<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-20577
CONTINENTAL CABLEVISION, INC.
(Exact name as registrant as specified in its charter)
DELAWARE No. 04-2370836
(State of Incorporation) (I.R.S. Employer Identification No.)
THE PILOT HOUSE, LEWIS WHARF, BOSTON, MASSACHUSETTS 02110
(Address of principal executive office) (Zip Code)
(617) 742-9500
(Telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
Number of Common Shares outstanding at the latest practicable date, August
2, 1996:
Class Par Value Shares Outstanding
----- --------- ------------------
Class A Common Stock..................... $.01 39,141,224
Class B Common Stock..................... $.01 109,424,371
================================================================================
<PAGE>
CONTINENTAL CABLEVISION, INC.
FORM 10-Q
June 30, 1996
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. Financial Information............................................
Item 1. Financial Statements..............................................
Condensed Consolidated Balance Sheets--December 31, 1995 and
June 30, 1996...................................................... 2
Condensed Statements of Consolidated Operations--Three and Six
Months Ended June 30, 1995 and 1996................................ 3
Condensed Statements of Consolidated Cash Flows--Six
Months Ended June 30, 1995 and 1996................................ 4
Condensed Statement of Consolidated Stockholders'
Equity (Deficiency)--Six Months Ended June 30, 1996................ 5
Notes to Condensed Consolidated Financial Statements................. 6
Item 2. Management's Discussion and Analysis of Operations and
Financial Condition.............................................. 13
PART II. Other Information............................................... 17
Item 6. Exhibits and Reports on Form 8-K................................. 17
Signatures................................................................ 18
</TABLE>
1
<PAGE>
CONTINENTAL CABLEVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
---- ----
(In Thousands)
ASSETS
------
<S> <C> <C>
Cash $ 18,551 $ 27,056
Accounts Receivable-net 110,132 100,608
Prepaid Expenses and Other 9,967 6,975
Supplies 88,687 104,266
Marketable Equity Securities 151,378 161,324
Investments 538,352 617,751
Property, Plant and Equipment-net 2,107,473 2,243,525
Intangible Assets-net 1,902,796 1,868,123
Other Assets-net 153,257 155,106
---------- ----------
Total $5,080,593 $5,284,734
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
------------------------------------
Accounts Payable $ 96,833 $ 113,339
Accrued Interest 86,977 88,085
Accrued and Other Liabilities 238,343 235,336
Debt 5,285,159 5,604,137
Deferred Income Taxes 307,041 264,245
Commitments and Contingencies
Minority Interest in Subsidiaries 26,056 28,435
Redeemable Common Stock, $.01 par value;
16,684,150 shares outstanding 256,135 270,290
Stockholders' Equity (Deficiency):
Preferred Stock, $.01 par value; 198,857,142 shares
authorized; none outstanding - -
Series A Convertible Preferred Stock, $.01 par value;
1,142,858 shares authorized and outstanding;
liquidation preference $527,578,000 and $548,619,000 11 11
Class A Common Stock, $.01 par value;
425,000,000 shares authorized; 38,780,694 and 38,820,774
shares outstanding 388 388
Class B Common Stock, $.01 par value;
200,000,000 shares authorized; 92,572,000 and
93,060,671 shares outstanding 926 931
Additional Paid-In Capital 1,181,193 1,178,929
Unearned Compensation (45,851) (49,276)
Foreign Currency Translation Adjustment - 6,746
Net Unrealized Holding Gain on Marketable Equity Securities 67,823 73,765
Deficit (2,420,441) (2,530,627)
----------- -----------
Stockholders' Equity (Deficiency) (1,215,951) (1,319,133)
----------- -----------
Total $ 5,080,593 $ 5,284,734
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
CONTINENTAL CABLEVISION, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
<TABLE>
<CAPTION>
Three months ended Six months ended
-------------------- ----------------------
June 30, June 30,
--------- ----------
1995 1996 1995 1996
--------- --------- ---------- ----------
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Revenues $331,472 $476,546 $650,048 $ 942,930
Costs and Expenses:
Operating 114,114 168,391 224,846 334,827
Selling, General and Administrative 78,952 110,958 150,332 221,533
Depreciation and Amortization 73,990 118,667 148,412 231,696
Restricted Stock Purchase Program 3,055 4,660 5,905 8,654
-------- -------- -------- ---------
Total 270,111 402,676 529,495 796,710
-------- -------- -------- ---------
Operating Income 61,361 73,870 120,553 146,220
-------- -------- -------- ---------
Other (Income) Expense:
Interest 82,891 117,256 166,314 233,578
Equity in Net Loss of Affiliates 15,149 40,410 25,817 62,803
Gain on Sale of Marketable Equity Securities - - (23,032) -
Gain on Sale of Investment - - (1,035) -
Minority Interest in Net Income (Loss)
of Subsidiaries (40) (99) (40) 74
Dividend Income (146) (345) (319) (394)
Other 384 1,703 625 5,754
-------- -------- -------- ---------
Total 98,238 158,925 168,330 301,815
-------- -------- -------- ---------
Loss Before Income Taxes (36,877) (85,055) (47,777) (155,595)
Income Tax Benefit (10,712) (26,540) (14,710) (45,409)
-------- -------- -------- ---------
Net Loss (26,165) (58,515) (33,067) (110,186)
-------- -------- -------- ---------
Preferred Stock Preferences (9,744) (10,539) (19,347) (21,041)
-------- -------- -------- ---------
Loss Applicable to Common Stockholders $(35,909) $(69,054) $(52,414) $(131,227)
======== ======== ======== =========
Loss Per Common Share $ (0.30) $ (0.46) $ (0.45) $ (0.88)
======== ======== ======== =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
CONTINENTAL CABLEVISION, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended June 30,
1995 1996
---------- -----------
(In Thousands)
<S> <C> <C>
Operating Activities:
Net Loss $ (33,067) $(110,186)
Adjustments to Reconcile Net Loss to Net Cash
Provided from Operating Activities:
Depreciation and Amortization 148,412 231,696
Restricted Stock Purchase Program 5,905 8,654
Amortization of Deferred Financing Costs 4,366 5,147
Equity in Net Loss of Affiliates 25,817 62,803
Gain on Sale of Marketable Equity Securities (23,032) -
Gain on Sale of Investment (1,035) -
Minority Interest in Net Income (Loss)
of Subsidiaries (40) 74
Deferred Income Taxes (15,495) (46,800)
Accrued Interest (7,979) 1,108
Accounts Payable, Accrued and Other Liabilities (21,092) 18,937
Other Working Capital Changes (5,233) 3,597
--------- ---------
Net Cash Provided from Operating Activities 77,527 175,030
--------- ---------
Financing Activities:
Proceeds from Borrowings 383,100 762,720
Repayment of Borrowings (104,906) (451,868)
Increase in Minority Interests 1,047 2,305
Issuance of Common Stock - 5
--------- ---------
Net Cash Provided from Financing Activities 279,241 313,162
--------- ---------
Investing Activities:
Acquisition - (10,978)
Property, Plant and Equipment (231,021) (311,447)
Investments (121,719) (133,020)
Other Assets (28,788) (24,242)
Proceeds from Sale of Marketable Equity Securities 27,357 -
Proceeds from Sale of Investment-net 1,181 -
--------- ---------
Net Cash Used for Investing Activities (352,990) (479,687)
--------- ---------
Net Increase in Cash 3,778 8,505
Balance at Beginning of Period 11,564 18,551
--------- ---------
Balance at End of Period $ 15,342 $ 27,056
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
CONTINENTAL CABLEVISION, INC. AND SUBSIDIARIES
CONDENSED STATEMENT OF CONSOLIDATED STOCKHOLDERS' EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>
Net Unrealized
Holding
Series A Common Stock Foreign Gain on
Convertible -------------- Additional Currency Marketable
Preferred Class Class Paid-In Unearned Translation Equity
Stock A B Capital Compensation Adjustment Securities Deficit
----------- ------ ------ ----------- ------------- ---------- ---------- ----------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996 $11 $388 $ 926 $1,181,193 $(45,851) $ - $67,823 $(2,420,441)
Net Loss - - - - - - - (110,186)
Accretion of Redeemable
Common Stock - - - (14,155) - - - -
Restricted Stock Purchase Program:
Stock Issued - - 5 13,266 (13,266) - - -
Stock Vested - - - - 8,654 - - -
Stock Forfeited - - - (1,187) 1,187 - - -
Stock Exchanged for Loans - - - (188) - - - -
Foreign Currency Translation
Adjustment - - - - - 6,746 - -
Change in Unrealized Gain, net of
income taxes of $4,004 - - - - - - 5,942 -
---- ------ ----- ---------- -------- ------ ------- -----------
Balance, June 30, 1996 $11 $388 $ 931 $1,178,929 $(49,276) $6,746 $73,765 $(2,530,627)
==== ====== ===== ========== ======== ====== ======= ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
CONTINENTAL CABLEVISION, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements are unaudited,
but, in the opinion of management, include all adjustments of a normal recurring
nature necessary for a fair presentation of the results for such periods. The
results of operations and cash flows for any interim periods are not necessarily
indicative of results for a full year. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted in
this Form 10-Q pursuant to the rules and regulations of the Securities and
Exchange Commission. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
contained in the Company's Form 10-K filed with the Securities and Exchange
Commission.
Intangible and Other Assets
Intangible assets consist primarily of franchise costs and goodwill recorded
in various acquisitions. Other assets represent deferred financing costs and
loans to employees (see Note 9). Intangible assets are amortized over 10 to 40
years. Accumulated amortization aggregated $868,665,000 at June 30, 1996.
Derivative Financial Instruments
The Company uses derivative financial instruments (primarily Interest Rate
Exchange Agreements (Swaps) and Interest Rate Cap Agreements (Caps)) as a means
of managing interest-rate risk associated with current debt or anticipated debt
transactions that have a high probability of being executed. These instruments
are matched with either fixed- or variable-rate debt and periodic cash payments
are accrued on a settlement basis as an adjustment to interest expense.
Derivative financial instruments are not held for trading purposes. Any
premiums associated with the instruments are amortized over their term and
realized gains or losses as a result of the termination of the instruments are
deferred and amortized over the shorter of the remaining term of the instrument
or the underlying debt (see Note 6).
Loss per Common Share
Loss per common share is calculated by dividing the loss available to common
stockholders by the weighted average number of common shares outstanding of
117,909,000 and 148,558,000 for the three months ended June 30, 1995 and 1996
and 117,627,000 and 148,440,000 for the six months ended June 30, 1995 and 1996,
respectively. Shares of the Series A Convertible Preferred Stock were not
assumed to be converted into shares of common stock since the result would be
anti-dilutive.
Foreign Currency Translation
The financial statements of the Company's non-U.S. investments are
translated into U.S. dollars in accordance with SFAS No. 52, "Foreign Currency
Translation." Net assets of non-U.S. investments whose functional currencies
are other than the U.S. dollar are translated at current rates of exchange.
Income and expense items are translated at the average exchange rate for the
period. The resulting translation adjustments are recorded directly into a
separate component of stockholders' equity (deficiency).
6
<PAGE>
2. SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
The following represents non-cash investing and financing activities and
cash paid for interest and income taxes (in thousands):
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1996
-------- --------
<S> <C> <C>
Accretion of Redeemable Common Stock $ 10,322 $ 14,155
======== ========
Accretion of Series A Convertible Preferred Stock $ 19,347 $ 21,041
======== ========
Cash Paid During the Period for Interest $178,837 $233,099
======== ========
Cash Paid During the Period for Income Taxes $ 845 $ 869
======== ========
</TABLE>
3. ACQUISITIONS AND DISPOSITIONS
The Company purchased cable television systems in the Chicago, Illinois area
for approximately $168,500,000 in August 1995 and cable television systems in
California for approximately $17,000,000 in September 1995. In October 1995, the
Company purchased cable television systems in Michigan for approximately
$155,000,000. Also, in October 1995, the Company, Providence Journal, King
Holding Corporation, King Broadcasting Company and The Providence Journal
Company consummated a merger (the Merger) in which Providence Journal (which at
the time of the Merger included only the Providence Journal cable businesses and
assets) was merged with and into the Company. In connection with the Merger, the
Company purchased the cable television businesses and assets of King
Broadcasting Company (the King Cable Assets, and collectively with Providence
Journal, Providence Journal Cable). The total consideration involved in the
Merger consisted of $405,000,000 in cash, the repayment of approximately
$410,000,000 of existing indebtedness and the issuance of 30,142,394 shares of
the Company's Class A common stock at an ascribed value of $584,762,000. In
December 1995, the Company purchased for $88,000,000 in cash the non-owned
interests in and discharged certain liabilities of N-Com Limited Partnership II
(N-Com), which owns and operates cable television systems in Michigan.
In May 1996, the Company acquired a cable television system in California
for a purchase price of $10,978,000.
The Company has signed a definitive Agreement and Plan of Merger (the Merger
Agreement) providing for the merger of the Company with and into U S WEST, Inc.
or a wholly owned subsidiary thereof. The Merger Agreement provides for the
stockholders of the Company to receive a combination of cash and securities of
U S WEST, Inc. valued at approximately $5.3 billion in exchange for all of the
outstanding stock of the Company. Additionally, U S WEST, Inc. or a wholly owned
subsidiary thereof will assume the Company's outstanding indebtedness and other
liabilities. The merger is contingent upon the receipt of, among other things,
regulatory approvals and approvals from the Company's stockholders. Certain
major stockholders have agreed to vote in favor of the merger and other related
matters. The merger is expected to close in the fourth quarter of 1996 or the
first quarter of 1997. No assurances can be given that the merger will occur, or
occur in the foregoing manner.
The Company has entered into a purchase agreement to acquire the non-owned
interests in and discharge or assume certain liabilities of Meredith/New
Heritage Strategic Partners, L.P. (M/NH) for approximately $219,200,000. M/NH
operates cable systems in the Minneapolis/St. Paul area. This acquisition is
expected to close in the fourth quarter of 1996.
The Company has entered into an agreement with TCI Cable Partners of St.
Louis L.P. (TCI Cable Partners) to exchange its cable systems in and around St.
Louis County, Missouri for TCI Cable Partners' systems serving certain
Massachusetts communities. The systems of each party serve approximately 100,000
basic subscribers. The Company expects to consummate this transaction in the
fourth quarter of 1996.
7
<PAGE>
The Company has entered into an agreement with Cox Communications, Inc.
(Cox) to exchange systems serving certain Virginia and Rhode Island communities
for Cox's systems serving certain Massachusetts communities. The systems of
each party serve approximately 48,000 basic subscribers. The Company expects to
close this transaction during the fourth quarter of 1996.
4. MARKETABLE EQUITY SECURITIES
Marketable equity securities have an aggregate cost basis of $37,837,000 as
of June 30, 1996.
5. INVESTMENTS
The Company's investments consist of the following (in thousands):
<TABLE>
<CAPTION>
Carrying Value
--------------
Approximate December 31, June 30,
Ownership 1995 1996
------------ ------------ --------------
<S> <C> <C> <C>
Equity Method Investments:
Teleport Communications Group, Inc. (TCG),
TCG Partners, and Regional TCG Partnerships 10%-30% $145,661 $137,683
PrimeStar Partners L.P. (PrimeStar) 10% 16,311 20,530
Fintelco, S.A 50% 164,144 151,108
Optus Vision Pty Ltd (Optus Vision) 47% 150,232 246,070
Singapore Cablevision Private Limited (SCV) 25% 15,023 13,301
Other 20%-50% 11,318 13,351
-------- --------
502,689 582,043
Cost Method Investments 35,663 35,708
-------- --------
Total $538,352 $617,751
======== ========
</TABLE>
A wholly owned subsidiary of the Company has issued a standby letter of
credit of $70,625,000 on behalf of PrimeStar, a limited partnership that
provides direct broadcast satellite services (DBS). The standby letter of credit
guarantees a portion of the financing PrimeStar is incurring to construct a
successor satellite system and is collateralized by marketable equity securities
with a carrying value of $161,324,000 as of June 30, 1996. As a result of the
commitments and other qualitative factors, the Company accounts for its
investment in PrimeStar using the equity method.
The major components of all equity method investees' combined financial
position and results of operations are as follows (the Company's proportionate
share for the periods which the investments are owned is reflected in
thousands):
<TABLE>
<CAPTION>
June 30,
1996
-----------------
<S> <C>
Total Assets $1,013,000
Total Liabilities 647,000
Equity 366,000
Six Months Ended
June 30, 1996
----------------
Revenues $ 140,000
Depreciation and Amortization 29,000
Operating Loss (35,000)
Net Loss (56,000)
</TABLE>
8
<PAGE>
Subsequent to June 30, 1996, TCG consummated an initial public offering
(IPO) of shares of its common stock. In conjunction with the IPO, TCG
implemented a plan of reorganization, under which the Company exchanged its
$53,800,000 loan and contributed its interests in TCG partnerships to TCG for
additional shares of TCG common stock. At the time of the IPO, TCG also redeemed
approximately 7,976,000 shares of TCG common stock from the Company for net cash
proceeds of approximately $121,000,000 from which the Company realized a gain of
approximately $78,000,000. As a net result of the redemption, the IPO, and the
reorganization the Company's ownership in TCG is less than 20%, and,
accordingly, the Company will now account for its remaining shares of TCG as
marketable equity securities.
6. DEBT
Total debt outstanding is as follows (in thousands):
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ -----------
<S> <C> <C>
1994 Credit Facility $1,586,200 $2,000,890
1995 Credit Facility 1,039,000 1,049,540
Insurance Company Notes 125,750 112,500
Senior Notes and Debentures 2,000,000 2,000,000
Subordinated Debt 500,000 400,000
Other 34,209 41,207
---------- ----------
Total $5,285,159 $5,604,137
========== ==========
</TABLE>
Credit availability under the Company's $2,200,000,000 unsecured reducing
revolving credit agreement (the 1994 Credit Facility) will decrease annually
commencing December 1997 with a final maturity in October 2003. Borrowings
under the 1994 Credit Facility bear interest at a rate between the agent bank's
prime rate and prime plus 1/2%, depending on certain financial tests. At the
Company's option, most borrowings bear interest at spreads over LIBOR. The
Company's obligations under the 1994 Credit Facility are guaranteed by the
Company's Restricted Subsidiaries (collectively with the Company, the Restricted
Group), which represent the majority of the Company's owned and operated cable
systems, excluding those acquired in the Providence Journal Cable and Michigan
acquisitions during 1995 (collectively, the New Borrowing Group) (see Note 3).
Prepayments are required from the proceeds of certain sales of the Restricted
Group's assets.
During 1995, certain of the Company's subsidiaries entered into a
$1,200,000,000 unsecured reducing revolving credit facility (the 1995 Credit
Facility). Initial borrowings under the 1995 Credit Facility were used to
finance the acquisitions of Providence Journal Cable and certain Michigan
cable systems. Credit availability under the 1995 Credit Facility will decrease
annually commencing in December 1998 with a final maturity in September 2004.
Borrowings under the 1995 Credit Facility bear interest at the agent bank's
prime rate plus 1/2%, depending on certain financial tests. At the New Borrowing
Group's option, most borrowings bear interest at spreads over LIBOR. The New
Borrowing Group's obligations under the 1995 Credit Facility are guaranteed by
substantially all of the New Borrowing Group subsidiaries. Prepayments are
required from the proceeds of certain sales of the New Borrowing Group's assets.
The Company's Insurance Company Notes are unsecured, bear interest at
10.12%, require increasing semi-annual repayments through July 1, 1999 and rank
pari passu in right of payment with the 1994 Credit Facility.
9
<PAGE>
The Company's unsecured Senior Notes and Debentures rank pari passu in right
of payment with the Insurance Company Notes and the 1994 Credit Facility
(collectively, the Company's Senior Debt) and are non-redeemable prior to
maturity, except for the 9 1/2% Senior Debentures, which are redeemable at the
Company's option at par plus declining premiums beginning in 2005. No sinking
fund is required for any of the Senior Notes or Debentures.
The Senior Notes and Debentures consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ -----------
<S> <C> <C>
8 1/2% Senior Notes, Due September 15, 2001 $ 200,000 $ 200,000
8 5/8% Senior Notes, Due August 15, 2003 100,000 100,000
8 7/8% Senior Debentures, Due September 15, 2005 275,000 275,000
8.30% Senior Notes, Due May 15, 2006 600,000 600,000
9% Senior Debentures, Due September 1, 2008 300,000 300,000
9 1/2% Senior Debentures, Due August 1, 2013 525,000 525,000
---------- ----------
Total $2,000,000 $2,000,000
========== ==========
</TABLE>
The Company's Senior Debt limits the Restricted Group with respect to, among
other things, payment of dividends and the repurchase of capital stock in an
aggregate amount in excess of $851,699,000, the creation of liens and additional
indebtedness, property dispositions, investments and leases, and requires
certain minimum ratios of cash flow to debt and cash flow to related fixed
charges. In addition, the 1995 Credit Facility imposes similar limitations on
the New Borrowing Group.
The Company's Subordinated Debt is redeemable at the Company's option at par
plus declining premiums at various dates, and is subordinated to the Company's
Senior Debt. Subordinated Debt consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ ---------
<S> <C> <C>
10 5/8% Senior Subordinated Notes,
Due June 15, 2002 $100,000 $100,000
Senior Subordinated Floating Rate Debentures,
Due November 1, 2004 100,000 -
11% Senior Subordinated Debentures,
Due June 1, 2007 300,000 300,000
-------- --------
Total $500,000 $400,000
======== ========
</TABLE>
In July 1996, the Company arranged an unsecured revolving credit facility
which will mature on July 1, 1997 (the 1996 Credit Facility). Maximum
availability under the 1996 Credit Facility is $1,000,000,000. Borrowings under
the 1996 Credit Facility may be used to fund general corporate purposes,
including capital expenditures, investments and acquisitions. The terms and
conditions of the 1996 Credit Facility are similar to those of the 1994 Credit
Facility. Indebtedness under the 1996 Credit Facility ranks pari passu in right
of payment with the Company's Senior Debt.
Derivative financial instruments used to manage interest-rate risk include
Swaps and Caps. The following table summarizes the terms of the Company's Swaps
and Caps as of June 30, 1996:
<TABLE>
<CAPTION>
Average
Notional Amount Maturities Interest Rate
--------------- ---------- --------------
(In Thousands)
<S> <C> <C> <C>
Fixed to Variable Swaps $1,425,000 1998-2003 5.8%
Variable to Fixed Swaps 1,100,000 1996-2000 8.6%
Caps 1,100,000 1996-1998 7.7%
</TABLE>
10
<PAGE>
The Company's credit risk if the counterparties failed to perform under
these agreements would be limited to the periodic settlement of amounts
receivable under these agreements.
7. REDEEMABLE COMMON STOCK
Pursuant to a Stock Liquidation Agreement with certain stockholders (the
Selling Stockholders), the Company committed to repurchase shares of its common
stock (Redeemable Common Stock) in December 1998 or January 1999 at a defined
purchase price (Purchase Price). The Purchase Price is the greater of the
estimated amount of net proceeds per share from an underwritten public offering
of the Company's common stock or the net proceeds per share from the
liquidation, sale or merger of the Company less a 22.5% discount.
The initial estimated repurchase cost for the Redeemable Common Stock has
been adjusted by periodic accretions through the repurchase dates, based on the
interest method, of the difference between the initial estimate and the
subsequent estimates of the Purchase Price.
In the event the Company is unable to meet its commitments under the Stock
Liquidation Agreement, the Selling Stockholders may cause the sale of all or
substantially all of the assets of the Company.
8. STOCKHOLDERS' EQUITY (DEFICIENCY)
At June 30, 1996, there were 39,141,224 and 109,424,371 shares of Class A
and Class B common stock outstanding, respectively. Stockholders' Equity
(Deficiency) reflects only 38,820,774 and 93,060,671 shares of Class A and Class
B common stock outstanding, respectively, due to the classification of
16,684,150 shares as Redeemable Common Stock. Class A common stock has one vote
per share and Class B common stock has ten votes per share.
Each share of Series A Convertible Preferred stock (Convertible Preferred)
is entitled to 250 votes per share, shares equally with each common share in all
dividends and distributions, and is convertible into 25 shares of common stock,
at any time, at the option of the holder. The Convertible Preferred
stockholders have the right to sell their shares in a public offering by causing
the Company to register such shares under the Securities Act of 1933. Certain
other stockholders of the Company have similar registration rights.
The Convertible Preferred has a liquidation preference equal to the greater
of its Accreted Value or the amount which would be distributed to common
stockholders, assuming conversion of the Convertible Preferred. The Accreted
Value assumes a yield of 8% per annum, compounded semi-annually in arrears on
the $350 purchase price per share. During the period, the carrying value of the
Convertible Preferred has been increased by $21,041,000 to reflect the Accreted
Value of $548,619,000 as of June 30, 1996.
After June 1997, if the value of the common stock is greater than 137.5% of
the then Accreted Value, the Company will have the right to convert each
outstanding share of Convertible Preferred into one share of common stock.
In June 2002, each outstanding share of Convertible Preferred may be
converted at the option of the holder or the Company into a number of common
shares which will have a value equal to the Accreted Value. The Company may, at
its sole option, purchase for cash at the Accreted Value all or part of the
Convertible Preferred instead of accepting or requiring conversion.
11
<PAGE>
9. RESTRICTED STOCK PURCHASE PROGRAM
The Company maintains a Restricted Stock Purchase Program under which
certain employees of the Company, selected by the Board of Directors, are
permitted to buy shares of the Company's common stock at the par value of one
cent per share. The shares remain wholly or partly subject to forfeiture for up
to seven years, during which time a pro rata portion of the shares becomes
"vested" at six-month intervals. Upon termination of employment with the
Company, an employee must resell to the Company, for the price paid by the
employee, the employee's shares which are not then vested. For financial
statement presentation, the difference between the purchase price and the fair
market value at the date of issuance (as determined by the Board of Directors)
is recorded as additional paid in capital and unearned compensation, and charged
to operations through 2001 as the shares vest. Shares of common stock issued
under the program for the period ended June 30, 1996 were 591,775. At June 30,
1996, 2,540,000 shares were not yet vested. In connection with the Restricted
Stock Purchase Program, a wholly owned subsidiary of the Company has loaned
approximately $33,379,000 at June 30, 1996 to the participating employees to
fund their individual tax liabilities. These loans are due in 2002, bear
interest at a range from 5% to 8% and are included in Other Assets in the
accompanying financial statements.
10. LEGISLATION AND REGULATION
Pursuant to the Cable Television Consumer Protection and Competition Act of
1992 (the 1992 Cable Act), the FCC in April 1993 promulgated rate regulations
that establish maximum allowable rates for cable television services, except for
services offered on a per-channel or per-program basis. The FCC's regulations
require rates for equipment and installations to be cost-based, and require
reasonable rates for regulated cable television services to be established based
on, at the election of the cable television operator, either application of the
FCC's benchmark formula or a cost-of-service showing pursuant to standards
adopted by the FCC. In addition, the FCC regulations limit future rate
increases for regulated services.
On August 3, 1995, a social contract between the Company and the FCC (the
Social Contract) was adopted. The Social Contract is a six-year agreement
covering all of the Company's existing franchises (except franchises acquired in
1995), including those that were unregulated at the time, and settled the
Company's pending cost-of-service rate cases and benchmark cable programming
service tier (CPS) rate cases. As part of the resolution of these cases, the
Company agreed to, among other things, (i) invest at least $1.35 billion in
domestic system rebuilds and upgrades through 2000 to expand channel capacity
and improve system reliability and picture quality, (ii) reduce its benchmark
broadcast service tier (BBT) service rates and (iii) make in-kind refunds to
affected subscribers totaling approximately $9.5 million in retail value. The
resolution of pending rate cases was without any finding by the FCC of any
wrongdoing by the Company.
On March 6, 1996, a proposed amendment to the Social Contract (the Social
Contract Amendment) was released by the FCC for public comment. If adopted, the
Social Contract Amendment would incorporate all franchises acquired during 1995
(see Note 3) into the Social Contract, and settle all CPS-rate cases of the
acquired franchises. The Social Contract Amendment provides for cash refunds of
$1.6 million (for which reserves have been recorded) and increases the Company's
investment commitment in domestic system rebuilds and upgrades from $1.35
billion to $1.7 billion.
The Social Contract also provides for its termination in the future if the
laws and regulations applicable to services offered in any of the Company's
franchises change in a manner that would have a material favorable financial
impact on the Company. In that instance, the Company may petition the FCC to
terminate the Social Contract.
In February 1996, the 1996 Telecommunications Act was enacted into law. The
1996 Telecommunications Act modifies various provisions of the Communications
Act of 1934, the 1984 Cable Act and the 1992 Cable Act, with the intent of
establishing a pro-competitive, deregulatory policy framework for the
telecommunications industry. Among other provisions, the 1996
Telecommunications Act sets March 31, 1999 as the date for removal of CPS-tier
rate regulations, allows telephone companies to build and operate cable systems
in their local markets, and sets forth the conditions for voice and data
competition in the local telephone market. The Company at this time cannot
predict the full effect that the 1996 Telecommunications Act or the FCC's
implementing regulations may have on its operations.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is
qualified in its entirety by reference to, the Company's Condensed Consolidated
Financial Statements for the six months ended June 30, 1995 and 1996.
The Company is a leading provider of broadband communications services. The
Company's operations consist primarily of U.S. cable television systems with
complementary operations and investments in three other areas: (i) international
broadband communications ventures; (ii) the telecommunications and technology
industries, including companies offering competitive-access telephony and DBS
service; and (iii) programming services.
During 1995, the Company completed a series of acquisitions of cable systems
in the United States, the most significant of which was the acquisition of the
cable television businesses and assets of Providence Journal (the Providence
Journal Merger). See Note 3 of the Company's Condensed Consolidated Financial
Statements.
The Company has entered into a definitive merger agreement with U S WEST,
Inc. (U S WEST), providing for the merger of the Company with and into U S WEST
or a wholly owned subsidiary thereof (the Merger). As a result of the Merger,
the Company's operations will become part of U S WEST Media Group, a leading
global media and telecommunications company.
The Merger is expected to close in the fourth quarter of 1996 or the first
quarter of 1997. The consummation of the Merger is subject to various
conditions, including, but not limited to, regulatory approvals and votes by the
Company's stockholders. Certain major stockholders have agreed to vote in favor
of the Merger and other related matters. No assurances can be given that the
Merger will occur, or occur in the foregoing manner. See Note 3 of the Company's
Condensed Consolidated Financial Statements.
Three Months Ended June 30, 1996 Compared to Three Months Ended June 30,
1995. Revenues increased 43.8% (or $145.1 million) to $476.5 million. The
acquisition of cable television systems during 1995 serving a total of
approximately 1,009,000 basic subscribers as of the acquisition dates, accounted
for $105.2 million of such revenue increase. Excluding the effects of the
foregoing acquisitions, revenues increased 12.0% (or $39.9 million) to $371.3 as
a result of a 2.4% increase in ending basic cable subscribers, an increase in
cable revenue per average basic subscriber and increases in DBS-service
revenues. Excluding the foregoing acquisitions and DBS-service revenues, monthly
cable revenue per average basic subscriber increased 7.0% from $36.09 to $38.61.
The $2.52 increase in monthly cable revenue per average basic subscriber
primarily reflects the addition of new channels and increases in rates. The
increase in cable revenues (excluding the foregoing acquisitions and DBS
services) also includes a $10.2 million increase in advertising and home
shopping revenues to $30.4 million, offset by a $1.1 million decrease in pay-
per-view revenues to $6.9 million. Revenues from DBS services increased by $8.3
million to $16.3 million as a result of an increase of 54,000 DBS-service
customers to approximately 103,000 as of June 30, 1996.
Operating, selling, general and administrative expenses increased 44.7% to
$279.3 million due primarily to the foregoing acquisitions, the provision of DBS
service, and increases in programming costs and wages. Depreciation and
amortization expenses increased 60.4% to $118.7 million due to the foregoing
acquisitions and increased levels of capital expenditures. Non-cash stock
compensation (Restricted Stock Purchase Program expense) increased 52.5% to $4.7
million due to the vesting of a greater number of shares issued under the
Company's Restricted Stock Purchase Program as compared to 1995. Operating
income increased 20.4% to $73.9 million. Interest expense increased 41.5% to
$117.3 million as a result of a 50.2% increase in average debt outstanding due
primarily to the foregoing acquisitions, offset by a decrease in the effective
interest rate from 9.1% to 8.5%. Other (income) expenses include equity in net
loss of affiliates, which increased from $15.1 million to $40.4 million due to
the Company recording its proportionate share of losses from its international
investments in Australia, Argentina, and Singapore and its investments in TCG
and The Golf Channel.
13
<PAGE>
As a result of such factors, the net loss for the three months ended June
30, 1996 compared to the same period in 1995 increased $32.4 million to $58.5
million.
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995.
Revenues increased 45.1% (or $292.9 million) to $942.9 million. The acquisition
of cable television systems during 1995 serving a total of approximately
1,009,000 basic subscribers as of the acquisition dates, accounted for $210.8
million of such revenue increase. Excluding the effects of the foregoing
acquisitions, revenues increased 12.6% (or $82.1 million) to $732.1 as a result
of a 2.4% increase in ending basic cable subscribers, an increase in cable
revenue per average basic subscriber and increases in DBS-service revenues.
Excluding the foregoing acquisitions and DBS-service revenues, monthly cable
revenue per average basic subscriber increased 7.4% from $35.71 to $38.34. The
$2.63 increase in monthly cable revenue per average basic subscriber primarily
reflects the addition of new channels and increases in rates. The increase in
cable revenues (excluding the foregoing acquisitions and DBS services) also
includes a $14.4 million increase in advertising and home shopping revenues to
$53.1 million, and a $2.0 million increase in pay-per-view revenues to $15.1
million. Revenues from DBS services increased by $16.4 million to $30.6 million
principally as a result of an increase of 54,000 DBS-service customers to
approximately 103,000 as of June 30, 1996.
Operating, selling, general and administrative expenses increased 48.3% to
$556.4 million due primarily to the foregoing acquisitions, the provision of DBS
service, and increases in programming costs and wages. Depreciation and
amortization expenses increased 56.1% to $231.7 million due to the foregoing
acquisitions and increased levels of capital expenditures. Non-cash stock
compensation (Restricted Stock Purchase Program expense) increased 46.6% to $8.7
million due to the vesting of a greater number of shares issued under the
Company's Restricted Stock Purchase Program as compared to 1995. Operating
income increased 21.3% to $146.2 million. Interest expense increased 40.4% to
$233.6 million as a result of a 51.1% increase in average debt outstanding due
primarily to the foregoing acquisitions, offset by a decrease in the effective
interest rate from 9.3% to 8.6%. Other (income) expenses include equity in net
loss of affiliates, which increased from $25.8 million to $62.8 million due to
the Company recording its proportionate share of losses from its international
investments in Australia, Argentina, and Singapore and its investments in TCG
and The Golf Channel.
As a result of such factors, the net loss for the six months ended June 30,
1996 compared to the same period in 1995 increased by $77.1 million to $110.2
million.
EBITDA. Based on its experience in the cable television industry, the
Company believes that EBITDA and related measures of cash flow serve as
important financial analysis tools for measuring and comparing cable television
companies in several areas, such as liquidity, operating performance and
leverage. EBITDA should not be considered as an alternative to operating or net
income (measured in accordance with GAAP) as an indicator of the Company's
performance or as an alternative to cash flows from operating activities
(measured in accordance with GAAP) as a measure of the Company's liquidity. For
the six months ended June 30, 1996, EBITDA increased 40.6% to $386.6 million, as
compared to the same period in 1995. Excluding the effects of the acquisitions
of cable television systems during 1995, EBITDA increased 9.5% to $301.1
million. DBS service accounted for approximately $1.2 million and $4.4 million
of EBITDA for the six months ended June 30, 1995 and 1996, respectively. The
remaining increase in EBITDA for the six months ended June 30, 1996 (excluding
the effects of the acquisitions) was the result of increases in revenues.
14
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The following table sets forth for the period indicated certain items from
the Company's Condensed Statement of Consolidated Cash Flows (in thousands):
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1996
-----------------
<S> <C>
Net cash provided From Operating
Activities $ 175,030
==========
Financing Activities:
Net borrowings $ 310,852
Other 2,310
----------
Net Cash Provided From Financing Activities $ 313,162
==========
Investing Activities:
Property, plant and equipment $(311,447)
Investments (133,020)
Other assets (24,242)
Acquisition (10,978)
-------
Net Cash Used For Investing Activities $(479,687)
==========
</TABLE>
Credit Arrangements of the Company. On June 30, 1996, the Company had cash
on hand of $27.1 million and the following credit arrangements: (i)
approximately $2.0 billion outstanding under a $2.2 billion reducing revolving
credit facility (the 1994 Credit Facility), (ii) approximately $1.0 billion
outstanding under a $1.2 billion reducing revolving credit facility (the 1995
Credit Facility); (iii) $112.5 million of 10.12% Senior Notes Due 1999 to the
Prudential Life Insurance Company; (iv) $200.0 million of 8 1/2% Senior Notes
Due 2001; (v) $100.0 million of 8 5/8% Senior Notes Due 2003; (vi) $275.0
million of 8 7/8% Senior Debentures Due 2005; (vii) $600.0 million of the 8.30%
Senior Notes Due 2006; (viii) $300.0 million of 9% Senior Debentures Due 2008;
(ix) $525.0 million of 9 1/2% Senior Debentures Due 2013; (x) $100.0 million of
10 5/8% Senior Subordinated Notes Due 2002; and (xi) $300.0 million of 11%
Senior Subordinated Debentures Due 2007. Other miscellaneous debt was
approximately $41.2 million as of June 30, 1996. As of July 31, 1996, there was
credit availability of approximately $199.1 million and $146.2 million under the
1994 Credit Facility and the 1995 Credit Facility, respectively. In February
1996, the Company borrowed funds under the 1994 Credit Facility to redeem in
full the $100.0 million of Senior Subordinated Floating Rate Debentures, plus
accrued interest thereon.
As of June 30, 1996, a subsidiary of the Company had issued a standby letter
of credit of approximately $70.6 million on behalf of PrimeStar, which
guaranteed a portion of the financing being incurred by PrimeStar to construct a
successor-satellite system. The letter of credit is secured by certain
marketable equity securities with a fair market value of approximately $161.3
million as of June 30, 1996.
In July 1996, the Company arranged revolving credit facility which will
mature on July 1, 1997 (the 1996 Credit Facility). Maximum availability under
the 1996 Credit Facility is $1.0 billion, which was all available as of July 31,
1996. Borrowings under the 1996 Credit Facility may be used to fund general
corporate purposes, including, capital expenditures, investments and
acquisitions. See Note 6 of the Company's Condensed Consolidated Financial
Statements.
15
<PAGE>
Capital Expenditures and U.S. Acquisitions. The Company's expenditures for
property, plant and equipment for the six months ended June 30, 1996 totaled
approximately $311.4 million (of which approximately $34.2 million was related
to the provision of DBS service and approximately $46.7 million was related to
the development of new businesses). The Company anticipates that it will spend
during 1996: (i) approximately $529.0 million on capital expenditures for its
cable systems (excluding the cable systems to be acquired in 1996 (see below)),
(ii) approximately $85.0 million on capital expenditures for the provision of
DBS service and (iii) approximately $120.0 million on capital expenditures for
new businesses such as telephony and high-speed data services. However, the
Company is continually reevaluating its capital budget based on economic,
technological and other factors. In accordance with the recently adopted Social
Contract with the FCC, the Company has agreed to invest a minimum of $1.35
billion in system rebuilds and upgrades in the United States through 2000 to
expand channel capacity and improve system reliability and picture quality.
Under the Social Contract Amendment, which is subject to approval by the FCC,
the Company would agree to increase the minimum investment to $1.7 billion, in
order to incorporate into the Social Contract the cable television systems that
were acquired in 1995, including those that were acquired in the Providence
Journal Merger (see Note 10 of the Company's Condensed Consolidated Financial
Statements).
In May 1996, the Company purchased a cable television system in California
for approximately $11.0 million.
The Company has entered into a purchase agreement to acquire the remaining
ownership interests and discharge or assume certain liabilities of Meredith/New
Heritage Strategic Partners, L.P. ("M/NH") for total consideration of
approximately $219.2 million. The acquisition of M/NH is expected to close in
the fourth quarter of 1996. See Note 3 of the Company's Condensed Consolidated
Financial Statements.
Investments. For purposes of the Condensed Statements of Consolidated Cash
Flows, the Company's investments include, among other things, interests in
telecommunications and technology and international broadband communications
ventures.
International Investments. As of June 30, 1996, the Company had advanced
US$150.5 million to Fintelco. In addition, the Company has recorded commitments
to contribute an additional US$17.1 million to Fintelco in order to finance its
portion of certain acquisitions of Argentine cable television systems. Fintelco
entered into a US$140.0 million credit facility in 1995 and is in the process
of arranging an aggregate of approximately US$65.0 million in additional credit
facilities. Proceeds from such facilities will be used to refinance existing
short-term indebtedness and for general corporate purposes, including capital
expenditures. Such facilities may reduce the amount of future advances from
Fintelco's shareholders, including the Company. No assurances can be given at
this time that such additional facilities will be successfully arranged.
As of June 30, 1996, the Company had invested approximately US$286.6 million
in Optus Vision. Optus Vision anticipates at this time that its remaining
funding needs will be provided by a combination of equity from the joint venture
partners and third-party debt. Optus Vision has arranged A$280.0 million of
short-term credit facilities and is in the process of arranging long-term credit
facilities. Proceeds from such facilities will be used to refinance existing
short-term indebtedness and for general corporate purposes, including capital
expenditures. Such facilities may reduce the amount of future advances from
Optus Vision's shareholders, including the Company. No assurances can be given
at this time that such long-term facilities will be successfully arranged.
16
<PAGE>
As of June 30, 1996, the Company had made capital contributions to SCV of
US$17.6 million and committed to contribute up to approximately US$27.0 million
(based on exchange rates as of June 30, 1996) in additional capital. In
addition, the Company has committed to lend up to approximately US$45.0 million
(based on exchange rates as of June 30, 1996) to SCV if third-party debt
financing is unavailable. SCV has arranged an aggregate of S$176.0 million in
senior credit facilities. Such facilities may reduce the amount of future
advances from SCV's shareholders, including the Company.
Investments in Telecommunications and Technology. The Company has made
numerous investments which are related to its ownership interests in Teleport
Communications Group, Inc. (TCG) and PrimeStar.
In 1993, the Company purchased 20% of TCG for a purchase price of $66.0
million. In addition, the Company committed to lend up to $69.9 million to TCG
through 2003, of which $53.8 million was advanced as of June 30, 1996. The
Company had also invested, as of June 30, 1996, $62.1 million in partnerships
involving TCG and other cable television operators.
Subsequent to June 30, 1996, TCG consummated an initial public offering
(IPO) of shares of its common stock. In conjunction with the IPO, TCG
implemented a plan of reorganization, under which CCI exchanged its $53.8
million loan and contributed its interests in TCG partnerships to TCG for
additional shares of TCG common stock. At the time of the IPO, TCG redeemed
approximately 8.0 million shares of TCG common stock from the Company for net
cash proceeds of approximately $121.0 million. The Company used such proceeds to
repay amounts outstanding under the 1994 Credit Facility. After the redemption
and the IPO, the Company owned approximately 17.9 million shares of TCG common
stock, represented an approximate 11.2% ownership interest and had a market
value of $276.8 million as of July 31, 1996.
Simultaneous with the IPO, TCG issued $925.0 million of public debt
securities. As a result of the IPO and such public debt issuance, the Company
does not anticipate making any additional advances to TCG in the future.
The Company also owns an approximate 10.4% partnership interest in
PrimeStar. The Company had made cash investments totaling $31.4 million as of
June 30, 1996 to fund PrimeStar's ongoing operations and may in the future make
additional investments in PrimeStar.
Other Financing and Investment Activities. During the six months ended June
30, 1996, the Company invested approximately $24.2 million in other assets which
included, among other things, an increase in loans to certain employees to cover
tax obligations in connection with the Company's Restricted Stock Purchase
Program (see Note 9 of the Company's Condensed Consolidated Financial
Statements).
1998-1999 Share Repurchase Program. The Company is a party to a liquidity
agreement (the Stock Liquidation Agreement) with certain stockholders, including
H. Irving Grousbeck (a co-founder of the Company), and the partners of certain
general investment limited partnerships managed by Burr, Egan, Deleage & Co.
(collectively, the Subject Stockholders), pursuant to which the Company has
obligations to purchase, and the Subject Stockholders and other stockholders who
have elected to have their shares of Common Stock covered thereby (Redeemable
Common Stock) have obligations to sell, such Redeemable Common Stock in 1998 or
1999. The Company's obligation under the Stock Liquidation Agreement is to
repurchase approximately 16.7 million shares of Redeemable Common Stock on
December 15, 1998 (or January 15, 1999), at each such stockholder's election.
See Note 7 of the Company's Condensed Consolidated Financial Statements.
17
<PAGE>
Capital Resources. Historically, cash generated from the Company's operating
activities in conjunction with borrowings and, to a lesser extent, proceeds from
private equity issuances have been sufficient to fund the Company's capital
expenditures, investments and acquisitions, debt service requirements and stock
repurchase obligations. Prior to the consummation of the Merger with U S WEST,
the Company anticipates funding its capital expenditures, acquisitions,
investments and debt service requirements with cash provided from operating
activities and borrowings under existing credit facilities. If the Merger is not
consummated, the Company anticipates funding its capital needs with cash
provided from operating activities, borrowings under existing and new credit
facilities and future equity issuances. However, there can be no assurances in
this regard. Furthermore, there can be no assurances that the terms available
for any future debt or equity financing would be favorable to the Company.
Recent Legislation. See Note 10 of the Company's Condensed Consolidated
Financial Statements.
18
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits listed in the Exhibit Index are filed as part of this Quarterly
Report on Form 10-Q and are incorporated herein by reference.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed.
19
<PAGE>
Continental Cablevision, Inc.
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 duly authorized.
DATE: August 13, 1996 By: /s/ P. Eric Krauss
________________________
P. Eric Krauss
Vice President, Treasurer
and Corporate Controller
DATE: August 13, 1996 By: /s/ Nancy Hawthorne
________________________
Nancy Hawthorne
Chief Financial Officer
20
<PAGE>
INDEX TO EXHIBITS
Listed below are the exhibits which are filed as part of this report
(according to the number assigned to them in Item 601 of Regulation S-K).
<TABLE>
<CAPTION>
EXHIBIT NO.
- ----------
<S> <C>
2.1 Agreement and Plan of Merger dated as of February 27, 1996, and as
amended and restated as of June 27, 1996, between U S West, Inc. and the
Company . . . . Filed herewith as Exhibit 2.1.
4.1 Amendment dated May 22, 1996 to the Amended and Restated Note
Agreement dated as of October 17, 1994 by and among the Company and
certain of its direct and indirect Subsidiaries as Guarantors and The
Prudential Insurance Company of America . . . . Filed herewith as Exhibit
4.1.
10.1 Amendment No. 2 dated as of May 20, 1996 to the Amended and Restated
Credit Agreement dated as of October 1, 1994 among the Company and
certain of its direct and indirect Subsidiaries as Guarantors and The First
National Bank of Boston, for itself and as Administrative Agent and
Managing Agent, and certain financial institutions named therein . . . .
Filed herewith as Exhibit 10.1.
10.2 Amendment No. 3 dated as of June 24, 1996 to the Amended and Restated
Credit Agreement dated as of October 1, 1994 among the Company and
certain of its direct and indirect Subsidiaries as Guarantors and The First
National Bank of Boston, for itself and as Administrative Agent and
Managing Agent, and certain financial institutions named therein . . . .
Filed herewith as Exhibit 10.2.
10.3 Amendment No. 2 dated as of June 24, 1996 to the Credit Agreement
dated as of July 18, 1995 among Colony Communications, Inc.,
Continental Cablevision of Eastern Michigan, Inc., Continental Cablevision
of Southeast Michigan, Inc. and their respective Subsidiaries and The
Toronto Dominion Bank for itself and as Documentation Agent and
Managing Agent, The First National Bank of Boston for itself and as
Administrative Agent and Managing Agent, The Bank of New York for
itself and as Syndication Agent and Managing Agent, and certain financial
institutions named therein . . . . Filed herewith as Exhibit 10.3.
10.4 Credit Agreement dated as of July 2, 1996 among the Company and certain
of its direct and indirect Subsidiaries as Guarantors and The Toronto-
Dominion Bank for itself and as Documentation Agent and Managing
Agent, The First National Bank of Boston for itself and as Administrative
Agent and Managing Agent, The Bank of New York for itself and as
Syndication Agent and Managing Agent, and certain financial institutions
named therein . . . . Filed herewith as Exhibit 10.4.
11.1 Schedule of computation of earnings per share . . . . Filed herewith as
Exhibit 11.1.
27. Financial Data Schedules . . . . Filed herewith as Exhibit 27.
</TABLE>
<PAGE>
EXHIBIT 2.1
=========================================================================
AGREEMENT AND PLAN OF MERGER
among
U S WEST, INC.,
CONTINENTAL MERGER CORPORATION
and
CONTINENTAL CABLEVISION, INC.
Dated as of February 27, 1996
And as amended and restated as of June 27, 1996
=========================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
DEFINITIONS
<S> <C>
1.1 Definitions.......................................................... 2
1.2 Terms Defined Elsewhere in the Agreement............................. 14
1.3 Other Definitional Provisions........................................ 16
ARTICLE II
THE MERGER
2.1 The Merger........................................................... 16
2.2 Closing.............................................................. 17
2.3 Effective Time....................................................... 17
2.4 Effects of the Merger................................................ 17
2.5 Directors; Certificate of Incorporation; Bylaws...................... 17
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Capital Stock.............................................. 18
3.2 Company Common Stock Elections; Exchange Fund........................ 23
3.3 Proration............................................................ 26
3.4 Dividends, Fractional Shares, Etc.................................... 27
3.5 Restricted Stock..................................................... 30
3.6 Dissenting Shares.................................................... 31
3.7 Share Price Adjustment............................................... 31
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Organization and Authority of the Company........................... 32
4.2 Capitalization...................................................... 34
4.3 No Conflicts........................................................ 35
4.4 Vote Required....................................................... 36
4.5 Board Recommendation; Opinion of Financial Advisor.................. 36
4.6 Consents............................................................ 36
4.7 Compliance; No Defaults............................................. 38
4.8 SEC Documents; Undisclosed Liabilities.............................. 39
4.9 Litigation.......................................................... 40
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
4.10 Taxes............................................................... 40
4.11 Employee Benefits................................................... 43
4.12 Cable Television Franchises......................................... 46
4.13 Environmental Matters............................................... 51
4.14 Labor............................................................... 52
4.15 Absence of Changes or Events........................................ 54
4.16 Unlawful Payments and Contributions................................. 56
4.17 Brokers and Intermediaries.......................................... 56
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
5.1 Organization and Authority.......................................... 57
5.2 Capitalization...................................................... 58
5.3 No Conflicts........................................................ 59
5.4 Stockholder Vote.................................................... 60
5.5 Consents............................................................ 60
5.6 Compliance; No Defaults............................................. 61
5.7 Acquiror SEC Documents; Undisclosed Liabilities..................... 62
5.8 Litigation.......................................................... 63
5.9 Absence of Changes or Events........................................ 63
5.10 Brokers and Intermediaries.......................................... 64
5.11 Ownership of Company Capital Stock.................................. 64
5.12 Operations of Company Sub........................................... 64
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Conduct of Business of the Company................................... 64
6.2 Conduct of Business of Acquiror and Company Sub...................... 70
6.3 Access to Information................................................ 72
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Preparation of Form S-4 and the Proxy Statement;
Stockholders' Meeting; Charter Amendments................................. 73
7.2 Letter of the Company's Accountants................................. 77
7.3 Letter of Acquiror's Accountants.................................... 77
7.4 Reasonable Best Efforts............................................. 77
7.5 Franchise and License Consents...................................... 78
7.6 Antitrust Notification.............................................. 80
7.7 Certain Actions..................................................... 81
7.8 Supplemental Disclosure............................................. 83
7.9 Announcements....................................................... 83
</TABLE>
ii
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<TABLE>
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7.10 No Solicitation..................................................... 83
7.11 Indemnification; Directors' and Officers Insurance.................. 85
7.12 NYSE Listing........................................................ 87
7.13 Affiliates.......................................................... 87
7.14 Employee Benefits................................................... 87
7.15 Registration Rights Agreement....................................... 89
7.16 Tax Treatment....................................................... 89
7.17 Series D Preferred Stock............................................ 89
7.18 Company Indebtedness 85
7.19 Authorization of Issuance of Merger Consideration................... 89
7.20 Attribution......................................................... 90
7.21 Further Assurances.................................................. 90
7.22 Internal Revenue Service Ruling..................................... 90
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation to
Effect the Merger................................................... 91
8.2 Conditions to Obligations of Acquiror and
Company Sub......................................................... 92
8.3 Conditions to Obligations of the Company............................ 95
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination......................................................... 98
9.2 Effect of Termination............................................... 100
9.3 Fees and Expenses................................................... 101
9.4 Certain Purchase Obligations........................................ 101
9.5 Amendment........................................................... 103
9.6 Extension; Waiver................................................... 104
ARTICLE X
GENERAL PROVISIONS
10.1 Frustration of the Closing Conditions............................... 104
10.2 Effectiveness of Representations, Warranties
and Agreements...................................................... 105
10.3 Expenses............................................................ 105
10.4 Applicable Law...................................................... 105
10.5 Notices............................................................. 105
10.6 Entire Agreement.................................................... 107
10.7 Headings; References................................................ 107
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10.8 Counterparts........................................................ 107
10.9 Parties in Interest; Assignment..................................... 108
10.10 Severability; Enforcement........................................... 108
10.11 Specific Performance................................................ 108
10.12 Jurisdiction........................................................ 108
</TABLE>
EXHIBITS
Exhibit A Form of Charter Amendments
Exhibit B Form of Registration Rights Agreement for Media Stock and Series
D Preferred Stock
Exhibit C Form of Certificate of Designation for Series D Convertible
Preferred Stock
Exhibit D Form of Affiliate Letter
Exhibit E Form of Certificate of Designation for Put Shares
Exhibit F Form of Registration Rights Agreement for Put Shares
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 27, 1996, and as
amended and restated as of June 27, 1996, among U S WEST, INC., a Delaware
corporation ("Acquiror"), CONTINENTAL MERGER CORPORATION, a Delaware corporation
and direct wholly owned subsidiary of Acquiror ("Company Sub"), and CONTINENTAL
CABLEVISION, INC., a Delaware corporation (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Acquiror and the Company have entered into an Agreement and
Plan of Merger, dated as of February 27, 1996 (the "Original Agreement"),
providing for the merger of the Company with and into Acquiror (the "Direct
Merger");
WHEREAS, Acquiror and the Company desire to amend and restate the
Original Agreement in its entirety to permit an alternate merger structure
providing for the merger of the Company into Company Sub (the "Subsidiary
Merger") and to make certain other amendments to the Original Agreement, and
Company Sub desires to become a party thereto;
WHEREAS, the board of directors of the Company has determined that the
Direct Merger and the Subsidiary Merger would be fair to and in the best
interests of its stockholders, and such board of directors has approved this
Agreement and the transactions contemplated hereby and has recommended the
adoption by the stockholders of the Company of this Agreement and the amendments
to Section F of Article FOURTH (the "Conversion Charter Amendment") and Section
H of Article FOURTH (the "Consideration Charter Amendment" and, together with
the Conversion Charter Amendment, the "Charter Amendments"), substantially in
the form contained in Exhibit A hereto, of the Company's Restated Certificate of
Incorporation to be effected prior to the consummation of the Direct Merger or
the Subsidiary Merger;
WHEREAS, the board of directors of Acquiror has determined that the
Direct Merger and the Subsidiary Merger, and the board of directors of Company
Sub has determined that the Subsidiary Merger, would be fair to and in the best
interests of their respective stockholders, and such boards of directors have
approved this Agreement and the transactions contemplated hereby;
1
<PAGE>
WHEREAS, concurrently with the execution of the Original Agreement and
in order to induce Acquiror to enter into the Original Agreement, certain
stockholders of the Company executed and delivered an agreement pursuant to
which, among other things, such Stockholders granted to Acquiror their proxy to
vote all of the votes entitled to be cast by such stockholders in favor of the
adoption of this Agreement and the Consideration Charter Amendment, which
agreement is being amended in connection with the execution and delivery of this
Agreement (as so amended, the "Stockholders' Agreement");
WHEREAS, for Federal income tax purposes, it is intended that the
Direct Merger and the Subsidiary Merger shall each qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated there under (the "Code");
and
WHEREAS, Acquiror, Company Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby and also to prescribe various conditions to the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agree ments herein contained, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the following
-----------
terms shall have the meanings set forth below:
"Acquiror Region" shall mean Arizona, Colorado, Idaho, Iowa,
---------------
Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota,
Utah, Washington and Wyoming.
"Affiliate" shall mean, with respect to any Person, any other Person
---------
directly or indirectly controlling, controlled by or under common control with
such other Person.
2
<PAGE>
"Basic Cable Service" shall mean as to each System the tier of video
-------------------
programming service defined in 47 C.F.R. (S) 76.901(a).
"Board of Directors" shall mean the board of directors of the Company.
------------------
"Business Day" shall mean a day other than a Saturday, Sunday or other
------------
day on which commercial banks in New York City are authorized or required by law
to close.
"Cable Act" shall mean the Cable Communications Policy Act of 1984, as
---------
amended by the Cable Television Consumer Protection and Competition Act of 1992
and the Telecommunications Act of 1996.
"Cable Programming Service" shall mean as to each System those video
-------------------------
programming services defined in 47 C.F.R. (S) 76.901(b).
"Calculation Price" shall mean the Determination Price, Cap Price or
-----------------
Floor Price, as applicable, based upon which the Class A Common Conversion
Number and Class B Common Conversion Number is determined in accordance with
Section 3.1(d).
"Cap Price" shall mean $28.175.
---------
"Cash Consideration Amount" shall equal $1 billion; provided, however,
------------------------- -------- -------
that the board of directors of Acquiror shall have the right, in its sole
discretion, to increase the Cash Consideration Amount to a maximum of $1.5
billion so long as notice of such change is given to the Company no later than
one Business Day prior to the Effective Time; provided, further, that the board
-------- -------
of directors of Acquiror shall have the right to increase the Cash Consideration
Amount above $1.5 billion in an amount equal to (x) the number of shares of
Company Common Stock issued or to be issued in connection with any acquisition
by the Company approved by Acquiror pursuant to Section 6.1 hereof multiplied by
(y) the Share Price; and provided, further, that the Cash Consideration Amount
-------- -------
may be reduced pursuant to Section 7.7(c).
"CATV" shall mean any method, presently existing, for the transmission
----
and/or exhibition (whether by microwave, fiber optics or coaxial cable) of
broadband video signals other than by means of DBS, MMDS, broadcast
3
<PAGE>
television and in-home video players (and which is based on the expectation of
payment by the recipient), and shall include without limitation cable television
(basic and premium) and pay-per-view television.
"Charter Amendments" shall have the meaning set forth in the third
------------------
recital to this Agreement.
"Class A Preferred Consideration Amount" shall mean the product of (x)
--------------------------------------
the Class A Preferred Percentage multiplied by (y) the Share Price multiplied by
(z) the number of shares of Class A Common Stock outstanding immediately prior
to the Effective Time on a fully diluted basis.
"Class A Preferred Conversion Number" shall mean the quotient of (x)
-----------------------------------
the product of (A) the Class A Preferred Percentage multiplied by (B) the Share
Price divided by (y) the Liquidation Value (rounded to the nearest hundredth, or
if there shall not be a nearest hundredth, to the next lowest hundredth).
"Class A Preferred Percentage" shall mean the difference between (x)
----------------------------
one and (y) the Class A Common Percentage.
"Class B Aggregate Consideration Amount" shall mean the sum of the
--------------------------------------
Cash Consideration Amount plus the Class B Preferred Consideration Amount plus
the Class B Common Consideration Amount.
"Class B Common Consideration Amount" shall mean the product of (x)
-----------------------------------
the Class B Percentage multiplied by (y) the Common Consideration Net Amount.
"Class B Common Percentage" shall mean the quotient (rounded to the
-------------------------
nearest hundredth, or if there shall not be a nearest hundredth, to the next
lowest hundredth) of (x) the Class B Common Consideration Amount divided by (y)
the sum of the Class B Common Consideration Amount and the Class B Preferred
Consideration Amount.
"Class B Percentage" shall mean the quotient (rounded to the nearest
------------------
hundredth, or if there shall not be a nearest hundredth, to the next lowest
hundredth) of (i) the number of shares of Class B Common Stock outstanding
immediately prior to the Effective Time on a fully diluted basis, including
giving effect to the conversion of all
4
<PAGE>
outstanding shares of Company Preferred Stock but excluding any and all unvested
and outstanding shares of Restricted Company Common Stock, divided by (ii) the
number of shares of Company Common Stock outstanding immediately prior to the
Effective Time on a fully diluted basis, including giving effect to the
conversion of all outstanding shares of Company Preferred Stock but excluding
any and all unvested and outstanding shares of Restricted Company Common Stock.
"Class B Preferred Consideration Amount" shall mean the difference
--------------------------------------
between (x) the Preferred Consideration Amount and (y) the Class A Preferred
Consideration Amount.
"Class B Preferred Conversion Number" shall mean the quotient of (x)
-----------------------------------
the product of (A) the Class B Preferred Percentage multiplied by (B) the Share
Price divided by (y) the Liquidation Value (rounded to the nearest hundredth, or
if there shall not be a nearest hundredth, to the next lowest hundredth).
"Class B Preferred Percentage" shall mean the quotient (rounded to the
----------------------------
nearest hundredth, or if there shall not be a nearest hundredth, to the next
highest hundredth) of (x) the Class B Preferred Consideration Amount divided by
(y) the sum of the Class B Common Consideration Amount and the Class B Preferred
Consideration Amount.
"Code" shall have the meaning set forth in the sixth recital to this
----
Agreement.
"Common Consideration Amount" shall equal the excess of (x) the
---------------------------
Transaction Value over (y) the sum of the Preferred Consideration Amount and the
Cash Consideration Amount.
"Common Consideration Net Amount" shall equal the difference between
-------------------------------
(x) the Common Consideration Amount and (y) the RSPA Amount.
"Common Percentage" shall mean the quotient (rounded to the nearest
-----------------
hundredth, or if there shall not be a nearest hundredth, to the next lowest
hundredth) of (x) the Common Consideration Net Amount divided by (y) the
Transaction Value.
"Communications Act" shall mean the Communications Act of 1934, as
------------------
amended, 47 U.S.C. (S)(S) 151, et seq., as amended by the Telecommunications Act
of 1996.
5
<PAGE>
"Consideration Charter Amendment" shall have the meaning set forth in
-------------------------------
the third recital to this Agreement.
"Conversion Charter Amendment" shall have the meaning set forth in the
----------------------------
third recital to this Agreement.
"Copyright Office" shall mean the United States Copyright Office of
----------------
the Library of Congress or any successor agency that shall hold principal
responsibility for administering the cable television compulsory license for
retransmission of broadcast signals established pursuant to Section 111 of the
Copyright Act, 17 U.S.C. (S) 111.
"DBS" shall mean a system providing direct-to-home in the broadcast
---
satellite services authorized by the FCC.
"Determination Price" shall mean the average of the Intra-Day Closing
-------------------
Prices for the Random Trading Days.
"DGCL" shall mean the Delaware General Corporation Law.
----
"Direct Merger" shall have the meaning set forth in the first recital
-------------
to this Agreement.
"DOJ" shall mean the Department of Justice.
---
"Encumbrances" shall mean any and all mortgages, security interests,
------------
liens, claims, pledges, restrictions, leases, title exceptions, charges or other
encumbrances.
"Environmental Claim" means any notice of violation, action, claim,
-------------------
Environmental Lien, demand, abatement or other Order or direction (conditional
or otherwise) by any Governmental Authority or any other Person for personal
injury (including sickness, disease or death), tangible or intangible property
damage, damage to the environment, pollution, contamination or other adverse
effects on the environment, or for fines, penalties or restrictions resulting
from or based upon (i) the existence of an Environmental Release (including,
without limitation, sudden or non-sudden accidental or non-accidental
Environmental Releases) of, or exposure to, any Hazardous Material, noxious odor
or illegal audible noise in, into or onto the environment (including, without
limitation, the air, soil, surface water or groundwater) at, in, by, from or
related to any property owned, operated or leased by the Company or its
Subsidiaries or any activities or operations
6
<PAGE>
thereof; (ii) the transportation, storage, treatment or disposal of Hazardous
Materials in connection with any property owned, operated or leased by the
Company or its Subsidiaries or their operations or facilities; or (iii) the
violation, or alleged violation, of any Environmental Law or Environmental
Permit of or from any Governmental Authority relating to environmental matters
connected with any property owned, leased or operated by the Company or any of
its Subsidiaries.
"Environmental Costs and Liabilities" means any and all losses,
-----------------------------------
liabilities, obligations, damages, fines, penalties, judgments, actions, claims,
costs and expenses (including, without limitation, fees, disbursements and
expenses of legal counsel, experts, engineers and consultants and the costs of
investigation and feasibility studies and Remedial Action) arising from or under
any Environmental Law or contract, agreement or similar arrangement with any
Governmental Authority or other Person required under any Environmental Law.
"Environmental Law" means any Federal, state, local, or foreign law
-----------------
(including common law), statute, code, ordinance, rule, regulation or other
legally enforceable requirement relating to the environment, natural resources,
or public or employee health and safety as it relates to exposure to Hazardous
Materials and includes, but is not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. (S) 9601 et seq., the
-- ----
Hazardous Materials Transportation Act, 49 U.S.C. (S) 1801 et seq., the Resource
-- ----
Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq., the Clean Water Act,
-- ----
33 U.S.C. (S) 1251 et seq., the Clean Air Act, 33 U.S.C. (S) 2601 et seq., the
-- ---- -- ----
Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq., the Federal
-- ----
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. (S) 136 et seq., the Oil
-- ----
Pollution Act of 1990, 33 U.S.C (S) 2701 et seq. and the relevant portions of
-- ---
the Occupational Safety and Health Act, 29 U.S.C. (S) 651 et seq., as such laws
-- ----
have been amended or supplemented as of the date hereof, and the regulations
promulgated pursuant thereto, and all analogous state or local statutes as of
the date hereof.
"Environmental Lien" means any lien arising under Environmental Laws.
------------------
7
<PAGE>
"Environmental Permit" means any permit, approval, authorization,
--------------------
license, variance, registration or permission required under any applicable
Environmental Law.
"Environmental Release" means any release, spill, emission, leaking,
---------------------
pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge,
dispersal, leaching, or migration on or into the indoor or outdoor environment
or into or out of any property not authorized under any Environmental Permit and
requiring notification under any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended, and the applicable regulations promulgated thereunder.
"ERISA Affiliate" shall mean any corporation or trade or business
---------------
(whether or not incorporated) which are or have ever been treated as a single
employer with or which are or have been under common control with the Company
within the meaning of Section 414(b), (c), (m) or (o) of the Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended, and the rules and regulations promulgated thereunder.
"FCC" shall mean the Federal Communications Commission.
---
"Final Order" shall mean an action or actions by any Governmental
-----------
Authority or the FCC which has not been reversed, stayed, enjoined, set aside,
annulled or suspended, and as to the FCC with respect to which the time for
filing any request, petition or appeal of such action has expired and the time
for the FCC to set aside its action on its own motion has passed, and as to any
Franchise Consent, when the Franchise Consent has been or is deemed to be
approved as provided in Section 617 of the Cable Act.
"Floor Price" shall mean $20.825.
-----------
"FTC" shall mean the Federal Trade Commission.
---
"GAAP" shall mean generally accepted accounting principles in effect
----
in the United States of America as of the date of the applicable determination.
8
<PAGE>
"Governmental Authority" shall mean any foreign, Federal, state,
----------------------
municipal or other governmental department, commission, board, bureau, agency or
instrumentality.
"Hazardous Material" means any substance, material or waste which is
------------------
regulated by any Governmental Authority in jurisdictions in which the Company
operates, including, without limitation, any material, substance or waste which
is defined as a "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "contaminant," "toxic
waste" or "toxic substance" under any provision of Environmental Law, which
includes, but is not limited to, petroleum, petroleum products, asbestos, and
polychlorinated biphenyls.
"Homes Passed" shall mean the number of homes to which CATV service is
------------
currently available from the Company or the Subsidiaries, whether or not a given
household subscribes to such service.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
-------
of 1976, as amended.
"Indebtedness" shall mean, with respect to any Person, any
------------
indebtedness, secured or unsecured, (i) in respect of borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such Person or
only to a portion thereof), and evidenced by bonds, notes, debentures or similar
instruments or letters of credit, to the extent of the face value thereof (or,
in the case of evidence of indebtedness issued at a discount, the current
accredit value thereof) or (ii) representing the balance deferred and unpaid of
the purchase price of property or services (other than accounts payable in the
ordinary course of business) and shall also include, to the extent not otherwise
included, (A) any capitalized lease obligations and (B) the face value of
guaranties of items of other Persons which would be included within this
definition for such other Persons (whether or not such items would appear upon
the balance sheet of the guarantor). No item constituting Indebtedness under
any of the definitions set forth above shall be counted twice by virtue of the
fact that it constitutes "Indebtedness" under more than one of such definitions.
"Intra-Day Closing Prices" shall mean the volume weighted average sale
------------------------
price of the Media Stock (regular way) as shown on the Composite Tape of the
NYSE.
9
<PAGE>
"IRS" means the United States Internal Revenue Service.
---
"Knowledge of the Company" and "to the Company's Knowledge" shall mean
------------------------ --------------------------
the actual knowledge of the executive officers (as identified in the Company SEC
Documents), the Senior Vice President-Corporate & Legal Affairs and the regional
Senior Vice Presidents, in each case of the Company after reasonable
investigation and due inquiry.
"Legal Proceedings" means any judicial, administrative or arbitral
-----------------
actions, suits, proceedings (public or private) or governmental proceedings.
"Material Adverse Effect" shall mean, (i) with respect to the Company,
-----------------------
any change or effect that is or is reasonably likely to be materially adverse to
the business, results of operations, properties, assets, liabilities or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
whole and (ii) with respect to Acquiror, any change or effect that is or is
reasonably likely to be materially adverse to the business, results of
operations, properties, assets, liabilities or condition (financial or
otherwise) of either (x) the Media Group or (y) Acquiror and its Subsidiaries
taken as a whole; provided, however, that Material Adverse Effect shall in each
-------- -------
instance exclude any change or effect due to general economic or industry wide
conditions.
"Media Group" shall have the meaning set forth in Section 2.6.15 of
-----------
Article V of the Restated Certificate of Incorporation of Acquiror as in effect
as of the date hereof.
"MMDS" shall mean a system operating in the Multichannel Multipoint
----
Distribution Services authorized by the FCC.
"NYSE" shall mean the New York Stock Exchange, Inc.
----
"Original Agreement" shall have the meaning set forth in the first
------------------
recital to this Agreement.
"Person" shall mean an individual, corporation, partnership, trust or
------
unincorporated organization or a government or any agency or political
subdivision thereof.
10
<PAGE>
"Preferred Consideration Amount" shall equal $1 billion.
------------------------------
"Random Trading Days" shall mean the 20 Trading Days selected by
-------------------
Acquiror by lot (through a method reasonably satisfactory to the Company) from
the 30 Trading Days ending on the fourth Trading Day prior to the Closing Date.
"Recently Acquired Systems" shall mean the Systems acquired by the
-------------------------
Company or its Subsidiaries from Providence Journal Company, Cablevision of
Chicago, Columbia of Michigan, Consolidated Cablevision of California and N-COM
Limited Partnership II since August 1, 1995.
"Registration Rights Agreement" shall mean the registration rights
-----------------------------
agreement, substantially in the form of Exhibit B hereto, to be entered into by
Acquiror, Amos B. Hostetter, Jr. and the Amos B. Hostetter, Jr. 1989 Trust.
"Remedial Action" means all actions required under any applicable
---------------
Environmental Law or otherwise undertaken by any Governmental Authority,
including, without limitation, any capital expenditures, required or undertaken
to (i) clean up, remove, treat, or in any other way address any Hazardous
Material; (ii) prevent the Environmental Release or threat of Environmental
Release, or minimize the further Environmental Release of any Hazardous Material
so it does not migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment; (iii) perform pre-remedial studies
and investigations or post-remedial monitoring and care; or (iv) bring
facilities on any property owned, operated or leased by the Company or its
Subsidiaries and the facilities located and operations conducted thereon into
compliance with all applicable Environmental Laws and Environmental Permits.
"RSPA Amount" shall mean the product of (x) the number of shares of
-----------
Restricted Company Common Stock that are unvested and outstanding immediately
prior to the Effective Time multiplied by (y) the Share Price.
"SEC" shall mean the Securities and Exchange Commission.
---
11
<PAGE>
"Securities Act" shall mean the Securities Act of 1933, as amended,
--------------
and the rules and regulations promulgated thereunder.
"Share Price" shall mean $30, decreased by the Per Share Adjustment
-----------
Amount, if any, plus the Additional Amount, if any, in accordance with the terms
of Section 3.7.
"Stockholders' Agreement" shall have the meaning set forth in the
-----------------------
fifth recital to this Agreement.
"Subpart N of the FCC Rules" shall refer to the Subpart N of Part 76
--------------------------
of the FCC's rules (47 C.F.R. (S)(S) 76.900 through 76.985), entitled "Cable
Rate Regulation," added by order in Docket 92-266, adopted by the FCC on April
1, 1993, as such Subpart may be amended from time to time thereafter, as such
rules were in effect on any particular date, and shall include successor
provisions if recodified or otherwise modified.
"Subscriber" shall mean a member of the general public who receives
----------
video programming services distributed by a System and does not further
distribute it; provided, however, that the number of Subscribers in a multi-unit
-------- -------
dwelling or commercial structure that obtains service on a "bulk rate" basis
shall be determined by dividing the bulk rate charge by the rate for individual
households subscribing to the same level of service as the multi-unit structure
(e.g., if the basic subscription rate for individual households is $10 and the
multi-unit dwelling or commercial structure paid a bulk fee of $100 for the same
level of service, then that multi-unit dwelling or structure shall be counted as
having 10 Subscribers).
"Subsidiary" shall mean, with respect to any Person, (i) each
----------
corporation, partnership, joint venture or other legal entity of which such
Person owns, either directly or indirectly, more than 50% of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or similar governing body of such
corporation, partnership, joint venture or other legal entity, (ii) each
partnership in which such Person or another Subsidiary of such Person is the
sole general partner or sole managing partner and (iii) each limited liability
company in which such Person or another Subsidiary of such Persons is the
managing member or otherwise controls.
12
<PAGE>
"Subsidiary Merger" shall have the meaning set forth in the second
-----------------
recital to this Agreement.
"Surviving Corporation" shall have the meaning set forth in Section
---------------------
2.1.
"Systems" shall mean the cable television systems listed in Section
-------
4.12(a) of the Company Disclosure Letter.
"Tax" or "Taxes" shall mean all taxes, charges, fees, imposts, levies
--- -----
or other assessments, including, without limitation, all net income, gross
receipts, capital, sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation, property
and estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever, together with any interest and any penalties, fines, additions to
tax or additional amounts imposed by any taxing authority (domestic or foreign)
and shall include any transferee liability in respect of Taxes.
"Third Party" shall mean a party or parties unaffiliated with either
-----------
the Company or Acquiror.
"Trading Day" shall mean a day on which (i) the NYSE is open for the
-----------
transaction of business and (ii) there is no suspension of trading of the Media
Stock.
"Transaction Documents" shall mean the Stockholders' Agreement and the
---------------------
Registration Rights Agreement.
"Transaction Value" shall equal the product of (x) the Share Price
-----------------
multiplied by (y) the number of shares of Company Common Stock outstanding
immediately prior to the Effective Time on a fully diluted basis, including
giving effect to the conversion of all outstanding shares of Company Preferred
Stock.
"WARN" shall mean the Worker Adjustment and Retraining Notification
----
Act and any similar state or local "plant closing" law.
13
<PAGE>
1.2 Terms Defined Elsewhere in the Agreement. For purposes of this
----------------------------------------
Agreement, the following terms have the meanings set forth in the sections
indicated:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Acceleration Event 7.14(c)
Acquiror Certificates 3.2(b)
Acquiror Consents 5.5
Acquiror Disclosure Letter 5.2(b)
Acquiror SEC Documents 5.7(a)
Acquiror Termination Notice 3.1(d)(ii)
Acquisition Proposal 7.10(d)
Additional Amount 3.7
Additional Payment 7.14(c)
Additional Stockholders' Meeting 7.1(d)
Allocation Determination 3.2(d)
Applicable Laws 4.7(a)
Articles 10.7
Benefit Plans 4.11(a)
Cap Top-Up Intent Notice 3.1(d)(ii)
Cash Cap 3.3(a)
Cash Election 3.1(c)(ii)
Certificate of Merger 2.3
Certificates 3.2(b)
Class A Common Stock 3.1(c)(i)
Class A Merger Consideration 3.1(c)(i)
Class B Common Stock Election
Conversion Number 3.1(d)
Class B Common Stock 3.1(c)(ii)
Class B Cash Consideration 3.1(c)(ii)
Class B Merger Consideration 3.1(c)(ii)
Class B Stock Consideration 3.1(c)(ii)
Class B Stock Election 3.2(a)
Closing 2.2
Closing Date 2.2
Communications Stock 5.2(a)
Company Capital Stock 4.2(a)
Company Certificate 3.1(c)(iii)
Company Common Stock 3.1
Company Consents 4.6
Company Letter of Transmittal 3.2(c)
Company Disclosure Letter 4.1(c)
Company Preferred Stock 4.2(a)
Company Representatives 7.10(a)
Company SEC Documents 4.8(a)
Company Termination Notice 3.1(d)(ii)
</TABLE>
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<TABLE>
<S> <C>
Confidentiality Agreements 6.3(c)
Conversion Number 3.1(d)
Copyright Act 4.12(e)
Designated Assets 7.7(b)
Designated Asset Fair Market Value 7.7(c)
Dissenting Shares 3.6
Effective Time 2.3
Election Deadline 3.2(d)
Election Form 3.2(c)
Equity Appreciation Rights Plans 4.11(i)
Excess Cash Amount 3.3(c)
Excise Tax 7.14(c)
Exchange Agent 3.2(b)
Exchange Fund 3.2(b)
Exhibits 10.7
Floor Top-Up Intent Notice 3.1(d)(ii)
Foreign Benefit Plans 4.11(b)
Form S-4 5.5
Fractional Shares 3.4(c)(i)
Franchise Consents 4.6
Franchises 4.12(a)
Gains Taxes 4.6
Incremental Excise Tax 7.14(c)
Indemnified Liabilities 7.11(b)
Indemnified Parties 7.11(b)
Initial Stockholders' Meeting 7.1(d)
Liquidation Value 3.1(c)(i)
License Consents 4.6
Material Franchises 4.12(c)
Media Stock 3.1(c)(i)
Merger 2.1
Merger Consideration 3.2(b)
Non-Required Franchises 7.5(b)
Non-Required Systems 7.5(b)
Permits 4.7(a)
Per Share Adjustment Amount 7.7(c)
Prorated Cash Amount 3.3(b)
Proxy Statement 4.6
Put Closing Date 9.4(c)
Put Exercise Notice 9.4(b)
Put Right 9.4(a)
Put Shares 9.4(a)
Requested Cash Amount 3.3(a)
Required Franchise Consents 8.2(j)
Restricted Company Common Stock 3.5
Rights Agreement 5.2(a)
RSPA 3.5
Ruling 2.1
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Sections 10.7
Series D Preferred Stock 3.1(c)(i)
Social Contract Amendment 4.6
Social Contract Consents 4.6
Social Contract Order 4.6
Standard Election 3.1(c)(ii)
Stock Election 3.1(c)(ii)
Stockholder Approvals 4.1(b)
Stockholders' Meeting 7.1(d)
Tax Returns 4.10(a)
Termination Date 9.1(d)
</TABLE>
1.3 Other Definitional Provisions. (a) The words "hereof",
-----------------------------
"herein", and "hereunder" and words of similar import, when used in this
Agreement, shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States dollars.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set
----------
forth in this Agreement, and in accordance with the DGCL, the Company shall be
merged with and into Company Sub at the Effective Time (as defined in Section
2.3); provided, however, that if Acquiror, the Company and The Providence
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Journal Company shall not have received a ruling from the IRS satisfactory to
each of them (the "Ruling") by the later of (i) the fifth Business Day after the
date on which the last of the conditions set forth in Article VIII is fulfilled
or waived, other than conditions requiring deliveries at the Closing and the
condition set forth in Section 8.1(f) and (ii) November 15, 1996, upon the terms
and subject to the conditions set forth in this Agreement and in accordance with
the DGCL, the Company shall be merged with and into Acquiror at the Effective
Time. As used herein, the "Merger" shall refer to the Subsidiary Merger or the
Direct Merger, as applicable. At the Effective Time, the separate corporate
existence of
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the Company shall cease, and Company Sub or Acquiror, as applicable, shall
continue as the surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all of the rights, properties, liabilities and obligations
of the Company in accordance with the DGCL.
2.2 Closing. Unless this Agreement shall have been terminated and
-------
the transactions herein contemplated shall have been abandoned pursuant to
Section 9.1, the closing of the Merger (the "Closing") shall take place at 10:00
a.m., New York City time, the later of (i) the fifth Business Day after the date
on which the last of the conditions set forth in Article VIII is fulfilled or
waived, other than conditions requiring deliveries at the Closing and (ii)
November 15, 1996 (the "Closing Date"), at the offices of Weil, Gotshal & Manges
LLP, 767 Fifth Avenue, New York, New York 10153, unless another date, time or
place is agreed to in writing by the parties hereto.
2.3 Effective Time. Subject to the provisions of this Agreement,
--------------
the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware, as provided in the DGCL, as soon as practicable on or
after the Closing Date. The Merger shall become effective upon such filing or at
such time thereafter as is provided in the Certificate of Merger (the "Effective
Time").
2.4 Effects of the Merger. The Merger shall have the effects set
---------------------
forth in Section 259 of the DGCL.
2.5 Directors; Certificate of Incorporation; Bylaws. (a) If the
-----------------------------------------------
Subsidiary Merger is effected, the directors of Company Sub immediately prior to
the Effective Time shall be the directors of the Surviving Corporation and the
officers of the Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, until their successors have been duly
elected or appointed and qualified, or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws. If the Direct Merger is effected, the directors of
Acquiror and the officers of Acquiror immediately prior to the Effective Time
shall be the directors and officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified, or until their
earlier death,
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<PAGE>
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
(b) If the Subsidiary Merger is effected, the Certificate of
Incorporation of Company Sub as in effect immediately prior to the Effective
Time shall be amended at the Effective Time so that Article I thereof reads in
its entirety as follows: "The name of the corporation is Continental
Cablevision, Inc." and, as so amended, such Certificate of Incorporation shall
be the Certificate of Incorporation of the Surviving Corporation until
thereafter duly amended in accordance with the terms thereof and the DGCL. If
the Direct Merger is effected, the Restated Certificate of Incorporation of
Acquiror as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter duly
amended in accordance with the terms thereof and the DGCL.
(c) If the Subsidiary Merger is effected, the Bylaws of Company Sub
as in effect immediately prior to the Effective Time shall be the bylaws of the
Surviving Corporation until thereafter amended as provided by Applicable Law,
the Certificate of Incorporation of the Surviving Corporation or such Bylaws. If
the Direct Merger is effected, the Bylaws of Acquiror as in effect immediately
prior to the Effective Time shall be the bylaws of the Surviving Corporation
until thereafter amended as provided by Applicable Law, the Certificate of
Incorporation of the Surviving Corporation or such Bylaws.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Capital Stock. At the Effective Time, by virtue of
-----------------------
the Merger and without any action on the part of the holder of any shares of
Company Capital Stock (as defined in Section 4.2) or the holder of any shares of
capital stock of Company Sub or Acquiror, as applicable:
(a) Capital Stock of Company Sub or Acquiror. If the Subsidiary
----------------------------------------
Merger is effected, each share of common stock, par value $.01 per share, of
Company Sub issued and outstanding immediately prior to the Effective Time shall
remain outstanding as one share of common stock, par value
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<PAGE>
$.01 per share, of the Surviving Corporation. If the Direct Merger is effected,
each share of each class of capital stock of Acquiror issued and outstanding
immediately prior to the Effective Time shall remain an issued and outstanding
share of the same class of capital stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Acquiror-Owned Stock. Each
-------------------------------------------------------
share of Company Capital Stock that is owned by the Company or any wholly owned
Subsidiary of the Company and each share of Company Capital Stock that is owned
by Acquiror or any wholly owned Subsidiary of Acquiror shall be canceled and
retired and shall cease to exist and no consideration shall be delivered or
deliverable in exchange therefor.
(c) Conversion of Company Common Stock.
----------------------------------
(i) Subject to Sections 3.5 and 3.6, at the Effective Time, each
issued and outstanding share (excluding shares cancelled pursuant to Section
3.1(b)) of Class A Common Stock, par value $.01 per share, of the Company
("Class A Common Stock") shall be converted into the right to receive (x) a
number of shares of U S WEST Media Group Common Stock, par value $.01 per share,
of Acquiror (the "Media Stock") equal to the Conversion Number (as determined in
accordance with Section 3.1(d)) and (y) a number of shares of Series D
Convertible Preferred Stock, par value $1.00 per share, of Acquiror (the "Series
D Preferred Stock"), having the rights, preferences and terms set forth in the
Certificate of Designation attached as Exhibit C hereto, with a liquidation
value of $50 per share (the "Liquidation Value"), equal to the Class A Preferred
Conversion Number (collectively, the "Class A Merger Consideration").
(ii) Subject to Sections 3.5 and 3.6, at the Effective Time each
issued and outstanding share (excluding shares cancelled pursuant to Section
3.1(b)) of Class B Common Stock, par value $.01 per share, of the Company
("Class B Common Stock" and, together with Class A Common Stock, "Company Common
Stock"), shall be converted into, at the election of the holder thereof, one of
the following (as adjusted pursuant to Section 3.3, the "Class B Merger
Consideration"):
(x) except as otherwise provided in Section 3.3, for each such share
of Class B Common Stock with
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<PAGE>
respect to which an election to receive cash has been effectively made and
not revoked, pursuant to Sections 3.2(c), (d) and (e) (a "Cash Election"),
the right to receive an amount in cash from Acquiror, without interest,
equal to the Share Price (the "Class B Cash Consideration");
(y) except as otherwise provided in Section 3.3, for each such
share of Class B Common Stock with respect to which an election to receive
a combination of Media Stock and Series D Preferred Stock has been
effectively made and not revoked, pursuant to Sections 3.2(c), (d) and (e)
(a "Stock Election"), the right to receive (1) a number of shares of Media
Stock equal to the Class B Common Stock Election Conversion Number (as
determined in accordance with Section 3.1(d)) and (2) a number of shares of
Series D Preferred Stock equal to the Class B Preferred Conversion Number
(collectively, the "Class B Stock Consideration"); or
(z) for each such share of Class B Common Stock with respect to which
an election to receive a combination of cash, Media Stock and Series D
Preferred Stock has been effectively made and not revoked, pursuant to
Sections 3.2(c), (d) and (e) (a "Standard Election"), the right to receive
(1) an amount in cash from Acquiror, without interest, equal to the product
of the Share Price and a fraction, the numerator of which is equal to the
Cash Consideration Amount and the denominator of which is equal to the
Class B Aggregate Consideration Amount, (2) a number of shares of Media
Stock equal to the Conversion Number (as determined in accordance with
Section 3.1(d)) and (3) a number of shares of Series D Preferred Stock
equal to the product of (x) the Share Price multiplied by (y) a fraction,
the numerator of which is equal to the Class B Preferred Consideration
Amount and the denominator of which is equal to the product of the
Liquidation Value multiplied by the Class B Aggregate Consideration Amount
(collectively, the "Class B Standard Consideration").
Each beneficial holder of shares of Class B Common Stock shall be entitled to
make only one election (either a Cash Election, a Stock Election or a Standard
Election) with respect to all of the shares of Class B Common Stock beneficially
owned by such holder.
20
<PAGE>
(iii) As a result of the Merger and without any action on the part of
the holder thereof, at the Effective Time all shares of Company Common Stock
shall cease to be outstanding and shall be cancelled and retired and shall cease
to exist, and each holder of shares of Company Common Stock shall thereafter
cease to have any rights with respect to such shares of Company Common Stock,
except the right to receive, without interest, the Class A Merger Consideration
or Class B Merger Consideration, as applicable, and cash for fractional shares
of Media Stock or Series D Preferred Stock in accordance with Section 3.6(c)
upon the surrender of a certificate representing such shares of Company Common
Stock (a "Company Certificate"). The Media Stock and Series D Preferred Stock
comprising the Class A Merger Consideration and part of the Class B Merger
Consideration, when issued to the holders of Company Common Stock, will be duly
authorized, validly issued, fully paid, non-assessable and not subject to
preemptive rights created by statute, Acquiror's Restated Certificate of
Incorporation or Bylaws or any agreement to which Acquiror is a party or by
which Acquiror is bound.
(d) Certain Adjustments and Determinations. (i) If, between the
--------------------------------------
date of this Agreement and the Effective Time, the outstanding shares of Media
Stock, Series D Preferred Stock or Company Common Stock shall have been changed
into a different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the Conversion Number, Class B Common Stock Election
Conversion Number, Class A Preferred Conversion Number and the Class B Preferred
Conversion Number correspondingly shall be adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares.
