EXHIBIT 10.3
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SUBSCRIPTION AGREEMENT
among
VIACOM INTERNATIONAL INC.,
TELE-COMMUNICATIONS, INC.
and
TCI COMMUNICATIONS, INC.
Dated as of July 24, 1995.
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS.......................... 1
Section 1.1 Definitions............................................ 1
ARTICLE II
SUBSCRIPTION AND PURCHASE OF STOCK
Section 2.1 Subscription, Issuance, Purchase and Sale of Stock..... 8
Section 2.2 Payment of Purchase Price.............................. 8
ARTICLE III
CERTAIN BORROWINGS
Section 3.1 Certain Borrowings..................................... 8
ARTICLE IV
CLOSING
Section 4.1 Closing................................................ 10
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TCI AND TCI SUB
Section 5.1 Corporate Existence and Power.......................... 10
Section 5.2 Corporate Authorization................................ 10
Section 5.3 Governmental Authorization............................. 10
Section 5.4 Consents............................................... 11
Section 5.5 Non-Contravention...................................... 11
Section 5.6 Binding Effect......................................... 11
Section 5.7 Finders' Fees.......................................... 11
Section 5.8 Acquisition of Shares for Investment................... 11
Section 5.9 Preferred Stock........................................ 12
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF OLD VII
Section 6.1 Corporate Existence and Power.............................. 12
Section 6.2 Corporate Authorization.................................... 12
Section 6.3 Governmental Authorization................................. 12
Section 6.4 Consents................................................... 12
Section 6.5 Non-Contravention.......................................... 13
Section 6.6 Binding Effect............................................. 13
Section 6.7 Finders' Fees.............................................. 13
Section 6.8 Shares..................................................... 13
Section 6.9 Material Contracts......................................... 14
Section 6.10 Tank Test Reports.......................................... 14
Section 6.11 Forms I-9.................................................. 14
ARTICLE VII
COVENANTS
Section 7.1 Conduct of the Business.................................... 14
Section 7.2 Telecom Partnerships....................................... 15
Section 7.3 Access to Information; Confidentiality..................... 16
Section 7.4 Additional Financial Statements and Reports................ 16
Section 7.5 Material Adverse Changes................................... 17
Section 7.6 Local Authorization and Material Contract Amendments....... 17
Section 7.7 Telecom Partnership Leases................................. 17
Section 7.8 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇.......................................... 17
Section 7.9 Efforts; Filing and Consents............................... 18
Section 7.10 Notices of Certain Events.................................. 21
Section 7.11 Further Assurances......................................... 22
Section 7.12 Confidentiality of Transaction............................. 22
Section 7.13 TCI Undertaking as to TCI Sub's Obligations................ 22
Section 7.14 Consummation of Transaction................................ 22
Section 7.15 Estimated Exchange Time Basic Subscribers.................. 23
Section 7.16 Estimate Statement; List of Service........................ 23
Section 7.17 Approved Capital Expenditure Plan.......................... 23
Section 7.18 Reimbursement of Capital Expenditures...................... 23
Section 7.19 Sale of Dayton and Nashville Systems....................... 24
Section 7.20 Employment................................................. 24
Section 7.21 1996 Capital Expenditure Plan.............................. 25
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ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF TCI AND TCI SUB
Section 8.1 Funding Conditions ........................................... 25
Section 8.2 Closing Conditions ........................................... 26
Section 8.2.1 Representations and Warranties; Covenants .................... 26
Section 8.2.2 HSR Act ...................................................... 26
Section 8.2.3 Consented Subscribers ........................................ 27
Section 8.2.4 Required Consents ............................................ 27
Section 8.2.5 Absence of Injunction ........................................ 27
Section 8.2.6 Opinions ..................................................... 27
Section 8.2.7 Exchange Offer ............................................... 27
Section 8.2.8 Resignation of Officers and Directors ........................ 27
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF OLD VII
Section 9.1 Representations and Warranties; Covenants .................... 27
Section 9.2 HSR Act ...................................................... 28
Section 9.3 Consented Subscribers ........................................ 28
Section 9.4 Opinions ..................................................... 28
Section 9.5 Consents ..................................................... 28
Section 9.6 Absence of Injunction ........................................ 28
Section 9.7 Exchange Offer ............................................... 28
ARTICLE X
TERMINATION
Section 10.1 Termination .................................................. 29
Section 10.2 Effect of Termination ........................................ 29
ARTICLE XI
MISCELLANEOUS
Section 11.1 Legend ....................................................... 29
Section 11.2 Expenses ..................................................... 29
Section 11.3 Headings ..................................................... 30
Section 11.4 Notices ...................................................... 30
Section 11.5 Assignment ................................................... 31
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Section 11.6 Entire Agreement ...................................... 31
Section 11.7 Amendment; Waiver ..................................... 31
Section 11.8 Counterparts .......................................... 31
Section 11.9 Governing Law ......................................... 31
Section 11.10 Severability .......................................... 31
Section 11.11 Consent to Jurisdiction ............................... 32
Section 11.12 Third Person Beneficiaries ............................ 32
Section 11.13 Specific Performance .................................. 32
Section 11.14 Survival .............................................. 32
Section 11.15 Preferred Stock Conversion ............................ 32
EXHIBITS
Exhibit A-1 - Old VII Opinion
Exhibit A-2 - Old VII Communications Act Opinion
Exhibit B - TCI Sub Opinion
Exhibit C - Form of Section 617 Certification
SCHEDULES
Schedule 5.4 - Consents Required by Contracts of TCI and TCI Sub
Schedule 7.1 - Absence of Changes
Schedule 7.18 - Additional Capital Expenditures
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT, dated as of July 24, 1995, by and among Viacom
International Inc., a Delaware corporation ("Old VII"), Tele-Communications,
Inc., a Delaware corporation ("TCI") and TCI Communications, Inc., a Delaware
corporation ("TCI Sub").
WHEREAS, TCI Sub wishes to subscribe to and purchase from Old VII, and Old
VII desires to issue and sell to TCI Sub 100 shares of Class B Common Stock; and
WHEREAS, TCI Sub is a wholly-owned subsidiary of TCI and in order to induce
Old VII to enter into this Agreement TCI is agreeing to cause TCI Sub to pay and
perform all of TCI Sub's obligations under this Agreement;
NOW THEREFORE, the parties hereto, in consideration of the premises and
mutual promises hereinafter set forth and intending to be legally bound, hereby
agree as follows:
ARTICLE I
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DEFINITIONS
Section 1.1 Definitions. The following terms, as used in this Agreement,
shall have the following meanings (and such meanings shall be equally applicable
to both the singular and plural forms of the terms defined herein):
"Affiliate" shall have the meaning specified in the Implementation
Agreement.
"Agents" shall have the meaning specified in Section 7.3.
"Aggregate Loan Amount" shall have the meaning specified in the Parents
Agreement.
"Agreement" shall mean this Subscription Agreement, including the Exhibits
and Schedules hereto.
"Amended and Restated Certificate of Incorporation" shall have the meaning
specified in the Implementation Agreement.
"Anticipated Commencement Date" shall have the meaning specified in the
Parents Agreement.
"Antitrust Laws" shall have the meaning specified in Section 7.9(b).
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"Approved Capital Expenditure Plan" shall have the meaning specified in the
Implementation Agreement.
"Asset Value" shall have the meaning specified in the Implementation
Agreement.
"Basic Subscriber" shall have the meaning specified in the Implementation
Agreement.
"Basic Subscriber Rate" shall have the meaning specified in the
Implementation Agreement.
"Benefit Plans" shall have the meaning specified in the Implementation
Agreement.
"Business" shall have the meaning specified in the Implementation
Agreement.
"Business Day" shall have the meaning specified in the Implementation
Agreement.
"Cable Assets" shall have the meaning specified in the Implementation
Agreement.
"Cable Division Subsidiaries" shall have the meaning specified in the
Implementation Agreement.
"Cable Group" shall have the meaning specified in the Implementation
Agreement.
"Cable Group Bargaining Agreement" shall have the meaning specified in
Section 7.20.
"Cash Collateral Account" shall mean a cash collateral account maintained
by Old VII at The Bank of New York into which the Loan Proceeds will be
deposited in which the Lenders shall be granted a security interest to secure
the Loans, the terms of which shall provide that upon notice from VI that it
will consummate the Exchange Offer and that all Exchange Offer Conditions have
been satisfied or waived, all funds held therein will be released without
condition to Old VII on the Exchange Date immediately prior to the Conveyance of
Assets and the Exchange Time for transfer to New VII as a contribution as
contemplated by the Implementation Agreement.
"Certificate" shall have the meaning specified in Section 4.1(c).
"Class A Common Stock" shall have the meaning specified in the Parents
Agreement.
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"Class B Common Stock" means the Class B Common Stock, par value $0.01, of
Old VII, after giving effect to the filing of the Amended and Restated
Certificate of Incorporation with the Secretary of State of Delaware.
"Closing" shall have the meaning specified in Section 4.1(a).
