EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF
NOVEMBER 16, 1999
AMONG
COMCAST CORPORATION,
COMCAST LCI HOLDINGS, INC.
▇▇▇▇▇▇▇ COMMUNICATIONS, INC.
AND
THE STOCKHOLDERS NAMED HEREIN
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER........................................................................................................2
1.1 The Merger........................................................................................2
1.2 Effective Date of the Merger......................................................................2
1.3 State Law.........................................................................................2
ARTICLE II
THE SURVIVING CORPORATION.........................................................................................2
2.1 Certificate of Incorporation......................................................................2
2.2 By-Laws...........................................................................................2
2.3 Board of Directors; Officers......................................................................2
ARTICLE III
MERGER CONSIDERATION; CONVERSION OF SHARES........................................................................2
3.1 Merger Consideration..............................................................................2
3.2 Conversion of Shares..............................................................................3
3.3 Adjustment Procedure..............................................................................4
3.4 Transfer Taxes....................................................................................6
3.5 No Fractional Shares..............................................................................6
3.6 Closing...........................................................................................6
3.7 Cash Election.....................................................................................7
3.8 Alternative Consideration.........................................................................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT..........................................................................8
4.1 Organization and Qualification....................................................................8
4.2 Status of Parent Stock............................................................................8
4.3 Authority Relative to this Agreement..............................................................8
4.4 Reports and Financial Statements..................................................................9
4.5 Absence of Certain Changes or Events..............................................................9
4.6 Financial Advisor.................................................................................9
4.7 Tax Matters.......................................................................................9
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING SUB.....................................................................10
5.1 Organization and Qualification...................................................................10
5.2 Capitalization...................................................................................10
5.3 Authority Relative to this Agreement.............................................................10
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................................................11
6.1 Organization and Qualification...................................................................11
6.2 Capitalization...................................................................................11
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6.3 Subsidiaries.....................................................................................11
6.4 Authority Relative to this Agreement.............................................................12
6.5 Reports and Financial Statements.................................................................13
6.6 Absence of Certain Changes or Events.............................................................13
6.7 Litigation.......................................................................................14
6.8 Employment Matters...............................................................................14
6.9 Compliance with Applicable Laws..................................................................16
6.10 Tax Matters......................................................................................18
6.11 Environmental Laws...............................................................................19
6.12 Intellectual Property............................................................................20
6.13 Material Contracts...............................................................................20
6.14 Year 2000 Readiness..............................................................................20
6.15 Financial Advisor................................................................................20
6.16 ▇▇▇▇▇▇▇ International, Inc.......................................................................20
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE MERGER...........................................................................21
7.1 Conduct of Business by the Company Pending the Merger............................................21
ARTICLE VIII
ADDITIONAL AGREEMENTS............................................................................................24
8.1 Access and Information...........................................................................24
8.2 FYI..............................................................................................24
8.3 NuStar and Telestar, etc.........................................................................24
8.4 Distribution of Boot and Additional Parent Stock.................................................24
8.5 Employee Arrangements............................................................................26
8.6 Year 2000 Readiness Covenants....................................................................26
8.7 Indemnification..................................................................................27
8.8 Actions by the Parties...........................................................................27
8.9 No Solicitation..................................................................................28
8.10 Affiliate Agreements.............................................................................28
8.11 Use of ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.....................................................................▇▇
8.12 Use of 1332 Enterprise Drive.....................................................................29
8.13 Employee Cable Service...........................................................................29
8.14 Transitional Use of ▇▇▇▇▇▇▇ Name.................................................................29
8.15 Tax Matters......................................................................................29
8.16 Company Claims...................................................................................29
8.17 Registration Rights..............................................................................30
8.18 ▇▇▇▇▇▇▇ MCN Valuation............................................................................30
ARTICLE IX
CONDITIONS PRECEDENT.............................................................................................30
9.1 Conditions to Each Party's Obligations...........................................................30
9.2 Conditions to Obligation of the Company Waivable Only by the Stockholders Representative and TCI
▇▇▇▇▇▇▇..........................................................................................30
9.3 Conditions to Obligations of Parent and Sub......................................................31
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9.4 Additional Condition to Obligations of the Company Waivable Only by TCI ▇▇▇▇▇▇▇..................32
9.5 Additional Conditions to Obligations of the Company Waivable Only by the Stockholders
Representative...................................................................................32
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER................................................................................33
10.1 Termination......................................................................................33
10.2 Effect of Termination............................................................................34
10.3 Waiver...........................................................................................34
ARTICLE XI
GENERAL PROVISIONS; DEFINITIONS..................................................................................34
11.1 Notices..........................................................................................37
11.2 Fees and Expenses................................................................................37
11.3 Publicity........................................................................................37
11.4 Specific Performance.............................................................................37
11.5 Amendment........................................................................................37
11.6 Miscellaneous....................................................................................37
11.7 Definitions......................................................................................38
11.8 Accounting Terms; Application of Defined Terms...................................................46
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
November 16, 1999, is by and among Comcast Corporation, a Pennsylvania
corporation ("Parent"), Comcast LCI Holdings, Inc., a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), ▇▇▇▇▇▇▇ Communications, Inc., a
Delaware corporation (the "Company"), ▇.▇. ▇▇▇▇▇▇▇, ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ (collectively, the "▇▇▇▇▇▇▇ Stockholders") and
TCI ▇▇▇▇▇▇▇, Inc., a Colorado corporation formerly known as LMC ▇▇▇▇▇▇▇, Inc.
("TCI ▇▇▇▇▇▇▇" and, together with the ▇▇▇▇▇▇▇ Stockholders, the "Stockholders").
RECITALS
WHEREAS, as of May 4, 1999, Company and the ▇▇▇▇▇▇▇ Stockholders
entered into an Agreement and Plan of Merger (the "AT&T Merger Agreement") with
AT&T Corp., a New York corporation ("AT&T"), and AT&T LCI Inc., a Delaware
corporation and a wholly owned subsidiary of AT&T, the consummation of which has
been suspended pending consummation or termination of this Agreement pursuant to
an amendment entered into concurrently with this Agreement;
WHEREAS, the parties have agreed, subject to the terms and conditions
in this Agreement, to merge Company with and into Sub (the "Merger");
WHEREAS, concurrently with the execution of this Agreement, Parent and
the Stockholders are executing a Consent and Indemnity Agreement (the "Consent
and Indemnity Agreement");
WHEREAS, concurrently with the execution of this Agreement, Parent and
the ▇▇▇▇▇▇▇ Stockholders are executing a Registration Rights Agreement in the
form of Exhibit D hereto (the "▇▇▇▇▇▇▇ Registration Rights Agreement"), and at
Closing, Parent and TCI ▇▇▇▇▇▇▇ shall execute a Registration Rights Agreement on
the terms set forth in Exhibit E hereto (the "TCI ▇▇▇▇▇▇▇ Registration Rights
Agreement");
WHEREAS, for federal income tax purposes, the Merger is to qualify as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"); and
WHEREAS, defined terms used in this Agreement are listed in Section
11.7;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained in this Agreement the
parties agree as follows:
ARTICLE I
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THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, on the Effective Date, the Company will be merged with and
into Sub in compliance with the provisions of the Delaware General Corporation
Law (the "DGCL"). Thereupon, the separate existence of Company will cease and
Sub shall be the surviving corporation (the "Surviving Corporation"). The name
of the Surviving Corporation in the Merger will be as determined by Parent.
1.2 Effective Date of the Merger. The parties will file a properly
executed Certificate of Merger with the Secretary of State of the State of
Delaware, which filing will be made on the Closing Date. When used in this
Agreement, the term "Effective Date" will mean the date and time at which such
filing will have been accepted for filing by the Secretary of State of the State
of Delaware or such later time as may be specified in the Certificate of Merger
by mutual agreement of Parent, TCI ▇▇▇▇▇▇▇ and the Stockholders Representative.
1.3 State Law. At the Effective Date, the Merger will have the effects
set forth in this Agreement and the effects set forth in Section 251 of the
DGCL.
ARTICLE II
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THE SURVIVING CORPORATION
2.1 Certificate of Incorporation. The Certificate of Incorporation of
Sub will be the Certificate of Incorporation of the Surviving Corporation after
the Effective Date, and thereafter may be amended in accordance with its terms
and as provided by law and this Agreement.
2.2 By-Laws. The By-laws of Sub as in effect on the Effective Date
will be the By-laws of the Surviving Corporation.
2.3 Board of Directors; Officers. The directors of Sub immediately
prior to the Effective Date will be the directors of the Surviving Corporation
and the officers of Sub immediately prior to the Effective Date will be the
officers of the Surviving Corporation, in each case until their respective
successors are duly elected and qualified.
ARTICLE III
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MERGER CONSIDERATION; CONVERSION OF SHARES
3.1 Merger Consideration. The aggregate consideration deliverable in
the Merger will be the sum of (i) a number of shares of Parent Stock (the "Stock
Merger Consideration") equal in value (valued at the Share Valuation) to (A)
$5,793,592,000, less (B) the Liabilities Adjustment, plus (C) the Subsidiary
Adjustment, plus (D) the Split-Dollar Life Adjustment, less (E) the Bonus
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Adjustment, less (F) the Debt Adjustment, less (G) subject to Section 8.18, the
▇▇▇▇▇▇▇ MCN Adjustment, less (H) if the ▇▇▇▇▇▇▇ Stockholders exercise the FYI
Payment Option, $3,000,000 (it being understood that there will be no deduction
under this clause (H) unless the ▇▇▇▇▇▇▇ Stockholders exercise the FYI Payment
Option), plus (ii) the additional consideration described in Section 8.4 below
and deliverable to the ▇▇▇▇▇▇▇ Stockholders in the Merger. The Stock Merger
Consideration shall be divided between TCI ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Stockholders
as follows: (a) the ▇▇▇▇▇▇▇ Stockholders shall be entitled to receive a number
of shares of Parent Stock equal in value (valued at the Share Valuation) to (1)
$2,444,842,000, plus (2) the Subsidiary Adjustment, plus (3) the Split-Dollar
Life Adjustment, less (4) the ▇▇▇▇▇▇▇ Bonus Adjustment, less (5) the Debt
Adjustment, less (6) subject to Section 8.18, the ▇▇▇▇▇▇▇ MCN Adjustment, less
(7) if the ▇▇▇▇▇▇▇ Stockholders exercise the FYI Payment Option, $3,000,000 (the
"▇▇▇▇▇▇▇ Stock Merger Consideration") and (b) TCI ▇▇▇▇▇▇▇ shall be entitled to
receive the remainder of the Stock Merger Consideration (the "TCI ▇▇▇▇▇▇▇ Stock
Merger Consideration"). The parties hereto agree that the Company Common Stock
held by the ▇▇▇▇▇▇▇ Stockholders has greater per share value than the Company
Common Stock held by TCI ▇▇▇▇▇▇▇ due to certain control rights and privileges of
the ▇▇▇▇▇▇▇ Stockholders, and that the division of the aggregate merger
consideration between TCI ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Stockholders takes into
account and reflects this greater value.
3.2 Conversion of Shares. As of the Effective Date, by virtue of the
Merger and without any action on the part of any Stockholder:
(a) Cancellation of Shares. All shares of common stock, par value $.01
per share, of the Company (the "Company Common Stock"), that are held by the
Company or any Subsidiary of the Company, will be canceled.
(b) Conversion of Shares.
(i) Each share of Company Common Stock issued and outstanding
immediately prior to the Merger that is held by a ▇▇▇▇▇▇▇ Stockholder will be
converted into and will become (x) that number of fully paid and nonassessable
shares of Parent Stock as equals the quotient of the ▇▇▇▇▇▇▇ Stockholder Stock
Merger Consideration divided by the number of shares of Company Common Stock
outstanding at the Effective Date and held by the ▇▇▇▇▇▇▇ Stockholders (the
"▇▇▇▇▇▇▇ Stockholder Conversion Number") plus (y) such ▇▇▇▇▇▇▇ Stockholder's
proportionate share (on a per share basis) of the consideration set forth in
clause (ii) of the first sentence of Section 3.1 above.
(ii) Each share of Company Common Stock issued and outstanding
immediately prior to the Merger that is held by TCI ▇▇▇▇▇▇▇ will be converted
into and will become that number of fully paid and nonassessable shares of
Parent Stock as equals the quotient of the TCI ▇▇▇▇▇▇▇ Stock Merger
Consideration divided by the number of shares of Company Common Stock
outstanding at the Effective Date and held by TCI ▇▇▇▇▇▇▇ (the "TCI ▇▇▇▇▇▇▇
Conversion Number").
(iii) If, following the date hereof, Parent should split or
combine the Parent Stock or pay a stock dividend or other stock distribution in
Parent Stock or otherwise effect any transaction that changes the Parent Stock
into any other securities or make any other dividend or distribution on the
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Parent Stock (other than normal quarterly cash dividends as the same may be
adjusted from time to time in the ordinary course consistent with past practice)
then the consideration to be paid in Parent Stock under this Agreement will be
appropriately adjusted to reflect such split, combination, transaction, dividend
or other distribution or change.
(c) Each share of Common Stock of Sub issued and outstanding
immediately prior to the Merger will be converted into and will become one fully
paid and nonassessable share of common stock of the Surviving Corporation.
3.3 Adjustment Procedure. Adjustments to the Stock Merger
Consideration will be determined and made as follows:
(a) Adjustments at Closing. Not later than 9:00 a.m. (New York City
time) on the date that the Company reasonably believes is one business day prior
to the Effective Date, the Company shall prepare and deliver to TCI ▇▇▇▇▇▇▇ and
Parent a calculation of the Adjustments (based on good faith reasonable
estimates in the case of any amounts to be finalized following the Effective
Date) to the Stock Merger Consideration, accompanied by a certificate of the
chief financial officer of the Company to the effect that such calculations are
in accordance with this Agreement. Such calculation of the Adjustments to the
Stock Merger Consideration delivered to Parent by the Company shall be the basis
for determining the amount of Parent Stock issuable on the Effective Date to TCI
▇▇▇▇▇▇▇ (the "TCI ▇▇▇▇▇▇▇ Preliminary Merger Consideration") and to the ▇▇▇▇▇▇▇
Stockholders (the "▇▇▇▇▇▇▇ Preliminary Merger Consideration" and, together with
the TCI ▇▇▇▇▇▇▇ Preliminary Merger Consideration, the "Preliminary Merger
Consideration"), subject to further adjustment as provided in this Section. On
the Effective Date, Parent will deliver to each Stockholder the number of whole
shares of Parent Stock rounded up to the nearest whole share determined by
multiplying the number of shares of Company Common Stock owned by such
Stockholder by the ▇▇▇▇▇▇▇ Stockholder Conversion Number, in the case of a
▇▇▇▇▇▇▇ Stockholder, or by the TCI ▇▇▇▇▇▇▇ Conversion Number, in the case of TCI
▇▇▇▇▇▇▇, based on the Preliminary Merger Consideration.
