EXHIBIT 99.2
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AGREEMENT AND PLAN OF MERGER
between
TELE-COMMUNICATIONS, INC.
and
TCI COMMUNICATIONS, INC.
Dated as of January 12, 1999
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITONS AND CONSTRUCTION.................................................................................................. 1
1.1 Certain Definitions............................................................................................. 1
1.2 Terms Generally................................................................................................. 6
ARTICLE II
THE MERGER AND RELATED MATTERS............................................................................................... 7
2.1 The Merger...................................................................................................... 7
2.2 Closing......................................................................................................... 7
2.3 Conversion of Securities........................................................................................ 8
2.4 Changes in TCI Group Series A Stock............................................................................. 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................................................ 9
3.1 Organization and Qualification.................................................................................. 9
3.2 Authorization and Validity of Agreement......................................................................... 9
3.3 Capitalization.................................................................................................. 10
3.4 Reports and Financial Statements................................................................................ 10
3.5 No Approvals or Notices Required; No Conflict with Instruments.................................................. 11
3.6 Vote Required................................................................................................... 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TCI........................................................................................ 13
4.1 Organization.................................................................................................... 13
4.2 Authorization and Validity of Agreement......................................................................... 13
4.3 Capitalization of TCI........................................................................................... 14
4.4 TCI Reports and Financial Statements............................................................................ 15
4.5 No Approvals or Notices Required; No Conflict with Instruments.................................................. 15
4.6 Vote Required................................................................................................... 16
4.7 TCI Group Series A Stock........................................................................................ 16
Page
ARTICLE V
CERTAIN ACTIONS............................................................................................................... 16
5.1 Conduct of the Company's Business Pending the Effective Time..................................................... 16
5.2 Indemnification.................................................................................................. 17
5.3 Actions by TCI................................................................................................... 18
5.4 Reasonable Efforts............................................................................................... 18
5.5 Employee Agreements.............................................................................................. 19
ARTICLE VI
CONDITIONS PRECEDENT.......................................................................................................... 19
6.1 Conditions Precedent to the Obligations of TCI and the Company................................................... 19
6.2 Conditions Precedent to the Obligations of TCI................................................................... 20
6.3 Conditions Precedent to the Obligations of the Company........................................................... 21
ARTICLE VII
TERMINATION................................................................................................................... 22
7.1 Termination and Abandonment...................................................................................... 22
7.2 Effect of Termination............................................................................................ 22
ARTICLE VIII
MISCELLANEOUS................................................................................................................. 22
8.1 Effectiveness of Representations, Warranties and Agreements...................................................... 22
8.2 Notices.......................................................................................................... 22
8.3 Entire Agreement................................................................................................. 23
8.4 Assignment; Binding Effect; Benefit.............................................................................. 23
8.5 Amendment........................................................................................................ 23
8.6 Extension; Waiver................................................................................................ 24
8.7 Headings......................................................................................................... 24
8.8 Counterparts..................................................................................................... 24
8.9 Applicable Law................................................................................................... 24
8.10 Severability..................................................................................................... 24
8.11 Limited Liability................................................................................................ 25
ii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of
this 12th day of January, 1999, between Tele-Communications, Inc., a Delaware
corporation ("TCI") and TCI Communications, Inc., a Delaware corporation (the
"Company").
WHEREAS, TCI is the parent of the Company and beneficially owns 100%
of the outstanding shares of common stock of the Company;
WHEREAS, the parties wish to provide for the terms and conditions upon
which TCI will acquire all the assets of the Company by means of a merger of the
Company with and into TCI (the "Merger");
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger shall qualify as a tax-free reorganization within the meaning of
Section 368(a) and a liquidation within the meaning of Section 332 of the
Internal Revenue Code of 1986 (the "Code");
WHEREAS, TCI has entered into an Agreement and Plan of Restructuring
and Merger, dated as of June 23, 1998, with AT&T Corp. ("AT&T") and Italy Merger
Corp. (the "AT&T Agreement"), pursuant to which, among other things, TCI will be
acquired by AT&T by means of a merger (the "AT&T Merger"); and
WHEREAS, this Agreement and the consummation of the transactions
contemplated hereby are contingent on consummation of the transactions
contemplated by the AT&T Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties hereto agree as follows:
ARTICLE IV
DEFINITIONS AND CONSTRUCTION
4.1 Certain Definitions. As used in this Agreement, the following terms
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shall have the following meanings unless the context otherwise requires:
"affiliate" of any Person shall have the meaning ascribed to such term
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in Rule 12b-2 under the Exchange Act. For purposes of this Agreement, unless
otherwise specified, (A) neither the Company nor any of its subsidiaries shall
be deemed to be affiliates of TCI or any of TCI's subsidiaries; (B) neither TCI
nor any of its subsidiaries shall be deemed to be affiliates of the Company or
any of the Company's subsidiaries; (C) none of the affiliates (the "Company
Affiliates") of the Company or any of its subsidiaries shall be deemed to be an
affiliate of TCI or any of TCI's
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subsidiaries, unless such Company Affiliate would be such an affiliate if
neither TCI nor any of its subsidiaries (1) owned any capital stock of the
Company, (2) designated or nominated, or possessed any contractual right to
designate or nominate, any directors of the Company or any of its subsidiaries
or (3) otherwise possessed, directly or indirectly, the power to direct or cause
the direction of the management or policies of the Company or any of its
subsidiaries; and (D) none of the affiliates ("TCI Affiliates") of TCI or any of
TCI's subsidiaries shall be deemed to be an affiliate of the Company or any of
the Company's subsidiaries, unless such TCI Affiliate would be such an affiliate
if neither TCI nor any of its subsidiaries (1) owned any capital stock of the
Company, (2) designated or nominated, or possessed any contractual right to
designate or nominate, any directors of the Company or any of its subsidiaries
or (3) otherwise possessed, directly or indirectly, the power to direct or cause
the direction of the management or policies of the Company or any of its
subsidiaries.
"Agreement" shall mean this Agreement and Plan of Merger.
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"AT&T" shall have the meaning specified in the preamble hereto.
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"AT&T Agreement" shall have the meaning specified in the preamble
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hereto.
"AT&T Certificate of Merger" shall mean the Certificate of Merger as
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defined in Article I of the AT&T Agreement.
"AT&T Merger" shall have the meaning specified in the preamble hereto.
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"Certificate of Merger" shall mean the certificate of merger with
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respect to the Merger, containing the provisions required by, and executed in
accordance with, Section 251 of the DGCL.
"Closing" shall mean the consummation of the transactions contemplated
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by this Agreement.
"Closing Date" shall mean the date on which the Closing occurs
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pursuant to Section 2.2 hereof.
"Code" shall have the meaning specified in the preamble hereto.
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"Company" shall have the meaning specified in the preamble hereto.
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"Company Board" shall mean the Board of Directors of the Company.
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2
"Company Charter" shall mean the Restated Certificate of Incorporation
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of the Company, as amended to the date hereof and as it may be further amended
prior to the Effective Time.
"Company Common Stock" shall mean the Company Class A Stock and the
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Company Class B Stock.
"Company Exchangeable Preferred Stock" shall mean the Cumulative
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Exchangeable Preferred Stock, Series A, par value $.01 per share, of the
Company.
"Company Equity Affiliates" shall have the meaning specified in
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Section 3.1 hereof.
"Company Preferred Stock" shall mean the Preferred Stock, par value
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$.01 per share, of the Company.
