<PAGE> 1
AS FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION
ON DECEMBER , 2000
PRELIMINARY PROXY STATEMENT
FILED ON SCHEDULE 14A
PRELIMINARY PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ENSTAR INCOME PROGRAM II-2, L.P.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter and Person Filing Preliminary
Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Units of Limited Partnership Interest.
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
29,880
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
The filing fee is based on the aggregate cash to be received by the
Registrant from the proposed sale of assets, which the Registrant
believes will be $15,770,000 multiplied by 1/50 of 1%.
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$15,770,000
--------------------------------------------------------------------------------
(5) Total fee paid:
$3,154.00
--------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
PRELIMINARY COPY
ENSTAR INCOME PROGRAM II-2, L.P.
C/O ENSTAR COMMUNICATIONS CORPORATION
12444 POWERSCOURT DRIVE, SUITE 100
ST. LOUIS, MISSOURI 63131
December , 2000
Dear Limited Partner:
As a limited partner and holder of units (also referred to as Units, and
the holders thereof being also referred to as Unitholders) of the limited
partnership interests of Enstar Income Program II-2, L.P. (also referred to as
Enstar II-2 or the Partnership), you are being asked to consider and vote upon a
Liquidation Plan for Enstar II-2 which consists of (a) the sale to Multimedia
Acquisition Corp. of Enstar II-2's cable television systems and (b) the
subsequent dissolution, termination and liquidation of Enstar II-2.
The aggregate purchase price payable to Enstar II-2 is approximately
$15,770,000, in cash. Estimated liquidating distributions to the Unitholders
would total approximately $690 per Unit, after estimated closing adjustments and
liquidation expenses, and subject to applicable withholding taxes. The
Liquidation Plan is more fully described in the attached Consent Solicitation
Statement.
Enstar Communications Corporation, the general partner of Enstar II-2, is
proposing the Liquidation Plan, principally because it believes that capital
intensive technological developments, the emergence of large, well-financed
single-source providers of Internet, telephony and video services, and the
consolidation of the cable television industry are creating an environment in
which small cable television systems such as Enstar II-2 will find it difficult
or impossible to compete. In light of this and the liquidity that the
Liquidation Plan will provide, Enstar Communications has determined that
approving the Liquidation Plan is in the best interest of Enstar II-2 and the
limited partners.
Multimedia is not affiliated with Enstar Communications, Enstar II-2 or any
affiliate of either of them.
AS A CONDITION TO THE SALE AND SUBSEQUENT LIQUIDATION OF ENSTAR II-2, THE
HOLDERS OF AT LEAST A MAJORITY OF THE UNITS MUST APPROVE THE LIQUIDATION PLAN.
YOUR VOTE IS VERY IMPORTANT. ENSTAR COMMUNICATIONS RECOMMENDS THAT YOU COMPLETE
AND RETURN THE CONSENT CARD WITH A VOTE TO "APPROVE" THE LIQUIDATION PLAN.
PLEASE RETURN YOUR CONSENT CARD AS SOON AS POSSIBLE. IF YOU FAIL TO SEND IN YOUR
CONSENT CARD, IT WILL HAVE THE SAME EFFECT AS A VOTE TO "DISAPPROVE" THE
LIQUIDATION PLAN.
You are urged to carefully read the attached Consent Solicitation Statement
in its entirety for a complete description of the Liquidation Plan. If you have
any questions regarding the Liquidation Plan or need assistance in completing
and returning your consent card, please feel free to contact Enstar II-2's
Soliciting Agent, Georgeson Shareholder Communications Inc. at (800) 223-2064.
Very truly yours,
Enstar Communications Corporation
General Partner
<PAGE> 3
PRELIMINARY COPY
ENSTAR INCOME PROGRAM II-2, L.P.
C/O ENSTAR COMMUNICATIONS CORPORATION
12444 POWERSCOURT DRIVE, SUITE 100
ST. LOUIS, MISSOURI 63131
NOTICE OF CONSENT SOLICITATION
December , 2000
To the Limited Partners of Enstar Income Program II-2, L.P.:
NOTICE IS HEREBY GIVEN to the holders of the limited partnership Units of
Enstar Income Program II-2, L.P., a Georgia limited partnership (also referred
to as Enstar II-2 or the Partnership), that Enstar Communications Corporation, a
Georgia corporation and the general partner of Enstar II-2 (also referred to as
Enstar Communications, the General Partner, we or us), is soliciting written
consents on behalf of Enstar II-2 to approve a Liquidation Plan pursuant to
which substantially all of Enstar II-2's cable television system assets will be
sold to Multimedia Acquisition Corp.
The total purchase price payable to Enstar II-2 is approximately
$15,770,000, in cash, subject to closing adjustments.
The Liquidation Plan consists of:
- the sale of all of Enstar II-2's cable television systems for
approximately $15,770,000, in cash; and
- the subsequent dissolution, termination and liquidation of Enstar II-2
through one or more liquidating distributions to its general and limited
partners in accordance with the partnership agreement.
The Liquidation Plan is more fully described in the attached Consent
Solicitation Statement and is part of the proposed sale to Multimedia of the
cable television systems of nine affiliated general and limited partnerships.
This group of nine partnerships (which includes Enstar II-2) is also referred to
as the Selling Partnerships. The Liquidation Plan is a single proposal that must
be approved by the holders of a majority of the Enstar II-2 Units. The
Liquidation Plan is subject to (i) the other Selling Partnerships obtaining the
necessary approvals from their limited partners to sell their respective cable
assets and liquidate their respective partnerships; and (ii) the grantors of the
franchises, covering 90% of the aggregate subscribers of the Selling
Partnerships, consenting to transfer those franchises to Multimedia. Enstar
Communications is seeking to obtain approval of the Liquidation Plan from the
Unitholders through the solicitation of their written consents. No meeting of
the Unitholders will be held. A vote to approve the Liquidation Plan will
constitute approval of each of its parts and the affirmative vote of the holders
of a majority of the Units will bind all of the Unitholders.
The close of business on October 31, 2000 has been fixed as the Record Date
for determining the Unitholders entitled to receive notice of the solicitation
of consents and to consent to the Liquidation Plan. Consents of the Unitholders
to the Liquidation Plan will be solicited during the period, also referred to as
the Solicitation Period, which begins on [DATE OF SOLICITATION] and will end at
5:00 p.m., New York City time, on the earlier of [30 DAYS FROM DATE OF
SOLICITATION], 2000 or the day that holders of at least a majority of the Units
consent (unless extended, in the sole discretion of Enstar Communications acting
on behalf of Enstar II-2). The enclosed consent card permits you to approve,
disapprove or abstain with respect to the Liquidation Plan. Please indicate your
approval, disapproval or abstention by marking and signing the enclosed consent
card and returning it in the enclosed self-addressed envelope to Georgeson
Shareholder Communications Inc., the Soliciting Agent, at Wall Street Station,
P.O. Box 1101, New York, New York 10269-0666. If you sign and send in the
enclosed consent card and do not indicate how you want to vote, your consent
card will be treated as voting to APPROVE the Liquidation Plan.
<PAGE> 4
You may change your vote at any time before 5:00 p.m., New York City time,
on [30 DAYS FROM DATE OF SOLICITATION], 2000, or the day that holders of at
least a majority of the Units consent, whichever comes first (unless extended,
in the sole discretion of Enstar Communications acting on behalf of Enstar
II-2). You can do this by sending a written notice dated later than your consent
card stating that you would like to revoke or change your vote, or by completing
and submitting a new consent card dated later than your original consent card.
If you choose either of these two methods, you must submit your notice of
revocation or new consent card to the Soliciting Agent, Georgeson Shareholder
Communications Inc. If you instructed a broker to vote your Units, you must
follow your broker's directions for changing those instructions. TO BE
EFFECTIVE, YOUR NOTICE OF REVOCATION OR NEW CONSENT CARD MUST BE RECEIVED BY
GEORGESON SHAREHOLDER COMMUNICATIONS BEFORE THE END OF THE SOLICITATION PERIOD.
YOUR APPROVAL IS IMPORTANT. PLEASE READ THE CONSENT SOLICITATION STATEMENT
AND THE EXHIBITS THERETO CAREFULLY AND THEN COMPLETE, SIGN AND DATE THE ENCLOSED
CONSENT CARD AND RETURN IT IN THE SELF-ADDRESSED PREPAID ENVELOPE OR BY SENDING
A FACSIMILE OF THE FRONT AND BACK OF THE CONSENT CARD TO GEORGESON SHAREHOLDER
COMMUNICATIONS INC. AT (212) 440-9009. YOUR PROMPT RESPONSE IS APPRECIATED.
ENSTAR COMMUNICATIONS CORPORATION
General Partner
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
2
<PAGE> 5
TABLE OF CONTENTS
ENSTAR INCOME PROGRAM II-2-1, L.P.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LIQUIDATION PLAN SUMMARY.................................... 3
QUESTIONS AND ANSWERS ABOUT THE LIQUIDATION PLAN............ 5
WHO CAN HELP ANSWER YOUR QUESTIONS.......................... 7
SPECIAL FACTORS............................................. 8
Recommendation of the General Partner..................... 10
Related Party Transactions................................ 11
The Purchase Agreement.................................... 12
Closing of the Sale....................................... 15
Description of Assets..................................... 15
Use of Proceeds and Cash Distributions.................... 15
Disadvantages of the Liquidation Plan..................... 16
Consequences of Failure to Approve Liquidation Plan....... 16
Liquidation............................................... 16
Federal Income Tax Consequences of the Liquidation Plan... 17
No Appraisal Rights....................................... 18
MARKET PRICES OF PARTNERSHIP INTERESTS NOT AVAILABLE........ 19
DISTRIBUTIONS TO UNITHOLDERS................................ 19
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF............. 19
IDENTITY AND BACKGROUND OF CERTAIN PERSONS.................. 19
Charter Communications Holding Company, LLC............... 19
Enstar Communications Corporation......................... 20
Multimedia Acquisition Corp............................... 22
VOTING PROCEDURES........................................... 22
AVAILABLE INFORMATION....................................... 23
</TABLE>
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit
A: Asset Purchase Agreement, dated as of August 8, 2000, by and
among Enstar II-2, the other Selling Partnerships and
Multimedia Acquisition Corp. ............................... A-1
Exhibit
B: Amendment dated September 29, 2000, of the Asset Purchase
Agreement, dated as of August 8, 2000, by and among Enstar
II-2, the other Selling Partnerships and Multimedia
Acquisition Corp. .......................................... B-1
</TABLE>
i
<PAGE> 6
ENSTAR INCOME PROGRAM II-2, L.P.
C/O ENSTAR COMMUNICATIONS CORPORATION
12444 POWERSCOURT DRIVE, SUITE 100
ST. LOUIS, MISSOURI 63131
December , 2000
CONSENT SOLICITATION STATEMENT
Enstar Communications Corporation, a Georgia corporation (also referred to
as Enstar Communications, the General Partner, we or us), is the general partner
of Enstar Income Program II-2, L.P., a Georgia limited partnership (also
referred to as Enstar II-2 or the Partnership), and is furnishing this Consent
Solicitation Statement to the holders of the limited partnership units of Enstar
II-2 (also referred to as Units, and the holders thereof being also referred to
as Unitholders) for the purpose of soliciting the Unitholders' consent to the
Liquidation Plan.
Pursuant to the Liquidation Plan, substantially all of Enstar II-2's cable
television system assets will be sold to Multimedia Acquisition Corp., a
Pennsylvania corporation, for a total cash purchase price of approximately
$15,770,000, subject to closing adjustments.
The Liquidation Plan consists of:
- the sale to Multimedia of Enstar II-2's cable television systems for
approximately $15,770,000, in cash; and
- after repaying or otherwise satisfying Enstar II-2's debts and
obligations, and funding required reserves, the dissolution, termination
and liquidation of Enstar II-2 through one or more liquidating
distributions to the Partnership's general and limited partners in
accordance with Enstar II-2's partnership agreement.
We presently estimate that liquidating distributions to Enstar II-2's
Unitholders from the Multimedia sale would total approximately $690 per Unit,
after estimated closing adjustments and liquidation expenses, and subject to
applicable withholding taxes.
These transactions are part of the proposed sale to Multimedia of the cable
television systems of nine affiliated Enstar general and limited partnerships.
This group of affiliated partnerships (which includes Enstar II-2) is also
referred to as the Selling Partnerships. The Liquidation Plan is a single
proposal which must be approved by the holders of a majority of the Units. The
Liquidation Plan is subject to (i) the other Selling Partnerships obtaining the
necessary approvals from their limited partners to sell their respective cable
assets and liquidate their respective partnerships; and (ii) the consent of the
grantors of the franchises, covering 90% of the aggregate subscribers of all the
Selling Partnerships, to the transfer of those franchises to Multimedia.
The close of business on October 31, 2000 has been fixed as the Record Date
for determining the Unitholders entitled to receive notice of the solicitation
of consents and to consent to the Liquidation Plan. On September 30, 2000, there
were 29,880 outstanding Units of Enstar II-2 entitled to vote on the Liquidation
Plan, which were held by 661 Unitholders. Unitholders will be notified as soon
as practicable as to the results of this solicitation.
The Soliciting Agent, Georgeson Shareholder Communications Inc., has been
retained to assist Enstar Communications in soliciting the consents for a base
fee of [$7,500], plus reimbursement of expenses which we estimate will be
approximately [$12,000]. In addition, directors, officers and certain employees
of Charter Communications Holding Company, LLC, a Delaware limited liability
company and the owner of all of the capital stock of Enstar Communications, may
solicit consents in person or by telephone, facsimile or other means of
communication. Neither such officers, directors and employees, nor Charter
Communications Holding Company, will receive any compensation for such services.
<PAGE> 7
If the holders of a majority of the Units on the Record Date vote to
approve the Liquidation Plan, that approval will bind all the Unitholders.
Neither Enstar II-2's partnership agreement nor the Georgia Revised Uniform
Limited Partnership Act, under which Enstar II-2 is governed, provides rights of
appraisal or other similar rights to Unitholders who dissent from the vote of
the majority in approving or disapproving the Liquidation Plan. For more
information, please see Special Factors -- No Appraisal Rights, on page .
The General Partner believes that the Liquidation Plan is in the best
interests of Enstar II-2 and its limited partners. We recommend that you vote to
"APPROVE" the Liquidation Plan. For more information, please see Special
Factors -- Recommendation of the General Partner, on page .
Please read this Consent Solicitation Statement and its exhibits carefully.
You can find additional information about Enstar II-2 in its Annual Report on
Form 10-K for the year ended December 31, 1999, its Quarterly Reports on Form
10-Q for the periods ended March 31, 2000, June 30, 2000, and September 30,
2000, and its other reports filed with the Securities and Exchange Commission.
You can obtain these reports from the General Partner at 12444 Powerscourt
Drive, Suite 100, St. Louis, Missouri 63131, Attention: Ms. Carol Wolf, Manager
of Partnership Relations; or call (314) 543-2389.
This Consent Solicitation Statement and the accompanying consent card are
first being mailed to the limited partners on or about December , 2000.
THE DATE OF THIS CONSENT STATEMENT IS DECEMBER , 2000.
2
<PAGE> 8
LIQUIDATION PLAN SUMMARY
The following summary highlights very important information contained
elsewhere in this Consent Solicitation Statement, but does not contain all of
the information in this Consent Statement that is important to your voting
decision. You should carefully read this entire document, including the
exhibits, before you decide how to vote.
- THE SALE: Enstar II-2 will sell all of its cable television systems to
Multimedia, along with the sale to Multimedia by eight other affiliated
partnerships of their respective cable systems. For more information,
please see Special Factors -- The Purchase Agreement, on page
.
- THE PURCHASE PRICE: Multimedia will pay an aggregate purchase price of
approximately $15,770,000 in cash for Enstar II-2's cable system assets.
This is Enstar II-2's allocable portion of the total purchase price paid
by Multimedia ($95,574,600). For more information, please see Special
Factors -- The Purchase Agreement, on page .
- PURCHASE PRICE ADJUSTMENTS: The purchase price to be paid by Multimedia
to each Selling Partnership is subject to closing adjustments to reflect
or take into account various factors including, among others, each
Selling Partnership's accounts receivable and any shortfall in numbers of
subscribers below a prescribed target. For more information, please see
Special Factors -- The Purchase Agreement, on page .
- ESCROW INDEMNIFICATION HOLDBACK: Each Selling Partnership has agreed to
indemnify Multimedia for certain liabilities set forth in the purchase
agreement. The Selling Partnerships' aggregate indemnification liability
for breaches of representations and warranties is $4,250,000. The
indemnification amount will be allocated based on each Selling
Partnership's allocated portion of the aggregate purchase price. Enstar
II-2's indemnification allocation is $695,297. At closing, Multimedia
will withhold $4,250,000 from the purchase price and deposit that amount
in escrow for a period of six months, after which the unexpended balance
will be distributed to the Selling Partnerships. For more information,
please see Special Factors -- The Purchase Agreement, on page .
- LIQUIDATION OF THE PARTNERSHIP: After paying or otherwise satisfying its
debts and obligations, and funding required reserves, Enstar II-2 will
terminate and dissolve and the General Partner will make liquidating
distributions to itself and the limited partners of the Partnership's
remaining assets, in accordance with Enstar II-2's partnership agreement.
We currently estimate that pre-tax liquidating distributions to the
Enstar II-2 Unitholders from the Multimedia sale will total approximately
$690 per Unit, after estimated closing adjustments and liquidation
expenses.
We presently expect that the sale to Multimedia would close in the first
quarter of 2001 and anticipate making the initial liquidating
distribution approximately 60 days after the closing. We also expect that
after required closing adjustments are completed (which we expect to
occur approximately 6 months after the closing), final liquidating
distributions would be made of any remaining funds. For more information,
please see Special Factors -- Use of Proceeds and Cash Distributions, on
page , and Special Factors -- Liquidation, on page .
- CLOSING CONDITIONS: The closing of the Multimedia purchase agreement is
subject to several conditions. These include approval by the Unitholders,
as well as the limited partners of the other Selling Partnerships, the
consent by their respective grantors to the transfer of the franchises
covering 90% of the aggregate subscribers of all the Selling
Partnerships, federal regulatory approvals and other closing conditions
that are customary in the industry. For more information, please see
Special Factors -- Closing of the Sale, on page .
- REASONS FOR THE SALE: We believe it is in the best interests of Enstar
II-2 and its limited partners for the Liquidation Plan to be approved.
This is based on:
(a) such factors as (i) the relative obsolescence of Enstar II-2's cable
television systems; (ii) the need to upgrade those systems in order to
remain competitive in the short term; and (iii) the
3
<PAGE> 9
uncertainty of whether those upgrades, if made, would result in a
significant increase in Enstar II-2's revenues and/or profits; and
(b) our belief that the combination of (i) technological advances such as
fiber optics, digital compression technology and satellite-based
television transmission; (ii) regulatory changes that allow telephone
and electric utility companies to provide a broad range of video,
telephony, interactive and Internet services; and (iii) the steady
consolidation of the cable television industry will pose competitive
challenges that Enstar II-2 is not likely to be able to meet or
overcome. In our view, Enstar II-2 could compete in this new
environment only if it were to make very substantial investments in a
broadband technological infrastructure, with no assurance of
maintaining its present market penetration, let alone competitive
success.
Based on the foregoing, we have concluded that approval of the Liquidation
Plan is in the best interests of Enstar II-2 and the limited partners. For
more information, please see Special Factors -- Background and Reasons for
the Proposed Sale, on page .
- REQUIRED VOTE: The Multimedia sale and the liquidation of Enstar II-2
must be approved by the holders of at least a majority of the Units. For
more information, please see Voting Procedures, on page .
- VOTING PROCEDURES: Please see Voting Procedures on page for
instructions on how and when to return your consent card, voting
deadlines, and changing your vote.
4
<PAGE> 10
QUESTIONS AND ANSWERS ABOUT THE LIQUIDATION PLAN
Q: WHY IS ENSTAR II-2 PROPOSING TO SELL ITS CABLE TELEVISION SYSTEMS?
A: We believe that in light of (i) what we estimate to be approximately $4.0
million in presently required, short-term cable system upgrades; (ii) the
uncertainty of whether those capital expenditures would significantly enhance
Enstar II-2's revenues and/or profitability; (iii) what we believe will be
significant competition from large, well-financed and technologically
advanced providers of single-source Internet, telephone and television
services; and (iv) the inherent risks of making the very substantial
long-term investments in a new, broadband infrastructure we believe will be
necessary to even minimally meet those emerging competitive challenges, now
is the appropriate time to dispose of all of Enstar II-2's cable television
systems. For more information, please see Special Factors -- Background and
Reasons for the Proposed Sale, on page .
Q: WHAT WILL I RECEIVE IN THE LIQUIDATION PLAN?
A: If the Liquidation Plan is completed, you will receive from the sale to
Multimedia of the Partnership's cable systems one or more liquidating
distributions presently estimated to total approximately $690 per Unit, after
estimated closing adjustments and liquidation expenses, and subject to
applicable withholding taxes. The Units were initially issued at a price of
$250 per Unit and, since such initial issuance, Enstar II-2 has made
aggregate cash distributions to the Unitholders of $80 per Unit. For more
information, please see Special Factors -- Use of Proceeds and Cash
Distributions, on page .
Q: WHY IS ENSTAR II-2 DISSOLVING?
A: Multimedia will be purchasing all of Enstar II-2's cable television systems.
The proceeds of this sale that are received by Enstar II-2 will be used to
repay the Partnership's debts and obligations and fund required reserves, and
the balance will be distributed to the general and limited partners.
Consequently, after such uses of the proceeds of the sale, Enstar II-2 will
not have any assets, and will no longer be able to fulfill its partnership
purpose, which is to own and operate cable television systems. Therefore,
Enstar II-2 will dissolve after completing the sale, paying its debts and
distributing the balance of the proceeds of the sale to its partners. For
more information, please see Special Factors -- Liquidation, on page .
Q: WHAT BENEFITS WILL ENSTAR COMMUNICATIONS, THE GENERAL PARTNER, RECEIVE IF THE
LIQUIDATION PLAN IS APPROVED?
A: Pursuant to the terms of the partnership agreement, Enstar Communications
will receive liquidating distributions estimated to be approximately
$525,300. For more information, please see Use of Proceeds and Cash
Distributions, on page .
Q: HOW DID ENSTAR COMMUNICATIONS DETERMINE THAT THE SALE PRICE IS FAIR?
A: Enstar Communications engaged Daniels & Associates, L.P., a business broker
with expertise in the cable and telecommunications industries, to market
Enstar II-2's cable television systems and the systems of affiliated general
and limited partnerships to third parties. Daniels contacted 48 prospective
purchasers and sent written evaluation materials to 19 of them over a period
of nine months. Bids were received from five parties, and after evaluating
the offers and conducting arms-length negotiations, we determined that among
the bidders Multimedia offered the most favorable price and other terms for
the systems. By selling our cable systems to Multimedia as part of a larger
sale of multiple cable systems, we believe we were able to obtain a better
price than if the systems had been sold separately, thereby yielding greater
net proceeds available for distribution. For more information, please see
Special Factors -- Background and Reasons for the Proposed Sale, on page ,
Special Factors -- Recommendation of the General Partner, on page , and
Special Factors -- Related Party Transactions, on page .
Q: WHAT ARE THE DISADVANTAGES OF SELLING THE ASSETS AND LIQUIDATING ENSTAR II-2?
A: The primary disadvantage is that Enstar II-2 will not benefit from possible
improvements in economic and market conditions, if any, which might produce
increased cash flow and possibly increase the sale price of
5
<PAGE> 11
its cable television systems in the future. For more information, please see
Special Factors -- Disadvantages of the Liquidation Plan, on page .
Q: WHAT ARE THE CONSEQUENCES TO THE LIMITED PARTNERS IF THE LIQUIDATION PLAN IS
NOT CONSUMMATED?
A: If the Multimedia sale is not completed, Enstar II-2 will continue to operate
its cable television systems for an indefinite period of time, the duration
of which we are unable to predict. Further, if the Liquidation Plan is not
approved, we believe the Partnership will face significant competition from a
variety of larger and better-financed providers of technologically advanced,
single-source television, telephone and Internet services. In our view,
unless the Partnership were to make large, long-term investments in new,
broadband technology, it will not be able to offer the quality and quantity
of services that will be needed for Enstar II-2 to compete in such a new
environment. Last, if the Multimedia sale is not approved, we might seek
buyers for the Enstar II-2 cable television systems from time to time when,
in our judgment, market conditions are favorable. Any such sale might be on
terms less favorable than the terms of the proposed Multimedia sale,
especially if such systems are sold individually (and not as part of a
larger, "package" transaction). For more information, please see Special
Factors -- Consequences of Failure to Approve Liquidation Plan, on page .
Q: WHAT WILL MY TOTAL DISTRIBUTIONS BE IF THE LIQUIDATION PLAN IS APPROVED? IF
IT IS NOT APPROVED?
A: From its inception until the date hereof, Enstar II-2 has paid a total of
$2,379,900 (or $80 per Unit) in distributions to its Unitholders.
Distributions have not been made to the Unitholders since December 1989, and
none are anticipated in the future.
If the Liquidation Plan is consummated, you will receive one or more
liquidating distributions aggregating approximately $690 per Unit, after
estimated closing adjustments and liquidation expenses, and subject to
applicable withholding taxes. Thereafter, Partnership distributions will
terminate, and you will have received approximately an aggregate of $770 per
Unit in total Partnership distributions since inception.
If the Liquidation Plan is not consummated, the Partnership will determine
its ability to pay distributions on a quarter-by-quarter basis. There is no
assurance that future distributions will be made, or if made, when. For more
information, please see Special Factors -- Consequences of Failure to Approve
Liquidation Plan, on page .
Q: WHEN DO YOU EXPECT THE LIQUIDATION PLAN TO BE COMPLETED?
A: We are working towards completing the Liquidation Plan as quickly as
possible. In addition to the approval of Enstar II-2's Unitholders, and the
limited partner approvals required in the case of the other Selling
Partnerships, we must also obtain certain regulatory and third-party
approvals. Although we cannot predict exactly when such approvals will be
received, we hope to complete the Liquidation Plan during the first quarter
of 2001. For more information, please see Special Factors -- Closing of the
Sale, on page .
Q: WILL I OWE ANY FEDERAL INCOME TAX AS A RESULT OF THE LIQUIDATION PLAN?
A: In general, you will recognize a gain or loss for federal income tax purposes
as a result of the Liquidation Plan. TAX MATTERS ARE VERY COMPLICATED AND THE
TAX CONSEQUENCES TO YOU OF THE LIQUIDATION PLAN MAY DEPEND ON THE FACTS OF
YOUR SITUATION. YOU SHOULD CONSULT YOUR TAX ADVISOR TO UNDERSTAND FULLY THE
TAX CONSEQUENCES TO YOU OF THE LIQUIDATION PLAN. For more information, please
see Special Factors -- Federal Income Tax Consequences of the Liquidation
Plan, on page .
Q: WHAT DO I DO TO VOTE MY UNITS?
A: In order to vote your Units either to approve, disapprove or abstain from the
Liquidation Plan, you must mark the appropriate box on the enclosed consent
card, sign and date the consent card and return it in the enclosed
self-addressed envelope to the Soliciting Agent, Georgeson Shareholder
Communications Inc., Wall Street Station, P.O. Box 1101, New York, New York
10269-0666. If you sign and send the consent card, but do not indicate your
vote, your consent card will be treated as voting to APPROVE the Liquidation
Plan. If you vote to ABSTAIN, or fail to send in your current card, the
effect will be the same as if you voted to DISAPPROVE the Liquidation Plan.
Your consent card must be received by the
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<PAGE> 12
Soliciting Agent before 5:00 p.m., New York City time, on [30 DAYS FROM DATE
OF SOLICITATION] 2000, or the day that holders of a majority of the Units
have consented to the Liquidation Plan, whichever comes first (unless
extended in the sole discretion of Enstar Communications acting on behalf of
Enstar II-2).
