EXHIBIT 10.37
FIRST AMENDMENT TO
PURCHASE AND CONTRIBUTION AGREEMENT
THIS FIRST AMENDMENT TO PURCHASE AND CONTRIBUTION AGREEMENT
("Amendment") is made and entered into as of June 22, 1999 by and among
Charter Communications, Inc., a Delaware corporation ("CCI"), Charter
Communications Holding Company, LLC, a Delaware limited liability company
("Charter LLC"), Falcon Communications, L.P., a California limited
partnership ("Falcon"), Falcon Holding Group, L.P., a Delaware limited
partnership ("FHGLP"), TCI Falcon Holdings, LLC, a Delaware limited liability
company ("TCI"), Falcon Cable Trust, a California trust ("FC Trust"), Falcon
Holding Group, Inc., a California corporation ("FHGI"), and DHN Inc., a
California corporation ("DHN") (FHGLP, TCI, FC Trust, FHGI and DHN are
sometimes referred to herein as "Sellers").
PRELIMINARY STATEMENT
A. CCI, Falcon, and Sellers entered into the Purchase and
Contribution Agreement on May 26, 1999 (the "Purchase and Contribution
Agreement").
B. The parties hereto desire to modify the Purchase and Contribution
Agreement in certain respects as described herein. Section 11.9 of the
Purchase and Contribution Agreement provides that the Purchase and
Contribution Agreement may be amended; provided that any such amendment will
be binding on the parties prior to Closing only if set forth in writing
executed by them.
C. Section 11.3 of the Purchase and Contribution Agreement permits
CCI to assign its rights, but not its obligations, under the Purchase and
Contribution Agreement to an Affiliate of CCI under certain circumstances.
CCI desires to assign its rights to purchase the Purchased Interests under
the Purchase and Contribution Agreement to Charter LLC, and Charter LLC is
willing to accept such assignment and assume the obligations of CCI under the
Purchase and Contribution Agreement. Sellers consent to such assignment of
CCI's rights to Charter LLC on the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Except as otherwise provided in the Amendment, all capitalized
terms used herein and not otherwise defined herein shall have the same
meanings assigned to them in the Purchase and Contribution Agreement. As used
in the Purchase and Contribution Agreement, the term "Charter LLC" shall have
the meaning given to it in this Amendment.
2. Subject to the terms set forth herein, (a) CCI assigns, transfers
and conveys to Charter LLC any and all rights of CCI under the Purchase and
Contribution Agreement to purchase the Purchased Interests; (b) Charter LLC
accepts such assignment and assumes and undertakes to discharge, satisfy and
perform all obligations of CCI under the Purchase and Contribution Agreement;
and (c) Sellers consent to such assignment. This assignment and assumption
shall not (i) relieve CCI of any liability or obligation as Buyer under the
Purchase and Contribution Agreement; or (ii) deprive Sellers of any rights or
benefits under the Purchase and Contribution Agreement. Upon such assignment,
the term "Buyer" as used in the Purchase
and Contribution Agreement shall include Charter LLC, to the extent
applicable as purchaser of and Purchased Interest, as well as CCI. Charter
LLC's assumption of the obligations of CCI under the Purchase and
Contribution Agreement is intended to be for the benefit of and shall be
enforceable by Sellers.
3. Clause (5) of Section 2.1(a) of the Purchase and Contribution
Agreement is hereby amended to read in its entirety as follows:
from FHGLP, all of the capital stock in Enstar, its entire membership
interest in Enstar Finance Company, LLC, and its entire membership
interest in CC VII, LLC, a Delaware limited liability company ("CC VII,
LLC"); and
4. The term "Minimum Contributed Interest" as defined in the fourth
sentence of Section 2.1(b) of the Purchase and Contribution Agreement is
hereby amended to be not less than 45.3% of FHGLP's partnership interest in
Falcon.
5. Clause (i) of Section 2.3(b) of the Purchase and Contribution
Agreement is hereby amended to read in its entirety as follows:
the value of the Aggregate Consideration allocated to FHGLP with respect
to its partnership interest in Falcon in Part III of the Allocation
Notice, and
6. Section 4 of the Purchase and Contribution Agreement is hereby
amended as follows:
(a) by amending the parenthetical clause of the first paragraph
of such Section to read in its entirety as follows:
(with respect to such Seller and not with respect to any other Seller, and
only FHGLP makes the representations and warranties in Sections 4.4(b),
4.7 and 4.9)
(b) by adding the following new subsection 4.9 to the end of
such Section:
4.9 CC VII, LLC was duly formed as a limited liability company
under the laws of the State of Delaware and is validly existing and in good
standing under the laws of the State of Delaware. FHGLP is the record and
beneficial owner of each issued and outstanding Equity Interest of CC VII,
LLC. FHGLP has formed CC VII, LLC solely to hold the interest in Falcon to be
transferred to it pursuant to Section 6.6(g) hereof and to exercise all
rights and perform all obligations pertaining thereto. At no time prior to
Closing will CC VII, LLC conduct any business activities or other operations
of any kind, or hold any asset other than the interest in Falcon, or become
liable for any obligation except its obligation under the Agreement. At all
times since its formation, CC VII, LLC has been treated for federal income
tax purposes as a disregarded entity under Treasury Regulations
ss.301.7701-3(b)(1)(ii).
