UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D/A
(Amendment No. 3)
Under the Securities Exchange Act of 1934
NTL Incorporated
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
629407107 (Common Stock)
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(CUSIP Number)
France Telecom S.A. Compagnie Generale des Communications
Jean-Louis Vinciguerra (COGECOM) S.A.
Senior Executive Vice President Pierre Hilaire
6 place d'Alleray Chairman of the Board of Directors
75505 Paris Cedex 15 6 place d'Alleray
France 75505 Paris Cedex 15
(33-1) 44-44-01-59 France
(33-1) 44-44-18-62
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
Copy to:
Alfred J. Ross, Jr.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telephone: (212) 848-4000
February 17, 2000
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(Date of Event which requires Filing of this Statement)
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If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box |_|.
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 629407107
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1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
France Telecom S.A.
IRS Identification Number: N/A
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2. Check the Appropriate Box if a Member of a Group
(a) |_|
(b) |_|
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3. SEC Use Only
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4. Source of Funds (See Instructions)
WC
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e) |_|
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6. Citizenship or Place of Organization
France
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7. Sole Voting Power 0
Number of Shares -----------------------------------------------------
8. Beneficially Shared Voting Power 20,148,341
Owned by Each -----------------------------------------------------
9. Reporting Person Sole Dispositive Power 0
With -----------------------------------------------------
10. Shared Dispositive Power 20,148,341
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
20,148,341 shares of Common Stock
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) |_|
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13. Percent of Class Represented by Amount in Row (11)
13.16% of the aggregate number of all outstanding shares of Common
Stock
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14. Type of Reporting Person (See Instructions)
CO
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CUSIP No. 629407107
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1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Compagnie Generale des Communications (COGECOM) S.A.
IRS Identification Number: N/A
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2. Check the Appropriate Box if a Member of a Group
(a) |_|
(b) |_|
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3. SEC Use Only
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4. Source of Funds (See Instructions)
WC
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e) |_|
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6. Citizenship or Place of Organization
France
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7. Sole Voting Power 0
Number of Shares -----------------------------------------------------
8. Beneficially Shared Voting Power 20,148,341
Owned by Each -----------------------------------------------------
9. Reporting Person Sole Dispositive Power 0
With -----------------------------------------------------
10. Shared Dispositive Power 20,148,341
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
20,148,341 shares of Common Stock
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) |_|
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13. Percent of Class Represented by Amount in Row (11)
13.16% of the aggregate number of all outstanding shares of Common
Stock
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14. Type of Reporting Person (See Instructions)
CO
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This Amendment No. 3 (the "Amendment") amends and supplements the
joint statement on Schedule 13D filed on August 25, 1999, and previously amended
and supplemented by Amendment No. 1 on October 26, 1999, and Amendment No.2 on
January 31, 2000 (as amended and supplemented, the "Schedule 13D"), of France
Telecom, a societe anonyme organized under the laws of France ("FT") and
Compagnie Generale des Communications (COGECOM), a societe anonyme organized
under the laws of France and a wholly owned subsidiary of FT ("COGECOM"), with
respect to the common stock, par value $0.01 per share (the "Common Stock"), of
NTL Incorporated, a Delaware corporation with its principal executive offices at
110 East 59th Street, New York, NY 10022 (the "Issuer"). All capitalized terms
used in this Amendment that are not otherwise defined herein have the meanings
ascribed to such terms in the Schedule 13D.
FT and COGECOM are filing this Amendment in respect of FT entering
into (i) a Purchase Agreement (the "Preferred Stock Purchase Agreement"), dated
as of February 17, 2000, by and among Banque Nationale de Paris, Credit Agricole
Indosuez, Deutsche Bank AG Paris Branch and Westdeutsche Landesbank Girozentrale
Paris Branch (collectively the "Banks"), FT and the Issuer; and (ii) a Put and
Call Option Agreement (the "Option Agreement"), dated as of February 17, 2000,
among the Banks and FT.
Item 1. Security and Issuer
No change.
Item 2. Identity and Background
No change
Item 3. Source and Amount of Funds or Other Consideration
Item 3 is hereby amended by incorporating by reference in their
entirety the paragraphs set forth in item 4 below.
Item 4. Purpose of Transaction
Item 4 is hereby amended by adding the following paragraphs:
The Banks, FT and the Issuer entered into the Preferred Stock
Purchase Agreement pursuant to which the Banks and FT agreed to purchase from
the Issuer 1,850,000 shares of 5% Cumulative Preferred Stock, Series A ("Series
A 5% Cumulative Preferred Stock"), for aggregate consideration of
$1,850,000,000. FT is obligated under the Preferred Stock Purchase Agreement to
purchase 750,000 shares of Series A 5% Cumulative Preferred Stock. The issuance
of the Series A 5% Cumulative Preferred Stock is conditional, among other
things, upon completion of the Issuer's acquisition from Cablecom Holding AG, a
company organized under the laws of Switzerland, of certain assets. FT has the
right to assign
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its obligation to purchase 750,000 shares of Series A 5% Cumulative Preferred
Stock under the Preferred Stock Purchase Agreement to one or more financial
institutions (the "Financial Institutions"), it being contemplated that such
Financial Institutions will become parties to the Option Agreement. A copy of
the Preferred Stock Purchase Agreement is attached hereto as Exhibit 10.6 and
incorporated by reference herein. A copy of the Certificate of Designation of
the Series A 5% Cumulative Preferred Stock is attached hereto as Exhibit 10.7
and incorporated by reference herein.
The Banks and FT have also entered into the Option Agreement
pursuant to which FT has the option of requiring the Banks and the Financial
Institutions, if any, to sell to FT the shares of Series A 5% Cumulative
Preferred Stock acquired by the Banks and the Financial Institutions, if any,
pursuant to the Preferred Stock Purchase Agreement (the "Bank Shares") and the
Banks have the option of requiring FT to purchase from the Banks and the
Financial Institutions, if any, the Bank Shares after two years from issuance of
Series A 5% Cumulative Preferred Stock. The Banks and the Financial
Institutions, if any, also have the right to require FT to purchase the Bank
Shares upon the occurrence of certain events of default. A copy of the Option
Agreement is attached hereto as Exhibit 10.8 and incorporated by reference
herein.
The Series A 5% Cumulative Preferred Stock, once issued, will have
voting rights only in certain limited circumstances and will be mandatorily
redeemable in cash after two years from issue at the option of the holders. In
addition, the holders of the Series A 5% Cumulative Preferred Stock (other than
holders which are commercial banks) would after an interim period be able to
elect to exchange such Series A 5% Cumulative Preferred Stock, subject to
certain conditions being satisfied, for up to a 50% interest in a new subsidiary
of NTL ("Eurotel") which is yet to be established and which will own certain or
all of the Issuer's then existing broadband communications, broadcast and cable
television interests in Continental Europe outside of France. The Issuer and FT
have agreed that if FT becomes a holder of the Series A 5% Cumulative Preferred
Stock and exercises the right to exchange such Series A 5% Cumulative Preferred
Stock for shares of Eurotel representing at least 49% interest in Eurotel, the
Issuer and FT will enter into a shareholders' agreement that will provide FT
with certain governance rights with respect to Eurotel. Should all of the Series
A 5% Cumulative Preferred Stock not be exchanged for shares of Eurotel, any
remaining shares that shall not have been exchanged may either be redeemed for
cash by NTL at NTL's option or, after a period of six months following the
consummation of the exchange, be convertible into Common Stock.
Item 5. Interest in Securities of the Issuer
Item 5 is hereby amended and restated as follows:
(a) On February 3, 2000, the Issuer effected a second
five-for-four stock split through a stock dividend (the "Second Stock Split").
The number of shares reflected herein is adjusted for the Second Stock Split.
After giving effect to the Second Stock Split and based on
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141,451,700 shares of Common Stock outstanding as of February 16, 2000, a figure
provided to FT and GOGECOM by the Issuer, FT and COGECOM on the date hereof were
the beneficial owners of 20,148,341 shares of Common Stock (assuming conversion
of the Series A Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and the 5 3/4% Convertible Notes), which represents
approximately 13.16% of the Common Stock outstanding.
Item 6. Contracts, Arrangements, Understanding of Relationships with
Respect to Securities of the Issuer
Item 6 is hereby amended by incorporating by reference in their
entirety the paragraphs set forth in item 4 above.
Item 7. Material to be Filed as Exhibits
Item 7 is hereby amended to include the following exhibits,
attached hereto:
Exhibit 10.6
Preferred Stock Purchase Agreement, dated February 17, 2000, by
and among the Banks, FT and the Issuer.
Exhibit 10.7
Form of Certificate of Designation of the Voting Powers,
Designation, Preferences and Relative, Participating, Optional or other Special
Rights and Qualifications, Limitations and Restrictions of the 5% Cumulative
Participating Convertible Preferred Stock, Series A of the Issuer.
Exhibit 10.8
Put and Call Option Agreement, dated February 17, 2000, among the
Banks and FT.
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After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 22, 2000
France Telecom S.A.
By: /s/ Jean-Louis Vinciguerra
------------------------------------
Name: Jean-Louis Vinciguerra
Title: Senior Executive Vice
President
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<PAGE>
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 22, 2000
Compagnie Generale des Communications
(COGECOM) S.A.
By: /s/ Pierre Hilaire
------------------------------------
Name: Pierre Hilaire
Title: Chairman of the Board of
Directors
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NTL Incorporated
PURCHASE AGREEMENT
---------------------------
February 17, 2000
Banque Nationale de Paris
16, Boulevard des Italiens
75009 Paris
France
Credit Agricole Indosuez
9 Quai du President Paul Doumer
92400 Courbevoie
France
Deutsche Bank AG
Paris Branch
3, Avenue de Friedland
75008 Paris
France
Westdeutsche Landesbank Girozentrale
Paris Branch
15, Avenue de Friedland
75008 Paris
France
France Telecom
6, Place d'Alleray
75505 Paris Cedex 15
France
Ladies and Gentlemen:
NTL Incorporated, a Delaware corporation ("NTL"), proposes, subject to
the terms and conditions set forth herein (including Attachment I and Exhibits
A, B, C, D,
<PAGE>
E and F hereto), to issue and sell to Banque Nationale de Paris, Credit Agricole
Indosuez, Deutsche Bank A.G., Westdeutsche Landesbank Girozentrale and France
Telecom (each, a "Purchaser" and, collectively, the "Purchasers"), 1,850,000
shares of 5% Cumulative Preferred Stock of NTL having an aggregate liquidation
preference of $1.85 billion (the "Preferred Shares") and having the terms set
forth in the Certificate of Designation at tached hereto as Attachment I (the
"Certificate of Designation").
1. NTL represents and warrants to, and agrees with, the Purchasers
that:
(a) NTL's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 and NTL's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999 have been made available to the Purchasers in connection with
the offering of the Preferred Shares. All documents filed by NTL or its
subsidiaries with the United States Securities and Exchange Commission (the
"Commission") pursuant to the United States Securities Exchange Act of 1934, as
amended (the "Exchange Act"), are referred to herein as the "Exchange Act
Reports". The Exchange Act Reports, when they were filed with the Commission,
complied in all material respects with the requirements of the Exchange Act and
the applicable rules and regulations of the Commission thereunder. The Exchange
Act Reports did not, as of their respective dates, contain any untrue statement
of material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. NTL and its
subsidiaries have timely filed all reports and registration statements and made
all filings required to be made with the Commission under the Exchange Act, the
United States Securities Act of 1933, as amended (the "Securities Act"), or the
applicable rules and regulations of the Commission thereunder;
(b) There has not been any material adverse change in, or any ad-
verse development which materially affects, the business, assets, properties,
financial condition or results of operations of NTL and its subsidiaries taken
as a whole since December 31, 1998; and, since December 31, 1998, there has not
been any material change in the capital stock, long-term debt or any other
liability of NTL or any of its subsidiaries not reported in an Exchange Act
Report or any material adverse change or any development involving a prospective
material adverse change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of opera tions of NTL and
its subsidiaries taken as a whole; provided, however, that any change resulting
from the proposed acquisition of Cablecom Holdings AG and its associated
businesses and assets (the "Strategic Acquisition") shall not be deemed a
material change for purposes of this Section 1(b);
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<PAGE>
(c) NTL has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its business as
described in the Exchange Act Reports, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties, or
conducts any business, or in which such qualification is necessary, except
where the failure to be so qualified in any such jurisdiction does not or would
not subject NTL to any material liability or disability; and each significant
subsidiary (as defined in Regulation S-X of the Commission, each a "Significant
Subsidiary") of NTL has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with corporate power and authority to own its properties and
conduct its business as it has been currently conducted, and has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, or in which such qualification is
nec essary, except where the failure to be so qualified in any such jurisdiction
does not or would not subject such Significant Subsidiary to any material
liability or disability;
(d) NTL has an authorized, issued and outstanding capitalization
as set forth in the attached Exhibit A, and all of the issued shares of capital
stock of NTL have been duly and validly authorized and issued and are fully paid
and non-assessable; and all of the issued shares of capital stock of each
Significant Subsidiary of NTL have been duly and validly authorized and issued,
are fully paid and non-assessable and (except for directors' qualifying shares)
are owned directly or indirectly by NTL, free and clear of all liens,
encumbrances, equities or claims;
(e) The Preferred Shares, including any dividends payable by NTL
with respect to the Preferred Shares in the form of additional shares of 5%
Cumulative Preferred Stock (the "Dividend Shares"), have been duly and validly
authorized by NTL, and, when issued and delivered (in the case of the Preferred
Shares, against payment therefor as provided herein), will be duly and validly
issued and fully paid and non-assessable, and the issuance of the Preferred
Shares and the Dividend Shares is not subject to preemptive or other similar
rights;
(f) The execution and delivery of this Purchase Agreement and the
consummation of the transactions contemplated herein (including, without
limitation, any redemption payments under paragraph 6(a) of the Certificate of
Designation) have been duly authorized by all necessary corporate action on the
part of NTL, and except with respect to consummation of the exchange provided
for in Section 8 of the Certificate of Designation (the "Exchange"), as to which
paragraph 1(g) is applicable, when executed by NTL and the Purchasers will not
conflict with or result in any breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation or
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imposition of any security interest, lien, charge or encumbrance upon any
property or assets of NTL or its Significant Subsidiaries pursuant to any
indenture, mortgage, deed of trust, loan agreement, lease, contract or other
agreement or instrument to which NTL or any of its Significant Subsidiaries is a
party or by which NTL or any of its Significant Subsidiaries may be bound or to
which any of the property or assets of NTL or any of its Significant
Subsidiaries is subject (an "Agreement"), nor will such action or, assuming
satisfaction of all conditions set forth in paragraph 8(b) of the Certificate of
Designation, the Exchange result in any violation of the provisions of the
Restated Certificate of Incorporation or the By-laws of NTL or of any of its
Significant Subsidiaries or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over NTL or any of its
Significant Subsidiaries or any of their properties or any of the federal and
cantonal laws of the Swiss Confederation or the laws of France; and other than
the filing of the Certificate of Designation with the Secretary of State of the
State of Delaware, no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body or under
the federal and cantonal laws of the Swiss Confederation or the laws of France
is required for the issuance and sale of the Preferred Shares and any dividends
paid with respect to the Preferred Shares or the consummation by NTL of the
transactions contemplated with respect to, or in connection with, the Strategic
Acquisition, this Purchase Agreement and the Put and Call Option Agreement (the
"Option Agreement"), by and among the Purchasers;
(g) No Agreement exists as of the date hereof which would be
breached or violated by consummation of the Exchange, or with respect to which
con summation of the Exchange would give rise to a right to terminate or
otherwise cause a loss of any material right thereunder, other than certain
Agreements with respect to which the foregoing representation will be true if
NTL retains more than 50% ownership of the assets that are the subject of such
Agreements.
(h) This Purchase Agreement has been duly authorized, executed and
delivered by NTL and constitutes valid and legally binding obligations of NTL
enforceable against NTL in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, fraudulent transfer,
moratorium and similar laws affecting the rights of creditors generally;
(i) Neither NTL nor any of its Significant Subsidiaries is in
violation of its Certificate of Incorporation or By-laws (or equivalent
documents) or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease, contract or other agreement or
instrument to which it is a party or by which it or any of its properties may be
bound;
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(j) There are no claims, actions, suits, arbitration, proceedings
or investigations pending against NTL or any of its Significant Subsidiaries or
of which any property of NTL or any of its Significant Subsidiaries is the
subject which, if determined aversely to NTL or any of its Significant
Subsidiaries, would individually or in the aggregate have a material adverse
effect on the current or future financial condition, shareholder's equity or
results of operations of NTL and its subsidiaries taken as a whole; and, to the
best of NTL's knowledge, no such claims, actions, suits, arbitration,
proceedings or investigations are threatened or contemplated by governmental
authorities or threatened or contemplated by others;
(k) The audited consolidated balance sheet of NTL and its subsid-
iaries for the fiscal years ended as of December 31, 1996, December 31, 1997,
and December 31, 1998, and the related audited consolidated statements of
income, retained earnings, stockholders' equity and cash flow of NTL and its
subsidiaries, together with all related notes and schedules thereto, and the
unaudited consolidated balance sheet of NTL and its subsidiaries as of September
30, 1999, and the related unaudited consolidated statements of income, retained
earnings, stockholders' equity and cash flow of NTL and its subsidiaries
together with all related notes and schedules thereto (the "Interim Financial
Statements"), all of which are contained in the respective Exchange Act Reports
(i) were prepared in accordance with the books of account and other financial
records of NTL and its subsidiaries, (ii) present fairly the consolidated
financial condition and results of operations of NTL and its subsidiaries as of
the dates thereof or for the periods covered thereby, (iii) have been prepared
in accordance with U.S. generally accepted accounting principles and practices
applied on a basis consistent with the past practices of NTL and its
subsidiaries and (iv) in case of the Interim Financial Statements, include all
adjustments (consisting only of normal recurring accruals) that are necessary
for a fair presentation of the consolidated financial condition and the results
of the operations of NTL and its subsidiaries as of the dates thereof or for the
periods covered thereby;
(l) The execution of, and consummation of the transactions con-
templated in, this Purchase Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) (i) constitute an event under
any Benefit Plan, Employee Agreement, trust or loan that will or may result in
any payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation to
fund benefits with respect to any current, former or retired employee, officer,
consultant, independent contractor, agent or director of NTL or any of its
subsidiaries (an "Employee"); or (ii) result in the triggering or imposition of
any restrictions or limitations on the right of NTL, any of its subsidiaries or
the Purchasers to amend or terminate any Benefit Plan. No payment or benefit
which will or may be made by NTL, any of its subsidiaries, the Purchasers or any
of their respective affiliates with respect to any Employee will be
characterized as an "excess parachute payment," within
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the meaning of Section 280G(b)(1) of the Internal Revenue Code of 1986, as
amended through the date hereof (the "Code").
(m) Each Benefit Plan (other than any Benefit Plan that is a
multiemployer plan within the meaning of Section 3(37) or 4001(a)(3) (a
"Multiemployer Plan") of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) is in substantial compliance with applicable law and has been
administered and operated in all material respects in accordance with its terms;
(2) each Benefit Plan (other than any Multiemployer Plan) which is intended to
be "qualified," within the meaning of Section 401(a) of the Code, has received a
favorable determination letter from the Internal Revenue Service and, to the
knowledge of NTL, no event has occurred and no condition exists which could
reasonably be expected to result in the revocation of any such determination;
(3) the actuarial present value of the accumulated plan benefits (whether or not
vested) under any Benefit Plan covered by Title IV of ERISA (other than any
Multiemployer Plan) as of the close of its most recent plan year did not exceed
the fair value of the assets allocable thereto; (4) no Benefit Plan covered by
Title IV of ERISA has been terminated and no proceedings have been instituted to
terminate or appoint a trustee to administer any such plan; (5) no "reportable
event" (as defined in Section 4043 of ERISA) has occurred with respect to any
Benefit Plan covered by Title IV of ERISA; (6) no Benefit Plan (other than any
Multiemployer Plan) subject to Section 412 of the Code or Section 302 of ERISA
has incurred any accumulated funding deficiency within the meaning of Section
412 of the Code or Section 703 of ERISA, or obtained a waiver of any minimum
funding standard or an extension of any amortization period under Section 412 of
the Code or Section 303 or 304 of ERISA; (7) NTL and each ERISA Affiliate have
made all contributions to each Multiemployer Plan required by the terms of each
such Multiemployer Plan or any collectively bargained agreement; (8) neither NTL
nor any ERISA Affiliate has incurred any unsatisfied withdrawal liability under
Part I of Subtitle E of Title IV of ERISA to any Multiemployer Plan and neither
NTL nor any ERISA Affiliate would be subject to any material withdrawal
liability if, as of the close of the most recent fiscal year of any such plan
ended prior to the date hereof, NTL or any such ERISA Affiliate were to engage
in a complete withdrawal (as defined in Section 4203 of ERISA) or potential
withdrawal (as defined in Section 4205 of ERISA) from any such plan; (9) neither
NTL nor any of its subsidiaries, nor, to the knowledge of NTL, any other
"disqualified person" or "party in interest" (as defined in Section 4975(e)(2)
of the Code and Section 3(14) of ERISA, respectively) has engaged in any
transactions in connection with any benefit Plan that could reasonably be
expected to result in the imposition of a material penalty pursuant to Section
502 of ERISA, material damages pursuant to Section 409 of ERISA or a material
tax pursuant to Section 4975 of the Code; (10) no Benefit Plan provides for
post-employment or retiree welfare benefits, except to the extent required by
Part 6 of Subtitle B of Title I of ERISA or Section 4980B of the Code; and (11)
no claim or action has been made or commenced or, to the knowl edge of NTL,
threatened, with respect to any Benefit Plan (other than routine
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<PAGE>
claims for benefits payable in the ordinary course, and appeals of such denied
claims) which could result in a material liability of NTL or any subsidiary
thereof.
For the purposes of this Section 1(m), "Benefit Plan" means each
plan, program, policy payroll practice, contract, agreement or other arrangement
provid ing for compensation, retirement benefits, severance, termination pay,
performance awards, stock or stock-related awards, fringe benefits or other
employee benefits of any kind, whether formal or informal, funded or unfunded,
written or oral and whether or not legally binding, including, without
limitation, each "employee benefit plan", within the meaning of Section 3(3) of
ERISA and each Multiemployer Plan, which plan, program, policy, payroll
practice, contract, agreement or arrangement is maintained by NTL, any of its
subsidiaries or any ERISA Affiliate or to which NTL, any such subsidiary or any
ERISA Affiliate contributes (or has any obligation to contribute) or is a party;
"Employee Agreement" means each management, employment, severance, consulting,
non-compete, confidentiality, or similar agreement or contract between NTL or
any ERISA Affiliate and any Employee pursuant to which NTL has or may have any
material liability contin gent or otherwise; "ERISA Affiliate" means each
business or entity which is or was a member of a "controlled group of
corporations", under "common control" or an "affili ated service group" with NTL
within the meaning of Section 414(b), (c) or (m) of the Code, or required to be
aggregated with NTL under Section 414(o) of the Code or is under "common
control" with NTL, within the meaning of Section 4001(a)(14) of ERISA;
(n) NTL is not and has not at any time during the prior five years
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code;
(o) Each of NTL and its subsidiaries has timely filed or caused to
be timely filed (including pursuant to any valid extensions of time for filing)
with the appropriate taxing authority, all material returns, statements, forms,
and reports for taxes (the "Returns") required to be filed by or with respect to
the income, properties or opera tions of NTL and/or any of its subsidiaries. The
returns accurately reflect in all material respects all liability for taxes of
NTL and its subsidiaries as a whole for the periods covered thereby. NTL and
each of its subsidiaries have paid all material taxes payable by them which have
become due other than those contested in good faith and for which adequate
reserves have been established in accordance with generally accepted account ing
principles. There is no material action, suit, proceeding, investigation, audit
or claim now pending or, to the best knowledge of NTL or any of its
subsidiaries, threatened by any authority regarding any taxes relating to NTL or
any of its subsidiaries. As of the Time of Delivery, neither NTL nor any of its
subsidiaries has entered into an agreement or waiver or been requested to enter
into an agreement or waiver extending any statute of limitations relating to the
payment or collection of taxes of NTL or any of
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its subsidiaries, or is aware of any circumstances that would cause the taxable
years or other taxable periods of NTL or any of its subsidiaries not to be
subject to the normally applicable statute of limitations which agreement or
waiver would have a material adverse effect on NTL. Neither NTL nor any of its
subsidiaries has provided, with respect to themselves or property held by them,
any consent under Section 341 of the Code. None of NTL or any of its
subsidiaries has incurred or will incur, any material tax liability in
connection with the Strategic Acquisition or any other transactions contemplated
hereby (it being under stood that the representation contained in this sentence
does not cover any future tax liabilities of NTL or any of its subsidiaries
arising as a result of the operation of their businesses in the ordinary course
of business);
(p) No stamp, transfer, sales and use, value added, documentary,
registration, issuance or similar tax, assessment or other governmental charge
will be imposed under United States federal law or New York or Delaware state
law on the sale or delivery of the Preferred Shares, or on the delivery of the
Dividend Shares, as applicable, pursuant to this Purchase Agreement or the
Option Agreement or upon the execution, delivery or performance of this Purchase
Agreement or the Option Agreement;
(q) It is not, and will not be, necessary in connection with the
offer, sale or delivery of the Preferred Shares and the Dividend Shares to the
Purchasers in the manner contemplated in this Purchase Agreement to register
either the Preferred Shares or the Dividend Shares under the Securities Act;
(r) NTL is not, and upon the issuance and sale of the Preferred
Shares and, as applicable, the issuance of the Dividend Shares, as contemplated
herein will not be, an "investment company" or an entity "controlled" by an
"investment company" (as such terms are defined in the Investment Company Act
of 1940, as amended);
(s) When issued, the Preferred Shares and the Dividend Shares will
be eligible for resale pursuant to Rule 144A(d)(3) of the Securities Act and
will not be, on or on any date following the Time of Delivery, of the same class
of securities (within the meaning of Rule 144A(d)(3) under the Securities Act)
listed on a U.S. national securities exchange registered under Section 6 of the
Exchange Act or quoted in a U.S. automated inter-dealer quotation system (as
such term is used in the rules under the Exchange Act);
(t) None of NTL, any of its affiliates, or any person acting on
its or their behalf has offered or sold or will offer or sell any Preferred
Shares or Dividend Shares by means of any general solicitation or general
advertising (within the meaning of Rule 502(c) under the Securities Act);
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<PAGE>
(u) None of NTL, any of its affiliates, or any person acting on
its or their behalf, has engaged, directly or indirectly, in any action for the
purpose of, or which might reasonably be expected to cause or result in: (1)
creating actual, or apparent, active trading in either the Preferred Shares or
the Dividend Shares, as applicable, or any other securities exchangeable for, or
representing the right to receive, Preferred Shares or Dividend Shares or (2)
stabilization or manipulation of the price of any security of NTL to facilitate
the sale or resale of the Preferred Shares or the Dividend Shares, as applica-
ble; and
(v) (i) No action has been or will be taken in any jurisdiction by
NTL that would permit a public offering of either the Preferred Shares or the
Dividend Shares, or distribution of any document issued in connection with the
proposed resale of the Preferred Shares or the Dividend Shares, as applicable,
or any other offering material, in any country or jurisdiction where action for
that purpose is required; and (ii) NTL will comply with all applicable
securities laws and regulations in each jurisdiction in which they, directly or
indirectly, purchase, offer, sell or deliver the Preferred Shares or the
Dividend Shares, as applicable, or distribute any offering material.
