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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 11)
C-TEC Corporation
(Name of Issuer)
Common Stock Class B Common Stock
$1.00 Par Value $1.00 Par Value
(Title of Classes of Securities)
126504109 126504208
(CUSIP Numbers)
Matthew J. Johnson, Esq.
c/o Peter Kiewit Sons', Inc.
1000 Kiewit Plaza
Omaha, Nebraska 68131
Tel. No.: (402) 536-3613
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
August 30, 1996
(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which
is the subject of this Schedule 13D, and is filing this statement because of
Rule 13d-1(b)(3) or (4), check the following: [ ].
Check the following box if a fee is being paid with this
statement: [ ].
Note: This document is being electronically filed with
the Commission, using the EDGAR system. See Rule 13d-1(a) for other parties
to whom copies are to be sent.
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SCHEDULE 13D
______________________________ ________________________________
| | | |
|CUSIP Nos. 126504109 | | Page 2 |
| 126504208 | | |
___________________________________________________________________________
| 1 | NAME OF REPORTING PERSON: |
| | RCN Corporation |
| | S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON |
| | 47-0761384 |
|____|____________________________________________________________________|
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* |
| | _ |
| | (a) |_| |
| | _ |
| | (b) |X| |
| | |
|____|____________________________________________________________________|
| 3 | SEC USE ONLY |
| | |
|____|____________________________________________________________________|
| 4 | SOURCE OF FUNDS* |
| | |
|____|____________________________________________________________________|
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED _ |
| | PURSUANT TO ITEMS 2(d) or 2(e) |_| |
| | |
|____|____________________________________________________________________|
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | Delaware |
|____|____________________________________________________________________|
| | 7 | SOLE VOTING POWER |
| | | 8,226,262 Common Stock (see Item 5) |
| | | 5,094,223 Class B Common Stock (see Item 5) |
| NUMBER OF |____|_______________________________________________|
| SHARES | 8 | SHARED VOTING POWER |
| BENEFICIALLY | | -0- (see Item 5) |
| OWNED BY |____|_______________________________________________|
| EACH | 9 | SOLE DISPOSITIVE POWER |
| REPORTING | | 8,226,262 Common Stock (see Item 5) |
| PERSON | | 5,094,223 Class B Common Stock (see Item 5) |
| WITH |____|_______________________________________________|
| | 10 | SHARED DISPOSITIVE POWER |
| | | -0- (see Item 5) |
|____________________|____|_______________________________________________|
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 8,226,262 Common Stock (see Item 5); |
| | 5,094,223 Class B Common Stock (see Item 5) |
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES _ |
| | CERTAIN SHARES* |_| |
|____|____________________________________________________________________|
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | 42.0% of Common Stock; 64.6% of Class B Common Stock |
| | (see Item 5) |
|____|____________________________________________________________________|
| 14 | TYPE OF REPORTING PERSON* |
| | CO |
- ---------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
SEC 1746 (9-88)
The following information amends the Schedule 13D dated June
28, 1993, as previously amended (as so amended, the "Schedule 13D").
Unless otherwise indicated, each capitalized term used but not
defined herein shall have the meaning assigned to such term in the Schedule
13D.
Item 4. Purpose of Transaction.
----------------------
The response set forth in Item 4 of the Schedule 13D is hereby
amended and supplemented as follows:
"On August 30, 1996, the Company and RCN entered into an Option
Exercise Agreement (the "Option Exercise Agreement") pursuant to which (i) the
parties agreed that (A) the closing of the purchase and sale of the CIT
Businesses under the Developmental Agreement would not be consummated and (B)
the Company, as a result of the determination by the Company's Board of
Directors not to proceed with the Prior Restructuring Plan, had the right to
exercise the Repurchase Option and (ii) the Company exercised the Repurchase
Option in order to reacquire the UrbanNet Business and to purchase the Freedom
Interest on the terms and subject to the conditions set forth in the
Developmental Agreement and the Option Exercise Agreement. In accordance
with the Option Exercise Agreement, on August 30, 1996 the Company (i)
repurchased the UrbanNet Business for $28,447,389 in cash and (ii)
purchased the Freedom Interest for $27,921,699 in cash. In connection with
those transactions, the Company acquired from RCN a note issued by Freedom
in connection with a loan from RCN to Freedom. The purchase price for the
note was $1,518,603, an amount equal to the accreted value of the note.
