SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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) APRIL 28, 1998
MARCUS CABLE COMPANY, L.P.
MARCUS CABLE OPERATING COMPANY, L.L.C.
MARCUS CABLE CAPITAL CORPORATION
MARCUS CABLE CAPITAL CORPORATION II
MARCUS CABLE CAPITAL CORPORATION III
(Exact name of registrants as specified in their charters)
DELAWARE 33-81088 & 33-67390 & 33-93808 75-2337471
DELAWARE 33-81088-01 75-2495706
DELAWARE 33-67390-01 75-2546077
DELAWARE 33-81088-02 75-2546713
DELAWARE 33-93808-01 75-2599586
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
Incorporation
or organization)
2911 TURTLE CREEK BOULEVARD, SUITE 1300
DALLAS, TEXAS 75219-6257
(Address of principal executive offices) (Zip Code)
(214) 521-7898
(Registrants' telephone number, including area code)
Page 1 of 112
Index to Exhibits on Page 9
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ITEM 2. CHANGES IN CONTROL OF REGISTRANT
In connection with the acquisition by Vulcan Cable, Inc.
("Vulcan") and Paul G. Allen of (i) the limited partner interests
of Marcus Cable Company, L.P. (the "Company"), (ii) the limited
partner interests of Marcus Cable Properties, L.P. ("MCPLP"), the
Company's sole general partner, and (iii) the non-voting common
stock of Marcus Cable Properties, Inc. ("MCPI"), the sole general
partner of MCPLP (the "Acquisition") (which acquisition is
described below under Item 5 of this Current Report on Form 8-K),
Vulcan, Mr. Allen, and Jeffrey A. Marcus (in his individual
capacity and as Trustee under a Voting Trust Agreement) and Nancy
C. Marcus (collectively, "Marcus") have entered into an Amended
Share Conversion and Put/Call Agreement (the "Put/Call Agreement")
under which (x) Mr. Allen may acquire from Marcus all of the voting
stock of MCPI under certain conditions upon the payment of a
specified purchase price, (y) Mr. Allen may convert his MCPI non-voting
common stock into 80% of the voting common stock of MCPI and
(z) Marcus may cause Mr. Allen to purchase their MCPI voting common
stock under certain conditions for a specified purchase price.
Unless and until any of the rights provided under the Put/Call
Agreement are exercised, Marcus will continue to hold all of the
voting common stock of MCPI. Mr. Allen has not made a
determination as to whether or when he intends to exercise any of
his rights under the Put/Call Agreement. For more information with
respect to the Put/Call Agreement, please refer to such agreement,
which has been filed as an exhibit to this report.
ITEM 5. OTHER EVENTS
On April 23, 1998, Vulcan and Mr. Allen completed the
Acquisition. As previously reported, on April 6, 1998 the Company
announced that Vulcan and Mr. Allen had entered into an agreement
to effect such acquisition. For more information with respect to
the Acquisition, please refer to the Purchase Agreement dated April
3, 1998, among the Company, Vulcan, Marcus Cable Properties, L.P.,
Marcus Cable Properties, Inc., Marcus and the other sellers listed
on the signature pages thereto, which has been filed as an exhibit
to this report.
The Acquisition has resulted in the occurrence of a "change of
control" under the indentures (collectively, the "Indentures")
governing the 13 1/2% Senior Subordinated Guaranteed Discount Notes
due August 1, 2004 (the "13 1/2% Notes"), the 11 7/8% Senior Debentures
due October 1, 2005 (the "11 /7% Debentures") and the 14 1/4% Senior
Discount Notes dues December 15, 2005 (the "14 1/4% Notes") issued by
the Company and certain of its subsidiaries. As a result, the
Company will be required to offer to repurchase such notes and
debentures at a redemption price (i) in the case of the 13 1/2% Notes,
of 101% of the Accreted Value (as defined in the Indenture
governing such notes) thereof, (ii) in the case of the 11 7/8%
Debentures, at a redemption price of 101% of the principal amount
thereof plus accrued but unpaid interest to the date of purchase
and (iii) in the case of the 14 1/4% Notes, at a redemption price of
101% of the Accreted Value (as defined in the Indenture governing
such notes) thereof. However, all of such notes and debentures, as
of the date of this Current Report on Form 8-K, are trading at
prices substantially above such redemption prices. As a result,
the Company does not expect that any of such notes or debentures
will be tendered in response to such offers to purchase. The
Company believes that it will be able
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to purchase any of the notes
or debentures so tendered. In addition, the Company's senior
credit facility was amended in connection with the Acquisition to
provide that the Acquisition did not constitute a "change of
control" thereunder.
In connection with the Acquisition, the Company has entered
into a three-year Employment Agreement with Jeffrey A. Marcus (the
"Marcus Employment Agreement"). The Marcus Employment Agreement
provides that Mr. Marcus will serve as the Company's Chairman,
President and Chief Executive Officer until a successor President
and Chief Executive Officer (a "Successor CEO") is jointly selected
by Vulcan and Mr. Marcus. It is anticipated that a Successor CEO
will be selected within the next six months. Following the
selection of such Successor CEO, Mr. Marcus will continue to serve
as the Company's Chairman. The Marcus Employment Agreement
generally permits Mr. Marcus to serve as a director or executive
officer of other businesses. The Marcus Employment Agreement
provides for certain adjustments to Mr. Marcus' employment terms
upon the employment of a Successor CEO.
Also, in connection with the Acquisition, the Company has
entered into a two-year Employment Agreement with Thomas P.
McMillin pursuant to which Mr. McMillin will serve as the Company's
Executive Vice President and Chief Financial Officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
21.1 Amended Share Conversion and Put/Call Agreement dated as of
April 23, 1998, among Vulcan Cable, Inc., Paul G. Allen,
Jeffrey A. Marcus (in his individual capacity and as Trustee
under a Voting Trust Agreement) and Nancy C. Marcus.
21.2 Purchase Agreement dated April 3, 1998, among Marcus Cable
Company, L.P., Marcus Cable Properties, L.P., Marcus Cable
Properties, Inc., Vulcan Cable Inc. and the sellers listed on
the signature pages thereto.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, each of the registrants have duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
MARCUS CABLE COMPANY, L.P.
(Registrant)
By: Marcus Cable Properties, L.P., its general
partner,
By: Marcus Cable Properties, Inc., its
general partner,
April 28, 1998 By: /s/ Jeffrey A. Marcus
Jeffrey A. Marcus
Its: President, Chief Executive Officer
and Sole Director of Marcus Cable
Properties, Inc.(Principal Executive
Officer)
By: /s/ Thomas P. McMillin
Thomas P. McMillin
Its: Executive Vice President and Chief
Financial Officer of Marcus Cable
Properties, Inc. (Principal
Financial Officer)
By: /s/ John P. Klingstedt, Jr.
John P. Klingstedt, Jr.
Its: Senior Vice President and Controller
of Marcus Cable Properties, Inc.
(Principal Accounting Officer)
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MARCUS CABLE OPERATING COMPANY, L.L.C.
(Registrant)
By: Marcus Cable Company, L.P., its general
partner,
By: Marcus Cable Properties, L.P., its
general partner,
By: Marcus Cable Properties, Inc., its
general partner,
April 28, 1998 By: /s/ Jeffrey A. Marcus
Jeffrey A. Marcus
Its: President, Chief Executive Officer
and Sole Director of Marcus Cable
Properties, Inc. (Principal
Executive Officer)
By: /s/ Thomas P. McMillin
Thomas P. McMillin
Its: Executive Vice President and Chief
Financial Officer of Marcus Cable
Properties, Inc. (Principal
Financial Officer)
By: /s/ John P. Klingstedt, Jr.
John P. Klingstedt, Jr.
Its: Senior Vice President and Controller
of Marcus Cable Properties, Inc.
(Principal Accounting Officer)
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MARCUS CABLE CAPITAL CORPORATION
(Registrant)
April 28, 1998 By: /s/ Jeffrey A. Marcus
Jeffrey A. Marcus
Its: President, Chief Executive Officer
and Sole Director of Marcus Cable
Capital Corporation (Principal
Executive Officer)
By: /s/ Thomas P. McMillin
Thomas P. McMillin
Its: Executive Vice President and Chief
Financial Officer of Marcus Cable
Capital Corporation (Principal
Financial Officer)
By: /s/ John P. Klingstedt, Jr.
John P. Klingstedt, Jr.
Its: Senior Vice President and Controller
of Marcus Cable Capital Corporation
(Principal Accounting Officer)
MARCUS CABLE CAPITAL CORPORATION II
(Registrant)
April 28, 1998 By: /s/ Jeffrey A. Marcus
Jeffrey A. Marcus
Its: President, Chief Executive Officer
and Sole Director of Marcus Cable
Capital Corporation II (Principal
Executive Officer)
By: /s/ Thomas P. McMillin
Thomas P. McMillin
Its: Executive Vice President and Chief
Financial Officer of Marcus Cable
Capital Corporation II (Principal
Financial Officer)
By: /s/ John P. Klingstedt, Jr.
John P. Klingstedt, Jr.
Its: Senior Vice President and Controller
of Marcus Cable Capital Corporation
II (Principal Accounting Officer)
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MARCUS CABLE CAPITAL CORPORATION III
(Registrant)
April 28, 1998 By: /s/ Jeffrey A. Marcus
Jeffrey A. Marcus
Its: President, Chief Executive Officer
and Sole Director of Marcus Cable
Capital Corporation III (Principal
Executive Officer)
By: /s/ Thomas P. McMillin
Thomas P. McMillin
Its: Executive Vice President and Chief
Financial Officer of Marcus Cable
Capital Corporation III (Principal
Financial Officer)
By: /s/ John P. Klingstedt, Jr.
John P. Klingstedt, Jr.
Its: Senior Vice President and Controller
of Marcus Cable Capital Corporation
III (Principal Accounting Officer)
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<TABLE>
INDEX TO EXHIBITS
<CAPTION>
Exhibit Page
Number Description Number
<S> <C> <C>
21.1 Amended Share Conversion and Put/Call
Agreement dated as of April 23, 1998,
among Vulcan Cable, Inc., Paul G. Allen,
Jeffrey A. Marcus (in his individual
capacity and as Trustee under a Voting
Trust Agreement)and Nancy C. Marcus. 9
21.2 Purchase Agreement dated April 3, 1998,
among Marcus Cable Company, L.P.,
Marcus Cable Properties, L.P., Marcus
Cable Properties, Inc., Vulcan Cable Inc.
and the sellers listed on the signature
pages thereto. 18
</TABLE>
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Exhibit 21.1
AMENDED SHARE CONVERSION AND PUT/CALL AGREEMENT
This Amended Share Conversion and Put/Call Agreement
("Agreement") is made this 23rd day of April, 1998, by and among
Paul G. Allen, an individual ("Allen"), Jeffrey A. Marcus,
individually and as Trustee of that certain Voting Trust Agreement,
dated as of August 1, 1990, between Jeffrey A. Marcus, in both such
capacities, and Nancy C. Marcus (the "Trust Agreement"), and
Nancy C. Marcus (collectively, "Marcus"), and, solely for purposes
of Sections 1 and 11.2 hereof, Vulcan Cable, Inc., a Washington
corporation ("Vulcan"), with reference to the following facts and
circumstances:
a. Vulcan and Marcus are parties to that certain Share
Conversion and Put/Call Agreement ("the Prior Agreement"), dated
April 3, 1998, between Vulcan and Marcus.
b. Vulcan and Marcus also are parties to that certain
Purchase Agreement (the "Purchase Agreement"), dated April 3, 1998,
among Marcus, the other sellers listed on the signature pages
thereto, Marcus Cable Company, L.P., a Delaware limited partnership
(the "Company"), Marcus Cable Properties, L.P., a Delaware limited
partnership and the sole general partner of the Company ("MCPLP"),
and Marcus Cable Properties, Inc., a Delaware corporation and the
sole general partner of MCPLP ("MCPI") on the one hand, and Vulcan,
on the other hand.
c. Marcus owns of record and beneficially all of the One
Thousand (1,000) shares (collectively, the "Shares") of the issued
and outstanding capital stock of MCPI (the "Stock").
d. Prior to the closing of the transactions contemplated by
the Purchase Agreement (the "Transaction Closing"), MCPI will
effect a recapitalization (the "MCPI Recapitalization") to be
effected by the exchange of the Shares (which, on the date of the
MCPI Recapitalization, shall be the only issued and authorized
capital stock of MCPI) for One Thousand (1,000) shares of common
stock comprising a class of voting common stock and a class of
convertible non-voting common stock of MCPI, each share having
identical rights and privileges (except, prior to conversion of the
non-voting shares, with respect to voting rights on matters other
than matters that would adversely affect the rights and privileges
of such non-voting shares and extraordinary corporate matters such
as a merger, a sale of all or substantially all of MCPI's assets
and changes to MCPI's governing documents), such that Seven Hundred
Ninety-Six and Sixty-Three One Hundredths (796.63) of the Shares
owned by Marcus shall be convertible non-voting common stock of
MCPI, convertible at any time and from time to time following
receipt of any necessary approvals of such conversion by the
Federal Communications Commission, at the option of the holder
thereof by notice to MCPI automatically and without further action
by the holder thereof into voting shares identical to all other
shares of
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common stock of MCPI (each, a "Non-Voting Share"), and
Two Hundred Three and Thirty-Seven One Hundredths (203.37) of the
Shares owned by Marcus shall be voting common stock (each, a
"Voting Share").
e. Vulcan has assigned to Allen all of Vulcan's rights under
the Purchase Agreement to purchase the Non-Voting Shares owned by
Marcus at the Transaction Closing. Allen will purchase such Non-Voting
Shares at the Transaction Closing.
f. Vulcan desires to assign to Allen all of Vulcan's right,
title and interest in the Prior Agreement, and Allen desires to
accept such assignment and to assume all of Vulcan's obligations
under the Prior Agreement.
g. The parties desire to provide by this Agreement for the
mutual rights and obligations of Allen and Marcus to buy or sell,
as the case may be, on demand at the times specified herein, the
Voting Shares, with the intention that this Agreement amend,
restate and supersede the Prior Agreement in its entirety.
NOW, THEREFORE, in consideration of the respective covenants
and agreements of the parties and for other good and valuable
consideration (the receipt and sufficiency of which are hereby
acknowledged by each party), the parties hereby agree as follows:
1. Assignment and Assumption. Vulcan hereby assigns and
delegates to Allen all of Vulcan's right, title and interest in the
Prior Agreement and all obligations thereunder, as amended,
restated and superseded by this Agreement. Assignee hereby accepts
the foregoing assignment and assumes and agrees to perform and dis-
charge, when due, and indemnify and hold Vulcan harmless from and
against any loss, liability, claims or expenses arising from, all
obligations of Vulcan under the Prior Agreement, as amended,
restated and superseded by this Agreement, relating to the period
from and after the date hereof.
2. Conversion of the Non-Voting Shares.
2.1 MCPI Recapitalization. Marcus agrees to cause MCPI
to effect the MCPI Recapitalization prior to the Transaction
Closing. Prior to the termination of this Agreement, Marcus shall
not take any action to, and shall cause MCPI not to take any
action, to authorize or issue any additional shares of capital
stock of MCPI or options, warrants or other rights, agreements,
arrangements or commitments of any character obligating MCPI to
issue, exchange or sell any equity interests in MCPI, or otherwise
change the capitalization of MCPI, directly or indirectly, through
subsidiaries or otherwise, including without limitation by
combination, recapitalization, reclassification, merger,
consolidation, sale of assets, stock split, stock dividend or stock
combination, except the effectuation of the MCPI Recapitalization
or the conversion of the Non-Voting Shares. The number of
Non-Voting Shares and Voting Shares issued in the MCPI
Recapitalization and referred to in this Agreement will be
adjusted, as appropriate, to take into account the effect of the
Transaction Closing occurring either before or after June 30, 1998
on accruals of preferred returns at the subsidiary partnerships
which affect the value of MCPI.
2.2 Conversion. Allen may, at his option exercisable by
written notice delivered
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to MCPI at any time after the Transaction
Closing, elect to have the Non-Voting Shares converted to voting
common stock. Marcus agrees to take any action required to, and to
cause MCPI to, effectuate the conversion of the Non-Voting Shares
to voting common stock identical to the Voting Shares.
3. Options on the Voting Shares.
3.1 Call by Allen. Allen may, at his option exercisable
by written notice delivered to Marcus within thirty (30) days after
the date of (i) the death of Jeffrey A. Marcus, (ii) the disability
of Jeffrey A. Marcus, or (iii) the termination of the employment of
Jeffrey A. Marcus with the Company, elect to buy all (but not less
than all) of the Voting Shares, and upon the giving of such notice,
Marcus shall be obligated to sell and Allen shall be obligated to
buy all of the Voting Shares, at the price and upon the terms and
conditions specified in Section 3.3.
3.2 Put by Marcus. Marcus may, at his option
exercisable by written notice delivered to Allen within thirty (30)
days after the date of the termination of the employment of
Jeffrey A. Marcus with the Company, elect to sell all (but not less
than all) of the Voting Shares, and upon the giving of such notice,
Allen shall be obligated to buy and Marcus shall be obligated to
sell, all of the Voting Shares, at the price and upon the terms and
conditions specified in Section 3.3.
3.3 Purchase Price; Closing.
In the case of a purchase pursuant to Section
3.1 or Section 3.2, the aggregate purchase price for the Voting
Shares (the "Payment") shall be the greater of (i) the Fair Market
Value of the Voting Shares or (ii) Eight Million Dollars
($8,000,000) plus an annual rate of return of twelve percent (12%),
compounded annually, for the period from the Transaction Closing
through the closing of the purchase of the Voting Shares hereunder
(the "Closing").
At the Closing, (a) Allen shall pay to Marcus
the Payment in immediately available funds by wire transfer or
certified bank check; and (b) Marcus shall deliver to Allen stock
certificate(s) evidencing the Voting Shares, together with duly
executed stock powers separate from certificate in form and
substance satisfactory to effectuate transfer of the Voting Shares
to Allen, together with such other documents as Allen may
reasonably deem necessary or desirable in order to effectuate the
transfer of the Voting Shares on the books of MCPI to the name of
Allen. Any applicable sales, stock, transfer or similar taxes
payable in connection with the sale of the Voting Shares shall be
paid (i) by Marcus, if the transfer is pursuant to Section 3.2 and
(ii) by Allen, if the transfer is pursuant to Section 3.1. The
Closing shall be held at MCPI's offices within five (5) business
days after Allen or Marcus, as the case may be, delivers the
written notice required by Section 3.1 or Section 3.2, as
applicable, or at such other time and place as Marcus and Allen may
agree.
3.4 Fair Market Value Definition. For purposes of this
Agreement, "Fair Market Value" on any date shall mean, with respect
to any security, if such security is publicly traded in the United
States, the average of the daily Closing Prices for the fifteen
(15) consecutive trading days ending on the day immediately prior
to the date as of which the Fair Market Value is to be determined,
or, if such day is not a trading date, the trading day immediately
preceding such date.
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The "Closing Price" for each day shall be the
closing bid sale price for a share of the security on any national
securities exchange or the Nasdaq National Market, or if not traded
on any such exchange or the Nasdaq National Market, the average of
the closing bid and closing ask price for such security or, if not
so traded, the last reported sale price regular way or, in case no
such reported sale takes place on such day, the average of the
reported closing bid and ask price regular way on the principal
stock exchange on which the security is then listed or traded, or,
if not then listed or traded on any such exchange, the mean of the
closing bid and ask prices on an automated quotation system as
furnished by any New York Stock Exchange member firm selected from
time to time by MCPI for that purpose. Except as set forth in the
preceding sentence, with respect to any security that is not
publicly traded in the United States, or any other asset that
cannot be readily valued, "Fair Market Value" on any date shall
mean the fair market value of such security or other asset on such
date (x) as determined by agreement of Marcus and Allen, or (y) if
they cannot agree on the Fair Market Value within thirty (30) days
after the date of the event that gave rise to the purchase and sale
obligation, then as determined by two nationally recognized
investment banking firms (each, an "Investment Bank"), with one
Investment Bank to be selected by each of Marcus and Allen for such
purpose. Unless otherwise waived by Marcus or Allen respectively,
the Investment Banks selected pursuant to the preceding sentence
shall not have had any significant relationship with Allen, on the
one hand, or Marcus, MCPI, MCPLP or the Company, on the other hand,
during the prior twelve month period. Each such Investment Bank
shall determine the Fair Market Value by reference to the price
that an unaffiliated third party would pay for all of MCPI in an
arm's length transaction (without taking into consideration the
strategic value to a competitor of Allen or Marcus, as applicable,
of owning or controlling MCPI rather than Allen or Marcus, as
applicable) and shall deliver its written valuation to Allen and
Marcus within thirty (30) days after selection. In the event that
such Investment Banks do not agree on the Fair Market Value, the
Fair Market Value shall be the average of the two valuations,
except that if the higher of the two valuations is greater than
110% of the lower valuation, the Investment Banks shall select
another Investment Bank of similar qualifications who shall
determine the Fair Market Value independently of such selection in
accordance with the procedures specified in the foregoing sentence.