2. Subject to the terms and conditions set forth herein, NTL shall
issue and sell to the Purchasers, and the Purchasers agree to purchase from NTL
the Preferred Shares at an aggregate purchase price of $1.85 billion (the
"Purchase Price"). The aggregate number of Preferred Shares purchased by each
Purchaser pursuant to this Purchase Agreement and the portion of the Purchase
Price payable by each Purchaser in respect of such Preferred Shares are set
forth in Exhibit B hereto. Each of the Purchasers, severally and not jointly,
shall purchase such number of shares of Preferred Shares set opposite that
Purchaser's name on Exhibit B hereto for the consideration set forth on such
Exhibit, and there shall be no obligation to purchase a number of Preferred
Shares in excess of such number of Preferred Shares.
3. (a) Each of the Purchasers hereby acknowledges and agrees with NTL
that the Preferred Shares have not been, and are not required to be, registered
under the Securities Act and the Preferred Shares may not be offered or sold
except pursuant to registration or to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. Each of the
Purchasers hereby acknowledges and agrees with NTL that, upon issuance of the
Dividend Shares, the Dividend Shares will not have been, and will not be
required to be, registered under the Securities Act and may not be offered or
sold except pursuant to registration or to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
(b) Each of the Purchasers hereby represents that it understands
that the purchase of the Preferred Shares involves substantial risk. Each of the
Purchasers hereby represents that it has experience as an investor in securities
of companies and
9
<PAGE>
acknowledges that it is able to fend for itself, can bear the economic risk of
its investment in the Preferred Shares and has such knowledge and experience in
financial or business matters, that it is capable of evaluating the merits and
risks of this investment in the Preferred Shares and protecting its own
interests in connection with this investment. Each of the Purchasers hereby
represents that it is an "accredited investor" as defined in Rule 501(a)
promulgated under the Securities Act.
(c) With regard to the purchase of the Preferred Shares by France
Telecom from the each of the Purchasers (other than France Telecom), as
contemplated in the Option Agreement, France Telecom agrees and covenants that
it will be a "qualified institutional buyer" as defined in Rule 144A under the
Securities Act, on the date of such resale.
(d) Each of the Purchasers hereby represents and covenants that,
except as contemplated in this Purchase Agreement and in the Option Agreement,
it is acquiring the Preferred Shares for investment for its own account, not as
a nominee or agent, and not with a view of the public resale or distribution
thereof within the meaning of the Securities Act. Each of the Purchasers further
agrees and covenants that it has not entered and will not enter into any
contract or other agreement with respect to the distribution or delivery of the
Preferred Shares or Dividend Shares, other than (i) pursuant to Rule 144 under
the Securities Act, (ii) pursuant to any transaction that does not require
registration under the Securities Act, (iii) as contemplated in this Agreement
or the Op tion Agreement, or (iv) with the prior written consent of NTL.
(e) Each of the Purchasers agrees and acknowledges that, when
issued, the Preferred Shares and the Dividend Shares will be eligible for resale
pursuant to Rule 144A(d)(3) of the Securities Act and will not be, on or on any
date following the Time of Delivery, of the same class of securities (within the
meaning of Rule 144A(d)(3) under the Securities Act) listed on a U.S. national
securities exchange registered under Section 6 of the Exchange Act or quoted in
a U.S. automated inter-dealer quotation system (as such term is used in the
rules under the Exchange Act); and
(f) Each of the Purchasers agrees and covenants that neither it,
nor any of its respective affiliates, nor any person acting on its or their
behalf, will (i) solicit any offers to buy, or offer, sell or deliver any of the
Preferred Shares or the Dividend Shares, as applicable, to any person or (ii)
distribute or furnish any offering material relating to the proposed resale of
the Preferred Shares or the Dividend Shares, as applicable, provided that
France Telecom shall have the right to communicate with financial institutions
(and take such other actions as may be reasonably necessary) for purposes of
assigning France Telecom's obligations in accordance with Section 12, as long as
such communications are conducted in a manner that would not require the
Preferred Shares or the Dividend Shares to be registered under the Securities
Act.
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<PAGE>
(g) Each of the Purchasers agrees and covenants that the
certificates for the Preferred Shares and the Dividend Shares shall bear the
legend set forth in paragraph 11(b) of the Certificate of Designation.
(h) Each of the Purchasers (other than France Telecom) acknowl-
edges that it is not a Qualified Holder as defined in the Certificate of
Designation and that it does not have a right to exchange the Preferred Shares
for Eurotel Stock pursuant to Section 8(a) of the Certificate of Designation.
(i) Subject to the provisions of Section 12, each of the
Purchasers herewith agrees not to sell, pledge or otherwise transfer the
Preferred Shares or interest therein (other than to another Purchaser or to an
affiliate of a Purchaser which agrees to be bound by this Agreement or as
otherwise contemplated in the Option Agreement) at any time prior to the earlier
of the second anniversary of the Time of Delivery or the expiration of the
Option Agreement.
4. (a) The Preferred Shares to be purchased by the Purchasers hereunder
will be represented by one or more stock certificates issued to each Purchaser
evidencing the Preferred Shares. NTL will deliver the stock certificates
evidencing the Preferred Shares to the Purchasers, against payment by or on
behalf of the Purchasers of the Purchase Price by wire transfer of immediately
available funds to an account designated by NTL. Such issuance, delivery and
payment shall occur immediately prior to the completion of the Strategic
Acquisition on the date of completion of the Strategic Acquisition, of which
date NTL shall give Purchasers at least five business days prior notice (or at
such other time and date as the Purchasers and NTL may agree upon in writing).
Such time and date are herein called the "Time of Delivery". If completion of
the Strategic Acquisition does not occur on or before June 29, 2000, the
provisions of this Purchase Agreement shall cease to have any effect (except as
regards any prior breaches by either party).
(b) The documents to be delivered at the Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including any
additional documents requested by the Purchasers pursuant to Sections 7(a) and
(b) hereof and the Preferred Shares will be delivered at the offices of Skadden,
Arps, Slate, Meagher & Flom LLP ("Skadden Arps"), Four Times Square, New York,
New York 10036, all at the Time of Delivery.
11
<PAGE>
5. NTL agrees and covenants:
(a) To file the Certificate of Designation with the Secretary of
State of the State of Delaware so that it is effective immediately prior to or
at the Time of Delivery;
(b) To deliver to the Purchasers or an affiliate thereof (as
applicable), (i) on or prior to the Time of Delivery and (ii) within 30 days
after a request by the Purchasers, valid statement described in Treasury
Regulation section 1.897-2(g)(1)(ii) and to comply with the notice requirements
in Treasury Regulation section 1.897-2(h);
(c) To use the Purchase Price primarily for the purpose of consum-
mating the Strategic Acquisition, including, without limitation, refinancing of
any assumed indebtedness incurred in connection therewith, and if any portion
of the Purchase Price is left after consummation of the Strategic Acquisition,
to use such remainder for purposes of acquiring companies or businesses
primarily engaged in the broadband communications, broadcasting and cable
television business in Continental Europe (out side of France);
(d) To pay and discharge, and to cause each of its subsidiaries to
pay and discharge, all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits, or upon any properties belonging
to it, prior to the date on which penalties would otherwise attach thereto, and
all lawful claims which, if unpaid, might become a lien or charge upon any
properties of NTL or any of its subsid iaries, provided that neither NTL or any
of its subsidiaries shall be required to pay any such tax, assessment, charge,
levy or claim which is being contested in good faith and by proper proceedings
if it has maintained adequate reserves with respect thereto in accordance with
generally accepted accounting principles;
(e) To enter into such agreements and take such actions as the
Purchasers may reasonably request in order to expedite or facilitate any
transfer or disposition of the Preferred Shares, or the Dividend Shares, as
applicable, in compliance with the provisions of Section 3 above, including
without limitation, directing the transfer agent to register the transfer of the
Preferred Shares or the Dividend Shares, as applicable, as directed by or on
behalf of the Purchasers; and
(f) None of NTL, any of its affiliates, or any person acting on
its or their behalf will (i) engage in any form of general solicitation or
general advertising (within the meaning of Rule 502(c) under the Securities Act)
in connection with any offer or sale of the Preferred Shares or the Dividend
Shares, as applicable, in the United States of America; (ii) solicit any offers
to buy, or offer, sell or deliver any Preferred Shares or
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<PAGE>
Dividend Shares, as applicable, to any person; (iii) distribute or furnish any
offering material relating to the proposed resale of the Preferred Shares or the
Dividend Shares, as applicable;
(g) For so long as NTL is neither subject to Section 13 or 15(d)
of the Exchange Act nor exempt from reporting pursuant to Rule 12g3-2(b) under
the Ex change Act, it will provide the information required by Rule 144A(d)(4)
of the Securities Act;
(h) If any shares of Common Stock of NTL are issued to a Pur-
chaser (or its assign) pursuant to paragraph 9 of the Certificate of
Designation, that such shares shall be entitled to registration rights
consistent with those set forth in the Investment Agreement, dated July 26,
1999, between NTL and France Telecom (the "Investment Agreement"); and
(i) Prior to the Time of Delivery, the Rights Agreement (as de-
fined in the Investment Agreement) will be amended to provide that the ownership
by a Purchaser of the Preferred Shares or common stock issuable upon conversion
thereof will not result in the Purchaser being deemed an Acquiring Person (as
such term is defined in the Rights Agreement) or result in the occurrence of a
Stock Acquisition Date, Section 11(a)(ii) Event or Section 13 Event (as such
terms are defined in the Rights Agreement), or as otherwise may be necessary.
6. (a) NTL covenants and agrees with the Purchasers that NTL will pay
or cause to be paid the following: (i) the cost of preparing the stock
certificates for the Preferred Shares, (ii) the cost of filing the Certificate
of Designation with the Secretary of State of the State of Delaware, (iii) any
stamp, transfer, sales and use, value added, documentary, registration,
issuance or similar tax, assessment or other governmental charge imposed on the
sale or delivery of the Preferred Shares, or on the delivery of the Dividend
Shares, as applicable, pursuant to this Purchase Agreement or the Option
Agreement or upon the execution, delivery or performance of this Purchase
Agreement or the Option Agreement and (iv) all other costs and expenses incident
to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 6. It is understood, however, that,
except as provided in this Section 6, the Purchasers will pay all of their own
costs and expenses, including the fees of their counsel.
(b) NTL hereby agrees to indemnify and hold each of the Pur-
chasers (which shall include their respective directors, officers, agents,
employees and affiliates) harmless from and against any and all costs, taxes
(other than withholding taxes or taxes measured by the net income or net profits
of a Purchaser as a result of distributions on or in redemption of the
Preferred Shares and/or the Dividend Shares, except as provided in paragraph
4(f) of the Certificate of Designation) fines, penalties,
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<PAGE>
damages, actions, losses, liabilities, expenses (including, but not limited to,
the fees and expenses of counsel) and claims (the "Losses") incurred by any of
the Purchasers (including France Telecom, notwithstanding any assignment by
France Telecom pursuant to Section 12 hereof) as a result of or in connection
with the consummation of transactions contemplated herein, arising out of or
resulting from any breach of a representation or warranty made by NTL contained
in this Purchase Agreement, or arising out of the performance of any such
Purchaser of its obligations under this Purchase Agreement or the compliance by
such Purchaser with the instructions set forth herein or delivered hereunder,
other than those Losses resulting solely from such Purchaser's gross negligence
or willful misconduct or the legal or regulatory status of the Purchaser. Each
Purchaser shall use its best efforts to notify NTL of the written assertion of a
claim against it or of any action commenced against it, promptly after it shall
have received any such written assertion of a claim or shall have been served
with the summons or other first legal process, giving information as to the
nature and basis of the claim; provided that such Purchaser's failure to so
notify shall not affect the obligations of NTL hereunder. Each Purchaser shall
be entitled to retain counsel of its choice in any such suit and NTL shall pay
the fees, expenses and disbursements of such counsel, and all other expenses in
connection therewith. The indemnity set forth herein shall be in addition to
any rights that the Purchasers may have at common law or otherwise, including
any right of contribution. With respect to the Purchasers (other than France
Telecom) this Section 6(b) shall survive (a) as long as the Purchasers hold the
Preferred Shares and/or the Dividend Shares, as applicable, and, (b) with regard
to any event that may occur during the time the Purchasers hold the Preferred
Shares and/or the Dividend Shares, as applicable, beyond the time that the
Purchasers hold the Preferred Shares and/or the Dividend Shares, as applicable.
With respect to France Telecom, this Section 6(b) shall survive for a period of
two (2) years following the date hereof.
(c) Upon the request of NTL and at NTL's expense, each Purchaser
shall provide NTL, to the extent permitted by law, with two Internal Revenue
Service Forms 1001, 4224 or W-BEN, as appropriate, or any successor or other
form prescribed by the Internal Revenue Service or other applicable taxing
authority certifying that such Purchaser is entitled to a reduction in, or
exemption from, withholding or other taxes for which NTL is liable under this
Purchase Agreement (including in this Section 6) or otherwise.
7. (a) The obligations of the Purchasers to purchase the Preferred
Shares shall be subject to the truth and accuracy of the representations and
warranties on the part of NTL contained herein as of the date hereof and as of
the Time of Delivery, to the truth and accuracy of the statements of NTL made in
any certificates pursuant to the provisions hereof, to the performance by NTL of
its obligations hereunder and to the following additional conditions:
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<PAGE>
(i) Prior to the Time of Delivery, NTL shall have furnished to
the Purchasers (including France Telecom, notwithstanding any assignment by
France Telecom pursuant to Section 12 hereof) (i) the Certificate of
Designation executed by a duly authorized officer of NTL and duly approved
by NTL's Board of Directors to be filed with the Secretary of State of the
State of Delaware and (ii) such further information, certificates and
documents as the Purchasers, France Telecom and their respective counsel may
reasonably request;
(ii) NTL shall have furnished to the Purchasers (including France
Telecom, notwithstanding any assignment by France Telecom pursuant to
Section 12 hereof) certificates of NTL, signed by the Chief Executive Offi-
cer, the President, the Executive Vice President or a Senior Vice President
of NTL and by the principal accounting or financial officer of NTL, as to
the truth and accuracy of the representations and warranties of NTL herein
as of the date hereof and as of the Time of Delivery as to the performance
by NTL of all of its obligations hereunder to be performed at or prior to
such Time of Delivery, and as to such other matters as the Purchasers and
their respective counsel may reasonably request;
(iii) The Purchasers (including France Telecom, notwithstanding
any assignment by France Telecom pursuant to Section 12 hereof) shall have
received an opinion of Skadden Arps regarding the Preferred Shares and the
Dividend Shares, as applicable, substantially as set forth as Exhibit C;
(iv) On the date of issuance, sale and delivery of the Preferred
Shares, the Purchasers, other than France Telecom, shall have received (a)
an opinion of Shearman & Sterling, substantially in the form and substance
as set forth as Exhibit D, (b) an opinion of in-house counsel (Directeur
Juridique) of France Telecom, substantially in the form and substance as set
forth as Exhibit E, and (c) an opinion of White & Case LLP, substantially in
the form and substance as set forth as Exhibit F; and
(v) None of the following pursuant to or within the meaning of any
Bankruptcy Law shall have occurred: (A) NTL or any Significant Subsidiary
having (1) commenced a voluntary case or filed a petition in bankruptcy or
become insolvent; (2) consented to the entry of an order for relief against
it in an involuntary case in which it is the debtor; (3) consented to the
appointment of a Custodian of it or for all or substantially all of its
property or assets; or (4) made a general assignment for the benefit of its
creditors;
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(A) an involuntary petition against NTL or any Significant
Subsidiary having been filed in an insolvency proceeding, and such
involuntary filing not having been dismissed within sixty (60) days
after such filing;
(B) a court of competent jurisdiction having entered an order or
decree under any Bankruptcy Law that: (1) is for relief against NTL or
any Significant Subsidiary in an involuntary case; (2) appoints a
Custodian of NTL or any Significant Subsidiary or for all or
substantially all of its property or assets; or (3) orders the
liquidation of NTL or any Significant Subsidiary, and the order or
decree remains unstayed and in effect for 60 days.
(C) NTL or any Significant Subsidiary having proposed or become a
party to any dissolution or liquidation.
For purposes of this Section, the term "Bankruptcy Law" means Title 11, U.S.
Code or any similar Federal, state or foreign law for the relief of debtors or
the protection of creditors, and the term "Custodian" means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law.
(vi) Neither NTL nor any Significant Subsidiary shall have become
unable to pay its debts as they shall become due or shall have pro-
posed a written agreement of composition or extension of its debts.
(b) The obligations of each party to consummate the transactions
contemplated hereby are further subject to the condition that the Strategic
Acquisition be consummated substantially simultaneously with the consummation of
the transactions contemplated hereby.
8. The respective agreements, representations, warranties and other
statements of NTL and the Purchasers, as set forth in this Purchase Agreement
or made by or on behalf of them, respectively, pursuant to this Purchase
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of the Purchasers or any controlling person of any Purchaser (including France
Telecom or any controlling person of France Telecom, notwithstanding any
assignment by France Telecom pursuant to Section 12 hereof), or NTL or any
officer or director or controlling person of NTL, and shall survive delivery of
and payment for the Preferred Shares.
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<PAGE>
9. This Purchase Agreement may be terminated by mutual agreement of the
parties, notwithstanding any assignment by France Telecom pursuant to Section 12
hereof, in which event, (i) NTL shall not then be under any liability or
obligation to the Purchasers with respect to this Purchase Agreement, the
Preferred Shares and the Dividend Shares, except as provided in Section 6(a)
and 6(b) hereof, (ii) the Purchasers shall not then be under any liability or
obligation to NTL with respect to this Purchase Agreement except as provided in
Section 6(a) hereof and (iii) all provisions of this Purchase Agreement shall
cease to have any effect with the exception of this Section 9, Section 13,
Section 14 and Section 15.
10. All statements, requests, notices and agreements hereunder shall be
in writing, and if to the Purchasers shall be delivered or sent by mail, telex
or facsimile transmission to Banque Nationale de Paris, 16, Boulevard des
Italiens, 75009 Paris, France, Attention: Philippe Roca, Fax
No.:(33)(1)40-14-69-40; Credit Agricole Indosuez, 9 Quai du President Paul
Doumer, 92400 Courbevoie, France, Attention: Damien Scaillierez, Fax No.:
(33)(1)41-89-39-53; Deutsche Bank AG, Paris Branch, 3, Avenue de Friedland,
75008 Paris, France, Attention: Benoit Deschamps, Fax No.: (33)(1)42-89-00- 45;
Westdeutsche Landesbank Girozentrale, Paris Branch, 15, Avenue de Friedland,
75008 Paris, France, Attention: Khaled Osman, Fax No. (33)(1)45-63-15-71; and
France Telecom, 6, Place d'Alleray, 75505 Paris Cedex 15, France, Attention:
Philippe McAllister, Fax No.: (33)(1)44-44-86-00, with copies to Shearman &
Sterling, 599 Lexington Avenue, New York, New York 10022, Attention: Alfred J.
Ross, Esq., Fax No.: (212) 848-7179; and if to NTL shall be delivered or sent by
mail, telex or facsimile transmission to NTL Incorporated, 110 East 59th Street,
New York, New York 10022, Attention: General Counsel, Fax No.: (212) 906-8497,
with a copy to Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New
York, New York 10036, Attention: Thomas H. Kennedy, Esq., Fax No.: (917)
777-2526. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
11. Except as provided in Section 12 hereof, this Purchase Agreement
shall be binding upon, and inure solely to the benefit of, the Purchasers and
NTL and their respective successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Purchase Agreement. No
purchaser of any of the Preferred Shares from any of the Purchasers, other than
France Telecom or an affiliate of France Telecom, shall be deemed a successor or
assign with respect to this Purchase Agreement by reason merely of such
purchase.
12. This Purchase Agreement may not be assigned by any of the Purchas-
ers without the express written consent of NTL, except that (i) the Purchasers
other than France Telecom may assign this Purchase Agreement (including, but not
limited to, their rights under Section 6(b)) to France Telecom or an affiliate
of any of the Purchasers or France Telecom without the consent of NTL, provided,
however, that no
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<PAGE>
such assignment shall release any of such Purchasers from their obligations
hereunder and (ii) France Telecom may, without the consent of any other party to
this Purchase Agreement, assign its obligation to purchase 750,000 Preferred
Shares, to (x) any one or more financial institutions (it being understood and
agreed that (i) such assignment shall release France Telecom only from its
obligation to purchase the Preferred Shares and (ii) France Telecom shall remain
liable for the performance of all its other obligations hereunder) or (y) an
affiliate of France Telecom (it being understood and agreed that France Telecom
shall remain liable for the performance by its affiliate of all of the other
obligations of France Telecom to be performed hereunder). Notwithstanding
anything to the contrary contained in this Agreement, the parties hereto
acknowledge and agree that, notwithstanding any assignment by France Telecom of
its obligation to purchase the Preferred Shares, France Telecom shall remain a
party to this Agreement, with the right to rely on the representations and
warranties contained herein, with the right of action to enforce any covenants
and agreements contained herein and to otherwise preserve all rights
specifically given to France Telecom hereunder. The parties further acknowledge
that France Telecom is entering into the Option Agreement in reliance on the
representations, warranties, covenants and agreements contained herein. NTL and
the Purchasers shall not modify, amend or terminate this Purchase Agreement or
waive any condition contained herein or any of their rights hereunder without
the express written consent of France Telecom.
13. This Purchase Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
executed in and to be performed entirely in that state and without regard to any
applicable conflicts of laws principles.
14. Each of NTL and each Purchaser irrevocably agrees that any legal
suit, action, or proceeding against it arising out of or in connection with this
Purchase Agreement, the Preferred Shares or the Securities, as the case may be,
may be instituted in the Supreme Court of the State of New York, County of New
York or the U.S. District Court for the Southern District of New York, as
applicable, and irrevocably waives any objection which it may now or hereinafter
have to the laying of venue of any such pro ceeding, and irrevocably submits to
the non-exclusive jurisdiction of such courts in any such suit, action or
proceeding.
15. France Telecom irrevocably waives any immunity to jurisdiction
which it has or hereafter may acquire (including any immunity, sovereign or
otherwise pursuant to public law or status, to pre-judgment attachment and
execution) in any legal suit, action or proceeding against it arising out of or
based on this Purchase Agreement or the transactions contemplated hereby that is
instituted in the Supreme Court of the State of New York, County of New York or
the U.S. District Court for the Southern District of New York, or in any
competent court of the French Republic or any other jurisdiction
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(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property. Without limiting the generality of the foregoing, France Telecom
agrees that the waivers set forth in this Section 15 shall have the fullest
scope permitted under the Foreign Sovereign Immunities Act of 1976 of the United
States and are intended to be irrevocable for purposes of such Act.
