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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 12, 1999
CC VII HOLDINGS, LLC
FALCON FUNDING CORP.
(Exact Name of Registrant as Specified in its Charter)
Delaware 033-60776 43-1854210
California 333-55755 95-4681480
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
12444 Powerscourt Drive, Suite 400, St. Louis, MO 63131
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (314) 965-0555
10900 Wilshire Boulevard-15th Floor, Los Angeles, CA 90024
(Former address, if changed since last report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On November 12, 1999, Charter Communications Holding Company, LLC
("Charter Holdco") acquired all of the partnership interests of Falcon
Communications, L.P. ("FCLP") and certain other assets and equity interests held
by affiliates of FCLP. The terms of the acquisition are governed by a Purchase
and Contribution Agreement, dated as of May 26, 1999, by and among Charter
Communications, Inc., FCLP, Falcon Holding Group, L.P., TCI Falcon Holdings,
LLC, Falcon Cable Trust, Falcon Holding Group, Inc. and DHN Inc., as amended by
the First, Second and Third Amendments (the "Purchase Agreement").
The aggregate consideration paid to acquire FCLP and the other assets
was $3.5 billion, consisting of approximately $1.3 billion in cash, $550 million
in equity of Charter Holdco and $1.7 million of assumed debt. The sources of the
cash consideration were (1) an equity contribution made by Vulcan Cable III Inc.
to Charter Holdco, and (2) the proceeds from the initial public offering of
Charter Communications, Inc. Vulcan Cable III Inc. obtained the contributed
funds from Paul G. Allen, the controlling shareholder of Vulcan Cable III Inc.,
as well as of Charter Communications, Inc. and Charter Investment, Inc.
Immediately after the consummation of the transactions contemplated by
the Purchase Agreement, on November 12, 1999, FCLP merged (the "Merger") with
and into CC VII Holdings, LLC, a Delaware limited liability company ("CC VII").
CC VII was the surviving entity of the Merger and succeeded to the rights and
obligations of FCLP. As a result of the Merger, Falcon Funding Corp. became a
wholly-owned subsidiary of CC VII. CC VII is a manager-managed limited liability
company, the manager of which is Charter Communications, Inc. The sole member of
CC VII is Charter Holdco.
ITEM 5. OTHER EVENTS.
(a) Immediately after the consummation of the transactions contemplated
by the Purchase Agreement, the Merger occurred.
As a result of the Merger and the consummation of the transactions
contemplated by the Purchase Agreement, the following occurred:
(1) As required by that certain Indenture, dated as of April
3, 1998, as amended by the First Supplemental Indenture dated as of September
30, 1998, by and among the Partnership, Falcon Funding Corporation and United
States Trust Company of New York, as trustee (the "Indenture"), relating to the
8.375% Senior Debentures due 2010 and the 9.285% Senior Discount Debentures due
2010 (the "Notes"), as of November 12, 1999, CC VII and Falcon Funding Corp. as
Issuers, FCLP, as predecessor of CC VII, and United States Trust Company of New
York, as trustee, entered into that certain Second Supplemental Indenture to the
Indenture.
(2) On or before December 12, 1999, as required by the
Indenture, CC VII and Falcon Funding Corp. intend to make an offer to repurchase
the Notes in a change of control repurchase offer required by the Indenture.
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(c) In connection with the sale of FCLP, the address of the
corporate offices of each of CC VII and Falcon Funding Corp. is 12444
Powerscourt Drive, Suite 400, St. Louis, Missouri 63131.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS
(a) Not Applicable
(b) Not Applicable
(c) The following are furnished as exhibits to this report:
2.1 Purchase and Contribution Agreement, dated as of May
26, 1999, by and among Charter Communications, Inc.,
Falcon Communications L.P, Falcon Holding Group,
L.P., TCI Falcon Holdings, LLC, Falcon Cable Trust,
Falcon Holding Group, Inc. and DHN Inc. (incorporated
by reference to Exhibit 2.9 to Amendment No. 2 to the
Registration Statement on Form S-1 filed by Charter
Communications, Inc. on September 28, 1999 (File No.
333-83887)).
2.2 First Amendment to Purchase and Contribution
Agreement, dated as of June 22, 1999, by and among
Charter Communications, Inc., Falcon Communications
L.P, Falcon Holding Group, L.P., TCI Falcon Holdings,
LLC, Falcon Cable Trust, Falcon Holding Group, Inc.
and DHN Inc. (incorporated by reference to the
quarterly report on Form 10-Q filed by Falcon
Communications, L.P. and Falcon Funding Corporation
on August 13, 1999 (File Nos. 333-60776 and
333-55755)).
