FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(Mark one)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
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 1-8608
NYNEX CORPORATION
A Delaware I.R.S. Employer
Corporation Identification No. 13-3180909
1113 Westchester Avenue, White Plains, New York 10604
Telephone Number (914) 644-6400
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock (par value New York, Boston, Chicago,
$1.00 per share) Pacific and Philadelphia
Stock Exchanges
Twenty year 9.55% Debentures
due May 1, 2010 New York Stock Exchange,Inc.
Securities registered pursuant to Section 12(g) of the Act: None.
At February 28, 1994, approximately 417,068,000 shares of Common Stock
were outstanding.
At February 28, 1994, the aggregate market value of the voting stock held
by nonaffiliates was approximately $15,527,000,000.
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 ......
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
DOCUMENTS INCORPORATED BY REFERENCE:
(1) Portions of the Registrant's Proxy Statement dated March 21, 1994
issued in connection with the 1994 Annual Meeting of Stockholders
(Parts II and III).
<PAGE>
TABLE OF CONTENTS
PART I
Item Page
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . 19
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 19
4. Submission of Matters to a Vote of Security Holders . . . . 22
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . 23
6. Selected Financial Data . . . . . . . . . . . . . . . . . . 24
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . 24
8. Consolidated Financial Statements and Supplementary Data . . 24
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure . . . . . . . . . . . . . . . . . . 24
PART III
10. Directors and Executive Officers of the Registrant . . . . . 24
11. Executive Compensation . . . . . . . . . . . . . . . . . . . 24
12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . . . 24
13. Certain Relationships and Related Transactions . . . . . . . 24
PART IV
14. Exhibits, Consolidated Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . 25
<PAGE>
PART I
Item 1. BUSINESS.
General
NYNEX Corporation ("NYNEX") was incorporated on October 7, 1983 under the
laws of the State of Delaware and has its principal executive offices at
1113 Westchester Avenue, White Plains, New York 10604 (telephone number
914-644-6400). NYNEX is a holding company with various subsidiaries
engaged in the provision of telecommunications products and services,
directory publishing and other business services.
NYNEX provides products and services in several industry segments (see
"Consolidated Financial Statements and Supplementary Data" below).
NYNEX's dominant industry segment is Telecommunications, which
includes New York Telephone Company ("New York Telephone"), New
England Telephone and Telegraph Company ("New England Telephone") and
their subsidiaries (see "Telecommunications" below).
In addition to Telecommunications, NYNEX has wholly-owned subsidiaries in
the following industry segments: Cellular (NYNEX Mobile Communications
Company), Publishing (NYNEX Information Resources Company), Financial
Services (NYNEX Credit Company, NYNEX Capital Funding Company and NYNEX
Trade Finance Company) and Other Diversified Operations (including NYNEX
Network Systems Company and NYNEX CableComms Limited, among others). Each
of these segments is described below.
Telecommunications
The two principal operating subsidiaries of NYNEX are operating telephone
companies, New York Telephone and New England Telephone (collectively, the
"Telephone Companies"). The Telephone Companies provided NYNEX with 86%
of its operating revenues in 1993. Approximately 87% of the Telephone
Companies' revenues were derived from operations in New York State and
Massachusetts. In 1993, revenues from one customer, American Telephone
and Telegraph Company ("AT&T"), accounted for approximately 16% of
NYNEX's total operating revenues, primarily in network access and
other revenues.
New York Telephone is incorporated under the laws of the State of
New York and is primarily engaged in providing telecommunications
services in a large portion of New York State and a small portion of
Connecticut (Greenwich and Byram only). New England Telephone is
incorporated under the laws of the State of New York and is primarily
engaged in providing telecommunications services in Massachusetts, Maine,
New Hampshire, Rhode Island and Vermont. The Telephone Companies are
primarily engaged in providing two types of telecommunications
services, exchange telecommunications and exchange access, in their
respective territories.
<PAGE>
Exchange telecommunications service is the transmission of
telecommunications among customers located within
geographical areas (local access and transport areas or
"LATAs"). These LATAs are generally centered on a city or other
identifiable community of interest and, subject to certain exceptions,
each LATA marks an area within which a former Bell System local exchange
company ("LEC") operating within such territory may provide
telecommunications services (see "Operations Under the
Modification of Final Judgment" below). Exchange telecommunications
service may include long distance service as well as local service within
LATAs. Examples of exchange telecommunications services include switched
local residential and business services, private line voice and data
services, Wide Area Telecommunications Service ("WATS"), long distance
and Centrex services.
Exchange access service refers to the link provided by LECs between
a customer's premises and the transmission facilities of other
telecommunications carriers, generally interLATA carriers. Examples
of exchange access services include switched access and special access
services.
Certain billing and collection services are performed by the Telephone
Companies for other carriers, primarily AT&T, and certain information
providers that elect to subscribe to these services rather than perform
such services themselves. Effective January 1, 1987, such billing and
collection services were detariffed on an interstate basis and are
offered to interexchange carriers under contract. In addition, many
components of billing and collection services in New York State have been
detariffed pursuant to orders of the New York State Public Service
Commission ("NYSPSC"). The NYSPSC has determined that other
components of intrastate billing and collection services shall remain
under tariff. In 1993, approximately 1% of NYNEX's operating revenues were
derived from billing and collection services. In 1990, the Telephone
Companies and AT&T signed a six-year contract extending the Telephone
Companies' roles as AT&T long distance billing and collection agents. The
agreement allows AT&T the flexibility of gradually assuming certain
administrative and billing functions performed by the Telephone
Companies. The contract expires on December 31, 1995.
There are six LATAs that comprise the area served by New York Telephone
and they are referred to as follows: the New York City Metropolitan Area
(which includes Westchester, Rockland, Putnam, Nassau and Suffolk Counties
in New York and Greenwich and Byram in Connecticut), Poughkeepsie,
Albany-Glens Falls, Syracuse-Utica, Buffalo and Binghamton-Elmira.
There are six LATAs served by New England Telephone: Eastern Massachusetts,
Western Massachusetts, Maine, New Hampshire, Vermont and Rhode Island.
Although the Telephone Companies generally are prohibited by the
Modification of Final Judgment from providing interLATA service,
New York Telephone is permitted to and does provide interLATA service
in certain areas, including service between New York City and northern
New Jersey (see "Operations Under the Modification of Final Judgment"
below).
<PAGE>
<TABLE>
The following table sets forth for the Telephone Companies the
approximate number of network access lines in service at the end
of each year:
<CAPTION>
Network Access Lines In Service
(In Thousands)
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
New York Telephone . . . 10,224 9,978 9,807 9,723 9,438
New England Telephone . . 5,906 5,721 5,604 5,544 5,461
Total . . . . . . . . . 16,130 15,699 15,411 15,267 14,899
</TABLE>
The territories served by the Telephone Companies contain sizeable areas
and many localities in which local service is provided by nonaffiliated
telephone companies. Rochester, Jamestown, Middletown, Webster and
Henrietta, New York are the only cities with a population of more than
25,000 within New York State that are served by such nonaffiliated
companies. On December 31, 1993 these nonaffiliated companies had
approximately 1,369,000 network access lines in service.
In 1990, NYNEX Materiel Enterprises Company was transferred from NYNEX to
the Telephone Companies and then merged into another jointly owned
subsidiary, NYNEX Service Company, which was renamed Telesector
Resources Group, Inc. ("Telesector Resources").
The Telephone Companies have consolidated all or part of many regional
service and support functions into Telesector Resources. Regional
service functions are interstate access services, operator services,
public communications, sales, market area services, corporate services,
information services, labor relations, engineering/construction and
business planning. Support functions are quality and process
re-engineering, marketing, technology and planning, public
relations, legal and human resources. In addition, Telesector
Resources provides various procurement, procurement support and
materials management services to the Telephone Companies, on a
nonexclusive basis. These services include product evaluation,
contracting, purchasing, materials management and disposition,
warehousing, transportation, and equipment repair management. Under
a reciprocal services agreement, the Telephone Companies provide certain
administrative and other services for Telesector Resources.
Each of the seven regional holding companies ("RHCs") formed in
connection with the AT&T divestiture owns an equal interest in
Bell Communications Research, Inc. ("Bellcore") (see "Operations Under
the Modification of Final Judgment" below). Bellcore furnishes to the
LECs, including the Telephone Companies, and certain of their
subsidiaries technical and support services (that include
research and development) relating to exchange telecommunications
and exchange access services that can be provided more efficiently on a
centralized basis. Bellcore serves as a central point of contact for
coordinating the efforts of NYNEX and the other RHCs in meeting the
national security and emergency preparedness requirements of the federal
government.