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7. Section 5.6 of the Purchase and Contribution Agreement is hereby
amended to read in its entirety as follows:
The ownership chart of CCI and its Subsidiaries included as SCHEDULE 5.6
is true and correct in all material respects. Without limiting the
generality of the foregoing, CCI is, and as of the Closing either CCI or
Charter LLC will be, the record and beneficial owner of all of the issued
and outstanding Equity Interests of Charter Holdings, and CCI is, and as
of the Closing CCI will be, the record and beneficial owner of all of the
issued and outstanding equity Interest of Charter LLC.
8. Section 6.1(a) is hereby amended by adding the following new
subparagraph (1):
(10) TAX STATUS OF CC VII, LLC. Take any action that would cause CC
VII, LLC to be treated for federal income tax purposes as an entity other
than a disregarded entity under treasury Regulations
ss.301.7701-3(b)(1)(ii).
9. Clause (1) of Section 6.6(c)of the Purchase and Contribution
Agreement is hereby amended to read in its entirety as follows:
the definitive Charter LLC Operating Agreement to be effective upon the
Closing in accordance with the terms set forth on Exhibit D, with such
changes as are appropriate to reflect the assignment by CCI to Charter LLC
of the right to acquire the Purchased Interests, and such additional terms
as Buyer and FHGLP may mutually agree,
10. Section 6.6 of the Purchase and Contribution Agreement hereby
amended by adding the following new paragraph (g):
(g) On or prior to the Closing, FHGLP shall contribute a one
percent (1%) limited partnership interest in Falcon to CC VII, LLC, free
and clear of all Encumbrances and subject to the Legal Restrictions.
11. Clause (i) of Section 6.10(h) of the Purchase and Contribution
Agreement is hereby amended to read in its entirety as follows:
the Cash Consideration allocable (pursuant to Section 2.3(d)) to the
membership interest in CC VII, LLC and to the partnership interests in
Falcon other than the Contributed Interest,
12. For the purpose of this paragraph 12, each of CCI and Charter LLC is
referred to as a "Buyer" and CCI and Charter LLC are referred to collectively as
the "Buyers." CCI and Charter LLC agree that all obligations specified in the
Purchase and Contribution Agreement as obligations of CCI, including the
obligation to pay the Aggregate Consideration and any other amounts payable to
Sellers, whether to be performed at, before or after Closing, shall be joint and
several obligations of CCI and Charter LLC. All such obligations, including
those pay money, including, without limitation, the Cash Consideration, may be
enforced by Sellers against either Buyer individually, and such enforcement
shall not be conditioned or contingent upon the pursuit of any remedies against
the other Buyer. Each Buyer hereby waives diligence, demand of payment, filing
of claims with a court in the event of merger or bankruptcy of the other Buyer,
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any right to require a proceeding first against the other Buyer, the benefit
of discussion, protest or notice and all demands whatsoever, and covenants
that this agreement will not be discharged as to any obligation except by
satisfaction of such obligation in full. Until Sellers have been paid in full
any amounts due and owing to them under this Amendment and the Purchase and
Contribution Agreement, each Buyer hereby irrevocably waives any claim or
other rights which it may now or hereafter acquire against the other Buyer
that arise from the existence, payment, performance or enforcement of its
obligations under the Amendment or the Purchase and Contribution Agreement,
including, without limitation, any right of reimbursement, exoneration,
contribution, indemnification, any right to participate in any claim or
remedy of any Seller against the other Buyer or any collateral that any
Seller hereafter acquires, whether or not such claim, remedy or right arises
in equity, or under contract, statute or common law, including, without
limitation, the right to take or receive from the other Buyer, directly or
indirectly, in cash or other property or by set-off in any other manner,
payment or security on account of such claim or other rights. To the fullest
extent permitted by applicable law, the obligations of each Buyer under this
Amendment and the Purchase and Contribution Agreement shall not be affected
by (a) the failure of the applicable obligee to assert any claim or demand or
to enforce any right or remedy against the other Buyer pursuant to the
provisions of this Amendment or the Purchase and Contribution Agreement or
otherwise, (b) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of this Amendment or the Purchase
and Contribution Agreement or the invalidity or unenforceability (in whole or
in part) of this Amendment or the Purchase and Contribution Agreement, unless
consented to in writing by Sellers, each Buyer, and Falcon and (c) any change
in the existence (corporate or otherwise) of either Buyer or any Seller or
any insolvency, bankruptcy, reorganization or similar proceeding affecting
any of them or their assets.