(b) Post-Closing Adjustments. As soon as practicable, but in no event
later than 90 days following the Effective Date, (i) the Company will prepare
the consolidated financial statements of the Company as of December 31, 1999 in
accordance with GAAP and the Company's past practices (the "Company Audited
Financial Statements") and a schedule setting forth the Liabilities Adjustment
based thereon, and will cause ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ LLP to audit the Company
Audited Financial Statements, and (ii) the Company shall deliver to the
Stockholders Representative and TCI ▇▇▇▇▇▇▇ the Company Audited Financial
Statements and a final calculation of all the Adjustments to the Stock Merger
Consideration (it being understood that the Liabilities Adjustment will be
determined as set forth in clause (i) of this Section 3.3(b) and that the
calculation of the Bonus Adjustment will include a schedule setting forth all
Bonus payments actually made under the Bonus Plan following the Effective Date)
(the "Final Adjustment Schedule"). Parent and Sub will afford to the
Stockholders Representative and TCI ▇▇▇▇▇▇▇ and to their respective accountants,
counsel and other representatives reasonable access during normal business hours
(and at such other times as the parties mutually agree) throughout the 45 day
period following delivery of the Company Audited Financial Statements and the
Final Adjustment Schedule to the relevant Company books and records for the
purposes of reviewing the Company Audited Financial Statements and verifying the
amounts included in the Final Adjustment Schedule. If Parent, the Stockholders
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Representative or TCI ▇▇▇▇▇▇▇ does not provide notice of dispute within 45 days
after delivery of the Company Audited Financial Statements and the Final
Adjustment Schedule, the Company Audited Financial Statements and the
Adjustments to the Stock Merger Consideration based on the Company Audited
Financial Statements and the Final Adjustment Schedule shall be final,
conclusive and binding. If Parent, the Stockholders Representative and/or TCI
▇▇▇▇▇▇▇ provides notice of disagreement, including reasonable details of his or
its objections, Parent, the Stockholders Representative and TCI ▇▇▇▇▇▇▇ shall in
good faith attempt to agree on the Adjustments and the Company Audited Financial
Statements. If Parent, the Stockholders Representative and TCI ▇▇▇▇▇▇▇ cannot
agree on the items or amounts in the Company Audited Financial Statements or of
the Adjustments within 30 days of delivery to Parent, Stockholders
Representative and TCI ▇▇▇▇▇▇▇ of a notice of disagreement, the items or amounts
in dispute shall be determined by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Accountants"), whose
determination shall be final, conclusive and binding upon Parent, Sub and the
Stockholders. The Stock Merger Consideration, as adjusted by the final
calculation of the Adjustments determined as described in this Section 3.3(b),
will be referred to as the "Final Merger Consideration"; such amount thereof as
is deliverable to the ▇▇▇▇▇▇▇ Stockholders under Section 3.1 will be referred to
as the "▇▇▇▇▇▇▇ Final Merger Consideration", and such amount thereof as is
deliverable to TCI ▇▇▇▇▇▇▇ under Section 3.1 will be referred to as the "TCI
▇▇▇▇▇▇▇ Final Merger Consideration". For the avoidance of doubt, (i) TCI ▇▇▇▇▇▇▇
and the Stockholders Representative may only provide a notice of dispute with
respect to those Adjustments which affect the TCI ▇▇▇▇▇▇▇ Final Merger
Consideration and the ▇▇▇▇▇▇▇ Final Merger Consideration, respectively, and (ii)
a dispute with respect to the TCI ▇▇▇▇▇▇▇ Final Merger Consideration or the
▇▇▇▇▇▇▇ Final Merger Consideration shall not delay the determination or payment
of the ▇▇▇▇▇▇▇ Final Merger Consideration or the TCI ▇▇▇▇▇▇▇ Final Merger
Consideration, respectively. All reasonable costs and fees of the Accountants
relating to a disagreement that involves the Company Audited Financial
Statements or the amount of the Liabilities Adjustment shall be borne one-half
by Parent and one-half by TCI ▇▇▇▇▇▇▇. All reasonable costs and fees of such
Accountants relating to a disagreement that involves the amount of the ▇▇▇▇▇▇▇
Bonus Adjustment shall be borne one-half by Parent and one-half by the
Stockholders (divided among the Stockholders on the basis of the respective
percentages of the total consideration receivable by them under Section 3.1).
All reasonable costs and fees of such Accountants relating to a disagreement
that involves amounts other than the amount of the ▇▇▇▇▇▇▇ Bonus Adjustment or
the Liabilities Adjustment shall be borne one-half by Parent and one-half by the
▇▇▇▇▇▇▇ Stockholders (divided among the ▇▇▇▇▇▇▇ Stockholders on the basis of the
respective percentages of the total consideration receivable by them under
Section 3.1).
(c) Within five business days after the determination of the Final
Merger Consideration pursuant to Section 3.3(b):
(i) if the TCI ▇▇▇▇▇▇▇ Final Merger Consideration is greater than
the TCI ▇▇▇▇▇▇▇ Preliminary Merger Consideration, Parent will deliver to TCI
▇▇▇▇▇▇▇ certificates representing the number of shares of Parent Stock equal to
the difference between (x) the number of shares of Parent Stock (rounded up to
the nearest whole share) that TCI ▇▇▇▇▇▇▇ had the right to receive on the
Effective Date based on the TCI ▇▇▇▇▇▇▇ Final Merger Consideration and (y) the
number of whole shares of Parent Stock delivered to TCI ▇▇▇▇▇▇▇ at the Effective
Date pursuant to Section 3.3(a) (together with dividends or distributions, if
any, with respect to the additional shares to be delivered under this Section
3.3(c)(i) made after the Effective Date).
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(ii) if the TCI ▇▇▇▇▇▇▇ Final Merger Consideration is less than
the TCI ▇▇▇▇▇▇▇ Preliminary Merger Consideration, TCI ▇▇▇▇▇▇▇ will deliver to
Parent certificates representing the number of shares of Parent Stock equal to
the difference between (x) the number of whole shares of Parent Stock delivered
to TCI ▇▇▇▇▇▇▇ on the Effective Date pursuant to Section 3.3(a) and (y) the
number of shares of Parent Stock (rounded up to the nearest whole share) that
TCI ▇▇▇▇▇▇▇ had the right to receive on the Effective Date based on the TCI
▇▇▇▇▇▇▇ Final Merger Consideration (together with dividends or distributions, if
any, with respect to the shares to be delivered under this Section 3.3(c)(ii)
made after the Effective Date).
(iii) if the ▇▇▇▇▇▇▇ Final Merger Consideration is greater than
the ▇▇▇▇▇▇▇ Preliminary Merger Consideration, Parent will deliver to each
▇▇▇▇▇▇▇ Stockholder certificates representing the number of shares of Parent
Stock equal to the difference between (x) the number of shares of Parent Stock
(rounded up to the nearest whole share) that such ▇▇▇▇▇▇▇ Stockholder had the
right to receive on the Effective Date based on the ▇▇▇▇▇▇▇ Final Merger
Consideration and (y) the number of whole shares of Parent Stock delivered to
such ▇▇▇▇▇▇▇ Stockholder at the Effective Date pursuant to Section 3.3(a)
(together with dividends or distributions, if any, with respect to the
additional shares to be delivered under this Section 3.3(c)(iii) made after the
Effective Date).
(iv) if the ▇▇▇▇▇▇▇ Final Merger Consideration is less than the
▇▇▇▇▇▇▇ Preliminary Merger Consideration, each ▇▇▇▇▇▇▇ Stockholder will deliver
to Parent certificates representing the number of shares of Parent Stock equal
to the difference between (x) the number of whole shares of Parent Stock
delivered to such ▇▇▇▇▇▇▇ Stockholder on the Effective Date pursuant to Section
3.3(a) and (y) the number of shares of Parent Stock (rounded up to the nearest
whole share) that such ▇▇▇▇▇▇▇ Stockholder had the right to receive on the
Effective Date based on the ▇▇▇▇▇▇▇ Final Merger Consideration (together with
dividends or distributions, if any, with respect to the shares to be delivered
under this Section 3.3(c)(iv) made after the Effective Date).
3.4 Transfer Taxes. Any transfer taxes payable by the holders of
Company Common Stock in connection with the Merger and the conversion of Company
Common Stock into Parent Stock will be shared equally by Parent and TCI ▇▇▇▇▇▇▇.
The Parent Stock shall be issued to the registered holders of Company Common
Stock on the Effective Date.
3.5 No Fractional Shares. If, but for this Section, the amount of
Parent Stock that a Stockholder would be entitled to receive pursuant to Section
3.3(a) or 3.3(c) is not a whole number of shares of Parent Stock, the number of
shares of Parent Stock that such Stockholder shall be entitled to receive
pursuant to this Agreement shall be rounded up to the nearest whole share.
3.6 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of ▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇, New York, New York at 10:00 a.m. local time on January 18, 2000, if
the conditions set forth in Article IX (other than those providing for the
delivery of documents at the Closing) are satisfied (or waived by the
appropriate parties) on or prior to such date, or, if the conditions set forth
in Article IX (other than those providing for the delivery of documents at the
Closing) are not satisfied (or waived by the appropriate parties) on or prior to
such date, the first business day following the date on which the last of the
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conditions set forth in Article IX (other than those providing for the delivery
of documents at the Closing) is satisfied (or waived by the appropriate parties)
(the "Closing Date").
3.7 Cash Election. Each ▇▇▇▇▇▇▇ Stockholder may, at his or her option,
elect to receive cash at Closing in lieu of not more than 10% of the number of
shares of Parent Stock (valued at the Share Valuation) otherwise deliverable to
such ▇▇▇▇▇▇▇ Stockholder pursuant to Section 3.3(a), provided that such ▇▇▇▇▇▇▇
Stockholder gives written notice to Parent of such election not later than 10
business days prior to the Effective Date, which notice will indicate the
specific dollar amount (or percentage of such ▇▇▇▇▇▇▇ Stockholder's share of the
▇▇▇▇▇▇▇ Preliminary Merger Consideration) as to which such election is being
exercised (the "Cash Consideration"). If a ▇▇▇▇▇▇▇ Stockholder makes such
election, (i) neither the ▇▇▇▇▇▇▇ Stockholder Conversion Number nor the TCI
▇▇▇▇▇▇▇ Conversion Number will be affected by such election, (ii) the number of
shares of Parent Stock to be delivered at Closing to such ▇▇▇▇▇▇▇ Stockholder
electing to receive Cash Consideration will be reduced by the quotient of such
electing ▇▇▇▇▇▇▇ Stockholder's Cash Consideration divided by $36.90, and all
references in this Agreement to the delivery of a particular number of shares of
Parent Stock will be modified accordingly (except as specified in the following
clause (iii)), and (iii) notwithstanding such Cash Consideration election, the
number of shares of Parent Stock to be delivered by any party under Section
3.3(b) and (c) will be calculated as if only Parent Stock (and no Cash
Consideration) had been delivered to the Stockholders pursuant to Section
3.3(a).
3.8 Alternative Consideration. If TCI ▇▇▇▇▇▇▇ or any of its Affiliates
at any time reasonably expects that it will be prohibited at the time of the
Merger by any applicable law or regulation or by the refusal of the necessary
governmental authorities to grant approvals on conditions reasonably acceptable
to TCI ▇▇▇▇▇▇▇ from owning all or any portion of the shares of Parent Stock that
Parent is to deliver to TCI ▇▇▇▇▇▇▇ hereunder, then the parties will cooperate
in good faith and use their reasonable best efforts to restructure the Merger so
as to avoid such prohibition and to minimize the adverse tax consequences of
such restructuring, including by substituting other securities of Parent (it
being understood that "reasonable best efforts", for this purpose, shall not
include an obligation on the part of any party to consent to any such
restructuring which reduces (or, in the case of Comcast, increases) the value of
the consideration to be received (or, in the case of Comcast, paid) by them in
the Merger or, in the case of any party, increases or accelerates any tax
liability they may have in respect thereof). Any such other securities will have
terms intended to cause them to trade at par. If the parties are not able to
restructure the transaction in this manner, Parent will deliver to TCI ▇▇▇▇▇▇▇,
in lieu of such portion of the shares of Parent Stock that TCI ▇▇▇▇▇▇▇ may not
own, an amount in cash equal to the value of such shares (valued at the average
Closing Price of such shares for the 20 consecutive trading days prior to and
ending one trading day prior to the closing date of such transaction). TCI
▇▇▇▇▇▇▇ and its Affiliates shall use reasonable best efforts to avoid being
subject to any prohibitions on owning shares of Parent Stock.
-7-
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company and the Stockholders as
follows:
4.1 Organization and Qualification. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has the corporate power to carry on its
business as it is now being conducted or currently proposed to be conducted.
Parent is duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified will not, individually or
in the aggregate, have a Parent Material Adverse Effect.
4.2 Status of Parent Stock. All shares of Parent Stock issuable
pursuant to this Agreement, when issued and delivered pursuant to this
Agreement, will be duly authorized, validly issued and fully paid and
nonassessable.
4.3 Authority Relative to this Agreement. Parent has the corporate
power to enter into this Agreement and the Transaction Documents to which it is
a party and to carry out its obligations hereunder and thereunder. The execution
and delivery of this Agreement and the Transaction Documents to which Parent is
a party and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by all requisite corporate action of Parent, including
approval by Parent's Board of Directors; and no other corporate proceedings on
the part of Parent, its Board of Directors or its stockholders are necessary to
authorize this Agreement and the Transaction Documents to which it is a party
and the transactions contemplated hereby and thereby. This Agreement constitutes
and, when executed and delivered by Parent, each of the Transaction Documents to
which it is a party will be, a valid and binding obligation of Parent
enforceable in accordance with its terms. The execution, delivery and
performance by Parent of this Agreement and the Transaction Documents and the
consummation by Parent of the transactions contemplated hereby and thereby will
not (i) violate or conflict with any Governing Document or (ii) result in a
violation or breach of or constitute (with or without due notice or lapse of
time or both) a default under or give any Person the right to terminate, cancel
or accelerate any obligation or result in the creation of any Lien or loss of a
benefit under any indenture or other loan document provision or any other
contract, license, franchise, permit, concession, lease, instrument or Legal
Requirement applicable to Parent or any of its Subsidiaries or their respective
properties or assets, other than, in the case of clause (ii) only, (A) any
conflicts, breaches, violations, defaults, terminations, cancellations or
accelerations, Liens or losses which, individually or in the aggregate, will not
have a Parent Material Adverse Effect or prevent or materially delay the
consummation of the transactions contemplated hereby and thereby and (B) the
Legal Requirements referred to in the next sentence. Except in connection, or in
compliance, with the provisions of the DGCL and rules and regulations of the
relevant Governmental Entities, and, without prejudice to the understanding set
forth in Section 9.3(d)(i) of this Agreement, the provisions of Franchises
regarding transfer of ownership or control of Franchises and Federal
Communications Commission ("FCC") licenses no filing or registration with, or
authorization, consent or approval of, any Governmental Entity or other Person
is necessary for the consummation by Parent of the transactions contemplated by
-8-
this Agreement and each of the Transaction Documents to which Parent is a party,
other than filings, registrations, authorizations, consents or approvals the
failure of which to make or obtain would not, individually or in the aggregate,
have a Parent Material Adverse Effect or prevent or materially delay the
consummation of the transactions contemplated hereby or thereby.
