EXHIBIT 2.1
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[FORM OF]
REORGANIZATION AGREEMENT
among
Tele-Communications, Inc.
TCI Communications, Inc.
Tempo Enterprises, Inc.
TCI Digital Satellite Entertainment, Inc.
Old TCI SE, Inc.
TCI K-1, Inc.
United Artists K-1 Investments, Inc.
TCISE Partner 1, Inc.
TCISE Partner 2, Inc.
and
TCI Satellite Entertainment, Inc.
Dated as of __________, 1996
TABLE OF CONTENTS
ARTICLE I
THE MERGERS
Section 1.1 The Mergers............................................2
Section 1.2 Effective Time of The Mergers..........................2
Section 1.3 Effect of The Mergers..................................2
Section 1.4 Certificate of Incorporation and By-laws...............3
Section 1.5 Directors And Officers of Surviving Corporation........4
Section 1.6 Conversion of Securities...............................4
ARTICLE II
CONTRIBUTION TO CAPITAL OF THE COMPANY BY TCIC
Section 2.1 Contribution...........................................5
Section 2.2 IRS Classification.....................................5
ARTICLE III
SALES OF PARTNERSHIP INTERESTS
BY TCI K-1 TO SUB 1 AND BY UA K-1 TO SUB 2
Section 3.1 Sales of Partnership Interests.........................5
Section 3.2 Purchase Price.........................................5
Section 3.3 Assumption of Liabilities..............................6
ARTICLE IV
ISSUANCE OF PROMISSORY NOTE BY THE COMPANY TO TCIC....................6
ARTICLE V SPINOFF OF THE COMPANY TO TCI....................................6
ARTICLE VI
ASSUMPTION OF INDEBTEDNESS
Section 6.1 Assumption and Novation................................7
Section 6.2 Allocation of Consideration............................7
ARTICLE VII
DISTRIBUTION OF THE COMPANY COMMON STOCK
TO THE TCI GROUP STOCKHOLDERS
Section 7.1 Amended and Restated Certificate of
Incorporation of the Company...........................8
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Section 7.2 Reclassification of Company Common Stock...............8
Section 7.3 The Distribution.......................................9
Section 7.4 Conditions to the Distribution.........................9
Section 7.5 Treatment of Outstanding Options and SARs.............10
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Section 8.1 Representations And Warrantiesof the Parties..........11
Section 8.2 Additional Representations and Warranties of TCIC.....12
Section 8.3 Additional Representatives and Warranties of the
Company, Sub 1 and Sub 2..............................13
ARTICLE IX
COVENANTS
Section 9.1 Cross-Indemnities.....................................13
Section 9.2 Further Assurances....................................14
Section 9.3 Specific Performance..................................14
Section 9.4 Access to Information.................................15
Section 9.5 Confidentiality.......................................15
ARTICLE X
CLOSING
Section 10.1 Closing...............................................16
Section 10.2 Conditions to Closing.................................16
Section 10.3 Deliveries at Closing.................................17
ARTICLE XI
TERMINATION
Section 11.1 Termination...........................................20
Section 11.2 Effect of Termination.................................20
ARTICLE XII
MISCELLANEOUS
Section 12.1 No Third-Party Rights.................................21
Section 12.2 Notices...............................................21
Section 12.3 Entire Agreement......................................21
Section 12.4 Amendment, Modification or Waiver.....................22
Section 12.5 Binding Effect; Benefit; Successors And Assigns.......22
Section 12.6 Costs And Expenses....................................22
Section 12.7 Severability..........................................22
Section 12.8 Miscellaneous.........................................22
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EXHIBIT A -- Form of Subsidiary Notes
EXHIBIT B -- Form of Company Note
EXHIBIT C -- Form of Company Charter
EXHIBIT D -- Form of Company Stock Option Agreement
SCHEDULE 8.1(b) -- Certain Agreements
SCHEDULE 8.5(d) -- Company Stock Options
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INDEX TO DEFINITIONS
The following terms used in this Agreement are defined in the sections
indicated:
Term Section
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Add-on Company Option Section 7.5(b)(i)
Adjusted TCI Option Section 7.5(b)(ii)
Agents Section 9.5(a)
Agreement Preamble
Assumed Liabilities Section 3.3(b)
Assumption Amount Section 6.1
Certificates of Merger Section 1.2
Closing Section 10.1
Closing Date Section 10.1
Code Section 2.2
Colorado Act Section 1.1(a)
Company Preamble
Company Charter Section 7.1
Company Common Stock Section 7.3(a)
Company Employees Section 7.5(c)
Company Note Article IV
Company Stock Options Section 7.5(d)
Delaware Act Section 1.1(a)
Digital Preamble
Digital Constituent Corporations Section 1.1(b)
Digital Merger Section 1.1(b)
Digital Satellite Assets Section 9.1(b)(i)(B)
Digital Satellite Business Recitals
Digital Stock Section 1.6(a)(ii)
Digital Surviving Corporation Section 1.1(b)
Disclosing Party Section 9.5(b)
Distribution Recitals
Distribution Date Section 7.3(b)
Enterprises Preamble
Enterprises Constituent Corporations Section 1.1(c)
Enterprises Merger Section 1.1(c)
Enterprises Surviving Corporation Section 1.1(c)
Grant Date Section 7.5(d)
Interests Section 3.1(b)
Losses Section 9.1(a)
Merger Effective Time Section 1.2
Mergers Section 1.1(c)
Oklahoma Act Section 1.1(c)
Old TCISE Preamble
Partnership Section 3.1(a)
Partnership Agreement Section 3.1(a)
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Party Section 9.4(a)
Proprietary Information Section 9.5(b)
receiving Party Section 9.5(b)
Reclassification Section 7.2
Record Date Section 7.3(b)
Series A Common Stock Section 7.2
Series A TCI Group Common Stock Recitals
Series B Common Stock Section 7.2
Series B TCI Group Common Stock Recitals
Sub 1 Preamble
Sub 1 Note Section 3.2
Sub 2 Preamble
Sub 2 Note Section 3.2
Subsidiary Notes Section 3.2
TCI Preamble
TCI Board Section 7.4(a)
TCIC Preamble
TCI Group Common Stock Recitals
TCI Group Stockholders Section 7.3(a)
TCI K-1 Preamble
TCI K-1 Assumed Liabilities Section 3.3(a)
TCI K-1 Interest Section 3.1(a)
TCI Options Section 7.5(a)
TCI Plan Committee Section 7.5(a)
TCI Plans Section 7.5(a)
TCI SARs Section 7.5(a)
TCISE Constituent Corporations Section 1.1(a)
TCISE Merger Section 1.1(a)
TCISE Surviving Corporation Section 1.1(a)
Tempo Recitals
Tempo Shares Section 2.1
Tempo Stock Section 2.1
UA K-1 Preamble
UA K-1 Assumed Liabilities Section 3.3(b)
UA K-1 Interest Section 3.1(b)
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REORGANIZATION AGREEMENT
Reorganization Agreement (this "Agreement"), dated as of ________ __,
1996, among Tele-Communications, Inc., a Delaware corporation ("TCI"), TCI
Communications, Inc., a Delaware corporation ("TCIC"), Tempo Enterprises, Inc.,
an Oklahoma corporation ("Enterprises"), TCI Digital Satellite Entertainment,
Inc., a Colorado corporation ("Digital"), Old TCI SE, Inc., a Delaware
corporation ("Old TCISE") XXX X-0, Xxx., x Xxxxxxxx xxxxxxxxxxx ("XXX X-0"),
United Artists K-1 Investments, Inc., a Colorado corporation ("UA K-1"), TCISE
Partner 1, Inc., a Colorado corporation ("Sub 1"), TCISE Partner 2, Inc., a
Colorado corporation ("Sub 2") and TCI Satellite Entertainment, Inc., a Delaware
corporation (the "Company").
