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Exhibit 2.11
PURCHASE AND CONTRIBUTION AGREEMENT
DATED AS OF JUNE 29, 1999
AMONG
BCI (USA), LLC,
XXXXXXX X. XXXXXXX,
BLACKSTONE BC CAPITAL PARTNERS, L.P.,
BLACKSTONE BC OFFSHORE CAPITAL PARTNERS, L.P.,
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP III L.P.,
TCI BRESNAN LLC and
TCID OF MICHIGAN, INC., as Sellers,
AND
CHARTER COMMUNICATIONS HOLDING COMPANY, LLC,
as Buyer
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TABLE OF CONTENTS
Page
ARTICLE 1 CERTAIN DEFINITIONS.............................................................................1
1.1 Terms Defined in this Section...................................................................1
1.2 Terms Defined Elsewhere in this Agreement......................................................11
1.3 Rules of Construction..........................................................................13
ARTICLE 2 SALE AND PURCHASE OF PURCHASED INTERESTS;
PURCHASE PRICE.................................................................................14
2.1 Sale and Purchase of Purchased Interests; Contribution of
Contributed Interests..........................................................................14
2.2 Purchase Price for Purchased Interests.........................................................14
2.3 Adjustments to Purchase Price..................................................................15
2.4 Payment at Closing.............................................................................17
2.5 Post-Closing Purchase Price Adjustments........................................................18
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS..................................................20
3.1 Organization and Ownership of Partnership......................................................20
3.2 Authorizations; No Conflict; Required Consents.................................................21
3.3 Partnership Assets.............................................................................22
3.4 System Franchises, System Licenses, and System Contracts.......................................22
3.5 Real Property..................................................................................23
3.6 Environmental..................................................................................24
3.7 Compliance with Legal Requirements.............................................................25
3.8 Intellectual Property..........................................................................25
3.9 Financial Statements; Absence of Certain Changes or Events.....................................25
3.10 Litigation.....................................................................................26
3.11 Tax Returns....................................................................................26
3.12 Employment Matters.............................................................................27
3.13 Partnership Systems Information................................................................31
3.14 Finders and Brokers............................................................................31
3.15 Transactions with Affiliates...................................................................31
3.16 Competition....................................................................................31
3.17 Pending Transactions...........................................................................32
3.18 Acquisition Agreement Schedules; Schedule References...........................................32
3.19 Securities Law Matters.........................................................................32
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER........................................................32
4.1 Organization; Authority........................................................................32
4.2 Authorization and Binding Obligation...........................................................33
4.3 No Conflict; Required Consents.................................................................33
(i)
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4.4 Finders and Brokers............................................................................33
4.5 Securities Law Matters.........................................................................33
4.6 Investment Company.............................................................................34
4.7 Litigation.....................................................................................34
4.8 Balance Sheet..................................................................................34
4.9 Financing......................................................................................34
4.10 Capitalization; Delivery of Limited Liability Company Interests................................34
4.11 Pending Buyer Acquisitions.....................................................................35
4.12 SEC Filings; Financial Information.............................................................35
ARTICLE 5 SPECIAL COVENANTS AND AGREEMENTS...............................................................35
5.1 Access to Premises and Records.................................................................35
5.2 Continuity and Maintenance of Operations; Certain Deliveries and Notices.......................35
5.3 Required Consents, Franchise Renewal...........................................................38
5.4 Confidentiality; Press Release.................................................................40
5.5 Cooperation; Commercially Reasonable Efforts...................................................41
5.6 HSR Act........................................................................................41
5.7 Tax Matters....................................................................................42
5.8 Certain Financing Matters......................................................................44
5.9 Consent and Agreements of Sellers and Buyer....................................................45
5.10 WARN Act.......................................................................................46
5.11 Programming and Other Commitments..............................................................46
5.12 401(k) Plans...................................................................................46
5.13 Notification of Certain Matters................................................................46
5.14 Offers.........................................................................................46
5.15 Buyer Acquisition Documents....................................................................47
5.17 Restructuring of the Partnership...............................................................47
ARTICLE 6 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS.................................................48
6.1 Conditions to Buyer's Obligations..............................................................48
6.2 Conditions to Sellers' Obligations.............................................................49
ARTICLE 7 CLOSING AND CLOSING DELIVERIES.................................................................50
7.1 The Closing; Time and Place....................................................................50
7.2 Deliveries by Sellers..........................................................................50
7.3 Deliveries by Buyer............................................................................51
ARTICLE 8 TERMINATION....................................................................................52
8.1 Termination by Agreement.......................................................................52
8.2 Termination by the Sellers.....................................................................52
8.3 Termination by Buyer...........................................................................52
8.4 Effect of Termination..........................................................................53
8.5 Attorneys' Fees................................................................................54
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ARTICLE 9 MISCELLANEOUS..................................................................................54
9.1 Fees and Expenses..............................................................................54
9.2 Notices........................................................................................54
9.3 Benefit and Binding Effect.....................................................................55
9.4 Further Assurances.............................................................................56
9.5 GOVERNING LAW..................................................................................56
9.6 Entire Agreement...............................................................................56
9.7 Amendments; Waiver of Compliance...............................................................56
9.8 Counterparts...................................................................................56
9.9 Rights Cumulative..............................................................................56
9.10 Survival.......................................................................................56
9.11 Limitation of Recourse against Sellers.........................................................57
9.12 Limitation of Recourse against Buyer...........................................................58
9.13 Specific Performance...........................................................................59
9.14 Commercially Reasonable Efforts................................................................59
9.15 Construction...................................................................................59
(iii)
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TABLE OF SCHEDULES ATTACHED TO DISCLOSURE LETTER
Schedule Description
-------- -----------
Schedule 3.1 Organization and Ownership of Partnership
Schedule 3.2 Conflicts; Required Consents
Schedule 3.3(a) Permitted Liens
Schedule 3.3(b) Tangible Personal Property
Schedule 3.4 System Franchises, System Licenses and System Contracts
Schedule 3.5 Real Property
Schedule 3.6 Environmental
Schedule 3.7 Compliance with Legal Requirements
Schedule 3.8 Intellectual Property
Schedule 3.9 Absence of Certain Changes or Events
Schedule 3.10 Partnership and Seller Litigation
Schedule 3.11 Tax Matters
Schedule 3.12 Employment Matters
Schedule 3.13 Partnership Systems Information
Schedule 3.15 Transactions with Affiliates
Schedule 3.16 Competition
Schedule 3.17 Acquisition Agreements
Schedule 4.7 Buyer Litigation
Schedule 4.10(a) Rights in Buyer's Securities
Schedule 4.11 Pending Buyer Acquisitions
Schedule 4.12(b) Buyer Cash Flow Statements
Schedule 5.2-I Post-Signing Operations
Schedule 5.2-II Partnership's Budget
Schedule 5.2(g) Permitted Activities
(iv)
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Schedule Description
-------- -----------
Schedule 5.9 Excluded Assets
Schedule 6.1 Scheduled Subscribers
(v)
The preceding schedules have been omitted from this exhibit. The Company agrees
to provide copies of such schedules to the Commission upon request.
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TABLE OF EXHIBITS
Exhibit Description
------- -----------
Exhibit A Sellers' Proportionate Interests
Exhibit B Designated Programming Services
Exhibit C Fourth Amendment to Contribution Agreement
Exhibit D Adjustment Escrow Agreement
Exhibit E Operating Agreement Term Sheet
Exhibit F Exchange Agreement Term Sheet
Exhibit G Form of Registration Rights Agreement
Exhibit H Form of Put Agreement
Exhibit I LLC Unit Formula
Exhibit J Form of TCI Put Agreement
(vi)
The preceding exhibits A, B and C have been omitted from this exhibit. The
Company agrees to provide copies of such exhibits to the Commission upon
request.
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PURCHASE AND CONTRIBUTION AGREEMENT
THIS PURCHASE AND CONTRIBUTION AGREEMENT (this "Agreement") is entered
into as of June 29, 1999, by and among BCI (USA), LLC, a Delaware limited
liability company (the "General Partner"), and Xxxxxxx X. Xxxxxxx ("WBresnan"),
Blackstone BC Capital Partners L.P., a Delaware limited partnership ("BBC"),
Blackstone BC Offshore Capital Partners L.P., a Cayman Islands exempted limited
partnership ("BBCO"), Blackstone Family Investment Partnership III L.P., a
Delaware limited partnership ("BFI"), TCID of Michigan, Inc., a Nevada
corporation ("TCID-MI") and TCI Bresnan LLC ("TCI LLC"), as Sellers, and Charter
Communications Holding Company, LLC, a Delaware limited liability company
("Buyer").
RECITALS
The General Partner owns all of the general partnership interests in
Bresnan Communications Company Limited Partnership, a Michigan limited
partnership (the "Partnership"). The Sellers are each limited partners of the
Partnership and own, in the aggregate, all of limited partnership interests in
the Partnership. Buyer desires to acquire all the partnership interests in the
Partnership, and the General Partner, WBresnan, BBC, BBCO, BFI, TCID-MI and TCI
LLC (referred to collectively as the "Sellers" and individually as a "Seller")
desire to sell and contribute to Buyer such partnership interests in the
Partnership, in each case for the consideration and on the terms and conditions
set forth in this Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, the parties to this Agreement, intending
to be bound legally, agree as follows:
ARTICLE 1 CERTAIN DEFINITIONS
1.1 Terms Defined in this Section. The following terms, as used in this
Agreement, have the meanings set forth in this Section:
"1992 Cable Act" means the Cable Television Consumer Protection and
Competition Act of 1992, as amended, and the FCC rules and regulations
promulgated thereunder, all as in effect from time to time.
"Acquisition Agreement Service Area" refers to the cable television
systems to be acquired by the Partnership or the Subsidiaries under the
Acquisition Agreements and means either (i) any geographic area in which the
seller under any Acquisition Agreement provides cable television service and an
Acquisition Agreement System Franchise is not required pursuant to applicable
Legal Requirements, or (ii) with respect to an Acquisition Agreement System
Franchise, the geographic area in which such seller is authorized to provide
cable television service pursuant to such Acquisition Agreement System
Franchise.
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"Acquisition Agreement System Franchises" means all franchise
agreements, operating permits or similar governing agreements, instruments,
resolutions, statutes, ordinances, approvals, authorizations and permits
obtained from any Franchising Authority in connection with the cable television
systems to be acquired by the Partnership or the Subsidiaries under the
Acquisition Agreements.
"Acquisition Agreements" means those binding agreements described on
Schedule 3.17 pursuant to which the Partnership or a Subsidiary has agreed to
acquire cable television systems and those non-binding expressions of intent to
which the Partnership or a Subsidiary is a party as of the date of this
Agreement pursuant to which the Partnership has indicated an intent to acquire
cable television systems.
"Adjustment Time" means 11:59 p.m., Eastern time, on the day before the
Closing Date.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with the specified Person,
where "control" means the ownership, directly or indirectly, of voting
securities representing the right generally to elect a majority of the directors
(or similar officials) of a Person or the possession, by contract or otherwise,
of the authority to direct the management and policies of a Person.
"Basic Services" means the lowest tier of cable television service
offered to subscribers of a Partnership System that includes the retransmission
of local broadcast signals as defined by the Cable Act and the 1992 Cable Act.
"BCG S-4" means that Form S-4 Registration Statement filed with the SEC
as of May 3, 1999 (File No. 333-77637) by Bresnan Communications Group LLC and
Bresnan Capital Corporation.
"Business Day" means any day other than a Saturday, Sunday or a day on
which the banking institutions in New York, New York are required or authorized
to be closed.
"Cable Act" means the Cable Communications Policy Act of 1984, as
amended, and the FCC rules and regulations promulgated thereunder, all as in
effect from time to time.
"Charter Documents" means the articles or certificate of incorporation,
bylaws, certificate of limited partnership, partnership agreement, certificate
of formation, limited liability company operating agreement, articles of
association, and similar charter documents, as applicable to any Person other
than an individual.
"Closing" means the consummation of the purchase and sale of the
Purchased Interests and the contribution of the Contributed Interests pursuant
to this Agreement in accordance with the provisions of Article 7.
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"Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder, all as in effect from time to time.
"Communications Act" means the Communications Act of 1934, as amended,
and the FCC rules and regulations promulgated thereunder, all as in effect from
time to time.
"Contract" means any contract, mortgage, deed of trust, bond,
indenture, lease, license, note, franchise, certificate, option, warrant, right
or other instrument, document, obligation or agreement, whether written or oral.
"Contribution Agreement" means the Contribution Agreement among the
Partnership, TCID-MI and various of its Affiliates, predecessors of BBC, BBCO
and BFI, WBresnan and predecessors of the General Partner, dated as of June 3,
1998, as amended on September 17, 1998, on February 2, 1999 and on the date of
this Agreement.
"Copyright Act" means the Copyright Act of 1976, as amended and in
effect from time to time.
"Corporate Office" means 000 Xxxxxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxx Xxxx
00000.
"Credit Facility" means the Loan Agreement dated as of February 2, 1999
among Bresnan Telecommunications Company LLC, the lenders party thereto and
Toronto Dominion (Texas), Inc., as Administrative Agent for the lenders, and the
Arranging Agents, Syndication Agent, Documentation Agents and Joint Book
Managers and Joint Lead Arrangers, as further set forth therein, as it may be
amended.
"Environmental Law" means any binding applicable Legal Requirement
concerning the protection of the environment and public or employee health (to
the extent relating to the environment), including Legal Requirements relating
to emissions, discharges, releases or threatened releases of Hazardous
Substances into the environment, air (including both ambient and within
buildings and other structures), surface water, ground water or land or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances.
"Equity Agreements" means the Operating Agreement, the Exchange
Agreement, the Registration Rights Agreement, the Put Agreement and the TCI Put
Agreement.
"Equivalent Basic Subscribers" means, as of the Closing Date or any
other date of determination and for each Partnership System, without
duplication, the aggregate of all of the following that are receiving Basic
Services provided by the Partnership Systems: (a) private residential customer
accounts that are billed by the Partnership by individual unit (regardless of
whether such accounts are in single family homes or in individually billed units
in apartment houses and other multi-unit buildings, but exclusive of secondary
outlets and courtesy accounts), each of
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which shall be counted as one "Equivalent Basic Subscriber"; and (b) all
commercial, bulk-billed and other accounts not billed by individual unit, such
as hotels, motels, apartment houses and multi-family homes, provided that the
number of "Equivalent Basic Subscribers" serviced by each such account shall be
deemed to be an amount equal to the quotient of (x) the aggregate monthly
revenue for Basic Services and Expanded Basic Services derived by the
Partnership Systems from such accounts, in each case for the last calendar month
preceding the date of such determination, divided by (y) the standard monthly
fees charged for the provision of Basic Service plus (for accounts receiving
Expanded Basic Service) the standard monthly fees charged for the provision of
Expanded Basic Service. In each case under clause (y) above, such standard
monthly fees will be the fees charged to customers served in the same Service
Area, as of the date of determination. Notwithstanding the foregoing, the term
"Equivalent Basic Subscribers" shall not include any commercial, residential or
other subscriber who (i) pays less than the standard rate (excluding bulk
accounts) for Basic Services (other than as a result of discounts offered in the
ordinary course of business), (ii) has not paid for one full month of service,
or (iii) is more than 65 days delinquent from the date of billing on any amount
due from such subscriber in excess of $10.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder and published
interpretations with respect thereto, all as in effect from time to time.
"ERISA Affiliate" means, with respect to any Person, a trade or
business affiliated within the meaning of Sections 414(b), (c) or (m) of the
Code.
"Exchange Agreement" means the Exchange Agreement by and among the
parties named therein, containing the provisions set forth in Exhibit F hereto
and such other provisions as contemplated in Section 5.16, which agreement
shall, subject to Section 5.16, be executed and delivered on the Closing Date.
"Excluded Assets" means the Partnership Assets described on Schedule
5.9.
"Expanded Basic Services" means any CPS tier of any Partnership System
designated as such in the rate filings of the Partnership.
"FCC" means the Federal Communications Commission.
"Franchising Authorities" means all Governmental Authorities that have
issued or granted a System Franchise relating to the operation of a Partnership
System.
"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time.
"General Partnership Interest" means the general partnership interest
in the Partnership held by the General Partner.
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"Governmental Authority" means the United States of America, any state,
commonwealth, territory or possession of the United States of America and any
political subdivision or quasi-governmental authority of any of the same,
including any court, tribunal, department, commission, board, bureau, agency,
county, municipality, province, parish or other instrumentality of any of the
foregoing, and including any Franchising Authority.
"Hazardous Substances" means (a) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. Sections
6901 et seq.), as amended, and the rules and regulations promulgated thereunder,
all as in effect from time to time; (b) any "hazardous substance" as defined by
the Comprehensive Environmental Response, Compensation and Liability Act of 1980
(15 U.S.C. Sections 9601 et seq.) (CERCLA), as amended, and the rules and
regulations promulgated thereunder, all as in effect from time to time; (c) any
substance regulated by the Toxic Substances Control Act (TSCA) (15 U.S.C.
Sections 2601 et seq.), or the Insecticide, Fungicide and Rodenticide Act (IFRA)
(7 U.S.C. Sections 136 et seq.), each as amended, and the rules and regulations
promulgated thereunder, all as in effect from time to time; (d) asbestos or
asbestos-containing material of any kind or character; (e) polychlorinated
biphenyls; (f) any substances regulated under the provisions of Subtitle I of
RCRA relating to underground storage tanks; (g) any substance the presence, use,
handling, treatment, storage or disposal of which on real property is prohibited
by any Environmental Law; and (h) any other substance which by any Environmental
Law requires special handling, reporting or notification of any Governmental
Authority in its collection, storage, use, treatment or disposal.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended and the regulations promulgated by the Federal Trade Commission
with respect thereto, all as in effect from time to time.
"Intellectual Property" means any (i) trademarks, trade dress, trade
names, service marks, logos and other similar proprietary rights, (ii) domain
names, (iii) copyrights and (iv) patents and patentable know-how, inventions and
processes.
"Judgment" means any judgment, writ, order, injunction, award or decree
of any court, judge, justice or magistrate, including any bankruptcy court or
judge or the arbitrator in any binding arbitration, and any order of or by any
Governmental Authority.
"Keepwell Agreement" means the letter agreement dated February 2, 1999
addressed to the Partnership and entered into among it and TCI Bresnan LLC,
Xxxxxxxx Cable TV Company, TCI of Illinois, Inc., Heritage Cablevision of South
East Massachusetts, Inc., TCI of Southern Minnesota, Inc., TCI Cablevision of
Nebraska, Inc., WestMarc Development, Inc. and TCID of Michigan, Inc.
"Knowledge" means, with respect to any Person, the actual knowledge of
a particular matter of such Person, or if such Person is an entity, one or more
of the principal corporate personnel of such Person, and, with respect to the
General Partner, includes the actual knowledge of one or more
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of the executive vice presidents or more senior officers of the Partnership or
regional vice presidents of the Partnership Systems.
"Leased Real Property" means all leasehold interests in real property
that are held for use or used in connection with the Partnership's Business
which the Partnership has, or acquires prior to Closing, including those
described as Leased Real Property on Schedule 3.5.
"Legal Requirement" means applicable common law and any statute,
ordinance, code or other law, rule, regulation, order, technical or other
written standard, requirement, policy or procedure enacted, adopted,
promulgated, applied or followed by any Governmental Authority, including any
Judgment and all judicial decisions applying common law or interpreting any
other Legal Requirement, in each case, as amended.
"Lien" means any security interest, any interest retained by the
transferor under a conditional sale or other title retention agreement,
mortgage, lien, pledge, option, encumbrance, adverse interest, constructive
exception to, defect in or other condition affecting title or other ownership
interest (including reservations, rights of entry, possibilities of reverter,
encroachments, easements, rights-of-way, restrictive covenants, leases and
licenses) of any kind, which constitutes an interest in or claim against
property, whether arising pursuant to any Legal Requirement, System License,
System Franchise, System Contract or otherwise.
"Limited Partnership Interests" means the limited partnership interests
in the Partnership held by each of the Sellers.
"Litigation" means any written claim, action, suit, proceeding,
arbitration or hearing that could result in a Judgment, or any written notice of
such claim, action, suit, proceeding, arbitration or hearing.
"Loan Documents" means the Credit Facility and the Senior Indenture.
"Loan Document Liens" means Liens created by the Loan Documents in
favor of the lenders or trustee thereunder.
"Material Adverse Effect" means a material adverse effect on (i) the
Partnership Assets or the business, results of operations or financial condition
of the Partnership, taken as a whole, but without giving effect to any effect
resulting from changes in conditions (including economic conditions, changes in
FCC regulations, or federal, state or local governmental actions, legislation or
regulations) that are applicable to the economy or the cable television industry
on a national, regional, state or local basis or any changes in technology or
competition affecting the business of the Partnership Systems, or (ii) on the
ability of any Seller to perform its obligations under this Agreement.
"MMDS" means multichannel multipoint distribution service.
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"Multichannel Video Programming Distributor" or "MVPD" means a
distributor of cable television services, MMDS, direct broadcast satellite
service or television receive-only satellite programming, who makes available
for purchase, by subscribers or customers, multiple channels of video
programming, other than Persons distributing such services only to multiple
dwelling unit or other commercial customers (including hotels, motels, resorts,
hospitals, dormitories, prisons, restaurants, bars and similar establishments).
"Operating Agreement" means the limited liability company agreement of
Buyer containing the provisions set forth in Exhibit E hereto and such other
provisions as contemplated in Section 5.16, which agreement shall be executed
and delivered on the Closing Date.
"Other Intangibles" means all intangible assets other than System
Franchises, System Licenses and System Contracts, including subscriber lists,
accounts receivable, claims, patents, and copyrights that are owned, held for
use or used in connection with the Partnership's Business and in which the
Partnership has, or acquires prior to Closing, any right, title or interest.
"Other Real Property Interests" means all easements and rights of
access (other than those relating to multiple dwelling units) and other
interests in real property that are held for use or used in connection with the
Partnership's Business and in which the Partnership has, or acquires prior to
Closing, any right, title or interest, including those interests described as
Other Real Property Interests on Schedule 3.5, but not including Leased Real
Property or Owned Real Property.
"Owned Real Property" means all fee interests in real property that are
held for use or used in connection with the Partnership's Business which the
Partnership owns, or acquires prior to Closing, including those described as
Owned Real Property on Schedule 3.5 and all improvements thereon.
"Partnership Agreement" means the Bresnan Communications Company
Limited Partnership Amended and Restated Limited Partnership Agreement dated as
of February 2, 1999, as it may be amended prior to the Closing.
"Partnership Assets" means all assets, properties, privileges, rights,
contracts, licenses, permits, interests and claims, real and personal, tangible
and intangible, of every type and description that are owned, leased, held for
use or used in connection with the Partnership's Business and in which the
Partnership or any Subsidiary has any right, title or interest or acquires any
right, title or interest on or before the Closing, including Tangible Personal
Property, Owned Real Property, Leased Real Property, Other Real Property
Interests, System Franchises, System Licenses, System Contracts, and Other
Intangibles.
"Partnership Systems" means the cable television systems owned and
operated by the Partnership or any Subsidiary or any combination of any of them,
each of which may be referred to herein individually as a "Partnership System."
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"Partnership's Budget" means the budget for the Partnership's Business
for the period and in the form attached hereto as Schedule 5.2-II, as the same
may be supplemented or modified by the Partnership with Buyer's consent, which
consent will not be unreasonably withheld, conditioned or delayed; except that
Buyer's consent will not be required if the Partnership's proposed supplement or
modification to the Partnership's Budget (i) would not, in the aggregate after
giving effect to the cumulative effect of supplements and modifications,
increase the Partnership's gross annual expenses by more than 3% or (ii)
reflects the consummation of any Acquisition Agreement, provided that the
modification resulting from such consummation is made in a manner consistent
with past practices.
"Partnership's Business" means the cable television business and all
related and ancillary businesses and all other businesses conducted by the
Partnership or any Subsidiary, whether conducted through the Partnership Systems
or otherwise.
"Pay TV" means a la carte tiers or premium programming services
selected by and sold to subscribers on a per channel or per program basis.
"Permitted Lien" means any (a) Lien securing Taxes, assessments and
governmental charges not yet due and payable, (b) zoning law or ordinance or any
similar Legal Requirement, (c) right reserved to any Governmental Authority to
regulate the affected property, (d) as to Owned Real Property and Other Real
Property Interests, any easement, right of way, condition, covenant, restriction
or imperfection of title that does not individually or in the aggregate
interfere with the right or ability to own, use or operate the Owned Real
Property or Other Real Property Interests as they are being used or operated or
to convey good and marketable title to such Owned Real Property or Other Real
Property Interests, (e) in the case of Owned Real Property and Leased Real
Property, any lease or sublease by the Partnership in favor of a third party
that is disclosed in the Schedules to this Agreement, (f) in the case of Leased
Real Property, the rights of any lessor and any Lien granted by any lessor of
Leased Real Property which do not, individually or in the aggregate with any
other such Liens, materially interfere with the Partnership's or any
Subsidiary's use of such Leased Real Property, (g) any inchoate materialmen's,
mechanics', workmen's, repairmen's or other like Liens arising in the ordinary
course of business, (h) the Loan Document Liens, (i) Liens described on Schedule
3.3(a), (j) the transfer restrictions created by the Partnership Agreement in
favor of the partners thereunder, and (k) recorded exceptions included in any
title policy that relates to Owned Real Property that is listed on Schedule 3.5
and was delivered to Buyer prior to execution of this Agreement; provided that
"Permitted Lien" will not include any Lien securing a debt (other than the Loan
Document Liens) or any Lien that could prevent or impair in any way the conduct
of the business of the affected Partnership System as it is currently being
conducted.
"Person" means any natural person, Governmental Authority, corporation,
general or limited partnership, limited liability company, joint venture, trust,
association or unincorporated entity of any kind.
"Proportionate Interest" with respect to each Seller means the
percentage set forth in Exhibit A, which Exhibit may be attached or amended by
the Sellers, in their discretion, at any time
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prior to Adjustment Time, provided that the sum of the Proportionate Interests
for all Sellers shall equal 100%.
"Put Agreement" means each Put Agreement by and among the parties named
therein, substantially in the form of Exhibit H hereto, which agreement shall be
executed and delivered as set forth in Section 5.16(d).
"Registration Rights Agreement" means the Registration Rights Agreement
by and among the parties named therein, substantially in the form of Exhibit G
hereto, which agreement shall be executed and delivered on the Closing Date.
"Required Consents" means the consents, permits, approvals and
authorizations of Governmental Authorities and other Persons, and filings,
notices, and applications with Governmental Authorities and other Persons,
necessary to transfer lawfully the Purchased Interests and the Contributed
Interests to Buyer or otherwise to consummate lawfully the transactions
contemplated by this Agreement.
"Scheduled Subscribers" means for each Service Area and each
Acquisition Agreement Service Area, the approximate number of Equivalent Basic
Subscribers served as of a date certain, as set forth on Schedule 6.1.
"SEC" means the United States Securities and Exchange Commission.
"Senior Indenture" means the Indenture dated as of February 2, 1999,
among Bresnan Communications Group LLC ("BCG"), Bresnan Capital Corporation
("BCC") and State Street Bank and Trust Company, as trustee, pursuant to which
BCG and BCC issued their 8% Senior Notes due 2009 and 9-1/4% Senior Discount
Notes due 2009.
"Service Area" means either (i) any geographic area in which the
Partnership or its Subsidiaries provides cable television service and a System
Franchise is not required pursuant to applicable Legal Requirements, or (ii)
with respect to any System Franchise, the geographic area in which the
Partnership is authorized to provide cable television service pursuant to such
System Franchise.
"SSI Supply Agreement" means the Satellite Services, Inc. Programming
Supply Agreement, between Bresnan Telecommunications Company LLC and Satellite
Services, Inc., as applicable to the Partnership's Business on the date of this
Agreement, and as may be amended prior to Closing.
"Subsidiary" means Bresnan Telecommunications Company LLC, Bresnan
Public Corporation, Bresnan Telephone of Michigan L.L.C., Bresnan Telephone of
Minnesota, L.L.C., Bresnan Communications Group LLC, or Bresnan Capital
Corporation, as the context may require.
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"System Contracts" means all pole line agreements, underground conduit
agreements, crossing agreements, multiple dwelling, bulk billing or commercial
service agreements, leased channel access agreements, retransmission consents,
lease agreements for tangible personal property and other Contracts (other than
System Franchises and System Licenses) held for use or used in connection with
the Partnership's Business and to which the Partnership or a Subsidiary is, or
becomes prior to Closing, a party or bound, including those described on
Schedule 3.4.
"System Franchises" means all franchise agreements, operating permits
or similar governing agreements, instruments, resolutions, statutes, ordinances,
approvals, authorizations and permits obtained from any Franchising Authority in
connection with the Partnership's Business, including those listed on Schedule
3.4, including all amendments and modifications thereto and all renewals
thereof.
"System Licenses" means the intangible cable television channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, earth station registrations, copyright notices and other
licenses, authorizations, consents or permits issued by the FCC or any other
Governmental Authority in connection with the Partnership's Business (other than
System Franchises, System Contracts and Other Real Property Interests),
including those described on Schedule 3.4.
"Tangible Personal Property" means all tangible personal property that
is owned, leased, held for use or used in connection with the Partnership's
Business and in which the Partnership has, or acquires prior to Closing any
right, title or interest, including towers, tower equipment, aboveground and
underground cable, distribution systems, headend amplifiers, line amplifiers,
microwave equipment, converters, testing equipment, motor vehicles, office
equipment, computers and billing equipment, furniture, fixtures, supplies,
inventory and other physical assets, the material items of which, including all
motor vehicles, are described on Schedule 3.3(b).
"Tax" or "Taxes," as the context may require, include any income,
alternative or add-on minimum tax, gross income, gross receipts, franchise,
profits, sales, use, ad valorem, business license, withholding, payroll,
employment, excise, stamp, transfer, recording, occupation, premium, property,
value added, custom duty, severance, windfall profit or license tax,
governmental fee, including estimated taxes relating to any of the foregoing, or
other similar tax or other like assessment or charge of similar kind whatsoever
together with any interest and any penalty, addition to tax or additional amount
imposed by any Governmental Authority responsible for the imposition of any such
Tax.
"Tax Returns" means any tax return, declaration of estimated tax, tax
report or other tax statement, or any other similar filing, including any
schedule or attachment thereto, and including any amendment thereof, required to
be submitted to any Governmental Authority with respect to any Tax.
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"TCI Put Agreement" means each TCI Put Agreement by and among the
parties named therein, substantially in the form of Exhibit J hereto, which
agreement shall be executed and delivered on the Closing Date.
"Transferable Service Area" means a Service Area or an Acquisition
Agreement Service Area with respect to which: (a) no franchise or similar
authorization is required for the provision of cable television service in such
Service Area or Acquisition Agreement Service Area, (b) no Required Consent is
necessary for the transfer of control of any System Franchise or Acquisition
Agreement System Franchise for such Service Area or Acquisition Agreement
Service Area in connection with the consummation of the transactions
contemplated by this Agreement, (c) if a Required Consent is necessary for the
transfer of control of any System Franchise or Acquisition Agreement System
Franchise for such Service Area or Acquisition Agreement Service Area in
connection with the consummation of the transactions contemplated by this
Agreement (including any expired System Franchise or Acquisition Agreement
System Franchise), an effective consent or approval has been obtained (or shall
have been deemed obtained by operation of law in accordance with the provisions
of the Cable Act) without the imposition of any condition or any modification
that in either case makes, or is reasonably likely to make, the underlying
System Franchise or Acquisition Agreement System Franchise materially more
onerous or materially reduces in any respect, or is reasonably likely to
materially reduce in any respect, the benefits available under the System
Franchise or Acquisition Agreement System Franchise in respect of which the
Required Consent relates (except, in each case, as approved by Buyer) or (d) if
a Required Consent is necessary for the transfer of control of any System
Franchise or Acquisition Agreement System Franchise for such Service Area or
Acquisition Agreement Service Area in connection with the consummation of the
transactions contemplated by this Agreement, the applicable franchising
authority does not expressly reject a request for approval to transfer such
System Franchise or Acquisition Agreement System Franchise within 120 days after
the due and proper submission of a completed Form 394 to such Franchising
Authority (plus such extensions of time as are mutually agreed upon by Buyer and
Sellers); provided that, with respect to any expired System Franchise or
Acquisition Agreement System Franchise for which the Franchising Authority has
not granted continuing operation authority to the Partnership or applicable
Subsidiary and pursuant to which consent was not required prior to its
expiration, the corresponding Service Area or Acquisition Agreement Service Area
shall not be a Transferable Franchise Area unless and until the applicable
Franchising Authority has either (i) consented to the consummation of the
Transactions contemplated by this Agreement, or (ii) renewed such System
Franchise or Acquisition Agreement System Franchise.
"Transaction Documents" means this Agreement, and the other documents,
agreements, certificates and other instruments to be executed, delivered and
performed by the parties in connection with the transactions contemplated by
this Agreement.
"Units" means common membership interests in Buyer, with the rights and
limitations set forth in the Operating Agreement.
"Upset Date" means May 1, 2000.
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1.2 Terms Defined Elsewhere in this Agreement. For purposes of this
Agreement, the following terms have the meanings set forth in the sections
indicated:
Term Section
---- -------
Adjustment Assets Section 2.3(a)(1)
Adjustment Escrow Agent Section 2.4(b)(1)
Adjustment Escrow Agreement Section 2.4(b)(1)
Adjustment Escrow Amount Section 2.4(b)(1)
Adjustment Liabilities Section 2.3(a)(2)
Agreement First Paragraph
Antitrust Division Section 5.6
Auditor Section 2.5(a)(2)
BBC First Paragraph
BBCO First Paragraph
BCI Section 5.12
BFI First Paragraph
Bresnan Plan Section 5.12
Buyer First Paragraph
Capital Expenditures Section 2.3(d)
CCH S-4 Section 4.12(a)
Charter Holdings Value Section 2.1(b)
Closing Date Section 7.1
commercially reasonable efforts Section 9.14
Confidential Information Section 5.4(a)
Contributed Interest Section 2.1(b)
Disclosure Letter Section 1.3
Equity Consideration Section 2.1(b)
Estimated Purchase Price Section 2.4(a)
Excluded Rights Section 5.9(e)
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Final Closing Statement Section 2.5(a)(1)
Final Purchase Price Section 2.5(b)(1)(A)
FTC Section 5.6
General Partner First Paragraph
Partnership First Paragraph
Partnership ERISA Affiliates Section 3.12(b)
Partnership Plans Section 3.12(b)
Partnership's Financial Statements Section 3.9
Pending Buyer Acquisitions Section 4.11
Preliminary Closing Statement Section 2.4
Preliminary Purchase Price Section 2.4(b)(2)
PublicCo Section 5.16(c)
Purchase Guaranty Section 9.12
Purchase Price Section 2.2
Purchased Interests Section 2.1
reasonable commercial efforts Section 9.14
Seller Recitals
Shared Reduction Amount Section 2.3(a)
Subscriber Adjustment Section 2.3(b)
Subscriber Shortfall Section 2.3(b)
Subscriber Threshold Section 2.3(b)
Subsequent Buyer Acquisition Section 5.15
Successor Plan Section 5.12
TCI LLC First Paragraph
TCID-MI First Paragraph
Vulcan Puts Section 5.16(d)
WARN Act Section 3.12(a)
WBresnan First Paragraph
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1.3 Rules of Construction. Words used in this Agreement, regardless of
the gender and number specifically used, shall be deemed and construed to
include any other gender and any other number as the context requires. As used
in this Agreement, the word "including" is not limiting, and the word "or" is
not exclusive. Except as specifically otherwise provided in this Agreement in a
particular instance, a reference to a Section is a reference to a Section of
this Agreement, a reference to an Exhibit is a reference to an Exhibit to this
Agreement, a reference to a Schedule is a reference to a Schedule to that
Disclosure Letter delivered on the date of this Agreement (the "Disclosure
Letter"), and the terms "hereof," "herein," and other like terms refer to this
Agreement as a whole, including the Schedules and the Exhibits to this
Agreement, and not solely to any particular part of this Agreement. The
descriptive headings in this Agreement are inserted for convenience of reference
only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement. Any reference in this Agreement to a "day" or
a number of "days" (without the explicit qualification of Business) will be
interpreted as a reference to a calendar day or number of calendar days. If any
action or notice is to be taken or given on or by a particular calendar day, and
such calendar day is not a Business Day, then such action or notice will be
deferred until, or may be taken or given on, the next Business Day.
ARTICLE 2 SALE AND PURCHASE OF PURCHASED INTERESTS; PURCHASE PRICE
2.1 Sale and Purchase of Purchased Interests; Contribution of
Contributed Interests.
(a) Subject to the terms and conditions set forth in this
Agreement, each Seller hereby agrees to sell, transfer, and deliver to Buyer at
the Closing, and Buyer hereby agrees to purchase at the Closing, the partnership
interests specified below (the "Purchased Interests"), free and clear of all
Liens:
(1) from the General Partner, the entire General
Partnership Interest; and
(2) from each Seller, that portion of its Limited
Partnership Interest that is not represented by a Contributed Interest.
(b) TCI LLC agrees to contribute to Buyer all of its Limited
Partnership Interest, and each other Seller agrees to contribute to Buyer a
portion of its Limited Partnership Interest, in each case free and clear of all
Liens and subject to the Legal Requirements (each such contributed Limited
Partnership Interest, a "Contributed Interest"). The aggregate interest in the
Partnership represented by the Contributed Interests will be a fraction, the
numerator of which is $1,000,000,000 plus the Shared Reduction Amount, if any,
and the denominator of which is $3,100,000,000, as adjusted pursuant to Section
2.3 plus the Shared Reduction Amount, if any. The percentage of each Seller's
(other than TCI LLC's) Limited Partnership Interest represented by the
Contributed Interest shall be set forth in a written notice delivered to Buyer
at least two days prior to Closing. In exchange for such contribution to Buyer,
each Seller shall receive Units in Buyer (the "Equity Consideration"). The
number of Units issued to Sellers will be calculated as set forth on Exhibit I.
For purposes of this Section 2.1, if the Adjustment Assets exceed the Adjustment
Liabilities, the
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"Shared Reduction Amount" will be zero, and otherwise, the "Shared Reduction
Amount" will equal one-half of the difference between the Adjustment Liabilities
and the Adjustment Assets, as calculated on the Preliminary Closing Statement,
provided that the Shared Reduction Amount shall in no event be greater than
$15,000,000.
2.2 Purchase Price for Purchased Interests. Buyer shall pay and deliver
to the Sellers, by wire transfer of immediately available funds to one or more
accounts of the Sellers, as designated in writing by the Sellers not later than
the Business Day before Closing, as consideration for the sale of the Purchased
Interests an aggregate amount in cash equal to $2,100,000,000, subject to
adjustment as provided in Section 2.3 (the "Purchase Price") and subject to the
provisions of Sections 2.4 and 2.5. Buyer shall have no liability or obligation
arising from its allocation of the Purchase Price among the Sellers, provided
that Buyer complies with the written instructions of the Sellers provided under
the preceding sentence.
2.3 Adjustments to Purchase Price.
(a) Working Capital Adjustment. The Purchase Price shall be
increased by the amount of the Adjustment Assets as of the Adjustment Time and
shall be decreased by the Adjustment Liabilities as of the Adjustment Time.
(1) Subject to the other provisions of this Section
2.3(a), "Adjustment Assets" means the sum of: (A) cash and cash equivalents (but
only to the extent such cash is held by the Partnership and the Subsidiaries at
the Closing), (B) Eligible Accounts Receivable net of any credit balances owed
to cable television subscribers of the Partnership Systems, (C) Prepaid
Expenses, (D) Deposits, and (E) Other Current Assets, in each case of clauses
(A) through (E) computed for the Partnership and the Subsidiaries as of the
Adjustment Time on a consolidated basis and without duplication in accordance
with GAAP applied on a basis consistent with the preparation of the
Partnership's Financial Statements.
(I) "Eligible Accounts Receivable" means the
face amount of all Subscriber Accounts Receivable that are 60 or fewer days past
due as of the Adjustment Time, all Advertising Accounts Receivable that are 120
days or fewer past due as of the Adjustment Time and all other accounts
receivable. No Subscriber Accounts Receivable that are more than 60 days past
due and no Advertising Accounts Receivable that are more than 120 days past due
will be included in Eligible Accounts Receivable.
(II) "Subscriber Accounts Receivable" means
accounts receivable of the Partnership and the Subsidiaries (excluding
Advertising Accounts Receivable) resulting from the provision of cable
television service by the Partnership Systems to active subscribers as of the
Adjustment Time and that relate to periods prior to the Adjustment Time. For
purposes of making "past due" calculations to determine whether Subscriber
Accounts Receivable are Eligible Accounts Receivable, the subscriber billing
statements will be deemed to be due and payable on the first day of the period
during which the service to which such billing statements relate is provided.
