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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
June 1, 1995 (May 15, 1995)
C-TEC CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 0-11053 23-2093008
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
105 Carnegie Center, Princeton, NJ 08540-6215
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(609) 734-3700
(Former name or former address, if changed since last report).
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Item 5. Other Events
C-TEC Corporation completed the first step in its acquisition of Twin
County Trans Video, Inc. on May 15, 1995 when the Company acquired a 40 percent
minority interest in Twin County from the shareholders of Twin County in
exchange for cash of approximately $26.4 million, including a $5 million deposit
made previously by the Company and a $4 million 5% promissory note of C-TEC
Cable Systems, Inc., a wholly owned subsidiary of the Company. Additionally, the
Company paid $11 million in consideration of a noncompete agreement. The source
of the funds was the Company's working capital. In addition C-TEC assumed
overall responsibility for Twin County's day to day operations in accordance
with the terms of a Management Agreement. The acquisition of the remaining
shares and the merger of Twin County with C-TEC is expected to be completed by
year-end. Pursuant to the Merger Agreement, Twin County shareholders will
receive either newly authorized convertible preferred stock of C-TEC Corporation
or exchangeable preferred stock of C-TEC Cable Systems, Inc., with a
stated value of $52 million in either case, for the remaining Twin County
shares. The amount of consideration in the Twin County transaction was
determined pursuant to arm's-length negotiations. Twin county is the largest
competitive cable operation in the country serving 74,000 subscribers in the
Lehigh Valley area of Pennsylvania.
Item 7. Exhibits
(c) Exhibits
10.1 Amendment Agreement dated as of March 30, 1995 to Merger
Agreement dated September 23, 1994 among C-TEC Cable Systems,
Inc., C-TEC Cable Systems of Pennsylvania, Inc., Twin County
Trans Video, Inc., Bark Lee Yee, Stella C. Yee, Susan C. Yee,
Raymond C. Yee, Kenneth C. Yee and Robert G. Tallman as trustee
for that certain trust created pursuant to a trust agreement
dated December 17, 1992.
10.2 Second Amendment Agreement dated as of May 15, 1995 to Merger
Agreement dated September 23, 1994 among C-TEC Cable Systems,
Inc., C-TEC Cable Systems of Pennsylvania, Inc., Twin County
Trans Video, Inc., Bark Lee Yee, Stella C. Yee, Susan C. Yee,
Raymond C. Yee, Kenneth C. Yee and Robert G. Tallman as trustee
for that certain trust created pursuant to a trust agreement
dated December 17, 1992 (including Exhibits M-1, M-2, N-1, N-2
and O to such Second Amendment Agreement).
99 Press release of C-TEC Corporation dated as of May 16, 1995
announcing the acquisition of a minority interest in Twin County
Trans Video, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
C-TEC Corporation
By: /s/ Bruce Godfrey
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Name: Bruce Godfrey
Title: Executive Vice President
and Chief Financial Officer
Date: June 1, 1995
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Exhibit 10.1
AMENDMENT AGREEMENT
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This Amendment Agreement (the "Amendment Agreement") is entered into as of
March 30, 1995 between C-TEC Cable Systems, Inc. ("C-TEC Cable"), C-TEC Cable
Systems of Pennsylvania, Inc. ("C-TEC-PA"), C-Tec Corporation ("C-TEC"), Twin
County Trans Video, Inc. ("Twin County") and Bark Lee Yee, Stella C. Yee, Susan
C. Yee, Raymond C. Yee, Kenneth C. Yee and Robert G. Tallman as trustee for
those two (2) certain trusts created pursuant to trust agreements dated
December 17, 1992 (such individuals and trustee referred to individually as a
"Shareholder" and in the aggregate as the "Shareholders"; with reference to the
following:
RELEVANT FACTS
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A. C-TEC Cable, C-TEC-PA, Twin county and the Shareholders entered into a
Merger Agreement dated September 23, 1994 (the "Merger Agreement"); and
B. The Merger Agreement provides for the execution of certain other
agreements including a Share Exchange Option Agreement (the "Exchange
Agreement") between the Shareholders and C-TEC, a Plan of Merger (the "Plan of
Merger"), a Promissory Note (the "Note"), a Non-Competition Agreement and
certain Tax-Free Representation Certificates (collectively the "Collateral
Documents"); and
C. The parties desire to amend the Merger Agreement and the Collateral
Documents and make certain other agreements and promises, including without
limitation, amendments to the Merger
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Agreement and the Collateral Documents providing for the novation of C-TEC for
C-TEC Cable, the novation of C-TEC Cable for C-TEC-PA and the release and
elimination of C-TEC-PA from the Merger Agreement and the Collateral Documents.
NOW, THEREFORE, intending to be legally bound hereby, and in consideration
of the foregoing, for good and valuable consideration, the adequacy of which
each of the parties acknowledge, the parties agree as follows:
1. All paragraphs of Relevant Facts stated above are incorporated herein
as if set forth at length.
2. All capitalized terms not otherwise defined herein shall have the
meaning set forth in the Merger Agreement. The term "novation" as used herein
shall mean the substitution of, and unconditional assumption by, one party of
the obligations of another party to the Merger Agreement and the Collateral
Documents.
3. Deposit.
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(a) On or prior to March 30, 1995, C-TEC Cable shall deliver to the
Shareholders Four (4) Million ($4,000,000.00) Dollars in readily available funds
by wire transfer to a bank or account of Shareholders' choice with wire
instructions to be received in writing by C-TEC Cable on or before the close of
business, March 29, 1995. C-TEC Cable hereby also directs the escrow agent under
the Escrow Agreement dated August 25, 1994
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(the "Existing Escrow") to deliver to the Shareholders on March 30, 1995, the
entire balance of the Escrow Account including paid, and accrued but unpaid
interest thereon, and upon said payment, all parties hereby release the Escrow
Agent from any and all liability, claims and/or accounting. Of the sums so
delivered to the Shareholders, the sum of Five Million ($5,000,000.00) Dollars
shall be hereinafter referred to as the "Deposit".
(b) At Closing under the Merger Agreement, the cash portion of the
Consideration under Section 2.7 of the Merger Agreement shall be reduced by the
amount of the Deposit.
(c) In the event C-TEC Cable fails to close under the Merger
Agreement on or prior to May 15, 1995, C-TEC Cable shall forfeit the Deposit and
all other sums paid hereunder to the Shareholders, such forfeiture being Twin
County's and the Shareholders' sole remedy and liquidated damages for the
failure of C-TEC Cable to close under the Merger Agreement. The parties agree
that the sums paid to the Shareholders hereunder are a reasonable forecast of
the Shareholders' damages occasioned by C-TEC Cable's failure to close under the
Merger Agreement and each party hereby irrevocably waives its rights, if any, to
challenge said sums as the appropriate or legally sufficient amount of
liquidated damages for such failure to close. C-TEC Cable shall not forfeit the
Deposit and shall be entitled to its prompt return in the event the failure to
close is due to a Default (as
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defined in paragraph 7 hereof) by Twin County or the Shareholders. Said Default
shall not be caused by changes to documents and changes to the warranties and
representations referred to in paragraph 8 of this Amendment Agreement.
4. Closing.
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The parties agree that Closing of the Merger shall occur on May 15,
1995 and that the parties shall diligently and in good faith prepare and execute
any agreements and instruments necessary to consummate the Merger and to
accommodate the terms of this Amendment Agreement at Closing.
5. Restructuring of Merger.
-----------------------
(a) The Merger shall be redefined to mean a merger of Twin County
with and into C-TEC Cable. Immediately following the merger, C-TEC Cable will
transfer all assets and liabilities received from Twin County to C-TEC-PA.
(b) Preferred Stock shall be deemed to be Preferred Stock of C-TEC
bearing terms similar to those of the Preferred Stock as currently set forth in
the Merger Agreement.
(c) The Exchange Agreement will not be executed by the parties, and
the terms of the Preferred Stock Series A and Series B, in their entirety, shall
be as stated in Exhibits A and B attached hereto and incorporated hereby. The
parties understand that such preferred stock has not be authorized, but C-TEC's
failure to authorize such stock prior to Closing will not excuse it from its
obligations hereunder.
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(d) The Note shall be restated in its entirety and shall be as
attached hereto as Exhibit C.
6. Consideration Adjustment.
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The cash portion of the Considerations set forth in Section 2.4(1)(b)
of the Merger Agreement shall be reduced by $7,400,000.(less any adjustment as
set forth in Section 8(e) herein).
7. Closing Conditions.
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C-TEC Cable agrees that: as of 2:30 P.M. on March 30, 1995, all due
diligence by C-TEC, C-TEC Cable and any and all of its affiliates will cease;
conditions to obligations to close under Section 5.1 of the Merger Agreement
have been satisfied; no action or inaction by any governmental agency shall be
deemed to be or cause a Default by Twin County or Shareholders, unless the same
shall have been caused by the conduct of Twin County and/or the Shareholders;
and as used herein a "Default" by the Shareholders or Twin County shall only
mean a failure or refusal to satisfy those conditions stated in Sections 5.1(4),
(5), (7), (8), (12), (13), (14), (15), (16), (18) and (19) of the Merger
Agreement, all of which Twin county and the Shareholders agree to satisfy on or
before May 15, 1995. Notwithstanding the foregoing and except as expressly
stated herein, C-TEC Cable is not waiving any rights to assert breaches of
representations, warranties and convenants.
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B. Other Terms and Conditions.
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(a) At Closing, the Shareholders shall purchase by assignment from
C-TEC Cable, the cash value of certain split dollar life insurance policies
insuring the lives of the individual Shareholders for Two Million Seven Hundred
Fifty Thousand Dollars ($2,750,000). C-TEC shall have no further obligation to
maintain such policies, nor shall it have any claim on the proceeds of such
policies.
(b) In the event that Twin County has any obligation or liability for
back programming fees for periods prior to the date of Closing, the
Shareholders' responsibility to indemnify C-TEC Cable for such amounts shall not
be subject to or limited by the Consideration Threshold set forth in Section
2.7(6) of the Merger Agreement. Upon receipt of any claim for such fees, C-TEC
Cable will promptly notify the Shareholders of said claim. The Shareholders
shall have the right to participate in all meetings and discussions with regard
to any such claim. Subject only to the right of Shareholders to participate,
C-TEC Cable shall have the full right to contest such proposed claim and shall
be entitled to settle or agree to pay in full such proposed claim. Upon the
settlement of said claim, the Shareholders, at their election, shall either (i)
elect to reimburse the Company within thirty (30) days of said settlement; or
(ii) request that the next scheduled dividend payment owed to them on the
Preferred
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Stock be reduced by the amount owed to C-TEC Cable for back programming fees;
(c) Regarding Article 3.2 of the Merger Agreement, C-TEC Cable will
accept and assume any liability for funding deficiencies that may occur in any
existing Twin County pension plans;
(d) C-TEC Cable agrees that any amounts due for services rendered by
its affiliate, Commonwealth Communications, Inc., relating to construction of
competitive access network/school network assets will be applied toward the
Consideration Threshold specified in Article 2.7 (6) of the Merger Agreement,
rather than as a Consideration Adjustment. Twin County affirms that all
equipment and facilities for the competitive access network/school assets will
be the property of Twin County. Such equipment and facilities have not been
pledged, assigned or transferred to the school or any third party;
(e) C-TEC Cable agrees that Twin County has not breached and is not
in default under Article 3.11 of the Merger Agreement. Twin County agrees to
cease all related construction activity and capital expenditures and not
undertake any additional construction or purchase any additional equipment in
the service area other than normal maintenance in the ordinary course of
business, unless C-TEC Cable requests otherwise. C-TEC Cable agrees that any
construction it requests
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Twin County to do between March 30 and Closing shall be at C-TEC Cable's sole
discretion and expense. Any capital items that have been ordered prior to but
arrive after March 30, 1995, shall be offset against the amount of the cash
Consideration Adjustment outlined under Section 6 hereof;
(f) Any adjustment to Consideration pursuant to Section 2.7(5) of the
Merger Agreement shall not be subject to, taken into consideration for, or
limited by the Consideration Threshold;
(g) In connection with the QVC II launch incentives, all monies
received (less payments for attorney fees related to the QVC litigation
settlement of approximately $89,250) shall be for the benefit of C-TEC and, at
Closing, such amounts shall be credited to C-TEC as an adjustment to the
Consideration;
(h) On or prior to Closing, Twin County shall obtain from Computer
Aid, Inc. ("CAI") an agreement releasing Twin County from any amounts due or
other obligation to CAI or to any of its subsidiaries, including, specifically,
New Century Communications ("NCC") which may have existed at any time subsequent
to Closing;
(i) C-TEC is aware of a Representation Petition with the National
Labor Relations Board that was filed by the International Brotherhood of
Electrical Workers, Local Union 375 and also an unfair labor practice charge
that was filed by the Union specifying that Twin County was using an
employer-dominated
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labor agreement and agrees that both of these actions do not constitute a
Material Adverse Change in accordance with Article 3.7 of the Merger Agreement.
(j) For purposes of the Consideration Adjustment under the Merger
Agreement and the Collateral Documents, the parties agree that the closing date
for the Balance Sheet shall be as of the close of business, April 30, 1995. To
the Consideration Adjustment made as of April 30, 1995, there shall be added the
sum of approximately $68,500.00, which the parties agree reflects the increase
in value of Twin County which would occur between April 30, 1995 and the date of
closing.
(k) Pursuant to Article 2.7, Consideration Adjustment, C-TEC agrees
that monthly operating revenues for the months of September, October and
November, 1994, as determined in accordance with GAAP averages, were not less
than $2,000,000 per month.
9. Amendment to Merger Agreement and Related Documents.
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(a) The terms of this Amendment Agreement shall be effective as of
the date set forth above.
(b) The parties agree to effect such amendments or revisions to the
Merger Agreement and the Collateral Documents, as well as any supplements to any
required regulatory filings as may be appropriate to effectuate this Amendment
Agreement.
(c) Except as otherwise expressly set forth herein, the parties
hereby ratify and confirm all other terms and
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conditions of the Merger Agreement and the Collateral Documents which shall
remain in full force and effect except that all warranties and representations
related to items amended by this Agreement are hereby accordingly amended to
incorporate the changes herein.
IN WITNESS WHEREOF, the parties enter into the Amendment Agreement
effective as of the date set forth above.
ATTEST/WITNESS: C-TEC CORPORATION
/s/ Phil Passanante By: /s/ David McCourt
- ------------------------ ------------------------
C-TEC CABLE SYSTEMS, INC.
/s/ Phil Passanante By: /s/ David McCourt
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C-TEC-CABLE SYSTEMS OF
PENNSYLVANIA, INC.
/s/ Phil Passanante By: /s/ David McCourt
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TWIN COUNTY TRANS VIDEO, INC.
/s/ Dolores A. Laputka By: /s/ Bark Lee Yee
- ------------------------ ------------------------
/s/ Dolores A. Laputka /s/ Bark Lee Yee
- ------------------------ ------------------------
Bark Lee Yee
/s/ Dolores A. Laputka /s/ Stella C. Yee
- ------------------------ ------------------------
Stella C. Yee
/s/ Dolores A. Laputka /s/ Raymond C. Yee
- ------------------------ ------------------------
Raymond C. Yee
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/s/ Dolores A. Laputka /s/ Susan C. Yee
- ------------------------ --------------------------
Susan C. Yee
/s/ Dolores A. Laputka /s/ Kenneth C. Yee
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Kenneth C. Yee
/s/ Dolores A. Laputka /s/ Robert G. Tallman
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Robert G. Tallman, Trustee
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Exhibit 10.2
SECOND AMENDMENT AGREEMENT
This SECOND AMENDMENT AGREEMENT (the "Agreement") is entered into as of May
15, 1995 between C-TEC Corporation, a Pennsylvania corporation ("C-TEC"), C-TEC
Cable Systems, Inc., a Delaware corporation ("C-TEC Cable"), C-TEC Cable Systems
of Pennsylvania, Inc., a Pennsylvania corporation ("C-TEC-PA"), Twin County
Trans Video, Inc., a Pennsylvania corporation ("Twin County") and Bark Lee Yee,
Stella C. Yee, Susan C. Yee, Raymond C. Yee, Kenneth C. Yee and Robert G.