"Closing Date" shall have the meaning specified in Section 4.1(a).
"Code" shall have the meaning specified in the Implementation Agreement.
"Commitments to Lend" shall mean commitments of commercial banks or other
lending institutions or other institutional investors reasonably acceptable to
TCI Sub ("Lenders") to make the Loans in the Aggregate Loan Amount to Old VII on
the Expiration Date prior to the Expiration Time. Without limitation of any
other instruments that may constitute Commitments to Lend, Loan Documentation,
when duly executed and delivered by the parties thereto, shall constitute
Commitments to Lend.
"Communications Act" shall have the meaning specified in the Implementation
Agreement.
"Company" shall have the meaning specified in the Implementation Agreement.
"Consented Subscribers" shall mean the number of Basic Subscribers as of a
date within ten days prior to the Exchange Date residing:
(a) in those Franchise Areas for which Local Authority
Consents have been obtained on or before such date and in respect
of which the ordinances, resolutions or other appropriate
governmental actions evidencing the grant of such Local Authority
Consents shall not have imposed any material adverse change in
the terms of the relevant Local Authorization, except for such
material adverse changes as TCI Sub shall have expressly accepted
or as otherwise agreed to by TCI Sub; and
(b) in those Franchise Areas for which a Local Authority
Consent is not required for the consummation of the Transaction.
"Continuing Employee" shall have the meaning specified in Section 7.20.
"Conveyance of Assets" shall have the meaning specified in the
Implementation Agreement.
"DOJ" shall mean the United States Department of Justice.
"Estimated Exchange Date Basic Subscribers" shall have the meaning
specified in Section 7.15.
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"Estimate Statement" shall have the meaning specified in the Implementation
Agreement.
"Exchange Date" shall have the meaning specified in the Parents Agreement.
"Exchange Date Basic Subscribers" shall have the meaning specified in the
Implementation Agreement.
"Exchange Offer" shall have the meaning specified in the Parents Agreement.
"Exchange Offer Conditions" shall have the meaning specified in the Parents
Agreement.
"Exchange Time" shall have the meaning specified in the Parents Agreement.
"Expiration Date" shall have the meaning specified in the Parents
Agreement.
"Expiration Time" shall have the meaning specified in the Parents
Agreement.
"FCC" shall have the meaning specified in the Implementation Agreement.
"FCC Authorizations" shall have the meaning specified in the Implementation
Agreement.
"Franchise Areas" shall have the meaning specified in the Implementation
Agreement.
"FTC" shall mean the Federal Trade Commission.
"GAAP" shall have the meaning specified in the Implementation Agreement.
"Governmental Authority" shall have the meaning specified in the
Implementation Agreement.
"HSR Act" shall have the meaning specified in the Implementation Agreement.
"Implementation Agreement" shall have the meaning specified in the Parents
Agreement.
"Inconsistent Terms" shall have the meaning specified in the Parents
Agreement.
"InterMedia" shall mean InterMedia Partners IV, L.P., a California limited
partnership.
"Legal Requirement" shall have the meaning specified in the Implementation
Agreement.
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"Lenders" shall have the meaning specified in the definition of
"Commitments to Lend".
"Loan Documentation" shall mean all agreements and other documentation
containing terms and conditions that are reasonably acceptable to TCI Sub, which
shall not contain any obligation of VI or any of its Affiliates other than Old
VII (including guarantees by Old VII to be effective after the Closing), or
after the Closing, a wholly-owned direct or indirect subsidiary of Old VII and
containing no Inconsistent Terms and pursuant to which Lenders agree to make the
Loans to Old VII on the Expiration Date prior to the Expiration Time.
"Loan Proceeds" shall mean all amounts borrowed by Old VII as Loans.
"Loans" shall mean loans by Lenders to Old VII, or after the Closing, a
wholly-owned direct or indirect subsidiary of Old VII, pursuant to the Loan
Documentation of an aggregate principal amount (after deduction of all interest,
fees and other expenses paid or payable by Old VII in connection with the Loans
or otherwise pursuant to the Commitments to Lend or Loan Documentation) at least
equal to the Aggregate Loan Amount on terms and conditions that are reasonably
acceptable to TCI Sub (which, without limitation, shall not contain any
obligation of VI or any of its Affiliates other than Old VII or, after the
Closing, a wholly-owned direct or indirect subsidiary of Old VII or include any
Inconsistent Terms).
"Local Authority Consent" shall have the meaning specified in the
Implementation Agreement.
"Local Authorizations" shall have the meaning specified in the
Implementation Agreement.
"Material Adverse Effect" shall have the meaning specified in the
Implementation Agreement.
"Material Contract" shall have the meaning specified in the Implementation
Agreement.
"Minimum Condition" shall have the meaning specified in the Parents
Agreement.
"New Borrowing Obligations" shall mean all liabilities and obligations of
Old VII, the Cable Division Subsidiaries and, after the Closing, any
wholly-owned direct or indirect subsidiary of Old VII under, with respect to or
in connection with the Loan Documentation, the Commitments to Lend or otherwise
to repay the Loans, including without limitation for the payment of principal,
interest, premium, fees, expenses or indemnities in connection therewith.
"New VII" shall have the meaning specified in the Implementation Agreement.
"1995 Plan" shall have the meaning specified in Section 7.21.
"1996 Capital Expenditure Plan" shall have the meaning specified in Section
7.21.
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"1934 Act" shall have the meaning specified in the Parents Agreement.
"1933 Act" shall have the meaning specified in the Parents Agreement.
"Non-Cable FCC Authorizations" shall have the meaning specified in the
Implementation Agreement.
"Non-Continuing Employees" shall have the meaning specified in Section
7.20.
"Offering Materials" shall have the meaning specified in the Parents
Agreement.
"Old VII" has the meaning specified in the preamble of this Agreement.
"Old VII Bank Borrowing Condition" shall mean the Old VII Bank Borrowing
Condition included in the Exchange Offer Conditions.
"Parents Agreement" shall have the meaning specified in the Implementation
Agreement.
"Person" shall have the meaning specified in the Implementation Agreement.
"Preferred Stock" shall have the meaning specified in the Parents
Agreement.
"Purchase Price" shall have the meaning specified in Section 2.1.
"RCS" shall mean RCS Pacific, L.P., a California limited partnership.
"Regulatory Approvals" shall have the meaning specified in Section 7.9(c).
"SEC" shall have the meaning specified in the Parents Agreement.
"Second Request" shall mean a request for additional information or
documentary material pursuant to 16 C.F.R. ss. 803.20.
"Shares" shall have the meaning specified in Section 2.1.
"Social Contract" shall mean a negotiated settlement with the FCC resolving
regulated rate disputes or challenges which imposes any obligations on the
Company after the Exchange Date.
"System" shall have the meaning specified in the Implementation Agreement.
"TCI" shall have the meaning specified in the preamble of this Agreement.
"TCI Stock" shall have the meaning specified in the Parents Agreement.
"TCI Sub" shall have the meaning specified in the preamble of this
Agreement.
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"Telecom Agreements" shall have the meaning specified in the Implementation
Agreement.
"Telecom Capital Expenditure Amount" shall have the meaning specified in
the Implementation Agreement.
"Telecom Partnership Agreements" shall have the meaning specified in the
Implementation Agreement.
"Telecom Partnerships" shall have the meaning specified in the
Implementation Agreement.
"Transaction" shall have the meaning specified in the Parents Agreement.
"Transaction Documents" shall have the meaning specified in the Parents
Agreement.
"Transferred Assets" shall have the meaning specified in the Implementation
Agreement.
"VI" shall mean Viacom Inc., a Delaware corporation.
ARTICLE II
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SUBSCRIPTION AND PURCHASE OF STOCK
Section 2.1 Subscription, Issuance, Purchase and Sale of Stock. Upon the
terms and subject to the conditions set forth in this Agreement, TCI Sub hereby
subscribes for and agrees to purchase, and Old VII agrees to sell, 100 shares of
Class B Common Stock (the "Shares") for a purchase price of three hundred fifty
million dollars ($350,000,000) (the "Purchase Price"). Upon the terms and
subject to the conditions set forth in this Agreement, upon payment in full of
the Purchase Price, Old VII hereby agrees to issue and sell 100 shares of Class
B Common Stock to TCI Sub, and issue and deliver a certificate in the name of
TCI Sub for 100 shares of Class B Common Stock.
Section 2.2 Payment of Purchase Price. The Purchase Price shall be payable
by wire transfer of immediately available funds to an account designated by
written notice by Old VII to TCI Sub delivered at least forty-eight (48) hours
prior to the Closing.
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ARTICLE III
CERTAIN BORROWINGS
Section 3.1 Certain Borrowings. (a) As soon as practicable following the
date hereof, TCI and TCI Sub shall cause Commitments to Lend (or other evidence
of the willingness of Lenders to make the Loans that is acceptable to Old VII)
to be delivered to Old VII. Old VII shall at such time execute and deliver the
Commitments to Lend. TCI and TCI Sub shall be responsible for and pay any and
all fees and expenses (including, but not limited to commitment fees) arising
from the Commitments to Lend.