RECITALS
A. Each of the parties to this agreement other than TCI is a direct
or indirect subsidiary of TCI. The parties desire to effect the transactions set
forth in this Agreement in connection with a plan to reorganize and spin off
TCI's interests in the business of distributing multichannel programing services
directly to consumers in the United States via digital broadcast satellite,
including the rental and sale of customer premises equipment relating thereto
(the "Digital Satellite Business"), which plan was adopted by TCI's Board of
Directors on June 17, 1996. Upon the consummation of the transactions provided
for herein, subject to regulatory approval and certain other conditions, TCI
intends to distribute (the "Distribution") all the capital stock of the Company
to the holders of record of shares of Tele-Communications, Inc. Series A TCI
Group Common Stock, par value $1.00 per share (the "Series A TCI Group Common
Stock"), and Tele-Communications, Inc. Series B TCI Group Common Stock, par
value $1.00 per share (the "Series B TCI Group Common Stock" and together with
the Series A TCI Group Common Stock, the "TCI Group Common Stock").
B. TCIC is a subsidiary of TCI.
C. Enterprises and Digital are direct wholly-owned subsidiaries of
TCIC.
D. Tempo Satellite, Inc., an Oklahoma corporation ("Tempo"), is a
direct wholly-owned subsidiary of Enterprises.
E. TCI K-1 and UA K-1 are indirect wholly-owned subsidiaries of
TCIC.
F. Old TCISE and the Company are direct wholly-owned subsidiaries of
Digital. Sub 1 and Sub 2 are direct wholly-owned subsidiaries of the Company.
Old TCISE, the Company, Sub 1 and Sub 2 were formed in connection with the
Distribution.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGERS
Section 1.1 The Mergers.
(a) In accordance with and subject to the provisions of this
Agreement, the Business Corporation Act of the State of Colorado (the "Colorado
Act") and the General Corporation Law of the State of Delaware (the "Delaware
Act"), at the Merger Effective Time with respect to the TCISE Merger (as such
terms are defined below), Old TCISE shall be merged with and into Digital, and
the separate existence of Old TCISE shall cease, and Digital shall continue as
the surviving corporation (sometimes referred to as the "TCISE Surviving
Corporation") under the laws of the State of Colorado (the "TCISE Merger").
Digital and Old TCISE are sometimes referred to collectively herein as the
"TCISE Constituent Corporations." The TCISE Merger is intended to be a "short
form" merger pursuant to section 0-000-000 of the Colorado Act and section 253
of the Delaware Act.
(b) In accordance with and subject to the provisions of this
Agreement, the Colorado Act and the Delaware Act, at the Merger Effective Time
with respect to the Digital Merger (as defined below), Digital shall be merged
with and into the Company and the separate existence of Digital shall cease, and
the Company shall continue as the surviving corporation (sometimes referred to
herein as the "Digital Surviving Corporation") under the laws of the State of
Delaware (the "Digital Merger"). The Company and Digital are sometimes referred
to collectively herein as "the Digital Constituent Corporations." The Digital
Merger is intended to be a "short form" merger pursuant to section 253 of the
Delaware Act and section 0-000-000 of the Colorado Act.
(c) In accordance with and subject to the provisions of this
Agreement, the General Corporation Act of the State of Oklahoma (the "Oklahoma
Act") and the Delaware Act, at the Merger Effective Time with respect to the
Enterprises Merger (as defined below), Enterprises shall be merged with and into
TCIC, and the separate existence of Enterprises shall cease, and TCIC shall
continue as the surviving corporation (sometimes referred to herein as the
"Enterprises Surviving Corporation") under the laws of the State of Delaware
(the "Enterprises Merger" and, together with the TCISE Merger and the Digital
Merger, the "Mergers"). TCIC and Enterprises are sometimes referred to
collectively herein as the "Enterprises Constituent Corporations." The
Enterprises Merger is intended to be a "short form" merger pursuant to section
253 of the Delaware Act and section 1083 of the Oklahoma Act.
Section 1.2 Effective Time of The Mergers.
Subject to the provisions of this Agreement, as soon as
practicable on or after the Closing Date, the parties to the Mergers shall file
such certificates of merger, articles of merger or other appropriate documents
(in any case, the "Certificates of Merger") executed in accordance with the
relevant provisions of the Delaware Act and the Colorado Act or the Oklahoma
Act, as the case may be, as shall be necessary or desirable in connection with
the Mergers. Each Merger shall become effective at the time specified in the
applicable Certificate of Merger (the time each Merger becomes effective being
the "Merger Effective Time" with respect to such Merger). The Mergers will occur
in the following order: first, the TCISE Merger; second, the Digital Merger; and
third, the Enterprises Merger.
Section 1.3 Effect of The Mergers.
(a) From and after the Merger Effective Time with respect to the
TCISE Merger, the TCISE Merger will have the effects set forth in section 7-111-
106 of the Colorado Act and, to the extent applicable, section 259 of the
Delaware Act. If, at any time after the Merger Effective Time with respect to
the TCISE Merger, the TCISE Surviving Corporation determines that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
TCISE Surviving Corporation its rights, title and interests in, to or under any
of the rights, properties or assets of either of the TCISE Constituent
Corporations, or otherwise to carry out the intent and purposes of the TCISE
Merger, the officers and directors of the TCISE Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of each of the
TCISE Constituent Corporations, all such deeds, bills of sale, assignments and
assurances, and to take and do, in the name and on behalf of each of the TCISE
Constituent Corporations, all such other actions and things as may be necessary
or desirable to vest, perfect or confirm any and all rights, title and interests
in, to and under such rights, properties or assets in the TCISE Surviving
Corporation or otherwise to carry out the intent and purposes of the TCISE
Merger.
(b) From and after the Merger Effective Time with respect to the
Digital Merger, the Digital Merger will have the effects set forth in section
259 of the Delaware Act and, to the extent applicable, section 0-000-000 of the
Colorado Act. If, at any time after the Merger Effective Time with respect to
the Digital Merger, the Digital Surviving Corporation determines that any deeds,
bills of sale, assignments, assurances or any other
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actions or things are necessary or desirable to vest, perfect or confirm of
record or otherwise in the Digital Surviving Corporation its rights, title and
interests in, to or under any of the rights, properties or assets of either of
the Digital Constituent Corporations, or otherwise to carry out the intent and
purposes of the Digital Merger, the officers and directors of the Digital
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of each of the Digital Constituent Corporations, all such deeds,
bills of sale, assignments and assurances, and to take and do, in the name and
on behalf of each of the Digital Constituent Corporations, all such other
actions and things, as may be necessary or desirable to vest, perfect or confirm
any and all rights, title and interests in, to and under such rights, properties
or assets in the Digital Surviving Corporation or otherwise to carry out the
intent and purposes of the Digital Merger.
(c) From and after the Merger Effective Time with respect to the
Enterprises Merger, the Enterprises Merger will have the effects set forth in
section 259 of the Delaware Act and, to the extent applicable, sections 1088 and
1090 of the Oklahoma Act. If, at any time after the Merger Effective Time with
respect to the Enterprises Merger, the Enterprises Surviving Corporation
determines that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm of
record or otherwise in the Enterprises Surviving Corporation its rights, title
and interests in, to or under any of the rights, properties or assets of either
of the Enterprises Constituent Corporations, or otherwise to carry out the
intent and purposes of the Enterprises Merger, the officers and directors of the
Enterprises Surviving Corporation shall be authorized to execute and deliver, in
the name and on behalf of each of the Enterprises Constituent Corporations, all
such deeds, bills of sale, assignments and assurances, and to take and do, in
the name and on behalf of each of the Enterprises Constituent Corporations, all
such other actions and things, as may be necessary or desirable to vest, perfect
or confirm any and all rights, title and interests in, to and under such rights,
properties or assets in the Enterprises Surviving Corporation or otherwise to
carry out the intent and purposes of the Enterprises Merger.