Pursuant to the Option Exercise Agreement, all rights and
obligations of the Company and RCN under the Developmental Agreement
terminated upon the repurchase of the UrbanNet Business by the Company,
subject to certain limited exceptions.
The Option Exercise Agreement and the transactions contemplated
thereby were approved by the Special Committee.
A copy of the Option Exercise Agreement is filed as Exhibit 7
hereto and is incorporated herein by reference. The description herein of
certain provisions of the Option Exercise Agreement is qualified in its
entirety by reference thereto."
Item 7. Material to be filed as Exhibits.
--------------------------------
The response set forth in Item 7 of the Schedule 13D is hereby
amended and supplemented by the following:
"Exhibit 7: Option Exercise Agreement dated as of August 30,
1996 between C-TEC Corporation, a Pennsylvania corporation, and RCN
Corporation, a Delaware corporation."
SIGNATURES
After reasonable inquiry and to the best knowledge and belief
of the undersigned, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
Date: September 3, 1996
RCN CORPORATION
/s/ Matthew J. Johnson
By: __________________________
Name: Matthew J. Johnson
Title: Vice President
EXHIBIT 7
OPTION EXERCISE AGREEMENT
AGREEMENT dated as of August 30, 1996 between C-TEC Corporation,
a Pennsylvania corporation ("C-TEC"), and RCN Corporation, a Delaware
corporation ("RCN").
W I T N E S S E T H:
WHEREAS, C-TEC and RCN are parties to a Stock Purchase Agreement
dated as of March 27, 1996 (the "SPA"; capitalized terms used but not defined
herein shall have the meanings set forth in the SPA) pursuant to which RCN
agreed to purchase, and C-TEC agreed to sell, the UrbanNet Business and the CIT
Businesses;
WHEREAS, on April 1, 1996, RCN acquired legal title to the
UrbanNet Business from C-TEC for $17,500,000 in cash in a transaction defined
in the SPA as the "First Closing";
WHEREAS, the closing of the acquisition of the CIT Businesses
(defined in the SPA as the "Second Closing") was subject to certain conditions
and has not been consummated;
WHEREAS, C-TEC has the option, at its election, to effect a
rescission of the First Closing by exercising the option granted to it under
Section 10.01(a) of the SPA (the "Option") on the terms and subject to the
conditions set forth in the SPA if, among other things, the C-TEC Board of
Directors determines not to proceed with certain specified types of
restructuring transactions regarding C-TEC;
WHEREAS, the SPA provides that if C-TEC elects to rescind the
First Closing pursuant to the exercise of the Option, then C-TEC has the right
and the obligation to purchase RCN's interest in Freedom L.L.C., a New York
limited liability company ("Freedom"), and all related rights and liabilities
(collectively, the "Freedom Interest") on the terms and subject to the
conditions set forth in the SPA;
WHEREAS, on August 8, 1996, the C-TEC Board of Directors
determined (the "August 8 Determination") not to proceed with its previously
announced plan to sell its domestic cable television operations to a third
party and, in connection therewith, to spin-off its local telephone operations
to its shareholders;
WHEREAS, C-TEC and RCN agree that the August 8 Determination
should be treated as a determination that results in C-TEC having the right to
rescind the First Closing pursuant to the exercise of the Option;
WHEREAS, C-TEC desires to exercise the Option in order to
rescind the First Closing and to purchase the Freedom Interest;
WHEREAS, in connection therewith C-TEC and RCN desire to enter
into this Agreement; and
WHEREAS, the Special Committee has approved the exercise of the
Option and the terms and conditions of this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. The Second Closing will not be consummated, and all rights
and obligations of the parties under the SPA with respect thereto are hereby
terminated.
2. The parties acknowledge and agree that the August 8
Determination will be treated as a determination that results in C-TEC being
entitled to exercise the Option. C-TEC hereby elects to exercise the Option
in order to rescind the First Closing and to purchase the Freedom Interest, on
the terms and subject to the conditions set forth in the SPA and this
Agreement. The parties agree that the rescission of the First Closing and the
purchase of the Freedom Interest (collectively, the "Third Closing") will take
place on the same date (the "Third Closing Date").