4.4 Reports and Financial Statements. Parent has previously furnished
or made available to the Company true and complete copies of its (i) Annual
Report on Form 10-K for the fiscal year ended December 31, 1998, as filed with
the Securities and Exchange Commission (the "Commission"), and (ii) all other
reports and registration statements filed by Parent with the Commission pursuant
to the Exchange Act or the Securities Act since January 1, 1999, as amended
prior to the date hereof (the documents described in clauses (i) and (ii)
(together with all subsequent filings referred to in the next two sentences)
being referred to in this Agreement collectively as the "Parent SEC Reports").
As of their respective dates or effective dates, the Parent SEC Reports complied
as to form in all material respects with the requirements of the Exchange Act or
the Securities Act, as the case may be, and the rules and regulations of the
Commission thereunder applicable to such Parent SEC Reports, except as the same
may have been corrected, updated or superseded by means of a subsequent filing
with the Commission prior to the date hereof. As of their respective dates or
effective dates and except as the same may have been corrected, updated or
superseded by means of a subsequent filing with the Commission prior to the date
hereof, the Parent SEC Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Since January 1, 1998, Parent has filed
with the Commission all reports required to be filed therewith by it pursuant to
the Exchange Act. The audited consolidated financial statements and unaudited
interim consolidated financial statements of Parent included in the Parent SEC
Reports have been prepared in accordance with GAAP applied on a consistent basis
(except as may be indicated therein or in the notes thereto) and fairly present,
in all material respects, the respective consolidated financial position of
Parent and its consolidated Subsidiaries as at the dates indicated therein and
the results of their operations and cash flows for the periods then ended
subject, in the case of the unaudited interim consolidated financial statements,
to the omission of notes and to normal year-end audit adjustments and any other
adjustments described therein.
4.5 Absence of Certain Changes or Events. Except as described in the
Parent SEC Reports, since January 1, 1999, there has not been any transaction,
commitment, dispute or other event or condition (financial or otherwise) of any
character (whether or not in the ordinary course of business) which,
individually or in the aggregate, has had, or in the future is reasonably likely
to have, a Parent Material Adverse Effect.
4.6 Financial Advisor. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent or its Affiliates, other than such fees payable
by Parent or its Affiliates.
4.7 Tax Matters. As of the date hereof, to the knowledge of Parent,
the representations set forth in the numbered paragraphs of the form of
Certificate of Parent attached as Schedule 4.7 are true and correct in all
material respects, assuming for purposes of this representation and warranty
-9-
that the Merger referred to in such form had been consummated on the date
hereof.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES REGARDING SUB
Parent and Sub jointly and severally represent and warrant to the
Company and the Stockholders as follows:
5.1 Organization and Qualification. Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Sub was formed by Parent solely for the purpose of engaging in the
transactions contemplated hereby and has conducted no business other than in
connection with this Agreement.
5.2 Capitalization. The authorized capital stock of Sub consists of
1,000 shares of common stock, par value $.01 per share, of which 100 shares are
issued and outstanding and held by Parent.
5.3 Authority Relative to this Agreement. Sub has the corporate power
to enter into this Agreement and the Transaction Documents to which it is a
party and to carry out its obligations hereunder and thereunder. The execution
and delivery of this Agreement and the Transaction Documents to which Sub is a
party and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by all requisite corporate action of Sub; and no other
corporate proceedings on the part of Sub, its Board of Directors or its
stockholders are necessary to authorize this Agreement and the Transaction
Documents to which it is a party and the transactions contemplated hereby and
thereby. This Agreement constitutes and, when executed and delivered by Sub,
each of the Transaction Documents to which it is a party will be, a valid and
binding obligation of Sub enforceable in accordance with its terms. The
execution, delivery and performance by Sub of this Agreement and the Transaction
Documents and the consummation by Sub of the transactions contemplated hereby
and thereby will not (i) violate or conflict with any Governing Document or (ii)
result in a violation or breach of or constitute (with or without due notice or
lapse of time or both) a default under or give any Person the right to
terminate, cancel or accelerate any obligation or result in the creation of any
Lien or loss of a benefit under any indenture or other loan document provision
or any other contract, license, franchise, permit, concession, lease, instrument
or Legal Requirement applicable to Sub or any of its Subsidiaries or their
respective properties or assets, other than, in the case of clause (ii) only,
(A) any conflicts, breaches, violations, defaults, terminations, cancellations
or accelerations, Liens or losses which, individually or in the aggregate, will
not have a Parent Material Adverse Effect or prevent or materially delay the
consummation of the transactions contemplated hereby and thereby and (B) the
Legal Requirements referred to in the next sentence. Except in connection, or in
compliance, with the provisions of the DGCL and rules and regulations of the
relevant Governmental Entities, and the provisions of Franchises regarding
transfer of ownership or control of Franchises and the transfer of ownership or
control of FCC licenses, no filing or registration with, or authorization,
consent or approval of, any Governmental Entity or other Person is necessary for
the consummation by Sub of the transactions contemplated by this Agreement and
-10-
each of the Transaction Documents to which it is a party, other than filings,
registrations, authorizations, consents or approvals the failure of which to
make or obtain would not have, individually or in the aggregate, a Parent
Material Adverse Effect or prevent or materially delay the consummation of the
transactions contemplated hereby or thereby.
ARTICLE VI
----------
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
6.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now being
conducted or currently proposed to be conducted. The Company is duly qualified
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified will not, individually or in the aggregate, have
a Company Material Adverse Effect.
6.2 Capitalization. The authorized capital stock of the Company
consists of 158,896 shares of Company Common Stock, all of which are issued and
outstanding. All issued and outstanding shares of Company Common Stock have been
duly authorized, validly issued and are fully paid and nonassessable and have
not been issued in violation of any federal or state securities laws. Except as
set forth on Schedule 6.2, there are no options, warrants, calls or other
rights, agreements or commitments of any character, to which the Company or any
of its Subsidiaries is a party, relating to the issued or unissued capital stock
or other securities of the Company, and no issued and outstanding shares of
Company Common Stock are subject to or have been issued in violation of any
preemptive rights.
6.3 Subsidiaries. The only Company Subsidiaries, or entities in which
the Company directly or through one or more of its Company Subsidiaries holds or
has the right to acquire any equity interest (each an "Equity Affiliate"), are
those set forth on Schedule 6.3, which Schedule reflects the percentage and
nature of the Company's ownership of each such Company Subsidiary or Equity
Affiliate. Each of the Company Subsidiaries is a corporation or partnership duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or formation and has the corporate or partnership
power to carry on its business as it is now being conducted or currently
proposed to be conducted. Each of the Company Subsidiaries is duly qualified as
a foreign corporation or partnership to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary except
where the failure to be so qualified will not have, individually or in the
aggregate, a Company Material Adverse Effect. All the outstanding shares of
capital stock of each of the Company Subsidiaries that is a corporation held by
the Company or a Company Subsidiary are validly issued, fully paid and
nonassessable. Except as set forth on Schedule 6.3, the shares of capital stock
or partnership or other ownership interests in each of the Company Subsidiaries
-11-
or Equity Affiliates that are owned by the Company or by a Company Subsidiary
are owned free and clear of any Liens, are not subject to and have not been
issued in violation of any preemptive rights and have not been issued in
violation of any federal or state securities laws. Except as set forth on
Schedule 6.3, there are no existing options, warrants, calls or other rights,
agreements or commitments of any character, to which the Company or any of its
Subsidiaries is a party, relating to the issued or unissued capital stock, other
securities or partnership or other ownership interests of any of the Company
Subsidiaries or Equity Affiliates of the Company, and there is no exercise of
any of the foregoing pending or of which the Company has received notice.
6.4 Authority Relative to this Agreement. The Company has the
corporate power to enter into this Agreement and the Transaction Documents to
which it is a party and to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and the Transaction Documents to
which the Company is a party and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
corporate action of the Company, including approval by the Company's Board of
Directors and stockholders; and no other corporate proceedings on the part of
the Company, its Board of Directors or its stockholders are necessary to
authorize this Agreement and the Transaction Documents to which it is a party
and the transactions contemplated hereby and thereby. This Agreement
constitutes, and when executed and delivered by the Company, each of the
Transaction Documents to which it is a party will be, a valid and binding
obligation of the Company enforceable in accordance with its terms. Except as
set forth on Schedule 6.4, the execution, delivery and performance by the
Company of this Agreement and the Transaction Documents and the consummation by
the Company of the transactions contemplated hereby and thereby will not (i)
violate or conflict with any Governing Document or (ii) result in a violation or
breach of or constitute (with or without due notice or lapse of time or both) a
default under or give any Person the right to terminate, cancel or accelerate
any obligation or result in the creation of any Lien or loss of a benefit under
any indenture or other loan document provision or any other contract, license,
franchise, permit, concession, lease, instrument or Legal Requirement applicable
to the Company or any of its Company Subsidiaries or their respective properties
or assets, other than, in the case of clause (ii) only, (A) any conflicts,
breaches, violations, defaults, terminations, cancellations or accelerations,
Liens or losses which, individually or in the aggregate, will not have a Company
Material Adverse Effect or prevent or materially delay the consummation of the
transactions contemplated hereby and thereby (other than any delay relating to
the Legal Requirements referred to in the next sentence) and (B) the Legal
Requirements referred to in the next sentence. Except as referred to in Schedule
6.4, and except in connection, or in compliance, with the provisions of the DGCL
and the rules and regulations of the relevant Governmental Entities, and the
provisions of Franchises regarding transfer of ownership or control of
Franchises and the transfer of ownership or control of the FCC licenses (all of
which licenses are listed in Schedule 6.4), no filing or registration with, or
authorization, consent or approval of, any Governmental Entity or other Person
is necessary for the consummation by the Company of the transactions
contemplated by this Agreement and each of the Transaction Documents to which
the Company is a party, other than filings, registrations, authorizations,
consents or approvals the failure of which to make or obtain would not have,
individually or in the aggregate, a Company Material Adverse Effect or prevent
or materially delay the consummation of the transactions contemplated hereby or
thereby.
-12-
6.5 Reports and Financial Statements. The Company has previously
furnished or made available to Parent true and complete copies of its (i) Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 (the "Company
10-K"), as filed with the Commission, and (ii) all other reports and
registration statements filed by the Company with the Commission pursuant to the
Exchange Act or the Securities Act since January 1, 1999, as amended prior to
the date hereof (the documents described in clauses (i) through (ii) (together
with all subsequent filings referred to in the next two sentences) being
referred to in this Agreement collectively as the "Company SEC Reports"). As of
their respective dates or effective dates, the Company SEC Reports complied as
to form in all material respects with the requirements of the Exchange Act or
the Securities Act, as the case may be, and the rules and regulations of the
Commission thereunder applicable to such Company SEC Reports, except as the same
may have been corrected, updated or superseded by means of a subsequent filing
with the Commission prior to the date hereof. As of their respective dates or
effective dates and except as the same may have been corrected, updated or
superseded by means of a subsequent filing with the Commission prior to the date
hereof, the Company SEC Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Since January 1, 1998, the Company has
filed with the Commission all reports required to be filed therewith by it
pursuant to the Exchange Act. The audited consolidated financial statements and
unaudited interim consolidated financial statements of the Company included in
the Company SEC Reports have been prepared in accordance with GAAP applied on a
consistent basis (except as may be indicated therein or in the notes thereto)
and fairly present, in all material respects, the respective consolidated
financial position of the Company and its consolidated Subsidiaries as at the
dates indicated therein and the results of their operations and cash flows for
the periods then ended subject, in the case of the unaudited interim
consolidated financial statements, to the omission of notes and to normal
year-end audit adjustments and any other adjustments described therein.
6.6 Absence of Certain Changes or Events. Except as set forth on
Schedule 6.6 and except for the AT&T Merger Agreement and the transactions
expressly permitted or required thereby, since January 1, 1999, there has not
been (i) any transaction, commitment, dispute or other event or condition
(financial or otherwise) of any character (whether or not in the ordinary course
of business) which, individually or in the aggregate, has had, or in the future
is reasonably likely to have, a Company Material Adverse Effect, (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to the capital stock of the
Company, (iii) any entry into any commitment or transaction material to the
Company and its Company Subsidiaries taken as a whole (including, without
limitation, any borrowing or sale of assets), whether or not in the ordinary
course of business or (iv) any event or circumstance which, had it occurred
after the date of this Agreement, would have constituted a violation of Section
7.1 of this Agreement. Except as set forth in Schedule 6.6 or in the Company SEC
Reports, the Company does not have any indebtedness, liability or obligation,
whether accrued or unaccrued, contingent or otherwise that is not reflected or
reserved against in the Audited Balance Sheet, except for such indebtedness,
liability or obligations arising in the ordinary course of business consistent
with past practice. Except as described in Schedule 6.6, since January 1, 1999,
neither the Company nor any Company Subsidiaries has made any loans,
contributions or advances to any Distributed Subsidiary or with respect to any
Distributed Assets.
-13-
6.7 Litigation. Except as set forth on Schedule 6.7, there is no suit,
action or proceeding pending or, to the Knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any of its Company Subsidiaries
that involves or is reasonably likely to involve an amount in excess of
$5,000,000. Except as set forth on Schedule 6.7, there is no suit, action or
proceeding pending, or, to the Knowledge of the Company, threatened that has had
or is likely to have, individually or in the aggregate, a Company Material
Adverse Effect nor is there any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against the Company or any of
its Company Subsidiaries that has had or is likely to have, individually or in
the aggregate, a Company Material Adverse Effect.
6.8 Employment Matters.
(a) The Company has provided a complete and correct list of the names
and positions of all employees engaged principally in the Company's business as
of the date set forth on such list (but not earlier than September 30, 1999). To
the Knowledge of the Company, the Company has complied in all material respects
with all applicable Legal Requirements relating to the employment of labor,
including, the Worker Adjustment and Retaining Notification Act, 29 U.S.C. ss.
2101, et seq. ("WARN"), ERISA, continuation coverage requirements with respect
to group health plans and those relating to wages, hours, collective bargaining,
unemployment insurance, worker's compensation, equal employment opportunity, age
and disability discrimination, immigration control and the payment and
withholding of Taxes.
(b) Schedule 6.8 sets forth all "employee benefit plans," as defined
in Section 3(3) of ERISA, and all other material employee benefit arrangements,
programs or payroll practices, including, without limitation, severance pay,
sick leave, vacation pay, salary continuation for disability, deferred
compensation, bonus, stock purchase, stock appreciation rights, hospitalization,
medical insurance, life insurance, tuition reimbursement, employee assistance
and employee discounts, that the Company or any trade or business (whether or
not incorporated) which is treated as a single employer with the Company under
Section 414(b), (c), (m) or (o) of the Code ("Code Affiliate") maintains or has
an obligation to make contributions other than Multiemployer Plans, as defined
in ERISA or the Code (the "Company Benefit Plans"). The Company has provided to
Parent true and complete copies of each of the Company Benefit Plans, the most
recent summary plan description, the most recent IRS determination letters,
annual reports (Form 5500 Series) for the preceding three years, and actuarial
statements of valuation, together with each current summary of material
modifications, or other current participant disclosure required under ERISA or
other applicable Legal Requirements.