None of Allen, Marcus, MCPI or the initial Investment Banks shall
provide the third Investment Bank with information regarding the
valuation of the initial Investment Banks. The valuation of the
third Investment Bank shall be arithmetically averaged with the two
prior valuations and the valuation farthest from the average of the
three valuations shall be disregarded. The Fair Market Value shall
be the average of the two remaining valuations. Marcus and Allen
shall each pay one-half of the expense of the valuation.
4. No Sale or Issuances. Prior to the termination of this
Agreement, Marcus shall not sell, transfer, assign, hypothecate,
grant a security interest in, or otherwise dispose of or encumber
any of the Voting Shares (or agree to do any of the foregoing),
except to Allen pursuant to the exercise of an option granted by
Section 3. Any purported sale, transfer, assignment,
hypothecation, grant of a security interest in, or other
disposition or encumbrance of any of the Voting Shares to any third
party (or agreement to do any of the foregoing) prior to the
termination of this Agreement shall be null and void ab initio. In
such event, the purported transferee shall not be deemed to be a
holder of the Voting Shares and shall not be entitled to receive a
new stock certificate or any dividends or other distributions on or
with respect to the Voting Shares.
5. Representations of Marcus. Marcus represents and
warrants to Allen that on the date hereof and at all times
hereafter through the Closing: (a) Marcus has full power and
authority to
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execute and deliver this Agreement and consummate the
transactions contemplated hereby; (b) this Agreement is the legal,
valid and binding obligation of Marcus, enforceable against Marcus
in accordance with its terms; (c) Marcus owns all of the Shares of
record and beneficially, free and clear of all liens, encumbrances
or adverse interests of any kind or nature whatsoever (including
any restriction on the right to vote, sell or otherwise dispose of
the Shares, except for the Trust Agreement and as contemplated by
this Agreement and the Purchase Agreement); (d) upon the transfer
of the Voting Shares pursuant to Section 3, Allen will receive good
and marketable title to the Voting Shares, free and clear of all
liens, encumbrances and adverse interests (including the Trust
Agreement, which shall be terminated and of no further force and
effect); and (f) One Thousand (1,000) Shares constitute all of the
issued and outstanding capital stock of MCPI, validly issued, fully
paid and non-assessable, subject to no options, warrants or other
rights, agreements, arrangements or commitments of any character
obligating MCPI to issue or sell any equity interests in MCPI.
6. Representations of Allen. Allen represents and warrants
to Marcus that on the date hereof and at all times hereafter
through the Closing: (a) Allen has full power and authority to
execute and deliver this Agreement and consummate the transactions
contemplated hereby; and (b) this Agreement constitutes the legal,
valid and binding obligation of Allen, enforceable against Allen in
accordance with its terms.
7. Legend. In addition to any other legend which may be
required pursuant to the Purchase Agreement or by applicable law,
each stock certificate evidencing a Voting Share owned by Marcus
shall have endorsed upon its face the following words:
SALE, TRANSFER OR HYPOTHECATION OF THE SHARES REPRESENTED
BY THIS CERTIFICATE IS RESTRICTED BY THE PROVISIONS OF AN
AMENDED SHARE CONVERSION AND PUT/CALL AGREEMENT AMONG
JEFFREY A. MARCUS, IN HIS INDIVIDUAL CAPACITY AND IN HIS
CAPACITY AS TRUSTEE OF THAT CERTAIN VOTING TRUST
AGREEMENT DATED AS OF AUGUST 1, 1990, NANCY C. MARCUS,
PAUL G. ALLEN, AND, SOLELY FOR PURPOSES OF SECTIONS 1 AND
11.2 THEREOF, VULCAN CABLE, INC., DATED APRIL 23, 1998,
ALL OF THE PROVISIONS OF WHICH ARE INCORPORATED HEREIN.
8. Specific Performance. Due to the fact that the Shares,
including the Voting Shares, cannot be readily purchased or sold in
the open market, and for other reasons, the parties will be
irreparably damaged in the event that this Agreement is not
specifically enforced. In the event of a breach or threatened
breach of the terms, covenants and/or conditions of this Agreement
by either party hereto, the other party shall, in addition to all
other remedies, be entitled (without any bond or other security
being required) to a temporary and/or permanent injunction, without
showing any actual damage or that monetary damages would not
provide an adequate remedy, and/or to a decree for specific
performance, in accordance with the provisions hereof.
9. Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be
sufficiently given if delivered in person or transmitted by
telecopy or similar means of recorded electronic communication to
the relevant party, addressed as follows (or at such other address
as either party shall have designated by notice as herein provided
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to the other party):
9.1 If to Marcus:
Jeffrey A. and Nancy C. Marcus
c/o Marcus Cable Properties, Inc.
2911 Turtle Creek Boulevard, Suite 1300
Dallas, Texas 75219
Telecopy: (214) 521-3468
with a copy to:
Baker & Botts LLP
2001 Ross Avenue, 7th Floor
Dallas, Texas 75201
Attention: Michael A. Saslaw, Esq.
Telecopy: (214) 953-6503
9.2 If to Allen:
Paul G. Allen
c/o Vulcan Northwest
110 110th Avenue Northwest
Bellevue, Washington 98004
Telecopy: (425) 453-1985
with a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067-4276
Attention: Alvin G. Segel, Esq.
Telecopy: (310) 203-7199
Any such notice or other communication shall be deemed to have been
given and received on the day on which it is delivered or
telecopied (or, if such day is not a business day or if the notice
or other communication is not telecopied during business hours, at
the place of receipt, on the next following business day).
10. Termination of Agreement. This Agreement, and all rights
and obligations of the parties hereunder, shall terminate upon the
earliest of the following: (a) written agreement of the parties;
or (b) the fifth anniversary of the date hereof.
11. Miscellaneous.
11.1 Complete Agreement; Modifications. This Agreement
constitutes the parties' entire agreement with respect to the
subject matter hereof and supersedes the Prior Agreement and all
other agreements, representations, warranties, statements, promises
and understandings, whether oral or written (other than the
Purchase Agreement and the Employment Agreement by and between
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the Company and Jeffrey A. Marcus, dated as of April 3, 1998), with
respect to the subject matter hereof. This Agreement may not be
amended, altered or modified except by a writing signed by the
parties other than Vulcan.
11.2 Additional Documents. Each party hereto agrees to
execute any and all further documents and writings and to perform
such other actions which may be or become necessary or expedient to
effectuate and carry out this Agreement.
11.3 No Third-Party Benefits. None of the provisions of
this Agreement shall be for the benefit of, or enforceable by, any
third-party beneficiary.
11.4 Waivers Strictly Construed. With regard to any
power, remedy or right provided herein or otherwise available to
any party hereunder (a) no waiver or extension of time shall be
effective unless expressly contained in a writing signed by the
waiving party; and (b) no alternation, modification or impairment
shall be implied by reason of any previous waiver, extension of
time, delay or omission in exercise or other indulgence.
11.5 Severability. The validity, legality or
enforceability of the remainder of this Agreement shall not be
affected even if one or more of the provisions of this Agreement
shall be held to be invalid, illegal or unenforceable in any
respect.
11.6 Attorneys' Fees. Should any litigation or
arbitration be commenced (including any proceedings in a bankruptcy
court) between the parties hereto or their representatives
concerning any provision of this Agreement or the rights and duties
of any person or entity hereunder, the party or parties prevailing,
in addition to such other relief as may be granted, shall be
entitled to recover the attorneys' fees and court costs incurred by
reason of such litigation or arbitration.
11.7 Marcus Undertakings. All authority herein conferred
or agreed to be conferred by Marcus and all agreements of Marcus
contained herein shall survive the death or incapacity of Marcus
(or either of them). All representations made, and obligations
undertaken by, Marcus hereunder shall be deemed to be joint and
several.
11.8 Successors and Assigns. Except as provided herein
to the contrary, this Agreement shall be binding upon and shall
inure to the benefit of the parties, their respective heirs,
personal representatives, successors and permitted assigns.
11.9 Assignments. This Agreement, and all of Marcus'
rights and obligations hereunder, are not transferable or
assignable by Marcus. Allen is entitled, in his sole discretion,
to assign this Agreement or any of his rights and obligations
hereunder to one or more persons or entities controlling,
controlled by or under common control with Allen (each such
assignee to be treated as "Allen" hereunder).
11.10 Governing Law. This Agreement shall be
governed by the laws of the State of Texas, without regard to any
choice of law provisions of that state or the laws of any other
jurisdiction.
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11.11 Headings. The Section headings in this
Agreement are inserted only as a matter of convenience and in no
way define, limit, extend or interpret the scope of this Agreement
or of any particular Section.
11.12 Number and Gender. Throughout this Agreement,
as the context may require, (a) the masculine gender includes the
feminine and neuter; and the neuter gender includes the masculine
and feminine; and (b) the singular tense and number includes the
plural, and the plural tense and number includes the singular.
11.13 Counterpart. This Agreement may be executed
simultaneously 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.
11.14 FCC Licenses and Franchises. The parties shall
cause the Company to bear all of the costs and expenses of any
filings and consents required from the Federal Communications
Commission and any other governmental authority so that the
exercise of the conversion rights on the Non-Voting Shares would be
permitted under and consistent with all FCC Licenses and Franchises
(each, as defined in the Purchase Agreement).
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first set forth above.
_________________________________
Paul G. Allen
_________________________________
Jeffrey A. Marcus, individually and as
Trustee under the Trust Agreement
_________________________________
Nancy C. Marcus
Vulcan Cable, Inc.
By:______________________________
Name:____________________________
Title:___________________________
<PAGE>
Exhibit 21.2
PURCHASE AGREEMENT
DATED APRIL 3, 1998
AMONG
THE SELLERS LISTED ON
THE SIGNATURE PAGES HERETO,
MARCUS CABLE COMPANY, L.P.,
MARCUS CABLE PROPERTIES, L.P.,
MARCUS CABLE PROPERTIES, INC.
AND
VULCAN CABLE, INC.
<PAGE>
TABLE OF CONTENTS
1. Interpretation. . . . . . . . . . . . . . . . . . . . . . .2
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . .2
2. Purchase and Sale of Purchased Interests. . . . . . . . . .9
2.1 Purchase and Sale of Purchased Interests . . . . . . .9
3. Representations and Warranties of the Sellers,
MCPI and MCPLP. . . . . . . . . . . . . . . . . . . . . . 11
3.1 Representations and Warranties of the Sellers. . . . 11
3.2 Representations and Warranties of MCPI . . . . . . . 15
3.3 Representations and Warranties of MCPLP. . . . . . . 18
4. Representations and Warranties of the Company,
MCPLP and MCPI. . . . . . . . . . . . . . . . . . . . . . 21
4.1 Organization and Qualification; Subsidiaries . . . . 21
4.2 Organizational Documents . . . . . . . . . . . . . . 22
4.3 Capitalization . . . . . . . . . . . . . . . . . . . 22
4.4 Authority Relative to This Agreement . . . . . . . . 23
4.5 No Conflict; Required Filings and Consents . . . . . 23
4.6 Compliance . . . . . . . . . . . . . . . . . . . . . 25
4.7 SEC Filings; Financial Statements. . . . . . . . . . 29
4.8 Franchises and Material Agreements . . . . . . . . . 30
4.9 Absence of Certain Changes or Events . . . . . . . . 34
4.10 Absence of Litigation. . . . . . . . . . . . . . . . 35
4.11 ERISA Plans. . . . . . . . . . . . . . . . . . . . . 36
4.12 Trademarks, Patents and Copyrights . . . . . . . . . 40
4.13 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 40
4.14 Environmental Matters. . . . . . . . . . . . . . . . 42
4.15 Brokers. . . . . . . . . . . . . . . . . . . . . . . 43
4.16 Title to and Condition of Properties; Encumbrances . 43
4.17 Labor Matters. . . . . . . . . . . . . . . . . . . . 47
4.18 Full Disclosure. . . . . . . . . . . . . . . . . . . 48
4.19 Transactions with Affiliates . . . . . . . . . . . . 48
4.20 Certain Matters With Respect to
Representations and Warranties . . . . . . . . . . . 49
5. Representations and Warranties of the Buyer . . . . . . . 49
5.1 Organization . . . . . . . . . . . . . . . . . . . . 49
5.2 Authority Relative to This Agreement . . . . . . . . 49
5.3 No Conflict; Required Filings and Consents . . . . . 50
5.4 Financial Capability . . . . . . . . . . . . . . . . 51
5.5 Litigation . . . . . . . . . . . . . . . . . . . . . 51
5.6 No Violation to FCC Cross Ownership Rules. . . . . . 51
5.7 Investment Intent; Sophisticated Buyer . . . . . . . 51
6. Covenants . . . . . . . . . . . . . . . . . . . . . . . . 52
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6.1 Access . . . . . . . . . . . . . . . . . . . . . . . 52
6.2 Interim Period Operations. . . . . . . . . . . . . . 52
6.3 No Amendment to Organizational Documents . . . . . . 55
6.4 Renewals; HSR. . . . . . . . . . . . . . . . . . . . 55
6.5 Commercially Reasonable Efforts. . . . . . . . . . . 56
6.6 Notification . . . . . . . . . . . . . . . . . . . . 56
6.7 Use of Marcus Name . . . . . . . . . . . . . . . . . 57
6.8 Tax Matters. . . . . . . . . . . . . . . . . . . . . 57
6.9 Exculpation and Indemnification. . . . . . . . . . . 57
6.10 Assistance Regarding Credit Facility . . . . . . . . 58
6.11 Admission as Substituted Limited Partner . . . . . . 58
6.12 MCC Reorganization . . . . . . . . . . . . . . . . . 59
6.13 MCPI Recapitalization. . . . . . . . . . . . . . . . 60
7. Conditions to Closing . . . . . . . . . . . . . . . . . . 60
7.1 Conditions to the Buyer's Obligations. . . . . . . . 60
7.2 Conditions to the Company's and the
Sellers' Obligations . . . . . . . . . . . . . . . . 62
8. Closing Arrangements. . . . . . . . . . . . . . . . . . . 63
8.1 Time and Place of Closing. . . . . . . . . . . . . . 63
8.2 Closing Deliveries . . . . . . . . . . . . . . . . . 64
8.3 Further Assurances . . . . . . . . . . . . . . . . . 65
9. Non-Survival of Representations and Warranties;
Limitation of Liability . . . . . . . . . . . . . . . . . 65
10. Termination . . . . . . . . . . . . . . . . . . . . . . . 66
10.1 Termination. . . . . . . . . . . . . . . . . . . . . 66
10.2 Procedure and Effect of Termination. . . . . . . . . 67
11. Restructure of . . . . . . . . . . . . . . . . . . . . . 68
12. General Provisions. . . . . . . . . . . . . . . . . . . . 68
12.1 [Intentionally Omitted.] . . . . . . . . . . . . . . 68
12.2 Notices. . . . . . . . . . . . . . . . . . . . . . . 68
12.3 Assignability and Enforceability . . . . . . . . . . 70
12.4 Expenses . . . . . . . . . . . . . . . . . . . . . . 70
12.5 Consultation . . . . . . . . . . . . . . . . . . . . 71
12.6 Governing Law. . . . . . . . . . . . . . . . . . . . 71
12.7 No Third Party Beneficiaries . . . . . . . . . . . . 71
12.8 Counterparts . . . . . . . . . . . . . . . . . . . . 71
12.9 Currency . . . . . . . . . . . . . . . . . . . . . . 71
12.10 Sections and Headings . . . . . . . . . . . . . 71
12.11 Number and Gender . . . . . . . . . . . . . . . 72
12.12 Entire Agreement. . . . . . . . . . . . . . . . 72
12.13 Severability. . . . . . . . . . . . . . . . . . 72
ii
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12.14 Amendments and Waivers. . . . . . . . . . . . . 72
12.15 Disclosure. . . . . . . . . . . . . . . . . . . 73
12.16 Knowledge . . . . . . . . . . . . . . . . . . . 73
iii
<PAGE>
SCHEDULES
Schedule 1.1 Franchises and FCC Licenses
Schedule 2.1 Purchased Interests
Schedule 2.3 Allocation of Transaction Consideration
Schedule
Schedule 3.1 Conflicts Resulting From Execution, Delivery
and Performance of Agreement by Seller
Schedule 3.2(d) Conflicts Resulting From Execution, Delivery
and Performance of Agreement by MCPI
Schedule 3.3(d) Conflicts Resulting From Execution, Delivery
and Performance of Agreement by MCPLP
Schedule 4.5 Conflicts Resulting From Execution, Delivery
and Performance of Agreement by Company
Schedule 4.7 SEC Reports; GAAP; Undisclosed Liabilities
Schedule 4.8 Material Overbuilds
Schedule 4.9 Certain Changes Since December 31, 1997
Schedule 4.11 Employee Matters
Schedule 4.12 Service Marks
Schedule 4.15 Brokers
Schedule 4.17 Labor Matters
Schedule 4.19 Transactions with Affiliates
Schedule 5.3 Conflicts Resulting From Execution, Delivery
and Performance of Agreement by Buyer
Schedule 6.2(a) Permitted Capital Expenditures
Schedule 7.1(f) Employment Contracts
Schedule 12.2 Notices
Schedule 12.4 Expenses
EXHIBITS
Exhibit A Purchase Price Deposit Escrow Agreement
Exhibit B Opinion of Counsel to the Company
Exhibit C Opinion of Counsel to the Buyer
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT made the 3rd day of April, 1998, among
the sellers listed on the signature pages hereto as of the date
hereof (together with the persons who hold Employee Units (as
hereinafter defined) and who will execute counterpart signature
pages prior to the consummation of the transactions contemplated
hereby, the "Sellers"), Marcus Cable Company, L.P., a Delaware
limited partnership (the "Company"), Marcus Cable Properties, L.P.,
a Delaware limited partnership and the sole general partner of the
Company ("MCPLP"), Marcus Cable Properties, Inc., a Delaware
corporation and the sole general partner of MCPLP ("MCPI") on the
one hand, and Vulcan Cable, Inc., a Washington corporation (the
"Buyer") on the other hand.
WHEREAS, the Sellers collectively own all of (i) the
outstanding capital stock of MCPI (which owns all of the
outstanding general partner interests of MCPLP), (ii) the
outstanding limited partner interests of MCPLP (which owns all of
the outstanding general partner interests of the Company) and (iii)
the outstanding limited partner interests of the Company.
WHEREAS, the Company, through its subsidiaries, owns and
operates cable television systems and businesses in respect thereof
in various areas of the United States; and
WHEREAS, the Sellers desire to sell to the Buyer, and the
Buyer desires to purchase from the Sellers, all of (i) the
outstanding limited partner interests of the Company (ii) the
outstanding limited partner interests of MCPLP and (iii) the non-voting
common stock of MCPI to be outstanding as of the date of
such purchase by Buyer, on the terms and subject to the conditions
set forth in this Agreement; and
<PAGE>
WHEREAS, concurrently herewith, Jeffrey Marcus (in his
individual capacity and his capacity as Trustee of that certain
Voting Trust Agreement dated as of 1990) and Nancy Marcus
(collectively, "Marcus") and Buyer have entered into a Share
Conversion and Put/Call Agreement whereby, among other things,
subject to certain conditions precedent, Marcus has agreed to sell
his remaining voting interest in MCPI to the Buyer or its assignee
upon demand of the Buyer and the Buyer or its assignee has agreed
to purchase Marcus' remaining voting interest in MCPI upon demand
of Marcus, subject to certain conditions precedent ("Marcus
Put/Call Agreement").