Tallman as trustee for those two (2) certain trusts created pursuant to trust
agreements dated December 17, 1992 (such individuals and trustee referred to
individually as a "Shareholder" and in the aggregate as the "Shareholders").
RECITALS
A. The parties to this Agreement (other than C-TEC) entered into a merger
agreement dated as of September 23, 1994 (the "Merger Agreement"), providing
for, inter alia, the merger of Twin County with and into C-TEC-PA, in exchange
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for certain cash, notes, preferred stock of C-TEC Cable, and the other
consideration set forth therein.
B. The parties to this Agreement entered into an Amendment Agreement (the
"Amendment Agreement") dated March 30, 1995
<PAGE>
containing certain agreements and covenants among the parties and amendments to
the Merger Agreement including amending the Merger Agreement to provide for,
inter alia, the merger of Twin County with and into C-TEC Cable, in exchange for
- ----- ----
certain cash, notes, preferred stock of C-TEC, and the other consideration set
forth therein.
C. The parties now wish to further amend the Merger Agreement, and provide
for certain other agreements and provisions.
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Definitions.
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"Articles of Merger" means the Articles of Merger referred to in
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Section 3.2.3.2 of this Agreement.
"Closing" has the meaning set forth in Section 3 of this Agreement.
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"Closing Date" means May 15, 1995.
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"C-TEC Shares" means the 3,671 shares of Twin County Class B Common
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Stock to be sold to C-TEC Cable pursuant to Section 2.1 of this Agreement.
"Escrow Agent" means the law firms of Tallman, Hudders & Sorrentino,
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P.C. and Swidler & Berlin, Chartered, acting jointly, as the escrow agent
appointed pursuant to the Escrow Agreement.
"Escrow Agreement" means the Escrow Agreement by and among Twin
----------------
County, the Shareholders, C-TEC Cable and the Escrow Agent, entered into
pursuant to Section 5.1 of this Agreement.
"Management Agreement" means the Management Agreement by and between
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C-TEC-PA and Twin County, entered into pursuant to Section 4.1 of this
Agreement.
"Management Period" means the term of the Management Agreement.
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"Other Shares" means all issued and outstanding Shares of the capital
------------
stock of Twin County, other than the TEC Shares, which Other Shares are being
delivered to the Escrow Agent pursuant to Section 2.2 hereof.
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"Plan of Merger" means the Plan of Merger referred to in Section
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3.2.3.2 of this Agreement.
"Share Exchange Agreement" means the Share Exchange Agreement referred
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to in Section 6.2 of this Agreement.
Any capitalized terms not defined in this Agreement shall have the meanings
ascribed to them in the Merger Agreement, as amended by the Amendment Agreement.
2. Purchase of Shares.
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2.1 Sale of C-TEC Shares. At the Closing Date, the Shareholders shall
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sell, transfer and deliver to C-TEC Cable 3,671 shares of Class B Common Stock
of Twin County (the "C-TEC Shares"), and good title thereto, free and clear of
all Liens (other than the lien and security interest in favor of First Union
National Bank of North Carolina) and shall deliver to the Escrow Agent the
certificates representing the C-TEC Shares duly endorsed to the Escrow Agent for
the benefit of C-TEC Cable under the Escrow Agreement or accompanied by stock
powers duly executed, with all necessary stock transfer stamps attached thereto
and canceled. The Escrow Agent shall hold such shares for the benefit of C-TEC
Cable pursuant to the Escrow Agreement.
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2.2 Delivery of Other Shares. On the Closing Date, the Shareholders
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shall deliver all of the Other Shares to the Escrow Agent who shall hold such
shares for the benefit of the Shareholders pursuant to the Escrow Agreement.
Such shares shall be delivered to the Escrow Agent free and clear of all Liens
(other than the lien and security interest in favor of First Union National Bank
of North Carolina), with the certificates duly endorsed to the Escrow Agent for
the benefit of the Shareholders under the Escrow Agreement or accompanied by
stock powers duly executed, with all necessary stock transfer stamps attached
and canceled.
3. Closing.
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3.1 Closing. On the Closing Date, a closing (the "Closing") will be
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held at the offices of C-TEC Corporation, 105 Carnegie Center, Princeton, New
Jersey at which time the transactions set forth in Section 2. of this Agreement
shall be consummated. Notwithstanding the foregoing, the filing of the Merger
Certificate, the filing of the Articles of Merger, the Merger of Twin County
with and into C-TEC Cable (pursuant to which Twin County will transfer all
assets and liabilities to C-TEC Cable) and the issuance by C-TEC of Preferred
Stock, Series A and Series B shall not take place at the Closing, but shall be
effected, if at all, pursuant to Section 6 of this Agreement. Except as
otherwise set forth in Section 8(j) of the Amendment
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Agreement, for all purposes of the Merger Agreement and Amendment Agreement,
the terms "Closing Date" and "Closing" shall have the meaning set forth in
this Agreement.
3.2 Deliveries at Closing.
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3.2.1 Deliveries by Twin County and the Shareholders to C-TEC.
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At the Closing, Twin County and the Shareholders shall deliver to C-TEC:
(a) The Non-Competition Agreement executed by each
Shareholder except Trustee;
(b) Tax-Free Reorganization Certificates dated the Closing
Date in the form of Exhibit A executed by each
Shareholder and Twin County;
(c) An opinion of Tallman, Hudders & Sorrentino, P.C.,
dated the Closing Date in the form of Exhibit B;
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(d) An opinion of Cole, Raywid & Braverman, dated the
Closing Date, in the form of Exhibit C;
(e) The Management Agreement executed by Twin County
pursuant to Section 4.1 of this Agreement;
(f) Written resignations in a form satisfactory to C-TEC
of all directors and officers of Twin County effective
as of the Closing Date;
(g) A unanimous consent of the Shareholders effective as
of the Closing Date reducing the number of directors
of Twin County to one (1) and designating that person
set forth in Section 4.3 of this Agreement as the
director of Twin County;
(h) An agreement executed by Computer Aid, Inc. releasing
Twin County as
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required pursuant to Section 8(h) of the Amendment
Agreement;
(i) An executed Assignment in the form of Exhibit D,
transferring Twin County's FCC Licenses to C-TEC-PA in
exchange for $100 of the Cash Consideration;
(j) A check in the amount of $2.75 million drawn on the
account of Twin County, Inc. or its counsel at
Meridian Bank and made payable to Twin County Trans
Video, Inc.;
(k) Any other documentation, certificate and instruments
required to be delivered pursuant to Section 5.1 of
the Merger Agreement, as amended by the Amendment
Agreement.
3.2.2 Deliveries by C-TEC to Twin County and the Shareholders.
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At the Closing, C-TEC shall deliver to the Shareholders:
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(a) By wire transfer of immediately available funds an
amount of cash equal to (1) $32,426,137 million (which
constitutes: (i) the Cash Consideration of $36 million
set forth in Section 2.4(1)(a) of the Merger Agreement
plus (ii) $11 million allocable to the Non-competition
Agreement less (iii) the Deposit of $5 million less
(iv) the reduction in Cash Consideration of $7.4
million pursuant to Section 6 of the Amendment
Agreement less (v) $315,750 pursuant to Section 8(g)
of the Amendment Agreement regarding QVC II launch
incentives and less (vii) $1,000,000, the amount
transferred to Escrow pursuant to Section 3.2.3.1(a),
plus (2) $1.733 million (representing dividends that
would have accrued on C-TEC Preferred Stock from May
1, 1995 through December 31, 1995), plus (3) $68,500
pursuant to Section 8(j) of the Amendment Agreement.
Such cash
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amount, after taking into consideration the Cash
Escrow, shall be further adjusted pursuant to Section
2.7 of the Merger Agreement (entitled "Consideration
Adjustments") as amended by the Amendment Agreement,
in accordance with the procedures set forth in Section
2.7(6) of the Merger Agreement and pursuant to Section
3.3 hereof.
(b) the Note referred to in Section 2.4(1)(C) of the
Merger Agreement (as amended pursuant to the Amendment
Agreement and this Agreement and attached hereto as
Exhibit E) in the amount of $4 million executed by C-
TEC Cable;
(c) a Tax-Free Reorganization Certificate dated the
Closing Date in the form of Exhibit F executed by C-
TEC;
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(d) an opinion of Swidler & Berlin dated the Closing Date
in the Form of Exhibit G;
(e) an assignment in a form satisfactory to Twin County
transferring to Twin County, Inc., rights to the cash
value of those certain split dollar life insurance
policies set forth in Section 8(a) of the Amendment
Agreement, which assignment shall only become
effective once the check referred to in Section
3.2.1(j) has cleared; and
(f) any other documents, certificates and instruments
required to be delivered by Section 5.2 of the Merger
Agreement, as amended by the Amendment Agreement.
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3.2.3 Deliveries to Escrow Agent.
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3.2.3.1 Deliveries by C-TEC. At the Closing, C-TEC shall
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deliver to the Escrow Agent:
(a) by wire transfer of immediately available funds
$1,000,000 (the "Cash Escrow"), to be held and
distributed by the Escrow Agent pursuant to the
terms of the Escrow Agreement and Section 5
hereof, and
(b) the Plan of Merger executed by C-TEC and C-TEC
Cable.
3.2.3.2 Deliveries by the Shareholders. At the Closing, the
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Shareholders and Twin County shall deliver to the Escrow Agent:
(a) the C-TEC Shares duly endorsed pursuant to
Section 2.1,
(b) the Other Shares duly endorsed pursuant to
Section 2.2,
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(c) the Plan of Merger executed by Twin County and
Shareholders, in the form of Exhibit H, and
(d) the Articles of Merger in the form of Exhibit I
executed by Twin County.
3.3 Cash Adjustment. After the computation of the
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consideration adjustments pursuant to Section 2.7 of the Merger Agreement, as
amended by the Amendment Agreement, the parties shall instruct the Escrow Agent
to distribute the Cash Escrow to C-TEC and the Shareholders in accordance with
such computation (income earned on such cash while in Escrow shall be
distributed pro rata to C-TEC and Shareholders on the same basis as the
principal amount of the Escrow).
4. Management of Twin County.
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4.1 Management Agreement. At the Closing, Twin County and
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C-TEC-PA shall enter into a Management Agreement in the form attached hereto as
Exhibit J, pursuant to which management of Twin County shall be vested solely in
C-TEC-PA (or its affiliates) during the Management Period.
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4.2 Resignations. At the Closing, each director and officer of Twin
------------
County shall execute a written resignation effective as of the Closing Date.
During the Management Period, except as otherwise set forth in certain
consulting agreements dated as of the Closing Date between C-TEC (or its
affiliate) and Raymond C. Yee, Susan C. Yee, and Kenneth C. Yee, no Shareholder
or affiliate or family member thereof (including but not limited to Leon
Poitras, his affiliates and family members) shall be entitled to any
compensation from Twin County for any services performed by such persons for
Twin County.
4.3 Voting Rights. During the Management Period, Twin County and
-------------
each of the Shareholders agree that C-TEC shall have the right to direct the
Escrow Agent as to all matters requiring a vote of the shareholders of Twin
County, including, but not limited to, the election of all directors of Twin
County, as well as the right to remove any such directors and elect new
directors. Attached hereto as Exhibit K is a unanimous consent electing David
C. McCourt as the sole director of Twin County which shall be executed on the
Closing Date.
4.4 Termination of Management Agreement. The Management Agreement
-----------------------------------
shall terminate upon the earlier of: (i) the closing of the transactions
contemplated by Section 6 hereof, or (ii) the disposition of C-TEC's interest in
Twin County.
-14-
<PAGE>
4.5 Restrictions on Transfer of Other Shares During Management
----------------------------------------------------------
Period. During the Management Period, no Shareholder shall transfer, sell,
- ------
pledge, convey, assign, exchange or otherwise dispose of any interest such
Shareholder may have in the escrow or any assets thereof, or shall enter into an
agreement to do any of the foregoing.
5. The Escrow.
----------
5.1 Creation of the Escrow. At the Closing, the parties shall execute
----------------------
and deliver an Escrow Agreement in the form attached hereto as Exhibit L.
5.2 Appointment of Escrow Agent; Delivery to Escrow; Instructions to
----------------------------------------------------------------
Escrow Agent. The Escrow Agent is hereby appointed to act as Escrow Agent
- ------------
pursuant to the terms of this Agreement and the Escrow Agreement. The parties to
this Agreement agree to execute joint written instructions to the Escrow Agent
in accordance with the provisions of this Section 5 and this Agreement.
5.3 Dividends or Distributions; Income. For such time as the C-TEC
----------------------------------
Shares and Other Shares are held in Escrow, the following provisions shall
apply:
-15-
<PAGE>
(a) Any dividends or other distributions by Twin County
attributable to the C-TEC Shares shall be distributed by the Escrow Agent to
C-TEC immediately upon the Escrow Agent's receipt of such amounts.
(b) Any dividends or other distributions by Twin County
attributable to the Other Shares shall be retained by the Escrow Agent until the
Other Shares have been transferred by the Escrow Agent in accordance with
Section 6 and the provisions of the Escrow Agreement, at which time such
dividends or distributions (and any income earned thereon while in Escrow)
shall be transferred to the party or parties to whom the Other Shares are
transferred.
6. The Merger.
----------
6.1 Twin County Merger Into C-TEC Cable. If C-TEC's common
-----------------------------------
shareholders have voted to approve the authorization of sufficient shares of
preferred stock such that C-TEC may issue the Preferred Stock, Series A and
Preferred Stock, Series B (the "C-TEC Preferred") pursuant to the Amendment
Agreement (such approval referred to as the "Shareholder Approval"), then,
within three (3) business days thereof, C-TEC shall give notice to Twin County
and the Shareholders (the "Merger Notice"). The C-TEC Preferred shall be in the
form set forth in Exhibits M-1 and M-2. Within three (3) business days of
receipt of the Merger Notice,
-16-
<PAGE>
consummation of the Merger shall occur at which time the following shall take
place:
(a) the Escrow Agent shall: (i) transfer to C-TEC the Plan of
Merger and Articles of Merger; (ii) upon the effectiveness of the Merger,
transfer the share certificates for the C-TEC Shares and Other Shares to C-TEC;
and (iii) upon the effectiveness of the Merger, transfer any cash pursuant to
Section 5.3 of the Agreement to C-TEC Cable.
(b) C-TEC Cable shall file the Articles of Merger with the
Corporation Bureau of the Commonwealth of Pennsylvania, and shall file the
Merger Certificate with the Secretary of State's office in the State of
Delaware. All parties shall take such other actions as are necessary for the
Merger to become effective.
(c) Upon the effectiveness of the Merger, C-TEC shall deliver to
the Escrow Agent certificates evidencing the C-TEC Preferred, to be issued in
the Merger pursuant to the Amendment Agreement, and the Escrow Agent shall
deliver the C-TEC Preferred to the Shareholders.
6.2 C-TEC Cable Preferred. If C-TEC determines that it will be
---------------------
unable to issue the C-TEC Preferred on or before December 31, 1995, for any
reason, including, but not limited to,
-17-
<PAGE>
failure to obtain the Shareholder Approval, or the prohibition by any
governmental entity of such issuance (including but not limited to a court
injunction or administrative action), C-TEC shall give notice of such
determination to Twin County and the Shareholders. Within three (3) days of such
notice, the parties shall execute and deliver all documents necessary to merge
Twin County with and into C-TEC Cable pursuant to Section 6.1 except that, in
lieu of issuing C-TEC Preferred, C-TEC shall cause C-TEC Cable to issue C-TEC
Cable, Preferred Stock, Series A and Preferred Stock, Series B pursuant to the
terms of Exhibits N-1 and N-2 (the "C-TEC Cable Preferred"). In addition, the
parties shall enter into a Share Exchange Agreement substantially in the form
attached hereto as Exhibit 0, and amended Articles of Merger and Plan of Merger.