Q: MAY I CHANGE MY VOTE AFTER I MAIL MY UNITHOLDER CONSENT CARD?
A: Yes. You may change your vote at any time before 5:00 p.m., New York City
time, on [30 DAYS FROM DATE OF SOLICITATION], 2000, or the day that holders
of at least a majority of the Units consent, whichever comes first (unless
extended, in the sole discretion of Enstar Communications acting on behalf of
Enstar II-2). You can do this in one of two ways. First, you can send a
written notice dated later than your consent card stating that you would like
to revoke or change your vote. Second, you can complete and submit a new
consent card dated later than your original consent card. If you choose
either of these two methods, you must submit your notice of revocation or new
consent card to the Soliciting Agent, Georgeson Shareholder Communications
Inc., Wall Street Station, P.O. Box 1101, New York, New York 10269-0666. If
you instructed a broker to vote your Units, you must follow your broker's
directions for changing those instructions. TO BE EFFECTIVE, YOUR NOTICE OF
REVOCATION OR NEW CONSENT CARD MUST BE RECEIVED BY GEORGESON SHAREHOLDER
COMMUNICATIONS BEFORE THE END OF THE SOLICITATION PERIOD.
Q: DO UNITHOLDERS HAVE APPRAISAL RIGHTS?
A: Under applicable state law, Enstar II-2's Unitholders are not entitled
to dissenters' appraisal rights.
WHO CAN HELP ANSWER YOUR QUESTIONS
If you have more questions about the Liquidation Plan you should contact:
Enstar Communications Corporation
12444 Powerscourt Drive
St. Louis, Missouri 63131
Attention: Ms. Carol Wolf
Telephone: (314) 543-2389
If you would like additional copies of this Consent Solicitation Statement,
or if you have questions about how to complete and return your consent card, you
should contact:
Georgeson Shareholder Communications Inc.
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
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<PAGE> 13
SPECIAL FACTORS
GENERAL
Enstar II-2 was formed in July 1984 to acquire, construct, improve, develop
and operate cable television systems in small and medium sized communities.
Enstar II-2's general partner is Enstar Communications Corporation, which is
wholly owned by Charter Communications Holding Company, LLC (also referred to as
Charter). Charter is controlled by Charter Communications, Inc., which is the
nation's fourth largest cable operator, serving 6.3 million customers. The
General Partner, Charter and affiliated companies are responsible for the
day-to-day management of the Partnership and its operations.
In January 1986, Enstar II-2 completed an offering of limited partnership
Units. A total of 30,000 Units were sold at a price of $250 per Unit, resulting
in gross proceeds to the Partnership of $7.5 million.
Enstar II-2 offers cable service in rural areas of Illinois and Missouri.
Its Hillsboro, Illinois system serves the communities of Hillsboro, Jerseyville,
Nokomis and Pana, Illinois, and its Malden, Missouri system serves the
communities of Malden and Campbell, Missouri. As of September 30, 2000, Enstar
II-2 served approximately 8,490 basic subscribers, with 6,180 located in
Illinois and 2,310 located in Missouri.
BACKGROUND AND REASONS FOR THE PROPOSED SALE
Expected Competition
In our view, the combination of: (i) technological developments such as
fiber optics, digital compression and satellite-based transmissions; (ii)
regulatory changes allowing telephone carriers and utility companies to provide
a broad range of video, telephony and interactive electronic services; and (iii)
the steady consolidation of the cable television industry, will pose an
increasingly serious competitive challenge Enstar II-2.
We believe that this growing competition is coming from non-traditional
providers of multi-channel video programming services, such as telephone
companies, and digital broadcast satellite (DBS) operators, and from providers
of single-source "bundled" electronic services, such as combinations of
Internet, long distance telephone and video program services. Such companies
will be particularly strong competitors, because their use of expensive,
broadband technologies enables them to transmit data in the volume and speed
necessary to deliver the picture clarity and variety of content which we believe
will be increasingly demanded by consumers. Further, as the use of the Internet
becomes evermore a common household feature, we believe that consumers will
demand "one-stop shopping" for their Internet access, network computing,
telecommunication and video services.
The technological infrastructure necessary to provide such broadband
services requires large expenditures of time and money. Because Internet service
providers, telephone companies and electric utilities already have a significant
investment in this infrastructure, we do not believe that small cable television
systems, such as Enstar II-2, will be able to prosper in the face of the
competitive challenges posed by these larger, well financed non-traditional
providers of video, telephony and Internet services.
In our view, this new competition is beginning to emerge. Video compression
technology allows DBS providers to offer more than 100 digital channels, thereby
surpassing Enstar II-2's present cable system. The 1996 Telecommunications Act
modified cross-ownership restrictions thereby making it possible for local
telephone companies to enter the cable television market. Several telephone
companies have already obtained or are seeking cable television franchises from
local governmental authorities and are constructing cable television systems.
Moreover, mergers in the industry, such as the recent merger of
Tele-Communications, Inc. and AT&T, may cause customers to expect a variety of
services, including Internet service, from a single provider, and may also
encourage further consolidation in the cable industry. This may increasingly
marginalize small cable television providers, such as Enstar II-2, in the
marketplace.
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<PAGE> 14
System Franchise and Upgrade Issues
The Partnership intends to upgrade its cable system in Campbell, Missouri
at an estimated cost of approximately $1.6 million. The Partnership also intends
to upgrade its cable system in Malden, Missouri at an estimated coast of
approximately $1.8 million, however, this upgrade is dependent upon the
Partnership obtaining a renewal of its franchise agreement. Other capital
expenditures budgeted for 2000 total approximately $600,000 for the improvement
and upgrade of other assets. As a result of these planned capital expenditures,
the Partnership intends, to the extent possible, to maintain cash reserves. It
is not possible for us to predict whether such expenditures and upgrades would
result in significantly increased revenues or profits for Enstar II-2.
Liquidity and Investment Return
There is no established trading market for the Units, and because of this
the liquidity of any Unitholder's investment in Enstar II-2 has been severely
limited. Approving the Multimedia sale will provide liquidity to the
Unitholders' investments that we believe is not otherwise attainable. If the
Liquidation Plan is approved, we expect that the liquidating distributions will
be approximately $690 per Unit, after estimated closing adjustments and
liquidation expenses, and subject to applicable withholding taxes.
Approval of the Liquidation Plan will allow the Unitholders to liquidate
their investments in Enstar II-2 at approximately $690 per Unit, on a pre-tax
basis after estimated closing adjustments and liquidation expenses, and will
avoid: (i) approximately $4.0 million of expenditures for presently planned,
non-broadband, upgrades; (ii) the uncertainty of whether those upgrades, if
made, would result in a significant increase in Enstar II-2's revenues and/or
profits; (iii) competition from much larger, better financed and more technology
advanced providers of video program and other services; (iv) the risk that even
if the Partnership makes a significant investment in broadband technologies, it
may still be unable to effectively compete with broadband, multiple service
providers; (v) the risk that such broadband technology could quickly become
obsolete, thus requiring even further capital investment in order for the
Partnership to have the opportunity to remain competitive; and (vi) the risk
that the Partnership has sufficient subscriber loyalty to retain (let alone
expand) its subscriber base in the face of the competition we expect to arise.
Sale Process
In December 1999, we entered into an agreement with Daniels & Associates,
L.P., a cable broker, to market the Partnership's cable television systems to
third parties. Over a period of nine months, the broker solicited offers to
purchase Enstar II-2's cable television systems along with those of the other
Selling Partnerships. The broker contacted 48 prospective purchasers and sent
written evaluation materials to 19 of them. Due diligence was conducted by four
parties, resulting in an offer from one party, which did not result in a
purchase agreement. Thereafter, Multimedia expressed an interest in the Selling
Partnerships' cable systems, and the parties executed the purchase agreement,
dated as of August 8, 2000.
In late July 2000, after negotiation of the purchase agreement had already
commenced, the General Partner learned that Daniels' New York City office had in
the past represented Gans Multimedia Partnership, the parent of Multimedia
Acquisition Corp., in certain equity or mergers and acquisitions financing
matters. At that time, the Selling Partnerships were being represented by
Daniels' Denver, Colorado office, and the Denver office had identified Gans as a
potential Enstar purchaser. When we learned of this potential conflict of
interest, we so advised all bidders for the Selling Partnerships, who were
allowed to withdraw or re-bid. Only Multimedia re-bid.
Given current market conditions for Enstar II-2's cable television systems;
the further upgrades that are required by franchise agreements and
competitive-driven considerations; the uncertainty of whether those upgrades, if
completed, would result in a significant increase, if any, of the Partnership's
revenues and/or profits; the liquidity afforded by the expected liquidating
distributions; longer-term competitive challenges to Enstar II-2 that we expect
to be posed by the growth of large, well-financed providers of sophisticated,
broadband electronic services such as single-source Internet, video programming
and telephone services; and the financial risks involved in making the
substantial capital investments we believe will be necessary to
9
<PAGE> 15
address those challenges, the General Partner concluded that accepting the
Multimedia offer is in the best interests of Enstar II-2 and its limited
partners. The consummation of the sale to Multimedia is subject to closing
conditions customary in the industry, including obtaining the requisite consents
from the limited partners of the Selling Partnerships, obtaining required
governmental regulatory consents, and the continued truth and accuracy of the
representations and warranties of each seller contained in the purchase
agreement. For more information, please see Special Factors -- The Purchase
Agreement, on page .
RECOMMENDATION OF THE GENERAL PARTNER
The General Partner believes that the advantages exceed any disadvantages
of consummating the sale at this time. Accordingly, the General Partner
recommends that the limited partners approve the Liquidation Plan.
In making this recommendation, we considered the following material
factors:
- If the Liquidation Plan is approved, Enstar II-2 will be able to
consummate the sale for an amount the General Partner believes represents
a fair value for Enstar II-2's assets and upon terms which the General
Partner believes will entail favorable transaction costs and permit an
efficient consummation of the sale.
- The purchase price was determined by arms-length negotiations.
- The purchase agreement contains closing conditions standard in the
industry. Multimedia's obligations under the purchase agreement are not
contingent upon the satisfactory completion of due diligence, nor are
they contingent upon Multimedia's obtaining adequate financing.
- The purchase agreement provides for the sale in one transaction of the
cable systems of several affiliated partnerships. We believe, based on
our business experience, that selling multiple systems in one transaction
generally yields greater net proceeds available for distribution than do
sales conducted on a system-by-system or asset-by-asset basis. We believe
that this is particularly true where the cable systems serve rural areas
with a small number of subscribers per headend (as is the case with the
cable systems of Enstar II-2 and the other Selling Partnerships). We also
believe that selling all of the cable systems at one time generally
results in lower aggregate sale costs than selling them individually, in
separate transactions. In addition, selling all of Enstar II-2's cable
systems at one time and completing the dissolution, termination, and
liquidation of Enstar II-2 promptly will minimize the ongoing
administrative and other expenses of continuing to operate Enstar II-2
during an extended sales period.
- The Partnership intends to upgrade its cable systems in Campbell and
Malden, Missouri in 2000 at an estimated cost of approximately $3.4
million. Other capital expenditures budgeted for 2000 total approximately
$600,000 for the improvement and upgrade of other assets. Selling the
cable systems in connection with the Liquidation Plan would eliminate the
need for Enstar II-2 to complete any of the above-mentioned upgrades.
- By selling its cable systems now, Enstar II-2 would eliminate the risks
inherent in the ownership of cable television systems, including, among
other things, the risk of the loss of valuable cable franchises that may
result if upgrades are not completed, the uncertainty of legislative and
regulatory changes, the rapid developments in the competitive environment
facing cable television operators, the financial and logistical
difficulties inherent in small cable television systems acquiring the
technological infrastructure needed to compete with "broadband" providers
of multiple television, Internet and telephony services, and reduced
subscriber rates (which in turn may be affected by general and local
economic conditions).
- Because there is no established trading market for the Units, the
Unitholders' liquidity has been and for the foreseeable future will be
limited to sporadic sales within an informal secondary market. The
Liquidation Plan would provide liquidity to the Unitholders.
- The Liquidation Plan requires the consent of the holders of at least a
majority of the Units.
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<PAGE> 16
The General Partner also considered the risk that by selling the cable
systems at this time, Enstar II-2 would not benefit from possible further
improvements in economic and market conditions which might produce increased
cash flow and possibly increase the sale prices of the cable systems. However,
we believe that this potential risk is outweighed by the potential benefits to
be realized from the Liquidation Plan.
After considering the factors discussed in this Section, we have determined
that the Liquidation Plan and the transactions contemplated thereby are fair to
the limited partners and would serve the best interests of Enstar II-2 and its
limited partners.
The information and factors discussed above were considered collectively by
the General Partner in connection with its review of the Liquidation Plan and
the transactions contemplated thereby. Although the General Partner did not find
it practicable to, and did not, quantify or otherwise assign relative weights to
the specific factors considered in reaching its determination, the General
Partner accorded added weight to the following factors: the fact that the
purchase price is in cash; the fact that the purchase agreement contains closing
conditions standard in the industry (including the fact that Multimedia's
obligations under the purchase agreement are not contingent upon the
satisfactory completion of due diligence or upon Multimedia obtaining adequate
financing); and the savings to its limited partners in administrative and sale
costs gained by selling all of the cable systems and liquidating pursuant to the
Liquidation Plan.
RELATED PARTY TRANSACTIONS
Enstar II-2 has a management agreement (referred to as the Management
Agreement) with Enstar Cable Corporation (also referred to as Enstar Cable), a
wholly owned subsidiary of the General Partner. Pursuant to the Management
Agreement, Enstar Cable manages Enstar II-2's systems and provides operational
support for the activities of Enstar II-2. For these services, Enstar Cable
receives a management fee equal to 5% of Enstar II-2's gross revenues (excluding
revenues from the sale of cable television systems or franchises) calculated and
paid monthly. Management fees for the fiscal year ended December 31, 1999 were
$196,400. In addition, Enstar II-2 reimburses Enstar Cable for certain operating
expenses incurred by Enstar Cable in the day-to-day operation of Enstar II-2's
cable systems. Enstar Cable charged Enstar II-2 reimbursed expenses of $330,300
for 1999. The Management Agreement also requires Enstar II-2 to indemnify Enstar
Cable (including its officers, employees, agents and shareholders) against loss
or expense, absent negligence or deliberate breach by Enstar Cable of the
Management Agreement. The Management Agreement is terminable by Enstar II-2 upon
60 days written notice to Enstar Cable.
Prior to November 12, 1999, the date on which Charter Communications
Holding Company, LLC acquired ownership of the General Partner through Charter's
acquisition of Falcon Communications, L.P. (the then owner of all of the General
Partner's outstanding capital stock), Enstar Cable had engaged Falcon to provide
certain management services for Enstar II-2, for which Falcon was paid a portion
of the management fees Enstar Cable received, and reimbursed Falcon for expenses
incurred on Enstar Cable's behalf. Subsequent to November 12, 1999, Charter, as
successor-by-merger to Falcon, has provided such services and received such
payments. In addition, Enstar II-2 receives certain system operating management
services from affiliates of Enstar Cable in lieu of directly employing personnel
to perform such services. Enstar II-2 reimburses those affiliates for its
allocable share of their operating costs. Enstar II-2 reimbursed affiliates
approximately $68,000 for system operating management services for 1999. The
General Partner also performs certain supervisory and administrative services
for Enstar II-2, for which it is compensated.
Enstar II-2 purchases basic and premium programming for its systems from
Charter. In return, Charter charges the Partnership for these costs at its cost,
which are generally based on a fixed fee per customer or a percentage of the
gross receipts for the particular service. Prior to Charter's acquisition of the
General Partner, Falcon charged the Partnership for these services based on an
estimate of what the General Partner could negotiate for such programming
services for the 14 limited partnerships managed by the General Partner as a
group (approximately 81,100 basic subscribers at December 31, 1999). Enstar II-2
paid $935,200 for programming services for the fiscal year ended December 31,
1999.
A cable system in one of the Partnership's franchise areas does not have
headend equipment to receive and retransmit its cable television signal. The
system relies on another partnership managed by the General
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<PAGE> 17
Partner, with systems located in neighboring communities, to provide its cable
television signal. The Partnership is not charged a fee for this service.
In late July 2000, after negotiation of the purchase agreement had already
commenced, the General Partner learned that Daniels' New York City office had in
the past represented Gans Multimedia Partnership, the parent of Multimedia
Acquisition Corp., in certain equity or mergers and acquisitions financing
matters. At that time, the Selling Partnerships were being represented by
Daniels' Denver, Colorado office, and the Denver office had identified Gans as a
potential Enstar purchaser. When we learned of this potential conflict of
interest, we so advised all bidders for the Selling Partnerships, who were
allowed to withdraw or re-bid. Only Multimedia re-bid.
THE PURCHASE AGREEMENT
Enstar II-2, together with Enstar Income/Growth Program Six-A, L.P., Enstar
Income Program II-1, L.P., Enstar Income Program IV-3, L.P., Enstar IV/PDB
Systems Venture, Enstar IX, Ltd., Enstar XI, Ltd., Enstar Cable of Cumberland
Valley and Enstar Cable of Macoupin County, as sellers, entered into a purchase
agreement with Multimedia (an affiliate of Gans Multimedia Partnership), as
purchaser, dated as of August 8, 2000. The following is a summary of the
material provisions of the purchase agreement. A copy of the purchase agreement
and an amendment to the purchase agreement are attached hereto as Exhibit A and
Exhibit B, respectively, and each is incorporated by reference into this Consent
Solicitation Statement. This summary is qualified in its entirety by reference
to the purchase agreement and the amendment, and we urge you to read them in
their entirety for a more complete description of their terms and conditions.
Purchase Price and Allocation
Multimedia will acquire substantially all of the assets of each of the
Selling Partnerships used in the operation of their respective cable television
systems for an aggregate purchase price of $95,574,600 (subject to closing
adjustments), to be paid in cash. With respect to Enstar II-2, the purchase
agreement provides for Multimedia to acquire Enstar II-2's cable systems served
by the Campbell and Malden, Missouri, and Pana, Illinois, headends. The assets
being sold to Multimedia constitute substantially all of the assets of Enstar
II-2. Of the aggregate cash purchase price being paid by Multimedia,
approximately $15,770,000 (subject to closing adjustments) will be allocated to
Enstar II-2.
The allocation of the purchase price among the Selling Partnerships is
based on the number of subscribers in each Selling Partnership's cable systems
and the price per subscriber for each of those systems as negotiated between
Multimedia and the General Partner. At the time the purchase agreement was
executed, Multimedia deposited in escrow $4,250,000 to secure its obligations
under the purchase agreement.
The purchase price payable to each Selling Partnership will be subject to
adjustments at closing to reflect or take account of, among other things, each
Selling Partnership's current accounts receivable; a pro rata allocation of such
seller's revenues and expenses as of the closing date; if there is an aggregate
shortfall of subscribers below prescribed limits or any shortfall in such
seller's subscribers below a prescribed target; certain liabilities assumed by
Multimedia with respect to employee benefits; and the estimated cost of
remediation of certain environmental and real estate title defects relating to
such seller's assets, if applicable, up to a prescribed maximum amount.
Representations and Warranties
The purchase agreement contains representations and warranties of Enstar
II-2 relating solely to itself and its respective cable systems that are
customary in the industry. In summary, Enstar II-2 represents and warrants to
Multimedia that:
- it was properly formed and is in good standing under laws of the state of
its organization;
- it has the full legal power and authority to own and operate its cable
systems as presently operated;
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<PAGE> 18
- subject to obtaining the requisite consents of its limited partners, it
has the full legal capacity and right to execute, deliver and perform the
purchase agreement and that the purchase agreement has been duly executed
and delivered by it and is binding on it;
- the consummation of the sale does not require any material action or
filing with any governmental authority except for compliance with the
applicable requirements of the local franchising authorities and the
Federal Communications Commission ("FCC"), and does not require any other
consents or actions of third parties other than obtaining the requisite
consents of its limited partners and other third parties disclosed in the
purchase agreement;
- the consummation of the sale does not violate its constituent documents
or any statutory or regulatory requirement or contractual obligation
applicable to it or its assets or systems;
- its most recent audited financial statements are in accordance with GAAP
and its books and records and fairly present its financial condition and
results of operations as of the dates thereof and for the periods stated
therein;
- no material adverse changes have occurred in its operations since
December 31, 1999;
- except as disclosed in the purchase agreement, each franchise, FCC
license and operating agreement applicable to it is valid and in full
force and effect;
- it has good title to, or valid leasehold interests in, all of the cable
television systems assets (including real property) being sold by it;
- there is no material litigation or pending or threatened claim relating
to it, except as disclosed in the purchase agreement;
- it has no knowledge that it is not in compliance with all legal
requirements applicable to it and its respective cable systems and it has
operated its systems in material compliance with applicable environmental
laws; and
- except for Daniels & Associates, L.P., it has not retained any broker or
finder in connection with the sale.
The purchase agreement also contains certain representations and warranties
identifying and describing the specific assets comprising each Selling
Partnerships' cable systems.
Conditions Precedent
Under the purchase agreement, Multimedia's obligation to acquire the cable
systems is subject to the following conditions precedent:
- no judgment, decree, order or other legal prohibition preventing or
making unlawful the sale shall be in effect;
- the necessary consents to transfer franchises shall have been obtained
such that franchises covering 90% of the Selling Partnerships' aggregate
subscribers can be legally transferred at closing;
- all other material authorizations, consents, permits and approvals
required for the consummation of the sale of the cable systems (as
designated in the purchase agreement) shall have been obtained and remain
in full force and effect;
- the necessary approvals of the limited partners of each of the Selling
Partnerships shall have been obtained;
- the Selling Partnerships' representations shall be true and correct as of
the closing date such that the aggregate effect of any inaccuracies will
not have a material adverse effect on the Selling Partnerships or their
respective assets or systems; and
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<PAGE> 19
- the Selling Partnerships' shall have materially complied with their
obligations under the purchase agreement, which include the obligation to
operate the cable systems in the ordinary course consistent with past
practices.
The Selling Partnerships' obligations to sell the cable systems are subject
to conditions precedent comparable to those of Multimedia.
Indemnification
Each Selling Partnership has agreed that following the closing it will
indemnify Multimedia for liabilities that arise out of:
- breaches of such Selling Partnership's respective covenants and other
obligations under the purchase agreement;
- such Selling Partnership's operation of its cable systems prior to
closing;
- subject to a six-month survival period, breaches of such Selling
Partnership's respective representations and warranties; and
- assets and liabilities that Multimedia does not acquire or assume.
The Selling Partnerships' aggregate indemnification liability for breaches
of representations and warranties is $4,250,000. This amount will be allocated
among the Selling Partnerships based on each Selling Partnership's allocated
portion of the purchase price. Enstar II-2's allocable portion of such
indemnification liability is a maximum of $695,297. At closing, Multimedia will
withhold the amount of $4,250,000 from the purchase price and deposit such
amount in escrow for a period of six months, to provide a fund for payment of
the Selling Partnerships' indemnification obligations. At the end of such
period, any funds remaining in escrow that are not subject to a pending claim
will be disbursed to the Selling Partnerships entitled to receive such funds on
a pro rata basis.
The purchase agreement contains comparable provisions under which
Multimedia agrees to indemnify the Selling Partnerships for liabilities arising
out of breaches of its obligations, representations and warranties under the
purchase agreement and its operation of the cable systems following the closing.
Termination and Breakup Fee
The Selling Partnerships may terminate the purchase agreement if, prior to
the closing date, their fiduciary duties require them to entertain a third
party's offer to acquire the cable systems, and the Selling Partnerships'
limited partners approve a sale based on such offer. The General Partner does
not expect to receive superior offers because of the efforts made by the broker
to solicit offers. However, if Enstar II-2 or any of the Selling Partnerships
receives a competing offer for its systems, it is required to afford Multimedia
an opportunity to improve its offer and to disclose the competing offer, as well
as any counter-offer subsequently submitted by Multimedia, to the limited
partners for their consideration. Multimedia may also terminate the purchase
agreement if a specified percentage of limited partners have disapproved the
sale on the date 120 days following execution of the purchase agreement. If the
purchase agreement is ultimately terminated solely because the Selling
Partnerships approve a sale based on a third party's offer, the Selling
Partnerships' liability to Multimedia would be a "breakup fee" in the aggregate
amount of $1,500,000. Enstar II-2 would be liable for a pro rata portion of the
breakup fee, based on its allocated portion of the purchase price, or $244,500.
In addition to the foregoing termination provisions, the Selling Partnerships
and Multimedia each may terminate the purchase agreement on certain customary
grounds.
As the purchaser, Multimedia expects to fulfill its obligations under the
purchase agreement with the proceeds of financing to be obtained concurrent with
the closing on the purchase agreement. The purchase agreement does not, however,
contain a financing contingency.
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<PAGE> 20
CLOSING OF THE SALE
It is anticipated that the sale to Multimedia will be consummated as soon
as practicable following receipt of (a) the requisite consents of the Selling
Partnerships' limited partners to the sale and (b) the requisite consents of
regulatory authorities to transfer the cable systems to Multimedia.
The closing of the purchase agreement will occur so long as franchises
covering 90% of the aggregate subscribers of all the Selling Partnerships can be
legally transferred, provided all other conditions to closing are satisfied or
waived. The purchase agreement provides that any franchises that cannot be
transferred at such time (and related assets) will be retained by the applicable
seller until the necessary consent or transfer is obtained, up to a maximum
period of one year. During that time Multimedia will manage the applicable
systems pursuant to a management agreement between Multimedia and the applicable
seller. At closing, Multimedia will withhold 20% of the amount of the purchase
price allocated to any such withheld system and will pay such amount to the
appropriate seller upon transfer of the withheld system. If the necessary
consent or approval is not obtained within one year following closing, the
franchise and related assets will nonetheless be transferred to Multimedia, but
Multimedia will not be required to pay the remaining 20% of the purchase price
applicable to such franchise and assets.
DESCRIPTION OF ASSETS
The table below sets forth operating statistics for Enstar II-2's cable
television systems being sold to Multimedia as of September 30, 2000.
<TABLE>
<CAPTION>
AVERAGE
MONTHLY
PREMIUM REVENUE
SYSTEM HOMES BASIC BASIC SERVICE PREMIUM PER
(HEADEND) PASSED(1) SUBSCRIBERS PENETRATION(2) UNITS(3) PENETRATION(4) SUBSCRIBER
--------- --------- ----------- -------------- -------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Hillsboro, IL........ 11,649 6,177 53.0% 1,699 27.5% $39.33
Malden, MO........... 4,149 2,314 55.8% 536 23.2% $34.04
------ ----- -----
Total................ 15,798 8,491 53.7% 2,235 26.3% $37.89
====== ===== =====
</TABLE>
---------------
(1) Homes passed refers to management's estimates of the approximate number of
dwelling units in a particular community that can be connected to the
distribution system without any further extension of principal transmission
lines. Such estimates are based upon a variety of sources, including billing
records, house counts, city directories and other local sources.
(2) Basic subscribers as a percentage of homes passed by cable.
(3) Premium service units include only single channel services offered for a
monthly fee per channel and do not include tiers of channels offered as a
package for a single monthly fee.
(4) Premium service units as a percentage of homes subscribing to cable service.
A customer may purchase more than one premium service, each of which is
counted as a separate premium service unit. This ratio may be greater than
100% if the average customer subscribes for more than one premium service.
(5) Average monthly revenue per basic subscriber has been computed based on
revenue for the nine months ended September 30, 2000.
USE OF PROCEEDS AND CASH DISTRIBUTIONS
The following table sets forth the anticipated application of the net
proceeds from the Multimedia sale. The amount available for distribution to the
Unitholders shown below assumes that all of the cable television systems covered
by the Multimedia purchase agreement are sold to Multimedia for the price, and
subject to the other terms and conditions, contained in the purchase agreement,
including reasonable closing adjustments.