NOW THEREFORE, in consideration of the respective covenants,
and agreements of the parties hereinafter contained and for other
good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged by each party), the parties hereby
agree as follows:
1. Interpretation
1.1 Defined Terms. For the purposes of this Agreement,
including the Schedules hereto, the following terms shall have the
respective meanings set out below and grammatical variations of
such terms shall have corresponding meanings:
"Affiliate" has the meaning given to that term in the
Exchange Act;
"Acquisition Transactions" means, collectively, the
potential acquisitions by the Company or its Subsidiaries of
certain cable television systems serving (i) the Alabama
municipalities and surrounding areas of Mountain Brook, Leeds,
Hoover, Vestavia Hills, Irondale, Indian Springs Village and
Pelham and parts of Jefferson and Shelby counties (the
"Mountain Brook Acquisition") and (ii) the Indiana counties of
Bartholomew, Elizabethtown, Hartsville, Jackson, Jonesville
and Jennings;
2
<PAGE>
"Agreement" means this Purchase Agreement, including the
Schedules and Exhibits, as the same may be amended from time
to time in accordance with Section 1.9;
"Allocation of Transaction Consideration Schedule" has
the meaning set forth in Section 2.3;
"Antitrust Laws" has the meaning set forth in Section 6.4;
"Basic Customer Factor" means, for a System, a number
equal to the sum of (a) the number of Individual Basic
Customers and (b) the number of Basic Customer Equivalents.
"Individual Basic Customers" means, as of any date, any
customer of a System as of the last full month ending on or
prior to such date at that System's regular monthly customer
rate or senior rate for basic service who has been an active
customer of that System's basic service and has paid at least
one month's payment in full without discount."Basic Customer
Equivalents" means, as of any date, an equivalent to an
Individual Basic Customer, the number of Basic Customer
Equivalents served by a System being equal, as of any date, to
the quotient of (i) the aggregate billings by that System for
basic service and expanded basic service provided by that
System, during the last full month ending on or prior to such
date to commercial establishments, residential multiple
dwelling units, other customers that are billed for such
service on a bulk basis and single family households that pay
rates other than the Systems regular monthly rate for basic
service and expanded basic service, divided by (ii) that
System's regular monthly customer rate for basic service and
expanded basic service in effect during such month. For
purposes of the foregoing there shall be excluded all billings
to any bulk account or discounted family
3
<PAGE>
household that (a)
has not paid at least one month's payment in full without
discount or (b) represents an installation or other non-recurring
charge, a late fee or other charge for late payment,
a charge for equipment, a charge for any outlet or connection
other than the first outlet or first connection in any single
family household or (with respect to a bulk account, in any
residential unit e.g., an individual apartment or rental
unit), a charge for any tiered service, a charge for any pay
TV, or a pass-through charge for sales taxes, line-itemized
franchise fees and charges, FCC fees, and similar items;
"Business" means the cable television business currently
carried on by the Company (through its Subsidiaries) in the United
States;
"Buyer Confidentiality Agreement" means the
Confidentiality Agreement dated February 27, 1998 between Vulcan
Northwest Inc. and the Company;
"Closing" has the meaning set forth in Section 8.1;
"Closing Date" means the date upon which the Closing occurs;
"Code" means the Internal Revenue Code of 1986, as amended;
"Communications Act" has the meaning set forth in Section
3.1;
"Company Group" means MCPLP, MCPI, and the Company and
its Subsidiaries;
"Company L.P. Units" means the limited partner interests
of the Company;
"Company 1997 Balance Sheet" has the meaning set forth
in Section 4.13;
"Company Partnership Agreement" has the meaning set forth
in Section 6.2(g);
"Company Plans" has the meaning set forth in Section 4.10;
4
<PAGE>
"Copyright Act" has the meaning set forth in Section 4.6;
"Credit Facility" means the Credit Agreement dated as of
August 31, 1995 among Marcus Cable Operating Company, L.P.,
the Company, the several banks and other financial
institutions from time to time parties thereto, First Union
National Bank of North Carolina, as Co-Agent, Banque Paribas,
Chase Manhattan Bank, N.A., Citibank, N.A., The First National
Bank of Boston, Pearl Street L.P. and Union Bank, as Managing
Agents, Chase Securities, Inc., Citicorp Securities, Inc., The
First National Bank of Boston, Goldman, Sachs & Co., Paribas
Capital Markets and Union Bank, as Co-Arrangers, and Chase
Manhattan Bank, N.A. as Administrative Agent for the lenders
thereunder, as amended and as may be amended from time to
time;
"Divestiture Transactions" means, collectively, the
divestitures or potential divestitures by the Company or its
Subsidiaries of the cable television systems owned by the
Company or its Subsidiaries in the Texas panhandle, Oklahoma,
Mississippi, Illinois, Delaware, Maryland, Connecticut and
Virginia and listed by district and by Franchise on Schedule
1.1;
"Employee Units" means the Company L.P. Units designated
as "Employee Units" pursuant to the Company Partnership
Agreement;
"Environmental Laws" has the meaning set forth in Section
4.14;
"ERISA" has the meaning set forth in Section 4.11;
"Exchange Act" means the Securities Exchange Act of 1934,
as amended;
"FAA" means the Federal Aviation Administration;
"FCC" means the Federal Communications Commission;
5
<PAGE>
"FCC Licenses" means permits, licenses and authorizations
of the Company or its Subsidiaries granted by the FCC listed
on Schedule 1.1;
"Franchises" means the cable television franchises of the
Company or its Subsidiaries under which the Systems are
operated;
"GAAP" means generally accepted accounting principles in
the United States of America as in effect from time to time
set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified
Public Accountants and the statements and pronouncements of
the Financial Accounting Standards Board, or in such other
statements by such other entity as may be in general use by
significant segments of the accounting profession, which are
applicable to the circumstances as of the date of
determination;
"Governmental Authority" has the meaning set forth in
Section 3.1;
"Hazardous Substances" has the meaning set forth in
Section 4.14;
"hereof", "hereunder", "hereby", "hereto" and similar
terms refer to this Agreement in its entirety and not only to
the particular Section in which they appear;
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended;
"Indentures" means collectively (i) the indenture dated
as of October 13, 1993 among the Company and Marcus Cable
Capital Corporation, as issuers, and U.S. Trust Company of
Texas, N.A., as trustee, as hereafter amended, supplemented or
otherwise modified from time to time, (ii) the indenture
dated as of July 29, 1994 among Marcus Cable Operating
Company, L.P. and Marcus Cable Capital Corporation II, as
issuers, the Company, as guarantor, and U.S. Trust Company of
6
<PAGE>
Texas, N.A., as trustee, as supplemented by that certain First
Supplemental Indenture dated as of July 29, 1994 and as
hereafter amended, supplemented or otherwise modified from
time to time and (iii) the indenture dated as of June 9, 1995
among the Company and Marcus Cable Capital Corporation III, as
issuers, and Norwest Bank Minnesota, National Association, as
trustee, as hereafter amended, supplemented or otherwise
modified from time to time;
"Interim Period" means the period from, and including,
the date hereof to the Closing;
"IRS" means the Internal Revenue Service;
"Liens" means any lien, claim, charge, restriction,
pledge, mortgage, security interest or other encumbrance;
"Material Adverse Effect" means any effect that is or is
reasonably likely to be materially adverse to the business,
results of operations or financial condition of MCPI and its
Subsidiaries, taken as a whole, except for effects due to
general economic or industry-wide conditions;
"Material Agreement" has the meaning set forth in Section
4.8;
"MCC Reorganization" has the meaning set forth in Section
6.12;
"MCPI Non-Voting Shares" means all of the shares of the
class of Non-Voting Shares (as defined in the Marcus Put/Call
Agreement) of MCPI, which will be designated prior to and in
contemplation of the MCPI Recapitalization;
"MCPI Recapitalization" shall have the meaning set forth
in the Marcus Put/Call Agreement;
7
<PAGE>
"MCPI Voting Shares" means all of the shares of the class
of Voting Shares (as defined in the Marcus Put/Call Agreement)
of MCPI, which will be designated prior to and in
contemplation of the MCPI Recapitalization;
"MCPLP L.P. Units" means the limited partner interests
of MCPLP;
"Mountain Brook Acquisition" has the meaning set forth
in the definition of "Acquisition Transactions" in this
Section 1.1;
"person" means an individual, a firm, a corporation, a
syndicate, a partnership, an association, a joint venture, a
government or agency thereof or any other legal or business
entity whatsoever;
"Promissory Notes" has the meaning set forth in Section
3.2;
"Purchase Price" has the meaning set forth in Section
2.2;
"Purchase Price Payment Schedule" has the meaning set
forth in Section 2.3;
"Purchase Price Deposit Escrow Agent" means Chase Bank
of Texas, National Association;
"Purchase Price Escrow Deposit" has the meaning set forth
in Section 2.3;
"Purchased Interests" means, collectively, the Company
L.P. Units, the MCPLP L.P. Units and the MCPI Non-Voting
Shares to be purchased by the Buyer pursuant to this
Agreement;
"SEC" means the Securities and Exchange Commission;
"SEC Reports" has the meaning set forth in Section 4.7;
"Securities Act" means the Securities Act of 1933, as
amended;
"Subsidiary" means, with respect to any person, any
affiliate directly or indirectly controlled by such person;
8
<PAGE>
"Systems" means cable television systems and businesses
owned and operated by the Company, through its Subsidiaries,
as listed by district and by Franchise on Schedule 1.1;
"Tax" means any income, alternative or add-on minimum
tax, gross income, gross receipts, franchise, profits,
including estimated taxes relating to any of the foregoing,
sales, use, ad valorem, business license, withholding,
payroll, employment, excise, stamp, transfer, recording,
occupation, premium, property, value added, custom duty,
severance, windfall profit or license tax, governmental fee or
other similar tax or other like assessment or charge of
similar kind whatsoever, together with any interest and any
penalty, addition to tax or additional amount imposed by any
taxing authority responsible for the imposition of any such
Tax.
"Tax Return" means any return, report, statement,
information statement and the like required to be filed with
any authority with respect to Taxes;
2. Purchase and Sale of Purchased Interests
2.1 Purchase and Sale of Purchased Interests. On the terms
and subject to the conditions set forth in this Agreement, each
Seller hereby severally agrees to sell to the Buyer, and the Buyer
hereby agrees to purchase from each Seller, the Company L.P. Units,
MCPLP L.P. Units or MCPI Non-Voting Shares, as applicable, listed
opposite the name of such Seller on Schedule 2.1 hereto. In the
case of any Employee Units issued following the date of this
Agreement as permitted by Section 6.2, upon the execution and
delivery by the holder of such Employee Units of a counterpart
signature page to this Agreement, Schedule 2.1 hereto will be
modified to reflect the addition of the Employee Units issued to
such holder.
9
<PAGE>
2.2 Purchase Price. The aggregate purchase price payable by
the Buyer for the Purchased Interests shall be One billion three
hundred eighty-four million dollars ($1,384,000,000) (the "Purchase
Price").
2.3 Payment of Purchase Price.
(a) One hundred million dollars ($100,000,000) (the
"Purchase Price Escrow Deposit") will be paid immediately upon
the execution and delivery of this Agreement by federal wire
transfer to an account designated by the Purchase Price
Deposit Escrow Agent, in accordance with the terms of an
escrow agreement between the Buyer and the Company
substantially in the form attached hereto as Exhibit A. At
the Closing, such amount, plus all interest or other earnings
thereon, will be returned to the Buyer
(b) The Purchase Price will be paid at the Closing to
the Sellers (by federal wire transfer of immediately available
funds to accounts of the Sellers designated in writing to the
Buyer at least five business days prior to the Closing by the
Company (on behalf of the Sellers)) in accordance with a
schedule (the "Purchase Price Payment Schedule") to be
delivered by the Company (on behalf of the Sellers) to the
Buyer at least two business days prior to the Closing. Buyer
shall be entitled to rely exclusively on the Purchase Price
Payment Schedule and shall have no responsibility to determine
whether the Purchase Price Payment Schedule was properly
prepared. Notwithstanding the foregoing, the Purchase Price
Payment Schedule shall not reflect a value for MCPI in excess
of $39.417 million (adjusted, as appropriate, to take into
account the effect of the Closing occurring either before or
after June 30, 1998 on the accruals of preferred returns).
10
<PAGE>
(c) The aggregate consideration to the Sellers in
connection with the transactions contemplated hereby shall be
allocated between tangible assets and Franchises in accordance
with Schedule 2.3 hereto (the "Allocation of Transaction
Consideration Schedule"). The parties shall not take any tax
position inconsistent with such allocation.
3. Representations and Warranties of the Sellers, MCPI and MCPLP.
3.1 Representations and Warranties of the Sellers. Each
Seller hereby, severally and not jointly, represents and warrants
as follows, as of the date of this Agreement (or, in the case of
any Seller who holds Employee Units and who becomes a party hereto
by execution of a counterpart signature page hereto subsequent to
the date of this Agreement, as of the date of the execution and
delivery of such counterpart signature page), and as of the Closing
Date, and acknowledges that the Buyer is relying on such
representations and warranties in connection with the purchase of
the Purchased Interests:
(a) Title to Purchased Interests. Such Seller owns,
beneficially and of record, all of the Purchased Interests
identified opposite such Seller's name on Schedule 2.1 hereto,
free and clear of all liens and encumbrances other than, if
applicable, any liens or encumbrances that will be terminated
or otherwise released prior to the Closing. Upon the Closing,
the Buyer will have valid title to all of the Purchased
Interests identified opposite such Seller's name on Schedule
2.1 hereto, free and clear of all liens and encumbrances,
other than any liens or encumbrances created by the Buyer or
arising through the Buyer.
(b) Enforceability of Agreement. This Agreement has
been duly and validly executed and delivered by such Seller
and constitutes a legal, valid and binding
11
<PAGE>
obligation of such
Seller, enforceable against such Seller in accordance with its
terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium and other similar laws or principles
affecting the rights of creditors generally and except for
limitations imposed by general principles of equity.
(c) No Conflict; Required Filings and Consents.
(i) Except as set forth on Schedule 3.1 hereto (and
assuming compliance with the HSR Act), the execution and
delivery of this Agreement by such Seller does not, and
the performance by such Seller of its obligations under
this Agreement will not, (i) conflict with or violate the
agreement of limited partnership, certificate of limited
partnership, certificate of incorporation, by-laws or
equivalent organizational documents of such Seller, (ii)
conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to such Seller or
by which any property or asset of such Seller is bound
or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or
lapse of time or both would become a default) under any
note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or
obligation to which such Seller is a party or by which
such Seller or any property or asset of such Seller is
bound except, in the case of clauses (ii) and (iii), for
any such conflicts, violations, breaches, defaults or
other occurrences which would not have a Material Adverse
Effect.
(ii) The execution and delivery of this Agreement by
such Seller does not, and the performance of this
Agreement by such Seller will not,
12
<PAGE>
require such Seller
to obtain or make any consent, approval, authorization
or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or
foreign, including, without limitation, any governmental
administrative agency or franchising authority (each a
"Governmental Authority"), except for the matters
disclosed in Schedule 3.1 hereto or except (i) for
applicable requirements, if any, of (A) federal or state
securities or "blue sky" laws, (B) the Communications Act
of 1934, as amended (the "Communications Act"), and (C)
state and local Governmental Authorities, including state
and local Franchise authorities, (ii) as required under
the HSR Act, and (iii) where failure to obtain such
consents, approvals, authorizations or permits, or to
make such filings or notifications, would not have a
Material Adverse Effect.
(d) Purchased Interests. If such Seller is selling MCPI
Non-Voting Shares, (i) such MCPI Non-Voting Shares being sold
by such Seller pursuant to this Agreement, together with the
MCPI Voting Shares which are the subject of the Marcus
Put/Call Agreement, will constitute (at all times from and
following the MCPI Recapitalization and until the Closing) all
outstanding shares of capital stock of MCPI and (ii) there are
no options, warrants or other rights, agreements, arrangements
or commitments of any character obligating MCPI to issue or
sell any shares of its capital stock or other equity interests
in MCPI.
(e) If such Seller is selling MCPLP L.P. Units, (i) such
MCPLP L.P. Units, together with the MCPLP L.P. Units being
sold by other Sellers pursuant to this Agreement and the
general partner interest of MCPLP that is owned solely by
13
<PAGE>
MCPI, constitute all outstanding equity interests in MCPLP,
and (ii) there are no options, warrants or other rights,
agreements, or arrangements or commitments of any character
obligating MCPLP to issue or sell any equity interests in
MCPLP.
(f) If such Seller is selling Company L.P. Units, (i)
such Company L.P. Units, together with the Company L.P. Units
being sold by other Sellers pursuant to this Agreement, the
general partner interest of the Company that is owned solely
by MCPLP and any Employee Units not sold pursuant to this
Agreement, constitute all outstanding equity interests in the
Company, and (ii) there are no options, warrants or other
rights, agreements, arrangements or commitments of any
character obligating the Company or its Subsidiaries to issue
or sell any equity interests in the Company or any Subsidiary
of the Company. The aggregate number of Employee Units
represents not more than 31,517 of the total Company L.P.
Units.
(g) If such Seller is an employee of any member of the
Company Group (an "Employee Seller"), all appropriate
withholding Tax amounts have been paid with respect to (i) the
Company L.P. Units held by such Employee Seller, if any, and
(ii) the MCPLP L.P. Units held by such Employee Seller, if
any, and such Employee Seller hereby authorizes the Company or
MCPLP, as the case may be, to determine any withholding Tax
owed with respect to such Company L.P. Units or MCPLP L.P.
Units, as applicable, and to instruct the Buyer to pay to the
Company or MCPLP, as applicable, such withholding Tax amounts
so determined in the Purchase Price Payment Schedule and to
reduce such Employee Seller's allocation of the Purchase Price
by the amount of such withholding Tax. Notwithstanding the
foregoing, each
14
<PAGE>
such Employee Seller will remain liable for
all withholding Taxes with respect to the Company L.P. Units
and the MCPLP L.P. Units.
3.2 Representations and Warranties of MCPI. MCPI hereby
represents and warrants as follows and acknowledges that the Buyer
is relying on such representations and warranties in connection
with the purchase of the Purchased Interests:
(a) Organization and Qualification. MCPI is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. MCPI has
the requisite corporate power and authority and all necessary
governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being
conducted, except where the failure to have such power,
authority and governmental approvals would not have a Material
Adverse Effect.
(b) Organizational Documents. MCPI has heretofore made
available to the Buyer a complete and correct copy of the
certificate of incorporation and by-laws, each as amended to
date, of MCPI. Such organizational documents are in full
force and effect. MCPI is not in violation of any provision
of its certificate of incorporation or by-laws.
(c) Authority Relative to This Agreement. MCPI has all
necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated
15
<PAGE>
hereby. The
execution and delivery of this Agreement by MCPI and the
consummation by MCPI of the transactions contemplated hereby
have been duly and validly authorized by all necessary
corporate action and no other corporate action on the part of
MCPI is necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by MCPI and, assuming
the due authorization, execution and delivery by the other
parties hereto, constitutes a legal, valid and binding
obligation of MCPI, enforceable against MCPI in accordance
with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium and similar laws affecting
the rights of creditors generally and except for limitations
imposed by general principles of equity.
(d) No Conflict; Required Filings and Consents.
(i) Except as set forth on Schedule 3.2(d) hereto
(and assuming compliance with the HSR Act), the execution
and delivery of this Agreement by MCPI does not, and the
performance by MCPI of its obligations under this
Agreement will not, (i) conflict with or violate the
certificate of incorporation or by-laws of MCPI, (ii)
conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to MCPI or by which
any property or asset of MCPI is bound or affected or
(iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would
become a default) under, result in the loss of a material
benefit under, or give to others any right of
termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or other encumbrance
on any property or asset of MCPI pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or
obligation to which MCPI is a party or by which MCPI or
any property or asset of MCPI is bound or affected,
except, in the case of clauses (ii) and (iii), for any
16
<PAGE>
such conflicts, violations, breaches, defaults or other
occurrences which would not have a Material Adverse
Effect.
