(vi) promptly deliver to Parent as they are available true and
complete copies of each Company Entity's monthly unaudited operating
statements and monthly subscriber or customer reports; and
(vii) promptly notify Parent of (A) any circumstance, event or
action by any Company Entity or otherwise, the existence, occurrence or
taking, as applicable, of which would result in any of the representations
and warranties of the Company in this Agreement (i) if specifically
qualified by materiality, not being true and complete as so qualified, and
(ii) if not qualified by materiality, not being true and correct in all
material respects, in each case when made or at the Closing, or (B) any
failure of the Company to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it prior to the Closing.
Section 5.3 Compliance with HSR Act and Rules. Parent and the
Company shall within 15 days after the date hereof file or cause to be filed
all necessary Notification and Report Forms (the "HSR Reports") mandated by
the HSR Act and the HSR Rules, to be filed by them, or by any other Person as
a result of the transactions contemplated by this Agreement and coordinate
the filing of such HSR Reports (and exchanging relevant portions of drafts
thereof) so as to present all HSR Reports to the FTC and the DOJ at the time
selected by the mutual agreement of the Company and Parent. The parties shall
use commercially reasonable efforts to respond, or to cause such other
Persons to respond, as promptly as reasonably practicable to any inquiries
received from the FTC or the Antitrust Division of the DOJ for additional
information or documentation and to respond, or to cause such other Persons
-39-
to respond, as promptly as reasonably practicable to all inquiries and
requests received from any other Governmental Authority in connection with
antitrust matters. The parties shall use their respective commercially
reasonable efforts to overcome any objections that may be raised by the FTC
or the Antitrust Division of the DOJ or any other Governmental Authority
having jurisdiction over antitrust matters. Notwithstanding anything to the
contrary in this Agreement, neither Parent nor the Company shall be required
to agree to any prohibition, limitation or other requirements that would (i)
prohibit or limit the ownership or operation by such Person or any of its
Affiliates of any portion of the business or assets of such Person or any of
its Affiliates, or compel such Person or any of its Affiliates to dispose of
or hold separate any portion of the business or assets of such Person or any
of its Affiliates, or (ii) prohibit such Person or any of its Affiliates from
effectively controlling in any material respect the business or operations of
such Person or any of its Affiliates.
Section 5.4 Company Shareholders' Meeting.
(a) The Company shall cause a meeting of its shareholders to be
duly called and held as soon as reasonably practicable for the purpose of
voting on the approval and adoption of this Agreement and the Merger (the
"Company Shareholders' Meeting"). In connection with the Company
Shareholders' Meeting, the Company will (i) subject to Section 5.4(b), use
its reasonable best efforts to obtain the necessary approvals by its
shareholders of this Agreement, the Merger and the other transactions
contemplated hereby and (ii) otherwise comply with all Legal Requirements
applicable to such meeting.
(b) The board of directors of the Company shall not withdraw, or
modify in a manner adverse to Parent, its recommendation to its shareholders
unless (i) the Company has complied with the terms of Section 5.5 in all
material respects, including, without limitation, the requirement in Section
5.5(c) that it notify Parent promptly after its receipt of any Acquisition
Proposal, (ii) the board of directors of the Company determines in good faith
on the basis of the advice of the Company's outside counsel, that it must
take such action to comply with its fiduciary duties under applicable Legal
Requirements, (iii) in the case of a withdrawal, modification or change that
occurs in the Initial Period, a Superior Proposal is pending at the time the
Board of Directors determines to take any such action and (iv) in the case of
a withdrawal, modification or change that occurs after the Initial Period,
the Company shall have delivered to Parent a prior written notice advising
Parent that it intends to take such action and describing its reasons for
taking such action (such notice to be delivered not less than two days prior
to the time such action is taken). Unless this Agreement is previously
terminated in accordance with Article Nine, the Company shall submit this
Agreement to its shareholders at the Company Shareholders' Meeting even if
the board of directors of the Company determines at any time after the date
-40-
hereof that it is no longer advisable or recommends that the Company
shareholders reject it.
Section 5.5 No Solicitation.
(a) The Company will not, and will cause the other Company
Entities and the officers, directors, employees, investment bankers,
attorneys, accountants, consultants or other agents or advisors of the
Company Entities not to, directly or indirectly:
(i) take any action to solicit, initiate, facilitate or
encourage the submission of any Acquisition Proposal;
(ii) other than in the ordinary course of business and not
related to an Acquisition Proposal or other than as permitted under clause
(iv) below, engage in any discussions or negotiations with, or disclose any
non-public information relating to any Company Entity or afford access to
the properties, books or records of any Company Entity to, any Person who
is known by any Company Entity to be considering making, or has made, an
Acquisition Proposal;
(iii) other than as permitted under clause (iv) below, amend or
grant any waiver or release under any standstill or similar agreement with
respect to any class of equity securities of the Company (a "Standstill
Agreement");
(iv) enter into any letter of intent, contract, agreement,
arrangement or other understanding with respect to an Acquisition Proposal
(other than a confidentiality agreement as described in item (C) below);
provided, that during the Initial Period, the Company may negotiate or
otherwise engage in substantive discussions with, and furnish non-public
information and provide a waiver or release of a Standstill Agreement (so
long as such waiver or release is limited to the Initial Period) to, any
Person (a "Third Party") who delivers an Acquisition Proposal that the
board of directors of the Company reasonably believes will lead to a
Superior Proposal if: (A) the Company has complied with the terms of this
Section 5.5, including, without limitation, the requirement in Section
5.5(c) that it notify Parent promptly after its receipt of any Acquisition
Proposal; (B) the board of directors of the Company determines in good
faith, on the basis of advice from the Company's outside counsel, that it
must take such action to comply with its fiduciary duties under applicable
Legal Requirements; and (C) the Third Party executes a confidentiality
agreement with terms no less favorable in the aggregate to the Company than
those contained in the Bilateral Nondisclosure Agreement, dated May 6,
1999, by and between Parent and the Company, as amended by Amendment No. 1
to Bilateral Nondisclosure Agreement, dated May 7, 1999, by and between
Parent and the Company (the "Confidentiality Agreement"); or
-41-
(v) take any action to render the Company Rights Agreement
inapplicable to any transaction with any Person other than Parent and
Merger Sub.
(b) Nothing contained in this Agreement shall prevent the board of
directors of the Company from complying with Rule 14e-2 and Rule 14d-9 under
the Exchange Act with regard to an Acquisition Proposal; provided that the
board of directors of the Company shall not recommend that the shareholders
of the Company tender their shares in connection with a tender offer, except
to the extent that the board of directors by vote determines in its good
faith judgment that such a recommendation is required to comply with the
fiduciary duties of the board of directors of the Company to shareholders
under applicable Legal Requirements, after receiving the advice of outside
legal counsel. As used herein, the term "Initial Period" means the 30-day
period commencing on the date hereof; provided, however, that if a Third
Party delivers an Acquisition Proposal meeting the requirements referred to
in clause (a)(iv) above to the Company on any day within the last five days
of the Initial Period, the Initial Period shall be extended (with respect to
such Third Party only) so that it ends on the date which is five days after
the date such Acquisition Proposal is delivered to the Company.
(c) The Company will notify Parent promptly (but in no event later
than 24 hours) after receipt by the Company (or any of its advisors) of any
Acquisition Proposal, or of any request (other than in the ordinary course of
business and not related to an Acquisition Proposal) for non-public
information relating to the Company or any other Company Entity or for access
to the properties, books or records of the Company or any other Company
Entity by any Person who is known to be considering making, or has made, an
Acquisition Proposal. The Company shall provide such notice orally and in
writing and shall identify the Person making, and the terms and conditions
of, any such Acquisition Proposal, indication or request. The Company shall
keep Parent fully informed, on a prompt basis (but in any event no later than
24 hours), of the status and details of any such Acquisition Proposal,
indication or request. The Company shall, and shall cause the other Company
Entities and the directors, employees and other agents of the Company and the
other Company Entities to, cease immediately and cause to be terminated all
activities, discussions or negotiations, if any, with any Persons conducted
prior to the date hereof with respect
to any Acquisition Proposal.
(d) The Company will take all action to (i) render the Company
Rights Agreement inapplicable to the Merger and the other transactions
contemplated by this Agreement, and (ii) provide that (A) neither Parent nor
any Parent Subsidiary, including Merger Sub, shall be deemed an "Acquiring
Person" (as defined in the Company Rights Agreement) as a result of this
Agreement or any of the transactions contemplated hereby, and (B) no
"Distribution Date" (as defined in the Company Rights Agreement) shall be
-42-
deemed to have occurred as a result of this Agreement or any of the
transactions contemplated hereby.