(ii) The Conversion Number and Class B Common Stock Election
Conversion Number shall be determined in the following manner:
(A) If the Determination Price is greater than or equal to the Floor
Price and less than or equal to the Cap Price, (x) the Conversion Number shall
be equal to the quotient of (1) the product of (I) the Common Percentage
multiplied by (II) the Share Price divided by (2) the Determination Price
(rounded to the nearest hundredth, or if there shall not be a nearest hundredth,
to the next lowest hundredth) and (y) the Class B Common Stock Election
21
<PAGE>
Conversion Number shall be equal to the quotient of (1) the product of (I) the
Class B Common Percentage multiplied by (II) the Share Price divided by (2) the
Determination Price (rounded to the nearest hundredth, or if there shall not be
a nearest hundredth, to the next lowest hundredth).
(B) If the Determination Price is less than the Floor Price, (x) the
Conversion Number shall be equal to the quotient of (1) the product of (I) the
Common Percentage multiplied by (II) the Share Price divided by (2) the Floor
Price (rounded to the nearest hundredth, or if there shall not be a nearest
hundredth, to the next lowest hundredth) and (y) the Class B Common Stock
Election Conversion Number shall be equal to the quotient of (1) the product of
(I) the Class B Common Percentage multiplied by (II) the Share Price divided by
(2) the Floor Price (rounded to the nearest hundredth, or if there shall not be
a nearest hundredth, to the next lowest hundredth); provided, however, that in
-------- -------
such event Acquiror shall have the right to give written notice to the Company
(the "Floor Top-Up Intent Notice") that the board of directors of Acquiror
elects to increase both (x) the Conversion Number to the quotient of (1) the
product of (I) the Common Percentage multiplied by (II) the Share Price divided
by (2) the Determination Price (rounded to the nearest hundredth, or if there
shall not be a nearest hundredth, to the next lowest hundredth) and (y) the
Class B Common Stock Election Conversion Number to the quotient of (1) the
product of (I) the Class B Common Percentage multiplied by (II) the Share Price
divided by (2) the Determination Price (rounded to the nearest hundredth, or if
there shall not be a nearest hundredth, to the next lowest hundredth). The Floor
Top-Up Intent Notice shall be delivered to the Company no later than 2:00 p.m.
on the second Business Day prior to the Closing Date. If, in such case, Acquiror
does not deliver a Floor Top-Up Intent Notice, the Company shall have the right
to give written notice to Acquiror (the "Company Termination Notice") that the
Company elects to terminate this Agreement. The Company Termination Notice shall
be delivered to Acquiror no later than 2:00 p.m. on the Business Day prior to
the Closing Date.
(C) If the Determination Price is greater than the Cap Price, (x)
the Conversion Number shall be equal to the quotient of (1) the product of (I)
the Common Percentage multiplied by (II) the Share Price divided by (2) the Cap
Price (rounded to the nearest hundredth, or if there shall not be a nearest
hundredth, to the next lowest hundredth)
22
<PAGE>
and (y) the Class B Common Stock Election Conversion Number shall be equal to
the quotient of (1) the product of (I) the Class B Common Percentage multiplied
by (II) the Share Price divided by (2) the Cap Price (rounded to the nearest
hundredth, or if there shall not be a nearest hundredth, to the next lowest
hundredth); provided, however, that in such event, the Company shall have the
-------- -------
right to give written notice to Acquiror (the "Cap Top-Up Intent Notice") that
the Board of Directors elects to decrease both (x) the Conversion Number to the
quotient of (1) the product of (I) the Common Percentage multiplied by (II) the
Share Price divided by (2) the Determination Price (rounded to the nearest
hundredth, or if there shall not be a nearest hundredth, to the next lowest
hundredth) and (y) the Class B Common Stock Election Conversion Number to the
quotient of (1) the product of (I) the Class B Common Percentage multiplied by
(II) the Share Price divided by (2) the Determination Price (rounded to the
nearest hundredth, or if there shall not be a nearest hundredth, to the next
lowest hundredth). The Cap Top-Up Intent Notice shall be delivered to Acquiror
no later than 2:00 p.m. on the second Business Day prior to the Closing Date.
If, in such case, the Company does not deliver a Cap Top-Up Intent Notice,
Acquiror shall have the right to give written notice to the Company (the
"Acquiror Termination Notice") that Acquiror elects to terminate this Agreement.
The Acquiror Termination Notice shall be delivered to the Company no later than
2:00 p.m. on the Business Day prior to the Closing Date.
3.2 Company Common Stock Elections; Exchange Fund. (a) Each Person
---------------------------------------------
who, at the Effective Time, is a record holder of shares of Class B Common Stock
(other than holders of shares of Class B Common Stock to be cancelled as set
forth in Section 3.1(b) or subject to Section 3.5 or 3.6) shall have the right
to submit an Election Form (as defined in Section 3.2(c)) specifying whether
such Person desires to have all, but not less than all, of such shares converted
into the right to receive either (i) the Class B Stock Consideration pursuant to
the Stock Election, (ii) the Class B Cash Consideration pursuant to the Cash
Election or (iii) the Class B Standard Consideration pursuant to the Standard
Election. Holders of record of shares of Class B Common Stock who hold such
shares as nominees, trustees or in other representative capacities (a
"Representative") may submit multiple Election Forms, provided that such
Representative certifies that each such Election Form covers
23
<PAGE>
all the shares of Class B Common Stock held by such Representative for a
particular beneficial owner.
(b) Promptly after the Allocation Determination (as defined in
Section 3.2(d)), (i) Acquiror shall deposit (or cause to be deposited) with a
bank or trust company to be designated by Acquiror and reasonably acceptable to
the Company (the "Exchange Agent"), for the benefit of the holders of shares of
Class B Common Stock, for exchange in accordance with this Article III, cash in
the amount sufficient to pay the aggregate Class B Cash Consideration and (ii)
Acquiror shall deposit (or cause to be deposited) with the Exchange Agent, for
the benefit of holders of shares of Company Common Stock, certificates
representing the shares of Media Stock and Series D Preferred Stock ("Acquiror
Certificates") for exchange in accordance with this Article III (the cash and
shares deposited pursuant to clauses (i) and (ii) being hereinafter referred to
as the "Exchange Fund"). The Media Stock and Series D Preferred Stock into which
Company Common Stock shall be converted pursuant to the Merger shall be deemed
to have been issued at the Effective Time.
(c) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of Company Common Stock
immediately prior to the Effective Time (excluding any shares of Company Common
Stock which will be cancelled pursuant to Section 3.1(b) or which are subject to
Section 3.5 or 3.6) (A) a letter of trans mittal (the "Company Letter of
Transmittal") (which shall specify that delivery shall be effected, and risk of
loss and title to the Company Certificates shall pass, only upon delivery of
such Company Certificates to the Exchange Agent and shall be in such form and
have such other provisions as Acquiror shall specify) and (B) instructions for
use in effecting the surrender of the Company Certificates in exchange for the
Class A Merger Consideration or Class B Merger Consideration, as applicable,
with respect to the shares of Company Common Stock formerly represented thereby.
The Exchange Agent shall also mail to holders of Class B Common Stock, together
with the items specified in the preceding sentence, an election form (the
"Election Form") providing for such holders to make, with respect to all, but
not less than all, of the shares of Class B Common Stock held of record by each
such holder (subject to the last sentence of Section 3.2(a)), either a Cash
Election, a Stock Election or a Standard Election. The Election Form shall
include information as to the Share Price, the Class B
24
<PAGE>
Common Conversion Number, the Class B Preferred Conversion Number, the Class B
Aggregate Consideration Amount and the Cash Consideration Amount and state the
pricing terms of the Series D Preferred Stock. As of the Election Deadline (as
hereinafter defined) all holders of Class B Common Stock immediately prior to
the Effective Time that shall not have submitted to the Exchange Agent or shall
have properly revoked an effective, properly completed Election Form shall be
deemed to have made a Standard Election.
(d) Any Cash Election, Stock Election or Standard Election (other
than a deemed Standard Election) shall have been validly made only if the
Exchange Agent shall have received by 5:00 p.m. New York, New York time on a
date (the "Election Deadline") to be mutually agreed upon by Acquiror and the
Company (which date shall not be later than the twentieth Business Day after the
Effective Time), an Election Form properly completed and executed (with the
signature or signatures thereof guaranteed to the extent required by the
Election Form) by such holder accompanied by such holder's Company Certificates,
or by an appropriate guarantee of delivery of such Company Certificates from a
member of any registered national securities exchange or of the National
Association of Securities Dealers, Inc. or a commercial bank or trust company in
the United States as set forth in such Election Form. Any holder of Class B
Common Stock (other than a holder who has submitted an irrevocable election) who
has made an election by submitting an Election Form to the Exchange Agent may at
any time prior to the Election Deadline change such holder's election by
submitting a revised Election Form, properly completed and signed that is
received by the Exchange Agent prior to the Election Deadline. Any holder of
Class B Common Stock may at any time prior to the Election Deadline revoke such
holder's election by written notice to the Exchange Agent received by the Close
of business on the day prior to the Election Deadline. As soon as practicable
after the Election Deadline, the Exchange Agent shall determine the allocation
of the cash portion of the Class B Merger Consideration and the stock portion of
the Class B Merger Consideration and shall notify Acquiror of its determination
(the "Allocation Determination").
(e) Upon surrender of a Company Certificate for cancellation to the
Exchange Agent, together with the Company Letter of Transmittal, duly executed,
and such other documents as Acquiror or the Exchange Agent shall reasonably
request, the holder of such Company Certificate shall be
25
<PAGE>
entitled to receive promptly after the Election Deadline in exchange therefor
(A) a certified or bank cashier's check in the amount equal to the cash, if any,
which such holder has the right to receive pursuant to the provisions of this
Article III (including any cash in lieu of fractional shares of Media Stock and
Series D Preferred Stock pursuant to Section 3.4(c)), and (B) Acquiror
Certificates representing that number of shares of Media Stock and Series D
Preferred Stock, if any, which such holder has the right to receive pursuant to
this Article III (in each case less the amount of any required withholding
taxes, if any, determined in accordance with Section 3.4(g)), and the Company
Certificate so surrendered shall forthwith be cancelled. Until surrendered as
contemplated by this Section 3.3, each Company Certificate shall be deemed at
any time after the Effective Time to represent only the right to receive the
Class A Merger Consideration or Class B Merger Considera tion, as applicable,
with respect to the shares of Company Common Stock formerly represented thereby.
(f) Acquiror shall have the right to make reason able rules, not
inconsistent with the terms of this Agree ment, governing the validity of the
Election Forms, the manner and extent to which Cash Elections or Stock Elections
are to be taken into account in making the determinations prescribed by Section
3.3, the issuance and delivery of certificates for Media Stock and Series D
Preferred Stock into which shares of Class B Common Stock are converted in the
Merger, and the payment of cash for shares of Class B Common Stock converted
into the right to receive cash in the Merger.
3.3 Proration. (a) The aggregate amount of cash to be paid to
---------
holders of Class B Common Stock shall not exceed the Cash Consideration Amount.
(b) In the event that the aggregate amount of cash represented by
the Cash Elections received by the Exchange Agent (the "Requested Cash Amount")
exceeds an amount equal to the excess of the Cash Consideration Amount over the
aggregate amount of cash represented by the Standard Elections (such difference,
the "Cash Cap"), each holder making a Cash Election shall receive, for each
share of Class B Common Stock for which a Cash Election has been made, (x) cash
in an amount equal to the product of the Class B Cash Consideration and a
fraction, the numerator of which is the Cash Cap and the denominator of which is
the Requested Cash Amount (such product, the "Prorated Cash
26
<PAGE>
Amount"), (y) a number of shares of Media Stock equal to the product of the
Class B Common Percentage and a fraction, the numerator of which is equal to the
Share Price minus the Prorated Cash Amount and the denominator of which is equal
to the Calculation Price and (z) a number of shares of Series D Preferred Stock
equal to the product of the Class B Preferred Percentage and a fraction, the
numerator of which is equal to the Share Price minus the Prorated Cash Amount
and the denominator of which is equal to the Liquidation Value.
(c) In the event the Requested Cash Amount is less than the Cash
Cap, each holder making a Stock Election (other than as set forth in Section
3.5) shall receive for each share of Class B Common Stock for which a Stock
Election has been made, (x) cash in an amount equal to the quotient of (1) the
excess of the Cash Cap over the Requested Cash Amount divided by (2) the number
of shares of Class B Common Stock for which such Stock Elections have been made
or have been deemed to have been made (such quotient, the "Excess Cash Amount"),
(y) a number of shares of Media Stock equal to the product of the Class B Common
Percentage and a fraction, the numerator of which is equal to the difference
between the Share Price and the Excess Cash Amount and the denominator of which
is equal to the Calculation Price and (z) a number of shares of Series D
Preferred Stock equal to the product of the Class B Preferred Percentage and a
fraction, the numerator of which is equal to the difference between the Share
Price and the Excess Cash Amount and the denominator of which is equal to the
Liquidation Value.
3.4 Dividends, Fractional Shares, Etc. (a) Notwithstanding any
---------------------------------
other provisions of this Agreement, no dividends or other distributions declared
after the Effective Time on Media Stock or Series D Preferred Stock shall be
paid with respect to any whole shares of Media Stock or Series D Preferred Stock
represented by a Company Certificate until such Company Certificate is
surrendered for exchange as provided herein. Subject to the effect of Applicable
Laws, following surrender of any such Company Certificate, there shall be paid
to the holder of the Acquiror Certificates issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time theretofore payable
with respect to such whole shares of Media Stock and Series D Preferred Stock
and not paid, less the amount of any withholding taxes which may
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<PAGE>
be required thereon, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of Media Stock and Series D Preferred Stock, less
the amount of any withholding taxes which may be required thereon.
(b) At or after the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the shares of Company Common Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates representing any such shares are presented to the
Surviving Corporation, they shall be cancelled and exchanged for certificates
for the considera tion, if any, deliverable in respect thereof pursuant to this
Agreement in accordance with the procedures set forth in this Article III.
Company Certificates surrendered for exchange by any Person constituting an
"affiliate" of the Company for purposes of Rule 145(c) under the Securities Act
shall not be exchanged until Acquiror has received a written agreement from such
Person as provided in Section 7.13.
(c) (i) No certificates or scrip evidencing fractional shares of
Media Stock or Series D Preferred Stock shall be issued upon the surrender for
exchange of Company Certificates, and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a stockholder of Acquiror.
In lieu of any such fractional shares, the Exchange Agent shall, on behalf of
all holders of fractional shares of Media Stock and Series D Preferred Stock, as
soon as practicable after the Effective Time, aggregate all such fractional
interests (collectively, the "Fractional Shares") and, at Acquiror's option,
such Fractional Shares shall be purchased by Acquiror or otherwise sold by the
Exchange Agent as agent for the holders of such Fractional Shares, in either
case at the then prevailing price on the NYSE, all in the manner provided
hereinafter. Until the net proceeds of such sale or sales have been distributed
to the holders of Fractional Shares, the Exchange Agent shall retain such
proceeds in trust for the benefit of such holders. Acquiror shall pay all
commissions, transfer taxes and other out-of-pocket transaction costs, including
expenses and compensation of the Exchange Agent, incurred in connection with
such sale of the Fractional Shares.
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(ii) To the extent not purchased by Acquiror, the sale of the
Fractional Shares by the Exchange Agent shall be executed on the NYSE or through
one or more member firms of the NYSE and will be executed in round lots to the
extent practicable. In either case, the Exchange Agent will determine the
portion, if any, of the net proceeds of such sale to which each holder of
Fractional Shares is entitled, by multiplying the amount of the aggregate net
proceeds of the sale of the Fractional Shares, by a fraction, the numerator of
which is the amount of Fractional Shares to which such holder is entitled and
the denominator of which is the aggregate amount of Fractional Shares to which
all holders of Fractional Shares are entitled.
(iii) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Fractional Shares in lieu of such
Fractional Shares, the Exchange Agent shall mail such amounts, without interest,
to such holders; provided, however, that no such amount will be paid to any
-------- -------
holder of such Fractional Shares prior to the surrender by such holder of the
Company Certificates formerly representing such holder's shares of Company
Common Stock.
(d) Any portion of the Exchange Fund that remains undistributed to
the holders of Company Common Stock for six months after the Effective Time
shall be delivered to Acquiror, upon demand, and any holders of Company Common
Stock who have not theretofore complied with this Article III shall thereafter
look only to Acquiror for the Class A Merger Consideration or Class B Merger
Consideration, as applicable, net cash proceeds from the sale of Fractional
Shares and unpaid dividends and distributions on the Media Stock and Series D
Preferred Stock to which they are entitled. All interest accrued in respect of
the Exchange Fund shall inure to the benefit of and be paid to Acquiror.
(e) None of Acquiror, Company Sub, the Company or the Exchange
Agent shall be liable to any holder of shares of Company Common Stock for any
cash, shares of Media Stock or Series D Preferred Stock, net cash proceeds from
the sale of Fractional Shares or unpaid dividends or distributions with respect
to Media Stock or Series D Preferred Stock from the Exchange Fund delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any Company Certificates shall not have been surrendered prior
to seven years after the Effective Time (or immediately prior to such earlier
date on which any cash,
29
<PAGE>
shares of Media Stock or Series D Preferred Stock, net cash proceeds from the
sale of Fractional Shares or unpaid dividends or distributions with respect to
Media Stock or Series D Preferred Stock in respect of such Company Certificates
would otherwise escheat to or become the property of any Governmental
Authority), any such cash, shares or unpaid dividends or distributions in
respect of such Company Certificates shall, to the extent permitted by
Applicable Laws, become the property of the Surviving Corporation; provided,
--------
however, that any holder of Company Common Stock shall thereafter have the right
- -------
to demand from Acquiror any such cash, shares or unpaid dividends or
distributions.
(f) In the event that any Company Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Company Certificate to be lost, stolen or destroyed and, if
required by Acquiror, the posting by such Person of a bond in such reasonable
amount as Acquiror may direct as indemnity against any claim that may be made
against it with respect to such Company Certificate, the Exchange Agent (or
Acquiror, as the case may be) will issue in exchange for such lost, stolen or
destroyed Company Certificate the Class A Merger Consideration or Class B Merger
Consideration, as applicable, cash in lieu of fractional shares, and unpaid
dividends and distributions on shares of Media Stock and Series D Preferred
Stock deliverable in respect thereof pursuant to this Agreement.
(g) Acquiror shall be entitled to, or shall be entitled to cause
the Exchange Agent to, deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as are required to be deducted and withheld with respect to
the making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Acquiror or the
Exchange Agent, as the case may be, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the shares
of Company Common Stock in respect of which such deduction and withholding was
made by Acquiror.
3.5 Restricted Stock. To the extent any Company Common Stock that
----------------
is unvested and outstanding immediately prior to the Effective Time is subject
to the terms and conditions of a Restricted Stock Purchase Agreement ("RSPA")
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between the Company and any current or former employee of the Company
("Restricted Company Common Stock"), then (i) notwithstanding Sections 3.1(c) or
3.3, at the Effective Time all such shares of Restricted Company Common Stock
shall be converted into the right to receive a number of shares of Media Stock
equal to the quotient of (x) the Share Price divided by (y) the Calculation
Price, (ii) the holder of such Restricted Company Common Stock shall not be
entitled to receive any cash or Series D Preferred Stock pursuant to Section 3.3
and (iii) any Media Stock received with respect to such Restricted Company
Common Stock shall be subject to the terms of such RSPA, as amended by an
Amendment to Restricted Stock Purchase Agreement substantially in the form set
forth in Section 3.5 of the Company Disclosure Letter.
3.6 Dissenting Shares. Notwithstanding any other provisions of this
-----------------
Agreement to the contrary, shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and that are held by stockholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who shall have demanded properly in writing appraisal for such shares in
accordance with Section 262 of the DGCL (collectively, the "Dissenting Shares")
shall not be converted into or represent the right to receive the Class A Merger
Consideration or Class B Merger Consideration, as applicable. Such stockholders
shall be entitled to receive payment of the appraised value of such shares of
Company Common Stock held by them in accordance with the provisions of such
Section 262, except that all Dissenting Shares held by stockholders who shall
have failed to perfect or who effectively shall have withdrawn or lost their
rights to appraisal of such shares of Company Common Stock under such Section
262 shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Class A Merger Consideration or Class B Merger
Consideration, as applicable, upon surrender in the manner provided in this
Article III, of the Company Certificate or Company Certificates that formerly
evidenced such shares of Class B Common Stock.
3.7 Share Price Adjustment. If the Closing shall not have occurred
----------------------
on or prior to January 3, 1997, the Share Price shall be increased at a rate
equal to 8% per annum from and including January 1, 1997 to and excluding the
Closing Date calculated on the basis of the actual number of days in the period
(such amount being the "Additional
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Amount"); provided, however, that no such amount shall be added to the Share
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Price if (i) the Closing has not occurred on or prior to January 3, 1997 and the
last of the conditions set forth in Article VIII to be fulfilled is the
condition set forth in Section 8.2(h) or the condition set forth in Section
8.1(a), other than, in each case as a result of any action taken or not taken by
Acquiror or Company Sub or (ii) the Company has taken any action that would
result in any of the conditions to the consummation of the Merger set forth
herein not being satisfied at such time; provided, further, that upon
-------- -------
satisfaction of the conditions described in clause (i) above if either such
condition is the last condition to be fulfilled, the Additional Amount shall be
added to the Share Price and shall be calculated commencing five Business Days
after the date of such satisfaction.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Acquiror as follows:
4.1 Organization and Authority of the Company. (a) Each of the
-----------------------------------------
Company and its Subsidiaries is a corporation or partnership duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization with all requisite power to enable it to own,
lease and operate its assets and properties and to conduct its business as
currently being conducted and is qualified and in good standing to do business
in each jurisdiction in which the nature of the business conducted by it or the
character or location of the properties owned or leased by it requires such
qualification, except to the extent the failure so to qualify would not have a
Material Adverse Effect with respect to the Company. Complete and correct
copies of the Restated Certificate of Incorporation and Bylaws, each as amended
to date, of the Company have been delivered to Acquiror. Such Restated
Certificate of Incorporation and Bylaws are in full force and effect.
(b) The Company has all requisite corporate power and authority to
execute and deliver this Agreement and the Transaction Documents to which it is
a party and to perform its obligations hereunder and thereunder and, subject to
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<PAGE>
(i) the adoption of this Agreement by the holders of a majority of the voting
power of the outstanding shares of Company Capital Stock, voting as a single
class and (ii) the adoption of the Consideration Charter Amendment by 66-2/3% of
the voting power of the outstanding shares of Company Capital Stock voting as a
single class and a majority of the voting power of each of the outstanding
shares of the Class A Common Stock and the Class B Common Stock voting as
separate classes (collectively, the "Stockholder Approvals"), to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and such Transaction Documents and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite corporate action on the part of the Company, subject, in the case of
this Agreement, the Merger and the Consideration Charter Amendment, to the
Stockholder Approvals. This Agreement and each Transaction Document to which the
Company is a party has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms, except (i) as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and (ii) as the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(c) Section 4.1 of the letter from the Company, dated the date
hereof, addressed to Acquiror (the "Company Disclosure Letter") sets forth, as
of the date hereof, a true and complete list of all of the Company's
Subsidiaries, including the jurisdiction of incorporation or organization of
each Subsidiary and the percentage of each Subsidiary's outstanding capital
stock or other ownership interest owned by the Company or another Subsidiary of
the Company or by any other Person. All of the outstanding shares of capital
stock of each Subsidiary have been validly issued and are fully paid and
nonassessable and, except as set forth in Section 4.1 of the Company Disclosure
Letter, are owned by the Company or a Subsidiary, free and clear of all
Encumbrances. Except as set forth in Section 4.1 of the Company Disclosure
Letter, the Company does not, directly or indirectly, own any capital stock of
or other equity interests in any corporation, partnership or other Person and
neither the Company nor any of its Subsidiaries is a
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<PAGE>
member of or participant in a partnership, joint venture or similar Person .
4.2 Capitalization. (a) As of the date hereof, the authorized
--------------
capital stock of the Company consists of: (i) 425,000,000 shares of Class A
Common Stock, of which (A) 38,885,385 shares are issued and outstanding, all of
which are duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights created by statute, the Company's Restated
Certificate of Incorporation or Bylaws or any agreement to which the Company is
a party or by which the Company is bound and (B) no shares are held in the
treasury of the Company; (ii) 200,000,000 shares of Class B Common Stock, of
which (A) 109,349,496 shares are issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, the Company's Restated Certificate of
Incorporation or Bylaws or any agreement to which the Company is a party or by
which the Company is bound, (B) no shares are held in the treasury of the
Company and (C) 28,571,450 shares are issuable upon conversion of Company
Preferred Stock; and (iii) 200,000,000 shares of Preferred Stock, par value $.01
per share, of the Company, of which 1,142,858 shares have been designated Series
A Participating Convertible Preferred Stock (the "Company Preferred Stock" and,
together with the Company Common Stock, the "Company Capital Stock") and are
issued and outstanding, all of which are duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights created by statute,
the Company's Certificate of Incorporation or Bylaws or any agreement to which
the Company is a party or by which the Company is bound.
(b) Other than as described in this Section 4.2, or as listed in
Section 4.2(b) of the Company Disclosure Letter, no shares of the capital stock
of the Company are authorized, issued or outstanding, or reserved for any other
purpose, and there are no options, warrants or other rights (including tag-
along, right of first refusal, buy-sell, registration or similar rights),
agreements, arrangements or commitments of any character to which the Company,
any of its Subsidiaries or any Person in which the Company or its Subsidiaries
own any interest is a party relating to the issued or unissued capital stock of
the Company, any of its Subsidiaries or any such Person or obligating or which
could obligate the Company or any of its Subsidiaries to grant,
34
<PAGE>
issue or sell any shares of capital stock of the Company, any of its
Subsidiaries or any Person in which the Company or its Subsidiaries own any
interest, by sale, lease, license or otherwise. Except as described in Section
4.2(b) of the Company Disclosure Letter, the Company has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote or that are convertible into or exercisable for securities having the right
to vote with the stockholders of the Company on any matter. Except as set forth
in Section 4.2(b) of the Company Disclosure Letter, there are, to the Knowledge
of the Company, no voting trusts or other agreements or understandings with
respect to the voting of Company Capital Stock. Except as set forth on Section
4.2 of the Company Disclosure Letter, none of the Company, its Subsidiaries or
any Person in which the Company or its Subsidiaries own any interest is a party
to any non-competition agreement or other agreement or arrangement which
restrains, limits or impedes the current or contemplated business or operations
of the Company or any of its Subsidiaries or would apply to Acquiror or any of
its Affiliates following the Effective Time.
4.3 No Conflicts. Except as set forth in Section 4.3 of the
------------
Company Disclosure Letter, subject to obtaining the Company Consents (as defined
in Section 4.6), the execution and delivery of this Agreement and each of the
Transaction Documents to which the Company is a party by the Company do not, and
the consummation of the transactions contemplated hereby and thereby and
compliance with the terms hereof and thereof will not, conflict with, or result
in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or to
increased, additional, accelerated or guaranteed rights or entitlements of any
Person under, or result in the creation of any Encumbrances upon any of the
properties or assets of the Company or its Subsidiaries under any provision of
(i) the Certificate of Incorporation, Bylaws or other organizational document of
the Company or any Subsidiary, (ii) any note, bond, mortgage, indenture or deed
of trust, deed to secure debt or any license, lease, contract, commitment,
permit, concession, franchise, agreement or other binding arrangement to which
the Company or any of its Subsidiaries is a party or by which any of them or
their respective properties or assets are bound, including any Franchise, (iii)
any judgment, order, writ, injunction or decree of any
35
<PAGE>
court, governmental body, administrative agency or arbitrator applicable to the
Company or any Subsidiary or their respective properties or assets as of the
date hereof or (iv) any law, statute, rule, regulation or judicial or
administrative decision applicable to the Company or any Subsidiary, except in
the case of clauses (ii) and (iv), such conflicts, violations and defaults,
termination, cancellation and acceleration rights and entitlements and
Encumbrances that in the aggregate would not hinder or impair the consummation
of the transactions contemplated hereby or have a Material Adverse Effect with
respect to the Company.
4.4 Vote Required. The Stockholder Approvals are the only votes of
-------------
the holders of any class or series of Company Capital Stock necessary or
required (under Applicable Law or otherwise) to approve this Agreement and the
transactions contemplated hereby.
4.5 Board Recommendation; Opinion of Financial Advisor. (a) The
--------------------------------------------------
Board of Directors, at a meeting duly called and held, has by unanimous vote of
those directors present (who constituted 100% of the directors then in office)
(i) determined that this Agreement and the transactions contemplated hereby,
including the Merger, are fair to and in the best interests of the stockholders
of the Company and has approved the same, and (ii) resolved to recommend that
the holders of the shares of Company Capital Stock adopt this Agreement and the
transactions contemplated hereby, including the Merger.
(b) The Company has received the opinions of (i) Lazard Freres &
Co. LLC, dated February 27, 1996, to the effect that, as of the date hereof, the
consideration to be received by the holders of shares of Company Capital Stock
in the Merger is fair from a financial point of view to such holders and (ii)
Allen & Company Incorporated, dated February 27, 1996, to the effect that, as of
the date hereof, the consideration to be received by the holders of the Class A
Common Stock in the Merger is fair from a financial point of view to such
holders. A signed, true and complete copy of such opinions has been delivered to
Acquiror.
4.6 Consents. Not later than 30 days after the date of this
--------
Agreement, the Company shall furnish to Acquiror a list of each Franchise as to
which notice to, or the consent of, a Governmental Authority is required as a
36
<PAGE>
condition to the transfer of control or the right to control the Franchise in
connection with the transactions contemplated hereby (all such notices and
consents being "Franchise Consents"). Section 4.6 of the Company Disclosure
Letter lists each FCC license held by the Company or any Subsidiary, other than
private mobile radio service licenses, as to which FCC consent is required prior
to the assignment or transfer of control of such license in connection with the
transactions contemplated hereby (all such notices and consents being "License
Consents"). Except for (i) the Franchise Consents and License Consents, (ii) as
set forth in Section 4.6 of the Company Disclosure Letter, (iii) compliance with
and filings under the HSR Act, (iv) the filing with the SEC of (A) a proxy
statement under the Exchange Act relating to the meeting (or meetings) of the
Company's stockholders to be held in connection with the Merger, the Charter
Amendments and the other transactions contemplated by this Agreement (the "Proxy
Statement"), (B) any registration statement required to be filed in connection
with any action taken by the Company pursuant to Section 7.7 and (C) such
reports under the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby, (v) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (vi) such filings and approvals as may be
required by any applicable state securities, "blue sky" or takeover laws, (vii)
such filings in connection with any state or local tax which is attributable to
the beneficial ownership of the Company's or its Subsidiaries' real property, if
any (collectively, "Gains Taxes"), and (viii) such filings as may be required
with the FCC or any Governmental Authority to obtain their consent to the
assumption by the Acquiror of the Social Contract (including all Systems and
communities encompassed thereby) between the Company and the FCC, as approved by
Memorandum Opinion and Order released August 3, 1995 (FCC 95-335) (the "Social
Contract Order") and as may be modified thereafter by a proposed Social Contract
Amendment that is substantially similar to that which the Company has provided
to Acquiror (the "Social Contract Amendment") (such notice and consent being the
"Social Contract Consents") (the items in clauses (i) through (vi) being
collectively referred to herein as "Company Consents"), no consents, approvals,
licenses, permits, orders or authorizations of, or registrations, declarations,
notices or filings with, any Governmental Authority or any Third Party are
required to be obtained or
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<PAGE>
made by or with respect to the Company or any of its Subsidiaries on or prior to
the Closing Date in connection with (A) the execution, delivery and performance
of this Agreement or any of the Transaction Documents to which the Company is a
party, the consummation of the transactions contemplated hereby and thereby or
the taking by the Company of any other action contemplated hereby or thereby,
(B) the continuing validity and effectiveness of (and prevention of any material
default under or violation of the terms of) any Franchise or any other material,
license, permit or authorization or any material contract, agreement or lease to
which the Company or any Subsidiary is a party or (C) the conduct by the Company
or any of its Subsidiaries of their respective businesses following the Closing
as conducted on the date hereof, which, if not obtained or made in connection
with clauses (A), (B) and (C), would have a Material Adverse Effect with respect
to the Company.
4.7 Compliance; No Defaults. (a) Except as set forth in Section
-----------------------
4.7 of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries is in violation of, is, to the Knowledge of the Company, under
investigation with respect to any violation of, has been given notice or been
charged with violation of, or failed to comply with any statute, law, ordinance,
rule, order or regulation of any Governmental Authority applicable to its
business or operations ("Applicable Laws") (including but not limited to the
Social Contract Order, as amended), except for violations and failures to comply
that would not have a Material Adverse Effect with respect to the Company.
Except as set forth in Section 4.7 of the Company Disclosure Letter, the Company
and its Subsidiaries have all permits, licenses, variances, exemptions, orders
and approvals of all Governmental Authorities ("Permits") which are material to
the operation of the businesses of the Company and its Subsidiaries, taken as a
whole.
(b) Neither the Company nor any of its Subsidiaries is in default
or violation (and no event has occurred which, with notice or the lapse of time
or both, would constitute a default or violation) of any term, condition or
provision of (i) its Certificate of Incorporation, as amended, or Bylaws or
other comparable organizational document or (ii) any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to which the
Company or any of its Subsidiaries is now a party or by which the Company or any
of its Subsidiaries or any of their respective properties or assets
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<PAGE>
may be bound, except in the case of clause (ii), for defaults or violations
which in the aggregate would not have a Material Adverse Effect with respect to
the Company.
4.8 SEC Documents; Undisclosed Liabilities. (a) The Company has
--------------------------------------
made available to Acquiror a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by the Company with
the SEC since January 1, 1993 (as such documents have since the time of their
filing been amended, the "Company SEC Documents"), which are all the documents
(other than preliminary proxy materials) that the Company was required to file
with the SEC since such date. As of their respective dates, the Company SEC
Documents (including any financial statements filed, to be filed or required to
have been filed as a part thereof) complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as applicable, and the
rules and regulations of the SEC thereunder applicable to such Company SEC
Documents, and none of the Company SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present (subject, in the case of the unaudited financial statements, to normal,
recurring audit adjustments, which were not individually or in the aggregate
material) the consolidated financial position of the Company and its
consolidated Subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.
(b) Except as disclosed in the Company SEC Documents or in Section
4.8 or 4.9 of the Company Disclosure Letter, as of the date hereof, the Company
and its Subsidiaries do not have any material indebtedness, obligations or
liabilities of any kind (whether accrued, absolute, contingent or otherwise, and
whether due or to become due or asserted or unasserted) required by GAAP to be
reflected on a consolidated balance sheet of the Company and
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<PAGE>
its consolidated Subsidiaries or in the notes, exhibits or schedules thereto.
4.9 Litigation. Except as set forth in the Company SEC Documents
----------
or in Section 4.9 of the Company Disclosure Letter, there are no Legal
Proceedings against or affecting the Company or any of its Subsidiaries or their
respective properties or assets pending or, to the Knowledge of the Company,
threatened against the Company or any of its Subsidiaries, that individually or
in the aggregate could (i) have a Material Adverse Effect with respect to the
Company or (ii) as of the date hereof, prevent, materially hinder or delay the
consummation of the transactions contemplated by this Agreement or the
Transaction Documents or seek to limit the ownership or operation of the Company
by Acquiror. Except as set forth in Section 4.9 of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party or subject to
or in default under any judgment, order, injunction or decree of any
Governmental Authority applicable to it or to its respective properties or
assets, which judgment, order, injunction, decree or default thereunder
constitutes a Material Adverse Effect with respect to the Company.
4.10 Taxes. (a) Except as set forth in Section 4.10(a) of the
-----
Company Disclosure Letter, (i) all Federal, state, local and foreign Tax
returns, declarations and reports ("Tax Returns") required to be filed by or on
behalf of the Company or any of its Subsidiaries have been filed on a timely
basis with the appropriate Governmental Authorities in all jurisdictions in
which such Tax Returns are required to be filed (after giving effect to any
valid extensions of time in which to make such filings), except for Tax Returns
as to which the failure to file would not individually or in the aggregate have
a Material Adverse Effect with respect to the Company, and all such Tax Returns
were true, correct and complete in all material respects; (ii) all amounts due
and payable in respect of such Tax Returns (including interest and penalties)
have been fully and timely paid or are or will be adequately provided for in the
appropriate financial statements of the Company and its Subsidiaries, except for
amounts the failure to pay would not have a Material Adverse Effect with respect
to the Company; (iii) no waivers of statutes of limitations have been given or
requested with respect to the Company or any of its Subsidiaries in connection
with any Tax Returns covering the Company or any of its Subsidiaries with
respect to any income or franchise Taxes or other material Taxes payable by any
of them; and
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(iv) each of the Company and its Subsidiaries has duly and timely withheld from
salaries, wages and other compensation of its employees and paid over to the
appropriate taxing authorities all amounts required to be so withheld and paid
over for all periods not barred by applicable statutes of limitations under all
Applicable Laws, except for amounts as to which the failure to withhold or pay
would not have a Material Adverse Effect with respect to the Company.
(b) Except as set forth in Section 4.10(b) of the Company Disclosure
Letter, all deficiencies asserted or assessments made in an amount in excess of
$300,000 by the IRS or any other taxing authority of the Tax Returns of or
covering the Company or any of its Subsidiaries have been fully paid or are or
will be adequately provided for in the appropriate financial statements of the
Company and its Subsidiaries.
(c) Except as set forth in Section 4.10(c) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries nor any other Person on
behalf of the Company or any of its Subsidiaries: (i) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any of its
Subsidiaries; (ii) has executed or entered into a closing agreement pursuant to
Section 7121 of the Code or any predecessor provision thereof or any similar
provision of state, local or foreign law; or (iii) has agreed to or is required
to make any adjustments pursuant to Section 481(a) of the Code or any similar
provision of state, local or foreign law by reason of a change in accounting
method initiated by the Company or any of its Subsidiaries nor to the Knowledge
of the Company (which for purposes of this Section 4.10 shall include the tax
director) has the IRS proposed any such adjustment or change in accounting
method, or has any application pending with any taxing authority requesting
permission for any changes in accounting methods that relate to the business or
operations of the Company or any of its Subsidiaries.
(d) Except as set forth in Section 4.10(d) of the Company Disclosure
Letter, none of the assets of the Company and its Subsidiaries is property
required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of
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the Tax Reform Act of 1986 or is "tax-exempt use property" within the meaning of
Section 168(h)(l) of the Code.
(e) The Federal income Tax Returns of the Company and its
Subsidiaries, any of their predecessors or any affiliated group of which the
Company or any of its Subsidiaries is or was a member have been examined by the
IRS, or the periods covered by such Tax Returns have been closed by applicable
statute of limitations, for all periods through December 31, 1991, except to the
extent such Tax Returns may be examined for the purpose of determining loss or
credit carryforwards to a year not so closed. The state income or franchise Tax
Returns of the Company and its Subsidiaries, any of their predecessors or any
affiliated, combined or unitary group of which the Company or any of its
Subsidiaries is or was a member have been examined by the relevant taxing
authorities, or the periods covered by such Tax Returns have been closed by
applicable statute of limitations, in each case through at least December 31,
1991, except to the extent such Tax Returns may be examined for the purpose of
determining loss or credit carryforwards to a year not so closed.
(f) Except as set forth in Section 4.10(f) of the Company Disclosure
Letter, (i) no Tax audits or other administrative proceedings are pending with
regard to any Taxes for which the Company or any of its Subsidiaries may be
liable and (ii) no written notice of any such audit has been received by the
Company or any of its Subsidiaries.
(g) As of December 31, 1995, the Company had net operating loss
carryforwards for Federal income tax purposes of no less than $900 million.
(h) Except as set forth in Section 4.10(h) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to or bound
by any agreement providing for the allocation or sharing of Taxes.
(i) Except as set forth in Section 4.10(i) of the Company Disclosure
Letter, since January 1, 1989 neither the Company nor any of its Subsidiaries
has been a member of, or was acquired from, any "affiliated group" (as defined
in Section 1504 of the Code) other than (i) in a transaction in which the common
parent of such affiliated group was acquired or (ii) the affiliated group in
which the Company is the common parent.
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(j) Except as set forth in Section 4.10(j) of the Company Disclosure
Letter, the performance of the transactions contemplated by this Agreement will
not (either alone or upon the occurrence of any additional or subsequent event)
result in any payment that would constitute an "excess parachute payment" within
the meaning of Section 280G of the Code.
(k) The Company and each of its Subsidiaries is not currently, has
not been within the last five years and does not anticipate becoming a "United
States real property holding corporation" within the meaning of Section 897(c)
of the Code.
4.11 Employee Benefits. (a) Section 4.11(a) of the Company
-----------------
Disclosure Letter lists all "employee benefit plans," as defined in Section 3(3)
of ERISA, and all other deferred compensation, bonus or other incentive
compensation, stock purchase or other Equity Appreciation Rights Plans,
severance pay, salary continuation for disability or other leave of absence,
supplemental unemployment benefits, lay-off or reduction in force, change in
control or educational assistance arrangements or policies for which the Company
or any of its Subsidiaries has any material obligation or liability (each a
"Benefit Plan" and collectively, the "Benefit Plans"), including, but not
limited to, any individual benefit arrangement, policy or practice with respect
to any current or former officer, employee or director of the Company or any of
its Subsidiaries.
(b) Section 4.11(b) of the Company Disclosure Letter lists,
separately for each foreign country, all Benefit Plans covering employees of the
Company and its Subsidiaries who are employed outside of the United States
("Foreign Benefit Plans").
(c) The Company and its Subsidiaries have delivered to Acquiror
correct and complete copies of all Benefit Plans, and, where applicable, each of
the following documents with respect to such plans: (i) any amendments, (ii) any
related trust documents, (iii) the two most recently filed IRS Forms 5500 with
all attachments thereto, (iv) the last IRS determination letter, (v) the most
recent summary plan descriptions and summaries of material modifications, (vi)
the last actuarial valuation report and (vii) written communications to
employees to the extent the substance of the Benefit Plans described therein
differs
43
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materially from the other documentation furnished under this Section.
(d) Except as disclosed in Section 4.11(d) of the Company Disclosure
Letter, none of the Benefit Plans is subject to Title IV of ERISA or Section 412
of the Code, and the Company and its ERISA Affiliates from time to time have not
within the preceding six years had any obligation to make any contribution to a
retirement plan subject to Title IV of ERISA or incurred any liability
(contingent or otherwise) under Title IV of ERISA and neither the Company, its
Subsidiaries nor any of its ERISA Affiliates has any actual or potential
obligation or liability to any multiemployer plan (as defined in Section
4001(a)(3) of ERISA).
(e) Each Benefit Plan, including any associated trust, intended to
qualify under Section 401 of the Code does so qualify.
(f) Except as disclosed on Section 4.11(f) of the Company Disclosure
Letter and except as would not have a Material Adverse Effect with respect to
the Company, the Benefit Plans have been maintained and administered in
accordance with their terms and with the provisions of ERISA, the Code and other
Applicable Laws.
(g) There are no pending or, to the Company's Knowledge, overtly
threatened actions, claims or lawsuits that have been asserted or instituted
against any of the Benefit Plans, the assets of any of the trusts under such
plans or the plan sponsor, plan administrator or fiduciary of any of the Benefit
Plans with respect to the operation of such plans (other than routine benefit
claims) that individually or in the aggregate could have a Material Adverse
Effect with respect to the Company.
(h) The Company and its Subsidiaries do not provide, and are not
obligated to provide, retiree life insurance or retiree health benefits to any
current or former employee after his or her termination of employment with the
Company or any Subsidiary, except as may be required under Section 4980B of the
Code and Part 6 of Subtitle B of Title I of ERISA or as disclosed in Section
4.11(h) of the Company Disclosure Letter.
(i) Except as disclosed in Section 4.11(i) of the Company
Disclosure Letter and except with respect to
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payments under the Equity Appreciation Rights Plans that will be paid or
satisfied by the Company on or prior to Closing of all estimated payments,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment becoming due to
any employee (current or former) of the Company or any Subsidiary, (ii) increase
any benefits otherwise payable under any Benefit Plan or (iii) result in the
acceleration of the time of payment or the vesting of any benefits under any
Benefit Plan. The Company has also delivered to Acquiror a schedule of all
estimated payments to be made under each Equity Appreciation Rights Plan on or
prior to the Closing. "Equity Appreciation Rights Plans"
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are all plans or arrangements maintained by the Company or any of its
Subsidiaries that provide for a benefit based upon the issuance of stock,
restricted stock, stock options, phantom stock or other equity appreciation
rights or incentive awards, determined by the book, fair market or formula value
of a share of stock of the Company.
(j) Except as disclosed in Section 4.11(j) of the Company Disclosure
Letter, (i) no employee of the Company or any Subsidiary will be entitled to any
severance payments upon the sale of the Company or any Subsidiary, or any
divisions or business units thereof, absent an employee's actual loss of
employment and (ii) none of the executives of the Company or any Subsidiary are
eligible to receive any payment under any severance pay, stay bonus or other
retention plan, program or arrangement of the Company or any of its
Subsidiaries.
(k) Except as disclosed in Schedule 4.11(k) of the Company Disclosure
Letter, the projected benefit obligation of the Company or any Subsidiary (as
calculated using actuarial assumptions used to calculate liabilities under FAS
87 with respect to post-employment benefits accrued) under each Benefit Plan
that is a defined benefit pension plan is fully funded by assets of such plan or
by an adequate reserve on the applicable balance sheet of the Company or any
Subsidiary.
4.12 Cable Television Franchises. (a) Section 4.12 of the Company
---------------------------
Disclosure Letter sets forth a list of the Systems, and as to each such System,
(i) the geographic area and FCC community unit(s) served, (ii) the name of the
legal entity that owns such System and holds the applicable
46
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franchise, as well as the identity, ownership interest and relationship to the
Company, if any, of each owner of any interest in such legal entity, (iii) as of
December 31, 1995, the number of Homes Passed and Subscribers served by such
System, and (iv) the names and addresses of the Governmental Authorities issuing
the franchises and/or implementing such ordinances. By no later than 30 days
after the date of this Agreement, the Company shall furnish to Acquiror a
complete and accurate list and copy of all of the franchise agreements and
similar governing agreements, instruments, resolutions, statutes and/or CATV-
franchise-related ordinances that are used, necessary or required in order to
operate, or to which the Company or its Subsidiaries are subject by reason of
their operation of, the Systems (individually as to each System, its "Franchise"
and collectively, the "Franchises"), and, as of December 31, 1995, the number of
Homes Passed and Subscribers served by the Systems by Franchise. The Systems
listed in Section 4.12 of the Company Disclosure Letter represent all of the
"cable television systems", as defined in Section 602(7) of the Cable Act, owned
and operated by the Company and its Subsidiaries in the United States. The
Franchises and any related regulatory ordinances contain all material
commitments, obligations and rights of the Company and its Subsidiaries with
respect to each of the Governmental Authorities granting such Franchises, in
connection with the construction, ownership and operation of the Systems. The
Franchises enable the Company and its Subsidiaries to operate, and, subject to
obtaining the Franchise Consents and License Consents, immediately following the
Closing will enable the Surviving Corporation and its Subsidiaries to continue
to operate all of the Systems as and where they are presently operated. To the
Knowledge of the Company, each Franchise is valid under all Federal, state and
local laws and is validly held by the Company or its Subsidiaries, as the case
may be. The Company and its Subsidiaries have complied with the material terms
and conditions of the Franchises and the same will not be subject to revocation
or nonrenewal as a result of the execution and delivery of this Agreement or the
Transaction Documents, or the consummation of the transactions contemplated
hereby and thereby, subject to obtaining the Franchise Consents and License
Consents. Except as set forth in Section 4.12 of the Company Disclosure Letter,
there are no lawsuits, revocation
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proceedings or disputes pending with respect to any of the Franchises or Systems
that would material affect the right of the Company or any Subsidiary to operate
a System, and no Governmental Authority or other Person has notified the Company
or any of its Subsidiaries in writing of its intention to conduct or initiate
the same. Neither the Company nor any of its Subsidiaries has received any
written notice that any such Franchise is under consideration to be revoked nor,
except for Franchises that are subject to renewal negotiations, to be modified
in any material respect.
(b) Except as set forth in Section 4.12 of the Company Disclosure
Letter, no Person other than certain municipalities (a list of which will be
provided no later than 30 days after the date of this Agreement) has any right
to acquire any interest in any of the Systems, or to designate any other person
or entity to acquire any interest in any of the Systems (including, without
limitation, any right of first refusal or similar right to purchase any interest
in the Systems), which right has not been validly, properly and irrevocably
(except for the right to revoke such waiver only if this Agreement is terminated
pursuant to Article IX hereof) waived by the party entitled to assert such
right.
(c) Section 4.12 of the Company Disclosure Letter lists the date on
which each Franchise will expire or has expired. Except as set forth in Section
4.12 of the Company Disclosure Letter, there are not now pending any proceedings
of any Governmental Authority with respect to any proposal for renewal of any
Franchise. There exists no fact or circumstance that makes it likely that any
Franchise will not be renewed or extended on commercially reasonable terms.
Except where the Company or its Subsidiaries are proceeding under informal
renewal procedures as provided for by the Cable Act, the Company and its
Subsidiaries have timely filed with the appropriate Governmental Authority all
appropriate requests for renewal within 30 to 36 months under the Cable Act.
Section 4.12 of the Company Disclosure Letter sets forth those Franchises
serving 25,000 or more Subscribers ("Material Franchises") where the Company or
a Subsidiary has not filed a written renewal notice pursuant to (S) 626(a)(1) of
the Cable Act. Except as set forth in
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Section 4.12 of the Company Disclosure Letter, as to any Franchise that has
expired prior to the date hereof, the Company is currently operating such
Franchise under duly authorized extensions, and the Company has no reason to
believe that such extensions will not be renewed until such time as the
Franchise itself has been renewed for an additional term.
(d) To the Company's Knowledge, the Systems and all related
businesses of the Company and its Subsidiaries are, and have been, operated in
compliance with the Communications Act and all regulations of the FCC
established pursuant thereto, and the Company and its Subsidiaries have
submitted to the FCC all filings that are required under the rules, orders and
regulations of the FCC or other Governmental Authorities with jurisdiction.
Except as set forth in Section 4.12 of the Company Disclosure Letter, the
operation of the Systems has been, and is, in compliance with the rules and
regulations of the FCC or other Governmental Authorities with jurisdiction and
the Company and its Subsidiaries have not received any written notice from the
FCC or other Governmental Authorities with jurisdiction with respect to any
material violation of its rules and regulations or from any other Governmental
Authorities with jurisdiction with respect to any material violation of any
Franchise.
(e) To the Company's Knowledge, for each relevant semi-annual
reporting period, the Company has timely filed with the United States Copyright
Office all required Statements of Account in true and correct form in all
material respects, and has paid when due all required copyright royalty fee
payments in the correct amount, relating to the Systems' carriage of television
broadcast signals and appropriately classifying the applicable tiers on which
the Systems carry television broadcast signals. To the Company's Knowledge,
carriage of all broadcast signals is in compliance with the Copyright Act of
1976, as amended (the "Copyright Act") and the rules and regulations of the
Copyright Office and is eligible for the compulsory license under Section 111 of
the Copyright Act. Except as set forth in Section 4.12 of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries has received
any inquiry from the Copyright Office or any Third Party
49
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challenging or questioning the information submitted in any Statement of Account
or the amount of any royalty payment, for which the Company has not provided
adequate reserves in its reasonable business judgment, nor are the Company or
its Subsidiaries aware of any basis for such inquiry. Except as set forth in
Section 4.12 of the Company Disclosure Letter, to the Company's Knowledge, no
claim or copyright infringement has been made against the Company or any of its
Subsidiaries that has not been settled, nor is any such claim pending or
threatened.
(f) Other than as set forth in Section 4.12 of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is subject to any FCC
proceeding challenging the rights of the Company or its Subsidiaries to carry or
not carry any signal, nor has the Company or any of its Subsidiaries received
any written notice or demand to carry or not carry any signal, the carriage or
non-carriage of which could have a material adverse effect on any System.
(g) The Systems (other than the Recently Acquired Systems) are, and
have been, operated in material compliance with the Social Contract Order and
the Company and its Subsidiaries have submitted to the FCC and any relevant
Governmental Authority all forms, notices and other written material required
thereunder for implementation of the Social Contract. Each such filing has been
prepared and filed in compliance with the Social Contract Order and is complete
and accurate in all material respects. Neither the Company nor any Subsidiary
has received written notice from the FCC as to any non-compliance with the
Social Contract Order. The Company shall use its reasonable best efforts to
seek amendment of the Social Contract Order to bring the Recently Acquired
Systems under terms substantially the same as those contained in the proposed
Social Contract Amendment.
(h) Section 4.12 of the Company Disclosure Letter lists each of the
Governmental Authorities that (i) has been certified by the FCC pursuant to 47
C.F.R. (S) 76.910 to regulate Basic Cable Service and associated equipment of a
System or (ii) has petitioned the FCC to regulate the rates for Basic Cable
Service and associated equipment pursuant to 47 C.F.R. (S) 76.913; Section 4.12
of the Company Disclosure
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Letter also lists each complaint filed against Cable Programming Service rates
on FCC Form 329 that has not been settled by the Social Contract Order. Of those
listed, the Form 329 complaints pertaining to the Recently Acquired Systems
would be settled by the proposed Social Contract Amendment.
(i) To the extent that the Company's and/or its Subsidiaries' rates
have not been settled pursuant to the Social Contract or would not be settled by
the proposed Social Contract Amendment, the Company and/or its Subsidiaries are
in compliance in all material respects with FCC rate requirements.
(j) Except as set forth in Section 4.12 of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries (x) is under any
investigation by the FCC or any Governmental Authority with respect to any of
its rates for Basic Cable Service or any Cable Programming Service (including
but not limited to rates for associated equipment) or (y) is a party to any
proceeding before the FCC or any other Governmental Authority the collective
outcome of which could result in the Company or any of its Subsidiaries being
ordered to make refunds to Subscribers in excess of $2,000,000 (exclusive of
potential Social Contract Amendment refunds) or reduce the rates currently
charged to Subscribers when netted against any increases to which the Company is
entitled.
(k) Section 4.12 of the Company Disclosure Letter lists each System,
and the Franchise(s) by which it is authorized, that is subject to effective
competition (as that term is defined in Section 623(l)(1) of the Cable Act) and
the basis for the Company's determination that the System operating under that
Franchise is subject to effective competition.
4.13 Environmental Matters. Except as set forth in Section 4.13 of the
---------------------
Company Disclosure Letter:
(i) the operations of the Company and its Subsidiaries are in
material compliance with all applicable Environmental Laws;
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(ii) to the Company's Knowledge, all real property owned, operated or
leased by the Company and its Subsidiaries are free from contamination by any
Hazardous Material that is reasonably likely to result in Environmental Costs
and Liabilities to the Company in excess of $2,000,000;
(iii) to the Knowledge of the Company, the Company and its
Subsidiaries have obtained and currently maintain all material Environmental
Permits necessary for their operations and are in material compliance with such
Environmental Permits;
(iv) except to the extent such matters are the subject matter of
other representations and warranties of the Company contained herein, there are
no Legal Proceedings or Environmental Claims pending, or to the Knowledge of the
Company, threatened against the Company or its Subsidiaries alleging the
violation of any Environmental Law or asserting claims regarding Environmental
Costs and Liabilities under any Environmental Law;
(v) neither the Company nor its Subsidiaries nor to the Knowledge of
the Company, any predecessor of the Company or its Subsidiaries or any owner of
premises leased or operated by the Company or its Subsidiaries with respect to
such property, has filed any formal notice under Federal, state, local or
foreign law indicating past or present generation treatment, storage, or
disposal of or reporting a Release of Hazardous Material into the environment;
and
(vi) to the Knowledge of the Company, there is not now, nor has there
been in the past, on, in or under any real property owned, leased or operated by
the Company or its Subsidiaries (A) any underground storage tanks, above-ground
storage tanks, dikes or impoundments, (B) any friable asbestos-containing
materials or (C) any polychlorinated biphenyls which, in each case, is material
to the operation of its business at such real property.
4.14 Labor. (a) Except as set forth in Section 4.14(a)(1) of the
-----
Company Disclosure Letter, neither the Company nor any of its Subsidiaries is a
party to any labor or
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collective bargaining agreement and there are no labor or collective bargaining
agreements that govern the terms and conditions of employment with the Company
or its Subsidiaries with respect to employees of the Company or its
Subsidiaries. Section 4.14(a)(2) of the Company Disclosure Letter lists all
employment, management, consulting, management retention or other personal
service, or compensation agreements or arrangements covering one or more non-
employees (including severance, termination or change-of-control arrangements)
and all material employment, management, consulting, management retention or
other personal service, or compensation agreements or arrangements covering one
or more employees (including severance, termination or change-of-control
arrangements) in each case, entered into by the Company or any of its
Subsidiaries and a copy of each such agreement has been delivered to Acquiror.
(b) Except as set forth in Section 4.14(b) of the Company Disclosure
Letter, no employees of the Company or any of its Subsidiaries are represented
by any labor organization; no labor organization or group of employees of the
Company or any of its Subsidiaries has made a pending demand against the Company
or any Subsidiary for recognition, and there are no representation proceedings
or petitions seeking a representation proceeding presently pending against or,
to the knowledge of the Company, threatened to be brought or filed against the
Company or any Subsidiary, with the National Labor Relations Board or other
labor relations tribunal; there is no organizing activity involving the Company
or any of the Subsidiaries pending or, to the Knowledge of the Company,
threatened by any labor organization or group of employees of the Company or any
its Subsidiaries.
(c) There are no (i) strikes, work stoppages, slowdowns, lockouts or
arbitrations (in the case of arbitrations which if adversely decided would
reasonably be expected to involve the payment of damages of more than $500,000)
or (ii) material grievances or other material labor disputes pending or, to the
Knowledge of the Company, threatened against or involving the Company or any of
its Subsidiaries. There are no unfair labor practice charges, grievances or
complaints pending or, to the Knowledge of the Company, threatened by or on
behalf of any employee or group
53
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of employees of the Company or any of its Subsidiaries that individually or in
the aggregate involve more than $500,000.
(d) Except as set forth in Section 4.14(d) of the Company Disclosure
Letter, there are no material complaints, charges or claims against the Company
and its Subsidiaries pending or, to the Knowledge of the Company, threatened to
be brought or filed with any Governmental Authority or in which an employee or
former employee of the Company or any of its Subsidiaries is a party or a
complainant based on, arising out of, in connection with, or otherwise relating
to the employment or termination of employment by the Company or a Subsidiary of
any individual, including any claim for workers' compensation or under the
Occupational Safety and Health Act of 1970, as amended. In the aggregate, the
complaints and charges set forth in Section 4.14(d) of the Company Disclosure
Letter would not have, singly or in the aggregate, a Material Adverse Effect
with respect to the Company even if each were resolved adversely to the Company
and its Subsidiaries.
(e) Hours worked by and payments made to employees of the Company and
its Subsidiaries have not been in material violation of the Federal Fair Labor
Standards Act or any other Applicable Law dealing with such matters.
(f) The Company and its Subsidiaries are in material compliance with
all Applicable Laws relating to the FCC-Equal Employment Opportunity Commission
standards and employment or termination of employment of labor (including, but
not limited to, leased workers and independent contractors), including all such
Applicable Laws and WARN relating to wages, hours, collective bargaining,
employment discrimination, civil rights, safety and health, workers'
compensation, pay equity and the collection and payment of withholding and/or
social security taxes and similar Taxes.
4.15 Absence of Changes or Events. Except as set forth in Section
----------------------------
4.15 of the Company Disclosure Letter or disclosed in the Company SEC Documents,
since the date of the most recent audited financial statements included in the
Company SEC Documents, the Company and its Subsidiaries have operated their
respective businesses only in the ordinary
54
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and usual course and in substantially the same manner as previously conducted
and there has not been:
(i) any damage, destruction or loss with respect to the properties or
assets of the Company or its Subsidiaries whether covered by insurance or
not, which has had or would have, individually or in the aggregate, a
Material Adverse Effect with respect to the Company;
(ii) any change, occurrence or circumstance that had a Material
Adverse Effect with respect to the Company;
(iii) any change in the accounting principles, methods, practices or
procedures followed by the Company in connection with the business of the
Company or any change in the depreciation or amortization policies or rates
theretofore adopted by the Company in connection with the business of the
Company and its Subsidiaries;
(iv) any declaration or payment of any dividends, or other
distributions in respect of the outstanding shares of Capital Stock of the
Company or any of its Subsidiaries (other than dividends declared or paid
by wholly-owned Subsidiaries);
(v) any split, combination or reclassification of the Company's
capital stock or any issuance of shares of capital stock of the Company or
any Subsidiary or any other change in the authorized capitalization of the
Company or any Subsidiary, except as contemplated by this Agreement;
(vi) any repurchase or redemption by the Company of shares of its
capital stock or any issuance by the Company of any other securities in
exchange or in substitution for shares of its capital stock except pursuant
to employee benefit plans, programs or arrangements in existence on the
date hereof, in the ordinary course of business consistent with past
practice; or
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(vii) any grant or award of any options, warrants, conversion rights
or other rights to acquire any shares of capital stock of the Company or
any Subsidiary, except as contemplated by this Agreement or except pursuant
to employee benefit plans, programs or arrangements in existence on the
date hereof, in the ordinary course of business consistent with past
practice.
4.16 Unlawful Payments and Contributions. Neither the Company nor, to
-----------------------------------
the Knowledge of the Company, any of its directors, officers or any of its other
employees or agents has (a) used any Company funds for any unlawful
contribution, endorsement, gift, entertainment or other unlawful expense
relating to political activity; (b) made any direct or indirect unlawful payment
to any government official or employee from Company funds; (c) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977, as
amended, in connection with the Company's and its Subsidiaries' business; or (d)
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any Person or entity with respect to matters pertaining to the
Company.
4.17 Brokers and Intermediaries. Neither the Company nor any of its
--------------------------
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement and the Transaction
Documents, except that the Company has retained Lazard Freres & Co. LLC and
Allen & Company Incorporated as its financial advisors, whose respective fees
and expenses shall be paid by the Company. The Company has delivered to Acquiror
a copy of the retention agreements related thereto.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF ACQUIROR AND COMPANY SUB
Acquiror and Company Sub represent and warrant to the Company that
(provided that the representations and warranties set forth herein with respect
to Company Sub shall be made as of June __, 1996):
5.1 Organization and Authority. (a) Each of Acquiror, Company Sub,
--------------------------
and Acquiror's other Subsidiaries is a corporation or partnership duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization with all requisite power to enable
it to own, lease and operate its assets and properties and to conduct its
business as currently being conducted and is qualified and in good standing to
do business in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties owned or leased by it
requires such qualification, except to the extent the failure so to qualify
would not have a Material Adverse Effect with respect to Acquiror. Complete and
correct copies of the Certificates of Incorporation and Bylaws, each as amended
to date, of Acquiror and Company Sub have been delivered to the Company. Such
Certificates of Incorporation and Bylaws are in full force and effect.
(b) Acquiror and Company Sub have all requisite corporate power and
authority to execute and deliver this Agreement and the Transaction Documents to
which it is a party and to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and such Transaction Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action on the part of Acquiror and Company
Sub. This Agreement and each Transaction Document to which it is a party has
been duly executed and delivered by Acquiror and Company Sub and constitutes the
legal, valid and binding obligation of each such party, enforceable against it
in accordance with its terms, except (i) as such enforceability
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may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and (ii) as the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
5.2 Capitalization. (a) As of the date hereof, the authorized
--------------
capital stock of Acquiror consists of (i) 2,000,000,000 shares of U S WEST
Communications Group Common Stock, par value $.01 per share ("Communications
Stock"), of which 475,604,443 shares were issued and outstanding as of February
23, 1996, all of which are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights created by statute,
Acquiror's Restated Certificate of Incorporation or any agreement to which
Acquiror is a party or by which Acquiror is bound, (ii) 2,000,000,000 shares of
Media Stock, of which 473,225,728 shares were issued and outstanding as of
February 23, 1996, all of which are duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights created by statute,
Acquiror's Restated Certificate of Incorporation or any agreement to which
Acquiror is a party or by which Acquiror is bound, and (iii) 200,000,000 shares
of Preferred Stock, par value $1.00 per share, of which (A) 10,000,000 shares
have been designated as Series A Junior Participating Cumulative Preferred
Stock, none of which are issued and outstanding and all of which are reserved
for issuance in connection with rights to purchase Communications Stock pursuant
to the Amended and Restated Rights Agreement, dated as of October 31, 1995 (the
"Rights Agreement"), by and between Acquiror and State Street Bank and Trust
Company, as rights agent, (B) 10,000,000 shares have been designated as Series B
Junior Participating Cumulative Preferred Stock, none of which are issued and
outstanding and all of which are reserved for issuance in connection with rights
to purchase Media Stock pursuant to the Rights Agreement, and (C) 50,000 shares
have been designated as Series C Cumulative Redeemable Preferred Stock and are
issued and outstanding, all of which are duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights created by statute,
Acquiror's Restated Certificate of Incorporation or Bylaws or any agreement to
which Acquiror
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is a party or by which Acquiror is bound. As of the date hereof, the Number of
Shares Issuable with Respect to the InterGroup Interest (as defined in Section
2.6.19 of Article V of Acquiror's Restated Certificate of Incorporation) is
zero. The authorized capital stock of Company Sub consists of _____ shares of
common stock, par value $.01 per share, all of which have been validly issued,
are fully paid and nonassessable and are owned by Acquiror, free and clear of
any Encumbrance.
(b) Other than as described in this Section 5.2, in the Acquiror SEC
Documents or in Section 5.2 of the Letter from Acquiror, dated the date hereof,
addressed to the Company (the "Acquiror Disclosure Letter"), no shares of the
capital stock of Acquiror or Company Sub are authorized, issued or outstanding,
or reserved for any other purpose, and there are no options, warrants or other
rights (including registration rights), agreements, arrangements or commitments
of any character to which Acquiror or Company Sub is a party relating to the
issued or unissued capital stock of Acquiror or Company Sub or any obligation of
Acquiror or Company Sub to grant, issue or sell any shares of capital stock of
Acquiror or Company Sub by sale, lease, license or otherwise. Except as
disclosed in the Acquiror SEC Documents or in Section 5.2 of the Acquiror
Disclosure Letter, neither Acquiror nor Company Sub has any outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote or which are convertible into or exercisable for securities having the
right to vote with the stockholders of Acquiror or Company Sub on any matter.
Except as set forth in Section 5.2 of the Acquiror Disclosure Letter there are
no voting trusts or other agreements or understandings with respect to the
voting of the capital stock of Acquiror or Company Sub.
5.3 No Conflicts. Subject to obtaining the Acquiror Consents (as
------------
defined in Section 5.5), the execution and delivery by Acquiror and Company Sub
of this Agreement and each of the Transaction Documents to which it is a party
do not, and the consummation of the transactions contemplated hereby and thereby
and compliance with the terms hereof and thereof will not, conflict with, or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of
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termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or to the increased, additional, accelerated or
guaranteed rights or entitlements of any Person under, or result in the creation
of any Encumbrances upon any of the properties or assets of Acquiror or Company
Sub under, any provision of (i) the Certificate of Incorporation and Bylaws of
Acquiror or Company Sub, (ii) any note, bond, mortgage, indenture or deed of
trust, deed to secure debt or any license, lease, contract, commitment, permit,
concession, franchise, agreement or other binding arrangement to which Acquiror
or Company Sub is a party or by which any of their respective properties or
assets may be bound or subject, (iii) any judgment, order, writ, injunction or
decree of any court, governmental body, administrative agency or arbitrator
applicable to Acquiror or Company Sub or their respective properties or assets,
or (iv) any law, statute, rule, regulation or judicial or administrative
decision applicable to Acquiror or Company Sub; except in the case of clauses
(ii) and (iv), such conflicts, violations and defaults, termination,
cancellation and acceleration rights and entitlements and Encumbrances that in
the aggregate would not hinder or impair the consummation of the transactions
contemplated hereby or have a Material Adverse Effect with respect to Acquiror.
5.4 Stockholder Vote. At such time as all conditions to the Merger
----------------
have otherwise been satisfied, no vote of the holders of any class or series of
Acquiror's or Company Sub's capital stock not theretofore obtained will be
necessary or required (under Applicable Law or otherwise) to approve this
Agreement and the transactions contemplated hereby.
5.5 Consents. Except for (i) as set forth in Section 5.5 of the
--------
Acquiror Disclosure Letter, (ii) compliance with and filings under the HSR Act,
(iii) the filing with the SEC by Acquiror of a registration statement on Form S-
4 registering under the Securities Act the shares of Media Stock and Series D
Preferred Stock to be issued in the Merger (the "Form S-4"), the filing with the
SEC by Acquiror of a registration statement on Form 8-A registering under the
Exchange Act the Series D Preferred Stock and such reports under the Exchange
Act as may be
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required in connection with this Agreement and the transactions contemplated
hereby, (iv) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware and appropriate documents with the relevant authorities
of other states in which the Company is qualified to do business, (v) such
filings and approvals as may be required by any applicable state securities,
"blue sky" or takeover laws, (vi) such filings in connection with Gains Taxes,
(vii) the filing by Acquiror of a Certificate of Designation with respect to the
Series D Preferred Stock (as contemplated by Section 7.17) with the Secretary of
State of the State of Delaware immediately prior to the Effective Time (the
items in clauses (i) through (vii) being collectively referred to herein as
"Acquiror Consents"), no consents, approvals, licenses, permits, orders or
authorizations of, or registrations, declarations, notices or filings with, any
Governmental Authority or any Third Party are required to be obtained or made by
or with respect to Acquiror or Company Sub in connection with the execution,
delivery and performance of this Agreement or any of the other agreements
contemplated hereby to which it is a party or the consummation of the
transactions contemplated hereby and thereby or the taking by Acquiror or
Company Sub of any other action contemplated hereby or thereby, which, if not
obtained or made, would have a Material Adverse Effect with respect to Acquiror.
5.6 Compliance; No Defaults. (a) Except as set forth in Section 5.6
-----------------------
of the Acquiror Disclosure Letter, neither Acquiror nor any of its Subsidiaries
is in violation of, is, to the knowledge of Acquiror, under investigation with
respect to any violation of, has been given notice or been charged with
violation of, or failed to comply with any Applicable Laws, except for
violations and failures to comply that would not have a Material Adverse Effect
with respect to Acquiror. Except as set forth in Section 5.6 of the Acquiror
Disclosure Letter, Acquiror and its Subsidiaries have all Permits which are
material to the operation of the businesses of Acquiror and its Subsidiaries.
(b) Neither Acquiror nor any of its Subsidiaries is in default or
violation (and no event has occurred which, with notice or the lapse of time or
both, would constitute a
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default or violation) of any term, condition or provision of (i) its Certificate
of Incorporation or Bylaws or other comparable organizational document or (ii)
any note, bond, mortgage, indenture, license, agreement or other instrument or
obligation to which Acquiror or any of its Subsidiaries is now a party or by
which Acquiror or any of its Subsidiaries or any of their respective properties
or assets may be bound, except in the case of clause (ii), for defaults or
violations which in the aggregate would not have a Material Adverse Effect with
respect to Acquiror.
5.7 Acquiror SEC Documents; Undisclosed Liabilities. (a) Acquiror
-----------------------------------------------
has filed all required reports, schedules, registration statements and
definitive proxy statements with the SEC since January 1, 1993 (as such
documents have since the time of their filing been amended, the "Acquiror SEC
Documents"). As of their respective dates, the Acquiror SEC Documents (including
any financial statements filed, to be filed or required to have been filed as a
part thereof) complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and regulations
of the SEC thereunder applicable to such Acquiror SEC Documents, and none of the
Acquiror SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial state ments of Acquiror included in the
Acquiror SEC Documents comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present (subject, in the case of the
unaudited financial statements, to normal, recurring audit adjustments, which
were not individually or in the aggregate material) the consolidated financial
position of Acquiror and its consolidated Subsidiaries as at the dates thereof
and the consolidated results of their operations and cash flows for the periods
then ended.
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(b) Except as disclosed in the Acquiror SEC Documents or in Section
5.7 of the Acquiror Disclosure Letter, as of the date hereof, Acquiror and its
Subsidiaries do not have any material indebtedness, obligations or liabilities
of any kind (whether accrued, absolute, contingent or otherwise, and whether due
or to become due or asserted or unasserted) required by GAAP to be reflected on
a consolidated balance sheet of Acquiror and its consolidated Subsidiaries or in
the notes, exhibits or schedules thereto.
5.8 Litigation. Except as set forth in the Acquiror SEC Documents or
----------
in Section 5.8 of the Acquiror Disclosure Letter, there are no Legal Proceedings
against or affecting Acquiror or any of its Subsidiaries or their respective
properties or assets pending or, to the knowledge of Acquiror, threatened, that
individually or in the aggregate could (i) have a Material Adverse Effect with
respect to Acquiror or (ii) prevent, hinder or materially delay the consummation
of the transactions contemplated by this Agreement or the Transaction Documents.
Except as set forth in Section 5.8 of the Acquiror Disclosure Letter, neither
Acquiror nor any of its Subsidiaries is a party or subject to or in default
under any judgment, order, injunction or decree of any Governmental Authority
applicable to it or to its respective properties or assets, which judgment,
order, injunction, decree or default thereunder constitutes a Material Adverse
Effect with respect to Acquiror.
5.9 Absence of Changes or Events. Except as disclosed in the
----------------------------
Acquiror SEC Documents, since the date of the most recent audited financial
statements included in the Acquiror SEC Documents, Acquiror and its Subsidiaries
have conducted their business operations only in the ordinary course and there
has not occurred (i) any change, occurrence or circumstance that had any
Material Adverse Effect with respect to Acquiror or (ii) other events or
conditions of any character that, individually or in the aggregate, have or
would reasonably be expected to have, a Material Adverse Effect with respect to
Acquiror or on the ability of Acquiror or Company Sub to perform their
respective material obligations under this Agreement and the Transaction
Documents to which it is a party.
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5.10 Brokers and Intermediaries. Neither Acquiror or Company Sub nor
--------------------------
any of their respective officers, directors or employees has employed any broker
or finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated by this Agreement
and the Transaction Documents, except that Acquiror has retained Lehman Brothers
Inc., as its financial advisor, whose fees and expenses shall be paid by
Acquiror.
5.11 Ownership of Company Capital Stock. Neither Acquiror nor any of
----------------------------------
its Subsidiaries owns, directly or indirectly, any shares of Company Capital
Stock.
5.12 Operations of Company Sub. Company Sub was formed solely for
-------------------------
the purpose of engaging in the transactions contemplated by this Agreement and
has not engaged in any business activities or conducted any operations other
than in connection with the transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Conduct of Business of the Company. Except as otherwise
----------------------------------
expressly permitted by the terms of this Agreement, from the date hereof to the
Effective Time, the Company shall, and shall cause its Subsidiaries to, carry on
their respective businesses in the ordinary course in substantially the same
manner as presently conducted (including with respect to advertising, promotions
and capital expenditures) and in compliance in all material respects with
Applicable Laws, use their reasonable best efforts consistent with past
practices to keep available the services of the present employees of the Company
and its Subsidiaries and to preserve their relationships with customers,
suppliers and others with whom the Company and its Subsidiaries deal to the end
that their goodwill and ongoing businesses shall not be materially impaired in
any material respect at the Closing Date. The Company shall not, and shall cause
its Subsidiaries not to, take any
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action that would, or that is reasonably likely to, result in any of the
representations and warranties of the Company set forth in Article IV being
untrue in any material respect as of the date made or in any of the conditions
to the consummation of the Merger set forth herein not being satisfied. In
addition, and without limiting the generality of the foregoing, except as
otherwise expressly permitted by the terms of this Agreement or as set forth in
Section 6.1 of the Company Disclosure Letter, during the period from the date
hereof to the Effective Time, the Company shall not (and shall cause its
Subsidiaries not to), without the written consent of Acquiror, which decision
regarding consents shall be made promptly (in light of its circumstances) after
receipt of notice seeking such consent:
(i) except for the Charter Amendments, amend its Certificate of
Incorporation, Bylaws or other comparable organizational documents;
(ii) subject to Sections 7.7 and 7.14(b), redeem or otherwise acquire
any shares of its capital stock, or issue any capital stock or any option,
warrant or right relating thereto or any securities convertible into or
exchangeable for any shares of its capital stock, or split, combine or
reclassify any of its capital stock or issue any securities in exchange or
in substitution for shares of its capital stock;
(iii) subject to Section 7.14(b), (A) grant or agree to grant to any
employee any increase in wages or bonus, severance, profit sharing,
retirement, deferred compensation, insurance or other compensation or
benefits, or establish any new compensation or benefit plans or
arrangements, or amend or agree to amend any existing Benefit Plans or
Equity Appreciation Rights Plans, except as may be required under existing
agreements or in the ordinary course of business consistent with past
practices or (B) enter into any new RSPA or amend the terms of any existing
RSPA or accelerate the vesting of any shares of Class B Common Stock issued
thereunder;
(iv) merge, amalgamate or consolidate with any other entity in any
transaction in which the Company is
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not the surviving corporation (other than mergers between Subsidiaries of
the Company), sell all or substantially all of its business or assets, or
acquire all or substantially all of the business or assets of any other
Person;
(v) enter into or amend any employment, consulting, severance or
similar agreement with any individual, except with respect to severance
gifts or payments of a nominal nature to persons holding non-
officer/executive level positions in the ordinary course of business
consistent with past practice;
(vi) subject to Section 7.7, declare, set aside or make any
dividends, payments or distributions in cash , securities or property to
the stockholders of the Company, whether or not upon or in respect of any
share of Company Capital Stock;
(vii) incur or assume any Indebtedness other than as specifically set
forth in Section 6.1(vii) of the Company Disclosure Letter;
(viii) voluntarily grant any material Encumbrance on any of its
material assets, other than Encumbrances that are incurred in the ordinary
course of business;
(ix) make any change in any method of accounting or accounting
practice or policy, except as required by Applicable Laws or by GAAP;
(x) make or incur any capital expenditures that are not set forth in
Section 6.1(x) of the Company Disclosure Letter or that, individually, are
in excess of $25 million or, in the aggregate, in excess of $50 million;
(xi) subject to Section 7.7, sell, lease, swap or otherwise dispose
of any assets, other than (A) sales, leases, swaps or other dispositions of
such assets not having a fair market value in excess of $15 million
individually or $30 million in the aggregate (so long as the Company
provides notice to Acquiror of any sale, lease, swap or other disposition
of any asset having a
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fair market value of greater than $5 million) or (B) swaps of Systems or
assets of Systems in order to facilitate the clustering of Systems or
dispose of Systems located in the Acquiror Region; provided, however, that
-------- -------
(1) such swaps shall not in the aggregate involve more than 500,000
Subscribers of the Company or its Subsidiaries, (2) any cable television
systems acquired by the Company or any of its Subsidiaries in any such swap
shall not be located in the Acquiror Region, (3) any cable television
systems acquired by the Company in any such swap shall not be in a
franchise area where there is a substantial overbuild with any other CATV
system owned by the Company, Acquiror or any of their respective
Affiliates, (4) the aggregate amount of cash paid by the Company or any of
its Subsidiaries in any such swap shall not exceed $50 million in the
aggregate, (5) any such swap shall require the approval of Acquiror, which
approval shall not be unreasonably withheld and Acquiror shall be
reasonably satisfied that the Company has received substantially equivalent
value including cash or other assets and (6) to the extent that the Company
or any Subsidiary must apply for the consent of the Governmental Authority
as a condition to the transfer of control or assignment of any Franchise
associated with any such swap, such application shall include an
application to the Governmental Authority, and relevant information
relating to the proposed transaction, requesting contemporaneous approval
for the anticipated acquisition of the Company or its Subsidiary by
Acquiror or Company Sub as contemplated herein and the transfer of control
of said Franchise to the Surviving Corporation in accordance with the terms
hereof; and provided, further, that any consent required from a
-------- -------
Governmental Authority as a condition to consummating such swap shall be
deemed a Required Franchise Consent;
(xii) acquire or agree to acquire by merging or consolidating with,
or by purchasing all or a substantial portion of the assets of or equity
in, or by any other manner, any business of any Person or acquire or agree
to acquire any assets (other than supplies, raw materials and inventory in
the ordinary
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course, capital expenditures permitted by clause (x) above and asset swaps
permitted by clause (xi) above);
(xiii) abandon, avoid, dispose, surrender, fail to file for timely
renewal, terminate or amend in any materially adverse manner the terms of
any material Franchises, any FCC license that would have a material adverse
effect on the operation of a System or the Social Contract Order, except as
amended by virtue of the proposed Social Contract Amendment, or, with
respect to any Material Franchise, fail to file for renewal pursuant to
Section 626(a) of the Cable Act;
(xiv) delete any programming service on the Systems or make material
change in the programming services offered on the Systems other than in the
ordinary course of business or as required by the Cable Act, the Social
Contract Order or any amendments thereto;
(xv) except as otherwise permitted by clauses (xi) and (xii), modify,
amend, terminate, renew or fail to use reasonable efforts to renew any
material contract or agreement necessary to continue the Company's business
in the ordinary course or waive, release or assign any material rights or
claims, other than in the ordinary course of business;
(xvi) offer free or reduced-price service as an inducement to any
Person, except in the ordinary course of business consistent with past
practice;
(xvii) except as permitted by Applicable Law, including the Social
Contract Order and any amendments thereto, (A) except as disclosed to
Acquiror in writing at least 30 days prior to any rate change, implement
any rate change, retiering or repackaging of CATV programming offered by
any of the Company's Subsidiaries, (B) except as disclosed in writing to
Acquiror at least 30 days prior to any cost-of-service rate change, make
any cost-of-service election under the rules and regulations adopted under
the Cable Act, (C) determine a method of refund pursuant to 47 C.F.R.
Section 76.942(d) or 76.961(c) or (D) amend any
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Franchise or agree to make any payments or commitments, including
commitments to make future capital improvements or provide future services,
in connection with any renewal of any Franchise other than that which the
Company would make in the ordinary course of business;
(xviii) enter into any agreement, understanding or commitment that
restrains, limits or impedes the ability of the Company or Acquiror to
compete with or conduct any business or line of business;
(xix) invest or enter into any agreement, understanding or
commitment, whether written or oral, by or on behalf of the Company or its
Subsidiaries, to invest or provide additional capital in respect of assets,
businesses or entities; provided, however, that the restrictions contained
-------- -------
in this clause shall not apply to existing commitments as set forth in
Section 6.1(xix) of the Company Disclosure Letter or to any investments not
in excess of $10 million individually or $20 million in the aggregate;
(xx) except as otherwise provided in clause (xix) above or Section
7.14, enter into any material contract or agreement with, or make any loan
or advance to, any Affiliate (other than a wholly owned Subsidiary) of the
Company or any stockholder or Affiliate thereof;
(xxi) enter into, or amend the terms of, any agreement relating to
interest rate swaps, caps or other hedging or derivative instruments
relating to Indebtedness of the Company and its Subsidiaries, except as
required under agreements relating to existing Indebtedness and
Indebtedness permitted by clause (vii) above;
(xxii) conduct its business in a manner or take, or cause to be
taken, any other action (including, without limitation, effecting or
agreeing to effect or announcing an intention or proposal to effect, any
acquisition, business combination, merger, consolidation, restructuring or
similar transaction) that would or might reasonably be expected to prevent
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Acquiror, Company Sub or the Company from consummating the transactions
contemplated hereby in accordance with the terms of this Agreement
(regardless of whether such action would otherwise be permitted or not
prohibited hereunder), including, without limitation, any action which may
limit the ability of Acquiror, Company Sub or the Company to consummate the
transactions contemplated hereby as a result of antitrust or other
regulatory concerns;
(xxiii) purchase, sell or trade (or announce any intention or
proposal to purchase, sell or trade) any shares of Media Stock, or take any
other action a principal purpose of which is to affect the calculation of
the Determination Price; or (xxiv) agree, whether in writing or otherwise,
to do any of the foregoing.
Prior to the date hereof, Acquiror delivered to the Company a list (which the
Acquiror may update from time to time) designating certain individuals of
Acquiror to whom the Company may direct requests for consents under this Section
6.1.
6.2 Conduct of Business of Acquiror and Company Sub. (a) Except as
-----------------------------------------------
set forth in Section 6.2 of the Acquiror Disclosure Letter, from the date hereof
to the Effective Time, Acquiror shall not (and shall cause its Subsidiaries not
to):
(i) issue shares of Media Stock or any option, warrant or right
relating thereto or any securities convertible into or exchangeable for any
shares of Media Stock at less than fair market value as determined by the
board of directors of Acquiror (other than pursuant to the terms of
existing options or benefit plans), or split, combine, redeem, convert or
reclassify the Media Stock or issue any securities in exchange or in
substitution for shares of Media Stock;
(ii) amend its Certificate of Incorporation or Bylaws (other than the
filing of a Certificate of Designation for the issuance of any series of
Preferred
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Stock) in any manner adverse to the holders of Media Stock;
(iii) declare, set aside or make any dividends or distributions in
cash, securities or property to holders of Media Stock;
(iv) conduct its business in a manner or take, or cause to be taken,
any other action (including, without limitation, effecting or agreeing to
effect or announcing an intention or proposal to effect, any acquisition,
business combination, merger, consolida tion, restructuring or similar
transaction) that would or might reasonably be expected to prevent
Acquiror, Company Sub or the Company from consummating the transactions
contemplated hereby in accordance with the terms of this Agreement
(regardless of whether such action would otherwise be permitted or not
prohibited hereunder), including, without limitation, any action which may
limit the ability of Acquiror, Company Sub or the Company to consummate the
transactions contemplated hereby as a result of antitrust or other
regulatory concerns;
(v) take any action that would, or that is reasonably likely to,
result in any of the representa tions and warranties of Acquiror or Company
Sub set forth in Article V being untrue in any material respect as of the
date made or any of the conditions to the Merger set forth herein not being
satisfied;
(vi) purchase, sell (other than through primary issuances) or trade
(or announce any intention or proposal to purchase, sell or trade) any
shares of Media Stock, or take any other action a principal purpose of
which is to affect the calculation of the Determination Price, other than
pursuant to benefit plans in the ordinary course of business;
(vii) sell all or substantially all of the properties and assets of
the Media Group (within the meaning of Section 2.4.1(B) of Article V of the
Restated Certificate of Incorporation of Acquiror); or
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(viii) acquire, or agree to acquire, any shares of Company Capital
Stock if, after giving effect to such acquisition and the purchase of the
Put Shares pursuant to Section 9.4, Acquiror would beneficially own 10% or
more of the Company Capital Stock.
(b) During the period of time from the date hereof to the Effective
Time, Company Sub shall not engage in any activities of any nature, except as
provided in or contemplated by this Agreement.
6.3 Access to Information. (a) From the date hereof until the
---------------------
Closing Date, the Company shall permit Acquiror and its representatives to have
full access to the management, facilities, suppliers, accounts, books, records
(including, without limitation, budgets, forecasts and personnel files and
records), contracts and other materials of the Company and its Subsidiaries
reasonably requested by Acquiror or such representatives and to make available
to Acquiror and its representatives the directors, officers, employees and
independent accountants of the Company for interviews for the purpose, among
other things, of verifying the information furnished to Acquiror, developing
transition plans and integrating the operations of the Company and its
Subsidiaries with the operations of Acquiror and its Subsidiaries and
Affiliates. Such access shall be subject to existing confidentiality agreements
and shall be conducted by Acquiror and its representatives during normal
business hours, upon reasonable advance notice and in such a manner as not to
interfere unreasonably with the business or operations of the Company and its
Subsidiaries.
(b) From the date hereof until the Closing Date, Acquiror and Company
Sub shall permit the Company and its representatives to have full access to the
management, facilities, suppliers, accounts, books, records (including, without
limitation, budgets and forecasts), contracts and other materials of the Media
Group reasonably requested by the Company or such representatives and to make
available to the Company and its representatives the directors, officers,
employees and independent accountants of the Media Group for interviews for the
purpose, among other things, of verifying the information furnished to the
Company. Such access shall be subject to existing confidentiality agreements and
shall
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be conducted by the Company and its representatives during normal business
hours, upon reasonable advance notice and in such a manner as not to interfere
unreasonably with the business or operations of the Media Group.
(c) Each of the Company, Acquiror and Company Sub agrees that it will
not, and will cause each of their respective Affiliates and representatives not
to, use any information obtained pursuant to this Section 6.3 for any purpose
unrelated to the consummation of the transactions contemplated by this
Agreement. The Confidentiality Agreement, dated as of September 26, 1994, as
amended on January 11, 1996, between Acquiror and the Company and the
Confidentiality Agreement, dated as of April 19, 1995, between Acquiror and the
Company (the "Confidentiality Agreements") shall apply with respect to
information furnished thereunder or hereunder and any other activities
contemplated thereby.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Preparation of Form S-4 and the Proxy Statement; Stockholders'
--------------------------------------------------------------
Meeting; Charter Amendments. (a) Promptly following the date of this Agreement,
- ---------------------------
the Company shall prepare and file with the SEC the Proxy Statement and Acquiror
shall prepare and file with the SEC the Form S-4, in which the Proxy Statement
will be included as a prospectus. Each of the Company and Acquiror shall use its
reasonable best efforts to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing. The Company shall
use its reasonable best efforts to cause the Proxy Statement to be mailed to the
Company's stockholders, as promptly as practicable after the Form S-4 is
declared effective under the Securities Act. Acquiror shall also take any action
(other than qualifying to do business in any jurisdiction in which it is not now
so qualified or consenting to service of process in any jurisdiction in which it
has not previously so consented in any action other than one arising out of the
offering of the Media Stock and the Series D Preferred Stock in such
jurisdiction) required to be taken to qualify the
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Media Stock and Series D Preferred Stock to be issued in the Merger under any
applicable state securities or "blue sky" laws prior to the Effective Time, and
the Company shall furnish all information concerning the Company and the holders
of the Company Capital Stock as may be reasonably requested in connection with
any such action.