<PAGE>
Cellular
NYNEX Mobile Communications Company ("NYNEX Mobile"), through its
operating subsidiaries and partnerships, provides a variety of
wireless telecommunications services and products, including services
and products that incorporate cellular technology, throughout the
northeastern United States.
Publishing
NYNEX Information Resources Company ("Information Resources") produces,
publishes and distributes alphabetical (White Pages) and classified
(Yellow Pages) directories for the Telephone Companies pursuant to
agreements that provide for the payment of fees to the Telephone
Companies in exchange for the right to publish such directories.
Acting through its subsidiaries, Information Resources also publishes, on
its own and in partnership with other entities, other telephone
directories, both domestically and internationally. NYNEX
Information Technologies Company, a subsidiary of Information
Resources, provides on-line electronic directories in the United
States and France and also provides CD-ROM directories.
Financial Services
NYNEX Credit Company is primarily engaged in the business of financing
transportation, industrial, and commercial equipment and facilities to a
broad range of companies through leasing transactions unrelated to NYNEX's
other businesses.
NYNEX Capital Funding Company provides a source of funding to NYNEX and
its subsidiaries, other than the Telephone Companies, through its ability
to issue debt securities in the United States, Europe and other
international markets.
NYNEX Trade Finance Company evaluates and obtains non-recourse and
trade-related financing for NYNEX projects, evaluates and manages
foreign currency risk and arranges the repatriation of profits from
foreign operations, principally in developing and third-world economies.
NYNEX is in the process of exiting the real estate development and
management business.
Other Diversified Operations
NYNEX Network Systems Company provides wireline and wireless network
services outside the United States.
NYNEX CableComms Limited ("CableComms") builds and operates cable
television and telephony networks in the United Kingdom.
Information products and services and consulting services are provided
both nationally and internationally by other companies within this
segment. NYNEX is in the process of exiting the information products
and services business. During 1993 and early 1994, NYNEX sold The BIS
Group Limited and AGS Computers, Inc.
<PAGE>
Business Restructuring
In the fourth quarter of 1993, NYNEX recorded charges of approximately
$2.1 billion for business restructuring. These charges resulted from a
comprehensive analysis of operations and work processes, resulting in a
strategy to redesign them to improve efficiency and customer service, to
implement work force reductions, and to produce cost savings necessary for
NYNEX to operate in an increasingly competitive environment.
<TABLE>
Capital Expenditures
NYNEX meets the expanding needs for telecommunications services by making
capital expenditures to upgrade and extend the existing telecommunications
network, including new construction, optical fiber and modernization at
both Telephone Companies. Capital expenditures also include the
construction of mobile cell sites in the Northeast and the building
of cable television and telephony networks in the United Kingdom.
Capital expenditures (excluding the equity component of allowance
for funds used during construction and additions under capital leases) for
1989 through 1993 are set forth below.
<CAPTION>
In Millions
<S> <C>
1993. . . . . . . . . . $2,717
1992. . . . . . . . . . $2,450
1991. . . . . . . . . . $2,499
1990. . . . . . . . . . $2,493
1989. . . . . . . . . . $2,421
</TABLE>
NYNEX's capital expenditures in 1994, excluding capital expenditures
resulting from business restructuring, are currently expected to be at
a level comparable to 1993 expenditures. Most of such expenditures will be
for the Telephone Companies, Telesector Resources, NYNEX Mobile, and
CableComms.
Operations Under the Modification of Final Judgment
The operations of NYNEX and its subsidiaries in all industry segments are
subject to the requirements of a consent decree known as the "Modification
of Final Judgment" ("MFJ"). The MFJ arose out of an antitrust action
brought by the United States Department of Justice ("DOJ") against
AT&T. On August 24, 1982, the United States District Court for the
District of Columbia (the "MFJ Court") approved the MFJ as in the public
interest. On February 28, 1983, the United States Supreme Court affirmed
the MFJ Court's action. Pursuant to the MFJ, AT&T divested its 22
wholly-owned LECs, including the Telephone Companies, distributed
them to the RHCs, and distributed the stock of the RHCs to AT&T's
stockholders on January 1, 1984.
As initially approved, the MFJ restricted the RHCs, including NYNEX and
its subsidiaries, to the provision of exchange telecommunications service,
exchange access and information access services, the provision (but not
manufacture) of customer premises equipment ("CPE") and the publishing
of printed directory advertising. Although some restrictions placed on RHC
operations have been removed or modified since entry of the MFJ, the RHCs
<PAGE>
are still required to seek MFJ Court approval in order to provide interLATA
telecommunications services, to manufacture or provide telecommunications
products and to manufacture CPE. Also, the Telephone Companies are still
required to offer to all interexchange carriers and information service
providers exchange access and information access, at certain locations,
which are equal in quality, type and price to that provided to AT&T and
its affiliates ("Equal Access"). Included in capital expenditures for
the period 1989 through 1993 are costs incurred in connection with the
requirement to provide Equal Access (see "Capital Expenditures" above).
MFJ Court approval to engage in any of the prohibited activities is
normally predicated upon a showing to the MFJ Court that there is no
substantial possibility that an RHC could use its monopoly power to impede
competition in the market it seeks to enter. The MFJ Court has established
procedures for dealing with requests by an RHC to enter new businesses.
Such requests must first be submitted to the DOJ for its review. After
DOJ review, the RHC seeks approval directly from the MFJ Court. The MFJ
Court will consider the recommendation of the DOJ in deciding whether a
specific request should be granted.
On July 25, 1991, the MFJ Court lifted the MFJ restriction on the
provision of the content of information services by the RHCs and
LECs, including NYNEX and the Telephone Companies. On May 28, 1993, the
United States Court of Appeals for the District of Columbia affirmed that
decision. The Court of Appeals decision allows the RHCs and LECs,
including NYNEX and the Telephone Companies, to create and own the
content of the information they transmit over the telephone lines and to
provide data processing services to customers. On November 15, 1993, the
United States Supreme Court declined to review the Court of Appeals
decision.
Regulated Services
Various services offered by NYNEX's subsidiaries in the
Telecommunications and Cellular segments are subject to
the jurisdiction of state and federal regulators. Intrastate
communications services offered by these subsidiaries are under
the jurisdiction of state public utility commissions (see "State Regulatory
Matters" below). Interstate communications services offered by the
Telephone Companies and NYNEX Mobile are regulated by the Federal
Communications Commission (the "FCC") (see "Federal Regulatory Matters"
below). In addition, state and federal regulators review various
transactions between these subsidiaries and the other subsidiaries
of NYNEX.
<PAGE>
State Regulatory Matters
Set forth below is a description of certain intrastate regulatory
proceedings with respect to changes in rates and revenues1/. NYNEX
is unable to state with certainty the effective dates of any changes that
may be ordered or the actual amounts of revenues that may result from any
such changes.
New York
As an outgrowth of New York Telephone's 1990 general rate case (the "1990
rate case"), in November 1990, the NYSPSC commenced a proceeding to review
the financial effects on ratepayers of the transactions in the years 1984
through 1990 between New York Telephone and other NYNEX affiliates. The
NYSPSC selected an independent consulting firm to perform an audit of
such transactions. The consultant commenced the audit in November 1991
and is expected to complete the audit and submit a report detailing its
findings and recommendations in 1994. The NYSPSC may hold hearings on
the consultant's audit report.
The NYSPSC authorized a $250 million increase in New York Telephone's
rates, effective January 1, 1991, of which $47.5 million annually
remains subject to refund pending resolution of certain affiliate
transactions issues.
In September 1992, the NYSPSC issued an order in the Second and Third
Stages (the "Second and Third Stages") of the 1990 general rate case
that approximately $27 million of revenues attributable to the reduction
in ad valorem taxes on central office equipment would be retained to reduce
the balance of regulatory assets on New York Telephone's books and the
remaining revenues ($15 million in 1992 and $62 million in 1993) would
offset rate increases that would otherwise have been required to offset
revenue decreases in long distance, carrier access and other revenues.
In October 1992, New York Telephone filed a response to the NYSPSC's order
in which it updated the Regulatory Asset Recovery Plan. In the updated
plan, New York Telephone outlined how certain regulatory assets
currently accounted for as deferred charges could be recovered over
six years, starting in 1993, by utilizing ad valorem tax savings and other
revenues currently being provided in rates. On January 28, 1994, the
NYSPSC approved New York Telephone's Regulatory Asset Recovery Plan.
1/ The term "rates" is synonymous with prices. When changes in rates are
referred to in the aggregate, the reference is to the aggregate
effect of individual price changes multiplied by the volumes of
services, assuming no change in volume as a result of the price
changes. The term "revenues", on the other hand, refers to the
aggregate effect of prices multiplied by volumes of service, with
effect given to the change in volume as a result of any price
changes.