(ii) The execution and delivery of this Agreement by
MCPI does not, and the performance of this Agreement by
MCPI will not, require MCPI to obtain or make any
consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority,
except for the matters disclosed in Schedule 3.2(d)
hereto or except (i) for applicable requirements, if any,
of (A) federal or state securities or "blue sky" laws,
(B) the Communications Act, and (C) state and local
Governmental Authorities, including state and local
Franchise authorities listed on Schedule 3.2(d) hereto,
(ii) as required under the HSR Act and (iii) where
failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or
notifications, would not have a Material Adverse Effect.
(e) Certain Capitalization Matters. The MCPI Non-Voting
Shares to be sold to the Buyer pursuant to the Agreement, as
identified on Schedule 2.1 hereto, together with the MCPI
Voting Shares which are the subject of the Marcus Put/Call
Agreement, will constitute (at all times from and following
the MCPI Recapitalization until the Closing) all outstanding
shares of capital stock of MCPI. MCPI owns, beneficially and
of record, all outstanding general partner interests of MCPLP,
free and clear of all liens and encumbrances. There are no
options, warrants or other rights, agreements, arrangements or
commitments of any character obligating MCPI to issue or sell
any shares of its capital stock or other equity interests.
17
<PAGE>
(f) Assets of MCPI. MCPI has no substantial assets
other than its general partner interest in MCPLP and
promissory notes of Jeffrey A. Marcus in the aggregate
principal amount of $6,575,066 as of December 31, 1997 (the
"Promissory Notes"), which will be distributed by MCPI to its
stockholders prior to the Closing. MCPI has no substantial
liabilities, except as a result of its status as general
partner of MCPLP.
3.3 Representations and Warranties of MCPLP. MCPLP hereby
represents and warrants as follows and acknowledges that the Buyer
is relying on such representations and warranties in connection
with the purchase of the Purchased Interests:
(a) Organization and Qualification. MCPLP is a
partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware. MCPLP has
the requisite power and authority and all necessary
governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being
conducted, except where the failure to have such power,
authority and governmental approvals would not have a Material
Adverse Effect.
(b) Organizational Documents. MCPLP has heretofore made
available to the Buyer a complete and correct copy of each of
the agreement of limited partnership and certificate of
limited partnership, each as amended to date, of MCPLP. Such
organizational documents are in full force and effect. MCPLP
is not in violation of any provision of its agreement of
limited partnership, or certificate of limited partnership.
(c) Authority Relative to This Agreement. MCPLP has all
necessary power and authority to execute and deliver this
Agreement, to perform its obligations
18
<PAGE>
hereunder and to consum-
mate the transactions contemplated hereby. The execution and
delivery of this Agreement by MCPLP and the consummation by
MCPLP of the transactions contemplated hereby have been duly
and validly authorized by all necessary partnership action and
no other partnership proceedings on the part of MCPLP are
necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by MCPLP and, assuming
the due authorization, execution and delivery by the other
parties hereto, constitutes a legal, valid and binding
obligation of MCPLP, enforceable against MCPLP in accordance
with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium and similar laws or
principles affecting the rights of creditors generally and
except for limitations imposed by general principles of
equity.
(d) No Conflict; Required Filings and Consents.
(i) Except as set forth on Schedule 3.3(d) hereto
(and assuming compliance with the HSR Act), the execution
and delivery of this Agreement by MCPLP does not, and the
performance by MCPLP of its obligations under this
Agreement will not, (i) conflict with or violate the
agreement of limited partnership, or certificate of
limited partnership, of MCPLP, (ii) conflict with or
violate any law, rule, regulation, order, judgment or
decree applicable to MCPLP or by which any property or
asset of MCPLP is bound or affected or (iii) result in
any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a
default) under, result in the loss of a material benefit
under, or give to others any right of termination,
19
<PAGE>
amendment, acceleration or cancellation of, or result in
the creation of a lien or other encumbrance on any
property or asset of MCPLP pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to
which MCPLP is a party or by which MCPLP or any property
or asset of MCPLP is bound or affected, except, in the
case of clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which
would not have a Material Adverse Effect.
(ii) The execution and delivery of this Agreement by
MCPLP does not, and the performance of this Agreement by
MCPLP will not, require MCPLP to obtain or make any
consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority,
except for matters disclosed on Schedule 3.3(d) hereto
or except (i) for applicable requirements, if any, of (A)
federal or state securities or "blue sky" laws, (B) the
Communications Act, and (C) state and local Governmental
Authorities, including state and local Franchise
authorities, (ii) as required under the HSR Act and (iii)
where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or
notifications, would not have a Material Adverse Effect.
(e) Certain Capitalization Matters. The MCPLP L.P.
Units to be sold to the Buyer pursuant to this Agreement, as
identified on Schedule 2.1 hereto, constitute all outstanding
limited partner interests of MCPLP. MCPLP owns, beneficially
and of record, all outstanding general partner interests of
the Company, free and clear of
20
<PAGE>
all liens or encumbrances.
There are no options, warrants or other rights, agreements,
arrangements or commitments of any character obligating MCPLP
to issue or sell any equity interests in MCPLP.
(f) Assets of MCPLP. MCPLP has no substantial assets
other than its general partner interest in the Company and
certain limited partner interests in certain Subsidiaries of
the Company which will be transferred to Subsidiaries of MCPLP
prior to the Closing pursuant to the MCC Reorganization.
MCPLP has no substantial liabilities, except as a result of
its status as general partner of the Company.
4. Representations and Warranties of the Company, MCPLP and MCPI.
The Company, MCPLP and MCPI, jointly and severally, hereby
represent and warrant as follows and acknowledge that the Buyer is
relying on such representations and warranties in connection with
the purchase of the Purchased Interests:
4.1 Organization and Qualification; Subsidiaries.
(a) The Company and each of its Subsidiaries is a
partnership, corporation or other legal entity duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. The
Company and each of its Subsidiaries has the requisite power
and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to have
such power, authority and governmental approvals would not
have a Material Adverse Effect. The Company and each of its
Subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes
21
<PAGE>
such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing
that would not have a Material Adverse Effect.
(b) The Company has heretofore furnished or made
available to Buyer a complete and correct list of the
Subsidiaries of the Company, which list sets forth the amount
of capital stock of or other equity interests in such
Subsidiaries owned by the Company, directly or indirectly.
4.2 Organizational Documents. The Company has heretofore
made available to the Buyer a complete and correct copy of each of
the agreement of limited partnership, certificate of limited
partnership, certificate of incorporation and by-laws, or
equivalent organizational documents, each as amended to date, of
the Company and each Subsidiary of the Company. Such
organizational documents are in full force and effect. Neither the
Company nor any Subsidiary of the Company is in violation of any
provision of its agreement of limited partnership, certificate of
limited partnership, certificate of incorporation, by-laws or
equivalent organizational documents, as applicable.
4.3 Capitalization. The Company L.P. Units to be sold to the
Buyer pursuant to this Agreement, as identified on Schedule 2.1
hereto, constitute all outstanding limited partner interests of the
Company. The Company, together with MCPLP, owns, directly or
through one or more Subsidiaries, all the outstanding general
partner interests, limited partner interests, and all other
outstanding equity interests of each Subsidiary of the Company.
There are no (i) options, warrants or other rights, agreements,
arrangements or commitments of any character obligating the Company
or any Subsidiary of the Company to issue or sell any shares of
capital stock of, or other equity interests in, the Company or any
Subsidiary of the
22
<PAGE>
Company, (ii) equity equivalents, performance
shares, interests in the ownership or earnings of any Company Group
member or other similar rights issued by a Company Group member or
(iii) outstanding obligations of any Company Group member to
repurchase, redeem or otherwise acquire any equity interest
therein.
4.4 Authority Relative to This Agreement. The Company has
all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery
of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly and
validly authorized by all necessary partnership action and no other
partnership proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the other parties hereto,
constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency,
moratorium and similar laws or principles affecting the rights of
creditors generally and except for limitations imposed by general
principles of equity.
4.5 No Conflict; Required Filings and Consents.
(a) Except as set forth on Schedule 4.5 hereto (assuming
compliance with the HSR Act), the execution and delivery of
this Agreement by the Company does not, and the performance by
the Company of its obligations under this Agreement will not,
(i) conflict with or violate the agreement of limited
partnership, certificate of limited partnership, certificate
of incorporation, by-laws or equivalent organizational
23
<PAGE>
documents of the Company or any Subsidiary of the Company,
(ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to the Company or any
Subsidiary of the Company or by which any property or asset of
the Company or any Subsidiary of the Company is bound or
affected or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or
both would become a default) under, result in the loss of a
material benefit under, or give to others any right of
termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or other encumbrance on any
property or asset of the Company or any Subsidiary of the
Company pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any
Subsidiary of the Company is a party or by which the Company
or any Subsidiary of the Company or any property or asset of
the Company or any Subsidiary of the Company is bound or
affected, except (A) in the case of clauses (ii) and (iii),
for any such conflicts, violations, breaches, defaults or
other occurrences which would not have a Material Adverse
Effect and (B) in the case of clause (iii), for any such
conflicts, violations, breaches, defaults or other occurrences
with respect to the Credit Facility or the Indentures (with
respect to which the representation set forth in clause (iii)
is not given).
(b) The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the
Company will not, require the Company or any of its
Subsidiaries to obtain or make any consent, approval,
authorization or permit of, or filing with or notification to,
any Governmental Authority, except for matters disclosed on
Schedule 4.5 hereto or except (i) for
24
<PAGE>
applicable requirements,
if any, of (A) federal or state securities or "blue sky" laws,
(B) the Communications Act, and (C) state and local
Governmental Authorities, including state and local Franchise
authorities, (ii) as required under the HSR Act and (iii)
where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or
notifications, would not have a Material Adverse Effect.
4.6 Compliance.
(a) The Company and its Subsidiaries hold all licenses,
Franchises, certificates, consents, permits, qualifications
and authorizations from all Governmental Authorities necessary
for the lawful conduct of the Company's and its Subsidiaries'
business, except where the failure to hold any of the
foregoing would not have a Material Adverse Effect. Neither
the Company nor any Subsidiary of the Company is in conflict
with, or in default or violation of, (a) any law, rule,
regulation, order, judgment or decree applicable to the
Company or any Subsidiary of the Company or by which any
property or asset of the Company or any Subsidiary of the
Company is bound or affected, or (b) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the
Company or any Subsidiary of the Company is a party or by
which the Company or any Subsidiary of the Company or any
property or asset of the Company or any Subsidiary of the
Company is bound or affected, except for any such conflicts,
defaults or violations that would not have a Material Adverse
Effect.
(b) Except as would not have a Material Adverse Effect,
(i) the Company and its Subsidiaries are operating in
compliance in all material respects with the provisions of the
Communications Act and the rules and regulations of the FCC,
25
<PAGE>
(ii) all reports required by the FCC to be filed and fees
required to be paid to the FCC for each System for the most
recent reporting or filing period for which such reports or
payments are due have been timely and accurately filed, (iii)
each System makes available to customers and third parties all
equipment and facilities required under any applicable
federal, state or local laws, rules, regulations and
ordinances, (iv) each System provides customers with periodic
notices and information as required by FCC rules and
regulations and (v) each employment unit comprised of one or
more Systems has been certified by the FCC for compliance with
the rules and regulations governing equal employment
opportunity for each reporting year since such System was
acquired by the Company or one of its Subsidiaries.
(c) The Company and its Subsidiaries are providing
syndicated exclusivity and network nonduplication protection
to stations entitled thereto which have requested such
protection and have followed the FCC procedures applicable to
origination cablecasting, the fairness doctrine, equal time
and personal attack obligations, obscenity, sponsorship
identifications and sponsorship lists as specified by
FCC rules, except where the failure to so provide such
protection or follow such procedures would not have a Material
Adverse Effect. The Company and its Subsidiaries have
obtained all necessary consents for the retransmission of
broadcast signals or are carrying such signals pursuant to
must carry elections.
(d) Except for normal "blackout," with respect to
syndicated exclusivity or network nonduplication notices
pursuant to FCC regulations, no notices or demands have been
received from any television station or from any other person
claiming to have a right, or objecting to or challenging the
right of the Company or
26
<PAGE>
any Subsidiary of the Company, to
carry on any Systems any program services, including without
limitation, broadcast signals or deliver the same, as now
being carried or challenging the channel position on which any
television station is carried or demanding the Company or any
of its Subsidiaries to carry any program services not carried,
except where such claim, demand, objection or challenge would
not have a Material Adverse Effect.
(e) The Company and its Subsidiaries maintain
appropriate files at the Systems as required by FCC rules,
except as would not have a Material Adverse Effect. The
Company has made available to Buyer true and complete copies
of (i) all FCC cable rate regulation forms that have been
filed with the FCC by the Company or any of its Subsidiaries,
(ii) all material correspondence with any Governmental
Authority, customer, or other interested party relating to
rate regulation generally or specific rates charged to
customers of the Systems, including, without limitation, any
complaints filed with the FCC with respect to any rates
charged to customers of the Systems, all FCC orders with
respect to rate complaints or petitions for review or appeals
of local rate decisions; (iii) all pleadings filed by the
Company, any Subsidiary or any other party in any pending FCC
rate proceeding involving any Systems' rates, and (iv) any
documentation supporting an exemption from the rate regulation
provisions of the Communications Act claimed by the Company or
any of its Subsidiaries with respect to the Systems. The
Company has provided to Buyer an accurate list of all
Franchise areas that are certified to regulate rates pursuant
to the laws and regulations of the FCC and a list of all
Franchise areas in which a complaint regarding cable
programming services has been filed with the FCC. All factual
27
<PAGE>
statements made by or on behalf of the Systems in any such
form are accurate and complete except as would not have a
Material Adverse Effect. Each System is in compliance with
all orders of local franchise authorities or the FCC affecting
such System's rates, except as would not have a Material
Adverse Effect.
(f) Since January 1, 1995, the Company and its
Subsidiaries have filed timely and accurately all copyright
notices, reports, statements, supplemental statements and
amendments required to be filed by Section 111 of the
Copyright Act of 1976, as amended (the "Copyright Act"), and
have timely and accurately paid all fees required to be paid
pursuant to Section 111 of the Copyright Act and the rules and
regulations of the United States Copyright Office with respect
to the operation of the Systems, except where the failure to
file or pay would not have a Material Adverse Effect. Neither
the Company nor any of its Subsidiaries has received any
written notice from the United States Copyright Office, or any
other person, either challenging any copyright filing or
payment made by a System or alleging a failure by such System
to make any copyright filing or payment, or threatening to
bring suit for copyright infringement, in each case except as
would not have a Material Adverse Effect. No member of the
Company Group is aware of any failure of any System acquired
by the Company or its Subsidiaries since January 1, 1995 to
make copyright filings or payments or any pending claim
against such System pre-dating January 1, 1995, except where
such failure or claim would not have a Material Adverse
Effect.
(g) The Company and its Subsidiaries have obtained all
necessary FAA approvals and waivers with respect to system
towers and are in compliance with all FAA rules and
regulations applicable to the Business, except where the
28
<PAGE>
failure to obtain such or be in such compliance would not have
a Material Adverse Affect. The Company has made available to
Buyer true and complete copies of all material FAA approvals
and waivers.
(h) No System has received any written notice from any
Governmental Authority of its intent to investigate customer
rates (other than with respect to FCC rate regulation) or
business practices, pursuant to a customer complaint or
otherwise, including without limitation under any state or
local so-called "consumer protection," "trade practice" or
other similar law, or any other statute, law, ordinance, rule
or regulation.
4.7 SEC Filings; Financial Statements. Except as set forth
on Schedule 4.7 hereto,
(a) The Company has filed all forms, reports and
documents required to be filed by it with the SEC since
January 1, 1995 and, to the extent any of the following is
applicable, has heretofore made available to the Buyer, in the
form filed with the SEC (excluding any exhibits thereto), (i)
its Annual Reports on Form 10-K for the fiscal years ended
December 31, 1995, 1996 and 1997, respectively, (ii) its
Quarterly Reports on Form 10-Q for the periods ended March 31,
June 30 and September 30, 1997, and (iii) all other forms,
reports and other registration statements (other than
Quarterly Reports on Form 10-Q not referred to in clause (ii)
above) filed by the Company with the SEC since January 1, 1995
(the forms, reports and other documents referred to in clauses
(i), (ii) and (iii) above being referred to herein,
collectively, as the "SEC Reports"). The SEC Reports and any
forms, reports and other documents filed by the Company with
the SEC after the date of this Agreement (x) were or will be
prepared in accordance with the requirements of the Securities
29
<PAGE>
Act and the Exchange Act, as the case may be, and the rules
and regulations thereunder and (y) did not at the time they
were filed, or will not at the time they are filed, contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the
SEC Reports was prepared in accordance with GAAP (except as
may be indicated in the notes thereto) and each fairly
presented the financial position, results of operations and
cash flows of the Company and its Subsidiaries as at the
respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which
were not and are not expected to be material in amount).
(c) Except as set forth in Schedule 4.7 hereto, or
except as and to the extent set forth in the SEC Reports filed
with the SEC prior to the date of this Agreement, the Company
and its Subsidiaries do not have any liability or obligation
(whether accrued, absolute, contingent or otherwise) that are
required by GAAP to be disclosed on a balance sheet other than
liabilities and obligations which would not have a Material
Adverse Effect.
4.8 Franchises and Material Agreements.
(a) As of December 31, 1997, after giving effect to the
Mountain Brook Acquisition and the Divestiture Transactions,
the Business (i) had a Basic Customer Factor of approximately
1,062,000, (ii) passed approximately 1,700,000 dwelling units,
and (iii) included approximately 26,000 plant miles of coaxial
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and fiber optic cable. The Company Group has provided Buyer
with access to true and complete copies of each Franchise and
all amendments or supplements thereto. Each Franchise and
Material Agreement (as defined below) is the validly existing,
legally enforceable obligation of the Company or any of its
Subsidiaries, as applicable, except as enforcement may be
limited to bankruptcy, insolvency, moratorium and similar laws
or principles affecting the rights of creditors generally and
except for limitations imposed by general principles of
equity. Each of the Company and its Subsidiaries is validly
and lawfully operating under its Franchises and the Material
Agreements to which it is a party, all of which are in full
force and effect, except where the failure to so operate or
the failure of such to be in full force and effect would not
have a Material Adverse Effect. Each member of the Company
Group has duly complied with all of the terms and conditions
of each of its Franchises and each Material Agreement to which
it is a party, except where the failure to so comply would not
have a Material Adverse Effect. Without limiting the
generality of the foregoing, all indebtedness incurred by any
Company Group member was incurred in compliance with the
Material Agreements, except as would not have a Material
Adverse Effect. The Company is not aware of any third-party
breach or default (or other act or omission that with notice,
passage of time or both would constitute a default) under any
Material Agreement. "Material Agreements" means (i) each
Indenture and the Credit Agreement and (ii) each agreement,
contract, arrangement which (A) is material to the ownership
and operation of the business of the members of the Company
Group, taken as a whole, to which any member of the Company
Group is a party or by which any of their properties or assets
are bound, (B) contains an unexpired covenant not to compete
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or similar restriction applying to any member of the Company
Group, (C) consists of an interest rate, currency or commodity
hedging, swap or similar derivative transactions, (D)
obligates any member of the Company Group to acquire or
dispose of any cable television system or any cable television
franchise or (E) would be required to be filed and have not
been filed as an exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997 or to
the Company's SEC Reports filed subsequent thereto and prior
to the date of this Agreement.
(b) Except as set forth in the Franchises, no person
(including any Governmental Authority) has any right to
acquire any interest in any cable television system or assets
of any member of the Company Group (including any right of
first refusal or similar right) upon a change of control of
the franchisee, other than rights of condemnation or eminent
domain afforded by law. Except as set forth on Schedule 4.8
hereto, no geographic area served by the Systems is presently
subject to, or to the Company Group's knowledge, threatened to
be subject to, any material overbuild situation. Except as
previously disclosed to the Buyer in writing, to the Company
Group's knowledge, no other person (i) has been granted or,
applied for the consent or approval of any Governmental
Authority for the installation, construction, development,
ownership, or operation of a cable television system (as
defined in the Cable Communications Policy Act of 1984, as
amended) within any geographic area served by the cable
television systems of the Company Group (other than county-wide
franchises where operators have not shown any significant
interest in overbuilding) or (ii) operates, or has commenced
the construction, installation or development of, any cable
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television system (as defined in the Cable Communications
Policy Act of 1984, as amended) within any geographic area
served by the Systems, except where the grant or approval, or
operation of, such cable television system would not have a
Material Adverse Effect.