Section 1.4 Certificate of Incorporation and By-laws.
(a) TCISE Merger. At the Merger Effective Time with respect to
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the TCISE Merger, the certificate of incorporation of Digital, as in effect
immediately prior to such time, shall be the certificate of incorporation of the
TCISE Surviving Corporation until thereafter altered, amended or repealed as
provided therein or in the Delaware Act. The by-laws of Digital, as in effect at
the Merger Effective Time with respect to the TCISE Merger, shall be the by-laws
of the TCISE Surviving Corporation until thereafter altered, amended or repealed
as provided therein or in the Delaware Act or in the certificate of
incorporaiton of the TCISE Surviving Corporation.
(b) Digital Merger. At the Merger Effective Time with respect
--------------
to the Digital Merger, the certificate of incorporation of the Company, as in
effect immediately prior to such time, shall be the certificate of incorporation
of the Digital Surviving Corporation until thereafter altered, amended or
repealed as provided therein or in the Delaware Act. The by-laws of the Company,
as in effect at the Merger Effective Time with respect to the Digital Merger,
shall be the by-laws of the Digital Surviving Corporation until thereafter
altered, amended or repealed as provided therein or in the Delaware Act or in
the certificate of incorporation of the Digital Surviving Corporation.
(c) Enterprises Merger. At the Merger Effective Time with
------------------
respect to the Enterprises Merger, the certificate of incorporation of TCIC, as
in effect immediately prior to such time, shall be the certificate of
incorporation of the Enterprises Surviving Corporation until thereafter altered,
amended or repealed as provided therein or in the Delaware Act. The by-laws of
TCIC, as in effect at the Merger Effective Time with respect to the Enterprises
Merger, shall be the by-laws of the Enterprises Surviving Corporation until
thereafter altered,
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amended or repealed as provided therein or in the Delaware Act or in the
certificate of incorporation of the Enterprises Surviving Corporation.
Section 1.5 Directors And Officers of Surviving Corporation.
(a) The directors of Digital, the Company and TCIC immediately
prior to the Merger Effective Time with respect to the TCISE Merger, the Digital
Merger and the Enterprises Merger, respectively, shall be the directors of the
TCISE Surviving Corporation, the Digital Surviving Corporation and the
Enterprises Surviving Corporation, respectively, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
(b) The officers of Digital, the Company and TCIC immediately
prior to the Merger Effective Time with respect to the TCISE Merger, the Digital
Merger and the Enterprises Merger, respectively, shall be the officers of the
TCISE Surviving Corporation, the Digital Surviving Corporation and the
Enterprises Surviving Corporation, respectively, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
Section 1.6 Conversion of Securities.
(a) TCISE Merger. At the Merger Effective Time with respect to
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the TCISE Merger, subject and pursuant to the terms of this Agreement and the
Delaware Act, by virtue of the TCISE Merger and without any action on the part
of the TCISE Constituent Corporations or any other person, (i) each issued and
outstanding share of capital stock of Digital, and each share of capital stock
of Digital then held by Digital as treasury stock, if any, shall remain issued
and outstanding and shall not be affected in any way by the TCISE Merger and
(ii) each share of capital stock of Old TCISE then issued and outstanding or
held by Old TCISE in its treasury shall be canceled and retired without
consideration.
(b) Digital Merger. At the Merger Effective Time with respect
--------------
to the Digital Merger, subject and pursuant to the terms of this Agreement and
the Delaware Act, by virtue of the Digital Merger and without any action on the
part of the Digital Constituent Corporations or any other person, (i) each
issued and outstanding share of capital stock of the Company as of immediately
prior to the Merger Effective Time with respect to the Digital Merger, all of
which is owned beneficially and of record by Digital, and each share of such
capital stock of the Company that is then held by the Company as treasury stock,
if any, shall be canceled and retired without consideration, (ii) each issued
and outstanding share of the common stock, par value $1.00 per share, of Digital
as of immediately prior to the Merger Effective Time with respect to the Digital
Merger (the "Digital Stock"), shall be converted into one share of common
stock, par value $1.00 per share, of the Digital Surviving Corporation, and
(iii) any shares of Digital Stock then held by Digital as treasury stock shall
be canceled and retired without consideration.
(c) Enterprises Merger. At the Merger Effective Time with
------------------
respect to the Enterprises Merger, subject and pursuant to the terms of this
Agreement and the Delaware Act, by virtue of the Enterprises Merger and without
any action on the part of the Enterprises Constituent Corporations or any other
person, (i) each issued and outstanding share of capital stock of TCIC, and each
share of capital stock of TCIC then held by TCIC as treasury stock, if any,
shall remain issued and outstanding and shall not be affected in any way by the
Enterprises Merger and (ii) each share of capital stock of Enterprises then
issued and outstanding or held by Enterprises in its treasury shall be canceled
and retired without consideration.
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ARTICLE II
CONTRIBUTION TO CAPITAL OF THE COMPANY BY TCIC
Section 2.1 Contribution.
TCIC hereby agrees to grant, assign, transfer, deliver and convey
to the Company at the Closing, effective immediately following the Merger
Effective Time with respect to the Mergers, as a contribution to capital and
without further consideration, 1,000 shares (the "Tempo Shares") of the common
stock, par value $1.00 per share, of Tempo (the "Tempo Stock"), which shares
constitute all the issued and outstanding shares of capital stock of Tempo. The
Company hereby agrees to acquire, accept and receive all of TCIC's rights, title
and interests in and to the Tempo Shares.
Section 2.2 IRS Classification.
The conveyance contemplated by this Article II is being
undertaken by the parties pursuant to Section 368(a)(1)(D) of the Internal
Revenue Code of 1986, as amended (the "Code").
ARTICLE III
SALES OF PARTNERSHIP INTERESTS
BY TCI K-1 TO SUB 1 AND BY UA K-1 TO SUB 2
Section 3.1 Sales of Partnership Interests.
(a) TCI K-1 hereby agrees to sell, assign, transfer, deliver and
convey to Sub 1 at the Closing all rights, title and interests of TCI K-1 in and
to its general and limited partnership interests (the "TCI K-1 Interest") in
PRIMESTAR Partners, L.P. (the "Partnership"), including, without limitation, its
rights under the Limited Partnership Agreement of the Partnership dated as of
February 8, 1990, as amended (the "Partnership Agreement").
(b) UA K-1 hereby agrees to sell, assign, transfer, deliver and
convey to Sub 2 at the Closing all rights, title and interests of UA K-1 in and
to its general and limited partnership interests (the "UA K-1 Interest" and,
collectively with the TCI K-1 Interest, the "Interests") in the Partnership,
including, without limitation, its rights under the Partnership Agreement.
Section 3.2 Purchase Price.
In consideration for the respective Interests, at the Closing,
Sub 1 hereby agrees to deliver to TCI K-1 a promissory note, substantially in
the form of Exhibit A attached hereto (the "Sub 1 Note"), in the original
principal amount of $________, and Sub 2 hereby agrees to deliver to UA K-1 a
promissory note, substantially in the form of Exhibit A attached hereto (the
"Sub 2
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Note" and, together with the Sub 1 Note, the "Subsidiary Notes"), in the
original principal amount of $________.
Section 3.3 Assumption of Liabilities.
(a) In connection with the sale of the TCI K-1 Interest as
contemplated hereby, and in further consideration thereof, Sub 1 hereby agrees
to be bound by all applicable provisions of the Partnership Agreement and to
assume and to perform and discharge, or cause to be performed and discharged,
when due any and all obligations and liabilities of TCI K-1 that were incurred
by TCI K-1 as a partner of the Partnership, including without limitation all
liabilities of TCI K-1 under the Partnership Agreement, whether such liabilities
(hereinafter collectively referred to as the "TCI K-1 Assumed Liabilities") are
known or unknown, accrued or unaccrued, liquidated or unliquidated in amount,
fixed or contingent, due or to become due, existing or inchoate, and whether
arising on or before or after the date hereof.