2.3 Form of Second Amendment to Purchase and Contribution
Agreement, by and among Charter Communications, Inc.,
Falcon Communications L.P, Falcon Holding Group,
L.P., TCI Falcon Holdings, LLC, Falcon Cable Trust,
Falcon Holding Group, Inc. and DHN Inc. (incorporated
by reference to Exhibit 2.9(b) to Amendment No. 5 to
the Registration Statement on Form S-1 filed by
Charter Communications, Inc. on November 4, 1999
(File No. 333-83887)).
2.4 Third Amendment to Purchase and Contribution
Agreement, dated as of November 12, 1999, by and
among Charter Communications, Inc., Falcon
Communications L.P, Falcon Holding Group, L.P., TCI
Falcon Holdings, LLC, Falcon Cable Trust, Falcon
Holding Group, Inc. and DHN Inc.*
2.5 Indenture, dated as of April 3, 1998, as amended by
the First Supplemental Indenture dated as of
September 30, 1998, by and among the Partnership,
Falcon Funding Corporation and United States Trust
Company of New York, as trustee (incorporated by
reference to the registration statement on Form S-4
of Falcon Holding Group, L.P.
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(now Falcon Communications, L.P.) filed on April 18,
1993 (File No. 333-55755)).
2.6 Supplemental Indenture, dated as of September 30,
1998, by and among Falcon Holding Group, L.P., Falcon
Funding Corporation, Falcon Communications, L.P. and
United States Trust Company of New York, as trustee
(incorporated by reference to the report on Form 8-K
of Falcon Communications, L.P. and Falcon Funding
Corporation filed on October 9, 1998 (File No.
33-60776)).
2.7 Second Supplemental Indenture, dated as of
November 12, 1999, by and among CC VII Holdings, LLC,
Falcon Funding Corp., Falcon Communications, L.P.
and United States Trust Company of New York, as
trustee.*
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* - filed herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CC VII HOLDINGS, LLC
By: Charter Communications, Inc., its Manager
Date: November 23, 1999 By: /s/ Curtis S. Shaw
-----------------------------------------
Curtis S. Shaw
Senior Vice President
FALCON FUNDING CORPORATION
Date: November 23, 1999 By: /s/ Curtis S. Shaw
-----------------------------------------
Curtis S. Shaw
Senior Vice President
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Exhibit Index
Exhibit Description
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2.1 Purchase and Contribution Agreement, dated as of May
26, 1999, by and among Charter Communications, Inc.,
Falcon Communications L.P, Falcon Holding Group,
L.P., TCI Falcon Holdings, LLC, Falcon Cable Trust,
Falcon Holding Group, Inc. and DHN Inc. (incorporated
by reference to Exhibit 2.9 to Amendment No. 2 to the
Registration Statement on Form S-1 filed by Charter
Communications, Inc. on September 28, 1999 (File No.
333-83887)).
2.2 First Amendment to Purchase and Contribution
Agreement, dated as of June 22, 1999, by and among
Charter Communications, Inc., Falcon Communications
L.P, Falcon Holding Group, L.P., TCI Falcon Holdings,
LLC, Falcon Cable Trust, Falcon Holding Group, Inc.
and DHN Inc. (incorporated by reference to the
quarterly report on Form 10-Q filed by Falcon
Communications, L.P. and Falcon Funding Corporation
on August 13, 1999 (File Nos. 333-60776 and
333-55755)).
2.3 Form of Second Amendment to Purchase and Contribution
Agreement, by and among Charter Communications, Inc.,
Falcon Communications L.P, Falcon Holding Group,
L.P., TCI Falcon Holdings, LLC, Falcon Cable Trust,
Falcon Holding Group, Inc. and DHN Inc. (incorporated
by reference to Exhibit 2.9(b) to Amendment No. 5 to
the Registration Statement on Form S-1 filed by
Charter Communications, Inc. on November 4, 1999
(File No. 333-83887)).
2.4 Third Amendment to Purchase and Contribution
Agreement, dated as of November 12, 1999, by and
among Charter Communications, Inc., Falcon
Communications L.P, Falcon Holding Group, L.P., TCI
Falcon Holdings, LLC, Falcon Cable Trust, Falcon
Holding Group, Inc. and DHN Inc.*
2.5 Indenture, dated as of April 3, 1998, as amended by
the First Supplemental Indenture dated as of
September 30, 1998, by and among the Partnership,
Falcon Funding Corporation and United States Trust
Company of New York, as trustee (incorporated by
reference to the registration statement on Form S-4
of Falcon Holding Group, L.P. (now Falcon
Communications, L.P.) filed on April 18, 1993 (File
No. 333-55755)).
2.6 Supplemental Indenture, dated as of September 30,
1998, by and among Falcon Holding Group, L.P., Falcon
Funding Corporation, Falcon Communications, L.P. and
United States Trust Company of New York, as trustee
(incorporated by reference to the report on Form 8-K
of Falcon Communications, L.P. and Falcon Funding
Corporation filed on October 9, 1998 (File No.