(b) No less than ten Business Days prior to the Anticipated Commencement
Date, TCI and TCI Sub shall procure the execution and delivery by Lenders of
Loan Documentation. Old VII shall at such time execute and deliver such Loan
Documentation. TCI Sub shall be responsible for and pay any and all fees and
expenses arising from the Loan Documentation.
(c) Subject to the fulfillment of the conditions set forth in Section 8.1,
TCI and TCI Sub shall cause the Lenders under the Loan Documentation to make the
Loans to Old VII on the Expiration Date prior to the Expiration Time and prior
to the Conveyance of Assets. Old VII shall take any reasonable commercial action
required to be taken by Old VII under the Loan Documentation in order to permit
TCI and TCI Sub to cause the Loans to be so made on the Expiration Date prior to
the Expiration Time and prior to the Conveyance of Assets, including the
granting to the Lenders under the Loan Documentation of a security interest in
the Cash Collateral Account and pledges of stock of the Cable Division
Subsidiaries effective upon the release to Old VII of cash from the Cash
Collateral Account. If the Closing does not occur within ten (10) Business Days
after the Expiration Date, at the option of the Lenders, the Loans will be
repaid in full from the Cash Collateral Account.
(d) It is agreed by the parties hereto that (i) the Loan Proceeds will be
conveyed to New VII pursuant to the Conveyance of Assets and that Old VII will
retain responsibility for repayment of and will be liable and responsible for
the Loans and (ii) following the Exchange Time, neither VI, New VII nor any of
their Affiliates after the Exchange Time will have any liability, responsibility
or obligation under or in connection with the Commitments to Lend, the Loan
Documentation or otherwise for or with respect to the Loans or Loan Proceeds,
including without limitation for payment of the principal, interest, fees
(including Lender's attorneys' fees), expenses or indemnities, and TCI and TCI
Sub shall indemnify and hold harmless New VII and its Affiliates from any such
liability, responsibility or obligation.
(e) Without limitation of TCI's and TCI Sub's obligations under Sections
3.1(a), (b) and (c) above, TCI and TCI Sub agree that in the event the Closing
does not occur, they will be responsible for and pay (or, in the case of fees
already paid, reimburse Old VII for) any and all fees and expenses (including,
but not limited to, commitment fees, but not including principal and interest on
principal) payable under or in connection with the Commitments to Lend, the Loan
Documentation, the Loans or any action by Old VII pursuant to Sections 3.1(a),
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(b) or (c) or by TCI or TCI Sub pursuant to Section 3.1(a), whether incurred
before or after the date hereof and whether or not the Commitments to Lend or
the Loan Documentation is entered into, and TCI and TCI Sub will indemnify and
hold harmless Old VII from any and all such fees and expenses.
ARTICLE IV
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CLOSING
Section 4.1 Closing. (a) The issuance and purchase of the Class B Common
Stock pursuant to Section 2.1 and the closing of the transactions herein set
forth (the "Closing") shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇,
New York, New York on the Exchange Date immediately following the Exchange Time
(the "Closing Date"). The Closing shall be deemed to be effective at the close
of business on the Closing Date.
(b) At the Closing, TCI Sub shall pay the Purchase Price to Old VII in the
manner specified in Section 2.2.
(c) At the Closing, Old VII shall deliver to TCI Sub a share certificate
representing 100 shares of Class B Common Stock (the "Certificate") and a
receipt executed by Old VII for the Purchase Price.
ARTICLE V
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REPRESENTATIONS AND WARRANTIES OF TCI AND TCI SUB
Each of TCI and TCI Sub jointly and severally represent and warrant to Old
VII that:
Section 5.1 Corporate Existence and Power. It (i) is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware, (ii) is authorized to transact business and is in good standing in
each state in which its ownership of assets or conduct of business requires such
qualification, and (iii) has all corporate powers required to carry on its
business as now conducted, with such exceptions as would not materially and
adversely affect its ability to consummate the Transactions contemplated to be
consummated by it pursuant hereto.
Section 5.2 Corporate Authorization. The execution, delivery and
performance by it of this Agreement and the consummation by it of the
Transactions contemplated to be consummated by it pursuant hereto are within its
corporate powers and have been duly authorized by all necessary corporate action
on its part.
Section 5.3 Governmental Authorization. The execution, delivery and
performance by it of this Agreement, and the consummation by it of the
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Transactions contemplated to be consummated by it pursuant hereto, require no
material action by or in respect of, or filing with, any governmental body,
agency, official or authority other than compliance with any applicable
requirements of the HSR Act, the Non-Cable FCC Authorizations, the FCC
Authorizations, and the Local Authorizations.
Section 5.4 Consents. Except as set out in Schedule 5.4, no consent by any
Person under any contract to which it is a party or to which its assets are
subject is required or necessary for the execution, delivery and performance by
it of this Agreement or the consummation by it of the Transactions contemplated
to be consummated by it pursuant hereto, with such exceptions as would not
materially and adversely affect its ability to consummate the Transactions
contemplated to be consummated by it pursuant hereto.
Section 5.5 Non-Contravention. The execution, delivery and performance by
it of this Agreement and the consummation by it of the Transactions contemplated
to be consummated by it pursuant hereto do not and will not (x) contravene its
certificate of incorporation or by-laws or (y) subject to obtaining, making or
taking actions and filings described in Section 5.3, result in or constitute a
breach or default (including any event that, with the passage of time or giving
of notice, or both, would become a breach or default) under any applicable Legal
Requirement or any judgment, order, decree, contract, license, lease, indenture,
mortgage, loan agreement, note, security agreement or other agreement or
instrument as to which it is a party or by which any of its properties may be
bound, the effect of which would materially and adversely impair its ability to
consummate the Transactions contemplated to be consummated by it pursuant
hereto.
Section 5.6 Binding Effect. This Agreement has been duly executed and
delivered by it and this Agreement constitutes its valid and binding obligation,
enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally or by the principles
governing the availability of equitable remedies.
Section 5.7 Finders' Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of TCI or TCI Sub (or InterMedia or RCS) or any of their Affiliates who might be
entitled to any fee or commission from Old VII or any of the Cable Division
Subsidiaries in connection with the execution, delivery or performance of this
Agreement or the consummation of the Transactions contemplated hereby.
Section 5.8 Acquisition of Shares for Investment. TCI Sub is acquiring the
Shares for investment and not with a present view toward, or for sale in
connection with, any distribution thereof, nor with any present intention of
distributing or selling the Shares. TCI Sub agrees that the Shares may not be
sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed
of (i) without registration under the 1933 Act, except pursuant to an exemption
from such registration available under the 1933 Act, and (ii) except in
accordance with any applicable provisions of state blue sky and securities laws.
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Section 5.9 Preferred Stock. The issuance of shares of TCI Stock to Old VII
upon exercise by the holders of Preferred Stock of their conversion rights as
specified in the terms of the Preferred Stock has been authorized by all
necessary corporate action on the part of TCI and TCI has available and has
reserved sufficient shares of authorized and unissued TCI Stock to satisfy its
obligation to issue shares of TCI Stock to Old VII upon conversion of the
Preferred Stock.
ARTICLE VI
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REPRESENTATIONS AND WARRANTIES OF OLD VII
Old VII represents and warrants to TCI Sub that:
Section 6.1 Corporate Existence and Power. Old VII (i) is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (ii) is authorized to transact business and is in
good standing in each state in which its ownership of assets or conduct of
business requires such qualification, and (iii) has all corporate powers
required to carry on its business as conducted on the date hereof, with such
exceptions to clauses (ii) and (iii) as would not materially and adversely
affect the ability of Old VII to consummate the Transactions contemplated to be
consummated by it pursuant hereto.
Section 6.2 Corporate Authorization. The Company has the corporate power to
own its assets and carry on its business as currently conducted. The performance
by Old VII of this Agreement and the consummation by Old VII of the Transactions
contemplated to be consummated by it pursuant hereto are within the corporate
powers of Old VII and have been duly authorized by all necessary corporate and
shareholder action on the part of Old VII.
Section 6.3 Governmental Authorization. The execution and delivery of this
Agreement by Old VII, and the performance by Old VII of this Agreement, and the
consummation by Old VII of the Transactions contemplated to be consummated by it
pursuant hereto, require no material action by or in respect of, or material
filing with, any Governmental Authority other than (x) compliance with any
applicable requirements of the HSR Act, the FCC Authorizations, the Non-Cable
FCC Authorizations and the Local Authorizations, (y) compliance with any
applicable requirements of the 1933 Act and the 1934 Act and state blue sky and
securities laws in connection with the Exchange Offer and (z) compliance with
any requirements that may be applicable as a result of the regulatory status of
TCI, Buyer or their Affiliates.
