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As filed with the Securities and Exchange Commission on July 10, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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COMCAST CELLULAR HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
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<CAPTION>
<S> <C> <C>
Delaware 4812 23-2687447
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
1105 North Market Street, Suite 1219
Wilmington, Delaware 19801
(302) 427-8991
(Address, including zip code, and telephone number, including area code, of
principal executive offices)
Comcast Delaware Services, Inc.
1105 North Market Street, Suite 1219
Wilmington, Delaware 19801
(302) 427-8991
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
Richard D. Truesdell, Jr.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
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If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box: / /
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CALCULATION OF REGISTRATION FEE
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Proposed
maximum Proposed maximum Amount of
Amount to be offering price aggregate offering Registration
Title of each class of securities to be registered registered per Note(1) price(1) Fee(2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 1/2% Senior Notes due 2007, Series B $1,000,000,000 100% $1,000,000,000 $ 303,031
=============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Calculated pursuant to Rule 457(f)(2).
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The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED JULY 10, 1997
PROSPECTUS
, 1997
Offer to Exchange
9 1/2% Senior Notes due 2007, Series B
for Any and All Outstanding 9 1/2% Senior Notes due 2007, Series A
of
Comcast Cellular Holdings, Inc.
The Exchange Offer will expire at 5:00 P.M.,
New York City time, on , 1997 unless extended
Comcast Cellular Holdings, Inc. (the "Company"), hereby offers, upon the
terms and subject to the conditions set forth in this Prospectus and the
accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange $1,000 principal amount of 9 1/2% Senior Notes due 2007,
Series B (the "New Notes") for each $1,000 principal amount of the issued and
outstanding 9 1/2% Senior Notes due 2007, Series A (the "Old Notes" and,
together with the New Notes, the "Notes") of the Company. As of the date of
this Prospectus, there were outstanding $1,000,000,000 principal amount of Old
Notes. The terms of the New Notes are identical in all material respects to
those of the Old Notes, except that the offer of the New Notes will have been
registered under the Securities Act of 1933, as amended (the "Securities Act")
and, therefore, the New Notes will not be subject to certain transfer
restrictions, registration rights and related liquidated damages provisions
applicable to the Old Notes. This Prospectus and Letter of Transmittal will be
first sent to all Holders of Old Notes on or about , 1997.
The New Notes will bear interest from May 8, 1997. Holders of Old Notes
whose Old Notes are accepted for exchange will be deemed to have waived the
right to receive any payment in respect of interest on the Old Notes accrued
from May 8, 1997 to the date of the issuance of the New Notes. Interest on the
New Notes is payable semi-annually on May 1 and November 1 of each year,
commencing November 1, 1997, accruing from May 8, 1997.
The Notes will be redeemable, in whole or in part, at the option of the
Company at any time after May 1, 2002 at a redemption price set forth herein
plus accrued and unpaid interest, if any, to the date of redemption. In
addition, prior to May 1, 2000, the Company may redeem the Notes at a price
equal to 108.5% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the date of redemption, with the net cash proceeds
of one or more Public Equity Offerings (as defined); provided, however, that at
least 65% of the originally issued principal amount of the Notes would remain
outstanding after giving effect to any such redemption. See "Description of the
Notes--Optional Redemption."
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The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company under the Registration Rights Agreement, dated May
8, 1997, among the Company and the other signatories thereto (the "Registration
Rights Agreement"). Based upon interpretations contained in letters issued to
third parties by the staff of the Securities and Exchange Commission (the
"Commission"), the Company believes that the New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by each Holder thereof (other than a broker-dealer, as
set forth below, and any such Holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act), without compliance
with the registration and prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
Holder's business and such Holder has no arrangement or understanding with any
person to participate in the distribution of such New Notes. Eligible Holders
wishing to accept the Exchange Offer must represent to the Company in the
Letter of Transmittal that such conditions have been met. Each broker-dealer
that receives New Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. The Letter of Transmittal states that by so acknowledging and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. This Prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of the New Notes received in exchange
of the Old Notes where such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 90 days after the consummation of the Exchange
Offer, it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. Tenders of
Old Notes pursuant to the Exchange Offer may be withdrawn at any time prior to
the Expiration Date (as defined). In the event the Company terminates the
Exchange Offer and does not accept for exchange any Old Notes, the Company will
promptly return tendered Old Notes to the Holders thereof. See "The Exchange
Offer."
Prior to this Exchange Offer, there has been no public market for the
Notes. The Company does not currently intend to list the New Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance than an active public market for
the New Notes will develop.
--------------
See "Risk Factors" beginning on page 11 for a discussion of certain risk
factors that should be considered by Holders prior to tendering their Old Notes
in the Exchange Offer.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
AVAILABLE INFORMATION
This Prospectus constitutes a part of a registration statement (the
"Registration Statement," which term shall encompass any amendments thereto)
filed by the Company with the Commission under the Securities Act. As permitted
by the rules and regulations of the Commission, this Prospectus does not
contain all of the information contained in the Registration Statement and the
exhibits and schedules thereto, and reference is hereby made to the
Registration Statement and the exhibits and schedules thereto for further
information with respect to the Company and the securities offered hereby.
Statements contained herein concerning the provisions of any documents filed as
an exhibit to the Registration Statement or otherwise filed with the Commission
are not necessarily complete, and in each instance reference is made to the
copy of such document so filed. Each such statement is qualified in its
entirety by such reference. The Registration Statement and the exhibits and
schedules thereto can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the
Commission at Seven World Trade Center, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
also can be obtained from the Public Reference Section of the Commission,
Washington, D.C. 20549 at prescribed rates. Such material may also be accessed
electronically by means of the Commission's home page on the Internet at
http://www.sec.gov.
As a result of this Exchange Offer, the Company will become subject to the
information and reporting requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and in accordance therewith will file periodic
reports and other information with the Commission. Such reports and other
information can be inspected and copied at the addresses, and may be accessed
electronically at the Internet address set forth above. The Company has agreed
that, whether or not it is required to do so by the rules and regulations of
the Commission, for so long as any of the Notes remain outstanding, it will
furnish to The Bank of New York, as trustee and to any Holder or beneficial
owner of Notes and file with the Commission (unless the Commission will not
accept such a filing) (i) all quarterly and annual financial information that
would be required to be contained in a filing with the Commission on Forms 10-Q
and 10-K if the Company were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants and (ii) all reports that
would be required to be filed with the Commission on Form 8-K if the Company
were required to file such reports.
2
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information (including the financial statements and the notes thereto) included
elsewhere in this Prospectus. Comcast Cellular Holdings, Inc. is a newly formed
wholly owned subsidiary of Comcast Corporation ("Comcast") which, prior to the
Formation referred to below, had no assets or liabilities. Immediately prior to
the closing of the offering of the Old Notes, Comcast contributed all of the
outstanding capital stock of its wholly owned subsidiary, Comcast Cellular
Corporation ("Comcast Cellular"), to Comcast Cellular Holdings, Inc. (the
"Formation"). Unless otherwise indicated, all references herein to the Company
refer to Comcast Cellular Holdings, Inc. and its subsidiaries (after giving
effect to the Formation), including Comcast Cellular and Comcast Cellular
Communications, Inc. ("CCCI"). Operating cash flow for any period is defined
for purposes of this Prospectus as operating income before depreciation and
amortization for such period. For a definition of certain terms, see "Certain
Terms."
THE COMPANY
The Company is one of the largest independent operators of cellular
telephone systems in the United States based on its 8.1 million aggregate Net
Pops. The Company serves approximately 766,000 subscribers in a large
contiguous area which comprises the Philadelphia, Pennsylvania area, Delaware
and significant portions of New Jersey. The Company's wireless products and
services are currently distributed under the Comcast Metrophone(SM) and Comcast
CELLULARONE(R) brand names. For the three months ended March 31, 1997 and for
the year ended December 31, 1996, the Company had net service income of $104.1
million and $426.1 million, respectively, and operating cash flow of $37.1
million and $154.0 million, respectively.
The Company's markets are primarily in urban and suburban areas with
above-average population density and per capita income. The Company's
geographic footprint includes a significant portion of the heavily traveled
I-95 corridor connecting New York, Philadelphia and Baltimore/Washington D.C.
The Company believes that its ability to offer service over a wide contiguous
geographic area will continue to attract new customers and retain existing
customers. The Company's contiguous markets allow its systems to realize
operating efficiencies due to increased utilization and effectiveness of
equipment, personnel, and marketing and advertising resources. The Company's
subscriber base grew from approximately 116,000 as of December 31, 1991 to
approximately 766,000 as of March 31, 1997. Net service income grew from $142.9
million in 1992 to $426.1 million in 1996, while operating cash flow grew from
$58.8 million to $154.0 million over the same period.
Since January 1, 1995, the Company has invested over $360.0 million to
rebuild and expand the capacity of its network, to upgrade network system
security, to increase its direct distribution capabilities and for other
capital expenditures. The Company intends to further expand the capacity and
improve the quality of its network by deploying Time Division Multiple Access
("TDMA") digital cellular technology throughout its entire coverage area
commencing in the third quarter of 1997. As a result of the Company's continued
expansion of its network and its anticipated deployment of digital technology,
the Company believes that its network will have sufficient capacity to
accommodate continued subscriber growth, as well as any increase in subscriber
minutes.
Business Strategy
The Company's objective is to continue to pursue growth in subscribers,
revenues and operating cash flow. The Company intends to achieve this objective
by providing a broad range of high quality integrated wireless communications
products and services. Key elements of the Company's strategy include:
Enhance Wireless Network. The Company has continually improved its
cellular network in order to better serve its customers and position itself to
offer competitive services and features. The Company's significant investment
in switching and cell site equipment manufactured by Lucent Technologies, Inc.
has
3
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positioned it to efficiently deploy TDMA digital cellular technology throughout
its network. The Company currently anticipates deploying TDMA technology
commencing in the third quarter of 1997, which will permit its subscribers and
roamers to use both analog and TDMA services throughout its coverage area. It
is anticipated that a substantial portion of the increased capacity for
subsequent traffic and subscriber growth will be accommodated using the lower
cost digital technology. The Company intends to continue expanding and
upgrading its cellular network in order to improve coverage and capacity as
required. A subsidiary of Comcast was the high bidder on twelve 10-MHz PCS
licenses covering the Philadelphia, PA MTA and the Allentown, PA BTA, all of
which have been awarded. Subject to the approval of the FCC, Comcast intends to
transfer the PCS licenses to the Company at Comcast's cost of $17.5 million.
These PCS licenses will provide the Company with additional spectrum capacity
and serve as a resource for future enhancement of its network.
Emphasize Customer Service. The Company places a priority on providing
consistently high quality customer service through on-line customer support 24
hours a day, 7 days a week. The Company utilizes a third party billing and
customer care platform in conjunction with an internally developed management
information system. Together, these systems enable the Company to provide
prompt, high quality services to its expanding customer base and afford the
Company access to detailed customer data which it uses to facilitate its
marketing efforts.
Grow Direct Distribution Channels. The Company distributes its products
and services through its direct distribution network (direct sales force,
retail stores and telemarketing) as well as through third party or indirect
distribution channels (national retailers, local agencies and automotive
dealers). The Company's long-term emphasis is on the development of direct
distribution channels, particularly its own retail outlets. The Company
believes that direct distribution offers substantial benefits, including lower
costs, greater effectiveness in selling to higher margin customers, a
consistent point of customer contact and greater ongoing satisfaction for
customers generated both indirectly and directly. The Company currently
operates 48 retail outlets in its markets and anticipates building additional
retail outlets, as well as upgrading existing outlets in the future. The
Company also intends to maintain significant indirect sales distribution
channels.
Capitalize on Regional Brand. The Company currently markets its services
under the Comcast Metrophone(SM) and Comcast CELLULARONE(R) brand names. The
Company believes that the Comcast name has particular regional benefits due to
the Company's telecommunications presence, Comcast's ownership of extensive
cable television facilities in Philadelphia and New Jersey, and Comcast's
interest in the Philadelphia 76ers NBA franchise, the Philadelphia Flyers NHL
franchise and two sports arenas.
Expand Product Offering. The Company continues to offer new and innovative
products and services in order to increase the value of the basic voice product
to its customers, broaden distribution, increase airtime revenues and
differentiate the Company. Among other products and services, the Company has
developed GroupTalk(R), a cellular dispatch service which enables work groups
to communicate among themselves at reduced airtime rates, and has begun to
offer paging services to the customers within its systems. In addition to
providing enhanced cellular voice service packages, the Company has begun to
offer data transmission, through both its existing analog network and the
Cellular Digital Packet Data protocol ("CDPD"). With the integration of digital
technology, the Company will be able to offer a variety of additional services
such as caller identification, short messaging and call encryption.
The Company and Comcast Cellular are Delaware corporations formed in 1997
and 1992, respectively. Both the Company and Comcast Cellular have their
principal executive offices at 1105 North Market Street, Wilmington, Delaware
19801 ((302) 427-8991).
THE REFINANCING
In May 1997, the Company issued $1.0 billion principal amount of Old Notes
for net proceeds of approximately $971.2 million. Such net proceeds were
contributed to Comcast Cellular and were used by
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Comcast Cellular to redeem (the "Zero Coupon Note Redemption") in full on May
19, 1997, all of Comcast Cellular's outstanding Series A Senior Participating
Redeemable Zero Coupon Notes due 2000 and Series B Senior Participating
Redeemable Zero Coupon Notes due 2000 (collectively the "Zero Coupon Notes").
The redemption price of the Zero Coupon Notes on the redemption date was
approximately $742.4 million, which represented their accreted value on such
date. Approximately $628.3 million of the net proceeds from the offering of the
Old Notes was used to redeem the Zero Coupon Notes, net of approximately $114.1
million for redemption of Zero Coupon Notes owned by CCCI and eliminated in
consolidation.
The remaining net proceeds of approximately $228.8 million were
contributed by Comcast Cellular to CCCI, which used such amount, together with
the $114.1 million received by it in the Zero Coupon Redemption, to repay a
portion of the amount outstanding under its existing credit agreement with
certain banks (the "Credit Agreement"), which provides for a term loan in the
principal amount of $300.0 million (the "Term Loan") and a reducing revolving
credit facility of up to $1.0 billion (the "Revolving Credit Loan"). Comcast
Financial Corporation ("CFC"), a wholly owned subsidiary of Comcast, owned
$217.7 million principal amount of Zero Coupon Notes and used the $161.5
million received by it in the Zero Coupon Note Redemption to purchase from the
Company an equal amount of mandatorily redeemable preferred stock (the "Series
A Preferred Stock") of the Company. The Company contributed the $161.5 million
received from the sale of its Series A Preferred Stock to CCCI, which used such
amount, as well as available cash, to further reduce the amount outstanding
under the Credit Agreement, resulting in a total reduction in borrowings under
the Credit Agreement of $505.0 million. The foregoing transactions are
collectively referred to in this Prospectus as the "Refinancing."
The approximate sources and uses of funds in connection with the
Refinancing are set forth below (in millions):
Sources of funds:
Old Notes ............................................. $ 998.4
Series A Preferred Stock issued to CFC ............... 161.5
Available cash ........................................ 0.6
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Total sources ....................................... $1,160.5
=========
Uses of funds:
Redeem Zero Coupon Notes held by non-affiliates ...... $ 466.8
Redeem Zero Coupon Notes held by CFC .................. 161.5
Repay bank debt ....................................... 505.0
Estimated fees and expenses ........................... 27.2
---------
Total uses .......................................... $1,160.5
=========
Dividends on the Series A Preferred Stock accrue at 12% per annum, payable
semi-annually in arrears. At the option of the Company, dividends may be paid
in additional shares of Series A Preferred Stock instead of cash through May 1,
2007. The Series A Preferred Stock is mandatorily redeemable after the final
maturity of the Notes and, subject to the restricted payment provisions of the
Indenture for the Notes, is redeemable at the option of the Company at any
time.
CCCI expects to enter into a new revolving credit facility of up to $500.0
million with a group of banks (the "New Bank Facility"). Borrowings under the
New Bank Facility will be used to repay all amounts remaining outstanding under
the Credit Agreement. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources --
Financing" for further information regarding the New Bank Facility. It is
expected that the Company will merge into Comcast Cellular following complete
repayment of all amounts outstanding under the Credit Agreement, in which event
the New Notes and, following the Exchange Offer, any Old Notes which remain
outstanding, will become direct obligations of Comcast Cellular. The Indenture
does not permit Comcast Cellular to incur any other indebtedness prior to the
merger.
5
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THE EXCHANGE OFFER
The following summary description of the Exchange Offer is qualified in
its entirety by the more detailed information contained elsewhere in this
Prospectus.
Notes Offered............ Up to $1,000,000,000 principal amount of 9 1/2%
Senior Notes due 2007, Series B. The terms of the
New Notes and the Old Notes are identical in all
material respects, except that the offer of the New
Notes will have been registered under the Securities
Act and, therefore, the New Notes will not be
subject to certain transfer restrictions,
registration rights and related liquidated damages
provisions applicable to the Old Notes.
The Exchange Offer ...... The Company is offering, upon the terms and
subject to the conditions of the Exchange Offer, to
exchange $1,000 principal amount of New Notes for
each $1,000 principal amount of Old Notes. See "The
Exchange Offer" for a description of the procedures
for tendering Old Notes. The Exchange Offer is
intended to satisfy obligations of the Company under
the Registration Rights Agreement.
Tenders, Expiration Date;
Withdrawal ............ The Exchange Offer will expire at 5:00 p.m., New
York City time, on , 1997, or such later date and
time to which it is extended. The tender of Old
Notes pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date.
Any Old Notes not accepted for exchange for any
reason will be returned without expense to the
tendering Holder thereof as promptly as practicable
after the expiration or termination of the Exchange
Offer.
Federal Income Tax
Consequences............ The exchange pursuant to the Exchange Offer will
not result in any income, gain or loss to the
Holders or the Company for federal income tax
purposes. See "Certain Federal Income Tax
Consequences."
Use of Proceeds ......... There will be no proceeds to the Company from the
issuance of the New Notes pursuant to the Exchange
Offer.
Exchange Agent ......... The Bank of New York is serving as Exchange Agent
in connection with the Exchange Offer.
6
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CONSEQUENCE OF EXCHANGING OLD NOTES
PURSUANT TO THE EXCHANGE OFFER
Based upon interpretations contained in letters issued to third parties by
the staff of the Commission, the Company believes that, generally, any Holder
of Old Notes (other than a broker-dealer, as set forth below, and any Holder
who is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) who exchanges its Old Notes for New Notes pursuant to the
Exchange Offer may offer such New Notes for resale, resell such New Notes, or
otherwise transfer such New Notes without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided such New Notes
are acquired in the ordinary course of the Holder's business and such Holder
has no arrangement or understanding with any person to participate in a
distribution of such New Notes. Eligible Holders wishing to accept the Exchange
Offer must represent to the Company in the Letter of Transmittal that such
conditions have been met and must represent, if such Holder is not a
broker-dealer, or is a broker-dealer but will not receive New Notes for its own
account in exchange for Old Notes, that neither such Holder nor the person
receiving such New Notes, if other than the Holder, is engaged in or intends to
participate in the distribution of such New Notes. Each broker-dealer that
receives New Notes for its own account in exchange for Old Notes must represent
that the Old Notes tendered in exchange therefor were acquired as a result of
market-making activities or other trading activities and must acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
See "Plan of Distribution." To comply with the securities laws of certain
jurisdictions, it may be necessary to qualify for sale or register the New
Notes prior to offering or selling such New Notes. The Company does not
currently intend to take any action to register or qualify the New Notes for
resale in any such jurisdiction. If a Holder of Old Notes does not exchange
such Old Notes for New Notes pursuant to the Exchange Offer, such Old Notes
will continue to be subject to the restrictions on transfer contained in the
legend thereon. In general, the Old Notes may not be offered or sold, unless
registered under the Securities Act, except pursuant to an exemption from, or
in a transaction not subject to, the Securities Act and applicable state
securities laws. Any Holder who tenders in the Exchange Offer with the
intention to participate, or for the purpose or participating, in a
distribution of New Notes could not rely on the position of the staff of the
Commission enunciated in Exxon Capital Holdings Corporation (available April
13, 1989) or similar no-action letters and, in the absence of an exemption
therefrom, must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. Failure to comply with such requirements in such instance may
result in such Holder incurring liability under the Securities Act for which
the Holder is not indemnified by the Company. See "The Exchange
Offer--Consequences of Failure to Exchange" and "Registration Rights;
Liquidated Damages."
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the New Notes and the Old Notes (collectively, the "Notes")
are identical in all material respects, except that the offer of the New Notes
will have been registered under the Securities Act and, therefore, the New
Notes will not be subject to certain transfer restrictions, registration rights
and related liquidated damages provisions applicable to the Old Notes. The
following summary description of the New Notes is qualified in its entirety by
the more detailed information set forth under the caption "Description of the
Notes" contained elsewhere in this Prospectus.
New Notes Offered ...... Up to $1,000,000,000 aggregate principal amount of
9 1/2% Senior Notes due 2007, Series B.
Maturity Date............ May 1, 2007.
Scheduled Interest Payment
Dates .................. May 1 and November 1, commencing November 1, 1997.
The New Notes will bear interest from May 8, 1997.
Holders of Old Notes whose Old Notes are accepted
for exchange in the Exchange Offer will be deemed to
have waived the right to receive any payment in
respect of interest on such Old Notes accrued from
May 8, 1997
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(the original issue date of the Old Notes) to the
date of the issuance of the New Notes.
Consequently, Holders who exchange their Old Notes
for New Notes will receive the same interest
payment on November 1, 1997 (the first interest
payment date with respect to the Old Notes and the
New Notes following consummation of the Exchange
Offer) that they would have received had they not
accepted the Exchange Offer.
Ranking.................. The New Notes will be general unsecured
obligations of the Company ranking senior to all
Subordinated Indebtedness (as defined) of the
Company and pari passu in right of payment with all
other existing and future unsecured and
unsubordinated Indebtedness (including any Old Notes
not exchanged pursuant to the Exchange Offer) and
other liabilities of the Company. As of the date of
this Prospectus, the Company has no Indebtedness
outstanding other than the Old Notes. The Company is
a holding company and, therefore, the New Notes will
be effectively subordinated to all liabilities
(including trade payables) of the Company's
subsidiaries. On a pro forma basis after giving
effect to the Refinancing, the outstanding
liabilities of the Company's subsidiaries reflected
on the Company's balance sheet would have been
$681.8 million as of March 31, 1997. See
"Description of the Notes -- Ranking."
Optional Redemption...... The New Notes are redeemable, in whole or in part,
at the option of the Company at any time after May
1, 2002 at the redemption prices set forth herein
plus accrued and unpaid interest, if any, to the
date of redemption.
In addition, prior to May 1, 2000, the Company may
redeem the Notes at a redemption price equal to
108.5% of the principal amount so redeemed, plus
accrued and unpaid interest thereon, if any, to the
date of redemption, with the net cash proceeds of
one or more Public Equity Offerings resulting in
aggregate gross cash proceeds to the Company of at
least $100.0 million; provided, however, that at
least 65% of the originally issued principal amount
of the Notes would remain outstanding immediately
after giving effect to any such redemption
(excluding any Notes owned by the Company or any of
its Affiliates (as defined)). Notice of any such
redemption must be given within 60 days after the
date of the last Public Equity Offering resulting
in gross cash proceeds to the Company, when
aggregated with all prior Public Equity Offerings,
of at least $100.0 million.
Change of Control ...... Upon the occurrence of a Change of Control
Triggering Event (as defined), each Holder of New
Notes will have the right to require the Company to
repurchase such Holder's New Notes at 101% of the
principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the repurchase date.
Certain Covenants ...... The Indenture imposes certain limitations on the
ability of the Company and its Restricted
Subsidiaries (as defined) to, among other things,
incur Indebtedness, make Restricted Payments (as
defined), effect certain Asset Sales (as defined),
enter into certain transactions with affiliates,
merge or consolidate with any other person or
transfer all or substantially all of their
properties and assets. See "Description of the Notes
-- Certain Covenants."
The New Notes are obligations only of the Company and are not guaranteed
by, and do not otherwise constitute obligations of, Comcast.
8
<PAGE>
RISK FACTORS
Prior to tendering Old Notes in the Exchange Offer, Holders should
carefully consider the factors discussed in detail elsewhere in this Prospectus
under the caption "Risk Factors."
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
The following table sets forth summary consolidated financial and other
data for the Company as of and for the three months ended March 31, 1997 and
1996 and as of and for each of the years in the five- year period ended December
31, 1996. The financial and other data (other than total Pops, total subscribers
at period end and penetration) as of and for each of the five years in the
period ended December 31, 1996 have been derived from the annual consolidated
financial statements of the Company. The financial and other data (other than
total Pops, total subscribers at period end and penetration) as of and for the
three months ended March 31, 1997 and 1996 have been derived from the unaudited
condensed consolidated financial statements of the Company. In the opinion of
management of the Company, the unaudited condensed consolidated financial data
reflect all adjustments, which are of a normal recurring nature, necessary for a
fair presentation of the financial position and results of operations for the
unaudited periods. The results of operations for the three months ended March
31, 1997 are not necessarily indicative of operating results for the full year.
The following data should be read in conjunction with "Selected Consolidated
Financial and Other Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the consolidated financial statements
and notes thereto of the Company included elsewhere herein.
<TABLE>
<CAPTION>
Three Months
Ended March 31,
--------------------------------
1997(1) 1996(1)
------------- -------------
<S> <C> <C>
Statement of Operations Data:
Service income, net ........................ $ 104,079 $ 98,192
Operating expenses ........................ 9,884 8,690
Selling, general and administrative
expenses ................................. 57,119 64,835
Depreciation and amortization ............ 29,972 29,883
Operating income (loss) .................. 7,104 (5,216)
Interest expense ........................... 29,448 26,612
Loss before extraordinary items and
cumulative effect of accounting changes (15,571) (35,570)
Extraordinary items ........................
Cumulative effect of accounting changes(4)
Net loss ................................. (15,571) (35,570)
Balance Sheet Data (at period end):
Working capital (deficiency) ............... $ (40,260) $ 16,026
Property and equipment, net ............... 355,945 289,781
Total assets .............................. 1,434,475 1,436,974
Long-term debt, less current portion ...... 1,295,479 1,207,712
Long-term investment in and due to
affiliates .............................. 111,057 138,943
Stockholder's (deficiency) equity ......... (371,426) (321,841)
Other Data:
Total Pops (000s)(5) ..................... 8,080 7,783
Total subscribers at period end (000s)(5) 766 705
Penetration(5) ........................... 9.5% 9.1%
Operating income before depreciation and
amortization(6) ........................... $ 37,076 $ 24,667
Net cash provided by (used in) operating
activities(7) ........................... $ 23,957 $ (5,025)
Capital expenditures ..................... $ 17,906 $ 14,888
Ratio of earnings to fixed charges(8) ......
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------------
1996(1) 1995(1)(2) 1994(1) 1993(3) 1992(3)
------------- ------------ -------------- ------------- ------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Service income, net ........................ $ 426,053 $ 374,880 $ 286,137 $ 202,030 $ 142,926
Operating expenses ........................ 36,876 28,923 22,684 16,997 12,457
Selling, general and administrative
expenses ................................. 235,176 212,657 154,011 97,210 71,697
Depreciation and amortization ............ 117,225 205,733 89,916 84,740 66,785
Operating income (loss) .................. 36,776 (72,433) 19,526 3,083 (8,013)
Interest expense ........................... 116,297 97,694 83,338 77,744 59,937
Loss before extraordinary items and
cumulative effect of accounting changes (69,584) (109,779) (55,089) (65,924) (79,971)
Extraordinary items ........................ (3,047) (6,072)
Cumulative effect of accounting changes(4) (425,106)
Net loss ................................. (69,584) (112,826) (61,161) (491,030) (79,971)
Balance Sheet Data (at period end):
Working capital (deficiency) ............... $ (66,619) $ (86,843) $ (15,593) $ 23,727 $ 18,131
Property and equipment, net ............... 353,414 286,681 221,945 186,833 169,352
Total assets .............................. 1,428,182 1,431,386 1,283,028 1,277,641 1,293,364
Long-term debt, less current portion ...... 1,259,325 1,068,104 869,605 844,589 798,167
Long-term investment in and due to
affiliates .............................. 108,804 133,239 110,173 90,711 74,772
Stockholder's (deficiency) equity ......... (355,855) (286,271) (173,445) (112,284) 378,746
Other Data:
Total Pops (000s)(5) ..................... 8,164 7,859 7,332 7,332 7,256
Total subscribers at period end (000s)(5) 762 665 501 323 230
Penetration(5) ........................... 9.3% 8.5% 6.8% 4.4% 3.2%
Operating income before depreciation and
amortization(6) ........................... $ 154,001 $ 133,300 $ 109,442 $ 87,823 $ 58,772
Net cash provided by (used in) operating
activities(7) ........................... $ 122,096 $ 69,340 $ 79,664 $ 65,942 $ 36,249
Capital expenditures ..................... $ 116,018 $ 228,706 $ 71,943 $ 50,488 $ 40,243
Ratio of earnings to fixed charges(8) ......
</TABLE>
9
<PAGE>
(1) See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for a discussion of events which affect the
comparability of the information reflected in the above summary
consolidated financial and other data.
(2) In 1995, in connection with the Cellular Rebuild (as defined), the Company
made capital expenditures of $172.0 million and charged $110.0 million to
depreciation expense, which represented the difference between the net
book value of the equipment replaced and the residual value realized upon
its disposal.
(3) Comparability of the information presented for the years ended December 31,
1993 and 1992 is affected by the Company's acquisition of AWACS, Inc.
("AWACS"), the non-wireline cellular telephone system serving the
Philadelphia, PA MSA, from Metromedia Company in March, 1992.
(4) Relates principally to the adoption of the Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes."
(5) Includes only the Company's consolidated systems. See "Business -- Summary
Market Data."
(6) Operating income before depreciation and amortization is commonly referred
to in the Company's industry as "operating cash flow." Operating cash flow
is a measure of a company's ability to generate cash to service its
obligations, including debt service obligations, and to finance capital
and other expenditures. In part due to the capital intensive nature of the
cellular industry and the resulting significant level of non-cash
depreciation and amortization expense, operating cash flow is frequently
used as one of the bases for evaluating cellular businesses. Operating
cash flow does not purport to represent net income or net cash provided by
operating activities, as those terms are defined under generally accepted
accounting principles, and should not be considered as an alternative to
such measurements as an indicator of the Company's performance.
(7) Represents net cash provided by (used in) operating activities as presented
in the Company's consolidated statement of cash flows.
(8) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of distributions from Garden State Cablevision and income
(loss) before extraordinary items and cumulative effect of accounting
changes, income tax expense (benefit), equity in net losses of affiliates
and fixed charges. Fixed charges consist of interest expense. For the
three months ended March 31, 1997 and 1996 and the years ended December
31, 1996, 1995, 1994, 1993 and 1992, earnings, as defined above, were
inadequate to cover fixed charges by $22.1 million, $55.3 million, $65.6
million, $163.1 million, $68.8 million, $73.6 million and $67.9 million,
respectively. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Results of Operations."
10
<PAGE>
RISK FACTORS
In addition to the other matters described in this Prospectus, Holders of
the Old Notes should consider the specific factors set forth below before
accepting the Exchange Offer.
This Prospectus contains statements which constitute forward looking
statements. Those statements appear in a number of places in this Prospectus and
include statements regarding the intent, belief or current expectations of the
Company, its directors or its officers primarily with respect to the future
operating performance of the Company. Holders of the Old Notes are cautioned
that any such forward looking statements are not guarantees of future
performance and may involve risks and uncertainties, and that actual results
may differ from those in the forward looking statements as a result of various
factors. The accompanying information contained in this Prospectus, including
without limitation the information set forth below and the information under
the heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations," identifies important factors that could cause such
differences.
Consequences of Failure to Exchange
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon, and, except
in certain limited circumstances, will no longer have any registration rights
with respect to the Old Notes or be entitled to any liquidated damages with
respect to the Old Notes. See "Registration Rights--Liquidated Damages." In
general, the Old Notes may not be offered or sold, unless registered under the
Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. The Company
does not intend to register the Old Notes under the Securities Act. The Company
believes that, based upon interpretations contained in letters issued to third
parties by the staff of the Commission, New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold or
otherwise transferred by each Holder thereof (other than a broker-dealer, as set
forth below, and any such Holder which is an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such New Notes are acquired in the ordinary course of such Holder's
business and such Holder has no arrangement or understanding with any person to
participate in the distribution of such New Notes. Eligible Holders wishing to
accept the Exchange Offer must represent to the Company in the Letter of
Transmittal that such conditions have been met and must represent, if such
Holder is not a broker-dealer, or is a broker-dealer but will not receive New
Notes for its own account in exchange for Old Notes, that neither such Holder
nor the person receiving such New Notes, if other than the Holder, is engaged in
or intends to participate in the distribution of such New Notes. Each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must represent that the Old Notes tendered in exchange therefor
were acquired as a result of market-making activities or other trading
activities and must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with the resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Company
has agreed that, prior to the 91st day after the consummation of the Exchange
Offer, it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution." However, to comply
with the securities laws of certain jurisdictions, if applicable, the New Notes
may not be offered or sold unless they have been registered or qualified for
sale in such jurisdiction or an exemption from registration or qualification is
available and is complied with. The Company does not currently intend to take
any action to register or qualify the New Notes for resale in any such
jurisdictions. In addition, the tender of Old Notes pursuant to the Exchange
Offer will reduce the principal amount of the Old Notes outstanding, which may
have an adverse effect upon, and increase the volatility of, the market price of
the Old Notes due to a reduction in liquidity.
11
<PAGE>
Leverage; Ability to Service Debt
The Company has been and will continue to be highly leveraged. For the
three months ended March 31, 1997 and for the year ended December 31, 1996, the
Company's earnings (deficit) were inadequate to cover fixed charges by $22.1
million and $65.6 million, respectively. On a pro forma basis, after giving
effect to the Refinancing, as of March 31, 1997 the Company's total long-term
debt would have been $1.2 billion and the Company's ratio of total debt to
total capitalization would have been 121.9%. The degree to which the Company is
leveraged could have important consequences to Holders of the Notes, including
the following: (i) the Company's ability to obtain additional financing in the
future for working capital, capital expenditures, acquisitions, general
corporate purposes or other purposes may be impaired; (ii) a substantial
portion of the Company's cash flows from operations will be dedicated to the
payment of principal and interest on its indebtedness, thereby reducing the
funds available to the Company for its operations and expansion plans; and
(iii) the Company may be more vulnerable to a downturn in general economic
conditions or its business. The discretion of the Company's management with
respect to certain business matters will be limited by covenants contained in
the Indenture and future debt instruments. Among other things, the covenants
contained in the Indenture restrict, condition or prohibit the Company from
incurring additional indebtedness, creating liens on its assets, making certain
asset dispositions and entering into transactions with affiliates. In addition,
CCCI's existing Credit Agreement contains, and the New Bank Facility (as
defined) is expected to contain, financial and operating covenants and
prohibitions, including requirements that CCCI maintain certain financial
ratios and use a portion of excess cash flow (as defined) and proceeds of
assets sales to repay indebtedness under such facility. There can be no
assurance that the Company's leverage and such restrictions will not materially
and adversely affect the Company's ability to finance its future operations or
capital needs or to engage in other business activities. Moreover, a failure to
comply with the obligations contained in the Indenture or any other agreements
with respect to additional financing (including the Credit Agreement or the New
Bank Facility) could result in an event of default under such agreements, which
could permit acceleration of the related debt and acceleration of debt under
future debt agreements that may contain cross-acceleration or cross-default
provisions. See "Description of the Notes."
The Company's ability to make scheduled payments or to refinance its
obligations with respect to its indebtedness depends on its financial and
operating performance, which, in turn, is subject to prevailing economic
conditions and to financial, business and other factors beyond its control and
to the ability of the Company to access payments and advances from its
subsidiaries in amounts and at times sufficient to fund its debt obligations.
There can be no assurance that the Company's operating results or access to
payments and advances from its subsidiaries will be sufficient for payment of
the Company's indebtedness, including the Notes. See "--Holding Company
Structure; Dependence upon Payments from Subsidiaries; Effective
Subordination."
Holding Company Structure; Dependence upon Payments from Subsidiaries;
Effective Subordination
The Company is a holding company and conducts all of its operations
through subsidiaries. Consequently, the ability of the Company to pay its
obligations, including its obligation to pay interest on and principal of the
Notes, whether at the maturity thereof or upon an earlier redemption or
purchase at the option of the Company or the Holders of the Notes, will be
dependent on the ability of the Company to receive dividends and other payments
or advances from its subsidiaries or to obtain additional capital or other
payments or advances, in cash or otherwise from Comcast (which has no
obligation to provide such capital, payments or advances) or from another
source. Comcast Cellular, CCCI and its subsidiaries are separate and distinct
legal entities and have no obligation, contingent or otherwise, to pay any
amounts due pursuant to the Notes or to make funds available therefor. The
ability of Comcast Cellular and CCCI to pay dividends or for Comcast Cellular
or CCCI or its subsidiaries to make other payments or advances to the Company
will depend upon the operating results of Comcast Cellular, CCCI and CCCI's
subsidiaries and any restrictions on paying such dividends or making such
payments or advances as may be applicable to Comcast Cellular, CCCI or any of
CCCI's subsidiaries.
The Indenture permits the Company and its subsidiaries to incur
substantial indebtedness. The Indenture permits the instruments governing such
indebtedness to restrict the ability of the Company's subsidiaries to pay
dividends or make other payments or advances to the Company and CCCI's existing
Credit Agreement contains, and the New Bank Facility is expected to contain,
such restrictions. There can be no assurance that, in the
12
<PAGE>
absence of other sources of liquidity, such restrictions, including
restrictions pursuant to the Credit Agreement and those likely to exist under
the New Bank Facility, will not have a material adverse effect on the ability
of the Company to service its indebtedness, including the Notes.
The right of the Company to receive assets of any of its subsidiaries upon
liquidation or reorganization (and the consequent right of Holders to
participate in those assets) of such subsidiary will be subject to the prior
claims of that subsidiary's creditors (including trade creditors) and preferred
stockholders. Accordingly, the New Notes effectively will be subordinated to
all liabilities of the Company's subsidiaries, including trade payables and the
liquidation value of preferred stock of the Company's subsidiaries, if any,
except to the extent that the Company is itself recognized as a creditor of
such subsidiary, in which case the claims of the Company would still be
subordinate to any security interest in the assets of such subsidiary, and any
indebtedness of such subsidiary senior to that held by the Company. The
Indenture will not limit the incurrence by Unrestricted Subsidiaries (as
defined) of additional indebtedness or the issuance of preferred stock. As
adjusted to give effect to the Refinancing, the aggregate amount of liabilities
of the Company's subsidiaries that effectively would have ranked senior to the
Old Notes would have been approximately $681.8 million as of March 31, 1997.
The Indenture will permit the incurrence by the Company of certain secured
indebtedness (without providing for the equal and ratable securing of the
Notes) and any such secured indebtedness would be effectively senior to the
Notes to the extent of the assets securing such indebtedness (which may be all
of the Company's assets). In addition, the indebtedness of CCCI under the
Credit Agreement is, and it is expected that borrowings under the New Bank
Facility may be, secured by the pledge of the capital stock of each of CCCI's
direct subsidiaries.
Limited Operating History; Net Losses
The Company and Comcast Cellular were formed in March 1997 and 1992,
respectively. In May 1997, Comcast contributed all of the outstanding capital
stock of Comcast Cellular to the Company. This contribution has been accounted
for in a manner similar to a pooling of interests. Since its formation, Comcast
Cellular has concentrated on the acquisition, exchange, construction, operation
and development of its cellular telephone systems. Comcast Cellular has
experienced significant losses since its inception. For the three months ended
March 31, 1997 and the year ended December 31, 1996, the Company incurred net
losses of $15.6 million and $69.6 million, respectively, and as of March 31,
1997, had an accumulated deficit of $871.9 million. The Company anticipates
that for the foreseeable future, depreciation, amortization and interest
expense will continue to be significant and will have a significant adverse
effect on the Company's ability to realize net earnings. See "Summary
Consolidated Financial and Other Data," "Selected Consolidated Financial and
Other Data" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- General."
Relationship with Comcast; Possible Conflicts of Interest
The interests of Comcast and the Company may conflict and there can be no
assurance that any such conflict will be resolved in favor of the Company. All
of the directors and certain of the officers of the Company are directors,
officers, or both, of Comcast. All of the officers and directors of the
Company, when acting in such capacity, have a fiduciary duty to the Company and
to its sole stockholder, Comcast. Officers and directors generally do not have
fiduciary duties to holders of debt securities such as the Notes. See
"Management."
Possible Disposition of the Company by Comcast
Over the past several years, Comcast has considered various transactions
involving the sale or other disposition (including a possible spin-off) of its
interest in the Company. While Comcast is not currently considering any such
transaction, no assurance can be given that the Company will remain a wholly
owned subsidiary of Comcast. See "-- Change of Control" below.
Issues Related to Brand Names
The Company currently markets its services under the Comcast Metrophone(SM)
brand name in the Philadelphia, PA MSA and under the Comcast CELLULARONE(R)
brand name in its other markets in New Jersey and
13
<PAGE>
Delaware. The Company intends to consolidate the provision of its services
under a single brand contemporaneously with the commencement of the digital
transition. There is no assurance that the Company will continue its use of
either brand name or that any change in brand name would not have a material
adverse effect on the Company's financial position, results of operations or
liquidity.
The Company does not own or have the contractual right to use the
"Comcast" name, which belongs to Comcast. While Comcast currently permits and
currently intends to continue to permit the Company to use the "Comcast" name
in marketing its products and services, there can be no assurance that Comcast
will continue to permit the Company to use the "Comcast" name or that any loss
of or limitation on the Company's right to use the "Comcast" name would not
have a material adverse effect on the Company's financial position, results of
operations or liquidity.
Competition
The FCC generally grants two licenses to operate cellular telephone
systems in each market. One of the two licenses was initially awarded to a
company or group affiliated with a local landline telephone carrier in the
market (the "wireline" license), and the other license was initially awarded to
a company, individual or a group not affiliated with any landline telephone
carrier (the "non-wireline" license). The Company's systems are all
non-wireline systems and compete directly with the wireline licensee in each
market in attracting and retaining cellular telephone customers and dealers.
The Company's principal wireline competitor has a larger coverage area and may
have access to more substantial financial resources than the Company.
Competition between wireless operators in each market is principally on the
basis of services and enhancements offered, technical quality of the system,
quality and responsiveness of customer service, pricing and coverage area.
In recent years, new mobile telecommunications service providers have
entered the market and created additional competition in the wireless
telecommunications business. Many of such providers have access to substantial
capital resources and operate, or through affiliates operate, cellular
telephone systems, thus bringing significant wireless experience to the new
marketplace. While there are only two cellular providers licensed in a given
area, new competitors continue to emerge utilizing different frequencies and
new technologies, including personal communications services ("PCS"),
Specialized Mobile Radio ("SMR") and Enhanced SMR. Winners of the auctions for
the 30-MHz licenses for PCS in the Company's Philadelphia market were AT&T
Wireless Services, Inc. and PhillieCo, L.P., an affiliate of Sprint Spectrum.
PhillieCo, L.P. and Nextel Communications, Inc. (an Enhanced SMR operator) have
each recently begun offering their wireless services in the Philadelphia, PA
area. Additional companies recently were granted 10-MHz PCS licenses
authorizing their operation throughout the Company's cellular service area. The
Company is unable to predict whether such competing technologies will be
successful and as a result will provide significant competition for the
Company.
Comcast, Tele-Communications, Inc. ("TCI"), Cox Communications, Inc.
("Cox") and Sprint Corporation ("Sprint"), through certain subsidiaries, engage
in the wireless communications business through a limited partnership known as
"Sprint Spectrum," a development stage enterprise. Comcast owns 15% of Sprint
Spectrum (other than with respect to the markets operated by the Company in the
Philadelphia, PA MTA). Pursuant to the Sprint Spectrum limited partnership
agreements, Comcast and its subsidiaries, including the Company, are prohibited
from acquiring any interest in Commercial Mobile Radio Service ("CMRS")
licenses or businesses beyond a predetermined cellular footprint, consisting of
the Philadelphia, PA MTA and the Allentown, PA BTA. Such limitations reduce the
Company's ability to expand the geographic scope of its existing cellular
telephone network.
The Company has entered into various reciprocal agreements among cellular
telephone system operators to allow their respective subscribers ("roamers") to
place and receive calls in other markets. Roamers are charged rates that are
generally at a premium to the regular service rate. While the Company believes
that it will maintain its ability to offer the ability to roam outside its
network to its customers, it also anticipates that increased competition will
both place downward pressure on roaming rates paid by other carriers to the
Company and permit a number of the cellular telephone providers who currently
allow their customers to roam on the Company's systems to migrate such roaming
to the systems of other providers. See "Business--Competition."
Change of Control
Upon a Change of Control Triggering Event, each holder of the Notes will
have the right to require the Company to repurchase any or all of the Notes
owned by such holder at a price equal to 101% of the principal
14
<PAGE>
amount thereof, together with accrued and unpaid interest. A Change of Control
Triggering Event requires both a Change of Control (as defined) and a Ratings
Decline (as defined). However, the Company's ability to repurchase the Notes
upon a Change of Control Triggering Event may be limited by the terms of then
existing contractual obligations of the Company and its subsidiaries. Although
the Company does not currently have any indebtedness containing change of
control provisions which indebtedness ranks pari passu with the Notes, the
Indenture does not prohibit the Company in the future from incurring
indebtedness otherwise permitted by the Indenture that contains such
provisions. Furthermore, CCCI's existing Credit Agreement has, and the New Bank
Facility is expected to have, change of control provisions that would require
CCCI to repay indebtedness thereunder before any funds from CCCI would be
available to the Company to satisfy its obligations under the Notes. In
addition, the Company may not have adequate financial resources to effect such
a repurchase, and there can be no assurance that the Company would be able to
obtain such resources through a refinancing of the Notes to be repurchased or
otherwise. If the Company fails to repurchase all of the Notes tendered for
purchase upon the occurrence of a Change of Control Triggering Event, such
failure will constitute an Event of Default under the Indenture. See
"--Leverage; Ability to Service Debt" above.
With respect to the sale of assets referred to in the definition of Change
of Control, the phrase "all or substantially all" as used in such definition
varies according to the facts and circumstances of the subject transaction, has
no clearly established meaning under the relevant law and is subject to
judicial interpretation. Accordingly, in certain circumstances there may be a
degree of uncertainty in ascertaining whether a particular transaction would
involve a disposition of "all or substantially all" of the assets of a person
and therefore it may be unclear whether a Change of Control has occurred and
whether the Notes are subject to an offer to purchase.
The Change of Control provision may not necessarily afford the Holders
protection in the event of a highly leveraged transaction, including a
reorganization, restructuring, merger or other similar transaction involving
the Company that may adversely affect the Holders, because such transactions
may not involve a shift in voting power or beneficial ownership or, even if
they do, may not involve a shift of the magnitude required under the definition
of Change of Control to trigger such provisions. Except as described under
"Description of the Notes -- Offer to Purchase upon Change of Control
Triggering Event," the Indenture does not contain provisions that permit the
Holders of the Notes to require the Company to repurchase or redeem the Notes
in the event of a takeover, recapitalization or similar transaction.
Potential for Adverse Regulatory Change and Need for Regulatory Approvals
The FCC regulates the licensing, construction, operation, acquisition and
sale of cellular systems, as well as the number of cellular and other wireless
licensees permitted in each market. All cellular licenses in the United States
were initially granted for a ten-year term. The FCC's current rules establish a
presumption in favor of the renewal of licenses that have complied with their
regulatory obligations during the initial license period. While the Company
believes that each of its licenses will be renewed based upon the FCC's rules,
there can be no assurance that all of the Company's licenses will be renewed on
favorable terms or at all. The Company's license for the Trenton, NJ MSA
expires in 1997. The balance of the Company's licenses expire from 1998 through
2006.
The FCC also regulates the ability of cellular operators to bundle the
provision of service with hardware, the resale of cellular service by third
parties and the coordination of frequency usage with other cellular licensees.
Cellular systems also are subject to Federal Aviation Administration and FCC
regulations concerning the siting, construction, marking and lighting of
cellular transmitter towers and antennae and FCC regulations concerning base
station transmitting facilities and signal emissions. In addition, the FCC
regulates the employment practices of cellular operators. Changes in the
regulation of cellular activities, in the activities of other wireless
carriers, or with respect to other matters ancillary to the wireless business
could have a material adverse effect on the Company's financial position,
results of operations or liquidity.
The Cellular Business and Non-Diversification
The Company through its subsidiaries is engaged in a single line of
business, the cellular communications business. The Company is, therefore,
subject to the risks of a non-diversified business.
15
<PAGE>
The Company's assets consist principally of intangible assets in the form
of investments in cellular telephone system licenses and licensees. The future
value of the Company's cellular interests depends significantly upon the
success of the Company's cellular telephone system operations and the growth of
the industry in general. The cellular communications industry may be affected
by, among other things, (a) changes in governmental regulation, (b) changes in
the competitive environment, (c) changes in technology and (d) changes in
banking regulations relating to highly leveraged transactions and market
conditions that may adversely affect the availability of debt and equity
financing. As a consequence, the value of such assets in the future may be
significantly lower than at present. In addition, any transfer of control of an
entity holding a license to offer cellular telephone communications services is
subject to prior approval of the FCC. There can be no assurance that, in the
event of default on indebtedness of the Company or any other event that may
result in the sale or liquidation of the Company's assets, the proceeds of such
sale or liquidation will be sufficient to pay the Company's obligations. In
addition, all of the Company's licenses are held by direct and indirect
subsidiaries of CCCI. All the capital stock of CCCI's direct subsidiaries have
been pledged to secure the existing Credit Agreement and may be pledged to
secure the New Bank Facility. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business -- Competition."
Equipment Failure; Natural Disaster
Although the Company carries "business interruption" insurance, a major
equipment failure or a natural disaster affecting any one of the Company's
central switching offices or certain of its cell sites could have a
significant, adverse effect on the Company's financial position, results of
operations and liquidity.
Radio Frequency Emission Concerns
Media reports have suggested that certain radio frequency ("RF") emissions
from portable cellular telephones may be linked to cancer and interfere with
heart pacemakers and other medical devices. Concerns over RF emissions and
interference may have the effect of discouraging the use of cellular
telephones, which could have an adverse effect upon the Company's business. In
August 1996, the FCC adopted new guidelines and methods for evaluating the
environmental effects of RF emissions. The updated guidelines generally are
more stringent than the previous rules, based on recommendations of federal
health and safety agencies, including the Environmental Protection Agency and
the Food and Drug Administration. Among the guidelines are limits for specific
absorption rates for evaluating certain hand-held devices such as cellular
telephones, as well as guidelines for the evaluation of cellular transmitting
facilities. The Company believes that the cellular telephones currently
marketed and in use by the Company's customers, as well as the Company's
transmitting facilities, comply with the new standards. Moreover, the FCC
preempted state and local government regulation of cellular and other personal
wireless services facilities based on RF emissions. Potential interference with
medical devices involves primarily digital transmissions rather than analog.
Industry, government, and medical experts have been conducting tests and
developing methods for reducing or eliminating such interference.
Adoption of New Technologies; Technological Obsolescence
The Company's commercial networks currently utilize analog technology. The
Company intends to deploy TDMA as its digital technology, utilizing the more
recently developed A-CELP vocoder, in 1997. The deployment of new technologies
incorporate certain inherent risks both from the standpoint of the Company's
transition of its operations and in the effectiveness of such technologies. In
addition, other digital technologies, including Code Division Multiple Access
("CDMA"), may ultimately provide substantial advantages over TDMA or analog
technology and, as these advantages become more established, the Company may be
at a competitive disadvantage and competitive pressures may force the Company
to implement CDMA or another digital technology at substantially increased
costs. However, as a result of the recent rebuild and enhancement of its
network, the Company could deploy CDMA digital radio technology in its network
in lieu of TDMA. In addition, other wireless communications companies may
implement digital technology before the Company, and consequently such
companies may be able to provide enhanced services and/or superior quality
compared with that which the Company is able to provide through its existing
analog technologies. There can be no assurance that the Company could respond
to such competitive pressures and implement digital technology on a timely
16
<PAGE>
basis or at an acceptable cost. One or more of the technologies currently
utilized by the Company or implemented in the future may not be preferred by
its customers or may become obsolete at some time in the future, which in
either case, could have a material adverse effect on the Company's financial
condition, results of operations and liquidity. There can be no assurance that
the Company's ongoing network improvements will be sufficient to meet or exceed
the capabilities and quality of competing networks.
Operating Costs Due to Fraud
As do most companies in the cellular industry, the Company incurs costs
associated with the unauthorized use of its network, including administrative
and capital costs associated with detecting, monitoring and reducing the
incidence of fraud. Fraud impacts interconnection costs, capacity costs,
administrative costs, fraud prevention costs and payments to other carriers for
unbillable fraudulent roaming. During 1995, the Company experienced for the
first time significant costs associated with the fraudulent use of its system.
Since that time, the Company has adopted a variety of fraud protection
measures which have decreased the incidence of fraudulent use of its systems.
Among these are personal identification numbers ("PINs"), which are required to
be used by the majority of the Company's customers, and the Company's Security
Zone feature, which restricts customer usage outside of the Company's service
areas by customers who do not routinely roam outside of the Company's markets.
In addition, the Company has implemented authentication and RF
fingerprinting technologies which associate electronic serial number
("ESN")/mobile identification number ("MIN") combinations to particular
cellular telephone units. The use of digital radio technology also purportedly
will make it more difficult to commit cellular fraud with respect to ESN/MIN
combinations. However, fraudulent use of the Company's systems remains a
significant concern, and there can be no assurance that the Company will not
incur substantial costs due to fraud in the future.
Absence of Public Market
The New Notes are a new issue of securities for which there is currently
no trading market. The Company does not intend to apply for listing of the New
Notes on any securities exchange or for quotation through the National
Association of Securities Dealers Automated Quotation System. There can be no
assurance that an active trading market for the New Notes will develop. If any
of the New Notes are traded after their initial issuance, they may trade at a
discount from their principal amount, depending upon prevailing interest rates,
the market for the Company's securities and other factors, including general
economic conditions and the financial condition, performance of, and prospects
for, the Company. The liquidity of, and trading markets for, the New Notes may
also be adversely affected by declines in the market for high yield securities
generally.
17
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization
of the Company as of March 31, 1997 and as adjusted to give effect to the
Refinancing. See "Prospectus Summary -- The Refinancing." This table should be
read in conjunction with the consolidated financial statements, including the
notes thereto, and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
As of March 31, 1997
--------------------------------------
Actual As Adjusted(1)
---------------- -------------------
(In thousands)
<S> <C> <C>
Long-term debt, less current portion:
Old Notes ......................................................... $ $ 998,370
Zero Coupon Notes ................................................ 619,078(2)
Revolving Credit Loan ............................................. 375,000 170,000(3)
Term Loan, due 2004 ................................................ 300,000
Other ............................................................ 1,401 1,401
----------- ------------
Total long-term debt, less current portion ..................... 1,295,479 1,169,771
----------- ------------
Series A Preferred Stock held by CFC ................................ 161,478
------------
Stockholder's deficiency:
Common stock, $.01 par value, authorized, 1,000 shares; issued, 100
shares .........................................................
Additional capital ................................................ 500,425 500,425
Accumulated deficit ............................................. (871,851) (871,851)(4)
----------- ------------
Total stockholder's deficiency ................................. (371,426) (371,426)
----------- ------------
Total capitalization .......................................... $ 924,053 $ 959,823
=========== ============
</TABLE>
- ------------
(1) The Zero Coupon Note Redemption occurred on May 19, 1997 and the accreted
value of the Zero Coupon Notes on such date was approximately $628.3
million (excluding $114.1 million accreted value of Zero Coupon Notes held
by CCCI eliminated in consolidation). Accordingly, the as adjusted
information gives effect to the accretion of the Zero Coupon Notes since
March 31, 1997. Similarly, the amount of Series A Preferred Stock
reflected in the table is based on the redemption date of the Zero Coupon
Notes. The as adjusted information reflects the repayment of the Term Loan
and a portion of the amounts outstanding under the Revolving Credit Loan
in May 1997. See "Prospectus Summary -- The Refinancing." From March 31,
1997 through the redemption date, there were no additional borrowings or
repayments under the Credit Agreement. The principal of the Term Loan was
payable in 2004. The maximum principal amount of the Revolving Credit Loan
is reduced in quarterly installments, which increase annually, commencing
September 30, 1998 and continuing through 2004. Outstanding amounts under
the Revolving Credit Loan as of December 31, 1996 are due in quarterly
installments commencing in 2002. Interest rates are based on a base, London
Interbank Offered Rate or Certificate of Deposit rate, plus a percentage
that varies as the ratio of total indebtedness to annual operating cash flow
(as defined) varies. As of March 31, 1997, the effective weighted average
interest rate on amounts outstanding under the Credit Agreement was 6.74%.
(2) Excludes $153.8 million principal amount at maturity ($112.4 million
accreted value at March 31, 1997) of Zero Coupon Notes owned by CCCI which
are eliminated in consolidation.
(3) The amount outstanding (as adjusted) under the Revolving Credit Loan is
expected to be refinanced with borrowings under the New Bank Facility. The
Company expects to record an extraordinary loss, net of related tax
benefit, of $3.6 million in connection with such refinancing. For a
discussion of the proposed New Bank Facility, see "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity
and Capital Resources -- Financing."
(4) Does not give effect to an extraordinary loss, net of related tax benefit,
of $7.3 million to be recorded in the second quarter of 1997, related to
the repayment of the Term Loan and the reduction of the Revolving Credit
Loan commitment from $1.0 billion to $425.0 million during such period.
Also does not give effect to the extraordinary loss of $3.6 million in
connection with the expected refinancing of the Revolving Credit Loan (see
Note 3). See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources --
Financing."
18
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
The following table sets forth selected consolidated financial and other
data for the Company as of and for the three months ended March 31, 1997 and
1996 and as of and for each of the years in the five-year period ended December
31, 1996. The financial and other data (other than total Pops, total subscribers
at period end and penetration) as of and for each of the five years in the
period ended December 31, 1996 have been derived from the annual consolidated
financial statements of the Company. The financial and other data (other than
total Pops, total subscribers at period end and penetration) as of and for the
three months ended March 31, 1997 and 1996 have been derived from the unaudited
condensed consolidated financial statements of the Company. In the opinion of
management of the Company, the unaudited condensed consolidated financial data
reflect all adjustments, which are of a normal recurring nature, necessary for a
fair presentation of the financial position and results of operations for the
unaudited periods. The results of operations for the three months ended March
31, 1997 are not necessarily indicative of operating results for the full year.
The following data should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
consolidated financial statements and notes thereto of the Company included
elsewhere herein.
<TABLE>
<CAPTION>
Three Months
Ended March 31,
--------------------------------------
1997(1) 1996(1)
------------- --------------
<S> <C> <C>
Statement of
Operations Data:
Service income, net ......... $ 104,079 $ 98,192
Operating expenses ......... 9,884 8,690
Selling, general and
administrative expenses ... 57,119 64,835
Depreciation and
amortization ............... 29,972 29,883
Operating income (loss) ...... 7,104 (5,216)
Interest expense ............ 29,448 26,612
Loss before extraordinary
items and cumulative
effect of accounting
changes ..................... (15,571) (35,570)
Extraordinary items .........
Cumulative effect of
accounting changes(4) ......
Net loss ..................... (15,571) (35,570)
Balance Sheet Data
(at period end):
Working capital
(deficiency) ................. $ (40,260) $ 16,026
Property and equipment, net . 355,945 289,781
Total assets .................. 1,434,475 1,436,974
Long-term debt, less current
portion ..................... 1,295,479 1,207,712
Long-term investment in and
due to affiliates ......... 111,057 138,943
Stockholder's (deficiency)
equity ..................... (371,426) (321,841)
Other Data:
Total Pops (000s)(5) ......... 8,080 7,783
Total subscribers at period
end (000s)(5) ............... 766 705
Penetration(5) ............... 9.5% 9.1%
Operating income before
depreciation and
amortization(6) ............ $ 37,076 $ 24,667
Net cash provided by (used
in) operating activities(7) . $ 23,957 $ (5,025)
Capital expenditures ......... $ 17,906 $ 14,888
Ratio of earnings to fixed
charges(8) ..................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------
1996(1) 1995(1)(2) 1994(1) 1993(3) 1992(3)
------------- ------------ -------------- ------------- -------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Statement of
Operations Data:
Service income, net ......... $ 426,053 $ 374,880 $ 286,137 $ 202,030 $ 142,926
Operating expenses ......... 36,876 28,923 22,684 16,997 12,457
Selling, general and
administrative expenses ... 235,176 212,657 154,011 97,210 71,697
Depreciation and
amortization ............... 117,225 205,733 89,916 84,740 66,785
Operating income (loss) ...... 36,776 (72,433) 19,526 3,083 (8,013)
Interest expense ............ 116,297 97,694 83,338 77,744 59,937
Loss before extraordinary
items and cumulative
effect of accounting
changes ..................... (69,584) (109,779) (55,089) (65,924) (79,971)
Extraordinary items ......... (3,047) (6,072)
Cumulative effect of
accounting changes(4) ...... (425,106)
Net loss ..................... (69,584) (112,826) (61,161) (491,030) (79,971)
Balance Sheet Data
(at period end):
Working capital
(deficiency).................. $ (66,619) $ (86,843) $ (15,593) $ 23,727 $ 18,131
Property and equipment, net . 353,414 286,681 221,945 186,833 169,352
Total assets .................. 1,428,182 1,431,386 1,283,028 1,277,641 1,293,364
Long-term debt, less current
portion ..................... 1,259,325 1,068,104 869,605 844,589 798,167
Long-term investment in and
due to affiliates ......... 108,804 133,239 110,173 90,711 74,772
Stockholder's (deficiency)
equity ..................... (355,855) (286,271) (173,445) (112,284) 378,746
Other Data:
Total Pops (000s)(5) ......... 8,164 7,859 7,332 7,332 7,256
Total subscribers at period
end (000s)(5) ............... 762 665 501 323 230
Penetration(5) ............... 9.3% 8.5% 6.8% 4.4% 3.2%
Operating income before
depreciation and
amortization(6) ............ $ 154,001 $ 133,300 $ 109,442 $ 87,823 $ 58,772
Net cash provided by (used
in) operating activities(7) . $ 122,096 $ 69,340 $ 79,664 $ 65,942 $ 36,249
Capital expenditures ......... $ 116,018 $ 228,706 $ 71,943 $ 50,488 $ 40,243
Ratio of earnings to fixed
charges(8) ..................
</TABLE>
(footnotes continued on following page)
19
<PAGE>
(1) See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for a discussion of events which affect the
comparability of the information reflected in the above selected
consolidated financial and other data.
(2) In 1995, in connection with the Cellular Rebuild, the Company made capital
expenditures of $172.0 million and charged $110.0 million to depreciation
expense, which represented the difference between the net book value of
the equipment replaced and the residual value realized upon its disposal.
(3) Comparability of the information presented for the years ended December 31,
1993 and 1992 is affected by the Company's acquisition of AWACS, the
non-wireline cellular telephone system serving the Philadelphia, PA MSA,
from Metromedia Company in March, 1992.
(4) Relates principally to the adoption of the Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes."
(5) Includes only the Company's consolidated systems. See "Business -- Summary
Market Data."
(6) Operating income before depreciation and amortization is commonly referred
to in the Company's industry as "operating cash flow." Operating cash flow
is a measure of a company's ability to generate cash to service its
obligations, including debt service obligations, and to finance capital
and other expenditures. In part due to the capital intensive nature of the
cellular industry and the resulting significant level of non-cash
depreciation and amortization expense, operating cash flow is frequently
used as one of the bases for evaluating cellular businesses. Operating
cash flow does not purport to represent net income or net cash provided by
operating activities, as those terms are defined under generally accepted
accounting principles, and should not be considered as an alternative to
such measurements as an indicator of the Company's performance.
(7) Represents net cash provided by (used in) operating activities as presented
in the Company's consolidated statement of cash flows.
(8) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of distributions from Garden State Cablevision and income
(loss) before extraordinary items and cumulative effect of accounting
changes, income tax expense (benefit), equity in net losses of affiliates
and fixed charges. Fixed charges consist of interest expense. For three
months ended March 31, 1997 and 1996 and for the years ended December 31,
1996, 1995, 1994, 1993 and 1992, earnings, as defined above, were
inadequate to cover fixed charges by $22.1 million, $55.3 million, $65.6
million, $163.1 million, $68.8 million, $73.6 million and $67.9 million,
respectively. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Results of Operations."
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
The Company, a Delaware corporation incorporated on March 27, 1997, is a
direct wholly owned subsidiary of Comcast Corporation ("Comcast") and is a
holding company that conducts all of its operations through its wholly owned
subsidiaries, Comcast Cellular Corporation ("Comcast Cellular"), Comcast
Cellular Communications, Inc. ("CCCI") and CCCI's subsidiaries. On May 7, 1997,
Comcast contributed all 100 of Comcast Cellular's issued and outstanding shares
of common stock held by it to the Company. This contribution has been accounted
for in a manner similar to a pooling of interests. Accordingly, the
consolidated financial statements of the Company include the accounts of
Comcast Cellular for all periods presented. The Company is principally engaged
in the development, management and operation of cellular telephone
communications systems located in Pennsylvania, New Jersey and Delaware.
The Company's business is capital intensive and continually requires cash
for development, expansion and debt service. The Company has historically met
its cash needs for operations through its cash flows from operating activities.
Cash requirements for acquisitions and capital expenditures have been provided
through the Company's financing activities, as well as its existing cash and
cash equivalents.
General Developments of Business
Cellular Retail Stores
In August 1996, the Company acquired twelve cellular retail stores and
direct sales locations located in Pennsylvania, New Jersey and Delaware, and
related assets from Advanced Telecomm, Inc. for $6.5 million in cash, subject
to certain purchase price adjustments. The Company accounted for the
acquisition under the purchase method.
Delaware 1 RSA
In May 1996, the Company and Southwestern Bell Mobile Systems, through a
partnership owned 50% by each of them, purchased the remaining 84% limited
partnership interests of the Delaware 1 Rural Statistical Area ("RSA") Limited
Partnership, the licensee of the non-wireline cellular license for the Kent and
Sussex, DE RSA (the "Delaware 1 RSA") for $44.1 million in cash, of which the
Company's share was $22.1 million. The surviving entity, C-SW Cellular
Partnership, a Delaware general partnership, now holds the cellular license for
the Delaware 1 RSA. American Cellular Network Corporation ("Amcell"), an
indirect wholly owned subsidiary of the Company, manages the daily operations
of the C-SW Cellular Partnership's interest in the Delaware 1 RSA. The
Company's investment of $29.5 million, $29.8 million and $5.5 million as of
March 31, 1997, December 31, 1996 and December 31, 1995, respectively, is
accounted for under the equity method and is classified as investment in
affiliate in the Company's consolidated balance sheet.
Ocean County RSA
In 1995, the Company completed its exchange agreement with McCaw Cellular
Communications, Inc. whereby the Company acquired a 100% interest in the entity
that held the Ocean County, NJ RSA (the "Ocean County RSA") non-wireline
cellular license in exchange for the Company's Hunterdon County, NJ RSA
cellular license and related assets, and $55.2 million in cash.
Vineland/Atlantic City MSA
In June 1995, the Company purchased all of the outstanding stock of United
States Cellular Operating Company of Vineland, Inc. ("USCC/Vineland") from
United States Cellular Corporation ("USCC") for $21.2 million in cash.
USCC/Vineland held an approximate 80.4% interest in the Vineland Cellular
Telephone Company, Inc. ("VCTC"), which holds the license to operate the
non-wireline cellular telephone system serving the Vineland, NJ Metropolitan
Statistical Area ("MSA"), and an approximate 9.3% interest in the non-wireline
cellular telephone system for the Atlantic City, NJ MSA (the "Atlantic City
Cellular System"). The acquisition of these interests was funded with the
proceeds of a loan from Comcast, which was repaid during 1995 in connection with
the Company's refinancing of certain indebtedness. See "Results of Operations --
Years Ended December 31, 1996, 1995 and 1994 -- Extraordinary Items." As of June
30, 1995, the Company began consolidating VCTC.
21
<PAGE>
In June 1996, the Company completed the acquisition of the license to
operate the Atlantic City Cellular System for $7.5 million in cash. The Company
accounted for the acquisition under the purchase method and began consolidating
the Atlantic City Cellular System effective June 1, 1996.
LCH Preferred Stock Redemption
In June 1994, LCH Communications, Inc. ("LCH") redeemed the Class A
Redeemable Preferred Stock (the "LCH Preferred Stock") held by CCCI through the
transfer to CCCI of 100% of the capital stock of LIN Cellular Communications
Corporation. As a result of such redemption, CCCI owns 100% of the common stock
of AWACS, a wholly owned subsidiary of CCCI. Since the Company has historically
accounted for the purchase of AWACS as if it had acquired a 100% direct
interest, the redemption of the LCH Preferred Stock had no effect on the
Company's accounting for AWACS.
In addition to the interest in AWACS, the redemption of the LCH Preferred
Stock entitled the Company to an interest in certain publishing and broadcasting
operations. CCCI issued to Metromedia Company participating preferred stock
which had economic attributes based on the performance and ultimate value of the
publishing and broadcasting operations. In June 1997, CCCI redeemed the
participating preferred stock in exchange for such assets. As these operations
are excluded from the Company's consolidated financial statements, the
redemption of the participating preferred stock will have no financial statement
effect.
The Company in its normal course of business considers potential
acquisitions of cellular telephone systems and other related assets and
business opportunities as such opportunities arise.
Liquidity and Capital Resources
Cash and Cash Equivalents
The Company's cash and cash equivalents are recorded at cost which
approximates their fair value. As of March 31, 1997, December 31, 1996 and
December 31, 1995, cash and cash equivalents were $30.4 million, $5.0 million,
and $19.6 million, respectively.
Capital Expenditures
It is anticipated that during 1997, the Company will incur approximately
$143.0 million of capital expenditures for the upgrading of its cellular
communications systems. The amount includes the Company's purchase of twelve
10-MHz PCS licenses from Comcast, at Comcast's cost of $17.5 million. Such
purchase is subject to the FCC's approval of their transfer to the Company. The
amount of such capital expenditures for years subsequent to 1997 will depend
upon numerous factors, many of which are beyond the Company's control,
including competition, new product offerings and other factors. The Company,
however, anticipates that capital expenditures for years subsequent to 1997
will continue to be significant. The Company believes it will be able to meet
its requirements for capital expenditures from cash generated from operations
and through other sources of financing. As of March 31, 1997, the Company does
not have any significant contractual obligations for capital expenditures.
Financing
On May 8, 1997, the Company completed the sale of $1.0 billion principal
amount of 9 1/2% Senior Notes due 2007 (the "Old Notes") through a private
offering with registration rights (the "Offering").
Interest on the Old Notes is payable in cash semi-annually on May 1 and
November 1 of each year, commencing on November 1, 1997. The Old Notes are
redeemable, in whole or in part, at the option of the Company, at any time on
or after May 1, 2002 at a redemption price, initially of 104.75% of the
principal amount of the Old Notes and declining annually to 100% on May 1,
2005, plus accrued and unpaid interest, if any, to the date of redemption. In
addition, prior to May 1, 2000, the Company may redeem the Old Notes at a price
equal to 108.5% of the principal amount, plus accrued and unpaid interest, if
any, to the redemption date, with the net cash proceeds from one or more Public
Equity Offerings (as defined); provided, however, that at least 65% of the
originally issued principal amount of the Old Notes would remain outstanding
after giving effect to
22
<PAGE>
any such redemption. Upon the occurrence of a Change of Control Triggering
Event (as defined), each holder of the Old Notes will have the right to require
the Company to repurchase such holder's Old Notes at 101% of the principal
amount, plus accrued and unpaid interest, if any, to the repurchase date.
The Old Notes are general unsecured obligations of the Company ranking
senior to all subordinated Indebtedness (as defined) of the Company and pari
passu in right of payment with all other existing and future unsecured
unsubordinated Indebtedness (as defined) and other liabilities of the Company.
The Old Notes are subordinate to all liabilities, including trade payables, of
the Company's subsidiaries.
The indenture for the Old Notes imposes certain limitations on the ability
of the Company and its Restricted Subsidiaries (as defined) to, among other
things, incur Indebtedness (as defined), make Restricted Payments (as defined),
including the payment of cash dividends on the Company's Series A Preferred
Stock (see below), effect certain Asset Sales (as defined), enter into certain
transactions with affiliates, merge or consolidate with any other person or
transfer all or substantially all of their properties and assets.
In May 1997, the Company contributed the net proceeds of $971.2 million
from the Offering to Comcast Cellular. On May 19, 1997 (the "Redemption Date"),
Comcast Cellular used such proceeds to redeem all of its Series A Senior
Participating Redeemable Zero Coupon Notes Due 2000 and Series B Senior
Participating Redeemable Zero Coupon Notes Due 2000 (together, the "Zero Coupon
Notes"), including the Zero Coupon Notes held by CCCI and Comcast Financial
Corporation ("CFC"), a wholly owned subsidiary of Comcast. Unamortized debt
acquisition costs related to the Zero Coupon Notes were not significant. As of
the Redemption Date, the Zero Coupon Notes had an aggregate accreted value of
$742.4 million, including the Zero Coupon Notes held by CCCI and CFC with
accreted values of $114.1 million and $161.5 million, respectively. On the
Redemption Date, CFC used the $161.5 million received upon redemption of the
Zero Coupon Notes held by it to purchase 1,614,775 shares of the Company's
newly authorized $.01 par value, Series A Preferred Stock (see below). The
Company contributed the $161.5 million received from the sale of its Series A
Preferred Stock to Comcast Cellular, which in turn contributed such amount and
the remaining net proceeds from the Offering, totaling $228.8 million, to CCCI
to repay a portion of the amounts outstanding under its $1.3 billion credit
agreement with certain banks (the "Credit Agreement").
The Credit Agreement provides for a term loan in the principal amount of
$300.0 million due 2004 (the "Term Loan") and a reducing revolving credit
facility of up to $1.0 billion (the "Revolving Credit Loan", and together with
the Term Loan, the "Loans"). As of March 31, 1997, CCCI had outstanding $300.0
million and $375.0 million under the Term Loan and the Revolving Credit Loan,
respectively. Interest is payable quarterly at rates based on a base, London
Interbank Offered Rate or Certificate of Deposit rate, plus a percentage which
varies as the ratio of total indebtedness to annual operating cash flow (as
defined) varies. In May 1997, subsequent to the Offering, CCCI canceled $575.0
million of its Revolving Credit Loan, thereby reducing the $1.0 billion
commitment to $425.0 million. CCCI used the amounts contributed by Comcast
Cellular and the proceeds received upon redemption of the Zero Coupon Notes
held by it (aggregating $504.4 million), as well as available cash, to repay
the Term Loan and $205.0 million under the Revolving Credit Loan. In connection
with the repayment of the Term Loan and the reduction of the Revolving Credit
Loan commitment, during the second quarter of 1997, the Company will record an
extraordinary loss, net of the related tax benefit, of $7.3 million. As a
result of these transactions, as of the Redemption Date, the Company had
outstanding $170.0 million under its Revolving Credit Loan.
At the option of the Company, by declaration of the Company's Board of
Directors, dividends may be paid in additional shares of Series A Preferred
Stock (the "Additional Shares") instead of cash through May 1, 2007. To the
extent dividends are paid in Additional Shares, such Additional Shares shall be
valued at $100 per share with a liquidation value of $100 per share. The Series
A Preferred Stock is redeemable, at the option of the Company at any time prior
to May 2, 2007, at a redemption price of $100 per share, plus accrued and
unpaid dividends, and is mandatorily redeemable on May 2, 2007, after final
maturity of the Old Notes, subject to certain conditions. The Series A
Preferred Stock is generally non-voting.
During the third quarter of 1997, the Company expects to amend the
Revolving Credit Loan or to enter into a new revolving credit facility of up to
$500.0 million with a group of banks (the "New Bank Facility"), although there
can be no assurance that any such financing will be available on acceptable
terms and conditions. The New
23
<PAGE>
Bank Facility is expected to be used to repay all amounts outstanding under the
Revolving Credit Loan, to fund capital expenditures and for subsidiary general
purposes. In connection with the repayment of the Revolving Credit Loan, during
the third quarter of 1997, the Company expects to record an extraordinary loss,
net of the related tax benefit, of approximately $3.6 million.
Borrowings under the New Bank Facility would be effectively senior to the
Old Notes and are expected to be secured by a pledge of the capital stock of
CCCI's subsidiaries. The arrangement of the New Bank Facility is subject to the
satisfaction of a number of significant conditions, including (i) reaching an
agreement in principle regarding the terms of the New Bank Facility, (ii) the
banks' credit committee approval, (iii) the negotiation and execution of a
definitive credit agreement and related documents satisfactory to the Company
and the banks, and (iv) the completion of due diligence satisfactory to the
banks. The Company can give no assurance that any such conditions will be
satisfied or that the New Bank Facility will be entered into.
The Company expects that the New Bank Facility will contain various
covenants, including financial covenants restricting changes in control (or
making such an event of default), restricting the payment of dividends or
distributions by CCCI, or the making of loans or advances to the Company.
During the third quarter of 1997, upon amendment or repayment of the
Revolving Credit Loan, it is expected that the Company will be merged with and
into Comcast Cellular, with Comcast Cellular being the surviving entity. Upon
consummation of the merger, the Notes will become direct obligations of Comcast
Cellular.
As of March 31, 1997, December 31, 1996 and December 31, 1995, the
Company's long-term debt, including current portion, was $1.297 billion, $1.261
billion and $1.070 billion, respectively, of which 48.2%, 48.0% and 44.5%,
respectively, was at variable rates. The Company's long-term debt had estimated
fair values of $1.113 billion and $1.178 billion as of December 31, 1996 and
1995, respectively. The Company's weighted average interest on the Loans was
6.74% and 6.82% during the three months ended March 31, 1997 and 1996,
respectively, and 6.84%, 7.17%, and 7.33% during the years ended December 31,
1996, 1995 and 1994, respectively. The Company continually evaluates its debt
structure with the intention of reducing its debt service requirements when
desirable.
The Company is a holding company and conducts all of its operations
through subsidiaries of CCCI. Consequently, the ability of the Company to pay
its obligations, including its obligation to pay interest on and principal of
the Notes, whether at the maturity thereof or upon an earlier redemption at the
option of the Company or the holders of the Notes, will be dependent on the
ability of the Company to receive dividends and other payments or advances from
its subsidiaries or to obtain additional capital or other payments or advances,
in cash or otherwise from Comcast (which has no obligation to provide such
capital, payments or advances) or from another source. Comcast Cellular, CCCI
and its subsidiaries are separate and distinct legal entities and have no
obligation, contingent or otherwise, to pay any amounts due pursuant to the
Notes or to make funds available therefor. The ability of Comcast Cellular or
CCCI to pay dividends or for Comcast Cellular, CCCI or its subsidiaries to make
other payments or advances to the Company will depend upon the operating
results of Comcast Cellular, CCCI and its subsidiaries and any restrictions on
paying such dividends or making such payments or advances as may be applicable
to Comcast Cellular, CCCI or any of its subsidiaries, such as those contained
in the Credit Agreement or expected to be contained in the New Bank Facility.
There can be no assurance that the Company will be able to improve its results
of operations or that funds will be available to the Company from Comcast,
Comcast Cellular, CCCI or other sources on satisfactory terms or at all.
Interest Rate Risk Management
The Company is exposed to market risk, including changes in interest
rates. To manage the volatility relating to these exposures, the Company enters
into various derivative transactions pursuant to the Company's policies in
areas such as counterparty exposure and hedging practices. Positions are
monitored using techniques including market value and sensitivity analyses. The
Company does not hold or issue any derivative financial instruments for trading
purposes and is not a party to leveraged instruments. The credit risks
associated with the Company's derivative financial instruments are controlled
through the evaluation and monitoring of the creditworthiness of the
counterparties. Although the Company may be exposed to losses in the event of
nonperformance by the counterparties, the Company does not expect such losses,
if any, to be significant.
24
<PAGE>
The use of interest rate risk management instruments, such as interest
rate exchange agreements ("Swaps") and interest rate collar agreements
("Collars"), is required under the terms of the Credit Agreement and is
expected to be required under the New Bank Facility. The Company's policy is to
manage interest costs using a mix of fixed and variable rate debt. Using Swaps,
the Company agrees to exchange, at specified intervals, the difference between
fixed and variable interest amounts calculated by reference to an agreed-upon
notional principal amount. Collars limit the Company's exposures to and
benefits from interest rate fluctuations on variable rate debt to within a
range of rates.
The following table summarizes the terms of the Company's existing Swap
and Collars as of December 31, 1996 and 1995 (dollars in millions):
Notional Average
Amount Maturities Interest Rate
-------- ----------- --------------
As of December 31, 1996
Variable to Fixed Swap ...... $ 50.0 1998 5.65%
Collars ..................... 220.0 1997 6.78%/5.38%
As of December 31, 1995
Variable to Fixed Swap ...... $ 50.0 1998 5.65%
Collar ..................... 50.0 1997 6.27%/5.00%
The notional amounts of interest rate agreements, as presented in the
above table, are used to measure interest to be paid or received and do not
represent the amount of exposure to credit loss. The difference between the
carrying values and estimated fair values of the Company's derivative financial
instruments was not significant as of December 31, 1996 and 1995, and has been
estimated based upon amounts at which such items could be settled. While Swaps
and Collars represent an integral part of the Company's interest rate risk
management program, their incremental effect on interest expense for the years
ended December 31, 1996, 1995 and 1994 was not significant.
The Company believes that it will be able to meet its current and
long-term liquidity and capital requirements, including fixed charges, through
its cash flows from operating activities, existing cash and cash equivalents
and lines of credit and other external financing.
Statement of Cash Flows
Three Months Ended March 31, 1997 and 1996
Cash and cash equivalents increased $25.5 million as of March 31, 1997
from December 31, 1996 and increased $31.2 million as of March 31, 1996 from
December 31, 1995. Increases in cash and cash equivalents resulted from cash
flows from operating, financing and investing activities which are explained
below.
Net cash provided by (used in) operating activities was $24.0 million and
($5.0) million for the three months ended March 31, 1997 and 1996,
respectively. The increase of $29.0 million from 1996 to 1997 is due primarily
to the increase in the Company's operating income before depreciation and
amortization expense and the effects of changes in working capital as a result
of the timing of receipts and disbursements.
Net cash provided by financing activities was $19.2 million and $51.1
million for the three months ended March 31, 1997 and 1996, respectively.
During the three months ended March 31, 1997, the Company borrowed $20.0
million under the Revolving Credit Loan. During the three months ended March
31, 1996, the Company borrowed $125.0 million under the Revolving Credit Loan
and paid $75.0 million for equipment purchased during 1995 subject to a
deferred payment plan.
Net cash used in investing activities was $17.7 million and $14.9 million
for the three months ended March 31, 1997 and 1996, respectively, and relates
primarily to capital expenditures.
Years Ended December 31, 1996, 1995 and 1994
Cash and cash equivalents decreased $14.7 million as of December 31, 1996
from December 31, 1995 and increased $11.6 million as of December 31, 1995 from
December 31, 1994. Changes in cash and cash equivalents resulted from cash
flows from operating, financing and investing activities which are explained
below.
25
<PAGE>
Net cash provided by operating activities amounted to $122.1 million,
$69.3 million and $79.7 million for the years ended December 31, 1996, 1995 and
1994, respectively. The increase of $52.8 million from 1995 to 1996 and the
decrease of $10.4 million from 1994 to 1995 is due primarily to the effects of
changes in working capital as a result of the timing of receipts and
disbursements and the increase in the Company's operating income before
depreciation and amortization expense.
Net cash (used in) provided by financing activities was ($18.1) million,
$232.4 million and ($24.4) million for the years ended December 31, 1996, 1995
and 1994, respectively. During 1996, the Company borrowed $166.9 million and
repaid $36.5 million under the Credit Agreement. In addition, during 1996, the
Company paid $120.2 million for equipment purchased during 1995 subject to a
deferred payment plan and repaid $35.5 million of its long-term due to
affiliate with the proceeds from distributions from Garden State Cablevision
L.P. ("Garden State Cablevision"). During 1995, the Company borrowed $553.6
million and repaid $423.4 million, primarily in connection with the refinancing
of its credit facility (see "Results of Operations -- Years Ended December 31,
1996, 1995 and 1994 -- Extraordinary Items") and to fund the USCC/Vineland
acquisition. In addition, during 1995, the Company borrowed $134.6 million for
equipment purchases subject to a deferred payment plan and incurred debt
acquisition costs of $20.4 million in connection with the refinancing of its
credit facility. During 1994, the Company borrowed $70.0 million and repaid
$95.0 million under its credit facility.
Net cash used in investing activities was $118.6 million, $290.2 million
and $54.8 million for the years ended December 31, 1996, 1995 and 1994,
respectively. The decrease of $171.6 million from 1995 to 1996 is due to the
effects of the Cellular Rebuild in 1995 (as described below), a $61.8 million
decrease from 1995 to 1996 in net cash used for acquisitions and distributions
of $35.5 million received from Garden State Cablevision in 1996. The $235.4
million increase from 1994 to 1995 results primarily from the effects of the
Cellular Rebuild in 1995, the proceeds of $25.7 million on the sales of
short-term investments in 1994 and net cash used for acquisitions of $75.8
million in 1995 (principally the Ocean County RSA and USCC/Vineland
acquisitions).
26
<PAGE>
Results of Operations
Three Months Ended March 31, 1997 and 1996
Summarized consolidated financial information for the Company for the
three months ended March 31, 1997 and 1996 is as follows (dollars in millions,
"NM" denotes percentage is not meaningful):
<TABLE>
<CAPTION>
Three Months Ended March 31, Increase/(Decrease)
---------------------------- ------------------------
1997 1996 $ %
<S> <C> <C> <C> <C>
Service income, net ........................ $ 104.1 $ 98.2 $ 5.9 6.0%
Operating, selling, general and administrative
expenses .................................... 67.0 73.5 (6.5) (8.8)
------- -------
Operating income before depreciation and
amortization (1) ........................... 37.1 24.7 12.4 50.2
Depreciation and amortization ............... 30.0 29.9 0.1 0.3
------- -------
Operating income (loss) ..................... 7.1 (5.2) 12.3 NM
------- -------
Interest expense ........................... 29.4 26.6 2.8 10.5
Investment income ........................... (0.4) (0.3) 0.1 33.3
Equity in net losses of affiliates ......... 2.1 2.2 (0.1) (4.5)
Litigation settlement ........................ 21.6 (21.6) NM
Other ....................................... 0.2 2.1 (1.9) (90.5)
Income tax benefit ........................... (8.6) (21.9) (13.3) (60.7)
------- -------
Net loss .................................... $ (15.6) $ (35.5) $ (19.9) (56.1)%
======= =======
</TABLE>
- ------------
(1) Operating income before depreciation and amortization is commonly referred
to in the cellular industry as "operating cash flow." Operating cash flow
is a measure of a company's ability to generate cash to service its
obligations, including debt service obligations, and to finance capital
and other expenditures. In part due to the capital intensive nature of the
cellular industry and the resulting significant level of non-cash
depreciation and amortization expense, operating cash flow is frequently
used as one of the bases for evaluating cellular businesses. Operating
cash flow does not purport to represent net income or net cash provided by
operating activities, as those terms are defined under generally accepted
accounting principles, and should not be considered as an alternative to
such measurements as an indicator of the Company's performance. See "--
Statement of Cash Flows" above for a discussion of net cash provided by
operating activities.
Service Income, net
Of the $5.9 million increase in service income for the three month period
from 1996 to 1997, $8.5 million is attributable to the Company's subscriber
growth. Offsetting this increase is a decrease of $2.6 million resulting
primarily from a reduction in the average rate per minute of use from 1996 to
the same period in 1997.
Operating, Selling, General and Administrative Expenses
The $6.5 million decrease in operating, selling, general and
administrative expenses for the three month period from 1996 to 1997 is
primarily attributable to expense reductions achieved through the
implementation of fraud management programs and a reduction in commission costs
resulting from fewer gross sales in 1997 as compared to the same period in
1996. These reductions were partially offset by increases in volume related
expenses resulting from subscriber growth.
Comcast and CCCI are parties to a management agreement (the "Management
Agreement") pursuant to which Comcast manages the business and operations of
CCCI. Pursuant to the Management Agreement, management fees of $1.4 million
were charged to selling, general and administrative expenses during each of the
three months ended March 31, 1997 and 1996. In accordance with the provisions
of the Management Agreement, annual cash payments of management fees are
limited to $5.0 million, subject to annual increases based on the consumer
price index. In certain circumstances, the Credit Agreement may further limit
the payment of management fees. As of March 31, 1997 and December 31, 1996,
deferred management fees payable, which are included in long-term investment in
and due to affiliates in the Company's condensed consolidated balance sheet,
totaled $16.1 million and $14.7 million, respectively. The Company intends to
pay all previously deferred management fees as of the date the Credit Agreement
is amended or refinanced with the New Credit Facility.
27
<PAGE>
In May 1997, subsequent to the redemption of the Zero Coupon Notes, the
Management Agreement was amended to provide for an annual management fee of
1.5% of revenues (on a pro forma basis, management fees for the three months
ended March 31, 1997 and 1996 would have been $1.6 million and $1.5 million,
respectively).
Interest Expense
The $2.8 million increase in interest expense for the three month period
from 1996 to 1997 is primarily due to higher levels of debt outstanding under
the Credit Agreement during the three months ended March 31, 1997 as compared
to the prior year period and the effects of compounding of interest on the Zero
Coupon Notes.
In 1992, a subsidiary of AWACS, Inc., an indirect subsidiary of the
Company, issued a note (the "AWACS Note") with an initial principal amount of
$51.0 million to purchase from a subsidiary of Comcast, a 40% limited
partnership interest in Garden State Cablevision L.P. ("Garden State
Cablevision"). The note bears interest at a rate of 11% per annum. Interest is
payable on a quarterly basis to the extent of available cash, with any unpaid
interest added to principal. Interest expense on the AWACS Note was $1.2
million and $2.0 million during the three months ended March 31, 1997 and 1996,
respectively. From the date of issuance through March 31, 1997, $35.5 million
of principal and interest has been paid on the AWACS Note with the proceeds
from distributions from Garden State Cablevision. The balance of the AWACS Note
is due on September 30, 1997, and, accordingly, has been classified as current
in the Company's condensed consolidated balance sheet.
Equity in Net Losses of Affiliates
Under the terms of the partnership agreement, 49.5% of Garden State
Cablevision's net losses are allocated to the Company. During the three months
ended March 31, 1997 and 1996, the Company recognized equity in net losses of
Garden State Cablevision of $1.8 million and $2.2 million, respectively. While
no assurances can be given, the Company expects to transfer its interest in
Garden State Cablevision to Comcast subsequent to the refinancing of the Credit
Agreement.
Litigation Settlement
The Company was involved in various civil lawsuits and administrative
proceedings regarding the ownership, operation and transfer of the license for
the Atlantic City Cellular System. In March 1995, the Company, Comcast,
Telephone and Data Systems, Inc. ("TDS"), United States Cellular Corporation,
Ellis Thompson and Ellis Thompson Corporation entered into a Settlement
Agreement (the "Settlement Agreement") with respect to outstanding civil
litigation. During the three months ended March 31, 1996, the Company recorded
$21.6 million of estimated litigation settlement expense in its condensed
consolidated statement of operations and accumulated deficit. In June 1996, the
Company paid such amount to TDS under the Settlement Agreement.
Earnings to Fixed Charges
For the three months ended March 31, 1997 and 1996, the Company's income
(loss) before income tax benefit, equity in net losses of affiliates and fixed
charges (interest expense) was $7.4 million and ($28.6) million, respectively.
Such amounts were not adequate to cover the Company's fixed charges of $29.4
million and $26.6 million for these periods, respectively. Fixed charges
include non-cash interest expense of $17.5 million and $16.6 million for the
three months ended March 31, 1997 and 1996, respectively. The inadequacy of the
Company's income (loss) to cover fixed charges is primarily due to substantial
non-cash charges for depreciation and amortization expense of $30.0 million and
$29.9 million during the three months ended March 31, 1997 and 1996,
respectively, and litigation settlement expense during the three months ended
March 31, 1996.
28
<PAGE>
Results of Operations
Years Ended December 31, 1996, 1995 and 1994
Summarized consolidated financial information for the Company for the
three years ended December 31, 1996 is as follows (dollars in millions, "NM"
denotes percentage is not meaningful):
<TABLE>
<CAPTION>
Year Ended December 31, Increase/(Decrease)
------------------------- ----------------------
1996 1995 $ %
<S> <C> <C> <C> <C>
Service income, net ........................ $ 426.1 $ 374.9 $ 51.2 13.7%
Operating, selling, general and administrative
expenses .................................... 272.1 241.6 30.5 12.6
------- --------
Operating income before depreciation and
amortization(1) ........................... 154.0 133.3 20.7 15.5
Depreciation and amortization ............... 117.2 205.7 (88.5) (43.0)
------- --------
Operating income (loss) ..................... 36.8 (72.4) 109.2 NM
------- --------
Interest expense ........................... 116.3 97.7 18.6 19.0
Investment income ........................... (2.5) (3.3) (0.8) (24.2)
Equity in net losses of affiliates ......... 6.6 9.6 (3.0) (31.3)
Litigation settlement ........................ 21.6 21.6 NM
Other ....................................... 2.5 (3.7) 6.2 167.6
Income tax benefit ........................... (38.1) (62.9) 24.8 39.4
Extraordinary items ........................... (3.0) (3.0) NM
------- --------
Net loss .................................... $ (69.6) $ (112.8) $ 43.2 38.3%
======= ========
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, Increase/(Decrease)
------------------------- ----------------------
1995 1994 $ %
<S> <C> <C> <C> <C>
Service income, net ........................ $ 374.9 $ 286.1 $ 88.8 31.0%
Operating, selling, general and administrative
expenses .................................... 241.6 176.7 64.9 36.7
-------- -------
Operating income before depreciation and
amortization(1) ........................... 133.3 109.4 23.9 21.8
Depreciation and amortization ............... 205.7 89.9 115.8 128.8
-------- -------
Operating (loss) income ..................... (72.4) 19.5 (91.9) NM
-------- -------
Interest expense ........................... 97.7 83.3 14.4 17.3
Investment income ........................... (3.3) (1.4) 1.9 135.7
Equity in net losses of affiliates ......... 9.6 8.2 1.4 17.1
Other ....................................... (3.7) 6.4 (10.1) (157.8)
Income tax benefit ........................... (62.9) (21.9) (41.0) (187.2)
Extraordinary items ........................ (3.0) (6.1) 3.1 50.8
-------- -------
Net loss .................................... $ (112.8) $ (61.2) $ (51.6) 84.3%
======== =======
</TABLE>
- ------------
(1) See footnote (1) on page 27.
Service Income, net
Of the respective increases of $51.2 million and $88.8 million in service
income from 1995 to 1996 and 1994 to 1995, $69.6 million and $99.6 million are
attributable to the Company's subscriber growth. Offsetting the increases from
1995 to 1996 and 1994 to 1995 are decreases of $19.3 million and $25.0 million,
respectively, resulting from reductions in the average rate per minute of use
in these respective periods. The remaining changes from 1995 to 1996 and 1994
to 1995 are attributable to growth in roamer revenue and other products of $0.9
million and $14.2 million, respectively. The Company expects that the decrease
in average minutes-of-use per subscriber will continue in the future, which is
consistent with industry trends.
29
<PAGE>
Operating, Selling, General and Administrative Expenses
Of the respective $30.5 million and $64.9 million increases in operating,
selling, general and administrative expenses from 1995 to 1996 and 1994 to
1995, $24.3 million and $38.2 million, respectively, are related to subscriber
growth, including the costs to acquire and service subscribers. The remaining
increases of $6.2 million from 1995 to 1996 and $26.7 million from 1994 to 1995
are due to increases in other expenses, including subscriber retention costs,
administrative costs and theft of service in 1995.
Pursuant to the Management Agreement, management fees were $5.5 million,
$5.5 million and $5.3 million for the years ended December 31, 1996, 1995 and
1994, respectively. During the years ended December 31, 1995 and 1994, CCCI was
charged additional management fees (the "Additional Management Fees") of $2.7
million and $2.5 million, respectively. Pursuant to the Management Agreement,
annual cash payments of management fees are limited to $5.0 million, subject to
annual increases in proportion to the increase in the consumer price index. In
certain circumstances, the Credit Agreement may further limit the payment of
management fees. As of December 31, 1996 and 1995, deferred management fees
payable, which are included in long-term investment in and due to affiliates in
the Company's consolidated balance sheet, totaled $14.7 million and $9.2
million, respectively. The Company intends to pay all previously deferred
management fees as of the date the Credit Agreement is amended or refinanced
with the New Bank Facility. On a pro forma basis, giving effect to the May 1997
amendment to the Management Agreement, management fees for the years ended
December 31, 1996, 1995 and 1994 would have been $6.4 million, $5.6 million and
$4.3 million, respectively.
Depreciation and Amortization Expense
The $88.5 million decrease from 1995 to 1996 and the $115.8 million
increase from 1994 to 1995 in depreciation and amortization expense is
principally due to the effects of the Cellular Rebuild, as described below, and
the effects of capital expenditures during the respective periods.
In 1995, the Company purchased $172.0 million of switching and cell site
equipment which replaced the existing switching and cell site equipment (the
"Cellular Rebuild"). The Company substantially completed the Cellular Rebuild
during 1995. Accordingly, during 1995, the Company charged $110.0 million to
depreciation expense, which represented the difference between the net book
value of the equipment replaced and the residual value realized upon its
disposal.
Interest Expense
The increases in interest expense of $18.6 million from 1995 to 1996 and
$14.4 million from 1994 to 1995 are primarily due to higher levels of debt
outstanding under the Company's credit agreements during the years ended
December 31, 1996 and 1995 as compared to the prior year periods and the
effects of compounding of interest on the Zero Coupon Notes.
Interest expense on the AWACS Note was $8.2 million, $7.5 million and $6.7
million for the years ended December 31, 1996, 1995 and 1994, respectively.
From the date of issuance through December 31, 1996, $35.5 million of principal
and interest has been paid on the AWACS Note with the proceeds from
distributions from Garden State Cablevision. The balance of the AWACS Note is
due on September 30, 1997, and, accordingly, has been classified as current in
the Company's consolidated balance sheet as of December 31, 1996.
Equity in Net Losses of Affiliates
During the years ended December 31, 1996, 1995 and 1994, the Company
recognized equity in net losses of Garden State Cablevision of $6.8 million,
$10.2 million and $8.9 million, respectively. While no assurances can be given,
the Company expects to transfer its interest in Garden State Cablevision to
Comcast subsequent to the refinancing of the Zero Coupon Notes and the Credit
Agreement.
Litigation Settlement
The Company was involved in various civil lawsuits and administrative
proceedings regarding the ownership, operation and transfer of the license for
the Atlantic City Cellular System. In March 1995, the Company, Comcast, TDS,
USCC, Ellis Thompson and Ellis Thompson Corporation entered into the Settlement
Agreement
30
<PAGE>
with respect to outstanding civil litigation. In June 1996, the Company paid
$21.6 million to TDS under the Settlement Agreement. The Company has recorded
the expenses related to the Settlement Agreement in its 1996 consolidated
statement of operations and accumulated deficit.
Extraordinary Items
In September 1995, the Company refinanced a portion of its outstanding
debt with the proceeds from the Credit Agreement. In connection with that
refinancing, the Company expensed unamortized debt acquisition costs of $4.7
million during 1995, resulting in an extraordinary loss, net of the related tax
benefit, of $3.0 million.
In 1994, CCCI purchased $153.8 million principal amount ($85.7 million
accreted value at that date) of Series A Zero Coupon Notes from a wholly owned
subsidiary of Comcast for $95.0 million. The premium paid in excess of the
accreted value of the Series A Zero Coupon Notes at the date of purchase of
$9.3 million was recorded as an extraordinary loss, net of the related tax
benefit of $3.3 million, in the Company's 1994 consolidated statement of
operations and accumulated deficit.
