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EXHIBIT 10.3
PURCHASE AND CONTRIBUTION AGREEMENT
DATED AS OF JUNE ___, 1999
AMONG
BCI (USA), LLC,
WILLIAM J. BRESNAN,
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
4.4 Finders and Brokers 33
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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
ARTICLE 9 MISCELLANEOUS 54
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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
TABLE OF SCHEDULES ATTACHED TO DISCLOSURE LETTER
Schedule Description
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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
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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
Schedule 5.9 Excluded Assets
Schedule 6.1 Scheduled Subscribers
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
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PURCHASE AND CONTRIBUTION AGREEMENT
THIS PURCHASE AND CONTRIBUTION AGREEMENT (this "Agreement") is entered
into as of June ___, 1999, by and among BCI (USA), LLC, a Delaware limited
liability company (the "General Partner"), and William J. Bresnan ("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:
12. CERTAIN DEFINITIONS
0.1. 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.
"Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury
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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 709 Westchester Avenue, White Plains, New
York 10604.
"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 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
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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.
"Governmental Authority" means the United States of America, any
state, commonwealth, territory or possession of the United States of America
and any political
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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 Hart-Scott-Rodino 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,
Beatrice 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 of the
executive vice presidents or more senior officers of the Partnership or
regional vice presidents of the Partnership Systems.
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"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.
"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
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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."
"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
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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 prior to Adjustment Time,
provided that the sum of the Proportionate Interests for all Sellers shall
equal 100%.
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"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.
"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
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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.
"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.
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"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.
0.1.1. Terms Defined Elsewhere in this Agreement . For purposes of
this Agreement, the following terms have the meanings set forth in the sections
indicated:
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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)
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
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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
0.1.2. 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
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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.
0.1.3.SALE AND PURCHASE OF PURCHASED INTERESTS; PURCHASE PRICE
0.2. Sale and Purchase of Purchased Interests; Contribution of
Contributed Interests .
0.2.1. 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:
0.2.1.1. from the General Partner, the entire
General Partnership Interest; and
0.2.1.2. from each Seller, that portion of
its Limited Partnership Interest that is not represented by a Contributed
Interest.
0.2.2. 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 "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.
0.3. 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
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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.
0.4. Adjustments to Purchase Price .
0.4.1. 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.
0.4.1.1. 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.
(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
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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.
0.4.1.2. 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 billings for services to be performed by
the Partnership and the Subsidiaries after the Adjustment Time.
(IV) "Other Current Liabilities" means
all other current liabilities of the Partnership and the Subsidiaries,
including accrued expenses.
0.4.1.3. 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
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revenues and expenses attributable to the period after the Adjustment Time
shall be for the account of Buyer.
0.4.2. 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.
0.4.3. 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.
0.4.4. 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 Budget, provided that Buyer
provides express prior written consent (in its sole and absolute discretion) to
the incurrence of such Capital Expenditures.
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0.5. Payment at Closing .
0.5.1. 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").
0.5.2. At Closing, Buyer shall pay cash as follows:
0.5.2.1. 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;
0.5.2.2. 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").
0.5.3. 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.
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0.6. Post-Closing Purchase Price Adjustments .
0.6.1. Final Closing Statement.
0.6.1.1. 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 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.
0.6.1.2. 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.
0.6.2. Payment of Purchase Price Adjustments.
0.6.2.1. 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
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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 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.
0.6.2.2. 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.
0.6.2.2.1.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:
0.7. Organization and Ownership of Partnership .
0.7.1. 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.
0.7.2. The General Partner holds of record and owns
beneficially, and as of the
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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.
0.7.3. 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, 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.
0.8. Authorizations; No Conflict; Required Consents.
0.8.1. 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.
0.8.2. 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
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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.
0.8.3. 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 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.
0.9. Partnership Assets .
0.9.1. 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.
0.9.2. 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.
0.10. System Franchises, System Licenses, and System Contracts .
0.10.1. 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
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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
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.
0.10.2. 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.