33-60776)).
2.7 Second Supplemental Indenture, dated as of
November 12, 1999, by and among CC VII Holdings, LLC,
Falcon Funding Corp., Falcon Communications, L.P.
and United States Trust Company of New York, as
trustee.*
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* - filed herewith
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EXHIBIT 2.4
THIRD AMENDMENT TO
PURCHASE AND CONTRIBUTION AGREEMENT
THIS THIRD AMENDMENT TO PURCHASE AND CONTRIBUTION AGREEMENT ("Third
Amendment") is made and entered into as of November 12, 1999 by and among
Charter Investment, Inc., a Delaware corporation formerly known as Charter
Communications, Inc. ("CII"), Charter Communications Holding Company, LLC, a
Delaware limited liability company ("Charter LLC"), Falcon Communications, L.P.,
a California limited partnership ("Falcon"), Falcon Holding Group, L.P., a
Delaware limited partnership ("FHGLP"), TCI Falcon Holdings, LLC, a Delaware
limited liability company ("TCI"), Falcon Cable Trust, a California trust ("FC
Trust"), Falcon Holding Group, Inc., a California corporation ("FHGI"), and DHN
Inc., a California corporation ("DHN") (FHGLP, TCI, FC Trust, FHGI and DHN are
sometimes referred to herein as "Sellers").
PRELIMINARY STATEMENT
A. CII, Falcon, and Sellers entered into the Purchase and Contribution
Agreement on May 26, 1999 (the "Purchase and Contribution Agreement"), which was
amended and modified by a First Amendment to Purchase and Contribution Agreement
dated as of June 22, 1999 ("First Amendment") and further amended and modified
by a Second Amendment to Purchase and Contribution Agreement dated as of October
27, 1999 ("Second Amendment").
B. The parties hereto desire to modify the Purchase and Contribution
Agreement in certain respects as described herein. Section 11.9 of the Purchase
and Contribution Agreement provides that the Purchase and Contribution Agreement
may be amended; provided that any such amendment will be binding on the parties
prior to Closing only if set forth in a writing executed by them.
NOW, THEREFORE, the parties hereto agree as follows:
1. Except as otherwise provided in this Third Amendment, all capitalized
terms used herein and not otherwise defined herein shall have the same meanings
assigned to them in the Purchase and Contribution Agreement, as amended and
modified by the First Amendment and the Second Amendment.
2. Section 1.1 of the Purchase and Contribution Agreement is hereby amended
by adding the following defined terms:
"Charter IPO" means the initial public offering of shares of Class A
Common Stock of PublicCo that is described in Amendment No. 4 to S-1
Registration Statement filed with the SEC on November 1, 1999.
"Class A Common Units" means the Class A Common Units of Charter LLC
to be issued to Vulcan Cable III (as the transferee of Belo Ventures, Inc.
pursuant to the Vulcan-Belo Put Agreement) pursuant to the Charter LLC
Operating Agreement.
"Class B Common Units" means the Class B Common Units of Charter LLC
to be issued to PublicCo (as the transferee of FHGLP pursuant to the
Exchange Agreement) pursuant to the Charter LLC Operating Agreement.
"Class D Common Units" means the Class D Common Units of Charter LLC
to be issued to FHGLP pursuant to the Charter LLC Operating Agreement.
"Common Units" means the Class A Common Units, Class B Common Units
and Class D Common Units.
"FHGLP Partners" means all current partners of FHGLP, other than Belo
Ventures, Inc.
"PublicCo" means Charter Communications, Inc., a Delaware corporation
incorporated on July 22, 1999.
3. Clause (1) of Section 2.3(d) of the Purchase and Contribution Agreement
is hereby amended to read in its entirety as follows:
(1) $1 shall be paid to FHGLP for all of its capital stock in Enstar
and its entire membership interest in Enstar Finance Company, LLC,
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4. Notwithstanding anything to the contrary in the Purchase and
Contribution Agreement, as amended, the parties agree that all intercompany
indebtedness among the Falcon Companies shall be excluded from Closing Net
Liabilities, Current Assets, and Current Liabilities and shall not give rise to
any adjustment to the Aggregate Consideration.
5. Exhibit F to the Purchase and Contribution Agreement is hereby amended
in its entirety as set forth on the attached Exhibit I.
6. For purposes of this Third Amendment, references to "Charter" mean CII,
Charter LLC and PublicCo individually and collectively. CII and Charter LLC each
hereby agree to cause PublicCo to perform all obligations to be performed by
PublicCo pursuant to the Purchase and Contribution Agreement and the Transaction
Documents, including this Third Amendment.