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(III) "Advertising Accounts Receivable"
means accounts receivable of the Partnership and the Subsidiaries resulting from
advertising on a Partnership System or another cable television system sold
either directly by the Partnership and the Subsidiaries or by an ad sales
representative or an advertising agency of the Partnership and the Subsidiaries
or through an advertising interconnect partnership or otherwise. For purposes of
making "past due" calculations to determine whether Advertising Accounts
Receivable are Eligible Accounts Receivable, invoices will be deemed to be due
and payable upon date of invoice.
(IV) "Prepaid Expenses" means the book value
of prepaid expenses of the Partnership and the Subsidiaries (but only to the
extent constituting a current asset and only to the extent that such prepaid
expenses will accrue to the benefit of the Partnership and the Subsidiaries upon
and after the Adjustment Time).
(V) "Deposits" means all monies which are on
deposit with third parties as of the Adjustment Time for the account of the
Partnership or the Subsidiaries or as security for the performance of their
respective obligations, including deposits on real property leases and deposits
for utilities that will accrue to the benefit of the Partnership or the
Subsidiaries upon and after the Adjustment Time.
(VI) "Other Current Assets" means all other
current assets of the Partnership and the Subsidiaries; provided, however,
notwithstanding any provision of this Agreement to the contrary, Adjustment
Assets shall not include inventory or accounts receivable that are not Eligible
Accounts Receivable.
(2) Subject to the other provisions of this Section
2.3(a), "Adjustment Liabilities" means the sum of: (A) Accounts Payable, (B)
Subscriber Prepayments and Deposits, (C) Deferred Revenue, and (D) Other Current
Liabilities, in each case of clauses (A) through (D) computed for the
Partnership and the Subsidiaries as of the Adjustment Time on a consolidated
basis and without duplication in accordance with GAAP applied on a basis
consistent with the preparation of the Partnership's Financial Statements.
(I) "Accounts Payable" means the book value
of all accounts payable of the Partnership and the Subsidiaries.
(II) "Subscriber Prepayments and Deposits"
means the sum of (1) all outstanding deposits of subscribers of the Partnership
Systems for converters, decoders and similar items (and, if required to be paid
to such subscribers, accrued interest thereon), and (2) all payments received by
the Partnership and the Subsidiaries prior to the Adjustment Time for services
to be rendered to subscribers of the Partnership Systems after the Adjustment
Time.
(III) "Deferred Revenue" means liabilities
to subscribers representing advance xxxxxxxx for services to be performed by the
Partnership and the Subsidiaries after the Adjustment Time.
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(IV) "Other Current Liabilities" means all
other current liabilities of the Partnership and the Subsidiaries, including
accrued expenses.
(3) For purposes of making the adjustments pursuant
to this Section 2.3(a), revenues and expenses shall be treated as prepaid or
accrued so as to reflect the principle that revenues and expenses will be
prorated so that the revenues and expenses attributable to the period prior to
the Adjustment Time shall be for the account of Sellers and the revenues and
expenses attributable to the period after the Adjustment Time shall be for the
account of Buyer.
(b) Subscriber Adjustment. The Purchase Price shall be
decreased by the dollar amount equal to the product of (1) the Subscriber
Shortfall multiplied by (2) $4,492 (such decrease, the "Subscriber Adjustment").
For purposes of this Agreement, the "Subscriber Shortfall" equals the number, if
any, by which the total number of Equivalent Basic Subscribers for all of the
Partnership Systems as of the Adjustment Time (as adjusted in accordance with
the following sentence) is less than 665,850. If any Acquisition Agreement
remains pending but not yet consummated prior to the Adjustment Time, then (i)
the number of Equivalent Basic Subscribers of cable television systems that the
Partnership intends to acquire by such Acquisition Agreement, as set forth on
Schedule 3.17, will solely for purposes of this Section 2.3(b) be deemed to be
Equivalent Basic Subscribers of the Partnership Systems as of the Adjustment
Time and (ii) the Partnership debt, for purposes of Section 2.3(c), will be
deemed to be increased on a pro forma basis by the purchase price under such
Acquisition Agreement.
(c) Debt Adjustment. The Purchase Price shall be decreased by
the sum of (1) all obligations of the Partnership and the Subsidiaries for
borrowed money (including all accrued and unpaid interest unless otherwise taken
into account in Section 2.3(a)) under the Loan Documents and under any bonds,
debentures, notes, indentures, mortgages, or similar instruments to which the
Partnership or any of the Subsidiaries are a party or by which any of them are
bound, (2) all capital lease obligations of the Partnership and the Subsidiaries
and (3) any other non-current liabilities (other than deferred taxes, launch
support payments and other items that do not reflect a cash obligation of the
Partnership), each as calculated as of the Closing Date in accordance with GAAP.
(d) Adjustment for Capital Expenditures. (1) The Purchase
Price shall be decreased by the amount (if any) by which $73,467,300 exceeds the
amount of Capital Expenditures. "Capital Expenditures" shall mean capital
expenditures made by the Partnership and the Subsidiaries on a consolidated
basis between January 1, 1999 and the Closing in connection with the upgrade or
rebuild of plant, headend consolidation or system interconnection, data services
equipment, reverse activation and any other expenditures approved in writing by
Buyer plus the cost of inventory acquired by the Partnership during such period
for use in connection with any of the foregoing, but which costs have not yet
been accounted for as a capital expenditure (to reflect the principle that all
adjustments be made without duplication).
(2) The Purchase Price shall be increased by the
amount of any Capital Expenditures incurred with respect to capital projects
that are not contemplated in the Partnership's
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Budget, provided that Buyer provides express prior written consent (in its sole
and absolute discretion) to the incurrence of such Capital Expenditures.
2.4 Payment at Closing.
(a) No later than ten Business Days prior to the date
scheduled for the Closing, the General Partner, in its capacity as the
representative of the Sellers, shall prepare and deliver to Buyer a written
report in reasonable detail (the "Preliminary Closing Statement") setting forth
the Sellers' estimate of the Purchase Price, as determined in accordance with
this Article 2. The Preliminary Closing Statement shall be prepared by the
General Partner in its capacity as the representative of the Sellers in good
faith and shall be certified by the General Partner, in such capacity, to be its
good faith estimate of the Purchase Price and the other amounts set forth
therein as of the date thereof. The Preliminary Closing Statement will be
accompanied by appropriate documentation supporting the amounts set forth
therein and such additional information as Buyer shall reasonably request
relating to the matters set forth in the Preliminary Closing Statement. The
Sellers shall provide to Buyer reasonable access, upon reasonable notice, to all
records in their possession for purposes of verification of the Preliminary
Closing Statement. The Purchase Price to be delivered at the Closing shall be
determined on the basis of the Preliminary Closing Statement, with any changes
thereto mutually agreed to by the Sellers and Buyer (the "Estimated Purchase
Price").
(b) At Closing, Buyer shall pay cash as follows:
(1) Buyer shall pay cash to Chase Manhattan Bank or
other escrow agent mutually satisfactory to the parties (the "Adjustment Escrow
Agent") in an amount equal to $10,000,000 (the "Adjustment Escrow Amount"), such
cash to be held by the Adjustment Escrow Agent in escrow on behalf of the
parties substantially in accordance with the terms of the escrow agreement
attached as Exhibit D (the "Adjustment Escrow Agreement") and Section 2.5;
(2) Buyer shall pay cash to Sellers in an aggregate
amount equal to the excess of (i) the Estimated Purchase Price over (ii) the
Adjustment Escrow Amount (such excess, the "Preliminary Purchase Price").
(c) None of the Adjustment Escrow Amount will be available for
any purpose, other than as described in Section 2.5(b), and the Adjustment
Escrow Amount shall not be available to satisfy any other obligations of Sellers
under this Agreement or otherwise.
2.5 Post-Closing Purchase Price Adjustments.
(a) Final Closing Statement.
(1) Within 90 days after the Closing Date, the
Sellers shall prepare and deliver to Buyer a written report (the "Final Closing
Statement") setting forth the Sellers' final
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estimate of the Purchase Price, as determined in accordance with this Article 2.
The Final Closing Statement shall be prepared by the General Partner, in its
capacity as the representative of the Sellers, in good faith and shall be
certified by the General Partner, in such capacity, to be its good faith
estimate of the Purchase Price and the other amounts set forth therein as of the
date thereof. The Final Closing Statement will be accompanied by appropriate
documentation supporting the amounts set forth therein and such additional
information as Buyer shall reasonably request relating to the matters set forth
in the Final Closing Statement. The Sellers and Buyer will each provide to the
other reasonable access, upon reasonable notice, to all records in its
possession for purposes of the preparation and verification of the Final Closing
Statement.
(2) Within 30 days after the date that the Final
Closing Statement is delivered by the Sellers to Buyer, Buyer shall complete its
examination thereof and may deliver to the Sellers a written report setting
forth any proposed adjustments to any amounts set forth in the Final Closing
Statement. If Buyer notifies the Sellers of Buyer's acceptance of the amounts
set forth in the Final Closing Statement, the amounts set forth in the Final
Closing Statement shall be conclusive, final, and binding on the parties as of
the date of such notification. If Buyer fails to deliver its report of any
proposed adjustments within the 30-day period specified in the preceding
sentence, the amounts set forth in the Final Closing Statement shall be
conclusive, final, and binding on the parties as of the last day of such 30-day
period. Buyer and the Sellers shall use good faith efforts to resolve any
dispute involving the amounts set forth in the Final Closing Statement. If the
Sellers and Buyer fail to agree on any amount set forth in the Final Closing
Statement within 10 days after the Sellers receive Buyer's report pursuant to
this Section 2.5(a), the disputed amounts will be determined within the
following 30-day period by Ernst & Young (the "Auditor"). The Auditor shall
endeavor to resolve the dispute as promptly as practicable and such auditor's
resolution of the dispute shall be final and binding on the parties, and a
judgment may be entered thereon in any court of competent jurisdiction. All of
the costs and expenses of the Auditor and its services rendered pursuant to this
Section 2.5 shall be borne by Buyer, on the one hand, and Sellers, on the other
hand, as nearly as possible in the proportion to the amount by which the
determination of all matters related to such costs and expenses varies from the
positions of Buyer and the Sellers, respectively, on all such matters.
(b) Payment of Purchase Price Adjustments.
(1) After final determination of all amounts
(including resolution of disputed amounts under Section 2.5(a)(2)), payments
shall be made as follows:
(A) If the amount of the Purchase Price as
determined pursuant to Section 2.5(a) ("Final Purchase Price") exceeds the
Preliminary Purchase Price, then within three Business Days after the date the
amount of the Final Purchase Price is determined, (i) Buyer and the Sellers
shall direct the Adjustment Escrow Agent to pay to Sellers the amount of such
excess (not to exceed the amounts on deposit in the Adjustment Escrow Account),
and (ii) Buyer and the Sellers shall direct the Adjustment Escrow Agent to pay
to Buyer the balance (if any) in the Adjustment Escrow Account. To the extent
that the Final Purchase Price exceeds the Preliminary Purchase Price
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by more than the amount on deposit in the Adjustment Escrow Account, Buyer shall
pay the remainder of the Final Purchase Price to Sellers within such three
Business Day period.
(B) If the amount of the Preliminary
Purchase Price exceeds the Final Purchase Price, then within three business days
after the date on which the amount of the Final Purchase Price is determined,
(i) Buyer and the Sellers shall direct the Adjustment Escrow Agent to pay to
Buyer in cash all amounts remaining in the Adjustment Escrow Account and (ii)
Sellers will pay to Buyer in cash an amount equal to the excess of the
Preliminary Purchase Price exceeds the Final Purchase Price.
(2) All payments to be made to the Sellers pursuant
to this Section 2.5(b) shall be paid by wire or accounts transfer of immediately
available funds to the accounts designated by the Sellers by written notice to
Buyer. All payments to be made to Buyer pursuant to this Section 2.5(b) shall be
paid by wire or accounts transfer of immediately available funds to one or more
accounts designated by Buyer by written notice to the Sellers. Buyer shall have
no liability or obligation arising from its allocation among the Sellers of
payments made to the Sellers pursuant to this Section 2.5(b), provided that
Buyer complies with the written instructions of the Sellers provided under the
preceding sentence.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller represents and warrants, to the extent set forth in Section
9.11(b) and not jointly and severally, to Buyer as follows:
3.1 Organization and Ownership of Partnership.
(a) The Partnership is a limited partnership duly formed,
validly existing, and in good standing under the laws of the jurisdiction of its
formation and has the requisite partnership power and authority to own, lease,
and operate its properties and assets and to carry on its business in the places
where such properties and assets are now owned, leased, or operated. The
Partnership and each of its Subsidiaries is duly qualified and in good standing
in all jurisdictions in which the ownership or leasing of the Partnership Assets
owned or leased by it or the nature of its activities in connection with the
Partnership's Business makes such qualification necessary and in which failure
to so qualify would, individually or in the aggregate, have a Material Adverse
Effect.
(b) The General Partner holds of record and owns beneficially,
and as of the Closing will hold of record and own beneficially, a 1.0% General
Partnership Interest, free and clear of all Liens. Each Seller holds of record
and owns beneficially, and as of the Closing will hold of record and own
beneficially, its respective Limited Partnership Interest, free and clear of all
Liens, and the percentage interest of such Seller is as set forth on Schedule
3.1.
(c) Except for this Agreement and the Partnership Agreement,
such Seller (1) is not party to, and has not granted to any other Person, any
options, warrants, subscription rights,
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rights of first refusal or any other rights providing for the acquisition or
disposition of partnership interests or other equity interests in the
Partnership, and (2) is not a party to any voting agreement, voting trust, proxy
or other agreement or understanding with respect to the voting of any of the
Purchased Interests or the Contributed Interests.
(d) The Partnership owns, directly or indirectly, all of the
equity interests in each Subsidiary, free and clear of all Liens other than the
Liens described on Schedule 3.1.
3.2 Authorizations; No Conflict; Required Consents.
(a) Such Seller has the requisite power and authority to
execute, deliver and perform this Agreement and the other Transaction Documents
to which such Seller is a party according to their respective terms. The
execution, delivery, and performance by such Seller of this Agreement and the
other Transaction Documents to which such Seller is a party have been duly
authorized by all necessary action on the part of such Seller. This Agreement
and the other Transaction Documents to which such Seller is a party have been
duly executed and delivered by such Seller (or, in the case of Transaction
Documents to be executed and delivered at Closing, when executed and delivered
will be duly executed and delivered) and constitute (or, in the case of
Transaction Documents to be executed and delivered at Closing, when executed and
delivered will constitute) the legal, valid, and binding obligation of such
Seller, enforceable against such Seller in accordance with their terms, except
as the enforceability of this Agreement and such other Transaction Documents may
be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws affecting creditors' rights generally or by judicial
discretion in the enforcement of equitable remedies.
(b) Except as described on Schedule 3.2, the execution and
delivery by such Seller, the performance by such Seller under, and the
consummation of the transactions contemplated by, this Agreement (other than the
transactions described in Section 5.17) and the Transaction Documents to which
such Seller is a party do not and will not: (a) conflict with or violate any
provision of the Charter Documents of such Seller; (b) violate in any material
respect any provision of any Legal Requirement applicable to such Seller; (c)
require any material consent, approval or authorization of, or filing of any
certificate, notice, application, report or other document with, any
Governmental Authority or other Person; or (d) (i) materially conflict with,
result in a material breach of or constitute a material default under (without
regard to requirements of notice, lapse of time or elections of other Persons or
any combination thereof), (ii) permit or result in the termination, suspension
or material modification of, (iii) result in the material acceleration of (or
give any Person the right to accelerate) the performance of such Seller under,
or (iv) result in the creation or imposition of any Lien upon the Purchased
Interest or Contributed Interest held by such Seller under, any Contract or
other instrument by which such Seller or any of its assets is bound or affected.
(c) Except as described on Schedule 3.2, the execution and
delivery by such Seller, the performance by such Seller under, and the
consummation of the transactions contemplated
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by, this Agreement (other than the transactions described in Section 5.17) and
the Transaction Documents do not and will not: (a) conflict with or violate any
provision of the Charter Documents of the Partnership or any Subsidiary; (b)
violate in any material respect any provision of any Legal Requirement
applicable to the Partnership or any Subsidiary; (c) require any material
consent, approval or authorization of, or filing of any material certificate,
notice, application, report or other document with, any Governmental Authority
or other Person; or (d) (i) materially conflict with, result in a material
breach of or constitute a material default under (without regard to requirements
of notice, lapse of time or elections of other Persons or any combination
thereof), (ii) permit or result in the termination, suspension or material
modification of, (iii) result in the material acceleration of (or give any
Person the right to accelerate) the performance of the Partnership or any
Subsidiary under, or (iv) result in the creation or imposition of any material
Lien upon any of the Partnership Assets under, any System Franchise, material
System License or any material System Contract by which the Partnership, any
Subsidiary or any of the Partnership Assets is bound or affected.
3.3 Partnership Assets.
(a) The Partnership or a Subsidiary has good and valid title
to (or, in the case of the Partnership Assets that are leased, valid leasehold
interests in) the Partnership Assets (other than Owned Real Property, Leased
Real Property and Other Real Property Interests, as to which representations and
warranties in Section 3.5 apply). The Partnership Assets are free and clear of
all Liens, except Permitted Liens.
(b) Except as set forth on Schedule 3.3(b), the Partnership
Assets include substantially all of the assets necessary to permit the
Partnership to conduct the Partnership's Business substantially as it is being
conducted and operated on the date of this Agreement and to operate the
Partnership Systems in material compliance with all Legal Requirements. The
Sellers have previously delivered to Buyer a list of the material items of
Tangible Personal Property. Except as described on Schedule 3.3(b), the material
Tangible Personal Property is in operating condition and repair (ordinary wear
and tear excepted) and is suitable for continued use in the manner in which it
is presently being used.
3.4 System Franchises, System Licenses, and System Contracts.
(a) Except as described on Schedules 3.4 or 3.5, neither the
Partnership nor any Subsidiary is bound or affected by any of the following: (i)
any material lease of real property; (ii) any material lease of personal
property that will remain effective for more than one year after Closing or
requiring payments by the Partnership or any Subsidiary exceeding $50,000 in
aggregate; (iii) franchises for the construction or operation of cable
television systems, or Contracts of substantially equivalent effect; (iv)
licenses, authorizations, consents or permits of the FCC; (v) other material
licenses, authorizations, consents or permits of any other Governmental
Authority; (vi) material easements or rights of access; (vii) material pole line
and joint line agreements, underground conduit agreements, crossing agreements,
or bulk or commercial service agreements; (viii) any Contract for any fiber or
fiber capacity lease or use arrangements that provide to any other
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Person the right to use any fiber or capacity of a Partnership System; (ix) any
Contract for any internet access or on-line services arrangements that provide
to any other Person the right to use the transmission capacity of a Partnership
System to provide internet access or other on-line services over such
Partnership System; (x) any Contract or agreement limiting the right of the
Partnership or any Subsidiary prior to the Closing, or Buyer or any of its
subsidiaries or controlled affiliates at or after the Closing to engage in, or
to compete with any Person in, any business, including each contract or
agreement containing exclusivity provisions restricting the geographical area in
which, or the method by which, any business may be conducted by the Partnership
or any Subsidiary prior to the Closing, or Buyer or any of its subsidiaries or
controlled Affiliates after the Closing; or (xi) any Contract that is not the
subject matter of any other clause of this Section 3.4(a) that will remain
effective for more than one year after Closing or requiring payments by the
Partnership or any Subsidiary exceeding $50,000 under any single contract or
series of related contracts; other than any of the Contracts described in
clauses (i) through (vii) or (xi), above, that is entered into after the date of
this Agreement in the ordinary course of business or otherwise as a result of
consummating any of the Acquisition Agreements.
(b) Complete and correct copies of the System Franchises and
System Licenses have been delivered by the General Partner to Buyer. Except as
described in Schedule 3.4, the System Franchises and System Licenses are
currently in full force and effect and are valid and enforceable under all
applicable Legal Requirements according to their terms. No event has occurred
that, with notice or lapse of time or both, would constitute a material breach,
violation or default by the Partnership, any Subsidiary or any Partnership
System, and to such Seller's Knowledge, no event has occurred that, with notice
or lapse of time or both, would constitute a material breach, violation or
default by any other Person, of any material obligations under the System
Franchises or the System Licenses. The Partnership and the Subsidiaries are in
material compliance with the terms and conditions of all System Franchises and
System Licenses and with other applicable material requirements of all
Governmental Authorities (including the FCC and the Register of Copyrights)
relating to the System Franchises and System Licenses.
(c) Complete and correct copies of all System Contracts listed
on Schedule 3.4 and all Contracts relating to Leased Real Property and Other
Real Property Interests described on Schedule 3.5 have been provided to or made
available to Buyer (other than System Contracts designated as "Missing" on
Schedule 3.4 or 3.5). Except as otherwise disclosed on Schedule 3.4, there has
not occurred any breach by the Partnership or any subsidiary, which breach is
continuing, of any material terms or conditions thereunder, and to such Seller's
Knowledge, there has not occurred any default (without regard to requirements of
notice, lapse of time, elections of other Persons, or any combination thereof)
by any other Person under any material terms or conditions thereunder.
3.5 Real Property. All Partnership Assets consisting of Owned Real
Property, Leased Real Property and material Other Real Property Interests are
described on Schedule 3.5. Except as otherwise disclosed on Schedule 3.5 or as
would not have a Material Adverse Effect, the Partnership or a Subsidiary holds
title to the Owned Real Property free and clear of all Liens (except Permitted
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Liens). To such Seller's Knowledge, except as otherwise disclosed on Schedule
3.5, the Partnership or a Subsidiary has valid and enforceable leasehold
interests in all Leased Real Property. To such Seller's Knowledge, except for
ordinary wear and tear and routine repairs, all of the material improvements,
leasehold improvements and the premises of the Owned Real Property and the
premises demised under the leases and other documents evidencing the Leased Real
Property are in operating condition and repair and are suitable for continued
use in the manner in which it is currently being used. Each parcel of Owned Real
Property and each parcel of Leased Real Property and any improvements thereon
(i) has access to and over public streets or private streets for which the
Partnership, a Subsidiary or a Partnership System has a valid right of ingress
and egress, and (ii) conforms in is current use and occupancy to all material
zoning requirements without reliance upon a variance issued by a Governmental
Authority or a classification of the parcel in question as a nonconforming use.
There are no pending condemnation, expropriation, eminent domain or similar
proceedings affecting, in any material respect, all or any portion of the Owned
Real Property, Leased Real Property, or, to such Seller's Knowledge, Other Real
Property.
3.6 Environmental. Except as would not reasonably be expected to result
in fines or penalties under Environmental Laws or environmental remediation
costs required to be incurred under Environmental Laws:
(a) Except as disclosed on Schedule 3.6, to the best of such
Seller's Knowledge (i) the Owned Real Property and Leased Real Property
currently comply in all material respects with all Environmental Laws, (ii)
neither the Partnership nor any Subsidiary has caused any events, conditions,
circumstances, activities, practices or incidents (including but not limited to
the presence, use, generation, manufacture, disposal, release or threatened
release of any Hazardous Substances from or on the Owned Real Property or the
Leased Real Property), which could interfere with or prevent continued
compliance, or which are reasonably likely to give rise to any liability, based
upon or related to the processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, of any Hazardous Substance from or
attributable to the Owned Real Property or Leased Real Property and (iii) there
is not any pending or threatened claim or investigation based on Environmental
Laws which arises from any condition of any Owned Real Property or Leased Real
Property.
(b) The General Partner has provided Buyer with complete and
correct copies of (i) any studies, reports, surveys or other materials in the
Partnership's or any Subsidiary's possession or to which the Partnership or any
Subsidiary has access relating to the presence or alleged presence of Hazardous
Substances at, on or affecting the Owned Real Property, Leased Real Property or
Other Real Property, (ii) any notices or other materials in the Partnership's or
any Subsidiary's possession that were received from any Governmental Authority
having the power to administer or enforce any Environmental Laws relating to
current or past ownership, use or operation of the Owned Real Property, Leased
Real Property or Other Real Property or activities at the Owned Real Property,
Leased Real Property or Other Real Property, and (iii) any materials in the
Partnership's or any Subsidiary's possession, or to which the Partnership or any
Subsidiary has access, relating to any
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claim, allegation or action by any Person other than a Governmental Entity under
any Environmental Law.
(c) Except as described on Schedule 3.6, to the Knowledge of
such Seller, (i) no aboveground or underground storage tanks are currently or
have been located on any Owned Property or Leased Property, and (ii) no Owned
Property or Leased Property has been used at any time as a gasoline service
station or other facility for storing, pumping, dispensing or producing gasoline
or any other petroleum products or wastes.
3.7 Compliance with Legal Requirements. Except as disclosed in Schedule
3.7, and except for any such noncompliance as has been remedied, each of the
Partnership, its Subsidiaries, and the Partnership Systems is in compliance and
has been operated in compliance in all material respects with all Legal
Requirements (including, without limitation, the Cable Act, the Copyright Act
and the FCC's Cumulative Leakage Index, but excluding Legal Requirements for
which more specific representations are set forth in Sections 3.6, 3.11 and
3.12). The Partnership has delivered or made available to Buyer complete and
correct copies of all FCC forms relating to rate regulation filed by the
Partnership, its Subsidiaries or the Partnership Systems with any Governmental
Authority with respect to the Partnership Systems and copies of all
correspondence from or to the Partnership, its Subsidiaries or the Partnership
Systems with any Governmental Authority relating to rate regulation generally
and any other Rate Regulatory Matter or specific rates charged to subscribers of
the Partnership Systems, and any other documentation prepared by the
Partnership, its Subsidiaries or the Partnership Systems supporting an exemption
from the rate regulation provisions of the Cable Act claimed by the Partnership,
its Subsidiaries or the Partnership Systems with respect to any of the
Partnership Systems. The Partnership has made available to Buyer, to the extent
in the possession of the Partnership, copies of all FCC forms relating to rate
regulation filed with any Governmental Authority with respect to the Partnership
Systems by parties other than the Partnership, its Subsidiaries or the
Partnership Systems and copies of all correspondence from or to parties other
than the Partnership, its Subsidiaries or the Partnership Systems with any
Governmental Authority relating to rate regulation generally and any other Rate
Regulatory Matter or specific rates charged to subscribers of the Partnership
Systems, and any other documentation supporting any exemption from the rate
regulation provisions of the Cable Act claimed by the Partnership Systems by
parties other than the Partnership, its Subsidiaries or the Partnership Systems.
3.8 Intellectual Property. The General Partner has delivered to Buyer
complete and correct copies of all current reports and filings for the past
three years, made or filed with the U.S. Copyright Office pursuant to copyright
rules and regulations with respect to the Partnership's Business. Except as set
forth on Schedule 3.8, the Partnership and the Subsidiaries do not own or use
any Intellectual Property related to and material to the operation of the
Partnership Systems and are not a party to any license or royalty agreement with
respect to any such Intellectual Property, except for licenses respecting
program material and obligations under the Copyright Act applicable to cable
television systems generally. To such Seller's Knowledge, except as described on
Schedule 3.8, the Partnership Systems and the Partnership's Business have been
operated in such a manner so
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as not to materially violate or infringe upon the rights, or give rise to any
rightful material claim of any Person for infringement of Intellectual Property
or license.
3.9 Financial Statements; Absence of Certain Changes or Events. Buyer
has received copies of the BCG S-4. The BCG S-4 contains complete and correct
copies of the audited consolidated balance sheets of the Partnership and the
Subsidiaries and related statements of income, stockholders' equity and cash
flows for the fiscal year ended December 31, 1998, as adjusted to reflect the
combination of certain assets to reflect the contribution by TCI LLC and its
Affiliates to the Partnership on February 2, 1999, including all notes and
schedules thereto (all of such financial statements and notes being hereinafter
referred to as the "Partnership's Financial Statements"). The Partnership's
Financial Statements are in accordance with the books and records of the
Partnership and were prepared in accordance with GAAP, except as may be
described therein, applied on a consistent basis throughout the periods covered
thereby. Except as set forth on Schedule 3.9 and after giving effect to the
various transactions consummated on February 2, 1999, and related financings,
since December 31, 1998, there has been no (i) event or events (other than any
affecting the cable television industry generally) occurred that, individually
or in the aggregate, are reasonably likely to result in a Material Adverse
Effect and (ii) material change in accounting principles or practices (other
than as a result of changes in GAAP) with respect to the Partnership Systems or
revaluation by the Partnership of the Partnership Assets for financial
reporting, property tax or other purposes. From December 31, 1998 to the date of
this Agreement, except with respect to the closing of various transactions on
February 2, 1999, and related financings, the Partnership's Business has been
conducted only in the usual, regular and ordinary course, except as disclosed on
Schedule 3.9 and except where the failure to conduct business in such manner
would not have a Material Adverse Effect.
3.10 Litigation.
(a) Except as set forth in Schedule 3.10: (i) there is no
Litigation pending or, to such Seller's Knowledge, threatened against the
Partnership or any Subsidiary; and (ii) there is not in existence any Judgment
(other than Judgments affecting the cable television industry in general)
requiring the Partnership or any Subsidiary to take any action of any kind with
respect to the Partnership Assets or the operation of the Partnership Systems.
(b) Except as set forth in Schedule 3.10, there is no
Litigation pending or, to such Seller's Knowledge, threatened against such
Seller which, individually or in the aggregate, is reasonably likely to
adversely affect the ability of such Seller to perform its obligations under
this Agreement.
3.11 Tax Returns.
(a) Except as described on Schedule 3.11, the Partnership and
the Subsidiaries have duly and timely filed in correct form all federal Tax
Returns and all other material Tax Returns required to be filed by it, and all
such Tax Returns are complete and correct in all material respects,
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except where the failure of such Tax Returns to be complete or correct would not
result in a material liability to the Partnership or the Subsidiaries. The
Partnership and the Subsidiaries have timely paid all material Taxes which have
become due and payable on such Tax Returns, except for Taxes reflected in the
Partnership's Financial Statements, such amounts as are being contested
diligently and in good faith and are not in the aggregate material or Taxes
reflected as an adjustment to the Purchase Price under Article 2. Neither the
Partnership nor any Subsidiary has received any written notice of, nor does such
Seller have any Knowledge of, any deficiency, assessment or audit, or proposed
deficiency, assessment or audit from any taxing Governmental Authority that
could result in any material liability on behalf of the Partnership.
(b) The appropriate Tax Returns of each of the Partnership and
the Subsidiaries have not been examined by the Internal Revenue Service for the
last six years.
(c) Except as set forth in Schedule 3.11, there are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any material Tax Returns required to be filed by, or which
include, the Partnership or any of the Subsidiaries.
(d) Except as set forth in Schedule 3.11, neither the
Partnership nor any of the Subsidiaries is subject to any joint venture,
partnership or other arrangement or contract which is treated as a partnership
for federal income tax purposes, other than ownership of any of the
Subsidiaries.
(e) Except as set forth in Schedule 3.11, there are no
material tax sharing agreements or similar arrangements with respect to or
involving the Partnership or any of the Subsidiaries.
(f) The Partnership and each of the Subsidiaries (except
Bresnan Capital Corporation) has been treated properly as either a partnership
or disregarded entity for federal income tax purposes since its inception,
respectively.
3.12 Employment Matters.
(a) Except as set forth on Schedule 3.12, the Partnership and
the Subsidiaries have complied in all material respects with all applicable
Legal Requirements relating to the employment of labor, including the Worker
Adjustment and Retraining Notification Act, as amended (the "WARN Act"), ERISA,
continuation coverage requirements with respect to group health plans and those
relating to wages, hours, collective bargaining, unemployment insurance,
worker's compensation, equal employment opportunity, age and disability
discrimination, immigration control and the payment and withholding of Taxes,
except as would not have a Material Adverse Effect.
(b) With respect to the Partnership, any Subsidiary, and the
Partnership Plans (as defined below):
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(1) Except as is disclosed on Schedule 3.12, (i)
neither the Partnership, any Subsidiary nor any of their ERISA Affiliates
maintains or sponsors (or ever maintained or sponsored), or makes or is required
to make contributions to, any Partnership Plans, (ii) none of the Partnership
Plans is or was a "multi-employer plan," as defined in Section 3(37) of ERISA,
(iii) none of the Partnership Plans is or was a "defined benefit pension plan"
within the meaning of Section 3(35) of ERISA, (iv) none of the Partnership Plans
provides or provided post-retirement medical or health benefits (except as
required by Section 4980B of the Code or similar Laws), (v) none of the
Partnership Plans is or was a "welfare benefit fund," as defined in Section
419(e) of the Code, or an organization described in Sections 501(c)(9) or
501(c)(20) of the Code, and (vi) neither the Partnership, any Subsidiary, nor
any of their ERISA Affiliates has announced or otherwise made any commitment to
create or amend any Partnership Plan. There is no Partnership Plan which the
Partnership will not be able to terminate immediately after the Closing in
accordance with its terms and ERISA. The Partnership has delivered to Buyer true
and complete copies of: (i) each of the Partnership Plans and any related
funding agreements thereto (including insurance contracts) including all
amendments, (ii) the currently effective Summary Plan Description pertaining to
each of the Partnership Plans, (iii) the most recent annual report for each of
the Partnership Plans (including all relevant schedules), and (iv) the most
recent Internal Revenue Service determination letter for each Partnership Plan
which is intended to constitute a qualified Partnership Plan under Section 401
of the Code, (v) the most recently filed PBGC Form 1, if applicable, (vi) for
each funded Partnership Plan, ERISA-required financial statements.
(2) Neither the Partnership, any Subsidiary nor any
of their ERISA Affiliates is subject to any liability, tax or penalty whatsoever
to any person or agency whomsoever as a result of engaging in a prohibited
transaction under ERISA or the Code, and neither the Partnership, any Subsidiary
nor any of their ERISA Affiliates has any knowledge of any circumstances which
reasonably might result in any liability, tax or penalty, including, but not
limited to, a penalty under Section 502 of ERISA, as a result of a breach of any
duty under ERISA or under other laws. There has been no material failure of any
Partnership Plan which is required to comply with the provisions of Sections
4980B and 4980C of the Code, or with the requirements referred to in Section
4980D(a) of the Code, to comply. No event has occurred which could subject any
Partnership Plan to any material tax under Section 511 of the Code.
(3) Each of the Partnership Plans which is intended
to be a qualified plan under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service. There has been no
failure to administer any of the Partnership Plans in material compliance with
the terms of such Partnership Plan, ERISA, the Code and all other applicable
laws. All contributions required to be made to each of the Partnership Plans
under the terms of that Partnership Plan, ERISA, the Code or any other
applicable laws have been timely made. The financial statements of the
Partnership delivered to Buyer pursuant to Section 3.9 properly reflect all
amounts required to be accrued as liabilities to date under each of the
Partnership Plans. Except as set forth on Schedule 3.12, there is no contract,
agreement or benefit arrangement covering any employee of the Partnership or any
Subsidiary which, individually or collectively, could give rise to the payment
of any amount which would constitute an "excess parachute payment" (as defined
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in Section 280G of the Code). Except as set forth on Schedule 3.12, the
execution and performance of this Agreement will not (i) result in any
obligation or liability (with respect to accrued benefits or otherwise) of the
Partnership or any Subsidiary to any Partnership Plan, or any present or former
employee of the Partnership or any Subsidiary, (ii) be a trigger event under any
Partnership Plan that will result in any payment (whether of severance pay or
otherwise) becoming due to any present or former employee, officer, director,
shareholder, contractor, or consultant, or any of their dependents, or (iii)
accelerate the time of payment or vesting, or increase the amount, of
compensation due to any employee, officer, director, shareholder, contractor, or
consultant of the Partnership or any Subsidiary. With respect to any insurance
policy which provides, or has provided, funding for benefits under any
Partnership Plan, (I) except as described on Schedule 3.12, there is and will be
no liability of the Partnership or Buyer in the nature of a retroactive or
retrospective rate adjustment, loss sharing arrangement, or actual or contingent
liability as of the Closing Date, nor would there be any such liability if such
insurance policy were terminated as of the Closing Date, and (II) no insurance
company issuing any such policy is in receivership, conservatorship, bankruptcy,
liquidation, or similar proceeding, and, to the knowledge of the Partnership or
any Subsidiary, no such proceedings with respect to any insurer are imminent.
(4) The present value of all accrued benefits under
any Partnership Plans subject to Title IV of ERISA shall not, as of the Closing
Date, exceed the value of the assets of such Partnership Plans allocated to such
accrued benefits, based upon the applicable provisions of the Code and ERISA,
and each such Partnership Plan shall be capable of being terminated as of the
Closing Date in a "standard termination" under Section 4041(b) of ERISA. The
transactions contemplated hereunder, including without limitation the
termination of any Partnership Plans at or prior to the Closing, shall not
result in any such withdrawal or other liability under any applicable laws.
There are no Liens against the Partnership Assets under Section 412(n) of the
Code or Sections 302(f) or 4068 of ERISA. With respect to any multi-employer
plan within the meaning of Section 3(37) of ERISA, or any plan subject to Title
IV of ERISA, to which the Partnership, any Subsidiary or any of their ERISA
Affiliates is or ever was obligated to contribute, (a) there has been no
material "reportable event" described in Sections 4043(c)(1), (2), (3), (5),
(6), (7), (10), or (13) of ERISA, (b) no "accumulated funding deficiency" (as
defined in Section 302 of ERISA) or "withdrawal liability" (as determined under
Section 4201 et seq. of ERISA) has occurred, exists or is continuing with
respect to any such plan other than a multi-employer plan (as defined in Section
3(37) of ERISA), or, to the Knowledge of the Partnership, its Subsidiaries or
any of their ERISA Affiliates, with respect to any such plan which is a
multi-employer plan (as defined in Section 3(37) of ERISA), (c) no such plan has
been terminated other than in accordance with ERISA or at a time when such plan
was not sufficiently funded, and (d) there has been no (i) withdrawal by the
Partnership, its Subsidiaries or any of their ERISA Affiliates that is a
substantial employer from a single-employer plan and that has two or more
contributing sponsors at least two of whom are not under common control, as
referred to in Section 4063(b) of ERISA, or (ii) cessation by the Partnership,
its Subsidiaries or any of their ERISA Affiliates of operations at a facility
causing more than twenty percent (20%) of plan participants to be separated from
employment, as referred to in Section 4062(e) of ERISA. The Partnership and its
ERISA Affiliates have no liability under Section 4064 of ERISA relating to any
"defined benefit pension plan" (within the meaning of Section 3(35)
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of ERISA) maintained or contributed to by any ERISA Affiliate within the
five-year period before the Closing Date.
(5) Other than routine claims for benefits under the
Partnership Plans, there are no pending, or, to the best knowledge of the
Partnership or any Subsidiary, threatened, investigations, proceedings, claims,
lawsuits, disputes, actions, audits or controversies involving the Partnership
Plans, or the fiduciaries, administrators, or trustees of any of the Partnership
Plans or the Partnership, any Subsidiary or any of their ERISA Affiliates as the
employer or sponsor under any Partnership Plan, with any of the Internal Revenue
Service, the Department of Labor, the Pension Benefit Guaranty Corporation, any
participant in or beneficiary of any Partnership Plan or any other person
whomsoever. To the Knowledge of the Partnership and any Subsidiary, there is no
reasonable basis for any such claim, lawsuit, dispute, action or controversy.
For purposes of this Section 3.12(b), the term
"Partnership Plans" shall mean (i) all "employee benefit plans" (as such term is
defined in Section 3(3) of ERISA, of which the Partnership, any Subsidiary or
any of their ERISA Affiliates (a "Partnership ERISA Affiliate") is or ever was
within the three-year period ending on the Closing Date a sponsor or
participating employer or as to which the Partnership, any Subsidiary or any
Partnership ERISA Affiliate makes contributions or is required to make
contributions, and (ii) any similar employment, severance or other arrangement
or policy of the Partnership or any Subsidiary providing for insurance coverage
(including self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits or retirement
benefits, or for profit sharing, deferred compensation, bonuses, stock options,
stock appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits.
(c) Except as set forth on Schedule 3.12, there are no union
or collective bargaining agreements applicable to any Person employed by the
Partnership or any Subsidiary that renders services in connection with the
Partnership Systems and neither the Partnership nor any Subsidiary has any duty
to bargain with any labor organization with respect to any such Person. There
has been no work stoppage or strike by employees of the Partnership and the
Subsidiaries within the last three years except as disclosed on Schedule 3.12.
Except as set forth on Schedule 3.12, there are not (i) any unfair labor
practice charges or arbitration proceedings pending, or to such Seller's
Knowledge, threatened against the Partnership or any Subsidiary, (ii) any
pending demand for recognition or (iii) any other pending effort of or request
or demand from, a labor organization for representative status with respect to
any Person employed by the Partnership or any Subsidiary that renders services
in connection with the Partnership Systems or the Partnership's Business. Except
as described on Schedule 3.12, neither the Partnership nor any Subsidiary has
any employment Contracts, either written or oral, with any employee of the
Partnership Systems, and none of such employment agreements listed on Schedule
3.12 requires Buyer to employ any person after Closing.