As promptly as practicable following the sale and calculation of all
required purchase price adjustments, the General Partner will discharge all of
the liabilities of Enstar II-2 and distribute the Partnership's
15
<PAGE> 21
remaining assets to itself and the limited partners in accordance with Enstar
II-2's partnership agreement. The General Partner presently estimates that the
liquidating distributions to the Unitholders from the proceeds of the Multimedia
sale would total approximately $690 per Unit, after estimated closing
adjustments and liquidation expenses, and subject to applicable withholding
taxes. This estimate is based on the assumed expenses shown below, and also
assumes a closing during the first quarter of 2001. HOWEVER, THERE CAN BE NO
ASSURANCE AS TO THE ACTUAL AMOUNTS DISTRIBUTED, OR AS TO THE AMOUNTS SET FORTH
BELOW. ACTUAL AMOUNTS MAY VARY MATERIALLY FROM THESE ESTIMATES.
In accordance with Enstar II-2's partnership agreement, the distributions
will be distributed in proportion to, and to the extent of, the positive capital
account balances of the partners.
<TABLE>
<S> <C>
Purchase price.............................................. $15,530,400
Less: Reasonable closing adjustments(1)..................... (773,000)
Plus: Working capital adjustment............................ 6,993,455
Less: Expenses of Liquidation Plan(2)....................... (621,216)
-----------
Net distribution amount..................................... $21,129,639
Less: Distribution to General Partner....................... (525,352)
Distributions to limited partners........................... $20,604,287
===========
Estimated distributions to limited partners per Unit........ $ 690
===========
</TABLE>
---------------
(1) The purchase price is subject to adjustments pursuant to the purchase
agreement. These adjustments are only estimates however, the adjustment
actually made at closing may be more or less than this amount. These
adjustments include the Partnership's allocable portion of the
indemnification escrow under the purchase agreement.
DISADVANTAGES OF THE LIQUIDATION PLAN
The principal disadvantage which would result to the limited partners from
the approval of the Liquidation Plan is that Enstar II-2 would not benefit from
any future improvements in economic and market conditions for its cable
television systems, which improvements could produce increased cash flow and
possibly increase the sale price of all or any of the cable television systems
in the future.
CONSEQUENCES OF FAILURE TO APPROVE LIQUIDATION PLAN
If the Multimedia sale is not completed, Enstar II-2 will continue to
operate its cable television systems for an indefinite period of time, the
duration of which we are unable to predict. No assurance can be given that
Enstar II-2's limited partners will receive any distributions in the future.
Further, if the Liquidation Plan is not approved, we believe the Partnership
will face significant competition from a variety of larger and better-financed
providers of technologically advanced television, telephone and Internet
services. In our view, unless the Partnership were to make large investments in
new, broadband technology, it will not be able to offer the quality and quantity
of services that will be needed for Enstar II-2 to compete in such a new
environment. Last, if the Multimedia sale is not approved, we might seek buyers
for the cable systems from time to time when, in our judgment, market conditions
are favorable. Any such sale might be on terms less favorable than the terms of
the proposed Multimedia sale, especially if the cable systems are sold
individually instead of in a larger transaction. Failure by the limited partners
to approve the Liquidation Plan will not affect their rights under the
partnership agreement.
LIQUIDATION
As soon as practicable following the closing of the sale, the General
Partner on behalf of Enstar II-2 will cause Enstar II-2 to: (a) pay all costs
associated with the sale, including costs associated with the solicitation of
consents from the Unitholders; (b) estimate and reserve for all such costs
associated with the sale for which
16
<PAGE> 22
invoices have not yet been received; and (c) provide a further contingency
reserve for all other expenses and liabilities of Enstar II-2. The General
Partner will then cause the Enstar II-2 to distribute the balance of the cash
from the sale to the limited partners and the General Partner as provided in the
partnership agreement.
The remaining assets of Enstar II-2, and any remainder of the contingency
reserve, will be distributed to the Unitholders and the General Partner as soon
as practicable after the closing of the sale. Enstar II-2 will terminate and be
dissolved upon the disposition of all of its assets.
FEDERAL INCOME TAX CONSEQUENCES OF THE LIQUIDATION PLAN
General
The following discussion generally summarizes the federal income tax
consequences expected to arise from the consummation of the Liquidation Plan.
Further, it does not summarize state income tax consequences of the Liquidation
Plan, which can vary from state to state. This summary is not intended to be and
should not be considered an opinion respecting the federal, state, local or
foreign income tax consequences to a particular limited partner. DUE TO THE
COMPLEXITY OF THE TAX ISSUES INVOLVED, THE UNITHOLDERS ARE URGED TO CONSULT WITH
THEIR PERSONAL TAX ADVISORS REGARDING THEIR INDIVIDUAL CIRCUMSTANCES AND THE TAX
REPORTING CONSEQUENCES OF THE TRANSACTION.
This summary is based upon the Internal Revenue Code of 1986, as amended
(which is also referred to as the Code); existing final, temporary and proposed
Treasury regulations thereunder (which are also referred to as the Regulations);
published rulings and practices of the Internal Revenue Service (which is also
referred to as the IRS); and court decisions, each as currently in effect. There
can be no assurance that the IRS will agree with the conclusions herein or that
future legislation or administrative changes or court decisions will not
significantly modify the federal income tax law regarding the matters described
herein, potentially with retroactive effect. This interpretation is also subject
to subsequent issuance of Treasury regulations and procedures for federal income
tax reporting.
This summary does not discuss all the federal income tax aspects of the
Liquidation Plan that may be relevant and material to a particular Unitholder in
light of the Unitholder's personal circumstances, or to certain types of
Unitholders who are subject to special treatment. For example, insurance
companies, S corporations, partnerships, pension and profit sharing plans,
tax-exempt organizations, non-U.S. taxpayers and others may be subject to
special rules not discussed below. This summary also does not address other
federal, state, local or foreign tax consequences of consummation of the
Liquidation Plan.
Partnership Status
Under current law, a "partnership" is not a taxable entity and incurs no
federal income tax liability. Instead, each partner is required to take into
account in computing such partner's income tax liability such partner's
allocable share of the partnership's items of income, gain, loss, deduction and
credit. The distribution of cash attributable to partnership income is generally
not a separate taxable event. This tax treatment, however, depends entirely upon
Enstar II-2's classification as a "partnership" (rather than as an "association
taxable as a corporation") for federal income tax purposes. This summary assumes
that the Partnership has been and will continue to be properly classified as a
"partnership" for federal income tax purposes. No opinion of counsel or of the
Partnership's independent accountants or ruling from the IRS is currently being
sought with respect to this partnership status issue.
Federal Income Tax Consequences
Realization of Gain on Sale of Assets. Consummation of the Liquidation
Plan will cause the Partnership to recognize gain for federal income tax
purposes. In general, such gain will equal the excess of the "amount realized"
over the Partnership's adjusted basis in the assets. The General Partner
anticipates that some or all of the recognized gain will be taxable as ordinary
income resulting from the recapture of previously claimed deductions for
depreciation and amortization under section 1245 of the Code. The gain
recognized by a limited partner may be reduced by his prior losses not
deductible because of the "passive activity loss"
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<PAGE> 23
limitations under section 469 of the Code. For more information, please see the
subsection entitled Passive Activity Losses below.
Passive Activity Losses. Under Section 469 of the Code, non-corporate
taxpayers, personal service corporations or certain other closely held
corporations generally can deduct "passive activity losses" in any year only to
the extent of its passive activity income for that year. Substantially all
post-1986 losses of Unitholders from the Partnership should be considered
passive activity losses. Thus, Unitholders may have "suspended" passive losses
from the Partnership (i.e., post-1986 net taxable losses in excess of
statutorily permitted "phase-in" amounts which have not been used to offset
income from other passive activities) which may be available to shelter gain
from the Liquidation Plan. Unitholders should consult their own tax advisors
regarding the effect that the passive activity loss rules will have upon his or
her tax situation.
Unrelated Business Income. For most tax-exempt Unitholders, a portion of
the gain from the sale of the assets will be treated as unrelated business
income subject to tax under section 511 of the Code. Under Section 514(a) of the
Code, gain from the sale of "debt-financed property" is treated as unrelated
business income generally in an amount equal to a ratio determined by comparing
the property's debt to its cost basis. Additional unrelated business income may
result to a tax-exempt Unitholder which borrowed funds to purchase its Units.
Tax-exempt Unitholders should consult their own tax advisors regarding the
unrelated trade or business income that may result from the sale of the cable
television systems.
Foreign Investors. A Unitholder who is a nonresident alien individual,
foreign corporation or other foreign person, is subject to a withholding tax on
that person's share of the gain recognized on the Liquidation Plan. The
withholding rates are 39.6% for Unitholders other than corporate Unitholders and
35% for corporate Unitholders. Amounts withheld will be remitted to the IRS and
the foreign person will receive a credit on such person's U.S. tax return for
the amount of the tax withheld by the Partnership. The tax withheld will be
treated as a distribution to the foreign Unitholder.
Complete liquidation. In general, upon complete liquidation of the
Partnership, gain will be recognized by a Unitholder upon receipt of a
liquidating distribution only to the extent any money (and certain other
property) received exceeds the adjusted basis of that Unitholder's Units. It is
anticipated that a Unitholder's basis for his Units will be approximately equal
to his liquidating distribution, primarily because the basis for his Units will
be increased by his share of gain on the sale of the assets. Thus, little or no
additional gain should be recognized as a result of receiving a liquidating
distribution. However, this may not be true in all cases, and some or all of the
Unitholders may recognize gain on the liquidation of the Partnership in addition
to their share of gain realized by the Partnership on the sale of the
Partnership's assets. Since any decrease in a Unitholder's share of Partnership
liabilities is deemed to be a distribution of money, the amount of gain on a
liquidation distribution may exceed the actual distribution of money. Loss will
generally be recognized by a Unitholder only if he receives no property other
than money, and then only to the extent the adjusted basis of his Units exceed
the sum of any money received.
State Tax Consequences
Many states impose income tax withholding requirements on partnerships that
have nonresident partners. These requirements are at the partnership level and,
therefore, do not reflect the actual tax profile of the individual partner.
Nonetheless, the Unitholders are urged to consult their personal tax advisors
for advice regarding the application of the information set forth herein to
their individual circumstances, including the state tax consequences to each of
them on the consummation of the Liquidation Plan and related distributions.
NO APPRAISAL RIGHTS
If the limited partners owning at least a majority of the Units on the
Record Date vote in favor of the Liquidation Plan, such approval will bind all
limited partners. The partnership agreement and the Georgia Revised Uniform
Limited Partnership Act, under which Enstar II-2 is governed, do not give rights
of appraisal or similar rights to limited partners who dissent from the vote of
the majority in approving or disapproving the Liquidation Plan. Accordingly,
dissenting limited partners do not have the right to have their Units appraised
18
<PAGE> 24
and to have the value of their Units paid to them because they disapprove of the
action of a majority in interest of the limited partners.
MARKET PRICES OF PARTNERSHIP INTERESTS NOT AVAILABLE
No established market for the Units of Enstar II-2 was ever expected to
develop, and none has developed. Consequently, transactions in the Units have
been limited and sporadic, and it is not known to what extent those transactions
have been between willing buyers and willing sellers, and whether they have
fairly reflected the market value of Enstar II-2. For these reasons, reliable
market prices for the Units are not available.
DISTRIBUTIONS TO UNITHOLDERS
From the inception of Enstar II-2 through December 1989 Enstar II-2 made
aggregate cash distributions to its Unitholders in the amount of $2,379,900, or
$80 per Unit. Such distributions were made from operating cash flow.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On September 30, 2000, there were 29,880 Units issued and outstanding and
entitled to vote on matters upon which the Unitholders may vote or consent,
which were held by 661 Unitholders. The General Partner owns a 0.5% interest in
the Partnership.
As of September 30, 2000, the only person known by the Partnership to own
beneficially or that may be deemed to own beneficially more than 5% of the Units
was:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
NAME AND ADDRESS ---------------------
OF BENEFICIAL OWNER AMOUNT PERCENT
------------------- -------- ---------
<S> <C> <C>
Everest Cable Investor LLC................................. 2,086(1) 7.0%
199 S. Los Robles Ave., Ste. 440
Pasadena, CA 91101
</TABLE>
---------------
(1) As reported to us by our transfer agent, Gemisys Corporation.
The General Partner is a wholly-owned subsidiary of Charter Communications
Holding Company, LLC. As of September 30, 2000, Charter Communications Holding
Company, LLC was beneficially controlled by Paul G. Allen through his ownership
and control of Charter Communications, Inc., Charter Investment, Inc. and Vulcan
Cable III, Inc.
IDENTITY AND BACKGROUND OF CERTAIN PERSONS
CHARTER COMMUNICATIONS HOLDING COMPANY, LLC
Charter Communications Holding Company, LLC, is owned, in part, by Charter
Communications, Inc. Charter Communications, Inc. is a public company. Charter
Communications Holding Company, LLC owns Enstar Communications Corporation, and
as an indirect subsidiary, also owns Enstar Cable Corporation, the company that
provides management services to the Enstar partnerships. Enstar Communications
Corporation is the general partner of the 14 Enstar partnerships that own cable
systems in various areas of the country. Charter has grown rapidly over the past
five years, completing 34 acquisitions during this period, including 14 since
January 1, 1999. As a result of its acquisition strategy, Charter is the fourth
largest operator of cable television systems in the United States, serving
approximately 6.3 million customers.
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<PAGE> 25
ENSTAR COMMUNICATIONS CORPORATION
Enstar Communications is the general partner of Enstar II-2. Enstar
Communications is a Georgia corporation whose principal business is to engage in
the cable/ telecommunications business, both as general partner of 14 limited
partnerships formed to own and operate cable television systems, and through a
wholly-owned operating subsidiary. As of December 31, 1999, Enstar
Communications managed cable television systems serving approximately 81,100
basic subscribers, all of which are currently in various stages of being sold.
The address of Enstar Communications' principal executive offices is 12444
Powerscourt Drive, Suite 100, St. Louis, Missouri 63131.
Set forth below is certain general information about the Directors and
Executive Officers of Enstar Communications, each of whom holds a comparable
position with Charter Communications, Inc.:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Jerald L. Kent....................... 44 Director, President and Chief Executive Officer
David Andersen....................... 51 Senior Vice President -- Communications and Investor
Relations
David G. Barford..................... 42 Senior Vice President of Operations -- Western
Division
Mary Pat Blake....................... 45 Senior Vice President -- Marketing and Programming
Eric A. Freesmeier................... 47 Senior Vice President -- Administration
Thomas R. Jokerst.................... 51 Senior Vice President -- Advanced Technology
Development
Kent D. Kalkwarf..................... 41 Senior Vice President and Chief Financial Officer
Ralph G. Kelly....................... 43 Senior Vice President -- Treasurer
David L. McCall...................... 45 Senior Vice President of Operations -- Eastern
Division
John C. Pietri....................... 50 Senior Vice President -- Engineering
Michael E. Riddle.................... 41 Senior Vice President and Chief Information Officer
Steven A. Schumm..................... 48 Executive Vice President, Assistant to the President
Curtis S. Shaw....................... 51 Senior Vice President, General Counsel and Secretary
Steven E. Silva...................... 40 Senior Vice President -- Corporate Development and
Technology
James (Trey) H. Smith, III........... 52 Senior Vice President of Operations -- Western
Division
</TABLE>
JERALD L. KENT, President, Chief Executive Officer and Director of Enstar
Communications, Inc. Mr. Kent has held these positions with Enstar
Communications since November 1999 and with Charter Investment, Inc. (an
affiliate of Enstar Communications) since April 1995. He previously held the
position of Chief Financial Officer of Charter Investment. Prior to co-founding
Charter Investment in 1993, Mr. Kent was Executive Vice President and Chief
Financial Officer of Cencom Cable Associates, Inc. Before that, he held other
executive positions at Cencom. Earlier he was with Arthur Andersen LLP, where he
attained the position of tax manager. Mr. Kent is a member of the board of
directors of High Speed Access Corp., Cable Television Laboratories, Inc., Com2l
Inc. and C-SPAN. He is also a member of the executive committee and the board of
directors of NCTA. Mr. Kent, a certified public accountant, received his
undergraduate and M.B.A. degrees from Washington University (St. Louis.).
DAVID C. ANDERSEN, Senior Vice President -- Communications. Prior to
joining Enstar Communications in May 2000, Mr. Andersen served as Vice President
of Communications for CNBC, the worldwide cable and satellite business news
network subsidiary of NBC. Before that, starting in 1982 when he established
their public relations department, Mr. Andersen served in various management
positions at Cox Communications, Inc., most recently as Vice President of Public
Affairs. Mr. Andersen serves on the Board of KIDSNET, and is a former Chairman
of the National Captioning Institute's Cable Advisory Board. He received a B.S.
degree in Journalism from the University of Kansas.
DAVID G. BARFORD, Executive Vice President and Chief Operating Officer.
Mr. Barford was promoted to his current position in July 2000, previously
serving as Senior Vice President of Operations-Western Division. Prior to
joining Charter Investment in 1995, Mr. Barford held various senior marketing
and
20
<PAGE> 26
operating roles during nine years at Comcast Cable Communications, Inc. He
received a B.A. degree from California State University, Fullerton, and an
M.B.A. degree from National University.
MARY PAT BLAKE, Senior Vice President -- Marketing and Programming. Ms.
Blake has held this position with Enstar Communications since November 1999.
Prior to joining Charter Investment in 1995, Ms. Blake was active in the
emerging business sector and formed Blake Investments, Inc. in 1993. She has 18
years of experience with senior management responsibilities in marketing, sales,
finance, systems, and general management. Ms. Blake received a B.S. degree from
the University of Minnesota and an M.B.A. degree from the Harvard Business
School.
ERIC A. FREESMEIER, Senior Vice President -- Administration. Mr.
Freesmeier has held this position with Enstar Communications since November
1999. From 1986 until joining Charter Investment in 1998, Mr. Freesmeier served
in various executive management positions at Edison Brothers Stores, Inc.
Earlier he held management and executive positions at Montgomery Ward. Mr.
Freesmeier holds a bachelor's degree from the University of Iowa and a master's
degree from Northwestern University's Kellogg Graduate School of Management.
THOMAS R. JOKERST, Senior Vice President Advanced Technology
Development. Mr. Jokerst has held this position with Enstar Communications
since November 1999. Mr. Jokerst joined Charter Investment in 1994. Previously
he served as a vice president of Cable Television Laboratories and as a regional
director of engineering for Continental Cablevision. He is a graduate of Ranken
Technical Institute and of Southern Illinois University.
KENT D. KALKWARF, Executive Vice President and Chief Financial Officer.
Mr. Kalkwarf was promoted to the position of Executive Vice President in July
2000, previously serving as Senior Vice President and Chief Financial Officer.
Prior to joining Charter Investment in 1995, Mr. Kalkwarf was employed for 13
years by Arthur Anderson LLP, where he attained the position of senior tax
manager. He has extensive experience in cable, real estate, and international
tax issues. Mr. Kalkwarf has a B.S. degree from Illinois Wesleyan University and
is a certified public accountant.
RALPH G. KELLY, Senior Vice President -- Treasurer. Mr. Kelly has held
this position with Enstar Communications since November 1999. Prior to joining
Charter Investment in 1993, Mr. Kelly was controller and then treasurer of
Cencom Cable Associates. He left Charter in 1994, to become Chief Financial
Officer of CableMaxx, Inc., and returned in 1996. Mr. Kelly received his
bachelor's degree in accounting from the University of Missouri -- Columbia and
his M.B.A. degree from Saint Louis University.
DAVID L. McCALL, Senior Vice President of Operations -- Eastern Division.
Mr. McCall has held this position with Enstar Communications since November
1999. Prior to joining Charter Investment in 1995, Mr. McCall was associated
with Crown Cable and its predecessor, Cencom Cable Associates, Inc., from 1983
to 1994. Mr. McCall has served as a director of the South Carolina Cable
Television Association for ten years and is a member of the Southern Cable
Association's Tower Club.
JOHN C. PIETRI, Senior Vice President -- Engineering. Mr. Pietri has held
this position with Enstar Communications since November 1999. Prior to joining
Charter Investment in 1998, Mr. Pietri was with Marcus Cable for nine years,
most recently serving as Senior Vice President and Chief Technical Officer.
Earlier he was in operations with West Marc Communications and Minnesota Utility
Contracting. Mr. Pietri attended the University of Wisconsin-Oshkosh.
MICHAEL E. RIDDLE, Senior Vice President and Chief Information Officer.
Prior to joining Enstar Communications in December 1999, Mr. Riddle was Director
of Applied Technologies of Cox Communications for four years. Prior to that, he
held technical and management positions during 17 years at Southwestern Bell and
its subsidiaries. Mr. Riddle attended Fort Hays State University.
STEVEN A. SCHUMM, Executive Vice President, Assistant to the President.
Mr. Schumm has held these positions with Enstar Communications since November
1999. Prior to joining Charter Investment in 1998, Mr. Schumm was Managing
Partner of the St. Louis office of Ernst & Young LLP, where he was a
21
<PAGE> 27
partner for 14 of 24 years. He served as one of 10 members of the firm's
National Tax Committee. Mr. Schumm earned a B.S. degree from Saint Louis
University.
CURTIS S. SHAW, Senior Vice President, General Counsel and Secretary. Mr.
Shaw has held these positions with Enstar Communications since November 1999.
From 1988 until he joined Charter Investment in 1997, Mr. Shaw served as
corporate counsel to NYNEX. He has over 26 years of experience as a corporate
lawyer, specializing in mergers and acquisitions, joint ventures, public
offerings, financings, and federal securities and antitrust law. Mr. Shaw
received a B.A. degree from Trinity College and a J.D. degree from Columbia
University School of Law.
STEPHEN E. SILVA, Senior Vice President -- Corporate Development and
Technology. Mr. Silva has held this position with Enstar Communications since
November 1999. From 1983 until joining Charter Investment in 1995, Mr. Silva
served in various management positions at U.S. Computer Services, Inc. He is a
member of the board of directors of High Speed Access Corp.
JAMES (TREY) H. SMITH, III, Senior Vice President of Operations -- Western
Division. Mr. Smith was appointed to his current position in September 2000,
previously serving as a Division President of AT&T Broadband. Before that, he
was President and CEO of Rogers Cablesystems Ltd., Senior Vice President of the
Western Region for MediaOne/Continental Cable and Executive Vice President of
Operations for Times Mirror Cable TV, Inc. He received B.B.A. and M.B.A. degrees
from Georgia State University and is a certified public accountant.
MULTIMEDIA ACQUISITION CORP.
Multimedia Acquisition Corp., the purchaser under the purchase agreement,
is a Pennsylvania corporation. Multimedia is not affiliated with any Selling
Partnership. The address of Multimedia's principal executive offices is 1059
East 10th Street, Hazleton, Pennsylvania 18201.
VOTING PROCEDURES
The Liquidation Plan is a single proposal that must be approved by the
holders of at least a majority of the Units. We are seeking to obtain that
approval through the solicitation of written consents. No meeting of the
Unitholders will be held. A vote to approve the Liquidation Plan will constitute
approval of each of the elements of the Liquidation Plan. If the holders of a
majority of the Units on the Record Date vote to approve the Liquidation Plan,
that approval will bind all Unitholders.
The close of business on October 31, 2000 has been fixed as the Record Date
for determining the Unitholders entitled to receive notice of the solicitation
of consents and to consent to the Liquidation Plan. Consents of the Unitholders
to the Liquidation Plan will be solicited during the period, also referred to as
the Solicitation Period, which begins on [DATE OF SOLICITATION] and will end at
5:00 p.m., New York City time, on the earlier of [30 DAYS FROM DATE OF
SOLICITATION], 2000 or the day that holders of at least a majority of the Units
consent (unless extended, in the sole discretion of Enstar Communications acting
on behalf of Enstar II-2). The enclosed consent card permits you to approve,
disapprove or abstain with respect to the Liquidation Plan. Please indicate your
approval, disapproval or abstention by marking and signing and dating the
enclosed consent card and returning it in the enclosed self-addressed envelope
to Georgeson Shareholder Communications Inc., Wall Street Station, P.O. Box
1101, New York, New York 10269-0666, a company Enstar II-2 has engaged to act as
Soliciting Agent. If you sign and send in the enclosed consent card and do not
indicate how you want to vote, your consent card will be treated as voting to
APPROVE the Liquidation Plan. If you fail to send in your consent card or
ABSTAIN, it will have the same effect as a vote to DISAPPROVE the Liquidation
Plan.
You may change your vote at any time before 5:00 p.m., New York City time,
on [30 DAYS FROM DATE OF SOLICITATION], 2000 or the day that holders of a
majority of the Units consent, whichever comes first (unless extended, in the
sole discretion of Enstar Communications acting on behalf of Enstar II-2). You
can do this in one of two ways. First, you can send a written notice dated later
than your consent card stating that you would like to revoke or change your
vote. Second, you can complete and submit a new consent card dated later than
22
<PAGE> 28
your original consent card. If you choose either of these two methods, you must
submit your notice of revocation or new consent card to the Soliciting Agent. If
you instructed a broker to vote your Units, you must follow your broker's
directions for changing those instructions. TO BE EFFECTIVE, YOUR NOTICE OF
REVOCATION OR NEW CONSENT CARD MUST BE RECEIVED BY GEORGESON SHAREHOLDER
COMMUNICATIONS BEFORE THE END OF THE SOLICITATION PERIOD.
On September 30, 2000, there were 29,880 outstanding Units entitled to vote
on the Liquidation Plan, which were held by 661 Unitholders. Unitholders holding
at least a majority of the outstanding Units are required to approve the
Liquidation Plan.
AVAILABLE INFORMATION
This Consent Solicitation Statement does not purport to be a complete
description of all agreements and matters relating to the condition of Enstar
II-2, Enstar II-2's assets and the transactions described herein. With respect
to statements contained in this Consent Solicitation Statement as to the content
of any contract or other document filed as an exhibit to Enstar II-2's Annual
Report on Form 10-K for the year ended December 31, 1999, Quarterly Reports on
Form 10-Q for the periods ended March 31, 2000, June 30, 2000, and September 30,
2000, or a Current Report on Form 8-K, each such statement is qualified in all
respects by reference to such reports and the schedules thereto, which may be
obtained without charge upon written request to Enstar II-2. To make such a
request, you should write to Enstar Communications Corporation, 12444
Powerscourt Drive, Suite 100, St. Louis, Missouri 63131, Attention: Ms. Carol
Wolf, Manager of Partnership Relations; or call (314) 543-2389.