(c) Neither the Company nor any Code Affiliate has incurred any
unsatisfied material withdrawal liability, as defined in Section 4201 of ERISA,
with respect to any multiemployer plan, nor has any of them incurred any
material liability due to the termination or reorganization of any multiemployer
plan. To the Knowledge of the Company, neither the Company nor any of its Code
Affiliates reasonably expects to incur any liability due to a withdrawal from or
termination or reorganization of a multiemployer plan.
-14-
(d) Each Company Benefit Plan that is intended to qualify under
Section 401 of the Code and the trust maintained pursuant thereto has been
determined to be exempt from federal income taxation under Section 501 of the
Code by the Internal Revenue Service, and to the Knowledge of the Company,
nothing has occurred with respect to any such plan since such determination
which could reasonably be expected to result in the loss of such exemption or
the imposition of any material liability, penalty or Tax under ERISA or the
Code. To the Knowledge of the Company, each Company Benefit Plan has at all
times been maintained, by its terms and in operation, in all material respects
in accordance with all applicable laws. No Company Benefit Plan is maintained in
connection with any trust described in Code Section 501(c)(9).
(e) All material contributions (including all employer contributions
and employee salary reduction contributions) required to have been made under
the Company Benefit Plans or by law (without regard to any waivers granted under
Section 412 of the Code) to any funds or trusts established thereunder or in
connection therewith have been made by the due date thereof (including any valid
extension), and no accumulated funding deficiency exists with respect to any of
the Company Benefit Plans subject to Section 412 of the Code.
(f) No Company Benefit Plan which is subject to Title IV of ERISA has:
(i) as of the most recent valuation date for such Company Benefit Plan, assets,
the fair market value of which (including for these purposes any accrued but
unpaid contributions) does not exceed the present value of all benefit
liabilities as defined in ERISA Section 4001(a)(16) under such Company Benefit
Plan determined on a termination basis using the assumptions that would be
applied by the PBGC for a plan terminating as of the date of this Agreement or
the Effective Date, or (ii) been a plan with respect to which there has been a
"reportable event," as defined in Section 4043 of ERISA and the regulations
thereunder, which would require the giving of notice to the PBGC. No transaction
prohibited by Section 406 of ERISA or Section 4975 of the Code has occurred with
respect to any Company Benefit Plan. Except for premiums paid to the PBGC,
neither the Company nor any Code Affiliate has incurred or reasonably expects to
incur any liability under Section 4062 or 4063 of ERISA to the PBGC, or any
trustee appointed under Section 4042 of ERISA. Neither the Company nor any Code
Affiliate has incurred any liability under Title IV of ERISA arising in
connection with the termination of any plan covered or previously covered by
Title IV of ERISA.
(g) To the Knowledge of the Company, there have been no violations of
ERISA or the Code with respect to the filing of applicable material reports,
documents and notices regarding the Company Benefit Plans with the Secretary of
Labor and the Secretary of the Treasury or the furnishing of such reports,
documents and notices to the participants or beneficiaries of the Company
Benefit Plans which would result in a Company Material Adverse Effect.
(h) There are no pending actions, written claims or lawsuits which
have been asserted or instituted against the Company Benefit Plans, the assets
of any of the trusts under such plans or the plan sponsor or the plan
administrator, or against any fiduciary of the Company Benefit Plans with
respect to the operation of such plans (other than routine benefit claims), nor
does the Company have Knowledge of facts which could reasonably form the basis
for any such actions, claims or lawsuits.
-15-
(i) Except as provided in Schedule 6.8 and as may be required under
Section 4980B of the Code, neither the Company nor any Code Affiliate maintains
any Company Benefit Plan that provides medical or welfare benefits to current or
future retired or terminated employees, their spouses or their dependents.
(j) Except as set forth on Schedule 6.8, there are no union or
collective bargaining agreements applicable to any Person employed by the
Company and the Company has no duty to bargain with any labor organization with
respect to any such Person. Since January 1, 1999 there have not been any unfair
labor practice charges against the Company, any demand for recognition or any
other effort of or request or demand from, a labor organization for
representative status with respect to any Person employed by the Company. Except
as described on Schedule 6.8, the Company has no employment contracts, either
written or oral, with any employee of the Company and none of the employment
contracts or other agreements listed on Schedule 6.8 requires the Company or
will require Parent or its Affiliates to employ any Person after the Closing.
(k) Except as expressly provided herein or as set forth on Schedule
6.8, the consummation of the transactions contemplated by this Agreement will
not (i) entitle any employee to severance pay, unemployment compensation or any
similar payment, or (ii) accelerate the time of payment or vesting, or increase
in the amount, of any compensation due to any employee or any director or former
employee of the Company, or (iii) renew or extend the term of any agreement
regarding compensation for an employee which, in the case of (i), (ii) or (iii)
above, would create any liability to the Company, or Parent, or its Affiliates
after the Effective Date. No payment or benefit which may be made by the Company
or any of its Affiliates with respect to any employee will be classified as an
"excess parachute payment" within the meaning of Section 280G(b)(1) of the Code.
6.9 Compliance with Applicable Laws
(a) Except as set forth on Schedule 6.9, the Company and its Company
Subsidiaries hold all permits, licenses, franchises, variances, exemptions,
concessions, leases, instruments, orders and approvals (the "Company Permits")
of all Governmental Entities required to be held by them, except for such
Company Permits the failure of which to hold, individually or in the aggregate,
does not have and, in the future is not likely to have, a Company Material
Adverse Effect. All of the Company Permits that are Franchises are listed on
Schedule 6.9-A. Except as set forth on Schedule 6.9, to the Knowledge of the
Company, the Company and its Company Subsidiaries are in compliance in all
material respects with the terms of the Company Permits. The Company and the
Company Subsidiaries have not received, nor do they have written notice that
they shall receive, from any Governmental Entity a preliminary assessment that a
Company or Company Subsidiary Franchise should not be renewed as provided in
Section 626(c)(1) of the Communications Act. Except as set forth on Schedule
6.9, the Company and the Company Subsidiaries have timely filed notices of
renewal in accordance with the Communications Act with all Governmental Entities
with respect to each Company and Company Subsidiary Franchise expiring within 30
months of the date of this Agreement. Such notices of renewal have been filed
pursuant to the formal renewal procedures established by Section 626(a) of the
Communications Act. Except as set forth on Schedule 6.7 or Schedule 6.9, as of
the date hereof, no Governmental Entity has commenced, or given written notice
that it intends to commence, a proceeding to revoke or suspend a Company or
-16-
Company Subsidiary Franchise. Except as set forth on Schedule 6.9, the
businesses of the Company and its Company Subsidiaries are not being conducted
in violation of any Legal Requirement, except for such violations which,
individually or in the aggregate, would not have a Company Material Adverse
Effect. Except as set forth on Schedule 6.7 or Schedule 6.9, no investigation or
review by any Governmental Entity with respect to the Company or any of its
Company Subsidiaries is pending, or, to the Knowledge of the Company,
threatened, nor has any Governmental Entity indicated to the Company an
intention to conduct the same.
(b) The Company and each of its Company Subsidiaries have made all
submissions (including, without limitation, registration statements) required
under the Communications Act of 1934, as amended, and the applicable rules and
regulations thereunder (collectively, the "Communications Act"), the Securities
Act and the Exchange Act, except for such submissions the failure of which to
make would not, individually or in the aggregate, have and, in the future are
not reasonably likely to have, a Company Material Adverse Effect.
(c) Without limiting the generality of the foregoing: (i) each of the
Company and its Company Subsidiaries is in compliance, in all material respects,
with the specifications set forth in Part 76, Subpart K of the rules and
regulations of the FCC, Section 111 of the U.S. Copyright Act of 1976 and the
applicable rules and regulations thereunder issued by the U.S. Copyright Office
and the Communications Act, including provisions of any thereof pertaining to
signal leakage, and all other applicable Legal Requirements relating to the
construction, maintenance, ownership and operation of the assets (including the
cable systems) and business of each of the Company and its Company Subsidiaries
and (ii) each cable system of the Company and each of its Company Subsidiaries
(a "System") is in compliance in all material respects with the provisions of
the Communications Act as such Legal Requirements relate to the operation of
such System. Each of the Company and its Company Subsidiaries has complied in
all material respects with the must carry and retransmission consent provisions
of the Communications Act as they relate to their Systems.
(d) Each of the Company and its Company Subsidiaries is using
reasonable good faith efforts to establish rates charged to subscribers that are
allowable under the Communications Act and any authoritative interpretation now
in effect. The Company has delivered to Parent complete and correct copies of
all FCC Forms relating to rate regulation filed by the Company and its Company
Subsidiaries with respect to their Systems, and of all correspondence with any
Governmental Entity relating to rate regulation generally or specific rates
charged to subscribers with respect to their Systems, including copies of any
complaints filed with the FCC with respect to any rates charged to subscribers
of their Systems, and any other documentation supporting an exemption from the
rate regulation provisions of the Communications Act claimed by each of the
Company and its Company Subsidiaries with respect to any of their Systems. To
the Knowledge of the Company, Schedule 6.9 hereto identifies all rate complaints
and all appeals of local rate orders of the Company and its Company Subsidiaries
which are pending at the FCC. Neither the Company nor any of its Company
Subsidiaries has received any written or oral notice from any Governmental
Entity with respect to an intention to enforce customer service standards
pursuant to the Communications Act and none of the Company or any of its Company
Subsidiaries has agreed with any Governmental Entity to establish customer
service standards that exceed the customer service standards promulgated
-17-
pursuant to the Communications Act. Except as set forth on Schedule 6.9, none of
the Company or any of its Company Subsidiaries has made any election with
respect to any cost of service proceeding conducted in accordance with Part
76.922 of Title 47 of the Code of Federal Regulations or any similar proceeding
with respect to any of their Systems (a "Cost of Service Election"). Except as
set forth on Schedule 6.9, none of the Company or any of its Company
Subsidiaries has entered into or is subject to any "social contract" or other
proposed resolution with the FCC with respect to rates charged for cable
television services in their Systems and is not currently negotiating or
anticipating entering into or being subject to the same.
6.10 Tax Matters.
(a) Except as set forth on Schedule 6.10, the Company and each of its
Subsidiaries have timely filed (including extensions) all Tax returns required
to be filed by any of them, and the information contained in such Tax returns is
true, complete and accurate in all material respects. All Taxes claimed by the
Company and each of its Subsidiaries to be owed in respect of the periods
covered by such returns have been timely paid by the Company or its
Subsidiaries, or the Company has set up an adequate reserve for the payment of
such Taxes. For the purposes of this Agreement, the terms "Tax" and "Taxes" will
include all federal, state, local and foreign income, profits, estimated,
franchise, gross receipts, payroll, sales, employment, use, property,
withholding, escheat, excise and other taxes, duties and assessments of any
nature whatsoever together with all interest, penalties and additions imposed
with respect to such amounts.
(b) Neither the Company nor any Subsidiary of the Company is
delinquent in the payment of any Tax, assessment or governmental charge. Except
as set forth on Schedule 6.10, no deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of its Subsidiaries that have
not been finally settled or paid in full, and no requests for waivers of the
time to assess any such Tax are pending.
(c) Except as set forth on Schedule 6.10, the amount of Taxes
reflected as a liability on the audited consolidated financial statements of the
Company as of December 31, 1998 including all notes therein (the "Financial
Statements") is a full and adequate reflection of the amount of accrued and
unpaid Taxes with respect to the Company and its Subsidiaries for all taxable
periods (or portions of taxable periods) through and including December 31,
1998.
(d) With respect to the stock, securities and assets described in
Section 8.4, as of the date hereof, there have been no "intercompany
transactions" giving rise to any "deferred intercompany transaction gain"
pursuant to the Treasury regulations issued under Section 1502 of the Code.
(e) [intentionally omited]
(f) As of the date hereof, to the Knowledge of the Company, the
representations set forth in the numbered paragraphs of the form of Certificate
of the Company attached as Schedule 6.10(f) are true and correct in all material
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respects, assuming for purposes of this representation and warranty that the
Merger referred to in such form had been consummated on the date hereof.
(g) Except as set forth on Schedule 6.10 or as a result of the Merger
or the transactions described in Article VIII, since the date of the Financial
Statements, the Company and its Subsidiaries have not incurred or accrued any
liability for any Taxes (whether fixed or contingent) except for those Taxes
incurred or accrued in the ordinary course of business of the Company and its
Subsidiaries.
6.11 Environmental Laws. Except as described on Schedule 6.11, the
Company has not generated, stored, used, treated, handled, discharged, released
or disposed of any flammable, explosive or radioactive materials, toxic
substances or other hazardous substances or wastes on, under or about any assets
of the Company that have had or could reasonably be expected to result in a
Company Material Adverse Effect. Except as set forth in Schedule 6.11, to the
Knowledge of the Company no release of hazardous substances or wastes outside of
any real property owned, leased or otherwise used by the Company has entered or
threatened to enter any such property that has had or could reasonably be
expected to result in a Company Material Adverse Effect and, there is not any
claim pending or, to the Knowledge of the Company, threatened based upon any
environmental laws arising from any condition of the land adjacent to or
surrounding any such property. Except as set forth in Schedule 6.11, no claim or
investigation based on any applicable environmental laws has been asserted or
conducted in the past or is currently pending or, to the Knowledge of the
Company, threatened with respect to any real property owned, leased or otherwise
used by the Company. Except as set forth in Schedule 6.11, (i) no aboveground or
underground storage tanks containing hazardous substances or hazardous waste are
currently or have been located at any of the real property owned, leased or
otherwise used by the Company during the term of the Company's ownership, lease
or use or, to the Company's Knowledge, prior to such ownership, lease or use,
(ii) no real property owned, leased or otherwise used by the Company has been
used at any time during the term of the Company's ownership, lease or use or, to
the Company's Knowledge, prior to such ownership, lease or use as a gasoline
service station or any other facility for storing, pumping, dispensing or
producing gasoline or other petroleum products or wastes and (iii) to the
Knowledge of the Company no building or other structure on any real property
owned, leased or otherwise used by the Company contains asbestos,
asbestos-containing material or material presumed to be asbestos containing
material under any environmental law, except in the case of any of the foregoing
(i) through (iii) where such would not have, individually or in the aggregate, a
Company Material Adverse Effect. The Company has made available to Parent true
and complete copies of all (i) environmental audits, investigations, studies or
reports with respect to any real property owned, leased or otherwise used by the
Company that have been performed by or at the direction or on behalf of the
Company or that are in the Company's possession, (ii) notices or other materials
in the Company's possession from Governmental Entities having the power to
administer or enforce any applicable environmental laws relating to current or
past ownership, use or operation of or activities at any real property owned,
leased or otherwise used by the Company and (iii) materials in the Company's
possession relating to any claim, allegation or action by any Person (other than
any Governmental Entities) under any applicable environmental law. For the
purpose of this Section, "hazardous substances," "hazardous waste" and
"asbestos-containing material" will have the meanings set forth in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 and
any applicable State law.