0.10.3. 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
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under any material terms or conditions thereunder.
0.11. 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 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.
0.12. 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:
0.12.1. 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.
0.12.2. 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
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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 claim, allegation or action by any Person other than a Governmental
Entity under any Environmental Law.
0.12.3. 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.
0.13. 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.
0.14. 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
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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 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.
0.15. 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.
0.16. Litigation .
0.16.1. 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.
0.16.2. 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.
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0.17. Tax Returns .
0.17.1. 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, 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.
0.17.2. 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.
0.17.3. 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.
0.17.4. 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.
0.17.5. 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.
0.17.6. 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.
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0.18. Employment Matters .
0.18.1. 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.
0.18.2. With respect to the Partnership, any
Subsidiary, and the Partnership Plans (as defined below):
0.18.2.1. 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.
0.18.2.2. 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
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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.
0.18.2.3. 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 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.
0.18.2.4. 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
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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) of ERISA) maintained or
contributed to by any ERISA Affiliate within the five-year period before the
Closing Date.
0.18.2.5. 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.
0.18.3. 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
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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 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.
0.19. 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
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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.
0.20. 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 Goldman, Sachs and Company, Waller Capital Corporation and Daniels &
Associates that will be paid in full by the Sellers.
0.21. 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.
0.22. 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.
0.23. 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.
0.24. 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
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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.
0.25. 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 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.
0.25.1. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to each Seller as follows:
0.26. 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.
0.27. 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
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discretion in the enforcement of equitable remedies.
0.28. 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 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.
0.29. 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.
0.30. 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.
0.31. 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.
0.32. 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.
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0.33. 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.
0.34. 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, 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).
0.35. Capitalization; Delivery of Limited Liability Company
Interests .
0.35.1. 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.
0.35.2. 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.
0.36. 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
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Buyer uses commercially reasonable efforts to secure a waiver of such
restrictions.
0.37. SEC Filings; Financial Information .
0.37.1. 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.
0.37.2. 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.
0.37.2.1. SPECIAL COVENANTS AND AGREEMENTS
The parties covenant and agree as follows:
0.38. 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.
0.39. 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:
0.39.1. 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
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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;
0.39.2. (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 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;
0.39.3. 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;
0.39.4. 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;
0.39.5. 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;
0.39.6. 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
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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.
0.39.6.1. 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 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
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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 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;
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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.
0.39.7. 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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0.40. Required Consents, Franchise Renewal .
0.40.1. 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.
0.40.2. 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
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Required Consent. The Partnership, any Subsidiary and the Partnership Systems
will not accept or agree or accede to any modifications or amendments to, or
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.
0.40.3. 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.
0.40.4. 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.
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0.41. Confidentiality; Press Release .
0.41.1. 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 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.
0.41.2. 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.
0.41.3. 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
49
May 27, 1999, between Charter Communications, Inc. and Waller Capital
Corporation on behalf of the Partnership, which agreement is hereby
incorporated herein by this reference.
0.41.4. 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.
0.41.4.1. 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 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.
0.42. 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.
0.43. Tax Matters .
The following provisions shall govern the allocation of responsibility
between Buyer and Sellers for certain tax matters following the Closing Date:
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0.43.1. 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
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.
0.43.2. Cooperation on Tax Matters.
0.43.2.1. 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.
0.43.2.2. 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).
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0.43.3. 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.
0.43.4. 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.
0.43.5. 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 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.
0.43.6. 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.
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0.44. Certain Financing Matters .
0.44.1. 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).
0.44.2. 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.
0.44.3. 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.
0.44.4. 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.
0.45. Consent and Agreements of Sellers and Buyer .
0.45.1. 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.
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0.45.2. 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.
0.45.3. 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.
0.45.4. 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.
0.45.5. 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 mark 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.
0.45.6. 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.
0.46. 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).
0.47. 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.
0.48. 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
54
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.
0.49. 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.
0.50. 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.
0.51. 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
55
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.
0.52. Other Agreements.
0.52.1. 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.