"Company SEC Filings" shall have the meaning specified in Section 3.4
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hereof.
"Company Class A Stock" shall mean the Class A Common Stock, $1.00 par
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value per share, of the Company.
"Company Class B Stock" shall mean the Class B Common Stock, $1.00 par
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value per share, of the Company.
"Company Stock" shall mean the Company Common Stock and the Company
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Preferred Stock.
"Contract Consent" shall have the meaning specified in Section
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3.5(iii) hereof.
"Contract Notice" shall have the meaning specified in Section 3.5(iii)
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hereof.
"Contract" shall have the meaning specified in Section 3.5(iv) hereof.
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"control" shall mean, with respect to any Person, the possession,
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direct or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or partnership interests, by contract or otherwise.
"DGCL" shall mean the General Corporation Law of the State of
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Delaware.
"Effective Time" shall mean the time when the Merger of the Company
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with and into TCI becomes effective under applicable law as provided in Section
2.1(a) hereof.
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"ERISA" shall mean the Employee Retirement Income Security Act of
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1974, as amended, and all regulations promulgated thereunder, as in effect from
time to time.
"Exchange Act" shall mean the Securities Exchange Act of 1934, and the
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rules and regulations thereunder.
"GAAP" shall mean generally accepted accounting principles as accepted
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by the accounting profession in the United States as in effect from time to
time.
"Government Consent" shall have the meaning specified in Section
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3.5(ii) hereof.
"Governmental Entity" shall mean any court, arbitrator, administrative
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or other governmental department, agency, commission, authority or
instrumentality, domestic or foreign.
"Governmental Filing" shall have the meaning specified in Section
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3.5(ii) hereof.
"Indemnified Liabilities" shall have the meaning specified in Section
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5.2(a) hereof.
"Indemnified Parties" shall have the meaning specified in Section
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5.2(a) hereof.
"Indemnified Party" shall have the meaning specified in Section 5.2(a)
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hereof.
"Injunction" shall mean any permanent or preliminary injunction or
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restraining order or other similar order issued or entered by any court or
Governmental Entity.
"License" shall mean any license, franchise, ordinance, authorization,
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permit, certificate, variance, exemption, concession, lease, right of way,
easement, instrument, order and approval, domestic or foreign.
"Local Approvals" shall have the meaning specified in Section 3.5(ii)
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hereof.
"Material Adverse Effect" shall mean (A) with respect to TCI, a
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material adverse effect on the business, properties, operations or financial
condition of (i) TCI and its subsidiaries (including the Company and its
subsidiaries) taken as a whole or (ii) the TCI Group, and (B) with respect to
the Company, a material adverse effect on the business, properties, operations
or financial condition of the Company and its subsidiaries taken as a whole, in
each case, other than any such effect arising out of or resulting from general
business or economic conditions in the United States or from changes in or
affecting the cable television industry generally in the United States.
"Merger" shall have the meaning specified in the preamble hereto.
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"Person" shall mean an individual, partnership, corporation, limited
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liability company, trust, unincorporated organization, association, or joint
venture or a government, agency, political subdivision, or instrumentality
thereof.
"SEC" shall mean the Securities and Exchange Commission.
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"Series C-TCI Group Preferred Stock" shall have the meaning specified
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in Section 4.3(a) hereof.
"Series F Preferred Stock" shall have the meaning specified in Section
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4.3(a) hereof.
"Series G Preferred Stock" shall have the meaning specified in Section
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4.3(a) hereof.
"subsidiary" when used with respect to any Person, means any other
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Person, of which (x) in the case of a corporation, at least (A) a majority of
the equity and (B) a majority of the voting interests are owned or controlled,
directly or indirectly, by such first Person, by any one or more of its
subsidiaries, or by such first Person and one or more of its subsidiaries or (y)
in the case of any Person other than a corporation, such first Person, one or
more of its subsidiaries, or such first Person and one or more of its
subsidiaries (A) owns a majority of the equity interests thereof and (B) has the
power to elect or direct the election of a majority of the members of the
governing body thereof or otherwise has control over such organization or
entity; provided that, for purposes of the agreements set forth in Article V,
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references to subsidiaries shall not include any Person as to which such first
Person's voting interests are subject to a voting agreement, proxy, management
contract or other arrangement as a result of which such first Person does not
control such other Person. For purposes of this Agreement, unless otherwise
specified, neither the Company nor any of its subsidiaries shall be deemed to be
subsidiaries of TCI or any of TCI's subsidiaries, whether or not they otherwise
would be subsidiaries of TCI or any of TCI's subsidiaries under the foregoing
definition.
"Surviving Corporation" shall mean TCI as the Surviving Corporation
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after the Merger as provided in Section 2.1(a).
"TCI" shall have the meaning specified in the preamble hereto.
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"TCI Benefit Arrangement" shall mean each material plan, program,
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policy, contract or arrangement of TCI and its subsidiaries, other than TCI
Employee Plans, providing for bonuses, pensions, deferred pay, stock or stock
related awards, severance pay, salary continuation or similar benefits,
hospitalization, medical, dental or disability benefits, life insurance or other
employee benefits, or compensation to or for any TCI Employees or any
beneficiaries or dependents of any TCI Employees (other than directors' and
officers' liability policies), whether or not insured or funded.
5
"TCI Charter" shall mean the Restated Certificate of Incorporation of
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TCI, as amended.
"TCI Employee" shall mean any current or former employee, agent,
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director or independent contractor of TCI or its subsidiaries.
"TCI Employee Plan" shall mean each material "employee benefit plan"
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(as defined in Section 3(3) of ERISA) of TCI and its subsidiaries in which TCI
Employees participate or pursuant to which TCI or any of its subsidiaries may
have a liability with respect to employees.
"TCI Equity Affiliates" shall have the meaning specified in Section
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4.1 hereof.
"TCI Group" shall have the meaning specified in the TCI Charter.
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"TCI Group Preferred Stock" shall mean the Series C-TCI Group
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Preferred Stock, the Series F Preferred Stock and the Series G Preferred Stock.
"TCI Group Series A Stock" shall mean the Tele-Communications, Inc.
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Series A TCI Group Common Stock, $1.00 par value per share, of TCI, as it exists
on the date of this Agreement and such other securities into which such TCI
Group Series A Stock may thereafter have been changed.
"TCI Group Series B Stock" shall mean the Tele-Communications, Inc.
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Series B TCI Group Common Stock, $1.00 par value per share, of TCI.
"TCI SEC Filings" shall have the meaning specified in Section 4.4
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hereof.
"Violation" shall have the meaning specified in Section 3.5(iv)
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hereof.
"Wholly-Owned Subsidiary" shall mean, as to any Person, a subsidiary
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of such Person 100% of the equity and voting interest in which is owned,
directly or indirectly, by such Person.
4.2 Terms Generally. The definitions in Section 1.1 shall apply equally
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to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The words
"herein", "hereof" and "hereunder" and words of similar import refer to this
Agreement in its entirety and not to any part hereof unless the context shall
otherwise require. As used herein, the term "to the knowledge of the Company"
or any similar term relating to the Company's knowledge means the actual
knowledge, without investigation, of any of the officers or directors of the
Company, and the term "to the knowledge of TCI" or any similar term relating to
TCI's knowledge means the actual knowledge, without investigation, of any of the
officers or directors of TCI. All references herein
6
to Articles and Sections shall be deemed references to Articles and Sections of
this Agreement unless the context shall otherwise require. Unless the context
shall otherwise require, any references to any agreement or other instrument or
statute or regulation are to it as amended and supplemented from time to time
(and, in the case of a statute or regulation, to any successor provisions). Any
reference in this Agreement to a "day" or number of "days" (without the explicit
qualification of "business") shall be interpreted as a reference to a calendar
day or number of calendar days. If any action or notice is to be taken or given
on or by a particular calendar day, and such calendar day is not a business day,
then such action or notice shall be deferred until, or may be taken or given on,
the next business day.