The Sellers have delivered to Buyer a list
describing, as of the date of this Agreement, individually and by category, the
name of each officer, employee and consultant of the
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Partnership and each Subsidiary (but not including employees of BCI and
employees of the Partnership who work out of the Corporate Office), together
with such person's position or function, annual base salary or wage and any
incentive, severance or bonus arrangements with respect to such person due from
the Partnership, in each case as of the date of this Agreement. Except as
disclosed in Schedule 3.12, the completion of the transactions contemplated by
this Agreement will not result in any payment or increased payment becoming due
from the Partnership or any Subsidiary to any officer, director, or employee of,
or consultant to, the Partnership or any Subsidiary (but not including employees
of BCI and employees of the Partnership who work out of the Corporate Office),
and to such Seller's Knowledge no employee of the Partnership or any Subsidiary
has made any threat, or otherwise revealed an intent, to terminate said
employee's relationship with the Partnership or any Subsidiary, for any reason,
including because of the consummation of the transactions contemplated by this
Agreement. Neither the Partnership nor any Subsidiary is a party to any
agreement for the provision of labor from any outside agency except as disclosed
in Schedule 3.12. To the Partnership's Knowledge, within the three year period
preceding the Closing Date there have been no claims by employees of such
outside agencies, if any, with regard to employees assigned to work for the
Partnership or any Subsidiary, and no claims by any governmental agency with
regard to such employees except as disclosed in Schedule 3.12. To such Seller's
Knowledge, there are no organizational efforts presently underway or threatened
involving any employees performing work for the Partnership or any Subsidiary
but provided by an outside employment agency, if any.
Neither the Partnership nor any Subsidiary has any
written policies and/or employee handbooks or manuals except as disclosed in
Schedule 3.12.
3.13 Partnership Systems Information. Schedule 3.13 sets forth the
approximate number of plant miles (aerial and underground) for each headend, the
approximate bandwidth capability of each headend, the stations and signals
carried by each headend and the channel position of each such signal and
station, which information is true and correct in all material respects, in each
case as of the applicable dates specified therein and subject to any
qualifications set forth therein. The Sellers have delivered to Buyer channel
lineups and the monthly rates charged for each class of service for each headend
in the Partnership Systems, which information is true and correct in all
material respects, in each case as of the applicable dates specified therein and
subject to any qualifications set forth therein. Except as described in Schedule
3.13, each Partnership System is capable of providing all channels, stations and
signals reflected as being carried on such Partnership System on Schedule 3.13.
The Sellers have prepared Schedule 6.1 in good faith on information believed by
them to be reliable.
3.14 Finders and Brokers. None of such Seller, the Partnership nor any
Person acting on behalf of such Seller or the Partnership has employed any
financial advisors, broker or finder or incurred any liability for any financial
advisory, brokerage, finder's or similar fee or commission in connection with
the transactions contemplated by this Agreement, except such fees of Xxxxxxx,
Xxxxx and Company, Xxxxxx Capital Corporation and Xxxxxxx & Associates that will
be paid in full by the Sellers.
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3.15 Transactions with Affiliates. Effective at and as of the Closing,
except as disclosed in Schedule 3.15, neither the Partnership nor any Subsidiary
will be involved in any business arrangement or business relationship with any
Affiliate of the Partnership (other than a Subsidiary), and no Affiliate of the
Partnership (other than a Subsidiary) owns any property or right, tangible or
intangible, that will be used in the Partnership's Business or the operation of
the Partnership Systems. For purposes of this Section 3.15, the reference to
Affiliates includes the Persons who are Affiliates immediately prior to Closing.
3.16 Competition. Except as set forth on Schedule 3.16, and other than
direct broadcast satellite and satellite master antenna television, as of the
date of this Agreement with respect to each Service Area: (i) no Person is
operating a cable television system or other non-satellite MVPD (or to Seller's
Knowledge, MMDS not emitting signals from a Service Area) other than a
Partnership System in such area; (ii) no local franchising authority has awarded
a cable television franchise in such area to any Person other than the
Partnership, any Subsidiary or a Partnership System; and (iii) to the Knowledge
of such Seller, no MVPD has applied for a cable television franchise to serve
such area.
3.17 Pending Transactions. Other than the transactions contemplated by
the Acquisition Agreements, neither the Partnership nor any Subsidiary has
entered into any agreement or letter of intent or other commitment to acquire or
dispose of any cable television system that has not been consummated prior to
the execution of this Agreement.
3.18 Acquisition Agreement Schedules; Schedule References. Any
information set forth in or disclosed in the schedules to the Acquisition
Agreements or any definitive agreement entered into by the Partnership or any
Subsidiary in connection therewith in each case as in effect on the date of this
Agreement, shall be deemed by this reference to be included in the Schedules to
this Agreement to the extent such information and disclosures would reasonably
be deemed relevant (based on the level of detail and sufficiency of information
provided therein) to the corresponding or analogous representations and
warranties made by the Sellers in this Article 3. True and complete copies of
the foregoing agreements have been delivered to Buyer prior to the date hereof.
Schedule and exhibit references contained in this Agreement are for convenience
only and any matter disclosed pursuant to one section, subsection or other
provision of this Agreement, are deemed disclosed for all purposes of this
Agreement, as long as the disclosure with respect to such matter provides a
truthful, accurate and adequate description of all relevant aspects of such
matter.
3.19 Securities Law Matters. Such Seller understands and acknowledges
that the Equity Consideration has not been registered or qualified under the
federal or applicable state securities laws and the Equity Consideration is
being transferred to the Sellers in reliance upon applicable exemptions from
such registration and qualification requirements. Such Seller is an "accredited
investor" within the meaning of the federal securities laws and acknowledges it
has been furnished with or afforded access to, and has had the opportunity to
ask questions and receive answers concerning, all information pertaining to the
Equity Consideration. The Equity Consideration is being acquired by such Seller
for investment only and not with a view to any public distribution
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thereof. Such Seller understands that the Equity Consideration represents
"restricted securities" within the meaning of the federal securities laws and
agrees that it will not offer to sell or otherwise dispose of the Equity
Consideration in violation of the registration and qualification requirements of
the federal and applicable state securities laws.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to each Seller as follows:
4.1 Organization; Authority. Buyer is a limited liability company duly
organized, validly existing, and in good standing under the laws of the State of
Delaware. Buyer has the requisite power and authority to conduct its activities
as such activities are currently conducted and to execute, deliver and perform
this Agreement and the other Transaction Documents to which Buyer is a party
according to their respective terms. Buyer is duly qualified to do business as a
foreign limited liability company and is in good standing in all jurisdictions
in which such qualification is necessary, except where such failure to be so
qualified would not, individually or in the aggregate, have a material adverse
effect on the ability of Buyer to perform its obligations under this Agreement.
4.2 Authorization and Binding Obligation. The execution, delivery, and
performance by Buyer of this Agreement and the other Transaction Documents to
which Buyer is a party have been duly authorized by all necessary action on the
part of Buyer. This Agreement and the other Transaction Documents to which Buyer
is a party have been duly executed and delivered by Buyer (or, in the case of
Transaction Documents to be executed and delivered at Closing, when executed and
delivered will be duly executed and delivered) and constitute (or, in the case
of Transaction Documents to be executed and delivered at Closing, when executed
and delivered will constitute) the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with their terms, except as the
enforceability of this Agreement and such other Transaction Documents may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws affecting creditors' rights generally or by judicial
discretion in the enforcement of equitable remedies.
4.3 No Conflict; Required Consents. The execution and delivery by
Buyer, the performance by Buyer under, and the consummation of the transactions
contemplated by, this Agreement and the Transaction Documents to which Buyer is
a party do not and will not: (a) conflict with or violate any provision of the
Charter Documents of Buyer; (b) violate any provision of any Legal Requirement;
(c) require any material consent, approval or authorization of, or filing of any
certificate, notice, application, report or other document with, any
Governmental Authority or other Person; or (d) (i) result in a material breach
of or constitute a material default under (without regard to requirements of
notice, lapse of time or elections of other Persons or any combination thereof),
(ii) permit or result in the termination, suspension or material modification
of, or (iii) result in the material acceleration of (or give any Person the
right to accelerate) the performance of Buyer under, any Contract or other
instrument by which Buyer or any of its assets
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is bound or affected, except for any of the foregoing that would not materially
adversely affect Buyer's ability to perform its obligations under this
Agreement.
4.4 Finders and Brokers. Neither Buyer nor any Person acting on behalf
of Buyer has employed any financial advisors broker or finder or incurred any
liability for any financial advisory, brokerage, finder's or similar fee or
commission in connection with the transactions contemplated by this Agreement,
except any of the foregoing that will be paid in full by Buyer.
4.5 Securities Law Matters. Buyer understands and acknowledges that the
Purchased Interests and the Contributed Interests have not been registered or
qualified under the federal or applicable state securities laws and the
Purchased Interests are being sold to and purchased by Buyer and the Contributed
Interests are being contributed to Buyer in reliance upon applicable exemptions
from such registration and qualification requirements. Buyer is an "accredited
investor" within the meaning of the federal securities laws and acknowledges it
has been furnished with or afforded access to, and has had the opportunity to
ask questions and receive answers concerning, all information pertaining to the
Purchased Interests and the Contributed Interests. The Purchased Interests and
the Contributed Interests are being acquired by Buyer for investment only and
not with a view to any public distribution thereof. Buyer understands that the
Purchased Interests and the Contributed Interests are "restricted securities"
within the meaning of the federal securities laws and agrees that it will not
offer to sell or otherwise dispose of the Purchased Interests and the
Contributed Interests in violation of the registration and qualification
requirements of the federal and applicable state securities laws.
4.6 Investment Company. Buyer is not, and upon consummation of the
transactions contemplated by this Agreement will not be, an "Investment Company"
required to register as such under the Investment Company Act of 1940, as
amended.
4.7 Litigation. Except as set forth in Schedule 4.7, there is no
Litigation pending or, to Buyer's Knowledge, threatened against Buyer which,
individually or in the aggregate, is reasonably likely to materially adversely
affect the ability of Buyer to perform its obligations under this Agreement.
4.8 Balance Sheet. Buyer has delivered to the Sellers a true and
complete copy of an audited consolidated balance sheet of Buyer and its
consolidated subsidiaries as of December 31, 1998. As of the date of this
Agreement, all cable television operations of Buyer and its Affiliates are
conducted through Buyer or one or more of its subsidiaries or joint ventures or
other Persons in which Buyer holds an equity interest.
4.9 Financing. As of the Closing Date, Buyer will have available cash
or cash equivalents on hand in an amount sufficient to enable it to pay in cash
the full amount of the Purchase Price and consummate the transactions
contemplated by this Agreement. At the Closing Date, Buyer will be able to
arrange the refinancing of the Credit Facility, if necessary. On the date
required for repurchase pursuant to any tender offer, Buyer also will have
available the cash or cash equivalents,
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or access to such cash equivalents under its existing credit facility, to
repurchase at 101% of the principal amount thereof any of the notes that are
tendered pursuant to the change of control repurchase offer that will be made
following the Closing pursuant to Section 5.8(b).
4.10 Capitalization; Delivery of Limited Liability Company
Interests.
(a) As of the date hereof, all of the equity interests in
Buyer are owned of record and beneficially by Charter Communications, Inc. As of
the date hereof, there are no preemptive rights, whether at law or otherwise, to
purchase any securities of Buyer and, except as disclosed in Schedule 4.10(a),
there are no outstanding options, warrants, subscriptions, agreements, plans,
rights or other commitments pursuant to which Buyer is or may become obligated
to sell or issue any Units or any other equity security, and there are no
outstanding securities convertible into such Units or any other equity security.
(b) The Equity Consideration being issued hereunder, when
issued and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly authorized and validly issued. The
delivery of such Equity Consideration pursuant to this Agreement will transfer
to the Sellers good and valid title to such Equity Consideration, free and clear
of all Liens and any other limitations or restrictions (including any
restrictions on the right to vote, sell or otherwise dispose of such interest),
other than the transfer restrictions created by the Operating Agreement or
imposed by applicable Legal Requirements.
4.11 Pending Buyer Acquisitions. Schedule 4.11 sets forth a description
of each pending transaction as of the date hereof in which Buyer, directly or
indirectly, would acquire a majority or other equity interests in, or the
operating business of, any Person (the "Pending Buyer Acquisitions"). Except as
set forth on Schedule 4.11, Buyer has delivered to Sellers true and complete
copies of the purchase agreement and/or other acquisition documents in
connection with or relating to each of the Pending Buyer Acquisitions. Buyer
will deliver to Sellers within 30 days of this Agreement true and complete
copies of the purchase agreement and/or other acquisition documents in
connection with or relating to each of the Pending Buyer Acquisitions described
on Schedule 4.11, subject to reasonable confidentiality restrictions; provided
that Buyer uses commercially reasonable efforts to secure a waiver of such
restrictions.
4.12 SEC Filings; Financial Information.
(a) Buyer has delivered to the Sellers Amendment No. 2 to the
Registration Statement on Form S-4 filed by Charter Communications Holdings, LLC
with the SEC (File No. 333-77499) on June 21, 1999 (the "CCH S-4"). Other than
with respect to information regarding the transactions contemplated by this
Agreement, the CCH S-4, as of the date hereof does not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
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(b) The pro forma system cash flow information for Buyer and
its subsidiaries (giving pro forma effect to the Pending Buyer Acquisitions and
the transactions contemplated herein) attached as Schedule 4.12(b) have been
prepared in good faith on the basis of assumptions believed by Buyer to be
reasonable.
ARTICLE 5 SPECIAL COVENANTS AND AGREEMENTS
The parties covenant and agree as follows:
5.1 Access to Premises and Records. Between the execution of this
Agreement and the Closing, upon reasonable notice the General Partner will cause
the Partnership and the Subsidiaries to give to Buyer and its representatives
reasonable access during normal business hours to all the premises and books and
records of the Partnership's Business and to all of the Partnership Assets and
Partnership Systems' personnel and will furnish to Buyer and its representatives
all such documents, financial information and other information regarding the
Partnership's Business, the Partnership Systems and the Partnership Assets as
Buyer from time to time reasonably may request.
5.2 Continuity and Maintenance of Operations; Certain Deliveries and
Notices. Except as described on Schedule 5.2-I or as Buyer may otherwise consent
(which, in the case of Sections 5.2(a) and 5.2(g) (except as specifically set
forth therein), will not be unreasonably withheld, conditioned or delayed)
between the date of this Agreement and the Closing, the Sellers will cause the
Partnership and the Subsidiaries to:
(a) conduct the Partnership's Business in good faith and
operate the Partnership Systems only in the usual, regular and ordinary course
and consistent with past practices, except as provided in this Agreement and the
Partnership's Budget (subject to, and except as modified by, compliance with the
following covenants), including operating substantially in accordance with the
Partnership's Budget, completing ongoing and planned line extensions, placing
conduit or cable in new developments, fulfilling installation requests,
completing disconnection work orders and disconnecting and discontinuing service
to customers whose accounts are delinquent, and, to the extent consistent with
such conduct and operation, use its commercially reasonable efforts to (i)
preserve the Partnership's Business intact in all material respects, including
preserving existing relationships with franchising authorities, suppliers,
customers and others having business dealings with the Partnership Systems, and
(ii) keep available the services of its employees and agents providing services
in connection with the Partnership's Business and the Partnership Systems, and
(iii) continue budgeted marketing, advertising and promotional expenditures with
respect to the Partnership's Business and the Partnership Systems consistent
with past practices;
(b) (i) maintain the Partnership Assets in operating
condition; (ii) maintain inventory for the Partnership Systems at levels
consistent with past practices (as adjusted for historical rebuild activities)
and sufficient to operate the Partnership Systems in the ordinary course of
business; (iii) use commercially reasonably efforts to maintain in full force
and effect policies of insurance with respect to the Partnership's Business
consistent with past practices; (iv) promptly
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notify Buyer of any event that results in any material loss or damage to the
Partnership Assets or Partnership Systems (whether resulting from fire, theft,
or any other casualty); (v) maintain its books, records and accounts with
respect to the Partnership Assets and the operation of the Partnership Systems
in the usual, regular and ordinary manner on a basis consistent with past
practices; (vi) comply in all material respects with all Legal Requirements
applicable to the Partnership and the operation of the Partnership's Business;
(vii) and subject to the availability of labor and materials and to other
matters outside the reasonable control of the Partnership, continue to make
capital expenditures, including rebuild expenditures, materially consistent with
the Partnership's Budget or otherwise implement the rebuild program contemplated
by the Partnership's Budget;
(c) promptly deliver to Buyer true and complete copies of all
quarterly financial statements and all monthly and quarterly financial and
operating reports with respect to the operation of the Partnership's Business
prepared in the ordinary course of business by or for any of the Partnership at
any time from the date of this Agreement until the Closing;
(d) give or cause to be given to Buyer and its counsel,
accountants and other representatives, as soon as reasonably possible but in any
event prior to the date of submission to the appropriate Governmental Authority,
copies of all FCC Forms 1200, 1205, 1210, 1215, 1220, 1225, 1235 and 1240 or any
other FCC forms required to be filed with any Governmental Authority under the
1992 Cable Act with respect to rates and prepared with respect to any of the
Partnership Systems;
(e) timely file a notice of renewal under Section 626 of the
Cable Act with the appropriate Franchising Authority with respect to any System
Franchise (other than those disclosed in Schedule 3.7) that will expire within
30 months after any date between the date of this Agreement and the Closing
Date;
(f) promptly notify Buyer of any fact, circumstance, event or
action by it or otherwise (i) which if known at the date of this Agreement would
have been required to be disclosed by it in or pursuant to this Agreement or
(ii) the existence, occurrence or taking of which would result in the condition
set forth in Section 6.1(a) not being satisfied at the Closing, and, with
respect to clause (ii), will use its commercially reasonable efforts to remedy
the same.
(g) except as set forth in Schedule 5.2(g), not
(i) modify, terminate, renew, suspend or abrogate any
System Contract (other than the System Contracts listed in the other
clauses of this Section 5.2(g));
(ii) enter into, modify, terminate, renew, suspend or
abrogate any retransmission consent System Contract, System Franchise
or System License, except for renewals (other than renewals of System
Franchises) on terms that are not materially different from those which
currently exist and renewals of System Franchises as otherwise required
or permitted under this Agreement or modify or amend any Acquisition
Agreement
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in a manner that is materially less favorable to the Partnership than
the terms thereof as of the date of this Agreement;
(iii) enter into, modify, terminate, renew, suspend
or abrogate any System Contract evidencing Leased Property or Other
Real Property Interests, lease agreements for Tangible Personal
Property except for renewals on terms that are not materially different
from those which currently exist;
(iv) engage in any marketing, subscriber
installation, collection or disconnection practices;
(v) make any election with respect to any cost of
service proceeding conducted in accordance with Part 76.922 of Title 47
of the Code of Federal Regulations or any similar proceeding with
respect to any Partnership System, in either case without providing
notice of such election to Buyer;
(vi) enter into any agreement with or commitment to
any competitive access provider and/or local exchange company or any
internet access or on-line services provider with respect to the use or
lease of any of the Partnership Assets;
(vii) except as contemplated by this Agreement, sell,
transfer or assign any portion of the Partnership Assets or permit the
creation of a Lien (other than Permitted Liens) on any of the
Partnership Assets;
(viii) decrease the rate charged for any level of
Basic Services, Expanded Basic Services or any Pay TV or add, delete,
retier or repackage any analog programming services, in each case
except to the extent required under the 1992 Cable Act or any other
Legal Requirement; provided, however, that if rates are decreased in
order to so comply, the Partnership will provide the Buyer with copies
of any FCC forms (even if not filed with any Governmental Authority)
that the Partnership, any Subsidiary or any Partnership System used to
determine that the new rates were required;
(ix) convert any Partnership Systems to any billing
system or otherwise change billing arrangements for any of the
Partnership Systems;
(x) enter into any Contract of any kind relating to
the Cable Business to be assumed by Buyer that individually or in the
aggregate call for payments over its terms or otherwise involving
expenditures in excess of $100,000, except for the renewal of Contracts
that would, but for such renewal, terminate in accordance with their
terms prior to Closing;
(xi) except pursuant to or required by plans,
agreements or arrangements already in effect on the date hereof or as
set forth in Section 5.12, make any material increase in compensation
or benefits payable or to become payable to employees or make any
material
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change in personnel policies, or modify, terminate, renew, renegotiate,
suspend or abrogate any insurance or annuity policy or contract used to
provide benefits under any Partnership Plan;
(xii) except as disclosed on Schedule 3.12, take any
action with respect to the grant or increase of severance or
termination pay in excess of $400,000 in the aggregate, payable by the
Partnership or any Subsidiary after the Closing Date;
(xiii) engage in any material transaction with
respect to the Partnership's Business or the Partnership Systems not
otherwise contemplated by the Partnership's Budget, except for the
renewal of Contracts that would, but for such renewal, terminate in
accordance with their terms prior to Closing and the Acquisition
Agreements listed on Schedule 3.17 (including definitive agreements
relating thereto);
(xiv) enter into, modify, terminate, renew, suspend
or abrogate any System Contract relating to programming or to the
provision of telephony or related services;
(xv) offer services under the ICTV, TCI@Home,
Bresnan@Home, World Gate or OSS agreements to any Subscribers other
than in the Partnership Systems set forth on Schedule 5.2(g);
(xvi) modify or extend the ICTV, TCI@Home,
Bresnan@Home or OSS agreements;
(xvii) enter into, modify or amend any Contract for
any fiber or fiber capacity lease or use arrangements or for any
internet access or on-line services arrangements (other than Systems
Contracts for the provision of internet access to business premises and
leases for point to point business data exchange); or (xviii) agree to
do any of the foregoing;
provided, with respect to (i), (iii), (iv), (vii), (viii), (x), (xi) and (xii),
the Partnership and its Subsidiaries may take such actions to the extent
consistent with the ordinary course of business, past practice or the
Partnership's Budget;
provided, further, that notwithstanding the preamble to Section 5.2, any consent
of the Buyer relating to an action which is prohibited by clauses (ii), (vi),
(vii), (ix), (x), (xiii), (xiv), (xv), (xvi), (xvii) and (xviii) (but only to
the extent that clause (xviii) relates to the foregoing clauses) of this Section
5.2(g) may be withheld by Buyer in its sole and absolute discretion.
(h) use its commercially reasonable efforts to challenge and
contest any Litigation brought against or otherwise involving the Partnership,
any Subsidiary or the Partnership Systems that could result in the imposition of
Legal Requirements that could cause the conditions to the Closing not to be
satisfied.
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5.3 Required Consents, Franchise Renewal.
(a) Prior to the Closing, the Sellers will cause the
Partnership to use commercially reasonable efforts to obtain in writing as
promptly as possible all of the Required Consents in form and substance
reasonably satisfactory to Buyer, and will deliver to Buyer copies of such
Required Consents promptly after they are obtained. Buyer will cooperate with
the Sellers and the Partnership in their efforts to obtain the Required
Consents; provided that Buyer will not be required to accept or agree or accede
to any modifications or amendments to, or the imposition of any condition to the
transfer of control of, any of the material System Franchises, System Licenses,
System Contracts, or leases or documents evidencing Leased Real Property or
Other Real Property Interests, that in either case, would make, or are
reasonably likely to make, the underlying instrument materially more onerous or
that would materially reduce in any respect, or are reasonably likely to
materially reduce in any respect, the benefits available under the instrument in
respect of which the consent relates. Within 45 days after the date of this
Agreement, the General Partner, in its capacity as the representative of the
Sellers, and Buyer will cooperate with each other to complete, execute and
deliver, or cause to be completed, executed and delivered to the appropriate
Governmental Authority or other Person, an application on FCC Form 394 (or other
appropriate form) and appropriate letters of transmittal requesting such
Governmental Authority's or other Person's consent to transfer of control of
each System Franchise, System License, System Contract, or lease or document
evidencing Leased Real Property or Other Real Property Interest as to which such
consent is required. The parties agree that without the Sellers' and Buyer's
prior consent, no notice or application or similar document filed with a
Governmental Authority or other Person for the purpose of requesting a Required
Consent (including any FCC Form 394 filed hereunder with respect to a System
Franchise) or notifying such party of the transactions contemplated by this
Agreement will state that the purchase and sale of the Purchased Interests,
contribution of the Contributed Interests and the Closing hereunder are
conditioned on or will necessarily result in consummation of any transaction
other than the transactions contemplated by this Agreement or will request that
any such Required Consent be conditioned on consummation of any transaction
other than the occurrence of the Closing hereunder, and Sellers and Buyer will
not be required to accept a Required Consent that is so conditioned without the
Sellers' or Buyer's consent, respectively.
(b) Prior to the Closing, each Seller will use commercially
reasonable efforts to obtain in writing as promptly as possible all of the
Required Consents required to be obtained by such Seller, in form and substance
reasonably satisfactory to Buyer, and will deliver to Buyer copies of such
Required Consents promptly after they are obtained. No Seller will take any
action that would result in the condition set forth in Section 6.1(a) not being
satisfied with respect to such Seller at the Closing. All documents delivered or
filed with any Governmental Authority or any Person by or on behalf of the
Partnership, any Subsidiary or the Partnership Systems pursuant to this Section,
when so delivered or filed, will be correct, current and complete in all
material respects. Sellers will cause the Partnership, any Subsidiary and the
Partnership Systems to cooperate with Buyer to obtain all Required Consents and
no Party shall intentionally take any action or steps that would prejudice or
jeopardize the obtaining of any Required Consent. The Partnership, any
Subsidiary and the Partnership Systems will not accept or agree or accede to any
modifications or amendments to, or
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the imposition of any condition to the transfer of, any of the System
Franchises, System Licenses or System Contracts that are not reasonably
acceptable to the other Party. No Seller will sell, assign, transfer or
otherwise dispose of all or any portion of the Purchased Interests and the
Contributed Interests held or represented to be held by it on the date of this
Agreement.
(c) Notwithstanding the provisions of subsections (a) and (b)
above, no Person will have any further obligation to obtain Required Consents:
(i) with respect to license agreements relating to pole attachments where the
licensing authority will not consent to an assignment of such license agreement
but requires that Buyer enter into a new agreement with such licensing
authority, in which case Buyer shall use its commercially reasonable efforts to
enter into such agreement prior to Closing or as soon as practicable thereafter
and the General Partner, in its capacity as the representative of the Sellers,
will cooperate with and assist Buyer in obtaining such agreements; (ii) for any
business radio license or any private operational fixed service (POFS) microwave
license which the General Partner, in its capacity as the representative of the
Sellers, reasonably expects can be obtained within 120 days after the Closing
and so long as a conditional temporary authorization (for a business radio
license) or a special temporary authorization (for a POFS license) is obtained
by Buyer under FCC rules with respect thereto; (iii) with respect to Contracts
evidencing Leased Real Property, if, with the consent of Buyer, the Sellers
cause the Partnership to obtain and make operational prior to Closing substitute
Leased Real Property that is reasonably satisfactory to Buyer; (iv) with respect
to Contracts evidencing leased Tangible Personal Property that is material to
the Partnership's Business, if, with the consent of Buyer, the Sellers cause the
Partnership to obtain and make operational prior to Closing substitute Tangible
Personal Property that is reasonably satisfactory to Buyer; and (v) with respect
to Contracts which are not identified with an asterisk (*) on Schedule 3.2, if
the Sellers use commercially reasonable efforts to obtain the Required Consent
of the other party to such Contract but fails to obtain such consent on or prior
to Closing.
(d) Prior to the Closing, the Sellers will cause the
Partnership to use commercially reasonable efforts to obtain a renewal or
extension of any System Franchise (for a period expiring no earlier than three
years after the Closing Date) for which a valid notice of renewal pursuant to
the formal renewal procedures established by Section 626 of the Cable Act has
not been timely delivered to the appropriate Governmental Authority and no
written confirmation has been received from such Governmental Authority that the
procedures established by Section 626 of the Cable Act nonetheless will be
applicable with respect to the renewal or extension of such System Franchise.
5.4 Confidentiality; Press Release.
(a) Sellers may from time to time in the course of this
transaction disclose to Buyer information and material concerning the Sellers,
the Partnership and the Subsidiaries, the Partnership Assets and the Partnership
Systems, including proprietary information, contracts, marketing information,
technical information, product or service concepts, subscriber information,
rates, financial information, ideas, concepts and research and development (any
of the foregoing and any analysis, compilations, studies or other documents
prepared by or on behalf of Buyer in respect thereof are hereafter collectively
referred to as "Confidential Information"). The term "Confidential
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Information" does not include any item of information that (1) is publicly known
at the time of its disclosure or (2) is lawfully received from a third party not
bound to keep such information confidential. Prior to the Closing, Buyer may
disclose Confidential Information if disclosure is required, in the reasonable
opinion of counsel, by applicable Legal Requirements and if Buyer has used all
reasonable efforts, and has afforded the other parties hereto the opportunity,
to obtain an appropriate protective order, or other satisfactory assurance of
confidential treatment, for the information compelled to be disclosed. Buyer
agrees that Confidential Information received from the Sellers or, prior to the
Closing, from the Partnership shall be used solely in connection with the
transaction contemplated by this Agreement. Buyer agrees that it shall treat
confidentially and not directly or indirectly, divulge, reveal, report, publish,
transfer or disclose, for any purpose whatsoever (other than to its investors,
financing sources and agents for the purpose of consummating the transactions
contemplated by this Agreement, each of whom Buyer shall cause to maintain the
confidentiality of such Confidential Information), all or any portion of the
Confidential Information disclosed to it by the Sellers or by the Partnership or
the Subsidiaries. In the event of a breach of the covenants contained in this
Section 5.4(a), the Sellers shall be entitled to seek injunctive relief as well
as any and all other remedies at law or equity. If the Closing does not occur,
the Confidential Information, except for that portion which consists of
analysis, compilations, studies or other documents prepared by or on behalf of
Buyer, will be returned to the Sellers immediately upon the Sellers' request
therefor; and that portion of the Confidential Information which consists of
analysis, compilations, studies or other documents prepared by or on behalf of
Buyer will be held by Buyer and kept confidential and subject to the terms of
this Section 5.4(a), or will be destroyed.
(b) No party will, and the Sellers will not permit the
Partnership to, issue any press release or make any other public announcements
concerning this Agreement or the transactions contemplated by this Agreement
without the prior written consent and approval of Buyer (in the case of the
Sellers or the Partnership) or the Sellers (in the case of Buyer) except for
disclosures required by applicable Legal Requirements. With respect to press
releases or any other public announcement required by applicable Legal
Requirements, the party intending to make such release or disclosure shall
provide the other parties with an advance copy and a reasonable opportunity to
review.
(c) This Section 5.4 shall be deemed in addition to, and not
in limitation of, those restrictions contained in the Confidentiality and
Nondisclosure Letter Agreement dated May 27, 1999, between Charter
Communications, Inc. and Xxxxxx Capital Corporation on behalf of the
Partnership, which agreement is hereby incorporated herein by this reference.
(d) Notwithstanding the provisions of this Section 5.4, any
party or its Affiliate may file a copy of this Agreement (but not the Disclosure
Letter or Schedules) as an exhibit, if reasonably required, to any Registration
Statement filed with the SEC.
5.5 Cooperation; Commercially Reasonable Efforts. The parties shall
cooperate, and the Sellers shall cause the Partnership to cooperate, with each
other and their respective counsel and accountants in all commercially
reasonable respects in connection with any actions required to be taken as part
of their respective obligations under this Agreement, and otherwise use their
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commercially reasonable efforts, and the parties shall also, and the Sellers
shall cause the Partnership to, use its commercially reasonable efforts to
consummate the transactions contemplated hereby and to fulfill their obligations
hereunder as expeditiously as practicable.
5.6 HSR Act. To the extent required by law, and no later than 30 days
after the execution of this Agreement, Buyer and the Sellers will each complete
and file, or cause to be completed and filed at its own cost and expense, any
notification and report required to be filed under the HSR Act with respect to
the transactions contemplated by this Agreement and each such filing shall
request early termination of the waiting period imposed by the HSR Act. The
parties shall use their respective commercially reasonable efforts to respond as
promptly as reasonably practicable to any inquiries received from the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "Antitrust Division") for additional information or documentation
and 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 which may be raised by the FTC,
the Antitrust Division or any other Governmental Authority having jurisdiction
over antitrust matters. Each party will cooperate to prevent inconsistencies
between their respective filings and between their respective responses to all
such inquiries and responses, and will furnish to each other such necessary
information and reasonable assistance as the other may reasonably request in
connection with its preparation of necessary filings or submissions under the
HSR Act. Notwithstanding the foregoing, no party shall be required to make any
significant change in the operations or activities of the business (or any
material assets employed therein) of such party or any of its Affiliates, if a
Party determines in good faith that such change would be materially adverse to
the operations or activities of the business (or any material assets employed
therein) of such party or any of its Affiliates having significant assets, net
worth or revenue.
5.7 Tax Matters.
The following provisions shall govern the allocation of responsibility
between Buyer and Sellers for certain tax matters following the Closing Date:
(a) Tax Returns to be Filed After the Closing Date. The
Sellers shall prepare or cause to be prepared and file or cause to be filed any
Tax Returns of the Partnership which are required to be filed after the Closing
Date and relate solely to periods, or portions thereof, ending on or prior to
the Closing Date, including the return for the Partnership's taxable year ending
on the Closing Date as a result of the Partnership's constructive termination.
Such Tax Returns shall be prepared in accordance with the Partnership's past
custom and practice (subject to applicable Legal Requirements and determined on
the basis of the appropriate permanent records of such Partnership),
notwithstanding any provision of the Partnership Agreement to the contrary. The
Sellers shall use reasonable commercial efforts to prepare such Tax Returns in a
manner that is consistent with past practice. The Sellers shall provide Buyer
with drafts of such Tax Returns (together with the relevant back-up
information), and Buyer may submit comments which it deems necessary to the
Sellers in connection with the preparation of such Tax Returns. The Sellers
shall in good faith consider the
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inclusion of such comments; provided, however, that the Sellers have the final
discretion in determining the final form of such Tax Returns and may file such
Tax Returns with the proper Governmental Authority without Buyer's consent.
(b) Cooperation on Tax Matters.
(1) Buyer and the Sellers shall cooperate fully, as
and to the extent reasonably requested by the other party, in connection with
the filing of Tax Returns pursuant to this Section 5.7 and any audit,
litigation, or other proceeding with respect to Taxes. Such cooperation shall
include the retention and (upon the other party's request) the provision of
records and information which are reasonably relevant to any such audit,
Litigation, or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Buyer and the Sellers agree to give the other party
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if the other party so requests, Buyer or the
Sellers, as the case may be, shall allow the other party to take possession of
such books and records to the extent they would otherwise be destroyed or
discarded, subject to a reasonable confidentiality agreement. After the Closing
the Sellers and Buyer shall promptly notify the others of any audit or other Tax
matter relating to any periods, or portions thereof, prior to the Closing Date
which is brought to its attention by notice from the Internal Revenue Service or
any other state, local or foreign taxing Governmental Authority and forward to
the other copies of any notices, correspondence, reports or other instruments,
communications or documents received in connection therewith. Buyer will not
settle or compromise any such audit or Tax matter without the consent of the
Sellers, which consent shall not be unreasonably withheld.
(2) Buyer and the Sellers further agree, upon
request, to use commercially reasonable efforts to obtain any certificate or
other document from any Governmental Authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including Taxes with respect to the transactions contemplated hereby).
(c) Tax Sharing Agreements. All tax sharing agreements or
similar agreements with respect to or involving the Partnership or any of the
Subsidiaries shall be terminated as of the Closing Date and, after the Closing
Date, neither the Partnership, any of the Subsidiaries nor Buyer shall be bound
thereby or have any liability thereunder.
(d) Certain Taxes. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be borne one-half by
Buyer and one-half by Sellers. Buyer and the Sellers will cooperate in all
reasonable respects to prepare and file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes and fees.
(e) Section 754 Elections. To the extent not already in
effect, each of the Partnership and its Subsidiaries that is treated as a
partnership for federal income tax purposes shall
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timely file an election under Section 754 of the Code so that such entities
shall be able to adjust the tax basis of their assets (collectively, the
"Partnership Assets") under Section 743(b) of the Code as a result of the
transactions contemplated herein.
(f) Allocation of Purchase Consideration. The Purchase Price,
as finally determined pursuant to Section 2.5 and the liabilities of the
Partnership and the Subsidiaries attributable to the Purchased Interests
(together, the "Purchase Consideration") shall be allocated among the portions
of the Partnership Assets attributable to the Purchased Interests in an
allocation agreement (the "Allocation Agreement") to be prepared in accordance
with the rules under Sections 743(b), 751, 755 and 1060 of the Code. The parties
agree that the Purchase Consideration shall be allocated among the Partnership
Assets by allocating an amount to the tangible assets of the Partnership and the
Subsidiaries equal to the portion of the book value for financial statement
purposes of such tangible assets attributable to the Purchased Interests and the
remainder to the System Franchises of the Partnership and the Subsidiaries.
Buyer shall deliver a draft of the Allocation Agreement to the General Partner,
in its capacity as the representative of the Sellers, within thirty (30) days
after a final determination is reached pursuant to Section 2.5 for approval and
consent, and Buyer and the General Partner, in its capacity as the
representative of the Sellers, shall mutually agree upon the Allocation
Agreement. Neither Buyer nor any of the Sellers shall unreasonably withhold its
approval and consent with respect to the Allocation Agreement. Unless otherwise
required by applicable law, Buyer, Sellers, the Partnership and the Subsidiaries
agree to act, and cause their respective affiliates to act, in accordance with
the computations and allocations contained in the Allocation Agreement in any
relevant Tax Returns or similar filings (including any forms or reports required
to be filed pursuant to Section 1060 of the Code ("1060 Forms")), to cooperate
in the preparation of any 1060 Forms, to file such 1060 Forms in the manner
required by applicable law and to not take any position inconsistent with such
Allocation Agreement upon examination of any tax refund or refund claim, in any
litigation or otherwise.
5.8 Certain Financing Matters.
(a) Prior to the Closing (or the date on which the Closing
would occur but for a breach of this Section 5.8(a)), the Sellers will use
commercially reasonable efforts to either (1) procure from the lenders under the
Credit Facility, at Buyer's expense, a written waiver, in form and substance
reasonably satisfactory to Buyer and the Sellers, that (A) will permit the
transactions contemplated by this Agreement to be consummated without an event
of default or acceleration thereunder being caused thereby and (B) will permit
the sale and transfer of the Purchased Interests and the contribution of the
Contributed Interests to Buyer as contemplated by this Agreement and the receipt
by the Sellers of the Purchase Price therefor free and clear of any Liens or
other restrictions; or (2) cooperate with Buyer to obtain refinancing of all of
the Partnership's existing indebtedness for borrowed money under the Credit
Facility to the extent such indebtedness would otherwise be subject to
acceleration upon consummation of the Closing absent the consent and waiver
described in clause (1).
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(b) After the Closing (or the date on which the Closing would
occur but for a breach of this Section 5.8(b)), Buyer will use commercially
reasonable efforts to take all actions required or permitted under the Senior
Indenture, in form and substance reasonably satisfactory to the Sellers, that
will permit the transactions contemplated by this Agreement to be consummated
without an event of default or acceleration thereunder being caused thereby.
Without limiting the foregoing, Buyer will make a change of control repurchase
offer and take all other steps as may be required under the Senior Indenture
following the Closing.
(c) Prior to the Closing, the Sellers shall cause the
Partnership to use commercially reasonable efforts to make effective the
registration statement with respect to the 8% Senior Notes due 2009 and the
9 1/4% Senior Discount Notes due 2009 of Bresnan Communications Group LLC.
(d) Buyer understands that consummation of the transactions
contemplated by this Agreement requires the prior consent of the lenders under
the Credit Facility, and in the absence of such consent, Buyer would have to
cause the Partnership and/or the Subsidiaries to refinance such facility at
Closing and, subject to Section 5.8(a), no Seller will be responsible for the
failure to obtain such consent or to effect such refinancing, which shall be
Buyer's responsibility to obtain. Buyer understands that the consummation of the
transactions contemplated by this Agreement will constitute a "change of
control" under the Senior Indenture and as a result, a repurchase offer must be
made following the Closing in accordance with the requirements of the Senior
Indenture.
5.9 Consent and Agreements of Sellers and Buyer.
(a) Each Seller consents to the execution, delivery, and
performance of this Agreement by each Seller and to the taking by each Seller
and the Partnership of all actions contemplated by this Agreement to be taken by
such Person, including the sale of the Purchased Interests and the contribution
of the Contributed Interests by each Seller to Buyer.
(b) At or prior to the Closing, each of the Sellers and the
Partnership will enter into the Fourth Amendment to Contribution Agreement
attached hereto as Exhibit C.
(c) TCID-MI, TCI LLC and their Affiliates may amend the
Keepwell Agreement in their sole discretion at any time at or prior to the
Closing, provided that no such amendment shall give rise to any obligations or
liability of the Partnership or any Subsidiary post-closing.