(b) None of the information supplied or to be supplied by the
Company, on the one hand, or Acquiror and Company Sub, on the other hand, for
inclusion or incorporation by reference in (i) the Form S-4 will, at the time
the Form S-4 is filed with the SEC, at any time it is amended or supplemented or
at the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(ii) the Proxy Statement will, at the date it is first mailed to the
stockholders of the Company or at the time of each Stockholders' Meeting (as
defined in Section 7.1(d)), contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement and the Form S-4 will comply
as to form in all material respects with the requirements of the Exchange Act or
the Securities Act, as the case may be. Notwithstanding the foregoing, (i) no
representation is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied in writing by
Acquiror and Company Sub specifically for inclusion or incorporation by
reference in the Proxy Statement and (ii) no representation is made by Acquiror
and Company Sub with respect to statements made or incorporated by reference
therein based on information supplied in writing by the Company specifically for
inclusion or incorporation by reference in the Form S-4.
(c) The Company and Acquiror shall cooperate with each other and
provide to each other all information necessary in order to prepare the Proxy
Statement and the Form S-4. The Company and Acquiror shall notify each other
promptly of the receipt of any comments from the SEC or its staff and of any
requests by the SEC or its staff for
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amendments or supplements to the Form S-4 or the Proxy Statement or for
additional information and shall supply the other parties with copies of all
correspondence between the Company or any of its representatives, or Acquiror or
any of its representatives, as the case may be, on the one hand, and the SEC or
its staff, on the other hand, with respect thereto. The Company and Acquiror
shall use their respective reasonable best efforts to respond to any comments of
the SEC with respect to the Form S-4 and the Proxy Statement as promptly as
practicable. If at any time prior to the Effective Time there shall occur (i)
any event with respect to the Company or any of its Subsidiaries, or with
respect to other information supplied by the Company for inclusion in the Proxy
Statement or (ii) any event with respect to Acquiror or any of its Subsidiaries,
or with respect to other information supplied by Acquiror for inclusion in the
Form S-4, in either case which event is required to be described in an amendment
of, or a supplement to, the Proxy Statement or Form S-4, such event shall be so
described, and such amendment or supplement shall be promptly filed with the SEC
and, as required by law, disseminated to the stockholders of the Company.
Acquiror shall notify the Company promptly upon (i) the declaration by the SEC
of the effectiveness of the Form S-4, (ii) the issuance or threatened issuance
of any stop order or other order preventing or suspending the use of any
prospectus relating to the Form S-4, (iii) any suspension or threatened
suspension of the use of any prospectus relating to the Form S-4 in any state,
(iv) any proceedings commenced or threatened to be commenced by the SEC or any
state securities commission that might result in the issuance of a stop order or
other order or suspension of use or (v) any request by the SEC to supplement or
amend any prospectus relating to the Form S-4 after the effectiveness thereof.
Acquiror and, to the extent applicable, the Company, shall use its reasonable
best efforts to prevent or promptly remove any stop order or other order
preventing or suspending the use of any prospectus relating to the Form S-4 and
to comply with any such request by the SEC or any state securities commission to
amend or supplement the Form S-4 or the prospectus relating thereto.
(d) The Company shall, as promptly as practicable, duly call, give
notice of, convene and hold a meeting
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of its stockholders (the "Initial Stockholders' Meeting") for the purpose of
obtaining the Stockholder Approvals. The Company shall use its reasonable best
efforts to hold such meeting as soon as practicable. In the event the
Consideration Charter Amendment is not adopted at the Initial Stockholders'
Meeting, the Company shall, as promptly as practicable following the date of the
Initial Stockholders' Meeting, duly call, give notice of, convene and hold
another meeting of its stockholders (the "Additional Stockholders' Meeting" and,
together with the Initial Stockholders' Meeting, collectively, the
"Stockholders' Meetings" and individually, a "Stockholders' Meeting") for the
purpose of obtaining adoption of the Consideration Charter Amendment and any
other Stockholder Approvals not previously obtained. The Company shall, as
promptly as practicable after the date of the Initial Stockholders' Meeting,
hold the Additional Stockholders' Meeting. Subject to the fiduciary duties of
the Board of Directors under Applicable Laws and to Section 9.1(g), the Company
shall, through the Board of Directors, recommend to its stockholders adoption of
this Agreement, the Charter Amendments and the other transactions contemplated
hereby and shall use its best efforts to solicit from stockholders proxies in
favor of adoption of this Agreement and the Charter Amendments and to take all
other action necessary to secure the Stockholder Approvals at the Initial
Stockholders' Meeting or the Additional Stockholders' Meeting, as the case may
be. Without limiting the generality of the foregoing, the Company agrees that
its obligations pursuant to the first and third sentences of this Section 7.1(d)
shall not be altered by the commence ment, public proposal or communication to
the Company of any Acquisition Proposal (as defined in Section 7.10).
(e) Subject to receipt of the Stockholder Approvals, the Company
shall take all actions necessary to cause a Certificate of Amendment containing
the Consideration Charter Amendment to be executed, acknowledged and filed and
to become effective no later than immediately prior to the Effective Time in
accordance with the DGCL as soon as practicable after the approval thereof at a
Stockholders' Meeting.
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(f) The Company shall make stock transfer records relating to the
Company available to Acquiror to the extent reasonably necessary to effectuate
the intent of this Agreement.
7.2 Letter of the Company's Accountants. The Company shall use its
-----------------------------------
reasonable best efforts to cause to be delivered to Acquiror letters of (i)
Deloitte & Touche LLP, the Company's independent public accountants and (ii) any
other independent public accountants whose reports are included or incorporated
by reference in the Form S-4, each dated a date within two business days before
the date on which the Form S-4 shall become effective and addressed to Acquiror,
in form and substance reasonably satisfactory to Acquiror and customary in scope
and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
7.3 Letter of Acquiror's Accountants. Acquiror shall use its
--------------------------------
reasonable best efforts to cause to be delivered to the Company a letter of
Coopers & Lybrand L.L.P., Acquiror's independent public accountants, dated a
date within two business days before the date on which the Form S-4 shall become
effective and addressed to the Company, in form and substance reasonably
satisfactory to the Company and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Form S-4.
7.4 Reasonable Best Efforts. Subject to the terms and conditions of
-----------------------
this Agreement, including, without limitation, Section 7.6, each of the parties
hereto agrees to use its reasonable best efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable under Applicable Laws and regulations to consummate and make effective
the transactions contemplated by this Agreement (including the execution of the
Transaction Documents to which they or any of their Affiliates are a party),
subject to the Stockholder Approval, including (a) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Authorities and the making of it all necessary registrations and
filings (including filings with Governmental Authorities, if any), and the
taking of all
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reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by, any Governmental Authorities, (b) the
obtaining of all necessary consents, approvals or waivers from Third Parties and
(c) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by this Agreement and the Transaction
Documents. In furtherance of the foregoing, Acquiror and the Company each shall
furnish to the other such necessary information and reasonable assistance as the
other may request in connection with obtaining any consents required to be
obtained by it or its Subsidiaries hereunder.
7.5 Franchise and License Consents. (a) Without limiting the
------------------------------
generality of Section 7.4, the Company and Acquiror shall each use their
respective reasonable best efforts to obtain all Franchise Consents and License
Consents, including taking the actions specified herein. In order to secure the
Franchise Consents and License Consents from Governmental Authorities and the
FCC, the Company shall proceed immediately in good faith and using its
reasonable best efforts, to prepare, file and prosecute each Franchise Consent
and License Consent from the relevant Governmental Authority and the FCC, with
the full right of participation by Acquiror including, without limitation, the
right of prior review and approval of correspondence or forms of transfer
resolutions, applications, ordinances or agreements to be submitted to
Governmental Authorities and the FCC (which approval shall not be unreasonably
withheld or delayed) and to be represented at all meetings or hearings as may be
scheduled to consider such submissions. The Company shall send notice of the
transactions contemplated in this Agreement to all Governmental Authorities. The
Company shall submit to each Governmental Authority whose consent is required a
form of ordinance or resolution, as appropriate, relating to the transfer of the
Franchise, which ordinance or resolution shall be in a form reasonably
acceptable to Acquiror and the Company. The Company shall consult with Acquiror
and promptly and regularly notify Acquiror with regard to all material
developments of the Franchise Consent and License Consent process, and shall
give Acquiror reasonable prior notice of all meetings scheduled with the
Governmental Authorities and the FCC. Acquiror shall use its reasonable best
efforts to promptly
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assist the Company and shall take such prompt and affirmative actions as may
reasonably be necessary in obtaining such approvals and shall cooperate with the
Company in the preparation, filing and prosecution of such applications as may
reasonably be necessary, including the preparation, filing and prosecution of
any joint applications required to be filed with the Governmental Authorities or
the FCC, and agrees to use its reasonable best efforts to furnish all
information as is reasonably or as is customarily required by the approving
entity, and, if required by a Governmental Authority or the FCC upon reasonable
notice, Acquiror shall have the obligation to be represented at such meetings or
hearings as may be scheduled to consider such applications. Any administrative
filing fees imposed or expenses for which reimbursement is required by the
Governmental Authority in connection with obtaining the Franchise Consents or
the License Consents shall be borne by the Company and each of the parties shall
bear its own legal fees or other costs of professional advisors incurred in the
filing and prosection of such applications. If, in connection with obtaining
Franchise Consents or the License Consents from a Governmental Authority or the
FCC, a Governmental Authority or the FCC impose new, material Franchise or
license conditions as a condition to granting its consent, Acquiror and the
Company shall negotiate jointly with such Governmental Authority or the FCC with
respect to such conditions, with such conditions to be accepted only if
consented to by Acquiror and the Company, which consent shall not be
unreasonably withheld. Acquiror agrees that prior to the Closing Date, it will
not, without the prior written consent of the Company, seek amendments,
modifications or other changes to Franchises and shall not institute any
discussions with Governmental Authorities or the FCC without the prior written
consent of the Company and without offering a representative of the Company an
opportunity to participate or observe such discussions. To the extent such
request would not, in the reasonable judgment of the Company, delay or impair
the ability to obtain any Franchise Consents, any application to any
Governmental Authority for any Franchise Consent necessary for the transfer of
control of any Franchise shall request that the relevant Governmental Authority
also agree that no further Franchise Consent shall be required for the
subsequent transfer of control of, or assignment of, such
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Franchise to a specified Person identified in such application who is an
Affiliate of Acquiror to which Acquiror intends to transfer or assign the
Franchise immediately prior to Closing. In addition, the Company will use
reasonable best efforts to obtain necessary transfers of all private mobile
radio service licenses.
(b) To the extent that any Franchise Consents listed in Section 4.6
of the Company Disclosure Letter have not been obtained by Final Order prior to
Closing (such Franchises hereinafter referred to as the "Non-Required
Franchises"), Acquiror and the Company shall enter into negotiations to
determine the disposition of the Non-Required Franchises after Closing. In the
event that the parties agree to transfer any part of a System which includes, in
part, areas covered by a Non-Required Franchise (hereinafter the "Non-Required
Systems"), the parties shall continue to be subject to Section 7.5(a) until such
time as all Franchise Consents are obtained and the Non-Required Franchises are
transferred to Acquiror.
7.6 Antitrust Notification. (a) The Company and Acquiror shall as
----------------------
promptly as practicable, but in no event later than 30 Business Days following
the execution and delivery of this Agreement, file with the FTC and the DOJ the
notification and report form required for the transactions contemplated hereby
and any supplemental information requested in connection therewith pursuant to
the HSR Act. Each of Acquiror and the Company shall furnish to each other's
counsel such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission that is
necessary under the HSR Act. The Company and Acquiror acknowledge that more than
one filing may be required under the HSR Act in order to consummate the
transactions contemplated by this Agreement, and agree to cooperate and furnish
to each other's counsel such necessary information and reasonable assistance as
the other may request in connection with its preparation of any subsequent
filing.
(b) The Company and Acquiror shall keep each other apprised of the
status of any communications with, and any inquiries or requests for additional
information from,
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the FTC and the DOJ and shall comply promptly with any such inquiry or request.
(c) Each of the Company and Acquiror shall use its reasonable best
efforts to obtain any clearance required under the HSR Act for the consummation
of the Merger, which efforts, for purposes of this Agreement shall not, except
as provided in Section 7.6(d), require Acquiror in order to obtain any consent
or clearance from the DOJ or any other Governmental Authority to (i) hold
separate, sell or otherwise dispose of any assets, including assets of the
Company, the effect of any of which, in the reasonable judgment of Acquiror,
would be to materially impair the value of the Merger to Acquiror or (ii)
contest any suit brought or threatened by the FTC or DOJ or attempt to lift or
rescind any injunction or restraining order obtained by the FTC or DOJ adversely
affecting the ability of the parties hereto to consummate the transactions
contemplated hereby.
(d) For purposes of Section 7.6(c), "reasonable best efforts" shall
include entry into a consent decree in any action brought by the DOJ or into a
consent order with the FTC where such decree or order requires the divestiture
of the Designated Assets and of the assets set forth in Section 7.6(d) of the
Company Disclosure Letter, if and only if, such decree or order does not
require, either absolutely or conditionally, the divestiture of any other assets
or of the stock of any other corporation, or (except for reasonable and
customary compliance and other requirements ancillary to the required
divestiture) impose any additional requirement or limitation on Acquiror, on its
ability to operate its current and contemplated businesses, or on its ability to
acquire assets or stock in any corporation; and only if such decree or order
provides that Acquiror shall have a period of at least 12 months to effect such
divestiture itself and an additional 12 months to divest pursuant to a
reasonable and customary trusteeship provision.
7.7 Certain Actions. (a) Except as otherwise specifically limited
---------------
by this Agreement, each of the Company and Acquiror agrees to use its reasonable
best efforts and to take, or cause to be taken, all actions and to do, or
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cause to be done, all things necessary, proper or advisable to ensure that there
shall be no regulatory impediments, pursuant to the Communications Act, the
rules and regulations of the FCC, or otherwise, to the closing of the
transactions contemplated hereby and the Company agrees not to acquire any
assets or engage in any activities prior to the Closing of a type which Acquiror
would be precluded from acquiring or engaging in pursuant to the Communications
Act, the rules and regulations of the FCC or otherwise.
(b) On or prior to the Closing Date, the Company shall sell,
distribute to stockholders or otherwise dispose of the properties of the Company
and its Subsidiaries listed in Section 7.7 of the Company Disclosure Letter (the
"Designated Assets") in a manner acceptable to Acquiror, in its sole discretion.
(c) Not later than one hundred and twenty (120) days following the
date hereof, the Company and Acquiror shall agree to the fair market value of
the Designated Assets (the "Designated Asset Fair Market Value"). In the event
of a sale or other disposition of the Designated Assets for an amount less than
the Designated Asset Fair Market Value, the Share Price shall be reduced by the
quotient of (i) the excess of (x) the Designated Asset Fair Market Value over
(y) the amount of consideration received by the Company in respect of such sale
or disposition divided by (ii) the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time on a fully diluted basis,
including giving effect to the conversion of all outstanding shares of Company
Preferred Stock. In the event of a distribution of the Designated Assets to the
stockholders of the Company, the Share Price shall be reduced by an amount equal
to the quotient of (i) the Designated Asset Fair Market Value divided by (ii)
the number of shares of Company Common Stock outstanding immediately prior to
the Effective Time on a fully diluted basis, including giving effect to the
conversion of all outstanding shares of Company Preferred Stock. The amount of
any adjustment to the Share Price pursuant to this Section 7.7(c) shall be
referred to as the "Per Share Adjustment Amount" and the Cash Consideration
Amount shall be reduced by the Per Share Adjustment Amount multiplied by the
number of shares of Company Common Stock
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outstanding immediately prior to the Effective Time on a fully diluted basis,
including giving effect to the conversion of all outstanding shares of Company
Preferred Stock.
7.8 Supplemental Disclosure. The Company shall confer on a regular
-----------------------
and frequent basis with Acquiror, report on operational matters and promptly
notify Acquiror of, and furnish Acquiror with, any information it may reasonably
request with respect to, any event or condition or the existence of any fact
that would cause any of the conditions to the obligations of Acquiror and
Company Sub to consummate the Merger not to be completed, and Acquiror shall
promptly notify the Company of, and furnish the Company any information it may
reasonably request with respect to, any event or condition or the existence of
any fact that would cause any of the conditions to the Company's obligation to
consummate the Merger not to be completed.
7.9 Announcements. Prior to the Closing, none of the Company,
-------------
Acquiror or Company Sub shall issue any press release or otherwise make any
public statement with respect to this Agreement and the transactions
contemplated hereby without the prior consent of the other parties (which
consent shall not be unreasonably withheld), except as may be required by
Applicable Law or stock exchange regulations (including, without limitation,
pursuant to the United States Federal securities laws in connection with any
registration statement or report filed thereunder), in which event the party
required to make the release or announcement shall, if possible, allow the other
party reasonable time to comment on such release or announcement in advance of
such issuance.
7.10 No Solicitation. (a) From the date hereof until the
---------------
Effective Time, the Company shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any of its officers,
directors, employees, agents, investment bankers, attorneys, financial advisors
or other representatives or those of any of its Subsidiaries (collectively,
"Company Representatives") to, directly or indirectly, solicit, initiate or
encourage (including by way of furnishing information or assistance) or take
other action to facilitate any inquiries or the making of any
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proposal that constitutes or may reasonably be expected to lead to, an
Acquisition Proposal from any Third Party, or engage in any discussions or
negotiations relating thereto or in furtherance thereof or accept or enter any
agreement with respect to any Acquisition Proposal; provided, however, that,
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notwithstanding anything to the contrary in this Agreement, (i) prior to the
approval of this Agreement by the Stockholders of the Company, the Company may
engage in discussions or negotiations with, and may furnish information
concerning the Company and its business, properties and assets to, a Third Party
who, without any solicitation, initiation, encouragement, discussion or
negotiation, directly or indirectly, by or with the Company or any Company
Representatives, or in furtherance thereof makes a written, bona fide
Acquisition Proposal that is not subject to any material contingencies relating
to financing and that is reasonably capable of being financed and is financially
superior to the consideration to be received by the Company's stockholders
pursuant to the Merger (as determined in good faith by the Board of Directors
after consultation with the Company's financial advisors) if (1) the Board of
Directors determines in its good faith, after receipt of written advice of the
Company's outside legal counsel, that such action is advisable for the Board of
Directors to act in a manner consistent with its fiduciary duties under
Applicable Law and (2) prior to furnishing information with respect to the
Company and its Subsidiaries to, such Third Party, the Company shall receive
from such Third Party an executed confidentiality agreement in reasonably
customary form on terms not more favorable to such Person or entity than the
terms contained in the Confidentiality Agreements, or (ii) the Board of
Directors may take and disclose to the Company's stockholders a position with
regard to a tender offer or exchange offer to the extent required by Rule 14e-
2(a) under the Exchange Act. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the preceding sentence by
any investment banker or financial advisor retained by the Company, whether or
not such Person is purporting to act of behalf of the Company of any of its
Subsidiaries or otherwise, shall constitute a breach of this Section 7.10 by the
Company.
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(b) The Company shall promptly notify Acquiror orally and in writing
of any Acquisition Proposal or any inquiry with respect to or which could lead
to any Acquisition Proposal, within 24 hours of the receipt thereof, including
the identity of the Third Party making any such Acquisition Proposal or inquiry
and the material terms and conditions of any Acquisition Proposal, and if such
Acquisition Proposal or inquiry is in writing, shall deliver to Acquiror a copy
of such Acquisition Proposal or inquiry. The Company shall keep Acquiror
informed of the status and details of any such Acquisition Proposal or inquiry.
(c) The Company shall immediately cease and cause to be terminated
any existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any parties conducted heretofore by the Company or any Company
Representatives with respect to any of the foregoing.
(d) As used in this Agreement, "Acquisition Proposal" shall mean any
proposal or offer, other than a proposal or offer by Acquiror or any of its
Affiliates, for a tender or exchange offer, merger, consolidation or other
business combination involving the Company or any of its material Subsidiaries
or any proposal to acquire in any manner a substantial equity interest in or a
substantial portion of the assets of the Company or any of its material
Subsidiaries; provided, however, that, the term "Acquisition Proposal" shall not
-------- -------
include any acquisition by the Company or any of its Subsidiaries of any assets,
businesses or entities in any transaction or series of related transactions in
exchange for other assets, businesses or entities of any Third Party.
7.11 Indemnification; Directors' and Officers Insurance. (a) If
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the Subsidiary Merger is effected, the Certificate of Incorporation and Bylaws
of the Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Certificate of Incorporation and Bylaws of the
Company on the date hereof, which provisions shall not be amended, repealed or
otherwise modified for a period of six years after the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who at
any time prior to the
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Effective Time were directors or officers of the Company in respect of actions
or omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement), unless such
modification is required by law. If the Direct Merger is effected, the Restated
Certificate of Incorporation and Bylaws of the Surviving Corporation at the
Effective Time shall not be amended, repealed or otherwise modified for a period
of six years after the Effective Time in any manner that would adversely affect
the rights thereunder of individuals who at any time prior to the Effective Time
were directors or officers of the Company or its Subsidiaries in respect of
actions or omissions occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement), unless
such modification is required by law.
(b) From and after the Effective Time, Acquiror shall indemnify,
defend and hold harmless each Person who is now, or has been at any time prior
to the date hereof or who becomes prior to the Effective Time, an officer or
director of the Company or any of its Subsidiaries (the "Indemnified Parties")
against all losses, claims, damages, costs, expenses (including attorneys' fees
and expenses), liabilities or judgments or amounts that are paid in settlement
with the approval of the indemnifying party (which approval shall not be
unreasonably withheld) of or in connection with any threatened or actual claim,
action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such Person is or was a
director or officer of the Company or any of its Subsidiaries or served as a
director of any Third Party on behalf of the Company or any of its Subsidiaries
whether pertaining to any matter existing or occurring at or prior to the
Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time ("Indemnified Liabilities"), including, without limitation, all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions contemplated
hereby, in each case to the fullest extent a corporation is permitted under the
DGCL to indemnify its own directors or officers as the case may be (and the
Company or the Surviving Corporation, as the case may be, will pay expenses in
advance of the
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final disposition of any such action or proceeding to each Indemnified Party to
the full extent permitted by law).
(c) The provisions of this Section 7.11 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her personal representatives and shall be binding on all
successors and assigns of Acquiror.
7.12 NYSE Listing. Acquiror shall use its best efforts to cause
------------
the shares of Media Stock and Series D Preferred Stock to be issued in the
Merger to be approved for listing on the NYSE, subject only to notice of
official issuance, prior to the Effective Time. If, for any reason, Acquiror
shall not be able to list the shares of the Series D Preferred Stock to be
issued in the Merger on the NYSE, Acquiror shall use its best efforts to, prior
to the Effective Date, list such shares on such other stock exchange, or cause
such shares to be eligible for trading on such other trading facility, as the
Company may request.
7.13 Affiliates. Prior to the Closing Date, the Company shall
----------
deliver to Acquiror a letter identifying all Persons who are, at the time this
Agreement is submitted to the stockholders of the Company, "affiliates" of the
Company for purposes of Rule 145 under the Securities Act. The Company shall use
its best efforts to cause each such Person to deliver to Acquiror on or prior to
the Closing Date a written agreement substantially in the form attached as
Exhibit D.
7.14 Employee Benefits. (a) For a period of one year following
-----------------
the Effective Time, Acquiror shall, or shall cause the Surviving Corporation to,
maintain in effect for employees of the Company and its Subsidiaries benefits
(other than RSPAs or similar benefits) no less favorable in the aggregate than
the benefits offered by the Company immediately prior to the Effective Time.
Acquiror agrees to, or to cause the Surviving Corporation to, honor and perform
all severance, employment and similar agreements of the Company disclosed in
Section 4.11 of the Company Disclosure Letter and each RSPA and related Tax
Liability Financing Agreement.
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(b) Following the date hereof, the Company shall, after consultation
with Acquiror, be permitted to (i) forgive up to $35.7 million principal amount
of outstanding loans made by the Company to employees to enable such employees
to pay income Taxes incurred by such employees as a result of the purchase of
shares of Company Common Stock by such employees pursuant to the RSPAs in
accordance with the terms of an amendment to the Tax Liability Financing
Agreement substantially in the form set forth in Section 7.14 of the Company
Disclosure Letter; provided, however, that any loan to an employee of the
-------- -------
Company who is, or reasonably can be expected to become, a "covered employee"
(within the meaning of Section 162(m) of the Code) shall in no event be
forgiven, in whole or in part, prior to the day following the Closing Date, (ii)
issue up to 350,000 shares of Company Common Stock pursuant to RSPAs
substantially in the form heretofore provided to Acquiror to employees of the
Company or any of its Subsidiaries; so long as, in each case, such forgiveness
or issuance acts as incentive for the purpose of retaining and motivating such
employee to continue in the employment of the Company following the Effective
Time and is implemented in a manner consistent with such purpose.
(c) If, following the Effective Time, the termination of the
employee's employment with the Company or any of its Subsidiaries results in the
acceleration of the vesting of an award under any RSPA or the forgiveness of a
loan related to an RSPA pursuant to a Tax Liability Financing Agreement (other
than as a result of termination of employment by reason of the employee's death
or disability) (an "Acceleration Event") and as a result of such Acceleration
Event, the employee either (i) becomes subject to an excise tax (the "Excise
Tax") under Section 4999 of the Code that such employee would not have been
subject to without the occurrence of such Acceleration Event or (ii) the amount
of the Excise Tax imposed on such employee is greater than the amount of the
Excise Tax that would have been imposed without the occurrence of such
Acceleration Event (the "Incremental Excise Tax"), Acquiror shall pay or shall
cause to be paid to the employee, at the time specified below, an additional
amount (the "Additional Payment") sufficient to (a) in the case of clause (i)
above, reimburse the employee for the Excise Tax and in the case of
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clause (ii) above, reimburse the employee for the Incremental Excise Tax and (b)
in either case, reimburse the employee for any federal, state or local income
tax or any additional excise tax under Section 4999 of the Code payable with
respect to any Additional Payment made pursuant to this Section 7.14(c). The
Additional Payment provided for in this Section 7.14(c) shall be made no later
than the due date for the Excise Tax or Incremental Excise Tax (as the case may
be) imposed. In the event of any dispute in the calculations made pursuant to
this Section 7.14(c), an independent big six accounting firm shall be selected
to resolve any such dispute and the decision of such accounting firm shall be
final and binding on the Company and the employee. The fees and costs of such
accounting firm shall be shared equally among the Company and the employee.
7.15 Registration Rights Agreement. Acquiror shall execute and
-----------------------------
deliver to the other parties thereto the Registration Rights Agreement at or
prior to the Closing.
7.16 Tax Treatment. Each of Acquiror, Company Sub and the Company
-------------
shall use its reasonable best efforts to cause the Merger to qualify as a
reorganization under the provisions of Section 368(a) of the Code and to obtain
the opinions of counsel referred to in Sections 8.2(c) and 8.3(c).
7.17 Series D Preferred Stock. Prior to the Effective Time,
------------------------
Acquiror shall file with the Secretary of State of the State of Delaware a
Certificate of Designation in the form of Exhibit C hereto with respect to the
shares of Series D Preferred Stock issuable pursuant to Section 3.1.
7.18 Company Indebtedness. The Company shall assist Acquiror, and
--------------------
shall take such actions as Acquiror may reasonably request at Acquiror's sole
expense in order to facilitate the amendment, repayment, redemption, refinancing
or other restructuring of outstanding Indebtedness of the Company on or after
the Effective Time.
7.19 Authorization of Issuance of Merger Consideration. Acquiror
-------------------------------------------------
shall obtain any authorizations and consents necessary, and shall take such
further actions as
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may be required, for the issuance of the Media Stock and the Series D Preferred
Stock to holders of Company Common Stock pursuant to the terms of this
Agreement.
7.20 Attribution. Following the Effective Time, the board of
-----------
directors of Acquiror shall attribute all of the assets and liabilities of the
Company and its Subsidi aries or, in the case of the Subsidiary Merger, of
Company Sub and its subsidiaries to the Media Group pursuant to Sections 2.5.1
and 2.6.15 of Article V of the Restated Certificate of Incorporation of
Acquiror.
7.21 Further Assurances. Each of the parties hereto shall execute
------------------
such documents and other instruments and take such further actions as may be
reasonably required or desirable to carry out the provisions hereof and consum
mate and evidence the transactions contemplated hereby or, at and after the
Closing Date, to evidence the consummation of the transactions contemplated by
this Agreement. Upon the terms and subject to the conditions hereof, each of the
parties hereto shall take or cause to be taken all actions and to do or cause to
be done all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement and to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings.
7.22 Internal Revenue Service Ruling. Acquiror, the Company and
-------------------------------
The Providence Journal Company submitted to the IRS on June 12, 1996 a request
for the Ruling. Acquiror and the Company shall provide each other and The
Providence Journal Company with copies of all materials subsequently submitted
to the IRS. Acquiror, the Company and The Providence Journal Company shall have
the opportunity to participate in all meetings and conferences with IRS
personnel, whether telephonically or in person. Each of Acquiror and the Company
shall cooperate in seeking to obtain the Ruling, subject to Section 2.1.
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ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation to Effect the Merger. The
----------------------------------------------------------
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) Stockholder Approvals; Consideration Charter Amendment. The
------------------------------------------------------
Company shall have obtained the Stockholder Approvals and a Certificate of
Amendment containing the Consideration Charter Amendment shall have been
executed, acknowledged and filed and shall have become effective in
accordance with the DGCL.
(b) HSR Act. (i) The waiting periods (and any extension thereof)
-------
applicable to the Merger under the HSR Act shall have expired or been
terminated; (ii) neither the FTC nor DOJ shall have authorized the
institution of enforcement proceedings (that have not been dismissed or
otherwise disposed of) to delay, prohibit, or otherwise restrain the
transactions contemplated by the Agreement; (iii) no such proceeding will
be pending as of the Closing Date and (iv) other than as contemplated by
Section 7.6(d), no injunction or order shall have been issued by a court of
competent jurisdiction and remain in effect as of the Closing Date.
(c) No Injunctions or Restraints. No statute, rule, regulation,
----------------------------
injunction, restraining order or decree of any court or Governmental
Authority of competent jurisdiction shall be in effect that restrains or
prevents the transactions contemplated hereby.
(d) Form S-4. The Form S-4 shall have been declared effective under
--------
the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order, and any material "blue sky" and other
state securities laws applicable to the issuance
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of the Media Stock and Series D Preferred Stock shall have been complied
with.
(e) NYSE Listing. The shares of Media Stock issuable to the Company's
------------
stockholders pursuant to this Agreement shall have been approved for
listing on the NYSE, subject only to official notice of issuance.
(f) Conversion of Company Preferred Stock; Certain Elections. The
--------------------------------------------------------
holders of shares of Company Preferred Stock shall have converted such
shares into shares of Class B Common Stock, effective no later than
immediately prior to the Effective Time.
8.2 Conditions to Obligations of Acquiror and Company Sub. The
-----------------------------------------------------
obligations of Acquiror and Company Sub to effect the Merger are subject to the
satisfaction of the following conditions, any or all of which may be waived in
whole or in part by Acquiror:
(a) Representations and Warranties. There shall be no breach of any
------------------------------
representation or warranty of the Company made hereunder that, individually
or together with all other such breaches, results in a Material Adverse
Effect with respect to the Company. Acquiror shall have received a
certificate from the Company dated the Closing Date signed by an authorized
officer of the Company certifying to the fulfillment of this condition.
(b) Agreements. The Company shall have performed and complied in all
----------
material respects with all of its undertakings, covenants, conditions and
agreements required by this Agreement to be performed or complied with by
it prior to or at the Closing. Acquiror shall have received a certificate
from the Company dated the Closing Date signed by an authorized officer of
the Company and certifying to the fulfillment of this condition.
(c) Tax Opinion. Acquiror shall have received an opinion of Weil,
-----------
Gotshal & Manges LLP, dated the Closing Date, to the effect that (i) the
Merger should be treated for Federal income tax purposes as a
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reorganization within the meaning of Section 368(a) of the Code; (ii) each
of Acquiror, the Company and, in the case of the Subsidiary Merger, Company
Sub should be a party to the reorganization within the meaning of Section
368(b) of the Code; and (iii) no gain or loss should be recognized by the
Company, Acquiror or, in the case of the Subsidiary Merger, Company Sub as
a result of the Merger. In rendering such opinion, Weil, Gotshal & Manges
LLP may receive and rely upon representations contained in certificates of
the Company, Acquiror, certain stockholders of the Company and, in the case
of the Subsidiary Merger, Company Sub.
(d) Letters from Affiliates. Acquiror shall have received from each
-----------------------
Person in the letter referred to in Section 7.13 an executed copy of an
agreement substantially in the form of Exhibit D.
(e) Consents. All Company Consents (other than Franchise Consents)
--------
and Acquiror Consents shall have been obtained, except where the failure to
obtain any such consent would not have a Material Adverse Effect with
respect to the Company or Acquiror, as the case may be.
(f) Transaction Documents. Each of the Transaction Documents which
---------------------
were not executed on the date hereof shall have been duly authorized and
executed by the parties thereto other than Acquiror.
(g) Dissenting Shares. Acquiror shall have received evidence, in
-----------------
form and substance reasonably satisfactory to it, that the number of
Dissenting Shares shall constitute no greater than 10% of the total number
of shares of Company Common Stock (assuming conversion of the Company
Preferred Stock) outstanding immediately prior to the Effective Time.
(h) Other Actions. The Company shall have disposed of the Designated
-------------
Assets as provided in Section 7.7.
(i) Litigation. Except as described in Section 7.6(c), there shall
----------
not be pending or threatened by any
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Governmental Authority any suit, action or proceeding, (i) seeking to
restrain or prohibit the Merger or seeking to obtain from Acquiror or the
Company or any of their respective Subsidiaries in connection with the
Merger any material damages, (ii) seeking to prohibit or limit the
ownership or operation by Acquiror, the Company or any of their respective
Subsidiaries of any material portion of the business or assets of Acquiror
and its Subsidiaries taken as a whole or the Company and its Subsidiaries
taken as a whole, or to compel Acquiror, the Company or any of their
respective Subsidiaries to dispose of or hold separate any material portion
of the business or assets of Acquiror and its Subsidiaries taken as a whole
or the Company and its Subsidiaries taken as a whole, in each case as a
result of the Merger or any of the other transactions contemplated by this
Agreement or the Transaction Documents, (iii) seeking to impose limitations
on the ability of Acquiror to acquire or hold, or exercise full rights of
ownership of, any shares of capital stock of the Company, including the
right to vote such shares on all matters properly presented to the
stockholders of the Company or (iv) seeking to prohibit Acquiror from
effectively controlling in any material respect any portion of the business
or operations of the Company or any of its Subsidiaries taken as a whole,
which, in each case, has a reasonable likelihood of success and if
determined in a manner adverse to the Company or Acquiror, could reasonably
be expected to result in a Material Adverse Effect with respect to Acquiror
or the Company.
(j) Franchise and License Consents. The Company shall have obtained,
------------------------------
in accordance with the terms of Section 7.5, (i) all Franchise Consents
required pursuant to this Section 8.2(j) (the "Required Franchise
Consents"); (ii) all License Consents for each FCC license set forth in
Section 4.6 of the Company Disclosure Letter and (iii) to the extent
required by the FCC or any Governmental Authority with jurisdiction, the
Social Contract Consent; provided, however, that each Franchise Consent
-------- -------
and License Consent and the Social Contract Consent required to be obtained
hereunder shall be a Final Order. The
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aggregate number of Subscribers covered by the Required Franchise Consents
(i) as to which Franchise Consents are obtained in accordance with the
terms of Section 7.5 and (ii) that do not require Franchise Consents, shall
equal at least ninety percent (90%) of the total number of Subscribers
covered by all Franchises and shall equal at least ninety-five percent
(95%) of the total number of Subscribers covered by Franchises located
within the thirty largest Metropolitan Statistical Areas (as ranked on the
basis of the 1994 U.S. Census by Rand McNally) in which the Company or its
Subsidiaries operates a Franchise, in each case as of March 31, 1996 based
on the Company's month-end billing report as of such date, as adjusted to
reflect any acquisitions or dispositions of Systems. The aggregate number
of Required Franchise Consents (i) as to which Franchise Consents are
obtained in accordance with the terms of Section 7.5 and (ii) that do not
require Franchise Consents, shall equal at leas t eighty-five percent (85%)
of the total number of Franchises as of the date hereof.
(k) Corporate Proceedings and Documents. All corporate proceedings
-----------------------------------
taken by the Company in connection with the transactions contemplated
hereby and all documents incident thereto shall be reasonably satisfactory
in all material respects to Acquiror and Acquiror's counsel, and Acquiror
and Acquiror's Counsel shall have received all such counterpart originals
or certified or other copies of such documents as they may reasonably
request.
8.3 Conditions to Obligations of the Company. The obligation of the
----------------------------------------
Company to effect the Merger is subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by the
Company:
(a) Representations and Warranties. There shall be no breach of any
------------------------------
representation or warranty of Acquiror and Company Sub made hereunder that,
individually or together with all other such breaches, results in a
Material Adverse Effect with respect to Acquiror. The Company shall have
received a
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certificate dated the Closing Date signed by an authorized officer of
Acquiror certifying to the fulfillment of this condition.
(b) Agreements. Acquiror and Company Sub shall have performed and
----------
complied in all material respects with all of their respective
undertakings, covenants, conditions and agreements required by this
Agreement to be performed or complied with prior to or at the Closing. The
Company shall have received a certificate dated the Closing Date signed by
an authorized officer of Acquiror certifying to the fulfillment of this
condition.
(c) Tax Opinion. The Company shall have received an opinion of
-----------
Sullivan & Worcester LLP, dated the Closing Date, to the effect that (i)
the Merger should be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code; (ii) each
of the Acquiror, the Company and, in the case of the Subsidiary Merger,
Company Sub should be a party to the reorganization within the meaning of
Section 368(b) of the Code; and (iii) gain, if any, realized should be
recognized by a stockholder of the Company as a result of the Merger, but
not in excess of the amount of cash received by such stockholder. In
rendering such opinion, Sullivan & Worcester LLP, may receive and rely upon
representa tions contained in certificates of Acquiror, the Company,
certain stockholders of the Company and, in the case of the Subsidiary
Merger, Company Sub.
(d) Consents. All Company Consents (other than Franchise Consents)
--------
and Acquiror Consents shall have been obtained, except where the failure to
obtain any such consent would not have a Material Adverse Effect with
respect to the Company or Acquiror, as the case may be.
(e) Transaction Documents. Each of the Transaction Documents shall
---------------------
have been duly authorized and executed by the parties thereto other than
the Company.
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(f) Preferred Stock Listing. The shares of Series D Preferred Stock
-----------------------
issuable to the Company's stockholders pursuant to this Agreement shall
have been approved for listing on the NYSE or otherwise approved for
listing or eligible for trading as provided in Section 7.12 hereof, subject
only to official notice of issuance.
(g) Corporate Proceedings and Documents. All corporate proceedings
-----------------------------------
taken by Acquiror and Company Sub in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in all material respects to the Company and the Company's
counsel, and the Company and the Company's counsel shall have received all
such counterpart originals or certified or other copies of such documents
as they may reasonably request.
(h) Franchise and License Consents. The Company shall have obtained,
------------------------------
in accordance with the terms of Section 7.5, (i) all Franchise Consents
required pursuant to this Section 8.3(h) (the "Company Required Franchise
Consents"); (ii) all License Consents for each FCC license set forth in
Section 4.6 of the Company Disclosure Letter and (iii) to the extent
required by the FCC or any Governmental Authority with jurisdiction, the
Social Contract Consent; provided, however, that each Franchise Consent and
-------- -------
License Consent and the Social Contract Consent required to be obtained
hereunder shall be a Final Order. The aggregate number of Subscribers
covered by the Company Required Franchise Consents (i) as to which
Franchise Consents are obtained in accordance with the terms of Section 7.5
and (ii) that do not require Franchise Consents, shall equal at least
ninety percent (90%) of the total number of Subscribers covered by all
Franchises and shall equal at least ninety-five percent (95%) of the total
number of Subscribers covered by Franchises located within the thirty
largest Metropolitan Statistical Areas (as ranked on the basis of the 1994
U.S. Census by Rand McNally) in which the Company or its Subsidiaries
operates a Franchise, in each case as of March 31, 1996 based on the
Company's month-end billing report as of such date, as adjusted
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to reflect any acquisitions or dispositions of Systems. The aggregate
number of Company Required Franchise Consents (i) as to which Franchise
Consents are obtained in accordance with the terms of Section 7.5 and (ii)
that do not require Franchise Consents, shall equal at least eighty-five
percent (85%) of the total number of Franchises as of the date hereof.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination. This Agreement may be terminated and the Merger may
-----------
be abandoned at any time prior to the Effective Time, whether before or after
the Stockholder Approvals:
(a) by mutual written consent of the Company, on the one hand, and
Acquiror, on the other hand, or by mutual action of their respective boards
of directors;
(b) by Acquiror, if any of the conditions set forth in Section 8.1 or
8.2 shall have become incapable of fulfillment, and shall not have been
waived by Acquiror, or if the Company shall breach in any material respect
any of its representations, warranties or obligations hereunder and such
breach shall not have been cured in all material respects or waived and the
Company shall not have provided reasonable assurance that such breach will
be cured in all material respects on or before the Closing Date, but only
if such breach, singly or together with all other such breaches, would have
a Material Adverse Effect with respect to the Company;
(c) by the Company, if any of the conditions set forth in Section 8.1
or 8.3 shall have become incapable of fulfillment, and shall not have been
waived by the Company, or if Acquiror or Company Sub shall breach in any
material respect any of its representations, warranties or obligations
hereunder and such breach shall not have been cured in all material
respects or waived and Acquiror shall not have provided reasonable
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assurance that such breach will be cured in all material respects on or
before the Closing Date, but only if such breach, singly or together with
all other such breaches, would have a Material Adverse Effect with respect
to Acquiror;
(d) by either the Company or Acquiror, if the Merger shall not have
been consummated on or before August 31, 1997 (the "Termination Date");
provided, however, that if all the conditions set forth in Article VIII
-------- -------
(other than the conditions set forth in Sections 8.1(a), 8.1(b), 8.1(c),
8.2(e), 8.2(h), 8.2(i) and 8.2(j)) have been satisfied at the Termination
Date, either Acquiror or the Company may, by notice to the other prior to
such date, extend the Termination Date to the latest date so extended by
either party but in no event later than December 31, 1997;
(e) by either the Company or Acquiror if the Stockholder Approvals
shall not have been obtained by reason of the failure to obtain the
required vote upon a vote held at the Stockholders' Meetings (including any
postponements or adjournments thereof); provided, however, that if the
-------- -------
Stockholder Approvals are not obtained at the Initial Stockholders' Meeting
solely by reason of a failure to obtain approval of the Consideration
Charter Amendment, then this Agreement shall not be terminable unless the
Stockholder Approvals shall not have been obtained by reason of a failure
to obtain the required vote upon a vote held at the Additional
Stockholders' Meeting;
(f) by Acquiror, if the Company shall have (i) withdrawn or modified,
in a manner adverse to Acquiror, its approval or recommendation of this
Agree ment or any of the transactions contemplated hereby, (ii) failed to
include such recommendation in the Proxy Statement, (iii) approved or
recommended any Acquisition Proposal from a Third Party or (iv) resolved to
do any of the foregoing;
(g) by the Company, prior to the adoption of this Agreement by the
stockholders of the Company, if the Board of Directors shall approve, and
the Company shall
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enter into, a definitive agreement providing for the implementation of an
Acquisition Proposal; provided, however, that (i) the Company is not then
-------- -------
in breach of Section 7.10, (ii) prior to such termination, the Company has
negotiated with Acquiror in good faith to make such adjustments in the
terms and conditions of this Agreement as would enable the Company to
proceed with the transactions contemplated hereby and (iii) the Board of
Directors, has determined in good faith (on the basis of the terms of such
Acquisition Proposal and the terms of this Agreement, after giving effect
to any concessions offered by Acquiror pursuant to clause (ii) above),
after receipt of written advice from the Company's outside legal counsel,
that such termination is advisable for the Board of Directors to act in a
manner consistent with its fiduciary duties to stockholders under
Applicable Law and (iv) the Company shall provide to Acquiror prior
written notice of such termination, which notice shall advise Acquiror of
the matters described in clauses (ii) and (iii) above;
(h) by the Company pursuant to Section 3.1(d)(ii)(B); or
(i) by Acquiror pursuant to Section 3.1(d)(ii)(C).
Notwithstanding the foregoing, a party shall not be permitted to terminate this
Agreement pursuant to clause (b), (c) or (d) hereof if such party is in breach
of any of its material representations, warranties, covenants or agreements
contained in this Agreement.
9.2 Effect of Termination. In the event of termination by the
---------------------
Company or Acquiror pursuant to Section 9.1, written notice thereof shall
promptly be given to the other parties and, except as otherwise provided herein,
the transactions contemplated by this Agreement shall be terminated, without
further action by any party. Notwithstanding the foregoing, nothing in this
Section 9.2 shall be deemed to release any party from any liability for any
breach by such party of the terms and provisions of this Agreement or to impair
the right of the Company, on the one hand, and Acquiror and Company Sub, on the
other hand, to
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compel specific performance of the other party of its or their obligations under
this Agreement.
9.3 Fees and Expenses. In order to induce Acquiror to, among other
-----------------
things, enter into this Agreement, the Company agrees that if this Agreement is
terminated (A) by Acquiror pursuant to Section 9.1(f) hereof, (B) by the Company
pursuant to Section 9.1(g) hereof, or (C) by the Company or Acquiror pursuant to
Section 9.1(e) hereof and the Board of Directors shall have materially modified
or withdrawn its approval, determination or recommendation of this Agreement or
any of the transactions contemplated hereby prior to the Initial Stockholders'
Meeting or there shall have been an Acquisition Proposal and such proposal shall
not have been withdrawn prior to the Initial Stockholders' Meeting and within
one year thereafter the Company enters into a definitive agreement with respect
to such Acquisition Proposal (including any definitive agreement relating to an
Acquisition Proposal offered by the same proponent or its Affiliate as such
Acquisition Proposal), then the Company shall promptly pay Acquiror a fee of
$125 million, plus an amount equal to the actual reasonable fees and expenses
paid or payable by or on behalf of Acquiror to its attorneys, accountants,
environmental consultants, management consultants, and other consultants and
advisors in connection with the negotiation, execution and delivery of this
Agreement and the transactions contemplated hereby; provided, however, that
-------- -------
payment for fees and expenses shall in no event exceed $15 million. Any payment
required by this Section 9.3 shall be made in same day funds to Acquiror by the
Company no later than five Business Days following termination of this Agreement
by Acquiror or the Company, as the case may be.
9.4 Certain Purchase Obligations. (a) In order to induce the
----------------------------
Company to, among other things, enter into this Agreement, Acquiror agrees that
if this Agreement is terminated by the Company pursuant to Section 9.1(h), then
the Company shall have the right, for a period of 30 days thereafter, to require
Acquiror to purchase from the Company (the "Put Right") 5,650,000 shares of
Series B Convertible Preferred Stock, par value $.01 per share, of the Company,
having the rights, preferences and terms set forth in the Certificate of
Designations attached as Exhibit E hereto
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(the "Put Shares") for an aggregate purchase price of $282.5 million.
(b) Following termination by the Company of this Agreement pursuant
to Section 9.1(h), the Company may exercise the Put Right by delivering to
Acquiror a written notice of such exercise (the "Put Exercise Notice"), which
shall specify a date not less than 90 days from the date of such notice for the
closing of the purchase of the Put Shares by Acquiror.
(c) The closing with respect to the purchase of the Put Shares shall
take place on the earlier of (i) the date specified in the Put Exercise Notice
and (ii) the second Business Day following the date on which the last of the
conditions set forth in Section 9.4(d) is fulfilled or waived, unless another
date, time or place is agreed to in writing by the parties hereto (the "Put
Closing Date"). At such closing, the Company shall deliver to Acquiror
certificates representing the Put Shares and Acquiror shall deliver to the
Company $282.5 million by wire transfer of immediately available funds to an
account designated by the Company.
(d) The obligations of Acquiror to purchase the Put Shares shall be
subject to the satisfaction prior to the Put Closing Date of the following
conditions:
(i) HSR Act. The waiting periods (and any extension thereof)
-------
applicable to the purchase of the Put Shares under the HSR Act shall have
expired or been terminated and there shall be no authorized or pending
action by a Governmental Authority seeking to restrain or prevent the
purchase of the Put Share s.
(ii) No Injunctions or Restraints. No statute, rule, regulation,
----------------------------
injunction, restraining order or decree of any nature of any court or
Governmental Authority shall be in effect that restrains or prevents the
purchase of the Put Shares.
(iii) Representations and Warranties. There shall be no breach of any
------------------------------
representation or warranty of the Company made hereunder that, individually
or
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together with all other such breaches, results in a Material Adverse
Effect with respect to the Company. Acquiror shall have received a
certificate from the Company dated the Put Closing Date signed by an
authorized officer of the Company certifying to the fulfillment of this
condition.
(iv) Agreements. The Company shall have performed and complied in all
----------
material respects with all of its undertakings, covenants, conditions and
agreements required by this Agreement to be performed or complied with by
it prior to or at the Put Closing Date. Acquiror shall have received a
certificate from the Company dated the Put Closing Date signed by an
authorized officer of the Company and certifying to the fulfillment of this
condition.
(v) Franchise Consents. To the extent any Franchise (s) induvidually
------------------
or collectively representing more than 5% of total Subscribers of the
Company and its Subsidiaries require notice to, or the consent of, a
Governmental Authority in connection with the purchase by Acquiror of the
Put Shares, the consent of each such Governmental Authority shall have been
obtained by the Company.
(vi) Registration Rights Agreement. The Company and Acquiror shall
-----------------------------
have entered into a Registration Rights Agreement substantially in the form
of Exhibit F hereto.
(e) From and after the Put Closing Date, for so long as Acquiror owns
any of the Put Shares, Acquiror shall not acquire, or agree to acquire, directly
or indirectly, any shares of Company Capital Stock, or any rights or options to
acquire shares of Company Capital Stock, if as a result of any such acquisition,
Acquiror would beneficially own 10 percent or more of the Company Capital Stock.
9.5 Amendment. Subject to Applicable Law, this Agreement may be
---------
amended, modified or supplemented only by written agreement of Acquiror and the
Company at any time prior to the Effective Time with respect to any of the terms
contained herein; provided, however, that, after this
-------- -------
103
<PAGE>
Agreement is adopted by the Company's stockholders, no such amendment or
modification shall (i) alter or change the amount or kind of consideration to be
delivered to the stockholders of the Company or (ii) alter or change any of the
terms and conditions of this Agreement, if such alteration or change would
adversely affect the holders of any class of capital stock of the Company.
9.6 Extension; Waiver. At any time prior to the Effective Time, the
-----------------
parties hereto, by action taken or authorized by their respective boards of
directors, may, to the extent legally allowed: (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto;
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto; and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure of
any party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights nor in any way effect the validity of this Agreement or
any part hereof or the right of such party thereafter to enforce each and every
provision of this Agreement. No waiver of any breach of or non-compliance with
this Agreement shall be held to be a waiver of any other or subsequent breach or
non-compliance.
ARTICLE X
GENERAL PROVISIONS
10.1 Frustration of the Closing Conditions. None of the Company,
-------------------------------------
Acquiror or Company Sub may rely on the failure of any condition precedent set
forth in Article VIII to be satisfied if such failure was caused by such party's
(or parties') failure to act in good faith or to use its reasonable best efforts
to consummate the transactions contemplated by this Agreement in accordance with
Section 7.4.
104
<PAGE>
10.2 Effectiveness of Representations, Warranties and Agreements.
-----------------------------------------------------------
The representations, warranties and agreements in this Agreement shall terminate
at the Effective Time or upon the termination of this Agreement pursuant to
Article IX, except that the agreements set forth in Articles I, II and III and
Sections 7.11, 7.14 and 7.20 shall survive the Effective Time and those set
forth in Sections 9.2, 9.3, 9.4 and Article X hereof shall survive termination.
10.3 Expenses. Except as otherwise provided herein, including in
--------
Sections 7.5 and 9.3, each of the parties hereto shall pay the fees and expenses
of its respective counsel, accountants and other experts and shall pay all other
costs and expenses incurred by it in connection with the negotiation,
preparation and execution of this Agreement and the Transaction Documents and
the consummation of the transactions contemplated hereby and thereby; provided,
--------
however, that the Company shall pay, with funds of the Company and not with
- -------
funds provided by Acquiror, any and all property or transfer Taxes imposed on
the Company or any Gains Taxes.
10.4 Applicable Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the laws of the State of Delaware without
reference to choice of law principles, including all matters of construction,
validity and performance.
10.5 Notices. Notices, requests, permissions, waivers, and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given if signed by the respective Persons giving them (in the case of any
corporation the signature shall be by an officer thereof) and delivered by hand,
deposited in the United States mail (registered or certified, return receipt
105
<PAGE>
requested), properly addressed and postage prepaid, or delivered by telecopy:
If to the Company, to:
Continental Cablevision, Inc.
The Pilot House
Lewis Wharf
Boston, Massachusetts 02110
Telephone: (617) 742-9500
Telecopy: (617) 742-0530
Attention: Amos B. Hostetter, Jr.
with a copy to:
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
Telephone: (212) 408-5100
Telecopy: (212) 541-5369
Attention: Dennis J. Friedman, Esq.
and:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Telephone: (617) 338-2800
Telecopy: (617) 338-2880
Attention: Patrick K. Miehe, Esq.
If to Acquiror or Company Sub, to:
U S WEST, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Telephone: (303) 793-6310
Telecopy: (303) 793-6707
Attention: General Counsel
106
<PAGE>
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Telecopy: (212) 310-8007
Attention: Dennis J. Block, Esq.
Such names and addresses may be changed by notice given in accordance with this
Section 10.5.
10.6 Entire Agreement. This Agreement and the Transaction Documents
----------------
(including the Exhibits attached hereto, all of which are a part hereof) contain
the entire understanding of the parties hereto and thereto with respect to the
subject matter contained herein and therein, supersede and cancel all prior
agreements, negotiations, correspondence, undertakings and communications of the
parties, oral or written, respecting such subject matter. There are no
restrictions, promises, representations, warranties, agreements or undertakings
of any party hereto or to any of the Transaction Documents with respect to the
transactions contemplated by this Agreement and the Transaction Documents other
than those set forth herein or therein or made hereunder or thereunder.
Notwithstanding the foregoing, the Confidentiality Agreements shall remain in
full force and effect and shall survive any termination of this Agreement.
10.7 Headings; References. The article, section and paragraph
--------------------
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. All
references herein to "Articles", "Sections" or "Exhibits" shall be deemed to be
references to Articles or Sections hereof or Exhibits hereto unless otherwise
indicated.
10.8 Counterparts. This Agreement may be executed in one or more
------------
counterparts and each counterpart shall be deemed to be an original, but all of
which shall constitute one and the same original.
107
<PAGE>
10.9 Parties in Interest; Assignment. Neither this Agreement nor
-------------------------------
any of the rights, interest or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties,
except that Company Sub may assign, in its sole discretion, any or all of its
rights, interests and obligations under this Agreement to any direct wholly
owned subsidiary of Acquiror, but no such assignment shall relieve Company Sub
of any of its obligations hereunder. Subject to the preceding sentence, this
Agreement shall inure to the benefit of and be binding upon the Company,
Acquiror and Company Sub and shall inure to the sole benefit of the Company,
Acquiror and Company Sub and their respective successors and permitted assigns.
Except as set forth in Section 7.11 and Section 7.14(c), nothing in this
Agreement, express or implied, is intended to confer upon any other Person any
rights or remedies under or by reason of this Agreement.
10.10 Severability; Enforcement. The invalidity of any portion
-------------------------
hereto shall not affect the validity, force or effect of the remaining portions
hereof. If it is ever held that any restriction hereunder is too broad to permit
enforcement of such restriction to its fullest extent, each party agrees that a
court of competent jurisdiction may enforce such restriction to the maximum
extent permitted by law, and each party hereby consents and agrees that such
scope may be judicially modified accordingly in any proceeding brought to
enforce such restriction.
10.11 Specific Performance. The parties hereto agree that the remedy
--------------------
at law for any breach of this Agreement will be inadequate and that any party by
whom this Agreement is enforceable shall be entitled to specific performance in
addition to any other appropriate relief or remedy. Such party may, in its sole
discretion, apply to a court of competent jurisdiction for specific performance
or injunctive or such other relief as such court may deem just and proper in
order to enforce this Agreement or prevent any violation hereof and, to the
extent permitted by Applicable Law, each party waives any objection to the
imposition of such relief.
108
<PAGE>
10.12 Jurisdiction. Each party to this Agreement hereby irrevocably
------------
agrees that any legal action, suit or proceeding arising out of or relating to
this Agreement, the Transaction Documents or any other agreements or
transactions contemplated hereby shall be brought in the Chancery Court of the
State of Delaware and each party hereto agrees not to assert, by way of motion,
as a defense or otherwise, in any such action, suit or proceeding any claim that
it is not subject personally to the jurisdiction of such court, that the action,
suit or proceeding is brought in an inconvenient forum, that the venue of the
action, suit or proceeding is improper or that this Agreement, any Transaction
Document, any other agreement or transaction or the subject matter hereof or
thereof may not be enforced in or by such court. Each party hereto further and
irrevocably submits to the jurisdiction of such court in any action, suit or
proceeding.
109
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
U S WEST, INC.
By: /s/
-------------------------------
Name:
Title:
CONTINENTAL MERGER CORPORATION
By: /s/
-------------------------------
Name:
Title:
CONTINENTAL CABLEVISION, INC.
By: /s/
-------------------------------
Name:
Title:
110
<PAGE>
EXHIBIT A
---------
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
CONTINENTAL CABLEVISION, INC.
Continental Cablevision, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation, at a meeting duly
called and held on __________ __, 1996, accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware, duly
adopted resolutions setting forth proposed amendments to the Restated
Certificate of Incorporation of the Corporation. The resolutions setting forth
the proposed amendments are as follows:
RESOLVED: That Section F of Article FOURTH of the Corporation's Restated
--------
Certificate of Incorporation be amended by adding a new paragraph
immediately following the last sentence of said Section F to read
as follows:
Notwithstanding anything in this Section F to the contrary,
so long as the Agreement and Plan of Merger, dated as of February
27, 1996, as the same may be amended from time to time (the
"Merger Agreement"), between U S WEST, Inc., a Delaware
corporation, and the Corporation, shall remain in effect, no
share of Class B Common Stock may be converted into a share of
Class A Common Stock pursuant to the immediately preceding
paragraph; provided, however, that a fully paid share of Class B
-------- -------
Common Stock may be converted into a share of Class A Common
Stock pursuant to the immediately preceding paragraph in
connection with (i) a bona fide transfer of such share of Class B
Common Stock for the fair market value of such share at the time
of such transfer, other than to a Permitted Transferee, or
(ii) the enforcement by a secured
<PAGE>
-2-
party of its rights in and to such share of Class B Common Stock
pursuant to a bona fide pledge of such share to secure
obligations. If a holder of shares of Class B Common Stock elects
to convert any such shares in connection with a bona fide
transfer of such shares for the fair market value of such share
at the time of such transfer, such holder shall certify in
writing to the Corporation that such conversion is in connection
with a bona fide transfer for and that such transfer is not being
made to a Permitted Transferee. If a secured party with rights in
and to shares of Class B Common Stock elects to convert any such
shares in connection with the enforcement of such rights, such
secured party shall certify in writing to the Corporation that
such conversion is in connection with the enforcement of such
secured party rights pursuant to a bona fide pledge of such stock
to secure obligations. Such certifications shall be delivered to
the Corporation at the same time as such holder or secured party
delivers the notice of election and other instruments required by
the immediately preceding paragraph.
RESOLVED: That Section H of Article FOURTH of the Corporation's Restated
--------
Certificate of Incorporation be amended to read as follows:
H. Other Rights. Except as otherwise required by the
------------
Delaware General Corporation Law or as otherwise provided in this
Restated Certificate of Incorporation, and except as provided in
the Merger Agreement, each share of Class A Common Stock and each
share of Class B Common Stock shall have identical powers,
preferences, rights and privileges.
RESOLVED: That the foregoing amendments to the Restated Certificate of
--------
Incorporation of the Corporation are recommended to the
stockholders for approval as being in the best interests of the
Corporation and that said amendments be presented to the
stockholders for their adoption and that a special meeting of the
stockholders duly be called for that purpose.
SECOND: The stockholders of the Corporation (including (i) the holders of
the Class A Common Stock, the Class B Common Stock, and the Series A
Participating Convertible Preferred Stock voting together as a single class,
(ii) the holders of the Class A Common Stock voting together as a separate class
(but only with regard to the proposed amendment to Section H of Article FOURTH
of the Corporation's Restated Certificate of Incorporation) and (iii) the
holders of the Class B Common Stock voting together as a separate class)
approved said proposed
<PAGE>
-3-
amendments at a special meeting of stockholders for which written notice was
given pursuant to Section 222 of the General Corporation Law of the State of
Delaware.
THIRD: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by William T. Schleyer, its duly authorized officer, this ___ day of
___________, 1996.
CONTINENTAL CABLEVISION, INC.
By:____________________________
Name: William T. Schleyer
Title: President
<PAGE>
Exhibit B
---------
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of _________ __, 1996,
among U S WEST, INC. , a Delaware corporation ("Acquiror"), Amos B. Hostetter,
Jr. ("Hostetter"), the Amos B. Hostetter, Jr. 1989 Trust (the "Trust") and the
Hostetter Foundation (the "Foundation" and, together with Hostetter and the
Trust, the "Stockholders").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Acquiror, CONTINENTAL MERGER CORPORATION, a Delaware
corporation ("Sub"), and CONTINENTAL CABLEVISION, INC., a Delaware corporation
(the "Company"), are parties to an Agreement and Plan of Merger, dated as of
February 27, 1996, as amended and restated as of June 27, 1996 (as in effect on
the date hereof, the "Merger Agreement"), pursuant to which either (i) the
Company will merge with and into Acquiror, with Acquiror continuing as the
surviving corporation or (ii) the Company will merge with and into Sub, with Sub
continuing as the surviving corporation (as applicable, the "Merger"); and
WHEREAS, Acquiror has agreed to provide registration rights to
the Stockholders with respect to the stock to be received in connection with the
Merger, subject to the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. Capitalized terms used but not defined herein shall
-----------
have the meanings assigned to such terms in the Merger Agreement. For purposes
of this Agreement, the following terms shall have the following meanings:
"Blackout Period" shall mean any Section 6(a) Period and any Section
---------------
6(b) Period.
"Closing Price", for any class of securities, shall mean the last
-------------
reported sale price per share of such security, regular way, as shown on the
Composite Tape of the NYSE, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices on the NYSE, or, if such
security is not listed or admitted to trading on the
<PAGE>
NYSE, on the principal national securities exchange on which such security is
listed or admitted to trading, or, if it is not listed or admitted to trading on
any national securities exchange, the last reported sale price per share of such
security, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, in either case as reported by Nasdaq.
"Current Market Price" for any class of securities on any applicable
--------------------
date shall mean the average of the daily Closing Prices per share of such
security for the ten (10) consecutive Trading Days ending on the third Trading
Day immediately preceding such date.
"Effective Period" shall mean a period commencing on the date of
----------------
this Agreement and ending on the earliest of (i) the first date as of which all
Registrable Securities cease to be Registrable Securities, (ii) the sixth
anniversary of the Closing Date and (iii) the date on which the aggregate number
of Registrable Securities issued and outstanding (assuming conversion of all
shares of Series D Preferred Stock held by the Holders) shall no longer exceed
one tenth (1/10) of the aggregate number of Registrable Securities (adjusted
appropriately to reflect any stock dividends, splits, combinations, exchange,
reorganization, recapitalization or reclassification involving the Media Stock
or Series D Preferred Stock or resulting from a merger or consolidation or
similar transaction involving Acquiror or the like after the date hereof)
outstanding on the date hereof.
"Holder" shall mean each Stockholder listed on Schedule A hereto
------
and each Permitted Assignee that becomes a holder of Registrable Securities,
provided that if such Person is not a Stockholder listed on Schedule A hereto,
such Permitted Assignee has agreed in writing to become a Holder hereunder and
to be bound by the terms and conditions of this Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
----
"Nasdaq" shall mean the Nasdaq National Market.
------
"NYSE" shall mean the New York Stock Exchange, Inc.
----
-2-
<PAGE>
"Permitted Assignee" shall mean (w) Hostetter, (x) Hostetter's
------------------
lineal descendants, (y) a trust for the benefit of, the estate of, executors,
personal representatives, administrators, guardians or conservators of any of
the individuals referred to in the foregoing clauses (w) and (x) (but only in
their capacity as such) and (z) charitable trusts and charitable foundations (in
addition to the Foundation) formed by Hostetter or the Trust.
"Prospectus" shall mean the prospectus included in any Registration
----------
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by any Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"Registrable Securities" shall mean any and all of (i) the shares of
----------------------
Media Stock issued pursuant to the Merger, (ii) the shares of Series D Preferred
Stock issued pursuant to the Merger, (iii) the shares of Media Stock or other
securities of Acquiror issuable or issued upon conversion of the Series D
Preferred Stock issued pursuant to the Merger and (iv) any securities issuable
or issued or distributed in respect of any of the securities identified in
clauses (i), (ii) or (iii) by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, reorganization,
merger, consolidation or otherwise. Securities will cease to be Registrable
Securities in accordance with Section 2 hereof.
"Registration Expenses" means any and all expenses incident to
---------------------
performance of or compliance with this Agreement, including, without limitation,
(i) all SEC, NASD and securities exchange registration and filing fees, (ii) all
fees and expenses of complying with state securities or blue sky laws (including
fees and disbursements of counsel for any underwriters in connection with blue
sky qualifications of the Registrable Securities), (iii) all processing,
printing, copying, messenger and delivery expenses, (iv) all fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange pursuant to Section 7(h), (v) the fees and disbursements of
counsel for Acquiror and of its independent public accountants and (vi) the
reasonable fees and expenses of any special experts retained in connection
-3-
<PAGE>
with the requested registration, but excluding (x) underwriting discounts and
commissions and transfer taxes, if any, and (y) any fees or disbursements of
counsel to the Holders or any Holder.
"Registration Statement" means any registration statement (including a
----------------------
Shelf Registration) of Acquiror referred to in Section 3 or 4, including any
Prospectus, amendments and supplements to any such registration statement,
including post-effective amendments, and all exhibits and all material
incorporated by reference in any such registration statement.
"Related Securities" means any securities of Acquiror similar or
------------------
identical to any of the Registrable Securities, including, without limitation,
any class of capital stock of Acquiror and all options, warrants, rights and
other securities convertible into, or exchangeable or exercisable for, any class
of capital stock of Acquiror.
"Section 6(a) Period" has the meaning specified in Section 6(a).
-------------------
"Section 6(b) Period" has the meaning specified in Section 6(b).
-------------------
"Shelf Registration" means a "shelf" registration statement on an
------------------
appropriate form pursuant to Rule 415 under the Securities Act (or any successor
rule that may be adopted by the SEC).
"Trading Day", for any class of securities, shall mean, so long as
-----------
such securities are listed or admitted to trading on the NYSE, a day on which
the NYSE is open for the transaction of business, or, if such securities are not
listed or admitted to trading on the NYSE, a day on which the principal national
securities exchange on which such securities are listed is open for the
transaction of business, or, if such securities are not so listed or admitted
for trading on any national securities exchange, a day on which Nasdaq is open
for the transaction of business.
"underwritten registration or underwritten offering" shall mean an
--------------------------------------------------
offering in which securities of Acquiror are sold to an underwriter for
reoffering to the public.
-4-
<PAGE>
2. Securities Subject to this Agreement. The securities entitled to
------------------------------------
the benefits of this Agreement are the Registrable Securities. For the purposes
of this Agreement, as to any particular Registrable Securities, such Registrable
Securities shall cease to be Registrable Securities when and to the extent that
(i) a Registration Statement covering such Registrable Securities has been
declared effective under the Securities Act and such Registrable Securities have
been disposed of pursuant to such effective Registration Statement, (ii) such
Registrable Securities are distributed to the public pursuant to and in
accordance with Rule 144 (or any similar provision then in force) under the
Securities Act, (iii) such Registrable Securities have been otherwise
transferred to a party that is not a Permitted Assignee, (iv) the Effective
Period ends or (v) such Registrable Securities have ceased to be outstanding.
3. Piggy-Back Registration Rights. (a) Whenever Acquiror shall
------------------------------
propose to file a Registration Statement under the Securities Act relating to
the public offering of Media Stock for cash (other than pursuant to a
Registration Statement on Form S-4 or Form S-8 or any successor forms thereto,
or filed in connection with an exchange offer or an offering of securities
solely to existing stockholders or employees of Acquiror and other than pursuant
to a Registration Statement filed in connection with an offering by Acquiror of
securities convertible into or exchangeable for Media Stock) for sale for its
own account, Acquiror shall (i) give written notice at least fifteen Business
Days prior to the filing thereof to each Holder then outstanding, specifying the
approximate date on which Acquiror proposes to file such Registration Statement
and the intended method of distribution in connection therewith, and advising
such Holder of such Holder's right to have any or all of the Registrable
Securities then held by such Holder included among the securities to be covered
thereby and (ii) at the written request of any such Holder given to Acquiror at
least two Business Days prior to the proposed filing date, include among the
securities covered by such Registration Statement the number of Registrable
Securities that such Holder shall have requested be so included. Subject to
reduction in accordance with paragraph (b) of this Section 3, Acquiror shall
cause the Registration Statement to include the Registrable Securities requested
to be included in the Registration Statement for such offering in the case of
Registrable Securities which are Media Stock, on the same terms and conditions
as the shares of Media Stock
-5-
<PAGE>
included therein and in the case of Registrable Securities which are Series D
Preferred Stock, on terms which would not conflict or interfere with in any
material respect (including, without limitation, adversely affect the pricing
of) the offering by Acquiror of Media Stock.
(b) If the lead managing underwriter selected by Acquiror for an
underwritten offering pursuant to Section 3(a) determines in writing that
marketing factors require a limitation on the number of shares of Media Stock
and/or Series D Preferred Stock (or other securities convertible into or
exchangeable for Media Stock) to be offered and sold by stockholders of Acquiror
in such offering, there shall be included in the offering, first, all securities
proposed by Acquiror to be sold for its account and, second, only that number of
shares of Media Stock and Series D Preferred Stock (and other securities
convertible into or exchangeable for Media Stock), if any, requested to be
included in such Registration Statement by stockholders of Acquiror that such
lead managing underwriter reasonably and in good faith believes will not
substantially interfere with (including, without limitation, adversely affect
the pricing of) the offering of all the shares of Media Stock that the Company
desires to sell for its own account. In such event and provided the managing
underwriter has so notified Acquiror in writing, the number of shares of Media
Stock and Series D Preferred Stock (and other securities of Acquiror convertible
into or exchangeable for Media Stock) to be offered and sold by stockholders of
Acquiror, including Holders of Registrable Securities, desiring to participate
in such offering shall be allocated among such stockholders of Acquiror on a pro
rata basis based upon the number of shares of Media Stock (assuming conversion
of the Series D Preferred Stock and other securities convertible into or
exchangeable for Media Stock held by such stockholders) each such stockholder
beneficially owns.
(c) Nothing in this Section 3 shall create any liability on the part
of Acquiror to the Holders of Registrable Securities if Acquiror for any reason
should decide not to file a Registration Statement proposed to be filed under
Section 3(a) or to withdraw such Registration Statement subsequent to its
filing, regardless of any action whatsoever that a Holder may have taken,
whether as a result of the issuance by Acquiror of any notice hereunder or
otherwise.
-6-
<PAGE>
(d) A request by Holders to include Registrable Securities in a
proposed offering pursuant to Section 3(a) shall not be deemed to be a request
for a demand registration pursuant to Section 4.
4. Demand Registration Rights. (a) Upon the written request (the
--------------------------
"Initial Request") of Holders of at least a majority in number of the
Registrable Securities (assuming conversion of all Series D Preferred Stock held
by Holders) that Acquiror effect the registration with the SEC under and in
accordance with the provisions of the Securities Act of all or part of such
Holder's or Holders' Registrable Securities and specifying the aggregate number
of shares of Registrable Securities requested to be so registered, Acquiror will
promptly give written notice of such requested registration to all other
Holders. Within 15 days after receipt of Acquiror's notice (such 15 day period
being the "Additional Request Period"), each such other Holder shall notify
Acquiror in writing as to whether such Holder wishes to have any or all of its
Registrable Securities included in such requested registration. Thereupon,
subject to Section 4(f), Acquiror shall use its best efforts to file a
Registration Statement as expeditiously as practicable (the terms of any
underwritten offering or other distribution to be determined by the Holders of a
majority of the Registrable Securities so requested to be registered); provided,
--------
however, that Acquiror shall not be required to take any action pursuant to this
- -------
Section 4:
(i) if prior to the date of such request Acquiror shall have
effected four registrations pursuant to this Section 4;
(ii) if Acquiror has effected a registration pursuant to this Section
4 within the 90-day period next preceding such request;
(iii) if Acquiror shall at the time have effective a Shelf
Registration pursuant to which the Holder or Holders that requested
registration could effect the disposition of such Registrable Securities
pursuant to an underwritten offering or such other method of distribution
requested by such Holder or Holders;
(iv) if the Registrable Securities that Acquiror shall have been
requested to register shall have a then
-7-
<PAGE>
current market value of less than $100,000,000, unless such registration
request is for all remaining Registrable Securities; or
(v) during the pendency of any Blackout Period;
and provided, further, that Acquiror shall be permitted to satisfy its
-------- -------
obligations under this Section 4(a) by amending (to the extent permitted by
applicable law) any Shelf Registration previously filed by Acquiror under the
Securities Act so that such Shelf Registration (as amended) shall permit the
disposition (in accordance with the intended methods of disposition specified as
aforesaid) of all of the Registrable Securities for which a demand for
registration has been made under this Section 4(a). If Acquiror shall so amend a
previously filed Shelf Registration, it shall be deemed to have effected a
registration for purposes of this Section 4.
(b) A registration requested pursuant to this Section 4 shall not be
deemed to be effected for purposes of this Section 4: (i) if it has not been
declared effective by the SEC or become effective in accordance with the
Securities Act, (ii) if after it has become effective, such registration is
materially interfered with by any stop order, injunction or similar order or
requirement of the SEC or other governmental agency or court for any reason not
attributable to any of the Holders and has not thereafter become effective, or
(iii) if the conditions to closing specified in the underwriting agreement, if
any, entered into in connection with such registration are not satisfied or
waived, other than by reason of a failure on the part of any of the Holders.
(c) Should a Registration Statement filed pursuant to this Section 4
not become effective due to the failure of the Holders to perform their
obligations under this Agreement or the inability of the Holders to reach
agreement with the underwriters on price or other customary terms for such
transaction, or in the event the Holders of a majority in number of the
Registrable Securities (assuming conversion of all Series D Preferred Stock held
by Holders) determine to withdraw or do not pursue a request for registration
pursuant to this Section 4 (in each of the foregoing cases, provided that at
such time Acquiror is in compliance in all material respects with its
obligations under this Agreement), then (subject to the last sentence of this
Section 4(c)) such registration shall be deemed to have
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<PAGE>
been effected for purposes of this Section 4. In such event, the Holders of
Registrable Securities who requested registration shall reimburse Acquiror for
all its out-of-pocket expenses incurred in the preparation, filing and
processing of the Registration Statement. If such reimbursement is made within
30 Business Days following a request therefor, such registration shall not be
deemed to have been effected for purposes of this Section 4.
(d) Acquiror will not include any securities that are not Registrable
Securities in any Registration Statement (including a Shelf Registration
referred to in the second proviso of Section 4(a)) filed pursuant to a demand
made under this Section 4 without the prior written consent of the Holders of a
majority in number of the Registrable Securities covered by such Registration
Statement (including a Shelf Registration referred to in the second proviso of
Section 4(a)).
(e) If the lead managing underwriter of an underwritten offering made
pursuant to this Section 4 shall advise Acquiror in writing (with a copy to the
Holders of Registrable Securities participating in such offering) that, in its
opinion, the number of Registrable Securities requested to be included in such
registration exceeds the number which can be sold in such offering within a
price range acceptable to the Holders of a majority in number of the Registrable
shares requested to be included in such offering, Acquiror will reduce to the
number which Acquiror is so advised can be sold in such offering within such
price range the Registrable Securities requested to be included in such
offering. If, as a result of any such reduction, the number of Registrable
Securities requested to be included in such registration by the Holders of
Registrable Securities participating in such offering is reduced by twenty-five
percent (25%) or more, then notwithstanding anything to the contrary contained
in this Agreement, a registration will not be deemed to have been effected for
purposes of this Section 4; provided, however, that the provisions of this
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sentence shall only apply to the first request made by Holders for a
registration pursuant to this Section 4. In the case of such a registration
which would have been deemed to be a registration for purposes of this Section 4
but for the application of the immediately preceding sentence, Acquiror
nonetheless shall pay the Registration Expenses in connection with such
registration.
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<PAGE>
(f) Prior to the filing by Acquiror of a Registration Statement
pursuant to Section 4(a), Acquiror shall have the right, exercisable for the ten
day period following the end of the Additional Request Period, upon written
notice to the Holders requesting registration, to purchase for cash from such
Holders on a pro rata basis all of the Registrable Securities which such Holders
requested to be registered pursuant to such Registration Statement (the
"Purchased Securities"). The exercise of such right shall constitute Acquiror's
legal and binding commitment to purchase the Purchased Securities in accordance
with this Section 4(f). The closing of the purchase by Acquiror of the Purchased
Securities shall take place within 30 days of delivery of such notice and the
purchase price per Purchased Security shall be equal to the Current Market Price
of such Purchased Security on the date of the Initial Request, less the amount
of any customary discounts and commissions that would be payable by Acquiror or
a similar issuer in connection with an underwritten offering of similar
securities (which discounts and commissions shall not exceed 5% of such Current
Market Price). At the closing of the sale of the Purchased Securities, the
Holders shall deliver to Acquiror certificates representing the Purchased
Securities and Acquiror shall deliver to the Holders the purchase price of the
Purchased Securities by wire transfer of immediately available funds. Following
the purchase of the Purchased Shares by Acquiror, a registration shall be deemed
to have been effected for purposes of this Section 4.
5. Selection of Underwriters. In connection with any offering
-------------------------
pursuant to a Registration Statement filed pursuant to a demand made in
accordance with Section 4, Acquiror shall have the right to select a managing
underwriter or underwriters to administer the offering, so long as such managing
underwriter or underwriters shall be reasonably satisfactory to Holders of a
majority in number of the Registrable Securities to be included in such offering
(assuming conversion of all Series D Preferred Stock held by Holders); provided,
--------
however, that such Holders shall have the right to select one co-managing
- -------
underwriter, so long as such co-managing underwriter shall be reasonably
satisfactory to Acquiror. The managing underwriter or underwriters selected by
Acquiror shall be deemed reasonably satisfactory to Holders of a majority in
number of the Registrable Securities to be included in such offering (assuming
conversion of all Series D Preferred Stock held by Holders) unless such Holders
sends a written notice of objection to Acquiror within 10 days of receipt of
notice
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<PAGE>
from Acquiror of the appointment of a managing underwriter or underwriters and
the co-managing underwriter selected by such Holders shall be deemed to be
reasonably satisfactory to Acquiror unless Acquiror sends a written notice of
objection to such Holders within 10 days of receipt of notice from such Holders
of the appointment of a co-managing underwriter.
6. Blackout Periods. (a) If Acquiror determines in good faith that
----------------
the registration and distribution of Registrable Securities (or the use of the
Registration Statement or related Prospectus) would interfere with any pending
financing, acquisition, corporate reorganization or any other corporate
development involving Acquiror or any of its subsidiaries (or would require
premature disclosure thereof) and promptly gives the Holders of Registrable
Securities written notice of such determination, Acquiror shall be entitled to
(i) postpone the filing of the Registration Statement otherwise required to be
prepared and filed by Acquiror pursuant to Section 3 or 4, or (ii) elect that
the Registration Statement not be used, in either case for a reasonable period
of time, but not to exceed 90 days (a "Section 6(a) Period"). Any such written
notice shall contain a general statement of the reasons for such postponement or
restriction on use and an estimate of the anticipated delay. Acquiror shall
promptly notify each Holder of the expiration or earlier termination of a
Section 6(a) Period.
(b) If (i) during the Effective Period, Acquiror shall file a
registration statement (other than in connection with the registration of
securities issuable pursuant to an employee stock option, stock purchase or
similar plan on Form S-8 or pursuant to a merger, exchange offer or a
transaction of the type specified in Rule 145(a) under the Securities Act) with
respect to any Related Securities and (ii) with reasonable written prior notice,
(A) Acquiror (in the case of a non-underwritten offering pursuant to such
registration statement) advises the Holders in writing that a sale or
distribution of Registrable Securities would adversely affect such offering or
(B) the managing underwriter or underwriters (in the case of an underwritten
offering) advise Acquiror in writing (in which case Acquiror shall notify the
Holders), that a sale or distribution of Registrable Securities would adversely
impact such offering, then each Holder shall, to the extent not inconsistent
with Applicable Law, refrain from effecting any sale or distribution of
Registrable Securities,
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<PAGE>
including sales pursuant to Rule 144 under the Securities Act, during the 10-day
period prior to, and during the 90-day period beginning on, the effective date
of such registration statement (a "Section 6(b) Period").
(c) The Effective Period and, in the case where the use of an
effective Registration Statement is prohibited under Section 6(a), the period
for which a Registration Statement shall be kept effective pursuant to Section
7(b), as the case may be, shall be extended by a number of days equal to the
number of days of any Blackout Period occurring during such period. Except as
provided below, the beginning of any Blackout Period shall be at least 120 days
after the end of any prior Blackout Period; provided, however, that once during
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any consecutive 12 months during the Effective Period a Section 6(b) Period may
begin on or within five days of the last day of a Section 6(a) Period.
Notwithstanding anything to the contrary contained herein, the aggregate number
of days included in all Blackout Periods during any consecutive 18 months during
the Effective Period shall not exceed 180 days.
(d) During the five day period prior to, and during the 30 day
period commencing on, the effective date of a registration statement filed by
Acquiror on behalf of Holders in connection with an underwritten offering
pursuant to Section 4(a), Acquiror hereby agrees not to effect (except pursuant
to employee benefit plans, the U S WEST Shareowner Investment Plan or a similar
plan) any public sale or distribution of (i) Media Stock, if the Registrable
Securities included in such registration include shares of Media Stock, and (ii)
preferred stock convertible into Media Stock, if the Registrable Securities
included in such registration include shares of Series D Preferred Stock.
7. Registration Procedures. If and whenever Acquiror is required to
-----------------------
use its best efforts to effect or cause the registration of any Registrable
Securities under the Securities Act as provided in this Agreement, Acquiror
shall, as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement with
respect to such Registrable Securities on any form for which Acquiror then
qualifies or that counsel for Acquiror shall deem appropriate, and which
form shall be available for the sale of the Registrable Securities in
accordance with the intended methods of distribution thereof, and use its
best efforts to cause
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<PAGE>
such Registration Statement to become and remain effective;
(b) prepare and file with the SEC amendments and post-effective
amendments to such Registration Statement and such amendments and
supplements to the Prospectus used in connection therewith as may be
necessary to maintain the effectiveness of such registration or as may be
required by the rules, regulations or instructions applicable to the
registration form utilized by Acquiror or by the Securities Act for a Shelf
Registration or otherwise necessary to keep such Registration Statement
effective for at least 90 days and cause the Prospectus as so supplemented
to be filed pursuant to Rule 424 under the Securities Act, and to otherwise
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement until
the earlier of (x) such 90th day and (y) such time as all Registrable
Securities covered by such Registration Statement have ceased to be
Registrable Securities (it being understood that Acquiror at its option may
determine to maintain such effectiveness for a longer period, whether
pursuant to a Shelf Registration or otherwise); provided, however, that a
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reasonable time before filing a Registration Statement or Prospectus, or
any amendments or supplements thereto (other than reports required to be
filed by it under the Exchange Act), Acquiror shall furnish to the Holders,
the managing underwriter and their respective counsel for review and
comment, copies of all documents proposed to be filed and shall not file
any such documents (other than as aforesaid) to which any of them
reasonably object prior to the filing thereof;
(c) furnish to each Holder of such Registrable Securities and to
any underwriter in connection with an underwritten offer such number of
conformed copies of such Registration Statement and of each amendment and
post-effective amendment thereto (in each case including all exhibits) and
such number of copies of any Prospectus or Prospectus supplement and such
other documents as such Holder or underwriter may reasonably request in
order to facilitate the disposition of the Registrable Securities by such
Holder or underwriter (Acquiror hereby consenting to the use (subject to
the limitations set forth in the last paragraph of this
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<PAGE>
Section 7) of the Prospectus or any amendment or supplement thereto in
connection with such disposition);
(d) use its best efforts to register or qualify such Registrable
Securities covered by such Registration Statement under such other
securities or "blue sky" laws of such jurisdictions as each Holder shall
reasonably request, except that Acquiror shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction where, but for the requirements of this Section 7(d), it
would not be obligated to be so qualified, to subject itself to taxation in
any such jurisdiction, or to consent to general service of process in any
such jurisdiction;
(e) notify each Holder of any such Registrable Securities covered
by such Registration Statement, at any time when a Prospectus relating
thereto is required to be delivered under the Securities Act within the
appropriate period mentioned in Section 7(b), of Acquiror's becoming aware
that the Prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing, and at the request of any such Holder, prepare and furnish to
such Holder a reasonable number of copies of an amendment or supplement to
such Registration Statement or related Prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable
Securities, such Prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances then existing;
(f) notify each Holder covered by such Registration Statement at any
time:
(i) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same
has become effective;
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<PAGE>
(ii) of any request by the SEC for amendments or supplements to
the Registration Statement or the Prospectus or for additional
information;
(iii) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or any order
preventing the use of a related Prospectus, or the initiation (or any
overt threats) of any proceedings for such purposes;
(iv) of the receipt by Acquiror of any written notification of
the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation (or overt
threats) of any proceeding for that purpose); and
(v) if at any time the representations and warranties of
Acquiror contemplated by paragraph (i)(1) below cease to be true and
correct in all material respects;
(g) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders an earnings statement that shall satisfy the provisions of Section
11(a) of the Securities Act, provided that Acquiror shall be deemed to have
complied with this paragraph if it has complied with Rule 158 of the
Securities Act;
(h) use its best efforts to cause all such Registrable Securities to
be listed on any securities exchange on which the class of Registrable
Securities being registered is then listed, if such Registrable Securities
are not already so listed and if such listing is then permitted under the
rules of such exchange, and to provide a transfer agent and registrar for
such Registrable Securities covered by such Registration Statement no later
than the effective date of such Registration Statement;
(i) enter into agreements (including an underwriting agreement in the
form customarily entered into by Acquiror in a comparable underwritten
offering) and take all other appropriate and all commercially reasonable
actions in order to expedite or facilitate
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<PAGE>
the disposition of such Registrable Securities and in such connection,
whether or not an underwriting agreement is entered into and whether or not
the registration is an underwritten registration:
(i) make such representations and warranties to the Holders of
such Registrable Securities and the underwriters, if any, in form,
substance and scope as are customarily made by Acquiror to
underwriters in comparable underwritten offerings;
(ii) obtain opinions of counsel to Acquiror and updates thereof
(which counsel and opinions shall be reasonably satisfactory (in form,
scope and substance) to the managing underwriters, if any, and the
Holders of a majority in number of the Registrable Securities being
sold) addressed to such Holders and the underwriters covering the
matters customarily covered in opinions requested in comparable
underwritten offerings by Acquiror;
(iii) obtain "cold comfort" letters and updates thereof from
Acquiror's independent certified public accountants addressed to the
selling Holders of Registrable Securities and the underwriters, if
any, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters by independent
accountants in connection with comparable underwritten offerings on
such date or dates as may be reasonably requested by the managing
underwriter;
(iv) provide the indemnification in accordance with the
provisions and procedures of Section 10 hereof to all parties to be
indemnified pursuant to such Section; and
(v) deliver such documents and certificates as may be reasonably
requested by the Holders of a majority in number of the Registrable
Securities being sold and the managing underwriters, if any, to
evidence compliance with clause (f) above and with any customary
conditions contained in the underwriting agreement or other agreement
entered into by Acquiror;
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<PAGE>
(j) cooperate with the Holders of Registrable Securities covered by
such Registration Statement and the managing underwriter or underwriters to
facilitate, to the extent reasonable under the circumstances, the timely
preparation and delivery of certificates (not bearing any restrictive
legends) representing the securities to be sold under such Registration
Statement, and enable such securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if
any, or such Holders may request and/or in a form eligible for deposit with
the Depository Trust Company;
(k) make available for inspection by any Holder included in such
Registration Statement, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney, accountant or
other agent retained by any such Holder or underwriter (collectively, the
"Inspectors"), reasonable access to appropriate officers of Acquiror and
Acquiror's subsidiaries to ask questions and to obtain information
reasonably requested by such Inspector and all financial and other records
and other information, pertinent corporate documents and properties of any
of Acquiror and its subsidiaries and affiliates (collectively, the
"Records"), as shall be reasonably necessary to enable them to exercise
their due diligence responsibility; provided, however, that the Records
-------- -------
that Acquiror determines, in good faith, to be confidential and which it
notifies the Inspectors in writing are confidential shall not be disclosed
to any Inspector unless such Inspector signs a confidentiality agreement
reasonably satisfactory to Acquiror or either (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission of a
material fact in such Registration Statement or (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction; provided, further, that any decision regarding the
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disclosure of information pursuant to subclause (i) shall be made only
after consultation with counsel for the applicable Inspectors; and
provided, further, that each Holder agrees that it will, promptly after
-------- -------
learning that disclosure of such Records is sought in a court having
jurisdiction, give notice to Acquiror and allow Acquiror, at Acquiror's
expense, to undertake appropriate action to prevent disclosure of such
Records; and
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<PAGE>
(l) in the event of the issuance of any stop order suspending the
effectiveness of the Registration Statement or of any order suspending or
preventing the use of any related Prospectus or suspending the
qualification of any Registrable Securities included in the Registration
Statement for sale in any jurisdiction, Acquiror will use all commercially
reasonable efforts promptly to obtain its withdrawal.