ARTICLE V
THE MERGER AND RELATED MATTERS
5.1. The Merger.
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(a) Merger; Effective Time. At the Effective Time and subject to and
----------------------
upon the terms and conditions of this Agreement, the Company shall merge with
and into TCI in accordance with the provisions of the DGCL, the separate
corporate existence of the Company shall cease and TCI shall continue as the
Surviving Corporation. The Effective Time shall occur on the date and at the
time that the Certificate of Merger shall have been accepted for filing by the
Delaware Secretary of State (or such later date and time as may be agreed to by
TCI and the Company and specified in the Certificate of Merger). Provided that
this Agreement has not been terminated pursuant to Article VII, the parties will
cause the Certificate of Merger to be filed with the Delaware Secretary of State
after the satisfaction or, if permissible, waiver of the conditions set forth in
Article VI and immediately prior to the filing of the AT&T Certificate of
Merger.
(b) Effects of the Merger. From and after the Effective Time, the
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Merger shall have the effects set forth in the DGCL (including, without
limitation, Sections 259, 260 and 261 thereof). Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of TCI and the Company
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of TCI and the Company shall become the debts, liabilities and duties of the
Surviving Corporation.
(c) Certificate of Incorporation; Bylaws. At the Effective Time, the
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TCI Charter and the Bylaws of TCI in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation and Bylaws of the Surviving
Corporation until thereafter amended in accordance with the terms thereof and
the DGCL.
(d) Directors and Officers of Surviving Corporation. The directors
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and officers of TCI at the Effective Time shall, from and after the Effective
Time, be the directors and officers
7
of the Surviving Corporation until their respective successors are duly elected
or appointed and qualified in accordance with the Certificate of Incorporation
and Bylaws of the Surviving Corporation, or as otherwise provided by applicable
law.
5.2. Closing. Unless this Agreement shall have been terminated pursuant to
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Section 7.1 and subject to the satisfaction or, when permissible, waiver of the
conditions set forth in Article VI, the Closing shall take place on the date the
Certificate of Merger shall have been submitted to and accepted for filing by
the Delaware Secretary of State, which shall be (i) as promptly as practicable
after the last of the conditions set forth in Article VI (other than the filing
of the Certificate of Merger and other than any such conditions which by their
terms are not capable of being satisfied until the Closing Date or thereafter)
is satisfied or, when permissible, waived, or (ii) on such other date and/or at
such other time as the parties may mutually agree.
5.3. Conversion of Securities.
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(a) Conversion of Company Common Stock. At the Effective Time, by
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virtue of the Merger and without any action on the part of TCI, the Company or
the holders of shares of Company Common Stock, each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time shall
automatically be canceled, retired and cease to exist without payment of any
consideration thereof and without any conversion thereof.
(b) Conversion of Company Exchangeable Preferred Stock. At the
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Effective Time, by virtue of the Merger and without any action on the part of
TCI, the Company or the holders of shares of Company Exchangeable Preferred
Stock, each share of Company Exchangeable Preferred Stock issued and outstanding
immediately prior to the Effective Time shall automatically be converted into
2.119 validly issued, fully paid and non-assessable shares of TCI Group Series A
Stock. From and after the Effective Time, all such shares of Company
Exchangeable Preferred Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares shall cease to have any rights
with respect thereto. Each certificate which immediately prior to the Effective
Time evidenced issued and outstanding shares of Company Exchangeable Preferred
Stock shall, from and after the Effective Time, represent the number of shares
of TCI Group Series A Stock into which the shares previously represented by such
certificate shall have been converted at the Effective Time pursuant to this
Article II. All shares of TCI Group Series A Stock in to which shares of
Company Exchangeable Preferred Stock shall have been converted in accordance
with this Article II shall be deemed to have been issued and paid in full
satisfaction of all rights pertaining to such shares of Company Exchangeable
Preferred Stock.
(c) TCI Securities. Each share of capital stock of TCI issued and
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outstanding immediately prior to the Effective Time shall remain outstanding and
shall continue as one share of the Surviving Corporation and each certificate
evidencing ownership of any such shares shall continue to evidence ownership of
the same number and kind of shares of the Surviving Corporation.
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5.4. Changes in TCI Group Series A Stock. If, after the date hereof and
-----------------------------------
prior to the Effective Time, the TCI Group Series A Stock shall be recapitalized
or reclassified or TCI shall effect any stock dividend, stock split, or reverse
stock split of TCI Group Series A Stock or otherwise effect any transaction that
changes the TCI Group Series A Stock into any other securities or any other
dividend or distribution shall be made on the TCI Group Series A Stock (or such
other securities), then the shares of TCI Group Series A Stock to be delivered
under this Agreement to the holders of Company Exchangeable Preferred Stock
shall be appropriately and equitably adjusted to the kind and amount of shares
of stock and other securities and property which the holders of such shares of
TCI Group Series A Stock would have been entitled to receive had such shares
been issued and outstanding as of the record date for determining stockholders
entitled to participate in such corporate event.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to TCI as follows:
6.1. Organization and Qualification. Each of the Company and its
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subsidiaries (i) is a corporation, partnership, limited liability company or
other business association duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, (ii)
has all requisite corporate, partnership, limited liability company or other
business association power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted and (iii)
is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or license necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed or in good standing has not had and is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Each entity in which the Company, directly or through one or more of its
subsidiaries, has an investment accounted for by the equity method (the "Company
Equity Affiliates") is a corporation, partnership, limited liability company or
other business association (A) duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, (B) has all requisite corporate, partnership, limited liability
company or other business association power and authority to own, lease and
operate its properties and to carry on its business as it is now being conducted
and (C) is duly qualified to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it, or the
nature of its activities, makes such qualification necessary, except in each
case where such failure to be so existing and in good standing or to have such
power and authority or to be so qualified to do business and be in good standing
has not had and is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
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6.2. Authorization and Validity of Agreement. The Company has all
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requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder and consummate the transactions contemplated
hereby. The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by the Company Board and by all other necessary corporate action
on the part of the Company. This Agreement has been duly executed and delivered
by the Company and (assuming the due execution and delivery of this Agreement by
TCI) constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
The Company and the Company Board have taken all actions, if any, necessary to
render the restrictions on business combinations set forth in Section 203 of the
DGCL inapplicable to the transactions contemplated by this Agreement.
6.3. Capitalization.
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(a) The authorized capital stock of the Company consists of (i)
1,005,000 shares of Company Common Stock, of which 905,553 shares are designated
as Company Class A Stock and 94,447 shares are designated as Company Class B
Stock and (ii) 5,000,000 shares of Company Preferred Stock, of which 4,600,000
shares are designated Company Exchangeable Preferred Stock. TCI owns all of the
issued and outstanding shares of Company Class A Stock and Company Class B
Stock.