<PAGE>
On February 4, 1993, the NYSPSC issued an order with respect to the
Second and Third Stages, permitting New York Telephone to retain 1993
earnings above a return on equity of 11.7% and up to 12.7% if it met
specified service-quality criteria, with earnings above 12.7% return
on equity to be held for the ratepayers' benefit. On February 25, 1994,
the NYSPSC preliminarily concluded that there would be no financial
penalty based on New York Telephone's 1993 service-quality results.
In July 1992, the NYSPSC initiated a proceeding to investigate
performance-based incentive regulatory plans for New York
Telephone for 1994 and beyond. The NYSPSC noted that incentive
regulatory agreements provide incentives to increase efficiency and
provide greater consumer benefits by permitting New York Telephone to
keep some of its performance gains, i.e., earn a higher rate of return
than authorized under traditional rate of return regulation, and by
penalizing unsatisfactory performance. In the first phase of the
proceeding, the NYSPSC issued Orders on December 24, 1993 and
January 28, 1994 for a reduction in New York Telephone's rates of
$170 million annually, effective January 1, 1994. An additional
$153.3 million of current revenues is to be made available "for
the ultimate benefit of customers and New York Telephone's competitive
position through earnings incentives for short-term service improvements
and a longer term plan for performance-based earning incentives and network
improvements." That incentive regulatory plan will be pursued in a second
phase of the proceeding during 1994. The Orders required New York
Telephone to record a $75 million charge in 1993, representing a
reversal of a portion of a regulatory asset related to deferred pension
costs that New York Telephone expected to recover through the regulatory
process and recorded under the provisions of Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of Certain
Types of Regulation".
The NYSPSC did not make a final finding on return on equity for 1994.
Subject to New York Telephone's achieving net productivity gains,
according to the Orders, New York Telephone would have an
opportunity to earn above a 10.8% return on equity, with equal
sharing with ratepayers of any earnings above a 12% return on equity.
On July 13, 1993, the NYSPSC issued an Opinion and Order, subject to
comments and a final decision, which would require New York Telephone
to provide IntraLATA Presubscription ("ILP") within 18 months of a bona
fide request from a carrier. ILP would give a customer the option of
designating, in advance, a carrier that would carry the customer's
intraLATA toll calls. Currently, absent special dialing arrangements,
such calls are carried by New York Telephone. The NYSPSC is considering
various options for the recovery by New York Telephone of out-of-pocket
costs and lost revenues resulting from ILP. At its February 2, 1994
Public Session, the NYSPSC suggested that certain issues relating to
ILP would be made the subject of negotiations and a "collaborative effort"
between the parties to the incentive regulatory proceeding.
<PAGE>
New York Telephone's tariffs to provide for switched interconnection by
competitors, as required by the NYSPSC in May 1992, became effective on
January 1, 1993. New York Telephone had previously filed tariffs to
permit private line collocation arrangements, whereby competitors place
their transmission equipment in New York Telephone's central offices.
Maine
On May 1, 1992, the Maine Public Utilities Commission ("MPUC") issued a
Notice of Proceeding to commence a comprehensive investigation regarding
New England Telephone's cost of service and rate design. New England
Telephone filed its comprehensive rate design proposal with the MPUC on
July 6, 1992. Although New England Telephone did not seek to increase the
overall revenues it receives, the rate design proposal would affect the
rates charged for various services. The rate design proposal seeks a
reduction in rates for message telecommunications and related long
distance services, a corresponding decrease in access rates and an
increase in residence basic exchange service rates.
At a March 11, 1994 deliberative session, the MPUC voted to reject
New England Telephone's rate design proposal. The MPUC found that
New England Telephone had not adequately supported the proposal. Because
New England Telephone's proposal was designed to be revenue neutral, there
will be no immediate earnings impact from the MPUC's decision. The final
order is expected to be released by the end of March.
The MPUC expressed an interest in exploring how the rate realignment
proposed by New England Telephone might be accomplished through an
alternative form of regulation, in lieu of traditional rate of return
regulation. The MPUC announced its intention to commence such an
investigation upon release of its final order.
Massachusetts
In June 1990, the Massachusetts Department of Public Utilities ("MDPU")
issued an order in Phase III of a proceeding that culminated a five-year
investigation into New England Telephone's rates, costs and revenues. The
order calls for the gradual restructuring of local and long distance rates
within the state, with the objective of moving prices for services closer
to the costs of providing them. This is accomplished through an annual
transitional filing of new rates by New England Telephone. At the time
the rates are established, revenue neutrality is maintained. New England
Telephone's first and second transitional filings became effective on
November 15, 1991 and January 15, 1993, respectively. On January 13,
1994, the MDPU approved the third transitional filing with minor
modifications to become effective April 14, 1994.
New Hampshire
On March 16, 1993, New England Telephone, the New Hampshire Public
Utilities Commission ("NHPUC") staff, the NHPUC Office of Consumer
Advocate, various interexchange and local exchange carriers and an
association of business customers filed a stipulation for approval by
the NHPUC to resolve
<PAGE>
all matters in the current phase of the generic intraLATA competition docket.
On June 10, 1993, the NHPUC issued an order approving in part and modifying
in part the stipulation, subject to the acceptance of the parties, to
provide that (1) the NHPUC will not initiate a show cause proceeding,
for effect prior to October 1, 1995, as to New England Telephone's earnings
or cost of capital; (2) New England Telephone will not initiate, prior to
April 1, 1995, a request for an increase in basic exchange rates, for
effect prior to October 1, 1995, except to reflect changes in exogenous
costs; (3) switched access rates for non-800 access service decrease from
20 cents to 16 cents effective October 1, 1993, which resulted in an
annual reduction of approximately $3.1 million in 1993, and will
decrease 12 cents the following year, 8 cents in the third year, and
in the fourth year would be equal to the interstate rate in effect at that
time; (4) New England Telephone will have pricing flexibility with respect
to its toll services; and (5) the settlements process between New England
Telephone and independent carriers will be replaced by access
arrangements. On July 29, 1993, the parties resubmitted the
stipulation with the NHPUC, as modified by the NHPUC and New England
Telephone. On August 2, 1993, the NHPUC approved the stipulation as
resubmitted.
Rhode Island
In August 1992, the Rhode Island Public Utilities Commission approved a
Price Regulation Trial ("PRT") that provides New England Telephone with
significantly increased pricing and earnings freedom through 1995 and
calls for specific investment and service-quality commitments by New
England Telephone. As a part of the PRT, New England Telephone makes an
annual filing, with overall price increases capped by a formula indexing
Rhode Island prices to the Gross National Product Price Index, adjusted
for productivity and exogenous factors. New England Telephone's most
recent annual filing became effective January 15, 1994. The
flexibility afforded by the PRT allows New England Telephone to
continue moving the prices of its services closer to the costs of
providing them. With respect to 1993 earnings, New England
Telephone must apply a one-time credit to customers' bills of 50%
of any earnings between 13.25% and 19.25% return on equity and 100% of any
return in excess of 19.25%.
Vermont
New England Telephone filed a petition for a price regulation plan with
the Vermont Public Service Board ("VPSB") on October 5, 1993. This
proposal provides that (1) New England Telephone would be allowed to
adjust its rates annually based on an increase in the Gross Domestic
Product Price Index, adjusted for productivity and exogenous factors;
(2) New England Telephone would enhance its current quality commitments;
(3) New England Telephone would retain the ability to offer new products
and services on 15 days' notice, and the ability to offer customer specific
contracts, without prior VPSB approval; and (4) New England Telephone's
earnings would not be restricted. In a related proceeding, on December
1, 1993, the Vermont Department of Public Service filed a petition seeking
to examine New England Telephone's rates and to ensure that rates are at
appropriate levels prior to the initiation of a price regulation plan.
The petition asserts that
<PAGE>
New England Telephone may be over-earning and asks the VPSB to direct that
any rate reduction be returned to the ratepayers of Vermont in the form
of a rebate retroactive to December 1993. A decision in both the
incentive regulation and rate dockets is due from the VPSB by
August 24, 1994. On February 18, 1994, the VPSB opened an
investigation into open network architecture ("ONA"), unbundling
and interconnection issues. This is a major competition docket that is
expected to continue into 1995.
Federal Regulatory Matters
Interstate Access Charges
Interstate access charges are tariff charges filed with the FCC that
compensate LECs, including the Telephone Companies, for services that
allow carriers and other customers to originate and terminate interstate
telecommunications traffic on the LECs' local distribution networks. Such
charges recover the LECs' access-related costs allocated to the interstate
jurisdiction ("Interstate Costs") under the FCC's jurisdictional cost
allocation rules.