23
<PAGE> 29
Exhibit A
ASSET PURCHASE AGREEMENT
BY AND AMONG
ENSTAR INCOME PROGRAM II-1, L.P.,
ENSTAR INCOME PROGRAM II-2, L.P.,
ENSTAR INCOME PROGRAM IV-3, L.P.,
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.,
ENSTAR IX, LTD., ENSTAR XI, LTD.,
ENSTAR IV/PBD SYSTEMS VENTURE,
ENSTAR CABLE OF CUMBERLAND VALLEY AND
ENSTAR CABLE OF MACOUPIN COUNTY,
AS SELLERS,
AND
MULTIMEDIA ACQUISITION CORP.,
AS BUYER
Dated as of August 8, 2000
A-1
<PAGE> 30
LIST OF EXHIBITS AND SCHEDULES
Exhibits
A Form of Deposit Escrow Agreement
B Form of Indemnity Escrow Agreement
C Form of Bill of Sale and Assignment and Assumption Agreement
D Form of Opinion of Sellers' Counsel
E Form of Opinion of Sellers' FCC Counsel
F Form of Opinion of Buyer's Counsel
Schedules
1.1A Purchase Price Allocation; Subscriber Adjustment Amounts;
Minimum Subscriber Numbers; Indemnification Allocation
1.1B Permitted Encumbrances
2.1(b)(i) Programming and Retransmission Consent Agreements Being Assigned
2.1(b)(viii) Excluded Assets
4.3 Required Consents
4.4 Financial Statements
4.6(a) Owned Real Property
4.6(b) Leased Real Property
4.7(b) Personal Property Leases
4.8 Governmental Authorizations
4.8A Agreements and Governmental Authorizations Not Delivered
4.9 Agreements
4.10 Pole Attachment Agreements; Related Agreements
4.11 Retransmission Consent and Must-Carry; Rate Regulation
4.12 Litigation
4.14(a) Systems Plans
4.17 Bonds; Guaranties; Letters of Credit
4.18 Information on the Systems and Subscribers
-v-
<PAGE> 31
TABLE OF CONTENTS
PAGE
1. DEFINITIONS................................................................1
1.1 Terms Defined in this Section.........................................1
1.2 Other Definitions.....................................................9
2. SALE OF ASSETS; ASSUMPTION OF CERTAIN LIABILITIES.........................10
2.1 Sales of Assets......................................................10
2.2 Assumed Liabilities..................................................12
3. CLOSING...................................................................12
3.1 Purchase Price.......................................................12
3.2 Manner and Time of Closing and Payment...............................12
3.3 Adjustment of Purchase Price.........................................13
3.4 Instrument of Assignment and Assumption..............................16
3.5 Deposit Escrow Agreement.............................................16
3.6 Post-Closing Adjustment of Enstar II-2 and Enstar IV Purchase Price..16
3.7 Purchase Price Allocation............................................16
4. REPRESENTATIONS AND WARRANTIES OF SELLERS.................................16
4.1 Organization, Qualification and Power................................16
4.2 Capacity; Due Authorization; Enforceability..........................17
4.3 Absence of Conflicting Agreements....................................17
4.4 Financial Statements; Absence of Undisclosed Liabilities; Accounts
Receivable...........................................................18
4.5 Absence of Certain Changes...........................................18
4.6 Real Property; Leases; Condemnation..................................18
4.7 Personal Property....................................................18
4.8 Governmental Authorizations..........................................19
4.9 Agreements...........................................................19
4.10 Pole Attachment Agreements; Related Agreements.......................20
4.11 Retransmission Consent and Must-Carry; Rate Regulation; Copyright
Compliance...........................................................20
4.12 Litigation...........................................................21
4.13 Compliance with Laws.................................................21
4.14 Employee Benefit Plans...............................................21
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TABLE OF CONTENTS
(CONTINUED)
PAGE
4.15 Labor Relations; Employees...........................................21
4.16 Environmental Matters................................................22
4.17 Bonds; Letters of Credit.............................................22
4.18 Information on the Systems and Subscribers...........................22
4.19 Broker; Brokers' Fees................................................23
5. REPRESENTATIONS AND WARRANTIES OF BUYER...................................23
5.1 Organization, Qualification and Power................................23
5.2 Capacity; Due Authorization; Enforceability..........................23
5.3 Absence of Conflicting Agreements....................................23
5.4 Litigation...........................................................24
5.5 Financial Capability.................................................24
5.6 Brokers..............................................................24
6. COVENANTS OF SELLERS AND BUYER............................................24
6.1 Continuity and Maintenance of Operations.............................24
6.2 Access to Sellers; Confidentiality...................................25
6.3 Notification.........................................................26
6.4 No Public Announcement...............................................26
6.5 Regulatory Filings...................................................26
6.6 Employees; Employee Benefits.........................................26
6.7 Required Consents....................................................28
6.8 Use of Transferor's Name.............................................29
6.9 Delivery of Subscriber Information...................................29
6.10 Tax Matters..........................................................30
6.11 Further Assurances; Satisfaction of Covenants........................30
6.12 Environmental Reports; Title Commitments.............................30
6.13 Limited Partner Consents.............................................32
6.14 Acquisition Proposals................................................33
6.15 Noncompetition Agreement.............................................33
6.16 Microwave Services; Headend Services.................................33
6.17 Performance of Settlement Agreement..................................34
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TABLE OF CONTENTS
(CONTINUED)
PAGE
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS...............................34
7.1 Representations and Warranties of Sellers............................34
7.2 Covenants............................................................35
7.3 Transferable Franchise Areas; Material Consents; Franchise Renewals;
Franchise Extensions.................................................35
7.4 Hart-Scott-Rodino Act................................................35
7.5 Judgment.............................................................35
7.6 Delivery of Certificates and Documents...............................35
7.7 Opinion of Sellers' Counsel..........................................36
7.8 Opinion of Sellers' FCC Counsel......................................36
7.9 General and Limited Partner Consents.................................36
7.10 Aggregate Subscriber Total...........................................36
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS..............................37
8.1 Representations and Warranties of Buyer..............................37
8.2 Covenants............................................................37
8.3 Transferable Franchise Areas; Material Consents......................37
8.4 Hart-Scott-Rodino Act................................................37
8.5 Judgment.............................................................37
8.6 General and Limited Partner Consents.................................37
8.7 Aggregate Subscriber Total...........................................38
8.8 Delivery of Certificates and Documents...............................38
8.9 Opinion of Buyer's Counsel...........................................38
8.10 Payment for Assets...................................................38
9. RETAINED FRANCHISES AND ASSETS............................................38
9.1 Non-Transferable Franchise Areas.....................................38
9.2 Retained Franchise Consents..........................................39
9.3 Subsequent Closings..................................................39
9.4 Final Closing........................................................39
9.5 Franchise Purchase Price; Discounted Franchise Purchase Price........39
9.6 Management Agreement.................................................40
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TABLE OF CONTENTS
(CONTINUED)
PAGE
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION...............40
10.1 Survival of Representations and Warranties...........................40
10.2 Indemnification......................................................40
10.3 Assertion of Claims..................................................40
10.4 Notice of and Right to Defend Third Party Claims.....................41
10.5 Limitations of Liability.............................................41
10.6 Indemnity Escrow Agreement...........................................42
11. TERMINATION...............................................................42
11.1 Termination..........................................................42
11.2 Breakup Fee; Acquisition Proposals...................................43
11.3 Reimbursement of Expenses............................................44
11.4 Surviving Obligations................................................44
11.5 Attorney's Fees......................................................45
12. EXPENSES..................................................................45
13. ENTIRE AGREEMENT..........................................................45
14. PARTIES OBLIGATED AND BENEFITED...........................................45
15. NOTICES...................................................................45
16. AMENDMENTS AND WAIVERS....................................................47
17. SEVERABILITY..............................................................47
18. SECTION HEADINGS AND TERMS................................................47
19. COUNTERPARTS..............................................................47
20. GOVERNING LAW; CONSENT IN JURISDICTION....................................47
21. SPECIFIC PERFORMANCE......................................................48
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made as of the 8th day of August, 2000, is by
and among Multimedia Acquisition Corp., a Pennsylvania corporation ("Buyer"),
and Enstar Income Program II-1, L.P., a Georgia limited partnership, Enstar
Income Program II-2, L.P., a Georgia limited partnership, Enstar Income Program
IV-3, L.P., a Georgia limited partnership, Enstar Income/Growth Program Six-A,
L.P., a Georgia limited partnership, Enstar IX, Ltd., a Georgia limited
partnership, Enstar XI, Ltd., a Georgia limited partnership, Enstar IV/PBD
Systems Venture, a Georgia general partnership, Enstar Cable of Cumberland
Valley, a Georgia general partnership, and Enstar Cable of Macoupin County, a
Georgia general partnership (collectively, "Sellers," and each individually, a
"Seller").
W I T N E S S E T H:
WHEREAS, Sellers own and operate cable television Systems (as
hereinafter defined) serving areas in and around Taylorville, Hillsboro, Flora,
Macoupin, Shelbyville and Mt. Carmel, Illinois; Dexter, Malden and Pomme de
Terre, Missouri; the Monticello area of Kentucky and Tennessee; Ashdown,
Arkansas; and Mobile, Alabama, as more particularly described in Schedule 4.18
hereto;
WHEREAS, Sellers have agreed to convey to Buyer substantially
all of their respective assets comprising or used or usable in connection with
their operation of their respective Systems, upon the terms and conditions set
forth herein;
WHEREAS, Buyer has agreed to assume certain specified
liabilities of Sellers, upon the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the representations and
warranties and the mutual covenants and agreements herein contained, and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Sellers and Buyer do hereby agree as follows:
1. Definitions.
1.1 Terms Defined in this Section. In addition to the terms
defined elsewhere in this Agreement, the following terms shall have the
following meanings when used herein with initial capital letters:
"Accounts Receivable" means the sum of 99% of the book value
of all subscriber accounts receivable that are outstanding as of the Closing
Date and no part of which other than $5.00 is more than sixty (60) days past due
(with an account being past due one day after the first day of the period to
which the applicable billing relates); plus 95% of the book value of all
advertising and other accounts receivable that are outstanding as of the Closing
Date and no part of which other than $5.00 is more than ninety (90) days from
the invoice date.
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"Affiliate" means, with respect to any Person, any other
Person controlling, controlled by or under common control with, such Person,
with "control" for such purpose meaning the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities or voting
interests, by contract or otherwise.
"Basic Cable Service" means the tier of cable television
service that includes the retransmission of local broadcast signals as defined
by the Cable Act.
"Business Day" means any day other than Saturday, Sunday or a
day on which banking institutions in New York, New York are required or
authorized to be closed.
"Cable Act" means Title VI of the Communications Act of 1934,
as amended, 47 U.S.C. Sections 151 et seq., all other provisions of the Cable
Communications Policy Act of 1984 and the provisions of the Cable Television
Consumer Protection and Competition Act of 1992, and the provisions of the
Telecommunications Act of 1996 amending Title VI of the Communications Act of
1934, in each case as amended and in effect from time to time.
"Charter" means Charter Communications, Inc., a Delaware
Corporation.
"Closing Date Subscriber Count" means the number of
Subscribers served by a Seller, System or Illinois System Group, as the case may
be, as of the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder as in effect from time to
time.
"Communications Act" means the Communications Act of 1934, as
amended by the Cable Communications Policy Act of 1984, the Cable Television
Consumer Protection and Competition Act of 1992 and the provisions of the
Telecommunications Act of 1996 amending Title VI of the Communications Act of
1934, and as may be further amended, and the rules and regulations, policies and
published decisions of the FCC thereunder, as in effect from time to time.
"Compensation Arrangement" means any plan or compensation
arrangement, other than an Employee Plan or a Multiemployer Plan, whether
written or unwritten, which provides to employees or former employees of Seller
or any ERISA Affiliate any compensation or other benefits, whether deferred or
not, in excess of base salary or wages and excluding overtime pay, and
including, but not limited to, any bonus (including any bonus given to motivate
employees to work for Seller through the Closing), incentive plan, stock rights
plan, deferred compensation arrangement, stock purchase plan, severance pay plan
and any other perquisites and employees fringe benefit plans.
"Deposit Amount" means the amount of $4,250,000 (which amount
shall be allocated among Sellers on a pro rata basis based on the allocation of
the aggregate Purchase Price among Sellers), being deposited by Buyer with the
Escrow Agent pursuant to the Deposit Escrow Agreement to secure Buyer's
performance of its covenants and obligations to the respective Sellers
hereunder.
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"Deposit Escrow Agreement" means the Deposit Escrow Agreement
among Buyer, Sellers and the Escrow Agent substantially in the form of Exhibit
A.
"Dexter Franchise" means the Franchise(s) covering the
System(s) serving the community of Dexter, Missouri.
"Employee" means any person employed by a Seller.
"Employee Plan" means any pension, retirement, profit-sharing,
deferred compensation, vacation, severance, bonus, incentive, medical, vision,
dental, disability, life insurance or any other employee benefit plan as defined
in Section 3(3) of ERISA (other than a Multiemployer Plan) to which any Seller
or any of its ERISA Affiliates contributes or has any obligation to contribute
or to which any Seller or any of its ERISA Affiliates sponsors, maintains or
otherwise has liability.
"Encumbrance" means any mortgage, lien, security interest,
security agreement, conditional sale or other title retention agreement, pledge,
option, charge, assessment, restriction, encumbrance, adverse interest, adverse
claim, voting agreement, restriction on transfer or any exception to or defect
in title.
"Enstar" means Enstar Communications Corporation, a Georgia
corporation.
"Enstar II-2" means Enstar Income Program II-2, L.P.
"Enstar IV" means Enstar IV/PBD Systems Venture.
"Enstar IX" means Enstar IX, Ltd.
"Enstar Cumberland" means Enstar Cable of Cumberland Valley.
"Environmental Claim" means any claim or charge of a violation
of or noncompliance with any Environmental Law.
"Environmental Laws" means any and all federal, state or local
laws, statutes, rules, regulations, ordinances, orders, decrees and other
binding obligations: (i) related to releases or threatened releases of any
Hazardous Substance to soil, surface water, groundwater, air or any other
environmental media; (ii) governing the use, treatment, storage, disposal,
transport or handling of Hazardous Substances; or (iii) related to the
protection of the environment and human health. Such Environmental Laws shall
include, but are not limited to, RCRA, CERCLA, EPCRA, the Clean Air Act, the
Clean Water Act, the Safe Drinking Water Act, the Toxic Substances Control Act,
the Endangered Species Act and any other federal, state or local laws, statutes,
ordinances, rules, orders, permit conditions, licenses or any terms or
provisions thereof related to clauses (i), (ii) or (iii) above.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations thereunder, as in effect from
time to time.
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"ERISA Affiliate" means, with respect to any Seller, (i) any
corporation which at, or at any time before, the Closing Date is or was a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Code) as Seller; (ii) any partnership, trade or business (whether
or not incorporated) which, at or any time before, the Closing Date is or was
under common control (within the meaning of Section 414(c) of the Code) with
such Seller; (iii) any entity, which at, or at any time before, the Closing Date
is or was a member of the same affiliated service group (within the meaning of
Section 414(m) of the Code) as either such Seller, any corporation described in
clause (i) or any partnership, trade or business described in clause (ii); and
(iv) any entity which at any time before the Closing Date is or was required to
be aggregated with such Seller under Section 414(o) of the Code.
"Escrow Agent" means The Bank of New York, or any other bank
reasonably acceptable to Sellers and Buyer.
"Expanded Basic Service" means the tier of cable television
service offered separately from Basic Cable Service and for a charge in addition
to that charged for Basic Cable Service, and that can only be purchased by
subscribers that also receive Basic Cable Service, but not including any a la
carte programming tier or other programming offered on a per channel or per
program basis.
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"Franchise" means all franchise agreements and similar
governing agreements, instruments and resolutions and franchise-related statutes
and ordinances that are necessary or required in order to operate any of the
Systems and to provide cable television services in any of the Systems.
"Franchise Area" means, with respect to any Franchise, the
geographic area in which a Seller is authorized to operate any of the Systems
pursuant to such Franchise.
"Franchise Extension" means the extension of the expiration
date for any Franchise that shall, by its terms, expire during the thirty-month
period subsequent to the Closing Date, such extension being on such terms and
conditions as shall be satisfactory to Buyer in its reasonably exercised
discretion.
"Franchise Renewal" means, for each Franchise that has expired
or shall expire prior to the Closing Date, the issuance of a new Franchise that
shall be on such terms and conditions as shall be satisfactory to Buyer in its
reasonably exercised discretion.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"General Partner" means each general partner of each of the
General Partnerships.
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"General Partner Consents" means the written consents of the
General Partners that are necessary for the consummation of the transactions
contemplated by this Agreement by each of the General Partnerships in accordance
with the terms hereof, which shall be in form and substance satisfactory to such
General Partnership.
"General Partnership" means each of the Sellers that is
identified in the preamble hereto as a general partnership.
"Governmental Authority" means (i) the United States of
America or (ii) any state of the United States of America and any political
subdivision thereof, including counties, municipalities and the like.
"Governmental Authorizations" means, collectively, all
Franchises and other authorizations, agreements, Licenses and permits for and
with respect to the construction and operation of any of the Systems obtained
from any Governmental Authority.
"Group Subscriber Deficiency" means the amount by which the
Closing Date Subscriber Count for an Illinois System Group is less than the
Minimum Subscriber Number applicable to such Illinois System Group.
"Hazardous Substance" means any substance, hazardous material
or other substance or compound regulated under Environmental Laws, including,
without limitation, petroleum or any refined product or fraction or derivative
thereof.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder, as in effect
from time to time.
"Illinois System" means each of the Systems serving the
communities of Flora, Mt. Carmel, Hillsboro, Macoupin, Shelbyville and
Taylorville, Illinois.
"Illinois System Group" means either the Southern Illinois
Seller Group or the Northern Illinois Seller Group, as set forth in Schedule
1.1A.
"Indemnity Escrow Agreement" means the Indemnity Escrow
Agreement or Agreements among Buyer, Sellers and the Escrow Agent, substantially
in the form of Exhibit B.
"Indemnity Fund" means the aggregate amount of $4,250,000,
being deposited by Buyer with the Escrow Agent pursuant to the Indemnity Escrow
Agreement(s) in accordance with Section 10.6 and the terms of the Indemnity
Escrow Agreement(s), to provide funds for the payment of any indemnification to
which any Buyer Indemnitee shall be entitled under Section 10 hereof.
"Knowledge of Seller" or "Seller's Knowledge" means the actual
knowledge of the chief financial officer of Enstar or, with respect to any
System, the general manager with respect to such System.
"Leases" means the Personal Property Leases and the Real
Property Leases.
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"Legal Requirement" means any statute, ordinance, code, law,
rule, regulation, permit or permit condition, administrative or judicial decree,
order or other requirement, standard or procedure enacted, adopted or applied by
any Governmental Authority, including judicial decisions applying common law or
interpreting any other Legal Requirement.
"License" means any license, permit or other authorization
(other than a Franchise) issued by a Governmental Authority, including, but not
limited to, the FCC, used or useful in the operation of any of the Systems
(including but not limited to TV translator station licenses, microwave licenses
(including but not limited to Cable Television Relay Services "CARS") and TVRO
earth station registrations).
"Limited Partner" means each of the limited partners of each
Limited Partnership and each of the limited partners in each General Partner.
"Limited Partner Consents" means the written consents of the
Limited Partners of each Seller that is a Limited Partnership, or in the case of
a Seller that is a General Partnership, the General Partner thereof, that are
necessary for the consummation of the transactions contemplated by this
Agreement by such Seller in accordance with the terms hereof, which shall be in
form and substance satisfactory to such Seller.
"Limited Partnership" means each of the Sellers that is
identified in the preamble hereto as a limited partnership.
"Malden Franchise" means the Franchise(s) covering the
System(s) serving the community of Malden, Missouri.
"Management Agreement" means any of the Management Agreements
entered into between Buyer and one or more of the Sellers pursuant to Section
9.6, which shall be in form and substance reasonably satisfactory to Buyer and
the applicable Seller(s), with Buyer having broad management authority and the
applicable Seller(s) receiving no compensation thereunder.
"Material Adverse Effect" means a material adverse effect on
any of the business, financial condition, results of operations, assets or
liabilities of any Seller or the Systems, taken as a whole.
"Material Consents" means the Required Consents designated as
Material Consents in Schedule 4.3.
"Minimum Subscriber Number" means, with respect to a System,
the Minimum Subscriber Number with respect to such System set forth in Schedule
1.1A, and with respect to any of the Illinois Systems, the Minimum Subscriber
Number for the applicable Illinois System Group set forth in Schedule 1.1A.
"Multiemployer Plan" means a plan, as defined in Section 3(37)
or 4001(a)(3) of ERISA, to which any Seller or any trade or business that would
be considered a single employer
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with such Seller under Section 4001(b)(1) of ERISA contributed, contributes or
is required to contribute.
"Outside Closing Date" means April 30, 2001.
"Past Practices" means the practices used since November 12,
1999, in the Systems and in any cable system directly or indirectly controlled
by Charter that is of comparable size to the Systems and is located in a
geographic area comparable to those in which the Systems are located.
"Permitted Encumbrances" means the following: (i) statutory
landlord's liens and liens for current taxes, assessments and governmental
charges not yet due and payable (or being contested in good faith); (ii) zoning
laws and ordinances and similar Legal Requirements; (iii) rights reserved to any
Governmental Authority to regulate the affected property; (iv) as to interests
in Real Property, any easements, rights-of-way, servitudes, permits,
restrictions and minor imperfections or irregularities in title that are
reflected in the public records and that do not individually or in the aggregate
materially interfere with the right or ability to own, use, lease or operate the
Real Property as presently utilized; and (v) Encumbrances set forth in Schedule
1.1B, provided that such Encumbrances set forth in Schedule 1.1B do not
individually or the in the aggregate materially interfere with Buyer's right to
own, use, lease or operate the Assets subject to such Encumbrances.
"Person" means any natural person, corporation, partnership,
trust, unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
"Poplar Bluff System" means the cable television system
operated as of the date hereof by Enstar IV that serves the community of Poplar
Bluff, Missouri.
"Real Property" means all of the fee and leasehold estates
and, to the extent of the interest, title, and rights of Sellers in the
following: buildings and other improvements thereon, easements, licenses, rights
to access, rights-of-way and other real property interests that are owned or
held by Sellers and used or held for use in the business or operations of the
Systems, plus such additions thereto and less such deletions therefrom arising
between the date hereof and the Closing Date in accordance with this Agreement.
"Related Agreements" means all written agreements,
instruments, affidavits, certificates and other documents, other than this
Agreement, that are executed and delivered by Buyer or Sellers pursuant to this
Agreement or in connection with Buyer's purchase of the Assets or any other
transactions contemplated by this Agreement, regardless of whether such
agreements, instruments, affidavits, certificates and other documents are
expressly referred to in this Agreement.
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment or into or out of any Real
Property (owned, leased or used by easement), including the movement of
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contaminants through or in the air, soil, surface water or groundwater above, in
or below any parcel of Real Property.
"Remedial Action" means any and all actions required to (i)
clean up, remove, treat or in any other way address contaminants in the indoor
or outdoor environment, (ii) prevent the Release or threat of Release or
minimize the further Release of contaminants so they do not migrate or endanger
public health or welfare of the indoor or outdoor environment or (iii) perform
pre-remedial studies and investigations and post-remedial monitoring and care.
"Required Consents" means any consent of any Governmental
Authority or other Person under any License, Franchise, Agreement or other
instrument which is necessary as a condition to the transfer or assignment of
any such License, Franchise, Agreement or other instrument or as a condition to
the consummation of the transaction contemplated by this Agreement and the
Related Agreements.
"SEC" means the United States Securities and Exchange
Commission.
"Settlement Agreement" means the Global Class Action
Settlement Agreement (and any other settlement agreement, as the case may be)
pursuant to the class action lawsuit titled Unfried, et al. v. Charter
Communications Holding Company, LLC, et al., Civil Action No. 99-L-48, Third
Judicial Circuit, Madison County, Illinois, and related litigation,
substantially in the form of the draft Global Class Action Settlement Agreement
with respect to such lawsuit dated July 28, 2000.
"Subscriber" means an active customer of one of the Systems
who subscribes for Basic Cable Service in a single household (excluding "second
connections", as such term is commonly understood in the cable television
industry, and any account duplication), commercial establishment or in a
multi-unit dwelling (including motels and hotels), and has paid the applicable
full non-discounted rate for at least one month's Basic Cable Service (including
deposit and installation charges consistent with the applicable Seller's
applicable past practice); provided, however, that the number of customers in a
multi-unit dwelling or commercial establishment that obtains service on a
"bulk-rate" basis shall be determined on a System-by-System basis by dividing
the gross bulk-rate revenue for Basic Cable Service and Expanded Basic Service
(but not revenues from tier or premium services, installation or converter
rental) attributable to such multi-unit dwelling or commercial establishment in
each System by the subscription rate for individual households within such
System for the higher level of Basic Cable Service and Expanded Basic Service
offered by such System. For purposes of this definition, an "active customer"
shall mean any customer: (i) who has not given or been given notice of
termination and who, consistent with the applicable Seller's policies, should
not have been given notice of termination; provided, that the number of
subscribers referred to in this clause (i) shall be net of the number of
prospective subscribers whose connection to a System is pending; (ii) who has
become a subscriber only pursuant to customary marketing promotions conducted in
the ordinary course of business consistent with Past Practices, excluding any
customers who became subscribers as a result of any such promotions conducted
within the preceding thirty (30) days; and (iii) whose account does not have an
outstanding balance (other
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than an amount of $5.00 or less) more than 60 days past due (with an account
being past due one day after the first day of the period to which the applicable
billing relates).
"Subscriber Adjustment Amount" means, with respect to a
System, the Subscriber Adjustment Amount for such System, or, with respect to an
Illinois System, the Subscriber Adjustment Amount for the applicable Illinois
System Group, each as set forth in Schedule 1.1A.
"Subscriber Deficiency" means the number of Subscribers by
which the number of Subscribers served by a Seller, System or Illinois System
Group is less than the Minimum Subscriber Number applicable to such Seller,
System or Illinois System Group, as the case may be, as of the Closing Date.
"Systems" means the cable television systems listed in
Schedule 4.18.
"Taxes" or "Tax" means and includes, without limitation, all
net income, capital gains, gross income, gross receipt, property, franchise,
sales, use, excise, withholding and other taxes, assessments, levies, fees,
duties, tariffs and other charges of any kind imposed upon any Seller or any of
the Assets, as applicable, by federal, foreign, state or local law, together
with any interest and any penalties, or additions to tax and additional amounts,
validly imposed with respect to such taxes.
"Transferable Franchise Area" means any Franchise Area with
respect to which (A) any Required Consent necessary under a Franchise in
connection with the consummation of the transactions contemplated by this
Agreement shall have been obtained or shall have been deemed obtained by
operation of law in accordance with the provisions of the Cable Act, or (B) no
Required Consent is necessary under a Franchise in connection with the
consummation of the transactions contemplated by this Agreement.
"Voting Period" means the period during which the Limited
Partners of any Seller are entitled to vote to approve or disapprove the
transactions contemplated by this Agreement with respect to such Seller,
pursuant to Section 6.13.
"WARN Act" means the Worker Adjustment Retraining and
Notification Act.
1.2 Other Definitions. The following terms are defined in the
Sections indicated:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Adjusted Purchase Price 3.1
Agreements 4.9(a)(iv)
Acquisition Proposal 6.14
Assets 2.1(a)
Assumed Liabilities 2.2
Bill of Sale and Assignment
and Assumption Agreements 3.4
Breakup Fee 11.2(a)
Broker 4.19
Buyer Preamble
</TABLE>
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<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Buyer Acquisition Proposal 11.2(a)
Closing 3.2
Closing Date 3.2
Confidential Information 6.2(b)
Copyright Act 4.11(b)
Discounted Franchise Purchase Price 9.5
Environmental Defects 6.12(c)
Environmental Reports 6.12(a)(i)
Excluded Assets 2.1(b)
Final Closing 9.4
Financial Statements 4.4
Franchise Purchase Price 9.5
Headend Services Agreement 6.l6(a)
Indemnitee 10.4
Indemnitor 10.4
Indemnity Period 10.1
Interest 6.14
Microwave Services Agreement 6.16(b)
Personal Property Leases 4.7(b)
Pole Attachment Agreements 4.10
Post-Closing Certificate 3.3(b)
Pre-Closing Certificate 3.3(a)
Purchase Price 3.1
Real Estate Inspection Period 6.12(a)(i)
Real Property Leases 4.6(b)
Retained Assets 9.1
Retained Franchise 9.1
Retained Franchise Consent 9.2
Seller Preamble
Sellers' Health Plans 6.6(b)
Subsequent Closing 9.3
Surveys 6.12(a)(i)
Systems Plans 4.14(a)
Title Commitments 6.12(a)(i)
Title Company 6.12(a)(i)
Title Defect 6.12(b)
Transferred Employee 6.6(a)
</TABLE>
2. Sale of Assets; Assumption of Certain Liabilities.
2.1 Sales of Assets.
(a) Subject to the terms, provisions and conditions contained
in this Agreement, and on the basis of the representations and warranties herein
set forth, on the Closing Date, each Seller agrees to sell, assign, transfer,
convey and deliver to Buyer, and Buyer agrees
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to purchase and acquire from each Seller, all right, title and interest of such
Seller in the Assets (as defined herein), free and clear of all Encumbrances
other than Permitted Encumbrances. The "Assets" shall mean all of the assets
(tangible and intangible, real and personal), owned, leased or otherwise held by
such Seller and used or usable in connection with the operation of the Systems;
provided, that the Assets shall not include any of the "Excluded Assets," as
defined in Section 2.1(b). Except as expressly set forth in this Agreement, the
Assets will be conveyed to Buyer on an "AS IS, WHERE IS" basis without
representations or warranties of any kind or manner whatsoever. The Assets shall
include, without limitation, the following:
(i) all of Sellers' rights under the Agreements, Franchises,
Licenses and other Governmental Authorizations and any other instruments
relating to operation of the Systems, and all intangibles relating to operation
of the Systems, including, but not limited to, all claims and goodwill, if any,
with respect to the operation of the Systems;
(ii) all tangible personalty, electronic devices, trunk and
distribution cable, amplifiers, power supplies, conduit, vaults and pedestals,
grounding and pole hardware, subscriber devices (including, without limitation,
converters, traps, decoders, switches, and fittings), "headend" (origination,
signal processing and transmission) equipment, facilities, vehicles,
inventories, supplies and other personal property used or usable in the
operation of the Systems;
(iii) all realty, towers, fixtures, leasehold and other
interests in Real Property;
(iv) all accounts receivable of Sellers relating to their
operation of the Systems; and
(v) all business, operational, maintenance, tax and
financial (relating primarily to the Systems or the Assets) and engineering
records, files, data, drawings, blueprints, schematics and maps, if any, of the
Systems and reports and records concerning suppliers, customers, subscribers and
others customary to the management and operation of the Systems.