(b) As of the close of business on December 31, 1998, (i) 811,655
shares of Company Class A Stock and 94,447 shares of Company Class B Stock were
issued and outstanding, (ii) no shares of Company Class A Stock and no shares of
Company Class B Stock were reserved for issuance upon conversion or exchange of
outstanding convertible or exchangeable securities, (iii) 4,600,000 shares of
Company Exchangeable Preferred Stock were issued and outstanding, and (iv) no
shares of Company Class A Stock and no shares of Company Class B Stock or
Company Exchangeable Preferred Stock were held in the treasury of the Company or
held by subsidiaries of the Company.
(c) All outstanding shares of Company Common Stock are duly
authorized, validly issued, fully paid and nonassessable, and no class of
capital stock of the Company is entitled to preemptive rights.
(d) There are no issued or outstanding bonds, debentures, notes or
other indebtedness of the Company or any of its subsidiaries which have the
right to vote (or which are convertible into other securities having the right
to vote) on any matters on which stockholders of the Company may vote.
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(e) There are no options, warrants or other rights to acquire capital
stock (or securities convertible into or exercisable or exchangeable for capital
stock) from the Company, other than (ii) the right of the holders of shares of
Company Class B Stock to convert such shares into shares of Company Class A
Stock, pursuant to the Company Charter, and (ii) the right of the holders of
shares of Company Exchangeable Preferred Stock to convert such shares into
shares of Company Class A Stock, in each case pursuant to the terms of the
Company Charter. Upon consummation of the Merger, none of such convertible
securities will be convertible into any shares of capital stock of the Company,
but instead will either be canceled or converted in the Merger into shares of
TCI Group Series A Stock in accordance with the terms of this Agreement.
6.4. Reports and Financial Statements. The Company has filed all Reports
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on Form 10-K, Form 10-Q and Form 8-K and proxy statements required under the
Exchange Act to be filed with the SEC since January 1, 1996 (collectively, the
"Company SEC Filings"). As of their respective dates, each of the Company SEC
Filings complied in all material respects with the applicable requirements of
the Exchange Act and the rules and regulations thereunder, and none of the
Company SEC Filings contained as of such date any untrue statement of a material
fact or omitted 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. When filed with the SEC, the financial
statements (including the related notes) included in the Company SEC Filings
complied as to form in all material respects with the applicable requirements of
the Exchange Act and the applicable rules and regulations thereunder and were
prepared in accordance with GAAP applied on a consistent basis (except as may be
indicated therein or in the schedules thereto), and such financial statements
fairly present, in all material respects, the consolidated financial position of
the Company and its consolidated subsidiaries as of the respective dates thereof
and the consolidated results of their operations and their consolidated cash
flows for the respective periods then ended, subject, in the case of the
unaudited interim financial statements, to normal, recurring year-end audit
adjustments. Except (i) as and to the extent disclosed or reserved against on
the balance sheet of the Company as of September 30, 1998 included in the
Company SEC Filings, or (ii) as incurred after the date thereof in the ordinary
course of business consistent with prior practice, none of the Company, any of
the Company's subsidiaries or, to the knowledge of the Company, any Company
Equity Affiliate has incurred any liability or obligation of any kind that,
individually or in the aggregate, has or would have a Material Adverse Effect on
the Company.
6.5. No Approvals or Notices Required; No Conflict with Instruments. The
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execution and delivery by the Company of this Agreement do not, and the
performance by the Company of its obligations hereunder and the consummation of
the transactions contemplated hereby will not:
(1) conflict with or violate the Company Charter or Bylaws or the
charter or bylaws of any corporate subsidiary of the Company, or the partnership
agreement of any partnership subsidiary of the Company, or any other instrument
or document governing any subsidiary of the Company that is not a corporation or
partnership;
11
(2) require any consent, approval, order or authorization of or other
action by any Governmental Entity (a "Government Consent") or any registration,
qualification, declaration or filing with or notice to any Governmental Entity
(a "Governmental Filing"), in each case on the part of or with respect to the
Company, any subsidiary of the Company or, to the knowledge of the Company, any
Company Equity Affiliate, except for (A) such reports under the Exchange Act as
may be required in connection with this Agreement and the transactions
contemplated hereby, (B) the filing of the Certificate of Merger with the
Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business,
(C) such Government Consents and Governmental Filings with state and local
governmental authorities (the "Local Approvals") as may be required with respect
to the Licenses held by the Company, any of its subsidiaries or, to the
knowledge of the Company, any of the Company Equity Affiliates or as may
otherwise be required under laws applicable to the conduct of the businesses of
the Company and its subsidiaries in the ordinary course, (D) the Governmental
Filings to be made on the part of or with respect to TCI referred to in clause
(ii) of Section 4.5, (E) such Government Consents and Governmental Filings as
may be required in connection with the issuance of the TCI Group Series A Stock
in the Merger pursuant to state securities and blue sky laws, and (F) such
Government Consents and Government Filings the absence or omission of which will
not, either individually or in the aggregate, have a Material Adverse Effect on
the Company or prevent or materially delay the consummation of the Merger;
(3) require, on the part of the Company, any subsidiary of the Company
or, to the knowledge of the Company, any Company Equity Affiliate, any consent
by or approval or authorization of (a "Contract Consent") or notice to (a
"Contract Notice") any other Person (other than a Governmental Entity), whether
under any License or other Contract or otherwise, except such Contract Consents
and Contract Notices the absence or omission of which will not, either
individually or in the aggregate, have a Material Adverse Effect on the Company
or prevent or materially delay the consummation of the Merger;
(4) assuming that any Government Consents and Governmental Filings
required under any Licenses are obtained or made, conflict with or result in any
violation or breach of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation, suspension,
modification or, subject to Section 3.5(v), acceleration of any obligation or
any increase in any payment required by or the impairment, loss or forfeiture of
any material benefit, rights or privileges under or the creation of a lien or
other encumbrance on any assets pursuant to (any such conflict, violation,
breach, default, right of termination, cancellation or acceleration, loss or
creation, a "Violation") any contract (including any note, bond, indenture,
mortgage, deed of trust, lease, franchise, permit, authorization, license,
contract, instrument, employee benefit plan or practice, or other agreement,
obligation, commitment or concession of any nature (each, a "Contract")) to
which the Company, any subsidiary of the Company or, to the knowledge of the
Company, any Company Equity Affiliate is a party, by which the Company, any
subsidiary of the Company or, to the knowledge of the Company, any Company
Equity Affiliate or any of their respective assets or properties is bound or
affected or pursuant to which the Company,
12
any subsidiary of the Company or, to the knowledge of the Company, any Company
Equity Affiliate is entitled to any rights or benefits (including the Licenses),
except such Violations which would not, individually or in the aggregate, have a
Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Merger; or
(5) assuming that the Government Consents and Governmental Filings
specified in clause (ii) of this Section 3.5 are obtained, made and given,
result in a Violation of, under or pursuant to any law, rule, regulation, order,
judgment or decree applicable to the Company, any subsidiary of the Company or,
to the knowledge of the Company, any Company Equity Affiliate, or by which any
of their respective properties or assets are bound or affected, except for such
Violations which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company or prevent or materially delay the consummation of
the Merger.