With respect to the provision of access to the switched network, separate
charges are applied to end users ("End User Common Line Charges") and to
interexchange carriers ("switched access"). End User Common Line
Charges recover, through a fixed charge, a portion of the Interstate
Costs of the line connecting an end user's premises with the LEC's central
office. The LECs recover their remaining Interstate Costs through mileage
and usage sensitive charges to the interexchange carriers.
Special access refers to the provision of nonswitched access for private
line services. Between January 1, 1984 and April 1985, the Telephone
Companies charged AT&T for special access pursuant to contracts and
charged other interexchange carriers pursuant to pre-existing tariffs.
In November 1984, pursuant to permission granted by the FCC, the Telephone
Companies increased by approximately 20 percent the special access rates to
the other interexchange carriers. In April 1985, special access tariffs
applicable to all interexchange carriers, including AT&T, became
effective. Upon review, the United States Court of Appeals for the
District of Columbia Circuit found that the rate increases permitted prior
to June 3, 1985 were instituted without the requisite period of notice
and, therefore, remanded the case to the FCC for a determination of the
appropriate refunds. On July 12, 1993, the FCC issued an order requiring
the Telephone Companies to calculate refunds for certain interexchange
carriers. Pursuant to that order, which is subject to a pending
petition for reconsideration by one of the interexchange carriers,
the Telephone Companies provided refunds totalling approximately $150,000
on November 29, 1993.
<PAGE>
Effective January 1, 1991, the FCC adopted a new system for regulating
the interstate rates of the LECs, including the Telephone Companies, and
established so called "price caps" that set maximum limits on the prices
they can charge. The limits will be adjusted each year to reflect
inflation, a productivity factor and certain other cost changes.
Price cap regulation does not guarantee that any LEC will earn its
authorized rate of return. If the Telephone Companies' earnings in
any year fall below 10.25%, the Telephone Companies are permitted to
increase their rates in the following year to reflect the difference
between their earnings and what earnings would have been at a 10.25% rate
of return. On November 1, 1990, the Telephone Companies filed tariffs to
comply with the FCC's new price cap rate regulation policy. Effective
January 1, 1991, the FCC lowered the interstate access authorized rate
of return from 12% to 11.25%. The tariffs, which became effective on
January 1, 1991, were based upon the authorized rate of return on
overall investment of 11.25%.
Under the FCC price cap regulations, each LEC may earn a rate of return
above the authorized rate of return, up to 12.25%, which equates to a
return on equity of slightly over 15.0% for the Telephone Companies.
Above that level, earnings are divided equally between the LEC and
customers, until they reach an effective cap on interstate return on
equity of approximately 18.7%. Also, if the Telephone Companies choose to
set their tariffs in any one year based on a more stringent (4.3% as
opposed to 3.3%) productivity standard, the Telephone Companies may
earn in that year a rate of return on overall investment of up to 13.25%
before earnings are shared with customers, which equates to a
correspondingly higher return on equity.
On April 2, 1991, the Telephone Companies filed their first annual access
tariff revisions under the new price cap rules. These revisions
incorporated a 3.3% productivity factor, as well as inflation
factor adjustments and other cost changes. The revised tariffs became
effective on July 1, 1991 and reduced annual interstate access rates
approximately $68 million.
In addition, on January 13, 1992, the FCC permitted the Telephone
Companies to implement the first step of a transition plan to unify
their interstate access rates. The Telephone Companies implemented the
second step transition rates on July 1, 1992 and the third and final
step on November 24, 1992.
On July 1, 1992, the Telephone Companies implemented the second annual
update to the price cap rates. These tariff changes, which included the
second step transition rates, resulted in a net reduction in the Telephone
Companies' annual interstate access rates of approximately $25 million
during the tariff period from July 1, 1992 to July 1, 1993.
On July 2, 1993, the Telephone Companies implemented the third annual
update to the price cap rates. These tariffs will result in a net
reduction in the Telephone Companies' annual interstate access rates
of approximately $90 million during the tariff period from July 2, 1993 to
June 30, 1994.
<PAGE>
While the unified rate structure is designed to have no impact on the
Telephone Companies' aggregate interstate revenues, New York Telephone
experienced an interstate rate decrease and New England Telephone
experienced an offsetting interstate rate increase. In order to
avoid sudden changes in each of the Telephone Company's earnings, the
Telephone Companies implemented a transition plan to phase-in the
earnings effect of the unified rate structure on each Telephone
Company.
With unification of interstate rates, the Telephone Companies report one
unified interstate rate of return to the FCC, which will be the basis for
determining any possible refund obligations due to over-earnings as well
as any need to increase interstate rates due to under-earnings under the
price cap plan. Previously, each individual Telephone Company's rate of
return was used for such purposes.
Other Federal Matters
On December 5, 1993, the Telephone Companies filed a petition with the
FCC for a waiver to implement the Universal Service Preservation Plan
("USPP") in order to compete more effectively with alternative providers
of local telephone service. The USPP would reduce the Switched Access rate
for multiline business users in zones of high traffic density by
approximately 40 percent, and would shift most of the revenues
lost from this rate reduction to flat, per-line charges applicable to all
access lines. Overall annual access revenues would be reduced by
$25 million.
On January 27, 1993, NYNEX, together with two other RHCs, requested that
the FCC initiate an immediate investigation of the competitive impact on
the public interest of the proposed acquisition by AT&T of a 33 percent
interest in McCaw Cellular Communications Inc. ("McCaw"), and in
particular, on the FCC's policies governing competition in
wireless services. The petition urged that the FCC require AT&T and
McCaw to disclose fully the terms of their agreement so that the FCC can
determine whether control of McCaw is passing to AT&T and whether the
proposed transaction is in the public interest. The FCC requested and
received comments from interested parties. Subsequently, after AT&T
announced its intent to acquire all of McCaw immediately, the FCC
commenced a proceeding to examine the proposed transaction. NYNEX and
a number of other parties filed petitions in that proceeding on November 1,
1993. NYNEX asked that the FCC impose conditions on any approval of the
transaction it might grant, in order to preserve and promote competition
in the cellular marketplace. The matter is pending.
In September 1992, the FCC adopted rules requiring certain LECs,
including the Telephone Companies, to offer physical collocation to
interexchange carriers for the provision of special access services under
terms and conditions similar to the intrastate collocation arrangements
<PAGE>
already in existence in Massachusetts and New York. The Telephone Companies
filed Special Access Expanded Interconnection tariffs on February 16, 1993.
The FCC issued an order on September 2, 1993 requiring certain LECs,
including the Telephone Companies, to file Switched Transport
Expanded Interconnection tariffs. The Telephone Companies filed
their tariffs on November 18, 1993. Although the FCC rejected requests
by the LECs to impose contribution charges, the FCC granted the LECs
additional pricing flexibility to be effective after expanded
interconnection arrangements become available. The financial impact
of the FCC rules is not presently determinable.
In August 1992, the FCC determined that the LECs may provide video
dialtone service, a common carrier platform for transporting and
switching video programming from programmers to subscribers, and that
neither the LEC providing video dialtone nor its programmer-customers
require a local cable franchise. On October 30, 1992, New York
Telephone asked the FCC for permission to conduct a trial of video
dialtone service in New York City. On June 29, 1993, the FCC granted that
request. The trial commenced in mid-January of 1994.
The Telephone Companies filed tariffs for their ONA services with the FCC
on November 1, 1991. The Telephone Companies requested a waiver of the
filing requirement for nine enhanced telecommunications services. On
January 1, 1992, the FCC issued orders allowing the tariffs to take effect
on February 2, 1992, subject to an investigation of the costs and rates, and
granting the requested waivers as to seven services. On December 15, 1993,
the FCC issued an order requiring certain revisions in the Telephone
Companies' ONA tariffs. The required revisions became effective
March 12, 1994.
In January 1992, the Telephone Companies entered into a consent decree
with the FCC to settle alleged violations of the FCC's accounting rules
in connection with transactions with the National Exchange Carrier
Association. Under the terms of the decree, each Telephone Company
paid $250,000 to the United States Treasury, and the FCC terminated the
proceedings without any finding of wrongdoing, violation or liability.
The outcome of all refund matters, including those described above under
"Regulated Services", as well as the time frame within which each will be
resolved, is not presently determinable. As of December 31, 1993, the
aggregate amount of revenues that was estimated to be subject to
possible refund from all regulatory proceedings was approximately
$172.9 million, plus related interest.
Competition
NYNEX faces competition in each of the industry segments in which it
operates. In Telecommunications, advances in technology, as well as
regulatory and court decisions, have expanded the types of communications
products and services available in the market, as well as the number of
alternatives to the telecommunications services provided by NYNEX.