6.3 Share Purchase. If C-TEC determines that neither the C-TEC
Preferred nor the C-TEC Cable Preferred may be issued on or before December 31,
1995, for any reason, including, but not limited to, failure to obtain the
Shareholder Approval, the absence of authorization for, or the prohibition by
any governmental entity of such issuance (including but not limited to a court
injunction or administrative action), C-TEC shall give notice to Twin County and
the Shareholders of such determination. Within five (5) days of such notice,
C-TEC, Twin County and the Shareholders shall instruct the Escrow Agent to
deliver the C-TEC Shares and the Other Shares to C-TEC at a closing to be held
on
- 18 -
<PAGE>
December 29, 1995, or, such earlier time as is mutually acceptable to the
parties. At the closing, C-TEC shall pay to the Shareholders an amount of cash
equal to $52 million, plus an additional $5,209,350, by wire transfer of
immediately available funds, in full and complete payment for the Other Shares
and, simultaneously therewith, the Escrow Agent shall deliver the C-TEC Shares
and the Other Shares to C-TEC.
6.4 Default. C-TEC shall not be deemed to be in default of its
-------
obligations under the Merger Agreement, Amendment Agreement or hereunder if it
is unable to consummate either the transactions set forth in Sections 6.1 or
6.2, provided it consummates the transaction set forth in Section 6.3.
7. Tax Representation and Indemnification. C-TEC hereby represents that
--------------------------------------
there is no Federal or state income tax risk concerning the tax-free nature of
the Merger which may be effected after May 15, 1995, but on or prior to December
31, 1995, pursuant to this Agreement (regardless of whether C-TEC Preferred is
used under Section 6.1 or C-TEC Cable Preferred is used under Section 6.2) that
exceeds whatever Federal or state income tax risk there would be concerning the
tax-free nature of a Merger had the Merger occurred in accordance with the
Merger Agreement as amended March 30, 1995 (and either C-TEC Preferred or C-TEC
Cable Preferred been used): In accordance with the procedures set forth in
Section 10.2 of the Merger Agreement, C-
-19-
<PAGE>
TEC agrees to indemnify each Shareholder for any Federal and state income tax
liability (including, without limitation, any attorneys' fees, court costs, or
other expenses related to defending any claims, charges, or assessments before
the Internal Revenue Service or any state income tax authority) that such
Shareholder incurs solely as a consequence of the failure of the foregoing
representation to be true.
8. Other Documents, Confirmation of Agreements. The parties agree to
-------------------------------------------
execute such other agreements, documents and instruments, and to make such
supplements to any regulatory filings as may be appropriate to effectuate the
terms of this Agreement. Except as otherwise set forth herein, the parties
hereby ratify and confirm all other terms and conditions of the Merger Agreement
and the Amendment Agreement, which shall remain in full force and effect,
including representations, warranties, terms, and conditions made or applicable
as of the Closing Date.
9. Termination of Buy-Sell Agreement. By executing this Agreement, Twin
---------------------------------
County and the Shareholders hereby terminate the Buy-Sell Agreement between such
parties dated January 11, 1990 and amended May 17, 1990.
-20-
<PAGE>
IN WITNESS WHEREOF, the parties enter into the Amendment Agreement
effective as of the date set forth above.
ATTEST/WITNESS C-TEC CORPORATION
/s/ Steven G. Miller By: /s/ Michael J. Mahoney
- ------------------------ -----------------------------
Steven G. Miller President
C-TEC-CABLE SYSTEMS OF
PENNSYLVANIA, INC.
/s/ Steven G. Miller By: /s/ Michael J. Mahoney
- ------------------------ -----------------------------
President
C-TEC CABLE SYSTEMS, INC.
/s/ Steven G. Miller By: /s/ Michael J. Mahoney
- ------------------------- -----------------------------
President
TWIN COUNTY TRANS VIDEO, INC.
/s/ Dolores A. Laputka By: /s/ Bark Lee Yee
- ------------------------ ------------------------------
/s/ Dolores A. Laputka /s/ Bark Lee Yee
- ------------------------ ------------------------------
Bark Lee Yee
/s/ Dolores A. Laputka /s/ Stella C. Yee
- ------------------------ ------------------------------
Stella C. Yee
/s/ Dolores A. Laputka /s/ Raymond C. Yee
- ------------------------ ------------------------------
Raymond C. Yee
/s/ Dolores A. Laputka /s/ Susan C. Yee
- ------------------------ ------------------------------
Susan C. Yee
/s/ Dolores A. Laputka /s/ Kenneth C. Yee
- ------------------------ ------------------------------
Kenneth C. Yee
/s/ Dolores A. Laputka /s/ Robert G. Tallman
- ------------------------ ------------------------------
Robert G. Tallman, Trustee
-21-
<PAGE>
LIST OF EXHIBITS
----------------
Exhibit A Seller Tax-Free Reorganization Certificate
Exhibit B Tallman, Hudders & Sorrentino, P.C. Opinion Letter
Exhibit C Cole, Raywid & Braverman Opinion Letter
Exhibit D Assignment of FCC Licenses
Exhibit E Note
Exhibit F C-TEC Tax-Free Reorganization Certificate
Exhibit G Swidler & Berlin Opinion Letter
Exhibit H Plan of Merger
Exhibit I Articles of Merger
Exhibit J Management Agreement
Exhibit K Twin County Shareholder Consent for New Director
Exhibit L Escrow Agreement
Exhibit M-1 Terms of C-TEC Preferred Stock, Series A
Exhibit M-2 Terms of C-TEC Preferred Stock, Series B
Exhibit N-1 Terms of C-TEC Cable Preferred Stock, Series A
Exhibit N-2 Terms of C-TEC Cable Preferred Stock, Series B
Exhibit O Share Exchange Agreement
4044392.2
-22-
<PAGE>
EXHIBIT M-1
TERMS OF C-TEC PREFERRED STOCK, SERIES A
<PAGE>
C-TEC Corporation (the CORPORATION)
Preferred Stock, Series A
The designation, preferences, privileges and voting powers of the shares of
the Preferred Stock, Series A, and the restrictions or qualifications thereof
(insofar as they differ from or supplement the provisions which are applicable
to all shares of the Corporation's stock), are as follows:
(A) The preferred stock described herein shall be designated as
Preferred Stock, Series A (hereinafter referred to as PREFERRED STOCK,
SERIES A).
(B) The dividend rate thereof shall be five percent (5%) per annum.
The dividends on the shares of the Preferred Stock, Series A shall be
cumulative from the first day of the calendar month in which the shares of
the Preferred Stock, Series A, if any, shall be issued, with accruals of
dividends uniform with the unpaid accruals of dividends, if any, on the
Preferred Stock, Series A outstanding at the time of the issue thereof;
provided, however, that if any shares of Preferred Stock, Series A are
issued prior to January 1, 1996, dividends shall begin to accrue thereon on
January 1, 1996.
(C) Except as provided in Paragraphs (O) and (P), the Preferred
Stock, Series A shall have no voting rights whatsoever.
(D) The sum per share payable upon the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation shall be $10 per
share (hereinafter referred to as the STATED VALUE) plus an amount equal to
the dividends accrued and unpaid on such share, whether or not earned or
declared.
(E) Each Holder of the shares of the Preferred Stock, Series A
(hereinafter referred to individually as a HOLDER, collectively, the
HOLDERS), may elect at any time during the EXCHANGE ELECTION PERIOD (as
defined below), to convert the shares of Preferred Stock, Series A into
common stock of the Corporation (hereinafter, the CONVERTED COMMON STOCK).
The number of shares of Converted Common Stock issuable upon conversion of
shares of Preferred Stock, Series A is determined by dividing the aggregate
Stated Value of the Preferred Stock, Series A which is being converted, by
the CONVERSION PRICE (as defined below) and rounding the result to the
nearest 1/100th of a share. No payment or adjustment in respect of
dividends on Converted Common Stock or Preferred Stock, Series A will be
made upon conversion of shares of Preferred Stock, Series A; provided,
however, that
<PAGE>
any accrued and unpaid dividends on such Preferred Stock, Series A as of
the Conversion Date (as hereinafter defined) shall be paid to the Holders
of the Converted Common Stock into which such Preferred Stock, Series A is
converted, when and if any dividend is subsequently declared and paid to
the holder or holders of the Corporation's capital stock. The conversion
price is $35.00 per share (the CONVERSION PRICE). The EXCHANGE ELECTION
PERIOD shall mean the period commencing on the date that is three (3) years
after the date of Closing (as such term is defined in that certain Merger
Agreement dated September 23, 1994 as amended by that certain Amendment
Agreement dated March 30, 1995, and as further amended by that certain
Second Amendment Agreement dated May 15, 1995) and ending on the date that
is eight (8) years after Closing. An election by a Holder shall only be
effective if the total shares of Preferred Stock, Series A proposed to be
converted by the Holder (or by the Holder and other Holders electing at the
same time) equals at least five percent (5%) of the total shares of
Preferred Stock, Series A and Preferred Stock, Series B outstanding at the
time such election is made.
(F) To convert Preferred Stock, Series A into Converted Common Stock,
a Holder must: (1) complete and sign the conversion notice on the back of
the Preferred Stock, Series A certificate; (2) surrender that certificate
to a conversion agent designated by the Corporation; (3) furnish
appropriate endorsement and transfer documents if required by the
conversion agent; and (4) pay any transfer tax or similar tax, if required.
The first day of the first calendar year quarter following the date on
which the holder of Preferred Stock, Series A satisfies all those
requirements is the conversion date (hereinafter the CONVERSION DATE). As
soon as practicable, the Corporation shall deliver through the conversion
agent a certificate for the number of full shares and fractional shares of
Converted Common Stock issuable upon the conversion, except that the
Corporation, at its option, may deliver in lieu of a certificate including
fractional shares a certificate for the number of full shares issuable upon
the conversion and a check for the value of any fractional share. The
person in whose name the certificate is registered shall be treated as a
shareholder of record on and after the conversion date.
(G) At any time during the Exchange Election Period by provision of
written notice to the Holders, the Corporation may elect to acquire from
the Holders all, but not less than all, of the Preferred Stock, Series A.
(The date such notice is provided is referred to as the CORPORATE NOTICE
DATE.) In the event the Corporation exercises its election to acquire the
Preferred Stock, Series A, in consideration of the transfer of the
applicable shares of Preferred Stock,
- 2 -
<PAGE>
Series A from the Holders to the Corporation, the Corporation shall:
(1) If the Market Value (as hereinafter defined) of the
Converted Common Stock is greater than or equal to the
Conversion Price, the Corporation shall transfer and deliver
to the Holders of Preferred Stock, Series A the Converted
Common Stock based upon the Conversion Price;
(2) If the Market Value of the Converted Common Stock is less
than the Conversion Price, the Corporation shall, at
Holders' option, either pay to the Holders in immediately
available funds an amount equal to the Conversion Price, or
the Corporation shall transfer and deliver to the Holders
the Converted Common Stock based upon the Conversion Price.
The Holders, acting as a whole but not in part, shall make
their election to receive either cash or Converted Common
Stock pursuant to this Section (G)(2) within ten (10) days
of the Corporate Notice Date. In the event that the Holders
fail to unanimously make an election within such ten (10)
day period, the Holders shall be deemed to have conclusively
elected to accept cash in consideration of the transfer and
delivery of the shares of Preferred Stock, Series A.
(H) For purposes of Paragraph (G), the Market Value of the Converted
Common Stock shall be the trading price of such stock as of the close of
business on the date immediately preceding the Corporate Notice Date.
Closing on the transfers shall be the later of thirty (30) days after the
Corporate Notice Date or the first day of the first calendar year quarter
immediately following the Corporate Notice Data except that, if the Holders
will be receiving cash, at the Corporation's option, closing may be
extended until ninety (90) days after the Corporate Notice Date. At the
Closing, the Holders shall satisfy the same conditions as set forth in
Subsections (1) through (4) of Paragraph (F).
(I) All remaining Preferred Stock, Series A shall be redeemed by the
Corporation for an amount equal to the Stated Value, plus any accrued and
unpaid dividends, on the date that is eight (8) years from the date of
Closing (hereinafter the REDEMPTION DATE) whether or not the Holders so
elect. Closing on such redemption shall occur on a date specified by the
Corporation but no later than ninety (90)
- 3 -
<PAGE>
days following the Redemption Date, provided, however, that dividends shall
accrue through the date of such Closing. At Closing, the Holders shall
satisfy the same conditions set forth in Subsections (1) through (4) of
Paragraph (F).
(J) For so long as shares of Preferred Stock, Series A, are
outstanding, the Corporation shall not enter into any Transaction (as
hereafter defined) if, upon entering into any such Transaction, the ratio
of Total Obligations (as hereafter defined) to EBITDA (as hereafter
defined) of the Corporation for the last fiscal quarter, thereafter
annualized by multiplying such amount(s) by four (4), exceeds 8:1. For
purposes hereof, the following terms shall have the following meanings:
(1) EBITDA shall mean, for any period, the consolidated net
income (or net loss) of the Corporation, as determined in
accordance with generally accepted accounting principles,
plus (1) the sum of, without duplication, the following for
----
the Corporation: (a) depreciation expense, (b) amortization
expense, (c) the excess, if any, of gross interest expense
for such period over gross interest income for such period,
in each case determined in accordance with generally
accepted accounting principles, (d) total income tax expense
and (e) extraordinary or unusual non-cash losses, less (2)
----
extraordinary non-cash gains.
(2) OBLIGATIONS shall mean, with respect to the Corporation, the
consolidated outstanding (1) principal amount of
indebtedness for borrowed money, (2) principal amount of
indebtedness for the deferred purchase price of property or
services (other than property or services purchased in the
ordinary course of business) and (3) the total stated value
outstanding preferred stock having a liquidation payment
priority senior to or pari passu with the shares of
---- -----
Preferred Stock, Series A, excluding, however, the Preferred
Stock, Series A and Preferred Stock, Series B of the
Corporation.
(3) TOTAL OBLIGATIONS shall mean, with respect to the
Corporation, as of the time of determination, the aggregate
consolidated amount of Obligations.
- 4 -
<PAGE>
(4) TRANSACTION as used in this Paragraph (J) shall mean, with
respect to the Corporation, (1) the incurrence of any
Obligation; (2) any merger or consolidation to which the
Corporation is a party; or (3) the sale of all or
substantially all of the assets of the Corporation.
(K) There shall be no sinking fund with respect to the shares of the
Preferred Stock, Series A.
(L) The holders of the Preferred Stock, Series A, shall be entitled
to receive, but only when, as and if declared by the Board of Directors,
but in no event more frequently than quarterly, dividends at the rate fixed
for such series and no more. Such dividends shall be payable on a date or
dates which shall be fixed by the Board of Directors and shall be
cumulative from such date as may be fixed for the series. All dividends
payable on Preferred Stock, Series A shall be fully paid, or declared and
set apart for payment before any dividends on the Common Stock of the
Corporation shall be paid or set apart for payment so that if, for all
dividend periods terminating on the same or an earlier date, dividends on
all outstanding shares of the Preferred Stock, Series A at the rates fixed
for the respective series shall not have been paid or set apart for
payment, the deficiency shall be fully paid or set apart before payment on
the Common Stock of the Corporation. The Preferred Stock, Series A shall
rank pari passu with all other series of preferred stock with respect to
dividends. Dividends in full shall not be paid or set apart for payment on
the preferred stock of any other series for any dividend period unless
dividends in full have been or are contemporaneously paid or set apart for
payment on the preferred stock of all other series for all dividend periods
in respect of such series terminating on the same or an earlier date. When
the stated dividends are not paid in full on all series of the preferred
stock in respect of any dividend period, the shares of all series having
the same dividend period shall share ratably in the payment of dividends,
including accumulations, if any, based on the dividends which would be
payable on said shares if all dividends in respect of such series were paid
in full. A DIVIDEND PERIOD is the period between any two consecutive
dividend payment dates, excluding the first of such dates, as fixed for the
series to which a share or shares shall belong. Accruals of dividends shall
not bear interest.