(d) At or prior to the Closing, the Partnership may sell,
transfer or distribute the Excluded Assets described on Schedule 5.9 for such
consideration or no consideration and on such terms as the Sellers may
determine; provided, however, that the Sellers shall cause the Partnership, its
Subsidiaries and the Partnership Systems to have no obligations or liabilities
after the Closing Date with respect to the Excluded Assets which are Contracts.
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(e) For a period of 180 days after the Closing, the
Partnership will be entitled to use the trademarks, trade names, service marks,
service names, logos and similar proprietary rights included in the Excluded
Assets (the "Excluded Rights") to the extent incorporated in or on the
Partnership Assets at the Closing on a royalty-free basis, provided that Buyer
will cause the Partnership to exercise commercially reasonable efforts to remove
all Excluded Rights (except to the extent otherwise permitted by the Seller to
which such Excluded Rights are distributed) from the Partnership Assets as soon
as reasonably practicable, and in any event within 180 days following the
Closing. Notwithstanding the foregoing, nothing in this Section will require
Buyer or the Partnership post-closing to remove or discontinue using any
Excluded Rights embodied in a xxxx or logo that is affixed to converters or
other items in or to be used in customer homes or properties, or as are used in
a similar fashion making such removal or discontinuation impracticable.
(f) Buyer covenants that, after the Closing, it shall not take
any action or cause or permit any of its Affiliates to take any action that
would result in a name change of the "Bresnan Arena" located in Mankato,
Minnesota, as provided in that Exclusive Naming Agreement dated January 31,
1999, between Mankato State University and the Partnership.
5.10 WARN Act. Buyer will not, on or within 90 days after the Closing
Date, permit the Partnership to effectuate a "plant closing" or "mass layoff"
resulting in "employment loss" at any of the employment sites of the Partnership
(as those terms are defined in the WARN Act).
5.11 Programming and Other Commitments. The SSI Supply Agreement shall
be terminated concurrently with the Closing without any further action by the
parties. Buyer agrees that the Partnership and the Subsidiaries will be bound by
the programming and other commitments described on Exhibit B from and after the
Closing.
5.12 401(k) Plans. The Partnership is the sponsor or participating
employer in a retirement plan qualified under Code section 401(a) that contains
a cash or deferred arrangement under Code section 401(k) (hereinafter referred
to as the "Bresnan Plan") and Bresnan Communications, Inc. ("BCI") is a
participating employer in such plan. If, as of the Closing Date, BCI is still a
participating employer in the Bresnan Plan, then, effective as of the Closing,
BCI shall cease participation in the Bresnan Plan and no contributions shall be
made to the Bresnan Plan with respect any of BCI's employees for compensation
earned after the Closing. If, as of the Closing Date, any active employee or
employees of BCI shall have account balances in the Bresnan Plan, then, as soon
as practicable following the Closing Date, Buyer shall cause the trustee of the
Bresnan Plan to transfer to the trustee of a successor plan established by BCI
(the "Successor Plan") cash and/or assets, including plan loan obligations,
equal to the value of the account balances of each of such BCI's employees under
the Bresnan Plan as of the last valuation date immediately preceding the
transfer date, which amount shall be credited to the respective account or
accounts under the Successor Plan. Notwithstanding the foregoing, the amount so
transferred with respect to any employee of BCI shall be reduced by any
withdrawals and other distributions made from the Bresnan Plan to such employee
between such valuation date and such transfer date.
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5.13 Notification of Certain Matters. Buyer will promptly notify the
Sellers in writing of any fact, event, circumstance, action or omission of which
Buyer obtains knowledge the existence or occurrence of (i) which if known at the
date of this Agreement would have been required to be disclosed by Seller in or
pursuant to this Agreement and (ii) the existence, occurrence or taking of which
would result in the condition set forth in Section 6.1(a) not being satisfied at
Closing.
5.14 Offers. No Seller (and, where applicable, such Seller's directors,
officers, employees, representatives and agents) shall directly or indirectly,
(i) offer its Partnership Interest, the Partnership Assets or the Partnership's
Business for sale, (ii) solicit, encourage or entertain offers for such
Partnership Interest, Partnership Assets or the Partnership's Business, (iii)
initiate negotiations or discussions for the sale of such Partnership Interest,
Partnership Assets or the Partnership's Business or (iv) make information about
such Partnership Interest, Partnership Assets or the Partnership's Business
available to any Third Party in connection with the possible sale of such
Partnership Interest, Partnership Assets or the Partnership's Business prior to
the Closing Date or the date this Agreement is terminated in accordance with its
terms.
5.15 Buyer Acquisition Documents. Upon execution of any material
amendments or modifications to the purchase agreement and/or other acquisition
documents in connection with or relating to any of the Pending Buyer
Acquisitions, Buyer shall promptly deliver to Sellers a true and complete copy
of any such amendment or modification. In addition, Buyer shall promptly deliver
to the Sellers any information reasonably requested by the Sellers regarding the
Pending Buyer Acquisitions. Upon execution of any purchase agreement and/or
other acquisition documents to acquire, directly or indirectly, majority or
other equity interests in, or the operating business of, any Person other than
the Pending Buyer Acquisitions (a "Subsequent Buyer Acquisition"), Buyer shall
promptly deliver to the Sellers (i) true and complete copies of the purchase
agreement and/or other acquisition documents in connection with or relating to
such Subsequent Buyer Acquisition, (ii) copies of the most recent audited (and,
if later, or, if audited statements are not available, unaudited) financial
statements of the Person which is the subject of such Subsequent Buyer
Acquisition and (iii) other information reasonably requested by the Sellers
regarding such Subsequent Buyer Acquisition. In each case, Buyer's obligations
under this Section 5.15 shall be subject to reasonable confidentiality
restrictions; provided that Buyer uses commercially reasonable efforts to secure
a waiver of such restrictions.
5.16 Other Agreements.
(a) Buyer and Sellers shall negotiate in good faith (i) within
90 days after the date hereof, the definitive Operating Agreement to be
effective upon the Closing in accordance with the terms set forth on Exhibit E
and such additional terms as Buyer and the Sellers may mutually agree and (ii)
within 30 days after the date hereof, the definitive Exchange Agreement in
accordance with the terms set forth on Exhibit F and such additional terms as
Buyer and Sellers may mutually agree. If Buyer and the Sellers do not agree on a
definitive Operating Agreement and/or a definitive Exchange Agreement prior to
the Closing, the terms set forth in Exhibits E and F, respectively, shall be
binding on each of Buyer and the Sellers.
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(b) Prior to the Closing and issuance of the Equity
Consideration to the Sellers, Buyer shall not dispose of its assets other than
in the ordinary course of its business or other than for fair market value.
(c) If the entity defined as "Charter" in the Registration
Rights Agreement ("PublicCo") is formed prior to the Closing, Buyer shall cause
PublicCo to execute and deliver the Registration Rights Agreement and the
Exchange Agreement at the Closing. If PublicCo is formed after the Closing,
Buyer will cause PublicCo to execute and deliver the Registration Rights
Agreement and the Exchange Agreement at the time of the formation of PublicCo.
(d) Concurrently with the delivery of this Agreement, Vulcan
Ventures, Inc., an Affiliate of Buyer controlled by Xxxx X. Xxxxx, has delivered
into escrow a Put Agreement with respect to each Seller, in the form attached as
Exhibit H (the "Vulcan Puts"). Buyer shall cause Xxxx X. Xxxxx to deliver to an
escrow agent reasonably acceptable to the Sellers no later than two weeks
after the date of this Agreement pursuant to escrow instructions mutually
acceptable to the parties, a Put Agreement with respect to each Seller, in the
form attached as Exhibit H, duly executed by Xxxx X. Xxxxx or his
attorney-in-fact (conformed copies of which will be delivered to the Sellers).
Upon such delivery, the Vulcan Puts shall be terminated and of no further force
or effect. In the event any Put Agreement is executed by an attorney-in-fact of
Xxxx X. Xxxxx, Buyer shall deliver to the Sellers, concurrently with the
delivery of such Put Agreement and again at Closing, a legal opinion of legal
counsel reasonably acceptable to the Sellers, in form and substance satisfactory
to the Sellers, confirming that such attorney-in-fact is duly empowered under a
power of attorney that is in full force and effect to bind Xxxx X. Xxxxx under
the terms of the Put Agreements executed by such attorney-in-fact.
(e) Buyer shall deliver to each of TCID-MI and TCI LLC on the
Closing Date, a TCI Put Agreement in the form attached as Exhibit J, duly
executed by Buyer.
5.17 Restructuring of the Partnership. At the election of Buyer, the
Sellers will, and will cause the Partnership to, cooperate in good faith with
Buyer in effecting a restructuring of the Partnership immediately prior to
Closing, as a result of which the Partnership will be merged into or succeeded
by a limited liability company. Such restructuring will be at the direction of,
and at the sole expense of, Buyer; provided that none of the Sellers will be
required to undertake any actions that would, or could reasonably be expected to
(as determined by the affected Seller): (i) have an adverse economic effect or
any other material adverse effect on such Seller or any of its Affiliates,
unless Buyer makes such Seller or its Affiliates whole, or (ii) delay the
Closing. If Buyer does not elect to so restructure the Partnership, it will
acquire the Purchased Interests and the Contributed Interests in such a manner
so as not to cause a dissolution of the Partnership under state law.
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ARTICLE 6 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS
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6.1 Conditions to Buyer's Obligations. The obligations of Buyer to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction at or before the Closing of the following conditions, any of which
may be waived by Buyer.
(a) Accuracy of Representations and Warranties. The
representations and warranties of each Seller in this Agreement and in any
Transaction Document, without giving effect to any references to or
qualifications based on Material Adverse Effect or materiality contained
therein, shall be true, complete and correct in all respects, at and as of the
Closing with the same effect as if made at and as of the Closing, except for any
representation or warranty which is made as of a specified date, which
representation or warranty shall be so true and correct as of such specified
date; provided, this condition will be deemed satisfied if all such untrue or
incorrect representations and warranties in the aggregate, do not have a
Material Adverse Effect.
(b) Performance of Agreements. Each Seller shall have
performed in all material respects all obligations and agreements and complied
in all material respects with all covenants in this Agreement and in any
Transaction Document to be performed and complied with by it at or before the
Closing.
(c) Deliveries. Each Seller shall have delivered the items and
documents required to be delivered by it pursuant to this Agreement, including
those required under Section 7.2.
(d) Legal Proceedings. No Judgment shall have been entered and
not vacated by any Governmental Authority or arbitration tribunal and no Legal
Requirement shall have been enacted, promulgated or issued or become or deemed
applicable to any of the transactions contemplated by this Agreement by any
Governmental Authority or arbitration tribunal, which would prevent or make
illegal the purchase and sale of the Purchased Interests or the contribution of
the Contributed Interests as contemplated by this Agreement.
(e) Franchise Required Consents. The aggregate number of
Scheduled Subscribers in the Service Areas and the Acquisition Agreement
Services Areas set forth on Schedule 6.1 that are, as of the Adjustment Time,
Transferable Service Areas shall be at least 90% of the total Scheduled
Subscribers; provided that Schedule 6.1 shall be amended from time to time as
necessary to reflect all Acquisition Agreement Service Areas that are the
subject of any pending Acquisition Agreements which have not been terminated.
(f) Other Required Consents. Seller shall have received
evidence, in form and substance reasonably satisfactory to it, that the Required
Consents marked with an asterisk on Schedule 3.2 have been obtained in
accordance with this Agreement.
(g) No Material Adverse Change. Since December 31, 1998, no
event has occurred which has had a Material Adverse Effect or has occurred which
is reasonably likely to result in a Material Adverse Effect (for purposes of
this paragraph a reduction in Equivalent Basic Subscribers shall not constitute
by itself a Material Adverse Effect).
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(h) Subscriber Adjustment. The Subscriber Adjustment (as
reasonably estimated by the Sellers in the Preliminary Closing Statement) shall
not be greater than $310,000,000.
(i) HSR Act Waiting Period. All necessary pre-merger
notification filings required under the HSR Act will have been made with the FTC
and the Antitrust Division and the prescribed waiting periods (and any
extensions thereof) will have expired or been terminated.
6.2 Conditions to Sellers' Obligations. The obligations of the Sellers
to consummate the transactions contemplated by this Agreement are subject to the
satisfaction at or before the Closing of the following conditions, any of which
may be waived if all Sellers so agree.
(a) Accuracy of Representations and Warranties. The
representations and warranties of Buyer in this Agreement and in any Transaction
Document, without giving effect to any references to or qualifications based on
Material Adverse Effect or materiality contained therein, shall be true,
complete and correct in all respects, at and as of the Closing with the same
effect as if made at and as of the Closing, except for any representation or
warranty which is made as of a specified date, which representation or warranty
shall be so true and correct as of such specified date; provided, this condition
will be deemed satisfied if all such untrue or incorrect representations and
warranties in the aggregate, do not have a material adverse effect on the
ability of Buyer to perform its obligations under this Agreement.
(b) Performance of Agreements. Buyer shall have performed in
all material respects all obligations and agreements and complied in all
material respects with all covenants in this Agreement and in any Transaction
Document to be performed and complied with by it at or before the Closing.
(c) Deliveries. Buyer shall have delivered the items and
documents required to be delivered by it pursuant to this Agreement, including
those required under Section 7.3.
(d) Legal Proceedings. No Judgment shall have been entered and
not vacated by any Governmental Authority or arbitration tribunal and no Legal
Requirement shall have been enacted, promulgated or issued or become or deemed
applicable to any of the transactions contemplated by this Agreement by any
Governmental Authority or arbitration tribunal, which would prevent or make
illegal the purchase and sale of the Purchased Interests or the contribution of
the Contributed Interests contemplated by this Agreement.
(e) Subscriber Adjustment. Either (1) the Subscriber
Adjustment (as reasonably estimated by the Sellers in the Preliminary Closing
Statement) shall not be greater than $310,000,000, or (2) Buyer shall have
waived its right to the Subscriber Adjustment in excess of $310,000,000.
(f) Debt. The consummation of the Closing will not constitute
(or would not, with notice or passage of time or both, constitute) a default
under the Credit Facility, Senior
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Indenture or any related instruments, agreements or documents, unless such
default shall have been waived or the debt under which such default would occur
has been refinanced.
(g) HSR Act Waiting Period. All necessary pre-merger
notification filings required under the HSR Act will have been made with the FTC
and the Antitrust Division and the prescribed waiting periods (and any
extensions thereof) will have expired or been terminated.
ARTICLE 7 CLOSING AND CLOSING DELIVERIES
7.1 The Closing; Time and Place. Subject to the terms and conditions of
this Agreement, the Closing shall be held at the offices of Irell & Xxxxxxx LLP,
in Los Angeles, California, at 10:00 a.m., local time, on the Business Day 10
days after the conditions set forth in Sections 6.1(e) and 6.1(f) shall have
been satisfied or waived (provided that each Party shall have at least five
days' prior notice of the scheduled Closing Date in order to prepare for the
Closing), but in no event prior to February 3, 2000, or if the other conditions
set forth in Article 6 (other than Sections 6.1(c) and 6.2(c)) are not then
satisfied, on the earliest date thereafter when such conditions are satisfied,
or at such other place, date and time as may be mutually agreed upon by the
Parties. The transactions to be consummated at Closing shall be deemed to have
been consummated as of 11:59 p.m., Eastern Time, on the Closing Date. The
"Closing Date" is the date on which the Closing occurs.
7.2 Deliveries by Sellers. Prior to or at the Closing, Sellers shall
deliver or cause to be delivered to Buyer the following:
(a) Purchased Interests and Contributed Interests. Assignment
agreements providing for the assignment of the Purchased Interests and the
Contributed Interests to Buyer, in a form reasonably satisfactory to Buyer.
(b) Seller's Certificate. A certificate executed by each
Seller, dated as of the Closing Date, certifying that the closing conditions
specified in Sections 6.1(a) and (b) have been satisfied as to such Seller,
except as disclosed in such certificate. Such certificate will merge into the
Closing and will not give rise to any claim against any Seller.
(c) Consents. Copies of all Required Consents which have been
obtained by the Sellers or the Partnership prior to the Closing.
(d) Lien Releases. The Sellers shall have delivered to Buyer
at or prior to the Closing evidence reasonably satisfactory to Buyer that all
Liens, if any, affecting or encumbering the Purchased Interests and the
Contributed Interests have been terminated, released or waived, as appropriate,
or original executed instruments in form reasonably satisfactory to Buyer
effecting such terminations, releases or waivers.
7.3 Deliveries by Buyer. Prior to or at the Closing, Buyer shall
deliver to Sellers the following:
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(a) Estimated Purchase Price. The Estimated Purchase Price for
the Purchased Interests will be paid to the Sellers by wire or accounts transfer
of immediately available funds to accounts designated by the Sellers by written
notice to Buyer not less than two Business Days prior to the Closing.
(b) Equity Consideration. Assignment agreements providing for
the assignment of the Equity Consideration to the Sellers, in a form reasonably
satisfactory to the Sellers.
(c) Buyer's Certificate. A certificate executed by Buyer,
dated as of the Closing Date, certifying that the closing conditions specified
in Sections 6.2(a) and (b) have been satisfied as to Buyer, except as disclosed
in such certificate. Such certificate will merge into the Closing and will not
give rise to any claim against Buyer.
(d) Exchange Agreement. Subject to Section 5.16, the Exchange
Agreement, in the form attached as Exhibit F, duly executed by Buyer and
PublicCo.
(e) Registration Rights Agreement. The Registration Rights
Agreement, in the form attached as Exhibit G, duly executed by PublicCo.
(f) Legal Opinion. The legal opinion (if any) required to be
delivered under Section 5.16(d).
(g) Release of Escrow. Such notice or agreement as may be
required to cause the escrow agent described in Section 5.16(d) to release the
Put Agreements held by such escrow agent and deliver such Put Agreements to the
Sellers, and such Put Agreements shall be in full force and effect without any
default thereunder and in the form delivered to the Sellers as conformed copies
under Section 5.16(d).
(h) TCI Put Agreements. The TCI Put Agreements, duly executed
by Buyer.
ARTICLE 8 TERMINATION.
8.1 Termination by Agreement. This Agreement may be terminated at any
time prior to the Closing by mutual agreement among the Sellers and Buyer.
8.2 Termination by the Sellers. This Agreement may be terminated at any
time prior to the Closing by the Sellers and the purchase and sale of the
Purchased Interests and contribution of the Contributed Interests abandoned,
upon written notice to Buyer, upon the occurrence of any of the following:
(a) Uncured Breach. Prior to the Closing (if the Seller
exercising such termination right is not then in material breach of any of its
obligations contained in this Agreement), if Buyer is in material breach or
default of any of its obligations in this Agreement, or if any of its
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representations in this Agreement is not true and correct, in either case in
such a manner that would cause the conditions contained in Sections 6.2(a) or
6.2(b) not to be met if such breach, default, or other condition were not cured
prior to Closing, if Sellers provide Buyer with prompt written notice that
provides a reasonably detailed explanation of the facts and circumstances
surrounding such breach or default; provided that Sellers shall have no right to
terminate if (i) Buyer cures such breach or default within 30 days after its
receipt of such written notice, unless such breach or default cannot be cured
within such 30-day period; or (ii) the breach or default is capable of being
cured prior to the Closing Date and Buyer commences to cure such breach or
default within such 30-day period and diligently continues to take all action
reasonably necessary to cure such breach or default prior to the Closing Date
and such breach or default is cured prior to the Closing Date; provided,
however, that if such breach is not cured prior to the Upset Date, the Sellers
will have the right to terminate this Agreement under Section 8.2(c).
(b) Failure to Deliver Letter Regarding Delivery of the Put
Agreements. If, within two weeks after the date of this Agreement, Buyer has not
satisfied the delivery requirements contained in Section 5.16(d).
(c) Conditions. If the Closing shall not have occurred on any
date designated therefor pursuant to Section 7.1 solely because Buyer has
refused to consummate the Closing and all of the conditions set forth in Section
6.1 had been satisfied as of such date (or would have been satisfied by actions
to be taken at the Closing).
(d) Upset Date. If the Closing shall not have occurred on or
prior to the Upset Date, unless the failure of the Closing to occur was
principally caused by any Seller's failure to act in good faith or a breach of
its obligations in accordance with the terms of this Agreement.
8.3 Termination by Buyer. This Agreement may be terminated at any time
prior to the Closing by Buyer and the purchase and sale of the Purchased
Interests and contribution of the Contributed Interests abandoned, upon written
notice to the Sellers, upon the occurrence of any of the following:
(a) Uncured Breach. Prior to the Closing (if Buyer itself is
not then in material breach of any of its obligations contained in this
Agreement), if any Seller is in material breach or default of any of its
obligations in this Agreement, or if any of its representations in this
Agreement is not true and correct, in either case in such a manner that would
cause the conditions contained in Sections 6.1(a) or 6.1(b) not to be met if
such breach, default or other condition were not cured prior to Closing, if
Buyer provides the breaching Seller with prompt written notice that provides a
reasonably detailed explanation of the facts and circumstances surrounding such
breach or default; provided that Buyer shall have no right to terminate if (i)
the breaching Seller cures such breach or default within 30 days after its
receipt of such written notice, unless such breach or default cannot be cured
within such 30-day period; or (ii) the breach or default is capable of being
cured prior to the Closing Date and the breaching Seller commences to cure such
breach or default within such 30-day period and diligently continues to take
all action reasonably necessary to cure such breach or
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default prior to the Closing Date and such breach or default is cured prior to
the Closing Date; provided, however, that if such breach is not cured prior to
the Upset Date, Buyer will have the right to terminate this Agreement under
Section 8.3(c).
(b) Conditions. If the Closing shall not have occurred on any
date designated therefor pursuant to Section 7.1 solely because any Seller has
refused to consummate the Closing and all of the conditions set forth in Section
6.2 had been satisfied as of such date (or would have been satisfied by actions
to be taken at the Closing).
(c) Upset Date. If the Closing shall not have occurred on or
prior to the Upset Date, unless the failure of the Closing to occur was
principally caused by Buyer's failure to act in good faith or a breach of its
obligations in accordance with the terms of this Agreement.
8.4 Effect of Termination. If this Agreement is terminated as provided
in this Article 8, then this Agreement will forthwith become null and void and
there will be no liability on the part of any party hereto to any other party
hereto or any other Person in respect thereof, provided that:
(a) Surviving Obligations. The obligations of the parties
described in Sections 5.4, 8.4 and 9.1 (and all other provisions of this
Agreement relating to expenses) will survive any such termination.
(b) Withdrawal of Applications. All filings, applications and
other submissions relating to the transfer of the Purchased Interests and the
Contributed Interests shall, to the extent practicable, be withdrawn from the
Governmental Authority or other Person to whom made.
(c) Breach by Buyer. No such termination will relieve Buyer
from liability for breach of its obligations under this Agreement, and in such
event the Sellers shall have all rights and remedies available at law or equity,
including the right of specific performance against Buyer.
(d) Breach by the Sellers. No such termination will relieve
any Seller from liability for breach of its obligations under this Agreement,
and in such event Buyer shall have all rights and remedies available at law or
equity, including the remedy of specific performance against such breaching
Seller.
8.5 Attorneys' Fees. Notwithstanding any provision in this Agreement
that may limit or qualify a party's remedies, in the event of a default by any
party that results in a lawsuit or other proceeding for any remedy available
under this Agreement, the prevailing party shall be entitled to reimbursement
from the defaulting party of its reasonable legal fees and expenses (whether
incurred in arbitration, at trial, or on appeal).
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ARTICLE 9 MISCELLANEOUS
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9.1 Fees and Expenses. Except as otherwise provided in this Agreement,
each party shall pay its own expenses incurred in connection with the
authorization, preparation, execution, and performance of this Agreement,
including all fees and expenses of counsel, accountants, agents, and
representatives.
9.2 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be in writing, may be
sent by telecopy (with automatic machine confirmation), delivered by personal
delivery, or sent by commercial delivery service or certified mail, return
receipt requested, shall be deemed to have been given on the date of actual
receipt, which may be conclusively evidenced by the date set forth in the
records of any commercial delivery service or on the return receipt, and shall
be addressed to the recipient at the address specified below, or with respect to
any party, to any other address that such party may from time to time designate
in a writing delivered in accordance with this Section 9.2:
If to Buyer: c/o Charter Communications, Inc.
00000 Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telecopier: (000) 000-0000
with a copy (which shall not Irell & Xxxxxxx LLP
constitute notice) to: 0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
If to the General Partners
or WBresnan: c/o Bresnan Communications, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. XxXxxx and
Xxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
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With a copy (which shall Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
not constitute notice) to: 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxxx, Esq.
Telecopier: (000) 000-0000
If to BBC, BBCO or BFI: c/o The Blackstone Group
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Telecopy: (000) 000-0000
with a copy (which shall not Xxxxxxx Xxxxxxx & Xxxxxxxx
constitute notice) to: 000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx Xxxxx, Esq.
Telecopier: (000) 000-0000
If to TCID-MI or TCI LLC: c/o AT&T Broadband & Internet Services
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telecopier: (000) 000-0000
with a copy (which shall not Xxxxxxx & Xxxxxx, L.L.C.
constitute notice) to: 000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
9.3 Benefit and Binding Effect. Neither this Agreement nor any of the
rights or obligations hereunder may be assigned by any Party hereto without the
prior written consent of each other Party, except that Buyer may assign its
rights and obligations under this Agreement to an Affiliate of Buyer or an
entity in which Xxxx X. Xxxxx has a direct or indirect equity interest of at
least $100,000,000; provided, however, that no such assignment shall be
permitted if it could reasonably be expected to delay the Closing. Subject to
the foregoing, this Agreement shall be binding upon and inure to the benefit of
the Parties hereto and their respective heirs, legal representatives, successors
and permitted assigns. This Agreement shall be for the sole benefit of the
Parties hereto and their respective heirs, successors, permitted assigns and
legal representatives and is not intended, nor shall be construed, to give any
Person, other than the Parties hereto and their respective heirs, successors,
assigns and legal representatives, any legal or equitable right, remedy or claim
hereunder.
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9.4 Further Assurances. After the Closing the parties shall take any
actions and execute any other documents that may be necessary or desirable to
the implementation and consummation of this Agreement upon the reasonable
request of the other party, at the expense of the requesting party. TCI shall
further use commercially reasonable efforts to cooperate with the Partnership to
obtain any material consents that were required to be obtained by TCI prior to
the closing under the Contribution Agreement that have not yet been obtained and
to execute any documents that may be necessary or desirable to evidence the
transfer of assets to the Partnership pursuant to the Contribution Agreement.
9.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO
THE CHOICE OF LAW PROVISIONS THEREOF).
9.6 Entire Agreement. This Agreement and the Exhibits hereto, the
Disclosure Letter and the other Transaction Documents to be delivered by the
parties pursuant to this Agreement, collectively represent the entire
understanding and agreement between Buyer and Sellers with respect to the
subject matter of this Agreement and supersedes all prior agreements,
understandings and negotiations between the parties.
9.7 Amendments; Waiver of Compliance. This Agreement may be amended and
any provision of this Agreement may be waived; provided that any such amendment
or waiver (a) will be binding upon a Seller only if such amendment or waiver is
set forth in a writing executed by such Seller, and (b) will be binding upon
Buyer only if such amendment or waiver is set forth in a writing executed by
Buyer. No waiver shall operate as a waiver of, or estoppel with respect to, any
subsequent or other matter not expressly waived.
9.8 Counterparts. This Agreement may be signed in counterparts with the
same effect as if the signature on each counterpart were upon the same
instrument.
9.9 Rights Cumulative. All rights and remedies of each of the parties
under this Agreement will be cumulative, and the exercise of one or more rights
or remedies will not preclude the exercise of any other right or remedy
available under this Agreement or applicable law.
9.10 Survival.
(a) Covenants and Agreements. Sections 5.16(d), 5.16(e),
7.3(g) and 7.3(h) and all covenants and agreements contained in this Agreement
which by their terms are to be performed after the Closing shall survive the
Closing and shall survive until performed in full, including all such covenants
and agreements contained in Article 2, and Sections 5.7, 5.8(b), 5.9(e), 5.11
and 9.1.
(b) Representations and Warranties of the Sellers. The
representations and warranties of the Sellers contained in Article 3 of this
Agreement (other than the representations and warranties contained in Sections
3.1(b), 3.1(c), 3.1(d), 3.2(a) and 3.14 which shall survive the
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Closing until the expiration of the applicable statute of limitations) shall
expire as of the Closing Date and shall not survive the Closing.
(c) Representations and Warranties of Buyer. The
representations and warranties of Buyer contained in Article 4 of this Agreement
(other than the representations and warranties contained in Sections 4.4, 4.5
and 4.6, which shall survive the Closing until the expiration of the applicable
statute of limitations) shall expire as of the Closing Date and shall not
survive the Closing.
(d) Acknowledgment by Buyer. Buyer understands that the
representations and warranties of the Sellers contained in this Agreement will
not survive the Closing (except as expressly set forth in Section 9.10(b)) and
constitute the sole and exclusive representations and warranties of the Sellers
to Buyer in connection with the transactions contemplated hereby. BUYER
UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT ALL OTHER REPRESENTATIONS AND
WARRANTIES OF ANY KIND OR NATURE EXPRESSED OR IMPLIED (INCLUDING WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR PURPOSE AND ANY WARRANTIES RELATING TO THE FUTURE
OR HISTORICAL FINANCIAL CONDITION, RESULTS OF OPERATIONS, ASSETS OR LIABILITIES
OF THE PARTNERSHIP) ARE SPECIFICALLY DISCLAIMED BY THE SELLERS. Buyer has
conducted its own inspection of the Partnership's Business and the Partnership
Systems to its own satisfaction and has independently investigated, analyzed and
appraised the condition, value, prospects, and profitability thereof and the
risks associated therewith.
(e) Acknowledgment by the Sellers. Each Seller understands
that the representations and warranties of Buyer contained in this Agreement
will not survive the Closing (except as expressly set forth in this Section
9.10) and constitute the sole and exclusive representations and warranties of
Buyer to the Sellers in connection with the transactions contemplated hereby,
and each Seller understands, acknowledges and agrees that all other
representations and warranties of any kind or nature expressed or implied are
specifically disclaimed by Buyer.
9.11 Limitation of Recourse against Sellers.
(a) Following the Closing, in the absence of its own actual
fraud, no Seller shall have any liability or obligation to indemnify or
otherwise hold harmless Buyer or the Partnership (or any of their successors or
permitted assigns) for any claim or any loss or liability arising from or in any
way relating to this Agreement or any of the transactions contemplated hereby
(including any misrepresentation or inaccuracy in, or breach of, any
representations or warranties (other than the representations or warranties
contained in Sections 3.1(b), 3.1(c), 3.1(d), 3.2(a) and 3.14 ) or any breach or
failure in performance prior to the Closing of any covenants or agreements made
by the Sellers, or any of them, in this Agreement or in any exhibit or the
Schedules hereto or any certificate or instrument delivered hereunder), and
neither Buyer nor the Partnership (or any of their successors or permitted
assigns) shall be entitled to bring any claim based on, relating to or arising
out of any
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of the foregoing against any Seller (or any of their respective employees,
directors, officers, attorneys, agents or representatives). Without limiting the
generality of the foregoing, in the absence of actual fraud, neither Buyer nor
its respective successors or permitted assigns shall be entitled to seek any
rescission of the transactions consummated under this Agreement or other remedy
at law or in equity. Notwithstanding the foregoing, this Section 9.11 shall not
preclude Buyer from making any claim in respect of a breach of any
representation, warranty, covenant or agreement which survives the Closing or
any claim under the assignments delivered at the Closing or is contained in the
Equity Agreements, which shall each be governed by its respective terms. Buyer
agrees that, notwithstanding any other provision of this Agreement or any
Transaction Document, and any rule of law or equity to the contrary, the
Sellers' obligations and liabilities under this Agreement and the other
Transaction Documents shall be nonrecourse to all direct and indirect
stockholders, general and limited partners and members of the Sellers and to
their successors and assigns and to all of their respective officers, directors,
shareholders, employees, and agents, and none of the foregoing (except to the
extent (i) it is a Seller (ii) of its interests in the assets of such Seller and
(iii) any distribution which has been received by it and which is required by
applicable law to be returned, directly or indirectly, to such Seller) shall
have any obligation or liability to Buyer arising out of or in connection with
the transactions contemplated by this Agreement and the other Transaction
Documents.
(b) The Sellers shall not be jointly and severally liable to
Buyer under this Agreement. Except as set forth below with respect to Sections
2.1, 3.1(b), 3.1(c), 3.2, 3.10(b) and 3.19, each Seller will be liable to Buyer
solely for such Seller's Proportionate Interest of any liability or obligation
owed to Buyer by any Seller hereunder (regardless of whether such liability or
obligation is attributable to any particular Seller). Buyer waives all recourse
against each Seller for claims in excess of such Proportionate Interest. Solely
with respect to the obligations set forth in Section 2.1 or the representations
and warranties set forth in Sections 3.1(b), 3.1(c), 3.2, 3.10(b) and 3.19, each
Seller will be fully responsible for its own breach of such obligations or
representations and warranties and will have no liability or obligation arising
from any other Seller's breach of such obligations or representations and
warranties.
9.12 Limitation of Recourse against Buyer. Following the Closing, in
the absence of actual fraud, Buyer shall not have any liability or obligation to
indemnify or otherwise hold harmless the Sellers or the Partnership (or any of
their successors or permitted assigns) for any claim or any loss or liability
arising from or in any way relating to this Agreement or any of the transactions
contemplated hereby (including any misrepresentation or inaccuracy in, or breach
of, any representations or warranties (other than the representations or
warranties contained in Sections 4.5 and 4.6) or any breach or failure in
performance prior to the Closing of any covenants or agreements made by Buyer in
this Agreement or in any exhibit or the Schedules hereto or any certificate or
instrument delivered hereunder), and neither the Sellers nor any of their
successors or permitted assigns shall be entitled to bring any claim based on,
relating to or arising out of any of the foregoing against Buyer or the
Partnership (or any of Buyer's or the Partnership' employees, directors, agents
or representatives). Without limiting the generality of the foregoing, in the
absence of actual fraud, neither the Sellers nor their respective successors or
permitted assigns shall be entitled to seek any
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rescission of the transactions consummated under this Agreement or other remedy
at law or in equity. Notwithstanding the foregoing, this Section 9.12 shall not
preclude the Sellers from making any claim in respect of a breach of any
representation, warranty, covenant or agreement which survives the Closing or is
contained in the Equity Agreements, which shall each be governed by its
respective terms. Concurrently with the execution of this Agreement, Charter
Communications, Inc. has delivered to the Sellers a performance guaranty with
respect to the terms of this Agreement (the "Purchase Guaranty"). Each Seller
agrees that, notwithstanding any other provision of this Agreement or any
Transaction Document, and any rule of law or equity to the contrary, and except
as set forth in the Purchase Guaranty and the Equity Agreements, Buyer's
obligations and liabilities under this Agreement and the other Transaction
Documents shall be nonrecourse to all direct and indirect general and limited
partners of Buyer and to their successors and assigns and to all of their
respective officers, directors, shareholders, employees, and agents, and none of
the foregoing (except to the extent (i) of its interests in the assets of Buyer
and (iii) any distribution which has been received by it and which is required
by applicable law to be returned, directly or indirectly, to Buyer) shall have
any obligation or liability to any Seller arising out of or in connection with
the transactions contemplated by this Agreement and the other Transaction
Documents.
9.13 Specific Performance. Each of the parties acknowledges and agrees
that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each party agrees that the other
party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the parties and the
matter (subject to Section 9.5) without the requirement of posting a bond or
other security therefor, in addition to any other remedy to which they may be
entitled, at law or in equity.
9.14 Commercially Reasonable Efforts. For purposes of this Agreement,
"commercially reasonable efforts" or "reasonable commercial efforts" will not be
deemed to require a party to undertake extraordinary measures, including the
initiation or prosecution of legal proceedings or the payment of amounts in
excess of normal and usual filing fees and processing fees, if any, or other
payments with respect to any contract that are significant in the context of
such contract (or are significant on an aggregate basis as to all contracts).
9.15 Construction. This Agreement has been negotiated by the parties
and their respective legal counsel, and legal or other equitable principles that
might require the construction of this Agreement or any provision of this
Agreement against the party drafting this Agreement will not apply in any
construction or interpretation of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY BLANK;
SIGNATURES ON FOLLOWING PAGES]
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IN WITNESS WHEREOF, this Agreement has been executed by Buyer, the
General Partner and the other Sellers as of the date first written above.
BUYER:
CHARTER COMMUNICATIONS HOLDING
COMPANY, LLC
By: /s/ Xxxxxx X. Xxxx
----------------------------------
Xxxxxx X. Xxxx
Senior Vice President
GENERAL PARTNER:
BCI (USA), LLC
By: Bresnan Communications, Inc., its Managing
Member
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Name:
Title: President and CEO
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
S-1
73
OTHER SELLERS:
BCI (USA), LLC
By: Bresnan Communications, Inc., its Managing
Member
By: /s/ Xxxxxxx X. Xxxxxxx
____________________________
Name:
Title: President and CEO
/s/ Xxxxxxx X. Xxxxxxx
____________________________
Xxxxxxx X. Xxxxxxx, individually
TCID OF MICHIGAN, INC.
By: /s/ Xxxxx Xxxxx
____________________________
Name:
Title:
TCI BRESNAN LLC
By: /s/ Xxxxx Xxxxx
____________________________
Name:
Title:
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
S-2
74
BLACKSTONE BC CAPITAL PARTNERS L.P.
By: Blackstone Management Associates
III L.L.C., its General Partner
By: /s/
-------------------------------------
Name:
Title:
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP III L.P.
By: Blackstone Management Associates
III L.L.C., its General Partner
By: /s/
-------------------------------------
Name:
Title:
BLACKSTONE BC OFFSHORE CAPITAL
PARTNERS L.P.
By: Blackstone Management Associates
III L.L.C., its Investment General
Partner
By: /s/
-------------------------------------
Name:
Title:
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
S-3
75
EXHIBIT D TO PURCHASE AND CONTRIBUTION AGREEMENT
FORM OF ADJUSTMENT ESCROW AGREEMENT
This ADJUSTMENT ESCROW AGREEMENT (this "Agreement") is dated
_____________ 2000, by and among BCI (USA), LLC, a Delaware limited liability
company, and Xxxxxxx X. Xxxxxxx, Xxxxxxxxxx XX Capital Partners L.P., a Delaware
limited partnership, Blackstone BC Offshore Capital Partners L.P., a Cayman
Islands exempted limited partnership, Blackstone Family Investment Partnership
III L.P., a Delaware limited partnership, and TCID of Michigan, Inc., a Nevada
corporation (collectively, the "Sellers"), Charter Communications Holding
Company, LLC, a Delaware limited liability company ("Buyer"), and
_____________________ ("Escrow Agent").
R E C I T A L S:
Buyer and the Sellers are parties to a Purchase and Contribution
Agreement dated as of June ___, 1999 (the "Purchase Agreement"), pursuant to
which the Sellers thereunder have agreed to sell, transfer and deliver to Buyer
all of the partnership interests in Bresnan Communications Company Limited
Partnership, a Michigan limited partnership (the "Partnership") held by the
Sellers, for the consideration set forth in the Purchase Agreement. Pursuant to
Section 2.4(b) of the Purchase Agreement, Buyer and the Sellers have agreed that
$_________ (the "Adjustment Deposit") shall be deposited in escrow with the
Escrow Agent as set forth in this Agreement in order to provide a fund which
shall be a source for any payment to be made by the Sellers to Buyer pursuant to
Section 2.5(b)(1) of the Purchase Agreement, subject to the terms and conditions
set forth in the Purchase Agreement. Capitalized terms used, but not defined
herein, have the meanings ascribed to such terms in the Purchase Agreement.
In consideration of the above recitals and of the covenants and
agreements contained herein, Buyer, the Sellers and Escrow Agent agree as
follows:
AGREEMENTS:
SECTION 1: ADJUSTMENT FUND
1.1 Delivery. Buyer hereby delivers to the Escrow Agent, by accounts or
wire transfer of immediately available funds to the account designated by the
Escrow Agent, the Adjustment Deposit. The Adjustment Fund (as defined herein)
shall be held by the Escrow Agent pursuant to the terms of this Agreement. The
Adjustment Deposit, and all income, interest and other earnings thereon, shall
be referred to collectively herein as the "Adjustment Fund." The Adjustment Fund
shall be a source for any payment to be made by the Sellers to Buyer pursuant to
Section 2.5(b)(1)
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of the Purchase Agreement, in each case, subject to the terms, conditions and
limitations set forth in the Purchase Agreement.
1.2 Receipt. The Escrow Agent hereby acknowledges receipt of the
Adjustment Deposit. The Escrow Agent shall deposit, upon receipt, the Adjustment
Deposit into a separate interest bearing account established for such purpose,
the sole signatory of which shall be the Escrow Agent. The Escrow Agent agrees
to hold and disburse the Adjustment Fund in accordance with the terms and
conditions of this Agreement and for the uses and purposes stated herein.