Section 6.4 Consents. Except as set forth on Schedules 4.5, 4.9, 4.14 and
4.16 of the Implementation Agreement, no consent by any Person under any
contract as to which Old VII is a party or to which its assets are subject is
required or necessary for the execution and delivery of this Agreement by Old
VII, or the performance by Old VII of this Agreement, or the consummation by Old
VII of the Transactions contemplated to be consummated by it pursuant hereto
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with such exceptions as would not materially and adversely affect the ability of
Old VII to consummate the Transactions contemplated to be consummated by it
pursuant hereto.
Section 6.5 Non-Contravention. The execution, delivery and performance of
this Agreement by Old VII, and the consummation by Old VII of the Transactions
contemplated to be consummated by it pursuant hereto, do not or before the
Exchange Date will not, (x) contravene the certificate of incorporation or
bylaws of Old VII or (y) subject to obtaining the consents described in
Schedules 4.5, 4.9, 4.14 and 4.16 of the Implementation Agreement, and subject
to obtaining, making or taking the actions and filings described in clauses (x),
(y) and (z) of Section 6.3, result in or constitute a breach or default
(including any event that, with the passage of time or giving of notice, or
both, would become a breach or default) under any applicable Legal Requirement
or any judgment, injunction, order, decree, contract, license, lease, indenture,
mortgage, loan agreement, note or other agreement or instrument as to which Old
VII is a party or by which any of its properties may be bound, the effect of
which would be to materially and adversely impair the ability of Old VII to
consummate the Transactions contemplated to be consummated by it pursuant
hereto.
Section 6.6 Binding Effect. This Agreement has been duly executed and
delivered by Old VII, and this Agreement constitutes a valid and binding
obligation of Old VII, enforceable against Old VII in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
or by the principles governing the availability of equitable remedies.
Section 6.7 Finders' Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Old VII or any of its Affiliates who might be entitled to any fee or
commission from TCI or TCI Sub or, after the Exchange Time, Old VII, or any of
their Affiliates in connection with the execution, delivery or performance of
this Agreement or the consummation of the Transactions contemplated hereby.
Section 6.8 Shares. The Shares, when paid for by and issued to TCI Sub in
accordance with the terms of this Agreement, will be duly and validly issued,
fully paid and non-assessable, and will constitute all of the issued and
outstanding shares of Class B Common Stock. Upon issuance of the Shares, Old VII
will deliver to TCI Sub good and valid title to the Shares, free and clear of
any Liens. Assuming that the representations and warranties of TCI and TCI Sub
contained in Section 5.8 are true and correct in all respects at the Closing and
that TCI Sub is an "accredited investor" (as such term is used in Regulation D
under the 1933 Act), when issued to TCI Sub in accordance with the provisions
hereof, the Shares will have been issued in accordance with the registration or
qualification provisions of the 1933 Act and any relevant state securities laws
or pursuant to valid exemptions therefrom.
Section 6.9 Material Contracts. Old VII has made available to RCS or TCI
Sub or representatives of RCS or TCI Sub, true and correct copies of all
Material Contracts, including without limitation all Material Contracts that are
programming agreements.
13
Section 6.10 Tank Test Reports. Old VII has delivered to TCI Sub or RCS
copies of the most recent tank test reports relating to the tanks listed on
Schedule 4.20 to the Implementation Agreement.
Section 6.11 Forms I-9. Old VII has made available to TCI Sub or RCS true
and complete copies of all Immigration and Naturalization Service Forms I-9 for
all Continuing Employees.
ARTICLE VII
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COVENANTS
Section 7.1 Conduct of the Business. Subject to Section 7.2, and except for
(v) any increase in the Basic Subscriber Rate or any other rate charged the
Company's subscribers or otherwise contemplated by the Transaction Documents,
(w) the incurrence of the New Borrowing Obligations, (x) the amendment of Old
VII's Certificate of Incorporation contemplated by the Transaction Documents,
(y) any change described in clause (a), (b) or (c) of the definition of Material
Adverse Effect or described on Schedule 7.1 or (z) compliance with VI's
obligations under the Parents Agreement or Old VII's obligations under the
Implementation Agreement or any other event or action contemplated by the
Transaction Documents, from the date hereof until the Exchange Date, Old VII
shall cause the Company to conduct the Business only in the ordinary course of
business consistent with past practices. Without limiting the generality of the
foregoing, Old VII shall not permit the Company to do any of the following,
without the consent of TCI Sub:
(i) (w) enter into a Social Contract, (x) materially amend
or, other than in accordance with its terms, terminate
any Material Contract, or enter into any Material
Contract outside of the ordinary course of business,
(y) enter into any programming agreement with any
programming service owned or operated by VI or any of
its Subsidiaries or Affiliates, or (z) enter into any
programming agreement that would require carriage of
programming or is not terminable at any time by Old
VII (without any out-of-pocket cost to Old VII), in
each case following the date that is six months after
the Closing Date;
(ii) enter into any employment agreement providing for a
term of employment other than as an employee at will,
except as disclosed to TCI Sub (or RCS or InterMedia)
on or prior to the date hereof;
(iii) increase the rate of compensation or bonus payments to
any employee of the Company, except in the ordinary
14
course of business and except for bonus payments in
conjunction with the Transaction where the cost is
borne by New VII or VI;
(iv) sell or dispose of assets relating to the Business
(other than Transferred Assets) except for sales or
dispositions of assets in the ordinary course of
business, provided that such assets (other than
assets listed as vacant land on Schedule 4.19 of the
Implementation Agreement) are replaced with other
assets in the ordinary course of business;
(v) amend the certificate of incorporation or by-laws (or
other such governing instruments with different
names) of Old VII or any Cable Division Subsidiary;
(vi) issue or sell any shares of the capital stock of Old
VII or any Cable Division Subsidiary (except for
shares of the Class A Common Stock which are issued
as contemplated by Section 2.4 of the Parents
Agreement);
(vii) incur any indebtedness for borrowed money outside the
ordinary course of business (other than the New
Borrowing Obligations); and
(viii) extend the term of (or fail to exercise a right of
termination with respect to) the Company's
programming agreement with the Science Fiction
Channel or Comedy Central.
Section 7.2 Telecom Partnerships. Prior to the Exchange Date, Old VII
shall cause the Company to make or cause to be made, when due and payable, all
capital contributions required to be made by the Company under, and shall
otherwise comply in all material respects with all material terms and conditions
of, the Telecom Partnership Agreements. Old VII shall use commercially
reasonable efforts prior to the Exchange Time to formalize and enter into
agreements with each Telecom Partnership covering the lease, license or use by
such Telecom Partnership of the plant, property and equipment of the Company
relating to capital expenditures covered by the definition of Telecom Capital
Expenditure Amount, to the extent such lease, license or use is not otherwise
covered by the Telecom Agreements. Old VII shall not sell, transfer or assign
its interest in the Telecom Partnerships.
Section 7.3 Access to Information; Confidentiality. Old VII shall cause the
Company to give TCI Sub, its counsel, financial advisors, accountants and other
authorized representatives reasonable access during normal business hours to the
offices, properties, books and records of the Company, and to furnish to TCI
Sub, its counsel, financial advisors, accountants and authorized representatives
such financial and operating data and other information as such Persons may
reasonably request. Prior to the Exchange Time, TCI Sub shall, and shall cause
its Affiliates, and its and their respective officers, directors, employees,
15
attorneys, financial advisors, accountants, authorized representatives and
agents (collectively, "Agents"), to keep secret and retain in strictest
confidence any and all confidential information relating to the Business or the
Systems or otherwise not available to the general public (provided that such
confidential information shall not include any information that (i) has become
generally available to the public other than as a result of a disclosure by TCI
Sub, its Affiliates or its Agents, (ii) has been independently developed by TCI
Sub or such Affiliate of TCI Sub or (iii) was available to TCI Sub or an
Affiliate of TCI Sub on a nonconfidential basis from a third party having no
obligation of confidentiality to Old VII or any Affiliate of Old VII and which
has not itself received such information directly or indirectly in breach of any
such obligation of confidentiality), and shall not disclose such confidential
information, and shall cause its Affiliates and Agents not to disclose such
confidential information, to any Person other than TCI Sub, its Affiliates, or
their respective Agents who have a need to know such confidential information,
except as may be required by law or legal process (in which event TCI Sub shall
so notify Old VII as promptly as practicable (and if possible, prior to making
such disclosure) and, if requested by Old VII, shall seek confidential treatment
of such information).