(M) Upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of the preferred
stock of each and every series then outstanding shall be entitled to
receive out of the net
- 5 -
<PAGE>
assets of the Corporation, whether capital or surplus, the sums per share
fixed for the shares of the respective series and payable upon such
dissolution, liquidation or winding up, plus, in the case of each share, an
amount equal to the dividends accrued and unpaid thereon, whether or not
earned or declared, before any distribution of the assets of the
Corporation shall be made to the holders of the common stock of the
Corporation as such.
If the assets distributable on such dissolution, liquidation or
winding up shall be insufficient to permit the payment to the holders of
each series of the preferred stock of the full amounts to which they
respectively are entitled as aforesaid, then said assets shall be
distributed among the holders of the respective series of the preferred
stock in the order of priority as specified for each class of stock and in
proportion to the sums which would be payable on such dissolution,
liquidation or winding up if all such sums were paid in full in preference
and priority over the shares of any of the common stock of the Corporation.
After payment to the holders of the preferred stock of the full
amounts to which they respectively are entitled as aforesaid, the holders
of the preferred stock, as such, shall have no right or claim to any of the
remaining assets of the Corporation.
The sale, conveyance, exchange or transfer of all or substantially all
of the property of the Corporation, or the merger or consolidation into or
with any other corporation, shall not be deemed a dissolution, liquidation
or winding up for the purposes of this Paragraph (M).
(N) Nothing herein contained shall limit any legal right of the
Corporation to purchase or otherwise acquire any shares of the Preferred
Stock, Series A.
(O) So long as any shares of the Preferred Stock, Series A, are
outstanding, the Corporation shall not, without the consent (given in
writing or by vote at a meeting called for that purpose in the manner
prescribed by the By-Laws of the Corporation) of the holders of record of
at least 50% of the total number of such votes which may be cast by the
Holders, each Holder being entitled to one vote for each such share of
Preferred Stock, Series A:
(1) Create or authorize any kind of stock ranking prior to the
Preferred Stock, Series A with respect to the payment of dividends or
upon the dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, or create or authorize any
- 6 -
<PAGE>
obligation or security convertible into shares of any such kind of
stock;
(2) Amend, alter, change or repeal any of the express terms of
the Preferred Stock, Series A so as to affect the Holders thereof
adversely.
(P) So long as any shares of the Preferred Stock, Series A are
outstanding, in the event that the Corporation shall fail to pay dividends
on the Preferred Stock, Series A for at least twelve (12) consecutive
calendar months sufficient to provide a cumulative dividend rate of five
percent (5%) per annum, the Holders shall be entitled to elect and
designate one (1) director of the Board of Directors of the Corporation and
the size of the Board of Directors of the Corporation shall thereupon be
increased by one (1) director, and such newly elected director shall hold
its position on the Board of Directors of the Corporation only until such
time as the Holders shall have received dividends sufficient to provide a
cumulative dividend rate of five percent (5%) per annum, in which event
such newly elected director shall be deemed to have resigned and the size
of the Board of Directors shall thereupon decrease by one (1) member. The
right of the Holders to elect and designate a member of the Board of
Directors of the Corporation shall be exercised jointly with, and not
separately from, the corresponding right granted to the Holders of the
Preferred Stock, Series B, such that only one (1) member of the Board of
Directors of the Corporation may be elected and designated, in the
aggregate, by the Holders of the Preferred Stock, Series A and Preferred
Stock, Series B.
(Q) REGISTRATION RIGHTS FOR COMMON SHARES.
-------------------------------------
(1) Demand Registration Rights. The Corporation covenants and
--------------------------
agrees with the Holders, but not any subsequent holders, of the
Preferred Stock, Series A that upon the unanimous written request of
the Holders made at any time during the Exchange Election Period, but
only once, the Corporation will file as promptly as practicable and,
in any event, within one hundred eighty (180) days after receipt of
such written request, a new registration statement (a REGISTRATION
STATEMENT) or a post-effective amendment to an existing registration
statement (an AMENDMENT) under the Securities Act of 1933 (the ACT),
registering or qualifying the Converted Common Stock for sale. No
other securities of the Corporation shall be entitled to be included
in such Amendment or Registration Statement. The Corporation will use
its good faith efforts to file and cause to become effective any such
- 7 -
<PAGE>
Amendment or Registration Statement as promptly as practicable and
remain effective for a period of not less than sixty (60) days or such
shorter period as is necessary to complete the distributions.
(2) Piggyback Registration Rights. The Corporation covenants and
-----------------------------
agrees with the Holders, but not any subsequent holders of the
Preferred Stock, Series A, that if, at any time within the Exchange
Election Period the Corporation proposes to file a Registration
Statement with respect to any class of security (other than in
connection with an offering to the Corporation's (or its affiliates')
employees under the Act in a primary registration on behalf of the
Corporation and/or in a secondary registration on behalf of holders of
such securities and the registration form to be used may be used for
registration of the Converted Common Stock, the Corporation will give
written notice, which shall be given at least forty five (45) days
prior to such filing, to the Holders of its intention to file a
Registration Statement and will offer to include in such Registration
Statement to the maximum extent possible, and limited, in the case of
a Regulation A offering, to the amount of the available exemption,
subject to paragraphs (a) and (b) of this Paragraph (2), such number
of Converted Common Stock with respect to which the Corporation has
received written requests for inclusion therein by the Holders within
ten (10) days after the giving of notice by the Corporation. This
right shall only apply to Holders who have converted to Converted
Common Stock prior to the date written notice is given by the
Corporation unless all, but not less than all, of the Holders who have
not converted to Converted Common Stock elect under Paragraph (E) to
convert to Converted Common Stock. All registrations requested
pursuant to this Paragraph Q(2) are referred to herein as PIGGYBACK
REGISTRATIONS. This paragraph is not applicable to a Registration
Statement filed by the Corporation with the Securities and Exchange
Commission (the SEC) on Forms S-4 or S-8 or any successor form or any
Registration Statement filed with the SEC prior to the Closing.
(a) Priority on Primary Registrations. If a Piggyback
---------------------------------
Registration includes an underwritten primary
registration on behalf of the Corporation and the
underwriter(s) for the offering being registered by the
Corporation shall determine in good faith and advise
the Corporation in writing that in its
- 8 -
<PAGE>
opinion the number of shares of Converted Common Stock
requested to be included in such registration exceeds
the number that can be sold in such offering without
materially adversely affecting the distribution of such
securities by the Corporation, the Corporation will
include in such registration (i) first, the securities
that the Corporation proposes to sell and (ii) second,
to the extent feasible, the Converted Common Stock
requested to be included in such registration,
apportioned ratably among the Holders of Converted
Common Stock requiring to be included in such
registration.
(b) Priority on Secondary Registrations. If a Piggyback
-----------------------------------
Registration consists only of an underwritten secondary
registration on behalf of holders of securities of the
Corporation (other than pursuant to Paragraph Q(1), and
the underwriter(s) for the offering being registered by
the Corporation advise the Corporation in writing that
in its opinion the number of shares of Converted Common
Stock requested to be included in such registration
exceeds the number which can be sold in such offering
without materially adversely affecting the distribution
of such securities by the Corporation, the Corporation
will include in such registration (i) first, the
securities requested to be included therein by the
holders requesting such registration and (ii) second,
to the extent feasible, the Converted Common Stock
requested to be included in such registration above,
apportioned ratably, among all such Holders on the
basis of the number of shares requested to be included
by each such Holder.
(3) Restrictions on Registration Rights.
-----------------------------------
(a) Notwithstanding the provisions set forth in Sections
(2)(a) and (2)(b) above or any other provisions, if any
such underwriter shall determine in good faith and
advise the Corporation in
- 9 -
<PAGE>
writing that the distribution of the Converted Common
Stock requested to be included in the registration
concurrently with the securities being registered by
the Corporation would materially adversely affect the
distribution of such securities by the Corporation,
then the Holders of such Converted Common Stock shall
delay their offering and sale for such period ending on
the earliest of (1) ninety (90) days following the
effective date of the Corporation's registration
statement, (2) the day upon which the underwriting
syndicate, if any, for such offering shall have been
disbanded or, (3) such date as the Corporation, the
underwriter(s) and the Holders shall otherwise agree.
In the event of such delay, the Corporation shall file
such supplements, post-effective amendments and take
any such other steps as may be reasonably necessary to
permit such Holders to make their proposed offering and
sale for a period not to exceed ninety (90) days
immediately following the end of such period of delay.
If any party disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by
written notice to the Corporation and the underwriter.
Notwithstanding the foregoing, the Corporation shall
not be required to file a registration statement to
include shares of Converted Common Stock pursuant to
this Paragraph (Q) if an opinion of independent
counsel, reasonably satisfactory to counsel for the
Corporation, that the shares of Converted Common Shares
proposed to be disposed of may be transferred pursuant
to the provisions of Rule 144 under the Act shall have
been delivered to counsel for the Corporation and the
Holders shall have agreed to indemnify the Corporation
with respect to the accuracy of the matter described in
any such opinion and the actions of the Corporation
taken in reliance thereon.
(b) The Corporation shall not be required to file a
Registration Statement or
- 10 -
<PAGE>
Amendment at a time when the audited financial
statements required to be included therein are not
available, which time shall be limited to the period
commencing forty five (45) days after the end of the
Corporation's last fiscal year and ending ninety (90)
days after the end of such fiscal year existing at the
time of the proposed offering.
(c) The Corporation shall not be required to file a
Registration Statement or Amendment if the Corporation
furnishes to the Holders a certificate signed by the
Corporation's Chairman or President stating that in his
or her good faith judgment it would be detrimental or
otherwise disadvantageous to the Corporation or its
shareholders for such a Registration Statement or
Amendment to be filed as expeditiously as possible, in
which case the Corporation shall have a period of not
more than 180 days within which to file such
Registration Statement or Amendment measured from the
date of the Corporation's receipt of Holders' request
for registration.
(4) Costs of Registration.
---------------------
(a) All costs, expenses, fees and other charges, including
but not limited to reasonable attorneys' and accounting
fees and expenses (collectively, the EXPENSES), arising
as a result of any registration pursuant to Paragraph
(Q) shall be borne by the Corporation and the Holders,
or both, as follows:
(i) With respect to an election made by the Holders
during the first two (2) years of the Exchange
Election Period, the Holders shall be solely
responsible for all such Expenses.
(ii) With respect to any election made by the Holders
during the period commencing on the day after the
first two (2) years of the Exchange Election
Period, through and until the day prior to the
date that is
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<PAGE>
three (3) years after the beginning of the
Exchange Election Period, the Expenses shall be
shared equally by the Holders and the Corporation.
(iii) With respect to any election made by the Holders
during the period commencing on the earlier of (1)
the date that is three (3) years after the
beginning of the Exchange Election Period, or (2)
the date of the Closing with respect to any option
exercised by the Corporation pursuant to Paragraph
(G) of this Agreement (other than where the
Holders have elected to receive immediately
available funds at Closing) through and until the
expiration of the Exchange Election Period, the
Expenses shall be borne solely by the Corporation.
(b) With respect to any election made by the Holders
pursuant to Paragraph (Q)(2), the Expenses shall be
borne solely by the Corporation.
(c) Notwithstanding any other provision of these terms of
Preferred Stock, Series A to the contrary, the Holders
shall be solely responsible for any fees and
disbursements of any counsel, accountant or other
professional for the Holders; any underwriters discount
or commission in respect of such Converted Common
Stock; and the cost of and liability or similar
insurance required by an underwriter to the extent that
such costs are attributable to the offering of such
Converted Common Stock.
(5) Subsequent Holder. The reference to any "subsequent holder"
-----------------
as stated above shall not include any trustee designated by the
Holders under a trust agreement for their benefit.
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<PAGE>
EXHIBIT M-2
TERMS OF C-TEC PREFERRED STOCK, SERIES B
<PAGE>
C-TEC Corporation (the CORPORATION)
Preferred Stock, Series B
The designation, preferences, privileges and voting powers of the shares of
the Preferred Stock, Series B, and the restrictions or qualifications thereof
(insofar as they differ from or supplement the provisions which are applicable
to all shares of the Corporation's stock), are as follows:
(A) The preferred stock described herein shall be designated as
Preferred Stock, Series B (hereinafter referred to as PREFERRED STOCK,
SERIES B).
(B) The dividend rate thereof shall be five percent (5%) per annum.
The dividends on the shares of the Preferred Stock, Series B shall be
cumulative from the first day of the calendar month in which the shares of
the Preferred Stock, Series B, if any, shall be issued, with accruals of
dividends uniform with the unpaid accruals of dividends, if any, on the
Preferred Stock, Series B outstanding at the time of the issue thereof;
provided, however, that if any shares of Preferred Stock, Series B are
issued prior to January 1, 1996, dividends shall begin to accrue thereon on
January 1, 1996.
(C) Except as provided in Paragraphs (O) and (P), the Preferred
Stock, Series B shall have no voting rights whatsoever.
(D) The sum per share payable upon the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation shall be $10 per
share (hereinafter referred to as the STATED VALUE) plus an amount equal to
the dividends accrued and unpaid on such share, whether or not earned or
declared.
(E) Each Holder of the shares of the Preferred Stock, Series B
(hereinafter referred to individually as a HOLDER, collectively, the
HOLDERS), may elect at any time during the EXCHANGE ELECTION PERIOD (as
defined below), to convert the shares of Preferred Stock, Series B into
common stock of the Corporation (hereinafter, the CONVERTED COMMON STOCK).
The number of shares of Converted Common Stock issuable upon conversion of
shares of Preferred Stock, Series B is determined by dividing the aggregate
Stated Value of the Preferred Stock, Series B which is being converted, by
the CONVERSION PRICE (as defined below) and rounding the result to the
nearest 1/100th of a share. No payment or adjustment in respect of
dividends on Converted Common Stock or Preferred Stock, Series B will be
made upon conversion of shares of Preferred Stock, Series B; provided,
however, that
<PAGE>
any accrued and unpaid dividends on such Preferred Stock, Series B as of
the Conversion Date (as hereinafter defined) shall be paid to the Holders
of the Converted Common Stock into which such Preferred Stock, Series B is
converted, when and if any dividend is subsequently declared and paid to
the holder or holders of the Corporation's capital stock. The conversion
price is $38.50 per share (the CONVERSION PRICE). The EXCHANGE ELECTION
PERIOD shall mean the period commencing on the date that is three (3) years
after the date of Closing (as such term is defined in that certain Merger
Agreement dated September 23, 1994 as amended by that certain Amendment
Agreement dated March 30, 1995, and as further amended by that certain
Second Amendment Agreement dated May 15, 1995) and ending on the date that
is eight (8) years after Closing. An election by a Holder shall only be
effective if the total shares of Preferred Stock, Series B proposed to be
converted by the Holder (or by the Holder and other Holders electing at the
same time) equals at least five percent (5%) of the total shares of
Preferred Stock, Series A and Preferred Stock, Series B outstanding at the
time such election is made.
(F) To convert Preferred Stock, Series B into Converted Common Stock,
a Holder must: (1) complete and sign the conversion notice on the back of
the Preferred Stock, Series B certificate; (2) surrender that certificate
to a conversion agent designated by the Corporation; (3) furnish
appropriate endorsement and transfer documents if required by the
conversion agent; and (4) pay any transfer tax or similar tax, if required.
The first day of the first calendar year quarter following the date on
which the holder of Preferred Stock, Series B satisfies all those
requirements is the conversion date (hereinafter the CONVERSION DATE). As
soon as practicable, the Corporation shall deliver through the conversion
agent a certificate for the number of full shares and fractional shares of
Converted Common Stock issuable upon the conversion, except that the
Corporation, at its option, may deliver in lieu of a certificate including
fractional shares a certificate for the number of full shares issuable upon
the conversion and a check for the value of any fractional share. The
person in whose name the certificate is registered shall be treated as a
shareholder of record on and after the conversion date.
(G) At any time during the Exchange Election Period by provision of
written notice to the Holders, the Corporation may elect to acquire from
the Holders all, but not less than all, of the Preferred Stock, Series B.