(b) In connection with the sale of the UA K-1 Interest as
contemplated hereby, and in further consideration thereof, Sub 2 hereby agrees
to be bound by all applicable provisions of the Partnership Agreement and to
assume and to perform and discharge, or cause to be performed and discharged,
when due any and all obligations and liabilities of UA K-1 that were incurred by
UA K-1 as a partner of the Partnership, including without limitation all
liabilities of UA K-1 under the Partnership Agreement, whether such liabilities
(hereinafter referred to as the "UA K-1 Assumed Liabilities" and, collectively
with the TCI K-1 Assumed Liabilities, the "Assumed Liabilities") are known or
unknown, accrued or unaccrued, liquidated or unliquidated in amount, fixed or
contingent, due or to become due, existing or inchoate, and whether arising on
or before or after the date hereof.
ARTICLE IV
ISSUANCE OF PROMISSORY NOTE BY THE COMPANY TO TCIC
At the Closing, immediately following the consummation of the
transactions provided for in Articles I, II and III of this Agreement, the
Company shall deliver to TCIC a promissory note, substantially in the form
attached hereto as Exhibit B (the "Company Note"), in an amount equal to the
intercompany balance between the Company and TCIC and/or any of TCIC's other
consolidated subsidiaries as of the Closing Date, in satisfaction of such
intercompany balance.
ARTICLE V
SPINOFF OF THE COMPANY TO TCI
At the Closing, immediately following delivery of the Company
Note by the Company to TCIC pursuant to Article IV hereof, TCIC shall distribute
to TCI, as a tax-free spinoff, all the issued and outstanding capital stock of
the Company.
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ARTICLE VI
ASSUMPTION OF INDEBTEDNESS
Section 6.1 Assumption and Novation.
At the Closing, immediately following the consummation of the
transaction provided for in Article V of this Agreement, TCI shall assume
indebtedness of the Company and/or its subsidiaries in an amount equal to the
excess of (a) the aggregate principal amounts of the Company Note and the
Subsidiary Notes over (b) $250,000,000 (such excess, the "Assumption Amount").
Such assumption of indebtedness shall be effected as follows:
(a) At the Closing, TCI shall assume, by novation, a portion of
the indebtedness represented by the Subsidiary Notes and Company Note equal in
the aggregate to the Assumption Amount. Such assumption of indebtedness shall be
applied first against the Subsidiary Notes, and then against the Company Note,
to the extent that the Assumption Amount exceeds the aggregate principal amount
of the Subsidiary Notes.
(b) Upon the assumption of indebtedness and novation provided for
in paragraph (a) of this Article VI:
(i) the Company Note and the Subsidiary Notes shall be
canceled and retired;
(ii) TCI shall issue its promissory notes to TCIC, TCI K-1
and UA K-1 in the respective principal amounts of the indebtedness to such
entities assumed by TCI, which notes shall be in substantially the forms of
the Company Note and the Subsidiary Notes, as the case may be, or in such
other form or forms as TCI and the payees shall agree; and
(iii) the Company shall issue to TCIC a substitute promissory
note, substantially in the form of the Company Note so canceled and
retired, in the principal amount of $250,000,000.
Section 6.2 Allocation of Consideration.
The consideration received by the Company as a result of the assumption of
indebtedness provided for in Section 6.1 shall be allocated as follows:
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(a) $100,000,000 of such indebtedness shall be assumed by TCI
as a capital contribution to the Company by TCI; and
(b) the remainder of such indebtedness shall be assumed by TCI as
consideration for (i) the assumption by the Company at the Closing of TCI's
obligations under the Company Stock Options, as provided in Section 7.5(d) of
this Agreement and (ii) the grant by the Company to TCI of an option to purchase
up to 4,765,000 shares of Company Common Stock, at an exercise price of $1.00
per share, as required by TCI from time to time to meet its obligations under
the conversion features of the TCI Series D Convertible Preferred Stock and the
Convertible Notes due December 12, 2021, of TCI UA, Inc., as such conversion
features are adjusted as a result of the Distribution, as provided in the Option
Agreement dated as of the date hereof between TCI and the Company.
ARTICLE VII
DISTRIBUTION OF THE COMPANY COMMON STOCK
TO THE TCI GROUP STOCKHOLDERS
Section 7.1 Amended and Restated Certificate of Incorporation of the Company.
Following the Closing and prior to the Distribution (i) the Company will
cause the Certificate of Incorporation of the Company to be amended and
restated, substantially in the form attached hereto as Exhibit C (the "Company
Charter"), (ii) TCI, as the sole stockholder of the Company, will approve the
Company Charter and (iii) the Company will cause the Company Charter to be filed
in the State of Delaware, in accordance with the Delaware Act.
Section 7.2 Reclassification of Company Common Stock.
Immediately following the amendment and restatement of the Certificate of
Incorporation of the Company as provided in Section 7.1, the Company will
reclassify (the "Reclassification") all of the issued and outstanding common
stock of the Company, which at such time will consist
8
of 1,000 shares of common stock owned by TCI, into that number of shares of
Series A Common Stock, par value $1.00 per share, of the Company (the "Series A
Common Stock") and that number of shares of Series B Common Stock, par value
$1.00 per share, of the Company (the "Series B Common Stock") as shall in the
aggregate be sufficient to effect the Distribution in accordance with Section
8.3 hereof.
Section 7.3 The Distribution.
(a) On the Distribution Date, after giving effect to the Reclassification
as provided in Section 7.2, and subject to the conditions to the Distribution
set forth in Section 7.4, TCI shall distribute to the holders of record of TCI
Group Common Stock at the close of business on the Record Date, other than TCI
or any subsidiary of TCI (such holders, the "TCI Group Stockholders"), as a
dividend, all the issued and outstanding shares of Series A Common Stock and
Series B Common Stock (collectively, the "Company Common Stock"), on the basis
of one share of Series A Common Stock for each ten shares of Series A TCI Group
Common Stock held of record on the Record Date and one share of Series B Common
Stock for each ten shares of Series B TCI Group Common Stock held of record on
the Record Date, rounded for each TCI Group Stockholder as provided in Section
7.3(c).
(b) The TCI Board shall have the authority (i) to declare or refrain from
declaring the Distribution, (ii) to establish or change the record date for the
Distribution (the "Record Date"), (iii) to establish or change the date on which
the Distribution will be effective (the "Distribution Date") and (iv) to
establish or change the procedures for effecting the Distribution, subject to
this Agreement and the Delaware Act.
(c) Anything contained herein to the contrary notwithstanding, TCI will
not issue fractional shares of Company Common Stock in connection with the
Distribution. Fractions of one-half or greater of a share will be rounded up
and fractions of less than one-half of a share will be rounded down to the
nearest whole number of shares of Series A Common Stock or Series B Common
Stock, as applicable, on a holder-by-holder basis.
Section 7.4 Conditions to the Distribution.
It shall be a condition to the effectiveness of the Distribution that, (a)
on or before the Record Date, the Board of Directors of TCI (the "TCI Board")
shall have taken all necessary corporate action to establish the Record Date and
the Distribution Date and to declare the Distribution in accordance with the
certificate of incorporation and by-laws of TCI and the Delaware Act, (b) prior
to the Distribution, Xxxxx & Xxxxx, L.L.P., counsel for TCI, shall have rendered
an opinion to the effect that the Distribution should qualify as a tax-free
transaction to the TCI Group Stockholders under Section 355 of the Code, and (c)
prior to the Distribution, the registration statement of the Company on Form 10
with respect to the registration under the Securities Exchange Act of 1934 of
the Series A Common Stock and the Series B Common Stock shall have become
effective, and such effectiveness shall not on the Distribution Date be stayed
or suspended.
9
Section 7.5 Treatment of Outstanding Options and SARs.