Section 7.4 Additional Financial Statements and Reports. As soon as
available, Old VII shall furnish TCI Sub with a consolidated balance sheet and
related statement of income of the Company for all fiscal quarters ending after
June 30, 1995 but prior to the Exchange Date certified by the Chief Financial
Officer of Old VII to present fairly in all material respects in conformity with
GAAP, the financial position and results of operations of the Company at and for
the fiscal quarter then ended, except to the extent that such unaudited
financial statements omit footnotes (and the disclosure contained therein) and
are subject to normal quarter-end and/or year-end adjustments. Promptly
following filing with the SEC, Old VII shall deliver copies of each Annual
Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K
and definitive proxy statement filed by VI or Old VII with the SEC (in each case
without exhibits) and each prospectus of VI or Old VII filed with the SEC under
the 1933 Act (other than any prospectus related to securities offered to
employees). Promptly after the preparation thereof, Old VII will deliver to TCI
Sub (a) copies of (i) each final monthly profit and loss statement for the
Business, (ii) each final monthly capital spending statement for the Business,
and (iii) final monthly customer reports for the Business showing the number of
limited, tier and premium households and (b) to the extent that any statement
referred to in clause (a)(i), (a)(ii) or (a)(iii) above is available on a System
or combined System basis, copies of such statement or report on such basis;
provided, however, that Old VII does not and shall not be deemed to have made
any representations or warranties as to any such statement or report.
Section 7.5 Material Adverse Changes. Old VII shall promptly notify TCI Sub
in writing of any material adverse developments affecting any System which
become known to Old VII, including, without limitation: (a) any material adverse
change in the condition, financial or otherwise, of any System; (b) any material
damage, destruction or loss (whether or not covered by insurance) adversely
affecting any Cable Asset or material to any System; (c) any material notice of
violation, forfeiture or complaint under any Local Authorization; or (d)
16
anything which, if not corrected prior to the Exchange Date, will prevent Old
VII from fulfilling any condition precedent described in Article VIII.
Section 7.6 Local Authorization and Material Contract Amendments. (a) Old
VII shall assist TCI Sub in obtaining modifications, renewals or extensions of
the terms of Local Authorizations, as necessary to the extent Old VII determines
that such modification, renewal or extension will not have an adverse effect on
the transfer of such Local Authorization, so that all will have unexpired terms
for at least five (5) years after the Exchange Date; provided that such
modifications, renewals or extensions shall be upon terms reasonably
satisfactory to TCI Sub and Old VII.
(b) Old VII shall consider in good faith any request by TCI Sub that the
Company seek to amend a Material Contract (other than any contract or agreement
between Old VII and VI or Affiliates of VI), and Old VII shall, at TCI Sub's
expense, seek to amend such Material Contract on the terms requested by TCI Sub
so long as both such amendment and seeking such amendment would not in Old VII's
good faith opinion have any adverse effect on the ability of the Company or any
Affiliate of Old VII to consummate the Transaction.
Section 7.7 Telecom Partnership Leases. Old VII shall use reasonable
commercial efforts to cause each Telecom Partnership to enter into leases with
respect to its communications plant as required by the Telecom Partnership
Agreements.
Section 7.8 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. As soon as practicable (and in any event
within ten (10) Business Days after the date of this Agreement), if required by
applicable Legal Requirements, TCI Sub, and Old VII shall complete and file, or
cause to be completed and filed, any notification and report required to be
filed under the HSR Act in connection with the Transaction. TCI, TCI Sub and Old
VII shall promptly take or cause to be taken any additional action that may be
necessary, proper or advisable, will cooperate to prevent inconsistencies
between their respective filings and will furnish to each other such necessary
information and reasonable assistance as the other may reasonably request in
connection with its preparation of necessary filings or submissions under the
HSR Act. TCI Sub and Old VII shall use commercially reasonable efforts
(including the filing of a request for early termination) to obtain the early
termination of the waiting period under the HSR Act. TCI Sub and Old VII will
each pay one-half of the fee payable in connection with the filing of such
notification and report under the HSR Act.
Section 7.9 Efforts; Filing and Consents. (a) General. Each of Old VII and
TCI Sub shall take, or cause to be taken, all actions and to do, or cause to be
done, all things reasonably necessary or advisable to consummate and make
effective as promptly as practicable the Transaction and to cooperate with the
other in connection with the foregoing, including using its reasonable
commercial efforts:
(i) to obtain all Local Authority Consents (but without
Old VII being required to provide any consideration
therefor);
17
(ii) to obtain (but without Old VII being required to
provide any consideration therefor) all necessary
consents from other parties to Material Contracts;
(iii) to obtain (but without Old VII being required to
provide any consideration therefor) all consents,
actions and authorizations that are required to be
obtained under applicable Legal Requirements in order
to consummate the Transaction;
(iv) to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the
parties to consummate the Transaction;
(v) to effect all necessary registrations and filings and
submissions of information requested by Governmental
Authorities; and
(vi) to fulfill all conditions to this Agreement.
Each of Old VII and TCI Sub shall, with respect to a threatened or pending
action seeking a preliminary or permanent injunction or other order, decree or
ruling or statute, rule, regulation or executive order that would adversely
affect the ability of the parties and their Affiliates to consummate the
Transaction, use its best efforts to prevent the entry, enactment or
promulgation thereof, as the case may be.
(b) Antitrust Matters. In furtherance and not in limitation of the
foregoing, Old VII, TCI and TCI Sub shall use their reasonable commercial
efforts to resolve such objections, if any, as may be asserted with respect to
the Transaction under any antitrust or trade regulatory laws of any government
or Governmental Authority ("Antitrust Laws"). If any such objection is made or
any suit is instituted challenging any part of the Transaction as violative of
any Antitrust Law, Old VII, TCI and TCI Sub shall use reasonable commercial
efforts to take such reasonable action as may be required, as the case may be:
(i) by the applicable government or Governmental Authority
(including, without limitation, the FCC, DOJ or FTC)
in order to promptly resolve such objections as such
government or authority may have to such transactions
under such Antitrust Law; or
(ii) by any court or similar tribunal, in any suit brought
by a private party or Governmental Authority
challenging the transactions contemplated hereby as
violative of any Antitrust Law, in order to avoid the
entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order
18
that has the effect of preventing the consummation of
any of such transactions.
Each of Old VII, TCI and TCI Sub shall promptly inform the other of any
material communication from the FCC, DOJ or FTC or any other Governmental
Authority regarding any matter related to the Antitrust Laws as they bear upon
the Transaction. If either Old VII, TCI or TCI Sub receives a request for
additional information or documentary material (including without limitation a
Second Request) from any Governmental Authority with respect to the Transaction,
such party will, after consultation with the other, supply any such requested
information or documentary material as promptly as practicable (it being
understood that this obligation does not preclude a party from negotiating with
such Governmental Authority regarding the scope of and content of such requested
information provided such negotiations are conducted as promptly as
practicable).
(c) Consents Process. Old VII and TCI Sub shall use their best efforts
(including, without limitation, by attendance at FCC or state regulatory
hearings, City Council or similar or related meetings and hearings before state,
local and county administrative bodies, by giving the other reasonable notice of
the time and date of such meetings and hearings and by responding promptly to
any requests by Governmental Authorities) to apply for and obtain, and shall
cooperate and assist one another in applying for and obtaining, all requisite
consents, actions and authorizations (including ordinances or resolutions
approving transfers) of Governmental Authorities (the "Regulatory Approvals")
required to be received by or on the part of Old VII, New VII, VI or TCI Sub in
order to consummate the Transaction contemplated by this Agreement. Without
limiting the foregoing, in respect of all such applications for such Regulatory
Approvals:
(i) Old VII will coordinate the efforts to obtain the
necessary consents of the Local Authorities. In this
role, Old VII shall submit all filings required by the
Local Authorities after TCI Sub has reviewed and
approved the same. TCI Sub will be responsible for
negotiating with the Local Authorities the form of the
Local Authorizations, which will be provided to Old
VII for its prior review and approval.
(ii) TCI Sub will coordinate the effort to obtain all FCC
Authorizations.
(iii) Form 394's or, with the consent of Old VII, amendments
to Form 394's (which shall include all information
required by the Local Authorities including pro forma
and price allocations if required or requested) shall
be completed by TCI Sub for each franchise, as
identified in Schedule 4.9 to the Implementation
19
Agreement, as requiring consent. The Form 394's (or
amendments to Form 394's) shall be in form and
substance acceptable to Old VII and delivered to Old
VII within twenty (20) Business Days from the date
hereof (or within five (5) Business Days of any
amendment of Schedule 4.9 to the Implementation
Agreement that gives rise to the need to file such
Form 394). Old VII shall be responsible for the filing
of the Form 394's (or amendments to Form 394's) and
shall file certifications under Section 617 of the
Communications Act promptly after the date hereof for
each Local Authorization not identified as requiring
consent in Schedule 4.9 to the Implementation
Agreement. Such certifications under Section 617 of
the Communications Act shall be prepared by Old VII,
shall be substantially in the form attached hereto as
Exhibit C, and shall state that such Local Authority
consent is not required for consummation of the
Transaction.
(iv) After the Form 394's (or amendments to Form 394's) are
filed, TCI Sub and Old VII shall respond to all lawful
requests from Local Authorities for additional
information as soon as reasonably practicable after
the receipt of such request. If TCI Sub receives
requests which it deems to be unlawful, TCI Sub shall
use its best efforts to seek to resolve the issues
with the Local Authorities as soon as practicable. If
a resolution cannot be reached within this time frame,
Old VII and TCI Sub will agree upon appropriate
administrative or judicial procedures to achieve such
a clarification.