Earnings to Fixed Charges
For the years ended December 31, 1996, 1995 and 1994, the Company's
distributions from Garden State Cablevision and income (loss) before
extraordinary items, income tax benefit, equity in net losses of affiliates and
fixed charges (interest expense) was $50.7 million, ($65.4) million and $14.5
million, respectively. Such amounts were not adequate to cover the Company's
fixed charges of $116.3 million, $97.7 million and $83.3 million for these
periods, respectively. Fixed charges include non-cash interest expense of $69.4
million, $62.5 million and $62.4 million for the years ended December 31, 1996,
1995 and 1994, respectively. The inadequacy of the Company's distributions from
Garden State Cablevision and (loss) income to cover fixed charges is primarily
due to substantial non-cash charges for depreciation and amortization expense
of $117.2 million, $205.7 million and $89.9 million during the years ended
December 31, 1996, 1995 and 1994, respectively. Included in depreciation and
amortization expense for the year ended December 31, 1995 is a one time charge
of $110.0 million relating to the Cellular Rebuild. See "--Depreciation and
Amortization Expense."
General
The Company anticipates that, for the foreseeable future, depreciation,
amortization and interest expense will continue to be significant and will have
a significant adverse effect on the Company's ability to realize net earnings.
The Company believes that its losses will not significantly affect the
performance of its normal business activities because of its existing cash and
cash equivalents, its ability to generate operating income before depreciation
and amortization and its ability to obtain external financing.
The Company believes that its operations are not materially affected by
inflation.
31
<PAGE>
THE EXCHANGE OFFER
Terms of the Exchange Offer; Period for Tendering Old Notes
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m.,
New York City time, on , 1997; provided, however, that if the Company,
in its sole discretion, has extended the period of time for which the Exchange
Offer is open, the term "Expiration Date" means the latest time and date to
which the Exchange Offer is extended.
As of the date of this Prospectus, $1,000,000,000 aggregate principal
amount of the Old Notes were outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about the date set forth on
the cover page to all Holders of Old Notes at the addresses set forth in the
security register with respect to Old Notes maintained by The Bank of New York,
as trustee (the "Trustee"). The Company's obligations to accept Old Notes for
exchange pursuant to the Exchange Offer is subject to certain conditions as set
forth under "--Certain Conditions to the Exchange Offer" below.
The Company expressly reserves the right, at any time or from time to
time, to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance of any Old Notes, by giving oral or written notice of
such extension to the Exchange Agent (as defined below) and notice of such
extension to the Holders as described below. During any such extension, all Old
Notes previously tendered will remain subject to the Exchange Offer and may be
accepted for exchange by the Company. Any Old Notes not accepted for exchange
for any reason will be returned without expense to the tendering Holder thereof
as promptly as practicable after the expiration or termination of the Exchange
Offer.
The Company expressly reserves the right to amend or terminate the
Exchange Offer, and not to accept for exchange any Old Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions of the
Exchange Offer specified below under "--Certain Conditions to the Exchange
Offer." The Company will give oral or written notice of any extension,
amendment, non-acceptance or termination to the Holders of the Old Notes as
promptly as practicable, such notice in the case of any extension to be issued
by means of a press release or other public announcement no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of the State of Delaware or the Indenture in
connection with the Exchange Offer. The Company intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Exchange Act and
the rules and regulations of the Commission thereunder.
Holders tendering Old Notes held in global form shall receive New Notes in
global form and Holders tendering Old Notes held directly in certificated form
shall receive New Notes in certificated form, in each case unless otherwise
specified in the Letter of Transmittal.
Procedures for Tendering Old Notes
The tender to the Company of Old Notes by a Holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering Holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a Holder who wishes to tender
Old Notes for exchange pursuant to the Exchange Offer must transmit a properly
completed and duly executed Letter of Transmittal, including all other
documents required by such Letter of Transmittal, to The Bank of New York (the
"Exchange Agent") at one of the addresses set forth below under "--Exchange
Agent" on or prior to the Expiration Date. In addition, (i) certificates for
such Old Notes must be received by the Exchange Agent along with the Letter of
Transmittal, (ii) a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Notes, if such procedure is available, into the
Exchange Agent's account at The Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedure for book-entry transfer described
below, must be received by the Exchange Agent prior
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to the Expiration Date or (iii) the Holder must comply with the guaranteed
delivery procedures described below. THE METHOD OF DELIVERY OF OLD NOTES,
LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND
RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT
REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO
LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered Holder of the Old Notes who
has not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution (as defined below). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker or dealer or government securities
broker or dealer; (iii) a credit union; (iv) a national securities exchange,
registered securities association or clearing agency; or (v) a savings
association (an "Eligible Institution"). If Old Notes are registered in the
name of a person other than the person signing the Letter of Transmittal, the
Old Notes surrendered for exchange must be endorsed by, or be accompanied by, a
written instrument or instruments of transfer or exchange, in satisfactory form
as determined by the Company in its sole discretion, duly executed by the
registered Holder and signed exactly as the name or names of the registered
Holder or Holders that appear on the Old Notes and with the signature thereon
guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined
by the Company in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or to not accept any
particular Old Notes which acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right in its
sole discretion to waive any defects or irregularities or conditions of the
Exchange Offer as to any particular Old Notes either before or after the
Expiration Date (including the right to waive the ineligibility of any Holder
who seeks to tender Old Notes in the Exchange Offer). The interpretation of the
terms and conditions of the Exchange Offer as to any particular Old Notes
either before or after the Expiration Date (including the Letter of Transmittal
and the instructions thereto) by the Company shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with the
tenders of Old Notes for exchange must be cured within such reasonable period
of time as the Company shall determine. Neither the Company, the Exchange Agent
nor any other person shall be under any duty to give notification of any defect
or irregularity with respect to any tender of Old Notes for exchange, nor shall
any of them incur any liability for failure to give such notification.
If the Letter of Transmittal or any Old Notes or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers or corporations or
others acting in a fiduciary or representative capacity, such person should so
indicate when signing and, unless waived by the Company, proper evidence
satisfactory to the Company of its authority to so act must be submitted.
By tendering, each Holder will represent to the Company that, among other
things, (i) the New Notes acquired pursuant to the Exchange Offer are being
acquired in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the Holder, (ii) neither the Holder nor
any such other person has an arrangement or understanding with any person to
participate in the distribution of such New Notes, (iii) if the Holder is not a
broker-dealer, or is a broker-dealer but will not receive New Notes for its own
account in exchange for Old Notes, neither the Holder nor any such other person
is engaged in or intends to participate in the distribution of such New Notes
and (iv) neither the Holder nor any such other person is an "affiliate," as
defined under Rule 405 of the Securities Act, of the Company. If the tendering
Holder is a broker-dealer, whether or not it is also an "affiliate," that will
receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities,
it will be required to acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale
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of such New Notes. By acknowledging that it will deliver and by delivering a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such New Notes, the Holder will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
Acceptance of Old Notes for Exchange; Delivery of New Notes
Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Company will accept, promptly after the Expiration Date, all Old
Notes properly tendered and will issue the New Notes promptly after acceptance
of the Old Notes. See "--Certain Conditions to the Exchange Offer" below. For
purposes of the Exchange Offer, the Company shall be deemed to have accepted
properly tendered Old Notes for exchange when, as and if the Company has given
oral or written notice thereof to the Exchange Agent.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, a properly completed and duly executed Letter of Transmittal
and all other required documents. If any tendered Old Notes are not accepted
for any reason set forth in the terms and conditions of the Exchange Offer or
if certificates representing Old Notes are submitted for a greater principal
amount than the Holder desires to exchange, such unaccepted or non-exchanged
Old Notes will be returned without expense to the tendering Holder thereof (or,
in the case of Old Notes tendered by book-entry transfers into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described below, such non-exchanged Old Notes will be
credited to an account maintained with such Book-Entry Transfer Facility) as
promptly as practicable after the expiration or termination of the Exchange
Offer.
Interest on the New Notes
The New Notes will bear interest from May 8, 1997 (the original issue date
of the Old Notes), payable semiannually on May 1 and November 1, of each year
commencing on November 1, 1997. Holders of Old Notes whose Old Notes are
accepted for exchange will be deemed to have waived the right to receive any
payment in respect of interest on the Old Notes accrued from May 8, 1997 until
the date of the issuance of the New Notes. Consequently, Holders who exchange
their Old Notes for New Notes will receive the same interest payment on
November 1, 1997 (the first payment date with respect to the Old Notes and the
New Notes following the consummation of the Exchange Offer) that they would
have received had they not accepted the Exchange Offer.
Book-Entry Transfer
The Exchange Agent will make a request to establish an account with
respect to the Old Notes at the Book-Entry Transfer Facility for purposes of
the Exchange Offer promptly after the date of this Prospectus. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry delivery of Old Notes by causing the Book-Entry Transfer
Facility to transfer such Old Notes into the Exchange Agent's account in
accordance with the Book-Entry Transfer Facility's Automated Tender Offer
Program ("ATOP") procedures for transfer. However, the exchange for the Old
Notes so tendered will only be made after timely confirmation of such book-entry
transfer of Old Notes into the Exchange Agent's account, and timely receipt by
the Exchange Agent of an Agent's Message (as such term is defined in the next
sentence) and any other documents required by the Letter of Transmittal. The
term "Agent's Message" means a message, transmitted by the Book-Entry Transfer
Facility and received by the Exchange Agent and forming a party of a Book-Entry
Confirmation, which states that the Book-Entry Transfer Facility has received an
express acknowledgment from a participant tendering Old Notes that are the
subject of such Book-Entry Confirmation that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal, and that the
Company may enforce such agreement against such participant.
Guaranteed Delivery Procedures
If a registered Holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
Holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) on or prior to the Expiration Date, the
Exchange Agent receives from such Eligible Institution a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the
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form provided by the Company (by facsimile transmission, mail or hand
delivery), setting forth the name and address of the Holder of Old Notes and
the amount of Old Notes tendered, stating that the tender is being made thereby
and guaranteeing that within five New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates of all physically tendered Old Notes, in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, and any other documents
required by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by the
Letter of Transmittal, are received by the Exchange Agent within five NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery.
Withdrawal Rights
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at one of the addresses set forth below under
"--Exchange Agent." Any such notice of withdrawal must specify the name of the
person having tendered the Old Notes to be withdrawn, identify the Old Notes to
be withdrawn (including the principal amount of such Old Notes), include a
statement that such a Holder is withdrawing its election to have such Old Notes
exchanged, and the name of the registered Holder of such Old Notes, and be
signed by the Holder in the same manner as the original signature on the Letter
of Transmittal (including any required signature guarantees) or be accompanied
by evidence satisfactory to the Company that the person withdrawing the tender
has succeeded to the beneficial ownership of the Old Notes being withdrawn. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates, the
withdrawing Holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with signatures
guaranteed by an Eligible Institution unless such Holder is an Eligible
Institution. If Old Notes have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Old Notes and otherwise comply with the procedures
of such facility. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old Notes which have been tendered for
exchange but which are not exchanged for any reason will be returned to the
Holder thereof without cost to such Holder (or, in the case of Old Notes
tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described above, such Old Notes will be credited to an account maintained with
such Book-Entry Transfer Facility for the Old Notes) as soon as practicable
after withdrawal, rejection of tender or termination of the Exchange Offer.
Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "Procedures for Tendering Old Notes" above at any
time on or prior to the Expiration Date.
Certain Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer, if at any
time before the acceptance of such Old Notes for exchange or the exchange of
the New Notes for such Old Notes, such acceptance or issuance would violate
applicable law or any interpretation of the staff of the Commission.
The foregoing condition is for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any
time to exercise the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes,
if at such time any stop order shall be threatened or in effect with respect to
the Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended (the "TIA").
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Exchange Agent
The Bank of New York has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at one of the addresses set forth below. Questions and requests
for assistance, requests for additional copies of this Prospectus or of the
Letter of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent, addressed as follows:
Deliver To:
The Bank of New York, Exchange Agent
By Hand Or Overnight Delivery: By Registered or Certified Mail:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street, 7B
Corporate Trust Services Window New York, New York 10286
Ground Level Attention: Reorganization Section,
Attention: Reorganization Section, Odell Romeo
Odell Romeo
Facsimile Transmissions:
(Eligible Institutions Only)
(212) 815-6339
To Confirm by Telephone
or for Information Call:
(212) 815-6337
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
Fees and Expenses
The principal solicitation is being made by mail; however, additional
solicitation may be made by telegraph, telephone or in person by officers and
regular employees of the Company and its affiliates. No additional compensation
will be paid to any such officers and employees who engage in soliciting
tenders. The Company will not make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
$600,000.
Transfer Taxes
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that Holders who
instruct the Company to register New Notes in the name of, or request that Old
Notes not tendered or not accepted in the Exchange Offer to be returned to, a
person other than the registered tendering Holder will be responsible for the
payment of any applicable transfer tax thereon.
Consequences of Failure to Exchange
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon and, except in
certain limited circumstances, will no longer have any registration rights or
be entitled to the
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<PAGE>
related liquidated damages with respect to the Old Notes. In general, the Old
Notes may not be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Company does not
intend to register the Old Notes under the Securities Act. The Company believes
that, based upon interpretations contained in letters issued to third parties
by the staff of the Commission, New Notes issued pursuant to the Exchange Offer
in exchange for Old Notes may be offered for resale, resold or otherwise
transferred by each Holder thereof (other than a broker-dealer, as set forth
below, and any such Holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such New Notes are acquired in the ordinary course of such Holder's
business and such Holder has no arrangement or understanding with any person to
participate in the distribution of such New Notes. If any Holder has any
arrangement or understanding with respect to the distribution of the New Notes
to be acquired pursuant to the Exchange Offer, such Holder (i) could not rely on
the applicable interpretation of the staff of the Commission and (ii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Each broker-dealer
that receives New Notes for its own account in exchange for Old Notes must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. See "Plan of Distribution." In addition, to comply with the
securities laws of certain jurisdictions, if applicable, the New Notes may not
be offered or sold unless they have been registered or qualified for sale in
such jurisdiction or an exemption from registration or qualification is
available and is complied with. The Company does not currently intend to take
any action to register or qualify the New Notes for resale in any jurisdiction.
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BUSINESS
General
The Company is one of the largest independent operators of cellular
telephone systems in the United States based on its 8.1 million aggregate Net
Pops. The Company serves approximately 766,000 subscribers in a large
contiguous area which comprises the Philadelphia, Pennsylvania area, Delaware
and significant portions of New Jersey. The Company's wireless products and
services are currently distributed under the Comcast Metrophone(SM) and Comcast
CELLULARONE(R) brand names. For the three months ended March 31, 1997 and for
the year ended December 31, 1996, the Company had net service income of $104.1
million and $426.1 million, respectively, and operating cash flow of $37.1
million and $154.0 million, respectively.
The Company's markets are primarily in urban and suburban areas with
above-average population density and per capita income. The Company's
geographic footprint includes a significant portion of the heavily traveled
I-95 corridor connecting New York, Philadelphia and Baltimore/Washington D.C.
The Company believes that its ability to offer service over a wide contiguous
geographic area will continue to attract new customers and retain existing
customers. The Company's contiguous markets allows its systems to realize
operating efficiencies due to increased utilization and effectiveness of
equipment, personnel, and marketing and advertising resources. The Company's
subscriber base grew from approximately 116,000 as of December 31, 1991 to
approximately 766,000 as of March 31, 1997. Net service income grew from $142.9
million in 1992 to $426.1 million in 1996, while operating cash flow grew from
$58.8 million to $154.0 million over the same period.
Since January 1, 1995, the Company has invested over $360.0 million to
rebuild and expand the capacity of its network, to improve network system
security, to increase its direct distribution capabilities and for other
capital expenditures. The Company intends to further expand the capacity and
improve the quality of its network by deploying TDMA digital cellular
technology throughout its entire coverage area commencing in the third quarter
of 1997. As a result of the Company's continued expansion of its network and
its anticipated deployment of digital technology, the Company believes that its
network will have sufficient capacity to accommodate continued subscriber
growth, as well as any increase in subscriber minutes.
Business Strategy
The Company's objective is to continue to pursue growth in subscribers,
revenues and operating cash flow. The Company intends to achieve this objective
by providing a broad range of high quality integrated wireless communications
products and services. Key elements of the Company's strategy include:
Enhance Wireless Network. The Company has continually improved its
cellular network in order to better serve its customers and position itself to
offer competitive services and features. The Company's significant investment
in switching and cell site equipment manufactured by Lucent Technologies, Inc.
has positioned it to efficiently deploy TDMA digital cellular technology
throughout its network. The Company currently anticipates deploying TDMA
technology commencing in the third quarter of 1997, which will permit its
subscribers and roamers to use both analog and TDMA services throughout its
coverage area. It is anticipated that a substantial portion of the increased
capacity for subsequent traffic and subscriber growth will be accommodated
using the lower cost digital technology. The Company intends to continue
expanding and upgrading its cellular network in order to improve coverage and
capacity as required. A subsidiary of Comcast was the high bidder on twelve
10-MHz PCS licenses covering the Philadelphia, PA MTA and the Allentown, PA
BTA, all of which have been awarded. Subject to the approval of the FCC,
Comcast intends to transfer the PCS licenses to the Company at Comcast's cost
of $17.5 million. These PCS licenses will provide the Company with additional
spectrum capacity and serve as a resource for future enhancement of its
network.
Emphasize Customer Service. The Company places a priority on providing
consistently high quality customer service through on-line customer support 24
hours a day, 7 days a week. The Company utilizes a third party billing and
customer care platform in conjunction with an internally developed management
information system. Together, these systems enable the Company to provide
prompt, high quality services to its expanding customer base and afford the
Company access to detailed customer data which it uses to facilitate its
marketing efforts.
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Grow Direct Distribution Channels. The Company distributes its products
and services through its direct distribution network (direct sales force,
retail stores and telemarketing) as well as through third party or indirect
distribution channels (national retailers, local agencies and automotive
dealers). The Company's long-term emphasis is on the development of direct
distribution channels, particularly its own retail outlets. The Company
believes that direct distribution offers substantial benefits, including lower
costs, greater effectiveness in selling to higher margin customers, a
consistent point of customer contact and greater ongoing satisfaction for
customers generated both indirectly and directly. The Company currently
operates 48 retail outlets in its markets and anticipates building additional
retail outlets, as well as upgrading existing outlets in the future. The
Company also intends to maintain significant indirect sales distribution
channels.
Capitalize on Regional Brand. The Company currently markets its services
under the Comcast Metrophone(SM) and Comcast CELLULARONE(R) brand names. The
Company believes that the Comcast name has particular regional benefits due to
the Company's telecommunications presence, Comcast's ownership of extensive
cable television facilities in Philadelphia and New Jersey and Comcast's
interest in the Philadelphia 76ers NBA franchise, the Philadelphia Flyers NHL
franchise and two sports arenas.
Expand Product Offering. The Company continues to offer new and innovative
products and services in order to increase the value of the basic voice product
to its customers, broaden distribution, increase airtime revenues and
differentiate the Company. Among other products and services, the Company has
developed GroupTalk(R), a cellular dispatch service which enables work groups
to communicate among themselves at reduced airtime rates, and has begun to
offer paging services to the customers within its systems. In addition to
enhanced cellular voice service packages, the Company has begun to offer data
transmission, through both its existing analog network and CDPD. With the
integration of digital technology, the Company will be able to offer a variety
of additional services such as caller identification, short messaging and call
encryption.
Summary Market Data
The table below sets forth, as of December 31, 1996, (i) the markets in
which the Company owns an interest in a cellular system, (ii) the Company's
ownership percentage of the system, (iii) total Pops and (iv) the Company's
Pops based on its ownership percentage.
Approximate Approximate Approximate
Market Ownership Pops(1) Net Pops
(In thousands)
MSAs:
Atlantic City, NJ ......... 97% 333 323
Aurora-Elgin, IL ......... 82% 48 39
Joliet, IL ............... 84% 36 30
Long Branch, NJ ......... 100% 591 591
New Brunswick, NJ ......... 100% 703 703
Philadelphia, PA ......... 100% 4,894 4,894
Trenton, NJ ............... 85% 331 281
Vineland, NJ ............ 95% 139 132
Wilmington, DE ............ 100% 618 618
------ ------
7,693 7,611
------ ------
RSAs:
Ocean County, NJ ......... 100% 471 471
Kent and Sussex, DE ...... 50% 257 129
------ ------
728 600
------ ------
8,421 8,211
====== ======
- ------------
(1) Source: 1997 Rand McNally Commercial Atlas & Marketing Guide.
As of March 31, 1997, the Company's consolidated cellular telephone
business had approximately 766,000 subscribers in the markets listed above,
which number does not include approximately 18,000 subscribers in the Delaware
1 RSA. Provisions in the limited partnership agreements among Comcast, TCI, Cox
and Sprint limit the Company's ability to expand the geographic scope of its
existing cellular telephone network. See "Risk Factors -- Competition."
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General Developments of Business; Acquisitions
Cellular Retail Stores
In August 1996, the Company acquired twelve cellular retail stores and
direct sales locations in Pennsylvania, New Jersey and Delaware, and related
assets, from Advanced Telecomm, Inc. for $6.5 million in cash, subject to
certain purchase price adjustments.
Delaware 1 RSA
In May 1996, the Company and Southwestern Bell Mobile Systems, through a
partnership owned 50% by each of them, purchased the remaining 84% limited
partnership interest of the Delaware 1 RSA Limited Partnership, the licensee of
the non-wireline cellular license for the Kent and Sussex, DE RSA (the
"Delaware 1 RSA") for $44.1 million in cash, of which the Company's share was
$22.1 million. The surviving entity, C-SW Cellular Partnership, a Delaware
general partnership, now holds the cellular license for the Delaware 1 RSA.
Amcell manages the daily operations of the C-SW Cellular Partnership's interest
in the Delaware 1 RSA.
Ocean County RSA
In 1995, the Company completed its exchange agreement with McCaw Cellular
Communications, Inc. whereby the Company acquired a 100% interest in the entity
that held the Ocean County RSA non-wireline cellular license in exchange for
the Company's Hunterdon County RSA cellular license and related assets, and
$55.2 million in cash.
Vineland/Atlantic City MSA
In June 1995, the Company purchased all of the outstanding stock of United
States Cellular Operating Company of Vineland, Inc. ("USCC/Vineland") from
United States Cellular Corporation for $21.2 million in cash. USCC/Vineland
held an approximate 80.4% interest in Vineland Cellular Telephone Company, Inc.
("VCTC"), which holds the license to operate the non-wireline cellular
telephone system serving the Vineland, NJ MSA and an approximate 9.3% interest
in the non-wireline cellular telephone system for the Atlantic City, NJ MSA
(the "Atlantic City Cellular System"). The acquisition of these interests was
funded with the proceeds of a loan from Comcast, which was repaid during 1995.
As of June 30, 1995, the Company began consolidating VCTC.
In June 1996, the Company completed the acquisition of the license to
operate the Atlantic City Cellular System for $7.5 million in cash. The Company
holds an approximate 97% interest in the Atlantic City Cellular System.
The Company in its normal course of business considers potential
acquisitions of cellular telephone systems and other related assets and
business opportunities as such opportunities arise.
Subscribers
The Company believes that its subscribers are primarily businesses and
consumers who utilize cellular telephone service to improve productivity.
Historically, the Company's business users were individuals who worked
extensively from their cars, in such professions as sales, construction and
real estate, and high end consumers. As a result of the growing acceptance of
cellular communications and the declining cost of portable and transportable
phones, as well as the Company's marketing efforts, the Company's users now are
drawn from a wider range of occupations and are increasingly from consumer
segments. Business users normally generate more revenue than non-business
consumers. While the Company anticipates increasing consumer acceptance of
cellular telephone service, business users are expected to generate the
majority of the Company's revenues for the foreseeable future.
The following table sets forth the aggregate number of subscribers and
penetration in the Company's consolidated systems:
<TABLE>
<CAPTION>
At March 31, At December 31,
-------------- --------------------------------------------
1997 1996 1995 1994 1993 1992
-------------- ------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Subscribers (in thousands) ...... 766 762 665 501 323 230
Penetration ..................... 9.5% 9.3% 8.5% 6.8% 4.4% 3.2%
</TABLE>
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<PAGE>
The Company believes that subscriber growth and increased penetration
since December 31, 1992 were products of the growing acceptance of cellular
communications, declining cost and availability of portable and transportable
phones, the Company's marketing efforts, in particular its expansion of
indirect distribution in that period, and to a lesser extent acquisitions.
During 1996, the Company endeavored to reduce its costs of acquiring new
subscribers who were determined to be low end users with less potential for
revenue generation, consumer loyalty or growth. The Company intends to continue
attempting to balance subscriber growth and growth in revenues with the costs
of acquiring new subscribers or maintaining existing subscribers, and to
develop more efficient means of offering its products and services to
businesses and consumers.
Products and Services
The Company provides services to its cellular telephone subscribers
similar to those provided by conventional landline telephone systems, including
custom calling features such as call forwarding, call waiting, conference
calling, directory assistance and voice mail. The Company is responsible for
the quality, pricing and packaging of cellular telephone service for each of
the systems it owns or controls.
Reciprocal agreements between the cellular telephone systems in which the
Company has an interest and other cellular telephone systems allow their
respective subscribers to receive and place calls in most service areas
throughout the country. The Company also services roamers when they place or
receive calls on the Company's systems. Roamers are charged rates which are
generally at a premium to the regular service rate.
With respect to certain markets, the Company charges its customers who
roam out of the Company's systems only the rates it charges in its own markets,
rather than passing through higher roaming rates customarily charged by many
cellular carriers. This billing practice creates a marketing advantage by
providing the customer with an apparently broader service area but also results
in increased costs for the Company. The Company has been reducing these costs
through the continued negotiation of more favorable roaming agreements with
cellular service providers in relevant markets.
The Company has offered and will continue to offer new and innovative
products and services in order to increase the value of the basic voice product
to the customer and to increase airtime revenues. Recent or near term service
additions include (i) GroupTalk(R), a cellular dispatch service which enables
work groups to communicate among themselves using the cellular system at
reduced airtime rates, (ii) paging services, (iii) enhanced directory
assistance and concierge services, which permit category searches of listings
and direct connections of cellular calls, (iv) personal numbering services,
which consolidate access to multiple communications numbers into a single
number, (v) QuickLink(R), which offers businesses four digit dialing capability
with their company's PBX, (vi) Voice Connect(R), which is a switch based voice
activated dialing system (requiring no special user equipment), (vii) enhanced
voice mail, which includes pager notification upon the receipt of voice mail
entries, and (viii) Prepaid Advanced Cellular(SM) or PAC(SM), through which
customers can purchase increments of cellular usage in advance, thereby
reducing the Company's risk of collection for applicable usage.
The Company now offers data transmission over its existing cellular
network, which allows the rapid transfer of data to and from personal
computers, personal digital assistants ("PDAs") and other devices. In addition,
the Company has deployed CDPD, an advanced data transmission method, in select
portions of its systems. The Company is anticipating the deployment of the TDMA
digital protocol in 1997 throughout its contiguous networks. Digital technology
will allow the Company to offer additional services such as caller
identification, short messaging, message waiting indicators and enhanced voice
privacy through call encryption. See "--Cellular Telephone Communications"
below.
The Company is in the course of conducting trials of cellular-based
vehicle location technologies, and is also exploring the possibility of
offering long distance telephone service as an agent or reseller in order to
further enhance its overall product and service offerings.
Marketing and Distribution
The Company currently markets its services under the Comcast Metrophone(SM)
brand name in the Philadelphia, PA MSA and under the Comcast CELLULARONE(R)
brand name in its other markets in New Jersey and
41
<PAGE>
Delaware. The Company intends to consolidate the provision of its services
under a single brand contemporaneous with the commencement of its digital
transition. In particular, the Company believes that the "Comcast" name has
particular regional benefits due to the Company's telecommunications presence,
Comcast's extensive cable television facilities in the Philadelphia area and
New Jersey and Comcast's more recent acquisition of a 66% interest in Comcast
Spectacor, L.P., the assets of which consist of the Philadelphia 76ers NBA
franchise, the Philadelphia Flyers NHL franchise, and two sports arenas. See
"Risk Factors -- Relationship with Comcast; Possible Conflicts of Interest,"
"--Issues Related to Brand Names," and "--Possible Disposition of the Company
by Comcast."
Among other things, the Company currently leverages the Comcast brand name
through a credit card loyalty rewards program developed in conjunction with
Advanta Corp. known as "Comcast Rewards." Through the program holders of the
co-branded Comcast Rewards Visa(R) card (the "Card") can accumulate rewards
points through their use of their cellular telephone and the Card. In addition,
selected premium customers who do not obtain the Card can accumulate rewards
points through their use of their cellular telephone. Rewards points may be
redeemed for the Company's products and services, cellular telephone and paging
equipment, tickets, sporting and entertainment events and other prizes.
The Company uses multiple distribution channels throughout its contiguous
markets to provide effective and extensive marketing of its products and
services and to reduce reliance on any single distribution source. These
distribution channels fall into two broad categories: direct channels (direct
sales force, retail stores and telemarketing) and indirect channels (national
retailers, local agencies and automotive dealers).
The Company's long-term emphasis is on the development of its direct
distribution channels, particularly its own retail outlets and telemarketing,
as a means to reduce the cost and improve the quality of new subscribers. The
Company's retail stores have been a historically low-cost distribution channel
once established, and telemarketing has been particularly effective at reducing
the cost of incremental sales. Also, Company sales representatives are most
effective in selling to the high-end customers and businesses, which tend to
provide the Company with the highest profit margins. The Company believes that
cellular customers increasingly prefer to deal directly with sales
representatives employed by the Company, particularly as the features and
services offered become more varied. In addition, Company stores provide an
ongoing point of contact with subscribers regardless of whether the point of
purchase was direct or indirect. The Company operates 48 retail outlets in its
markets and anticipates building additional retail outlets, as well as
upgrading its existing retail outlets in the future.
The Company maintains a knowledgeable, customer-oriented sales force. The
Company has developed and administers its own sales training program designed
to educate sales representatives for its markets. The program offers a
curriculum that highlights mobile technologies, sales techniques and the
customer service process. The Company believes that, following the program,
sales representatives are better able to address existing and potential
customers' needs in a professional, knowledgeable and productive manner.
The Company has relied, upon its indirect distribution network to generate
a significant percentage of its subscriber growth. The Company's indirect
channels consist of independent contractors paid solely on a commission basis,
with portions of the commission dependent upon the subscribers maintaining
service for a specified period of time. The Company intends to maintain
significant indirect sales distribution channels.
The Company sells cellular telephone equipment to its customers in order
to encourage use of its services. The Company's practice, typical in the
industry, is to sell telephones at or below cost in response to competitive
pressures.
The Company's current marketing strategy is to generate continued net
subscriber growth by offering a wide range of pricing plans so that customers
are able to choose the plan that best fits their calling needs. The offering of
digital telephones and service will further enhance customer choice. The use of
digital technology results in more efficient use of the Company's networks
thereby permitting an even broader range of more competitive pricing plans and
features. The Company's pricing plans currently, and in the future will,
combine different charges for monthly access, usage, customer calling features,
and, in some cases, varying amounts of pre-paid minutes of usage. The Company
periodically reviews its pricing and promotional offers and, when it believes
appropriate, revises, develops or terminates its strategies or programs. As
part of its efforts to reduce subscriber cancellations, the Company generally
requires new customers to enter into one year agreements for cellular service.
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<PAGE>
Customer Service
The Company places a priority on providing consistently high quality
customer service. In 1996 the Company consolidated its Delaware operations,
including customer care operations, into the operations of the Philadelphia
market. The Company is currently consolidating its New Jersey operations,
including customer care operations, into the operations of the Philadelphia
market. The Company's sales and marketing presence (including through the
Company's direct sales group and retail stores) and customer and dealer support
will be maintained throughout the systems. In addition to overall reductions in
operating costs and increases in operational efficiencies, such consolidations
permit an increased emphasis by the Company upon more uniform, efficient and
cost effective delivery of customer service and support from the Company's
offices in Wayne, Pennsylvania. The Company will continue to seek ways of
improving its delivery of customer service and support to its customers while
driving operating efficiencies.
The Company utilizes the MacroCell(R) billing and customer care platform
developed and licensed by Cincinnati Bell Information Systems, Inc. Customer
service representatives are able to access current billing information quickly
in order to respond promptly to customer inquiries. In addition, the Company is
continually improving its management information systems in order to enhance
internal operations and the customer service function. To supplement the
Company's customer service operations, Company telemarketers contact customers
periodically to determine their satisfaction with the Company's service and to
identify problems that can lead to subscriber cancellations.
Cellular Telephone Communications
The Company is engaged in the development, management and operation of
cellular telephone communications systems in various service areas pursuant to
licenses granted by the FCC. Each service area is divided into segments
referred to as "cells" equipped with a receiver, signaling equipment and a
low-power transmitter. The use of low-power transmitters and the placement of
cells close to one another permits re-use of frequencies, thus substantially
increasing the volume of calls capable of being handled simultaneously over the
number handled by prior generation systems. Each cell has a coverage area
generally ranging from one to more than 300 square miles. A cellular telephone
system includes one or more computerized central switching facilities known as
mobile switching centers ("MSC"), which control the automatic transfer of
calls, coordinate calls to and from cellular telephones and connect calls to
the local exchange carrier ("LEC") or to an interexchange carrier. An MSC also
records information on system usage and subscriber statistics.
Each cell's facilities monitor the strength of the signal returned from
the subscriber's cellular telephone. When the signal strength declines to a
predetermined level and the transmission strength is greater at another cell in
or interconnected with the system, the MSC automatically and instantaneously
passes the mobile user's call in progress to the other cell without
disconnecting the call ("hand off"). Interconnection agreements between
cellular telephone system operators and various LECs and interexchange carriers
establish the manner in which the cellular telephone system integrates with
other telecommunications systems.
As required by the FCC, all cellular telephones are designed for
compatibility with cellular systems in all markets within the United States so
that a cellular telephone may be used wherever cellular service is available.
Each cellular telephone system in the United States uses one of two groups of
channels, termed "Block A" and "Block B," which the FCC has allotted for
cellular service. Minor adjustments to cellular telephones may be required to
enable the subscriber to change from a cellular system on one frequency block
to a cellular system on the other frequency block.
While most MSCs process information digitally, most radio transmission of
cellular telephone calls is done on an analog basis. Digital transmission of
cellular telephone calls offers advantages, including larger system capacity
and the potential for lower incremental costs for additional subscribers. The
FCC allows carriers to provide digital service and requires cellular carriers
to provide analog service. The Company's implementation of digital radio
technology is expected to commence in the third quarter of 1997. It is
anticipated that a substantial portion of increased capacity for subsequent
traffic and subscriber growth will be accommodated using the lower cost digital
technology.
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<PAGE>
Reciprocal agreements among cellular telephone system operators allow
roamers to place and receive calls in most service areas throughout the
country. Roamers are charged rates which are generally at a premium to the
regular service rate. In recent years, cellular carriers have experienced
increased fraud associated with roamer service, including ESN cloning. The
Company and other carriers have implemented a number of features which have
decreased the incidents of fraudulent use of their systems. Among these are
PINs, which are required to be used by a majority of the Company's customers,
and the Company's Security Zone feature which restricts customer usage outside
of the Company's service areas.
In addition, the Company has implemented authentication and RF
fingerprinting technologies which associate ESN/MIN combinations with
particular cellular telephone units. The use of digital radio technology also
purportedly will make it more difficult to commit cellular fraud. However,
fraudulent use of the Company's systems remains a significant concern.
Certain Anticipated Asset Transfers
The Company through a wholly owned subsidiary has a 40% limited
partnership interest in Garden State Cablevision. The Company acquired its
interest in Garden State Cablevision in 1992 from Comcast for $51.0 million
through the issuance of a note bearing interest at 11% per annum and payable in
September 1997. See Note 3 of notes to condensed consolidated financial
statements for the three months ended March 31, 1997 and 1996 and Note 5 of
notes to consolidated financial statements for the years ended December 31,
1996, 1995 and 1994 included elsewhere herein. While no assurance can be given,
the Company expects to transfer its interest in Garden State Cablevision to
Comcast subsequent to the refinancing of the Credit Agreement. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations."
The Company through a wholly owned subsidiary has a 51% interest in a
partnership that provides directory assistance services to the public. A
subsidiary of Comcast owns the remaining 49% interest. Although no assurance
can be given, the Company expects to transfer its interest in the partnership
to Comcast some time after the Expiration Date of the Exchange Offer.
The Company's interests in the foregoing entities and assets will
constitute Unrestricted Subsidiaries for purposes of the Indenture relating to
the Notes. See "Description of the Notes -- Certain Covenants -- Designation of
Unrestricted Subsidiaries."
Competition
The FCC generally grants two licenses to operate cellular telephone
systems in each market. One of the two licenses was initially awarded to a
company or group affiliated with the local landline telephone carriers in the
market (the "wireline" license), and the other license was initially awarded to
a company, individual, or group not affiliated with any landline telephone
carrier (the "non-wireline" license). The Company's systems are all
non-wireline systems and compete directly with the wireline licensee in each
market in attracting and retaining cellular telephone customers and dealers.
The wireline licensee in the Company's principal markets is Cellco Partnership,
a joint venture between Bell Atlantic Mobile Systems, Inc. and NYNEX Mobile
Communications Co. The Company's principal wireline competitor has a larger
coverage area and may have access to more substantial financial resources than
the Company.
In recent years, new mobile telecommunications service providers have
entered the market and created additional competition in the wireless
telecommunications business. Many of such providers have access to substantial
capital resources and operate, or through affiliates operate, cellular
telephone systems, bringing significant wireless experience to the new
marketplace. Accordingly, while there are only two cellular providers licensed
in a given area, new competitors continue to emerge utilizing different
frequencies and new technologies. Competition between wireless operators in
each market is principally on the basis of services and enhancements offered,
technical quality of the system, quality and responsiveness of customer
service, price and coverage area.
The most prominent new providers are the PCS operators. PCS is used to
describe a variety of digital, wireless communications systems currently
primarily suited for use in densely populated areas. At the power levels that
the FCC's rules now provide, each cell of a PCS system would have more limited
coverage than a cell in a cellular telephone system. The FCC has allocated
spectrum and adopted rules for both narrow and
44
<PAGE>
broadband PCS services. In 1994, the FCC completed a spectrum auction for
nationwide narrowband PCS licenses, undertook the first regional narrowband PCS
auction, and began the first auction of broadband PCS spectrum. All of the
30-MHz MTA licenses for PCS were issued by June 1995 and PCS licensees are
required to construct their networks to be capable of covering one-third of
their service area population within five years of the date of licensing.
Winners in the Company's Philadelphia markets were AT&T Wireless Services, Inc.
and PhillieCo L.P., an affiliate of Sprint Spectrum. Broadband PCS service
likely will become a direct competitor to cellular service. PhillieCo, L.P. has
recently begun offering its wireless services in the Philadelphia, PA area. In
September 1996, the FCC granted, through a bidding process, additional 30-MHz
BTA PCS licenses, designated for license to small businesses, rural telephone
companies and other entrepreneurs. Additional auctions for 10-MHz blocks of PCS
spectrum (including licenses designated for small businesses) were concluded in
January 1997. An affiliate of the Company was the high bidder on twelve 10-MHz
licenses covering the Philadelphia MTA and the Allentown BTA, all of which have
been awarded. Subject to the approval of the FCC, Comcast intends to transfer
the PCS licenses to the Company at Comcast's cost of $17.5 million.
Cellular telephone systems, including the Company's systems, also face
actual or potential competition from other current and developing technologies.
SMR systems, such as those used by taxicabs, as well as other forms of mobile
communications service, may provide competition in certain markets. SMR systems
are permitted by FCC rules to be interconnected to the public switched
telephone network and are significantly less expensive to build and operate
than cellular telephone systems. SMR systems are, however, licensed to operate
on substantially fewer channels per system than cellular telephone systems and
currently lack cellular's ability to expand capacity through frequency re-use
by using many low-power transmitters and to hand-off calls. Nextel
Communications, Inc., in which Comcast holds an equity interest, has begun to
implement its proposal to use its available SMR spectrum in various
metropolitan areas more efficiently to increase capacity and to provide a broad
range of mobile radio communications services. This proposal, known as Enhanced
SMR service, could provide additional competition to existing cellular
carriers, including the Company. Nextel Communications, Inc. has recently begun
offering its wireless services in the Philadelphia, PA area. In 1994, the FCC
decided to license SMR systems in the 800-MHz bands for wide-area use, thus
increasing potential competition with cellular. The FCC has also decided to
license SMR spectrum in contiguous blocks via the competitive bidding process.
One-way paging or beeper services that feature voice message, data
services and tones are also available in the Company's markets. These services
may provide adequate capacity and sufficient mobile capabilities for some
potential cellular subscribers, thus providing additional competition to the
Company's systems.
The FCC requires cellular licensees to provide service to resellers of
cellular service which purchase cellular service from licensees, usually in the
form of blocks of numbers, then resell the service to the public. Thus, a
reseller may be both a customer and a competitor of a licensed cellular
operator. The FCC currently is seeking comment on whether resellers should be
permitted to install separate switching facilities in cellular systems,
although it has tentatively concluded not to require such interconnections. The
FCC is also considering whether resellers should receive direct assignments of
telephone numbers from LECs.
In April 1997, the FCC concluded auctioning spectrum for "Wireless
Communications Services" which broadly encompasses all wireless services.
Another subsidiary of Comcast was the high bidder on 17 of the "WCS" licenses
auctioned in April. It is likely that the FCC will offer additional spectrum
for wireless mobile CMRS licenses in the future. Applicants also have received
and others are seeking FCC authorization to construct and operate global
satellite networks to provide domestic and international mobile communications
services from geostationary and low earth orbit satellites. In addition, the
1993 Budget Act provided, among other things, for the release of 200-MHz of
Federal government spectrum for commercial use over a fifteen-year period.
These developments and further technological advances may make available other
alternatives to cellular service, thereby creating additional sources of
competition.
In February 1997, the U.S. government entered into a World Trade
Organization agreement with respect to telecommunications. When it becomes
effective on January 1, 1998, the agreement will require the United States,
among other things, to afford "national" treatment to foreign investors seeking
indirect ownership of CMRS licenses in the United States. These changes may
permit additional foreign investment and participation in the United States'
wireless marketplace and therefore may enhance competition. The FCC has
instituted a rule making proceeding to develop policies for implementing the
agreement.
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Legislation and Regulation
FCC Regulation. The FCC regulates the licensing, construction, operation
and acquisition of cellular telephone systems pursuant to the Communications
Act of 1934 (the "Communications Act"). For licensing purposes, the FCC divided
the United States into separate markets: 306 MSAs and 428 RSAs. In each market,
the allocated cellular frequencies are divided into two blocks: Block A,
initially awarded for utilization by non-wireline entities such as the Company,
and Block B, initially awarded for utilization by affiliates of local exchange
wireline telephone companies. There is no technical or operational difference
between wireline and non-wireline systems other than different frequencies.
Under the Communications Act, no party may transfer control of or assign a
cellular license without first obtaining FCC consent. FCC rules (i) prohibit an
entity controlling one system in a market from holding any interest in the
competing cellular system in the market and (ii) prohibit an entity from
holding non-controlling interests in more than one system in any market, if the
common ownership interests present anti-competitive concerns under FCC
policies. Cellular radio licenses generally expire on October 1 of the tenth
year following grant of the license in the particular market and are renewable
for periods of ten years upon application to the FCC. Licenses may be revoked
for cause and license renewal applications denied if the FCC determines that a
renewal would not serve the public interest. FCC rules provide that competing
renewal applications for cellular licenses will be considered in comparative
hearings, and establish the qualifications for competing applications and the
standards to be applied in such hearings. Under current policies, the FCC will
grant incumbent cellular licensees a "renewal expectancy" if the licensee has
provided substantial service to the public, substantially complied with
applicable FCC rules and policies and the Communications Act and is otherwise
qualified to hold an FCC license. The FCC has granted renewal of the Company's
licenses for the Philadelphia, PA, Wilmington, DE and New Brunswick and Long
Branch, NJ MSAs. The Company's license for the Trenton, NJ MSA expires in 1997.
The balance of the Company's licenses expire from 1998 through 2006.
The FCC regulates the ability of cellular operators to bundle the
provision of service with hardware, the resale of cellular service by third
parties and the coordination of frequency usage with other cellular licensees.
The FCC also regulates the height and power of base station transmitting
facilities and signal emissions in the cellular system. Cellular systems also
are subject to Federal Aviation Administration and FCC regulations concerning
the siting, construction, marking and lighting of cellular transmitter towers
and antennae. In addition, the FCC also regulates the employment practices of
cellular operators.
The Communications Act currently restricts foreign ownership or control
over commercial mobile radio licenses, which include cellular radio service
licenses. The FCC recently decided to consider the opportunities that other
nations provide to U.S. companies in their communications industries as a
factor in deciding whether to permit higher levels of indirect foreign
ownership in companies controlling common carrier and certain other radio
licenses. The 1996 Telecom Act relaxes these restrictions by eliminating the
statutory provisions restricting foreign officers and directors in licensees
and their parent corporations.
In February 1997, the U.S. government entered into a World Trade
Organization agreement with respect to telecommunications. Upon its
effectiveness, the agreement will require the United States, among other
things, to afford "national" treatment to foreign investors seeking indirect
ownership of CMRS licenses in the United States. These changes may permit
additional foreign investment and participation in the United States' wireless
marketplace and therefore may enhance competition.
Allegations of harmful effects from the use of hand-held cellular phones
have caused the cellular industry to fund additional research to review and
update previous studies concerning the safety of the emissions of
electromagnetic energy from cellular phones. In August 1996, however, the FCC
adopted new standards for evaluating the extent to which wireless facilities
will expose both employees and the public to RF radiation. At that time, the
FCC determined that state and local regulation of RF radiation from facilities
used to provide "personal wireless services," including cellular and PCS, is
preempted to the extent the facilities comply with the FCC's RF exposure
limits.
The FCC also requires LECs in each market to offer reasonable terms and
facilities for the interconnection of both cellular telephone systems in that
market to the LECs' landline network. Cellular telephone companies affiliated
with the LEC are required to disclose how their systems will interconnect with
the landline network. The licensee not affiliated with the LEC has the right to
interconnect with the landline network in a manner no
46
<PAGE>
less favorable than that of the licensee affiliated with the LEC. In addition,
the licensee not affiliated with the LEC may, at its discretion, request
reasonable interconnection arrangements that are different than those provided
to the affiliated licensee in that market, and the LEC must negotiate such
requests in good faith. The FCC reiterated its position on interconnection
issues in a declaratory ruling which clarified that LECs are expected to
provide, within a reasonable time, the agreed-upon form of interconnection. In
June 1996, the FCC adopted a national regulatory framework for implementing the
local competition provisions of the 1996 Telecom Act, including adoption of
rules delineating interconnection obligations of incumbent LECs, ("ILECs"),
unbundling requirements for ILECs, network elements, requirements for access to
local rights-of-way, dialing parity and telephone numbering and number
portability, and requirements for resale of and non-discriminatory access to
ILEC services. In many instances, the FCC left the task of implementing the
FCC's regulatory standards to the individual states. Numerous LECs have
appealed the FCC's decisions and a judicial determination of the legality of
the FCC's interconnection rules is pending at the United States Court of
Appeals for the Eighth Circuit, which has stayed certain portions of the FCC's
new regulations concerning ILEC pricing and nondiscrimination obligations.
Notwithstanding the federal court stay of certain FCC interconnection
regulations, the Company has renegotiated its interconnection contracts with
Bell Atlantic pursuant to the 1996 Telecom Act. The agreements, covering
Pennsylvania, New Jersey, Delaware and Maryland, provide for the reciprocal
transport and termination of CMRS traffic by Bell Atlantic and the Company at
substantially reduced rates. These agreements all have been approved by the
four applicable state public utility commissions and are in effect.
To date, the FCC has undertaken significant efforts to reconsider the
regulation of CMRS providers in the wake of competitive developments in the
telecommunications marketplace. For instance, in June 1996, the FCC eliminated
the cellular/PCS cross-ownership rule in favor of a single, generally
applicable, CMRS spectrum cap rule. The change permits cellular providers to
hold attributable interests in 20-MHz of PCS spectrum (e.g., two 10-MHz
licenses) in areas where there is significant service area overlap. The FCC is
also considering whether all CMRS providers should provide interconnection to
all other CMRS providers.
The FCC recently established new federal universal service mechanisms that
will affect cellular and other wireless operators. Under the new rules,
wireless service providers gain access to universal service subsidies for the
first time; however, they also are required to contribute to both federal and
state universal service funds. The new rules have been appealed in numerous
jurisdictions throughout the country. A judical determination of the legality
of the rules will determine the extent to which cellular and other wireless
service providers will be required to support state universal service programs.
The FCC also recently promulgated rules to reform its system of interstate
access charges to make it compatible with the 1996 Telecom Act and with federal
and state actions to open local networks to competition. The new rules
establish a transition to an access charge structure that more closely reflects
the economic costs of accessing landline networks for the termination of long
distance calls. These rules also have been appealed, principally by incumbent
local exchange carriers. Judicial resolution of the issues raised in the
litigation will affect the costs of interstate access to local
telecommunications networks. Wireless carriers indirectly are affected by these
costs to the extent they provide cellular long distance and other offerings
that package or utilize long distance services for the convenience and benefit
of their customers. Further, the FCC is considering new rules to govern how
customer proprietary network information ("CPNI") may be used by
telecommunications carriers, including the BOCs in marketing a broad range of
telecommunications services to their customers, and the customers of affiliated
companies. Resolution of the issues raised in these proceedings may affect the
costs of providing cellular service and the way in which the Company conducts
its business. However, the Company does not anticipate that resolution of these
issues will result in a significant adverse impact on its financial position,
results of operations or liquidity.
Finally, the 1996 Telecom Act relieves cellular providers affiliated with
a BOC of their equal access obligations. As such, BOC-affiliated carriers are
afforded greater flexibility in contracting with interexchange carriers for the
provision of long distance services. Prior to the legislative change, cellular
systems affiliated with the BOCs were required to offer equal access to
interexchange carriers and those affiliated with AT&T voluntarily provided
equal access. Nevertheless, the FCC retains authority to require all CMRS
operators to provide unblocked access through the use of other mechanisms if
customers are being denied access to the telephone toll service providers of
their choice, and if such denial is contrary to the public interest.
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State Regulation and Local Approvals. Except for the State of Illinois,
the states in which the Company presently operates currently do not regulate
cellular telephone service. In the 1993 Budget Act, Congress gave the FCC the
authority to preempt states from regulating rates or entry into CMRS, including
cellular. In its order implementing the provisions of the 1993 Budget Act
affecting CMRS, the FCC preempted the states and established a procedure for
states to petition the FCC for authority to regulate rates and entry into CMRS.
The FCC, to date, has denied all state petitions to regulate the rates charged
by CMRS providers.
The scope of the allowable level of state regulation of CMRS, however,
remains unclear. The 1993 Budget Act does not identify the "other terms and
conditions" of CMRS service that can be regulated by the states. Moreover, the
extent to which states may regulate intrastate LEC-CMRS interconnection remains
unresolved. The resolution of this issue will impact the extent to which
cellular providers will be subject to state regulation of CMRS interconnection
to the LECs. The siting of cells also remains subject to state and local
jurisdiction although petitions seeking clarification of states' siting
authority are currently pending at the FCC.
Employees
As of March 31, 1997, the Company had approximately 1,600 employees. None
of the Company's employees is represented by a labor organization, and the
Company's management considers its employee relations to be good.
Properties
The principal physical assets of a cellular telephone system include cell
sites and central switching equipment. The Company primarily leases its sites
used for its transmission facilities and its administrative offices. The
physical components of a cellular telephone communications system require
maintenance and upgrading to keep pace with technological advances over the
next several years. It is anticipated that digital capability will be added to
the Company's system beginning in the third quarter of 1997.
Legal Proceedings
The Company is not party to litigation which, in the opinion of the
Company's management, will have a material adverse effect on the Company's
financial position, results of operations or liquidity.
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MANAGEMENT
Directors and Executive Officers
The business and operations of CCCI are managed by Comcast pursuant to the
Management Agreement between Comcast and CCCI. See "Certain Relationships and
Related Transactions." The following table sets forth certain information with
respect to directors and executive officers of the Company as of June 1, 1997.
All of the Company's directors and executive officers are employees of, and
compensated by Comcast, and will receive no separate compensation from the
Company. The Company reimburses all directors for expenses incurred in
performing their duties as directors. Except as indicated below, all of the
Company's directors and executive officers were elected to their positions with
Comcast Cellular in 1992 and hold the same position with the Company, Comcast
Cellular and Comcast.
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Ralph J. Roberts 77 Chairman of the Board of Directors; Director
Julian A. Brodsky 63 Vice Chairman of the Board of Directors; Director
Brian L. Roberts 37 President; Director
Lawrence S. Smith 49 Executive Vice President
John R. Alchin 49 Senior Vice President; Treasurer
Stanley L. Wang 56 Senior Vice President; Secretary
</TABLE>
Ralph J. Roberts has served as a Director and Chairman of the Board of
Directors of Comcast for more than five years. Mr. Roberts has been the
President and a Director of Sural Corporation, a privately-held investment
company ("Sural") and Comcast's largest shareholder, for more than five years.
Mr. Roberts devotes a major portion of his time to the business and affairs of
Comcast. Mr. Roberts currently has voting control of Sural. Mr. Ralph J.
Roberts has indicated his intention to transfer control of Sural to Mr. Brian
L. Roberts upon receipt of various regulatory and other approvals required in
connection with such transfer. The FCC has granted its consent to the transfer
of control of Comcast Cellular and its subsidiaries to Mr. Brian L. Roberts.
Mr. Roberts is also a Director of Comcast UK Cable Partners Limited and Storer
Communications, Inc.
Julian A. Brodsky has served as a Director and Vice Chairman of the Board
of Directors of Comcast for more than five years. Mr. Brodsky presently serves
as the Treasurer and a Director of Sural. Mr. Brodsky devotes a major portion
of his time to the business and affairs of Comcast. Mr. Brodsky is also a
Director of Comcast UK Cable Partners Limited, Storer Communications, Inc. and
RBB Fund, Inc.
Brian L. Roberts has served as President and a Director of Comcast for more
than five years. Mr. Roberts presently serves as Vice President and a Director
of Sural. Mr. Roberts devotes a major portion of his time to the business and
affairs of Comcast. Mr. Roberts is also a Director of Teleport Communications
Group, Inc., Comcast UK Cable Partners Limited and Storer Communications, Inc.
He is a son of Ralph J. Roberts.
Lawrence S. Smith was named Executive Vice President of Comcast in December
1995. Prior to that time, Mr. Smith served as Senior Vice President of Comcast
for more than five years. Mr. Smith is the Principal Accounting Officer of the
Company and Comcast. Mr. Smith is a Director of Teleport Communications Group,
Inc. and Comcast UK Cable Partners Limited and is a Partnership Board
Representative of Sprint Spectrum Holding Company, L.P.
John R. Alchin has served as Treasurer and Senior Vice President of
Comcast for more than five years. Mr. Alchin is the Principal Financial Officer
of the Company and Comcast. Mr. Alchin is a Director of Comcast UK Cable
Partners Limited.
Stanley L. Wang has served as Senior Vice President, Secretary and General
Counsel of Comcast for more than five years. Mr. Wang is a Director of the
Company, Comcast Cellular and Storer Communications, Inc.
Key Operating Employees of CCCI
David N. Watson was named President of CCCI in February 1997. For the five
years immediately prior to that time, Mr. Watson served as Senior Vice
President and Vice President of Marketing and Sales of CCCI.
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<PAGE>
Anna E. Hillman has served as Vice President and subsequently Senior Vice
President of Finance and Administration of CCCI for more than five years.
Raymond E. Dombroski has served as Vice President and subsequently Senior
Vice President of Engineering Operations and New Technologies of CCCI since
1994. Prior to that time, Mr. Dombroski served as Vice President of New
Technologies of CCCI from 1992.
Jeffrey E. Smith has served as Vice President and General Counsel of CCCI
since 1994. Mr. Smith has served as Deputy General Counsel of Comcast for more
than five years.
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<PAGE>
PRINCIPAL STOCKHOLDERS
All of the outstanding capital stock of the Company, consisting of 100
shares of Common Stock, are owned by Comcast. The following table provides
certain information regarding the beneficial ownership, as defined in Rule
13d-3 of the Exchange Act, of Comcast's Common Stock as of June 1, 1997 by (i)
each stockholder known to the Company to be the beneficial owner of 5% or more
of any class of Comcast's voting securities, (ii) each of the Company's
directors and executive officers and (iii) all directors and executive officers
as a group. So far as is known to the Company, the persons named in the tables
below as beneficially owning the shares set forth therein have sole voting
power and sole investment power with respect to such shares, unless otherwise
indicated.
Beneficial Ownership of
Class A Common Stock
-------------------------
Amount Percent
Beneficially of
Name and Address of Beneficial Owner Owned Class
- -------------------------------------- -------------- --------
The Capital Group
Companies, Inc. ..................... 2,654,000(1) 8.3%
333 South Hope Street
Los Angeles, CA 90071
Neuberger & Berman, LLC ............ 1,642,000(2) 5.2%
605 Third Avenue
New York, NY 10158-3698
<TABLE>
<CAPTION>
Amount Beneficially Owned(3) Percent of Class(3)
-------------------------------------------------------- ----------------------------------
Class Class
Name of Beneficial Owner Class A A Special Class B Class A A Special Class B
- ----------------------------- ---------------- ------------------- --------------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Alchin, John R. ............ 239,125(7) (13) (13)
Brodsky, Julian A. ......... 280,559(4) 1,811,242 (13) (13)
Roberts, Brian L. ......... 4,061(5) 516,362(8) (13) (13)
Roberts, Ralph J. ......... 2,164,107(6) 10,506,929(9) 9,444,375(12) 6.8% 3.6% 100%
Smith, Lawrence S. ......... 319,784(10) (13) (13)
Wang, Stanley L. ......... 40,891 205,039(11) (13) (13)
All directors and executive
officers as a group
(6 persons) ................ 2,489,618 13,598,481 9,444,375 7.8% 4.7% 100%
(4)(5)(6) (7)(8)(9)(10) (12)
(11)
</TABLE>
- ------------
(1) The information contained in this table with respect to The Capital Group
Companies, Inc. ("TCG") is based upon filings made on Form 13F by TCG and
its wholly owned subsidiaries, Capital Research and Management Company
("Capital Research") and Capital Guardian Trust Company ("Capital
Guardian"), setting forth information as of March 31, 1997. Based upon
such filings, 1,950,000 and 704,000 of these shares are beneficially owned
by Capital Research and Capital Guardian, respectively.
(2) The information contained in this table with respect to Neuberger &
Berman, LLC ("Neuberger") is based upon filings made on Form 13F by
Neuberger, its wholly owned subsidiary, Neuberger & Berman Management,
Inc., and Neuberger & Berman Institutional Asset Management, setting forth
information as of March 31, 1997. Based upon such filings, 575,000 shares
are beneficially owned by Neuberger and 1,000,000 shares and 67,000 shares
are beneficially owned by Neuberger & Berman Management, Inc. and Neuberger
& Berman Institutional Asset Management, respectively.
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<PAGE>
(3) With respect to each beneficial owner, the shares issuable upon exercise
of his currently exercisable options and options exercisable within 60
days of June 1, 1997 are deemed to be outstanding for purposes of
computing the percentage of the class of Common Stock owned. Includes the
following shares of Class A Special Common Stock and Class B Common Stock,
respectively, for which the named individuals, and all directors and
executive officers as a group, hold currently exercisable options or
options exercisable within 60 days of June 1, 1997: John R. Alchin,
189,565 shares and none; Julian A. Brodsky, 984,646 shares and none; Brian
L. Roberts, 374,517 shares and none; Ralph J. Roberts, 4,412,566 and
658,125 shares; Lawrence S. Smith, 275,555 shares and none; Stanley L.
Wang, 144,652 shares and none; and all directors and executive officers as
a group, 6,381,501 and 658,125 shares.
(4) Includes 20,000 shares of Class A Common Stock owned by a charitable
foundation of which he and members of his family are directors and
officers, as to which shares he disclaims beneficial ownership.
(5) Includes 1,356 shares of Class A Common Stock owned by his wife, as to
which shares he disclaims beneficial ownership.
(6) At June 1, 1997, Sural owned 1,845,037 shares of Class A Common Stock. Mr.
Roberts, Chairman of the Board of Directors of Comcast, and members of his
family own all of the voting securities of Sural. Pursuant to Rule 13d-3
of the Exchange Act, Mr. Roberts is deemed to be the beneficial owner of
the shares of Class A Common Stock owned by Sural. Also includes 319,070
shares owned directly by Mr. Roberts. See also the last two sentences of
note (12) below.
(7) Includes 15 shares of Class A Special Common Stock owned in the Comcast
Corporation Retirement-Investment Plan as to which shares he disclaims
beneficial ownership.
(8) Includes 678 shares of Class A Special Common Stock owned by his wife,
20,542 shares owned in the Comcast Corporation Retirement-Investment Plan,
and 58,140 shares owned by a charitable foundation of which he and his
wife are directors and officers, as to all of which shares he disclaims
beneficial ownership.
(9) Includes 5,315,772 shares of Class A Special Common Stock owned by Sural
and 61,800 shares owned by a charitable foundation of which he and his
wife are trustees and as to which shares he disclaims beneficial
ownership. See also the last sentence of note (12) below.
(10) Includes 20,901 shares of Class A Special Common Stock owned in a Keogh
Plan, as to which shares he disclaims beneficial ownership.
(11) Includes 15 shares of Class A Special Common Stock owned in the Comcast
Corporation Retirement-Investment Plan as to which shares he disclaims
beneficial ownership.
(12) At June 1, 1997, Sural was the sole owner of Comcast's Class B Common
Stock. Pursuant to Rule 13d-3 of the Exchange Act, Mr. Roberts is deemed
to be the beneficial owner of the shares of Class B Common Stock owned by
Sural. In addition to the shares owned by Sural, Mr. Roberts has options
to purchase 658,125 shares of Class B Common Stock, all of which are
currently exercisable. Since each share of Class B Common Stock is
entitled to fifteen votes, the shares of Class A Common Stock and Class B
Common Stock owned by Sural constitute approximately 82% of the voting
power of the two classes of Comcast's voting Common Stock combined (83% if
all others shares of Class A Common Stock which he is deemed to
beneficially own and shares underlying his options to purchase Class B
Common Stock currently exercisable or exercisable within 60 days of June
1, 1997 are included). The Class B Common Stock is convertible on a
share-for-share basis into Class A Common Stock or Class A Special Common
Stock. If Sural and Mr. Roberts were to convert the Class B Common Stock
which they are deemed to beneficially own into Class A Common Stock, Mr.
Roberts would beneficially own 11,608,482 shares of Class A Common Stock
(approximately 28% of the Class A Common Stock). Mr. Ralph J. Roberts has
indicated his intention to transfer control of Sural to Mr. Brian L.
Roberts upon receipt of various regulatory and other approvals required in
connection with such transfer. The FCC has granted its consent to the
transfer of control of Comcast Cellular and its subsidiaries to Mr. Brian
L. Roberts.
(13) Less than one percent of the applicable class.
52
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Comcast and CCCI are parties to a management agreement (the "Management
Agreement") pursuant to which Comcast manages the business and operations of
CCCI. Pursuant to the Management Agreement, management fees of $1.4 million,
$1.4 million, $5.5 million, $5.5 million and $5.3 million were charged to
selling, general and administrative expenses during the three months ended
March 31, 1997 and 1996 and during the years ended December 31, 1996, 1995 and
1994, respectively. During the years ended December 31, 1995 and 1994, CCCI was
charged additional management fees (the "Additional Management Fees") of $2.7
million and $2.5 million, respectively. In accordance with the provisions of
the Management Agreement, annual cash payments of management fees are limited
to $5.0 million, subject to annual increases based on the consumer price index.
In certain circumstances, CCCI's existing Credit Agreement may further limit
the payment of management fees. As of March 31, 1997 deferred management fees
payable totaled $16.1 million. The Company intends to pay all previously
deferred management fees as of the date the Credit Agreement is amended or
refinanced with the New Bank Facility.
In May 1997, subsequent to the redemption of the Zero Coupon Notes, the
Management Agreement was amended to provide for management fees of 1.5% of
revenues (on a pro forma basis, management fees would have been $1.6 million
and $6.4 million for the three months ended March 31, 1997 and the year ended
December 31, 1996, respectively).
The Company, Comcast Cellular, Comcast and CCCI are parties to a tax
sharing agreement (the "Tax Sharing Agreement") whereby the Company joins with
Comcast in filing a consolidated federal income tax return. Comcast allocates
income tax expense or benefit to the Company as if the Company were filing a
separate federal income tax return. Tax benefits from both losses and tax
credits are made available to the Company as it is able to realize such
benefits on a separate return basis. The Company is required to pay to Comcast
for income taxes an amount equal to that amount of tax the Company would pay if
it filed a separate tax return. Subsidiaries that were less than 80% owned have
been excluded from the Tax Sharing Agreement, as they were not members of the
Comcast consolidated group for tax purposes.
In 1992, a subsidiary of AWACS, issued a note with an initial principal
amount of $51.0 million to purchase from a subsidiary of Comcast, a 40% limited
partnership interest in Garden State Cablevision. Interest is payable on a
quarterly basis to the extent of available cash, with any unpaid interest added
to principal. The note bears interest at a rate of 11% per annum. Interest
expense on the note was $1.2 million, $2.0 million, $8.2 million, $7.5 million
and $6.7 million during the three months ended March 31, 1997 and 1996 and the
years ended December 31, 1996, 1995 and 1994, respectively. From the date of
issuance through March 31, 1997, $35.5 million of principal and interest has
been paid on the note with the proceeds from distributions from Garden State
Cablevision. The balance of the note is due on September 30, 1997, and,
accordingly, has been classified as current in the Company's consolidated
balance sheet as of March 31, 1997 and December 31, 1996. See "Business --
Certain Anticipated Asset Transfers."
53
<PAGE>
DESCRIPTION OF THE NOTES
The New Notes will be issued, and the Old Notes were issued, under an
Indenture (the "Indenture") dated as of May 8, 1997 between the Company and The
Bank of New York, as trustee (the "Trustee"), which has been filed as an
exhibit to the Registration Statement of which the Prospectus constitutes a
part. The following summary of certain provisions of the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), and to all of the provisions of the Indenture, including the definitions
of certain terms therein and those terms made a part of the Indenture by
reference to the Trust Indenture Act, as in effect on the date of the
Indenture. The definitions of certain capitalized terms used in the following
summary are set forth under "-- Certain Definitions" below. Capitalized terms
that are used but not otherwise defined herein have the meaning assigned to
them in the Indenture. References in this "Description of the Notes" section to
"the Company" mean only Comcast Cellular Holdings, Inc. and not any of its
Subsidiaries.
The terms of the New Notes are identical in all material respects to the
terms of the Old Notes, except for certain transfer restrictions, and
registration rights and the related liquidated damages provisions applicable to
the Old Notes and except that, if the Exchange Offer is not consummated by
November 4, 1997, Holders that have complied with their obligations under the
Registration Rights Agreement will be entitled, subject to certain exceptions,
to liquidated damages in an amount equal to $0.05 per week per $1,000 principal
amount of Old Notes held by such Holder. The amount of liquidated damages will
increase by an additional $0.05 per week per $1,000 principal amount of Old
Notes for each subsequent 90-day period until the Exchange Offer is
consummated, up to a maximum amount of liquidated damages of $0.25 per week per
$1,000 principal amount of Old Notes held by such Holder.
General
The New Notes will be, and the Old Notes were, issued only in registered
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. The Company has initially appointed the Trustee to serve as registrar
and paying agent under the Indenture at its offices at 101 Barclay Street, New
York, New York 10286. No service charge will be made for any registration of
transfer or exchange of the Old Notes and the New Notes, except for any tax or
other governmental charge that may be imposed in connection therewith. The Old
Notes and the New Notes are treated as a single class of securities under the
Indenture and are collectively referred to herein as the Notes.
Upon amendment of the Revolving Credit Loan or the repayment thereof with
borrowings under the New Bank Facility (see "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources -- Financing"), it is expected that the Company will be
merged into Comcast Cellular, with Comcast Cellular being the surviving entity.
Upon consummation of the merger, Comcast Cellular will assume all obligations
of the Company under the Indenture and the Notes.
Ranking
The Indebtedness evidenced by the New Notes will rank, and the Old Notes
rank, pari passu in right of payment with all other unsubordinated and
unsecured indebtedness of the Company and senior in right of payment to all
subordinated and unsecured indebtedness of the Company. The New Notes will be,
and the Old Notes are, unsecured.
The Company is a holding company with limited assets and no business
operations of its own. The Company operates its business through its
Subsidiaries. Any right of the Company and its creditors, including Holders of
the Notes, to participate in the assets of any of the Company's Subsidiaries
upon any liquidation, dissolution or winding-up of any such Subsidiary will be
subject to the prior claims of the creditors of such Subsidiary. The claims of
creditors of the Company, including Holders of the Notes, will be effectively
subordinated to all existing and future indebtedness and liabilities, including
trade payables, of the Company's Subsidiaries. On a pro forma basis after
giving effect to the Refinancing, the aggregate amount of outstanding
obligations of the Company's Subsidiaries reflected on the Company's balance
sheet that would have ranked effectively senior to the Notes was approximately
$681.8 million as of March 31, 1997. The Company and its
54
<PAGE>
Subsidiaries may incur other debt in the future, including secured debt, which,
in the case of the debt of such Subsidiaries or secured debt of the Company,
would be effectively senior to the Notes. As of the date of this Prospectus,
the Company has no Subordinated Indebtedness outstanding.
Maturity, Interest and Principal of the Notes
The Notes are limited to $1,000,000,000 aggregate principal amount and
will mature on May 1, 2007. Cash interest on the New Notes will accrue at a
rate of 9 1/2% per annum and will be payable semi-annually in arrears on each
May 1 and November 1, commencing November 1, 1997, to the Holders of record of
Notes at the close of business on April 15 and October 15, respectively,
immediately preceding such interest payment date. Cash interest will accrue
from May 8, 1997. Holders of Old Notes whose Old Notes are accepted for
exchange in the Exchange Offer will be deemed to have waived the right to
receive any payment in respect of interest on the Old Notes accrued from May 8,
1997 to the date of issuance of the New Notes. Consequently, Holders of Old
Notes who exchange their Old Notes for New Notes will receive the same interest
payment on November 1, 1997 (the first interest payment date with respect to
the Notes following consummation of the Exchange Offer) that they would have
received had they not accepted the Exchange Offer. Interest will be computed on
the basis of a 360-day year of twelve 30-day months.
Optional Redemption
The Notes will be redeemable at the option of the Company, in whole or in
part, at any time on or after May 1, 2002, at the redemption prices (expressed
as a percentage of principal amount) set forth below, plus accrued and unpaid
interest thereon, if any, to the redemption date, if redeemed during the
12-month period beginning on May 1 of the years indicated below:
Redemption
Year Price
- ---------------------------- -----------
2002 ..................... 104.750%
2003 ..................... 103.167%
2004 ..................... 101.583%
2005 and thereafter ...... 100.000%
In addition, prior to May 1, 2000, the Company may redeem up to 35% of the
originally issued principal amount of the Notes at a redemption price equal to
108.5% of the principal amount of the Notes so redeemed, plus accrued and
unpaid interest thereon, if any, to the redemption date with the net cash
proceeds of one or more Public Equity Offerings resulting in aggregate gross
cash proceeds to the Company of at least $100.0 million; provided, however,
that at least 65% of the originally issued principal amount of the Notes would
remain outstanding immediately after giving effect to any such redemption
(excluding any Notes owned by the Company or any of its Affiliates). Notice of
any such redemption must be given within 60 days after the date of the last
Public Equity Offering resulting in gross cash proceeds to the Company, when
aggregated with all prior Public Equity Offerings, of at least $100.0 million.
Selection and Notice of Redemption
In the event that less than all of the Notes are to be redeemed at any
time pursuant to an optional redemption, selection of such Notes for redemption
will be made by the Trustee in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed
or, if the Notes are not then listed on a national securities exchange, on a
pro rata basis, by lot or by such method as the Trustee shall deem fair and
appropriate; provided, however, that no Notes of a principal amount of $1,000
or less shall be redeemed in part. Notice of redemption shall be mailed by
first-class mail at least 30 but not more than 60 days before the redemption
date to each Holder of Notes to be redeemed at its registered address. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in a principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after the redemption date, interest will cease to
accrue on Notes or portions thereof called for redemption as long as the
Company has deposited with the paying agent for the Notes funds in satisfaction
of the redemption price pursuant to the Indenture.
55
<PAGE>
Offer to Purchase upon Change of Control Triggering Event
Following the occurrence of a Change of Control Triggering Event (the date
of such occurrence being the "Change of Control Date"), the Company shall
notify the Holders of such occurrence in the manner prescribed by the Indenture
and shall, within 20 Business Days after the Change of Control Date, make an
Offer to Purchase all Notes then outstanding at a purchase price in cash equal
to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Purchase Date. The Company's obligations may
be satisfied if a third party makes the Offer to Purchase in the manner, at the
times and otherwise in compliance with the requirements of the Indenture
applicable to an Offer to Purchase made by the Company and purchases all Notes
validly tendered and not withdrawn under such Offer to Purchase.
If an Offer to Purchase is made, there can be no assurance that the
Company will have available funds sufficient to pay for all of the Notes that
might be tendered by Holders seeking to accept the Offer to Purchase. If the
Company fails to repurchase all of the Notes tendered for purchase upon the
occurrence of a Change of Control Triggering Event, such failure will
constitute an Event of Default under the Indenture. See "-- Events of Default"
below and "Risk Factors -- Change of Control."
If the Company makes an Offer to Purchase, the Company will comply with
all applicable tender offer laws and regulations, including, to the extent
applicable, Section 14(e) and Rule 14e-1 under the Exchange Act, and any other
applicable Federal or state securities laws and regulations and any applicable
requirements of any securities exchange on which the Notes are listed, and any
violation of the provisions of the Indenture relating to such Offer to Purchase
occurring as a result of such compliance shall not be deemed a Default or an
Event of Default.
Certain Covenants
Limitation on Restricted Payments. The Company shall not, and shall not
cause or permit any Restricted Subsidiary to, directly or indirectly,
(i) declare or pay any dividend or any other distribution on any Equity
Interests of the Company or any Restricted Subsidiary or make any payment or
distribution to the direct or indirect holders (in their capacities as such) of
Equity Interests of the Company or any Restricted Subsidiary (other than (A)
any dividend, distribution or payment made to the Company or any Restricted
Subsidiary, (B) any dividend, distribution or other payment by any Restricted
Subsidiary on or with respect to its Equity Interests that is paid pro rata to
all holders of such Equity Interests or (C) any dividend, distribution or
payment on or with respect to Equity Interests of the Company or any Restricted
Subsidiary payable solely in Qualified Equity Interests of the Company or such
Restricted Subsidiary, as the case may be, or in options, warrants or other
rights to purchase Qualified Equity Interests of the Company or such Restricted
Subsidiary, as the case may be);
(ii) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of the Company;
(iii) purchase, redeem, defease or retire for value, or make any principal
payment on, prior to any scheduled maturity, scheduled repayment or scheduled
sinking fund payment or mandatory redemption or mandatory repurchase thereof
pursuant to the terms thereof, any Subordinated Indebtedness (other than any
Subordinated Indebtedness held by any Restricted Subsidiary); or
(iv) make any Restricted Investment
(such payments or any other actions (other than the exceptions thereto)
described in (i), (ii), (iii) and (iv) collectively, "Restricted Payments"),
unless
(a) no Default or Event of Default shall have occurred and be continuing
at the time or after giving effect to such Restricted Payment;
(b) immediately after giving effect to such Restricted Payment, the
Company would be able to Incur $1.00 of Indebtedness under the Debt to
Annualized Operating Cash Flow Ratio of the first paragraph of "-- Limitation
on Indebtedness" below; and
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(c) immediately after giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments declared or made on or after the
Issue Date of the Old Notes does not exceed an amount equal to the sum of (1)
the difference between (x) the Cumulative Operating Cash Flow determined at the
time of such Restricted Payment and (y) 120% of cumulative Consolidated
Interest Expense of the Company determined for the period commencing on the
Issue Date and ending on the last day of the most recent fiscal quarter
immediately preceding the date of such Restricted Payment for which
consolidated financial information of the Company is available, plus (2) the
aggregate Net Proceeds received by the Company either (x) as capital
contributions to the Company after the Issue Date of the Old Notes or (y) from
the issue or sale (other than to a Restricted Subsidiary) of its Qualified
Equity Interests after the Issue Date of the Old Notes (excluding the Net
Proceeds from any issuance or sale of Qualified Equity Interests financed,
directly or indirectly, using funds borrowed from the Company or any Restricted
Subsidiary until and to the extent such borrowing is repaid), plus (3) the
principal amount (or accreted value (determined in accordance with GAAP), if
less) of any Indebtedness of the Company or any Restricted Subsidiary which has
been converted into or exchanged for Qualified Equity Interests of the Company,
plus (4) in the case of the disposition or repayment of any Restricted
Investment constituting a Restricted Payment made after the Issue Date of the
Old Notes, an amount (to the extent not included in the computation of
Cumulative Operating Cash Flow) equal to the lesser of: (x) the return of
capital with respect to such Investment and (y) the amount of such Investment
which was treated as a Restricted Payment, in either case, less the cost of the
disposition of such Investment, plus (5) so long as the Designation thereof was
treated as a Restricted Payment made after the Issue Date of the Old Notes,
with respect to any Unrestricted Subsidiary that has been redesignated as a
Restricted Subsidiary after the Issue Date of the Old Notes in accordance with
"-- Designation of Unrestricted Subsidiaries" below, the Company's
proportionate interest in an amount equal to the excess of (x) the total assets
of such Subsidiary, valued on an aggregate basis at the lesser of book value
and Fair Market Value, over (y) the total liabilities of such Subsidiary,
determined in accordance with GAAP (and provided that such amount shall not in
any case exceed the Designation Amount with respect to such Restricted
Subsidiary upon its Designation), plus (6) (to the extent not included in the
computation of Cumulative Operating Cash Flow) the amount of cash dividends or
cash distributions (other than to pay taxes) received from any Unrestricted
Subsidiary since the Issue Date of the Old Notes, plus (7) $25.0 million minus
(8) the greater of (x) $0 and (y) the Designation Amount (measured as of the
date of Designation) with respect to any Subsidiary of the Company which has
been designated as an Unrestricted Subsidiary after the Issue Date of the Old
Notes in accordance with "-- Designation of Unrestricted Subsidiaries" below.
For purposes of the preceding clauses (c)(2) and (c)(3), the value of the
aggregate Net Proceeds received by the Company from the issuance of Qualified
Equity Interests upon the conversion or exchange of outstanding Indebtedness or
upon the exercise of options, warrants or rights will be the Net Proceeds
received upon the issuance of such Indebtedness, options, warrants or rights
plus the incremental amount received by the Company upon such conversion,
exchange or exercise.
The foregoing provisions will not prevent (i) the payment of any dividend
or distribution on, or redemption of, Equity Interests within 60 days after the
date of declaration of such dividend or distribution or the giving of formal
notice of such redemption, if at the date of such declaration or giving of
formal notice such payment or redemption would comply with the foregoing
provisions; (ii) the purchase, redemption, retirement or other acquisition of
any Equity Interests of the Company in exchange for, or out of the net cash
proceeds of the substantially concurrent issue or sale (other than to a
Restricted Subsidiary) of, Qualified Equity Interests of the Company; provided,
however, that any such net cash proceeds and the value of any Equity Interests
issued in exchange for such retired Equity Interests are excluded from clause
(c)(2) of the preceding paragraph (and were not included therein at any time);
(iii) the purchase, redemption, retirement, defeasance or other acquisition of
Subordinated Indebtedness made in exchange for, or out of the net cash proceeds
of a substantially concurrent issue or sale (other than to a Restricted
Subsidiary) of, (x) Qualified Equity Interests of the Company; provided,
however, that any such net cash proceeds and the value of any Equity Interests
issued in exchange for Subordinated Indebtedness are excluded from clauses
(c)(2) and (c)(3) of the preceding paragraph (and were not included therein at
any time) or (y) other Subordinated Indebtedness having no stated maturity for
the payment of principal thereof prior to the final stated maturity of the
Notes; (iv) Restricted Investments not to exceed $10.0 million in the aggregate
since the Issue Date of the Old Notes; (v) the purchase, redemption or other
acquisition, cancellation or retirement for value of Equity Interests, or
options, warrants, equity appreciation rights or other rights to purchase or
acquire Equity Interests, of the Company or any Restricted Subsidiary, or
similar securities, held by officers or employees or former officers or
employees of the Company or any Restricted Subsidiary
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(or their estates or beneficiaries under their estates), upon death,
disability, retirement or termination of employment, not to exceed $2.0 million
in any calendar year and $10.0 million in the aggregate since the Issue Date of
the Old Notes; and (vi) the redemption, retirement, purchase or other
acquisition of shares of Participating Preferred Stock required or permitted
by, or for consideration with a value not greater than the redemption price of
the Participating Preferred Stock as provided in, Article II of the Certificate
of Designation therefor, without giving effect to any amendments thereto or
waivers thereof; provided, however, that in the case of each of clauses (ii),
(iii), (iv), (v) and (vi) no Default or Event of Default shall have occurred
and be continuing or would arise therefrom.
In determining the amount of Restricted Payments permissible under this
covenant, amounts expended pursuant to clauses (i), (iv), (v) and (vi) of the
preceding paragraph shall be included as Restricted Payments and amounts
expended pursuant to clauses (ii) and (iii) shall be excluded. The amount of
any non-cash Restricted Payment shall be deemed to be equal to the Fair Market
Value thereof at the date of the making of such Restricted Payment.
The Company's obligations to comply with this covenant will terminate if
and when the Notes are rated Investment Grade by both Moody's and S&P and the
Company delivers an Officers' Certificate to the Trustee certifying as to the
same.
Limitation on Indebtedness. (a) The Company shall not, and shall not cause
or permit any Restricted Subsidiary to, directly or indirectly, Incur any
Indebtedness (including Acquired Indebtedness) or issue any Disqualified Equity
Interests except for Permitted Indebtedness; provided, however, that the
Company or any Restricted Subsidiary (other than Comcast Cellular so long as it
is a Subsidiary of the Company) may Incur Indebtedness and the Company or any
Restricted Subsidiary (other than Comcast Cellular so long as it is a
Subsidiary of the Company) may issue Disqualified Equity Interests if, at the
time of and immediately after giving pro forma effect to such Incurrence of
Indebtedness or issuance of Disqualified Equity Interests and the application
of the proceeds therefrom, the Debt to Annualized Operating Cash Flow Ratio
would be less than or equal to 8.50 to 1.0.
(b) The foregoing limitations of clause (a) of this covenant will not
apply to the Incurrence by the Company or any Restricted Subsidiary (other than
Comcast Cellular so long as it is a Subsidiary of the Company) of any of the
following (collectively, "Permitted Indebtedness"), each of which shall be
given independent effect:
(i) Indebtedness under the Notes;
(ii) Existing Indebtedness;
(iii) Indebtedness under the Bank Credit Agreement in an aggregate
principal amount at any one time outstanding not to exceed the sum of (A)
$500.0 million, plus (B) any amounts outstanding under the Bank Credit
Agreement that utilize subparagraph (xi) of this paragraph of this covenant
(less the amount of net proceeds which have been received in connection
with a Permitted Receivables Financing; provided that such reduction shall
apply only for so long as a Permitted Receivables Financing is in effect);
(iv) (x) Indebtedness of any Restricted Subsidiary owed to and held by
the Company or any Restricted Subsidiary and (y) Indebtedness of the
Company owed to and held by any Restricted Subsidiary; provided, however,
that an Incurrence of Indebtedness that is not permitted by this clause
(iv) shall be deemed to have occurred upon (I) any sale or other
disposition of any Indebtedness of the Company or any Restricted Subsidiary
referred to in this clause (iv) to any Person other than the Company or any
Restricted Subsidiary; (II) any sale or other disposition of Equity
Interests of any Restricted Subsidiary which holds Indebtedness of the
Company or another Restricted Subsidiary such that such Restricted
Subsidiary ceases to be a Restricted Subsidiary; or (III) the designation
of a Restricted Subsidiary which holds Indebtedness of the Company or any
other Restricted Subsidiary as an Unrestricted Subsidiary;
(v) Interest Rate Protection Obligations relating to (A) Indebtedness of
the Company or any Restricted Subsidiary (which Indebtedness is otherwise
permitted to be Incurred under this covenant) or (B) Indebtedness for which
a lender has provided a commitment in an amount reasonably anticipated to
be Incurred by the Company or any Restricted Subsidiary in the 12 months
after such Interest Rate Protection Obligation has been Incurred; provided,
however, that the notional principal amount of such Interest Rate
Protection Obligations does not exceed the principal amount of the
Indebtedness (including Indebtedness subject to commitments) to which such
Interest Rate Protection Obligations relate;
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(vi) Purchase Money Indebtedness and Capital Lease Obligations which do
not exceed $15.0 million in the aggregate at any one time outstanding;
(vii) Indebtedness or Disqualified Equity Interests to the extent
representing a replacement, renewal, refinancing or extension
(collectively, a "refinancing") of outstanding Indebtedness or Disqualified
Equity Interests Incurred in compliance with the Debt to Annualized
Operating Cash Flow Ratio of the first paragraph of this covenant or clause
(i), (ii), (ix) or (x) of this paragraph of this covenant; provided,
however, that (1) any such refinancing shall not exceed the sum of the
principal amount (or accreted amount (determined in accordance with GAAP),
if less) of the Indebtedness or Disqualified Equity Interests being
refinanced, plus the amount of accrued interest or dividends thereon, plus
the amount of any reasonably determined prepayment premium necessary to
accomplish such refinancing and such reasonable fees and expenses incurred
in connection therewith; (2) Indebtedness representing a refinancing of
Indebtedness shall have a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of the Indebtedness
being refinanced; and (3) Indebtedness that is pari passu with the Notes
may be refinanced only with Indebtedness that is made pari passu with or
subordinate in right of payment to the Notes, Subordinated Indebtedness may
be refinanced only with Subordinated Indebtedness or Disqualified Equity
Interests, and Disqualified Equity Interests may be refinanced only with
Disqualified Equity Interests;
(viii) Indebtedness of the Company or any Restricted Subsidiary
consisting of guarantees, indemnities or obligations in respect of purchase
price adjustments, in connection with the disposition of assets permitted
under the Indenture, in a principal amount not to exceed the gross proceeds
actually received by the Company or any Restricted Subsidiary in connection
with such disposition;
(ix) Indebtedness of a Securitization Subsidiary pursuant to a Permitted
Receivables Financing; provided that after giving effect to the Incurrence
thereof, the Company could Incur at least $1.00 of Indebtedness under
clause (iii) of this second paragraph of this covenant;
(x) the Series A Preferred Stock; and
(xi) in addition to the items referred to in clauses (i) through (x)
above, Indebtedness (including any Indebtedness under the Bank Credit
Agreement that utilizes this subparagraph (xi)) having an aggregate
principal amount not to exceed $50.0 million at any time outstanding.
(c) For purposes of determining any particular amount of Indebtedness
under this covenant, Guarantees, Liens or obligations with respect to letters
of credit supporting Indebtedness otherwise included in the determination of
such particular amount shall not be included. For purposes of determining
compliance with this covenant, (i) in the event that an item of Indebtedness
meets the criteria of more than one of the types of Indebtedness provided for
in paragraph (a) or described in the definition of Permitted Indebtedness, the
Company shall classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in paragraph (a) or in one of
the clauses in the definition of Permitted Indebtedness and (ii) the amount of
Indebtedness issued at a price that is less than the principal amount thereof
shall be equal to the amount of the liability in respect thereof determined in
conformity with GAAP.
The Company's obligations to comply with this covenant will terminate if
and when the Notes are rated Investment Grade by both Moody's and S&P and the
Company delivers an Officers' Certificate to the Trustee certifying as to the
same.
Limitations on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries. The Company shall not, and shall not cause or permit
any Restricted Subsidiary to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions to the Company or any other Restricted Subsidiary on its Equity
Interests or with respect to any other interest or participation in, or
measured by, its profits, or pay any Indebtedness owed to the Company or any
other Restricted Subsidiary, (b) make loans or advances to, or guarantee any
Indebtedness or other obligations of, the Company or any other Restricted
Subsidiary or (c) transfer any of its properties or assets to the Company or
any other Restricted Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) the Bank Credit Agreement; provided,
however, that in no event shall Comcast Cellular (so long as it is a Subsidiary
of the Company) be subject to any encumbrance
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or restriction with respect to actions taken by it; (ii) any agreement of the
Company or any Restricted Subsidiary outstanding on the Issue Date of the Old
Notes, as in effect on the Issue Date of the Old Notes, and any amendments,
restatements, renewals, replacements or refinancings thereof (each, a
"refinancing"); provided, however, that (x) no such refinancing is more
restrictive in the aggregate with respect to such encumbrances or restrictions
than those contained in such agreement on the Issue Date of the Old Notes; and
(y) in no event shall any such refinancing cause Comcast Cellular (so long as
it is a Subsidiary of the Company) to be subject to any such encumbrance or
restriction with respect to actions taken by it; (iii) applicable law; (iv) any
agreement of an Acquired Person acquired by the Company or any Restricted
Subsidiary as in effect at the time of such acquisition (except to the extent
such agreement was created by such Acquired Person in connection with, as a
result of or in contemplation of such acquisition) and any refinancing thereof;
provided, however, that no such refinancing is more restrictive in the
aggregate with respect to such encumbrances or restrictions than those
contained in such agreement at the time of such acquisition; and provided,
further, that such encumbrances and restrictions are not applicable to the
Company or any Restricted Subsidiary, or the properties or assets of the
Company or any Restricted Subsidiary, other than the Acquired Person; (v)
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices; (vi) Purchase Money
Indebtedness for property acquired in the ordinary course of business that
imposes encumbrances and restrictions only on the property so acquired; (vii)
any agreement for the sale or disposition of the Equity Interests or assets of
any Restricted Subsidiary; provided, however, that such encumbrances and
restrictions described in this clause (vii) are only applicable to such
Restricted Subsidiary or assets, as applicable, and any such sale or
disposition is made in compliance with "-- Disposition of Proceeds of Asset
Sales" below to the extent applicable thereto; (viii) refinancing Indebtedness
permitted under clause (vii) of the second paragraph of "-- Limitation on
Indebtedness" above; provided, however, that the encumbrances and restrictions
contained in the agreements governing such Indebtedness are no more restrictive
in the aggregate than those contained in the agreements governing the
Indebtedness being refinanced immediately prior to such refinancing; (ix) with
respect to a Securitization Subsidiary, an agreement relating to Indebtedness
of a Securitization Subsidiary which is permitted under "-- Limitation on
Indebtedness" above or pursuant to an agreement relating to a Permitted
Receivables Financing by a Securitization Subsidiary; or (x) the Indenture.
The Company's obligations to comply with this covenant will terminate if
and when the Notes are rated Investment Grade by both Moody's and S&P and the
Company delivers an Officers' Certificate to the Trustee certifying as to the
same.
Designation of Unrestricted Subsidiaries. (a) AWACS Investment Holdings,
Inc. was initially designated by the Company as an Unrestricted Subsidiary as
of the Issue Date of the Old Notes. The Company may designate after the Issue
Date of the Old Notes any other Subsidiary of the Company as an "Unrestricted
Subsidiary" under the Indenture (a "Designation") only if:
(i) no Default or Event of Default shall have occurred and be continuing
at the time of or after giving effect to such Designation;
(ii) at the time of and after giving effect to such Designation, the
Company could Incur $1.00 of additional Indebtedness under the Debt to
Annualized Operating Cash Flow Ratio of the first paragraph of
"-- Limitation on Indebtedness" above; and
(iii) (A) the Subsidiary to be so designated has total assets of $1,000
or less or (B) the Company would be permitted to make a Restricted
Investment at the time of Designation (assuming the effectiveness of such
Designation) pursuant to the first paragraph of "-- Limitation on
Restricted Payments" above in an amount (the "Designation Amount") equal to
the Fair Market Value of the Company's proportionate interest in the net
worth of such Subsidiary on such date calculated in accordance with GAAP.
Notwithstanding the foregoing, Comcast Directory Services, Inc. ("CDSI")
may be designated an Unrestricted Subsidiary at any time on or after the Issue
Date of the Old Notes (and such designation shall not be deemed a Restricted
Payment for purposes of "-- Limitation on Restricted Payments"), provided
Investments by the Company and the Restricted Subsidiaries in CDSI since the
Issue Date of the Old Notes and outstanding on the date of designation shall
not exceed $200,000 in the aggregate (without giving effect to any writedown or
writeoff of such Investment).
Neither the Company nor any Restricted Subsidiary shall at any time (x)
provide credit support for, subject any of its property or assets (other than
the Equity Interests of any Unrestricted Subsidiary) to the satisfaction
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of, or guarantee, any Indebtedness of any Unrestricted Subsidiary (including
any undertaking, agreement or instrument evidencing such Indebtedness) or (y)
be directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary, except, in the case of clause (x) or (y), to the extent otherwise
permitted under the terms of the Indenture, including, without limitation,
pursuant to "-- Limitation on Restricted Payments" above or "-- Limitation on
Indebtedness" above and "-- Disposition of Proceeds of Asset Sales" below, and
except for any non-recourse guarantee given solely to support the pledge by the
Company or any Restricted Subsidiary of the Equity Interests of any
Unrestricted Subsidiary. All Subsidiaries of Unrestricted Subsidiaries shall be
Unrestricted Subsidiaries.
(b) The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") if:
(i) no Default or Event of Default shall have occurred and be continuing
at the time of and after giving effect to such Revocation;
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if Incurred at
such time, have been permitted to be Incurred for all purposes of the
Indenture; and
(iii) any transaction (or series of related transactions) between such
Subsidiary and any of its Affiliates that occurred while such Subsidiary
was an Unrestricted Subsidiary would be permitted by "-- Transactions with
Affiliates" below as if such transaction (or series of related
transactions) had occurred at the time of such Revocation.
All Designations and Revocations must be evidenced by resolutions of the
Board of Directors of the Company, delivered to the Trustee certifying
compliance with the foregoing provisions.
Limitation on Liens. The Company shall not, and shall not cause or permit
any Restricted Subsidiary to, directly or indirectly, Incur any Liens of any
kind against or upon any of their respective properties or assets now owned or
hereafter acquired, or any proceeds therefrom or any income or profits
therefrom, to secure any Indebtedness unless contemporaneously therewith
effective provision is made to secure the Notes equally and ratably with such
Indebtedness with a Lien on the same properties and assets securing
Indebtedness for so long as such Indebtedness is secured by such Lien, except
for Permitted Liens.
Disposition of Proceeds of Asset Sales. (a) The Company shall not, and
shall not cause or permit any Restricted Subsidiary to, directly or indirectly,
make any Asset Sale, unless (i) the Company or such Restricted Subsidiary, as
the case may be, receives consideration at the time of such Asset Sale at least
equal to the Fair Market Value of the assets sold or otherwise disposed of and
(ii) at least 80% of such consideration consists of (A) cash or Cash
Equivalents, (B) properties and assets to be owned by and used in the business
of the Company or any Restricted Subsidiary or (C) Equity Interests in one or
more Persons which (x) are or thereby become Restricted Subsidiaries, or (y)
are engaged in the Wireless Telecommunications Business to the extent that
immediately after such Asset Sale (and the receipt of the proceeds therefrom),
the percentage of the aggregate Net Pops of the cellular wireless
communications systems in which the Company or any of its Restricted
Subsidiaries has ownership interests represented by cellular wireless
telecommunications systems owned directly by the Company or a Person or Persons
a majority of whose voting power and Equity Interests is owned by the Company
and/or the Restricted Subsidiaries is no less than 80%. The amount of any (i)
Indebtedness (other than any Subordinated Indebtedness) of the Company or any
Restricted Subsidiary that is actually assumed by the transferee in such Asset
Sale and from which the Company and the Restricted Subsidiaries are fully
released shall be deemed to be cash solely for purposes of determining the
percentage of cash consideration received by the Company or the Restricted
Subsidiaries and (ii) notes or other similar obligations received by the
Company or the Restricted Subsidiaries from such transferee that are
immediately converted, sold or exchanged (or are converted, sold or exchanged
within thirty days of the related Asset Sale) by the Company or the Restricted
Subsidiaries into cash shall be deemed to be cash, in an amount equal to the
net cash proceeds realized upon such conversion, sale or exchange for purposes
of determining the percentage of cash consideration received by the Company or
the Restricted Subsidiaries.
The Net Cash Proceeds (or any portion thereof) from any Asset Sale may be
applied by the Company or a Restricted Subsidiary, to the extent the Company or
such Restricted Subsidiary elects, (i) to repay, prepay or
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purchase Indebtedness under the Bank Credit Agreement or Indebtedness of the
Company that is not subordinate to the Notes or other Indebtedness of any
Restricted Subsidiary (in each case, excluding Indebtedness owed to the Company
or an Affiliate of the Company) or (ii) to reinvest in Additional Assets
(including by means of an Investment in Additional Assets by a Restricted
Subsidiary with Net Cash Proceeds received by the Company or another Restricted
Subsidiary).
To the extent all or part of the Net Cash Proceeds of any Asset Sale are
not applied within 365 days of such Asset Sale as described in the immediately
preceding paragraph (such Net Cash Proceeds, the "Unutilized Net Cash
Proceeds"), the Company shall, within 20 days after such 365th day, make an
Offer to Purchase all outstanding Notes up to a maximum principal amount
(expressed as a multiple of $1,000) of Notes equal to the Note Portion of
Unutilized Net Cash Proceeds, at a purchase price in cash equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Purchase Date; provided, however, that the Offer to Purchase may be
deferred until there are aggregate Unutilized Net Cash Proceeds equal to or in
excess of $25.0 million, at which time the entire amount of such Unutilized Net
Cash Proceeds, and not just the amount in excess of $25.0 million, shall be
applied as required pursuant to this paragraph.
In the event that any other Indebtedness of the Company which ranks pari
passu with the Notes (the "Other Debt") requires an offer to purchase to be
made to repurchase such Other Debt upon the consummation of an Asset Sale, the
Company may apply the Unutilized Net Cash Proceeds otherwise required to be
applied to an Offer to Purchase to offer to purchase such Other Debt and to an
Offer to Purchase so long as the amount of such Unutilized Net Cash Proceeds
applied to purchase the Notes is not less than the Note Portion of Unutilized
Net Cash Proceeds. With respect to any Unutilized Net Cash Proceeds, the
Company shall make the Offer to Purchase in respect thereof at the same time as
the analogous offer to purchase is made pursuant to any Other Debt and the
Purchase Date in respect thereof shall be the same as the purchase date in
respect thereof pursuant to any Other Debt.
For purposes of this covenant, "Note Portion of Unutilized Net Cash
Proceeds" means (1) if no Other Debt is being offered to be repurchased, the
amount of the Unutilized Net Cash Proceeds and (2) if Other Debt is being
offered to be repurchased, the amount of the Unutilized Net Cash Proceeds equal
to the product of (x) the Unutilized Net Cash Proceeds and (y) a fraction the
numerator of which is the principal amount of all Notes tendered pursuant to
the Offer to Purchase related to such Unutilized Net Cash Proceeds (the "Note
Amount") and the denominator of which is the sum of the Note Amount and the
lesser of the aggregate principal face amount or accreted value as of the
relevant purchase date of all Other Debt tendered pursuant to a concurrent
offer to purchase such Other Debt made at the time of such Offer to Purchase.
With respect to any Offer to Purchase effected pursuant to this covenant,
among the Notes to the extent the aggregate principal amount of Notes tendered
pursuant to such Offer to Purchase exceeds the Note Portion of Unutilized Net
Cash Proceeds to be applied to the repurchase thereof, such Notes shall be
purchased pro rata based on the aggregate principal amount of such Notes
tendered by each Holder.
To the extent the Note Portion of Unutilized Net Cash Proceeds exceeds the
aggregate principal amount of Notes tendered by the Holders pursuant to such
Offer to Purchase, the Company may retain and utilize any portion of the Note
Portion of Unutilized Net Cash Proceeds not applied to repurchase the Notes for
any purpose consistent with the other terms of the Indenture, and such amounts
shall thereafter not constitute Unutilized Net Cash Proceeds.
In the event that the Company makes an Offer to Purchase the Notes, the
Company shall comply with any applicable securities laws and regulations,
including any applicable requirements of Section 14(e) of, and Rule 14e-1
under, the Exchange Act, and any violation of the provisions of the Indenture
relating to such Offer to Purchase occurring as a result of such compliance
shall not be deemed a Default or an Event of Default.