6.6. Vote Required. The only approval of stockholders of the Company
-------------
required under the DGCL, the Company Charter, the Company's Bylaws and the rules
and regulations of The Nasdaq Stock Market in order to adopt this Agreement is
the affirmative vote of a majority of the aggregate voting power of the issued
and outstanding shares of Company Class A Stock and the Company Class B Stock
voting together as a single class. No other vote or approval of or other action
by the holders of any capital stock or other securities of the Company is
required in connection with this Agreement or the consummation of the Merger.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF TCI
TCI hereby represents and warrants to the Company as follows:
7.1. Organization. Each of TCI and TCI's subsidiaries (i) is a
------------
corporation, partnership, limited liability company or other business
association duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization, (ii) has all requisite
corporate, partnership, limited liability company or other business association
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted and (iii) is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or license necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed or in good standing has
not had and is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on TCI. Each entity in which TCI, directly or through
one or more of its subsidiaries, has an investment accounted for by the equity
method (the "TCI Equity Affiliates") is a corporation, partnership, limited
liability company or other business association (A) duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, (B) has all requisite corporate, partnership,
limited liability company or other business association power and authority to
own, lease and operate its
13
properties and to carry on its business as it is now being conducted and (C) is
duly qualified to do business and is in good standing in each jurisdiction in
which the property owned, leased or operated by it, or the nature of its
activities, makes such qualification necessary, except in each case where such
failure to be so existing and in good standing or to have such power and
authority or to be so qualified to do business and be in good standing has not
had and is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on TCI.
7.2. Authorization and Validity of Agreement. TCI has all requisite
---------------------------------------
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance by TCI of this Agreement and the
consummation by TCI of the transactions contemplated hereby have been approved
by the Board of Directors of TCI, and have been duly authorized by all other
necessary corporate action on the part of TCI. This Agreement has been duly
executed and delivered by TCI and (assuming the due execution and delivery of
this Agreement by the Company) constitutes a valid and binding agreement of TCI,
enforceable against TCI in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
7.3. Capitalization of TCI.
---------------------
(a) TCI's authorized capital stock includes 1,750,000,000 shares of
TCI Group Series A Stock and 150,000,000 shares of TCI Group Series B Stock. No
shares of TCI's preferred stock are convertible into TCI Group Series A Stock or
TCI Group Series B Stock other than its Convertible Preferred Stock, Series C-
TCI Group (the "Series C-TCI Group Preferred Stock"), its Convertible Redeemable
Participating Preferred Stock, Series F (the "Series F Preferred Stock"), and
its Redeemable Convertible TCI Group Preferred Stock, Series G (the "Series G
Preferred Stock"). There are 70,575 authorized shares of Series C-TCI Group
Preferred Stock, 500,000 authorized shares of Series F Preferred Stock and
7,259,380 authorized shares of Series G Preferred Stock.
(b) As of the close of business on December 31, 1998, (A) 473,657,007
shares of TCI Group Series A Stock and 64,444,193 shares of TCI Group Series B
Stock (in each case net of shares held in treasury and shares held by
subsidiaries of TCI) were issued and were outstanding, (B) 11,362,365 shares of
TCI Group Series A Stock and 330,902 shares of TCI Group Series B Stock were
held in TCI's treasury, (C) 125,728,816 shares of TCI Group Series A Stock and
9,154,134 shares of TCI Group Series B Stock were held by subsidiaries of TCI,
and (D) 43,575 shares of Series C-TCI Group Preferred Stock, 278,307 shares of
Series F Preferred Stock and 6,444,244 shares of Series G Preferred Stock were
issued and were outstanding.
(c) All outstanding shares of TCI Group Series A Stock, TCI Group
Series B Stock and TCI Group Preferred Stock are duly authorized, validly
issued, fully paid and nonassessable, and no class of capital stock of TCI is
entitled to preemptive rights.
14
(d) As of the close of business on December 31, 1998, there were no
options, warrants or other rights to acquire TCI Group Series A Stock (or
securities convertible into or exercisable or exchangeable for TCI Group Series
A Stock) from TCI, other than (i) the right of the holders of TCI Group Series B
Stock to convert shares of TCI Group Series B Stock into TCI Group Series A
Stock, pursuant to the TCI Charter, (ii) options or other rights representing in
the aggregate the right to purchase or otherwise acquire up to 17,331,816 shares
of TCI Group Series A Stock, pursuant to TCI Employee Plans or TCI Benefit
Arrangements or otherwise, (iii) 24,163,259 shares of TCI Group Series A Stock
issuable upon exchange of the TCI UA, Inc. Convertible Notes due December 12,
2021, and (iv) (A) 5,789,374 shares of TCI Group Series A Stock issuable upon
conversion of the Series C-TCI Group Preferred Stock, at a conversion rate equal
to 132.86 per share, (B) 7,668,650 shares of TCI Group Series A Stock issuable
upon conversion of the Series G Preferred Stock, at a conversion rate equal to
1.190 per share, (C) 9,747,400 shares of TCI Group Series A Stock issuable upon
exchange of the shares of Company Exchangeable Preferred Stock, (D) 34,087,114
shares of TCI Group Series A Stock issuable upon exchange of the shares of Class
A Senior Cumulative Exchangeable Preferred Stock, $100 par value per share, of
TCI Pacific Communications, Inc., and (E) 1,084,056 shares of TCI Group Series A
Stock issuable upon exchange of the Exchangeable Preferred Stock, Series A, $.01
par value per share, of ETC NSCI Holdings, Inc..
7.4. TCI Reports and Financial Statements. TCI has filed all Reports on
------------------------------------
Form 10-K, Form 10-Q and Form 8-K and proxy statements required under the
Exchange Act to be filed with the SEC since January 1, 1996 (collectively, the
"TCI SEC Filings"). The TCI SEC Filings constitute all of the documents (other
than preliminary material) that TCI was required to file with the SEC under the
Exchange Act since such date. As of their respective dates, each of the TCI SEC
Filings complied in all material respects with the applicable requirements of
the Exchange Act and the rules and regulations thereunder, and none of the TCI
SEC Filings contained as of such date any untrue statement of a material fact or
omitted 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. When filed with the SEC, the financial statements
(including the related notes) included in the TCI SEC Filings complied as to
form in all material respects with the applicable requirements of the Exchange
Act and the applicable rules and regulations thereunder and were prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
therein or in the schedules thereto), and such financial statements fairly
present, in all material respects, the consolidated financial position of TCI
and its consolidated subsidiaries as of the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the respective periods then ended, subject, in the case of the unaudited interim
financial statements, to normal, recurring year-end audit adjustments. Except
(i) as and to the extent disclosed or reserved against on TCI's balance sheet as
of September 30, 1998 included in the TCI SEC Filings, or (ii) as incurred after
the date thereof in the ordinary course of business consistent with prior
practice, none of TCI, any of TCI's subsidiaries or, to the knowledge of TCI,
any TCI Equity Affiliate has incurred any liability or obligation of any kind
that, individually or in the aggregate, has or would have a Material Adverse
Effect on TCI.