(a) Certain directors, officers and employees of TCI and its subsidiaries
(including the Company) have been granted options to purchase shares of Series A
TCI Group Common Stock ("TCI Options") and stock appreciation rights with
respect to shares of Series A TCI Group Common Stock ("TCI SARs"). The TCI
Options and TCI SARs have been granted pursuant to various stock plans of TCI
(the "TCI Plans"). The TCI Plans give the committee of the TCI Board that
administers the TCI Plans (the "TCI Plan Committee") the authority to make
equitable adjustments to outstanding TCI Options and TCI SARs in the event of
certain transactions, of which the Distribution is one.
(b) Subject to the approval of the TCI Plan Committee and the TCI Board,
immediately prior to the Distribution, each TCI Option shall be divided into two
separately exercisable options: (i) an option to purchase Series A Common Stock
(an "Add-on Company Option"), exercisable for the number of shares of Series A
Common Stock that would have been issued in the Distribution in respect of the
shares of Series A TCI Group Common Stock subject to the applicable TCI Option,
if such TCI Option had been exercised in full immediately prior to the Record
Date, and containing substantially equivalent terms as the existing TCI Option,
and (ii) an option to purchase Series A TCI Group Common Stock (an "Adjusted TCI
Option"), exercisable for the same number of shares of Series A TCI Group Common
Stock as the corresponding TCI Option had been. The aggregate exercise price of
each TCI Option shall be allocated between the Add-on Company Option and the
Adjusted TCI Option into which it is divided, and all other terms of the Add-on
Company Option and Adjusted TCI Option shall in all material respects be the
same as such TCI Option, except that references therein to TCI shall generally
refer to the Company with respect to Adjusted TCI Options and Add-on Company
Options (and related SARs) held by Company Employees (as defined in Section
7.5(c)). Similar adjustments shall be made to the outstanding TCI SARs,
resulting in the holders thereof holding Adjusted TCI SARs and Add-on Company
SARs instead of TCI SARs, effective immediately prior to the Distribution. The
foregoing adjustments shall be made pursuant to the anti-dilution provisions of
the TCI Plans pursuant to which the respective TCI Options and TCI SARs were
granted. Notwithstanding the foregoing, in order to give the Company an
opportunity to file a registration statement on Form S-3 with respect to the
shares of Series A Common Stock issuable upon exercise of Add-on Company Options
and Add-on Company SARs, such options and SARs will not be exercisable for
Series A Common Stock during the first fifteen months following the
Distribution, and Add-on Company Options (and Add-on Company SARs) which would
otherwise have expired during the first eighteen months following the
Distribution will remain in effect until the expiration of such eighteen month
period. Such deferral will not otherwise affect the vesting schedule or other
terms and conditions of the Add-on Company Options (and Add-on Company SARs).
(c) As a result of the foregoing, certain persons who remain TCI employees
or non-employee directors after the Distribution and certain persons who were
TCI employees prior to the Distribution but become Company employees after the
Distribution will hold both Adjusted TCI Options and separate Add-on Company
Options and/or will hold both Adjusted TCI SARs and separate Add-on Company
SARs. The obligations with respect to the Adjusted TCI Options, Add-on Company
Options, Adjusted TCI SARs and Add-on Company SARs held by TCI employees and
non-employee directors following the Distribution shall be obligations solely of
TCI. The obligations with respect to the Adjusted TCI Options, Add-on Company
Options, Adjusted TCI SARs and Add-on Company SARs held by persons who are
Company employees at the time of the Distribution and following the Distribution
are no longer TCI employees ("Company Employees") shall be obligations solely of
the Company. Prior to the Distribution, TCI and the Company shall enter into an
agreement to sell to each other from time to time at the then current market
price shares of Series A TCI Group Common Stock and Series A Common Stock,
respectively, as necessary to satisfy their respective obligations under such
securities.
10
(d) In June 1996, the TCI Board and the Compensation Committee of the TCI
Board authorized and approved the grant to each of the persons set forth on
Schedule 7.5(d) attached hereto, effective as of the date of the Closing, (the
"Grant Date"), of an option to purchase that number of shares of Series A Common
Stock as shall represent, on the Grant Date after, giving effect to the
Distribution, that percentage of the total outstanding equity of the Company as
is set forth opposite the name of such person on such Schedule 7.5(d), at an
aggregate exercise price equal to that same percentage of TCI's total investment
in the Company as of the Grant Date (other than any portion of such investment
represented by a promissory note on the Grant Date) (such options collectively,
the "Company Stock Options"). In consideration of the agreement of TCI to make
the capital contribution to the Company provided for in Section 6.2(b) hereof,
the Company hereby agrees to assume the obligations of TCI under the Company
Stock Options. In that connection, on or before the Distribution Date, the
Company shall issue to each of the persons set forth in Schedule 7.5(d) a stock
option agreement substantially in the form of Exhibit D attached hereto, dated
as of the Grant Date and otherwise having the terms and conditions set forth in
Schedule 7.5(d). During the term of the Company Stock Options TCI shall notify
the Company promptly upon any termination of the employment with TCI and its
subsidiaries of any of the persons set forth on Schedule 7.5(d), and shall
promptly provide the Company with all other information as the Company shall
reasonably request to assist the Company in administering the Company Stock
Options in accordance with their terms.
Section 7.6. Assumption of Executive Employment Contract.
On the Distribution Date, subject to the conditions to the
Distribution set forth in Section 7.4, the Company shall assume all obligations
of TCI to Xxxx X. Xxxxxx with respect to Xx. Xxxxxx'x former employment contract
with United Cable Television Corporation. In that connection, the Company shall
make the payments in respect of such employment contract to the same effect as
if Xx. Xxxxxx had continued to remain an employee of TCI.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Section 8.1 Representations And Warranties of the Parties.
Each of the parties hereto, severally as to itself and not jointly,
hereby represents and warrants to each of the other parties as follows:
(a) Organization and Qualification. Such party is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the state of
its incorporation, has all requisite corporate power and authority to own, lease
or operate its properties and to conduct the business heretofore conducted by
it, and is duly qualified and in good standing to do business in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except in such jurisdictions where the failure to be so qualified and in good
standing would not have a material adverse effect on its business, financial
condition or results of operations.
11
(b) Authorization and Validity of Agreement. Such party has all
---------------------------------------
requisite corporate power and authority to execute, deliver and perform this
Agreement. The execution, delivery and performance by such party of this
Agreement and the consummation by it of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of such party
and, to the extent required by law, its stockholders, and no other corporate
action on its part is necessary to authorize the execution and delivery by such
party of this Agreement and the consummation by it of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by such
party, and is a valid and binding obligation of such party, enforceable in
accordance with its terms (except as enforceability may be limited by laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies).
(c) No Approvals or Notices Required; No Conflict with Instruments.
--------------------------------------------------------------
The execution, delivery and performance by such party of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
conflict with or result in a breach or violation of any of the terms or
provisions of, constitute a default under, or result in the creation of any
lien, charge or encumbrance upon any of its assets pursuant to the terms of, the
charter or bylaws of such party, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by which it
or any of its assets are bound, or any law, rule, regulation, judgment, order or
decree of any government, governmental instrumentality or court having
jurisdiction over it or its properties.
Section 8.2 Additional Representations and Warranties of TCIC.
TCIC hereby represents and warrants to the Company, Sub 1 and Sub 2 as
follows:
(a) TCI K-1 is the sole record and beneficial owner of the TCI K-1
Interest and, upon the transfer thereof to Sub 1, Sub 1 will acquire all rights,
title and interests of TCI K-1 in and to the TCI K-1 Interest, free and clear of
any liens, claims and encumbrances.
(b) UA K-1 is the sole record and beneficial owner of the UA K-1
Interest and, upon the transfer thereof to Sub 2, Sub 2 will acquire all rights,
title and interests of UA K-1 in and to the UA K-1 Interest, free and clear of
any liens, claims and encumbrances.