Section 5.6 Consents.
(a) Receipt of Consents. Subject to the terms and conditions of
this Agreement, the Company and Parent will cooperate with each other and
use their reasonable best efforts to promptly (i) take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement as soon as practicable,
including, without limitation, preparing and filing as promptly as
practicable all documentation to effect all necessary filings, notices,
petitions, statements, registrations, submissions of information,
applications and other documents, (ii) obtain and maintain all approvals,
consents, registrations, permits, authorizations and other confirmations
required to be obtained from any third party that are necessary, proper or
advisable to consummate the Merger and the other transactions contemplated by
this Agreement and (iii) obtain and maintain waivers of all Purchase Rights
(as defined below). Subject to applicable laws relating to the exchange of
information, the Company and Parent shall have the right to review in
advance, and to the extent practicable each will consult the other on, all
the information relating to the Company Entities and Parent, as the case may
be, that appears in any filing made with, or written materials submitted to,
any third party and/or any Governmental Authority in connection with the
Merger and the other transactions contemplated by this Agreement. Within
five Business Days of the date hereof, the Company will provide to Parent a
true and complete list of all Franchise Consents, all License Consents and
all rights that any Person may have under the terms of the Franchises to
purchase all or any portion of a Cable System as a result of the transactions
contemplated hereby ("Purchase Rights"). Notwithstanding anything to the
contrary in this Agreement, neither Parent nor the Company shall be required
in connection with obtaining the required consents or other approvals
referred to in this Section 5.6(a) to agree to any prohibition, limitation or
other requirement that would (i) prohibit or limit the ownership or operation
by such Person or any of its Affiliates of any portion of the business or
assets of such Person or any of its Affiliates, or compel such Person or any
of its Affiliates to dispose of or hold separate any portion of the business
or assets of such Person or any of its Affiliates, or (ii) prohibit such
Person or any of its Affiliates from effectively controlling in any material
respect the business or operations of such Person or any of its Affiliates.
(b) Franchise Renewals and Extensions. From the date hereof
through Closing, the Company shall cause all requests for renewal under
Section 626(a) of the Communications Act to be filed with the proper
Governmental Authority with respect to any Franchise as soon as practicable
after the date which is 36 months prior to the expiration date of any such
-43-
Franchise (and in no event later than 30 months prior to the expiration date
thereof), provided that the Company shall consult with Parent prior to the
filing of any such renewal requests (in each case such Franchise is referred
to herein as an "Expiring Franchise"). The Company shall (A) cause the
Company Entities to use reasonable best efforts to have the respective
Governmental Authorities approve the transfer of the Expiring Franchises to
Parent without any change in (other than an extension to the franchise term
of such Expiring Franchises), or imposition of any adverse condition to, the
terms and provisions of such Expiring Franchises as in effect on the date of
this Agreement, or (B) cause the Company Entities, in cooperation with
Parent, to renew such Expiring Franchises for an additional term beyond their
respective current expiration dates on terms and conditions not materially
less favorable to the franchisee in the aggregate.
Section 5.7 Interim Financial Statements. The Company shall deliver
to Parent (i) unaudited monthly operating statements of each of the Company
Entities and month-end billing reports and month-end subscriber reports
prepared by the Company or any other Company Entity in the ordinary course of
its business (the "Monthly Statements") within 45 days after the end of each
fiscal month, (ii) unaudited quarterly consolidated and consolidating
financial statements for the Company within 60 days after the end of each
fiscal quarter (other than the fiscal quarter ending October 31) and (iii)
audited annual consolidated and consolidating financial statements for the
Company within 120 days after the end of any fiscal year (and the Company
shall use commercially reasonable efforts to deliver such annual financial
statements within 75 days after the end of such fiscal year), for each fiscal
month, quarter and year ending between the date of this Agreement and the
Closing Date and any other similar regularly prepared materials that Parent
may reasonably request. Except as may otherwise be noted therein, the
Monthly Statements shall be prepared, and upon delivery of each Monthly
Statement to Parent, the Company shall be deemed to represent and warrant to
Parent that such Monthly Statement has been prepared in accordance with the
books and records of the Company and the other Company Entities and in a
manner consistent with the past practice of the relevant Company Entity.
Section 5.8 Capital Expenditures. Notwithstanding anything in this
Agreement to the contrary, from the date of this Agreement until Closing, the
Company shall make capital expenditures, including, without limitation, for
purposes of completing line extensions, placing conduit or cable in new
developments and fulfilling installation requests, in such manner and in such
amounts as are consistent in all material respects with the business plan for
the business of each of the Company Entities for 1999, which shall be
delivered by the Company to Parent within five Business Days after the date
of this Agreement.
Section 5.9 Affiliates of Parent and Company. Promptly after
execution of this Agreement, each of the directors of the Company has
-44-
executed an agreement to the effect set forth in this Section 5.9. Prior to
the Effective Time, the Company shall deliver to Parent a letter identifying
all other Persons who, to the knowledge of the Company, at the Effective
Time, may be deemed to be "affiliates" of the Company for purposes of Rule
145 under the Securities Act or who may otherwise be deemed to be Affiliates
of the Company (the "Rule 145 Affiliates"). The Company shall use its
reasonable best efforts to cause each Person who is identified as a Rule 145
Affiliate in such list to deliver to Parent on or prior to the 30th day prior
to the Effective Time, a written agreement, in the form attached hereto as
Exhibit B, that such Rule 145 Affiliate will not sell, pledge, transfer or
otherwise dispose of any Parent Class A Common Stock issued to such Rule 145
Affiliate pursuant to the Merger, except pursuant to an effective
registration statement or in compliance with Rule 145 under the Securities
Act or an exemption from the registration requirements of the Securities Act.
Section 5.10 Employee Benefits.
(a) For the period ending on the last day of the first calendar
year beginning after the Effective Date, Parent shall or shall cause the
Surviving Corporation to maintain employee benefit plans and arrangements
that provide benefits, in the aggregate, on the same terms and subject to the
same conditions as in effect under such Benefit Plan (not taking into account
benefits under any Benefits Plans that are equity based). Notwithstanding
the foregoing, Parent and the Surviving Corporation may elect to provide any
matching employer contributions required under the terms of a cash or
deferred arrangement intended to be qualified under Section 401(k) of the
Code in the form of either Parent Class A Common Stock or cash.
(b) With respect to any employee benefit plans of Parent in which
the employees of the Company Entities participate subsequent to the Effective
Time, Parent shall, or shall cause the Surviving Corporation to: (A) waive
all limitations as to pre-existing conditions, exclusions and waiting periods
with respect to participation and coverage requirements applicable to the
employees under any such employee benefit plan that is a welfare plan, as
defined in Section 3(1) of ERISA in which such employees may be eligible to
participate and (B) recognize all service of the employees of the Company
Entities with any of the Company Entities for all purposes (excluding benefit
accrual under any defined benefit pension plan and eligibility for benefits
under any post-retirement medical plans) in any employee benefit plan of
Parent in which such employees may be eligible to participate after the
Effective Time, to the same extent taken into account under a comparable
Company Benefit Plan immediately prior to the Effective Time.
Section 5.11 Proxy Statement.
(a) As promptly as practicable after the execution of this
Agreement, the Company shall prepare and file with the SEC the proxy
-45-
statement of the Company relating to the Company Shareholders' Meeting
(together with any amendments thereto, the "Proxy Statement"), and Parent
shall prepare and file with the SEC the registration statement on Form S-4 of
Parent, in which the Proxy Statement will be included (together with any
amendments thereto, the "Registration Statement"), in connection with the
registration under the Securities Act of the Parent Class A Common Stock to
be issued to the shareholders of the Company in connection with the Merger.
Substantially contemporaneously with the filing of the definitive Proxy
Statement with the SEC, copies of the definitive Proxy Statement shall be
provided to the NYSE and Nasdaq. Parent shall each use its reasonable best
efforts to cause the Registration Statement to become effective as promptly
as practicable. Parent or the Company, as the case may be, shall furnish all
information concerning Parent or the Company as the other party may
reasonably request in connection with such actions and preparation of the
Proxy Statement. As promptly as practicable after the effective date of the
Registration Statement, the Company shall cause the Proxy Statement and
prospectus included in the Registration Statement (collectively, the "Proxy
Materials") to be mailed to the shareholders of the Company. Parent and
the Company shall cause the Proxy Statement to comply as to form and
substance in all material respects with the applicable requirements of (i)
the Exchange Act, including Sections 14(a) and 14(d) thereof and the
respective regulations promulgated thereunder, (ii) the Securities Act, (iii)
the rules and regulations of the NYSE and Nasdaq, (iv) the DGCL and (v) the
TBCA.