Acquiror may require each Holder as to which any registration is being
effected to furnish Acquiror with such information regarding such Holder and
pertinent to the disclosure requirements relating to the registration and the
distribution of such securities as Acquiror may from time to time reasonably
request in writing.
Each Holder agrees that, upon receipt of any notice from Acquiror of
the happening of any event of the kind described in Section 7(e), such Holder
shall forthwith discontinue disposition of Registrable Securities pursuant to
the Prospectus or Registration Statement covering such Registrable Securities
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 7(e), and, if so directed by Acquiror, such
Holder will deliver to Acquiror (at Acquiror's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event Acquiror shall give any such notice, the Effective Period
and the period mentioned in Section 7(b) shall be extended by the number of days
during the period from the date of the giving of such notice pursuant to Section
7(e) and through the date when each seller of Registrable Securities covered by
such Registration Statement shall have received the copies of the supplemented
or amended Prospectus contemplated by Section 7(e).
8. Registration Expenses. Acquiror shall pay all Registration
---------------------
Expenses in connection with all registrations of Registrable Securities pursuant
to Sections 3 and 4 and each Holder shall pay (x) all fees and expenses of
counsel to such Holder and any counsel to the Holders and (y) all underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Registrable Securities pursuant to the Registration
Statement.
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<PAGE>
9. Rule 144. Acquiror agrees that it shall timely file the
--------
reports required to be filed by it under the Securities Act or the Exchange
Act (including, without limitation, the reports under sections 13 and 15
(d) of the Exchange Act referred to in paragraph (c)(1) of Rule 144 under
the Securities Act), and shall take such further actions as any Holder may
reasonably request, all to the extent required to enable Holders to sell
Registrable Securities, from time to time, pursuant to the resale
limitations of (a) Rule 144 under the Securities Act, as such rule may be
hereafter amended, or (b) any similar rules or regulations hereafter
adopted by the SEC. Upon the written request of any Holder, Acquiror shall
deliver to such Holder a written statement verifying that it has complied
with such requirements.
10. Indemnification; Contribution. (a) Indemnification by
----------------------------- ------------------
Acquiror. Acquiror agrees to indemnify and hold harmless each Holder
--------
included in any registration of Registrable Securities pursuant to this
Agreement, its trustees, officers and directors and each Person who
controls such Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act), and any agent or investment adviser
thereof against all losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees and expenses) incurred by such party
pursuant to any actual or threatened action, suit, proceeding or
investigation arising out of or based upon (i) any untrue or alleged untrue
statement of material fact contained in any Registration Statement, any
Prospectus or preliminary Prospectus, or any amendment or supplement to any
of the foregoing or (ii) any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein (in the case of a Prospectus or a preliminary
Prospectus, in light of the circumstances then existing) not misleading,
except in each case insofar as the same arise out of or are based upon, any
such untrue statement or omission made in reliance on and in conformity
with information with respect to such Holder furnished in writing to
Acquiror by such Holder or its counsel expressly for use therein. In
connection with an underwritten offering, Acquiror will indemnify the
underwriters thereof, their officers, directors and agents and each Person
who controls such underwriters (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the same extent as
provided above with respect to the indemnification of the Holders.
Notwithstanding the
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foregoing provisions of this Section 10(a), Acquiror will not be liable to
any Holder, any Person who participates as an underwriter in the offering
or sale of Registrable Securities or any other Person, if any, who controls
such Holder or underwriter (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), under the indemnity
agreement in this Section 10(a) for any such loss, claim, damage, liability
(or action or proceeding in respect thereof) or expense that arises out of
such Holder's or other Person's failure to send or deliver a copy of a
final Prospectus to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of the Registrable Securities to such Person if
such statement or omission was corrected in such final Prospectus and
Acquiror has previously furnished copies thereof to such Holder in
accordance with this Agreement.
(b) Indemnification by Holders of Registrable Securities. In
----------------------------------------------------
connection with the any registration of Registrable Securities pursuant to
this Agreement, each Holder included in such registration shall furnish to
Acquiror and any underwriter in writing such information, including the
name, address and the amount of Registrable Securities held by such Holder,
as Acquiror or any underwriter reasonably requests for use in the
Registration Statement relating to such registration or the related
Prospectus and agrees to indemnify and hold harmless Acquiror, all other
Holders and any underwriter, each such party's officers and directors and
each Person who controls each such party (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act), and any agent or
investment adviser thereof against all losses, claims, damages, liabilities
and expenses (including reasonable attorneys' fees and expenses) incurred
by each such party pursuant to any actual or threatened action, suit,
proceeding or investigation arising out of or based upon (i) any untrue or
alleged untrue statement of material fact contained in any Registration
Statement, any Prospectus or preliminary Prospectus, or any amendment or
supplement to any of the foregoing or (ii) any omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein (in the case of a Prospectus or a
preliminary Prospectus, in light of the circumstances then existing) not
misleading, but only to the extent that any such untrue statement or
omission is made in reliance on and in conformity with information with
respect to such Holder furnished in writing
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<PAGE>
to Acquiror or any underwriter by such Holder or its counsel specifically
for inclusion therein.
(c) Conduct of Indemnification Proceedings. Any Person entitled
--------------------------------------
to indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such indemnified party of any
written notice of the commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which such indemnified
party may claim indemnification or contribution pursuant to this Section 10
(provided that failure to give such notification shall not affect the
obligations of the indemnifying party pursuant to this Section 10 except to
the extent the indemnifying party shall have been actually prejudiced as a
result of such failure). In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under these
indemnification provisions for any legal expenses of other counsel or any
other expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs
of investigation. Notwithstanding the foregoing, if (i) the indemnifying
party shall not have employed counsel reasonably satisfactory to such
indemnified party to take charge of the defense of such action within a
reasonable time after notice of commencement of such action (so long as
such failure to employ counsel is not the result of an unreasonable
determination by such indemnified party that counsel selected pursuant to
the immediately preceding sentence is unsatisfactory), or (ii) the actual
or potential defendants in, or targets of, any such action include both the
indemnifying party and such indemnified party and such indemnified party
shall have reasonably concluded that there may be legal defenses available
to it which are different from or additional to those available to the
indemnifying party which, if the indemnifying party and such indemnified
party were to be represented by the same counsel, could result in a
conflict of interest for such counsel or
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<PAGE>
materially prejudice the prosecution of the defenses available to such
indemnified party, then such indemnified party shall have the right to
employ separate counsel, in which case the fees and expenses of one counsel
or firm of counsel (plus one local or regulatory counsel or firm of
counsel) selected by a majority in interest of the indemnified parties
shall be borne by the indemnifying party and the fees and expenses of all
other counsel retained by the indemnified parties shall be paid by the
indemnified parties. No indemnified party shall consent to entry of any
judgment or enter into any settlement without the consent (which consent,
in the case of an action, suit, claim or proceeding exclusively seeking
monetary relief, shall not be unreasonably withheld) of each indemnifying
party.
(d) Contribution. If the indemnification from the indemnifying
------------
party provided for in this Section 10 is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages, liabilities and expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified party
in connection with the actions which resulted in such losses, claims,
damages, liabilities and expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include, subject to the limitations set forth in Section
10(c), any legal and other fees and expenses reasonably incurred by such
indemnified party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 10(d) were determined by pro rata
allocation or by any other method of allocation which does not take account
of the
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<PAGE>
equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 10(d), no
underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission and no Holder shall be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities of such Holder were offered to the public exceeds
the amount of any damages which such Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
If indemnification is available under this Section 10, the
indemnifying parties shall indemnify each indemnified party to the fullest
extent provided in Section 10(a) or (b), as the case may be, without regard
to the relative fault of such indemnifying parties or indemnified party or
any other equitable consideration provided for in this Section 10(d).
(e) The provisions of this Section 10 shall be in addition to
any liability which any party may have to any other party and shall survive
any termination of this Agreement. The indemnification provided by this
Section 10 shall remain in full force and effect irrespective of any
investigation made by or on behalf of an indemnified party, so long as such
indemnified party does not act in a fraudulent, reckless or grossly
negligent manner.
11. Participation in Underwritten Offerings. No Holder may
---------------------------------------
participate in any underwritten offering hereunder unless such Holder (a)
in the case of a registration pursuant to Section 3, agrees to sell such
Holder's securities on the basis provided in any underwriting arrangements
approved by Acquiror in its reasonable discretion and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
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<PAGE>
12. Miscellaneous. (a) Remedies. Each Holder, in addition to
------------- --------
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement.
(b) Amendments and Waivers. Except as otherwise provided
----------------------
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless Acquiror has obtained the written consent
of Holders of at least a majority in number of the Registrable Securities
then outstanding.
(c) Notices. Notices, requests, permissions, waivers, and other
-------
communications hereunder shall be in writing and shall be deemed to have
been duly given if signed by the respective Persons giving them (in the
case of any corporation the signature shall be by an officer thereof) and
delivered by hand, deposited in the United States mail (registered or
certified, return receipt requested), properly addressed and postage
prepaid, or delivered by telecopy:
If to a Holder, to:
Amos B. Hostetter, Jr.
c/o CONTINENTAL CABLEVISION, INC.
The Pilot House, Lewis Wharf
Boston, Massachusetts 02110
Telephone: (617) 742-9500
Telecopy: (617) 742-0530
Attention: Amos B. Hostetter, Jr.
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Telephone: (617) 338-2800
Telecopy: (617) 338-2880
Attention: Patrick K. Miehe, Esq.
If to Acquiror, to:
U S WEST, INC.
7800 East Orchard Road
Englewood, Colorado 80111
Telephone: (303) 793-6310
-24-
<PAGE>
Telecopy: (303) 793-6707
Attention: General Counsel
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Telecopy: (212) 310-8007
Attention: Dennis J. Block, Esq.
(d) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors of each of the parties;
provided, however, that any successor to a Holder shall have agreed in
-------- -------
writing to become a Holder under this Agreement and to be bound by the
terms and conditions hereof and to become a Stockholder under the
Stockholders Agreement and to be bound by the terms and conditions thereof.
This Agreement and the provisions of this Agreement that are for the
benefit of the Holders shall not be assignable by any Holder to any Person
and any such purported assignment shall be null and void.
(e) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other parties.
(f) Descriptive Headings. The descriptive headings used herein
--------------------
are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
(g) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
(h) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein
shall not be in any way impaired thereby, it being
-25-
<PAGE>
intended that all remaining provisions contained herein shall not be in any
way impaired thereby, it being intended that all of the rights and
privileges of the Holder shall be enforceable to the fullest extent
permitted by law.
(i) Entire Agreement. This Agreement is intended by the parties
----------------
as a final expression and a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter hereof. There are no restrictions, promises, warranties or
undertakings with respect to the subject matter hereof, other than those
set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such
subject matter.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
U S WEST, INC.
By: ________________________________________
Name:
Title:
_________________________________________________
Amos B. Hostetter, Jr.
THE AMOS B. HOSTETTER, JR. 1989 TRUST
By:_________________________________________
Name: Amos B. Hostetter, Jr.
Title: Trustee
By:_________________________________________
Name: Timothy P. Neher
Title: Trustee
THE HOSTETTER FOUNDATION
By:_____________________________________
Name:
Title:
-27-
<PAGE>
EXHIBIT C
---------
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF SERIES D CONVERTIBLE
PREFERRED STOCK
OF
U S WEST, INC.
_____________________
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
_____________________
U S WEST, INC., a corporation organized and existing by virtue of
the General Corporation Law of the State of Delaware (the "Corporation"),
does hereby certify that the following resolution was duly adopted by
action of the Board of Directors of the Corporation at a meeting duly held
on February 26, 1996.
RESOLVED that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of
Section 3 of Article V of the Restated Certificate of Incorporation of the
Corporation (the "Certificate of Incorporation"), and Section 151(g) of the
General Corporation Law of the State of Delaware, such Board of Directors
hereby creates, from the authorized shares of Preferred Stock, par value
$1.00 per share (the "Preferred Stock"), of the Corporation authorized to
be issued pursuant to the Certificate of Incorporation, a series of
Preferred Stock, and hereby fixes the voting powers, designations,
preferences and relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof, of the shares of
such series as follows:
The series of Preferred Stock hereby established shall consist of
20,000,000 shares designated as Series D Convertible Preferred Stock. The
rights, preferences and limitations of such series shall be as follows:
<PAGE>
1. Definitions. Unless otherwise defined herein, terms used
-----------
herein shall have the meanings assigned to them in Section 2.6 of Article V
of the Certificate of Incorporation and the following terms shall have the
indicated meanings:
1.1 "Board of Directors" shall mean the Board of Directors
of the Corporation or, with respect to any action to be taken by the Board
of Directors, any committee of the Board of Directors duly authorized to
take such action.
1.2 "Capital Stock" shall mean any and all shares of
corporate stock of a Person (however designated and whether representing
rights to vote, rights to participate in dividends or distributions upon
liquidation or otherwise with respect to the Corporation, or any division
or subsidiary thereof, or any joint venture, partnership, corporation or
other entity).
1.3 "Certificate" shall mean the certificate of the voting
powers, designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions
thereof, of Series D Convertible Preferred Stock filed with respect to this
resolution with the Secretary of State of the State of Delaware pursuant to
Section 151 of the General Corporation Law of the State of Delaware.
1.4 "Closing Price" shall mean the last reported sale price
of the Media Stock (or such other class or series of common stock into
which shares of this Series are then convertible), regular way, as shown on
the Composite Tape of the NYSE, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices on the NYSE, or,
if the Media Stock (or such other class or series of common stock) is not
listed or admitted to trading on the NYSE, on the principal national
securities exchange on which such stock is listed or admitted to trading,
or, if it is not listed or admitted to trading on any national securities
exchange, the last reported sale price of the Media Stock (or such other
class or series of common stock), or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, in either case
as reported by Nasdaq.
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<PAGE>
1.5 "Communications Stock" shall mean the class of U S WEST
Communications Group Common Stock, par value $.01 per share, of the
Corporation or any other class of stock resulting from (x) successive
changes or reclassifications of such stock consisting solely of changes in
par value, or from par value to no par value or (y) a subdivision or
combination, and in any such case including any shares thereof authorized
after the date of the Certificate, together with any associated rights to
purchase other securities of the Corporation which are at the time
represented by the certificates representing such shares.
1.6 "Conversion Date" shall have the meaning set forth in
Section 3.5.
1.7 "Conversion Price" shall have the meaning set forth in
Section 3.1 hereof.
1.8 "Conversion Rate" shall have the meaning set forth in
Section 3.1 hereof.
1.9 "Converting Holder" shall have the meaning set forth in
Section 3.5 hereof.
1.10 "Current Market Price" on any applicable record date,
Conversion Date or Redemption Date referred to in Section 3 or Section 4
shall mean the average of the daily Closing Prices per share of Media Stock
(or such other class or series of common stock into which shares of this
Series are then convertible) for the ten (10) consecutive Trading Days
ending on the third Trading Day immediately preceding such record date,
Conversion Date or Redemption Date.
1.11 "Dividend Payment Date" shall have the meaning set
forth in Section 2.1 hereof.
1.12 "Effective Time" shall mean the effective time of the
Merger.
1.13 "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder.
1.14 "Exchange Rate" for each share of this Series called
for exchange shall be a number of shares of Media Stock (or such other
class or series of common stock
-3-
<PAGE>
into which shares of this Series are then convertible) equal to the
quotient of (x) the sum of (I) the Liquidation Value plus (II) the amount
of accrued and unpaid dividends on such share of Series D Stock to the
Redemption Date divided by (y) the product of (I) .95 multiplied by (II)
the Current Market Price on the Redemption Date.
1.15 "Extraordinary Cash Distributions" shall mean, with
respect to any consecutive 12-month period, all cash dividends and cash
distributions on the outstanding shares of Media Stock during such period
(other than cash dividends or cash distributions for which a prior
adjustment to the Conversion Rate was previously made) to the extent such
cash dividends and cash distributions exceed, on a per share of Media Stock
basis, 10% of the average daily Closing Price of the Media Stock over such
period.
1.16 "Junior Stock" shall mean the Media Stock, the
Communications Stock and the shares of any other class or series of stock
of the Corporation which, by the terms of the Certificate of Incorporation
or of the instrument by which the Board of Directors, acting pursuant to
authority granted in the Certificate of Incorporation, shall fix the
relative rights, preferences and limitations thereof, shall be junior to
the Series D Stock in respect of the right to receive dividends or to
participate in any distribution of assets other than by way of dividends.
1.17 "Liquidation Value" shall have the meaning set forth
in Section 6.2 hereof.
1.18 "Media Group Disposition Redemption" shall have the
meaning set forth in Section 4.1 hereof.
1.19 "Media Group Disposition Dividend" shall have the
meaning set forth in Section 4.1 hereof.
1.20 "Media Group Special Dividend" shall have the meaning
set forth in Section 4.1 hereof.
1.21 "Media Group Special Events" shall have the meaning
set forth in Section 4.1 hereof.
1.22 "Media Group Subsidiary Redemption" shall have the
meaning set forth in Section 4.1 hereof.
-4-
<PAGE>
1.23 "Media Stock" shall mean the class of U S WEST Media
Group Common Stock, par value $.01 per share, of the Corporation or any
other class of stock resulting from (x) successive changes or
reclassifications of such stock consisting solely of changes in par value,
or from par value to no par value or (y) a subdivision or combination, and
in any such case including any shares thereof authorized after the date of
the Certificate, together with any associated rights to purchase other
securities of the Corporation which are at the time represented by the
certificates representing such shares.
1.24 "Media Group Tender or Exchange Offer" shall have the
meaning set forth in Section 4.1 hereof.
1.25 "Merger" shall mean either (i) the merger of
Continental Cablevision, Inc., a Delaware corporation, with and into
Continental Cablevision, Inc. or (ii) the merger of Continental Merger
Corporation, a Delaware corporation, with and into the Corporation,
pursuant to the terms of the Merger Agreement.
1.26 "Merger Agreement" shall mean the Agreement and Plan
of Merger, dated as of February 27, 1996, as amended and restated as of
June 27, 1996, among the Corporation, Continental Merger Corporation, a
Delaware corporation, and Continental Cablevision, Inc., a Delaware
corporation.
1.27 "Nasdaq" shall mean the Nasdaq National Market.
1.28 "NYSE" shall mean the New York Stock Exchange, Inc.
1.29 "Parity Stock" shall mean the Series A Stock, the
Series B Stock, the Series C Stock and the shares of any other class or
series of stock of the Corporation (other than Junior Stock) which, by the
terms of the Certificate of Incorporation or of the instrument by which the
Board of Directors, acting pursuant to authority granted in the Certificate
of Incorporation, shall fix the relative rights, preferences and
limitations thereof, shall, in the event that the stated dividends thereon
are not paid in full, be entitled to share ratably with the Series D Stock
in the payment of dividends, including accumulations, if any, in accordance
with the sums which would be payable on
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<PAGE>
such shares if all dividends were declared and paid in full, or shall, in
the event that the amounts payable thereon on liquidation are not paid in
full, be entitled to share ratably with the Series D Stock in any
distribution of assets other than by way of dividends in accordance with
the sums which would be payable in such distribution if all sums payable
were discharged in full; provided, however, that the term "Parity Stock"
-------- -------
shall be deemed to refer (i) in Section 6 hereof, to any stock which is
Parity Stock in respect of the distribution of assets; and (ii) in Sections
5.1 and 5.2 hereof, to any stock which is Parity Stock in respect of either
dividend rights or the distribution of assets and which, pursuant to the
Certificate of Incorporation or any instrument in which the Board of
Directors, acting pursuant to authority granted in the Certificate of
Incorporation, shall so designate, is entitled to vote with the holders of
Series D Stock.
1.30 "Person" shall mean an individual, corporation,
limited liability company, partnership, joint venture, association, trust,
unincorporated organization or other entity.
1.31 "Preferred Stock" shall mean the class of Preferred
Stock, par value $1.00 per share, of the Corporation authorized at the date
of the Certificate, including any shares thereof authorized after the date
of the Certificate.
1.32 "Record Date" shall have the meaning set forth in
Section 2.1 hereof.
1.33 "Redemption Date" shall mean the date on which the
Corporation shall effect the redemption or exchange of all or any part of
the outstanding shares of this Series pursuant to Section 4.1.
1.34 "Redemption Price" for each share of this Series
called for redemption shall be equal to the sum of (x) the Liquidation
Value plus (y) an amount equal to the accrued and unpaid dividends on such
share of Series D Stock to the Redemption Date.
1.35 "Redemption Rescission Event" shall mean the
occurrence of (a) any general suspension of trading in, or limitation on
prices for, securities on the principal national securities exchange on
which shares of Media Stock
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<PAGE>
(or such other class or series of common stock into which shares of this
Series are then convertible) are registered and listed for trading (or, if
shares of Media Stock (or such other class or series of common stock) are
not registered and listed for trading on any such exchange, in the over-
the-counter market) for more than six-and-one-half (6 1/2) consecutive
trading hours, (b) any decline in either the Dow Jones Industrial Average
or the Standard & Poor's Index of 500 Industrial Companies (or any
successor index published by Dow Jones & Company, Inc. or Standard & Poor's
Corporation) by either (i) an amount in excess of 10%, measured from the
close of business on any Trading Day to the close of business on the next
succeeding Trading Day during the period commencing on the Trading Day
preceding the day notice of any redemption or exchange of shares of this
Series is given (or, if such notice is given after the close of business on
a Trading Day, commencing on such Trading Day) and ending at the Redemption
Date or (ii) an amount in excess of 15% (or, if the time and date fixed for
redemption or exchange is more than 15 days following the date on which
notice of redemption or exchange is given, 20%), measured from the close of
business on the Trading Day preceding the day notice of such redemption or
exchange is given (or, if such notice is given after the close of business
on a Trading Day, from such Trading Day) to the close of business on any
Trading Day on or prior to the Redemption Date, (c) a declaration of a
banking moratorium or any suspension of payments in respect of banks by
Federal or state authorities in the United States or (d) the commencement
of a war or armed hostilities or other national or international calamity
directly or indirectly involving the United States which in the reasonable
judgment of the Corporation could have a material adverse effect on the
market for the Media Stock (or such other class or series of common stock
into which shares of this Series are then convertible).
1.36 "Rescission Date" shall have the meaning set forth in
Section 4.5 hereof.
1.37 "Senior Stock" shall mean the shares of any class or
series of stock of the Corporation which, by the terms of the Certificate
of Incorporation or of the instrument by which the Board of Directors,
acting pursuant to authority granted in the Certificate of Incorporation,
shall fix the relative rights, preferences and limitations thereof, shall
be senior to the Series D Stock in respect of
-7-
<PAGE>
the right to receive dividends or to participate in any distribution of
assets other than by way of dividends.
1.38 "Series A Stock" shall mean the series of Preferred
Stock authorized and designated as Series A Junior Participating Cumulative
Preferred Stock at the date of the Certificate, including any shares
thereof authorized and designated after the date of the Certificate.
1.39 "Series B Stock" shall mean the series of Preferred
Stock authorized and designated as Series B Junior Participating Cumulative
Preferred Stock at the date of the Certificate, including any shares
thereof authorized and designated after the date of the Certificate.
1.40 "Series C Stock" shall mean the series of Preferred
Stock authorized and designated as Series C Cumulative Redeemable Preferred
Stock at the date of the Certificate, including any shares thereof
authorized and designated after the date of the Certificate.
1.41 "Series D Stock" and "this Series" shall mean the
series of Preferred Stock authorized and designated as the Series D
Convertible Preferred Stock, including any shares thereof authorized and
designated after the date of the Certificate.
1.42 "Surrendered Shares" shall have the meaning set forth
in Section 3.5 hereof.
1.43 "Trading Day" shall mean, so long as the Media Stock
(or such other class or series of common stock into which shares of this
Series are then convertible) is listed or admitted to trading on the NYSE,
a day on which the NYSE is open for the transaction of business, or, if the
Media Stock (or such other class or series of common stock) is not listed
or admitted to trading on the NYSE, a day on which the principal national
securities exchange on which the Media Stock (or such other class or series
of common stock) is listed is open for the transaction of business, or, if
the Media Stock (or such other class or series of common stock) is not so
listed or admitted for trading on any national securities exchange, a day
on which Nasdaq is open for the transaction of business.
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<PAGE>
2. Dividends.
---------
2.1 The holders of the outstanding Series D Stock shall be
entitled to receive dividends, as and when declared by the Board of
Directors out of funds legally available therefor, and any dividends
declared by the Board of Directors out of funds legally available therefor
in accordance with Section 3.6(d). Each dividend shall be at the annual
rate equal to ____% per share of Series D Stock (which is equivalent to
$__________ quarterly and $__________ annually per share)./1/ All dividends
shall be_________________________
1. The dividend rate (the "Dividend Rate") shall be equal to the sum of 4.375%
(the "Base Dividend Rate") plus the Adjustment Amount (as defined below). If the
Calculation Price (as defined in the Merger Agreement) is less than $24.50, the
Corporation shall have the right, in its sole discretion, to (i) increase the
Base Dividend Rate to 6.00% and (ii) increase the Conversion Rate pursuant to
footnote 2.
The Base Dividend Rate shall be subject to adjustment in the following
manner:
(i) If the Adjustment Amount is less than seven basis points in absolute
terms, then the Adjustment Amount shall be deemed to be zero and the
Dividend Rate shall equal the Base Dividend Rate.
(ii) If the Adjustment Amount is greater than or equal to seven basis
points in absolute terms, then the Dividend Rate shall be equal to
the Base Dividend Rate plus the Adjustment Amount, rounded to the
nearest multiple of 0.125%.
"Adjustment Amount" shall be equal to the product of (x) the sum of (1) the
Change In Weighted Average Yield plus (2) the Change In Credit Spread multiplied
by (y) the Discount Factor.
"Change In Weighted Average Yield" shall equal the sum (whether positive or
negative) of the following, based upon the average market closing levels of
Treasury securities for the 10 Trading Days ending 5 Trading Days prior to the
Effective Time:
(i) the change (whether positive or negative) since February 27, 1996 in
basis points in 3-year Treasury
(continued...)
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<PAGE>
payable in cash on or about the first day of February, May, August
and November in each year, beginning on the first such date that is more
than 15 days after the Effective Time, as fixed by the Board of Directors,
or such other dates as are fixed by the Board of Directors (each a
"Dividend Payment Date"), to the holders of record of Series D Stock at the
close of business on or about the 15th day of the month next preceding such
first day of February, May,
August and November, as the case may be, as fixed by the
___________________________
1. (...continued)
yields x 0.25;
(ii) the change (whether positive or negative) since February 27, 1996 in
basis points in 5-year Treasury yields x 0.25;
(iii) the change (whether positive or negative) since February 27, 1996 in
basis points in 10-year Treasury yields x 0.25; and
(iv) the change (whether positive or negative) since February 27, 1996 in
basis points in 20-year Treasury yields x 0.25.
"Change In Credit Spread" shall equal (whether positive or negative) the
average credit spread measured in basis points on U S WEST Financing I's 7.96%
Trust Originated Preferred Securities (based upon the closing market price
expressed as a stripped current yield) over the 30-year Treasury "pricing bond"
for the 10 Trading Days ending 5 Trading Days prior to the Effective Time minus
159.5 basis points.
"Discount Factor" shall equal 0.55.
For example, if (i) the Base Dividend Rate is 4.375%, (ii) the average 3-
year Treasury, 5-year Treasury, 10-year Treasury and 20-year Treasury yields are
each 20 basis points lower at the Effective Time than they are on February 27,
1996 and (iii) the Change In Credit Spread is fifty basis points, then the
Adjustment Amount shall equal 16.5 basis points ((-20 basis points + fifty basis
points) x 0.55). Because such Adjustment Amount is greater than seven basis
points, the Dividend Rate would be equal to the Base Dividend Rate plus the
Adjustment Amount (or 4.540%), rounded to the yield which is at the nearest
multiple of 0.125% (or 4.500%).
-10-
<PAGE>
Board of Directors, or such other dates as are fixed by the Board of
Directors (each a "Record Date"). Such dividends shall accrue on each share
cumulatively on a daily basis, whether or not there are unrestricted funds
legally available for the payment of such dividends and whether or not
earned or declared, from and after the day immediately succeeding the
Effective Time and any such dividends that become payable for any partial
dividend period shall be computed on the basis of the actual days elapsed
in such period. All dividends that accrue in accordance with the foregoing
provisions shall be cumulative from and after the day immediately
succeeding the Effective Time. The per share dividend amount payable to
each holder of record of Series D Stock on any Dividend Payment Date shall
be rounded to the nearest cent. The dividend rate per share of this Series
shall be appropriately adjusted from time to time to reflect any split or
combination of the shares of this Series.
2.2 Except as hereinafter provided in this Section 2.2 and
except for redemptions by the Corporation pursuant to Sections 4.1(b),
4.1(c) or 4.1(d), unless all dividends on the outstanding shares of Series
D Stock and any Parity Stock that shall have accrued through any prior
Dividend Payment Date shall have been paid, or declared and funds set apart
for payment thereof, no dividend or other distribution (payable other than
in shares of Junior Stock) shall be paid to the holders of Junior Stock or
Parity Stock, and no shares of Series D Stock, Parity Stock or Junior Stock
shall be purchased, redeemed or otherwise acquired by the Corporation or
any of its subsidiaries (except by conversion into or exchange for Junior
Stock), nor shall any monies be paid or made available for a purchase,
redemption or sinking fund for the purchase or redemption of any Series D
Stock, Junior Stock or Parity Stock. When dividends are not paid in full
upon the shares of this Series and any Parity Stock, all dividends declared
upon shares of this Series and all Parity Stock shall be declared pro rata
so that the amount of dividends declared per share on this Series and all
such Parity Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the shares of this Series and all such
Parity Stock bear to each other. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments
on this Series which may be in arrears.
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<PAGE>
3. Conversion Rights.
-----------------
3.1 (a) Subject to Section 3.1(b), each holder of a share
of this Series shall have the right at any time to convert such share into
a number of shares of Media Stock equal to [ ] shares of Media Stock for
each share of this Series, subject to adjustment as provided in this
Section 3 (such rate, as so adjusted from time to time, is herein called
the "Conversion Rate"; and the "Conversion Price" at any time shall mean
the Liquidation Value per share divided by the Conversion Rate in effect at
such time (rounded to the nearest one hundredth of a cent))/2/.
(b) The right of a holder of a share of this Series called
for redemption or exchange pursuant to Sections 4.1(a) or 4.1(c) to convert
such share into Media Stock (or such other class or series of common stock
into which shares of this Series are then convertible) pursuant to Section
3.1(a) shall terminate at the close of business on the Redemption Date
unless the Corporation defaults in the payment of the Redemption Price or
Exchange Rate or, in the case of a redemption or exchange pursuant to
Section 4.1(a), the Corporation exercises its right to rescind such
redemption or exchange pursuant to Section 4.5, in which case such right of
conversion shall not terminate at the close of business on such date. The
right of a holder of a share of this Series called for redemption pursuant
to Section 4.1(b): (i) in connection with a Media Group Subsidiary
Redemption, a Media Group Tender or Exchange Offer or a Media Group
Disposition Redemption involving a Disposition of all (not merely
substantially all) of the properties and assets attributed to the Media
Group, to convert such share into Media Stock pursuant to Section 3.1(a)
shall terminate at the close of business on the Redemption Date; (ii) in
connection with a Media Group Disposition Dividend or Media Group Special
Dividend, to
_____________________
2. The Conversion Rate shall be equal to the quotient of (x) $50 divided by
(y) the product of (I) 1.25 multiplied by (II) the Calculation Price (as defined
in the Merger Agreement). If the Calculation Price is less than $24.50, the
Corporation shall have the right, in its sole discretion, to (i) set the
Conversion Rate equal to the quotient of (x) $50 divided by (y) the product of
(I) 1.40 multiplied by (II) the Calculation Price and (ii) increase the Base
Dividend Rate in accordance with footnote 1.
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convert such share into Media Stock pursuant to Section 3.1(a) shall
terminate at the close of business on the record date for determining
holders entitled to receive such dividend; and (iii) in connection with a
Media Group Disposition Redemption involving a Disposition of substantially
all (but not all) of the properties and assets attributed to the Media
Group, to convert such share into Media Stock shall terminate at the close
of business on the date on which shares of Media Stock are selected to be
redeemed in such Media Group Disposition Redemption, unless, in any of the
foregoing cases, the Corporation defaults in the payment of the Redemption
Price or the conditions to such redemption set forth in the last sentence
of Section 4.1(b) shall not have been satisfied, in which event such right
of conversion shall not terminate at the close of business on such date.
In the event the Corporation converts all of the outstanding shares of
Media Stock into shares of Communications Stock (or, if the Communications
Stock is not Publicly Traded at such time and shares of any other class or
series of common stock of the Corporation (other than Media Stock) are then
Publicly Traded, of such other class or series of common stock as has the
largest Market Capitalization), the right of a holder of a share of this
Series called for redemption pursuant to Section 4.1(d) in connection with
an event substantially similar to a Media Group Special Event to convert
such share into Communications Stock (or such other class or series of
common stock) shall terminate on a date comparable to the date specified in
the preceding sentence with respect to a Media Group Special Event
substantially similar to such event.
3.2 If any shares of this Series are surrendered for
conversion subsequent to the Record Date preceding a Dividend Payment Date
but on or prior to such Dividend Payment Date (except shares called for
redemption or exchange on a Redemption Date between such Record Date and
Dividend Payment Date and with respect to which such redemption or exchange
has not been rescinded), the registered holder of such shares at the close
of business on such Record Date shall be entitled to receive the dividend,
if any, payable on such shares on such Dividend Payment Date
notwithstanding the conversion thereof. Except as provided in this Section
3.2, no adjustments in respect of payments of dividends on shares
surrendered for conversion or any dividend on the Media Stock issued upon
conversion shall be made upon the conversion of any shares of this Series.
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3.3 The Corporation may, but shall not be required to, in
connection with any conversion of shares of this Series, issue a fraction
of a share of Media Stock, and if the Corporation shall determine not to
issue any such fraction, the Corporation shall, subject to Section 3.6(g),
make a cash payment (rounded to the nearest cent) equal to such fraction
multiplied by the Closing Price of the Media Stock on the last Trading Day
prior to the date of conversion.
3.4 Any holder of shares of this Series electing to convert
such shares into Media Stock shall surrender the certificate or
certificates for such shares at the office of the transfer agent or agents
therefor (or at such other place in the United States as the Corporation
may designate by notice to the holders of shares of this Series) during
regular business hours, duly endorsed to the Corporation or in blank, or
accompanied by instruments of transfer to the Corporation or in blank, or
in form satisfactory to the Corporation, and shall give written notice to
the Corporation at such office that such holder elects to convert such
shares of this Series. The Corporation shall, as soon as practicable and
in any event within five Trading Days (subject to Section 3.6(g)) after
such surrender of certificates for shares of this Series, accompanied by
the written notice above prescribed issue and deliver at such office to the
holder for whose account such shares were surrendered, or to his nominee,
(i) certificates representing the number of shares of Media Stock to which
such holder is entitled upon such conversion and (ii) if less than the full
number of shares of this Series represented by such certificate or
certificates is being converted, a new certificate of like tenor
representing the shares of this Series not converted.
3.5 Conversion shall be deemed to have been made
immediately prior to the close of business as of the date that certificates
for the shares of this Series to be converted, and the written notice
prescribed in Section 3.4, are received by the transfer agent or agents for
this Series (such date being referred to herein as the "Conversion Date").
The Person entitled to receive the Media Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such
Media Stock as of the close of business on the Conversion Date and such
conversion shall be at the Conversion Rate in effect on such date.
Notwithstanding anything to the contrary contained herein,
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in the event the Corporation shall have rescinded a redemption or exchange
of shares of this Series pursuant to Section 4.5, any holder of shares of
this Series that shall have surrendered shares of this Series for
conversion following the day on which notice of the redemption or exchange
shall have been given but prior to the later of (a) the close of business
on the Trading Day next succeeding the date on which public announcement of
the rescission of such redemption or exchange shall have been made and (b)
the date which is three Trading Days following the mailing of the notice of
rescission required by Section 4.5 (a "Converting Holder") may rescind the
conversion of such shares surrendered for conversion by (i) properly
completing a form prescribed by the Corporation and mailed to holders of
shares of this Series (including Converting Holders) with the Corporation's
notice of rescission, which form shall provide for the certification by any
Converting Holder rescinding a conversion on behalf of any beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of shares of this
Series that the beneficial ownership (within the meaning of such Rule) of
such shares shall not have changed from the date on which such shares were
surrendered for conversion to the date of such certification and (ii)
delivering such form to the Corporation no later than the close of business
on that date which is fifteen (15) Trading Days following the date of the
mailing of the Corporation's notice of rescission. The delivery of such
form by a Converting Holder shall be accompanied by (x) any certificates
representing shares of Media Stock issued to such Converting Holder upon a
conversion of shares of this Series that shall be rescinded by the proper
delivery of such form (the "Surrendered Shares"), (y) any securities,
evidences of indebtedness or assets (other than cash) distributed by the
Corporation to such Converting Holder by reason of such Converting Holder's
being a record holder of the Surrendered Shares and (z) payment in New York
Clearing House funds or other funds acceptable to the Corporation of an
amount equal to the sum of (I) any cash such Converting Holder may have
received in lieu of the issuance of fractional shares upon conversion and
(II) any cash paid or payable by the Corporation to such Converting Holder
by reason of such Converting Holder being a record holder of the
Surrendered Shares. Upon receipt by the Corporation of any such form
properly completed by a Converting Holder and any certificates, securities,
evidences of indebtedness, assets or cash payments required to be returned
or made by such Converting Holder to the Corporation as set forth
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above, the Corporation shall instruct the transfer agent or agents for
shares of Media Stock and shares of this Series to cancel any certificates
representing the Surrendered Shares (which Surrendered Shares shall be
deposited in the treasury of the Corporation) and reissue certificates
representing shares of this Series to such Converting Holder (which shares
of this Series shall, notwithstanding their surrender for conversion, be
deemed to have been outstanding at all times). The Corporation shall, as
promptly as practicable, and in no event more than five (5) Trading Days,
following the receipt of any such properly completed form and any such
certificates, securities, evidences of indebtedness, assets or cash
payments required to be so returned or made, pay to the Converting Holder
or as otherwise directed by such Converting Holder any dividend or other
payment made on such shares of this Series during the period from the time
such shares shall have been surrendered for conversion to the rescission of
such conversion. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of any form submitted to the
Corporation to rescind the conversion of shares of this Series, including
questions as to the proper completion or execution of any such form or any
certification contained therein, shall be resolved by the Corporation,
whose good faith determination shall be final and binding. The Corporation
shall not be required to deliver certificates for shares of Media Stock
while the stock transfer books for such stock or for this Series are duly
closed for any purpose (but not for a period in excess of two Trading Days)
or during any period commencing at a Redemption Rescission Event and ending
at either (i) the time and date at which the Corporation's right of
rescission shall expire pursuant to Section 4.5 if the Corporation shall
not have exercised such right or (ii) the close of business on that day
which is fifteen (15) Trading Days following the date of the mailing of a
notice of rescission pursuant to Section 4.5 if the Corporation shall have
exercised such right of rescission, but certificates for shares of Media
Stock shall be delivered as soon as practicable after the opening of such
books or the expiration of such period.
3.6 The Conversion Rate shall be adjusted from time to time
as follows for events occurring after the Effective Time:
(a) In case the Corporation shall, at any time or from time
to time, (i) pay a dividend or make a
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distribution in shares of Media Stock, (ii) combine the outstanding
shares of Media Stock into a smaller number of shares, or (iii)
subdivide or reclassify the outstanding shares of Media Stock, then
the Conversion Rate in effect immediately before such action shall be
adjusted so that immediately following such event the holders of the
Series D Stock shall be entitled to receive upon conversion thereof
the kind and amount of shares of capital stock of the Corporation
which they would have owned or been entitled to receive upon or by
reason of such event if such shares of Series D Stock had been
converted immediately before the record date (or, if no record date,
the effective date) for such event. An adjustment made pursuant to
this Section 3.6(a) shall become effective immediately after the
opening of business on the day next following the record date in the
case of a dividend or distribution and shall become effective
immediately after the opening of business on the day next following
the effective date in the case of a subdivision, combination or
reclassification. For the purposes of this Section 3.6(a), if holders
of Media Stock are entitled to elect the kind or amount of securities
receivable upon the payment of any such divided, subdivision,
combination or reclassification, each holder of Series D Stock shall
be deemed to have failed to exercise any such right of election
(provided that if the kind or amount of securities receivable upon
such dividend, distribution, subdivision, combination or
reclassification is not the same for each nonelecting share, then the
kind and amount of securities receivable upon such dividend,
distribution, subdivision, combination or reclassification for each
nonelecting share shall be deemed to be the kind and amount so
receivable per share by a plurality of the nonelecting shares).
(b) If the Corporation shall issue rights, warrants or
options to all holders of Media Stock entitling them (for a period not
exceeding 45 days from the record date referred to below) to subscribe
for or purchase shares of Media Stock at a price per share less than
the Current Market Price (determined as of the record date for the
determination of stockholders entitled to receive such rights,
warrants or options), then, in any such event, the Conversion Rate
shall be adjusted by multiplying the Conversion Rate in effect
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immediately prior to the opening of business on such record date by a
fraction, the numerator of which shall be the number of shares of
Media Stock outstanding on such record date plus the maximum number of
additional shares of Media Stock offered for subscription pursuant to
such rights, warrants or options, and the denominator of which shall
be the number of shares of Media Stock outstanding on such record date
plus the maximum number of additional shares of Media Stock which the
aggregate offering price of the maximum number of shares of Media
Stock so offered for subscription or purchase pursuant to such rights,
warrants or options would purchase at such Current Market Price
(determined by multiplying such maximum number of shares by the
exercise price of such rights, warrants or options (plus any other
consideration received by the Corporation upon the issuance or
exercise of such rights, warrants or options) and dividing the product
so obtained by such Current Market Price). Such adjustment shall
become effective at the opening of business on the day next following
the record date for the determination of stockholders entitled to
receive such rights, warrants or options. To the extent that shares of
Media Stock are not delivered after the expiration of such rights,
warrants or options, the Conversion Rate shall be readjusted to the
Conversion Rate which would then be in effect had the adjustments made
upon the record date for the determination of stockholders entitled to
receive such rights, warrants or options been made upon the basis of
delivery of only the number of shares of Media Stock actually
delivered and the amount actually paid therefor. In determining
whether any rights, warrants or options entitle the holders to
subscribe for or purchase shares of Media Stock at a price per share
less than such Current Market Price, there shall be taken into account
any consideration received by the Corporation upon issuance and upon
exercise of such rights, warrants or options. The value of such
consideration, if other than cash, shall be determined by the good
faith business judgment of the Board of Directors, whose determination
shall be conclusive.
(c) If the Corporation shall pay a dividend or make a
distribution to all holders of outstanding shares of Media Stock, of
capital stock, cash, evidences of its indebtedness or other assets of
the
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Corporation (but excluding (x) any cash dividends or distributions
(other than Extraordinary Cash Distributions) and (y) dividends or
distributions referred to in Section 3.6(a)), then the Conversion Rate
shall be adjusted by multiplying the Conversion Rate in effect
immediately prior to the opening of business on the record date for
the determination of stockholders entitled to receive such dividend or
distribution by a fraction, the numerator of which shall be the
Current Market Price (determined as of such record date), and the
denominator of which shall be such Current Market Price less either
(A) the fair market value (as determined by the good faith business
judgment of the Board of Directors, whose determination shall be
conclusive), as of such record date, of the portion of the capital
stock, assets or evidences of indebtedness to be so distributed
applicable to one share of Media Stock or (B), if applicable, the
amount of the Extraordinary Cash Distribution to be distributed per
share of Media Stock. The adjustment pursuant to the foregoing
provisions of this Section 3.6(c) shall become effective at the
opening of business on the day next following the record date for the
determination of stockholders entitled to receive such dividend or
distribution.
(d) In lieu of making an adjustment to the Conversion Rate
pursuant to Sections 3.6(a), 3.6(b) or 3.6(c) above for a dividend or
distribution or an issue of rights, warrants or options, the
Corporation may distribute out of funds legally available therefor to
the holders of shares of this Series, or reserve for distribution out
of funds legally available therefor with each share of Media Stock
delivered to a person converting a share of this Series pursuant to
this Section 3, such dividend or distribution or such rights, warrants
or options; provided, however, that in the case of such a reservation,
-------- -------
on the date, if any, on which a person converting a share of this
Series would no longer be entitled to receive such dividend or
distribution or receive or exercise such rights, warrants or options,
such dividend or distribution shall be deemed to have occurred, or
such rights, warrants or options shall be deemed to have issued, and
the Conversion Rate shall be adjusted as provided in Section 3.6(a),
3.6(b) or 3.6(c), as the case may be (with such termination date being
the relevant date of
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determination for purposes of determining the Current Market Price).
(e) The Corporation shall be entitled to make such
additional increases in the Conversion Rate, in addition to the
adjustments required by subsections 3.6(a) through 3.6(c), as shall be
determined by the Board of Directors to be necessary in order that any
dividend or distribution in Media Stock, any subdivision,
reclassification or combination of shares of Media Stock or any
issuance of rights or warrants referred to above, shall not be taxable
to the holders of Media Stock for United States Federal income tax
purposes.
(f) To the extent permitted by applicable law, the
Corporation may from time to time increase the Conversion Rate by any
amount for any period of time if the period is at least 20 Trading
Days, the increase is irrevocable during such period and the Board of
Directors shall have made a determination that such increase would be
in the best interests of the Corporation, which determination shall be
conclusive.
(g) In any case in which this Section 3.6 shall require
that any adjustment be made effective as of or immediately following a
record date, the Corporation may elect to defer (but only for five (5)
Trading Days following the occurrence of the event which necessitates
the filing of the statement referred to in Section 3.9(a)) issuing to
the holder of any shares of this Series converted after such record
date (i) the shares of Media Stock and other capital stock of the
Corporation issuable upon such conversion over and above the shares of
Media Stock and other capital stock of the Corporation issuable upon
such conversion on the basis of the Conversion Rate prior to
adjustment and (ii) paying to such holder any amount in cash in lieu
of any fraction thereof pursuant to Section 3.3; provided, however,
-------- -------
that the Corporation shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such
adjustment.
(h) All calculations under this Section 3 shall be made to
the nearest cent, one-hundredth of a
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share or, in the case of the Conversion Rate, one hundred-thousandth.
Notwithstanding any other provision of this Section 3, the Corporation
shall not be required to make any adjustment of the Conversion Rate
unless such adjustment would require an increase or decrease of at
least 1.00000% of such Conversion Rate. Any lesser adjustment shall
be carried forward and shall be made at the time of and together with
the next subsequent adjustment which, together with any adjustment or
adjustments so carried forward, shall amount to an increase or
decrease of at least 1.00000% in such rate. Any adjustments under
this Section 3 shall be made successively whenever an event requiring
such an adjustment occurs.
(i) If the Corporation shall take a record of the holders
of Media Stock for the purpose of entitling them to receive a dividend
or other distribution, and shall thereafter and before the
distribution to stockholders thereof legally abandon its plan to pay
or deliver such dividend or distribution, then thereafter no
adjustment in the Conversion Rate then in effect shall be required by
reason of the taking of such record.
(j) Subject to Section 3.6(e) hereof, no adjustment shall
be made pursuant to this Section 3.6 with respect to any share of
Series D Stock that is converted prior to the time such adjustment
otherwise would be made.
3.7 In case of (a) any consolidation or merger to which the
Corporation is a party, other than a merger or consolidation in which the
Corporation is the surviving or continuing corporation and which does not
result in any reclassification of, or change (other than a change in par
value or from par value to no par value or from no par value to par value,
or as a result of a subdivision or combination) in, outstanding shares of
Media Stock (or such other class or series of common stock into which
shares of this Series are then convertible) or (b) any sale or conveyance
of all or substantially all of the property and assets of the Corporation,
then lawful provision shall be made as part of the terms of such
transaction whereby the holder of each share of Series D Stock which is not
converted into the right to receive stock or other securities and property
in connection with such
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transaction shall have the right thereafter, during the period such share
shall be convertible, to convert such share into the kind and amount of
shares of stock or other securities and property receivable upon such
consolidation, merger, sale or conveyance by a holder of the number of
shares of Media Stock (or such other class or series of common stock into
which shares of this Series are then convertible) into which such shares of
this Series could have been converted immediately prior to such
consolidation, merger, sale or conveyance, subject to adjustment which
shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 3. If holders of Media Stock (or such other
class or series of common stock into which shares of this Series are then
convertible) are entitled to elect the kind or amount of securities or
other property receivable upon such consolidation, merger, sale or
conveyance, all adjustments made pursuant to this Section 3.7 shall be
based upon (i) the election, if any, made in writing to the Secretary of
the Corporation by the record holder of the largest number of shares of
Series D Stock prior to the earlier of (x) the last date on which a holder
of Media Stock (or such other class or series of common stock) may make
such an election and (y) the date which is five (5) Trading Days prior to
the record date for determining the holders of Media Stock (or such other
class or series of common stock) entitled to participate in the transaction
(or if no such record date is established, the effective date of such
transaction) or (ii) if no such election is timely made, an assumption that
each holder of Shares of this Series failed to exercise such rights of
election (provided that if the kind or amount of securities or other
property receivable upon such consolidation, merger, sale or conveyance is
not the same for each nonelecting share, then the kind and amount of
securities or other property receivable upon such consolidation, merger,
sale or conveyance for each nonelecting share shall be deemed to be the
kind and amount so receivable per share by a plurality of the nonelecting
shares). Concurrently with the mailing to holders of Media Stock (or such
other class or series of common stock) of any document pursuant to which
such holders may make an election regarding the kind or amount of
securities or other property that will be receivable by such holder in any
transaction described in clause (a) or (b) of the first sentence of this
Section 3.7, the Corporation shall mail a copy thereof to the holders of
shares of the Series D Stock. The Corporation shall not enter into any of
the transactions referred to in clauses
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(a) or (b) of the first sentence of this Section 3.7 unless, prior to the
consummation thereof, effective provision shall be made in a certificate or
articles of incorporation or other constituent document or written
instrument of the Corporation or the entity surviving the consolidation or
merger, if other than the Corporation, or the entity acquiring the
Corporation's assets, unless, in either case, such entity is a direct or
indirect subsidiary of another entity, in which case such provision shall
be made in the certificate or articles of incorporation or other
constituent document or written instrument of such other entity (any such
entity or other entity being the "Surviving Entity") so as to assume the
obligation to deliver to each holder of shares of Series D Stock such stock
or other securities and property and otherwise give effect to the
provisions set forth in this Section 3.7. The provisions of this Section
3.7 shall apply similarly to successive consolidations, mergers, sales or
conveyances.
3.8 After the date, if any, on which all outstanding shares
of Media Stock (or such other class or series of common stock into which
shares of this Series are then convertible) are converted into or exchanged
for shares of another class or series of common stock of the Corporation,
each share of this Series shall thereafter be convertible into or
exchangeable for the number of shares of such other class or series of
common stock receivable upon such conversion or exchange by a holder of
that number of shares or fraction thereof of Media Stock (or such other
class or series of common stock into which shares of this Series are then
convertible) into which one share of this Series was convertible
immediately prior to such conversion or exchange. From and after any such
conversion or exchange, Conversion Rate adjustments as nearly equivalent as
may be practicable to the adjustments pursuant to Sections 3.6 and 3.7
which, prior to such exchange, were made in respect of Media Stock (or such
other class or series of common stock into which shares of this Series are
then convertible) shall instead be made pursuant to such Sections 3.6 and
3.7 in respect of shares of such other class or series of common stock.
3.9 (a) Whenever the Conversion Rate is adjusted as
provided in this Section 3, the Corporation (or, in the case of Section
3.7, the Corporation or the Surviving Entity, as the case may be, shall
forthwith place on file with its transfer agent or agents for this Series a
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statement signed by a duly authorized officer of the Corporation or the
Surviving Entity, as the case may be, stating the adjusted Conversion Rate
determined as provided herein. Such statements shall set forth in
reasonable detail such facts as shall be necessary to show the reason for
and the manner of computing such adjustment. Promptly after the adjustment
of the Conversion Rate, the Corporation or the Surviving Entity, as the
case may be, shall mail a notice thereof to each holder of shares of this
Series. Whenever the Conversion Rate is increased pursuant to Section
3.6(f), such notice shall be mailed to each holder of shares of this Series
as promptly as possible after the Corporation shall have determined to
effect such increase and, in any event, at least 15 Trading Days prior to
the date such increased Conversion Rate takes effect, and such notice shall
state such increased Conversion Rate and the period during which it will be
in effect. Where appropriate, the notice required by this Section 3.9(a)
may be given in advance and included as part of the notice required
pursuant to Section 3.9(b) or 3.9(c).
(b) Subject to the provisions of Section 3.9(c), if: (i)
the Corporation takes any action that would require an adjustment of the
Conversion Rate pursuant to Sections 3.6 through 3.8; (ii) there shall be
any consolidation or merger to which the Corporation is a party and for
which approval of any stockholders of the Corporation is required, or the
sale or transfer of all or substantially all of the assets of the
Corporation; or (iii) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, then the
Corporation shall, as promptly as possible, but at least 10 Trading Days
prior to the record date or other date set for definitive action if there
shall be no record date, cause notice to be filed with the transfer agent
or agents for this Series and given to each record holder of outstanding
shares of this Series stating the action or event for which such notice is
being given and the record date for and the anticipated effective date of
such action or event. Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of the related
transaction.
(c) If the Corporation intends to convert all of the
outstanding shares of Media Stock into shares of Communications Stock (or,
if the Communications Stock is not Publicly Traded at such time and shares
of any other class
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or series of common stock of the Corporation (other than Media Stock) are
then Publicly Traded, of such other class or series of common stock as has
the largest Market Capitalization) (as provided in Section 2.4 of Article V
of the Certificate of Incorporation), then the Corporation shall, not later
than the 35th Trading Day and not earlier than the 45th Trading Day prior
to the date of such conversion, cause notice to be filed with the transfer
agent or agents for this Series and given to each record holder of shares
of this Series, setting forth: (1) a statement that all outstanding shares
of Media Stock shall be converted; (2) the date of such conversion; (3) the
per share number of shares of Communications Stock (or such other class or
series of common stock) to be received with respect to each share of Media
Stock, including details as to the calculation thereof; (4) the place or
places where certificates for shares of Media Stock, properly endorsed or
assigned for transfer (unless the Corporation shall waive such
requirement), are to be surrendered for delivery of certificates for shares
of Communications Stock (or such other class or series of common stock);
(5) the number of shares of Media Stock outstanding and the number of
shares of Media Stock into or for which outstanding Convertible Securities
are then convertible, exchangeable or exercisable and the conversion,
exchange or exercise price thereof, including the number of outstanding
shares of this Series and the Conversion Price; (6) a statement to the
effect that, subject to Section 2.4.5(I) of Article V of the Certificate of
Incorporation, dividends on shares of such Media Stock shall cease to be
paid as of the date of such conversion; (7) that a holder of shares of this
Series shall be entitled to receive shares of Communications Stock (or such
other class or series of common stock) pursuant to such conversion if such
holder converts shares of this Series on or prior to the date of such
conversion; and (8) a statement as to what such holder will be entitled to
receive pursuant to the terms of Section 3.8 if such holder thereafter
properly converts shares of this Series. In addition, from and after any
conversion of Media Stock effected in accordance with Section 2.4 of
Article V of the Certificate of Incorporation, if (x) a class or series of
common stock of the Corporation exists in addition to the class or series
of common stock into which the Media Stock was converted and (y) the
Corporation intends to convert the class or series of common stock into
which the Media Stock was converted into another such class or series of
common stock of the Corporation, then the Corporation shall give notice
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comparable to the notice described in the preceding sentence of its
intention to effect such a conversion. In the event of any conflict
between the notice provisions of this Section 3.9(c) and Section 3.9(b),
the notice provisions of this Section 3.9(c) shall govern.
3.10 There shall be no adjustment of the Conversion Rate in
case of the issuance of any stock of the Corporation in a reorganization,
acquisition or other similar transaction except as specifically set forth
in this Section 3. If any action or transaction would require adjustment of
any Conversion Rate established hereunder pursuant to more than one
paragraph of this Section 3, only the adjustment which would result in the
largest increase of such Conversion Rate shall be made.
3.11 The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but unissued
stock, for the purpose of effecting the conversion of the shares of this
Series, such number of its duly authorized shares of Media Stock (or, if
applicable, any other shares of Capital Stock of the Corporation) as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of this Series into such Media Stock (or such other shares of
Capital Stock) at any time; provided, however, that nothing contained
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herein shall preclude the Corporation from satisfying its obligations in
respect of the conversion of the shares by delivery of purchased shares of
Media Stock (or such other shares of Capital Stock) that are held in the
treasury of the Corporation. All shares of Media Stock (or such other
shares of Capital Stock of the Corporation) which shall be deliverable upon
conversion of the shares of this Series shall be duly and validly issued,
fully paid and nonassessable. For purposes of this Section 3, the number
of shares of Media Stock or any other class or series of common stock of
the Corporation at any time outstanding shall not include any shares of
Media Stock or such other class or series of common stock then owned or
held by or for the account of Corporation or any subsidiary of the
Corporation.
3.12 If any shares of Media Stock (or such other class or
series of common stock into which shares of this Series are then
convertible) which would be issuable upon conversion of shares of this
Series hereunder require registration with or approval of any governmental
authority
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before such shares may be issued upon conversion, the Corporation will in
good faith and as expeditiously as possible cause such shares to be duly
registered or approved, as the case may be. The Corporation will endeavor
to list the shares of (or depositary shares representing fractional
interests in) Media Stock (or such other class or series of common stock
into which shares of this Series are then convertible) required to be
delivered upon conversion of shares of this Series prior to such delivery
upon the principal national securities exchange upon which the outstanding
Media Stock (or such other class or series of common stock) is listed at
the time of such delivery.
3.13 The Corporation shall pay any and all issue, stamp,
documentation, transfer or other taxes that may be payable in respect of
any issue or delivery of shares of Media Stock (or such other class or
series of common stock into which shares of this Series are then
convertible) on conversion of shares of this Series pursuant hereto. The
Corporation shall not, however, be required to pay any tax which is payable
in respect of any transfer involved in the issue or delivery of Media Stock
(or such other class or series of common stock) in a name other than that
in which the shares of this Series so converted were registered, and no
such issue or delivery shall be made unless and until the Person requesting
such issue has paid to the Corporation the amount of such tax, or has
established, to the satisfaction of the Corporation, that such tax has been
paid.
4. Redemption or Exchange.
----------------------
4.1 (a) Except as provided in Section 4.1(b), the shares
of this Series shall not be redeemable by the Corporation prior to the
third anniversary of the Effective Time. The Corporation may, at its sole
option, subject to Section 2.2 hereof, from time to time on and after the
third anniversary of the Effective Time and prior to the fifth anniversary
of the Effective Time, exchange shares of Media Stock (or such other class
or series of common stock into which shares of this Series are then
convertible) for all or any part of the outstanding shares of this Series
at the Exchange Rate; provided, however, that such an exchange may only be
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effected if the Closing Price shall be greater than the product of (x) the
Conversion Price multiplied by (y) 1.35, on 20 of the 30 Trading Days
immediately prior to the date of the notice delivered by the Corporation
pursuant to Section 4.3(a) to holders of shares
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of this Series to be exchanged. The Corporation may, at its sole option,
subject to Section 2.2 hereof, from time to time on and after the fifth
anniversary of the Effective Time, at its election either: (i) redeem, out
of funds legally available therefor, all or any part of the outstanding
shares of this Series at the Redemption Price; (ii) exchange shares of
Media Stock (or such other class or series of common stock into which
shares of this Series are then convertible) for all or any part of the
outstanding shares of this Series at the Exchange Rate; or (iii) effect a
combination of the options described in the foregoing clauses (i) and (ii)
(in which event each holder of shares of this Series which are selected for
redemption and exchange pursuant to Section 4.2 shall receive the same
proportion of cash and shares of Media Stock (or such other class or series
of common stock into which shares of this Series are then convertible)
(except for cash paid in lieu of fractional shares) paid to other holders
of shares of this Series selected for redemption and exchange).
(b) The Corporation shall redeem, out of funds legally
available therefor, all of the outstanding shares of this Series, at the
Redemption Price, if any of the following events with respect to the Media
Group occur (such events being collectively referred to herein as the
"Media Group Special Events"):
(i) (A) the Corporation redeems all of the outstanding
shares of Media Stock in exchange for shares of common stock of the
Media Group Subsidiaries as provided in Section 2.4.3 of Article V of
the Certificate of Incorporation (the "Media Group Subsidiary
Redemption") or (B) following a Disposition of all or substantially
all of the properties and assets attributed to the Media Group, the
Corporation either (1) pays a dividend on the Media Stock in an amount
equal to the product of the Outstanding Media Fraction multiplied by
the Fair Value of the Net Proceeds of such Disposition as provided in
Section 2.4.1(A)(1)(a) of Article V of the Certificate of
Incorporation (the "Media Group Disposition Dividend"), or (2) redeems
shares of Media Stock for an amount equal to the product of the
Outstanding Media Fraction multiplied by the Fair Value of the Net
Proceeds of such Disposition as provided in Section 2.4.1(A)(1)(b) of
Article V of the Certificate of Incorporation (the "Media Group
Disposition Redemption"); or
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(ii) the Corporation pays a dividend on, or the Corporation
or any of its subsidiaries consummates a tender offer or exchange
offer for, shares of Media Stock and the aggregate amount of such
dividend or the consideration paid in such tender offer or exchange
offer is an amount equal to the Fair Value of all or substantially all
of the properties and assets attributed to the Media Group (the "Media
Group Special Dividend" or the "Media Group Tender or Exchange Offer",
respectively); provided, however, that the calculation of the Fair
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Value of all or substantially all of the properties and assets
attributed to the Media Group shall be made without giving effect to
any money borrowed by the Corporation or any of its subsidiaries in
connection with such dividend or tender offer or exchange offer, as
the case may be.
The Redemption Date for shares of this Series to be redeemed by the
Corporation pursuant to this Section 4.1(b) shall be, if the applicable
Media Group Special Event is (I) the Media Group Subsidiary Redemption, the
date of such exchange, (II) the Media Group Disposition Dividend or the
Media Group Special Dividend, the date of payment of such dividend, (III)
the Media Group Disposition Redemption, the date of such redemption or (IV)
the Media Group Tender or Exchange Offer, the date such tender offer or
exchange offer is consummated. Notwithstanding anything to the contrary
contained in this Section 4.1(b), any redemption pursuant to this Section
4.1(b) shall be conditioned upon the actual redemption of Media Stock for
shares of common stock of the Media Group Subsidiaries, payment of the
Media Group Disposition Dividend or the amount due as a result of the Media
Group Disposition Redemption (in each case in the required kind of capital
stock, cash, securities and/or other property), payment of the Media Group
Special Dividend or the consummation of the Media Group Tender or Exchange
Offer, as the case may be.
(c) The Corporation shall, on the twentieth anniversary of
the Effective Time, at its election either: (i) redeem, out of funds
legally available therefor, all of the outstanding shares of this Series at
the Redemption Price; (ii) exchange shares of Media Stock (or such other
class or series of common stock into which shares of this Series are then
convertible) for all of the outstanding shares of this Series at the
Exchange Rate; or (iii) effect a combination of the options described in
the foregoing
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clauses (i) and (ii) (in which event each holder of shares of this Series
shall receive the same proportion of cash and shares of Media Stock (or
such other class or series of common stock into which shares of this Series
are then convertible) (except for cash paid in lieu of fractional shares)
paid to other holders of shares of this Series).
(d) The Corporation shall redeem, out of funds legally
available therefore, all of the outstanding shares of this Series at the
Redemption Price, if (i) the Corporation converts all of the outstanding
shares of Media Stock into shares of Communications Stock (or, if the
Communications Stock is not Publicly Traded at such time and shares of any
other class or series of common stock of the Corporation (other than Media
Stock) are then Publicly Traded, of such other class or series of common
stock as has the largest Market Capitalization) as provided in Section 2.4
of Article V of the Certificate of Incorporation and (ii) at any time
following such conversion (A) an event substantially similar to any Media
Group Special Event occurs in respect to the Communications Stock (or such
other class or series of common stock) and (B) at the time of such event
shares of another class or series of common stock of the Corporation (other
then Communications Stock or such other class or series of common stock)
are then Publicly Traded. The Redemption Date for, and the conditions to,
any such redemption shall be determined in a manner consistent with the
Redemption Date and conditions set forth in Section 4.1(b) for a redemption
resulting from a substantially similar Media Group Special Event.
(e) The Corporation shall be entitled to effect an exchange
of shares of Media Stock (or such other class or series of common stock
into which shares of this Series are then convertible) for shares of Series
D Stock pursuant to Section 4.1(a) or 4.1(c) only to the extent Media Stock
(or such other class or series of common stock) shall be available for
issuance (including delivery of previously issued shares of Media Stock (or
such other class or series) held in the Corporation's treasury on the
Redemption Date). The Corporation may, but shall not be required to, in
connection with any exchange of shares of this Series pursuant to Section
4.1(a) or 4.1(c), issue a fraction of a share of Media Stock (or such other
class or series of common stock into which shares of this Series are then
convertible), and if the Corporation shall determine not to issue any such
fraction, the Corporation shall make a
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cash payment (rounded to the nearest cent) equal to such fraction
multiplied by the Closing Price of the Media Stock (or such other class or
series of common stock) on the last Trading Day prior to the Redemption
Date.
4.2 In the event that fewer than all of the outstanding
shares of this Series are to be redeemed and/or exchanged pursuant to
Section 4.1(a), subject to clause (iii) of the third sentence of Section
4.1(a), the aggregate number of shares of this Series held by each holder
which will be redeemed and/or exchanged shall be determined by the
Corporation by lot or pro rata or by any other method as may be determined
by the Board of Directors in its sole discretion to be equitable, and the
certificate of the Corporation's Secretary or an Assistant Secretary filed
with the transfer agent or transfer agents for this Series in respect of
such determination by the Board of Directors shall be conclusive.
4.3 (a) If the Corporation determines to redeem and/or
exchange shares of this Series pursuant to Section 4.1(a) or 4.1(c), the
Corporation shall, not later than the 15th Trading Day nor earlier than the
60th Trading Day prior to the Redemption Date, cause notice to be filed
with the transfer agent or agents for this Series and to be given to each
record holder of the shares to be redeemed and/or exchanged, setting forth:
(1) the Redemption Date; (2) in the case of a redemption or exchange
pursuant to Section 4.1(c), that all shares of this Series outstanding on
the Redemption Date shall be redeemed and/or exchanged by the Corporation;
(3) in the case of a redemption or exchange pursuant to Section 4.1(a), the
total number of shares of this Series to be redeemed and/or exchanged and,
if fewer than all the shares held by such holder are to be redeemed and/or
exchanged, the aggregate number of such shares which will be redeemed
and/or exchanged; (4) the Redemption Price and/or the manner in which the
Exchange Rate will be calculated prior to the Redemption Date; (5) that, if
applicable, the Corporation shall determine on or prior to the second
Trading Day preceding the Redemption Date the percentage of such holder's
shares to be redeemed and the percentage of such holder's shares to be
exchanged; (6) that shares of this Series called for redemption or exchange
may be converted at any time prior to the Redemption Date (unless the
Corporation (i) shall, in the case of a redemption, default in payment of
the Redemption Price or, in the case of an exchange, fail to exchange the
shares of
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<PAGE>
this Series for the applicable number of shares of Media Stock or (ii)
shall, in the case of a redemption pursuant to Section 4.1(a), exercise its
right to rescind such redemption or exchange pursuant to Section 4.5, in
which case such right of conversion shall not terminate at such time and
date); (7) the applicable Conversion Price; (8) the place or places where
certificates for such shares are to be surrendered for payment of the
Redemption Price and/or the Exchange Rate, as the case may be; and (9) that
dividends on the shares to be redeemed and/or exchanged will cease to
accrue on the Redemption Date. Promptly, following the Redemption Date,
the Corporation shall cause notice to be filed with the transfer agent or
agents for this Series and to be given to each record holder of the shares
to be redeemed and/or exchanged setting forth the percentage of such
holder's shares which the Corporation has elected to redeem and the
percentage of such holder's shares which the Corporation has elected to
exchange.
(b) If the Corporation determines to effect a Media Group
Subsidiary Redemption, the Corporation shall, not later than the 30th
Trading Day and not earlier than the 45th Trading Day prior to the
Redemption Date, cause notice to be filed with the transfer agent or agents
for this Series and given to each record holder of shares of this Series,
setting forth: (1) the Redemption Date (which, pursuant to the penultimate
sentence of Section 4.1(b), shall be the same as the date specified in
clause (8) below); (2) that all shares of this Series outstanding on the
Redemption Date shall be redeemed by the Corporation; (3) the Redemption
Price; (4) that the redemption of the shares of this Series shall be
conditioned upon the consummation of the Media Group Subsidiary Redemption;
(5) the place or places where certificates for shares of this Series,
properly endorsed or assigned for transfer (unless the Corporation waives
such requirement), are to be surrendered for payment of the Redemption
Price; (6) that dividends on the shares to be redeemed will cease to accrue
on the Redemption Date; (7) a statement that all shares of Media Stock
outstanding on the date of the Media Group Subsidiary Redemption shall be
redeemed in exchange for shares of common stock of the Media Group
Subsidiaries; (8) the date of such Media Group Subsidiary Redemption; (9)
the Outstanding Media Fraction on the date of such notice; (10) the place
or places where certificates for shares of Media Stock, properly endorsed
or assigned for transfer (unless the Corporation shall waive such
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requirement), are to be surrendered for delivery of certificates for shares
of the Media Group Subsidiaries; (11) a statement to the effect that,
subject to Section 2.4.5(I) of Article V of the Certificate of
Incorporation, dividends on the Media Stock shall cease to be paid as of
the Redemption Date; (12) the number of shares of Media Stock outstanding
and the number of shares of Media Stock into or for which outstanding
Convertible Securities are then convertible, exchangeable or exercisable
and the conversion, exchange or exercise price thereof, including the
number of outstanding shares of this Series and the Conversion Price; and
(13) that a holder of shares of this Series shall be entitled to receive
shares of common stock of the Media Group Subsidiaries upon the Media Group
Subsidiary Redemption in lieu of the Redemption Price only if such holder
converts such shares of this Series on or prior to the Redemption Date.
(c) If the Corporation determines to effect a Media Group
Disposition Dividend, the Corporation shall, not later than the 30th
Trading Day following the consummation of the Disposition by the
Corporation of all or substantially all of the properties and assets
attributed to the Media Group, cause notice to be filed with the transfer
agent or agents for this Series and given to each record holder of shares
of this Series, setting forth: (1) the anticipated Redemption Date (which,
pursuant to the penultimate sentence of Section 4.1(b), shall be the same
as the date specified in clause (8) below); (2) that all shares of this
Series outstanding on the Redemption Date shall be redeemed by the
Corporation; (3) the Redemption Price; (4) that the redemption of the
shares of this Series shall be conditioned upon the payment of the Media
Group Disposition Dividend; (5) the place or places where certificates for
shares of this Series, properly endorsed or assigned for transfer (unless
the Corporation waives such requirement), are to be surrendered for payment
of the Redemption Price; (6) that dividends on the shares to be redeemed
will cease to accrue on the Redemption Date; (7) the record date for
determining holders of Media Stock entitled to receive the Media Group
Disposition Dividend, which shall be not earlier than the 40th Trading Day
and not later than the 50th Trading Day following the consummation of such
Disposition; (8) the anticipated date of payment of the Media Group
Disposition Dividend (which shall not be more than 85 Trading Days
following the consummation of such Disposition); (9) the type of property
to be paid as such
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dividend in respect of the outstanding shares of Media Stock; (10) the Net
Proceeds of such Disposition; (11) the Outstanding Media Fraction on the
date of such notice; (12) the number of outstanding shares of Media Stock
and the number of shares of Media Stock into or for which outstanding
Convertible Securities are then convertible, exchangeable or exercisable
and the conversion, exchange or exercise price thereof, including the
number of outstanding shares of this Series and the Conversion Price in
effect at such time; and (13) that a holder of shares of this Series shall
be entitled to receive such dividend in lieu of the Redemption Price only
if such holder properly converts such shares on or prior to the record date
referred to in clause (7) of this sentence and that shares of this Series
shall not be convertible after such record date.
(d) If the Corporation determines to effect a Media Group
Disposition Redemption following a Disposition of all (not merely
substantially all) of the properties and assets attributed to the Media
Group (in accordance with Section 2.4.1(A)(1)(b)(i) of Article V of the
Certificate of Incorporation), the Corporation shall, not later than the
35th Trading Day and not earlier than the 45th Trading Day prior to the
Redemption Date, cause notice to be filed with the transfer agent or agents
for this Series and given to each record holder of shares of this Series,
setting forth: (1) the Redemption Date (which, pursuant to the penultimate
sentence of Section 4.1(b), shall be the same as the date specified in
clause (8) below); (2) that all shares of this Series outstanding on the
Redemption Date shall be redeemed by the Corporation; (3) the Redemption
Price; (4) that the redemption of shares of this Series shall be
conditioned upon the consummation of the Media Group Disposition
Redemption; (5) the place or places where certificates for shares of this
Series, properly endorsed or assigned for transfer (unless the Corporation
waives such requirement), are to be surrendered for payment of the
Redemption Price; (6) that dividends on the shares to be redeemed will
cease to accrue on the Redemption Date; (7) that all shares of Media Stock
outstanding on the date of such Media Group Disposition Redemption shall be
redeemed; (8) the date of such Media Group Disposition Redemption (which
shall not be more than 85 Trading Days following the consummation of such
Disposition); (9) the type of property in which the redemption price for
the shares of Media Stock to be redeemed is to be paid; (10) the Net
Proceeds of such Disposition; (11) the Outstanding Media Fraction on the
date
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of such notice; (12) the place or places where certificates for shares of
Media Stock, properly endorsed or assigned for transfer (unless the
Corporation waives such requirement), are to be surrendered for delivery of
cash and/or securities or other property; (13) the number of outstanding
shares of Media Stock and the number of shares of Media Stock into or for
which such outstanding Convertible Securities are then convertible,
exchangeable or exercisable and the conversion, exchange or exercise price
thereof, including the number of outstanding shares of this Series and the
Conversion Price in effect at such time; (14) that a holder of shares of
this Series shall be entitled to participate in the Media Group Disposition
Redemption in lieu of participating in the redemption of the shares of this
Series only if such holder properly converts such shares of this Series on
or prior to the Redemption Date; and (15) that, except as otherwise
provided by Section 2.4.5(I) of Article V of the Certificate of
Incorporation, dividends on shares of Media Stock shall cease to be paid as
of the Redemption Date.
(e) If the Corporation determines to effect a Media Group
Disposition Redemption following a Disposition of substantially all (but
not all) of the properties and assets attributed to the Media Group (in
accordance with Section 2.4.1(A)(1)(b)(ii) of Article V of the Certificate
of Incorporation), the Corporation shall, not later than the 30th Trading
Day following the consummation of such Disposition, cause notice to be
filed with the transfer agent or agents for this Series and given to each
record holder of shares of this Series, setting forth: (1) the anticipated
Redemption Date (which, pursuant to the penultimate sentence of Section
4.1(b), shall be the same as the date specified in clause (8) below); (2)
that all shares of this Series outstanding on the Redemption Date shall be
redeemed by the Corporation; (3) the Redemption Price; (4) that the
redemption of shares of this Series shall be conditioned upon the
consummation of the Media Group Disposition Redemption; (5) the place or
places where certificates for shares of this Series, properly endorsed or
assigned for transfer (unless the Corporation waives such requirement), are
to be surrendered for payment of the Redemption Price; (6) that dividends
on the shares to be redeemed will cease to accrue on the Redemption Date;
(7) a date not earlier than the 40th Trading Day and not later than the
50th Trading Day following the consummation of such Disposition on which
shares of Media Stock shall be selected for redemption pursuant to such
Media Group Disposition
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Redemption; (8) the anticipated date of such Media Group Disposition
Redemption (which shall not be more than 85 Trading Days following the
consummation of such Disposition); (9) the type of property in which the
redemption price for the shares of Media Stock to be redeemed is to be
paid; (10) the Net Proceeds of such Disposition; (11) the Outstanding Media
Fraction; (12) the number of shares of Media Stock outstanding and the
number of shares of Media Stock into or for which outstanding Convertible
Securities are then convertible, exchangeable or exercisable and the
conversion, exchange or exercise price thereof, including the number of
outstanding shares of this Series and the Conversion Price in effect at
such time; (13) that a holder of shares of this Series shall be eligible to
participate in such selection for redemption pursuant to such Media Group
Disposition Redemption in lieu of participating in the redemption of shares
of this Series only if such holder properly converts such shares of this
Series on or prior to the date referred to in clause (7) of this sentence
and that shares of this Series shall not be convertible after such date;
and (14) a statement that the Corporation will not be required to register
a transfer of any shares of Media Stock for a period of 15 Trading Days
next preceding the date referred to in clause (7) of this sentence.
(f) If the Corporation determines to effect a Media Group
Special Dividend, the Corporation shall, not later than the 45th Trading
Day and not earlier than the 60th Trading day prior to the date of payment
of such dividend, cause notice to be filed with transfer agent or agent for
this Series and given to each record holder of shares of this Series,
setting forth: (1) the anticipated Redemption Date (which, pursuant to the
penultimate sentence of Section 4.1(b), shall be the same as the date
specified in clause (8) below); (2) that all shares of this Series
outstanding on the Redemption Date shall be redeemed by the Corporation;
(3) the Redemption Price; (4) that the redemption of the shares of this
Series shall be conditioned upon the payment of the Media Group Special
Dividend; (5) the place or places where certificates for shares of this
Series, properly endorsed or assigned for transfer (unless the Corporation
waives such requirement), are to be surrendered for payment of the
Redemption Price; (6) that dividends on the shares to be redeemed will
cease to accrue on the Redemption Date; (7) the record date for determining
holders of Media Stock entitled to receive the Media Group
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Special Dividend, which shall be not earlier than the 20th Trading Day
prior to the date of payment of such dividend; (8) the anticipated date of
payment of the Media Group Special Dividend; (9) the type of property to be
paid as such dividend in respect of the outstanding shares of Media Stock;
(10) the Outstanding Media Fraction on the date of such notice; (11) the
number of outstanding shares of Media Stock and the number of shares of
Media Stock into or for which outstanding Convertible Securities are then
convertible, exchangeable or exercisable and the conversion, exchange or
exercise price thereof, including the number of outstanding shares of this
Series and the Conversion Price in effect at such time; and (12) that a
holder of shares of this Series shall be entitled to receive such dividend
in lieu of the Redemption Price only if such holder properly converts such
shares on or prior to the record date referred to in clause (7) of this
sentence and that shares of this Series shall not be convertible after such
record date.
(g) If the Corporation or any of its subsidiaries determines to
effect a Media Group Tender or Exchange Offer, the Corporation shall, on
the date of the public announcement of such tender offer or exchange offer
by the Corporation or any of its subsidiaries but in any event not later
than the 35th Trading Day prior to such redemption, cause notice to be
filed with the transfer agent or agent for this Series and given to each
record holder of shares of this Series, setting forth: (1) the anticipated
Redemption Date (which, pursuant to the penultimate sentence of Section
4.1(b), shall be the same as the date specified in clause (7) below); (2)
that all shares of this Series outstanding on the Redemption Date shall be
redeemed by the Corporation; (3) the Redemption Price; (4) that the
redemption of shares of this Series shall be conditioned upon the
consummation of the Media Group Tender or Exchange Offer; (5) the place or
places where certificates for shares of this Series, properly endorsed or
assigned for transfer (unless the Corporation waives such requirement), are
to be surrendered for payment of the Redemption Price; (6) that dividends
on the shares to be redeemed will cease to accrue on the Redemption Date;
(7) the anticipated date of consummation of such Media Group Tender or
Exchange Offer; (8) the type of consideration to be paid by the Corporation
or its subsidiary in such Media Group Tender Offer or Exchange Offer for
shares of Media Stock; (9) the date on which such Media Group Tender or
Exchange Offer commenced, the date on which such Media Group Tender or
Exchange Offer
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is scheduled to expire unless extended and any other material terms thereof
(or the material terms of any amendment thereto); (10) the Outstanding
Media Fraction on the date of such notice; (11) the number of outstanding
shares of Media Stock and the number of shares of Media Stock into or for
which such outstanding Convertible Securities are then convertible,
exchangeable or exercisable and the conversion, exchange or exercise price
thereof, including the number of outstanding shares of this Series and the
Conversion Price in effect at such time; and (12) that a holder of shares
of this Series shall be entitled to participate in the Media Group Tender
or Exchange Offer in lieu of participating in the redemption of the shares
of this Series only if such holder properly converts such shares of this
Series on or prior to the Redemption Date and then complies with the terms
and conditions of the Media Group Tender or Exchange Offer and that such
holder shall be permitted to tender or exchange shares of Media Stock upon
conversion of shares of this Series by notice of guaranteed delivery so
long as physical certificates are tendered as soon as practicable after
physical receipt thereof.
(h) In the event the Corporation shall redeem shares of this
Series pursuant to Section 4.1(d), notice of such redemption shall be given
by the Corporation at a time, and such notice shall contain information,
comparable to the time or information, as the case may be, specified in
Sections 4.3(b) through (g) with respect to a notice of a redemption
pursuant to Section 4.1(b) resulting from a substantially similar Media
Group Special Event.
4.4 If notice of redemption or exchange shall have been given by
the Corporation as provided in Section 4.3, from and after the Redemption
Date, dividends on the shares of this Series so called for redemption or
exchange shall cease to accrue, such shares shall no longer be deemed to be
outstanding, and all rights of the holders thereof as stockholders of the
Corporation with respect to shares so called for redemption or exchange
(except, in the case of a redemption, the right to receive from the
Corporation the Redemption Price without interest and, in the case of an
exchange, the right to receive from the Corporation the Exchange Rate
without interest) shall cease (including any right to receive dividends
otherwise payable on any Dividend Payment Date that would have occurred
after the Redemption Date), unless (a) the Corporation, in the
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case of a redemption, defaults in the payment of the Redemption Price and,
in the case of an exchange, the Corporation fails to exchange the shares of
this Series for the applicable number of shares of Media Stock, (b) in the
case of a redemption or exchange pursuant to Section 4.1(a), the
Corporation exercises its right to rescind such redemption or exchange
pursuant to Section 4.5 or (c) in the case of a redemption pursuant to
Section 4.1(b) or 4.1(d), the conditions to such redemption shall not have
been satisfied, in which case such rights shall not terminate at the close
of business on such date. On or before the Redemption Date, the
Corporation shall deposit with a bank or trust company doing business in
New York, as paying agent, in the case of a redemption, money sufficient to
pay the Redemption Price on the Redemption Date, and in the case of an
exchange, certificates representing the shares of Media Stock to be
exchanged on the Redemption Date, in trust, with irrevocable instructions
that such money or shares be applied to the redemption or exchange of
shares of this Series so called for redemption or exchange. Any money or
certificates so deposited with any such paying agent which shall not be
required for such redemption or exchange because of the exercise of any
right of conversion, rescission or otherwise (including if the conditions
to a redemption pursuant to Section 4.1(b) or 4.1(d) are not satisfied)
shall be returned to the Corporation forthwith. Upon surrender (in
accordance with the notice of redemption or exchange) of the certificate or
certificates for any shares of this Series to be so redeemed or exchanged
(properly endorsed or assigned for transfer, if the Corporation shall so
require and the notice of redemption or exchange shall so state), such
shares shall be redeemed by the Corporation at the Redemption Price or
exchanged by the Corporation at the Exchange Rate, as applicable (unless,
in the case of a redemption or exchange pursuant to Section 4.1(a), the
Corporation shall have exercised its right to rescind such redemption or
exchange pursuant to Section 4.5 or, in the case of a redemption pursuant
to Section 4.1(b) or 4.1(d), the conditions to such redemption shall not
have been satisfied). In case fewer than all the shares represented by any
such certificate are to be redeemed or exchanged, a new certificate shall
be issued representing the unredeemed and unexchanged shares (or fractions
thereof as provided in Section 7.4), without cost to the holder thereof.
Subject to applicable escheat laws, any moneys or shares so set aside by
the Corporation and unclaimed at the end of two years from the Redemption
Date shall revert to
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<PAGE>
the general funds of the Corporation, after which reversion the holders of
such shares so called for redemption or exchange shall look only to the
Corporation for the payment of the Redemption Price or the Exchange Rate,
as the case may be, without interest. Any interest accrued on any funds so
deposited shall be paid to the Corporation from time to time.
4.5 If notice of redemption or exchange pursuant to Section
4.1(a) shall have been given by the Corporation pursuant to Section 4.3(a),
in the event that a Redemption Rescission Event shall occur following the
date of such notice but at or prior to the Redemption Date, the Corporation
may, at its sole option, at any time prior to the earlier of (i) the close
of business on that day which is five (5) Trading Days following such
Redemption Rescission Event and (ii) the Redemption Date, rescind such
redemption or exchange by making a public announcement of such rescission
(the date on which such public announcement shall have been made being
hereinafter referred to as the "Rescission Date"). The Corporation shall
be deemed to have made such announcement if it shall issue a release to the
Dow Jones News Service and Reuters Information Services or any successor
news wire service. From and after the making of such announcement, the
Corporation shall have no obligation to effect such redemption or exchange
or to pay the Redemption Price or Exchange Rate therefor and all rights of
holders of shares of this Series shall be restored as if notice of
redemption or exchange had not been given. The Corporation shall give
notice of any such rescission by first-class mail, postage prepaid, mailed
as promptly as practicable, but in no event later than the close of
business on that date which is five (5) Trading Days following the
Rescission Date to each record holder of shares of this Series at the close
of business on the Rescission Date and to any other Person or entity that
was a record holder of shares of this Series and that shall have
surrendered shares of this Series for conversion following the giving of
notice of the subsequently rescinded redemption or exchange. Each notice
of rescission shall (w) state that such redemption or exchange has been
rescinded, (x) state that any Converting Holder shall be entitled to
rescind the conversion of shares of this Series surrendered for conversion
following the day on which notice of such redemption or exchange was given
but on or prior to the later of (I) the close of business on the Trading
Day next succeeding the date on which public announcement of the
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<PAGE>
rescission of such redemption or exchange shall have been made and (II) the
date which is three Trading Days following the mailing of the Corporation's
notice of rescission, (y) be accompanied by a form prescribed by the
Corporation to be used by any Converting Holder rescinding the conversion
of shares so surrendered for conversion (and instructions for the
completion and delivery of such form, including instructions with respect
to payments that may be required to accompany such delivery in accordance
with Section 3.5) and (z) state that such form must be properly completed
and received by the Corporation no later than the close of business on a
date that shall be fifteen (15) Trading Days following the date of the
mailing of such notice of rescission.
5. Voting. The shares of this Series shall have no voting
------
rights except as required by law or as set forth below.
5.1 (a) So long as any shares of this Series remain
outstanding, unless a greater percentage shall then be required by law, the
Corporation shall not, without the affirmative vote at a meeting or the
written consent with or without a meeting of the holders of shares of this
Series representing at least a majority of the shares of this Series then
outstanding (i) authorize any Senior Stock or reclassify any Junior Stock
or Parity Stock as Senior Stock, or (ii) amend, alter or repeal any of the
provisions of the Certificate or the Certificate of Incorporation, so as in
any such case to materially and adversely affect the voting powers,
designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions of the
shares of this Series; provided, however, that an amendment which effects a
-------- -------
split of this Series or which effects a combination of the shares of this
Series into a fewer number of Shares shall not be deemed to have any such
material adverse effect.
(b) No vote or consent of holders of shares of this Series
shall be required for (i) the creation of any indebtedness of any kind of
the Corporation, (ii) the authorization or issuance of any class of Junior
Stock (including any class or series of common stock of the Corporation) or
Parity Stock, (iii) the authorization, designation or issuance of
additional shares of Series D
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<PAGE>
Stock or (iv) subject to Section 5.1(a), the authorization or issuance of
any other shares of Preferred Stock.
5.2 (a) If and whenever at any time or times dividends
payable on shares of this Series shall have been in arrears and unpaid in
an aggregate amount equal to or exceeding the amount of dividends payable
thereon for six quarterly dividend periods, then the number of directors
constituting the Board of Directors shall be automatically increased by two
and the holders of shares of this Series, together with the holders of any
shares of any Parity Stock as to which in each case dividends are in
arrears and unpaid in an aggregate amount equal to or exceeding the amount
of dividends payable thereon for six quarterly dividend periods, shall have
the exclusive right, voting separately as a class with such other series,
to elect two directors of the Corporation.
(b) Such voting right may be exercised initially either by
written consent or at a special meeting of the holders of the Preferred
Stock having such voting right, called as hereinafter provided, or at any
annual meeting of stockholders held for the purpose of electing directors,
and thereafter at each such annual meeting until such time as all dividends
in arrears on the shares of this Series shall have been paid in full and
all dividends payable on the shares of this Series on four subsequent
consecutive Dividend Payment Dates shall have been paid in full on such
dates or funds shall have been set aside for the payment thereof, at which
time such voting right and the term of the directors elected pursuant to
Section 5.2(a) shall terminate.