(c) No member of the Company Group has made any material
commitments to any state, municipal, local or other
governmental commission, agency or body with respect to the
operation and construction of their respective Systems which
are not fully reflected in the Franchises, except as would not
have a Material Adverse Effect. No member of the Company
Group has entered into any agreements with any Governmental
Authority, community groups or similar third parties
restricting or limiting the types of programming that may be
shown on such Systems, except where such restrictions or
limitations would not have a Material Adverse Effect.
(d) There exists no factor or matter which would
constitute a legally valid basis for revocation, suspension,
termination or denial of granting of a new Franchise upon the
expiration thereof, or elimination of rights thereunder,
except where such revocation, suspension, termination, denial
or elimination would not have a Material Adverse Effect. No
Franchise authority has advised any member of the Company
Group, in writing, or otherwise formally notified any member
of the Company Group in accordance with the terms of the
applicable Franchise, of its intention to deny renewal of an
existing Franchise. Except as would not have a Material
Adverse Effect, the Company Group has no reason to believe
that any Franchise will not be renewed in accordance with
Section 626 of the Communications Act on reasonable terms.
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The members of the Company Group have timely filed notices of
renewal in accordance with the Communications Act with all
necessary franchising authorities and have diligently pursued
the renewal of each Franchise expiring within 36 months after
the date of this Agreement, except as previously disclosed in
writing to the Buyer or except where the failure to so file
any such notice and to diligently pursue any such renewal
would not have a Material Adverse Effect.
4.9 Absence of Certain Changes or Events. Since December 31,
1997, except as contemplated by this Agreement or as set forth on
Schedule 4.9 hereto, or as disclosed in any SEC Report filed since
December 31, 1997, and prior to the date of this Agreement, the
members of the Company Group have conducted their businesses only
in the ordinary course and in a manner consistent with past
practice and, since December 31, 1997, there has not been (a) as of
the date hereof, any change, occurrence or circumstance in the
business, results of operations or financial condition of the
members of the Company Group having a Material Adverse Effect, (b)
any damage, destruction or loss (whether or not covered by
insurance) with respect to any property or asset of any member of
the Company Group and having a Material Adverse Effect, (c) any
change by any member of the Company Group in its accounting
methods, principles or practices which would be required to be
disclosed pursuant to federal securities laws, (d) other than the
distribution of the Promissory Notes by MCPI to its stockholders,
any declaration, setting aside or payment of any dividend or
distribution in respect of any equity interest of any member of the
Company Group or any redemption, purchase or other acquisition of
any of their respective securities other than dividends or
distributions by a member of the Company Group or to another member
of the Company Group, or (e) other than pursuant to the plans,
programs or arrangements referred to in Section 4.11 and other than
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in the ordinary course of business consistent with past practice,
any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit
sharing, option, stock purchase or other employee benefit plan, or
any other increase in the compensation payable or to become payable
to any executive officers of any member of the Company Group
(excluding, however, any stay put bonus arrangements or similar
arrangements put in place with respect to, or paid to, executive
officers or employees of any member of the Company Group as of the
date hereof or put in place in accordance with Section 6.2).
4.10 Absence of Litigation. Except as previously disclosed
in writing to the Buyer, or except as disclosed in the SEC Reports
filed with the SEC prior to the date of this Agreement, there is no
claim, action, proceeding or investigation pending or, to the
knowledge of the Company Group, threatened against any member of
the Company Group, or any property or asset of any member of the
Company Group (except for proceedings or investigations affecting
the cable television industry generally), before any court,
arbitrator or administrative, governmental or regulatory authority
or body, domestic or foreign, which would have a Material Adverse
Effect. None of the litigation previously disclosed to Buyer or in
the SEC Reports is reasonably anticipated by the Company to have a
Material Adverse Effect. Except as disclosed in the SEC Reports
filed with the SEC prior to the date of this Agreement, no member
of the Company Group nor any property or asset of any member of the
Company Group is subject to any order, writ, judgment, injunction,
decree, determination or award which would have a Material Adverse
Effect, or which is reasonably likely to delay the consummation of
the transactions contemplated hereby.
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4.11 ERISA Plans.
(a) Existence of Plans. For purposes of this Agreement,
the term "Plans" shall mean (i) all "Employee Benefit Plans" (as
such term is defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), of which MCPI,
MCPLP, the Company, its Subsidiaries or any member of the same
controlled group of businesses as any member of the Company Group
within the meaning of Section 4001(a)(14) of ERISA (an "ERISA
Affiliate") is or has been during the last six years a sponsor or
participating employer or as to which any member of the Company
Group or any of their respective ERISA Affiliates makes
contributions or is required to make contributions, and (ii) any
similar employment, severance or other arrangement or policy of any
member of the Company Group or of any of their respective ERISA
Affiliates (whether written or oral) providing for insurance
coverage (including self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment
benefits, vacation benefits, fringe benefits or retirement
benefits, or for profit sharing, deferred compensation, bonuses,
stock options, stock appreciation or other forms of incentive
compensation or post-retirement insurance, compensation or
benefits. Except as is disclosed on Schedule 4.11, (i) none of the
Company Group members nor any of their respective ERISA Affiliates
maintains or sponsors (or has during the last six years maintained
or sponsored), or makes or is required to make contributions to,
any Plans, (ii) none of the Plans is or was a "multi-employer
plan," as defined in Section 3(37) of ERISA is or was subject to
Section 412 of the Code, (iii) none of the Plans is or was a
"defined benefit pension plan" within the meaning of Section 3(35)
of ERISA, and (iv) none of the Plans provides or provided post-retirement
medical or health benefits, (v) none of the Plans is or
was a "welfare benefit fund," as defined in Section 419(e) of the
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Code, or an organization described in Sections 501(c)(9) or
501(c)(20) of the Code, and (vi) no member of the Company Group,
nor any ERISA Affiliate has announced or otherwise made any
commitment to create or amend any Plan. The Company has never
contributed or been obligated to contribute to any "multi-employer
plan," as defined in Section 3(37) of ERISA. There are no Plans
which the Company will not be able to terminate immediately after
the Closing in accordance with their terms and ERISA. The Company
has delivered to the Buyer true and complete copies of: (i) each
of the Plans, (ii) any related funding agreements thereto
(including insurance contracts) including all amendments, all of
which are legally valid and binding and in full force and effect
and there are no defaults thereunder except for any such failure to
be legally valid and binding or in full force and effect or for any
defaults which would not have a Material Adverse Effect, (iii) the
currently effective Summary Plan Description pertaining to each of
the Plans, (iv) the three most recent annual reports for each of
the Plans (including all relevant schedules), and (v) the most
recent Internal Revenue Service determination letter for each Plan
which is intended to constitute a qualified plan under Section 401
of the Code.
(b) Penalties; Reportable Events. No member of the
Company Group nor any ERISA Affiliate of either is subject to any
liability, tax or penalty to any Person or governmental agency as
a result of engaging in a prohibited transaction under ERISA or the
Code except as would not have a Material Adverse Effect. Each Plan
which is required to comply with the provisions of Sections 4980B
and 4980C of the Code, or with the requirements referred to in
Section 4980D(a) of the Code, has complied except as would not have
a Material Adverse Effect. No event has occurred which could
subject any Plan to tax under Section 511 of the Code.
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(c) Qualification. Each of the Plans which is intended
to be a qualified plan under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue
Service, and has been operated in compliance with its terms and
with the provisions of the Code except as would not have a Material
Adverse Effect. All of the Plans have been administered and
maintained in compliance with ERISA, the Code and all other
applicable laws except as would not have a Material Adverse Effect.
All contributions required to be made to each of the Plans under
the terms of that Plan, ERISA, the Code or any other applicable
laws have been timely made except as would not have a Material
Adverse Effect. Each Plan intended to meet the requirements for
tax-favored treatment under Subchapter B of Chapter 1 of the Code
meets such requirements except as would not have a Material Adverse
Effect. The Company 1997 Balance Sheet (as defined in Section
4.13) properly reflects all material amounts required to be accrued
as liabilities as of December 31, 1997 under each of the Plans.
There is no contract, agreement or benefit arrangement covering any
employee of any member of the Company Group which, individually or
collectively, could give rise to the payment of any amount which
would constitute an "excess parachute payment" (as defined in
Section 280G of the Code) except as would not have a Material
Adverse Effect. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby, alone or in conjunction with any other event, such as a
voluntary or involuntary termination of employment, will (i) result
in any payment becoming due to any employee, former employee,
officer, director, or consultant, or any of their dependents (other
than (i) the signing bonuses or stay put bonuses permitted pursuant
to Section 6.2 hereof, (ii) any accelerated vesting of Employee
Units or (iii) any benefits under the severance plans listed on
Schedule 4.11), of the Company or any ERISA Affiliate; (ii)
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increase any benefits otherwise payable under any Plan; or (iii)
result in the acceleration of the time of payment or vesting of any
benefits under any Plan except as would not have a Material Adverse
Effect. Except as disclosed on Schedule 4.11, there are no
severance agreements or employment agreements between the Company
or any ERISA Affiliate and any employee of the Company or such
ERISA Affiliate except as would not have a Material Adverse Effect.
With respect to any insurance policy which provides, or has
provided, funding for benefits under any Plan, (A) there is and
will be no liability of any member of the Company Group or the
Buyer in the nature of a retroactive or retrospective rate
adjustment, loss sharing arrangement, or actual or contingent
liability as of the Closing, nor would there be any such liability
if such insurance policy were terminated as of the Closing, and (B)
to the knowledge of the Company Group, no insurance company issuing
any such policy is in receivership, conservatorship, bankruptcy,
liquidation, or similar proceeding, and, to the knowledge of the
Company Group, no such proceedings with respect to any insurer are
imminent except as would not have a Material Adverse Effect.
(e) Litigation. Other than routine claims for benefits
under the Plans, there are no pending, or, to the knowledge of the
Company Group, threatened, investigations, proceedings, claims,
lawsuits, disputes, actions, audits or controversies involving the
Plans, or the fiduciaries, administrators, or trustees of any of
the Plans or any member of the Company Group or any ERISA Affiliate
of either as the employer or sponsor under any Plan, with any of
the Internal Revenue Service, the Department of Labor, the Pension
Benefit Guaranty Corporation, any participant in or beneficiary of
any Plan, except as would not have a Material Adverse Effect. The
Company knows of no reasonable basis for any such claim, lawsuit,
dispute, action or controversy.
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4.12 Trademarks, Patents and Copyrights. Schedule 4.12 sets
forth all of the federal and state service mark registrations and
applications of the Company Group. Except as would not have a
Material Adverse Effect, the Company Group holds all right and
title to such service marks and registrations, free and clear of
any liens, encumbrance or third party license rights. Except as
would not have a Material Adverse Effect, the Company and the
Subsidiaries of the Company own or possess adequate licenses or
other valid rights to use all material patents, patent rights,
trademarks, trademark rights, trade names, trade name rights,
copyrights, service marks, trade secrets, applications for
trademarks and for service marks, know-how and other proprietary
rights and information used or held for use in connection with the
business of the Company and the Subsidiaries of the Company as
currently conducted or as contemplated to be conducted, and the
Company is unaware of any assertion or claim challenging the
validity of any of the foregoing which would have a Material
Adverse Effect. The conduct of the business of the Company and the
Subsidiaries of the Company as currently conducted does not
conflict in any way with any patent, patent right, license,
trademark, trademark right, trade name, trade name right, service
mark or copyright of any third party which would have a Material
Adverse Effect. To the knowledge of the Company Group, there are
no infringements of any proprietary rights owned by or licensed by
or to the Company or any Subsidiary of the Company which would have
a Material Adverse Effect.
4.13 Taxes.
(a) The Company, its Subsidiaries, MCPLP and MCPI have
timely filed all federal, state, local and foreign Tax Returns
required to be filed by them through the date hereof and shall
timely file all Tax Returns required to be filed at or before the
Closing, except for such returns and reports the failure of which
to file timely would not have a
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Material Adverse Effect. Such
reports and returns are and will be true, correct and complete,
except for such failure to be true, correct and complete as would
not have a Material Adverse Effect. The Company, its Subsidiaries,
MCPLP and MCPI have paid and discharged all Taxes due from them,
other than such Taxes that are being contested in good faith by
appropriate proceedings and are adequately reserved as shown in the
audited consolidated balance sheet of the Company dated December
31, 1997 (the "Company 1997 Balance Sheet"), except for such
failures to so pay and discharge which would not have a Material
Adverse Effect. Neither the IRS nor any other taxing authority or
agency, domestic or foreign, is now asserting or, to the knowledge
of the Company Group, threatening to assert against any member of
the Company Group, stockholders of MCPI or partners of the Company
or MCPLP any deficiency or material claim for additional Taxes
which, if such deficiencies or claims were finally resolved against
any such member of the Company Group, any such stockholders of MCPI
or any such partners would have a Material Adverse Effect or, in
the case of stockholders of MCPI or partners of MCPLP or the
Company, would have a Material Adverse Effect if such deficiencies
or claims were levied against MCPI, MCPLP or the Company.
Moreover, the Company Group has no knowledge of any facts on the
basis of which taxing authorities could assert deficiencies or
claims described in the preceding sentence. The accruals and
reserves for Taxes reflected in the Company 1997 Balance Sheet are
adequate in accordance with generally accepted accounting
principles. The Company, its Subsidiaries, MCPLP or MCPI have
withheld or collected and paid over to the appropriate Governmental
Authorities or are properly holding for such payment all Taxes
required by law to be withheld or collected, except for such
failures to have so withheld or collected and paid over or to be so
holding for payment which would not have a Material Adverse Effect.
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No member of the Company Group has a Tax liability pursuant to
section 1.1502-6 of the Treasury Regulations promulgated under the
Code which would have a Material Adverse Effect. There are no
material liens for Taxes upon the assets of the Company, any
Subsidiary of the Company, MCPLP or MCPI, other than liens for
current Taxes not yet due and payable and liens for Taxes that are
being contested in good faith by appropriate proceedings. For
purposes of this Section 4.13, where a determination of whether a
failure by the Company, any Subsidiary of the Company, MCPLP or
MCPI to comply with the representations herein has a Material
Adverse Effect is necessary, such determination shall be made on an
aggregate basis with all other failures within this Section 4.13.
Each of the Company, its Subsidiaries, MCPLP and MCPI have had and
will continue to have through the Closing Date the federal tax
status (i.e., partnership, S corporation or C corporation) such
entity reported on its 1996 federal Tax Returns, except as results
from the MCC Reorganization.
(b) Five business days prior to the Closing, the Company
will provide to the Buyer a schedule of all Employee Units and all
interests in MCPLP owned by employees of any member of the Company
Group that are not subject to valid elections pursuant to section
83(b) of the Code.
4.14 Environmental Matters. The operations conducted by the
Company Group are being conducted under all environmental, health
and safety permits, licenses and other authorizations required
under all applicable Environmental Laws (as defined below), except
for such permits, licenses and other authorizations the failure of
which to obtain would not have a Material Adverse Effect. All
members of the Company Group have made or given all environmental,
health and safety filings, reports and notices required of them
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under applicable Environmental Laws, except for such filings,
reports and notices the failure of which to make would not have a
Material Adverse Effect. All members of the Company Group are in
compliance with all Environmental Laws, and have not been notified
that they are liable or potentially liable under, or in violation
of any, Environmental Laws, nor are there any facts, events or
occurrences which could form the basis of such liability or
violation, except for such noncompliance, liability or violation as
would not have a Material Adverse Effect. "Environmental Law"
means any statute, ordinance, code, law, or regulation, or any
other requirement enacted or adopted by any Governmental Authority
relating to pollution or protection of public health, safety or
welfare or the environment, including those relating to emissions,
discharges, releases or threatened releases of Hazardous Substances
(as defined below) into the environment (including ambient air,
surface water, ground water or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances, including,
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, the Resource Conservation and
Recovery Act, the Clean Air Act, the Clean Water Act, and any state
law counterparts. "Hazardous Substances" means any material,
substance or waste that is defined as "hazardous" or "toxic" under
applicable Environmental Laws.
4.15 Brokers. Except for the fees of the persons listed on
Schedule 4.15, all of which will be paid by the Company, no broker,
finder or investment banker is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions
provided for in this Agreement based upon arrangements made by or
on behalf of MCPI, MCPLP, the Company or any Subsidiary of the
Company.
4.16 Title to and Condition of Properties; Encumbrances.
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(a) The Company has previously delivered to the Buyer a
list of all material real property owned by any member of the
Company Group (the "Owned Property") and all material real
property leased or operated (or leased and subleased) by any
member of the Company Group (the "Leased Property"). The
Owned Property and the Leased Property shall be referred to
collectively as the "Real Property."
(b) The members of the Company Group are the exclusive
holders of all rights in or to all Real Property and all and
personal, tangible and intangible, property and assets of the
members of the Company Group (other than any such assets held
by the members of the Company Group pursuant to leases or
licenses with a person other than a member of the Company
Group) used or useful in the ownership and operation of the
cable television systems owned or operated by the members of
the Company Group except where the failure to hold all of such
rights would not have a Material Adverse Effect. Except as
would not have a Material Adverse Effect, the members of the
Company Group have good and valid title to its respective
assets, free and clear of all defects and Liens except (a)
materialmen's, mechanic's, carriers', or other like Liens
arising in the ordinary course of business, or deposits to
obtain the release of such Liens; (b) Liens for current Taxes
not yet due and payable; (c) Liens or imperfections of title
that do not interfere with the use or detract from the value
of such property; (d) Liens to be released at or before
Closing; and (e) in the case of the Real Property owned or
leased by a member of the Company Group, (i) such leases for
Real Property, (ii) municipal and zoning ordinances, (iii)
such rights of way as do not interfere with the present use or
value of the property, (iv) standard title insurance
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exceptions and (v) easements for public utilities, recorded
building and use restrictions and covenants, and other minor
encumbrances. Except as would not have a Material Adverse
Effect, the Real Property complies with, and is operated in
accordance with, all applicable ordinances, laws, rules,
regulations, statutes, codes and orders (collectively referred
to for purposes of this Agreement as "Applicable Laws," which
term shall also include, without limitation, all "Hazardous
Materials Laws," as defined below) affecting the Real Property
or the possession, use, occupancy or operation thereof
promulgated or issued by any governmental or quasi-governmental body,
agency or entity and with any and all
liens, encumbrances, agreements, covenants, conditions and
restrictions affecting any member of the Company Group or the
Real Property. Except as would not have a Material Adverse
Effect, there are no actions, litigation or proceedings
pending (or, to the knowledge of the Company Group,
threatened): (1) to take all or any portion of the Real
Property, or any interest therein, by eminent domain, or
(2) to modify the zoning of, or other governmental rules or
restrictions applicable to, the Real Property or the use or
development thereof. The members of the Company Group own or
have the lawful right to use all of their respective assets,
properties, operating rights, easements, contracts, leases,
and other instruments necessary to operate its business
lawfully and as presently conducted.
(c) The Systems and all major component parts thereof,
including specifically, but not limited to, headend antenna
equipment, headend amplifiers and associated equipment, line
amplifiers, trunk line cable and distribution cable, are, in
all material respects, in good and efficient operating
condition, and require no more repair, replacement and
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rehabilitation than is normal in the cable television
industry, and the Systems, in general, deliver a picture and
sound to all customers which meets the technical standards of
47 C.F.R. Part 76, Subpart K, and adequate proof of
performance tests as required thereby have been made showing
compliance therewith. The Company and its Subsidiaries have
not received any notification that any plant used in the
Systems requires any rearrangement or rehabilitation in order
to conform to the requirements of the National Electric Safety
Code, or the terms of any pole attachment, conduit or buried
cable agreement, except for any such requirement as would not
have a Material Adverse Effect.