(b) The Proxy Statement shall include the unanimous and
unconditional recommendation of the board of directors of the Company to the
shareholders of the Company that they vote in favor of the adoption of this
Agreement and the Merger, except as otherwise provided in Section 5.4(b) of
this Agreement.
(c) No amendment or supplement to the Registration Statement or
the Proxy Statement will be made without the approval of each of Parent and
the Company, which approval shall not be unreasonably withheld or delayed.
Each of Parent and the Company will advise the other, promptly after it
receives notice thereof, of the time when the Registration Statement becomes
effective or any supplement or amendment has been filed, of the issuance of
any stop order, of the suspension of the qualification of Parent Class A
Common Stock issuable in connection with the Merger for offering or sale in
any jurisdiction, or of any request by the SEC, the NYSE or Nasdaq for
amendment of the Proxy Statement or comments thereon and responses thereto or
requests by the SEC for additional information.
(d) The information supplied by the Company for inclusion in the
Registration Statement and included in the Proxy Statement shall not, at (i)
the time the Registration Statement is declared effective, (ii) the time the
Proxy Materials (or any amendment thereof or supplement thereto) are first
-46-
mailed to the shareholders of the Company, (iii) the time of the Company
Shareholders' Meeting and (iv) the Effective Time, contain any untrue
statement of a material fact or fail to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event or
circumstance relating to the Company or any other Company Entity, or their
respective officers or directors, should be discovered by the Company that
should be set forth in an amendment or a supplement to the Proxy Statement or
Registration Statement, the Company shall promptly inform Parent. All
documents that the Company is responsible for filing with the SEC in
connection with the transactions contemplated hereby will comply as to form
in all material respects with the applicable requirements of the DGCL, the
TBCA, the Securities Act and the Exchange Act.
(e) The information supplied by Parent for inclusion in the Proxy
Statement and included by Parent in the Registration Statement shall not, at
(i) the time the Registration Statement is declared effective, (ii) the time
the Proxy Materials (or any amendment of or supplement to the Proxy
Materials) are first mailed to the shareholders of the Company, (iii) the
time of the Company Shareholders' Meeting, and (iv) the Effective Time,
contain any untrue statement of a material fact or fail to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading. If, at any time prior to the Effective
Time, any event or circumstance relating to Parent or any Parent Subsidiary,
or their respective officers or directors, should be discovered by Parent
that should be set forth in an amendment or a supplement to the Proxy
Statement or Registration Statement, Parent shall promptly inform the
Company. All documents that Parent is responsible for filing with the SEC in
connection with the transactions contemplated by this Agreement will comply
as to form in all material respects with the applicable requirements of the
DGCL, the TBCA, the Securities Act and the Exchange Act.
Section 5.12 Other Parent Transactions. Notwithstanding anything to
the contrary in this Agreement, nothing in this Agreement shall prevent or
restrict Parent and its Subsidiaries from engaging in any merger,
acquisition, business combination or other transaction (whether or not Parent
is the surviving corporation); provided that such merger, acquisition,
business combination or other transaction would not (i) prevent, or delay
beyond the Termination Date, the ability of Parent to consummate the Merger
or (ii) cause the Merger to fail to qualify as a reorganization within the
meaning of Section 368(a) of the Code.
Section 5.13 Directors' and Officers' Indemnification and Insurance.
(a) The Surviving Corporation shall, and Parent shall cause the
Surviving Corporation to, indemnify and hold harmless, and provide
advancement of expenses to, all past and present directors, officers and
-47-
employees of any Company Entity (the "Indemnified Parties") to the same
extent such persons are indemnified or have the right to advancement of
expenses as of the date of this Agreement by the Company pursuant to the
Company's articles of incorporation, bylaws and indemnification agreements,
if any, in existence on the date hereof with any directors, officers and
employees of the Company and the other Company Entities for acts or omissions
occurring at or prior to the Effective Time (including for acts or omissions
occurring in connection with the approval of this Agreement and the
consummation of the transactions contemplated hereby). Parent shall also
obtain and maintain directors' and officers' liability insurance coverage for
the Indemnified Parties to the extent that it obtains and maintains any such
coverage for its officers and directors.
(b) This Section 5.13 is intended to benefit the Indemnified
Parties and shall be binding on all successors and assigns of Parent, Merger
Sub and the Surviving Corporation.
Section 5.14 Registration and Listing of Parent Class A Common Stock.
(a) Parent will use all reasonable best efforts to register the
Parent Class A Common Stock to be issued pursuant to this Agreement under the
applicable provisions of the Securities Act.
(b) Parent will use all reasonable best efforts to cause the
Parent Class A Common Stock to be issued pursuant to this Agreement to be
listed for trading on the NYSE.
Section 5.15 Rate and Programming Information. No later than five
Business Days after the date of this Agreement, the Company shall deliver to
Parent (i) copies of each of the Company Entities' rate structures as of the
date of this Agreement and (ii) listings of all of the programming (by tier)
offered to subscribers or customers of each of the Company Entities as of the
date of this Agreement.
Section 5.16 Classic Cable Division. Parent acknowledges that it is
Parent's current intention (a) to operate the Surviving Corporation as a
stand-alone division of Parent, with its headquarters in Tyler, Texas, which
would own, operate and maintain Classic Cable television systems and (b) that
the President of the Surviving Corporation shall report directly to the
President and Chief Executive Officer of Parent.
Section 5.17 Warrant. The Company shall use reasonable best efforts
to cause the Warrant to be exercised in full prior to the Effective Time.
Section 5.18 Donrey Waiver. The Company shall use its reasonable
efforts to obtain from DR Partners, a Nevada general partnership, a waiver
and release of all of its rights, powers and privileges pursuant to Section
-48-
3.4(c) of the Amended and Restated General Partnership Agreement dated as of
April 11, 1996 by and between DR Partners and TAL Financial Corporation in
connection with the execution, delivery and performance of this Agreement.
ARTICLE SIX
CONDITIONS OF PARENT'S AND MERGER SUB'S OBLIGATIONS
Section 6.1 In General. The obligations of Parent and Merger Sub to
complete the transactions provided for in this Agreement are subject to all
of the conditions set forth below in this Article Six, any of which may be
waived in writing by Parent and Merger Sub.
Section 6.2 Receipt of Consents. All of the License Consents,
Franchise Consents and waivers of all Purchase Rights shall have been
obtained, made and delivered to Parent and shall be Final (in the case of any
consent or waiver from a Governmental Authority) and in full force and effect
as of the Closing with, as a result of obtaining any Franchise Consent, no
change having been made in the terms of any Franchise except as provided in
Section 5.6(b). Notwithstanding the foregoing, (i) the License Consents
(other than with respect to CARS licenses) shall be deemed to have been
obtained as required above in this Section 6.2 if the FCC, on or prior to the
Closing Date, grants "special temporary authority" or "conditional authority"
to Parent to use the same or, in the case of business radio licenses, so long
as a temporary authorization or conditional authorization is available to
Parent under FCC rules and Parent reasonably expects that the FCC's consent
can be obtained within 120 days after Closing, and (ii) the Franchise
Consents shall be deemed to be obtained in the event all Franchise Consents
are obtained except with respect to Franchises that, in the aggregate,
exclusive of Franchises for which no Franchise Consent is required, serve
less than ten percent (10%) of all Basic Subscribers of the Cable Systems in
the aggregate.
Section 6.3 Performance by Company. The Company shall have performed
in all material respects all of its agreements and covenants under this
Agreement (including, but not limited to, making, or standing willing and
able to make, the deliveries and taking, or standing willing and able to
take, the actions required by Section 8.2, but excluding the covenants and
agreements set forth in Section 5.2(b)(vii)) to the extent such are required
to be performed at or prior to the Closing.
Section 6.4 Truth of Representations and Warranties. Each of the
representations and warranties of the Company contained in this Agreement (i)
if specifically qualified by materiality, shall be true and complete as so
qualified, and (ii) if not qualified by materiality, shall be true and
complete in all material respects, in each such case, on and as of the date
hereof and as of the Closing Date, with the same effect as if then made,
-49-
except where any such representation or warranty is as of a specific earlier
date, in which event it shall remain true and correct (as qualified) as of
such earlier date, and except as any such representation or warranty may be
affected by specific transactions or occurrences contemplated in or permitted
by this Agreement or any Related Agreement. The foregoing notwithstanding,
the Closing condition set forth above in this Section 6.4 shall be deemed to
be satisfied unless the failure of such representations and warranties to be
so true and complete in all material respects, if not qualified by
materiality, and true and complete as so qualified, if qualified by
materiality, shall individually or in the aggregate constitute a Company
Material Adverse Effect or that would have a material adverse effect on the
ability of the Company to consummate the transactions hereunder; provided,
however, that the representations and warranties set forth in Section 3.2(b)
and Section 3.24 shall be true and complete in all respects.