(b) Notwithstanding the foregoing, the Assets shall not include,
and Buyer shall not acquire any interest in or to, any of the following (the
"Excluded Assets"):
(i) programming and retransmission consent agreements of
Sellers other than those listed on Schedule 2.1(b)(i);
(ii) insurance policies of Sellers and rights and claims
thereunder;
(iii) bonds, letters of credit, surety instruments and other
similar items and any stocks, bonds, certificates of deposit and similar
investments of Sellers;
(iv) cash and cash equivalents and notes receivable of
Sellers;
(v) Sellers' trademarks, trade names, service marks, service
names, logos and similar proprietary rights, subject to Section 6.8;
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(vi) Sellers' minute books and other books and records
related to internal matters and financial relationships with Sellers' lenders
and affiliates;
(vii) all Employee Plans, Multiemployer Plans and
Compensation Arrangements;
(viii) the assets and properties set forth in Schedule
2.1(b)(viii); and
(ix) installment sale agreements and other agreements under
which Buyer would be obligated to pay the deferred purchase price of property,
except any such agreements that are listed in Schedule 4.9 hereto and except any
such agreements permitted to be entered into by Sellers pursuant to Section
6.1(b)(viii).
2.2 Assumed Liabilities. Subject to the terms, provisions and
conditions contained in this Agreement, and on the basis of the representations
and warranties herein set forth on the Closing Date, Buyer agrees to pay,
discharge and perform the following to the extent related to the Assets received
by Buyer (the "Assumed Liabilities"):
(i) liabilities and obligations under any Agreements,
Governmental Authorizations, Licenses and other instruments included within the
Assets and accruing and relating to the period from and after the Closing Date;
(ii) liabilities and obligations of Sellers to the extent
there is a reduction in the Purchase Price pursuant to Section 3.3(a)(ii) with
respect thereto; and
(iii) liabilities and obligations arising out of Buyer's
ownership or operation of the Systems from and after the Closing Date, except to
the extent that any such liability or obligation relates to any of the Excluded
Assets.
All other obligations and liabilities of Sellers, including (a) obligations with
respect to the Excluded Assets, (b) any obligations under the Agreements assumed
by Buyer relating to the time period prior to or on the Closing Date and (c) any
claims or pending litigation or proceedings relating to the operation of the
Systems prior to or on the Closing Date shall remain the obligations and
liabilities of Sellers.
3. Closing.
3.1 Purchase Price. The aggregate purchase price payable for the Assets
shall be Ninety-Four Million Nine Hundred Twenty-Nine Thousand Four Hundred
Dollars ($94,929,400), subject to Sections 9.1, 9.5 and 11.1(g), and as adjusted
at the Closing pursuant to Section 3.3(a) (the "Purchase Price"), and as further
adjusted post-Closing pursuant to Section 3.3(b) and, if applicable, Section 3.6
and, if applicable, Section 3.6 (as so adjusted, the "Adjusted Purchase Price").
The Purchase Price shall be allocated among the Sellers as set forth in Schedule
1.1A.
3.2 Manner and Time of Closing and Payment. The closing of the
transactions contemplated herein (the "Closing") shall take place at 9:00 a.m.
at the offices of Baer Marks &
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Upham LLP, 805 Third Avenue, New York, New York 10022, or at such other time and
location mutually determined by Sellers and Buyer, on the last Business Day of
the calendar month that is at least five (5) Business Days after the
satisfaction or waiver of all conditions set forth in Sections 7.3, 7.4, 7.9,
8.3, 8.4 and 8.6 hereof, but, subject to Section 11.1(b) hereof, no later than
the Outside Closing Date (such date on which the Closing actually occurs, the
"Closing Date"). At Closing, (a) Buyer shall deliver to Sellers, the Purchase
Price, less (i) the amount of the Deposit Amount and all interest and other
earnings accrued thereon and (ii) the amount of the Indemnity Fund, in
immediately available funds by wire, inter-bank or intra-bank transfer to
Sellers in accordance with Sellers' written instructions, to be delivered to
Buyer at least three (3) Business Days prior to Closing; (b) Buyer and Sellers
shall cause the Escrow Agent to deliver to Sellers the Deposit Amount and all
interest and other earnings accrued thereon, in accordance with the terms of the
Deposit Escrow Agreement, which amount shall be credited against the Purchase
Price payable to each Seller on a pro rata basis based on the allocation of the
aggregate Purchase Price among Sellers; and (c) Buyer shall deliver the
Indemnity Fund to the Escrow Agent, in accordance with the terms of the
Indemnity Escrow Agreement and the Escrow Agent's instructions.
3.3 Adjustment of Purchase Price.
(a) The Purchase Price payable to each Seller shall be
subject to adjustment, as of 11:59 p.m. (New York City time) on the Closing
Date, to reflect, in accordance with GAAP, the principle that all revenues and
refunds, and all costs, expenses and liabilities, attributable to the operation
of such Seller's Systems for any period prior to such time on the Closing Date
are for the account of the applicable Seller, and all revenues and refunds, and
all costs, expenses and liabilities (other than liabilities and obligations
under contracts or other obligations of such Seller that Buyer does not assume)
attributable to the operation of such Seller's Systems from and after such time
on the Closing Date are for the account of Buyer. The adjustments to be made to
the Purchase Price payable to each Seller pursuant to this Section 3.3(a) shall
consist of the following:
(i) an increase in the Purchase Price by an amount
equal to the sum of:
(A) all prepaid items relating to the ownership
or operation of the Assets or the Systems and for which Buyer will receive a
benefit after the Closing, which prepaid items shall be prorated between the
applicable Seller and Buyer as of the Closing Date on the basis of the period
covered by the respective prepayment, and shall be deemed to include, without
limitation, all such prepaid items attributable to: real and personal property
taxes and assessments levied against the Assets; real and personal property
rentals; pole rentals; and power and utility charges;
(B) the amount of the Accounts Receivable with
respect to such Seller; and
(C) solely with respect to Enstar II-2, if as
of the Closing Date Buyer or an Affiliate of Buyer shall have acquired the
Poplar Bluff System, the amount of
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<PAGE> 49
the product of (I) $300 and (II) the number of Subscribers covered by the Malden
Franchise as of the Closing Date; and
(D) solely with respect to Enstar IV, if as of
the Closing Date Buyer or an Affiliate of Buyer shall have acquired the Poplar
Bluff System, the amount of the product of (I) $500 and (II) the number of
Subscribers covered by the Dexter Franchise as of the Closing Date; and
(ii) a decrease in the Purchase Price by an amount
equal to the sum of:
(A) the amount of all subscriber prepayments,
credit balances and deposits held by Seller as of the Closing Date with respect
to such Seller's Systems;
(B) all accrued and unpaid expenses relating to
the ownership or operation of such Seller's Assets and Systems, including
accrued and unpaid franchise fees (which accrued and unpaid expenses shall be
prorated between such Seller and Buyer as of the Closing Date on the basis of
the period to which the respective expense relates, and shall be deemed to
include, without limitation, accrued and unpaid expenses of the kind itemized in
Section 3.3(a)(i)(A) above);
(C) in the event that the Closing Date
Subscriber Count (excluding Subscribers served by Illinois Systems) for any of
such Seller's Systems (other than Illinois Systems) is less than the Minimum
Subscriber Number for such System, the product of (I) the Subscriber Adjustment
Amount with respect to such System and (II) the Subscriber Deficiency with
respect to such System;
(D) in the event that the Closing Date
Subscriber Count for any Illinois System Group is less than the Minimum
Subscriber Number for such Illinois System Group, an allocated portion of the
product of (I) the Group Subscriber Deficiency and (II) the Subscriber
Adjustment Amount for such Illinois System Group; which portion shall be
determined by allocating said product among the Sellers within such Illinois
System Group whose Closing Date Subscriber Counts are less than the respective
Minimum Subscriber Numbers for such Sellers, on the basis of the proportion of
each such Seller's respective Subscriber Deficiency to the sum of the Subscriber
Deficiencies for all such Sellers;
(E) with respect to Transferred Employees,
accrued obligations for vacation and sick days, subject to Section 6.6(c);
(F) any amounts by which the Purchase Price is
decreased pursuant to Section 6.12(a), (b) or (c); and
(G) any amounts by which the Purchase Price is
decreased pursuant to Section 6.17.
Sellers shall deliver to Buyer, not less than seven (7) Business Days prior to
the Closing Date, a certificate signed by Sellers (the "Pre-Closing
Certificate"), which shall specify each Seller's good faith best estimate of the
adjustments to the Purchase Price payable to such Seller required
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<PAGE> 50
under this Section 3.3(a) above, calculated as of the Closing Date and prepared
consistent with GAAP. The Pre-Closing Certificate shall be accompanied by
reasonably detailed documentation supporting the calculations set forth therein.
Buyer shall have the right to challenge the content of the Pre-Closing
Certificate within four (4) Business Days of delivery if Buyer believes, in good
faith, that it is in error. Buyer and the applicable Seller shall use good faith
efforts to resolve any disputes with respect to the Pre-Closing Certificate(s)
prior to the Closing Date. If any such dispute is not resolved prior to the
Closing, the amount of the Purchase Price paid to the applicable Seller(s) at
Closing shall be based on the adjustments to the Purchase Price for such
Seller(s) set forth in the Pre-Closing Certificate.
(b) Within 120 days after the Closing Date, Buyer shall
deliver to Sellers a certificate signed by Buyer (the "Post-Closing
Certificate"), which shall set forth Buyer's final adjustments to the Purchase
Price payable to each Seller to be made as of the Closing Date pursuant to
Section 3.3(a) above and Section 6.17, together with such documentation as may
be necessary to support Buyer's determination thereof; and, thereafter, Buyer
shall provide each Seller with such other documentation relating to the
Post-Closing Certificate as such Seller may reasonably request. If a Seller
wishes to dispute the final adjustments to the Purchase Price to be made as of
the Closing Date pursuant to Section 3.3(a) above, as reflected in the
Post-Closing Certificate, such Seller shall, within thirty (30) days after its
receipt of the Post-Closing Certificate, serve Buyer with a written description
of the disputed items together with such documentation as Buyer may reasonably
request. If any Seller notifies Buyer of its acceptance of the amounts set forth
in the Post-Closing Certificate, or if a Seller fails to deliver its report of
any proposed adjustments within the thirty (30)-day period specified in the
preceding sentence, the amounts set forth in the Post-Closing Certificate for
such Seller shall be conclusive, final and binding on Buyer and such Seller as
of the last day of such thirty (30)-day period. If Buyer and any Seller cannot
resolve any dispute within thirty (30) days after Buyer's receipt of such
Seller's written objection, Buyer and such Seller, shall, within the ten (10)
days following expiration of such thirty (30)-day period, appoint KPMG or such
other independent public accounting firm of national reputation as is agreed
upon by the parties to resolve the dispute, provided such firm is not the
auditor for either Buyer or the applicable Seller. The cost of retaining such
firm shall be borne one-half by Buyer and one-half by such Seller. Such firm
shall report its determination in writing to Buyer and the applicable Seller,
and such determination shall be conclusive and binding on Buyer and the
applicable Seller and shall not be subject to further dispute or review.
(c) If, as a result of any resolution reached by Buyer and any
Seller, or any determination made by an accounting firm, in either case pursuant
to Section 3.3(b), Buyer is finally determined to owe any amount to any Seller,
or any Seller is finally determined to owe any amount to Buyer, the obligor
shall pay such amount to the other party hereto within three (3) Business Days
of such determination. Notwithstanding the foregoing, Buyer shall pay to the
applicable Seller or such Seller shall pay to Buyer, as the case may be, the
amount due such other party with respect to any item that is not in dispute
within three (3) Business Days of the date on which a dispute no longer exists
in immediately available funds to an account or accounts specified in writing by
the obligee. Sellers acknowledge and agree that any amount determined to be
payable to Buyer by any Seller pursuant to Section 3.3(b) shall be paid by such
Seller and shall not be limited by nor disbursed from the Indemnity Fund.
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3.4 Instrument of Assignment and Assumption. At the Closing, Buyer
and each Seller will execute and deliver a Bill of Sale and Assignment and
Assumption Agreement, in the form of Exhibit C (the "Bill of Sale and Assignment
and Assumption Agreements").
3.5 Deposit Escrow Agreement. Not more than fifteen (15) Business
Days following the execution hereof, Buyer and Sellers shall execute and deliver
the Deposit Escrow Agreement, and Buyer shall deposit the Deposit Amount with
the Escrow Agent in accordance with the terms thereof. In the event that Buyer
shall not have delivered the Deposit Amount to the Escrow Agent within said
fifteen (15)-day period, Sellers shall be entitled to terminate this Agreement
pursuant to Section 11.1(h) by giving Buyer five (5) Business Days' written
notice of Sellers' intention to terminate; provided, that during such five (5)
Business Day period Buyer shall be entitled to deliver the Deposit Amount to the
Escrow Agent and execute and deliver the Deposit Escrow Agreement, in which case
this Agreement shall not be terminated.
3.6 Post-Closing Adjustment of Enstar II-2 and Enstar IV Purchase
Price. Notwithstanding any adjustments to the Purchase Price made pursuant to
Section 3.3(b) hereof, the Purchase Price payable to each of Enstar II-2 and
Enstar IV shall be subject to further increase, in accordance with this Section
3.6, in the event that Buyer or an Affiliate of Buyer enters into an agreement
with Enstar IV to acquire the Poplar Bluff System within twelve (12) months
following the date hereof, and such acquisition is subsequently consummated.
Concurrent with the closing on such acquisition, Buyer shall pay (a) to Enstar
II-2, the amount of the product of (i) $300 and (ii) the number of Subscribers
covered by the Malden Franchise as of the Closing Date (as set forth in the
Pre-Closing Certificate or as otherwise determined pursuant to Section 3.3(a) or
(b)); and (b) to Enstar IV, the amount of the product of (x) $500 and (y) the
number of Subscribers covered by the Dexter Franchise as of the Closing Date (as
set forth in the Pre-Closing Certificate or as otherwise determined pursuant to
Section 3.3(a) or (b)); each of the foregoing payments to be made in immediately
available funds by wire, inter-bank or intrabank transfer in accordance with
Enstar II-2's or Enstar IV's respective written instructions.
3.7 Purchase Price Allocation. Buyer and each Seller will use good
faith efforts to agree on the allocation, for tax reporting purposes, of the
Purchase Price payable to such Seller among the Assets being conveyed by such
Seller. As soon as practicable following the date hereof, Buyer shall deliver to
each Seller a proposed allocation with respect to such Seller. Buyer and Sellers
shall file the form required to be filed under Section 1060 of the Code
consistent with such allocation.
4. Representations And Warranties Of Sellers.
Each Seller hereby represents and warrants to Buyer that the following
statements are true and correct, solely with respect to itself and the Assets
and Systems being conveyed by it pursuant to this Agreement.
4.1 Organization, Qualification and Power.
(a) Seller is a limited partnership or general partnership (as
indicated in the preamble hereto) duly organized, validly existing and in good
standing under the laws of the
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State of Georgia, with full power and authority to own, lease or license its
properties and assets and to carry on the business in which it is engaged in the
manner in which such business is now carried on.
(b) Enstar is a corporation, duly incorporated, validly
existing and in good standing under the laws of the State of Georgia, with full
power and authority to carry on the business in which it is engaged in the
manner in which such business is now carried on. Enstar is the sole general
partner of each Limited Partnership and of each of the General Partners.
4.2 Capacity; Due Authorization; Enforceability. Subject to
obtaining the Limited Partner Consents and the General Partner Consents, all
requisite limited partnership or general partnership action, as the case may be,
required to be taken by Seller for the execution, delivery and performance by
Seller of this Agreement and all Related Agreements to which it is a party have
been duly taken. Seller has the full legal capacity and legal right, power and
authority to enter into this Agreement and the Related Agreements and to
consummate the transactions contemplated hereby and thereby. Enstar has the full
legal capacity and legal right, power and authority to execute this Agreement
and any of the Related Agreements to which Seller is a party on behalf of Seller
or, if Seller is a General Partnership, on behalf of each General Partner
thereof. Subject to obtaining the Limited Partner Consents and the General
Partner Consents, this Agreement has been duly executed and delivered by Seller,
and this Agreement and each of the Related Agreements to which Seller is a
party, upon execution and delivery, will be a legal, valid and binding
obligation of Seller, enforceable in accordance with its respective terms,
except in each case to the extent that such enforcement may be subject to
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws of
general application affecting the rights and remedies of creditors or secured
parties, and that the availability of equitable remedies including specific
performance and injunctive relief may be subject to equitable defenses and the
discretion of the court before which any proceeding therefor may be brought.
4.3 Absence of Conflicting Agreements.
(a) The execution and delivery of this Agreement and the
Related Agreements to which Seller is a party and the consummation of the
transactions contemplated hereby and thereby (provided that all of the Required
Consents and the Limited Partner Consents and General Partner Consents are
obtained and the applicable waiting period(s) under the HSR Act shall have
expired or been terminated) will not (a) violate (i) Seller's certificate of
formation or limited partnership agreement, if Seller is a Limited Partnership,
or (ii) Seller's general partnership agreement, if Seller is a General
Partnership; (b) violate any Legal Requirement applicable to Seller, the Assets
or the Systems; (c) conflict with or result in any breach of or default under
any contract, note, mortgage or agreement to which Seller is a party or by which
Seller is bound.
(b) Except for the Required Consents listed in Schedule 4.3,
the Limited Partner Consents and the General Partner Consents and the expiration
or termination of the applicable waiting period(s) under the HSR Act, no
approval, consent, authorization or act of or any declaration, filing,
application, registration or other action with any Person or any foreign,
federal, state or local court or Governmental Authority is necessary for the
consummation of the
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transactions contemplated in this Agreement and the Related Agreements in
accordance with the terms hereof and thereof.
4.4 Financial Statements; Absence of Undisclosed Liabilities;
Accounts Receivable. Seller has delivered to Buyer true and correct copies of
the financial statements identified in Schedule 4.4 (collectively, the
"Financial Statements"). The Financial Statements are in accordance with the
books and records of Seller and have been prepared in accordance with GAAP. The
Financial Statements present fairly the financial condition and results of
operations of Seller at the respective dates thereof and throughout the
respective periods covered thereby subject, in the case of unaudited financial
statements, to normal year-end accruals and audit adjustments and to the absence
of footnotes thereto.
4.5 Absence of Certain Changes. Since December 31, 1999, Seller
has operated the Systems in the ordinary course of business and has not:
(a) made any sale, assignment, lease or other transfer of
assets used or usable in connection with the Systems other than in the ordinary
course of business (unless such assets were unnecessary or obsolete);
(b) made or promised any material increase in the salary or
other compensation payable or to become payable to any Employee of Seller other
than in the ordinary course of business or as contemplated under any employment
arrangement currently in effect; or
(c) experienced any occurrence or been involved in any
transaction which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
4.6 Real Property; Leases; Condemnation.
(a) Schedule 4.6(a) contains a list of the parcels of Real
Property owned by Seller and included within the Assets. Seller has good title
to each such parcel of Real Property and all buildings, structures and other
improvements thereon, in each case free and clear of all Encumbrances other than
Permitted Encumbrances.
(b) Schedule 4.6(b) contains a list of the leases under which
Seller is lessee of any Real Property owned by any third party ("Real Property
Leases"). Copies of all written Real Property Leases listed in Schedule 4.6(b)
have been delivered to Buyer. Such Real Property Leases are in full force and
effect.
4.7 Personal Property.
(a) Seller owns and has good title to all of the tangible
personal properties and intangible properties included within the Assets.
(b) Schedule 4.7(b) contains a list, as of the date hereof, of
each lease or other agreement or right, under which Seller is lessee of, or
holds or operates, any machinery, equipment, vehicle or other tangible personal
property owned by a third party ("Personal
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Property Leases") other than any such Personal Property Lease involving,
individually, payments of $25,000 or less or that is terminable on sixty (60)
days' notice or less.
4.8 Governmental Authorizations.
(a) Identified in Schedule 4.8 are all of the Governmental
Authorizations held by Seller and issued in connection with the Systems or the
operation thereof or held by Seller or issued by any Governmental Authority with
respect to the Systems authorizing Seller to install, construct, own or operate
a cable television system within the jurisdiction of the issuing body or
authority thereof. Except as set forth in Schedule 4.8A, copies of all the
Governmental Authorizations listed in Schedule 4.8 have been delivered to Buyer.
Except as set forth in Schedule 4.8 or as may otherwise be disclosed pursuant to
Section 4.8(b), each such Governmental Authorization is in full force and
effect. To Seller's Knowledge, a written request for renewal has been timely
filed pursuant to Section 626(a) of the Cable Act with the proper Governmental
Authority with respect to any Franchise expiring within thirty (30) months after
the date of this representation.
(b) Not more than thirty (30) days following the date of this
Agreement, each Seller shall have delivered to Buyer a true and complete
description of any material noncompliance with the terms of, or material default
under, any Governmental Authorization by such Seller of which such Seller has
Knowledge as of the date of such delivery.
(c) On the Closing Date, Seller shall be in compliance in all
material respects with the terms of all Governmental Authorizations to which it
is a party or by which it is bound or affected, and there shall be no material
uncured defaults thereunder; provided, that the foregoing representation and
warranty shall not apply to any Governmental Authorization with respect to which
a Franchise Renewal or Franchise Extension shall have been obtained.
4.9 Agreements.
(a) Except as set forth in Schedule 4.9, as of the date as of
this Agreement, with respect to the Assets or operation of the Systems, Seller
is not a party to or bound by:
(i) any contract for the purchase, sale or lease of real
property or any option to purchase or sell real property;
(ii) any installment sale agreement or liability for the
deferred purchase price of property with respect to any of the Assets involving
payments exceeding $25,000 individually;
(iii) any multiple dwelling unit agreement (covering fifty
(50) or more units), written agreement with subscribers for cable television
service or written hotel and motel agreement, except for such agreements as have
been entered into in the ordinary course of business; or
(iv) any other contract, agreement, commitment,
understanding or instrument, including any retransmission consent agreement,
that is material to Seller, the
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Systems or the Assets, other than those instruments referred to in Sections
4.6(b), 4.7(b) and 4.10 and other than agreements and instruments involving
payments, individually, of $25,000 or less or that are terminable on sixty (60)
days' notice or less (collectively, with such other agreements described in
clauses (a)(i) through (iii), and the Pole Attachment Agreements and other
agreements and instruments referred to in Sections 4.6(b), 4.7(b) and 4.10, as
well as such Agreements as are not required to be listed in any Schedule hereto,
the "Agreements"). Except as set forth in Schedule 4.8A, Seller has delivered to
Buyer copies of all Agreements that are identified in Schedule 4.9. All of the
Agreements are in full force and effect.
(b) Seller is in compliance in all material respects with the
terms of all Agreements to which it is a party or by which it is bound or
affected, and there are no material uncured defaults thereunder.
4.10 Pole Attachment Agreements; Related Agreements. Schedule 4.10
contains a list, as of the date hereof, of all contracts, agreements and
understandings (other than the Governmental Authorizations listed in Schedule
4.8 and the Agreements described in Section 4.9) with respect to the Assets or
Systems to which Seller is a party or by which it is bound relating to: (i) the
use of any public utility facilities including, without limitation, all pole
line, joint pole or master contracts for pole attachment rights and the use of
conduits (herein called "Pole Attachment Agreements"), (ii) the use of any
microwave or satellite transmission facilities or (iii) the sale of cablecast
time to third parties for advertising or other purposes. Except as set forth in
Schedule 4.8A, Seller has delivered to Buyer copies of all Pole Attachment
Agreements and other agreements and instruments referred to in Schedule 4.10.
4.11 Retransmission Consent and Must-Carry; Rate Regulation;
Copyright Compliance.
(a) Set forth in Schedule 4.11 is a list of the stations
within the Systems that have elected "must-carry" or retransmission consent
status pursuant to the Cable Act. Seller has delivered to Buyer copies of all
retransmission consent agreements and copies of all must-carry election notices
that are in Seller's possession. To Seller's Knowledge, each station carried by
any of the Systems is carried pursuant to a retransmission consent agreement,
"must-carry" election or other programming agreement.
(b) Seller has filed with the Copyright Office all required
statements of account with respect to the Systems that were required to have
been filed since July 1, 1999 in accordance with the Copyright Act of 1976 and
regulations promulgated pursuant thereto (collectively referred to herein as the
"Copyright Act"), and Seller has paid all royalty fees payable with respect to
the Systems since July 1, 1999. Seller has delivered to Buyer copies of all
Statements of Account referred to in this Section 4.11(b).
(c) Seller has not, since November 12, 1999, received any
written notice that, and Seller has no Knowledge that since January 1, 1999, it
or any of the Systems operated by it: (i) is not or has not been in compliance
in all material respects with the Communications Act and all applicable rules of
the FCC, except for such compliance which would not be reasonably expected to
have a Material Adverse Effect; or (ii) has not made all material filings
required to
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be made by it with the FCC in connection with the Systems or provided all
material notices to customers of the Systems required under the Communications
Act and the FCC's rules and regulations, other than such filings and notices,
the failure of which to be made or provided would not be reasonably expected to
have a Material Adverse Effect. Schedule 4.11 sets forth the cable television
service rates charged in each of the Systems. Seller has not, since November 12,
1999, received any notice that any of such rates are not permitted rates under
the rules and regulations of the FCC. Schedule 4.11 also sets forth a list, as
of the date hereof, of all pending rate complaints on file at the FCC with
respect to the Systems.
4.12 Litigation. Except as set forth in Schedule 4.12, and except
as may be disclosed pursuant to Section 4.8(b), there is no claim, legal action,
arbitration or other legal, governmental, administrative or tax proceeding or
any order, complaint, decree or judgment pending, or to Seller's Knowledge
threatened, against or relating to Seller or the Systems other than (i) FCC and
other proceedings generally affecting the cable television industry and not
specific to Seller; and (ii) routine collection actions with respect to the
payment by subscribers for services rendered by Seller and other proceedings and
actions arising in the ordinary course of business that are covered by Seller's
insurance policies.
4.13 Compliance with Laws. Except as may be disclosed pursuant to
Section 4.8(b), Seller has not, since November 12, 1999, received any notice of
any claim by any Governmental Authority, and Seller has no Knowledge that Seller
has not been or is not in compliance with any Legal Requirement applicable to
it, the Systems or the Assets.
4.14 Employee Benefit Plans.
(a) All Employee Plans and Compensation Arrangements providing
benefits to Employees or Employees of the Systems whose employment terminated
since November 12, 1999 ("Systems Plans") are listed in Schedule 4.14(a). Except
as disclosed in Schedule 4.14(a), there is no new Employee Plan or Compensation
Arrangement or any amendment to an existing Employee Plan or Compensation
Arrangement that will affect the benefits of Employees or former Employees of
the Systems and that is to become effective after the date of this Agreement.