(c) At any time when such voting right shall have vested in
holders of shares of such series of Preferred Stock described in Section
5.2(b), and if such right shall not already have been exercised by written
consent, a proper officer of the Corporation may call, and, upon the
written request, addressed to the Secretary of the Corporation, of the
record holders of either (i) shares representing twenty-five percent (25%)
of the voting power of the shares then outstanding of the Series D Stock or
(ii) shares representing twenty-five percent (25%) of the voting power of
shares of all series of Preferred Stock having such voting right, shall
call, a special meeting of the holders of Preferred Stock having such
voting right. Such meeting shall be held at the earliest practicable date
upon the
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<PAGE>
notice required for annual meetings of stockholders at the place for
holding annual meetings of stockholders of the Corporation, or, if none, at
a place designated by the Board of Directors. Notwithstanding the
provisions of this Section 5.2(c), no such special meeting shall be called
during a period within 60 days immediately preceding the date fixed for the
next annual meeting of stockholders.
(d) At any meeting held for the purpose of electing
directors at which the holders of such Preferred Stock shall have the right
to elect directors as provided herein, the presence in person or by proxy
of the holders of shares representing more than fifty percent (50%) in
voting power of the then outstanding shares of such Preferred Stock having
such right shall be required and shall be sufficient to constitute a quorum
of such class for the election of directors by such class.
(e) Any director elected by holders of Preferred Stock
pursuant to the voting right created under this Section 5.2 shall hold
office until the next annual meeting of stockholders (unless such term has
previously terminated pursuant to Section 5.2(b)) and any vacancy in
respect of any such director shall be filled only by vote of the remaining
director so elected, or if there be no such remaining director, by the
holders of such Preferred Stock entitled to elect such director or
directors by written consent or at a special meeting called in accordance
with the procedures set forth in Section 5.2(c), or, if no special meeting
is called or written consent executed, at the next annual meeting of
stockholders.
(f) In exercising the voting rights set forth in this
Section 5.2, each share of this Series shall have a number of votes equal
to its Liquidation Value.
6. Liquidation Rights.
------------------
6.1 Upon the dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of the shares of
this Series shall be entitled to receive out of the assets of the
Corporation available for distribution to stockholders, in preference to
the holders of, and before any payment of distribution shall be made on,
Junior Stock, the Liquidation Value in effect at such time, plus an amount
equal to all accrued and unpaid dividends to the date of final
distribution.
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<PAGE>
6.2 The Liquidation Value shall initially be equal to $50
per share of Series D Stock. The Liquidation Value shall be subject to
adjustment from time to time to appropriately give effect to any split or
combination of the shares of this Series.
6.3 Neither the sale, exchange or other conveyance (for
cash, shares of stock, securities or other consideration) of all or
substantially all the property and assets of the Corporation nor the merger
or consolidation of the Corporation into or with any other corporation, or
the merger or consolidation of any other corporation into or with the
Corporation, shall be deemed to be a dissolution, liquidation or winding
up, voluntary or involuntary, for the purposes of this Section 6.
6.4 After the payment to the holders of the shares of this
Series of full preferential amounts provided for in this Section 6, the
holders of this Series as such shall have no right or claim to any of the
remaining assets of the Corporation.
6.5 In the event the assets of the Corporation available
for distribution to the holders of shares of this Series upon any
dissolution, liquidation or winding up of the Corporation, whether
voluntary or involuntary, shall be insufficient to pay in full all amounts
to which such holders are entitled pursuant to Section 6.1, no such
distribution shall be made on account of any shares of any Parity Stock
upon such dissolution, liquidation or winding up unless proportionate
distributive amounts shall be paid on account of the shares of this Series,
ratably, in proportion to the full distributable amounts for which holders
of all Parity Stock are entitled upon such dissolution, liquidation or
winding up.
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<PAGE>
7. Other Provisions.
----------------
7.1 All notices from the Corporation to the holders shall
be given by first class mail, postage prepaid, to the holders of shares of
this Series at their last address as it shall appear on the stock register.
With respect to any notice to a holder of Shares of this Series required to
be provided hereunder, neither failure to mail such notice, nor any defect
therein or in the mailing thereof, shall affect the sufficiency of the
notice or the validity of the proceedings referred to in such notice or
affect the legality or validity of any distribution, right, warrant,
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any such action. Any notice
which was mailed in the manner herein provided shall be conclusively
presumed to have been duly given whether or not the holder receives the
notice.
7.2 All notices and other communications from a holder of
shares of this Series shall be deemed given if delivered personally or sent
by overnight courier (providing proof of delivery) to the Corporation at
the following address (or at such other address as the Corporation shall
specify in a notice pursuant to Section 7.1): U S WEST, Inc., 7800 East
Orchard Road, Englewood, Colorado 80111, Attention: General Counsel.
7.3 Any shares of this Series which have been converted,
redeemed, exchanged or otherwise acquired by the Corporation shall, after
such conversion, redemption, exchange or acquisition, as the case may be,
be retired and promptly cancelled and the Corporation shall take all
appropriate action to cause such shares to obtain the status of authorized
but unissued shares of Preferred Stock, without designation as to series,
until such shares are once more designated as part of a particular series
by the Board of Directors. The Corporation may cause a certificate setting
forth a resolution adopted by the Board of Directors that none of the
authorized shares of this Series are outstanding to be filed with the
Secretary of State of the State of Delaware. When such certificate becomes
effective, all references to Series D Stock shall be eliminated from the
Certificate of Incorporation and the shares of Preferred Stock designated
hereby as Series D Stock shall have the status of authorized and unissued
shares of Preferred Stock and may be reissued as part of any new series of
Preferred
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<PAGE>
Stock to be created by resolution or resolutions of the Board of Directors.
7.4 The shares of this Series shall be issuable in whole
shares or in any fraction of a whole share or any integral multiple of such
fraction.
7.5 The Corporation shall, to the fullest extent permitted
by law, be entitled to recognize the exclusive right of a Person registered
on its records as the holder of shares of this Series, and such record
holder shall be deemed the holder of such shares for all purposes.
7.6 All notice periods referred to in the Certificate shall
commence on the date of the mailing of the applicable notice.
7.7 Subject to applicable law, any determinations made in
the exercise of the good faith business judgment of the Board of Directors
under any provision of the Certificate shall be final and binding on all
stockholders of the Corporation, including the holders of shares of this
Series.
7.8 Certificates for shares of this Series shall bear such
legends as the Corporation shall from time to time deem appropriate.
IN WITNESS WHEREOF, U S WEST, INC. has caused this certificate to
be signed and attested this [ ] day of [ ], 1996.
U S WEST, INC.
By:_____________________________________
Name:
Title:
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<PAGE>
EXHIBIT D
---------
[Form of Affiliate Letter]
U S WEST, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be
deemed to be an "affiliate" of Continental Cablevision, Inc., a Delaware
corporation (the "Company"), as such term is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), or (ii) used in and for purposes of Accounting Series Releases 130
and 135, as amended, of the Commission. Pursuant to the terms of the
Agreement and Plan of Merger, dated as of February 27, 1996, as amended and
restated as of June 27, 1996 (as amended from time to time, the "Merger
Agreement"), among U S WEST, Inc., a Delaware corporation ("Acquiror"),
CONTINENTAL MERGER CORPORATION, a Delaware corporation ("Sub"), and the
Company, either (i) the Company will be merged with and into Acquiror, with
Acquiror continuing as the surviving corporation or (ii) the Company will
be merged with and into Sub, with Sub continuing as the surviving
corporation (as applicable, the "Merger").
Pursuant to the Merger, each share of Class A Common Stock, par
value $.01 per share, of the Company owned by me, if any, and each share of
Class B Common Stock, par value $.01 per share, of the Company ("Class B
Common Stock") owned by me will be converted into the right to receive, at
my election, either (i) cash (in the case of shares of Class B Common Stock
only) or (ii) shares of U S WEST Media Group Common Stock, par value $.01
per share, of Acquiror (the "Media Stock") and shares of Series D
<PAGE>
Convertible Preferred Stock, par value $1.00 per share, of Acquiror (the
"Series D Preferred Stock").
I represent, warrant and covenant to Acquiror that, with respect
to all Media Stock and Series D Preferred Stock received by me as a result
of the Merger:
1. I shall not make any sale, transfer or other disposition of
Media Stock or Series D Preferred Stock in violation of the Securities Act
or the Rules and Regulations.
2. I have carefully read this letter and the Merger Agreement
and discussed the requirements of such documents and any other applicable
limitations upon my ability to sell, transfer or otherwise dispose of Media
Stock or Series D Preferred Stock to the extent I felt necessary, with my
counsel or counsel for the Company.
3. I have been advised that the issuance of Media Stock and
Series D Preferred Stock to me pursuant to the Merger has been registered
with the Commission under the Securities Act. However, I have also been
advised that, since at the time the Merger Agreement was submitted for a
vote of the stockholders of the Company, I may be deemed to have been an
"affiliate" of the Company and the distribution by me of Media Stock and
Series D Preferred Stock has not been registered under the Act, I may not
sell, transfer or otherwise dispose of Media Stock and Series D Preferred
Stock issued to me in the Merger unless (i) such sale, transfer or other
disposition has been registered under the Securities Act or is made in
conformity with Rule 145 under the Securities Act, or (ii) in the opinion
of counsel reasonably acceptable to Acquiror, or pursuant to a "no action"
letter obtained by me from the staff of the Commission, such sale, transfer
or other disposition is otherwise exempt from registration under the
Securities Act.
4. I understand, that, except as may be provided in a
registration rights agreement, if any, to be entered into by Acquiror and
me as contemplated by the Merger Agreement, Acquiror is under no obligation
to register under the Securities Act the sale, transfer or other
disposition of Media Stock or Series D Preferred Stock by me or on my
behalf or to take any other action necessary in order to make compliance
with an exemption from such registration available.
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<PAGE>
5. I understand that Acquiror will give stop transfer
instructions to Acquiror's transfer agents with respect to the Media Stock
and Series D Preferred Stock and that the certificates for the Media Stock
and Series D Preferred Stock issued to me, or any substitutions therefor,
will bear a legend substantial to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY ONLY
BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT, DATED
_________ __, 1996, BETWEEN THE REGISTERED HOLDER HEREOF AND U S WEST,
INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF
U S WEST, INC."
6. I also understand that unless the transfer by me of my Media
Stock or Series D Preferred Stock has been registered under the Securities
Act or is a sale made in conformity with the provisions of Rule 145,
Acquiror reserves the right to place the following legend on the
certificates issued to any transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A
PERSON WHO RECEIVED SUCH SECURITIES IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SECURITIES
HAVE NOT BEEN ACQUIRED BY THE HOLDER WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in
paragraphs 5 and 6 above shall be removed by delivery of substitute
certificates without such legend if such legend is not required for
purposes of the Securities Act. It is understood and agreed that such
legends and the stop orders referred to above will be removed if (i) two
years shall have elapsed from the date I acquired Media Stock and Series D
Preferred Stock received in the Merger and the provisions of Rule 145(d)(2)
are then available to me, (ii) three years shall have elapsed from the date
I
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<PAGE>
acquired Media Stock and Series D Preferred Stock received in the Merger
and the provisions of Rule 145(d)(3) are then available to me, or (iii)
Acquiror has received either an opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to Acquiror, or a "no-action"
letter obtained by me from the staff of the Commission, to the effect that
the restrictions imposed by Rule 145 under the Securities Act no longer
apply to me.
Execution of this letter should not be considered an admission on
my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter or as a waiver of any rights that I may have to
object to any claim that I am such an affiliate on or after the date of
this letter.
Sincerely,
___________________________________
Name:
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<PAGE>
Accepted this __ day of
________ __, 1996:
U S WEST, INC.
By:___________________________________
Name:
Title:
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<PAGE>
EXHIBIT E
---------
CONTINENTAL CABLEVISION, INC.
CERTIFICATE OF DESIGNATION
OF SERIES B CONVERTIBLE
PREFERRED STOCK SETTING FORTH THE POWERS,
PREFERENCES, RIGHTS, QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF
SUCH SERIES OF PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware, Continental Cablevision, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DOES
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
of the Corporation by Article FOURTH of the Restated Certificate of
Incorporation of the Corporation (as in effect on the date hereof and as
amended from time to time in accordance with its terms, the "Restated
Certificate of Incorporation"), and in accordance with the provisions of
Section 151 of the General Corporation Law of the State of Delaware, the
Board of Directors of the Corporation on ______, 199_, adopted the
following resolution creating a series of Preferred Stock designated as
Series B Convertible Preferred Stock:
RESOLVED that, pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the
Restated Certificate of Incorporation, a series of the class of authorized
Preferred Stock, par value $.01 per share, of the Corporation is hereby
created and that the designation and number of shares thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications,
limitations and restrictions thereof are as follows:
1. Designation and Number. (a) The shares of such series shall be
----------------------
designated as "Series B
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<PAGE>
Convertible Preferred Stock" (the "Series B Preferred Stock" or "this
Series"). The number of shares initially constituting the Series B
Preferred Stock shall be 5,650,000, which number may be decreased (but not
increased) by the Board of Directors without a vote of stockholders;
provided, however, that such number may not be decreased below the number
-------- -------
of then outstanding shares of Series B Preferred Stock. Notwithstanding any
other provision in this Certificate of Designation, the Corporation shall
not be required to issue fractional shares of the Series B Preferred Stock.
2. Ranking. The Series B Preferred Stock shall, with respect to
-------
dividend rights and rights on liquidation, dissolution or winding up, rank
pari passu with the Series A Preferred Stock and prior to or pari passu
with all other classes and series of the Corporation's preferred stock
(other than preferred stock that is not convertible into or exchangeable
for any class or series of the Corporation's equity securities or for any
other property, including without limitation securities other than the
Corporation's equity securities referred to herein) and prior to all
classes of the Common Stock, par value $.01 per share, of the Corporation
(the "Common Stock").
3. Dividends and Distributions. (a) The holders of shares of Series
---------------------------
B Preferred Stock shall be entitled to receive as and when declared by the
Board of Directors out of funds legally available therefor, cash dividends
at the rate (the "Dividend Rate") of ___________ ___________________
percent (_____%) per annum/1/, through
____________________
/1/. The Dividend Rate shall be subject to an adjustment such that the final
Dividend Rate equals the sum of 5.875%, (the "Base Dividend Rate") plus the
Adjustment Amount (as defined below).
The Base Dividend Rate shall be subject to adjustment in the following
manner:
(continued....)
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<PAGE>
_______________________
1. (....continued)
(i) If the Adjustment Amount is less than seven basis points in absolute
terms, then the Adjustment Amount shall be deemed to be zero and the Dividend
Rate shall equal the Base Dividend Rate.
(ii) If the Adjustment Amount is greater than or equal to seven basis
points in absolute terms, then the Dividend Rate shall be equal to the Base
Dividend Rate plus the Adjustment Amount (whether positive or negative), rounded
to the nearest multiple of 0.125%.
"Adjustment Amount" shall be equal to the product of (x) the sum of (1) the
Change In Weighted Average Yield plus (2) the Credit Spread multiplied by (y)
the Discount Factor.
"Average Credit Spread" shall be equal to the average of the difference
between the closing bid-side yield of the Corporation's 8.30% senior unsecured
notes due 2006 and the 10-year Treasury yield, calculated for each of the 10
Trading Days after announcement of the termination of the transactions
contemplated by the Merger Agreement (as defined in Section 12).
"Change In Weighted Average Yield" shall equal the sum (whether positive or
negative) of the following, based upon the average market closing levels of
Treasury securities for the 10 Trading Days after announcement of the
termination of the transactions contemplated by the Merger Agreement:
(i) the change (whether positive or negative) since February 27, 1996 in
basis points in 3-year Treasury yields x 0.25;
(ii) the change (whether positive or negative) since February 27, 1996
in basis points in 5-year Treasury yields x 0.25; and
(iii) the change (whether positive or negative) since February 27, 1996
in basis points in 10-year Treasury yields x 0.25; and
(iv) the change (whether positive or negative) since February 27, 1996
in basis points in 20-year Treasury yields x 0.25.
"Credit Spread" shall equal the difference between (A) the product of
1.87234 multiplied by the Average Credit Spread minus (B) 440 basis points.
(continued....)
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<PAGE>
and_____________________ including the date on which such Series B
Preferred Stock is no longer issued and outstanding, which dividends shall
be payable in equal quarterly installments on _______, ________, _________
and _______ each year (each such date, regardless of whether any dividends
have been paid or declared and set aside for payment on such date, being a
"Dividend Payment Date") to holders of record as they appear on the stock
books on such record dates as are fixed by the Board of Directors, but only
when, as and if declared by the Board of Directors out of funds at the time
legally available for the payment of dividends. For purposes of calculation
of such cash dividends, the Series B Preferred Stock shall be valued at the
Stated Value (as defined in Section 12). Such dividends shall begin to
accrue on outstanding shares of Series B Preferred Stock from the date of
issuance and shall be deemed to accrue from day to day whether or not
earned or declared until paid; provided, however, that dividends accrued or
-------- -------
deemed to have accrued for any period shorter than the full three-month
period between Dividend Payment Dates shall be computed based on the actual
number of days elapsed in the three-month period for which such dividends
are payable. Dividends on the Series B Preferred Stock shall be
cumulative. The Dividend Rate per share of Series B Preferred Stock shall
be appropriately adjusted from time to time
__________________
1. (...continued)
"Discount Factor" shall equal 0.55.
For example, if (i) the Base Dividend Rate is 5.875%, (ii) the average 3-year
Treasury, 5-year Treasury, 10-year Treasury and 20-year Treasury yields are each
20 basis points lower at closing than they are currently and (iii) the Average
Credit Spread is 260 basis points, the Credit Spread would be equal to 47 basis
points ((260 x 1.87234) - 440). The resulting Adjustment Amount would be equal
to 14.85 basis points ((-20 + 47) x 0.55). Because such Adjustment Amount is
greater than seven basis points, the Dividend Rate would be equal to the Base
Dividend Rate plus the Adjustment Amount (or 6.0235%), rounded to the yield
which is at the nearest multiple of 0.125% (or 6.00%).
-4-
<PAGE>
to reflect any split or combination of the shares of the Series B Preferred
Stock.
(b) No dividends or other distributions, other than dividends or
other distributions payable solely in shares of capital stock ranking
junior (both as to dividends and upon liquidation, dissolution or winding
up) to the Series B Preferred Stock (or cash in lieu of fractional shares
with respect to such dividends or distributions) and liquidating
distributions which are subject to the provisions of Section 8 hereof,
shall be paid or set aside for payment on, and no purchase, redemption or
other acquisition shall be made of, any shares of capital stock of the
Corporation (other than any class or series of Preferred Stock that, in
accordance with Section 2 hereof, (i) ranks senior to the Series B
Preferred Stock or (ii) is Parity Stock (as defined in Section 12), so long
as any dividend payments per share on Parity Stock as a percentage of
accrued and unpaid dividends per share on Parity Stock do not exceed
contemporaneous dividend payments per share on the Series B Preferred Stock
as a percentage of accrued and unpaid dividends per share on the Series B
Preferred Stock), unless and until all accrued and unpaid dividends on the
Series B Preferred Stock for any prior quarterly dividend period shall have
been declared and paid or a sum sufficient for the payment thereof set
aside for such purposes. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on the
Series B Preferred Stock which may be in arrears.
(c) Any reference to "distribution" contained in this Section 3 shall
not be deemed to include any stock dividend or distributions made in
connection with any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary.
(d) The holders of shares of Series B Preferred Stock shall not be
entitled to receive
-5-
<PAGE>
any dividends or other distributions with respect to such shares except as
provided herein.
4. Voting. (a) The holders of record of shares of Series B
------
Preferred Stock shall have no voting rights except as required by law or as set
forth below; provided, however, that the rights set forth in Section 4(c) hereof
-------- -------
may be exercised only to the extent that such exercise would not result in a
Legal Prohibition or any violation of applicable law or regulation.
(b) (i) So long as any shares of Series B Preferred Stock remain
outstanding, unless a greater percentage shall then be required by law, the
Corporation shall not, without the affirmative vote at a meeting or the written
consent with or representing at least 51% of the shares of Series B Preferred
Stock then outstanding (A) authorize any Senior Stock or reclassify any Junior
Stock or Parity Stock as Senior Stock or (B) amend, alter or repeal any of the
provisions of the Certificate or the Restated Certificate of Incorporation, so
as in any such case to materially and adversely affect the voting powers,
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions of the Series B
Preferred Stock; provided, however, that an amendment which effects a split of
-------- -------
Series B Preferred Stock or which effects a combination of the shares of Series
B Preferred Stock into a fewer number of shares shall not be deemed to have any
such material adverse effect.
(ii) No vote or consent of holders of shares of Series B Preferred
Stock shall be required for (A) the creation of any indebtedness of any kind of
the Corporation, (B) the authorization or issuance of any class of Junior Stock
(including any class or series of common stock of the Corporation) or Parity
Stock, (C) the authorization, designation or issuance of additional shares of
Series B Preferred Stock or
-6-
<PAGE>
(D) subject to Section 4(b)(i), the authorization or issuance of any other
shares of Preferred Stock.
(c) (i) If and whenever at any time or times dividends payable on
shares of this Series shall have been in arrears and unpaid in an aggregate
amount equal to or exceeding the amount of dividends payable thereon for six
quarterly dividend periods, then the number of directors constituting the Board
of Directors shall be automatically increased by two and the holders of shares
of Series B Preferred Stock, together with the holders of any shares of any
Parity Stock as to which in each case dividends are in arrears and unpaid in an
aggregate amount equal to or exceeding the amount of dividends payable thereon
for six quarterly dividend periods, shall have the exclusive right, voting
separately as a class with the holders of any such Parity Stock, to elect two
directors of the Corporation.
(ii) Such voting right may be exercised initially either by written
consent or at a special meeting of the holders of Preferred Stock having such
voting right, called as hereinafter provided, or at any annual meeting of
stockholders held for the purpose of electing directors, and thereafter at each
such annual meeting until such time as all dividends in arrears on the shares of
this Series shall have been paid in full and all dividends payable on the shares
on this Series on four subsequent consecutive Dividend Payment Dates shall have
been paid in full on such dates or funds shall have been set aside for the
payment thereof, at which time such voting right and the term of the directors
elected pursuant to Section 4(c)(i) shall terminate.
(iii) At any time when such voting right shall have vested in holders
of shares of such series of Preferred Stock described in Section 4(c)(ii), and
if such right shall not already have been exercised by written consent, a proper
officer of the Corporation may call, and,
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<PAGE>
upon the written request, addressed to the Secretary of the Corporation, of the
record holders of either (A) shares representing twenty-five percent (25%) of
the voting power of the shares then outstanding of Series B Preferred Stock or
(B) shares representing twenty-five percent (25%) of the voting power of shares
of all series of Preferred Stock having such voting right, shall call, a special
meeting of the holders of all such series of Preferred Stock having such voting
right. Such meeting shall be held at the earliest practicable date upon the
notice required for annual meetings of stockholders at the place for holding
annual meetings of stockholders of the Corporation, or, if none, at a place
designated by the Board of Directors. Notwithstanding the provisions of this
Section 4(c)(iii), no such special meeting shall be called during a period
within 60 days immediately preceding the date fixed for the next annual meeting
of stockholders.
(iv) At any meeting held for the purpose of electing directors at
which the holders of such Preferred Stock shall have the right to elect
directors as provided herein, the presence in person or by proxy of the holders
of shares representing more than fifty percent (50%) in voting power of the then
outstanding shares of such Preferred Stock having such right shall be required
and shall be sufficient to constitute a quorum of such class for the election of
directors by such class.
(v) Any director elected by holders of such Preferred Stock pursuant
to the voting right created under this Section 4(c) shall hold office until the
next annual meeting of stockholders (unless such term has previously terminated
pursuant to Section 4(c)(ii)) and any vacancy in respect of any such director
shall be filled only by vote of the remaining director so elected, or if there
be no such remaining director, by the holders of such Preferred Stock entitled
to elect such director or directors by written consent or at a
-8-
<PAGE>
special meeting called in accordance with the procedures set forth in Section
4(c)(iii), or, if no special meeting is called or written consent executed, at
the next annual meeting of stockholders.
(vi) In exercising the voting rights set forth in this Section
4(c), each share of Series B Preferred Stock shall have one vote per share.
5. Certain Restrictions. (a) Whenever dividends or distributions
--------------------
payable on shares of Series B Preferred Stock as provided in Section 3 for any
prior quarterly dividend period are not paid in full, thereafter and until all
such unpaid dividends or distributions payable, whether or not declared, on the
outstanding shares of Series B Preferred Stock shall have been paid in full or
declared and set apart for payment, the Corporation shall not: (i) redeem,
purchase or otherwise acquire for consideration any shares of Junior Stock or
Parity Stock pursuant to any mandatory redemption, put, sinking fund or other
similar obligation; provided that (A) the Corporation may at any time redeem,
--------
purchase or otherwise acquire shares of Junior Stock or Parity Stock, in
exchange for any shares of Common Stock or for other capital stock of the
Corporation ranking junior (both as to dividends and upon liquidation,
dissolution or winding up) to the Series B Preferred Stock and (B) the
Corporation may accept shares of any Parity Stock for conversion; or (ii) redeem
or purchase or otherwise acquire for consideration any shares of Series B
Preferred Stock; provided that the Corporation may accept shares of Series B
--------
Preferred Stock surrendered for conversion into shares of capital stock of the
Corporation pursuant to Section 9.
(b) The Corporation shall not permit any Subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
capital stock of the Corporation or to make or extend any loan or advance
specified in clause
-9-
<PAGE>
(iii) of Section 5(a) unless the Corporation could, pursuant to paragraph (a) of
this Section 5, purchase such shares at such time and in such manner or make or
extend such loan or advance at such time, as the case may be.
6. Redemption or Exchange. (a) The Corporation shall not have any right
----------------------
to redeem any shares of Series B Preferred Stock prior to the third anniversary
of the Issue Date (as defined in Section 12). The Corporation may, at its sole
option, subject to Section 3(b) hereof, from time to time on and after the third
anniversary of the Issue Date, at its election either: (i) redeem, out of funds
legally available therefor, all or any part of the outstanding shares of the
Series B Preferred Stock at the Redemption Price (as defined in Section 12);
(ii) subject to Section 6(f) hereof, exchange shares of Class A Common Stock (or
such other class or series of common stock into which shares of this Series are
then convertible) for all or any part of the outstanding shares of this Series
at the Exchange Price (as defined in Section 12); or (iii) subject to Section
6(f) hereof, effect a combination of the options described in the foregoing
clauses (i) and (ii) (in which event each holder of shares of this Series which
are selected for redemption and exchange pursuant to Section 6(e) shall receive
the same proportion of cash and shares of Class A Common Stock (or such other
class or series of common stock into which shares of this Series are then
convertible) (except for cash paid in lieu of fractional shares) paid to other
holders of shares of this Series selected for redemption and exchange);
provided, however, that shares of Series B Preferred Stock shall not be
- -------- -------
redeemable by the Corporation prior to the fifth anniversary of the Issue Date
unless the Current Market Price (as defined in Section 12) shall be greater than
the product of (x) the Conversion Price (as defined in Section 9) multiplied by
(y) 1.35 , on at least 20 of the 30 Trading Days immediately prior to the date
of the notice delivered by the Corporation to
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<PAGE>
holders of shares of Series B Preferred Stock to be redeemed pursuant to
paragraph (d) of this Section 6.
(b) Not more than 60 nor less than 15 Trading Days prior to the
Redemption Date, the Corporation shall, if the Series B Preferred Stock is
listed on any national securities exchange or traded in the over-the-counter
market, give notice by publication in a newspaper of general circulation in the
Borough of Manhattan, The City of New York, that the Corporation has elected in
accordance with paragraph (a) of this Section 6 to redeem and/or exchange any or
all shares of the Series B Preferred Stock. The notice shall also specify (i)
the percentage of the Series B Preferred Stock to be redeemed and/or exchanged,
if less than all, (ii) if more than one form of consideration has been elected
by the Corporation, the portion of such shares to be redeemed and the portion of
such shares to be exchanged, (iii) the Redemption Price and the manner in which
the Exchange Price shall be calculated prior to the Redemption Date, and (iv)
the procedures to be followed to receive payment of the Redemption Price and/or
the Exchange Price, as the case may be; and, a similar notice shall be mailed
concurrently to each record holder of shares of Series B Preferred Stock, at
such holder's address as it appears on the transfer books of the Corporation;
provided, however, that if the Series B Preferred Stock is owned of record by 50
- -------- -------
or fewer holders or groups of affiliated holders, the Corporation shall publicly
announce the information contained in the notice by issuance of a press release
and such notice shall be mailed in not more than 60 or less than 15 Trading Days
prior to the Redemption Date, and shall set forth the information contained
above.
(c) On or before the Redemption Date, the Corporation shall deposit
for the benefit of the holders of shares of Series B Preferred Stock, in the
case of a redemption, the funds necessary for such redemption and, in the case
of an exchange,
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<PAGE>
certificates representing the shares of Class A Common Stock to be exchanged,
with a bank or trust company in the Borough of Manhattan, The City of New York,
or in the City of Boston, in either case having a capital and surplus of at
least $2,000,000,000. Any moneys or certificates so deposited by the Corporation
and unclaimed at the end of two years from the date designated for such
redemption or exchange shall be released from any such deposit and revert to the
general funds of the Corporation. After such conversion, any such bank or trust
company shall, upon demand, pay over to the Corporation such unclaimed amounts
or certificates, as the case may be, and thereupon such bank or trust company
shall be relieved of all responsibility in respect thereof and any holder of
shares of Series B Preferred Stock to be redeemed shall look only to the
Corporation for the payment of the Redemption Price. In the event that moneys or
certificates are deposited pursuant to this paragraph (c) in respect of shares
of Series B Preferred Stock that are converted in accordance with the provisions
of Section 9, such moneys or certificates, as the case may be, shall, upon such
conversion, be released from any such deposit and revert to the Corporation.
After such reversion, any such bank or trust company shall pay over to the
Corporation such moneys or certificates and shall be relieved of all
responsibility to the holders of such converted shares in respect thereof. Any
interest accrued on funds deposited pursuant to this paragraph (c) shall be paid
from time to time to the Corporation.
(d) Notice of redemption or exchange having been given as aforesaid,
upon the deposit of funds or certificates, as the case may be, pursuant to
paragraph (c) in respect of shares of Series B Preferred Stock to be redeemed or
exchanged pursuant to this Section 6, notwithstanding that any certificates for
such shares to be redeemed or exchanged shall not have been surrendered for
cancellation, from and after the Redemption Date (i) the shares represented
thereby shall no longer
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<PAGE>
be deemed outstanding, (ii) the rights to receive dividends thereon shall cease
and terminate and dividends on the Series B Preferred Stock shall cease to
accrue and (iii) all rights of the holders of shares of Series B Preferred Stock
to be redeemed or exchange shall cease and terminate, excepting only the right
to receive the Redemption Price and/or Exchange Price therefor, without any
interest thereon.
(e) In the event that fewer than all of the outstanding shares of
this Series are to be redeemed and/or exchanged pursuant to Section 6(a),
subject to clause (iii) of the second sentence of section 6(a), the aggregate
number of shares of this Series held by each holder which will be redeemed
and/or exchanged shall be determined by the Corporation by lot or pro rata or by
any other method as may be determined by the Board of Directors in its sole
discretion to be equitable, and the certificate of the Corporation's Secretary
or an Assistant Secretary filed with the transfer agent or transfer agents for
this Series in respect of such determination by the Board of Directors shall be
conclusive.
(f) Notwithstanding anything contained herein to the contrary, the
Corporation shall not be permitted to exchange any shares of Class A Common
Stock (or such other class or series of common stock into which shares of this
Series are convertible) for all or any part of the outstanding shares of this
Series if such stock which the Corporation seeks to exchange for shares of this
Series is not listed or admitted for trading on any national securities exchange
or the Nasdaq National Market. In connection with the exchange of any shares of
this Series, the Corporation may, but shall not be required to, issue a fraction
of a share of Class A Common Stock (or such other class or series of common
stock into which shares of this Series are then convertible) and, if the
Corporation shall determine not to issue such fraction, the Corporation shall
pay a cash payment
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<PAGE>
(rounded to the nearest cent) equal to such fraction multiplied by the Current
Market Price per share of Class A Common Stock (or such other class or series of
common stock into which shares of this Series are then convertible) on the last
Trading Day prior to the Redemption Date. Notwithstanding the foregoing, this
Section 6(f) shall in no way restrict or limit the Corporation's right to redeem
all or any part of the outstanding shares of this Series for cash at the
Redemption Price.
7. Reacquired Shares. Any shares of Series B Preferred Stock converted,
-----------------
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares of Series B Preferred Stock shall upon their cancellation, and
upon the filing of an appropriate certificate with the Secretary of State of the
State of Delaware, become authorized but unissued shares of Preferred Stock, par
value $.01 per share, of the Corporation and may be reissued as part of another
series of Preferred Stock, par value $.01 per share, of the Corporation subject
to the conditions or restrictions on issuance set forth herein.
8. Liquidation, Dissolution or Winding Up. (a) Upon the liquidation,
--------------------------------------
dissolution or winding up of the Corporation, whether voluntary or involuntary,
no distribution shall be made (i) to the holders of shares of Junior Stock upon
liquidation, dissolution or winding up unless, prior thereto, the holders of
shares of Series B Preferred Stock, subject to Section 9, shall have received
the Liquidation Preference (as defined in Section 12 with respect to each share,
or (ii) to the holders of shares of Parity Stock upon liquidation, dissolution
or winding up, except distributions made ratably on all such Parity Stock and
the Series B Preferred Stock in proportion to the total amounts to which the
holders of all shares of such Parity Stock and the Series B
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<PAGE>
Preferred Stock are entitled upon such liquidation, dissolution or winding up.
(b) Neither the consolidation, merger or other business combination
of the Corporation with or into any other Person or Persons nor the sale of all
or substantially all the assets of the Corporation shall be deemed to be a
liquidation, dissolution or winding up of the Corporation for purposes of this
Section 8.
9. Conversion. (a) Each holder of shares of Series B Preferred Stock
----------
may, at its option at any time and from time to time, upon surrender of the
certificates therefor, convert any or all of its shares of Series B Preferred
Stock into Common Stock as follows. The number of fully paid and nonassessable
shares of Class A Common Stock deliverable on conversion of a share of Series B
Preferred Stock is referred to as the "Conversion Ratio". The Conversion Ratio
shall initially be equal to the quotient of $50 per share divided by the
Conversion Price and shall be subject to adjustment from time to time pursuant
to paragraph (f) of this Section 9. The "Conversion Price" shall be equal to the
product of 1.25 multiplied by the greater of: (i) $20 per share, (ii) if shares
of Class A Common Stock are publicly traded on the New York Stock Exchange, then
over the fifteen Trading Days beginning the first Trading Day after the
announcement of the termination of the Merger Agreement (the "Measurement
Period"), (a) if the average of the daily volume of Class A Common Stock traded
during the Measurement Period exceeds or is equal to 100,000 shares per day, the
average of the Current Market Price of Class A Common Stock over the Measurement
Period, or (b) if the average of the daily volume of Class A Common Stock traded
during the Measurement Period is less than 100,000 shares per day, the product
of .925 multiplied by the average of the Current Market Price of Class A Common
Stock over the Measurement Period, or (iii) if shares of Class A Common Stock
are publicly traded on the Nasdaq National Market, over the
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<PAGE>
Measurement Period, (a) if the average of the daily volume of Class A Common
Stock traded during the Measurement Period exceeds or is equal to 200,000 shares
per day, the average of the Current Market Price of Class A Common Stock over
the Measurement Period, or (b) if the average of the daily volume of Class A
Common Stock traded during the Measurement Period is less than 200,000 shares
per day, the product of .925 multiplied by the average of the Current Market
Price of Class A Common Stock over the Measurement Period.
(b) Conversion of the Series B Preferred Stock may be effected by any
such holder upon the surrender to the Corporation at the principal office of the
Corporation in the Commonwealth of Massachusetts (the "Transfer Agent") or at
the office of any agent or agents of the Corporation, as may be designated by
the Board of Directors of the Corporation, of the certificate for such Series B
Preferred Stock to be converted at any time after the Issue Date accompanied by
a written notice stating that such holder elects to convert all or a specified
whole number of such shares in accordance with the provisions of this Section 9
and specifying the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. In case such notice shall
specify a name or names other than that of such holder, such notice shall be
accompanied by payment of all issue, stamp, documentation and transfer taxes
payable upon the issuance of shares of Common Stock in such name or names. Other
than such taxes, the Corporation will pay any and all issue, stamp,
documentation, transfer and other taxes (other than taxes based on gross or net
income) that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of Series B Preferred Stock pursuant hereto. As
promptly as practicable, and in any event within five Business Days after the
surrender of such certificate or certificates and the receipt of such notice
relating thereto and, if such notice shall specify a name or names other than
that of such
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<PAGE>
holder, (a) payment of all transfer taxes (or the demonstration to the
satisfaction of the Corporation that such taxes have been paid), and (b) unless
such issuance is registered under the Securities Act and all applicable state
securities laws, the holder of the applicable shares of Series B Preferred Stock
which are to be converted into Class A Common Stock hereunder shall have
furnished to the Corporation evidence satisfactory to it that such issuance is
exempt from registration under the Securities Act and all applicable state
securities laws, the Corporation shall deliver or cause to be delivered (i)
certificates representing the number of validly issued, fully paid and non
assessable full shares of Class A Common Stock to which the holder of shares of
Series B Preferred Stock being converted shall be entitled and (ii) if less than
the full number of shares of Series B Preferred Stock evidenced by the
surrendered certificate or certificates is being converted, a new certificate or
certificates, of like tenor, for the number of shares evidenced by such
surrendered certificate or certificates less the number of shares being
converted. Such conversion shall be deemed to have been made at the close of
business on the date of receipt of such notice and of such surrender of the
certificate or certificates representing the shares of Series B Preferred Stock
to be converted so that the rights of the holder thereof as to the shares being
converted shall cease except for the right to receive shares of Class A Common
Stock in accordance herewith, and the person entitled to receive the shares of
Class A Common Stock shall be treated for all purposes as having become the
record holder of such shares of Class A Common Stock at such time. The
Corporation shall not be required to convert, and no surrender of shares of
Series B Preferred Stock shall be effective for that purpose, while the transfer
books of the Corporation for the Common Stock are closed for any purpose (but
not for any period in excess of 2 days); but the surrender of shares of Series B
Preferred Stock for conversion during any period while such books are so closed
shall become
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<PAGE>
effective for conversion immediately upon the reopening of such books, as if the
conversion had been made on the date such shares of Series B Preferred Stock
were surrendered, and at the Conversion Ratio in effect at the date of such
surrender.
(c) In case any shares of Series B Preferred Stock are to be redeemed
pursuant to Section 6, the right of conversion under this Section 9 shall cease
and terminate as to the shares of Series B Preferred Stock to be redeemed at the
close of business on the second Business Day next preceding the Redemption Date
unless the Corporation shall default in the payment of the Redemption Price.
(d) In connection with the conversion of any shares of Series B
Preferred Stock, no fractions of shares of Class A Common Stock shall be issued,
but in lieu thereof the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to such fractional interest
multiplied by the Current Market Price per share of Class A Common Stock on the
Trading Day on which such shares of Series B Preferred Stock are deemed to have
been converted. If more than one share of Series B Preferred Stock shall be
surrendered for conversion by the same holder at the same time, the number of
full shares of Class A Common Stock issuable on conversion thereof shall be
computed on the basis of the total number of shares of Series B Preferred Stock
so surrendered.
(e) The Corporation shall at all times reserve and keep available for
issuance upon the conversion of the Series B Preferred Stock, such number of its
authorized but unissued shares of Class A Common Stock as will from time to time
be sufficient to permit the conversion of all outstanding shares of Series B
Preferred Stock, and shall take all action required to increase the authorized
number of shares of Class A Common Stock
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<PAGE>
if necessary to permit the conversion of all outstanding shares of Series B
Preferred Stock.
(f) The Conversion Ratio shall be subject to adjustment from time to
time as follows:
(i) In case the Corporation shall (i) declare a dividend or make a
distribution on the outstanding shares of its Common Stock in shares of its
Common Stock, (ii) subdivide its outstanding shares of Common Stock into a
greater number of shares, or (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, the Conversion Price in effect at
the time of the record date for such dividend or distribution or the
effective date of such subdivision or combination shall be proportionately
adjusted so that the holder of any shares of Series B Preferred Stock
surrendered for conversion after such time shall be entitled to receive the
aggregate number of shares of Class A Common Stock which the holder would
have owned or been entitled to receive had such shares of Series B
Preferred Stock been converted immediately prior to such record date or
effective date and the resulting Common Stock had been subject to such
dividend, distribution, subdivision or combination. An adjustment made
pursuant to this clause (i) shall become effective (x) in the case of any
such dividend or distribution, immediately after the close of business on
the record date for the determination of holders of shares of Common Stock
entitled to receive such dividend or distribution, or (y) in the case of
any such subdivision, combination, consolidation or reclassification, at
the close of business on the day upon which such corporate action becomes
effective.
(ii) If the Corporation shall issue rights, warrants or options
to all holders of Class A Common Stock entitling them (for a period not
exceeding 45 days from the record
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<PAGE>
date referred to below) to subscribe for or purchase shares of Class A
Common Stock at a price per share less than the Current Market Price
(determined over the Value Period (as defined in Section 12) as of the date
of determination of stockholders entitled to receive such rights, warrants
or options), then, in any such event, the Conversion Ratio shall be
adjusted by multiplying the Conversion Ratio in effect immediately prior to
the opening of business on such record date by a fraction, the numerator of
which shall be the number of shares of Class A Common Stock outstanding on
such record date plus the maximum number of additional shares of Class A
Common Stock offered for subscription pursuant to such rights, warrants or
options, and the denominator of which shall be the number of shares of
Class A Common Stock outstanding on such record date plus the maximum
number of additional shares of Class A Common Stock which the aggregate
offering price of the maximum number of shares of Class A Common Stock so
offered for subscription or purchase pursuant to such rights, warrants or
options would purchase at such Current Market Price (determined by
multiplying such maximum number of shares by the exercise price of such
rights, warrants or options (plus any other consideration received by the
Corporation upon the issuance or exercise of such rights, warrants or
options) and dividing the product so obtained by such Current Market
Price). Such adjustment shall become effective at the opening of business
on the day next following the record date for the determination of
stockholders entitled to receive such rights, warrants or options. To the
extent that shares of Class A Common Stock are not delivered after the
expiration of such rights, warrants or options, the Conversion Ratio shall
be readjusted to the Conversion Ratio which would then be in effect had the
adjustments made upon the record date for the determination of
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<PAGE>
stockholders entitled to receive such rights, warrants or options been made
upon the basis of delivery of only the number of shares of Class A Common
Stock actually delivered and the amount actually paid therefor. In
determining whether any rights, warrants or options entitle the holders to
subscribe for or purchase shares of Class A Common Stock at a price per
share less than such Current Market Price, there shall be taken into
account any consideration received by the Corporation upon issuance and
upon exercise of such rights, warrants or options. The value of such
consideration, if other than cash, shall be determined by the good faith
business judgment of the Board of Directors, whose determination shall be
conclusive.
(iii) If the Corporation shall pay a dividend or make a distribution
to all holders of outstanding shares of Class A Common Stock, of capital
stock, cash, evidences of its indebtedness or other assets of the
Corporation (but excluding (x) any cash dividends or distributions (other
than Extraordinary Cash Distributions) and (y) dividends or distributions
referred to in Section 9(f)(i)), then the Conversion Ratio shall be
adjusted by multiplying the Conversion Ratio in effect immediately prior to
the opening of business on the record date for the determination of
stockholders entitled to receive such dividend or distribution by a
fraction, the numerator of which shall be the Current Market Price
(determined over the Value Period as of such record date), and the
denominator of which shall be such Current Market Price less either (A) the
fair market value (as determined by the good faith business judgment of the
Board of Directors, whose determination shall be conclusive), as of such
record date, of the portion of the capital stock assets or evidences of
indebtedness to be so distributed applicable to one share of Class A Common
Stock
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<PAGE>
or (B), if applicable, the amount of the Extraordinary Cash
Distribution to be distributed per share of Class A Common Stock. The
adjustment pursuant to the foregoing provisions of this Section 9(f)(iii)
shall become effective at the opening of business on the day next following
the record date for the determination of stockholders entitled to receive
such dividend or distribution.
(iv) In lieu of making an adjustment to the Conversion Ratio
pursuant to Sections 9(f)(i), 9(f)(ii) or 9(f)(iii) above for a dividend or
distribution or an issue or rights, warrants or options, the Corporation
may distribute to the holders of shares of Series B Preferred Stock, or
reserve for distribution with each share of Class A Common Stock delivered
to a person converting a share of Series B Preferred Stock pursuant to this
Section 9, such dividend or distribution or such rights, warrants or
options; provided, however, that in the case of such a reservation, on the
-------- -------
date, if any, on which a person converting a share of Series B Preferred
Stock would no longer be entitled to receive such dividend or distribution
or to receive or exercise such rights, warrants or options, such dividend
or distribution shall be deemed to have occurred, or such rights, warrants
or options shall be deemed to have issued, and the Conversion Ratio shall
be adjusted as provided in Section 9(f)(i), 9(f)(ii) or 9(f)(iii), as the
case may be (with such termination date being the relevant date of
determination for purposes of determining the Current Market Price).
(v) The Corporation shall be entitled to make such additional
increases in the Conversion Ratio, in addition to those required by
subsections 9(f)(i) thorough 9(f)(iii), as shall be determined by the Board
of Directors to be necessary in order that any dividend or
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<PAGE>
distribution in Class A Common Stock, any subdivision, reclassification or
combination of shares of Class A Common Stock or any issuance of rights or
warrants referred to above, shall not be taxable to the holders of Class A
Common Stock for United States Federal income tax purposes.
(vi) To the extent permitted by applicable law, the Corporation
may from time to time increase the Conversion Ratio by any amount for any
period of time if the period is at least 20 Trading Days, the increase is
irrevocable during such period and the Board of Directors shall have made a
determination that such increase would be in the best interests of the
Corporation, which determination shall be conclusive.
(vii) In any case in which this Section 9(f) shall require that
any adjustment be made effective as of or immediately following a record
date, the Corporation may elect to defer (but only for five (5) Trading
Days following the occurrence of the event which necessitates the filing of
the statement referred to in Section 10) issuing to the holder of any
shares of this Series converted after such record date (i) the shares of
Class A Common Stock and other capital stock of the Corporation issuable
upon such conversion over and above the shares of Class A Common Stock and
other capital stock of the Corporation issuable upon such conversion on the
basis of the Conversion Ratio prior to adjustment and (ii) paying to such
holder any amount in cash in lieu of any fraction thereof pursuant to
Section 9(d); provided, however, that the Corporation shall deliver to such
-------- -------
holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
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<PAGE>
(viii) For purposes of this paragraph (f), the number of shares of
Common Stock at any time outstanding shall not include any shares of Common
Stock then owned or held by or for the account of the Corporation or a
Subsidiary of the Corporation.
(ix) The certificate of any firm of independent public accountants of
recognized standing selected by the Board of Directors of the Corporation
(which may be the firm of independent public accountants regularly employed
by the Corporation) shall be presumptively correct for any computation made
under this paragraph (f).
(x) If the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or
other distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then thereafter no adjustment in the number of
shares of Common Stock issuable upon exercise of the right of conversion
granted by this paragraph (f) or in the Conversion Ratio then in effect
shall be required by reason of the taking of such record.
(g) In case of any capital reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
paragraph (f)(i) of this Section 9), or in case of any consolidation or merger
of the Corporation with or into another corporation, or in case of any sale or
conveyance to another corporation of the property of the Corporation as an
entirety or substantially as an entirety (each of the foregoing being referred
to as a "Transaction"), each share of Series B Preferred Stock then outstanding
shall thereafter be convertible into, in lieu of the Class A Common Stock
issuable upon such conversion prior to the consummation of such Transaction,the
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<PAGE>
kind and amount of shares of stock and other securities and property
(including cash) receivable upon the consummation of such Transaction by a
holder of that number of shares of Class A Common Stock into which one
share of Series B Preferred Stock was convertible immediately prior to such
Transaction (including, on a pro rata basis, the cash, securities or
property received by holders of Class A Common Stock in any tender or
exchange offer that is a step in such Transaction). In any such case, if
necessary, appropriate adjustment (as determined by the Board of Directors)
shall be made in the application of the provisions set forth in this
Section 9 with respect to rights and interests thereafter of the holders of
shares of Series B Preferred Stock to the end that the provisions set forth
herein for the protection of the conversion rights of the Series B
Preferred Stock shall thereafter be applicable, as nearly as reasonably may
be, to any such other shares of stock and other securities and property
deliverable upon conversion of the shares of Series B Preferred Stock
remaining outstanding. In case securities or property other than Class A
Common Stock shall be issuable or deliverable upon conversion as aforesaid,
then all references in this Section 9 shall be deemed to apply, so far as
appropriate and as nearly as may be, to such other securities or property.
Notwithstanding anything contained herein to the contrary, the
Corporation will not effect any Transaction unless, prior to the
consummation thereof, the Surviving Person (as defined in Section 12)
thereof shall assume, by written instrument mailed to each record holder of
shares of Series B Preferred Stock at the addresses of each as shown on the
books of the Corporation maintained by the Transfer Agent thereof if such
shares are held by 50 or fewer holders or groups of affiliated holders or
to each Transfer Agent for the shares of Series B Preferred Stock at the
addresses of each as shown on the books of the Corporation maintained by
the Transfer Agent thereof, if such shares are held by a greater
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<PAGE>
number of holders, the obligation to deliver to such holder such cash and
such securities to which, in accordance with the foregoing provisions, such
holder is entitled and such Surviving Person shall have mailed to each
record holder of shares of Series B Preferred Stock at the addresses of
each as shown on the books of the Corporation maintained by the Transfer
Agent thereof, if such shares are held by 50 or fewer holders or groups of
affiliated holders, or to each Transfer Agent for the shares of Series B
Preferred Stock, if such shares are held by a greater number of holders, an
opinion of independent counsel for such Person stating that such assumption
agreement is a valid, binding and enforceable agreement of the Surviving
Person (subject to customary exceptions).
(h) In case at any time or from time to time the Corporation
shall pay any dividend or make any other distribution to the holders of its
Common Stock, or shall offer for subscription pro rata to the holders of
its Common Stock any additional shares of stock of any class or any other
right, or there shall be any capital reorganization or reclassification of
the Common Stock of the Corporation or consolidation or merger of the
Corporation with or into another corporation, or any sale or conveyance to
another corporation of the property of the Corporation as an entirety or
substantially as an entirety, or there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, then, in any one
or more of said cases the Corporation shall give at least 10 days' prior
written notice (the time of mailing of such notice shall be deemed to be
the time of giving thereof) to the record holders of the Series B Preferred
Stock at the addresses of each as shown on the books of the Corporation
maintained by the Transfer Agent thereof of the date on which (i) the books
of the Corporation shall close or a record shall be taken for such stock
dividend, distribution or subscription rights or (ii) such reorganization,
reclassification, consolidation, merger, sale or conveyance,
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<PAGE>
dissolution, liquidation or winding up shall take place, as the case may
be, provided that in the case of any Transaction to which paragraph (g) of
this Section 9 applies the Corporation shall give at least 30 days' prior
written notice as aforesaid. Such notice shall also specify the date as of
which the holders of the Common Stock and of the Series B Preferred Stock
of record shall participate in said dividend, distribution or subscription
rights or shall be entitled to exchange their Common Stock or Series B
Preferred Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance
or participate in such dissolution, liquidation or winding up, as the case
may be. Failure to give such notice shall not invalidate any action so
taken.
(i) The Corporation will at no time effect conversion of any
Series B Preferred Stock pursuant to this Section 9, and any purported
conversion of any Series B Preferred Stock shall be null and void, if such
conversion would result in the violation of a Legal Prohibition (as defined
in Section 12).
(j) All calculations under this Section 9 shall be made to the
nearest cent or to the nearest one one-hundredth of a share of Common Stock
as the case may be. Notwithstanding any other provision of this Section 9,
the Corporation shall not be required to make any adjustment of the
Conversion Ratio unless such adjustment would require an increase or
decrease of at least 1.00% of such Conversion Ratio. Any lesser adjustment
shall be carried forward and shall be made at the time of and together with
the next subsequent adjustment which, together with any adjustment or
adjustments so carried forward, shall amount to an increase or decrease of
at least 1.00% in the Conversion Ratio. Any adjustments under this Section
9 shall be made successively whenever an event requiring such an adjustment
occurs.
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<PAGE>
(k) Upon the surrender of certificates representing shares of
Series B Preferred Stock in accordance with the terms hereof, the Person
converting or exchanging shall be deemed to be the holder of record at such
time of the shares of Class A Common Stock and other securities or property
issuable on such conversion or exchange and all rights with respect to the
shares of Series B Preferred Stock surrendered shall forthwith terminate
except the right to receive the shares of Class A Common Stock or other
securities or property issuable on such conversion or exchange, as the case
may be. If any shares of Series B Preferred Stock are surrendered for
conversion or exchange subsequent to the record date preceding a Dividend
Payment Date but on or prior to such Dividend Payment Date (except shares
called for redemption or exchange on a Redemption Date between such record
date and Dividend Payment Date), the registered holder of such shares at
the closed of business on such record date shall be entitled to receive the
dividend, if any, payable on such shares on such Dividend Payment Date
notwithstanding the conversion thereof. Except as provided in this Section
9, no adjustments in respect of payments of dividends on shares surrendered
for conversion or exchange or any dividend on the Common Stock issued upon
conversion or exchange shall be made upon the conversion or exchange of any
shares of this Series.
(l) The Corporation will endeavor to list the shares of (or
depositary shares representing fractional interests in) Class A Common
Stock required to be delivered upon conversion of shares of Series B
Preferred Stock prior to such delivery upon the principal national
securities exchange upon which the outstanding Class A Common Stock is
listed at the time of such delivery.
10. Reports as to Adjustments. Upon any adjustment of the Conversion
-------------------------
Ratio then in effect and any increase or decrease in the number of shares
of Common Stock issuable upon the operation
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<PAGE>
of the conversion set forth in Section 9, then, and in each such case, the
Corporation shall promptly deliver to the Transfer Agent of the Series B
Preferred Stock and Common Stock a certificate signed by the President or a
Vice President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Corporation setting forth in
reasonable detail the event requiring the adjustment and the method by
which such adjustment was calculated and specifying the Conversion Ratio
then in effect following such adjustment and the increased or decreased
number of shares issuable upon the conversion set forth in Section 9. The
Corporation shall also promptly after the making of such adjustment give
written notice to the record holders of the Series B Preferred Stock at the
address of each holder as shown on the books of the Corporation maintained
by the Transfer Agent thereof, which notice shall state the Conversion
Ratio then in effect, as adjusted, and the increased or decreased number of
shares issuable upon the exercise of the right of conversion granted by
Section 9, and shall set forth in reasonable detail the method of
calculation of each and a brief statement of the facts requiring such
adjustment. Where appropriate, such notice to record holders of the Series
B Preferred Stock may be given in advance and included as part of the
notice required under the provisions of Section 9(h).
11. Certain Covenants. Any record holder of Series B Preferred Stock
-----------------
may proceed to protect and enforce its rights and the rights of such
holders by any available remedy by proceeding at law or in equity to
protect and enforce any such rights, whether for the specific enforcement
of any provision in this Certificate of Designation or in aid of the
exercise of any power granted herein, or to enforce any other proper
remedy.
12. Definitions. For the purposes of this Certificate of Designation
-----------
of Series B Convertible
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<PAGE>
Preferred Stock, the following terms shall have the meanings indicated:
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act.
"Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Certificate" shall mean the certificate of the voting powers,
designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, of
Series B Preferred Stock filed with respect to this Certificate of
Designation with the Secretary of State of the State of Delaware pursuant
to Section 151 of the General Corporation Law of the State of Delaware.
"Class A Common Stock" and "Class B Common Stock" each shall have
the meaning assigned to such term in the Corporation's Restated Certificate
of Incorporation. "Common Stock" shall mean either the Class A Common Stock
or the Class B Common Stock.
"Current Market Price", when used with reference to shares of
Common Stock or other securities on any date, shall mean the closing price
per share of Common Stock or such other securities on such date and, when
used with reference to shares of Common Stock or other securities for any
period shall mean the average of the daily closing prices per share of
Common Stock or such other securities for such period. The closing price
for each day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction
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<PAGE>
reporting system with respect to securities listed or admitted to trading
on the New York Stock Exchange or, if the Common Stock or such other
securities are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
systems with respect to securities listed on the principal national
securities exchange on which the Common Stock or such other securities are
listed or admitted to trading or, if the Common Stock or such other
securities are not listed or admitted to trading on any national securities
exchange, the last quoted sale price or, if not so quoted, the average of
the high bid and low asked prices, as reported by the Nasdaq National
Market or such other system then in use, or, if on any such date the Common
Stock or such other securities are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by the primary
professional market maker making a market in the Common Stock or such other
securities as selected by the Board of Directors of the Corporation. If the
Common Stock is not publicly held or so listed or publicly traded, "Current
Market Price" shall mean the amount as determined by investment bankers
mutually agreeable to the Corporation and the holders of a majority of the
outstanding shares of Series B Preferred Stock (the fees and expenses of
which shall be paid by the Corporation) equal to the net proceeds that
would be expected to be received by a stockholder of the Corporation from
the sale of such shares of Common Stock in an underwritten public offering
after being reduced by pro forma expenses and underwriting discounts and
commissions. If securities other than Common Stock are not publicly held or
so listed or publicly traded, "Current Market Price" shall mean the Fair
Market Value per share of such other securities as determined by an
independent investment banking firm mutually agreeable to the Corporation
and the holders of a majority of the outstanding shares of Series B
Preferred Stock (the fees and expenses of which shall be paid by the
Corporation).
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<PAGE>
"Dividend Payment Date" shall have the meaning set forth in
Section 3(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Price" for each share of this Series called for
exchange shall be a number of shares of Class A Common Stock (or such other
class or series of common stock into which shares of this Series are then
convertible) equal to the quotient of (x) the sum of (I) the Stated Value
plus (II) the amount of accrued or unpaid dividends on this Series to the
Redemption Date divided by (y) the product of (I) .95 multiplied by (II)
the Current Market Price determined over the Value Period as of the
Redemption Date.
"Extraordinary Cash Distributions" shall mean, with respect to
any consecutive 12-month period, all cash dividends and cash distributions
on the outstanding shares of Series B Preferred Stock during such period
(other than cash dividends or cash distributions for which a prior
adjustment to the Conversion Ratio was previously made) to the extent such
cash dividends and cash distributions exceed, on a per share of Series B
Preferred Stock basis, 10% of the average daily Closing Price of the Series
B Preferred Stock over such period.
"Fair Market Value" shall mean the amount which a willing buyer
would pay a willing seller in an arm's-length transaction.
"Issue Date" shall mean the date on which shares of Series B
Preferred Stock are issued.
"Junior Stock" shall mean any capital stock of the Corporation
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series B Preferred Stock.
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<PAGE>
"Legal Prohibition" shall mean any law, statute, rule, regulation
or judicial or administrative decision which would prohibit a holder of
Series B Preferred Stock from owning such number of shares of Common Stock
which such holder would receive upon converting the Series B Preferred
Stock or which would require the Corporation to dispose of any assets or
terminate any business activity as a result of a holder of the Series B
Preferred Stock owning such number of shares of Common Stock which such
holder would receive upon converting the Series B Preferred Stock.
"Liquidation Preference" with respect to a share of the Series B
Preferred Stock shall mean an amount equal to the Stated Value plus an
amount per share equal to all unpaid dividends accrued thereon to the date
of final distribution to the holder thereof (without interest).
"Merger Agreement" shall mean the Agreement and Plan of Merger,
dated as of February 27, 1996, between the Corporation and US WEST, Inc., a
Delaware Corporation.
"Parity Stock" shall mean the Series A Participating Convertible
Preferred Stock and any other capital stock of the Corporation (other than
Junior Stock) ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series B Preferred Stock.
"Person" shall mean any individual, firm, trust, partnership,
corporation or other entity, and shall include any successor (by merger or
otherwise) of such entity.
"Preferred Stock" shall mean the class of Preferred Stock, par
value $0.01 per share, of the Corporation authorized at the date of the
Certificate, including any shares thereof authorized after the date of the
Certificate.
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<PAGE>
"Redemption Date" shall mean the date on which the Corporation
shall effect the redemption or exchange, as the case may be, of all or any
part of the outstanding shares of the Series B Preferred Stock pursuant to
Section 6 hereof.
"Redemption Price" in respect of a share of Series B Preferred
Stock shall mean the Stated Value as of the Redemption Date, plus an amount
per share equal to all unpaid dividends thereon, whether or not declared,
to the date of redemption (without interest).
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Senior Stock" shall mean the shares of any class or series of
stock of the Corporation which, by the terms of the Restated Certificate of
Incorporation or of the instrument by which the Board of Directors, acting
pursuant to authority granted in the Restated Certificate of Incorporation,
shall fix the relative rights, preferences and limitations thereof, shall
be senior to the Series B Preferred Stock in respect of the right to
receive dividends or to participate in any distribution of assets other
than by way of dividends.
"Stated Value" in respect of the Series B Preferred Stock shall
initially be $50 per share, as appropriately adjusted from time to time to
reflect any split or combination of the shares of the Series B Preferred
Stock.
"Subsidiary" of any Person means any corporation or other entity
of which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
"Surviving Person" shall mean the continuing or surviving Person
of a merger, consolidation or other corporate combination, the Person
receiving a transfer of all or a substantial part of the properties and
assets of the Corporation, or the Person consolidating with or merging into
the Corporation in a merger, consolidation or other corporate combination
in which the Corporation is the continuing or surviving person, but in
connection with which the Series B Preferred Stock or Common Stock of the
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<PAGE>
Corporation is exchanged, converted or reinstated into the securities of
any other Person or cash or other property; provided, however, if such
-------- -------
Surviving Person is a direct or indirect Subsidiary of a Person, the parent
entity also shall be deemed to be a Surviving Person.
Trading Day" means a day on which the principal national
securities exchange on which the Common Stock is listed or admitted to
trading is open for the transaction of business or, if the Common Stock is
not listed or admitted to trading on any national securities exchange, a
Business Day.
"Transaction" has the meaning specified in Section 9(g).
"Value Period" shall mean the ten (10) consecutive Trading Days
ending on the third Trading Day immediately preceding the applicable date.
IN WITNESS WHEREOF, Continental Cablevision, Inc. has caused this
Certificate to be duly executed in its corporate name as of the th day
of [ ]
CONTINENTAL CABLEVISION, INC
By__________________________
Attest:
_____________________
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<PAGE>
EXHIBIT F
---------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and entered
into as of _________ __, 199_ among Continental Cablevision, Inc., a
Delaware corporation (the "COMPANY"), and U S WEST, Inc., a Delaware
corporation (the "HOLDER").
RECITALS
--------
A. This Agreement is being entered into in connection with, and
pursuant to section [_.__] of, the Agreement and Plan of Merger, dated as
of February 27, 1996, between the Company and the Holder (the "MERGER
AGREEMENT").
B. The Company has heretofore entered into (i) a Registration Rights
Agreement dated as of June 22, 1992 with Corporate Partners, L.P. and
certain other signatories thereto and (ii) an amendment thereto dated as of
July 15, 1992 (said Registration Rights Agreement and amendment are
hereinafter referred to as the "CP AGREEMENT").
C. The Company has heretofore entered into a Registration Rights
Agreement dated as of July 15, 1992 with Boston Ventures Limited
Partnership III and certain other signatories thereto (said Registration
Rights Agreement is hereinafter referred to as the "BV AGREEMENT").
D. The Company has heretofore entered into a Registration Rights
Agreement dated as of October 5, 1995 with The Providence Journal Company,
as Representative, and certain other signatories thereto (said Registration
Rights Agreement is hereinafter referred to as the "PROJO AGREEMENT").
E. It is intended by the Company and the Holder that this Agreement
shall become effective immediately upon the issuance to the Holder of the
[_________] shares of Series D Convertible Preferred Stock, par value $.01
per share, of the Company to be issued pursuant to Section [_.__] of the
Merger Agreement (the "PREFERRED SECURITIES").
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein, and of other good and valuable consideration,
the receipt and
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<PAGE>
sufficiency of which are hereby acknowledged, the Company and the Holder,
intending to be legally bound, each hereby agrees as follows:
ARTICLE 1.
REGISTRATION UNDER SECURITIES ACT
---------------------------------
Section 1.01 Registration Upon Request. (a) Request. Subject to the
------------------------- -------
provisions of this Agreement (including Section 4.11 hereof), upon the
written request of the Holder requesting that the Company effect the
registration under the Securities Act of Registrable Securities (as
hereinafter defined), which request shall specify in reasonable detail the
number of Registrable Securities to be registered and the intended method
of distribution thereof, the Company shall use its best efforts to register
under the Securities Act (a "DEMAND REGISTRATION"), including by means of a
shelf registration pursuant to Rule 415 under the Securities Act if so
requested in such request and if the Company is then eligible to use such a
registration, as expeditiously as may be practicable, the Registrable
Securities which the Company has been requested to register by the Holder,
all to the extent requisite to permit the disposition of such Registrable
Securities in accordance with the plan of distribution set forth in the
applicable registration statement. In the case of such Demand
Registration, the Holder must request registration of Registrable
Securities representing not less than such number of Registrable Securities
the Expected Proceeds of which, on the date of the aforementioned written
request, would equal at least $100 million unless such registration request
is for all remaining Registrable Securities.
(b) Registration of Other Securities. Whenever the Company shall
--------------------------------
effect a registration pursuant to this Section 1.01 in connection with an
underwritten offering by the Holder of Registrable Securities, no
securities (other than Registrable Securities) shall be included among the
securities covered by such registration if the managing underwriter, if
any, of such offering shall have advised the Holder and the Company in
writing of its belief that the inclusion of such other securities would
substantially interfere with such offering.
(c) Registration Statement Form. Registrations under this Section
---------------------------
1.01 shall be on such appropriate registration form of the Commission as
shall be selected by the Company and available to it under the Securities
Act. The Company agrees to include in any such registration
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<PAGE>
statement all information which, in the opinion of counsel to the Holder
and counsel to the Company, is reasonably required to be included therein
under the Securities Act.
(d) Limitations on Registration; Expenses. The Company will not be
-------------------------------------
required to effect more than two (2) Demand Registrations pursuant to this
Section 1.01. Subject to the provisions of Sections 1.01(h) and 1.02(b)
hereof, the Company shall pay the Registration Expenses in connection with
such Demand Registration.
(e) Effective Registration Statement. Subject to the provisions of
--------------------------------
Section 1.01(i) hereof, a registration requested pursuant to this Section
1.01 shall not be deemed to have been effected (i) unless a registration
statement with respect thereto has become effective, (ii) if after it has
become effective, such registration is materially interfered with by any
stop order, injunction or similar order or requirement of the Commission or
other governmental agency or court for any reason not attributable to any
of the Holder and has not thereafter become effective, or (iii) if the
conditions to closing specified in the underwriting agreement, if any,
entered into in connection with such registration are not satisfied or
waived, other than by reason of a failure on the part of the Holder.
(f) Selection of Underwriters. In the case of such Demand
-------------------------
Registration, the selection of any managing underwriter(s) shall be made by
the Company (with the consent of the Holder, which consent shall not be
unreasonably withheld), provided, however, that (i) the Holder shall be
-------- -------
entitled to select (with the consent of the Company, which consent shall
not be unreasonably withheld) one (1) managing underwriter other than the
lead managing underwriter, and (ii) the selection of the underwriters
(other than the managing underwriter(s)) shall be made by the mutual
agreement of the Company and the Holder.
(g) Certain Requirements in Connection with Registration Rights. In
-----------------------------------------------------------
the case of such Demand Registration, if the Holder has determined to enter
into one or more underwriting agreements in connection therewith, no Person
may participate in such Demand Registration unless such Person agrees to
sell his or its securities on the basis provided in the underwriting
arrangements and completes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents which are
reasonable and customary under the circumstances.
(h) Priority in Demand Registration. If the managing underwriter
-------------------------------
of any underwritten offering shall
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<PAGE>
advise the Company in writing (with a copy to the Holder) that, in its
opinion, the number of Registrable Securities requested to be included in
such registration exceeds the number which can be sold in such offering
within a price range acceptable to the Holder, the Company will reduce to
the number which the Company is so advised can be sold in such offering
within such price range (the "Actual Number of Securities to be
Registered"), the Registrable Securities requested to be included in such
registration. If, as a result of any such reduction, the number of
Registrable Securities requested to be included in such registration by the
Holder of the Registrable Securities is reduced by twenty-five percent
(25%) or more, then notwithstanding anything to the contrary contained in
this Agreement, a Demand Registration in connection with such registration
will not be deemed to have been effected under Section 1.01(e) hereof;
provided, however, that the provisions of this sentence shall apply to and
-------- -------
be operative in respect of only the first request in writing made by the
Holder under this Section 1.01 for the registration of Registrable
Securities. In the case of such a registration which would have been
deemed to be a Demand Registration under Section 1.01(e) hereof but for the
application of the immediately preceding sentence of this Section 1.01(h),
(i) the Company nonetheless shall pay the Registration Expenses of the
Holder in connection with such registration, and (ii) no securities other
than Registrable Securities shall be covered by such registration.
(i) Certain Other Matters. For purposes of Section 1.01(e)(i)
---------------------
hereof, should a Demand Registration not become effective due to the
failure of the Holder to perform its obligations under this Agreement or
the inability of the Holder to reach agreement with the underwriters on
price or other customary terms for such transaction, or in the event the
Holder withdraws or does not pursue the request for the Demand Registration
(in each of the foregoing cases, provided that at such time the Company is
in compliance in all material respects with its obligations under this
Agreement), then, except as otherwise provided in the last sentence of this
Section 1.01(i), such Demand Registration shall be deemed to have been
effected. In such event, the Holder shall reimburse the Company for all of
the Registration Expenses (other than the Registration Expenses referred to
in clause (a) of the definition of Registration Expenses) incurred by the
Company in the preparation, filing and processing of such registration. If
such reimbursement is made within thirty (30) business days following a
request therefor, a Demand Registration shall not be deemed to have been
effected for purposes of this Section 1.01.
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<PAGE>
Section 1.02 Incidental Registration. (a) Rights to Include. Subject
----------------------- -----------------
to the provisions of this Agreement (including Section 4.11 hereof)and the
rights of the holders of the CP/BV Registrable Securities under the BV
Agreement or the CP Agreement, if at any time the Company proposes to
register the offering for cash of any shares of Class A Common Stock under
the Securities Act on Form S-1, S-2 or S-3 (or any successor or similar
form thereto) for the account of the Company, the Company shall furnish
prompt written notice to the Holder of its intention to effect such
registration and the intended method of distribution in connection
therewith. Upon the written request of the Holder made to the Company
within fifteen (15) business days after the delivery of the aforementioned
notice by the Company, which request shall specify the number of shares of
Registrable Securities intended to be registered, the Company shall include
such Registrable Securities in such registration, subject however to the
following sentence of this Section 1.02(a) and to the provisions of Section
1.02(c) hereof. If the Company shall thereafter determine in its sole
discretion not to register or to delay the registration of such securities,
the Company may, at its election, provide written notice of such
determination to the Holder and, (i) in the case of a determination not to
effect a registration, shall thereupon be relieved of the obligation to
register such Registrable Securities (but, under such circumstances, the
Company shall pay any Registration Expenses reasonably incurred by the
Holder until such time as the Holder received the Company's written notice)
and, (ii) in the case of a determination to delay a registration, shall
thereupon be permitted to delay registering any Registrable Securities for
the same period as the delay in respect of securities being registered for
the Company's own account. No incidental registration effected pursuant to
this Section 1.02 shall be deemed to have been effected or otherwise
relieve the Company of any of its obligations to the Holder pursuant to
Section 1.01 hereof.
(b) In connection with any incidental registration as provided in
Section 1.02(a) hereof, the Company shall pay the Registration Expenses for
the registration in question.
(c) Priority in Incidental Registrations. If the lead managing
------------------------------------
underwriter of any underwritten offering shall inform the Company by letter
of its belief that the number of Registrable Securities requested to be
included in such registration would substantially interfere with (including
without limitation adversely affect the pricing of) such offering, then the
Company will include in such registration, to the extent of the number and
type which the
-5-
<PAGE>
Company is so advised can be sold in (or during the time of) such offering
without such substantial interference, FIRST, all securities proposed by
the Company to be sold for its own account, SECOND, subject to the
provisions of Section 4.11 hereof, all securities of the Company ranking
senior to or on a parity with (as to rights to dividends and upon
liquidation) the Company's Series A Participating Convertible Preferred
Stock ("Senior Securities") and CP/BV Registrable Securities requested to
be included in such registration (such securities to be included in such
registration pro rata on the basis of the Expected Proceeds from the sale
thereof), and THIRD, any other securities of the Company requested to be
included in such registration.
Section 1.03 Registration Procedures. If and whenever the Company is
-----------------------
required by the provisions of this Agreement to effect or cause the
registration of any Registrable Securities under the Securities Act as
provided in this Agreement, the Company shall, as expeditiously as
practicable:
(a) In the case of a Demand Registration, use its best efforts to
prepare and file with the Commission and obtain the effectiveness of a
registration statement on such form as is available for the sale of
Registrable Securities by the Holder in accordance with the plan of
distribution set forth in such registration statement; provided, however,
-------- -------
if a request for registration pursuant to Section 1.01 hereof is made
within sixty (60) days before the end of the Company's fiscal year and the
Company is not then eligible to effect a registration under the Securities
Act by use of Form S-3 (or other comparable short-form registration
statement), the Company shall be entitled to delay the filing of such
registration statement until the earlier of (i) such time as the Company
receives audited financial statements for such fiscal year and (ii) the
expiration of 90 days after the last day of such fiscal year; and provided,
--------
further, that if the Company shall furnish to the Holder a certificate
-------
signed by the President of the Company stating that, in the good faith
judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such registration
statement to be filed on the date filing would be required under this
Agreement because such registration would require premature disclosure of
any acquisition, corporate reorganization or other material transaction
involving the Company and that it is therefore essential to defer taking
action with respect to the filing of such registration statement, then the
Company may direct that such request for registration be delayed for a
period not to exceed ninety
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<PAGE>
(90) days, such right to delay a request to be exercised by the Company not
more than once in any 12-month period.
(b) Prepare and file with the Commission such amendments, post-
effective amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for up to ninety (90) days (unless the
Registrable Securities registered thereunder have been sold or disposed of
prior to the expiration of such 90-day period); and to comply with the
provisions of the Securities Act applicable to the Company with respect to
the disposition of all securities covered by such registration statement
during such time as such registration statement is effective.
(c) Furnish to the Holder and each underwriter of the Registrable
Securities being sold, as the Holder and such underwriter may reasonably
request in order to facilitate the disposition of Registrable Securities in
accordance with the plan of distribution set forth in such registration
statement, (i) such number of copies (including manually executed and
conformed copies) of such registration statement and of each such amendment
thereof and supplement thereto (including all annexes, appendices,
schedules and exhibits), (ii) such number of copies of the prospectus used
in connection with such registration statement (including each preliminary
prospectus and the final prospectus filed pursuant to Rule 424(b) under the
Securities Act), and (iii) such other documents incident thereto.
(d) Use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under the securities or
"blue sky" laws of such jurisdictions in which an exemption is not
available as the Holder and the managing underwriter shall reasonably
request, and do any and all other reasonable acts and things which may be
necessary or advisable to permit the offering and disposition of
Registrable Securities in such jurisdictions in accordance with the plan of
distribution set forth in the registration statement; provided, however,
-------- -------
the Company shall not be required to qualify generally to do business as a
foreign corporation, subject itself to taxation, or consent to general
service of process, in any jurisdiction wherein it would not, but for the
requirements of this Section 1.03, be obligated to do so.
(e) Use its best efforts to cause the Registrable Securities
covered by such registration statement to be registered with, or approved
by, such other public, governmental or regulatory authorities as may be
necessary
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<PAGE>
in the reasonable judgment of counsel for the Holder and the Company to
facilitate the disposition of such Registrable Securities in accordance
with the plan of distribution set forth in such registration statement.
(f) Notify the Holder and the managing underwriter, if any,
promptly and, if requested by any such Person, confirm such notification in
writing, (i) when a prospectus or any prospectus supplement has been filed
with the Commission, and, with respect to such registration statement or
any post-effective amendment thereto, when the same has been declared
effective by the Commission, (ii) of any request by the Commission for
amendments or supplements to such registration statement or related
prospectus, or any written request by the Commission for additional
information, (iii) of the issuance by the Commission of any stop order or
the receipt of notice of the initiation of any proceedings for such or a
similar purpose (and the Company shall make every reasonable effort to
obtain the withdrawal of any such order at the earliest possible moment and
the Holder shall cooperate in all reasonable respects in such efforts),
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction or the receipt of notice of the initiation or
threatening of any proceeding for such purpose (and the Company shall make
every reasonable effort to obtain the withdrawal of any such suspension at
the earliest possible moment and the Holder shall cooperate in all
reasonable respects in such efforts), (v) of the occurrence of any event
during the period when a prospectus with respect to the Registrable
Securities is required to be delivered under the Securities Act which
requires the making of any changes to such registration statement or
related prospectus so that such documents will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading (and the
Company shall promptly prepare and furnish to the Holder and any managing
underwriter a reasonable number of copies of a supplemented or amended
prospectus or preliminary prospectus such that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus or
preliminary prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading), and (vi) of the Company's
determination that the filing of a post-effective amendment to such
registration statement shall be necessary or
-8-
<PAGE>
appropriate. The Holder shall be deemed to have agreed by its acquisition
of Registrable Securities that upon the receipt of any notice from the
Company of the occurrence of any event of the kind described in clause (v)
of this Section 1.03(f), the Holder shall forthwith discontinue the
Holder's offer and disposition of Registrable Securities until the Holder
shall have received copies of an appropriately supplemented or amended
prospectus or preliminary prospectus and, if so directed by the Company,
shall deliver to the Company, at its expense, all copies (other than
permanent file copies) of the prospectus or preliminary prospectus covering
such Registrable Securities which are then in the Holder's possession. In
the event the Company shall provide any notice of the type referred to in
the preceding sentence, the 90-day period mentioned in Section 1.03(b)
hereof shall be extended by the number of days from and including the date
such notice is provided to and including the date when each seller of any
Registrable Securities covered by such registration statement and the
managing underwriter shall have received copies of the corrected prospectus
contemplated by clause (v) of this Section 1.03(f), plus an additional
seven (7) days. The underwriters or, if there are no underwriters, the
Holder shall deliver such supplemented or amended prospectus or preliminary
prospectus to all purchasers or offerees of the Registrable Securities sold
by it to which such delivery may be required or advisable under the
Securities Act and any applicable state securities or "blue sky" laws.
(g) Otherwise use its best efforts in connection with each
registration and offering of Registrable Securities hereunder to comply
with all applicable rules and regulations of the Commission, as the same
may hereafter be amended, including section 11(a) of the Securities Act and
Rule 158 thereunder.
(h) Use its best efforts to cause all such Registrable Securities
covered by such registration statement to be listed on each securities
exchange on which the same class of securities issued by the Company are
then listed, if the listing of such Registrable Securities is then
permitted under the rules and regulations of such exchange and, if
requested by the Holder, cause all such Registrable Securities that are of
a different class or series than those Company securities already listed or
traded to be listed on one (but not more than one) securities exchange
reasonably requested by the Holder.
(i) Engage and provide a transfer agent and registrar for all
Registrable Securities covered by such
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<PAGE>
registration statement not later than the effective date of such
registration statement.
(j) Furnish to the Holder a signed counterpart of an opinion from
counsel to the Company, and a "cold comfort" letter from the Company's
independent certified public accounting firm covering such matters of the
type customarily covered by such opinions and "cold comfort" letters as any
managing underwriter and the Holder shall reasonably request.
(k) Subject to confidentiality restrictions reasonably required by
the Company, at reasonable times and upon reasonable notice, and as
necessary to permit a reasonable investigation with respect to the Company
and its business in connection with the preparation and filing of such
registration statement, make available for inspection by the Holder, by any
managing underwriter or other underwriters participating in any disposition
of Registrable Securities, and by any attorney, accountant or other agent,
representative or advisor retained by any such seller or underwriters, all
pertinent financial and other records and corporate documents of the
Company; and cause all of the Company's officers, directors and employees
to discuss pertinent aspects of the Company's business with the Holder and
any such underwriter, accountant, agent, representative or advisor in
connection with such registration statement; provided, however, that the
-------- -------
Company shall not be obligated pursuant to this Section 1.03(k) to provide
access to any information which it reasonably considers to be a trade
secret or similar confidential information.
(l) Permit the Holder, if the Holder, in the judgment of its
counsel, might be deemed to be a "control person" of the Company (within
the meaning of section 15 of the Securities Act or section 20 of the
Exchange Act), to participate in the preparation of such registration
statement and include therein material, furnished to the Company in writing
which, in the reasonable judgment of the Holder and its counsel, is
required to be included therein; and
(m) If any registration statement refers to the Holder by name or
otherwise as the holder of any securities of the Company, and if the Holder
reasonably believes it is or may be deemed to be a control person in
relation to, or an Affiliate of, the Company, then the Holder shall have
the right to require (i) the insertion in such registration statement of
language, in form and substance reasonably satisfactory to the Holder, to
the effect that the ownership by the Holder of such securities is not to be
construed as
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<PAGE>
and is not intended to be a recommendation by the Holder of the investment
quality of, or the relative merits and risks attendant to the purchase of,
the Company's securities covered thereby, and that such ownership does not
imply that the Holder will assist in meeting any future financial or
operating requirements of the Company, or (ii) in the case where the
reference to the Holder by name or otherwise is not required by the
Securities Act or any similar federal or state statute then in effect, the
deletion of the reference to the Holder.
Section 1.04 Underwritten Offerings. (a) Requested Underwritten
---------------------- ----------------------
Offerings. If requested by the underwriters for any underwritten offering
---------
by the Holder of Registrable Securities pursuant to a Demand Registration,
the Company and the Holder will use their best efforts to enter into an
underwriting agreement with such underwriters for such offering, such
agreement (i) to be reasonably satisfactory in substance and form to the
Company, the Holder and the underwriters and (ii) to contain such
representations and warranties by the Company and such other terms as are
reasonable and customary in the circumstances on the part of an issuer in
agreements of that type, including, without limitation, indemnities to the
effect and to the extent provided in Article 2 hereof. The Holder shall
cooperate with the Company in the negotiation of the underwriting
agreement, and shall be party to such underwriting agreement and may, at
its option, require that any or all of the representations and warranties
by, and the other agreements on the part of, the Company to and for the
benefit of such underwriters shall also be made to and for the benefit of
the Holder and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of the Holder. The Company shall
notify the Holder if at any time the representations and warranties
contemplated by such underwriting agreement cease to be true and correct in
all material respects. The Holder shall not be required to make any
representations or warranties to or agreements with the Company other than
representations, warranties or agreements regarding the Holder, the
Holder's Registrable Securities and the Holder's intended method of
distribution as otherwise required by law.
(b) Incidental Underwritten Offerings. If the Company proposes
---------------------------------
to register any of its securities under the Securities Act as contemplated
by Section 1.02 hereof and such securities are distributed by or through
one or more underwriters, the Holder of Registrable Securities to be
distributed by such underwriters shall be party to the underwriting
agreement between the Company and such
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<PAGE>
underwriters and may, at its option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of the Holder and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of the Holder. The
Company shall notify the Holder if at any time the representations and
warranties contemplated by such underwriting agreement cease to be true and
correct in all material respects. The Holder shall not be required to make
any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding
the Holder, the Holder's Registrable Securities and the Holder's intended
method of distribution or as otherwise required by law.
(c) Limitations on Sale or Distribution of Other Securities.
-------------------------------------------------------
Anything herein to the contrary notwithstanding (including Section 1.01(a)
hereof), if the Company shall file a registration statement with respect to
any of the Company's securities, whether or not for its own account, by
means of an underwritten offering, the Holder agrees not to effect any
public sale or distribution of any Registrable Securities, including any
resale pursuant to Rule 144 under the Securities Act, and to use the
Holder's best efforts not to effect any such public sale or distribution
(other than as part of such underwritten offering) of any other securities
which, with notice, lapse of time and/or payment of monies, are
exchangeable or exercisable for or convertible into any Registrable
Securities, during the 15-day period prior to, and during the 120-day
period (or such longer period as shall have been requested by the managing
underwriters) commencing on, the effective date of the registration
statement filed with the Commission in connection with such underwritten
offering.
(d) In order to ensure compliance with the provisions of Section
1.04(c) hereof, the Company hereby agrees to notify the Holder as to the
status and proposed effective date of any registration statement of the
Company which is filed with the Commission.
(e) The Company hereby agrees not to effect, except pursuant to
employee benefit plans, any public sale or distribution of any securities
of the same class as (or otherwise similar to) the Registrable Securities,
or any securities which, with notice, lapse of time and/or payment of
monies, are exchangeable or exercisable for or convertible into any such
securities during the 15-day
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<PAGE>
period prior to, and during the 90-day period commencing on, the effective
date of a registration statement filed with the Commission in connection
with an underwritten offering effected pursuant to Section 1.01 of this
Agreement, except to the extent otherwise required by the CP Agreement, the
BV Agreement or the ProJo Agreement.
(f) Without limiting the generality of the foregoing, the
provisions of Section 1.04(c) hereof shall not apply to the Holder if the
Holder is prevented by statute or other applicable regulation from agreeing
to such provisions.
Section 1.05 Certain Agreements of the Company and Holder. (a) The
--------------------------------------------
Holder, in connection with any registration of Registrable Securities,
shall furnish to the Company such information regarding the Holder and the
plan of distribution proposed by the Holder as the Company may reasonably
request and as shall reasonably be required in connection with any
registration, qualification or compliance referred to in this Agreement. In
the case of a Demand Registration, the Company agrees that any plan of
distribution included in the registration statement (which plan relates to
the Holder) shall be as reasonably specified by the Holder.
If requested by the Company, information with respect to the
Holder required, in the opinion of counsel for the Company, to be included
pursuant to the Securities Act in any registration statement or prospectus
for an offering of Registrable Securities shall be furnished to the Company
promptly by the Holder in writing in a form specifically and expressly for
use in such registration statement or prospectus.
(b) If at the time of any transfer of any Registrable
Securities, such Registrable Securities shall not have been theretofore
registered under the Securities Act, the Company may require, as a
condition of allowing such transfer, that the Holder or the Holder's
transferee furnish to the Company (i) such information as is necessary in
order to establish that such transfer may be made without registration
under the Securities Act; and (ii) at the expense of the Holder or the
Holder's transferee, an opinion of legal counsel designated by the Holder
or the Holder's transferee to the effect that such transfer may be made
without registration under the Securities Act, except that nothing
contained in this Section 1.05(b) shall relieve the Company from complying
with any request for registration, qualification or compliance made
pursuant to the other provisions of this Agreement.
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<PAGE>
(c) The Holder agrees that it will keep confidential and will
not disclose or divulge any confidential, proprietary or secret information
that the Holder may obtain from the Company, and that the Company has
marked "Confidential", "Proprietary" or "Secret" or has otherwise
identified as being such, pursuant to financial information, reports and
other materials and discussions with officers, directors, employees or
agents made available by the Company as required hereunder unless such
information is or becomes known to the Holder from a Person other than the
Company (other than as a result of a breach of a duty of confidentiality
owed to the Company by such Person) or is or becomes publicly known other
than as a result of a breach of this provision, or unless the Company gives
its written consent to the Holder's release of such information, except
that no such written consent shall be required (and the Holder shall be
free to release such information) if such information is to be provided to
the Holder's counsel or accountant, or to an officer, director, employee,
advisor or partner of the Holder, provided that the Holder shall inform the
--------
recipient of the confidential nature of such information, and shall require
the recipient to treat the information as confidential to the same extent
as the Holder.
(d) The Holder agrees to perform any further acts and to execute
and deliver any further documents that may reasonably be requested or
necessary to confirm, or to carry out, the provisions of this Agreement
(including the provisions of Article 2 of this Agreement).
ARTICLE 2.
INDEMNIFICATION
---------------
Section 2.01 Indemnification. (a) With respect to each registration
---------------
of Registrable Securities pursuant to this Agreement, the Company hereby
indemnifies, to the fullest extent permitted by law, the Holder, its
officers and directors, if any, and each Person, if any, who controls the
Holder within the meaning of section 15 of the Securities Act and section
20 of the Exchange Act, against all losses, claims, damages, liabilities
(or proceedings in respect thereof) and reasonable expenses (under the
Securities Act, common law and otherwise), joint or several, caused by (i)
any untrue statement or alleged untrue statement of a material fact
contained in the applicable registration statement or prospectus or any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light (in
the case of a prospectus) of the circumstances
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<PAGE>
under which they were made, not misleading, or (ii) any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus or any omission or alleged omission to state therein a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading if used prior to
the effective date of such registration statement (unless such statement or
omission is corrected in the final prospectus and the Company has
previously furnished copies thereof to the Holder included in such
registration which is seeking such indemnification and to the underwriters
of the registration in question); provided, however, that such
-------- -------
indemnification shall not extend to any such losses, claims, damages,
liabilities (or proceedings in respect thereof) or expenses which are
caused (x) by any untrue statement or alleged untrue statement contained
in, or by any omission or alleged omission from, information furnished in
writing to the Company by the Holder or any underwriter thereof
specifically and expressly for use in any such registration statement or
prospectus or (y) any failure by the Holder or any underwriter to deliver a
prospectus or preliminary prospectus (or amendment or supplement thereto)
as and when required under the Securities Act after such prospectus has
been timely furnished by the Company.
(b) In the case of an underwritten offering in which the
registration statement covers Registrable Securities, the Company agrees to
indemnify the underwriters, their officers and directors, if any, and each
Person, if any, who controls such underwriters within the meaning of
section 15 of the Securities Act and section 20 of the Exchange Act, to the
extent customary in the circumstances for an issuer in an underwritten
public offering.