7. Section 6.6 of the Purchase and Contribution Agreement is hereby amended
by adding the following sentence to the end of subsection (c) thereof:
The foregoing provisions of this Section 6.6(c) are subject to the
provisions of Section 6.6(h) and (i).
8. Section 6.6 of the Purchase and Contribution Agreement is hereby amended
by adding the following new paragraphs (h), (i) and (j):
(h) In the event the Closing occurs on the same day as, and
concurrently with, the Charter IPO, at the Closing (i) Charter LLC will
enter into the definitive Charter LLC Operating Agreement with FHGLP in the
form attached to the Third Amendment as Exhibit II; (ii) FHGLP will
distribute its Class D Common Units to each of the FHGLP Partners and Belo
Ventures, Inc.; (iii) PublicCo will enter into the definitive Exchange
Agreement with the FHGLP Partners in the form attached to the Third
Amendment as Exhibit III; (iv) Paul G. Allen will enter into definitive Put
Agreements with the FHGLP Partners in the forms attached to the Third
Amendment as Exhibit IV; (v) Vulcan Cable III will purchase from Belo
Ventures, Inc. all of its Class D Common Units pursuant to the Vulcan-Belo
Put Agreement (as defined in the Charter LLC Operating Agreement attached
to the Third Amendment as Exhibit II); and (vi) PublicCo will enter into
the definitive Registration Rights Agreement with the FHGLP Partners in the
form attached to the Third Amendment as Exhibit V.
(i) In the event the Closing does not occur on the same day as, and
concurrently with, the Charter IPO, the terms of Exhibits II, III, IV and V
to the Third Amendment shall not be binding on FHGLP or Charter, and FHGLP
and Charter shall negotiate in good faith appropriate modifications to the
forms of Charter LLC Operating Agreement, the Exchange Agreement, the Put
Agreement, and the Registration Rights Agreement attached to the Third
Amendment as Exhibits II, III, IV and V (as well as negotiate in good faith
a definitive Tag-Along Agreement to be entered into among Paul G. Allen,
FHGLP and certain partners of FHGLP) in accordance with, and subject to,
the provisions of the Purchase and Contribution Agreement, including but
not limited to Section 6.6(c) thereof, as in effect before giving effect to
the Third Amendment.
(j) At the Closing, in exchange for the Contributed Interest, Charter
LLC will issue to FHGLP a number of Class D Common Units sufficient to
cause FHGLP to hold a percentage of all Common Units in Charter LLC (giving
effect to the Charter IPO) equal to the percentage determined by dividing
the Equity Value by the sum of (x) the Charter Value and (y) the Equity
Value. The Equity Value will be determined in accordance with Section
2.3(b) of the Purchase and Contribution Agreement. In reliance on Charter's
representations and other agreements set forth below in this Section
6.6(j), FHGLP hereby agrees that the Charter Value will be determined in
accordance with the definition of "Charter Value" as set forth in the form
of Charter LLC Operating Agreement attached to the Third Amendment as
Exhibit II.
(1) The parties agree that the component of "Charter Value" set
forth in Section 1.27.1 of the form of Charter LLC Operating Agreement
attached to the Third Amendment as Exhibit II is required to be
determined in accordance with the following formula: (a) the product
of seventeen (17) and the following: (i) the projected EBITDA for the
calendar year ended December 31, 2000 of the assets owned by Charter
LLC on May 26, 1999 (as reflected in the definition of the term
"Charter Holdings Value" in Exhibit D to the Purchase and Contribution
Agreement), plus (ii) the projected EBITDA for the calendar year ended
December 31, 2000 of the assets owned by Charter LLC as of the Closing
Date (other than the assets acquired by Charter LLC pursuant to the
Purchase and Contribution Agreement and the assets owned by Charter
LLC as of May 26, 1999), plus (iii) the projected
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EBITDA for the calendar year ended December 31, 2000 of the assets
that are to be acquired by Charter LLC pursuant to the Avalon Purchase
Agreement and the Fanch Purchase Agreement (as those terms are defined
in the form of Charter LLC Operating Agreement attached to the Third
Amendment as Exhibit II), minus (iv) 5,000,000; minus (b) the sum of
(i) the amount of non-current liabilities (excluding deferred taxes)
and the accreted amount of preferred equity interests immediately
prior to the Closing Date, plus (ii) the excess of current liabilities
over current assets as of October 31, 1999 of Charter LLC and its
subsidiaries (in each case determined on a consolidated basis in
accordance with generally accepted accounting principles); minus (c)
the purchase price (including assumption of liabilities) of the assets
described in clause (a)(iii) above, less any cash deposits which may
be applied against such purchase price or refunded upon payment of the
full purchase price (provided such deposits are not included in
current assets included in clause (b)(ii) above). Charter represents
and warrants that, in computing the amount presently set forth in said