Various
<PAGE>
business alliances and other undertakings were announced in the
telecommunications industry in 1993 that indicate an
intensifying level of competition, especially with respect to the
operations of the Telephone Companies. AT&T intends to acquire McCaw
through a merger (see "Other Federal Matters" above). McCaw operates
in a number of areas within NYNEX's region in the Northeast. US WEST Inc.
acquired a major interest in Time Warner Entertainment Co. L.P., which
includes Time Warner Cable. Time Warner Cable has extensive operations
in the Northeast, including New York City. Cablevision Systems Corp., which
operates in Boston, Long Island, and Westchester County, plans to construct
a fiber-optic network to deliver telecommunications and video services.
MCI Communications Corp. ("MCI") plans to spend $2 billion to establish
local fiber-optic networks in 20 major cities, including New York and
Boston, offering a way to bypass the local exchange carrier, including
the Telephone Companies, and connect directly to MCI's long-distance
network. In certain markets in New York and New England, the
Telephone Companies face significant competition from local access
providers with substantial resources. The Telephone Companies allowed
alternative service providers to place transmission equipment in the
Telephone Companies' central offices, under an arrangement known as
collocation. The Telephone Companies also face increasing competition
in Centrex services, long distance, WATS, billing and collection services,
pay telephones, and various other services. In October 1993, the FCC
issued rules for the licensing of wireless personal communications
services ("PCS") under an auction process scheduled to begin in 1994.
NYNEX can participate in the auction for PCS licenses on the same basis as
other applicants except that its participation is limited in those PCS
service areas where NYNEX Mobile provides cellular service. NYNEX is
considering its options for participating in the PCS auction process.
NYNEX is implementing a major restructuring of its business and is
pursuing strategic alliances in order to meet this competition.
NYNEX is aggressively pursuing the enactment of changes to current
restrictions on providing certain communication, information, and
entertainment services over the network. NYNEX currently provides some
of these services overseas, such as cable television and telephony services
in the United Kingdom and advanced voice, data, video and cable services in
Thailand. If legislation pending before Congress were passed, NYNEX would
be able to offer video programming in its own service areas, offer
long-distance service and manufacture telecommunications equipment.
NYNEX Mobile faces competition in its provision of cellular services and
equipment, from both facilities-based cellular service competitors and
resellers in its two largest markets (New York City and Boston) as well
as in a number of other markets. There is also competition from
non-cellular mobile services in some markets.
Information Resources competes with various alternative directory
publishers in New York and New England. Its directories published
in other areas also face competition from other published directories.
Directory publishing also competes with other advertising media such as
newspapers, magazines, and broadcast media.
<PAGE>
There is substantial competition in the Financial Services segment.
Numerous firms, both large and small, offer various types of financial
services.
NYNEX's Other Diversified Operations segment also faces substantial
competition. In pursuit of business opportunities outside the
United States, NYNEX Network Systems Company faces competition from
other RHCs and United States interexchange carriers, as well as from
multi-national corporations and local entities.
CableComms' business opportunity in the United Kingdom is a direct result
of Government policy to introduce competition to the dominant carrier. Just
as CableComms is providing a competitive service in the local loop, the
Government has also licensed alternative long distance operators and a
growing number of wireless providers. In entertainment services CableComms
competes with direct to home satellite, broadcast television and video
cassette rental and retail outlets. The dominant telecommunications
carrier in the United Kingdom has also announced an intention to offer a
form of entertainment service over its existing network.
NYNEX cannot predict the effect of such competition on future revenues,
expenses, rates of return, profit or growth of its industry segments.
Research and Development
Research and development is primarily conducted at NYNEX Science
& Technology, Inc.("Science & Technology"), which was formed in
June 1991 to continue the activities previously performed within a
department of NYNEX. Science & Technology provides NYNEX with
technical direction and support that is essential in developing new
services, improving current services and increasing operational
efficiencies. It focuses on applied research and development of
advanced communications, information and network technologies. Another
NYNEX business unit, Telesector Resources, performs market research,
product development and field trials associated with new services NYNEX
plans to introduce. Bellcore conducts research and development in areas
relating primarily to exchange telecommunications and exchange access
services. Research and development costs charged to expense were
approximately $162.8, $131.7, and $108.4 million in 1993, 1992 and
1991, respectively.
Employee Relations
NYNEX and its subsidiaries had approximately 76,200 employees at
December 31, 1993. Approximately 49,800 employees are represented
by unions. Of those so represented, approximately 68% are represented by
the Communications Workers of America ("CWA") and approximately 32% by the
International Brotherhood of Electrical Workers ("IBEW"), both of which are
affiliated with the AFL-CIO.
In August 1993, pursuant to labor agreements that were to expire in
August 1995, employees represented by the CWA and IBEW at New York
Telephone and its subsidiary, New England Telephone, Information
Resources, Telesector Resources and NYNEX Mobile received wage
increases of up to 4.25%. In August 1994, these employees will
receive an additional wage increase of up to 4.0%. There may also be
a cost-of-living adjustment in August 1994.
NYNEX, the CWA and Local 2213 of the IBEW in New York have reached a
tentative agreement on a new contract extending the existing contract
to August 1998. The tentative agreement is subject to the completion of
<PAGE>
local bargaining and ratification by the union membership. Talks began on
March 21, 1994 in attempts to reach similar agreements with locals of the
IBEW in New England.
Item 2. PROPERTIES.
The properties of NYNEX and its subsidiaries do not lend themselves to
simple description by character and location of principal units.
At December 31, 1993, the gross book value of property, plant and
equipment was $34.0 billion, consisting principally of telephone
plant and equipment (84%). Other classifications include: land, land
improvements and buildings (9%); furniture and other equipment (4%); and
plant under construction and other (3%).
Substantially all of the Telephone Companies' central office equipment is
located in buildings owned by the Telephone Companies and is situated on
land that they own. Many administrative offices of NYNEX and the
Telephone Companies, as well as many garages and business offices of
the Telephone Companies, are in rented quarters.
Substantially all of New York Telephone's assets are subject to lien
under New York Telephone's Refunding Mortgage Bond indenture. At
December 31, 1993, the principal amount of Refunding Mortgage Bonds
outstanding was $1.10 billion.
As part of NYNEX's 1993 restructuring associated with re-engineering the
way service is delivered to customers, NYNEX intends to consolidate work
centers from 300 to approximately 50 by the end of 1996 to build larger
work teams in fewer locations.
Item 3. LEGAL PROCEEDINGS.
Contingent Liabilities Agreement
The Plan of Reorganization, which was approved by the MFJ Court in August
1983 in connection with the AT&T divestiture, provides for the recognition
and payment of liabilities that are attributable to predivestiture events
(including transactions to implement divestiture), but that do not become
certain until after divestiture. These contingent liabilities relate
principally to predivestiture litigation and other claims against AT&T,
its affiliates and the LECs with respect to the environment, rates, taxes,
contracts and torts (including business torts, such as alleged violations
of the antitrust laws).
With respect to such liabilities, AT&T and the LECs will share the costs
of any judgment or other determination of liability entered by a court or
administrative agency against any of them, whether or not a given entity
is a party to the proceeding and regardless of whether an entity is
dismissed from the proceeding by virtue of settlement or otherwise.
Other costs to be shared would include the costs of defending the claim
(including attorneys'
fees and court costs) and the cost of interest or penalties with respect to
any such judgment or determination. With certain exceptions,
responsibility for such contingent liabilities will generally
be divided among AT&T and the LECs on the basis of their relative net
investment as of the effective date of divestiture. Under this general
rule of allocation, the Telephone Companies pay approximately 10.9% of any
judgment or determination of liability.
<PAGE>
Antitrust Actions
On May 25, 1990, Discon Incorporated filed an action in the United States
District Court for the Western District of New York alleging, among other
things, violations of the Racketeer Influenced and Corrupt Organizations
Act ("RICO") and the federal antitrust laws. The defendants include NYNEX,
New York Telephone, NYNEX Materiel Enterprises Company, and an officer and
director of NYNEX. Plaintiff's allegations relate to, among other things,
the removal of equipment from New York Telephone's central offices. On June
25, 1992, the District Court dismissed the original complaint in this case.
Discon then filed an amended complaint. A motion to dismiss is pending
before the District Court.
On October 29, 1990, North American Industries Inc. filed a third party
complaint against New York Telephone alleging, among other things,
violations of the federal antitrust laws relating to the provision
of facilities for pay telephone services. The case is pending in the
United States District Court for the Southern District of New York. In
1992, three similar suits were filed in the same court, and one was filed
against New England Telephone in the United States District Court for the
District of Massachusetts.