(c) In connection with any written information furnished to the
Company or any underwriter of any underwritten offering specifically and
expressly for use in a registration statement with respect to the Holder,
the Holder hereby indemnifies severally (but not jointly), to the fullest
extent permitted by law, the Company, its officers and directors and each
Person, if any, who controls the Company within the meaning of section 15
of the Securities Act and section 20 of the Exchange Act, against any
losses, claims, damages, liabilities (or proceedings in respect thereof)
and expenses caused by (i) any untrue statement or alleged untrue statement
of a material fact contained in the applicable registration statement,
prospectus or preliminary prospectus or any omission or alleged omission to
state therein a material fact required
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<PAGE>
to be stated therein or necessary to make the statements therein, in light
(in the case of a prospectus) of the circumstances under which they were
made, not misleading; provided, however, that the indemnification set forth
-------- -------
in this Section 2.01(c) shall only apply if, and the Holder shall be liable
hereunder if and only to the extent that, any such loss, claim, damage or
liability arises solely out of or is based solely upon an untrue statement
or alleged untrue statement or omission or alleged omission, made in
reliance upon and in conformity with information pertaining to the Holder,
which is furnished in writing to the Company or any underwriter of any
underwritten offering by the Holder expressly for use in any such
registration statement or prospectus.
(d) In the case of an underwritten offering of Registrable
Securities, the Holder shall agree to indemnify such underwriters, their
officers and directors, if any, and each Person, if any, who controls such
underwriters within the meaning of section 15 of the Securities Act and
section 20 of the Exchange Act, to the extent customary in the
circumstances for a selling stockholder in an underwritten public offering.
Section 2.02 Notices of Claims. (a) Any Person seeking
-----------------
indemnification under the provisions of this Article 2 shall, promptly
after receipt by such Person of notice of the existence of such claim or of
the commencement of any action, suit, claim or proceeding, notify each
party against whom indemnification is to be sought in writing of the
existence or commencement thereof; provided, however, the failure so to
-------- -------
notify an indemnifying party shall not relieve the indemnifying party from
any liability which it may have under this Article 2 or from any liability
which the indemnifying party may otherwise have (except if and to the
extent that it has been prejudiced in any material respect by such
failure). In case any such action, suit, claim or proceeding is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party, except as
otherwise provided in Section 2.02(c) hereof. Upon delivery of such notice
by the Company (if it is the indemnifying party) to such indemnified party
and approval of such counsel by such indemnified party, the Company will
not be liable under this Article 2 for any legal or other expenses
subsequently incurred by the Holder in connection with the defense of
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<PAGE>
such action, suit, claim or proceeding, except as otherwise provided in
Section 2.02(b) hereof.
(b) Notwithstanding the foregoing, the indemnified party shall
have the right to employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of such
suit, action, claim or proceeding, (ii) the indemnifying party shall not
have employed counsel (reasonably satisfactory to the indemnified party) to
take charge of the defense of such action, suit, claim or proceeding within
a reasonable time after notice of commencement of the action, suit, claim
or proceeding, or (iii) such indemnified party shall have reasonably
concluded that there may be defenses available to it which are different
from or additional to those available to the indemnifying party which, if
the indemnifying party and the indemnified party were to be represented by
the same counsel, could result in a conflict of interest for such counsel
or materially prejudice the prosecution of the defenses available to such
indemnified party. If any of the events specified in clauses (ii) or (iii)
of the preceding sentence shall have occurred or such clauses shall
otherwise be applicable, then the fees and expenses of one counsel or firm
of counsel, plus one local or regulatory counsel or firm of counsel,
selected by a majority in interest of the indemnified parties shall be
borne by the indemnifying party.
(c) If, in any case, the indemnified party employs separate
counsel, the indemnifying party shall not have the right to direct the
defense of such action, suit, claim or proceeding on behalf of the
indemnified party.
(d) Anything in this Article 2 to the contrary notwithstanding,
an indemnifying party shall not be liable for any settlement or compromise
of, or consent to entry of any judgment with respect to, any action, suit,
claim or proceeding effected without its prior written consent (which
consent in the case of an action, suit, claim or proceeding exclusively
seeking monetary relief shall not be unreasonably withheld). Such
indemnification shall remain in full force and effect irrespective of any
investigation made by or on behalf of an indemnified party.
Section 2.03 Contribution. (a) If the indemnification from the
------------
indemnifying party as provided in this Article 2 is unavailable or is
otherwise insufficient to hold harmless an indemnified party in respect of
any losses, claims, damages,
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<PAGE>
liabilities or expenses referred to therein, then the indemnifying party
shall, to the fullest extent permitted by law, contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations, subject to the provisions of Section
2.03(b) hereof. The relative fault of such indemnifying party shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact, has been
made, or relates to information supplied by such indemnifying party, and
the parties, relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable
by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include, subject to the
limitations set forth in Section 2.02 hereof, any legal or other fees or
expenses reasonably incurred by such party in connection with any
investigation or proceeding. The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Article 2 were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in
this Section 2.03(a). Notwithstanding the provisions of this Section 2.03,
no underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Securities
underwritten by it and offered to the public exceeds the amount of any
damages for which such underwriter has otherwise been held liable by reason
of such untrue statement or alleged untrue statement or omission or alleged
omission; and the Holder shall not be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities offered to the public exceeds the amount of any damages for
which the Holder has otherwise been held liable by reason of such untrue
statement or alleged untrue statement or omission or alleged omission.
(b) No Person guilty of fraudulent misrepresentation (within the
meaning of section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
-18-
<PAGE>
(c) If indemnification is available under this Article 2, the
indemnifying parties shall indemnify each indemnified party to the fullest
extent provided in Section 2.01 and Section 2.02 hereof without regard to
the relative fault of said indemnifying party or indemnified party or any
other equitable consideration provided for in this Section 2.03.
Section 2.04 Indemnification Payments. The indemnification and
------------------------
contribution required by this Article 2 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as
and when bills are received or expense, loss, damage or liability is
incurred.
ARTICLE 3.
CERTAIN DEFINITIONS
-------------------
As used herein, the following terms have the following respective
meanings:
"Affiliate" shall have the meaning specified for "affiliate" in Rule
12b-2 under the Exchange Act.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Class A Common Stock" shall mean Class A Common Stock, par value $.01
per share, of the Company.
"CP/BV Registrable Securities" shall mean the securities of the
Company which are defined as "Registrable Securities" under either the CP
Agreement or the BV Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the time.
"Expected Proceeds" shall mean, as of any date, the aggregate proceeds
that would be expected to be received by a holder of securities from the
sale of such securities in an offering made on such date (without being
reduced by any pro forma expenses or underwriting discounts). The
determination of Expected Proceeds shall be made (a) if the offering is
intended to be made in an underwritten public offering, then by the
intended managing underwriter of such offering or (b) if the offering is
not intended to be made in an underwritten public offering, then by
investment
-19-
<PAGE>
bankers mutually agreeable to the Company and the Holder, the fees and
expenses of which shall be paid by the Company.
"Person" shall mean a corporation, an association, a partnership, an
organization, a business, an individual, a governmental or political
subdivision thereof or a governmental agency.
"Register", "registered" and "registration" shall mean a registration
effected by preparing and filing a registration statement in compliance
with the Securities Act and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" shall mean, subject to the provisions of
Sections 4.02(b) and 4.11 hereof, any and all shares of Class A Common
Stock issued or issuable upon conversion of the Preferred Securities. As
to any particular Registrable Securities, such securities shall cease to
constitute Registrable Securities when (i) a registration statement with
respect to the sale of such securities shall have been declared effective
under the Securities Act and such securities shall have been disposed of in
accordance with the methods contemplated by the registration statement,
(ii) such securities (or the Preferred Securities that are convertible into
such securities) shall have been sold in satisfaction of all applicable
conditions to the resale provisions of Rule 144 under the Securities Act
(or any successor provision thereto), (iii) such securities (or the
Preferred Securities that are convertible into such securities) shall have
been otherwise transferred except to a permitted assignee pursuant to
Section 4.02(b) hereof, or (iv) such securities shall have been issued upon
conversion of the Preferred Securities and thereafter shall have ceased to
be issued and outstanding.
"Registration Expenses" shall mean all expenses incident to the
Company's performance of or compliance with Article 1, including, without
limitation, (a) any allocation of salaries and expenses of Company
personnel or other general overhead expenses of the Company, or other
expenses for the preparation of historical and pro forma financial
statements or other data normally prepared by the Company in the ordinary
course of business; (b) all registration, application, filing, listing,
transfer and registrar fees; (c) all NASD fees and fees and expenses of
registration or qualification of Registrable Securities under state
securities or "blue sky" laws pursuant to Section 1.03(d) hereof; (d) all
word processing, duplicating and printing expenses, messenger and delivery
expenses; (e) the fees and
-20-
<PAGE>
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of customary "cold comfort" letters
required by or incident to such performance and compliance; and (f) any
fees and disbursements of underwriters and broker-dealers customarily paid
by issuers or sellers of securities; provided, however, Registration
-------- -------
Expenses shall exclude, and the sellers of the Registrable Securities being
registered shall pay, the fees and disbursements of counsel to such
sellers, and underwriting discounts and commissions and transfer taxes in
respect of the Registrable Securities being registered and, to the extent
such laws prohibit the Company from paying such expenses on behalf of the
Holder, expenses of registering or qualifying Registrable Securities under
state securities or blue sky laws.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time.
ARTICLE 4.
MISCELLANEOUS
-------------
Section 4.01 Rule 144. If the Company shall have filed with the
--------
Commission and obtained the effectiveness of a registration statement
covering the Company's equity securities pursuant to the requirements of
section 12 of the Exchange Act or pursuant to the requirements of the
Securities Act, the Company agrees that it shall timely file the reports
required to be filed by it under the Securities Act or the Exchange Act
(including, without limitation, the reports under sections 13 and 15(d) of
the Exchange Act referred to in paragraph (c)(1) of Rule 144 under the
Securities Act), and shall take such further actions as the Holder may
reasonably request, all to the extent necessary to enable the Holder to
sell Registrable Securities, from time to time, pursuant to the resale
limitations of (a) Rule 144 under the Securities Act, as such rule may be
hereafter amended, or (b) any similar rules or regulations hereafter
adopted by the Commission. Upon the written request of the Holder, the
Company shall deliver to the Holder a written statement verifying that it
has complied with such requirements.
Section 4.02 Assignment. (a) This Agreement shall be binding upon
----------
and inure to the benefit of and be enforceable by the Company and the
Holder and, with respect to the Company, its respective successors and
assigns.
-21-
<PAGE>
(b) The rights of the Holder to cause the Company to register
Registrable Securities under Sections 1.01 and 1.02 hereof may not be
assigned or otherwise conveyed, whether directly or indirectly or by
operation of law or otherwise, to any Person, including any transferee or
assignee of any of the Preferred Securities or the Registrable Securities;
provided, however, that the Holder shall have the right to assign, on one
-------- -------
and only one occasion (whether by instrument of assignment, operation of
law or otherwise), to a third party any of its rights to require the
Company to register Registrable Securities under Section 1.01 or 1.02
hereof in connection with a transfer by the Holder of more than fifty
percent (50%) of the aggregate number of Registrable Securities (adjusted
appropriately to reflect any stock dividends, splits, combinations,
exchange, reorganization, recapitalization or reclassification involving
the Class A Common Stock or resulting from a merger or consolidation or
similar business combination transaction involving the Company after the
date hereof) issuable at the date hereof upon conversion of the Preferred
Securities, provided that such third party shall have executed and
delivered to the Company a written agreement, in form and substance
reasonably satisfactory to the Company, by which such third party shall
have agreed to become party to and bound by the terms and conditions of
this Agreement as though it were the Holder.
Section 4.03 Notices. Except as otherwise provided below, whenever
-------
it is provided in this Agreement that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or
served upon the Company, the Holder, or whenever the Company or the Holder
desires to provide to or serve upon any Person any other communication with
respect to this Agreement, each such notice, demand, request, consent,
approval, declaration or other communication shall be in writing and either
shall be delivered in person with receipt acknowledged or sent by
registered or certified mail (return receipt requested, postage prepaid),
or by overnight mail, courier, or delivery service or by telecopy and
confirmed by telecopy answerback, addressed as follows:
(a) If to the Company, to:
---------------------
Attention: Vice President and Treasurer
---------
- With a copy to -
Sullivan & Worcester
-22-
<PAGE>
One Post Office Square
Boston, Massachusetts 02109
Telephone: (617) 338-2800
Telecopy: (617) 338-2880
Attention: Patrick K. Miehe, Esq.
---------
(b) If to the Holder, to:
----------------
- With a copy to -
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Telecopy: (212) 310-8007
Attention: Dennis J. Block, Esq.
---------
or at such other address as may be substituted by it by notice delivered as
provided herein. The furnishing of any notice required hereunder may be
waived in writing by the party entitled to receive such notice. Every
notice, demand, request, consent, approval, declaration or other
communication hereunder shall be deemed to have been duly delivered,
furnished or served on (i) the date on which personally delivered, with
receipt acknowledged, (ii) the date on which telecopied and confirmed by
telecopy answerback, (iii) the next business day if delivered by overnight
or express mail, courier or delivery service, or (iv) three business days
after the same shall have been deposited in the United States mail, as the
case may be. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to the
persons designated above to receive copies shall in no way adversely affect
the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.
Section 4.04 Entire Agreement; Amendment. This Agreement represents
---------------------------
the entire agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersedes any and all prior oral
and written agreements, arrangements and understandings among the
-23-
<PAGE>
parties hereto with respect to such subject matter; and can be amended,
supplemented or changed, and any provision hereof can be waived, only by a
written instrument making specific reference to this Agreement signed by
the Company and the Holder.
Section 4.05 Paragraph Headings, etc. The paragraph headings
-----------------------
contained in this Agreement are for general reference purposes only and
shall not affect in any manner the meaning, interpretation or construction
of the terms or other provisions of this Agreement. The terms "including",
"includes" and "included" shall not be limiting.
Section 4.06 Applicable Law. This Agreement shall be governed by,
--------------
construed and enforced in accordance with the laws of The Commonwealth of
Massachusetts, applicable to contracts to be made, executed, delivered and
performed wholly within such state and, in any case, without regard to the
conflicts of law principles of such state.
Section 4.07 Severability. If at any time subsequent to the date
------------
hereof, any provision of this Agreement shall be held by any court of
competent jurisdiction to be illegal, void or unenforceable, such provision
shall be of no force and effect, but the illegality or unenforceability of
such provision shall have no effect upon and shall not impair the
enforceability of any other provision of this Agreement.
Section 4.08 Equitable Remedies. The parties hereto agree that
------------------
irreparable harm would occur in the event that any of the agreements and
provisions of this Agreement were not performed fully by the parties hereto
in accordance with their specific terms or conditions or were otherwise
breached, and that money damages are an inadequate remedy for breach of
this Agreement because of the difficulty of ascertaining and quantifying
the amount of damage that will be suffered by the parties hereto in the
event that this Agreement is not performed in accordance with its terms or
conditions or is otherwise breached. It is accordingly hereby agreed that
the parties hereto shall be entitled to an injunction or injunctions to
restrain, enjoin and prevent breaches of this Agreement by the other
parties and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, such remedy
being in addition to and not in lieu of, any other rights and remedies to
which the other parties are entitled to at law or in equity.
Section 4.09 No Waiver. The failure of any party at any time or
---------
times to require performance of any provision hereof shall not affect the
right at a later time to enforce the
-24-
<PAGE>
same. No waiver by any party of any condition, and no breach of any
provision, term, covenant, representation or warranty contained in this
Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be construed as a further or continuing waiver of any
such condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
Section 4.10 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute but one and the same original instrument.
Section 4.11 Special Limitation and Termination of Registration
--------------------------------------------------
Rights. Anything in this Agreement to the contrary notwithstanding:
------
(a) The obligations of the Company to the Holder with respect to
its rights of registration provided for in Sections 1.01 and 1.02 hereof
shall cease and terminate upon the earlier of (i) six (6) years after the
date hereof and (ii) the date on which the aggregate number of Registrable
Securities issued and outstanding (or issuable and which would be
outstanding upon conversion of the Preferred Securities) shall no longer
exceed one third (1/3) of the aggregate number of shares (adjusted
appropriately downward or upward to reflect any stock dividends, splits,
combinations, exchange, reorganization, recapitalization or
reclassification involving Class A Common Stock of the Company or pursuant
to a merger or consolidation or similar transaction involving the Company
or the like after the date hereof) of Registrable Securities issuable at
the date hereof upon conversion of the Preferred Securities.
(b) The rights of registration provided for in Sections 1.01 and
1.02 hereof are subject to and limited by the terms and provisions of
Article XIII of the Restated By-Laws of the Company effective as of May 14,
1992, as amended through the date hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
CONTINENTAL CABLEVISION, INC.
By:________________________________
Name:
Title:
-25-
<PAGE>
U S WEST, INC.
By:________________________________
Name:
Title:
-26-
<PAGE>
EXHIBIT 4.1
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
c/o Prudential Capital Group
777 South Figueroa Street, Suite 2950
Los Angeles, CA 90017
May 22, 1996
Continental Cablevision, Inc.
The Pilot House
Lewis Wharf
Boston, MA 02110
Ladies and Gentlemen:
Reference is made to the Amended and Restated Note Agreement dated as of
October 17, 1994 (the "Note Agreement") between Continental Cablevision, Inc.
(the "Company") and The Prudential Insurance Company of America ("Prudential"),
pursuant to which the Company issued and sold and Prudential purchased the
Company's 10.12% Senior Notes due July 1, 1999 in the principal amount of
$150,000,000. Capitalized terms used herein and not defined shall have the
meanings set forth in the Note Agreement.
The Company has announced its intention to merge with U S WEST, Inc. or one
of its subsidiaries (the "Merger") and has requested certain modifications to
the Note Agreement to permit consummation of the Merger and the funding of its
operations pending consummation of the Merger. Prudential is willing to make
modifications to the Note Agreement on the terms and conditions provided herein.
The Company and Prudential hereby agree as follows:
1. Modification of Paragraph 6A. Paragraph 6A of the Note Agreement is
----------------------------
hereby deleted in its entirety and a new paragraph 6A is hereby substituted
therefor as follows:
"6A. Ratio of Consolidated Total Debt to Consolidated Operating
----------------------------------------------------------
Income. The Company covenants that on the last day of each fiscal quarter
------
of the Company, commencing with the fiscal quarter ending September 30,
1994, Consolidated Total Debt outstanding at such date less contingent
obligations in respect of letters of credit shall not exceed the following
amounts: (i) from and after the date of the effectiveness of that certain
modification letter with respect to this Agreement dated May 22, 1996 (the
"1996 Modification Letter"), through March 31, 1997, 800% of four (4) times
Consolidated Operating Income for such fiscal quarter and (ii) at all other
times, 775% of four (4) times Consolidated Operating Income for each fiscal
quarter."
<PAGE>
2. Modification of Paragraph 6. Paragraph 6 of the Note Agreement is
---------------------------
hereby modified by deleting paragraph 6E thereof in its entirety and
substituting therefor the following:
"6E. Mergers. Neither the Company nor any of its Restricted
-------
Subsidiaries will enter into any merger or consolidation; provided,
---------
however, that the Company may enter into a merger with U S WEST, Inc. or
one of its subsidiaries only on the terms provided in clause 6E(4) below
and provided further that the Company and any Restricted Subsidiary may
---------------------
enter other mergers and consolidations as provided in clauses 6E(1), 6E(2)
and 6E(3) below:
6E(1). Any Restricted Subsidiary may consolidate with or merge
into the Company or any other Restricted Subsidiary if the Company or
such other Restricted Subsidiary, as the case may be, shall be the
surviving corporation.
6E(2). Any corporation or partnership other than the Company or
a Restricted Subsidiary may merge into the Company or a Restricted
Subsidiary or any Restricted Subsidiary may consolidate with or merge
into any other corporation or partnership, if (i) (A) the Company or a
Restricted Subsidiary, as the case may be, shall be the surviving
corporation or partnership or (B) the surviving corporation or
partnership is designated as a Restricted Subsidiary and becomes a
party to the Guaranty and (ii) prior to such merger or consolidation,
such other corporation or partnership had conducted its business so as
to derive its revenues from the cable television business and/or
telecommunications business and related activities and (iii)
immediately after giving effect to such merger, no Default shall
exist.
6E(3). Any Restricted Subsidiary may consolidate with or merge
into any other Person in connection with the sale of the assets of
such Restricted Subsidiary to the extent permitted by paragraph 6C.
6E(4). The Company may merge with or into U S WEST, Inc. or one
of its wholly-owned subsidiaries (with the Company, U S WEST, Inc. or
such subsidiary being the surviving corporation) (the "Merger")
provided that simultaneous with the Merger, U S WEST, Inc. either
directly assumes all obligations and agreements of the Company under
the Note Agreement and the Notes or unconditionally guaranties all
obligations and agreements of the Company under the Note Agreement and
the Notes, all on terms and conditions, including representations and
warranties, covenants and defaults, reasonably acceptable to you."
3. Modification of Paragraph 6F. Paragraph 6F of the Note Agreement is
----------------------------
hereby modified by adding the following clause 6F(8):
2
<PAGE>
"6F(8). Indebtedness of Restricted Subsidiaries under guaranties of
-----
the Bridge Financing. "Bridge Financing" shall mean Indebtedness of the
Company in a principal amount not to exceed $1,000,000,000 incurred
pursuant to a Credit Agreement between the Company, The First National Bank
of Boston, as Administrative Agent and a Managing Agent, The Bank of New
York, as Syndication Agent and a Managing Agent, The Toronto Dominion Bank,
as Documentation Agent and a Managing Agent, and the other lenders named
therein, substantially in accordance with the May 9, 1996 draft Credit
Agreement heretofore provided to you, as such Credit Agreement may be
amended and restated from time to time."
4. Modification Fees. The Company hereby agrees to pay to Prudential the
-----------------
following fees:
A. On the date hereof, a non-refundable modification fee of $225,000,
which fee shall be earned in full on the date hereof.
B. On January 31, 1997, if (1) the Merger has not been consummated by
such date and (2) Consolidated Total Debt outstanding on December 31,
1996 less contingent obligations in respect of letters of credit
exceeded 750% of four (4) times Consolidated Operating Income for the
quarter ending December 31, 1996, a non-refundable modification fee of
$100,000, which fee shall be earned in full on January 31, 1997.
C. On July 1, 1997 and on each January 1 and July 1 thereafter, a
non-refundable modification fee equal to 0.125 multiplied by the
principal amount of the Notes outstanding on each such semi-annual
payment date, which fees shall be earned in full on each such payment
date; provided, however, that no modification fees shall be payable
under this paragraph 4C after the date on which the Company has
submitted financial statements under paragraph 5A(i) or 5A(ii) of the
Note Agreement demonstrating that, for any quarterly period ending
after December 31, 1996, the Company's Consolidated Total Debt less
contingent obligations in respect of letters of credit is less than
750% of four (4) times Consolidated Operating Income."
5. Modification of Paragraph 7A. Paragraph 7A of the Note Agreement is
----------------------------
hereby modified by adding the word "or" at the end of clause (xiii) thereof and
by adding the following clause (xiv) after clause (xiii):
"(xiv) the Company fails to perform or observe any agreement
contained in the 1996 Modification Letter."
6. Effectiveness; Conditions to Effectiveness. This modification letter
------------------------------------------
shall become effective as of May 22, 1996 upon execution hereof by the Company
and Prudential and satisfaction of the following conditions:
3
<PAGE>
(a) The Company shall have delivered to Prudential an Officer's
Certificate certifying that the representations and warranties of the Company
contained in paragraph 8 of the Note Agreement, as supplemented by revised
Exhibits D and E to the Note Agreement attached to such Officer's Certificate
and acceptable to Prudential, are true and correct and that no Event of Default
has occurred under the Note Agreement.
(b) The Company shall have delivered to Prudential an opinion of
Sullivan & Worcester, counsel to the Company, in form and substance satisfactory
to Prudential.
(c) The Company shall have delivered to Prudential evidence of the
consent of the lenders under the Restated Credit Agreement to the Bridge
Financing.
(d) The Company shall have paid to Prudential the modification fee
referred to in paragraph 4A hereof.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterparts of this letter and return the same to
the undersigned, and upon satisfaction of the conditions set forth in paragraph
6 above, this letter shall become a binding agreement among the Company and
Prudential.
Very truly yours,
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/
-------------------------
Vice President
AGREED AND ACCEPTED:
CONTINENTAL CABLEVISION, INC.
By: /s/
---------------------------
P. Eric Krauss
Vice President and Treasurer
4
<PAGE>
EXHIBIT 10.1
CONTINENTAL CABLEVISION, INC.
CREDIT AGREEMENT
Amendment No. 2
---------------
This Agreement, dated as of May 20, 1996, is among Continental Cablevision,
Inc., a Delaware corporation, certain of its subsidiaries, The First National
Bank of Boston, in its capacity as Administrative Agent and as a Managing Agent
for itself and the other Lenders, and The Bank of New York, in its capacity as a
Managing Agent for itself and the other Lenders. The parties agree as follows:
1. Reference to Credit Agreement; Definitions. Reference is made to the
------------------------------------------
Amended and Restated Credit Agreement dated as of October 1, 1994, as amended
and in effect on the date hereof prior to giving effect to this Agreement (the
"Credit Agreement"), among the Company, its subsidiaries from time to time party
- -----------------
thereto, the Lenders from time to time party thereto, the Administrative Agent
and the Managing Agents. Terms defined in the Credit Agreement as amended
hereby (the "Amended Credit Agreement") and not otherwise defined herein are
------------------------
used herein with the meanings so defined. References in this Agreement to
"Sections" and "Exhibits", except as the context otherwise dictates, are
references to sections hereof and exhibits hereto.
2. Amendments to Credit Agreement. Effective on the date hereof, the Credit
------------------------------
Agreement is hereby amended as follows:
2.1. Amendment to Section 1.2.6. Section 1.2.6 of the Credit Agreement is
--------------------------
amended to read in its entirety as follows:
"1.2.6. "Applicable Rate Reference Period" means, at any time, the
--------------------------------
most recent prior fiscal quarter of the Company for which financial
statements are required to have been furnished to the Lenders in accordance
with Section 7.2.1 or, in the case of the fourth quarter of a fiscal year,
Section 7.2.2. (For example, for the fiscal quarter from April 1, 1996
through June 30, 1996, the Applicable Rate Reference Period will be (a) on
and prior to the date upon which financial statements for the fiscal
quarter ended March 31, 1996 are required to have been furnished to the
Lenders in accordance with Section 7.2.1, the fiscal quarter ended December
31, 1995 and (b) after the date upon which financial statements for the
fiscal quarter ended March 31, 1996 are required to have been furnished to
the Lenders in accordance with Section 7.2.1, the fiscal quarter ended
March 31, 1996.)"
<PAGE>
2.2. Addition of Section 1.2.17A. A new Section 1.2.17A is added to the
---------------------------
Credit Agreement immediately after Section 1.2.17 of the Credit Agreement to
read in its entirety as follows:
"1.2.17A. "Bridge Credit Facility" means the credit agreement to be
----------------------
dated on or prior to July 31, 1996, as amended and in effect from time to
time, among the Company, its subsidiaries from time to time party thereto,
The First National Bank of Boston, The Toronto-Dominion Bank, The Bank of
New York and a syndicate of other lenders pursuant to which the Company may
borrow up to a maximum principal amount of $1,000,000,000."
2.3. Amendment to Section 1.2.36. Section 1.2.36 of the Credit Agreement
---------------------------
is amended to read in its entirety as follows:
"1.2.36. "Effective Rate" means, with respect to each portion of the
--------------
Revolving Loan with interest based upon the Eurodollar Rate or the Base
Rate, as the case may be, for each day in any fiscal quarter of the
Company, the sum of:
(a) the rate for such portion shown in Exhibit 1 next to the
ratio of (i) the Consolidated Total Debt outstanding on the last day
of the Applicable Rate Reference Period to (ii) four times
Consolidated Operating Income for such Applicable Rate Reference
Period; provided, however, that in the case of any portion of the
-------- -------
Revolving Loan that is subject to a Eurodollar Pricing Option having a
Eurodollar Interest Period in excess of six months in duration, the
amount in this clause (a) will be the applicable Eurodollar Rate plus
the applicable Weighted Average Long-Term Pricing Option Spread; plus
----
(b) effective on the date of the termination or expiration of
the Merger Agreement, an additional 1/4% per annum at all times when
the ratio of (A) the Consolidated Total Debt outstanding on the last
day of the Applicable Rate Reference Period to (B) four times
Consolidated Operating Income for such Applicable Rate Reference
Period is greater than or equal to 7.5; plus
----
(c) an additional 2% per annum effective on the day the
Administrative Agent notifies the Company that the interest rates
hereunder are increasing as a result of the occurrence and continuance
of an Event of Default under Section 9.1.1 until the earlier of such
time as (i) such Event of Default is no longer continuing or (ii) such
Event of Default is deemed pursuant to Section 9.3 no longer to exist;
minus
-----
(d) 1/8% per annum effective on the date the Company notifies
the Administrative Agent that the Company's long term senior debt has
been rated at least BBB- by S&P or Baa3 by Moody's (or if S&P or
Moody's changes its rating categories, the comparable new rating
category) and ending on the date on which such debt no longer has
either such rating; provided, however that the Effective
-------- -------
-2-
<PAGE>
Rate with respect to each portion of the Revolving Loan with interest
based upon the Base Rate shall never be less than the Base Rate (or,
in the event clause (c) above applies, the sum of 2% plus the Base
Rate)." ----
2.4. Addition of Section 1.2.68A. A new Section 1.2.68A is added to the
---------------------------
Credit Agreement immediately after Section 1.2.68 of the Credit Agreement to
read in its entirety as follows:
"1.2.68A. "Merger Agreement" means the Agreement and Plan of Merger
----------------
dated February 27, 1996, as furnished to the Managing Agents, between U S
WEST, Inc. and the Company, as the same may from time to time be amended,
modified, supplemented or restated so long as any material amendments,
modifications, supplements or restatements are furnished promptly after
effectiveness thereof to the Managing Agents."
2.5. Addition of Sections 1.2.92A and 1.2.92B. New Sections 1.2.92A and
----------------------------------------
1.2.92B are added to the Credit Agreement immediately after Section 1.2.92 of
the Credit Agreement to read in their entirety as follows:
"1.2.92A. "Preferred Stock Put Net Proceeds" means the cash proceeds
--------------------------------
received by the Company, net of all reasonable expenses incurred by it, in
connection with the exercise by the Company of its right to sell 5,650,000
shares of its Series B Convertible Preferred Stock to U S WEST, Inc.
pursuant to the Merger Agreement.
"1.2.92B. "Preferred Stock Put Repayment Amount" means the product of
------------------------------------
(a) the Preferred Stock Put Net Proceeds multiplied by (b) the quotient of
---------- --
(i) the aggregate amount of the Commitments of the Lenders under this
Agreement divided by (ii) the sum of (A) the aggregate amount of the
------- --
Commitments of the Lenders under this Agreement plus (B) the aggregate
----
amount of the commitments of the lenders to extend credit under the Bridge
Credit Facility."
2.6. Amendment to Section 1.2.93. Section 1.2.93 of the Credit Agreement
---------------------------
is amended in its entirety as follows:
"1.2.93. "Pro Forma Debt Service" means, for any period, the sum of
----------------------
(a) Pro Forma Interest Payments plus (b) the aggregate amount of principal
----
(including payments in the nature of principal under Capitalized Leases and
Redeemable Preferred Stock) required to be paid in cash by the Company and
its Restricted Subsidiaries on all Indebtedness minus (c) to the extent
-----
included in the clause (b) above, the aggregate amount of principal of the
Bridge Credit Facility required to paid in cash by the Company upon final
maturity of the Bridge Credit Facility.
2.7. Amendment to Section 1.2.99. The last sentence of Section 1.2.99 is
---------------------------
amended to read in its entirety as follows:
-3-
<PAGE>
"By way of illustration, the 1992 Preferred Stock does not constitute
Redeemable Preferred Stock and, in the event it is issued pursuant to the
Merger Agreement in substantially the form of Exhibit E to the Merger
Agreement, the Company's Series B Convertible Preferred Stock will not
constitute Redeemable Preferred Stock."
2.8. Amendment to Section 2.4. Section 2.4 of the Credit Agreement is
-------------------------
amended to read in its entirety as follows:
"2.4. Maximum Amount of Credit. The combined aggregate principal
------------------------
amount of all loans at any one time outstanding under Sections 2.1, 2.2 and
2.3 shall not at any time exceed an amount (the "Maximum Amount of Credit")
equal to:
(a) (i) the least of (A) during each period specified in the table
below, the amount specified in such table:
<TABLE>
<CAPTION>
Period Maximum Amount
------ --------------
<S> <C>
Initial Closing Date
through December 30, 1997 $2,200,000,000
December 31, 1997
through December 30, 1998 $2,090,000,000
December 31, 1998
through December 30, 1999 $1,870,000,000
December 31, 1999
through December 30, 2000 $1,540,000,000
December 31, 2000
through December 30, 2001 $1,175,000,000
December 31, 2001
through December 30, 2002 $ 815,000,000
December 31, 2002
through the Final Maturity Date $ 375,000,000,
</TABLE>
(B) the amount (being an integral multiple of $5,000,000 unless the
Company terminates the entire Maximum Amount of Credit) irrevocably
specified from time to time by at least three Banking Days prior
written notice from the Company to the Administrative Agent, or (C)
the excess of (1) $2,200,000,000 over (2) the Preferred Stock Put
----
Repayment Amount,
-4-
<PAGE>
minus (ii) the aggregate principal amount of all Asset Sale
-----
Designations which are automatically rescinded pursuant to clause (b)
of the last sentence of Section 2.5.2 (the amount determined pursuant
to this clause (a) is referred to herein as the "Stated Maximum");
minus (b) all unborrowed amounts for which designations are in effect
-----
pursuant to Section 2.5.
2.9. Addition of Section 7.7.12. A new Section 7.7.12 is added to the
--------------------------
Credit Agreement immediately after Section 7.7.11 of the Credit Agreement to
read in its entirety as follows:
"7.7.12. Indebtedness under the Bridge Credit Facility."
2.10. Amendment to Section 7.13.1. Section 7.13.1 of the Credit Agreement
----------------------------
is amended to read in its entirety as follows:
"7.13.1. Consolidated Total Debt to Consolidated Operating Income.
--------------------------------------------------------
On the last day of each fiscal quarter of the Company specified in the
table below, Consolidated Total Debt shall not exceed the percentage
specified in such table of four times Consolidated Operating Income for
such fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Percentage
--------------------- ----------
<S> <C>
September 30, 1994 through
March 31, 1995 690%
June 30, 1995 675%
September 30, 1995 690%
December 31, 1995 through
March 31, 1996 725%
June 30, 1996 775%
September 30, 1996 through
March 31, 1997 800%
June 30, 1997 625%
September 30, 1997 through
December 31, 1997 600%
March 31, 1998 through
December 31, 1998 550%
</TABLE>
-5-
<PAGE>
<TABLE>
<S> <C>
March 31, 1999 through
December 31, 1999 500%
March 31, 2000 and
thereafter 450%"
</TABLE>
2.11. Amendment to Section 7.13.2. Section 7.13.2 of the Credit
---------------------------
Agreement is amended to read in its entirety as follows:
"7.13.2. Consolidated Operating Cash Flow to Pro Forma Interest
------------------------------------------------------
Payments. On the last day of each fiscal quarter of the Company specified
--------
in the table below, four times Consolidated Operating Cash Flow for such
fiscal quarter shall equal or exceed the percentage specified in such table
of Pro Forma Interest Payments for the four consecutive fiscal quarters of
the Company commencing immediately after such date:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Percentage
--------------------- ----------
<S> <C>
September 30, 1994 through
September 30, 1995 150%
December 31, 1995 through
March 31, 1996 145%
June 30, 1996 through
March 31, 1997 135%
June 30, 1997 through
December 31, 1997 150%
March 31, 1998 through
December 31, 1998 175%
March 31, 1999 and
thereafter 200%"
</TABLE>
2.12. Amendment to Section 7.17. Section 7.17 of the Credit Agreement is
-------------------------
amended to read in its entirety as follows:
"7.17. Interest Rate Protection. At any time (other than during the
------------------------
period beginning with the initial closing date under the Bridge Credit
Facility through the final maturity date of the Bridge Credit Facility)
when Consolidated Total Debt as of the last day of the most recently
completed fiscal quarter for which financial statements have been (or are
required to have been) furnished in accordance with Section 7.2.1 or 7.2.2
exceeds 550% of four times Consolidated Operating Income for such fiscal
quarter, the Company
-6-
<PAGE>
shall have in effect interest rate protection agreements (including
Indebtedness bearing interest at fixed rates), each in form satisfactory to
the Administrative Agent, covering at least 50% in principal amount of such
Consolidated Total Debt."
2.13. Amendment to Exhibit 1. Exhibit 1 to the Credit Agreement is
----------------------
amended to read in its entirety as set forth in Exhibit 1 hereto.
3. Consent. Each of the undersigned Lenders hereby consents to an amendment to
-------
the Amended and Restated Note Agreement dated as of October 17, 1994 between the
Company and The Prudential Insurance Company of America, such amendment to
contain terms and conditions no less favorable to the Company in any material
respect than those set forth in the form of Exhibit 2 hereto.
4. Representations and Warranties. In order to induce the Lenders to consent
------------------------------
to, and each of the Administrative Agent and the Managing Agents to enter into,
this Agreement, each of the Company and the Guarantors represents and warrants
to each of the Lenders that immediately before and after giving effect to this
Agreement, no Default exists.
5. General. The Amended Credit Agreement and all of the other Lender
-------
Agreements are each confirmed as being in full force and effect. This
Agreement, the Amended Credit Agreement and the other Lender Agreements referred
to herein or therein constitute the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede all prior and
current understandings and agreements, whether written or oral, with respect to
such subject matter. The invalidity or unenforceability of any provision hereof
shall not affect the validity or enforceability of any other term or provision
hereof. The headings in this Agreement are for convenience of reference only
and shall not alter, limit or otherwise affect the meaning hereof. Each of this
Agreement and the Amended Credit Agreement is a Lender Agreement and may be
executed in any number of counterparts, which together shall constitute one
instrument, and shall bind and inure to the benefit of the parties and their
respective permitted successors and assigns. This Agreement shall be governed
by and construed in accordance with the laws (other than the conflict of laws
rules) of The Commonwealth of Massachusetts.
-7-
<PAGE>
Each of the undersigned has executed this Agreement under seal by a duly
authorized officer as of the date first set forth above.
COMPANY:
CONTINENTAL CABLEVISION, INC.
By /s/
--------------------------
Vice President and Treasurer
GUARANTORS:
AMERICAN CABLESYSTEMS CORPORATION
AMERICAN CABLESYSTEMS OF CALIFORNIA, INC.
AMERICAN CABLESYSTEMS OF NEW YORK, INC.
CONTINENTAL CABLEVISION ACQUISITIONS OF
NORTHERN ILLINOIS, INC
CONTINENTAL CABLEVISION OF CALIFORNIA, INC.
CONTINENTAL CABLEVISION OF ILLINOIS, INC.
CONTINENTAL CABLEVISION OF JACKSONVILLE, INC.
CONTINENTAL CABLEVISION OF MANCHESTER, INC.
CONTINENTAL CABLEVISION OF
MASSACHUSETTS, INC.
CONTINENTAL CABLEVISION OF MICHIGAN, INC.
CONTINENTAL CABLEVISION OF NEW ENGLAND, INC.
CONTINENTAL CABLEVISION OF NORTHERN
ILLINOIS, INC.
CONTINENTAL CABLEVISION OF OHIO, INC.
CONTINENTAL CABLEVISION OF ST. LOUIS
COUNTY, INC.
CONTINENTAL CABLEVISION OF ST. PAUL, INC.
CONTINENTAL CABLEVISION OF SIERRA
VALLEYS, INC.
CONTINENTAL CABLEVISION OF VIRGINIA, INC.
CONTINENTAL CABLEVISION OF WESTERN
NEW ENGLAND, INC.
CONTINENTAL CABLEVISION SATELLITE COMPANY
OF NORTHERN CALIFORNIA, INC.
CONTINENTAL SATELLITE COMPANY OF
CHICAGO, INC.
CONTINENTAL SATELLITE COMPANY OF
FLORIDA, INC.
-8-
<PAGE>
CONTINENTAL SATELLITE COMPANY OF
ILLINOIS, INC.
CONTINENTAL SATELLITE COMPANY OF
MICHIGAN, INC.
CONTINENTAL SATELLITE COMPANY OF
MINNESOTA, INC.
CONTINENTAL SATELLITE COMPANY OF
NEW ENGLAND, INC.
CONTINENTAL SATELLITE COMPANY OF OHIO, INC.
CONTINENTAL SATELLITE COMPANY OF
VIRGINIA, INC.
FRESNO CABLE TV LIMITED
NOR CAL CABLEVISION, INC.
TELCAB COMMUNICATIONS, INC.
By /s/
--------------------------
Vice President and Treasurer of each of the
foregoing corporations
MANAGING AGENTS:
THE FIRST NATIONAL BANK OF BOSTON, as
Administrative Agent and as a Managing Agent
for itself and the other Lenders
By /s/
--------------------------
Title:
THE BANK OF NEW YORK, as a Managing Agent for
itself and the other Lenders
By /s/
--------------------------
Title:
-9-
<PAGE>
Each of the undersigned hereby consents to the foregoing Agreement:
AGENTS:
CANADIAN IMPERIAL BANK MELLON BANK, N.A.
OF COMMERCE
By /s/ By /s/
------------------- --------------------
Title: Title:
NATIONSBANK OF TEXAS, N.A. THE TORONTO-DOMINION BANK
By /s/ By /s/
------------------- --------------------
Title: Title:
CO-AGENTS:
THE BANK OF NOVA SCOTIA BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
By /s/ By /s/
------------------- --------------------
Title: Title:
CHEMICAL BANK, N.A. CITIBANK, N.A.
By /s/ By /s/
------------------- --------------------
Title: Title:
THE FIRST NATIONAL BANK THE FUJI BANK, LIMITED
OF CHICAGO
By /s/ By /s/
------------------- --------------------
Title: Title:
INDUSTRIAL BANK OF JAPAN THE LONG-TERM CREDIT BANK
OF JAPAN, LIMITED,
NEW YORK BRANCH
By /s/ By /s/
------------------- --------------------
Title: Title:
-10-
<PAGE>
MORGAN GUARANTY ROYAL BANK OF CANADA
TRUST COMPANY
By /s/ By /s/
------------------- --------------------
Title: Title:
SOCIETE GENERALE THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH
By /s/ By /s/
------------------- ---------------------
Title: Title:
UNION BANK
By /s/
-------------------
Title:
OTHER LENDERS:
THE BANK OF CALIFORNIA, N.A. BANK OF HAWAII
By /s/ By /s/
------------------- --------------------
Title: Title:
BANK OF IRELAND, GRAND BANK OF MONTREAL
CAYMAN BRANCH
By /s/ By /s/
------------------- --------------------
Title: Title:
BANQUE FRANCAISE DU BANQUE NATIONAL DE PARIS
COMMERCE EXTERIEUR
By /s/ By /s/
------------------- --------------------
Title: Title:
By /s/
--------------------
Title:
-11-
<PAGE>
BANQUE PARIBAS COMPAGNIE FINANCIERE DE CIC
ET DE L'UNION EUROPEENNE
By /s/ By /s/
------------------- --------------------
Title: Title:
By /s/ By /s/
------------------- --------------------
Title: Title:
CORESTATES BANK, N.A. CREDIT LYONNAIS CAYMAN
ISLAND BRANCH
By /s/ By /s/
------------------- --------------------
Title: Title
CRESTAR BANK THE DAI-CHI KANGYO BANK,
LIMITED, NEW YORK BRANCH
By /s/ By /s/
------------------- --------------------
Title: Title:
DE NATIONAL DRESDNER BANK AG NEW YORK
INVESTERINGSBANK N.V. AND GRAND CAYMAN BRANCHES
By /s/ By /s/
------------------- --------------------
Title: Title:
By /s/
--------------------
Title:
FIRST BANK FIRST HAWAIIAN BANK
NATIONAL ASSOCIATION
By /s/ By /s/
------------------- --------------------
Title: Title:
THE FIRST NATIONAL BANK FLEET NATIONAL BANK
OF MARYLAND
-12-
<PAGE>
By /s/ By /s/
------------------- --------------------
Title: Title:
FUYO GENERAL LEASE
(U.S.A.), INC.
KLEINWORT BENSON LIMITED
By /s/
------------------- By /s/
Title: --------------------
Title:
THE MITSUBISHI TRUST AND NBD BANK, N.A.
BANKING CORPORATION
By /s/ By /s/
------------------- --------------------
Title: Title:
THE NIPPON CREDIT BANK, LTD. THE ROYAL BANK OF
SCOTLAND, PLC
By /s/ By /s/
------------------- --------------------
Title: Title:
THE SAKURA BANK, LIMITED THE SANWA BANK, LIMITED
By /s/ By /s/
------------------- --------------------
Title: Title:
SUMITOMO BANK, LIMITED THE SUMITOMO TRUST &
BANKING CO., LTD.,
NEW YORK BRANCH
By /s/ By /s/
------------------- --------------------
Title: Title:
SUN BANK, N.A. SWISS BANK CORPORATION,
NEW YORK BRANCH
By /s/ By /s/
------------------- --------------------
Title: Title:
By /s/
--------------------
Title:
-13-
<PAGE>
THE TOKAI BANK, LIMITED THE TOYO TRUST AND
BANKING CO., LTD.
By /s/ By /s/
------------------- --------------------
Title: Title:
UNITED JERSEY BANK VAN KAMPEN MERRITT PRIME
RATE INCOME TRUST
By /s/ By /s/
------------------- --------------------
Title: Title:
CHL HIGH YIELD LOAN PORTFOLIO BANK OF TOKYO-MITSUBISHI,
(A UNIT OF CHEMICAL BANK) LIMITED
By /s/ By /s/
------------------- --------------------
Title: Title:
-14-
<PAGE>
EXHIBIT 10.2
CONTINENTAL CABLEVISION, INC.
CREDIT AGREEMENT
Amendment No. 3
---------------
This Agreement, dated as of June 24, 1996, is among Continental
Cablevision, Inc., a Delaware corporation, certain of its subsidiaries, The
First National Bank of Boston, in its capacity as Administrative Agent and as a
Managing Agent for itself and the other Lenders, and The Bank of New York, in
its capacity as a Managing Agent for itself and the other Lenders. The parties
agree as follows:
1. Reference to Credit Agreement; Definitions. Reference is made to the
------------------------------------------
Amended and Restated Credit Agreement dated as of October 1, 1994, as amended
and in effect on the date hereof prior to giving effect to this Agreement (the
"Credit Agreement"), among the Company, its subsidiaries from time to time party
- -----------------
thereto, the Lenders from time to time party thereto, the Administrative Agent
and the Managing Agents. Terms defined in the Credit Agreement as amended
hereby (the "Amended Credit Agreement") and not otherwise defined herein are
------------------------
used herein with the meanings so defined. References in this Agreement to
"Sections" and "Exhibits", except as the context otherwise dictates, are
references to sections hereof and exhibits hereto.
2. Amendments to Credit Agreement. Effective on the date hereof, the Credit
------------------------------
Agreement is hereby amended as follows:
2.1. Amendment to Section 1.2.23. Section 1.2.23 of the Credit Agreement
---------------------------
is amended to read in its entirety as follows:
"1.2.23. "Company" means Continental Cablevision, Inc., a Delaware
-------
corporation, and its successor by merger to the extent permitted by Section
7.11.4."
2.2. Addition of Section 7.11.4. A new Section 7.11.4 is added to the
--------------------------
Credit Agreement immediately after Section 7.11.3 of the Credit Agreement to
read in its entirety as follows:
"7.11.4. The Company may consolidate with and merge into U S WEST,
Inc. or a wholly owned subsidiary of U S WEST, Inc. in accordance with the
Merger Agreement, so long as:
(a) either (i) U S WEST, Inc. succeeds to and assumes all of the
liabilities and obligations of the Company under each of the Lender
Agreements pursuant to an assumption agreement or other written
instrument reasonably satisfactory to the Managing Agents, or (ii) U S
WEST, Inc. or U S WEST Capital Funding Inc. guarantees the payment and
performance of the Credit Obligations pursuant to a
<PAGE>
guarantee that is reasonably satisfactory to the Managing Agents; and
in each such case the Lenders have been furnished with legal opinions
reasonably satisfactory to the Managing Agents and evidence of
corporate authorization with respect to U S WEST, Inc. or U S WEST
Capital Funding Inc.; and
(b) immediately after giving effect to such merger, no Default
exists."
2.3. Amendment to Section 9.1.7. Section 9.1.7 of the Credit Agreement is
--------------------------
amended to read in its entirety as follows:
"9.1.7. Prior to the consummation of the merger permitted by
Section 7.11.4, the Management Group shall fail to own, directly or
indirectly, at least 25% of the voting power of the Company's capital
stock; provided, however, that so long as the Management Group maintains a
-------- -------
block of the voting power of the Company's capital stock larger than any
block held by any other Person together with "affiliates" (as defined in
Rule 12b-2 under the Exchange Act) of such Person and any members of a
"group" (within the meaning of Rule 13d-1 under the Exchange Act) with such
Person, the voting power of the Management Group may decrease below 25%
after an offering and sale of capital stock by the Company."
3. Representations and Warranties. In order to induce the Administrative Agent
------------------------------
and the Managing Agents to enter into this Agreement, each of the Company and
the Guarantors represents and warrants that immediately before and after giving
effect to this Agreement, no Default exists.
4. General. The Amended Credit Agreement and all of the other Lender
-------
Agreements are each confirmed as being in full force and effect. This
Agreement, the Amended Credit Agreement and the other Lender Agreements referred
to herein or therein constitute the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede all prior and
current understandings and agreements, whether written or oral, with respect to
such subject matter. The invalidity or unenforceability of any provision hereof
shall not affect the validity or enforceability of any other term or provision
hereof. The headings in this Agreement are for convenience of reference only
and shall not alter, limit or otherwise affect the meaning hereof. Each of this
Agreement and the Amended Credit Agreement is a Lender Agreement and may be
executed in any number of counterparts, which together shall constitute one
instrument, and shall bind and inure to the benefit of the parties and their
respective permitted successors and assigns. This Agreement shall be governed
by and construed in accordance with the laws (other than the conflict of laws
rules) of The Commonwealth of Massachusetts.
-2-
<PAGE>
Each of the undersigned has executed this Agreement under seal by a duly
authorized officer as of the date first set forth above.
COMPANY:
CONTINENTAL CABLEVISION, INC.
By /s/
---------------------------
Vice President and Treasurer
GUARANTORS:
AMERICAN CABLESYSTEMS CORPORATION
AMERICAN CABLESYSTEMS OF CALIFORNIA, INC.
AMERICAN CABLESYSTEMS OF NEW YORK, INC.
CONTINENTAL CABLEVISION ACQUISITIONS OF
NORTHERN ILLINOIS, INC.
CONTINENTAL CABLEVISION OF CALIFORNIA, INC.
CONTINENTAL CABLEVISION OF ILLINOIS, INC.
CONTINENTAL CABLEVISION OF JACKSONVILLE, INC.
CONTINENTAL CABLEVISION OF MANCHESTER, INC.
CONTINENTAL CABLEVISION OF
MASSACHUSETTS, INC.
CONTINENTAL CABLEVISION OF MICHIGAN, INC.
CONTINENTAL CABLEVISION OF NEW ENGLAND, INC.
CONTINENTAL CABLEVISION OF NORTHERN
ILLINOIS, INC.
CONTINENTAL CABLEVISION OF OHIO, INC.
CONTINENTAL CABLEVISION OF ST. LOUIS
COUNTY, INC.
CONTINENTAL CABLEVISION OF ST. PAUL, INC.
CONTINENTAL CABLEVISION OF SIERRA
VALLEYS, INC.
CONTINENTAL CABLEVISION OF VIRGINIA, INC.
CONTINENTAL CABLEVISION OF WESTERN
NEW ENGLAND, INC.
CONTINENTAL CABLEVISION SATELLITE COMPANY
OF NORTHERN CALIFORNIA, INC.
CONTINENTAL SATELLITE COMPANY OF
CHICAGO, INC.
CONTINENTAL SATELLITE COMPANY OF
FLORIDA, INC.
-3-
<PAGE>
CONTINENTAL SATELLITE COMPANY OF
ILLINOIS, INC.
CONTINENTAL SATELLITE COMPANY OF
MICHIGAN, INC.
CONTINENTAL SATELLITE COMPANY OF
MINNESOTA, INC.
CONTINENTAL SATELLITE COMPANY OF
NEW ENGLAND, INC.
CONTINENTAL SATELLITE COMPANY OF OHIO, INC.
CONTINENTAL SATELLITE COMPANY OF
VIRGINIA, INC.
FRESNO CABLE TV LIMITED
NOR CAL CABLEVISION, INC.
TELCAB COMMUNICATIONS, INC.
By /s/
-------------------------
Vice President and Treasurer of each of the
foregoing corporations
MANAGING AGENTS:
THE FIRST NATIONAL BANK OF BOSTON, as
Administrative Agent and as a Managing Agent
for itself and the other Lenders
By /s/
-------------------------
Title:
THE BANK OF NEW YORK, as a Managing Agent for itself
and the other Lenders
By /s/
-------------------------
Title:
-4-
<PAGE>
Each of the undersigned hereby consents to the foregoing Agreement:
AGENTS:
CANADIAN IMPERIAL BANK MELLON BANK, N.A.
OF COMMERCE
By /s/ By /s/
-------------------- ----------------------
Title: Title:
NATIONSBANK OF TEXAS, N.A. THE TORONTO-DOMINION BANK
By /s/ By /s/
-------------------- ----------------------
Title: Title:
CO-AGENTS:
THE BANK OF NOVA SCOTIA BANK OF TOKYO-MITSUBISHI
LIMITED
By /s/ By /s/
-------------------- ----------------------
Title: Title:
BANK OF TOKYO-MITSUBISHI CHEMICAL BANK, N.A.
TRUST COMPANY
By /s/ By /s/
-------------------- ----------------------
Title: Title:
CITIBANK, N.A. THE FUJI BANK, LIMITED
By /s/ By /s/
-------------------- ----------------------
Title: Title:
INDUSTRIAL BANK OF JAPAN THE LONG-TERM CREDIT BANK
OF JAPAN, LIMITED,
NEW YORK BRANCH
By /s/
--------------------
Title: By /s/
----------------------
Title:
-5-
<PAGE>
MORGAN GUARANTY ROYAL BANK OF CANADA
TRUST COMPANY
By /s/
By /s/ ----------------------
-------------------- Title:
Title:
SOCIETE GENERALE THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH
By /s/ By /s/
---------------------- ----------------------
Title: Title:
UNION BANK OF CALIFORNIA
By /s/
----------------------
Title:
OTHER LENDERS:
BANK OF HAWAII BANK OF IRELAND, GRAND
CAYMAN BRANCH
By /s/ By /s/
---------------------- ----------------------
Title: Title:
BANK OF MONTREAL BANQUE FRANCAISE DU
COMMERCE EXTERIEUR
By /s/ By /s/
---------------------- ----------------------
Title: Title:
BANQUE NATIONAL DE PARIS BANQUE PARIBAS
By /s/ By /s/
---------------------- ----------------------
Title: Title:
By /s/ By /s/
---------------------- ----------------------
Title: Title:
-6-
<PAGE>
CHL HIGH YIELD LOAN PORTFOLIO CITI NATIONAL BANK
(A UNIT OF CHEMICAL BANK)
By /s/ By /s/
-------------------- ----------------------
Title: Title:
COMPAGNIE FINANCIERE DE CIC CORESTATES BANK, N.A.
ET DE L'UNION EUROPEENNE
By /s/ By /s/
-------------------- ----------------------
Title: Title:
CREDIT LOCAL DE FRANCE CREDIT LYONNAIS CAYMAN
ISLAND BRANCH
By /s/ By /s/
-------------------- ----------------------
Title: Title:
CRESTAR BANK THE DAI-ICHI KANGYO BANK,
LIMITED, NEW YORK BRANCH
By /s/ By /s/
-------------------- ----------------------
Title: Title:
DE NATIONAL DRESDNER BANK AG NEW YORK
INVESTERINGSBANK N.V. AND GRAND CAYMAN BRANCHES
By /s/ By /s/
-------------------- ----------------------
Title: Title:
By /s/
----------------------
Title:
FIRST BANK FIRST HAWAIIAN BANK
NATIONAL ASSOCIATION
By /s/ By /s/
-------------------- ----------------------
Title: Title:
-7-
<PAGE>
THE FIRST NATIONAL BANK FLEET NATIONAL BANK
OF MARYLAND
By /s/ By /s/
-------------------- ----------------------
Title: Title:
FUYO GENERAL LEASE KLEINWORT BENSON LIMITED
(U.S.A.), INC.
By /s/ By /s/
-------------------- ----------------------
Title: Title:
THE MITSUBISHI TRUST AND NBD BANK, N.A.
BANKING CORPORATION
By /s/ By /s/
-------------------- ----------------------
Title: Title:
THE NIPPON CREDIT BANK, LTD. PEARL STREET L.P.
By /s/ By /s/
-------------------- ----------------------
Title: Title:
THE RIGGS BANK N.A. THE ROYAL BANK OF
SCOTLAND plc
By /s/ By /s/
-------------------- ----------------------
Title: Title:
THE SAKURA BANK, LIMITED THE SANWA BANK, LIMITED
By /s/ By /s/
-------------------- ----------------------
Title: Title:
THE SUMITOMO BANK, LIMITED THE SUMITOMO TRUST &
BANKING CO., LTD.,
NEW YORK BRANCH
By /s/ By /s/
-------------------- ----------------------
Title: Title:
By /s/
--------------------
Title:
-8-
<PAGE>
SUN BANK, N.A. SWISS BANK CORPORATION,
NEW YORK BRANCH
By /s/ By /s/
-------------------- ----------------------
Title: Title:
By /s/
----------------------
Title:
THE TOKAI BANK, LIMITED THE TOYO TRUST AND
BANKING CO., LTD.
By /s/ By /s/
-------------------- ----------------------
Title: Title:
UNITED JERSEY BANK USTrust
By /s/ By /s/
-------------------- ----------------------
Title: Title:
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By /s/
--------------------
Title:
-9-
<PAGE>
EXHIBIT 10.3
COLONY COMMUNICATIONS, INC.
CONTINENTAL CABLEVISION OF EASTERN MICHIGAN, INC.
CONTINENTAL CABLEVISION OF SOUTHEAST MICHIGAN, INC.
CREDIT AGREEMENT
Amendment No. 2
---------------
This Agreement, dated as of June 24, 1996 is among Continental Cablevision
of Southeast Michigan, Inc., a Michigan corporation, Colony Communications,
Inc., a Rhode Island corporation, Continental Cablevision of Eastern Michigan,
Inc., a Delaware corporation, The Toronto-Dominion Bank, in its capacity as
Documentation Agent and as a Managing Agent for the Lenders, The First National
Bank of Boston, in its capacity as Administrative Agent and as a Managing Agent
for itself and the other Lenders, and The Bank of New York, in its capacity as
Syndication Agent and as a Managing Agent for itself and the other Lenders. The
parties agree as follows:
1. Reference to Credit Agreement; Definitions. Reference is made to the Credit
------------------------------------------
Agreement dated as of July 18, 1995, as amended and in effect on the date hereof
prior to giving effect to this Agreement (the "Credit Agreement"), among Colony,
----------------
Continental Cablevision of Southeast Michigan, Inc., Continental Cablevision of
Eastern Michigan, Inc., their respective Subsidiaries from time to time party
thereto, the Lenders from time to time party thereto, the Documentation Agent,
the Administrative Agent, the Syndication Agent and the Managing Agents. Terms
defined in the Credit Agreement as amended hereby (the "Amended Credit
--------------
Agreement") and not otherwise defined herein are used herein with the meanings
- ---------
so defined. References in this Agreement to "Sections" and "Exhibits", except as
the context otherwise dictates, are references to sections hereof and exhibits
hereto.
2. Amendments to Credit Agreement. Subject to all the terms and conditions
------------------------------
hereof, and in reliance upon the representations and warranties set forth in
Section 3, the Credit Agreement is hereby amended as follows:
2.1. Addition of Defined Term in Section 1. Section 1 is amended to add
-------------------------------------
the following new sections in Section 1 of the Credit Agreement:
1.8A. "Approved U S West Merger" means the merger of the Company
------------------------
with and into U S WEST, Inc. or a wholly owned subsidiary of U S WEST, Inc.
in accordance with the Merger Agreement, so long as (a) U S WEST, Inc. or U
S WEST Capital Funding Inc. guarantees the payment and performance of the
Credit Obligations pursuant to a guarantee that is reasonably satisfactory
to the Managing Agents; (b) the Lenders have
<PAGE>
been furnished with legal opinions reasonably satisfactory to the Managing
Agents and evidence of corporate authorization with respect to U S WEST,
Inc. or U S WEST Capital Funding Inc.; and (c) immediately after giving
effect to such merger, no Default exists."
"1.81A." Merger Agreement" means the Agreement and Plan of
----------------
Merger dated February 27, 1996, as furnished to the Managing Agents,
between U S WEST, Inc. and the Company, as the same may from time to time
be amended, modified, supplemented or restated so long as any material
amendments, modifications, supplements or restatements are furnished
promptly after effectiveness thereof to the Managing Agents."
2.2. Amendment to Section 1.27. The definition of "Columbia" in Section
-------------------------
1.27 of the Credit Agreement is amended to read in its entirety as follows:
"1.27. "Columbia" means Columbia Cable of Michigan, Inc., now
--------
known as Continental Cablevision of Eastern Michigan, Inc., a Delaware
corporation and an indirect wholly owned Subsidiary of the Company.
2.3. Amendment to Section 1.37. The definition of the "Company" in
-------------------------
Section 1.37 of the Credit Agreement is amended to read in its entirety as
follows:
"1.37. "Company" means Continental Cablevision, Inc., a Delaware
-------
corporation, and its successor by merger to the extent permitted under the
Company Credit Facility."
2.4. Amendment to Section 1.89. The definition of "N-Com" in Section 1.89
-------------------------
of the Credit Agreement is amended to read in its entirety as follows:
"1.89. "N-Com" means N-Com Acquisition Corporation, now known as
-----
Continental Cablevision of Southeast Michigan, Inc., a Michigan corporation
and a wholly owned Subsidiary of the Company.
-2-
<PAGE>
2.5. Amendment to Section 9.1.7. Section 9.1.7 of the Credit Agreement is
--------------------------
amended to read in its entirety as follows:
"9.1.7. Prior to the consummation of the Approved U S West
Merger, the Management Group shall fail to own, directly or indirectly, at
least 25% of the voting power of the Company's capital stock; provided,
however, that so long as the Management Group maintains a block of the
voting power of the Company's capital stock larger than any block held by
any other Person together with "affiliates" (as defined in Rule 12b-2 under
the Exchange Act) of such Person and any members of a "group" (within the
meaning of Rule 13d-1 under the Exchange Act) with such Person, the voting
power of the Management Group may decrease below 25% after an offering and
sale of capital stock by the Company."
3. Representations and Warranties. In order to induce the Administrative
------------------------------
Agent and the Managing Agents to enter into this Agreement, each of the
Borrowers and the Guarantors represents and warrants that immediately before and
after giving effect to this Agreement, no Default exists.
4. General. The Amended Credit Agreement and all of the Lender Agreements are
-------
each confirmed as being in full force and effect. This Agreement, the Amended
Credit Agreement and the other Lender Agreements referred to herein or therein
constitute the entire understanding of the parties with respect to the subject
matter hereof and thereof and supersede all prior and current understandings and
agreements, whether written or oral, with respect to such subject matter. The
invalidity or unenforceability of any provision hereof shall not affect the
validity or enforceability of any other term or provision hereof. The headings
in this Agreement are for convenience of reference only and shall not alter,
limit or otherwise affect the meaning hereof. Each of this Agreement and the
Amended Credit Agreement is a Lender Agreement and may be executed in any number
of counterparts, which together shall constitute one instrument, and shall bind
and inure to the benefit of the parties and their respective permitted
successors and assigns. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of The
Commonwealth of Massachusetts.
-3-
<PAGE>
Each of the undersigned has executed this Agreement under seal by a duly
authorized officer as of the date first set forth above.
BORROWERS AND GUARANTORS:
COLONY COMMUNICATIONS, INC.
By /s/
-----------------------------
Title:
CONTINENTAL CABLEVISION OF
SOUTHEAST MICHIGAN, INC.
By /s/
------------------------------
Title:
CONTINENTAL CABLEVISION OF EASTERN
MICHIGAN, INC.
By /s/
------------------------------
Title:
CCF MANAGEMENT SERVICES, INC.
CCI MANAGEMENT SERVICES, INC.
COLONY CABLEVISION OF LAKEWOOD, INC.
COLONY INTERCONNECTS, INC.
CONTINENTAL CABLEVISION OF SOUTHERN NEW
ENGLAND, INC.
DYNAMIC CABLEVISION OF FLORIDA, INC.
U.S. CABLEVISION CORP.
VISION-CABLE COMPANY OF RHODE ISLAND, INC.
COPLEY/COLONY, INC.
COPLEY/COLONY CABLEVISION OF COSTA MESA, INC.
COPLEY/COLONY CABLEVISION OF CYPRESS, INC.
COPLEY/COLONY CABLEVISION OF LOMITA, INC.
COPLEY/COLONY CABLEVISION OF LOS ANGELES
COUNTY, INC.
COPLEY/COLONY HARBOR CABLEVISION, INC.
KING VIDEOCABLE COMPANY
KING VIDEOCABLE COMPANY-MINNESOTA
-4-
<PAGE>
KING VIDEOCABLE COMPANY-NEWHALL
KING VIDEOCABLE COMPANY-TWIN FALLS
KING VIDEO-CABLE COMPANY-IDAHO
KING VIDEO-CABLE COMPANY-VALENCIA
By /s/
-------------------------------
As Vice President and Treasurer of each of
the foregoing corporations
MANAGING AGENTS:
THE TORONTO-DOMINION BANK, as
Documentation Agent and as a Managing Agent
for the Lenders
By /s/
-------------------------------
Title:
THE FIRST NATIONAL BANK OF BOSTON, as
Administrative Agent and as a Managing Agent
for itself and the other Lenders
By /s/
-------------------------------
Title:
THE BANK OF NEW YORK, as Syndication
Agent and as a Managing Agent for itself and
the other Lenders
By /s/
-------------------------------
Title:
-5-
<PAGE>
Each of the undersigned hereby consents to the foregoing Agreement:
AGENTS:
CHEMICAL BANK CIBC INC.
By /s/ By /s/
--------------------- ---------------------
Title: Title:
CITIBANK, N.A. MELLON BANK, N.A.
By /s/ By /s/
--------------------- ---------------------
Title: Title:
NATIONSBANK OF TEXAS, N.A.
By /s/
---------------------
Title:
CO-AGENTS:
BANK OF MONTREAL THE BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
By /s/ By /s/
--------------------- ---------------------
Title: Title:
BANQUE NATIONALE DE BANQUE PARIBAS
PARIS
By /s/ By /s/
--------------------- ---------------------
Title: Title:
By /s/ By /s/
--------------------- ---------------------
Title: Title:
-6-
<PAGE>
COMPAGNIE FINANCIERE DE CIC CREDIT LYONNAIS CAYMAN
ET DE L'UNION EUROPEENNE ISLAND BRANCH
By /s/ By /s/
------------------------ ------------------------
Title: Title:
By /s/
------------------------
Title:
DEUTSCHE BANK AG, NEW YORK THE FIRST NATIONAL BANK
AND/OR CAYMAN ISLAND OF CHICAGO
BRANCHES
By /s/ By /s/
------------------------ -----------------------
Title: Title:
By /s/
------------------------
Title:
FLEET NATIONAL BANK THE FUJI BANK, LIMITED
By /s/ By /s/
----------------------- ------------------------
Title: Title:
LTCB TRUST COMPANY MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By /s/ By /s/
------------------------ ------------------------
Title: Title:
FLEET BANK, N.A. ROYAL BANK OF CANADA
By /s/ By /s/
------------------------ ------------------------
Title: Title:
-7-
<PAGE>
SOCIETE GENERALE SWISS BANK CORPORATION,
NEW YORK BRANCH
By /s/ By /s/
------------------------ ------------------------
Title: Title:
By /s/
------------------------
Title:
UNION BANK
By /s/
------------------------
Title:
OTHER LENDERS:
BANK OF IRELAND, GRAND BANQUE FRANCAIS DU COMMERCE
CAYMAN BRANCH EXTERIEVE
By /s/ By /s/
------------------------ ------------------------
Title: Title:
THE DAI-ICHI KANGYO BANK, DRESDNER BANK AG
LIMITED, NEW YORK BRANCH NEW YORK AND GRAND
CAYMAN BRANCHES
By /s/ By /s/
------------------------ ------------------------
Title: Title:
By /s/ By /s/
------------------------ ------------------------
Title: Title:
FIRST HAWAIIAN BANK MIDLANTIC BANK, N.A.
By /s/ By /s/
------------------------ ------------------------
Title: Title:
-8-
<PAGE>
THE MITSUBISHI TRUST AND NATIONAL CITY BANK
BANKING CORPORATION
By /s/ By /s/
-------------------------- --------------------------
Title: Title:
NBD BANK THE NIPPON CREDIT BANK, LTD.
By /s/ By /s/
-------------------------- --------------------------
Title: Title:
THE SANWA BANK, LIMITED THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH
By /s/ By /s/
-------------------------- --------------------------
Title: Title:
TORONTO DOMINION UNITED JERSEY BANK
(NEW YORK) INC.
By /s/ By /s/
-------------------------- --------------------------
Title: Title:
VAN KAMPEN AMERICAN CAPITAL THE SUMITOMO BANK, LIMITED
PRIME RATE INCOME TRUST
By /s/ By /s/
-------------------------- --------------------------
Title: Title:
By /s/
--------------------------
Title:
-9-
<PAGE>
EXHIBIT 10.4
================================================================================
CONTINENTAL CABLEVISION, INC.
CREDIT AGREEMENT
Dated as of July 2, 1996
THE TORONTO-DOMINION BANK,
as Documentation Agent and as a Managing Agent
THE FIRST NATIONAL BANK OF BOSTON,
as Administrative Agent and as a Managing Agent
THE BANK OF NEW YORK,
as Syndication Agent and as a Managing Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. DEFINITIONS; CERTAIN RULES OF CONSTRUCTION.......................................... 1
2. THE CREDITS......................................................................... 16
2.1. Loan.......................................................................... 16
2.1.1. Loan Accounts....................................................... 16
2.1.2. Maturity, etc....................................................... 16
2.2. Maximum Amount of Credit...................................................... 16
2.3. Application of Proceeds; Specifically Prohibited Applications................. 17
2.4. Nature of Obligations of Lenders to Make Loans................................ 17
3. INTEREST; EURODOLLAR PRICING OPTIONS; FEES; ETC..................................... 17
3.1. Interest on Loan.............................................................. 17
3.1.1. Computations of Interest............................................ 18
3.2. Eurodollar Pricing Options.................................................... 18
3.2.1. Election of Eurodollar Pricing Options.............................. 18
3.2.2. Notices Relating to Eurodollar Pricing Options...................... 19
3.3. Additional Provisions Concerning Eurodollar Pricing Options................... 20
3.3.1. Selection of Eurodollar Interest Periods............................ 20
3.3.2. Additional Interest Relating to Eurodollar Pricing Options.......... 20
3.3.3. Change in Applicable Laws, Regulations, etc......................... 20
3.3.4. Funding Procedure................................................... 21
3.4. Commitment Fees on Loan....................................................... 21
3.5. Capital Adequacy.............................................................. 22
3.6. Taxes......................................................................... 23
4. PAYMENT............................................................................. 24
4.1. Payment at Maturity........................................................... 24
4.2. Contingent Required Prepayments............................................... 24
4.2.1. Excess Credit Exposure.............................................. 24
4.2.2. Allocation of Payments.............................................. 24
4.3. Voluntary Prepayments......................................................... 24
4.4. Payment and Interest Cutoff, etc.............................................. 25
5. CONDITIONS TO MAKING LOANS.......................................................... 25
5.1. Conditions to Making Initial Loans............................................ 25
5.1.1. Notes............................................................... 25
5.1.2. Amendment to the 1994 Credit Agreement.............................. 25
5.1.3. Amended Note Agreement.............................................. 25
5.1.4. Guarantors' Contribution Agreement.................................. 25
5.1.5. Payment of Fees..................................................... 26
5.1.6. Legal Opinions...................................................... 26
5.2. Conditions to Making Each Loan................................................ 26
5.2.1. Company Officer's Certificate....................................... 26
5.2.2. Proper Proceedings.................................................. 27
5.2.3. Legality, etc....................................................... 27
5.2.4. General............................................................. 27
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
6. GUARANTEES.......................................................................... 27
6.1. Guarantees of Credit Obligations.............................................. 27
6.2. Waivers....................................................................... 28
6.3. Certain Representations....................................................... 29
6.4. Power to Amend, etc........................................................... 30
6.5. Information Regarding the Company, etc........................................ 30
6.6. No Subrogation; Subordination................................................. 31
6.7. Further Assurances............................................................ 31
6.8. Release of Guarantors and Restricted Subsidiaries............................. 31
7. COVENANTS........................................................................... 32
7.1. Corporate Existence; Conduct of Business...................................... 32
7.2. Financial Statements, etc..................................................... 32
7.2.1. Quarterly Reports................................................... 32
7.2.2. Annual Reports...................................................... 33
7.2.3. Audits.............................................................. 34
7.2.4. ERISA Reports....................................................... 34
7.2.5. Public Reports...................................................... 35
7.2.6. Defaults............................................................ 35
7.2.7. Other Events........................................................ 35
7.2.8. Requested Information............................................... 35
7.2.9. Confidentiality..................................................... 36
7.3. Insurance..................................................................... 36
7.4. Taxes; Claims................................................................. 36
7.5. Maintenance of Properties..................................................... 36
7.6. Statutory Compliance.......................................................... 37
7.7. Indebtedness.................................................................. 37
7.8. Liens......................................................................... 38
7.9. Investments................................................................... 40
7.10. Sales of Assets; etc......................................................... 40
7.11. Mergers...................................................................... 43
7.12. Distributions................................................................ 44
7.13. Certain Financial Tests...................................................... 44
7.13.1. Consolidated Total Debt to Consolidated Operating Income........... 44
7.13.2. Consolidated Operating Cash Flow to Pro Forma
Interest Payments............................................ 45
7.13.3. Consolidated Operating Cash Flow to Pro Forma Debt Service......... 45
7.14. ERISA........................................................................ 45
7.15. No Amendments to Certain Agreements.......................................... 45
7.16. Transactions with Affiliates................................................. 45
8. REPRESENTATIONS AND WARRANTIES...................................................... 46
8.1. Organization, Qualification and Standing...................................... 46
8.1.1. The Company......................................................... 46
8.1.2. Subsidiaries........................................................ 46
8.1.3. Capitalization...................................................... 47
8.2. Authorization, etc............................................................ 47
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C> <C>
8.3. Litigation.................................................................... 48
8.4. Financial Statements.......................................................... 48
8.5. Title to Properties........................................................... 48
8.6. No Adverse Developments....................................................... 48
8.7. Defaults...................................................................... 49
8.8. Pension Plans................................................................. 49
9. EVENTS OF DEFAULT................................................................... 50
9.1. Events of Default............................................................. 50
9.2. Certain Actions Following an Event of Default................................. 52
9.2.1. Specific Performance; Exercise of Remedies.......................... 52
9.2.2. Acceleration........................................................ 52
9.2.3. Enforcement of Payment; Setoff...................................... 52
9.3. Annulment of Defaults......................................................... 53
9.4. Waivers....................................................................... 53
9.5. Course of Dealing............................................................. 53
10. EXPENSES; INDEMNITY; AGENT'S FEE.................................................... 53
10.1. Fees and Expenses............................................................ 53
10.2. Indemnification.............................................................. 54
11. NOTICES............................................................................. 55
12. OPERATIONS.......................................................................... 55
12.1. Interests in the Loan........................................................ 55
12.2. Company to Pay Administrative Agent.......................................... 55
12.3. Lender Operations for Advances and Payments, etc............................. 55
12.3.1. Advances and Payments.............................................. 55
12.3.2. Delinquent Lenders; Nonperforming Lenders.......................... 56
12.4. Sharing of Payments, etc..................................................... 57
12.5. Administrative Agent's Authority to Act...................................... 57
12.6. Administrative Agent's Resignation........................................... 57
12.7. Amendments, Consents, Waivers, etc........................................... 58
12.7.1. Modifications to Voting Percentages................................ 59
12.7.2. Obligations to Make New Loans...................................... 59
12.7.3. Conforming Amendments, Consents and Waivers Under 1994
Credit Agreement................................................... 59
12.8. Concerning the Administrative Agent.......................................... 59
12.8.1. Action in Good Faith, etc.......................................... 59
12.8.2. No Implied Duties, etc............................................. 60
12.8.3. Validity, etc...................................................... 60
12.8.4. Compliance......................................................... 60
12.8.5. Employment of Administrative Agents and Counsel.................... 60
12.8.6. Reliance on Documents and Counsel.................................. 61
12.8.7. Administrative Agent's Reimbursement............................... 61
12.8.8. Rights as a Lender................................................. 61
12.9. Independent Credit Decision.................................................. 61
12.10. Indemnification............................................................. 62
12.11. Waiver of Pro Rata Event.................................................... 62
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C> <C>
12.12. Amendment to Section 12..................................................... 63
13. SUCCESSORS AND ASSIGNS; LENDER ASSIGNMENTS
AND PARTICIPATIONS.................................................................. 63
13.1. Assignments by Lenders....................................................... 63
13.1.1. Assignees and Assignment Procedures................................ 63
13.1.2. Terms of Assignment and Acceptance................................. 64
13.1.3. Register........................................................... 65
13.1.4. Acceptance of Assignment and Assumption............................ 65
13.1.5. Federal Reserve Bank............................................... 65
13.1.6. Further Assurances................................................. 65
13.2. Credit Participants.......................................................... 65
13.3. Replacement of Lenders....................................................... 66
14. FOREIGN PERSONS..................................................................... 67
15. REPLACEMENT NOTES................................................................... 68
16. SURVIVAL OF COVENANTS............................................................... 68
17. VENUE; SERVICE OF PROCESS........................................................... 68
18. WAIVER OF JURY TRIAL................................................................ 69
19. GENERAL............................................................................. 69
</TABLE>
-iv-
<PAGE>
EXHIBITS
1 - Effective Rates
2.1.1 - Note
5.1.2 - Amendment No. 3 to the 1994 Credit Agreement
5.1.3 - Form of Amendment to the Amended Note Agreement
5.2.1 - Officer's Certificate
7.7 - Indebtedness
8.1 - Company and its Restricted Subsidiaries
12.1 - Lenders and Revolving Percentage Interests
13.1.1 - Assignment and Acceptance
<PAGE>
CONTINENTAL CABLEVISION, INC.
CREDIT AGREEMENT
This Agreement, dated as of July 2, 1996, is among Continental Cablevision,
Inc., a Delaware corporation, its Restricted Subsidiaries from time to time
party hereto, the Lenders from time to time party hereto, The Toronto-Dominion
Bank, in its capacity as Documentation Agent and as a Managing Agent for the
other Lenders, The First National Bank of Boston, both in its capacity as a
Lender and in its capacity as Administrative Agent and as a Managing Agent for
itself and the other Lenders, and The Bank of New York, both in its capacity as
a Lender and in its capacity as Syndication Agent and as a Managing Agent for
itself and the other Lenders. The parties agree as follows:
1. DEFINITIONS; CERTAIN RULES OF CONSTRUCTION. Except as otherwise explicitly
specified to the contrary or unless the context clearly requires otherwise, (a)
the capitalized term "Section" refers to sections of this Agreement, (b) the
capitalized term "Exhibit" refers to exhibits to this Agreement, (c) references
to a particular Section include all subsections thereof, (d) the word
"including" shall be construed as "including without limitation" and (e)
accounting terms not otherwise defined herein shall have the meaning provided
under generally accepted accounting principles. References to "the date hereof"
shall mean the date first set forth above. Certain capitalized terms are used
in this Agreement and in the other Lender Agreements with the specific meanings
defined below:
1.1. "Administrative Agent" means The First National Bank of Boston in its
--------------------
capacity as administrative agent for the Lenders hereunder, as well as its
successors and assigns in such capacity pursuant to Section 12.6.
1.2. "Affected Lender" is defined in Section 13.3.
---------------
1.3. "Affiliate" means, with respect to any Person, (a) a spouse of such
---------
Person, (b) any relative (by blood, adoption or marriage) of such Person within
the third degree, (c) any director or officer of such Person, (d) any other
Person controlling, controlled by or under direct or indirect common control
with such Person, (e) any other Person directly or indirectly holding 5% or more
of any class of the capital stock or other shares of beneficial interest of such
Person, (f) any other Person of which 5% or more of any class of its capital
stock or other shares of beneficial interest is held directly or indirectly by
such Person, (g) any other Person who constitutes a general partner of such
Person (or a Subsidiary of such Person) and (h) any other Person of whom such
Person constitutes a general partner.
1.4. "Agents" means each of the Managing Agents, such Lenders designated
------
as Agents on the signature pages hereto or any Lenders acting as successor
Agents hereunder from time to time.
1.5. "Amended Note Agreement" is defined in Section 5.1.3.
----------------------
<PAGE>
1.6. "Applicable Rate Reference Period" means, at any time, the most
--------------------------------
recent prior fiscal quarter of the Company for which financial statements are
required to have been furnished to the Lenders in accordance with Section 7.2.1
or, in the case of the fourth quarter of a fiscal year, Section 7.2.2. (For
example, for the fiscal quarter from April 1, 1996 through June 30, 1996, the
Applicable Rate Reference Period will be (a) on and prior to the date upon which
financial statements for the fiscal quarter ended March 31, 1996 are required to
have been furnished to the Lenders in accordance with Section 7.2.1, the fiscal
quarter ended December 31, 1995 and (b) after the date upon which financial
statements for the fiscal quarter ended March 31, 1996 are required to have been
furnished to the Lenders in accordance with Section 7.2.1, the fiscal quarter
ended March 31, 1996.)
1.7. "Asset Sale" means a sale, disposition or exchange of assets by the
----------
Company or any of its Restricted Subsidiaries permitted by Section 7.10.3 or
7.10.4.
1.8. "Assignee" is defined in Section 13.1.1.
--------
1.9. "Assignment and Acceptance" is defined in Section 13.1.1.
-------------------------
1.10. "Banking Day" means a day on which dealings may be effected in
-----------
Eurodollar deposits by first class banks in the inter-bank Eurodollar market in
New York, New York and at each Eurodollar Office of the Administrative Agent and
on which banks may conduct business in Boston, Massachusetts and New York, New
York.
1.11. "Bankruptcy Code" means Title 11 of the United States Code (or any
---------------
successor statute) and the rules and regulations thereunder, all as from time to
time in effect.
1.12. "Bankruptcy Default" means an Event of Default under Section 9.1.9.
------------------
1.13. "Base Rate" means the greater of (a) the rate of interest from time
---------
to time announced by the Administrative Agent at the Boston Office as its "Base
Rate", and (b) with respect to any day designated by the Administrative Agent by
notice to the Company given prior to 12:00 noon (Boston time) on such date, the
sum of (i) 1/2% plus (ii) the Federal Funds Rate; provided, however, that no
---- -------- -------
such designation may be made with respect to more than 12 days in any calendar
year.
1.14. "Basic Eurodollar Rate" as applied to any Eurodollar Interest Period
---------------------
means the quotient (rounded if necessary to the nearest 1/100%) obtained by
dividing (a) the sum of the Basic Reference Eurodollar Rates of the Managing
Agents for such Eurodollar Interest Period by (b) the number of Managing Agents,
all as determined by the Administrative Agent on the basis of the Basic
Reference Eurodollar Rates furnished to it by the Managing Agents. Each
determination by the Administrative Agent of any Basic Eurodollar Rate pursuant
to the foregoing sentence shall, in the absence of manifest error, be
conclusive; provided, however, that
-------- -------
-2-
<PAGE>
at the request of the Company or any Lender the Administrative Agent shall
demonstrate the basis for such determination.
1.15. "Basic Reference Eurodollar Rate" as applied to any Eurodollar
-------------------------------
Interest Period and any Managing Agent means the rate of interest at which
Eurodollar deposits in an amount equal to such Managing Agent's Revolving
Percentage Interest in the portion of the Loans as to which a Eurodollar Pricing
Option has been elected and which have a term corresponding to the Eurodollar
Interest Period in question are offered to such Managing Agent by first-class
banks in the inter-bank Eurodollar market for delivery in immediately available
funds at a Eurodollar Office of such Managing Agent on the first day of such
Eurodollar Interest Period as determined by such Managing Agent at approximately
10:00 a.m. (Boston time) two Banking Days prior to the date upon which the
Eurodollar Interest Period in question is to commence. Each determination by
any Managing Agent of any Basic Reference Eurodollar Rate shall, in the absence
of manifest error, be conclusive; provided, however, that at the request of the
-------- -------
Company or any Lender, such Managing Agent shall demonstrate the basis for such
determination.
1.16. "Boston Office" means the principal banking office of the
-------------
Administrative Agent in Boston, Massachusetts.
1.17. "Capitalized Lease" means any lease which is required to be
-----------------
capitalized on the balance sheet of the lessee in accordance with generally
accepted accounting principles and Statement Nos. 13 and 98 of the Financial
Accounting Standards Board.
1.18. "Closing Date" means each of the Initial Closing Date and each other
------------
date on which any extension of credit is made pursuant to Section 2.
1.19. "Code" means the Internal Revenue Code of 1986, as amended (or any
----
successor statute), and the rules and regulations thereunder, collectively and
as from time to time in effect.
1.20. "Commitment" means, with respect to any Lender, such Lender's
----------
Revolving Percentage Interest in the obligations to extend the credits
contemplated by the Lender Agreements. The initial Commitments are set forth in
Exhibit 12.1.
1.21. "Commitment Fee Rate" means the rate of 1/4% per annum.
-------------------
1.22. "Company" means Continental Cablevision, Inc., a Delaware
-------
corporation, and its successor by merger to the extent permitted by Section
7.11.4.
1.23. "Consolidated Interest Expense" means, for any period, the aggregate
-----------------------------
amount of interest (including cash payments in the nature of interest under
Capitalized Leases, interest rate protection agreements and Redeemable Preferred
Stock) required to be accrued or paid in cash by the Company and its Restricted
Subsidiaries on all Indebtedness, including the Loan, whether such interest was
or is to be reflected as an item of expense or capitalized.
-3-
<PAGE>
1.24. "Consolidated Operating Cash Flow" means, for any period, the total
--------------------------------
of (a) Consolidated Operating Income minus (b) taxes based upon or measured by
-----
net income that are actually paid in cash during such period in respect of the
continuing, ordinary operations of the Company and its Restricted Subsidiaries
(but not in any event including cash taxes paid in respect of extraordinary
gains).
1.25. "Consolidated Operating Income" means, for any period, the operating
-----------------------------
income (or loss) before depreciation, amortization, non-cash regulatory reserves
and non-operating expenses such as non-cash restricted stock purchase program
expenses, other non-cash expenses, interest and income taxes, but including all
operating income (or loss) on account of management fees, of the Company and its
Restricted Subsidiaries for such period, determined in accordance with generally
accepted accounting principles on a consolidated basis, after eliminating all
intercompany items, excluding any extraordinary or nonrecurring items and the
write-up of any asset.
For purposes of calculating Consolidated Operating Income, income (or loss)
of the Company's Unrestricted Subsidiaries will be reflected in Consolidated
Operating Income only to the extent that the Company and its Restricted
Subsidiaries actually receive dividends or similar payments from the Company's
Unrestricted Subsidiaries.
For purposes of calculating Consolidated Operating Income, operating income
(or loss) of the Company and its Restricted Subsidiaries for the most recently
completed fiscal periods shall include the operating income (or loss) of any
Restricted Subsidiary designated or acquired after the commencement of such
fiscal periods (including Operating Assets acquired by the Company or a
Restricted Subsidiary). If Consolidated Operating Income includes the operating
income (or loss) of any Restricted Subsidiary or Operating Assets for any fiscal
period prior to its acquisition by the Company or a Restricted Subsidiary and
if, in the opinion of the Company, the actual financial statements of such newly
acquired Restricted Subsidiary or Operating Assets for such period are
unavailable or inaccurate, then (a) such operating income (or loss) may be
determined from pro forma financial statements of such newly acquired Restricted
Subsidiary or Operating Assets for such period in a form approved in writing by
all of the Managing Agents, and (b) the Company shall furnish to the Lenders
with each quarterly calculation under Section 7.2.1 or 7.2.2 such financial
information relating to such Restricted Subsidiary or Operating Assets for such
prior period as the Managing Agents may reasonably request.
1.26. "Consolidated Total Debt" means, at any date as of which the amount
-----------------------
thereof shall be determined, the total of (a) all Indebtedness of the Company
and its Restricted Subsidiaries on a consolidated basis, including all
guarantees by the Company or any of its Restricted Subsidiaries in respect of
Indebtedness of others, and all obligations of the Company and its Restricted
Subsidiaries, contingent or otherwise, in respect of reimbursement obligations
under letters of credit (calculated in respect of the maximum
outstanding amount of such letters of credit), minus
-----
-4-
<PAGE>
(b) cash and Investments permitted by Section 7.9.1 then owned by the Company
and its Restricted Subsidiaries.
1.27. "Control Group Person" means any Person which is a member of the
--------------------
controlled group or under common control with the Company within the meaning of
sections 414(b) or 414(c) of the Code or section 4001(b)(1) of ERISA.