(d) The Systems, in general, monitor signal leakage,
maintain applicable signal leakage logs, conduct the
cumulative leakage tests, demonstrate compliance with the
cumulative leakage criteria by showing a passing cumulative
leakage index or a successful flyover, and comply with the
frequency separation standards, in material compliance with
the requirements set forth in 47 C.F.R. Part 76 Sec.76.610
through Sec.76.619. The members of the Company Group have filed
with the FCC all notifications of utilization of frequencies
in the 108-137 MHZ and 225-400 MHZ bands and all other reports
required to be filed under such rules and regulations and have
not received any notification of objection thereto by the FCC
which has not been promptly resolved by a member of the
Company Group, except for any such failure to file or any such
notification of objection that would not have a Material
Adverse Effect.
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4.17 Labor Matters.
(a) Except as disclosed on Schedule 4.17, no member of
the Company Group is party to any labor or collective
bargaining agreement and there are no labor or collective
bargaining agreements which pertain to employees of any member
of the Company Group.
(b) Except as disclosed on Schedule 4.17, as of the date
hereof, (i) no employees of any member of the Company Group
are represented by any labor organization and (ii) as of the
date hereof, no labor organization or group of employees of
any member of the Company Group has made a pending demand for
recognition or certification, and there are no representation
or certification proceedings or petitions seeking a
representation proceeding presently pending, or to the
knowledge of the members of the Company Group, threatened to
be brought or filed, with the National Labor Relations Board
or any other labor relations tribunal or authority that would
have a Material Adverse Effect. Except as disclosed on
Schedule 4.17, to the knowledge of the members of the Company
Group, there are no formal organizing activities involving
employees of the members of the Company Group pending with,
or threatened by, any labor organization that would have a
Material Adverse Effect.
(c) As of the date of this Agreement, (i) there are no
strikes, work stoppages, slowdowns, lockouts, material
arbitrations or material grievances or other material labor
disputes pending or, to the knowledge of the Company,
threatened against or involving the Company or any of its
Subsidiaries and (ii) there are no unfair labor practice
charges, material grievances or material complaints pending
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or, to the knowledge of the Company, threatened by or on
behalf of any employee or group of employees of the Company or
any of its Subsidiaries.
4.18 Full Disclosure. The representations, taken as a whole,
of the Company, MCPLP, MCPI and the Sellers in this Agreement do
not contain any untrue statement of a material fact, and do not
omit to state any material fact required to be stated therein in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
4.19 Transactions with Affiliates. Schedule 4.19 hereto sets
forth a list of (i) each material agreement in effect as of the
date hereof between (A) any member of the Company Group and any of
the officers, directors or affiliates of any member of the Company
Group or (B) any member of the Company Group and any of Goldman,
Sachs & Co., Hicks, Muse, Tate & Furst Incorporated or any of their
respective affiliates, (ii) any obligations of any member of the
Company Group to make payments to any affiliate of any member of
the Company Group that are outstanding as of the date hereof, and
(iii) any loans by any member of the Company Group to any of the
officers, directors or affiliates of any member of the Company
Group that are outstanding as of the date hereof, other than (x)
the employment agreements entered into, or to be entered into, with
certain officers of the Company as contemplated by this Agreement
or as approved by the Buyer in connection with the transactions
contemplated by this Agreement and (y) the stay put bonuses or
signing bonuses permitted pursuant to Section 6.2 hereof. None of
the transactions listed on Schedule 4.19 hereto violates the terms
of any Material Agreement, except as would not have a Material
Adverse Effect.
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4.20 Certain Matters With Respect to Representations and
Warranties. The representations and warranties of the Sellers,
MCPI, MCPLP and the Company set forth in this Agreement, taken as
a whole, are true and correct in all respects (without giving
effect to the Material Adverse Effect or other materiality
qualifiers set forth therein) on the date hereof (except to the
extent such representations or warranties speak as of an earlier
date) except as would not have a Material Adverse Effect or a
material adverse effect on the transactions contemplated hereby.
5. Representations and Warranties of the Buyer.
The Buyer hereby represents and warrants as follows and
acknowledges that Sellers and the Company are relying on such
representations and warranties in connection with the sale of the
Purchased Interests to the Buyer:
5.1 Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
5.2 Authority Relative to This Agreement. The Buyer has all
necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery
of this Agreement by the Buyer and the consummation by the Buyer of
the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no other corporate
proceedings on the part of the Buyer are necessary to authorize
this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and
delivered by the Buyer and, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes a
legal, valid and binding obligation of the Buyer, enforceable
against the Buyer in accordance with its terms.
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5.3 No Conflict; Required Filings and Consents.
(a) Except as set forth on Schedule 5.3 hereto, the
execution and delivery of this Agreement by the Company does
not, and the performance by the Buyer of its obligations under
this Agreement will not, (i) conflict with or violate the
certificate of incorporation, or by-laws of the Buyer, (ii)
conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Buyer or by which any
property or asset of the Buyer is bound or affected or (iii)
result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a
default) under, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other
instrument or obligation to which the Buyer is a party or by
which the Buyer or any property or asset of the Buyer is bound
except, in the case of clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences
which would not prevent or delay consummation of the Closing,
or otherwise prevent the Buyer from performing its obligations
under this Agreement.
(b) The execution and delivery of this Agreement by the
Buyer does not, and the performance of this Agreement by the
Buyer will not, require Buyer to obtain or make any consent,
approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, except (i) for
applicable requirements, if any, of (A) federal or state
securities or "blue sky" laws, (B) the Communications Act, and
(C) state and local governmental authorities, including state
and local Franchise authorities (ii) as required under the HSR
Act and (iii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings
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or notifications, would not prevent or delay consummation of
the Closing or otherwise prevent the Buyer from performing its
obligations under this Agreement.
5.4 Financial Capability. The Buyer has the financial
ability to purchase the Purchased Interests in accordance with the
terms of this Agreement. The Buyer has available and will have
available as of the Closing Date funds sufficient to pay the
Purchase Price in accordance with Section 2.3.
5.5 Litigation. There is no claim, action, proceeding or
investigation pending or, to the knowledge of the Buyer, threatened
against the Buyer or any of its affiliates or any property or asset
of the Buyer or any affiliate, before any court, arbitrator, or
administrative, governmental or regulatory authority or body,
domestic or foreign, which would have an adverse effect on the
Buyer's ability to complete the transactions contemplated by this
Agreement.
5.6 No Violation to FCC Cross Ownership Rules. On the
Closing Date, Buyer will not be in violation of any FCC
restrictions regarding the ownership of competing media and related
businesses that materially adversely affect the ability of the
Buyer to own the business or any material part thereof.
5.7 Investment Intent; Sophisticated Buyer. Buyer (a) is an
informed sophisticated entity with sufficient knowledge and
experience in investing so as to be able to evaluate the risks and
merits of its investment in securities of MCPI and its Subsidiaries
to be acquired pursuant hereto, (b) is financially able to bear the
risks of investing in MCPI and its Subsidiaries, (c) has had an
opportunity to discuss the business, management and financial
affairs of MCPI and its Subsidiaries with the management of MCPI
and its Subsidiaries, (d) is acquiring such securities for its own
account for the purpose of investment and not with a view to or for
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sale in connection with any distribution thereof, (e) understands
that (i) such securities have not been registered under the
Securities Act, (ii) such securities must be held indefinitely
unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration, (f) has no
present need for liquidity in connection with its purchase of such
securities, (g) understands that the purchase of such securities
involves a high degree of risk, and (h) acknowledges that the
purchase of such securities is consistent with its general
investment objectives.
6. Covenants.
6.1 Access. The Company Group shall cause to be made
available to the Buyer and its authorized representatives during
the Interim Period reasonable access (upon reasonable notice by the
Buyer and without undue interference to the conduct of business
operations) to the books and records, properties, plants and
offices of the members of the Company Group during normal business
hours in order that the Buyer may have full opportunity to make
such investigations as it desires of the properties and affairs of
the members of the Company Group. Prior to Closing, any
information provided to the Buyer or its representatives pursuant
to this Agreement shall be held by the Buyer and its
representatives in confidence in accordance with and subject to the
terms of the Buyer Confidentiality Agreement.
6.2 Interim Period Operations. From the date hereof until
the Closing, the Company shall use its commercially reasonable
efforts to operate pursuant to the terms of the budget previously
provided by the Company to the Buyer. From the date hereof until
the Closing, except as otherwise contemplated by this Agreement or
with the Buyer's prior consent, not to be unreasonably withheld,
each member of the Company Group shall carry on its business in the
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ordinary course consistent with past practice and use commercially
reasonable efforts to preserve intact its business organizations
and material relationships with third parties. Without limiting
the generality of the foregoing, each member of the Company Group
shall not:
(a) make any material capital expenditures, as
determined in accordance with GAAP, except for capital
expenditures referred to in Schedule 6.2(a) hereto;
(b) other than pursuant to the Divestiture Transactions,
agree or commit to dispose of any material assets out of the
ordinary course of business where the proceeds of disposition
or the net book value of the relevant assets exceed
$2,000,000;
(c) merge or consolidate with any person, acquire any
stock or other ownership interest in any person or, except as
pursuant to the Acquisition Transactions, the assets of any
business as an entirety, in each case if any such single
transaction involves consideration in excess of $5,000,000 or
if all such transactions in the aggregate involve in excess of
$15,000,000;
(d) except as required by law, adopt, amend, modify,
spin-off, transfer or assume any of the assets or liabilities
of, terminate or partially terminate any Plan;
(e) make any change in the compensation payable or to
become payable to any officer, director, employee, agent,
affiliate or consultant, enter into or amend any employment,
severance, termination or other agreement or make, other than
in the ordinary course of business consistent with past
practice (and in compliance with the Credit Facility assuming,
for this purpose, that the covenants therein apply to the
entire Company Group), any loans to any of its officers,
directors, employees, agents,
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affiliates or consultants or
make any material change in its existing borrowing or lending
arrangements for or on behalf of any of such persons, or
otherwise enter into any transactions with or make any payment
to or for any affiliate of the Company, in each case whether
contingent on consummation of the transactions contemplated
hereby or otherwise, except for increases in the compensation
payable to non-executive salaried employees in the ordinary
course of business and consistent with past practice and which
would not cause the aggregate cash compensation payable to all
employees on an annualized basis to exceed by more than 5% the
cash compensation payable by the Company or its Subsidiaries
to all of their employees on an annualized basis as of
April 1, 1998 (provided that this Section 6.2(e) shall not
apply with respect to signing bonuses, stay put bonuses or
similar items in the aggregate amount of up to $8,000,000);
(f) except for the distribution of the Promissory Notes
by MCPI to its stockholders, declare, set aside or pay any
dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of the equity
of any member of the Company Group (other than any such
dividend or distribution paid to any member of the Company
Group), or redeem or otherwise acquire any of its respective
securities;
(g) issue, sell, deliver or agree or commit to issue,
sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any stock of any class or any other
securities or partnership interests of MCPI or any of its
Subsidiaries or amend any of the terms of any securities of
MCPI or any of its Subsidiaries outstanding on the date hereof
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other than (i) pursuant to the MCPI Recapitalization or (ii)
the issuance of Employee Units pursuant to the Fifth Amended
and Restated Agreement of Limited Partnership of the Company
(the "Company Partnership Agreement"); provided, however, that
recipients of such Employee Units must, upon receipt of such
units, execute a counterpart signature page to this Agreement
and, as a result, such units shall be included as Purchased
Interests under this Agreement and such recipients shall
become Sellers of such Purchased Interests pursuant to the
terms of this Agreement;
(h) except as previously disclosed to the Buyer, change
the rates or marketing practices applicable to any System
without notifying the Buyer; or
(i) take, or agree in writing or otherwise to take, any
of the foregoing actions or any actions.
6.3 No Amendment to Organizational Documents. From the date
hereof until the Closing, except pursuant to the MCPI
Recapitalization and the MCC Reorganization with the Buyer's prior
consent not to be unreasonably withheld, neither MCPI, MCPLP nor
the Company shall, nor shall they permit any Subsidiary of the
Company to amend, in any material respect, the agreement of limited
partnership, certificate of limited partnership, certificate of
incorporation, by-laws or other organizational documents of such
entity.
6.4 Renewals; HSR.
(a) Franchise Renewals. The Company and its
Subsidiaries shall continue to seek Franchise renewals in the
ordinary course of business consistent with past practice.
(b) HSR; Antitrust Matters. Each of the parties to this
Agreement, to the extent required, shall file (or shall cause
its ultimate parent entity to file, if applicable) within 15
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days following the date of this Agreement, the appropriate
notifications required under the HSR Act in connection with
the transactions contemplated by this Agreement. Each party
shall promptly inform the other of any material communication
from the FCC, the Federal Trade Commission, the Department of
Justice or any other government or Governmental Authority
regarding any matter related to any antitrust or trade
regulatory laws of any government or Governmental Authority
("Antitrust Laws") as they bear upon the purchase and sale of
the Purchased Interests under this Agreement. If either party
receives a request for additional information or documentary
material from any such government or authority with respect to
the transactions contemplated hereby, such party will endeavor
in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other
parties, an appropriate response in compliance with such
request. The Buyer will, to the extent permitted, notify the
Company of, and permit them to participate in, any discussion
between the Buyer and such government or authority regarding
antitrust matters in connection with the transactions
contemplated hereby.
6.5 Commercially Reasonable Efforts. The Buyer and the
members of the Company Group shall each use commercially reasonable
efforts to cause all conditions in Section 7 to be satisfied and
the Closing contemplated hereby to occur.
6.6 Notification. Each member of the Company Group and the
Buyer shall:
(a) in the event of, or promptly after obtaining
knowledge of the occurrence or reasonably expected occurrence
of, any fact or circumstance that would cause or constitute a
breach of any of its representations and warranties set forth
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herein, give notice thereof to the other party and shall use
its best efforts to prevent or promptly to remedy such breach;
and
(b) promptly notify the other party of any notice or
other communication from any Governmental Authority in
connection with the transactions contemplated by this
Agreement.
6.7 Use of Marcus Name. Buyer agrees that Jeffrey A. Marcus
(or any entity affiliated with Mr. Marcus) may use his name or any
derivation thereof in connection with any business, whether or not
Mr. Marcus is directly involved in such business, so long as such
business does not involve the operation or ownership of cable
television systems or multi-channel video service or two way
return interactive high speed data service; provided, that Mr.
Marcus shall not have any right to use the name "Marcus Cable" or
any variant thereof in connection with any such business (provided
that no name shall be deemed to be a variant of "Marcus Cable" or
"Marcus Media" unless such name includes the word "cable" or
"Media" or any variants thereof).
6.8 Tax Matters. To the extent requested by the Buyer, the
Company, its Subsidiaries and MCPLP each shall make an election
pursuant to section 754 of the Code and under the comparable
provisions of state law on any Tax Return due on or after the
Closing Date. The Company, its Subsidiaries, MCPI and MCPLP shall
not take a position on any Tax Return with respect to such entity's
federal tax status (i.e., partnership, S corporation or C
corporation) different than that which such entity reported on its
1996 federal Tax Returns.
6.9 Exculpation and Indemnification. The Company's
obligations provided for in Section 6.4 of the Company Partnership
Agreement, with respect to the indemnification of any director,
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officer, employee or agent of MCPLP or any affiliate of MCPLP, who,
in such capacity, will engage or has engaged in activities on
behalf of the Company (the "Indemnification Provisions") shall
continue in effect, and shall not be amended or eliminated, for a
period of at least five years following the Closing Date. During
such five year period, the Buyer (or any of its successors or
assigns) shall not permit any other person to acquire effective
control of the Company unless such person undertakes that it will
not permit the Indemnification Provisions to be amended or
eliminated during such period. The Company (or any of its
successors or assigns) will not transfer all or the majority of its
assets to any person in a single transaction or series of related
transactions (including but not limited to any transfer in
connection with the liquidation or termination of the Company or
any merger or consolidation involving the Company), unless such
transferee agrees to assume and be responsible for the obligations
of the Company under the Indemnification Provisions during the five
year period commencing on the Closing Date.
6.10 Assistance Regarding Credit Facility. The Company will
use commercially reasonable efforts to assist the Buyer in
obtaining any consents of lenders under the Credit Facility that
are necessary to permit the Buyer to keep the Credit Facility in
place following the Closing.
6.11 Admission as Substituted Limited Partner. Each party
will take such action as is required on its part pursuant to the
Company Partnership Agreement in order that, upon the Closing, the
Buyer will be admitted as a Substituted Limited Partner (as defined
in the Company Partnership Agreement) under the provisions of the
Company Partnership Agreement. Each party will take such action as
is required on its part pursuant to MCPLP's agreement of limited
partnership in order that, upon the Closing, the Buyer will be
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admitted as a limited partner under such agreement of limited
partnership.
6.12 MCC Reorganization.
(a) Prior to the Closing Date, the Company and MCPLP
will cause each of the following limited partnerships to be
converted into a Delaware limited liability company, pursuant
to Section 18-214 of the Delaware Limited Liability Company
Act:
(i) Marcus Cable Operating Company, L.P., a
Delaware limited partnership;
(ii) Marcus Cable Partners, L.P., a Delaware
limited partnership;
(iii) Marcus Cable Associates, L.P., a Delaware
limited partnership;
(iv) Marcus Cable of Alabama, L.P., a Delaware
limited partnership.
Each such conversion shall result in the name of such entity
remaining the same, except that "L.P." shall be changed to "L.L.C."
The operating agreement for each such limited liability company
shall be subject to the prior consent of Buyer, which consent shall
not be unreasonably withheld. Upon the conversion of Marcus Cable
of Alabama, L.P. to a Delaware limited liability company, Marcus
Cable of Alabama, Inc. shall be the sole manager of Marcus Cable of
Alabama, L.P. and shall remain so at all times prior to the Closing
unless and until it is merged with and into Marcus Cable Operating
Company, L.L.C. in accordance with Section 6.12(b).
(b) Prior to the Closing Date and after the
effectiveness of the Delaware limited liability company
conversions described in clause (a) of this Section 6.12,
MCPLP will transfer all of its interests in Marcus Cable
Operating Company, L.L.C., and Marcus Cable Partners, L.L.C.,
to the Company as a contribution to capital. Then, the
Company shall transfer its interests in Marcus Cable Partners,
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L.L.C. and Marcus Cable Associates, L.L.C. to Marcus Cable
Operating Company, L.L.C., as a contribution to capital. In
addition, the interest in Marcus Fiberlink, L.L.C., a Delaware
limited liability company, held by Marcus Cable Partners,
L.L.C., shall be transferred to Marcus Cable Operating
Company, L.L.C. At the option of Buyer exercised by notice to
the Company at least four business days prior to the Closing,
the Company shall cause Marcus Cable Operating Company, L.L.C.
to cause Marcus Cable of Alabama, Inc., a Delaware
corporation, to merge into Marcus Cable Operating Company,
L.L.C. prior to the Closing Date and after the effectiveness
of the Delaware limited liability conversions described in
clause (a) of this Section 6.12. The transactions described
in this Section 6.12 shall result in each of the entities
identified in Section 6.12(a) and Fiberlink, L.L.C. being
wholly-owned Subsidiaries of Marcus Cable Operating Company,
L.L.C. and are referred to as the "MCC Reorganization."
6.13 MCPI Recapitalization. Prior to the Closing, MCPI and its
stockholders shall take all action to effect the MCPI
Recapitalization pursuant to which immediately following such
Recapitalization and immediately prior to the Closing, the
outstanding capital stock of MCPI shall consist solely of (i) MCPI
Non-Voting Shares and (ii) MCPI Voting Shares.
7. Conditions to Closing.
7.1 Conditions to the Buyer's Obligations. The obligation
of the Buyer to effect the Closing is subject to the satisfaction
of the following conditions for the exclusive benefit of the Buyer.
(a) Representations and Warranties of the Sellers, MCPI,
MCPLP and the Company. The representations and warranties of
the Sellers, MCPI, MCPLP, and the Company set forth in this
Agreement, taken as a whole, shall be true and correct in all
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respects (without giving effect to the materiality or Material
Adverse Effect qualifiers set forth therein) on the Closing
Date with the same force and effect as if such representations
and warranties had been made on and as of such date (except to
the extent such representations and warranties speak as of an
earlier date) except as would not in the aggregate have a
Material Adverse Effect or a material adverse effect on the
transactions contemplated hereby.