1.3 Investment and Income. Upon receipt of the Adjustment Deposit, the
Escrow Agent shall, pending the disbursement thereof pursuant to this Agreement,
invest the Adjustment Fund in accordance with the Sellers' instructions in (a)
direct obligations of, or obligations fully guaranteed by, the United States of
America or any agency thereof, (b) certificates of deposit issued by commercial
banks having a combined capital, surplus and undivided profits of not less than
Five Hundred Million Dollars ($500,000,000), (c) repurchase agreements
collateralized by securities issued by the United States of America or any
agency thereof, or by any private corporation the obligations of which are
guaranteed by the full faith and credit of the United States of America, (d)
prime banker's acceptances, (e) money market funds investing in any of the
above, or (f) other investments of equal or greater security and liquidity.
SECTION 2: DISBURSEMENT OF ADJUSTMENT FUND
The Escrow Agent shall dispose of or distribute the Adjustment Fund
only in accordance with this Section 2. The procedure set forth in this Section
2 shall govern the application of the Adjustment Fund to satisfy any payment to
be made pursuant to Section 2.5(b)(1) of the Purchase Agreement, in each case,
as set forth therein. Notwithstanding the foregoing, the basis for claims for
such payment, and any limitations thereon, shall be governed by the Purchase
Agreement, which shall be controlling between Buyer and the Sellers for all
purposes of this Agreement and shall be applicable between Buyer and the Sellers
to the extent inconsistent with any provision of this Agreement.
2.1 Disbursement Procedure. All disbursements of the Adjustment Fund
under Section 2.5(b)(1) of the Purchase Agreement shall be made by joint written
instructions of Buyer and the Sellers, which instructions shall designate the
payee, the amount to be paid, and wire or other payment instructions. The Escrow
Agent shall not pay any amount of the Adjustment Fund to the Sellers or Buyer,
except (i) in accordance with Sections 2.2, 2.5, 2.6 and 6.8 hereof, (ii)
pursuant to joint instructions in writing from Buyer and the Sellers under this
Section 2.1, or (iii) pursuant to a Court Order (as hereinafter defined).
2.2 Release of Adjustment Fund. Upon receipt of joint instruction under
Section 2.1, the Escrow Agent shall promptly make the payment required to be
made under such joint instructions by wire transfers of immediately available
funds (or as the recipient shall have otherwise instructed the Escrow Agent) in
accordance with such joint instructions. Prior to the disbursement of the
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Adjustment Fund as specifically provided in this Section 2 and Section 6.8, the
Sellers shall have no rights to receive, pledge, borrow or otherwise obtain the
benefits of the money or other property constituting the Adjustment Fund.
2.3 Dispute. In the event of any dispute among any of the parties to
this Agreement, the Escrow Agent shall not comply with any claims or demands as
long as such disagreements may continue, and in so refusing, the Escrow Agent
shall make no delivery or other disposition of any property then held by it
under this Agreement which is the subject of such dispute until it has received
a final judgement or final court order from a court of competent jurisdiction
directing disposition of such property (a "Court Order"). A judgment or order
under any provision of this Agreement shall not be deemed to be final until the
time within which an appeal may be taken therefrom has expired and no appeal has
been taken, or until the entry of a judgment or order from which no appeal may
be taken.
2.4 Joint Instructions. In the event that the Escrow Agent receives
joint instructions in writing from Buyer and the Sellers, such instructions may
only be revoked pursuant to further joint instructions in writing of Buyer and
the Sellers or a Court Order.
2.5 Other Disbursements of the Adjustment Fund. Notwithstanding the
provisions of Sections 2.1 through 2.3 above and Section 2.6 below, the Escrow
Agent shall disburse the Adjustment Fund, or a portion thereof, in accordance
with the following:
(a) upon receipt of written instructions signed by Buyer and
the Sellers in accordance with such instructions; or
(b) in accordance with Section 6.8 of this Agreement.
2.6 Taxes. Buyer shall be deemed to be the owner of the Adjustment Fund
for tax purposes. Buyer shall provide the Escrow Agent with a correct taxpayer
identification number on a substitute Form W-9 within 90 days following the date
hereof and indicate thereon that it is not subject to backup withholding on
income earned on any amounts received hereunder. To the extent that the Escrow
Agent becomes liable for the payment of taxes on behalf of another party
hereunder, including withholding taxes, in respect of interest, income and other
earnings from the investment of the Adjustment Fund held hereunder or any
payment made hereunder, the Escrow Agent may pay such taxes on behalf of such
party. The Escrow Agent may withhold from any payment of monies to the party on
whose behalf the taxes were paid, such amount as the Escrow Agent reasonably
estimates to be sufficient to provide for the payment of such taxes not yet
paid, and shall use the sums withheld solely for that purpose. The Escrow Agent
shall be indemnified and held harmless against any liability for taxes and for
any penalties or interest in respect of taxes on such interest, income or other
earnings in the manner provided in Section 3.3. The Escrow Agent shall, promptly
following the end of each taxable period in which the Adjustment Fund remains in
existence, make distributions ("Tax Distributions") to Buyer from the interest,
income or other earnings of the
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Adjustment Fund in an amount equal to forty percent (40%) of such interest,
income or other earnings to they extent they constitute taxable income.
2.7 Purpose. None of the Adjustment Fund will be available for any
purpose, other than as described in Section 2.5(b) of the Purchase Agreement,
and the Adjustment Fund shall not be available to satisfy any other obligations
of the Sellers arising under the Purchase Agreement.
SECTION 3: ESCROW AGENT
3.1 Appointment and Duties. Buyer and the Sellers hereby appoint the
Escrow Agent to serve hereunder and the Escrow Agent hereby accepts such
appointment and agrees to perform all duties which are expressly set forth in
this Agreement.
3.2 Compensation. Compensation will be paid to the Escrow Agent
one-half by Buyer and one-half by the Sellers, in the aggregate, as specified in
Schedule A annexed hereto.
3.3 Indemnification. Buyer and the Sellers will, at their expense,
indemnify the Escrow Agent, hold it harmless, at their joint and several
expense, from any and all claims, regardless of nature, arising out of or
because of this Agreement, and exonerate the Escrow Agent from any liability in
connection with this Agreement, at their joint and several expense, except as
such may arise because of the Escrow Agent's gross negligence or willful
misconduct. Promptly after the receipt by the Escrow Agent of notice of any
claim, the Escrow Agent shall, if a claim in respect thereof is to be made
against any of the other parties hereto, notify such other parties in writing.
Notwithstanding the foregoing, but provided that such notice shall have been
given, the failure by the Escrow Agent to give such notice promptly shall not
relieve the parties from any liability which such parties may have to the Escrow
Agent hereunder except to the extent the defense of such action is prejudiced
thereby. Any payment to the Escrow Agent pursuant to this Section 3.3, as
between Buyer, on the one hand, and the Sellers, on the other hand, shall be
borne equally by Buyer, on the one hand, and the Sellers, on the other hand, on
all such matters; provided, however, that any expense or loss incurred by the
Escrow Agent as a result of participating in any proceeding brought by Buyer
against the Sellers or by any Seller against Buyer shall be paid by the party
against whom judgment is rendered in such proceeding. Nothing in this Section
3.3 shall constitute a waiver of any claim which Buyer, on the one hand, or the
Sellers, on the other hand, may have against the other party for contributions
arising from their joint obligation to indemnify and hold the Escrow Agent
harmless hereunder.
3.4 Resignation. The Escrow Agent may resign at any time upon giving
the parties hereto 30 days' prior written notice to that effect. In such event,
the successor shall be such person, firm or corporation as shall be mutually
selected by Buyer and the Sellers. It is understood and agreed that such
resignation shall not be effective until a successor agrees to act hereunder;
provided, however, if no successor is appointed and acting hereunder within 30
days after such notice is given, the Escrow Agent may pay and deliver the
Adjustment Fund into a court of competent jurisdiction.
SECTION 4: LIABILITIES OF ESCROW AGENT
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4.1 Limitations. The Escrow Agent shall be liable only to accept, hold
and deliver the Adjustment Fund in accordance with the provisions of this
Agreement and amendments thereto; provided, however, that the Escrow Agent shall
not incur any liability with respect to (a) any action taken or omitted in good
faith upon the advice of its counsel given with respect to any questions
relating to its duties and responsibilities as Escrow Agent under this
Agreement, so long as such action is consistent with the terms of this Agreement
or (b) any action taken or omitted in reliance upon any instrument which the
Escrow Agent shall in good faith believe to be genuine (including the execution,
the identity or authority of any person executing such instrument, its validity
and effectiveness, and the truth and accuracy of any information contained
therein), to have been signed by a proper person or persons and to conform to
the provisions of this Agreement. The Escrow Agent shall exercise the same
degree of care toward the Adjustment Fund as it would exercise toward its own
similar property.
4.2 Collateral Agreements. The Escrow Agent shall not be bound in any
way by any contract or agreement between other parties hereto, whether or not it
has knowledge of any such contract or agreement or of its terms or conditions.
SECTION 5: TERMINATION
This Agreement shall be terminated (i) upon disbursement or release of
the entire or remaining Adjustment Fund by the Escrow Agent, (ii) by written
mutual consent signed by all parties, or (iii) payment of the Adjustment Fund
into a court of competent jurisdiction in accordance with Section 3.4 hereof.
This Agreement shall not be otherwise terminated.
SECTION 6: OTHER PROVISIONS
6.1 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be in writing, may be
sent by telecopy (with automatic machine confirmation), delivered by personal
delivery, or sent by commercial delivery service or certified mail, return
receipt requested, shall be deemed to have been given on the date of actual
receipt, which may be conclusively evidenced by the date set forth in the
records of any commercial delivery service or on the return receipt, and shall
be addressed to the recipient at the address specified below, or with respect to
any party, to any other address that such party may from time to time designate
in a writing delivered in accordance with this Section 6.1:
If to Buyer: c/o Charter Communications, Inc.
00000 Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telecopier: (000) 000-0000
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with a copy (which shall not Irell & Xxxxxxx LLP
constitute notice) to: 0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
If to the Sellers: c/o Bresnan Communications, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. XxXxxx and
Xxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
c/o The Blackstone Group
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Telecopy: (000) 000-0000
c/o AT&T Broadband & Internet Services
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telecopier: (000) 000-0000
with copies (which shall not Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
constitute notice) to: 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxxx, Esq.
Telecopier: (000) 000-0000
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx Xxxxx, Esq.
Telecopier: (000) 000-0000
Xxxxxxx & Xxxxxx, L.L.C.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
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If to Escrow Agent: ____________________________________
____________________________________
____________________________________
____________________________________
Attention:
Telecopier:
6.2 Benefit and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns; provided that (a) neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by the Sellers
without the prior written consent of Buyer (which consent shall not be
unreasonably withheld or delayed), (b) neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by Buyer without the
prior written consent of the Sellers (which consent shall not be unreasonably
withheld or delayed) and (c) neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by the Escrow Agent without
the prior written consent of Buyer and the Sellers (which consent shall not be
unreasonably withheld or delayed), except as otherwise expressly provided
herein. This Agreement is not intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
6.3 Entire Agreement; Amendment. This Agreement and the Purchase
Agreement contain all the terms agreed upon by the parties with respect to the
subject matter hereto. This Agreement may be amended or modified only by written
agreement executed by Buyer and the Sellers and if the amendment in any way
affects the compensation, duties and/or responsibilities of the Escrow Agent, by
a duly authorized representative of the Escrow Agent. No waiver of any provision
hereof or rights hereunder shall be binding upon a party unless evidenced by a
writing signed by such party.
6.4 Headings. The headings of the sections and subsections of this
Agreement are for ease of reference only and do not evidence the intentions of
the parties.
6.5 Governing, Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF [NEW YORK] (WITHOUT REGARD
TO THE CHOICE OF LAW PROVISIONS THEREOF).
6.6 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, PERFORMANCE OR
ENFORCEMENT HEREOF.
6.7 Counterparts. This Agreement may be signed upon any number of
counterparts with the same effect as if the signatures on all counterparts were
upon the same instrument.
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6.8 Earnings. All interest, income and other earnings upon any of the
Adjustment Deposit or the Adjustment Fund shall be paid to the party or parties
receiving the principal portion of such funds pro rata based on the amount of
such funds received by such party or parties. For purposes of the preceding
sentence, any Tax Distributions made to Buyer will be applied as a credit
against any interest, income or other earnings required to be paid to Buyer
under this Section 6.8. In no event, however, will Buyer be required to refund
in cash to the Sellers or the Adjustment Fund any portion of the Tax
Distributions received by it. All income and earnings upon the Adjustment
Deposit or the Adjustment Fund not distributed as of the end of any taxable
period shall be deemed for tax reporting purposes to have accrued for the
account of Buyer.
[REMAINDER OF PAGE INTENTIONALLY BLANK;
SIGNATURES ON FOLLOWING PAGES]
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IN WITNESS WHEREOF, this Agreement has been executed by each of Buyer,
the Sellers, and Escrow Agent as of the date first written above.
BUYER:
______________________________________________________
By:___________________________________________________
Xxxxxx X. Xxxx
Senior Vice President
THE SELLERS:
BCI (USA), LLC
By: Bresnan Communications, Inc., its Managing
Member
By:__________________________________________
Name:
Title:
OTHER SELLERS:
BCI (USA), LLC
By: Bresnan Communications, Inc., its Managing
Member
By:__________________________________________
Name:
Title:
______________________________________________________
Xxxxxxx X. Xxxxxxx, individually
X-0
00
XXXX XX XXXXXXXX, INC.
By:__________________________________________
Name:
Title:
BLACKSTONE BC CAPITAL PARTNERS L.P.
By: Blackstone Management Associates III
L.L.C., its General Partner
By:__________________________________________
Name:
Title:
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP III L.P.
By: Blackstone Management Associates III
L.L.C., its General Partner
By:________________________________
Name:
Title:
BLACKSTONE BC OFFSHORE CAPITAL PARTNERS L.P.
By: Blackstone Management Associates III
L.L.C., its Investment General
Partner
By:________________________________
Name:
Title:
X-00
00
XXXXXX XXXXX:
______________________________________________
By:___________________________________________
Name:
Title:
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86
EXHIBIT E
TERMS OF CHARTER LLC OPERATING AGREEMENT
Issuance of Units in Charter LLC Charter Communications Holding Company,
LLC ("Charter LLC") is currently
wholly-owned by Charter Communications,
Inc. ("CCI"). Charter LLC currently owns
all of the membership interests in Charter
Communications Holdings, LLC ("Charter
Holdings").
At the Closing of the Charter/Bresnan
transaction, Bresnan partners will
contribute to Charter LLC a portion of the
partnership interest owned by them in
Bresnan Communications Company Limited
Partnership ("Bresnan") in exchange for
common membership interests in Charter LLC
represented by units (the "Units"). The
contribution by the Bresnan partners is
intended to be a tax-free contribution to
Charter LLC by the Bresnan partners (but
it is understood that it may involve some
tax liability for the Bresnan partners not
affiliated with Blackstone as a result of
shifting of partnership liabilities).
Transfer of Bresnan Units The Units received by the Bresnan Holders
will be transferable in accordance with
the following: the Bresnan Holders will
have the right to transfer their Units in
Charter LLC pursuant to the tag along
rights and to their Permitted Transferees
(as defined below), and to freely transfer
any Units with respect to which any Put
Option has been exercised and Xxxx Xxxxx
or Charter LLC has breached their purchase
obligations under the Put provided,
however, that (i) each such transferee
must agree to be bound by the terms of the
Charter LLC Operating Agreement and other
applicable equity documents (including the
Exchange Agreement), (ii) each such
transferee must represent that it is an
accredited investor and give such other
investment representations and other
undertakings as are customarily given by
persons acquiring securities in a private
placement, and (iii) the transfer to such
transferee must be effected pursuant to an
exemption from registration under
applicable securities laws. All Units will
be freely exchangeable into common stock
of PublicCo and freely transferable
without restriction to Xxxx X. Xxxxx (or
any other person or
87
entity to whom Units may be put under the
Put Agreement) in accordance with the Put
Agreement. "Permitted Transferees" shall
be defined as described in the
Registration Rights Agreement.
References to the Put Agreement include
the TCI Put Agreement, as applicable.
IPO It is the current intent of CCI to effect
an initial public offering of stock in a
corporation ("PublicCo") that will acquire
an interest in Charter LLC (an "IPO").
Each of the Bresnan Holders may at any
time and from time to time exchange its
Units in Charter LLC, in whole or in part,
for stock in PublicCo on the terms set
forth in an Exchange Agreement.
If an initial public offering is effected
other than through PublicCo (i.e., through
CCI or Charter LLC), the Bresnan Holders
will have rights and protections that will
put them in the same economic position as
if the IPO had been effected through
PublicCo.
Dilution for Events Prior to IPO After Closing and prior to an IPO, upon
the contribution by CCI (or any affiliate
of CCI) of assets to Charter LLC, the
members' interests in Charter LLC will be
adjusted, and additional Units will be
issued to CCI (or affiliate) based on the
valuation of Charter LLC and the
contributed assets determined in good
faith by the Board of Charter LLC and
Xxxxxx Xxxx.
Prior to an IPO (whether before or after
Closing), upon the issuance of Units in
Charter LLC to an entity unrelated to CCI
(or any affiliate of CCI), and upon the
issuance of Units in Charter LLC to
employees of Charter LLC in their capacity
as employees, the Bresnan Holders'
interest in Charter LLC will be diluted on
a proportional basis with CCI.
Dilution Upon and After IPO In connection with an IPO, the Bresnan
Holders' interest in Charter LLC will be
diluted on a proportional basis with CCI
and any affiliate of CCI.
If, after an IPO, CCI or any affiliate of
CCI contributes assets to Charter LLC, the
Bresnan Holders' interest in Charter LLC
will be diluted on a proportional basis
with PublicCo.
Upon the issuance of Units in Charter LLC
to an
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88
entity unrelated to CCI (or any affiliate
of CCI), and upon the issuance of Units in
Charter LLC to employees of Charter LLC in
their capacity as employees, the Bresnan
Holders' interest in Charter LLC will be
diluted on a proportional basis with CCI.
Nondiscrimination In any transactions between Charter LLC
and any holders of Charter LLC Units in
their capacities as such, the Bresnan
Holders must be treated in a
nondiscriminatory manner to the Units held
by CCI, Xxxx Xxxxx or their affiliates.
For instance, any proposed redemption of
Units held by CCI, Xxxx Xxxxx and their
affiliates must be offered to the Bresnan
Holders on the same proportionate terms
and conditions offered to such other
holders of Units.
Tag-along Rights Prior to an IPO, if Xxxx Xxxxx disposes of
more than 25% (cumulatively) of his
current interests in CCI (or control,
irrespective of the amount of interests
sold), or if CCI disposes of more than 25%
(cumulatively) of its current interests in
Charter LLC (or control, irrespective of
the amount of interests sold), each of the
Bresnan Holders will have the right to
sell a proportionate share of its Units on
the same economic terms and conditions and
for proportionate consideration. The
examples below illustrate the operation of
this provision:
Example 1: Assume CCI owns 100 units of
Charter LLC and sells 30 of those units
(but not control) to an unaffiliated third
party. The Bresnan Holders have the right
to sell 30% of their Units in the sale.
Example 2: Assume CCI owns 100 units of
Charter LLC and sells 20 of those units
(but not control) to an unaffiliated third
party. The Bresnan Holders have no tag
along rights in the sale.
Example 3: Same facts as Example 2, but
after the sale CCI sells 10 units to
another unaffiliated party. The Bresnan
Holders have the right to sell 12.5% of
their Units.
Example 4: Same facts as Example 2, but
after the sale CCI sells 30 units (but not
control) to another unaffiliated party.
The Bresnan Holders have the right to sell
37.5% of their Units in the sale.
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89
Distributions After satisfying any distribution
requirements on preferred units (if any),
distributions from Charter LLC shall be
made in proportion to the number of Units
held by each member. Subject to any
limitations in contractual covenants of
Charter LLC or its subsidiaries (provided
that Charter LLC shall negotiate such
covenants in good faith to permit tax
distributions) and subject to applicable
law, within 90 days after the end of each
fiscal year, Charter LLC will distribute
to all holders, in proportion to the
number of Units held by them, cash in an
amount which, in the reasonable judgment
of Charter LLC, is sufficient to pay the
federal, state, and local income taxes on
each holder's share of Charter LLC's
taxable income for such fiscal year at the
highest combined marginal rate applicable
to the ordinary income of an individual
residing in New York City. Distributions
on dissolution or liquidation will be made
in accordance with capital accounts.
Book and Tax Allocations Profit and Loss for book purposes under
Section 704(b) of the Internal Revenue
Code (the "Code") of Charter LLC will be
computed without taking into account
depreciation and amortization deductions.
Such Profit or Loss will be allocated in
accordance with Units. Depreciation and
amortization deductions will first be
specially allocated for Code Section
704(b) book purposes to the Bresnan
Holders to the extent necessary to cause
depreciation and amortization to be
allocated to the Bresnan Holders for tax
purposes so as to eliminate any taxable
income to the Bresnan Holders from Charter
LLC (taking into account the effect of
making allocations pursuant to the
traditional method under Section 704(c) of
the Code). All remaining depreciation and
amortization deductions will be specially
allocated to CCI (and any members
resulting from the transactions listed in
Attachment A to the LLC Unit Formula Term
Sheet and PublicCo as CCI may agree with
such members). For the sixth and later
taxable years of Charter LLC ending after
the Closing, the special allocations will
be changed as among the Bresnan Holders
and CCI to achieve substantially the same
result as if the remedial method of
allocation of depreciation and
amortization under Section 704(c) of the
Code was in place. TCI Bresnan LLC and
TCID of Michigan, Inc. (as a group) shall
have the right to elect, in lieu of the
foregoing, to have the special allocations
above made
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90
to achieve substantially the same result as
if the remedial method of allocation of
depreciation and amortization under Section
704(c) of the Code (unless it is determined
that the remedial method under Section
704(c) of the Code can be elected with
respect to the assets attributable only to
those entities) for all years, if such
election is made 5 days before the earlier
of (I) the date the final Form S-1 for the
IPO is to be filed with the SEC or (II) the
Closing. With respect to the Falcon holders,
CCI may offer to them that these special
allocations either (i) will apply to them or
(ii) will be modified such that the Falcon
holders will be treated in the same way as
if allocations in accordance with the
remedial method under Section 704(c) of the
Code were in place. To the extent not
inconsistent with the foregoing, there will
be a chargeback allocation mechanism to make
CCI economically whole via its capital
account over time. The parties will work in
good faith to implement the foregoing
principles in a reasonably practicable
fashion in the Operating Agreement.
Section 754 election At the request of a transferee of (or
other successor to) Units that takes an
increased tax basis in such Units, the
Manager shall cause Charter LLC to make an
election under Section 754 of the Code,
unless the Manager determines that any
member who holds a number of Units (or
other equity interests) at least as great
as the number (or value) being transferred
has a built-in tax loss with respect to
such Units (or other equity interests)
held.
Access to information The Bresnan Holders shall have reasonable
access to Charter LLC's book and records
and will be entitled to receive such
periodic operating and financial reports
as they may reasonably request. As soon as
reasonably practicable following the end
of each fiscal year, but in no event later
than July 15, Charter LLC shall furnish to
each Bresnan Holder its Schedule K-1, and
to any Bresnan Holder requesting such
information, a complete copy of Charter
LLC's federal information return (Form
1065) for such fiscal year (as filed) and
a schedule setting forth each member's
capital account balance as of the end of
such fiscal year; provided, however, that
for the taxable year of Charter LLC in
which the Closing occurs, such information
must be furnished no later
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than August 15 following the end of such
fiscal year.
Governance The Bresnan Holders will have no voting
rights, except that the operating
agreement of Charter LLC cannot be amended
in a manner that is adverse to the Bresnan
Holders, without the consent of Holders
owning a majority of the Units adversely
affected. Prior to the beginning of the
Put Period (as defined in the Xxxxx Put
Agreement) Charter LLC will not dissolve
or liquidate without the consent of all
Bresnan Holders, which consent shall not
be unreasonably withheld; provided that at
no time will Charter LLC be dissolved or
liquidated unless (i) such dissolution or
liquidation can be accomplished in a
manner that does not cause adverse tax or
economic consequences to TCI Bresnan LLC
and/or TCID of Michigan, Inc. (taking into
account any compensation to be provided to
such entities) in excess of $1 million or
(ii) Charter LLC receives the written
consent of the adversely affected entity.
The Bresnan Holder affiliated with the
Blackstone Group L.P. will be entitled to
consultative rights reasonably acceptable
to Charter in order to maintain its VCOC
status.
It is the current intention of Charter LLC
and CCI, and they will in good faith
attempt, to keep in place the notes and
credit facility and the terms and
conditions relating to their security and
collateral (other than the Keepwell
Agreement, which may be amended as set
forth in the Purchase Agreement) of
Bresnan and its Subsidiaries.
Charter LLC will be a manager-managed (and
not a member-managed) limited liability
company, and the manager(s) will be CCI,
PublicCo, and/or their affiliates.
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EXHIBIT F
EXCHANGE AGREEMENT TERM SHEET
Certain definitions Charter LLC: Charter Communications
Holding Company, LLC, which owns all
interests in Charter Communications
Holdings, LLC ("CCH"). Currently, Charter
LLC is wholly owned by Charter
Communications, Inc., but in the event of
an IPO, it is expected that PublicCo would
own a portion of Charter LLC. Certain
other parties, such as the Sellers of the
partnership interests in Falcon and BCCLP,
are expected to acquire portions of
Charter LLC over time, either through
acquisitions or otherwise.
PublicCo: the entity through which Charter
effects an initial public offering of
indirect equity interests in Charter LLC,
and its successors.
Right to exchange interests Any holder of a membership interest in
Charter LLC will have the right at any
time (subject to the conditions specified
in "Conditions to Exchange" below) to
exchange all or part of its membership
interest in Charter LLC for shares of
PublicCo common stock.
The shares of PublicCo common stock
received in the exchange would be:
- of the same class as the shares of
PublicCo common stock that are publicly
traded
- duly authorized, validly issued, fully
paid, and nonassessable
- freely tradable and transferable,
subject only to restrictions imposed by
applicable securities laws
- "Registrable Securities" for purposes of
a Registration Rights Agreement to be
entered into pursuant to the Purchase
Agreement (it being agreed that such
shares may be registered even prior to
their actually being issued in an
exchange)
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Conditions to exchange A holder's right to exchange its
membership interest in Charter LLC for
PublicCo's common stock would be
conditioned on (1) the holder's execution
and delivery to PublicCo of such
investment representations and other
undertakings as are customarily given by
persons acquiring securities in a private
placement (subject to the holder's ability
to resell (possibly immediately) in a
registered offering or under Rule 144),
and (2) Charter's reasonable satisfaction
that the exchange and the issuance of
PublicCo common stock to the holder
complies with applicable securities laws.
Exchange ratio The exchange ratio will be determined in a
manner that preserves the exchanging
member's relative ownership interest in
Charter LLC.
If PublicCo has no assets other than its
membership interests in Charter LLC and
has no debt or preferred stock
outstanding, the exchange will yield to
the exchanging holder a number of shares
in PublicCo that provide an indirect
interest in Charter LLC equal to the
direct interest represented by the LLC
interests being exchanged.
If PublicCo has assets other than its
membership interests in Charter LLC or has
debt or preferred stock outstanding, the
value of the shares of PublicCo common
stock received in the exchange will be the
same as the value of the membership
interest in Charter LLC exchanged for such
shares.
The Shares of PublicCo common stock would
be valued as follows:
- shares of PublicCo common stock would be
valued at the price to the public of
such shares in PublicCo's initial public
offering (before any underwriting or
brokerage discounts and commissions) if
the exchange occurs concurrently with
PublicCo's initial public offering
- shares of PublicCo common stock would be
valued at the weighted average trading
price of such shares for the twenty
trading days prior to the exchange if
the exchange occurs after PublicCo's
initial public offering
Regardless of which method is used to
value shares of PublicCo common stock, the
membership interest in Charter LLC being
exchanged would be valued in accordance
with the following:
- the value of a membership interest in
Charter LLC would be the product of the
percentage interest represented by such
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membership interest times the aggregate
value of Charter LLC
- the aggregate value of Charter LLC would
equal the value of PublicCo's membership
interest in Charter LLC divided by the
percentage interest represented by
PublicCo's membership interest in
Charter LLC
- the value of PublicCo's membership
interest in Charter LLC would equal the
sum of (i) the aggregate value of all
outstanding shares of PublicCo common
stock, with each share valued as
described above, plus (ii) the amount of
any outstanding PublicCo liabilities
(other than deferred taxes) and
preferred stock, minus (iii) the gross
fair market value of any other assets of
PublicCo other than deferred tax assets
and other than its membership interest
in Charter LLC (such assets, the
"Non-Charter LLC Assets"). If PublicCo
has subsidiaries that are not
consolidated with Charter LLC, the
amounts in (ii) and (iii) above shall be
calculated for PublicCo on a
consolidated basis (without
duplication). For purposes of clause
(iii) above, (1) if Non-Charter LLC
Assets have an aggregate value of less
than $100 million, the value of such
assets shall be determined in good faith
by the Board of PublicCo, and (2) if
Non-Charter LLC Assets have an aggregate
value of more than $100 million, then
PublicCo shall engage a nationally
recognized investment banking firm on a
reasonable periodic basis to value such
assets, and the value at any given time
shall be the value given such assets
pursuant to the most recent appraisal.
Modification of formulas This term sheet does not prescribe the
for calculating the capital structure of either Charter LLC or
exchange ratio PublicCo and, therefore, equity interests
(such as preferred or convertible
interests) or liabilities of Charter LLC
or PublicCo, or assets of PublicCo other
than its interest in Charter LLC may exist
that prevent the formulas described under
the above from preserving an exchanging
member's relative ownership interest in
Charter LLC. The Exchange Agreement will
include appropriate provisions to deal
with such equity interests, liabilities,
or assets.
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EXHIBIT G
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
__________, is entered into by and among [Charter], a Delaware corporation
("Charter") and the other Persons executing this Agreement.
PRELIMINARY STATEMENTS
In connection with the consummation of the transactions contemplated by
the Purchase Agreement, dated as of June 29, 0000 (xxx "Xxxxxxxx Xxxxxxxxx"),
xxxxx XXX (XXX), LLC, Xxxxxxx X. Xxxxxxx, Xxxxxxxxxx XX Capital Partners, L.P.,
Blackstone BC Offshore Capital Partners, L.P., Blackstone Family Investment
Partnership III L.P., TCI Bresnan LLC and TCID of Michigan, Inc. (collectively,
the "Sellers"), Charter Communications Holding Company, LLC ("Charter Holding
Company"), the Sellers have acquired membership interests in Charter Holding
Company. Pursuant to the Exchange Agreement, the holder of a membership interest
in Charter Holding Company may exchange such membership interest for shares of
Common Stock (as hereinafter defined).
As a result of such transactions, each of the parties to this Agreement
(other than Charter), either holds a membership interest in Charter Holding
Company and has the right to exchange its membership interest in Charter Holding
Company for shares of Common Stock or holds shares of Common Stock that were
issued in exchange for a membership interest in Charter Holding Company.
In the Purchase Agreement, Charter Holding Company agreed that Charter
would enter into this Agreement to provide for certain registration rights with
respect to the shares of Common Stock issued or issuable in exchange for
membership interests in Charter Holding Company.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreement and covenants hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Certain Definitions.
1.1 Terms Defined in this Section. For purposes of this Agreement, the
following terms have the following meanings:
"Xxxxx" means Xxxx X. Xxxxx.
"Business Day" means any day other than a Saturday, Sunday, or other
day on which commercial banking institutions in New York, New York are required
or authorized by law to remain closed.
"Charter Indemnified Parties" means Charter, its officers, directors,
employees, and agents, and each Person, if any, who controls Charter within the
meaning of either the Securities
96
Act or the Exchange Act, and the officers, directors, employees, and agents of
the foregoing parties.
"Common Stock" means the [Series __] Common Stock, par value
$__________ per share, of Charter and any securities into or for which such
securities are converted or exchanged by Charter.
"Exchange Act" means the Securities Exchange Act of 1934, or any
successor federal statute, and the rules and regulations of the SEC promulgated
thereunder, in each case as amended from time to time.
"Exchange Agreement" means [Exchange Agreement to be entered into by
Bresnan holders].
"Falcon Purchase Agreement" means the Contribution and Purchase
Agreement, dated as of May 26, 1999, by and among Charter Communications, Inc.,
Falcon Communications, L.P, Falcon Holding Group, L.P., TCI Falcon Holdings,
LLC, Falcon Cable Trust, Falcon Holding Group, Inc. and DHN, Inc., as amended or
supplemented from time to time.
"Falcon Registration Rights Agreements" means the registration rights
agreements entered into in connection with, relating to, or as a result of the
Falcon Purchase Agreement.
"Indemnified Party" means a Person claiming a right to indemnification
pursuant to Section 6 of this Agreement.
"Indemnifying Party" means a Person required to provide indemnification
pursuant to Section 6 of this Agreement.
"IPO" means the initial primary underwritten public offering of shares
of Common Stock by Charter.
"Losses" means any losses, claims, damages, or liabilities, and any
related legal or other fees and expenses.
"Permitted Bresnan Transferee" shall mean (i) any affiliate of Xxxxxxx
Xxxxxxx ("WBresnan") that is, directly or indirectly, at least 80% owned or
controlled by WBresnan, (ii) WBresnan's spouse and descendants (including
spouses of his descendants), any trust established solely for the benefit of any
of the foregoing individuals, or any partnership or other entity at least 80%
owned or controlled directly or indirectly by any of the foregoing persons, or
(iii) WBresnan.
"Permitted Transferee" means (1) with respect to TCI Bresnan LLC and
TCID of Michigan, Inc., any entity controlled by AT&T Corp., and (2) with
respect to BCI (USA), LLC and Xxxxxxx X. Xxxxxxx, any Permitted Bresnan
Transferee. There are no Permitted Transferees with respect to Blackstone BC
Capital Partners, L.P., Blackstone BC Offshore Capital Partners, L.P., or
Blackstone Family Investment Partnership III L.P.
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"Person" means any individual, corporation, partnership, limited
partnership, limited liability partnership, limited liability company, trust,
association, organization, or other entity.
"Prospectus" means the prospectus included in a Registration Statement
as of the date it becomes effective under the Securities Act and, in the case of
references to the Prospectus as of a date subsequent to the effective date of
the Registration Statement, as amended or supplemented as of such date,
including all documents incorporated by reference therein, each as amended, and
each applicable prospectus supplement relating to the offering and sale of any
of the Registrable Securities pursuant to such Registration Statement.
"Put Agreement" means, with respect to any Stockholder, the Put
Agreement between such Stockholder and Xxxxx dated as of June 29, 1999; and in
addition, with respect to TCID of Michigan, Inc., "Put Agreement" shall include
the TCI Put Agreement (as defined in the Purchase Agreement).
"Put Default" means, with respect to a Stockholder who has properly and
validly exercised its Put Option under a Put Agreement, a failure by the Put
Party under such Put Agreement to satisfy its obligations under such Put
Agreement to purchase the securities as to which the Put Option has been
exercised within the time period specified for such purchase in the Put
Agreement after the Stockholder has tendered delivery of such securities to the
Put Party in accordance with the terms of the Put Agreement; provided, however,
solely for purposes of Section 2.1, the failure of Charter Holding Company to
purchase securities pursuant to the Capped Ownership Put Option of the TCI Put
Agreement shall not constitute a "Put Default."
"Put Option" means, with respect to a Stockholder, the meaning ascribed
to the term "Put Option" in such Stockholder's Put Agreement.
"Put Party" means, with respect to a Put Agreement, the party obligated
under such Put Agreement to purchase from the applicable Stockholder the
securities subject to the Put Option.
"Registrable Securities" means:
(i) any shares of Common Stock that are issued or issuable to a
Stockholder in exchange for membership interests in Charter Holding Company,
pursuant to the Exchange Agreement, and
(ii) any securities of Charter or its successors issued or issuable
with respect to any shares referred to in paragraph (i) whether by way of
conversion, exchange, dividend, or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation, or other
reorganization or otherwise.
Securities that are Registrable Securities will cease to be Registrable
Securities:
(i) when a registration statement with respect to the sale of such
securities has become effective under the Securities Act and such securities
have been disposed of in accordance with such registration statement,
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(ii) when such securities shall have been sold pursuant to Rule 144 or
Rule 145 (or any successor provisions) under the Securities Act or in any other
transaction in which the applicable purchaser does not receive "restricted
securities" (as that term is defined for purposes of Rule 144 under the
Securities Act),
(iii) on the first date on which such securities can be sold without
regard to the volume and manner of sale limitations set forth in Rule 144 (or
any successor provision), or
(iv) when such securities cease to be outstanding.
"Registration Statement" means a registration statement (including the
related Prospectus) of Charter under the Securities Act on any form selected by
Charter for which Charter then qualifies and which permits the sale thereunder
of the number and type of Registrable Securities (and any other securities of
Charter) to be included therein in accordance with this Agreement by the
applicable sellers in the manner described herein. The term "Registration
Statement" shall also include all exhibits, financial statements, and schedules
and all documents incorporated by reference in such Registration Statement when
it becomes effective under the Securities Act, and in the case of the references
to the Registration Statement as of a date subsequent to the effective date, as
amended or supplemented as of such date.
"Rule 144-Eligible Securities" means Registrable Securities that can
then be sold by the Stockholder owning such Registrable Securities without
registration under the Securities Act pursuant to Rule 144 (or any successor
provision) under the Securities Act. Except as provided in Section 3.1(d), any
reference in this Agreement to "Registrable Securities" that does not expressly
exclude Rule 144-Eligible Securities shall be interpreted as a reference to all
Registrable Securities, including all Rule 144-Eligible Securities.
"SEC" means the Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act or the Exchange Act.
"Securities Act" means the Securities Act of 1933, or any successor
federal statute, and the rules and regulations of the SEC promulgated
thereunder, in each case as amended from time to time.
"Selling Stockholder" means any Stockholder whose Registrable
Securities are included at the request of such Stockholder in any Registration
Statement pursuant to Section 2 or Section 3.
"Stockholder" means each party to this Agreement who owns Registrable
Securities or has the right to acquire Registrable Securities pursuant to the
Exchange Agreement and any other Person:
(i) to whom any Registrable Securities or any rights to acquire any
Registrable Securities are transferred by any Person that was, immediately prior
to such transfer, a Stockholder,
(ii) who continues to hold such Registrable Securities or the right to
acquire such Registrable Securities,
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(iii) to whom the transferring Stockholder has assigned any of its
rights under this Agreement, in whole or in part, in accordance with the
provisions of Section 8.6 of this Agreement with respect to such Registrable
Securities, and
(iv) who has executed a counterpart hereof in connection with the
transfer of such Registrable Securities.
"Stockholder Representative" means BCI (USA), LLC or such other party
as the Sellers shall notify Charter from time to time in a writing signed by all
of the Sellers.
"Stockholder Indemnified Parties" means each Selling Stockholder, its
officers, directors, members, partners, employees, and agents, each Person (if
any) who controls such Selling Stockholder within the meaning of either the
Securities Act or the Exchange Act, and the officers, directors, members,
partners, employees, and agents of the foregoing parties.
"Third-Party Demand Stockholder" means any Person having the right to
require that Charter effect a registration under the Securities Act of
securities owned by such Person, other than pursuant to this Agreement, and any
other Person exercising incidental rights of registration pursuant to the
agreement under which such first Person has the right to require registration.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of this
Agreement, the following terms have the meanings set forth in the sections
indicated:
Term Section
---- -------
Demand Registration Section 2.1
Demand Request Section 2.2(a)
Demanding Stockholders Section 2.2(a)
Incidental Registration Section 3.1(a)
Material Event Section 2.6(a)
Minimum Condition Section 2.2(c)
Registration Expenses Section 5.1
1.3 Terms Generally. The definitions in this Agreement shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context requires, any pronoun includes the corresponding masculine, feminine,
and neuter forms. The words "include," "includes," and "including" are not
limiting. Any reference in this Agreement to a "day" or number of "days"
(without the explicit qualification of "Business") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action or notice
is to be taken or given on or by a particular calendar day, and such calendar
day is not a Business Day, then such action or notice shall be deferred until,
or may be taken or given on, the next Business Day.
2. Demand Registration.
2.1 Demand Registration. At any time on or after the 180th day
following the consummation of the IPO, the Stockholders (through the Stockholder
Representative, as described below) shall have the right to require that Charter
register under the Securities Act the offer or sale of all or a portion of the
Registrable Securities held by the Stockholders on the terms and subject to the
conditions and limitations set forth herein. In addition, if an IPO has not
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occurred and a Put Default has occurred with respect to a Stockholder, such
Stockholder shall have the right (through the Stockholder Representative as
described below) to require that Charter (i) form an entity through which an
indirect ownership interest in Charter Holding Company may be offered to the
public (provided that the form, organization, capital structure, voting control
and other organizational aspects of the formation and establishment of such
entity shall be determined by Charter Holding Company in its sole and absolute
discretion, except that such entity shall be the manager of Charter Holding
Company), and (ii) through such entity, register under the Securities Act the
offer or sale of all or a portion of the Registrable Securities held by such
Stockholder on the terms and subject to the conditions and limitations set forth
herein at any time from and after such Put Default. The registration of
Registrable Securities under the Securities Act in accordance with this Section
2 is referred to in this Agreement as a "Demand Registration." The number of
Demand Registrations to which the Stockholders collectively shall be entitled
shall not exceed four.