Section 1.27.1, the projected EBITDA amounts described in clauses
(a)(ii) and (a)(iii) above (sometimes referred to as the "EBITDA
Amounts") were determined in good faith by Charter in a manner
consistent with information provided to Falcon on or about May 24,
1999, the amount set forth in clause (a)(iv) above as the amount of
additional corporate overhead that Charter LLC will incur as a result
of the acquisitions described in clauses (a)(ii) and (a)(iii) above
was determined by Charter in good faith, and the amount of the
liabilities described in clause (b) above (the "Liability Amount") was
determined in good faith by Charter in accordance with generally
accepted accounting principles. Charter also represents and warrants
that the projected EBITDA amount for the calendar year ended December
31, 2000 of the assets to be acquired by Charter LLC pursuant to the
Bresnan Purchase Agreement (as that term is defined in the form of
Charter LLC Operating Agreement attached to the Third Amendment as
Exhibit II) that is a component of the computation set forth in
Section 3.6.6(c)(v) of the form of Charter LLC Operating Agreement
attached to the Third Amendment as Exhibit II (the "Bresnan EBITDA
Amount") will be determined in good faith by Charter in a manner
consistent with information provided to Falcon on or about May 24,
1999. In reliance on the preceding representations and the other
agreements of Charter set forth in this Section 6.6(j), FHGLP agrees
that it will not receive any additional information relating to the
determination of the EBITDA Amounts, the Liability Amount, and the
Bresnan EBITDA Amount prior to the Closing.
(2) Charter shall retain and preserve all books and records, work
papers and other information pertinent to its determination of the
EBITDA Amounts, the Liability Amount, and the Bresnan EBITDA Amount,
including, without limitation, its assumptions underlying such
determinations (collectively, the "Supporting Information"). As soon
as practicable following the Closing when the Supporting Information
may be released by Charter without constituting "inside information"
and without causing any violation of applicable Legal Requirements
(including, without limitation, the Securities Act and Exchange Act),
as reasonably determined by Charter in consultation with its counsel,
but in any event no later than January 31, 2001, Charter will provide
the Supporting Information to FHGLP, together with any such other
information pertinent to the determination of the EBITDA Amounts, the
Liability Amount, and the Bresnan EBITDA Amount as FHGLP may
reasonably request.
(3) If FHGLP concludes that Charter's determinations of the
EBITDA Amounts, the Liability Amount, and the Bresnan EBITDA Amount
were unreasonable taken as a whole (as determined in accordance with
this subsection (3)) and resulted in FHGLP or its transferees
receiving fewer Common Units pursuant to Section 3.6.6 of the Charter
LLC Operating Agreement in the aggregate than they would have received
were the determinations of the EBITDA Amounts, the Liability Amount,
and the Bresnan EBITDA Amount reasonable, then on or prior to the 30th
day after FHGLP receives the Supporting Information and other
requested information, FHGLP may so notify Charter. In such event,
FHGLP and Charter shall endeavor in good faith to agree within 30 days
after FHGLP so notifies Charter on the additional number of Common
Units in the aggregate that would have been issued to FHGLP and its
transferees pursuant to Section 3.6.6 of the Charter LLC Operating
Agreement were the determinations of the EBITDA Amounts, the Liability
Amount, and the Bresnan EBITDA Amount reasonable. The reasonableness
of Charter's determinations of the above-referenced amounts shall be
based on the methodology (as opposed to the specific underlying facts
and circumstances with respect to the cable television systems
included in the determinations) utilized in determining the
$11,272,700,000 amount set forth as the "Charter Holdings Value" in
Exhibit D to the
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Purchase and Contribution Agreement, taking into account the facts and
circumstances that existed prior to the time of the Closing with
respect to the cable television systems included in the determinations
of the EBITDA Amounts, the Liability Amount, and the Bresnan EBITDA
Amount, and to the extent not determinable from the foregoing methods,
based on cable industry standards for cable television systems of
comparable size, characteristics and composition. In this regard, the
parties further acknowledge that the EBITDA amount described in clause
(a)(i) and the amount set forth in clause (a)(iv) of subsection (1)
above are fixed for purposes of determining the Charter Value and are
not subject to review pursuant to this Section 6.6(j) and that the
current liabilities arising out of potential violations of Section 5
of the Securities Act that are reflected in the pro forma financial
statements of PublicCo in its Registration Statement on Form S-1
relating to the Charter IPO are not to be included in the computation
of the above-referenced Liability Amount.