(b) Covenants of the Company. The Company shall have
complied with and performed in all material respects all
covenants and agreements contained in this Agreement to be
complied with or performed by the Company on or prior to the
Closing Date;
(c) HSR. All waiting periods prescribed under the HSR
Act shall have expired or been terminated.
(d) [Intentionally omitted.]
(e) No Injunction. No preliminary or permanent
injunction or other order or decree by any court which
prevents or restrains the consummation of any of the
transactions contemplated hereby shall have been issued and
remain in effect (each party agreeing to use its commercially
reasonable efforts to have any such injunction, order or
decree lifted), and no action, suit, proceeding or
investigation by any Governmental Authority or other person
shall have been instituted to restrain, prohibit or invalidate
any of the transactions contemplated by this Agreement,
provided that, in the case of any such action, suit,
proceeding or investigation by any person other than a
Governmental Authority, such action, suit, proceeding or
investigation shall have a reasonable likelihood of success.
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(f) Marcus Put/Call Agreement. The Marcus Put/Call
Agreement shall be in full force and effect as of the Closing
Date.
(g) MCC Reorganization. The MCC Reorganization shall
have been effected and all FCC approvals required therefor
shall have been obtained prior thereto.
(h) Execution of Agreement by Holders of Employee Units.
Subject to the provisions of Section 11 hereof, each person
who holds any Employee Units shall have executed and delivered
a counterpart signature page to this Agreement.
(i) MCPI Recapitalization. MCPI and its stockholders
shall have effected the MCPI Recapitalization.
(j) Legal Opinion. The Buyer shall have received an
opinion of counsel to the Company as to the matters set forth
on Exhibit B hereto.
Any of the conditions set out in this Section 7.1 may be
waived in whole or in part by the Buyer, any such waiver to be
binding on the Buyer only if the same is in writing.
7.2 Conditions to the Company's and the Sellers' Obligations.
The obligations of the Company and the Sellers to effect the
Closing are subject to the satisfaction of the following conditions
for the exclusive benefit of the Company and the Sellers:
(a) Representations and Warranties of the Buyer. Each
of the representations and warranties of the Buyer set forth
in this Agreement shall be true and correct in all material
respects on the Closing Date with the same force and effect as
if such representations and warranties had been made on and as
of such date (except to the extent such representations and
warranties speak as of an earlier date) except as would not in
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the aggregate have a material adverse effect on the
transactions contemplated hereby.
(b) Covenants of the Buyer. The Buyer shall have
complied with and performed in all material respects all
covenants and agreements contained in this Agreement to be
complied with or performed by the Buyer on or prior to the
Closing Date.
(c) HSR. All waiting periods prescribed by the HSR Act
shall have expired or been terminated.
(d) No Injunction. No preliminary or permanent
injunction or other order or decree by any court which
prevents the consummation of any of the transactions
contemplated hereby shall have been issued and remain in
effect (each party agreeing to use its commercially reasonable
efforts to have any such injunction, order or decree lifted),
and no action, suit, proceeding or investigation by any
administrative agency or other Governmental Authority or other
person shall have been instituted to restrain, prohibit or
invalidate any of the transactions contemplated by this
Agreement provided that, in the case of any such action, suit,
proceeding or investigation by any person other than a
Governmental Authority, such action suit, proceeding or
investigation shall have a reasonable likelihood of success.
(e) Opinion of Counsel. The Company shall have received
an opinion of counsel to the Buyer as to the matters set forth
on Exhibit C hereto.
8. Closing Arrangements.
8.1 Time and Place of Closing. The closing of the purchase
and sale of the Purchased Interests under this Agreement shall take
place on a date to be specified by the parties, which shall be no
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later than 5 days following satisfaction or waiver of all the
conditions set forth in Section 7 hereof (other than conditions
that can only be satisfied at the Closing). The Closing shall take
place at the offices of Baker & Botts, L.L.P., 2001 Ross Avenue,
Dallas, Texas 75201, or at such other place as may be mutually
agreed upon by the Buyer and the Company.
8.2 Closing Deliveries. On the Closing Date, subject to the
satisfaction of all conditions set out in Sections 7.1 and 7.2
which have not been waived by the party or parties entitled to the
benefit thereof:
(a) the Buyer shall make the payments described in
Section 2.3;
(b) Sellers shall deliver to the Buyer the certificates
representing the Purchased Interests, duly endorsed for
transfer;
(c) Certificate of the Company. The Company shall
deliver to the Buyer a certificate dated the Closing Date, in
form reasonably satisfactory to the Buyer and signed on behalf
of the Company by a senior officer of MCPI to the effect that
the conditions specified in Sections 7.1(a) and 7.1(b) have
been satisfied;
(d) Certificate. The Buyer shall deliver a certificate
dated the Closing Date, in form reasonably satisfactory to the
Company and signed on behalf of the Buyer by a senior officer
of the Buyer, to the effect that the conditions specified in
Sections 7.2(a) and 7.2(b) have been satisfied; and
(e) Release. Each Seller who holds Company L.P. Units
(other than Employee Units) and Jeffrey A. Marcus shall
deliver to the Buyer a release dated the Closing Date, in form
reasonably satisfactory to the Buyer and duly executed by such
Seller, of all claims, liabilities and obligations of any
nature of such Seller against any member of the Company Group
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or any officer or director of any member of the Company Group
to the extent arising out of such Seller's ownership of equity
securities of the Company or status as a partner of the
Company. In addition (i) Goldman, Sachs & Co. and Hicks,
Muse, Tate & Furst Incorporated shall confirm in writing that
there are no ongoing obligations on the part of any member of
the Company Group to utilize Goldman, Sachs & Co. or Hicks,
Muse, Tate & Furst Incorporated for investment banking or
financial advisory services, and (ii) the Company shall
deliver to the Buyer a certificate of the Chief Executive
Officer and the Chief Financial Officer of the Company to the
effect that no material agreements remain in force and effect
between any member of the Company Group and any of the Sellers
(other than holders of Employee Units), other than (A)
agreements referred to in this Agreement or any schedule
hereto or (B) agreements for the provision of goods or
services in the ordinary course on terms that are no less
favorable to the member of the Company Group that is a party
thereto than would be available on an arms-length basis from
another third party.
8.3 Further Assurances. Sellers agree to execute all such
further documents and to do all such other acts and things (other
than the payment of money) as the Buyer, acting reasonably, may
request from time to time after Closing for the purpose of
transferring to the Buyer all right, title and interest of Sellers,
direct or indirect, in and to the Purchased Interests.
9. Non-Survival of Representations and Warranties; Limitation of
Liability.
None of the representations and warranties of the parties
hereto contained in this Agreement or in any instrument delivered
pursuant hereto shall survive the Closing; provided, however, that
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the representations and warranties of the Sellers set forth in
Section 3.1(a), (d), (e), (f) and (g) shall survive the Closing and
remain in effect indefinitely thereafter. The liability of any
Seller with respect to the breach of any representation set forth
in Section 3.1(d), (e), or (f) relating to any member of the
Company Group shall be limited to an amount which bears the same
ratio to the entire amount of damages of the Buyer resulting from
such breach as such Seller's equity interest in such member of the
Company Group bears to the entire equity interest of all Sellers in
such member of the Company Group.
10. Termination.
10.1 Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual consent of the Company (on behalf of
the Sellers) and the Buyer;
(b) by either the Company (on behalf of the Sellers),
the Company (in its own behalf) or the Buyer by written notice
to the others, if the Closing Date has not occurred on or
prior to August 31, 1998;
(c) by Buyer, upon a material breach of representation,
warranty, covenant or agreement on the part of the Company or
any Seller set forth in this Agreement (provided such breach
has not been cured within 30 days following receipt by the
Company of written notice of such breach); or
(d) by the Company, upon a material breach of
representation, warranty, covenant or agreement on the part of
the Buyer set forth in this Agreement (provided such breach
has not been cured within 30 days following receipt by the
Buyer of written notice of such breach).
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10.2 Procedure and Effect of Termination.
(a) If this Agreement is terminated by the Company (on
behalf of itself or the Sellers) as a result of (i) Buyer's
material uncured breach of this Agreement and, at the time of
such termination, neither the Company, MCPI, MCPLP nor any
Seller is in material breach of this Agreement, or (ii)
Buyer's failure or inability to effect the Closing
notwithstanding the fact that the Company, MCPI, MCPLP and the
Sellers stand ready to satisfy the conditions to Buyer's
obligation to effect the Closing, then, in either case, the
Purchase Price Escrow Deposit Agent will pay to each Seller
such Seller's allocable portion (determined in accordance with
the allocation to each Seller reflected in a schedule to be
provided to the Purchase Price Escrow Deposit Agent by the
Company (on behalf of the Sellers)) of the Purchase Price
Escrow Deposit and all interest or other earnings thereon.
The payment of the Purchase Price Escrow Deposit to the
Sellers shall constitute liquidated damages for the Company
Group and Sellers in respect of any such material breach or
failure to close by Buyer as described in the previous
sentence, and no Seller or Company Group member shall be
entitled to receive any additional damages in respect thereof.
If this Agreement is terminated other than as a result of any
event described in the immediately preceding sentence, then
the Purchase Price Escrow Deposit shall be returned to Buyer,
together with all interest or other earnings thereon.
(b) In the event of termination of this Agreement
pursuant to Section 10.1, this Agreement shall become void and
have no force or effect (except for the last sentence of
Section 6.1 and Section 12.4) and the transactions
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contemplated hereby shall be abandoned without further action
by the parties; provided, however, that except as provided
elsewhere herein, any such termination shall not relieve any
party of any liability for any breach, prior to such
termination, of any covenant or obligation of such party under
this Agreement.
11. Restructure of Transaction. In the event that any holder of
Employee Units fails to execute a counterpart signature page to
this Agreement, the parties hereto agree to work together in good
faith to restructure (as a merger or otherwise) the transactions
contemplated by this Agreement in order, without requiring the
signature of such holder, to effectuate the purposes, and to
provide to the parties the relative benefits and obligations
(including but not limited to tax consequences), as are comparable
to those that would be provided by this Agreement in the event such
transactions were not restructured. In the event the parties must
restructure the transactions contemplated hereby, the parties will
use their commercially reasonable efforts to consummate such
transactions as promptly as practicable.
12. General Provisions
12.1 [Intentionally Omitted.]
12.2 Notices.
(a) Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall
be sufficiently given if delivered in person or transmitted by
telecopy or similar means of recorded electronic communication
to the relevant party as follows:
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(i) in the case of the Company:
Marcus Cable Company L.P.
2911 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Attention: Jeffrey A. Marcus
Telecopy: (214) 521-3468
with a copies to:
Marcus Cable Company L.P.
2911 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Attention: Richard A.B. Gleiner, Esq.
Telecopy: (214) 521-3468
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
Attention: Michael A. Saslaw, Esq.
Telecopy: (214) 953-6503
(ii) in the case of the Seller, the addresses set
forth opposite each Seller's respective name on Schedule
12.2 hereto:
(iii) in the case of the Buyer:
Vulcan Cable, Inc.
110 110th Avenue Northeast
Bellevue, Wisconsin 98004
Attention: William D. Savoy
Telecopy: (425) 453-1985
with a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067-4276
Attention: Alvin G. Segel, Esq.
Telecopy: (310) 203-7199
(b) Any such notice or other communication shall be
deemed to have been given and received on the day on which it
is delivered or telecopied (or, if such day is not a business
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day or if the notice or other communication is not telecopied
during business hours, at the place of receipt, on the next
following business day).
(c) Any party may change its address for the purposes of
this Section by giving notice to the other parties in
accordance with the foregoing.
12.3 Assignability and Enforceability. This Agreement shall
be binding on and enforceable by the parties and their respective
successors and permitted assigns. No party may assign any of its
rights, benefits or obligations under this Agreement to any person
without the prior written consent of the other party; provided,
however, that Buyer may assign its rights, benefits or obligations
under this Agreement to one or more entities controlled by or under
common control with the Buyer, without the prior consent of other
party hereto. No such assignment shall relieve the Buyer of its
obligations under this Agreement.
12.4 Expenses. Except as otherwise specifically provided
herein, and subject to consummation of the transactions
contemplated by Section 2.1 above, all costs and expenses
(including, without limitation, legal, accounting, investment
banking and other professional fees) incurred by the Buyer in
connection with this Agreement or the transactions contemplated
hereby, not to exceed $20,000,000, shall be paid by the Company.
All Buyer costs and expenses in excess of $20,000,000, shall be
borne by the Buyer. Except as otherwise specifically provided
herein, all costs and expenses (including, without limitation,
legal, accounting, investment banking and other professional fees)
of the Company incurred in connection with this Agreement or the
transactions contemplated hereby, not to exceed $30,000,000, shall
be paid by the Company; provided however that the stay put bonuses
or signing bonuses permitted pursuant to Section 6.2 hereof shall
not be subject to such $30,000,000 limitation. Such amounts shall
include, without limitation, the items set forth in Schedule 12.4
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hereto. All Company costs and expenses in excess of $30,000,000,
and all costs and expenses of the Sellers in connection with the
transactions contemplated hereby, shall be borne by the Sellers,
and the Company shall have no obligation with respect thereto.
12.5 Consultation. The parties shall consult with each other
before issuing any press release or making any other public
announcement with respect to this Agreement or the transactions
contemplated hereby and, except as required by any applicable law
or regulatory or stock exchange requirement, neither of them shall
issue any such press release or make any such public announcement
without the prior written consent of the other, which consent shall
not be unreasonably withheld or delayed.
12.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Texas,
without giving effect to the principles of conflicts of law
thereof.
12.7 No Third Party Beneficiaries. No person other than the
parties hereto shall have any rights under this Agreement, except
pursuant to Section 6.9.
12.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original and all of
which taken together shall constitute one and the same instrument.
12.9 Currency. Unless otherwise indicated, all dollar amounts
in this Agreement are expressed in United States dollars.
12.10 Sections and Headings. The division of this
Agreement into Sections and the insertion of headings are for
reference purposes only and shall not affect the interpretation of
this Agreement. Unless otherwise indicated, any reference in this
Agreement to a Section, Schedule or Exhibit refers to the specified
Section of or Schedule or Exhibit to this Agreement.
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12.11 Number and Gender. In this Agreement, words
importing the singular number only shall include the plural and
vice versa and words importing gender shall include all genders.
12.12 Entire Agreement. This Agreement, including the
Schedules and Exhibits and any agreements or documents referred to
herein or executed contemporaneously herewith, constitutes the
entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether written or oral, except as
expressly provided in another agreement and except that the Buyer
Confidentiality Agreement shall remain in full force and effect in
accordance with its terms until the Closing. There are no
conditions, covenants, agreements, representations, warranties or
other provisions, express or implied, collateral, statutory or
otherwise, relating to the subject matter hereof except as herein
provided.
12.13 Severability. If any provision of this Agreement is
determined by a court of competent jurisdiction to be invalid,
illegal or unenforceable in any respect, such determination shall
not impair or affect the validity, legality or enforceability of
the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
12.14 Amendments and Waivers. No amendment or waiver of
any provision of this Agreement shall be binding on any party (or,
in the case of the Sellers, by the Company on behalf of the
Sellers) unless consented to in writing by such party. No waiver
of any provision of this Agreement shall be construed as a waiver
of any other provision nor shall any waiver constitute a continuing
waiver unless otherwise expressly provided. No provision of this
Agreement shall be deemed waived by a course of conduct including
the act of Closing unless such waiver is in writing signed by all
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parties and stating specifically that it was intended to modify
this Agreement.
12.15 Disclosure. Any information disclosed by a party in
any Schedule or Exhibit shall be deemed to qualify all
representations and warranties of such party set forth in this
Agreement to which such information may reasonably be regarded as
relevant, regardless of whether the specific representations and
warranties refer specifically to such Schedule or Exhibit.
12.16 Knowledge. For purposes of this Agreement, the
Company and the Company Group shall be deemed to have knowledge of
and be aware of all facts, circumstances and information of which
any of Jeffrey A. Marcus, Louis A. Borrelli, Jr., Thomas P.
McMillin and Richard A.B. Gleiner has knowledge or is aware.
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IN WITNESS WHEREOF the parties have executed this
Agreement.
MARCUS CABLE COMPANY, L.P.:
By: Marcus Cable Properties, L.P.,
its general partner
By: Marcus Cable Properties, Inc.,
its general partner
By: /s/ Jeffrey A. Marcus
Jeffrey A. Marcus
President and Chief Executive Officer
MARCUS CABLE PROPERTIES, L.P.
By: Marcus Cable Properties, Inc.,
its general partner
By:/s/ Jeffrey A. Marcus
Jeffrey A. Marcus
President and Chief Executive Officer
MARCUS CABLE PROPERTIES, INC.
By: /s/ Jeffrey A. Marcus
Jeffrey A. Marcus
President and Chief Executive Officer
<PAGE>
BUYER:
VULCAN CABLE, INC.
By:/s/ William D. Savoy
William D. Savoy
President
<PAGE>
EXHIBIT A
PURCHASE PRICE DEPOSIT ESCROW AGREEMENT
This PURCHASE PRICE DEPOSIT ESCROW AGREEMENT (this
"Agreement") is entered into as of the 3rd day of April, 1998, by
and among Marcus Cable Company, L.P., a Delaware limited
partnership ("MCC"), Vulcan Cable, Inc., a Washington corporation
("Buyer"), and Chase Bank of Texas, National Association (the
"Escrow Agent").
WHEREAS, Buyer, MCC and the partners and stockholders of
MCC, its general partner and its ultimate general partner (the
"Sellers") have entered into a Purchase Agreement dated as of the
date hereof (the "Purchase Agreement"), providing for the ultimate
sale, directly and indirectly, by the Sellers to Buyer of all of
the partner interests in MCC, all as set forth in the Purchase
Agreement;
WHEREAS, Buyer and MCC have delivered to the Escrow Agent
on the date hereof a true and correct copy of the Purchase
Agreement;
WHEREAS, Buyer and MCC desire to enter into this
Agreement with Escrow Agent with respect to the Purchase Price
Escrow Deposit contemplated by Section 2.3 of the Purchase
Agreement; and
WHEREAS, capitalized terms not otherwise defined herein
shall have the respective meanings set forth in the Purchase
Agreement.
NOW, THEREFORE, in consideration of the foregoing and of
the promises contained herein, the parties, intending legally to be
bound, agree as follows:
SECTION I
DEPOSIT
1.1 Delivery. On the date hereof, the Escrow Agent
hereby agrees to accept from Buyer, by wire transfer of immediately
available funds, $100,000,000 (the "Escrow Deposit"), which shall
be held by the Escrow Agent pursuant to the terms of this
Agreement.
1.2 Receipt. The Escrow Agent agrees to hold and
disburse the Escrow Deposit, and all interest and other earnings
thereon, in accordance with the terms and conditions of this
Agreement and for the uses and purposes stated herein. The Escrow
Agent shall, upon receipt of the Escrow Deposit, acknowledge
receipt thereof to Buyer and MCC.
1.3 Investment and Income. Upon receipt of the Escrow
Deposit, the Escrow Agent shall, pending the disbursement of the
Escrow Deposit pursuant to this Agreement, invest the Escrow
Deposit, and all interest and other earnings thereon, in accordance
with the joint instructions of Buyer and MCC in (a) direct
obligations of, or obligations fully guaranteed by, the United
States of America or any agency thereof, (b) 30 day certificates of
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deposit issued by federally insured commercial banks having a
combined capital surplus and undivided profits of not less than
$1.0 billion or (c) money market funds investing solely in any of
the above. Absent such joint instructions from Buyer and MCC, the
Escrow Agent shall invest the Escrow Deposit, and all interest and
other earnings thereon, in the Chase VISTA 100% U.S. Treasury
Securities Money Market Fund (VISTA Share Class). The money market
funds referred to in clause (c) above may include any open-end or
closed-end management investment trust or investment company
registered under the Investment Company Act of 1940, as amended,
for which the Escrow Agent or one of its affiliates acts as
investment advisor, custodian, transfer agent, registrar, sponsor,
distributor, manager or otherwise, and any fees paid to the Escrow
Agent or its affiliate by such fund shall be in addition to the
fees and expenses owed to the Escrow Agent under this Agreement.