(b) Each Employee Plan and Compensation Arrangement has been
established, maintained, operated and administered in accordance with its own
terms and, where applicable, ERISA, the Code, and any other applicable Legal
Requirement.
(c) To Seller's Knowledge no lien has arisen under Section 412
of the Code or Section 302 of ERISA in favor of any Employee Plan.
4.15 Labor Relations; Employees.
(a) Seller is not a party to any collective bargaining
agreement or other contract with any labor organization regarding any of the
Employees of the Systems; Seller has not recognized any union or other
collective bargaining representative of any group of
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Employees of the Systems; and no union or other collective bargaining
representative has been certified as representing any of the Employees of the
Systems;
(b) there currently is no (i) unfair labor practice charge or
complaint against Seller involving any Employee of the Systems pending before
the National Labor Relations Board, any state labor relations board or any court
or tribunal, (ii) grievance or other claim involving any Employee of the Systems
pending before any Governmental Authority against Seller, or (iii) arbitration
proceeding arising out of or under any collective bargaining agreement pending
before any Governmental Authority against Seller involving any Employee of the
Systems;
(c) Except with respect to ongoing disputes of a routine
nature or involving immaterial amounts, Seller has paid in full to all of its
Employees providing services to the Systems all wages, salaries, commissions,
bonuses, benefits and other compensation due and payable to such Employees.
4.16 Environmental Matters. Except for any such noncompliance of an
insubstantial nature that has been remedied as required by applicable
Environmental Laws: (a) Seller's operations with respect to the Systems have
complied and comply in all material respects with all applicable Environmental
Laws; (b) Seller has not used the Real Property for the manufacture,
transportation, treatment, storage or disposal of Hazardous Substances except
for gasoline and diesel fuel and such use of Hazardous Substances (in cleaning
fluids, solvents and other similar substances) customary in the construction,
maintenance and operation of a cable television system and in amounts or under
circumstances that would not reasonably be expected to give rise to material
liability for Remedial Action, and (c) to Seller's Knowledge, the Real Property
complies and has complied in all material respects with all applicable
Environmental Laws. Except as set forth in Schedule 4.16, to Seller's Knowledge,
no underground storage tank is located under any of the Real Property, and to
Seller's Knowledge, none of the Real Property has been used as a gasoline
service station or any other facility for storing, pumping, dispensing or
producing gasoline or any other petroleum products or wastes. Seller has
delivered to Buyer copies of all assessments, studies, reports and surveys
relating to the environmental condition of the Real Property, including but not
limited to the presence or alleged presence of Hazardous Substances at or on the
Real Property, that are in the possession or under the control of Seller. To
Seller's Knowledge, no ambient asbestos is present at the Real Property.
4.17 Bonds; Letters of Credit. Schedule 4.17 sets forth a list of
all franchise, construction, fidelity, performance and other bonds, guaranties
in lieu of bonds and letters of credit posted by Seller in connection with its
operation of any of the Systems.
4.18 Information on the Systems and Subscribers.
(a) Schedule 4.18 sets forth a list, as of the date set forth
in said Schedule, of the Systems that are owned and operated by Seller and for
each System a materially accurate statement of the following information:
(i) the total number of Subscribers served by such
System;
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(ii) the bandwidth capacity of the System specified in
MHz; and
(iii) the channel line-up and rate card for such System.
(b) Seller has made available to Buyer all existing system
engineering drawings and "as built" maps with respect to the Systems that are in
the possession of Seller and that have been requested by Buyer or its
representatives for review.
4.19 Broker; Brokers' Fees. Except for Daniel & Associates, Inc.,
which has been retained by and whose fee shall be paid by Sellers, neither
Seller nor any Person acting on its behalf has dealt with any broker or finder
in connection with the transactions contemplated by this Agreement or incurred
any liability for any finders' or brokers' fees or commissions in connection
with the transactions contemplated by this Agreement. Sellers agree to indemnify
and hold harmless Buyer against any fee, commission, loss or expense arising out
of any claim by any other broker or finder employed or alleged to have been
employed by them.
5. Representations And Warranties of Buyer.
Buyer represents and warrants to Sellers that the following statements
are true and correct:
5.1 Organization, Qualification and Power. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Pennsylvania, with full power and authority to own, lease or license
its properties and assets and to carry on the business in which it is engaged in
the manner in which such business is now carried on. On the Closing Date, Buyer
will be duly qualified to do business in all jurisdictions where the ownership
and operation of the Assets and Systems requires such qualification.
5.2 Capacity; Due Authorization; Enforceability. All requisite
corporate action required to be taken by Buyer for the execution, delivery and
performance by Buyer of this Agreement and all Related Agreements to which Buyer
is a party have been duly performed. Buyer has the full legal capacity and legal
right, power and authority to enter into this Agreement and the Related
Agreements and to consummate the transactions contemplated hereby and thereby.
This Agreement has been duly executed and delivered by Buyer and is, and this
Agreement and each of the Related Agreements to which Buyer is a party, upon
execution and delivery, will be, a legal, valid and binding obligation of Buyer,
enforceable in accordance with its respective terms, except in each case to the
extent that such enforcement may be subject to applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws of general application
affecting the rights and remedies of creditors or secured parties, and that the
availability of equitable remedies including specific performance and injunctive
relief may be subject to equitable defenses and the discretion of the court
before which any proceeding therefor may be brought.
5.3 Absence of Conflicting Agreements. The execution and delivery
of this Agreement and the Related Agreements to which Buyer is a party and the
consummation of the transactions contemplated hereby and thereby (provided all
of the Required Consents are
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obtained and the applicable waiting period(s) under the HSR Act shall have
expired or been terminated) will not (a) violate Buyer's certificate of
incorporation or bylaws; (b) violate any Legal Requirement applicable to Buyer,
the Assets on the Systems; (c) conflict with or result in a breach of or default
under any contract, note, mortgage or agreement to which Buyer is a party or by
which Buyer is bound.
5.4 Litigation. There is no claim, legal action, arbitration or
other legal, governmental, administrative or tax proceeding, or any order,
complaint, decree or judgment pending, or, to Buyer's knowledge, threatened,
that would prevent, limit, delay or otherwise interfere with Buyer's ability to
consummate the transactions contemplated by this Agreement in accordance with
the terms hereof.
5.5 Financial Capability. Buyer has the financial capability,
including to obtain financing, necessary to consummate the transactions
contemplated in this Agreement, in accordance with the terms hereof, including
payment of the Purchase Price.
5.6 Brokers. Neither Buyer nor any Person acting on its behalf has
dealt with any broker or finder in connection with the transactions contemplated
by this Agreement or incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
6. Covenants of Sellers and Buyer.
6.1 Continuity and Maintenance of Operations.
(a) Except as Buyer may otherwise agree in writing, until the
Closing each Seller shall operate its respective Systems in the ordinary course
of business consistent with Past Practices and shall:
(b) (i) maintain and repair the Assets in the ordinary
course of business consistent with its year 2000 budgets, and at Closing the
Assets will be in substantially the same condition as they are in as of the date
hereof, subject to ordinary wear and tear;
(ii) maintain its inventory and other supplies and spare
parts at levels consistent with its year 2000 budgets;
(iii) make capital expenditures substantially in
accordance with its year 2000 capital budget;
(iv) use commercially reasonable efforts to comply with
Legal Requirements applicable to the Systems;
(v) not conduct promotional activities inconsistent with
Past Practices;
(vi) continue its procedures for disconnection and
discontinuance of service to subscribers whose accounts are delinquent, in
accordance with Past Practices; and
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(vii) not enter into installment sale agreements and other
agreements under which Buyer would be obligated to pay the deferred purchase
price of property, which agreements collectively will involve aggregate payments
in excess of $25,000 following the Closing Date.
(c) Except as required by law and except as budgeted by
Seller, after the date of this Agreement, Seller will not, without giving prior
written notice to Buyer, change customer rates for any tier of service or
charges for remote or installation, make channel additions, channel
substitutions, change the channel lineups or implement any retiering or
repackaging of cable television programming offered by any of the Systems, or
change billing, collection or installation practices.
6.2 Access to Sellers; Confidentiality.
(a) Upon reasonable advance notice, each Seller shall afford
to the officers, employees and authorized representatives of Buyer and to the
employees and authorized representatives of Buyer's equity and financing sources
reasonable access during normal business hours to its respective Systems and to
its offices, properties and business and financial records (including computer
files, retrieval programs and similar documentation) that relate to its
respective Systems and the operation thereof.
(b) Until Closing Buyer (i) shall use reasonable efforts to
cause its directors, officers, employees and representatives and the employees,
representatives and agents of Buyer's equity and financing sources to hold in
strict confidence all information furnished to any of them by Sellers in
connection with the transactions contemplated by this Agreement that is not
otherwise available to the public (the "Confidential Information"), and (ii)
shall not, without the prior written consent of the Seller or Sellers to which
such Confidential Information pertains, release or disclose any Confidential
Information to any other person, except (A) to the extent required by applicable
law, (B) as necessary in connection with filings, approvals and rulings to be
obtained from any governmental agency, including, but not limited to, the
Federal Trade Commission, the Department of Justice, the Securities and Exchange
Commission and the Internal Revenue Service (it being understood that any such
filing may include the filing of a copy of this Agreement), (C) to Buyer's
equity and financing sources and its directors, officers, employees or
representatives who are informed by Buyer of the confidential nature of the
Confidential Information, (D) as necessary to obtain consents to the transfer of
any Franchise or otherwise necessary for the consummation of the transactions
contemplated by this Agreement, and (E) as otherwise permitted by the remainder
of this Section 6.2(b). In the event Buyer or any person to whom Buyer transmits
Confidential Information pursuant to this Agreement becomes legally compelled to
disclose any of the Confidential Information, Buyer shall provide the Seller or
Sellers to which such Confidential Information pertains with prompt notice so
that such Seller(s) may seek a protective order or other appropriate remedy or
waive compliance with the provisions of this Section 6.2(b), or both. In the
event that such protective order or other remedy is not obtained, or that Seller
waives compliance with the provisions of this Section 6.2(b), Buyer shall
furnish only that portion of the Confidential Information which is legally
required.
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(c) Following the Closing, upon reasonable notice by Buyer,
each Seller shall afford to Buyer's officers, employees, accountants and other
authorized representatives, reasonable access to such Seller's business and
financial records and accountants that relate to such Seller's Systems to enable
Buyer to obtain information and data reasonably required in connection with the
preparation of Buyer's financial statements and any regulatory filings relating
to such Seller's Systems.
6.3 Notification.
(a) Each party shall promptly notify the other of any action,
suit, proceeding or investigation that is instituted or threatened against such
party to restrain, prohibit or otherwise challenge the legality or propriety of
any transaction contemplated by this Agreement.
(b) If Buyer or any Seller acquires actual knowledge before
the Closing Date that a material breach of any of Sellers' or Buyer's (as the
case may be) representations or warranties has occurred, the party acquiring
such actual knowledge shall provide prompt written notice to Buyer or the
applicable Seller (as the case may be) describing such breach. Notwithstanding
the foregoing, no notice or information delivered by or to any party shall
affect the other party's right to rely on any representation or warranty made by
such party or relieve such party of any obligations under this Agreement as the
result of a breach of any of its representations and warranties.
6.4 No Public Announcement. Prior to the Closing Date, no party
hereto shall, without the approval of the other party, make any press release or
other public announcement concerning the transactions contemplated by this
Agreement, except as and to the extent that any such party shall be so obligated
by law, in which case the other party shall be advised and the parties shall use
their reasonable efforts to cause a mutually agreeable release or announcement
to be issued.
6.5 Regulatory Filings. As soon as may be reasonably practicable,
but in no event later than thirty (30) days after the date hereof, Buyer and
Sellers shall file or cause to be filed with the Federal Trade Commission and
the Antitrust Division of the United States Department of Justice such
Notifications and Report Forms relating to the transactions contemplated hereby
as are required by the pre-merger notification rules issued under the HSR Act.
Buyer and each applicable Seller shall: (i) promptly supply each other with any
information provided in response to any requests for additional information made
by either of such agencies, and (ii) use all reasonable efforts to cause the
waiting period under the HSR Act to terminate or expire at the earliest possible
date. Buyer and the applicable Sellers shall share equally all filing fees
associated with each Notification and Report Form required to be filed in
connection with this Agreement.
6.6 Employees; Employee Benefits.
(a) Subject to the following sentence, effective as of and
contingent upon the Closing, Buyer shall make offers of employment to such
Employees who render services to the Systems as Buyer shall determine, in its
sole and absolute discretion (each Employee who
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accepts Buyer's offer of employment and who becomes an employee of Buyer
effective as of the Closing hereinafter called a "Transferred Employee"). Not
less than thirty (30) days prior to the Closing, Buyer shall notify each Seller
in writing of the Employees of such Seller to whom Buyer intends offer
employment, and Buyer shall make offers of employment to such Employees in
accordance with the preceding sentence. Prior to Closing each Seller shall, with
respect to its Employees, take all actions reasonably necessary to comply with
the WARN Act, if applicable, and any applicable comparable state laws. Each
Seller shall pay when required all compensation and shall provide all benefits
to its respective Employees as are required, and, except as set forth in Section
6.6(b) Seller shall retain liability for all obligations and liabilities owed to
its respective Employees that relate to periods prior to the Closing Date.
(b) Buyer shall offer group health plan coverage to all
Transferred Employees and their spouses and eligible dependents who are covered
on the Closing Date under a group health plan maintained or contributed to by
Sellers, and such coverage shall be the same, and shall be subject to the same
terms and conditions, as Buyer provides to similarly situated employees,
provided that such coverage shall be effective as of the Closing and that no
pre-existing condition limitation shall be applied to any such Transferred
Employees, their spouses and eligible dependents unless, and only to the same
extent that, such persons are subject to pre-existing condition limitations
under Sellers' group health plan. Each Seller shall have full responsibility and
liability for offering and providing "continuation coverage" to any "covered
employee" who is an Employee, and to any "qualified beneficiary" of such
Employee, and who is covered by a "group health plan" sponsored or contributed
to by such Seller (all such group health plans of Sellers individually and
collectively called "Sellers' Health Plans") to the extent that such
continuation coverage is required to be provided by such Seller under Code
Section 4980B, and the regulations promulgated thereunder, as a result of a
"qualifying event" experienced by such covered employee or qualified beneficiary
with respect to or in connection with the transactions contemplated by this
Agreement. "Continuation coverage," "covered employee," "qualified beneficiary,"
"qualifying event" and "group health plan" all shall have the meanings given
such terms under Section 4980B of the Code and Section 601 et seq. of ERISA.
(c) Sellers have delivered to Buyer separately descriptions of
Sellers' vacation and sick leave policies. Within ten (10) days following
Buyer's delivery to Sellers of the notices referred to in Section 6.6(a)
(regarding the Employees to whom Buyer intends to make offers of employment),
each Seller shall provide to Buyer a list of the accrued vacation and sick leave
of each of its Employees to whom Buyer has indicated it intends to offer
employment. Each Transferred Employee shall be credited under Buyer's vacation
and sick leave policy with the full amount of vacation leave accrued by such
Transferred Employee but unused as of the Closing Date under the vacation
policies of Sellers applicable to such Transferred Employee.
(d) From the date of this Agreement through the date that is
one (1) year following the Closing, without Buyer's consent, neither Sellers,
Charter nor any of Charter's subsidiaries will solicit the employment of persons
who are employees of the Systems as of the date hereof or who become employees
of the Systems prior to Closing, other than (i) any such employee who does not
accept Buyer's offer of employment; and (ii) any Transferred Employee whose
employment is terminated by Buyer following the Closing.
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6.7 Required Consents.
(a) Following the execution hereof, until the Closing Date,
each Seller shall use commercially reasonable efforts, and Buyer shall cooperate
in good faith with Sellers, to obtain all Required Consents, including Required
Consents under the Franchises, Licenses and Agreements. Each Seller and Buyer
shall prepare and file, or cause to be prepared and filed, within fifteen (15)
days after the date hereof (subject to extension for a period of up to an
additional ten (10) days, if reasonably necessary for a party to complete its
application), all applications (including FCC Forms 394 or other appropriate
forms, to the extent such Seller determines they are necessary or appropriate)
required to be filed with the FCC and any other Governmental Authority that are
necessary for the assignment to Buyer, in connection with the consummation of
the transactions contemplated by this Agreement, of the Governmental
Authorizations. The parties shall also make appropriate requests, as soon as
practicable after the date hereof, for any Required Consent required under any
Agreement. Notwithstanding subsection (d)(i) hereof, and subject to subsection
(d)(ii) hereof, nothing in this Section 6.7 shall require the expenditure or
payment of any funds (other than in respect of normal and usual attorneys' fees,
filing fees or other normal costs of doing business) or the giving of any other
consideration by Buyer or Sellers, provided that Sellers shall be liable for all
obligations or liabilities under each Governmental Authorization or Agreement
during the period prior to the Closing Date.
(b) In connection with and as part of the parties' efforts to
obtain the Required Consents of each applicable Governmental Authority to the
transfer of any Franchise issued thereby from each applicable Seller to Buyer,
such Seller shall use commercially reasonable efforts to obtain, with Buyer's
cooperation, a Franchise Renewal for each such Franchise that has expired or
shall expire prior to the Closing Date, and a Franchise Extension for each such
Franchise that shall, by its terms, expire during the thirty-month period
subsequent to the Closing Date.
(c) Sellers shall also use commercially reasonable efforts to
cause each such Required Consent relating to a Franchise or Agreement to include
provisions that permit (i) Buyer to grant a security interest in such Franchise
or Agreement to its lender(s) providing financing to Buyer with respect to the
transaction contemplated hereby, and (ii) Buyer to transfer such Franchise or
Agreement to any Affiliate of Buyer that agrees in writing as a condition to
such transfer to be bound by any and all obligations of Buyer in connection
therewith; provided, that Sellers shall have no additional obligation with
respect to obtaining such provisions if the inclusion of such provisions would
cause such Required Consent to be unreasonably withheld, delayed or otherwise
conditioned.
(d) (i) Buyer agrees that if in connection with the process of
obtaining any Required Consent, Franchise Renewal or Franchise Extension, a
Governmental Authority or other Person purports to require any condition or any
change to a Franchise, License or Agreement to which such Required Consent,
Franchise Renewal or Franchise Extension relates that would be applicable to
either Buyer or Sellers as a requirement for granting such Required Consent,
Franchise Renewal or Franchise Extension, which condition or change involves a
monetary payment or commitment to such Governmental Authority or other Person,
either Buyer
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or Sellers may elect, in its or their sole discretion, to satisfy such monetary
payment or commitment, in which case, Buyer and Sellers will accept any
condition or change in the Franchise, License or Agreement to which such
Required Consent, Franchise Renewal or Franchise Extension relates to the extent
provided herein.
(ii) Subject to the terms of subsection (i) above, no
Seller shall agree, without Buyer's prior written consent, which consent Buyer
shall grant or withhold in its reasonably exercised discretion, to any adverse
change (other than immaterial, non-monetary changes) to the terms of any
Governmental Authorization or Agreement as a condition to obtaining any Required
Consent to the assignment of such Governmental Authorization or Agreement to
Buyer. If in connection with the obtaining of any Required Consent, a
Governmental Authority or other third party seeks to impose any condition or
adverse change to any Governmental Authorization or Agreement to which such
Required Consent relates that would be applicable to Buyer as a requirement for
granting such Required Consent, Sellers shall promptly notify Buyer of such fact
and Sellers shall not agree to such condition or adverse change unless Buyer
shall, in its reasonably exercised discretion, consent to such condition or
change in writing.
(e) Buyer shall promptly furnish to any Governmental Authority
or other Person from which a Required Consent, Franchise Extension or Franchise
Renewal is requested such accurate and complete information regarding Buyer and
its Affiliates, including financial information relating to the cable and other
media operations of Buyer and its Affiliates, as a Governmental Authority or
other Person may reasonably require in connection with obtaining any Required
Consent, Franchise Extension or Franchise Renewal.
(f) It is understood and agreed that nothing herein shall
prevent Buyer or its Affiliates (or their employees, agents, representatives and
any other Person acting on behalf of Buyer and its Affiliates) from making
statements or inquiries to, attending meetings of, making presentations to, or
from responding to requests initiated by, Governmental Authorities or other
Persons from which a Required Consent, Franchise Extension or Franchise Renewal
is sought, and Buyer shall use commercially reasonable efforts to apprise
Sellers of all such requests.
6.8 Use of Transferor's Name. For a period of 180 days after the
Closing Date, Buyer may continue (but only to the extent reasonably necessary)
to operate the Systems using the name "Enstar" and all derivations and
abbreviations of such name and related trade names and marks in use in the
Systems on the Closing Date, such use to be in a manner consistent with the way
in which Sellers have used the marks. Within 180 days after the Closing Date,
Buyer will discontinue using and will dispose of all items of stationery,
business cards and literature bearing such name or marks. Notwithstanding the
foregoing, Buyer will not be required to remove or discontinue using any such
name or mark that is affixed to converters or other items in or to be used in
customer homes or properties, or as are used in similar fashion making such
removal or discontinuation impracticable for Buyer.
6.9 Delivery of Subscriber Information. Between the date of this
Agreement and the Closing Date, promptly after the preparation thereof, each
Seller shall deliver to Buyer true, correct and complete copies of (i) quarterly
financial information, including a balance sheet, a
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statement of income and expenses and a statement of cash flows (ii) quarterly
statements of capital expenditures with respect to such Seller's Systems and
(iii) monthly subscriber counts for its Systems prepared by such Seller for its
internal use.
6.10 Tax Matters. All transfer, documentary, sales, use, stamp,
registration and other Taxes and fees (including any penalties and interest),
incurred in connection with the transactions consummated pursuant to this
Agreement with respect to the Assets conveyed by any Seller shall be shared
equally by Buyer and such Seller. Buyer and Sellers will cooperate in all
reasonable respects to prepare and file all necessary federal, state and local
tax returns, tax information returns, reports and estimates and other
documentation with respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes and fees.
6.11 Further Assurances; Satisfaction of Covenants. Sellers and
Buyer each shall execute such documents and other papers and take or cause to be
taken such further action as may be reasonably required to carry out the
provisions hereof and to consummate and make effective the transactions
contemplated hereby. Sellers and Buyer shall each use commercially reasonable
efforts to satisfy each of its covenants and obligations under this Agreement
and to satisfy each condition to Closing it is required to satisfy hereunder.
6.12 Environmental Reports; Title Commitments.
(a) (i) Buyer shall be entitled to obtain, at its own
expense, during the period of sixty (60) days after the date hereof (the "Real
Estate Inspection Period") (A) commitments of title insurance ("Title
Commitments") issued by a nationally-recognized title insurance company selected
by Buyer and reasonably acceptable to Sellers (a "Title Company"), committing to
insure fee title to the parcels of Real Property owned by Sellers and leasehold
title to those parcels of Real Property leased by Sellers, by ALTA (1992)
owner's policies of title insurance, (B) surveys of said parcels of Real
Property, in such form as is necessary to obtain the title insurance to be
issued pursuant to the Title Commitments, with the standard printed exceptions
relating to survey matters deleted ("Surveys"), certified to Buyer and to the
Title Company issuing the Title Commitment with respect to that parcel of Real
Property, and (C) Phase I environmental reports concerning the owned or leased
Real Property, which shall be performed by environmental consulting or
engineering firms reasonably acceptable to Buyer and Sellers (together with any
Phase II report, "Environmental Reports"). Buyer shall deliver to Sellers true
and complete copies of all such Title Commitments, Surveys and Environmental
Reports within five (5) Business Days after Buyer's receipt thereof.
(ii) If any Phase I Environmental Report discloses a potential
presence of Hazardous Substances or a violation of any Environmental Law that is
sufficiently material to reasonably warrant a Phase II study, or shall otherwise
recommend performance of a Phase II study, then Buyer shall have the right
(subject to the provisions of this Paragraph (a)(ii)) beyond such 60 day period,
to obtain a Phase II report with respect to the subject parcel of Real Property,
in which event the Real Estate Inspection Period shall be extended accordingly
(but not more than 45 days) with respect to such parcel of Real Property. Any
such Phase II report shall be ordered promptly after receipt and analysis of the
respective Phase I report. If Buyer proposes to undertake a Phase II
environmental study on any parcel of Real Property, Buyer shall provide to
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the applicable Seller a plan for such proposed study prior to commencing the
same, and such Seller shall have the right (which such Seller shall exercise by
written notice to Buyer within ten (10) Business Days after receipt of Buyer's
proposal) to deny by Buyer's request to perform such Phase II environmental
study on such Real Property. If such Seller refuses to allow such Phase II
study, Buyer may terminate this Agreement by written notice to Sellers within
ten (10) Business Days of such Seller's refusal, or Buyer may elect to close
notwithstanding such refusal. If Buyer elects to close notwithstanding such
refusal, (A) Buyer may not thereafter terminate this Agreement based on Title
Defects or Environmental Defects of the applicable parcel of Real Property, (B)
Buyer shall not have any recourse against Sellers based on such Title Defects or
Environmental Defects except as provided in clause (C) of this sentence, and (C)
if within six (6) months after Closing, Buyer incurs environmental remediation
expenses in respect of Environmental Defects at the site(s) for which a Seller
refused to allow a Phase II study, such Seller will reimburse Buyer for the
reasonable costs of such remediation; provided, that (I) in no event shall the
aggregate amount of reimbursement by Sellers under this clause (C) and any
remediation costs incurred by Sellers prior to Closing in respect of
Environmental Defects and Title Defects (other than monetary Encumbrances that
Seller is required to remove regardless of the amount thereof) exceed $100,000
in the aggregate, and (II) this clause (C) shall be inapplicable if a Purchase
Price reduction is made under Subsection (b) or (c) of this Section 6.12.
(b) In the event that a Title Commitment or Survey reveals the
existence of any matter that renders title to the subject Real Property to be
other than as represented herein (a "Title Defect"), and Buyer requests in
writing, within ten (10) days of Buyer's receipt of the relevant Title
Commitment or Survey, that the applicable Seller remedy the same, then such
Seller shall use commercially reasonable efforts to either cure the Title Defect
or cause the Title Company to insure over it; provided, that Sellers shall not
be obligated to expend more than an aggregate amount of $100,000 for remediation
of all Title Defects and Environmental Defects required to be remedied hereunder
(other than monetary Encumbrances that Seller is required to remove regardless
of the amount thereof); and if it is reasonably expected that the cost of such
remediation together with the actual or estimated expense of remedying
Environmental Defects will exceed $100,000 in the aggregate, such Seller shall
have no obligation to undertake such remediation. A Seller's decision regarding
whether to undertake remediation shall be made by written notice to Buyer within
ten (10) Business Days after all Title Defects and Environmental Defects are
disclosed to Sellers. If under such circumstances the applicable Seller elects
to not undertake such remediation, Buyer may, by notice to such Seller given
within ten (10) Business Days after such Seller's election to not remediate,
terminate this Agreement, or Buyer may, by notice to Sellers given within ten
(10) Business Days after such Seller's election to not remediate, elect to close
notwithstanding such election. If Buyer elects to close notwithstanding such
election, (i) Buyer may not thereafter terminate this Agreement based on Title
Defects or Environmental Defects; (ii) Buyer shall have no recourse against
Sellers based on any such Title Defects or Environmental Defects (including any
claim for indemnification pursuant to Section 10 hereof); and (iii) at Closing
the Purchase Price shall be reduced by $100,000; provided, that there shall be
no such reduction in the Purchase Price under this subsection (b) if there is a
Purchase Price reduction under Subsection (c) below.