16. This Purchase Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such respective counterparts shall together constitute
one and the same instrument.
19
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
between the Purchasers and NTL.
Very truly yours,
NTL INCORPORATED
By: /s/ John Gregg
----------------------------------
Name: John Gregg
Title: Chief Financial Officer
Accepted as of the date hereof:
BANQUE NATIONALE DE PARIS
By: /s/ Lionel Bordarier By: /s/ Christophe Delafontaine
-------------------------------- --------------------------------
Name: Lionel Bordarier Name: Christophe Delafontaine
Title: Directeur Title: Directeur Adjoint
CREDIT AGRICOLE INDOSUEZ
By: /s/ Michel Chabanel By: /s/ Damien Scaillierez
-------------------------------- --------------------------------
Name: Michel Chabanel Name: Damien Scaillierez
Title:
DEUTSCHE BANK A.G.
PARIS BRANCH
By: /s/ Benoit Deschamps By: /s/ Antoine de Maistre
-------------------------------- --------------------------------
Name: Benoit Deschamps Name: Antoine de Maistre
Title: Directeur
WESTDEUTSCHE LANDESBANK GIROZENTRALE
PARIS BRANCH
By: /s/ Barbara Selves By: /s/ Nadine Veldung
-------------------------------- --------------------------------
Name: Barbara Selves Name: Nadine Veldung
Title: Directeur Title: Directeur
20
<PAGE>
FRANCE TELECOM
By: /s/ Eric Bouvier
--------------------------------
Name: Eric Bouvier
Title: Senior Vice-President
21
<PAGE>
Exhibit A
Capital Stock of NTL Incorporated
Our authorized capital stock consists of 400,000,000 shares (or, in the event
the NTL stockholders approve an increase in the number of authorized shares of
NTL Common Stock at the upcoming special meeting of stockholders (the "Share
Increase"), 800,000,000 shares) of common stock, par value $.01 per share; and
10,000,000 shares of preferred stock, par value $.01 per share. As of the close
of business on January 31, 2000, as adjusted for the 5-for-4 stock split by way
of a stock dividend paid on February 3, 2000:
133,199,042 shares of NTL Common Stock issued and outstanding, each including an
associated right to purchase NTL Junior Participating Preferred Stock;
6.8818 shares of NTL 13% Series A Preferred Stock issued and outstanding;
142,308.635 shares of NTL 13% Series B Preferred Stock issued and outstanding;
52,217 shares of NTL 9.90% Series B Preferred Stock issued and outstanding;
500,000 shares of NTL 5 1/4% Series A Preferred Stock issued and outstanding;
4,447.92 shares of NTL 5 1/4% Series B Preferred Stock issued and outstanding;
6,620.88 shares of NTL 5 1/4% Series C Preferred Stock issued and outstanding;
6,707.78 shares of NTL 5 1/4% Series D Preferred Stock issued and outstanding;
6,795.82 shares of NTL 5 1/4% Series E Preferred Stock issued and outstanding;
750,000 shares of NTL 5% Series A Cumulative Participating Convertible Preferred
Stock issued and outstanding;
5,000 shares of NTL 5% Series C Cumulative Participating Convertible Preferred
Stock issued and outstanding;
9,437.5 shares of NTL 5% Series D Cumulative Participating Convertible Preferred
Stock issued and outstanding.
There are (i)28,452,055 shares of NTL common stock reserved for issuance upon
exercise of stock options of NTL outstanding pursuant to employee stock option
and
22
<PAGE>
similar plans; (ii)18,340,094 shares of NTL common stock reserved for issuance
upon the conversion of NTL preferred stock; (iii) 11,092,213 shares of NTL
common stock reserved for issuance upon conversion of the NTL 5 3/4% Convertible
Subordinated Notes due 2009; (iv) 4,395,966 shares of NTL common stock reserved
for issuance upon the exercise of the outstanding warrants to acquire shares of
NTL common stock outstanding; and (v) 15,288,266 shares of NTL common stock
reserved for issuance upon conversion of the outstanding 7% Convertible
Subordinated Notes due 2008.
23
<PAGE>
Exhibit B
Purchaser Number of Shares of Purchase Price
Preferred
Banque Nationale de Paris 275,000 $275,000,000
Credit Agricole Indosuez 275,000 $275,000,000
Deutsche Bank AG 275,000 $275,000,000
Westdeutsche Landesbank Girozentrale 275,000 $275,000,000
France Telecom 750,000 $750,000,000
24
<PAGE>
Exhibit C
[Omitted]
<PAGE>
Exhibit D
[Omitted]
<PAGE>
Exhibit E
[Omitted]
<PAGE>
Exhibit F
[Omitted]
ATTACHMENT I
------------
CERTIFICATE OF DESIGNATION
OF THE VOTING POWERS, DESIGNATION,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF THE
5% CUMULATIVE PREFERRED STOCK, SERIES A, OF
NTL INCORPORATED
-------------------------------
PURSUANT TO SECTION 151(g) OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
-------------------------------
The undersigned, Executive Vice President, General Counsel and
Secretary of NTL Incorporated, a Delaware corporation (the "Corporation"),
HEREBY CERTIFIES that the Board of Directors, in accordance with Article FOURTH,
Section B of the Corporation's Restated Certificate of Incorporation and Section
151(g) of the Delaware General Corporation Law (the "DGCL"), has authorized the
creation of the series of Preferred Stock hereinafter provided for and has
established the dividend, redemption and voting rights thereof and has adopted
the following resolution, creating the following new series of the Corporation's
Preferred Stock:
"BE IT RESOLVED that, pursuant to authority expressly granted to the
Board of Directors by the provisions of Article FOURTH, Section B of the
Restated Certificate of Incorporation of the Corporation and Section 151(g) of
the DGCL, there is hereby created and authorized the issuance of a new series of
the Corporation's Preferred Stock, par value $0.01 per share ("Preferred
Stock"), with the following powers, designations, dividend rights, voting
powers, rights on liquidation, redemption rights and other preferences and
relative, participating, optional or other special rights and with the
qualifications, limitations or restrictions on the shares of such series (in
addition to the powers, designations, preferences and relative, participating,
optional or other special rights and the qualifications, limitations or
restrictions thereof set forth in the Restated Certificate of Incorporation that
are applicable to each series of Preferred Stock) hereinafter set forth.
<PAGE>
(1) Number and Designation. 1,850,000 shares of the Preferred Stock of
the Corporation shall be designated as 5% Cumulative Preferred Stock, Series A
(the "5% Preferred Stock"), and no other shares of Preferred Stock shall be
designated as 5% Preferred Stock.
(2) Definitions. For purposes of the 5% Preferred Stock, the following
terms shall have the meanings indicated:
"Bankruptcy Event" shall mean any of the following: (i) a court having
jurisdiction in the premises enters a decree or order for (A) relief in respect
of any Major Entity in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereinafter in effect, (B) appointment of
a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of any Major Entity or for all or substantially all of the property and
assets of any Major Entity or (C) the winding up or liquidation of the affairs
of any Major Entity; or (ii) any Major Entity (A) commences a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of any Major Entity, or for all or
substantially all of the property and assets of any Major Entity or (C) effects
any general assignment for the benefit of creditors.
"Board of Directors" shall mean the board of directors of the
Corporation. "Board of Directors" shall also mean the Executive Committee, if
any, of such board of directors or any other committee duly authorized by such
board of directors to perform any of its responsibilities with respect to the 5%
Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New York, New
York are not required to be open.
"Common Stock" shall mean the Corporation's Common Stock, par value
$0.01 per share.
"Constituent Person" shall have the meaning set forth in paragraph
(9)(e) hereof.
2
<PAGE>
"Conversion Rate" shall have the meaning set forth in paragraph (9)(a)
hereof.
"Corporation" shall have the meaning set forth in the preamble.
"Current Market Price" of publicly traded shares of Common Stock or any
other class of capital stock or other security of the Corporation or any other
issuer for any day shall mean the last reported sale price for such security on
the principal exchange or quotation system on which such security is listed or
traded. If the security is not admitted for trading on any national securities
exchange or the Nasdaq National Market, "Current Market Price" shall mean the
average of the last reported closing bid and asked prices reported by the Nasdaq
as furnished by any member in good standing of the National Association of
Securities Dealers, Inc., selected from time to time by the Corporation for that
purpose or as quoted by the National Quotation Bureau Incorporated. In the event
that no such quotation is available for such day, the Current Market Price shall
be the average of the quotations for the last five Trading Days for which a
quotation is available within the last 30 Trading Days prior to such day. In the
event that five such quotations are not available within such 30-Trading Day
period, the Board of Directors shall be entitled to determine the Current Market
Price on the basis of such quotations as it reasonably considers appropriate.
"Determination Date" shall have the meaning set forth in paragraph
(9)(a) hereof.
"Dividend Payment Date" shall mean the applicable redemption date of
the 5% Preferred Stock as set forth in paragraph 6(a).
"Dividend Periods" shall mean quarterly dividend periods commencing on
March 31, June 30, September 30 and December 31 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend Period
(except that the initial Dividend Period shall commence on the Issue Date and
the final Dividend Period shall end on but exclude the Dividend Payment Date.
"Eurotel" shall mean an entity which is or will be a direct or
indirect, wholly-owned subsidiary of the Corporation, which entity owns all of
the outstanding capital stock of entities that are primarily engaged in the
broadband communications, broadcasting and cable television business in
Continental Europe (outside of France).
3
<PAGE>
"Eurotel Stock" shall mean capital stock of Eurotel with the greatest
voting power and the power to control or direct the management of Eurotel of the
type and class held, directly or through any of its subsidiaries, by the
Corporation.
"Exchange Act"" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulation thereunder.
"Exchange Date" shall have the meaning set forth in paragraph (9)(a)
hereof.
"Expiration Time" shall have the meaning set forth in paragraph
(9)(d)(v) hereof.
"5% Preferred Stock" shall have the meaning set forth in paragraph (1)
hereof.
"5% Convertible Preferred" shall have the meaning set forth in
paragraph (3)(d) hereof.
"5% Convertible Series A" shall have the meaning set forth in paragraph
(3)(d) hereof.
"5% Convertible Series B" shall have the meaning set forth in paragraph
(3)(d) hereof.
"5 1/4% Preferred" shall have the meaning set forth in paragraph (3)(d)
hereof.1
"5 1/4% Series A" shall have the meaning set forth in paragraph (3)(d)
hereof.
"GAAP" shall mean United States generally accepted accounting
principles and practices as in effect from time to time and applied consistently
throughout the periods involved.
"Holdco" shall have the meaning set forth in paragraph (11) hereof.
- --------
1 Called for redemption on February 7, 2000. As soon as appropriate
certificates of elimination are filed, this Certificate of Designation
will be amended to eliminate references.
4
<PAGE>
"Issue Date" shall mean the date on which shares of 5% Preferred Stock
are first issued.
"Investment Agreement" means the agreement, dated July 26, 1999,
between France Telecom and the Corporation.
"Junior Securities" shall have the meaning set forth in paragraph
(3)(c) hereof.
"Junior Securities Distribution" shall have the meaning set forth in
paragraph (4)(e) hereof.
"Liquidation Right" shall mean, for each share of 5% Preferred Stock,
an amount equal to US$1,000 per share, plus an amount equal to all dividends
(whether or not earned or declared) accrued and unpaid thereon to the date of
final distribution to such holders.
"Major Entity" shall mean any of the Corporation, NTL Communications
Corp., Diamond Cable Communications Limited, Diamond Holdings Limited, NTL
(Triangle) LLC or any Significant Subsidiary.
"Nasdaq" means the Nasdaq Stock Market, Inc., the electronic securities
market regulated by the National Association of Securities Dealers, Inc.
"Nasdaq National Market" shall have the meaning set forth in Rule
4200(a)(23) of the rules of the National Association of Securities Dealers, Inc.
"9.9% Series B Preferred" shall have the meaning set forth in paragraph
(3)(d) hereof.
"NYSE" means the New York Stock Exchange.
"outstanding", when used with reference to shares of stock, shall mean
issued shares, excluding shares held by the Corporation or a subsidiary.
"Parity Securities" shall have the meaning set forth in paragraph
(3)(b) hereof.
5
<PAGE>
"Person" shall mean any individual, partnership, association, joint
venture, corporation, business, trust, joint stock company, limited liability
company, any unincorporated organization, any other entity, a "group" of such
persons, as that term is defined in Rule 13d-5(b) under the Exchange Act, or a
government or political subdivision thereof.
"Preferred Stock" shall have the meaning set forth in the first
resolution above.
"Purchase Agreement" shall mean the Purchase Agreement, dated February
17, 2000, among the Corporation and certain parties identified therein with
respect to the 5% Preferred Stock.
"Purchase Shares" shall have the meaning set forth in (9)(d)(v) hereof.
"Qualified Holder" shall mean any holder other than a commercial bank
or an affiliate of a commercial bank.
"Record Date" shall have the meaning set forth in paragraph (9)(d)(iv)
hereof.
"Redemption Date" shall have the meaning set forth in paragraph (6)(a)
hereof.
"Redemption Obligation" shall have the meaning set forth in paragraph
(6)(b) hereof.
"Redemption Price" shall have the meaning set forth in paragraph (6)(a)
hereof.
"Senior Securities" shall have the meaning set forth in paragraph
(3)(a) hereof.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any class or series of
Junior Securities or any class or series of Parity Securities are placed in a
separate account of the Corporation or
6
<PAGE>
delivered to a disbursing, paying or other similar agent, then "set apart for
payment" with respect to the 5% Preferred Stock shall mean placing such funds in
a separate account or delivering such funds to a disbursing, paying or other
similar agent, as the case may be.
"Significant Subsidiary" shall have the meaning given to such term in
Regulation S-X under the Exchange Act.
"13% Preferred" shall have the meaning set forth in paragraph (3)(d)
hereof.
"Trading Day" shall mean any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on the Nasdaq National Market, or if such
securities are not quoted thereon, in the applicable securities market in which
the securities are traded.
"Transaction" shall have the meaning set forth in paragraph (9)(e)
hereof.
"25-Day Average Market Price" shall mean, for any security, the volume-
weighted average of the Current Market Prices of that security for the
twenty-five Trading Days immediately preceding the date of determination.
(3) Rank. Any class or series of stock of the Corporation shall be
deemed to rank:
(a) prior to the 5% Preferred Stock, either as to the payment of
dividends or as to distribution of assets upon liquidation, dissolution or
winding up, or both, if the holders of such class or series shall be entitled by
the terms thereof to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up, in preference or priority to the holders
of 5% Preferred Stock ("Senior Securities");
(b) on a parity with the 5% Preferred Stock, either as to the
payment of dividends or as to distributions of assets upon liquidation,
dissolution or winding up, or both, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share thereof be different
from those of the 5% Preferred Stock, if the holders of the 5% Preferred Stock
and of such class of stock or series shall be entitled by the terms thereof to
the receipt of dividends or of amounts
7
<PAGE>
distributable upon liquidation, dissolution or winding up, or both, in
proportion to their respective amounts of accrued and unpaid dividends per share
or liquidation preferences, without preference or priority one over the other
and such class of stock or series is not a class of Senior Securities ("Parity
Securities"); and
(c) junior to the 5% Preferred Stock, either as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, or both, if such stock or series shall be Common Stock or if the
holders of the 5% Preferred Stock shall be entitled to receipt of dividends, and
of amounts distributable upon liquidation, dissolution or winding up, in
preference or priority to the holders of shares of such stock or series ("Junior
Securities").
(d) Each of the 13% Series B Senior Redeemable Exchangeable
Preferred Stock (the "13% Preferred") and the 5 1/4% Convertible Preferred
Stock, Series A (the "5 1/4% Series A") and any dividends paid on the 5 1/4%
Series A in accordance with its terms, to the extent that such dividends are
paid in preferred stock having terms substantially identical to the 5 1/4%
Series A and any dividends paid on preferred stock issued as in-kind dividends
thereon, to the extent such dividends are paid in preferred stock having terms
substantially identical to the 5 1/4% Series A (the 5 1/4% Series A and all such
in-kind dividends being hereinafter referred to as the "5 1/4% Preferred"), is a
Senior Security. Each of the 5% Cumulative Participating Convertible Preferred
Stock, Series A (the "5% Convertible Series A") and any dividends paid on the 5%
Convertible Series A in accordance with its terms, to the extent that such
dividends are paid in preferred stock having terms substantially identical to
the 5% Convertible Series A and any dividends paid on preferred stock issued as
in-kind dividends thereon, to the extent such dividends are paid in preferred
stock having terms substantially identical to the 5% Convertible Series A (the
5% Convertible Series A and all such in-kind dividends being hereinafter
referred to as the "5% Convertible Preferred"), is a Parity Security. Each of
the 9.9% Non-Voting Mandatorily Redeemable Preferred Stock, Series B ("9.9%
Series B Preferred") and the Series A Junior Participating Preferred Stock is a
Junior Security. Except for the Preferred Stock proposed to be issued under the
terms of the Investment Agreement (and collectively with any dividends paid
thereon in preferred stock, the "5% Convertible Series B"), each of which would
be a Parity Security, there shall be no issue of other Senior Securities, Parity
Securities or rights or options exercisable for or convertible into any such
securities, except as approved by the holders of the 5% Preferred Stock, or as
otherwise permitted, pursuant to paragraph 9(c).
8
<PAGE>
(e) The respective definitions of Senior Securities, Junior
Securities and Parity Securities shall also include any rights or options
exercisable for or convertible into any of the Senior Securities, Junior
Securities and Parity Securities, as the case may be. The 5% Preferred Stock
shall be subject to the creation of Junior Securities, Parity Securities and
Senior Securities as set forth herein.
(4) Dividends. (a) The holders of shares of 5% Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors, out of
funds legally available for the payment of dividends (after taking into account
revaluation of the assets and liabilities of the Corporation to the extent
deemed reasonable by the Board of Directors of the Corporation after
consultation with legal and financial advisors) but without regard to any
contractual or other restrictions with respect thereto, dividends at the
quarterly rate of US$12.50 per share (assuming a US$1,000 face amount) payable
in additional shares of the 5% Preferred Stock. All dividends on the 5%
Preferred Stock shall be payable in arrears on the Dividend Payment Date and
shall be cumulative from the Issue Date (except that dividends on additional
shares of the 5% Preferred Stock issued as dividends on 5% Preferred Stock shall
accrue from the date such additional shares of 5% Preferred Stock are issued or
would have been issued in accordance with this Certificate of Designation if
such dividends had been declared), whether or not in any Dividend Period or
Dividend Periods there shall be funds of the Corporation legally available for
the payment of such dividends. The total accumulative dividends for all Dividend
Periods terminating on or prior to the applicable redemption date shall be
payable to the holders of record of shares of the 5% Preferred Stock, as they
appear on the stock records of the Corporation at the close of business on the
record date for such dividend. Upon receipt by the Company of notice from the
holders of the 5% Preferred Stock that they have elected to require the Company
to discharge its Redemption Obligation, the Board of Directors shall fix as such
record date the fifth Business Day preceding the Dividend Payment Date and shall
give notice on or prior to the record date of the number of additional shares of
5% Preferred Stock payable in respect of the dividends accrued up to but
excluding the Dividend Payment Date.
(b) For the purpose of determining the number of additional shares of
5% Preferred Stock to be issued as dividends pursuant to paragraph (4)(a), each
such share of additional 5% Preferred Stock shall be valued at US$1,000. Holders
of such additional shares of 5% Preferred Stock shall be entitled to receive
dividends payable at the rates specified in paragraph (4)(a).
9
<PAGE>
(c) The dividends payable for the initial Dividend Period, or any other
period shorter than a full Dividend Period, on the 5% Preferred Stock shall
accrue daily and be computed on the basis of a 360-day year and the actual
number of days in such period. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on the 5%
Preferred Stock that may be in arrears except as otherwise provided herein.
(d) So long as any shares of the 5% Preferred Stock are outstanding,
no dividends, except as described in the next succeeding sentence, shall be
declared or paid or set apart for payment on Parity Securities or Junior
Securities, for any period, nor shall any Parity Securities or Junior Securities
be redeemed, purchased or otherwise acquired for any consideration (or any
moneys be paid to or made available for a sinking fund for the redemption of any
such Parity Securities or Junior Securities) by the Corporation (except for
conversion into or exchange into other Parity Securities or Junior Securities,
as the case may be) unless, in each case, (i) full cumulative dividends on all
outstanding shares of the 5% Preferred Stock for all Dividend Periods
terminating on or prior to the date of such redemption, repurchase or other
acquisition shall have been paid or set apart for payment (together with any
payments that may be required under paragraph (12)(c)), (ii) sufficient funds
shall have been paid or set apart for the payment of the dividend for the
current Dividend Period with respect to the 5% Preferred Stock and (iii) the
Corporation is not in default with respect to any redemption of shares of 5%
Preferred Stock by the Corporation pursuant to paragraph (6) below. When
dividends are not fully paid in additional shares of 5% Preferred Stock or a sum
sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon shares of the 5% Preferred Stock and all dividends declared upon
Parity Securities shall be declared ratably in proportion to the respective
amounts of dividends accumulated and unpaid on the 5% Preferred Stock and
accumulated and unpaid on such Parity Securities.
(e) So long as any shares of the 5% Preferred Stock are outstanding,
no dividends (other than (i) any rights issued pursuant to the Rights Agreement
and (ii) dividends or distributions paid in shares of, or options, warrants or
rights to subscribe for or purchase shares of, Junior Securities) shall be
declared or paid or set apart for payment or other distribution declared or made
upon Junior Securities, nor shall any Junior Securities be redeemed, purchased
or otherwise acquired (other than a redemption, purchase, or other acquisition
of shares of Common Stock made for purposes of an employee incentive or benefit
plan of the Corporation or any subsidiary) (all such dividends, distributions,
redemptions or purchases being hereinafter referred to as "Junior Securities
Distributions") for any consideration (or any moneys
10
<PAGE>
be paid to or made available for a sinking fund for the redemption of any shares
of any such stock) by the Corporation, directly or indirectly (except by
conversion into or exchange for Junior Securities, including pursuant to
paragraph 4(d) of the 9.9% Series B Preferred), unless in each case (A) full
cumulative dividends on all outstanding shares of the 5% Preferred Stock and
all other Parity Securities shall have been paid or set apart for payment for
all past Dividend Periods and dividend periods for such other stock, (B)
sufficient funds shall have been paid or set apart for the payment of the
dividend for the current Dividend Period with respect to the 5% Preferred Stock
and all other Parity Securities, (C) the Corporation is not in default with
respect to any redemption of shares of 5% Preferred Stock by the Corporation
pursuant to paragraph (6) below and (D) the Corporation has fully performed its
obligations under paragraphs (4)(a) and (6) hereof.
(f) Notwithstanding the provisions of Section 6(b) of the Purchase
Agreement, all payments by the Corporation of dividends on 5% Preferred Stock to
a holder thereof that is not a Qualified Holder (a "Non-Qualified Holder") will
be made free and clear of, and without deduction or withholding for, any present
or future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by the United States of America or by
any political subdivision or taxing authority thereof or therein with respect to
such payments (but excluding, except as provided in the second succeeding
sentence, any tax imposed on or measured by the net income or net profits of a
Non-Qualified Holder pursuant to the laws of the jurisdiction in which it is
organized or the jurisdiction in which the principal office or applicable
lending office of such Non-Qualified Holder is located or any subdivision
thereof or therein) and all interest, penalties or similar liabilities with
respect to such non-excluded taxes, levies, imposts, duties, fees, assessments
or other charges (all such non-excluded taxes, levies, imposts, duties, fees,
assessments or other charges being referred to collectively as "Taxes"). If any
Taxes are so levied or imposed, the Corporation agrees to pay the full amount of
such Taxes, and such additional amounts as may be necessary so that every
payment of all amounts due under the 5% Preferred Stock, after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein or in such 5% Preferred Stock. If any amounts are payable
in respect of Taxes pursuant to the preceding sentence, the Corporation agrees
to reimburse each Non-Qualified Holder, upon the written request of such
Non-Qualified Holder, for taxes imposed on or measured by the net income or net
profits of such Non-Qualified Holder pursuant to the laws of the jurisdiction in
which such Non-Qualified Holder is organized or in which the principal office or
applicable lending office of such Non-Qualified Holder is located or under the
laws of any political subdivision or taxing authority of any
11
<PAGE>
such jurisdiction in which such Non-Qualified Holder is organized or in which
the principal office or applicable lending office of such Non-Qualified Holder
is located and for any withholding of taxes as such Non-Qualified Holder shall
determine are payable by, or withheld from, such Non-Qualified Holder, in
respect of such amounts so paid to or on behalf of such Non-Qualified Holder
pursuant to the preceding sentence and in respect of any amounts paid to or on
behalf of such Non-Qualified Holder pursuant to this sentence. The Corporation
will furnish to each Non-Qualified Holder within 45 days after the date the
payment of any Taxes is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by the Corporation. The Corporation agrees to
indemnify and hold harmless each Non-Qualified Holder, and reimburse such
Non-Qualified Holder upon its written request, for the amount of any Taxes so
levied or imposed and paid by such Non-Qualified Holder.