0.52.2. 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.
0.52.3. 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.
0.52.4. Concurrently with the delivery of this Agreement,
Vulcan Ventures, Inc., an Affiliate of Buyer controlled by Paul G. Allen, 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 Paul G. Allen 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 Paul G. Allen 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 Paul G. Allen, 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 Paul G. Allen 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.
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0.53. 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 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.
0.53.1. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS
0.54. 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.
0.54.1. 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.
0.54.2. 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.
0.54.3. 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.
0.54.4. 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.
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0.54.5. 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.
0.54.6. 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.
0.54.7. 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).
0.54.8. Subscriber Adjustment. The Subscriber
Adjustment (as reasonably estimated by the Sellers in the Preliminary Closing
Statement) shall not be greater than $310,000,000.
0.54.9. 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.
0.55. 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.
0.55.1. 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.
0.55.2. 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.
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0.55.3. 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.
0.55.4. 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.
0.55.5. 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.
0.55.6. 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 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.
0.55.7. 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.
0.55.7.1. CLOSING AND CLOSING DELIVERIES
0.56. The Closing; Time and Place . Subject to the terms and
conditions of this Agreement, the Closing shall be held at the offices of Irell
& Manella 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.
0.57. Deliveries by Sellers . Prior to or at the Closing, Sellers
shall deliver or cause to be delivered to Buyer the following:
0.57.1. 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.
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0.57.2. 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.
0.57.3. Consents. Copies of all Required Consents
which have been obtained by the Sellers or the Partnership prior to the
Closing.
0.57.4. 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.
0.57.4.1. Deliveries by Buyer . Prior to or at the Closing,
Buyer shall deliver to Sellers the following:
0.57.5. 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.
0.57.6. Equity Consideration. Assignment agreements
providing for the assignment of the Equity Consideration to the Sellers, in a
form reasonably satisfactory to the Sellers.
0.57.7. 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.
0.57.8. Exchange Agreement. Subject to Section 5.16, the
Exchange Agreement, in the form attached as Exhibit F, duly executed by Buyer
and PublicCo.
0.57.9. Registration Rights Agreement. The Registration
Rights Agreement, in the form attached as Exhibit G, duly executed by PublicCo.
0.57.10. Legal Opinion. The legal opinion (if any)
required to be delivered under Section 5.16(d).
0.57.11. 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
60
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.
0.57.11.1. TERMINATION.
0.58. Termination by Agreement . This Agreement may be terminated
at any time prior to the Closing by mutual agreement among the Sellers and
Buyer.
0.59. 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:
0.59.1. 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
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).
0.59.1. 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).
0.59.2. 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).
0.59.3. 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
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Agreement.
0.60. 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:
0.60.1. 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 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).
0.60.2. 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).
0.60.3. 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.
0.61. 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:
0.61.1. 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.
0.61.2. Withdrawal of Applications. All filings,
applications and other
62
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.
0.61.3. 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.
0.61.4. 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.
0.62. 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).
0.62.1. MISCELLANEOUS
0.63. 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.
0.64. 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.
12444 Powerscourt Drive, Suite 400
St. Louis, Missouri 63131
Attention: Curtis S. Shaw, Esq.
Telecopier: (314) 965-8793
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with a copy (which shall not Irell & Manella LLP
constitute notice) to: 1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
Attention: Alvin G. Segel, Esq.
Telecopier: (310) 203-7199
If to the General Partners
or WBresnan: c/o Bresnan Communications, Inc.
709 Westchester Avenue
White Plains, New York 10604
Attention: Jeffrey S. DeMond and
Robert V. Bresnan, Esq.
Telecopier: (914) 993-6601
With a copy (which shall Paul, Hastings, Janofsky & Walker LLP
not constitute notice) to: 399 Park Avenue
New York, New York 10022
Attention: Marie Censoplano, Esq.