(v) Old VII shall consult with TCI Sub in connection with
proceedings relating to any renewal of a Local
Authorization, and, insofar as Old VII is concerned,
TCI Sub may participate in such proceedings, subject
to Old VII's control. TCI Sub agrees to accept the
Local Authorizations on their terms existing and in
effect as of the date hereof, with such changes in the
case of Local Authorizations that are renewed prior to
the Closing Date as are not materially adverse to TCI
Sub.
(vi) Old VII and the Cable Division Subsidiaries and New
VII and its Affiliates shall not be obligated to agree
to any continuing obligation under any Local
Authorization as a condition of any consent or
approval to the consummation of the Transaction
20
(provided that TCI Sub may agree on its own behalf to
such a continuing obligation so long as it would not
have an effect on the calculation of the Asset Value).
(vii) TCI Sub and Old VII shall each be responsible for its
own out-of-pocket costs incurred in applying for and
obtaining all of the Regulatory Approvals.
(viii)TCI Sub and Old VII shall provide each other with
informal weekly progress reports with respect to the
status of obtaining the Regulatory Approvals
consisting of such information as the parties may from
time to time reasonably request.
(ix) TCI Sub and Old VII shall provide to each other copies
of all correspondence between any franchising
authority, the FCC, any federal, city, state or local
Governmental Authority or regulatory body having
jurisdiction and their respective agents and advisers
in connection with the Regulatory Approvals and the
sender of such correspondence will provide to the
other a copy in advance of its sending.
(x) If any regulatory or judicial proceeding arises from a
dispute relating to the process of obtaining the
Regulatory Approvals, Old VII shall have the right to
name the legal counsel to defend against such action
subject to the consent of TCI Sub. Such expenses shall
be borne by TCI Sub and Old VII in equal shares.
If there should be any change in Legal Requirements applicable to obtaining
Regulatory Approvals after the date hereof, the parties shall, to the extent
necessary, adapt the procedures set forth in paragraphs (i) - (x) above to take
into account such changes.
Section 7.10 Notices of Certain Events. Each of TCI and TCI Sub, on the one
hand, and Old VII, on the other hand, shall promptly notify the other of:
(a) any notice or other communication received from any
Person (other than with respect to consents identified on any
Schedule to this Agreement, the Implementation Agreement or the
Parents Agreement) alleging that the consent of such Person is or
may be required in connection with the Transaction;
(b) any notice or other communication from any governmental
or regulatory agency or authority in connection with the
Transaction;
21
(c) any actions, suits, claims, investigations or
proceedings commenced, or to its knowledge threatened, against,
relating to, involving or otherwise affecting Old VII, TCI, TCI
Sub or their Affiliates, relating to the consummation of the
Transaction;
(d) any information known to such party that indicates that
any representation and warranty contained herein will not be true
and correct in any material respect as of the Exchange Time; and
(e) the occurrence of any event known to such party which
will result, or has a reasonable prospect of resulting, in the
failure to satisfy a condition specified in Article VIII or IX
hereof.
Section 7.11 Further Assurances. From time to time after the Exchange Time
and without further consideration, the parties will execute and deliver, or
arrange for the execution and delivery of such other instruments of conveyance
and transfer or other instruments or documents and take or arrange for such
other actions as may reasonably be requested to complete more effectively the
Transaction, to confirm the transfer to TCI Sub of title to the Shares as
provided herein, and to vest in TCI Sub all rights of a record owner of the
Shares. Old VII shall use its reasonable commercial efforts (but without Old VII
being required to incur any out-of-pocket expenses or costs) to remove or clear
any defects to its title to real property.
Section 7.12 Confidentiality of Transaction. Prior to the Exchange Time,
other than the release of information required by Lenders to Old VII or its
Affiliates or by applicable law (including, but not limited to, the preparation
and dissemination of the Offering Materials in the Exchange Offer), each party
shall, and shall cause its respective Affiliates, directors, officers, agents
and employees to, keep the existence and terms of this Agreement confidential,
except as the disclosure thereof may be required by law or pursuant to any
listing agreement with, or the rules or regulations of, any national securities
exchange on which securities of such party or any such Affiliate are listed or
traded or except as may be required to satisfy the "due diligence" inquiries of
any purchaser or underwriter with respect to any securities of such party or
Affiliate or of any lender to such party or Affiliate. Any press release
concerning this Agreement or the Transaction must be jointly approved by the
parties prior to its release.
Section 7.13 TCI Undertaking as to TCI Sub's Obligations. TCI hereby agrees
with Old VII to cause TCI Sub to pay when due all of TCI Sub's payment
obligations under this Agreement and to perform when due all of TCI Sub's other
obligations under this Agreement.
Section 7.14 Consummation of Transaction. Each of TCI, TCI Sub and Old VII
shall use reasonable commercial efforts to consummate and make effective as
promptly as practicable the Transaction, and will not take any action that would
cause the consummation of the Transaction to result in a violation of the
Communications Act or the rules and regulations promulgated thereunder that
would materially and adversely impair the ability of the parties and their
Affiliates to consummate the Transaction.
22
Section 7.15 Estimated Exchange Time Basic Subscribers. Prior to the
Anticipated Commencement Date, Old VII will determine in good faith its
estimates of Exchange Date Basic Subscribers ("Estimated Exchange Date Basic
Subscribers"). At least five (5) Business Days prior to the Anticipated
Commencement Date, Old VII will deliver to TCI Sub a statement setting forth
Estimated Exchange Date Basic Subscribers, which statement shall: (i) contain
the information in reasonable detail required to calculate Estimated Exchange
Date Basic Subscribers; (ii) be prepared in accordance with the requirements of
this Agreement; and (iii) be certified by an authorized officer of Old VII to be
Old VII's good faith estimate as of the date thereof. Old VII shall not be
deemed to have made any representations or warranties as to the statements
delivered pursuant to this Section, except that they were prepared in good
faith.
Section 7.16 Estimate Statement; List of Service. Old VII will, at the time
it delivers an Estimate Statement or a statement described in the third sentence
of Section 3.1 of the Implementation Agreement to New VII, deliver a copy
thereof to TCI Sub. Old VII will, at the time it delivers to New VII a list
setting forth the service accrued by each Continuing Employee pursuant to
Section 8.1(b) of the Implementation Agreement, deliver a copy thereof to TCI
Sub.
Section 7.17 Approved Capital Expenditure Plan. Old VII shall make or cause
to be made the capital expenditures called for by the Approved Capital
Expenditure Plan in all material respects except that Old VII shall not be
required to make or cause to be made (i) expenditures which were required by law
at the time the Approved Capital Expenditure Plan was approved but are no longer
so required, (ii) expenditures which TCI Sub has agreed in writing do not have
to be made, (iii) expenditures which it is commercially unreasonable to make
because the assumptions used in developing and underlying the Approved Capital
Expenditure Plan prove to be incorrect in any material respect and (iv)
expenditures which cannot be made for reasons not within Old VII's control
(including, without limitation, unavailability of equipment, lack of access to
real property, delays in orders being filled, unavailability of pole attachment
agreements and force majeure). In the event clause (iii) above is applicable,
Old VII and TCI Sub shall cooperate and negotiate in good faith to amend the
Approved Capital Expenditure Plan to preserve for the parties, to the extent
reasonably practicable and commercially reasonable, the economic benefits
originally intended to be afforded by the expenditures not made as a consequence
of clause (iii) above.
Section 7.18 Reimbursement of Capital Expenditures. If this Agreement
terminates without the Exchange Time having occurred, TCI Sub shall reimburse
Old VII for the amount of additional capital expenditures that the Company shall
have made after January 20, 1995 as a result of complying with RCS's or TCI
Sub's rebuild standards as determined pursuant to the Approved Capital
Expenditure Plan. The incremental costs per mile of such capital expenditures
made prior to the date hereof are set forth under column A on Schedule 7.18 and
of such capital expenditures made after the date hereof are set forth under
column B on Schedule 7.18. TCI Sub shall promptly pay to Old VII the amount of
all such expenditures as to which Old VII has provided to TCI Sub documentation
establishing that such expenditures were made, provided that no such payment
shall be required earlier than the fifth Business Day after the date of such
termination, and the aggregate amount of such payments shall not exceed
23
$6,215,000 if the Exchange Date occurs on or prior to December 31, 1995 or
$11,495,000 if the Exchange Date occurs after December 31, 1995, unless TCI Sub
shall have approved the capital expenditures to which such reimbursements in
excess of such amount relate. Notwithstanding any provision of any Transaction
Document, Old VII shall not be required to make any capital expenditure in order
to comply with RCS's or TCI Sub's rebuild standards if it would not be
reimbursed for the incremental cost thereof pursuant to this Section 7.18 upon
the termination of this Agreement without the Exchange Time having occurred.