(5) Liquidation Preference. (a) In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of Junior
Securities, the holders of the shares of 5% Preferred Stock shall be entitled to
receive the Liquidation Right. If, upon any liquidation, dissolution or winding
up of the Corporation, the assets of the Corporation, or proceeds thereof,
distributable among the holders of the shares of 5% Preferred Stock shall be
insufficient to pay in full the preferential amount aforesaid and liquidating
payments on any Parity Securities, then such assets, or the proceeds thereof,
shall be distributed among the holders of shares of 5% Preferred Stock and any
such other Parity Securities ratably in accordance with the respective amounts
that would be payable on such shares of 5% Preferred Stock and any such other
stock if all amounts payable thereon were paid in full. For the purposes of this
paragraph (5), (i) a consolidation or merger of the Corporation with one or more
corporations, or (ii) a sale or transfer of all or substantially all of the
Corporation's assets, shall not be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, of the Corporation.
(b) Subject to the rights of the holders of any Parity Securities, upon
any liquidation, dissolution or winding up of the Corporation, after payment
shall have been made in full to the holders of the 5% Preferred Stock, as
provided in this paragraph (5), any other series or class or classes of Junior
Securities shall, subject to the respective terms and provisions (if any)
applying thereto, be entitled to receive any and all assets remaining to be paid
or distributed, and the holders of the 5% Preferred Stock shall not be entitled
to share therein.
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(6) Redemption. (a) On and after the date that is the second
anniversary of the Issue Date (the "Redemption Date"), each holder of shares of
5% Preferred Stock that is a Qualified Holder shall have the right to require
the Corporation, to the extent the Corporation shall have funds legally
available therefor (after taking into account revaluation of the assets and
liabilities of the Corporation to the extent deemed reasonable by the Board of
Directors of the Corporation after consultation with legal and financial
advisors) but without regard to any contractual or other restrictions with
respect thereto, to redeem all or some of such Qualified Holder's shares of 5%
Preferred Stock, from time to time in part, or in whole, at US$1,000 per share
(the "Redemption Price"), payable in cash, together with accrued and unpaid
dividends thereon to, but excluding, the date fixed for redemption, without
interest. Any holder of shares of 5% Preferred Stock that is a Qualified Holder
which elects to exercise its rights pursuant to this paragraph (6)(a) shall
deliver to the Corporation a written notice of election not less than 20 days
prior to the date on which such Qualified Holder demands redemption pursuant to
this paragraph (6)(a), which notice shall set forth the name of the Qualified
Holder, the number of shares of 5% Preferred Stock to be redeemed and a
statement that the election to exercise a redemption right is being made
thereby, and shall deliver to the Corporation on or before the date of
redemption certificates evidencing the shares of 5% Preferred Stock to be
redeemed, duly endorsed for transfer to the Corporation.
(b) If the Corporation is unable to redeem all outstanding shares of 5%
Preferred Stock requested by any holder of 5% Preferred Stock to be redeemed
pursuant to paragraph (6)(a) (the "Redemption Obligation") because the
Corporation does not have funds legally available therefor, the Redemption
Obligation shall be discharged as soon as the Corporation has funds legally
available to discharge such Redemption Obligation and its obligations under
paragraph (12)(c). So long as the Corporation fails to discharge the Redemption
Obligation for any reason, dividends shall continue to accrue on the Redemption
Price in accordance with paragraph (4) in addition to dividends that accrue
pursuant to paragraph (12)(c). If and so long as any Redemption Obligation with
respect to the 5% Preferred Stock shall not be fully discharged, the Corporation
shall not (i) directly or indirectly, redeem, purchase, or otherwise acquire any
Parity Security or discharge any mandatory or optional redemption, sinking fund
or other similar obligation in respect of any Parity Securities (except in
connection with a redemption, sinking fund or other similar obligation to be
satisfied pro rata with the 5% Preferred Stock) or (ii) declare or make any
Junior Securities Distribution (other than dividends or distributions paid in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, Junior Securi-
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<PAGE>
ties), or, directly or indirectly, discharge any mandatory or optional
redemption, sinking fund or other similar obligation in respect of the Junior
Securities.
(c) On and after the date that is the earlier of (i) the second
anniversary of the Issue Date or (ii) the date an exchange is consummated
pursuant to paragraph (8)(a), the Corporation shall have the right to redeem
from any Qualified Holder, upon not less than five days' nor more than ten days'
notice of the redemption date, from time to time in part, or in whole, shares of
5% Preferred Stock, at the Redemption Price, payable in cash, together with
accrued and unpaid dividends thereon, including any dividend required under
paragraph (12)(c), to, but excluding, the date fixed for redemption, without
interest.
(d) Upon the redemption of 5% Preferred Stock, the Corporation shall
pay the Redemption Price, any accrued and unpaid dividends in arrears to, but
excluding, the Dividend Payment Date, and any other dividend required under
paragraph (12)(c).
(e) For purposes of paragraph (6)(a), unless full cumulative dividends
(whether or not declared) on all outstanding shares of 5% Preferred Stock and
any Parity Securities shall have been paid or contemporaneously are declared and
paid or set apart for payment for all Dividend Periods terminating on or prior
to the applicable redemption date and notice has been given in accordance with
paragraph (7), none of the shares of 5% Preferred Stock shall be redeemed, and
no sum shall be set aside for such redemption, unless shares of 5% Preferred
Stock are redeemed pro rata and notice has previously been given in accordance
with paragraph (7).
(7) Procedure for Redemption. (a) When the Corporation is requested to
redeem shares of 5% Preferred Stock pursuant to paragraph (6), notice of the
request for such redemption shall be given by certified mail, return receipt
requested, postage prepaid, mailed not less than 20 days prior to the redemption
date, by each requesting
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<PAGE>
holder to the Corporation at the following address and confirmed by facsimile
transmission:
NTL Incorporated
110 East 59th Street
New York, New York 10022
Facsimile: (212) 906-8497
Each such notice shall state (i) the redemption date and (ii) if the
holder is requiring the Corporation to redeem fewer than all the shares of 5%
Preferred Stock held by such holder, the number of shares that the Corporation
is being required to redeem from such holder.
Within 10 days of receipt of any such notice from a holder of the 5%
Preferred Stock, the Corporation shall respond to each requesting holder with a
notice sent by certified mail, return receipt requested, postage prepaid, to
each requesting holder at such holder's address as the same appears on the stock
register of the Corporation and confirmed by facsimile transmission to each
requesting holder of record if the Corporation has been furnished with such
facsimile address by the holder(s); provided, however, that neither the failure
to give such notice nor confirmation nor any defect therein or in the mailing
thereof, to any particular holder, shall affect the sufficiency of the notice or
the validity of the proceedings for redemption with respect to the other
holders. Each such notice shall (i) confirm the redemption date and the number
of shares of 5% Preferred Stock to be redeemed and, if fewer than all the shares
held by such holder are to be redeemed, the number of shares to be redeemed from
such holder and (ii) state (A) the amount payable, (B) the place or places where
certificates for such shares are to be surrendered or the notice should be sent
for payment of the redemption price, and (C) that dividends on the shares to be
redeemed will cease to accrue at and from such redemption date, except as
otherwise provided herein. Any notice that was mailed in the manner herein
provided shall be conclusively presumed to have been duly given on the date
mailed whether or not the holder receives the notice.
(b) If notice has been mailed by the Corporation in response to any
holder who has given the Corporation notice requesting redemption of any of its
shares of 5% Preferred Stock, as aforesaid, from and after the redemption date
(unless default shall be made by the Corporation in providing for the payment of
the redemption price of the shares called for redemption and dividends accrued
and unpaid thereon, if any), (i) except as otherwise provided herein, dividends
on the
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<PAGE>
shares of 5% Preferred Stock so called for redemption shall cease to accrue,
(ii) said shares shall no longer be deemed to be outstanding, and (iii) all
rights of the holders thereof as holders of the 5% Preferred Stock shall cease
(except the right to receive from the Corporation the Redemption Price without
interest thereon, upon surrender and endorsement of the certificates for any
shares so redeemed, and to receive any dividends payable thereon, including any
amounts payable pursuant to paragraph (12)(c)).
(c) Upon surrender of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the Redemption Price aforesaid, plus any
dividends payable thereon, including any amounts payable pursuant to paragraph
12(c). If fewer than all the outstanding shares of 5% Preferred Stock are to be
redeemed due to the restriction set forth in paragraph (6)(b), the number of
shares to be redeemed shall be determined by the Board of Directors and the
shares to be redeemed shall be selected pro rata (with any fractional shares
being rounded to the nearest whole share). In case fewer than all the shares
represented by any such certificate are redeemed, without cost to the holder
thereof either (i) a new certificate shall be issued representing the
non-surrendered shares, or (ii) at the option of the holder, the holder shall be
entitled to retain its existing certificates, which shall be deemed to represent
the number of shares of 5% Preferred Stock that have not been redeemed.
(8) Exchange. (a) Upon at least 30 days' written notice to the Corpora-
tion, a Qualified Holder shall have the right, at such Qualified Holder's
option, to exchange all or any part of such shares of 5% Preferred Stock for
shares of Eurotel Stock (or to effect a constructive exchange in accordance with
paragraph (12)(d)) having a value (calculated pursuant to paragraph 8(c) below)
equal to the Redemption Price of the shares of 5% Preferred Stock with respect
to which the exchange right is being exercised, together with accrued and unpaid
dividends thereon to, but excluding, the date fixed for exchange, of such shares
of 5% Preferred Stock.
(b) Any exchange pursuant to paragraph 8(a) shall be subject to the
following requirements:
(i) The 5% Preferred Stock shall have been outstanding for at
least six months.
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<PAGE>
(ii) Consummation of the exchange will not cause the Corporation,
any subsidiary of the Corporation, or Eurotel to become in breach or
contravention of, or give rise to a right to terminate or otherwise cause a loss
of any material right under, any material agreement, contract, instrument or
obligation of or binding on such entity; and the Corporation covenants and
agrees not to enter into any such agreement, contract or instrument or incur
such obligation after the date of issuance of the 5% Preferred Stock.
(iii) All necessary approvals of any governmental competition or
other regulatory bodies or authorities having jurisdiction over the exchange or
any matters arising as a result thereof shall have been received, and the
exchange will have no material negative effect on any material governmental
license, permit or authorization held by Eurotel or any subsidiary of Eurotel;
provided that after receipt of a notice from a Qualified Holder under paragraph
8(a) the Corporation shall, subject to receiving in the case of competition
approvals full cooperation from the Qualified Holder, promptly take all
reasonable steps necessary to receive all such governmental competition and
regulatory approvals and to avoid any such material negative effect.
(iv) The maximum amount of Eurotel Stock that may be acquired upon
an exchange shall be 50% of the outstanding amount thereof. Any shares of 5%
Preferred Stock remaining outstanding after acquisition of the maximum amount
of Eurotel Stock shall be subject to redemption in accordance with paragraph
6(a) hereof.
(c) The aggregate value at any time of the Eurotel Stock shall equal
the aggregate amount expended by the Corporation and its subsidiaries in the
acquisition of the entities that comprise Eurotel (less the aggregate amount of
debt, as reflected on the consolidated balance sheet of Eurotel prepared in
conformity with GAAP, which is incurred or assumed by Eurotel or any of its
subsidiaries or entities comprising Eurotel or its predecessors in connection
therewith (the "Acquisition Debt")), together with any amounts invested in
Eurotel or any of its subsidiaries (other than by Eurotel or its subsidiaries)
after such acquisition and prior to the exchange, reduced by any dividends,
distribution or transfers of any assets from Eurotel to any other Person
increasing at a rate of 5% per annum from the date of such acquisition or
investment to the date the value of Eurotel is being calculated. The value of
each share of Eurotel Stock shall be pro rata to the aggregate value of Eurotel.
17
<PAGE>
(d) If at the time of any exchange of all of the 5% Preferred Stock,
the Eurotel Stock acquired as a result of such exchange does not constitute 50%
of the outstanding shares of Eurotel Stock, the Qualified Holder shall have the
right (subject to the conditions set forth in paragraph (b) above) to acquire
from the Corporation an additional amount of Eurotel Stock (the "Additional
Amount") such that the amount of Eurotel Stock held by such Qualified Holder as
a result of the exchange and the acquisition of the Additional Amount equals 50%
of the outstanding shares of Eurotel Stock. The Additional Amount shall be
acquired for cash at the same per share value calculated pursuant to paragraph
(c) above.
(e) If Eurotel shall issue to the Corporation any option, warrant or
right to acquire Eurotel Stock, or if the issued Eurotel Stock shall be
comprised of more than one class, the rights of the Qualified Holder under this
paragraph (8) shall be equitably adjusted so as to maintain the intent of this
paragraph (8) that the Qualified Holder may acquire 50% of the Eurotel Stock
from the Corporation at a value reflecting the provisions of paragraph 8(c).
(f) If any of the requirements set forth in paragraph (8)(b) cannot be
satisfied upon a Qualified Holder's exchange for Eurotel Stock under paragraph
8(a) or acquisition of Eurotel Stock under paragraph 8(d) of 50% of the
outstanding amount of Eurotel Stock, as determined in good faith by such
Qualified Holder and the Corporation, the Qualified Holder shall have the right
to acquire, upon exchange under paragraph 8(a) of any part of the 5% Preferred
Stock held by the Qualified Holder or acquisition under paragraph 8(d), such
amount of Eurotel Stock as would allow the requirements set forth in paragraph
(8)(b) to be satisfied. If the Qualified Holder exercises the right described in
the previous sentence, it shall have the right (i) to exchange or acquire the
remaining amount of Eurotel Stock as soon as possible after the restrictions on
the exchange or acquisition of the entire amount of Eurotel Stock permitted
hereunder shall cease to exist or (ii) to require redemption of any amount of
Preferred Shares that such Qualified Holder shall hold after exercising its
rights under the first sentence of this paragraph (8)(f).
(g) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Eurotel Stock upon exchange of the 5% Preferred Stock pursuant hereto; provided,
however, that the Corporation shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issue or delivery of shares
of Eurotel Stock in a name other than that of the holder of the 5% Preferred
Stock to be exchanged and no such issue or delivery shall be made unless and
until the Person
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<PAGE>
requesting such issue or delivery has paid to the Corporation the amount of any
such tax or established, to the satisfaction of the Corporation, that such tax
has been paid.
(9) Conversion. (a) Subject to and upon compliance with the provisions
of this paragraph (9), each holder of shares of 5% Preferred Stock which is a
Qualified Holder shall have the right, at any time and from time to time after
the date which is six months from the consummation of an exchange pursuant to
paragraph (8)(a), at such holder's option, to convert any or all outstanding
shares of 5% Preferred Stock held by such holder, but not fractions of shares,
into fully paid and non-assessable shares of Common Stock by surrendering such
shares to be converted, such surrender to be made in the manner provided in
paragraph (9)(b) hereof. The number of shares of Common Stock deliverable upon
conversion of each share of 5% Preferred Stock shall be equal to $1,000 divided
by the 25-Day Average Market Price as of the date the exchange is consummated
(the "Exchange Date"), as adjusted as provided herein, provided that such
conversion rate (the "Conversion Rate") shall not be less than the price that
would cause an adjustment pursuant to Schedule 25, Section 2(c) of the Restated
Transaction Agreement, dated July 26, 1999, by and among Bell Atlantic
Corporation, Cable and Wireless plc, Cable & Wireless Communications plc and the
Corporation. The Conversion Rate is subject to adjustment from time to time
pursuant to paragraph (9)(d) hereof. The right to convert shares called for
redemption pursuant to paragraph 6(c) shall terminate at the close of business
on the date immediately preceding the date fixed for such redemption unless the
Corporation shall default in making payment of the amount payable upon such
redemption, in which case such right of conversion shall be reinstated. Upon
conversion, any accrued and unpaid dividends, including any dividends required
under paragraph (12)(c), on the 5% Preferred Stock at the date of conversion
shall be paid to the holder thereof in accordance with the provisions of
paragraph (4).
(b) (i) In order to exercise the conversion privilege, the holder of
each share of 5% Preferred Stock to be converted shall surrender (or
constructively surrender in accordance with paragraph (12)(d)) the certificate
representing such share, duly endorsed or assigned to the Corporation or in
blank, at the office of the Corporation, or to any transfer agent of the
Corporation previously designated by the Corporation to the holders of the 5%
Preferred Stock for such purposes, with a written notice of election to convert
completed and signed, specifying the number of shares to be converted. Such
notice shall state that the holder has satisfied any legal or regulatory
requirement for conversion, including compliance with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976; provided, however, that the Corporation
shall use its best efforts in cooperating with such holder to obtain such
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<PAGE>
legal or regulatory approvals to the extent its cooperation is necessary. Such
notice shall also state the name or names (with address and social security or
other taxpayer identification number, if applicable) in which the certificate or
certificates for Common Stock are to be issued. Unless the shares issuable on
conversion are to be issued in the same name as the name in which such share of
5% Preferred Stock is registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or the holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation demonstrating that such
taxes have been paid). All certificates representing shares of 5% Preferred
Stock surrendered for conversion shall be canceled by the Corporation or the
transfer agent.
(ii) Subject to the last sentence of paragraph (9)(a), holders of
shares of 5% Preferred Stock at the close of business on a dividend payment
record date shall not be entitled to receive the dividend payable on such shares
on the corresponding Dividend Payment Date if such holder shall have surrendered
(or made a constructive surrender under paragraph (12)(d)) for conversion such
shares at any time following the preceding Dividend Payment Date and prior to
such Dividend Payment Date.
(iii) Subject to a holder's election under paragraph (12)(d), as
promptly as practicable after the surrender (including a constructive surrender
under paragraph (12)(d)) by a holder of the certificates for shares of 5%
Preferred Stock as aforesaid, the Corporation shall issue and shall deliver to
such holder, or on the holder's written order, a certificate or certificates
(which certificate or certificates shall have the legend set forth in paragraph
(12)(d)) for the whole number of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock issuable upon the conversion of such
shares in accordance with the provisions of this paragraph (9), and any
fractional interest in respect of a share of Common Stock arising on such
conversion shall be settled as provided in paragraph (9)(c). Upon conversion of
only a portion of the shares of 5% Preferred Stock represented by any
certificate, a new certificate shall be issued representing the unconverted
portion of the certificate so surrendered without cost to the holder thereof.
Subject to a holder's election under paragraph (12)(d), upon the surrender
(including a constructive surrender under paragraph (12)(d)) of certificates
representing shares of 5% Preferred Stock to be converted, such shares shall no
longer be deemed to be outstanding and all rights of a holder with respect to
such shares so surrendered shall
20
<PAGE>
immediately terminate except the right to receive the Common Stock and other
amounts payable pursuant to this paragraph (9).
(iv) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the certificates
for shares of 5% Preferred Stock shall have been surrendered (or deemed
surrendered pursuant to an election under paragraph (12)(d)) and such notice
received by the Corporation as aforesaid, and the person or persons in whose
name or names any certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares of Common Stock represented thereby at such time
on such date and such conversion shall be into a number of shares of Common
Stock equal to the product of the number of shares of 5% Preferred Stock
surrendered times the Conversion Rate in effect at such time on such date,
unless the stock transfer books of the Corporation shall be closed on that date,
in which event such Person or Persons shall be deemed to have become such holder
or holders of record at the close of business on the next succeeding day on
which such stock transfer books are open, but such conversion shall be based
upon the Conversion Rate in effect on the date upon which such shares shall have
been surrendered and such notice received by the Corporation.
(c) (i) No fractional shares or scrip representing fractions of shares
of Common Stock shall be issued upon conversion of the 5% Preferred Stock.
Instead of any fractional interest in a share of Common Stock that would
otherwise be deliverable upon the conversion of a share of 5% Preferred Stock,
the Corporation shall pay to the holder of such share an amount in cash based
upon the Current Market Price of Common Stock on the Trading Day immediately
preceding the date of conversion. If more than one share shall be surrendered
for conversion (or deemed surrendered under paragraph (12)(d)) at one time by
the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of 5% Preferred Stock surrendered (or deemed surrendered under paragraph
(12)(d)) for conversion by such holder.
(ii) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the certificates
for shares of 5% Preferred Stock shall have been surrendered (or deemed
surrendered under paragraph (12)(d)) and such notice received by the Corporation
as aforesaid, and the Person or Persons in whose name or names any certificate
or certificates for shares of Common Stock shall be issuable upon such
conversion shall be deemed to
21
<PAGE>
have become the holder or holders of record of the shares of Common Stock repre-
sented thereby at such time on such date and such conversion shall be into a
number of shares of Common Stock equal to the product of the number of shares of
5% Preferred Stock surrendered times the Conversion Rate in effect at such time
on such date, unless the stock transfer books of the Corporation shall be closed
on that date, in which event such Person or Persons shall be deemed to have
become such holder or holders of record at the close of business on the next
succeeding day on which such stock transfer books are open, but such conversion
shall be based upon the Conversion Rate in effect on the date upon which such
shares shall have been surrendered (or deemed surrendered under paragraph
(12)(d)) and such notice received by the Corporation.
(d) The Conversion Rate shall be adjusted from time to time as follows:
(i) If the Corporation shall after the Exchange Date (A) declare a
dividend or make a distribution on its Common Stock in shares of its Common
Stock, (B) subdivide its outstanding Common Stock into a greater number of
shares, (C) combine its outstanding Common Stock into a smaller number of
shares, or (D) effect any reclassification of its outstanding Common Stock, the
Conversion Rate in effect on the record date for such dividend or distribution,
or the effective date of such subdivision, combination or reclassification, as
the case may be, shall be proportionately adjusted so that the holder of any
share of 5% Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number and kind of shares of Common Stock that such
holder would have owned or have been entitled to receive after the happening of
any of the events described above had such share been converted immediately
prior to the record date in the case of a dividend or distribution or the
effective date in the case of a subdivision, combination or reclassification.
An adjustment made pursuant to this subparagraph (i) shall become effective
immediately after the opening of business on the Business Day next following the
record date (except as provided in paragraph (9)(h)) in the case of a dividend
or distribution and shall become effective immediately after the opening of
business on the Business Day next following the effective date in the case of a
subdivision, combination or reclassification. Adjustments in accordance with
this paragraph (9)(d)(i) shall be made whenever any event listed above shall
occur.
(ii) If the Corporation shall after the Exchange Date fix a record
date for the issuance of rights or warrants (in each case, other than any rights
issued pursuant to a shareholder rights plan) to all holders of Common Stock
22
<PAGE>
entitling them (for a period expiring within 45 days after such record date) to
subscribe for or purchase Common Stock (or securities convertible into Common
Stock) at a price per share (or, in the case of a right or warrant to purchase
securities convertible into Common Stock, having an effective exercise price per
share of Common Stock, computed on the basis of the maximum number of shares of
Common Stock issuable upon conversion of such convertible securities, plus the
amount of additional consideration payable, if any, to receive one share of
Common Stock upon conversion of such securities) less than the 25-Day Average
Market Price on the date on which such issuance was declared or otherwise
announced by the Corporation (the "Determination Date"), then the Conversion
Rate in effect at the opening of business on the Business Day next following
such record date shall be adjusted so that the holder of each share of 5%
Preferred Stock shall be entitled to receive, upon the conversion thereof, the
number of shares of Common Stock determined by multiplying (I) the Conversion
Rate in effect immediately prior to such record date by (II) a fraction, the
numerator of which shall be the sum of (A) the number of shares of Common Stock
outstanding on the close of business on the Determination Date and (B) the
number of additional shares of Common Stock offered for subscription or purchase
pursuant to such rights or warrants (or in the case of a right or warrant to
purchase securities convertible into Common Stock, the aggregate number of
additional shares of Common Stock into which the convertible securities so
offered are initially convertible), and the denominator of which shall be the
sum of (A) the number of shares of Common Stock outstanding on the close of
business on the Determination Date and (B) the number of shares that the
aggregate proceeds to the Corporation from the exercise of such rights or
warrants for Common Stock would purchase at such 25-Day Average Market Price on
such date (or, in the case of a right of warrant to purchase securities
convertible into Common Stock, the number of shares of Common Stock obtained by
dividing the aggregate exercise price of such rights or warrants for the maximum
number of shares of Common Stock issuable upon conversion of such convertible
securities, plus the aggregate amount of additional consideration payable, if
any, to convert such securities into Common Stock, by such 25-Day Average Market
Price). Such adjustment shall become effective immediately after the opening of
business on the Business Day next following such record date (except as provided
in paragraph (9)(h)). Such adjustment shall be made successively whenever such a
record date is fixed. In the event that after fixing a record date such rights
or warrants are not so issued, the Conversion Rate shall be readjusted to the
Conversion Rate which would then be in effect if such record date had not been
fixed. In determining whether any rights or warrants entitle the holders of
Common Stock to subscribe for or purchase shares of Common Stock at less than
such 25-Day Average Market Price, there shall be taken
23
<PAGE>
into account any consideration received by the Corporation upon issuance and
upon exercise of such rights or warrants, the value of such consideration, if
other than cash, to be determined by the Board of Directors in good faith. In
case any rights or warrants referred to in this subparagraph (ii) shall expire
unexercised after the same have been distributed or issued by the Corporation
(or, in the case of rights or warrants to purchase securities convertible into
Common Stock once exercised, the conversion right of such securities shall
expire), the Conversion Rate shall be readjusted at the time of such expiration
to the Conversion Rate that would have been in effect if no adjustment had been
made on account of the distribution or issuance of such expired rights or
warrants.