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(c) In the event that an Environmental Report reveals the
presence of Hazardous Substances on the Real Property that could reasonably
result in liability to the owner or user thereof or reveals noncompliance with
any Environmental Law (either, an "Environmental Defect"), and Buyer requests in
writing, within ten (10) days of Buyer's receipt of the relevant Environmental
Report, that the applicable Seller remedy the same, such Seller shall use
commercially reasonable efforts to cure any such Environmental Defect; provided,
that Sellers shall not be obligated to expend more than an aggregate of $100,000
for remediation of all Environmental Defects and Title Defects (other than
monetary Encumbrances that Seller is required to remove regardless of the amount
thereof); and, if it is reasonably expected that the cost of such remediation
together with the actual or estimated cost of remedying Title Defects (other
than monetary Encumbrances that Seller is required to remove regardless of the
amount thereof) will exceed $100,000 in the aggregate, such Seller shall have no
obligation to undertake such remediation. A Seller's decision as to whether to
undertake remediation shall be made by written notice to Buyer within ten (10)
Business Days after all Title Defects and Environmental Defects are disclosed to
Sellers. If under such circumstances the applicable Seller elects to not
remediate, Buyer may, by notice to Sellers given within ten (10) Business Days
after such Seller's election to not remediate, proceed to close notwithstanding
such election. If Buyer elects to close notwithstanding such election, (i) Buyer
may not thereafter terminate this Agreement based on Title Defects or
Environmental Defects; (ii) Buyer shall have no recourse against Sellers based
on Title Defects or Environmental Defects (including any claim for
indemnification pursuant to Section 10 hereof); and (iii) at Closing the
Purchase Price shall be reduced by $100,000; provided, that there shall be no
such reduction in the Purchase Price under this Subsection (c) if there is a
Purchase Price reduction under Subsection (b) above.
(d) After the Real Estate Inspection Period (as it may be
extended pursuant to Subsection (a)(ii) hereof) Buyer shall not be entitled to
terminate this Agreement based on Title Defects or Environmental Defects, nor
shall Buyer be entitled to make any claim for indemnification pursuant to
Section 10 hereof based on Title Defects or Environmental Defects.
(e) Buyer shall indemnify each Seller and hold each Seller
harmless from and against any losses incurred by such Seller relating to damage
to Real Property in connection with Buyer's obtaining any Environmental Reports.
6.13 Limited Partner Consents. As soon as reasonably practicable
following the execution hereof, the Limited Partnerships and the General
Partners shall, if required to do so under applicable Legal Requirements, file
with the SEC proposed proxy materials relating to the Limited Partnerships' and
the General Partners' solicitation of the Limited Partner Consents. Each Limited
Partnership and General Partner shall use reasonable efforts (i) to have such
proxy materials cleared by the SEC (if applicable) so as to enable it to
disseminate definitive proxy materials to its respective Limited Partners, (ii)
to disseminate such materials, upon receipt of SEC clearance (if applicable), to
its respective Limited Partners and (iii) thereafter to obtain the Limited
Partner Consents. Sellers shall give Buyer prompt notice when the Limited
Partner Consents have been obtained and when any material development has
occurred that causes substantial doubt as to whether the Limited Partner
Consents will be obtained.
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6.14 Acquisition Proposals. If, prior to obtaining all the Limited
Partner Consents, any Seller or any Person acting on behalf of any Seller
receives a solicitation from a third party regarding an Acquisition Proposal (as
defined herein), which Acquisition Proposal such Seller intends to submit to its
respective Limited Partners (or the Limited Partners of its General Partner, as
the case may be) for their approval, such Seller shall, within five (5) Business
Days following receipt of such solicitation, notify Buyer in writing of the
price and other material terms of such Acquisition Proposal, and Buyer shall be
entitled, within five (5) Business Days following receipt of such notification,
to submit an Acquisition Proposal in response to the third party's Acquisition
Proposal (a "Buyer Acquisition Proposal"), which Buyer Acquisition Proposal
shall contain all the terms and conditions of this Agreement other than the
Purchase Price. For purposes hereof, an "Acquisition Proposal" means any bona
fide proposed (i) asset acquisition or exchange or similar transaction providing
for any third party's acquisition of any of the Assets or Systems or (ii)
acquisition of partnership interests, merger, consolidation, exchange of
partnership or other equity interests or similar transaction that would result
in the acquisition by any third party of a percentage of the Interests (as
defined herein) in any Seller sufficient to give such third party voting control
over the applicable Seller. For purposes hereof, an "Interest" in any Seller
means an interest in the capital and profits of such Seller or General Partner
that is acquired by the making of a capital contribution to such Seller or as
otherwise provided under the general or limited partnership agreement applicable
to such Seller.
6.15 Noncompetition Agreement. Charter agrees, on behalf of itself
and its direct and indirect subsidiaries, that prior to the third anniversary of
the Closing Date it will not, without the written consent of Buyer, directly or
indirectly, own, manage, operate or control, engage or participate in the
ownership, management, operation or control of or be connected as a shareholder,
partner, manager, agent or otherwise with any business or company any part of
which operates hardwire cable television systems (or which obtains or holds any
franchises therefor) within any of the Franchise Areas. Notwithstanding the
foregoing, nothing in this provision shall be construed to prohibit the
following: (i) the ownership of a company's securities that constitute less than
ten percent (10%) of the outstanding voting stock of such company or does not
otherwise constitute control over such company, (ii) the operation by Charter or
any of its subsidiaries that are bound by this provision of cable television
systems (or the holding of franchises therefor) in those geographical areas
included in the Franchise Areas for which Charter or any such subsidiary holds a
cable franchise on the date hereof or (iii) the direct or indirect ownership,
management, operation or control by Charter or any of its subsidiaries that are
bound by this provision of any cable business as the result of a transaction in
which the subscribers involved that are located within the Franchise Areas
constitute a minority of the subscribers involved in such transaction.
6.16 Microwave Services; Headend Services.
(a) Buyer agrees that following the Closing, Buyer shall
provide cable television signals to certain customers of Charter (or an
Affiliate of Charter), currently serviced by Enstar Cumberland, who are located
in Columbia/Adair and Green Counties, Kentucky, from headends that are included
within the Assets Buyer is acquiring from Enstar Cumberland hereunder. In
furtherance thereof, at Closing, Buyer and Charter (or such Affiliate, as the
case may be) shall enter into an agreement for the provision of such signals,
which agreement shall be
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on reasonable and customary terms to be discussed by the parties thereto
("Headend Services Agreement").
(b) Buyer and Sellers agree that in the event that following
the Closing it is necessary for Buyer to provide microwave signals to any of the
Systems in order for such System or Systems to continue to carry all of the
programming carried by it or them as of the Closing, Buyer and the affected
Seller(s) shall enter into an agreement at the Closing to provide for Buyer's
provision of such signal,s which agreement shall be on reasonable and customary
terms to be discussed by the parties thereto ("Microwave Services Agreement").
(c) If, after reasonable discussions, the parties thereto are
not able to agree on the terms of either the Headend Services Agreement or the
Microwave Services Agreement, the parties shall appoint an arbitrator to resolve
the disputed terms, which arbitrator shall be an attorney who is an expert with
respect to the relevant FCC matters and who does not currently represent any of
such parties or their respective Affiliates. Such arbitrator's resolution of the
disputed terms of the Headend Services Agreement and/or the Microwave Services
Agreement shall be final and binding and shall be effective retroactive to the
effective date thereof.
6.17 Performance of Settlement Agreement. In the event that Sellers
enter into the Settlement Agreement, whether before or after the Closing, Buyer
expressly agrees that it shall be bound by the terms of, and shall fully perform
the obligations set forth in, Sections 8.1 through 8.3 of the Settlement
Agreement, insofar as such terms and obligations relate to the Systems acquired
by Buyer hereunder. The Purchase Price payable to each Seller shall be reduced,
pursuant to Section 3.3(b) or thereafter, by the amount of (i) $20.00 for each
claim made under the Settlement Agreement with respect to any of such Seller's
Systems by a claimant that is a then-current customer of any such Systems, and
(ii) $9.95 for each claim made under the Settlement Agreement with respect to
any of such Seller's Systems by a claimant that is a former customer of any such
Systems; each of which claims shall have been made in accordance with the terms
of the Settlement Agreement and shall be evidenced by documentation
demonstrating, to Sellers' reasonable satisfaction, Buyer's satisfaction of such
claim. Buyer agrees to indemnify and hold harmless Sellers and their Affiliates
from and against any and all claims, costs and expenses based on or arising out
of Buyer's failure to fully comply with and perform the obligations set forth in
Sections 8.1 through 8.3 of the Settlement Agreement insofar as related to the
Systems acquired by Buyer hereunder. It is expressly agreed and understood that
Buyer is not assuming and shall not be bound by any term or provision of the
Settlement Agreement other than as expressly set forth herein.
7. Conditions Precedent To Buyer's Obligations.
The obligations of Buyer to purchase and accept assignment, transfer
and delivery of the Assets to be sold, assigned, transferred and delivered to
Buyer hereby are subject to the satisfaction or waiver, at or prior to the
Closing Date (as provided herein), of the following conditions:
7.1 Representations and Warranties of Sellers. As to the
representations and warranties of Sellers set forth in Section 4, (1) each of
those representations and warranties set
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forth in Section 4 which is expressly stated to be made solely as of the date of
this Agreement or another specified date shall be true and correct in all
respects as of such date, without regard to the materiality or Material Adverse
Effect qualifiers set forth therein, and (2) each of the other representations
and warranties of Sellers set forth in Section 4 shall be true and correct in
all respects at and as of the time of the Closing as though made at and as of
that time, without regard to the materiality or Material Adverse Effect
qualifiers set forth therein; provided, that for purposes of each of clauses (1)
and (2) above, the representations and warranties shall be deemed true and
correct in all respects to the extent that the aggregate effect of the
inaccuracies in such representations and warranties as of the applicable times
does not constitute a Material Adverse Effect; and provided, further, that the
representations and warranties referred to in this Section 7.1 shall not include
the representations and warranties contained in Section 4.8(c) with respect to
any Governmental Authorization with respect to which a Franchise Extension or
Franchise Renewal shall have been obtained.
7.2 Covenants. Each Seller shall have performed and complied in
all material respects with all covenants and agreements required by this
Agreement to be performed or complied with by it prior to or at the Closing.
7.3 Transferable Franchise Areas; Material Consents; Franchise
Renewals; Franchise Extensions. (i) The Franchise Areas covering at least ninety
percent (90%) of Subscribers shall have become Transferable Franchise Areas;
provided, that if the Franchises and Assets of Enstar IX are not transferred at
Closing pursuant to Section 11.1(g), such Systems and the Subscribers served
thereby shall be excluded for purposes of such calculation; (ii) subject to
clause (i), the Material Consents (other than those that pertain solely to
non-Transferable Franchise Areas or Retained Assets) shall have been obtained
(other than those that pertain solely to non-Transferable Franchise Areas); and
(iii) the Franchise Renewals and Franchise Extensions shall have been obtained.
7.4 Hart-Scott-Rodino Act. All necessary pre-merger notification
filings required under the HSR Act shall have been made with the Federal Trade
Commission and the United States Department of Justice and the prescribed
waiting period(s) (and any extensions thereof) will have expired or been
terminated.
7.5 Judgment. There shall not be in effect on the date on which
the Closing is to occur any judgment, decree, order or other prohibition having
the force of law that would prevent or make unlawful the Closing; provided, that
the Buyer shall have used commercially reasonable efforts to prevent the entry
of any such judgment, decree, order or other legal prohibition and to appeal as
expeditiously as possible any such judgment, decree, order or other legal
prohibition that may be entered.
7.6 Delivery of Certificates and Documents. Sellers shall have
furnished to Buyer the following:
(a) a certificate of the Secretary or Assistant Secretary of
each Seller or, if applicable, such Seller's ultimate corporate general partner,
as to (i) the limited or general partnership agreement of Seller; (ii) all
actions taken by and on behalf of Seller and its partners
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to authorize the execution, delivery and performance of this Agreement and the
Related Agreements and (iii) the incumbency of officers signing this Agreement
and any Related Agreement on behalf of such Seller;
(b) in the case of each Seller that is a Limited Partnership,
a certificate of good standing of such Seller that is a limited partnership from
the Secretary of State of its state of formation and a certificate of foreign
qualification for each such Seller from each state in which any of such Seller's
Assets are located;
(c) a certificate of an executive officer of Enstar,
certifying on behalf of Sellers that the conditions set forth in Sections 7.1
and 7.2 have been met;
(d) the Bill of Sale and Assignment and Assumption Agreements,
duly executed by Sellers;
(e) the Indemnity Escrow Agreement(s) duly executed by
Sellers;
(f) if necessary, the Management Agreement(s), duly executed
by the appropriate Seller(s);
(g) a deed, in form and substance reasonably satisfactory to
the applicable Seller and Buyer, conveying title to each parcel of Real Property
owned by such Seller to Buyer;
(h) copies of all Material Consents obtained on or prior to
Closing; and
(i) all other documents as are reasonably necessary to
transfer title to the Assets to Buyer.
7.7 Opinion of Sellers' Counsel. Sellers shall have furnished
Buyer with an opinion letter, dated the Closing Date, of Baer Marks & Upham LLP,
counsel for Sellers, in the form set forth in Exhibit D hereto.
7.8 Opinion of Sellers' FCC Counsel. Sellers shall have furnished
Buyer with an opinion letter, dated the Closing Date, of Cole, Raywid &
Braverman, L.L.P., FCC counsel for Sellers, in the form set forth in Exhibit E
hereto.
7.9 General and Limited Partner Consents. The General Partner
Consents and the Limited Partner Consents shall have been obtained, except that
obtaining the Limited Partner Consents with respect to Enstar IX shall not be a
condition to Buyer's closing with respect to any other Seller.
7.10 Aggregate Subscriber Total. On the Closing Date the Systems
shall serve, in the aggregate, no fewer than 51,000 Subscribers; provided, that
if the Systems of Enstar IX are not transferred at Closing in accordance with
the terms of this Agreement, on the Closing Date the Systems shall serve, in the
aggregate, no fewer than 49,630 Subscribers.
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8. Conditions Precedent to Sellers' Obligations.
The obligations of Sellers to sell, assign, transfer and deliver the
Assets to Buyer hereunder are subject to the satisfaction or waiver at or prior
to the Closing Date (as provided herein) of the following conditions:
8.1 Representations and Warranties of Buyer. As to the
representations and warranties of Buyer set forth in Section 5, (1) each of
those representations and warranties set forth in Section 5 which is expressly
stated to be made solely as of the date of this Agreement or another specified
date shall be true and correct in all respects as of such date, without regard
to the materiality or Material Adverse Effect qualifiers set forth therein, and
(2) each of the other representations and warranties of Buyer set forth in
Section 5 shall be true and correct in all respects at and as of the time of the
Closing as though made at and as of that time, without regard to the materiality
or Material Adverse Effect qualifiers set forth therein; provided that for
purposes of each of clauses (1) and (2) above, the representations and
warranties shall be deemed true and correct in all respects to the extent that
the aggregate effect of the inaccuracies in such representations and warranties
as of the applicable times does not constitute a Material Adverse Effect.
8.2 Covenants. Buyer shall have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed or complied with by it prior to or at the Closing.
8.3 Transferable Franchise Areas; Material Consents. (i) The
Franchise Areas covering at least ninety percent (90%) of Subscribers shall have
become Transferable Franchise Areas; provided, that if the Franchises and Assets
of Enstar IX are not transferred at Closing pursuant to Section 11.1(g), such
Systems and the Subscribers served thereby shall be excluded for purposes of
such calculation; and (ii) subject to clause (i), the Material Consents issued
by Governmental Authorities (other than those that pertain solely to
non-Transferable Franchise Areas or Retained Assets) shall have been obtained.
8.4 Hart-Scott-Rodino Act. All necessary pre-merger notification
filings required under the HSR Act will have been made with the Federal Trade
Commission and the United States Department of Justice, and the prescribed
waiting period(s) (and any extensions thereof) will have expired or been
terminated.
8.5 Judgment. There shall not be in effect on the date on which
the Closing is to occur any judgment, decree, order or other prohibition having
the force of law that would prevent or make unlawful the Closing; provided that
Sellers shall have used commercially reasonable efforts to prevent the entry of
any such judgment, decree, order or other legal prohibition and to appeal as
expeditiously as possible any such judgment, decree, order or other legal
prohibition that may be entered.
8.6 General and Limited Partner Consents. The General Partner
Consents and the Limited Partner Consents shall have been obtained, except that
obtaining the Limited Partner
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Consents with respect to Enstar IX shall not be a condition to Sellers' closing
with respect to any other Seller.
8.7 Aggregate Subscriber Total. On the Closing Date the Systems
shall serve, in the aggregate, no fewer than 51,000 Subscribers; provided, that
if the Systems of Enstar IX are not transferred at Closing in accordance with
the terms of this Agreement, on the Closing Date the Systems shall serve, in the
aggregate, no fewer than 49,630 Subscribers.
8.8 Delivery of Certificates and Documents. Buyer shall have
furnished to Sellers the following:
(a) a certificate of the Secretary or Assistant Secretary of
Buyer as to (i) the certificate of incorporation and bylaws of Buyer, (ii)
resolutions of Buyer authorizing the execution, delivery and performance of this
Agreement and the Related Agreements; and (iii) the incumbency of officers
signing this Agreement and the Related Agreements on behalf of Buyer;
(b) a certificate of legal existence and good standing of
Buyer from the Secretary of State of Buyer's state of organization and a
certificate of foreign qualification of Buyer in any state in which any of the
Systems or Assets is located;
(c) a certificate of an executive officer of Buyer certifying
that the conditions set forth in Sections 8.1 and 8.2 have been met;
(d) the Bill of Sale and Assignment and Assumption Agreements,
duly executed by Buyer;
(e) the Indemnity Escrow Agreement(s), duly executed by Buyer;
(f) the Headend Services Agreement, duly executed by Buyer;
and
(g) if necessary, the Management Agreement(s), duly executed
by Buyer.
8.9 Opinion of Buyer's Counsel. Buyer shall have furnished Sellers
with an opinion letter, dated the Closing Date, of Dow Lohnes & Albertson, PLLC,
counsel for Buyer, in the form set forth in Exhibit F.
8.10 Payment for Assets. Buyer shall have delivered the Purchase
Price as provided in Section 3.2.
9. Retained Franchises and Assets.
9.1 Non-Transferable Franchise Areas. In the event that on the
Closing Date any Franchise Area is not a Transferable Franchise Area, then the
Franchise covering such Franchise Area ("Retained Franchise") and any other
Assets used solely in connection with any Seller's operations within such
Franchise Area ("Retained Assets") shall be excluded from the Assets conveyed on
the Closing Date, and the provisions of this Section 9 shall apply. In the event
there are any Retained Franchises and Assets on the Closing Date, the amount of
the Purchase Price
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paid by Buyer at Closing with respect to such Retained Franchises and Assets
shall be the Discounted Franchise Purchase Price (as defined in Section 9.5)
with respect thereto.
9.2 Retained Franchise Consents. From and after the Closing Date
the Seller(s) owning any Retained Franchises or Retained Assets shall continue
to use commercially reasonable efforts to obtain the Required Consent with
respect to any Retained Franchise ("Retained Franchise Consent"), and the terms
and conditions of Section 6.7, insofar as they apply to Franchise Required
Consents, shall govern the obtaining of any such Retained Franchise Consent.
9.3 Subsequent Closings. Subject to Section 9.4, at such time as
the Franchise Area covered by any Retained Franchise shall become a Transferable
Franchise Area, Buyer and the applicable Seller shall conduct a closing (each, a
"Subsequent Closing") at which such Seller shall assign, transfer, convey and
deliver to Buyer, and Buyer shall acquire from such Seller, the Retained
Franchise covering such Franchise Area and any Retained Assets with respect
thereto. Each Subsequent Closing shall take place on a Business Day on which the
relevant parties shall agree and that is not less than five (5) nor more than
ten (10) Business Days from the date on which Buyer receives notice that the
Retained Franchise Consent is obtained or the relevant Franchise Area has
otherwise become a Transferable Franchise Area. At such Subsequent Closing, (i)
Buyer shall deliver to the applicable Seller, in the manner set forth in Section
3.2(a), the amount of the difference between the Franchise Purchase Price and
the Discounted Franchise Purchase Price with respect to such Retained Franchise
and any such Retained Assets; and (ii) Buyer or the applicable Seller, as the
case may be, shall deliver the instruments described in Sections 7.6(d), (g),
(h) and (i) and 8.7(d) with respect to such Retained Franchise and Retained
Assets.
9.4 Final Closing. If, on the date that is one (1) year from the
date of the Closing Date, any Franchise Area shall not have become a
Transferable Franchise Area, Buyer and the Seller with respect thereto shall
nevertheless conduct a final Closing with respect to the Retained Franchise and
Retained Assets relating to any such Franchise Area ("Final Closing"), at which
such Seller shall assign, transfer, convey and deliver to Buyer, and Buyer shall
acquire from such Seller, such Retained Franchise and Retained Assets. Such
Final Closing shall occur on such one year anniversary date or, if such date is
not a Business Day, on the next Business Day. At such Final Closing, Buyer or
the applicable Seller, as the case may be, shall deliver the instruments
described in Sections 7.6(d), (g), (h) and (i) and 8.7(d) with respect to such
Retained Franchise and Retained Assets.
9.5 Franchise Purchase Price; Discounted Franchise Purchase Price.
The "Franchise Purchase Price" with respect to any Retained Franchise (and the
Retained Assets with respect thereto), shall be the product of (i) the number of
Subscribers covered by such Retained Franchise as of the Closing Date, based on
the Pre-Closing Certificate, as it may be modified to reflect the resolution of
any pre-Closing disputes with respect thereto, and (ii) the Subscriber
Adjustment Amount applicable to the Seller of such Retained Franchise and
Assets. The "Discounted Franchise Purchase Price" with respect to any Retained
Franchise (and the Retained Assets with respect thereto) shall be the amount of
eighty percent (80%) of the Franchise Purchase Price with respect to such
Retained Franchise and Assets.
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9.6 Management Agreement. If there are any Retained Franchises,
the Systems covered by such Retained Franchises shall be operated pursuant to
the Management Agreement from the Closing until the Subsequent Closing with
respect thereto or the Final Closing, as the case may be.
10. Survival of Representations and Warranties; Indemnification.
10.1 Survival of Representations and Warranties. Subject to Section
6.12, the representations and warranties of the parties provided for in this
Agreement shall survive the Closing for a period of six (6) months, except
representations and warranties relating to environmental matters and title to
Real Property, which representations and warranties shall be governed by Section
6.12, and to Taxes, title to Assets other than Real Property and authority,
which representations and warranties shall survive the Closing for the duration
of the applicable statute of limitations (the "Indemnity Period"). No claim for
indemnification for breach of a representation or warranty may be asserted after
the expiration of the applicable Indemnity Period; provided, that the written
assertion of any claim by a party against the other hereunder with respect to
the breach or alleged breach of any representation, warranty (or of a series of
facts which would support such breach) shall extend the Indemnity Period with
respect to such claim through the date such claim is conclusively resolved.
10.2 Indemnification.
(a) Subject to the provisions of Sections 10.1 and 10.5, Buyer
agrees to indemnify and hold harmless each Seller, after the Closing, from and
against any and all claims to the extent such claims are based upon, arise out
of or are related to (i) a breach of any representation or warranty, or any
failure to perform or comply with any of the covenants, conditions or agreements
of Buyer set forth in this Agreement or in any Related Agreement, (ii) the
assertion of any claim or legal action against such Seller by any Person or
Governmental Authority based upon, arising out of or relating to the ownership
or operation of the Assets occurring, arising or accruing after the Closing
Date, or (iii) as set forth in Section 6.17.
(b) Subject to the provisions of Sections 10.1 and 10.5, each
Seller agrees to indemnify and hold harmless Buyer, after the Closing, from and
against any and all claims to the extent such claims are based upon, arise out
of or relate to (i) a breach of any representation or warranty, or any failure
to perform or comply with any of the covenants, conditions or agreements of such
Seller set forth in this Agreement or in any Related Agreement or (ii) any
liability of such Seller arising or accruing on or prior to, or existing on, the
Closing Date, except any such liability for which an adjustment to the Purchase
Price is made pursuant to Section 3.3(a)(ii); or (iii) any obligation or
liability of such Seller not assumed by Buyer pursuant to the terms of this
Agreement.
10.3 Assertion of Claims.
(a) If Buyer, on the one hand, or any Seller, on the other
hand believes that it has a claim for indemnification, it shall notify the other
(the particular Seller, in the case of a claim against a particular Seller)
promptly in writing describing such claim with reasonable
40
<PAGE> 76
particularity and containing a reference to the provisions of this Agreement
under which such claim has arisen.
(b) As used in this Section 10 the word "claim" shall mean any
and all liabilities, obligations, losses, damages, deficiencies, demands,
claims, fines, penalties, interest, assessments, judgments, actions, proceedings
and suits of whatever kind and nature and all costs and expenses relating
thereto (including, without limitation, reasonable attorneys' fees incurred in
connection with the investigation or defense thereof or in asserting rights
hereunder).
(c) Neither this Section 10 nor any other provision of this
Agreement is intended to confer any third party beneficiary rights, including
but not limited to any extension of any statute of limitations pertaining to
suits, actions or proceedings brought by third parties.
10.4 Notice of and Right to Defend Third Party Claims. Promptly
upon receipt of notice of any claim or the commencement of any suit, action or
proceeding by a third party in respect of which indemnification may be sought on
account of an indemnity agreement contained in Section 10.2, the party seeking
indemnification (the "Indemnitee") shall give notice in writing to the party
from whom indemnification is sought (the "Indemnitor"). The omission by such
Indemnitee to so notify promptly such Indemnitor of any such claim or action
shall not relieve such Indemnitor from any liability which it may have to such
Indemnitee in connection therewith. In case any claim shall be asserted or suit,
action or proceeding commenced against an Indemnitee, the Indemnitor will be
entitled to participate therein, and, to the extent that it may wish, subject to
Indemnitor's written confirmation of its indemnity obligations hereunder with
respect to such claim, to assume the defense or conduct the settlement thereof.
Anything herein to the contrary notwithstanding, Indemnitor shall not be
entitled to settle any such suit, action or proceeding without Indemnitee's
consent, which consent shall be not unreasonably withheld. After notice from the
Indemnitor to the Indemnitee of its election so to assume the defense, conduct
or settlement thereof (along with its written confirmation of its indemnity
obligations), the Indemnitor will not be liable to the Indemnitee for any legal
or other expenses subsequently incurred by the Indemnitee in connection with the
defense, conduct or settlement thereof following such notice. The Indemnitee
will reasonably cooperate with the Indemnitor in connection with any such claim
assumed by the Indemnitor to make available to the Indemnitor all Persons and
all pertinent information under the Indemnitee's control.
10.5 Limitations of Liability.
(a) For purposes of this Agreement, claims for indemnification
for breach of any representation, warranty, covenant or agreement shall not take
into account, give effect to or be qualified by any considerations of
materiality or knowledge which may be expressed in such representation or
warranty.
(b) The amount of any claim indemnifiable by an Indemnitor
pursuant to Section 10.2 shall be reduced by the amount of any insurance
proceeds and the amount of any tax benefit resulting from the subject matter of
such claim received by the Indemnitee in respect of such claim.
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<PAGE> 77
(c) A Seller shall not be required to indemnify Buyer under
Section 10.2(b) with respect to claims arising from breaches of such Seller's
representations or warranties hereunder, and Buyer shall not be required to
indemnify any Seller under Section 10.2(a) with respect to Claims arising from
Buyer's representations or warranties hereunder, until the aggregate amount of
all such Claims against Sellers or Buyer, as the case may be, exceeds the
aggregate amount of $350,000, in which case the indemnifying party shall be
liable for the total amount of all of such claims starting from the first
dollar.
(d) Sellers' aggregate liability to Buyer for Claims arising
from breaches of Sellers' representations and warranties hereunder shall be
limited to losses or damages not exceeding the aggregate amount of $4,250,000,
as allocated among the Sellers as set forth in Schedule 1.1A, except that such
limit shall not apply to Claims arising out of representations and warranties
relating to title to Assets other than Real Property, Taxes and authority.