Section 6.5 Absence of Proceedings. All waiting periods required
under the HSR Act shall have expired or otherwise terminated prior to the
Closing; no Governmental Authority (including, without limitation, any
federal or state court of competent jurisdiction) shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, judgement, injunction or other order (whether temporary,
preliminary or permanent), in any case that is in effect and that prevents or
prohibits consummation of the Merger or any other transactions contemplated
in this Agreement; and no judgment or order shall have been issued, and no
action or proceeding shall have been instituted by any Governmental Authority
on or prior to the Closing, that has or would have if successful a Company
Material Adverse Effect or a Parent Material Adverse Effect or that would
prevent the consummation of the transactions contemplated by this Agreement
in the manner provided in this Agreement.
Section 6.6 Tax Opinion. Parent shall have received an opinion from
Parent's tax counsel to the effect that, if the Merger is consummated in
accordance with the provisions of this Agreement, the Merger will be treated
for federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code.
Section 6.7 Shareholder Approval. The Company Shareholders' Approval
shall have been obtained in accordance with applicable Legal Requirements and
the articles of incorporation and bylaws of the Company and the provisions of
Section 5.4 hereof.
Section 6.8 Registration Statement. The Registration Statement shall
have been declared effective and shall be effective at the Effective Time,
and no stop order suspending effectiveness shall have been issued, no action,
suit, proceeding or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing.
-50-
ARTICLE SEVEN
CONDITIONS OF COMPANY'S OBLIGATIONS
Section 7.1 In General. The obligations of the Company to complete
the transactions provided for in this Agreement are subject to all of the
conditions set forth below in this Article Seven, any of which may be waived
in writing by the Company.
Section 7.2 Performance by Parent and Merger Sub. Parent and Merger
Sub shall have performed in all material respects all of their respective
agreements and covenants under this Agreement (including, but not limited to,
making, or standing willing and able to make, the deliveries and taking, or
standing willing and able to take, the actions required by Section 8.3, but
excluding the covenants and agreements set forth in Section 5.1(b)) to the
extent such are required to be performed at or prior to the Closing.
Section 7.3 Truth of Representations and Warranties. Each of the
representations and warranties of Parent and Merger Sub contained in this
Agreement (i) if specifically qualified by materiality, shall be true and
complete as so qualified, and (ii) if not qualified by materiality, shall be
true and complete in all material respects, in each such case, on and as of
the date hereof and as of the Closing Date, with the same effect as if then
made, except where any such representation or warranty is as of a specific
earlier date in which event it shall remain true and correct (as qualified)
as of such earlier date, and except as any such representation or warranty
may be affected by specific transactions or occurrences contemplated in or
permitted by this Agreement or any Related Agreement. The foregoing
notwithstanding, the Closing condition set forth above in this Section 7.4
shall be deemed satisfied unless the failure of such representations and
warranties to be so true and complete in all material respects, if not
qualified by materiality, and true and complete as so qualified, if qualified
by materiality, shall individually or in the aggregate constitute a Parent
Material Adverse Effect or that would have a material adverse effect on the
ability of the Company to consummate the transactions hereunder.
Section 7.4 Absence of Proceedings. All waiting periods required
under the HSR Act shall have expired or otherwise terminated prior to the
Closing; no Governmental Authority (including, without limitation, any
federal or state court of competent jurisdiction) shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, judgement, injunction or other order (whether temporary,
preliminary or permanent), in any case that is in effect and that prevents or
prohibits consummation of the Merger or any other transactions contemplated
in this Agreement; and no judgment or order shall have been issued, and no
action or proceeding shall have been instituted by any Governmental Authority
on or prior to the Closing that has or would have if successful a Company
-51-
Material Adverse Effect, a Parent Material Adverse Effect or that would
prevent the consummation of the transactions contemplated by this Agreement
in the manner provided in this Agreement.
Section 7.5 Tax Opinion. The Company shall have received an opinion
from the Company's tax counsel dated as of the Effective Date to the effect
that, if the Merger is consummated in accordance with the provisions of this
Agreement, the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code.
Section 7.6 Shareholder Approval. The Company Shareholders' Approval
shall have been obtained in accordance with applicable Legal Requirements and
the articles of incorporation and bylaws of the Company and the provisions of
Section 5.4 hereof.
Section 7.7 Registration Statement. The Registration Statement shall
have been declared effective and shall be effective at the Effective Time,
and no stop order suspending effectiveness shall have been issued, no action,
suit, proceeding or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing.
Section 7.8 Listing of Parent Class A Common Stock on NYSE. The
shares of Parent Class A Common Stock required to be issued hereunder shall
have been approved for listing on the NYSE, subject only to official notice
of issuance.
Section 7.9 Exchange Fund. Parent shall have delivered to the
Exchange Agent the Exchange Fund as provided in Section 2.5(a).
ARTICLE EIGHT
CLOSING
Section 8.1 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Dow, Xxxxxx
& Xxxxxxxxx, PLLC, Xxx Xxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, at
10:00 a.m., local time, on the date specified by Parent by notice to the
Company, which specified date shall be no later than five Business Days after
(i) the Franchise Consents and the License Consents have been obtained,
waived or deemed obtained in accordance with Section 6.2, (ii) the applicable
waiting periods required under the HSR Act have expired or otherwise
terminated, and (iii) the Company Shareholders' Approval has been obtained
(in any event, the "Closing Date"), unless otherwise provided by the mutual
agreement, in writing, of the Company, Parent and Merger Sub, and in no event
later than the first anniversary of the date hereof (the "Termination Date").
-52-
Section 8.2 Deliveries and Actions by Company. The Company shall
deliver to Parent the following items, and the Company shall take the
following actions, at the Closing.
(a) Consents. The Company shall deliver to Parent at Closing
originals of the License Consents, Franchise Consents and waivers of all
Purchase Rights, other than (i) those License Consents and Franchise Consents
deemed received in accordance with Section 6.2 and (ii) those which the
parties have waived as conditions to Closing in accordance with Article Six
and Article Seven.
(b) Articles of Incorporation, Certified Bylaws and Certificates
of Existence and Good Standing for the Company Entities. The Company shall
deliver to Parent at Closing (i) copies of the articles of incorporation or
other applicable governing instruments, and all amendments thereto, of each
of the Company Entities certified within five Business Days prior to Closing
by the Secretary of State of the State in which such entity is incorporated,
(ii) copies of the bylaws or other applicable governing instruments of each
of the Company Entities certified by the respective Secretary or Assistant
Secretary of each such Company Entity as being correct, complete and in full
force and effect on the Closing Date, and (iii) certificates of existence and
good standing for each of the Company Entities dated within five Business
Days of the Closing Date issued by the Secretary of State of the State in
which each such entity is incorporated.
(c) Company's Closing Certificate. The Company shall deliver to
Parent at Closing a certificate of an executive officer of the Company
certifying, without personal liability (i) as to the incumbency and
signatures of the officers of the Company who executed this Agreement and the
Company's Related Agreements on behalf of the Company, (ii) as to the
adoption of resolutions of the board of directors of the Company being
correct, complete and in full force and effect on the Closing Date (though
not necessarily dated as of the Closing Date), authorizing (A) the execution
and delivery of this Agreement and the Company's Related Agreements, and (B)
the performance of the obligations of the Company hereunder and thereunder,
(iii) as to the Company's bylaws and all amendments thereto as being correct,
complete and in full force and effect on the Closing Date, and (iv) that the
conditions to Parent's obligations to consummate the transactions
contemplated by this Agreement set forth in Sections 6.3 and 6.4 have been
satisfied.
Section 8.3 Deliveries by Parent. Parent shall deliver the following
items, and Parent shall take the following actions, at the Closing.
(a) Certificates of Existence, Good Standing and Qualification.
Parent shall deliver to the Company at Closing a certified copy of the
certificates of incorporation and certificates of existence and good standing
-53-
with respect to Parent and Merger Sub, dated within five Business Days of the
Closing Date, issued by the Secretary of State of Delaware.