(b) Each Holder shall be entitled to tender all or any portion of the
Notes owned by such Holder pursuant to the Offer to Purchase, subject to the
requirement that any portion of a Note tendered must be tendered in an integral
multiple of $1,000 principal amount and subject to any proration among
tendering Holders as described above.
The Company's obligations to comply with this covenant will terminate if
and when the Notes are rated Investment Grade by both Moody's and S&P and the
Company delivers an Officers' Certificate to the Trustee certifying as to the
same.
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Transactions with Affiliates. The Company shall not, and shall not cause
or permit any Restricted Subsidiary to, directly or indirectly, enter into any
transaction (or series of related transactions) with any of their respective
Affiliates or any officer or director of the Company or any Restricted
Subsidiary (each an "Affiliate Transaction"), unless such Affiliate Transaction
is on terms which are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than would be available in a comparable
transaction with an unaffiliated third party. For any such transaction that
involves an amount in excess of $10.0 million, the Company shall deliver to the
Trustee an Officers' Certificate stating that the transaction satisfies the
above criteria and a majority of the Disinterested Directors, or, if there are
no Disinterested Directors, a majority of the members of the Board of Directors
of such Person, shall determine that the transaction satisfies the above
criteria and shall evidence such a determination by a Board Resolution filed
with the Trustee.
Notwithstanding the foregoing, the restrictions set forth in this covenant
shall not apply to (i) transactions with or among the Company and any
Restricted Subsidiary or between or among Restricted Subsidiaries; (ii)
customary directors' fees, indemnification and similar arrangements, employee
salaries, bonuses or employment agreements, compensation or employee benefit
arrangements and incentive arrangements with any officer, director or employee
of the Company entered into in the ordinary course of business (including
customary benefits thereunder) and payments under any indemnification
arrangements permitted by applicable law; (iii) transactions pursuant to the
Management Agreement and the Tax Sharing Agreement, each as in effect on the
Issue Date, and any transactions undertaken pursuant to any other contractual
obligations in existence on the Issue Date (as in effect on the Issue Date), or
as any such agreement (including the Management Agreement and the Tax Sharing
Agreement) may be amended, modified or supplemented after the Issue Date in a
manner not materially adverse to the Holders (it being understood that the
increase of the fee payable to Comcast Corporation pursuant to the Management
Agreement or any amendment thereof to 1.5% of revenues of the Company shall be
permitted by this covenant); (iv) the entering into of a tax-sharing agreement
or payments pursuant thereto, between the Company and any other Person with
which the Company is required or permitted to file a consolidated tax return or
with which the Company is or could be part of a consolidated group for tax
purposes, which payments are not in excess of the tax liabilities attributable
solely to the Company and the Restricted Subsidiaries (as a consolidated
group); (v) the issue and sale by the Company to its Affiliates of Qualified
Equity Interests; (vi) any Restricted Payments made in compliance with "--
Limitation on "Restricted Payments" above; (vii) loans and advances to
officers, directors and employees of the Company and the Restricted
Subsidiaries for travel, entertainment, moving and other relocation expenses,
in each case made in the ordinary course of business and consistent with past
business practices; (viii) roaming and switching agreements customary in the
industry; (ix) any transaction in the ordinary course of business or approved
by a majority of the Disinterested Directors (or, if there are no Disinterested
Directors, a majority of the members of the Board of Directors of such Person)
of the Company between the Company or any Restricted Subsidiary and any
Affiliate of the Company controlled by the Company (other than a Wholly Owned
Restricted Subsidiary) that is a joint venture or similar entity primarily
engaged in the Wireless Telecommunications Business (provided that no Person or
entity that has an economic interest in Comcast Corporation or any of its
Affiliates has an interest in such joint venture other than through the Company
or any Restricted Subsidiary); (x) the pledge of Equity Interests of
Unrestricted Subsidiaries to support the Indebtedness thereof; (xi)
transactions in connection with a Permitted Receivables Financing; (xii) any
transaction in the ordinary course of business and on ordinary business terms
between the Company or any Restricted Subsidiary and any Affiliate thereof
engaged in the Wireless Telecommunications Business; (xiii) the transfer to the
Company or any of its Subsidiaries by Comcast Corporation of the 10-MHz PCS
licenses covering the Philadelphia, PA MTA and the Allentown, PA BTA for $17.5
million; and (xiv) the payment of accrued management fees to Comcast in an
amount not to exceed $17.0 million.
The Company's obligations to comply with this covenant will terminate if
and when the Notes are rated Investment Grade by both Moody's and S&P and the
Company delivers an Officers' Certificate to the Trustee certifying as to the
same.
Transactions not Subject to Covenants. Notwithstanding anything to the
contrary in the Indenture, the following shall not be prohibited (regardless of
the form or substance of the transaction or series of transactions effecting
the same):
(i) the redemption, repurchase or cancellation of all (but not less than
all) of the Participating Preferred Stock in exchange for, or out of the
proceeds of the substantially concurrent sale of, Guest Informant (which
stock redemption and asset transfer occurred in June 1997):
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(ii) the issuance of up to 4.11% of the Qualified Equity Interests of
Amcell of Atlantic City, Inc., a New Jersey corporation, to the holders of
the 4.11% minority interest in the Atlantic City MSA License in exchange
for all (but not less than all) of such interest; and
(iii) the transfer, by sale, dividend or other distribution or
otherwise, directly or indirectly, in one transaction or series of
transactions, of all of the Equity Interests or all or substantially all of
the assets of AWACS Investment Holdings, Inc. and its Subsidiaries or
Comcast Directory Services, Inc. and its Subsidiaries.
No transaction described in this covenant, and no change in the results
of operations or financial condition of the Company or any Restricted
Subsidiary resulting solely therefrom, shall be taken into account in any
calculation under "-- Limitation on Restricted Payments" above or in the
calculation under the first paragraph under "-- Limitation on Indebtedness"
above of the Debt to Annualized Operating Cash Flow Ratio.
Merger, Sale of Assets, etc. The Company shall not consolidate with or
merge with or into (whether or not the Company is the Surviving Person) any
other entity, and the Company shall not, and shall not cause or permit any
Restricted Subsidiary to, sell, convey, assign, transfer, lease or otherwise
dispose of all or substantially all of the Company's and the Restricted
Subsidiaries' properties and assets (determined on a consolidated basis for the
Company and the Restricted Subsidiaries) to any entity in a single transaction
or series of related transactions, unless: (i) either (x) the Company shall be
the Surviving Person or (y) the Surviving Person (if other than the Company)
shall be a corporation organized and validly existing under the laws of the
United States of America or any State thereof or the District of Columbia, and
shall, in any such case, expressly assume by a supplemental indenture, the due
and punctual payment of the principal of, premium, if any, and interest on the
Notes and the performance and observance of every covenant of the Indenture and
the Registration Rights Agreement to be performed or observed on the part of
the Company; (ii) immediately thereafter, no Default or Event of Default shall
have occurred and be continuing; and (iii) immediately after giving effect to
any such transaction involving the Incurrence by the Company or any Restricted
Subsidiary, directly or indirectly, of additional Indebtedness (and treating
any Indebtedness not previously an obligation of the Company or any Restricted
Subsidiary in connection with or as a result of such transaction as having been
Incurred at the time of such transaction), the Surviving Person could Incur, on
a pro forma basis after giving effect to such transaction as if it had occurred
at the beginning of the quarter immediately preceding the latest fiscal quarter
for which consolidated financial statements of the Company are available, at
least $1.00 of additional Indebtedness under the Debt to Annualized Operating
Cash Flow Ratio of the first paragraph of "-- Limitation on Indebtedness"
above; provided, however, that neither clause (ii) nor clause (iii) shall
prohibit a merger of the Company with and into Comcast Cellular or a merger of
a Restricted Subsidiary with and into the Company.
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the immediately preceding paragraph in
which the Company is not the Surviving Person and the Surviving Person is to
assume all the Obligations of the Company under the Notes, the Indenture and
the Registration Rights Agreement pursuant to a supplemental indenture, such
Surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of, the Company and the Company shall be discharged from
its Obligations under the Notes, the Indenture and the Registration Rights
Agreement.
Provision of Financial Information. Whether or not the Company is subject
to Section 13(a) or 15(d) of the Exchange Act, or any successor provision
thereto, the Company shall file with the SEC (if permitted by SEC practice and
applicable law and regulations) the annual reports, quarterly reports and other
documents which the Company would have been required to file with the SEC
pursuant to such Section 13(a) or 15(d) or any successor provision thereto if
the Company were so required, such documents to be filed with the SEC on or
prior to the respective dates (the "Required Filing Dates") by which the
Company would have been required so to file such documents if the Company were
so required. The Company shall also in any event (a) within 15 days of each
Required Filing Date (whether or not permitted or required to be filed with the
SEC) (i) transmit (or cause to be transmitted) by mail to all Holders, as their
names and addresses appear in the Note register, without cost to such Holders,
and (ii) file with the Trustee, copies of the annual reports, quarterly reports
and other documents which the Company is required to file with the SEC pursuant
to the preceding sentence, or, if such filing is not so permitted, information
and data of a similar nature, and (b) if, notwithstanding the preceding
sentence,
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filing such documents by the Company with the SEC is not permitted by SEC
practice or applicable law or regulations, promptly upon written request supply
copies of such documents to any Holder. In addition, for so long as any Old
Notes remain outstanding, the Company will furnish to the Holders thereof and
to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act, and, to any beneficial holder of Old Notes, if not obtainable
from the SEC, information of the type that would be filed with the SEC pursuant
to the foregoing provisions, upon the request of any such Holder.
Events of Default
The occurrence of any of the following will be defined as an "Events of
Default" under the Indenture: (a) failure to pay principal of (or premium, if
any, on) any Note when due; (b) failure to pay any interest on any Note when
due, continued for 30 days or more; (c) default in the payment of principal of
or interest on Notes required to be purchased pursuant to any Offer to Purchase
required by the Indenture when due and payable or failure to pay on the
Purchase Date the Purchase Price for any Note validly tendered pursuant to any
Offer to Purchase; (d) failure to perform any other covenant, warranty or
agreement of the Company under the Indenture or in the Notes continued for 30
days or more after written notice to the Company by the Trustee or Holders of
at least 25% in aggregate principal amount of the outstanding Notes; (e)
default or defaults under the terms of one or more instruments evidencing or
securing Indebtedness of the Company or any of its Significant Restricted
Subsidiaries having an outstanding principal amount of $25.0 million or more
individually or in the aggregate that has resulted in the acceleration of the
payment of such Indebtedness or failure by the Company or any of its
Significant Restricted Subsidiaries to pay principal when due at the stated
final maturity (but not any interim maturity) of any such Indebtedness;
provided, however, that it shall not be an Event of Default if such
Indebtedness shall have been repaid in full or such acceleration shall have
been rescinded within 60 days; (f) the rendering of a final judgment or
judgments (not subject to appeal) against the Company or any of its Significant
Restricted Subsidiaries in an amount of $25.0 million or more (net of any
amounts covered by reputable and creditworthy insurance companies) which
remains undischarged or unstayed for a period of 60 days after the date on
which the right to appeal has expired; (g) certain events of bankruptcy,
insolvency or reorganization affecting the Company or any of its Significant
Restricted Subsidiaries; or (h) at any time that Comcast is an Affiliate of the
Company, Comcast or any Subsidiary of Comcast, other than the Company or any of
its Subsidiaries, is engaged in the cellular telecommunications business or
broadband personal communication services business in any market in which the
Company or any of its Subsidiaries is engaged in the cellular
telecommunications business or broadband personal communication services
business (other than any market where Comcast or any such Subsidiary was
engaged in such business prior to the Company and its Subsidiaries). Subject to
the provisions of the Indenture relating to the duties of the Trustee, in case
an Event of Default shall occur and be continuing, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders, unless the Holders shall have
offered to the Trustee reasonable indemnity. Subject to such provisions for the
indemnification of the Trustee, the Holders of a majority in aggregate
principal amount of the outstanding Notes will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee.
If an Event of Default with respect to the Notes (other than an Event of
Default with respect to the Company described in clause (g) of the preceding
paragraph) occurs and is continuing, the Trustee or the Holders of at least 25%
in aggregate principal amount of the outstanding Notes by notice in writing to
the Company may declare the unpaid principal of (and premium, if any) and
accrued interest to the date of acceleration on all the outstanding Notes to be
due and payable immediately and, upon any such declaration, such principal
amount (and premium, if any) and accrued interest, notwithstanding anything
contained in the Indenture or the Notes to the contrary, will become
immediately due and payable. If an Event or Default specified in clause (g) of
the preceding paragraph with respect to the Company occurs under the Indenture,
the Notes will ipso facto become immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder of the Notes.
Any such declaration with respect to the Notes may be annulled by the
Holders of a majority in aggregate principal amount of the outstanding Notes
upon the conditions provided in the Indenture. For information as to waiver of
defaults, see "-- Modification and Waiver" below.
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The Indenture provides that the Trustee shall, within 30 days after the
occurrence of any Default or Event of Default with respect to the Notes, give
the Holders notice of all uncured Defaults or Events of Default thereunder
known to it; provided, however, that, except in the case of an Event of Default
in payment with respect to the Notes, the Trustee shall be protected in
withholding such notice if and so long as a committee of its trust officers in
good faith determines that the withholding of such notice is in the interest of
the Holders.
No Holder will have any right to institute any proceeding with respect to
the Indenture or for any remedy thereunder, unless such Holder shall have
previously given to the Trustee written notice of a continuing Event of Default
thereunder and unless the Holders of at least 25% of the aggregate principal
amount of the outstanding Notes shall have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as Trustee,
and the Trustee shall not have received from the Holders of a majority in
aggregate principal amount of the Notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
However, such limitations do not apply to a suit instituted by a Holder of any
Note for enforcement of payment of the principal of and premium, if any, or
interest on such Note on or after the due date expressed in such Note.
The Company will be required to furnish to the Trustee quarterly a
statement as to the performance by it of certain of its obligations under the
Indenture and as to any default in such performance.
No Personal Liability of Directors, Officers, Employees, Incorporator and
Stockholders
No director, officer, employee, incorporator or stockholder of the Company
or any of its Affiliates, as such, shall have any liability for any obligations
of the Company or any of its Affiliates under the Notes or the Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.
Satisfaction and Discharge of Indenture; Defeasance
The Company may terminate its substantive obligations in respect of the
Notes by delivering all outstanding Notes to the Trustee for cancellation and
paying all sums payable by it on account of principal of, premium, if any, and
interest on all Notes or otherwise. In addition to the foregoing, the Company
may terminate the applicability of the covenants under "--Certain Covenants" or
any Event of Default under clause (d) of "--Events of Default" by (i)
depositing with the Trustee, under the terms of an irrevocable trust agreement,
money or United States Government Obligations sufficient (without reinvestment)
to pay all remaining indebtedness on such Notes at maturity or upon earlier
redemption; (ii) delivering to the Trustee either an Opinion of Counsel or a
ruling directed to the Trustee from the Internal Revenue Service to the effect
that the Holders of the Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and termination of
obligations; (iii) delivering to the Trustee an Opinion of Counsel to the
effect that the Company's exercise of its option under this paragraph will not
result in any of the Company, the Trustee or the trust created by the Company's
deposit of funds pursuant to this provision becoming or being deemed to be an
"investment company" under the Investment Company Act of 1940, as amended (the
"Investment Act"); and (iv) complying with certain other requirements set forth
in the Indenture. In addition, the Company may, provided that no Default or
Event of Default has occurred and is continuing or would arise therefrom (or,
with respect to a Default or Event of Default specified in clause (g) of
"-- Events of Default" above, occurs at any time on or prior to the 91st
calendar day after the date of the deposit (it being understood that this
condition shall not be deemed satisfied until after such 91st day)) under the
Indenture, terminate all of its substantive obligations in respect of the Notes
(including its obligations to pay the principal of (and premium, if any, on)
and interest on such Notes) by (i) depositing with the Trustee, under the terms
of an irrevocable trust agreement, money or United States Government
Obligations sufficient (without reinvestment) to pay all remaining Indebtedness
on such Notes at maturity or upon earlier redemption; (ii) delivering to the
Trustee either a ruling directed to the Trustee from the Internal Revenue
Service to the effect that the Holders of such Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such deposit and
termination of obligations or an Opinion of Counsel addressed to the Trustee
based upon such a ruling or based on a change in the applicable
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federal tax law since the date of the Indenture, to such effect; (iii)
delivering to the Trustee an Opinion of Counsel to the effect that the
Company's exercise of its option under this paragraph will not result in any of
the Company, such Trustee or the relevant trust created by the Company's
deposit of funds pursuant to this provision becoming or being deemed to be an
"investment company" under the Investment Act; and (iv) complying with certain
other requirements set forth in the Indenture.
Governing Law
The Indenture and the Notes will be governed by the laws of the State of
New York without regard to principles of conflicts of laws.
Modification and Waiver
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Notes (including consents obtained in connection with a
tender offer or exchange offer for such Notes); provided, however, that no such
modification or amendment to the Indenture may, without the consent of the
Holder of each Note affected thereby, (a) change the Stated Maturity of the
principal of or any installment of interest on any such Note or alter the
optional redemption or repurchase provisions of any such Note or the Indenture
in a manner adverse to the Holders of such Notes; (b) reduce the principal
amount of (or the premium) of any such Note; (c) reduce the rate of or extend
the time for payment of interest on any such Note; (d) change the place or
currency of payment of principal of (or premium) or interest on any such Note;
(e) modify any provisions of the Indenture relating to the waiver of past
defaults (other than to add sections of the Indenture or the Notes subject
thereto) or the right of the Holders of Notes to institute suit for the
enforcement of any payment on or with respect to any such Note in respect
thereof or the modification and amendment provisions of the Indenture and such
Notes (other than to add sections of the Indenture or such Notes which may not
be amended, supplemented or waived without the consent of each Holder therein
affected); (f) reduce the percentage of the principal amount of outstanding
Notes necessary for amendment to or waiver of compliance with any provision of
the Indenture or the Notes or for waiver of any Default in respect thereof; (g)
waive a default in the payment of principal of, interest on, or redemption
payment with respect to, such Note (except a rescission of acceleration of the
relevant Notes by the Holders thereof as provided in the Indenture and a waiver
of the payment default that resulted from such acceleration); (h) modify the
ranking or priority of any Note; or (i) modify the provisions of any covenant
(or the related definitions) in the Indenture requiring the Company to make an
Offer to Purchase in a manner materially adverse to the Holders of Notes
affected thereby.
The Holders of a majority in aggregate principal amount of the outstanding
Notes, on behalf of all Holders, may waive compliance by the Company with
certain restrictive provisions of the Indenture. Subject to certain rights of
the Trustee as provided in the Indenture, the Holders of a majority in
aggregate principal amount of the Notes, on behalf of all Holders, may waive
any past default under the Indenture (including any such waiver obtained in
connection with a tender offer or exchange offer for such Notes), except a
default in the payment of principal, premium or interest or a default arising
from failure to purchase any Notes tendered pursuant to an Offer to Purchase
pursuant thereto, or a default in respect of a provision that under the
Indenture cannot be modified or amended without the consent of the Holder of
each Note that is affected.
The Trustee
Except during the continuance of a Default, the Trustee will perform only
such duties as are specifically set forth in the Indenture. During the
existence of a Default under the Indenture, the Trustee will exercise such
rights and powers vested in it under the Indenture and use the same degree of
care and skill in its exercise as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs.
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company or any other obligor upon the Notes, to obtain
payment of claims in certain cases or to realize on certain property received
by it in respect of
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any such claim as the Notes or otherwise. The Trustee is permitted to engage in
other transactions with the Company or an Affiliate of the Company; provided,
however, that if it acquires any conflicting interest (as defined in the
Indenture or in the Trust Indenture Act), it must eliminate such conflict or
resign.
Certain Definitions
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person (a) assumed in
connection with an Acquisition from such Person or (b) existing at the time
such Person becomes a Restricted Subsidiary or is merged or consolidated with
or into the Company or any Restricted Subsidiary.
"Acquired Person" means, with respect to any specified Person, any other
Person which merges with or into or becomes a Subsidiary of such specified
Person.
"Acquisition" means (i) any capital contribution (by means of transfers of
cash or other property to others or payments for property or services for the
account or use of others, or otherwise) by the Company or any Restricted
Subsidiary to any other Person, or any acquisition or purchase of Equity
Interests of any other Person by the Company or any Restricted Subsidiary, in
either case pursuant to which such Person shall become a Restricted Subsidiary
or shall be consolidated, merged with or into the Company or any Restricted
Subsidiary or (ii) any acquisition by the Company or any Restricted Subsidiary
of the assets of any Person which constitute substantially all of an operating
unit or line of business of such Person or which is otherwise outside of the
ordinary course of business.
"Additional Assets" means (i) any property (other than cash, cash
equivalents or securities) to be owned by the Company or a Restricted
Subsidiary and used in the Wireless Telecommunications Business, (ii) the costs
of improving or developing any Property owned by the Company or a Restricted
Subsidiary which is used in the Wireless Telecommunications Business and (iii)
Investments in any other Person engaged primarily in the Wireless
Telecommunications Business (including the acquisition from third parties of
Equity Interests of such Person) to the extent that the percentage of the
aggregate Net Pops of the cellular wireless communications systems in which the
Company or any of its Restricted Subsidiaries has ownership interests
represented by cellular wireless telecommunications systems owned directly by
the Company or a Person or Persons a majority of whose voting power and Equity
Interests is owned by the Company and/or the Restricted Subsidiaries is no less
than 80%.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person.
"Asset Sale" means any direct or indirect sale, conveyance, transfer,
lease (that has the effect of a disposition and is not for security purposes)
or other disposition (including, without limitation, any merger, consolidation
or sale-leaseback transaction) to any Person other than the Company or a
Restricted Subsidiary, in one transaction or a series of related transactions,
of (i) any Equity Interest of any Restricted Subsidiary; (ii) any material
license, franchise or other authorization of the Company or any Restricted
Subsidiary; (iii) any assets of the Company or any Restricted Subsidiary which
constitute substantially all of an operating unit or line of business of the
Company or any Restricted Subsidiary; or (iv) any other property or asset of
the Company or any Restricted Subsidiary outside of the ordinary course of
business (including the receipt of proceeds paid on account of the loss of or
damage to any property or asset and awards of compensation for any asset taken
by condemnation, eminent domain or similar proceedings). For the purposes of
this definition, the term "Asset Sale" shall not include (a) any transaction
consummated in compliance with "-- Certain Covenants -- Merger, Sale of Assets,
etc." above and the creation of any Lien not prohibited by "-- Certain
Covenants -- Limitation on Liens" above; provided, however, that any
transaction consummated in compliance with "-- Certain Covenants -- Merger,
Sale of Assets, etc.", above involving a sale, conveyance, assignment,
transfer, lease or other disposal of less than all of the properties or assets
of the Company and the Restricted Subsidiaries shall be deemed to be an Asset
Sale with respect to the properties or assets of the Company and Restricted
Subsidiaries that are not so sold, conveyed, assigned, transferred, leased or
otherwise disposed of in such transaction; (b) sales of
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property or equipment that has become worn out, obsolete or damaged or
otherwise unsuitable for use in connection with the business of the Company or
any Restricted Subsidiary, as the case may be; (c) any transaction consummated
in compliance with "-- Certain Covenants -- Limitation on Restricted Payments"
above; (d) sales of accounts receivable for cash at fair market value; and (e)
any Permitted Receivables Financing. In addition, solely for purposes of
"-- Certain Covenants -- Disposition of Proceeds of Asset Sales" above, any
sale, conveyance, transfer, lease or other disposition of any property or
asset, whether in one transaction or a series of related transactions,
involving assets with a Fair Market Value not in excess of $5.0 million in any
fiscal year shall be deemed not to be an Asset Sale.
"Atlantic City MSA License" means the license to operate the non-wireline
cellular telephone system for the Atlantic City, NJ MSA.
"AWACS Investment Holdings, Inc." means AWACS Investment Holding, Inc., a
Delaware corporation, and its successors.
"Bank Credit Agreement" means the Credit Agreement, dated as of September
14, 1995, among CCCI, the lenders named therein, The Bank of New York, Barclays
Bank PLC, The Chase Manhattan Bank, N.A., PNC Bank, National Association and
The Toronto-Dominion Bank, as Arranging Agent, and Toronto Dominion (Texas),
Inc., as Administrative Agent, including any deferrals, renewals, extensions,
replacements, refinancings or refundings thereof, or amendments, modifications
or supplements thereto and any agreement providing therefor, whether by or with
the same or any other lender, creditor, group of lenders or group of creditors,
and including related notes, guarantees and other instruments and agreements
executed in connection therewith.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on the balance sheet in
accordance with GAAP.
"Cash Equivalents" means: (a) U.S. dollars; (b) securities issued or
directly and fully guaranteed or insured by the U.S. government or any agency
or instrumentality thereof having maturities of not more than one year from the
date of acquisition; (c) certificates of deposit and eurodollar time deposits
with maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding one year and overnight bank deposits,
in each case with any domestic commercial bank having capital and surplus in
excess of $500 million; (d) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clauses (b) and
(c) entered into with any financial institution meeting the qualifications
specified in clause (c) above; (e) commercial paper rated P-1, A-1 or the
equivalent thereof by Moody's or S&P, respectively, and in each case maturing
within six months after the date of acquisition; and (f) investments in money
market funds substantially all of the assets of which comprise securities
described in the foregoing clauses (b)-(e).
"CCCI" means Comcast Cellular Communications, Inc., a Delaware
corporation, and its successors.
"Change of Control" shall mean the occurrence of any of the following
events (whether or not approved by the Board of Directors of the Company): (a)
any "person" or "group" (as such terms are used in Section 13(d) and 14(d) of
the Exchange Act or any successor provision to either of the foregoing,
including any group acting for the purpose of acquiring, holding or disposing
of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act),
excluding Permitted Holders, is or becomes the "beneficial owner," directly or
indirectly, of 50% or more of the total voting power of the Voting Equity
Interests of the Company or Comcast Corporation; (b) the Company consolidates
with, or merges with or into, another Person (other than a Wholly Owned
Restricted Subsidiary) or the Company or any Restricted Subsidiary sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of the assets of the Company and the Restricted Subsidiaries
(determined on a consolidated basis) to any Person (other than a Wholly Owned
Restricted Subsidiary), or any Person (other than a Wholly Owned Restricted
Subsidiary) consolidates with, or merges with or into, the Company, other than
in any such event pursuant to a transaction in which immediately after such
transaction the Permitted Holders or the Person or Persons that "beneficially
owned" immediately prior to such transaction, directly or indirectly, the
Voting Equity Interests of the Company "beneficially own," directly or
indirectly, a majority of the total voting power of the Voting Equity Interests
of the surviving or transferee Person; (c) during any consecutive two-year
period, individuals who at the beginning of such period constituted the Board
of Directors of
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the Company or Comcast Corporation (together with any new directors whose
election by the Board of Directors of the Company or Comcast Corporation or
whose nomination for election by the stockholders of the Company or Comcast
Corporation was approved by a vote of at least a majority of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason (other than by action of the Permitted Holders) to constitute a
majority of the Board of Directors of the Company or Comcast Corporation then
in office; or (d) there shall occur the liquidation or dissolution of the
Company. For purposes of this definition "beneficially own," "beneficial owner"
and "beneficial ownership" shall have the meaning as defined pursuant to Rules
13d-3 and 13d-5 under the Exchange Act (except that a Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time, upon the happening of an event or otherwise). For purposes of
this definition, references to Comcast Corporation shall be deemed to apply
only so long as Comcast Corporation controls the Company.
"Change of Control Date" has the meaning set forth under "-- Offer to
Purchase upon Change of Control Triggering Event" above.
"Change of Control Triggering Event" shall mean the occurrence of both a
Change of Control and a Rating Decline.
"Comcast Cellular" means Comcast Cellular Corporation, a Delaware
corporation and a Wholly Owned Subsidiary of the Company, and its successors
(other than the Company).
"Comcast Corporation" means Comcast Corporation, a Pennsylvania
corporation, and its successors.
"Consolidated Income Tax Expense" means, with respect to the Company for
any period, the provision for federal, state, local and foreign income taxes
payable by the Company and the Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to the Company for any
period, without duplication, the sum of (i) the interest expense of the Company
and the Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP, including, without limitation, (a) any
amortization of debt discount, (b) the net cost under Interest Rate Protection
Obligations (including any amortization of discounts), (c) the interest portion
of any deferred payment obligation, (d) all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing, (e) all capitalized interest and all accrued interest and (f)
interest-equivalent costs associated with any Permitted Receivables Financing,
whether accounted for as interest expense or loss on the sale of Receivables
and Related Assets, (ii) the interest component of Capital Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by the Company and the
Restricted Subsidiaries during such period as determined on a consolidated
basis in accordance with GAAP and (iii) dividends and distributions in respect
of Disqualified Equity Interests actually paid in cash by the Company during
such period as determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any period, the net
income of the Company and the Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, adjusted, to the
extent included in calculating such net income, by excluding, without
duplication, (a) all extraordinary gains or losses and all gains and losses
from the sales or other dispositions of assets out of the ordinary course of
business (net of taxes, fees and expenses relating to the transaction giving
rise thereto) for such period; (b) that portion of such net income derived from
or in respect of investments in Persons other than Restricted Subsidiaries,
except to the extent actually received in cash by the Company or any Restricted
Subsidiary (subject, in the case of any Restricted Subsidiary, to the
provisions of clause (e) of this definition); (c) the portion of such net
income (or loss) allocable to minority interests in any Person (other than a
Restricted Subsidiary) for such period, except to the extent actually received
in cash by the Company or any Restricted Subsidiary (subject, in the case of
any Restricted Subsidiary, to the provisions of clause (e) of this definition);
(d) the net income (or loss) of any other Person combined with the Company or
any Restricted Subsidiary on a "pooling of interests" basis attributable to any
period prior to the date of combination; (e) the net income (or loss) of any
Restricted Subsidiary to the extent that the declaration of dividends or
similar distributions by that Restricted Subsidiary of that income is not at
the time permitted, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulations applicable to that Restricted Subsidiary or its Equity
Interest holders; and (f) the cumulative effect of a change in accounting
principles.
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"Consolidated Operating Cash Flow" means, with respect to any period,
Consolidated Net Income for such period increased (without duplication) by the
sum of (a) Consolidated Income Tax Expense for such period to the extent
deducted in determining Consolidated Net Income for such period; (b)
Consolidated Interest Expense for such period to the extent deducted in
determining Consolidated Net Income for such period; and (c) depreciation,
amortization and any other non cash items for such period to the extent
deducted in determining Consolidated Net Income for such period of the Company
and the Restricted Subsidiaries, including, without limitation, amortization of
capitalized debt issuance costs for such period, all of the foregoing
determined on a consolidated basis in accordance with GAAP minus non cash items
to the extent they increase Consolidated Net Income (including the partial or
entire reversal of reserves taken in prior periods) for such period.
"control" means, as used with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities or other voting interests, by agreement or otherwise; provided,
however, that beneficial ownership of 10.0% or more of the voting securities or
other voting interests of a Person shall be deemed to be control (and the terms
"controlling," "controlled by" and "under common control with" shall have
correlative meanings).
"Cumulative Operating Cash Flow" means, as at any date of determination,
the positive cumulative Consolidated Operating Cash Flow realized during the
period commencing on the Issue Date and ending on the last day of the most
recent fiscal quarter immediately preceding the date of determination for which
consolidated financial information of the Company is available or, if such
cumulative Consolidated Operating Cash Flow for such period is negative, the
negative amount by which cumulative Consolidated Operating Cash Flow is less
than zero.
"Debt to Annualized Operating Cash Flow Ratio" means the ratio of (a) the
Total Consolidated Indebtedness as of the date of calculation (the
"Determination Date") to (b) two times the Consolidated Operating Cash Flow for
the latest two fiscal quarters for which financial information is available
immediately preceding such Determination Date (the "Measurement Period"). For
purposes of calculating Consolidated Operating Cash Flow for the Measurement
Period immediately prior to the relevant Determination Date, (I) any Person
that is a Restricted Subsidiary on the Determination Date (or would become a
Restricted Subsidiary on such Determination Date in connection with the
transaction that requires the determination of such Consolidated Operating Cash
Flow) will be deemed to have been a Restricted Subsidiary at all times during
such Measurement Period, (II) any Person that is not a Restricted Subsidiary on
such Determination Date (or would cease to be a Restricted Subsidiary on such
Determination Date in connection with the transaction that requires the
determination of such Consolidated Operating Cash Flow) will be deemed not to
have been a Restricted Subsidiary at any time during such Measurement Period,
and (III) if the Company or any Restricted Subsidiary shall have in any manner
(x) acquired (including through an Acquisition or the commencement of
activities constituting such operating business) or (y) disposed of (including
by way of an Asset Sale or the termination or discontinuance of activities
constituting such operating business) any operating business during such
Measurement Period or after the end of such period and on or prior to such
Determination Date, such calculation will be made on a pro forma basis in
accordance with GAAP as if, in the case of an Acquisition or the commencement
of activities constituting such operating business, all such transactions had
been consummated on the first day of such Measurement Period and, in the case
of an Asset Sale or termination or discontinuance of activities constituting
such operating business, all such transactions had been consummated prior to
the first day of such Measurement Period; provided, however, that such pro
forma adjustment shall not give effect to the Consolidated Operating Cash Flow
of any Acquired Person to the extent that such Person's net income would be
excluded pursuant to clause (e) of the definition of Consolidated Net Income.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Designation" has the meaning set forth in "-- Certain Covenants --
Designation of Unrestricted Subsidiaries" above.
"Designation Amount" has the meaning set forth in "-- Certain Covenants --
Designation of Unrestricted Subsidiaries" above.
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"Disinterested Director" means, with respect to any Person, a member of
the Board of Directors of such Person who does not have any material direct or
indirect financial interest in or with respect to the transaction being
considered.
"Disposition" means, with respect to any Person, any merger, consolidation
or other business combination involving such Person (whether or not such Person
is the Surviving Person) or the sale, assignment, transfer, lease, conveyance
or other disposition of all or substantially all of such Person's assets.
"Disqualified Equity Interest" means any Equity Interest which, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable, at the option of the
holder thereof, in whole or in part, or exchangeable into Indebtedness on or
prior to the earlier of the maturity date of the Notes or the date on which no
Notes remain outstanding; provided, however, that any Equity Interests that
would not constitute Disqualified Equity Interests but for provisions thereof
giving holders thereof the right to require the Company to repurchase or redeem
such Equity Interests upon the occurrence of a change in control occurring
prior to the final maturity date of the Notes shall not constitute Disqualified
Equity Interests if the change in control provisions applicable to such Equity
Interests are no more favorable to the holders of such Equity Interests than
the provisions described under the caption "-- Offer to Purchase upon Change of
Control Triggering Event" above and such Equity Interests specifically provide
that the Company will not repurchase or redeem any such Equity Interests
pursuant to such provisions prior to the Company's repurchase of the Notes as
are required to be repurchased pursuant to the provisions described under the
caption "-- Offer to Purchase upon Change of Control Triggering Event" above.
"Equity Interest" in any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of
or interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such Person, including any Preferred Equity Interests.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Existing Indebtedness" means any Indebtedness of the Company and the
Restricted Subsidiaries in existence on the Issue Date until such amounts are
repaid.
"Expiration Date" has the meaning set forth in the definition of "Offer to
Purchase" below.
"Fair Market Value" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) which could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of which is under any
compulsion to complete the transaction; provided, however, that the Fair Market
Value of any such asset or assets shall be determined conclusively by the Board
of Directors of the Company acting in good faith, and shall be evidenced by
resolutions of the Board of Directors of the Company delivered to the Trustee.
"GAAP" means, at any date of determination, generally accepted accounting
principles in effect in the United States which are applicable at the date of
determination.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"guarantee" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit. A guarantee shall include,
without limitation, any agreement to maintain or preserve any other person's
financial condition or to cause any other Person to achieve certain levels of
operating results.
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"Guest Informant" means substantially all of the assets of Comcast
Publishing Holdings Corporation, a Pennsylvania corporation and a wholly owned
subsidiary of CCCI.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred" and "Incurring" shall have
meanings correlative to the foregoing). Neither the accrual of interest
(including the issuance of "pay in kind" securities or similar instruments in
respect of such accrued interest), nor the accretion of original issue
discount, nor the extension of the maturity of any Indebtedness shall be deemed
to be an Incurrence of Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (a) every obligation of such Person for money
borrowed; (b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments; (c) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person; (d) every obligation of such
Person issued or assumed as the deferred purchase price of property or services
(but excluding trade accounts payable incurred in the ordinary course of
business and payable in accordance with industry practices, or other accrued
liabilities arising in the ordinary course of business which are not overdue or
which are being contested in good faith); (e) every Capital Lease Obligation of
such Person; (f) every net obligation under interest rate swap or similar
agreements or foreign currency hedge, exchange or similar agreements of such
Person; (g) every obligation of the type referred to in clauses (a) through (f)
of another Person and all dividends of another Person the payment of which, in
either case, such Person has guaranteed or is responsible or liable for,
directly or indirectly, as obligor, guarantor or otherwise; and (h) any and all
deferrals, renewals, extensions and refundings of, or amendments, modifications
or supplements to, any liability of the kind described in any of the preceding
clauses (a) through (g) above. Indebtedness (i) shall never be calculated
taking into account any cash and cash equivalents held by such Person; (ii)
shall not include obligations of any Person (x) arising from the honoring by a
bank or other financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds in the ordinary course of
business, provided that such obligations are extinguished within two Business
Days of their incurrence unless covered by an overdraft line, (y) resulting
from the endorsement of negotiable instruments for collection in the ordinary
course of business and consistent with past business practices and (z) under
stand-by letters of credit to the extent collateralized by cash or Cash
Equivalents; (iii) which provides that an amount less than the principal amount
thereof shall be due upon any declaration of acceleration thereof shall be
deemed to be incurred or outstanding in an amount equal to the accreted value
thereof at the date of determination determined in accordance with GAAP; (iv)
shall include the liquidation preference and any mandatory redemption payment
obligations in respect of any Disqualified Equity Interests of the Company or
any Restricted Subsidiary; and (v) shall not include obligations under
performance bonds, performance guarantees, surety bonds and appeal bonds,
letters of credit or similar obligations, incurred in the ordinary course of
business and on ordinary business terms.
"interest" means, with respect to the Notes, any cash interest on the
Notes and, in the case of Old Notes, any Liquidated Damages.
"Interest Rate Protection Obligations" means, with respect to any Person,
the Obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, and (ii)
other agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
"Investment" means, with respect to any Person, any direct or indirect
loan, advance, guarantee or other extension of credit or capital contribution
to (by means of transfers of cash or other property or assets to others or
payments for property or services for the account or use of others, or
otherwise), or purchase or acquisition of capital stock, bonds, notes,
debentures or other securities or evidences of Indebtedness issued by, any
other Person. The amount of any Investment shall be the original cost of such
Investment, plus the cost of all additions thereto, and minus the amount of any
portion of such Investment repaid to such Person in cash as a repayment of
principal or a return of capital, as the case may be, but without any other
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment. In determining the
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amount of any investment involving a transfer of any property or asset other
than cash, such property shall be valued at its fair market value at the time
of such transfer, as determined in good faith by the board of directors (or
comparable body) of the Person making such transfer.
"Investment Grade" shall mean BBB- or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such ratings by S&P or Moody's. In the event that
the Company shall be permitted to select any other Rating Agency, the
equivalent of such ratings by such Rating Agency shall be used.
"Issue Date" means the original issue date of the Notes (May 8, 1997).
"Lien" means any lien, mortgage, charge, security interest, hypothecation,
assignment for security or encumbrance of any kind (including any conditional
sale or capital lease or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest).
"Liquidated Damages" has the meaning provided in Section 4(a) of the
Registration Rights Agreement.
"Management Agreement" means the Management Agreement dated as of March 5,
1992 between Comcast Corporation and CCCI.
"Maturity Date" means the date, which is set forth on the face of the
Notes, on which the Notes will mature.
"Moody's" means Moody's Investors Services, Inc., or any successor to such
rating agency business thereof.
"MSA" has the meaning given to such term in the definition of Pops.
"Net Cash Proceeds" means the aggregate proceeds in the form of cash or
Cash Equivalents received by the Company or any Restricted Subsidiary in
respect of any Asset Sale, including all cash or Cash Equivalents received upon
any sale, liquidation or other exchange of proceeds of Asset Sales received in
a form other than cash or Cash Equivalents if sold, liquidated or exchanged
within 12 months from the date of receipt thereof, net of (a) the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof; (b) provisions for all taxes (whether or not such
taxes will actually be paid or are payable) as a result of such Asset Sale
without regard to the consolidated results of operations of the Company and the
Restricted Subsidiaries, taken as a whole; (c) amounts required to be applied
to the repayment of Indebtedness (i) secured by a Lien on the asset or assets
that were the subject of such Asset Sale or (ii) required to be repaid as a
result of such Asset Sale or in order to obtain a necessary consent to such
Asset Sale; (d) amounts deemed, in good faith, appropriate by the Board of
Directors of the Company to be provided as a reserve, in accordance with GAAP,
against any liabilities associated with such assets which are the subject of
such Asset Sale (provided that the amount of any such reserves shall be deemed
to constitute Net Cash Proceeds at the time such reserves shall have been
released or are not otherwise required to be retained as a reserve); and (e)
with respect to Asset Sales by Subsidiaries, the portion of such cash payments
attributable to Persons holding a minority interest in such Subsidiary.
"Net Pops" of any Person with respect to any system means the Pops of the
MSA or RSA served by such system multiplied by the direct and/or indirect
percentage interest of such Person in the entity licensed or designated to
receive an authorization by the Federal Communications Commission to construct
or operate a system in that MSA or RSA.
"Net Proceeds" means the aggregate net proceeds (including the fair market
value of non-cash proceeds constituting equipment, licenses or other assets of
a type generally used in the Wireless Telecommunications Business in an amount
to be determined by the Board of Directors of the Company for amounts under
$25.0 million and by a financial advisor or appraiser of national reputation
for equal or greater amounts) received by a Person from the sale of Qualified
Equity Interests after payment of out-of-pocket expenses, commission and
discounts incurred in connection therewith.
"Obligations" means any principal, interest (including, without
limitation, post-petition interest), penalties, fees, indemnifications,
reimbursement obligations, damages and other liabilities payable under the
documentation governing any Indebtedness.
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"Offer" has the meaning set forth in the definition of "Offer to Purchase"
below.
"Offer to Purchase" means a written offer (the "Offer") sent by or on
behalf of the Company by first-class mail, postage prepaid, to each Holder at
his address appearing in the register for the Notes on the date of the Offer
offering to purchase up to the principal amount of Notes specified in such
Offer at the purchase price specified in such Offer (as determined pursuant to
the Indenture). Unless otherwise required by applicable law, the Offer shall
specify an expiration date (the "Expiration Date") of the Offer to Purchase,
which shall be not less than 20 Business Days nor more than 60 days after the
date of such Offer, and a settlement date (the "Purchase Date") for purchase of
Notes to occur no later than five Business Days after the Expiration Date. The
Company shall notify the Trustee at least 15 Business Days (or such shorter
period as is acceptable to the Trustee) prior to the mailing of the Offer of
the Company's obligation to make an Offer to Purchase, and the Offer shall be
mailed by the Company or, at the Company's request, by the Trustee in the name
and at the expense of the Company. The Offer shall contain all the information
required by applicable law to be included therein. The Offer shall also contain
a description of the events requiring the Company to make the Offer to
Purchase. The Offer shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Offer to Purchase. The
Offer shall also state:
(1) the Section of the Indenture pursuant to which the Offer to Purchase
is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the outstanding Notes offered to be
purchased by the Company pursuant to the Offer to Purchase (including,
if less than 100%, the manner by which such amount has been determined
pursuant to the Section of the Indenture requiring the Offer to
Purchase) (the "Purchase Amount");
(4) the purchase price to be paid by the Company for each $1,000 aggregate
principal amount of Notes accepted for payment (as specified pursuant to
the Indenture) (the "Purchase Price");
(5) that the Holder may tender all or any portion of the Notes registered
in the name of such Holder and that any portion of a Note tendered must
be tendered in an integral multiple of $1,000 principal amount at
maturity;
(6) the place or places where Notes are to be surrendered for tender
pursuant to the Offer to Purchase;
(7) that interest on any Note not tendered or tendered but not purchased by
the Company pursuant to the Offer to Purchase will continue to accrue;
(8) that on the Purchase Date the Purchase Price will become due and payable
upon each Note being accepted for payment pursuant to the Offer to
Purchase and that interest thereon shall cease to accrue on and after
the Purchase Date;
(9) that each Holder electing to tender all or any portion of a Note
pursuant to the Offer to Purchase will be required to surrender such
Note at the place or places specified in the Offer prior to the close of
business on the Expiration Date (such Note being, if the Company or the
Trustee so requires, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing);
(10) that Holders will be entitled to withdraw all or any portion of Notes
tendered if the Company (or its Paying Agent) receives, not later than
the close of business on the fifth Business Day next preceding the
Expiration Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Note
the Holder tendered, the certificate number of the Note the Holder
tendered and a statement that such Holder is withdrawing all or a
portion of his tender;
(11) that (a) if Notes in an aggregate principal amount less than or equal to
the Purchase Amount are duly tendered and not withdrawn pursuant to the
Offer to Purchase, the Company shall purchase all such Notes and (b) if
Notes in an aggregate principal amount in excess of the Purchase Amount
are tendered and not withdrawn pursuant to the Offer to Purchase, the
Company shall purchase Notes having an aggregate principal amount equal
to the Purchase Amount on a pro rata basis (with such adjustments as may
be deemed appropriate so that only Notes in denominations of $1,000
principal amount at maturity or integral multiples thereof shall be
purchased); and
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(12) that in the case of any Holder whose Note is purchased only in part, the
Company shall execute and the Trustee shall authenticate and deliver to
the Holder of such Note without service charge, a new Note or Notes, of
any authorized denomination as requested by such Holder, in an aggregate
principal amount equal to and in exchange for the unpurchased portion of
the Note so tendered.
An Offer to Purchase shall be governed by and effected in accordance with
the provisions above pertaining to any Offer.
"Participating Preferred Stock" means the shares of Class B Participating
Redeemable Preferred Stock, par value $.01 per share, of CCCI.
"Permitted Holder" means any of (i) Comcast Corporation so long as
controlled by any other Permitted Holder or so long as no "person" or "group"
(as such terms are used in Section 13(d) and 14(d) of the Exchange Act or any
successor provision to either of the foregoing, including any group acting for
the purpose of acquiring, holding or disposing of securities within the meaning
of Rule 13d-5(b)(1) under the Exchange Act), excluding Permitted Holders, is or
becomes the "beneficial owner," directly or indirectly, of 50% or more of the
total voting power of the Voting Equity Interests of Comcast Corporation, (ii)
the Roberts Family, (iii) any of the Permitted Transferees of the persons
referred to in clauses (i) and (ii), and (iv) any person or group controlled by
each or any of the Persons referred to in clauses (i) through (iii). For
purposes of this definition "beneficially own," "beneficial owner" and
"beneficial ownership" shall have the meaning as defined pursuant to Rules
13d-3 and 13d-5 under the Exchange Act (except that a Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time, upon the happening of an event or otherwise).
"Permitted Liens" means (a) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary; provided, however, that such Liens were not incurred in
contemplation of such merger or consolidation and do not secure any property or
assets of the Company or any Restricted Subsidiary other than the property or
assets subject to the Liens prior to such merger or consolidation; (b) Liens
existing on the Issue Date; (c) Liens securing Indebtedness consisting of
Capitalized Lease Obligations, Purchase Money Indebtedness, mortgage
financings, industrial revenue bonds or other monetary obligations, in each
case incurred solely for the purpose of financing all or any part of the
purchase price or cost of construction or installation of assets used in the
business of the Company or the Restricted Subsidiaries, or repairs, additions
or improvements to such assets, provided, however, that (I) such Liens secure
Indebtedness in an amount not in excess of the original purchase price or the
original cost of any such assets or repair, addition or improvement thereto
(plus an amount equal to the reasonable fees and expenses in connection with
the incurrence of such Indebtedness), (II) such Liens do not extend to any
other assets of the Company or the Restricted Subsidiaries (and, in the case of
repair, addition or improvements to any such assets, such Lien extends only to
the assets (and improvements thereto or thereon) repaired, added to or
improved), (III) the Incurrence of such Indebtedness is permitted by
"-- Certain Covenants -- Limitation on Indebtedness" above and (IV) such Liens
attach within 365 days of such purchase, construction, installation, repair,
addition or improvement; (d) any Lien granted by a Restricted Subsidiary on its
property or assets to the extent limitations on the incurrence of such Liens
are prohibited by any agreement to which such Restricted Subsidiary is subject
as of the date of the Indenture; (e) Liens to secure any refinancings,
renewals, extensions, modifications or replacements (collectively,
"refinancing") (or successive refinancings), in whole or in part, of any
Indebtedness secured by Liens referred to in the clauses above so long as such
Lien does not extend to any other property (other than improvements thereto);
(f) Liens securing letters of credit entered into in the ordinary course of
business and consistent with past business practice; (g) Liens on and pledges
of the capital stock of any Unrestricted Subsidiary securing any Indebtedness
of such Unrestricted Subsidiary; (h) Liens securing Indebtedness (including all
Obligations) under the Bank Credit Facility; (i) other Liens securing
Indebtedness that is permitted by the terms of the Indenture to be outstanding
having an aggregate principal amount at any one time outstanding not to exceed
$20.0 million; and (j) Liens on Receivables and Related Assets securing
Indebtedness or otherwise permitted to be Incurred, in each case, with a
Permitted Receivables Financing.
"Permitted Receivables Financing" means a transaction or series of
transactions (including amendments, supplements, extensions, renewals,
replacements, refinancings or modifications thereof) pursuant to which a
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Securitization Subsidiary purchases Receivables and Related Assets from the
Company or any Restricted Subsidiary and finances such Receivables and Related
Assets through the issuance of indebtedness or equity interests or through the
sale of the Receivables and Related Assets or a fractional undivided interest
in the Receivables and Related Assets; provided that (i) the Board of Directors
shall have determined in good faith that such Permitted Receivables Financing
is economically fair and reasonable to the Company and the Securitization
Subsidiary, (ii) all sales of Receivables and Related Assets to or by the
Securitization Subsidiary are made at fair market value (as determined in good
faith by the Board of Directors of the Company), (iii) the financing terms,
covenants, termination events and other provisions thereof shall be market
terms (as determined in good faith by the Board of Directors of the Company),
(iv) no portion of the Indebtedness of a Securitization Subsidiary is
guaranteed by or is recourse to the Company or any Restricted Subsidiary (other
than recourse for customary representations, warranties, covenants and
indemnities, none of which shall relate to the collectibility of the
Receivables and Related Assets) and (v) neither the Company nor any Subsidiary
has any obligation to maintain or preserve the Securitization Subsidiary's
financial condition.
"Permitted Transferee" means, with respect to any Person: (a) in the case
of any Person who is a natural person, such individual's spouse or children,
any trust for such individual's benefit or the benefit of such individual's
spouse or children, or any corporation or partnership in which the direct and
beneficial owner of all of the equity interest is such Person or such
individual's spouse or children or any trust for the benefit of such persons;
(b) in the case of any Person who is a natural person, the heirs, executors,
administrators or personal representatives upon the death of such Person or
upon the incompetency or disability of such Person for purposes of the
protection and management of such individual's assets; and (c) in the case of
any Person who is not a natural person, any Affiliate of such Person.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, limited liability
limited partnership, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Pops" means the estimate of the population of a Metropolitan Statistical
Area ("MSA") or Rural Service Area ("RSA") as derived from the most recent Rand
McNally Commercial Atlas & Marketing Guide or if such statistics are no longer
printed in the Rand McNally Commercial Atlas & Marketing Guide or the Rand
McNally Commercial Atlas & Marketing Guide is no longer published the most
recent Donnelly Market Service or if such statistics are no longer printed in
the Donnelly Market Service or the Donnelly Market Service is no longer
published, such other nationally recognized source of such information.
"Preferred Equity Interest," in any Person, means an Equity Interest of
any class or classes (however designated) which is preferred as to the payment
of dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over Equity
Interests of any other class in such Person.
"principal" of a debt security means the principal of the security plus,
when appropriate, the premium, if any, on the security.
"Public Equity Offering" means an underwritten public offering of common
equity of the Company pursuant to an effective registration statement filed
under the Securities Act (excluding registration statements filed on Form S-8).
"Purchase Amount" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Purchase Date" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Purchase Money Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary Incurred for the purpose of financing all or any part of
the purchase price or the cost of construction or improvement of any property,
provided that the aggregate principal amount of such Indebtedness does not
exceed the lesser of the Fair Market Value of such property or such purchase
price or cost, including any refinancing of such indebtedness that does not
increase the aggregate principal amount (or accreted amount, if less) thereof
as of the date of refinancing.
"Purchase Price" has the meaning set forth in the definition of "Offer to
Purchase" above.
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<PAGE>
"Qualified Equity Interest" in any Person means any Equity Interest in
such Person other than any Disqualified Equity Interest (it being understood
that the New Preferred Stock shall in no event constitute Qualified Equity
Interest).
"Rating Agencies" shall mean (i) S&P and (ii) Moody's and (iii) if S&P or
Moody's or both shall not make a rating of the Notes publicly available, a
nationally recognized securities rating agency or agencies, as the case may be,
selected by the Company, which shall be substituted for S&P or Moody's or both,
as the case may be.
"Rating Category" shall mean (i) with respect to S&P, any of the following
categories: BB, B, CCC, CC, C and D (or equivalent successor categories); (ii)
with respect to Moody's, any of the following categories: Ba, B, Caa, Ca, C and
D (or equivalent successor categories); and (iii) the equivalent of any such
category of S&P or Moody's used by another Rating Agency. In determining
whether the rating of the Notes has decreased by one or more gradations,
gradations within Rating Categories (+ and - for S&P; 1, 2 and 3 for Moody's;
or the equivalent gradations for another Rating Agency) shall be taken into
account (e.g., with respect to S&P, a decline in a rating from BB to BB-, as
well as from BB- to B+, will constitute a decrease of one gradation).
"Rating Date" shall mean that date which is 90 days prior to the earlier
of (x) a Change of Control and (y) public notice of the occurrence of a Change
of Control or of the intention by the Company or any Permitted Holder to effect
a Change of Control.
"Rating Decline" shall mean the occurrence on, or within 90 days after,
the date of public notice of the occurrence of a Change of Control or the
intention by the Company or any Permitted Holder to effect a Change of Control
(which period shall be extended so long as the rating of the Notes is under
publicly announced consideration for possible downgrade by any of the Rating
Agencies) of any of (a) in the event the Notes are rated by both Moody's and
S&P on the Rating Date as Investment Grade, the rating of the Notes by either
Rating Agency shall be below Investment Grade; (b) in the event the Notes are
rated by either, but not both, of the Rating Agencies on the Rating Date as
Investment Grade, the rating of the Notes by both Rating Agencies shall be
below Investment Grade; or (c) in the event the Notes are rated below
Investment Grade by both Rating Agencies on the Rating Date, the rating of the
Notes by either Rating Agency shall be decreased by one or more gradations
(including gradations within Rating Categories as well as between Rating
Categories).
"Receivables and Related Assets" means accounts receivable and
instruments, chattel paper, obligations, general intangibles and other similar
assets, in each case relating to such receivables, including interests in
merchandise or goods, the sale or lease of which gave rise to such receivable,
related contractual rights, guarantees, insurance proceeds, collections, other
related assets and proceeds of all of the foregoing.
"Restricted Investment" means an Investment in any Person that is, or as a
result of such Investment becomes, an Affiliate of the Company other than an
Investment in (a) the Company, (b) a Restricted Subsidiary, (c) a Person that
immediately after giving effect to such Investment becomes a Restricted
Subsidiary or (d) any Person that is an Affiliate of the Company (other than an
Unrestricted Subsidiary) solely because of the control of such Person by the
Company and/or one or more of the Restricted Subsidiaries.
"Restricted Subsidiary" means any Subsidiary of the Company that has not
been designated as an Unrestricted Subsidiary pursuant to "-- Certain Covenants
- -- Designation of Unrestricted Subsidiaries" above. Any such designation may be
revoked by a resolution of the Board of Directors of the Company delivered to
the Trustee, subject to the provisions of such covenant.
"Roberts Family" means:
(i) Ralph J. Roberts or his spouse;
(ii) a lineal descendant of Ralph J. Roberts (whether by the whole or
half blood); or
(iii) a trust established for the benefit of any of Ralph J. Roberts,
his spouse and/or a lineal descendant or descendants of Ralph J. Roberts
(whether by the whole or half blood).
"RSA" has the meaning given to such term in the definition of Pops.
"SEC" means the Securities and Exchange Commission.
78
<PAGE>
"Securitization Subsidiary" means a Wholly Owned Restricted Subsidiary
which is established for the limited purpose of acquiring and financing
Receivables and Related Assets and engaging in activities ancillary thereto.
"Series A Preferred Stock" means the pay-in-kind preferred stock of the
Company issued to CFC, which preferred stock was purchased by CFC with
substantially all of the proceeds received by it in the redemption of the Zero
Coupon Notes held by CFC.
"Significant Restricted Subsidiary" means, at any date of determination,
any Restricted Subsidiary that, together with its Subsidiaries that constitute
Restricted Subsidiaries (i) for the most recent fiscal year of the Company
accounted for more than 10.0% of the consolidated revenues of the Company and
the Restricted Subsidiaries or (ii) as of the end of such fiscal year, owned
more than 10.0% of the consolidated assets of the Company and the Restricted
Subsidiaries, all as set forth on the consolidated financial statements of the
Company and the Restricted Subsidiaries for such year prepared in conformity
with GAAP.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc., or any successor to such rating agency business thereof.
"Stated Maturity" means, when used with respect to any security or any
installment of interest thereon, the date specified in such security as the
fixed date on which the principal of such security or such installment of
interest is due and payable.
"Subordinated Indebtedness" means any Indebtedness of the Company which is
expressly subordinated in right of payment to the Notes.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which the outstanding Voting Equity Interests having at least a majority of the
votes entitled to be cast in the election of directors shall at the time be
owned, directly or indirectly, by such Person, or (b) any other Person of which
at least a majority of Voting Equity Interests are at the time, directly or
indirectly, owned by such first named Person.
"Surviving Person" means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or
the Person to which such Disposition is made.
"Tax Sharing Agreement" means the tax sharing agreement dated as of March
5, 1992 among Comcast Corporation, Comcast Cellular and CCCI and its
Subsidiaries, as in effect on the Issue Date or as may be amended to include
the Company.
"Total Consolidated Indebtedness" means, as at any date of determination,
an amount equal to the aggregate amount of all Indebtedness and Disqualified
Equity Interests of the Company and the Restricted Subsidiaries outstanding as
of such date of determination.
"Unrestricted Subsidiary" means any Subsidiary of the Company designated
as such pursuant to "-- Certain Covenants -- Designation of Unrestricted
Subsidiaries" above. Any such designation may be revoked by a resolution of the
Board of Directors of the Company delivered to the Trustee, subject to the
provisions of such covenant.
"Voting Equity Interests" means Equity Interests in a corporation or other
Person with voting power under ordinary circumstances entitling the holders
thereof to elect the Board of Directors or other governing body of such
corporation or Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment of final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
aggregate principal amount of such Indebtedness.
79
<PAGE>
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary all
of the outstanding Voting Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Company.
"Wireless Telecommunications Business" means the development, management
and operation of cellular telephone systems, paging systems and personal
communication systems and activities reasonably related thereto, including,
without limitation, retail distribution thereof.
"Zero Coupon Notes" means the Series A Senior Participating Redeemable
Zero Coupon Notes due 2000 and the Series B Senior Participating Redeemable
Zero Coupon Notes due 2000.
Book-Entry, Delivery and Form
New Notes will be in registered certificated form ("Certificated Notes") or
registered global form ("Global Notes"). Each Global Note will be deposited upon
issuance with The Depository Trust Company ("DTC") and registered in the name of
a nominee of DTC. Holders may elect to hold their New Notes directly or, subject
to the rules and procedures of DTC described below, in a Global Note. However,
tendering Holders of Old Notes held in global form shall initially receive an
interest held in a Global Note and tendering Holders of Old Notes held directly
in certificated form shall initially receive New Notes in certificated form, in
each case unless otherwise specified in the Letter of Transmittal.
The Global Notes
The Company expects that pursuant to procedures established by DTC (a)
upon the issuance of the Global Notes, DTC or its custodian will credit, on its
internal system, the principal amount of Notes of the individual beneficial
interests represented by the Global Notes to the respective accounts of persons
who have accounts with DTC and (b) ownership of beneficial interests in the
Global Notes will be shown on, and the transfer of such ownership will be
effected only through, records maintained by DTC or its nominee (with respect
to interests of Participants (as defined herein)) and the records of
Participants (with respect to interests of persons other than Participants).
Ownership of beneficial interests in the Global Notes will be limited to
persons who have accounts with DTC ("Participants") or persons who hold
interests through Participants. Interests in the Global Notes may be held
directly through DTC, by Participants, or indirectly through organizations
which are Participants.
So long as DTC, or its nominee, is the registered owner or holder of the
Global Notes, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by such Global Notes for all
purposes under the Indenture. No beneficial owner of an interest in any Global
Notes will be able to transfer that interest except in accordance with DTC's
procedures, in addition to those provided for under the Indenture.
Payments of the principal of, premium, if any, and interest on the Global
Notes will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. None of the Company, the Trustee or any paying agent will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment
of principal, premium, if any, or interest in respect of the Global Notes, will
credit Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Notes as
shown on the records of DTC or its nominee. The Company also expects that
payments by Participants to owners of beneficial interests in the Global Notes
held through such Participants will be governed by standing instructions and
customary practice, as is now the case with securities held for the accounts of
customers registered in the names of nominees for such customers. Such payments
will be the responsibility of such Participants.
Transfers between Participants will be effected in the ordinary way in
accordance with DTC rules and will be settled in clearinghouse funds. If a
Holder requires physical delivery of a Certificated Note for any reason,
80
<PAGE>
including to sell New Notes to persons in states which require physical
delivery of the New Notes, or to pledge such securities, such Holder must
transfer its interest in a Global Note in accordance with the normal procedures
of DTC and with the procedures set forth in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder of New Notes only at the direction of one or more
Participants to whose account the DTC interests in the Global Notes are
credited and only in respect of such portion of the aggregate principal amount
of New Notes as to which such Participant or Participants has or have given
such direction. However, if there is an Event of Default under the Indenture,
DTC will exchange the Global Notes in whole for Certificated Notes, which it
will distribute to the Participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for Participants and facilitate the clearance and settlement of
securities transactions between Participants through electronic book-entry
changes in accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Notes among Participants, it is under no
obligation to perform such procedures, and such procedures may be discontinued
at any time. Neither the Company nor the Trustee will have any responsibility
for the performance by DTC or the Participants or Indirect Participants of
their respective obligations under the rules and procedures governing their
operations.
Certificated Notes
If DTC is at any time unwilling or unable to continue as a depositary for
the Global Notes and a successor depositary is not appointed by the Company
within 90 days, Certificated Notes will be issued in exchange for the Global
Notes.
81
<PAGE>
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
Holders of New Notes are not entitled to any registration rights with
respect to the New Notes. Holders of Old Notes are entitled to certain
registration rights pursuant to the Registration Rights Agreement. Pursuant to
the Registration Rights Agreement, the Company has agreed to file with the
Commission and have declared effective on or prior to October 5, 1997, a
registration statement (the "Exchange Offer Registration Statement") under the
Securities Act with respect to the Exchange Offer. The Company also agreed
that, after the effectiveness of the Exchange Offer Registration Statement, it
would, subject to certain conditions, offer to the Holders of Old Notes who are
able to make certain representations the opportunity to exchange their Old
Notes for New Notes. In the event that applicable interpretations of the staff
of the Commission do not permit the Company to effect the Exchange Offer
("Commission Blockage") or do not permit any Holder of Old Notes, subject to
certain limitations, to participate in such Exchange Offer, the Company has
agreed to file with the Commission a shelf registration statement ("the Shelf
Registration Statement") to cover resales of the Old Notes. The Registration
Statement of which this Prospectus is a part constitutes the Exchange Offer
Registration Statement.
The Registration Rights Agreement provides that (i) the Company will use
its reasonable best efforts to have the Exchange Offer Registration Statement
(and, if applicable, a Shelf Registration Statement) declared effective by the
Commission on or prior to October 5, 1997. If the Exchange Offer has not been
consummated by November 4, 1997 (unless there exists a Commission Blockage)
(such event, a "Registration Default"), the Company will pay liquidated damages
to each Holder of Old Notes, during the first 90-day period immediately
following the occurrence of such Registration Default in an amount equal to
$0.05 per week per $1,000 principal amount of Old Notes held by such Holder.
The amount of the liquidated damages will increase by an additional $0.05 per
week per $1,000 principal amount of Old Notes for each subsequent 90-day period
until the Exchange Offer is consummated, up to a maximum amount of liquidated
damages of $0.25 per week per $1,000 principal amount of Old Notes. All accrued
liquidated damages shall be paid to Holders in the same manner and on the same
date as interest payments on the Old Notes. Following the cure of all
Registration Defaults, the payment of liquidated damages will cease.
The Registration Rights Agreement also provides that the Company (i) shall
make available for a period of 90 days after the consummation of the Exchange
Offer a prospectus meeting the requirements of the Securities Act to any
broker-dealer for use in connection with any resale of any of New Notes and
(ii) shall pay all expenses incident to the Exchange Offer (including the
expenses of one counsel to the Holders of the Notes) and will indemnify certain
Holders of the Old Notes (including any broker-dealer) against certain
liabilities, including liabilities under the Securities Act.
Holders of Old Notes will be required to make certain representations to
the Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information
to be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Old Notes included
in the Shelf Registration Statement and benefit from the provisions regarding
liquidated damages discussed above. In addition, for so long as the Old Notes
are outstanding, the Company will continue to provide to Holders of Old Notes
and to prospective purchasers of the Old Notes the information required by Rule
144A (d) (4). The Company will provide a copy of the Registration Rights
Agreement to prospective investors upon request.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Davis Polk & Wardwell, tax counsel to the Company, the
following summary describes the material federal income tax considerations
applicable to the exchange of Old Notes for New Notes and the ownership and
disposition of the New Notes by Holders who acquire the New Notes. The summary
applies only to a Holder of Old Notes that acquired such Old Notes from the
Company pursuant to their original issuance and will be an initial Holder of
the New Notes pursuant to the exchange hereunder. This discussion is based on
laws, regulations, rulings and decisions now in effect, all of which are
subject to change, possibly retroactively. The discussion does not cover all
aspects of federal income taxation that may be relevant to Holders, in light of
their specific circumstances, particularly Holders subject to special treatment
under the federal income tax laws (such as insurance companies, financial
institutions, tax exempt organizations, foreign persons and taxpayers
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<PAGE>
subject to the alternative minimum tax). It also does not address state, local,
foreign or other tax laws. The description assumes that Holders of the Old
Notes hold the Old Notes as "capital assets" within the meaning of Section 1221
of the Internal Revenue Code of 1986, as amended (the "Code").
Tax Consequences to U.S. Holders
Exchange of Notes
There will be no federal income tax consequences to Holders exchanging Old
Notes for New Notes pursuant to the Exchange Offer and a Holder will have the
same basis and holding period in the New Notes as it had in the Old Notes
immediately before the exchange.
Sale, Exchange or Retirement of the Notes
Upon the sale, exchange or retirement of an New Note, a Holder will
recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement and such Holder's adjusted tax
basis in the New Note. A Holder's adjusted tax basis in an New Note will equal
the cost of the Old Note to such Holder reduced by any payments of principal on
the Note received by the Holder.
EACH HOLDER SHOULD CONSULT HIS TAX ADVISOR IN DETERMINING THE FEDERAL,
STATE, LOCAL AND ANY OTHER TAX CONSEQUENCES TO THE PARTICULAR HOLDER OF THE
EXCHANGE OF OLD NOTES FOR NEW NOTES AND THE OWNERSHIP AND DISPOSITION OF THE
NEW NOTES.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market making activities or other
trading activities. The Company has agreed that, for a period of 90 days after
the consummation of the Exchange Offer, it will make this Prospectus, as
amended or supplemented, available to any such broker-dealer for use in
connection with any such resale. New Notes received by broker-dealers for their
own account pursuant to the Exchange Offer may be sold from time to time in one
or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Notes or a combination
of such methods of resale, at market prices prevailing at the time of resale,
at prices related to such prevailing market prices or at negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer and/or the purchasers of any such New Notes. Any
broker-dealer that resells New Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act, and any profit on any
such resale of New Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
For the period of 90 days after the consummation of the Exchange Offer,
the Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company has agreed in the
Registration Rights Agreement to indemnify each broker-dealer reselling New
Notes pursuant to this Prospectus, and their officers, directors and
controlling persons, against certain liabilities in connection with the offer
and sale of the New Notes, including liabilities under the Securities Act, or
to contribute to payments that such broker-dealers may be required to make in
respect thereof.
CERTAIN TERMS
Interests in cellular markets that are licensed by the Federal
Communications Commission (the "FCC") are commonly measured on the basis of the
population of the market served, with each person residing in the mar-
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<PAGE>
ket area referred to as a "Pop." As used in this Prospectus, unless otherwise
indicated, the term "Pops" means the estimate of the 1997 population of a
Metropolitan Statistical Area ("MSA") or Rural Service Area ("RSA"), as derived
from the 1997 Rand McNally Commercial Atlas & Marketing Guide. The term "Net
Pops" means the estimated population with respect to a given service area
multiplied by the percentage interest that the Company owns in the entity
licensed in such service area. See "Business -- Summary Market Data." The
number of Pops or Net Pops owned is not necessarily indicative of the number of
subscribers or potential subscribers. MSAs and RSAs are also referred to as
"markets." The term "wireline" license refers to the license for any market
initially awarded to a company or group that was affiliated with a local
landline telephone carrier in the market, and the term "non-wireline" or
"independent" license refers to the license for any market that was initially
awarded to a company, individual or group not affiliated with any landline
carrier. The term "system" means a FCC-licensed cellular telephone system, the
term "MTA" means Major Trading Area and the term "BTA" means Basic Trading
Area.
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for the
Company by Davis Polk & Wardwell, New York, New York.
EXPERTS
The consolidated balance sheet of the Company and its subsidiaries as of
December 31, 1996 and 1995 and the related consolidated statements of operations
and accumulated deficit and of cash flows for each of the three years in the
period ended December 31, 1996 appearing in this Prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein. The Company's consolidated financial
statements include amounts for Garden State Cablevision L.P. ("Garden State
Cablevision"), an equity method investment of the Company. Other auditors have
audited the financial statements of Garden State Cablevision as of December 31,
1996 and 1995 and for each of the three years in the period ended December 31,
1996. The report of such auditors with respect to Garden State Cablevision was
furnished to Deloitte & Touche LLP for the purpose of its report with respect to
the consolidated financial statements of the Company described above, insofar as
it relates to amounts included in the Company's consolidated financial
statements for Garden State Cablevision for the periods specified in the
Company's consolidated financial statements.
84
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheet as of March 31, 1997 and December 31, 1996
(unaudited)................................................................................ F-2
Condensed Consolidated Statement of Operations and Accumulated Deficit for the three
months ended March 31, 1997 and 1996 (unaudited) .......................................... F-3
Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 1997 and
1996 (unaudited) ........................................................................ F-4
Notes to Condensed Consolidated Financial Statements for the three months ended March 31, 1997
and 1996 (unaudited) ..................................................................... F-5
Independent Auditors' Report ............................................................... F-10
Consolidated Balance Sheet as of December 31, 1996 and 1995 ................................. F-11
Consolidated Statement of Operations and Accumulated Deficit for the years ended
December 31, 1996, 1995 and 1994 ......................................................... F-12
Consolidated Statement of Cash Flows for the years ended December 31, 1996, 1995 and 1994.... F-13
Notes to Consolidated Financial Statements for the years ended December 31, 1996, 1995
and 1994 ................................................................................. F-14
</TABLE>
F-1
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents .............................. $ 30,439 $ 4,980
Accounts receivable, less allowance for doubtful accounts
of $4,351 and $3,148.................................... 59,279 66,425
Inventories ............................................. 9,679 10,458
Other current assets .................................... 4,490 3,470
---------- ----------
Total current assets ................................. 103,887 85,333
---------- ----------
INVESTMENT IN AFFILIATE ................................. 29,531 29,823
---------- ----------
PROPERTY AND EQUIPMENT .................................... 485,639 467,558
Accumulated depreciation .............................. (129,694) (114,144)
---------- ----------
Property and equipment, net ........................... 355,945 353,414
---------- ----------
DEFERRED CHARGES AND OTHER .............................. 1,245,568 1,245,283
Accumulated amortization .............................. (300,456) (285,671)
---------- ----------
Deferred charges and other, net ........................ 945,112 959,612
---------- ----------
$1,434,475 $1,428,182
========== ==========
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses .................. $ 76,077 $ 83,831
Accrued commissions .................................... 4,787 7,836
Accrued interest ....................................... 3,886 3,166
Deferred revenue and customer deposits .................. 10,002 9,291
Current portion of long-term debt ........................ 1,909 1,902
Due to affiliates ....................................... 47,486 45,926
---------- ----------
Total current liabilities ........................... 144,147 151,952
---------- ----------
LONG-TERM DEBT, less current portion ..................... 1,295,479 1,259,325
---------- ----------
INVESTMENT IN AND DUE TO AFFILIATES ..................... 111,057 108,804
---------- ----------
DEFERRED INCOME TAXES .................................... 249,354 256,737
---------- ----------
MINORITY INTEREST AND OTHER .............................. 5,864 7,219
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S DEFICIENCY
Common stock, $.01 par value - authorized, 1,000 shares;
issued, 100 shares ....................................
Additional capital ....................................... 500,425 500,425
Accumulated deficit .................................... (871,851) (856,280)
---------- ----------
Total stockholder's deficiency ..................... (371,426) (355,855)
---------- ----------
$1,434,475 $1,428,182
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
F-2
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
------------ --------------
<S> <C> <C>
SERVICE INCOME, net ........................ $ 104,079 $ 98,192
---------- ----------
COSTS AND EXPENSES
Operating ................................. 9,884 8,690
Selling, general and administrative ...... 57,119 64,835
Depreciation and amortization ............ 29,972 29,883
---------- ----------
96,975 103,408
---------- ----------
OPERATING INCOME (LOSS) ..................... 7,104 (5,216)
OTHER (INCOME) EXPENSE
Interest expense ........................ 29,448 26,612
Investment income ........................ (451) (356)
Equity in net losses of affiliates ...... 2,121 2,218
Litigation settlement ..................... 21,647
Other .................................... 169 2,140
---------- ----------
31,287 52,261
---------- ----------
LOSS BEFORE INCOME TAX BENEFIT ............ (24,183) (57,477)
INCOME TAX BENEFIT ........................ (8,612) (21,907)
---------- ----------
NET LOSS .................................... (15,571) (35,570)
ACCUMULATED DEFICIT
Beginning of period ..................... (856,280) (786,696)
---------- ----------
End of period ........................... ($ 871,851) ($822,266)
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
F-3
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss ............................................. ($ 15,571) ($ 35,570)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization ..................... 29,972 29,883
Non-cash interest expense ........................ 17,504 16,604
Equity in net losses of affiliates ............... 2,121 2,218
Minority interest ................................. 227 89
Deferred management fees ........................... 1,428 1,386
Deferred income taxes and other .................. (9,257) (21,805)
---------- ---------
26,424 (7,195)
Decrease in accounts receivable, inventories and
other current assets ........................... 6,905 9,758
Increase in accrued interest ..................... 720 75
Decrease in accounts payable and accrued
expenses, accrued commissions and deferred
revenue and customer deposits ..................... (10,092) (7,663)
---------- ---------
Net cash provided by (used in) operating
activities .................................... 23,957 (5,025)
---------- ---------
FINANCING ACTIVITIES
Proceeds from borrowings of long-term debt ............ 20,000 125,000
Repayments of long-term debt ........................ (98)
Repayments under deferred payment plan ............... (75,000)
Net transactions with affiliates ..................... (689) 1,128
---------- ---------
Net cash provided by financing activities ...... 19,213 51,128
---------- ---------
INVESTING ACTIVITIES
Capital expenditures ................................. (17,906) (14,888)
Other ................................................ 195 (48)
---------- ---------
Net cash used in investing activities ......... (17,711) (14,936)
---------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS .................. 25,459 31,167
CASH AND CASH EQUIVALENTS, beginning of period 4,980 19,640
---------- ---------
CASH AND CASH EQUIVALENTS, end of period ............... $ 30,439 $ 50,807
========== =========
</TABLE>
See notes to condensed consolidated financial statements.
F-4
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
1. ORGANIZATION
Comcast Cellular Holdings, Inc. (the "Company") was incorporated on March
27, 1997 under the laws of the State of Delaware. At the date of incorporation,
the Company issued 100 shares of its newly authorized $.01 par value common
stock to Comcast Corporation ("Comcast") and became a wholly owned subsidiary
of Comcast.
On May 7, 1997, Comcast contributed all 100 of the issued and outstanding
$.01 par value common shares of Comcast Cellular Corporation ("Comcast
Cellular"), its wholly owned subsidiary, to the Company. This contribution has
been accounted for in a manner similar to a pooling of interests. Accordingly,
the condensed consolidated financial statements of the Company include the
accounts of Comcast Cellular for all periods presented. The Company is
principally engaged in the development, management and operation of cellular
telephone communications systems located in Pennsylvania, New Jersey and
Delaware.
2. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The condensed consolidated balance sheet as of December 31, 1996 has been
condensed from the audited balance sheet as of that date. The condensed
consolidated balance sheet as of March 31, 1997 and the condensed consolidated
statements of operations and accumulated deficit and of cash flows for the
three months ended March 31, 1997 and 1996 have been prepared by the Company
and have not been audited by the Company's independent auditors. In the opinion
of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows as of March 31, 1997 and for all periods presented
have been made.
Certain information and note disclosures normally included in the
Company's annual financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. These condensed
consolidated financial statements should be read in conjunction with the
Company's December 31, 1996 audited consolidated financial statements. The
results of operations for the period ended March 31, 1997 are not necessarily
indicative of operating results for the full year.
Reclassifications
Certain reclassifications have been made to the prior year condensed
consolidated financial statements to conform to those classifications used in
1997.
3. ACQUISITIONS AND OTHER SIGNIFICANT EVENTS
Debt Offering
In May, 1997, the Company completed the sale of $1.0 billion principal
amount of 9 1/2% Senior Notes due 2007 (the "Old Notes") through a private
offering with registration rights (the "Offering").
Interest on the Old Notes is payable in cash semi-annually on May 1 and
November 1 of each year, commencing on November 1, 1997. The Old Notes are
redeemable, in whole or in part, at the option of the Company, at any time on
or after May 1, 2002 at a redemption price, initially of 104.75% of the
principal amount of the Old Notes and declining annually to 100% on May 1,
2005, plus accrued and unpaid interest, if any, to the date of redemption. In
addition, prior to May 1, 2000, the Company may redeem the Old Notes at a price
equal to 108.5% of the principal amount, plus accrued and unpaid interest, if
any, to the redemption date, with the net cash proceeds from one or more Public
Equity Offerings (as defined); provided, however, that at least 65% of the
originally issued principal amount of the Old Notes would remain outstanding
after giving effect to
F-5
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
any such redemption. Upon the occurrence of a Change of Control Triggering
Event (as defined), each holder of the Old Notes will have the right to require
the Company to repurchase such holder's Old Notes at 101% of the principal
amount, plus accrued and unpaid interest, if any, to the repurchase date.
The Old Notes are general unsecured obligations of the Company ranking
senior to all subordinated Indebtedness (as defined) of the Company and pari
passu in right of payment with all other existing and future unsecured
unsubordinated Indebtedness (as defined) and other liabilities of the Company.
The Old Notes are subordinate to all liabilities, including trade payables, of
the Company's subsidiaries.
The indenture for the Old Notes imposes certain limitations on the ability
of the Company and its Restricted Subsidiaries (as defined) to, among other
things, incur Indebtedness (as defined), make Restricted Payments (as defined),
including the payment of cash dividends on the Company's Series A Preferred
Stock (see below), effect certain Asset Sales (as defined), enter into certain
transactions with affiliates, merge or consolidate with any other person or
transfer all or substantially all of their properties and assets.
Redemption of Zero Coupon Notes
In May 1997, the Company contributed the net proceeds of $971.2 million
from the Offering to Comcast Cellular. On May 19, 1997 (the "Redemption Date"),
Comcast Cellular used such proceeds to redeem all of its Series A Senior
Participating Redeemable Zero Coupon Notes Due 2000 and Series B Senior
Participating Redeemable Zero Coupon Notes Due 2000 (together, the "Zero Coupon
Notes"), including the Zero Coupon Notes held by Comcast Cellular
Communications, Inc. ("CCCI"), a wholly owned subsidiary of Comcast Cellular,
and Comcast Financial Corporation ("CFC"), a wholly owned subsidiary of
Comcast. Unamortized debt acquisition costs related to the Zero Coupon Notes
were not significant. As of the Redemption Date, the Zero Coupon Notes had an
aggregate accreted value of $742.4 million, including the Zero Coupon Notes
held by CCCI and CFC with accreted values of $114.1 million and $161.5 million,
respectively. On the Redemption Date, CFC used the $161.5 million received upon
redemption of the Zero Coupon Notes held by it to purchase 1,614,775 shares of
the Company's newly authorized $.01 par value, Series A Preferred Stock (see
below). The Company contributed the $161.5 million received from the sale of
its Series A Preferred Stock to Comcast Cellular, which in turn contributed
such amount and the remaining net proceeds from the Offering, totaling $228.8
million, to CCCI to repay a portion of the amounts outstanding under CCCI's
$1.3 billion credit agreement with certain banks (the "Credit Agreement").
Repayment of Term Loan and Revolving Credit Loan
The Credit Agreement provides for a term loan in the principal amount of
$300.0 million due 2004 (the "Term Loan") and a reducing revolving credit
facility of up to $1.0 billion (the "Revolving Credit Loan"). As of March 31,
1997, CCCI had outstanding $300.0 million and $375.0 million under the Term
Loan and the Revolving Credit Loan, respectively. In May 1997, subsequent to
the Offering, CCCI canceled $575.0 million of its Revolving Credit Loan,
thereby reducing the $1.0 billion commitment to $425.0 million. CCCI used the
amounts contributed by Comcast Cellular and the proceeds received upon
redemption of the Zero Coupon Notes held by it (aggregating $504.4 million), as
well as available cash, to repay the Term Loan and $205.0 million under the
Revolving Credit Loan. In connection with the repayment of the Term Loan and
the reduction in the Revolving Credit Loan commitment, during the second
quarter of 1997, the Company will record an extraordinary loss, net of the
related tax benefit, of $7.3 million. As a result of these transactions, as of
the Redemption Date, the CCCI had outstanding $170.0 million under its
Revolving Credit Loan.
F-6
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
Authorization and Issuance of Mandatorily Redeemable Preferred Stock
On May 7, 1997, the Company authorized 10,000,000 shares of $.01 par value
preferred stock and designated 5,200,000 of such shares as Series A Preferred
Stock. On May 19, 1997, the Company issued 1,614,775 shares of its mandatorily
redeemable Series A Preferred Stock to CFC. Each holder of the Series A
Preferred Stock is entitled to receive cumulative cash dividends at the annual
rate of $12 per share, payable semi-annually on May 1 and November 1 each year,
in arrears. At the option of the Company, by declaration of the Company's Board
of Directors, dividends may be paid in additional shares of Series A Preferred
Stock (the "Additional Shares") instead of cash through May 1, 2007. To the
extent dividends are paid in Additional Shares, such Additional Shares shall be
valued at $100 per share with a liquidation value of $100 per share. The Series
A Preferred Stock is redeemable, at the option of the Company, at any time
prior to May 2, 2007, at a redemption price of $100 per share, plus accrued and
unpaid dividends, and is mandatorily redeemable on May 2, 2007 after final
maturity of the Old Notes, subject to certain conditions. The Series A
Preferred Stock is generally non-voting.
Cellular Retail Stores
In August 1996, the Company acquired twelve cellular retail stores and
direct sales locations located in Pennsylvania, New Jersey and Delaware, and
related assets from Advanced Telecomm, Inc. for $6.5 million in cash, subject
to certain purchase price adjustments. The Company accounted for the
acquisition under the purchase method.
Delaware 1 RSA
In May 1996, the Company and Southwestern Bell Mobile Systems, through a
partnership owned 50% by each of them, purchased the remaining 84% limited
partnership interests of the Delaware 1 Rural Statistical Area ("RSA") Limited
Partnership, the licensee of the non-wireline cellular license for the Kent and
Sussex, DE RSA (the "Delaware 1 RSA") for $44.1 million in cash, of which the
Company's share was $22.1 million. The surviving entity, C-SW Cellular
Partnership, a Delaware general partnership, now holds the cellular license for
the Delaware 1 RSA. American Cellular Network Corporation, an indirect wholly
owned subsidiary of the Company, manages the daily operations of the C-SW
Cellular Partnership's interest in the Delaware 1 RSA. The Company's investment
of $29.5 million and $29.8 million as of March 31, 1997 and December 31, 1996,
respectively, is accounted for under the equity method and is classified as
investment in affiliate in the Company's condensed consolidated balance sheet.
Atlantic City MSA
In June 1996, the Company completed its acquisition of the license to
operate the non-wireline cellular telephone system for the Atlantic City, NJ
Metropolitan Statistical Area (the "Atlantic City Cellular System") for $7.5
million in cash. The Company accounted for the acquisition under the purchase
method and began consolidating the Atlantic City Cellular System effective June
1, 1996.
Litigation Settlement
The Company was involved in various civil lawsuits and administrative
proceedings regarding the ownership, operation and transfer of the license for
the Atlantic City Cellular System. In March 1995, the Company, Comcast,
Telephone and Data Systems, Inc. ("TDS"), United States Cellular Corporation,
Ellis Thompson and Ellis Thompson Corporation entered into a Settlement
Agreement (the "Settlement Agreement") with respect to outstanding civil
litigation. During the three months ended March 31, 1996, the Company recorded
$21.6 million of estimated litigation settlement expense in its condensed
consolidated statement of operations and accumulated deficit. In June 1996, the
Company paid such amount to TDS under the Settlement Agreement.
F-7
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
3. INVESTMENT IN AND DUE TO AFFILIATES
In 1992, a subsidiary (the "AWACS Cable Subsidiary") of AWACS, Inc., an
indirect subsidiary of the Company, issued a note with an initial principal
amount of $51.0 million to purchase, from a subsidiary of Comcast, a 40%
limited partnership interest in Garden State Cablevision L.P. ("Garden State
Cablevision"). The note bears interest at a rate of 11% per annum. Interest is
payable on a quarterly basis to the extent of available cash, with any unpaid
interest added to principal. Interest expense on the note was $1.2 million and
$2.0 million during the three months ended March 31, 1997 and 1996,
respectively. From the date of issuance through March 31, 1997, $35.5 million
of principal and interest has been paid on the note with the proceeds from
distributions from Garden State Cablevision. The balance of the note is due on
September 30, 1997, and accordingly, has been classified as current in the
Company's condensed consolidated balance sheet.
Under the terms of the partnership agreement, 49.5% of Garden State
Cablevision's net losses are allocated to the Company. Summarized financial
information for Garden State Cablevision as of March 31, 1997 and for the three
months ended March 31, 1997 and 1996 is as follows (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
-------------- ------------
<S> <C> <C>
Results of Operations
Service income ................................................ $ 26,730 $ 24,179
Operating, selling, general and administrative expenses ...... (11,574) (10,826)
Depreciation and amortization ................................. (11,481) (12,076)
Operating income ............................................. 3,675 1,277
Net loss ...................................................... (3,695) (4,487)
Company's equity in net loss ................................. (1,829) (2,221)
March 31,
1997
-------------
Financial Position
Current assets ................................................ $ 7,571
Noncurrent assets ............................................. 151,730
Current liabilities .......................................... 11,069
Noncurrent liabilities ....................................... 334,194
</TABLE>
4. RELATED PARTY TRANSACTIONS
Comcast and CCCI are parties to a management agreement (the "Management
Agreement") pursuant to which Comcast manages the business and operations of
CCCI. Pursuant to the Management Agreement, management fees of $1.4 million
were charged to selling, general and administrative expenses during each of the
three months ended March 31, 1997 and 1996. In accordance with the provisions
of the Management Agreement, annual cash payments of management fees are
limited to $5.0 million, subject to annual increases based on the consumer
price index. In certain circumstances, the Credit Agreement may further limit
the payment of management fees. As of March 31, 1997 and December 31, 1996,
deferred management fees payable, which are included in long-term investment in
and due to affiliates in the Company's condensed consolidated balance sheet,
totaled $16.1 million and $14.7 million, respectively. In May 1997, subsequent
to the redemption of the Zero Coupon Notes, the Management Agreement was
amended to provide for an annual management fee of 1.5% of revenues (on a pro
forma basis, management fees for the three months ended March 31, 1997 and 1996
would have been $1.6 million and $1.5 million, respectively).
5. STATEMENT OF CASH FLOWS -- SUPPLEMENTAL INFORMATION
The Company made cash payments for interest of $11.2 million and $9.9
million during the three months ended March 31, 1997 and 1996, respectively.
F-8
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Concluded)
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
The Company made cash payments for income taxes of $0.4 million during the
three months ended March 31, 1996. The Company made no cash payments for income
taxes during the three months ended March 31, 1997.
6. CONTINGENCIES
The Company is subject to claims which arise in the ordinary course of its
business and other legal proceedings. In the opinion of management, the amount
of ultimate liability with respect to these actions will not materially affect
the financial position, results of operations or liquidity of the Company.
F-9
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholder
Comcast Cellular Holdings, Inc.
Wilmington, Delaware
We have audited the accompanying consolidated balance sheet of Comcast Cellular
Holdings, Inc. (a wholly owned subsidiary of Comcast Corporation) and its
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of operations and accumulated deficit, and of cash flows for each of
the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of Garden State
Cablevision L.P. ("Garden State Cablevision"), the Company's investment which
is accounted for under the equity method. The Company's equity of $93,664,000
and $51,341,000 in Garden State Cablevision's deficit at December 31, 1996 and
1995, respectively, and of $6,844,000, $10,175,000 and $8,863,000 in Garden
State Cablevision's net loss for the years ended December 31, 1996, 1995 and
1994, respectively, are included in the accompanying consolidated financial
statements. The financial statements of Garden State Cablevision were audited
by other auditors whose report has been furnished to us, and our opinion,
insofar as it relates to the amounts included in the Company's consolidated
financial statements for Garden State Cablevision as of December 31, 1996 and
1995, and for each of the three years in the period ended December 31, 1996 is
based solely on the report of such other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, based upon our audit and the report of other auditors, such
consolidated financial statements present fairly, in all material respects, the
financial position of Comcast Cellular Holdings, Inc. and its subsidiaries as
of December 31, 1996 and 1995 and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1996 in
conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, on May 7,
1997, Comcast Corporation contributed all 100 of the issued and outstanding
$.01 par value common shares of Comcast Cellular Corporation, its wholly owned
subsidiary, to the Company. This contribution has been accounted for in a
manner similar to a pooling of interests. Accordingly, the consolidated
financial statements of the Company include the accounts of Comcast Cellular
Corporation for all periods presented.
/s/ DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
May 7, 1997 (except for Note 3, as
to which the date is May 19, 1997)
F-10
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
December 31,
1996 1995
------------- ---------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents .............................. $ 4,980 $ 19,640
Accounts receivable, less allowance for doubtful accounts
of $3,148 and $3,264 ................................. 66,425 85,688
Inventories ............................................. 10,458 8,601
Other current assets .................................... 3,470 4,233
Due from affiliates .................................... 11,023
----------- -----------
Total current assets ................................. 85,333 129,185
----------- -----------
INVESTMENT IN AFFILIATE ................................. 29,823 5,523
----------- -----------
PROPERTY AND EQUIPMENT .................................... 467,558 353,810
Accumulated depreciation .............................. (114,144) (67,129)
----------- -----------
Property and equipment, net ........................... 353,414 286,681
----------- -----------
DEFERRED CHARGES AND OTHER .............................. 1,245,283 1,238,338
Accumulated amortization .............................. (285,671) (228,341)
----------- -----------
Deferred charges and other, net ........................ 959,612 1,009,997
----------- -----------
$1,428,182 $ 1,431,386
=========== ===========
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses .................. $ 83,831 $ 189,934
Accrued commissions .................................... 7,836 11,001
Accrued interest ....................................... 3,166 5,019
Deferred revenue and customer deposits .................. 9,291 8,574
Current portion of long-term debt ........................ 1,902 1,500
Due to affiliates ....................................... 45,926
----------- -----------
Total current liabilities ........................... 151,952 216,028
----------- -----------
LONG-TERM DEBT, less current portion ..................... 1,259,325 1,068,104
----------- -----------
INVESTMENT IN AND DUE TO AFFILIATES ..................... 108,804 133,239
----------- -----------
DEFERRED INCOME TAXES .................................... 256,737 295,117
----------- -----------
MINORITY INTEREST AND OTHER .............................. 7,219 5,169
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S DEFICIENCY
Common stock, $.01 par value - authorized, 1,000 shares;
issued, 100 shares ....................................
Additional capital ....................................... 500,425 500,425
Accumulated deficit .................................... (856,280) (786,696)
----------- -----------
Total stockholder's deficiency ..................... (355,855) (286,271)
----------- -----------
$1,428,182 $ 1,431,386
=========== ===========
</TABLE>
See notes to consolidated financial statements.
F-11
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
-------------- -------------- -------------
<S> <C> <C> <C>
SERVICE INCOME, net ........................ $ 426,053 $ 374,880 $ 286,137
---------- ---------- ----------
COSTS AND EXPENSES
Operating ................................. 36,876 28,923 22,684
Selling, general and administrative ...... 235,176 212,657 154,011
Depreciation and amortization ............ 117,225 205,733 89,916
---------- ---------- ----------
389,277 447,313 266,611
---------- ---------- ----------
OPERATING INCOME (LOSS) ..................... 36,776 (72,433) 19,526
OTHER (INCOME) EXPENSE
Interest expense ........................ 116,297 97,694 83,338
Investment income ........................ (2,525) (3,288) (1,373)
Equity in net losses of affiliates ...... 6,559 9,600 8,146
Litigation settlement ..................... 21,647
Other .................................... 2,449 (3,716) 6,411
---------- ---------- ----------
144,427 100,290 96,522
---------- ---------- ----------
LOSS BEFORE INCOME TAX BENEFIT
AND EXTRAORDINARY ITEMS .................. (107,651) (172,723) (76,996)
INCOME TAX BENEFIT ........................ (38,067) (62,944) (21,907)
---------- ---------- ----------
LOSS BEFORE EXTRAORDINARY ITEMS ............ (69,584) (109,779) (55,089)
EXTRAORDINARY ITEMS ........................ (3,047) (6,072)
---------- ---------- ----------
NET LOSS .................................... (69,584) (112,826) (61,161)
ACCUMULATED DEFICIT
Beginning of year ........................ (786,696) (673,870) (612,709)
---------- ---------- ----------
End of year .............................. ($ 856,280) ($ 786,696) ($ 673,870)
========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
F-12
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss ............................................. ($ 69,584) ($ 112,826) ($ 61,161)
Adjustments to reconcile net loss to net cash provided
by operating activities: ...........................
Extraordinary items .............................. 3,047 6,072
Depreciation and amortization ..................... 117,225 205,733 89,916
Non-cash interest expense ........................ 69,400 62,461 62,369
Equity in net losses of affiliates ............... 6,559 9,600 8,146
Minority interest ................................. 773 1,099 959
Deferred management fees ........................... 5,545 6,746 2,500
Deferred income taxes and other .................. (38,070) (80,335) (27,639)
---------- ---------- ----------
91,848 95,525 81,162
Decrease (increase) in accounts receivable,
inventories and other current assets ............ 22,726 (15,752) (40,592)
(Decrease) increase in accrued interest ............ (1,853) 1,498 1,426
Increase (decrease) in accounts payable and
accrued expenses, accrued commissions and
deferred revenue and customer deposits ............ 9,375 (11,931) 37,668
---------- ---------- ----------
Net cash provided by operating activities ...... 122,096 69,340 79,664
---------- ---------- ----------
FINANCING ACTIVITIES
Proceeds from borrowings of long-term debt ............ 166,908 553,618 70,000
Repayments of long-term debt ........................ (36,500) (423,438) (95,023)
Debt acquisition costs .............................. (20,350)
(Repayments) borrowings under deferred payment
plan ................................................ (120,177) 134,636
Repayment of long-term due to affiliate ............... (35,479)
Net transactions with affiliates ..................... 7,100 (12,035) 629
---------- ---------- ----------
Net cash (used in) provided by financing
activities .................................... (18,148) 232,431 (24,394)
---------- ---------- ----------
INVESTING ACTIVITIES
Acquisitions, net of cash acquired .................. (13,958) (75,755)
Capital expenditures ................................. (116,018) (228,706) (71,943)
Proceeds from sale of equipment and other ............ 256 17,872 (27)
Purchase of minority interests, license acquisition
costs and other .................................... (24,367) (3,601) (8,512)
Distributions from Garden State Cablevision ......... 35,479
Sales of short-term investments ..................... 25,682
---------- ---------- ----------
Net cash used in investing activities ......... (118,608) (290,190) (54,800)
---------- ---------- ----------
(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS .......................................... (14,660) 11,581 470
CASH AND CASH EQUIVALENTS, beginning of year . 19,640 8,059 7,589
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, end of year .................. $ 4,980 $ 19,640 $ 8,059
========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
F-13
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1. BUSINESS
Comcast Cellular Holdings, Inc. (the "Company") was incorporated on March
27, 1997 under the laws of the State of Delaware. At the date of incorporation,
the Company issued 100 shares of its newly authorized $.01 par value common
stock to Comcast Corporation ("Comcast") and became a wholly owned subsidiary
of Comcast. On May 7, 1997, Comcast contributed all 100 of the issued and
outstanding $.01 par value common shares of Comcast Cellular Corporation
("Comcast Cellular"), its wholly owned subsidiary, to the Company. This
contribution has been accounted for in a manner similar to a pooling of
interests. Accordingly, the consolidated financial statements of the Company
include the accounts of Comcast Cellular for all periods presented. Comcast
Cellular is a holding company whose sole direct subsidiary is Comcast Cellular
Communications, Inc. ("CCCI"). The Company's business is operated through
CCCI's subsidiaries, AWACS, Inc. ("AWACS") and American Cellular Network Corp.
("Amcell"). The Company is principally engaged in the development, management
and operation of cellular telephone communications systems located in
Pennsylvania, New Jersey and Delaware. The Company's consolidated systems
served 762,000 subscribers as of December 31, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned or controlled subsidiaries. All significant intercompany
accounts and transactions among the consolidated entities have been eliminated.
Management's Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Fair Values
The estimated fair value amounts presented in these notes to consolidated
financial statements have been determined by the Company using available market
information and appropriate methodologies. However, considerable judgment is
required in interpreting market data to develop the estimates of fair value.
The estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts. Such fair value estimates
are based on pertinent information available to management as of December 31,
1996 and 1995, and have not been comprehensively revalued for purposes of these
consolidated financial statements since such dates.
A reasonable estimate of fair values of the due to/from affiliates in the
Company's consolidated balance sheet is not practicable to obtain because of
the related party nature of these items and the lack of quoted market prices.
Cash Equivalents
Cash equivalents consist principally of overnight investments in money
market funds with maturities of three months or less when purchased. The
carrying amounts of the Company's cash equivalents, classified as available for
sale securities, approximate their fair values as of December 31, 1996 and
1995.
F-14
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Inventories
Inventories, which include products held for sale, materials and supplies,
are stated at the lower of cost or market. Cost for products held for sale is
stated at weighted average cost, which approximates market.
Investments
Investments in entities in which the Company has the ability to exercise
significant influence over the operating and financial policies of the investee
are accounted for under the equity method. Equity method investments are
recorded at original cost and adjusted periodically to recognize the Company's
proportionate share of the investees' net income or losses after the date of
investment, additional contributions made and dividends received. Investments
in privately held companies are stated at cost, adjusted for any known
diminution in value.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided by the
straight-line method over estimated useful lives as follows:
Buildings .................. 10-40 years
Operating facilities ...... 8-12 years
Other equipment ............ 3-8 years
Improvements that extend asset lives are capitalized; other repairs and
maintenance charges are expensed as incurred. The cost and related accumulated
depreciation applicable to assets sold or retired are removed from the accounts
and the gain or loss on disposition is recognized as a component of
depreciation expense.