3. RCN represents and warrants that from the date of each
applicable Closing to the date hereof it has complied with its obligations
under Section 10.01(e) of the SPA in respect of the UrbanNet Business and the
Freedom Interest; provided that RCN has loaned to Freedom $1,500,000, which
loan is evidenced by a note (the "Freedom Note").
RCN covenants that it will comply with Section 10.01(e) of the
SPA in respect of the UrbanNet Business and the Freedom Interest from the date
hereof to the Third Closing Date.
RCN represents and warrants that the Repurchase Price
Certificate set forth as Exhibit I hereto, which has been calculated as of the
date hereof, is true and correct.
RCN represents and covenants that there is not and will not be
any liability of RCN or any of its ERISA Affiliates in connection with any
plan within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, whether for taxes, funding, benefits or otherwise, which
liability could become a liability of C-TEC or any of its ERISA Affiliates,
other than any liability arising in connection with any plan administered,
maintained or contributed to by C-TEC or any of its subsidiaries or any of the
UrbanNet Companies. "ERISA Affiliate" of any person means any other person
which, together with such person, would be treated as a single employer under
Section 414 of the Code.
4. The Third Closing will occur as set forth in Section
10.01(c) of the SPA with respect to the UrbanNet Business and the Freedom
Interest provided that the purchase and sale of the Freedom Interest will, for
purposes of the last paragraph of Section 10.01(c), be effected as follows:
(i) C-TEC will deliver to RCN an amount of cash equal to the Freedom Price by
wire transfer in immediately available funds to an account in the United
States, which account shall be designated by RCN no later than two business
days prior to the Third Closing Date, (ii) RCN will deliver or cause to be
delivered to C-TEC good and valid title to the following free and clear of any
Lien other than Liens arising under the limited liability company operating
agreements with respect to Freedom and, if LVE, L.L.C. ("LVE") exists at such
time, LVE: (A) RCN's 80.1% interest in Freedom, (B) if LVE exists at such
time, RCN's 19.9% interest in LVE and (C) the Freedom Note and (iii) RCN will
assign to C-TEC, and C-TEC will accept and assume, all related rights and
obligations of RCN. For purposes hereof, the term "Freedom Price" means an
amount equal to the sum of (1) the purchase price with respect to the Freedom
Interest determined in accordance with the SPA, (2) $405,062, which is the
amount of the fees and expenses incurred by RCN and its affiliates (other than
the UrbanNet Companies) in connection with the acquisition by RCN of the
Freedom Interest, and (3) the amount of the Freedom Note plus accrued interest
thereon to the Third Closing Date (the amount of the Freedom Note plus accrued
interest thereon to the date hereof is shown on Exhibit II hereto). In lieu
of wire transfers, the parties may agree to any other form of transfer that
effects the same monetary exchange.
5. Simultaneously with the Third Closing, C-TEC will purchase
from RCN, and RCN will sell to C-TEC, all of the outstanding capital stock of
(i) RCN Corporate Services, Inc., a New Jersey corporation ("Corporate"), for
$1,000 in cash and (ii) RCN Financial Services, Inc., a New Jersey corporation
("Financial"), for $1,000 in cash. The closing purchase and sale of the
capital stock of Corporate and Financial is referred to herein as the "C/F
Closing". At the C/F Closing, (A) C-TEC shall deliver to RCN $2,000 by wire
transfer in immediately available funds to an account in the United States,
which account shall be designated by RCN no later than two business days prior
to the date of the Repurchase Closing, and (B) RCN shall deliver or cause to
be delivered to C-TEC good and valid title to all of the capital stock of the
Corporate and Financial free and clear of any Lien.
6. The parties acknowledge their obligations under the second
paragraph of Section 10.01(c) of the SPA to use their reasonable best efforts
both to satisfy all applicable regulatory requirements and to obtain all
third-party approvals necessary to consummate the Third Closing as promptly as
practicable. The Third Closing will be consummated promptly after all
material regulatory requirements and third party consents have been satisfied
or obtained, as applicable. If the Third Closing cannot be effected within 90
days of the date hereof for any reason, the parties agree to negotiate in good
faith to enter into an alternative arrangement to effect the intent of this
Agreement as nearly as is possible under the relevant circumstances.