(c) The authorized capital stock of Tempo consists of 50,000 shares of
Tempo Stock, of which 1,000 shares have been duly issued and are outstanding.
The Tempo Shares have been duly authorized and validly issued, are fully paid,
nonassessable and free from preemptive rights, and constitute all of the issued
and outstanding shares of Tempo capital stock. As of the date of this
Agreement, the Tempo Shares are owned beneficially and of record by Enterprises,
free and clear of any and all liens, claims and encumbrances. Upon the
consummation of the Enterprises Merger and the contribution of the Tempo Shares
to the Company in accordance with Section 2.1, the Company will acquire from
TCIC good and marketable title to, and sole record and beneficial ownership of,
the Tempo Shares, free and clear of all liens, claims and encumbrances.
12
(d) As of immediately prior to the Merger Effective Time with respect
to the Mergers: (i) all the issued and outstanding shares of capital stock of
Enterprises, and all the issued and outstanding shares of capital stock of
Digital, are owned, beneficially and of record, by TCIC; and (ii) all the issued
and outstanding shares of capital stock of Old TCISE and the Company are owned,
beneficially and of record, by Digital.
Section 8.3 Additional Representations and Warranties of the Company, Sub 1
and Sub 2.
Each of the Company, Sub 1 and Sub 2 hereby represents and warrants to
each of the other parties that it has been given full access to and ample
opportunity to review and investigate all financial and other information in
connection with the transactions contemplated hereby as it has deemed necessary
to make an informed investment decision and has availed itself of such access
and opportunity to the full extent that it desired. In determining to enter
into this Agreement and consummate the transactions contemplated hereby, it has
not relied upon any representation, warranty, promise or agreement other than
those expressly contained herein, and no other representation, warranty, promise
or agreement has been made or shall be implied.
ARTICLE IX
COVENANTS
Section 9.1 Cross-Indemnities.
(a) Each of the parties hereby covenants and agrees to indemnify and
hold harmless each of the other parties hereto and their respective
subsidiaries, officers and directors, from and against any and all losses,
liabilities, claims, damages, costs and expenses (including attorneys' fees and
disbursements and other reasonable professional fees and disbursements, whether
or not litigation is instituted) (collectively, "Losses") based upon, arising
out of or resulting from any breach of any representation, warranty or covenant
of such party contained herein.
(b) In addition to the indemnification provided for in Section
9.1(a), and except as otherwise expressly provided herein or in any of the
agreements set forth on Schedule 9.1(b) hereto:
(i) the Company and its subsidiaries hereby covenant and agree to
indemnify and hold harmless TCI and its subsidiaries and their respective
officers, directors, employees and agents, from and against (A) the Assumed
Liabilities, (B) any and all other Losses arising out of or resulting from the
operation by the Company, its subsidiaries, or any of their respective
predecessors of the Digital Satellite Business or the ownership by the Company,
its subsidiaries, or any of their respective predecessors of any assets used
primarily therein (collectively the "Digital Satellite Assets"), whether before
or after the
13
Distribution and (C) any and all Losses arising out of or resulting from the
business, affairs, assets or liabilities of the Company and its subsidiaries
following the Distribution; and
(ii) TCI and its subsidiaries hereby covenant and agree to
indemnify and hold harmless the Company and its subsidiaries and their
respective officers, directors, employees and agents, from and against (A) any
and all Losses arising out of or resulting from (1) the operation by TCI, its
subsidiaries or any of their respective predecessors of any business other than
the Digital Satellite Business, (2) the ownership by TCI, its subsidiaries or
any of their respective predecessors of any assets other than the Digital
Satellite Assets, or (3) any other activity of TCI, its subsidiaries or any of
their respective predecessors, or any other reason or thing, not related to the
operation of the Digital Satellite Business or the ownership of any Digital
Satellite Assets, in any such case whether before or after the Distribution and
(B) any and all other Losses arising out of or resulting from the business,
affairs, assets or liabilities of TCI and its subsidiaries following the
Distribution.
(c) Any party seeking indemnification hereunder will give prompt
notice to the other party of any claim as to which indemnification is sought,
and will give the indemnifying party the right to control, at its own expense,
the conduct of any such claim, and any litigation arising out of such claim. An
indemnifying party shall not be liable for any settlement of any action or claim
effected without its consent, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, the party seeking indemnification hereunder shall
have the right, at its own expense, to participate in (but not control) the
defense of any third-party claim giving rise to a claim of indemnification
hereunder, and shall have the right to control (with counsel of its own choice
and at the expense of the indemnifying party) the defense of any such third
party claim if such third party claim shall seek any material non-monetary
damages or criminal penalties, or if the indemnifying party shall also be a
party or potential party to such claim (or another claim based on substantially
similar facts) and the party seeking indemnification shall have received an
opinion of counsel stating that the party seeking indemnification has
substantive defenses to such claim that are different from and potentially
inconsistent with those available to the indemnifying party.
Section 9.2 Further Assurances.
Each of the parties hereto covenants and agrees to make, execute,
acknowledge and deliver such instruments, agreements, consents, assurances and
documents, and take all such actions, as any other party may reasonably request
and as may reasonably be required in order to effectuate the purposes and
intents of this Agreement and to carry out the terms hereof, including, without
limitation, to vest in the Company the record and beneficial ownership of all of
the capital stock of Tempo and to vest in Sub 1 and Sub 2 respectively the
record and beneficial ownership of all rights, title and interests in and to the
TCI K-1 Interest and the UA K-1 Interest (including, without limitation, the
admission of Sub 1 and Sub 2 as limited and general partners in the Partnership,
in accordance with Section 10.04 of the Partnership Agreement).
Section 9.3 Specific Performance.
14
Each of the parties hereto hereby acknowledges that the benefits to
the other parties of the performance by such party of its obligations to be
performed under this Agreement at and after the Closing are unique, that the
other parties hereto are willing to enter into this Agreement only upon
performance by such party of such obligations and that monetary damages may not
afford adequate remedy for failure to perform any of such obligations.
Accordingly, each of the parties hereto hereby consents to specific performance
of its obligations hereunder to be performed at or after the Closing and waives
any requirement for securing or posting of any bond in connection with the
obtaining by the other party or parties of any injunctive or other equitable
relief to enforce its or their rights hereunder.
Section 9.4 Access to Information.
(a) Each of (x) the Company and its subsidiaries and (y) TCI and its
subsidiaries (each, a "Party") shall provide to the other Party, at any time
before or after the Closing Date, upon written request and on a reasonable
schedule to be agreed by the Parties, any information in the possession or under
the control of a Party that the requesting Party reasonably needs (i) to comply
with reporting, filing or other requirements imposed on the requesting Party by
a federal, state or local judicial, regulatory, administrative or taxing
authority having jurisdiction over the requesting Party or (ii) to enable the
requesting Party to implement the transactions contemplated hereby, including
but not limited to performing its obligations under this Agreement.
(b) Any information owned by a Party that is provided to the other
Party pursuant to Section 9.4(a) shall remain the property of the providing
Party. Nothing contained in this Agreement shall be construed as granting or
conferring rights of license or otherwise in any such information.
(c) The Party requesting any information under this Section 9.4 shall
reimburse the other Party for the reasonable costs, if any, of creating,
gathering and copying such information, to the extent that such costs are
incurred for the benefit of the requesting Party. No Party shall have any
liability to the other Party in the event that any information exchanged or
provided pursuant to this Agreement that is an estimate or forecast, or is based
on an estimate or forecast, is found to be inaccurate, absent willful misconduct
by the Party providing such information.
Section 9.5 Confidentiality.
(a) Each of the Parties shall keep confidential for five years
following the Closing Date (or for five years following disclosure, whichever is
longer), and shall use reasonable efforts to cause its officers, directors,
employees, affiliates and agents (collectively, "Agents") to keep confidential
during such five year period, all Proprietary Information (as defined below) of
the other Party, in each case to the extent permitted by law.