Deferred Charges and Other
Deferred charges consist principally of license acquisition costs and debt
acquisition costs. License acquisition costs are being amortized on a
straight-line basis over the estimated useful lives of the licenses of up to 40
years. Debt acquisition costs are being amortized on a straight-line basis over
the term of the related debt of nine years.
Valuation of Long-Lived Assets
The Company periodically evaluates the recoverability of its long-lived
assets, including property and equipment and deferred charges using objective
methodologies. Such methodologies include evaluations based on the cash flows
generated by the underlying assets or other determinants of fair value.
Revenue Recognition
Service income is recognized as service is provided and is recorded net of
long distance and roaming incollect charges. Credit risk is managed by
disconnecting services to customers who are delinquent.
Postretirement and Postemployment Benefits
The estimated costs of retiree benefits and benefits for former or
inactive employees, after employment but before retirement, are accrued and
recorded as a charge to operations during the years the employees provide
services. The Company's retiree benefit obligation is unfunded and all benefits
are paid by Comcast. Accordingly, the Company's liability for these costs is
included in long-term investment in and due to affiliates.
Income Taxes
The Company recognizes deferred tax assets and liabilities for temporary
differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities and expected benefits of utilizing net
operating loss carryforwards. The impact on deferred taxes of changes in tax
rates and laws, if any, applied to the years during which temporary differences
are expected to be settled, are reflected in the consolidated financial
statements in the period of enactment.
F-15
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Derivative Financial Instruments
The Company uses derivative financial instruments, including interest rate
exchange agreements ("Swaps") and interest rate collar agreements ("Collars")
to manage its exposure to fluctuations in interest rates. Swaps and Collars are
matched with either fixed or variable rate debt and periodic cash payments are
accrued on a settlement basis as an adjustment to interest expense.
The Company does not hold or issue any derivative financial instruments
for trading purposes and is not a party to leveraged instruments (see Note 4).
The credit risks associated with the Company's derivative financial instruments
are controlled through the evaluation and monitoring of the creditworthiness of
the counterparties. Although the Company may be exposed to losses in the event
of nonperformance by the counterparties, the Company does not expect such
losses, if any, to be significant.
Reclassifications
Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to those classifications used in 1996.
3. ACQUISITIONS AND OTHER SIGNIFICANT EVENTS
Debt Offering and Related Transactions
In May 1997, the Company completed the sale of $1.0 billion principal
amount of 9 1/2% Senior Notes due 2007 (the "Old Notes") through a private
offering with registration rights (the "Offering"). On May 19, 1997, the
Company issued 1,614,775 shares of its newly authorized $.01 par value
mandatorily redeemable Series A Preferred Stock to Comcast Financial
Corporation ("CFC"), a wholly owned subsidiary of Comcast, for $161.5 million.
The Company used the net proceeds from the Offering and from the issuance of
its Series A Preferred Stock to repay all amounts outstanding under the Zero
Coupon Notes (as defined in Note 4) and a portion of the amounts outstanding
under CCCI's $1.3 billion credit agreement with certain banks (the "Credit
Agreement") (see Note 4).
Cellular Retail Stores
In August 1996, the Company acquired twelve cellular retail stores and
direct sales locations in Pennsylvania, New Jersey and Delaware, and related
assets from Advanced Telecomm, Inc. for $6.5 million in cash, subject to
certain purchase price adjustments. The Company accounted for the acquisition
under the purchase method.
Delaware 1 RSA
In May 1996, the Company and Southwestern Bell Mobile Systems, through a
partnership owned 50% by each of them, purchased the remaining 84% limited
partnership interests of the Delaware 1 Rural Statistical Area ("RSA") Limited
Partnership, the licensee of the non-wireline cellular license for the Kent and
Sussex, DE RSA (the "Delaware 1 RSA") for $44.1 million in cash, of which the
Company's share was $22.1 million. The surviving entity, C-SW Cellular
Partnership, a Delaware general partnership, now holds the cellular license for
the Delaware 1 RSA. Amcell manages the daily operations of the C-SW Cellular
Partnership's interest in the Delaware 1 RSA. The Company's investment of $29.8
million and $5.5 million as of December 31, 1996 and 1995, respectively, is
accounted for under the equity method and is classified as investment in
affiliate in the Company's consolidated balance sheet.
F-16
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Ocean County RSA
In 1995, the Company completed its exchange agreement with McCaw Cellular
Communications, Inc. whereby the Company acquired a 100% interest in the entity
that held the Ocean County, NJ RSA (the "Ocean County RSA") non-wireline
cellular license in exchange for the Company's Hunterdon County, NJ RSA
cellular license and related assets, and $55.2 million in cash.
Vineland/Atlantic City MSA
In June 1995, the Company purchased all of the outstanding stock of United
States Cellular Operating Company of Vineland, Inc. ("USCC/Vineland") from
United States Cellular Corporation ("USCC") for $21.2 million in cash.
USCC/Vineland held an approximate 80.4% interest in the Vineland Cellular
Telephone Company, Inc. ("VCTC"), which holds the license to operate the
non-wireline cellular telephone system serving the Vineland, NJ Metropolitan
Statistical Area ("MSA"), and an approximate 9.3% interest in the non-wireline
cellular telephone system for the Atlantic City, NJ MSA (the "Atlantic City
Cellular System"). The acquisition of these interests was funded with the
proceeds of a loan from Comcast, which was repaid during 1995 in connection
with the 1995 Refinancing described in Note 4. As of June 30, 1995, the Company
began consolidating VCTC.
In June 1996, the Company completed the acquisition of the license to
operate the Atlantic City Cellular System and paid $7.5 million in cash. The
Company began consolidating the Atlantic City Cellular System effective June 1,
1996. The Company accounted for the acquisitions under the purchase method.
Litigation Settlement
The Company was involved in various civil lawsuits and administrative
proceedings regarding the ownership, operation and transfer of the license for
the Atlantic City Cellular System. In March 1995, the Company, Comcast,
Telephone and Data Systems, Inc. ("TDS"), USCC, Ellis Thompson and Ellis
Thompson Corporation entered into a Settlement Agreement (the "Settlement
Agreement") with respect to outstanding civil litigation. In June 1996, the
Company paid $21.6 million to TDS under the Settlement Agreement. The Company
recorded the expenses related to the Settlement Agreement in its 1996
consolidated statement of operations and accumulated deficit.
Cellular Rebuild
In 1995, the Company purchased $172.0 million of switching and cell site
equipment which replaced the existing switching and cell site equipment (the
"Cellular Rebuild"). The Company substantially completed the Cellular Rebuild
during 1995. Accordingly, during 1995, the Company charged $110.0 million to
depreciation expense, which represented the difference between the net book
value of the equipment replaced and the residual value realized upon its
disposal.
4. LONG-TERM DEBT
Long-term debt consists of the following (dollars in thousands):
December 31,
1996 1995
------------ -----------
Zero Coupon Notes ............ $ 602,819 $ 541,604
Term Loan ..................... 300,000 300,000
Revolving Credit Loan ......... 355,000 225,000
Other, due through 2001 ...... 3,408 3,000
----------- -----------
1,261,227 1,069,604
Less current portion ......... 1,902 1,500
----------- -----------
$1,259,325 $1,068,104
=========== ===========
F-17
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Series A & B Senior Participating Redeemable Zero Coupon Notes Due 2000
As of December 31, 1996, the Series A Senior Participating Redeemable Zero
Coupon Notes Due 2000 (the "Series A Notes") and the Series B Senior
Participating Redeemable Zero Coupon Notes Due 2000 (the "Series B Notes" and,
together with the Series A Notes, the "Zero Coupon Notes") had an aggregate
face amount payable at maturity of $847.1 million, accreting from $359.7
million at 11% per annum (computed on a semi-annual bond equivalent basis). The
Zero Coupon Notes were effectively subordinate to all of the liabilities and
preferred stock obligations of the subsidiaries of the Company, including trade
payables.
The Company, at its option, may redeem the Zero Coupon Notes at any time.
Holders of a majority in principal amount of the Zero Coupon Notes have the
right to require the Company to redeem all of the Zero Coupon Notes at any time
on or after March 5, 1998. In the event of the sale of all or substantially all
of the Company, the Company has the option, and the holders of a majority in
principal amount of the Zero Coupon Notes have the right to require the
Company, to redeem the Zero Coupon Notes.
At maturity or upon an earlier redemption, the Company was required to pay
the Redemption Price (as defined), equal to the greater of (a) the then
accreted value of the Zero Coupon Notes and (b) the Applicable Percentage (as
defined; initially 35%) of the then Private Market Value of CCCI (plus
additional interest in certain cases). As defined, Private Market Value is
determined, in part, on a basis as if CCCI and its subsidiaries did not own any
of the Excluded Assets (as defined). The Excluded Assets include the AWACS
Cable Subsidiary (see Note 5).
The Series A Notes and the Series B Notes were identical except that the
Company could, at its option, pay the Series A Notes either in cash, or subject
to certain conditions, in shares of Comcast Class A Special Common Stock, which
is generally non-voting, or a combination thereof. The Company was required to
pay the Series B Notes solely in cash. The Zero Coupon Notes were not
obligations of or guaranteed by Comcast or CCCI.
The Zero Coupon Notes contained covenants which, among other things, (a)
prohibited the Company from incurring any indebtedness other than the Zero
Coupon Notes and certain expenses (such covenant did not, however, restrict
indebtedness which might have been incurred by subsidiaries of the Company),
(b) limited the ability of the Company and CCCI to pay any dividends or make
any distributions on their capital stock or make any loans to affiliates, (c)
limited the ability of the Company and its subsidiaries to engage in
transactions with affiliates on terms less favorable than those which could be
obtained from a non-affiliate, (d) limited the ability of CCCI and its
subsidiaries to engage in any business other than the management and operation
of cellular communications systems and operations ancillary thereto, and (e)
prohibited the Company from liquidating or causing CCCI to liquidate.
In 1994, CCCI purchased $153.8 million principal amount ($85.7 million
accreted value at that date) of the Company's Series A Notes from a wholly
owned subsidiary of Comcast for $95.0 million. The premium paid in excess of
the accreted value of the Series A Notes at the date of purchase of $9.3
million was recorded as an extraordinary loss, net of the related tax benefit
of $3.3 million, in the Company's 1994 consolidated statement of operations and
accumulated deficit.
As of December 31, 1996 and 1995, $217.7 million principal amount of the
Zero Coupon Notes with an accreted value of $154.9 million and $139.2 million,
respectively, were held CFC.
In May 1997, the Company redeemed the Zero Coupon Notes in full, with the
net proceeds from the Offering and from the issuance of its Series A Preferred
Stock (see Note 3). Unamortized debt acquisition costs related to the Zero
Coupon Notes were not significant.
F-18
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Debt Refinancing
In September 1995, the Company refinanced a portion of its outstanding
debt (the "1995 Refinancing"). In connection with the 1995 Refinancing, the
Company entered into a $1.3 billion credit agreement (the "Credit Agreement")
with certain banks. As a result of the 1995 Refinancing, the Company expensed
unamortized debt acquisition costs relating to its previous credit facility of
$4.7 million during 1995, resulting in an extraordinary loss, net of the
related tax benefit, of $3.0 million.
The Credit Agreement provides for a term loan in the principal amount of
$300.0 million due 2004 (the "Term Loan") and a reducing revolving credit
facility of up to $1.0 billion (the "Revolving Credit Loan" and, together with
the Term Loan, the "Loans").
The maximum principal amount of the Revolving Credit Loan is reduced in
quarterly installments, which increase annually, commencing September 30, 1998
and continuing through 2004. Outstanding amounts under the Revolving Credit
Loan as of December 31, 1996 are due in quarterly installments commencing in
2002. Interest rates are based on a base, London Interbank Offered Rate or
Certificate of Deposit rate, plus a percentage which varies as the ratio of
total indebtedness to annual operating cash flow (as defined) varies. The
Company's effective weighted average interest rate on the Loans was 6.84%,
7.17% and 7.33% during the years ended December 31, 1996, 1995 and 1994,
respectively.
As security for the Loans, CCCI has pledged the capital stock of its
direct subsidiaries. The Credit Agreement contains certain restrictions,
including prohibitions on the payment of dividends (with certain limited
exceptions), changes in CCCI's business, incurrence of indebtedness, liens,
asset acquisitions and sales, investments and affiliate transactions. CCCI is
required to maintain certain financial ratios relating to operating cash flow
(as defined) and is required to use a portion of excess cash flow (as defined)
and proceeds of asset sales to prepay indebtedness under the Credit Agreement.
The calculation of these financial ratios excludes the results of the AWACS
Cable Subsidiary (see Note 5).
In May 1997, the Company repaid the Term Loan and a portion of the amounts
outstanding under the Revolving Credit Loan (see Note 3) and canceled $575.0
million of its Revolving Credit Loan, thereby reducing the $1.0 billion
commitment to $425.0 million. In connection with the repayment of a portion of
the amounts outstanding under the Credit Agreement and the reduction in the
Revolving Credit Loan commitment, during the second quarter of 1997, the
Company will record an extraordinary loss, net of the related tax benefit, of
$7.3 million. As a result of these transactions, as of the redemption date, the
Company had $170.0 million outstanding under its Revolving Credit Loan.
Interest Rate Risk Management
The Company is exposed to market risk including changes in interest rates.
To manage the volatility relating to these exposures, the Company enters into
various derivative transactions pursuant to the Company's policies in areas
such as counterparty exposure and hedging practices. Positions are monitored
using techniques including market value and sensitivity analyses.
The use of interest rate risk management instruments, such as Swaps and
Collars, is required under the terms of the Credit Agreement. The Company's
policy is to manage interest costs using a mix of fixed and variable rate debt.
Using Swaps, the Company agrees to exchange, at specified intervals, the
difference between fixed and variable interest amounts calculated by reference
to an agreed-upon notional principal amount. Collars limit the Company's
exposures to and benefits from interest rate fluctuations on variable rate debt
to within a range of rates.
F-19
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
The following table summarizes the terms of the Company's existing Swap
and Collars as of December 31, 1996 and 1995 (dollars in thousands):
Notional Average
Amount Maturities Interest Rate
---------- ------------ --------------
As of December 31, 1996
Variable to Fixed Swap ...... $ 50,000 1998 5.65%
Collars ..................... 220,000 1997 6.78%/5.38%
As of December 31, 1995
Variable to Fixed Swap ...... $ 50,000 1998 5.65%
Collar ..................... 50,000 1997 6.27%/5.00%
The notional amounts of interest rate agreements, as presented in the
above table, are used to measure interest to be paid or received and do not
represent the amount of exposure to credit loss. While Swaps and Collars
represent an integral part of the Company's interest rate risk management
program, their incremental effect on interest expense for the years ended
December 31, 1996, 1995 and 1994 was not significant.
The Company's long-term debt had carrying amounts of $1.261 billion and
$1.070 billion and estimated fair values of $1.113 billion and $1.178 billion
as of December 31, 1996 and 1995, respectively. The estimated fair value of the
Company's publicly traded debt is based on quoted market prices for that debt.
Interest rates that are currently available to the Company for issuance of debt
with similar terms and remaining maturities are used to estimate fair value for
debt issues for which quoted market prices are not available.
The difference between the carrying values and estimated fair values of
the Company's derivative financial instruments was not significant as of
December 31, 1996 and 1995, and has been estimated based upon amounts at which
such items could be settled.
5. INVESTMENT IN AND DUE TO AFFILIATES
In 1992, a subsidiary (the "AWACS Cable Subsidiary") of AWACS issued a
note with an initial principal amount of $51.0 million to purchase, from a
subsidiary of Comcast, a 40% limited partnership interest in Garden State
Cablevision L.P. ("Garden State Cablevision"). The note bears interest at a
rate of 11% per annum. Interest is payable on a quarterly basis to the extent
of available cash, with any unpaid interest added to principal. Interest
expense on the note was $8.2 million, $7.5 million, and $6.7 million for the
years ended December 31, 1996, 1995 and 1994, respectively. From the date of
issuance through December 31, 1996, $35.5 million of principal and interest has
been paid on the note with the proceeds from distributions from Garden State
Cablevision. The balance of the note is due on September 30, 1997, and
accordingly, has been classified as current in the Company's consolidated
balance sheet as of December 31, 1996.
Under the terms of the partnership agreement, 49.5% of Garden State
Cablevision's net losses are allocated to the Company. Under the terms of the
Zero Coupon Notes and Loans (see Note 4), the AWACS Cable Subsidiary is
excluded for the purposes of determining the Redemption Price (as defined), and
the required cash flow ratios.
F-20
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Summarized financial information for Garden State Cablevision for 1996,
1995 and 1994 is as follows (dollars in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
----------- ---------- ------------
<S> <C> <C> <C>
Results of Operations
Service income ................................................ $ 100,756 $ 91,771 $ 91,288
Operating, selling, general and administrative expenses ...... 43,608 40,595 39,068
Depreciation and amortization ................................. 48,524 46,976 47,293
Operating income ............................................. 8,624 4,200 4,927
Net loss ...................................................... (13,826) (20,556) (17,905)
Company's equity in net loss ................................. (6,844) (10,175) (8,863)
</TABLE>
December 31,
1996 1995
--------- --------
Financial Position
Current assets ............ $ 8,457 $ 7,003
Noncurrent assets ......... 161,241 186,196
Current liabilities ......... 17,609 12,877
Noncurrent liabilities ...... 334,356 260,047
6. LCH PREFERRED STOCK REDEMPTION
In June 1994, LCH Communications, Inc. ("LCH") redeemed the Class A
Redeemable Preferred Stock (the "LCH Preferred Stock") held by CCCI through the
transfer to CCCI of 100% of the capital stock of LIN Cellular Communications
Corporation. As a result of such redemption, CCCI owns 100% of the common stock
of AWACS. Since the Company has historically accounted for the purchase of
AWACS as if it had acquired a 100% direct interest, the redemption of the LCH
Preferred Stock had no effect on the Company's accounting for AWACS.
In addition to the interest in AWACS, the redemption of the LCH Preferred
Stock entitled the Company to an interest in certain publishing and broadcasting
operations. CCCI issued to Metromedia Company participating preferred stock
which had economic attributes based on the performance and ultimate value of the
publishing and broadcasting operations. In June 1997, CCCI redeemed the
participating preferred stock in exchange for such assets. As these operations
are excluded from the Company's consolidated financial statements, the
redemption of the participating preferred stock will have no financial statement
effect.
7. RELATED PARTY TRANSACTIONS
Comcast and CCCI are parties to a management agreement (the "Management
Agreement") pursuant to which Comcast manages the business and operations of
CCCI. Pursuant to the Management Agreement, management fees of $5.5 million,
$5.5 million and $5.3 million were charged to selling, general and
administrative expenses during the years ended December 31, 1996, 1995 and
1994, respectively. During the years ended December 31, 1995 and 1994, CCCI was
charged additional management fees (the "Additional Management Fees") of $2.7
million and $2.5 million, respectively. In accordance with the provisions of
the Management Agreement, annual cash payments of management fees are limited
to $5.0 million, subject to annual increases based on the consumer price index.
In certain circumstances, the Credit Agreement may further limit the payment of
management fees. As of December 31, 1996 and 1995, deferred management fees
payable, which are included in long-term investment in and due to affiliates,
totaled $14.7 million and $9.2 million, respectively. In May 1997, subsequent
to the redemption of the Zero Coupon Notes, the Management Agreement was
amended to provide for an annual management fee of 1.5% of revenues (on a pro
forma basis, management fees for the years ended December 31, 1996, 1995 and
1994 would have been $6.4 million, $5.6 million and $4.3 million,
respectively).
F-21
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
8. INCOME TAXES
Comcast, the Company, and CCCI have entered into a tax sharing agreement
(the "Tax Sharing Agreement") whereby, the Company joins with Comcast in filing
a consolidated federal income tax return. Comcast allocates income tax expense
or benefit to the Company as if the Company was filing a separate federal
income tax return. Tax benefits from both losses and tax credits are made
available to the Company as it is able to realize such benefits on a separate
return basis. The Company is required to pay to Comcast for income taxes an
amount equal to that amount of tax the Company would pay if it filed a separate
tax return. Subsidiaries which were less than 80% owned have been excluded from
the Tax Sharing Agreement, as they were not members of the Comcast consolidated
group for tax purposes. Accordingly, their tax liabilities have been determined
on a separate company basis.
Significant components of the Company's net deferred tax liability are as
follows (dollars in thousands):
<TABLE>
<CAPTION>
December 31,
1996 1995
----------- ----------
<S> <C> <C>
Deferred tax liabilities:
Difference between book and tax basis of property and equipment ... $394,308 $394,202
--------- ---------
Deferred tax assets:
Net operating loss carryforwards .................................... 147,953 107,190
Difference between book and tax basis of property and equipment and
deferred charges ................................................ 24,911 27,188
Less valuation allowance .......................................... (35,293) (35,293)
--------- ---------
137,571 99,085
--------- ---------
Net deferred tax liability .......................................... $256,737 $295,117
========= =========
</TABLE>
Income tax benefit consists of the following components (dollars in
thousands):
Year Ended December 31,
1996 1995 1994
------------ ------------ ------------
Current expense
Federal ............... $ $ 1,932 $ 5,682
State .................. 313 921 6,522
--------- --------- ---------
313 2,853 12,204
--------- --------- ---------
Deferred (benefit) expense
Federal ............... (36,836) (60,571) (34,757)
State .................. (1,544) (5,226) 646
--------- --------- ---------
(38,380) (65,797) (34,111)
--------- --------- ---------
($ 38,067) ($ 62,944) ($ 21,907)
========= ========= =========
F-22
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Concluded)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
The effective income tax benefit of the Company differs from the statutory
amount because of the effect of the following items (dollars in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Federal tax at statutory rate .................. ($ 37,678) ($ 60,453) ($ 26,949)
State income taxes, net of federal benefit ...... (800) (2,798) 4,659
Other, net ....................................... 411 307 383
--------- --------- ---------
($ 38,067) ($ 62,944) ($ 21,907)
========= ========= =========
</TABLE>
As of December 31, 1996, the Company has available net operating loss
carryforwards of approximately $367.0 million for which a deferred tax asset
has been recorded and which expire through the year 2011.
9. STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION
The Company made cash payments for interest of $48.7 million, $33.7
million and $19.5 million during the years ended December 31, 1996, 1995 and
1994, respectively.
The Company made cash payments for income taxes of $0.8 million, $7.5
million and $5.9 million during the years ended December 31, 1996, 1995 and
1994, respectively.
10. COMMITMENTS AND CONTINGENCIES
The Company leases certain office and transmissions facilities under
noncancellable operating leases expiring on various dates through 2039. The
leases generally provide for fixed annual rentals plus certain real estate
taxes and other costs. Rental expense of $10.5 million, $7.6 million and $6.3
million for 1996, 1995 and 1994, respectively, has been charged to operations.
As of December 31, 1996, the minimum rental commitments under
noncancellable operating leases are as follows (dollars in thousands):
1997 ................................ $10,900
1998 ................................ 10,902
1999 ................................ 10,007
2000 ................................ 8,545
2001 ................................ 6,557
Thereafter .......................... 16,326
The Company is subject to claims which arise in the ordinary course of its
business and other legal proceedings. In the opinion of management, the amount
of ultimate liability with respect to these actions will not materially affect
the financial position, results of operations or liquidity of the Company.
F-23
<PAGE>
==============================================================================
No person has been authorized to give any information or make any
representations, other than those contained in this Prospectus, in
connection with the offering made hereby, and, if given or made, such
information or representation must not be relied upon as having been
authorized by the Company or any other person. Neither the delivery of
this Prospectus nor any sale made hereunder shall under any circumstances
create any implication that there has been no change in the affairs of the
Company since the date hereof. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any securities offered
hereby by anyone in any jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation
is not qualified to do so or to any person to whom it is unlawful to make
such an offer or solicitation.
--------------
TABLE OF CONTENTS
Page
-------
Available Information ........................ 2
Prospectus Summary ........................... 3
Risk Factors ................................. 11
Capitalization ............................... 18
Selected Consolidated Financial and Other
Data ..................................... 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ................................ 21
The Exchange Offer ........................... 32
Business ..................................... 38
Management ................................... 49
Principal Stockholders ....................... 51
Certain Relationships and Related
Transactions .............................. 53
Description of the Notes ..................... 54
Registration Rights; Liquidated Damages ...... 82
Certain Federal Income Tax Consequences ...... 82
Plan of Distribution ......................... 83
Certain Terms ................................ 83
Legal Matters ................................ 84
Experts ...................................... 84
Index to Consolidated Financial
Statements ................................ F-1
Until , 1997 (90 days after the date hereof), all dealers effecting
transactions in the New Notes, whether or not participating in this
distribution, may be required to deliver a prospectus. This is in addition
to the obligations of dealers to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
===============================================================================
<PAGE>
===============================================================================
$1,000,000,000
COMCAST CELLULAR
HOLDINGS, INC.
9 1/2% Senior Notes due 2007, Series B
-----------------------
PROSPECTUS
-----------------------
, 1997
===============================================================================
<PAGE>
PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides, generally,
that a corporation shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any action, suit or proceeding
(except actions by or in the right of the corporation) by reason of the fact
that such person is or was a director or officer of the corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. A corporation may similarly indemnify any person who was or is a
party or is threatened to be made a party to any action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of the
fact that the person is or was a director or officer of the corporation for
expenses actually and reasonably incurred by him in connection with the defense
or settlement of any action or suit by or in the right of the corporation,
provided such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and, in the
case of claims, issues and matters as to which such person shall have been
adjudged liable to the corporation, provided that a court, shall have
determined, upon application, that, despite the adjudication of liability but
in view of all of the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such court shall deem
proper.
Section 102(b)(7) of the Delaware General Corporation Law provides,
generally, that the certificate of incorporation may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision may not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or knowing violation of law, (iii)
under section 174 of Title 8 of the Delaware General Corporation Law, or (iv)
for any transaction form which the director derived an improper personal
benefit. No such provision may eliminate or limit the liability of a director
for any act or omission occurring prior to the date which such provision
becomes effective.
Article NINTH of the Company's Certificate of Incorporation provides as
follows:
"NINTH. No director of the Corporation shall be liable to the Corporation
or any of its stockholders for monetary damages for breach of fiduciary duty as
a director, provided that this provision does not eliminate the liability of
the director (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of Title 8 of the Delaware Code, or (iv) for any transaction
from which the director derived an improper personal benefit. In the case of
any change in Delaware law which expands the liability of directors, the
limited liability of directors shall continue as theretofore to the extent
permitted by law; in the case of any change in Delaware law which permits the
corporation, without the requirement of any further action by the stockholders
or directors of the corporation, to limit further the liability of directors,
then such liability thereupon shall be so limited to the extent permitted by
law."
Article VII of the Company's By-Laws also contains an indemnity provision,
requiring the Company to indemnify any directors, officers, employees, or
agents of the Company and their respective heirs, executors, and administrators
to the extent permitted by law. In addition, Article VII of the Company's
By-Laws permits the Company (i) to pay the expense incurred by officers or
directors in defending any civil or criminal action, suit, or proceeding upon
receipt of an undertaking by or on behalf of such officers or directors to
repay such amount without interest unless it shall ultimately be determined
that he is entitled to be indemnified by the Company as authorized by law and
(ii) to purchase and maintain insurance on behalf of current and former
directors, officers, employees, or agents of the Company against liability
arising out of his status as such, whether or not the Company would have the
power to indemnify him against such liability under law.
II-1
<PAGE>
Comcast has a policy insuring the Company and directors and officers of
the Company against certain liabilities under the Securities Act.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
3.1 -- Certificate of Incorporation of the Company, as amended.
3.2 -- By-laws of the Company.
4.1 -- Indenture dated as of May 8, 1997 by and between the Company and The
Bank of New York, as Trustee, in respect of the 9 1/2% Senior Notes
due 2007 (including the form of Notes).
5.1 -- Opinion of Davis Polk & Wardwell as to the validity of the New Notes
being registered.
8.1 -- Opinion of Davis Polk & Wardwell regarding tax matters.
10.1 -- Management Agreement dated as of March 5, 1992 by and between
Comcast Corporation ("Comcast") and CCCI, as amended May 20, 1997.
10.2 -- Tax Sharing Agreement dated as of March 5, 1992 by and among the
Company, Comcast Cellular Corporation, Comcast and CCCI, as amended
May 20, 1997.
10.3 -- Credit Agreement dated as of September 14, 1995, among CCCI, the
banks listed therein, The Bank of New York, Barclays Bank PLC, The
Chase Manhattan Bank, N.A., PNC Bank, National Association, and The
Toronto Dominion Bank, as Arranging Agents, and Toronto Dominion
(Texas), Inc., as Administrative Agent.
12.1 -- Statement re: Computation of Ratio of Earnings to Fixed Charges.
21.1 -- Subsidiaries of the Company.
23.1 -- Consent of Deloitte & Touche LLP.
23.2 -- Consent of Davis Polk & Wardwell (contained in Exhibit 5.1 and
Exhibit 8.1).
23.3 -- Consent of Arthur Andersen LLP.
25.1 -- Statement of Eligibility of Trustee on Form T-1.
27.1 -- Financial Data Schedule.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Instruction to Registered Holder and/or Book-entry transfer of
Participant from Owner of the Company.
99.4 -- Form of Letter to Clients.
99.5 -- Form of Letter to Registered Holders and Depository Trust Company
Participants.
99.6 -- Report of Independent Public Accountants to Garden State Cablevision
L.P., for the years ended December 31, 1996, 1995 and 1994.
(b) FINANCIAL STATEMENT SCHEDULE
Schedule II -- Valuation and Qualifying Accounts.
II-2
<PAGE>
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Items 4, 10(b), 11 or 13 of Form S-4,
within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the Registration Statement through the date of responding to the
request.
(d) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it
became effective.
II-3
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in Wilmington, Delaware on July 10, 1997.
COMCAST CELLULAR HOLDINGS, INC.
By: /s/ Brian L. Roberts
-------------------------------
Brian L. Roberts
President; Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Ralph J. Roberts, Julian A. Brodsky, Brian L.
Roberts, Lawrence S. Smith, John R. Alchin, Stanley L. Wang and Arthur R. Block
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities to sign any and all amendments to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney's-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
---------- ----- ----
<S> <C> <C>
/s/ Ralph J. Roberts Chairman of the Board of Directors; July 10, 1997
- ------------------------ Director
Ralph J. Roberts
/s/ Julian A. Brodsky Vice Chairman of the Board of Directors; July 10, 1997
- ------------------------ Director
Julian A. Brodsky
/s/ Brian L. Roberts President; Director (Principal Executive July 10, 1997
- ------------------------ Officer)
Brian L. Roberts
/s/ Lawrence S. Smith Executive Vice President (Principal July 10, 1997
- ------------------------ Accounting Officer)
Lawrence S. Smith
/s/ John R. Alchin Senior Vice President; Treasurer July 10, 1997
- ------------------------ (Principal Financial Officer)
John R. Alchin
/s/ Stanley L. Wang Senior Vice President; Secretary; Director July 10, 1997
- ------------------------
Stanley L. Wang
</TABLE>
II-4
<PAGE>
COMCAST CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In thousands)
<TABLE>
<CAPTION>
Additions
Balance at Charged to Deductions Balance
Beginning Costs and from at End
of Year Expenses Reserves(A) of Year
------------ ------------ ------------- --------
<S> <C> <C> <C> <C>
Allowance for Doubtful Accounts
1996 ........................ $3,264 $14,032 $14,148 $3,148
1995 ........................... 2,796 7,268 6,800 3,264
1994 ........................... 2,409 5,175 4,788 2,796
</TABLE>
- ------------
(A) Uncollectible accounts written off.
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
3.1 -- Certificate of Incorporation of the Company, as amended.
3.2 -- By-laws of the Company.
4.1 -- Indenture dated as of May 8, 1997 by and between the Company and The Bank of New York, as
Trustee, in respect of the 9 1/2% Senior Notes due 2007 (including the form of Notes).
5.1 -- Opinion of Davis Polk & Wardwell as to the validity of the New Notes being registered.
8.1 -- Opinion of Davis Polk & Wardwell regarding tax matters.
10.1 -- Management Agreement dated as March 5, 1992 by and between Comcast Corporation ("Comcast")
and CCCI, as amended May 20, 1997.
10.2 -- Tax Sharing Agreement dated as of March 5, 1992 by and among the Company, Comcast Cellular
Corporation, Comcast and CCCI, as amended May 20, 1997.
10.3 -- Credit Agreement dated as of September 14, 1995, among CCCI, the banks listed therein, The
Bank of New York, Barclays Bank PLC, The Chase Manhattan Bank, N.A., PNC Bank, National
Association, and The Toronto Dominion Bank, as Arranging Agents, and Toronto Dominion
(Texas), Inc., as Administrative Agent.
12.1 -- Statement re: Computation of Ratio of Earnings to Fixed Charges.
21.1 -- Subsidiaries of the Company.
23.1 -- Consent of Deloitte & Touche LLP.
23.2 -- Consent of Davis Polk & Wardwell (contained in Exhibit 5.1 and Exhibit 8.1).
23.3 -- Consent of Arthur Andersen LLP.
25.1 -- Statement of Eligibility of Trustee on Form T-1.
27.1 -- Financial Data Schedule.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Instruction to Registered Holder and/or Book-entry transfer of Participant from Owner of the
Company.
99.4 -- Form of Letter to Clients.
99.5 -- Form of Letter to Registered Holders and Depository Trust Company Participants.2
99.6 -- Report of Independent Public Accountants to Garden State Cablevision L.P., for the years ended
December 31, 1996, 1995 and 1994.
</TABLE>
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
COMCAST CELLULAR HOLDINGS INC.
FIRST: The name of the corporation is:
Comcast Cellular Holdings, Inc.
SECOND: The address of its registered office in the State of
Delaware is: 1105 N. Market Street, Suite 1219, Wilmington, New Castle County,
Delaware, 19801. The name of its registered agent at such address is: COMCAST
DELAWARE SERVICES, INC.
THIRD: The nature of the business or purposes to be conducted or
promoted is:
To have unlimited power to engage in any lawful act or
activity for which corporations may be organized under the
General Corporation Law of Delaware.
FOURTH: The total number of shares of stock of all classes which
the Corporation shall have authority to issue is 10,001,000, consisting of 1000
shares of Common Stock, par value $.01 per share (the "Common Stock"), and
10,000,000 shares of Preferred Stock, par value $.01 per share (the "Preferred
Stock").
The Board of Directors is hereby empowered to authorize by
resolution or resolutions from time to time the issuance of one or more
classes or series of Preferred Stock and to fix the designations, powers,
preferences and relative, participating, optional or other rights, if any, and
the qualifications, limitations or restrictions thereof, if any, with respect
to each such class or series of Preferred Stock and the number of shares
constituting each such class or series, and to increase or decrease the number
of shares of any such class or series to the extent permitted by the General
Corporation Law of the State of Delaware, as amended from time to time.
FIFTH: The name and mailing address of the incorporator is as
follows:
Name Address
---- -------
Robert E. Shema 1500 Market Street
35th Floor
Philadelphia, PA 19102
<PAGE>
SIXTH: In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized to make,
alter or repeat the Bylaws of the corporation.
SEVENTH: Elections of directors need not be by written
ballot unless the Bylaws of the corporation shall so provide.
EIGHTH: Whenever a compromise or arrangement is proposed
between this corporation and its creditors or any class of them and/or between
this corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in
a summary way of this corporation or of any creditor of stockholder thereof or
on the application of any receiver or receivers appointed for this corporation
under the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of Section 279 or Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as
the case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and
to any reorganization of this corporation as consequence of such compromise
or arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may
be, and also on this corporation.
NINTH: A director of this corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director; provided, however, that this shall not exempt
a director from liability (i) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (ii) for acts or omission not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which a director derived an
improper personal benefit. In the case of any change in Delaware law which
expands the liability of directors, the limited liability of directors shall
continue as theretofore to the extent permitted by law; in the case of any
change in Delaware law which permits the corporation, without the requirement
of any further action by the stockholders or directors of the corporation, to
limit further the liability of directors, then such liability thereupon shall
be so limited to the extend permitted by law.
IN WITNESS WHEREOF, I have hereunto set my hand this 27th day
of March, 1997.
/s/ Robert E. Shema
---------------------------
Robert E. Shema
Sole Incorporator
Page=2
<PAGE>
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES A PREFERRED STOCK
OF
COMCAST CELLULAR HOLDINGS, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, the undersigned, John R. Alchin, Senior Vice President and
Treasurer, and Stanley Wang, Secretary, of Comcast Cellular Holdings, Inc.,
a Delaware corporation (hereinafter called the "Corporation"), pursuant to the
provisions of Sections 103 and 151 of the General Corporation Law of the State
of Delaware, do hereby make this Certificate of Designations and do hereby
state and certify that pursuant to the authority expressly vested in the Board
of Directors of the Corporation by the Certificate of Incorporation, the Board
of Directors duly adopted the following resolution:
RESOLVED, that, pursuant to Article Fourth of the Certificate of
Incorporation (which authorizes 10,000,000 shares of preferred stock, $.01 par
value ("Preferred Stock"), the Board of Directors hereby fixes the powers,
designations, preferences and relative, participating, optional and other
special rights, and the qualifications, limitations and restrictions, of a
series of Preferred Stock.
RESOLVED, that each share of such series of Preferred Stock
shall rank equally in all respects and shall be subject to the following
provisions:
(1) Number and Designation. 5,200,000 shares of the Preferred
Stock of the Corporation shall be designated as Series A Preferred Stock (the
"Series A Preferred Stock").
(2) Rank. The Series A Preferred Stock shall, with respect to
dividend rights and rights on liquidation, dissolution and winding up, rank
prior to all classes of the Corporation's common stock, $.01 par value
("Common Stock") and prior to any series of Preferred Stock that explicitly
states that it shall rank junior to the Series A Preferred Stock with respect
to dividend rights, or rights on liquidation, dissolution and winding up. All
equity securities of the Corporation to which the Series A Preferred Stock
ranks prior (whether with respect to dividends or upon liquidation,
dissolution, winding up or otherwise), including the Common Stock, are
collectively referred to herein as the "Junior Securities." All equity
securities of the Corporation with which the Series A Preferred Stock ranks on
a parity (whether with respect to dividends or upon liquidation, dissolution
or winding up) are collectively referred to herein as the "Parity Securities."
The respective definitions of Junior Securities and Parity Securities shall
also include any rights or options exercisable for or convertible into any of
the Junior Securities and Parity Securities, as the case may be. The Series A
Preferred Stock shall be subject to the creation of Junior Securities and
Parity Securities.
(3) Dividends. (a) The holders of shares of Series A 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, cash
dividends (or, to the extent permitted by paragraph 3(b), dividends in kind) at
the annual rate of $12 par share. Such dividends shall be payable in arrears in
equal amounts semi-annually on May 1 and November 1 of each year (unless such
day is not a business day, in which event on the next succeeding business day)
Page=3
<PAGE>
(each of such dates being a "Dividend Payment Date" and each such semi-annual
period being a "Dividend Period"). Such dividends shall be cumulative from the
date of issue (except that dividends on Additional Shares (as defined below)
shall accrue from the date such Additional Shares are issued), whether or not
in any Dividend Period or Periods there shall be funds of the Corporation
legally available for the payment of such dividends. Each such dividend shall
be payable to the holders of record of shares of the Series A Preferred Stock,
as they appear on the stock records of the Corporation as the close of
business on such record dates, not more than 60 days or less than 10 days
preceding the payment dates thereof, as shall be fixed by the Board of
Directors. Accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any Dividend Payment Date,
to holders of record on such date, not more than 45 days preceding the payment
date thereof, as may be fixed by the Board of Directors.
(b) At the option of the Corporation, by declaration of the
Board of Directors, dividends may be paid, in additional shares of Series A
Preferred Stock (the "Additional Shares") instead of cash, out of funds
legally available for the payment of dividends, for any or all Dividend
Periods through and including May 1, 2007. To the extent dividends are paid in
Additional Shares, such Additional Shares shall be valued at $100 per share
with a liquidation value of $100 per share. Holders of such Additional Shares
shall be entitled to receive dividends payable at the rates specified in the
next preceding paragraph, subject to the option of the Corporation to pay such
dividends in Additional Shares as permitted by this paragraph (3)(b).
(c) The amount of dividends payable for each full Dividend
Period for the Series A Preferred Stock shall be computed by dividing the
annual dividend rate by two. The amount of dividends payable for the initial
Dividend Period, or any other period shorter or longer than a full Dividend
Period, on the Series A Preferred Stock shall be computed on the basis of
twelve 30-day months and a 360-day year. Holders of shares of Series A
Preferred Stock shall not be entitled to any dividends, whether payable in
cash, property or stock, in excess of cumulative dividends, as herein
provided, on the Series A Preferred Stock. No interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment or
payments on the Series A Preferred Stock that may be in arrears; provided that
if dividends are not paid in full in either cash or Additional Shares on any
Dividend Payment Date, dividends will cumulate as if dividends had been paid
in Additional Shares and such Additional Shares were outstanding for
succeeding Dividend Periods.
(d) So long as any shares of the Series A 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, for
any period unless full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on the Series A Preferred Stock for all Dividend
Periods terminating on or prior to the date of payment of the dividend on such
Parity Securities. When dividends are not paid in full or a sum sufficient for
such payment is not set apart, as aforesaid, all dividends declared upon shares
of the Series A Preferred Stock and all dividends declared upon any other
Parity Securities shall be declared ratably in proportion to the respective
amounts of dividends accumulated and unpaid on the Series A Preferred Stock
and accumulated and unpaid on such Parity Securities.
(e) So long as any shares of the Series A Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
Page=4
<PAGE>
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 a "Junior Securities Distribution") for any
consideration (or any moneys 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), unless in each case (i) the full cumulative dividends on all
outstanding shares of the Series A Preferred Stock and any other Parity
Securities shall have been paid or set apart for payment for all past Dividend
Periods with respect to the Series A Preferred Stock and all past dividend
periods with respect to such Parity Securities and (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 Series A Preferred Stock and the current
dividend period with respect to such Parity Securities.
(4) Liquidation Preferences. (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 Series A Preferred
Stock shall be entitled to receive $100 per share of Series A Preferred Stock
plus an amount equal to all dividends (whether or not earned or declared)
accrued and unpaid thereon on the date of final distribution to such holders;
but such holders shall not be entitled to any further payment. 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 Series A 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 Series A Preferred Stock and any such other
Parity Securities ratably in accordance with the respective amounts that would
be payable on such shares of Series A Preferred Stock and any such other stock
if all amounts payable thereon were paid in full. For purposes of this
paragraph (4), (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, after payment shall have been made in full to the holders of the
Series A Preferred Stock, as provided in this paragraph (4), any other series
or class or classes or 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 Series
A Preferred Stock shall not be entitled to share therein.
(5) Redemption. (a) To the extent the Corporation shall have
funds legally available for such payment, the Corporation may redeem at its
option shares of Series A Preferred Stock, at any time in whole or from time
to time in part, at a redemption price of $100 per share in cash, together
with accrued and unpaid dividends thereon to the date fixed for redemption,
without interest.
(6) To the extent the Corporation shall have funds legally
available for such payment, on May 2, 2007, if any shares of the Series A
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Preferred Stock shall be outstanding, the Corporation shall redeem all
outstanding shares of the Series A Preferred Stock, at a redemption price of
$100 per share in cash, together with accrued and unpaid dividends thereon to
such date, without interest.
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EXHIBIT 3.2
BY-LAWS OF
COMCAST CELLULAR HOLDINGS INC.
(DELAWARE)
ARTICLE 1 -- OFFICES
Section 1-1 Registered Office and Registered Agent. The
Corporation shall maintain a registered office and registered agent within the
State of Delaware, which may be changed by the Board of Directors from time to
time.
Section 1-2 Other Offices. The Corporation may also have
offices at such other places, within or without the State of Delaware, as the
Board of Directors may from time to time determine.
ARTICLE II -- STOCKHOLDERS' MEETINGS
Section 2-1 Place of Stockholders' Meetings. Meetings of
stockholders may be held at such place, either within or without the State of
Delaware, as may be designated by the Board of Directors from time to time.
If no such place is designated by the Board of Directors, meetings of the
stockholders shall be held at the registered office of the Corporation in the
State of Delaware.
Section 2-2 Annual Meeting. A meeting of the stockholders of
the Corporation shall be held in each calendar year, commencing with the year
1997, on the 2nd Thursday of June at 10 o'clock a.m. if not a legal holiday,
and if such day is a legal holiday, then such meeting shall be held on the next
business day.
At such annual meeting, there shall be held an election for a
Board of Directors to serve for the ensuing year and until their respective
successors are elected and qualified, or until their earlier resignation or
removal.
Unless the Board of Directors shall deem it advisable,
financial reports of the Corporation's business need not be send to the
stockholders and need not be presented at the annual meeting. If any report
is deemed advisable by the Board of Directors, such report may contain such
information as the Board of Directors shall determine and need not be
certified by a Certified Public Accountant unless the Board of Directors shall
so direct.
Section 2-3 Special Meetings. Except as otherwise specifically
provided by law, special meetings of the stockholders may be called at any
time:
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(a) By the Board of Directors; or
(b) By the President of the Corporation; or
(c) By the holders of record of not less than a majority of all
the shares outstanding and entitled to vote.
Upon the written request of any person entitled to call a
special meeting, which request shall set forth the purpose for which the
meeting is desired, it shall be the duty of the Secretary to give prompt
written notice of such meeting to be held at such time as the Secretary may
fix, subject to the provisions of Section 2-4 hereof. If the Secretary shall
fail to fix such date and give notice within ten (10) days after receipt of
such request, the person or persons making such request may do so.
Section 2-4 Notice of Meetings and Adjourned Meetings. Written
notice stating the place, date and hour of any meeting shall be given not less
than ten (10) nor more than sixty (60) days before the date of the meeting to
each stockholder entitled to vote at such meeting. If mailed, notice is given
when deposited in the United States Mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
Such notice may be given by or at the direction of the person or persons
authorized to call the meeting.
When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. If the
adjournment is for more than thirty (30) days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 2-5 Quorum. Unless otherwise provided in the
Certificate of Incorporation or in a By-Law adopted by the stockholders or by
the Board of Directors (or the Incorporators if no first Directors were named
in the Certificate of Incorporation) at its organization meeting following the
filing of the Articles of Incorporation, the presence, in person or by proxy,
of the holders of a majority of the outstanding shares entitled to vote shall
constitute a quorum but in no event shall a quorum consist of less than
one-third (1/3) of the shares entitled to vote at a meeting. The
stockholders present at a duly organized meeting can continue to do business
until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum. If a meeting cannot be organized because of the
absence of a quorum, those present may, except as otherwise provided by law,
adjourn the meeting to such time and place as they may determine. In the case
of any meeting for the election of Directors, those stockholders who attend
the second of such adjourned meetings, although less than a quorum as fixed in
this Section, shall nevertheless constitute a quorum for the purpose of
electing Directors.
Section 2-6 Voting List; Proxies. The officer who has charge
of the stock ledger of the Corporation shall prepare and make, at least ten
(10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
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which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
Each stockholder entitled to vote at a meeting of stockholders
or to express consent or dissent to corporate action in writing without a
meeting may authorize another person or persons to act for him by proxy. All
proxies shall be executed in writing and shall be filed with the Secretary of
the Corporation not later than the day on which exercised. No proxy shall be
voted or acted upon after three (3) years from its date, unless the proxy
provides for a longer period.
Except as otherwise specifically provided by law, all matters
coming before the meeting shall be determined by a vote of shares. All
elections of Directors shall be by written ballot unless otherwise provided in
the Certificate of Incorporation. Except as otherwise specifically provided
by law, all other votes may be taken by voice unless a stockholder demands
that it be taken by ballot, in which latter event the vote shall be taken by
written ballot.
Section 2-7 Informal Action by Stockholders. Unless otherwise
provided by the Certificate of Incorporation, any action required to be taken
at any annual or special meeting of stockholders, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
Prompt notice of the taking of corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders or members, who have not consented in writing.
ARTICLE III -- BOARD OF DIRECTORS
Section 3-1 Number. The Board of Directors shall consist of
such number of directors, not less than two (2) nor more than seven (7), as
may be determined from time to time by resolution of the Board of Directors.
Section 3-2 Place of Meeting. Meetings of the Board of
Directors may be held at such place either within or without the State of
Delaware, as a majority of the Directors may from time to time designate or as
may be designated in the notice calling the meeting.
Section 3-3 Regular Meetings. A regular meeting of the Board of
Directors shall be held annually, immediately following the annual meeting of
stockholders, at the place where such meeting of the stockholders is held or at
such other place, date and hour as a majority of the newly elected Directors
may designate. At such meeting the Board of Directors shall elect officers of
the Corporation. In addition to such regular meeting, the Board of Directors
shall have the power to fix, by resolution, the place, date and hour of other
regular meetings of the Board.
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Section 3-4 Special Meetings. Special meetings of the Board of
Directors shall be held whenever ordered by the President, by a majority of
the members of the executive committee, if any, or by a majority of the
Directors in office.
Section 3-5 Notices of Meetings of Board of Directors.
(a) Regular Meetings. No notice shall be required to be
given of any regular meeting, unless the same be held at other than the time or
place for holding such meeting as fixed in accordance with Section 3-3 of
these by-laws, in which event one (1) day's notice shall be given of the time
and place of such meeting.
(b) Special Meetings. At least one (1) day's notice shall
be given of the time, place and purpose for which any special meeting of the
Board of Directors is to be held.
Section 3-6 Quorum. A majority of the total number of Directors
shall constitute a quorum for the transaction of business, and the vote of a
majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors. If there be less than a quorum
present, a majority of those present may adjourn the meeting from time to time
and place to place and shall cause notice of each such adjourned meeting to be
given to all absent Directors.
Section 3-7 Informal Action by the Board of Directors. Any
action required or permitted to be taken at any meeting of the Board of
Directors, or of any committee thereof, may be taken without a meeting if all
members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
Section 3-8 Powers.
(a) General Powers. The Board of Directors shall have all
powers necessary or appropriate to the management of the business and affairs
of the Corporation, and, in addition to the power and authority conferred by
these by-laws, may exercise all powers of the Corporation and do all such
lawful acts and things as are not by statute, these by-laws or the Certificate
of Incorporation directed or required to be exercised or done by the
stockholders.
(b) Specific Powers. Without limiting the general powers
conferred by the last preceding clause and the powers conferred by the
Certificate of Incorporation and by-laws of the Corporation, it is hereby
expressly declared that the Board of Directors shall have the following powers:
(i) To confer upon any officer or officers of the
Corporation the power to choose, remove or suspend assistant
officers, agents or servants.
(ii) To appoint any person, firm or corporation to accept and
hold in trust for the Corporation any property belonging to
the Corporation or in which it is interested, and to
authorize any such person, firm or corporation to execute
any documents and perform any duties that may be requisite
in relation to any such trust.
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(iii) To appoint a person or persons to vote shares of
another corporation held and owned by the Corporation.
(iv) By resolution adopted by a majority of the full Board of
Directors, to designate one (1) or more of its number to
constitute an executive committee which, to the extent
provided in such resolution, shall have and may exercise the
power of the Board of Directors in the management of the
business and affairs of the Corporation and may authorize
the seal of the Corporation to be affixed.
(v) By resolution passed by a majority of the whole Board of
Directors, to designate one (1) or more additional
committees, each to consist of one (1) or more directors, to
have such duties, powers and authority as the Board of
Directors shall determine. All committees of the Board of
Directors, including the executive committee, shall have the
authority to adopt their own rules of procedure. Absent the
adoption of specific procedures, the procedures applicable
to the Board of Directors shall also apply to committees
thereof.
(vi) To fix the place, time and purpose of meetings of
stockholders.
(vii) To purchase or otherwise acquire for the Corporation
any property, rights or privileges which the Corporation is
authorized to acquire, at such prices, on such terms and
conditions and for such consideration as it shall from time
to time see fit, and, at its discretion, to pay any property
or rights acquired by the Corporation, either wholly or
partly in money or in stocks, bonds, debentures or other
securities of the Corporation.
(viii) To create, make and issue mortgages, bonds, deeds of
trust, trust agreements and negotiable or transferable
instruments and securities, secured by mortgage or
otherwise, and to do every other act and thing necessary to
effectuate the same.
(ix) To appoint and remove or suspend such subordinate
officers, agents or servants, permanently or temporarily, as
it may from time to time think fit, and to determine their
duties, and fix, and from time to time change, their
salaries or emoluments, and to require security in such
instances and in such amounts as it thinks fit.
(x) To determine who shall be authorized on the
Corporation's behalf to sign bills, notes, receipts,
acceptances, endorsements, checks, releases, contracts and
documents.
Section 3-9 Compensation of Directors. Compensation of
Directors and reimbursement of their expenses incurred in connection with the
business of the Corporation, if any, shall be determined from time to time by
resolution of the Board of Directors.
Section 3-10 Removal of Directors by Stockholders. The entire
Board of Directors or any individual Director may be removed from office
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without assigning any cause by a majority vote of the holders of the
outstanding shares entitled to vote. In case the Board of Directors or any
one (1) or more Directors be so removed, new Directors may elected at the same
time.
Section 3-11 Resignations. Any Director may resign at any time
by submitting his written registration to the Corporation. Such resignation
shall take effect at the time of its receipt by the Corporation unless another
time be fixed in the resignation, in which case it shall become effective at
the time so fixed. The acceptance of a resignation shall not be required to
make it effective.
Section 3-12 Vacancies. Vacancies and new created directorships
resulting from any increase in the authorized number of directors elected by
all of the stockholders having the right to vote as a single class may be
filled by a majority of the Directors then in office, although less than a
quorum, or by a sole remaining Director, and each person so elected shall be a
Director until his successor is elected and qualified or until his earlier
resignation or removal.
Section 3-13. Participation by Conference Telephone.
Directors may participate in regular or special meetings of the Board by
telephone or similar communications equipment by means of which all other
persons participating in the meeting can hear each other, and such
participation shall constitute presence at the meeting.
ARTICLE IV -- OFFICERS
Section 4-1 Election and Office. The Corporation shall have a
President, a Secretary and a Treasurer who shall be elected by the Board of
Directors. The Board of Directors may elect such additional officers as it may
deem proper, including a Chairman and a Vice Chairman of the Board of
Directors, one (1) or more Vice Presidents, a Controller and one (1) or more
assistant or honorary officers. Any number of offices may be held by the same
person.
Section 4-2 Term. The President, the Secretary and the
Treasurer shall each serve for a term of one (1) year and until their
respective successors are chosen and qualified, unless removed from office by
the Board of Directors during their respective tenures. The term of office of
any other officer shall be as specified by the Board of Directors.
Section 4-3 Powers and Duties of the President. Unless
otherwise determined by the Board of Directors, the President shall have the
usual duties of an executive officer with general supervision over and
direction of the affairs of the Corporation. In the exercise of these duties
and subject to the limitations of the laws of the State of Delaware, these
by-laws, and the actions of the Board of Directors, he may appoint, suspend
and discharge employees and agents, shall preside at all meetings of the
stockholders at which he shall be present, and, unless there is a Chairman of
the Board of Directors, shall preside at all meetings of the Board of
Directors and, unless otherwise specified by the Board of Directors, shall be
a member of all committees. He shall also do and perform such other duties as
from time to time may be assigned to him by the Board of Directors.
Unless otherwise determined by the Board of Directors, the
President shall have full power and authority on behalf of the Corporation to
attend and to act and to vote at any meeting of the stockholders of any
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corporation in which the Corporation may hold stock, and, at any such meeting,
shall possess and may exercise any and all of the rights and powers incident
to the ownership of such stock and which, as the owner thereof, the Corporation
might have possessed and exercised.
Section 4-4 Powers and Duties of the Secretary. Unless
otherwise determined by the Board of Directors, the Secretary shall record all
proceedings of the meetings of the Corporation, the Board of Directors and all
committees, in books to be kept for that purpose, and shall attend to the
giving and serving of all notices for the Corporation. He shall have charge
of the corporate seal, the certificate books, transfer books and stock
ledgers, and such other books and papers as the Board of Directors may direct.
He shall perform all other duties ordinarily incident to the office of
Secretary and shall have such other powers and perform such other duties as
may be assigned to him by the Board of Directors.
Section 4-5 Powers and Duties of the Treasurer. Unless
otherwise determined by the Board of Directors, the Treasurer shall have
charge of all the funds and securities of the Corporation which may come into
his hands. When necessary or proper, unless otherwise ordered by the Board of
Directors, he shall endorse for collection on behalf of the Corporation checks,
notes and other obligations, and shall deposit the same to the credit of the
Corporation in such banks or depositories as the Board of Directors may
designate and shall sign all receipts and vouchers for payments made to the
Corporation. He shall sign all checks made by the Corporation, except when
the Board of Directors shall otherwise direct. He shall enter regularly, in
books of the Corporation to be kept by him for that purpose, a full and
accurate account of all moneys received and paid by him on account of the
Corporation. Whenever required by the Board of Directors, he shall render a
statement of the financial condition of the Corporation. He shall at all
reasonable times exhibit his books and accounts to any Director of the
Corporation, upon application at the office of the Corporation during business
hours. He shall have such other powers and perform such other duties as may
be assigned to him from time to time by the Board of Directors. He shall give
such bond, if any, for the faithful performance of his duties as shall be
required by the Board of Directors and any such bond shall remain in the
custody of the President.
Section 4-6. Powers and Duties of the Chairman of the Board of
Directors. Unless otherwise determined by the Board of Directors, the
Chairman of the Board of Directors, if any, shall preside at all meetings of
Directors. He shall have such other powers and perform such further duties as
may be assigned to him by the Board of Directors, including, without
limitation, acting as Chief Executive Officer of the Corporation. To be
eligible to serve, the Chairman of the Board must be a Director of the
Corporation.
Section 4-7 Powers and Duties of Vice Presidents and Assistant
Officers. Unless otherwise determined by the Board of Directors, each Vice
President and each assistant officer shall have the powers and perform the
duties of his respective superior officer. Vice Presidents and assistant
officers shall have such rank as shall be designated by the Board of Directors
and each, in the order of rank, shall act for such superior officer in his
absence, or upon his disability or when such directed by such superior officer
or by the Board of Directors. Vice Presidents may be designated as having
responsibility for a specific aspect of the Corporation's affairs, in which
event such Vice President shall be superior to the other Vice Presidents in
relation to matters within his aspect. The President shall be the superior
officer of the Vice Presidents. The Treasurer and the Secretary shall be the
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superior officers of the Assistant Treasurers and the Assistant Secretaries,
respectively.
Section 4-8 Delegation of Office. The Board of Directors may
delegate the powers or duties of any officer of the Corporation to any other
officer or to any Director from time to time.
Section 4-9 Vacancies. The Board of Directors shall have the
power to fill any vacancies in any office occurring for whatever reason.
Section 4-10 Resignations. Any officer may resign at any time
by submitting his written resignation to the Corporation. Such resignation
shall take effect at the time of its receipt by the Corporation, unless
another time be fixed in the resignation, in which case it shall become
effective at the time so fixed. The acceptance of a resignation shall not be
required to make it effective.
Section 4-11 Designation of Chief Financial Officer. The Board
of Directors shall have the power to designate from among the Chairman, any
Vice Chairman, President, any Vice President or the Treasurer of this
Corporation a Chief Financial Officer who shall be deemed the principal
financial and accounting officer and who shall have the ultimate responsibility
to oversee the financial operation and performance of the Corporation. In the
event that the Treasurer is not designated by the Board of Directors as the
Chief Financial Officer, the Treasurer shall report to the Chief Financial
Officer from time to time concerning all duties which the Treasurer is
obligated to perform and the Chief Financial Officer shall, at his election,
assume such of the duties of the Treasurer as are provided herein as he shall
deem appropriate. The Chief Financial Officer shall have the power to modify
and/or amend any and all actions taken by the Treasurer and shall have such
other powers and perform such other duties as may be assigned to him by the
Board of Directors.
ARTICLE V -- CAPITAL STOCK
Section 5-1 Stock Certificates. Shares of the Corporation
shall be represented by certificates signed by or in the name of the
Corporation by (a) the Chairman or Vice Chairman of the Board of Directors, or
the President or a Vice President, and (b) the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary, representing the number
of shares registered in certificate form. If such certificate is
countersigned (i) by a transfer agent other than the Corporation or its
employee, or (ii) by a registrar other than the Corporation or its employee,
the signatures of the officers of the Corporation may be facsimiles. In case
any officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer at the date of issue.
Section 5-2. Determination of Stockholders of Record. The
Board of Directors may fix, in advance, a record date to determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock for the
purpose of any other lawful action. Such date shall be not more than sixty
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(60) nor less than ten (10) days before the date of any such meeting, nor more
than sixty (60) days prior to any other action.
If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next preceding the day on which
notice is given, or, if notice is waived, at the close of business on the next
day preceding the day on which the meeting is held.
The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 5-3 Transfer of Shares. Transfer of shares shall be
made on the books of the Corporation only upon surrender of the share
certificate, duly endorsed and otherwise in proper form for transfer, which
certificate shall be cancelled at the time of the transfer. No transfer of
shares shall be made on the books of this Corporation if such transfer is in
violation of a lawful restriction noted conspicuously on the certificate.
Section 5-4 Lost, Stolen or Destroyed Share Certificates. The
Corporation may issue a new certificate of stock, or uncertified shares in
place of any certificate therefore issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or his legal representative to give the
Corporation a bond sufficient to indemnify it against claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate or uncertificated shares.
ARTICLE VI -- NOTICES
Section 6-1 Contents of Notice. Whenever any notice of a
meeting is required to be given pursuant to these by-laws or the Certificate of
Incorporation or otherwise, the notice shall specify the place, day and hour of
the meeting and, in the case of a special meeting or where otherwise required
by law, the general nature of the business to be transacted at such meeting.
Section 6-2 Method of Notice. All notices shall be given to
each person entitled thereto, either personally or by sending a copy thereof
through the mail or by telegraph, charges prepaid, to his address as it
appears on the records of the Corporation, or supplied by him to the
Corporation for the purpose of notice. If notice is sent by mail or
telegraph, it shall be deemed to have been given to the person entitled
thereto when deposited in the United States Mail or with the telegraph office
for transmission. If no address for a stockholder appears on the books of the
Corporation and such stockholder has not supplied the Corporation with an
address for the purpose of notice, notice deposited in the United States Mail
addressed to such stockholder care of General Delivery in the city in which
the principal office of the Corporation is located shall be sufficient.
Section 6-3 Waiver of Notice. Whenever notice is required to be
given under any provision of law or of the Certificate of Incorporation or
by-laws of the Corporation, a written waiver, signed by the person entitled to
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notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, Directors or members of a
committee of Directors need be specified in any written waiver of notice
unless so required by the Certificate of Incorporation.
ARTICLE VII -- INDEMNIFICATION OF DIRECTORS AND
OFFICERS AND OTHER PERSONS
Section 7-1 Indemnification. The Corporation shall indemnify
any person who is a Director or officer of the Corporation or any Director or
officer who is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise (any such person is hereinafter referred to in this
Article VII as a "Director or officer") against expenses (including, but not
limited to, attorneys' fees), judgements, fines and amounts paid in settlement,
actually and reasonably incurred by such Director or officer ("liabilities"),
to the fullest extent now or hereafter permitted by law in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (as used in this Article VII,
"Proceeding" or, in the plural, "Proceedings"), brought or threatened to be
brought against such Director or officer by reason of the fact that he or she
is or was serving in any such capacity or in any other capacity on behalf of
the Corporation, its parent or any of its subsidiaries.
The Board of Directors by resolution adopted in each specific
instance may similarly indemnify any person other than a Director or officer
(any such person is hereinafter referred to in this Article VII as an "Other
Person") for liabilities incurred by him or her in connection with services
rendered by him or her for or at the request of the Corporation, its parent or
any of its subsidiaries.
Section 7-2 Advances. Expenses (including, but not limited to,
attorneys' fees) incurred by any Director or officer in defending a Proceeding
shall be paid by the Corporation in advance of the final disposition of such
Proceeding as authorized by the Board of Directors in the specific case upon
receipt of an undertaking, by or on behalf of such Director or officer, to
repay such amount without interest if it shall ultimately be determined that
he or she is not entitled to be indemnified by the Corporation as authorized
by law. Advance expenses (including, but not limited to, attorneys' fees)
incurred by Other Persons may be paid if the Board of Directors deems
appropriate and upon such terms and conditions, including the giving of an
undertaking, as the Board of Directors deems appropriate.
Section 7-3 Applicability; Survival. The provisions of
Sections 7-1 and 7-2 shall be applicable to all Proceedings commenced before
or after the adoption of this Article VII, whether such arise out of acts or
omissions which occurred prior or subsequent to such adoption and shall
continue as to a person who has ceased to be a Director or officer (or, where
and so long as the Board of Directors has authorized indemnification or
advancement of expenses to an Other Person in accordance with this Article
VII, to an Other Person who has ceased to render services for or at the
request of the Corporation, its parent or subsidiaries) and shall inure to the
benefit of the heirs, executors and administrators of such a person.
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Section 7-4 Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a Director, officer,
or Other Person of the Corporation, or is or was serving at the request of the
Corporation as a Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in any such capacity,
or arising out of his or her status as such, whether or not the Corporation
would have the power to indemnify him or her against such liability under law.
Section 7-5 Non-Exclusivity. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article VII,
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under these bylaws,
agreement, vote of stockholders or disinterested directors, or otherwise, both
as to action in his or her official capacity and as to action in another
capacity while holding such office.
ARTICLE VIII -- SEAL
The form of the seal of the Corporation,
called the corporate seal of the Corporation, [Form of Seal]
shall be as impressed adjacent hereto.
ARTICLE IX -- FISCAL YEAR
The Board of Directors shall have the power by resolution to
fix the fiscal year of the Corporation. If the Board of Directors shall fail
to do so, the President shall fix the fiscal year.
ARTICLE X -- AMENDMENTS
The original or other by-laws may be adopted, amended or
repealed by the stockholders entitled to vote thereon at any regular or
special meeting or, if the Certificate of Incorporation so provides, by the
Board of Directors. The fact that such power has been so conferred upon the
Board of Directors shall not divest the stockholders of the power nor limit
their power to adopt, amend or repeal by-laws.
ARTICLE XI -- INTERPRETATION OF BY-LAWS
All words, terms and provisions of these by-laws shall be
interpreted and defined by and in accordance with the General Corporation Law
of the State of Delaware, as amended, and as amended from time to time
hereafter.
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INDENTURE
Dated as of May 8, 1997
Between
COMCAST CELLULAR HOLDINGS, INC., as Issuer
and
THE BANK OF NEW YORK, as Trustee
____________________
$1,000,000,000
9 1/2% Senior Notes due 2007
9 1/2% Senior Notes due 2007, Series B
Trust Indenture Indenture
Act Section Section
- --------------- ---------
Section 310(a)(1)................................. 7.10
(a)(2)................................. 7.10
(a)(3)................................. N.A.
(a)(4)................................. N.A.
(a)(5)................................. 7.08, 7.10.
(b).................................... 7.08; 7.10; 10.02
(c).................................... N.A.
Section 311(a).................................... 7.11
(b).................................... 7.11
(c).................................... N.A.
Section 312(a).................................... 2.05
(b).................................... 10.03
(c).................................... 10.03
Section 313(a).................................... 7.06
(b)(1)................................. 7.06
(b)(2)................................. 7.06
(c).................................... 7.06; 10.02
(d).................................... 7.06
Section 314(a).................................... 4.11; 4.12; 10.02
(b).................................... 14.02
(c)(1)................................. 10.04
(c)(2)................................. 10.04
(c)(3)................................. N.A.
(d).................................... N.A.
(e).................................... 10.05
(f).................................... N.A.
Section 315(a).................................... 7.01(b)
(b).................................... 7.05; 10.02
(c).................................... 7.01(a)
(d).................................... 7.01(c)
(e).................................... 6.11
Section 316(a)(last sentence)..................... 2.09
(a)(1)(A).............................. 6.05
(a)(1)(B).............................. 6.04
(a)(2)................................. N.A.
(b).................................... 6.07
(c).................................... 9.04
Section 317(a)(1)................................. 6.08
(a)(2)................................. 6.09
(b).................................... 2.04
Section 318(a).................................... 10.01
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions...................................................1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act............19
SECTION 1.03. Rules of Construction........................................20
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating..............................................20
SECTION 2.02. Execution and Authentication.................................21
SECTION 2.03. Registrar and Paying Agent...................................22
SECTION 2.04. Paying Agent To Hold Assets in Trust.........................22
SECTION 2.05. Securityholder Lists.........................................22
SECTION 2.06. Transfer and Exchange........................................23
SECTION 2.07. Replacement Securities.......................................23
SECTION 2.08. Outstanding Securities.......................................23
SECTION 2.09. Treasury Securities..........................................24
SECTION 2.10. Temporary Securities.........................................24
SECTION 2.11. Cancellation.................................................24
SECTION 2.12. Defaulted Interest...........................................24
SECTION 2.13. CUSIP Number.................................................25
SECTION 2.14. Deposit of Moneys............................................25
SECTION 2.15. Book-Entry Provisions for Global Securities..................25
SECTION 2.16. Registration of Transfers and Exchanges......................26
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee...........................................30
SECTION 3.02. Selection of Securities To Be Redeemed.......................30
SECTION 3.03. Notice of Redemption.........................................30
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SECTION 3.04. Effect of Notice of Redemption...............................31
SECTION 3.05. Deposit of Redemption Price..................................31
SECTION 3.06. Securities Redeemed in Part..................................32
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities........................................32
SECTION 4.02. Maintenance of Office or Agency..............................32
SECTION 4.03. Transactions with Affiliates.................................32
SECTION 4.04. Limitation on Indebtedness...................................33
SECTION 4.05. Disposition of Proceeds of Asset Sales.......................35
SECTION 4.06. Limitation on Restricted Payments............................37
SECTION 4.07. Corporate Existence..........................................40
SECTION 4.08. Payment of Taxes and Other Claims............................40
SECTION 4.09. Notice of Defaults...........................................40
SECTION 4.10. Maintenance of Properties and Insurance......................40
SECTION 4.11. Compliance Certificate.......................................41
SECTION 4.12. Provision of Financial Information...........................41
SECTION 4.13. Waiver of Stay, Extension or Usury Laws......................42
SECTION 4.14. Change of Control Triggering Event...........................42
SECTION 4.15. Limitations on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries..........................43
SECTION 4.16. Designation of Unrestricted Subsidiaries.....................44
SECTION 4.17. Limitation on Liens..........................................45
SECTION 4.18. Redemption of Zero Coupon Notes..............................45
SECTION 4.19. Transactions not Subject to Covenants........................45
ARTICLE FIVE
MERGERS; SUCCESSOR CORPORATION
SECTION 5.01. Mergers, Sale of Assets, etc.................................46
SECTION 5.02. Successor Corporation Substituted............................46
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default............................................47
SECTION 6.02. Acceleration.................................................48
SECTION 6.03. Other Remedies...............................................49
SECTION 6.04. Waiver of Past Default.......................................49
SECTION 6.05. Control by Majority..........................................50
SECTION 6.06. Limitation on Suits..........................................50
SECTION 6.07. Rights of Holders To Receive Payment.........................50
SECTION 6.08. Collection Suit by Trustee...................................50
SECTION 6.09. Trustee May File Proofs of Claim.............................51
SECTION 6.10. Priorities...................................................51
SECTION 6.11. Undertaking for Costs........................................51
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee............................................52
SECTION 7.02. Rights of Trustee............................................53
SECTION 7.03. Individual Rights of Trustee.................................54
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SECTION 7.04. Trustee's Disclaimer.........................................54
SECTION 7.05. Notice of Defaults...........................................54
SECTION 7.06. Reports by Trustee to Holders................................54
SECTION 7.07. Compensation and Indemnity...................................54
SECTION 7.08. Replacement of Trustee.......................................55
SECTION 7.09. Successor Trustee by Merger, etc.............................56
SECTION 7.10. Eligibility; Disqualification................................56
SECTION 7.11. Preferential Collection of Claims Against Company............56
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations.........................57
SECTION 8.02. Application of Trust Money...................................58
SECTION 8.03. Repayment to Company.........................................58
SECTION 8.04. Reinstatement................................................58
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders...................................59
SECTION 9.02. With Consent of Holders......................................59
SECTION 9.03. Compliance with Trust Indenture Act..........................60
SECTION 9.04. Revocation and Effect of Consents............................60
SECTION 9.05. Notation on or Exchange of Securities........................61
SECTION 9.06. Trustee To Sign Amendments, etc..............................61
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act Controls................................61
SECTION 10.02. Notices.....................................................62
SECTION 10.03. Communications by Holders with Other Holders................63
SECTION 10.04. Certificate and Opinion as to Conditions Precedent..........63
SECTION 10.05. Statements Required in Certificate or Opinion...............63
SECTION 10.06. Rules by Trustee, Paying Agent, Registrar...................64
SECTION 10.07. Governing Law...............................................64
SECTION 10.08. No Recourse Against Others..................................64
SECTION 10.09. Successors..................................................64
SECTION 10.10. Counterpart Originals.......................................64
SECTION 10.11. Severability................................................64
SECTION 10.12. No Adverse Interpretation of Other Agreements...............64
SECTION 10.13. Legal Holidays..............................................64
SIGNATURES................................................................S-1
EXHIBIT A Form of Series A Security.......................................A-1
EXHIBIT B Form of Series B Security.......................................B-1
EXHIBIT C Form of Legend for Global Securities............................C-1
EXHIBIT D Form of Transfer Certificate....................................D-1
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EXHIBIT E Form of Transfer Certificate for Institutional Accredited
Investors...............................................................E-1
EXHIBIT F Form of Transfer Certificate for Regulation S
Transfers...............................................................F-1
INDENTURE dated as of May 8, 1997, between COMCAST CELLULAR
HOLDINGS, INC., a Delaware corporation (the "Company"), and THE BANK OF NEW
YORK, a New York banking corporation, as trustee.
Each party hereto agrees as follows for the benefit of each
other party and for the equal and ratable benefit of the Holders of the
Securities:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Accredited Investor Global Security" see Section 2.01.
"Acquired Indebtedness" means Indebtedness of a Person (a)
assumed in connection with an Acquisition from such Person or (b) existing at
the time such Person becomes a Restricted Subsidiary or is merged or
consolidated with or into the Company or any Restricted Subsidiary.
"Acquired Person" means, with respect to any specified Person,
any other Person which merges with or into or becomes a Subsidiary of such
specified Person.
"Acquisition" means (i) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) by the Company or any
Restricted Subsidiary to any other Person, or any acquisition or purchase of
Equity Interests of any other Person by the Company or any Restricted
Subsidiary, in either case pursuant to which such Person shall become a
Restricted Subsidiary or shall be consolidated or merged with or into the
Company or any Restricted Subsidiary or (ii) any acquisition by the Company or
any Restricted Subsidiary of the assets of any Person which constitute
substantially all of an operating unit or line of business of such Person or
which is otherwise outside of the ordinary course of business.
"Additional Assets" means (i) any property (other than cash,
cash equivalents or securities) to be owned by the Company or a Restricted
Subsidiary and used in the Wireless Telecommunications Business, (ii) the
costs of improving or developing any property owned by the Company or a
Restricted Subsidiary which is used in the Wireless Telecommunications
Business and (iii) Investments in any other Person engaged primarily in the
Wireless Telecommunications Business (including the acquisition from third
parties of Equity Interests of such Person) to the extent that the percentage
of the aggregate Net Pops of the cellular wireless communications systems in
which the Company or any of its Restricted Subsidiaries has ownership
interests represented by cellular wireless telecommunications systems owned
directly by the Company and/or the Restricted Subsidiaries is no less than 80%.
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"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Asset Sale" means any direct or indirect sale, conveyance,
transfer, lease (that has the effect of a disposition and is not for security
purposes) or other disposition (including, without limitation, any merger,
consolidation or sale-leaseback transaction) to any Person other than the
Company or a Restricted Subsidiary, in one transaction or a series of related
transactions, of (i) any Equity Interest of any Restricted Subsidiary; (ii)
any material license, franchise or other authorization of the Company or any
Restricted Subsidiary; (iii) any assets of the Company or any Restricted
Subsidiary which constitute substantially all of an operating unit or line of
business of the Company or any Restricted Subsidiary; or (iv) any other
property or asset of the Company or any Restricted Subsidiary outside of the
ordinary course of business (including the receipt of proceeds paid on account
of the loss of or damage to any property or asset and awards of compensation
for any asset taken by condemnation, eminent domain or similar proceedings).
For the purposes of this definition, the term "Asset Sale" shall not include
(a) any transaction consummated in compliance with Section 5.01 and the
creation of any Lien not prohibited by Section 4.17; provided, however, that
any transaction consummated in compliance with Section 5.01 involving a sale,
conveyance, assignment, transfer, lease or other disposal of less than all of
the properties or assets of the Company and the Restricted Subsidiaries shall
be deemed to be an Asset Sale with respect to the properties or assets of the
Company and Restricted Subsidiaries that are not so sold, conveyed, assigned,
transferred, leased or otherwise disposed of in such transaction; (b) sales of
property or equipment that has become worn out, obsolete or damaged or
otherwise unsuitable for use in connection with the business of the Company or
any Restricted Subsidiary, as the case may be; (c) any transaction consummated
in compliance with Section 4.06; (d) sales of accounts receivable for cash at
fair market value; and (e) any Permitted Receivables Financing. In addition,
solely for purposes of Section 4.05, any sale, conveyance, transfer, lease or
other disposition of any property or asset, whether in one transaction or a
series of related transactions, involving assets with a Fair Market Value not
in excess of $5.0 million in any fiscal year shall be deemed not to be an
Asset Sale.
"Atlantic City MSA License" means the license to operate the
non-wireline cellular telephone system for the Atlantic City, NJ MSA.
"AWACS Investment Holdings, Inc." means AWACS Investment
Holding, Inc., a Delaware corporation, and its successors.
"Bank Credit Facility" means the Credit Agreement, dated as of
September 14, 1995, among CCCI, the lenders named therein, The Bank of New
York, Barclays Bank PLC, The Chase Manhattan Bank, N.A., PNC Bank, National
Association and The Toronto-Dominion Bank, as Arranging Agent, and Toronto
Dominion (Texas), Inc., as Administrative Agent, including any deferrals,
renewals, extensions, replacements, refinancings or refundings thereof, or
amendments, modifications or supplements thereto and any agreement providing
therefor, whether by or with the same or any other lender, creditor, group of
lenders or group of creditors, and including related notes, guarantees and
other instruments and agreements executed in connection therewith.
"Bankruptcy Law" see Section 6.01.
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"Board of Directors" means, with respect to any Person, the
Board of Directors of such Person (or comparable governing body), or any
authorized committee of that Board.
"Board Resolution" means, with respect to any Person, a duly
adopted resolution of the Board of Directors of such Person.
"Business Day" means a day (other than a Saturday or Sunday) on
which the Depository and banks in New York are open for business.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on the balance
sheet in accordance with GAAP.
"Cash Equivalents" means: (a) U.S. dollars; (b) securities
issued or directly and fully guaranteed or insured by the U.S. government or
any agency or instrumentality thereof having maturities of not more than one
year from the date of acquisition; (c) certificates of deposit and eurodollar
time deposits with maturities of one year or less from the date of
acquisition, bankers' acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any domestic commercial bank having
capital and surplus in excess of $500 million; (d) repurchase obligations with
a term of not more than seven days for underlying securities of the types
described in clauses (b) and (c) entered into with any financial institution
meeting the qualifications specified in clause (c) above; (e) commercial paper
rated P-1, A-1 or the equivalent thereof by Moody's or S&P, respectively, and
in each case maturing within six months after the date of acquisition and (f)
investments in money market funds substantially all of the assets of which
comprise securities described in the foregoing clauses (b)-(e).
"CCCI" means Comcast Cellular Communications, Inc., a Delaware
corporation, and its successors.
"Change of Control" shall mean the occurrence of any of the
following events (whether or not approved by the Board of Directors of the
Company): (a) any "person" or "group" (as such terms are used in Section
13(d) and 14(d) of the Exchange Act or any successor provision to either of
the foregoing, including any group acting for the purpose of acquiring,
holding or disposing of securities within the meaning of Rule 13d-5(b)(1)
under the Exchange Act), excluding Permitted Holders, is or becomes the
"beneficial owner," directly or indirectly, of 50% or more of the total voting
power of the Voting Equity Interests of the Company or Comcast Corporation;
(b) the Company consolidates with, or merges with or into, another Person
(other than a Wholly Owned Restricted Subsidiary) or the Company or any
Restricted Subsidiary sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of the assets of the Company and the
Restricted Subsidiaries (determined on a consolidated basis) to any Person
(other than a Wholly Owned Restricted Subsidiary), or any Person (other than a
Wholly Owned Restricted Subsidiary) consolidates with, or merges with or into,
the Company, other than in any such event pursuant to a transaction in which
immediately after such transaction the Permitted Holders or the Person or
Persons that "beneficially owned" immediately prior to such transaction,
directly or indirectly, the Voting Equity Interests of the Company
"beneficially own," directly or indirectly, a majority of the total voting
power of the Voting Equity Interests of the surviving or transferee Person;
(c) during any consecutive two-year period, individuals who at the beginning
of such period constituted the Board of Directors of the Company or Comcast
Corporation (together with any new directors whose election by the Board of
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Directors of the Company or Comcast Corporation or whose nomination for
election by the stockholders of the Company or Comcast Corporation was
approved by a vote of at least a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason (other than by action of the Permitted Holders) to constitute a
majority of the Board of Directors of the Company or Comcast Corporation then
in office; or (d) there shall occur the liquidation or dissolution of the
Company. For purposes of this definition "beneficially own," "beneficial
owner" and "beneficial ownership" shall have the meaning as defined pursuant
to Rules 13d-3 and 13d-5 under the Exchange Act (except that a Person shall be
deemed to have "beneficial ownership" of all securities that such Person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time, upon the happening of an event or otherwise). For
purposes of this definition, all references to Comcast Corporation shall be
deemed to apply only so long as Comcast Corporation controls the Company.
"Change of Control Date" see Section 4.14.
"Change of Control Triggering Event" shall mean the occurrence
of both a Change of Control and a Rating Decline.
"Comcast Cellular" means Comcast Cellular Corporation, a
Delaware corporation and a wholly owned Subsidiary of the Company, and its
successors (other than the Company).
"Comcast Corporation" means Comcast Corporation, a Pennsylvania
corporation, and its successors.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Company" shall
mean such successor.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by two Officers or by an Officer and
an Assistant Treasurer or an Assistant Secretary, and delivered to the Trustee.
"Consolidated Income Tax Expense" means, with respect to the
Company for any period, the provision for federal, state, local and foreign
income taxes payable by the Company and the Restricted Subsidiaries for such
period as determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to the
Company for any period, without duplication, the sum of (i) the interest
expense of the Company and the Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP, including, without
limitation, (a) any amortization of debt discount; (b) the net cost under
Interest Rate Protection Obligations (including any amortization of
discounts); (c) the interest portion of any deferred payment obligation; (d)
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing; (e) all capitalized
interest and all accrued interest; and (f) interest-equivalent costs
associated with any Permitted Receivables Financing, whether accounted for as
interest expense or loss on the sale of Receivables and Related Assets; (ii)
the interest component of Capital Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by the Company and the Restricted Subsidiaries
during such period as determined on a consolidated basis in accordance with
GAAP; and (iii) dividends and distributions in respect of Disqualified Equity
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Interests actually paid in cash by the Company during such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any period,
the net income of the Company and the Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, adjusted, to the
extent included in calculating such net income, by excluding, without
duplication, (a) all extraordinary gains or losses and all gains and losses
from the sales or other dispositions of assets out of the ordinary course of
business (net of taxes, fees and expenses relating to the transaction giving
rise thereto) for such period; (b) that portion of such net income derived
from or in respect of Investments in Persons other than Restricted
Subsidiaries, except to the extent actually received in cash by the Company or
any Restricted Subsidiary (subject, in the case of any Restricted Subsidiary,
to the provisions of clause (e) of this definition); (c) the portion of such
net income (or loss) allocable to minority interests in any Person (other than
a Restricted Subsidiary) for such period, except to the extent actually
received in cash by the Company or any Restricted Subsidiary (subject, in the
case of any Restricted Subsidiary, to the provisions of clause (e) of this
definition); (d) the net income (or loss) of any other Person combined with
the Company or any Restricted Subsidiary on a "pooling of interests" basis
attributable to any period prior to the date of combination; (e) the net
income (or loss) of any Restricted Subsidiary to the extent that the
declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulations
applicable to that Restricted Subsidiary or its Equity Interest holders; and
(f) the cumulative effect of a change in accounting principles.
"Consolidated Operating Cash Flow" means, with respect to any
period, Consolidated Net Income for such period increased (without
duplication) by the sum of (a) Consolidated Income Tax Expense for such period
to the extent deducted in determining Consolidated Net Income for such period;
(b) Consolidated Interest Expense for such period to the extent deducted in
determining Consolidated Net Income for such period; and (c) depreciation,
amortization and any other non cash items for such period to the extent
deducted in determining Consolidated Net Income for such period of the Company
and the Restricted Subsidiaries, including, without limitation, amortization
of capitalized debt issuance costs for such period, all of the foregoing
determined on a consolidated basis in accordance with GAAP minus non cash
items to the extent they increase Consolidated Net Income (including the
partial or entire reversal of reserves taken in prior periods) for such period.
"control" means, as used with respect to any Person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities or other voting interests, by agreement or
otherwise; provided, however, that beneficial ownership of 10.0% or more of
the voting securities or other voting interests of a Person shall be deemed to
be control (and the terms "controlling," "controlled by" and "under common
control with" shall have correlative meanings).
"Corporate Trust Office of the Trustee" shall be at the address
of the Trustee specified in Section 10.02 or such other address as the Trustee
may give notice to the Company.
"Cumulative Operating Cash Flow" means, as at any date of
determination, the positive cumulative Consolidated Operating Cash Flow
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realized during the period commencing on the Issue Date and ending on the last
day of the most recent fiscal quarter immediately preceding the date of
determination for which consolidated financial information of the Company is
available or, if such cumulative Consolidated Operating Cash Flow for such
period is negative, the negative amount by which cumulative Consolidated
Operating Cash Flow is less than zero.
"Custodian" see Section 6.01.
"Debt to Annualized Operating Cash Flow Ratio" means the ratio
of (a) the Total Consolidated Indebtedness as of the date of calculation (the
"Determination Date") to (b) two times the Consolidated Operating Cash Flow
for the latest two fiscal quarters for which financial information is
available immediately preceding such Determination Date (the "Measurement
Period"). For purposes of calculating Consolidated Operating Cash Flow for the
Measurement Period immediately prior to the relevant Determination Date, (I)
any Person that is a Restricted Subsidiary on the Determination Date (or would
become a Restricted Subsidiary on such Determination Date in connection with
the transaction that requires the determination of such Consolidated Operating
Cash Flow) will be deemed to have been a Restricted Subsidiary at all times
during such Measurement Period, (II) any Person that is not a Restricted
Subsidiary on such Determination Date (or would cease to be a Restricted
Subsidiary on such Determination Date in connection with the transaction that
requires the determination of such Consolidated Operating Cash Flow) will be
deemed not to have been a Restricted Subsidiary at any time during such
Measurement Period, and (III) if the Company or any Restricted Subsidiary
shall have in any manner (x) acquired (including through an Acquisition or the
commencement of activities constituting such operating business) or (y)
disposed of (including by way of an Asset Sale or the termination or
discontinuance of activities constituting such operating business) any
operating business during such Measurement Period or after the end of such
period and on or prior to such Determination Date, such calculation will be
made on a pro forma basis in accordance with GAAP as if, in the case of an
Acquisition or the commencement of activities constituting such operating
business, all such transactions had been consummated on the first day of such
Measurement Period and, in the case of an Asset Sale or termination or
discontinuance of activities constituting such operating business, all such
transactions had been consummated prior to the first day of such Measurement
Period; provided, however, that such pro forma adjustment shall not give
effect to the Consolidated Operating Cash Flow of any Acquired Person
(calculated as such Consolidated Operating Cash Flow would be calculated for
the Company except as follows) to the extent that such Person's net income
would be excluded pursuant to clause (e) of the definition of Consolidated Net
Income.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"Depository" means, with respect to the Securities issued in
the form of one or more Global Securities, The Depository Trust Company or
another Person designated as Depository by the Company, which must be a
clearing agency registered under the Exchange Act.
"Designation" see Section 4.16.
"Designation Amount" see Section 4.16.
"Determination Date" has the meaning set forth in the
definition of "Debt to Annualized Operating Cash Flow Ratio" above.
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"Disinterested Director" means, with respect to any Person, a
member of the Board of Directors of such Person who does not have any material
direct or indirect financial interest in or with respect to the transaction
being considered.
"Disposition" means, with respect to any Person, any merger,
consolidation or other business combination involving such Person (whether or
not such Person is the Surviving Person) or the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of such
Person's assets.
"Disqualified Equity Interest" means any Equity Interest which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable, at the option of the
holder thereof, in whole or in part, or exchangeable into Indebtedness on or
prior to the earlier of the maturity date of the Securities or the date on
which no Securities remain outstanding; provided, however, that any Equity
Interests that would not constitute Disqualified Equity Interests but for
provisions thereof giving holders thereof the right to require the Company to
repurchase or redeem such Equity Interests upon the occurrence of a change in
control occurring prior to the Final Maturity Date of the Securities shall not
constitute Disqualified Equity Interests if the change in control provisions
applicable to such Equity Interests are no more favorable to the holders of
such Equity Interests than the provisions described under Section 4.14 and
such Equity Interests specifically provide that the Company will not
repurchase or redeem any such Equity Interests pursuant to such provisions
prior to the Company's repurchase of the Securities as are required to be
repurchased pursuant to the provisions described under Section 4.14.
"Equity Interest" in any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) corporate stock or other
equity participations, including partnership interests, whether general or
limited, in such Person, including any Preferred Equity Interests.
"Event of Default" see Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Existing Indebtedness" means any Indebtedness of the Company
and the Restricted Subsidiaries in existence on the Issue Date until such
amounts are repaid.
"Expiration Date" has the meaning set forth in the definition
of "Offer to Purchase" below.
"Fair Market Value" means, with respect to any asset, the price
(after taking into account any liabilities relating to such assets) which
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of which is
under any compulsion to complete the transaction; provided, however, that the
Fair Market Value of any such asset or assets shall be determined conclusively
by the Board of Directors of the Company acting in good faith, and shall be
evidenced by resolutions of the Board of Directors of the Company delivered to
the Trustee.
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"Final Maturity Date" means May 1, 2007.
"GAAP" means, at any date of determination, generally accepted
accounting principles in effect in the United States which are applicable at
the date of determination.
"Global Security" means a security evidencing all or a portion
of the Securities issued to the Depository or its nominee in accordance with
Section 2.01 and bearing the legend set forth in Exhibit C hereto.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of
which guarantee or obligations the full faith and credit of the United States
is pledged.
"guarantee" means, as applied to any obligation, (i) a
guarantee (other than by endorsement of negotiable instruments for collection
in the ordinary course of business), direct or indirect, in any manner, of any
part or all of such obligation and (ii) an agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to assure in any way
the payment or performance (or payment of damages in the event of
non-performance) of all or any part of such obligation, including, without
limiting the foregoing, the payment of amounts drawn down by letters of
credit. A guarantee shall include, without limitation, any agreement to
maintain or preserve any other person's financial condition or to cause any
other Person to achieve certain levels of operating results.
"Guest Informant" means substantially all of the assets of
Comcast Publishing Holdings Corporation, a Pennsylvania corporation and a
wholly owned Subsidiary of CCCI.
"Holder," "holder of Securities," "Securityholders" or other
similar terms mean the registered holder of any Security.
"Incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (including by conversion,
exchange or otherwise), assume, guarantee or otherwise become liable in
respect of such Indebtedness or other obligation or the recording, as required
pursuant to GAAP or otherwise, of any such Indebtedness or other obligation on
the balance sheet of such Person (and "Incurrence," "Incurred" and "Incurring"
shall have meanings correlative to the foregoing). Neither the accrual of
interest (including the issuance of "pay in kind" securities or similar
instruments in respect of such accrued interest), nor the accretion of
original issue discount, nor the extension of the maturity of any Indebtedness
shall be deemed to be an Incurrence of Indebtedness.
"Indebtedness" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person
and whether or not contingent, (a) every obligation of such Person for money
borrowed; (b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments; (c) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person; (d) every obligation of such
Person issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable incurred in the ordinary course
of business and payable in accordance with industry practices, or other
accrued liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good faith); (e) every Capital Lease
Obligation of such Person; (f) every net obligation under interest rate swap
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or similar agreements or foreign currency hedge, exchange or similar
agreements of such Person; (g) every obligation of the type referred to in
clauses (a) through (f) of another Person and all dividends of another Person
the payment of which, in either case, such Person has guaranteed or is
responsible or liable for, directly or indirectly, as obligor, guarantor or
otherwise; and (h) any and all deferrals, renewals, extensions and refundings
of, or amendments, modifications or supplements to, any liability of the kind
described in any of the preceding clauses (a) through (g) above. Indebtedness
(i) shall never be calculated taking into account any cash and cash
equivalents held by such Person; (ii) shall not include obligations of any
Person (x) arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument inadvertently drawn against
insufficient funds in the ordinary course of business, provided that such
obligations are extinguished within two Business Days of their incurrence
unless covered by an overdraft line, (y) resulting from the endorsement of
negotiable instruments for collection in the ordinary course of business and
consistent with past business practices and (z) under stand-by letters of
credit to the extent collateralized by cash or Cash Equivalents; (iii) which
provides that an amount less than the principal amount thereof shall be due
upon any declaration of acceleration thereof shall be deemed to be incurred or
outstanding in an amount equal to the accreted value thereof at the date of
determination determined in accordance with GAAP; (iv) shall include the
liquidation preference and any mandatory redemption payment obligations in
respect of any Disqualified Equity Interests of the Company or any Restricted
Subsidiary; and (v) shall not include obligations under performance bonds,
performance guarantees, surety bonds and appeal bonds, letters of credit or
similar obligations, incurred in the ordinary course of business and on
ordinary business terms.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Initial Purchasers" means Donaldson, Lufkin & Jenrette
Securities Corporation, Credit Suisse, First Boston Corporation, Salomon
Brothers Inc, BNY Capital Markets, Inc., Chase Securities Inc., J.P. Morgan
Securities Inc., NationsBanc Capital Markets, Inc. and TD Securities (USA) Inc.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act.
"interest" means, with respect to the Securities, the sum of
any cash interest and any Liquidated Damages on the Securities.
"Interest Payment Date" means each semiannual interest payment
date on May 1 and November 1 of each year, commencing May 1, 1997.
"Interest Rate Protection Obligations" means, with respect to
any Person, the Obligations of such Person under (i) interest rate swap
agreements, interest rate cap agreements and interest rate collar agreements,
and (ii) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates.
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"Interest Record Date" for the interest payable on any Interest
Payment Date (except a date for payment of defaulted interest) means the April
15 or October 15 (whether or not a Business Day), as the case may be,
immediately preceding such Interest Payment Date.
"Investment" means, with respect to any Person, any direct or
indirect loan, advance, guarantee or other extension of credit or capital
contribution to (by means of transfers of cash or other property or assets to
others or payments for property or services for the account or use of others,
or otherwise), or purchase or acquisition of capital stock, bonds, notes,
debentures or other securities or evidences of Indebtedness issued by, any
other Person. The amount of any Investment shall be the original cost of such
Investment, plus the cost of all additions thereto, and minus the amount of
any portion of such Investment repaid to such Person in cash as a repayment of
principal or a return of capital, as the case may be, but without any other
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment. In determining the amount of any
investment involving a transfer of any property or asset other than cash, such
property shall be valued at its fair market value at the time of such
transfer, as determined in good faith by the Board of Directors of the Person
making such transfer.
"Investment Grade" shall mean BBB- or higher by S&P or Baa3 or
higher by Moody's or the equivalent of such ratings by S&P or Moody's. In the
event that the Company shall be permitted to select any other Rating Agency,
the equivalent of such ratings by such Rating Agency shall be used.
"Issue Date" means the original issue date of the Securities.
"Lien" means any lien, mortgage, charge, security interest,
hypothecation, assignment for security or encumbrance of any kind (including
any conditional sale or capital lease or other title retention agreement, any
lease in the nature thereof, and any agreement to give any security interest).
"Liquidated Damages" has the meaning provided in the
Registration Rights Agreement.
"Management Agreement" means the Management Agreement dated as
of March 5, 1992 between Comcast Corporation and CCCI.
"Maturity Date" means the date, which is set forth on the face
of the Securities, on which the Securities will mature.
"Measurement Period" has the meaning set forth in the
definition of "Debt to Annualized Operating Cash Flow Ratio" above.
"Moody's" means Moody's Investors Service, Inc., or any
successor to such rating agency business thereof.
"MSA" has the meaning given to such term in the definition of
"Pops" below.
"Net Cash Proceeds" means the aggregate proceeds in the form of
cash or Cash Equivalents received by the Company or any Restricted Subsidiary
in respect of any Asset Sale, including all cash or Cash Equivalents received
upon any sale, liquidation or other exchange of proceeds of Asset Sales
received in a form other than cash or Cash Equivalents if sold, liquidated or
exchanged within 12 months from the date of receipt thereof, net of (a) the
direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof; (b) provisions for all taxes
(whether or not such taxes will actually be paid or are payable) as a result
of such Asset Sale without regard to the consolidated results of operations of
the Company and the Restricted Subsidiaries, taken as a whole; (c) amounts
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required to be applied to the repayment of Indebtedness (i) secured by a Lien
on the asset or assets that were the subject of such Asset Sale or (ii)
required to be repaid as a result of such Asset Sale or in order to obtain a
necessary consent to such Asset Sale; (d) amounts deemed, in good faith,
appropriate by the Board of Directors of the Company to be provided as a
reserve, in accordance with GAAP, against any liabilities associated with such
assets which are the subject of such Asset Sale (provided that the amount of
any such reserves shall be deemed to constitute Net Cash Proceeds at the time
such reserves shall have been released or are not otherwise required to be
retained as a reserve); and (e) with respect to Asset Sales by Subsidiaries,
the portion of such cash payments attributable to Persons holding a minority
interest in such Subsidiary.
"Net Pops" of any Person with respect to any system means the
Pops of the MSA or RSA served by such system multiplied by the direct and/or
indirect percentage interest of such Person in the entity licensed or
designated to receive an authorization by the Federal Communications
Commission to construct or operate a system in that MSA or RSA.
"Net Proceeds" means the aggregate net proceeds (including the
fair market value of non-cash proceeds constituting equipment, licenses or other
assets of a type generally used in the Wireless Telecommunications Business in
an amount to be determined by the Board of Directors of the Company for amounts
under $25.0 million and by a financial advisor or appraiser of national
reputation for equal or greater amounts) received by a Person from the sale of
Qualified Equity Interests after payment of out-of-pocket expenses, commission
and discounts incurred in connection therewith.
"New Preferred Stock" means the pay-in-kind preferred stock of
the Company issued to Comcast Corporation, which preferred stock was purchased
by Comcast Corporation with substantially all of the proceeds received by it
in the redemption of the Zero Coupon Notes held by Comcast Corporation.
"Non-U.S. Person" means a person who is not a U.S. Person, as
defined in Regulation S.
"Obligations" means any principal, interest (including, without
limitation, post-petition interest), penalties, fees, indemnifications,
reimbursement obligations, damages and other liabilities payable under the
documentation governing any Indebtedness.
"Offer" has the meaning set forth in the definition of "Offer
to Purchase" below.
"Offer to Purchase" means a written offer (the "Offer") sent by
or on behalf of the Company by first-class mail, postage prepaid, to each
Holder at his address appearing in the register for the Securities on the date
of the Offer offering to purchase up to the principal amount of Securities
specified in such Offer at the purchase price specified in such Offer (as
determined pursuant to this Indenture). Unless otherwise required by
applicable law, the Offer shall specify an expiration date (the "Expiration
Date") of the Offer to Purchase, which shall be not less than 20 Business Days
nor more than 60 days after the date of such Offer, and a settlement date (the
"Purchase Date") for purchase of Securities to occur no later than five
Business Days after the Expiration Date. The Company shall notify the Trustee
at least 15 Business Days (or such shorter period as is acceptable to the
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Trustee) prior to the mailing of the Offer of the Company's obligation to make
an Offer to Purchase, and the Offer shall be mailed by the Company or, at the
Company's request, by the Trustee in the name and at the expense of the
Company. The Offer shall contain all the information required by applicable
law to be included therein. The Offer shall also contain a description of the
events requiring the Company to make the Offer to Purchase. The Offer shall
contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Offer to Purchase.