(iii) If the Corporation shall fix a record date for the making of
a distribution to all holders of its Common Stock of evidences of its
indebtedness, shares of its capital stock or assets (excluding regular cash
dividends or distributions declared in the ordinary course by the Board of
Directors and dividends payable in Common Stock for which an adjustment is made
pursuant to paragraph (9)(d)(i)) or rights or warrants (in each case, other than
any rights issued pursuant to a shareholder rights plan) to subscribe for or
purchase any of its securities (excluding those rights and warrants issued to
all holders of Common Stock entitling them (for a period expiring within 45 days
after such record date) to subscribe for or purchase Common Stock or securities
convertible into shares of Common Stock, which rights and warrants are referred
to in and treated under subparagraph (ii) above) (any of the foregoing being
hereinafter in this subparagraph (iii) called the "Securities"), then in each
such case the Conversion Rate shall be adjusted so that the holder of each share
of 5% Preferred Stock shall be entitled to receive, upon the conversion thereof,
the number of shares of Common Stock determined by multiplying (I) the
Conversion Rate in effect immediately prior to the close of business on such
record date by (II) a fraction, the numerator of which shall be the 25-Day
Average Market Price per share of the Common Stock on such record date, and the
denominator of which shall be the 25-Day Average Market Price per share of the
Common Stock on such record date less the then-fair market value (as determined
by the Board of Directors in good faith, whose determinations shall be
conclusive) of the portion of the assets, shares of its capital stock or
evidences of indebtedness so distributed or of such rights or warrants
applicable to one share of Common Stock. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event that after
fixing a record date such distribution is not so made, the Conversion Rate shall
be readjusted to the Conversion Rate which would then be in effect if such
record date had not been fixed. Such adjustment shall become effective
immediately at the opening of business on the Business Day next following
(except as provided in paragraph (9)(h))
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<PAGE>
the record date for the determination of shareholders entitled to receive such
distribution. For the purposes of this subparagraph (iii), the distribution of
a Security, which is distributed not only to the holders of the Common Stock on
the date fixed for the determination of shareholders entitled to such
distribution of such Security, but also is distributed with each share of Common
Stock delivered to a Person converting a share of 5% Preferred Stock after such
determination date, shall not require an adjustment of the Conversion Rate
pursuant to this subparagraph (iii); provided, however, that on the date, if
any, on which a Person converting a share of 5% Preferred Stock would no longer
be entitled to receive such Security with a share of Common Stock (other than as
a result of the termination of all such Securities), a distribution of such
Securities shall be deemed to have occurred and the Conversion Rate shall be
adjusted as provided in this subparagraph (iii) (and such day shall be deemed to
be "the date fixed for the determination of shareholders entitled to receive
such distribution" and "the record date" within the meaning of the three
preceding sentences). If any rights or warrants referred to in this subparagraph
(iii) shall expire unexercised after the same shall have been distributed or
issued by the Corporation, the Conversion Rate shall be readjusted at the time
of such expiration to the Conversion Rate that would have been in effect if no
adjustment had been made on account of the distribution or issuance of such
expired rights or warrants.
(iv) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash in the amount per share that,
together with the aggregate of the per share amounts of any other cash
distributions to all holders of its Common Stock made within the 12 months
preceding the date of payment of such distribution and in respect of which no
adjustment pursuant to this paragraph (iv) has been made exceeds 5.0% of the
25-Day Average Market Price immediately prior to the date of declaration of such
dividend or distribution (excluding any dividend or distribution in connection
with the liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, and any cash that is distributed upon a merger,
consolidation or other transaction for which an adjust ment pursuant to
paragraph 9(e) is made), then, in such case, the Conversion Rate shall be
adjusted so that the same shall equal the rate determined by multiplying the
Conversion Rate in effect immediately prior to the close of business on the
Record Date for the cash dividend or distribution by a fraction the numerator of
which shall be the Current Market Price of a share of the Common Stock on the
Record Date and the denominator shall be such Current Market Price less the per
share amount of cash so distributed during the 12-month period applicable to one
share of Common Stock, such adjustment to be effective immediately prior to the
opening of business on the Business Day following the Record Date; provided,
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<PAGE>
however, that in the event the denominator of the foregoing fraction is zero or
negative, in lieu of the foregoing adjustment, adequate provision shall be made
so that each holder of 5% Preferred Stock shall have the right to receive upon
conversion, in addition to the shares of Common Stock to which the holder is
entitled, the amount of cash such holder would have received had such holder
converted each share of 5% Preferred Stock at the beginning of the 12-month
period. In the event that such dividend or distribution is not so paid or made,
the Conversion Rate shall again be adjusted to be the Conver sion Rate which
would then be in effect if such dividend or distribution had not been declared.
Notwithstanding the foregoing, if any adjustment is required to be made as set
forth in this paragraph (9)(d)(iv), the calculation of any such adjustment shall
include the amount of the quarterly cash dividends paid during the 12-month
reference period only to the extent such dividends exceed the regular quarterly
cash dividends paid during the 12 months preceding the 12-month reference
period. For purposes of this paragraph (9)(d)(iv), "Record Date" shall mean,
with respect to any dividend or distribution in which the holders of Common
Stock have the right to receive cash, the date fixed for determination of
shareholders entitled to receive such cash.
In the event that at any time cash distributions to holders of Common
Stock are not paid equally on all series of Common Stock, the provisions of this
paragraph 9(d)(iv) will apply to any cash dividend or cash distribution on any
series of Common Stock otherwise meeting the requirements of this paragraph, and
shall be deemed amended to the extent necessary so that any adjustment required
will be made on the basis of the cash dividend or cash distribution made on any
such series.
(v) In case of the consummation of a tender or exchange offer
(other than an odd-lot tender offer) made by the Corporation or any subsidiary
of the Corporation for all or any portion of the outstanding shares of Common
Stock to the extent that the cash and fair market value (as determined in good
faith by the Board of Directors of the Corporation, whose determination shall be
conclusive and shall be described in a resolution of such Board) of any other
consideration included in such payment per share of Common Stock at the last
time (the "Expiration Time") tenders or exchanges may be made pursuant to such
tender or exchange offer (as amended) exceed by more than 5.0%, with any smaller
excess being disregarded in computing the adjustment to the Conversion Rate
provided in this paragraph (9)(d)(v), the first reported sale price per share of
the Common Stock on the Trading Day next succeeding the Expiration Time, then
the Conversion Rate shall be adjusted so that the same shall equal the rate
determined by multiplying the Conversion Rate in effect immediately prior to the
Expiration Time by a fraction the numerator of
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<PAGE>
which shall be the sum of (x) the fair market value (determined as aforesaid) of
the aggregate consideration payable to shareholders based on the acceptance (up
to any maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Expiration Time
(the shares deemed so accepted, up to any such maximum, being referred to as the
"Purchase Shares") and (y) the product of the number of shares of Common Stock
outstanding (less any Purchase Shares) on the Expiration Time and the first
reported sale price of the Common Stock on the Trading Day next succeeding the
Expiration Time, and the denominator of which shall be the number of shares of
Common Stock outstanding (including any tendered or exchanged shares) on the
Expiration Time multiplied by the first reported sale price of the Common Stock
on the Trading Day next succeeding the Expiration Time, such adjustment to
become effective immediately prior to the opening of business on the day
following the Expiration Time.
(vi) No adjustment in the Conversion Rate shall be required unless
such adjustment would require a cumulative increase or decrease of at least 1%
in the Conversion Rate; provided, however, that any adjustments that by reason
of this subparagraph (vi) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment until made, and provided
further that any adjustment shall be required and made in accordance with the
provisions of this paragraph (9) (other than this subparagraph (vi)) not later
than such time as may be required in order to preserve the tax-free nature of a
distribution for United States income tax purposes to the holders of shares of
5% Preferred Stock or Common Stock. Notwithstanding any other provisions of this
paragraph (9), the Corporation shall not be required to make any adjustment of
the Conversion Rate for the issuance of any shares of Common Stock pursuant to
any plan providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of additional optional amounts
in shares of Common Stock under such plan. All calculations under this paragraph
(9) shall be made to the nearest dollar or to the nearest 1/1,000 of a share, as
the case may be. Anything in this paragraph (9)(d) to the contrary
notwithstanding, the Corporation shall be entitled, to the extent permitted by
law, to make such adjustments in the Conversion Rate, in addition to those
required by this paragraph (9)(d), as it in its discretion shall determine to be
advisable in order that any stock dividends subdivision of shares,
reclassification or combination of shares, distribution or rights or warrants to
purchase stock or securities, or a distribution of other assets (other than
cash dividends) hereafter made by the Corporation to its shareholders shall not
be taxable.
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<PAGE>
(vii) In the event that, at any time as a result of shares of any
other class of capital stock becoming issuable in exchange or substitution for
or in lieu of shares of Common Stock or as a result of an adjustment made
pursuant to the provisions of this paragraph (9)(d), the holder of 5% Preferred
Stock upon subsequent conversion shall become entitled to receive any shares of
capital stock of the Corporation other than Common Stock, the number of such
other shares so receivable upon conversion of any shares of 5% Preferred Stock
shall thereafter be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions contained herein.
(e) If the Corporation shall be a party to any transaction (including
without limitation, a merger, consolidation, sale of all or substantially all of
the Corporation's assets or recapitalization of the Common Stock and excluding
any transaction as to which paragraph (9)(d)(i) applies) (each of the foregoing
being referred to herein as a "Transaction"), in each case as a result of which
shares of Common Stock shall be converted into the right to receive stock,
securities or other property (including cash or any combination thereof), there
shall be no adjustment to the Conversion Rate but each share of 5% Preferred
Stock which is not converted into the right to receive stock, securities or
other property in connection with such Transaction shall thereafter be
convertible into the kind and amount of shares of stock, securities and other
property (including cash or any combination thereof) receivable upon the
consummation of such Transaction by a holder of that number of shares or
fraction thereof of Common Stock into which one share of 5% Preferred Stock was
convertible immediately prior to such Transaction, assuming such holder of
Common Stock (i) is not a Person with which the Corporation consolidated or into
which the Corporation merged or which merged into the Corporation or to which
such sale or transfer was made, as the case may be ("Constituent Person"), or an
affiliate of a Constituent Person and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of stock securities and other
property (including cash) receivable upon such Transaction (provided that if the
kind or amount of stock, securities and other property (including cash)
receivable upon such Transaction is not the same for each share of Common Stock
of the Corporation held immediately prior to such Transaction by other than a
Constituent Person or an affiliate thereof and in respect of which such rights
of election shall not have been exercised ("non-electing share"), then for the
purpose of this paragraph (9)(e) the kind and amount of stock, securities and
other property (including cash) receivable upon such Transaction by each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares). The provisions of this
paragraph (9)(e) shall similarly apply to successive Transactions.
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<PAGE>
(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock; or
(ii) the Corporation shall authorize the granting to the holders
of the Common Stock of rights or warrants to subscribe for or purchase any
shares of any class or any other rights or warrants; or
(iii) there shall be any subdivision, combination or reclassi-
fication of the Common Stock or any consolidation or merger to which the Corpora
tion is a party and for which approval of any shareholders of the Corporation is
required, or the sale or transfer of all or substantially all of the assets of
the Corporation as an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Corporation shall cause to be filed with any transfer agent designated
by the Corporation pursuant to paragraph (9)(b) and shall cause to be mailed to
the holders of shares of the 5% Preferred Stock at their addresses as shown on
the stock records of the Corporation, as promptly as possible, but at least ten
days prior to the applicable date hereinafter specified, a notice stating (A)
the date on which a record is to be taken for the purpose of such dividend (or
such other distribution) or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights or warrants are to be determined or (B)
the date on which such subdivision, combination, reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up or
other action is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property, if any,
deliverable upon such subdivision, combination, reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution or winding up. Failure to give
or receive such notice or any defect therein shall not affect the legality or
validity of any distribution, right, warrant subdivision, combination,
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, winding up or other action, or the vote upon any of the foregoing.
29
<PAGE>
(g) Whenever the Conversion Rate is adjusted as herein provided, the
Corporation shall prepare an officer's certificate with respect to such
adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and
the effective date of such adjustment and shall mail a copy of such officer's
certificate to the holder of each share of 5% Preferred Stock at such holder's
last address as shown on the stock records of the Corporation. If the
Corporation shall have designated a transfer agent pursuant to paragraph (9)(b),
it shall also promptly file with such transfer agent an officer's certificate
setting forth the Conversion Rate after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate shall
be conclusive evidence of the correctness of such adjustment.
(h) In any case in which paragraph (9)(d) provides that an adjustment
shall become effective on the day next following a record date for an event, the
Corporation may defer until the occurrence of such event (i) issuing to the
holder of any share of 5% Preferred Stock converted after such record date and
before the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by such event
over and above the Common Stock issuable upon such conversion before giving
effect to such adjustment and (ii) paying to such holder any amount in cash in
lieu of any fraction pursuant to paragraph (9)(c).
(i) For purposes of this paragraph (9), the number of shares of Common
Stock at any time outstanding shall not include any shares of Common Stock then
owned or held by or for the account of the Corporation. The Corporation shall
not pay a dividend or make any distribution on shares of Common Stock held in
the treasury of the Corporation.
(j) There shall be no adjustment of the Conversion Rate in case of the
issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this paragraph
(9). If any single action would require adjustment of the Conversion Rate
pursuant to more than one subparagraph of this paragraph (9), only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(k) If the Corporation shall take any action affecting the Common
Stock, other than action described in this paragraph (9), that in the opinion of
the Board of Directors materially adversely affects the conversion rights of the
holders of the shares of 5% Preferred Stock, the Conversion Rate may be
adjusted, to the extent permitted by law, in such manner, if any, and at such
time, as the Board of Directors
30
<PAGE>
may determine to be equitable in the circumstances; provided that the provisions
of this paragraph (9)(k) shall not affect any rights the holders of 5% Preferred
Stock may have at law or in equity.
(l) (i) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock or its issued shares of Common
Stock held in its treasury, or both, for the purpose of effecting conversion of
the 5% Preferred Stock, the full number of shares of Common Stock deliverable
upon the conversion of all outstanding shares of 5% Preferred Stock not
theretofore converted. For purposes of this paragraph (9)(l) the number of
shares of Common Stock that shall be deliverable upon the conversion of all
outstanding shares of 5% Preferred Stock shall be computed as if at the time of
computation all such outstanding shares were held by a single holder.
(ii) The Corporation covenants that any shares of Common Stock
issued upon conversion of the 5% Preferred Stock shall be duly authorized,
validly issued, fully paid and non-assessable. Before taking any action that
would cause an adjustment increasing the Conversion Rate such that the quotient
of $1,000.00 and the Conversion Rate would be reduced below the then-par value
of the shares of Common Stock deliverable upon conversion of the 5% Preferred
Stock, the Corporation will take any corporate action that, in the opinion of
its counsel, may be necessary in order that the Corporation may validly and
legally issue fully paid and non-assessable shares of Common Stock based upon
such adjusted Conversion Rate.
(iii) Prior to the delivery of any securities that the Corpora-
tion shall be obligated to deliver upon conversion of the 5% Preferred Stock,
the Corporation shall comply with all applicable federal and state laws and
regulations which required action to be taken by the Corporation.
(m) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock or other securities or property on conversion of the 5% Preferred
Stock pursuant hereto; provided, however, that the Corporation shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of shares of Common Stock or other securities or
property in a name other than that of the holder of the 5% Preferred Stock to be
converted and no such issue or delivery shall be made unless and until the
Person requesting such issue or delivery
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<PAGE>
has paid to the Corporation the amount of any such tax or established, to the
satisfaction of the Corporation, that such tax has been paid.
(10) Voting Rights. (a) The holders of record of shares of 5% Preferred
Stock shall not be entitled to any voting rights except as hereinafter provided
in this paragraph (10) or as otherwise provided by law. When and if the holders
of 5% Preferred Stock are entitled to vote by law or pursuant to this paragraph
(10), each holder will be entitled to one vote per share except that when any
other series of preferred stock shall have the right to vote with the 5%
Preferred Stock as a single class on any matter, then the 5% Preferred Stock and
other series shall have with respect to such matters one vote per $1,000 of
stated liquidation preference.
(b) Without the written consent of the holders of at least 662/3% of
aggregate Liquidation Rights of the outstanding shares of 5% Preferred Stock or
the vote of holders of at least 662/3% of aggregate Liquidation Rights of the
outstanding shares of 5% Preferred Stock at a meeting of the holders of 5%
Preferred Stock called for such purpose, the Corporation will not amend, alter
or repeal any provision of the Restated Certificate of Incorporation (by merger
or otherwise) so as to adversely affect the preferences, rights or powers of the
5% Preferred Stock; pro vided that any such amendment that changes the dividend
payable on, or the aggregate Liquidation Rights of, the 5% Preferred Stock
shall require the affirmative vote at a meeting of holders of 5% Preferred Stock
called for such purpose or written consent of the holder of each share of 5%
Preferred Stock.
(c) Without the written consent of the holders of at least 66 2/3% of
aggregate Liquidation Rights of the outstanding shares of 5% Preferred Stock or
the vote of holders of at least 662/3% of aggregate Liquidation Rights of the
outstanding shares of 5% Preferred Stock at a meeting of such holders called for
such purpose, the Corporation will not issue any additional 5% Preferred Stock
or create, authorize or issue any Parity Securities or Senior Securities or
increase the authorized amount of any such other class or series; provided that
this paragraph (9)(c) shall not limit the right of the Corporation to (i) issue
additional shares of 5% Preferred Stock as dividends pursuant to paragraph (4)
or (ii) to issue Parity Securities or Senior Securities in order to refinance,
redeem or refund the 13% Preferred, the 5 1/4% Preferred, the 5% Convertible
Preferred Series A or the 5% Convertible Preferred Series B, provided that in
the case of a refinancing, redemption or refund of the 13% Preferred or the 5
1/4% Preferred, the maximum accrual value (i.e., the sum of stated value and
maximum amount payable in kind over the term from issuance to first date of
mandatory redemption or redemption at the option of the holder) of such Parity
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<PAGE>
Securities or Senior Securities issued by the Corporation in such refinancing,
as shall be reflected on the Corporation's consolidated balance sheet prepared
in accordance with GAAP applied on a basis consistent with the Corporation's
prior practice, may not exceed the maximum accrual value of the 13% Preferred,
or the 5 1/4% Preferred or the 5% Convertible Preferred respectively, as
reflected on the Corporation's consolidated balance sheet as contained in the
report filed by the Corporation with the United States Securities and Exchange
Commission pursuant to the Exchange Act that is most recent prior to such
refinancing.
(d) Nothing in this paragraph (10) shall be in derogation of any rights
that a holder of shares of 5% Preferred Stock may have in his capacity as a
holder of shares of Common Stock.
(e) Except as otherwise set forth in this paragraph (10) or as required
by law, the holders of 5% Preferred Stock shall not have any relative,
participating, optional or other special voting rights and powers, except as
provided by this Certificate or in any agreement the Corporation and a holder
and the consent or vote of such holders shall not be required for the taking of
any corporate action by the Corporation or the Board of Directors. The
provisions of this paragraph (10) are in lieu of, and not in addition to, any
voting rights specified in the Restated Certifi cate of Incorporation as
applicable to a series of Preferred Stock.
(11) Holding Company. Notwithstanding anything herein to the contrary,
if the Corporation is reorganized such that the Common Stock is exchanged for
the common stock of a new entity ("Holdco") whose common stock is traded on
NASDAQ or another recognized securities exchange, then the Corporation, by
notice to the holders of the 5% Preferred Stock but without any required consent
on their part, may cause the exchange of this 5% Preferred Stock for 5%
preferred stock of Holdco having the same terms, conditions, ranking and other
rights as set forth herein, provided that (i) Holdco shall be incorporated under
the Delaware General Corporation Law and be based in the United States and (ii)
to the extent permitted by applicable law, the certificates representing shares
of the 5% Preferred Stock prior to the formation of Holdco shall be deemed to
represent shares of the new 5% preferred stock, and the holder thereof shall not
be required to surrender or exchange its certificates representing shares of 5%
Preferred Stock.
(12) General Provisions. (a) The headings of the paragraphs, subpara
graphs, clauses and subclauses of this Certificate of Designation are for
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<PAGE>
convenience of reference only and shall not define, limit or affect any of the
provisions hereof.
(b) The shares of 5% Preferred Stock shall bear the following legend:
THE SHARES OF PREFERRED STOCK, PAR VALUE $0.01, OF THE CORPORATION (THE
"PREFERRED STOCK") REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR
SOLD IN THE UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") AND ANY APPLICABLE STATE SECURITIES LAWS OR IN
ACCORDANCE WITH ANY APPLICABLE EXEMPTION FROM, OR TRANSACTION NOT SUBJECT
TO, THE REGIS TRATION REQUIREMENTS UNDER THE ACT. THE TRANS FER OF THE
PREFERRED STOCK EVIDENCED BY THIS CER TIFICATE IS SUBJECT TO THE
RESTRICTIONS ON TRANSFER PROVIDED FOR IN THE PURCHASE AGREEMENT, DATED
FEBRUARY [ ], 2000, AS MAY BE AMENDED, AMONG THE CORPORATION AND CERTAIN
PURCHASERS, A COPY OF WHICH IS ON FILE AT THE EXECUTIVE OFFICES OF THE
CORPORATION AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH
PREFERRED STOCK UPON WRITTEN REQUEST TO THE CORPORATION.
SO LONG AS ANY OF THE PREFERRED STOCK ARE RESTRICTED SECURITIES WITHIN THE
MEANING OF RULE 144(a)(3) UNDER THE ACT, THE CORPORATION WILL, DURING ANY
PERIOD IN WHICH (A) THE CORPORATION IS NOT SUBJECT TO AND IN COMPLIANCE WITH
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE
"EXCHANGE ACT"), OR (B) THE COR PORATION IS NOT EXEMPT FROM THE REPORTING
OBLIGATIONS OF RULE 12g3-2(B) OF THE EXCHANGE ACT, PROVIDE TO EACH HOLDER OF
SUCH RESTRICTED SECURITIES AND TO EACH PRO SPECTIVE PURCHASER (AS DESIGNATED
BY SUCH HOLDER) OF SUCH RESTRICTED SECURITIES, UPON THE REQUEST OF SUCH
HOLDER OR PROSPECTIVE PURCHASER, ANY
34
<PAGE>
INFORMATION REQUIRED TO BE PROVIDED BY SUBJECTION (d)(4)(i) OF RULE 144(A)
UNDER THE ACT.
(c) If the Corporation shall have failed to declare or pay dividends as
required pursuant to paragraph (4) hereof or shall have failed to discharge the
Redemption Obligation pursuant to paragraph (6) hereof, the holders of shares of
5% Preferred Stock shall be entitled to receive, in addition to all other
amounts required to be paid hereunder, when, as and if declared by the Board of
Directors, out of funds legally available for the payment of dividends (after
taking into account revaluation of the assets and liabilities of the Corporation
to the extent deemed reasonable by the Board of Directors of the Corporation
after consultation with legal and financial advisors) but without regard to any
contractual or other restrictions with respect thereto, cash dividends on (i)
the aggregate dividends which the Corporation shall have failed to declare or
pay or (ii) the aggregate Redemption Price together with accrued and unpaid
dividends on the 5% Preferred Stock, as applicable, in each case at a rate of 2%
per quarter, compounded quarterly, for the period during which the failure to
pay dividends or failure to discharge the Redemption Obligation shall continue.
(d) (i) Whenever in connection with any exchange or conversion of the
5% Preferred Stock for Eurotel Stock or Common Stock, as applicable, the
Qualified Holder is required to surrender certificates representing such shares
of 5% Preferred Stock, the Qualified Holder may, by written notice to the
Corporation and its transfer agent, elect to retain such certificates. In such
case, the certificates so retained by the Qualified Holder shall be deemed (as
and to the extent permitted by the law of the jurisdiction of incorporation of
Eurotel and with respect to Common Stock, Delaware) to represent, at and from
the date of such exchange, the number of shares of Eurotel Stock or the Common
Stock, as the case may be, issuable upon such exchange pursuant to paragraph (8)
or conversion pursuant to paragraph (9).
(ii) (A) A Qualified Holder which has previously elected to retain
certificates representing the 5% Preferred Stock in accordance with para graph
(12)(d)(i) upon exchange or conversion may subsequently elect to receive
certificates representing the shares of Eurotel Stock or the Common Stock issued
upon such exchange or conversion. To receive certificates representing such
shares of Eurotel Stock or the Common Stock, as applicable, the holder of such
certificates shall surrender it, duly endorsed or assigned to the Corporation or
in blank, at the office of the Corporation, or to any transfer agent of the
Corporation previously
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<PAGE>
designated by the Corporation for such purposes, with a written notice of that
election.