-19-
6.12 Intellectual Property. To the Knowledge of the Company, the
conduct of its business does not infringe, in any material way, upon the
patents, trademarks, copyrights, trade names or other intellectual property
rights, domestic or foreign, of any Person. Except as set forth on Schedule
6.12, no Person has asserted any claim to the Company with respect to any such
infringement.
6.13 Material Contracts. Except as set forth on Schedule 6.13 or as
disclosed in the Company SEC Filings, the Company or any of its Company
Subsidiaries is not a party to any of the following:
(i) any agreement concerning a partnership or joint venture;
(ii) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of
$1,000,000 or under which it has imposed a security interest on any of
its assets, tangible or intangible;
(iii) any noncompetition agreement restricting activities by the
Company or any of its Subsidiaries;
(iv) any agreement with any Affiliates of the Company or with
AT&T or Affiliates of AT&T or with @Home;
(v) any agreement under which the consequences of a default or
termination could have a Company Material Adverse Effect; or
(vi) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $5,000,000.
The Company has delivered to Parent a correct and complete copy of each written
agreement listed in Schedule 6.13. The Company is not, and to the Knowledge of
the Company no other party is, in default under, and no event has occurred which
with notice or lapse of time would constitute a material breach or default, or
permit termination, modification, or acceleration, under each such agreement.
6.14 Year 2000 Readiness. The Company has established a Year 2000
Remediation Program on or before the Effective Date.
6.15 Financial Advisor. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company, the Stockholders or their respective
Affiliates, other than such fees payable by the Stockholders or their
Affiliates.
6.16 ▇▇▇▇▇▇▇ International, Inc. ▇▇▇▇▇▇▇ International, Inc. has no
assets other than the cash in the ▇▇▇▇▇▇▇ International Separate Account and no
liabilities other than tax liabilities arising out of the sale of the stock of
Videopole and of United Pan-European Communications, N.V.
-20-
ARTICLE VII
-----------
CONDUCT OF BUSINESS PENDING THE MERGER
7.1 Conduct of Business by the Company Pending the Merger. Prior to
the Effective Date, unless Parent otherwise agrees in writing:
(i) the Company will, and will cause its Company Subsidiaries to,
carry on their respective businesses in the ordinary course, and use their
reasonable best efforts to preserve intact their present business
organizations and preserve their relationships with customers, suppliers
and others having business dealings with them;
(ii) the Company will not (A) sell or pledge or agree to sell or
pledge any capital stock owned by it in any of its Company Subsidiaries,
(B) amend or propose to amend its Certificate of Incorporation or By-laws,
(C) split, combine or reclassify its outstanding capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of, or in substitution for, shares of capital stock of the Company,
declare, set aside or pay any dividend or other distribution payable in
cash, stock or property, (D) directly or indirectly redeem, purchase or
otherwise acquire or agree to redeem, purchase or otherwise acquire any
shares of capital stock of the Company, or (E) agree to do any of the
foregoing;
(iii) except as contemplated hereby, the Company will not, and
will cause its Company Subsidiaries not to, (A) issue, deliver or sell or
agree to issue, deliver or sell any additional shares of, or rights of any
kind to acquire any shares of, its capital stock of any class, or any
option, rights or warrants to acquire, or securities convertible into,
shares of capital stock or any stock appreciation rights or similar rights,
(B) acquire, lease or dispose of or agree to acquire, lease or dispose of
any capital assets or any other assets, other than any acquisition, lease
or disposition that is, individually or in the aggregate, immaterial in
amount, whether or not in the ordinary course of business and in the case
of any such acquisition, that is acquired by a Company Subsidiary; (C)
create, assume or incur any additional indebtedness for borrowed money or
mortgage, pledge or subject to any Lien any of its assets, except pursuant
to credit facilities in effect as of the date hereof, or enter into any
other material transaction other than in each case in the ordinary course
of business consistent with past practice; (D) make any payments with
respect to any indebtedness of the Company or its Subsidiaries except for
such payments that are permitted to be made without penalty or are
scheduled to come due prior to the Effective Date; (E) except as permitted
in Subsection (B), acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, except that the Company may
acquire new Franchises, or interests therein, in the ordinary course of
business; or (F) agree to do any of the foregoing;
-21-
(iv) except as provided in Section 8.5, the Company will not, and
will cause the Company Subsidiaries not to, except as required to comply
with applicable law or existing contracts or plans, (A) adopt or terminate
or amend any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation rights, pension, retirement, deferred
compensation, employment or other Company Benefit Plan, agreement, trust,
fund or other arrangement for the benefit or welfare of any director,
officer or current or former employee, (B) increase or decrease in any
manner the compensation or fringe benefit of any director, officer or
employee (except for normal increases in the ordinary course of business
consistent with past practice), (C) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or Company
Benefit Plan (except for such awards made in the ordinary course of
business consistent with past practice unless such award is otherwise
prohibited under Section 7.1(iii)(A)), (D) take any action to fund or in
any other way secure the payment of compensation or benefits under any
employee plan, agreement, contract or arrangement or Company Benefit Plan
(except for such actions made in the ordinary course of business consistent
with past practice) or (E) agree to do any of the foregoing;
(v) the Company will not, and will cause its Company Subsidiaries
not to, make any affirmative election with respect to any cost of service
proceeding conducted in accordance with Part 76.922 of Title 47 of the Code
of Federal Regulations or any similar proceeding;
(vi) the Company will duly and timely file a valid notice of
renewal under Section 626 of the Cable Communications Policy Act of 1984,
as amended, with the appropriate Governmental Entity with respect to any
Franchise of the Company or its Company Subsidiaries that will expire
within 36 months after any date between the date hereof and the Effective
Date;
(vii) the Company will not, and will cause its Subsidiaries not
to, take, or agree in writing or otherwise to take, any actions that would
(A) make any representation or warranty of the Company contained in this
Agreement untrue or incorrect in any material respect or (B) result in any
of the conditions of this Agreement set forth in Section 9.3 not being
satisfied as of the Effective Date;
(viii) the Company will consult with Parent concerning, and
permit Parent to participate in, any proceedings for or negotiations with
respect to (A) any Franchise that is subject to renewal between the date of
this Agreement and the Effective Date and (B) obtaining the consent of any
Governmental Entity with respect to the transfer of ownership or control of
any Franchise in connection with the transactions contemplated by this
Agreement;
(ix) the Company will not, and will cause its Company
Subsidiaries not to, amend, alter or otherwise modify the provisions of, or
agree to undertake any obligation not required to be performed under, the
provisions of any Franchise of the Company that would materially increase
the obligations of the Company under such Franchise if included as an
amendment thereto;
-22-
(x) the Company will not, and will cause its Company Subsidiaries
not to, (A) make any new loans, contributions or other advances to any
Distributed Subsidiary or relating to any Distributed Assets which, when
aggregated with all other such loans, contributions or other advances made
after May 4, 1999, would exceed $30,000,000, other than the contribution of
intercompany indebtedness which indebtedness arose prior to May 4, 1999 as
contemplated by Section 8.4, or (B) enter into any material contract that
will not be subject to termination by the Company or such Company
Subsidiary within one year after Closing without cost or amend in any
material respect any material contract, or (C) acquire or sell any
Marketable Shares, any General Instrument Corp. stock, or any beneficial
interest, options, warrants or similar instruments with respect to such
stock or (D) enter into any contract for the provision of telephony or
high-speed data services over cable except if required by law or (E) grant
any retransmission consent except if required by law or obligations
existing as of the date hereof to do so or (F) enter into any agreement
with any Affiliate of the Company or with AT&T or any of its Affiliates;
(xi) the Company will (A) maintain its books, accounts and
records in the usual and regular manner, in accordance with past accounting
practices, consistently applied, and (B) not make or rescind any express or
deemed election relating to Taxes, settle or compromise any claim, action,
suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes, change any of its methods of reporting
income or deductions for federal income tax purposes or file (other than in
a manner consistent with past practice) any Tax return;
(xii) the Company will design and implement all cable system
upgrade activities and capital expenditures (A) until December 31, 1999 in
accordance with its Capital Budget and (B) thereafter in accordance with
its regularly prepared capital budget, in each case consistent with the
specifications approved by Parent, subject to the Company's ability to
finance the same under its applicable credit facilities;
(xiii) the Company will not, and will cause its Affiliates not
to, contribute or otherwise transfer any cash to or from the ▇▇▇▇▇▇▇
International Separate Account except as may be required in connection with
any purchase price adjustment arising out of the sale of stock of United
Pan-European Communications, N.V. or any investment or reinvestment of the
proceeds therefrom;
(xiv) the Company will not, and will cause its Subsidiaries not
to, acquire or sell any Marketable Shares, any General Instrument Corp.
stock, or any beneficial interest, options, warrants or similar instruments
with respect to such stock;
(xv) if so requested by Parent after December 31, 1999, the
Company will terminate the DIVA Agreement to the extent permitted by the
terms thereof, such termination to be effective upon the Merger; and
(xvi) the Company will not, and will cause the Company
Subsidiaries not to, increase the number of headends covered by the
agreements referred to on Schedule 8.10, items 7 and 8.
-23-
Nothing in this Section 7.1 will prevent the Company from engaging in any
transaction with Company Subsidiaries or prevent the Company Subsidiaries from
engaging in any transaction with other Company Subsidiaries.
ARTICLE VIII
------------
ADDITIONAL AGREEMENTS
8.1 Access and Information. The Company and its Company Subsidiaries
will afford to Parent and to Parent's accountants, counsel and other
representatives reasonable access during normal business hours (and at such
other times as the parties may mutually agree) throughout the period prior to
the Effective Date to all of the Company's and the Company Subsidiaries'
properties, books, contracts, commitments, records and personnel; provided,
however, that in exercising such right of access Parent and its accountants,
counsel and other representatives will use their reasonable efforts to not
disrupt the business operations of the Company and the Company Subsidiaries.
During such period, the Company and its Company Subsidiaries and Parent will
furnish promptly to the other a copy of each report, schedule and other document
filed or received by it pursuant to the requirements of federal or state
securities laws to the extent it relates to the Company, the Company
Subsidiaries or the transactions contemplated hereby.
8.2 FYI. At the Closing, the ▇▇▇▇▇▇▇ Stockholders will acquire the FYI
business (which consists of production of a photoclassified cable television
channel with some infomercials with other information on same screen, such as
weather, time, stock quotes, etc.), including the assets set forth on Schedule
8.2 (which assets are owned of record by ▇▇▇▇▇▇▇ Advertising, Inc. but used
primarily by FYI) for a price of $3,000,000 in cash at Closing (or as an
adjustment in such amount to the ▇▇▇▇▇▇▇ Stockholder Stock Merger Consideration
(valued at the Share Valuation) if the Stockholders Representative so elects by
written notice to such effect delivered to Comcast not later than 10 business
days prior to Closing (the "FYI Payment Option")). At the Closing, Parent and
the appropriate FYI entity will enter into the affiliation agreement with FYI in
the form attached hereto as Exhibit A.
8.3 NuStar and Telestar, etc.. At the Closing, Parent (or its
Subsidiaries) and the appropriate Affiliate of the Company will enter into
agreements with the Distributed Subsidiaries (or Successor Entities) in the
forms attached hereto as Exhibit B and Exhibit C.
8.4 Distribution of Boot and Additional Parent Stock.
(a) As of the Effective Date, by virtue of the Merger, the ▇▇▇▇▇▇▇
Stockholders shall receive, in the aggregate, the following as additional
consideration in exchange for their Company Common Stock: (i) the assets
described as "Distributed Assets" in Schedule 8.4, and (ii) the Subsidiaries of
the Company described as "Distributed Subsidiaries" in Schedule 8.4 including
all assets and liabilities of such Distributed Subsidiaries; provided, however,
that in lieu of receiving one or more of such Distributed Subsidiaries the
▇▇▇▇▇▇▇ Stockholders may elect to receive a distribution of limited liability
company membership interests or partnership interests in one or more limited
liability companies or partnerships that are successors to such Distributed
-24-
Subsidiaries and hold all the assets and are responsible for all the liabilities
of such Distributed Subsidiaries ("Successor Entities"). Such additional
consideration shall be distributed to the ▇▇▇▇▇▇▇ Stockholders or their
designees in proportion to the ownership of Company Common Stock by each ▇▇▇▇▇▇▇
Stockholder as determined immediately prior to the Merger. Any reference to a
Distributed Subsidiary in this Agreement shall include a reference to the
applicable Successor Entity, if any.
(b) Prior to the Effective Date, all intercompany indebtedness
(including all accrued interest thereon) owed by any of the Distributed
Subsidiaries to the Company or any of its Subsidiaries will be contributed to
the capital of such Distributed Subsidiaries.
(c) All elections given to the ▇▇▇▇▇▇▇ Stockholders under this Section
8.4 shall be made by the Stockholders Representative on behalf of the ▇▇▇▇▇▇▇
Stockholders, and shall be effective if notice of such election is provided to
Parent not less than seven days prior to the Effective Date.
(d) All Distributed Assets and the Distributed Subsidiaries (or, if
applicable, the interests in Successor Entities) shall be distributed as is,
where is and subject to no title or other warranties (including express or
implied warranties of any sort, all of which are disclaimed) and will be
distributed subject to all obligations, indebtedness and liabilities owed by
each Distributed Subsidiary (or, in the case of Distributed Assets, by the
Company or any Subsidiaries) to parties other than the Company and its
Subsidiaries as of the Closing. Any agreement or arrangement (whether oral or
written) between any Distributed Subsidiary and the Company or its Company
Subsidiaries will be terminated to the extent required by Section 8.10.
(e) It is agreed and acknowledged that the personal property of ▇.▇.
▇▇▇▇▇▇▇ may be removed by him or his representatives before or after the Closing
from premises owned by the Company and its Subsidiaries. Neither the Company,
its Subsidiaries, Parent, Sub, the Stockholders or their respective Affiliates
will have any responsibility for any damages or losses to such items.