(b) Parent's Closing Certificate. Parent shall deliver to the
Company at Closing a certificate of an executive officer of Parent certifying
without personal liability (i) as to the incumbency and signatures of the
officers of Parent who execute this Agreement and Parent's Related Agreements
on behalf of Parent, (ii) as to the adoption of resolutions of the board of
directors of Parent being correct, complete and in full force and effect on
the Closing Date (though not necessarily dated as of the Closing Date),
authorizing (A) the execution and delivery of this Agreement and Parent's
Related Agreements, and (B) the performance of the obligations of Parent
hereunder and thereunder, (iii) as to Parent's bylaws and all amendments
thereto as being correct, complete and in full force and effect on the
Closing Date, and (iv) that the conditions to the Company's obligations to
consummate the transactions contemplated by this Agreement set forth in
Sections 7.2 and 7.3 with respect to Parent have been satisfied.
(c) Merger Sub's Closing Certificate. Merger Sub shall deliver to
the Company at Closing a certificate of an executive officer of Merger Sub
certifying without personal liability (i) as to the incumbency and signatures
of the officers of Merger Sub who execute this Agreement and Merger Sub's
Related Agreements on behalf of Merger Sub, (ii) as to the adoption of
resolutions of the board of directors of Merger Sub being correct, complete
and in full force and effect on the Closing Date (though not necessarily
dated as of the Closing Date), authorizing (A) the execution and delivery of
this Agreement and Merger Sub's Related Agreements, and (B) the performance
of the obligations of Merger Sub hereunder and thereunder, (iii) as to Merger
Sub's bylaws and all amendments thereto as being correct, complete and in
full force and effect on the Closing Date, and (iv) that the conditions to
the Company's obligations to consummate the transactions contemplated by this
Agreement set forth in Sections 7.2 and 7.3 with respect to Merger Sub have
been satisfied.
Section 8.4 Waiver of Conditions. Any party may waive in writing any
or all of the conditions to its obligations under this Agreement, and the
written waiver of any such condition will constitute a waiver by such party
of all rights or remedies that such party may have or have had against the
non-waiving party regarding the specific subject matter of the condition so
waived, except that no such waiver of a condition will constitute a waiver by
the waiving party of any of its rights or remedies, at law or in equity, at
the time such condition is waived, as to the non-waiving party's breach of
any representation, warranty or covenant under this Agreement which has not
been waived by the waiving party.
-54-
ARTICLE NINE
TERMINATION
Section 9.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time:
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if:
(i) the Merger has not been consummated on or before the
Termination Date; provided that the right to terminate this Agreement
pursuant to this Section 9.1(b)(i) shall not be available to a party whose
breach of any provision of this Agreement results in the failure of the
Merger to be consummated by the Termination Date;
(ii) (A) there shall be any law or regulation that makes
consummation of the Merger illegal or otherwise prohibited or (B) any
judgment, injunction, order or decree of any court or other Governmental
Authority having competent jurisdiction enjoining the Company and Parent
from consummating the Merger is entered, and such judgment, injunction,
order or decree shall have become Final; or
(iii) the Company Shareholders' Approval shall not have been
obtained at the Company Shareholders' Meeting (or any adjournment or
postponement thereof);
(c) by Parent if:
(i) the board of directors of the Company shall withdraw, or
shall have modified in a manner adverse to Parent, its approval or
recommendation of this Agreement, or shall have failed to call the Company
Shareholders' Meeting in accordance with Section 5.4(a) (or the board of
directors of the Company resolves to do any of the foregoing);
(ii) The Company shall have breached in any material respect any
of its obligations under Section 5.4(b) or Section 5.5; or
(iii) a breach of any representation, warranty, covenant or
agreement (other than those contained in Section 5.4(b) or Section 5.5) on
the part of the Company set forth in this Agreement shall have occurred
that would cause the conditions set forth in Section 6.3 or Section 6.4 not
to be satisfied, and such condition shall be incapable of being satisfied
by the Termination Date; or
-55-
(d) by the Company if:
(i) a breach of any representation, warranty, covenant or
agreement on the part of Parent set forth in this Agreement shall have
occurred that would cause the conditions set forth in Section 7.2 or
Section 7.3 not to be satisfied, and such condition shall be incapable of
being satisfied by the Termination Date;
(ii) (A) the board of directors of the Company authorizes the
Company, to enter into a binding written agreement concerning a transaction
that constitutes a Superior Proposal and the Company notifies Parent in
writing that it intends to enter into such an agreement, attaching the most
current version of such agreement to such notice (which version shall be
updated on a current basis); (B) Parent does not make, within five days
(or, in the case of any update of such version with respect to a given
Third Party, other than the initial notification, three days) of receipt of
the Company's written notification of its intention to enter into a binding
agreement for a Superior Proposal, an offer that the board of directors of
the Company determines, in good faith after consultation with its financial
advisors, is at least as favorable to the shareholders of the Company as
the Superior Proposal; (C) the Company prior to such termination pursuant
to this clause (ii) pays to Parent in immediately available funds the fees
required to be paid pursuant to Section 9.3(c); (D) such termination takes
place no later than the last day of the Initial Period (as it may be
extended under Section 5.5(b)); and (E) the Company shall have complied
with Section 5.5 in all material respects. The Company agrees to notify
Parent promptly if its intention to enter into a written agreement
referred to in its notification shall change at any time after giving such
notification; or
(iii) the Ten Day Parent Weighted Average Stock Price is below
$69.00 ($34.50 after the consummation of the Stock Split).
The party desiring to terminate this Agreement pursuant to this
Section 9.1 (other than pursuant to Section 9.1(a)) shall give notice of such
termination to the other party.
Section 9.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall become void and of no effect
without liability of any party (or any stockholder, director, officer,
employee, agent, consultant or representative of such party) to the other
parties hereto, except that (a) the agreements contained in this Section 9.2
and in Section 9.3 of this Agreement shall survive the termination hereof,
and (b) no such termination shall relieve any party of any liability or
damages resulting from any willful breach by such party of this Agreement.
-56-
Section 9.3 Fees and Expenses.
(a) Except as otherwise provided in this Section 9.3, all costs
and expenses incurred in connection with this Agreement shall be paid by the
party incurring such cost or expense whether or not the Merger is
consummated.
(b) If this Agreement is terminated pursuant to Section 9.1(c)(i)
or Section 9.1(c)(ii) the Company shall pay to Parent a termination fee of
Ninety-Two Million Five Hundred Thousand Dollars ($92,500,000.00) in cash
(the "Termination Fee").
(c) If this Agreement is terminated pursuant to Section
9.1(d)(ii), the Company shall pay to Parent the Termination Fee.
(d) If (A) this Agreement is terminated pursuant to Section
9.1(b)(iii), (B) prior to the Company Shareholders' Meeting, an Acquisition
Proposal is made by any Person (other than Parent or an Affiliate of Parent)
and not withdrawn prior to such meeting and (C) within nine months of the
Company Shareholders' Meeting, either (1) the Company or any other Company
Entity enters into an agreement with any Person (other than Parent or an
Affiliate of Parent) with respect to an Acquisition Proposal which provides
for (x) transfer or issuance of securities representing more than 50% of the
equity or voting interests in the Company, (y) a merger, consolidation,
recapitalization or another transaction resulting in the issuance of cash or
securities of any Person (other than a reincorporation or a holding company
merger that results in the Company's shareholders owning all of the equity
interests in the surviving corporation) to the Company's shareholders in
exchange for more than 50% of the equity or voting interests in the Company,
or (z) transfer of assets, securities or ownership interests representing
more than 50% of the consolidated assets or earning power of the Company, or
(2) any Person (other than Parent or an Affiliate of Parent) commences a
tender offer that results in the acquisition by the Person making the tender
offer of a majority of the Company Common Stock, then the Company shall pay
to Parent the Termination Fee.
(e) Any payment of the Termination Fee pursuant to this Section
9.3 shall be paid immediately prior to the termination of this Agreement,
except that any payment of the Termination Fee pursuant to Section 9.3(d)
shall be paid within one (1) Business Day of the Company or any other Company
Entity entering into an agreement contemplated by Section 9.3(d)(C)(1) or
within one (1) Business Day of the acquisition by the Person making the
tender offer of a majority of the Company Common Stock contemplated by
Section 9.3(d)(C)(2). Any payment of the Termination Fee shall be made by
wire transfer of immediately available funds. If one party fails to pay to
the other promptly the Termination Fee, the defaulting party shall pay the
costs and expenses (including legal fees and expenses) in connection with any
-57-
action, including the prosecution of any lawsuit or other legal action, taken
to collect payment, together with interest on the amount of any unpaid fee at
the publicly announced prime rate of The Bank of New York in New York City
from the date such fee was required to be paid to the date it is paid.