Other Litigation
On November 12, 1993, the Court of Appeals for the District of Columbia
Circuit reversed and vacated the February 16, 1993 judgment of the United
States District Court for the District of Columbia which had found NYNEX
guilty of criminal contempt for an alleged violation of the MFJ's
information services prohibition and had ordered NYNEX to pay a fine
of $1 million. The Court of Appeals found that the MFJ lacked the necessary
clarity and specificity to support a finding of criminal contempt.
In an October 1, 1990 decision in the Fifth Stage of New York Telephone's
1984 general rate case, the NYSPSC confirmed New York Telephone's right to
retain $152 million in cost savings. In September 1991, two suits were
filed in the New York State Supreme Court, challenging the NYSPSC's
decision. In anticipation of such challenges, New York Telephone also
filed suit in September 1991, asserting that the retention of the revenues
was required by the terms of the Moratorium Extension. The NYSPSC's
motion to dismiss New York Telephone's suit was granted in May 1992.
New York Telephone appealed and on November 10, 1993, the Appellate
Division of the New York Supreme Court issued an order affirming the
NYSPSC's October 1, 1990 order.
On April 24, 1990, Scott J. Rafferty filed a lawsuit against New York
Telephone, NYNEX Information Solutions Group, Inc. and various
individuals, including an officer and director of NYNEX. The
lawsuit, filed in the United States District Court for the Southern
District of New York, alleged violations of the RICO and state common
law relating to, among other things, the termination of Mr. Rafferty's
employment with Telco Research Corporation, then a subsidiary of NYNEX
Information Solutions Group, Inc. On July 16, 1991, the Court issued an
order dismissing some of the plaintiff's claims and staying the remainder
pending dismissal. On November 12, 1993, the Court dismissed the
remainder of Mr. Rafferty's claims and issued a final judgment in
favor of the defendants.
<PAGE>
On January 25, 1990, Wegoland Ltd. and Howard Weiner filed an action in
the United States District Court for the Southern District of New York on
behalf of the telephone ratepayers of New York Telephone and New England
Telephone alleging violations of the RICO and various state laws. A
substantially identical case was filed by Donna Roazen on March 12,
1990. The defendants in these cases are NYNEX, certain of its
subsidiaries and certain present and former officers of those
companies. Plaintiffs allege that the Telephone Companies have been
charged inflated prices in transactions with their affiliates and that
those prices are unlawfully reflected in the Telephone Companies'
regulated rates. On November 13, 1992, the District Court granted
defendants' motions to dismiss these actions with prejudice. Plaintiffs'
appeal is pending before the United States Court of Appeals for the Second
Circuit.
Fifty-four actions, of which approximately 15 remain, were brought in New
York State Supreme Court, New York County, against New York Telephone,
Empire City Subway Company (Limited) and others arising out of a power
failure in a predominantly commercial section of New York City in August
1983. The actions are predicated on broad and general claims of
negligence in excavating and/or installing underground equipment.
Several of these cases involve multiple plaintiffs.
While counsel cannot give assurance as to the outcome of any of these
matters, in the opinion of Management based upon the advice of counsel,
the ultimate resolution of these matters in future periods is not expected
to have a material effect on NYNEX's financial position or annual operating
results but could have a material effect on quarterly operating results.
On November 15, 1993, NYNEX and New England Telephone filed suit in the
United States District Court for the District of Maine seeking an order
declaring that section 533(b) of the Cable Communications Policy Act of
1984 is unconstitutional and permanently enjoining the United States from
enforcing section 533(b) against NYNEX. Section 533(b) prohibits NYNEX
from providing video programming to subscribers in areas where the
Telephone Companies provide service.
<PAGE>
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders in the fourth
quarter of the fiscal year covered by this Annual Report on Form 10-K.
<TABLE>
Executive Officers of the Registrant (as of March 1, 1994)
For each of the executive officers of NYNEX, set forth below is the name,
age, position and date each person initially became an executive officer:
<CAPTION>
Name Age Position Date
<S> <C> <C> <C>
William C. Ferguson 63 Chairman and Chief Executive Officer January 1987
Ivan G. Seidenberg 47 President and Chief Operating
Officer, and
Vice Chairman-Telecommunications
Group March 1986
Frederic V. Salerno 50 Vice Chairman-Finance and
Business Development March 1991
Raymond F. Burke 60 Executive Vice President,
General Counsel and Secretary October 1983
Jeffrey S. Rubin 50 Executive Vice President and
Chief Financial Officer August 1990
Peter M. Ciccone 51 Vice President and Comptroller June 1992
Saul Fisher 50 Vice President-Law March 1993
Patrick F. X. Mulhearn 42 Vice President-Public Relations January 1994
Donald J. Sacco 52 Vice President-Human Resources May 1990
Thomas J. Tauke 43 Vice President-Government Affairs September 1991
Colson P. Turner 51 Vice President and Treasurer July 1991
</TABLE>
Prior to their election as executive officers of NYNEX, all of such officers
except Mr. Rubin, Mr. Mulhearn and Mr. Tauke had held, for at least the past
five years, high level managerial positions with NYNEX or a subsidiary of
NYNEX. Officers are not elected for a fixed term of office, but serve at
the discretion of the Board of Directors.
Jeffrey S. Rubin was elected Executive Vice President and Chief Financial
Officer of NYNEX effective November 1, 1993. From September 1992 through
October 1993, he held the position of Senior Vice President and Chief
Financial Officer of NYNEX. Commencing August 1, 1990 through
August 31, 1992, he held the position of Vice President-Finance and
Treasurer of NYNEX. In July 1991, he relinquished the title of Treasurer but
remained Vice President-Finance. Prior thereto, he served as
Vice President-Finance and Chief Financial Officer
(1987-1990); Vice President-Planning and Control (1985-1987); and
Vice President-Controller (1984-1985) of Combustion Engineering Inc.
<PAGE>
Patrick F. X. Mulhearn was elected Vice President-Public Relations
effective January 1, 1994. He served as Vice President-Public
Affairs and Corporate Communications at New York Telephone
(1991-1993) and as Vice President and Chief Operating Officer of
NYNEX Information Resources Company (1990-1991). Mr. Mulhearn joined New
York Telephone in 1988 as a Director-Business Marketing Operations.
Thomas J. Tauke was elected Vice President-Government Affairs effective
September 1, 1991. Prior to joining NYNEX, he was founder and senior
partner of Tauke, Walgren and Associates, a public policy consulting
firm specializing in telecommunications, health, environmental and energy
issues. Mr. Tauke was also president and chief executive officer of Home
Technology Systems, Inc., a small business specializing in personal
emergency systems. From January 1979 to January 1991, Mr. Tauke
represented Iowa's Second Congressional District in the United States
House of Representatives.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Information with respect to quarterly dividends and Common Stock prices
appearing on page 49 of the Registrant's Proxy Statement dated March 21,
1994; information with respect to Common Stock exchange listings appearing
on the back cover of such Proxy Statement under the caption "Stock Exchange
Listings"; and information with respect to the number of stockholders of
record of NYNEX Common Stock appearing on page 36 of such Proxy Statement
are incorporated herein by reference.
During 1993, NYNEX issued approximately 2.3 million shares of Common
Stock for the NYNEX Share Owner Dividend Reinvestment and Stock
Purchase Plan ("DRISPP"); the NYNEX Corporation Savings Plan for
Salaried Employees and the NYNEX Corporation Savings and Security Plan
(Non-Salaried Employees) ("Savings Plans"); and other stock incentive
programs. On February 1, 1993, NYNEX began open market purchases for
shares of Common Stock associated with the DRISPP, Savings Plans, and
other stock incentive programs. On November 1, 1993, NYNEX
discontinued purchasing shares and began issuing new shares. On
January 26, 1993, NYNEX began a repurchase program of shares of Common Stock
over a ten-year period related to the NYNEX 1992 Management Stock Option
Plan and the NYNEX 1992 Non-Management Stock Option Plan ("Stock Option
Plans"). Upon exercise of the stock options, these repurchased shares will
be released into the open market.
On July 15, 1993, the Board of Directors of NYNEX declared a two-for-one
common stock split in the form of a 100 percent stock dividend, payable on
September 15, 1993 to holders of record at the close of business on
August 16, 1993.
<PAGE>
On March 17, 1994, the Board of Directors of NYNEX announced a quarterly
cash dividend of $.59 per share of Common Stock, which was unchanged from
the previous quarter. The dividend is payable on May 1, 1994 to holders
of record at the close of business on March 31, 1994.
Item 6. SELECTED FINANCIAL DATA.
Selected financial data for the five years ended December 31, 1993,
appearing on page 32 of the Registrant's Proxy Statement dated
March 21, 1994, is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Management's Discussion and Analysis of Financial Condition and Results
of Operations, appearing on pages 21 through 31 of the Registrant's Proxy
Statement dated March 21, 1994, is incorporated herein by reference.