2.2 Procedure for Stockholder Representative; Procedures for Demand
Registrations.
(a) The Stockholder Representative may initiate a Demand
Registration pursuant to this Section 2.2(a) by furnishing Charter and each
Stockholder with a written notice ("Demand Request") specifying (i) the number
of Registrable Securities the Stockholders desire to have registered, which must
be an amount at least equal to the Minimum Condition, (ii) the Stockholders
intending to register their Registrable Securities, (iii) the respective amount
of Registrable Securities intended to be registered by each such Stockholder,
(iv) whether any of such Registrable Securities are Rule 144-Eligible
Securities, and (v) the intended method or methods of distribution of all such
Registrable Securities by such Stockholders. The Registrable Securities that the
Stockholders desire to have registered, as specified in the Demand Request, must
include some Registrable Securities that are not Rule 144-Eligible Securities.
The Stockholders whose Registrable Securities are included in the Demand Request
are referred to as the "Demanding Stockholders."
(b) If the number of Registrable Securities (excluding any
Rule 144-Eligible Securities) that the Stockholder Representative desires to
have registered, as specified in the Demand Request, does not satisfy the
Minimum Condition, then Charter will have no obligation to effect a Demand
Registration in response to such Demand Request.
(c) The "Minimum Condition" means that the number of
Registrable Securities (other than any Rule 144-Eligible Securities) that the
Stockholder Representative desires to have registered, as specified in the
Demand Request,
(i) have an aggregate market value on the date of the
delivery of the Demand Request (before any underwriting or brokerage discounts
and commissions) of not less than $40,000,000; or
(ii) have an aggregate value at the price to the
public of shares of Common Stock in the IPO (before any underwriting or
brokerage discounts and commissions, and adjusted as necessary for any events
described in Section 2.9(d) occurring between the
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consummation of the IPO and the calculation of the Minimum Condition) of not
less than $60,000,000.
(d) Following the effectiveness of a Registration Statement
filed in connection with a Demand Registration, Charter will not be required to
file a Registration Statement for a subsequent Demand Registration within six
months after the date on which it received the Demand Request pursuant to
Section 2.2(a) for the immediately preceding Demand Registration.
(e) As soon as reasonably practicable after receipt of a
Demand Request (which satisfies the Minimum Condition), subject to Section
2.6(a) and Section 2.6(d), Charter will file with the SEC and use its reasonable
best efforts to cause to become effective as promptly as practicable a
Registration Statement that covers the Registrable Securities requested to be
registered in the manner set forth above. Subject to the provisions of Section
2.3 below, each Registration Statement may also include securities to be sold
for the account of Charter, for Stockholders who do not participate as Demanding
Stockholders but who exercise their rights under Section 3 below, or for any
stockholder of Charter not holding Registrable Securities.
2.3 Underwriters.
(a) The Stockholder Representative shall have the right to select the
lead book running managing underwriter for any underwritten public offering in
connection with a Demand Registration, which lead managing underwriter shall be
reasonably acceptable to Charter.
(b) Each Demanding Stockholder electing to participate in a Demand
Registration involving an underwritten public offering shall, as a condition to
Charter's obligation under this Section 2 to include such Demanding
Stockholder's Registrable Securities in the Demand Registration, enter into and
perform its obligations under an underwriting agreement or other similar
arrangement in customary form with the lead underwriter of such offering.
2.4 Shelf Registration. If at the time the Minimum Condition is
satisfied, Charter is eligible to file a registration statement on Form S-3 (or
any equivalent successor form), then the Stockholder Representative may elect to
require that the Demand Registration be effected pursuant to a shelf
registration under Rule 415 of the Securities Act; provided, however, that (a)
Charter will not be required to effect the Demand Registration pursuant to a
shelf registration under Rule 415 of the Securities Act if Charter has been
advised by an independent investment banking firm of nationally recognized
standing that such method of distribution could reasonably be expected to
materially and adversely affect the public market for the Common Stock or
materially and adversely affect any financing then being contemplated by
Charter; (b) the Stockholder Representative may not elect to require that the
Demand Registration be effected pursuant to a shelf registration under Rule 415
of the Securities Act unless the Registrable Securities to be included in the
Demand Registration have an aggregate market value on the date of the
Stockholder Representative's election (before any underwriting or brokerage
discounts and commissions) of at least $100,000,000, or such lesser amount as
may be represented by all the remaining Registrable Securities; and (c) during
the time any such shelf registration is
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effective, Charter may require from time to time that the Selling Stockholders
refrain from selling pursuant to such registration under the circumstances, in
the manner, and for the time period described in Section 2.6. Charter will use
its reasonable best efforts to cause any Demand Registration effected as a shelf
registration under Rule 415 of the Securities Act to remain effective for a
period ending on the earlier of (i) the date that is a number of days after the
effective date of the Registration Statement equal to 365 plus the number of
days that the Selling Stockholders must refrain from selling pursuant to Section
2.6, and (ii) the date on which all Registrable Securities covered by the
Registration Statement have been sold pursuant to the Demand Registration; and
(d) Charter will not be required under this Section 2.4 to effect more than one
Demand Registration as a shelf registration under Rule 415 of the Securities
Act.
2.5 Limitation on Inclusion of Registrable Securities.
(a) If the book running managing underwriter of any underwritten public
offering in connection with a Demand Registration determines in good faith that
the aggregate number of Registrable Securities to be offered exceeds the number
of shares that could be sold without having an adverse effect on such offering
(including the price at which the Registrable Securities may be sold), then the
number of Registrable Securities to be offered for the accounts of the Demanding
Stockholders in such offering shall be reduced or limited on a pro rata basis,
based on the respective numbers of Registrable Securities requested to be
included in such offering by all Demanding Stockholders, to the extent necessary
to reduce the total number of shares to be included in such offering to the
amount recommended by the book running managing underwriter; provided, however,
that if such registration includes securities other than Registrable Securities
of the Demanding Stockholders (whether for the account of Charter or for any
stockholder of Charter not exercising rights under Section 2.2), such reduction
shall be made:
(i) first, from securities held by Persons who are not
Stockholders and from securities being offered for the account of Charter,
allocated between Charter and such other Persons as Charter may determine,
subject to any agreements between Charter and such other Persons; and
(ii) second, from the number of Registrable Securities
requested to be included in such offering by the Demanding Stockholders, on a
pro rata basis, based on the number of Registrable Securities requested to be
included in the registration by the Demanding Stockholders.
(b) The Stockholder Representative may elect not to proceed with the
registration if less than 75% of the Registrable Securities requested to be
registered by each of the Demanding Stockholders are included in such
registration. If the Stockholder Representative elects not to proceed with the
registration pursuant to this Section 2.5(b), the Registration Statement for
such registration shall be promptly withdrawn, and if the Stockholder
Representative so elects, a Demand Registration shall not be deemed to have been
effected for purposes of this Agreement (including the limitations on the number
of Demand Registrations set forth in Section 2.1 above) and the Demanding
Stockholders will pay all out-of-pocket Registration Expenses incurred by
Charter in connection with such Registration Statement.
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2.6 Delay of Filing or Sales.
(a) Charter shall have the right, exercisable by giving written notice
of the exercise of such right to the applicable Selling Stockholders, subject to
Section 2.6(b), at any time and from time to time, to delay filing or the
declaration of effectiveness of a Registration Statement or to require the
applicable Selling Stockholders not to sell any Registrable Securities pursuant
to an effective Registration Statement for a period not in excess of 120 days
beginning on the date on which such notice is given, or such shorter period of
time as may be specified in such notice or in a subsequent notice delivered by
Charter to such effect prior to or during the effectiveness of the Registration
Statement, if:
(i) Charter is engaged in discussions or negotiations with
respect to, or there otherwise is pending, any merger, acquisition, or other
form of business combination that is "probable" (within the meaning of the
Securities Act), any divestiture, tender offer, financing, or other event that,
in any such case, is material to Charter (any such activity or event, a
"Material Event"),
(ii) such Material Event would, in the judgment of Charter's
board of directors (after consultation with counsel), require disclosure so as
to permit the Registrable Securities to be sold in compliance with law, and
(iii) disclosure of such Material Event would, in the judgment
of Charter's board of directors (after consultation with counsel), be adverse to
its interests.
(b) Charter may not delay the filing of a Registration Statement or the
sale of any Registrable Securities, whether pursuant to one or more notices
pursuant to Section 2.6(a), for more than an aggregate of 120 days within any
12-month period.
(c) If Charter postpones its obligations under this Agreement by reason
of a Material Event as described in Section 2.6(a), any Selling Stockholder will
have the right to withdraw its Registrable Securities from the applicable Demand
Registration or Incidental Registration, by giving notice to Charter at any time
following delivery of Charter's notice pursuant to Section 2.6(a) and if all
Selling Stockholders withdraw their Registrable Securities following delivery of
such notice, a Demand Registration shall not be deemed to have been effected for
purposes of this Agreement.
(d) The Stockholder Representative may not deliver a Demand Request
pursuant to the first sentence of Section 2.2(a) during the period of any
postponement pursuant to Section 2.6(a) until Charter notifies all Stockholders
of the end of such Material Event or the expiration of the 120-day period
described in Section 2.6(a).
(e) Charter shall have the right, exercisable by giving notice of the
exercise of such right to the applicable Selling Stockholders, to delay filing
or the declaration of effectiveness of a Registration Statement during any
period in which, as a result of Charter's failure to satisfy the conditions in
Rule 3-01(c) of Regulation S-X, Charter is required to include in the
Registration Statement audited financial statements of Charter prior to the date
on which such audited financial statements would normally have been prepared in
accordance with Charter's past practices and the SEC's periodic reporting
requirements.
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2.7 Withdrawal.
(a) If (i) a Registration Statement filed pursuant to this Section 2
does not remain effective under the Securities Act for the period specified in
Section 2.8(a) due to a stop order, injunction, or other order of the SEC or
other governmental agency, and (ii) each of the Demanding Stockholders has not
sold at least two-thirds of its Registrable Securities registered under such
Registration Statement, then the Demanding Stockholders may elect to withdraw
such Registration Statement by written notice to Charter; and, in such an event,
such registration shall not be deemed to have been a Demand Registration for
purposes of the limitations on the number of Demand Registrations contained in
Section 2.1, and Charter shall bear the Registration Expenses incurred in
connection with such registration.
(b) Each Selling Stockholder may, no less than five Business Days
before any Registration Statement becomes effective, withdraw some or all of its
Registrable Securities from inclusion in the Registration Statement. If such
withdrawals result in the Minimum Condition not being satisfied, then Charter
may withdraw such Registration Statement unless the remaining Demanding
Stockholders agree to include additional Registrable Securities (excluding any
Rule 144-Eligible Securities) in the registration such that the Minimum
Condition would be satisfied or agree to bear the Registration Expenses incurred
by Charter in connection with such registration.
(c) If Charter withdraws a Registration Statement pursuant to Section
2.7(b), then the requested registration shall be deemed to have been a Demand
Registration for purposes of the limitations on the number of Demand
Registrations contained in Section 2.1 unless
(i) at the time of a Stockholder's withdrawal of Registrable
Securities pursuant to Section 2.7(b), there has been a material adverse change
in the operating results, financial condition, or business of Charter that was
not publicly known at the time that the Minimum Condition was originally
satisfied; or
(ii) Charter has postponed its obligations under this
Agreement by reason of a Material Event as described in Section 2.6(a).
2.8 Effectiveness of Registration Statement.
(a) In connection with any Demand Registration pursuant to Section 2.2,
subject to Section 2.6, Charter will use its best efforts to prepare and file
with the SEC any amendments and supplements to the Registration Statement and
the Prospectus used in connection therewith, and to take any other actions, that
may be necessary to keep the Registration Statement and the Prospectus
effective, current, and in compliance with the provisions of the Securities Act,
until the sooner to occur of (i) the sale of all of the Registrable Securities
covered by such Registration Statement in accordance with the intended methods
of distribution thereof or (ii) the 90th day following the effective date of
such Registration Statement.
(b) A Demand Registration shall not be deemed to have been effected for
purposes of this Agreement (including the limitations on the number of Demand
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Registrations set forth in Section 2.1 above) until the Registration Statement
therefor shall have been declared effective under the Securities Act by the SEC
(and is not then subject to any stop order, injunction, or other order or
requirement of the SEC or other governmental agency or court for any reason) for
the period specified in Section 2.8.
2.9 Right to Purchase Shares. In lieu of undertaking to effect a Demand
Registration at any time that Charter would otherwise be required to do so under
this Agreement, Charter may instead elect to purchase, or cause to be purchased,
all Registrable Securities that the Demanding Stockholders desire to have
registered, as specified in the Demand Request, on the following terms:
(a) Charter may elect to purchase all, but not less than all, of such
Registrable Securities by delivering written notice of its election to the
Demanding Stockholders within five Business Days after the delivery of a Demand
Request pursuant to Section 2.2(a).
(b) Charter may not make an election pursuant to this Section 2.9
unless all Registrable Securities specified in the Demand Request are securities
for which the "average trading price" can be determined in accordance with
Section 2.9(d). Charter may not make an election pursuant to this Section 2.9 if
such purchase would require any waiver, consent, or approval of any Person that
could impede or materially delay the closing of the purchase and sale of the
Registrable Securities required to be purchased.
(c) Upon Charter's delivery of notice of its election pursuant to
Section 2.9(a), Charter shall be obligated to purchase, or to cause to be
purchased, and each Demanding Stockholder shall be obligated to sell, the
Registrable Securities specified in the Demand Request.
(d) The purchase price per share for such Registrable Securities shall
be the "average trading price" (determined as provided below) as of the date on
which the Stockholder Representative sent the Demand Request pursuant to Section
2.2(a) of a share of the same class as such Registrable Securities and shall be
payable to each Selling Stockholder in immediately available funds at the
closing. The "average trading price" as of any date of any securities will be
the average for the twenty full trading days preceding such date of (i) the last
reported sales prices, regular way, as reported on the principal national
securities exchange on which such securities are listed or admitted for trading
or (ii) if such securities are not listed or admitted for trading on any
national securities exchange, the last reported sales prices, regular way, as
reported on the Nasdaq National Market or, if such securities are not listed on
the Nasdaq National Market, the average of the highest bid and lowest asked
prices on each such trading day as reported on the Nasdaq Stock Market, or (iii)
if such securities are not listed or admitted to trading on any national
securities exchange, the Nasdaq National Market or the Nasdaq Stock Market, the
average of the highest bid and lowest asked prices on each such trading day in
the domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization. For purposes of
this Section 2.9(d), a "trading day" means a day on which the principal national
securities exchange on which such securities are listed or admitted to trading,
or the Nasdaq National Market or the Nasdaq Stock Market, as applicable, if such
securities are not listed or admitted to trading on any national securities
exchange, is open for the transaction of business (unless such trading shall
have been
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suspended for the entire day) or, if such securities are not listed or admitted
to trading on any national securities exchange, the Nasdaq National Market or
the Nasdaq Stock Market, any Business Day. For purposes of determining the
"average trading price" of any securities, (i) the applicable sales price or bid
and asked prices of such securities on any day prior to any "ex-dividend" date
or any similar date occurring prior to the closing of the purchase of
Registrable Securities pursuant to this Section 2.9 for any dividend or
distribution (other than a dividend or distribution contemplated by clause
(ii)(B) of this sentence) paid or to be paid with respect to such securities
shall be reduced by the fair value of the per share amount of such dividend or
distribution and (ii) the applicable sales price or bid and asked prices of such
securities on any day prior to (A) the effective date of any subdivision (by
stock split or otherwise) or combination (by reverse stock split or otherwise)
of outstanding shares of such securities occurring prior to the closing of the
purchase of Registrable Securities pursuant to this Section 2.9 or (B) any
"ex-dividend" date or any similar date occurring prior to the closing of the
purchase of Registrable Securities pursuant to this Section 2.9 for any dividend
or distribution with respect to such securities to be made in shares of such
securities or securities that are convertible, exchangeable, or exercisable for
shares of Common Stock shall be appropriately adjusted, as determined by the
Board of Directors of Charter, to reflect such subdivision, combination,
dividend, or distribution.
(e) The closing of the purchase and sale of such Registrable Securities
shall take place on a date determined by Charter and set forth in the notice of
its election pursuant to Section 2.9(a) which shall not be fewer than seven nor
more than thirty days after the date of Charter's notice of its election
pursuant to Section 2.9(a)
(f) An election by Charter pursuant to this Section 2.9 shall not
affect the number of Demand Registrations to which the Stockholders are entitled
under Section 2.1.
3. Incidental Registration.
3.1 Notice of Incidental Registration.
(a) Subject to Section 3.1(b) and Section 3.1(c), if Charter at any
time proposes to register under the Securities Act any shares of the same class
as any of the Registrable Securities (whether in an underwritten public offering
or otherwise and whether or not for the account of Charter or for any
stockholder of Charter, including Selling Stockholders registering Registrable
Securities in a Demand Registration pursuant to Section 2.2), in a manner that
would permit the registration under the Securities Act of Registrable Securities
for sale to the public, Charter will give written notice to each Stockholder of
its intention to do so not later than ten days prior to the anticipated filing
date of the applicable Registration Statement. If the proposed registration is
intended to be a Demand Registration, Charter shall give the notice described in
the preceding sentence but only to the Stockholders that did not previously
elect to become Demanding Stockholders pursuant to Section 2.2 with respect to
such registration. Any Stockholder may elect to participate in such registration
on the same basis as the planned method of distribution contemplated by the
proposed registration by delivering written notice of its election to Charter
within five days after its receipt of Charter's notice pursuant to this Section
3.1(a). A Stockholder's election pursuant to this Section 3.1(a) must (i)
specify the amount of Registrable Securities desired to be included in such
registration by such Stockholder and (ii) include any other information that
Charter reasonably requests be included in such registration
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statement. Upon its receipt of a Stockholder's election pursuant to this Section
3.1(a), Charter will, subject to Section 3.2, use its reasonable best efforts to
include in such registration all Registrable Securities requested to be
included. Any registration of Registrable Securities pursuant to this Section 3
is referred to as an "Incidental Registration."
(b) Charter shall have no obligation under this Section 3 with respect
to any registration effected pursuant to a registration statement on Form S-4
(or any other registration statement registering shares issued in a merger,
consolidation, acquisition, or similar transaction) or Form S-8 or any successor
or comparable forms, or a registration statement filed in connection with an
exchange offer or any offering of securities solely to Charter's existing
stockholders or otherwise pursuant to a dividend reinvestment plan, stock
purchase plan, or other employee benefit plan.
(c) Charter shall have no obligation under this Section 3 with respect
to any registration initiated by Xxxxx if the applicable registration rights
agreement between Charter and Xxxxx prohibits the inclusion in such registration
of securities other than those offered by Xxxxx.
(d) Solely for purposes of this Section 3, Rule 144-Eligible Securities
will not be deemed to be Registrable Securities, and any Stockholder owning any
Rule 144-Eligible Securities will have no rights to require an Incidental
Registration of its Rule 144-Eligible Securities, in the case of any
registration in which no stockholder of Charter has the right to include any
securities that could then be sold by such stockholder without registration
under the Securities Act pursuant to Rule 144 (or any successor provision) under
the Securities Act (regardless of whether any such stockholder elects to include
such securities in such registration).
3.2 Limitation on Inclusion of Registrable Securities; Priorities. If
the proposed method of distribution in connection with an Incidental
Registration is an underwritten public offering and the lead managing
underwriter thereof determines in good faith that the amount of securities to be
included in such offering would adversely affect such offering (including an
adverse effect on the price at which the securities proposed to be registered
may be sold), the amount of securities to be offered may be reduced or limited
to the extent necessary to reduce the total number of securities to be included
in such offering to the amount recommended by the lead managing underwriter as
follows:
(a) in connection with an offering initiated by Charter, if securities
are being offered for the account of other Persons (including any Stockholders)
such reduction shall be made:
(i) first, from the securities intended to be offered by such
other Persons (including any Stockholders), on a pro rata basis, based on the
number of Registrable Securities and other securities that are requested to be
included in such offering; and
(ii) last, from the number of securities to be offered for the
account of Charter;
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(b) in connection with an offering initiated by a Third-Party Demand
Stockholder, such reduction shall be made:
(i) first, from securities held by Persons who are not
Stockholders, Third-Party Demand Stockholders, or other stockholders entitled
under any agreements between them and Charter to participate pari passu with the
Selling Stockholders in such Incidental Registration, and from securities being
offered for the account of Charter, allocated between Charter and such other
Persons as Charter may determine, subject to any agreements between Charter and
such other Persons;
(ii) second, from the number of Registrable Securities
requested to be included in such offering by the Selling Stockholders and any
other stockholders entitled under any agreements between them and Charter to
participate pari passu with the Selling Stockholders in such Incidental
Registration, on a pro rata basis, based on the number of Registrable Securities
and other securities which are requested to be included in the registration; and
(iii) last, from securities being offered by the Third-Party
Demand Stockholders.
(c) For purposes of Section 3.2(b), the rights of the Stockholders
shall rank pari passu with the incidental rights of the stockholders pursuant to
the Falcon Registration Rights Agreements (except to the extent that such other
stockholders are Third-Party Demand Stockholders).
3.3 Delay or Withdrawal of Registration. Charter may, without the
consent of any Stockholder, delay, suspend, abandon, or withdraw any proposed
registration in which any Stockholder has requested inclusion of such
Stockholder's Registrable Securities pursuant to this Section 3.
3.4 Withdrawal by Selling Stockholder. Each Selling Stockholder may, no
less than five Business Days before the anticipated effective date of the
applicable Registration Statement for an Incidental Registration, withdraw some
or all of its Registrable Securities from inclusion in the Registration
Statement. No such withdrawal shall relieve any withdrawing Selling Stockholder
of its obligation to pay expenses incurred solely with respect to such withdrawn
Registrable Securities.
3.5 Underwriters; Underwriting Agreement. In connection with any
Incidental Registration involving an underwritten public offering of securities
for the account of Charter or a Third-Party Demand Stockholder, (a) the managing
and lead underwriters shall be selected by Charter, unless otherwise provided in
any agreement between Charter and any Third-Party Demand Stockholder, and (b)
each Selling Stockholder electing to participate in the Incidental Registration
shall, as a condition to Charter's obligation under this Section 3 to include
such Selling Stockholder's Registrable Securities in such Incidental
Registration, enter into and perform its obligations under an underwriting
agreement or other similar arrangement in customary form with the managing
underwriter of such offering.
4. Obligations with Respect to Registration.
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4.1 Obligations of Charter. Whenever Charter is obligated by the provisions
of this Agreement to effect the registration of any Registrable Securities under
the Securities Act, Charter shall:
(a) Subject to the provisions of Section 4.2, use its reasonable best
efforts to cause the applicable Registration Statement to become effective as
promptly as practicable, and to prepare and file with the SEC any amendments and
supplements to the Registration Statement and to the Prospectus used in
connection therewith as may be necessary to keep the Registration Statement and
the Prospectus effective, current, and in compliance with the provisions of the
Securities Act, during the periods when Charter is required by this Agreement to
keep the Registration Statement effective and current.
(b) Within a reasonable time not to exceed ten Business Days prior to
filing a Registration Statement or Prospectus or any amendment or supplement
thereto (other than any amendment or supplement in the form of a filing that
Charter makes pursuant to the Exchange Act), furnish to each Selling Stockholder
and each underwriter, if any, of the Registrable Securities covered by such
Registration Statement copies of such Registration Statement or Prospectus as
proposed to be filed, which documents will be subject to the reasonable review
and comments of the Selling Stockholders (and their respective counsel) during
such period, and Charter will not file any Registration Statement or any
Prospectus or any amendment or supplement thereto containing any statements with
respect to any Selling Stockholder or the distribution of the Registrable
Securities to be included in such Registration Statement for sale by such
Selling Stockholder if such Selling Stockholder reasonably objects in writing.
Thereafter, Charter will furnish to each Selling Stockholder and each
underwriter, if any, such number of copies of such Registration Statement, each
amendment and supplement thereto (in each case including all exhibits thereto
and any documents incorporated by reference), the Prospectus included in such
Registration Statement (including each preliminary Prospectus), and such other
documents as such Selling Stockholder or underwriter may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by such
Selling Stockholder.
(c) After the filing of the Registration Statement, promptly notify
each Selling Stockholder of the effectiveness thereof and of any stop order
issued or threatened by the SEC and take all reasonable actions required to
prevent the entry of such stop order or to remove it at the earliest possible
moment if entered and promptly notify each Selling Stockholder of the lifting or
withdrawal of any such order.
(d) Immediately notify each Selling Stockholder holding Registrable
Securities covered by the applicable Registration Statement at any time when a
Prospectus relating thereto is required to be delivered under the Securities
Act, of (i) the determination that a Material Event exists or (ii) the
occurrence of an event requiring the preparation of a supplement or amendment to
such Prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such Prospectus will not contain an 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, in light of the circumstances in
which they were made, not misleading and promptly make available to such Selling
Stockholder any such supplement or amendment, and subject to the provisions of
this Agreement regarding the existence of a Material Event, Charter will
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promptly prepare and furnish to each such Selling Stockholder a supplement to or
an amendment of such Prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus will not contain any
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
(e) Enter into customary agreements (including an underwriting
agreement in customary form including customary indemnification provisions) and
perform its obligations under any such agreements and shall take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities.
(f) Make available for inspection by any Selling Stockholder covered by
such Registration Statement, any underwriter selected by the Stockholder
Representative pursuant to Section 2.3 participating in any disposition pursuant
to such Registration Statement, and any attorney, accountant, or other
professional retained by any such Selling Stockholder or underwriter, all
financial and other records, pertinent corporate documents, and properties of
Charter as shall be reasonably necessary to enable them to exercise their due
diligence responsibility in connection therewith, and cause Charter's officers,
directors, and employees to supply all information reasonably requested by any
of such Persons in connection with such Registration Statement. Information that
Charter determines, in good faith, to be confidential and notifies such Persons
is confidential shall not be disclosed by such Persons unless (i) the release of
such information is ordered pursuant to a subpoena or other order from a court,
or other governmental agency or tribunal, of competent jurisdiction or (ii) such
information becomes public other than through a breach by such Persons of the
confidentiality obligations of such Persons. Each Selling Stockholder agrees
that information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any transactions in
the securities of Charter or for any other purpose unless and until such
information is made generally available to the public.
(g) Furnish, in the case of an underwritten public offering, to each
Selling Stockholder and to each underwriter a signed counterpart of (i) an
opinion or opinions of in-house counsel or outside counsel, as requested by the
lead underwriter, to Charter addressed to such Selling Stockholder and
underwriters (on which opinion both such Selling Stockholder and each such
underwriter shall be entitled to rely) and (ii) a comfort letter or comfort
letters from Charter's independent public accountants, each in customary form
and covering such matters of the type customarily covered by opinions or comfort
letters, as the case may be, as the Stockholder Representative or the managing
underwriter therefor reasonably requests.
(h) Register or qualify the Registrable Securities covered by a
Registration Statement under the securities or blue sky laws of such United
States jurisdictions as the Stockholder Representative shall reasonably request,
and do any and all other acts and things which may be necessary to enable each
Selling Stockholder to consummate the disposition in such jurisdictions of such
Registrable Securities in accordance with the method of distribution described
in such Registration Statement; provided, however, that Charter shall not be
required (i) to qualify to do business as a foreign corporation in any
jurisdiction where it is not otherwise required to be so qualified, (ii) to
conform its capitalization or the composition of its assets at the time to the
securities or blue sky laws of such jurisdiction, (iii) to execute or file any
general
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consent to service of process under the laws of any jurisdiction, or (iv) to
subject itself to taxation in any jurisdiction where it has not theretofore done
so.
(i) Use its reasonable best efforts to (i) cause such
Registrable Securities covered by a Registration Statement to be listed on the
principal exchange or exchanges or qualified for trading on the principal
over-the-counter market or listed on the automated quotation market on which
securities of the same class and series as the Registrable Securities (or into
which such Registrable Securities will be or have been converted) are then
listed, traded, or quoted upon the sale of such Registrable Securities pursuant
to such Registration Statement and (ii) provide a transfer agent and registrar
for such Registrable Securities covered by such Registration Statement not later
than the effective date of such Registration Statement.
(j) Make and keep information publicly available relating to Charter so
as to satisfy the requirements of Rule 144 under the Securities Act (or any
successor or corresponding rule) and file with the SEC all reports and other
documents required of Charter under the Securities Act and the Exchange Act in a
timely manner.
(k) Make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve
months, but not more than eighteen months, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act (provided that
Charter shall not be deemed in violation of this paragraph so long as it files
customary quarterly reports with the SEC for such period), and not file any
amendment or supplement to such Registration Statement or Prospectus to which
any of the Selling Stockholders shall have reasonably objected on the grounds
that such amendment or supplement does not comply in all material respects with
the requirements of the Securities Act.
(l) Use its reasonable best efforts to cause such Registrable
Securities covered by such Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities.
(m) Use its reasonable best efforts, subject to the other duties and
responsibilities of Charter's senior executive officers, to make available one
or more senior executive officer of Charter (the selection of whom shall be in
Charter's sole discretion) to participate with the Selling Stockholders and any
underwriters in any "road show" (which shall not involve presentations at more
than two cities) that may be reasonably requested by the Stockholders
Representative in connection with the distribution of Registrable Securities,
pursuant to a Demand Registration; provided, however, the number of "road shows"
that the Stockholders shall collectively be entitled to require Charter to
participate in pursuant to such requests shall be two.
(n) If requested by the managing underwriter or any Selling
Stockholder, promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriter or such Selling
Stockholder reasonably requests to be included therein, including, without
limitation, with respect to the number of Registrable Securities being sold by
such Selling Stockholder to such underwriter, the purchase price being
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paid therefor by such underwriter and with respect to any other terms of the
underwritten offering of the Registrable Securities to be sold in such offering;
and make all required filings of such prospectus supplement or post-effective
amendment as soon as practicable after being notified of the matters
incorporated in such prospectus supplement or post-effective amendment.
(o) Cooperate with the Selling Stockholder and the managing underwriter
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legends) representing securities to be sold under the
Registration Statement, and enable such securities to be in such denominations
and registered in such names as the managing underwriter or such Selling
Stockholder may request.
(p) Cooperate with each Selling Stockholder and each underwriter
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with the
NASD.
4.2 Selling Stockholders' Obligations. Charter's obligations under this
Agreement to a Selling Stockholder shall be conditioned upon such Selling
Stockholder's compliance with the following:
(a) Such Selling Stockholder shall cooperate with Charter in connection
with the preparation of the Registration Statement, and for so long as Charter
is obligated to keep the Registration Statement effective, such Selling
Stockholder will provide to Charter, in writing, for use in the Registration
Statement, all information regarding such Selling Stockholder, its intended
method of disposition of the applicable Registrable Securities, and such other
information as Charter may reasonably request to prepare the Registration
Statement and Prospectus covering the Registrable Securities and to maintain the
currency and effectiveness thereof.
(b) Such Selling Stockholder agrees that, upon receipt of any notice
from Charter of the happening of any event of the kind described in Section
4.1(d), such Selling Stockholder will discontinue its offering and sale of
Registrable Securities pursuant to the applicable Registration Statement until
such Selling Stockholder's receipt of either (i) notice from Charter that a
Material Event no longer exists (but for no longer than the end of the 120-day
period described in Section 2.6) or (ii) the copies of the supplemented or
amended Prospectus contemplated by Section 4.1(d), and, in either case, if so
directed by Charter, such Stockholder will deliver to Charter all copies in its
possession of the most recent Prospectus covering such Registrable Securities at
the time of receipt of such notice. In the event Charter shall give any such
notice, the period mentioned in clause (ii) of Section 2.8(a) shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 4.1(d) and including the date when
each seller of Registrable Securities covered by such Registration Statement
shall have received the copies of the supplemented or amended prospectus
contemplated by Section 4.1(d).
4.3 Underwriting Agreement. Neither Charter nor any other Person may
participate in any underwritten public offering in connection with a Demand
Registration or an Incidental Registration unless such Person (i) agrees to sell
its securities on the basis provided in any underwriting arrangements approved
by the Person or Persons selecting the lead managing
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underwriters for such offering and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements, and
other documents reasonably required under the terms of such underwriting
arrangements and this Agreement.
4.4 Holdback by Charter. Charter agrees not to engage in any public
sale or distribution by it of any securities of the same class or series as the
Registrable Securities or securities convertible into, or exchangeable or
exercisable for, or the value of which relates to or is based upon, such
securities during the ten days prior to, and during the 45-day period beginning
on, the effective date of any Registration Statement filed with respect to any
public offering of Registrable Securities to the extent the lead book running
managing underwriter for such offering advises Charter in writing that a public
sale or distribution during such 45-day period (including a sale pursuant to
Rule 144 under the Securities Act) of Registrable Securities by Charter other
than pursuant to the underwritten public offering contemplated by such
Registration Statement would materially adversely impact such underwritten
public offering), except as part of such registration; provided, however, that
the limitation set forth in this Section 4.4 shall not apply: (a) to
registrations by Charter on Form S-4 or any other registration of shares issued
in a merger, consolidation, acquisition, or similar transaction or on Form S-8,
or any successor or comparable forms, or a registration statement filed in
connection with an exchange offer of securities of Charter made solely to
Charter's existing stockholders or otherwise pursuant to a dividend reinvestment
plan, stock purchase plan, or other employee benefit plan; (b) to sales by
Charter upon exercise or exchange, by the holder thereof, of options, warrants
or convertible securities; (c) to any employee benefit plan (if necessary to
allow such plan to fulfill its funding obligations in the ordinary course); or
(d) to any Demand Registration effected as a shelf registration under Rule 415
of the Securities Act. This Section 4.4 shall not limit any public sale or
distribution of any securities of Charter by any Third-Party Demand Stockholder
or any Person having the right to require that Charter include its securities in
any registration initiated by any Third-Party Demand Stockholder.
5. Expenses of Registration.
5.1 Registration Expenses. Except as provided in Section 5.2 and
Section 5.3, all Registration Expenses incurred in connection with any Demand
Registration or Incidental Registration and the distribution of any Registrable
Securities in connection therewith shall be borne by Charter. For purposes of
this Agreement, the term "Registration Expenses" means all:
(a) registration, application, filing, listing, transfer, and registrar
fees,
(b) NASD fees and fees and expenses of registration or qualification of
Registrable Securities under state securities or blue sky laws
(c) printing expenses (or comparable duplication expenses), delivery
charges, and escrow fees,
(d) fees and disbursements of counsel for Charter,
(e) fees and expenses for independent certified public accountants
retained by Charter (including the expenses of any comfort letters or costs
associated with the delivery by independent certified public accountants of a
comfort letter or comfort letters),
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(f) fees and expenses of any special experts retained by Charter in
connection with such registration;
(g) reasonable fees and disbursements of underwriters and
broker-dealers customarily paid by issuers or sellers of securities, and
(h) fees and expenses of listing the Registrable Securities on a
securities exchange or over-the-counter market; and
(i) all fees and disbursements of one counsel for all such Selling
Stockholders as a group attributable to the registration and sale of the
Registrable Securities of such Selling Stockholders included in such
registration.
5.2 Selling Stockholder Expenses. Each Selling Stockholder shall pay
all stock transfer fees or expenses (including the cost of all transfer tax
stamps), if any, all underwriting or brokerage discounts and commissions and all
fees and disbursements of counsel for such Selling Stockholder (other than the
one counsel described in Section 5.1(i)) attributable to the distribution of the
Registrable Securities of such Selling Stockholder included in such
registration.
5.3 Internal Expenses of Charter. Notwithstanding any other provision
of this Agreement, Charter shall be obligated to bear all internal expenses of
Charter in connection with any Demand Registration or Incidental Registration
(including all salaries and expenses of its officers and employees performing
accounting and legal functions and related expenses).
6. Indemnification.
6.1 By Charter. Charter agrees to indemnify and hold harmless each
Stockholder Indemnified Party from and against any Losses, joint or several, to
which such Stockholder Indemnified Party may become subject under the Securities
Act, the Exchange Act, state securities or blue sky laws, common law or
otherwise, insofar as such Losses (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of a material
fact contained in the applicable Registration Statement or Prospectus, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and Charter will
reimburse each such Stockholder Indemnified Party for any reasonable fees and
expenses of outside legal counsel for such Stockholder Indemnified Parties, or
other expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such claims; provided, however, that Charter will
not indemnify or hold harmless any Stockholder Indemnified Party from or against
any such Losses (including any related expenses) to the extent such Losses
(including any related expenses) result from an untrue statement, omission or
allegation thereof which were (a) made in reliance upon and in conformity with
written information provided by or on behalf of the applicable Selling
Stockholder specifically and expressly for use or inclusion in the applicable
Registration Statement or Prospectus or (b) made in any Prospectus used after
such time as Charter advised such Selling Stockholder that the filing of a
post-effective amendment or supplement thereto was required, except that this
proviso shall not apply if the untrue statement, omission, or allegation
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thereof is contained in the Prospectus as so amended or supplemented. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Stockholder Indemnified Parties and shall survive
the transfer of such securities by the Selling Stockholders.
6.2 By Selling Stockholders. Each Selling Stockholder, individually and
not jointly, agrees to indemnify and hold harmless each Charter Indemnified
Party and each other Stockholder Indemnified Party from and against any Losses,
joint or several, to which such Charter Indemnified Party or any other
Stockholder Indemnified Party may become subject, insofar as such Losses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the applicable
Registration Statement or the Prospectus, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, if the statement or omission was made in reliance upon and
in conformity with written information provided by or on behalf of such Selling
Stockholder or any Person who controls such Selling Stockholder specifically and
expressly for use or inclusion in the applicable Registration Statement or
Prospectus; provided, however, that such Selling Stockholder will not indemnify
or hold harmless any Charter Indemnified Party or other Stockholder Indemnified
Party from or against any such Losses (including any related expenses) (a) to
the extent the untrue statement, omission, or allegation thereof upon which such
Losses (including any related expenses) are based was made in any Prospectus
used after such time as such Selling Stockholder advised Charter that the filing
of a post-effective amendment or supplement thereto was required, except the
Prospectus as so amended or supplemented, or (b) in an amount that exceeds the
net proceeds received by such Selling Stockholder from the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity shall remain
in full force and effect regardless of any investigation by or on behalf of
Charter Indemnified Parties or the Stockholder Indemnified Parties, and shall
survive the transfer of such securities by the Selling Stockholder.
6.3 Procedures. Each Indemnified Party shall give notice to each
Indemnifying Party promptly after such Indemnified Party has actual knowledge of
any claim as to which indemnity may be sought, and the Indemnifying Party may
participate at its own expense in the defense, or if it so elects, assume the
defense of any such claim and any action or proceeding resulting therefrom,
including the employment of counsel and the payment of all expenses; provided
that such counsel shall be reasonably satisfactory to the Indemnified Party. The
failure of any Indemnified Party to give notice as provided in this Section 6.3
shall not relieve the Indemnifying Party from its obligations to indemnify such
Indemnified Party, except to the extent the Indemnified Party's failure to so
notify actually prejudices the Indemnifying Party's ability to defend against
such claim, action, or proceeding. If the Indemnifying Party elects to assume
the defense in any action or proceeding, an Indemnified Party shall have the
right to employ separate counsel in such action or proceeding and to participate
in the defense thereof, but such Indemnified Party shall pay the fees and
expenses of such separate counsel unless (a) the Indemnifying Party has agreed
to pay such fees and expenses, or (b) the named parties to any such action or
proceeding (including any impleaded parties) include such Indemnified Party and
the Indemnifying Party, and such Indemnified Party shall have been advised by
counsel that there is or would be a conflict of interest between such
Indemnified Party and the Indemnifying Party in the conduct of the defense of
such action (in which case, if such
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Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not assume the defense of such action or proceeding on
such Indemnified Party's behalf) or (c) the Indemnifying Party shall not have
employed counsel reasonably satisfactory to the Indemnified Party to represent
the Indemnified Party within a reasonable time after notice of the institution
of such claim. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of the Indemnified Party (which
consent will not be unreasonably withheld), consent to entry of any judgment, or
enter into any settlement that does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect to such claim or litigation.
6.4 Contribution. If the indemnification provided for under this
Section 6 is unavailable to or insufficient to hold the Indemnified Party
harmless under Section 6.1 or Section 6.2 above in respect of any Losses
referred to therein for any reason other than as specified therein, then the
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party, on the one
hand, and such Indemnified Party, on the other, in connection with the
statements or omissions that resulted in such Losses. The relative fault of each
Indemnifying Party or Indemnified Party, as the case may be, shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by (or that was failed to be
supplied by) such Indemnifying Party or Indemnified Party, such party's relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
6.5 Other Indemnification. Indemnification similar to that specified in
the preceding provisions of Section 6.1 (mutatis mutandis) shall be given by
Charter and each seller of Registrable Securities to the applicable Indemnified
Parties with respect to any required registration or other qualification of
securities under any federal or state law or regulation or governmental
authority other than the Securities Act.