1.28. "Credit Obligations" means all present and future obligations and
------------------
Indebtedness of the Company or any Guarantor owing to any Lender or the
Administrative Agent under this Agreement or under any other Lender Agreement,
as from time to time amended or modified, including without limitation the
obligation to pay the Loan and the obligation of the Company to pay interest,
commitment fees, Lenders' fees and other indemnities, charges and amounts from
time to time owed hereunder or under any other Lender Agreement.
1.29. "Credit Participant" is defined in Section 13.2.
------------------
1.30. "Default" means an Event of Default or an event or condition which
-------
with the passage of time or giving of notice, or both, would become such an
Event of Default, and in any event shall include the filing against the Company
or any of its Restricted Subsidiaries of an involuntary case under the
Bankruptcy Code.
1.31. "Delinquency Period" is defined in Section 12.3.2.
------------------
1.32. "Delinquent Lender" is defined in Section 12.3.2.
-----------------
1.33. "Delinquent Payment" is defined in Section 12.3.2.
------------------
1.34. "Distribution" means (a) the declaration or payment of any dividend
------------
(other than payments made in capital stock which does not constitute
Indebtedness of the payor) in respect of any shares of capital stock of the
Company or any of its Restricted Subsidiaries, (b) the purchase, redemption or
other retirement of any shares of capital stock of the Company or any of its
Restricted Subsidiaries (other than payments made in capital stock which does
not constitute Indebtedness of the payor), (c) any other payment (other than
payments made in capital stock which does not constitute Indebtedness of the
payor) to the holder of any shares of capital stock of the Company or any of its
Restricted Subsidiaries in respect of such capital stock, and (d) any payment of
principal of or interest on, or redemption or defeasance of, Subordinated Debt.
1.35. "Documentation Agent" means The Toronto-Dominion Bank in its
-------------------
capacity as documentation agent for the Lenders hereunder, as well as its
successors and assigns in such capacity.
1.36. "Effective Rate" means, for any portion of the Loan, the sum of:
--------------
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<PAGE>
(a) the rate for such portion of the Loan shown in Exhibit 1 under
the ratio of (i) the Consolidated Total Debt outstanding on the last day of
the Applicable Rate Reference Period to (ii) four times Consolidated
Operating Income for such Applicable Rate Reference Period; provided,
--------
however, that in the case of any portion of the Loan that is subject to a
-------
Eurodollar Pricing Option having a Eurodollar Interest Period in excess of
six months in duration, the amount in this clause (a) will be the
applicable Eurodollar Rate plus the applicable Weighted Average Long-Term
----
Pricing Option Spread; plus
----
(b) effective on the date of the termination or expiration of the
Merger Agreement, an additional 1/4% per annum at all times when the ratio
of (i) Consolidated Total Debt outstanding on the last day of the
Applicable Rate Reference Period to (ii) four times Consolidated Operating
Income for such Applicable Rate Reference Period is greater than or equal
to 7.5; plus
----
(c) an additional 2% per annum effective on the day the
Administrative Agent notifies the Company that the interest rates hereunder
are increasing as a result of the occurrence and continuance of an Event of
Default under Section 9.1.1 until the earlier of such time as (i) such
Event of Default is no longer continuing or (ii) such Event of Default is
deemed pursuant to Section 9.3 no longer to exist; minus
-----
(d) 1/8% per annum effective on the date the Company notifies the
Administrative Agent that the Company's long term unsecured senior debt has
been rated at least BBB- by S&P or Baa3 by Moody's (or if S&P or Moody's
changes its rating categories, the comparable new rating category) and
ending on the date on which such debt no longer has either such rating;
provided, however that the Effective Rate with respect to each portion of
-------- -------
the Loan with interest based upon the Base Rate shall never be less than
the Base Rate (or, in the event clause (c) above applies, the sum of 2%
plus the Base Rate).
----
1.37. "ERISA" means the federal Employee Retirement Income Security Act of
-----
1974, as amended (or any successor statute), and the rules and regulations
thereunder, collectively and as from time to time in effect.
1.38. "Eurodollar Interest Period" means any period of one, two, three or
--------------------------
six months, or such greater number of months up to 12 months, all commencing on
any Banking Day, which shall be selected as provided in Section 3.2 and in
Section 3.3.1 as the term of a Eurodollar Pricing Option. Subject to Section
3.3.1, (a) the number of days in any month shall be determined by the
Administrative Agent in accordance with the then current banking practice in the
inter-bank Eurodollar market with respect to Eurodollar deposits at any
Eurodollar Office, and (b) if any Eurodollar Interest Period so selected would
otherwise end on a date which is not a Banking Day, such Eurodollar Interest
Period shall instead end on the immediately preceding or succeeding Banking Day
as determined by the Administrative Agent in accordance with the then current
banking practice in the inter-bank Eurodollar
market with respect to Eurodollar deposits at any Eurodollar Office. Each such
determination by the Administrative Agent shall, in the absence of
-6-
<PAGE>
manifest error, be conclusive; provided, however, that at the request of the
-------- -------
Company or any Lender the Administrative Agent shall demonstrate the basis for
such determination.
1.39. "Eurodollar Office" means such non-United States office or offices
-----------------
or international banking facility or facilities of any Managing Agent as such
Managing Agent may from time to time select.
1.40. "Eurodollar Pricing Options" means the options granted pursuant to
--------------------------
Section 3.2 to have the interest on all or any portion of the Loan computed on
the basis of a Eurodollar Rate.
1.41. "Eurodollar Rate" means for any Eurodollar Interest Period the rate,
---------------
rounded if necessary to the nearest 1/100%, obtained by dividing (a) the Basic
Eurodollar Rate for such Eurodollar Interest Period by (b) an amount equal to 1
minus the Eurodollar Reserve Rate; provided, however, that if at any time during
- ----- -------- -------
such Eurodollar Interest Period the Eurodollar Reserve Rate changes, the
Eurodollar Rate for such Eurodollar Interest Period shall automatically be
adjusted to reflect such change, effective as of the date of such change.
1.42. "Eurodollar Reserve Rate" means the stated maximum rate as changed
-----------------------
from time to time (expressed as a decimal) of all reserves (including any basic,
supplemental, marginal or emergency reserve or any reserve asset), if any,
required by any Legal Requirement to be maintained by the Administrative Agent
against "Eurocurrency liabilities" as specified in Regulation D of the Board of
Governors of the Federal Reserve System, or against (a) any other category of
liabilities that includes deposits by reference to which the interest rate on
portions of the Loan subject to Eurodollar Pricing Options is determined, (b)
the principal amount of or interest on any loan hereunder subject to a
Eurodollar Pricing Option, or (c) any other category of extensions of credit, or
other assets, that includes loans by a non-United States office of any Lender to
United States residents.
1.43. "Eurodollars" means deposits of United States Funds in a non-United
-----------
States office or an international banking facility of a Lender.
1.44. "Event of Default" is defined in Section 9.1.
----------------
1.45. "Exchange Act" means the federal Securities Exchange Act of 1934 (or
------------
any successor statute) and the rules and regulations thereunder, all as from
time to time in effect.
1.46. "FCC License" means any cellular telephone, CARS, earth station,
-----------
business radio, microwave or special safety radio service license issued by the
Federal Communications Commission pursuant to the Communications Act of 1934, as
amended.
1.47. "Federal Funds Rate" means for any day, the rate equal to the
------------------
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as such
weighted average is published for such day (or, if such
-7-
<PAGE>
day is not a Banking Day, for the immediately preceding Banking Day) by the
Federal Reserve Bank of New York or, if such rate is not so published for such a
Banking Day, the average of the quoted rates for such Banking Day on such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by the Administrative Agent. Each
determination by the Administrative Agent of the Federal Funds Rate shall, in
the absence of manifest error, be conclusive; provided, however, that at the
-------- -------
request of the Company or any Lender the Administrative Agent shall demonstrate
the basis of such determination.
1.48. "Final Maturity Date" means the date which is 364 days after the
-------------------
date hereof, or, if such date is not a Banking Day, the Banking Day immediately
preceding such date.
1.49. "Financial Officer" of the Company (or other specified Person) means
-----------------
its chairman of the board of directors, vice chairman of the board of directors,
chief executive officer, chief financial officer, chief operating officer,
president, treasurer, assistant treasurer or any of its vice presidents whose
primary responsibility is for its financial affairs, all of whose incumbency and
signatures have been certified to the Administrative Agent by the secretary or
other appropriate attesting officer of the Company (or such specified Person).
1.50. "Franchise" means any franchise, permit, license or other
---------
authorization granted by any governmental unit or authority for the construction
and operation of a cable television system or the reception and transmission of
signals by microwave, including without limitation, any material FCC License.
1.51. "Guarantor" means each Restricted Subsidiary which is or
---------
subsequently becomes party to this Agreement as a Guarantor; provided, however,
-------- -------
that in no event shall the term "Guarantor" include any Restricted Subsidiary
which has been released as a Guarantor in accordance with Section 6.8.
1.52. "Guarantors' Contribution Agreement" is defined in Section 5.1.4.
----------------------------------
1.53. "Hostetter Group" means each of Amos B. Hostetter, Jr., his heirs,
---------------
executors and administrators, trusts for himself or his family and charitable
foundations to which shares of the Company's capital stock, beneficially owned
by any one of the foregoing, have been transferred.
1.54. "Indebtedness" means all obligations, contingent or otherwise, which
------------
in accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities in respect of borrowed money,
notes or similar instruments, Capitalized Leases, the deferred purchase price of
property or Redeemable Preferred Stock, and all guarantees, endorsements and
other contingent obligations in respect of Indebtedness of others.
1.55. "Indentures" means the 1989 Indentures and the 1992 Indentures.
----------
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<PAGE>
1.56. "Initial Closing Date" means July 2, 1996 or such other date prior
--------------------
to July 15, 1996 agreed to by the Company and the Documentation Agent as the
first Closing Date hereunder.
1.57. "Investment" means with respect to any Person (a) any share of
----------
capital stock, evidence of Indebtedness or other security issued by any other
Person, (b) any loan, advance, extension of credit to, or contribution to the
capital of, any other Person, (c) the acquisition of the stock or assets of a
business or (d) any other investment; provided, however, that the term
-------- -------
"Investment" shall not include (i) fixed assets or inventory acquired in the
ordinary course of business and payable in accordance with customary trade
terms, (ii) advances to employees for travel expenses, drawing accounts and
similar expenditures, (iii) stock or other securities acquired in connection
with the satisfaction or enforcement of Indebtedness or claims due or owing to
the Company or any of its Subsidiaries or as security for any such Indebtedness
or claim, (iv) any investment or purchase made through the issuance of common
stock of the payor or (v) demand deposits in banks or trust companies. The
amount of an Investment outstanding at any time shall be determined in
accordance with generally accepted accounting principles; provided, however,
-------- -------
that no Investment shall be increased as a result of an increase in the
undistributed retained earnings of the Person in whom an Investment was made or
decreased as a result of an equity in the losses of any such Person.
1.58. "Investment Subsidiary" means Continental Cablevision Asset
---------------------
Management Corporation, a Massachusetts corporation, and such other Unrestricted
Subsidiaries that the Company hereafter from time to time designates to the
Administrative Agent as Investment Subsidiaries.
1.59. "Legal Requirement" means any requirement imposed upon any Lender by
-----------------
any law of any applicable jurisdiction or by any regulation, order,
interpretation, ruling or official directive of the Board of Governors of the
Federal Reserve System or any other central bank or any other board or
governmental or administrative agency of any applicable jurisdiction or of any
political subdivision of any such jurisdiction. Any requirement imposed by any
such regulation, order, ruling or official directive not having the force of law
shall be deemed to be a Legal Requirement if any Lender reasonably believes that
compliance therewith is in the best interest of such Lender, and if the Company
provides its written consent with respect thereto, which consent shall not be
unreasonably withheld.
1.60. "Lender" means each of the Persons listed as lenders on Exhibit
------
12.1, as from time to time in effect, including each of The First National Bank
of Boston, The Bank of New York, Toronto-Dominion (New York) Inc. and the other
Agents in their capacities as Lenders, and such other Persons who may from time
to time own a Revolving Percentage Interest in the Credit Obligations, but the
term "Lender" shall not include any Person holding a participation in the Credit
Obligations under Section 13.2.
-9-
<PAGE>
1.61. "Lender Agreement" means each of the following documents:
----------------
(a) this Agreement and the Notes;
(b) all financial statements, reports, notices, assignments or
certificates delivered to the Administrative Agent or the Lenders by the
Company or any Guarantor in connection herewith or therewith; and
(c) any other present or future agreement or instrument from time
to time entered into among the Company, any Guarantor or any other Person
guaranteeing or providing collateral for the Credit Obligations, on the one
hand, and the Administrative Agent (on behalf of all of the Lenders) or all
of the Lenders, on the other hand, relating to, amending or modifying this
Agreement or any other Lender Agreement referred to above or which is
stated to be a Lender Agreement, each as from time to time in effect.
1.62. "Loan" is defined in Section 2.1.1.
----
1.63. "Loan Accounts" is defined in Section 2.1.1.
-------------
1.64. "Long-Term Pricing Option Spread" means the interest increment,
-------------------------------
expressed as a decimal, over the applicable Eurodollar Rate of which each Lender
advises the Administrative Agent pursuant to Section 3.2.1 with respect to a
proposed Eurodollar Interest Period exceeding six months in duration.
1.65. "Management Group" means, collectively, the Hostetter Group and the
----------------
other officers of the Company and its Subsidiaries.
1.66. "Managing Agents" means The First National Bank of Boston, The Bank
---------------
of New York, The Toronto-Dominion Bank or any Lenders acting as successor
Managing Agents hereunder from time to time.
1.67. "Margin Stock" means "margin stock" within the meaning of
------------
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System, or any regulations, interpretations or rulings thereunder, as from time
to time in effect.
1.68. "Maximum Amount of Credit" is defined in Section 2.2.
------------------------
1.69. "Merger Agreement" means the Agreement and Plan of Merger dated
----------------
February 27, 1996 between U S WEST, Inc. and the Company, as furnished to the
Managing Agents and as the same may from time to time be amended, modified,
supplemented or restated so long as any material amendments, modifications,
supplements or restatements are furnished promptly after effectiveness thereof
to the Managing Agents.
-10-
<PAGE>
1.70. "Moody's" means Moody's Investors Service, Inc.
-------
1.71. "1989 Indentures" means the Indentures initially between the Company
---------------
and National Westminster Bank USA, as trustee, dated as of November 1, 1989,
relating to the 1989 Subordinated Debt, as previously furnished to the
Administrative Agent.
1.72. "1989 Subordinated Debt" means the Company's previously outstanding
----------------------
Senior Subordinated Debentures and Senior Subordinated Floating Rate Debentures,
each of which were due 2004, issued in the aggregate principal amounts of
$350,000,000 and $100,000,000, respectively, in accordance with the 1989
Indentures.
1.73. "1992 Indentures" means the indentures initially between the Company
---------------
and Morgan Guaranty Trust Company of New York, as trustee, relating to the 1992
Subordinated Debt, as previously furnished to the Lenders.
1.74. "1992 Preferred Stock" means the Series A Participating Convertible
--------------------
Preferred Stock, $.01 par value per share, of the Company.
1.75. "1992 Subordinated Debt" means the Senior Subordinated Notes due
----------------------
2002 and the Senior Subordinated Debentures due 2007 issued by the Company in
accordance with the 1992 Indentures.
1.76. "1994 Credit Agreement" means the credit agreement dated as of
---------------------
October 1, 1994, as amended and from time to time in effect, among the Company,
certain of its Subsidiaries from time to time party thereto, The First National
Bank of Boston and The Bank of New York and the other lenders party thereto.
1.77. "Nonperforming Lender" is defined in Section 12.3.2.
--------------------
1.78. "Note" is defined in Section 2.1.1.
----
1.79. "Note Agreement" means the Amended and Restated Note Agreement dated
--------------
October 17, 1994, as amended and in effect from time to time, between the
Company and The Prudential Insurance Company of America.
1.80. "Operating Assets" means (a) a group of tangible and intangible
----------------
assets used by a Person to provide cable television or telecommunications
services or to conduct any related activities, or (b) all of the outstanding
capital stock of, or other equity interests in, a Person engaged in the
provision of cable television or telecommunications services or conducting any
related activities; provided, however, that the assets, capital stock or other
-------- -------
equity interests of a Person acquired by the Company or a Restricted Subsidiary
shall constitute Operating Assets only to the extent such assets are held by, or
such Person is designated as, a Restricted Subsidiary after consummation of such
acquisition.
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<PAGE>
1.81. "Payment Date" means the last Banking Day of each March, June,
------------
September and December of each year.
1.82. "Performing Lender" is defined in Section 12.3.2.
-----------------
1.83. "Person" means a corporation, association, partnership, limited
------
liability company, limited liability partnership, joint venture, company, trust,
organization, business, individual or government or any governmental agency or
political subdivision thereof.
1.84. "PBGC" means the Pension Benefit Guaranty Corporation or any
----
successor entity.
1.85. "Plan" means any pension plan subject to Title IV of ERISA
----
established or maintained, or to which contributions are made, by the Company or
any of its Restricted Subsidiaries or any Control Group Person.
1.86. "Pooled Percentage Interest" means, for each Lender or each lender
--------------------------
under the 1994 Credit Agreement, as the case may be, (a) the aggregate amount of
such lender's Commitment to make the Loan under this Agreement and its
commitment to extend credit under the 1994 Credit Agreement divided by (b) the
----------
sum of the Maximum Amount of Credit under this Agreement plus the Stated Maximum
----
under, and as defined in, the 1994 Credit Agreement.
1.87. "Preferred Stock Put Net Proceeds" means the cash proceeds received
--------------------------------
by the Company, net of all reasonable expenses incurred by it, in connection
with the exercise by the Company of its right to sell 5,650,000 shares of its
Series B Convertible Preferred Stock to U S WEST, Inc. pursuant to the Merger
Agreement.
1.88. "Preferred Stock Put Repayment Amount" means the product of (a) the
------------------------------------
Preferred Stock Put Net Proceeds multiplied by (b) the quotient of (i) the
---------- --
aggregate amount of the Commitments of the Lenders under this Agreement divided
-------
by (ii) the sum of (A) the aggregate amount of the Commitments of the Lenders
- --
under this Agreement plus (B) the aggregate amount of the commitments of the
----
lenders to extend credit under the 1994 Credit Agreement.
1.89. "Pro Forma Debt Service" means, for any period, the sum of (a) Pro
----------------------
Forma Interest Payments plus (b) the aggregate amount of principal (including
----
payments in the nature of principal under Capitalized Leases and Redeemable
Preferred Stock) required to be paid in cash by the Company and its Restricted
Subsidiaries on all Indebtedness minus (c) to the extent included in clause (b)
-----
above, the aggregate amount of the Loan required to paid by the Company at the
Final Maturity Date.
1.90. "Pro Forma Interest Payments" means, for any period, the sum of (a)
---------------------------
the aggregate amount of interest (including payments in the nature of interest
under Capitalized Leases and interest rate protection agreements) required to be
accrued or paid in cash by the Company and its
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<PAGE>
Restricted Subsidiaries during the period in question on all Indebtedness,
including the Loan, whether such interest was or is to be reflected as an item
of expense or capitalized, and (b) the aggregate amount of dividends on capital
stock of the Company required to be paid in cash by the Company during the
period in question. For purposes of computing projected interest for any period
under the preceding sentence, (i) the amount of Indebtedness or capital stock
outstanding on the first day of such period shall be assumed to remain
outstanding during the entire period except to the extent that such Indebtedness
or capital stock is subject to a mandatory prepayment of principal or a
mandatory redemption of capital stock, as the case may be, during such period,
(ii) if the Company and the Restricted Subsidiaries have committed to incur
additional Indebtedness or issue additional capital stock during such period,
interest or cash dividends on such additional Indebtedness or capital stock, as
the case may be, shall be taken into account from and after the date on which
such Person is committed to incur it, (iii) where interest varies with or
depends on a floating rate, the rate in effect on the first day of such period
will be assumed to be in effect and remain constant during the entire period for
which interest is being computed, (iv) where interest is fixed for a portion of
such period, the floating rate that would otherwise have been applicable on the
first day of such period will be assumed to be in effect and remain constant
during the balance of such period after the fixed rate terminates, and (v) where
interest is subject to an interest rate protection agreement, the effective
interest cost to the Company and its Restricted Subsidiaries shall be deemed to
be the interest rate set forth in such interest rate protection agreement.
1.91. "Pro Rata Event" is defined in Section 12.7.1.
--------------
1.92. "Qualifying Reinvestment" means, with respect to any Asset Sale, the
-----------------------
acquisition by the Company or a Restricted Subsidiary of Operating Assets which
satisfies one of the following conditions: (a) such acquisition occurs within
90 days prior to such Asset Sale or (b)(i) within 180 days after such Asset Sale
the Company or a Restricted Subsidiary has executed and delivered a binding
agreement pursuant to which the Company or a Restricted Subsidiary is committed
to acquire Operating Assets and (ii) within 180 days after the execution and
delivery of such agreement, the Company or a Restricted Subsidiary actually
acquires such Operating Assets.
1.93. "Redeemable Preferred Stock" means preferred stock with redemption
--------------------------
obligations that (a) are either (i) fixed or (ii) at the option of the holder
and (b) may be satisfied only by the payment of cash, Indebtedness or property
other than capital stock of the issuer (unless such capital stock constitutes
Redeemable Preferred Stock). By way of illustration, the 1992 Preferred Stock
does not constitute Redeemable Preferred Stock and, in the event it is issued
pursuant to the Merger Agreement in substantially the form of Exhibit E to the
Merger Agreement, the Company's Series B Convertible Preferred Stock will not
constitute Redeemable Preferred Stock.
1.94. "Redeployment Rate" means the quotient (rounded if necessary to the
-----------------
nearest 1/100%) obtained by dividing (a) the sum of the Reference Redeployment
Rates of the Managing Agents by (b) the number of Managing Agents, all as
determined by the Administrative Agent on
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<PAGE>
the basis of the Reference Redeployment Rates furnished to it by the Managing
Agents. Each determination by the Administrative Agent of the Redeployment Rate
pursuant to the foregoing sentence shall, in the absence of manifest error, be
conclusive; provided, however, that at the request of the Company or any Lender
-------- -------
the Administrative Agent shall demonstrate the basis for such determination.
1.95. "Reference Redeployment Rates" as applied to any Managing Agent
----------------------------
means the rate of interest at which Eurodollar deposits on a date approximating
the date of prepayment or termination of a Eurodollar Pricing Option, in an
amount equal to (or approximating) such Managing Agent's Revolving Percentage
Interest in the portion of the Loan subject to such Eurodollar Pricing Option
and having a maturity date approximating the last Banking Day of such Eurodollar
Interest Period, are offered by such Managing Agent in the inter-bank Eurodollar
market for delivery in immediately available funds at the Eurodollar Office (or
a similar rate if such rate is for any reason not offered by such Managing
Agent). Each determination by a Managing Agent of any Reference Redeployment
Rate shall, in the absence of manifest error, be conclusive; provided, however,
-------- -------
that at the request of the Company or any Lender, such Managing Agent shall
demonstrate the basis for such determination.
1.96. "Register" is defined in Section 13.1.3.
--------
1.97. "Replacement Lender" is defined in Section 13.3.
------------------
1.98. "Restricted Subsidiary" means (a) any Subsidiary designated as a
---------------------
Restricted Subsidiary in Exhibit 8.1 as in effect on the Initial Closing Date,
and (b) any Subsidiary hereafter designated by a Financial Officer of the
Company certifying that such Subsidiary is a Person (i) 80% of (A) the voting
stock or (B) the equity, partnership or other beneficial interests of which is
owned by the Company or its Restricted Subsidiaries, (ii) which is organized
under the laws of the United States of America or any state thereof or the
District of Columbia and has substantially all of its properties and assets
located within the United States of America, (iii) which conducts its business
so as to derive its revenues from the cable television or telecommunications
businesses and related activities, and (iv) immediately after such Person
becomes a Restricted Subsidiary, no Default exists; provided, however, that in
-------- -------
no event shall the term "Restricted Subsidiary" include a Subsidiary released in
accordance with Section 6.8. No Restricted Subsidiary may subsequently become
an Unrestricted Subsidiary, except in accordance with Section 6.8.
1.99. "Revolving Percentage Interest" means, for each Lender, its
-----------------------------
percentage interest in the Commitments to make the Loan as set forth in Exhibit
12.1 as from time to time in effect; provided, however, that after the
-------- -------
occurrence of a Pro Rata Event and until such Pro Rata Event has been waived
pursuant to Section 12.11, the Revolving Percentage Interests shall be
calculated as set forth in Section 12.7.1.
1.100. "S&P" means Standard & Poor's Ratings Group, a division of McGraw-
---
Hill, Inc.
-14-
<PAGE>
1.101. "Senior Subordinated Debt" means each of the 1989 Subordinated Debt
------------------------
and the 1992 Subordinated Debt.
1.102. "Subordinated Debt" means (a) the Senior Subordinated Debt and (b)
-----------------
Indebtedness (including Redeemable Preferred Stock that constitutes
Indebtedness) subordinated to the Credit Obligations and permitted by Section
7.7.7 or 7.7.9.
1.103. "Subsidiary" means any Person of which the Company (or other
----------
specified parent) shall at the time, directly or indirectly through one or more
of its Subsidiaries, own at least a majority of (a) the outstanding voting stock
or (b) the equity, partnership or other beneficial interests.
1.104. "Syndication Agent" means The Bank of New York in its capacity as
-----------------
syndication agent for the Lenders hereunder, as well as its successors and
assigns in such capacity.
1.105. "Tax" means any tax, levy, impost, duty, deduction, withholding or
---
other charges of whatever nature at any time required by any Legal Requirement
having the force of law (a) to be paid by any Lender or (b) to be withheld or
deducted from any payment otherwise required hereby to be made by the Company to
any Lender, other than taxes imposed upon or measured by the net income of such
Lender.
1.106. "United States Funds" means such coin or currency of the United
-------------------
States of America as at the time shall be legal tender therein for the payment
of public and private debts.
1.107. "Unrestricted Subsidiary" means any Subsidiary of the Company (or
-----------------------
other specified Person) other than a Restricted Subsidiary.
1.108. "Weighted Average Long-Term Pricing Option Spread" means with
------------------------------------------------
respect to any Eurodollar Pricing Option having a Eurodollar Interest Period in
excess of six months in duration, the average of the Long-Term Pricing Option
Spread of which each Lender shall have advised the Administrative Agent with
respect to such Eurodollar Pricing Option, weighted according to the Lenders'
respective Revolving Percentage Interests in the portion of the Loan subject to
such Eurodollar Pricing Option.
2. THE CREDITS.
2.1. Loan. Subject to all the terms and conditions hereof, and so long as
----
no Default exists, on such Banking Days prior to the Final Maturity Date as the
Company may from time to time request by not fewer than one Banking Day prior
telephone notice to The First National Bank of Boston in its capacity as
administrative agent hereunder (in such capacity, the "Administrative Agent"),
which telephone notice shall be promptly confirmed in writing, or such longer
notice period required by Section 3.2.1 if a Eurodollar Pricing Option is
requested, the Lenders will severally lend to the Company, in accordance with
their respective Revolving
-15-
<PAGE>
Percentage Interests, such amounts (not less than $5,000,000 in the aggregate
and in integral multiples of $100,000, or in such greater amounts as required by
Section 3.2.1 if a Eurodollar Pricing Option is requested) as the Company shall
have so requested, by causing the Administrative Agent to debit the amount of
such loans to the Loan Accounts and to credit the amount thereof to the general
account of the Company with the Administrative Agent at the Boston Office;
provided, however, that in no event shall the combined aggregate principal
- -------- -------
amount of loans at any time outstanding under this Section 2.1 exceed the
Maximum Amount of Credit. In connection with each request for a loan under this
Section 2.1, the Company shall furnish to the Administrative Agent by telecopy
no later than 4:00 p.m. on the applicable Closing Date (with a duplicate
furnished promptly by mail) a certificate dated such Closing Date in
substantially the form of Exhibit 5.2.1 and signed by the Company, together with
any other documents required by Section 5.
2.1.1. Loan Accounts. The Administrative Agent shall establish on
-------------
its books separate loan accounts on behalf of each Lender (collectively,
the "Loan Accounts"), each of which shall reflect the loans made by such
Lender to the Company pursuant to this Section 2.1, and all of which shall
be administered by the Administrative Agent as follows: (a) the
Administrative Agent shall debit to each Loan Account, and each such Loan
Account shall evidence, the principal amount of loans from time to time
made by each Lender to the Company pursuant to this Section 2.1, and (b)
the Administrative Agent shall credit each Loan Account with all payments
made on account of the principal amount of Indebtedness evidenced by such
Loan Account. All such payments received by the Administrative Agent shall
be credited to the several Loan Accounts in accordance with the respective
principal amounts thereof. The aggregate principal amount of Indebtedness
from time to time evidenced by the Loan Accounts is referred to as the
"Loan". The Company's obligations to pay each Lender's Revolving Percentage
Interest in the Loan shall be evidenced by a separate note of the Company
substantially in the form of Exhibit 2.1.1 (each a "Note"), payable to each
Lender in a maximum principal amount equal to such Lender's Revolving
Percentage Interest in the Loan.
2.1.2. Maturity, etc. The Loan shall bear interest as provided in
-------------
Section 3.1, shall be payable and prepayable as provided in Section 4 and
shall have a stated maturity of the Final Maturity Date.
2.2. Maximum Amount of Credit. The combined aggregate principal amount of
------------------------
all loans at any one time outstanding under Section 2.1 shall not at any time
exceed an amount equal to the least of (a) $1,000,000,000; (b) the amount (being
an integral multiple of $5,000,000 unless the Company terminates the entire
Maximum Amount of Credit) irrevocably specified from time to time by at least
three Banking Days prior written notice from the Company to the Administrative
Agent or (c) the excess of $1,000,000,000 over the Preferred Stock Put Repayment
Amount (the amount determined pursuant to this Section 2.2 is referred to
herein as the "Maximum Amount of Credit").
-16-
<PAGE>
2.3. Application of Proceeds; Specifically Prohibited Applications. The
-------------------------------------------------------------
Company covenants that the proceeds of the loans made pursuant to this Agreement
will be applied only to lawful corporate purposes of the Company. In addition,
the Company will not directly or indirectly apply any part of the proceeds of
any loan made pursuant to this Agreement to the purchasing or carrying of any
Margin Stock; provided, however, that the Company may apply proceeds of such
-------- -------
loans to make Investments in any Investment Subsidiary, in accordance with
Section 7.9.5, to enable the Investment Subsidiaries to purchase or carry Margin
Stock.
2.4. Nature of Obligations of Lenders to Make Loans. The Lenders'
----------------------------------------------
obligations under this Agreement to extend the Loan are several and are not
joint or joint and several. If on the Initial Closing Date or any Closing Date,
one or more Lenders holding more than 50% of the Revolving Percentage Interests
shall fail to perform such obligations, the other Lenders not so failing shall
be relieved of their obligations to make any such loan. In the case of any
other such failure to perform by any Lender, the aggregate amount of the
commitment to make the loans provided for in this Section 2 shall be reduced by
the amount of the commitment hereunder of the Lenders so failing to perform, and
the Revolving Percentage Interests of each other Lender shall be appropriately
adjusted, but such reduction and adjustment shall not relieve such Lenders from
any of their obligations to make such loans. The other Lenders not so failing
may, if they so desire, assume in such proportions as they may agree upon among
themselves the obligations of any Lender who fails to perform any such
obligations.
3. INTEREST; EURODOLLAR PRICING OPTIONS; FEES; ETC.
3.1. Interest on Loan. The Loan shall accrue and bear interest at a rate
----------------
per annum which shall at all times equal the Effective Rate. Prior to any
stated or accelerated maturity of the Loan, the Company will, on each Payment
Date commencing on September 30, 1996, pay the accrued and unpaid interest on
the Indebtedness evidenced by the Loan Accounts which was not subject to a
Eurodollar Pricing Option. On the last day of each Eurodollar Interest Period
or on any earlier termination of any Eurodollar Pricing Option, the Company will
pay the accrued and unpaid interest on the portion of the Loan which was subject
to the Eurodollar Pricing Option which expired or terminated on such date;
provided, however, that if any Eurodollar Interest Period is longer than three
- -------- -------
months, the Company will also pay on each Payment Date in such Eurodollar
Interest Period the amount of accrued and unpaid interest on the portion of the
Loan subject to the Eurodollar Pricing Option having such Eurodollar Interest
Period. On any stated or accelerated maturity of the Loan, all accrued and
unpaid interest thereon shall be immediately due and payable, including without
limitation any accrued and unpaid interest on any portion thereof which is
subject to a Eurodollar Pricing Option. All payments of interest under this
Section 3.1 in respect of the Loan shall be made by the Company to the
Administrative Agent for the account of the Lenders in accordance with their
respective Revolving Percentage Interests; provided, however, that payments of
-------- -------
interest on portions of the Loan that are subject to a Eurodollar Pricing Option
having a Eurodollar Interest Period in excess of six months in duration shall be
distributed to each Lender in accordance with the Long-Term Pricing Option
Spread quoted by such Lender with respect to such Eurodollar Pricing Option
under Section 3.2.2.
-17-
<PAGE>
3.1.1. Computations of Interest. The Effective Rate with respect to
------------------------
the portions of the Loan for which no Eurodollar Pricing Option is at the
time in effect shall be calculated on a daily basis and on the basis of a
year of 365 or 366 days, whichever is applicable. Except as provided in the
preceding sentence and in Section 3.4, calculations of amounts of interest
and of amounts expressed as interest for all purposes of this Agreement
shall be made on a daily basis and on the basis of a 360-day year.
3.2. Eurodollar Pricing Options.
--------------------------
3.2.1. Election of Eurodollar Pricing Options. Subject to all the
--------------------------------------
terms and conditions hereof and so long as there exists no Default on the
date which is three Banking Days prior to the commencement of the
Eurodollar Interest Period selected in such notice, the Company may, by
notice to the Administrative Agent received not less than three Banking
Days prior to the commencement of the Eurodollar Interest Period selected
in such notice, elect to have all or such portion of the Loan, as the
Company may specify in such notice accrue and bear daily interest during
the Eurodollar Interest Period so selected at a per annum rate equal to the
Effective Rate computed on the basis of the Eurodollar Rate for such
Eurodollar Interest Period; provided, however, that:
-------- -------
(a) no such election shall become effective if, prior to the
commencement of such Eurodollar Interest Period:
(i) the electing or granting of such Eurodollar Pricing Option
would violate a Legal Requirement;
(ii) any Managing Agent determines that Eurodollar deposits in
an amount equal to the portion of the Loan as to which such Eurodollar
Pricing Option has been elected and which have a term corresponding to
the proposed Eurodollar Interest Period are not readily available in
the inter-bank Eurodollar market for delivery at any Eurodollar Office
or that by reason of circumstances affecting such market adequate and
reasonable methods do not exist for ascertaining the interest rate
applicable to such deposits for the proposed Eurodollar Interest
Period;
(iii) in the case of an election of a Eurodollar Interest Period
exceeding six months in duration, the Administrative Agent is advised
by any Lender that Eurodollar deposits in an amount equal to such
Lender's Revolving Percentage Interest in the portion of the Loan as
to which such Eurodollar Pricing Option has been elected and which
have a term corresponding to the proposed Eurodollar Interest Period
are not readily available in the inter-bank Eurodollar market for
delivery at any non-United States office or international banking
facility of such Lender or of a correspondent bank with which such
Lender has an arrangement for the funding of Eurodollar loans; or
-18-
<PAGE>
(iv) in the case of an election of a Eurodollar Interest Period
exceeding six months in duration, any Lender shall not have advised
the Administrative Agent of the applicable Long-Term Pricing Option
Spread of such Lender pursuant to Section 3.2.2;
(b) any such election made with respect to any portion of the Loan
shall be in an amount not less than $10,000,000 and in increments of
$1,000,000; and
(c) no such election will be made if it would result in there being
more than 25 Eurodollar Pricing Options in the aggregate outstanding at any
one time.
Each notice of election of a Eurodollar Pricing Option shall be
irrevocable, except that the Company may specify in such notice a maximum
Eurodollar Rate or, in the case of a proposed Eurodollar Interest Period
exceeding six months in duration, a maximum combined Eurodollar Rate and
Weighted Average Long-Term Pricing Option Spread which it will accept for
the Eurodollar Interest Period in question, and the Eurodollar Interest
Period elected in such notice shall not become effective if the applicable
Eurodollar Rate (or Eurodollar Rate plus Weighted Average Long-Term Pricing
----
Option Spread, if applicable) exceeds such specified maximum.
3.2.2. Notices Relating to Eurodollar Pricing Options. The
----------------------------------------------
Administrative Agent will promptly inform each Lender of each notice from
the Company received by the Administrative Agent pursuant to Section 3.2.1
and the Eurodollar Interest Period and any maximum Eurodollar Rate (or
Eurodollar Rate plus Weighted Average Long-Term Pricing Option Spread, if
----
applicable) specified by the Company in such notice. If the proposed
Eurodollar Interest Period exceeds six months in duration, each Lender
willing to give effect to such proposed Eurodollar Pricing Option exceeding
six months in duration shall advise the Administrative Agent not later than
two Banking Days prior to the commencement of such proposed Eurodollar
Interest Period by telephone (promptly confirmed in writing) of the Long-
Term Pricing Option Spread such Lender would charge with respect to the
proposed Eurodollar Pricing Option. Upon determination by the
Administrative Agent of the Eurodollar Rate for any Eurodollar Interest
Period selected by the Company, the Administrative Agent will promptly
inform each Lender of the Eurodollar Rate so determined or, if applicable,
the reason why the Company's election will not become effective; provided,
--------
however, that if the Company's election will not become effective because
--------
the Eurodollar Rate determined by the Administrative Agent exceeds the
maximum Eurodollar Rate specified by the Company with respect to a proposed
Eurodollar Pricing Option, the Administrative Agent shall inform each
Lender by telephone on a reasonable efforts basis, telex or telecopy no
later than 11:00 a.m. (Boston time) on such date of determination that the
Company's election will not become effective.
-19-
<PAGE>
3.3. Additional Provisions Concerning Eurodollar Pricing Options.
-----------------------------------------------------------
3.3.1. Selection of Eurodollar Interest Periods. Eurodollar
----------------------------------------
Interest Periods shall be selected so that no Eurodollar Interest Period
shall expire later than the Final Maturity Date./
3.3.2. Additional Interest Relating to Eurodollar Pricing Options.
----------------------------------------------------------
If any portion of the Loan which is subject to a Eurodollar Pricing Option
is repaid or any Eurodollar Pricing Option is terminated on a date which is
prior to the last Banking Day of the Eurodollar Interest Period applicable
to such Eurodollar Pricing Option for any reason (other than (a) a Legal
Requirement not having the force of law or (b) the payment in full of the
Credit Obligations as a result of the failure of any Lender to perform its
obligations hereunder), the Company will pay to the Administrative Agent
for the account of each Lender in accordance with its interest therein, for
the period commencing on the date of such repayment or termination and
ending on such last Banking Day, an amount equal to daily interest on the
principal amount of its portion of the Loan so repaid or as to which a
Eurodollar Pricing Option was so terminated at a per annum rate equal to
the difference (if positive) of (i) the Basic Eurodollar Rate applicable to
such Eurodollar Pricing Option minus (ii) the Redeployment Rate.
-----
Amounts of interest due under this Section 3.3.2 shall be payable in
arrears on each Payment Date and on the last Banking Day of the Eurodollar
Interest Period applicable to the Eurodollar Pricing Option that is
terminated, notwithstanding the prior payment in full of the Credit
Obligations and the prior termination of this Agreement. The determination
by the Administrative Agent of amounts of additional interest payable
hereunder shall, in the absence of manifest error, be conclusive; provided,
--------
however, that at the request of the Company or any Lender the
-------
Administrative Agent shall demonstrate the basis for such determination or
provide an explanation, reasonably satisfactory to the Company or such
Lender, why such determination may not be demonstrated.
For purposes of this Section 3.3.2, if any portion of the Loan which
was to have been subject to a Eurodollar Pricing Option is not outstanding
on the first day of the Eurodollar Interest Period applicable to such
Eurodollar Pricing Option other than by reason of a Lender failing to
perform its obligations hereunder, the Company shall be deemed to have
terminated such Eurodollar Pricing Option with respect to such portion of
the Loan.
3.3.3. Change in Applicable Laws, Regulations, etc. If any Legal
-------------------------------------------
Requirement shall restrict any Lender from maintaining through the purchase
or holding of Eurodollar deposits any portion of the Loan subject to a
Eurodollar Pricing Option or otherwise from giving effect to its
obligations as contemplated hereby, (a) the Administrative Agent may by
notice thereof to the Company terminate all of the relevant portions of
such Eurodollar Pricing Options as to which such Lender actually shall have
funded its Revolving
-20-
<PAGE>
Percentage Interest through the purchase of Eurodollar deposits (without
giving effect for the purposes of this Section 3.3.3 to the second sentence
of Section 3.3.4), (b) the portion of each then outstanding loan subject to
such terminated Eurodollar Pricing Options shall immediately bear interest
thereafter at the Effective Rate computed on the basis of the Base Rate and
(c) if such Legal Requirement shall have the force of law and shall have
made it unlawful for such Lender so to fund such portion of the Loan or
otherwise to give effect to its obligations as contemplated hereby, the
Company shall indemnify such Lender as provided in Section 3.3.2.
3.3.4. Funding Procedure. The Lenders have indicated that, if the
-----------------
Company elects a Eurodollar Pricing Option, one or more Lenders may wish to
purchase Eurodollar deposits in the inter-bank Eurodollar market to fund
their respective Revolving Percentage Interests in such portion of the Loan
subject to such Eurodollar Pricing Option; provided, however, that each
-------- -------
Lender may fund all or any portion of its Revolving Percentage Interest in
any portion of the Loan which is subject to a Eurodollar Pricing Option in
any manner it may choose. The provisions of this Agreement relating to the
funding and pricing of such Indebtedness are included only for the purpose
of conducting operations hereunder, and it is therefore understood that,
regardless of the manner selected by any Lender to fund any such
Indebtedness, all operations hereunder, including without limitation, the
determination of the interest rate applicable to any such Indebtedness and
the amounts payable under Sections 3.3.2 or 3.6 (but excluding operations
under Section 3.3.3), shall be conducted as if all the Lenders had actually
funded their respective Revolving Percentage Interests in all such
Indebtedness through the purchase of deposits in like amount having terms
coterminous with the applicable Eurodollar Interest Periods relating
thereto and through the transfer of such deposits from the applicable
Eurodollar Office to one of their offices in the United States. It shall be
the responsibility of each Lender to inquire of the Administrative Agent
whether or not a Eurodollar Pricing Option which has been elected by the
Company will become effective prior to purchasing deposits in order to fund
loans under this Agreement. Any Lender may specify through which office
such Lender shall be funding or booking its Revolving Percentage Interest
in the portion of the Loan subject to Eurodollar Pricing Options by
designating such office in Exhibit 12.1 hereto or otherwise from time to
time by notice to the Company and the Administrative Agent.
3.4. Commitment Fees on Loan. In consideration of the Lenders'
-----------------------
commitments to extend the Loan, for the period on and after the date hereof
during which such commitments are outstanding, the Company shall pay the
Administrative Agent for the Lenders' accounts on each Payment Date commencing
on September 30, 1996 and ending on the Final Maturity Date and on the date of
any earlier termination of this Agreement, an amount equal to daily interest,
computed on the basis of a year of 365 or 366 days, whichever is applicable, for
the immediately preceding calendar quarter or portion thereof ending on such
date, as the case may be, at the Commitment Fee Rate on the amount, if any, by
which (a) the average daily Maximum Amount of Credit, as from time to time in
effect during such quarter or portion thereof exceeded (b) the average daily
-21-
<PAGE>
Loan during such quarter or portion thereof. The Administrative Agent shall
promptly credit in immediately available funds to each Lender in proportion to
its Revolving Percentage Interest its share of all payments made pursuant to
this Section 3.4.
3.5. Capital Adequacy.
----------------
(a) If after the date hereof any Lender shall have determined that
compliance with any applicable law, governmental rule, regulation or order
regarding capital adequacy of banks or bank holding companies, or any
change therein (including without limitation, any change according to a
prescribed schedule of increasing requirements, whether or not in effect or
known on the date hereof), or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender with any guideline, request or
directive regarding capital adequacy (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful) of
any such authority, central bank or comparable agency, has or would have
the effect of reducing the rate of return on such Lender's capital with
respect to, or as a consequence of, (i) its unfunded commitments to extend
credit hereunder or (ii) loans made hereunder on the basis of Eurodollar
Pricing Options (but not loans the interest on which is computed with
reference to the Base Rate) to a level below that which such Lender could
have achieved but for such change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy immediately before
such change or compliance and assuming that its capital was fully utilized
prior to such change or compliance) by an amount deemed by such Lender to
be material, then, within 30 days after demand, the Company shall pay to
the Administrative Agent for the account of such Lender as from time to
time specified by such Lender such additional amounts as shall be
sufficient to compensate such Lender for such reduced return relating to
its commitments to make such loans hereunder, together with interest on
each such amount from the date demanded until payment in full thereof at
the Effective Rate based upon the Base Rate. A certificate of an officer
of such Lender setting forth the amount to be paid to it hereunder shall,
in the absence of manifest error, be conclusive; provided, however, that at
-------- -------
the request of the Company, such Lender shall demonstrate the basis for
such determination. Each Lender agrees that if, after the payment by the
Company of any such additional amount for the account of such Lender, any
part thereof is subsequently recovered by such Lender, such Lender shall
promptly reimburse the Company to the extent of the amount so recovered. A
certificate of an officer of such Lender setting forth the amount of such
recovery and the basis therefor shall, in the absence of manifest error, be
conclusive; provided, however, that at the request of the Company, such
-------- -------
Lender shall demonstrate the basis for such calculation or provide an
explanation, reasonably satisfactory to the Company, why such calculation
may not be demonstrated.
(b) The Administrative Agent may include in the charges to the
account of the Company for interest under this Agreement amounts owed under
this Section 3.5 as a
-22-
<PAGE>
result of events affecting capital adequacy to the extent that such events
are generally applicable, and to apply uniformly, to the Lenders. The
payment by the Company of such amounts shall fulfill its obligations under
this Section 3.5 with respect to the amounts so charged and paid. Each
Lender's determination of the allocated amount of such costs among the
Company and other customers which have arrangements with such Lender
similar to the credit provided hereunder, if done in good faith and if such
allocation is made on an equitable basis, shall, in the absence of manifest
error, be conclusive; provided, however, that at the request of the
-------- -------
Company, the Lender shall demonstrate the basis for such determination.
(c) Each Lender will use its best efforts to inform the Company and
the Administrative Agent of any events affecting capital adequacy occurring
after the date hereof which will require payments to be made under this
Section 3.5 promptly after it becomes aware of such event, but the failure
of any of the Lenders to inform the Company or the Administrative Agent of
any such event shall not affect any of the obligations of the Company
hereunder.
3.6. Taxes.
-----
(a) If (i) any Lender shall be subject to any Tax or (ii) the
Company shall be required to withhold or deduct any Tax, the Company will,
within 30 days after demand by the Administrative Agent, pay to the
Administrative Agent for the Lenders' respective accounts such additional
amount as is necessary to enable each Lender to receive on an after-tax
basis the full amount of all payments of the Credit Obligations (in the
case of the portion of the Loan on which interest is determined at the
Effective Rate based upon the Base Rate, only to the extent not adequately
compensated by an increase in the Base Rate), together with interest on
such amount from the date demanded until payment in full thereof at the
Effective Rate based upon the Base Rate. The determination by each Lender
of such additional amount owing to such Lender shall, in the absence of
manifest error, be conclusive; provided, however, that at the request of
-------- -------
the Company such Lender shall demonstrate the basis for such determination.
Each Lender agrees that if, after the payment by the Company of any such
additional amount for the account of such Lender, any part thereof is
subsequently recovered by such Lender, such Lender shall promptly reimburse
the Company to the extent of the amount so recovered. A certificate of an
officer of such Lender setting forth the amount of such recovery and the
basis therefor shall be conclusive; provided, however, that at the request
-------- -------
of the Company such Lender shall demonstrate the basis for such calculation
or provide an explanation, reasonably satisfactory to the Company, why such
calculation may not be demonstrated.
(b) The Administrative Agent may include in the charges to the
account of the Company for interest under this Agreement amounts owed under
this Section 3.6 as a result of Legal Requirements to the extent that such
Legal Requirements are or are deemed hereby to be generally applicable, and
to apply uniformly, to all of the Lenders.
-23-
<PAGE>
The payment by the Company of such amounts shall fulfill its obligations
under this Section 3.6 with respect to the amounts so charged and paid. Any
Lender's determination of the amount of such costs and the allocation, if
any, of such costs among the Company and other customers which have
arrangements with such Lender similar to the Credit Obligations, if done in
good faith and if such allocation is made on an equitable basis, shall, in
the absence of manifest error, be conclusive; provided, however, that at
-------- -------
the request of the Company such Lender shall demonstrate the basis for such
determination or provide an explanation, reasonably satisfactory to the
Company, why such determination may not be demonstrated.
(c) Each Lender will use its best efforts to inform the Company and
the Administrative Agent of the imposition of, or any change in, any Tax
occurring after the date hereof which will require payments to be made
under this Section 3.6 promptly after such Lender becomes aware of such Tax
or change therein, but the failure of any Lender so to inform the Company
or the Administrative Agent shall not affect any of the obligations of the
Company hereunder.
4. PAYMENT.
4.1. Payment at Maturity. On the Final Maturity Date, the Company shall
-------------------
pay to the Administrative Agent for credit to the Loan Accounts the entire
outstanding principal amount of Indebtedness evidenced thereby, together with
all accrued and unpaid interest with respect thereto, and all other Credit
Obligations owing by it to any Lender. On any accelerated maturity of the
Indebtedness evidenced by the Loan Accounts, the Company shall pay to the
Administrative Agent for credit to the Loan Accounts the entire outstanding
principal amount of Indebtedness evidenced thereby, together with all accrued
and unpaid interest with respect thereto, and all other Credit Obligations owing
by it to any Lender.
4.2. Contingent Required Prepayments.
-------------------------------
4.2.1. Excess Credit Exposure. If at any time the Loan exceeds the
----------------------
limits set forth in Section 2.2, the Company will promptly pay the amount
of such excess to the Administrative Agent for the account of the Lenders.
4.2.2. Allocation of Payments. Contingent prepayments required to
----------------------
be made by the Company pursuant to Section 4.2.1 shall be paid to the
Administrative Agent for the Lenders' several accounts in accordance with
their Revolving Percentage Interests and shall be allocated first to the
portion of the Loan not subject to Eurodollar Pricing Options, and then to
the portion of the Loan subject to Eurodollar Pricing Options.
4.3. Voluntary Prepayments. In addition to the prepayments required by
---------------------
Section 4.2, at any time or from time to time upon not less than one Banking Day
prior written notice to the Administrative Agent, the Company shall have the
right to prepay, without premium or penalty of
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<PAGE>
any type (except as provided in Section 3.3.2), all or any part of the Loan in
such amounts as are not less than $5,000,000 and in integral multiples of
$100,000 in the aggregate for all such payments on such date, unless such
payment is equal to the entire outstanding principal amount of the Loan.
4.4. Payment and Interest Cutoff, etc. Notice of prepayment having been
--------------------------------
given in compliance with Section 4.3 (and whether or not notice is given of
payments required by Section 4.1 or 4.2), the amount specified to be prepaid
shall become due and payable on the date specified for prepayment and from and
after such date (except to the extent that the Company shall fail to make
payment thereof) interest thereon shall cease to accrue. Unless otherwise
specified by the Company, (a) all prepayments of the Loan shall be allocated
first to the portion of such Loan not subject to Eurodollar Pricing Options and
(b) all prepayments of any portion of the Loan subject to Eurodollar Pricing
Options shall be applied in the chronological order of the respective maturities
of such Eurodollar Pricing Options.
5. CONDITIONS TO MAKING LOANS.
5.1. Conditions to Making Initial Loans. The Lenders' several obligations
----------------------------------
to make the loans contemplated by Section 2.1 shall be subject to the
satisfaction, on or before the Initial Closing Date, of the following
conditions, as well as the conditions set forth in Section 5.2:
5.1.1. Notes. The Company shall have duly executed and delivered
-----
to the Documentation Agent a Note for each Lender.
5.1.2. Amendment to the 1994 Credit Agreement. The Company, each
--------------------------------------
of the Restricted Subsidiaries and the lenders holding a majority of the
Voting Percentage Interests under, and as defined in, the 1994 Credit
Agreement shall have executed and delivered to the Administrative Agent
Amendment No. 3 to the 1994 Credit Agreement in the form attached as
Exhibit 5.1.2.
5.1.3. Amended Note Agreement. The Company shall have delivered to
----------------------
the Documentation Agent a copy of an amendment to the Amended and Restated
Note Agreement (the "Amended Note Agreement") between the Company and The
Prudential Insurance Company of America in the form attached hereto as
Exhibit 5.1.3 and the Amended Note Agreement shall be in full force and
effect.
5.1.4. Guarantors' Contribution Agreement. The Company shall have
----------------------------------
delivered to the Documentation Agent a copy of a guarantors' contribution
agreement (the "Guarantors' Contribution Agreement") among the Guarantors
pursuant to which the Guarantors shall have agreed to make contributions
among themselves as a result of payments by the Guarantors under their
respective guarantees of the Credit Obligations, and such Guarantors'
Contribution Agreement shall be in full force and effect.
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5.1.5. Payment of Fees. The Company shall have paid (a) to the
---------------
Administrative Agent (i) for the respective accounts of the Lenders certain
closing fees as previously agreed among the Company and such Lenders and
(ii) for the respective accounts of the Administrative Agent and the other
Managing Agents, certain fees and expenses of the Administrative Agent and
the other Managing Agents as previously agreed upon among the Company, the
Administrative Agent and the other Managing Agents and (b) the reasonable
fees and disbursements of the Managing Agents' counsel for which statements
have been rendered on or prior to the Initial Closing Date.
5.1.6. Legal Opinions. On the Initial Closing Date, the Lenders
--------------
shall have received from the following counsel their respective opinions
with respect to the transactions contemplated by the Lender Agreements and,
from counsel to the Company, an opinion with respect to the enforceability,
execution and authorization of the Merger Agreement, which opinions shall
be in form and substance satisfactory to the Managing Agents:
(a) Sullivan & Worcester, counsel for the Company and the
Guarantors.
(b) Ropes & Gray, special counsel for the Managing Agents.
The Company authorizes and directs Sullivan & Worcester to furnish
the foregoing opinions.
5.2. Conditions to Making Each Loan. The Lenders' several obligations to
------------------------------
make any loan contemplated by Section 2.1, shall be subject to the satisfaction,
on or before the Closing Date for such loan, of the following conditions:
5.2.1. Company Officer's Certificate. The representations and
-----------------------------
warranties contained in Sections 6.3 and 8 shall be true and correct on and
as of each Closing Date with the same force and effect as though made on
and as of such Closing Date (after giving effect to any supplements to
Exhibit 8.1 furnished prior to such Closing Date in accordance with
Sections 7.2.1 and 7.2.2) (provided, that the representation and warranty
-------- ----
contained in Section 8.10 is made and certified to only on and as of the
Initial Closing Date); no Default shall have occurred or shall exist after
giving effect to the loan to be made on such Closing Date; between March
31, 1996 and such Closing Date, neither the business, operations, assets
nor the condition, financial or otherwise, of the Company and its
Restricted Subsidiaries on a consolidated basis shall have been adversely
affected in any material manner as a result of any event or development
(other than as a result of the termination or expiration of the Merger
Agreement); and the Administrative Agent will have received a certificate
to these effects and indicating any change in the Company's charter, by-
laws or signing officers in substantially the form of Exhibit 5.2.1 dated
such Closing Date and signed by a Financial Officer.
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<PAGE>
5.2.2. Proper Proceedings. All proper corporate or partnership
------------------
proceedings shall have been taken by the Company and each Guarantor to
authorize this Agreement and each other Lender Agreement to which it is a
party and the transactions contemplated hereby and thereby. All necessary
consents, approvals and authorizations of, or filings with, any
governmental or administrative agency or any other Person to or of any of
the transactions contemplated hereby or by any other Lender Agreement shall
have been obtained or made and shall be in full force and effect.
5.2.3. Legality, etc. The making of the loans shall not (a)
-------------
subject any Lender to any penalty or special tax (other than a Tax for
which it is indemnified by the Company pursuant to Section 3.8) or (b) be
prohibited by, or violate, any law or governmental order or regulation
applicable to any Lender, the Company or any Guarantor.
5.2.4. General. All instruments and legal and corporate
-------
proceedings in connection with the loans and other transactions
contemplated by this Agreement shall be satisfactory in form and substance
to the Administrative Agent, and the Administrative Agent shall have
received copies of all documents, including legal opinions, records of
corporate proceedings and a certificate as to the incumbency of officers,
which the Administrative Agent may have reasonably requested in connection
therewith.
6. GUARANTEES.
6.1. Guarantees of Credit Obligations. Each of the Guarantors hereby
--------------------------------
unconditionally jointly and severally guarantees that the Credit Obligations
will be paid in full in cash when due and payable, whether at the stated or
accelerated maturity thereof or upon any mandatory or voluntary prepayment
pursuant to this Agreement or otherwise, this guarantee being a guarantee of
payment and not of collectability and being absolute and in no way conditional
or contingent. In the event that any part of the Credit Obligations shall not
have been so paid in full when due and payable, each Guarantor will, promptly
upon receipt of notice from the Administrative Agent or any Lender, or without
notice, upon the occurrence of a Bankruptcy Default, pay or cause to be paid to
the Administrative Agent or such Lender, as the case may be, the amount thereof
as is then due and payable and unpaid. The obligations of each Guarantor under
this Agreement shall not be affected by the invalidity or unenforceability of
any of the Credit Obligations as against the Company, any other guarantor
thereof or any other Person. If for any reason a court of competent
jurisdiction in a final, nonappealable decision shall determine that any portion
of the guarantee by any Guarantor hereunder is not enforceable, such guarantee
shall continue in full force and effect to the maximum extent permitted by law.
For purposes hereof, the Credit Obligations shall be due and payable when and as
the same shall be due and payable under this Agreement or any other Lender
Agreement notwithstanding the fact that the collection or enforcement thereof
may be stayed or enjoined under the Bankruptcy Code or other applicable law.
Each Guarantor acknowledges that the Administrative Agent and the Lenders have
entered into this Agreement (and, to the extent that the Lenders may enter into
any future Lender Agreement, will have entered into such Agreement) in reliance
on this Section 6 being a
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<PAGE>
continuing agreement and the irrevocability of the guarantee hereunder, and each
Guarantor agrees that this guarantee may not be revoked in whole or in part. The
obligations of each Guarantor hereunder shall terminate when the Lenders'
commitments to extend credit hereunder shall have been irrevocably terminated
and all of the Credit Obligations have been indefeasibly paid in full in cash
and discharged; provided, however, that if a claim is made upon the
-------- -------
Administrative Agent or any holder of any Credit Obligation at any time for
repayment or recovery of any amounts or any property (whether tangible or
intangible) received by any of them from any source in payment on account of any
Credit Obligations and such one of them repays or returns any amounts or
property so received (including interest thereon to the extent required to be
paid by such one of them) or becomes liable for any part of such claim by reason
of (a) any judgment, decree or order of any court or administrative body having
competent jurisdiction, or (b) any settlement or compromise of any such claim,
each Guarantor shall remain jointly and severally liable under this Section 6
for the amounts or property so repaid or returned or the amounts for which the
Administrative Agent or any holder of any Credit Obligation becomes liable (such
amounts, together with an amount equal to the greater of the value of such
property when it was received by any of them, or when it was returned by such
one of them being deemed part of the Credit Obligations) to the same extent as
if such amount or property had never been received by such one of them,
notwithstanding any termination hereof or the cancellation of any note or other
agreement evidencing any of the Credit Obligations, and each Guarantor shall,
upon notice from the Administrative Agent, pay to the Administrative Agent an
amount equal to the amount of such repayment or return or of such claim for
which the Administrative Agent or any holder of any Credit Obligation has so
become liable. If the stock, partnership interest or other beneficial interest
of a Guarantor is sold or exchanged in accordance with Section 7.10 so that it
is no longer a Subsidiary of the Company, or if a Guarantor is released in
accordance with Section 6.8, such Guarantor shall automatically be released from
any further obligations under this Agreement, including the guarantee contained
in this Section 6, without the necessity of any further action on the part of
the Company, such Guarantor or the Lenders.
6.2. Waivers. Except to the extent that any of the following are
-------
expressly required by the provisions of any of the Lender Agreements, each
Guarantor hereby waives (a) presentment, demand for payment and protest of
nonpayment of any of the Credit Obligations, and notices of protest, dishonor or
nonperformance, (b) notice of acceptance of this guarantee and notice that
credit has been extended by the Lenders in reliance on such Guarantor's
guarantee of the Credit Obligations, (c) notice of any Default under this
Agreement or any other Lender Agreement or the Lenders' inability to enforce
performance of the Company's obligations to any holder of Credit Obligations,
(d) demand for performance or observance of, and any enforcement of any
provision of, the Credit Obligations or any pursuit or exhaustion of rights or
remedies against the Company or any other obligor on or guarantor of the Credit
Obligations, pursuant to this Agreement or any other Lender Agreement or
otherwise, and any requirements of diligence or promptness on the part of the
Administrative Agent or any holder of the Credit Obligations in connection
therewith, (e) any action or nonaction on the part of the Administrative Agent
or any holder of Credit Obligations which may impair or prejudice the rights of
any Guarantor, including without limitation subrogation rights or rights to
obtain exoneration, contribution, indemnification or any
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<PAGE>
other reimbursement or compensation from the Company, any other guarantor or
obligor in respect of the Credit Obligations or any other Person, (f) any
defense based upon an election of remedies by the Administrative Agent or the
holders of the Credit Obligations, (g) any defense based upon any statute or
rule of law which provides that the obligation of a surety must be neither
larger in amount nor in other respects more burdensome than that of the
principal, (h) any and all demands and notices of every kind and description
with respect to the foregoing or which may be required to be given by any
statute or rule of law and (i) all defenses (other than indefeasible payment in
full) which the Company may now or hereafter have to the payment of the Credit
Obligations which could otherwise be asserted by such Guarantor. In addition to
the defenses referred to above which have been expressly waived hereunder, each
Guarantor waives all other defenses (other than indefeasible payment in full)
which it may now or hereafter have to the payment by it of the Credit
Obligations. No delay or omission on the part of the Administrative Agent or any
holder of any Credit Obligation shall operate as a waiver or relinquishment of
such right. No action which the Administrative Agent, the holder of any Credit
Obligation, the Company or any Guarantor may take or refrain from taking with
respect to the Credit Obligations, including any amendments thereto or
modifications thereof or waivers with respect thereto, shall affect the
provisions of this Agreement or the obligations of the Guarantors hereunder.
None of the rights of the Administrative Agent or of any holder of any Credit
Obligation shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of any of them or the Company or any Guarantor, by
any noncompliance by any Guarantor with the terms, provisions and covenants of
this Agreement, regardless of any knowledge thereof which the Administrative
Agent or any holder of the Credit Obligations may have or otherwise be charged
with. Each Guarantor hereby agrees to waive, and does hereby absolutely and
irrevocably waive and relinquish the benefit and advantage of, and does hereby
covenant not to assert, any appraisement, valuation, stay, extension, redemption
or similar laws, now or at any time hereafter in force, which might delay,
prevent or otherwise impede the performance or enforcement of this Agreement or
any other Lender Agreement or the Credit Obligations.
6.3. Certain Representations. Each Guarantor hereby represents that it
-----------------------
has determined (a) that it is in its best interest and in pursuance of its
corporate or partnership purposes as an integral part of the business conducted
and proposed to be conducted by the Company and its Subsidiaries (including such
Guarantor), and reasonably necessary and convenient in connection with the
conduct of the business conducted and proposed to be conducted by it, to induce
the Lenders to enter into this Agreement and to extend credit to the Company
hereunder by making the guarantees contemplated by this Section 6, (b) that the
credit available hereunder will directly or indirectly inure to its benefit, and
(c) that by virtue of the foregoing it is receiving at least fair consideration
and reasonably equivalent value from the Lenders for its guarantee. Each
Guarantor acknowledges that it has been advised by the Lenders that they are
unwilling to enter into this Agreement unless the guarantees contemplated by
this Section 6 are given by the Guarantors. Each Guarantor represents that it
will not be rendered insolvent as a result of entering into this Agreement, and
that, after giving effect to the transactions contemplated by this Agreement, it
will have assets having a fair saleable value in excess of the amount required
to pay
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<PAGE>
its probable liability on its existing debts as they become absolute and
matured, and that it has, and will have, adequate capital for the conduct of its
business and the ability to pay its debts from time to time incurred in
connection therewith as such debts mature.
6.4. Power to Amend, etc. Each Guarantor hereby grants to the Lenders and
-------------------
the holders of the Credit Obligations full power in the Lenders' or their
uncontrolled discretion, without notice to such Guarantor, such notice being
hereby expressly waived, and without in any way affecting the liability of such
Guarantor under this guarantee:
(a) To waive compliance with, and any Default under, and to consent
to any amendment to or modification of any term or provision of, or to give
any waiver in respect of, this Agreement, any other Lender Agreement, the
Credit Obligations or any guarantee thereof (each as from time to time in
effect);
(b) To grant any one or more extensions or renewals of the Credit
Obligations (for any period, no matter how long), any total or partial
release (by operation of law or otherwise), discharge, compromise or
settlement with respect to the obligations of the Company or any other
Person in respect of the Credit Obligations, whether or not rights against
the other Guarantors under this Section 6 are reserved in connection
therewith;
(c) To obtain, modify or release any present or future guarantees
of the Credit Obligations and to proceed against such guarantees in any
order;
(d) To collect or liquidate any of the Credit Obligations in any
manner or to refrain from collecting or liquidating any of the Credit
Obligations; and
(e) To extend credit under this Agreement or any other Lender
Agreement, or otherwise, in such amount as the Lenders may determine, even
though the condition of the Company (financial or otherwise on an
individual or consolidated basis) may have deteriorated since the date
hereof.
6.5. Information Regarding the Company, etc. Each Guarantor acknowledges
--------------------------------------
and agrees that it has made such investigation as it deems desirable of the
risks undertaken by such Guarantor in entering into this Agreement and is fully
satisfied that it understands all such risks. Each Guarantor hereby waives any
obligation which may now or hereafter exist on the part of the Administrative
Agent or any holder of any Credit Obligation to inform such Guarantor of the
risks being undertaken by entering into this Agreement or of any changes in such
risks and, from and after the date hereof, each Guarantor undertakes to keep
itself informed of such risks and any changes therein. Further, each Guarantor
hereby expressly waives any duty which may now or hereafter exist on the part of
the Administrative Agent or any holder of any Credit Obligation to disclose to
such Guarantor any matter related to the business, operations, character,
collateral, credit or condition (financial or otherwise) or prospects of the
Company, its Subsidiaries or Affiliates or their properties or management,
whether now or hereafter known by the
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<PAGE>
Administrative Agent or any holder of any Credit Obligation. Each Guarantor
represents, warrants and agrees that it assumes sole responsibility for
obtaining from the Company and its Subsidiaries all information concerning this
Agreement and all other Lender Agreements and all other information as to the
Company, its Subsidiaries and Affiliates or their properties or management or
anything relating to any of the above as such Guarantor deems necessary or
desirable.
6.6. No Subrogation; Subordination. Each Guarantor hereby covenants and
-----------------------------
agrees that (a) it will not at any time enforce or otherwise exercise any rights
of indemnification, reimbursement, subrogation, contribution or other similar
rights with respect to the Credit Obligations against any Person, including
without limitation any other guarantor of the Credit Obligations (except
pursuant to the Guarantors' Contribution Agreement) or the Company, and (b) all
Indebtedness, claims and liabilities now or hereafter owing by the Company to
such Guarantor are hereby subordinated to the prior payment in full of the
Credit Obligations and are so subordinated as a claim against the Company or any
of its assets, whether such claim be in the ordinary course of business or in
the event of voluntary or involuntary liquidation, dissolution, insolvency or
bankruptcy, so that no payment with respect to any such Indebtedness, claim or
liability will be made or received while any of the Credit Obligations are
outstanding or prior to the termination of the Lenders' commitments hereunder;
provided, however, that the subordination provisions of this clause (b) shall
- -------- -------
apply only so long as any Default shall exist.
6.7. Further Assurances. Each Guarantor will, upon the request of the
------------------
Administrative Agent or any Lender from time to time, execute, acknowledge and
deliver, and file and record, all such instruments, and take all such action, as
the Administrative Agent or the Lenders may reasonably deem necessary or
advisable to carry out the intent and purpose of this Agreement and the Lender
Agreements. The Company and each Guarantor shall from time to time cause any of
the Company's present or future wholly owned Restricted Subsidiaries (within 30
days after any such future wholly owned Restricted Subsidiary becomes a wholly
owned Restricted Subsidiary) that are not Guarantors to guarantee the payment
and performance of the Credit Obligations in accordance with this Section 6.
The Company and each Guarantor shall use reasonable efforts to obtain all
outside stockholder consents for any of its future Restricted Subsidiaries that
are not wholly owned by the Company or the Guarantors and that are not
Guarantors to guarantee the payment and performance of the Credit Obligations
and, once such outside stockholder consents have been obtained, to cause such
Restricted Subsidiary to guarantee the payment and performance of the Credit
Obligations in accordance with this Section 6.
6.8. Release of Guarantors and Restricted Subsidiaries. The Company may
-------------------------------------------------
by 10 Banking Days prior written notice to the Administrative Agent designate
any Restricted Subsidiary to be released as a Guarantor (if necessary) and as a
Restricted Subsidiary; provided, however, that immediately after giving effect
-------- -------
to any such release, (a) no Default shall exist and (b) the assets of the
Restricted Subsidiaries so released could have been sold or exchanged in
accordance with Section 7.10.3 or Section 7.10.4.
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<PAGE>
7. COVENANTS. Each of the Company and the Guarantors covenants that it will
comply and will cause each of its Subsidiaries to comply with the following
provisions:
7.1. Corporate Existence; Conduct of Business. Each of the Company and
----------------------------------------
its Restricted Subsidiaries will take the necessary steps to preserve its
corporate existence and will conduct their respective businesses so as to derive
their revenues from the cable television and telecommunications businesses and
related activities; provided, however, that the foregoing provisions shall not
-------- -------
prevent any merger permitted by Section 7.11 or the liquidation of any
Restricted Subsidiary if in the good faith judgment of the Company's board of
directors such liquidation is in the best interests of the Company and is not
materially disadvantageous to the holders of the Credit Obligations.
7.2. Financial Statements, etc. Each of the Company and its Subsidiaries
-------------------------
will maintain a system of accounting in which full and correct entries will be
made of all dealings and transactions in relation to their respective businesses
and affairs in accordance with generally accepted accounting principles.
7.2.1. Quarterly Reports. Within 60 days after the end of each of
-----------------
the first three quarters of each fiscal year, the Company will furnish to
each Lender copies of the balance sheet of the Company and its Subsidiaries
as of the end of such quarter and the statements of income and cash flows
of the Company and its Subsidiaries for the portion of the fiscal year then
ended, all in reasonable detail, which statements shall be consolidated and
by group (including the Company and its Restricted Subsidiaries as such a
group), shall have been prepared without audit and shall be certified by a
Financial Officer as presenting fairly the financial condition and results
of operations of the Company and its Subsidiaries in accordance with
generally accepted accounting principles consistently followed, subject to
normal year-end audit adjustments, it being understood, however, that such
financial statements may not contain all of the explanatory footnotes which
accompany the audited year-end financial statements, together with a
certificate by such Financial Officer as to the following:
(a) stating that he or she has reviewed this Agreement and has
made, or caused to be made under his or her supervision, a review of the
transactions and conditions of the Company and its Restricted Subsidiaries
during the accounting period covered by such financial statements;
(b) stating that such review has not disclosed the existence during
such accounting period (and that such officer does not have knowledge of
the existence, as of the date of such certificate) of any Default or, if
any Default existed or exists, specifying the nature and period of
existence thereof and what action the Company has taken, is taking or
proposes to take with respect thereto;
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<PAGE>
(c) stating, when appropriate, the effects on such financial
statements of any change in the Company's method of accounting for system
development costs;
(d) demonstrating as at the end of such accounting period in
reasonable detail compliance with Sections 7.7.2, 7.7.6, 7.7.8, 7.7.10,
7.7.11, 7.9.4, 7.10.3, 7.10.4, 7.12.2 and 7.13;
(e) containing a report setting forth the number of homes passed,
subscribers and subscribers receiving premium services, as at the end of
such accounting period, through the cable television systems owned and
operated by the Company and its Restricted Subsidiaries;
(f) supplementing Exhibit 8.1 with any changes in the information
set forth therein during such fiscal quarter;
(g) showing a schedule of intercompany Indebtedness among the
Company and its Restricted Subsidiaries; and
(h) stating the amount of any cash payments made by the Company or
any Restricted Subsidiary during such quarter in respect of any amount for
which the Company has established regulatory reserves.
7.2.2. Annual Reports. Within 90 days after the end of each fiscal
--------------
year, the Company will furnish to each Lender copies of the balance sheet
and supplemental schedules of the Company and its Subsidiaries as at the
end of such year and the statements of income and cash flows and
supplemental schedules of the Company and its Subsidiaries for such year,
all in reasonable detail, which statements shall be consolidated and by
group (including the Company and its Restricted Subsidiaries as such a
group), shall include explanatory notes thereto and shall be accompanied by
the following:
(a) a certificate or report of Deloitte & Touche (or other
independent public accountants of recognized standing selected by the
Company and satisfactory to the Administrative Agent) to the effect that
such statements present fairly in all material respects the financial
condition and results of operations of the Company and its Subsidiaries in
accordance with generally accepted accounting principles, applied on a
basis consistent with that of prior years;
(b) the statement of such accountants (i) briefly setting forth the
scope of their examination (which shall include a review of the relevant
provisions of this Agreement, as such provisions relate to accounting
matters), and stating that in their judgment such examination is sufficient
to enable them to give such certificate and (ii) that they have reviewed
the computations by the Company described in clause (c) below and that in
the course of their audit of the Company nothing has come to their
attention to lead them to
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<PAGE>
believe that any Default exists or, if such is not the case, specifying the
Default or possible Default and the nature thereof, it being understood
that the examination by such accountants cannot be relied upon to give them
knowledge of any such Default except as it relates to accounting or
auditing matters;
(c) computations by the Company demonstrating, as of the close of
such fiscal year, compliance with Sections 7.7.2, 7.7.6, 7.7.8, 7.7.10,
7.7.11, 7.9.4, 7.10.3, 7.10.4, 7.12.2 and 7.13;
(d) a report of the Company setting forth the number of homes
passed, subscribers and subscribers receiving premium services, as at the
end of such fiscal year, through the cable television systems owned and
operated by the Company and its Restricted Subsidiaries;
(e) supplements to Exhibit 8.1 showing any changes in the
information set forth therein during the last fiscal quarter of such fiscal
year;
(f) a schedule of intercompany Indebtedness among the Company and
its Restricted Subsidiaries; and
(g) stating the amount of any cash payments made by the Company or
any Restricted Subsidiary during the last fiscal quarter of such fiscal
year in respect of any amount for which the Company has established
regulatory reserves.
7.2.3. Audits. Promptly upon receipt thereof, the Company shall
------
deliver to each Managing Agent copies of all other reports submitted to the
Company by independent public accountants in connection with any annual,
interim or special audit of the books of the Company or any of its
Restricted Subsidiaries made by such accountants.
7.2.4. ERISA Reports. Each of the Company and its Restricted
-------------
Subsidiaries will furnish the Administrative Agent with copies of any
request for waiver of the funding standards or extension of the
amortization periods required by sections 303 and 304 of ERISA or section
412 of the Code promptly after any such request is submitted by any of them
to the Department of Labor or the Internal Revenue Service, as the case may
be. Promptly after a reportable event as defined by section 4043 of ERISA
occurs as to which the PBGC has not waived the 30-day reporting
requirements under its rules and regulations thereunder, or the Company or
any of its Restricted Subsidiaries receives notice that the PBGC or any
Control Group Person has instituted or intends to institute proceedings to
terminate any Plan, or prior to the Plan administrator's terminating a Plan
pursuant to section 4041 of ERISA, the Company will notify the
Administrative Agent and will furnish to the Administrative Agent a copy of
any notice of such reportable event which is required to be filed with the
PBGC, or any notice delivered by the PBGC evidencing its institution of
such proceedings or its intent to institute such proceedings, or
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<PAGE>
any notice to the PBGC that a Plan is to be terminated, as the case may be.
As soon as available and in any event within nine months after the end of
each fiscal year, the Company will provide each Managing Agent with a
calculation of the current value of the benefits guaranteed under Title IV
of ERISA of each Plan and of the current value of each such Plan's assets
allocable to such benefits as at the end of such fiscal year (or as at the
end of the most recently completed Plan year if it is not concurrent with
such fiscal year).
7.2.5. Public Reports. Promptly upon their becoming available, the
--------------
Company shall deliver to each Lender copies of all financial statements
sent by the Company or any of its Subsidiaries to shareholders (other than
the Company or any of its Subsidiaries) and all reports, notices and proxy
statements sent by the Company to its shareholders, and all regular and
periodic reports (without exhibits) and effective registration statements
(without exhibits) filed by the Company with any securities exchange or
with the Securities and Exchange Commission or its successor, and the
Company shall deliver to the Managing Agents copies of all press releases
and other statements made available generally by the Company to the public
concerning material developments in the business of the Company and its
Subsidiaries.
7.2.6. Defaults. Immediately upon becoming aware of the existence
--------
of any Default, the Company shall deliver to the Lenders written notice
specifying the nature and period of existence thereof and what action the
Company has taken, is taking or proposes to take with respect thereto.
7.2.7. Other Events.
------------
(a) Immediately upon becoming aware that the holder of any evidence
of Indebtedness or other security of the Company or any of its Restricted
Subsidiaries has given notice or taken any other action with respect to a
claimed default, the Company shall deliver to the Lenders a written notice
specifying the notice given or action taken by such holder and the nature
of the claimed default and what action the Company has taken, is taking or
proposes to take with respect thereto.
(b) Promptly upon any of the Company's Financial Officers obtaining
knowledge thereof, the Company shall promptly notify the Administrative
Agent of (i) the receipt by the Company or any of its Restricted
Subsidiaries of notice from any federal, state or local governmental
authority of the institution of proceedings to revoke, terminate or suspend
any Franchise now or hereafter held by the Company or any of its Restricted
Subsidiaries and (ii) any abandonment or expiration of a Franchise now or
hereafter held by the Company or any of its Restricted Subsidiaries.
7.2.8. Requested Information. The Company will with reasonable
---------------------
promptness furnish such other data as any Lender may reasonably request,
and will from time to time
-35-
<PAGE>
permit each Lender by or through any of its officers, agents, employees,
attorneys or accountants to inspect and make extracts from its books and
records.
7.2.9. Confidentiality. The Lenders acknowledge that some of the
---------------
information furnished to them pursuant to this Section 7.2 may be received
by them prior to the time it shall have been made public and the Lenders
agree that they will keep all information so furnished to them pursuant to
this Section 7.2 confidential and will make no disclosure of such
information until it shall have become public, subject, however, to their
obligations under law or regulatory requirements or pursuant to subpoenas
or other process, to make information available to governmental agencies
and examiners or to others; provided, however, that any Lender may divulge
-------- -------
such information (a) to its attorneys and accountants and to its commercial
banking Affiliates which are wholly owned by the same corporate parent as
such Lender, (b) to other financial institutions which are creditors of the
Company, the representatives of such creditors and governmental authorities
having jurisdiction in connection with the enforcement of the Credit
Obligations or following the occurrence of any Event of Default in
connection with discussions relating to a modification or restructuring of
Indebtedness of the Company, (c) with the prior written consent of the
Company, and (d) to Credit Participants, prospective Credit Participants
and prospective Lenders who agree to maintain the confidentiality of such
information in accordance with this Section 7.2.9. The provisions of this
Section 7.2.9 shall survive the termination of this Agreement.
7.3. Insurance. The Company will maintain or cause to be maintained, with
---------
financially sound and reputable insurers, insurance with respect to the
properties and business of the Company and its Restricted Subsidiaries against
loss or damage of the kinds customarily insured against by corporations of
established reputation engaged in the same or a similar business and similarly
situated of such types and in such amounts as is customarily carried under
similar circumstances by such other corporations in the reasonable determination
of the Company's management.
7.4. Taxes; Claims. The Company will, and will cause each Restricted
-------------
Subsidiary to, pay or make provision for all taxes, assessments and other
governmental charges validly imposed upon it or any of its properties or assets
or in respect of any of its Franchises, business, income or profits before any
substantial penalty or interest accrues thereon, and all claims (including
without limitation, claims for labor, services, materials and supplies) for sums
which have become due and payable and which by law have or might become a lien
or charge upon any of its properties or assets; provided, however, no such tax,
-------- -------
assessment, charge or claim need be paid if it is then being contested in good
faith by appropriate proceedings and the Company shall have created adequate
reserves on its books with respect thereto.
7.5. Maintenance of Properties. The Company and its Restricted
-------------------------
Subsidiaries shall maintain and keep the properties used or, in the good faith
judgment of the Company's management, useful in its business in good repair,
working order and condition, and shall make or
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<PAGE>
cause to be made all repairs, renewals and replacements thereof deemed by the
Company's management to be necessary or appropriate.
7.6. Statutory Compliance. Each of the Company and its Restricted
--------------------
Subsidiaries will comply in all material respects with all valid and applicable
statutes, rules and regulations of the United States of America, of the states
thereof and their counties, municipalities and other subdivisions and of any
other jurisdiction applicable to it, whether foreign or domestic, except where
compliance therewith shall at the time be contested in good faith by appropriate
proceedings.
7.7. Indebtedness. Neither the Company nor any Restricted Subsidiary will
------------
create, incur, suffer or permit to exist, or assume or guarantee, either
directly or indirectly, or otherwise become liable with respect to, any
Indebtedness, except the following:
7.7.1. The Credit Obligations and the Indebtedness of the Company
and the Restricted Subsidiaries under the 1994 Credit Agreement.
7.7.2. Unsecured Indebtedness for the deferred purchase price of
property in aggregate principal amount not exceeding $50,000,000 at any one
time outstanding and Indebtedness secured by purchase money security
interests (including Capitalized Leases) to the extent permitted by Section
7.8.5.
7.7.3. Indebtedness of any Restricted Subsidiary to the Company or
any other Restricted Subsidiary, and Indebtedness of the Company to any
Restricted Subsidiary.
7.7.4. Indebtedness of the Company (a) described in Part A of
Exhibit 7.7 as in effect on the dates set forth therein, together with
guarantees by the Guarantors of such Indebtedness, and (b) described in
Part B of Exhibit 7.7 as in effect on the dates set forth therein, on the
terms set forth in the indentures referred to in Exhibit 7.7 as in effect
on the dates set forth therein.
7.7.5. Indebtedness of the Company's Restricted Subsidiaries
described in Part C of Exhibit 7.7 as in effect on the dates set forth
therein.
7.7.6. Indebtedness of the Company not in excess of $150,000,000 in
the aggregate at any one time outstanding, which Indebtedness shall be
unsecured, shall be for a term of no more than 90 days and shall not be
refunded or otherwise refinanced by other Indebtedness permitted by this
Section 7.7.6.
7.7.7. Other Indebtedness of the Company for which the amount,
terms (including subordination terms, if applicable) and lender have been
approved by the prior written consent of the holders of at least a majority
of the Pooled Percentage Interests.
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<PAGE>
7.7.8. Indebtedness of the Company with respect to commercial paper
in the aggregate face amount or aggregate principal amount, as the case may
be, at any one time outstanding not exceeding the amount of credit reserved
with respect thereto in accordance with Section 2.5.1(a) of the 1994 Credit
Agreement.
7.7.9. Indebtedness of the Company which:
(a) is unsecured and, in the reasonable determination of the
Managing Agents at the time of the incurrence thereof, has a commercially
reasonable interest rate given the then-prevailing market conditions and
the Company's then-current credit rating;
(b) to the extent such Indebtedness is not subordinated to the
Credit Obligations, has, in the reasonable determination of the Managing
Agents, terms no more restrictive or burdensome in any material respect on
the Company and its Restricted Subsidiaries than the terms of this
Agreement; provided, however, that to the extent certain terms of such
-------- -------
Indebtedness relate to the Company's mandatory redemption obligations in
respect of such Indebtedness, such terms shall be no more restrictive or
burdensome in any material respect on the Company and its Restricted
Subsidiaries than the most restrictive and burdensome terms relating to the
Company's mandatory redemption obligations in respect of the Senior
Subordinated Debt;
(c) to the extent such Indebtedness is subordinated to the Credit
Obligations, has, in the reasonable determination of the Managing Agents,
(i) terms no more restrictive or burdensome in any material respect on the
Company and its Restricted Subsidiaries than the most restrictive and
burdensome applicable terms of any Senior Subordinated Debt or (ii)
subordination terms at least as favorable to the Lenders as the most
favorable subordination terms of any Senior Subordinated Debt; and
(d) shall have no scheduled principal payments on or prior to the
Final Maturity Date.
7.7.10. Guarantees by the Company and its Restricted Subsidiaries of
Indebtedness of other Persons in an aggregate principal amount not to
exceed $200,000,000 at any time outstanding.
7.7.11. Letters of credit issued on behalf of the Company and its
Restricted Subsidiaries in an aggregate amount not to exceed $50,000,000 at
any time outstanding.
7.8. Liens. Neither the Company nor any Restricted Subsidiary will
-----
mortgage, pledge or otherwise encumber any of its property, or permit any lien
or security interest to exist thereon, except the following:
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<PAGE>
7.8.1. Liens for taxes, assessments or governmental charges or
claims the payment of which is not at the time required by Section 7.4.
7.8.2. Liens of mechanics, carriers, warehousemen or materialmen
arising in the ordinary course of business in respect of obligations which
are not overdue or which are being contested in good faith.
7.8.3. Liens, other than Liens created by section 4068 of ERISA,
resulting from deposits or pledges made in the ordinary course of business
to secure payment of workers' compensation, unemployment insurance, old age
pension or other social security, or in connection with or to secure the
performance of bids, tenders or contracts made in the ordinary course of
business, or to secure statutory obligations or surety, performance or
appeal bonds.
7.8.4. Liens in respect of judgments or awards the payment of which
is not at the time required by Section 7.4.
7.8.5. Purchase money security interests (including mortgages, any
conditional sale or other title retention agreement and any Capitalized
Lease); provided, however, that the principal amount of Indebtedness
-------- -------
secured by each such security interest in each such item (or group of
items) of property shall not exceed the cost of the item (or group of
items) subject thereto and each such security interest shall attach only to
the particular item (or group of items) so acquired and any additions or
accessions thereto.
7.8.6. Encumbrances in respect of easements, rights of way, zoning
restrictions, restrictions on the use of real property and minor defects
and irregularities in the title thereto, landlord's or lessor's liens under
leases to which the Company or any of its Restricted Subsidiaries is a
party and other similar encumbrances, none of which in the reasonable
opinion of the Company interferes with the use of the property by the
Company or such Restricted Subsidiary in the ordinary conduct of its
business.
7.8.7. Liens of utilities and other Persons pursuant to pole
agreements, and restrictions on the transfer of rights under Franchises or
pole agreements, and any encumbrances created in favor of franchising
authorities and subscribers by provisions of Franchises on cable television
plant and equipment located in the areas covered thereby.
7.8.8. Pledges of Investments in Unrestricted Subsidiaries to
secure contractual obligations (including, without limitation,
Indebtedness) of Unrestricted Subsidiaries.
7.8.9. Leases or subleases granted to others in the ordinary course
of business and not materially interfering with the ordinary conduct of the
business of the Company and its Restricted Subsidiaries, taken as a whole.
-39-
<PAGE>
7.9. Investments. Neither the Company nor any of its Restricted
-----------
Subsidiaries shall have outstanding or acquire or commit itself to acquire or
hold any Investment except the following:
7.9.1. Investments in
(a) negotiable certificates of deposit, time deposits, short-term
obligations and bankers' acceptances issued by any Lender or any United
States bank or trust company having capital and surplus and undivided
profits aggregating at least $100,000,000 and rated Prime-1 by Moody's or
A-1 by S&P;
(b) short-term obligations issued by corporations rated Prime-1 by
Moody's or A-1 by S&P;
(c) any direct obligation of the United States of America or any
agency or instrumentality thereof which (i) has a remaining maturity at the
time of purchase of not more than two years or (ii) is subject to a
repurchase agreement with one of the Lenders, banks or trust companies
referred to in clause (a) hereof exercisable within two years from the time
of purchase; and
(d) repurchase agreements with any of the banks or trust companies
referred to in clause (a) hereof.
7.9.2. Investments in Restricted Subsidiaries or in the Company.
7.9.3. Investments evidenced by deposits with, and advances to,
suppliers of goods and services in the ordinary course of business.
7.9.4. Investments in any Person who is an employee of the Company
or any of its Restricted Subsidiaries (other than an employee who is an
Affiliate); provided, however, that the aggregate outstanding amount of
-------- -------
such Investments shall not at any time exceed $1,000,000.
7.9.5. Investments in Affiliates (other than the Company and its
Restricted Subsidiaries), including the acquisition of ownership interests
in Affiliates; provided, however, that, immediately after any such
-------- -------
Investment is made, no Event of Default shall exist; and provided, further,
-------- -------
that any transfer of assets (other than cash) shall be permitted under this
Section 7.9.5 only to the extent permitted by Section 7.10.
7.10. Sales of Assets; etc. Neither the Company nor any of its Restricted
--------------------
Subsidiaries will sell any of its assets (including Investments in Subsidiaries)
and no Restricted Subsidiary will issue any shares of its capital stock, or
rights or options to acquire such stock, to any Person other than the Company or
any of the Guarantors, except the following:
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<PAGE>
7.10.1. Normal retirements and replacements of property and
equipment in the ordinary course of business.