The Offer shall also state:
(1) the Section of this Indenture pursuant to
which the Offer to Purchase is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the
outstanding Securities offered to be purchased by the
Company pursuant to the Offer to Purchase (including, if
less than 100%, the manner by which such amount has been
determined pursuant to the Section of this Indenture
requiring the Offer to Purchase) (the "Purchase Amount");
(4) the purchase price to be paid by the Company
for each $1,000 aggregate principal amount of Securities
accepted for payment (as specified pursuant to this
Indenture) (the "Purchase Price");
(5) that the Holder may tender all or any portion
of the Securities registered in the name of such Holder and
that any portion of a Security tendered must be tendered in
an integral multiple of $1,000 principal amount at maturity;
(6) the place or places where Securities are to be
surrendered for tender pursuant to the Offer to Purchase;
(7) that interest on any Security not tendered or
tendered but not purchased by the Company pursuant to the
Offer to Purchase will continue to accrue;
(8) that on the Purchase Date the Purchase Price
will become due and payable upon each Security being
accepted for payment pursuant to the Offer to Purchase and
that interest thereon shall cease to accrue on and after the
Purchase Date;
(9) that each Holder electing to tender all or any
portion of a Security pursuant to the Offer to Purchase will
be required to surrender such Security at the place or
places specified in the Offer prior to the close of business
on the Expiration Date (such Security being, if the Company
or the Trustee so requires, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the holder
thereof or his attorney duly authorized in writing);
(10) that Holders will be entitled to withdraw all
or any portion of Securities tendered if the Company (or its
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Paying Agent) receives, not later than the close of business
on the fifth Business Day next preceding the Expiration
Date, a facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Security the
Holder tendered, the certificate number of the Security the
Holder tendered and a statement that such Holder is
withdrawing all or a portion of his tender;
(11) that (a) if Securities in an aggregate
principal amount less than or equal to the Purchase Amount
are duly tendered and not withdrawn pursuant to the Offer to
Purchase, the Company shall purchase all such Securities and
(b) if Securities in an aggregate principal amount in excess
of the Purchase Amount are tendered and not withdrawn
pursuant to the Offer to Purchase, the Company shall
purchase Securities having an aggregate principal amount
equal to the Purchase Amount on a pro rata basis (with such
adjustments as may be deemed appropriate so that only
Securities in denominations of $1,000 principal amount at
maturity or integral multiples thereof shall be purchased);
and
(12) that in the case of any Holder whose Security
is purchased only in part, the Company shall execute and the
Trustee shall authenticate and deliver to the holder of such
Security without service charge, a new Security or
Securities, of any authorized denomination as requested by
such Holder, in an aggregate principal amount equal to and
in exchange for the unpurchased portion of the Security so
tendered. An Offer to Purchase shall be governed by and
effected in accordance with the provisions above pertaining
to any Offer.
"Officer" means the Chairman, any Vice Chairman, the President,
any Vice President, the Chief Financial Officer, the Treasurer, or the
Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers or by an Officer and an Assistant Treasurer or Assistant Secretary of
the Company complying with Sections 10.04 and 10.05.
"Opinion of Counsel" means a written opinion from legal counsel
who is reasonably acceptable to the Trustee. The counsel may be an employee of
or counsel to the Company or the Trustee.
"Other Debt" see Section 4.05.
"Participant" has the meaning set forth in Section 2.15.
"Participating Preferred Stock" means the shares of Class B
Participating Redeemable Preferred Stock, par value $.01 per share, of CCCI.
"Paying Agent" has the meaning provided in Section 2.03.
"Permitted Indebtedness" see Section 4.04.
"Permitted Holder" means any of (i) Comcast Corporation so long
as controlled by any other Permitted Holder or so long as no "person" or
"group" (as such terms are used in Section 13(d) and 14(d) of the Exchange Act
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or any successor provision to either of the foregoing, including any group
acting for the purpose of acquiring, holding or disposing of securities within
the meaning of Rule 13d-5(b)(1) under the Exchange Act), excluding Permitted
Holders, is or becomes the "beneficial owner," directly or indirectly, of 50%
or more of the total voting power of the Voting Equity Interests of Comcast
Corporation, (ii) the Roberts Family, (iii) any of the Permitted Transferees
of the Persons referred to in clauses (i) and (ii), and (iv) any Person or
group controlled by each or any of the Persons referred to in clauses (i)
through (iii). For purposes of this definition "beneficially own," "beneficial
owner" and "beneficial ownership" shall have the meaning as defined pursuant
to Rules 13d-3 and 13d-5 under the Exchange Act (except that a Person shall be
deemed to have "beneficial ownership" of all securities that such Person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time, upon the happening of an event or otherwise).
"Permitted Liens" means (a) Liens on property of a Person
existing at the time such Person is merged into or consolidated with the
Company or any Restricted Subsidiary; provided, however, that such Liens were
not incurred in contemplation of such merger or consolidation and do not
secure any property or assets of the Company or any Restricted Subsidiary
other than the property or assets subject to the Liens prior to such merger or
consolidation; (b) Liens existing on the Issue Date; (c) Liens securing
Indebtedness consisting of Capitalized Lease Obligations, Purchase Money
Indebtedness, mortgage financings, industrial revenue bonds or other monetary
obligations, in each case incurred solely for the purpose of financing all or
any part of the purchase price or cost of construction or installation of
assets used in the business of the Company or the Restricted Subsidiaries, or
repairs, additions or improvements to such assets; provided, however, that (I)
such Liens secure Indebtedness in an amount not in excess of the original
purchase price or the original cost of any such assets or repair, addition or
improvement thereto (plus an amount equal to the reasonable fees and expenses
in connection with the incurrence of such Indebtedness), (II) such Liens do
not extend to any other assets of the Company or the Restricted Subsidiaries
(and, in the case of repair, addition or improvements to any such assets, such
Lien extends only to the assets (and improvements thereto or thereon)
repaired, added to or improved), (III) the Incurrence of such Indebtedness is
permitted by Section 4.04, and (IV) such Liens attach within 365 days of such
purchase, construction, installation, repair, addition or improvement; (d) any
Lien granted by a Restricted Subsidiary on its property or assets to the
extent limitations on the incurrence of such Liens are prohibited by any
agreement to which such Restricted Subsidiary is subject as of the date of
this Indenture; (e) Liens to secure any refinancings, renewals, extensions,
modifications or replacements (collectively, "refinancing") (or successive
refinancings), in whole or in part, of any Indebtedness secured by Liens
referred to in the clauses above so long as such Lien does not extend to any
other property (other than improvements thereto); (f) Liens securing letters
of credit entered into in the ordinary course of business and consistent with
past business practice; (g) Liens on and pledges of the Equity Interests of
any Unrestricted Subsidiary securing any Indebtedness of such Unrestricted
Subsidiary; (h) Liens securing Indebtedness (including all Obligations) under
the Bank Credit Facility; (i) other Liens securing Indebtedness that is
permitted by the terms of this Indenture to be outstanding having an aggregate
principal amount at any one time outstanding not to exceed $20.0 million; and
(j) Liens on Receivables and Related Assets securing Indebtedness or otherwise
permitted to be Incurred, in each case, with a Permitted Receivables
Financing.
"Permitted Receivables Financing" means a transaction or series
of transactions (including amendments, supplements, extensions, renewals,
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replacements, refinancings or modifications thereof) pursuant to which a
Securitization Subsidiary purchases Receivables and Related Assets from the
Company or any Restricted Subsidiary and finances such Receivables and Related
Assets through the issuance of indebtedness or equity interests or through the
sale of the Receivables and Related Assets or a fractional undivided interest
in the Receivables and Related Assets; provided, however, that (i) the Board of
Directors shall have determined in good faith that such Permitted Receivables
Financing is economically fair and reasonable to the Company and the
Securitization Subsidiary, (ii) all sales of Receivables and Related Assets to
or by the Securitization Subsidiary are made at fair market value (as
determined in good faith by the Board of Directors of the Company), (iii) the
financing terms, covenants, termination events and other provisions thereof
shall be market terms (as determined in good faith by the Board of Directors of
the Company), (iv) no portion of the Indebtedness of a Securitization
Subsidiary is guaranteed by or is recourse to the Company or any Restricted
Subsidiary (other than recourse for customary representations, warranties,
covenants and indemnities, none of which shall relate to the collectibility of
the Receivables and Related Assets) and (v) neither the Company nor any
Subsidiary has any obligation to maintain or preserve the Securitization
Subsidiary's financial condition.
"Permitted Transferee" means, with respect to any Person: (a)
in the case of any Person who is a natural person, such individual's spouse or
children, any trust for such individual's benefit or the benefit of such
individual's spouse or children, or any corporation or partnership in which
the direct and beneficial owner of all of the equity interest is such Person
or such individual's spouse or children or any trust for the benefit of such
persons; (b) in the case of any Person who is a natural person, the heirs,
executors, administrators or personal representatives upon the death of such
Person or upon the incompetency or disability of such Person for purposes of
the protection and management of such individual's assets; and (c) in the case
of any Person who is not a natural person, any Affiliate of such Person.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, limited
liability limited partnership, trust, unincorporated organization or government
or any agency or political subdivision thereof.
"Physical Securities" has the meaning set forth in Section 2.01.
"Pops" means the estimate of the population of a Metropolitan
Statistical Area ("MSA") or Rural Service Area ("RSA") as derived from the
most recent Rand McNally Commercial Atlas & Marketing Guide or if such
statistics are no longer printed in the Rand McNally Commercial Atlas &
Marketing Guide or the Rand McNally Commercial Atlas & Marketing Guide is no
longer published, the most recent Donnelly Market Service or if such
statistics are no longer printed in the Donnelly Market Service or the
Donnelly Market Service is no longer published, such other nationally
recognized source of such information.
"Preferred Equity Interest" in any Person means an Equity
Interest of any class or classes (however designated) which is preferred as to
the payment of dividends or distributions, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over Equity Interests of any other class in such Person.
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"principal" of a debt security means the principal of the
security, plus, when appropriate, the premium, if any, on the security.
"Private Placement Legend" means the legend initially set forth
on the Series A Securities in the form set forth on Exhibit A hereto.
"Public Equity Offering" means an underwritten public offering
of common equity of the Company pursuant to an effective registration
statement filed under the Securities Act (excluding registration statements
filed on Form S-8).
"Purchase Agreement" means the Purchase Agreement dated as of
May 5, 1997 between the Company and the Initial Purchasers.
"Purchase Amount" has the meaning set forth in the definition
of "Offer to Purchase" above.
"Purchase Date" has the meaning set forth in the definition of
"Offer to Purchase" above.
"Purchase Money Indebtedness" means Indebtedness of the Company
or any Restricted Subsidiary Incurred for the purpose of financing all or any
part of the purchase price or the cost of construction or improvement of any
property, provided that the aggregate principal amount of such Indebtedness
does not exceed the lesser of the Fair Market Value of such property or such
purchase price or cost, including any refinancing of such indebtedness that
does not increase the aggregate principal amount (or accreted amount, if less)
thereof as of the date of refinancing.
"Purchase Price" has the meaning set forth in the definition of
"Offer to Purchase" above.
"QIB Global Security" see Section 2.01.
"Qualified Equity Interest" in any Person means any Equity
Interest in such Person other than any Disqualified Equity Interest (it being
understood that the New Preferred Stock shall in no event constitute Qualified
Equity Interest).
"Qualified Institutional Buyer" or "QIB" means a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act.
"Rating Agencies" shall mean (i) S&P and (ii) Moody's and (iii)
if S&P or Moody's or both shall not make a rating of the Securities publicly
available, a nationally recognized securities rating agency or agencies, as
the case may be, selected by the Company, which shall be substituted for S&P or
Moody's or both, as the case may be.
"Rating Category" shall mean (i) with respect to S&P, any of
the following categories: BB, B, CCC, CC, C and D (or equivalent successor
categories); (ii) with respect to Moody's, any of the following categories:
Ba, B, Caa, Ca, C and D (or equivalent successor categories); and (iii) the
equivalent of any such category of S&P or Moody's used by another Rating
Agency. In determining whether the rating of the Securities has decreased by
one or more gradations, gradations within Rating Categories (+ and - for S&P;
1, 2 and 3 for Moody's; or the equivalent gradations for another Rating
Agency) shall be taken into account (e.g., with respect to S&P, a decline in a
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rating from BB to BB-, as well as from BB- to B+, will constitute a decrease
of one gradation).
"Rating Date" shall mean that date which is 90 days prior to
the earlier of (x) a Change of Control and (y) public notice of the occurrence
of a Change of Control or of the intention by the Company or any Permitted
Holder to effect a Change of Control.
"Rating Decline" shall mean the occurrence on, or within 90
days after, the date of public notice of the occurrence of a Change of Control
or the intention by the Company or any Permitted Holder to effect a Change of
Control (which period shall be extended so long as the rating of the
Securities is under publicly announced consideration for possible downgrade by
any of the Rating Agencies) of any of (a) in the event the Securities are
rated by both Moody's and S&P on the Rating Date as Investment Grade, the
rating of the Securities by either Rating Agency shall be below Investment
Grade; (b) in the event the Securities are rated by either, but not both, of
the Rating Agencies on the Rating Date as Investment Grade, the rating of the
Securities by both Rating Agencies shall be below Investment Grade; or (c) in
the event the Securities are rated below Investment Grade by both Rating
Agencies on the Rating Date, the rating of the Securities by either Rating
Agency shall be decreased by one or more gradations (including gradations
within Rating Categories as well as between Rating Categories).
"Receivables and Related Assets" means accounts receivable and
instruments, chattel paper, obligations, general intangibles and other similar
assets, in each case relating to such receivables, including interests in
merchandise or goods, the sale or lease of which gave rise to such receivable,
related contractual rights, guarantees, insurance proceeds, collections, other
related assets and proceeds of all of the foregoing.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture.
"Redemption Price," when used with respect to any Security to
be redeemed, means the price fixed for such redemption pursuant to this
Indenture as set forth in the form of Security annexed hereto as Exhibit A or
Exhibit B hereto.
"Registered Exchange Offer" means the offer to exchange the
Series B Securities for all of the outstanding Series A Securities in
accordance with the Registration Rights Agreement.
"Registrar" see Section 2.03.
"Registration" means the Registered Exchange Offer by the
Company or other registration of the Series A Securities under the Securities
Act pursuant to and in accordance with the terms of the Registration Rights
Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of May 8, 1997 between the Company and the Initial
Purchasers.
"Registration Statement" means the registration statement(s) as
defined and described in the Registration Rights Agreement.
"Regulation S" means Regulation S under the Securities Act.
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"Regulation S Global Security" see Section 2.01.
"Required Filing Date" see Section 4.12.
"Restricted Investment" means an Investment in any Person that
is, or as a result of such Investment becomes, an Affiliate of the Company
other than an Investment in (a) the Company, (b) a Restricted Subsidiary, (c)
a Person that immediately after giving effect to such Investment becomes a
Restricted Subsidiary or (d) any Person that is an Affiliate of the Company
(other than an Unrestricted Subsidiary) solely because of the control of such
Person by the Company and/or one or more of the Restricted Subsidiaries.
"Restricted Payments" see Section 4.06.
"Restricted Security" has the meaning set forth in Rule
144(a)(3) under the Securities Act or any successor to such rule; provided,
that the Trustee shall be entitled to request and conclusively rely upon an
Opinion of Counsel with respect to whether any Security is a Restricted
Security.
"Restricted Subsidiary" means any Subsidiary of the Company
that has not been designated as an Unrestricted Subsidiary pursuant to Section
4.16. Any such designation may be revoked by a resolution of the Board of
Directors of the Company delivered to the Trustee, subject to the provisions of
such covenant.
"Revocation" see Section 4.16.
"Roberts Family" means: (i) Ralph J. Roberts or his spouse;
(ii) a lineal descendant of Ralph J. Roberts (whether by the whole or half
blood); or (iii) a trust established for the benefit of any of Ralph J.
Roberts, his spouse and/or a lineal descendant or descendants of Ralph J.
Roberts (whether by the whole or half blood).
"RSA" has the meaning given to such term in the definition of
Pops.
"Rule 144A" means Rule 144A under the Securities Act or any
successor thereto.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor to such rating agency business thereof.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Series A Securities and the Series B
Securities treated as a single class of securities, as amended or supplemented
from time to time in accordance with the terms of this Indenture.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Securities Amount" see Section 4.05.
"Securities Portion of Unutilized Net Cash Proceeds" see
Section 4.05.
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"Securitization Subsidiary" means a Wholly Owned Restricted
Subsidiary which is established for the limited purpose of acquiring and
financing Receivables and Related Assets and engaging in activities ancillary
thereto.
"Series A Securities" means the 9 1/2% Senior Notes due 2007 of
the Company issued pursuant to this Indenture and sold pursuant to the
Purchase Agreement.
"Series B Securities" means the 9 1/2% Senior Notes due 2007,
Series B, of the Company to be issued pursuant to this Indenture in exchange
for the Series A Securities pursuant to the Registered Exchange Offer and the
Registration Rights Agreement.
"Significant Restricted Subsidiary" means, at any date of
determination, any Restricted Subsidiary that, together with its Subsidiaries
that constitute Restricted Subsidiaries, (i) for the most recent fiscal year
of the Company accounted for more than 10.0% of the consolidated revenues of
the Company and the Restricted Subsidiaries or (ii) as of the end of such
fiscal year, owned more than 10.0% of the consolidated assets of the Company
and the Restricted Subsidiaries, all as set forth on the consolidated
financial statements of the Company and the Restricted Subsidiaries for such
year prepared in conformity with GAAP.
"Stated Maturity" means, when used with respect to any security
or any installment of interest thereon, the date specified in such security as
the fixed date on which the principal of such security or such installment of
interest is due and payable.
"Subordinated Indebtedness" means any Indebtedness of the
Company which is expressly subordinated in right of payment to the Securities.
"Subsidiary" means, with respect to any Person, (a) any
corporation of which the outstanding Voting Equity Interests having at least a
majority of the votes entitled to be cast in the election of directors shall
at the time be owned, directly or indirectly, by such Person, or (b) any other
Person of which at least a majority of Voting Equity Interests are at the
time, directly or indirectly, owned by such first named Person.
"Surviving Person" means, with respect to any Person involved
in or that makes any Disposition, the Person formed by or surviving such
Disposition or the Person to which such Disposition is made.
"Tax Sharing Agreement" means the tax sharing agreement dated
as of March 5, 1992 among Comcast Corporation, Comcast Cellular and CCCI and
its Subsidiaries, as in effect on the Issue Date or as may be amended to
include the Company.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Section Section 77aaa-77bbbb), as amended, as in effect on the date of this
Indenture, except as provided in Section 9.03.
"Total Consolidated Indebtedness" means, as at any date of
determination, an amount equal to the aggregate amount of all Indebtedness and
Disqualified Equity Interests of the Company and the Restricted Subsidiaries
outstanding as of such date of determination.
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"Trustee" means the party named as such in this Indenture until
a successor replaces it in accordance with the provisions of this Indenture
and thereafter means such successor.
"Trust Officer" means any officer within the corporate trust
department (or any successor group of the Trustee) including any vice
president, assistant vice president, assistant secretary or any other officer
or assistant officer of the Trustee customarily performing functions similar
to those performed by the persons who at that time shall be such officers, and
also means, with respect to a particular corporate trust matter, any other
officer to whom such trust matter is referred because of his knowledge of and
familiarity with the particular subject.
"United States Government Obligations" see Section 8.01.
"Unrestricted Subsidiary" means any Subsidiary of the Company
designated as such pursuant to Section 4.16. Any such designation may be
revoked by a resolution of the Board of Directors of the Company delivered to
the Trustee, subject to the provisions of such covenant.
"Unutilized Net Cash Proceeds" see Section 4.05(a).
"U.S. Person" means a "U.S. person" as defined in Rule 902
under the Securities Act or any successor to such Rule.
"Voting Equity Interests" means Equity Interests in a
corporation or other Person with voting power under ordinary circumstances
entitling the holders thereof to elect the Board of Directors or other
governing body of such corporation or Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment of final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
aggregate principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means any Restricted
Subsidiary all of the outstanding Voting Equity Interests (other than
directors' qualifying shares) of which are owned, directly or indirectly, by
the Company.
"Wireless Telecommunications Business" means the development,
management and operation of cellular telephone systems, paging systems and
personal communication systems and activities reasonably related thereto,
including, without limitation, retail distribution thereof.
"Zero Coupon Indenture" has the meaning set forth in Section
4.18.
"Zero Coupon Notes" has the meaning set forth in Section 4.18.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
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"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company or any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule
and not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
in effect from time to time, and any other reference in this Indenture to
"generally accepted accounting principles" refers to GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions; and
(6) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section or
other subdivision.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
The Series A Securities and the Trustee's certificate of
authentication thereof shall be substantially in the form of Exhibit A hereto,
which is hereby incorporated in and expressly made a part of this Indenture.
The Series B Securities and the Trustee's certificate of authentication
thereof shall be substantially in the form of Exhibit B hereto, which is
hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule or usage. The Company and the Trustee shall approve the form of
the Securities and any notation, legend or endorsement on them. Each Security
shall be dated the date of its issuance and shall show the date of its
authentication.
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Securities initially offered and sold by the Initial Purchasers
(i) to Qualified Institutional Buyers in reliance on Rule 144A or (ii) in
offshore transactions in reliance on Regulation S shall, unless the applicable
Holder requests Securities in the form of certificated Securities in
registered form ("Physical Securities"), which shall be in substantially the
form set forth in Exhibit A hereto, be issued initially in the form of one or
more permanent Global Securities in registered form, substantially in the form
set forth in Exhibit A hereto, deposited with the Trustee, as custodian for
the Depository, and shall bear the legend set forth on Exhibit C hereto.
Securities initially offered and sold by the Initial Purchasers to
Institutional Accredited Investors shall be in the form of Physical
Securities, substantially in the form set forth in Exhibit A hereto. One or
more separate Global Securities shall be issued to represent Securities held by
(i) Qualified Institutional Buyers (a "QIB Global Security"), (ii)
Institutional Accredited Investors (an "Accredited Investor Global Security")
and (iii) Persons acquiring Securities in offshore transactions in reliance on
Regulation S (a "Regulation S Global Security"). The Company shall cause the
QIB Global Securities, Accredited Investor Global Securities and Regulation S
Global Securities to have separate CUSIP numbers.
Upon consummation of the Registration, Series B Securities may
be issued in the form of one or more permanent Global Securities in registered
form, substantially in the form set forth in Exhibit B hereto, deposited with
the Trustee, as custodian for the Depository, and shall bear the legend set
forth on Exhibit C hereto.
The aggregate principal amount of any Global Security may from
time to time be increased or decreased by adjustments made on the records of
the Trustee, as custodian for the Depository, as hereinafter provided.
SECTION 2.02. Execution and Authentication.
Two Officers, or an Officer and an Assistant Secretary, shall
sign, or one Officer shall sign and one Officer or an Assistant Secretary
(each of whom shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to, the Securities for the Company by manual
or facsimile signature.
If an Officer whose signature is on a Security was an Officer
at the time of such execution but no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate (i) Series A Securities for
original issue in the aggregate principal amount not to exceed $1,000,000,000
and (ii) Series B Securities from time to time only in exchange for a like
principal amount of Series A Securities in accordance with the Registration
Rights Agreement, in each case upon a written order of the Company in the form
of an Officers' Certificate. The Officers' Certificate shall specify the
amount of Securities to be authenticated, the series of Securities and the
date on which the Securities are to be authenticated. The aggregate principal
amount of Securities outstanding at any time may not exceed $1,000,000,000,
except as provided in Section 2.07. Upon receipt of a written order of the
Company in the form of an Officers' Certificate, the Trustee shall authenticate
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Securities in substitution for Securities originally issued to reflect any
name change of the Company.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Securities. Unless otherwise
provided in the appointment, an authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture
to authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company
and Affiliates of the Company.
The Securities shall be issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough
of Manhattan, The City of New York, where (a) Securities may be presented or
surrendered for registration of transfer or for exchange ("Registrar"), (b)
Securities may be presented or surrendered for payment ("Paying Agent") and
(c) notices and demands in respect of the Securities and this Indenture may be
served. The Registrar shall keep a register or registers of the Securities
and of their transfer and exchange. The Company, upon notice to the Trustee,
may appoint one or more co-Registrars and one or more additional Paying
Agents. The term "Paying Agent" includes any additional Paying Agent. Except
as provided herein, the Company, or any Subsidiary may act as Paying Agent,
Registrar or co-Registrar.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture, which shall incorporate the
provisions of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee of
the name and address of any such Agent. If the Company fails to maintain a
Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee
shall act as such and shall be entitled to appropriate compensation in
accordance with Section 7.07.
The Company initially appoints the Trustee as Registrar and
Paying Agent until such time as the Trustee has resigned or a successor has
been appointed.
SECTION 2.04. Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that each Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all assets held by the Paying Agent for the
payment of principal of, or interest on, the Securities, and shall notify the
Trustee of any Default by the Company in making any such payment. The Company
at any time may require a Paying Agent to distribute all assets held by it to
the Trustee and account for any assets disbursed and the Trustee may at any
time during the continuance of any payment Default, upon written request to a
Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to
the Trustee of all assets that shall have been delivered by the Company to the
Paying Agent (if other than the Company), the Paying Agent shall have no
further liability for such assets. If the Company, any Subsidiary or any of
their respective Affiliates acts as Paying Agent, it shall, on or before each
due date of the principal of or interest on the Securities, segregate and hold
in trust for the benefit of the Persons entitled thereto a sum sufficient to
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pay the principal or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
SECTION 2.05. Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee before each Interest Record Date and at such other
times as the Trustee may request in writing a list as of such date and in such
form as the Trustee may reasonably require of the names and addresses of
Holders, which list may be conclusively relied upon by the Trustee.
SECTION 2.06. Transfer and Exchange.
Subject to the provisions of Sections 2.15 and 2.16, when
Securities are presented to the Registrar or a co-Registrar with a request to
register the transfer of such Securities or to exchange such Securities for an
equal principal amount of Securities of other authorized denominations of the
same series, the Registrar or co-Registrar shall register the transfer or make
the exchange as requested if its requirements for such transaction are met;
provided, however, that the Securities surrendered for transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Securities at the Registrar's or co-Registrar's
written request. No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or other governmental charge
payable upon exchanges or transfers pursuant to Section 2.02, 2.10, 3.06,
4.05, 4.14 or 9.05). The Registrar or co-Registrar shall not be required to
register the transfer or exchange of any Security (i) during a period
beginning at the opening of business 15 days before the mailing of a notice of
redemption of Securities and ending at the close of business on the day of
such mailing and (ii) selected for redemption in whole or in part pursuant to
Article Three hereof, except the unredeemed portion of any Security being
redeemed in part.
Prior to the registration of any transfer by a Holder as
provided herein, the Company, the Trustee, and any Agent of the Company shall
treat the person in whose name the Security is registered as the owner thereof
for all purposes whether or not the Security shall be overdue, and neither the
Company, the Trustee, nor any such Agent shall be affected by notice to the
contrary. Any Holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interests in such Global Security
may be effected only through a book-entry system maintained by the Depository
(or its agent), and that ownership of a beneficial interest in a Global
Security shall be required to be reflected in a book entry.
SECTION 2.07. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security if the Trustee's requirements for replacement of
Securities are met. Such Holder must provide an indemnity bond or other
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indemnity, sufficient in the judgment of both the Company and the Trustee, to
protect the Company, the Trustee and any Agent from any loss which any of them
may suffer if a Security is replaced and evidence to their satisfaction of the
apparent loss, destruction or theft of such Security. The Company may charge
such Holder for its reasonable out-of-pocket expenses in replacing a Security,
including reasonable fees and expenses of counsel.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all the Securities that
have been authenticated by the Trustee except those cancelled by it, those
delivered to it for cancellation and those described in this Section 2.08 as
not outstanding. Subject to Section 2.09, a Security does not cease to be
outstanding because the Company or any of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other than
a mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced
Security is held by a bona fide purchaser. A mutilated Security ceases to be
outstanding upon surrender of such Security and replacement thereof pursuant
to Section 2.07.
If on a Redemption Date, Purchase Date or the Final Maturity
Date the Paying Agent holds money sufficient to pay all of the principal and
interest due on the Securities payable on that date, then on and after that
date such Securities cease to be outstanding and interest on them ceases to
accrue.
SECTION 2.09. Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or any of its Affiliates shall be disregarded,
except that, for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Securities
that a Trust Officer of the Trustee actually knows are so owned shall be
disregarded.
The Trustee may require an Officers' Certificate listing
Securities owned by the Company or its Affiliates.
SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Company considers appropriate for
temporary Securities. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate upon receipt of a written order of the
Company pursuant to Section 2.02 definitive Securities in exchange for
temporary Securities.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
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Trustee any Securities surrendered to them for transfer, exchange or payment.
The Trustee, or at the direction of the Trustee, the Registrar or the Paying
Agent, and no one else, shall cancel all Securities surrendered for transfer,
exchange, payment or cancellation and deliver to the Company such cancelled
Securities for disposal. Subject to Section 2.07, the Company may not issue
new Securities to replace Securities that it has paid or delivered to the
Trustee for cancellation. If the Company shall acquire any of the Securities,
such acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of principal or interest
on the Securities, it shall pay interest on overdue principal and on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the rate per annum borne by the Securities, to the
extent lawful.
SECTION 2.13. CUSIP Number.
The Company in issuing the Securities will use one or more
"CUSIP" numbers and the Trustee shall use the appropriate CUSIP number in
notices of redemption or exchange as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to
the correctness or accuracy of the CUSIP number printed in the notice or on
the Securities, and that reliance may be placed only on the other
identification numbers printed on the Securities. The Company shall promptly
notify the Trustee of any changes in CUSIP numbers.
SECTION 2.14. Deposit of Moneys.
Prior to 10:00 a.m. New York City time on each Interest Payment
Date, Redemption Date, Purchase Date and the Final Maturity Date, the Company
shall deposit with the Paying Agent in immediately available funds money
sufficient to make cash payments, if any, due on such Interest Payment Date,
Redemption Date, Purchase Date or Final Maturity Date, as the case may be, in
a timely manner which permits the Paying Agent to remit payment to the Holders
on such Interest Payment Date, Redemption Date, Purchase Date or Final
Maturity Date, as the case may be.
SECTION 2.15. Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be registered in
the name of the Depository or the nominee of such Depository, (ii) be
delivered to the Trustee as custodian for such Depository and (iii) bear
legends as set forth in Exhibit C hereto.
Members of, or participants in, the Depository ("Participants")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depository, or the Trustee as its custodian, or
under such Global Security, and the Depository may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner
of such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent
of the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depository or impair, as between
the Depository and Participants, the operation of customary practices
governing the exercise of the rights of a Holder of any Security.
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(b) Transfers of Global Securities shall be limited to
transfers in whole, but not in part, to the Depository, its successors or
their respective nominees. Interests of beneficial owners in the Global
Securities may be transferred or exchanged for Physical Securities in
accordance with the rules and procedures of the Depository and the provisions
of Section 2.16. In addition, Physical Securities shall be transferred to all
beneficial owners in exchange for their beneficial interests in Global
Securities if (i) the Depository notifies the Company that it is unwilling or
unable to continue as Depository for any Global Security and a successor
Depository is not appointed by the Company within 90 days of such notice or
(ii) an Event of Default has occurred and is continuing and the Registrar has
received a request from the Depository to issue Physical Securities.
(c) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b) of this Section 2.15,
the Global Securities shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall upon
written instructions from the Company authenticate and make available for
delivery, to each beneficial owner identified by the Depository in exchange
for its beneficial interest in the Global Securities, an equal aggregate
principal amount of Physical Securities of authorized denominations.
(d) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to
paragraph (b) of this Section 2.15 shall, except as otherwise provided by
Section 2.16, bear the Private Placement Legend.
(e) The Holder of any Global Security may grant proxies and
otherwise authorize any Person, including Participants and Persons that may
hold interests through Participants, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
SECTION 2.16. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Physical Securities. When
Physical Securities are presented to the Registrar or co-Registrar with a
request:
(i) to register the transfer of the Physical
Securities; or
(ii) to exchange such Physical Securities for an
equal principal amount of Physical Securities of other
authorized denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if the requirements under this Indenture as set forth in this
Section 2.16 for such transactions are met; provided, however, that the
Physical Securities presented or surrendered for registration of transfer or
exchange:
(I) shall be duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the
Registrar or co-Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing; and
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(II) in the case of Physical Securities of Series A
Securities, such Physical Securities shall be accompanied,
in the sole discretion of the Company, by the following
additional information and documents, as applicable:
(A) if such Physical Security is being delivered
to the Registrar or co-Registrar by a Holder for
registration in the name of such Holder, without transfer,
a certification from such Holder to that effect
(substantially in the form of Exhibit D hereto); or
(B) if such Physical Security is being
transferred to a Qualified Institutional Buyer in
accordance with Rule 144A, a certification to that effect
(substantially in the form of Exhibit D hereto); or
(C) if such Physical Security is being
transferred to an Institutional Accredited Investor,
delivery of a certification to that effect (substantially
in the form of Exhibit D hereto) and a transferee
certificate for Institutional Accredited Investors
substantially in the form of Exhibit E hereto and an
Opinion of Counsel reasonably satisfactory to the Company
to the effect that such transfer is in compliance with the
Securities Act; or
(D) if such Physical Security is being
transferred in reliance on Regulation S, delivery of a
certification to that effect (substantially in the form of
Exhibit D hereto) and a transferor certificate for
Regulation S transfers substantially in the form of Exhibit
F hereto and an Opinion of Counsel reasonably satisfactory
to the Company to the effect that such transfer is in
compliance with the Securities Act; or
(E) if such Physical Security is being
transferred in reliance on Rule 144 under the Securities
Act, delivery of a certification to that effect
(substantially in the form of Exhibit D hereto) and an
Opinion of Counsel reasonably satisfactory to the Company
to the effect that such transfer is in compliance with the
Securities Act; or
(F) if such Physical Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect (substantially in the form of
Exhibit D hereto) and an Opinion of Counsel reasonably
acceptable to the Company to the effect that such transfer
is in compliance with the Securities Act.
(b) Restrictions on Transfer of a Physical Security for a
Beneficial Interest in a Global Security. A Physical Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the
Registrar or co-Registrar of a Physical Security, duly endorsed or accompanied
by appropriate instruments of transfer, in form satisfactory to the Registrar
or co-Registrar, together with:
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(A) in the case of Series A Securities, certification,
substantially in the form of Exhibit D hereto, that
such Physical Security is being transferred (I) to a
Qualified Institutional Buyer, (II) to an Accredited
Investor or (III) in an offshore transaction in
reliance on Regulation S and, with respect to (II) or
(III), an Opinion of Counsel reasonably acceptable to
the Company to the effect that such transfer is in
compliance with the Securities Act; and
(B) written instructions directing the Registrar or
co-Registrar to make, or to direct the Depository to
make, an endorsement on the applicable Global Security
to reflect an increase in the aggregate amount of the
Securities represented by the Global Security,
then the Registrar or co-Registrar shall cancel such Physical Security and
cause, or direct the Depository to cause, in accordance with the standing
instructions and procedures existing between the Depository and the Registrar
or co-Registrar, the principal amount of Securities represented by the
applicable Global Security to be increased accordingly. If no Global Security
representing Securities held by Qualified Institutional Buyers, Institutional
Accredited Investors or Persons acquiring Securities in offshore transactions
in reliance on Regulation S, as the case may be, is then outstanding, the
Company shall issue and the Trustee shall, upon written instructions from the
Company in accordance with Section 2.02, authenticate such a Global Security
in the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer
and exchange of Global Securities or beneficial interests therein shall be
effected through the Depository in accordance with this Indenture (including
the restrictions on transfer set forth herein) and the procedures of the
Depository therefor. Upon receipt by the Registrar or Co-Registrar of written
instructions, or such other instruction as is customary for the Depository,
from the Depository or its nominee, requesting the registration of transfer
of an interest in a QIB Global Security, an Accredited Investor Global
Security or Regulation S Global Security, as the case may be, to another type
of Global Security, together with the applicable Global Securities (or, if the
applicable type of Global Security required to represent the interest as
requested to be transferred is not then outstanding, only the Global Security
representing the interest being transferred), the Registrar or Co-Registrar
shall cancel such Global Securities (or Global Security) and the Company shall
issue and the Trustee shall, upon written instructions from the Company in
accordance with Section 2.02, authenticate new Global Securities of the types
so cancelled (or the type so cancelled and applicable type required to
represent the interest as requested to be transferred) reflecting the
applicable increase and decrease of the principal amount of Securities
represented by such types of Global Securities, giving effect to such
transfer. If the applicable type of Global Security required to represent the
interest as requested to be transferred is not outstanding at the time of such
request, the Company shall issue and the Trustee shall, upon written
instructions from the Company in accordance with Section 2.02, authenticate a
new Global Security of such type in principal amount equal to the principal
amount of the interest requested to be transferred.
(d) Transfer of a Beneficial Interest in a Global Security for
a Physical Security.
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(i) Any Person having a beneficial interest in a
Global Security may upon request exchange such beneficial interest
for a Physical Security. Upon receipt by the Registrar or co-
Registrar of written instructions, or such other form of instructions
as is customary for the Depository, from the Depository or its
nominee on behalf of any Person having a beneficial interest in a
Global Security and upon receipt by the Trustee of a written order or
such other form of instructions as is customary for the Depository or
the Person designated by the Depository as having such a beneficial
interest containing registration instructions and, in the case of any
such transfer or exchange of a beneficial interest in Series A
Securities, the following additional information and documents:
(A) if such beneficial interest is being transferred to the
Person designated by the Depository as being the
beneficial owner, a certification from such Person to
that effect (substantially in the form of Exhibit D
hereto); or
(B) if such beneficial interest is being transferred to a
Qualified Institutional Buyer in accordance with Rule
l44A, a certification to that effect (substantially in
the form of Exhibit D hereto); or
(C) if such beneficial interest is being transferred to an
Institutional Accredited Investor, delivery of a
certification to that effect (substantially in the form
of Exhibit D hereto) and a transferee certificate for
Institutional Accredited Investors substantially in the
form of Exhibit E hereto and an Opinion of Counsel
reasonably satisfactory to the Company to the effect
that such transfer is in compliance with the Securities
Act; or
(D) if such beneficial interest is being transferred in
reliance on Regulation S, delivery of a certification
to that effect (substantially in the form of Exhibit D
hereto) and a transferor certificate for Regulation S
transfers substantially in the form of Exhibit F hereto
and an Opinion of Counsel reasonably satisfactory to
the Company to the effect that such transfer is in
compliance with the Securities Act; or
(E) if such beneficial interest is being transferred in
reliance on Rule 144 under the Securities Act, delivery
of a certification to that effect (substantially in the
form of Exhibit D hereto) and an Opinion of Counsel
reasonably satisfactory to the Company to the effect
that such transfer is in compliance with the Securities
Act; or
(F) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect (substantially in the form of Exhibit D
hereto) and an Opinion of Counsel reasonably
satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act,
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then the Registrar or co-Registrar will cause, in accordance with the
standing instructions and procedures existing between the Depository
and the Registrar or co-Registrar, the aggregate principal amount of
the applicable Global Security to be reduced and, following such
reduction, the Company will execute and, upon receipt of an
authentication order in the form of an Officers' Certificate in
accordance with Section 2.02, the Trustee will authenticate and
deliver to the transferee a Physical Security in the appropriate
principal amount.
(ii) Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.16(d) shall
be registered in such names and in such authorized denominations as
the Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Registrar or co-
Registrar in writing. The Registrar or co-Registrar shall deliver
such Physical Securities to the Persons in whose names such Physical
Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture, a Global
Security may not be transferred as a whole except by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository
or another nominee of the Depository or by the Depository or any such nominee
to a successor Depository or a nominee of such successor Depository.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar or co-Registrar shall deliver Securities that do not bear the
Private Placement Legend. Upon the transfer, exchange or replacement of
Securities bearing the Private Placement Legend, the Registrar or co-Registrar
shall deliver only Securities that bear the Private Placement Legend unless,
and the Trustee is hereby authorized to deliver Securities without the Private
Placement Legend if, (i) there is delivered to the Trustee an Opinion of
Counsel reasonably satisfactory to the Company and the Trustee to the effect
that neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act or
(ii) such Security has been sold pursuant to an effective registration
statement under the Securities Act (including pursuant to a Registration).
(g) General. By its acceptance of any Security bearing the
Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in
the Private Placement Legend and agrees that it will transfer such Security
only as provided in this Indenture.
The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between or
among Participants or beneficial owners of interest in any Global Security)
other than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by the terms of, this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.15 or this Section
2.16. The Company shall have the right to inspect and make copies of all such
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letters, notices or other written communications at any reasonable time upon
the giving of reasonable written notice to the Registrar.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Securities pursuant to
paragraph 5 or 6 of the Securities at the applicable redemption price set
forth thereon, it shall notify the Trustee in writing of the Redemption Date
and the principal amount of Securities to be redeemed. The Company shall give
such notice to the Trustee at least 45 days before the Redemption Date (unless
a shorter notice shall be agreed to by the Trustee in writing), together with
an Officers' Certificate stating that such redemption will comply with the
conditions contained herein.
SECTION 3.02. Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant
to paragraph 5 or 6 of the Securities, the Trustee shall select the Securities
to be redeemed in compliance with the requirements of the national securities
exchange, if any, on which the Securities are listed or, if the Securities are
not then listed on a national securities exchange, on a pro rata basis, by lot
or in such other manner as the Trustee shall deem fair and appropriate. The
Trustee shall make the selection from the Securities then outstanding, subject
to redemption and not previously called for redemption.
The Trustee may select for redemption pursuant to paragraph 5
or 6 of the Securities portions of the principal amount of Securities that
have denominations equal to or larger than $1,000 principal amount.
Securities and portions of them the Trustee so selects shall be in amounts of
$1,000 principal amount or integral multiples thereof. Provisions of this
Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption
Date, the Company shall mail a notice of redemption by first-class mail to
each Holder whose Securities are to be redeemed at such Holder's registered
address; provided, however, that notice of a redemption pursuant to paragraph
6 of the Securities shall be mailed to each Holder whose Securities are to be
redeemed no later than 60 days following the consummation of the last Public
Equity Offering resulting in gross cash proceeds to the Company, when
aggregated with all prior Public Equity Offerings, of at least $100.0 million.
Each notice of redemption shall identify the Securities to be
redeemed (including the CUSIP number thereon) and shall state:
(1) the Redemption Date;
(2) the redemption price;
(3) the name and address of the Paying Agent to which the
Securities are to be surrendered for redemption;
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(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to
accrete on and after the Redemption Date and the only remaining right
of the Holders is to receive payment of the redemption price upon
surrender to the Paying Agent; and
(6) if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and that, after
the Redemption Date, upon surrender of such Security, a new Security
or Securities in principal amount equal to the unredeemed portion
thereof will be issued.
At the Company's request, the Trustee shall give the notice of
redemption on behalf of the Company, in the Company's name and at the
Company's expense.
SECTION 3.04. Effect of Notice of Redemption.
Once a notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at the redemption
price. Upon surrender to the Paying Agent, such Securities shall be paid at
the redemption price, plus accrued interest thereon, if any, to the Redemption
Date, but interest installments whose maturity is on or prior to such
Redemption Date shall be payable to the Holders of record at the close of
business on the relevant Interest Record Date.
SECTION 3.05. Deposit of Redemption Price.
Prior to 10:00 a.m. New York City time on the Redemption Date,
the Company shall deposit with the Paying Agent (or if the Company is its own
Paying Agent, shall, on or before the Redemption Date, segregate and hold in
trust) money sufficient to pay the redemption price of and accrued interest,
if any, on all Securities to be redeemed on that date other than Securities or
portions thereof called for redemption on that date which have been delivered
by the Company to the Trustee for cancellation.
If any Security surrendered for redemption in the manner
provided in the Securities shall not be so paid on the Redemption Date due to
the failure of the Company to deposit with the Paying Agent money sufficient
to pay the redemption price thereof, the principal and accrued and unpaid
interest, if any, thereon shall, until paid or duly provided for, bear
interest as provided in Sections 2.12 and 4.01 with respect to any payment
default.
SECTION 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the
Trustee shall authenticate for the Holder a new Security equal in principal
amount to the unredeemed portion of the Security surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
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The Company shall pay the principal of and interest on the
Securities in the manner provided in the Securities and the Registration
Rights Agreement. An installment of principal or interest shall be considered
paid on the date due if the Trustee or Paying Agent (other than the Company, a
Subsidiary or an Affiliate of the Company) holds on that date money designated
for and sufficient to pay the installment in full and is not prohibited from
paying such money to the Holders of the Securities pursuant to the terms of
this Indenture.
The Company shall pay cash interest on overdue principal at the
same rate per annum borne by the Securities. The Company shall pay cash
interest on overdue installments of interest at the same rate per annum borne
by the Securities, to the extent lawful, as provided in Section 2.12.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The
City of New York, the office or agency required under Section 2.03. The
Company shall give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 10.02 hereof. The Company hereby initially
designates the Trustee at its address set forth in Section 10.02 hereof as its
office or agency in The Borough of Manhattan, The City of New York, for such
purposes.
SECTION 4.03. Transactions with Affiliates.
The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, enter into any transaction
(or series of related transactions) with any of their respective Affiliates or
any officer or director of the Company or any Restricted Subsidiary (each an
"Affiliate Transaction"), unless such Affiliate Transaction is on terms which
are no less favorable to the Company or such Restricted Subsidiary, as the
case may be, than would be available in a comparable transaction with an
unaffiliated third party. For any such transaction that involves an amount in
excess of $10.0 million, the Company shall deliver to the Trustee an Officers'
Certificate stating that the transaction satisfies the above criteria and a
majority of the Disinterested Directors, or, if there are no Disinterested
Directors, a majority of the members of the Board of Directors of such Person,
shall determine that the transaction satisfies the above criteria and shall
evidence such a determination by a Board Resolution filed with the Trustee.
Notwithstanding the foregoing, the restrictions set forth in
this covenant shall not apply to (i) transactions with or among the Company
and any Restricted Subsidiary or between or among Restricted Subsidiaries;
(ii) customary directors' fees, indemnification and similar arrangements,
employee salaries, bonuses or employment agreements, compensation or employee
benefit arrangements and incentive arrangements with any officer, director or
employee of the Company entered into in the ordinary course of business
(including customary benefits thereunder) and payments under any
indemnification arrangements permitted by applicable law; (iii) transactions
pursuant to the Management Agreement and the Tax Sharing Agreement, each as in
effect on the Issue Date, and any transactions undertaken pursuant to any
other contractual obligations in existence on the Issue Date (as in effect on
the Issue Date), or as any such agreement (including the Management Agreement
and the Tax Sharing Agreement) may be amended, modified or supplemented after
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the Issue Date in a manner not materially adverse to the Holders (it being
understood that the increase of the fee payable to Comcast Corporation
pursuant to the Management Agreement or any amendment thereof to 1.5% of
revenues of the Company shall be permitted by this covenant); (iv) the
entering into of a tax-sharing agreement or payments pursuant thereto, between
the Company and any other Person with which the Company is required or
permitted to file a consolidated tax return or with which the Company is or
could be part of a consolidated group for tax purposes, which payments are not
in excess of the tax liabilities attributable solely to the Company and the
Restricted Subsidiaries (as a consolidated group); (v) the issue and sale by
the Company to its Affiliates of Qualified Equity Interests; (vi) any
Restricted Payments made in compliance with Section 4.06; (vii) loans and
advances to officers, directors and employees of the Company and the
Restricted Subsidiaries for travel, entertainment, moving and other relocation
expenses, in each case made in the ordinary course of business and consistent
with past business practices; (viii) roaming and switching agreements
customary in the industry; (ix) any transaction in the ordinary course of
business or approved by a majority of the Disinterested Directors (or, if
there are no Disinterested Directors, a majority of the members of the Board of
Directors of such Person) of the Company between the Company or any Restricted
Subsidiary and any Affiliate of the Company controlled by the Company (other
than a Wholly Owned Restricted Subsidiary) that is a joint venture or similar
entity primarily engaged in the Wireless Telecommunications Business (provided
that no Person or entity that has an economic interest in Comcast Corporation
or any of its Affiliates has an interest in such joint venture other than
through the Company or any Restricted Subsidiary); (x) the pledge of Equity
Interests of Unrestricted Subsidiaries to support the Indebtedness thereof;
(xi) transactions in connection with a Permitted Receivables Financing; (xii)
any transaction in the ordinary course of business and on ordinary business
terms between the Company or any Restricted Subsidiary and any Affiliate
thereof engaged in the Wireless Telecommunications Business; (xiii) the
transfer to the Company or any of its Subsidiaries by Comcast Corporation of
the 10-MHz PCS licenses covering the Philadelphia, PA MTA and the Allentown,
PA BTA for $17.5 million; and (xiv) the payment of accrued management fees to
Comcast Corporation in an amount not to exceed $17.0 million.
The Company's obligations to comply with this covenant will
terminate if and when the Securities are rated Investment Grade by both
Moody's and S&P and the Company delivers an Officers' Certificate to the
Trustee certifying as to the same.
SECTION 4.04. Limitation on Indebtedness.
(a) The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, Incur any Indebtedness
(including Acquired Indebtedness) or issue any Disqualified Equity Interests
except for Permitted Indebtedness; provided, however, that the Company or any
Restricted Subsidiary (other than Comcast Cellular so long as it is a
Subsidiary of the Company) may Incur Indebtedness and the Company or any
Restricted Subsidiary (other than Comcast Cellular so long as it is a
Subsidiary of the Company) may issue Disqualified Equity Interests if, at the
time of and immediately after giving pro forma effect to such Incurrence of
Indebtedness or issuance of Disqualified Equity Interests and the application
of the proceeds therefrom, the Debt to Annualized Operating Cash Flow Ratio
would be less than or equal to 8.50 to 1.0.
(b) The foregoing limitations of clause (a) of this covenant
will not apply to the Incurrence by the Company or any Restricted Subsidiary
(other than Comcast Cellular so long as it is a Subsidiary of the Company) of
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any of the following (collectively, "Permitted Indebtedness"), each of which
shall be given independent effect:
(i) Indebtedness under the Securities;
(ii) Existing Indebtedness;
(iii) Indebtedness under the Bank Credit Facility in
an aggregate principal amount at any one time outstanding not to
exceed the sum of (A) $500.0 million, plus (B) any amounts
outstanding under the Bank Credit Facility that utilize subparagraph
(xi) of this Section 4.04(b) (less the amount of net proceeds which
have been received in connection with a Permitted Receivables
Financing; provided that such reduction shall apply only
for so long as a Permitted Receivables Financing is in effect);
(iv) (x) Indebtedness of any Restricted Subsidiary
owed to and held by the Company or any Restricted Subsidiary and (y)
Indebtedness of the Company owed to and held by any Restricted
Subsidiary; provided, however, that an Incurrence of Indebtedness
that is not permitted by this clause (iv) shall be deemed to have
occurred upon (I) any sale or other disposition of any Indebtedness
of the Company or any Restricted Subsidiary referred to in this
clause (iv) to any Person other than the Company or any Restricted
Subsidiary; (II) any sale or other disposition of Equity Interests
of any Restricted Subsidiary which holds Indebtedness of the Company
or another Restricted Subsidiary such that such Restricted Subsidiary
ceases to be a Restricted Subsidiary; or (III) the designation of a
Restricted Subsidiary which holds Indebtedness of the Company or any
other Restricted Subsidiary as an Unrestricted Subsidiary;
(v) Interest Rate Protection Obligations relating
to (A) Indebtedness of the Company or any Restricted Subsidiary
(which Indebtedness is otherwise permitted to be Incurred under this
covenant) or (B) Indebtedness for which a lender has provided a
commitment in an amount reasonably anticipated to be Incurred by the
Company or any Restricted Subsidiary in the 12 months after such
Interest Rate Protection Obligation has been Incurred; provided,
however, that the notional principal amount of such Interest Rate
Protection Obligations does not exceed the principal amount of the
Indebtedness (including Indebtedness subject to commitments) to which
such Interest Rate Protection Obligations relate;
(vi) Purchase Money Indebtedness and Capital Lease
Obligations which do not exceed $15.0 million in the aggregate at any
one time outstanding;
(vii) Indebtedness or Disqualified Equity Interests
to the extent representing a replacement, renewal, refinancing or
extension (collectively, a "refinancing") of outstanding Indebtedness
or Disqualified Equity Interests Incurred in compliance with the Debt
to Annualized Operating Cash Flow Ratio of Section 4.04(a) or clause
(i), (ii), (ix) or (x) of this Section 4.04(b); provided, however,
that (1) any such refinancing shall not exceed the sum of the
principal amount (or accreted amount (determined in accordance with
GAAP), if less) of the Indebtedness or Disqualified Equity Interests
being refinanced, plus the amount of accrued interest or dividends
thereon, plus the amount of any reasonably determined prepayment
premium necessary to accomplish such refinancing and such reasonable
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fees and expenses incurred in connection therewith; (2)
Indebtedness representing a refinancing of Indebtedness shall have a
Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of the Indebtedness being
refinanced; and (3) Indebtedness that is pari passu with the
Securities may be refinanced only with Indebtedness that is made pari
passu with or subordinate in right of payment to the Securities,
Subordinated Indebtedness may be refinanced only with Subordinated
Indebtedness or Disqualified Equity Interests, and Disqualified
Equity Interests may be refinanced only with Disqualified Equity
Interests;
(viii) Indebtedness of the Company or any Restricted
Subsidiary consisting of guarantees, indemnities or obligations in
respect of purchase price adjustments, in connection with the
disposition of assets permitted under this Indenture, in a principal
amount not to exceed the gross proceeds actually received by the
Company or any Restricted Subsidiary in connection with such
disposition;
(ix) Indebtedness of a Securitization Subsidiary pursuant
to a Permitted Receivables Financing; provided that after giving
effect to the Incurrence thereof, the Company could Incur at least
$1.00 of Indebtedness under clause (iii) of this Section 4.04(b);
(x) the New Preferred Stock; and
(xi) in addition to the items referred to in
clauses (i) through (x) above, Indebtedness (including any
Indebtedness under the Bank Credit Facility that utilizes this
subparagraph (xi)) having an aggregate principal amount not to exceed
$50.0 million at any time outstanding.
(c) For purposes of determining any particular amount of
Indebtedness under this covenant, Guarantees, Liens or obligations with
respect to letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included. For purposes of
determining compliance with this covenant, (i) in the event that an item of
Indebtedness meets the criteria of more than one of the types of Indebtedness
provided for in Section 4.04(a) or described in the definition of Permitted
Indebtedness, the Company shall classify such item of Indebtedness and only be
required to include the amount and type of such Indebtedness in Section
4.04(a) or in one of the clauses in the definition of Permitted Indebtedness
and (ii) the amount of Indebtedness issued at a price that is less than the
principal amount thereof shall be equal to the amount of the liability in
respect thereof determined in conformity with GAAP.
The Company's obligations to comply with this covenant will
terminate if and when the Securities are rated Investment Grade by both
Moody's and S&P and the Company delivers an Officers' Certificate to the
Trustee certifying as to the same.
SECTION 4.05. Disposition of Proceeds of Asset Sales.
(a) The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, make any Asset Sale, unless
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(i) the Company or such Restricted Subsidiary, as the case
may be, receives consideration at the time of such Asset Sale at
least equal to the Fair Market Value of the assets sold or otherwise
disposed of; and
(ii) at least 80% of such consideration consists of (A) cash
or Cash Equivalents, (B) properties and assets to be owned by and
used in the business of the Company or any Restricted Subsidiary or
(C) Equity Interests in one or more Persons which (x) are or
thereby become Restricted Subsidiaries or (y) are engaged in the
Wireless Telecommunications Business to the extent that immediately
after such Asset Sale (and the receipt of the proceeds therefrom),
the percentage of the aggregate Net Pops of the cellular wireless
communications systems in which the Company or any of its Restricted
Subsidiaries has ownership interests represented by cellular
wireless telecommunications systems owned directly by the Company or
a Person or Persons a majority of whose voting power and Equity
Interests is owned by the Company and/or the Restricted Subsidiaries
is no less than 80%. The amount of any (i) Indebtedness (other
than any Subordinated Indebtedness) of the Company or any Restricted
Subsidiary that is actually assumed by the transferee in such Asset
Sale and from which the Company and the Restricted Subsidiaries are
fully released shall be deemed to be cash solely for purposes of
determining the percentage of cash consideration received by the
Company or the Restricted Subsidiaries and (ii) notes or other
similar obligations received by the Company or the Restricted
Subsidiaries from such transferee that are immediately converted,
sold or exchanged (or are converted, sold or exchanged within thirty
days of the related Asset Sale) by the Company or the Restricted
Subsidiaries into cash shall be deemed to be cash, in an amount
equal to the net cash proceeds realized upon such conversion, sale
or exchange for purposes of determining the percentage of cash
consideration received by the Company or the Restricted
Subsidiaries.
The Net Cash Proceeds (or any portion thereof) from any Asset
Sale may be applied by the Company or a Restricted Subsidiary, to the extent
the Company or such Restricted Subsidiary elects, (i) to repay, prepay or
purchase Indebtedness under the Bank Credit Facility or Indebtedness of the
Company that is not subordinate to the Securities or other Indebtedness of any
Restricted Subsidiary (in each case, excluding Indebtedness owed to the
Company or an Affiliate of the Company) or (ii) to reinvest in Additional
Assets (including by means of an Investment in Additional Assets by a
Restricted Subsidiary with Net Cash Proceeds received by the Company or
another Restricted Subsidiary).
To the extent all or part of the Net Cash Proceeds of any Asset
Sale are not applied within 365 days of such Asset Sale as described in the
immediately preceding paragraph (such Net Cash Proceeds, the "Unutilized Net
Cash Proceeds"), the Company shall, within 20 days after such 365th day, make
an Offer to Purchase all outstanding Securities up to a maximum principal
amount (expressed as a multiple of $1,000) of Securities equal to the
Securities Portion of Unutilized Net Cash Proceeds, at a purchase price in
cash equal to 100% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Purchase Date; provided however, that the
Offer to Purchase may be deferred until there are aggregate Unutilized Net
Cash Proceeds equal to or in excess of $25.0 million, at which time the entire
amount of such Unutilized Net Cash Proceeds, and not just the amount in excess
of $25.0 million, shall be applied as required pursuant to this paragraph.
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In the event that any other Indebtedness of the Company which
ranks pari passu with the Securities (the "Other Debt") requires an offer to
purchase to be made to repurchase such Other Debt upon the consummation of an
Asset Sale, the Company may apply the Unutilized Net Cash Proceeds otherwise
required to be applied to an Offer to Purchase to offer to purchase such Other
Debt and to an Offer to Purchase so long as the amount of such Unutilized Net
Cash Proceeds applied to purchase the Securities is not less than the
Securities Portion of Unutilized Net Cash Proceeds. With respect to any
Unutilized Net Cash Proceeds, the Company shall make the Offer to Purchase in
respect thereof at the same time as the analogous offer to purchase is made
pursuant to any Other Debt and the Purchase Date in respect thereof shall be
the same as the purchase date in respect thereof pursuant to any Other Debt.
For purposes of this covenant, "Securities Portion of
Unutilized Net Cash Proceeds" means (1) if no Other Debt is being offered to
be repurchased, the amount of the Unutilized Net Cash Proceeds and (2) if
Other Debt is being offered to be repurchased, the amount of the Unutilized
Net Cash Proceeds equal to the product of (x) the Unutilized Net Cash Proceeds
and (y) a fraction the numerator of which is the principal amount of all
Securities tendered pursuant to the Offer to Purchase related to such
Unutilized Net Cash Proceeds (the "Securities Amount") and the denominator of
which is the sum of the Securities Amount and the lesser of the aggregate
principal face amount or accreted value as of the relevant purchase date of
all Other Debt tendered pursuant to a concurrent offer to purchase such Other
Debt made at the time of such Offer to Purchase.
With respect to any Offer to Purchase effected pursuant to this
covenant, among the Securities to the extent the aggregate principal amount of
Securities tendered pursuant to such Offer to Purchase exceeds the Securities
Portion of Unutilized Net Cash proceeds to be applied to the repurchase
thereof, such Securities shall be purchased pro rata based on the aggregate
principal amount of such Securities tendered by each Holder. To the extent
the Securities Portion of Unutilized Net Cash proceeds exceeds the aggregate
principal amount of Securities tendered by the Holders pursuant to such Offer
to Purchase, the Company may retain and utilize any portion of the Securities
Portion of Unutilized Net Cash Proceeds not applied to repurchase the
Securities for any purpose consistent with the other terms of this Indenture,
and such amounts shall thereafter not constitute Unutilized Net Cash Proceeds.
An Offer to Purchase effected pursuant to this covenant shall
follow the procedures set forth in Section 4.14(b).
In the event that the Company makes an Offer to Purchase the
Securities, the Company shall comply with any applicable securities laws and
regulations, including any applicable requirements of Section 14(e) of, and
Rule 14e-1 under, the Exchange Act, and any violation of the provisions of
this Indenture relating to such Offer to Purchase occurring as a result of
such compliance shall not be deemed a Default or an Event of Default.
(b) Each Holder shall be entitled to tender all or any portion
of the Securities owned by such Holder pursuant to the Offer to Purchase,
subject to the requirement that any portion of a Security tendered must be
tendered in an integral multiple of $1,000 principal amount and subject to any
proration among tendering Holders as described above.
The Company's obligations to comply with this covenant will
terminate if and when the Securities are rated Investment Grade by both
Moody's and S&P and the Company delivers an Officers' Certificate to the
Trustee certifying as to the same.
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SECTION 4.06. Limitation on Restricted Payments.
The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly,
(i) declare or pay any dividend or any other distribution on
any Equity Interests of the Company or any Restricted Subsidiary or make any
payment or distribution to the direct or indirect holders (in their capacities
as such) of Equity Interests of the Company or any Restricted Subsidiary
(other than (A) any dividend, distribution or payment made to the Company or
any Restricted Subsidiary, (B) any dividend, distribution or other payment by
any Restricted Subsidiary on or with respect to its Equity Interests that is
paid pro rata to all holders of such Equity Interests or (C) any dividend,
distribution or payment on or with respect to Equity Interests of the Company
or any Restricted Subsidiary payable solely in Qualified Equity Interests of
the Company or such Restricted Subsidiary, as the case may be, or in options,
warrants or other rights to purchase Qualified Equity Interests of the Company
or such Restricted Subsidiary, as the case may be);
(ii) purchase, redeem or otherwise acquire or retire for value
any Equity Interests of the Company;
(iii) purchase, redeem, defease or retire for value, or make
any principal payment on, prior to any scheduled maturity, scheduled repayment
or scheduled sinking fund payment or mandatory redemption or mandatory
repurchase thereof pursuant to the terms thereof, any Subordinated
Indebtedness (other than any Subordinated Indebtedness held by any Restricted
Subsidiary); or
(iv) make any Restricted Investment
(such payments or any other actions (other than the exceptions thereto)
described in (i), (ii), (iii) and (iv) collectively, "Restricted Payments"),
unless
(a) no Default or Event of Default shall have occurred and be
continuing at the time or after giving effect to such Restricted Payment;
(b) immediately after giving effect to such Restricted
Payment, the Company would be able to Incur $1.00 of Indebtedness under the
Debt to Annualized Operating Cash Flow Ratio of Section 4.04(a); and
(c) immediately after giving effect to such Restricted
Payment, the aggregate amount of all Restricted Payments declared or made on
or after the Issue Date does not exceed an amount equal to the sum of (1) the
difference between (x) the Cumulative Operating Cash Flow determined at the
time of such Restricted Payment and (y) 120% of cumulative Consolidated
Interest Expense of the Company determined for the period commencing on the
Issue Date and ending on the last day of the most recent fiscal quarter
immediately preceding the date of such Restricted Payment for which
consolidated financial information of the Company is available, plus (2) the
aggregate Net Proceeds received by the Company either (x) as capital
contributions to the Company after the Issue Date or (y) from the issue or
sale (other than to a Restricted Subsidiary) of its Qualified Equity Interests
after the Issue Date (excluding the Net Proceeds from any issuance or sale of
Qualified Equity Interests financed, directly or indirectly, using funds
borrowed from the Company or any Restricted Subsidiary until and to the extent
such borrowing is repaid), plus (3) the principal amount (or accreted value
(determined in accordance with GAAP), if less) of any Indebtedness of the
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Company or any Restricted Subsidiary which has been converted into or
exchanged for Qualified Equity Interests of the Company, plus (4) in the case
of the disposition or repayment of any Restricted Investment constituting a
Restricted Payment made after the Issue Date (other than pursuant to clause
(v) of the paragraph after the next paragraph), an amount (to the extent not
included in the computation of Cumulative Operating Cash Flow) equal to the
lesser of: (x) the return of capital with respect to such Restricted
Investment and (y) the amount of such Investment which was treated as a
Restricted Payment, in either case, less the cost of the disposition of such
Investment, plus (5) so long as the Designation thereof was treated as a
Restricted Payment made after the Issue Date, with respect to any Unrestricted
Subsidiary that has been redesignated as a Restricted Subsidiary after the
Issue Date in accordance with Section 4.16, the Company's proportionate
interest in an amount equal to the excess of (x) the total assets of such
Subsidiary, valued on an aggregate basis at the lesser of book value and Fair
Market Value, over (y) the total liabilities of such Subsidiary, determined in
accordance with GAAP (and provided that such amount shall not in any case
exceed the Designation Amount with respect to such Restricted Subsidiary upon
its Designation), plus (6) (to the extent not included in the computation of
Cumulative Operating Cash Flow) the amount of cash dividends or cash
distributions (other than to pay taxes) received from any Unrestricted
Subsidiary since the Issue Date, plus (7) $25.0 million, minus (8) the greater
of (x) $0 and (y) the Designation Amount (measured as of the date of
Designation) with respect to any Subsidiary of the Company which has been
designated as an Unrestricted Subsidiary after the Issue Date in accordance
with Section 4.16.
For purposes of the preceding clauses (c)(2) and (c)(3), the
value of the aggregate Net Proceeds received by the Company from the issuance
of Qualified Equity Interests upon the conversion or exchange of outstanding
Indebtedness or upon the exercise of options, warrants or rights will be the
Net Proceeds received upon the issuance of such Indebtedness, options, warrants
or rights plus the incremental amount received by the Company upon such
conversion, exchange or exercise.
The foregoing provisions will not prevent (i) the payment of
any dividend or distribution on, or redemption of, Equity Interests within 60
days after the date of declaration of such dividend or distribution or the
giving of formal notice of such redemption, if at the date of such declaration
or giving of formal notice such payment or redemption would comply with the
foregoing provisions; (ii) the purchase, redemption, retirement or other
acquisition of any Equity Interests of the Company in exchange for, or out of
the net cash proceeds of the substantially concurrent issue or sale (other
than to a Restricted Subsidiary) of, Qualified Equity Interests of the
Company; provided, however, that any such net cash proceeds and the value of
any Equity Interests issued in exchange for such retired Equity Interests are
excluded from clause (c)(2) of the preceding paragraph (and were not included
therein at any time); (iii) the purchase, redemption, retirement, defeasance
or other acquisition of Subordinated Indebtedness made in exchange for, or out
of the net cash proceeds of a substantially concurrent issue or sale (other
than to a Restricted Subsidiary) of, (x) Qualified Equity Interests of the
Company; provided, however, that any such net cash proceeds and the value of
any Equity Interests issued in exchange for Subordinated Indebtedness are
excluded from clauses (c)(2) and (c)(3) of the preceding paragraph (and were
not included therein at any time) or (y) other Subordinated Indebtedness
having no stated maturity for the payment of principal thereof prior to the
Final Maturity Date of the Securities; (iv) Restricted Investments not to
exceed $10.0 million in the aggregate since the Issue Date; (v) the purchase,
redemption or other acquisition, cancellation or retirement for value of
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Equity Interests, or options, warrants, equity appreciation rights or other
rights to purchase or acquire Equity Interests, of the Company or any
Restricted Subsidiary, or similar securities, held by officers or employees or
former officers or employees of the Company or any Restricted Subsidiary (or
their estates or beneficiaries under their estates), upon death, disability,
retirement or termination of employment, not to exceed $2.0 million in any
calendar year and $10.0 million in the aggregate since the Issue Date; and
(vi) the redemption, retirement, purchase or other acquisition of shares of
Participating Preferred Stock required or permitted by, or for consideration
with a value not greater than the redemption price of the Participating
Preferred Stock as provided in, Article II of the Certificate of Designation
therefor, without giving effect to any amendments thereto or waivers thereof;
provided, however, that in the case of each of clauses (ii), (iii), (iv), (v)
and (vi) no Default or Event of Default shall have occurred and be continuing
or would arise therefrom.
In determining the amount of Restricted Payments permissible
under this covenant, amounts expended pursuant to clauses (i), (iv), (v) and
(vi) of the preceding paragraph shall be included as Restricted Payments and
amounts expended pursuant to clauses (ii) and (iii) shall be excluded. The
amount of any non-cash Restricted Payment shall be deemed to be equal to the
Fair Market Value thereof at the date of the making of such Restricted Payment.
The Company's obligations to comply with this covenant will
terminate if and when the Securities are rated Investment Grade by both
Moody's and S&P and the Company delivers an Officers' Certificate to the
Trustee certifying as to the same.
SECTION 4.07. Corporate Existence.
Subject to Article Five, the Company shall do or shall cause to
be done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each
Significant Restricted Subsidiary in accordance with the respective
organizational documents of each such Significant Restricted Subsidiary and
the rights (charter and statutory) and material franchises of the Company and
the Significant Restricted Subsidiaries; provided, however, that the Company
shall not be required to preserve any such right or franchise, or the
corporate existence of any Significant Restricted Subsidiary, if the Board of
Directors of the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and the
Restricted Subsidiaries, taken as a whole, and that the loss thereof is not,
and will not be, adverse in any material respect to the Holders; provided,
further, however, that a determination of the Board of Directors of the
Company shall not be required in the event of a merger of one or more Wholly
Owned Restricted Subsidiaries of the Company with or into another Wholly Owned
Restricted Subsidiary of the Company or another Person, if the surviving
Person is a Wholly Owned Restricted Subsidiary of the Company organized under
the laws of the United States or a State thereof or of the District of
Columbia.
SECTION 4.08. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all material taxes,
assessments and governmental charges levied or imposed upon the Company or any
Significant Restricted Subsidiary or upon the income, profits or property of
the Company or any Significant Restricted Subsidiary and (2) all lawful claims
for labor, materials and supplies which, in each case, if unpaid, might by law
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become a material liability, or Lien upon the property, of the Company or any
Significant Restricted Subsidiary; provided, however, that the Company shall
not be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings and for which
appropriate provision has been made.
SECTION 4.09. Notice of Defaults.
(a) In the event that any Indebtedness of the Company or any
of its Subsidiaries is declared due and payable before its maturity because of
the occurrence of any default (or any event which, with notice or lapse of
time, or both, would constitute such a default) under such Indebtedness, the
Company shall promptly give written notice to the Trustee of such declaration,
the status of such default or event and what action the Company is taking or
proposes to take with respect thereto.
(b) Upon becoming aware of any Default or Event of Default,
the Company shall promptly deliver an Officers' Certificate to the Trustee
specifying the Default or Event of Default.
SECTION 4.10. Maintenance of Properties and Insurance.
(a) The Company shall cause all material properties owned by
or leased to it or any Restricted Subsidiary and used or useful in the conduct
of its business or the business of any Significant Restricted Subsidiary to be
maintained and kept in normal condition, repair and working order and supplied
with all necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary, so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section 4.10 shall prevent the
Company or any Significant Restricted Subsidiary from discontinuing the use,
operation or maintenance of any of such properties, or disposing of any of
them, if such discontinuance or disposal is, in the judgment of the Board of
Directors or of the board of directors of the Significant Restricted
Subsidiary concerned, or of an officer (or other agent employed by the Company
or of any Significant Restricted Subsidiary) of the Company or such Significant
Restricted Subsidiary having managerial responsibility for any such property,
desirable in the conduct of the business of the Company or any Significant
Restricted Subsidiary, and if such discontinuance or disposal is not adverse
in any material respect to the Holders.
(b) The Company shall maintain, and shall cause the
Significant Restricted Subsidiaries to maintain, insurance with responsible
carriers against such risks and in such amounts, and with such deductibles,
retentions, self-insured amounts and co-insurance provisions, as are
customarily carried by similar businesses of similar size, including property
and casualty loss, and workers' compensation insurance.
SECTION 4.11. Compliance Certificate.
The Company shall deliver to the Trustee within 45 days after
the end of each of the first three fiscal quarters of the Company and within
90 days after the close of each fiscal year a certificate signed by the
principal executive officer, principal financial officer or principal
accounting officer stating that a review of the activities of the Company has
been made under the supervision of the signing officers with a view to
determining whether a Default or Event of Default has occurred and whether or
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not the signers know of any Default or Event of Default by the Company that
occurred during such fiscal quarter or fiscal year. If they do know of such a
Default or Event of Default, the certificate shall describe all such Defaults
or Events of Default, their status and the action the Company is taking or
proposes to take with respect thereto. The first certificate to be delivered
by the Company pursuant to this Section 4.11 shall be for the fiscal quarter
ending June 30, 1997. The certificate delivered pursuant to this Section
4.11 need not comply with Section 10.05.
SECTION 4.12. Provision of Financial Information.
Whether or not the Company is subject to Section 13(a) or 15(d)
of the Exchange Act, or any successor provision thereto, the Company shall
file with the SEC (if permitted by SEC practice and applicable law and
regulations) the annual reports, quarterly reports and other documents which
the Company would have been required to file with the SEC pursuant to such
Section 13(a) or 15(d) or any successor provision thereto if the Company were
so subject, such documents to be filed with the SEC on or prior to the
respective dates (the "Required Filing Dates") by which the Company would have
been required so to file such documents if the Company were so subject. The
Company shall also in any event (a) within 15 days of each Required Filing Date
(whether or not permitted or required to be filed with the SEC) (i) transmit
(or cause to be transmitted) by mail to all Holders, as their names and
addresses appear in the Security Register, without cost to such Holders, and
(ii) file with the Trustee, copies of the annual reports, quarterly reports
and other documents which the Company is required to file with the SEC
pursuant to the preceding sentence, or, if such filing is not so permitted,
information and data of a similar nature, and (b) if, notwithstanding the
preceding sentence, filing such documents by the Company with the SEC is not
permitted by SEC practice or applicable law or regulations, promptly upon
written request supply copies of such documents to any Holder. In addition,
for so long as any Series A Securities remain outstanding, the Company will
furnish to the Holders of Series A Securities and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act, and, to any
beneficial holder of Series A Securities, if not obtainable from the SEC,
information of the type that would be filed with the SEC pursuant to the
foregoing provisions, upon the request of any such holder. The Company will
also comply with Section 314(a) of the TIA. Delivery of such reports,
information and documents to the Trustee is for informational purposes only
and the Trustee's receipt of such shall not constitute constructive notice of
any information contained therein, including the Company's compliance with any
of its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates).
SECTION 4.13. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension
law or any usury law or other law, which would prohibit or forgive the Company
from paying all or any portion of the principal of and/or interest, if any, on
the Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of
this Indenture; and (to the extent that it may lawfully do so) the Company
hereby expressly waives all benefit or advantage of any such law, and
covenants that it shall not hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law had been enacted.
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SECTION 4.14. Change of Control Triggering Event.
(a) Following the occurrence of a Change of Control Triggering
Event (the date of such occurrence being the "Change of Control Date"), the
Company shall notify the Trustee and Holders of the Securities of such
occurrence in the manner prescribed by this Indenture and shall, within 20
Business Days after the Change of Control Date, make an Offer to Purchase all
Securities then outstanding at a purchase price in cash equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest thereon,
if any, to the Purchase Date. The Company's obligations may be satisfied if a
third party makes the Offer to Purchase in the manner, at the times and
otherwise in compliance with the requirements of this Indenture applicable to
an Offer to Purchase made by the Company and purchases all Securities validly
tendered and not withdrawn under such Offer to Purchase. Each Holder shall be
entitled to tender all or any portion of the Securities owned by such Holder
pursuant to the Offer to Purchase, subject to the requirement that any portion
of a Security tendered must be tendered in an integral multiple of $1,000
principal amount.
(b) On or prior to the Purchase Date specified in the Offer to
Purchase, the Company shall (i) accept for payment all Securities or portions
thereof validly tendered pursuant to the Offer, (ii) deposit with the Paying
Agent or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 2.04) money sufficient to pay the Purchase
Price of all Securities or portions thereof so accepted and (iii) deliver or
cause to be delivered to the Trustee for cancellation all Securities so
accepted together with an Officers' Certificate stating the Securities or
portions thereof accepted for payment by the Company. The Paying Agent (or the
Company, if so acting) shall promptly mail or deliver to Holders of Securities
so accepted, payment in an amount equal to the Purchase Price for such
Securities, and the Trustee shall promptly authenticate and mail or deliver to
each Holder of Securities a new Security or Securities equal in principal
amount to any unpurchased portion of the Security surrendered as requested by
the Holder. Any Security not accepted for payment shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall publicly
announce the results of the Offer on or as soon as practicable after the
Purchase Date.
(c) If the Company makes an Offer to Purchase, the Company
will comply with all applicable tender offer laws and regulations, including,
to the extent applicable, Section 14(e) and Rule 14e-1 under the Exchange Act,
and any other applicable Federal or state securities laws and regulations and
any applicable requirements of any securities exchange on which the Securities
are listed, and any violation of the provisions of this Indenture relating to
such Offer to Purchase occurring as a result of such compliance shall not be
deemed a Default or an Event of Default.
SECTION 4.15. Limitations on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries.
The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions to the Company or any other Restricted Subsidiary on its Equity
Interests or with respect to any other interest or participation in, or
measured by, its profits, or pay any Indebtedness owed to the Company or any
other Restricted Subsidiary, (b) make loans or advances to, or guarantee any
Indebtedness or other obligations of, the Company or any other Restricted
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Subsidiary or (c) transfer any of its properties or assets to the Company or
any other Restricted Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) the Bank Credit Facility; provided,
however, that in no event shall Comcast Cellular (so long as it is a
Subsidiary of the Company) be subject to any encumbrance or restriction with
respect to actions taken by it, (ii) any agreement of the Company or any
Restricted Subsidiary outstanding on the Issue Date, as in effect on the Issue
Date, and any amendments, restatements, renewals, replacements or refinancings
thereof (each, a "refinancing"); provided, however, that (x) no such
refinancing is more restrictive in the aggregate with respect to such
encumbrances or restrictions than those contained in such agreement on the
Issue Date and (y) in no event shall any such refinancing cause Comcast
Cellular (so long as it is a Subsidiary of the Company) to be subject to any
such encumbrance or restriction with respect to actions taken by it; (iii)
applicable law; (iv) any agreement of an Acquired Person acquired by the
Company or any Restricted Subsidiary as in effect at the time of such
acquisition (except to the extent such agreement was created by such Acquired
Person in connection with, as a result of or in contemplation of such
acquisition) and any refinancing thereof; provided, however, that no such
refinancing is more restrictive in the aggregate with respect to such
encumbrances or restrictions than those contained in such agreement at the
time of such acquisition; and provided, further, that such encumbrances and
restrictions are not applicable to the Company or any Restricted Subsidiary,
or the properties or assets of the Company or any Restricted Subsidiary, other
than the Acquired Person; (v) customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices; (vi) Purchase Money Indebtedness for property acquired in the
ordinary course of business that imposes encumbrances and restrictions only on
the property so acquired; (vii) any agreement for the sale or disposition of the
Equity Interests or assets of any Restricted Subsidiary; provided, however, that
such encumbrances and restrictions described in this clause (vii) are only
applicable to such Restricted Subsidiary or assets, as applicable, and any such
sale or disposition is made in compliance with Section 4.05 to the extent
applicable thereto; (viii) refinancing Indebtedness permitted under clause (vii)
of Section 4.04(b); provided, however, that the encumbrances and restrictions
contained in the agreements governing such Indebtedness are no more restrictive
in the aggregate than those contained in the agreements governing the
Indebtedness being refinanced immediately prior to such refinancing; (ix) with
respect to a Securitization Subsidiary, an agreement relating to Indebtedness of
a Securitization Subsidiary which is permitted under Section 4.04 or pursuant to
an agreement relating to a Permitted Receivables Financing by a Securitization
Subsidiary; or (x) this Indenture.
The Company's obligations to comply with this covenant will
terminate if and when the Securities are rated Investment Grade by both
Moody's and S&P and the Company delivers an Officers' Certificate to the
Trustee certifying as to the same.
SECTION 4.16. Designation of Unrestricted Subsidiaries.
(a) AWACS Investment Holdings, Inc. is initially designated by
the Company as an Unrestricted Subsidiary as of the Issue Date. The Company
may designate after the Issue Date any other Subsidiary of the Company as an
"Unrestricted Subsidiary" under this Indenture (a "Designation") only if:
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(i) no Default or Event of Default shall have occurred and
be continuing at the time of or after giving effect to such
Designation;
(ii) at the time of and after giving effect to such
Designation, the Company could Incur $1.00 of additional Indebtedness
under the Debt to Annualized Operating Cash Flow Ratio of Section
4.04(a); and
(iii) (A) the Subsidiary to be so designated has
total assets of $1,000 or less or (B) the Company would be permitted
to make a Restricted Investment at the time of Designation (assuming
the effectiveness of such Designation) pursuant to the first
paragraph of Section 4.06 in an amount (the "Designation Amount")
equal to the Fair Market Value of the Company's proportionate
interest in the net worth of such Subsidiary on such date calculated
in accordance with GAAP.
Notwithstanding the foregoing, Comcast directory Services, Inc.
("CDSI") may be designated an Unrestricted Subsidiary at any time on or after
the Issue Date (and such designation shall not be deemed a Restricted Payment
for purposes of Section 4.06 above, provided Investments by the Company the
Restricted Subsidiaries in CDSI since the Issue Date and outstanding on the
date of designation shall not exceed $200,000 in the aggregate (without giving
effect to any writedown or writeoff of such Investment).
Neither the Company nor any Restricted Subsidiary shall at any
time (x) provide credit support for, subject any of its property or assets
(other than the Equity Interests of any Unrestricted Subsidiary) to the
satisfaction of, or guarantee, any Indebtedness of any Unrestricted Subsidiary
(including any undertaking, agreement or instrument evidencing such
Indebtedness) or (y) be directly or indirectly liable for any Indebtedness of
any Unrestricted Subsidiary, except, in the case of clause (x) or (y), to the
extent otherwise permitted under the terms of this Indenture, including,
without limitation pursuant to Section 4.06, Section 4.05 and Section 4.04,
and except for any non-recourse guarantee given solely to support the pledge
by the Company or any Restricted Subsidiary of the Equity Interests of any
Unrestricted Subsidiary. All Subsidiaries of Unrestricted Subsidiaries shall
be Unrestricted Subsidiaries.
(b) The Company may revoke any Designation of a Subsidiary as
an Unrestricted Subsidiary (a "Revocation") if:
(i) no Default or Event of Default shall have occurred and
be continuing at the time of and after giving effect to such
Revocation;
(ii) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately following such Revocation would,
if Incurred at such time, have been permitted to be Incurred for all
purposes of this Indenture; and
(iii) any transaction (or series of related transactions)
between such Subsidiary and any of its Affiliates that occurred
while such Subsidiary was an Unrestricted Subsidiary would be
permitted by Section 4.03 as if such transaction (or series of
related transactions) had occurred at the time of such Revocation.
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All Designations and Revocations must be evidenced by
resolutions of the Board of Directors of the Company, delivered to the Trustee
certifying compliance with the foregoing provisions.
SECTION 4.17. Limitation on Liens.
The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, Incur any Liens of any kind
against or upon any of their respective properties or assets now owned or
hereafter acquired, or any proceeds therefrom or any income or profits
therefrom, to secure any Indebtedness unless contemporaneously therewith
effective provision is made to secure the Securities equally and ratably with
such Indebtedness with a Lien on the same properties and assets securing
Indebtedness for so long as such Indebtedness is secured by such Lien, except
for Permitted Liens.
SECTION 4.18. Redemption of Zero Coupon Notes.
On the Issue Date the Company shall cause Comcast Cellular to
issue a Valuation Notice (as defined in the Zero Coupon Indenture) pursuant to
the Amended and Restated Indenture dated as of June 5, 1992 (as amended and in
effect from time to time, the "Zero Coupon Indenture") among Comcast Cellular,
Comcast Corporation and The Bank of New York, as trustee, and as soon as
practicable following the giving of such Valuation Notice to redeem in
accordance with the Valuation Notice and the Zero Coupon Indenture, all of the
Series A Senior Participating Zero Coupon Notes due 2000 and the Series B
Senior Participating Zero Coupon Notes due 2000 issued and outstanding
thereunder (the "Zero Coupon Notes").
SECTION 4.19. Transactions not Subject to Covenants.
Notwithstanding anything to the contrary in this Indenture, the
following shall not be prohibited (regardless of the form or substance of the
transaction or series of transactions effecting the same):
(i) the redemption, repurchase or cancellation of all (but
not less than all) of the Participating Preferred Stock in exchange
for, or out of the proceeds of the substantially concurrent sale of,
Guest Informant;
(ii) the issuance of up to 4.11% of the Qualified Equity
Interests of Amcell of Atlantic City, Inc., a New Jersey corporation,
to the holders of the 4.11% minority interest in the Atlantic City
MSA License in exchange for all (but not less than all) of such
interest; and
(iii) the transfer, by sale, dividend or other distribution
or otherwise, directly or indirectly, in one transaction or series of
transactions, of all of the Equity Interests or all or substantially
all of the assets of AWACS Investment Holdings, Inc. and its
Subsidiaries or Comcast Directory Services, Inc. and its
Subsidiaries.
No transaction described in this covenant, and no change in the
results of operations or financial condition of the Company or any Restricted
Subsidiary resulting solely therefrom, shall be taken into account in any
calculation under Section 4.06 or in the calculation under Section 4.04(a) of
the Debt to Annualized Operating Cash Flow Ratio.
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ARTICLE FIVE
MERGERS; SUCCESSOR CORPORATION
SECTION 5.01. Mergers, Sale of Assets, etc.
The Company shall not consolidate with or merge with or into
(whether or not the Company is the Surviving Person) any other entity, and the
Company shall not, and shall not cause or permit any Restricted Subsidiary to,
sell, convey, assign, transfer, lease or otherwise dispose of all or
substantially all of the Company's and the Restricted Subsidiaries' properties
and assets (determined on a consolidated basis for the Company and the
Restricted Subsidiaries) to any entity in a single transaction or series of
related transactions, unless: (i) either (x) the Company shall be the
Surviving Person or (y) the Surviving Person (if other than the Company) shall
be a corporation organized and validly existing under the laws of the United
States of America or any State thereof or the District of Columbia, and shall,
in any such case, expressly assume by a supplemental indenture, the due and
punctual payment of the principal of, premium, if any, and interest on the
Securities and the performance and observance of every covenant of this
Indenture and the Registration Rights Agreement to be performed or observed on
the part of the Company; (ii) immediately thereafter, no Default or Event of
Default shall have occurred and be continuing; and (iii) immediately after
giving effect to any such transaction involving the Incurrence by the Company
or any Restricted Subsidiary, directly or indirectly, of additional
Indebtedness (and treating any Indebtedness not previously an obligation of
the Company or any Restricted Subsidiary in connection with or as a result of
such transaction as having been Incurred at the time of such transaction), the
Surviving Person could Incur, on a pro forma basis after giving effect to such
transaction as if it had occurred at the beginning of the quarter immediately
preceding the latest fiscal quarter for which consolidated financial
statements of the Company are available, at least $1.00 of additional
Indebtedness under the Debt to Annualized Operating Cash Flow Ratio of Section
4.04(a); provided, however, that neither clause (ii) nor clause (iii) shall
prohibit a merger of the Company with or into Comcast Cellular or a merger of
a Restricted Subsidiary with or into the Company.
SECTION 5.02. Successor Corporation Substituted.
In the event of any transaction (other than a lease) described
in and complying with the conditions listed in Section 5.01 in which the
Company is not the Surviving Person and the Surviving Person is to assume all
the Obligations of the Company under the Securities, this Indenture and the
Registration Rights Agreement pursuant to a supplemental indenture, such
Surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of, the Company and the Company shall be discharged from
its Obligations under the Securities, this Indenture and the Registration
Rights Agreement.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
Each of the following shall be an "Event of Default" for
purposes of this Indenture:
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(1) failure to pay any interest on any Security when the
same becomes due and payable and the Default continues for a period
of 30 days;
(2) failure to pay the principal of any Security when the
same becomes due and payable at maturity, upon redemption, upon
repurchase pursuant to an Offer to Purchase or otherwise, or the
Company fails to pay on the Purchase Date the Purchase Price for any
Security tendered pursuant to an Offer to Purchase;
(3) failure to perform any other covenant, warranty or
agreement under this Indenture or in the Securities, and the Default
continues for the period and after the notice specified in the last
paragraph of this Section 6.01;
(4) a default or defaults under the terms of one or more
instruments evidencing or securing Indebtedness of the Company or any
Significant Restricted Subsidiary having an outstanding principal
amount of $25.0 million or more individually or in the aggregate that
has resulted in the acceleration of the payment of such Indebtedness
or failure by the Company or any Significant Restricted Subsidiary to
pay principal when due at the stated final maturity (but not any
interim maturity) of any such Indebtedness; provided, however, that
it shall not be an Event of Default if such Indebtedness shall have
been repaid in full or such acceleration shall have been rescinded
within 60 days of such acceleration or failure to pay;
(5) there shall have been any final judgment or judgments
(not subject to appeal) against the Company or any Significant
Restricted Subsidiary in an amount of $25.0 million or more (net of
any amounts covered by reputable and creditworthy insurance
companies) which remain undischarged or unstayed for a period of 60
days after the date on which the right to appeal has expired;
(6) the Company or any Significant Restricted Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(A) admits in writing its inability to pay its debts
generally as they become due,
(B) commences a voluntary case or proceeding,
(C) consents to the entry of an order for relief
against it in an involuntary case or proceeding,
(D) consents or acquiesces in the institution of a
bankruptcy or insolvency proceeding against it,
(E) consents to the appointment of a Custodian of it
or for all or substantially all of its property, or
(F) makes a general assignment for the benefit of its
creditors, or any of them takes any action to authorize or
effect any of the foregoing;
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
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(A) is for relief against the Company or any
Significant Restricted Subsidiary in an involuntary case or
proceeding,
(B) appoints a Custodian of the Company or any
Significant Restricted Subsidiary or for all or substantially
all of its property, or
(C) orders the liquidation of the Company or any
Significant Restricted Subsidiary, and in each case the order
or decree remains unstayed and in effect for 60 days; provided,
however, that if the entry of such order or decree is appealed
and dismissed on appeal, then the Event of Default hereunder by
reason of the entry of such order or decree shall be deemed to
have been cured; or
(8) at any time that Comcast Corporation is an Affiliate
of the Company, Comcast Corporation or any Subsidiary of Comcast
Corporation (other than the Company or any of its Subsidiaries) is
engaged in the cellular telecommunications business or broadband
personal communication services business in any market in which the
Company or any of its Subsidiaries is engaged in the cellular
telecommunications business or broadband personal communication
services business (other than any market where Comcast Corporation or
any such Subsidiary was engaged in such business prior to the Company
and its Subsidiaries).
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal, state or foreign law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or
similar official under any Bankruptcy Law.
A Default under clause (3) is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in principal
amount of the outstanding Securities notify the Company and the Trustee, of
the Default in writing and the Company does not cure the Default within 30
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default." Such
notice shall be given by the Trustee if so requested by the Holders of at
least 25% in principal amount of the Securities then outstanding. When a
Default is cured, it ceases.
SECTION 6.02. Acceleration.
If an Event of Default with respect to the Securities (other
than an Event of Default specified in clause (6) or (7) of Section 6.01 with
respect to the Company) occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount of the outstanding Securities by
notice in writing to the Company (and to the Trustee if given by the Holders)
may declare the unpaid principal of and accrued interest to the date of
acceleration on all outstanding Securities to be due and payable immediately
and, upon any such declaration, such principal amount and accrued interest,
notwithstanding anything contained in this Indenture or the Securities to the
contrary, shall become immediately due and payable.
If an Event of Default specified in clause (6) or (7) of
Section 6.01 with respect to the Company occurs, all unpaid principal of and
accrued interest on all outstanding Securities shall ipso facto become
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immediately due and payable without any declaration or other act on the part
of the Trustee or any Holder.
After a declaration of acceleration, but before a judgment or
decree of the money due in respect of the Securities has been obtained, the
Holders of not less than a majority in aggregate principal amount of the
Securities then outstanding by written notice to the Trustee may rescind an
acceleration and its consequences if all existing Events of Default (other
than the nonpayment of principal of and interest on the Securities which has
become due solely by virtue of such acceleration) have been cured or waived
and if the rescission would not conflict with any judgment or decree. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect
the payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy maturing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.
SECTION 6.04. Waiver of Past Default.
Subject to Sections 2.09, 6.07 and 9.02, prior to the
declaration of acceleration of the Securities, the Holders of not less than a
majority in aggregate principal amount of the outstanding Securities by
written notice to the Trustee may waive an existing Default or Event of
Default and its consequences, except a Default in the payment of principal of
or interest on any Security as specified in clauses (1) and (2) of Section
6.01 or a Default in respect of any term or provision of this Indenture that
may not be amended or modified without the consent of each Holder affected as
provided in Section 9.02. The Company shall deliver to the Trustee an Officers'
Certificate stating that the requisite percentage of Holders have consented to
such waiver and attaching copies of such consents. In case of any such waiver,
the Company, the Trustee and the Holders shall be restored to their former
positions and rights hereunder and under the Securities, respectively. This
paragraph of this Section 6.04 shall be in lieu of Section 316(a)(1)(B) of
the TIA and such Section 316(a)(1)(B) of the TIA is hereby expressly excluded
from this Indenture and the Securities, as permitted by the TIA.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have occurred
for every purpose of this Indenture and the Securities, but no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereon.
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in principal
amount of the outstanding Securities may direct the time, method and place of
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conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture, that
the Trustee determines may be unduly prejudicial to the rights of another
Securityholder, or that may involve the Trustee in personal liability;
provided, however, that the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction. In the event the
Trustee takes any action or follows any direction pursuant to this Indenture,
the Trustee shall be entitled to indemnification satisfactory to it in its
sole discretion against any loss or expense caused by taking such action or
following such direction. This Section 6.05 shall be in lieu of Section
316(a)(1)(A) of the TIA, and such Section 316(a)(1)(A) of the TIA is hereby
expressly excluded from this Indenture and the Securities, as permitted by the
TIA.
SECTION 6.06. Limitation on Suits.
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(i) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal
amount of the outstanding Securities make a written request to the
Trustee to pursue a remedy;
(iii) such Holder or Holders offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(iv) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested,
the provision of indemnity; and
(v) during such 60-day period the Holders of a majority in
principal amount of the outstanding Securities (excluding Affiliates
of the Company) do not give the Trustee a direction which, in the
opinion of the Trustee, is inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
such other Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of principal of or interest on a
Security, on or after the respective due dates expressed in the Security, or
to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of the
Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against
the Company or any other obligor on the Securities for the whole amount of
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principal and accrued interest remaining unpaid, together with interest
overdue on principal and to the extent that payment of such interest is
lawful, interest on overdue installments of interest, in each case at the rate
per annum borne by the Securities and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Securityholders allowed in any judicial proceedings relative to the Company (or
any other obligor upon the Securities), its creditors or its property and
shall be entitled and empowered to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same,
and any Custodian in any such judicial proceedings is hereby authorized by
each Securityholder to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent
and counsel, and any other amounts due the Trustee under Section 7.07. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this
Article Six, it shall pay out the money or property in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
Third: to the Company.
The Trustee, upon prior written notice to the Company, may fix
a record date and payment date for any payment to Securityholders pursuant to
this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 shall not apply to a suit by the
Trustee, a suit by a Holder or group of Holders of more than 10% in aggregate
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principal amount of the outstanding Securities, or to any suit instituted by
any Holder for the enforcement or the payment of the principal or interest on
any Securities on or after the respective due dates expressed in the Security.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If a Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture
and use the same degree of care and skill in their exercise as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of a Default:
(1) The Trustee shall not be liable except for
the performance of such duties as are specifically set forth herein;
and
(2) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
or opinions conforming to the requirements of this Indenture;
however, in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall examine such certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee shall not be relieved from liability for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section 7.01;
(2) The Trustee shall not be liable for any
error of judgment made in good faith by a Trust Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(3) The Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 6.05.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or take any action at the request or direction of
Holders if it shall have reasonable grounds for believing that repayment of
such funds is not assured to it or it does not receive from such Holders an
indemnity satisfactory to it in its sole discretion against such risk,
liability, loss, fee or expense which might be incurred by it in compliance
with such request or direction.
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(e) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section
7.01.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate and/or an Opinion of Counsel, which shall
conform to the provisions of Section 10.05. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
certificate or opinion.
(c) The Trustee may act through attorneys and agents of its
selection and shall not be responsible for the misconduct or negligence of any
agent or attorney (other than an agent who is an employee of the Trustee)
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be authorized or
within its rights or powers.
(e) The Trustee may consult with counsel and the advice or
opinion of such counsel as to matters of law shall be full and complete
authorization and protection from liability in respect of any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
(f) Any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution.
(g) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Securityholders pursuant to this Indenture, unless
such Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred
by it in compliance with such request or direction.
(h) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document,
but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney.
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(i) The Trustee shall not be deemed to have notice of any
Event of Default unless a Trust Officer of the Trustee has actual knowledge
thereof or unless the Trustee shall have received written notice thereof at
the Corporate Trust Office of the Trustee, and such notice references the
Securities and this Indenture.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or
its Affiliates with the same rights it would have if it were not Trustee,
subject to Section 7.10 hereof. Any Agent may do the same with like rights.
However, the Trustee is subject to Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the
Securities, it shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement of the
Company in this Indenture or any document issued in connection with the sale
of Securities or any statement in the Securities other than the Trustee's
certificate of authentication.
SECTION 7.05. Notice of Defaults.
If a Default or an Event of Default occurs and is continuing
and the Trustee knows of such Defaults or Events of Default, the Trustee shall
mail to each Securityholder notice of the Default or Event of Default within
30 days after the occurrence thereof. Except in the case of a Default or an
Event of Default in payment of principal of or interest on any Security, the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the
interest of Securityholders. This Section 7.05 shall be in lieu of the proviso
to Section 315(b) of the TIA and such proviso to Section 315(b) of the TIA
is hereby expressly excluded from this Indenture and the Securities, as
permitted by the TIA.
SECTION 7.06. Reports by Trustee to Holders.
If required by TIA Section 313(a), within 60 days after each
May 15 beginning with May 15, 1998, the Trustee shall mail to each
Securityholder a report dated as of such May 15 that complies with TIA Section
313(a). The Trustee also shall comply with TIA Section 313(b), (c) and (d).
A copy of each such report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange, if any,
on which the Securities are listed.
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or of any delisting thereof.
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as the Company and the Trustee shall from time to time agree in
writing for its services. The Trustee's compensation shall not be limited by
any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
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and advances (including fees, disbursements and expenses of its agents and
counsel) incurred or made by it in addition to the compensation for its
services except any such disbursements, expenses and advances as may be
attributable to the Trustee's negligence or bad faith. Such expenses shall
include the reasonable compensation, disbursements and expenses of the
Trustee's agents, accountants, experts and counsel and any taxes or other
expenses incurred by a trust created pursuant to Section 8.01 hereof.
The Company shall indemnify the Trustee for, and hold it
harmless against any and all loss, damage, claims, liability or expense,
including taxes (other than franchise taxes imposed on the Trustee and taxes
based upon, measured by or determined by the income of the Trustee), arising
out of or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of any
of its powers or duties hereunder, except to the extent that such loss,
damage, claim, liability or expense is due to its own negligence or bad faith.
The Trustee shall notify the Company promptly of any claim asserted against
the Trustee for which it may seek indemnity. However, the failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense (and may employ its own counsel) at the
Company's expense; provided, however, that the Company's reimbursement
obligation with respect to counsel employed by the Trustee will be limited to
the reasonable fees and expenses of such counsel.