(B) Unless the certificates to be issued shall be registered in the
same name as the name in which such surrendered certificates are registered,
each certificate so surrendered shall be accompanied by instruments of transfer,
in form satisfactory to the Corporation, duly executed by the Qualified Holder
or the Qualified Holder's duly authorized attorney and an amount sufficient to
pay any transfer or similar tax (or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid). All certificates so
surrendered shall be canceled by the Corporation or the transfer agent.
(C) As promptly as practicable after the surrender by the Qualified
Holder of such certificates, the Corporation shall issue and shall deliver to
such Qualified Holder, or on the Qualified Holder's written order, a certificate
or certificates for the number of duly authorized, validly issued, fully paid
and non-assessable shares of Eurotel Stock or the Common Stock, as applicable,
represented by the certificates so surrendered.
IN WITNESS WHEREOF, NTL Incorporated has caused this Certificate of
Designation to be signed by the undersigned this [ ] day of [ ], 2000.
NTL INCORPORATED
By:
----------------------------------------
Name: Richard J. Lubasch
Title: Executive Vice President,
General Counsel and Secretary
Dated February 17, 2000
-----------------------------
BANQUE NATIONALE DE PARIS
CREDIT AGRICOLE INDOSUEZ
DEUTSCHE BANK AG
PARIS BRANCH
WESTDEUTSCHE LANDESBANK GIROZENTRALE
PARIS BRANCH
and
FRANCE TELECOM
-----------------------------
PUT AND CALL OPTION AGREEMENT
-----------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Definitions and Interpretation.............................................1
2. Conditions.................................................................6
3. Put Option.................................................................7
4. Call Option................................................................8
5. Sale Price and Refund of Option Premium....................................9
6. Fees, Option Premium and Default Interest.................................10
7. Payments..................................................................11
8. Undertakings..............................................................12
9. Representations and Warranties............................................14
10. Put Acceleration Events...................................................17
11. Indemnity.................................................................20
12. Increased costs...........................................................22
13. Mitigation by the Finance Parties.........................................23
14. Costs and Expenses........................................................24
15. Possible Extension of the Call Option Period and of the Put Option Period.24
16. Assignments and Transfers.................................................26
17. Bank Representative.......................................................26
18. Accession of New Banks....................................................29
19. Applicable Law and Jurisdiction...........................................29
20. Entire Agreement..........................................................29
21. Notices...................................................................29
22. Remedies and Waivers......................................................31
EXHIBIT 3.3 NOTICE
EXHIBIT 3.4 STOCK POWER
EXHIBIT 18 FORM OF ACCESSION NOTICE TO BE DELIVERED BY AN ADDITIONAL BANK
PURSUANT TO CLAUSE 18
<PAGE>
THIS AGREEMENT (this "Agreement") is made on February 17, 2000
AMONG:
BANQUE NATIONALE DE PARIS whose principal place of business is at 16 boulevard
des Italiens, 75009 Paris France, represented by Lionel Bordarier and Christophe
Delafontaine ("BNP");
CREDIT AGRICOLE INDOSUEZ whose principal place of business is at 9, Quai du
President Paul Doumer, 92400 Courbevoie France, represented by Michel Chabanel
and Damien Scaillierez ("CAI");
DEUTSCHE BANK AG acting through its Paris branch whose principal place of
business is at 3 avenue de Friedland, 75008 Paris, represented by Benoit
Deschamps and Antoine de Maistre ("DB");
WESTDEUTSCHE LANDESBANK GIROZENTRALE acting through its Paris branch whose
principal place of business is at 15 avenue de Friedland, 75008 Paris,
represented by Barbara Selves and Nadine Veldung ("West LB");
(BNP, CAI, DB and West LB are hereafter referred to each as a "Bank" and
collectively as the "Banks")
and
FRANCE TELECOM whose principal place of business is at 6 Place d'Alleray, 75505
Paris, Cedex 15, France, represented by Eric Bouvier and _______________________
("France Telecom").
IN CONSIDERATION OF THE MUTUAL COVENANTS HEREIN CONTAINED, IT IS HEREBY AGREED
as follows:
1. Definitions and Interpretation
1.1 Definitions
The following words and expressions where used in this Agreement have the
meanings given to them below:
"Additional Bank" has the meaning set forth in clause 18 Accession of New
Banks;
"Affiliate" means in relation to any person, a Subsidiary of that person
or a Holding Company of that Person or any other Subsidiary of that
Holding Company;
<PAGE>
"Banks" has the meaning set forth at the beginning of this Agreement to
also include any Additional Bank after its accession to this Agreement in
accordance with the provisions of clause 18 Accession of New Banks;
"Bank Representative" means CAI, appointed pursuant to clause 17 Bank
Representative in its separate capacity to act as the Banks'
representative or any successor named as Bank Representative pursuant to
the terms of this Agreement;
"Borrowed Monies Indebtedness" means any indebtedness of any person:
(i) for monies borrowed;
(ii) whether actual or contingent under any guarantee, security,
indemnity or other commitment designed to assure any creditor
against loss in respect of any Borrowed Monies Indebtedness of any
third party;
(iii) under any acceptance credit having a term exceeding 90 days from
the date of issue;
(iv) under any debenture, bond, note, bill of exchange or commercial
paper;
(v) for amounts actually owing in respect of any interest rate swap or
cross-currency swap or forward sale or purchase contract; or
(vi) in respect of the payment obligations under any lease entered into
for the purpose of obtaining or raising finance;
"Business Day" means any day on which banks are open for general business
in New York City and Paris, excluding Saturdays and Sundays;
"Call Completion Date" has the meaning set forth in clause 4.2;
"Call Option" means the right of France Telecom (exercisable during the
Call Option Period) to acquire all (but not less than all) of the Option
Stock from the Banks at a price equal to the sum of all Sale Prices as
set forth in clause 4.1;
"Call Option Period" means the period during which the Call Option can be
exercised (within the meaning of clause 1.2.5.), being the period
commencing on the Date of Issue and ending 5 Business Days before the
Termination Date;
"Completion Date" means any Call Completion Date or Put Completion Date
being the day on which France Telecom completes the sale and purchase of
Option Stock from Banks;
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"Consolidated Net Worth" means the aggregate of the amount paid up or
credited as paid up on the issued ordinary share capital of France
Telecom including any capital reserves and retained earnings deducting
(to the extent included) any minority interests, all as determined by
reference to its most recent consolidated financial statements prepared
in accordance with generally accepted accounting principles in France
relating to commercial and industrial companies;
"Date of Issue" means the date of issue, sale and delivery of the
Preferred Stock pursuant to the Purchase Agreement;
"Dollars" and "US$" mean the lawful currency of the United States of
America;
"Finance Party" means the Bank Representative or a Bank;
"Group" means France Telecom and its Subsidiaries;
"Holding Company" means in relation to a company or corporation, any
other company or corporation in respect of which the former is a
Subsidiary;
"LIBOR" means in relation to each Premium Period or other period
concerned (which shall not vary during such period when fixed), the
London Interbank Offered Rate for deposits in Dollars for an equivalent
period (or, for any period which is not exactly divisible by a month, for
a period rounded upwards to the nearest month) as displayed on the
relevant page (T 3750) of the Reuters Monitor Money Rates Service (or, if
the agreed page is replaced or that service is unavailable, such
alternative page or service as the Bank Representative may select) at or
about 11 A.M. on the second London banking day before the first day of
such period; if no rate available as provided above, LIBOR means the
arithmetic mean of the rates (rounded upwards to four decimal places) as
supplied to the Bank Representative at its request quoted by the
Reference Banks to leading banks in the London interbank market at or
about 11 A.M on the second London banking day before the first day of the
period concerned for deposits in Dollars for an equivalent period;
"Majority Banks" means as long as the number of Banks is four, at least
two Banks and at any other time, Banks the sum of whose Purchase Prices
represent an amount equal to or greater than 50% of the sum of all
Purchase Prices at such time;
"Market Disruption Event" means:
(i) when LIBOR is to be determined by reference to the Reference Banks
as provided in the definition of LIBOR and none or only one of the
Reference Banks supplies a rate to the Bank Representative to
determine LIBOR for the relevant Premium Period or other period
concerned, or
(ii) before close of business day in London on the day where LIBOR must
be determined for a given Premium Period or for another period
concerned, the Bank Representative receives notification
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<PAGE>
from a Bank or Banks that the cost to it or to them of obtaining
matching deposits in the London Interbank Market would be in
excess of LIBOR;
"NTL" means NTL Incorporated, a Delaware corporation (or its successor
company);
"Option Premium" means the premium from time to time payable pursuant to
clause 6 Fees, Option Premium and Default Interest;
"Option Stock" means the aggregate of 275,000 shares of Preferred Stock
held by BNP, 275,000 shares of Preferred Stock held by CAI, 275,000
shares of Preferred Stock held by DB and 275,000 shares of Preferred
Stock held by West LB, the number of Preferred Stock held by each
Additional Bank, if any, and (in each case) shall include any further or
additional securities allotted in respect thereof (whether by way of
distribution, bonus or otherwise) or in substitution therefor (whether as
a result of conversion, the implementation of a scheme of arrangement or
similar proposal or otherwise howsoever);
"Overnight Rate" means the rate quoted daily as the overnight rate in the
London interbank market for deposits in Dollars and listed in the
relevant page of the Reuters Monitor Money Rates Service;
"Preferred Stock" means the series of redeemable 5% preferred shares of
NTL issuable to and purchasable by the Banks and France Telecom under the
Purchase Agreement;
"Premium Payment Date" means each of the dates as set out in the table
under the definition of "Relevant Margin";
"Premium Period" means the period between each Premium Payment Date,
other than the fourth Premium Period, which will be the period between
the fourth Premium Payment Date and the date two years after the Date of
Issue;
"Prepaid LIBOR" means in relation to each Premium Period or other period
concerned, the rate equivalent in present value to the LIBOR rate
determined in actuarial terms, to be calculated as follows:
PL = LIBOR 6 months X 360
--------------------------
360 + (LIBOR 6 months X j)
where "PL" is the Prepaid LIBOR and "j" is the number of days comprising
the period for which Prepaid LIBOR is calculated.
"Protected Party" means a Finance Party which is or will be, for or on
account of Tax, subject to any liability or required to make any payment
in relation to a sum received or receivable (or any sum deemed for the
purpose of Tax to be received or receivable) under this Agreement or in
connection with the Option Stock (including any dividend related
thereto);
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"Purchase Agreement" means the agreement dated the date of this Agreement
among NTL, France Telecom and the Banks (including the attached
Certificate of Designation, as defined in the Purchase Agreement)
relating to the issuance by NTL to, and the purchase by France Telecom
(or its assignees) and the Banks of, the Preferred Stock;
"Purchase Price" means with respect to each Bank the purchase price paid
by such Bank to NTL to purchase the Preferred Stock held by such Bank
(pursuant to the Purchase Agreement), such Purchase Price to be in the
amount of US$ 275,000,000 in the case of each of BNP, CAI, DB and West
LB;
"Put Acceleration Events" means any of the events or circumstances set
out in clause 10 Put Acceleration Events;
"Put Completion Date" has the meaning set forth in clause 3.3;
"Put Option" means the right of each Bank to require France Telecom to
acquire all (but not less than all) of the Option Stock it holds as set
forth in clause 3.1;
"Put Option Period" means the period during which the Put Option can be
exercised (within the meaning of clause 1.2.5), being the period
commencing on the day 20 Business Days before the Termination Date and
ending on the day which is 8 Business Days before the Termination Date;
"Reference Banks" means, in relation to LIBOR, the principal London
offices of National Westminster Bank, plc, Dresdner Bank, AG and Credit
Lyonnais or such other banks as may be appointed by the Bank
Representative in consultation with France Telecom;
"Relevant Margin" means the margin applicable to the calculation of the
Option Premium in respect of each Premium Period, as more particularly
set out below:
<TABLE>
<CAPTION>
-------------------- --------------------------- --------------------------- -----------------------------
Premium Period Premium Payment Dates Last day of the Premium Relevant Margin
Period
-------------------- --------------------------- --------------------------- -----------------------------
<S> <C> <C> <C>
First The Date of Issue 6 months after the Date 0.15 per cent per annum
of Issue
-------------------- --------------------------- --------------------------- -----------------------------
Second 6 months after the Date 1 year after the Date of 0.15 per cent per annum
of Issue Issue
-------------------- --------------------------- --------------------------- -----------------------------
Third 1 year after the Date of 18 months after the Date 0.25 per cent per annum
Issue of Issue
-------------------- --------------------------- --------------------------- -----------------------------
-------------------- --------------------------- --------------------------- -----------------------------
Fourth 18 months after the Date 2 years after the Date of 0.25 per cent per annum
of Issue (the last Issue
Premium Payment Date)
-------------------- --------------------------- --------------------------- -----------------------------
</TABLE>
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"Sale Price" means the price to be paid for the Option Stock held by each
Bank on the Completion Date as described in clause 5 Sale Price and
Refund of Option Premium;
"Subsidiary" means with respect to a company or corporation, any company
or corporation
(i) which is controlled, directly or indirectly, by the first-mentioned
company or corporation;
(ii) more than half the issued share capital of which is beneficially
owned, directly or indirectly, by the first-mentioned company or
corporation; or
(iii) which is a subsidiary of another Subsidiary of the first-mentioned
company or corporation
and, for these purposes, a company or corporation shall be treated as
being controlled by another if that other company or corporation has the
right or power to direct its affairs and/or has the right to elect a
majority of its board of directors or any equivalent body or its chief
executive officer;
"Tax" means any tax, levy, impost, duty or other charge or withholding of
a similar nature (including any penalty or interest payable in connection
with any failure to pay or any delay in paying any of the same);
"Termination Date" means the second anniversary of the Date of Issue.
1.2 Interpretation
1.2.1 The headings used in this Agreement are for convenience only
and shall not affect its meaning.
1.2.2 References to a clause are (unless otherwise stated) to a
clause of this Agreement.
1.2.3 Words importing one gender shall (where appropriate) include
any other gender and words importing the singular shall (where
appropriate) include the plural and vice versa.
1.2.4 References to a time in this Agreement are references to the
time prevailing in New York City, except with respect to the
determination of LIBOR where the time referred to is the time
prevailing in London and except with respect to the
application of clause 21.2.3 where the time referred to is the
time prevailing in Paris.
1.2.5 Any reference to the "exercise" of the Call Option or of the
Put Option shall mean the sending of the notices provided
respectively under clauses 4.2, 3.3 or 10.2.
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2. Conditions
2.1 The provisions of this Agreement are conditional upon the Option Stock
being sold to the Banks in accordance with the terms of the Purchase
Agreement and issued with the terms set forth in the Certificate of
Designation as defined in and attached to the Purchase Agreement.
2.2 If the condition described in clause 2.1 is not satisfied on or before
June 29, 2000 the provisions of this Agreement shall cease to have any
effect with the exception of the provisions of clauses 11 Indemnity, 14
Costs and Expenses and 19 Applicable Law and Jurisdiction.
3. Put Option
3.1 France Telecom hereby grants to each Bank the right to require France
Telecom to purchase all (but not less than all) of the Option Stock that
such Bank holds at the Sale Price.
3.2 The Put Option may only be exercised by each Bank:
(a) during the Put Option Period; or
(b) during any other period in which a Put Acceleration Event has
occurred and is continuing.
3.3 The Put Option shall be irrevocably exercisable by sending a notice in
the form attached hereto as Exhibit 3.3 given either by each Bank or by
the Bank Representative on behalf of all the Banks in writing to France
Telecom at any time during the Put Option Period or in any period in
which a Put Acceleration Event has occurred and is continuing. Subject to
the provisions of clause 15 Possible extension of the Call Option Period
and of the Put Option Period, if, at the expiry of the Put Option Period,
the Put Option shall not have been so exercised by a Bank, it shall lapse
for such Bank. Each notice shall specify the date (the "Put Completion
Date"), which shall be not less than 8 Business Days from the date of the
notice and which shall be at the latest on the Termination Date (except
in case of extension of the Put Option Period as provided in clause
15.1), for the completion of the sale and purchase of the Option Stock
concerned by such notice. Each Bank exercising its Put Option shall
notify such exercise to the Bank Representative and all the other Banks
without delay.
3.4 Completion of the sale and purchase of any Option Stock concerned by a
notice received by France Telecom pursuant to clause 3.3 following the
exercise of the Put Option shall take place on the Put Completion Date at
the office of the Bank Representative or at such other place as the Bank
Representative and France Telecom shall agree. At that time the Bank
Representative (or, in the case where the notice referred to in clause
3.3 was not sent by the Bank Representative, each Bank having sent such
notice) shall deliver to France Telecom duly executed stock powers in the
form of Exhibit 3.4 for the Option Stock concerned by the notice(s) sent
pursuant to clause 3.3 to effect the transfer of good and marketable
title to all such Option Stock free and clear of any and all liens and
encumbrances created by
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<PAGE>
the Banks together with all share certificates in respect of the same,
against payment to each Bank concerned by such notice (as set forth
therein) of the Sale Price attributed to such Bank in respect of all its
Option Stock. Completion of the sale and purchase of the Option Stock
pursuant to clause 4.3 and 10.2 of this Agreement shall be conducted in
accordance with the provisions of this clause 3.4.
3.5 The rights of each Bank under or in connection with this clause 3 Put
Option and more generally under or in connection with this Agreement are
separate and independent rights and any debt arising under this Agreement
to a Bank from France Telecom shall be a separate and independent debt.
3.6 A Finance Party may, except as otherwise stated in this Agreement,
separately enforce its rights under this Agreement.
3.7 The obligation of France Telecom to purchase Option Stock from a Bank
under this clause 3 Put Option and under clause 10.1 shall be conditioned
upon such Bank not having as of the Put Completion Date relating to such
Option Stock (i) agreed to amend, modify or terminate, or waived any
condition or right of such Bank under, the Purchase Agreement, without
the written consent of France Telecom, or (ii) sold, assigned,
transferred or created a lien, encumbrance or charge with respect to any
of its Option Stock or any of its rights thereto which continues to exist
on the Put Completion Date.
4. Call Option
4.1 In consideration of the payment of the option fees and of the Option
Premiums as provided in clause 6 Fees, Option Premium and Default
Interest, the Banks hereby grant to France Telecom or any Subsidiary of
France Telecom designated in writing by France Telecom to the Banks in
the notice given by France Telecom pursuant to clause 4.2 the right
(exercisable during the Call Option Period) to purchase all (but not some
only) of the Option Stock at a price equal to the sum of all Sale Prices.
4.2 The Call Option shall be irrevocably exercisable by sending a notice in
the form attached hereto as Exhibit 3.3 given by France Telecom in
writing to the Bank Representative at any time during the Call Option
Period and exclusively for all the Option Stock at the same time. Any
partial exercise of the Call Option shall be null and void, except as
permitted under clauses 4.5 and 4.6. If at the expiry of the Call Option
Period the Call Option shall not have been so exercised it shall lapse.
The notice shall specify the date (the "Call Completion Date"), which
shall be not less than 5 Business Days from the date of the notice and
which shall be at the latest on the Termination Date (except in case of
extension of the Call Option Period as provided in clause 15.1), for the
completion of the sale and purchase of the Option Stock.
4.3 Completion of the sale and purchase of the Option Stock following the
exercise of the Call Option shall take place on the Call Completion Date
in accordance with the procedures set out in clause 3.4 provided that,
the duly executed stock powers and the share certificates shall be
delivered to France Telecom or to
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the Subsidiary of France Telecom designated in writing by France Telecom
to the Banks as provided in clause 4.1.
4.4 The obligations of each Bank under this clause 4 Call Option and more
generally under this Agreement are several. Failure by a Bank to perform
its obligations under this Agreement does not affect the obligations of
any other party to this Agreement. No Finance Party is responsible for
the obligations of any other Finance Party under this Agreement.
4.5 Notwithstanding anything to the contrary contained herein, if the Put
Option is exercised by some but not all of the Banks, France Telecom
shall have the right to exercise the Call Option hereunder with respect
to the Option Stock held by the Banks that did not exercise the Put
Option at a price equal to the sum of Sale Prices with respect to such
remaining Option Stock.
4.6 Notwithstanding anything to the contrary contained herein, if some but
not all of the Banks give notice pursuant to clause 3.3 of the exercise
of their Put Option, the completion of the sale and purchase of the
Option Stock concerned to take place on a Put Completion Date specified
in such notice, France Telecom shall have the right to exercise the Call
Option hereunder with respect to the Option Stock held by the Banks
having given such notice by giving notice pursuant to clause 4.2 to each
such Banks (with a copy to the Bank Representative) for a Call Completion
Date which shall be on or before the Put Completion Date specified in the
notice given by those Banks having so notified their exercise of the Put
Option.
5. Sale Price and Refund of Option Premium
5.1 The Sale Price for the Option Stock held by each Bank shall be equal to
its Purchase Price.
5.2 If a Put Option or a Call Option is exercised pursuant to this Agreement,
each Bank concerned by such Put Option or Call Option will on the
corresponding Completion Date refund to France Telecom (such refund to be
paid by partial offset of the Sale Price stated in clause 5.1) an amount
equal to the equivalent in present value (determined in actuarial terms)
to the Option Premium paid by France Telecom to such Bank on the most
recent Premium Payment Date, to the extent to which such payment only
accrued after the Completion Date, such amount to be calculated as
follows:
PP x L' x j
------------
360 + L' x j
where "PP" is Purchase Price, " L' " is the LIBOR minus 0.10 per cent per
annum plus the Relevant Margin notified by the Bank Representative for
the period remaining between the corresponding Completion Date and the
next Premium Payment Date, and "j" is the number of days comprising the
period for which "L'" is calculated.
For the avoidance of doubt, such formula also covers any so-called
"funding breakage costs".
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If a Market Disruption Event occurs and the Bank Representative or France
Telecom so requires, the Bank Representative and France Telecom shall
enter into negotiations (for a period of not more than thirty (30) days)
with a view to agreeing to a substitute basis for determining the rate to
be used to calculate the refund.
Any alternative basis agreed pursuant to the preceding paragraph shall,
with the prior consent of all the Banks and France Telecom, be binding on
all parties.
6. Fees, Option Premium and Default Interest
6.1 France Telecom, in respect of the Call Option, shall pay to the Bank
Representative on behalf of (and for distribution to) the Banks (i) on
the date of signature of this Agreement an option fee equal to 0.10 per
cent of the aggregate amount of the Purchase Prices, (ii) on the earlier
of April 30, 2000 and the Date of Issue an option fee equal to 0.05 per
cent of the aggregate amount of the Purchase Prices, (iii) on the Date of
Issue, an additional option fee equal to 0.05 per cent of the aggregate
amount of the Purchase Prices, and (iv) on the third Premium Payment Date
if the Call Completion Date has not occurred prior to such date an option
fee equal to 0.10 per cent of the aggregate amount of the Purchase
Prices.
6.2 France Telecom shall pay to the Bank Representative on behalf of (and for
distribution to) the Banks on each Premium Payment Date (for those Banks
as to which the Completion Date has not occurred prior thereto) an Option
Premium (calculated in accordance with this clause 6.2) in respect of the
Call Option.
6.2.1 The Option Premium payable on any given Premium Payment Date
shall be equal to the interest which would accrue on a
principal amount equal to the aggregate amount of the Purchase
Prices attributable to the Option Stock for which the
Completion Date has not occurred in respect of the Premium
Period commencing on such Premium Payment Date calculated at
the rate per annum determined by the Bank Representative to be
the aggregate of (a) the Relevant Margin and (b) Prepaid
LIBOR.
6.2.2 The first Premium Period will commence on the Date of Issue
and end on the date falling six months after that date. Each
subsequent Premium Period in respect of this Agreement will
commence on the last day of the previous Premium Period and
shall end on the date falling six months after such date.
6.2.3 Subject to clause 6.2.4 if LIBOR is to be determined by
reference to the Reference Banks but a Reference Bank does not
supply a quotation as provided in the definition of LIBOR, the
applicable LIBOR shall be determined on the basis of the
quotations of the remaining Reference Banks.
6.2.4 Unless otherwise determined in accordance with clause 6.2.5,
if a Market Disruption Event occurs for any Premium Period,
then the Option Premium payable to each Bank on the
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corresponding Premium Payment Date shall be equal to the
interest which would accrue on a principal amount equal to
the amount of the Purchase Price paid by such Bank in
respect of the Premium Period commencing on such Premium
Payment Date calculated at the rate per annum determined by
the Bank Representative to be the aggregate of (a) the
Relevant Margin and (b) the rate equivalent in actuarial
terms (as provided in the definition of Prepaid LIBOR) to
the rate notified to the Bank Representative by such Bank as
soon as practicable and in any event before the Option
Premium is due to be paid in respect of the Premium Period,
to be that which expresses as a percentage rate per annum
the cost to that Bank of funding its Purchase Price from
whatever sources it may reasonably select.
6.2.5 If a Market Disruption Event occurs and the Bank
Representative or France Telecom so requires, the Bank
Representative and France Telecom shall enter into
negotiations (for a period of not more than thirty (30) days)
with a view to agreeing to a substitute basis for determining
the rate to be used to calculate the Option Premium.