15
7.5. No Approvals or Notices Required; No Conflict with Instruments.
--------------------------------------------------------------
The execution and delivery by TCI of this Agreement do not, and the performance
by TCI of its obligations hereunder and the consummation of the transactions
contemplated hereby will not:
(1) conflict with or violate the TCI Charter or TCI's Bylaws;
(2) require any Government Consent or Governmental Filing on the
part of or with respect to TCI, any subsidiary of TCI or, to the knowledge of
TCI, any TCI Equity Affiliate, except for (A) such reports under the Exchange
Act as may be required in connection with this Agreement and the transactions
contemplated hereby, (B) the filing of the Certificate of Merger with the
Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business,
(C) the Local Approvals, (D) such Government Consents and Governmental Filings
as may be required in connection with the issuance of the TCI Group Series A
Stock in the Merger pursuant to state securities and blue sky laws, (E) the
Governmental Filings to be made on the part of or with respect to the Company
referred to in clause (ii) of Section 3.5, and (F) such Government Consents and
Governmental Filings the absence or omission of which will not, either
individually or in the aggregate, have a Material Adverse Effect on TCI or
prevent or materially delay the consummation of the Merger;
(3) require on the part of TCI, any subsidiary of TCI or, to the
knowledge of TCI, any TCI Equity Affiliate, any Contract Consent or Contract
Notice, except such Contract Consents and Contract Notices the absence or
omission of which will not, either individually or in the aggregate, have a
Material Adverse Effect on TCI or prevent or materially delay the consummation
of the Merger;
(4) assuming that any Government Consents and Governmental
Filings required under any Licenses are obtained or made, result in a Violation
by TCI or any subsidiary of TCI of any Contract to which TCI, any subsidiary of
TCI or, to the knowledge of TCI, any TCI Equity Affiliate is a party, by which
TCI, any subsidiary of TCI or, to the knowledge of TCI, any TCI Equity Affiliate
or any of their respective assets or properties is bound or affected or pursuant
to which TCI, any subsidiary of TCI or, to the knowledge of TCI, any TCI Equity
Affiliate is entitled to any rights or benefits, except for such Violations
which would not, individually or in the aggregate, have a Material Adverse
Effect on TCI or prevent or materially delay the consummation of the Merger; or
(5) assuming that the Government Consents and Governmental
Filings specified in clause (ii) of this Section 4.5 are obtained, made and
given, result in a Violation of, under or pursuant to any law, rule, regulation,
order, judgment or decree applicable to TCI, any subsidiary of TCI or, to the
knowledge of TCI, any TCI Equity Affiliate or by which any of their respective
properties or assets are bound or affected, except for such Violations which
would not, individually or in the aggregate, have a Material Adverse Effect on
TCI or prevent or materially delay the consummation of the Merger.
16
7.6. Vote Required. No vote of stockholders of TCI is required under
-------------
the DGCL, the TCI Charter, TCI's Bylaws or the rules and regulations of The
Nasdaq Stock Market in order for TCI to validly perform its obligations under
this Agreement (including, without limitation, its obligation to issue the TCI
Group Series A Stock pursuant to Section 2.3(b) hereof).
7.7. TCI Group Series A Stock. The shares of TCI Group Series A Stock
------------------------
to be issued pursuant to Section 2.3 will be, when the Merger has become
effective, duly authorized, validly issued, fully paid and nonassessable and no
stockholder of TCI will have any preemptive right of subscription or purchase in
respect thereof.
ARTICLE VIII
CERTAIN ACTIONS
8.1. Conduct of the Company's Business Pending the Effective Time.
------------------------------------------------------------
During the period commencing on the date hereof and ending at the Effective
Time, the Company shall, and shall cause each of its subsidiaries to conduct its
business only in the ordinary and usual course of its business and consistent
with past practices, except as permitted, required or specifically contemplated
by this Agreement, required by any change in applicable law or consented to or
approved by TCI.
8.2. Indemnification.
---------------
(a) Indemnification of Company Directors and Officers. From and after
-------------------------------------------------
the Effective Time, TCI shall indemnify, defend and hold harmless the present
and former directors, officers, employees or agents of the Company and any of
its subsidiaries, and any Person who is or was serving at the request of the
Company as a director, officer, employee or agent of another Person
(individually an "Indemnified Party" and, collectively, the "Indemnified
Parties") against (i) all losses, claims, damages, costs, expenses (including
fees and expenses of counsel properly retained by an Indemnified Party under
this Section 5.2) (promptly as statements therefor are received), liabilities or
judgments or amounts that are paid in settlement with the approval of TCI (which
approval shall not be unreasonably withheld) of or in connection with any claim,
action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such Person was at any time
prior to the Effective Time a director, officer, employee or agent of the
Company, whether pertaining to any matter existing or occurring at or prior to
the Effective Time and whether asserted or claimed prior to, at or after the
Effective Time ("Indemnified Liabilities") and (ii) all Indemnified Liabilities
based in whole or in part on, or arising in whole or in part out of, or
pertaining to this Agreement or the transactions contemplated hereby (and TCI
shall pay expenses in advance of the final disposition of any such action, suit,
proceeding or investigation to each Indemnified Party (including fees and
expenses of counsel properly retained by an Indemnified Party under this Section
5.2), promptly as statements therefor are received, to the full extent permitted
by law upon receipt of the undertaking contemplated by Section 145(e) of the
17
DGCL), in each case to the full extent that (x) a corporation is permitted under
Delaware law to indemnify or advance expenses to its own directors, officers,
employees or agents, as the case may be, (y) such Indemnified Party would have
been entitled to be indemnified by the Company, if such Indemnified Party was a
director, officer, employee or agent of the Company, with respect to the
Indemnified Liabilities in question under the Company Charter and the Company's
Bylaws as in effect on January 1, 1998 and under any indemnification agreement
with the Company in a form disclosed to TCI prior to the date hereof and (z)
such indemnification otherwise is permitted by applicable law. In the event any
such claim, action, suit, proceeding or investigation is asserted or commenced
against any Indemnified Party (whether before or after the Effective Time), TCI
will be entitled to participate and, to the extent that it may wish, to assume
the defense thereof, except that if TCI also is a subject of such claim, action,
suit, proceeding or investigation and there is, under applicable standards of
professional conduct, a conflict on any significant issue between the position
of TCI and the position of such Indemnified Party, or if TCI shall fail to
assume responsibility for such defense, such Indemnified Party may, subject to
Section 5.2(b), retain counsel who will represent such Indemnified Party, and
TCI shall pay all fees and expenses of such counsel promptly as statements
therefor are received; provided that such Indemnified Party shall vigorously
--------
defend (or, if the defense is assumed by TCI, use his reasonable best efforts to
assist in the vigorous defense of) any such matter; provided, further, that TCI
-------- -------
shall not be liable for any settlement effected without its written consent,
which consent, however, shall not be unreasonably withheld; and provided,
--------
further, that TCI shall not have any obligation hereunder to any Indemnified
-------
Party when and if a court of competent jurisdiction shall ultimately determine,
after exhaustion of all avenues of appeal, that such Indemnified Party is not
entitled to indemnification hereunder.
(b) Indemnification Procedures. Any Indemnified Party wishing to
---------------------------
claim indemnification or advancement of expenses under Section 5.2(a), upon
learning of any such claim, action, suit, proceeding or investigation, shall
promptly notify TCI thereof (provided that the failure so to notify TCI shall
not relieve TCI from any liability which it may have under this Section 5.2,
except to the extent such failure materially prejudices TCI) and shall deliver
to TCI an undertaking to repay any amounts advanced pursuant thereto when and if
a court of competent jurisdiction shall ultimately determine, after exhaustion
of all avenues of appeal, that such Indemnified Party is not entitled to
indemnification hereunder. In no event may the Indemnified Parties retain more
than one lead law firm and one local counsel to represent them with respect to
any such matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the position of any two or
more Indemnified Parties in which case the Indemnified Parties may (unless the
defense of such matter has been assumed by TCI as provided herein) retain, at
the expense of TCI, such number of additional counsel as are necessary to
eliminate all conflicts of the type referred to above.