7. Limitation on Other Registration Rights. Charter shall not grant to
any Person any demand registration right, incidental registration right, or
other right that would conflict with any of the rights granted to Stockholders
herein.
8. Miscellaneous.
8.1 Notices.
(a) All notices, requests, demands, waivers, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given if delivered personally, mailed, certified or registered mail with postage
prepaid, or sent by reliable overnight courier, or facsimile transmission, to
the address or facsimile number specified for the applicable party on Schedule A
attached to this Agreement, or to such other Person, address, or facsimile
number as any party shall specify by notice in writing to the other parties.
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(b) Any notice or other communication to a party in accordance with the
provisions of this Agreement shall be deemed to have been given (i) three
Business Days after it is sent by certified or registered mail, postage prepaid,
return receipt requested, (ii) upon receipt when delivered by hand or
transmitted by facsimile (confirmation received), or (iii) one Business Day
after it is sent by a reliable overnight courier service, with acknowledgment of
receipt requested. Notwithstanding the preceding sentence, notice of change of
address shall be effective only upon actual receipt thereof.
8.2 Amendment. Any provision of this Agreement may be amended or
modified in whole or in part at any time by an agreement in writing among
Charter and each Stockholder, executed in the same manner as this Agreement. No
consent, waiver, or similar act shall be effective unless in writing.
8.3 Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto and supersedes all prior agreements and understandings,
oral and written, among the parties hereto with respect to the subject matter
hereof.
8.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
8.5 Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of New York, without giving
effect to principles of conflicts of laws.
8.6 Assignment.
(a) Except as expressly provided in this Section 8.6, the rights of the
parties hereto cannot be transferred or assigned and any purported assignment or
transfer to the contrary shall be void ab initio. So long as the terms of this
Section 8.6 are followed, any Stockholder may transfer any of its rights under
this Agreement, without the consent of Charter, to any Person to whom such
holder transfers any Registrable Securities or any rights to acquire Registrable
Securities, whether such transfer is by sale, gift, assignment, pledge, or
otherwise:
(i) If the IPO has occurred or no Put Default has occurred
with respect to such transferring Stockholder, then so long as (x) such transfer
is not made pursuant to an effective Registration Statement or pursuant to Rule
144 or Rule 145 (or any successor provisions) under the Securities Act or in any
other manner the effect of which is to cause the transferred securities to be
freely transferable without regard to the volume and manner of sale limitations
set forth in Rule 144 (or any successor provision) in the hands of the
transferee as of the date of such transfer; and (y) such transfer is made to a
Permitted Transferee.
(ii) If the IPO has not occurred and a Put Default has
occurred with respect to such transferring Stockholder, then so long as (x) such
transfer is not made pursuant to an effective Registration Statement or into the
public market pursuant to Rule 144 or Rule 145 (or any successor provisions)
under the Securities Act; and (y) such transfer is made to a Permitted
Transferee.
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(b) Notwithstanding Section 8.6(a), unless the IPO has not occurred and
a Put Default has occurred with respect to such Stockholder, no Stockholder may
assign any of its rights under this Agreement to any Person to whom such
Stockholder transfers any Registrable Securities unless the transfer of such
Registrable Securities did not require registration under the Securities Act.
(c) The nature and extent of any rights assigned shall be as agreed to
between the assigning party and the assignee. No Person may be assigned any
rights under this Agreement unless Charter is given written notice by the
assigning party at the time of such assignment stating the name and address of
the assignee, identifying the securities of Charter as to which the rights in
question are being assigned, and providing a detailed description of the nature
and extent of the rights that are being assigned. Any assignee hereunder shall
receive such assigned rights subject to all the terms and conditions of this
Agreement, including the provisions of this Section 8.6. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
8.7 Binding Agreement; No Third Party Beneficiaries. This Agreement
will be binding upon and inure to the benefit of the parties hereto and their
successors and permitted assigns. Except as set forth herein and by operation of
law, no party to this Agreement may assign or delegate all or any portion of its
rights, obligations, or liabilities under this Agreement without the prior
written consent of each other party to this Agreement.
[Signature page follows.]
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IN WITNESS WHEREOF, Charter and each of the other parties hereto has
executed this Agreement as of the date first above written.
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EXHIBIT H
PUT AGREEMENT
This Put Agreement ("Agreement") is made as of June 29, 1999, by and
between Vulcan Ventures Inc., a Washington corporation ("Vulcan"), and the party
set forth on the third signature page hereto (the "Holder"), with reference to
the following facts:
A. Charter Communications Holding Company, LLC ("Charter LLC") is a
party to that certain Purchase and Contribution Agreement (the "Purchase
Agreement") of even date herewith, pursuant to which Charter LLC has agreed to
acquire, subject to the terms and conditions set forth therein, all of the
outstanding equity of Bresnan Communications Company Limited Partnership.
B. Vulcan is an entity controlled by Xxxx X. Xxxxx ("Xxxxx"), who is
the controlling stockholder of Charter LLC's parent company.
C. Under the Purchase Agreement, the Holder has agreed to acquire,
subject to the terms and conditions set forth therein, units of limited
liability company interests in Charter LLC, which are exchangeable for shares of
common stock of the entity through which Charter Communications, Inc. effects an
initial public offering of indirect equity interests in Charter LLC
("PublicCo").
D. As an inducement for the Holder to enter into the Purchase
Agreement, Charter LLC agreed that Xxxxx would grant the Holder a put option
substantially in the form of the Put Option Agreement attached hereto as Exhibit
A (the "Xxxxx Put"), and the execution and delivery of the Xxxxx Put by Xxxxx is
a condition to closing under the Purchase Agreement.
E. Pending the delivery of the originally executed Xxxxx Put to Xxxxxxx
& Xxxxxx L.L.C. or such other escrow agent reasonably acceptable to the parties
(the "Escrow Agent") or to the Holder, Vulcan has agreed to execute and deliver
this Agreement to the Escrow Agent.
F. Upon the delivery of the originally executed Xxxxx Put to the Escrow
Agent or to the Holder, this Agreement shall terminate, all obligations and
liabilities of Vulcan hereunder shall immediately terminate, and this Agreement
shall be returned to Vulcan.
NOW, THEREFORE, in consideration of the respective covenants and
agreements of the parties and the Holder's entering into the Purchase Agreement
and for other good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged by each party), the parties hereby agree as
follows:
1. Definitions. Capitalized terms not otherwise defined herein have the
meanings ascribed to such terms in the Purchase Agreement. As used in this
Agreement, the following terms have the following meanings:
"Base Price" means the amount of the Equity Consideration divided by
the aggregate number of Put Units of Charter LLC issued to the Sellers under the
Purchase Agreement, as such number of Put Units may be increased or decreased
following the
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closing under the Purchase Agreement in accordance with Paragraph C or D of
Exhibit I to the Purchase Agreement (LLC Unit Formula Term Sheet).
"Exchange Agreement" means the exchange agreement entered into in
accordance with Section 5.16 of the Purchase Agreement.
"Fair Market Value" means the fixed cash price at which a willing
seller would sell and a willing buyer would buy, as of the date of exercise of
the Put Option, all of the common equity of Charter LLC (or its successor)
having full knowledge of all material facts, in an arm's length transaction with
the expectation of concluding the purchase and sale within a reasonable time on
the basis of an agreement containing customary terms and conditions. Section 3.4
describes the procedure for determining Fair Market Value.
"IPO" shall mean the consummation of a bona fide firm commitment
underwritten public offering of the common stock of PublicCo involving aggregate
gross proceeds of at least $500 million, or a series of such offerings with
gross proceeds aggregating to at least $500 million.
"Permitted Bresnan Transferee" shall mean (i) any affiliate of
Xxxxxxx Xxxxxxx ("WBresnan") that is, directly or indirectly, at least 80% owned
or controlled by WBresnan, (ii) WBresnan's spouse and descendants (including
spouses of his descendants), any trust established solely for the benefit of any
of the foregoing individuals, or any partnership or other entity at least 80%
owned or controlled directly or indirectly by any of the foregoing persons, or
(iii) WBresnan.
"Permitted Transferee" means (1) if the Holder is TCI Bresnan LLC or
TCID of Michigan, Inc., any entity controlled by AT&T Corp.; (2) if the Holder
is BCI (USA), LLC or Xxxxxxx X. Xxxxxxx, any Permitted Bresnan Transferee; and
(3) if the Holder is Blackstone BC Capital Partners, L.P., Blackstone BC
Offshore Capital Partners, L.P., or Blackstone Family Investment Partnership III
L.P. then the Holder shall have no Permitted Transferees.
"Put Unit" means, initially, one unit of Charter LLC delivered to
the initial Holder at the closing of the transactions contemplated by the
Purchase Agreement and, after the closing under the Purchase Agreement, any
additional or other interests, securities or other property received or
receivable in respect of that which immediately prior to the relevant event
comprised a Put Unit, whether as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, subdivision, combination,
stock split, stock dividend, or other similar transaction, including without
limitation shares of common stock of PublicCo received in respect of a Put Unit
in accordance with the Exchange Agreement. Notwithstanding the foregoing, in the
event additional units of Charter LLC are issued to the Holder (or the Holder
surrenders Units to Charter LLC) following the closing under the Purchase
Agreement in accordance with Exhibit I to the Purchase Agreement (LLC Unit
Formula Term Sheet), such issuance (or surrender) will result in additional (or
fewer) Put Units being outstanding (rather than adjusting that which is deemed
to comprise a single Put Unit). By way of example, if after the Holder received
10,000 units of Charter LLC at the closing of the Purchase Agreement, Charter
LLC terminated a pending acquisition and was obligated under the Purchase
Agreement to issue to the Holder an additional 2,000 units,
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then the Holder would own 12,000 Put Units, each consisting of one Charter LLC
unit. If each unit of Charter LLC were subsequently exchanged for 10 shares of
PublicCo common stock, then the Holder would own 12,000 Put Units, each
consisting of 10 shares of common stock. If the Holder then transferred 30,000
shares of PublicCo common stock to a Permitted Transferee, the Holder would then
own 9,000 Put Units, each consisting of 10 shares of common stock.
2. Put Option. Vulcan hereby grants to the Holder, effective upon the
closing of the transactions contemplated by the Purchase Agreement and the
issuance of the Put Units and subject to the terms and conditions set forth
herein, the right and option (the "Put Option"), exercisable by delivery of
written notice to Vulcan during the Put Period (as defined in Section 7), to
sell to Vulcan or its assignee, any or all of the Holder's Put Units. Upon the
giving of such notice, Vulcan shall be obligated to buy or to cause its assignee
to buy and the Holder shall be obligated to sell the Holder's Put Units as to
which the Put Option has been exercised, at the price and upon the terms and
conditions specified in Section 3. This Put Option may not be exercised more
than once.
3. Purchase Price; Closing.
3.1 The purchase price per Put Unit to be paid upon the exercise of
the Put Option (the "Purchase Price") shall be equal to:
(a) if an IPO has not occurred prior to the exercise of the
Put Option, the higher of (i) the Base Price, and (ii) the value of such Put
Unit based on such Put Unit's proportionate share of Fair Market Value; or
(b) if an IPO has occurred prior to the exercise of the Put
Option, the Base Price, plus four and one-half percent (4.5%) thereof per year,
compounded annually, for the period from the date of the closing under the
Purchase Agreement through the closing of the purchase and sale of the Put Units
hereunder (the "Closing").
3.2 The Purchase Price and the liabilities of Charter LLC and its
non-corporate Subsidiaries attributable to any Put Unit purchased pursuant to
this Put Agreement (together the "Purchase Consideration") shall be allocated
among the portions of the assets of Charter LLC and its non-corporate
Subsidiaries (to the extent applicable) attributable to the Put Unit in an
allocation agreement (the "Allocation Agreement") to be prepared in accordance
with the rules under Sections 743(b), 751, 755 and 1060 of the Internal Revenue
Code. The parties agree that the Purchase Consideration shall be allocated among
the assets of Charter LLC and its non-corporate subsidiaries by allocating an
amount to the portion of the tangible assets of Charter LLC and its
non-corporate subsidiaries attributable to the Put Unit equal to the portion of
the book value for financial statement purposes of such tangible assets
attributable to the Put Unit, allocating an amount to the portions of the stock
of the corporate subsidiaries of Charter LLC attributable to the Put Unit equal
to their fair value as reasonably determined by Charter LLC and allocating the
remainder to the portion of the franchises of Charter LLC and its non-corporate
subsidiaries attributable to the Put Unit. Vulcan shall deliver a draft of the
Allocation Agreement to the Holder within thirty (30) days after the Closing and
Vulcan and Holder shall mutually agree upon the Allocation Agreement. Neither
Vulcan nor Holder shall unreasonably withhold its approval and
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consent with respect to the Allocation Agreement. Unless otherwise required by
applicable law, Vulcan and Holder agree to act, and cause their respective
affiliates to act, in accordance with the computations and allocations contained
in the Allocation Agreement in any relevant tax returns or similar filings
(including any forms or reports required to be filed pursuant to Section 1060 of
the Code ("1060 Forms")), to cooperate in the preparation of any 1060 Forms, to
file such 1060 Forms in the manner required by applicable law and to not take
any position inconsistent with such Allocation Agreement upon examination of any
tax refund or refund claim, in any litigation or otherwise.
3.3 At the Closing, (a) Vulcan or its assignee shall pay to the Holder
the Purchase Price (or, if the next sentence applies, the Base Price) in
immediately available funds by wire transfer or certified bank check; and (b)
the Holder shall deliver to Vulcan or its assignee one or more certificates
evidencing the Put Units to be purchased and sold at the Closing (if such Put
Units are certificated securities), together with duly executed assignments
separate from certificate in form and substance sufficient to effectuate the
transfer of such Put Units to Vulcan or its assignee, together with a
certificate of the Holder and its Permitted Transferee, if applicable,
reaffirming the representations in Section 4. Notwithstanding the foregoing, if
the Purchase Price per Put Unit is to be calculated pursuant to Section 3.1
above and if the Fair Market Value has not been determined by the Closing, then
only the Base Price shall be paid at the Closing. Within 30 days after the date
that the Fair Market Value has been determined in accordance with the terms of
this Agreement, Vulcan or its assignee shall pay to the Holder, for each Put
Unit purchased, the excess (if any) of the Purchase Price over the Base Price in
immediately available funds by wire transfer or certified bank check.
3.4 The Closing shall be held at the offices of Irell & Xxxxxxx LLP in
Los Angeles, California, on a business day selected by Vulcan (as to which
prompt written notice is to be given to the Holder) no later than 90 days after
the delivery of notice that the Put Option is being exercised, or at such other
time and place as the Holder and Vulcan may agree. The Holder and Vulcan will
cooperate so as to permit all documents required to be delivered at the Closing
to be delivered by mail, delivery service or courier without requiring either
party or his or its representatives to be physically present at the Closing.
3.5 Fair Market Value.
(a) At the request of a Holder in connection with its exercise of
the Put Option, Vulcan and such Holder will attempt to agree on Fair Market
Value. If they are unable to agree on Fair Market Value within 10 days of such
request, then Vulcan and the Holder will each select within two business days
after the end of such 10 day period a qualified appraiser, and such selected
appraisers will, within 20 days of their selection, render their respective
determinations of Fair Market Value. Such determinations will be delivered
concurrently, so that Vulcan and the Holder will each learn at the same time the
determination of the other's appraiser.
(b) If the Fair Market Value reflected in the higher of the two
appraisals (the "Higher Initial Appraisal") is not greater than 105% of the Fair
Market Value reflected in the lower of the two appraisals (the "Lower Initial
Appraisal"), Fair Market Value will be the average of the two appraisals. If the
two appraisals are not within this
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range, the two appraisers will within two business days select a third qualified
appraiser to determine Fair Market Value. The third appraiser will deliver to
Vulcan and the Holder its determination of Fair Market Value within 20 days of
its selection.
(c) If the Higher Initial Appraisal is greater than 105% but not
greater than 120% of the Lower Initial Appraisal, then Fair Market Value will be
equal to the average of the two of the three appraisals that are closest to one
another (or if the highest and lowest appraisal are equidistant from the middle,
then Fair Market Value will be equal to the middle appraisal).
(d) If the Higher Initial Appraisal is greater than 120% of the
Lower Initial Appraisal, then Fair Market Value will be equal to either the
Higher Initial Appraisal or the Lower Initial Appraisal, whichever is closest to
the third appraisal (or if the Higher Initial Appraisal and the Lower Initial
Appraisal are equidistant from the third appraisal, then such Fair Market Value
will be equal to the third appraisal).
(e) Charter LLC will pay the cost of the appraisals and will
promptly make available to Vulcan, the Holder, their respective representatives
and the appraisers selected as provided above (subject to appropriate and
customary confidentiality agreements) all information concerning Charter LLC and
its finances and operations as may be reasonably requested for purposes of
determining Fair Market Value.
4. Representations of the Holder. The Holder represents and warrants to
Vulcan and any of its assignees that on the date hereof and at each Closing: (a)
the Holder has full power and authority to execute and deliver this Agreement
and consummate the transactions contemplated hereby; (b) this Agreement is the
legal, valid and binding obligation of the Holder, enforceable against the
Holder in accordance with its terms; (c) at the Closing, the Holder will own all
of the Put Units required to be purchased and sold at the Closing, both of
record and beneficially, free and clear of all liens, encumbrances or adverse
interests of any kind or nature whatsoever (including any restriction on the
right to vote, sell or otherwise dispose of the Put Units (other than
restrictions set forth in the Charter LLC Operating Agreement, those arising
under applicable law and those arising under the organizational documents of the
issuer of the Put Units)); (d) upon the transfer of the Put Units pursuant to
Section 3, Vulcan or its assignee will receive good title to the Put Units, free
and clear of all liens, encumbrances and adverse interests created by the
Holder, other than those arising under applicable law or those arising under the
organizational documents of the relevant issuer.
5. Termination of Put Option; Surrender of Put Agreement. Upon the
execution and delivery of the executed Xxxxx Put to the Escrow Agent or to the
Holder, this Agreement and all liabilities and obligations of Vulcan hereunder
shall immediately terminate and the Holder shall immediately surrender this
Agreement to Vulcan (if the Agreement has previously been delivered to the
Holder), whether or not the closing of the transactions contemplated by the
Purchase Agreement have occurred.
6. Representations of Vulcan. Vulcan represents and warrants to the
Holder and each Permitted Transferee that on the date hereof and at all times
hereafter through the Closing: (a) Vulcan has full corporate power and authority
to execute and deliver this
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Agreement and consummate the transactions contemplated hereby; (b) this
Agreement constitutes the legal, valid and binding obligation of Vulcan,
enforceable against Vulcan in accordance with its terms, except as the
enforceability of this Agreement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting
creditors' rights generally or by judicial discretion in the enforcement of
equitable remedies; and (c) its execution and delivery of this Agreement does
not, and his performance of his obligations under this Agreement will not,
violate, conflict with or constitute a breach of, or a default under, its bylaws
or articles of incorporation, or any material agreement, indenture or instrument
to which it is a party or which is binding on it, and will not result in the
creation of any lien on, or security interest in, any of its assets (other than
such violations, breaches, defaults, liens or security interests that would not
materially and adversely affect its ability to perform its obligations under
this Agreement).
7. Put Period.
7.1 The "Put Period" shall begin on the second anniversary of the
Closing under the Purchase Agreement; provided, however, if any representation
and warranty in Section 6 is or becomes untrue, the Put Period will begin at
that point. Irrespective of the date on which the Put Period begins, the Put
Period shall terminate at the close of business on the sixtieth day (or, if such
day is not a business day, the next succeeding business day) after the second
anniversary of the date of the closing under the Purchase Agreement.
7.2 Upon termination of the Put Period, this Put Option and all
rights hereunder (other than rights associated with the proper exercise of the
Put Option during the Put Period) shall immediately terminate.
7.3 The Put Option shall terminate as to any Put Units on the date
on which such Put Units are first transferred by the Holder to a person or
entity that is not a Permitted Transferee.
8. Miscellaneous.
8.1 Complete Agreement; Modifications. This Agreement constitutes
the parties' entire agreement with respect to the subject matter hereof and
supersedes all other agreements, representations, warranties, statements,
promises and understandings, whether oral or written, with respect to the
subject matter hereof. This Agreement may not be amended, altered or modified
except by a writing signed by both parties.
8.2 Additional Documents. Each party hereto agrees to execute any
and all further documents and writings and to perform such other actions which
may be or become necessary or expedient to effectuate and carry out this
Agreement.
8.3 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be sufficiently
given if delivered in person or transmitted by telecopy or similar means of
recorded electronic communication to the relevant party, addressed as follows
(or at such other address as either party shall have designated by notice as
herein provided to the other party):
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If to the Holder, to the address set forth in the Notice
provision of the Purchase Agreement.
If to Vulcan:
Xxxxxxx X. Xxxxx @ Vulcan Northwest
000 000xx Xxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
with a copy to:
Irell & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Telecopy: (000) 000-0000
Any such notice or other communication shall be deemed to have been given and
received on the day on which it is delivered or telecopied (or, if such day is
not a business day or if the notice or other communication is not telecopied
during business hours, at the place of receipt, on the next following business
day); provided, however, that any such notice or other communication shall be
deemed to have been given and received on the day on which it is sent if
delivery thereof is refused or if delivery thereof in the manner described above
is not possible because of the intended recipient's failure to advise the
sending party of a change in the intended recipient's address or telecopy
number.
8.4 No Third-Party Benefits. None of the provisions of this Agreement
shall be for the benefit of, or enforceable by, any person or entity that is not
a party to this Agreement, other than any Permitted Transferees of the Holder.
8.5 Waivers Strictly Construed. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (a) no
waiver or extension of time shall be effective unless expressly contained in a
writing signed by the waiving party; and (b) no alternation, modification or
impairment shall be implied by reason of any previous waiver, extension of time,
delay or omission in exercise or other indulgence.
8.6 Severability. The validity, legality or enforceability of the
remainder of this Agreement shall not be affected even if one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect.
8.7 Undertakings. All authority herein conferred or agreed to be
conferred upon a party to this Agreement and all agreements of a party contained
herein shall survive the death or incapacity of such party (or any of them).
8.8 Successors and Assigns. Except as provided herein to the contrary,
this Agreement shall be binding upon and shall inure to the benefit of the
parties, their respective heirs, estates, personal representatives,
conservators, successors and permitted assigns.
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8.9 Assignments.
(a) The Holder may transfer some or all of its Put Units to any
person or entity that is a Permitted Transferee, and the Holder may assign its
rights under this Agreement with respect to the transferred Put Units, without
the consent of Vulcan, to such Permitted Transferee.
(b) Upon the transfer of Put Units to any Permitted Transferee and
the assignment to such Permitted Transferee of the Holder's rights under this
Agreement with respect to the transferred Put Units, Vulcan and the Permitted
Transferee will enter into a Put Agreement in the form hereof, and Vulcan and
the Permitted Transferee will thereupon have the rights and be subject to the
obligations set forth in such Put Agreement. A Permitted Transferee may only
transfer Put Units to a person or entity who would have been "Permitted
Transferees" of the original Holder of such Put Units.
(c) Vulcan is entitled, in his sole discretion, to assign his
rights to purchase any Put Units under this Agreement to one or more entities
controlled by Vulcan and organized under the laws of the United States or any
state thereof, but no such assignment will relieve Vulcan of any of its
obligations under this Agreement.
8.10 Governing Law. This Agreement shall be governed by the laws of the
State of New York, without regard to any choice of law provisions of that state
or the laws of any other jurisdiction.
8.11 Headings. The Section headings in this Agreement are inserted only
as a matter of convenience and in no way define, limit, extend or interpret the
scope of this Agreement or of any particular Section.
8.12 Number and Gender. Throughout this Agreement, as the context may
require, (a) the masculine gender includes the feminine and neuter; and the
neuter gender includes the masculine and feminine; and (b) the singular tense
and number includes the plural, and the plural tense and number includes the
singular.
8.13 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.14 Costs. Except as otherwise provided in this Agreement, each party
will bear his or its own costs in connection with the exercise of the Holder's
right under this Agreement and the purchase and sale of any Put Units pursuant
to this Agreement.
8.15 Default. In the event of any legal action between the parties
arising out of or in relation to this Agreement, the prevailing party in such
legal action shall be entitled to recover, in addition to any other legal
remedies, all of his or its costs and expenses, including reasonable attorney's
fees, from the non-prevailing party, regardless of whether such legal action is
prosecuted to completion.
8.16 No Obligations Until Purchase Transactions Close; Termination.
Notwithstanding anything to the contrary herein, Vulcan shall have no
obligations or
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liabilities whatsoever pursuant to this Agreement prior to the closing of the
transactions contemplated pursuant to the Purchase Agreement. Upon the
termination of the Purchase Agreement, this Agreement shall immediately
terminate (without further action required by Vulcan) and Vulcan shall have no
further liabilities or obligations hereunder.
8.17 No Obligations With Respect to the Purchase Agreement. Vulcan
shall have no obligations or liabilities under the Purchase Agreement (or any
related documents or agreements, except for this Agreement) or under any claim
based on, in respect of, or by reason of, any representations, warranties,
covenants, obligations or liabilities set forth therein (collectively, "Purchase
Agreement Obligations"). By executing this Agreement, and as consideration for
Vulcan's execution of this Agreement, the Holder hereby waives and releases
Vulcan of any and all claims in respect of Purchase Agreement Obligations.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
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[FIRST SIGNATURE PAGE TO PUT OPTION]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
VULCAN VENTURES INC.
By: _________________________________
Name: Xxxxxxx X. Xxxxx
Title: Vice President
130
[SECOND SIGNATURE PAGE TO PUT OPTION]
Its signature below evidences solely the
agreement of Charter LLC to comply with its
obligations described in Section 3.5.
Charter LLC shall have no other obligations
or liabilities hereunder.
CHARTER COMMUNICATIONS
HOLDING COMPANY, LLC
By: _________________________________
Name:
Title:
131
[THIRD SIGNATURE PAGE TO PUT OPTION]
BRESNAN COMMUNICATIONS COMPANY
LIMITED PARTNERSHIP
By: BCI (USA), LLC, its General Partner
By: Bresnan Communications, Inc., its
Managing Member
By:________________________________
Name: _____________________________
Title______________________________
132
[THIRD SIGNATURE PAGE TO PUT OPTION]
BCI (USA), LLC
By: Bresnan Communications, Inc., its
Managing Member
By:________________________________
Name: _____________________________
Title______________________________
133
[THIRD SIGNATURE PAGE TO PUT OPTION]
------------------------------------
Xxxxxxx X. Xxxxxxx, individually
134
[THIRD SIGNATURE PAGE TO PUT OPTION]
TCID OF MICHIGAN, INC.
By:______________________________
Name: ___________________________
Title____________________________
135
[THIRD SIGNATURE PAGE TO PUT OPTION]
TCI BRESNAN LLC
By:_____________________________
Name: __________________________
Title___________________________
136
[THIRD SIGNATURE PAGE TO PUT OPTION]
BLACKSTONE BC CAPITAL PARTNERS L.P.
By: Blackstone Management Associates III
L.L.C., its General Partner
By:_________________________________
Name: ______________________________
Title_______________________________
137
[THIRD SIGNATURE PAGE TO PUT OPTION]
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP III L.P.
By: Blackstone Management Associates III
L.L.C., its General Partner
By:__________________________________
Name: _______________________________
Title________________________________
138
[THIRD SIGNATURE PAGE TO PUT OPTION]
BLACKSTONE BC OFFSHORE CAPITAL
PARTNERS L.P.
By: Blackstone Management Associates III
L.L.C., its Investment General Partner
By:_________________________________
Name: ______________________________
Title_______________________________
139
PUT AGREEMENT
This Put Agreement ("Agreement") is made as of June 29, 1999, by and
between Xxxx X. Xxxxx, an individual ("Xxxxx"), and the party set forth on the
third signature page hereto (the "Holder"), with reference to the following
facts:
A. Charter Communications Holding Company, LLC ("Charter LLC") is
a party to that certain Purchase and Contribution Agreement (the "Purchase
Agreement") of even date herewith, pursuant to which Charter LLC has agreed to
acquire, subject to the terms and conditions set forth therein, all of the
outstanding equity of Bresnan Communications Company Limited Partnership. Xxxxx
is the controlling stockholder of Charter LLC's parent company and expects to
derive benefit upon the closing of the transactions contemplated by the Purchase
Agreement.
B. Under the Purchase Agreement, the Holder has agreed to
acquire, subject to the terms and conditions set forth therein, units of limited
liability company interests in Charter LLC, which are exchangeable for shares of
common stock of the entity through which Charter Communications, Inc. effects an
initial public offering of indirect equity interests in Charter LLC
("PublicCo").
C. As an inducement for the Holder to enter into the Purchase
Agreement, Charter LLC agreed that Xxxxx would grant the Holder the Put Option
provided for herein, and the execution and delivery of this Agreement by Xxxxx
is a condition to the Holder's performance of its obligations under the Purchase
Agreement.
NOW, THEREFORE, in consideration of the respective covenants and
agreements of the parties and the Holder's entering into the Purchase Agreement
and for other good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged by each party), the parties hereby agree as
follows:
1. Definitions. Capitalized terms not otherwise defined herein have the
meanings ascribed to such terms in the Purchase Agreement. As used in this
Agreement, the following terms have the following meanings:
"Base Price" means the amount of the Equity Consideration
divided by the aggregate number of Put Units of Charter LLC issued to the
Sellers under the Purchase Agreement, as such number of Put Units may be
increased or decreased following the closing under the Purchase Agreement in
accordance with Paragraph C or D of Exhibit I to the Purchase Agreement (LLC
Unit Formula Term Sheet).
"Exchange Agreement" means the exchange agreement entered into
in accordance with Section 5.16 of the Purchase Agreement.
"Fair Market Value" means the fixed cash price at which a
willing seller would sell and a willing buyer would buy, as of the date of
exercise of the Put Option, all of the common equity of Charter LLC (or its
successor) having full knowledge of all material facts, in an arm's length
transaction with the expectation of concluding the purchase and sale
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within a reasonable time on the basis of an agreement containing customary terms
and conditions. Section 3.4 describes the procedure for determining Fair Market
Value.
"IPO" shall mean the consummation of a bona fide firm
commitment underwritten public offering of the common stock of PublicCo
involving aggregate gross proceeds of at least $500 million, or a series of such
offerings with gross proceeds aggregating to at least $500 million.
"Permitted Bresnan Transferee" shall mean (i) any affiliate of
Xxxxxxx Xxxxxxx ("WBresnan") that is, directly or indirectly, at least 80% owned
or controlled by WBresnan, (ii) WBresnan's spouse and descendants (including
spouses of his descendants), any trust established solely for the benefit of any
of the foregoing individuals, or any partnership or other entity at least 80%
owned or controlled directly or indirectly by any of the foregoing persons, or
(iii) WBresnan.
"Permitted Transferee" means (1) if the Holder is TCI Bresnan
LLC or TCID of Michigan, Inc., any entity controlled by AT&T Corp.; (2) if the
Holder is BCI (USA), LLC or Xxxxxxx X. Xxxxxxx, any Permitted Bresnan
Transferee; and (3) if the Holder is Blackstone BC Capital Partners, L.P.,
Blackstone BC Offshore Capital Partners, L.P., or Blackstone Family Investment
Partnership III L.P. then the Holder shall have no Permitted Transferees.
"Put Unit" means, initially, one unit of Charter LLC delivered
to the initial Holder at the closing of the transactions contemplated by the
Purchase Agreement and, after the closing under the Purchase Agreement, any
additional or other interests, securities or other property received or
receivable in respect of that which immediately prior to the relevant event
comprised a Put Unit, whether as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, subdivision, combination,
stock split, stock dividend, or other similar transaction, including without
limitation shares of common stock of PublicCo received in respect of a Put Unit
in accordance with the Exchange Agreement. Notwithstanding the foregoing, in the
event additional units of Charter LLC are issued to the Holder (or the Holder
surrenders Units to Charter LLC) following the closing under the Purchase
Agreement in accordance with Exhibit I to the Purchase Agreement (LLC Unit
Formula Term Sheet), such issuance (or surrender) will result in additional (or
fewer) Put Units being outstanding (rather than adjusting that which is deemed
to comprise a single Put Unit). By way of example, if after the Holder received
10,000 units of Charter LLC at the closing of the Purchase Agreement, Charter
LLC terminated a pending acquisition and was obligated under the Purchase
Agreement to issue to the Holder an additional 2,000 units, then the Holder
would own 12,000 Put Units, each consisting of one Charter LLC unit. If each
unit of Charter LLC were subsequently exchanged for 10 shares of PublicCo common
stock, then the Holder would own 12,000 Put Units, each consisting of 10 shares
of common stock. If the Holder then transferred 30,000 shares of PublicCo common
stock to a Permitted Transferee, the Holder would then own 9,000 Put Units, each
consisting of 10 shares of common stock.
2. Put Option. Xxxxx hereby grants to the Holder, effective upon the
closing of the transactions contemplated by the Purchase Agreement and the
issuance of the Put Units to the Holder and subject to the terms and conditions
set forth herein, the right and option (the
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"Put Option"), exercisable by delivery of written notice to Xxxxx during the Put
Period (as defined in Section 7), to sell to Xxxxx or his designee, any or all
of the Holder's Put Units. Upon the giving of such notice, Xxxxx shall be
obligated to buy or to cause his designee to buy and the Holder shall be
obligated to sell the Holder's Put Units as to which the Put Option has been
exercised, at the price and upon the terms and conditions specified in Section
3. This Put Option may not be exercised more than once.
3. Purchase Price; Closing.
3.1 The purchase price per Put Unit to be paid upon the exercise
of the Put Option (the "Purchase Price") shall be equal to:
(a) if an IPO has not occurred prior to the exercise of the
Put Option, the higher of (i) the Base Price, and (ii) the value of such Put
Unit based on such Put Unit's proportionate share of Fair Market Value; or
(b) if an IPO has occurred prior to the exercise of the Put
Option, the Base Price, plus four and one-half percent (4.5%) thereof per year,
compounded annually, for the period from the date of the closing under the
Purchase Agreement through the closing of the purchase and sale of the Put Units
hereunder (the "Closing").
3.2 The Purchase Price and the liabilities of Charter LLC and its
non-corporate Subsidiaries attributable to any Put Unit purchased pursuant to
this Put Agreement (together the "Purchase Consideration") shall be allocated
among the portions of the assets of Charter LLC and its non-corporate
Subsidiaries (to the extent applicable) attributable to the Put Unit in an
allocation agreement (the "Allocation Agreement") to be prepared in accordance
with the rules under Sections 743(b), 751, 755 and 1060 of the Internal Revenue
Code. The parties agree that the Purchase Consideration shall be allocated among
the assets of Charter LLC and its non-corporate subsidiaries by allocating an
amount to the portion of the tangible assets of Charter LLC and its
non-corporate subsidiaries attributable to the Put Unit equal to the portion of
the book value for financial statement purposes of such tangible assets
attributable to the Put Unit, allocating an amount to the portions of the stock
of the corporate subsidiaries of Charter LLC attributable to the Put Unit equal
to their fair value as reasonably determined by Charter LLC and allocating the
remainder to the portion of the franchises of Charter LLC and its non-corporate
subsidiaries attributable to the Put Unit. Xxxxx shall deliver a draft of the
Allocation Agreement to the Holder within thirty (30) days after the Closing and
Xxxxx and Holder shall mutually agree upon the Allocation Agreement. Neither
Xxxxx nor Holder shall unreasonably withhold its approval and consent with
respect to the Allocation Agreement. Unless otherwise required by applicable
law, Xxxxx and Holder agree to act, and cause their respective affiliates to
act, in accordance with the computations and allocations contained in the
Allocation Agreement in any relevant tax returns or similar filings (including
any forms or reports required to be filed pursuant to Section 1060 of the Code
("1060 Forms")), to cooperate in the preparation of any 1060 Forms, to file such
1060 Forms in the manner required by applicable law and to not take any position
inconsistent with such Allocation Agreement upon examination of any tax refund
or refund claim, in any litigation or otherwise.
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3.3 At the Closing, (a) Xxxxx or his designee shall pay to the Holder
the Purchase Price (or, if the next sentence applies, the Base Price) in
immediately available funds by wire transfer or certified bank check; and (b)
the Holder shall deliver to Xxxxx or his designee one or more certificates
evidencing the Put Units to be purchased and sold at the Closing (if such Put
Units are certificated securities), together with duly executed assignments
separate from certificate in form and substance sufficient to effectuate the
transfer of such Put Units to Xxxxx or his designee, together with a certificate
of the Holder and its Permitted Transferee, if applicable, reaffirming the
representations in Section 4. Notwithstanding the foregoing, if the Purchase
Price per Put Unit is to be calculated pursuant to Section 3.1 above and if the
Fair Market Value has not been determined by the Closing, then only the Base
Price shall be paid at the Closing. Within 30 days after the date that the Fair
Market Value has been determined in accordance with the terms of this Agreement,
Xxxxx or his designee shall pay to the Holder, for each Put Unit purchased, the
excess (if any) of the Purchase Price over the Base Price in immediately
available funds by wire transfer or certified bank check.
3.4 The Closing shall be held at the offices of Irell & Xxxxxxx LLP in
Los Angeles, California, on a business day selected by Xxxxx (as to which prompt
written notice is to be given to the Holder) no later than 90 days after the
delivery of notice that the Put Option is being exercised, or at such other time
and place as the Holder and Xxxxx may agree. The Holder and Xxxxx will cooperate
so as to permit all documents required to be delivered at the Closing to be
delivered by mail, delivery service or courier without requiring either party or
his or its representatives to be physically present at the Closing.
3.5 Fair Market Value.
(a) At the request of a Holder in connection with its exercise
of the Put Option, Xxxxx and such Holder will attempt to agree on Fair Market
Value. If they are unable to agree on Fair Market Value within 10 days of such
request, then Xxxxx and the Holder will each select within two business days
after the end of such 10 day period a qualified appraiser, and such selected
appraisers will, within 20 days of their selection, render their respective
determinations of Fair Market Value. Such determinations will be delivered
concurrently, so that Xxxxx and the Holder will each learn at the same time the
determination of the other's appraiser.
(b) If the Fair Market Value reflected in the higher of the
two appraisals (the "Higher Initial Appraisal") is not greater than 105% of the
Fair Market Value reflected in the lower of the two appraisals (the "Lower
Initial Appraisal"), Fair Market Value will be the average of the two
appraisals. If the two appraisals are not within this range, the two appraisers
will within two business days select a third qualified appraiser to determine
Fair Market Value. The third appraiser will deliver to Xxxxx and the Holder its
determination of Fair Market Value within 20 days of its selection.
(c) If the Higher Initial Appraisal is greater than 105% but
not greater than 120% of the Lower Initial Appraisal, then Fair Market Value
will be equal to the average of the two of the three appraisals that are closest
to one another (or if the highest and lowest appraisal are equidistant from the
middle, then Fair Market Value will be equal to the middle appraisal).
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(d) If the Higher Initial Appraisal is greater than 120% of
the Lower Initial Appraisal, then Fair Market Value will be equal to either the
Higher Initial Appraisal or the Lower Initial Appraisal, whichever is closest to
the third appraisal (or if the Higher Initial Appraisal and the Lower Initial
Appraisal are equidistant from the third appraisal, then such Fair Market Value
will be equal to the third appraisal).
(e) Charter LLC will pay the cost of the appraisals and will
promptly make available to Xxxxx, the Holder, their respective representatives
and the appraisers selected as provided above (subject to appropriate and
customary confidentiality agreements) all information concerning Charter LLC and
its finances and operations as may be reasonably requested for purposes of
determining Fair Market Value.
4. Representations of the Holder. The Holder represents and warrants to
Xxxxx and any of his designees or assignees that on the date hereof and at each
Closing: (a) the Holder has full power and authority to execute and deliver this
Agreement and consummate the transactions contemplated hereby; (b) this
Agreement is the legal, valid and binding obligation of the Holder, enforceable
against the Holder in accordance with its terms; (c) at the Closing, the Holder
will own all of the Put Units required to be purchased and sold at the Closing,
both of record and beneficially, free and clear of all liens, encumbrances or
adverse interests of any kind or nature whatsoever (including any restriction on
the right to vote, sell or otherwise dispose of the Put Units (other than
restrictions set forth in the Charter LLC Operating Agreement, those arising
under applicable law and those arising under the organizational documents of the
issuer of the Put Units)); (d) upon the transfer of the Put Units pursuant to
Section 3, Xxxxx or his designee will receive good title to the Put Units, free
and clear of all liens, encumbrances and adverse interests created by the
Holder, other than those arising under applicable law or those arising under the
organizational documents of the relevant issuer.