(b) "Proprietary Information" means any proprietary ideas, plans and
information, including information of a technological or business nature, of a
Party (in this context, the
15
"disclosing Party") (including all trade secrets, technology, intellectual
property, data, summaries, reports, or mailing lists, in whatever form or media
whatsoever, including oral communications, and however produced or reproduced),
that is marked proprietary or confidential, or that bears a marking of like
import, or that the disclosing Party states is to be considered proprietary or
confidential, or that a reasonable and prudent person would consider proprietary
or confidential under the circumstances of its disclosure. In addition, all
information of the types referred to in the immediately preceding sentence that
is used by the Company and its subsidiaries on or prior to the Closing Date and
that is maintained by TCI or the Company or any of their respective subsidiaries
as proprietary or confidential, or that a reasonable and prudent person would
consider proprietary or confidential under the circumstances, shall constitute
Proprietary Information of the Company for all purposes of this Section 10.5.
Notwithstanding the foregoing, information of a disclosing Party will not
constitute Proprietary Information (and the other Party (in this context, the
"receiving Party") shall have no obligation with respect thereto), to the extent
such information: (i) is approved for release by prior written authorization of
the disclosing Party; (ii) is disclosed in order to comply with a judicial order
issued by a court of competent jurisdiction, or to comply with government laws
or regulations, in which event the receiving Party shall give prior written
notice to the disclosing Party of such disclosure as soon as practicable and
shall cooperate with the disclosing Party in using commercially reasonable
efforts to obtain an appropriate protective order or equivalent, and provided
that the information shall continue to be Proprietary Information to the extent
it is covered by such protective order or equivalent; (iii) is disclosed to the
receiving Party or the receiving Party's Agents on a non-confidential basis by a
person other than the disclosing Party or its Agents that, to the receiving
Party's knowledge, is not restricted from disclosing such information to the
receiving Party by any contractual, fiduciary or other legal obligation; or (iv)
is independently developed after the Closing Date by the receiving Party or its
Agents.
ARTICLE X
CLOSING
Section 10.1 Closing.
Unless this Agreement shall have been terminated and the transactions
contemplated by this Agreement abandoned pursuant to the provisions of Article
XI hereto, and subject to the satisfaction of all conditions set forth in
Section 10.2 (or waiver of such conditions to the extent such conditions may be
waived), the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of TCI, at 0000 XXX Xxxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000, at a mutually acceptable time and date (the "Closing
Date").
Section 10.2 Conditions to Closing.
(a) The obligations of the parties hereto to complete the
transactions provided for herein are conditioned upon the following:
16
(i) the receipt and continued validity of all third party
consents or waivers required to be obtained in connection with the
transactions contemplated by this Agreement; and
(ii) the receipt and continued validity of all consents,
approvals, orders, licenses or permits required to be received from the FCC
and the regulations of the FCC relating thereto in connection with the
transfer of control of or of an ownership interest in any of the businesses
of the parties hereto in which the Company (or any of its subsidiaries)
would have a direct or indirect interest upon consummation of the
transactions provided for herein;
The parties hereto acknowledge that all consents, waivers, orders and approvals
referred to above have been obtained as of the date hereof.
(b) The performance by each party hereto of its obligations
hereunder is further conditioned upon:
(i) the performance by each other party of its covenants and
agreements contained herein to the extent such are required to be performed
at or prior to the Closing; and
(ii) the representations and warranties of the other parties
herein being true and complete in all material respects as of the Closing
Date with the same force and effect as if made at and as of the Closing
Date.
Section 10.3 Deliveries at Closing.
(a) TCI. At the Closing, TCI shall deliver to
---
the appropriate party or parties:
(i) promissory notes to TCIC,TCI K-1 and UA K-1, pursuant to
Article VI, paragraph (b)(ii), hereof; and
(ii) certified copies of resolutions of its Board of Directors
authorizing the execution, delivery and performance by TCI of this
Agreement, which resolutions shall be in full force and effect at and as of
the Closing .
(b) TCIC. At the Closing, TCIC shall deliver to the appropriate party
----
or parties:
(i) executed certificates of ownership and merger in respect of
the Enterprises Merger pursuant to section 253(a) of the Delaware Act and
section 1083-A of the Oklahoma Act;
17
(ii) stock certificates evidencing the Tempo Shares, duly
endorsed in blank or accompanied by stock powers duly executed in blank,
all in proper form for transfer to the Company; and
(iii) certified copies of resolutions of its Board of Directors
authorizing the execution, delivery and performance by TCIC of this
Agreement, and the consummation of the Enterprises Merger as provided
herein, which resolutions shall be in full force and effect at and as of
the Closing.
(c) The Company. At the Closing, the Company shall deliver to the
-----------
appropriate party or parties:
(i) executed articles of merger in respect of the Digital Merger
pursuant to section 7-111-105(1) of the Colorado Act;
(ii) the Company Note and a substitute promissory note pursuant
to Article VI, paragraph (b)(iii), hereof; and
(iii) certified copies of resolutions of its Board of Directors
authorizing the execution, delivery and performance by the Company of this
Agreement, and the consummation of the Digital Merger as provided herein,
which resolutions shall be in full force and effect at and as of the
Closing.
(d) Enterprises. At the Closing, Enterprises shall deliver to each
-----------
other party certified copies of resolutions of its Board of Directors
authorizing execution, delivery and performance by Enterprises of this
Agreement, and the consummation of the Enterprises Merger as provided herein,
which resolutions shall be in full force and effect at and as of the Closing.
(e) Old TCISE. At the Closing, Old TCISE shall deliver to each other
---------
party certified copies of resolutions of its Board of Directors authorizing the
execution, delivery and performance by Old TCISE of this Agreement, and the
consummation of the TCISE Merger as provided herein, which resolutions shall be
in full force and effect at and as of the Closing.
(f) Digital. At the Closing, Digital shall deliver to the
-------
appropriate party or parties:
(i) executed articles of merger in respect of the TCISE Merger
pursuant to Section 7-111-105(1) of the Colorado Act;
(ii) an executed certificate of ownership and merger in respect
of the TCISE Merger and the Digital Merger pursuant to section 253(a) of
the Delaware Act; and
(iii) certified copies of (A) resolutions of the Board of
Directors of Digital, authorizing the execution, delivery and performance
by Digital of this Agreement and the consummation of the TCISE Merger and
the Digital Merger as provided herein, and (B) resolutions of TCIC, as sole
18
stockholder of Digital, approving the Digital Merger pursuant to section
7-111-104(3) of the Colorado Act, which resolutions shall be in full
force and effect at and as of the Closing.
(g) TCI K-1. At the Closing, TCI K-1 shalldeliver to the appropriate
-------
party or parties:
(i) such bills of sale, assignments and other documents and
instruments of transfer as shall be necessary or desirable under the
Partnership Agreement or otherwise or as shall reasonably be requested by
any other party hereto in order to effectively vest in Sub 1 all rights,
title and interests of TCI K-1 to the TCI K-1 Interest; and
(ii) certified copies of resolutions of the Board of Directors of
TCI K-1 authorizing the execution, delivery and performance by TCI K-1 of
this Agreement, which resolutions shall be in full force and effect at and
as of the Closing.
(h) UA K-1. At the Closing, UA K-1 shall deliver to the appropriate
------
party or parties:
(i) such bills of sale, assignments and other documents and
instruments of transfer as shall be necessary or desirable under the
Partnership Agreement or otherwise or as shall reasonably be requested by
any other party hereto in order to effectively vest in Sub 2 all rights,
title and interests of UA K-1 to the UA K-1 Interest; and
(ii) certified copies of resolutions of the Board of Directors of
UA K-1 authorizing the execution, delivery and performance by UA K-1 of
this Agreement, which resolutions shall be in full force and effect at and
as of the Closing.