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of the Registrant and its
wholly-owned subsidiaries, included in the Registrant's Proxy
Statement dated March 21, 1994, are incorporated herein by reference
and are listed in Item 14 below.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
During 1993 and 1992, NYNEX did not change its auditors, and there was no
disagreement on any matter of accounting principles or practices or
consolidated financial statement disclosure that would have
required the filing of a Current Report on Form 8-K.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Item 11. EXECUTIVE COMPENSATION.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required under Items 10, 11, 12 and 13 is included in the
Registrant's Proxy Statement dated March 21, 1994, on pages 2
(commencing under the caption "Stock Ownership of Directors and
Executive Officers") through 5, pages 13 (commencing under the caption
"Executive Compensation: Committee on Benefits Report on Executive
Compensation") through the bottom of page 19, and page 19 (the first
paragraph commencing under the caption "Other Information"). Such
information is incorporated herein by reference. There existed no
relationship and there were no transactions reportable under Item 13.
Information regarding Executive Officers of the Registrant required by
Item 401 of Regulation S-K is included in Part I of this Annual Report on
Form 10-K following Item 4.
<PAGE>
PART IV
Item 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K.
(a) Documents filed as part of this Annual Report on Form 10-K.
(1) Consolidated Financial Statements. The following report and
consolidated financial statements, included in the
Registrant's Proxy Statement dated March 21, 1994, are
incorporated herein by reference in response to Item 8:
Page(s) in
Registrant's
Proxy Statement
dated
March 21, 1994
Report of Independent Accountants ............. 32
Consolidated Statements of Income for each
of the Three Years in the Period Ended
December 31, 1993............................ 34
Consolidated Balance Sheets as of
December 31, 1993 and 1992................... 35
Consolidated Statements of Changes in
Stockholders' Equity for each of the Three
Years in the Period Ended December 31, 1993.. 36
Consolidated Statements of Cash Flows for each
of the Three Years in the Period Ended
December 31, 1993............................ 37
Notes to Consolidated Financial Statements .... 38
Supplementary Information
Quarterly Financial Data (Unaudited) ........ 49
<PAGE>
Item 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K. (continued)
(2) Consolidated Financial Statement Schedules. The following
consolidated financial statement schedules of the
Registrant are included herein in response to Item 14:
Page(s) in this
Annual Report on
Form 10-K
Report of Independent Accountants .......... 32
V - Property, Plant and Equipment ....... 33-36
VI - Accumulated Depreciation, Depletion
and Amortization of Property,
Plant and Equipment .......... 37-40
VIII - Valuation and Qualifying Accounts .... 41
X - Supplementary Income Statement
Information ................... 42
Consolidated financial statement schedules other than those listed
above have been omitted because the required information is
contained in the consolidated financial statements and notes
thereto or because such schedules are not required or applicable.
(3) Exhibits. Exhibits on file with the Securities and Exchange
Commission (the "SEC"), as identified in parentheses below,
are incorporated herein by reference as exhibits hereto.
Exhibit
Number
(3)a Restated Certificate of Incorporation of NYNEX Corporation dated May
6, 1987 (Exhibit No. (3)a to the Registrant's filing on Form SE
dated March 24, 1988, File No. 1-8608).
(3)b By-Laws of NYNEX Corporation dated October 12, 1983, as amended
October 17, 1991 (Exhibit No. (3)b to the Registrant's filing
on Form 10-Q dated October 31, 1991, File No. 1-8608).
(4) No instrument which defines the rights of holders of long-term debt
of NYNEX and its subsidiaries is filed herewith pursuant to
Regulation S-K, Item 601(b)(4)(iii)(A). Pursuant to this
regulation, NYNEX hereby agrees to furnish a copy of any such
instrument to the SEC upon request.
<PAGE>
Exhibit
Number
(10)(i)1 Reorganization and Divestiture Agreement among American
Telephone and Telegraph Company, NYNEX Corporation and
Affiliates dated as of November 1, 1983 (Exhibit No. (10)(i)1
to the Registrant's 1983 Annual Report on Form 10-K, File No.
1-8608).
(10)(i)2 Agreement Concerning Contingent Liabilities, Tax Matters and
Termination of Certain Agreements among American Telephone
and Telegraph Company, Bell System Operating Companies,
Regional Holding Companies and Affiliates dated as of
November 1, 1983 (Exhibit No. (10)(i)8 to the Registrant's
1983 Annual Report on Form 10-K, File No. 1-8608).
(10)(i)3 Divestiture Interchange Agreement between American Telephone
and Telegraph Company, NYNEX Corporation, other Regional
Holding Companies, Central Services Organization, Advanced
Mobile Phone Service, Inc., Cincinnati Bell Inc. and The
Southern New England Telephone Company dated as of
November 1, 1983 (Exhibit No. (10)(i)13 to the
Registrant's 1983 Annual Report on Form 10-K, File
No. 1-8608).
(10)(i)4 Unfunded Post-Retirement Benefits Cost-Sharing Agreement
between American Telephone and Telegraph Company, NYNEX
Corporation, other Regional Holding Companies, Central
Services Organization and Advanced Mobile Phone
Service, Inc. dated as of November 1, 1983 (Exhibit
No. (10)(i)15 to the Registrant's 1983 Annual Report on
Form 10-K, File No. 1-8608).
(10)(i)5 Actuarial Services Agreement between American Telephone and
Telegraph Company, NYNEX Corporation, other Regional
Holding Companies, Central Services Organization and
Advanced Mobile Phone Service, Inc. dated as of November
1, 1983 (Exhibit No. (10)(i)16 to the Registrant's 1983
Annual Report on Form 10-K, File No. 1-8608).
(10)(i)6 Shared Network Facilities Agreement among American Telephone
and Telegraph Company, AT&T Communications of New York,
Inc. and New York Telephone Company dated as of November
1, 1983 (Exhibit No. (10)(i)20 to the Registrant's 1983
Annual Report on Form 10-K, File No. 1-8608).
(10)(i)7 Shared Network Facilities Agreement among American Telephone
and Telegraph Company, AT&T Communications of New England,
Inc. and New England Telephone and Telegraph Company dated
as of November 1, 1983 (Exhibit No. (10)(i)21 to the
Registrant's 1983 Annual Report on Form 10-K, File
No. 1-8608).
<PAGE>
(10)(i)8 Agreement Concerning the Sharing of Contingent Liabilities
dated as of January 28, 1985 (Exhibit No. (19)(i)2 to the
Registrant's 1984 Annual Report on Form 10-K, File No.
1-8608).
(10)(ii)1 Shareholder Services Agreement between The First National
Bank of Boston and NYNEX Corporation dated as of
September 8, 1992.
(10)(ii)2 Preferred Stock Purchase Agreement between NYNEX Corporation
and Viacom Inc., dated October 4, 1993, and amendment
thereto dated November 19, 1993.
(10)(iii)(A)1 NYNEX Senior Management Short Term Incentive Plan (Exhibit
No. 10-aa to Registration Statement No. 2-87850).
(10)(iii)(A)2 NYNEX Senior Management Long Term Disability and Survivor
Protection Plan (Exhibit No. 10-dd to Registration
Statement No. 2-87850).
(10)(iii)(A)3 NYNEX Senior Management Transfer Program (Exhibit No. 10-ee
to Registration Statement No. 2-87850).
(10)(iii)(A)4 Description of NYNEX Financial Counseling Service for Senior
Managers (Exhibit No. 10-ff to Registration Statement No.
2-87850).
(10)(iii)(A)5 NYNEX Corporation Deferred Compensation Plan for Non-Employee
Directors (Exhibit No. 10-gg to Registration Statement No.
2-87850).
(10)(iii)(A)6 Description of NYNEX Insurance Plan for Directors (Exhibit
No. 10-hh to Registration Statement No. 2-87850).
(10)(iii)(A)7 Description of NYNEX Plan for Non-Employee Directors' Travel
Accident Insurance (Exhibit No. 10-ii to Registration
Statement No. 2-87850).
(10)(iii)(A)8 NYNEX Senior Management Incentive Award Deferral Plan
(Exhibit No. 10-kk to Registration Statement No.
2-87850).
(10)(iii)(A)9 Description of NYNEX Mid-Career Hire Program
(Exhibit No. 10-ll to Registration
Statement No. 2-87850).
(10)(iii)(A)10 NYNEX Mid-Career Pension Program (Exhibit No. 10-mm to
Registration Statement No. 2-87850).
(10)(iii)(A)11 NYNEX Estate Planning Legal Services Program
(Exhibit No. 10-nn to Registration
Statement No. 2-87850).