7.10.2. Sales of Investments in Unrestricted Subsidiaries
(including, without limitation, the Investment Subsidiaries).
7.10.3. Sales of assets (including Investments in Restricted
Subsidiaries) by the Company or any of its Restricted Subsidiaries for a
cash consideration representing the fair value thereof at the time of such
sale (as determined in good faith by the board of directors of the Company
or the executive committee thereof in the case of any transaction involving
consideration exceeding $50,000,000); provided, however, that immediately
-------- -------
after giving effect to any such sale,
(a) no Default shall exist;
(b) the sum of the respective contributions to Consolidated
Operating Income, calculated in accordance with clause (d) below, for all
assets sold pursuant to this Section 7.10.3 by the Company and its
Restricted Subsidiaries during the immediately preceding twelve-month
period up to and including the date of such sale (other than sales that
were or would otherwise have been permitted by the other provisions of this
Section 7.10), together with all Restricted Subsidiaries released during
such period in accordance with Section 6.8 and Operating Asset exchange
shortfalls during such period deemed asset sales pursuant to Section
7.10.4, shall not exceed 15%; and
(c) the sum of the respective contributions to Consolidated
Operating Income, calculated in accordance with clause (e) below and netted
against certain amounts in the event of a Qualifying Reinvestment as
provided in such clause (e), for all assets sold pursuant to this Section
7.10.3 by the Company and its Restricted Subsidiaries during the period
commencing on the later of June 30, 1994 and the date which is five years
prior to the date of such sale and ending on the date of such sale (other
than sales that were or would otherwise have been permitted by the other
provisions of this Section 7.10), together with all Restricted Subsidiaries
released during such period in accordance with Section 6.8 and Operating
Asset exchange shortfalls during such period deemed asset sales pursuant to
Section 7.10.4, shall not exceed 30%.
(d) For purposes of calculating the foregoing clause (b) and clause
(b) of Section 7.10.4, the percentage accounted for by each asset so sold
or Restricted Subsidiary so released is that percentage of Consolidated
Operating Income in the most recently completed period of four fiscal
quarters for which financial statements have been (or are required to have
been) furnished to the Lenders in accordance with Section 7.2.1 or 7.2.2
preceding such sale or release which was contributed by such asset or
released Restricted Subsidiary.
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<PAGE>
(e) For purposes of calculating the foregoing clause (c):
(i) for each group of Operating Assets acquired in a Qualifying
Reinvestment, the percentage of Consolidated Operating Income
contributed by such Operating Assets shall be determined by measuring
(A) the Consolidated Operating Income of such Operating Assets (on a
pro forma basis) during the most recently completed period of four
fiscal quarters for which financial statements have been (or are
required to have been) furnished to the Lenders in accordance with
Section 7.2.1 or 7.2.2 prior to the acquisition of such Operating
Assets against (B) the Consolidated Operating Income of the Company
and its Restricted Subsidiaries during such period, and
(ii) the aggregate percentage of Consolidated Operating Income
for all assets so sold or Restricted Subsidiaries so released equals
(a) the sum of the historical percentages calculated in accordance
with the foregoing clause (d) in respect of assets sold or Restricted
Subsidiaries released during the applicable five-year (or shorter)
period minus (b) the sum of the historical percentages calculated in
-----
accordance with the foregoing clause (i) in respect of Operating
Assets acquired in a Qualifying Reinvestment during such five-year (or
shorter) period.
7.10.4. The Company and its Restricted Subsidiaries may exchange
Operating Assets for Operating Assets of another Person; provided, however,
-------- -------
that immediately after giving effect to any such exchange,
(a) no Default shall exist; and
(b) the sum of the respective contributions to Consolidated Operating
Income, calculated in accordance with clause (d) of Section 7.10.3, for all
Operating Assets so exchanged by the Company and its Restricted
Subsidiaries during the immediately preceding twelve-month period up to and
including the date of such exchange (other than transactions that were or
would otherwise have been permitted by the other provisions of this Section
7.10) shall not exceed 15%.
In the event that any Operating Assets acquired by the Company and its
Restricted Subsidiaries in any such exchange contribute less Consolidated
Operating Income (on a pro forma basis) than the Operating Assets
transferred by the Company and its Restricted Subsidiaries in such exchange
(in each case calculated in accordance with clause (d) of Section 7.10.3),
the amount of such shortfall in Consolidated Operating Income shall be
considered an asset sale under Section 7.10.3. In connection with an
exchange of Operating Assets permitted by this Section 7.10.4, the Company
and its Restricted Subsidiaries, on the one hand, and the other Person
party to such exchange, on the other hand, may receive or give cash and
other consideration to the extent necessary to reflect differences in the
values of the Operating Assets being exchanged.
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<PAGE>
7.10.5. So long as immediately after giving effect thereto no Default
exists, Restricted Subsidiaries may transfer assets to the Company or any
Guarantor.
7.11. Mergers. Neither the Company nor any of its Restricted Subsidiaries
-------
will enter into any merger or consolidation, except the following:
7.11.1. Any Restricted Subsidiary may consolidate with or merge
into the Company or any other Guarantor if the Company or a Guarantor, as
the case may be, shall be the surviving corporation.
7.11.2. Any corporation or partnership other than the Company or a
Restricted Subsidiary may merge into the Company or a Restricted Subsidiary
or any Restricted Subsidiary may consolidate with or merge into any other
corporation or partnership, if:
(a) the Company or a Restricted Subsidiary, as the case may be,
shall be the surviving corporation or partnership (except that if a
Guarantor is party to such consolidation or merger, the Company or a
Guarantor must be the surviving corporation or partnership),
(b) prior to such merger, such other corporation or partnership had
conducted its business so as to derive its revenues from the cable
television and/or telecommunications business and related activities and
(c) immediately after giving effect to such merger, no Default
exists.
7.11.3. Any Restricted Subsidiary may consolidate with or merge
into any other Person in connection with the sale of the assets of such
Restricted Subsidiary to the extent permitted by Section 7.10.
7.11.4. The Company may consolidate with and merge into U S WEST,
Inc. or a wholly owned subsidiary of U S WEST, Inc. in accordance with the
Merger Agreement, so long as:
(a) either (i) U S WEST, Inc. succeeds to and assumes all of
the liabilities and obligations of the Company under each of the
Lender Agreements pursuant to an assumption agreement or other
written instrument reasonably satisfactory to the Managing Agents,
or (ii) U S WEST, Inc. or U S WEST Capital Funding Inc. guarantees
the payment and performance of the Credit Obligations pursuant to a
guarantee that is reasonably satisfactory to the Managing Agents;
and in each such case the Lenders have been furnished with legal
opinions reasonably satisfactory to the Managing Agents and evidence
of corporate authorization with respect to U S WEST, Inc. or U S
WEST Capital Funding Inc.; and
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<PAGE>
(b) immediately after giving effect to such merger, no
Default exists.
7.12. Distributions. Neither the Company nor any of its Restricted
-------------
Subsidiaries shall make any Distribution, except that:
7.12.1. Any Restricted Subsidiary may make Distributions to the
Company or any Guarantor and, so long as after giving effect thereto no
Default exists, any Restricted Subsidiary that is not a Guarantor.
7.12.2. So long as immediately after giving effect thereto no
Default exists, the Company may make Distributions to its former employees
in order to redeem or repurchase shares of its capital stock so long as
immediately after giving effect thereto the aggregate amount of all
Distributions made pursuant to this Section 7.12.2 does not exceed
$25,000,000.
7.12.3. So long as immediately after giving effect thereto no Event
of Default exists, the Company and its Restricted Subsidiaries may make
payments of interest on Subordinated Debt (including, without limitation,
the Senior Subordinated Debt).
7.12.4. So long as immediately after giving effect thereto no
Default exists, (a) any Restricted Subsidiary may, on a pro rata basis with
respect to all its stockholders or partners, as the case may be, pay
dividends on or make other Distributions with respect to, stock or
partnership interests owned by minority investors; and (b) the Company or
any of its Restricted Subsidiaries may redeem or purchase stock or
partnership interests of a Restricted Subsidiary owned by a minority
stockholder or partner, as the case may be, for fair value (as determined
in good faith by the Company); provided, however, that immediately after
-------- -------
giving effect thereto, the aggregate amount of all Distributions made to
any Person who is not a Restricted Subsidiary pursuant to clauses (a) and
(b) shall not exceed $25,000,000.
7.13. Certain Financial Tests.
-----------------------
7.13.1. Consolidated Total Debt to Consolidated Operating Income.
--------------------------------------------------------
On the last day of each fiscal quarter of the Company specified in the
table below, Consolidated Total Debt shall not exceed the percentage
specified in such table of four times Consolidated Operating Income for
such fiscal quarter:
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<PAGE>
<TABLE>
<CAPTION>
Fiscal Quarter Ending Percentage
--------------------- ----------
<S> <C>
June 30, 1996 775%
September 30, 1996 through
March 31, 1997 800%
</TABLE>
7.13.2. Consolidated Operating Cash Flow to Pro Forma Interest
------------------------------------------------------
Payments. On the last day of each fiscal quarter of the Company, four times
--------
Consolidated Operating Cash Flow for such fiscal quarter shall equal or
exceed 135% of Pro Forma Interest Payments for the four consecutive fiscal
quarters of the Company commencing immediately after such date.
7.13.3. Consolidated Operating Cash Flow to Pro Forma Debt Service.
----------------------------------------------------------
On the last day of each fiscal quarter of the Company, four times
Consolidated Operating Cash Flow for such fiscal quarter shall equal or
exceed 110% of Pro Forma Debt Service for the four consecutive fiscal
quarters of the Company commencing immediately after such date.
7.14. ERISA. Each of the Company and its Restricted Subsidiaries will
-----
meet, and will cause all Control Group Persons to meet, all minimum funding
requirements applicable to any Plan imposed by ERISA or the Code, and will at
all times comply in all material respects with the provisions of ERISA and the
Code which are applicable to the Plans. At no time shall the actuarial present
value of benefits liabilities under the Plans, calculated in a manner consistent
with Statement No. 87 of the Financial Accounting Standards Board, exceed the
current value of the aggregate net assets of the Plans by more than $5,000,000.
Neither the Company nor any of its Restricted Subsidiaries will permit any event
or condition to exist which would permit any Plan to be terminated pursuant to
sections 4041(c) or 4042 of ERISA under circumstances which would cause the lien
provided for in section 4068 of ERISA to attach to the assets of the Company or
any of its Restricted Subsidiaries.
7.15. No Amendments to Certain Agreements. The provisions of the
-----------------------------------
agreements referred to in Exhibit 7.7 shall not be amended, modified, waived or
terminated without the prior written consent of the Administrative Agent, acting
pursuant to the consent of the holders of at least a majority of the Pooled
Percentage Interests, so as (a) to increase the amounts paid or payable by the
Company and its Restricted Subsidiaries, (b) to increase the other obligations
of the Company and its Restricted Subsidiaries thereunder in any material
respect, or (c) to affect the subordination provisions with respect to any
Indebtedness.
7.16. Transactions with Affiliates. Neither the Company nor any of its
----------------------------
Restricted Subsidiaries shall effect any transaction with any Affiliate (other
than the Company and its Restricted Subsidiaries) on a basis less favorable to
the Company or its Restricted Subsidiary in question than would be the case if
such transaction had been effected with a Person that was not an Affiliate;
provided, however, that the foregoing prohibition shall not extend to the
- -------- -------
following:
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<PAGE>
(a) contracts of employment and compensation for services rendered
which have been duly authorized by a disinterested majority of the
Company's board of directors or of the compensation committee thereof;
(b) any transactions permitted by Sections 7.7 or 7.9;
(c) the provision of goods and services to any Unrestricted
Subsidiary if such goods and services are billed to such Unrestricted
Subsidiary on the basis of the provider's cost therefor;
(d) any guarantee of the obligations of any Affiliate so long as such
obligations contain terms which, in all material respects, are no less
favorable to such Affiliate than those terms which could, at the time, be
obtained in comparable transactions;
(e) the provision of management services to Affiliates; or
(f) any other transaction with an Affiliate of the Company (other
than a Person owning beneficially or of record 5% or more of the Company's
common stock) or any Restricted Subsidiary, if such transaction (i) is not
otherwise prohibited by this Agreement and (ii) a disinterested majority of
the Company's board of directors shall have determined that such
transaction is in the best interests of the Company or such Restricted
Subsidiary, such determination to be evidenced by a resolution of the
Company's board of directors (a copy of which, certified by the secretary
or an assistant secretary of the Company, shall be delivered to each
Managing Agent).
8. REPRESENTATIONS AND WARRANTIES. To induce each Lender to enter into this
Agreement, the Company and each Guarantor represents and warrants that:
8.1. Organization, Qualification and Standing.
----------------------------------------
8.1.1. The Company. The Company (a) is a corporation duly organized,
-----------
validly existing and in good standing under the laws of the State of Delaware,
(b) has the power and authority to own its property and to carry on its business
and (c) is duly qualified to do business and is in good standing as a foreign
corporation in all places where the failure to be so qualified is likely to
result in any material adverse effect on the business or assets or on the
condition, financial or otherwise, of the Company and its Restricted
Subsidiaries on a consolidated basis.
8.1.2. Subsidiaries. Each of the Company's Restricted Subsidiaries,
------------
including each Guarantor, (a) is a corporation or partnership duly organized,
validly existing and in good standing under the laws of the state of its
organization, (b) has the power and authority to own its property and to carry
on its business and is duly qualified to do business and (c) is
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<PAGE>
in good standing as a foreign corporation or partnership, as the case may
be, in all places where the failure to be so qualified is likely to result
in any material adverse effect on the business or assets or on the
condition, financial or otherwise, of the Company and its Restricted
Subsidiaries on a consolidated basis. Exhibit 8.1, after giving effect to
any supplement furnished in accordance with Section 7.2.1 or 7.2.2 prior to
the date such representation or warranty is made, correctly sets forth, as
to each Subsidiary of the Company its name, the jurisdiction of its
organization, whether it is a Restricted Subsidiary, the number of shares
of capital stock or the amount of other equity, partnership or other
beneficial interests of such Subsidiary owned, beneficially or of record,
by the Company or one of its Subsidiaries, the names of the Person or
Persons owning of record at least 6% of the outstanding capital stock,
equity, partnership or other beneficial interests of such Subsidiary not
owned by the Company or one of its Subsidiaries, and the percentage of each
class of such stock, equity, partnership or other beneficial interest owned
of record by each Person.
8.1.3. Capitalization. The Company and its Subsidiaries own the
--------------
outstanding capital stock, equity, partnership or other beneficial
interests of each Subsidiary shown as owned by them, respectively, in
Exhibit 8.1, after giving effect to any supplement furnished in accordance
with Section 7.2.1 or 7.2.2 prior to the date such representation or
warranty is made, in each case free of any mortgage, pledge, lien, charge,
encumbrance or option, except as set forth therein, and all of such stock,
equity, partnership or other beneficial interests, to the extent
applicable, is validly issued and outstanding, fully paid and nonassessable
except as set forth on Exhibit 8.1. There are no outstanding rights,
options, warrants, conversion rights or agreements for the purchase or
acquisition by third parties from any of the Company's Restricted
Subsidiaries of any shares of its capital stock, equity, partnership or
other beneficial interests.
8.2. Authorization, etc. The execution, delivery and performance (a) by
------------------
the Company of this Agreement, the Notes and the other Lender Agreements to
which it is a party, and (b) by each Guarantor of this Agreement and each other
Lender Agreement to which it is a party, have been duly authorized by all
necessary corporate or partnership action on the part of the Company or such
Guarantor and do not violate the charter, by-laws or partnership agreement, as
the case may be, or any Franchise or other agreement (including leases) or any
law or order, regulation, ruling or requirement of a court or public body or
authority to which the Company or any Guarantor is a party or by which it is
bound. No approval, authorization or other action by any governmental authority
or any other Person not heretofore obtained is required to be obtained by the
Company or any Guarantor in connection with the execution, delivery and
performance of this Agreement or any other Lender Agreement or the transactions
contemplated hereby or thereby, or the making of any borrowing by the Company
hereunder. Neither the Company nor any of its Subsidiaries (other than the
Investment Subsidiaries) owns any Margin Stock. Each of this Agreement, the
Notes and the other Lender Agreements as of the date furnished to the Lenders is
the valid and binding obligation of the Company and each Guarantor and is
enforceable against each such Person in accordance with its terms.
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8.3. Litigation. There is no litigation, at law or in equity, or any
----------
proceeding involving the Company or any Subsidiary before any federal, state or
municipal board or other governmental or administrative agency or
instrumentality pending, or to the knowledge of the Company or any Guarantor
threatened, which involves a material risk of any judgment or liability not
fully covered by insurance which with any significant likelihood may result in
any material adverse change in the business or assets or in the condition,
financial or otherwise, of the Company and its Restricted Subsidiaries on a
consolidated basis or which seeks to enjoin the consummation of any of the
transactions contemplated by this Agreement or any Lender Agreement, and no
judgment, decree or order of any court, board or other governmental or
administrative agency or instrumentality has been issued against the Company or
any of its Subsidiaries which has, or will have a material adverse effect on the
business, operations or assets or on the condition, financial or otherwise, of
the Company and its Restricted Subsidiaries on a consolidated basis.
8.4. Financial Statements. All balance sheets, earnings statements and
--------------------
other financial data which have been furnished by the Company to the Lenders
present fairly the financial condition as of the date and the results of the
operations for the period or periods stated to be covered thereby of the Company
and its Subsidiaries, and all other information, reports and other papers and
data furnished to the Lenders by or on behalf of the Company or any Guarantor
are accurate and correct in all material respects and complete insofar as
completeness may be necessary to give the Lenders true and accurate information
as to the subject matter contained therein, except that (a) interim financial
statements may not contain explanatory notes as are included in those for the
fiscal year which may be useful or necessary for understanding or evaluating
certain data set forth therein and (b) no representation or warranty is made
with respect to projections. All Indebtedness of the Company and its Restricted
Subsidiaries required to be set forth on Exhibit 7.7 pursuant to Section 7.7.4
or 7.7.5 is referred to in Exhibit 7.7 as of the dates specified therein.
8.5. Title to Properties. None of the assets of the Company or any
-------------------
Restricted Subsidiary is subject to any security agreement, mortgage, pledge,
lien or encumbrance, except liens or security interests permitted by Section
7.8.
8.6. No Adverse Developments. Since March 31, 1996, neither the financial
-----------------------
condition, business, operations, affairs, prospects, properties nor assets of
the Company and its Restricted Subsidiaries, taken as a whole, have been
materially adversely affected as the result of any legislative or regulatory
change, or any revocation, amendment or termination, or any such action pending
or threatened, of any franchise or license (including any Franchise) or right to
do business, or any fire, explosion, flood, drought, windstorm, earthquake,
accident, casualty, labor trouble, riot, condemnation, requisition, embargo, act
of God or of the public enemy or of armed forces, or other casualty (whether or
not related to the foregoing), whether or not insured against (other than as a
result of the termination or expiration of the Merger Agreement).
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8.7. Defaults. Neither the Company nor any Restricted Subsidiary is in
--------
default under any provision of its charter or by-laws or partnership agreement,
as the case may be, any agreement (including leases) to which it is a party or
by which it is bound or any law or order, regulation, ruling or requirement of
any court or public body or authority so as to affect adversely in any material
manner the business, assets or condition, financial or otherwise, of the Company
and its Restricted Subsidiaries on a consolidated basis.
8.8. Pension Plans. Each Plan maintained by the Company or any of its
-------------
Restricted Subsidiaries or any Control Group Person or to which any of them
makes contributions is in material compliance with the applicable provisions of
ERISA and the Code. As of the Initial Closing Date, neither the Company, any of
its Restricted Subsidiaries nor any Control Group Person maintains, contributes
to or participates in any pension plan that is a "defined benefit plan" as
defined in ERISA, except for The Continental Cablevision Retirement Plan. The
Company, its Restricted Subsidiaries and any Control Group Person have since
1980 maintained, contributed to or participated in no "multiemployer plan" as
defined in ERISA. The Company, each of its Subsidiaries and each Control Group
Person have met all of the funding standards applicable to the Plans, and there
exists no event or condition which would permit the institution of proceedings
to terminate any Plan under section 4042 of ERISA. The current value of benefits
liabilities under Title IV of ERISA of each Plan does not exceed the current
value of the Plans' assets allocable to such benefits by more than $5,000,000.
8.9. Disclosure. Neither this Agreement nor any agreement, document,
----------
certificate or statement furnished pursuant hereto to any Lender by or on behalf
of the Company or any of its Restricted Subsidiaries in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading; provided, however, that nothing
-------- -------
herein shall be deemed to require disclosure by the Company or any of its
Restricted Subsidiaries to any Lender with respect to general economic
conditions, competition or increased federal, state or municipal regulation.
8.10. Merger Agreement. The Company has all requisite corporate power and
----------------
authority to execute and deliver the Merger Agreement and to perform its
obligations thereunder and, subject to (i) the adoption of the Merger Agreement
by the holders of a majority of the voting power of the outstanding shares of
the capital stock of the Company, voting as a single class and (ii) the adoption
of an amendment to the Company's charter by 66 2/3% of the voting power of the
outstanding shares of the capital stock of the Company voting as a single class
and a majority of the voting power of each of the outstanding shares of the
Class A Common Stock and the Class B Common Stock voting as separate classes
(collectively, the "Stockholder Approvals"), to consummate the transactions
contemplated thereby. The execution and delivery of the Merger Agreement and
the consummation of the transactions contemplated thereby have been duly
authorized by all requisite corporate action on the part of the Company,
subject, in the case of the Merger Agreement and the amendment to the Company's
charter, to the Stockholder Approvals. The Merger Agreement has been duly
executed and delivered by the Company and constitutes the
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legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and (ii) as the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. As of the Initial Closing Date, neither the Company nor, to the
Company's knowledge, U S WEST, Inc. has terminated the Merger Agreement or is in
default or violation (and no event has occurred which, with notice or the lapse
of time or both, would constitute a default or violation) of any material term,
condition or provision of the Merger Agreement.
9. EVENTS OF DEFAULT.
9.1. Events of Default. Each of the following events is referred to as an
-----------------
"Event of Default":
9.1.1. The Company shall fail to pay to the Administrative Agent for
the account of any Lender when due and payable (a) any interest on any
Credit Obligation or fees or expenses with respect thereto and such failure
shall continue for five days or (b) any principal of any Credit Obligation
and such failure shall continue for two days.
9.1.2. The Company or any of its Restricted Subsidiaries shall fail
to perform or observe any of the provisions of Sections 7.7, 7.8, 7.10,
7.11, 7.12, 7.13 or 7.15.
9.1.3. The Company or any of its Restricted Subsidiaries shall fail
to perform or observe any of the provisions of Sections 7.9, 7.14 or 7.16
and such failure shall continue for five days after the earlier of (a)
notice to the Company from the Administrative Agent or (b) any of the
Company's officers or directors obtains knowledge of any such failure.
9.1.4. The Company or any of its Restricted Subsidiaries shall fail
to perform or observe any other covenant, agreement or provision to be
performed or observed by it under this Agreement or any other Lender
Agreement and such failure shall continue for 15 days after the earlier of
(a) notice thereof from the Administrative Agent to the Company or (b) any
of the Company's officers or directors obtains knowledge of any such
failure.
9.1.5. Any representation, warranty, statement, certificate,
schedule or report made herein or in any other Lender Agreement or
furnished hereunder or thereunder shall prove to have been false or
misleading in any materially adverse respect as of the time made or
furnished and shall not have been corrected within five days after a
Financial Officer of the Company has actual knowledge thereof.
9.1.6. (a) Any event of default with respect to any Indebtedness of
the Company or any Restricted Subsidiary outstanding in an aggregate
principal amount exceeding
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$25,000,000 which permits the acceleration of the maturity thereof, (b) any
acceleration of the maturity of any Indebtedness of the Company or any
Restricted Subsidiary outstanding in an aggregate principal amount
exceeding $25,000,000, or (c) the failure of the Company or any Restricted
Subsidiary to make any payment of any such Indebtedness for borrowed money
outstanding in an aggregate principal amount exceeding $25,000,000 when due
and payable and such failure shall continue beyond the period of grace, if
any, therein specified.
9.1.7. Prior to the consummation of the merger permitted by Section
7.11.4, the Management Group shall fail to own, directly or indirectly, at
least 25% of the voting power of the Company's capital stock; provided,
--------
however, that so long as the Management Group maintains a block of the
-------
voting power of the Company's capital stock larger than any block held by
any other Person together with "affiliates" (as defined in Rule 12b-2 under
the Exchange Act) of such Person and any members of a "group" (within the
meaning of Rule 13d-1 under the Exchange Act) with such Person, the voting
power of the Management Group may decrease below 25% after an offering and
sale of capital stock by the Company.
9.1.8. Franchises covering 25% (or 15% in the event that Consolidated
Total Debt as of the last day of the most recently completed fiscal quarter
for which financial statements have been (or are required to have been)
furnished in accordance with Section 7.2.1 or 7.2.2 exceeded 550% of four
times Consolidated Operating Income for such fiscal quarter) of the
subscribers of the Company and its Restricted Subsidiaries (as of the
respective dates of expiration or termination) shall have expired or been
terminated since the date hereof without having been renewed, extended or
replaced.
9.1.9. The Company or any of its Restricted Subsidiaries shall:
(a) commence a voluntary case under the Bankruptcy Code, or
authorize, by appropriate proceedings of its board of directors or other
governing body, the commencement of such a voluntary case;
(b) file an answer or other pleading admitting or failing to deny the
material allegations of a petition filed against it commencing an
involuntary case under the Bankruptcy Code, or seeking, consenting to or
acquiescing in the relief therein provided, or fail to controvert timely
the material allegations of any such petition;
(c) have entered against it an order for relief in any involuntary
case commenced under the Bankruptcy Code (or other law dealing with
insolvency, bankruptcy or receivership) or not have any such case dismissed
within 30 days after the commencement thereof;
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<PAGE>
(d) seek relief as a debtor under any applicable law, other than the
Bankruptcy Code, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the
rights of creditors, or consent to or acquiesce in or become subject to
such relief;
(e) have entered against it an order by a court of competent
jurisdiction (i) finding it to be bankrupt or insolvent, (ii) ordering or
approving its liquidation, reorganization or any modification or alteration
of the rights of its creditors or (iii) assuming custody of, or appointing
a receiver or other custodian for, all or a substantial portion of its
property; or
(f) make an assignment for the benefit of, or enter into a
composition with, its creditors, or appoint or consent to the appointment
of a receiver or other custodian for all or a substantial portion of its
property.
9.2. Certain Actions Following an Event of Default. If one or more Events
---------------------------------------------
of Default shall occur, then, in each and every such case:
9.2.1. Specific Performance; Exercise of Remedies. The
------------------------------------------
Administrative Agent may (and, upon the request of such Lenders as shall
hold at least 66 2/3% of the Revolving Percentage Interests, shall) proceed
to protect and enforce the Lenders' and its rights by suit in equity,
action at law and/or other appropriate proceeding either for specific
performance of any covenant or condition contained in this Agreement or any
other Lender Agreement or in any instrument or assignment delivered to the
Administrative Agent pursuant to this Agreement or any other Lender
Agreement, or in aid of the exercise of any power granted in this Agreement
or any other Lender Agreement or any such instrument or assignment.
9.2.2. Acceleration. Unless there shall have occurred a Bankruptcy
------------
Default, in which case the unpaid balance of the Credit Obligations shall
become immediately due and payable, the Administrative Agent may (and, upon
the request of such Lenders as shall hold at least 66 2/3% of the Revolving
Percentage Interests, shall) by notice in writing to the Company declare
all or any portion of the unpaid balance of the Credit Obligations then
outstanding to be immediately due and payable, and thereupon such unpaid
balance or portion thereof shall become so due and payable without
presentation, protest or further demand or notice of any kind, all of which
are hereby expressly waived, and the Lenders' obligation to make further
loans hereunder shall terminate.
9.2.3. Enforcement of Payment; Setoff. The Administrative Agent may
------------------------------
(and, upon the request of such Lenders as shall hold at least 66 2/3% of
the Revolving Percentage Interests, shall) proceed to enforce payment of
the Credit Obligations or a portion thereof in such manner as it may elect,
and each Lender may offset and apply toward the payment of the Credit
Obligations or a portion thereof any Indebtedness from such Lender to the
Company or any other obligor, including any Indebtedness represented
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<PAGE>
by deposits in any general or special account maintained with such Lender,
regardless of the adequacy of any security for the Credit Obligations, and
the Lenders shall have no duty to determine the adequacy of such security
in connection with any such offset.
9.3. Annulment of Defaults. A Default or an Event of Default shall not be
---------------------
deemed to have occurred or to be in existence for any purpose of this Agreement
if the Administrative Agent, with the consent of such Lenders as shall hold the
amount of Revolving Percentage Interests required by Section 12.7, shall have
waived such Default or Event of Default in writing or stated in writing that the
same has been cured to its reasonable satisfaction, but no such waiver shall
extend to or affect any subsequent Default or Event of Default or impair any of
the Lenders' rights or any rights of the Administrative Agent upon the
occurrence thereof.
9.4. Waivers. The Company hereby waives to the extent permitted by
-------
applicable law (a) all presentments, demands for performance, notices of
nonperformance (except to the extent required by the provisions hereof),
protests, notices of protest and notices of dishonor in connection with the
Loan, (b) any requirement of diligence or promptness on the Lenders' or the
Administrative Agent's part in the enforcement of their or its rights under this
Agreement or any other Lender Agreement, (c) any and all notices of every kind
and description which may be required to be given by any statute or rule of law
and (d) any defense of any kind which it may now or hereafter have with respect
to its liability under this Agreement (other than indefeasible payment in full
of any of the Credit Obligations), under any other Lender Agreement or with
respect to any of the Credit Obligations.
9.5. Course of Dealing. No course of dealing between the Company, any
-----------------
Guarantor and the Administrative Agent or any Lender shall operate as a waiver
of any of the Lenders' or the Administrative Agent's rights under this Agreement
or any other Lender Agreement or with respect to any of the Credit Obligations.
No delay or omission on the Lenders' or the Administrative Agent's part in
exercising any right under this Agreement or any other Lender Agreement or with
respect to any of the Credit Obligations shall operate as a waiver of such right
or any other right hereunder. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right or remedy on any future occasion.
No waiver or consent shall be binding upon the Lenders unless it is in writing
and signed by the Administrative Agent or such Lenders as may be required by
Section 12.7. The making of a loan hereunder during the existence of a Default
shall not constitute a waiver thereof.
10. EXPENSES; INDEMNITY; AGENT'S FEE.
10.1. Fees and Expenses. Whether or not the transactions contemplated
-----------------
hereby shall be consummated, the Company will bear (a) all expenses of the
Managing Agents (including the reasonable fees and disbursements of the Managing
Agents' special counsel) in connection with the preparation of the Lender
Agreements and the transactions contemplated hereby and thereby and operations
hereunder or thereunder and (b) all expenses incurred by the Managing Agents,
the Lenders or any holder of any Credit Obligation in connection with the
enforcement of any
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<PAGE>
rights hereunder or under any Lender Agreement, including without limitation
costs of collection and reasonable attorneys' fees and out-of-pocket expenses.
10.2. Indemnification. The Company will indemnify each Managing Agent,
---------------
each Lender, the directors, officers, employees and agents of each Managing
Agent and each Lender and each other Person, if any, who controls such Managing
Agent or any Lender, and hold such Managing Agent, each Lender and such other
Persons harmless from and against any and all claims, damages, losses,
liabilities, judgments and expenses (including without limitation all reasonable
fees and expenses of counsel and all expenses of litigation or preparation
therefor) which such Managing Agent, any Lender or such other Persons may incur
or which may be asserted against such Managing Agent, any Lender or such other
Persons in connection with or arising out of any investigation, litigation or
proceeding involving the Company, any of its Affiliates or any officer, director
or employee thereof or this Agreement or the other Lender Agreements (including
compliance with or contesting of any subpoenas or other process issued against
such Managing Agent, any Lender or any director, officer or employee of such
Managing Agent, any Lender or any Person, if any, who controls such Managing
Agent or any Lender in any proceeding involving the Company or any of its
Affiliates or any Lender Agreement), whether or not such Managing Agent or any
Lender is a party thereto, other than claims, damages, losses, liabilities or
judgments (a) asserted by one or more Lenders against another Lender in
connection with operations hereunder governed by Section 12, (b) with respect to
any matter as to which such Managing Agent, such Lender or such other Person
seeking indemnity shall have been finally adjudicated to have acted with gross
negligence or willful misconduct or (c) brought by the Company against any
Lender. The Company will also indemnify the Lenders against and hold them
harmless from any liability, loss or damage resulting from the violation by the
Company of Section 2.3.
Promptly upon receipt by any indemnified party hereunder of notice of the
commencement of any action against such indemnified party for which a claim is
to be made against the Company hereunder, such indemnified party shall notify
the Company in writing of the commencement thereof, although the failure to
provide such notice shall not affect the indemnification rights of any such
indemnified party hereunder to the extent such indemnified party demonstrates to
the reasonable satisfaction of the Company that such failure to provide notice
does not prejudice the Company in its defense of such claim. The Company shall
have the right, at its option upon notice to the indemnified parties, to defend
any such matter at its own expense and with its own counsel, except as provided
below, which counsel must be reasonably acceptable to the indemnified parties.
The indemnified party shall cooperate with the Company in the defense of such
matter. The indemnified party shall have the right to employ separate counsel
and to participate in the defense of such matter at its own expense. In the
event that (i) the employment of separate counsel by an indemnified party has
been authorized in writing by the Company, (ii) the Company has failed to assume
the defense of such matter or (iii) the named parties to any such action
(including impleaded parties) include any indemnified party who has been advised
by counsel that there may be one or more legal defenses available to it, or
prospective bases for liability against it, which are different from those
available to or against the Company and its Affiliates, then the Company shall
not have the right to assume the defense of such matter with
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<PAGE>
respect to such indemnified party. The Company shall not be liable for any
compromise or settlement of any such matter effected without the written consent
of the Company, which consent may not be unreasonably delayed. The Company shall
not compromise or settle any such matter against an indemnified party without
the written consent of the indemnified party, which consent may not be
unreasonably delayed, unless such settlement or compromise does not involve any
payment of money by the indemnified party or any injunctive relief or factual
findings or stipulations binding on the indemnified party.
11. NOTICES. Except as otherwise specified in this Agreement, any notice
required to be given pursuant to this Agreement shall be given in writing. Any
notice, demand or other communication in connection with this Agreement shall be
deemed to be given if given in writing (including telex, telecopy or similar
teletransmission) addressed as provided below (or to the addressee at such other
address as the addressee shall have specified by notice actually received by the
addressor), and if either (a) actually delivered in fully legible form to such
address (evidenced in the case of a telex by receipt of the correct answerback,
in the case of a telecopy by a confirmation receipt or in the case of another
teletransmission by whatever means of confirmation as shall at the time be
customary) or (b) in the case of a letter, five business days shall have elapsed
after the same shall have been deposited in the United States mails, with first-
class postage prepaid and registered or certified.
If to the Company or any of its Subsidiaries, to it in care of the Company
at its address set forth in Exhibit 8.1 (as supplemented pursuant to Sections
7.2.1 and 7.2.2), to the attention of the treasurer.
If to any Lender or any Agent, to it at its address set forth in Exhibit
12.1 or in the Register, with a copy to the Administrative Agent.
12. OPERATIONS. The making of loans and operations under this Agreement shall
be governed by the following provisions:
12.1. Interests in the Loan. The percentage interest of each Lender in
---------------------
the Loan shall be computed based on the maximum principal amount for each Lender
as set forth on Exhibit 12.1. Upon the consummation of any assignment pursuant
to Section 13.1 or 13.3, the Administrative Agent shall modify Exhibit 12.1 to
reflect such assignment.
12.2. Company to Pay Administrative Agent. The Company shall be fully
-----------------------------------
protected in making all payments in respect of the Credit Obligations to the
Administrative Agent notwithstanding any notice to the contrary from any Lender
other than the Administrative Agent.
12.3. Lender Operations for Advances and Payments, etc.
------------------------------------------------
12.3.1. Advances and Payments. Each advance under this Agreement
---------------------
shall be made by the Administrative Agent and shall be (a) for its own
account as a Lender with
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<PAGE>
respect to the Loan to the extent of its Revolving Percentage Interest and
(b) for the account of the other Lenders with respect to the Loan to the
extent of their respective Revolving Percentage Interests. The obligations
of each Lender to make any loan hereunder shall be several (and not joint
or joint and several) in accordance with its respective interests. Each
Lender hereby authorizes and requests the Administrative Agent to advance
for such Lender's account, pursuant to the terms hereof, its Revolving
Percentage Interest in each Loan to be made by such Lender, and each Lender
agrees forthwith to reimburse the Administrative Agent in immediately
available funds for the amount of such Revolving Percentage Interest. All
payments of principal, interest and commitment fees in respect of the loans
made pursuant to Section 2, including prepayments, shall, as a matter of
convenience, be made to the Administrative Agent at the Boston Office and
the shares thereof shall be credited forthwith to the Lenders by the
Administrative Agent in immediately available funds in proportion to their
respective interests in such loans.
12.3.2. Delinquent Lenders; Nonperforming Lenders. In the event that
-----------------------------------------
any Lender fails to reimburse the Administrative Agent pursuant to Section
12.3.1 for the interests of such Lender (a "Delinquent Lender") in any
credit advanced by the Administrative Agent pursuant hereto, overdue
amounts (the "Delinquent Payment") due from the Delinquent Lender to the
Administrative Agent shall bear interest, payable by the Delinquent Lender
on demand, at a per annum rate equal to (a) the Federal Funds Rate for the
first four days overdue and (b) the sum of 2% plus the Federal Funds Rate
----
for any longer period. Such interest shall be payable to the Administrative
Agent for its own account for the period commencing on the date of the
Delinquent Payment and ending on the date the Delinquent Lender reimburses
the Administrative Agent on account of the Delinquent Payment (to the
extent not paid by the Company as provided below) and the accrued interest
thereon (the "Delinquency Period"), whether pursuant to the assignments
referred to below or otherwise. Upon notice by the Administrative Agent,
the Company will pay to the Administrative Agent the principal (but not the
interest) portion of the Delinquent Payment. During any other period in
which any Lender is not performing its obligations to extend credit under
Section 2 (a "Nonperforming Lender"), the Nonperforming Lender shall be
deemed to have assigned to each Lender that is not a Nonperforming Lender
(a "Performing Lender") all principal and other payments made by the
Company under Section 4 that would have thereafter otherwise been payable
under the Lender Agreements to the Nonperforming Lender. The Administrative
Agent shall credit a portion of such payments to each Performing Lender in
an amount equal to the Revolving Percentage Interest of such Performing
Lender divided by one minus the Revolving Percentage Interest of the
-----
Nonperforming Lender until the respective portions of the Loan owed to all
the Lenders are the same as the Revolving Percentage Interests of the
Lenders immediately prior to the failure of the Nonperforming Lender to
perform its obligations under Section 2. The foregoing provisions shall be
in addition to any other remedies the Administrative Agent, the Performing
Lenders or the Company may have under law or equity against the Delinquent
Lender as a result of the Delinquent Payment
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or against the Nonperforming Lender as a result of its failure to perform
its obligations under Section 2.
12.4. Sharing of Payments, etc. Each Lender agrees that (a) if by
-------------------------
exercising any right of set-off or counterclaim or otherwise, it shall receive
payment of a proportion of the aggregate amount of principal or interest due
with respect to its Revolving Percentage Interest in the Loan which is greater
than the proportion received by any other Lender in respect of the aggregate
amount of principal and interest due with respect to the Revolving Percentage
Interest in the Loan of such other Lender and (b) if such inequality shall
continue for more than 10 days, the Lender receiving such proportionately
greater payment shall purchase participations in the Revolving Percentage
Interests in the Loan held by the other Lenders, and such other adjustments
shall be made from time to time (including rescission of such purchases of
participations in the event the unequal payment originally received is recovered
from such Lender through bankruptcy proceedings or otherwise), as may be
required so that all such payments of principal and interest with respect to the
Loan held by the Lenders shall be shared by the Lenders pro rata in accordance
with their respective Revolving Percentage Interests; provided, however, that
-------- -------
this Section 12.4 shall not impair the right of any Lender to exercise any right
of set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of Indebtedness of the Company or any Guarantor other
than the Company's or such Guarantor's Indebtedness with respect to the Loan.
Each Lender that grants a participation in the Credit Obligations to a Credit
Participant shall require as a condition to the granting of such participation
that such Credit Participant agree to share payments received in respect of the
Credit Obligations as provided in this Section 12.4. The provisions of this
Section 12.4 are for the sole and exclusive benefit of the Lenders and no
failure of any Lender to comply with the terms hereof shall be available to the
Company or any Guarantor as a defense to the payment of the Credit Obligations.
12.5. Administrative Agent's Authority to Act. Each Lender hereby
---------------------------------------
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the other Lender
Agreements as are delegated to the Administrative Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto. In
acting hereunder and thereunder, the Administrative Agent is acting for its own
account as a Lender to the extent of its Revolving Percentage Interest in the
Loan and for the account of the other Lenders to the extent of each of their
Revolving Percentage Interests.
12.6. Administrative Agent's Resignation. The Administrative Agent may
----------------------------------
resign at any time by giving at least 60 days' prior written notice of its
intention to do so and upon the appointment by such Lenders as own at least a
majority of the Revolving Percentage Interests of a successor Administrative
Agent satisfactory to the Company. If no successor Administrative Agent shall
have been so appointed and shall have accepted such appointment within 45 days
after the retiring Administrative Agent's giving of such notice of resignation,
then the retiring Administrative Agent may with the consent of the Company,
which shall not be unreasonably withheld, appoint a successor Administrative
Agent which shall be a bank or a trust company
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organized under the laws of the United States of America or any state thereof
and having a combined capital, surplus and undivided profit of at least
$100,000,000; provided, however, that any successor Administrative Agent
-------- -------
appointed under this sentence may be removed upon the written request of such
Lenders as hold at least a majority of the Revolving Percentage Interests, which
request shall also appoint a successor Administrative Agent satisfactory to the
Company. Upon the appointment of a new Administrative Agent hereunder, the term
"Administrative Agent" shall for all purposes of this Agreement thereafter mean
such successor. After any retiring Administrative Agent's resignation hereunder
as Administrative Agent, or the removal hereunder of any successor
Administrative Agent, the provisions of this Agreement shall continue to inure
to the benefit of such Administrative Agent as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement.
12.7. Amendments, Consents, Waivers, etc. Except as otherwise set forth
----------------------------------
herein, the Administrative Agent may (and upon the request of such Lenders as
hold at least a majority of the Revolving Percentage Interests shall) take or
refrain from taking any action under this Agreement or any other Lender
Agreement, giving its written consent to any modification of or amendment to and
waiving in writing compliance with any covenant or condition in this Agreement
or any other Lender Agreement or any Default or Event of Default hereunder or
thereunder, all of which actions shall be binding upon all Lenders; provided,
--------
however, that:
- -------
(a) Without the written consent of such Lenders as hold at least a
majority of the Revolving Percentage Interests, no written modification of
or amendment to or waiver of compliance with or waiver of any provision of
this Agreement shall be made, except as provided below in this Section 12.7
and in Sections 12.7.1 and 12.12.
(b) Without the written consent of such Lenders as hold 100% of the
Revolving Percentage Interests, subject to Section 12.7.1, the
Administrative Agent shall not give its written consent to:
(i) any forgiveness or similar reduction in the principal
of, or any reduction in the stated rate of interest on, or the stated
amount of any fee relating to, the Credit Obligations;
(ii) any extension or postponement of the stated time of
payment of the principal amount of, interest on, or any fee relating
to, the Credit Obligations;
(iii) any increase in the amount, or extension of the term,
of the Lenders' commitments hereunder beyond those provided for under
Sections 2 and 12.1;
(iv) any total or partial release or termination of the
guarantees provided in Section 6, except to the extent otherwise
permitted by Section 6.8 or in connection with a sale of the stock in
or assets of or merger of a Restricted Subsidiary permitted by
Sections 7.10 and 7.11; and
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(v) any alteration of the Lenders' rights of set-off
contained in Section 9.2.3.
12.7.1. Modifications to Voting Percentages. After the occurrence of
-----------------------------------
(a) an Event of Default under Sections 9.1.1 or 9.1.9, (b) the acceleration
of all or any part of the Credit Obligations, (c) any exercise of rights of
setoff contained in Section 9.2.3 or (d) any other Event of Default if
Lenders holding at least 66 2/3% of the principal amount of the then
outstanding Credit Obligations shall have so notified the Administrative
Agent (each a "Pro Rata Event") and until such Pro Rata Event has been
waived pursuant to Section 12.11, all references in the preceding
provisions of this Section 12.7 to Revolving Percentage Interests or Pooled
Percentage Interests, and all references in this Agreement to Revolving
Percentage Interests and Pooled Percentage Interests that relate to voting
by the Lenders' or their consent to modifications, amendments or waivers of
this Agreement (except as provided in Section 12.7.2), shall be deemed to
be references to such Lenders as shall at the time of determination hold
the specified percentage of the principal amount of the Credit Obligations
then outstanding under this Agreement and Credit Obligations under, and as
defined in, the 1994 Credit Agreement, respectively.
12.7.2. Obligations to Make New Loans. Notwithstanding Section
-----------------------------
12.7.1, if after a Pro Rata Event this Agreement is modified or amended, or
any waiver or consent is granted hereunder, the Lenders shall not be
required to make any loan pursuant to Section 2 unless such modification,
amendment, waiver or consent shall have been approved by the requisite
holders of the Revolving Percentage Interests or Pooled Percentage
Interests, as the case may be (determined without regard to Section
12.7.1).
12.7.3. Conforming Amendments, Consents and Waivers Under 1994 Credit
-------------------------------------------------------------
Agreement. Notwithstanding anything to the contrary in this Agreement, if
---------
the lenders under the 1994 Credit Agreement make any amendment to, or grant
any waiver of compliance with, any provision of the 1994 Credit Agreement
which requires less than the unanimous consent of such lenders, then a
substantially similar amendment to, or waiver of compliance with, any
corresponding provision of this Agreement may be made with the written
consent of such Lenders and lenders under the 1994 Credit Agreement as hold
at least a majority of the Pooled Percentage Interests.
12.8. Concerning the Administrative Agent. The following provisions shall
-----------------------------------
apply to the Administrative Agent and the conduct of the Administrative Agent's
duties hereunder:
12.8.1. Action in Good Faith, etc. The Administrative Agent and its
-------------------------
officers, directors, employees and agents shall be under no liability to
any Lender, to any future holder of any interest in the Credit Obligations
or to the Company or any Guarantor for any action or failure to act taken
or suffered in good faith and without gross negligence, and any action or
failure to act in accordance with an opinion of its counsel selected with
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reasonable care shall conclusively be deemed to be in good faith. The
Administrative Agent shall in all cases be entitled to rely, and shall be
fully protected in relying, on instructions given to the Administrative
Agent by the required holders of Revolving Percentage Interests or Pooled
Percentage Interests, as the case may be, as provided in this Agreement.
12.8.2. No Implied Duties, etc. The Administrative Agent shall have
----------------------
and may exercise such powers as are specifically delegated to the
Administrative Agent under this Agreement or any other Lender Agreement
together with all other powers as may be incidental thereto. The
Administrative Agent shall have no implied duties to any Person or any
obligation to take any action under this Agreement or any other Lender
Agreement except for any action specifically provided for in this Agreement
or any other Lender Agreement to be taken by the Administrative Agent.
Before taking any action under this Agreement or any other Lender
Agreement, the Administrative Agent may request a reasonable specific
indemnity satisfactory to it from each Lender in addition to the general
indemnity provided for in Section 12.10, and until the Administrative Agent
has received such specific indemnity, the Administrative Agent shall not be
obligated to take (although it may in its sole discretion take) any such
action under this Agreement or any other Lender Agreement.
12.8.3. Validity, etc. The Administrative Agent shall not be
-------------
responsible to any Lender or any future holder of any interest in the
Credit Obligations (a) for the legality, validity, enforceability or
effectiveness of this Agreement or any other Lender Agreement or (b) for
any recitals, reports, representations, warranties or statements contained
in or made in connection with this Agreement or any other Lender Agreement.
12.8.4. Compliance. The Administrative Agent shall not be obligated
----------
to ascertain or inquire as to the performance or observance of any of the
terms of this Agreement or any other Lender Agreement, and in connection
with any extension of credit under this Agreement or any other Lender
Agreement, the Administrative Agent shall be fully protected in relying on
a certificate of the Company as to the fulfillment by the Company of any
conditions to such extension of credit.
12.8.5. Employment of Administrative Agents and Counsel. The
-----------------------------------------------
Administrative Agent may execute any of its duties as Administrative Agent
under this Agreement or any other Lender Agreement by or through employees,
agents and attorneys-in-fact and shall not be answerable to any Lender, the
Company or the Guarantors (except as to money or securities received by the
Administrative Agent or the Administrative Agent's authorized agents) for
the default or misconduct of any such employees, agents or attorneys-in-
fact selected by the Administrative Agent with reasonable care. The
Administrative Agent shall be entitled to advice of counsel concerning all
matters pertaining to the agency hereby created and its duties hereunder.
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12.8.6. Reliance on Documents and Counsel. The Administrative Agent
---------------------------------
shall be entitled to rely, and shall be fully protected in relying, upon
any affidavit, certificate, cablegram, consent, instrument, letter, notice,
order, document, statement, telecopy, telegram, telex or teletype message
or writing believed in good faith by the Administrative Agent to be genuine
and correct and to have been signed, sent or made by the Person in
question, including without limitation any telephonic or oral statement
made by such Person and, with respect to legal matters, upon the opinion of
counsel selected by the Administrative Agent with reasonable care.
12.8.7. Administrative Agent's Reimbursement. Each Lender severally
------------------------------------
agrees to reimburse the Administrative Agent in the amount of its Revolving
Percentage Interest thereof for any expenses not reimbursed by the Company
or the Guarantors (without limiting their obligation to make such
reimbursement): (a) for which the Administrative Agent is entitled to
reimbursement by the Company or the Guarantors under this Agreement or any
other Lender Agreement, and (b) after the occurrence of a Default, for any
other reasonable expenses incurred by the Administrative Agent on the
Lenders' behalf in connection with the enforcement of their rights under
this Agreement or any other Lender Agreement.
12.8.8. Rights as a Lender. With respect to any credit extended by
------------------
it hereunder, The First National Bank of Boston shall have the same rights
and powers hereunder as any other Lender and may exercise such rights and
powers as though it were not the Administrative Agent, and unless the
context otherwise specifies, The First National Bank of Boston shall be
treated in its capacity as a Lender as though it were not the
Administrative Agent hereunder. Without limiting the generality of the
foregoing, the Revolving Percentage Interest and the Pooled Percentage
Interest of The First National Bank of Boston shall be included in any
computations of Revolving Percentage Interests or Pooled Percentage
Interests hereunder. The First National Bank of Boston and its Affiliates
may accept deposits from, lend money to, act as trustee for and generally
engage in any kind of banking or trust business with the Company and any of
its Affiliates and any Person who may do business with or own an equity
interest in the Company or any of its Affiliates, all as if such bank were
not the Administrative Agent and without any duty to account therefor to
the other Lenders.
12.9. Independent Credit Decision. Each Lender acknowledges that it has
---------------------------
independently and without reliance upon the Managing Agents, based on the
financial statements and other documents referred to in Section 8.4, on the
other representations and warranties contained herein and on such other
information with respect to the Company and the Guarantors as such Lender has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and to make the loans provided for hereunder. Each Lender represents
to the Managing Agents that such Lender will continue to make its own
independent credit and other decisions in taking or not taking action under this
Agreement or any other Lender Agreement. Each Lender expressly acknowledges
that neither the Managing Agents nor any of their respective officers,
directors,
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employees, agents, attorneys-in-fact or affiliates has made any representations
or warranties to such Lender, and no act by the Managing Agents taken under this
Agreement or any other Lender Agreement, including without limitation any review
of the affairs of the Company and its Subsidiaries, shall be deemed to
constitute any representation or warranty by the Managing Agents. Except for
notices, reports and other documents expressly required to be furnished to each
Lender by the Administrative Agent under this Agreement or any other Lender
Agreement, no Managing Agents shall have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
operations, property, condition, financial or otherwise, or creditworthiness of
the Company or any of its Subsidiaries or other Affiliates which may come into
the possession of any Managing Agent or any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates.
12.10. Indemnification. The holders of the Credit Obligations hereby
---------------
agree to indemnify each Managing Agent (to the extent not reimbursed by the
Company or the Guarantors and without limiting their obligation to do so),
ratably according to such holders' Revolving Percentage Interests, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments and suits, and any and all reasonable costs, expenses or
disbursements, of any kind whatsoever which may at any time be imposed on,
incurred by or asserted against such Managing Agent relating to or arising out
of this Agreement, any other Lender Agreement, the transactions contemplated
hereby or thereby, or any action taken or omitted by such Managing Agent in
connection with any of the foregoing; provided, however, that the foregoing
-------- -------
shall not extend to actions or omissions which were not taken in good faith or
which were taken with gross negligence by such Managing Agent.
12.11. Waiver of Pro Rata Event. A Pro Rata Event shall not be deemed to
------------------------
have occurred or to exist for any purpose of this Agreement if each Lender shall
have waived such event in writing or stated in writing that the same has been
cured to its reasonable satisfaction, but no such waiver shall extend to or
affect any subsequent Pro Rata Event.
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assigns; provided, however, that (a) the Company and the Guarantors may not
-------- -------
assign their rights or obligations under this Agreement except for mergers or
liquidations permitted by Section 7.11, and (b) the Lenders shall not be
entitled to assign their respective interests in the Loan hereunder except as
set forth below in this Section 13.
13.1. Assignments by Lenders.
----------------------
13.1.1. Assignees and Assignment Procedures. Each Lender may (a)
-----------------------------------
without the consent of the Administrative Agent or the Company if the
proposed assignee is already a Lender hereunder or an Affiliate of a Lender
hereunder or (b) otherwise with the consents of the Administrative Agent
and the Company (which consents will not be unreasonably withheld), in
compliance with Section 14 and with applicable laws in connection with such
assignment, assign to one or more commercial banks or other financial
institutions (each, an "Assignee") all or a portion of its interests,
rights and obligations under this Agreement and the other Lender
Agreements, including all or a portion of its Commitment, the portion of
the Loan at the time owing to it and the Note held by it; provided,
--------
however, that:
-------
(i) the aggregate amount of the Commitment of the assigning
Lender subject to each such assignment to any Assignee other than
another Lender (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall not be less than
the lesser of (a) $10,000,000 or (b) the assigning Lender's total
Commitment;
(ii) after giving effect to such assignment, the assigning
Lender's Commitment shall not be less than $10,000,000 (unless such
Lender is assigning its entire Commitment); and
(iii) the parties to each such assignment shall execute and
deliver to the Administrative Agent and the Company an Assignment
and Acceptance (the "Assignment and Acceptance") substantially in
the form of Exhibit 13.1.1, together with the Note subject to such
assignment, any documents required by Section 14 and a processing
and recordation fee of $2,500 payable by the assigning Lender or the
Assignee to the Administrative Agent.
Upon acceptance and recording pursuant to Section 13.1.4, from and after
the effective date specified in each Assignment and Acceptance (which
effective date shall be at least five Banking Days after the execution
thereof unless waived by the Administrative Agent and the Company):
(1) the Assignee shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement; and
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(2) the assigning Lender shall, to the extent provided in
such assignment, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of
Sections 3.3.2, 3.5, 3.6 and 10, as well as (except as otherwise set
forth in the Assignment and Acceptance) to any fees accrued for its
account hereunder and not yet paid).
13.1.2. Terms of Assignment and Acceptance. By executing and
----------------------------------
delivering an Assignment and Acceptance, the assigning Lender and Assignee
shall be deemed to confirm to and agree with each other and the other
parties hereto as follows:
(a) other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement
or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Lender Agreement or any
other instrument or document furnished pursuant hereto;
(b) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Company and its Subsidiaries or the performance or observance by the
Company or any of its Subsidiaries of any of its obligations under this
Agreement, any other Lender Agreement or any other instrument or document
furnished pursuant hereto;
(c) such Assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Sections 7.1 and 7.2 and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance;
(d) such Assignee will independently and without reliance upon the
Administrative Agent, such assigning Lender or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement;
(e) such Assignee appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Administrative Agent by the
terms hereof, together with such powers as are reasonably incidental
thereto; and
(f) such Assignee agrees that it will perform in accordance with
the terms of this Agreement all the obligations which are required to be
performed by it as a Lender.
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13.1.3. Register. The Administrative Agent shall maintain at the
--------
Boston Office a register (the "Register") for the recordation of (a) the
names and addresses of the Lenders and the Assignees which assume rights
and obligations pursuant to an assignment under Section 13.1.1, (b) the
Revolving Percentage Interest of each such Lender as set forth in Exhibit
12.1 and (c) the amount of the Loan owing to each Lender from time to time.
The entries in the Register shall be conclusive, in the absence of manifest
error, and the Company, the Administrative Agent and the Lenders may treat
each Person whose name is registered therein for all purposes as a party to
this Agreement. The Register shall be available for inspection by the
Company or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
13.1.4. Acceptance of Assignment and Assumption. Upon its receipt of
---------------------------------------
(a) a completed Assignment and Acceptance executed by an assigning Lender
and an Assignee, together with the Note subject to such assignment, (b) the
processing and recordation fee referred to in Section 13.1.1, (c) any
required consent by itself and the Company and (d) any documents required
by Section 14, the Administrative Agent shall (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Company. Within five
Banking Days after receipt of notice, the Company, at its own expense,
shall execute and deliver to the Administrative Agent, in exchange for the
surrendered Note, a new Note to the order of such Assignee in a principal
amount equal to the applicable Commitment and Loan assumed by it pursuant
to such Assignment and Acceptance and, if the assigning Lender has retained
a Commitment and Loan, a new Note to the order of such assigning Lender in
a principal amount equal to the applicable Commitment and Loan retained by
it. Each such new Note shall be in an aggregate principal amount equal to
the aggregate principal amount of the applicable surrendered Note, and
shall be dated the date of the assignment.
13.1.5. Federal Reserve Bank. Notwithstanding the foregoing
--------------------
provisions of this Section 13, any Lender may at any time pledge or assign
all or any portion of such Lender's rights under this Agreement and the
other Lender Agreements to a Federal Reserve Bank; provided, however, that
-------- -------
no such pledge or assignment shall release such Lender from such Lender's
obligations hereunder or under any other Lender Agreement.
13.1.6. Further Assurances. The Company and its Restricted
------------------
Subsidiaries shall sign such documents and take such other actions from
time to time reasonably requested by a Assignee to enable it to share in
the benefits of the rights created by the Lender Agreements.
13.2. Credit Participants. Each Lender may, without the consent of the
-------------------
Company or the Administrative Agent, in compliance with applicable laws in
connection with such participation, sell to one or more commercial banks or
other financial institutions (each a "Credit Participant") participations in all
or a portion of its interests, rights and obligations under this Agreement and
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the other Lender Agreements, including all or a portion of its Commitment, the
Loan owing to it and the Note held by it; provided, however, that:
-------- -------
(a) such Lender's obligations under this Agreement and the other
Lender Agreements shall remain unchanged;
(b) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations;
(c) the Credit Participant shall be entitled to the benefit of the
cost protection provisions contained in Sections 3.3.2, 3.5, 3.6 and 10,
but shall not be entitled to receive any greater payment thereunder than
the selling Lender would have been entitled to receive with respect to the
interest so sold if such interest had not been sold; and
(d) the Company, the Guarantors, the Agents and the other Lenders
shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement, and such
Lender shall retain the sole right to enforce the obligations of the
Company relating to the Loan and to approve any amendment, modification or
waiver of any provision of this Agreement (other than amendments,
modifications or waivers with respect to any fees payable hereunder or the
amount of principal of or the rate at which interest is payable on the
Loan, or the stated dates for payments of principal of or interest on the
Loan).
Each of the Company and each Guarantor agrees, to the fullest extent permitted
by applicable law, that any Credit Participant and any Lender purchasing a
participation from another Lender pursuant to this Section 13.2 may exercise all
rights of payment (including the right of set-off), with respect to its
participation as fully as if such Credit Participant or such Lender were the
direct creditor of the Company and each Guarantor and a Lender hereunder in the
amount of such participation.
13.3. Replacement of Lenders. In the event that any Lender, or, to the
----------------------
extent applicable, any Credit Participant, (the "Affected Lender"):
(a) fails to perform its obligations to fund any Loan on any
Closing Date or to comply with Section 7.2.9;
(b) demands payment under the capital adequacy provisions of
Section 3.5 or the Tax provisions in Section 3.6 in an amount the Company
deems materially in excess of the amounts with respect thereto demanded by
the other Lenders;
(c) refuses to consent to a proposed amendment, modification,
waiver or other action that is consented to by the holders of the requisite
Revolving Percentage Interests or Pooled Percentage Interests in accordance
with Sections 12.7(a); or
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(d) refuses to consent to a proposed amendment, modification,
waiver or other action requiring consent of the holders of 100% of the
Revolving Percentage Interests under Section 12.7(b);
then, so long as no Event of Default exists, the Company shall have the right to
seek a replacement lender which meets the requirements of Section 14 and which
is reasonably satisfactory to the Managing Agents (the "Replacement Lender").
The Replacement Lender shall purchase the interests of the Affected Lender in
the Loan and its Commitment and shall assume the obligations of the Affected
Lender hereunder and under the other Lender Agreements upon execution by the
Replacement Lender of an Assignment and Acceptance and the tender by it to the
Affected Lender of a purchase price agreed to by it and the Affected Lender (or,
if they are unable to agree, a purchase price in the amount of all accrued
Credit Obligations then owed to the Affected Lender). Upon consummation of such
assignment, the Replacement Lender shall become party to this Agreement as a
signatory hereto and shall have all the rights and obligations of the Affected
Lender under this Agreement and the other Lender Agreements with a Revolving
Percentage Interest equal to the Revolving Percentage Interest of the Affected
Lender, and the Affected Lender shall be released from its obligations hereunder
and under the other Lender Agreements, and no further consent or action by any
party shall be required. Upon the consummation of such assignment, the Company,
the Administrative Agent and the Affected Lender shall make appropriate
arrangements so that a new Note is issued to the Replacement Lender. The
Company and the Guarantors shall sign such documents and take such other actions
reasonably requested by the Replacement Lender to enable it to share in the
benefits of the rights created by the Lender Agreements. Until the consummation
of an assignment in accordance with the foregoing provisions of this Section
13.3, the Company shall continue to pay to the Affected Lender any Credit
Obligations as they become due and payable.
14. FOREIGN PERSONS. If any Lender constitutes a Person which is not
incorporated or organized under the laws of the United States of America or a
state thereof, such Lender shall deliver to the Company and the Administrative
Agent the following:
(a) two valid, duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 or successor applicable form, as the case
may be, certifying in each case that such Person is entitled to receive
payments under this Agreement and the Note payable to it, without deduction
or withholding of any United States federal income taxes; and
(b) a valid, duly completed Internal Revenue Service Form W-8 or W-9
or successor applicable form, as the case may be, to establish an exemption
from United States backup withholding tax.
Each such Person which delivers to the Company and the Administrative Agent
a Form 1001 or 4224 and Form W-8 or W-9 pursuant to this Section 14 further
undertakes to deliver to the Company and the Administrative Agent two further
copies of Forms 1001 or 4224 and Form W-8 or W-9, or successor applicable forms,
or other manner of certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or otherwise is required to be
resubmitted as a condition to obtaining an exemption from withholding tax or
after the occurrence of any event requiring a change in the most recent form
previously delivered by it to
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the Company and the Administrative Agent two further copies of Form 1001 or 4224
and Form W-8 or W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or otherwise is required to be resubmitted as a
condition to obtaining an exemption from withholding tax or after the occurrence
of any event requiring a change in the most recent form previously delivered by
it to the Company and the Administrative Agent, and such extensions or renewals
thereof as may reasonably be requested by the Company and the Administrative
Agent. Such Forms 1001 or 4224 shall certify that such Person is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes. The foregoing documents need not be
delivered in the event any change in treaty, law or regulation or official
interpretation thereof has occurred prior to the date on which any such delivery
would otherwise be required which renders all such forms inapplicable or which
would prevent such transferee from duly completing and delivering any such
letter or form with respect to it or such Person advises the Company that it is
not capable of receiving payments without any deduction or withholding of United
States federal income tax, and in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax. Until such time as the
Company and the Administrative Agent have received such forms indicating that
payments hereunder are not subject to United States withholding tax or are
subject to such tax at a rate reduced by an applicable tax treaty, the Company
shall withhold taxes from such payments at the applicable statutory rate.
15. REPLACEMENT NOTES. Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of any Note and, in
the case of loss, theft or destruction, upon delivery of an unsecured indemnity
of any Lender in form reasonably satisfactory to the Company and, in the case of
mutilation, upon surrender and cancellation of such Note, the Company will issue
a new Note, of like tenor, in the principal amount of the Note replaced.
16. SURVIVAL OF COVENANTS. All covenants, agreements, representations and
warranties made herein or in any other Lender Agreement and in certificates
delivered pursuant hereto or thereto shall be deemed to have been material and
relied on by the Lenders, notwithstanding any investigation made by the Lenders
or on their behalf, and shall survive the execution and delivery to them hereof
and thereof. The covenants contained in Sections 3.3.2, 3.5, 3.6, 7.2.9, 10,
12.8.7 and 12.10 shall survive the termination of this Agreement.
17. VENUE; SERVICE OF PROCESS. Each of the Company and the Guarantors:
(a) irrevocably submits to the nonexclusive jurisdiction of the state
courts of The Commonwealth of Massachusetts and to the nonexclusive
jurisdiction of the United States District Court for the District of
Massachusetts for the purpose of any suit, action or other proceeding
arising out of or based upon this Agreement or any other Lender Agreement
or the subject matter hereof or thereof; and
-68-
<PAGE>
(b) to the extent not prohibited by applicable law that cannot be
waived, waives and agrees not to assert, by way of motion, as a defense or
otherwise, in any such proceeding brought in any of the above-named courts,
any claim that it is not subject personally to the jurisdiction of such
court, that its property is exempt or immune from attachment or execution,
that such proceeding is brought in an inconvenient forum, that the venue of
such proceeding is improper, or that this Agreement or any other Lender
Agreement, or the subject matter hereof or thereof, may not be enforced in
or by such court.
Each of the Company and the Guarantors consents to service of process in any
such proceeding in any manner at the time permitted by Chapter 223A of the
General Laws of The Commonwealth of Massachusetts and agrees that service of
process by registered or certified mail, return receipt requested, at its
address specified in or pursuant to Section 11 is reasonably calculated to give
actual notice.
18. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
THAT CANNOT BE WAIVED, EACH OF THE COMPANY, THE GUARANTORS, THE AGENTS AND THE
LENDERS WAIVES, AND COVENANTS NOT TO ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY OTHER LENDER AGREEMENT
OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY CREDIT OBLIGATION OR IN ANY WAY
CONNECTED WITH THE DEALINGS OF THE COMPANY, THE GUARANTORS, THE AGENTS OR THE
LENDERS IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR OTHERWISE. Each of the
Company and the Guarantors acknowledges that it has been informed by the
Managing Agents that the provisions of this Section 18 constitute a material
inducement upon which each of the Lenders has relied and will rely in entering
into this Agreement and any other Lender Agreement, and that it has reviewed the
provisions of this Section 18 with its counsel. Any Lender, any Agent, the
Company or any Guarantor may file an original counterpart or a copy of this
Section 18 with any court as written evidence of the consent of the Company, the
Guarantor, the Agents and the Lenders to the waiver of their rights to trial by
jury.
19. GENERAL. All covenants, agreements, representations and warranties made
in this Agreement or any other Lender Agreement or in certificates delivered
pursuant hereto or thereto shall be deemed to have been relied on by each
Lender, notwithstanding any investigation made by any Lender on its behalf, and
shall survive the execution and delivery to the Lenders hereof and thereof. The
invalidity or unenforceability of any provision hereof shall not affect the
validity or enforceability of any other provision hereof. The headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof. This Agreement and the other Lender Agreements
constitute the entire understanding of the parties with respect to the subject
matter hereof and thereof and supersede all prior and contemporaneous
understandings
-69-
<PAGE>
and agreements, whether written or oral. This Agreement may be executed in any
number of counterparts which together shall constitute one instrument. This
Agreement shall be governed by and construed in accordance with the laws (other
than the conflict of laws rules) of The Commonwealth of Massachusetts.
-70-
<PAGE>
Each of the undersigned has executed this Agreement under seal by a duly
authorized officer as of the date first set forth above.
COMPANY:
CONTINENTAL CABLEVISION, INC.
By /s/
-----------------------------
Vice President and Treasurer
GUARANTORS:
AMERICAN CABLESYSTEMS CORPORATION
AMERICAN CABLESYSTEMS OF CALIFORNIA, INC.
AMERICAN CABLESYSTEMS OF NEW YORK, INC.
CONTINENTAL CABLEVISION ACQUISITIONS OF
NORTHERN ILLINOIS, INC.
CONTINENTAL CABLEVISION OF CALIFORNIA, INC.
CONTINENTAL CABLEVISION OF ILLINOIS, INC.
CONTINENTAL CABLEVISION OF JACKSONVILLE, INC.
CONTINENTAL CABLEVISION OF MANCHESTER, INC.
CONTINENTAL CABLEVISION OF
MASSACHUSETTS, INC.
CONTINENTAL CABLEVISION OF MICHIGAN, INC.
CONTINENTAL CABLEVISION OF NEW ENGLAND, INC.
CONTINENTAL CABLEVISION OF NORTHERN
ILLINOIS, INC.
CONTINENTAL CABLEVISION OF OHIO, INC.
CONTINENTAL CABLEVISION OF ST. LOUIS
COUNTY, INC.
CONTINENTAL CABLEVISION OF ST. PAUL, INC.
CONTINENTAL CABLEVISION OF SIERRA
VALLEYS, INC.
CONTINENTAL CABLEVISION OF VIRGINIA, INC.
CONTINENTAL CABLEVISION OF WESTERN
NEW ENGLAND, INC.
CONTINENTAL CABLEVISION SATELLITE COMPANY
OF NORTHERN CALIFORNIA, INC.
CONTINENTAL SATELLITE COMPANY OF
CHICAGO, INC.
CONTINENTAL SATELLITE COMPANY OF
FLORIDA, INC.
-71-
<PAGE>
CONTINENTAL SATELLITE COMPANY OF
ILLINOIS, INC.
CONTINENTAL SATELLITE COMPANY OF
MICHIGAN, INC.
CONTINENTAL SATELLITE COMPANY OF
MINNESOTA, INC.
CONTINENTAL SATELLITE COMPANY OF
NEW ENGLAND, INC.
CONTINENTAL SATELLITE COMPANY OF OHIO, INC.
CONTINENTAL SATELLITE COMPANY OF
VIRGINIA, INC.
FRESNO CABLE TV LIMITED
NOR CAL CABLEVISION, INC.
TELCAB COMMUNICATIONS, INC.
By /s/
---------------------------------
Vice President and Treasurer of each of the
foregoing corporations
-72-
<PAGE>
MANAGING AGENTS:
THE TORONTO-DOMINION BANK THE FIRST NATIONAL BANK OF
BOSTON
By /s/ By /s/
----------------------- -------------------------
Title: Title:
THE BANK OF NEW YORK
By /s/
-----------------------
Title:
AGENTS:
CHEMICAL BANK, N.A. CIBC, INC.
By /s/ By /s/
----------------------- -------------------------
Title: Title:
CITIBANK, N.A. FLEET NATIONAL BANK
By /s/ By /s/
----------------------- -------------------------
Title: Title:
MELLON BANK, N.A. NATIONSBANK OF TEXAS, N.A.
By /s/ By /s/
----------------------- -------------------------
Title: Title:
SOCIETE GENERALE
By /s/
-----------------------
Title:
-73-
<PAGE>
CO-AGENTS:
BANK OF HAWAII BANK OF MONTREAL
By /s/ By /s/
----------------------- -------------------------
Title: Title:
BANQUE PARIBAS BARCLAYS BANK
By /s/ By /s/
----------------------- -------------------------
Title: Title:
By /s/
-----------------------
Title:
COMPAGNIE FINANCIERE DE CIC CORESTATES BANK, N.A.
ET DE L'UNION EUROPEENNE
By /s/ By /s/
----------------------- -------------------------
Title: Title:
By /s/
-----------------------
Title:
THE FUJI BANK, LIMITED LTCB TRUST COMPANY
By /s/ By /s/
----------------------- -------------------------
Title: Title:
THE MITSUBISHI TRUST AND MORGAN GUARANTY
BANKING CORPORATION TRUST COMPANY
By /s/ By /s/
----------------------- -------------------------
Title: Title:
ROYAL BANK OF CANADA THE ROYAL BANK OF
SCOTLAND plc
By /s/ By /s/
----------------------- -------------------------
Title: Title:
-74-
<PAGE>
THE SAKURA BANK, LIMITED THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH
By /s/ By /s/
----------------------- -------------------------
Title: Title:
OTHER LENDERS:
ABN AMRO BANK N.V. BANK BRUSSELS LAMBERT
BOSTON BRANCH NEW YORK BRANCH
By ABN AMRO North America, Inc., By /s/
as Agent -------------------------
Title:
By /s/ By /s/
----------------------- -------------------------
Title: Title:
THE BANK OF NOVA SCOTIA BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
By /s/ By /s/
----------------------- -------------------------
Title: Title:
BANQUE NATIONAL DE PARIS CREDIT LYONNAIS CAYMAN
NEW YORK BRANCH
By /s/ By /s/
----------------------- -------------------------
Title: Title:
CREDIT SUISSE THE DAI-ICHI KANGYO BANK,
LIMITED, NEW YORK BRANCH
By /s/ By /s/
----------------------- -------------------------
Title: Title:
By /s/
-----------------------
Title:
-75-
<PAGE>
DEUTSCHE BANK AG, NEW YORK DG BANK
AND/OR CAYMAN ISLANDS
BRANCHES
By /s/ By /s/
----------------------- -----------------------
Title: Title:
By /s/
-----------------------
Title:
FIRST BANK NATIONAL FIRST HAWAIIAN BANK
ASSOCIATION
By /s/ By /s/
----------------------- -----------------------
Title: Title:
FUYO GENERAL LEASE NATIONAL CITY BANK
(U.S.A.), INC.
By /s/ By /s/
----------------------- -----------------------
Title: Title:
THE NIPPON CREDIT BANK, LTD. PNC BANK, NATIONAL
ASSOCIATION
By /s/
----------------------- By /s/
Title: -----------------------
Title:
THE SANWA BANK, LIMITED SUNTRUST BANK, CENTRAL
FLORIDA, N.A.
By /s/ By /s/
----------------------- -----------------------
Title: Title:
THE TOKAI BANK, LIMITED TORONTO DOMINION
(NEW YORK) INC.
By /s/ By /s/
----------------------- -----------------------
Title: Title:
UNION BANK OF CALIFORNIA UNITED JERSEY BANK
By /s/ By /s/
----------------------- -----------------------
Title: Title:
WESTDEUTSCHE LANDESBANK BANK OF TOKYO-MITSUBISHI,
GIROZENTRALE, NEW YORK LIMITED
BRANCH
By /s/ By /s/
----------------------- -----------------------
Title: Title:
-76-
<PAGE>
EXHIBIT 1
---------
EFFECTIVE RATES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Ratio of Consolidated Total Debt to Four Interest Rate on Portions of Interest Rate on Portions of
Times Consolidated Operating Income Revolving Loan Subject to Revolving Loan Not Subject
Eurodollar Pricing Option to Eurodollar Pricing Option
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Greater than or equal to 7.75 to 1 Eurodollar Rate plus 2 1/4% Base Rate plus 1%
- -------------------------------------------------------------------------------------------------------
Greater than or equal to 7.50 to 1 but Eurodollar Rate plus 2% Base Rate plus 3/4%
less than 7.75 to 1
- -------------------------------------------------------------------------------------------------------
Greater than or equal to 7.25 to 1 but Eurodollar Rate plus 1 7/8% Base Rate plus 5/8%
less than 7.50 to 1
- -------------------------------------------------------------------------------------------------------
Greater than or equal to 6.75 to 1 but Eurodollar Rate plus 1 3/4% Base Rate plus 1/2%
less than 7.25 to 1
- -------------------------------------------------------------------------------------------------------
Greater than or equal to 6.50 to 1 but Eurodollar Rate plus 1 5/8% Base Rate plus 3/8%
less than 6.75 to 1
- -------------------------------------------------------------------------------------------------------
Greater than or equal to 6.00 to 1 but Eurodollar Rate plus 1 1/2% Base Rate plus 1/4%
less than 6.50 to 1
- -------------------------------------------------------------------------------------------------------
Greater than or equal to 5.50 to 1 but Eurodollar Rate plus 1 3/8% Base Rate plus 1/8%
less than 6.00 to 1
- -------------------------------------------------------------------------------------------------------
Greater than or equal to 5.00 to 1 but Eurodollar Rate plus 1 1/8% Base Rate
less than 5.50 to 1
- -------------------------------------------------------------------------------------------------------
Greater than or equal to 4.50 to 1 but Eurodollar Rate plus 7/8% Base Rate
less than 5.00 to 1
- -------------------------------------------------------------------------------------------------------
Less than 4.50 to 1 Eurodollar Rate plus 5/8% Base Rate
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 2.1.1
-------------
REVOLVING LOAN NOTE
No. ___ ________________, 199_
$_______________ Boston, Massachusetts
FOR VALUE RECEIVED, the undersigned CONTINENTAL CABLEVISION, INC., a
Delaware corporation (the "Company"), hereby promises to pay to
____________________ (the "Holder") or order, on July ____, 1997,
___________________________________ DOLLARS ($_______________) or, if less, the
aggregate unpaid Loan made to the Company by the Holder, with daily interest
from the date hereof, computed as provided in the Credit Agreement referred to
below, on the principal amount of such Loan from time to time unpaid at a rate
per annum on each portion of the principal amount which shall at all times equal
the Effective Rate (as defined in the Credit Agreement) applicable to such
portion in accordance with the Credit Agreement. Interest shall be payable on
the dates specified in the Credit Agreement, except that all accrued interest
shall be paid at the stated or accelerated maturity hereof or upon the
prepayment in full hereof.
Payments hereunder shall be made to The First National Bank of Boston, as
administrative agent for the payee hereof, at 100 Federal Street, Boston,
Massachusetts 02110.
This Note is one of several Notes evidencing Loans under and is entitled to
the benefits and subject to the provisions of the Credit Agreement dated as of
July 2, 1996, as from time to time in effect (the "Credit Agreement"), among the
undersigned, certain of its subsidiaries, and certain lenders for which The
First National Bank of Boston is acting as administrative agent. The principal
of this Note may be due and payable in whole or in part prior to the maturity
date stated above and is subject to mandatory prepayment in the amounts and
under the circumstances set forth in the Credit Agreement, and may be prepaid in
whole or from time to time in part, all as set forth in the Credit Agreement.
Amounts so prepaid may be reborrowed by the Company in accordance with and
subject to the terms of the Credit Agreement. This Note may not be assigned or
otherwise transferred except in accordance with the Credit Agreement.
In case an Event of Default (as defined in the Credit Agreement) shall
occur, the entire principal amount of this Note may become or be declared due
and payable in the manner and with the effect provided in the Credit Agreement.
This Note shall be governed by and construed in accordance with the laws
(other than the conflict of laws rules) of The Commonwealth of Massachusetts.
<PAGE>
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance and enforcement of this
Note, except as specifically otherwise provided in the Credit Agreement, and
assent to extensions of time of payment or forbearance or other indulgence
without notice.
CONTINENTAL CABLEVISION, INC.
By______________________________
Vice President and Treasurer
2
<PAGE>
EXHIBIT 5.2.1
-------------
OFFICER'S CERTIFICATE
The First National Bank of Boston,
as Administrative Agent under
the Credit Agreement (as defined below)
100 Federal Street
Boston, Massachusetts 02110
Attention: Media and Communications Department
Dear Administrative Agent:
Pursuant to Section 5.2.1 of the Credit Agreement dated as of July 2, 1996,
as from time to time in effect (the "Credit Agreement"), among Continental
Cablevision, Inc. (the "Company"), its subsidiaries from time to time party
thereto, you and the other Lenders party thereto, the Company has requested that
a loan be made to it on the date hereof in the principal amount of
$____________________ in accordance with the Credit Agreement.
The Company represents and warrants as follows:
(a) The representations and warranties contained in Sections 6.3 and 8
(other than Section 8.10) of the Credit Agreement are true and correct on and as
of the date hereof with the same force and effect as though made on and as of
such date.
(b) No Default under the Credit Agreement has occurred or shall exist
after giving effect to the loan requested hereby.
(c) Between March 31, 1996 and the date hereof, neither the business,
operations, assets nor the condition, financial or otherwise, of the Company and
its Restricted Subsidiaries on a consolidated basis has been adversely affected
in any material manner as a result of any event or development.
(d) Except as set forth in the certificate, if any, attached hereto, there
has been no change in (i) the charters or by-laws of the Company and its
Restricted Subsidiaries heretofore certified to you, or (ii) the incumbency of
the officers of the Company and its Restricted Subsidiaries whose signatures
have been heretofore certified to you.
(e) After giving effect to the loan requested hereby, the principal amount
of the Loan shall not exceed an amount equal to the Maximum Amount of Credit.
Terms defined in the Credit Agreement and not otherwise defined are used
herein with the meanings so defined.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
____ day of _______________, 199_.
<PAGE>
CONTINENTAL CABLEVISION, INC.
By________________________________
Title:
2
<PAGE>
EXHIBIT 13.1.1
--------------
ASSIGNMENT AND ACCEPTANCE
[Assignor's Letterhead]
[Date]
[Name and Address of Assignee]
Re: Continental Cablevision, Inc.
----------------------------
Ladies and Gentlemen:
Reference is made to the Amended and Restated Credit Agreement dated as of
June ___, 1996, as in effect from time to time (the "Credit Agreement"), among
Continental Cablevision, Inc., a Delaware corporation (the "Company"), its
subsidiaries from time to time party thereto and certain lenders (the
"Lenders"), including The First National Bank of Boston as administrative agent
for the Lenders (the "Administrative Agent"). Terms defined in the Credit
Agreement and not otherwise defined herein are used herein with the meanings so
defined.
For valuable consideration, the receipt of which is hereby acknowledged,
the undersigned (the "Assignor") hereby agrees with you (the "Assignee") as
follows:
1. Assignment and Assumption. Pursuant to Section 13.1 of the Credit
-------------------------
Agreement, as of ________________ (the "Assignment Date"), the Assignor hereby
assigns to the Assignee the following:
$__________ of the Assignor's $__________ current Revolving Percentage
Interest, including $__________ of the Assignor's $__________ Revolving
Loan Account currently outstanding.
The foregoing assignment is made together with the concomitant proportionate
amounts of the Assignor's other rights and obligations as a Lender under the
Credit Agreement and the other Lender Agreements, and the Assignee hereby
assumes such rights and obligations completely. As of the Assignment Date, the
Assignor shall have the interests in the Credit Obligations and under the Credit
Agreement as set forth on Schedule A hereto.
2. Representations and Warranties of the Assignor. The Assignor hereby
----------------------------------------------
represents and warrants that:
2..1. The Assignor owns that portion of the rights and obligations
under the Credit Agreement assigned hereunder legally and beneficially, free and
clear of any adverse claim.
2..2. The Assignee shall receive from the Assignor good and
marketable title to those rights and obligations under the Credit Agreement
assigned hereunder free and clear of any adverse claim except as expressly
otherwise set forth herein.
Except as to the representations and warranties set forth in this Section 2, the
foregoing assignment is made without any representation or warranty by or
recourse of any kind to the Assignor.
<PAGE>
3. Representations and Warranties of the Assignee. The Assignee hereby
----------------------------------------------
represents and warrants that it is a commercial bank or financial institution.
4. Party to the Credit Agreement, etc. Upon the execution and delivery of
-----------------------------------
this Agreement by the parties hereto (including, without limitation, the Company
and Administrative Agent), the Assignee shall become party to the Credit
Agreement as a signatory thereto. Notwithstanding the five Banking Day
execution and delivery requirement set forth in Section 13.1.4 of the Credit
Agreement, the parties hereto (including, without limitation, the Company and
Administrative Agent) agree that as of the Assignment Date, the Assignee shall
have all the rights and obligations of a Lender under the Credit Agreement and
the other Lender Agreements, including without limitation, as set forth on
Schedule B (including interest accrued thereon from and after the Assignment
Date). As of the Assignment Date, the Assignor shall be released from its
obligations under the Credit Agreement to the extent corresponding to the
assignment hereunder (other than its obligations under Section 7.2.9), and no
further consent or action by any party shall be required. Pursuant to Section
12.7 of the Credit Agreement, the Administrative Agent and the Company by their
execution hereof waive compliance with the five Banking Day execution and
delivery requirement described above.
5. Notices. All notices and other communications required to be given or
-------
made to the Assignee under this Agreement or the Credit Agreement shall be given
or made at the address of the Assignee set forth on the first page hereof or at
such other address as the Assignee shall have specified to the Assignor, the
Administrative Agent and the Company in writing.
6. Expenses. The Assignee shall pay its own expenses but not the expenses
--------
of the Assignor in connection with the preparation and execution of this
Agreement and the consummation of the transactions contemplated hereby. The
Assignee shall be responsible for paying to the Administrative Agent the fee
called for pursuant to Section 13.1.1 of the Credit Agreement.
7. Further Assurances. The parties hereto hereby agree to execute and
------------------
deliver such other instruments and documents and to take such other actions as
any party hereto may reasonably request in connection with the transactions
contemplated by this Agreement.
8. General. This Agreement and the Credit Agreement constitute the entire
-------
understanding of the parties with respect to the subject matter hereof and
thereof and supersede all prior and current understandings and agreements,
whether written or oral. The invalidity or unenforceability of any provision
hereof shall not affect the validity or enforceability of any other term or
provision hereof. The headings in this Agreement are for convenience of
reference only and shall not alter, limit or otherwise affect the meaning
hereof. This Agreement may be executed in any number of counterparts, which
together shall constitute one instrument, and shall bind and inure to the
benefit of the parties and their respective successors and assigns, including as
such successors and assigns all holders of any Credit Obligation. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (OTHER
THAN THE CONFLICT OF LAWS RULES) OF THE COMMONWEALTH OF MASSACHUSETTS.
2
<PAGE>
If the foregoing corresponds with your understanding of our agreement,
please sign this letter and the accompanying copies thereof in the appropriate
space below and return copies to the undersigned, the Company and the
Administrative Agent, whereupon this letter shall become a binding agreement
between you and the undersigned.
[ASSIGNOR]
By_________________________
Title:
The foregoing is
hereby accepted:
[ASSIGNEE]
By___________________________
Title:
The foregoing is
hereby approved:
CONTINENTAL CABLEVISION, INC.
By___________________________
Title: Treasurer
THE FIRST NATIONAL BANK
OF BOSTON, as Administrative Agent
By___________________________
Title:
3
<PAGE>
Schedule A
----------
Assignor's Revolving Percentage Interest in the Revolving Loan under the Credit
Agreement on and after the Assignment Date after giving effect to the other
assignments being made on the Assignment Date.
Revolving Percentage Interest $___________
Assignor's Revolving Loan Account as of the Assignment Date after giving effect
to the other assignments being made on the Assignment Date.
Revolving Loan Account $____________
<PAGE>
Schedule B
----------
Assignee's Revolving Percentage Interest in the Revolving Loan under the Credit
Agreement on and after the Assignment Date after giving effect to the other
assignments being made on the Assignment Date.
Revolving Percentage Interest $__________
Assignee's Revolving Loan Account as of the Assignment Date after giving effect
to the other assignments being made on the Assignment Date.
Revolving Loan Account $__________
<PAGE>
EXHIBIT 11.1
CONTINENTAL CABLEVISION, INC. AND SUBSIDIARIES
SCHEDULE OF COMPUTATION OF EARNINGS (LOSS) PER SHARE
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ----------------------
1995 1996 1995 1996
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Net Loss $(26,165) $(58,515) $(33,067) $(110,186)
Preferred Stock Preferences (9,744) (10,539) (19,347) (21,041)
-------- -------- -------- ---------
Loss Applicable for Common Stockholders $(35,909) $(69,054) $(52,414) $(131,227)
======== ======== ======== =========
Loss Per Common Share $ (0.30) $ (0.46) $ (0.45) $ (0.88)
======== ======== ======== =========
Weighted Average Number of Shares Outstanding 117,909 148,558 117,627 148,440
======== ======== ======== =========
</TABLE>
1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> JUN-30-1995 JUN-30-1996
<CASH> 18,551 27,056
<SECURITIES> 151,378 161,324
<RECEIVABLES> 110,132 100,608
<ALLOWANCES> 12,476 15,221
<INVENTORY> 88,687 104,266
<CURRENT-ASSETS> 0 0
<PP&E> 2,107,473 2,243,525
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 5,080,593 5,284,734
<CURRENT-LIABILITIES> 0 0
<BONDS> 5,285,159 5,604,137
256,135 270,290
11 11
<COMMON> 388 388
<OTHER-SE> (1,215,552) (1,318,734)
<TOTAL-LIABILITY-AND-EQUITY> 5,080,593 5,284,734
<SALES> 650,048 942,930
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 529,495 796,710
<OTHER-EXPENSES> 168,330 301,815
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 166,314 233,578
<INCOME-PRETAX> (47,777) (155,595)
<INCOME-TAX> (14,710) (45,409)
<INCOME-CONTINUING> (33,067) (110,186)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (33,067) (110,186)
<EPS-PRIMARY> (0.45) (0.88)
<EPS-DILUTED> 0 0
</TABLE>