Section 7.19 Sale of Dayton and Nashville Systems. Old VII will cooperate
with TCI Sub on a reasonable basis in seeking consents to the Transaction in a
manner that will facilitate the sale or exchange by Old VII of the Dayton and
Nashville Systems on or after the day following the Closing Date, provided that
Old VII will not be required to cooperate with TCI Sub pursuant to this Section
7.19 to the extent such cooperation involves any out-of-pocket expenditure by
Old VII or could in Old VII's judgment reasonably be expected to delay the
Exchange Date.
Section 7.20 Employment. (a) Not less than 120 days prior to the Exchange
Date, Old VII shall provide to TCI Sub a list of all active employees of the
Company as of a recent date showing then current job titles, work locations and
rates of compensation. Within twenty-five (25) days after Old VII's delivery of
such list, TCI Sub shall notify Old VII in writing of which employees TCI Sub or
its Affiliates intend to retain as employees of the Company (the "Continuing
Employees") and which employees TCI Sub and its Affiliates do not intend to
retain as employees of the Company (the "Non-Continuing Employees") after the
Exchange Time, provided, however, that TCI Sub shall not require the Company to
and the Company shall not violate any applicable employment discrimination laws,
any contractual or promissory rights of any employee or the terms of any
collective bargaining agreement then in effect with respect to any employee of
the Company covered by such agreement ("Cable Group Bargaining Agreement"). All
employees of the Company immediately prior to the Exchange Time which are
Non-Continuing Employees shall not be retained by the Company after the Exchange
Time.
(b) After the date Old VII provides to TCI Sub a list of active employees
of the Company pursuant to paragraph (a) above, TCI Sub may, by notice to Old
VII stating that TCI Sub is in good faith considering designating such an
employee a Continuing Employee, request that it be given access to any
employment agreement between such employee and Old VII or any Cable Division
Subsidiary, in which case Old VII will offer TCI Sub access to such agreement.
(c) Old VII has provided to TCI Sub true and complete copies of the most
recent Internal Revenue Service Form 5500 with respect to each Benefit Plan
which is tax qualified under Code Section 401(a) and which covers employees or
former employees of the Company.
Section 7.21 1996 Capital Expenditure Plan. Old VII and TCI Sub shall in
good faith endeavor to agree on a capital expenditure plan for the Company for
24
1996 (the "1996 Capital Expenditure Plan"). If Old VII and TCI Sub cannot agree
on a 1996 Capital Expenditure Plan by December 31, 1995, the 1996 Capital
Expenditure Plan shall be prepared by Old VII and shall provide for quarterly
aggregate capital expenditures not in excess of the amount required to be spent
pursuant to the capital expenditure plan attached as Exhibit A to the
Implementation Agreement (the "1995 Plan") plus an amount equal to the
percentage growth in the consumer price index for 1995 (expressed as a decimal)
multiplied by such amount, provided that such amount shall be allocated among
different categories of expenditures in a manner consistent with the 1995 Plan
with such changes as are consistent with the progress of rebuilds and other
projects reflected thereon.
ARTICLE VIII
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CONDITIONS TO THE OBLIGATIONS OF TCI AND TCI SUB
Section 8.1 Funding Conditions. The obligations of TCI and TCI Sub to take
the action required to be taken by them pursuant to Section 3.1(c) shall be
subject to the satisfaction of each of the following conditions, each of which
may be waived by TCI and TCI Sub:
(i) HSR Act. Any applicable waiting period (and any
extension thereof) under the HSR Act shall have
expired or been terminated without the commencement or
threat of any litigation by a Governmental Authority
of competent jurisdiction to restrain the consummation
of the Transaction contemplated by this Agreement in
any material respect.
(ii) Consented Subscribers. The number of Consented
Subscribers shall be not less than 90% of Estimated
Exchange Date Basic Subscribers.
(iii) Absence of Injunction. No order, stay, judgment or
decree shall have been issued by any court and be in
effect restraining or prohibiting the consummation of
the Transaction in any material respect.
(iv) Conditions to Exchange Offer. All Exchange Offer
Conditions (other than the Minimum Condition and the
Old VII Bank Borrowing Condition) shall have been
satisfied or waived.
(v) Other Conditions. No condition contained in Section
8.2 shall have become incapable of satisfaction.
25
(vi) Certificate. Old VII shall have delivered to TCI Sub a
certificate in which it certifies that to its
knowledge the conditions set forth in Section 8.2 are
reasonably likely to be satisfied.
Section 8.2 Closing Conditions. The obligations of TCI Sub required to be
performed by TCI Sub at the Closing are subject to the satisfaction, at or prior
to the Expiration Time (or, in the case of the conditions set forth in Sections
8.2.1(c) and 8.2.7, the Closing), of each of the following conditions, each of
which may be waived by TCI Sub:
Section 8.2.1 Representations and Warranties; Covenants. (a) Each
representation and warranty of Old VII contained in Article VI of this Agreement
and each representation and warranty of New VII in Article IV of the
Implementation Agreement that (i) is qualified by a reference therein to
"Material Adverse Effect", shall be true and correct as of the Expiration Time
as though such representation and warranty was made at and as of such time
(except to the extent a different date is specified therein, in which case such
representation and warranty will be true and correct as of such date), or (ii)
is not so qualified, shall be true and correct as of the Expiration Time as
though such representation and warranty were made at and as of such time (except
to the extent a different date is specified therein, in which case such
representation and warranty will be true and correct as of such date), with such
exceptions that do not, individually or in the aggregate, result in a Material
Adverse Effect, and except in the case of both clauses (i) and (ii) for changes
occurring after the date of this Agreement (x) pursuant to the terms of
Transaction Documents, (y) not prohibited by Section 7.1 or (z) consented to by
RCS prior to the date hereof or by TCI Sub.
(b) Each material covenant and obligation of Old VII and New VII required
by this Agreement or the Implementation Agreement to be performed by it at or
prior to the Expiration Time will have been duly performed and complied with in
all material respects as of the Expiration Time.
(c) Old VII shall have delivered the Certificate to TCI Sub.
(d) TCI Sub shall have received a certificate, dated as of the Closing Date
and duly executed by an executive officer of Old VII on behalf of Old VII, to
the effect that the conditions set forth in Section 8.2.1(a) and Section
8.2.1(b) have been satisfied.
Section 8.2.2 HSR Act. Any applicable waiting period (and any extension
thereof) under the HSR Act will have expired or been terminated without the
commencement or threat of any litigation by a Governmental Authority of
competent jurisdiction to restrain the consummation of the transactions
contemplated by this Agreement in any material respect.
Section 8.2.3 Consented Subscribers. The number of Consented Subscribers
shall be not less than 90% of Estimated Exchange Date Basic Subscribers.
26
Section 8.2.4 Required Consents. Notwithstanding the provisions of Sections
2.2 and 2.3 of the Implementation Agreement, all consents required to be
obtained by VI or Old VII in connection with the transactions contemplated by
this Agreement shall have been obtained and remain in full force and effect,
with such exceptions as would not have a Material Adverse Effect.
Section 8.2.5 Absence of Injunction. No order, stay, judgment or decree
shall have been issued by any court and be in effect restraining or prohibiting
the consummation of the Transaction in any material respect.
Section 8.2.6 Opinions. Legal opinions of counsel to Old VII (who may be
the general counsel or deputy general counsel of VI or any Affiliate thereof
with respect to Exhibit A-1 only) given as of the time immediately prior to the
Exchange Time and covering the substance of the matters set forth in Exhibits
A-1 and A-2 shall be delivered to TCI Sub.
Section 8.2.7 Exchange Offer. The Exchange Time shall have occurred.
Section 8.2.8 Resignation of Officers and Directors. Old VII shall have
delivered to TCI Sub the resignation of each of its directors and corporate
officers, effective as of the Closing.
ARTICLE IX
----------
CONDITIONS TO THE OBLIGATIONS OF OLD VII
The obligations of Old VII to be performed by Old VII at the Closing are
subject to the satisfaction, at or prior to the Expiration Time (or, in the case
of the conditions set forth in Sections 9.1(c) and 9.7, the Closing) of each of
the following conditions, each of which may be waived by Old VII:
Section 9.1 Representations and Warranties; Covenants. (a) Each
representation and warranty of TCI and TCI Sub contained in Article V of this
Agreement will be true and correct in all material respects as of the Expiration
Time as though such representation and warranty was made at and as of such time
(except to the extent a different date is specified therein, in which case such
representation and warranty will be true and correct as of such date).
(b) Each material covenant and obligation of each of TCI and TCI Sub
required by this Agreement to be performed by it at or prior to the Expiration
Time will have been duly performed and complied with in all material respects as
of the Expiration Time.
(c) TCI Sub shall have paid the Purchase Price to Old VII in the manner
specified by Section 2.2.
27
(d) Old VII will have received a certificate, dated as of the Closing Date
and duly executed by an executive officer of TCI Sub to the effect that the
conditions set forth in Sections 9.1(a) and 9.1(b) have been satisfied.