(The date such notice is provided is referred to as the CORPORATE NOTICE
DATE.) In the event the Corporation exercises its election to acquire the
Preferred Stock, Series B, in consideration of the transfer of the
applicable shares of Preferred Stock,
- 2 -
<PAGE>
Series B from the Holders to the Corporation, the Corporation shall:
(1) If the Market Value (as hereinafter defined) of the
Converted Common Stock is greater than or equal to the
Conversion Price, the Corporation shall transfer and deliver
to the Holders of Preferred Stock, Series B the Converted
Common Stock based upon the Conversion Price;
(2) If the Market Value of the Converted Common Stock is less
than the Conversion Price, the Corporation shall, at
Holders' option, either pay to the Holders in immediately
available funds an amount equal to the Conversion Price, or
the Corporation shall transfer and deliver to the Holders
the Converted Common Stock based upon the Conversion Price.
The Holders, acting as a whole but not in part, shall make
their election to receive either cash or Converted Common
Stock pursuant to this Section (G)(2) within ten (10) days
of the Corporate Notice Date. In the event that the Holders
fail to unanimously make an election within such ten (10)
day period, the Holders shall be deemed to have conclusively
elected to accept cash in consideration of the transfer and
delivery of the shares of Preferred Stock, Series B.
(H) For purposes of Paragraph (G), the Market Value of the Converted
Common Stock shall be the trading price of such stock as of the close of
business on the date immediately preceding the Corporate Notice Date.
Closing on the transfers shall be the later of thirty (30) days after the
Corporate Notice Date or the first day of the first calendar year quarter
immediately following the Corporate Notice Data except that, if the Holders
will be receiving cash, at the Corporation's option, closing may be
extended until ninety (90) days after the Corporate Notice Date. At the
Closing, the Holders shall satisfy the same conditions as set forth in
Subsections (1) through (4) of Paragraph (F).
(I) All remaining Preferred Stock, Series B shall be redeemed by the
Corporation for an amount equal to the Stated Value, plus any accrued and
unpaid dividends, on the date that is eight (8) years from the date of
Closing (hereinafter the REDEMPTION DATE) whether or not the Holders so
elect. Closing on such redemption shall occur on a date specified by the
Corporation but no later than ninety (90)
- 3 -
<PAGE>
days following the Redemption Date, provided, however, that dividends shall
accrue through the date of such Closing. At Closing, the Holders shall
satisfy the same conditions set forth in Subsections (1) through (4) of
Paragraph (F).
(J) For so long as shares of Preferred Stock, Series B, are
outstanding, the Corporation shall not enter into any Transaction (as
hereafter defined) if, upon entering into any such Transaction, the ratio
of Total Obligations (as hereafter defined) to EBITDA (as hereafter
defined) of the Corporation for the last fiscal quarter, thereafter
annualized by multiplying such amount(s) by four (4), exceeds 8:1. For
purposes hereof, the following terms shall have the following meanings:
(1) EBITDA shall mean, for any period, the consolidated net
income (or net loss) of the Corporation, as determined in
accordance with generally accepted accounting principles,
plus (1) the sum of, without duplication, the following for
----
the Corporation: (a) depreciation expense, (b) amortization
expense, (c) the excess, if any, of gross interest expense
for such period over gross interest income for such period,
in each case determined in accordance with generally
accepted accounting principles, (d) total income tax expense
and (e) extraordinary or unusual non-cash losses, less (2)
----
extraordinary non-cash gains.
(2) OBLIGATIONS shall mean, with respect to the Corporation, the
consolidated outstanding (1) principal amount of
indebtedness for borrowed money, (2) principal amount of
indebtedness for the deferred purchase price of property or
services (other than property or services purchased in the
ordinary course of business) and (3) the total stated value
outstanding preferred stock having a liquidation payment
priority senior to or pari passu with the shares of
---- -----
Preferred Stock, Series B, excluding, however, the Preferred
Stock, Series A and Preferred Stock, Series B of the
Corporation.
(3) TOTAL OBLIGATIONS shall mean, with respect to the
Corporation, as of the time of determination, the aggregate
consolidated amount of Obligations.
- 4 -
<PAGE>
(4) TRANSACTION as used in this Paragraph (J) shall mean, with
respect to the Corporation, (1) the incurrence of any
Obligation; (2) any merger or consolidation to which the
Corporation is a party; or (3) the sale of all or
substantially all of the assets of the Corporation.
(K) There shall be no sinking fund with respect to the shares of the
Preferred Stock, Series B.
(L) The holders of the Preferred Stock, Series B, shall be entitled
to receive, but only when, as and if declared by the Board of Directors,
but in no event more frequently than quarterly, dividends at the rate fixed
for such series and no more. Such dividends shall be payable on a date or
dates which shall be fixed by the Board of Directors and shall be
cumulative from such date as may be fixed for the series. All dividends
payable on Preferred Stock, Series B shall be fully paid, or declared and
set apart for payment before any dividends on the Common Stock of the
Corporation shall be paid or set apart for payment so that if, for all
dividend periods terminating on the same or an earlier date, dividends on
all outstanding shares of the Preferred Stock, Series B at the rates fixed
for the respective series shall not have been paid or set apart for
payment, the deficiency shall be fully paid or set apart before payment on
the Common Stock of the Corporation. The Preferred Stock, Series B shall
rank pari passu with all other series of preferred stock with respect to
dividends. Dividends in full shall not be paid or set apart for payment on
the preferred stock of any other series for any dividend period unless
dividends in full have been or are contemporaneously paid or set apart for
payment on the preferred stock of all other series for all dividend periods
in respect of such series terminating on the same or an earlier date. When
the stated dividends are not paid in full on all series of the preferred
stock in respect of any dividend period, the shares of all series having
the same dividend period shall share ratably in the payment of dividends,
including accumulations, if any, based on the dividends which would be
payable on said shares if all dividends in respect of such series were paid
in full. A DIVIDEND PERIOD is the period between any two consecutive
dividend payment dates, excluding the first of such dates, as fixed for the
series to which a share or shares shall belong. Accruals of dividends shall
not bear interest.
(M) Upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of the preferred
stock of each and every series then outstanding shall be entitled to
receive out of the net
- 5 -
<PAGE>
assets of the Corporation, whether capital or surplus, the sums per share
fixed for the shares of the respective series and payable upon such
dissolution, liquidation or winding up, plus, in the case of each share, an
amount equal to the dividends accrued and unpaid thereon, whether or not
earned or declared, before any distribution of the assets of the
Corporation shall be made to the holders of the common stock of the
Corporation as such.
If the assets distributable on such dissolution, liquidation or
winding up shall be insufficient to permit the payment to the holders of
each series of the preferred stock of the full amounts to which they
respectively are entitled as aforesaid, then said assets shall be
distributed among the holders of the respective series of the preferred
stock in the order of priority as specified for each class of stock and in
proportion to the sums which would be payable on such dissolution,
liquidation or winding up if all such sums were paid in full in preference
and priority over the shares of any of the common stock of the Corporation.
After payment to the holders of the preferred stock of the full
amounts to which they respectively are entitled as aforesaid, the holders
of the preferred stock, as such, shall have no right or claim to any of the
remaining assets of the Corporation.
The sale, conveyance, exchange or transfer of all or substantially all
of the property of the Corporation, or the merger or consolidation into or
with any other corporation, shall not be deemed a dissolution, liquidation
or winding up for the purposes of this Paragraph (M).
(N) Nothing herein contained shall limit any legal right of the
Corporation to purchase or otherwise acquire any shares of the Preferred
Stock, Series B.
(O) So long as any shares of the Preferred Stock, Series B, are
outstanding, the Corporation shall not, without the consent (given in
writing or by vote at a meeting called for that purpose in the manner
prescribed by the By-Laws of the Corporation) of the holders of record of
at least 50% of the total number of such votes which may be cast by the
Holders, each Holder being entitled to one vote for each such share of
Preferred Stock, Series B:
(1) Create or authorize any kind of stock ranking prior to the
Preferred Stock, Series B with respect to the payment of dividends or
upon the dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, or create or authorize any
- 6 -
<PAGE>
obligation or security convertible into shares of any such kind of
stock;
(2) Amend, alter, change or repeal any of the express terms of
the Preferred Stock, Series B so as to affect the Holders thereof
adversely.
(P) So long as any shares of the Preferred Stock, Series B are
outstanding, in the event that the Corporation shall fail to pay dividends
on the Preferred Stock, Series B for at least twelve (12) consecutive
calendar months sufficient to provide a cumulative dividend rate of five
percent (5%) per annum, the Holders shall be entitled to elect and
designate one (1) director of the Board of Directors of the Corporation and
the size of the Board of Directors of the Corporation shall thereupon be
increased by one (1) director, and such newly elected director shall hold
its position on the Board of Directors of the Corporation only until such
time as the Holders shall have received dividends sufficient to provide a
cumulative dividend rate of five percent (5%) per annum, in which event
such newly elected director shall be deemed to have resigned and the size
of the Board of Directors shall thereupon decrease by one (1) member. The
right of the Holders to elect and designate a member of the Board of
Directors of the Corporation shall be exercised jointly with, and not
separately from, the corresponding right granted to the Holders of the
Preferred Stock, Series B, such that only one (1) member of the Board of
Directors of the Corporation may be elected and designated, in the
aggregate, by the Holders of the Preferred Stock, Series A and Preferred
Stock, Series B.
(Q) REGISTRATION RIGHTS FOR COMMON SHARES.
-------------------------------------
(1) Demand Registration Rights. The Corporation covenants and
--------------------------
agrees with the Holders, but not any subsequent holders, of the
Preferred Stock, Series B that upon the unanimous written request of
the Holders made at any time during the Exchange Election Period, but
only once, the Corporation will file as promptly as practicable and,
in any event, within one hundred eighty (180) days after receipt of
such written request, a new registration statement (a REGISTRATION
STATEMENT) or a post-effective amendment to an existing registration
statement (an AMENDMENT) under the Securities Act of 1933 (the ACT),
registering or qualifying the Converted Common Stock for sale. No
other securities of the Corporation shall be entitled to be included
in such Amendment or Registration Statement. The Corporation will use
its good faith efforts to file and cause to become effective any such
- 7 -
<PAGE>
Amendment or Registration Statement as promptly as practicable and
remain effective for a period of not less than sixty (60) days or such
shorter period as is necessary to complete the distributions.
(2) Piggyback Registration Rights. The Corporation covenants and
-----------------------------
agrees with the Holders, but not any subsequent holders, of the
Preferred Stock, Series B, that if, at any time within the Exchange
Election Period the Corporation proposes to file a Registration
Statement with respect to any class of security (other than in
connection with an offering to the Corporation's (or its affiliates')
employees under the Act in a primary registration on behalf of the
Corporation and/or in a secondary registration on behalf of holders of
such securities and the registration form to be used may be used for
registration of the Converted Common Stock, the Corporation will give
written notice, which shall be given at least forty five (45) days
prior to such filing, to the Holders of its intention to file a
Registration Statement and will offer to include in such Registration
Statement to the maximum extent possible, and limited, in the case of
a Regulation A offering, to the amount of the available exemption,
subject to paragraphs (a) and (b) of this Paragraph (2), such number
of Converted Common Stock with respect to which the Corporation has
received written requests for inclusion therein by the Holders within
ten (10) days after the giving of notice by the Corporation. This
right shall only apply to Holders who have converted to Converted
Common Stock prior to the date written notice is given by the
Corporation unless all, but not less than all, of the Holders who have
not converted to Converted Common Stock elect under Paragraph (E) to
convert to Converted Common Stock. All registrations requested
pursuant to this Paragraph Q(2) are referred to herein as PIGGYBACK
REGISTRATIONS. This paragraph is not applicable to a Registration
Statement filed by the Corporation with the Securities and Exchange
Commission (the SEC) on Forms S-4 or S-8 or any successor form or any
Registration Statement filed with the SEC prior to the Closing.
(a) Priority on Primary Registrations. If a Piggyback
---------------------------------
Registration includes an underwritten primary
registration on behalf of the Corporation and the
underwriter(s) for the offering being registered by the
Corporation shall determine in good faith and advise
the Corporation in writing that in its
- 8 -
<PAGE>
opinion the number of shares of Converted Common Stock
requested to be included in such registration exceeds
the number that can be sold in such offering without
materially adversely affecting the distribution of such
securities by the Corporation, the Corporation will
include in such registration (i) first, the securities
that the Corporation proposes to sell and (ii) second,
to the extent feasible, the Converted Common Stock
requested to be included in such registration,
apportioned ratably among the Holders of Converted
Common Stock requiring to be included in such
registration.
(b) Priority on Secondary Registrations. If a Piggyback
-----------------------------------
Registration consists only of an underwritten secondary
registration on behalf of holders of securities of the
Corporation (other than pursuant to Paragraph Q(1), and
the underwriter(s) for the offering being registered by
the Corporation advise the Corporation in writing that
in its opinion the number of shares of Converted Common
Stock requested to be included in such registration
exceeds the number which can be sold in such offering
without materially adversely affecting the distribution
of such securities by the Corporation, the Corporation
will include in such registration (i) first, the
securities requested to be included therein by the
holders requesting such registration and (ii) second,
to the extent feasible, the Converted Common Stock
requested to be included in such registration above,
apportioned ratably, among all such Holders on the
basis of the number of shares requested to be included
by each such Holder.
(3) Restrictions on Registration Rights.
-----------------------------------
(a) Notwithstanding the provisions set forth in Sections
(2)(a) and (2)(b) above or any other provisions, if any
such underwriter shall determine in good faith and
advise the Corporation in
- 9 -
<PAGE>
writing that the distribution of the Converted Common
Stock requested to be included in the registration
concurrently with the securities being registered by
the Corporation would materially adversely affect the
distribution of such securities by the Corporation,
then the Holders of such Converted Common Stock shall
delay their offering and sale for such period ending on
the earliest of (1) ninety (90) days following the
effective date of the Corporation's registration
statement, (2) the day upon which the underwriting
syndicate, if any, for such offering shall have been
disbanded or, (3) such date as the Corporation, the
underwriter(s) and the Holders shall otherwise agree.
In the event of such delay, the Corporation shall file
such supplements, post-effective amendments and take
any such other steps as may be reasonably necessary to
permit such Holders to make their proposed offering and
sale for a period not to exceed ninety (90) days
immediately following the end of such period of delay.
If any party disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by
written notice to the Corporation and the underwriter.
Notwithstanding the foregoing, the Corporation shall
not be required to file a registration statement to
include shares of Converted Common Stock pursuant to
this Paragraph (Q) if an opinion of independent
counsel, reasonably satisfactory to counsel for the
Corporation, that the shares of Converted Common Shares
proposed to be disposed of may be transferred pursuant
to the provisions of Rule 144 under the Act shall have
been delivered to counsel for the Corporation and the
Holders shall have agreed to indemnify the Corporation
with respect to the accuracy of the matter described in
any such opinion and the actions of the Corporation
taken in reliance thereon.
(b) The Corporation shall not be required to file a
Registration Statement or
- 10 -
<PAGE>
Amendment at a time when the audited financial
statements required to be included therein are not
available, which time shall be limited to the period
commencing forty five (45) days after the end of the
Corporation's last fiscal year and ending ninety (90)
days after the end of such fiscal year existing at the
time of the proposed offering.
(c) The Corporation shall not be required to file a
Registration Statement or Amendment if the Corporation
furnishes to the Holders a certificate signed by the
Corporation's Chairman or President stating that in his
or her good faith judgment it would be detrimental or
otherwise disadvantageous to the Corporation or its
shareholders for such a Registration Statement or
Amendment to be filed as expeditiously as possible, in
which case the Corporation shall have a period of not
more than 180 days within which to file such
Registration Statement or Amendment measured from the
date of the Corporation's receipt of Holders' request
for registration.
(4) Costs of Registration.
---------------------
(a) All costs, expenses, fees and other charges, including
but not limited to reasonable attorneys' and accounting
fees and expenses (collectively, the EXPENSES), arising
as a result of any registration pursuant to Paragraph
(Q) shall be borne by the Corporation and the Holders,
or both, as follows:
(i) With respect to an election made by the Holders
during the first two (2) years of the Exchange
Election Period, the Holders shall be solely
responsible for all such Expenses.