5. Transfer of CCI Stock. If Xxxxx transfers more than 5% of his shares
of Charter Communications Inc. ("CCI") in any one transaction, or has
transferred more than 20% of his shares in CCI cumulatively, to any other entity
or entities controlled by him, Xxxxx will concurrently with each such transfer
cause such other entity to enter into a counterpart of this Put Agreement, so
that the entity or entities holding such shares becomes a joint and several
obligor with respect to the Put Option; provided, however, that for purposes of
determining whether the 20% threshold has been reached, Xxxxx shall be deemed to
own any shares owned by an entity that has previously executed a counterpart to
this Put Agreement pursuant to this Section 5.
6. Representations of Xxxxx. Xxxxx represents and warrants to the
Holder and each Permitted Transferee that on the date hereof and at all times
hereafter through the Closing: (a) Xxxxx has full power and authority to execute
and deliver this Agreement and consummate the transactions contemplated hereby;
(b) this Agreement constitutes the legal, valid and binding obligation of Xxxxx,
enforceable against Xxxxx in accordance with its terms, except as the
enforceability of this Agreement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting
creditors' rights generally or by judicial discretion in the enforcement of
equitable remedies; (c) his execution and delivery of this Agreement does not,
and his performance of his obligations under this Agreement will not, violate,
conflict with or constitute a breach of, or
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a default under, any material agreement, indenture or instrument to which he is
a party or which is binding on him, and will not result in the creation of any
lien on, or security interest in, any of his assets (other than such violations,
breaches, defaults, liens or security interests that would not materially and
adversely affect his ability to perform his obligations under this Agreement);
and (d) his Net Worth is and will be greater than $4 billion. At the request of
the Holder made no more frequently than every 180 days, Xxxxx will within 10
days of such request deliver to the Holder a certificate signed by him or his
attorney-in-fact as to the representation and warranty in clause (d) being true
and correct at such time. "Net Worth" means the excess of the fair market value
of Xxxxx'x assets over the aggregate amount of Xxxxx'x liabilities.
7. Put Period.
7.1 The "Put Period" shall begin on the second anniversary of the
Closing under the Purchase Agreement; provided, however, if any representation
and warranty in Section 6 is or becomes untrue, the Put Period will begin at
that point. Irrespective of the date on which the Put Period begins, the Put
Period shall terminate at the close of business on the sixtieth day (or, if such
day is not a business day, the next succeeding business day) after the second
anniversary of the date of the closing under the Purchase Agreement.
7.2 Upon termination of the Put Period, this Put Option and all
rights hereunder (other than rights associated with the proper exercise of the
Put Option during the Put Period) shall immediately terminate.
7.3 The Put Option shall terminate as to any Put Units on the date
on which such Put Units are first transferred by the Holder to a person or
entity that is not a Permitted Transferee.
8. Miscellaneous.
8.1 Complete Agreement; Modifications. This Agreement constitutes
the parties' entire agreement with respect to the subject matter hereof and
supersedes all other agreements, representations, warranties, statements,
promises and understandings, whether oral or written, with respect to the
subject matter hereof. This Agreement may not be amended, altered or modified
except by a writing signed by both parties.
8.2 Additional Documents. Each party hereto agrees to execute any
and all further documents and writings and to perform such other actions which
may be or become necessary or expedient to effectuate and carry out this
Agreement.
8.3 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be sufficiently
given if delivered in person or transmitted by telecopy or similar means of
recorded electronic communication to the relevant party, addressed as follows
(or at such other address as either party shall have designated by notice as
herein provided to the other party):
If to the Holder, to the address set forth in the Notice
provision of the Purchase Agreement.
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If to Xxxxx:
Xxxx X. Xxxxx
c/o Xxxxxxx X. Xxxxx @ Vulcan Northwest
000 000xx Xxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
with a copy to:
Irell & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Telecopy: (000) 000-0000
Any such notice or other communication shall be deemed to have been given and
received on the day on which it is delivered or telecopied (or, if such day is
not a business day or if the notice or other communication is not telecopied
during business hours, at the place of receipt, on the next following business
day); provided, however, that any such notice or other communication shall be
deemed to have been given and received on the day on which it is sent if
delivery thereof is refused or if delivery thereof in the manner described above
is not possible because of the intended recipient's failure to advise the
sending party of a change in the intended recipient's address or telecopy
number.
8.4 No Third-Party Benefits. None of the provisions of this
Agreement shall be for the benefit of, or enforceable by, any person or entity
that is not a party to this Agreement, other than any Permitted Transferees of
the Holder.
8.5 Waivers Strictly Construed. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (a) no
waiver or extension of time shall be effective unless expressly contained in a
writing signed by the waiving party; and (b) no alternation, modification or
impairment shall be implied by reason of any previous waiver, extension of time,
delay or omission in exercise or other indulgence.
8.6 Severability. The validity, legality or enforceability of the
remainder of this Agreement shall not be affected even if one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect.
8.7 Undertakings. All authority herein conferred or agreed to be
conferred upon a party to this Agreement and all agreements of a party contained
herein shall survive the death or incapacity of such party (or any of them).
8.8 Successors and Assigns. Except as provided herein to the
contrary, this Agreement shall be binding upon and shall inure to the benefit of
the parties, their respective heirs, estates, personal representatives,
conservators, successors and permitted assigns.
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8.9 Assignments.
(a) The Holder may transfer some or all of its Put Units to
any person or entity that is a Permitted Transferee, and the Holder may assign
its rights under this Agreement with respect to the transferred Put Units,
without the consent of Xxxxx, to such Permitted Transferee.
(b) Upon the transfer of Put Units to any Permitted Transferee
and the assignment to such Permitted Transferee of the Holder's rights under
this Agreement with respect to the transferred Put Units, Xxxxx and the
Permitted Transferee will enter into a Put Agreement in the form hereof, and
Xxxxx and the Permitted Transferee will thereupon have the rights and be subject
to the obligations set forth in such Put Agreement. A Permitted Transferee may
only transfer Put Units to a person or entity who would have been "Permitted
Transferees" of the original Holder of such Put Units.
(c) Xxxxx is entitled, in his sole discretion, to assign his
rights to purchase any Put Units under this Agreement to one or more entities
controlled by Xxxxx and organized under the laws of the United States or any
state thereof, but no such assignment will relieve Xxxxx of any of his
obligations under this Agreement.
8.10 Governing Law. This Agreement shall be governed by the laws of
the State of New York, without regard to any choice of law provisions of that
state or the laws of any other jurisdiction.
8.11 Headings. The Section headings in this Agreement are inserted
only as a matter of convenience and in no way define, limit, extend or interpret
the scope of this Agreement or of any particular Section.
8.12 Number and Gender. Throughout this Agreement, as the context
may require, (a) the masculine gender includes the feminine and neuter; and the
neuter gender includes the masculine and feminine; and (b) the singular tense
and number includes the plural, and the plural tense and number includes the
singular.
8.13 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.14 Costs. Except as otherwise provided in this Agreement, each
party will bear his or its own costs in connection with the exercise of the
Holder's right under this Agreement and the purchase and sale of any Put Units
pursuant to this Agreement.
8.15 Default. In the event of any legal action between the parties
arising out of or in relation to this Agreement, the prevailing party in such
legal action shall be entitled to recover, in addition to any other legal
remedies, all of his or its costs and expenses, including reasonable attorney's
fees, from the non-prevailing party, regardless of whether such legal action is
prosecuted to completion.
8.16 No Obligations Until Purchase Transactions Close; Termination.
Notwithstanding anything to the contrary herein, Xxxxx shall have no obligations
or
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147
liabilities whatsoever pursuant to this Agreement prior to the closing of the
transactions contemplated pursuant to the Purchase Agreement. Upon the
termination of the Purchase Agreement, this Agreement shall immediately
terminate (without further action required by Xxxxx) and Xxxxx shall have no
further liabilities or obligations hereunder.
8.17 No Obligations With Respect to the Purchase Agreement. Xxxxx
shall have no obligations or liabilities under the Purchase Agreement (or any
related documents or agreements, except for this Agreement) or under any claim
based on, in respect of, or by reason of, any representations, warranties,
covenants, obligations or liabilities set forth therein (collectively, "Purchase
Agreement Obligations"). By executing this Agreement, and as consideration for
Xxxxx'x execution of this Agreement, the Holder hereby waives and releases Xxxxx
of any and all claims in respect of Purchase Agreement Obligations.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
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148
[FIRST SIGNATURE PAGE TO PUT OPTION]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
-------------------------------------
Xxxx X. Xxxxx, by Xxxxxxx X. Xxxxx,
attorney-in-fact
149
[SECOND SIGNATURE PAGE TO PUT OPTION]
Its signature below evidences solely the
agreement of Charter LLC to comply with
its obligations described in Section 3.5.
Charter LLC shall have no other
obligations or liabilities hereunder.
CHARTER COMMUNICATIONS
HOLDING COMPANY, LLC
By:
-------------------------------------
Name:
Title:
150
[THIRD SIGNATURE PAGE TO PUT OPTION]
BRESNAN COMMUNICATIONS COMPANY
LIMITED PARTNERSHIP
By: BCI (USA), LLC, its General Partner
By: Bresnan Communications, Inc., its
Managing Member
By:_______________________________
Name: ____________________________
Title_____________________________
151
[THIRD SIGNATURE PAGE TO PUT OPTION]
BCI (USA), LLC
By: Bresnan Communications, Inc.,
its Managing Member
By:______________________________
Name: ___________________________
Title____________________________
152
[THIRD SIGNATURE PAGE TO PUT OPTION]
-----------------------------
Xxxxxxx X. Xxxxxxx, individually
153
[THIRD SIGNATURE PAGE TO PUT OPTION]
TCID OF MICHIGAN, INC.
By:__________________________
Name: _______________________
Title________________________
154
[THIRD SIGNATURE PAGE TO PUT OPTION]
TCI BRESNAN LLC
By:______________________________
Name: ___________________________
Title____________________________
155
[THIRD SIGNATURE PAGE TO PUT OPTION]
BLACKSTONE BC CAPITAL
By: Blackstone Management Associates III
L.L.C., its General Partner
By:___________________________________
Name: ________________________________
Title_________________________________
156
[THIRD SIGNATURE PAGE TO PUT OPTION]
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP III L.P.
By: Blackstone Management Associates III
L.L.C., its General Partner
By:________________________________
Name: _____________________________
Title______________________________
157
[THIRD SIGNATURE PAGE TO PUT OPTION]
BLACKSTONE BC OFFSHORE CAPITAL PARTNERS L.P.
By: Blackstone Management Associates III
L.L.C., its Investment General Partner
By:____________________________________
Name: _________________________________
Title__________________________________
158
EXHIBIT I
LLC UNIT FORMULA TERM SHEET
A. The number of units ("Units") of Charter Communications Holding Company, LLC
("Charter LLC") issued to the Bresnan partners will be a fraction of all Units
in Charter LLC outstanding on the Closing plus any Units expected to be issued
under acquisitions described on Attachment A or in Paragraph B(5) (such sum, the
"Total Estimated Units"), the numerator of which will equal the amount of the
Equity Consideration (as defined in the Purchase Agreement), and the denominator
of which will equal the Charter Holdings Value calculated pursuant to the
methodology set forth on Attachment A hereto.
B. "Charter Holdings Value" will equal $27,173,760,000:
(1) less liabilities (other than deferred taxes) and preferred equity of
Charter LLC and its Subsidiaries (determined on a consolidated basis in
accordance with Generally Accepted Accounting Principles) at the
Closing, and less Charter LLC's best estimate of the pro forma
liabilities (other than deferred taxes) and preferred equity to be
incurred or assumed in connection with the transactions included in
Attachment A, if any, which are pending but not yet consummated at
Closing,
(2) plus, with respect to acquisitions of assets that consist predominantly
of cable television systems in the U.S. ("Cable Assets"), that are
acquired by Charter LLC or its Subsidiaries on or before the Closing,
and that are not reflected on Attachment A other than assets described
in clause (4), the product of 17 and the projected EBITDA of such
assets for fiscal year ended December 31, 2000, determined in good
faith on a reasonable basis and otherwise in a manner consistent with
the methodology employed in estimating future EBITDA for the acquired
companies referred to in Attachment A,
(3) plus, with respect to acquisitions of non-Cable Assets that are
acquired by Charter LLC or its Subsidiaries on or before the Closing
and that are not reflected on Attachment A (other than assets described
in clause (4)), the fair market value of such assets determined by a
nationally recognized valuation firm reasonably acceptable to Charter
LLC and the Bresnan Holders (an "Appraiser"),
(4) plus, the fair market value, as determined by an Appraiser of assets
that are acquired by or contributed to Charter LLC on or before the
Closing from parties related to CCI, provided that Cable Assets will be
valued in accordance with clause (2),
(5) plus, with respect to acquisitions of Cable Assets not included in
Attachment A that are subject to definitive agreements entered into
prior to the Closing, but which have not been acquired by Charter LLC
or its Subsidiaries on or before Closing, the product of 17 and the
projected EBITDA of such assets for fiscal year ended December 31,
2000, determined in good faith on a reasonable basis and otherwise in a
manner consistent with the methodology employed in estimating future
EBITDA for the acquired companies referred to in Attachment A, less
Charter LLC's best
159
estimate of the pro forma liabilities (other than deferred taxes) and
preferred equity to be incurred or assumed in connection with such
acquisitions.
C. After the Closing, to the extent that the assets described in clause (5)
above or included in Attachment A hereto have not been acquired by Charter LLC
or its Subsidiaries and the "Definitive Agreements" to which such assets are
subject are terminated, then the Bresnan Holders shall be issued additional
Units in Charter LLC in an amount sufficient to provide the Bresnan Holders with
the same economic interests in Charter LLC that they would have had (i) if the
Charter Holdings Value determined at the Closing had been (x) reduced by the
value of such assets as determined on Attachment A or as determined in clause
(5) above, and (y) increased by any liabilities (other than deferred taxes) and
preferred equity previously subtracted pursuant to clause (1) or (5) above,
estimated to have been incurred or assumed in respect of transactions referred
to in Attachment A or clause (1) or (5) above that are not consummated, (ii)
taking into account distributions from Charter LLC to its members and other
events occurring after the Closing but prior to the issuance of additional Units
to the Bresnan Holders and (iii) reducing the number of Total Estimated Units by
the number of Units that had been expected to be issued in such terminated
transaction. Similarly, if the amount of liabilities (other than deferred taxes)
and preferred stock actually incurred or assumed in connection with a pending
transaction is different from the amounts estimated to be incurred or assumed
for purposes of clauses (1) or (5) as a result of an increase or decrease in the
amount of common equity assumed to be contributed in connection with the
relevant transaction, an appropriate adjustment to Charter Holdings Value will
be made, and either additional Units will be issued to the Bresnan Holders or
Units will be surrendered to Charter LLC by the Bresnan Holders, in each case,
pro rata based on the relative amount of Equity Consideration received by each
such Bresnan Holder.
D. If the purchase price for any of the transactions included in Attachment A is
reduced after the date of the Purchase Agreement, whether before of after the
Closing, an appropriate redetermination of the Charter Holdings Value will be
made to account for any lower projection of 2000 EBITDA that relates to such
reduction. If such a redetermination occurs after the Closing, the Bresnan
Holders will receive additional Units pro rata based on the relative amount of
Equity Consideration received by each such Bresnan Holder.
E. The Bresnan Holders shall have reasonable access to the information and
documents necessary to verify the calculations made in accordance with the
methodology set forth above.
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ATTACHMENT A
TO
LLC UNIT FORMULA TERM SHEET
Charter Communications, Inc. Ownership Percentage Calculation
(all amounts in 000's)
Projected 2000 EBITDA* $ 1,578,200
Multiple 17.0
Enterprise Value $ 26,829,400
Plus Strike Price of Options** $ 344,360
------------
Subtotal: Enterprise Value $ 27,173,760
Less Pro-Forma Debt At Closing $(10,897,000)
------------
Equity Value $ 16,276,760
Equity Contributed by Bresnan*** $ 1,000,000
Pro-Forma Ownership Percentage 6.14%
* See Next Page
** Assumes all options are exercised
***Assumes Equity Consideration is $1 billion
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Charter Communications, Inc.
Historical/Pro-forma System Cash Flow
(All amounts in thousands)
1998 Projected Projected
Per S-4 1999 2000
------- ---- ----
Charter/Marcus $ 490,767 $ 540,600 $ 595,600
American Cable $ 18,843 $ 19,700 $ 21,700
Renaissance $ 31,116 $ 35,300 $ 38,800
Greater Media $ 33,756 $ 39,600 $ 40,700
Intermedia $ 89,174 $ 95,800 $ 104,700
Helicon $ 38,230 $ 45,400 $ 49,900
Xxxxxx $ 100,086 $ 115,300 $ 126,600
Vista $ 7,991 $ 10,900 $ 12,600
---------- --------- ---------
Total System Cash Flow
for Charter Holdings $ 809,963 $ 902,600 $ 990,600
Less Corporate Overhead -- $ (30,000)
---------
Charter EBITDA $ 960,600
Avalon $ 62,200
Falcon $ 248,000
Fanch $ 147,400
Bresnan $ 160,000
---------
Total Charter $1,578,200
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FINAL
EXHIBIT J
TCI PUT AGREEMENT
This Put Agreement ("Agreement") is made as of ______ __, 2000, by and
among Charter Communications Holding Company, LLC, a Delaware limited liability
company ("Charter LLC"), TCI Bresnan LLC, a Delaware limited liability company
("TCI Bresnan") and TCID of Michigan, Inc., a Nevada corporation ("TCID-MI")
(each of TCI Bresnan and TCID-MI a "Holder," and collectively, the "Holders"),
with reference to the following facts:
A. Charter LLC is a party to that certain Purchase and Contribution
Agreement dated as of June 29, 1999 (the "Purchase Agreement"), pursuant to
which Charter LLC is acquiring, as of the date hereof, all of the outstanding
equity of Bresnan Communications Company Limited Partnership.
B. Under the Purchase Agreement, the Holders are acquiring, as of the
date hereof, units of limited liability company interests in Charter LLC, which
are exchangeable for shares of common stock of the entity through which Charter
Communications, Inc. effects an initial public offering of indirect equity
interests in Charter LLC ("PublicCo").
C. As an inducement for the Holders to consummate the transactions
contemplated by the Purchase Agreement, Charter LLC agreed to grant the Holders
the Put Options provided for herein, and the execution and delivery of this
Agreement by Charter LLC is a condition to closing under the Purchase Agreement.
NOW, THEREFORE, in consideration of the respective covenants and
agreements of the parties and the Holders' consummating the transactions
contemplated by the Purchase Agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
each party), the parties hereby agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein have the
meanings ascribed to such terms in the Purchase Agreement. As used in this
Agreement, the following terms have the following meanings:
"Affiliate" means, with respect to any Person, any other
Person controlling, controlled by or under common control with the specified
Person, where "control" means the ownership, directly or indirectly, of voting
securities representing the right generally to elect a majority of the directors
(or similar officials) of a Person or the possession, by contract or otherwise,
of the authority to direct the management and policies of a Person.
"Annual Put Period" means the 90-day period beginning on
__________ [insert month and day of closing] for each of the years ________
[2003 (i.e., third year after closing)] through __________ [2010 (i.e., tenth
year after closing)].
163
"Average Trading Price" as of any date, with respect to any
securities, means the average for the twenty full trading days preceding such
date of (i) the last reported sales prices, regular way, as reported on the
principal national securities exchange on which such securities are listed or
admitted for trading or (ii) if such securities are not listed or admitted for
trading on any national securities exchange, the last reported sales prices,
regular way, as reported on the Nasdaq National Market or, if such securities
are not listed on the Nasdaq National Market, the average of the highest bid and
lowest asked prices on each such trading day as reported on the Nasdaq Stock
Market, or (iii) if such securities are not listed or admitted to trading on any
national securities exchange, the Nasdaq National Market or the Nasdaq Stock
Market, the average of the highest bid and lowest asked prices on each such
trading day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization. For
purposes of this definition, a "trading day" means a day on which the principal
national securities exchange on which such securities are listed or admitted to
trading, or the Nasdaq National Market or the Nasdaq Stock Market, as
applicable, if such securities are not listed or admitted to trading on any
national securities exchange, is open for the transaction of business (unless
such trading shall have been suspended for the entire day) or, if such
securities are not listed or admitted to trading on any national securities
exchange, the Nasdaq National Market or the Nasdaq Stock Market, any day other
than a Saturday, Sunday, or other day on which commercial banking institutions
in New York, New York are required or authorized by law to remain closed.
"Capped Ownership Put Option" means the Put Option provided in
Section 2.1.2.
"Capped Ownership Put Period" means (i) with respect to any
Proposed Transaction (other than transactions pursuant to Public Equity
Repurchase Programs), the period beginning on the date that is two (2) days
prior to the closing of the Proposed Transaction (or, if later, the date notice
is received by the Holders pursuant to Section 2.1.1(b) with respect to such
Proposed Transaction) and ending on the 90th day following such beginning date,
and (ii) with respect to a Public Equity Repurchase Program, the period
beginning on the date on which the Put Units owned by Holders (and their
Permitted Transferees) represent more than 4.9%, in the aggregate, of all of the
outstanding common equity interests in Charter LLC, and ending 90 days after the
beginning of such period (or, if later, 5 days after termination of the Public
Equity Repurchase Program in question).
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchange Agreement" means the exchange agreement entered into
in accordance with Section 5.16 of the Purchase Agreement.
"Executive Officer" shall have the meaning set forth in Rule
3b-7 under the Exchange Act.
"Fair Market Value" means the fixed cash price at which a
willing seller would sell and a willing buyer would buy, as of the date of
exercise of any Put Option, all of the common equity of Charter LLC (or its
successor) having full knowledge of all material
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164
facts, in an arm's length transaction with the expectation of concluding the
purchase and sale within a reasonable time on the basis of an agreement
containing customary terms and conditions. Section 3.5 describes the procedure
for determining Fair Market Value.
"IPO" shall mean the consummation of a bona fide firm
commitment underwritten public offering of the common stock of PublicCo
involving aggregate gross proceeds of at least $500 million, or a series of such
offerings with gross proceeds aggregating to at least $500 million.
"Permitted Transferee" shall mean any entity controlled by
AT&T Corp.
"Person" means any natural person, corporation, general or
limited partnership, limited liability company, joint venture, trust,
association or unincorporated entity of any kind.
"Proposed Transaction" shall have the meaning set forth in
Section 2.1.1.
"Public Equity Repurchase Program" means a repurchase program
by PublicCo or an Affiliate thereof of PublicCo's common equity securities in
the public markets (or other similar program or series of transactions).
"Publicly Traded" shall have the following meaning: PublicCo
shall be "Publicly Traded" on any date (i) if an IPO has occurred prior to such
date and, on such date, (ii) the aggregate value of common equity securities of
PublicCo (determined based on the Average Trading Price of such securities
calculated as of the trading day immediately preceding such date) held by all
Persons who are not Affiliates or Executive Officers of PublicCo exceeds $500
million, (iii) the number of outstanding common equity securities of PublicCo
owned by Persons who are not Affiliates or Executive Officers of PublicCo is
greater than one-sixth of the aggregate number of common equity securities of
PublicCo sold in the IPO and (iv) PublicCo is subject to the reporting
requirements under Section 12 or Section 15 of the Exchange Act and is not
eligible to terminate such reporting pursuant to the rules and regulations
adopted pursuant to the Exchange Act.
"Put Period" means the Capped Ownership Put Period or any
Annual Put Period, as applicable.
"Put Unit" means, initially, one unit of Charter LLC delivered
to the initial Holders at the closing of the transactions contemplated by the
Purchase Agreement and, after the closing under the Purchase Agreement, any
additional or other interests, securities or other property received or
receivable in respect of that which immediately prior to the relevant event
comprised a Put Unit, whether as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, subdivision, combination,
stock split, stock dividend, or other similar transaction, including without
limitation shares of common stock of PublicCo received in respect of a Put Unit
in accordance with the Exchange Agreement. Notwithstanding the foregoing, in the
event additional units of Charter LLC are issued to the Holder (or the Holder
surrenders Units to Charter LLC) following the closing under the Purchase
Agreement in accordance with Exhibit I to the Purchase Agreement (LLC Unit
Formula Term Sheet), such issuance (or surrender) will result in additional (or
fewer) Put Units being outstanding (rather than adjusting that which is deemed
to comprise a single Put
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Unit). By way of example, if after the Holder received 10,000 units of Charter
LLC at the closing of the Purchase Agreement, Charter LLC terminated a pending
acquisition and was obligated under the Purchase Agreement to issue to the
Holder an additional 2,000 units, then the Holder would own 12,000 Put Units,
each consisting of one Charter LLC unit. If each unit of Charter LLC were
subsequently exchanged for 10 shares of PublicCo common stock, then the Holder
would own 12,000 Put Units, each consisting of 10 shares of common stock. If the
Holder then transferred 30,000 shares of PublicCo common stock to a Permitted
Transferee, the Holder would then own 9,000 Put Units, each consisting of 10
shares of common stock.
2. Put Option Rights. Charter LLC hereby grants to the Holder, subject
to the terms and conditions set forth herein, the following rights and options
(each, a "Put Option", and collectively, the "Put Options"):
2.1 Capped Ownership Put Option.
2.1.1 Charter LLC to Provide Notice to Holders of Certain
Transactions. Charter LLC shall give written notice to the Holders (a) prior to
the commencement of a Public Equity Repurchase Program, and (b) no later than 15
days prior to the consummation of any proposed transaction (other than a
transaction pursuant to a Public Equity Repurchase Program) the effect of which
would reasonably be expected to cause the Put Units owned by the Holders (and
their Permitted Transferees) to represent more than 4.9% in the aggregate of all
of the common equity interests of Charter LLC (either type of transaction, a
"Proposed Transaction"). In addition, Charter LLC shall give written notice to
the Holders promptly following the termination of a Public Equity Repurchase
Program. Charter LLC shall provide the Holders with such information as is
reasonably requested by the Holders regarding the expected timing of a Proposed
Transaction and the expected effect of such Proposed Transaction on the
percentage ownership of the Holders (and their Permitted Transferees) (subject
to reasonable and customary confidentiality agreements).
2.1.2 With respect to any Proposed Transaction, the Holders
shall each have the right, exercisable by delivery of written notice to Charter
LLC during the Capped Ownership Put Period with respect to such Proposed
Transaction, to sell to Charter LLC or its designee, a number of such Holder's
Put Units not to exceed the amount necessary to cause the Put Units owned by the
Holders (and their Permitted Transferees) not to be more than 4.9% in the
aggregate of all of the common equity interests of Charter LLC. Notwithstanding
the foregoing, in no event shall a Holder be permitted to exercise the Capped
Ownership Put Option if PublicCo is Publicly Traded at the time the Holder
wishes to exercise such Put Option. Upon the giving of the notice of exercise
described above, Charter LLC shall be obligated to buy or to cause its designee
to buy, and the Holder shall be obligated to sell, the number of Holder's Put
Units as to which the Capped Ownership Put Option has validly been exercised, at
the price and upon the terms and conditions specified in Section 3.
2.2 Annual Put Option. TCI Bresnan shall have the right, exercisable
by delivery of written notice to Charter LLC during any Annual Put Period, to
sell to Charter LLC or its designee, any or all of TCI Bresnan's Put Units;
provided, however, in no event
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shall TCI Bresnan be permitted to exercise the Annual Put Option if PublicCo is
Publicly Traded at the time TCI Bresnan wishes to exercise such option. Upon the
giving of such notice, Charter LLC shall be obligated to buy or to cause its
designee to buy, and the Holder shall be obligated to sell, the number of TCI
Bresnan 's Put Units as to which the Annual Put Option has been exercised, at
the price and upon the terms and conditions specified in Section 3. The Annual
Put Option may only be exercised once during any Annual Put Period and, in any
event, may not be exercised (including all exercises by TCI Bresnan and its
Permitted Transferees) during more than two Annual Put Periods. After the Annual
Put Option has been exercised during two different Annual Put Periods, the
Annual Put Option and all rights thereunder shall terminate (except for rights
associated with the proper exercise of such Put Option prior to such
termination). Only Put Units originally issued to TCI Bresnan in connection with
the closing under the Purchase Agreement shall be subject to the Annual Put
Option. [NOTE: The Amount of Equity Consideration subject to the Annual Put
shall not exceed $300 Million.]
3. Purchase Price; Closing.
3.1 The purchase price per Put Unit to be paid upon the exercise of
any Put Option (the "Purchase Price") shall be equal to the value of such Put
Unit based on such Put Unit's proportionate share of Fair Market Value.
3.2 The Purchase Price and the liabilities of Charter LLC and its
non-corporate Subsidiaries attributable to any Put Unit purchased pursuant to
this Put Agreement (together the "Purchase Consideration") shall be allocated
among the portions of the assets of Charter LLC and its non-corporate
Subsidiaries (to the extent applicable) attributable to the Put Unit in an
allocation agreement (the "Allocation Agreement") to be prepared in accordance
with the rules under Sections 743(b), 751, 755 and 1060 of the Internal Revenue
Code. The parties agree that the Purchase Consideration shall be allocated among
the assets of Charter LLC and its non-corporate subsidiaries by allocating an
amount to the portion of the tangible assets of Charter LLC and its
non-corporate subsidiaries attributable to the Put Unit equal to the portion of
the book value for financial statement purposes of such tangible assets
attributable to the Put Unit, allocating an amount to the portions of the stock
of the corporate subsidiaries of Charter LLC attributable to the Put Unit equal
to their fair value as reasonably determined by Charter LLC and allocating the
remainder to the portion of the franchises of Charter LLC and its non-corporate
subsidiaries attributable to the Put Unit. Charter LLC shall deliver a draft of
the Allocation Agreement to the Holder within thirty (30) days after the Closing
and Charter LLC and Holder shall mutually agree upon the Allocation Agreement.
Neither Charter LLC nor Holder shall unreasonably withhold its approval and
consent with respect to the Allocation Agreement. Unless otherwise required by
applicable law, Charter LLC and Holder agree to act, and cause their respective
affiliates to act, in accordance with the computations and allocations contained
in the Allocation Agreement in any relevant tax returns or similar filings
(including any forms or reports required to be filed pursuant to Section 1060 of
the Code ("1060 Forms")), to cooperate in the preparation of any 1060 Forms, to
file such 1060 Forms in the manner required by applicable law and to not take
any position inconsistent with such Allocation Agreement upon examination of any
tax refund or refund claim, in any litigation or otherwise.
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3.3 At the closing of the purchase and sale of Put Units pursuant to
the exercise of any Put Option hereunder (the "Closing"), (a) Charter LLC or its
designee shall pay to the Holder the Purchase Price in immediately available
funds by wire transfer or certified bank check; and (b) the Holder shall deliver
to Charter LLC or its designee one or more certificates evidencing the Put Units
to be purchased and sold at the Closing (if such Put Units are certificated
securities), together with duly executed assignments separate from certificate
in form and substance sufficient to effectuate the transfer of such Put Units to
Charter LLC or its designee, together with a certificate of the Holder and its
Permitted Transferee, if applicable, reaffirming the representations in Section
4.
3.4 The Closing with respect to the exercise of any Put Option shall be
held at the offices of Irell & Xxxxxxx LLP in Los Angeles, California, on a
business day selected by Charter LLC (as to which prompt written notice is to be
given to the Holder) no later than 120 days after the delivery of notice that
the Put Option is being exercised, or at such other time and place as the Holder
and Charter LLC may agree. The Holder and Charter LLC will cooperate so as to
permit all documents required to be delivered at the Closing to be delivered by
mail, delivery service or courier without requiring either party or its or its
representatives to be physically present at the Closing.
3.5 Fair Market Value.
(a) At the request of a Holder in connection with its exercise of
any Put Option, Charter LLC and such Holder will attempt to agree on Fair Market
Value. If they are unable to agree on Fair Market Value within 20 days of such
request, then Charter LLC and the Holder will each select within two business
days after the end of such 20 day period a qualified appraiser, and such
selected appraisers will, within 30 days of their selection, render their
respective determinations of Fair Market Value. Such determinations
will be delivered concurrently, so that Charter LLC and the Holder will each
learn at the same time the determination of the other's appraiser.
(b) If the Fair Market Value reflected in the higher of the two
appraisals (the "Higher Initial Appraisal") is not greater than 105% of the Fair
Market Value reflected in the lower of the two appraisals (the "Lower Initial
Appraisal"), Fair Market Value will be the average of the two appraisals. If the
two appraisals are not within this range, the two appraisers will within two
business days select a third qualified appraiser to determine Fair Market Value.
The third appraiser will deliver to Charter LLC and the Holder its determination
of Fair Market Value within 30 days of its selection.
(c) If the Higher Initial Appraisal is greater than 105% but not
greater than 120% of the Lower Initial Appraisal, then Fair Market Value will be
equal to the average of the two of the three appraisals that are closest to one
another (or if the highest and lowest appraisal are equidistant from the middle,
then Fair Market Value will be equal to the middle appraisal).
(d) If the Higher Initial Appraisal is greater than 120% of the
Lower Initial Appraisal, then Fair Market Value will be equal to either the
Higher Initial Appraisal or the Lower Initial Appraisal, whichever is closest to
the third appraisal (or if the
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Higher Initial Appraisal and the Lower Initial Appraisal are equidistant from
the third appraisal, then such Fair Market Value will be equal to the third
appraisal).
(e) Charter LLC will pay the cost of the appraisals and will
promptly make available to Charter LLC, the Holder, their respective
representatives and the appraisers selected as provided above (subject to
appropriate and customary confidentiality agreements) all information concerning
Charter LLC and its finances and operations as may be reasonably requested for
purposes of determining Fair Market Value.
4. Representations of the Holder. The Holder represents and warrants to
Charter LLC and any of its designees or assignees that on the date hereof and at
each Closing: (a) the Holder has full power and authority to execute and deliver
this Agreement and consummate the transactions contemplated hereby; (b) this
Agreement is the legal, valid and binding obligation of the Holder, enforceable
against the Holder in accordance with its terms; (c) at the Closing, the Holder
will own all of the Put Units required to be purchased and sold at the Closing,
both of record and beneficially, free and clear of all liens, encumbrances or
adverse interests of any kind or nature whatsoever (including any restriction on
the right to vote, sell or otherwise dispose of the Put Units (other than
restrictions set forth in the Charter LLC Operating Agreement, those arising
under applicable law and those arising under the organizational documents of the
issuer of the Put Units)); and (d) upon the transfer of the Put Units pursuant
to Section 3, Charter LLC or its designee will receive good title to the Put
Units, free and clear of all liens, encumbrances and adverse interests created
by the Holder, other than those arising under applicable law or those arising
under the organizational documents of the relevant issuer.
5. Representations of Charter LLC. Charter LLC represents and warrants
to the Holders and each Permitted Transferee that on the date hereof and at all
times hereafter through the Closing: (a) Charter LLC has full power and
authority to execute and deliver this Agreement and consummate the transactions
contemplated hereby; (b) this Agreement constitutes the legal, valid and binding
obligation of Charter LLC, enforceable against Charter LLC in accordance with
its terms, except as the enforceability of this Agreement may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws affecting creditors' rights generally or by judicial discretion in
the enforcement of equitable remedies; and (c) the execution and delivery of
this Agreement does not, and its performance of its obligations under this
Agreement will not, violate, conflict with or constitute a breach of, or a
default under, any material agreement, indenture or instrument to which it is a
party or which is binding on it, and will not result in the creation of any lien
on, or security interest in, any of its assets (other than such violations,
breaches, defaults, liens or security interests that would not materially and
adversely affect its ability to perform its obligations under this Agreement).
6. Termination of Put Options.
6.1 This Agreement shall terminate upon _________ [the 90th day
following the tenth anniversary of the closing under the Put Agreement]. Upon
termination of this Agreement, all Put Options and all rights associated
therewith (other than rights associated with the proper and timely exercise of
such Put Options) shall immediately terminate.
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6.2 This Agreement and the Put Options provided hereunder shall
terminate as to any Put Units on the date on which such Put Units are first
transferred by a Holder to a person or entity that is not a Permitted
Transferee.
7. Miscellaneous.
7.1 Complete Agreement; Modifications. This Agreement constitutes
the parties' entire agreement with respect to the subject matter hereof and
supersedes all other agreements, representations, warranties, statements,
promises and understandings, whether oral or written, with respect to the
subject matter hereof. This Agreement may not be amended, altered or modified
except by a writing signed by both parties.
7.2 Additional Documents. Each party hereto agrees to execute any
and all further documents and writings and to perform such other actions which
may be or become necessary or expedient to effectuate and carry out this
Agreement.
7.3 Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be sufficiently given if
delivered in person or transmitted by telecopy or similar means of recorded
electronic communication to the relevant party, addressed as follows (or at such
other address as either party shall have designated by notice as herein provided
to the other party):
If to the Holder, to the address set forth in the Notice
provision of the Purchase Agreement.
If to Charter LLC:
Charter Communications, Inc.
00000 Xxxxxxxxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, President
Telecopy: (000) 000-0000
with a copy to:
Irell & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Telecopy: (000) 000-0000
Any such notice or other communication shall be deemed to have been given and
received on the day on which it is delivered or telecopied (or, if such day is
not a business day or if the notice or other communication is not telecopied
during business hours, at the place of receipt, on the next following business
day); provided, however, that any such notice or other communication shall be
deemed to have been given and received on the day on which it is sent if
delivery thereof is refused or if delivery thereof in the manner described above
is not possible because of the intended recipient's failure to advise the
sending party of a change in the intended recipient's address or telecopy
number.
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7.4 No Third-Party Benefits. None of the provisions of this Agreement
shall be for the benefit of, or enforceable by, any person or entity that is not
a party to this Agreement, other than any Permitted Transferees of the Holder.
7.5 Waivers Strictly Construed. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (a) no
waiver or extension of time shall be effective unless expressly contained in a
writing signed by the waiving party; and (b) no alternation, modification or
impairment shall be implied by reason of any previous waiver, extension of time,
delay or omission in exercise or other indulgence.
7.6 Severability. The validity, legality or enforceability of the
remainder of this Agreement shall not be affected even if one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect.
7.7 Undertakings. All authority herein conferred or agreed to be
conferred upon a party to this Agreement and all agreements of a party contained
herein shall survive the death or incapacity of such party (or any of them).
7.8 Successors and Assigns. Except as provided herein to the contrary,
this Agreement shall be binding upon and shall inure to the benefit of the
parties, their respective heirs, estates, personal representatives,
conservators, successors and permitted assigns.
7.9 Assignments.
(a) The Holders may transfer some or all of their Put Units to any
person or entity that is a Permitted Transferee, and the Holders may assign
their rights under this Agreement with respect to the transferred Put Units,
without the consent of Charter LLC, to such Permitted Transferee.
(b) Upon the transfer of Put Units to any Permitted Transferee and
the assignment to such Permitted Transferee of a Holder's rights under this
Agreement with respect to the transferred Put Units, Charter LLC and the
Permitted Transferee will enter into a Put Agreement in the form hereof, and
Charter LLC and the Permitted Transferee will thereupon have the rights and be
subject to the obligations set forth in such Put Agreement. A Permitted
Transferee may only transfer Put Units to a person or entity who would have been
"Permitted Transferees" of the original Holder of such Put Units.
(c) Charter LLC is entitled, in its sole discretion, to assign its
rights to purchase any Put Units under this Agreement to one or more entities
controlled by Charter LLC and organized under the laws of the United States or
any state thereof, but no such assignment will relieve Charter LLC of any of its
obligations under this Agreement.
7.10 Governing Law. This Agreement shall be governed by the laws of the
State of New York, without regard to any choice of law provisions of that state
or the laws of any other jurisdiction.
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7.11 Headings. The Section headings in this Agreement are inserted only
as a matter of convenience and in no way define, limit, extend or interpret the
scope of this Agreement or of any particular Section.
7.12 Number and Gender. Throughout this Agreement, as the context may
require, (a) the masculine gender includes the feminine and neuter; and the
neuter gender includes the masculine and feminine; and (b) the singular tense
and number includes the plural, and the plural tense and number includes the
singular.
7.13 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
7.14 Costs. Except as otherwise provided in this Agreement, each party
will bear its or its own costs in connection with the exercise of the Holders'
right under this Agreement and the purchase and sale of any Put Units pursuant
to this Agreement.
7.15 Default. In the event of any legal action between the parties
arising out of or in relation to this Agreement, the prevailing party in such
legal action shall be entitled to recover, in addition to any other legal
remedies, all of its or its costs and expenses, including reasonable attorney's
fees, from the non-prevailing party, regardless of whether such legal action is
prosecuted to completion.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
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[FIRST SIGNATURE PAGE TO TCI PUT AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
CHARTER COMMUNICATIONS HOLDING COMPANY, LLC
-------------------------------------
By: Xxxxxx X. Xxxx, Senior Vice President
173
[SECOND SIGNATURE PAGE TO TCI PUT AGREEMENT]
TCID OF MICHIGAN, INC.
By:___________________________________
Name: ________________________________
Title: _______________________________
TCI BRESNAN LLC
By:___________________________________
Name: ________________________________
Title: _______________________________