The Company need not pay for any settlement made without its
written consent, which consent shall not be unreasonably withheld. The Company
need not reimburse any expense or indemnify against any loss or liability
incurred by the Trustee as a result of the violation of this Indenture by the
Trustee.
To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a Lien prior to the Securities against all money
or property held or collected by the Trustee, in its capacity as Trustee,
except money or property held in trust to pay principal of or interest on
particular Securities or the Purchase Price or redemption price of any
Securities to be purchased or pursuant to an Offer to Purchase or redeemed.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(6) or (7) occurs, the expenses
(including the reasonable fees and expenses of its agents and counsel) and the
compensation for the services shall be preferred over the status of the
Holders in a proceeding under any Bankruptcy Law and are intended to
constitute expenses of administration under any Bankruptcy Law. The Company's
obligations under this Section 7.07 and any claim arising hereunder shall
survive the resignation or removal of any Trustee, the discharge of the
Company's obligations pursuant to Article Eight and any rejection or
termination under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign at any time by so notifying the Company
in writing. The Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Trustee and the Company
in writing and may appoint a successor Trustee with the Company's consent. The
Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
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(2) the Trustee is adjudged a bankrupt or an insolvent under
any Bankruptcy Law;
(3) a custodian or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. As promptly as
practicable after that, the retiring Trustee shall transfer, after payment of
all sums then owing to the Trustee pursuant to Section 7.07, all property held
by it as Trustee to the successor Trustee, subject to the Lien provided in
Section 7.07, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have the rights, powers and duties
of the Trustee under this Indenture. A successor Trustee shall mail notice of
its succession to each Securityholder.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in principal amount of the outstanding
Securities may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or banking corporation, the resulting, surviving or transferee
corporation or banking corporation without any further act shall be the
successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee which shall be
eligible to act as Trustee under TIA Section Section 310(a)(1) and 310(a)(2).
The Trustee shall have a combined capital and surplus of at least $50,000,000
as set forth in its most recent published annual report of condition. If the
Trustee has or shall acquire any "conflicting interest" within the meaning of
TIA Section 310(b), the Trustee and the Company shall comply with the
provisions of TIA Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
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requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
If at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 7.10, the Trustee shall resign immediately in the
manner and with the effect hereinbefore specified in this Article Seven.
SECTION 7.11. Preferential Collection of Claims Against
Company.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations.
The Company may terminate its substantive obligations in
respect of the Securities by delivering all outstanding Securities to the
Trustee for cancellation and paying all sums payable by it on account of
principal of and interest on all Securities or otherwise. In addition to the
foregoing, the Company may terminate its obligation under Sections 4.03, 4.04,
4.05, 4.06, 4.08, 4.10, 4.13, 4.14, 4.16, 4.17, 4.18 and 4.19 (and no Default
or Event of Default under Section 6.01(3) shall thereafter apply), by (i)
depositing with the Trustee, under the terms of an irrevocable trust
agreement, money or direct non-callable obligations of the United States of
America for the payment of which the full faith and credit of the United
States is pledged ("United States Government Obligations") sufficient (without
reinvestment) to pay all remaining indebtedness on the Securities at maturity
or an earlier redemption, (ii) delivering to the Trustee either an Opinion of
Counsel or a ruling directed to the Trustee from the Internal Revenue Service
to the effect that the Holders of the Securities will not recognize income,
gain or loss for federal income tax purposes as a result of such deposit and
termination of obligations, (iii) delivering to the Trustee an Opinion of
Counsel to the effect that the Company's exercise of its option under this
paragraph will not result in any of the Company, the Trustee or the trust
created by the Company's deposit of funds pursuant to this provision becoming
or being deemed to be an "investment company" under the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and (iv) delivering to the
Trustee an Officers' Certificate and an Opinion of Counsel each stating
compliance with all conditions precedent provided for herein. In addition, the
Company may, provided that no Default or Event of Default has occurred and is
continuing or would arise therefrom (or, with respect to a Default or Event of
Default specified in Section 6.01(6) or (7), occurs at any time on or prior to
the 91st calendar day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until after such 91st day)),
terminate all of its substantive obligations in respect of the Securities
(including its obligations to pay the principal of (and premium, if any, on)
and interest on the Securities) by (i) depositing with the Trustee, under the
terms of an irrevocable trust agreement, money or United States Government
Obligations sufficient (without reinvestment) to pay all remaining
indebtedness on the Securities at maturity or on earlier redemption, (ii)
delivering to the Trustee either a ruling directed to the Trustee from the
Internal Revenue Service to the effect that the Holders of the Securities will
not recognize income, gain or loss for federal income tax purposes as a result
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of such deposit and termination of obligations or an Opinion of Counsel
addressed to the Trustee based upon such a ruling or based on a change in the
applicable Federal tax law since the date of this Indenture to such effect,
(iii) delivering to the Trustee an Opinion of Counsel to the effect that the
Company's exercise of its option under this paragraph will not result in any
of the Company, the Trustee or the trust created by the Company's deposit of
funds pursuant to this provision becoming or being deemed to be an "investment
company" under the Investment Company Act and (iv) delivering to the Trustee
an Officers' Certificate and an Opinion of Counsel each stating compliance
with all conditions precedent provided for herein.
Notwithstanding the foregoing paragraph, the Company's
obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 2.12, 2.13
and 4.01 (but not with respect to termination of substantive obligations
pursuant to the third sentence of the foregoing paragraph), 4.02, 7.07, 7.08,
8.03 and 8.04 shall survive until the Securities are no longer outstanding.
Thereafter the Company's obligations in Sections 7.07, 8.03 and 8.04 shall
survive.
After such delivery or irrevocable deposit and delivery of an
Officers' Certificate and Opinion of Counsel, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Securities and this Indenture except for those surviving obligations specified
above.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the United States
Government Obligations deposited pursuant to this Section 8.01 or the
principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of
outstanding Securities.
SECTION 8.02. Application of Trust Money.
The Trustee shall hold in trust money or United States
Government Obligations deposited with it pursuant to Section 8.01, and shall
apply the deposited money and the money from United States Government
Obligations in accordance with this Indenture solely to the payment of
principal of and interest on the Securities.
SECTION 8.03. Repayment to Company.
Subject to Sections 7.07 and 8.01, the Trustee shall promptly
pay to the Company upon written request any excess money held by it at any
time. The Trustee shall pay to the Company upon written request any money held
by it for the payment of principal or interest that remains unclaimed for two
years; provided, however, that the Trustee before being required to make any
payment may at the expense of the Company cause to be published once in a
newspaper of general circulation in The City of New York or mail to each
Holder entitled to such money notice that such money remains unclaimed and
that, after a date specified therein which shall be at least 30 days from the
date of such publication or mailing, any unclaimed balance of such money then
remaining shall be repaid to the Company. After payment to the Company,
Securityholders entitled to money must look to the Company for payment as
general creditors unless an applicable abandoned property law designates
another person and all liability of the Trustee or Paying Agent with respect
to such money shall thereupon cease.
SECTION 8.04. Reinstatement.
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If the Trustee is unable to apply any money or United States
Government Obligations in accordance with Section 8.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
the Company's obligations under this Indenture and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant to Section
8.01 until such time as the Trustee is permitted to apply all such money or
United States Government Obligations in accordance with Section 8.01;
provided, however, that if the Company has made any payment of interest on or
principal of any Securities because of the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money or United States Government
Obligations held by the Trustee.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company, when authorized by a resolution of its Board of
Directors, and the Trustee may amend or supplement this Indenture or the
Securities without notice to or consent of any Securityholder:
(i) to cure any ambiguity, defect or inconsistency;
provided, however, that such amendment or supplement does not
materially adversely affect the rights of any Holder;
(ii) to effect the assumption by a successor Person of all
obligations of the Company under the Securities, this Indenture and
the Registration Rights Agreement in connection with any transaction
complying with Article Five of this Indenture;
(iii) to provide for uncertificated Securities in addition
to or in place of certificated Securities;
(iv) to comply with any requirements of the SEC in order to
effect or maintain the qualification of this Indenture under the TIA;
(v) to make any change that would provide any additional
benefit or rights to the Holders;
(vi) to make any other change that does not materially
adversely affect the rights of any Holder under this Indenture;
(vii) to add to the covenants of the Company for the benefit
of the Holders, or to surrender any right or power herein conferred
upon the Company; or
(viii) to secure the Securities pursuant to the requirements
of Section 4.18 or otherwise;
provided, however, that the Company has delivered to the Trustee an Opinion of
Counsel stating that such amendment or supplement complies with the provisions
of this Section 9.01.
SECTION 9.02. With Consent of Holders.
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Subject to Section 6.07, the Company, when authorized by a
resolution of its Board of Directors, and the Trustee may amend or supplement
this Indenture or the Securities with the written consent of the Holders of at
least a majority in principal amount of the outstanding Securities. Subject to
Section 6.07, the Holders of a majority in principal amount of the outstanding
Securities may waive compliance by the Company with any provision of this
Indenture or the Securities. However, without the consent of each
Securityholder affected, an amendment, supplement or waiver, including a
waiver pursuant to Section 6.04, may not:
(1) change the Stated Maturity of the principal of or any
installment of interest on any Security or alter the optional
redemption or repurchase provisions of any Security or this Indenture
in a manner adverse to the Holders of the Securities;
(2) reduce the principal amount (or the premium) of any
Security;
(3) reduce the rate of or extend the time for payment of
interest on any Security;
(4) change the place or currency of payment of the principal
of or interest on any Security;
(5) modify any provisions of Section 6.04 (other than to add
sections of this Indenture or the Securities subject thereto) or 6.07
or this Section 9.02 (other than to add sections of this Indenture or
the Securities which may not be amended, supplemented or waived
without the consent of each Securityholder affected);
(6) reduce the percentage of the principal amount of
outstanding Securities necessary for amendment to or waiver of
compliance with any provision of this Indenture or the Securities or
for waiver of any Default;
(7) waive a default in the payment of the principal of or
interest on or redemption payment with respect to any Security
(except a rescission of acceleration of the Securities by the Holders
as provided in Section 6.02 and a waiver of the payment default that
resulted from such acceleration);
(8) modify the ranking or priority of the Securities; or
(9) modify the provisions of any covenant (or the related
definitions in this Indenture) requiring the Company to make any
Offer to Purchase in a manner materially adverse to the Holders.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Company shall mail to the Holders affected thereby
a notice briefly describing the amendment, supplement or waiver. Any failure
of the Company to mail such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such supplemental indenture.
SECTION 9.03. Compliance with Trust Indenture Act.
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Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it
by a Holder is a continuing consent by the Holder and every subsequent Holder
of that Security or portion of that Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made
on any Security. Subject to the following paragraph, any such Holder or
subsequent Holder may revoke the consent as to such Holder's Security or
portion of such Security by notice to the Trustee or the Company received
before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Securities
have consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders of Securities entitled to
consent to any amendment, supplement or waiver. If a record date is fixed,
then, notwithstanding the last sentence of the immediately preceding
paragraph, those persons who were Holders of Securities at such record date
(or their duly designated proxies), and only those persons, shall be entitled
to consent to such amendment, supplement or waiver or to revoke any consent
previously given, whether or not such persons continue to be Holders of such
Securities after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder, unless it makes a change described in any of
clauses (1) through (9) of Section 9.02. In that case the amendment,
supplement or waiver shall bind each Holder of a Security who has consented to
it and every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security.
SECTION 9.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Security
about the changed terms and return it to the Holder. Alternatively, if the
Company or the Trustee so determines, the Company in exchange for the Security
shall issue and the Trustee shall authenticate a new Security that reflects
the changed terms. Failure to make the appropriate notation or issue a new
Security shall not affect the validity and effect of such amendment,
supplement or waiver.
SECTION 9.06. Trustee to Sign Amendments, etc.
The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article Nine
is authorized or permitted by this Indenture and that such amendment,
supplement or waiver constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms (subject to customary
exceptions). The Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver which affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise. In signing any amendment,
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supplement or waiver, the Trustee shall be entitled to receive an indemnity
reasonably satisfactory to it.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act Controls.
This Indenture is subject to the provisions of the TIA that are
required to be a part of this Indenture, and shall, to the extent applicable,
be governed by such provisions. If any provision of this Indenture modifies
any TIA provision that may be so modified, such TIA provision shall be deemed
to apply to this Indenture as so modified. If any provision of this Indenture
excludes any TIA provision that may be so excluded, such TIA provision shall
be excluded from this Indenture.
The provisions of TIA Section Section 310 through 317 that
impose duties on any Person (including the provisions automatically deemed
included unless expressly excluded by this Indenture) are a part of and govern
this Indenture, whether or not physically contained herein.
SECTION 10.02. Notices.
Any notice or communication shall be sufficiently given if in
writing and delivered in person, by facsimile and confirmed by overnight
courier, or mailed by first-class mail addressed as follows:
if to the Company:
Comcast Cellular Holdings, Inc.
c/o Comcast Corporation
1500 Market Street
Philadelphia, Pennsylvania 19102
Attention: General Counsel
Facsimile: (215) 981-7790
Telephone: (215) 665-1700
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Richard D. Truesdell, Jr.
Facsimile: (212) 450-4800
Telephone: (212) 450-4000
if to the Trustee:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Trustee Administration
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Facsimile: (212)815-5359
Telephone: (212) 815-5915
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed, first-class, postage
prepaid, to a Holder including any notice delivered in connection with TIA
Section 310(b), TIA Section 313(c), TIA Section 314(a) and TIA Section
315(b), shall be mailed to him at his address as set forth on the Security
Register and shall be sufficiently given to him if so mailed within the time
prescribed. To the extent required by the TIA, any notice or communication
shall also be mailed to any Person described in TIA Section 313(c).
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. Except for a notice to the Trustee, which is deemed given
only when received, if a notice or communication is mailed in the manner
provided above, it is duly given, whether or not the addressee receives it.
SECTION 10.03. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b)
with other Securityholders with respect to their rights under this Indenture
or the Securities. The Company, the Trustee, the Registrar and any other
person shall have the protection of TIA Section 312(c).
SECTION 10.04. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the Trustee
to take or refrain from taking any action under this Indenture, the Company
shall furnish to the Trustee at the request of the Trustee:
(1) an Officers' Certificate in form and substance
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance satisfactory
to the Trustee stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
SECTION 10.05. Statements Required in Certificate or Opinion.
Each certificate (other than the certificates provided pursuant
to Section 4.11) or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
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(3) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of such
person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel
may rely on an Officers' Certificate or certificates of public
officials.
SECTION 10.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Paying Agent or Registrar may make reasonable
rules for its functions.
SECTION 10.07. Governing Law.
The laws of the State of New York shall govern this Indenture
and the Securities without regard to principles of conflicts of law.
SECTION 10.08. No Recourse Against Others.
A director, officer, employee, incorporator or stockholder of
the Company or any of its Affiliates, as such, shall not have any liability
for any obligations of the Company or any of its Affiliates under the
Securities or this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability.
SECTION 10.09. Successors.
All agreements of the Company in this Indenture and the
Securities shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 10.10. Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 10.11. Severability.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, and a Holder shall have no claim therefor against any party
hereto.
SECTION 10.12. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or a Subsidiary. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 10.13. Legal Holidays.
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If a payment date is a not a Business Day at a place of
payment, payment may be made at that place on the next succeeding Business
Day, and no interest shall accrue for the intervening period.
[Signature Pages Follow]
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
COMCAST CELLULAR HOLDINGS, INC.
By: /s/ John R. Alchin
--------------------------------
Name: John R. Alchin
Title: Senior Vice President and
Treasurer
THE BANK OF NEW YORK,
AS TRUSTEE
By: /s/ Mary Jane Morrissey
-------------------------------
Name: Mary Jane Morrissey
Title: Vice President
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<PAGE>
EXHIBIT 5.1
DAVIS POLK & WARDWELL
450 Lexington Avenue
New York, N.Y. 10017
212-450-4000
July 3, 1997
Comcast Cellular Holdings, Inc.
1105 North Market Street
Wilmington, DE 19801
Ladies and Gentlemen:
We have acted as special counsel to Comcast Cellular Holdings,
Inc. (the "Company") in connection with the Company's offer (the "Exchange
Offer") to exchange its 9 1/2% Exchange Notes due 2007, Series A (the "Old
Notes"), for a like principal amount of any or all of its outstanding 9 1/2%
Notes due 2007, Series B (the "New Notes").
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments as we have deemed
necessary or advisable for the purpose of rendering this opinion.
Upon the basis of the foregoing and assuming the due execution
and delivery of the New Notes, we are of the opinion that the New Notes, when
the New Notes are executed, authenticated and delivered in accordance with the
Indenture dated as of May 8, 1997 by and between the Company and The Bank of
New York, as Trustee, in exchange for the Old Notes in accordance with the
Exchange Offer, will be valid and binding obligations of the Company
enforceable in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and similar laws
affecting creditors' rights generally and equitable principles.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the federal
laws of the United States of America and the General Corporation Law of the
State of Delaware.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement relating to the Exchange Offer. We also consent
to the reference to us under the caption "Validity of the Notes" in the
Prospectus contained in such Registration Statement.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other
purpose or relied upon by or furnished to any other person without our prior
written consent.
Very truly yours,
/s/ Davis Polk & Wardwell
<PAGE>
EXHIBIT 8.1
DAVIS POLK & WARDWELL
450 Lexington Avenue
New York, N.Y. 10017
212-450-4000
July 3, 1997
Comcast Cellular Holdings, Inc.
1105 North Market Street
Wilmington, DE 19899
Ladies and Gentlemen:
Reference is made to the prospectus (the "Prospectus")
contained in the registration statement on Form S-4 being furnished by Comcast
Cellular Holdings, Inc. to the Securities and Exchange Commission (the
"Commission") on the date hereof in connection with the exchange of Old Notes
for New Notes (the "Exchange"), all as described in the Prospectus.
The discussion of material federal income tax consequences
relevant to the Exchange and holding of Notes contained under the caption
"Certain Federal Income Tax Consequences" in the Prospectus constitutes the
opinion of Davis Polk & Wardwell, subject to the qualifications stated
therein.
We consent to the furnishing to the Commission of a copy of
this opinion and to the reference to our firm under the caption "Certain
Federal Income Tax Consequences" in the Prospectus.
Very truly yours,
/s/ Davis Polk & Wardwell
<PAGE>
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of May 20, 1997 by and between
COMCAST CORPORATION, a Pennsylvania corporation, with an address at 1500 Market
Street, Philadelphia, Pennsylvania 19102 ("Comcast"), and COMCAST CELLULAR
COMMUNICATIONS, INC., a Delaware corporation with an address at 1105 North
Market Street, Suite 1300, Wilmington, Delaware 19899 (including its
subsidiaries as they may exist at any time, "CCCI").
WHEREAS, CCCI owns and operates certain cellular telephone
systems (the "Systems"); and
WHEREAS, Comcast is experienced in the management and
operation of cellular telephone systems, CCCI has requested Comcast to render
supervisory services in connection with the management and operation of the
Systems, and Comcast is willing to do so on the terms and conditions hereinafter
set forth;
WHEREAS, Comcast and CCCI are parties to a certain Management
Agreement, dated as of March 5, 1992 ("Original Management Agreement") and it is
the desire of the parties not to terminate said agreement as certain Zero Coupon
Notes ("Zero Notes") issued by Comcast Cellular Corporation on March 5, 1992
were repaid in full; and
WHEREAS, due to repayment in full of the Zero Notes on May 19,
1997, the parties hereto wish to supersede the Original Management Agreement
with this Agreement;
NOW THEREFORE, the parties hereto, intending to be legally
bound, agree as follows:
<PAGE>
1. Comcast shall use its commercially reasonable efforts to
supervise and manage the development and operation of the Systems.
2. Specifically, Comcast shall, at the expense of CCCI,
arrange for and supervise the performance of the following functions, but will
not necessarily perform any of such functions itself:
(a) purchasing equipment and materials and the
provision of labor and
other services;
(b) interviewing, hiring, discharging and training
personnel;
(c) establishing office and accounting procedures and
administration thereof;
(d) establishing procedures for maintenance,
replacement, and expansion of the systems;
(e) preparing market surveys from time to time and,
on the basis thereof, preparing and submitting to CCCI operating projections
which will include (i) a breakdown of capital requirements for additional
operating facilities; annual operating budgets; and (ii) cash flow analysis;
(f) preparing advertising and sales promotion
programs, including newspaper, radio, and other advertising, direct selling, and
special events activities; and
(g) preparing periodic reports to CCCI regarding
operations and general developments in the cellular industry as they may affect
CCCI's operations.
3. As compensation for such services, Comcast shall be paid an
annual management fee, payable in quarterly installments, in an amount equal to
one and one-half
2
<PAGE>
percent (1.5%) of the consolidated gross operating revenue ("Total Revenue") of
CCCI during the relevant fiscal year. Total Revenue shall include revenue
derived in the ordinary course of business in respect of the Cellular
Communications Systems of CCCI (excluding interest income and unusual or
extraordinary items) computed pursuant to CCCI's method of accounting for
reporting Total Revenue for federal income tax purposes.
Notwithstanding the foregoing, payment of the management fee
shall be limited in the manner set forth in the Credit Agreement, dated
September 15, 1995, by and among CCCI, Toronto Dominion (Texas), Inc. as
Administrative Agent and the other agents and banks named therein as such
agreement may be amended, supplemented, extended, or modified from time to time
(the "Credit Agreement") or in any credit agreement replacing, restating or
refinancing the indebtedness evidenced by the Credit Agreement and the Affiliate
Subordination Agreement referred to in such Credit Agreement.
4. Comcast shall be entitled to reimbursement from CCCI for
Comcast's reasonable out-of-pocket expenses allocable to the management and
operation of the Systems. These reimbursements will compensate Comcast for
services which otherwise would have been performed by CCCI itself. Operating and
management expenses may include telephone, travel, and copying charges and
salaries of any full or part-time employees used in pre-construction work,
construction supervision, marketing, engineering and non-supervisory services to
the extent required for the operations of the Systems, but may not include
reimbursements to Comcast for its own management salaries, corporate overhead,
rent, leasehold, or utilities expenses. Such reimbursement shall be made at the
end of each month for disbursements during such month.
5. Comcast may, in connection with the operation of the
Systems, render services or furnish facilities or equipment beyond the services
required to be performed under
3
<PAGE>
this Agreement, such as accounting and bookkeeping services. In such case,
Comcast shall be entitled to be paid for such services, facilities or equipment
in addition to compensation or reimbursement to be paid pursuant to any other
provision of this Agreement, at reasonable rates.
6. CCCI shall bear any and all losses resulting from the
operation of the Systems, and Comcast shall not, under any circumstances, be
held liable therefor so long as Comcast shall perform its duties hereunder in
good faith. Comcast shall not be held to have incurred any liability to CCCI or
to any third party by virtue of any action taken in good faith by it in
discharge of its duties hereunder, and CCCI agrees to indemnify Comcast and hold
Comcast harmless with respect to any and all claims that may be made against it
in respect thereof.
7. The parties recognize that Comcast is engaged directly or
through subsidiaries and affiliates in various similar and other businesses.
Nothing herein shall be construed to prevent the continued involvement of any
such entities in similar and other businesses, whether such involvement now
exists or occurs in the future, including, without limitation, the ownership or
management of other cellular businesses.
8. This Agreement shall continue in effect for 10 years from
the date hereof.
9. This Agreement sets forth the entire understanding of the
parties with respect to the subject matter hereof, supersedes all existing
agreements among them concerning such subject matter, and may be modified only
by a written instrument duly executed by each party.
10. Neither party may sell, assign, transfer, or otherwise
convey any of its rights or delegate any of its duties under this Agreement
except to a corporation which has succeeded to substantially all the business
and assets of the assignor and assumed in writing its
4
<PAGE>
obligations under this Agreement or to a corporation surviving a merger or
consolidation to which the party to this Agreement is a party, or in the case of
Comcast to any subsidiary corporation so long as such corporation remains a
subsidiary of Comcast, and this Agreement shall be binding upon and inure to the
benefit of the parties hereto and such respective successors and assigns
provided, however, CCCI (or its successors or assigns) may assign its rights and
duties hereunder to any Permitted Successor (as such term is defined in the
Credit Agreement) which becomes a Borrower under the Credit Agreement by doing
written notice of such assignment to Comcast. Any sale, assignment, transfer,
conveyance or delegation in violation of this Section 10 shall be void.
11. This Agreement does not create, and shall not be construed
as creating, any rights enforceable by any person not a party to this Agreement
(except as provided in Section 10).
12. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall be governed by
and construed in accordance with the laws of Pennsylvania, without giving effect
to conflict of laws.
13. In providing the services to CCCI contemplated by this
Agreement, Comcast is acting as an independent contractor and nothing in this
Agreement shall be construed to imply that Comcast is a partner or joint
venturer with, or an agent of, CCCI.
14. This Agreement shall be effective as of the date first
above written upon execution by the parties hereto but not before repayment in
full of the Zero Notes. Upon the effectiveness of this Agreement, the Original
Management Agreement shall terminate.
5
<PAGE>
15. CCCI may assign all its rights and obligations hereunder
to any Permitted Successor which becomes a Borrower under the Credit Agreement
upon written notice to Comcast, which notice shall be signed by both CCCI and
the Permitted Successor. Upon delivery of said notice, (a) all rights hereunder
shall inure to and all obligations hereunder shall be borne by the Permitted
Successor and (b) all obligations and rights of Comcast Cellular Communications,
Inc. hereunder shall terminate.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first written.
COMCAST CORPORATION
By: /s/ STANLEY WANG
------------------------------------
Name: Stanley Wang
Title: Senior Vice President & Secretary
COMCAST CELLULAR
COMMUNICATIONS, INC.
By: /s/ LAWRENCE S. SMITH
-------------------------------------
Name: Lawrence S. Smith
Title: Executive Vice President
6
<PAGE>
Exhibit 10.2
TAX SHARING AGREEMENT
TAX SHARING AGREEMENT dated as of May 20, 1997 among Comcast
Corporation ("Comcast"), Comcast Cellular Holdings, Inc. ("CC Hold"), Comcast
Cellular Corporation ("CC Corp."), and Comcast Cellular Communications, Inc.
(the "Company").
WHEREAS, CC Hold., CC Corp., the Company, and the Company's
Subsidiaries (as hereinafter defined) are or will be members of an affiliated
group of corporations (the "Affiliated Group") filing consolidated returns for
United States Federal income tax purposes, of which Comcast is the "common
parent" within the meaning of Section 1504 of the Internal Revenue Code of 1986,
as amended (the "Code");
WHEREAS, the parties hereto are parties to a certain Tax Sharing
Agreement, dated as of March 5, 1992 (the "Original Tax Agreement");
WHEREAS, it is the intention of the parties that the Original Tax
Agreement shall be terminated and superseded by this Agreement;
WHEREAS, it is the intention of the parties that, upon the
effectiveness of this Agreement, there shall be no other tax sharing, tax
allocation, or similar agreement providing for the allocation of tax payments
owing by the members of the Affiliated Group (whether in respect of Federal or
state income) among the members of the Affiliated Group;
WHEREAS, the Company has entered into a Credit Agreement dated as of
September 14, 1995 (as modified and supplemented and in effect from time to
time, the "Credit Agreement") between the Company, the Banks party thereto, the
Arranging Agents party thereto, the Managing Agents party thereto and Toronto
Dominion (Texas), Inc., as Administrative Agent for said Banks;
<PAGE>
WHEREAS, the parties hereto wish to agree as to the allocation of
certain tax payments and tax benefits among Comcast, CC Hold., CC Corp., and the
Company;
NOW THEREFORE, it is hereby agreed as follows:
Section 1. Definitions. Certain terms are defined in the preamble
hereto and the WHEREAS clauses hereof, and the terms: (a) "Amcell" shall mean
American Cellular Network Corp., a New Jersey corporation, (b) "Subsidiary" of
any corporation (the "parent") shall mean any Person (as defined in the Credit
Agreement) which is entitled to join with the parent in the filing of a Federal
consolidated income tax return (or would be if the parent were considered the
common parent of a separate consolidated group).
Section 2. Accrual of Tax Liability. The Company shall accrue annually,
as an obligation to Comcast, an amount equal to the full amount of Federal and
state income taxes which the Company and its Subsidiaries would have accrued if
the Company and its Subsidiaries had at all times (from the date hereof forward)
filed a separate consolidated Federal income tax return, with the Company as the
"common parent" (within the meaning of Section 1504 of the Code) (but without
giving effect to the use by the Company and its Subsidiaries of any net
operating loss carryforwards or other tax attributes of Amcell which accrued
prior to Amcell becoming a Subsidiary of the Company). If the Company and its
Subsidiaries incur any net operating losses or other tax attributes (other than
any net operating loss carryforwards or other tax attributes of Amcell which
accrued prior to Amcell becoming a Subsidiary of the Company) that would have
been available to be carried forward or back to any taxable period or portion
thereof beginning on or after the date hereof if the Company and its
Subsidiaries had at all times (from the date hereof forward) filed a separate
2
<PAGE>
consolidated Federal income tax return with the Company as the "common parent"
(within the meaning of Section 1504 of the Code), such net operating losses or
other tax attributes shall be taken into account in computing the amounts to be
accrued, or reversing amounts previously accrued (which reversal, if such
previously accrued amounts shall have been paid pursuant to Section 3, shall be
accrued as an obligation from Comcast), pursuant to the first sentence of this
Section 2. The accrual pursuant to this Section 2 will be computed on earnings
reported for financial statement purposes.
Section 3. Tax Payments. The Company shall pay to Comcast, not less
often than annually, an amount equal to the least of (a) the amount of Federal
and state income taxes which CC Hold. and its Subsidiaries would have paid if CC
Hold. and its Subsidiaries had at all times (from the date hereof forward) filed
a separate consolidated Federal income tax return, with CC Hold. as the "common
parent" (within the meaning of Section 1504 of the Code), (b) the amount accrued
for such period under Section 2 and (c) the amount that would have accrued for
such period under Section 2 if the Excluded Subsidiaries were excluded from the
Affiliated Group. If CC Hold. and its Subsidiaries incur any net operating
losses or other tax attributes that would have been available to be carried
forward or back to any taxable period or portion thereof beginning on or after
the date hereof if CC Hold. and its Subsidiaries had at all times (from the date
hereof forward) filed a separate consolidated Federal income tax return with CC
Hold. as the "common parent" (within the meaning of Section 1504 of the Code),
such net operating losses or other tax attributes shall be taken into account in
computing the amounts to be paid, or in reversing amounts previously paid (which
reversed amounts shall first be offset against any accrued amount owed by CC
Hold. to Comcast, to the extent thereof, and any excess shall be repaid by
Comcast to the Company), pursuant to the first sentence of this Section 3. The
3
<PAGE>
amounts determined pursuant to this Section 3 shall be payable promptly upon the
determination thereof. Any excess of the net amount accrued under Section 2 over
the net amounts paid pursuant to this Section 3 will become due and payable to
Comcast 180 days after repayment by the Company of all obligations under the
Credit Agreement and termination of Commitments and, for each fiscal year
thereafter, shall be payable at the same time as the payments are due under this
Section 3.
Section 4. Duties of Comcast. Comcast agrees to (a) timely file all
required consolidated Federal (and, where applicable, state) income tax returns
which shall include CC Hold, CC Corp., the Company and its Subsidiaries, (b)
timely pay all taxes due under such returns, and (c) indemnify the Company for
any taxes (including penalties and interest) that any taxing authority may
collect or seek to collect from the Company or any of its Subsidiaries in
connection with such returns, to the extent that such taxes are in excess of any
amount accrued pursuant to Section 2 of this Agreement and not yet paid pursuant
to Section 3 of the Agreement.
Section 5. Adjustment to Taxes. If any authority having jurisdiction
shall make a final determination of any tax liability of the Affiliated Group
which differs from the initial determination by Comcast and its Subsidiaries of
such tax liability, (a) appropriate changes or adjustments to payments and
liabilities under this Agreement shall be made as quickly as reasonably
practical and (b) if such a final determination results in a refund to the
Affiliated Group which is in whole or in part attributable to an adjustment in
income of the Company and its Subsidiaries, Comcast shall promptly reimburse the
Company to the extent that the amount of any payment previously made under
Section 3 would have been less taking into account the income of the Company and
its Subsidiaries as so adjusted.
4
<PAGE>
Section 6. State Taxes. Nothing in this Agreement shall be construed to
require the Company to pay or to accrue liability to Comcast with respect to any
income taxes unless it and its Subsidiaries are included in a consolidated or
combined return with Comcast with respect to such taxes.
Section 7. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without giving
effect to conflicts of laws.
Section 8. Effective Date. This Agreement shall be effective as of the
date first above written when executed by the parties hereto but not before
repayment in full of certain Zero Coupon Notes issued by Comcast Cellular
Corporation on March 5, 1992.
Section 9. Assignment to Permitted Successor. The Company may assign
all its rights and obligations hereunder to any Permitted Successor (as such
term is defined in the Credit Agreement) upon its becoming the Borrower and
written notice to the other parties hereto which notice shall be signed by both
the Company and the Permitted Successor. Upon delivery of said notice, (a) all
rights hereunder shall inure to and all obligations hereunder shall be borne by
5
<PAGE>
the Permitted Successor and (b) all obligations and rights of Comcast Cellular
Communications, Inc. hereunder shall terminate.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
COMCAST CORPORATION
By /s/ C. Stephen Backstrom
-------------------------------------
Name: C. Stephen Backstrom
Title: Vice President
COMCAST CELLULAR HOLDINGS, INC.
By /s/ C. Stephen Backstrom
-------------------------------------
Name: C. Stephen Backstrom
Title: Vice President
COMCAST CELLULAR CORPORATION
By /s/ C. Stephen Backstrom
-------------------------------------
Name: C. Stephen Backstrom
Title: Vice President
COMCAST CELLULAR COMMUNICATIONS, INC.
By /s/ C. Stephen Backstrom
-------------------------------------
Name: C. Stephen Backstrom
Title: Vice President
6
<PAGE>
EXECUTION COPY
- --------------------------------------------------------------------------------
$1,300,000,000
CREDIT AGREEMENT
Dated as of September 14, 1995
Among
COMCAST CELLULAR COMMUNICATIONS, INC.,
THE BANKS LISTED ON THE
SIGNATURE PAGES HEREOF,
THE BANK OF NEW YORK,
BARCLAYS BANK PLC,
THE CHASE MANHATTAN BANK, N.A.,
PNC BANK, NATIONAL ASSOCIATION
and
THE TORONTO-DOMINION BANK,
as Arranging Agents,
and
TORONTO DOMINION (TEXAS), INC.,
as Administrative Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
CREDIT FACILITY
Section 1.01. Commitment to Lend .................................. 1
(a) Loans.......................................... 1
(b) Type of Loans.................................. 1
Section 1.02. Manner of Borrowing.................................. 1
Section 1.03. Interest............................................. 3
(a) Rates.......................................... 3
(b) Payment........................................ 3
(c) Conversion and Continuation.................... 3
(d) Maximum Interest Rate.......................... 4
Section 1.04. Repayment............................................ 5
Section 1.05. Prepayments.......................................... 5
(a) Optional Prepayments........................... 5
(b) Mandatory Prepayments.......................... 5
Section 1.06. Limitation on Types of Loans......................... 7
Section 1.07. Reductions of Total Tranche A Commitment............. 7
(a) Scheduled Reductions .......................... 7
(b) Optional Reductions ........................... 8
(c) Other Mandatory Reductions .................... 8
(d) Adjustments ................................... 9
(e) No Reinstatement .............................. 9
Section 1.08. Commitment Fees ..................................... 9
Section 1.09. Computation of Interest and Fees .................... 9
Section 1.10. Payments by the Borrower ............................ 9
(a) Time, Place and Manner ........................ 9
(b) No Reductions .................................10
(c) Authorization to Charge Accounts ..............10
(d) Extension of Payment Dates ....................10
Section 1.11. Distribution of Payments by the
Administrative Agent ................................11
Section 1.12. Taxes on Payments ...................................11
(a) Taxes Payable by the Borrower .................11
(b) Taxes Payable by any Bank or Agent ............12
(c) Exemption from U.S. Withholding Taxes .........12
(d) Credits and Deductions ........................13
Section 1.13. Evidence of Indebtedness ............................14
Section 1.14. Pro Rata Treatment ..................................14
<PAGE>
ARTICLE 2
CONDITIONS TO LOANS
Section 2.01. Conditions to Initial Loans ............................16
Section 2.02. Conditions to Each Loan ................................18
ARTICLE 3
CERTAIN REPRESENTATIONS AND WARRANTIES
Section 3.01. Organization; Power; Qualification .....................20
Section 3.02. Capitalization; Subsidiaries ...........................20
Section 3.03. Authorization; Enforceability; Required
Consents; Absence of Conflicts .........................20
Section 3.04. Litigation .............................................21
Section 3.05. Burdensome Provisions ..................................22
Section 3.06. No Adverse Change or Event .............................22
Section 3.07. Taxes ..................................................22
Section 3.08. No Default .............................................23
Section 3.09. Cellular Licenses and Related Matters ..................23
Section 3.10. Not an Investment Company ..............................23
Section 3.11. Hazardous Materials ....................................24
Section 3.12. Senior Obligations .....................................24
Section 3.13. Benefit Plans ..........................................24
Section 3.14. Security Interest ......................................24
ARTICLE 4
CERTAIN COVENANTS
Section 4.01. Preservation of Existence and Properties,
Scope of Business, Compliance with Law,
Payment of Taxes and Claims, Preservation
of Enforceability ......................................25
Section 4.02. Insurance ..............................................25
Section 4.03. Use of Proceeds ........................................26
Section 4.04. Guaranties .............................................26
Section 4.05. Liens ..................................................26
Section 4.06. Restricted Payments ....................................27
Section 4.07. Merger or Consolidation; Acquisitions ..................28
Section 4.08. Disposition of Assets ..................................30
Section 4.09. Indebtedness ...........................................31
Section 4.10. Transactions with Affiliates ...........................32
Section 4.11. Management .............................................32
(a) Management Agreement ...............................32
(b) Management Fees ....................................32
Section 4.12. Limitation on Restrictive Covenants ....................33
Section 4.13. Issuance or Disposition of Capital
Securities .............................................33
Section 4.14. Investments ............................................34
<PAGE>
Section 4.15. Leverage Ratio .........................................35
Section 4.16. Interest Coverage Ratio ................................35
Section 4.17. Pro Forma Debt Service Ratio ...........................35
Section 4.18. Interest Rate Protection Agreements ....................35
Section 4.19. Cellular Systems Revenues ..............................36
Section 4.20. Tax Sharing Agreement ..................................36
Section 4.21. Senior Subordinated Indebtedness .......................36
ARTICLE 5
FINANCIAL STATEMENTS AND INFORMATION
Section 5.01. Financial Statements and Information
to Be Furnished ........................................37
(a) Quarterly Financial Statements;
Officer's Certificate .............................37
(b) Year End Financial Statements;
Accountants' and Officer's
Certificates ......................................37
(c) Reports and Filings ................................38
(d) Requested Information ..............................38
(e) Notice of Defaults and Other Matters ...............38
(f) Cellular System Information ........................39
Section 5.02. Accuracy of Financial Statements and
Information ............................................39
(a) Historical Financial Statements ....................39
(b) Future Financial Statements ........................40
(c) Historical Information .............................40
(d) Future Information .................................41
Section 5.03. Additional Covenants Relating to
Disclosure .............................................41
(a) Accounting Methods and Financial
Records ............................................41
(b) Fiscal Year ........................................41
(c) Visits, Inspections and Discussions ................42
Section 5.04. Authorization of Third Parties to Deliver
Information ............................................42
ARTICLE 6
DEFAULT
Section 6.01. Events of Default ......................................42
Section 6.02. Remedies upon Event of Default .........................46
Section 6.03. Certain Cure Rights ....................................47
ARTICLE 7
ADDITIONAL CREDIT FACILITY PROVISIONS
<PAGE>
Section 7.01. Mandatory Suspension and Conversion of
Eurodollar Rate Loans ..................................48
Section 7.02. Regulatory Changes .....................................49
Section 7.03. Capital Requirements ...................................50
Section 7.04. Funding Losses .........................................51
Section 7.05. Determinations .........................................51
Section 7.06. Change of Lending Office ...............................51
Section 7.07. Replacement of Banks ...................................52
ARTICLE 8
THE AGENTS
Section 8.01. Appointment and Powers .................................53
Section 8.02. Limitation on Agents' Liability ........................53
Section 8.03. Defaults ...............................................54
Section 8.04. Rights as a Bank .......................................54
Section 8.05. Indemnification ........................................54
Section 8.06. Non Reliance on Agents and Other Banks .................55
Section 8.07. Resignation of the Administrative Agent ................55
ARTICLE 9
MISCELLANEOUS
Section 9.01. Notices and Deliveries .................................56
(a) Manner of Delivery .................................56
(b) Addresses ..........................................56
(c) Effectiveness ......................................57
Section 9.02. Expenses; Indemnification ..............................58
Section 9.03. Amounts Payable Due upon Request for
Payment ................................................59
Section 9.04. Remedies of the Essence ................................59
Section 9.05. Rights Cumulative ......................................60
Section 9.06. Confidentiality ........................................60
Section 9.07. Amendments; Waivers ....................................60
Section 9.08. Set Off; Suspension of Payment and
Performance ............................................61
Section 9.09. Sharing of Recoveries ..................................62
Section 9.10. Assignments and Participations .........................63
(a) Assignments ........................................63
(b) Participations .....................................64
(c) Rights of Assignees and Participants ...............64
(d) Assignments and Transfers of
Registered Notes ...................................65
Section 9.11. Governing Law ..........................................65
Section 9.12. Judicial Proceedings; Waiver of Jury Trial .............65
Section 9.13. Severability of Provisions .............................66
Section 9.14. Counterparts ...........................................66
Section 9.15. Survival of Obligations ................................66
Section 9.16. Entire Agreement .......................................66
<PAGE>
Section 9.17. Successors and Assigns .................................66
Section 9.18. Reference Banks ........................................66
<PAGE>
ARTICLE 10
INTERPRETATION
Section 10.01. Definitional Provisions ................................67
(a) Defined Terms ..................................67
(b) Other Definitional Provisions ..................92
Section 10.02. Accounting Matters .....................................93
Section 10.03. Representations and Warranties .........................94
Section 10.04. Captions ...............................................94
Annex A Banks, Lending Offices and Notice
Addresses
Schedule 1.02 Form of Notice of Borrowing
Schedule 1.03(c)(iv) Form of Notice of Conversion or
Continuation
Schedule 1.05 Form of Notice of Prepayment
Schedule 2.01 Form of Certificate as to
Resolutions, etc.
Schedule 2.01(a)(iv)-l Form of Opinion of Counsel for the
Borrower
Schedule 2.01(a)(iv)-2 Form of Opinion of Counsel for each Loan
Party other than the Borrower
Schedule 2.01(a)(v)-l Form of Opinion of Special FCC Counsel
Schedule 2.01(a)(v)-2 Form of Opinion of Local Counsel - NJ
Schedule 2.01(a)(v)-3 Form of Opinion of Local Counsel - IL
Schedule 2.01(a)(v)-4 Form of Opinion of Local Counsel - PA
Schedule 2.01(a)(vi) Form of Opinion of Special Counsel for
the Arranging Agents and the
Managing Agents
Schedule 2.01(a)(xiv) Form of Solvency Certificate of the
Borrower
Schedule 3.02(a) Schedule of Capital Securities owned by
the Borrower
Schedule 3.03 Schedule of Required Consents and
Governmental Approvals
Schedule 3.04 Material Litigation
Schedule 3.09(a) List of Cellular Licenses and related
information
Schedule 3.09(b) List of Point to Point Microwave
Licenses
Schedule 3.09(c) List of 38 GHz Microwave Licenses
Schedule 3.13 Schedule of Existing Benefit Plans
Schedule 4.04 Schedule of Existing Guaranties
Schedule 4.05 Schedule of Existing Liens
Schedule 4.08(g) Form of Certificate as to Sales
and Exchanges
Schedule 4.12 Schedule of Existing Restrictive
Covenants
Schedule 4.14 Schedule of Existing Investments
Schedule 5.01(a) Form of Certificate as to Quarterly
Financial Statements
<PAGE>
Schedule 5.01(b) Form of Certificate as to
Year-End Financial Statements
Schedule 5.01(f) Form of Certificate as to Cellular
System Information
Schedule 5.02(a) Schedule of Historical Financial
Statements
Schedule 9.10(a) Form of Notice of Assignment
Schedule 10.01 Schedule of Predecessor Indebtedness
Exhibit A-1 Form of Tranche A Note
Exhibit A-2 Form of Tranche B Note
<PAGE>
CREDIT AGREEMENT
Dated as of September 14, 1995
COMCAST CELLULAR COMMUNICATIONS, INC., a Delaware corporation,
the BANKS listed on the signature pages hereof, THE BANK OF NEW YORK, BARCLAYS
BANK PLC, THE CHASE MANHATTAN BANK, N.A., PNC BANK, NATIONAL ASSOCIATION and THE
TORONTO-DOMINION BANK, as Arranging Agents and TORONTO DOMINION (TEXAS), INC.,
as Administrative Agent, agree as follows (with certain terms used herein being
defined in Article 10):
ARTICLE 1
CREDIT FACILITY
Section 1.01. Commitment to Lend. (a) Loans. Upon the terms
and subject to the conditions of this Agreement, each Bank agrees to make, (i)
from time to time during the period from the Agreement Date through the Tranche
A Commitment Termination Date, one or more Tranche A Loans to the Borrower in an
aggregate unpaid principal amount not exceeding at such time such Bank's Tranche
A Commitment at such time and (ii) on the Closing Date, a Tranche B Loan to the
Borrower in a principal amount not exceeding such Bank's Tranche B Commitment at
such time; provided, however, that no Tranche A Loan shall be requested or made
if, after giving effect to the making thereof and the making of each other
Tranche A Loan requested to be made at such time, the aggregate principal amount
of all Tranche A Loans outstanding at such time, together with the aggregate
amount of all Senior Subordinated Indebtedness outstanding at such time, would
exceed the Total Tranche A Commitment at such time. The Total Tranche A
Commitment on the Agreement Date is $1,000,000,000. The Total Tranche B
Commitment on the Agreement Date is $300,000,000.
(b) Type of Loans. Subject to Section 1.06 and the other terms
and conditions of this Agreement, the Loans may, at the option of the Borrower,
be made as, and from time to time continued as or converted into, Base Rate
Loans or Eurodollar Rate Loans of any permitted Type, or any combination
thereof.
Section 1.02. Manner of Borrowing. (a) The Borrower shall give
the Administrative Agent notice (which shall be irrevocable) no later than 10:00
a.m. (New York time) on, in the case of Base Rate Loans, the Business Day and,
in the case of Eurodollar Rate Loans, the third Eurodollar Business Day, before
the requested date for the making of such Loans. Each such notice shall be in
the form of Schedule 1.02 and shall specify
<PAGE>
(i) in the case of the initial Loans, whether such Loans are Tranche A Loans or
Tranche B Loans (or a combination thereof), (ii) the requested date for the
making of the requested Loans, which shall be, in the case of Base Rate Loans, a
Business Day and, in the case of Eurodollar Rate Loans, a Eurodollar Business
Day, (iii) the Type or Types of Loans requested and (iv) the amount of each such
Type of Loan, the aggregate amount of which shall be $5,000,000 or any integral
multiple of $1,000,000 in excess thereof or the amount of the unused Total
Tranche A Commitment or Total Tranche B Commitment, as applicable. Upon receipt
of any such notice, the Administrative Agent shall promptly notify each Bank of
the contents thereof, of the amount and Type of each Loan to be made by such
Bank on the requested date specified therein and whether such Loan is a Tranche
A Loan or a Tranche B Loan (or a combination thereof).
(b) Not later than 12:00 noon (New York time) on each
requested date for the making of Loans, each Bank shall make available to the
Administrative Agent, in Dollars in funds immediately available to the
Administrative Agent at the Administrative Agent's Office, the Loans to be made
by such Bank on such date. The obligations of the Banks hereunder are several
and, accordingly, any Bank's failure to make any Loan to be made by it on the
requested date therefor shall not relieve any other Bank of its obligation to
make any Loan to be made by such other Bank on such date, but such other Bank
shall not be liable for such failure.
(c) Unless the Administrative Agent shall have received notice
from a Bank prior to 12:00 noon (New York time) on the requested date for the
making of any Loans that such Bank will not make available to the Administrative
Agent the Loans requested to be made by such Bank on such date, the
Administrative Agent may assume that such Bank has made such Loans available to
the Administrative Agent on such date in accordance with Section 1.02(b) and the
Administrative Agent in its sole discretion may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount
on behalf of such Bank. If and to the extent such Bank shall not have so made
available to the Administrative Agent the Loans requested to be made by such
Bank on such date and the Administrative Agent shall have so made available to
the Borrower a corresponding amount on behalf of such Bank, such Bank shall, on
demand, pay to the Administrative Agent such corresponding amount together with
interest thereon, for each day from the date such amount shall have been so made
available by the Administrative Agent to the Borrower until the date such amount
shall have been paid to the Administrative Agent, at the Federal Funds Rate
until (and including) the third Business Day after demand is made and thereafter
at the Base Rate. If such Bank does not pay such corresponding amount promptly
upon the Administrative Agent's demand therefor, the Administrative Agent shall
promptly notify the Borrower and the Borrower shall
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immediately repay such corresponding amount to the Administrative Agent together
with accrued interest thereon at the applicable rate or rates provided in
Section 1.03(a); provided, however, that, with respect to such repayment, the
Borrower shall have no liability with respect to losses, costs or expenses
otherwise compensable under Section 7.04 in connection therewith.
(d) All Loans made available to the Administrative Agent in
accordance with Section 1.02(b) shall be disbursed by the Administrative Agent
not later than 3:00 p.m. (New York time) on the requested date therefor in
Dollars in funds immediately available to the Borrower by credit to an account
of the Borrower at the Administrative Agent's Office or in such other manner as
may have been specified in the applicable notice and as shall be acceptable to
the Administrative Agent.
Section 1.03. Interest. (a) Rates. Each Loan shall bear
interest on the outstanding principal amount thereof until due at a rate per
annum equal to, (i) so long as it is a Base Rate Loan, the Base Rate as in
effect from time to time plus the Applicable Margin and (ii) so long as it is a
Eurodollar Rate Loan, the applicable Adjusted Eurodollar Rate plus the
Applicable Margin. If all or any part of a Loan or any other amount due and
payable under the Borrower Loan Documents is not paid when due (whether at
maturity, by reason of notice of prepayment or acceleration or otherwise), such
unpaid amount shall, to the maximum extent permitted by Applicable Law, bear
interest for each day during the period from the date such amount became so due
until it shall be paid in full (whether before or after judgment) at a rate per
annum equal to the applicable Post-Default Rate.
(b) Payment. Interest shall be payable, (i) in the case of
Base Rate Loans, on each Interest Payment Date, (ii) in the case of Eurodollar
Rate Loans, on the last day of each applicable Interest Period (and, in the case
of a Eurodollar Rate Loan having an Interest Period longer than three months, on
each three month anniversary of the first day of such Interest Period) and (iii)
in the case of any Loan, when such Loan shall be due (whether at maturity, upon
mandatory prepayment, by reason of notice of prepayment or acceleration or
otherwise) or converted, but only to the extent then accrued on the amount then
so due or converted. Interest at the Post-Default Rate shall be payable on
demand.
(c) Conversion and Continuation. (i) All or any part of the
principal amount of Loans of any Type may, on any Business Day, be converted
into any other Type or Types of Loans, except that (A) Eurodollar Rate Loans may
be converted only on the last day of the applicable Interest Periods therefor
and (B) Base Rate Loans may be converted into Eurodollar Rate Loans only on a
Eurodollar Business Day.
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(ii) Base Rate Loans shall continue as Base Rate Loans unless
and until such Loans are converted into Loans of another Type. Eurodollar Rate
Loans of any Type shall continue as Loans of such Type until the end of the then
current Interest Period therefor, at which time they shall be automatically
converted into Base Rate Loans unless the Borrower shall have given the
Administrative Agent notice in accordance with Section 1.03(c)(iv) requesting
either that such Loans continue as Loans of such Type for another Interest
Period or that such Loans be converted into Loans of another Type at the end of
such Interest Period.
(iii) Notwithstanding anything to the contrary contained in
Section 1.03(c)(i) or (ii), so long as an Event of Default shall have occurred
and be continuing, the Administrative Agent may (and, at the request of Banks
having more than 66_% of the Loans outstanding (or, if there are no Loans
outstanding, more than 66_% of the Total Commitment), shall) notify the Borrower
that Loans may only be converted into or continued upon the expiration of the
applicable current Interest Period therefor as Loans of certain specified Types
and, thereafter, until no Event of Default shall continue to exist, Loans may
not be converted into or continued as Loans of any Type other than one or more
of such specified Types.
(iv) The Borrower shall give the Administrative Agent notice
(which shall be irrevocable) of each conversion of Loans or continuation of
Eurodollar Rate Loans no later than 11:00 a.m. (New York time) on, in the case
of a conversion into Base Rate Loans, the Business Day and, in the case of a
conversion into or continuation of Eurodollar Rate Loans, the third Eurodollar
Business Day before the requested date of such conversion or continuation. Each
notice of conversion or continuation shall be in the form of Schedule
1.03(c)(iv) and shall specify (A) the requested date of such conversion or
continuation, (B) whether such Loans are Tranche A Loans or Tranche B Loans (or
a combination thereof), (C) the amount and Type and, in the case of Eurodollar
Rate Loans, the last day of the applicable Interest Period for the Loans to be
converted or continued and (D) the amount and Type or Types of Loans into which
such Loans are to be converted or as which such Loans are to be continued. Upon
receipt of any such notice, the Administrative Agent shall promptly notify each
Bank of (w) the contents thereof, (x) the amount and Type and, in the case of
Eurodollar Rate Loans, the last day of the applicable Interest Period for each
Loan to be converted or continued by such Bank, (y) whether such Loans are
Tranche A Loans or Tranche B Loans (or a combination thereof) and (z) the amount
and Type or Types of Loans into which such Loans are to be converted or as which
such Loans are to be continued.
(d) Maximum Interest Rate. Nothing contained in the Loan
Documents shall require the Borrower at any time to pay
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interest at a rate exceeding the Maximum Permissible Rate. If interest payable
by the Borrower on any date would exceed the maximum amount permitted by the
Maximum Permissible Rate, such interest payment shall automatically be reduced
to such maximum amount permitted, and interest for any subsequent period, to the
extent less than the maximum amount permitted for such period by the Maximum
Permissible Rate, shall be increased by the unpaid amount of such reduction. Any
interest actually received for any period in excess of such maximum amount
permitted for such period shall be deemed to have been applied as a prepayment
of the corresponding Loans.
Section 1.04. Repayment. (a) The aggregate outstanding
principal amount of the Tranche A Loans shall mature and become due and payable,
and shall be repaid by the Borrower, on the Tranche A Commitment Termination
Date.
(b) The aggregate outstanding principal amount of the Tranche
B Loans shall mature and become due and payable, and shall be repaid by the
Borrower, in two installments of $150,000,000 each, payable on March 31, 2004
and on September 30, 2004, respectively.
Section 1.05. Prepayments. (a) Optional Prepayments. The
Borrower may, at any time and from time to time, prepay the Loans in whole or in
part, without premium or penalty, except that any optional partial prepayment
shall be in an aggregate principal amount of $5,000,000 or any integral multiple
of $1,000,000 in excess thereof. Any prepayment of Eurodollar Rate Loans made on
a day other than the last day of the applicable Interest Periods therefor shall
be accompanied by the amount, if any, required to be paid in respect thereof
pursuant to Section 7.04. The Borrower shall give the Administrative Agent
notice of each prepayment no later than 11:00 a.m. (New York time) on, in the
case of a prepayment of Base Rate Loans, the Business Day and, in the case of a
prepayment of Eurodollar Rate Loans, the third Eurodollar Business Day, before
the date of such prepayment. Each such notice of prepayment shall be in the form
of Schedule 1.05 and shall specify (i) whether such Loans are Tranche A Loans or
Tranche B Loans, (ii) the date such prepayment is to be made and (iii) the
amount and Type and, in the case of Eurodollar Rate Loans, the last day of the
applicable Interest Periods for the Loans to be prepaid. Upon receipt of any
such notice, the Administrative Agent shall promptly notify each Bank of the
contents thereof and the amount and Type and, in the case of Eurodollar Rate
Loans, the last day of the applicable Interest Periods for the Loans of such
Bank to be prepaid. Amounts to be so prepaid shall irrevocably be due and
payable on the date specified in the applicable notice of prepayment, together
with interest thereon as provided in Section 1.03(b).
(b) Mandatory Prepayments. (i) If, after giving effect to any
reduction of the Total Tranche A Commitment
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pursuant to Section 1.07, the aggregate outstanding principal amount of the
Tranche A Loans exceeds the Total Tranche A Commitment, the Borrower shall
prepay the Tranche A Loans in an amount equal to the amount of such excess.
(ii) Commencing in 1998 in respect of the fiscal year of the
Borrower ending December 31, 1997, upon the earlier of the date on which the
Administrative Agent receives the financial statements specified in Section
5.01(b) hereof with respect to the most recently ended fiscal year of the
Borrower and the date by which the Borrower is required to provide the
Administrative Agent with such financial statements, the Borrower shall prepay
the Tranche B Loans in an amount equal to the Tranche B Share at such time of
50% of Excess Cash Flow for such fiscal year; provided, however that no
prepayments under this Section 1.05(b)(ii) shall be required with respect to
Excess Cash Flow for any fiscal year if the Leverage Ratio is less than or equal
to 5.00 to 1 as of the time that such prepayment would otherwise be required to
be made.
(iii) In the event that (A) any of the Net Proceeds of any
sale or disposition of assets contemplated by and in accordance with Section
4.08(g) have not been reinvested, pursuant to acquisitions described in Section
4.07(e) or pursuant to investments described in Section 4.14(j), in a manner not
prohibited by this Agreement within the fifteen-month period following such sale
or disposition and (B) the Leverage Ratio is greater than 5.50 to 1 on the last
day of such fifteen-month period, the Borrower shall, on such day, prepay the
Tranche B Loans in an amount equal to the Tranche B Share at such time of the
amount of such uninvested Net Proceeds.
(iv) Upon the making of any Restricted Payment contemplated by
Section 4.06(e), the Borrower shall prepay the Tranche B Loans, in an amount
equal to the Tranche B Share at such time of 50% of the amount of such
Restricted Payment, on the day on which such Restricted Payment shall have been
made.
(v) Upon the incurrence of any Permitted Additional
Indebtedness the principal amount of which, together with the principal amount
of all other Permitted Additional Indebtedness then outstanding, is in excess of
$550,000,000, the Borrower shall prepay the Tranche B Loans (without giving
effect to any increase thereof in the event that such Permitted Additional
Indebtedness consists in whole or in part of an increase of the Tranche B
Loans), in an amount equal to the Tranche B Share (determined without giving
effect to the incurrence of such Permitted Additional Indebtedness) at such time
of the amount of such excess, on the day on which such Indebtedness shall have
been incurred.
(vi) Amounts prepaid pursuant to this Section 1.05(b) shall be
accompanied by interest thereon accrued to the
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date of such prepayment as provided in Section 1.03(b) and the amount, if any,
required to be paid in respect thereof pursuant to Section 7.04, and shall be
applied first to prepay Base Rate Loans and then to prepay Eurodollar Loans in
the order that the Interest Periods for such Loans end. Amounts to be prepaid
pursuant to this Section 1.05(b) shall be paid on the date specified therefor,
whether or not such payment would require a prepayment of Eurodollar Rate Loans
prior to the last day of the applicable Interest Period or would result in
losses, costs or expenses compensable under Section 7.04; provided, however,
that if and to the extent that the Borrower shall be required to prepay
Eurodollar Rate Loans prior to the last day of the applicable Interest Period in
order to effect any of the prepayments required pursuant to clauses (ii), (iii),
(iv) or (v) of this Section 1.05(b) (or pursuant to clause (i) of this Section
1.05(b) as a result of a related mandatory reduction of the Total Tranche A
Commitment pursuant to Section 1.07(c)), such prepayment, at the election of the
Borrower, may be made on the last day of the applicable earliest-expiring
Interest Period or Periods so long as the Borrower shall have deposited with the
Administrative Agent, on the day on which such prepayment would have been
required to be made but for this proviso, funds in the entire amount of such
prepayment to be held by the Administrative Agent in an interest-bearing cash
collateral account pursuant to arrangements satisfactory to the Administrative
Agent. The amounts so deposited shall be applied on such last day or days to
such prepayment and interest thereon shall be paid to the Borrower.
(c) Application to Tranche B Loans. Each prepayment of Tranche
B Loans made pursuant to this Section 1.05 shall be applied to each of the
remaining installments thereof, pro rata in accordance with the respective
amounts thereof.
(d) Reborrowing. Amounts of Tranche B Loans prepaid
may not be reborrowed.
Section 1.06. Limitation on Types of Loans. Notwithstanding
anything to the contrary contained in this Agreement, the Borrower shall borrow,
prepay, convert and continue Loans in a manner such that (a) the aggregate
principal amount of Eurodollar Rate Loans having the same Interest Period shall
at all times be not less than $5,000,000, (b) there shall not be, at any one
time, more than ten Interest Periods in effect with respect to Eurodollar Rate
Loans of all Types and (c) no payment of Eurodollar Rate Loans will have to be
made prior to the last day of an applicable Interest Period in order to repay
the Loans in the amounts and (subject to Section 1.10(d)) on the dates specified
in Sections 1.04 and 1.05(b).
Section 1.07. Reductions of Total Tranche A Commitment. (a)
Scheduled Reductions. Subject to the adjustments described in Section 1.07(d),
the Total Tranche A
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Commitment shall be automatically reduced on each date set forth below by the
amount set forth below opposite each such date:
Amount of
Date Reduction
---- ---------
September 30, 1998 $50,000,000
December 31, 1998 $25,000,000
March 31, 1999 $25,000,000
June 30, 1999 $25,000,000
September 30, 1999 $25,000,000
December 31, 1999 $50,000,000
March 31, 2000 $50,000,000
June 30, 2000 $50,000,000
September 30, 2000 $50,000,000
December 31, 2000 $50,000,000
March 31, 2001 $50,000,000
June 30, 2001 $50,000,000
September 30, 2001 $50,000,000
December 31, 2001 $56,250,000
March 31, 2002 $56,250,000
June 30, 2002 $56,250,000
September 30, 2002 $56,250,000
December 31, 2002 $56,250,000
March 31, 2003 $56,250,000
June 30, 2003 $56,250,000
September 30, 2003 $56,250,000
(b) Optional Reductions. The Borrower may reduce the Total
Tranche A Commitment by giving the Administrative Agent notice (which shall be
irrevocable) thereof no later than 10:00 a.m. (New York time) on the third
Business Day before the requested date of such reduction, except that each
partial reduction thereof shall be in an amount equal to $5,000,000 or any
integral multiple of $1,000,000 in excess thereof and that no reduction shall
reduce the Total Tranche A Commitment to an amount less than the aggregate
principal amount of all Tranche A Loans outstanding at such time and all Senior
Subordinated Indebtedness outstanding at such time. Upon receipt of any such
notice, the Administrative Agent shall promptly notify each Bank of the contents
thereof and the amounts to which such Bank's Tranche A Commitment is to be
reduced.
(c) Other Mandatory Reductions. The Total Tranche A Commitment
(without giving effect, in the case of any reduction required pursuant to this
clause (c) relating to Section 1.05(b)(v), to any increase thereof in the event
that the Permitted Additional Indebtedness referred to in Section
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1.05(b)(v) consists in whole or in part of an increase of the Total Tranche A
Commitment) shall automatically be reduced on each day on which a prepayment of
Tranche B Loans is required to be made pursuant to Section 1.05(b)(ii), (iii),
(iv) or (v) by an amount equal to the Tranche A Share (determined, in the case
of any reduction required pursuant to this clause (c) relating to Section
1.05(b)(v), without giving effect to the incurrence of the Permitted Additional
Indebtedness referred to therein) at such time of, in the case of Section
1.05(b)(ii), 50% of the applicable Excess Cash Flow referred to therein, in the
case of Section 1.05(b)(iii), the amount of the applicable uninvested Net
Proceeds referred to therein, in the case of Section 1.05(b)(iv), 50% of the
amount of the applicable Restricted Payment referred to therein and, in the case
of Section 1.05(b)(v), the amount of the applicable excess Indebtedness referred
to therein.
(d) Adjustments. Upon each reduction of the Total Tranche A
Commitment pursuant to Section 1.07(b) or Section 1.07(c), the remaining
scheduled reductions set forth in Section 1.07(a) shall be adjusted, after
giving effect to any prior adjustments thereto pursuant to this Section 1.07(d),
by reducing each such scheduled reduction by the amount obtained by multiplying
such reduction of the Total Tranche A Commitment by a fraction, the numerator of
which is the amount of such scheduled reduction and the denominator of which is
the aggregate of all such remaining scheduled reductions.
(e) No Reinstatement. No reduction of the Total
Tranche A Commitment may be reinstated.
Section 1.08. Commitment Fees. The Borrower shall pay to the
Administrative Agent, for the account of each Bank, a commitment fee on the
daily unused amount of such Bank's Tranche A Commitment for each day from the
Agreement Date through the Commitment Termination Date at a rate per annum of
(a) for so long as the Leverage Ratio is greater than 5.00 to 1, 0.375%, and (b)
for so long as the Leverage Ratio is less than or equal to 5.00 to 1, 0.250%,
payable in arrears on successive Interest Payment Dates, on the date of any
reduction of such Tranche A Commitment (to the extent accrued and unpaid on the
amount of such reduction) and on the Tranche A Commitment Termination Date.
Section 1.09. Computation of Interest and Fees. Interest
calculated on the basis of the Adjusted Eurodollar Rate or the Federal Funds
Rate shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed. Commitment fees and interest calculated on the
basis of the Prime Rate shall be computed on the basis of a year of 365 or 366
days, as applicable, and paid for the actual number of days elapsed. Interest
for any period shall be calculated from and including the first day thereof to
but excluding the last day thereof.
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Section 1.10. Payments by the Borrower. (a) Time, Place and
Manner. All payments due to the Administrative Agent under the Borrower Loan
Documents shall be made to the Administrative Agent at the Administrative
Agent's Office or to such other Person or at such other address as the
Administrative Agent may designate by notice to the Borrower. All payments due
to any Bank under the Borrower Loan Documents shall, in the case of payments on
account of principal of or interest on the Loans or fees, be made to the
Administrative Agent at the Administrative Agent's Office and, in the case of
all other payments, be made directly to such Bank at its Domestic Lending Office
or at such other address as such Bank may designate by notice to the Borrower.
All payments due to any Bank under the Borrower Loan Documents, whether made to
the Administrative Agent or directly to such Bank, shall be made for the account
of, in the case of payments in respect of Eurodollar Rate Loans, such Bank's
Eurodollar Lending Office and, in the case of all other payments, such Bank's
Domestic Lending Office. A payment shall not be deemed to have been made on any
day unless such payment has been received by the required Person, at the
required place of payment, in Dollars in funds immediately available to such
Person, no later than 1:00 p.m. (New York time) on such day; provided, however,
that the failure of the Borrower to make any such payment by such time shall not
constitute a Default hereunder so long as such payment is received no later than
3:00 p.m. (New York time) on such day, but any such payment received later than
1:00 p.m. (New York time) on such day shall be deemed to have been made on the
next Business Day for the purpose of calculating interest on the amount paid.
(b) No Reductions. All payments due to the Administrative
Agent or any Bank under the Borrower Loan Documents, and all other terms,
conditions, covenants and agreements to be observed and performed by the
Borrower thereunder, shall be made, observed or performed by the Borrower
without any reduction or deduction whatsoever, including any reduction or
deduction for any set-off, recoupment, counterclaim (whether sounding in tort,
contract or otherwise) or Tax, except for, so long as the Borrower is in
compliance with Section 1.12, any withholding or deduction for Taxes required to
be withheld or deducted under Applicable Law.
(c) Authorization to Charge Accounts. The Borrower hereby
authorizes the Administrative Agent and each Bank, if and to the extent any
amount payable by the Borrower under the Borrower Loan Documents (whether
payable to such Person or to any other Person that is the Administrative Agent
or a Bank) is not otherwise paid when due, to charge such amount against any or
all of the demand deposit or other transaction accounts of the Borrower with
such Person or any of such Person's Affiliates (whether maintained at a branch
or office located within or without the United States), with the Borrower
remaining liable for any deficiency. The Person so charging any such account
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shall give the Borrower prompt notice thereof, but any failure to give or delay
in giving such notice shall not affect such Person's right to effect such
charge.
(d) Extension of Payment Dates. Whenever any payment to the
Administrative Agent or any Bank under the Borrower Loan Documents would
otherwise be due (except by reason of acceleration) on a day that is not a
Business Day or, in the case of payments of the principal of Eurodollar Rate
Loans, a Eurodollar Business Day, such payment shall instead be due on the next
succeeding Business or Eurodollar Business Day, as the case may be, unless, in
the case of a payment of the principal of Eurodollar Rate Loans, such extension
would cause payment to be due in the next succeeding calendar month, in which
case such due date shall be advanced to the next preceding Eurodollar Business
Day. If the due date for any payment under the Borrower Loan Documents is
extended (whether by operation of any Borrower Loan Document, Applicable Law or
otherwise), such payment shall bear interest for such extended time at the rate
of interest applicable hereunder.
Section 1.11. Distribution of Payments by the Administrative
Agent. (a) The Administrative Agent shall promptly distribute to each Bank its
ratable share of each payment received by the Administrative Agent under the
Loan Documents for the account of the Banks by credit to an account of such Bank
at the Administrative Agent's Office or by wire transfer to an account of such
Bank at an office of any other commercial bank located in the United States or
at any Federal Reserve Bank, in each case as may be specified by such Bank.
(b) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the Banks
under the Loan Documents that the Borrower will not make such payment in full,
the Administrative Agent may assume that the Borrower has made such payment in
full to the Administrative Agent on such date and the Administrative Agent in
its sole discretion may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date a corresponding amount with respect to
the amount then due such Bank. If and to the extent the Borrower shall not have
so made such payment in full to the Administrative Agent and the Administrative
Agent shall have so distributed to any Bank a corresponding amount, such Bank
shall, on demand, repay to the Administrative Agent the amount so distributed
together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Administrative Agent, at the Federal Funds Rate until (and including) the third
Business Day after demand is made and thereafter at the Base Rate.
Section 1.12. Taxes on Payments. (a) Taxes Payable by the
Borrower. If any Tax is required to be withheld or
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deducted from, or is otherwise payable by the Borrower in connection with, any
payment due to any Bank or any Agent that is not a "United States person" (as
such term is defined in Section 7701(a)(30) of the Code) hereunder, the Borrower
(i) shall, if required, withhold or deduct the amount of such Tax from such
payment and, in any case, pay such Tax to the appropriate taxing authority in
accordance with Applicable Law and (ii) except in the case of any Bank Tax,
shall pay to such Bank or Agent such additional amounts as may be necessary so
that the net amount received by such Bank or Agent with respect to such payment,
after withholding or deducting all Taxes required to be withheld or deducted, is
equal to the full amount payable hereunder. If any Tax is withheld or deducted
from, or is otherwise payable by the Borrower in connection with, any payment
due to any such Bank or Agent hereunder, the Borrower shall furnish to such Bank
or Agent the original or a certified copy of a receipt for such Tax from the
applicable taxing authority within 30 days after the date of such payment (or,
if such receipt shall not have been made available by such taxing authority
within such time, the Borrower shall use reasonable efforts to promptly obtain
and furnish such receipt). If the Borrower fails to pay any Taxes when due to
the appropriate taxing authority or fails to remit to any such Bank or Agent the
required receipts, the Borrower shall indemnify such Bank or Agent for any
Taxes, interest, penalties or additions to Tax that may become payable by such
Bank or Agent as a result of any such failure.
(b) Taxes Payable by any Bank or Agent. The Borrower shall,
promptly upon request by any Bank or Agent that is not a United States person
for the payment thereof, pay to any such Bank or Agent an amount equal to (i)
all Taxes (other than Bank Taxes and without duplication of amounts paid
pursuant to Section 1.12(a)) payable by such Bank or Agent with respect to any
payment due to such Bank or Agent hereunder and (ii) all Taxes (other than Bank
Taxes) payable by such Bank or Agent as a result of payments made by the
Borrower (whether made to a taxing authority or to such Bank or Agent) pursuant
to Section 1.12(a) or this Section 1.12(b).
(c) Exemption from U.S. Withholding Taxes. (i) Each Bank that
is not a United States person shall submit to the Borrower and the
Administrative Agent, on or before the fifth day prior to the first Interest
Payment Date occurring after the Closing Date (or, in the case of a Person that
is not a United States person and that became a Bank by assignment, promptly
upon such assignment), two duly completed and signed copies of either (A)(1)
Form 1001 of the United States Internal Revenue Service entitling such Bank to a
complete exemption from withholding on all amounts to be received by such Bank
pursuant to this Agreement and the Loans or (2) Form 4224 of the United States
Internal Revenue Service relating to all amounts to be received by such Bank
pursuant to this Agreement and the Loans or (B) in the case of any Bank (or
Person that becomes a Bank by
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assignment) that is exempt from United States Federal withholding tax pursuant
to Sections 871(b) or 881(c) of the Code, Form W-8 of the United States Internal
Revenue Service. Each such Bank shall, from time to time after submitting any
such Form, submit to the Borrower and the Administrative Agent such additional
duly completed and signed copies of one or another such Forms (or any successor
forms as shall be adopted from time to time by the relevant United States taxing
authorities) as may be (A) requested in writing by the Borrower or the
Administrative Agent and (B) appropriate under the circumstances and under then
current United States law or regulations to avoid or reduce United States
withholding taxes on payments in respect of all amounts to be received by such
Bank pursuant to this Agreement or the Loans. Upon the request of the Borrower
or the Administrative Agent, each Bank that is a United States person shall
submit to the Borrower and the Administrative Agent a certificate to the effect
that it is a United States person.
(ii) If any Bank determines that it is unable to submit to the
Borrower or the Administrative Agent any form or certificate that such Bank is
obligated to submit pursuant to the preceding paragraph, or that it is required
to withdraw or cancel any such form or certificate, or that any such form or
certificate previously submitted has otherwise become ineffective or inaccurate,
such Bank shall promptly notify the Borrower and the Administrative Agent of
such fact.
(iii) Notwithstanding anything to the contrary contained
herein, the Borrower shall not be required to pay any additional amount in
respect of United States withholding taxes pursuant to Section 1.12(a) or
Section 7.02 to any Bank that (A) is not, on the date this Agreement is executed
by such Bank (or, in the case of a Person that became a Bank by assignment, on
the date of such assignment), either (x) entitled to submit Form W-8 or Form
1001 of the United States Internal Revenue Service entitling such Bank to a
complete exemption from withholding on all amounts to be received by such Bank
pursuant to this Agreement and the Loans or Form 4224 of the United States
Internal Revenue Service relating to all amounts to be received by such Bank
pursuant to this Agreement and the Loans or (y) a United States person, (B) is
no longer entitled or, in the case of a Bank that is no longer a United States
person, is not entitled, to submit either such Form (or any successor form as
shall be adopted from time to time by the relevant United States taxing
authorities) as a result of any change in circumstances or other event other
than a Regulatory Change or (C) with respect to any affected interest payments,
fails to fulfill its requirements set forth in Section 1.12(c)(i) (other than as
a result of a Regulatory Change).
(d) Credits and Deductions. If any Agent or Bank is, in its
sole opinion, able to apply for any refund, offset, credit, deduction or other
reduction in Taxes by reason of any
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payment made by the Borrower under Section 1.12(a) or (b), such Agent or Bank,
as the case may be, shall use reasonable efforts to obtain such refund, offset,
credit, deduction or other reduction and, upon receipt thereof, will pay to the
Borrower such amount, not exceeding the increased amount paid by the Borrower,
as is equal to the net after-tax value to such Agent or Bank, in its sole
opinion, of such part of such refund, offset, credit, deduction or other
reduction as it considers to be allocable to such payment by the Borrower,
having regard to all of such Agent's or Bank's dealings giving rise to similar
refunds, offsets, credits, deductions or other reductions in relation to the
same tax period and to the cost of obtaining the same; provided, however, that
if any Agent or Bank has made a payment to the Borrower pursuant to this Section
1.12(d) and the applicable refund, offset, credit, deduction or other reduction
in Tax is subsequently disallowed, the Borrower shall, promptly upon request by
any Agent or Bank, refund to such Agent or Bank that portion of such payment
determined by such Agent or Bank, in its sole opinion, relating to such
disallowance; and provided, further that (i) such Agent or Bank, as the case may
be, shall not be obligated to disclose to the Borrower any information regarding
its Tax affairs or computations and (ii) nothing in this Section 1.12(d) shall
interfere with the right of such Agent or Bank to arrange its Tax affairs as it
deems appropriate.
Section 1.13. Evidence of Indebtedness. Each Bank's Loans and
the Borrower's obligation to repay such Loans with interest in accordance with
the terms of this Agreement shall be evidenced by this Agreement, the records of
such Bank and, in the case of Tranche A Loans, a single Tranche A Note payable
to the order of such Bank and, in the case of Tranche B Loans, a single Tranche
B Note payable to the order of such Bank. The Administrative Agent shall keep a
record of each Bank's Commitments, Loans and accrued interest thereon and of all
payments made in respect thereof; provided, however, that the records of each
such Bank shall be prima facie evidence of such Loans, interest and payments.
Section 1.14. Pro Rata Treatment. Except to the extent
otherwise provided herein, (a) Tranche A Loans and Tranche B Loans shall be made
by the Banks pro rata in accordance with their respective Tranche A Commitments
or Tranche B Commitments, as applicable, (b) Tranche A Loans of the Banks shall
be converted and continued pro rata in accordance with their respective amounts
of Tranche A Loans of the Type and, in the case of Eurodollar Rate Loans, having
the Interest Period being so converted or continued, (c) Tranche B Loans of the
Banks shall be converted and continued pro rata in accordance with their
respective amounts of Tranche B Loans of the Type and, in the case of Eurodollar
Rate Loans, having the Interest Period being so converted or continued, (d) each
reduction of the Total Tranche A Commitment shall be applied to the Tranche A
Commitments of the Banks pro rata in accordance with the
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respective amounts thereof and (e) each payment of the principal of or interest
on the Loans or of commitment fees shall be made for the account of the Banks
pro rata in accordance with their respective amounts thereof then due and
payable.
Section 1.15. Registered Notes. (a) Any Bank that is not a
U.S. Person (a "Non-U.S. Bank"), and that could become completely exempt from
withholding of U.S. Taxes in respect of payment of any obligations due to such
Bank hereunder relating to any of its Loans if such Loans were in registered
form for U.S. Federal income tax purposes, may request the Borrower (through the
Administrative Agent), and the Borrower agrees thereupon, to register such Loans
as provided in Section 1.15(c) and to issue such Bank's Tranche A Note or
Tranche B Note, as applicable, evidencing such Loans, or to exchange either
thereof for a new Tranche A Note or Tranche B Note, as applicable, registered as
provided in Section 1.15(c) (a "Registered Note"). A Registered Note may not be
exchanged for a Note that is not in registered form. A Registered Note shall be
deemed to be and shall be a Note for all purposes of this Agreement and the
other Loan Documents.
(b) Each Non-U.S. Bank that requests or holds a Registered
Note pursuant to Section 1.15(a) or registers its Loans pursuant to Section
1.15(c) (a "Registered Noteholder") (or, if such Registered Noteholder is not
the beneficial owner thereof, such beneficial owner) shall deliver to the
Borrower (with a copy to the Administrative Agent) prior to or at the time such
Non-U.S. Bank becomes a Registered Noteholder, the applicable form described in
Section 1.12(c)(i) (or such successor and related forms as may from time to time
be adopted by the relevant taxing authorities of the United States of America)
together with an annual certificate stating that such Registered Noteholder or
beneficial owner, as the case may be, is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and is not otherwise described in Section
881(c)(3) of the Code. Each Registered Noteholder or beneficial owner, as the
case may be, shall promptly notify the Borrower (with a copy to the
Administrative Agent) if at any time such Registered Noteholder or beneficial
owner, as the case may be, determines that it is no longer in a position to
provide such previously delivered certificate to the Borrower (or any other form
of certification adopted by the relevant taxing authorities of the United States
of America for such purposes).
(c) The Administrative Agent, acting, for this purpose, as
agent of the Borrower, shall maintain a register (the "Register") (which shall
be kept by the Administrative Agent at no extra charge to the Borrower at the
address to which notices to the Administrative Agent are to be sent hereunder)
on which it shall enter the name, address and taxpayer identification number (if
provided) of the registered owner of the Loans evidenced by a Registered Note or
for which a Registered Note has been requested
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(and, upon request of such registered owner, such entry shall be made by the
Administrative Agent notwithstanding that such Registered Note may not have yet
been delivered to such owner). In addition to the requirements of Section 9.10,
a Registered Note and the Loans evidenced thereby (or such Loans pending
delivery of such Registered Note) may be assigned or otherwise transferred in
whole or in part only by registration of such assignment or transfer of such
Registered Note and the Loans evidenced thereby on the Register (and each such
Registered Note shall expressly so provide). Any assignment or transfer of all
or part of such Loans and the Registered Note evidencing the same shall be
registered on the Register only upon compliance with the provisions of Section
9.10 and surrender for registration of assignment or transfer of the Registered
Note evidencing such Loans, duly endorsed by (or accompanied by a written
instrument of assignment or transfer fully executed by) the Registered
Noteholder thereof, and thereupon one or more new Registered Notes in the same
aggregate principal amount shall be issued to the designated assignee(s) or
transferee(s) and, if less than all of such Registered Notes is thereby being
assigned or transferred, the assignor or transferor. Prior to the due
presentation for registration of transfer of any Registered Note, the Borrower
and the Administrative Agent shall treat the Person in whose name such Loans and
the Registered Note evidencing the same is registered as the owner thereof for
the purpose of receiving all payments thereon and for all other purposes,
notwithstanding any notice to the contrary.
(d) The Register shall be available for inspection by the
Borrower and any Bank at any reasonable time during the Administrative Agent's
business hours upon reasonable prior notice.
ARTICLE 2
CONDITIONS TO LOANS
Section 2.01. Conditions to Initial Loans. The obligation of
each Bank to make its initial Loan is subject to the fulfillment of each of the
following conditions:
(a) the Arranging Agents' and the Managing Agents' receipt of
each of the following, in form and substance and, in the case of the materials
referred to in clauses (i), (ii), (iii), (vii), (viii), (x), (xiii) and (xiv)
below, certified in a manner satisfactory to the Arranging Agents and the
Managing Agents:
(i) a certificate of the Secretary or an Assistant Secretary
or a Responsible Officer of each of the Loan Parties, dated the requested date
for the making of such Loan, substantially in the form of Schedule 2.01(a)(i),
to
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which shall be attached copies of the resolutions and by-laws referred to
in such certificate;
(ii) copies of the certificate of incorporation of each of the
Loan Parties, in each case certified, as of a recent date, by the Secretary of
State or other appropriate official of the jurisdiction of incorporation of such
Loan Party;
(iii) a good standing or subsistence certificate with respect
to the Borrower, each Consolidated Subsidiary and each other Loan Party (in each
case, other than partnerships, to the extent such certificate is not customarily
available with respect thereto), issued as of a recent date by the Secretary of
State or other appropriate official of such Person's jurisdiction of
incorporation, together with a telegram from such Secretary of State or other
official, updating the information in such certificate;
(iv) an opinion of counsel for the Borrower and an opinion of
counsel for each other Loan Party, each dated the requested date for the making
of such Loan, in the form of Schedules 2.01(a)(iv)-1 and 2.01(a)(iv)-2,
respectively, with such changes as the Arranging Agents and the Managing Agents
shall approve;
(v) an opinion of special FCC counsel for the Borrower and the
Subsidiaries and opinions of local counsel for the Borrower and the Subsidiaries
addressing the law of the States of New Jersey, Pennsylvania (which may be staff
counsel of the Borrower) and Illinois, each dated the requested date for the
making of such Loan, in the form of Schedules 2.01(a)(v)-1, 2.01(a)(v)-2,
2.01(a)(v)-3 and 2.01(a)(v)-4, respectively, with such changes as the Arranging
Agents and the Managing Agents shall approve;
(vi) an opinion of Winthrop, Stimson, Putnam & Roberts,
special counsel for the Arranging Agents and the Managing Agents, dated the
requested date for the making of such Loan, in the form of Schedule 2.01(a)(vi);
(vii) a copy of each Governmental Approval and other consent
or approval listed on Schedule 3.03;
(viii) a certificate of a Responsible Officer of the Borrower,
dated the requested date for the making of such Loan, with respect to the
conditions set forth in Sections 2.02(b) and (c) and setting forth the
calculation of the Leverage Ratio in effect immediately after giving effect to
the making of the initial Loans and the application of the proceeds thereof;
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(ix) a duly executed Tranche A Note and Tranche B Note for
each Bank and a duly executed copy of each of the other Loan Documents;
(x) a copy of the Management Agreement and the Tax Sharing
Agreement, each of which shall be in form and substance satisfactory to the
Arranging Agents and the Managing Agents;
(xi) such instruments and other documents as the Arranging
Agents and the Managing Agents may request, the possession of which is necessary
or appropriate in the Arranging Agents' and the Managing Agents' determination
to create or perfect a security interest in the Collateral under Applicable Law,
including but not limited to the certificates representing the Pledged
Securities, together with undated stock powers for such certificates duly
executed in blank, and duly executed UCC-1 financing statements;
(xii) evidence that, prior to or substantially simultaneously
with the making of such Loan, (A) the Predecessor Indebtedness will be repaid,
(B) all commitments to lend in respect of the Predecessor Indebtedness shall
have been effectively terminated and (C) all UCC-3 termination statements and
all other documents necessary in the determination of the Arranging Agents and
the Managing Agents to effectively terminate of record all security interests
related to the Predecessor Indebtedness shall have been duly executed by the
proper parties and shall have been delivered to the Administrative Agent, or
other arrangements with respect thereto satisfactory to the Arranging Agents and
the Managing Agents shall have been made;
(xiii) a certificate of a Responsible Officer of the Borrower,
dated the requested date for the making of such Loan, to which shall be attached
financial projections for the Borrower and the Consolidated Subsidiaries and a
pro forma balance sheet of the Borrower and the Consolidated Subsidiaries as at
June 30, 1995, reflecting the making of the initial Loans and the repayment or
satisfaction of the Predecessor Indebtedness, each of which shall be in
reasonable detail and in form satisfactory to the Arranging Agents and the
Managing Agents;
(xiv) a certificate of a Responsible Officer of the Borrower
with respect to its solvency and adequacy of capital, substantially in the form
of Schedule 2.01(a)(xiv); and
(xv) evidence that the Borrower shall have paid all of the
fees required to be paid to the Agents and the Banks on the date of the initial
Loans and all of the reasonable fees
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and disbursements of Winthrop, Stimson, Putnam & Roberts, special
counsel for the Arranging Agents and the Managing Agents, in connection
with the negotiation, preparation, execution and delivery of the Loan
Documents and the making of the initial Loans.
Section 2.02. Conditions to Each Loan. The obligation of each
Bank to make each Loan requested to be made by it, including its initial Loan,
is subject to the fulfillment of each of the following conditions:
(a) the Administrative Agent shall have received a notice of
borrowing with respect to such Loan complying with the requirements of Section
1.02;
(b) each Loan Document Representation and Warranty shall be
true and correct in all material respects at and as of the time such Loan is to
be made, both with and without giving effect to such Loan and all other Loans to
be made at such time and to the application of the proceeds thereof, except, in
the case of Loans other than the initial Loans, to the extent waived by the
Required Banks;
(c) no Default (other than a Default (i) that shall have been
waived by the Required Banks or, to the extent required by Section 9.07, each of
the Banks or (ii) that shall not constitute an Event of Default and will be
cured, contemporaneously with the making of such Loan, pursuant to arrangements
satisfactory to the Required Agents, by the application of the proceeds of such
Loan and the other Loans to be made at such time) shall have occurred and be
continuing at the time such Loan is to be made or would result from the making
of such Loan and all other Loans to be made at such time or from the application
of the proceeds thereof;
(d) without in any way limiting Section 2.02(c), such Bank
shall have received such materials as it may have reasonably requested pursuant
to Section 5.01(d) and that were reasonably capable of being delivered to such
Bank prior to the making of such Loan; and
(e) in the case of any Loan the proceeds of which are to be
used to make any Restricted Payment contemplated by clauses (a) or (b) of
Section 4.06, the Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower with respect to its solvency and adequacy of
capital, substantially in the form of Schedule 2.01(a)(xiv) and giving effect to
the making of such Loans.
Except to the extent that the Borrower shall have disclosed in
the notice of borrowing, or in a subsequent notice given to the Banks prior to
5:00 p.m. (New York time) on the Business Day before the requested date for the
making of the
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requested Loans, that a condition specified in Section 2.02(b) or (c) will not
be fulfilled as of the requested time for the making of such Loans, the Borrower
shall be deemed to have made a Representation and Warranty as of the time of the
making of such Loans that the conditions specified in such clauses have been
fulfilled as of such time. No such disclosure by the Borrower that a condition
specified in Section 2.02(b) or (c) will not be fulfilled as of the requested
time for the making of the requested Loans shall affect the right of each Bank
to not make the Loans requested to be made by it if such condition has not been
fulfilled at such time.
ARTICLE 3
CERTAIN REPRESENTATIONS AND WARRANTIES
--------------------------------------
In order to induce each Bank to enter into this Agreement and
to make each Loan requested to be made by it, the Borrower represents and
warrants as follows:
Section 3.01. Organization; Power; Qualification. Each of the
Borrower and the Subsidiaries is a corporation or a partnership, as the case may
be, duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, has full corporate or partnership power and
authority to own its properties and to carry on its business as now being and
hereafter proposed to be conducted and is duly qualified and in good standing as
a foreign corporation or limited partnership, as the case may be, and is
authorized to do business, in all jurisdictions in which the character of its
properties or the nature of its business requires such qualification or
authorization, except for qualifications and authorizations the lack of which,
singly or in the aggregate, has not had and, insofar as can reasonably be
foreseen, will not have a Materially Adverse Effect on (a) the Borrower and the
Consolidated Subsidiaries taken as a whole or (b) the Collateral.
Section 3.02. Capitalization; Subsidiaries. Schedule 3.02 sets
forth, as of the Agreement Date, (a) all of the Capital Securities issued by the
Borrower and the Persons owning such Capital Securities, the jurisdictions of
incorporation of such Persons and the percentages of such Capital Securities so
owned and (b) all of the Subsidiaries, their jurisdictions of organization and
the percentages of the various classes of their Capital Securities owned by the
Borrower or another Subsidiary and indicates which Subsidiaries are Consolidated
Subsidiaries. The Borrower or another Subsidiary, as the case may be, has the
unrestricted right to vote, and (subject to limitations imposed by Applicable
Law) to receive dividends and distributions on, all Capital Securities issued by
the Subsidiaries indicated on Schedule 3.02 as owned by the Borrower or such
Subsidiary. All such Capital Securities have been duly authorized and issued and
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are fully paid and nonassessable.
Section 3.03. Authorization; Enforceability; Required
Consents; Absence of Conflicts. The Borrower has the power, and has taken all
necessary action (including, if a corporation, any necessary stockholder action)
to authorize it, to execute, deliver and perform in accordance with their
respective terms the Loan Documents to which it is a party and to borrow
hereunder in the amount of the unused Total Commitment. This Agreement has been,
and each of the other Loan Documents to which the Borrower is a party when
delivered to the Arranging Agents and the Managing Agents will have been, duly
executed and delivered by the Borrower and is, or when so delivered will be, a
legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity. The execution, delivery and performance in accordance with
their respective terms by the Borrower of the Loan Documents to which it is a
party, and each borrowing hereunder, whether or not in the amount of the unused
Total Commitment, do not and (absent any change in any Applicable Law or
applicable Contract) will not (a) require any Governmental Approval or any other
consent or approval, including any consent or approval of any Subsidiary or any
consent or approval of the stockholders or the partners, as the case may be, of
the Borrower or any Subsidiary, other than Governmental Approvals and other
consents and approvals that have been obtained, are in full force and effect and
are final and not subject to review on appeal or to collateral attack and, in
the case of any such required under any Applicable Law or Contract as in effect
on the Agreement Date, are listed on Schedule 3.03 or (b) violate, conflict
with, result in a breach of, constitute a default under, or result in or require
the creation of any Lien upon any assets of the Borrower or any Subsidiary
under, (i) any Contract to which the Borrower or any Subsidiary is a party or by
which the Borrower or any Subsidiary or any of their respective properties may
be bound or (ii) any Applicable Law, except for such violations, conflicts,
breaches or defaults of or under, or Liens resulting from or created under,
Contracts or Applicable Law (A) so long as, in the case of any Contract, such
Contract is not expressly identified or contemplated herein or in any other Loan
Document, and no Loan Party is party thereto, or, in the case of Applicable Law,
such Applicable Law is not applicable to any Loan Party, or, in the case of any
such Lien, such Lien does not attach to any property of the Borrower, (B) that
could not reasonably be expected to expose any Agent or Bank to any liability,
loss, cost or expense and (C) that, either alone or in conjunction with all
other such violations, breaches or defaults, could not have a Materially Adverse
Effect on (x) the Borrower and the Consolidated Subsidiaries taken as a whole,
(y) any Material Loan Document or (z) the Collateral.
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Section 3.04. Litigation. Except as set forth on Schedule
3.04, there are not, in any court or before any arbitrator of any kind or before
or by any governmental or non-governmental body, any actions, suits or
proceedings pending or, to the knowledge of the Borrower and the Subsidiaries,
threatened against or in any other way relating to or affecting (i) the Borrower
or any Subsidiary or any of their respective businesses or properties, (ii) any
Material Loan Document or (iii) the Collateral (except actions, suits or
proceedings that may affect the cellular telephone industry generally but with
respect to which neither the Borrower or any Subsidiary nor any other Loan Party
is a party) with respect to which there is a reasonable probability of a
determination adverse to the interests of the Borrower or any Subsidiary that,
if adversely determined, would, singly or in the aggregate, have a Materially
Adverse Effect on (A) the Borrower and the Consolidated Subsidiaries taken as a
whole, (B) any Material Loan Document or (C) the Collateral.
Section 3.05. Burdensome Provisions. As of the Agreement Date
and as of the Closing Date, neither the Borrower nor any Subsidiary is a party
to or bound by any Contract or Applicable Law (other than Applicable Law
affecting the cellular telephone industry generally), compliance with which
might, insofar as can reasonably be foreseen by the Borrower, have a Materially
Adverse Effect on (a) the Borrower and the Consolidated Subsidiaries taken as a
whole, (b) any Material Loan Document or (c) the Collateral.
Section 3.06. No Adverse Change or Event. Except for events
affecting the cellular telephone industry generally, since December 31, 1994, no
change in the business, assets, Liabilities, financial condition or results of
operations of the Borrower or any Subsidiary has occurred, and no event has
occurred or, in the case of events anticipated by the Borrower to have occurred
prior to the making or deemed making of this representation and warranty, failed
to occur, that has had or might have, insofar as can reasonably be foreseen by
the Borrower, either alone or in conjunction with all other such changes, events
and failures, a Materially Adverse Effect on (a) the Borrower and the
Consolidated Subsidiaries taken as a whole, (b) any Material Loan Document or
(c) the Collateral. Such an adverse change may have occurred, and such an event
may have occurred or failed to occur, within the meaning of this Section 3.06 at
any particular time without regard to whether such change, event or failure
constitutes a Default or whether any other Default shall have occurred and be
continuing.
Section 3.07. Taxes. Each of the Borrower and the Subsidiaries
has filed (either directly or indirectly through the Affiliate of the Borrower
or such Subsidiary responsible (whether as common parent or agent of a filing
group or otherwise) under Applicable Law for such filing) all United States
Federal income
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tax returns and all other material Tax returns that are required to be filed by
such Person and have paid (either directly or indirectly through the Affiliate
of the Borrower or such Subsidiary responsible (whether as common parent or
agent of a filing group or otherwise) under Applicable Law for such payment) all
Taxes reflected as being due pursuant to such returns and all Taxes due pursuant
to any assessment received by the Borrower or any of its Affiliates and relating
to the Borrower or any Subsidiary, except such Taxes, if any, as are being
contested in good faith by appropriate proceedings, if any, and as to which
adequate reserves have been provided and except, with respect to such
Subsidiaries, as at the Agreement Date and the Closing Date, for such tax
returns the failure to file and Taxes the failure to pay of which could not
reasonably be expected to have a Materially Adverse Effect on (a) the Borrower
and the Consolidated Subsidiaries taken as a whole, (b) any Material Loan
Document or (c) the Collateral. The charges, accruals and reserves on the books
of the Borrower and each of the Subsidiaries in respect of Taxes and other
governmental charges are, as of the Agreement Date and the Closing Date, to the
knowledge of the Borrower, and at all other times, in the opinion of the
Borrower, adequate. Other than the Tax Sharing Agreement, there is in effect on
the Agreement Date no tax sharing, tax allocation or similar agreement to which
the Borrower or any Subsidiary is a party.
Section 3.08. No Default. Neither the Borrower nor any of the
Subsidiaries is in default in the payment or performance or observance of any
Contract to which it is a party or by which it or its properties or assets may
be bound that, individually or together with all other such defaults, could have
a Materially Adverse Effect on (a) the Borrower and the Consolidated
Subsidiaries taken as a whole, (b) any Material Loan Document or (c) the
Collateral.
Section 3.09. Cellular Licenses and Related Matters. Schedule
3.09 sets forth, as of the Agreement Date, (a) each MSA and RSA in which Amcell,
AWACS or any of their respective Subsidiaries is authorized by the FCC to
operate a Cellular System, together with, for each such Cellular System, (i) the
FCC call sign for such Cellular System, (ii) the name of the licensee of such
Cellular System and (iii) the date of the expiration of the license for such
Cellular System and (b) each point-to-point common carrier microwave station
that Amcell, AWACS or any of their respective Subsidiaries is authorized by the
FCC to operate, together with, for each such microwave station, (i) the FCC call
sign for such station and (ii) the name of the licensee of such station. Except
as set forth on Schedule 3.09, each of the Borrower and the Subsidiaries has
duly secured all permits, licenses, consents and authorizations from, and has
duly filed all registrations, applications, reports and other documents with,
the FCC and, if applicable, any state public utilities commission or similar
regulatory authority, and has obtained all
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other Governmental Approvals, necessary for the ownership and operation of the
Cellular Systems owned or operated by the Borrower or any Subsidiary, and the
ownership and operation of such Cellular Systems by the Borrower and the
Subsidiaries comply in all material respects with the Communications Act of 1934
and all rules and regulations of the FCC thereunder, except to the extent that
the failure to secure any such permit, license, consent or authorization, or to
have made any such filing, or to obtain any such Governmental Approval, or to
comply with such Act or any such rules or regulations, would not have a
Materially Adverse Effect on (a) the Borrower and the Consolidated Subsidiaries
taken as a whole, (b) any Material Loan Document or (c) the Collateral.
Section 3.10. Not an Investment Company. Neither the
Borrower nor any of the Subsidiaries is an "investment company"
within the meaning of the Investment Company Act of 1940.
Section 3.11. Hazardous Materials. The Borrower and each of
the Subsidiaries have obtained all permits, licenses and other authorizations
which are required under all Environmental Laws, except to the extent failure to
have any such permit, license or authorization would not reasonably be expected
to have a Materially Adverse Effect on (a) the Borrower and the Consolidated
Subsidiaries taken as a whole, (b) any Material Loan Document or (c) the
Collateral. The Borrower and each of the Subsidiaries are in compliance with the
terms and conditions of all such permits, licenses and authorizations, and are
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply could
not reasonably be expected to have a Materially Adverse Effect on (i) the
Borrower and the Consolidated Subsidiaries taken as a whole, (ii) any Material
Loan Document or (iii) the Collateral. In addition, to the knowledge of the
Borrower, no notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending or threatened by any
governmental or other entity with respect to any alleged failure by the Borrower
or any of the Subsidiaries to have any permit, license or authorization required
in connection with the conduct of the business of the Borrower or any of the
Subsidiaries or with respect to any generation, treatment, storage, recycling,
transportation, discharge, disposal or "release" (as such term is defined in 42
U.S.C. ss. 9601(22)) of Hazardous Materials generated by the Borrower or any of
the Subsidiaries, the consequences of any of which would have a Materially
Adverse Effect on (x) the Borrower and the Consolidated Subsidiaries taken as a
whole, (y) any Material Loan Document or (z) the Collateral.