The Escrow Agent shall not be held liable or responsible for the
quality or diversity of the assets constituting the Escrow Deposit
or for any loss or depreciation in the value of such assets or any
loss resulting from any investment made by the Escrow Agent in
accordance with the terms of this Agreement.
SECTION II
PROCEDURES FOR DISBURSEMENT
OF THE ESCROW DEPOSIT
2.1 Release of the Escrow Deposit. Subject to the
provisions of Section 3 of this Agreement, the Escrow Agent shall
hold the Escrow Deposit, and all interest and other earnings
thereon, until it delivers the same as provided in this Section 2.1
as follows:
(a) If the Closing occurs, the Escrow Deposit shall
be delivered to the Buyer at the Closing; or
(b) If the Purchase Agreement is terminated by MCC
(on behalf of itself or the Sellers) as a result of
(i) Buyer's material breach of the Purchase Agreement or
(ii) Buyer's failure or inability to effect the Closing
notwithstanding the fact that MCC and the Sellers stand ready
to satisfy the conditions to Buyer's obligation to effect the
Closing, then the Escrow Deposit shall be delivered to the
Sellers (in accordance with the allocation to each Seller and
wiring instructions reflected in a schedule to be provided, at
least two business days prior to the date of delivery of the
Escrow Deposit by the Escrow Agent pursuant to this paragraph,
to the Escrow Agent by MCC (on behalf of the Seller the
"Seller Allocation Schedule"); or
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(c) If the Purchase Agreement is terminated other
than as a result of an event described in Section 2.1(b), then
the Escrow Deposit shall be delivered to Buyer; and
(d) All interest and other earnings on the Escrow
Deposit shall be released, upon release of the Escrow Deposit
in accordance with this Section 2.1, (i) in the case of the
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release to Buyer of the Escrow Deposit, to Buyer, or (ii) in
the case of the release to Sellers of the Escrow Deposit, to
Sellers in accordance with the allocation to each Seller and
wiring instructions reflected in the Seller Allocation
Schedule.
The Escrow Agent, upon the receipt of joint written instructions
from Buyer and MCC, will release the Escrow Deposit, together with
all interest and other earnings thereon, to Buyer or Sellers (in
the case of such release to the Sellers, in accordance with the
allocation reflected in the Seller Allocation Schedule), as
specified in such joint written instructions. In addition, the
Escrow Agent, at the end of 20 calender days after receipt of a
written demand from MCC or from Buyer (i) stating that one of the
conditions contained in Section 2.1(b) or 2.1(c) of this Agreement
(and specifying such condition) has occurred and (ii) enclosing
evidence satisfactory to the Escrow Agent that notice of making
such written demand was given to the other party, shall deliver the
Escrow Deposit (and all interest and earnings thereon) as directed
and demanded, unless prior to the expiration of such 20 calender
day period, the Escrow Agent shall receive notice from the other
party to withhold the delivery of the Escrow Deposit (and all
interest and earnings thereon). If the Escrow Agent does receive
notice to withhold the delivery of the Escrow Deposit (and all
interest and earnings thereon) within such time period, the
provisions of Section 2 of this Agreement shall no longer have any
force and effect, and the Escrow Agent shall thereafter hold the
Escrow Deposit (and all interest and earnings thereon) until it has
received joint instructions from MCC and Buyer or a final non-appealable
order of a court of competent jurisdiction directing
delivery of the Escrow Deposit (and all interest and earnings
thereon). The Escrow Agent shall have no duty to determine or
inquire into the happening or occurrence of any event or
contingency or the performance or failure of performance of either
the MCC or the Buyer with respect to the Purchase Agreement or the
matters addressed in Section 2 hereof, the Escrow Agent's sole duty
hereunder being to hold the Escrow Deposit (and all interest and
earnings thereon) and to deliver the same in accordance with
instructions given to it as provided in this Section 2.
2.2 Interpleader. Notwithstanding anything to the
contrary in this Escrow Agreement:
(a) The Escrow Agent may deposit the Escrow Deposit
and interest and other earnings thereon with the clerk of any
court of competent jurisdiction upon commencement of an action
in the nature of interpleader or in the course of any court
proceedings, including any action commenced by the Escrow
Agent.
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(b) If at any time the Escrow Agent receives a
final non-appealable order of a court of competent
jurisdiction, or written instructions signed by Buyer and MCC,
directing delivery of the Escrow Deposit and all interest and
other earnings thereon, the Escrow Agent shall comply with the
order or instructions. Upon any delivery or deposit of the
Escrow Deposit and any interest and other earnings thereon as
provided in Section 2.1 hereof or this Section 2.2, the Escrow
Agent shall thereupon be released and discharged from any and
all further obligations arising in connection with this Escrow
Agreement.
SECTION III
ESCROW AGENT
3.1 Appointment. Buyer and MCC hereby appoint the
Escrow Agent to serve hereunder and the Escrow Agent hereby accepts
such appointment and agrees to perform all duties which are
expressly set forth in this Agreement.
3.2 Compensation. Each of MCC and Buyer hereby jointly
and severally agrees to pay the Escrow Agent for its services
hereunder the fees determined in accordance with, and payable as
specified in, the Schedule of Fees set forth in Exhibit A attached
hereto. In addition, each of MCC and Buyer hereby jointly and
severally agrees to pay to the Escrow Agent any expenses incurred
by the Escrow Agent in connection with this Agreement, including,
but not limited to, legal fees and expenses, if the Escrow Agent
deems it necessary to retain counsel. Such expenses shall be paid
to the Escrow Agent within ten days following receipt by either MCC
or Buyer of a written statement setting forth such expenses. As
between MCC and Buyer, the fees and expenses addressed herein shall
be apportioned equally.
3.3 Indemnification. MCC AND BUYER, JOINTLY AND
SEVERALLY, RELEASE, ACQUIT AND DISCHARGE THE ESCROW AGENT AND AGREE
TO INDEMNIFY THE ESCROW AGENT AND ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS AND ATTORNEYS (COLLECTIVELY, THE "INDEMNIFIED
PARTIES") AGAINST AND DEFEND AND HOLD THE INDEMNIFIED PARTIES
HARMLESS FROM ANY AND ALL LOSSES, COSTS, DAMAGES, EXPENSES, CLAIMS,
AND ATTORNEY'S FEES SUFFERED OR INCURRED BY THE INDEMNIFIED PARTIES
AS A RESULT OF, IN CONNECTION WITH OR ARISING FROM OR OUT OF THE
ACTS OR OMISSIONS OF ANY INDEMNIFIED PARTY IN PERFORMANCE OF OR
PURSUANT TO THIS AGREEMENT, EXCEPT SUCH ACTS OR OMISSIONS AS MAY
RESULT FROM SUCH INDEMNIFIED PARTY'S WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE. SUCH INDEMNIFICATION SPECIFICALLY INCLUDES WITHOUT
LIMITATION, ALL LOSSES, DAMAGES, LIABILITIES AND EXPENSES, AND
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COSTS OF INVESTIGATION INCURRED (A) IN CONNECTION WITH ANY
LITIGATION (WHETHER AT THE TRIAL OR APPELLATE LEVELS) ARISING FROM
THIS AGREEMENT OR INVOLVING THE SUBJECT MATTER HEREOF AND (B)
ARISING OUT OF THE ORDINARY NEGLIGENCE OF SUCH INDEMNIFIED PARTY.
As between MCC and Buyer, the obligations under this Section 3.3
shall be apportioned equally, provided, however, that, as between
MCC and Buyer, any expense incurred by the Escrow Agent as a result
of participating in any proceeding brought by Buyer against MCC, or
by MCC against Buyer, shall be paid by the party against whom
judgment is rendered in such proceeding. In no event shall the
Escrow Agent's liability include any special, consequential,
punitive or indirect loss or damage which any party may incur or
suffer in connection with this Agreement. In no event shall the
Escrow Agent be responsible for any party's attorneys' fees. All
protections and indemnities benefitting the Escrow Agent (and any
other Indemnified Party) are cumulative of any other rights it (or
they) may have by law or otherwise, and shall survive the
termination of this Agreement or the resignation or removal of the
Escrow Agent. Nothing in this paragraph shall constitute a waiver
of any claim which Buyer, on the one hand, or MCC, on the other
hand, may have against the other for contributions arising from
their joint obligation to hold the Escrow Agent harmless hereunder.
3.4 Resignation. The Escrow Agent may resign at any
time upon giving the parties hereto 30 days' prior written notice;
in such event, the successor Escrow Agent shall be such person,
firm or corporation as shall be mutually selected by Buyer and MCC.
It is understood and agreed that such resignation shall not be
effective until a successor agrees to act hereunder; provided,
however, that if no successor is appointed and acting hereunder
within 30 days after such notice is given, the Escrow Agent may pay
and deliver the Escrow Deposit and all interest and other earnings
thereon to a court of competent jurisdiction. Upon making such
deposit (with notice thereof to Buyer and MCC), the Escrow Agent
shall have no further duties hereunder.
SECTION IV
LIABILITIES OF ESCROW AGENT
4.1 Limitations. The Escrow Agent shall be liable only
to accept, hold and deliver the Escrow Deposit and any interest and
other earnings thereon in accordance with the provisions of this
Agreement and any amendments hereto; provided, however, that the
Escrow Agent shall not incur any liability with respect to (a) any
action taken or omitted in good faith upon the advice of its
counsel given with respect to any questions relating to the duties
and responsibilities of the Escrow Agent under this Agreement, or
(b) any action taken or omitted in reliance upon any instrument
which the Escrow Agent shall in good faith believe to be genuine
(including the execution of such instrument, the identity or
authority of any person executing such instrument, its validity and
effectiveness, and the truth and accuracy of any information
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contained therein), to have been signed by a proper person or
persons and to conform to the provisions of this Agreement.
4.2 Collateral Agreements. The Escrow Agent shall not
be bound in any way by any contract or agreement between other
parties hereto, whether or not it has knowledge of any such
contract or agreement or of its terms or conditions. Notwith-
standing anything contained in this Agreement to the contrary, as
between Buyer and MCC in the event of any conflict between the
terms of this Agreement and the terms of the Purchase Agreement,
the terms of the Purchase Agreement shall control and any language
to the contrary in this Agreement shall not be deemed an amendment
of the terms of the Purchase Agreement.
4.3 Miscellaneous.
(a) Whenever under the terms hereof the time for
performance of any provision shall fall on a date which is not
a regular business day of the Escrow Agent, the performance
thereof on the next succeeding regular business day of the
Escrow Agent shall be deemed to be in full compliance.
(b) The Escrow Agent shall never be required to
post a bond in connection with the providing of its services
hereunder.
(c) No monies shall be disbursed by the Escrow
Agent until it has collected funds. The Escrow Agent shall
not be obligated to take any legal action to enforce payment
of any item deposited with it in escrow.
(d) The Escrow Agent may enter into business
dealings with any party to this Agreement, and such business
dealings shall not constitute a conflict of interest with the
responsibilities of the Escrow Agent hereunder.
(e) As security for all fees and expenses of the
Escrow Agent hereunder and any and all losses, claims,
damages, liabilities and expenses incurred in connection with
the acceptance of appointment hereunder or with the
performance of its obligations under this Agreement and to
secure the obligation of MCC and Buyer to indemnify the Escrow
Agent and the other Indemnified Parties as set forth herein,
the Escrow Agent is granted a security interest in, lien upon
and right of offset against the Escrow Deposit, which security
interest, lien and right of offset shall be prior to all other
security interests, liens or claims against the Escrow Deposit
or any part thereof.
(f) The Escrow Agent shall not be responsible or
liable for determination or payment of any taxes assessed
against the Escrow Deposit or the income therefrom nor for the
preparation or filing of any tax returns other than withholder
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required by statute or treaty. Each of MCC and Buyer agree to
provide the Escrow Agent with an IRS Form W-9 and any other
information necessary to perform any such required withholding
and the Escrow Agent shall be entitled to rely on such
information.
SECTION V
TERMINATION
5.1 Termination. This Agreement shall be terminated (a)
upon disbursement or release of the Escrow Deposit and all interest
and other earnings thereon by the Escrow Agent as provided in
Section 2.1 hereof, (b) by written mutual consent signed by all the
parties hereto, or (c) upon delivery of the Escrow Amount and all
interest and other earnings thereon into a court of competent
jurisdiction in accordance with this Agreement. This Agreement
shall not be otherwise terminated. The indemnification of the
Escrow Agent provided for in Section 3.3 hereof shall survive the
termination of this Agreement and the resignation of the Escrow
Agent.
SECTION VI
OTHER PROVISIONS
6.1 Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be
in writing and shall be deemed to have been duly given, made and
received only when delivered or telecopied, or five days after
mailed, registered or certified mail, postage prepaid addressed as
follows (or to such other person or address as the party to receive
such notice may have designated from time to time by notice in
writing pursuant hereto):
(a) If to MCC:
Marcus Cable Company, L.P.
2911 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Facsimile: (214) 526-2154
Attention: President
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With copies, given in the manner prescribed above,
to:
Marcus Cable Company, L.P.
2911 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Facsimile: (214) 526-2154
Attention: General Counsel
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
Facsimile: (214) 953-6503
Attention: Michael A. Saslaw
(b) If to Buyer:
Vulcan Cable, Inc.
110 110th Avenue Northeast
Bellevue, Wisconsin 98004
Facsimile: (425) 453-1985
Attention: William D. Savoy
With a copy, given in the manner prescribed above,
to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067-4276
Facsimile: (310) 203-7199
Attention: Alvin G. Segel
(c) If to Escrow Agent:
Chase Bank of Texas, National Association
2200 Ross Avenue
5th Floor
Dallas, Texas 75201
Facsimile: (214) 965-3577
Attention: Mr. Michael Scrivner
Any party may alter the address to which communications
or copies are to be sent by giving notice of such change of address
in conformity with the provisions of this paragraph for the giving
of notice.
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6.2 Binding Nature of Agreement; Assignment. This
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. No
party may assign or transfer its rights or obligations under this
Agreement without the prior written consent of the other party
hereto.
6.3 Severability. If any provision of this Agreement is
held illegal, invalid or unenforceable, such illegal, invalid or
unenforceable provision shall not affect any other provision
hereof. Such provision and the remainder of this Agreement shall,
in such circumstances, be deemed modified to the extent necessary
to render enforceable the remaining provisions hereof.
6.4 Expenses. Except as otherwise expressly provided
herein, each of Buyer and MCC shall pay its own expenses incident
to this Agreement and the transactions contemplated hereunder,
including all legal and accounting fees and disbursements, and
costs of obtaining all necessary respective consents.
6.5 Section Headings. The section headings in this
Agreement are for convenience only; they form no part of this
Agreement and shall not affect its interpretation.
6.6 Controlling Law.
(a) This Agreement and all questions relating to
its validity, interpretation, performance and enforcement
(including, without limitation, provisions concerning
limitations of actions), shall be governed by and construed in
accordance with the internal laws (without giving effect to
principles of conflict of laws) of the State of Texas, and
without the aid of any canon, custom or rule of law requiring
construction against the draftsman.
(b) Each of MCC, Buyer and Escrow Agent agrees that
any action or proceeding relating to this Agreement may be
brought in any Federal or state court sitting in the County of
Dallas, State of Texas in the United States of America and
each of them (i) consents to jurisdiction of each of those
courts in any such action or proceeding, (ii) agrees not to
seek to have the venue of any such action or proceeding
changed because of inconvenience of the forum or otherwise
(except that nothing in this clause will prevent a party from
removing an action from a state court sitting in the State of
Texas to a Federal court sitting in that state) and (iii)
agrees that process in any such action or proceeding may be
served by registered mail or in nay other manner permitted by
the rules of the court in which the action or proceeding is
brought.
6.7 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be
deemed to be an original and all of which shall together constitute
one and the same instrument.
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6.8 Miscellaneous. This Agreement shall not be amended
except by written instrument executed by MCC, Buyer and Escrow
Agent. This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter addressed herein,
and there are no understandings or agreements, conditions or
qualifications relative to this Agreement which are not fully
covered in this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized
partners or officers as of the date first above written.
MARCUS CABLE COMPANY, L.P.
By: Marcus Cable Properties, L.P.,
its general partner
By: Marcus Cable Properties, Inc.,
its general partner
By:
Name:
Title:
BUYER:
VULCAN CABLE, INC.
By:
William D. Savoy
President
ESCROW AGENT:
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION
By:
Name:
Title:
<PAGE>
EXHIBIT A
SCHEDULE OF FEES
[TO COME]
<PAGE>
EXHIBIT B
OPINION OF BAKER & BOTTS, L.L.P.
(Capitalized terms not otherwise defined herein have the
meanings ascribed to them in the Purchase Agreement)
Subject to normal qualifiers and exceptions:
1. Each of MCPLP, MCC and Marcus Cable Operating Company, L.P.
("MCOC") (collectively the "Entities"), was, at the date of the
execution and delivery of the Purchase Agreement, and at the date
hereof is a partnership except as respects MCOC at the Closing
Date, a limited liability company duly organized and validly
existing under the laws of the State of Delaware, has the entity
power and authority to own and operate its property and assets and
to carry on its business as currently conducted and is duly
qualified as a foreign partnership, except as respects MCOC at the
Closing Date, a limited liability company, in each jurisdiction in
which its failure to so qualify might reasonably be expected to
have a Material Adverse Effect.
2. MCPI is a corporation duly organized and validly existing
under the laws of the State of Delaware, has the corporate power
and authority to own and operate its property and assets and to
carry on its business as currently conducted and is duly qualified
as a foreign corporation in each jurisdiction in which its failure
to so qualify might reasonably be expected to have a Material
Adverse Effect. MCPI has made a valid S-corporation election and
has continued to qualify as an S-corporation through the date
hereof.
3. Each Entity has all requisite entity power to enter into the
Purchase Agreement, to carry out and perform all of its obligations
under the Purchase Agreement and to consummate the transactions
contemplated thereby.
4. MCPI has all requisite corporate power to enter into the
Purchase Agreement, to carry out and perform all of its obligations
under the Purchase Agreement and to consummate the transactions
contemplated thereby.
5. All necessary entity action on the part of each Entity to
authorize the execution, delivery and performance of the Purchase
Agreement on behalf of such Entity and the consummation of the
transactions contemplated thereby on behalf of such Entity has been
taken.
6. All necessary corporate action on the part of MCPI to
authorize the execution delivery and performance of the Purchase
Agreement on behalf of MCPI and the consummation of the
transactions contemplated thereby on behalf of MCPI has been taken.
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7. The execution and performance by MCPI and the Entities of the
Purchase Agreement and the performance of their respective
obligations thereunder will not conflict with, violate or
constitute a breach by any of them of, or constitute a breach or
default under, (a) in the case of an Entity, the partnership
agreement or limited liability company operating agreement, as
applicable, of such Entity, (b) in the case of MCPI, the
certificate of incorporation or by-laws of MCPI, (c) any material
statute, rule or regulation of the State of Texas or the general
corporate, partnership or limited liability company law of the
State of Delaware (excluding Franchise and FCC License matters, as
to which we express no opinion), or (d) to our knowledge, any
Material Agreement of the Company Group (excluding Franchises, as
to which we express no opinion).
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EXHIBIT C
OPINION OF IRELL & MANELLA LLP
(Capitalized terms not otherwise defined herein have the
meanings ascribed to them in the Purchase Agreement)
Subject to normal qualifiers and exceptions:
1. The Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Washington.
2. The Buyer has all requisite corporate power to enter into the
Purchase Agreement, to carry out and perform all of its obligations
under the Purchase Agreement and to consummate the transactions
contemplated thereby.
3. All necessary corporate action on the part of the Buyer to
authorize the execution, delivery and performance of the Purchase
Agreement on behalf of the Buyer and the consummation of the
transactions contemplated thereby on behalf of the Buyer has been
taken.
4. The execution and performance by the Buyer of the Purchase
Agreement and the performance of its obligations thereunder will
not conflict with, violate or constitute a breach by it of, or
constitute a breach or default under (a) the certificate of
incorporation or bylaws of the Buyer, (b) any material statute,
rule or regulation of the State of California (excluding Franchise
and FCC License matters, as to which we express no opinion) or (d)
to our knowledge, any material agreement of the Buyer.
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