(4) If FHGLP and Charter do not agree on such aggregate number of
Common Units by such 30th day, either FHGLP or Charter may elect to
submit the matter to a mutually acceptable arbitrator by giving the
other party written notice of such election. If FHGLP and Charter do
not agree on the selection of an arbitrator within 10 days after a
party has elected to submit the matter to an arbitrator, an arbitrator
shall be selected by the Los Angeles, California office of the
American Arbitration Association, provided that the arbitrator shall
be a partner or member of a Big 5 accounting firm and provided further
that in making such selection the AAA shall give preference to any
such person with recent experience in the finance of cable television
companies. The arbitrator shall endeavor to render his decision within
30 days after the arbitration hearing and his decision shall be final
and binding on the parties, subject to subsection (6) below. The costs
and expenses of the arbitrator and his services rendered pursuant to
this Section 6.6(j) shall be borne one-half by FHGLP and one-half by
Charter.
(5) If it is determined that FHGLP or its transferees did receive
fewer Common Units pursuant to Section 3.6.6 of the Charter LLC
Operating Agreement in the aggregate than they would have received
were the determinations of the EBITDA Amounts, the Liability Amount,
and the Bresnan EBITDA Amount reasonable, taken as a whole (either by
agreement of FHGLP and Charter or by the decision of an arbitrator),
then within three days after such determination, Charter and Charter
LLC shall pay to FHGLP in immediately available funds, in lieu of
issuing additional Common Units to FHGLP or its transferees, cash in
the amount of the "Per Common Unit Price" for each additional Common
Unit that would have been issued to FHGLP and its transferees pursuant
to Section 3.6.6 of the Charter LLC Operating Agreement, plus interest
thereon at a rate of four and one-half percent (4.5%) per year,
compounded annually, for the period from the Closing Date through the
date payment in full is received by FHGLP, where the "Per Common Unit
Price" is equal to the Equity Value divided by the aggregate number of
Common Units which would have been issued to FHGLP and its transferees
pursuant to Section 3.6.6 of the Charter LLC Operating Agreement were
the determinations of the EBITDA Amounts, the Liability Amount, and
the Bresnan EBITDA Amount reasonable.
(6) In no event will the number of Common Units issuable to FHGLP
and its transferees pursuant to Section 3.6.6 of the Charter LLC
Operating Agreement be adjusted downward or will FHGLP or its
transferees be required to forfeit any Common Units or other
consideration received in respect thereof as a result of the
provisions of this Section 6.6(j) or any decision of any arbitrator
arising out of such provisions.
(7) FHGLP agrees that the financial information (including
without limitation any projections) of Charter LLC and its
subsidiaries (including subsidiaries to be acquired pursuant to the
Avalon Purchase Agreement, the Fanch Purchase Agreement and the
Bresnan Purchase Agreement) that is or has been provided to FHGLP by
Charter or PublicCo and is not otherwise generally available to the
public will be kept confidential and will be used solely for the
purposes of evaluating, reviewing and analyzing the determination of
Charter Value, electing the size of its Contributed Interest, and
exercising its rights under the Purchase and Contribution Agreement
and related agreements. FHGLP agrees to disclose such confidential
information only (i) to officers, directors and employees of FHGLP and
its general partner involved in the foregoing purposes and who are
informed of FHGLP's obligations under this subsection (7), (ii) to
such agents, representatives, attorneys, accountants and advisors as
have been retained by Falcon, FHGLP or FHGLP's general partner in
connection with the transactions contemplated by the Purchase and
Contribution
<PAGE> 5
Agreement and who are informed of FHGLP's obligations under this
subsection (7), and/or (iii) in response to subpoena, court order or
similar process or as otherwise may be required by applicable Legal
Requirements. Without limiting the foregoing, so long as such
information constitutes material nonpublic information, FHGLP itself
will refrain from public trading in Class A Common Stock of PublicCo.
If FHGLP is requested or required by subpoena, court order or similar
process or other Legal Requirements to disclose any of the
confidential information, FHGLP will use reasonable efforts to provide
Charter and PublicCo with prompt notice so as to afford Charter and
PublicCo the opportunity, at Charter's and PublicCo's sole cost and
expense, to pursue a protective order or other remedy and FHGLP shall
reasonably cooperate with Charter and PublicCo in such efforts so long
as such cooperation does not expose FHGLP to risk of liability,
penalty or censure or other adverse consequences.
9. Notwithstanding anything to the contrary in the Purchase and
Contribution Agreement, as amended, including Sections 2.4(b) and 6.9(b) of the
Purchase and Contribution Agreement, FHGLP covenants and agrees to cause the
portion of the Net Closing Payment designated for the severance payments
contemplated by said Section 6.9(b) and the payments of amounts due under the
Falcon Communications, L.P. Key Executive Equity Program to be paid, no later
than the tenth day following the Closing Date, to eligible employees who have
delivered an effective employee release (substantially in form and substance as
previously delivered to Buyer) on or before the Closing that has not been
revoked prior to the time of such payments, and the amount of such payments
shall not be reflected as a Current Liability or a Closing Net Liability in the
computation of Aggregate Consideration pursuant to Section 2.4 of the Purchase
and Contribution Agreement. FHGLP further covenants and agrees to indemnify and
hold Charter harmless from FHGLP's failure to make such payments in accordance
with the preceding sentence.