(ii) With respect to any election made by the Holders
during the period commencing on the day after the
first two (2) years of the Exchange Election
Period, through and until the day prior to the
date that is
- 11 -
<PAGE>
three (3) years after the beginning of the
Exchange Election Period, the Expenses shall be
shared equally by the Holders and the Corporation.
(iii) With respect to any election made by the Holders
during the period commencing on the earlier of (1)
the date that is three (3) years after the
beginning of the Exchange Election Period, or (2)
the date of the Closing with respect to any option
exercised by the Corporation pursuant to Paragraph
(G) of this Agreement (other than where the
Holders have elected to receive immediately
available funds at Closing) through and until the
expiration of the Exchange Election Period, the
Expenses shall be borne solely by the Corporation.
(b) With respect to any election made by the Holders
pursuant to Paragraph (Q)(2), the Expenses shall be
borne solely by the Corporation.
(c) Notwithstanding any other provision of these terms of
Preferred Stock, Series B to the contrary, the Holders
shall be solely responsible for any fees and
disbursements of any counsel, accountant or other
professional for the Holders; any underwriters discount
or commission in respect of such Converted Common
Stock; and the cost of and liability or similar
insurance required by an underwriter to the extent that
such costs are attributable to the offering of such
Converted Common Stock.
(5) Subsequent Holder. The reference to any "subsequent holder"
-----------------
as stated above shall not include any trustee designated by the
Holders under a trust agreement for their benefit.
(R) SET-OFF RIGHTS. In the event that all or any of the Holders of
--------------
Preferred Stock, Series B shall be required to make any payment to or
indemnify or hold harmless the Corporation, or any affiliate, pursuant to
the terms and provisions of the Merger Agreement, including but not
- 12 -
<PAGE>
limited to any and all payments and indemnity obligations arising under
Article X of the Merger Agreement, the Corporation shall be entitled to
set-off all such payments and indemnification and hold harmless obligations
in accordance with the Merger Agreement against any and all amounts,
payments and other consideration to be paid and delivered by the
Corporation hereunder whether in the form of cash, instruments, stock or
otherwise.
- 13 -
<PAGE>
EXHIBIT N-1
TERMS OF C-TEC CABLE PREFERRED STOCK, SERIES A
<PAGE>
C-TEC Cable Systems, Inc. (the CORPORATION)
Preferred Stock, Series A
The designation preferences, privileges and voting powers of the shares of
the Preferred Stock, Series A, and the restrictions or qualifications thereof
(insofar as they differ from or supplement the provisions which are applicable
to all shares of the preferred stock irrespective of series), are as follows:
(A) The series shall be designated as Preferred Stock, Series A
(hereinafter referred to as Preferred Stock, Series A).
(B) The dividend rate thereof shall be five percent (5%) per annum.
The dividends on the shares of the Preferred Stock shall be cumulative from
the first day of the calendar month in which the shares of the Preferred
Stock, Series A, if any, shall be issued, with accruals of dividends
uniform with the unpaid accruals of dividends, if any, on the Preferred
Stock, Series A outstanding at the time of the issue thereof.
(C) Except as provided in Subsection (K) and (L), the Preferred
Stock, Series A shall have no voting rights whatsoever.
(D) The sum per share payable upon the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation shall be $10 per
share plus an amount equal to the dividends accrued and unpaid on such
share, whether or not earned or declared.
(E) The holders of the shares of the Preferred Stock, Series A
(collectively, the HOLDERS), acting as a whole, may elect, or may be
required, as the case may be, at any time during the period (the ELECTION
PERIOD) commencing on the date that is three (3) years and expiring on the
date that is eight (8) years from the date of Closing (as such term is
defined in that certain Merger Agreement dated September 23, 1994, as
amended by that certain Amendment Agreement dated March 30, 1995, and
further amended by that certain Second Amendment Agreement dated May 15,
1995 (the AGREEMENT), to exchange their shares of Preferred Stock, Series A
with C-TEC Corporation, a Pennsylvania corporation (C-TEC), either for
shares of common stock of C-TEC (C-TEC COMMON) or cash. The terms and
conditions of such exchange rights are set forth in that certain Share
Exchange Option Agreement between the Holders and C-TEC dated ___________
(the
<PAGE>
EXCHANGE AGREEMENT). In the event that either C-TEC or the Holders
exercise their option, in accordance with the Exchange Agreement to
exchange shares of Preferred Stock, Series A for C-TEC Common or cash, as
the case may be, and provided the Corporation has received notice of any
such election in writing not less than 30 nor more than 90 days prior to
the date fixed for such exchange, the Corporation shall cooperate and take
such actions as are reasonably required to effectuate such exchange on the
books and records of the Corporation.
(F) For so long as shares of Preferred Stock, Series A are
outstanding, the Corporation shall not enter into any Transaction (as
hereafter defined) if, upon entering into any such Transaction, the ratio
of Total Obligations (as hereafter defined) to EBITDA (as hereafter
defined) of the Corporation for the last fiscal quarter, thereafter
annualized by multiplying such amount(s) by four (4), exceeds 8:1. For
purposes hereof, the following terms shall have the following meanings:
. EBITDA shall mean, for any period, the consolidated net
income (or net loss) of the Corporation, as determined in
accordance with generally accepted accounting principles,
plus (1) the sum of, without duplication, the following for
----
the Corporation: (a) depreciation expense, (b) amortization
expense, (c) the excess, if any, of gross interest expense
for such period over gross interest income for such period,
in each case determined in accordance with generally
accepted accounting principles, (d) total income tax expense
and (e) extraordinary or unusual non-cash losses, less (2)
----
extraordinary non-cash gains.
. OBLIGATIONS shall mean, with respect to the Corporation, the
consolidated outstanding (1) principal amount of
indebtedness for borrowed money, (2) principal amount of
indebtedness for the deferred purchase price of property or
services (other than property or services purchased in the
ordinary course of business) and (3) total stated value of
issued and outstanding preferred stock having a liquidation
payment priority senior to or pari passu with the shares of
---- -----
Preferred Stock, Series A, excluding, however, the Preferred
Stock, Series A and Preferred Stock, Series B of the
Corporation.
- 2 -
<PAGE>
. TOTAL OBLIGATIONS shall mean, with respect to the
Corporation, as of the time of determination, the aggregate
consolidated amount of Obligations.
. TRANSACTION shall mean, with respect to the Corporation, (1)
the incurrence of any Obligation; (2) any merger or
consolidation to which the Corporation is a party; or (3)
the sale of all or substantially all of the assets of the
Corporation.
(G) There shall be no sinking fund with respect to the shares of the
Preferred Stock, Series A.
(H) The holders of the Preferred Stock, Series A, shall be entitled
to receive, but only when, as and if declared by the Board of Directors,
but in no event more frequently than quarterly, dividends at the rate fixed
for such series and no more. Such dividends shall be payable on a date or
dates which shall be fixed by the Board of Directors and shall be
cumulative from such date as may be fixed for the series. All dividends
payable on Preferred Stock, Series A shall be fully paid, or declared and
set apart for payment before any dividends on the common stock of the
Corporation shall be paid or set apart for payment so that if, for all
dividend periods terminating on the same or an earlier date, dividends on
all outstanding shares of the Preferred Stock, Series A at the rates fixed
for the respective series shall not have been paid or set apart for
payment, the deficiency shall be fully paid or set apart before payment on
the common stock of the Corporation. The Preferred Stock, Series A, shall
rank pari passu with all other series of preferred stock with respect to
dividends. Dividends in full shall not be paid or set apart for payment on
the preferred stock of any other series for any dividend period unless
dividends in full have been or are contemporaneously paid or set apart for
payment on the preferred stock of all other series for all dividend periods
in respect of such series terminating on the same or an earlier date. When
the stated dividends are not paid in full on all series of the preferred
stock in respect of any dividend period, the shares of all series having
the same dividend period shall share ratably in the payment of dividends,
including accumulations, if any, based on the dividends which would be
payable on said shares if all dividends in respect of such series were paid
in full. A DIVIDEND PERIOD is the period between any two consecutive
dividend payment dates, excluding the first of such dates, as fixed for the
series to which a share or shares shall belong. Accruals of dividends shall
not bear interest.
- 3 -
<PAGE>
(I) Upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of the preferred
stock of each and every series then outstanding shall be entitled to
receive out of the net assets of the Corporation, whether capital or
surplus, the sums per share fixed for the shares of the respective series
and payable upon such dissolution, liquidation or winding up, plus, in the
case of each share, an amount equal to the dividends accrued and unpaid
thereon, whether or not earned or declared, before any distribution of the
assets of the Corporation shall be made to the holders of the common stock
of the Corporation as such.
If the assets distributable on such dissolution, liquidation or
winding up shall be insufficient to permit the payment to the holders of
each series of the preferred stock of the full amounts to which they
respectively are entitled as aforesaid, then said assets shall be
distributed among the holders of the respective series of the preferred
stock in the order of priority as specified for each class of stock and in
proportion to the sums which would be payable on such dissolution,
liquidation or winding up if all such sums were paid in full in preference
and priority over the shares of any of the Common Stock of the Corporation.
After payment to the holders of the preferred stock of the full
amounts to which they respectively are entitled as aforesaid, the holders
of the preferred stock, as such, shall have no right or claim to any of the
remaining assets of the Corporation.
The sale, conveyance, exchange or transfer of all or substantially all
of the property of the Corporation, or the merger or consolidation into or
with any other corporation, shall not be deemed a dissolution, liquidation
or winding up for the purposes of this Subsection (I).
(J) Nothing herein contained shall limit any legal right of the
Corporation to purchase or otherwise acquire any shares of the Preferred
Stock, Series A.
(K) So long as any shares of the Preferred Stock, Series A are
outstanding, the Corporation shall not, without the consent (given in
writing or by vote at a meeting called for that purpose in the manner
prescribed by the By-Laws of the Corporation) of the holders of record of
at least 50% of the total number of such votes which may be cast by the
Holders, each Holder being entitled to one vote for each such share of
Preferred Stock, Series A:
- 4 -
<PAGE>
(1) Create or authorize any kind of stock ranking prior to the
Preferred Stock, Series A with respect to the payment of dividends or
upon the dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, or create or authorize any
obligation or security convertible into shares of any such kind of
stock;
(2) Amend, alter, change or repeal any of the express terms of
the Preferred Stock, Series A so as to affect the Holders thereof
adversely.
(L) So long as any shares of the Preferred Stock, Series A are
outstanding, in the event that the Corporation shall fail to pay dividends
on the Preferred Stock, Series A or Preferred Stock, Series B for at least
twelve (12) consecutive calendar months sufficient to provide a cumulative
dividend rate of five percent (5%) per annum, the Holders shall be entitled
to elect and designate one (1) director of the Board of Directors of the
Corporation and the size of the Board of Directors of the Corporation shall
thereupon be increased by one (1) director, and such newly elected director
shall hold its position on the Board of Directors of the Corporation only
until such time as the Holders shall have received dividends sufficient to
provide a cumulative dividend rate of five percent (5%) per annum, in which
event such newly elected director shall be deemed to have resigned and the
size of the Board of Directors shall thereupon decrease by one (1) member.
The right of the Holders to elect and designate a member of the Board of
Directors of the Corporation shall be exercised jointly with, and not
separately from, the corresponding right granted to the Holders of the
Preferred Stock, Series B, such that only one (1) member of the Board of
Directors of the Corporation may be elected and designated, in the
aggregate, by the Holders of the Preferred Stock, Series A and the
Preferred Stock, Series B.
- 5 -
<PAGE>
EXHIBIT N-2
TERMS OF C-TEC CABLE PREFERRED STOCK, SERIES B
<PAGE>
C-TEC Cable Systems, Inc. (the CORPORATION)
Preferred Stock, Series B
The designation preferences, privileges and voting powers of the shares of
the Preferred Stock, Series B, and the restrictions or qualifications thereof
(insofar as they differ from or supplement the provisions which are applicable
to all shares of the preferred stock irrespective of series), are as follows:
(A) The series shall be designated as Preferred Stock, Series B
(hereinafter referred to as "Preferred Stock, Series B").
(B) The dividend rate thereof shall be five percent (5%) per annum.
The dividends on the shares of the Preferred Stock shall be cumulative from
the first day of the calendar month in which the shares of the Preferred
Stock, Series B, if any, shall be issued, with accruals of dividends
uniform with the unpaid accruals of dividends, if any, on the Preferred
Stock, Series B outstanding at the time of the issue thereof.
(C) Except as provided in Subsection (K) and (L), the Preferred
Stock, Series B shall have no voting rights whatsoever.
(D) The sum per share payable upon the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation shall be $10 per
share plus an amount equal to the dividends accrued and unpaid on such
share, whether or not earned or declared.
(E) The holders of the shares of the Preferred Stock, Series B
(collectively, the HOLDERS), acting as a whole, may elect, or may be
required, as the case may be, at any time during the period (the ELECTION
PERIOD) commencing on the date that is three (3) years and expiring on the
date that is eight (8) years from the date of Closing (as such term is
defined in that certain Merger Agreement dated September 23, 1994, as
amended by that certain Amendment Agreement dated March 30, 1995, and
further amended by that certain Second Amendment Agreement dated May 15,
1995 (the AGREEMENT), to exchange their shares of Preferred Stock, Series B
with C-TEC Corporation, a Pennsylvania corporation (C-TEC), either for
shares of common stock of C-TEC (C-TEC COMMON) or cash. The terms and
conditions of such exchange rights are set forth in that certain Share
Exchange Option Agreement between the Holders and C-TEC dated ___________
(the
<PAGE>
EXCHANGE AGREEMENT). In the event that either C-TEC or the Holders
exercise their option, in accordance with the Exchange Agreement to
exchange shares of Preferred Stock, Series B for C-TEC Common or cash, as
the case may be, and provided the Corporation has received notice of any
such election in writing not less than 30 nor more than 90 days prior to
the date fixed for such exchange, the Corporation shall cooperate and take
such actions as are reasonably required to effectuate such exchange on the
books and records of the Corporation.
(F) For so long as shares of Preferred Stock, Series B are
outstanding, the Corporation shall not enter into any Transaction (as
hereafter defined) if, upon entering into any such Transaction, the ratio
of Total Obligations (as hereafter defined) to EBITDA (as hereafter
defined) of the Corporation for the last fiscal quarter, thereafter
annualized by multiplying such amount(s) by four (4), exceeds 8:1. For
purposes hereof, the following terms shall have the following meanings:
. EBITDA shall mean, for any period, the consolidated net
income (or net loss) of the Corporation, as determined in
accordance with generally accepted accounting principles,
plus (1) the sum of, without duplication, the following for
----
the Corporation: (a) depreciation expense, (b) amortization
expense, (c) the excess, if any, of gross interest expense
for such period over gross interest income for such period,
in each case determined in accordance with generally
accepted accounting principles, (d) total income tax expense
and (e) extraordinary or unusual non-cash losses, less (2)
----
extraordinary non-cash gains.
. OBLIGATIONS shall mean, with respect to the Corporation, the
consolidated outstanding (1) principal amount of
indebtedness for borrowed money, (2) principal amount of
indebtedness for the deferred purchase price of property or
services (other than property or services purchased in the
ordinary course of business) and (3) total stated value of
issued and outstanding preferred stock having a liquidation
payment priority senior to or pari passu with the shares of
---- -----
Preferred Stock, Series B, excluding, however, the Preferred
Stock, Series A and Preferred Stock, Series B of the
Corporation.
- 2 -
<PAGE>
. TOTAL OBLIGATIONS shall mean, with respect to the
Corporation, as of the time of determination, the aggregate
consolidated amount of Obligations.
. TRANSACTION shall mean, with respect to the Corporation, (1)
the incurrence of any Obligation; (2) any merger or
consolidation to which the Corporation is a party; or (3)
the sale of all or substantially all of the assets of the
Corporation.
(G) There shall be no sinking fund with respect to the shares of the
Preferred Stock, Series B.