Any alternative basis agreed pursuant to the preceding
paragraph shall, with the prior consent of all the Banks and
France Telecom, be binding on all parties.
6.2.6 France Telecom shall compensate the Bank Representative (to
the extent not otherwise reimbursed under this Agreement) and
each Bank upon written request from the Bank Representative
(which request shall set forth the basis for such compensation
and shall, absent manifest error, bind all parties hereto),
for all losses (including loss of reasonably anticipated
profits), reasonable expenses and liabilities (including any
loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds
required by a Bank to fund its Purchase Price) which such Bank
sustains:
(i) as a consequence of the occurrence of a Put
Acceleration Event as provided in clause 10 Put
Acceleration Events; or
(ii) as a consequence of a failure by France Telecom to pay
any amount under this Agreement on its due date.
6.3 If either party fails to pay any sum (including any sum payable pursuant
to this clause 6.3) on its due date for payment under this Agreement,
such party shall pay interest on such sum at a rate equal to the sum of
1.25 per cent per annum and of the Overnight Rate calculated on the basis
of actual days elapsed from the due date up to the date of actual payment
(as well after as before judgment).
Default interest under this clause 6.3 shall be due and payable on the
last day of each such period and at least on the last day of every
successive three-month period following the due date or, if earlier, on
the date on which the sum in respect of which such default interest is
accruing shall actually be paid.
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Default interest (if unpaid) arising on an overdue amount will be
compounded with the overdue amount at the end of such successive
three-month period applicable to that overdue amount until actual payment
but will remain immediately due and payable.
7. Payments
7.1 Except as provided in clause 5.2, all payments by France Telecom
hereunder shall be made without set-off or counterclaim and, subject to
clause 7.2., free and clear of any deductions or withholdings, in Dollars
in same day funds on the due date to the account of the Bank
Representative notified to France Telecom by the Bank Representative.
7.2 If at any time France Telecom is required by law to make any deduction or
withholding in respect of any Taxes from any payment due to any Finance
Party hereunder, the sum due from France Telecom in respect of such
payment shall be increased to the extent necessary to ensure that, after
the making of such deduction or withholding, the Bank Representative
receives on the relevant due date and retains (free from any liability in
respect of such deduction or withholding) a net sum equal to the sum
which it would have received had no such deduction or withholding been
required to be made. France Telecom shall promptly deliver to the Bank
Representative receipts, certificates or other proof evidencing the
amounts (if any) paid or payable in respect of any such deduction or
withholding.
France Telecom shall promptly upon becoming aware that it must make a Tax
deduction or withholding (or that there is any change in the rate or the
basis of a Tax deduction or withholding) notify the Bank Representative
accordingly.
If France Telecom is required to make a Tax deduction or withholding,
France Telecom shall make such Tax Deduction or withholding within the
time allowed and in the minimum amount required by law.
Within 30 days of making either a Tax deduction or withholding or any
payment required in connection with a Tax deduction or withholding,
France Telecom shall deliver to the Bank Representative evidence
reasonably satisfactory to the Bank entitled to the payment that the Tax
deduction or withholding has been made or (as applicable) any appropriate
payment paid to the relevant tax authority.
7.3 When any payment would otherwise be due on a day which is not a Business
Day, the next following Business Day shall be substituted for such day,
unless such Business Day falls in the next calendar month, in which case
the immediately preceding Business Day shall be substituted therefor.
7.4 Option Premium, default interest and other sums computed on an annualized
basis shall accrue from day to day and be calculated on the actual number
of days elapsed and on the basis of a 360-day year.
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7.5 Any certificate or determination of the Bank Representative as to any
amount payable or required to be calculated hereunder shall be conclusive
and binding on France Telecom and on the Banks in the absence of manifest
error.
8. Undertakings
8.1 France Telecom undertakes with each Bank that:
8.1.1 it shall inform the Bank Representative of any Put
Acceleration Event or any event which with the giving of
notice or lapse of time or both would constitute a Put
Acceleration Event forthwith upon becoming aware thereof;
8.1.2 it shall provide the Banks with such financial and other
information concerning France Telecom and NTL (to the extent
that France Telecom has the right to provide any such
information with respect to NTL without violating any
confidentiality or fiduciary obligation) and their respective
affairs as the Bank Representative may from time to time
reasonably require;
8.1.3 it shall obtain, comply with the terms of and do all that is
necessary to maintain in full force and effect all
authorizations, approvals, licenses and consents required in
or by the laws and regulations of France or of the United
States of America or any subdivision thereof, to enable it
lawfully to enter into and perform its obligations under this
Agreement and the Purchase Agreement or to ensure the
legality, validity, enforceability or admissibility in
evidence of this Agreement and, to the extent applicable, of
the Purchase Agreement;
8.1.4 it shall ensure that at all times the claims of the Banks
against it under this Agreement rank at least pari passu with
the claims of all its other unsecured and unsubordinated
creditors;
8.1.5 it shall not, without the prior written consent of the
Majority Banks, create or permit to subsist any encumbrance in
respect of Borrowed Monies Indebtedness over all or any of its
present or future revenues or assets other than:
(a) any lien or right of set-off arising solely by
operation of law and not by reason of any default;
(b) subject to clause 8.1.6, any banker's right of set-off
or netting against amounts credited to accounts held by
any Group member for amounts outstanding or liabilities
of itself or any other Group member which is entered
into in the ordinary course of business or as a result
of normal banking arrangements or any banker's lien
created in respect of any such set-off or netting
arrangements but excluding arrangements which are
established primarily for the purpose of affording a
preferential position to the relevant creditor;
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(c) any lien incurred in respect of purchase money
indebtedness applied for the acquisition of an asset by
France Telecom or any Subsidiary of France Telecom;
(d) any lien incurred to finance any development or
alteration to any property which is directly owned by
France Telecom or any Subsidiary of France Telecom;
(e) any lien attached to any asset of any Subsidiary prior
to its acquisition by France Telecom;
(f) any encumbrance not covered by paragraphs (a) to (e)
above, provided that the aggregate amount of Borrowed
Monies Indebtedness secured by all encumbrances falling
within this paragraph (f) does not, at any time, exceed
25 per cent of Consolidated Net Worth; or
(g) renewals of any encumbrances referred to in paragraphs
(a) to (f) above;
8.1.6 it shall make sure that its obligations pursuant to this
Agreement shall be appropriately reflected in its accounts,
including in its audited annual accounts, and if treated
off-balance sheet by an appropriate note to the financial
statements; and
8.1.7 it shall duly perform and uphold its undertakings and
agreements under the Purchase Agreement.
8.2 Each Bank undertakes with France Telecom that it will not, prior to the
Completion Date on which the sale of its Option Stock is completed or, if
later, the Termination Date, at any time sell, assign, transfer, create a
lien with respect to, encumber, charge, exchange or convert any of its
Option Stock or any of its rights thereto unless either:
8.2.1 a Put Acceleration Event has occurred and (i) has not been
remedied as per clause 10.1.2 or (ii) France Telecom shall
have not performed its obligation to purchase Option Stock
upon exercise by any of the Banks of the Put Option; or
8.2.2 the prior written consent of France Telecom has been obtained.
9. Representations and Warranties
9.1 France Telecom represents and warrants to each Bank as of the date
hereof, and will be deemed to represent and warrant to each Bank on each
Premium Payment Date and on each Completion Date, that:
9.1.1 France Telecom is duly incorporated and validly existing under
the laws of France and has power to execute, deliver and
perform its obligations under this Agreement; all necessary
action has been taken by it to authorize the execution,
delivery and performance of this
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Agreement, no limitation on its powers will be exceeded as a
result of transactions under this Agreement and this Agreement
constitutes valid and legally binding obligations of France
Telecom enforceable in accordance with its terms;
9.1.2 the execution, delivery and performance of this Agreement by
France Telecom will not contravene any existing law,
regulation or authorization to which it is subject, result in
any material breach of or default under any agreement or other
instrument to which France Telecom is a party or is subject or
contravene any provision of France Telecom's corporate
documents or to the best knowledge of France Telecom, without
having made any specific investigation thereof, result in any
material breach of or material default under any agreement or
other instrument to which NTL is a party or is subject;
9.1.3 every authorization of, or registration with, governmental or
public bodies or courts required by France Telecom in
connection with the execution, delivery, performance,
validity, enforceability or admissibility in evidence of this
Agreement has been obtained or made and is in full force and
effect and there has been no default in the observance of any
conditions imposed in connection therewith;
9.1.4 no event or circumstance which constitutes or which with the
giving of notice or lapse of time or both would constitute a
Put Acceleration Event has occurred and is continuing;
9.1.5 under the laws of France in force at the date hereof, it will
not be required to make any deduction or withholding from any
payment it may make hereunder;
9.1.6 under the laws of France and of the State of New York in force
at the date hereof, the claims of the Banks against France
Telecom under this Agreement will rank at least pari passu
with the claims of all its other unsecured and unsubordinated
creditors, except for claims that may arise by operation of
law;
9.1.7 it irrevocably waives any immunity to jurisdiction which it
has or hereafter may acquire (including any immunity,
sovereign or otherwise pursuant to public law or status, to
pre-judgment attachment and execution) in any legal suit,
action or proceeding against it arising out of or based on
this Agreement or the transactions contemplated hereby that
is instituted in the Supreme Court of the State of New York,
County of New York or the U.S. District Court for the
Southern District of New York, or in any competent court of
the French Republic or any other jurisdiction (whether
through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with
respect to itself or its property. Without limiting the
generality of the foregoing, France Telecom agrees that the
waivers set forth in this clause 9.1.7 shall have the
fullest scope permitted under the Foreign Sovereign
Immunities Act of 1976 of the United States and are intended
to be irrevocable for purposes of such act;
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9.1.8 it has not taken any corporate action nor have any other steps
been taken or legal proceedings been started or (to its best
knowledge and belief) threatened against it for its
winding-up, dissolution (liquidation judiciaire),
administration or reorganization (redressement judiciaire) or
for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of it or
of any or all of its assets or revenues;
9.1.9 it is not in breach of or in default under any agreement to
which it is a party or which is binding on it or any of its
assets to an extent or in a manner which is reasonably likely
to have a material adverse effect on its ability to perform
its obligations hereunder;
9.1.10 no action or administrative proceeding of or before any court
or agency which is reasonably likely to have a material
adverse effect on its ability to perform its obligations
hereunder has been started or (to the best of its knowledge
and belief) threatened against it;
9.1.11 all of the written information supplied by it to the Banks in
connection herewith is true, complete and accurate in all
material respects and it is not aware of any material facts or
circumstances that have not been disclosed to the Banks and
which might, if disclosed, adversely affect the decision of a
person considering whether or not to provide financing to
France Telecom or to acquire the Preferred Stock;
9.1.12 except with respect to encumbrances of the type permitted by
clause 8.1.5, to the best knowledge of France Telecom, no
encumbrance exists over all or any of its material present or
future revenues or assets;
9.1.13 the execution of this Agreement and of the Purchase Agreement
and its exercise of its rights and performance of its
obligations hereunder and thereunder will not result in the
existence of nor oblige it to create any encumbrance over all
or any of its present or future revenues or assets;
9.1.14 the execution of this Agreement and of the Purchase Agreement
constitutes, and its exercise of its rights and performance of
its obligations hereunder and thereunder will constitute,
private and commercial acts done and performed for private and
commercial purposes;
9.1.15 it has not granted any rights of set-off under or pursuant to
the terms of any outstanding credit facilities, bond
documentation or note documentation, excluding any notes with
a maturity of less than three years, to which it is a party;
9.1.16 it has made its own investigation and assessment of the
creditworthiness and general condition of NTL; it shall be
solely responsible for continuing to evaluate the foregoing
for its own account and shall not rely on any Finance Party
for the furnishing of any assessment, information or
commentary whatsoever in respect thereof and it has not relied
on any
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statement or information given by any Finance Party in
deciding to enter into this Agreement or the Purchase
Agreement; and
9.1.17 the representations and warranties of France Telecom under the
Purchase Agreement with respect to the purchase by France
Telecom from the Banks of the Preferred Shares (as such term
is defined in the Purchase Agreement) are true and accurate.
9.2 Each Bank represents and warrants to France Telecom as of the date hereof
and on the Completion Date on which the sale of its Option Stock is
completed that:
9.2.1 the Purchase Agreement has not been amended, modified or
terminated, and no provision or condition thereof or any right
of a Bank thereunder has been waived, without the written
consent of France Telecom;
9.2.2 each Bank is duly incorporated and validly existing under the
laws of France or Germany, as the case may be, has on the date
hereof and on the Completion Date the full corporate power and
authority to make, and has taken all necessary corporate
action to authorize the execution, delivery and performance of
this Agreement.
10. Put Acceleration Events
10.1 Each Bank may, and if so instructed by all the Banks, the Bank
Representative shall, without prejudice to the Banks' other rights
hereunder, require France Telecom to acquire the Option Stock held by
such Bank (if requested by one Bank) or all the Option Stock (if
requested by the Bank Representative) after any of the following events
shall have occurred and so long as the same is subsisting, provided that
with respect to any event listed in clause 10.1.2, 10.1.3, 10.1.4,
10.1.5, 10.1.8, 10.1.9, 10.1.11 and 10.1.14 the Majority Banks shall have
to decide that such an event has occurred and constitutes a Put
Acceleration Event prior to any request by any Bank or the Bank
Representative that France Telecom acquires Option Stock;
10.1.1 France Telecom fails to pay any sum payable by it under this
Agreement in the currency, at the time and in the manner
specified in this Agreement unless for sums other than any
Sale Price or any Option Premium, such failure to pay is
remedied within 10 Business Days of the occurrence thereof; or
10.1.2 France Telecom defaults in the due performance or observance
of any other of its obligations under this Agreement or, as
long as it is a party to the Purchase Agreement, under the
Purchase Agreement and (if such default is in the opinion of
the Majority Banks capable of remedy) such default shall not
have been remedied within 10 Business Days following written
notice thereof to France Telecom by the Bank Representative;
or
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10.1.3 any representation or warranty made or deemed to be made or
repeated by France Telecom in or pursuant to this Agreement or
in or pursuant to the Purchase Agreement is or proves to have
been incorrect or misleading in any material respect; or
10.1.4 it becomes unlawful for France Telecom to perform any or all
its obligations under this Agreement or, as long as it is a
party to the Purchase Agreement, under the Purchase Agreement;
or
10.1.5 France Telecom or NTL is unable to pay its debts as they fall
due (in the case of France Telecom is in cessation de
paiements), commences negotiations with its creditors with a
view to the general readjustment or rescheduling of its
indebtedness or makes a general assignment for the benefit of
or a composition with its creditors; or
10.1.6 France Telecom or NTL takes any corporate action or other
steps are taken or legal proceedings (which proceedings are
not discharged within 60 days from the date of their
commencement) are started for its redressement judiciaire,
liquidation judiciaire, winding-up, dissolution,
administration or reorganization in a bankruptcy or insolvency
proceeding; or
10.1.7 France Telecom or NTL takes any corporate action or other
steps are taken or legal proceedings are started for the
appointment of an administrateur judiciaire, receiver,
administrator, administrative receiver, trustee or similar
officer of it or of any or all of its revenues and assets; or
10.1.8 any execution or distress is levied against, or an
encumbrancer takes possession of the whole or any material
part of, the property, undertaking or assets of France Telecom
or NTL; or
10.1.9 NTL defaults in any material respect in the due performance or
observance of any of its obligations under the Purchase
Agreement and (if such default is in the opinion of the
Majority Banks capable of remedy) such default shall not
have been remedied within 10 Business Days following written
notice thereof to France Telecom, with a copy thereof sent
at the same time to NTL at its address set forth in the
Purchase Agreement, or any representation or warranty made
or deemed to be made or repeated by NTL in or pursuant to
Section 1 of the Purchase Agreement is or proves to have
been incorrect or misleading in any material respect; or
10.1.10 France Telecom repudiates this Agreement; or
10.1.11 at any time any act, condition or thing required to be done,
fulfilled or performed in order (a) to enable France Telecom
lawfully to enter into, exercise its rights under and
perform the obligations expressed to be assumed by it in
this Agreement or under the Purchase Agreement, (b) to
ensure that the obligations expressed to be assumed by
France Telecom in this Agreement or in the Purchase
Agreement are legal, valid and binding or (c) to make this
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Agreement or the Purchase Agreement admissible in evidence
in the city of New York and in France is not done, fulfilled
or performed and any such act, condition or thing is, in the
opinion of the Majority Banks, material; or
10.1.12 Standard and Poors reduces its credit rating of France
Telecom's long-term debt below A - or Moody's reduces its
credit rating of France Telecom's long-term debt below Aa3; or
10.1.13 it becomes unlawful in any jurisdiction for a Bank to perform
any of its obligations as contemplated by this Agreement or
the Purchase Agreement or to hold Preferred Stock, in which
case the Put Acceleration Event shall be deemed to occur
solely with respect to such Bank; or
10.1.14 any company or person or a group of persons and/or of
companies acting in concert, other than France Telecom,
acquires control directly or indirectly of NTL, within the
meaning of the term "control" as set forth in the definition
of Subsidiary or France Telecom and/or any Subsidiary thereof
shall no longer be the registered and beneficial owner of
capital stock of NTL representing at least 2 per cent of the
voting rights of all outstanding NTL capital stock; or
10.1.15 companies of the Group, on a consolidated basis (including
France Telecom), or France Telecom on an individual basis
sell, lease, transfer or otherwise dispose of (including by
discontinuation), by one or more transactions or series of
transactions (whether related or not), the whole or any
substantial part (the book value of which is, (i) in the
case of companies of the Group on a consolidated basis, when
aggregated with the book value of the Group's revenues or,
as the case may be, the Group's assets which have been sold,
leased, transferred or otherwise disposed of during any
twelve month period following the date of this Agreement, 20
per cent or more of the book value of the whole, determined
by reference to France Telecom's latest consolidated
financial statements delivered by France Telecom pursuant to
clause 8.1.2 and (ii) in the case of France Telecom on an
individual basis when aggregated with the book value of its
revenues or, as the case may be, assets which have been
sold, leased, transferred or otherwise disposed of during
any twelve month period following the date of this
Agreement, 20 per cent or more of the book value of the
whole, determined by reference to France Telecom's latest
statutory audited financial statements delivered by France
Telecom pursuant to clause 8.1.2) of the Group's revenues or
assets in the case of companies of the Group on a
consolidated basis or of France Telecom's revenues or assets
in the case of France Telecom on an individual basis, other
than:
(a) disposals of stock in trade in the ordinary course of
business;
(b) disposals on arm's length commercial terms, for full
value and for cash consideration;
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(c) in the case of companies of the Group other than France
Telecom, disposals to another member of the Group;
(d) disposals required by law, regulation, governmental
order or governmental authority; or
(e) disposals, the proceeds of which are to be reinvested
in the Group in the case of companies of the Group
other than France Telecom or used to repay any Borrowed
Monies Indebtedness within six months.
10.2 The rights conferred upon the Banks and the Bank Representative pursuant
to clause 10.1 may be exercised even if the Put Option Period has not
then begun. If France Telecom is required to purchase all or part of the
Option Stock pursuant to clause 10.1, then completion of the transaction
shall take place pursuant to the notice given to France Telecom in
accordance with clause 3.3 or 4.2 and in accordance with the provisions
of clause 3.4.
11. Indemnity
11.1 Notwithstanding anything to the contrary in this Agreement or any other
agreement referred to in this Agreement including the Purchase Agreement,
France Telecom agrees to indemnify and hold harmless each of the Finance
Parties and each director, officer, employee and affiliate thereof (each
an "indemnified person") from and against any and all actions, suits,
proceedings (including any investigations or inquiries), claims, losses,
damages, liabilities or expenses of any kind or nature whatsoever which
may be incurred by or asserted against or involve any such indemnified
person as a result of or arising out of or in any way related to or
resulting from this Agreement, from the Purchase Agreement or from
holding Preferred Stock, and France Telecom agrees to reimburse each
indemnified person for any reasonable and documented legal or other
out-of-pocket expenses incurred in connection with investigating,
defending or preparing to defend any such action, suit, proceeding
(including any inquiry or investigation) or claim (whether or not any
such indemnified person is a party to any action or proceeding out of
which any such expenses arise); provided that France Telecom shall not
have to indemnify any indemnified person against loss, claim, damage,
expense or liability to the extent that the same resulted primarily from
the gross negligence or willful misconduct of such indemnified person.
Promptly after receipt by an indemnified person of notice of the
commencement of any action, suit or proceeding, or existence of a claim,
such indemnified person shall give written notice to France Telecom with
respect thereto. At France Telecom's request, the Banks and their counsel
shall cooperate and consult with France Telecom and the counsel appointed
at France Telecom's cost by France Telecom. The Banks shall provide
France Telecom with all information or documents in relation to any such
action, suit, proceeding or claim which France Telecom may reasonably
request. In the event of a disagreement on the strategy to be implemented
with regard to any such action, suit, proceeding or claim or if France
Telecom chooses not to intervene in the defense of the indemnified
person, the indemnified person will keep ultimate management of its
defense for its own benefit.
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11.2 (a) France Telecom shall (within 5 Business Days of demand by
the Bank Representative) pay to a Protected Party an amount equal
to the loss, liability or cost which that Protected Party
determines will be or has been (directly or indirectly) suffered
for or on account of Tax by that Protected Party.
(b) Paragraph (a) above shall not apply with respect to any Tax
assessed on a Finance Party:
(A) under the law of the jurisdiction in which that Finance
Party is incorporated or, if different, the jurisdiction
(or jurisdictions) in which that Finance Party is treated
as resident for tax purposes; or
(B) under the law of the jurisdiction in which that Finance
Party's office through which that Finance Party will
perform its obligations under this Agreement and the
Purchase Agreement is located in respect of amounts
received or receivable in that jurisdiction,
if that Tax is imposed on or calculated by reference to the net
income received or receivable (but not any sum deemed to be
received or receivable) by that Finance Party other than a
dividend in kind in relation to the Preferred Stock;
(c) A Protected Party making or intending to make a claim pursuant to
paragraph (a) above shall promptly notify the Bank Representative
of the event which will give, or has given, rise to the claims,
following which the Bank Representative shall notify France
Telecom;
(d) A Protected Party shall, on receiving payment from France Telecom
under this clause 11.2, notify the Bank Representative.
11.3 (a) All consideration payable under this Agreement by France
Telecom to a Finance Party shall be deemed to be exclusive
of any value added tax (VAT). If VAT is chargeable, France Telecom
shall pay to the Finance Party (in addition to and at the same
time as paying the consideration) an amount equal to the amount of
the VAT.
(b) Where this Agreement requires France Telecom to reimburse a
Finance Party for any costs or expenses, France Telecom shall also
at the same time pay and indemnify that Finance Party against all
VAT incurred by that Finance Party in respect of the costs or
expenses save to the extent that that Finance Party is entitled to
repayment or credit in respect of the VAT.
11.4 France Telecom shall promptly indemnify the Bank Representative (acting
on behalf and for distribution to the Banks) for any cost relating to
any stamp, transfer, sales and use, value added, documentary,
registration, issuance or similar tax, assessment or other governmental
charge imposed on the sale or delivery of the Preferred Stock pursuant
to the Purchase Agreement, on the sale or delivery of the Option Stock
pursuant to this Agreement, or upon the execution, delivery or
performance of the Purchase Agreement and this Agreement.
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11.5 France Telecom shall promptly indemnify the Bank Representative against
any cost, loss or liability incurred by the Bank Representative (acting
reasonably) as a result of:
(a) investigating any event which it reasonably believes is a Put
Acceleration Event; or
(b) acting or relying on any notice, request or instruction which it
reasonably believes to be genuine, correct and appropriately
authorized.
11.6 If any sum due from France Telecom under this Agreement (a "Sum"), or
any order, judgment or award given or made in relation to a Sum, has to
be converted from the currency (the "First Currency") in which that Sum
is payable into another currency (the "Second Currency") for the
purpose of:
(i) making or filing a claim or proof against France Telecom; or
(ii) obtaining or enforcing an order, judgment or award in relation to
any litigation or arbitration proceedings,
France Telecom shall, as an independent obligation, within 5 Business
Days of demand, indemnify each Finance Party to whom that Sum is due
against any cost, loss or liability arising out of or as a result of
the conversion including any discrepancy between (A) the rate of
exchange used to calculate the conversion of that Sum from the First
Currency into the Second Currency and (B) the market rate or rates of
exchange actually available to such Finance Party at the time of its
receipt of that Sum.
France Telecom waives any right it may have in any jurisdiction to pay
any amount under this Agreement in a currency or currency unit other
than that in which it is expressed to be payable.
11.7 In the event any Finance Party receives, as a result of judgment,
settlement, indemnification or otherwise, any amounts that in the
aggregate exceed the amount of damages, costs or expenses actually
suffered or incurred by such Finance Party and with respect to which such
Finance Party has received reimbursement, indemnification or other
payment from France Telecom pursuant to this Agreement, such Finance
Party shall promptly pay to France Telecom the amount equal to the excess
of the aggregate amounts received by such Finance Party with respect to
such damages, costs or expenses over the amounts of damages, costs or
expenses actually suffered or incurred by such Finance Party.