10. Section 6.9 of the Purchase Agreement is hereby amended by deleting
existing paragraph 6.9(g) in its entirety and substituting, in lieu thereof, the
following new paragraph 6.9(g):
(g) Notwithstanding anything in this Agreement to the contrary, on or
prior to the Closing Date, Falcon shall take such action as may be
necessary or appropriate to cause each participant in the Falcon
Communications, L.P. "Smart" 401(k) Plan and each participant in the Enstar
Cable Corporation "Smart" 401(k) Plan (the "Falcon 401(k) Plans") to become
fully vested in his or her benefit under such plans. As of the Closing
Date, Buyer or an Affiliate of the Buyer shall assume all obligations to
sponsor, contribute to and administer the Falcon 401(k) Plans. Buyer agrees
not to take any action or cause any actions to be taken to unreasonably
delay distributions from the Falcon 401(k) Plans to participants otherwise
entitled to a distribution from those plans by reason of the termination of
employment as of the Closing Date. Nothing in this Section 6.9(g) shall be
deemed to prevent Buyer or its Affiliates from (i) terminating, freezing,
or merging the Falcon 401(k) Plans into another qualified defined
contribution plan under Section 414(l) of the Code after the Closing, to
the extent such actions are permitted by the Code and ERISA, or (ii) from
deferring enrollment of Falcon employees into Buyer's 401(k) plans until
the first day of the ensuing calendar quarter.
11. Section 6.9 of the Purchase Agreement is hereby amended by adding the
following new paragraph (h):
(h) Buyer or an Affiliate of Buyer shall offer employment to the two
employees of Western Tele-Communications, Inc. ("WTCI") who primarily
perform services on behalf of Pacific Microwave Joint Venture ("PMJV")
pursuant to the terms of the Lease and Management Agreement dated as of
November 30, 1989 (as amended, the "PMJV Management Agreement") between
WTCI and PMJV on such terms and conditions as are substantially similar in
the aggregate to the terms and conditions of employment of Buyer's and its
Affiliates' employees, such employment to be effective as of the
termination of the PMJV Management Agreement in accordance with its terms.
From and after the Closing Date, Buyer shall reimburse WTCI for any
employee-related expenses in accordance with Section 3.5 of the PMJV
Management Agreement, as in effect on the Closing Date, through and until
the termination of such agreement. For all other purposes under this
Section 6.9, such employees of WTCI shall be treated as employees of the
Falcon Companies as of the date such WTCI employees become employees of
Buyer or any Affiliate of Buyer.
12. The parties hereby agree that the Purchase and Contribution Agreement,
as amended and modified by the First Amendment and the Second Amendment, is
hereby deemed further amended in all respects necessary to give effect to the
consents, agreements and waivers contained in this Third Amendment, whether or
not a particular Section or provision of the Purchase and Contribution Agreement
has been referred to in this Third Amendment. Except as amended hereby, the
Purchase and Contribution Agreement, as amended and modified by the First
Amendment and the Second Amendment, shall remain unchanged and in full force and
effect, and this Third Amendment shall be governed by and subject to the terms
of the Purchase and Contribution Agreement, as amended and modified by the First
Amendment, the
<PAGE> 6
Second Amendment and this Third Amendment. From and after the date of this Third
Amendment, each reference in the Purchase and Contribution Agreement to "this
Agreement," "hereof," "hereunder" or words of like import, and all references to
the Purchase and Contribution Agreement in any and all agreements, instruments,
documents, notes, certificates and other writings of every kind and nature
(other than in this Third Amendment or as otherwise expressly provided) shall be
deemed to mean the Purchase and Contribution Agreement, as amended and modified
by the First Amendment and the Second Amendment and as further amended and
modified by this Third Amendment, whether or not such First Amendment, Second
Amendment, or Third Amendment is expressly referenced. This Third Amendment may
be signed in one or more counterparts, each of which shall constitute one
original but which when taken together shall constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 7
IN WITNESS WHEREOF, this Third Amendment has been executed by each of CII,
Charter LLC, Falcon and Sellers as of the date first written above.
<TABLE>
<S> <C>
SELLERS: CII:
FALCON HOLDING GROUP, L.P. CHARTER INVESTMENT, INC.