(H) The holders of the Preferred Stock Series B shall be entitled to
receive, but only when, as and if declared by the Board of Directors, but
in no event more frequently than quarterly, dividends at the rate fixed for
such series and no more. Such dividends shall be payable on a date or
dates which shall be fixed by the Board of Directors and shall be
cumulative from such date as may be fixed for the series. All dividends
payable on Preferred Stock Series B shall be fully paid, or declared and
set apart for payment before any dividends on the common stock of the
Corporation shall be paid or set apart for payment so that if, for all
dividend periods terminating on the same or an earlier date, dividends on
all outstanding shares of the Preferred Stock Series B at the rates fixed
for the respective series shall not have been paid or set apart for
payment, the deficiency shall be fully paid or set apart before payment on
the common stock of the Corporation. The Preferred Stock, Series B shall
rank pari passu with all other series of preferred stock with respect to
dividends. Dividends in full shall not be paid or set apart for payment on
the preferred stock of any other series for any dividend period unless
dividends in full have been or are contemporaneously paid or set apart for
payment on the preferred stock of all other series for all dividend periods
in respect of such series terminating on the same or an earlier date. When
the stated dividends are not paid in full on all series of the preferred
stock in respect of any dividend period, the shares of all series having
the same dividend period shall share ratably in the payment of dividends,
including accumulations, if any, based on the dividends which would be
payable on said shares if all dividends in respect of such series were paid
in full. A DIVIDEND PERIOD is the period between any two consecutive
dividend payment dates, excluding the first of such dates, as fixed for the
series to which a share or shares shall belong. Accruals of dividends
shall not bear interest.
- 3 -
<PAGE>
(I) Upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of the preferred
stock of each and every series then outstanding shall be entitled to
receive out of the net assets of the Corporation, whether capital or
surplus, the sums per share fixed for the shares of the respective series
and payable upon such dissolution, liquidation or winding up, plus, in the
case of each share, an amount equal to the dividends accrued and unpaid
thereon, whether or not earned or declared, before any distribution of the
assets of the Corporation shall be made to the holders of the common stock
of the Corporation as such.
If the assets distributable on such dissolution, liquidation or
winding up shall be insufficient to permit the payment to the holders of
each series of the preferred stock of the full amounts to which they
respectively are entitled as aforesaid, then said assets shall be
distributed among the holders of the respective series of the preferred
stock in the order of priority as specified for each class of stock and in
proportion to the sums which would be payable on such dissolution,
liquidation or winding up if all such sums were paid in full in preference
and priority over the shares of any of the Common Stock of the Corporation.
After payment to the holders of the preferred stock of the full
amounts to which they respectively are entitled as aforesaid, the holders
of the preferred stock, as such, shall have no right or claim to any of the
remaining assets of the Corporation.
The sale, conveyance, exchange or transfer of all or substantially all
of the property of the Corporation, or the merger or consolidation into or
with any other corporation, shall not be deemed a dissolution, liquidation
or winding up for the purposes of this Subsection (I).
(J) Nothing herein contained shall limit any legal right of the
Corporation to purchase or otherwise acquire any shares of the Preferred
Stock, Series B.
(K) So long as any shares of the Preferred Stock, Series B are
outstanding, the Corporation shall not, without the consent (given in
writing or by vote at a meeting called for that purpose in the manner
prescribed by the By-Laws of the Corporation) of the holders of record of
at least 50% of the total number of such votes which may be cast by the
Holders, each Holder being entitled to one vote for each such share of
Preferred Stock, Series B:
- 4 -
<PAGE>
(1) Create or authorize any kind of stock ranking prior to the
Preferred Stock, Series B with respect to the payment of dividends or
upon the dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, or create or authorize any
obligation or security convertible into shares of any such kind of
stock;
(2) Amend, alter, change or repeal any of the express terms of
the Preferred Stock, Series B so as to affect the Holders thereof
adversely.
(L) So long as any shares of the Preferred Stock, Series B are
outstanding, in the event that the Corporation shall fail to pay dividends
on the Preferred Stock, Series A or Preferred Stock, Series B for at least
twelve (12) consecutive calendar months sufficient to provide a cumulative
dividend rate of five percent (5%) per annum, the Holders shall be entitled
to elect and designate one (1) director of the Board of Directors of the
Corporation and the size of the Board of Directors of the Corporation shall
thereupon be increased by one (1) director, and such newly elected director
shall hold its position on the Board of Directors of the Corporation only
until such time as the Holders shall have received dividends sufficient to
provide a cumulative dividend rate of five percent (5%) per annum, in which
event such newly elected director shall be deemed to have resigned and the
size of the Board of Directors shall thereupon decrease by one (1) member.
The right of the Holders to elect and designate a member of the Board of
Directors of the Corporation shall be exercised jointly with, and not
separately from, the corresponding right granted to the Holders of the
Preferred Stock, Series A, such that only one (1) member of the Board of
Directors of the Corporation may be elected and designated, in the
aggregate by the Holders of the Preferred Stock, Series A and the Preferred
Stock, Series B.
(M) In the event that all or any of the Holders shall be required to
make any payment to or indemnify or hold harmless the Corporation or C-TEC
or any affiliate of the Corporation or C-TEC pursuant to the terms and
provisions of the Agreement, including but not limited to any and all
payments and indemnity obligations arising under Article 10 of the
Agreement, the Corporation shall be entitled to set-off all such payments
and indemnification and hold harmless obligations against any and all
amounts, dividends and other payments to be made by the Corporation
hereunder, including but not limited to any consideration, whether in the
form of cash, instruments, stock or otherwise.
- 5 -
<PAGE>
EXHIBIT O
SHARE EXCHANGE AGREEMENT
<PAGE>
Share Exchange Option Agreement
This Share Exchange Option Agreement (this AGREEMENT) is made as of this
____ day of __________________, 1995, by and among (i) Bark Lee Yee, Stella C.
Yee, Susan C. Yee, Raymond C. Yee, Kenneth C. Yee and Robert G. Tallman, as
Trustee for those two (2) certain trusts created pursuant to trust agreements
dated December 17, 1992 (collectively, the HOLDERS and each, a HOLDER), and (ii)
C-TEC Corporation, a Pennsylvania corporation (C-TEC).
Recitals
A. The Holders are, collectively, the owners of all of the Preferred Stock
Series A and Preferred Stock Series B of Cable;
B. Cable is a wholly-owned subsidiary of C-TEC and, partly in
consideration for the Holders entering into the Merger Agreement, C-TEC desires
to enter into this Agreement;
C. The Holders and C-TEC have agreed to certain terms and conditions
pursuant to which the Holders shall have an option to acquire certain shares of
the Common Stock from C-TEC and C-TEC shall have the option to acquire the
Preferred Stock from the Holders; and
D. The Holders and C-TEC desire to enter into this Agreement to set forth
more fully the terms and conditions of their respective options.
Agreement
Now, therefore, in consideration of the foregoing, for the mutual promises
and covenants contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. DEFINITIONS. In addition to other words and terms defined elsewhere in
-----------
this Agreement, as used herein, the following words and terms shall have the
following meanings, unless the context clearly requires otherwise:
CABLE shall mean C-TEC Cable Systems, Inc., a Delaware corporation.
CLOSING shall have the meaning given such term in Section 5.
<PAGE>
CLOSING DATE shall have the meaning given such term in Section 5.
COMMON STOCK shall mean the shares of Common Stock of C-TEC then
issued, whether or not outstanding.
EFFECTIVE DATE shall mean the date upon which an Election Notice is
deemed validly given in accordance with the provisions of Section 8(a).
ELECTION NOTICE shall have the meaning given such term in Section 4.
ELECTION PERIOD shall mean the period commencing on the date that is
three (3) years from May 15, 1995 and ending on the date that is eight (8) years
from May 15, 1995.
MARKET VALUE shall mean the then current fair market value of the
Series A Transfer Shares and Series B Transfer Shares, as applicable, determined
as of the applicable Effective Date, which fair market value shall be deemed to
be the closing price per share of the Common Stock as reported on the NASDAQ
System as of the close of business of the business day immediately preceding the
applicable Effective Date, multiplied by the applicable number of shares.
MERGER AGREEMENT shall mean that certain Merger Agreement dated
September 23, 1994 between the Holders and Cable, as amended by that certain
Amendment Agreement dated March 30, 1995, and further amended by that certain
Second Amendment Agreement dated May 15, 1995.
PREFERRED STOCK shall mean, collectively, the Preferred Stock Series A
and the Preferred Stock Series B.
PREFERRED STOCK SERIES A shall mean those certain 4,100,000 shares of
Preferred Stock, 5% Series A issued by Cable held in the aggregate by the
Holders.
PREFERRED STOCK SERIES B shall mean those certain 1,100,000 shares of
Preferred Stock, 5% Series B issued by Cable held in the aggregate by the
Holders.
SERIES A STRIKE PRICE shall mean an amount equal to Forty-one Million
Dollars ($41,000,000), which amount is derived from and approximately equal to
the sum of 1,171,428 shares of Common Stock multiplied by $35.00 per share.
SERIES B STRIKE PRICE shall mean an amount equal to Eleven Million
Dollars ($11,000,000) which amount is derived and approximately equal to the sum
of 285,714 shares of Common Stock multiplied by $38.50 per share.
<PAGE>
SERIES A TRANSFER SHARES shall mean the 1,171,428 shares of Common
Stock to be transferred by C-TEC to the Holders of Preferred Stock Series A upon
the occurrence of certain events as set forth in this Agreement.
SERIES B TRANSFER SHARES shall mean the 285,714 shares of Common Stock
to be transferred by C-TEC to the Holders of the Preferred Stock Series B upon
the occurrence of certain events as set forth in this Agreement.
TRANSFER SHARES shall mean, collectively, the Series A Transfer Shares
and the Series B Transfer Shares.
2. OPTIONS IN FAVOR OF HOLDERS.
---------------------------
(a) The Holders of Preferred Stock Series A, acting as a whole but not
in part, may elect at any time during the Election Period, to acquire all, but
not less than all, of the Series A Transfer Shares from C-TEC. In the event the
Holders properly exercise their election to acquire the Series A Transfer Shares
in accordance with the procedures set forth in Section 4, in consideration of
the transfer and delivery of the Series A Transfer Shares to Holders, the
Holders shall, contemporaneously with such transfer, transfer and deliver the
shares of Preferred Stock Series A to C-TEC. If the Holders are unable to
unanimously make an election pursuant to this subsection with respect to the
Preferred Stock Series A, the Holders shall each be deemed to have elected to
take no action with respect to this subsection.
(b) The Holders of Preferred Stock Series B, acting as a whole but not
in part, may elect at any time during the Election Period, to acquire all, but
not less than all, of the Series B Transfer Shares from C-TEC. In the event the
Holders properly exercise their election to acquire the Series B Transfer Shares
in accordance with the procedures set forth in Section 4, in consideration of
the transfer and delivery of the Series B Transfer Shares to Holders, the
Holders shall, contemporaneously with such transfer, transfer and deliver the
shares of Preferred Stock Series B to C-TEC. If the Holders are unable to
unanimously make an election pursuant to this subsection with respect to the
Preferred Stock Series B, the Holders shall each be deemed to have elected to
take no action with respect to this subsection.
(c) The options in favor of the Holders to acquire the Transfer Shares
granted pursuant to the foregoing Sections 2(a) and (b) may be exercised by the
Holders, acting as a whole, either separately or jointly at any time during the
Election Period and the exercise by the Holders of one option shall not preclude
the Holders from exercising the remaining options.
- 3 -
<PAGE>
3. OPTION IN FAVOR OF C-TEC.
------------------------
(a) C-TEC may elect at any time during the Election Period to acquire
from the Holders all, but not less than all, of the Preferred Stock Series A. In
the event C-TEC properly exercises its election to acquire the Preferred Stock
Series A in accordance with the procedures set forth in Section 4 of this
Agreement, in consideration of the transfer of the applicable shares of
Preferred Stock Series A from the Holders to C-TEC, C-TEC shall:
(i) If the Market Value of the Series A Transfer Shares is
greater than or equal to the Series A Strike Price, C-TEC
shall transfer and deliver to the Holders of Preferred Stock
Series A the Series A Transfer Shares, ratably in proportion
to the shares of Preferred Stock Series A held by them;
(ii) If the Market Value of the Series A Transfer Shares is less
than the Series A Strike Price, C-TEC shall, at Holder's
option, either pay to the Holders in immediately available
funds at Closing an amount equal to the Series A Strike
Price, or C-TEC shall transfer and deliver to the Holders
the Series A Transfer Shares. The Holders, acting as a
whole but not in part, shall make their election to receive
either cash or Series A Transfer Shares pursuant to this
Section 3(a)(ii) within ten (10) days of the applicable
Effective Date of the Election Notice. In the event that
the Holders fail to unanimously make an election within such
ten (10) day period, the Holders shall be deemed to have
conclusively elected to accept cash in consideration of the
transfer and delivery of the shares of Preferred Stock
Series A.
(b) C-TEC may elect at any time during the Election Period to acquire
from the Holders all, but not less than all, of the Preferred Stock Series B. In
the event C-TEC properly exercises its election to acquire the Preferred Stock
Series B in accordance with the procedures set forth in Section 4 of this
Agreement, in consideration of the transfer of the applicable shares of
Preferred Stock Series B from the Holders to C-TEC, C-TEC shall:
(i) If the Market Value of the Series B Transfer Shares is
greater than or equal to the Series B Strike Price, C-TEC
shall transfer and
- 4 -
<PAGE>
deliver to the Holders of Preferred Stock Series B the
Series B Transfer Shares, ratably in proportion to the
shares of Preferred Stock Series B held by them;
(ii) If the Market Value of the Series B Transfer Shares is less
than the Series B Strike Price, C-TEC shall, at Holder's
option, either pay to the Holders in immediately available
funds at Closing an amount equal to the Series B Strike
Price, or C-TEC shall transfer and deliver to the Holders
the Series B Transfer Shares. The Holders, acting as a
whole but not in part, shall make their election to receive
either cash or Series B Transfer Shares pursuant to this
Section 3(b)(ii) within ten (10) days of the Effective Date
of the applicable Election Notice. In the event that the
Holders fail to unanimously make an election within such ten
(10) day period, the Holders shall be deemed to have
conclusively elected to accept cash in consideration of the
transfer and delivery of the shares of Preferred Stock
Series B.
(c) The options in favor of C-TEC to acquire the Preferred Stock
Series A and the Preferred Stock Series B granted pursuant to the foregoing
Sections 3(a) and (b) may be exercised by C-TEC either separately or jointly, at
any time during the Election Period and the exercise by C-TEC of one such option
shall not preclude C-TEC from exercising the remaining option.
4. ELECTION PROCEDURE. In order to exercise the election rights pursuant
------------------
to Sections 2 and 3 of this Agreement, the Holders or C-TEC, as applicable,
shall deliver to the other party an irrevocable written notice of the election
(each, an ELECTION NOTICE). The Election Notice shall specify the Closing Date
upon which the relevant transfers shall occur, which Closing Date shall not be
less than thirty (30) days from the Effective Date of the Election Notice (if
the Holders will be receiving C-TEC Common Stock) and ninety (90) days from the
Effective Date of the Election Notice (if the Holders will be receiving cash).
Upon the exercise of an election by either the Holders or C-TEC pursuant to
Section 2 or 3 of this Agreement, the remaining election rights of the non-
electing party with respect to any remaining shares of Preferred Stock then held
by the Holders shall continue, and all other election rights shall thereupon be
extinguished.
- 5 -
<PAGE>
5. CLOSING.
-------
(a) In the event of the exercise of any election provided in Sections
2 or 3 of this Agreement, on the Closing Date specified in the applicable
Election Notice on the applicable Closing Date, each Holder shall transfer and
deliver their respective shares of the applicable series of Preferred Stock
to C-TEC pursuant to an appropriate endorsement and by physical delivery of such
shares, and C-TEC shall either (x) contemporaneously transfer and deliver to the
Holders, ratably in proportion to their respective shares of Preferred Stock
transferred, the applicable Transfer Shares pursuant to an appropriate
endorsement and by physical delivery of such shares, or (y) pay to the Holders
the applicable strike price for the shares of Preferred Stock transferred in
immediately available funds.