13. Exhibit F to the Purchase and Contribution Agreement is hereby
amended in its entirety as set forth on the attached Exhibit I.
14. The parties hereby agree that the Purchase and Contribution
Agreement is hereby deemed amended in all respects necessary to give effect
to the consents, agreements and waivers contained in the Amendment, whether
or not a particular Section or provision of the Purchase and Contribution
Agreement has been referred to in this Amendment. Except as amended hereby,
the Purchase and Contribution Agreement shall remain unchanged and in full
force and effect, and this Amendment shall be governed by and subject to the
terms of the Purchase and Contribution Agreement, as amended hereby. From and
after the date of this Amendment, each reference in the Purchase and
Contribution Agreement to :"this Agreement," "hereof," "hereunder" or words
of like import, and all references to the Purchase and Contribution Agreement
in any and all agreements, instruments, documents, notes, certificates and
other writings of every kind and nature (other than in this Amendment or as
otherwise expressly provided) shall be deemed to mean the Purchase and
Contribution Agreement, as amended by this Amendment, whether or not such
Amendment is expressly referenced.
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IN WITNESS WHEREOF, this Amendment has been executed by each of CCI,
Charter LLC, Falcon and Sellers as of the date first written above.
SELLERS: CCI:
FALCON HOLDING GROUP, L.P. CHARTER COMMUNICATIONS, INC.
By: Falcon Holding Group, Inc.,
General Partner By: /s/ Curtis S. Shaw
-------------------------------------
Name: Curtis S. Shaw
By: /s/ Stanley S. Itskowitch Title: Senior Vice President
----------------------------------
Name: Stanley S. Itskowitch
Title: Executive Vice President CHARTER LLC:
TCI FALCON HOLDINGS, LLC CHARTER COMMUNICATIONS HOLDING COMPANY, LLC
By: /s/ Derek Chang By: /s/ Curtis S. Shaw
---------------------------------- -------------------------------------
Name: Derek Chang Name: Curtis S. Shaw
Title: Vice President Title: Senior Vice President
FALCON HOLDING GROUP, INC. FALCON:
By: /s/ Stanley S. Itskowitch FALCON COMMUNICATIONS, L.P.
----------------------------------
Name: Stanley S. Itskowitch
Title: Executive Vice President By: Falcon Holding Group, L.P.
General Partner
FALCON CABLE TRUST By: Falcon Holding Group, L.P.
By: /s/ Marc B. Nathanson General Partner
----------------------------------
Name: Marc B. Nathanson
Title: Trustee By: /s/ Stanley S. Itskowitch
-------------------------------------
Name: Stanley S. Itskowitch
Title: Executive Vice President
DHN, INC.
By: /s/ Stanley S. Itskowitch By: TCI Falcon Holding, L.L.C.
---------------------------------- General Partner
Name: Stanley S. Itskowitch
Title: Executive Vice President By: /s/ Derek Chang
-------------------------------------
Name: Derek Chang
Title: Vice President
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EXHIBIT I
EXHIBIT F
FORM OF ALLOCATION NOTICE
(Example)
I. Percentage of FHGLP's partnership interest in Falcon represented by %
the Contributed Interest:
II. Aggregage Consideration based on Preliminary Closing Statement: Less
payment to Encore Escrow
III. Aggregate Consideration payable to Sellers Allocation of Aggregate
Consideration based on Preliminary Closing Statement:
FHGLP, with respect to the stock of Enstar: 1
DHN, with respect to its interest in Adlink: 1
ALLOCATION OF PERCENTAGE SHARE
REMAINING OF REMAINING
AGGREGATE AGGREGATE
CONSIDERATION CONSIDERATION
FHGLP:
With respect to its membership interest in CC VII, LLC With
respect to its partnership interest in Falcon
Total to FHGLP %
TCI %
FC Trust %
FHGI %
Total 100.000000%
IV. Equity Value:
V. Payment of Cash Portion of Closing Payment:
FHGLP
[wire instructions]
TCI
[wire instructions]
FC Trust
[wire instructions]
FHGI
[wire instructions]
Total
VI. Payment to Sellers of Funds from Adjustment Escrow Account:
FHGLP %
TCI %
FC Trust %
FHGI %
Total 100.000000%