By: Falcon Holding Group, Inc.,
General Partner By: /s/ Marcy Lifton
---------------------------------
Name: Marcy Lifton
Title: Vice President
By: /s/ Stanley S. Itskowitch
-------------------------------
Name: Stanley S. Itskowitch
Title: Executive Vice President CHARTER LLC:
CHARTER COMMUNICATIONS
TCI FALCON HOLDINGS, LLC HOLDING COMPANY, LLC
By: /s/ Derek Chang By: /s/ Marcy Lifton
------------------------------- ---------------------------------
Name: Derek Chang Name: Marcy Lifton
Title: Vice President Title: Vice President
FALCON HOLDING GROUP, INC. FALCON:
FALCON COMMUNICATIONS, L.P.
By: /s/ Stanley S. Itskowitch
-------------------------------
Name: Stanley S. Itskowitch By: Falcon Holding Group, L.P.,
Title: Executive Vice President General Partner
By: Falcon Holding Group, Inc.,
FALCON CABLE TRUST General Partner
By: /s/ Marc B. Nathanson By: /s/ Stanley S. Itskowitch
------------------------------- ---------------------------------
Name: Marc B. Nathanson Name: Stanley S. Itskowitch
Title: Trustee Title: Executive Vice President
By: TCI Falcon Holdings, LLC,
DHN, INC. General Partner
By: /s/ Stanley S. Itskowitch By: /s/ Derek Chang
------------------------------- --------------------------------
Name: Stanley S. Itskowitch Name: Derek Chang
Title: Executive Vice President Title: Vice President
</TABLE>
[THIS IS A SIGNATURE PAGE TO THE THIRD AMENDMENT]
<PAGE> 1
EXHIBIT 2.7
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE (the "Supplemental Indenture"), dated as of
November 12, 1999, by and among Falcon Communications, L.P., a California
limited partnership ("FCLP"), Falcon Funding Corporation, a California
corporation ("FFC"), CC VII Holdings, LLC, a Delaware limited liability company
("CCLLC"), and United States Trust Company of New York, as trustee (the
"Trustee").
WITNESSETH:
WHEREAS, as of the date hereof, FCLP is to be merged with and into CCLLC,
with CCLLC surviving the merger as successor-in-interest to FCLP;
WHEREAS, pursuant to Section 5.01(ii) of that certain Indenture dated as of
April 3, 1998, as amended by the First Supplemental Indenture dated as of
September 30, 1998, by and among FCLP, FFC, and the Trustee, relating to the
8.375% Senior Debentures due 2010 and the 9.285% Senior Discount Debentures due
2010 (the "Indenture"), FCLP may not consolidate or merge with or transfer all
or substantially all of its assets to any Person unless such Person assumes all
of the obligations of FCLP under the Debentures and the Indenture, and any
remaining obligations of FCLP and Falcon Holding Group, L.P., a Delaware limited
partnership ("FHGLP"), under the Registration Rights Agreement;
WHEREAS, all things necessary to make this Supplemental Indenture a valid
supplement to the Indenture according to its terms and the terms of the
Indenture have been done.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Definitions. All capitalized terms used herein without definition
herein shall have the meanings ascribed to such terms in the Indenture.
Section 2. Assumption of Obligations. CCLLC hereby expressly assumes all of the
obligations of FCLP under the Debentures and the Indenture, and any remaining
obligations of FCLP and FHGLP under the Registration Rights Agreement. The
Indenture is hereby amended in accordance with the preceding sentence.
Section 3. Governing Law. The laws of the State of New York shall govern this
Supplemental Indenture, without regard to the choice of law provisions thereof.
Section 4. Counterparts. This Supplemental Indenture may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
Section 5. Ratification. Except as expressly amended hereby, each provision of
the Indenture shall remain in full force and effect and, as amended hereby, the
Indenture is in all respects agreed to, ratified, and confirmed by each of the
Issuers and the Trustee.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
FALCON COMMUNICATIONS, L.P.
By: Charter Communications Holding Company, LLC
Its: General Partner
By: /s/ CURTIS S. SHAW
-----------------------------------
Name: Curtis S. Shaw
---------------------------------
Title: Senior Vice President
--------------------------------
FALCON FUNDING CORPORATION
By: /s/ CURTIS S. SHAW
----------------------------------------
Name: Curtis S. Shaw
--------------------------------------
Title: Senior Vice President
-------------------------------------
CC VII HOLDINGS, LLC
By: /s/ CURTIS S. SHAW
---------------------------------------
Name: Curtis S. Shaw
--------------------------------------
Title: Senior Vice President
-------------------------------------
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee
By: /s/ MARGARET M. CIESMELEWSKI
----------------------------------------
Name: Margaret M. Ciesmelewski
--------------------------------------
Title: Assistant Vice President
-------------------------------------