ARTICLE TEN
PUBLIC STATEMENTS
Section 10.1 Public Statement and Press Releases. Neither the Company
on the one hand, nor Parent or Merger Sub, on the other hand, without the
prior written consent of the other, or except as required by law in the
judgment of outside legal counsel for such party or legal process, shall make
any press release or other public statement concerning this Agreement or the
transactions contemplated by this Agreement; provided, however, that nothing
in this Section 10.1 shall be deemed to prohibit any party hereto from making
any disclosure which its counsel deems necessary or advisable in order to
fulfill such party's disclosure obligations imposed by law or the rules of
any national securities exchange or automated quotation system. Parent and
Merger Sub each agrees that the discussion (to the extent permitted under
applicable securities laws) of the transactions contemplated hereby by the
Company with the Company Entities' lenders, the Company Entities' Affiliates
(and their respective directors, officers, employees, partners and
stockholders), the Company's counsel or other professional advisors, and any
Person whose consent or waiver may be necessary or desirable in order to
consummate the transactions contemplated hereby, shall not be deemed to be
"intended for" or to "result in public dissemination," for the purposes of
the foregoing sentence. The Company agrees that the discussion (to the
extent required under applicable securities laws) of the transactions
contemplated hereby by Parent with Parent's lenders and stockholders,
Parent's Affiliates (and their respective directors, officers, employees,
partners and stockholders), Parent's counsel or other professional advisors,
and any Person whose consent or waiver may be necessary or desirable in order
to consummate the transactions contemplated hereby shall not be deemed to be
"intended for" or to "result in public dissemination," for the purposes of
this Section 10.1.
Section 10.2 Injunctive Relief and Survival. The parties to this
Agreement expressly agree that, in addition to any other right or remedy the
others may have, such other party may seek and obtain specific performance of
the covenants and agreements set forth in or made pursuant to Section 10.1
above and temporary and permanent injunctive relief to prevent any breach or
violation thereof, and that no bond or other security may be required from
such other party in connection therewith. This Article Ten will survive the
termination of this Agreement.
-58-
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.1 Amendments; Waivers. This Agreement may only be amended
pursuant to a written agreement executed by all the parties to this
Agreement, and no waiver of compliance with any provision or condition of
this Agreement and no consent provided for in this Agreement shall be
effective unless evidenced by a written instrument executed by the party to
this Agreement sought to be charged with such waiver or consent; provided,
however, that after adoption of this Agreement by the shareholders of the
Company, no amendment or waiver of this Agreement shall be effective that
requires the approval of the shareholders of the Company unless the required
approval is obtained. No waiver of any term or provision of this Agreement
shall be construed as a further or continuing waiver of such term or
provision or any other term or provision.
Section 11.2 Entire Agreement. This Agreement, the Related
Agreements, the Voting Agreement, the Confidentiality Agreement and the
Exhibits and Schedules to this Agreement set forth the entire understanding
of the parties and supersedes any and all prior agreements, memoranda,
arrangements and understandings relating to the subject matter of this
Agreement. No representation, warranty, promise, inducement or statement of
intention has been made by any party which is not contained in this
Agreement, the Related Agreements, the Voting Agreement or Schedules or
Exhibits to this Agreement and no party shall be bound by, or be liable for,
any alleged representation, promise, inducement or statement of intention not
contained herein or therein.
Section 11.3 Binding Effect: Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. No party to this Agreement may assign its
rights or delegate its obligations under this Agreement to any other Person
without the express prior written consent of the other parties hereto. Any
such assignment or transfer made without the prior written consent of the
other parties hereto shall be null and void.
Section 11.4 Construction: Counterparts. The Article, Section and
paragraph headings of this Agreement are for convenience of reference only
and do not form a part of this Agreement and do not in any way modify,
interpret or construe the intentions of the parties. To facilitate
execution, this Agreement may be executed in any number of counterparts as
may be convenient or necessary, and it shall not be necessary that the
signatures of all parties hereto or thereto be contained on any one
counterpart hereof or thereof. Additionally, the parties hereto agree that
for purposes of facilitating the execution of this Agreement, (i) the
signature pages taken from separate individually executed counterparts of
-59-
this Agreement may be combined to form multiple fully executed counterparts
and (ii) a facsimile transmission shall be deemed to be an original
signature. All executed counterparts of this Agreement shall be deemed to be
originals, but all such counterparts taken together or collectively, as the
case may be, shall constitute one and the same Agreement.
Section 11.5 Notices. All notices and communications hereunder shall
be in writing and shall be deemed to have been duly given to a party when
delivered in person or sent by overnight delivery, telecopy or enclosed in a
properly sealed envelope, certified or registered mail (postage and
certification or registration prepaid) and addressed to the parties as
follows:
If to Parent or Merger Sub: Xxx Communications, Inc.
0000 Xxxx Xxxxx Xxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxx X. Xxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With copies (which shall not
constitute notice) to: Xxx Communications, Inc.
0000 Xxxx Xxxxx Xxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Legal Department
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
and
Dow, Xxxxxx & Xxxxxxxxx, PLLC
0000 Xxx Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to the Company: TCA Cable TV, Inc.
0000 XXX Xxxx 000
Xxxxx, Xxxxx 00000
Attention: Xx. Xxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
-60-
With a copy (which shall not
constitute notice) to: TCA Cable TV, Inc.
0000 XXX Xxxx 000
Xxxxx, Xxxxx 757
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Any such notice will be deemed to be given when received, if personally
delivered, sent by overnight delivery or sent by telecopy (during the
recipient's normal business hours), and, if mailed, five days after deposit
in the United States mail, properly addressed, with proper postage affixed.
Any party may change its address for purposes of notice by giving notice in
accordance with the provisions of this Section 11.5.
Section 11.6 Governing Law and Venue. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the
State of Delaware, without regard to the conflicts of laws principles of such
State, except that the effects of the Merger under the laws of the State of
Texas shall be governed by the TBCA. Any suit brought with respect to this
Agreement, whether in contract, tort, equity or otherwise, shall be brought
in the state or federal courts sitting in Delaware, the parties hereby
waiving any claim or defense that such forum is not convenient or proper.
Each party hereby agrees that any such court shall have in personam
jurisdiction over it, consents to service of process in any manner authorized
by Delaware law, and agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner specified by law.
Section 11.7 Further Actions. At any time and from time to time after
the Closing, each party hereto shall, at its own expense (except as otherwise
provided herein), take such actions and execute and deliver such documents as
may be reasonably necessary to effectuate the purposes of this Agreement.
Section 11.8 Gender, Tense, Etc. Where the context or construction
requires, all words applied in the plural shall be deemed to have been used
in the singular, and vice versa; the masculine shall include the feminine and
neuter, and vice versa; and the present tense shall include the past and
future tense, and vice versa.
Section 11.9 Severability. If any provision or any part of any
provision of this Agreement shall be void or unenforceable for any reason
whatsoever, then such provision shall be stricken and of no force and effect.
However, unless such stricken provision goes to the essence of the
consideration bargained for by a party, the remaining provisions of this
Agreement shall continue in full force and effect and, to the extent
required, shall be modified to preserve their validity.
-61-
Section 11.10 No Third-Party Rights. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies
under or by reason of this Agreement on any Persons other than the parties
and their respective successors and permitted assigns and other than as
provided in Section 5.13 of this Agreement, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third
Persons to any party, nor shall any provisions give any third Persons any
right or subrogation over or action against any party.
Section 11.11 Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time, other
than those representations and warranties contained in the Voting Agreement,
which shall survive in accordance with the terms thereof. This Section 11.11
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section 11.12 Enforcement. The Company and Parent agree that
irreparable damage would occur and that the parties would not have any
adequate remedy at law in the event that any provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent any and all breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
federal court located in the State of Delaware or in any Delaware state
court, this being in addition to any other remedy to which they are entitled
at law or equity.
[Signatures on following page]
-62-
EXECUTED as of the date first above written.
XXX COMMUNICATIONS, INC.
By:/s/ Xxxx X. Xxxx
----------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President, Mergers and
Acquisitions
COX CLASSIC CABLE, INC.
By: /s/ Xxxx X. Xxxx
----------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
TCA CABLE TV, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chairman, Chief Executive
Officer and President
-63-
EXHIBIT A
Definitions
"Acquisition Proposal" means any offer or proposal for, or any
indication of interest in (i) a merger, consolidation, share exchange,
business combination, reorganization, recapitalization or other similar
transaction involving the Company or any other Company Entity or (ii) the
acquisition, directly or indirectly, of (A) an equity interest representing
15% or more of the voting securities of the Company or any other Company
Entity or (B) assets, securities or ownership interests representing an
amount equal to 15% or more of the consolidated assets or earning power of
the Company, other than the transactions contemplated by this Agreement or
permitted pursuant to Section 5.2 hereof.