(i) Sub 1. At the Closing, Sub 1 shall deliver to the appropriate
-----
party or parties:
(i) the Sub 1 Note;
(ii) such instruments evidencing Sub 1's assumption of the TCI
K-1 Assumed Liabilities as shall reasonably be requested by any other party
hereto; and
(iii) certified copies of resolutions of the Board of Directors
of Sub 1 authorizing the execution, delivery and performance by Sub 1 of
this Agreement, which resolutions shall be in full force and effect at and
as of the Closing.
(j) Sub 2. At the Closing, Sub 2 shall deliver to the appropriate
-----
party or parties:
(i) the Sub 2 Note;
19
(ii) such instruments evidencing Sub 2's assumption of the UA K-1
Assumed Liabilities as shall reasonably be requested by any other party
hereto; and
(iii) certified copies of resolutions of the Board of Directors
of Sub 2 authorizing the execution, delivery and performance by Sub 2 of
this Agreement, which resolutions shall be in full force and effect at and
as of the Closing.
ARTICLE XI
TERMINATION
Section 11.1 Termination.
This Agreement may be terminated and the transactions contemplated by
this Agreement may be abandoned at any time prior to the Closing Date:
(i) by TCI for any reason; or
(ii) by any other party hereto if such party shall have
discovered any material error, misstatement or omission in any of the
representations or warranties of any other party hereto, any other party
shall have otherwise breached in any material respect any such
representation or warranty, any such representation or warranty shall not
be true and complete in all material respects at and as of the Closing Date
with the same effect as if made at and as of such time, or any other party
hereto shall fail to comply in any material respect with any of the terms,
covenants, conditions or agreements contained in this Agreement to be
complied with or performed by any such party at or prior to the Closing
Date.
20
Section 11.2 Effect of Termination.
In the event of termination of this Agreement as provided by Section
11.1, this Agreement shall forthwith become void and the parties hereto shall
have no obligation or liability to each other with respect to the transactions
contemplated hereby. Upon any such termination, upon the request of TCI, the
parties shall cause the boards of directors of one or both of the Digital
Constituent Corporations and of one or both of the Enterprises Constituent
Corporations to take such actions as may be required to terminate their
respective agreements of merger contained herein.
ARTICLE XII
MISCELLANEOUS
Section 12.1 No Third-Party Rights.
Nothing expressed or referred to in this Agreement is intended or
shall be construed to give any person or entity other than the parties hereto
any legal or equitable right, remedy or claim under or with respect to this
Agreement, or any provision hereof, it being the intention of the parties hereto
that this Agreement and all of its provisions and conditions are for the sole
and exclusive benefit of the parties to this Agreement and for the benefit of no
other person or entity.
Section 12.2 Notices.
All notices and communications hereunder shall be in writing and shall
be deemed to have been duly given if delivered personally or mailed, certified
or registered mail with postage prepaid, or sent by telegram or confirmed telex
or facsimile, addressed as follows:
if to TCI, TCIC, Tele-Communications, Inc.
TCI K-1, 0000 XXX Xxxxxxx
XX X-0, Xxxxxxxxx, Xxxxxxxx 00000
or Enterprises: Facsimile (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq., Executive Vice
President, General Counsel and Secretary
if to Digital, TCI Satellite Entertainment, Inc.
Old TCISE, 0000 Xxxxx Xxxxxxx, Xxxxx 000
the Company, Xxxxxxxxx, Xxxxxxxx 00000
Sub 1 or Sub 2: Facsimile (000) 000-0000
Attention: Xxxx X. Xxxxxx, President
or to such other address (or to the attention of such other person) as the
parties may hereafter designate in writing. All such notices and communications
shall be deemed to have been received
21
on the date of delivery or the third business day after the mailing thereof,
except that any notice of a change of address shall be effective only upon
actual receipt thereof.
Section 12.3 Entire Agreement.
This Agreement (including the Exhibits attached hereto) 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.
Section 12.4 Amendment, Modification or Waiver.
Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated other than by agreement in writing signed by the
parties hereto. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instance shall be
deemed or construed as a further or continuing waiver of any such term,
provision or condition of this Agreement or any other term, provision or
condition of this Agreement; but any party hereto may waive its rights in any
particular instance by written instrument of waiver.
Section 12.5 Binding Effect; Benefit; Successors And Assigns.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns, provided that this
--------
Agreement may not be assigned by any of the parties hereto without the prior
written consent of the other parties hereto.
Section 12.6 Costs And Expenses.
All costs and expenses incurred in connection with the authorization,
preparation and consummation of this Agreement and the transactions contemplated
hereby shall be borne one-half by the Company and one-half by TCI, unless the
parties shall otherwise agree.
Section 12.7 Severability.
It is the intention of the parties hereto that the provisions of this
Agreement shall be enforced to the fullest extent permissible under all
applicable laws and public policies, but that the unenforceability of any
provision hereof (or the modification of any provision hereof to conform with
such laws or public policies, as provided in the next sentence) shall not render
unenforceable or impair the remainder of this Agreement. Accordingly, if any
provision shall be determined to be invalid or unenforceable either in whole or
in part, this Agreement shall be deemed amended to delete or modify, as
necessary, the invalid or unenforceable provisions and to alter the balance of
this Agreement in order to render the same valid and enforceable, consistent (to
the fullest extent possible) with the intent and purposes hereof.
22
Section 12.8 Miscellaneous.
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. This Agreement constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof. This Agreement may be executed in one
or more counterparts, each of which will be deemed an original, and all of which
together shall constitute one and the same instrument. This Agreement and the
legal relations among the parties hereto shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware, without regard to the conflict of laws rules thereof (except to the
extent that (x) provisions of the Colorado Act shall be mandatorily applicable
to the Digital Merger, the TCISE Merger or this Agreement and (y) provisions of
the Oklahoma Act shall be mandatorily applicable to the Enterprises Merger or
this Agreement).
23
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
TELE-COMMUNICATIONS, INC. TCI K-1, INC.
By: By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
TCI COMMUNICATIONS, INC. UNITED ARTISTS K-1 INVESTMENTS, INC.
By: By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
TEMPO ENTERPRISES, INC. TCISE PARTNER 1, INC.
By: By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
TCI DIGITAL SATELLITE TCISE PARTNER 2, INC.
ENTERTAINMENT, INC.
By:
By: -----------------------------
----------------------------- Name:
Name: Title:
Title:
OLD TCI SE, INC. TCI SATELLITE ENTERTAINMENT, INC.
By: By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
24
EXHIBIT A
Form of Subsidiary Note
-----------------------
[Intentionally Omitted]
A-1
EXHIBIT B
Form of Company Note
--------------------
[Intentionally Omitted]
B-1
EXHIBIT C
Form of Company Charter
-----------------------
[Intentionally Omitted]
C-1
EXHIBIT D
Form of Company Stock Option Agreement
--------------------------------------
[Intentionally Omitted]
D-1
SCHEDULE 7.5(d)
Company Stock Options
---------------------
Grantee Percentage
------- ----------
Xxxxxxx X. Xxxxxxxx 1%
Xxxxx X. Xxxxxxx 1%
Xxxxx X. Xxxxxx 1/2%
S-1
SCHEDULE 10.1(b)
Certain Agreements
------------------
1. Transition Services Agreement dated as of _____________, 1996, between
Tele-Communications, Inc. ("TCI") and TCI Satellite Entertainment, Inc.
(the "Company").
2. Trade Name and Service Xxxx License Agreement dated as of _____________,
1996, between TCI and the Company.
3. Tax Sharing Agreement dated as of July 1, 1995, among TCI, TCIC and the
other parties thereto, as amended.
4. Indemnification Agreement dated as of _____________, 1996, between TCI
UA 1, Inc. and the Company.
5. Indemnification Agreement dated as of _____________, 1996, between TCIC
and the Company.
6. Fulfillment Agreement dated as of September __, 1996, between TCIC and the
Company.
S-2