Telecopier: (212) 319-4090
If to BBC, BBCO or BFI: c/o The Blackstone Group
345 Park Avenue
New York, New York 10154
Attention: Simon Lonergan
Telecopy: (212) 583-5710
with a copy (which shall not Simpson Thacher & Bartlett
constitute notice) to: 425 Lexington Avenue
New York, New York 10017-3954
Attention: Wilson Neely, Esq.
Telecopier: (212) 455-2502
If to TCID-MI or TCI LLC: c/o AT&T Broadband & Internet Services
9197 South Peoria Street
Englewood, Colorado 80112
Attention: Derek Chang
Telecopier: (720) 875-5396
64
with a copy (which shall not Sherman & Howard, L.L.C.
constitute notice) to: 633 Seventeenth Street
Suite 3000
Denver, Colorado 80202
Attention: Arlene S. Bobrow, Esq.
Telecopier: (303) 299-8140
0.65. 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 Paul G. Allen 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.
0.66. 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.
0.67. 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).
0.68. 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.
0.69. 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
65
to, any subsequent or other matter not expressly waived.
0.70. Counterparts . This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
0.71. 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.
0.72. Survival .
0.72.1. 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.
0.72.2. 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 Closing until the expiration of the applicable statute of
limitations) shall expire as of the Closing Date and shall not survive the
Closing.
0.72.3. 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.
0.72.4. 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.
66
0.72.5. 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.
0.73. Limitation of Recourse against Sellers .
0.73.1. 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 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.
0.73.2. 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
67
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.
0.74. 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
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.
0.75. 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
68
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.
0.76. 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).
0.77. 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]
69
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:
Curtis S. Shaw
Senior Vice President
GENERAL PARTNER:
BCI (USA), LLC
By: Bresnan Communications, Inc., its
Managing Member
By:
Name:
Title:
70
OTHER SELLERS:
BCI (USA), LLC
By: Bresnan Communications, Inc., its Managing Member
By:
Name:
Title:
William J. Bresnan, individually
TCID OF MICHIGAN, INC.
By:
Name:
Title:
TCI BRESNAN LLC
By:
Name:
Title:
BLACKSTONE BC CAPITAL PARTNERS L.P.
By: Blackstone Management Associates
III L.L.C., its General Partner
By:
Name:
Title:
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
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:
S-2
71
EXHIBIT B TO PURCHASE AGREEMENT
Buyer agrees that the Partnership and the Subsidiaries will be bound
by the programming and other commitments described on this Exhibit B from and
after the Closing.
1. Programming Carriage. Notwithstanding the termination of the SSI Supply
Agreement at Closing, as to all of the cable television systems that TCID-MI,
TCI LLC or any Affiliate of either contributed to the Partnership (the "TCI
Contributed Systems") pursuant to the Contribution Agreement after Closing
under the Purchase Agreement, Buyer will cause such TCI Contributed Systems to
continue carriage of the programming services listed below through the
following expiration dates:
SERVICE EXPIRATION DATE
American Movie Classics 6/30/06
Animal Planet 12/30/06
Bravo 6/30/06
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
S-3
72
Court TV 7/2/01
Discovery Channel* 12/30/06
DMX 6/30/07
Encore/Starz!** 7/2/22
The Learning Channel*** 12/31/06
Odyssey 12/31/06
Romance Classics 6/30/06
Travel Channel 12/30/07
* Discovery Channel will remain on basic if headend carries Discovery
Channel on basic as of the Effective Date.
** Monthly fee structure will continue in accordance with previously
disclosed terms.
*** The Learning Channel will remain on basic if headend carries The
Learning Channel on basic as of the Effective Date.
2. @ Home. Buyer agrees that after the Closing the TCI Contributed Systems
will become subject to an At Home Corporation distribution agreement containing
terms and conditions that are no less favorable to Buyer than the terms and
conditions of Buyer's (or its affiliate's) existing @Home Network Distribution
Agreement covering its Fort Worth, Texas cable system, except that At Home
Corporation will remain the exclusive Internet service provider for the TCI
Contributed Systems for a period ending no earlier than June 4, 2002.
S-4