"Advisor" and "Advisor Agreement" are defined in Section 3.11.
"Affiliates" means any Person directly or indirectly controlling,
controlled by, or under common control with, the Person with respect to whom
the term "Affiliate" is used. Notwithstanding the foregoing a Person shall
be deemed an "Affiliate" of a Person with respect to whom the term
"Affiliate" is used if 10% or more of the voting securities of such Person is
owned, directly or indirectly, by the Person with respect to whom the term
"Affiliate" is used.
"Agreement" means this Agreement and Plan of Merger among Parent,
Merger Sub and the Company, and all the Exhibits and Schedules hereto, as
amended from time to time.
"All Cash Amount" is defined in Section 2.2(c).
"All Cash Election" is defined in Section 2.2(e).
"All Stock Amount" is defined in Section 2.2(c).
"All Stock Election" is defined in Section 2.2(e).
"Assets" shall mean all of the Company Entities' properties, assets,
privileges, rights, interests, claims and good will, real and personal,
tangible and intangible, of every type and description, including any Company
Entity's leasehold interests in leased property (but excepting any assets
disposed of by the Company Entities prior to the Closing in the ordinary
course of business and not in violation of this Agreement), which are used or
held for use in connection with the operation of the Cable Systems and the
business of the Company Entities, now in existence or hereafter acquired by
the Company Entities prior to the Closing, including, without limitation,
those assets described in Section 3.7.
-1-
"Basic Subscribers" means the sum of (i) the number of all active
subscribers to the Cable Systems receiving the lowest level of television
service that may be subscribed to by such subscribers, who are billed for
such service at a monthly rate equal to the published residential rate card
rate, plus (ii) the number of Equivalent Basic Subscribers, in each case
determined as of the most recent end-of-month billing cycle cut-off and
reporting date.
"Benefit Plans" means any retirement, incentive or welfare plans or
arrangements or any other employee benefit plans, including, but not limited
to, employee benefit plans defined in Section 3(3) of ERISA, to which any
Company Entity or any Affiliate of any Company Entity contributes or which
any Company Entity or any Affiliate of any Company Entity sponsors, maintains
or otherwise is bound for the benefit of current and former employees of the
Company Entities and any other plan or compensation arrangement, whether
written or unwritten, that provides to employees, former employees, officers,
directors and shareholders of the Company Entities any compensation or other
benefits, whether deferred or not, including, without limitation, any bonus
or incentive plan, stock rights plan, stay bonuses arrangement, deferred
compensation arrangement, life insurance, stock purchase plan, severance pay
plan and any other employee fringe benefit plan.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which national banking institutions in the
cities of Atlanta, Georgia or New York, New York are authorized or obligated
by law or executive order to be closed.
"Cable Systems" means the cable television systems owned and operated
by the Company Entities, all of which are set forth on Exhibit D, together
with a list of the communities served by each Cable System.
"Cash Fraction" is defined in Section 2.2(g)(ii)(A)(2).
"Certificate of Merger" is defined in Section 2.1(b).
"Certificate" is defined in Section 2.2(e).
"Closing" is defined in Section 8.1.
"Closing Date" is defined in Section 8.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Communications Act" means the Communications Act of 1934, as
amended.
"Company" is defined in the first paragraph of this Agreement.
-2-
"Company Balance Sheet" means the consolidated balance sheet of the
Company and its consolidated Subsidiaries as of October 31, 1998 and the
footnotes thereto set forth in the Company SEC Reports.
"Company Common Stock" means the Common Stock, par value $.01 per
share, of the Company.
"Company Entities" means the Company and the Subsidiaries of the
Company, all of which are listed on Schedule 3.2 (a).
"Company Material Adverse Effect" means a material adverse change in
the financial condition or financial results of operations of the Company
Entities, taken as a whole, other than any change (i) arising out of matters
of a general economic nature or matters affecting the cable television
industry generally, including, without limitation, (A) competition arising
from new or existing technology or caused by or arising from other multiple
channel distribution services or systems and from (B) litigation,
legislation, rule making or regulations or (ii) resulting directly or
primarily from the announcement or other disclosure or consummation of the
transactions contemplated by this Agreement.
"Company Rights Agreement" means the Rights Agreement, dated as of
January 15, 1998, between the Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent.
"Company SEC Reports" is defined in Section 3.4(a).
"Company Shareholders' Approval" is defined in Section 3.24.
"Company Shareholders' Meeting" is defined in Section 5.4(a).
"Computer Systems" is defined in Section 3.25.
"Copyright Act" is defined in Section 3.12(a).
"Confidentiality Agreement" is defined in Section 5.5(a)(iv).
"Consideration" is defined in Section 2.2(c).
"Contracts" means each lease, contract, agreement or instrument to
which any of the Company Entities is a party or to or by which any of the
Company Entities is subject or bound as the date hereof.
"Daily Closing Stock Price" means, with respect to any NYSE trading
day, the amount obtained by multiplying the trading volume of the Parent
Class A Common Stock on the NYSE for such day by the closing sales price,
regular way (or, if there is no such closing sales price of the Parent Class
-3-
A Common Stock on such day, the last bid price of the Parent Class A Common
Stock on such day.)
"DGCL" means the Delaware General Corporation Law.
"Director Options" is defined in Section 2.6(a).
"Directors Plan" is defined in Section 2.6(a).
"Dissenting Shares" is defined in Section 2.4.
"DOJ" means the Department of Justice.
"Effective Date" is defined in Section 2.1(b).
"Effective Time" is defined in Section 2.1(b).
"Election" is defined in Section 2.2(e).
"Election Deadline" is defined in Section 2.2(j).
"Environmental Laws" is defined in Section 3.15(d).
"Environmental Permits" is defined in Section 3.15(d).
"Equivalent Basic Subscribers" means subscribers to the Cable Systems
receiving basic service under bulk billing arrangements which provide for
pricing at a rate that is not equal to the published residential rate card
rate, including, without limitation, multi-unit residential complexes,
hospitals, commercial accounts, bars and taverns, but excluding hotels and
motels. The number of Equivalent Basic Subscribers shall be determined by
dividing (i) the monthly aggregate amount billed for basic and CPST cable
television service as of the most recent end-of-month billing cycle cut-off
immediately preceding the date such determination is to be made, by (ii) the
published residential rate card rate in effect for basic and CPST cable
television service, respectively, as of the date such determination is to be
made.
"ERISA" means the Employee Retirement Security Act of 1974, as
amended.
"Excess Shares" is defined in Section 2.3.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" is defined in Section 2.2(i).
-4-
"Exchange Fund" is defined in Section 2.5(a).
"Excluded Shares" is defined in Section 2.2(b).
"Expiring Franchise" is defined in Section 5.6(b).
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"Final" means action which shall not have been reversed, stayed,
enjoined, set aside, annulled or suspended; with respect to which no timely
request for stay, petition for rehearing, appeal or certiorari or sua sponte
action of the Governmental Authority with comparable effect shall be pending;
and as to which the time for filing any such request, petition, appeal,
certiorari or for the taking of any such sua sponte action by the
Governmental Authority has expired.
"Form of Election" is defined in Section 2.2(e).
"Fractional Securities Fund" is defined in Section 2.3.
"Franchise Consents" is defined in Section 3.3(a).
"Franchises" is defined in Section 3.7(a)(i).
"Franchising Authorities" means those Governmental Authorities
issuing, and having jurisdiction over, the Franchises.
"FTC" means the Federal Trade Commission.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States.
"Governmental Authority" means any of the following: (a) the United
States of America, (b) any state, commonwealth, territory or possession of
the United States of America and any political subdivision thereof (including
counties, municipalities and the like), and (c) any agency, authority or
instrumentality of any of the foregoing, including any court, tribunal,
department, bureau, commission or board.
"Guarantee of Delivery" is defined in Section 2.2(j).
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended from time to time.
"HSR Reports" is defined in Section 5.3.
-0-
"XXX Xxxxx" means the rules and regulations promulgated under the HSR
Act.
"Indemnified Parties" is defined in Section 5.13(a).
"Initial Period" is defined in Section 5.5(b).
"Intellectual Property" is defined in Section 3.20.
"Investment Interests" is defined in Section 3.2(c).