Section 9.2 HSR Act. Any applicable waiting period under the HSR Act (and
any extension thereof) shall have expired or been terminated without the
commencement or threat of any litigation by a Governmental Authority of
competent jurisdiction to restrain the consummation of the Transaction
contemplated by this Agreement in any material respect.
Section 9.3 Consented Subscribers. The number of Consented Subscribers
shall not be less than 90% of Estimated Exchange Date Basic Subscribers.
Section 9.4 Opinions. A legal opinion of counsel to TCI and TCI Sub (who
may be the general counsel or deputy general counsel of TCI, TCI Sub or any
Affiliate thereof) covering the substance of the matters set forth on Exhibit B
shall be delivered to Old VII.
Section 9.5 Consents. All consents required to be obtained by TCI and TCI
Sub in connection with the transactions contemplated hereby shall have been
obtained and remain in full force and effect, with such exceptions as do not
result in a material adverse effect on TCI's and TCI Sub's ability to consummate
the transactions contemplated hereby.
Section 9.6 Absence of Injunction. No order, stay, judgment or decree will
have been issued by any court and be in effect restraining or prohibiting the
consummation of the Transaction in any material respect.
Section 9.7 Exchange Offer. The Exchange Time shall have occurred.
ARTICLE X
---------
TERMINATION
Section 10.1 Termination. This Agreement shall automatically terminate upon
any termination of the Parents Agreement pursuant to Section 7.1 thereof.
Section 10.2 Effect of Termination. (a) Upon termination of this Agreement
pursuant to Section 10.1 hereof, except as provided in clause (b) below (i) this
Agreement will forthwith become null and void, (ii) such termination will be the
sole remedy with respect to any breach of any representation, warranty, covenant
or agreement contained in or made pursuant to this Agreement and (iii) no party
hereto or any of their respective officers, directors, employees, agents,
consultants, shareholders or principals will have any liability or obligation
hereunder or with respect hereto; provided, however, that no party to this
Agreement shall be entitled to recover consequential damages in respect of any
breach of this Agreement or any other Transaction Document.
28
(b) The provisions of clause (a) above notwithstanding, no party will be
relieved of: (i) liability for any breach of representations and warranties of
Articles V and VI (other than Sections 6.9, 6.10 and 6.11 hereof), and (ii)
liability for any breach of any material covenant or agreement contained herein
or made pursuant hereto (for purposes of this Section 10.2 the covenants and
agreements of TCI and TCI Sub contained in Sections 2.2 and 3.1, and the
obligations of Old VII contained in Section 2.1, will be deemed to be material).
The provisions of Sections 3.1(e), 7.12, 7.13 (insofar as it applies to the
provisions referred to in this sentence), 7.18, 10.2, 11.2, 11.9 and 11.11 will
survive termination hereof.
ARTICLE XI
----------
MISCELLANEOUS
Section 11.1 Legend. The certificates representing the Shares shall bear
the following legend:
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF
REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SAID ACT.
Section 11.2 Expenses. Except as expressly set forth herein, the fees and
expenses (including the fees of any lawyers, accountants, investment bankers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated will be paid by the party incurring the same.
Section 11.3 Headings. The Section headings herein are for convenience of
reference only, do not constitute part of this Agreement and will not be deemed
to limit or otherwise affect any of the provisions hereof. References to
Sections and Exhibits, unless otherwise indicated, are references to Sections
and Exhibits hereof.
Section 11.4 Notices. Any notice or other communication required or
permitted to be given hereunder will be in writing and will be mailed by prepaid
registered or certified mail, timely deposited with an overnight courier such as
Federal Express, or delivered against receipt, as follows:
(a) In the case of TCI or TCI Sub, to:
Tele-Communications, Inc.
Terrace Tower II
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
Tele-Communications, Inc.
Terrace Tower II
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
(b) In the case of Old VII to:
Viacom Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇▇▇, Esq.
or to such other address as the party may have furnished in writing in
accordance with the provisions of this Section 11.4. Any notice or other
communication shall be deemed to have been given, made and received upon
receipt. Either party may change the address to which notices are to be
addressed by giving the other party notice in the manner herein set forth.
Section 11.5 Assignment. This Agreement and all provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors, however, neither this Agreement nor any right, interest, or
obligation hereunder may be assigned by any party hereto (other than by
operation of law) without the prior written consent of the other parties, and
any such assignment or purported assignment without such consent shall be void.
Section 11.6 Entire Agreement. This Agreement and the other Transaction
Documents embody the entire agreement and understanding of the parties with
respect to the transactions contemplated hereby and supersede all prior written
or oral commitments, arrangements or understandings with respect thereto.
29
Section 11.7 Amendment; Waiver. (a) This Agreement may only be amended or
modified in writing signed by the party against whom enforcement of any such
amendment or modification is sought.
(b) Any party hereto may, by an instrument in writing, waive compliance
with any term or provision of this Agreement on the part of such other party
hereto. The waiver by any party hereto of a breach of any term or provision of
this Agreement will not be construed as a waiver of any subsequent breach.
Section 11.8 Counterparts. This Agreement may be executed in two or more
counterparts, all of which will be considered one and the same agreement and
each of which will be deemed an original. All signatures need not be on one
counterpart.
Section 11.9 Governing Law. THIS AGREEMENT WILL BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK (REGARDLESS OF THE LAWS THAT MIGHT BE APPLICABLE UNDER
PRINCIPLES OF CONFLICTS OF LAW) AS TO ALL MATTERS, INCLUDING BUT NOT LIMITED TO
MATTERS OF VALIDITY, CONSTRUCTION, EFFECT AND PERFORMANCE.
Section 11.10 Severability. If any one or more of the provisions of this
Agreement is held to be invalid, illegal or unenforceable, the validity,
legality or enforceability of the remaining provisions of this Agreement will
not be affected thereby, and Old VII, TCI Sub and TCI will use their reasonable
efforts to substitute one or more valid, legal and enforceable provisions which
insofar as practicable implement the purposes and intent hereof. To the extent
permitted by applicable law, each party waives any provision of law which
renders any provision of this Agreement invalid, illegal or unenforceable in any
respect.
Section 11.11 Consent to Jurisdiction. Each party hereby submits to the
non-exclusive jurisdiction of the courts of general jurisdiction of the States
of New York and Colorado and the federal courts of the United States of America,
located in the City of New York, New York, and Denver, Colorado solely in
respect of the interpretation and enforcement of the provisions of this
Agreement and hereby waives, and agrees not to assert, as a defense in any
action, suit or proceeding for the interpretation or enforcement of this
Agreement that it is not subject thereto or that such action, suit or proceeding
may not be brought or is not maintainable in such courts or that this Agreement
may not be enforced in or by such courts or that its property is exempt or
immune from execution, that the suit, action or proceeding is brought in an
inconvenient forum, or that the venue of the suit, action or proceeding is
improper. Service of process with respect thereto may be made upon any party by
mailing a copy thereof by registered or certified mail, postage prepaid, to such
party at its address as provided in Section 11.4 hereof, provided that service
of process may be accomplished in any other manner permitted by applicable law.
Section 11.12 Third Person Beneficiaries. This Agreement is not intended
and shall not be construed to confer upon any Person (other than TCI, TCI Sub
30
and Old VII) any rights or remedies hereunder, except that New VII shall be a
third-party beneficiary of Section 3.1(d), entitled to enforce said Section as
if it were a party hereto.
Section 11.13 Specific Performance. Old VII, TCI and TCI Sub recognize that
any breach of any covenant or agreement contained in this Agreement may give
rise to irreparable harm for which money damages would not be an adequate
remedy, and accordingly agree that, in addition to other remedies, any
non-breaching party will be entitled to enforce the agreements and covenants
contained herein of TCI and TCI Sub or Old VII, as the case may be, by a decree
of specific performance without the necessity of proving the inadequacy as a
remedy of money damages.
Section 11.14 Survival. The representations and warranties contained in or
made pursuant to this Agreement shall terminate and be of no further force on
and as of April 30, 1997, except that the representation and warranty contained
in Sections 5.7, 6.7 and 6.8 and the provisions of the last sentence of Section
3.1(a) shall survive indefinitely.
Section 11.15 Preferred Stock Conversion. TCI shall contribute to Old VII
or otherwise cause Old VII to have available sufficient shares to enable Old VII
to issue to holders of the Preferred Stock, shares of TCI Stock upon exercise by
the holders of the Preferred Stock of their conversion rights as specified in
the terms of the Preferred Stock. TCI shall reserve and keep available at all
times, out of its authorized and unissued stock, sufficient shares of TCI Stock
to satisfy its obligations to Old VII in connection with such conversion of the
Preferred Stock. TCI agrees to comply with its obligations specified herein and
further agrees that any such TCI Stock, when issued, will be registered under
the 1933 Act, and all state securities and blue sky laws applicable to such
issuance shall have been complied with respect thereto.
31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed in New York, New York, as of the day and year first above written.
VIACOM INTERNATIONAL INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
TELE-COMMUNICATIONS, INC.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
TCI COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President