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Section 3.12. Senior Obligations. The obligations of the
Borrower under the Borrower Loan Documents and under any Interest Rate
Protection Agreement entered into with any Bank or any Affiliate of a Bank
constitute "Senior Obligations" within the meaning and pursuant to the terms of
the Affiliate Subordination Agreement with respect to Affiliate Subordinated
Obligations.
Section 3.13. Benefit Plans. As of the Agreement Date, neither
the Borrower nor any Subsidiary has any Existing Benefit Plans other than those
listed on Schedule 3.13.
Section 3.14. Security Interest. When the Administrative Agent
as the Secured Party has taken possession on behalf of the Principals (as
defined in the Pledge Agreement) of the certificates representing the Pledged
Securities, the Security Interest will constitute a valid and perfected security
interest in the Pledged Securities and the Pledged Securities will not be
subject to any other Lien.
ARTICLE 4
CERTAIN COVENANTS
-----------------
From the Agreement Date and until the Repayment Date,
A. The Borrower shall and shall cause each Subsidiary to:
Section 4.01. Preservation of Existence and Properties, Scope
of Business, Compliance with Law, Payment of Taxes and Claims, Preservation of
Enforceability. (a) Preserve and maintain its corporate or partnership
existence, as the case may be (except as permitted by Section 4.07 and except
for liquidation or dissolution of any Subsidiary in connection with or following
the sale or other disposition of all or substantially all of the assets of such
Subsidiary in a disposition permitted under Section 4.08), and, except as
contemplated under Section 4.08, all of its other franchises, licenses, rights
and privileges, including Cellular Licenses, (b) preserve, protect and obtain
all Intellectual Property, and preserve and maintain in good repair, working
order and condition all other properties, required for the conduct of its
business, (c) comply with Applicable Law, including, without limitation, all
laws applicable to the construction, ownership and operation of a Cellular
System or the ownership and use of a Cellular License (including, without
limitation, the Communications Act of 1934, and all rules and regulations of the
FCC thereunder), (d) pay or discharge when due all Taxes and all Liabilities
that are or might become a Lien on any of its properties and (e) take all action
and obtain all consents and Governmental Approvals required so that its
obligations under the Loan Documents will at
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all times be legal, valid and binding and enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally; provided, however, that this Section
4.01 (other than clause (a) above (insofar as it requires the Borrower to
preserve its corporate or partnership existence, as the case may be) and clause
(e) above) shall not apply in any circumstance where noncompliance, together
with all other noncompliances with this Section 4.01, will not have a Materially
Adverse Effect on (i) the Borrower and the Consolidated Subsidiaries taken as a
whole, (ii) any Material Loan Document or (iii) the Collateral.
Section 4.02. Insurance. Maintain insurance with responsible
insurance companies against at least such risks and in at least such amounts (a)
as is customarily maintained by similar businesses or (b) as may be required by
Applicable Law, except, in the case of clause (b) above, to the extent that the
failure to maintain such insurance could not have a Materially Adverse Effect on
(i) the Borrower and the Consolidated Subsidiaries taken as a whole, (ii) any
Material Loan Document or (iii) the Collateral. Whether or not customarily
maintained by similar businesses, the Borrower shall, and shall cause the
Subsidiaries to, maintain business interruption insurance, so long as such
insurance is available on commercially reasonable terms or is otherwise required
to be maintained by the Required Agents.
Section 4.03. Use of Proceeds. Use the proceeds of the Loans
only to (a) repay in full the Predecessor Indebtedness and pay transaction costs
in connection herewith, (b) make acquisitions to which Section 4.07 is by its
express terms inapplicable, (c) make investments to which Section 4.14 is by its
express terms inapplicable, (d) fund working capital and capital expenditure
requirements and other general corporate purposes, (e) subject to Section 4.06,
make Restricted Payments and (f) subject to Section 4.21, make payments of
principal and interest in respect of Senior Subordinated Indebtedness. None of
the proceeds of any of the Loans shall be used by the Borrower or any Subsidiary
to purchase or carry, or to reduce or retire or refinance any credit incurred by
the Borrower or any Subsidiary to purchase or carry, any margin stock (within
the meaning of Regulations U and X of the Board of Governors of the Federal
Reserve System) or to extend credit to others for the purpose of purchasing or
carrying any margin stock. If requested by any Bank, the Borrower shall complete
and sign Part I of a copy of Federal Reserve Form U-1 referred to in Regulation
U of the Board of Governors of the Federal Reserve System and deliver such copy
to such Bank.
B. The Borrower shall not, and shall not permit or suffer
any Subsidiary to, directly or indirectly:
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Section 4.04. Guaranties. Be obligated, at any time, in
respect of any Guaranty, except that this Section 4.04 shall not apply to (a)
Existing Guaranties and (b) Permitted Guaranties.
Section 4.05. Liens. Permit to exist, at any time, any Lien
upon any of its properties or assets of any character, whether now owned or
hereafter acquired, or upon any income or profits therefrom, except that this
Section 4.05 shall not apply to Permitted Liens; provided, however, that if,
notwithstanding this Section 4.05, any Lien to which this Section 4.05 is
applicable shall be created or arise, the Liabilities of the Loan Parties under
the Loan Documents shall, to the extent such Lien attaches to any asset that
does not constitute Collateral or to any asset with respect to which such Lien
would be prior to the Security Interest, automatically be secured by such Lien
to the full extent permitted by Applicable Law equally and ratably with the
other Liabilities secured thereby, and the holder of such other Liabilities, by
accepting such Lien, shall be deemed to have agreed thereto and to share with
the Banks, on that basis, the proceeds of such Lien, whether or not the Banks'
security interest shall be perfected; provided further, however, that
notwithstanding such equal and ratable securing and sharing, the existence of
such Lien shall constitute a default by the Borrower in the performance or
observance of this Section 4.05.
Section 4.06. Restricted Payments. Make or declare or
otherwise become obligated to make any Restricted Payment, except that, so long
as, at both the time of the declaration or other incurrence, if any, of any such
Restricted Payment, and the time of the making thereof, and immediately after
giving effect thereto, no Default shall have occurred and be continuing, this
Section 4.06 shall not apply to (a) any Restricted Payment made to Comcast
Cellular Corporation for the purpose of redeeming, and promptly applied to the
redemption of, the Comcast Cellular Zeros; (b) any Restricted Payment (i) made
to Comcast or any Subsidiary of Comcast in an amount up to the aggregate
redemption price of the Comcast Cellular Zeros, if any, redeemed with shares of
Comcast Common Stock and/or (ii) in an amount up to the amount of the proceeds
of the redemption of Comcast Cellular Zeros owned by the Borrower or any
Subsidiary; (c) any Restricted Payment made to Comcast or any Subsidiary of
Comcast of up to $100,000,000 of the proceeds of Permitted Additional
Indebtedness of the Borrower; (d) any Restricted Payment made to Holdco for the
purpose of making, and promptly applied to make, cash interest payments on
Permitted Additional Non-Facility Indebtedness of Holdco, so long as, if the
terms and conditions of such Permitted Additional Non-Facility Indebtedness did
not require any cash interest payments thereon at any time within the three-year
period immediately following the incurrence thereof (other than customary
charges, not to exceed $2,750,000 in any year, payable in connection with
Permitted Additional Non-
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Facility Indebtedness of Holdco), the Leverage Ratio is less than 5.50 to 1 both
before and after giving effect to such Restricted Payment; (e) any Restricted
Payment, so long as (i) the Leverage Ratio is less than 5.00 to 1 both before
and after giving effect to such Restricted Payment and (ii) the Borrower shall
have made (A) the prepayment, if any, of the Tranche A Loans pursuant to Section
1.05(b)(i) required to be made upon the reduction of the Total Tranche A
Commitment pursuant to Section 1.07(c) resulting from such Restricted Payment
and (B) the prepayment of the Tranche B Loans pursuant to Section 1.05(b)(iv)
required to be made upon the making of such Restricted Payment; (f) any
Restricted Payment, so long as the Leverage Ratio is less than 4.50 to 1 both
before and after giving effect to such Restricted Payment; (g) any distribution
of the assets or Capital Securities of, or other equity interests in, the
Excluded Subsidiaries or any Restricted Payment consisting of the proceeds of
any disposition of such assets, Capital Securities or other equity
interests; (h) any Restricted Payment consisting of the proceeds of any issuance
of the capital stock of the Borrower, so long as no Default under Section
6.01(l) shall have resulted from such issuance; (i) any Restricted Payment made
for the purpose of redeeming or repurchasing the Borrower's Class B
Participating Redeemable Preferred Stock; and (j) any Restricted Payment, in an
amount, together with the aggregate amount of all other Restricted Payments
pursuant to this clause (j), not in excess of $2,750,000 in any year, made to
Holdco for the purpose of making, and promptly applied to make, payment of
customary charges payable in connection with Permitted Additional Non-Facility
Indebtedness of Holdco; provided, that the Borrower shall have delivered to the
Banks, prior to the making of any such Restricted Payment pursuant to clauses
(a), (b) and (c) above, the financial projections referred to in Section
2.01(a)(xiii), revised to reflect (A) operating performance since the date of
such financial projections and (B) the making of such Restricted Payment, and
demonstrating pro forma compliance with the terms of this Agreement through the
Termination Date.
Section 4.07. Merger or Consolidation; Acquisitions. Merge or
consolidate with any Person, or acquire substantially all the assets or
business, business unit or division from or substantially all the Capital
Securities issued by any Person, except that, if after giving effect thereto no
Default would exist, this Section 4.07 shall not apply to (a) any merger or
consolidation of the Borrower with any Person so long as the sole purpose of
such merger or consolidation was to change the domicile of the Borrower, the
Person into which the Borrower merged or with which it consolidated was
specially formed for such purpose and had at no time conducted any business or
operations and such Person shall have assumed in writing the obligations of the
Borrower under the Loan Documents in a manner reasonably satisfactory to the
Required Agents, (b) any merger or consolidation of any Subsidiary with any one
or more other Subsidiaries or with any Person acquired as provided in clause
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(e) below, (c) any acquisition of assets in the ordinary course of business or
contemplated by Section 4.08(c), (d) any acquisition of any interest in Cellular
Systems within the Ocean County, New Jersey RSA; the Trenton, New Jersey MSA;
the Atlantic City, New Jersey MSA; the Delaware 1-Kent RSA, the Aurora/Elgin,
Illinois MSA; the Joliet, Illinois MSA; and the Vineland-Millville-Brigeton, New
Jersey MSA, and (e) any acquisition (whether effected by merger, consolidation,
acquisition of Capital Securities or otherwise) of Cellular Systems located
within the United States and of businesses directly related to Cellular Systems
owned or controlled by the Borrower or any Subsidiary which is in exchange for
Cellular Systems or related telecommunications businesses as provided in Section
4.08(g)(ii) or the purchase price of which is funded with any one or any
combination of the following sources, subject to any condition or restriction
set forth below with respect thereto:
(i) the proceeds of Junior Subordinated Indebtedness
received after the Agreement Date (other than Junior
Subordinated Indebtedness applied or deemed applied as
set forth in Section 6.03);
(ii) the amount of cash equity contributions and cash
payments for the Borrower's Capital Securities (other
than Mandatorily Redeemable Securities) received by the
Borrower after the Agreement Date
(other than from a Subsidiary);
(iii) so long as such acquisition is from any Person
other than an Affiliate, the proceeds of sales (or the
cash component of exchanges) of assets referred to in
clauses (f) or (g) of Section 4.08; and
(iv) other funds available therefor, so long as any such
acquisition the purchase price of which is funded in
whole or in part as contemplated by this clause (iv) is
consummated after December 31, 1996 and the aggregate
amount of funds so used pursuant to this clause (iv) for
all such acquisitions, together with the aggregate amount
of investments to which the proviso contained in Section
4.14(j) is applicable, is not in excess of (A) so long as
the Leverage Ratio is less than 5.50 to 1 both before and
immediately after giving effect to such acquisition,
$200,000,000 and (B) at all other times, $100,000,000;
provided, however, that, in the case of clauses (d) and (e), the Borrower shall
have furnished to the Banks, promptly upon consummation of each such acquisition
wherein the Pro Forma Cash Flow Percentage of the acquired Cellular System or
business exceeds 10%, financial statements, subscriber information and pro forma
projections relating thereto demonstrating pro forma
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compliance with the terms of this Agreement through the Termination Date and
that, in the event that any such acquisition is from an Affiliate, the Board of
Directors of the Borrower shall have determined in its good faith judgment that
the amount paid was not in excess of the fair market value of the assets
acquired. For purposes of this Section 4.07, "Pro Forma Cash Flow Percentage"
means, as of the date of any such acquisition, the ratio, expressed as a
percentage, derived by dividing (x) Cash Flow attributable to the Cellular
System or business so acquired for the four consecutive fiscal quarters of the
seller thereof ending on, or most recently ended prior to, such date for which
financial information is available by (y) the sum of the amount determined
pursuant to clause (x) and Cash Flow of the Borrower and the Consolidated
Subsidiaries for the four consecutive fiscal quarters of the Borrower ending on,
or most recently ended prior to, such date for which financial information is
available and has been delivered to the Banks hereunder prior to such date.
Section 4.08. Disposition of Assets. Sell, lease, license,
transfer or otherwise dispose of any asset or any interest therein, except that
this Section 4.08 shall not apply to (a) any disposition of property in the
ordinary course of business, (b) any disposition of equipment that is obsolete
or no longer required in its business, (c) any disposition of any asset or any
interest therein by a Subsidiary to the Borrower (so long as, after giving
effect to such disposition and all other such dispositions by such Subsidiary to
the Borrower after the Agreement Date, such Subsidiary shall not have disposed
of a substantial portion of its assets to the Borrower) or a Wholly Owned
Subsidiary or any disposition of any asset or any interest therein by the
Borrower to a Wholly Owned Subsidiary, (d) any sale or assignment of delinquent
accounts receivable or other delinquent trade receivables (or notes evidencing
such receivables) to a collection agency or similar service in the ordinary
course of business, (e) any transaction to which any of the other provisions of
this Agreement (other than Section 4.10) is by its express terms inapplicable,
(f) any disposition of (i) any interest in or assets of the Excluded
Subsidiaries or any proceeds of any disposition of any such interest or assets
or (ii) any interest in Cellular Systems within the Maryland 2 RSA or any other
such interests that are owned by the Borrower or any Subsidiary on the Agreement
Date and constitute no more than 15% of the total equity of any Cellular System
and (g) any disposition of any interest in or assets of a Cellular System or a
cellular telephone, wireless or related telecommunications business, so long as
no Default shall have occurred and be continuing immediately prior to or after
giving effect to such disposition and
(i) such disposition is a sale to any Person for cash
in an amount not less than the fair market value of the interests or
assets sold net of the liabilities assumed, as
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determined in the good faith judgment of the Board of Directors of the
Borrower or the applicable Subsidiary, and (A) the Cash Flow Percentage
attributable to such interests or assets together with the Cash Flow
Percentage of all other interests and assets sold or exchanged by the
Borrower and its Subsidiaries pursuant to this clause (i) or clause
(ii) below within the prior twelve calendar month period (or, if
shorter, the period from the Closing Date) does not exceed 5% and (B)
the Cash Flow Percentage attributable to such interests or assets
together with the Cash Flow Percentage (determined, with respect to
prior sales or exchanges, at the time of each such sale or exchange)
attributable to all interests and assets sold or exchanged by the
Borrower and its Subsidiaries pursuant to this clause (i) or clause
(ii) below since the Closing Date does not exceed 20%, or
(ii) such disposition is an exchange, with any Person, of
interests or assets exchanged by the Borrower or applicable Subsidiary
comprising interests in or assets of one or more cellular telephone,
wireless and related telecommunications businesses or the stock or
other equity of a Person owning such interests or assets for interests
in or assets of one or more other Cellular Systems located in the
United States or businesses directly related to Cellular Systems owned
or controlled by the Borrower or any Subsidiary, together with any
Permitted Securities received by the Borrower or any Subsidiary in
connection with such exchange, and of equal or greater value, as
determined in the good faith judgment of the Board of Directors of the
Borrower or the applicable Subsidiary, and (A) the Cash Flow Percentage
attributable to such interests or assets exchanged by the Borrower or
applicable Subsidiary together with the Cash Flow Percentage
attributable to all other interests and assets exchanged or sold by the
Borrower and its Subsidiaries pursuant to this clause (ii) or clause
(i) above within the prior twelve calendar month period (or, if
shorter, the period from the Closing Date) does not exceed 5% and (B)
the Cash Flow Percentage attributable to such interests or assets
together with the Cash Flow Percentage (determined, with respect to
prior exchanges, at the time of each such exchange) attributable to all
other interests and assets exchanged or sold by the Borrower and its
Subsidiaries pursuant to this clause (ii) or clause (i) above since the
Closing Date does not exceed 20%;
provided that, in the case of any such sale to or exchange with an Affiliate, in
addition to the requirements set forth above in clause (i) and (ii), (y) the
Cash Flow Percentage attributable to the interests or assets sold or exchanged,
together with the Cash Flow Percentage of all other interests and assets sold to
or exchanged with Affiliates since the Closing Date, shall not exceed 5%, and
(z) such Board of Directors shall have determined,
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in its good faith judgment, that such sale or exchange is for consideration or
in exchange for interests or assets reflecting the fair market value of the
interests or assets sold or exchanged, and the Borrower shall have furnished to
the Banks, not later than the fifteenth Business Day preceding the date of such
sale or exchange, a fairness opinion with respect to such sale or exchange from
a recognized investment bank or broker, as the case may be, reasonably
satisfactory in form and content to the Required Agents.
Section 4.09. Indebtedness. Incur, create, assume or suffer to
exist any Indebtedness, except that this Section 4.09 shall not apply to (a)
Indebtedness under the Loan Documents, provided that, any portion thereof
representing an increase in the aggregate amount of Indebtedness and, without
duplication, Commitments hereunder pursuant to the consent of the Required Banks
shall constitute Permitted Additional Facility Indebtedness, (b) Junior
Subordinated Indebtedness, (c) Senior Subordinated Indebtedness, (d)
Indebtedness to which Section 4.14 is by its express terms inapplicable by
virtue of clause (f) thereof, (e) assumptions by certain Subsidiaries of
portions of the Indebtedness of the Borrower described in clause (a) of this
Section 4.09, so long as such assumptions (i) are effected pursuant to
assumption agreements in the forms furnished to the Arranging Agents and the
Managing Agents on the Closing Date and (ii) shall not constitute a release in
whole or in part of the Borrower from its obligations in respect thereof, (f)
Permitted Additional Non-Facility Indebtedness of the Borrower, and (g) other
Indebtedness in an aggregate principal amount outstanding at any time not in
excess of $35,000,000.
Section 4.10. Transactions with Affiliates. Effect any
transaction with any Affiliate (other than the Borrower or any Subsidiary) on a
basis less favorable than would at the time be obtainable for a comparable
transaction in arms-length dealing with an unrelated third party, except that
this Section 4.10 shall not apply to (a) transactions to which this Agreement is
by its express terms inapplicable, (b) the Management Agreement and (c) the Tax
Sharing Agreement.
Section 4.11. Management. (a) Management Agreement. Fail at
any time to keep the Management Agreement in full force and effect (payment
under which shall be the sole and exclusive payment by the Borrower and the
Subsidiaries to Comcast or any Subsidiary of Comcast or any other Person for the
supervision and management of the Borrower and the Subsidiaries (other than
amounts paid in reimbursement of out-of-pocket costs and expenses incurred on
behalf of the Borrower or the Subsidiaries)) or permit any Persons other than
Comcast or any Subsidiary of Comcast to supervise or manage the day-to-day
business of the Borrower and the Subsidiaries.
(b) Management Fees. Make payments in respect of, or
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accrue, Management Fees at any time other than Permitted Management Fees. For
purposes of this Agreement, "Permitted Management Fees" means, with respect to
any fiscal quarter of the Borrower, (i) Management Fees in an amount up to 6% of
Total Revenue for such fiscal quarter, which may be paid in cash or accrued to
the extent not currently paid in cash as provided below within 90 days (or, in
the case of the last quarter of any fiscal year of the Borrower, 120 days) after
the end of such fiscal quarter ("Current Management Fees"), and (ii) the accrued
and unpaid portion of Management Fees for periods preceding the Closing Date and
Current Management Fees from prior fiscal quarters ("Accrued Management Fees").
When the Leverage Ratio is greater than 7.00 to 1 as of the last day of any
fiscal quarter of the Borrower, no Current Management Fees with respect to such
fiscal quarter or Accrued Management Fees shall be paid. When the Leverage Ratio
is greater than 5.00 to 1 but less than or equal to 7.00 to 1 as of the last day
of any fiscal quarter of the Borrower (determined without giving effect to the
payment, if any, of Current Management Fees pursuant to this sentence), the
portion of Current Management Fees with respect to such fiscal quarter paid in
cash shall not exceed 2% of Total Revenue for such fiscal quarter. When the
Leverage Ratio is less than 5.00 to 1 as of the last day of any fiscal quarter
of the Borrower (determined without giving effect to the payment, if any, of
Current Management Fees pursuant to this sentence), the portion of Current
Management Fees with respect to such fiscal quarter paid in cash shall not
exceed 4% of Total Revenue for such fiscal quarter. Accrued Management Fees
shall not be paid in cash unless and only to the extent that any payment thereof
would constitute a Restricted Payment contemplated by clauses (e) or (f) of
Section 4.06. Notwithstanding the foregoing, Permitted Management Fees shall not
be paid in cash at any time a Default exists or, immediately after giving effect
thereto, would exist. For purposes of this Section 4.11, "Total Revenue" means,
with respect to any fiscal quarter of the Borrower, consolidated gross operating
revenue of the Borrower and the Subsidiaries (excluding interest income and
unusual or extraordinary items) for such fiscal quarter.
Section 4.12. Limitation on Restrictive Covenants. Permit to
exist, at any time, any consensual restriction limiting the ability (whether by
covenant, event of default, subordination or otherwise) of any Subsidiary to (a)
pay dividends or make any other distributions on shares of its Capital
Securities held by the Borrower or any other Subsidiary, (b) pay any obligation
owed to the Borrower or any other Subsidiary, (c) make any loans or advances to
or investments in the Borrower or in any other Subsidiary, (d) transfer any of
its material property or assets (other than property or assets subject to
Permitted Liens) to the Borrower or any other Subsidiary, except for contracts,
leases or licenses which by their terms are non-assignable or (e) create any
Lien upon its material property or assets (other than property or assets subject
to Permitted Liens) whether now owned
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or hereafter acquired or upon any income or profits therefrom (other than
contracts, leases or licenses which by their terms may not be pledged or
otherwise encumbered), except that this Section 4.12 shall not apply to
Permitted Restrictive Covenants or, in the case of clause (d) and (e) only, to
limitations or restrictions applicable to stock, partnership or joint venture
interests held by a Subsidiary contained in the charter, partnership agreement
or other constitutive or governing document with respect to such interests or
limitations or restrictions with respect to Cellular Licenses.
Section 4.13. Issuance or Disposition of Capital Securities.
Issue any of its Capital Securities or sell, transfer or otherwise dispose of
any Capital Securities issued by any Subsidiary, except that this Section 4.13
shall not apply to (a) any issuance by a Subsidiary of any of its Capital
Securities to the Borrower or a Wholly Owned Subsidiary, (b) any issuance by a
Subsidiary of any of its Capital Securities to the holders of the common stock
or other ownership interests of such Subsidiary made pro rata to the relative
amounts of such common stock or other ownership interests, respectively, held by
such holders or otherwise as permitted under Section 4.07(d), (c) any
disposition by the Borrower or any Subsidiary of any Capital Securities issued
by a Subsidiary (other than the Collateral, except as expressly provided in the
Pledge Agreement) (i) to the Borrower or a Wholly Owned Subsidiary or (ii)
pursuant to any disposition permitted under Section 4.08 and (d) so long as no
Default under Section 6.01(l) would result therefrom, any issuance by the
Borrower of its Capital Securities.
Section 4.14. Investments. Purchase or acquire obligations or
Capital Securities issued by, or any other interest in, or make loans to, any
Person, except that this Section 4.14 shall not apply to any such obligation,
Capital Security, interest or loan consisting of (a) obligations issued or
guaranteed by the United States of America with a remaining maturity not
exceeding one year, (b) commercial paper with maturities of not more than 270
days and a published rating of not less than A-1 by Standard & Poor's Ratings
Services, a Division of the McGraw Hill Companies, Inc. ("S&P") or P-1 by
Moody's Investors Service, Inc. ("Moody's") (or the equivalent rating), (c)
certificates of time deposit and bankers' acceptances having maturities of not
more than one year of any Bank or other commercial bank if (i) such bank has a
combined capital and surplus of at least $100,000,000 and (ii) its unsecured
long-term debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A- or A3 (or the equivalent rating) by a
nationally recognized investment rating agency, (d) repurchase agreements with
any Bank for periods not in excess of 180 days fully collateralized by
securities constituting obligations issued or guaranteed by the United States of
America, (e) notes and other instruments that are exempt from Federal income
taxation with a remaining maturity
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not exceeding one year, provided that such notes and other instruments are rated
in the highest safety category (MIG1 or equivalent) by Moody's or S&P, (f) stock
or interests in, or loans or advances to, the Borrower or any of the
Consolidated Subsidiaries, provided that no such loans or advances to a
Consolidated Subsidiary shall remain outstanding after any sale, exchange or
disposition of such Subsidiary, (g) acquisitions referred to in Section 4.07,
(h) Interest Rate Protection Agreements having a designated notional amount not
exceeding, at the time entered into, 100% of the Total Commitment then in
effect, having a maturity not later than the Commitment Termination Date, (i)
Existing Investments, (j) investments in cellular telephone, wireless and
related telecommunications businesses made with (i) the funds described in any
of clauses (i), (ii), (iii) (to the extent that such funds constitute the
proceeds of sales (or the cash component of exchanges) of assets other than
Cellular Systems located within the United States or of businesses directly
related to Cellular Systems owned or controlled by the Borrower or any
Subsidiary, or any interest therein) and (iv) of Section 4.07(e) and (ii) the
proceeds of any dividends or distributions received in cash by the Borrower or
any Subsidiary with respect to any such investment, provided that, in the case
of any such investment funded in part or in whole with funds described in such
clause (iv), such investment shall have been made after December 31, 1996 and
the aggregate amount of such funds described in such clause (iv) used for all
investments shall not exceed (A) so long as the Leverage Ratio is less than 5.50
to 1 both before and after giving effect to such investment, the lesser of (x)
$75,000,000 and (y) $200,000,000 minus the aggregate amount of such funds used
for acquisitions contemplated by Section 4.07(e)(iv)(A) and (B) at all other
times, the lesser of (x) $35,000,000 and (y) $100,000,000 minus the aggregate
amount of such funds used for acquisitions contemplated by Section
4.07(e)(iv)(B) and (k) investments in Permitted Securities. For purposes of the
foregoing proviso, the amount of any such investment shall be deemed to be the
aggregate amount of cash (or fair market value of other property) which the
Person making such investment is specifically obligated or committed to pay or
contribute with respect thereto at any time, as increased, at the time such
Person makes any additional payment or contribution with respect thereto, by the
amount thereof.
C. The Borrower shall not:
----------------------
Section 4.15. Leverage Ratio. Permit the Leverage Ratio to be
greater than the following respective amounts at any time during the following
respective periods:
Period Leverage Ratio
Closing Date through June 29, 1996 9.95 to 1
June 30, 1996 through December 30, 1996 9.50 to 1
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December 31, 1996 through December 30, 1997 8.50 to 1
December 31, 1997 through December 30, 1998 7.00 to 1
December 31, 1998 through September 29, 1999 5.50 to 1
September 30, 1999 through September 29, 2000 5.00 to 1
September 30, 2000 and thereafter 4.50 to 1
; provided, however, that if the Borrower shall have made a Restricted Payment
contemplated by Section 4.06(f), the Borrower shall not permit the Leverage
Ratio to be greater than 4.50 to 1 at any time after such Restricted Payment
shall have been made.
Section 4.16. Interest Coverage Ratio. Permit the Interest
Coverage Ratio to be less than (a) 1.15 to 1 at any time during the period from
the Closing Date through December 31, 1996, (b) 1.30 to 1 at any time during the
period from January 1, 1997 through December 31, 1997, (c) 1.60 to 1 at any time
during the period from January 1, 1998 through December 31, 1998 and (d) 2.00 to
1 at any time thereafter.
Section 4.17. Pro Forma Debt Service Ratio. Permit the Pro
Forma Debt Service Ratio to be less than 1.05 to 1 at any time after January 1,
1997.
Section 4.18. Interest Rate Protection Agreements. At any time
on and after the date that is 180 days after the Closing Date, fail to maintain
in full force and effect Interest Rate Protection Agreements or other similar
arrangements satisfactory in form and substance to no fewer than four of the
five Arranging Agents with respect to a notional principal amount that, together
with the aggregate principal amount of all Consolidated Indebtedness (other than
Junior Subordinated Indebtedness) and Permitted Additional Non-Facility
Indebtedness of Holdco that would be included in the calculation of the Leverage
Ratio by operation of the definition of "Leverage Ratio" at such time then
outstanding that bears interest at a fixed rate, would be equal to or greater
than 40% of the aggregate principal amount of Consolidated Indebtedness (other
than Junior Subordinated Indebtedness) and Permitted Additional Non-Facility
Indebtedness of Holdco that would be included in the calculation of the Leverage
Ratio by operation of the definition of "Leverage Ratio" at such time; provided,
however, that the Borrower shall not be required to maintain such Interest Rate
Protection Agreements during any period in which the Leverage Ratio is less than
4.50 to 1 at all times and was less than 4.50 to 1 at all times during the two
full fiscal quarters of the Borrower immediately preceding such period.
Section 4.19. Cellular Systems Revenues. Permit at any time
the portion of consolidated gross revenues of the Borrower and its Consolidated
Subsidiaries derived from their Cellular Systems for any fiscal quarter of the
Borrower to be less than 90% of the total consolidated gross revenues of the
Borrower and its Consolidated Subsidiaries for such fiscal
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quarter.
Section 4.20. Tax Sharing Agreement. File, or permit or suffer
any Subsidiary to file, a consolidated tax return with any other Person other
than Comcast or its Subsidiaries or amend, modify, or waive any provision of, or
terminate, the Tax Sharing Agreement or enter into, or allow any Subsidiary to
enter into, any other tax sharing, tax allocation or similar agreement, if the
result of such amendment, modification, waiver or agreement is adverse to the
Borrower and the Consolidated Subsidiaries taken as a whole.
Section 4.21. Senior Subordinated Indebtedness. Make payments
of principal or interest in respect of Senior Subordinated Indebtedness, except
that this Section 4.21 shall not apply to any payments so long as (i) such
payments of principal are made with the proceeds of Loans made substantially
simultaneously therewith and (ii) such payments of interest are made on the
regularly-scheduled quarterly payment dates therefor or on the date of any
repayment of Senior Subordinated Indebtedness in an amount not in excess of the
amount accrued on the principal being repaid.
ARTICLE 5
FINANCIAL STATEMENTS AND INFORMATION
------------------------------------
Section 5.01. Financial Statements and Information to Be
Furnished. From the Agreement Date and until the Repayment Date, the Borrower
shall furnish to the Administrative Agent, with sufficient copies for each of
the Banks (which copies shall be promptly forwarded by the Administrative Agent
to each of the Banks):
(a) Quarterly Financial Statements; Officer's Certificate. As
soon as available and in any event within 60 days after the close of each of the
first three quarterly accounting periods in each fiscal year of the Borrower,
commencing with the quarterly period ending September 30, 1995:
(i) a consolidated balance sheet of the Borrower and
the Consolidated Subsidiaries as at the end of such quarterly period and the
related consolidated statements of operations, retained earnings and cash flows
of the Borrower and the Consolidated Subsidiaries for such quarterly period and
for the elapsed portion of the fiscal year of the Borrower ended with the last
day of such quarterly period, setting forth in each case in comparative form the
figures for the corresponding periods of the previous fiscal year of the
Borrower; and
(ii) a certificate with respect thereto of a
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Responsible Officer of the Borrower in the form of Schedule 5.01(a).
(b) Year-End Financial Statements; Accountants' and Officer's
Certificates. As soon as available and in any event within 120 days after the
end of each fiscal year of the Borrower, commencing with the fiscal year ending
December 31, 1995:
(i) a consolidated balance sheet of the Borrower and
the Consolidated Subsidiaries as at the end of such fiscal year and the
related consolidated statements of operations, changes in retained
earnings or net equity and cash flows of the Borrower and the
Consolidated Subsidiaries for such fiscal year, setting forth in each
case in comparative form the figures as at the end of and for the
previous fiscal year of the Borrower;
(ii) an audit report of Deloitte & Touche, or other
independent certified public accountants of recognized standing
satisfactory to the Required Agents, on the consolidated financial
statements referred to in clause (i) above, which report shall state
that such consolidated financial statements fairly present the
consolidated financial condition and results of operations of the
Borrower and the Consolidated Subsidiaries in conformity with Generally
Accepted Accounting Principles (except for the exclusion of the
Excluded Subsidiaries) as at the end of and for such fiscal year and
which report shall otherwise be satisfactory in scope to the Required
Agents;
(iii) a certificate of the accountants referred to in
clause (ii) above addressed to the Banks and in form satisfactory to
the Required Agents stating that such accountants have read this
Agreement in making the examination necessary for their report on such
consolidated financial statements and that nothing came to their
attention that caused them to believe that, as of the date of such
financial statements, any Default exists or, if such is not the case,
specifying such Default and its nature, when it occurred and whether it
is continuing; provided, however, that the furnishing of such
certificate shall not require any expansion of the scope of the audit
conducted by such accountants; and
(iv) a certificate of a Responsible Officer of the
Borrower in the form of Schedule 5.01(b).
(c) Reports and Filings. (i) During any period while the most
recent financial statements of the Borrower and the Consolidated Subsidiaries
delivered pursuant to Section 5.01(a) or (b) shall have been accompanied by a
qualified opinion of the Borrower's independent public accountants or by a
similar written
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statement of material inadequacy with respect to such financial statements,
then, promptly upon receipt thereof, copies of all reports, if any, submitted to
the Borrower or any Subsidiary, or the Board of Directors of the Borrower or any
Subsidiary, by such independent certified public accountants, including any
management letter; and (ii) together with the financial statements next required
to be furnished pursuant to Section 5.01(a) or (b), copies of all financial
statements and reports as Comcast, the Borrower or any Subsidiary shall send to
its stockholders (other than, in the case of the Borrower or any Subsidiary, its
Affiliates) and of all registration statements and all regular or periodic
reports that the Borrower or any Subsidiary shall file with the Securities and
Exchange Commission.
(d) Requested Information. From time to time and with
reasonable promptness upon request of any Bank, such Information regarding the
Loan Documents, the Loans or the business, assets, Liabilities, financial
condition, results of operations or business prospects of the Borrower and the
Subsidiaries as such Bank may reasonably request.
(e) Notice of Defaults and Other Matters. Prompt notice of:
(i) any Event of Default, after a Responsible Officer of the Borrower shall have
become aware thereof, describing such Default and the action, if any, that the
Borrower is proposing to take with respect thereto, (ii) the occurrence or
non-occurrence of any change or event that would cause the Representation and
Warranty contained in Section 3.10 to be incorrect if made at such time and
(iii) any material amendment to the certificate of incorporation or by-laws of
the Borrower.
(f) Cellular System Information. Together with the
financial statements delivered pursuant to Section 5.01(a) and
(b), a report
(i) setting forth, with respect to each Cellular
System owned or controlled by the Borrower or any of the Consolidated
Subsidiaries, the aggregate number of subscribers served by such Cellular System
as at the last day of the most recent fiscal quarter of the Borrower covered by
such financial statements; and
(ii) setting forth, in the case of such financial
statements covering the fourth fiscal quarter of any fiscal year of the
Borrower, with respect to each Cellular System owned or controlled by the
Borrower or any of the Consolidated Subsidiaries, (A) the aggregate percentage
ownership held by the Borrower and the Consolidated Subsidiaries in such
Cellular System and (B) the Pops of such Cellular System, in each case, as at
the last day of such fourth fiscal quarter.
Section 5.02. Accuracy of Financial Statements and
Information.
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(a) Historical Financial Statements. The Borrower hereby
represents and warrants that (i) Schedule 5.02(a) sets forth a complete and
correct list of the financial statements (other than projections) submitted by
the Borrower to the Banks in order to induce them to execute and deliver this
Agreement, (ii) (A) each of such financial statements which is audited is and
(B) each of such financial statements which is unaudited is, in all material
respects, complete and correct and presents fairly, in accordance with Generally
Accepted Accounting Principles (except (x) as noted in the auditor's report
thereon, (y) for the absence of footnotes in unaudited financial statements and
normal year-end audit adjustments and any pro forma balance sheets and (z) for
the exclusion of the Excluded Subsidiaries), the financial position of the
Persons to which such financial statements relate as at their respective dates
and the results of operations, retained earnings or partners' capital, as the
case may be, and, as applicable, changes in financial position or cash flows of
such Persons for the respective periods to which such statements relate and
(iii) except as disclosed or reflected in such financial statements, or
otherwise set forth herein (including the Schedules hereto), as at June 30,
1995, none of such Persons had any Liability, contingent or otherwise, or any
unrealized or anticipated loss, that, singly or in the aggregate, has had or
might have, insofar as can reasonably be foreseen by the Borrower, a Materially
Adverse Effect on the Borrower and the Consolidated Subsidiaries taken as a
whole.
(b) Future Financial Statements. The financial statements
delivered pursuant to Section 5.01(a) or (b) shall present fairly, in accordance
with Generally Accepted Accounting Principles (except for changes therein or
departures therefrom, subject to satisfaction of the exception set forth in
Section 10.02 and except for the exclusion of the Excluded Subsidiaries), the
consolidated financial position of the Borrower and the Consolidated
Subsidiaries as at their respective dates and the consolidated results of
operations, retained earnings and cash flows of the Borrower and such
Subsidiaries for the respective periods to which such statements relate. The
furnishing of the financial statements pursuant to Section 5.01(a) and (b) shall
constitute a representation and warranty by the Borrower made on the date the
same are furnished to the Administrative Agent to that effect and to the further
effect that, except as disclosed or reflected in such financial statements, as
at the respective dates thereof, neither the Borrower nor any Subsidiary had any
Liability, contingent or otherwise, or any unrealized or anticipated loss, that,
singly or in the aggregate, has had or might have, insofar as can reasonably be
foreseen by the Borrower, a Materially Adverse Effect on the Borrower and the
Consolidated Subsidiaries taken as a whole.
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(c) Historical Information. The Borrower hereby represents and
warrants that all Information (other than the financial statements listed on
Schedule 5.02(a) and financial projections) furnished to the Administrative
Agent or the Banks in writing by or on behalf of the Borrower or any Subsidiary
and concerning such Person, and not the cellular telephone industry generally,
prior to the Agreement Date in connection with or pursuant to the Loan Documents
and the relationships established thereunder, at the time the same was so
furnished, but in the case of Information dated as of a prior date, as of such
date, when taken together (giving effect to Information so furnished that
corrects, supplements or supersedes Information previously furnished), (i) in
the case of any Information prepared in the ordinary course of business, was
correct in all material respects in the light of the purpose for which it was
prepared and (ii) in the case of any Information the preparation of which was
requested by any Bank, (A) did not contain any untrue statement of a material
fact and (B) did not omit to state a material fact necessary in order to make
the statements contained therein not misleading in the light of the
circumstances under which they were made. The Borrower hereby represents and
warrants that all financial projections furnished to the Administrative Agent or
the Banks in writing by or on behalf of the Borrower or any Subsidiary on or
prior to the Closing Date, which are not to be construed as guaranties of the
financial performance of the Borrower and the Consolidated Subsidiaries for the
period or periods to which such projections relate, were based on reasonable
estimates and assumptions made by the Borrower in good faith and are the
projections used in the capitalization and financial planning of the Borrower
and the Consolidated Subsidiaries for such period or periods, and no fact is
known to the Borrower on the Agreement Date or the Closing Date that has not
been disclosed in writing to the Banks that would result in any material change
in any such projections or in any estimate or assumption reflected therein.
(d) Future Information. All Information (other than financial
statements delivered pursuant to Section 5.01(a) or (b)) furnished to the
Administrative Agent or the Banks in writing by or on behalf of the Borrower or
any Subsidiary and concerning such Person, and not the cellular telephone
industry generally, on or after the Agreement Date in connection with or
pursuant to the Loan Documents or in connection with or pursuant to any
amendment or modification of, or waiver of rights under, the Loan Documents,
shall, at the time the same is so furnished, but in the case of Information
dated as of a prior date, as of such date, when taken together (giving effect to
Information so furnished that corrects, supplements or supersedes Information
previously so furnished) (i) in the case of any Information prepared in the
ordinary course of business, be correct in all material respects in the light of
the purpose prepared and (ii) in the case of any Information required by the
terms of the Loan Documents or the preparation of which was requested by any
Bank,
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not contain any untrue statement of a material fact, and not omit to state a
material fact necessary in order to make the statements contained therein not
misleading in the light of the circumstances under which they were made, and the
furnishing of the same to the Administrative Agent or any Bank shall constitute
a representation and warranty by the Borrower made on the date the same are so
furnished to the effect specified in clauses (i) and (ii) above.
Section 5.03. Additional Covenants Relating to Disclosure.
From the Agreement Date and until the Repayment Date, the Borrower shall and
shall cause each Subsidiary to:
(a) Accounting Methods and Financial Records. Maintain a
system of accounting, and keep such books, records and accounts (which shall be
true and complete) as may be required or necessary to permit (i) the preparation
of financial statements required to be delivered pursuant to Sections 5.01(a)
and (b) and (ii) the determination of the compliance of the Borrower and the
Subsidiaries with the terms of the Loan Documents.
(b) Fiscal Year. Unless the Required Agents shall otherwise
consent, maintain the same opening and closing dates for each fiscal year as for
the fiscal year reflected in the Base Financial Statements or, if the opening
and closing dates for the fiscal year reflected in the Base Financial Statements
were determined pursuant to a formula, determine the opening and closing dates
for each fiscal year pursuant to the same formula.
(c) Visits, Inspections and Discussions. Permit
representatives (whether or not officers or employees) of any Bank, from time to
time, as often as may be reasonably requested and upon reasonable notice, but,
unless an Event of Default shall have occurred and be continuing, at such Bank's
expense, to (i) visit any of its premises or property or any premises or
property of others on which any of its property or books and records (or books
and records of others relating to it) may be located, (ii) inspect, and verify
the amount, character and condition of, any of its property, (iii) review and
make extracts from its books and records and books and records of others
relating to it and (iv) discuss its affairs, finances and accounts with its
officers, employees and, upon prior notice to the Borrower and subject to the
Borrower's right, unless an Event of Default shall have occurred and be
continuing, to have a representative present at such discussion, its independent
public accountants (and by this provision the Borrower authorizes such
accountants to discuss the finances and affairs of the Borrower and the
Subsidiaries).
Section 5.04. Authorization of Third Parties to Deliver
Information. The Borrower hereby agrees that any opinion, report or other
Information delivered to the Administrative Agent, the Arranging Agents, the
Managing Agents
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or the Banks pursuant to the Loan Documents (including under Article 2 or this
Article 5) is hereby deemed to have been authorized and directed by the Borrower
to be delivered for the benefit of the Administrative Agent, the Arranging
Agents, the Managing Agents and the Banks.
ARTICLE 6
DEFAULT
Section 6.01. Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary, or within or without the control of the
Borrower, any Subsidiary or any other Loan Party, or be effected by operation of
law or pursuant to any judgment or order of any court or any order, rule or
regulation of any governmental or nongovernmental body:
(a) Any payment of principal of or interest on any of the
Loans or the Notes or of any fee shall not be made when and as due (whether at
maturity, upon mandatory prepayment, by reason of notice of prepayment or
acceleration or otherwise) and in accordance with the terms of this Agreement
and the Notes and, except in the case of payments of principal, such failure
shall continue for three Business Days;
(b) Any Loan Document Representation and Warranty shall at any
time prove to have been incorrect or misleading in any material respect when
made;
(c) (i) The Borrower shall default in the performance or
observance of:
(A) any term, covenant, condition or
agreement contained in (x) Section 4.01(a) (insofar as such
Section requires the preservation of the corporate existence
of each of the Loan Parties), 4.01(e), 4.03 through 4.17, 4.19
through 4.21, 5.01(e)(i), 5.03(b) or 5.03(c) of this Agreement
or (y) Sections 2 and 3 of the Pledge Agreement; or
(B) any term, covenant, condition or
agreement contained in (x) this Agreement or the Pledge
Agreement (other than a term, covenant, condition or agreement
a default in the performance or observance of which is
elsewhere in this Section 6.01 specifically dealt with) or (y)
any other Borrower Loan Document and, in the case of any such
default under clause (x) or (y), if capable of being remedied,
such default shall continue unremedied for a period of 30
days; or
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(ii) Any Loan Party (other than the
Borrower) shall default in the performance or observance of
any term, covenant, condition or agreement contained in any
Loan Document to which such Loan Party is a party, and, if
capable of being remedied, such default shall continue
unremedied for the duration of any applicable cure period
provided for in such Loan Document; or
(d) (i) The Borrower, Holdco or any Subsidiary shall fail to
pay, in accordance with its terms and when due and payable (after giving effect
to any applicable grace period), any of the principal of or interest on any
Indebtedness (other than the Loans and Affiliate Subordinated Obligations)
having a then outstanding principal amount in excess of $15,000,000, (ii) the
maturity of any such Indebtedness shall, in whole or in part, have been
accelerated, or any such Indebtedness shall, in whole or in part, have been
required to be prepaid or purchased prior to the stated maturity thereof (other
than pursuant to any customary due-on-sale clause or any provision requiring
prepayment of such Indebtedness based on excess cash flow or other similar
arrangement), in accordance with the provisions of any Contract evidencing,
providing for the creation of or concerning such Indebtedness or (iii) (A) any
event shall have occurred and be continuing that, after giving effect to any
applicable waivers or amendments, permits (or, with the passage of time or the
giving of notice or both, would permit) any holder or holders of such
Indebtedness, any trustee or agent acting on behalf of such holder or holders or
any other Person so to accelerate such maturity or require any such prepayment
or purchase and (B) if the Contract evidencing, providing for the creation of or
concerning such Indebtedness provides for a cure period for such event, such
event shall not be cured prior to the end of such cure period;
(e) A default by the Borrower or any Subsidiary shall be
continuing under any Contract (other than a Contract relating to Indebtedness to
which clause (a) or (d) of this Section 6.01 is applicable) binding upon the
Borrower, any Subsidiary or any other Loan Party, except a default that,
together with all other such defaults, has not had and will not have a
Materially Adverse Effect on (i) the Borrower and the Consolidated Subsidiaries
taken as a whole or any other Loan Party, (ii) any Material Loan Document or
(iii) the Collateral;
(f) (i) The Borrower, Holdco, any Subsidiary or any other Loan
Party shall (A) commence a voluntary case under the Federal bankruptcy laws (as
now or hereafter in effect), (B) file a petition seeking to take advantage of
any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition or adjustment of debts, (C) consent to
or fail to contest in a timely and appropriate manner any petition filed against
it in an involuntary case under such bankruptcy laws or other laws, (D) apply
for, or consent to, or
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fail to contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee, liquidator or the like
of itself or of a substantial part of its assets, domestic or foreign, (E) admit
in writing its inability to pay, or generally not be paying, its debts (other
than those that are the subject of bona fide disputes) as they become due, (F)
make a general assignment for the benefit of creditors or (G) take any corporate
action for the purpose of effecting any of the foregoing; or
(ii) (A) A case or other proceeding shall be commenced
against the Borrower, Holdco, any Subsidiary or any other Loan Party seeking (x)
relief under the Federal bankruptcy laws (as now or hereafter in effect) or
under any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition or adjustment of debts or (y) the
appointment of a trustee, receiver, custodian, liquidator or the like of the
Borrower, Holdco, any Subsidiary or any other Loan Party, or of all or any
substantial part of the assets, domestic or foreign, of the Borrower, Holdco,
any Subsidiary or any other Loan Party, and such case or proceeding shall
continue undismissed or unstayed for a period of 60 days or (B) an order
granting the relief requested in such case or proceeding against the Borrower,
Holdco, any Subsidiary or any other Loan Party (including an order for relief
under such Federal bankruptcy laws) shall be entered;
(g) A judgment or order shall be entered against the Borrower
or any Subsidiary by any court and (i) in the case of a judgment or order for
the payment of money, such judgment or order shall continue undismissed,
unbonded, undischarged or unstayed for a period of 30 days in which the
aggregate amount of all such judgments and orders exceeds $15,000,000 and (ii)
in the case of any judgment or order for other than the payment of money, such
judgment or order could, in the reasonable judgment of the Required Banks,
together with all other such judgments or orders, have a Materially Adverse
Effect on the Borrower and the Consolidated Subsidiaries taken as a whole;
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(h) (i) any Termination Event shall occur with respect to any
Benefit Plan of the Borrower or any Subsidiary or any of their respective ERISA
Affiliates, (ii) any Accumulated Funding Deficiency, whether or not waived,
shall exist with respect to any such Benefit Plan, (iii) any Person shall engage
in any Prohibited Transaction involving any such Benefit Plan, (iv) the
Borrower, any Subsidiary or any of their respective ERISA Affiliates shall be in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments
owing to any such Benefit Plan that is a Multiemployer Benefit Plan as a result
of such Person's complete or partial withdrawal (as described in Section 4203 or
4205 of ERISA) therefrom, (v) the Borrower, any Subsidiary or any of their
respective ERISA Affiliates shall fail to pay when due an amount that is payable
by it to the PBGC or to any such Benefit Plan under Title IV of ERISA, (vi) a
proceeding shall be instituted by a fiduciary of any such Benefit Plan against
the Borrower, any Subsidiary or any of their respective ERISA Affiliates to
enforce Section 515 of ERISA and such proceeding shall not have been dismissed
within 30 days thereafter or (vii) any other event or condition shall occur or
exist with respect to any such Benefit Plan, except that no event or condition
referred to in clauses (i) through (vii) above shall constitute an Event of
Default if it, together with all other such events or conditions at the time
existing, has not subjected and is not reasonably likely to subject the Borrower
or any Subsidiary to any Liability that, alone or in the aggregate, has had or
could have a Materially Adverse Effect on (x) the Borrower and the Consolidated
Subsidiaries taken as a whole, (y) any Material Loan Document or (z) the
Collateral;
(i) Any Loan Party asserts, or any Loan Party institutes any
proceedings seeking to establish, that (i) any provision of the Loan Documents
is invalid, not binding or unenforceable or (ii) the Security Interest is not a
valid and perfected first priority security interest in the Collateral subject
only to Permitted Liens;
(j) One or more Cellular Licenses held by the Borrower or any
of the Subsidiaries shall be terminated or revoked such that the Borrower and
the Subsidiaries are no longer able to operate the related Cellular Systems and
retain the revenue received therefrom or the Borrower and the Subsidiaries or
the grantors of any such Cellular License shall fail to renew any such Cellular
License at the stated expiration thereof such that the Borrower and the
Subsidiaries are no longer able to operate the related Cellular Systems and
retain the revenue received therefrom, and the overall effect of all such
terminations, revocations and failures to renew would be to reduce Annualized
Cash Flow by 10% or more;
(k) Any of the parties to the Affiliate Subordination
Agreement (other than the Administrative Agent) shall have
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breached any of the provisions thereof or shall otherwise be in default
thereunder;
(l) Comcast shall at any time cease to own, directly or
indirectly, and control Capital Securities issued by the Borrower (i) having a
majority of the total votes of all outstanding Capital Securities entitled to
vote in an ordinary election of the Board of Directors of the Borrower and (ii)
representing not less than 50.01% of the equity ownership interest in the
Borrower;
(m) The Management Agreement shall have been terminated or
shall cease to be in full force and effect or Comcast or a Subsidiary of Comcast
shall at any time fail to manage and supervise pursuant to the Management
Agreement each Cellular System of the Borrower and the Subsidiaries in a manner
consistent with good industry practices;
(n) Holdco shall at any time incur, create, assume or suffer
to exist any Indebtedness other than Permitted Additional Non-Facility
Indebtedness and other than the Comcast Cellular Zeros;
(o) Any of the Capital Securities of the Borrower or any
interest therein shall at any time become subject to a Lien other than a
Permitted Lien and other than a pledge of the Borrower's Class B Participating
Redeemable Preferred Stock in favor of Comcast; and
(p) Any redemption or repurchase of the Borrower's Class B
Participating Redeemable Preferred Stock shall be funded other than with the
capital stock (or other equity investments) or assets of Excluded Subsidiaries
or the proceeds of (i) the sale of GuestInformant (a division of LIN Cellular
Communications Corporation), (ii) cash payments for stock (other than
Mandatorily Redeemable Securities), cash equity contributions and other equity
contributions, so long as, in the case of any non-cash equity contribution, such
redemption or repurchase is effected with such non-cash equity contribution in
the exact form received or with the proceeds thereof realized upon the sale
thereof to a Person other than a Subsidiary, and (iii) Junior Subordinated
Indebtedness, in each case, received by the Borrower or any Subsidiary after the
Agreement Date.
Section 6.02. Remedies upon Event of Default. During the
continuance of any Event of Default (other than one specified in Section 6.01(f)
with respect to the Borrower) and in every such event, the Administrative Agent,
upon notice to the Borrower, may (but shall not be obligated to), and if so
directed by the Required Banks shall, do either or both of the following: (a)
declare, in whole or, from time to time, in part, the principal of and interest
on the Loans and the Notes and all other amounts owing under the Borrower Loan
Documents to be, and
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the Loans and the Notes and all such other amounts shall thereupon and to that
extent become, due and payable and (b) terminate, in whole or, from time to
time, in part, the Commitments. Upon the occurrence of an Event of Default
specified in Section 6.01(f) with respect to the Borrower, automatically and
without any notice to the Borrower, (i) the principal of and interest on the
Loans and the Notes and all other amounts owing under the Borrower Loan
Documents shall be due and payable and (ii) the Commitments shall terminate.
Presentment, demand, protest or notice of any kind (other than
the notice provided for in the first sentence of this Section 6.02) are hereby
expressly waived.
Section 6.03. Certain Cure Rights. Notwithstanding the
provisions of Sections 6.01 and 6.02, but without limiting the obligations of
the Borrower under Sections 4.15, 4.16 and 4.17, if the Borrower shall default
in the performance or observance of any term, covenant, condition or agreement
contained in Sections 4.15, 4.16 or 4.17, such default shall not constitute an
Event of Default (but shall constitute a Default) until the Cure Date, and if on
or before the Cure Date the respective actions set forth below shall have been
taken and evidence thereof shall have been delivered to the Banks, then such
default shall be deemed to have been cured:
(a) With respect to Section 4.15, the Borrower shall have
prepaid Loans, either from cash on hand or the proceeds of new capital
contributions or Junior Subordinated Indebtedness in an aggregate amount
sufficient so that, after giving effect to the application of such prepayments
and the reduction of Consolidated Indebtedness by the amount thereof for the
purpose of determining compliance with Section 4.15, the Borrower would be in
compliance therewith as recalculated at the date of receipt of such proceeds;
and
(b) With respect to Section 4.16 or 4.17, the Borrower shall
have prepaid Loans, either from the proceeds of new capital contributions or the
proceeds of Junior Subordinated Indebtedness, in an amount sufficient so that if
the respective ratios set forth in Section 4.16 or 4.17 as at the date of
receipt of such proceeds were recalculated in a manner which, in the case of
Section 4.16, would include as additional Cash Flow or which, in the case of
Section 4.17, would add to Annualized Cash Flow the amount of such proceeds, the
Borrower would be in compliance with the provisions of Section 4.16 or 4.17 as
at such date;
provided, however, that (i) any such default may not be deemed to be cured
pursuant to this Section 6.03 more than an aggregate of four times during the
term of this Agreement or with respect to more than two consecutive fiscal
quarters of the Borrower and, for purposes of this proviso, in the event that
the receipt and application by the Borrower of the proceeds of any new capital
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contributions or Junior Subordinated Indebtedness shall at any time have the
effect of enabling the Borrower to avoid any such default, the Borrower shall be
deemed to have cured any such default pursuant to this Section 6.03 and (ii) the
recalculations described in this Section 6.03 shall not be deemed to constitute
a recalculation for any other purpose of this Agreement, including the
determination of the Applicable Margin. For purposes of this Section 6.03, "Cure
Date" means, with respect to any breach of the covenants contained in Sections
4.15, 4.16 and 4.17, the date that is 30 days after the earlier of (A) the day
on which financial statements for the fiscal quarter (or fiscal year, in the
case of any such breach occurring in the fourth quarter of any fiscal year) in
which such breach occurred are delivered to the Banks pursuant to Section 5.01
and (B) the day by which such financial statements are required to be delivered
pursuant to Section 5.01.
ARTICLE 7
ADDITIONAL CREDIT FACILITY PROVISIONS
-------------------------------------
Section 7.01. Mandatory Suspension and Conversion of
Eurodollar Rate Loans. A Bank's obligations to make, continue or convert into
Eurodollar Rate Loans of any Type shall be suspended, all such Bank's
outstanding Loans of such Type shall be converted on the last day of their
applicable Interest Periods (or, if earlier, in the case of clause (c) below, on
the last day such Bank may lawfully continue to maintain Loans of such Type or,
in the case of clause (d) below, on the day determined by such Bank to be the
last Business Day before the effective date of the applicable restriction) into,
and all pending requests for the making or continuation of or conversion into
Loans of such Type by such Bank shall be deemed requests for, Base Rate Loans,
if:
(a) on or prior to the determination of an interest rate for a
Eurodollar Rate Loan of such Type for any Interest Period, the Administrative
Agent determines that for any reason appropriate information is not available to
it for purposes of determining the Adjusted Eurodollar Rate for such Interest
Period;
(b) on or prior to the first day of any Interest Period for a
Eurodollar Rate Loan of such Type, the Required Banks have informed the
Administrative Agent of their determination that the Adjusted Eurodollar Rate as
determined by the Administrative Agent for such Interest Period would not
accurately reflect the cost to such Banks of making, continuing or converting
into a Eurodollar Rate Loan of such Type for such Interest Period;
(c) at any time such Bank determines that any
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Regulatory Change makes it unlawful or impracticable for such Bank or its
applicable Lending Office to make, continue or convert into a Eurodollar Rate
Loan of such Type, or to comply with its obligations hereunder in respect
thereof; or
(d) such Bank determines that, by reason of any Regulatory
Change, such Bank or its applicable Lending Office is restricted, directly or
indirectly, in the amount that it may hold of (i) a category of liabilities that
includes deposits by reference to which, or on the basis of which, the interest
rate applicable to Eurodollar Rate Loans of such Type is directly or indirectly
determined or (ii) the category of assets that includes Eurodollar Rate Loans of
such Type.
If, as a result of this Section 7.01, any Loan of any Bank that would otherwise
be made or maintained as or converted into a Eurodollar Rate Loan of any Type
for any Interest Period is instead made or maintained as or converted into a
Base Rate Loan, then, unless the corresponding Loan of each of the other Banks
is also to be made or maintained as or converted into a Base Rate Loan, such
Loan shall be treated as being a Eurodollar Rate Loan of such Type for such
Interest Period for all purposes of this Agreement (including the timing,
application and proration among the Banks of interest payments, conversions and
prepayments) except for the calculation of the interest rate borne by such Loan.
The Administrative Agent shall promptly notify the Borrower and each Bank of the
existence or occurrence of any condition or circumstance specified in clause (a)
above, and each Bank shall promptly notify the Borrower and the Administrative
Agent of the existence, occurrence or termination of any condition or
circumstance specified in clause (b), (c) or (d) above applicable to such Bank's
Loans, but the failure by the Administrative Agent or such Bank to give any such
notice shall not affect such Bank's rights hereunder.
Section 7.02. Regulatory Changes. If in the determination of
any Bank (a) any Regulatory Change shall directly or indirectly (i) reduce the
amount of any sum received or receivable by such Bank with respect to any Loan
or the return to be earned by such Bank on any Loan, (ii) impose a cost on such
Bank or any Affiliate of such Bank that is attributable to the making or
maintaining of, or such Bank's commitment to make, any Loan, (iii) require such
Bank or any Affiliate of such Bank to make any payment on or calculated by
reference to the gross amount of any amount received by such Bank under any Loan
Document or (iv) reduce, or have the effect of reducing, the rate of return on
any capital of such Bank or any Affiliate of such Bank that such Bank or such
Affiliate is required to maintain on account of any Loan or such Bank's
commitment to make any Loan and (b) such reduction, increased cost or payment
shall not be fully compensated for by an adjustment in the applicable rates of
interest payable under the Loan Documents, then the Borrower shall pay to such
Bank such additional amounts as such Bank
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determines will, together with any adjustment in the applicable rates of
interest payable hereunder, fully compensate for such reduction, increased cost
or payment. Such additional amounts shall be payable, in the case of those
applicable to prior periods, within 15 Business Days after request by such Bank
for such payment accompanied by the certificate described in Section 7.05 and,
in the case of those applicable to future periods, on the dates specified, or
determined in accordance with a method specified, by such Bank. Each Bank will
promptly notify the Borrower of any determination made by it referred to in
clauses (a) and (b) above, but the failure to give such notice shall not affect
such Bank's right to such compensation; provided, however, that the Borrower
shall not be required to pay such additional amounts in respect of any
Regulatory Change for any period ending prior to the date that is 90 days prior
to the giving of the notice of the determination of such additional amounts
(unless such period shall have commenced after the date that such Bank notified
the Borrower of the possibility that additional amounts may be payable as a
result of such Regulatory Change), except, if such Regulatory Change shall have
been imposed retroactively, for the period from the effective date of such
Regulatory Change to the date that is 90 days after the first date on which such
Bank reasonably should have had knowledge of such Regulatory Change.
Section 7.03. Capital Requirements. If, in the determination
of any Bank, such Bank or any Affiliate of such Bank is required, as a result of
a Regulatory Change, to maintain capital on account of any Loan or such Bank's
commitment to make any Loan, then, upon request by such Bank, the Borrower shall
from time to time thereafter pay to such Bank such additional amounts as such
Bank determines will fully compensate for any reduction in the rate of return on
the capital that such Bank or such Affiliate is so required to maintain on
account of such Loan or commitment suffered as a result of such capital
requirement. Such additional amounts shall be payable, in the case of those
applicable to prior periods, within 15 Business Days after request by such Bank
for such payment accompanied by the certificate described in Section 7.05 and,
in the case of those relating to future periods, on the dates specified, or
determined in accordance with a method specified, by such Bank; provided,
however, that the Borrower shall not be required to pay such additional amounts
in respect of any Regulatory Change for any period ending prior to the date that
is 90 days prior to the making of such Bank's initial request for such
additional amounts (unless such period shall have commenced after the date that
such Bank notified the Borrower of the possibility that additional amounts may
be payable as a result of such Regulatory Change), except, if such Regulatory
Change shall have been imposed retroactively, for the period from the effective
date of such Regulatory Change to the date that is 90 days after the first date
on which such Bank reasonably should have had knowledge of such Regulatory
Change.
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Section 7.04. Funding Losses. The Borrower shall pay to each
Bank, upon request, such amount or amounts as such Bank determines are necessary
to compensate it for any loss, cost or expense (excluding loss of the Applicable
Margin) incurred by it as a result of (a) any payment, prepayment or conversion
of a Eurodollar Rate Loan on a date other than the last day of an Interest
Period for Eurodollar Rate Loan or (b) a Eurodollar Rate Loan for any reason not
being made or converted (other than as a result of the failure of such Bank to
make such Loan available to the Borrower upon the fulfillment of the conditions
specified in Article 2 without any determination by the Administrative Agent or
such Bank under Section 7.01), or any payment of principal thereof or interest
thereon not being made, on the date therefor determined in accordance with the
applicable provisions of this Agreement. At the election of such Bank, and
without limiting the generality of the foregoing, but without duplication, such
compensation on account of losses may include an amount equal to the excess of
(i) the interest that would have been received from the Borrower under this
Agreement (excluding the Applicable Margin) on any amounts to be reemployed
during an Interest Period or its remaining portion over (ii) the interest
component of the return that such Bank determines it could have obtained had it
placed such amount on deposit in the London interbank Dollar market for a period
equal to such Interest Period or remaining portion.
Section 7.05. Determinations. In making the determinations
contemplated by Sections 7.01, 7.02, 7.03 and 7.04, each Bank may make such
estimates, assumptions, allocations and the like that such Bank in good faith
determines to be appropriate, and such Bank's selection thereof in accordance
with this Section 7.05, and the determinations made by such Bank on the basis
thereof, shall be final, binding and conclusive upon the Borrower, except, in
the case of such determinations, for manifest errors in computation or
transmission. Each Bank shall furnish to the Borrower, at the time of any
request for compensation under Section 7.02 or 7.03 and otherwise upon request,
a certificate outlining in reasonable detail the computation of any amounts
claimed by it under this Article 7 and the assumptions underlying such
computations, which shall include a statement of an officer of such Bank
certifying that such request for compensation is being made pursuant to a policy
adopted by such Bank to seek such compensation generally from customers similar
to the Borrower and having similar provisions in agreements with such Bank.
Section 7.06. Change of Lending Office. If an event occurs
with respect to a Lending Office of any Bank that obligates the Borrower to pay
any amount under Section 1.12, makes operable the provisions of Section 7.01(c)
or (d) or entitles such Bank to make a claim under Section 7.02 or 7.03, such
Bank shall, if requested by the Borrower, use reasonable efforts to designate
another Lending Office or Offices the
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designation of which will reduce the amount the Borrower is so obligated to pay,
eliminate such operability or reduce the amount such Bank is so entitled to
claim, provided that such designation would not, in the sole and absolute
discretion of such Bank, be disadvantageous to such Bank in any manner or
contrary to such Bank's policies. Each Bank may at any time and from time to
time change any Lending Office and shall give notice of any such change to the
Administrative Agent and the Borrower. Except in the case of a change in Lending
Offices made at the written request of the Borrower, the designation of a new
Lending Office by any Bank shall not obligate the Borrower to pay any amount to
such Bank under Section 1.12, make operable the provisions of Section 7.01(c) or
(d) or entitle such Bank to make a claim under Section 7.02 or 7.03 if such
obligation, the operability of such clause or such claim results solely from
such designation and not from a Regulatory Change subsequent to such
designation.
Section 7.07. Replacement of Banks. If any Bank requests
compensation pursuant to Section 1.12, 7.02 or 7.03, or such Bank's obligation
to make or continue, or to convert Loans of any other Type into, any Type of
Eurodollar Rate Loan shall be suspended pursuant to Section 7.01, the Borrower,
upon three Business Days' notice, may require that such Bank transfer all of its
right, title and interest under this Agreement and such Bank's Notes to any bank
or financial institution identified by the Borrower with the consent of the
Administrative Agent (which consent shall not be unreasonably withheld) (a) if
such proposed transferee agrees to assume all of the obligations of such Bank
for consideration equal to the outstanding principal amount of such Bank's
Loans, together with interest thereon to the date of such transfer, and
satisfactory arrangements are made for payment to such Bank of all other amounts
payable hereunder to such Bank on or prior to the date of such transfer
(including any fees accrued hereunder and any amounts that would be payable
under Section 7.04 as if all of such Bank's Loans were being prepaid in full on
such date) and (b) if such Bank being replaced has requested compensation
pursuant to Section 1.12, 7.02 or 7.03, such proposed transferee's aggregate
requested compensation, if any, pursuant to Section 1.12, 7.02 or 7.03 with
respect to such replaced Bank's Loans is lower than that of the Bank replaced.
Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements of the Borrower contained in Sections 1.12, 7.02,
7.03, 7.04 and 9.02 (without duplication of any payments made to such Bank by
the Borrower or the proposed transferee) shall survive for the benefit of any
Bank replaced under this Section 7.07 with respect to the time prior to such
replacement.
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ARTICLE 8
THE AGENTS
----------
Section 8.01. Appointment and Powers. Each Bank hereby
irrevocably appoints and authorizes the Agents, individually in their respective
capacities as Agents, to act as the agents for such Bank under the Loan
Documents with such powers as are delegated to the respective Agents by the
terms thereof, together with such other powers as are reasonably incidental
thereto. The Agents' duties shall be purely ministerial and they shall have no
duties or responsibilities except those expressly set forth in the Loan
Documents. None of the Agents shall be required under any circumstances to take
any action that, in its judgment, (a) is contrary to any provision of the Loan
Documents or Applicable Law or (b) would expose it to any Liability or expense
against which it has not been indemnified to its satisfaction. None of the
Agents shall, by reason of its serving as an Agent, be a trustee or other
fiduciary for any Bank. By its execution and delivery hereof, each Bank, in its
capacity as a Bank and in its capacity, if any, as a party to an Interest Rate
Protection Agreement, authorizes the Administrative Agent to act as its agent
under, and to execute and deliver, in its name and on its behalf, the Pledge
Agreement and the Affiliate Subordination Agreement. The Administrative Agent
shall consent to any amendment of any term, covenant, agreement or condition of,
or to any waiver of any right under, the Pledge Agreement or the Affiliate
Subordination Agreement if, but only if, but subject to Section 9.07, the
Administrative Agent is directed to do so in writing by the Required Banks;
provided, however, that the Administrative Agent shall not be required to
consent to any such amendment or waiver that affects its rights or duties.
Section 8.02. Limitation on Agents' Liability. None of the
Agents nor any of their respective directors, officers, employees or agents
shall be liable or responsible for any action taken or omitted to be taken by
them under or in connection with the Loan Documents, except for its or their own
gross negligence or willful misconduct. None of the Agents shall be responsible
to any Bank for (a) any recitals, statements, representations or warranties
contained in the Loan Documents or in any certificate or other document referred
to or provided for in, or received by any of the Banks under, the Loan
Documents, (b) the validity, effectiveness or enforceability of the Loan
Documents or any such certificate or other document, (c) the value or
sufficiency of the Collateral or (d) any failure by the Loan Parties to perform
any of their obligations under the Loan Documents. Each of the Agents may employ
agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact so long as such Agent was not
grossly negligent in selecting or directing such agents or attorneys-in-fact.
Each of the Agents shall be entitled to rely upon any
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certification, notice or other communication (including any thereof by
telephone, telex, telecopier, telegram or cable) believed by it to be genuine
and correct and to have been signed or given by or on behalf of the proper
Person or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by such Agent. As to any matters not
expressly provided for by the Loan Documents, each of the Agents shall in all
cases be fully protected in acting, or in refraining from acting, under the Loan
Documents in accordance with instructions signed by the Required Banks, and such
instructions of the Required Banks and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks.
Section 8.03. Defaults. The Administrative Agent shall not be
deemed to have knowledge of the occurrence of a Default (other than the
non-payment to it of fees or principal of or interest on Loans) unless the
Administrative Agent has received notice from a Bank or the Borrower specifying
such Default and stating that such notice is a "Notice of Default." In the event
that the Administrative Agent receives such a notice of the occurrence of a
Default, the Administrative Agent shall give prompt notice thereof to the Banks.
In the event of any Default, the Administrative Agent shall (a) in the case of a
Default that constitutes an Event of Default, take either or both of the actions
referred to in Section 6.02(a) and Section 6.02(b) if so directed by the
Required Banks and (b) in the case of any Default, take such other action with
respect to such Default as shall be reasonably directed by the Required Banks.
Unless and until the Administrative Agent shall have received such directions,
in the event of any Default, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable in the best interests of the Banks.
Section 8.04. Rights as a Bank. Each Person acting as an Agent
that is also a Bank shall, in its capacity as a Bank, have the same rights and
powers under the Loan Documents as any other Bank and may exercise the same as
though it were not acting as an Agent, and the term "Bank" or "Banks" shall
include such Person in its individual capacity. Each Person acting as an Agent
and its Affiliates may (without having to account therefor to any Bank) accept
deposits from, lend money to and generally engage in any kind of banking, trust
or other business with the Loan Parties and their Affiliates as if it were not
acting as an Agent, and such Person and its Affiliates may accept fees and other
consideration from the Borrower and its Affiliates for services in connection
with the Loan Documents or otherwise without having to account for the same to
the Banks.
Section 8.05. Indemnification. The Banks agree to indemnify
each of the Agents (to the extent not reimbursed by the Loan Parties under the
Loan Documents), ratably on the basis of
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the respective principal amounts of the Loans outstanding made by the Banks (or,
if no Loans are at the time outstanding, ratably on the basis of their
respective Commitments), for any and all Liabilities, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against such Agent in its capacity as an Agent (including the costs and expenses
that the Loan Parties are obligated to pay under the Loan Documents) in any way
relating to or arising out of the Loan Documents or any other documents
contemplated thereby or referred to therein or the transactions contemplated
thereby or the enforcement of any of the terms thereof or of any such other
documents, provided that no Bank shall be liable for any of the foregoing to the
extent they arise from gross negligence or willful misconduct by such Agent.
Section 8.06. Non-Reliance on Agents and Other Banks. Each
Bank agrees that it has made and will continue to make, independently and
without reliance on any of the Agents or any other Bank, and based on such
documents and information as it deems appropriate, its own credit analysis of
the Loan Parties, its own evaluation of the Collateral and its own decision to
enter into the Loan Documents and to take or refrain from taking any action in
connection therewith. None of the Agents shall be required to keep itself
informed as to the performance or observance by the Loan Parties of the Loan
Documents or any other document referred to or provided for therein or to
inspect the properties or books of any Loan Party or any Subsidiary thereof or
the Collateral. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Administrative Agent
under the Loan Documents, none of the Agents shall have any obligation to
provide any Bank with any information concerning the business, status or
condition of any Loan Party or any Subsidiary thereof, the Loan Documents or the
Collateral that may come into the possession of such Agent or any of its
Affiliates.
Section 8.07. Resignation of the Administrative Agent. Subject
to the appointment and acceptance of a successor Administrative Agent as
provided below, the Administrative Agent may resign at any time by giving notice
thereof to the Banks and the Borrower. Upon receipt of any such notice of
resignation, the Required Banks may, with the consent of the Borrower (which
consent shall not be unreasonably withheld), appoint any bank or financial
institution as the successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Required Banks and
shall have accepted such appointment within 30 days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Banks and with the consent of the
Borrower (which consent shall not be unreasonably withheld), appoint any bank or
financial institution as the successor Administrative Agent. Upon the acceptance
by any Person of its appointment as a
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successor Administrative Agent, such Person shall thereupon succeed to and
become vested with all the rights, powers, privileges, duties and obligations of
the retiring Administrative Agent and the retiring Administrative Agent shall be
discharged from its duties and obligations as Administrative Agent under the
Loan Documents. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Article 8 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Administrative Agent.
ARTICLE 9
MISCELLANEOUS
Section 9.01. Notices and Deliveries.
(a) Manner of Delivery. All notices, communications and
materials (including all Information) to be given or delivered pursuant to the
Borrower Loan Documents shall, except in those cases where giving notice by
telephone is expressly permitted, be given or delivered in writing (which shall
include telecopy transmissions). Notices under Sections 1.02, 1.03(c), 1.05,
1.07 and 6.02 may be by telephone, promptly confirmed in writing. In the event
of a discrepancy between any telephonic notice and any written confirmation
thereof, such written confirmation shall be deemed the effective notice except
to the extent that the Administrative Agent has acted in reliance on such
telephonic notice.
(b) Addresses. All notices, communications and materials to be
given or delivered pursuant to the Borrower Loan Documents shall be given or
delivered at the following respective addresses and telecopier and telephone
numbers and to the attention of the following individuals or departments:
(i) if to the Borrower, to it at:
1105 Market Street
Suite 1219
Wilmington, DE 19801
Telecopier No.: (302) 427-7664
Telephone No.: (302) 427-8991
Attention: Howard Grabelle
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with a copy to:
1500 Market Street
Philadelphia, PA 19102
Telecopier No.: (215) 981-7744
Telephone No.: (215) 981-7503
Attention: John R. Alchin, Senior
Treasurer
(ii) if to the Administrative Agent, to it
at:
909 Fannin Street
Suite 1700
Houston, Texas 77010
Telecopier No.: (713) 951-9921
Telephone No.: (713) 653-8235
Attention: Manager, Agency
(iii) if to any Bank, to it at the address
or telecopier or telephone number and
to the attention of the individual or
department set forth below such
Bank's name under the heading "Notice
Address" on Annex A or, in the case
of a Bank that becomes a Bank
pursuant to an assignment, set forth
under the heading "Notice Address" in
the Notice of Assignment given to the
Borrower and the Administrative Agent
with respect to such assignment;
or at such other address or telecopier or telephone number or to the attention
of such other individual or department as the party to which such information
pertains may hereafter specify for the purpose in a notice specifically
captioned "Notice of Change of Address" given to (x) if the party to which such
information pertains is the Borrower, the Administrative Agent and each Bank,
(y) if the party to which such information pertains is the Administrative Agent,
the Borrower and each Bank and (z) if the party to which such information
pertains is a Bank, the Borrower and the Administrative Agent.
(c) Effectiveness. Each notice and communication and any
material to be given or delivered pursuant to the Borrower Loan Documents shall
be deemed so given or delivered (i) if sent by registered or certified mail,
postage prepaid, return receipt
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requested, on the third Business Day after such notice, communication or
material, addressed as above provided, is delivered to a United States post
office and a receipt therefor is issued thereby, (ii) if sent by any other means
of physical delivery, when such notice, communication or material is delivered
to the appropriate address as above provided, (iii) if sent by telecopier, when
such notice, communication or material is transmitted to the appropriate
telecopier number as above provided and is received at such number and (iv) if
given by telephone, when communicated to the individual or any member of the
department specified as the individual or department to whose attention notices,
communications and materials are to be given or delivered, or, in the case of
notice by the Administrative Agent to the Borrower under Section 6.02 given by
telephone as above provided, if any individual or any member of the department
to whose attention notices, communications and materials are to be given or
delivered is unavailable at the time, to any other officer of the Borrower,
except that notices of a change of address, telecopier or telephone number or
individual or department to whose attention notices, communications and
materials are to be given or delivered shall not be deemed given until received.
Section 9.02. Expenses; Indemnification. Whether or
not any Loans are made hereunder, the Borrower shall:
(a) pay or reimburse the Administrative Agent and each Bank
for all transfer, documentary, stamp and similar taxes, and all recording and
filing fees and taxes, payable in connection with, arising out of, or in any way
related to, the execution, delivery and performance of the Loan Documents or the
making of the Loans, excluding any such taxes imposed as a result of the
assignment of any Loan or portion thereof;
(b) pay or reimburse the Administrative Agent for all
reasonable out-of-pocket costs and expenses (including reasonable fees and
disbursements of legal counsel collectively retained by the Arranging Agents and
the Managing Agents or, other than with respect to clause (i) below, appraisers,
accountants and other experts employed or retained collectively by the Arranging
Agents and the Managing Agents or the Administrative Agent) incurred by the
Administrative Agent (or, in the case of fees and disbursements of legal
counsel, the Arranging Agents and the Managing Agents) in connection with,
arising out of, or in any way related to (i) the negotiation, preparation,
execution and delivery of (A) the Loan Documents and (B) whether or not
executed, any waiver, amendment or consent thereunder or thereto, (ii) the
administration of and any operations under the Loan Documents, (iii) consulting
with respect to any matter in any way arising out of, related to, or connected
with, the Loan Documents, including (A) the protection or preservation of the
Collateral, (B) the protection, preservation, exercise or enforcement of any of
the rights of the Administrative Agent or
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the Banks in, under or related to the Collateral or the Loan Documents during a
Default or (C) the performance of any of the obligations of the Administrative
Agent or the Banks under or related to the Loan Documents, (iv) protecting or
preserving the Collateral or (v) protecting, preserving, exercising or enforcing
any of the rights of the Administrative Agent or the Banks in, under or related
to the Collateral or the Loan Documents during a Default, including defending
the Security Interest as a valid, perfected, first priority security interest in
the Collateral subject only to Permitted Liens;
(c) pay or reimburse each Bank for all reasonable costs and
expenses (including reasonable fees and disbursements of legal counsel and other
experts employed or retained by such Bank) incurred by such Bank in connection
with, arising out of, or in any way related to protecting, preserving,
exercising or enforcing during a Default any of its rights in, under or related
to the Collateral or the Loan Documents; and
(d) indemnify and hold each Indemnified Person harmless from
and against all losses (including judgments, penalties and fines) suffered, and
pay or reimburse each Indemnified Person for all costs and reasonable expenses
(including reasonable fees and disbursements of legal counsel and other experts
employed or retained by such Indemnified Person) incurred, by such Indemnified
Person in connection with, arising out of or in any way related to (i) any Loan
Document Related Claim (whether asserted by such Indemnified Person or the
Borrower or any other Person), including the prosecution or defense thereof and
any litigation or proceeding with respect thereto (whether or not, in the case
of any such litigation or proceeding, such Indemnified Person is a party
thereto), or (ii) any investigation, governmental or otherwise, arising out of,
related to, or in any way connected with, the Loan Documents or the
relationships established thereunder, except that the foregoing indemnity shall
not be applicable to (A) any loss suffered by any Indemnified Person to the
extent such loss is determined by a judgment of a court that is binding on the
Borrower and such Indemnified Person, final and not subject to review on appeal
to be the result of acts or omissions on the part of such Indemnified Person
constituting gross negligence or willful misconduct or (B) any such losses,
costs and expenses incurred in connection with any examination of such
Indemnified Person by governmental authorities and arising other than with
respect to this Agreement and the Loans specifically.
Section 9.03. Amounts Payable Due upon Request for Payment.
All amounts payable by the Borrower under Section 9.02 and under the other
provisions of the Borrower Loan Documents shall, except as otherwise expressly
provided, be immediately due upon request for the payment thereof accompanied by
a certificate of the requesting Bank setting forth the basis for the request and
the computation for the amount thereof in reasonable detail.
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Section 9.04. Remedies of the Essence. The various rights and
remedies of the Administrative Agent and the Banks under the Borrower Loan
Documents are of the essence of those agreements, and the Administrative Agent
and the Banks shall be entitled to obtain a decree requiring specific
performance of each such right and remedy.
Section 9.05. Rights Cumulative. Each of the rights and
remedies of the Administrative Agent and the Banks under the Loan Documents
shall be in addition to all of their other rights and remedies under the Loan
Documents and Applicable Law, and nothing in the Loan Documents shall be
construed as limiting any such rights or remedies.
Section 9.06. Confidentiality. Each Bank agrees to exercise
all reasonable efforts to keep any information delivered or made available by
the Borrower confidential from anyone other than persons employed or retained by
such Bank who are or are expected to become engaged in evaluating, approving,
structuring or administering the Loans; provided, however, that nothing herein
shall prevent any Bank from disclosing such information (a) to any Affiliate of
such Bank or to any other Bank, (b) upon the order of any court or
administrative agency, (c) upon the request or demand of any regulatory agency
or authority having jurisdiction over such Bank, (d) that has been publicly
disclosed, (e) in connection with any litigation relating to the Loans, this
Agreement or any transaction contemplated hereby to which any Bank, any Loan
Party or any Agent may be a party, (f) to the extent reasonably required in
connection with the exercise of any remedy hereunder, (g) to such Bank's legal
counsel and independent auditors and (h) to any actual or proposed participant
or assignee of all or any part of its Loans hereunder, if such other Person,
prior to such disclosure, agrees for the benefit of the Borrower to comply with
the provisions of this Section 9.06.
Section 9.07. Amendments; Waivers. Any term, covenant,
agreement or condition of any Loan Document to which the Banks are party may be
amended, and any right under the Loan Documents may be waived, if, but only if,
such amendment or waiver is in writing and is signed by the Required Banks and,
if the rights and duties of the Administrative Agent are affected thereby, by
the Administrative Agent and by each Loan Party that is a party thereto;
provided, however, that no such amendment or waiver shall be effective, unless
in writing and signed by each Bank affected thereby, to the extent it (a)
changes the amount or extends the term of such Bank's Commitment, (b) reduces
the principal of or the rate of interest on such Bank's Loans or Notes or any
fees payable to such Bank hereunder, (c) postpones any date fixed for, or
reduces the amount of, any scheduled payment of principal of or interest on such
Bank's Loans or Notes or any fees payable to such Bank hereunder or any
scheduled
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reduction of Commitments, (d) amends or waives Section 1.05(b)(i), (ii) or (v)
or Section 1.07 (as such Section relates to Section 1.05(b)(i), (ii) or (v)), or
amends any of the defined terms used therein, in a manner that has the effect of
postponing any date fixed for, or reducing the amount of, any mandatory payment
of principal or interest on such Bank's Loans or Notes or any fees payable to
such Bank hereunder or any mandatory reduction of Commitments (other than any
such amendment or waiver providing for the issuance or otherwise providing for
the treatment hereunder of, Mandatorily Redeemable Securities), (e) releases any
portion of the Collateral from the Security Interest (except that assets (other
than Capital Securities of a Subsidiary) received by the Borrower as the result
of the liquidation or dissolution of Amcell or one or more of its Subsidiaries
or the merger or consolidation of Amcell or one or more of its Subsidiaries with
the Borrower may be released with the consent of the Required Banks and no fewer
than four of the five Arranging Agents), (f) waives any material condition
precedent under Section 2.01 or 2.02 (as Section 2.02 applies to the initial
Loans hereunder), (g) amends or waives the proviso to Section 4.09(a) or Section
9.10(a)(i)(A), (B) or (C) or (h) amends this Section 9.07 or any provision of
this Agreement or the other Loan Documents requiring the consent or other action
of all of the Banks. Unless otherwise specified in such waiver, a waiver of any
right under the Borrower Loan Documents shall be effective only in the specific
instance and for the specific purpose for which given. No election not to
exercise, failure to exercise or delay in exercising any right, nor any course
of dealing or performance, shall operate as a waiver of any right of the
Administrative Agent or any Bank under the Borrower Loan Documents or Applicable
Law, nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right of the
Administrative Agent or any Bank under the Borrower Loan Documents or Applicable
Law.
Section 9.08. Set-Off; Suspension of Payment and Performance.
The Administrative Agent and each Bank is hereby authorized by the Borrower, at
any time and from time to time, without prior notice, (a) during any Event of
Default, to set off against, and to appropriate and apply to the payment of, the
Liabilities of the Borrower under the Borrower Loan Documents (whether owing to
such Person or to any other Person that is the Administrative Agent or a Bank
and whether matured or unmatured, fixed or contingent or liquidated or
unliquidated) any and all Liabilities owing by such Person to the Borrower
(whether payable in Dollars or any other currency, whether matured or unmatured
and, in the case of Liabilities that are deposits, whether general or special,
time or demand and however evidenced and whether maintained at a branch or
office located within or without the United States) and (b) during any Default,
to suspend the payment and performance of such Liabilities owing by such Person
and, in the case of Liabilities that are deposits, to
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return as unpaid for insufficient funds any and all checks and other items drawn
against such deposits. The Person so setting off against any such Liabilities of
the Borrower or suspending payment or performance of any such Liabilities of
such Person, as the case may be, shall give the Borrower notice thereof promptly
following such set-off or suspension, but any failure to give or delay in giving
such notice shall not affect such Person's right to so set off or suspend
payment or performance.
Section 9.09. Sharing of Recoveries. (a) Each Bank agrees
that, if, for any reason, including as a result of (i) the exercise of any right
of counterclaim, set-off, banker's lien or similar right, (ii) its claim in any
applicable bankruptcy, insolvency or other similar proceeding being deemed
secured by a Debt owed by it to any Loan Party, including a claim deemed secured
under Section 506 of the Bankruptcy Code, or (iii) the allocation of payments by
the Administrative Agent or any Loan Party in a manner contrary to the
provisions of Section 1.14, such Bank shall receive payment of a proportion of
the aggregate amount due and payable to it hereunder as principal, interest or
fees that is greater than the proportion received by any other Bank in respect
of the aggregate of such amounts due and payable to such other Bank hereunder,
then the Bank receiving such proportionately greater payment shall purchase
participations (which it shall be deemed to have done simultaneously upon the
receipt of such payment) in the rights of the other Banks hereunder so that all
such recoveries with respect to such amounts due and payable hereunder (net of
costs of collection) shall be pro rata; provided, however, that if all or part
of such proportionately greater payment received by the purchasing Bank is
thereafter recovered by or on behalf of any Loan Party from such Bank, such
purchases shall be rescinded and the purchase prices paid for such participation
shall be returned to such Bank to the extent of such recovery, but without
interest (unless the purchasing Bank is required to pay interest on the amount
recovered to the Person recovering such amount, in which case the selling Bank
shall be required to pay interest at a like rate). The Borrower expressly
consents to the foregoing arrangements and agrees that any holder of a
participation in any rights hereunder so purchased or acquired pursuant to this
Section 9.09(a) shall, with respect to such participation, be entitled to all of
the rights of a Bank under Sections 7.02, 9.02 and 9.08 and may exercise any and
all rights of set-off with respect to such participation as fully as though the
Borrower were directly indebted to the holder of such participation for Loans in
the amount of such participation.
(b) Notwithstanding anything to the contrary contained herein,
Section 9.09(a) shall not be deemed to limit each Bank's entitlement to exercise
any right of counterclaim, set-off, banker's lien or similar right that it may
have in respect of the Borrower in any manner as it may choose and to apply the
amount subject to such exercise to the payment of Liabilities of the
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Borrower other than obligations subject to the sharing provisions of Section
9.09(a).
Section 9.10. Assignments and Participations. (a) Assignments.
(i) The Borrower may not assign any of its rights or obligations under the
Borrower Loan Documents without the prior written consent of the Administrative
Agent and each Bank, and no assignment of any such obligation shall release the
Borrower therefrom unless the Administrative Agent or each Bank, as applicable,
shall have consented to such release in a writing specifically referring to the
obligation from which the Borrower is to be released; provided, however, that
the Borrower may, upon the prior written consent of the Required Banks, assign
all of its rights and obligations under the Borrower Loan Documents to a
Permitted Successor, so long as (A) no Default shall have occurred and be
continuing at the time any such assignment is to be made or would result from
the making of such assignment, (B) each Loan Document Representation and
Warranty shall be true and correct in all material respects at and as of the
time such assignment is to be made and after giving effect thereto, and (C) the
Arranging Agents and the Managing Agents shall have received (1) such items
described in Section 2.01(a) (other than clauses (vi) and (xii) thereof) as they
shall request, in each case as of the date of such assignment and with respect
to such Permitted Successor, including a pledge agreement, substantially in the
form of the Pledge Agreement and with respect to the Collateral, duly executed
and delivered by such Permitted Successor, and (2) executed copies of all
documents effecting such assignment of rights and obligations of the Borrower,
in scope, form and substance satisfactory to the Required Agents.
(ii) Each Bank may from time to time assign any or
all of its rights and obligations under the Loan Documents and with respect to
the Collateral to one or more banks or other financial institutions with (except
in the case of any assignment by a Bank to an Affiliate of such Bank) the
consent of the Borrower and the Administrative Agent (which consents shall not
be unreasonably withheld); provided, however, that no such assignment shall be
effective unless and until (x) a Notice of Assignment with respect thereto, duly
executed by the assignor and the assignee, shall have been given to the Borrower
and the Administrative Agent and (y) except in the case of an assignment by any
Bank to an Affiliate of such Bank, the Administrative Agent shall have been paid
an assignment fee of $2,500; provided further, however, that, unless the
Borrower and the Administrative Agent shall have otherwise consented, no such
partial assignment, other than a partial assignment by any Bank to an Affiliate
of such Bank, shall be made or shall be effective unless (1) if such assignment
is made other than to another Bank, the amount thereof is not less than
$5,000,000 and (2) after giving effect to such assignment and all other
assignments made and participations granted by such Bank, the Commitment (or, if
the Total Commitment shall have terminated, the Loans), net of
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the amount of such participations, retained by such Bank is not less than (aa)
in the case of each Arranging Agent, $35,000,000, (bb) in the case of each
Managing Agent, $30,000,000 and (cc) in the case of each other Bank, 50% of the
Commitment of such Bank hereunder in effect on the Agreement Date or, if such
Bank became a Bank pursuant to an assignment, on the day it became a Bank. Any
such assignment by a Bank of any or all of its obligations under the Borrower
Loan Documents shall release such Bank therefrom. No such assignment by a Bank
of any or all of its obligations under the Borrower Loan Documents to any
Affiliate of such Bank shall obligate the Borrower to pay any amount to the
assignee Bank under Section 1.12, make operable the provisions of Section
7.01(c) or (d) or entitle such assignee Bank to make a claim under Section 7.02
or 7.03 if such obligation, the operability of such clause or such claim results
solely from such assignment and not from a Regulatory Change subsequent to such
assignment. In the event of any such assignment by a Bank, the Borrower shall
issue new Notes to the assignee Bank (against, other than in the case of a
partial assignment, receipt of the applicable existing Note of the assignor
Bank). Nothing in this Section 9.10 shall limit the right of any Bank to assign
its interest in the Loans and Notes to a Federal Reserve Bank as collateral
security under Regulation A of the Board of Governors of the Federal Reserve
System, but no such assignment shall release such Bank from its obligations
hereunder.
(b) Participations. Each Bank may from time to time sell or
otherwise grant participations in any or all of its rights and obligations under
the Borrower Loan Documents and with respect to the Collateral without the
consent of the Borrower, the Administrative Agent or any other Bank; provided,
however, that, unless the Borrower and the Administrative Agent shall have
otherwise consented, no such participation, other than a participation sold or
granted by any Bank to an Affiliate of such Bank, shall be made or shall be
effective unless (i) the amount thereof is not less than $5,000,000 and (ii)
after giving effect to such participation and all other participations granted
and assignments made by such Bank, the Commitment (or, if the Total Commitment
shall have terminated, the Loans), net of the amount of such participations,
retained by such Bank is not less than (1) in the case of each Arranging Agent,
$35,000,000, (2) in the case of each Managing Agent, $30,000,000 and (3) in the
case of each other Bank, 50% of the Commitment of such Bank hereunder in effect
on the Agreement Date or, if such Bank became a Bank pursuant to an assignment,
on the day it became a Bank. No sale by a Bank of any participation shall
relieve such Bank of any of its obligations to the Borrower hereunder.
(c) Rights of Assignees and Participants. Each assignee of,
and each holder of a participation in, the rights of any Bank under the Borrower
Loan Documents and with respect to the Collateral, if and to the extent the
applicable assignment or participation agreement so provides, (i) shall, in the
case of
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assignees and with respect to its assignment, be entitled to all of the rights
of a Bank and (ii) may exercise any and all rights of set-off or banker's lien
with respect thereto (as fully, in the case of a holder of a participation, as
though the Borrower were directly indebted to such holder for amounts payable
under the Borrower Loan Documents to which such holder is entitled under the
applicable participation agreement); provided, however, that each such
participation agreement shall provide that the Bank that shall have sold or
granted the participation shall retain the sole right to take or refrain from
taking any action under the Loan Documents except that such participation
agreement may provide that such Bank shall not, without the consent of the
participant, agree to any amendment or waiver that would have any of the effects
described in the proviso to the first sentence of Section 9.07, to the extent
that the participant would be affected thereby. All amounts payable to any Bank
under Section 1.12 or Article 7 shall be determined as if such Bank had not sold
any participations. Each Bank that sells or grants a participation shall (A)
withhold or deduct from each payment to the holder of such participation the
amount of any Tax required under Applicable Law to be withheld or deducted from
such payment and not withheld or deducted therefrom by the Borrower or the
Administrative Agent, (B) pay any Tax so withheld or deducted by it to the
appropriate taxing authority in accordance with Applicable Law and (C) indemnify
the Borrower and the Administrative Agent for any losses, costs and expenses
that they may incur as a result of any failure to so withhold or deduct and pay
such Tax.
(d) Assignments and Transfers of Registered Notes. In addition
to the requirements set forth in this Section 9.10, any assignment or transfer
of a Registered Note shall be subject to the requirements and limitations set
forth in Section 1.15.
Section 9.11. Governing Law. This Agreement and the Notes
(including matters relating to the Maximum Permissible Rate) shall be construed
in accordance with and governed by the law of the State of New York (without
giving effect to its choice of law principles).
Section 9.12. Judicial Proceedings; Waiver of Jury Trial. Any
judicial proceeding brought against the Borrower with respect to any Loan
Document Related Claim may be brought in any court of competent jurisdiction in
the City of New York, and, by execution and delivery of this Agreement, the
Borrower (a) accepts, generally and unconditionally, the nonexclusive
jurisdiction of such courts and any related appellate court and irrevocably
agrees to be bound by any judgment rendered thereby in connection with any Loan
Document Related Claim and (b) irrevocably waives any objection it may now or
hereafter have as to the venue of any such proceeding brought in such a court or
that such a court is an inconvenient forum. The Borrower hereby waives personal
service of process and consents that service of
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process upon it may be made by certified or registered mail, return receipt
requested, at its address specified or determined in accordance with the
provisions of Section 9.01(b)(i), and service so made shall be deemed completed
on the third Business Day after such service is deposited in the mail. Nothing
herein shall affect the right of any Agent or Bank or any other Indemnified
Person to serve process in any other manner permitted by law or shall limit the
right of any Agent or Bank or any other Indemnified Person to bring proceedings
against the Borrower in the courts of any other jurisdiction. To the extent
permitted in accordance with Applicable Law (including Applicable Law relating
to jurisdiction and venue), any judicial proceeding by the Borrower against the
Administrative Agent or any Bank involving any Loan Document Related Claim shall
be brought only in a court located in the City and State of New York. THE
BORROWER, THE AGENTS AND EACH BANK HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING ANY LOAN DOCUMENT RELATED CLAIM.
Section 9.13. Severability of Provisions. Any provision of the
Borrower Loan Documents that is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 9.14. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto were upon the same instrument.
Section 9.15. Survival of Obligations. Except as otherwise
expressly provided therein, the obligations of the Borrower under Sections 1.12,
7.02, 7.03, 7.04 and 9.02, and the obligations of the Banks under Section 8.05,
shall survive the Repayment Date and the termination of the Security Interest.
Section 9.16. Entire Agreement. This Agreement, the Notes and
the other Loan Documents embody the entire agreement among the Borrower, the
Administrative Agent and the Banks relating to the subject matter hereof and
supersede all prior agreements, representations and understandings, if any,
relating to the subject matter hereof.
Section 9.17. Successors and Assigns. All of the provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
Section 9.18. Reference Banks. Each Reference Bank shall
furnish to the Administrative Agent timely information for the purpose of
determining the Eurodollar Rate. If any Reference Bank shall notify the
Administrative Agent that thenceforth it
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shall not be able to furnish such information in a timely manner or shall assign
all of its Loans or Commitment to a Person that is not an Affiliate of such
Reference Bank, the Administrative Agent shall, with the consent of the Required
Banks and after consultation with the Borrower, appoint another Bank (which
Bank, or, in the event that the long-term debt securities of such Bank shall not
be rated by a nationally-recognized credit rating agency, the parent holding
company in the corporate group of which such Bank is a member, shall have a
credit rating with respect to long-term debt securities from a
nationally-recognized credit rating agency substantially equivalent to the Bank,
or the parent holding company in the corporate group of which such Bank is a
member, being replaced) as a Reference Bank in place of such Reference Bank.
ARTICLE 10
INTERPRETATION
--------------
Section 10.01. Definitional Provisions. (a) Defined
Terms. For the purposes of this Agreement:
"Accrued Management Fees" has the meaning ascribed to
such term in Section 4.11(b).
"Accumulated Funding Deficiency" has the meaning ascribed to
such term in Section 302 of ERISA.
"Adjusted Eurodollar Rate" means, for any Interest Period, a
rate per annum (rounded upward, if necessary, to the next higher 1/100 of 1%)
equal to the rate obtained by dividing (i) the Eurodollar Rate for such Interest
Period by (ii) a percentage equal to 1 minus the Reserve Requirement in effect
from time to time during such Interest Period.
"Administrative Agent" means Toronto Dominion (Texas), Inc.,
as Administrative Agent for the Banks under the Loan Documents, and any
successor Administrative Agent appointed pursuant to Section 8.07.
"Administrative Agent's Office" means the address of the
Administrative Agent specified in or determined in accordance with the
provisions of Section 9.01(b)(ii).
"Affiliate" means, with respect to a Person, any other Person
that, directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such first Person; unless
otherwise specified, "Affiliate" means an Affiliate of the Borrower. As used in
this definition, "control" (including, with correlative meanings, "controlled
by" and "under common control with") means possession, directly or indirectly,
of power to direct or cause
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the direction of management or policies (whether through ownership of securities
or partnership or other ownership interests, by Contract or otherwise);
provided, however, that, in any event, any Person that owns directly or
indirectly Capital Securities having 15% or more of the ordinary voting power
for the election of directors or other governing body of a corporation or 15% or
more of the partnership or other ownership interests in any other Person (other
than as a limited partner of such other Person) will be deemed to control such
corporation or other Person. Notwithstanding the foregoing, no individual shall
be deemed to be an Affiliate of a Person solely by reason of such individual
being an officer or director of such Person.