"Legal Requirement" is any statute, ordinance, code, law, rule,
regulation, order or other requirement, standard or procedure enacted,
adopted or applied by any Governmental Authority, including, but not limited
to, judicial decisions applying common law or interpreting any other Legal
Requirement.
"License Consents" is defined in Section 3.3(a).
"Liens" means any lien, security interest, adverse claim or other
encumbrance of any nature whatsoever.
"LTIP" is defined in Section 2.6(b).
"Management Agreements" means all agreements, instruments, contracts
and other understandings pursuant to which the Company or any other Company
Entity manages the operations of the cable television systems (i) owned by
Cable One, Inc. and serving areas in and around Xxxxxxxxxx and Corrigan,
Texas; (ii) owned by Telecable, Inc. and serving areas in and around
Jonesboro, Arkansas; (iii) owned in whole or in part by TCA Cable Partners
and serving certain communities in Arkansas, California and Oklahoma; and
(iv) owned in whole or in part by TCA Cable Partners II and serving certain
communities in Texas, Louisiana and New Mexico.
"Maximum Cash Amount" is defined in Section 2.2(d).
"Maximum Parent Shares" is defined in Section 2.2(d).
"Merger" is defined in the Background paragraphs of this Agreement.
"Merger Sub" is defined in the first paragraph of this Agreement.
"Monthly Statements" is defined in Section 5.7.
"Multiemployer Plan" means a plan, as defined in ERISA Section 3(37),
to which any Company Entity or any Affiliate of any Company Entity has
contributed, is contributing or is required to contribute for the benefit of
current and former employees of the Company Entities.
-6-
"Nasdaq" means the Nasdaq National Market.
"Non-Election" is defined in Section 2.2(e).
"NYSE" means The New York Stock Exchange, Inc.
"Option Plan" is defined in Section 2.6(b).
"Parent" is defined in the first paragraph of this Agreement.
"Parent Class A Common Stock" means the Class A Common Stock, par
value $1.00 per share, of Parent.
"Parent Material Adverse Effect" means a material adverse change in
the financial condition or financial results of operations of Parent and its
Subsidiaries, taken as a whole, other than any change (i) arising out of
matters of a general economic nature or matters affecting the cable
television, broadband distribution or programming industries generally,
including, without limitation, (A) competition arising from new or existing
technology or caused by or arising from other multiple channel distribution
services or systems and (B) from litigation, legislation, rule making or
regulations or (ii) resulting directly or primarily from the announcement or
other disclosure or consummation of the transactions contemplated by this
Agreement.
"Parent SEC Reports" is defined in Section 4.8(a).
"Partnership Agreements" means (i) that certain Amended and Restated
General Partnership Agreement of TCA Cable Partners dated as of April 11,
1996 and (ii) that certain General Partnership Agreement of TCA Cable
Partners II dated as of November 13, 1997.
"Permitted Liens" means (a) zoning restrictions, easements,
rights-of-way or other restrictions on the use of the Real Property, provided
that such liens and restrictions were incurred either prior to the time the
Company Entities acquired an interest in the Real Property or in the ordinary
course of the business of the Cable Systems and do not, individually, or in
the aggregate, materially interfere with any Company Entity's operation of
its respective business as currently operated; (b) pledges or deposits by a
Company Entity under workmen's compensation laws, unemployment insurance laws
or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of indebtedness) or leases to
which such Company Entity is a party, or deposits to secure public or
statutory obligations of such Company Entity or deposits or cash or United
States government bonds to secure surety or appeal bonds to which such
Company Entity is a party, or deposits as security for contested taxes or
import or customs duties or for the payment of rent, in each case incurred or
-7-
made in the ordinary course of business; (c) liens imposed by law, including
carriers', warehousemen's, landlords' and mechanics' liens, in each case
incurred in the ordinary course of business for sums not yet due or being
contested in good faith by appropriate proceedings if a reserve or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made in respect thereof; (d) liens for taxes, assessments or other
governmental charges not yet subject to penalties for non-payment or which
are being contested in good faith by appropriate proceedings provided
appropriate reserves required pursuant to GAAP have been made in respect
thereof; and (e) liens in favor of issuers of surety or performance bonds or
letters of credit or bankers' acceptances issued pursuant to the request of
and for the account of a Company Entity in the ordinary course of its
business.
"Permitted Stock Restrictions" means restrictions on transfer of
shares of capital stock imposed by the Franchises and the Communications Act
and the rules and regulations of the FCC thereunder and applicable securities
or blue sky laws.
"Person" means an individual, corporation, partnership, limited
liability company, trust or unincorporated organization, or a government or
any agency or political subdivision thereof.
"Preferred Election" is defined in Section 2.2(e).
"Preferred Per Share Cash Amount" is defined in Section 2.2(c).
"Preferred Per Share Stock Amount" is defined in Section 2.2(c).
"Proxy Materials" is defined in Section 5.11(a).
"Proxy Statement" is defined in Section 5.11(a).
"Purchase Rights" is defined in Section 5.6(a).
"Real Property" is defined in Section 3.14.
"Registration Statement" is defined in Section 5.11(a).
"Related Agreements" is defined in Sections 3.2(a) and 4.2.
"Remaining Cash Amount" is defined in Section 2.2(f).
"Remaining Parent Shares" is defined in Section 2.2(f).
"Representative" is defined in Section 2.2(e).
-8-
"Reverse Merger" is defined in Section 2.1(a).
"Rule 145 Affiliates" is defined in Section 5.9.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" is defined in Section 3.2(b).
"Standstill Agreement" is defined in Section 5.5(a)(iii).
"Stock Fraction" is defined in Section 2.2(h)(ii)(A)(2).
"Stock Split" means the two-for-one stock split of the Parent Class A
Common Stock, Class C Common Stock and Series A Convertible Preferred Stock
approved by the board of directors of Parent on March 17, 1999.
"Subsidiary" shall mean, as to any Person, any other Person of which
at least 50% of the equity and voting interests are owned, directly or
indirectly, by such first Person.
"Superior Proposal" means any bona fide, unsolicited written
Acquisition Proposal that the board of directors of the Company determines in
good faith on the basis of the advice of a financial advisor and a legal
advisor of nationally recognized reputation, and taking into account all the
terms and conditions of the Acquisition Proposal, including, without
limitation, the likelihood of consummation of such proposal, is more
favorable to the Company's shareholders than the Merger and for which
financing, to the extent required, is then fully committed or reasonably
determined to be available by the board of directors of the Company.
"Surviving Corporation" means the surviving corporation of the
Merger.
"System Rights" is defined in Section 3.7(a)(i).
"Taxes" is defined as all taxes, charges, fees, levies, charges,
imposts, duties, withholdings or other assessments including, without
limitation, income, withholding, capital, excise, employment, occupancy,
property, ad valorem, sales, transfer, recording, documentary, registration,
motor vehicle, franchise, use and gross receipts taxes, imposed by the United
States or any state, county, local or foreign government or any subdivision
thereof. Such terms shall also include any interest, penalties, fines or
additions attributable to such assessments.
-9-
"Tax Return" is defined as any return, report, information return or
other document (including any related or supporting information, any schedule
or attachment thereto, and any amendment thereof) filed or required to be
filed with any federal, state or local taxing authority in connection with
the determination, assessment, collection, administration or imposition of
any Taxes.
"TBCA" means the Texas Business Corporation Act.
"Ten Day Parent Weighted Average Stock Price" means the quotient of
(a) the sum of the ten products determined by multiplying (i) the Daily
Closing Stock Price for a share of Parent Class A Common Stock for each of
the ten consecutive NYSE trading days ending on the second trading day prior
to the Company Shareholders' Meeting by (ii) the number of shares of Parent
Class A Common Stock traded on the NYSE on the day on which each such Daily
Closing Stock Price occurred divided by (b) the aggregate number of shares of
Parent Class A Common Stock traded on the NYSE during such ten trading day
period.
"Termination Date" is defined in Section 8.1.
"Termination Fee" is defined in Section 9.3(b).
"Third Party" is defined in Section 5.5(a)(iv).
"Voting Agreement" means the Voting Agreement entered into
concurrently with the execution of this Agreement by Parent, the Company and
Xxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxxx, Xxx X. Xxxxx, M.D., X.X. Xxxxx, Xx.,
X.X. Xxxxx, III, Xxxxx X. XxXxxxxx, Xxxxxx XxXxxxxx, Xxxxxxx X. Xxxxxx,
Xxxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxx Xxxxxx
Xxxxxxx, and Xxxxxx Venture Enterprises, Inc., a Texas corporation.
"Warrant" is defined in Section 3.2(b).
"Year 2000 Compliant" is defined in Section 3.25.
-10-