(c) Survival of Existing Indemnification Rights. TCI agrees that all
-------------------------------------------
rights to indemnification, including provisions relating to advances of expenses
incurred in defense of any action, suit or proceeding, whether civil, criminal,
administrative or investigative (each, a "Claim"), existing in favor of the
Indemnified Parties as provided in the Company Charter or the Company's
18
Bylaws or pursuant to other agreements, or certificates of incorporation or
bylaws or similar documents of any of the Company's subsidiaries, as in effect
as of the date hereof, shall survive the Merger and shall continue in full force
and effect for a period of not less than six years from the Effective Time;
provided, however, that all rights to indemnification in respect of any Claim
-------- -------
asserted, made or commenced within such period shall continue until the final
disposition of such Claim.
(d) Survival. This Section 5.2 shall survive the consummation of the
--------
Merger. The provisions of this Section 5.2 are intended to be for the benefit
of and shall be enforceable by each of the Indemnified Parties and his heirs and
legal representatives, and shall be binding on the Surviving Corporation and its
respective successors and assigns.
8.3. Actions by TCI. In its capacity as the beneficial owner of all of
--------------
the issued and outstanding shares of Company Common Stock, TCI hereby consents
to the adoption of this Agreement and agrees to cause such shares of the Company
Common Stock to be voted in favor of the adoption of this Agreement at any
meeting of stockholders of the Company called for such purpose.
8.4. Reasonable Efforts. Subject to the terms and conditions of this
------------------
Agreement and applicable law and, in the case of the Company, except as
otherwise required by the fiduciary duties of the Company Board (as determined
in good faith by the Company Board following the receipt of advice of the
Company's outside legal counsel thereon), each of the parties hereto shall use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations or otherwise to consummate and make
effective the Merger and the other transactions contemplated by this Agreement
as soon as reasonably practicable, including such actions or things as any other
party hereto may reasonably request in order to cause any of the conditions to
such other party's obligation to consummate such transactions specified in
Article VI to be fully satisfied.
8.5. Employee Agreements. From and after the Effective Time, the
-------------------
Surviving Corporation agrees to honor, in accordance with their terms, all
existing employment and other agreements relating to employees of the Company
(the "Employment Agreements"); provided, however, that nothing herein shall
-------- -------
preclude any change in any Employment Agreement effective on a prospective basis
that is permitted pursuant to the terms of the applicable Employment Agreement.
19
ARTICLE IX
CONDITIONS PRECEDENT
9.1. Conditions Precedent to the Obligations of TCI and the Company. The
--------------------------------------------------------------
respective obligations of TCI and the Company to consummate the transactions
contemplated by this Agreement are subject to the satisfaction at or prior to
the Effective Time of each of the following conditions, any or all of which, to
the extent permitted by applicable law, may be waived by TCI for itself (but not
for the Company), or by the Company for itself (but not for TCI):
(a) Satisfactions of Conditions to the AT&T Agreement. The AT&T
-------------------------------------------------
Agreement shall not have been terminated and all conditions contained in Article
VIII of the AT&T Agreement shall have been satisfied or, where permissible,
waived.
(b) Absence of Injunctions. No permanent or preliminary Injunction or
----------------------
restraining order or other order by any court or other Governmental Entity of
competent jurisdiction, or other legal restraint or prohibition, preventing
consummation of the transactions contemplated hereby as provided herein shall be
in effect, or permitting such consummation only subject to any condition or
restriction that has or would have a Material Adverse Effect on the Company or
TCI.
(c) Tax Opinion. TCI and the Company shall have received the opinion
-----------
of ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., in form and substance reasonably satisfactory to TCI
and the Company, to the effect that (i) the Merger should be treated for federal
income tax purposes as a reorganization within the meaning of Section 368(a) and
a liquidation within the meaning of Section 332 of the Code, (ii) no gain or
loss should be recognized by TCI or the Company as a result of the Merger, and
(iii) no gain or loss should be recognized by a holder of Company Exchangeable
Preferred Stock to the extent that such holder receives only stock of TCI in
exchange for his Company Exchangeable Preferred Stock in the Merger. In
rendering the opinion referenced in this Section 6.1(c), ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
may rely on representations contained in certificates of the Company, TCI and
others, in each case in form and substance reasonably acceptable to ▇▇▇▇▇ &
▇▇▇▇▇, L.L.P., and upon such other documents and data as such counsel deems
appropriate as a basis for such opinions.
9.2. Conditions Precedent to the Obligations of TCI. The obligation of TCI
----------------------------------------------
to consummate the transactions contemplated by this Agreement is also subject to
the satisfaction at or prior to the Closing Date of each of the following
conditions, unless waived by TCI:
(a) Accuracy of Representations and Warranties. All representations
------------------------------------------
and warranties of the Company contained in this Agreement shall, if specifically
qualified by materiality, be true and correct and, if not so qualified, be true
and correct in all material respects in each case as of the date of this
Agreement and (except to the extent such representations and warranties speak as
of a specified earlier date) on and as of the Closing Date as though made on and
as of the Closing Date, except for changes permitted or contemplated by this
Agreement.
20
(b) Performance of Agreements. The Company shall have performed in
-------------------------
all material respects all obligations and agreements, and complied in all
material respects with all covenants and conditions, contained in this Agreement
to be performed or complied with by it prior to or on the Closing Date.
(c) No Adverse Enactments. There shall not have been any action
---------------------
taken, or any statute, rule, regulation, order, judgment or decree proposed,
enacted, promulgated, entered, issued, enforced or deemed applicable by any
foreign or United States federal, state or local Governmental Entity, and there
shall be no action, suit or proceeding pending or threatened, which (i) makes or
may make this Agreement, the Merger, or any of the other transactions
contemplated by this Agreement illegal or imposes or may impose material damages
or penalties in connection therewith; (ii) requires or may require the
divestiture of a material portion of the business of (A) TCI and its
subsidiaries taken as a whole, or (B) the TCI Group, if the Merger is
consummated; (iii) requires or may require TCI or any of its material
subsidiaries or affiliates to cease or refrain from engaging in any material
business, including any material business conducted by the Company or any of its
subsidiaries prior to the Merger, if the Merger is consummated; or (iv)
otherwise prohibits, restricts, or unreasonably delays consummation of the
Merger or any of the other transactions contemplated by this Agreement or
increases or may increase in any material respect the liabilities or obligations
of TCI arising out of this Agreement, the Merger, or any of the other
transactions contemplated by this Agreement.
(d) Receipt of Licenses, Permits and Consents. Other than the filing
-----------------------------------------
of the Certificate of Merger with the Delaware Secretary of State and filings
due after the Effective Time, all Local Approvals and all other Government
Consents as are required in connection with the consummation of the transactions
contemplated hereby shall have been obtained and shall be in full force and
effect and all Governmental Filings as are required in connection with the
consummation of such transactions shall have been made, and all waiting periods,
if any, applicable to the consummation of such transactions imposed by any
Governmental Entity shall have expired, other than those which, if not obtained,
in force or effect, made or expired (as the case may be) would not, either
individually or in the aggregate, (i) have a material adverse effect on the
transactions contemplated hereby or (ii) assuming consummation of the Merger,
have a Material Adverse Effect, as of or after the Effective Time, on TCI.