(f) Sub agrees that it will take all actions reasonably necessary to
effect a one-time transfer of the total vested and unvested account balances of
the participants in The ▇▇▇▇▇▇▇ Group Retirement Plan (the "LCI Plan") who are
or become employed by a Distributed Subsidiary or Successor Entity (the
"Distributed Employee Accounts") on or after the Closing Date to the 401(k) plan
established by the Distributed Subsidiaries or Successor Entities (the
"Distributed Subsidiary Plan"), such transfer to occur within a reasonable
period of time after the Closing. Such transfer will be in cash, except that the
portion of the Distributed Employee Accounts representing outstanding
participant loans will be distributed in the form of promissory notes, based on
the value of the Distributed Employee Accounts as of the valuation date under
the LCI Plan immediately preceding the date of the transfer. The transfer shall
only be made if the Distributed Subsidiaries agree to take all steps necessary
to cause the transfer of assets and liabilities from the LCI Plan to the
Distributed Subsidiary Plan and to ensure, in accordance with Section 411(d)(6)
of the Code, that no participant will receive an accrued benefit under the
Distributed Entity Plan less than the accrued benefit the participant would be
entitled to receive under the LCI Plan as of the date immediately prior to the
date the transfer occurs. The transfer will be accomplished in full compliance
with the applicable provisions of ERISA, the Code, and regulations and rulings
-25-
promulgated thereunder. Sub agrees to provide to the Distributed Subsidiaries in
a timely manner all information for each Distributed Employee Account, including
accrued benefits under the LCI Plan as the date of transfer (or most recent
valuation date coincident with or prior to such date), vesting service and any
other employee or contribution information required by the Distributed
Subsidiaries to determine the accounting for and benefits payable from the
Distributed Subsidiary Plan. Sub and the Distributed Subsidiaries each will be
solely responsible for their respective costs and expenses relating to, or
arising from, the transfer. The form of the Distributed Subsidiary Plan document
shall qualify under Code Section 401(a) and the Distributed Subsidiary Plan will
not be amended or operated in such a manner as would result in the
disqualification of the Distributed Subsidiary Plan. No provision of this
Section shall create any right or benefit in any person not a party to this
Agreement.
(g) Schedule 8.4(g) lists the assets of StarNet, Inc. which are owned
of record by ▇▇▇▇▇▇▇ Advertising, Inc. and used primarily in the business of
StarNet, Inc. and will be transferred to StarNet, Inc. on or before the
Effective Date.
8.5 Employee Arrangements.
(a) Prior to the Effective Date, the Company shall adopt the bonus
plan (the "Bonus Plan") as previously agreed among the parties. The Company and
Sub shall make the Bonus payments at the times, in the amounts and to the
persons specified in the Bonus Plan, subject to the satisfaction of any
condition thereto described therein.
(b) Sub shall pay severance benefits to certain individuals currently
employed by the Company and/or its Company Subsidiaries in accordance with the
terms specified on Schedule 8.5(b)(i). Notwithstanding anything to the contrary
in this Agreement, no severance benefits will be payable by Sub to any person
listed on Schedule 8.5(b)(ii) who shall become an employee of the Distributed
Subsidiaries after the date hereof, nor shall any severance benefits be payable
to any person who is a "disqualified individual" within the meaning of Section
280G(c) of the Code unless the Company has complied with the requirements of
Section 8.5(c) below with respect to such severance benefits.
(c) The Company shall comply with the shareholder approval
requirements of Section 280G(b)(5)(B) of the Code with respect to all payments
to be made in connection with the transactions contemplated hereby that would
otherwise constitute "parachute payments" within the meaning of Section 280G of
the Code and shall comply with any other requirements necessary for such
payments not to constitute "parachute payments" within the meaning of Section
280G of the Code.
8.6 Year 2000 Readiness Covenants. The Company shall maintain its Year
2000 Remediation Program, which has previously been reviewed by Parent, pursuant
to which all the Company's material Computer and Other Systems will be
evaluated, remedied and tested on an expedited basis. The Company will allow
Parent, Sub and their representatives to continuously monitor the efforts of the
Company toward achieving Year 2000 Readiness, including making available to
Parent and Sub and their representatives copies of all internal or external
reports, memoranda or other materials regarding its Year 2000 Remediation
Program and all inventory, testing and other implementation activities and
results. If Parent determines that it is not satisfied with the Company's
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progress on becoming Year 2000 Ready, Parent may elect, by written notice to the
Company to such effect, to manage such activities on behalf of the Company, and
the Company will cooperate fully with Parent in such efforts. If Parent makes
the election in the preceding sentence, expenses for Parent personnel and
consultants associated with such Parent efforts will be borne by Parent. If this
Agreement is terminated, Parent will reimburse the Company for any equipment
purchased at the direction of Parent to make the Company and its Company
Subsidiaries Year 2000 Ready.
8.7 Indemnification. Parent agrees that all rights to indemnification
existing in favor of the directors, officers or employees of the Company and
Company Subsidiaries as provided in the Company's and its Company Subsidiaries'
Certificates of Incorporation and By-Laws with respect to matters occurring
through the Effective Date will survive the Merger. Parent will cause the
Surviving Corporation to continue to provide indemnification to the employees,
officers and directors of the Company to the fullest extent permitted under
applicable law for a period of at least six years after the Effective Date.
8.8 Actions by the Parties.
(a) Subject to the terms and conditions of this Agreement, Parent will
use its reasonable 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, and (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. In connection with the foregoing,
each of the other parties hereto will cooperate with and assist Parent. Subject
to the terms and conditions of this Agreement, with respect to matters that are
within the Company's power or control, the Company will use its reasonable
efforts to, and with respect to matters that are within the sole power or
control of any Stockholder, such Stockholder shall use reasonable efforts to,
and the Stockholders will, taking into account their respective rights within
the Company, use reasonable efforts to cause the Company 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 and (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.
At Parent's request, Company will commit to and implement any divestiture, hold
separate, contribution to a trust or similar transaction or action with respect
to any asset, Franchise, license or business of the Company, which commitment
and implementation may, at the Company's option, be conditioned upon and
effective as of the Effective Date. Any such arrangement may, at the request of
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Parent, include a management agreement pursuant to which Parent will manage the
assets or business subject to such arrangement.
(b) In furtherance and not in limitation of the foregoing, each of
Parent and the Company agrees to (i) make any appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby as promptly as practicable and in any event
within ten business days of the date hereof, (ii) supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act, (iii) use reasonable best efforts to resist
the issuance or continuance of any injunction which would prevent the
consummation of the transactions contemplated by this Agreement and (iv) use
reasonable efforts to complete the review process under the HSR Act to permit
the consummation of the Merger including, but not limited to, causing the
expiration or termination of the applicable waiting periods under the HSR Act as
soon as practicable.
8.9 No Solicitation. Simultaneously with the execution and delivery of
this Agreement the Stockholders of the Company have unanimously consented to the
Merger and accordingly, the directors and officers of the Company have no
fiduciary duties to the Stockholders with respect to any Acquisition Proposal
that may be received by the Company. The Company and its Subsidiaries and their
respective officers, directors, representatives or agents will not take any
action to (i) initiate the submission of any Acquisition Proposal, (ii) enter
into any agreement with respect to any Acquisition Proposal or (iii) participate
in negotiations with any Person in connection with any Acquisition Proposal. The
Company will promptly communicate to Parent any solicitation or inquiry received
by the Company and the terms of any proposal or inquiry that it may receive in
respect of any Acquisition Proposal, or of any such representatives of
information requested from it or of any such negotiations or discussions being
sought to be initiated with the Company. "Acquisition Proposal" means any
proposed (A) merger, consolidation or similar transaction involving the Company,
(B) sale, lease or other disposition directly or indirectly by merger,
consolidation, share exchange or otherwise of all or any substantial part of the
assets of the Company or its Subsidiaries, (C) issuance, sale or other
disposition of securities representing 10% or more of the voting power of the
Company Common Stock or (D) any transaction in which any Person will acquire
beneficial ownership (as such term is defined in Rule 13d-3 under the Exchange
Act), or the right to acquire beneficial ownership or any "group" (as such term
is defined under the Exchange Act) will have been formed which beneficially owns
or has the right to acquire beneficial ownership of 10% or more of the
outstanding Company Common Stock.
8.10 Affiliate Agreements. Except as described on Schedule 8.10 and
except for the arrangements contemplated by Exhibits A, B, C and G hereto, at or
prior to the Closing the Company will terminate any agreement or arrangement
(whether oral or written) between the Company or any of its Company
Subsidiaries, on the one hand, and (i) any Stockholder or any of its Affiliates,
(ii) any relative of ▇.▇. ▇▇▇▇▇▇▇, or (iii) any Distributed Subsidiary, on the
other hand in each case without cost to the Company. The parties hereto hereby
acknowledge that, upon the Merger, any agreement between SSI and the Company
and/or the Company Subsidiaries providing for affiliation with certain
Affiliates of AT&T Broadband & Internet Services shall terminate.
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8.11 Use of ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. After Closing, ▇.▇. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇, and their assistants shall have the right, without charge, to
continue to use the spaces they presently occupy at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, and telephone and computer service for a period of up to three
months after the Effective Date.
8.12 Use of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. After the Closing, Sub and its
Affiliates will have the right to continue to occupy ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ during the transition of the advertising sales business of
the Company. At the Closing, Parent will, or will cause one or more of its
Affiliates to, execute and deliver the lease attached hereto as Exhibit G. After
the Closing, the ▇▇▇▇▇▇▇ Stockholders will cause StarNet (or the applicable
Successor Entity) and its employees to cooperate during such transition. Parent
or an Affiliate of Parent will promptly reimburse StarNet (or the applicable
Successor Entity) for the use of StarNet's employees based on the allocable
share of such expenses during such transition, as reasonably determined by
StarNet (it being understood that Parent is not obligated to use any StarNet
employees under this Section 8.12 and will only be required to share such
expenses to the extent it uses such employees). The allocation as determined by
StarNet will be subject to audit by Parent or an Affiliate.
8.13 Employee Cable Service. For a period of three years following
Closing, Sub will provide basic and standard and one premium cable service, free
of charge, to individuals who from time to time are employees of the Distributed
Subsidiaries or Successor Entities and who reside within the service area of
Suburban or Parent's Subsidiaries in the Philadelphia and HLLY DMAs.
Notwithstanding the preceding sentence, at no time will the Company be required
to provide such free service to more than 500 employees of the Distributed
Subsidiaries or Successor Entities. A list of additions and deletions to the
employee lists will be provided to Sub on a quarterly basis. Any person
receiving this free service must be an employee of a Distributed Subsidiary or a
Successor Entity.
8.14 Transitional Use of ▇▇▇▇▇▇▇ Name. For a period of 180 days after
the Closing, Sub and the Company Subsidiaries will be entitled to use the
trademarks, trade names, service marks, service names, logos and similar
proprietary rights that incorporate the name "▇▇▇▇▇▇▇" on a royalty-free basis,
provided that such entities remove all such names, marks, logos and similar
proprietary rights that incorporate the name "▇▇▇▇▇▇▇" from their assets as soon
as reasonably practicable, and in any event within 180 days, following the
Closing. Thereafter the ▇▇▇▇▇▇▇ Stockholders will have the exclusive right to
use the name "▇▇▇▇▇▇▇" and all derivations thereof. Notwithstanding the
foregoing, nothing in this Section will require removal or discontinuation of
the use of any such name or ▇▇▇▇ that is affixed to converters or other items in
customer homes or properties on the Effective Date.
8.15 Tax Matters. Neither the Company nor Parent nor Sub shall take
any action that would cause its (or in the case of Sub, Parent's) respective
representations set forth in the forms of certificates attached hereto as
Schedules 4.7 and 6.10(f) not to be true in all material respects from and after
the date hereof until the Effective Date.
8.16 Company Claims. The Company represents and warrants that it has
not sold, assigned or otherwise conveyed any claims the Company may have with
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respect to warrants issued by @Home to Affiliates of TCI ▇▇▇▇▇▇▇ and agrees
that, upon the Merger, any such claims shall be terminated, released and waived.
8.17 Registration Rights. At the Closing, Parent and TCI ▇▇▇▇▇▇▇ will
execute and deliver the TCI ▇▇▇▇▇▇▇ Registration Rights Agreement on the terms
set forth in Exhibit E hereto.
8.18 ▇▇▇▇▇▇▇ MCN Valuation. Parent and the Company shall retain an
appraiser (mutually satisfactory to each of them) to render, prior to the
Effective Date, an appraisal of ▇▇▇▇▇▇▇ MCN, Inc. (the "▇▇▇▇▇▇▇ MCN Valuation").
The Stockholders Representative shall have the option of paying the ▇▇▇▇▇▇▇ MCN
Adjustment in cash at Closing, in which case the amount of the ▇▇▇▇▇▇▇ MCN
Adjustment for the purpose of Section 3.1 shall be zero.
ARTICLE IX
----------
CONDITIONS PRECEDENT
9.1 Conditions to Each Party's Obligations. The respective obligations
of each party to consummate the transactions contemplated by this Agreement will
be subject to the satisfaction of the following conditions:
(a) No preliminary or permanent injunction or other order by any
federal or state court in the United States which prevents the consummation of
the transactions contemplated by this Agreement has been issued and remains in
effect.
(b) Any applicable waiting period under the HSR Act relating to the
Merger has expired or been terminated.
9.2 Conditions to Obligation of the Company Waivable Only by the
Stockholders Representative and TCI ▇▇▇▇▇▇▇. The obligation of the Company to
consummate the transactions contemplated by this Agreement will be subject to
the satisfaction of the additional following conditions, unless waived by the
Stockholders Representative and TCI ▇▇▇▇▇▇▇:
(a) Parent and Sub have performed in all material respects their
agreements contained in this Agreement and in any Transaction Document required
to be performed on or prior to the Effective Date and the representations and
warranties of Parent and Sub contained in this Agreement and in any Transaction
Document are true without regard to any materiality qualification in those
representations and warranties (except where the failure to be true,
individually or in the aggregate, would not have a Parent Material Adverse
Effect) when made and on and as of the Effective Date as if made on and as of
such date (other than those which speak as of a specific date which must be true
as of such specific date except where the failure to be true, individually or in
the aggregate, would not have a Parent Material Adverse Effect).
(b) Since the date hereof, no event or circumstance has occurred which
has resulted in, or could reasonably be expected to result in, a Parent Material
Adverse Effect.
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(c) Parent shall deliver to the Company at Closing a certificate of
Parent dated the Effective Date, executed by the President, the Executive Vice
President, any Senior Vice President or any Vice President of Parent, certifying
that the conditions to consummate the transactions contemplated by this
Agreement set forth in Sections 9.2(a) and 9.2 (b) have been satisfied.
9.3 Conditions to Obligations of Parent and Sub. The obligations of
Parent and Sub to consummate the transactions contemplated by this Agreement
will be subject to the satisfaction at Closing of the additional following
conditions, unless waived by Parent:
(a) The Company and the Stockholders have performed in all material
respects their agreements contained in this Agreement and in any Transaction
Document required to be performed on or prior to the Effective Date and the
representations and warranties of the Company and the Stockholders contained in
this Agreement and in any Transaction Document are true without regard to any
materiality qualification in those representations and warranties (except where
the failure to be true, individually or in the aggregate, would not have a
Company Material Adverse Effect) when made and on and as of the Effective Date
as if made on and as of such date (other than those which speak as of a specific
date which must be true as of such specific date except where the failure to be
true, individually or in the aggregate, would not have a Company Material
Adverse Effect).
(b) Since the date hereof, no event or circumstance has occurred which
has resulted in, or could reasonably be expected to result in, a Company
Material Adverse Effect.
(c) The Stockholders will deliver to Parent at Closing certificates
representing all shares of Company Common Stock outstanding held by
Stockholders, duly endorsed in blank or accompanied by duly executed stock
powers in blank.
(d) The Company shall deliver to Parent the following items, and the
Company shall take the following actions, at the Closing.
