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