9.3. Conditions Precedent to the Obligations of the Company. The
------------------------------------------------------
obligation of the Company to consummate the transactions contemplated by this
Agreement is also subject to the satisfaction at or prior to the Closing Date of
each of the following conditions, unless waived by the Company:
(a) Accuracy of Representations and Warranties. All representations
------------------------------------------
and warranties of TCI contained in this Agreement shall, if specifically
qualified by materiality, be true and correct and, if not so qualified, be true
and correct in all material respects in each case as of the date of this
Agreement and (except to the extent such representations and warranties speak of
a
21
specified earlier date) on and as of the Closing Date as though made on and as
of the Closing Date, except for changes permitted or contemplated by this
Agreement.
(b) Performance of Agreements. TCI shall have performed in all
-------------------------
material respects all obligations and agreements, and complied in all material
respects with all covenants and conditions, contained in this Agreement to be
performed or complied with by it prior to or on the Closing Date.
(c) No Adverse Enactments. There shall not have been any action
---------------------
taken, or any statute, rule, regulation, order, judgment or decree proposed,
enacted, promulgated, entered, issued, enforced or deemed applicable by any
foreign or United States federal, state or local Governmental Entity, and there
shall be no action, suit or proceeding pending or threatened, which (i) makes or
may make this Agreement, the Merger, or any of the other transactions
contemplated by this Agreement illegal or imposes or may impose material damages
or penalties in connection therewith or (ii) has or, in the reasonable judgment
of the Company, assuming consummation of the Merger, is reasonably likely to
have a Material Adverse Effect, as of or after the Effective Time, on TCI.
(d) Receipt of Licenses, Permits and Consents. Other than the filing
-----------------------------------------
of the Certificate of Merger with the Delaware Secretary of State and filings
due after the Effective Time, all Local Approvals and all other Government
Consents as are required in connection with the consummation of the transactions
contemplated hereby shall have been obtained and shall be in full force and
effect, all Governmental Filings as are required in connection with the
consummation of such transactions shall have been made, and all waiting periods,
if any, applicable to the consummation of such transactions imposed by any
Governmental Entity shall have expired, other than those which, if not obtained,
in force or effect, made or expired (as the case may be), would not, either
individually or in the aggregate, assuming consummation of the Merger, have a
Material Adverse Effect, as of or after the Effective Time, on TCI.
ARTICLE X
TERMINATION
10.1. Termination and Abandonment. This Agreement may be terminated and the
---------------------------
transactions contemplated hereby may be abandoned at any time prior to the
Effective Time, whether before or after adoption of this Agreement by the
stockholders of the Company:
(i) by mutual consent of TCI and the Company; or
(ii) by either the Company or TCI: (A) if the AT&T Agreement is
terminated or the AT&T Merger is otherwise abandoned; (B) if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of the other party contained in this
22
Agreement and such breach is incapable of being cured, or (C) if any court of
competent jurisdiction or other competent governmental authority shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable.
10.2. Effect of Termination. In the event of any termination of this
---------------------
Agreement by the Company or TCI pursuant to Section 7.1, this Agreement
forthwith shall become void and there shall be no liability or obligation on the
part of TCI, the Company or their respective affiliates, stockholders,
directors, officers, agents or representatives except as provided in Section
8.11, which shall survive such termination.
ARTICLE XI
MISCELLANEOUS
11.1. Effectiveness of Representations, Warranties and Agreements. The
-----------------------------------------------------------
representations, warranties, covenants or agreements contained in this Agreement
or in any certificate or other instrument delivered pursuant to this Agreement
shall terminate at the Effective Time, except for the agreements contained in
Article II, Section 5.2, Section 5.5 and in this Article VIII.
11.2. Notices. All notices, requests, demands, waivers and other
-------
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or mailed, certified or registered mail with postage prepaid, or sent by
confirmed telecopier, as follows: if to TCI, to Tele-Communications, Inc. and if
to the Company, to TCI Communications, Inc., in each case, at:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Executive Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other Person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been
23
received on the date of delivery or on the third business day after the mailing
thereof, except that any notice of a change of address shall be effective only
upon actual receipt thereof.
11.3. Entire Agreement. This Agreement (including the other documents
----------------
delivered in connection herewith) constitutes the entire agreement of the
parties and supersedes all prior agreements and understandings, oral and
written, between the parties with respect to the subject matter hereof.
11.4. Assignment; Binding Effect; Benefit.
-----------------------------------
(a) Neither this Agreement nor any of the rights, benefits or
obligations hereunder may be assigned by any party (whether by operation of law
or otherwise) without the prior written consent of the other party. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns. Nothing in this Agreement, express or implied, is intended to confer
on, or to make enforceable by, any Person other than the parties or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, other than rights conferred
upon Indemnified Parties under Section 5.2 and upon stockholders, directors,
officers, affiliates, agents and representatives of the parties under Section
8.11. Notwithstanding anything to the contrary contained in this Agreement, the
provisions of Section 5.2 of this Agreement may not be amended or altered in any
manner with respect to any Indemnified Party without the written consent of such
Indemnified Party. No assignment of this Agreement shall relieve TCI from its
obligations to any Indemnified Party contained in Section 5.2 of this Agreement.
(b) Notwithstanding Section 8.4(a), this Agreement and all the rights,
benefits and obligations hereunder shall be assignable to and binding upon, and
inure to the benefit of and be enforceable by, any successor of TCI pursuant to
the AT&T Merger.
11.5. Amendment. This Agreement may be amended by the parties hereto, by
---------
action taken or authorized by their respective Boards of Directors, at any time
prior to the Effective Time; provided, however, that no amendment may be made
-------- -------
without the further requisite approval of the stockholders of the Company if
such amendment by law requires the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
11.6. Extension; Waiver. At any time prior to the Effective Time, either
-----------------
of the parties, by action taken or authorized by such party's Board of
Directors, may, to the extent legally allowed, (i) extend the time specified
herein for the performance of any of the obligations of the other party, (ii)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered pursuant hereto, (iii) waive
compliance by the other party with any of the agreements or covenants of such
other party contained herein or (iv) waive any condition to such waiving party's
obligation to consummate the transactions contemplated hereby. Any such
extension
24
or waiver shall be valid only if set forth in a written instrument signed by the
party or parties to be bound thereby. Any such extension or waiver by any party
shall be binding on such party but not on the other party entitled to the
benefits of the provision of this Agreement affected unless such other party
also has agreed to such extension or waiver. No such waiver shall constitute a
waiver of, or estoppel with respect to, any subsequent or other breach or
failure to strictly comply with the provisions of this Agreement. The failure of
any party to exercise any of its rights, powers or remedies hereunder or with
respect hereto or to insist on strict compliance with this Agreement shall not
constitute a waiver by such party of its right to exercise any such or other
rights, powers or remedies or to demand such compliance. Whenever this Agreement
requires or permits consent or approval by any party, such consent or approval
shall be effective if given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this Section 8.6.
11.7. Headings. The table of contents and headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.8. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
11.9. Applicable Law. This Agreement and the legal relations between the
--------------
parties shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to the conflict of laws rules thereof.
11.10. Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
11.11. Limited Liability. Notwithstanding any other provision of this
-----------------
Agreement, no stockholder, director, officer, affiliate, agent or representative
of any party shall have any liability in respect of or relating to the
covenants, obligations, representations or warranties of such party hereunder or
in respect of any certificate delivered with respect thereto and, to the fullest
extent legally permissible, each party, for itself and its stockholders,
directors, officers and affiliates, waives and agrees not to seek to assert or
enforce any such liability which any such Person otherwise might have pursuant
to applicable law.
25
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
and Plan of Merger as of the date first above written.
TELE-COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
TCI COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
26