(i) Consents. The Company shall deliver to Parent at Closing
consents of Governmental Entities, if any, which have been obtained regarding
the transfer (including a transfer of control) of Franchises and FCC licenses
held by the Company or any Company Subsidiaries in connection with the
transactions contemplated by this Agreement, it being understood that obtaining
any consents, legally required or otherwise, is not a condition to the
obligations of Parent or Sub to consummate the transactions contemplated by this
Agreement.
(ii) Company's Closing Certificate. The Company shall deliver to
Parent at Closing a certificate of the Company executed by the President or a
Vice President of the Company, and shall cause the Stockholders to deliver their
certificate(s) (in the case of TCI ▇▇▇▇▇▇▇, executed by an executive officer of
TCI ▇▇▇▇▇▇▇), dated the Effective Date, certifying that the conditions to
Parent's obligation to consummate the transactions contemplated by this
Agreement set forth in Section 9.3(a) have been satisfied.
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(iii) Agreements. The parties thereto (other than Parent and its
Subsidiaries) shall execute and deliver to Parent at Closing agreements in
accordance with Exhibits A, B, C, D, E and G.
(iv) Noncompetition Agreement. The Company shall deliver to
Parent at Closing the Noncompetition Agreements in the forms of Exhibit H-1 and
H-2 executed by the ▇▇▇▇▇▇▇ Stockholders specified therein.
(v) FCC Counsel Opinion. The Company shall deliver to Parent at
Closing an opinion of FCC counsel to the Company, dated as of the Effective
Date, substantially in the form of Exhibit J to this Agreement with only such
changes thereto as are to matters which have not had, and could not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, and subject to such assumptions and limitations as may be
customary for legal opinions of such type.
(e) Parent shall have received an opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇,
dated the Effective Date, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. In rendering
such opinion, ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ may receive and rely upon representations
contained in certificates of the Company, Stockholders, Parent, Sub and others,
in each case in form and substance reasonably acceptable to ▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇.
9.4 Additional Condition to Obligations of the Company Waivable Only
by TCI ▇▇▇▇▇▇▇. The obligations of the Company to consummate the transactions
contemplated by this Agreement will be subject to satisfaction of the additional
following conditions unless waived TCI ▇▇▇▇▇▇▇:
(a) TCI ▇▇▇▇▇▇▇ shall have received an opinion of Wachtell, Lipton,
▇▇▇▇▇ & ▇▇▇▇, dated the Effective Date, to the effect that the Merger will
qualify as a reorganization within the meaning of Section 368(a) of the Code. In
rendering such opinion, Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇ may receive and rely upon
representations contained in certificates of the Company, Stockholders, Parent,
Sub and others, in each case in form and substance reasonably acceptable to
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇.
(b) Parent shall execute and deliver at Closing to TCI ▇▇▇▇▇▇▇ the TCI
▇▇▇▇▇▇▇ Registration Rights Agreement.
9.5 Additional Conditions to Obligations of the Company Waivable Only
by the Stockholders Representative. The obligations of the Company to consummate
the transactions contemplated by this Agreement will be subject to satisfaction
of the additional following conditions unless waived the Stockholders
Representative:
(a) The Company shall have received an opinion of Saul, Ewing, ▇▇▇▇▇▇
& ▇▇▇▇, LLP, dated the Effective Date, to the effect that the Merger will
qualify as a reorganization within the meaning of Section 368 (a) of the Code.
In rendering such opinion, Saul, Ewing, ▇▇▇▇▇▇ & ▇▇▇▇, LLP may receive and rely
upon representations contained in certificates of the Company, Stockholders,
Parent, Sub and others, in each case in form and substance reasonably acceptable
to Saul, Ewing, ▇▇▇▇▇▇ & ▇▇▇▇, LLP.
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(b) The parties thereto (other than the ▇▇▇▇▇▇▇ Stockholders, the
Company and the Distributed Subsidiaries) shall execute and deliver at Closing
agreements in accordance with Exhibits A, B and C.
(c) Parent shall have performed in all material respects its
agreements contained in the ▇▇▇▇▇▇▇ Registration Rights Agreement required to be
performed on or prior to the Effective Date; no conditions shall exist which
have resulted in a material breach of or constitute (with or without due notice
or lapse of time or both) a material default under the ▇▇▇▇▇▇▇ Registration
Rights Agreement; and the registration statement provided for therein shall have
been declared effective under the Securities Act, and no stop order suspending
the effectiveness of such registration statement shall be in effect and no
proceedings for such purpose shall be pending or threatened before the
Commission.
ARTICLE X
---------
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. This Agreement may be terminated at any time prior
to the Effective Date:
(a) by mutual written consent of the Stockholders Representative, TCI
▇▇▇▇▇▇▇ and Parent;
(b) by the Stockholders Representative, TCI ▇▇▇▇▇▇▇ or Parent if the
Closing does not occur on or before 11:59 p.m. (New York City time) on January
18, 2000, provided that the party seeking to terminate this Agreement (and, in
the case of termination by the Stockholders Representative, the Company) has or
have not breached its obligations hereunder in any material respect; and
provided further that if the only conditions to Closing that have not as of such
date been satisfied or waived are one or more of those contained in Section 9.1,
the reference to January 18, 2000 in this paragraph will be changed to February
18, 2000;
(c) by the Stockholders Representative or TCI ▇▇▇▇▇▇▇, provided that,
in the case of a termination by the Stockholders Representative, the Company and
the ▇▇▇▇▇▇▇ Stockholders or, in the case of a termination by TCI ▇▇▇▇▇▇▇, TCI
▇▇▇▇▇▇▇ have not breached any of their obligations hereunder in any material
respect, if any of the conditions specified in Sections 9.1 or 9.2 have not been
satisfied or waived by the Stockholders Representative and TCI ▇▇▇▇▇▇▇ at such
time as such condition is no longer capable of satisfaction;
(d) by Parent, provided Parent has not breached any of its obligations
hereunder in any material respect, if any of the conditions specified in
Sections 9.1 or 9.3 have not been satisfied or waived by Parent at such time as
such condition is no longer capable of satisfaction;
(e) by TCI ▇▇▇▇▇▇▇, provided that TCI ▇▇▇▇▇▇▇ has not breached any of
its obligations hereunder in any material respect, if any of the conditions
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specified in Section 9.4 have not been satisfied or waived by TCI ▇▇▇▇▇▇▇ at
such time as such condition is no longer capable of satisfaction; or
(f) by the Stockholders Representative, provided that the ▇▇▇▇▇▇▇
Stockholders have not breached any of their obligations hereunder in any
material respect, if any of the conditions specified in Section 9.5 have not
been satisfied or waived by the Stockholders Representative at such time as such
condition is no longer capable of satisfaction.
Any termination by the Company in accordance with this Section 10.1
may be effected as specified in Section 251(d) of the DGCL.
10.2 Effect of Termination. In the event of termination of this
Agreement by either the Stockholders Representative, TCI ▇▇▇▇▇▇▇ or Parent, as
provided above, this Agreement will forthwith become void and (except for the
intentional or willful breach of this Agreement by any party) there will be no
liability on the part of any of the Company, Parent, Sub, or any Stockholder or
their respective officers or directors or stockholders of Affiliates, except as
specifically provided herein. The provisions of Sections 11.2 and 11.6 shall
survive any termination.
10.3 Waiver. At any time prior to the Effective Date, the parties, by
or pursuant to action taken by their respective Boards of Directors in the case
of any corporation (with the consent of TCI ▇▇▇▇▇▇▇, in the case of the
Company), may (i) extend the time for the performance of any of the obligations
or other acts of the other parties, (ii) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any documents
delivered pursuant and (iii) waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver will be valid if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE XI
----------
GENERAL PROVISIONS; DEFINITIONS
11.1 Notices. All notices or other communications under this Agreement
will be in writing and will be given (and will be deemed to have been duly given
upon receipt) by delivery in person or by fax (with receipt confirmed) or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Company:
▇▇▇▇▇▇▇ Communications, Inc.
c/o The ▇▇▇▇▇▇▇ Group
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With copies to:
Saul, Ewing, ▇▇▇▇▇▇ & ▇▇▇▇, LLP
Centre Square West
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent or Sub:
Comcast Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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If to TCI ▇▇▇▇▇▇▇:
AT&T Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Corporate Secretary
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
AT&T Broadband & Internet Services
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Legal Department
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the ▇▇▇▇▇▇▇ Stockholders:
▇.▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
Saul, Ewing, ▇▇▇▇▇▇ & ▇▇▇▇, LLP
Centre Square West
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other addresses as any party may have furnished to the other parties
in writing in accordance with this Section.
11.2 Fees and Expenses. Whether or not the Closing occurs, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement will be paid by the party incurring such costs
and expenses, provided, however, that if Closing occurs, the reasonable costs
and expenses of the ▇▇▇▇▇▇▇ Stockholders up to $250,000 will be paid by TCI
▇▇▇▇▇▇▇.
11.3 Publicity. So long as this Agreement is in effect prior to the
Effective Date, the Company and Parent will consult with each other in issuing
any press release or otherwise making any public statement with respect to the
transactions contemplated by this Agreement. Neither the Company nor Parent will
issue any such press release or make any such public statement without the prior
written consent of the other parties, except as may be required by law or by
obligations pursuant to any listing agreement with any national securities
market. The commencement of litigation relating to this Agreement or the
transactions contemplated hereby or any proceedings in connection therewith will
not be deemed a violation of this Section 11.3.
11.4 Specific Performance. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties will be entitled to enforce specifically
the terms and provisions in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
11.5 Amendment. This Agreement will be of no force or effect until
executed and delivered by all of the parties. This Agreement may be amended,
modified or cancelled, and the terms and conditions may be waived, only by a
written instrument signed by the parties.
11.6 Miscellaneous. This Agreement (including the Transaction
Documents and the other documents and instruments referred to in this Agreement)
and, as between Comcast and TCI ▇▇▇▇▇▇▇ and its Affiliates, the Letter Agreement
dated May 4, 1999 between AT&T Corp. and Comcast, as amended, (a) when executed
and delivered, constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter and (b) will be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware (without giving effect to the provisions thereof relating to
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conflicts of law). This Agreement is not intended to and shall not confer upon
any person (including any employees of the Company) other than the parties
hereto any rights or remedies under this Agreement, provided that the directors,
officers or employees of the Company and Company Subsidiaries shall be
third-party beneficiaries of Section 8.7 hereof. This Agreement may be executed
in two or more counterparts which together will constitute a single agreement.
Any certificate delivered pursuant to this Agreement by an officer, director or
employee on behalf of a legal entity will be made without personal liability on
the part of the person giving such certificate. Headings used in this Agreement
are for convenience of reference only and will not be deemed to affect the
meaning or scope of the provisions of this Agreement. This Agreement shall be
binding upon and inure to the benefit of the legal successors, estates
(including their distributees to the extent applicable) and assigns of the
parties hereto, provided that the rights and obligations hereunder (other than
the right to receive any consideration in respect of shares of Company Common
Stock) may not be assigned by any of the parties hereto without the written
consent of the other parties hereto.
11.7 Definitions.
"Accountants" has the meaning set forth in Section 3.3(b) of this
Agreement.
"Acquisition Proposal" has the meaning set forth in Section 8.9 of
this Agreement.
"Adjustment Date" means the second business day prior to the Effective
Date.
"Adjustments" means, collectively, the Debt Adjustment, the Bonus
Adjustment, the ▇▇▇▇▇▇▇ Bonus Adjustment, the ▇▇▇▇▇▇▇ MCN Adjustment, the
Liabilities Adjustment, the Split-Dollar Life Adjustment and the Subsidiary
Adjustment.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, controls, or is under common control with, or is controlled by,
such Person. As used in this definition, "control" (including, with its
correlative meanings, "controlling," "controlled by" and "under common control
with") will mean possession, directly or indirectly, of the power to direct or
cause the direction of management or policies of a Person (whether through the
ownership of securities, or partnership or other ownership interest, by contract
or otherwise), provided, however, that Liberty Media, @Home and any Affiliates
of Liberty Media, @Home or of any of their respective Subsidiaries shall not be
treated as Affiliates of AT&T or of any of AT&T's Subsidiaries or Affiliates for
purposes of this Agreement. For purposes of this Agreement, "Liberty Media"
means Liberty Media Corporation, a Delaware corporation, and its successors and
assigns, and each other corporation or Person constituting part of the Liberty
Media Group as defined in AT&T's certificate of incorporation, and "@Home" means
At Home Corporation, a Delaware corporation.
"Agreed Value" for any specified shares of stock means the average
Closing Price per share of such stock during the ten consecutive trading days
immediately prior to and ending on the Adjustment Date multiplied by the number
of shares of such stock.
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"Agreement" has the meaning set forth in the preamble of this
Agreement and Plan of Merger.
"AT&T" has the meaning set forth in the Recitals.
"AT&T Merger Agreement" has the meaning set forth in the Recitals.
"Audited Balance Sheet" means the consolidated balance sheet of the
Company as of December 31, 1998 and the footnotes thereto set forth in the
Company 10-K.
"Bonus" has the meaning set forth in the Bonus Plan.
"Bonus Adjustment" means 63% of the gross amount of the Bonus payments
actually made pursuant to the Bonus Plan.
"Bonus Plan" has the meaning set forth in Section 8.5(a).
"business day" means any day other than a Saturday or Sunday or a day
of the year on which banks are not required or authorized by law to close in New
York City.
"Capital Budget" means the proposed capital budget of the Company for
the year ending December 31, 1999 attached as Exhibit I or any alternative
capital budgets approved in writing by Parent and the Company for 1999.
"Cash Consideration" has the meaning set forth in Section 3.7(a).
"Closing" has the meaning set forth in Section 3.6 of this Agreement.
"Closing Date" has the meaning set forth in Section 3.6 of this
Agreement.
"Closing Price" of any security on any date means the last reported
sale price during the first trading session (if there is more than one trading
session on such date) of such security on such date, or in case no sale takes
place on such date, the average of the closing bid and ask prices during the
first trading session (if there is more than one trading session on such date)
in each case on the principal securities exchange on which such securities are
listed or admitted to trading or, if not listed or admitted to trading on any
securities exchange, on the National Market System of the National Association
of Securities Dealers, Inc. or any successor national automated interdealer
quotation system (the "NNM") or, if such securities are not listed or admitted
to trading on any national securities exchange or quoted on the NNM, the average
of the closing bid and asked prices of such security in the over-the-counter
market as furnished by any New York Stock Exchange, Inc. member firm reasonably
selected by the Stockholders Representative for such purpose.
"Code" has the meaning set forth in the Recitals.
"Code Affiliate" has the meaning set forth in Section 6.8(b) of this
Agreement.
"Commission" has the meaning set forth in Section 4.4 of this
Agreement.
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"Communications Act" has the meaning set forth in Section 6.9(b) of
this Agreement. "Company" has the meaning set forth in the preamble to this
Agreement.
"Company 10-K" has the meaning set forth in Section 6.5 of this
Agreement.
"Company Audited Financial Statements" has the meaning set forth in
Section 3.3(b) of this Agreement.
"Company Benefit Plans" has the meaning set forth in Section 6.8(b) of
this Agreement.