(b) The closing of any such sale and transfer (each, a CLOSING) shall
take place at the offices of C-TEC Corporation, 105 Carnegie Center, Princeton,
New Jersey 08540 on the applicable Closing Date, or at such other place and time
as the parties may mutually agree.
6. MANDATORY PURCHASE. All remaining Preferred Stock Series A and
------------------
Preferred Stock Series B shall be purchased by C-TEC for an amount equal to $10
per share, plus the value of any accrued and unpaid dividends (hereinafter the
PURCHASE AMOUNT), on May 15, 2003 (hereinafter the PURCHASE DATE) whether or not
the Holders so elect. Closing on such purchase shall occur on a date specified
by C-TEC but no later than ninety (90) days following the Purchase Date,
provided, however, that for purposes of determining the Purchase Amount,
dividends shall be deemed to have accrued through the Closing. At the Closing,
each Holder shall transfer and deliver their respective shares of the applicable
series of Preferred Stock to C-TEC pursuant to an appropriate endorsement and by
physical delivery of such shares, and C-TEC shall pay to the Holders the
Purchase Amount for the shares of Preferred Stock transferred in immediately
available funds.
7. SET-OFF RIGHTS. In the event that all or any of the Holders of
--------------
Preferred Stock, Series B shall be required to make any payment to or indemnify
or hold harmless C-TEC or Cable, or any affiliate of C-TEC or Cable, pursuant to
the terms and provisions of the Merger Agreement, including but not limited to
any and all payments and indemnity obligations arising under Article X of the
Merger Agreement, C-TEC shall be entitled to set-off all such payments and
indemnification and hold harmless obligations in accordance with the Merger
Agreement against any and all amounts, payments and other consideration to be
paid and delivered by C-TEC hereunder whether in the form of cash, instruments,
stock or otherwise.
- 6 -
<PAGE>
8. REGISTRATION RIGHTS FOR COMMON SHARES.
-------------------------------------
(a) Demand Registration Rights. C-TEC covenants and agrees with the
--------------------------
Holders, but not any subsequent holder of, the Transfer Shares that, upon the
unanimous written request of the Holders made at any time after Closing, but in
any event, during the Election Period, but only once, C-TEC will file as
promptly as practicable and, in any event, within one hundred eighty (180) days
after receipt of such written request, a new registration statement (a
REGISTRATION STATEMENT) or a post-effective amendment to an existing
registration statement (an AMENDMENT) under the Securities Act of 1933 (the
ACT), registering or qualifying the Transfer Shares for sale. No other
securities of C-TEC shall be entitled to be included in such Amendment or
Registration Statement. C-TEC will use its good faith efforts to file and cause
to become effective any such Amendment or Registration Statement as promptly as
practicable and remain effective for a period of not less than sixty (60) days
or such shorter period as is necessary to complete the distributions.
(b) Piggyback Registration Rights. C-TEC covenants and agrees with
-----------------------------
the Holders, but not any subsequent holder of, the Transfer Shares that if, at
any time within the Election Period C-TEC proposes to file a Registration
Statement with respect to any class of security (other than in connection with
an offering to C-TEC's employees) under the Act in a primary registration on
behalf of C-TEC and/or in a secondary registration on behalf of holders of such
securities and the registration form to be used may be used for registration of
the Transfer Shares, C-TEC will give written notice, which shall be given at
least forty-five (45) days prior to such filing, to the Holders in the manner
set forth in Section 8(a) of its intention to file a Registration Statement and
will offer to include in such Registration Statement to the maximum extent
possible, and limited, in the case of a Regulation A offering, to the amount of
the available exemption, subject to paragraphs (i) and (ii) of this paragraph
(b), such number of Transfer Shares with respect to which C-TEC has received
written requests for inclusion therein by the Holders within ten (10) days after
the giving of notice by C-TEC. All registrations requested pursuant to this
Section 8(b) are referred to herein as PIGGYBACK REGISTRATIONS. This paragraph
is not applicable to a Registration Statement filed by C-TEC with the Securities
and Exchange Commission (the SEC) on Forms S-4 or S-8 or any successor form or
any Registration Statement filed with the SEC prior to the Closing.
(i) Priority or Primary Registrations. If a Piggyback
---------------------------------
Registration includes an underwritten primary registration
on behalf of C-TEC and the underwriter(s) for the offering
being registered by C-TEC shall determine in good faith and
advise C-TEC in
- 7 -
<PAGE>
writing that in its opinion the number of Transfer Shares
requested to be included in such registration exceeds the
number that can be sold in such offering without materially
adversely affecting the distribution of such securities by C
TEC, C-TEC will include in such registration (A) first, the
securities that C-TEC proposes to sell and (B) second, to
the extent feasible, the Transfer Shares requested to be
included in such registration, apportioned ratably among the
Holders of Transfer Shares requiring to be included in such
registration.
(ii) Priority on Secondary Registrations. If a Piggyback
-----------------------------------
Registration consists only of an underwritten secondary
registration on behalf of holders of securities of C-TEC
(other than pursuant to Section 8(a)), and the
underwriter(s) for the offering being registered by C-TEC
advise C-TEC in writing that in its opinion the number of
Transfer Shares requested to be included in such
registration exceeds the number which can be sold in such
offering without materially adversely affecting the
distribution of such securities by C-TEC, C-TEC will include
in such registration (A) first, the securities requested to
be included therein by the holders requesting such
registration and (B) second, to the extent feasible, the
Transfer Shares requested to be included in such
registration above, apportioned ratably, among all such
Holders on the basis of the number of shares requested to be
included by each such Holder.
(c) Restrictions on Registration Rights.
-----------------------------------
(i) Notwithstanding the provisions set forth in Sections (b)(i)
and (b)(ii) above or any other provisions, if any such
underwriter shall determine in good faith and advise C-TEC
in writing that the distribution of the Transfer Shares
requested to be included in the registration concurrently
with the securities being registered by C-TEC would
materially adversely affect the distribution of such
securities by C-TEC, then the Holders of such Transfer
Shares shall delay their offering and sale for such period
ending on the earliest of (1) ninety (90) days
- 8 -
<PAGE>
following the effective date of C-TEC's registration
statement, (2) the day upon which the underwriting
syndicate, if any, for such offering shall have been
disbanded or, (3) such date as C-TEC, the underwriter(s) and
the Holders shall otherwise agree. In the event of such
delay, C-TEC shall file such supplements, post-effective
amendments and take any such other steps as may be
reasonably necessary to permit such Holders to make their
proposed offering and sale for a period not to exceed ninety
(90) days immediately following the end of such period of
delay. If any party disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written
notice to C-TEC and the underwriter. Notwithstanding the
foregoing, C-TEC shall not be required to file a
registration statement to include Transfer Shares pursuant
to this Section 8 if an opinion of independent counsel,
reasonably satisfactory to counsel for C-TEC, that the
Transfer Shares proposed to be disposed of may be
transferred pursuant to the provisions of Rule 144 under the
Act shall have been delivered to counsel for C-TEC and the
Holders shall have agreed to indemnify C-TEC with respect to
the accuracy of the matter described in any such opinion and
the actions of C-TEC taken in reliance thereon.
(ii) C-TEC shall not be required to file a Registration Statement
or Amendment at a time when the audited financial statements
required to be included therein are not available, which
time shall be limited to the period commencing 45 days after
the end of C-TEC's last fiscal year and ending 90 days after
the end of such fiscal year existing at the time of the
proposed offering.
(iii) C-TEC shall not be required to file a Registration
Statement or Amendment if C-TEC furnishes to the
Holders a certificate signed by C-TEC's Chairman or
President stating that in his or her good faith
judgment it would be detrimental or otherwise
disadvantageous to C-TEC or its shareholders for such a
Registration Statement or Amendment to be filed as
expeditiously as possible, in which case C-TEC shall
have a period
- 9 -
<PAGE>
of not more than 180 days within which to file such
Registration Statement or Amendment measured from the
date of the C-TEC's receipt of Holders' request for
registration.
(d) Costs of Registration.
---------------------
(i) All costs, expenses, fees and other charges, including but
not limited to reasonable attorneys' and accounting fees and
expenses (collectively, the EXPENSES), arising as a result of
any registration pursuant to Section 8(a) shall be borne by
C- TEC and the Holders, or both, as follows:
(x) With respect to an election made by the Holders during
the first two (2) years of the Election Period, the
Holders shall be solely responsible for all such
Expenses.
(y) With respect to any election made by the Holders during
the period commencing on the day after the first two
(2) years of the Election Period, through and until the
day prior to the date that is three (3) years after the
beginning of the Election Period, the Expenses shall be
shared equally by the Holder and C-TEC.
(z) With respect to any election made by the Holders during
the period commencing on the earlier of (1) the date
that is three (3) years after the beginning of the
Election Period, or (2) the date of the Closing with
respect to any option exercised by the C-TEC pursuant
to Section 3 of this Agreement (other than where the
Holders have elected to receive immediately available
funds at Closing) through and until the expiration of
the Election Period, the Expenses shall be borne solely
by C-TEC.
(ii) With respect to any election made by the Holders pursuant to
Section 8(b), the Expenses shall be borne solely by C-TEC.
(iii) Notwithstanding any other provision of this Agreement
to the contrary, the Holders shall be solely
responsible for
- 10 -
<PAGE>
any fees and disbursements of any counsel, accountant
or other professional for the Holders; any underwriters
discount or commission in respect of such Transfer
Shares; and the cost of and liability or similar
insurance required by an underwriter to the extent that
such costs are attributable to the offering of such
Transfer Shares.
(e) Subsequent Holder. The reference to any "subsequent holder" as
-----------------
stated above shall not include any trustee designated by the Holders under a
trust agreement for their benefit.
9. MISCELLANEOUS.
-------------
(a) Notices. All notices, requests, and other communications
-------
provided for in this Agreement shall be in writing and shall be deemed validly
given upon personal delivery, one day after being sent by overnight courier
service, and upon confirmation of receipt if sent by telecopier, to the
following address or telecopy number:
(i) if to each of the Shareholders listed in the agreement:
(1) Bark Lee Yee;
(2) Stella C. Yee;
(3) Susan C. Yee;
(5) Raymond C. Yee; and
(6) Kenneth C. Yee
at: 3925 Airport Road
Allentown, PA 18103
with a copy to:
Robert G. Tallman
Tallman Hudder & Sorrentino. P.C.
The Paragon Centre
Suite 300
1611 Pond Road
Allentown, Pennsylvania 18104
(ii) If to C-TEC, at:
C-TEC Corporation
105 Carnegie Center
Princeton, NJ 08540
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<PAGE>
Attn: Stephen J. Rabbitt
Executive Vice President
C-TEC Cable Systems, Inc.
With a copy to:
C-TEC Corporation
105 Carnegie Center
Princeton, NJ 08540
Attn: Raymond B. Ostroski
General Counsel
or at such other address or telecopy number as any party hereto
may designate by written notice to the other parties hereto.
(b) Fees and Expenses. Except as otherwise specifically provided in
-----------------
this Agreement, each party hereto shall pay all its own costs and expenses
incident to this Agreement, and the transactions contemplated hereby, including
legal and accounting fees and disbursements.
(c) Severability. If any provision of this Agreement is held to be
------------
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, the invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that provision, in any
other competent jurisdiction.
(d) Further Assurances. From time to time, the parties shall execute
------------------
such documents and shall take such actions as shall be reasonably necessary in
order to carry out and effectuate the intent and purpose of this Agreement and
the transactions contemplated by this Agreement.
(e) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the Commonwealth of Pennsylvania without regard
to the choice of law rules thereof.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(g) Time of the Essence. Time is of the essence with respect to the
-------------------
obligations of the parties hereunder.
- 12 -
<PAGE>
(h) Securities Laws. All sales of securities by Holders in
---------------
connection with the Registration Rights referred to herein shall be conducted
in accordance with all applicable laws and regulations.
(i) Assignment. In no event shall the Holders be entitled to assign
----------
or transfer any of their rights under this Agreement, whether voluntarily,
involuntarily or by operation of law, except that the Holders may assign such
rights to a trustee for their sole benefit or the benefit of their heirs or
estates. Any attempted assignment shall be void.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first-above written.
Witness C-TEC CORPORATION,
A PENNSYLVANIA CORPORATION
______________________________ By:_____________________________________
_________________________
Name:___________________________________
______________________
Title:__________________________________
___________________________
HOLDERS:
______________________________ __________________________________
Bark Lee Yee
______________________________ __________________________________
Stella C. Yee
______________________________ __________________________________
Susan C. Yee
______________________________ __________________________________
Raymond C. Yee
______________________________ __________________________________
Kenneth C. Yee
______________________________ __________________________________
Robert G. Tallman, Trustee
- 13 -
<PAGE>
"C-TEC Letterhead" Exhibit 99
FOR IMMEDIATE RELEASE
May 16, 1995
Contacts: C-TEC: Valerie Haertel (Investor Relations) (609)734-3816
Carrie Thorpe (Public Relations) (717)825-1177
Twin County Susan Yee (610)261-5000
C-TEC INITIATES TWIN COUNTY MERGER
PRINCETON, N.J. - C-TEC Corporation (Nasdaq: CTEX, CTEXB) and Twin County Trans
Video, Inc. of Northampton, Pennsylvania, announced the first step toward the
closing of their previously announced merger, whereby Twin County will merge
with C-TEC Cable Systems, a C-TEC subsidiary. In this first step, C-TEC has
secured a minority interest in Twin County pursuant to the Merger Agreement. In
addition, C-TEC is assuming overall responsibility for Twin County's day to day
operations in accordance with the terms of a Management Agreement.
The merger of Twin County with C-TEC is expected to be completed by year-end.
Pursuant to the Merger Agreement, the Twin County shareholders will receive
either newly authorized convertible preferred stock of C-TEC Corporation or
exchangeable preferred stock of C-TEC Cable Systems, Inc. for the Twin County
shares owned at the time of the completion of the merger.
Twin County, founded by Bark Lee and Stella Yee, is the largest competitive
cable operation in the country serving 74,000 subscribers in the greater Lehigh
Valley area. Founded in 1962, its operations are strategically situated within
75 miles of the New York, Philadelphia, and Wilkes-Barre metropolitan areas.
C-TEC Cable Systems and Commonwealth Telephone Company operations surround its
service territory.
C-TEC's Chairman and Chief Executive Officer, David C. McCourt, said "C-TEC is
fortunate to be able to welcome Twin County Cable's subscribers to one of
C-TEC's core businesses. Not only will C-TEC continue to provide outstanding
customer service to Twin County customers, but we will also be able to offer an
even broader range of diversified and value-added services going forward."
<PAGE>
1st add/C-TEC Corporation/5-15-95
Susan Yee, Twin County's Chief Operating Officer, noted, "In the current
competitive telecommunications environment, C-TEC was our first choice. Twin
County customers will continue to benefit from a superior customer service
philosophy and dedication to technological advancements in the
telecommunications market. Both Twin County and C-TEC have made significant
investments in fiber in order to provide customers with the most advanced
services available."
C-TEC Corporation, with headquarters in Princeton, New Jersey, is a diversified
telecommunications and high-technology company. In addition to being the 30th
largest cable provider, C-TEC is also the nations 20th largest telephone company
serving over 220,000 main access lines in Pennsylvania. C-TEC also recently
announced the signing of a definitive agreement to acquire Buffalo Valley
Telephone (BVT) which serves 17,000 access lines in Lewisburg, Pennsylvania.
The closing of the transaction is subject to regulatory approvals, BVT and C-TEC
shareholder approvals, a registration statement (with respect to convertible
preferred stock being offered to BVT shareholders) being declared effective by
the Securities Exchange Commission and other conditions.
Other C-TEC businesses include Commonwealth Long Distance, a long distance
telephone provider, Commonwealth Communications, Inc., and international
engineering and technical services business, and C-TEC International, Inc. which
owns a 40 percent interest in Megacable, Mexico's second largest television
operation with over 174,000 subscribers and over 900,000 under franchise.
###
Photo Caption:
C-TEC Chairman and CEO, David C. McCourt with Twin County Trans Video Inc.
Principals, Bark Lee Yee and Stella Yee, at C-TEC headquarters in Princeton,
N.J., signing the Merger Agreement.