7. The parties agree that the exercise of the Option is to be
treated as a rescission of the First Closing and that any sale or transfer
effected by the First Closing shall be treated as null and void and as having
no effect for all income tax purposes. The parties further agree to report
the transactions contemplated hereby on a basis consistent in all respects
with the preceding sentence. Pursuant to the foregoing, RCN represents and
covenants that C-TEC will not have, solely as a result of the First Closing or
the performance by C-TEC of any of its obligations under the SPA, any
liability for Taxes of any member (other than any UrbanNet Company) of any
affiliated group (as defined under Section 1504 of the Code or any similar
provision of state, local or foreign law) of which RCN is a member.
8. Prior to the Third Closing, the SPA will remain in full
force and effect, except to the extent the provisions thereof are inconsistent
with the terms of this Agreement. Effective upon the Third Closing, the SPA
will terminate and neither party to the SPA will have any liability or
further obligation with respect thereto, except as provided in Sections 6.01
and 14.02 thereof; provided, however, that no such termination of the SPA
shall relieve either party of liability for a willful breach of any provision
of the SPA occurring before such termination. Each party represents and
warrants that as of the date hereof, it has no knowledge of any willful breach
of any provision of the SPA by either party. Effective upon the Third
Closing, the parties will cause the Services Agreement to be terminated. The
parties acknowledge that, as a result of treating any sale or transfer
effected by the First Closing as null and void, the Transferred Employees,
solely by reason of the First Closing, have not been and will not be vested in
their accrued benefits under the Pension Plan or in their account balances
under the Individual Account Plan.
9. C-TEC may assign to any wholly owned subsidiary its rights
and obligations with respect to (i) the purchase of the Freedom Interest under
the SPA and this Agreement or (ii) the purchase of the capital stock of
Corporate and Financial under this Agreement, provided that no such assignment
will relieve C-TEC of its obligations with respect thereto.
10. The provisions of Article XIV of the SPA will apply to this
Agreement mutatis mutandis.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
RCN CORPORATION
By: /s/ Matthew J. Johnson
-----------------------------
Name: Matthew J. Johnson
Title: Vice President
C-TEC CORPORATION
By: /s/ Michael J. Mahoney
-----------------------------
Name: Michael J. Mahoney
Title: President
EXHIBIT 1
<TABLE>
<CAPTION>
UrbanNet
1-Apr-96 30-Apr-96 31-May-96 30-Jun-96 31-Jul-96 15-Aug-96 30-Aug-96 Total
---------- ---------- ----------- ---------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
UrbanNet Purchase Price 17,500,000 17,500,000
Contributions 8,100,000 - - - - 2,100,000 - 10,200,000
Distributions - - - - - - - -
Cumulative Investment 25,600,000 25,600,000 25,600,000 25,600,000 25,600,000 27,700,000 27,700,000
Rate of Return
Interest (7.0%) 142,378 152,197 147,288 152,197 73,644 79,685 747,389
----------
UrbanNet Repurchase Price 28,447,389
==========
</TABLE>
<TABLE>
<CAPTION>
Freedom Interest
5-Mar-96 19-Mar-96 1-Apr-96 30-Apr-96 31-May-96 30-Jun-96 31-Jul-96 15-Aug-96 30-Aug-96 Total
---------- ---------- --------- --------- --------- --------- --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments 27,000,000 - - - - - - - - 27,000,000
Cumulative
Investment 27,000,000 27,000,000 27,000,000 27,000,00 27,000,00 27,000,000 27,000,000 27,000,000 27,000,000
Rate of Return
Interest (7.0%) 72,493 67,315 150,164 160,521 155,342 160,521 77,671 77,671 921,699
----------
Freedom Interest
Purchase Price 27,921,699
==========
</TABLE>
EXHIBIT 2
<TABLE>
<CAPTION>
Freedom Note
19-Mar-96 1-Apr-96 30-Apr-96 31-May-96 30-Jun-96 31-Jul-96 15-Aug-96 30-Aug-96 Total
--------- --------- ---------- ---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans 500,000 - - - - - 1,000,000 - 1,500,000
Outstanding Balance 500,000 500,000 500,000 500,000 500,000 500,000 1,500,000 1,500,000
Accrued Interest (7.0%) 1,247 2,781 2,973 2,877 2,973 1,438 4,315 18,603
</TABLE>