Buyer's liability to Sellers for Claims arising out of breaches of its
representations and warranties hereunder shall be limited to losses or damages
not exceeding the aggregate amount of $4,250,000, which shall be allocated among
the Sellers as set forth in Schedule 1.1A.
10.6 Indemnity Escrow Agreement. At the Closing, Buyer, Sellers and
the Escrow Agent shall execute the Indemnity Agreement, in accordance with which
Buyer will deposit the Indemnity Fund with the Escrow Agent on the Closing Date
in order to provide a fund for the payment of any indemnification to which any
Buyer Indemnitee is entitled under this Section 10; provided, that at any
Seller's request, at the Closing a separate Indemnity Escrow Agreement shall be
entered into with respect to each Seller.
11. Termination.
11.1 Termination. This Agreement may be terminated prior to the
Closing only in accordance with the following:
(a) At any time by mutual consent of the Sellers and Buyer;
(b) By either Sellers or Buyer if the Closing hereunder has
not taken place on or before the Outside Closing Date other than by reason of a
breach or default of any of the covenants or agreements contained in this
Agreement by the party seeking to terminate; provided, that, either party may,
at its sole option, extend such date for an additional three (3) months if as of
such date the conditions to Closing set forth in Sections 7.3 and 8.3 shall have
not been satisfied; or
(c) By either Sellers or Buyer, at any time, if the other
party is in material breach or material default of its covenants and agreements
under this Agreement and the party in breach or default does not cure such
breach or default within thirty (30) days after written notice thereof is
delivered to the non-terminating party, provided that the terminating party is
not also in material breach or material default hereunder;
(d) By either Sellers or Buyer, if the representations and
warranties of the other party (without regard to the materiality or Material
Adverse Effect qualifiers set forth
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<PAGE> 78
therein) are not true and correct in all respects (or, with respect to
representations and warranties made as of a specific date, are not true and
correct in all respects as of such date), and such failure is not cured by the
Outside Closing Date, provided that all of the representations and warranties of
the terminating party are true and correct in all respects; provided, that for
purposes of this Section 11.1(d), the representations and warranties of a party
shall be deemed true and correct in all respects to the extent that the
aggregate effect of the inaccuracies in such representations and warranties as
of the applicable times does not constitute a Material Adverse Effect;
(e) By Buyer, pursuant to Section 6.12(a), (b) or (c);
(f) By Buyer in the event that any of the following shall
occur: (i) as of the date that is one hundred twenty (120) days following the
date hereof, the Limited Partners holding forty percent (40%) or more of the
Interests of any Limited Partnership or any General Partner, as the case may be,
shall have affirmatively disapproved the transactions contemplated by this
Agreement (unless the Limited Partners holding fifty percent (50%) or more of
the Interests of such Limited Partnership or General Partner shall have approved
the transactions contemplated hereby); (ii) as of any date, the Limited Partners
holding fifty percent (50%) or more of the Interests of any Limited Partnership
or General Partner, as the case may be, shall have affirmatively disapproved the
transactions contemplated by this Agreement or approved any Acquisition
Proposal; or (iii) as of the termination of the Voting Period applicable to any
Limited Partnership or General Partner, the Limited Partner Consents of such
Limited Partnership or General Partner shall not have been obtained; provided,
however, that for purposes of clauses (i) and (ii) the percentage of Interests
disapproving the transactions contemplated by this Agreement or approving an
Acquisition Proposal shall not include any disapprovals or approvals (as the
case may be) that shall have been rescinded, revoked or otherwise withdrawn as
of the date of such termination;
(g) By Enstar IX, solely with respect to the obligations and
liabilities under this Agreement that relate to Enstar IX, in the event that (i)
the Limited Partner Consents with respect to Enstar IX are not obtained as of
the termination of the Voting Period applicable to Enstar IX or (ii) the Limited
Partners holding fifty percent (50%) or more of the Interests of Enstar IX shall
have affirmatively disapproved the transactions contemplated by this Agreement;
in the event of such termination the Purchase Price shall be reduced by the
amount allocated to Enstar IX, as set forth in Schedule 1.1A; or
(h) By Sellers, pursuant to Section 3.5.
11.2 Breakup Fee; Acquisition Proposals.
(a) Each Seller shall pay to Buyer a Breakup Fee (as defined
herein), in accordance with the terms of this Section 11.2, in the event that
(i) this Agreement is terminated by Buyer pursuant to Section 11.1(f), (ii) as
of the date of such termination any Limited Partnership's or General Partner's
Limited Partners shall have given their consent to an Acquisition Proposal
submitted by a third party; and (iii) Buyer shall have performed and complied in
all material respects with all covenants and agreements required to be performed
or
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<PAGE> 79
complied with by it under this Agreement during the period prior to the first to
occur of (x) the date on which any Limited Partnership's or General Partner's
Limited Partners shall have either disapproved the transactions contemplated by
this Agreement or given their consent to an Acquisition Proposal submitted by a
third party, or (y) the first-occurring date of termination of the Voting Period
of any Limited Partnership or General Partner during which the Limited Partner
Consents for such Limited Partnership or General Partner shall not have been
obtained. Sellers shall pay the Breakup Fee to Buyer by wire transfer of
immediately available funds or by certified check (in accordance with Buyer's
written instructions) within five (5) Business Days following the date of
termination pursuant to Section 11.1(f). For purposes hereof, the "Breakup Fee"
with respect to any Seller means a pro rata portion of the aggregate amount of
$1,500,000, which shall be determined by allocating the amount of $1,500,000
among Sellers based on the allocation of the aggregate Purchase Price among
Sellers.
(b) In the event that the Closing does not occur and this
Agreement is terminated with respect to a Seller solely as a result of the
failure to satisfy the conditions to Closing set forth in Sections 7.9 and 8.6
with respect to such Seller, and within six (6) months following the termination
of the applicable Voting Period, such Seller receives an Acquisition Proposal
from a third party, which Acquisition Proposal such Seller intends to submit to
its or its General Partner's respective Limited Partners, as the case may be,
for their approval, such Seller shall notify Buyer in writing of the price and
other material terms of such Acquisition Proposal, and Buyer shall be entitled,
within five (5) Business Days of such notification, to submit a Buyer
Acquisition Proposal.
11.3 Reimbursement of Expenses. In the event that (i) this
Agreement is terminated by Buyer pursuant to Section 11.1(f), (ii) as of the
date of such termination no Limited Partnership's or General Partner's Limited
Partners shall have given their consent to an Acquisition Proposal submitted by
a third party; and (iii) Buyer shall have performed and complied in all material
respects with all covenants and agreements required to be performed or complied
with by it under this Agreement during the period prior to the first to occur of
(x) the date on which any Limited Partnership's or General Partner's Limited
Partners shall have disapproved the transactions contemplated by this Agreement,
or (y) the first-occurring date of termination of the Voting Period of any
Limited Partnership or General Partner during which the Limited Partner Consents
for such Seller shall not have been obtained, such Seller(s) or General
Partner(s) for which the Limited Partner Consents shall not have been obtained
will reimburse Buyer for Buyer's actual out-of-pocket costs and expenses
incurred in connection with the negotiation and performance of this Agreement;
provided, however, that if Buyer shall consummate this Agreement with those
Seller(s) for which the Limited Partner Consents shall have been obtained, such
reimbursement shall be reduced by the amount of such costs and expenses
allocated to the consummating Sellers based on the allocation of the aggregate
Purchase Price among Sellers.
11.4 Surviving Obligations. In the event of termination of this
Agreement by either Buyer, Sellers or Enstar IX pursuant to this Section 11,
prompt written notice thereof shall be given to the other party or parties; and
this Agreement shall terminate (or shall terminate solely with respect to Enstar
IX, in the case of termination pursuant to Section 11.1(g)) without further
action by any of the parties hereto, and all obligations of the parties
hereunder with respect to
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<PAGE> 80
which this Agreement is terminated shall terminate, except for the obligations
set forth in Sections 4.19, 6.4, 11.2, 11.3, 11.5, 12 and 21.
11.5 Attorney's Fees. Notwithstanding any provision in this
Agreement that may limit or qualify a party's remedies, in the event of a
default by any party that results in a lawsuit or other proceeding for any
remedy available under this Agreement, the prevailing party shall be entitled to
reimbursement from the defaulting party of its reasonable legal fees and
expenses.
12. Expenses.
Except as otherwise provided in this Agreement, each party shall pay
its own expenses incurred in connection with the authorization, preparation,
execution and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents and other representatives.
13. Entire Agreement.
Buyer and Sellers agree that this Agreement, including the Schedules
and all Exhibits hereto and any other written document or instrument delivered
in connection herewith, constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior
understandings and agreements with respect thereto.
14. Parties Obligated and Benefited.
Subject to the limitations set forth below, this Agreement will be
binding upon the parties and their respective assigns and successors in interest
and will inure solely to the benefit of the parties and their respective assigns
and successors in interest, and no other Person will be entitled to any of the
benefits conferred by this Agreement. Without the prior written consent of the
other parties, no party will assign any of its rights under this Agreement or
delegate any of its duties under this Agreement. Notwithstanding the foregoing,
Buyer shall have the right, without Sellers' prior consent, (i) to assign this
Agreement to any Affiliate of Buyer, and (ii) to assign this Agreement, insofar
as it relates solely to Enstar IX, to any third party, other than any assignment
described in clause (i) or (ii) that is reasonably expected to cause a delay of
the consummation of the transactions contemplated by this Agreement; provided,
that in the event of any such assignment described in clause (i) or (ii) Buyer
shall remain liable for payment of the full Purchase Price as provided in this
Agreement.
15. Notices.
All notices, requests, consents, and other communications under this
Agreement shall be in writing and shall be delivered in person or mailed by
first-class certified or registered mail, return receipt requested, postage
prepaid, by reputable overnight mail or courier or by telecopier, in either
case, with receipt confirmed, addressed as follows:
45
<PAGE> 81
If to any Seller: Enstar Communications Corporation
12444 Powerscourt Drive
St. Louis, MO 63131
Telephone: (314) 965-0555
Telecopy: (314) 965-0571
Attention: Ralph G. Kelly, Senior Vice President - Treasurer
with a copy to: Curtis S. Shaw, Esq., Senior Vice President,
General Counsel & Secretary
With a copy to: Baer Marks & Upham LLP
805 Third Avenue
New York, NY 10022
Telephone: (212) 702-5700
Telecopy: (212) 702-5941
Attention: Stanley E. Bloch, Esq.
and
If to Buyer: Multimedia Acquisition Corp.
1059 East 10th Street
Hazleton, Pennsylvania 18201-3421
Telephone: (570) 455-4251
Telecopy: (570) 459-0963
Attention: Terrence J. Herron, Vice President
With a copy to: Dow Lohnes & Albertson, PLLC
1200 New Hampshire Ave, N.W.
Suite 800
Washington, D.C. 20036-6802
Telephone: (202) 776-2000
Telecopy: (202) 776-2222
Attention: John H. Pomeroy, Esq.
or at such other address or addresses as may have been furnished in writing by
any party to the others in accordance with the provisions of this Section 15.
Notices and other communications provided in accordance with this Section 15
shall be deemed delivered upon receipt. The furnishing of any notice or
communication required hereunder may be waived in writing by the party entitled
to receive such notice. Failure or delay in delivering copies of any notice to
persons designated above to receive copies shall in no way adversely affect the
effectiveness of such notice or communication.
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<PAGE> 82
16. Amendments and Waivers.
Except as otherwise expressly set forth in this Agreement, any term of
this Agreement may be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of Sellers and
Buyer. Any amendment or waiver effected in accordance with this Section 16 shall
be binding upon each party. No waivers of or exceptions to any term, condition
or provision of this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
17. Severability.
If any provision of this Agreement shall be held or deemed to be, or
shall in fact be, invalid, inoperative or unenforceable because of the conflict
of such provision with any constitution or statute or rule of public policy or
for any other reason, such circumstance shall not have the effect of rendering
any other provision or provisions herein contained invalid, inoperative or
unenforceable, but this Agreement shall be reformed and construed as if such
invalid, inoperative or unenforceable provision had never been contained herein
and such provision reformed so that it would be valid, operative and enforceable
to the maximum extent permitted.
18. Section Headings and Terms.
The section headings in this Agreement are for convenience and
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
19. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument, and shall become effective when counterparts which
together contain the signatures of each party hereto shall have been delivered
to Seller and Buyer.
20. Governing Law; Consent in Jurisdiction.
This Agreement shall be governed by and construed and enforced in
accordance with the law (without giving effect to the law governing the
principles of conflicts of law) of the State of New York. Any action to enforce,
arising out of, or relating in any way to, any of the provisions of this
Agreement may be brought and prosecuted in any such court or courts located
within the State of New York as is prohibited by law, and the parties consent to
the jurisdiction of said court or courts located within the State of New York
and to service of process by registered mail, return receipt requested, or by
any other manner provided by law. Each party hereto agrees not to assert, by way
of motion, as a defense or otherwise, in any such action, suit or proceeding any
claim that it is not subject personally to the jurisdiction of such court, that
the action, suit or proceeding is brought in an inconvenient forum, that the
venue of the action, suit or proceeding is improper or that this Agreement, or
any other agreement or transaction related hereto or the subject matter thereof
or thereof may not be enforced in or by such court.
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<PAGE> 83
21. Specific Performance.
The parties hereto acknowledge that money damages are not an adequate
remedy for violations of this Agreement and that any party may, in its sole
discretion, apply to a court of competent jurisdiction for specific performance
or injunctive or other relief (without the posting of any bond or other
security) as such court may deem just and proper in order to enforce this
Agreement or prevent any violation hereof by any of the parties hereto and, to
the extent permitted by applicable Legal Requirements, each party hereof waives
any objection to the imposition of such relief. Any such specific or equitable
relief granted shall not be exclusive and an Indemnitee shall also be entitled
to seek money damages.
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<PAGE> 84
IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date and year first above written.
BUYER:
MULTIMEDIA ACQUISITION CORP.
By: \s\ Terrence J. Herron
---------------------------------------------
Name: Terrence J. Herron
Title: Vice President
SELLERS:
ENSTAR INCOME PROGRAM II-1, L.P.
By: Enstar Communications Corporation,
its General Partner
By: \s\ Marcy Lifton
----------------------------------------
Name: Marcy Lifton
Title: Vice President
ENSTAR INCOME PROGRAM II-2, L.P.
By: Enstar Communications Corporation,
its General Partner
By: \s\ Marcy Lifton
----------------------------------------
Name: Marcy Lifton
Title: Vice President
ENSTAR INCOME PROGRAM IV-3, L.P.
By: Enstar Communications Corporation,
its General Partner
By: \s\ Marcy Lifton
----------------------------------------
Name: Marcy Lifton
Title: Vice President
<PAGE> 85
ENSTAR INCOME/GROWTH PROGRAM
SIX-A, L.P.
By: Enstar Communications Corporation,
its General Partner
By: \s\ Marcy Lifton
----------------------------------------
Name: Marcy Lifton
Title: Vice President
ENSTAR IX, LTD.
By: Enstar Communications Corporation,
its General Partner
By: \s\ Marcy Lifton
----------------------------------------
Name: Marcy Lifton
Title: Vice President
ENSTAR XI, LTD.
By: Enstar Communications Corporation,
its General Partner
By: \s\ Marcy Lifton
----------------------------------------
Name: Marcy Lifton
Title: Vice President
ENSTAR IV/PBD SYSTEMS VENTURE
By: Enstar Income Program IV-I, L.P., General
Partner
By: Enstar Communications Corporation,
its General Partner
By: \s\ Marcy Lifton
-------------------------------------
Name: Marcy Lifton
Title: Vice President
<PAGE> 86
By: Enstar Income Program IV-2, L.P., General
Partner
By: Enstar Communications Corporation,
its General Partner
By: \s\ Marcy Lifton
-------------------------------------
Name: Marcy Lifton
Title: Vice President
ENSTAR CABLE OF CUMBERLAND VALLEY
By: Enstar Income Growth Program Five-A,
L.P., General Partner
By: Enstar Communications Corporation,
its General Partner
By: \s\ Marcy Lifton
-------------------------------------
Name: Marcy Lifton
Title: Vice President
By: Enstar Income Growth Program Five-B,
L.P., General Partner
By: Enstar Communications Corporation,
its General Partner
By: \s\ Marcy Lifton
-------------------------------------
Name: Marcy Lifton
Title: Vice President
<PAGE> 87
ENSTAR CABLE OF MACOUPIN COUNTY
By: Enstar Income Program IV-I, L.P.,
General Partner
By: Enstar Communications Corporation,
its General Partner
By: \s\ Marcy Lifton
-------------------------------------
Name: Marcy Lifton
Title: Vice President
By: Enstar Income Program IV-2, L.P.,
General Partner
By: Enstar Communications Corporation,
its General Partner
By: \s\ Marcy Lifton
-------------------------------------
Name: Marcy Lifton
Title: Vice President
By: Enstar Income Program IV-3, L.P.,
General Partner
By: Enstar Communications Corporation,
its General Partner
By: \s\ Marcy Lifton
-------------------------------------
Name: Marcy Lifton
Title: Vice President
Solely for purposes of Sections 6.6(d) and 6.15:
CHARTER COMMUNICATIONS, INC.
By: \s\ Marcy Lifton
---------------------------------------------
Name: Marcy Lifton
Title: Vice President
<PAGE> 88
EXHIBIT B
ENSTAR COMMUNICATIONS CORPORATION
12444 Powerscourt Drive - Suite 100
St. Louis, Missouri 63131
September 29, 2000
VIA ELECTRONIC MAIL
Multimedia Acquisition Corp.
1059 East 10th Street
Hazleton, Pennsylvania 18201-3421
Attention: Terrence J. Herron, Vice President
Re: Enstar Communications Corporation
Ladies and Gentlemen:
Reference is hereby made to that certain Asset Purchase Agreement by
and among Multimedia Acquisition Corp. ("Buyer"), and Enstar Income Program
II-1, L.P., Enstar Income Program II-2, L.P., Enstar Income Program IV-3, L.P.,
Enstar Income/Growth Program Six-A, L.P., Enstar IX, Ltd., Enstar XI, Ltd.,
Enstar IV/PBD Systems Venture, Enstar Cable of Cumberland Valley and Enstar
Cable of Macoupin County (collectively, "Sellers," and each individually, a
"Seller"), dated as of August 8, 2000 (the "Purchase Agreement"). Capitalized
terms used and not otherwise defined herein shall have the meanings given to
them in the Purchase Agreement.
For and in consideration of the mutual covenants set forth in the
Purchase Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Buyer and Sellers agree as
follows:
1. Purchase Price.
(a) Section 3.1 of the Purchase Agreement is hereby
amended by replacing the Purchase Price of
"Ninety-Four Million Nine Hundred Twenty-Nine
Thousand Four Hundred Dollars ($94,929,400)" with a
Purchase Price of "Ninety-Five Million Five Hundred
Seventy-Four Thousand Six Hundred ($95,574,600)."
(b) Schedule 1.1A to the Purchase Agreement is hereby
replaced by Schedule 1.1A attached hereto, which
Schedule is deemed to be incorporated into the
Purchase Agreement and made a Schedule thereto for
all purposes.
(c) In consideration for the increase in the Purchase
Price set forth in subsection (a) above that is
allocated to Enstar II-2 and Enstar IV on Schedule
1.1A, as attached hereto, Sections 3.3(a)(i) of the
Purchase Agreement is hereby amended to delete
B-1
<PAGE> 89
the adjustments to the Purchase Price set forth in
subsections (C) and (D) thereof, and Section 3.6 of
the Purchase Agreement is hereby deleted.
2. Digital Ad Insertion Equipment.
(a) Schedule 2.1(b)(viii) to the Purchase Agreement is
hereby amended by adding the following, as an
Excluded Asset, as item (d): "(d) Digital ad
insertion equipment located at any headend serving
any of the Systems (with Sellers hereby representing
that the initial cost of such equipment is accurately
set forth in all material respects in Schedule
3.3(a)(ii))."
(b) Section 3.3(a)(ii) of the Purchase Agreement is
hereby amended by adding the following item (H): "(H)
the cost of the digital ad insertion equipment
located at headends serving any of such Seller's
Systems, which cost is set forth in Schedule
3.3(a)(ii)." Schedule 3.3(a)(ii), which is attached
hereto, is hereby incorporated into the Purchase
Agreement and made a Schedule thereto for all
purposes.
3. Performance of Settlement Agreement. Section 6.17 of the
Purchase Agreement is hereby amended by adding the following
language at the end of the first sentence, following the word
"hereunder": ", provided, that Buyer shall have no obligation
to indemnify a Seller with respect to any claim by any former
customer of such Seller under Section 8.1.2 of the Settlement
Agreement, which claim shall have been paid by Seller or any
Affiliate of such Seller (or any third party hired by Charter
to administer the distribution of benefits) directly to such
former customer."
4. Except as expressly set forth herein, the Purchase Agreement
shall remain in full force and effect.
[The remainder of this page is intentionally left blank.]
<PAGE> 90
Please indicate your acceptance of the foregoing terms by signing this
letter in the space provided below and returning it to the undersigned.
Very truly yours,
ENSTAR INCOME PROGRAM II-1, L.P.
ENSTAR INCOME PROGRAM II-2, L.P.
ENSTAR INCOME PROGRAM IV-3, L.P.
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
ENSTAR IX, LTD.
ENSTAR XI, LTD.
ENSTAR IV/PBD SYSTEMS VENTURE
ENSTAR CABLE OF CUMBERLAND VALLEY
ENSTAR CABLE OF MACOUPIN COUNTY
By: Enstar Communications Corporation,
as ultimate General Partner of each of
the foregoing
By: /s/ Ralph G. Kelly
------------------------------
Ralph G. Kelly
Senior Vice President
ACCEPTED AND AGREED TO:
MULTIMEDIA ACQUISITION CORP.
By: /s/ Terrence J. Herron
--------------------------------------------
Name: Terrence J. Herron
Title: Vice President
<PAGE> 91
SCHEDULE 1.1A
ALLOCATION OF PURCHASE PRICE AND INDEMNITY FUND;
MINIMUM SUBSCRIBER NUMBERS & ADJUSTMENT AMOUNTS
<TABLE>
<CAPTION>
MINIMUM SUBSCRIBER
SUBSCRIBER ADJUSTMENT
SELLER OR GROUP LOCATION PURCHASE PRICE PERCENT INDEMNITY FUND NUMBER AMOUNT
--------------- -------- -------------- ------- -------------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Enstar Six-A Flora, IL $12,444,000 13.1% $557,119 6,172 $2,000
Enstar IV/PBD Mt. Carmel, IL $4,654,000 4.9% $208,360 2,277 $2,000
SOUTHERN ILLINOIS 8,449 $2,000
SELLER GROUP
Enstar II-2 Hillsboro, IL $12,648,000 13.3% $566,252 6,194 $2,000
Enstar Cable of Macoupin, IL $9,074,000 9.6% $406,244 4,487 $2,000
Macoupin County
Enstar IV-3 Shelbyville, IL $7,354,000 7.7% $329,239 3,627 $2,000
Enstar II-1 Taylorville, IL $13,846,000 14.6% $619,887 6,793 $2,000
NORTHERN ILLINOIS
SELLER GROUP 21,101 $2,000
Enstar II-2 Malden, MO $3,122,600 3.0% $129,045 2,200 $1,419
Enstar IV/PBD Dexter, MO $4,455,000 4.3% $181,319 3,900 $1,142
Enstar V-A, V-B Pomme de $1,429,500 1.5% $63,999 900 $1,129
Terre, MO
Enstar IX Mobile, AL $789,000 0.8% $35,324 1,450 $500
Enstar Cable of Monticello, KY $24,049,500 25.3% $1,076,699 14,350 $1,669
Cumberland Valley
Enstar XI Ashdown, AR $1,709,000 1.8% $76,512 1,650 $1,000
--------
TOTAL $95,574,600 100.0% $4,250,000 54,000
========
</TABLE>
<PAGE> 92
Schedule 3.3(a)(ii)
Cost of Digital Ad Insertion Equipment
<TABLE>
<CAPTION>
Cost of
Seller Headend Equipment
------ ------- ---------
<S> <C> <C>
Enstar Cable of Cumberland Valley Monticello, KY $57,180.91
Enstar Cable of Cumberland Valley Russell Springs, KY $57,180.91
TOTAL CUMBERLAND VALLEY: $114,361.82
Enstar Income Program II-1, L.P. Litchfield/Gillespie, IL $23,546.00
Enstar Income Program II-1, L.P. Taylorville, IL $31,842.00
TOTAL ENSTAR II-1: $55,388.00
Enstar Income Program II-2, L.P. Hillsboro, IL $23,546.00
Enstar Income Program II-2, L.P. Jerseyville, IL $23,546.00
Enstar Income Program II-2, L.P. Malden, MO $23,546.00
TOTAL ENSTAR II-2: $70,638.00
Enstar Income/Growth Program Six-A, L.P. Flora, IL $23,546.00
Enstar Income/Growth Program Six-A, L.P. Salem, IL $23,546.00
Enstar Income/Growth Program Six-A, L.P. Fairfield, IL $23,546.00
TOTAL ENSTAR SIX-A: $70,638.00
Enstar IV/PBD Systems Venture Dexter/Bloomfield, MO $40,318.00
Enstar IV/PBD Systems Venture Mt. Carmel, IL $23,546.00
TOTAL ENSTAR IV/PBD: $63,864.00
Enstar Cable of Macoupin County Carlinville, IL $23,546.00
TOTAL ENSTAR MACOUPIN: $23,546.00
</TABLE>
<PAGE> 93
CONSENT SOLICITATION BY THE GENERAL PARTNER OF
ENSTAR INCOME PROGRAM II-2, L.P.
CONSENT CARD
The undersigned record owner (the "Unitholder") of limited partnership units
(the "Units") of Enstar Income Program II-2, L.P. (the "Partnership") hereby
specifies that all of the Units of the Partnership that the Unitholder is
entitled to vote shall be voted as follows:
AS SET FORTH IN THE CONSENT SOLICITATION STATEMENT, IN EACH CASE APPROVAL
SHALL BE DEEMED TO INCLUDE SUCH NON-MATERIAL MODIFICATIONS AS ENSTAR
COMMUNICATIONS CORPORATION, AS THE GENERAL PARTNER OF THE PARTNERSHIP, MAY IN
ITS SOLE DISCRETION DETERMINE.
IF NO SPECIFICATION IS MADE WITH RESPECT TO THE VOTING ON THE LIQUIDATION
PLAN, THIS CONSENT CARD WILL BE TREATED AS VOTING TO APPROVE THE LIQUIDATION
PLAN.
To carry out and complete the Liquidation Plan, as set forth in the
Partnership's consent solicitation statement dated December , 2000 (the
"Consent Statement") by:
(I) Selling all of the Partnership's cable television systems to Multimedia
Acquisition Corp., pursuant to that agreement, between the parties
dated as of August 8, 2000, as amended as of September 29, 2000; and
(II) Terminating and dissolving the Partnership.
<TABLE>
<S> <C> <C>
APPROVE DISAPPROVE ABSTAIN
/ / / / / /
</TABLE>
(Please date and sign on other side)
<PAGE> 94
The undersigned hereby acknowledges receipt of the Consent Statement.
The undersigned hereby revokes any prior authorization to vote the Units of the
Partnership heretofore given by the undersigned to any person.
Dated --------------------- , 2000
-----------------------------------
(Unitholder's Signature)
-----------------------------------
(Unitholder's Signature)
Please date and sign exactly as
name appears on this consent card,
and promptly return in the enclosed
envelope. When signing as guardian,
executor, administrator, attorney,
trustee, custodian, or in any other
similar capacity, please give full
title. If a corporation, sign in
full corporate name by president or
other authorized officer, giving
title and affixing corporate seal.
If a partnership or limited
liability company, sign in the
partnership/ limited liability
company name, as the case may be,
by a duly authorized person. In the
case of joint ownership, each joint
owner must sign.