"Affiliate Subordinated Obligations" has the meaning ascribed
to such term in the Affiliate Subordination Agreement, and, as provided therein,
includes accrued Management Fees, Junior Subordinated Indebtedness and Senior
Subordinated Indebtedness.
"Affiliate Subordination Agreement" means the Affiliate
Subordination Agreement among the Borrower, Comcast, Comcast Financial
Corporation, Affiliates of the Borrower from time to time party thereto and the
Administrative Agent, in the form attached hereto as Exhibit B.
"Agent" means the Administrative Agent or any of the
Arranging Agents or Managing Agents.
"Agreement" means this Agreement, including all
Schedules, Annexes and Exhibits hereto.
"Agreement Date" means the date set forth as such on the last
signature page hereof, which date is the date that executed copies of this
Agreement were delivered by all parties hereto and, accordingly, this Agreement
became effective.
"Amcell" means American Cellular Network Corp., a New
Jersey corporation.
"Annualized Cash Flow" means, as of any date of determination,
Cash Flow of the Borrower and the Consolidated Subsidiaries for the period of
two consecutive fiscal quarters of the Borrower ending on, or most recently
ended prior to, such date multiplied by two. For purposes of determining
Annualized Cash Flow, Cash Flow with respect to any Person, Cellular System, any
interest therein or other assets for any period shall be adjusted by (i)
deducting therefrom an amount to reflect, as if such Person, Cellular System,
interest or other assets were not owned for any portion of such period, the
reduction in Cash Flow associated with the Person, Cellular System, interest or
assets sold, exchanged or otherwise disposed of pursuant to Section 4.08(g)
hereof during such period and (ii) adding thereto an amount to reflect, as if
such Person, Cellular Systems, interest
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or other assets were owned for the entire period, the addition to Cash Flow
associated with the acquisition of Persons, Cellular Systems or other assets
during such period acquired pursuant to Section 4.07(d) or (e).
"Applicable Law" means, anything in Section 9.11 to the
contrary notwithstanding, (i) all applicable common law and principles of equity
and (ii) all applicable provisions of all (A) constitutions, statutes, rules,
regulations and orders of governmental bodies, (B) Governmental Approvals and
(C) orders, decisions, judgments and decrees of all courts (whether at law or in
equity or admiralty) and arbitrators.
"Applicable Margin" means, at any time, (a) in the case of
Tranche A Loans, the respective percentage set forth below under the caption for
such Type of Loan opposite the applicable Leverage Ratio at such time set forth
below:
Eurodollar
Leverage Ratio Base Rate Rate
- -------------- --------- ---------
Greater than 9.50 to 1 1.000% 2.000%
Less than or equal to 9.50 to 1 and
greater than 9.00 to 1 0.875% 1.875%
Less than or equal to 9.00 to 1 and
greater than 8.00 to 1 0.625% 1.625%
Less than or equal to 8.00 to 1 and
greater than 7.00 to 1 0.500% 1.500%
Less than or equal to 7.00 to 1 and
greater than 6.00 to 1 0.375% 1.375%
Less than or equal to 6.00 to 1 and
greater than 5.00 to 1 0.250% 1.250%
Less than or equal to 5.00 to 1 and
greater than 4.00 to 1 0.000% 1.000%
Less than or equal to 4.00 to 1 0.000% 0.875%
(b) in the case of Tranche B Loans, (i) during the period from
the Closing Date to the date that is the earlier of (A) the date that is three
months after the Closing Date and (B) the date upon which any or all of the
Comcast Cellular Zeros are redeemed, the respective percentage set forth in
clause (a) above under the caption for such Type of Loan opposite the applicable
Leverage Ratio at such time and (ii) thereafter, (A) the respective percentage
set forth in clause (a) above under the caption for such Type of Loan opposite
the applicable Leverage
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Ratio at such time plus (B) 0.375%;
provided, however, that the Applicable Margin with respect to any Loan will be
increased by 0.250% during any period in which (x) Permitted Additional
Non-Facility Indebtedness of Holdco is outstanding if such Indebtedness is
excluded from the calculation of the Leverage Ratio by operation of the
definition of the term "Leverage Ratio" or (y) any Comcast Cellular Zeros are
outstanding.
The Leverage Ratio shall be determined initially on the basis of the certificate
provided for in Section 2.01(a)(viii) and subsequently on the basis of the most
recent financial statements delivered pursuant to Section 5.01. Any change in
the Applicable Margin as a result of a change in the Leverage Ratio shall be
effective as of the third Business Day after the day on which financial
statements are delivered to the Administrative Agent pursuant to Section 5.01
that indicate such change in the Leverage Ratio.
"Arranging Agents" means The Bank of New York, Barclays Bank
PLC, The Chase Manhattan Bank, N.A., PNC Bank, National Association, and The
Toronto-Dominion Bank, as Arranging Agents for the Banks under the Loan
Documents, and, in the event that any such Bank elects not to continue to serve
as an Arranging Agent or merges into or otherwise consolidates with any other
Arranging Agent, any successor to such Bank in its role as an Arranging Agent
designated by the Borrower and agreed to by each of the other Arranging Agents.
"AWACS" means AWACS, Inc., a Pennsylvania corporation.
"Bank" means (i) any Person listed as such on the signature
pages hereof and (ii) any Person that has been assigned any or all of the rights
or obligations of a Bank pursuant to Section 9.10(a).
"Bank Tax" means any Tax based on or measured by net income,
any franchise Tax and any doing business Tax (including any gross receipts Tax
in the nature of a doing business Tax) imposed upon any Bank or any Agent by any
jurisdiction (or any political subdivision thereof) in which such Bank, such
Agent or any Lending Office is located.
"Base Financial Statements" means the consolidated balance
sheet of the Borrower and the Consolidated Subsidiaries as of December 31, 1994
and the related statements of income, retained earnings and cash flows for the
fiscal year ended with the date of such balance sheet.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate in effect on such day and (ii) the Federal Funds
Rate in effect on such day plus 0.5%.
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"Base Rate Loan" means any Loan the interest on which is, or
is to be, as the context may require, computed on the basis of the Base Rate.
"Benefit Plan" means, with respect to any Person at any time,
any employee pension benefit plan (including a Multiemployer Benefit Plan) which
is covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code, the funding requirements of which (under Section
302 of ERISA or Section 412 of the Code) are, or at any time within five years
preceding the time in question were, in whole or in part, the responsibility of
such Person.
"Borrower" means Comcast Cellular Communications, Inc.,
a Delaware corporation, or, subject to Section 9.10(a)(i), any
Permitted Successor.
"Borrower Loan Documents" means the Loan Documents to
which the Borrower is a party.
"Business Day" means any day other than a Saturday, Sunday or
other day on which banks in New York City are authorized to close.
"Capital Security" means, with respect to any Person, (i) any
share of capital stock of such Person or (ii) any security convertible into, or
any option, warrant or other right to acquire, any share of capital stock of
such Person.
"Cash Flow" means, with respect to any Person, Cellular
System, any interest therein or other assets for any period, (i) the net income
(which shall be consolidated, as appropriate) attributable to such Person,
Cellular System, interest or other assets for such period, adjusted to exclude
(A) gains and losses from unusual or extraordinary items, (B) interest income
and (C) the amount of any restoration of any charge to or other reserve against
revenues taken during any prior period, in each case for such period plus (ii)
income or gross receipts taxes (whether or not deferred), Cash Interest Expense
of the Borrower and the Consolidated Subsidiaries (which for this purpose shall
include, to the extent deducted in determining net income, interest on Junior
Subordinated Indebtedness), Current Management Fees accrued and not paid in
cash, bank fees and expenses, depreciation, amortization and other non-cash
charges to income, in each case for such period minus (iii) except to the extent
deducted in determining such net income, Current Management Fees paid in cash
with respect to such period.
"Cash Flow Percentage" means, as of the date of any sale or
exchange of capital stock, assets, or Cellular System or any interest therein,
the ratio, expressed as a percentage, derived by dividing (a) Cash Flow
attributable thereto for the
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four consecutive fiscal quarters of the Borrower ending on, or most recently
ended prior to, such date for which financial information is available and has
been delivered to the Banks hereunder prior to such date of sale or exchange by
(b) Cash Flow of the Borrower and its Consolidated Subsidiaries for such period.
"Cash Interest Expense" means, for any Person, Cellular
System, any interest therein or other assets for any period, without
duplication, (i) all interest on Indebtedness (other than Junior Subordinated
Indebtedness) of such Person, or attributable to such Cellular System, interest
therein or other assets, and commitment fees in respect of such Indebtedness,
accrued or to accrue during such period and, in each case, payable in cash plus
(ii) the net amount payable accrued or to accrue by such Person, or attributable
to such Cellular System, interest therein or other assets, pursuant to any
Interest Rate Protection Agreement during such period (or minus the net amount
receivable accrued or to accrue by such Person, or attributable to such Cellular
System, interest therein or other assets, thereunder during such period) plus
(iii) the amount of all Restricted Payments made or to be made during such
period contemplated by Sections 4.06(d) and (j).
"Cellular License" means any license issued or granted by the
FCC to operate a Cellular System.
"Cellular System" means any wireline or non-wireline
cellular telephone system.
"Closing Date" means the date of the making of the
initial Loans hereunder.
"Code" means the Internal Revenue Code of 1986.
"Collateral" means all property in which a Lien is
created pursuant to the Loan Documents.
"Comcast" means Comcast Corporation, a Pennsylvania
corporation.
"Comcast Cellular Corporation" means Comcast Cellular
Corporation, a Delaware corporation.
"Comcast Cellular Zeros" means the Comcast Cellular
Corporation Series A and Series B Senior Participating Redeemable Zero Coupon
Notes Due 2000.
"Commitment" means, with respect to any Bank, its Tranche A
Commitment and its Tranche B Commitment.
"Consolidated Indebtedness" means, at any time, the
consolidated Indebtedness of the Borrower and the Consolidated
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Subsidiaries as of such time.
"Consolidated Subsidiary" means, with respect to any Person at
any time, any Subsidiary or other Person the accounts of which would be
consolidated with those of such first Person in its consolidated financial
statements as of such time; unless otherwise specified, "Consolidated
Subsidiary" means a Consolidated Subsidiary of the Borrower and excludes the
Excluded Subsidiaries.
"Contract" means (i) any agreement (whether executory or
non-executory and whether a Person entitled to rights thereunder is so entitled
directly or as a third-party beneficiary), including an indenture, lease or
license, (ii) any deed or other instrument of conveyance, (iii) any certificate
of incorporation or charter and (iv) any by-law.
"Cure Date" has the meaning ascribed to such term in
Section 6.03.
"Current Management Fees" has the meaning ascribed to
such term in Section 4.11(b).
"Debt" means any Liability that constitutes "debt" or "Debt"
under Section 101(11) of the Bankruptcy Code or under the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any analogous Applicable
Law.
"Default" means any condition or event that constitutes an
Event of Default or that with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Dollars" and the sign "$" mean lawful money of the
United States of America.
"Domestic Lending Office" means, with respect to any Bank, (i)
the branch or office of such Bank set forth below such Bank's name under the
heading "Domestic Lending Office" on Annex A or, in the case of a Bank that
becomes a Bank pursuant to an assignment, the branch or office of such Bank set
forth under the heading "Domestic Lending Office" in the Notice of Assignment
given to the Borrower and the Administrative Agent with respect to such
assignment or (ii) such other branch or office of such Bank designated by such
Bank from time to time as the branch or office at which its Base Rate Loans are
to be made or maintained.
"Environmental Laws" means any and all Federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants,
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contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment, including ambient air, surface water, ground water or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or waste.
"ERISA" means the Employee Retirement Income Security
Act of 1974.
"ERISA Affiliate" means, with respect to any Person, any other
Person, including a Subsidiary or other Affiliate of such first Person, that is
a member of any group of organizations within the meaning of Section 414(b),
(c), (m) or (o) of the Code of which such first Person is a member.
"Eurodollar Business Day" means any Business Day on which
dealings in Dollar deposits are carried on in the London interbank market and on
which commercial banks are open for domestic and international business
(including dealings in Dollar deposits) in London, England.
"Eurodollar Lending Office" means, with respect to any Bank,
(i) the branch or office of such Bank set forth below such Bank's name under the
heading "Eurodollar Lending Office" on Annex A or, in the case of a Bank that
becomes a Bank pursuant to an assignment, the branch or office of such Bank set
forth under the heading "Eurodollar Lending Office" in the Notice of Assignment
given to the Borrower and the Administrative Agent with respect to such
assignment or (ii) such other branch or office of such Bank designated by such
Bank from time to time as the branch or office at which its Eurodollar Rate
Loans are to be made or maintained.
"Eurodollar Rate" means, for any Interest Period, the rate per
annum determined by the Administrative Agent to be the average (rounded upward,
if necessary, to the next higher 1/100 of 1%) of the rates per annum determined,
respectively, by each Reference Bank to be the rate at which such Reference Bank
offered or would have offered to place with first-class banks in the London
interbank market deposits in Dollars in amounts comparable to the Eurodollar
Rate Loan of such Reference Bank to which such Interest Period applies, for a
period equal to such Interest Period, at 11:00 a.m. (London time) on the second
Eurodollar Business Day before the first day of such Interest Period. If any
Reference Bank is unable or otherwise fails to furnish the Administrative Agent
with appropriate rate information in a timely manner, the Administrative Agent
shall determine the Eurodollar Rate based on the rate information furnished by
the remaining Reference Banks.
"Eurodollar Rate Loan" means any Loan the interest on
which is, or is to be, as the context may require, computed on
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the basis of the Adjusted Eurodollar Rate.
"Event of Default" means any of the events specified in
Section 6.01.
"Excess Cash Flow" means, for any fiscal year, the amount, if
any, by which (a) Cash Flow of the Borrower and the Consolidated Subsidiaries
for such fiscal year exceeds (b) the sum of (i) the aggregate amount of Cash
Interest Expense of the Borrower and the Consolidated Subsidiaries for such
fiscal year, (ii) an amount equal to the amount of capital expenditures made or
incurred by the Borrower or any Consolidated Subsidiary during such fiscal year
(net of any after-tax proceeds realized in respect of damaged or destroyed
capital assets or from the disposition of obsolete or retired capital assets),
(iii) the amount of Required Repayments in respect of such fiscal year, the
amount of all payments of principal with respect to the Tranche B Loans made
during such fiscal year and all other payments of principal of Indebtedness
(other than Junior Subordinated Indebtedness) of the Borrower and the
Consolidated Subsidiaries required to be made in respect of such fiscal year,
(iv) the amount of income taxes, without duplication, paid or payable in cash
during such fiscal year, including (without duplication) the amount paid in
respect of income taxes pursuant to any Tax Sharing Agreement, by the Borrower
and the Consolidated Subsidiaries, (v) the amount of Restricted Payments
contemplated by Section 4.06 made during such year (other than any such
Restricted Payments contemplated by Section 4.06(d)) and (vi) $10,000,000.
"Excluded Subsidiary" means any of Comcast Publishing Holdings
Corp., a Pennsylvania corporation, Comcast Publishing Holdings Financial Corp.,
a Delaware corporation, AWACS Investment Holdings, Inc., a Delaware corporation,
AWACS Garden State, Inc., a Delaware corporation, and Garden State Cablevision,
L.P., a Delaware limited partnership, and any Subsidiary of any of the
foregoing.
"Existing Benefit Plan" means, with respect to any Person at
any time, any employee benefit plan (including a multiemployer benefit plan as
defined in Section 4001(a)(3) of ERISA), the funding requirements of which
(under Section 302 of ERISA or Section 412 of the Code) are, in whole or in
part, the responsibility of such Person.
"Existing Guaranty" means (i) any Guaranty outstanding on the
Agreement Date, to the extent set forth on Schedule 4.04, and (ii) any Guaranty
that constitutes a renewal, extension or replacement of an Existing Guaranty,
but only if (A) at the time such Guaranty is entered into and after giving
effect thereto, no Default would exist, (B) such Guaranty is binding only on the
obligor or obligors under the Guaranty so renewed, extended or replaced, (C) the
principal amount of the obligations Guaranteed
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by such Guaranty does not exceed the principal amount of the obligations
Guaranteed by the Guaranty so renewed, extended or replaced and (D) the
obligations Guaranteed by such Guaranty bear interest at a rate per annum not
exceeding the rate borne by the obligations Guaranteed by the Guaranty so
renewed, extended or replaced except for any increase that is commercially
reasonable at the time of such increase.
"Existing Investment" means any investment outstanding on the
Agreement Date, to the extent set forth on Schedule 4.14, and any renewal or
extension thereof not involving an increase therein as the result of an
additional investment by the Borrower or any Subsidiary.
"FCC" means the Federal Communications Commission.
"Federal Funds Rate" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York or, if such rate is not so published for any
day that is a Business Day, the average of quotations for such day on such
transactions received by Toronto Dominion (Texas), Inc., from three Federal
funds brokers of recognized standing selected by such bank.
"Funded Current Liability Percentage" has the meaning ascribed
to such term in Section 401(a)(29) of the Code.
"Generally Accepted Accounting Principles" means (i) in the
case of the Base Financial Statements, generally accepted accounting principles
at the time of the issuance of the Base Financial Statements and (ii) in all
other cases, the accounting principles followed in the preparation of the Base
Financial Statements, except as provided in Section 10.02.
"Governmental Approval" means any authorization, consent,
approval, license or exemption of, registration or filing with, or report or
notice to, any governmental unit.
"Guaranty" means, with respect to any Person, any contractual
obligation, contingent or otherwise, of such Person (i) to pay any Indebtedness
or other obligation of any other Person or to otherwise protect the holder of
any such Indebtedness or other obligation against loss (whether such obligation
arises by agreement to pay, to keep well, to purchase assets, goods, securities
or services or otherwise) or (ii) incurred in connection with the issuance by a
third Person of a Guaranty of any Indebtedness or other obligation of any other
Person (whether such obligation arises by agreement to reimburse or indemnify
such third Person or otherwise by Contract); provided, however, that the term
"Guaranty" shall not include an
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endorsement for collection or deposit in the ordinary course of business. The
word "Guarantee" when used as a verb has the correlative meaning.
"Hazardous Material" means any oil, hazardous waste, hazardous
material or hazardous substance listed, defined or otherwise identified as
hazardous in the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6921 et
seq., the Comprehensive Environmental Response Compensation and Liability Act,
42 U.S.C. ss. 9601 et seq., or any other Federal or state Environmental Law.
"Holdco" means Comcast Cellular Corporation, or other direct
owner of 100% of the equity ownership interest in the Borrower (or such lesser
interest, equal to or greater than 50.01% of such equity ownership interest, as
shall not constitute a Default under Section 6.01(l)).
"Indebtedness" means, with respect to any Person (in each
case, whether such obligation is with full or limited recourse), without
duplication, (i) any obligation of such Person for borrowed money, (ii) any
obligation of such Person evidenced by a bond, debenture, note or other similar
instrument, (iii) any obligation of such Person, whether or not owed to
Affiliates, to pay the deferred purchase price of property or services, except a
trade account payable that arises in the ordinary course of business but only
if, in the case of any such payable owed to Affiliates, it is payable on
customary trade terms, (iv) any obligation of such Person as lessee under a
capital lease, (v) any Mandatorily Redeemable Securities issued by such Person
owned by any Person other than such Person or a Wholly Owned Subsidiary of such
Person (the amount of such Mandatorily Redeemable Securities to be determined
for this purpose as the higher of the liquidation preference of and the amount
payable upon redemption of such Mandatorily Redeemable Securities), (vi) any
obligation of such Person to purchase securities or other property that arises
out of or in connection with the sale of the same or substantially similar
securities or property, (vii) any contractual obligation, contingent or
otherwise, of such Person to reimburse any other Person in respect of amounts
paid under a letter of credit or performance or other bond issued by such other
Person, (viii) any Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) a Lien on any asset of such Person and (ix) any Indebtedness of others
Guaranteed by such Person; provided, however, that the term "Indebtedness" with
respect to the Borrower shall not include the Borrower's Class B Participating
Redeemable Preferred Stock and with respect to the Borrower and the Consolidated
Subsidiaries shall not include Permitted Management Fees.
"Indemnified Person" means, at any time, any Person that is,
or at such time was, the Administrative Agent, any other Agent, a Bank, an
Affiliate of the Administrative Agent, any
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other Agent or a Bank or a director, officer, employee or agent of any
such Person.
"Information" means written data, certificates, reports,
statements (excluding financial statements), documents and other written
information.
"Intellectual Property" means (i) (A) patents and patent
rights, (B) trademarks, trademark rights, trade names, trade name rights,
corporate names, business names, trade styles, service marks, logos and general
intangibles of like nature and (C) copyrights, in each case whether registered,
unregistered or under pending registration and, in the case of any such that are
registered or under pending registration, whether registered or under pending
registration under the laws of the United States or any other country, (ii)
reissues, continuations, continuations-in-part and extensions of any
Intellectual Property referred to in clause (i) above and (iii) rights relating
to any Intellectual Property referred to in clause (i) or (ii) above, including
rights under applications (whether pending under the laws of the United States
or any other country) or licenses relating thereto.
"Interest Coverage Ratio" means, as of any date of
determination, the ratio of (i) Cash Flow of the Borrower and the Consolidated
Subsidiaries for the period of four consecutive fiscal quarters of the Borrower
ending on, or most recently ended prior to, such date to (ii) Designated Cash
Interest Expense for such period. For purposes of this definition, "Designated
Cash Interest Expense" shall mean (A) at any time prior to December 31, 1995,
four times the Cash Interest Expense of the Borrower and the Consolidated
Subsidiaries for the most recently completed full fiscal quarter of the
Borrower, (B) at any time from and including December 31, 1995 to but excluding
March 31, 1996, two times the Cash Interest Expense of the Borrower and the
Consolidated Subsidiaries for the two most recently completed full fiscal
quarters of the Borrower, (C) at any time from and including March 31, 1996 to
but excluding June 30, 1996, Cash Interest Expense of the Borrower and the
Consolidated Subsidiaries for the three most recently completed full fiscal
quarters of the Borrower divided by 0.75 and (D) at any time on or after June
30, 1996, Cash Interest Expense of the Borrower and the Consolidated
Subsidiaries for the four consecutive fiscal quarters of the Borrower ending on,
or most recently ended prior to, such date.
"Interest Payment Date" means the last day of March, June,
September and December of each year.
"Interest Period" means a period commencing, in the case of
the first Interest Period applicable to a Eurodollar Rate Loan, on the day of
the making of, or conversion into, such Loan, and, in the case of each
subsequent, successive Interest Period
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applicable thereto, on the last day of the next preceding Interest Period, and
ending, depending on the Type of Loan, on the same day in the first, second,
third, sixth or, if made available by each of the Banks, ninth or twelfth
calendar month thereafter, except that (i) any Interest Period that would
otherwise end on a day that is not a Eurodollar Business Day shall be extended
to the next succeeding Eurodollar Business Day, unless such Eurodollar Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Eurodollar Business Day and (ii) any Interest Period
that begins on the last Eurodollar Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month in
which such Interest Period ends) shall end on the last Eurodollar Business Day
of a calendar month.
"Interest Rate Protection Agreements" means, for any Person,
an interest rate swap, cap or collar agreement or similar arrangement between
such Person and a Bank or other financial institution having combined capital
and surplus of at least $200,000,000 or that has (or that is a subsidiary of a
bank holding company that has) publicly traded unsecured long-term debt
securities given a rating of A- (or the equivalent rating then in effect) or
better by Standard & Poor's Ratings Services, a Division of the McGraw Hill
Companies, Inc., or a rating of A3 (or the equivalent rating then in effect) or
better by Moody's Investors Service, Inc., providing for the transfer or
mitigation of interest risks either generally or under specific contingencies.
"Junior Subordinated Indebtedness" means Affiliate
Subordinated Obligations (other than Senior Subordinated Indebtedness and
accrued Management Fees) advanced to the Borrower by Comcast (or any Affiliate
of the Borrower that is or shall have become a party to the Affiliate
Subordination Agreement).
"Lending Office" means, with respect to any Bank, the Domestic
Lending Office or the Eurodollar Lending Office of such Bank.
"Leverage Ratio" means, as of any date of determination, the
ratio of (i) the sum of (A) Consolidated Indebtedness (other than Junior
Subordinated Indebtedness) on such date and (B) Permitted Additional
Non-Facility Indebtedness of Holdco (other than any such Indebtedness the terms
and conditions of which did not and do not require any cash interest payments
thereon at any time within the three-year period immediately following the
incurrence thereof, other than customary charges, not to exceed $2,750,000 in
any year, payable in connection with Permitted Additional Non-Facility
Indebtedness of Holdco) on such date to (ii) Annualized Cash Flow as of such
date.
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"Liability" means, with respect to any Person, any
indebtedness, liability or obligation of or binding upon such Person or any of
its assets.
"Lien" means, with respect to any property or asset (or any
income or profits therefrom) of any Person (in each case whether the same is
consensual or nonconsensual or arises by Contract, operation of law, legal
process or otherwise), (i) any mortgage, lien, pledge, attachment, levy or other
security interest of any kind thereupon or in respect thereof or (ii) any other
arrangement under which the same is transferred, sequestered or otherwise
identified with the intention of subjecting the same to, or making the same
available for, the payment or performance of any Liability in priority to the
payment of the ordinary, unsecured creditors of such Person. For the purposes of
this Agreement, a Person shall be deemed to own subject to a Lien any asset that
it has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" means a Tranche A Loan or a Tranche B Loan.
"Loan Document Related Claim" means any claim (whether civil,
criminal or administrative and whether sounding in tort, contract or otherwise)
arising out of, related to, or connected with, the Loan Documents, whether such
claim arises or is asserted before or after the Agreement Date or before or
after the Repayment Date.
"Loan Document Representation and Warranty" means any
"Representation and Warranty" as defined in any Loan Document and any other
representation or warranty made or deemed made pursuant to the terms of any Loan
Document.
"Loan Documents" means (i) this Agreement, the Notes, the
Pledge Agreement and the Affiliate Subordination Agreement and (ii) all other
agreements, documents and instruments (other than the assumption agreements
referred to in Section 4.09(e)(i) and any promissory notes payable to the
Borrower and executed in connection therewith) arising out of (A) any agreement,
document or instrument referred to in clause (i) above, (B) any other agreement,
document or instrument referred to in this clause (ii) or (C) any of the
transactions pursuant to any agreement, document or instrument referred to in
clause (i) above or in this clause (ii).
"Loan Parties" means the Borrower, Comcast and any Affiliate
of the Borrower from time to time party to the Affiliate Subordination Agreement
(until such time as such Affiliate shall be released therefrom in the manner
provided therein).
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"Management Agreement" means (a) the Management Agreement
dated as of March 5, 1992 between the Borrower and Comcast and (b) if executed
after the date upon which all of the Comcast Cellular Zeros are redeemed, the
Management Agreement in the form attached hereto as Exhibit C.
"Management Fees" means all fees and other amounts payable
under the Management Agreement, including but not limited to overhead and
administrative costs allocated by Comcast to the Subsidiaries of the Borrower
party thereto but excluding amounts paid in reimbursement of out-of-pocket costs
and expenses incurred on behalf of such Subsidiaries.
"Managing Agents" means The Bank of Nova Scotia, CIBC Inc.,
Chemical Bank, Credit Lyonnais Cayman Island Branch, The Industrial Bank of
Japan, Limited, Morgan Guaranty Trust Company of New York, and NationsBank of
Texas, N.A., as Managing Agents for the Banks under the Loan Documents.
"Mandatorily Redeemable Securities" means, with respect to any
Person, any Capital Securities issued by such Person to the extent that they are
(i) redeemable, payable or required to be purchased or otherwise retired or
extinguished, or convertible into any Indebtedness or other Liability of such
Person, (A) at a fixed or determinable date, whether by operation of a sinking
fund or otherwise, (B) at the option of any Person other than such Person or (C)
upon the occurrence of a condition not solely within the control of such Person,
such as a redemption required to be made out of future earnings or (ii)
convertible into Mandatorily Redeemable Securities.
"Material Loan Documents" means this Agreement, the Notes, the
Pledge Agreement and the Affiliate Subordination Agreement.
"Materially Adverse Effect" means, (i) with respect to any
Person, any materially adverse effect on such Person's business, assets,
Liabilities, financial condition or results of operations, (ii) with respect to
a group of Persons "taken as a whole," any materially adverse effect on such
Persons' business, assets, Liabilities, financial condition or results of
operations taken as a whole on, where appropriate, a consolidated basis in
accordance with Generally Accepted Accounting Principles, (iii) with respect to
any Loan Document, any material adverse effect on the binding nature, validity
or enforceability thereof as an obligation of any Loan Party that is a party
thereto and (iv) with respect to any Collateral, or any category of Collateral,
pledged by any Loan Party, a materially adverse effect on the validity,
perfection, priority or enforceability of the Security Interest therein.
"Maximum Permissible Rate" means, with respect to
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interest payable on any amount, the rate of interest on such amount that, if
exceeded, could, under Applicable Law, result in (i) civil or criminal penalties
being imposed on the payee or (ii) the payee's being unable to enforce payment
of (or, if collected, to retain) all or any part of such amount or the interest
payable thereon.
"MSA" means a "Metropolitan Statistical Area" as such term is
defined and modified by the FCC for purposes of licensing Cellular Systems.
"Multiemployer Benefit Plan" means any Benefit Plan that is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Net Proceeds" shall mean, with respect to any sale or
disposition (including an exchange) of assets, the gross amount of consideration
(other than consideration in the form of Indebtedness and other Liabilities
assumed directly or indirectly by the purchaser of such assets) or other amounts
including condemnation awards and insurance settlements paid to or received by
the Borrower or any Subsidiary in respect of such sale or disposition (including
only the cash component and/or the component constituting Permitted Securities
(valued as provided in the definition thereof), if any, of exchanges of assets),
less the sum of (a) reasonable and customary fees, costs and expenses incurred
in connection with such sale or disposition and payable by or on behalf of the
seller or the transferor of the assets to which such sale or disposition
relates, (b) the amount, reasonably estimated by the Borrower, of taxes payable
to federal, state and local taxing authorities by such seller or transferor in
connection with such sale or disposition and (c) the amount of the Indebtedness
and other liabilities attributable to or associated with such assets (other than
any such Indebtedness or liability owed to the Borrower or any Subsidiary)
required to be paid or repaid or, in the case of any such liability, retained on
a primary obligor basis by the Borrower or any Subsidiary in connection with
such sale or disposition. For purposes hereof, the value of any noncash
consideration received from purchasers of assets shall be the fair market value
thereof, as determined in good faith by the Borrower.
"Non-U.S. Bank" has the meaning set forth in Section 1.15.
"Note" means any Tranche A Note and any Tranche B Note.
"Notice of Assignment" means any notice to the Borrower and
the Administrative Agent with respect to an assignment pursuant to Section
9.10(a) in the form of Schedule 9.10(a).
"PBGC" means the Pension Benefit Guaranty Corporation.
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"Permitted Additional Facility Indebtedness" means
Indebtedness of the Borrower incurred under this Agreement pursuant to increases
in the Commitments of one or more of the Banks and/or new commitments to lend
hereunder of one or more Banks or other lenders, so long as (a) the aggregate
principal amount of such Indebtedness outstanding at any time shall not exceed
the lesser of (i) $150,000,000 and (ii) $750,000,000 minus the aggregate
principal amount of Permitted Additional Non-Facility Indebtedness outstanding
at such time, and (b) the incurrence of such Indebtedness and the terms and
conditions thereof shall have been consented to by the Required Banks.
"Permitted Additional Indebtedness" means Permitted Additional
Facility Indebtedness and Permitted Additional Non-Facility Indebtedness.
"Permitted Additional Non-Facility Indebtedness" means
Indebtedness of the Borrower and/or Holdco (a) in an aggregate principal amount
outstanding at any time not in excess of $750,000,000 minus the aggregate
principal amount of Permitted Additional Facility Indebtedness outstanding at
such time, provided that, to the extent that any such Indebtedness is incurred
and, after giving effect to such incurrence, the aggregate principal amount of
Permitted Additional Indebtedness outstanding at such time exceeds $550,000,000,
the Tranche B Loans shall have been prepaid and the Total Tranche A Commitment
shall have been reduced, collectively by the amount of such excess, as provided
in Section 1.05(b)(v) and 1.07(c), (b) the terms and conditions of which (i) do
not provide for any scheduled repayments or mandatory prepayments of the
principal thereof prior to the first anniversary of the Termination Date, (ii)
are no more onerous on the Borrower (whether the Borrower is bound by such terms
and conditions directly or such terms and conditions apply to the Borrower as a
Subsidiary of Holdco) than the terms and conditions of this Agreement and (iii)
are reasonably satisfactory to no fewer than four of the Arranging Agents, (c)
with respect to which the Borrower shall have delivered to the Banks, prior to
the incurrence of such Indebtedness, the financial projections referred to in
Section 2.01(a)(xiii), revised to reflect (i) operating performance since the
date of such financial projections and (ii) the incurrence of such Indebtedness
and the application of the proceeds thereof and demonstrating pro forma
compliance with the terms of this Agreement through the Termination Date and (d)
that, in the case of any such Indebtedness of the Borrower, is unsecured, not
senior in right of payment to the Loans and not entitled to the benefit of any
Guaranty.
"Permitted Guaranty" means (i) any Guaranty to which Section
4.09 is by its express terms inapplicable by virtue of clauses (e) or (g)
thereof and (ii) any Guaranty of obligations of the Borrower or any Subsidiary
so long as such obligations do not constitute Indebtedness and have been
incurred in the
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ordinary course of business.
"Permitted Lien" means (i) the Security Interest; (ii) any
Lien securing the obligations of the obligor in respect of Indebtedness to which
Section 4.09 is by its express terms inapplicable by virtue of clause (g)
thereof; (iii) any right of set-off arising under law and not under Contract,
any Lien securing a tax, assessment or other governmental charge or levy or the
claim of a materialman, mechanic, carrier, warehouseman or landlord for labor,
materials, supplies or rentals incurred in the ordinary course of business, but
only if payment thereof shall not at the time be required to be made in
accordance with Section 4.01(d) and foreclosure, distraint, sale or other
similar proceedings shall not have been commenced and remained unstayed or
undismissed for more than 30 days; (iv) any Lien on the properties and assets of
a Subsidiary securing an obligation owing to the Borrower or a Wholly Owned
Subsidiary; (v) any Lien consisting of a deposit or pledge made in the ordinary
course of business in connection with, or to secure payment of, obligations
under workers' compensation, unemployment insurance or similar legislation; (vi)
any Lien (other than a Lien on the Collateral) arising pursuant to an order of
attachment, distraint or similar legal process arising in connection with legal
proceedings, but only if and so long as, in the case of any such Lien arising in
connection with a judgment, no Event of Default set forth in Section 6.01(g)
shall exist and, in each other case, the execution or other enforcement thereof
is not unstayed for more than 20 days; (vii) any Lien existing on (A) any
property or asset of any Person at the time such Person becomes a Subsidiary or
(B) any property or asset at the time such property or asset is acquired by the
Borrower or a Subsidiary, but only, in the case of either (A) or (B), if and so
long as (w) such Lien was not created in contemplation of such Person becoming a
Subsidiary or such property or asset being acquired, (x) such Lien is and will
remain confined to the property or asset subject to it at the time such Person
becomes a Subsidiary or such property or asset is acquired and to fixed
improvements thereafter erected on such property or asset, (y) such Lien secures
only the obligation secured thereby at the time such Person becomes a Subsidiary
or such property or asset is acquired and (z) the obligation secured by such
Lien is not in default; (viii) any Lien in existence on the Agreement Date to
the extent set forth on Schedule 4.05, but only, in the case of each such Lien,
to the extent it secures an obligation outstanding on the Agreement Date to the
extent set forth on such Schedule; or (ix) any Lien constituting a renewal,
extension or replacement of a Lien constituting a Permitted Lien by virtue of
clause (vii), (viii) or (ix) above, but only if (A) at the time such Lien is
granted and after giving effect thereto, no Default would exist, (B) such Lien
is limited to all or a part of the property or asset that was subject to the
Lien so renewed, extended or replaced and to fixed improvements thereafter
erected on such property or asset, (C) the principal amount of the obligations
secured by such Lien does not exceed the principal
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amount of the obligations secured by the Lien so renewed, extended or replaced
and (D) the obligations secured by such Lien bear interest at a rate per annum
not exceeding the rate borne by the obligations secured by the Lien so renewed,
extended or replaced except for any increase that is commercially reasonable at
the time of such increase.
"Permitted Management Fees" has the meaning ascribed to such
term in Section 4.11(b).
"Permitted Restrictive Covenant" means (i) any covenant or
restriction contained in any Loan Document or, so long as any such covenants or
restrictions are no more restrictive than those contained in the Loan Documents,
any document governing the terms of Permitted Additional Non-Facility
Indebtedness, (ii) any covenant or restriction binding upon any Person at the
time such Person becomes a Subsidiary of the Borrower if the same is not created
in contemplation thereof, (iii) any covenant or restriction described in
Schedule 4.12, but only to the extent such covenant or restriction is there
identified by specific reference to the provision of the Contract in which such
covenant or restriction is contained or (iv) any covenant or restriction that
(A) is not more burdensome than an existing Permitted Restrictive Covenant that
is such by virtue of clause (ii), (iii) or (iv) above, (B) is contained in a
Contract constituting a renewal, extension or replacement of the Contract in
which such existing Permitted Restrictive Covenant is contained and (C) is
binding only on the Person or Persons bound by such existing Permitted
Restrictive Covenant.
"Permitted Securities" means any equity security listed on a
national securities exchange (including, for this purpose, the automated
quotation system of the National Association of Securities Dealers, Inc.), the
fair market value (determined, for any such Permitted Security, as of the day on
which such Permitted Security is received by the Borrower or any Subsidiary in
connection with an exchange contemplated by Section 4.08(g)(ii)) of which shall
not exceed $15,000,000 in the aggregate for all such Permitted Securities
received by the Borrower and the Subsidiaries after the Agreement Date in
connection with any disposition (including an exchange) of assets of the
Borrower or any Subsidiary.
"Permitted Successor" means any entity that will, immediately
after giving effect to any assignment contemplated by Section 9.10(a)(i), own
all of the direct or indirect interests in Cellular Systems that were owned by
the Borrower immediately prior to such assignment.
"Person" means any individual, sole proprietorship,
corporation, partnership, trust, unincorporated organization, mutual company,
joint stock company, estate, union, employee organization, government or any
agency or political subdivision
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thereof or, for the purpose of the definition of "ERISA Affiliate," any trade or
business.
"Pledge Agreement" means the Pledge Agreement, dated as of the
date hereof, between the Borrower and the Secured Party and any successor pledge
agreement entered into pursuant to and in accordance with Section 9.10(a)(i).
"Pledged Securities" has the meaning ascribed to such term in
the Pledge Agreement.
"Pledgor" has the meaning ascribed to such term in the Pledge
Agreement.
"Pops" means, with respect to any Cellular System, the
aggregate number of individuals resident in the MSA or RSA (as the case may be)
in which such Cellular System is licensed to operate, as reflected in the
population estimates most recently published by the Pops Information Service.
"Pops Information Service" means (a) any of Donnelly Marketing
Service, Rand McNally or the United States Census Bureau as shall be selected by
the Borrower as the source for the population information in the first quarterly
or annual report required to be delivered by the Borrower under Section 5.01(f)
and (b) if such Person as shall have been selected by the Borrower shall cease
to publish such estimates, either of the other two Persons referred to in clause
(a) above.
"Post-Default Rate" means the rate otherwise applicable under
Section 1.03(a) plus 2% or, if there is no such rate, the Base Rate plus the
Applicable Margin plus 2%.
"Predecessor Indebtedness" means Indebtedness set forth on
Schedule 10.01.
"Prime Rate" means the rate of interest adopted by The
Toronto-Dominion Bank in New York, New York from time to time as its reference
rate for the determination of interest rates on loans of varying maturities in
Dollars to United States residents of varying degrees of creditworthiness and
being quoted at such time by The Toronto-Dominion Bank as its "prime rate",
which rate is not necessarily the lowest rate of interest of The
Toronto-Dominion Bank.
"Pro Forma Debt Service" means, as of any date of
determination, the sum of (i) all Required Repayments, all scheduled payments of
principal of the Loans and all other payments of principal of Indebtedness
(other than Junior Subordinated Indebtedness) of the Borrower and the
Consolidated Subsidiaries (including all payments in respect of capitalized
leases) scheduled to be made, during the period commencing with the day next
succeeding such date and ending on the date
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corresponding to such date of determination in the following calendar year and
(ii) Cash Interest Expense of the Borrower and the Consolidated Subsidiaries for
such period; provided, however, that Cash Interest Expense shall be calculated,
for purposes of this definition, (1) on the basis of (A) in the case of
Eurodollar Rate Loans, the interest rate or rates then in effect with respect to
such Eurodollar Rate Loans, (B) in the case of Base Rate Loans, the average
interest rate applicable to such Loans during the period of 90 days preceding
the date of determination and (C) in the case of all Indebtedness of the
Borrower (other than the Loans) or Holdco bearing interest at a floating rate,
the interest rate or rates then in effect with respect to such Indebtedness and
(2) on the assumption that the entire amount of cash interest required to be
paid on Permitted Additional Non-Facility Indebtedness of Holdco during such
period will be funded by Restricted Payments contemplated by Section 4.06(d).
"Pro Forma Debt Service Ratio" means, as of any date of
determination, the ratio of (i) Annualized Cash Flow as of such date to (ii) Pro
Forma Debt Service as of such date.
"Prohibited Transaction" means any transaction that is
prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt
under Section 4975 of the Code or Section 408 of ERISA.
"Reference Banks" means each of the Arranging Agents and any
replacement Reference Bank appointed pursuant to Section 9.18.
"Register" has the meaning set forth in Section 1.15.
"Registered Note" has the meaning set forth in Section 1.15.
"Registered Noteholder" has the meaning set forth in Section
1.15.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System.
"Regulatory Change" means any Applicable Law, interpretation,
directive, request or guideline (whether or not having the force of law), or any
change therein or in the administration or enforcement thereof, that becomes
effective or is implemented or first required or expected to be complied with
after the Agreement Date (including any Applicable Law that shall have become
such as the result of any act or omission of the Borrower or any of its
Affiliates, without regard to when such Applicable Law shall have been enacted
or implemented), whether the same is (i) the result of an enactment by a
government or any agency or political subdivision thereof, a determination of a
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court or regulatory authority or otherwise or (ii) enacted, adopted, issued or
proposed before or after the Agreement Date, including any such that imposes,
increases or modifies any Tax, reserve requirement, insurance charge, special
deposit requirement, assessment or capital adequacy requirement, but excluding
any such that imposes, increases or modifies any Bank Tax.
"Repayment Date" means the later of (i) the termination of the
Total Commitment (whether as a result of the occurrence of the Commitment
Termination Date, the reduction to zero pursuant to Section 1.07 or termination
pursuant to Section 6.02) and (ii) the payment in full of the Loans and all
other amounts payable or accrued hereunder.
"Reportable Event" means, with respect to any Benefit Plan of
any Person, (i) the occurrence of any of the events set forth in ERISA Section
4043(c), other than an event as to which the requirement of 30 days' notice, or
the penalty for failure to provide such notice, has been waived by the PBGC,
(ii) the existence of conditions sufficient to require advance notice to the
PBGC pursuant to ERISA Section 4043(b), (iii) the occurrence of any of the
events set forth in ERISA Sections 4062(e) or 4063(a) or the regulations
thereunder, (iv) any event requiring such Person or any of its ERISA Affiliates
to provide security to such Benefit Plan under Section 401(a)(29) of the Code or
(v) any failure to make a payment required by Section 412(m) of the Code with
respect to such Benefit Plan.
"Representation and Warranty" means any written representation
or warranty made pursuant to or under (i) Section 2.02, Article 3, Section 5.02
or any other provision of this Agreement or (ii) any amendment to, or waiver of
rights under, this Agreement, WHETHER OR NOT, IN THE CASE OF ANY REPRESENTATION
OR WARRANTY REFERRED TO IN CLAUSE (i) OR (ii) ABOVE (EXCEPT, IN EACH CASE, TO
THE EXTENT OTHERWISE EXPRESSLY PROVIDED), THE INFORMATION THAT IS THE SUBJECT
MATTER THEREOF IS WITHIN THE KNOWLEDGE OF THE BORROWER.
"Required Agents" means Arranging Agents and Managing Agents
comprising a majority of the total number of Arranging Agents and Managing
Agents.
"Required Banks" means, at any time, Banks having at least 51%
of the sum of (i) the Loans outstanding and (ii) without duplication, the
Commitments then in effect.
"Required Repayments" means, for any period, the excess, if
any, of (i) the outstanding amount of Tranche A Loans and Senior Subordinated
Indebtedness at the beginning of such period over (ii) the Total Tranche A
Commitment at the end of such period.
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"Reserve Requirement" means, at any time, the then current
maximum rate for which reserves (including any marginal, supplemental or
emergency reserve) are required to be maintained under Regulation D by member
banks of the Federal Reserve System in New York City with deposits exceeding
five billion Dollars against "Eurocurrency liabilities," as such term is used in
Regulation D. The Adjusted Eurodollar Rate shall be adjusted automatically on
and as of the effective date of any change in the applicable Reserve
Requirement.
"Responsible Officer" means, with respect to any Loan Party,
the chairman, vice chairman, president, any senior vice president or the chief
financial officer of such Loan Party.
"Restricted Payment" means (i) (A) any dividend or other
distribution on account of any Capital Securities issued by the Borrower or any
Subsidiary (other than dividends payable solely in such Capital Securities other
than Mandatorily Redeemable Securities and other than dividends and other
distributions payable to the Borrower or any Subsidiary), (B) any payment on
account of the principal of or premium, if any, on any Indebtedness convertible
into Capital Securities issued by the Borrower or any Subsidiary (other than any
such payment to the Borrower or any Subsidiary) or (C) any payment on account of
any purchase, redemption, retirement, exchange or conversion of any Capital
Securities issued by the Borrower or any Subsidiary (other than any such payment
to the Borrower or any Subsidiary) and (ii) payments of interest on, or payments
or prepayments of principal of, or the setting apart of money for a sinking or
other analogous fund for, the purchase, redemption, retirement or other
acquisition of, any principal of or interest on Junior Subordinated
Indebtedness. For the purposes of this definition, a "payment" or "prepayment"
shall include the transfer of any asset or the issuance of any Indebtedness or
other obligation (the amount of any such payment to be the fair market value of
such asset or the amount of such obligation, respectively) but shall not include
the issuance of any Capital Securities other than Mandatorily Redeemable
Securities.
"RSA" means a "Rural Service Area" as such term is defined and
modified by the FCC for purposes of licensing Cellular Systems.
"Secured Party" has the meaning ascribed to such term in the
Pledge Agreement.
"Security Interest" means the Liens created, or purported to
be created, by the Loan Documents.
"Senior Subordinated Indebtedness" means Affiliate
Subordinated Obligations advanced to the Borrower by Comcast (or any Affiliate
of the Borrower that is or shall have become a party to the Affiliate
Subordination Agreement), bearing interest
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at a rate per annum, for any fiscal quarter of the Borrower, not in excess of
the rate that is 1/2% below the weighted average interest rate applicable to the
Tranche A Loans hereunder during such fiscal quarter and in an aggregate
principal amount not in excess of the lesser of the Maximum Senior Subordinated
Indebtedness Amount and the unused portion, if any, of the Total Tranche A
Commitment at such time. As used herein, "Maximum Senior Subordinated
Indebtedness Amount" means, at any time prior to December 31, 1998, $200,000,000
and, at any time thereafter, an amount equal to the product of $200,000,000 and
a fraction, the numerator of which is equal to the Total Tranche A Commitment
that was in effect on the most recent December 31 (after giving effect to any
reductions to the Total Tranche A Commitment to be made on such December 31) and
the denominator of which is $1,000,000,000. Obligations treated as Junior
Subordinated Indebtedness by the lender and borrower thereof shall not be deemed
Senior Subordinated Indebtedness irrespective of the interest rate or other
terms applicable thereto.
"Subscribers" has the meaning ascribed to such term in Section
5.01(f).
"Subsidiary" means, with respect to any Person, any other
Person (i) Capital Securities of which having ordinary voting power to elect a
majority of the board of directors (or other persons having similar functions)
of such Person or (ii) other ownership interests, including partnership
interests, of which ordinarily constituting a majority voting interest are at
the time, directly or indirectly, owned or controlled by such first Person, or
by one or more of its Subsidiaries, or by such first Person and one or more of
its Subsidiaries; unless otherwise specified, "Subsidiary" means a Subsidiary of
the Borrower and excludes the Excluded Subsidiaries.
"Tax" means any Federal, State or foreign tax, assessment or
other governmental charge or levy (including any withholding tax) upon a Person
or upon its assets, revenues, income or profits.
"Tax Sharing Agreement" means (a) the Tax Sharing Agreement,
dated as of March 5, 1992 among the Borrower, Comcast Cellular Corporation and
Comcast and (b) if executed after the date upon which all of the Comcast
Cellular Zeros are redeemed, the Tax Sharing Agreement in the form attached
hereto as Exhibit D.
"Termination Date" means September 30, 2004.
"Termination Event" means, with respect to any Benefit Plan,
(i) any Reportable Event with respect to such Benefit Plan, (ii) the termination
of such Benefit Plan, or the filing of a notice of intent to terminate such
Benefit Plan, or the treatment of any amendment to such Benefit Plan as a
termination under
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Section 4041(c) of ERISA, (iii) the institution of proceedings to terminate such
Benefit Plan under Section 4042 of ERISA or (iv) the appointment of a trustee to
administer such Benefit Plan under Section 4042 of ERISA.
"Total Commitment" means the aggregate amount of the Total
Tranche A Commitment, as the same may be reduced from time to time pursuant to
Section 1.07, and Total Tranche B Commitment.
"Total Revenue" has the meaning ascribed to such term in
Section 4.11(b).
"Total Tranche A Commitment" means the aggregate amount of the
Tranche A Commitments, as the same may be reduced from time to time pursuant to
Section 1.07.
"Total Tranche B Commitment" means the aggregate amount of the
Tranche B Commitments.
"Tranche A Commitment" means, with respect to any Bank, (i)
the amount set forth opposite such Bank's name under the heading "Tranche A
Commitment" on Annex A or, in the case of a Bank that becomes a Bank pursuant to
an assignment, the amount of the assignor's Tranche A Commitment assigned to
such Bank, in either case as the same may be reduced from time to time pursuant
to Section 1.07 or increased or reduced from time to time pursuant to
assignments in accordance with Section 9.10(a) or (ii) as the context may
require, the obligation of such Bank to make Tranche A Loans in an aggregate
unpaid principal amount not exceeding such amount.
"Tranche A Commitment Termination Date" means September 30,
2003.
"Tranche A Loan" means any amount advanced by a Bank with
respect to its Tranche A Commitment pursuant to Section 1.01(a).
" Tranche A Note" means any promissory note in the form of
Exhibit A-1.
"Tranche A Share" means, at any time, a fraction, the
numerator of which is the Total Tranche A Commitment at such time and the
denominator of which is the sum of the Total Tranche A Commitment at such time
and the aggregate principal amount of Tranche B Loans outstanding at such time.
"Tranche B Commitment" means, with respect to any Bank, (i)
the amount set forth opposite such Bank's name under the heading "Tranche B
Commitment" on Annex A or (ii) as the context may require, the obligation of
such Bank to make a Tranche B Loan in a principal amount not exceeding such
amount.
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"Tranche B Loan" means any amount advanced by a Bank with
respect to its Tranche B Commitment pursuant to Section 1.01(a).
" Tranche B Note" means any promissory note in the form of
Exhibit A-2.
"Tranche B Share" means, at any time, a fraction, the
numerator of which is the aggregate principal amount of Tranche B Loans
outstanding at such time and the denominator of which is the sum of such
aggregate outstanding principal amount and the Total Tranche A Commitment at
such time.
"Type" means, with respect to Loans, any of the following,
each of which shall be deemed to be a different "Type" of Loan: Base Rate Loans,
Eurodollar Rate Loans having a one-month Interest Period, Eurodollar Rate Loans
having a two-month Interest Period, Eurodollar Rate Loans having a three-month
Interest Period, Eurodollar Rate Loans having a six-month Interest Period and,
if made available by each of the Banks, Eurodollar Rate Loans having a
nine-month Interest Period and Eurodollar Rate Loans having a twelve-month
Interest Period. Any Eurodollar Rate Loan having an Interest Period with a
duration that differs from the duration specified for a Type of Eurodollar Rate
Loan listed above solely as a result of the operation of clauses (i) and (ii) of
the definition of "Interest Period" shall be deemed to be a Loan of such Type
notwithstanding such difference in duration of Interest Periods.
"Unfunded Benefit Liabilities" means, with respect to any
Benefit Plan at any time, the amount of unfunded benefit liabilities of such
Benefit Plan at such time as determined under Section 4001 (a) (18) of ERISA.
"Uniform Commercial Code" means the Uniform Commercial Code as
in effect from time to time in the State of New York.
"United States person" has the meaning ascribed to such term
in Section 1.12(a).
"U.S. Person" means a citizen or resident of the United States
of America, a corporation, partnership or other entity created or organized in
or under any laws of the United States of America, or any estate or trust that
is subject to Federal income taxation regardless of the source of its income.
"U.S. Taxes" means any present or future tax, assessment or
other charge or levy imposed by or on behalf of the United States of America or
any taxing authority thereof.
"Wholly Owned Subsidiary" means, with respect to any Person,
any Subsidiary of such Person all of the Capital Securities and all other
ownership interests and rights to
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acquire ownership interests of which (except directors' qualifying shares) are,
directly or indirectly, owned or controlled by such Person or one or more Wholly
Owned Subsidiaries of such Person or by such Person and one or more of such
Subsidiaries; unless otherwise specified, "Wholly Owned Subsidiary" means a
Wholly Owned Subsidiary of the Borrower.
(b) Other Definitional Provisions. (i) Except as otherwise
specified herein, all references herein (A) to any Person shall be deemed to
include such Person's successors and assigns, (B) to any Applicable Law defined
or referred to herein shall be deemed references to such Applicable Law or any
successor Applicable Law as the same may have been or may be amended or
supplemented from time to time and (C) to any Loan Document or Contract defined
or referred to herein shall be deemed references to such Loan Document or
Contract (and, in the case of any Note or any other instrument, any instrument
issued in substitution therefor) as the terms thereof may have been or may be
amended, supplemented, waived or otherwise modified from time to time.
(ii) When used in this Agreement, the words "herein," "hereof"
and "hereunder" and words of similar import shall refer to this Agreement as a
whole and not to any provision of this Agreement, and the words "Article,"
"Section," "Annex," "Schedule" and "Exhibit" shall refer to Articles and
Sections of, and Annexes, Schedules and Exhibits to, this Agreement unless
otherwise specified.
(iii) Whenever the context so requires, the singular number
includes the plural and vice versa.
(iv) Any item or list of items set forth following the word
"including," "include" or "includes" is set forth only for the purpose of
indicating that, regardless of whatever other items are in the category in which
such item or items are "included," such item or items are in such category, and
shall not be construed as indicating that the items in the category in which
such item or items are "included" are limited to such items or to items similar
to such items.
(v) Each authorization in favor of the Administrative Agent,
the Banks, the Borrower or any other Person granted by or pursuant to this
Agreement shall be deemed to be irrevocable and coupled with an interest.
(vi) Except as otherwise specified herein, all references
herein to the Administrative Agent, any Bank or any Loan Party shall be deemed
to refer to such Person however designated in the Loan Documents, so that (A) a
reference to rights or duties of the Administrative Agent under the Loan
Documents shall be deemed to include the rights or duties of such Person as the
Secured Party under the Pledge Agreement and as a
94
<PAGE>
party under the Affiliate Subordination Agreement, (B) a reference to costs
incurred by a Bank in connection with the Loan Documents shall be deemed to
include costs incurred by such Person as a beneficiary of the Security Interest
under the Pledge Agreement and as a beneficiary of the terms of the Affiliate
Subordination Agreement and (C) a reference to the obligations of the Loan
Parties (other than the Borrower) under the Loan Documents shall be deemed to
include the obligations of such Persons as parties under the Affiliate
Subordination Agreement and, in the case of the Borrower, as Pledgor under the
Pledge Agreement.
(vii) Except as otherwise specified therein, all terms
defined in this Agreement shall have the meanings herein ascribed to them when
used in the Notes or any certificate, opinion or other document delivered
pursuant hereto or thereto.
Section 10.02. Accounting Matters. Unless otherwise specified
herein, all accounting determinations hereunder and all computations utilized by
the Borrower in complying with the covenants contained herein shall be made, all
accounting terms used herein shall be interpreted, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with
Generally Accepted Accounting Principles, except for such departures from
Generally Accepted Accounting Principles so long as (a) the Borrower shall have
delivered to the Administrative Agent, with sufficient copies for each of the
Banks, not later than the first time that such financial statements or
computations are prepared or made on the basis of such departures, a notice
setting forth in reasonable detail the nature and substance of such departures
and the application thereof to such financial statements or computations and (b)
the Required Banks shall not have notified the Borrower within 60 days of the
receipt of the Borrower's notice that such financial statements or computations
may not be prepared or made in accordance with or on the basis of such
departures.
Section 10.03. Representations and Warranties. Except to the
extent that any Representation or Warranty is expressly stated to be made only
at or as of a specified time or times, all Representations and Warranties shall
be deemed made (a) in the case of any Representation and Warranty contained in
this Agreement at the time of its initial execution and delivery, at and as of
the Agreement Date, (b) in the case of any Representation and Warranty contained
in this Agreement or any other document at the time any Loan is made, at and as
of such time and (c) in the case of any particular Representation and Warranty,
wherever contained, at such other time or times as such Representation and
Warranty is made or deemed made in accordance with the provisions of this
Agreement or the document pursuant to, under or in connection with which such
Representation and Warranty is made or deemed made.
95
<PAGE>
Section 10.04. Captions. Captions to Articles, Sections and
subsections of, and Annexes, Schedules and Exhibits to, this Agreement are
included for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose or in any way affect the meaning or
construction of any provision of this Agreement.
96
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers all as of the Agreement Date.
COMCAST CELLULAR COMMUNICATIONS, INC.
By: /s/ John R. Alchin
---------------------------------
Name: John R. Alchin
Title: Senior Vice President
and Treasurer
TORONTO DOMINION (TEXAS), INC., as
Administrative Agent
By: /s/ Sophia D. Sgarbi
---------------------------------
Name: Sophia D. Sgarbi
Title: Vice President
THE BANK OF NEW YORK, as Arranging
Agent and a Bank
By: /s/ Kalpana Raina
---------------------------------
Name: Kalpana Raina
Title: Senior Vice President
BARCLAYS BANK PLC, as Arranging Agent
and a Bank
By: /s/ Andrew M. Wynn
---------------------------------
Name: Andrew M. Wynn
Title: Managing Director
THE CHASE MANHATTAN BANK, N.A., as
Arranging Agent and a Bank
By: /s/ John P. White
---------------------------------
Name: John P. White
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION, as
Arranging Agent and a Bank
By: /s/ Scott C. Meves
---------------------------------
Name: Scott C. Meves
Title: Vice President
THE TORONTO-DOMINION BANK, as Arranging
Agent and a Bank
By: /s/ Sophia D. Sgarbi
---------------------------------
Name: Sophia D. Sgarbi
Title: Mgr. Syndications & Credit
Admin.
<PAGE>
Managing Agents
THE BANK OF NOVA SCOTIA, as Managing
Agent and a Bank
By: /s/ Claudia J. Chifos
---------------------------------
Name: Claudia J. Chifos
Title: Authorized Signatory
CIBC, INC.,
as Managing Agent and a Bank
By: /s/ Deborah D. Strek
---------------------------------
Name: Deborah D. Strek
Title: Vice President
CHEMICAL BANK, as Managing Agent
and a Bank
By: /s/ John J. Huber III
---------------------------------
Name: John J. Huber III
Title: Managing Director
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as Managing Agent and a Bank
By: /s/ James E. Morris
---------------------------------
Name: James E. Morris
Title: Authorized Signature
THE INDUSTRIAL BANK OF JAPAN, LIMITED, as
Managing Agent and a Bank
By: /s/ Jeffrey Cole
---------------------------------
Name: Jeffrey Cole
Title: Senior Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Managing Agent and a Bank
By: /s/ Eugenia Wilds
---------------------------------
Name: Eugenia Wilds
Title: Vice President
NATIONSBANK OF TEXAS, N.A., as Managing
Agent and a Bank
By: /s/ Chad E. Coben
---------------------------------
Name: Chad E. Coben
Title: Vice President
Agreement Date: September 14, 1995
<PAGE>
EXHIBIT 12.1
COMCAST CELLULAR HOLDINGS, INC.
RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------
1997 1996
------------- -------------
<S> <C> <C>
Earnings (loss) before fixed charges (1):
Loss before extraordinary items and
cumulative effect of accounting changes ($ 15,571) ($ 35,570)
Income tax (benefit) expense ............ (8,612) (21,907)
Equity in net losses of affiliates ...... 2,121 2,218
Distributions from Garden State
Cablevision ...........................
Fixed charges (Interest expense) ......... 29,448 26,612
--------- ---------
$ 7,386 ($ 28,647)
========= =========
Ratio of earnings to fixed charges (2) ... -- --
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Earnings (loss) before fixed charges (1):
Loss before extraordinary items and
cumulative effect of accounting changes ($ 69,584) ($ 109,779) ($ 55,089) ($ 65,924) ($79,971)
Income tax (benefit) expense ............ (38,067) (62,944) (21,907) (17,222) 9,044
Equity in net losses of affiliates ...... 6,559 9,600 8,146 9,507 2,985
Distributions from Garden State
Cablevision ........................... 35,479
Fixed charges (Interest expense) ......... 116,297 97,694 83,338 77,744 59,937
--------- ---------- --------- --------- --------
$ 50,684 ($ 65,429) $ 14,488 $ 4,105 ($ 8,005)
========= ========== ========= ========= ========
Ratio of earnings to fixed charges (2) ... -- -- -- -- --
</TABLE>
- ------------
(1) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of distributions from Garden State Cablevision and income
(loss) before extraordinary items and cumulative effect of accounting
changes, income tax expense (benefit), equity in net losses of affiliates
and fixed charges. Fixed charges consist of interest expense.
(2) For the three months ended March 31, 1997 and 1996, earnings, as defined
above, were inadequate to cover fixed charges by $22.1 million and $55.3
million, respectively. For the years ended December 31, 1996, 1995, 1994,
1993 and 1992 earnings, as defined above, were inadequate to cover fixed
charges by $65.6 million, $163.1 million, $68.8 million, $73.6 million and
$67.9 million, respectively.
<PAGE>
EXHIBIT 21.1
Subsidiaries in which Company has State of Incorporation
direct or indirect majority equity interest or Organization
------------------------------------------- ----------------------
Amcell of Atlantic City, Inc. NJ
Amcell of Ocean County, Inc. DE
Amcell of Trenton, Inc. NJ
Amcell of Vineland Holdings, Inc. DE
American Cellular Network Corp. NJ
American Cellular Network Corp. of Delaware DE
Aurora/Elgin Cellular Telephone Company, Inc. IL
AWACS Financial Corporation DE
AWACS Garden State, Inc. DE
AWACS, Inc. PA
AWACS Investment Holdings, Inc. DE
AWACS Purchasing Corporation DE
AWACS Retail Stores, Inc. DE
Cell South of New Jersey, Inc. NJ
Comcast Cellular Corporation DE
Comcast Cellular Communications, Inc. DE
Comcast Cellular Communications, Inc. PA
Comcast Central NJ Holding Company, Inc. DE
Comcast Directory Assistance Partnership DE
Comcast Directory Services, Inc. DE
Comcast Publishing Holdings Corporation PA
Comcast Publishing Holdings Financial Corporation DE
Joliet Cellular Telephone Company, Inc. IL
Long Branch Cellular Telephone Company DE
New Brunswick Cellular Telephone Company DE
Ocean County Cellular Telephone Company WA
Vineland Cellular Telephone Company Inc. DE
Wilmington Cellular Telephone Company DE
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULE
We consent to the use of this Registration Statement of Comcast Cellular
Holdings, Inc. on Form S-4 of our report dated May 7, 1997 (except for Note 3,
as to which the date is May 19, 1997) relating to the consolidated financial
statements of Comcast Cellular Holdings, Inc., appearing in the Prospectus,
which is part of this Registration Statement. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
Our audits of the consolidated financial statements referred to in our
aforementioned report also included the financial statement schedule of Comcast
Cellular Holdings, Inc. listed in Item 21(b). The financial statement schedule
is the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
/s/ DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
July 8, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated January 31, 1997 on Garden State Cablevision L.P. and to all references to
our Firm included in or made a part of this registration statement of Comcast
Cellular Holdings, Inc.
/s/ ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
July 7, 1997
<PAGE>
==============================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
------------
COMCAST CELLULAR HOLDINGS, INC.
(Exact name of obligor as specified in its charter)
Delaware 23-2687447
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1105 North Market Street
Wilmington, Delaware 19801
(Address of principal executive offices) (Zip code)
------------
9 1/2% Senior Notes due 2007, Series B
(Title of the indenture securities)
<PAGE>
==============================================================================
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
- ------------------------------------------------------------------------------
Name Address
- ------------------------------------------------------------------------------
Superintendent of Banks of the State 2 Rector Street, New York,
of New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33- 29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33- 44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
Page=2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 25th day of June, 1997.
THE BANK OF NEW YORK
By: /S/VIVIAN GEORGES
-------------------------------
Name: VIVIAN GEORGES
Title: ASSISTANT VICE PRESIDENT
------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the
Federal Reserve System, at the close of business December 31, 1996, published in
accordance with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from
despository institutions:
Noninterest-bearing balances and
currency and coin .................. $ 6,024,605
Interest-bearing balances .......... 808,821
Securities:
Held-to-maturity securities ........ 1,071,747
Available-for-sale securities ...... 3,105,207
Federal funds sold in domestic offices
of the bank: .......................... 4,250,941
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ............................ 31,962,915
LESS: Allowance for loan and
lease losses ...................... 635,084
LESS: Allocated transfer risk
reserve............................ 429
Loans and leases, net of unearned
income, allowance, and reserve 31,327,402
Assets held in trading accounts ...... 1,539,612
Page=3
<PAGE>
Premises and fixed assets (including
capitalized leases) ................ 692,317
Other real estate owned .............. 22,123
Investments in unconsolidated
subsidiaries and associated
companies .......................... 213,512
Customers' liability to this bank on
acceptances outstanding ............ 985,297
Intangible assets .................... 590,973
Other assets ......................... 1,487,903
----------
Total assets ......................... $52,120,460
==========
LIABILITIES
Deposits:
In domestic offices ................ $25,929,642
Noninterest-bearing ................ 11,245,050
Interest-bearing ................... 14,684,592
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 12,852,809
Noninterest-bearing ................ 552,203
Interest-bearing ................... 12,300,606
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the
bank and of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds purchased ............ 1,360,877
Securities sold under agreements
to repurchase....................... 226,158
Demand notes issued to the U.S.
Treasury ........................... 204,987
Trading liabilities .................. 1,437,445
Other borrowed money:
With original maturity of one year
or less .......................... 2,312,556
With original maturity of more than
one year ......................... 20,766
Bank's liability on acceptances
executed and outstanding ........... 1,014,717
Subordinated notes and debentures .... 1,014,400
Other liabilities .................... 1,721,291
----------
Total liabilities .................... 48,095,648
==========
Page=4
<PAGE>
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 731,319
Undivided profits and capital
reserves .......................... 2,354,095
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 7,030
Cumulative foreign currency transla-
tion adjustments .................. ( 9,916)
----------
Total equity capital ................ 4,024,812
----------
Total liabilities and equity
capital ........................... $52,120,460
==========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
/s/ Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
/s/ J. Carter Bacot
/s/ Thomas A. Renyi Directors
/s/ Alan R. Griffith
------------------------------------------------------------------------------
Page=5
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statement of operations and consolidated balance sheet and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-END> MAR-31-1997 DEC-31-1996
<CASH> 30,439 4,980
<SECURITIES> 0 0
<RECEIVABLES> 63,630 69,573
<ALLOWANCES> 4,351 3,148
<INVENTORY> 9,679 10,458
<CURRENT-ASSETS> 103,887 85,333
<PP&E> 485,639 467,558
<DEPRECIATION> (129,694) (114,144)
<TOTAL-ASSETS> 1,434,475 1,428,182
<CURRENT-LIABILITIES> 144,147 151,952
<BONDS> 1,295,479 1,259,325
0 0
0 0
<COMMON> 0 0
<OTHER-SE> (371,426) (355,855)
<TOTAL-LIABILITY-AND-EQUITY> 1,434,475 1,428,182
<SALES> 104,079 426,053
<TOTAL-REVENUES> 104,079 426,053
<CGS> 0 0
<TOTAL-COSTS> 96,975 389,277
<OTHER-EXPENSES> 2,290 30,655
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 29,448 116,297
<INCOME-PRETAX> (24,183) (107,651)
<INCOME-TAX> (8,612) (38,067)
<INCOME-CONTINUING> (15,571) (69,584)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (15,571) (69,584)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
$1,000,000,000 9 1/2% Senior Notes due 2007, Series B
for Any and All Outstanding 9 1/2% Senior Notes due 2007, Series A
of
Comcast Cellular Holdings, Inc.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00P.M.,
NEW YORK CITY TIME ON , 1997
(THE "EXPIRATION DATE")
UNLESS EXTENDED BY COMCAST CELLULAR HOLDINGS, INC.
EXCHANGE AGENT:
THE BANK OF NEW YORK
By Hand Or Overnight Delivery: By Registered or Certified Mail:
The Bank or New York The Bank of New York
101 Barclay Street 101 Barclay Street, 7B
Corporate Trust Services Window New York, New York 10286
Ground Level Attention: Reorganization Section,
Attention: Reorganization Section, Odell Romeo
Odell Romeo
Facsimile Transmissions:
(Eligible Institutions Only)
(212) 815-6339
To Confirm by Telephone
or for Information Call:
(212) 815-6337
Delivery of this Letter of Transmittal to an address other than as
set forth above or transmission of Instructions via a facsimile
transmission to a number other than as set forth above will not constitute
a valid delivery.
<PAGE>
The undersigned acknowledges receipt of the Prospectus dated
, 1997 (the "Prospectus") of Comcast Cellular Holdings, Inc. (the "Company")
which, together with this Letter of Transmittal (the "Letter of Transmittal"),
describes the Company's offer (the "Exchange Offer") to exchange $1,000 in
principal amount of its 9 1/2% Notes due 2007, Series B (the "New Notes") for
each $1,000 in principal amount of outstanding 9 1/2% Notes due 2007, Series A
(the "Old Notes").
The terms of the New Notes are identical in all material respects
(including principal amount, interest rate and maturity) to the terms of
the Old Notes for which they may be exchanged pursuant to the Exchange
Offer, except that the offering of the New Notes will have been registered
under the Securities Act of 1933, as amended, and, therefore, the New Notes
will not bear legends restricting the transfer thereof. The undersigned
has checked the appropriate boxes below and signed this Letter of
Transmittal to indicate the action the undersigned desires to take with
respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS
CAREFULLY BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE
FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF
THE PROSPECTUS AND THIS LETTER OR TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE
AGENT.
List below the Old Notes to which this Letter of Transmittal relates.
If the space provided below is inadequate, the Certificate Numbers and
Principal Amounts should be listed on a separate signed schedule affixed
hereto.
DESCRIPTION OF OLD NOTES TENDERED HEREWITH
Name(s) and Address(es) Certificate Aggregate Principal
of Registered Holder(s) Number(s)* Principal Amount
(Please fill in) Amount Tendered**
Represented
by Notes*
Total
- ---------------
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered
the full aggregate principal amount represented by Old Notes. See
Instruction 2.
Page=2
<PAGE>
This Letter of Transmittal is to be used either if certificates
for Old Notes are to be forwarded herewith or if delivery of Old Notes is to
be made by book-entry transfer to an account maintained by the Exchange Agent
at The Depository Trust Company ("DTC"), pursuant to the procedures set forth
in "The Exchange OfferBook-Entry Transfer" in the Prospectus. Delivery of
documents to a book-entry transfer facility does not constitute delivery to
the Exchange Agent.
Unless the context requires otherwise, the term "Holder" for
purposes of this Letter of Transmittal means any person in whose name Old
Notes are registered on the books of the Company or any other person who has
obtained a properly completed bond power from the registered holder or any
person whose Old Notes are held of record by DTC who desires to deliver such
Old Notes by book-entry transfer at DTC.
Holders whose Old Notes are not immediately available or who
cannot deliver their Old Notes and all other documents required hereby to the
Exchange Agent on or prior to the Expiration Date may tender their Old Notes
according to the guaranteed delivery procedure set forth in the Prospectus
under the caption "The Exchange Offer-Guaranteed Delivery Procedures."
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
DEPOSITORY TRUST COMPANY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution_______________________________________
____________________________________________________________________
The Depository Trust Company
Account Number______________________________________________________
Transaction Code Number_____________________________________________
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)________________________________________
____________________________________________________________________
Name of Eligible Institution that Guaranteed Delivery
____________________________________________________________________
If Delivered by Book-Entry Transfer:
Account Number______________________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS THERETO.
Name:_______________________________________________________________
Address:____________________________________________________________
____________________________________________________________________
Page=3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange
Offer, the undersigned hereby tenders to the Company the above-described
principal amount of Old Notes. Subject to, and effective upon, the acceptance
for exchange of the Old Notes tendered herewith, the undersigned hereby
exchanges, assigns and transfers to, or upon the order or, the Company all
right, title and interest in and to such Old Notes. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent as the true and lawful
agent and attorney-in-fact of the undersigned (with full knowledge that said
Exchange Agent acts as the agent of the undersigned in connection with the
Exchange Offer) to cause the Old Notes to be assigned, transferred and
exchanged. The undersigned represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Old Notes and to
acquire New Notes issuable upon the exchange of such tendered Old Notes, and
that, when the same are accepted for exchange, the Company will acquire good
and unencumbered title to the tendered Old Notes, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim.
The undersigned also warrants that it will, upon request, execute and deliver
any additional documents deemed by the Exchange Agent or the Company to be
necessary or desirable to complete the exchange, assignment and transfer of
tendered Old Notes or transfer ownership of such Old Notes on the account
books maintained by the Depository Trust Company.
The Exchange Offer is subject to certain conditions as set
forth in the Prospectus under the caption "The Exchange Offer." The
undersigned recognizes that as a result of these conditions (which may be
waived, in whole or in part, by the Company), as more particularly set forth
in the Prospectus, the Company may not be required to exchange any of the Old
Notes tendered hereby and, in such event, the Old Notes not exchanged will be
returned to the undersigned at the address shown below the signature of the
undersigned.
By tendering, each holder of Old Notes represents to the
Company that (i) the New Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the person receiving such
New Notes, whether or not such person is such holder, (ii) neither the holder
of Old Notes nor any such other person has an arrangement or understanding
with any person to participate in the distribution of such New Notes, (iii) if
the holder is not a broker-dealer or is a broker-dealer but will not receive
new Notes for its own account in exchange for Old Notes, neither the holder
nor any such other person is engaged in or intends to participate in a
distribution of the New Notes and (iv) neither the holder nor any such other
person is an "affiliate" of the Company within the meaning of Rule 405 under
the Securities Act of 1933, as amended (the "Act"). If the tendering holder
is a broker-dealer (whether or not it is also an "affiliate") that will
receive New Notes for its own account in exchange for Old Notes, it represents
that the Old Notes to be exchanged for the New Notes were acquired by it as a
result of market-making activities or other trading activities, and
acknowledges that it will deliver a prospectus meeting the requirements of the
Act in connection with any resale of such New Notes. By acknowledging that it
will deliver and by delivering a prospectus meeting the requirements of the
Act in connection with any resale of such New Notes, the undersigned is not
deemed to admit that it is an "underwriter" within the meaning of the Act.
Page=4
<PAGE>
All authority herein conferred or agreed to be conferred shall
survive the death, bankruptcy or incapacity of the undersigned and every
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Tendered
Old Notes may be withdrawn at any time prior to the Expiration Date.
Unless otherwise indicated under "Special Exchange
Instructions," please cause New Notes to be issued, and return any Old Notes
not tendered or not accepted for exchange, in the name(s) of the undersigned
(and, in the case of Old Notes tendered by book-entry transfer, by credit to
the account at DTC). Similarly, unless otherwise indicated under "Special
Delivery Instructions", please mail any certificates for Old Notes not
tendered or not accepted for exchange (and accompanying documents, as
appropriate), and any certificates for New Notes, to the undersigned at the
address shown below the undersigned's signature(s). If both "Special Exchange
Instructions" and "Special Delivery Instructions" are completed, please cause
New Notes to be issued, and return any Old Notes not tendered or not accepted
for exchange, in the name(s) of, and deliver any certificates for such Old
Notes or New Notes to, the person(s) so indicated (and in the case of Old
Notes tendered by book-entry transfer, by credit to the account at DTC so
indicated). The undersigned recognizes that the Company has no obligation,
pursuant to the "Special Exchange Instructions," to transfer any Old Notes
from the name of the registered holder(s) thereof if the Company does not
accept for exchange any of the Old Notes so tendered.
<TABLE>
<S> <C>
SPECIAL EXCHANGE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3, 4 and 9) (See Instructions 3 and 9)
To be completed ONLY if certificates for To be completed ONLY if certificates for
New Notes are to be issued, or beneficial Old Notes not tendered or not accepted for
interests in certificates representing New exchange, or certificates for New Notes,
Notes are to be recorded, or certificates for are to be mailed to someone other than the
Old Notes not tendered or not accepted for undersigned, or to the undersigned at an
exchange are to be issued, or beneficial address other than that shown below the
interests in global securities representing undersigned's signature(s).
Old Notes not accepted for exchange are to
be recorded, in the name of someone other
than the undersigned.
Issue [ ] certificates for New Notes Mail [ ] certificates for Old Notes to:
in name of:
Record [ ] beneficial interests in [ ] certificates for New Notes to:
certificates representing
New Notes to DTC account
of:
Issue [ ] certificates for Old Notes Name____________________________________
to: (Please Print)
Record [ ] beneficial interests in Old Address_________________________________
Notes to DTC account of:
________________________________________
(Zip Code)
Name____________________________________
(Please Print)
Address_________________________________
________________________________________
(Zip Code)
________________________________________
(Taxpayer Identification No.)
</TABLE>
Page=5
<PAGE>
TENDERING HOLDER(S) SIGN HERE
_____________________________________________________________________________
_____________________________________________________________________________
Signature(s) of Holder(s)
Dated:______________________________, 199_
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for Old Notes or by any person(s) authorized to become
registered holder(s) by endorsements and documents transmitted herewith or, if
the Old Notes are held of record by DTC, the person in whose name such Old
Notes are registered on the books of DTC. If signature by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation
or other person acting in a fiduciary or representative capacity, please set
forth the full title of such person.) See Instruction 3.
Name(s):_____________________________________________________________________
_____________________________________________________________________________
(Please Print)
Capacity (full title):_______________________________________________________
Address:_____________________________________________________________________
_____________________________________________________________________________
(Including Zip Code)
Area Code and Telephone No.__________________________________________________
_____________________________________________________________________________
Tax Identification No.
GUARANTEE OF SIGNATURE(S)
(If Required--See Instruction 3)
Authorized Signature:
Name:________________________________________________________________________
Title:_______________________________________________________________________
Address:_____________________________________________________________________
Name of Firm:________________________________________________________________
Area Code and Telephone No.__________________________________________________
Dated:_____________________, 199_
Page=6
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions
of the Exchange Offer
1 Delivery of this Letter of Transmittal and Certificates.
Certificates for all physically delivered Old Notes or confirmation of any
book-entry transfer to the Exchange Agent's account at The Depository Trust
Company of Old Notes tendered by book-entry transfer, as well as a properly
completed and duly executed copy of this Letter of Transmittal or facsimile
thereof, and any other documents required by this Letter of Transmittal, must
be received by the Exchange Agent at any of its addresses set forth herein on
or prior to the Expiration Date.
The method of delivery of this Letter of Transmittal, the Old
Notes and any other required documents is at the election and risk of the
holder and, except as otherwise provided below, the delivery will be deemed
made only when actually received by the Exchange Agent. If such delivery is
by mail, it is suggested that registered mail with return receipt requested,
properly insured, be used.
Holders whose Old Notes are not immediately available or who
cannot deliver their Old Notes and all other required documents to the
Exchange Agent on or prior to the Expiration Date or comply with book-entry
transfer procedures on a timely basis may tender their Old Notes pursuant to
the guaranteed delivery procedure set forth in the Prospectus under "The
Exchange Offer-Guaranteed Delivery Procedures." Pursuant to such procedure:
(i) such tender must be made by or through an Eligible Institution (as defined
therein); (ii) on or prior to the Expiration Date, the Exchange Agent must
have received from such Eligible Institution, a letter, telegram or facsimile
transmission setting forth the name and address of the tendering holder, the
names in which such Old Notes are registered, and, if possible, the
certificate numbers of the Old Notes to be tendered; and (iii) all tendered
Old Notes (or a confirmation of any book-entry transfer of such Old Notes into
the Exchange Agent's account at The Depository Trust Company) as well as this
Letter of Transmittal and all other documents required by this Letter of
Transmittal must be received by the Exchange Agent within five New York Stock
Exchange trading days after the date of execution of such letter, telegram or
facsimile transmission, all as provided in the Prospectus under the caption
"The Exchange Offer-Guaranteed Delivery Procedures."
No alternative, conditional, irregular or contingent tenders
will be accepted. All tendering holders, by execution of this Letter of
Transmittal (or facsimile thereof), shall waive any right to receive notice of
the acceptance of the Old Notes for exchange.
Page=7
<PAGE>
2 Partial Tenders; Withdrawals. Tenders of Old Notes will be
accepted in all denominations of $1,000 and integral multiples in excess
thereof. If less than the entire principal amount of Old Notes evidenced by a
submitted certificate is tendered, the tendering holder must fill in the
principal amount tendered in the box entitled "Principal Amount Tendered." A
newly issued certificate for the principal amount of Old Notes submitted but
not tendered will be sent to such holder as soon as practicable after the
Expiration Date. All Old Notes delivered to the Exchange Agent will be deemed
to have been tendered unless otherwise indicated.
Tenders of Old Notes pursuant to the Exchange Offer are
irrevocable, except that Old Notes tendered pursuant to the Exchange Offer may
be withdrawn at any time prior to the Expiration Date. To be effective, a
written, telegraphic or facsimile transmission notice of withdrawal must be
timely received by the Exchange Agent. Any such notice of withdrawal must
specify the person named in the Letter of Transmittal as having tendered Old
Notes to be withdrawn, the certificate numbers of the Old Notes to be
withdrawn, the principal amount of Old Notes delivered for exchange, a
statement that such a holder is withdrawing its election to have such Old
Notes exchanged, and the name of the registered holder of such Old Notes, and
must be signed by the holder in the same manner as the original signature on
the Letter of Transmittal (including any required signature guarantees) or be
accompanied by evidence satisfactory to the Company that the person
withdrawing the tender has succeeded to the beneficial ownership of the Old
Notes being withdrawn. The Exchange Agent will return the properly withdrawn
Old Notes promptly following receipt of notice of withdrawal. If Old Notes
have been tendered pursuant to the procedure for book-entry transfer, any
notice of withdrawal must specify the name and number of the account at The
Depository Trust Company to be credited with the withdrawn Old Notes or
otherwise comply with The Depository Trust Company's procedures.
3 Signature on this Letter of Transmittal; Written Instruments
and Endorsements; Guarantee of Signatures. If this Letter of Transmittal is
signed by the registered holder(s) of the Old Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of
certificates without alteration, enlargement or any change whatsoever.
If any of the Old Notes tendered hereby are owned of record
by two or more joint owners, all such owners must sign this Letter of
Transmittal.
If a number of Old Notes registered in different names are
tendered, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
Old Notes.
Page=8
<PAGE>
When this Letter of Transmittal is signed by the registered
holder or holders of Old Notes listed and tendered hereby, no endorsements of
certificates or separate written instruments of transfer or exchange are
required unless New Notes issued in exchange therefor are to be issued, or Old
Notes not tendered or not exchanged are to be returned in the name of any
person other than the registered holder(s). Signatures on any such
certificates or separate written instruments of transfer or exchange must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than
the registered holder or holders of the Old Notes listed, such Notes must be
endorsed or accompanied by separate written instruments of transfer or
exchange in form satisfactory to the Company and duly executed by the
registered holder, in either case signed exactly as the name or names of the
registered holder or holders appear(s) on the Old Notes.
If this Letter of Transmittal, any certificates or separate
written instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should
so indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
Endorsements on certificates or signatures on separate written
instruments of transfer or exchange required by this Instruction 3 must be
guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal need not be guaranteed
by an Eligible Institution, provided the Old Notes are tendered: (i) by a
registered holder of such Old Notes and the certificates for New Notes to be
issued in exchange therefor are to be issued (or any untendered amount of Old
Notes are to be reissued) to the registered holder and such holder has not
completed the instruction entitled "Special Exchange Instructions" or "Special
Delivery Instructions"; or (ii) for the account of any Eligible Institution.
4 Transfer Taxes. The Company shall pay all transfer taxes, if
any, applicable to the transfer and exchange of Old Notes to it or its order
pursuant to the Exchange Offer. If, however, New Notes are to be delivered
to, or are to be registered or issued in the name of, any person other than
the registered holder of the Old Notes tendered hereby, or if a transfer tax
is imposed for any reason other than the transfer of Old Notes to the Company
or its order pursuant to the Exchange Offer, the amount of any such transfer
taxes (whether imposed on the registered holder or any other person) will be
payable by the registered tendering holder. If satisfactory evidence of
payment of such taxes or exception therefrom is not submitted herewith the
amount of such transfer taxes will be billed directly to such registered
tendering holder.
Page=9
<PAGE>
Except as provided in this Instruction 4, it will not be
necessary for transfer tax stamps to be affixed to the Old Notes listed in
this Letter of Transmittal.
5 Waiver of Conditions. The Company reserves the absolute
right to waive, in whole or in part, any of the conditions to the Exchange
Offer set forth in the Prospectus.
6 Mutilated, Lost, Stolen or Destroyed Notes. Any holder whose
Old Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated below for further instructions.
7 Requests for Assistance or Additional Copies. Questions
relating to the procedure for tendering, as well as requests for additional
copies of the Prospectus and this Letter of Transmittal, may be directed to
the Exchange Agent at the address and telephone number set forth below. In
addition, all questions relating to the Exchange Offer, as well as requests
for assistance or additional copies of the Prospectus and this Letter of
Transmittal, may be directed to 1500 Market Street, Philadelphia, Pennsylvania
19102. Attention: Kelley Claypool, (215) 665-1700.
8 Irregularities. All questions as to the validity, form,
eligibility (including time of receipt), and acceptance of Letters of
Transmittal or Old Notes will be resolved by the Company, whose determination
will be final and binding. The Company reserves the absolute right to reject
any or all Letters of Transmittal or tenders that are not in proper form or
the acceptance of which would, in the opinion of the Company's counsel, be
unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to the particular Old Notes covered by any Letter of
Transmittal or tendered pursuant to such letter. None of the Company, the
Exchange Agent or any other person will be under any duty to give notification
of any defects or irregularities in tenders or incur any liability for failure
to give any such notification. The Company's interpretation of the terms and
conditions of the Exchange Offer shall be final and binding.
9 Special Exchange and Delivery Instructions. If certificates
representing New Notes are to be issued in the name of, or any Old Notes not
tendered or not accepted for exchange are to be issued or to be returned to, a
person other than the person(s) signing this Letter of Transmittal or any
certificates for New Notes or Certificates for Old Notes not tendered or not
accepted for exchange are to be mailed to someone other than the person(s)
signing this Letter of Transmittal or to the person signing this Letter of
Transmittal at an address other than that shown above, the appropriate boxes
on this Letter of Transmittal should be completed. A holder in whose name
such Old Notes are registered on the books of DTC may request that Old Notes
not accepted for exchange be credited to such account maintained at DTC as
such holder may designate under "Special Exchange Instructions." If no such
instructions are given, such Old Notes not accepted for exchange will be
returned by crediting the account at DTC.
10 Definitions. Capitalized terms used in this Letter of
Transmittal and not otherwise defined have the meanings given in the
Prospectus.
IMPORTANT: This Letter of Transmittal or a facsimile thereof
(together with certificates for Old Notes or confirmation of book-entry
transfer and all other required documents) or a Notice of Guaranteed Delivery
must be received by the Exchange Agent on or prior to the Expiration Date.
Page=10
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
for
Offer to Exchange
9 1/2% Senior Notes due 2007, Series B
for Any and All Outstanding
9 1/2% Senior Notes due 2007, Series A
of
COMCAST CELLULAR HOLDINGS, INC.
Registered holders of outstanding 9 1/2% Senior Notes due 2007,
Series A (the "Old Notes") who wish to tender their Old Notes in exchange for
a like principal amount of 9 1/2% Senior Notes due 2007, Series B (the "New
Notes") and, in each case, whose Old Notes are not immediately available or
who cannot deliver their Old Notes and Letter of Transmittal (and any other
documents required by the Letter of Transmittal) to The Bank of New York (the
"Exchange Agent") prior to the Expiration Date, may use this Notice of
Guaranteed Delivery or one substantially equivalent hereto. This Notice of
Guaranteed Delivery may be delivered by hand or sent by facsimile transmission
(receipt confirmed by telephone and an original delivered by guaranteed
overnight delivery) or by mail to the Exchange Agent. See "The Exchange
OfferGuaranteed Delivery Procedures" in the Prospectus.
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
By Hand Or Overnight Delivery: By Registered or Certified Mail:
The Bank or New York The Bank of New York
101 Barclay Street 101 Barclay Street, 7B
Corporate Trust Services Window New York, New York 10286
Ground Level Attention: Reorganization Section,
Attention: Reorganization Section, Odell Romeo
Odell Romeo
Facsimile Transmissions:
(Eligible Institutions Only)
(212) 815-6339
To Confirm by Telephone
or for Information Call:
(212) 815-6337
Delivery of this Notice of Guaranteed Delivery to an address other
than as set forth above or transmission of instructions via a facsimile
transmission to a number other than as set forth above will not constitute a
valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on Letter of Transmittal is required to be
guaranteed by an Eligible Institution, such signature guarantee must appear in
the applicable space provided on the Letter of Transmittal for Guarantee of
Signatures.
<PAGE>
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(Note to be used for signature guarantee)
The undersigned, a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as an "eligible guarantor institution," including (as
such terms are defined therein); (i) a bank; (ii) a broker, dealer, municipal
securities broker or dealer or government securities broker or dealer; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association, hereby
guarantees to deliver to the Exchange Agent at one of its addresses set forth
above, the certificates representing the Old Notes, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, and any other documents required by the
Letter of Transmittal within five New York Stock Exchange, Inc. trading days
after the date of execution of this Notice of Guaranteed Delivery.
Name of Firm:_________________________ ______________________________________
(Authorized Signature)
Address:______________________________ Title:________________________________
______________________________________ Name:_________________________________
(Zip Code) (Please type or print)
Area Code and Telephone Number: Date:
______________________________________ ______________________________________
NOTE: DO NOT SEND NOTES WITH THIS NOTICE OF GUARANTEED
DELIVERY. NOTES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
Page=2
<PAGE>
EXHIBIT 99.3
INSTRUCTION TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER OF PARTICIPANT FROM OWNER
OF
COMCAST CELLULAR HOLDINGS, INC.
9 1/2% Senior Notes due 2007, Series A
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus
dated , 1997 (the "Prospectus") of Comcast
Cellular Holdings, Inc., a Delaware corporation (the "Company"), and the
accompanying Letter of Transmittal (the "Letter of Transmittal"), that
together constitute the Company's offer (the "Exchange Offer"). Capitalized
terms used but not defined herein have the meaning as ascribed to them in the
Prospectus.
This will instruct you, the registered holder and/or book-entry
transfer facility participant, as to the action to be taken by you relating to
the Exchange Offer with respect to the Old Notes held by you for the account
of the undersigned.
The aggregate face amount of the Old Notes held by you for the
account of the undersigned is (fill in amount):
$__________________ of the 9 1/2% Senior Notes due 2007, Series A
With respect to the Exchange Offer, the undersigned hereby
instructs you (check appropriate box):
[ ] To TENDER the following Old Notes held by you for the account
of the undersigned (insert principal amount of Old Notes to be tendered, if
any):
$__________________ of the 9 1/2% Senior Notes due 2007, Series A
[ ] NOT to TENDER any Old Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Old Notes held by
you for the account of the undersigned, it is understood that you are
authorized to make, on behalf of the undersigned (and the undersigned, by its
signature below, hereby makes to you), the representation and warranties
contained in the Letter of Transmittal that are to be made with respect to the
undersigned as a beneficial owner, including but not limited to the
representations, that (i) the New Notes acquired pursuant to the Exchange
Offer are being obtained in the ordinary course of business of the
undersigned, (ii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate in the
distribution of such New Notes, (iii) if the undersigned is not a
broker-dealer, or is a broker-dealer but will not receive New Notes for its
own account in exchange for Old Notes, neither the undersigned nor any such
other person is engaged in or intends to participate in the distribution of
such New Notes and (iv) neither the undersigned nor any such person is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act of 1933, as amended (the "Securities Act"). If the undersigned is a
broker-dealer (whether or not it is also an "affiliate") that will receive New
Notes for its own account in exchange for Old Notes, it represents that such
Old Notes were acquired as a result of market-making activities or other
trading activities, and it acknowledges that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale
of such New Notes. By acknowledging that it will deliver and by delivering a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such New Notes, the undersigned is not deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
<PAGE>
SIGN HERE
Name of beneficial owner(s):__________________________________________________
Signature(s):_________________________________________________________________
Name(s) (please print):_______________________________________________________
Address:______________________________________________________________________
______________________________________________________________________________
Telephone Number:_____________________________________________________________
Taxpayer Identification or Social Security Number:____________________________
______________________________________________________________________________
Date:_________________________________________________________________________
Page=2
<PAGE>
EXHIBIT 99.4
Offer to Exchange
9 1/2% Senior Notes due 2007, Series B
for Any and All Outstanding
9 1/2% Senior Notes due 2007, Series A
of
COMCAST CELLULAR HOLDINGS, INC.
To Our Clients:
We are enclosing herewith a Prospectus, dated ,
1997, of Comcast Cellular Holdings, Inc. (the "Company"), a Delaware
corporation, and a related Letter of Transmittal (which together constitute
the "Exchange Offer") relating to the offer by the Company to exchange its 9
1/2% Senior Notes, Series B due 2007 (the "New Notes"), pursuant to an
offering registered under the Securities Act of 1933, as amended (the
"Securities Act"), for a like principal amount of its issued and outstanding 9
1/2% Senior Notes due 2007, Series A (the "Old Notes") upon the terms and
subject to the conditions set forth in the Exchange Offer.
Please note that the Offer will expire at 5:00 p.m., New York City
time, on , 1997, unless extended.
The Offer is not conditioned upon any minimum number of Old Notes
being tendered.
We are the holder of record and/or participant in the book-entry
transfer facility of Old Notes held by us for your account. A tender of such
Old Notes can be made only by us as the record holder and/or participant in
the book-entry transfer facility and pursuant to your instructions. The Letter
of Transmittal is furnished to you for your information only and cannot be
used by you to tender Old Notes held by us for your account.
We request instructions as to whether you wish to tender any or
all of the Old Notes held by us for your account pursuant to the terms and
conditions of the Exchange Offer. We also request that you confirm that we may
on your behalf make the representations contained in the Letter of
Transmittal.
Pursuant to the Letter of Transmittal, each holder of Old Notes
will represent to the Company that (i) the New Notes acquired in the Exchange
Offer are being obtained in the ordinary course of business of the person
receiving such New Notes, whether or not such person is such holder, (ii)
neither the holder of the Old Notes nor any such other person has an
arrangement or understanding with any person to participate in the
distribution of such New Notes, (iii) if the holder is not a broker-dealer or
is a broker-dealer but will not receive New Notes for its own account in
exchange for Old Notes, neither the holder nor any such other person is
engaged in or intends to participate in a distribution of the New Notes and
(iv) neither the holder nor any such other person is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act. If the
tendering holder is a broker-dealer (whether or not it is also an "affiliate")
that will receive New Notes for its own account in exchange for Old Notes, we
will represent on behalf of such broker-dealer that the Old Notes to be
exchanged for the New Notes were acquired by it as a result of
marketing-making activities or other trading activities, and acknowledge on
behalf of such broker-dealer that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes. By acknowledging that it will deliver and by delivering a prospectus
meeting the requirements of the Securities Act in connection with any resale
of such New Notes, the undersigned is not deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
Very truly yours,
<PAGE>
EXHIBIT 99.5
Offer to Exchange
9 1/2% Senior Notes due 2007, Series B
for Any and All Outstanding
9 1/2% Senior Notes due 2007, Series A
of
COMCAST CELLULAR HOLDINGS, INC.
To Registered Holders and Depository
Trust Company Participants:
We are enclosing herewith the material listed below relating to
the offer by Comcast Cellular Holdings, Inc. (the "Company"), a Delaware
corporation, to exchange its 9 1/2% Senior Notes due 2007, Series B (the "New
Notes"), pursuant to an offering registered under the Securities Act of 1933,
as amended (the "Securities Act"), for a like principal amount of its issued
and outstanding 9 1/2% Senior Notes due 2007, Series A (the "Old Notes") upon
the terms and subject to the conditions set forth in the Company's Prospectus,
dated , 1997, and the related Letter of Transmittal (which
together constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated , 1997;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instruction to Registered Holder and/or Book-Entry Transfer
Participant from Owner; and
5. Letter which may be sent to your clients for whose account
you hold Old Notes in your name or in the name of your
nominee, to accompany the instruction form referred to
above, for obtaining such client's instruction with regard
to the Exchange Offer.
We urge you to contact your clients promptly. Please note that the
Offer will expire at 5:00 p.m., New York City time, on , 1997,
unless extended.
The Offer is not conditioned upon any minimum number of Old Notes
being tendered.
<PAGE>
Pursuant to the Letter of Transmittal, each holder of Old Notes
will represent to the Company that (i) the New Notes acquired in the Exchange
Offer are being obtained in the ordinary course of business of the person
receiving such New Notes, whether or not such person is such holder, (ii)
neither the holder of the Old Notes nor any such other person has an
arrangement or understanding with any person to participate in the
distribution of such New Notes, (iii) if the holder is not a broker-dealer or
is a broker-dealer but will not receive New Notes for its own account in
exchange for Old Notes, neither the holder nor any such other person is
engaged in or intends to participate in a distribution of the New Notes and
(iv) neither the holder nor any such other person is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act. If the
tendering holder is a broker-dealer that will receive New Notes for its own
account in exchange for Old Notes, you will represent on behalf of such
broker-dealer that the Old Notes to be exchanged for the New Notes were
acquired by it as a result of market-making activities or other trading
activities, and acknowledge on behalf of such broker-dealer that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes. By acknowledging that it will
deliver and by delivering a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes, the
undersigned is not deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The enclosed Instruction to Registered Holder and/or Book-Entry
Transfer Participant from Owner contains an authorization by the beneficial
owners of the Old Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or
dealer or to any other persons (other than the Exchange Agent) in connection
with the solicitation of tenders of Old Notes pursuant to the Offer. The
Company will pay or cause to be paid any transfer taxes payable on the
transfer of Old Notes to it, except as otherwise provided in Instruction 4 of
the enclosed Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
undersigned.
Very truly yours,
THE BANK OF NEW YORK
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU THE
AGENT OF COMCAST CELLULAR HOLDINGS, INC. OR THE BANK OF NEW YORK OR AUTHORIZE
YOU TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON THEIR BEHALF IN CONNECTION
WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
<PAGE>
EXHIBIT 99.6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Garden State Cablevision L.P.:
We have audited the accompanying balance sheets of Garden State Cablevision
L.P., (a Delaware Limited Partnership) as of December 31, 1995 and 1996, and the
related statements of operations, partners' deficit and cash flows for each of
the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Garden State Cablevision L.P.
as of December 31, 1995 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
January 31, 1997