12. Increased costs
12.1 (a) Subject to clause 12.3, France Telecom shall, within five Business
Days of a demand by the Bank Representative, pay for the account
of a Finance Party the amount of any Increased Costs incurred by
that Finance Party as a result of (i) the introduction of or any
change in (or in the interpretation or application of) any law or
regulation or (ii) compliance with any law or regulation made
after the date of this Agreement.
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(b) In this Agreement "Increased Costs" means:
(i) a reduction in the return on or calculated by reference to
any amount received or receivable by a Finance Party under
this Agreement or a reduction in the rate of return on a
Finance Party's overall capital;
(ii) an additional or increased cost; or
(iii) a reduction of any amount due and payable under this
Agreement,
which is incurred or suffered by a Finance Party to the extent
that it is attributable to that Finance Party having entered into
this Agreement or the Purchase Agreement or performing its
obligations under this Agreement or the Purchase Agreement.
12.2 (a) A Finance Party intending to make a claim pursuant to
clause 12.1 shall notify the Bank Representative of the event
giving rise to the claim, following which the Bank Representative
shall promptly notify France Telecom.
(b) Each Finance Party shall, as soon as practicable after a demand by
the Bank Representative, provide a certificate confirming the
amount of its Increased Costs.
12.3 Clause 12.1 does not apply to the extent any Increased Cost is
(i) attributable to a Tax deduction required by law to be made by
France Telecom;
(ii) otherwise compensated for pursuant to this Agreement, including
under clause 11.2 (or would have been compensated for under clause
11.2 but was not so compensated solely because one of the
exclusions in paragraph (b) of clause 11.2 applied); or
(iii) attributable to gross negligence of the relevant Finance Party or
to the willful breach by the relevant Finance Party of any law or
regulation or of this Agreement or the Purchase Agreement.
13. Mitigation by the Finance Parties
13.1 (a) Each Finance Party shall, in consultation with France
Telecom (such consultation to extend to the analysis of all
possible steps to be taken reasonably by each Finance Party), take
all reasonable steps to mitigate any circumstances which arise and
which would result in any amount becoming payable under any of
clause 7.2, clause 11 Indemnity, clause 12 Increased Costs or
clause 15 Possible Extension of the Call Option Period and of the
Put Option Period.
(b) Paragraph (a) above does not in any way limit the obligations of
France Telecom under this Agreement.
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13.2 (a) France Telecom shall indemnify each Finance Party for all
costs and expenses reasonably incurred by that Finance Party as a
result of steps taken by it under clause 13.1.
(b) A Finance Party is not obliged to take any steps under clause 13.1
if, in the opinion of that Finance Party (acting reasonably), to
do so would be detrimental to it.
14. Costs and Expenses
14.1 France Telecom shall promptly on demand pay the Banks the amount of all
reasonable fees and disbursements of one law firm incurred by them in
connection with the negotiation, preparation and execution of this
Agreement and any other documents referred to in this Agreement
(including the Purchase Agreement).
14.2 If France Telecom requests an amendment, waiver or consent, France
Telecom shall, within 10 Business Days of demand, reimburse the Bank
Representative for the amount of all reasonable fees and disbursements of
one law firm incurred by the Bank Representative and the Banks in
responding to, evaluating, negotiating or complying with that request or
requirement.
14.3 France Telecom shall, within 10 Business Days of demand, pay to each
Finance Party the amount of all costs and expenses (including fees and
disbursements of one law firm in France and of one law firm in the United
States of America for all Finance Parties) incurred by that Finance Party
in connection with the enforcement of, or the preservation of any rights
under, this Agreement and any other documents referred to in this
Agreement including the Purchase Agreement.
15. Possible Extension of the Call Option Period and of the Put Option Period
15.1 To the extent that on the last day of the Call Option Period or of the
Put Option Period any law, regulation or judicial decision prohibits or
otherwise renders impossible the transfer of all or part of the Option
Stock from any or all Banks to France Telecom, the duration of the Call
Option Period and of the Put Option Period shall be extended until 20
Business Days following the date on which each Finance Party and France
Telecom has been notified that such prohibition or impossibility is
terminated (whether or not such date is after the Termination Date),
subject to the following conditions:
(a) if the transfer of all or part of the Option Stock from the Banks
to France Telecom is prohibited by a decision of a tribunal at the
request of a person who is either France Telecom or an Affiliate
thereof, the duration of the Call Option Period shall not be
extended unless such judicial decision determines on the merits
that France Telecom is prohibited by a newly enacted law or
regulation from acquiring the Option Stock from the Banks under
this Agreement;
(b) as long as the period during which the Put Option Period and/or
the Call Option Period is extended hereunder, France Telecom
agrees to use all reasonable efforts to cause NTL to (i) fully
cooperate
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and ensure that the reasons for such extension disappear as soon
as possible, and (ii) assist as much as possible the other
parties hereto in the elaboration of any action taken to reach
such result;
15.2 It is only after a final court decision, not subject to appeal, has ruled
that the circumstances which have led to the extension of the Call Option
Period and/or of the Put Option Period cannot be lifted, that each Bank
will be entitled to request France Telecom to pay to such Bank the Sale
Price of such Bank as if the transfer of the Option Stock could occur and
France Telecom will have to pay such Sale Price within 5 Business Days
from such request; in such circumstances after such payment and as long
as France Telecom cannot become the holder of the Option Stock (i) each
Bank shall use its best efforts to transfer the Option Stock to France
Telecom as soon as possible, (ii) each Bank shall ensure that all income
(net of any Tax bearing on such Bank in respect thereof) received by such
Bank in relation with the Option Stock be transferred to France Telecom
as soon as possible after receipt and (iii) to the maximum extent
possible without suffering a prejudice therefrom, each Bank will utilize
its best efforts, in good faith, to accept any possible alternate
solution to the payment of the Sale Price.
15.3 As long as the Call Option Period and/or the Put Option Period are
extended beyond the Termination Date as provided in clause 15.1 and
unless the Sale Price has been paid in accordance with the provisions of
clause 15.2, for the first time on the Termination Date, then on the date
which is falling six months after the Termination Date and thereafter on
each date which is falling six months after the preceding date on which
such a payment is made, France Telecom shall pay to each Bank a premium
calculated like the Option Premium except that the Relevant Margin shall
be equal to 0.50 per cent per annum.
15.4 As long as the Call Option Period and/or the Put Option Period are
extended beyond the Termination Date as provided in clause 15.1, to the
extent the Banks receive (or are deemed to receive for tax purposes) any
income in relation with the Preferred Stock and have to pay Taxes in
connection therewith, without limiting the generality of the provisions
of clauses 7.2 and 11.2, France Telecom shall (within 5 Business Days of
demand by the Bank Representative) pay to such Banks an amount sufficient
to ensure that, after the making of such payment, such Banks are fully
indemnified for any such Taxes including any Tax on any amount so
received pursuant to this clause 15.4.
15.5 As long as the Call Option Period and/or the Put Option Period are
extended beyond the Termination Date, and more generally any time a
substantive provision of this Agreement cannot be applied in accordance
with its terms, the parties to this Agreement agree to meet in good faith
to try to find any possible alternative solution which will allow the
parties to this Agreement to maintain generally the economic equilibrium
of this Agreement and achieve their original intentions when entering
into this Agreement, provided that nothing in this clause 15.5 shall
entail that, in order to achieve such objective, any Bank shall have to
suffer a prejudice or take any action which it considers, in good faith,
to be detrimental to it.
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15.6 Except as provided in clauses 15.1 through 15.5, all the provisions of
this Agreement will remain unchanged as long as the Call Option Period
and/or the Put Option Period are extended as provided in clause 15.1.
16. Assignments and Transfers
16.1 This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors.
16.2 None of the parties hereto may assign or transfer any of its rights or
obligations under this Agreement without, in the case of France Telecom,
having obtained the prior written consent of the Bank Representative on
behalf of the Banks and, in the case of any Finance Party, the prior
written consent of France Telecom which, in the case of an assignment or
transfer to any such Finance Party's Affiliate, shall not be refused
without reasonable justification.
17. Bank Representative
17.1 Each Bank hereby appoints the Bank Representative to act as its agent in
connection herewith and authorises the Bank Representative to exercise
such rights, powers and discretions as are specifically delegated to the
Bank Representative by the terms hereof together with all such rights,
powers and discretions as are reasonably incidental thereto (it being
declared, for the avoidance of doubt, that the Bank Representative shall
have no authority to commence legal proceedings against France Telecom on
behalf of any Bank without the prior written consent of such Bank).
17.2 The Bank Representative may:
(i) assume that none of those events mentioned in clause 10 Put
Acceleration Events has occurred and that France Telecom is not in
breach of its obligations hereunder unless it has actual knowledge
or actual notice to the contrary;
(ii) engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or services
may to it seem reasonably necessary, expedient or desirable and
rely upon any advice so obtained;
(iii) rely as to any matters of fact which might reasonably be expected
to be within the knowledge of France Telecom upon a certificate
signed by or on behalf of France Telecom;
(iv) rely on any communication or document believed by it to be
genuine;
(v) refrain from exercising any right, power or discretion vested in
it hereunder unless and until instructed by the Majority Banks as
to whether or not such right, power or discretion is to be
exercised and, if it is to be exercised, as to the manner in which
it should be exercised; and
26
<PAGE>
(vi) refrain from acting in accordance with any instructions of the
Majority Banks to begin any legal action or proceeding arising out
of or in connection with this Agreement until it shall have
received such security as it may require (whether by way of
payment in advance or otherwise) for all costs, claims, expenses
(including legal fees) and liabilities which it will or may expend
or incur in complying with such instructions.
17.3 The Bank Representative shall:
(i) promptly inform each Bank of the contents of any notice or
document received by it from France Telecom hereunder;
(ii) promptly notify each Bank of the occurrence of any of those events
mentioned in clause 10 Put Acceleration Events or any default by
France Telecom in the due performance of its obligations under
this Agreement of which the Bank Representative has actual
knowledge or actual notice;
(iii) subject to the foregoing provisions of this clause, act in
accordance with any instructions given to it by the Majority
Banks; and
(iv) if so instructed by the Majority Banks, refrain from exercising a
right, power or discretion vested in it hereunder.
17.4 Notwithstanding anything to the contrary expressed or implied herein, the
Bank Representative shall not:
(i) be bound to enquire as to the occurrence or otherwise of any
of those events mentioned in clause 10 Put Acceleration Events or
as to the performance or otherwise by France Telecom of its
obligations hereunder;
(ii) be bound to account to any Bank for any sum or the profit element
of any sum received by it for its own account;
(iii) be bound to disclose to any other person any information relating
to France Telecom if such disclosure would or might in its opinion
constitute a breach of any law or regulation or be otherwise
actionable at the suit of any person; or
(iv) be under any obligation other than those for which express
provision is made herein.
17.5 Subject to the appointment and acceptance of a successor Bank
Representative as provided below, the Bank Representative may at any time
and upon not less than 60 (sixty) days' notice from the Majority Banks
shall resign as Bank Representative by giving written notice to the Banks
and France Telecom. Upon any such resignation, the Majority Banks shall
have the right to appoint a successor Bank Representative acceptable to
France Telecom. If no successor Bank Representative shall have been so
appointed by the Majority Banks and shall have accepted such appointment
within thirty days after the
27
<PAGE>
retiring Bank Representative gave notice of resignation, the retiring
Bank Representative may on behalf of the Banks, appoint a successor
Bank Representative, which shall be a Bank or a bank which is a
subsidiary or a parent company of a Bank. Upon the acceptance of any
appointment as Bank Representative by a successor Bank Representative,
such successor Bank Representative shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of
the retiring Bank Representative, and the retiring Bank Representative
shall be discharged from its duties and obligations hereunder as Bank
Representative. The provisions of this clause 17.5 shall continue in
effect for the benefit of the retiring Bank Representative in respect
of any actions taken or omitted to be taken by it while it was acting
as the Bank Representative.
17.6 The Bank Representative shall be indemnified by each Bank against any and
all costs, claims, expenses (including but not limited to legal fees) and
liabilities which the Bank Representative may incur in complying with any
instructions received by it from the Majority Banks in the proportion
which the Purchase Price of such Bank bears to the aggregate amount of
all Purchase Prices, provided no Bank shall have any obligation under
this clause 17.6 to indemnify the Bank Representative against any such
costs, claims, expenses and liabilities incurred by the Bank
Representative in the course of any legal proceedings taken against
France Telecom without the prior written consent of such Bank.
17.7 The Bank Representative does not accept any responsibility for the
accuracy and/or completeness of any information supplied to any Bank in
connection with the transactions contemplated by this Agreement or the
Purchase Agreement or for the legality, validity, effectiveness, adequacy
or enforceability of this Agreement or the Purchase Agreement and the
Bank Representative shall not be under any liability as a result of
taking or omitting to take any action in relation to this Agreement save
in the case of gross negligence or wilful misconduct.
17.8 Each Bank agrees that it will not assert or seek to assert against any
director, officer or employee of the Bank Representative any claim it
might have in respect of the matters referred to in clause 17.7.
17.9 The Bank Representative may accept deposits from, lend money to and
generally engage in any kind of banking, trust or other business with
France Telecom.
17.10 It is understood and agreed by each Bank that it has itself been, and
will continue to be, solely responsible for making its own independent
appraisal of and investigation into the financial condition,
creditworthiness, affairs, status and nature of France Telecom and NTL
and accordingly each Bank confirms to the Bank Representative that it has
not relied, and will not hereafter rely, on the Bank Representative:
(i) to check or inquire on its behalf into the adequacy, accuracy
or completeness of any information provided by France Telecom and
NTL in connection with this Agreement or the Purchase Agreement or
the transactions therein contemplated (whether or not such
information has been or is hereafter circulated to such Bank by
the Bank Representative); or
28
<PAGE>
(ii) to assess or keep under review on its behalf the financial
condition, creditworthiness, affairs, status or nature of France
Telecom and NTL.
18. Accession of New Banks
To the extent that prior to the Date of Issue France Telecom substitutes to
itself, in whole or in part, one or more banks to acquire Preferred Stock under
the Purchase Agreement, any such bank (an "Additional Bank") shall become party
to this Agreement and shall be allowed to participate in the arrangements
contemplated by this Agreement, in which case, upon and with effect from
delivery to the Bank Representative by such Additional Bank and France Telecom
of an Accession Notice in the form attached as Exhibit 18, such Additional Bank
shall be treated as a Bank as if it had been named as such at the beginning of
this Agreement, provided that such Additional Bank is a first rank bank
established in Paris, with a rating of its long-term debt by Standard & Poors of
at least "A" unless the prior written approval of the Majority Banks has been
obtained, such approval not to be unreasonably withheld.
19. Applicable Law and Jurisdiction
19.1 This Agreement and the rights and obligations of the parties shall be
governed by and construed in accordance with the law of the State of New
York, United States of America.
19.2 Each of the Finance Parties and France Telecom irrevocably agrees that
any legal suit, action or proceeding against it arising out of or in
connection with this Agreement, the Preferred Stock or the Option Stock,
as the case may be, may be instituted in the Supreme Court of the State
of New York, County of New York or the U.S. District Court for the
Southern District of New York, as applicable, and irrevocably waives any
objection which it may now or hereinafter have to the laying of venue of
any such proceeding, and irrevocably submits to the non-exclusive
jurisdiction of such courts in any such suit, action or proceeding.
20. Entire Agreement
This Agreement constitutes the entire and only legally binding agreement
between the parties relating to its subject matter and no amendment or
modification of this Agreement shall be effective unless made in writing
signed by or on behalf of all the parties and expressed to be such an
amendment or modification.
21. Notices
21.1 Any notice shall be in writing and signed by or on behalf of the person
giving it. Except in the case of personal service, any notice shall be
sent or delivered to the party to be served at the address given below or
in the Accession Notice in the case of an Additional Bank. Any alteration
in such details shall, to have effect, be notified to the other parties
in accordance with this clause.
21.2 Service of a notice must be effected by one of the following methods:
29
<PAGE>
21.2.1 personally on an authorized representative of France Telecom
or a Bank or the Bank Representative, as the case may be, in
which case notice shall be treated as served at the time of
such service;
21.2.2 by prepaid first class mail (or by airmail if from one country
to another) to the address of France Telecom, a Bank or the
Bank Representative, as the case may be, and shall be treated
as served on the second (or if by airmail the fourth) Business
Day after the date of posting. In proving service it shall be
sufficient to prove that the envelope containing the notice
was correctly addressed, postage paid and posted; or
21.2.3 by facsimile to France Telecom, a Bank or the Bank
Representative, as the case may be, in which case notice shall
be treated as served at the expiration of 2 hours after the
time of dispatch, if dispatched before 3.00 p.m. on any
Business Day and, in any other case, at 10.00 a.m. on the
Business Day following the date of dispatch, but in any event
only if a confirmation of the receipt by the recipient of the
facsimile appears correctly on the sender's facsimile
transmission report.
30
<PAGE>
21.3 The relevant address and facsimile numbers of the parties are as follows:
<TABLE>
<CAPTION>
----------------------------- ------------------------- -------------------------- ------------------------
Party Attention Facsimile number Address
----------------------------- ------------------------- -------------------------- ------------------------
<S> <C> <C> <C>
the Bank Representative Damien Scaillierez (33-1) 41-89-39-53 Credit Agricole
Indosuez
9, Quai du President
Paul Doumer
92400 Courbevoie,
France
----------------------------- ------------------------- -------------------------- ------------------------
Banque Nationale de Paris Philippe Roca (33-1) 40-14-69-40 Financements Structures
20, Boulevard des
Italiens
75009 Paris, France
----------------------------- ------------------------- -------------------------- ------------------------
Credit Agricole Indosuez Damien Scaillierez (33-1) 41-89-39-53 Credit Agricole
Indosuez
9, Quai du President
Paul Doumer
92400 Courbevoie,
France
----------------------------- ------------------------- -------------------------- ------------------------
Deutsche Bank AG Benoit Deschamps (33-1) 42-89-00-45 3, Avenue de Friedland
Paris Branch 75008 Paris, France
----------------------------- ------------------------- -------------------------- ------------------------
Westdeutsche Landesbank Khaled Osman (33-1) 45-63-15-71 15, Avenue de Friedland
Girozentrale 75008 Paris, France
Paris Branch
----------------------------- ------------------------- -------------------------- ------------------------
France Telecom Philip McAllister (33-1) 212, rue Raymond
44-44-86-00 Losserand
75014 Paris,
France
----------------------------- ------------------------- -------------------------- ------------------------
with a copy to:
Shearman & Sterling Alfred J. Ross, Jr. (212) 848-7179 599 Lexington Avenue
New York, NY
10022, U.S.A.
----------------------------- ------------------------- -------------------------- ------------------------
</TABLE>
22. Remedies and Waivers
No failure to exercise, nor any delay in exercising, on the part of any
Finance Party, any right or remedy under this Agreement shall operate as
a waiver, nor shall any single or partial exercise of any right or remedy
prevent any further or other exercise of any other right or remedy. The
rights and remedies provided in this Agreement are cumulative and not
exclusive of any rights or remedies provided by law.
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<PAGE>
THIS AGREEMENT has been duly executed on the date stated above.
BANQUE NATIONALE DE PARIS
By: /s/ Lionel Bordarier By: /s/ Christophe Delafontaine
-------------------------- --------------------------------
Title : Directeur Title : Directeur Adjoint
CREDIT AGRICOLE INDOSUEZ
By: /s/ Michel Chabanel By: /s/ Damien Scaillierez
-------------------------- --------------------------------
Title : Head of Acquisition Title : Fonde de Pouvoir
Finance
DEUTSCHE BANK AG
PARIS BRANCH
By: /s/ Benoit Deschamps By: /s/ Antoine de Maistre
-------------------------- --------------------------------
Title : Directeur Title :
WESTDEUTSCHE LANDESBANK GIROZENTRALE
PARIS BRANCH
By: /s/ Barbara Selves By: /s/ Nadine Veldung
-------------------------- --------------------------------
Title : Directeur Title : Directeur
FRANCE TELECOM
By: /s/ Eric Bouvier By:
-------------------------- --------------------------------
Title : Head of the Mergers Title :
& Acquisitions Department
CREDIT AGRICOLE INDOSUEZ,
as Bank Representative
By: /s/ Michel Chabanel By: /s/ Damien Scaillierez
-------------------------- --------------------------------
Title : Head of Acquisition Title : Fonde de Pouvoir
Finance
32
<PAGE>
EXHIBIT 3.3
NOTICE
[To be delivered for purposes of exercising the Put or Call Option]
To: [______](1)
Reference is hereby made to the Put and Call Option Agreement dated
February 17, 2000, among Banque Nationale de Paris, Credit Agricole Indosuez,
Deutsche Bank AG Paris Branch, Westdeutsche Landesbank Girozentrale Paris Branch
and France Telecom [as amended](2). The undersigned hereby gives notice pursuant
to clause [___](3) of the Put and Call Option Agreement that it irrevocably
exercises its rights under the Put and Call Option Agreement (Put Option/Call
Option)(4) to [sell/purchase](4) [___] shares of 5% Cumulative Preferred Stock,
Series A of NTL Incorporated, with a Completion Date for delivering the shares
and the amount payable with respect thereto under the Put and Call Option
Agreement to be on [___], 200[___].(5)
Payment of the Purchase Price (being US $ _____________) shall be made
in same day funds to the undersigned at [insert payment instructions].
[In case of exercise of the Call Option, if applicable indicate the
name of the Subsidiary of France Telecom to receive and pay for the Option Stock
and relevant instructions.]
Dated: [_____________]
[ENTITY NAME]
By: ___________________
Name:
Title:
- --------------------------------------------------------------------------------
1 If notice is given by a Bank or the Bank Representative of its
exercise of the Put Option, notice should be given to France Telecom. If notice
is given by France Telecom of its exercise of the Call Option, notice should be
given to the Bank Representative and in connection with clause 4.6 to each Bank
concerned.
2 Delete if not necessary.
3 Refer to appropriate clause: clause 3.3 or 10.2 with respect to the
Put Option; 4.2 with respect to the Call Option.
4 Delete inapplicable references.
5 Specify a Completion Date which is not less than 5 Business Days (for
the Call Option) or 8 Business Days (for the Put Option) from the date of the
notice and which will be at the latest on the Termination Date.
(i)
<PAGE>
EXHIBIT 3.4
STOCK POWER
FOR VALUE RECEIVED, [_____________] does hereby sell, assign and transfer
unto [_____________] Shares of 5% Cumulative Preferred Stock, Series A of NTL
Incorporated represented by Certificate No. [_____________] (the "Stock"),
standing in its name on the books of said corporation and does hereby
irrevocably constitute and appoint [_____________] attorney to transfer the said
Stock on the books of said corporation with full power of substitution in the
premises.
Dated: [_____________], 200[__]
[NAME OF ENTITY]
By: ___________________
Name:
In presence of:
----------------
Name:
(ii)
<PAGE>
EXHIBIT 18
FORM OF ACCESSION NOTICE TO BE DELIVERED
BY AN ADDITIONAL BANK PURSUANT TO CLAUSE 18
To: [Bank Representative]
(a) Reference is hereby made to the Put and Call Option Agreement
dated February 17, 2000, among Banque Nationale de Paris, Credit
Agricole Indosuez, Deutsche Bank AG Paris Branch, Westdeutsche
Landesbank Girozentrale Paris Branch and France Telecom (the
"Option Agreement"). Terms defined in the Option Agreement have
the same meanings herein.
(b) We hereby confirm and give you notice pursuant to clause 18
Accession of New Banks of the Option Agreement that we wish to
accede to the Option Agreement and become a Bank for purposes of
the Option Agreement.
(c) We hereby confirm that we have received a copy of the Option
Agreement and the Purchase Agreement and attached Certificate of
Designation and hereby undertake and agree to be bound by the
terms and conditions thereof insofar as such terms and conditions
apply to a Bank.
(d) We hereby confirm that our Option Stock will, upon closing of the
purchase thereof, consist of [______] shares of Preferred Stock.
(e) We hereby confirm that at the date hereof the representations set
out in clause 9.2 of the Option Agreement would be true (to the
extent that such representations can relate to ourselves) if
repeated by reference to and in respect of ourselves on the date
of this Notice and hereby repeat the same.
(f) We hereby confirm that we have received separately on the date
hereof from France Telecom the fees which should have been due to
us on or prior to the date hereof pursuant to the provisions of
clause 6.1 of the Option Agreement.
(g) Our details for notices under the Option Agreement are:
Address:
Telephone Number:
Telex Number:
Facsimile Number:
(iii)
<PAGE>
(h) This Accession Notice shall be governed by and construed in
accordance with the laws of the State of New York, United States
of America applicable to contracts executed in and to be performed
entirely in that state and without regard to any applicable
conflicts of law principles.
[NAME OF ENTITY]
---------------
by:
We hereby confirm our acceptance of the accession by [________] to the
Option Agreement as provided above and hereby confirm that from the date
hereof we agree to treat [________] as a Bank under the Option Agreement
as if it had been named as such at the beginning of the Option Agreement.
France Telecom
By : ________________
Title:
(iv)