"Company Common Stock" has the meaning set forth in Section 3.2(a) of
this Agreement.
"Company Material Adverse Effect" means a material adverse effect on
the business, properties, assets, condition (financial or otherwise),
liabilities or operations of the Company and its Subsidiaries, taken as a whole
or in the ability of the Company to perform its obligations under this Agreement
(other than (i) as a result of changes in Legal Requirements of general
applicability, (ii) changes resulting from general economic, financial or market
conditions or (iii) arising in connection with or as a result of any filing or
application with, or approval or consent of, any Person or Governmental Entity
(or failure to make or obtain the same), including any consents to the transfer
of control to Parent of any of the Company's FCC Licenses or Franchises, which
may be necessary or advisable in connection with the transactions contemplated
hereby or by the Transaction Documents, but excluding any filings, approval or
consent required to be made or obtained under the HSR Act).
"Company Permits" has the meaning set forth in Section 6.9(a) of this
Agreement.
"Company SEC Reports" has the meaning set forth in Section 6.5 of this
Agreement.
"Company Subsidiary" means each Subsidiary of the Company other than
each of the Distributed Subsidiaries.
"Computer and Other Systems" means any level of hardware or software,
equipment and cable plant, or building and other facilities used by the Company
in connection with its business which are date dependent or which process date
data, including any firmware, application programs, user interfaces, files and
databases, and which might be adversely affected by the advent or changeover to
the Year 2000 or to the advent or changeover to any leap year.
"Consent and Indemnity Agreement" has the meaning set forth in the
Recitals.
"Cost of Service Election" has the meaning set forth in Section 6.9(d)
of this Agreement.
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"Debt Adjustment" means the aggregate dollar amount of any loans,
contributions or other advances (including all accrued interest thereon) made by
the Company or any Company Subsidiary to any Distributed Subsidiary or with
respect to any Distributed Assets ( "Distribution Funding") between May 4, 1999
and the Effective Date, (i) disregarding the contribution of intercompany debt
to the Distributed Subsidiaries as set forth in Section 8.4(b) and (ii) not
taking into account the lesser of (A) the amount of any such loans,
contributions or other advances used to fund net operating costs and (B)
$2,000,000.
"DGCL" has the meaning set forth in Section 1.1.
"Distributed Assets" has the meaning set forth in Section 8.4.
"Distributed Employee Accounts" has the meaning set forth in Section
8.4(h).
"Distribution Funding" has the meaning set forth in the definition of
Debt Adjustment.
"Distributed Subsidiary" means each Subsidiary of the Company that is
distributed or otherwise transferred to the ▇▇▇▇▇▇▇ Stockholders pursuant to
Section 8.4.
"Distributed Subsidiary Plan" has the meaning set forth in Section
8.4(h).
"Effective Date" has the meaning set forth in Section 1.2.
"Equity Affiliate" has the meaning set forth in Section 6.3 of this
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended and the rules and regulations thereunder.
"FCC" has the meaning set forth in Section 4.3 of this Agreement.
"Final Adjustment Schedule" has the meaning set forth in Section
3.3(b) of this Agreement.
"Final Merger Consideration" has the meaning set forth in Section
3.3(b) of this Agreement.
"Financial Statements" has the meaning set forth in Section 6.10(c).
"Franchise" means authority to provide cable television service
pursuant to a governmental franchise or similar authorization.
"FYI Payment Option" has the meaning set forth in Section 8.2.
"GAAP" means Generally Accepted Accounting Principles as in effect on
the date.
-41-
"GI Warrants" means that number of General Instrument Corp. warrants
that General Instrument Corp. confirms in writing the Company or its Company
Subsidiaries own or have the right to receive at a future date as a result of
purchases of equipment (regardless of whether such warrants have been received
or earned as of the Effective Date).
"Governing Document" means, with respect to any Person, such Person's
(x) certificate of incorporation, articles of incorporation or other corporate
organizational document, (y) by-laws and (z) partnership agreement relating to
the formation of such Person as in effect at the time of determination to
include any amendments thereto.
"Governmental Entity" means the United States of America, any state,
commonwealth, territory or possession of the United States of America and any
political subdivision or quasi-governmental authority of any of the same,
including any court, tribunal, department, commission, board, bureau, agency,
county, municipality, province, parish or other instrumentality of any of the
foregoing.
"HLLY DMAs" means the Harrisburg-Lancaster-Lebanon-York designated
market area.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976.
"Knowledge of the Company" or "Company's Knowledge" with respect to a
particular fact or other matter means the current or prior knowledge of any of
the following individuals: ▇.▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
"LCI Plan" has the meaning set forth in Section 8.4(f).
"Legal Requirement" means applicable common law and any statute,
ordinance, code or other law, rule, regulation, order, technical or other
written standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Entity.
"▇▇▇▇▇▇▇ Bonus Adjustment" means an amount equal to the sum of (x) 50%
of the Bonus Adjustment attributable to payments made to employees, former
employees (who are not independent contractors) and surviving spouses of former
employees (who are not independent contractors) of the Company, the Company
Subsidiaries or Distributed Subsidiaries pursuant to the Bonus Plan and (y) 100%
of the Bonus Adjustment attributable to any payments pursuant to the Bonus Plan
other than to the parties set forth in the foregoing clause (x).
"▇▇▇▇▇▇▇ Final Merger Consideration" has the meaning set forth in
Section 3.3(b) of this Agreement.
"▇▇▇▇▇▇▇ International Separate Account" means one or more accounts
held by ▇▇▇▇▇▇▇ International, Inc. in which only the undistributed proceeds
(and any interest and other accruals thereon) from the sale prior to the date of
this Agreement by ▇▇▇▇▇▇▇ International, Inc. of stock of United Pan-European
Communications, N.V. or Videopole stock are held. Exhibit K hereto sets forth
the balance in the ▇▇▇▇▇▇▇ International Separate Account as of the date of this
Agreement.
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"▇▇▇▇▇▇▇ MCN Adjustment" means (i) the amount by which the ▇▇▇▇▇▇▇ MCN
Valuation exceeds $1,000,000 or (ii) if the ▇▇▇▇▇▇▇ MCN Valuation is equal to or
less than $1,000,000, zero.
"▇▇▇▇▇▇▇ MCN Valuation" has the meaning set forth in Section 8.18.
"▇▇▇▇▇▇▇ Preliminary Merger Consideration" has the meaning set forth
in Section 3.3(a) of this Agreement
"▇▇▇▇▇▇▇ Registration Rights Agreement" has the meaning set forth in
the Recitals.
"▇▇▇▇▇▇▇ Stockholder Conversion Number" has the meaning set forth in
Section 3.2(b).
"▇▇▇▇▇▇▇ Stockholder Stock Merger Consideration" has the meaning set
forth in Section 3.1.
"▇▇▇▇▇▇▇ Stockholders" has the meaning set forth in the preamble of
this Agreement and Plan of Merger.
"Liabilities Adjustment" means the excess of
(i) the sum of (A) Notes payable and obligations under capital
leases, plus (B) Accounts Payable and accrued expenses-unrelated parties, plus
(C) Accounts Payable-affiliate, plus (D) Customer prepayments and deposits, less
(E) any Distribution Funding reflected in any of the foregoing clauses (A)-(D),
less (F) any liabilities of any Distributed Subsidiary or respecting the
Distributed Assets, FYI, ▇▇▇▇▇▇▇ International, Inc. or any component of the
Subsidiary Adjustment or the Split-Dollar Life Adjustment reflected in any of
the foregoing clauses (A)-(D) and (G) not to include any liability for payments
under the Bonus Plan or for severance under the severance plans set forth in
Schedule 8.5(b)(i), over
(ii) the sum of (1) Cash and cash equivalents, plus (2)
marketable securities, plus (3) Accounts receivable, trade and other, less
allowance for doubtful accounts, plus (4) Prepaid expenses, less (5) any assets
of the Distributed Subsidiaries or FYI reflected in any of the foregoing clauses
(1)-(4), less (6) any amounts included in any of the foregoing clauses (1)-(4)
in respect of assets included in the Subsidiary Adjustment or the Split-Dollar
Life Adjustment,
in the case of all such line items and amounts, as of December 31, 1999 and as
reflected on the Company Audited Financial Statements.
"Lien" means any lien, security interest, pledge, charge, claim,
option, right to acquire, restriction on transfer, voting restriction or
encumbrance of any nature.
"Marketable Securities" means the Marketable Shares and the GI
Warrants.
"Marketable Shares" means shares of stock of Adelphia Business
Solutions, Inc., a Delaware corporation, and Liberty Digital, Inc., a Delaware
corporation.
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"Merger" has the meaning set forth in the Recitals.
"Merger Consideration" has the meaning set forth in Section 3.1.
"Parent" has the meaning set forth in the preamble to this Agreement.
"Parent Material Adverse Effect" means a material adverse effect on
the business, properties, assets, condition (financial or otherwise),
liabilities or operations of Parent and its Subsidiaries, taken as a whole, or a
material impairment or adverse effect on the ability of Parent to perform its
obligations under this Agreement (other than as a result of changes in Legal
Requirements of general applicability or any changes resulting from general
economic, financial or market conditions).
"Parent SEC Reports" has the meaning set forth in Section 4.4 of this
Agreement.
"Parent Stock" means Class A Special Common Stock, $1.00 par value per
share, of Parent.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means any individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Entity or other entity of any nature.
"Preliminary Merger Consideration" has the meaning set forth in
Section 3.3(a) of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Share Valuation" shall mean $36.90 per share of Parent Stock.
"Split-Dollar Life Adjustment" means an amount equal to the amount
realized by, paid to or reimbursed to the Company or the Company Subsidiaries as
provided in the applicable split-dollar arrangements involving the split-dollar
policies set forth on Exhibit L, net of any liabilities of the Company or any
Company Subsidiary arising from any of the foregoing.
"Stock Merger Consideration" has the meaning set forth in Section 3.1.
"Stockholder" has the meaning set forth in the preamble of this
Agreement and Plan of Merger.
"Stockholders Representative" means ▇.▇. ▇▇▇▇▇▇▇, acting as the agent
of the ▇▇▇▇▇▇▇ Stockholders.
"Sub" has the meaning set forth in the preamble to this Agreement.
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"Subsidiary" means with respect to any Person, any corporation or
partnership more than 50% of whose outstanding voting securities or partnership
interests, as the case may be, are directly or indirectly owned by such Person.
"Subsidiary Adjustment" means an amount equal to the sum of (i) the
product of 0.90 and the sum of (x) the Agreed Value of the Marketable Shares
held by the Company or any of its Subsidiaries as of the Effective Date and (y)
the excess of the Agreed Value of that number of shares of General Instrument
Corp. common stock underlying the GI Warrants over the aggregate exercise price
of the GI Warrants, (ii) without duplication, the sum of (a) 100% of the value
of any cash and cash equivalents and 90% of the value of any property or
securities distributed with respect to the securities described in (i) above
prior to the Effective Date or exchanged for such securities on or prior to the
Effective Date in connection with any dividends, recapitalization, stock split,
reorganization, acquisition or similar transaction and (b) the net proceeds of
any sale of the securities described in (i) above prior to the Effective Date,
and (iii) the cash and cash equivalents in the ▇▇▇▇▇▇▇ International Separate
Account as of the Effective Date. Exhibit F hereto sets forth the number of
Marketable Shares held by the Company or any of its Subsidiaries as of the date
of this Agreement.
"Suburban" means Suburban Cable TV Co., Inc., a Pennsylvania
corporation.
"Successor Entities" has the meaning set forth in Section 8.4(a).
"Surviving Corporation" has the meaning set forth in Section 1.1.
"System" has the meaning set forth in Section 6.9(c) of this
Agreement.
"Tax" has the meaning set forth in Section 6.10(a).
"TCI ▇▇▇▇▇▇▇" has the meaning set forth in the preamble of this
Agreement and Plan of Merger.
"TCI ▇▇▇▇▇▇▇ Conversion Number" has the meaning set forth in Section
3.2(b).
"TCI ▇▇▇▇▇▇▇ Final Merger Consideration" has the meaning set forth in
Section 3.3(b) of this Agreement.
"TCI ▇▇▇▇▇▇▇ Preliminary Merger Consideration" has the meaning set
forth in Section 3.3(a) of this Agreement
"TCI ▇▇▇▇▇▇▇ Registration Rights Agreement" has the meaning set forth
in the Recitals.
"TCI ▇▇▇▇▇▇▇ Stock Merger Consideration" has the meaning set forth in
Section 3.1.
"Transaction Documents" means the Consent and Indemnity Agreement, the
▇▇▇▇▇▇▇ Registration Rights Agreement, the TCI ▇▇▇▇▇▇▇ Registration Rights
Agreement and the instruments and documents described in Sections 9.2(c) and
9.3(d)(ii)-(iv) that are to be delivered by or on behalf of Parent, Sub or the
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Company or Stockholders in connection with this Agreement or the transactions
contemplated hereby.
"WARN" has the meaning set forth in Section 6.8(a) of this Agreement.
"Year 2000 Ready" or "Year 2000 Readiness" means that the referenced
component, system, software, equipment or other item is designed to be used
prior to, during and after the calendar year 2000 A.D., and that such item will
operate at all levels, including microcode, firmware, application programs, user
interfaces, files and databases, during each such time period without error or
interruption relating to, or the product of, date data which represents or
references different centuries or more than one century or leap year.
"Year 2000 Remediation Program" means an enterprise-wide program to
make Year 2000 Ready all material components, systems, software, equipment,
facilities and other items related to the subject entity's business. Such Year
2000 Remediation Program must be conducted by persons with experience in issues
related to Year 2000 Readiness and such persons must have organized an
enterprise-wide program management office which reports to executive level
management and the board of directors or other governing body of such entity.
11.8 Accounting Terms; Application of Defined Terms. Terms used with
initial capital letters or otherwise defined in this Agreement will have the
meanings specified, applicable to both singular and plural forms, for all
purposes of this Agreement. The word "include" and derivatives of that word are
used in this Agreement in an illustrative sense rather than limiting sense.
All accounting terms not otherwise defined in this Agreement will have
the meanings ascribed to them under GAAP.
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IN WITNESS WHEREOF, Parent, Sub, the Company and Stockholders have
caused this Agreement to be signed by their respective officers thereunder duly
authorized all as of the date first written above.
COMCAST CORPORATION
By: _________________________________________
Name: _______________________________________
Title: ______________________________________
COMCAST LCI HOLDINGS, INC.
By: _________________________________________
Name: _______________________________________
Title: ______________________________________
▇▇▇▇▇▇▇ COMMUNICATIONS, INC.
By: _________________________________________
Name: _______________________________________
Title: ______________________________________
TCI ▇▇▇▇▇▇▇, INC.
By: _________________________________________
Name: _______________________________________
Title: ______________________________________
▇▇▇▇▇▇▇ STOCKHOLDERS
_____________________________________________
▇.▇. ▇▇▇▇▇▇▇
_____________________________________________
H. ▇▇▇▇▇ ▇▇▇▇▇▇▇
_____________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
-47-