(10)(iii)(A)12 NYNEX 1984 Stock Option Plan, as amended and restated
(Post-Effective Amendment No. 1 to Registration
No. 2-97813, dated September 21, 1987).
<PAGE>
(10)(iii)(A)13 NYNEX Senior Management Long Term Incentive Plan (Exhibit No.
(19)(ii)1 to the Registrant's 1984 Annual Report on Form
10-K, File No. 1-8608).
(a) Description of certain amendments to the NYNEX Senior
Management Long Term Incentive Plan
(Exhibit No. (19)(ii)4 to the Registrant's
Filing on Form SE dated March 27, 1987, File No. 1-8608).
(10)(iii)(A)14 NYNEX Senior Management Non-Qualified Pension Plan (Exhibit
No. (19)(ii)2 to the Registrant's 1984 Annual Report on
Form 10-K, File No. 1-8608).
(a) Description of certain amendments to the NYNEX Senior
Management Non-Qualified Pension Plan
(Exhibit No. (19)(ii)6 to the Registrant's
Filing on Form SE dated March 27, 1987, File No. 1-8608).
(b) Description of certain amendments to the NYNEX Non-Qualified
Pension Plan (Exhibit No. (19)(ii)7 to the Registrant's
Filing on Form SE dated March 27, 1987, File No. 1-8608).
(c) Description of certain amendments to the NYNEX Senior
Management Non-Qualified Pension Plan (Exhibit No.
(19)(ii)1 to the Registrant's 1987 Annual Report on Form
10-K, File No. 1-8608).
(d) Description of certain amendments to the NYNEX Senior
Management Non-Qualified Pension Plan (Exhibit
No. (19)(ii)l to the Registrant's 1991 Annual Report
on Form 10-K, File No. 1-8608).
(10)(iii)(A)15 Description of NYNEX Corporation Non-Employee Director
Pension Plan (Exhibit No. (28)(i)1 to Amendment No. 1
to the Registrant's 1987 Annual Report on Form 10-K, File
No. 1-8608).
(10)(iii)(A)16 NYNEX Senior Management Non-Qualified Supplemental Savings
Plan (Exhibit No. (10)(iii)(A)(18) to the Registrant's
1988 Annual Report on Form 10-K, File No. 1-8608).
(10)(iii)(A)17 NYNEX 1987 Restricted Stock Award Plan (Exhibit No. (28)(i)1
to the Registrant's Filing on Form SE dated March 23, 1988,
File No. 1-8608).
(10)(iii)(A)18 NYNEX 1990 Long Term Incentive Program (Exhibit No. 1 to the
Registrant's Proxy Statement dated March 26, 1990).
(10)(iii)(A)19 NYNEX 1990 Stock Option Plan (Exhibit No. 2 to the
Registrant's Proxy Statement dated March 26,
1990).
<PAGE>
(10)(iii)(A)20 NYNEX Stock Plan for Non-Employee Directors (Exhibit
No. (10)(iii)(A)22 to the Registrant's 1990 Annual
Report on Form 10-K, File No. 1-8608).
(10)(iii)(A)21 Description of the NYNEX Supplemental Life Insurance Plan
(Exhibit No. (19)(i)2 to the Registrant's filing on Form
SE, dated March 23, 1993, File No. 1-8608).
(10)(iii)(A)22 Description of certain amendments to the NYNEX Senior
Management Long Term Incentive Plan (Exhibit No.
(19)(ii)1 to the Registrant's filing on Form SE, dated
March 23, 1993, File No. 1-8608).
(10)(iii)(A)23 Description of certain amendments to the NYNEX Senior
Management Non-Qualified Pension Plan (Exhibit
No. (19)(ii)2 to the Registrant's filing on Form SE,
dated March 23, 1993, File No. 1-8608).
(10)(iii)(A)24 NYNEX Executive Retention Agreement.
(10)(iii)(A)25 NYNEX Executive Severance Pay Plan.
(11) Computation of Earnings Per Share.
(12) Computation of Ratio of Earnings to Fixed Charges.
(21) Subsidiaries of NYNEX.
(23) Consent of Independent Accountants.
(24) Powers of attorney.
(b) Reports on Form 8-K.
The Company's Current Report on Form 8-K, date of report October 4, 1993
and filed October 7, 1993, reporting on Item 5.
The Company's Current Report on Form 8-K, date of report November 10,
1993 and filed November 19, 1993, reporting on Item 5.
The Company's Current Report on Form 8-K, date of report November 19,
1993 and filed November 24, 1993, reporting on Item 5.
The Company's Current Report on Form 8-K, date of report December 24,
1993 and filed January 13, 1994, reporting on Item 5.
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
NYNEX CORPORATION
By P. M. Ciccone
P. M. Ciccone
Vice President and Comptroller
March 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Principal Executive Officer:
W. C. Ferguson* Chairman of the Board
and Chief Executive Officer
Principal Financial Officer:
J. S. Rubin* Executive Vice President
and Chief Financial Officer
Principal Accounting Officer:
P. M. Ciccone Vice President and Comptroller
Directors:
John Brademas*
Randolph W. Bromery*
John J. Creedon*
W. C. Ferguson*
Stanley P. Goldstein*
Helene L. Kaplan*
Elizabeth T. Kennan*
David J. Mahoney* *By P. M. Ciccone
Edward E. Phillips* (P. M. Ciccone, as attorney-in-fact
F. V. Salerno* and on his own behalf as
Ivan Seidenberg* Principal Accounting Officer)
Walter V. Shipley*
John R. Stafford* March 25, 1994
<PAGE>
REPORT of INDEPENDENT ACCOUNTANTS
Our report on the consolidated financial statements of NYNEX Corporation
and its subsidiaries has been incorporated by reference in this Annual
Report on Form 10-K from page 32 of the Proxy Statement dated March 21,
1994 of NYNEX Corporation. In connection with our audits of such
consolidated financial statements, we have also audited the
related consolidated financial statement schedules listed in the index
on pages 25 and 26 of this Annual Report on Form 10-K.
In our opinion, the consolidated financial statement schedules referred
to above, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly, in all material respects, the
information required to be included therein. This information should be
read in conjuction with the last paragraph of our report on page 32 of
the Proxy Statement.
Coopers & Lybrand
New York, New York
February 9, 1994
<PAGE>
<TABLE>
Schedule V - Page 1 of 4
NYNEX CORPORATION
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(Dollars in Millions)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Balance Balance
at Other at
12/31/92 Additions (a) Retirements (b) Changes (c) 12/31/93
<S> <C> <C> <C> <C> <C>
Land and Land Improvements. . . . . . . . 166.0 3.0 - (4.4) 164.6
Buildings . . . . . . . . . . . . . . . . 2,725.8 133.5 55.7 (7.6) 2,796.0
Furniture and Other Equipment . . . . . . 1,438.9 236.7 124.7 (88.8) 1,462.1
Telephone Plant and Equipment
Central Office Equipment. . . . . . . . 12,734.2 1,065.9(f) 762.9 1.8 13,039.0
Cable and Wiring. . . . . . . . . . . . 9,174.0 672.5(f) 143.3 115.4 9,818.6
Conduit and Poles . . . . . . . . . . . 2,789.9 146.7 16.1 2.5 2,923.0
Station and Terminal Equipment. . . . . 2,134.9 265.7 682.6 7.9 1,725.9
Other . . . . . . . . . . . . . . . . . 1,027.0 114.1 78.4 (0.3) 1,062.4
Plant Under Construction. . . . . . . . . 693.9 1,764.5 1,677.5(e) 5.9 786.8
Other . . . . . . . . . . . . . . . . . . 193.8 21.6 11.4 (13.0) 191.0
TOTAL PLANT . . . . . . . . . . . . . . . 33,078.4 4,424.2(d) 3,552.6 (19.4) 33,969.4
See page 4 of 4 for description of (a), (b), (c), (d), (e), and (f).
</TABLE>
<PAGE>
<TABLE>
Schedule V - Page 2 of 4
NYNEX CORPORATION
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(Dollars in Millions)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Balance Balance
at Other at
12/31/91 Additions (a) Retirements (b) Changes (c) 12/31/92
<S> <C> <C> <C> <C> <C>
Land and Land Improvements. . . . . . . . 158.9 1.3 - 5.8 166.0
Buildings . . . . . . . . . . . . . . . . 2,574.4 149.0 18.0 20.4 2,725.8
Furniture and Other Equipment . . . . . . 1,253.3 264.1 74.3 (4.2) 1,438.9
Telephone Plant and Equipment
Central Office Equipment. . . . . . . . 12,285.1 1,076.9(f) 605.7 (22.1) 12,734.2
Cable and Wiring. . . . . . . . . . . . 8,711.6 627.9(f) 164.6 (0.9) 9,174.0
Conduit and Poles . . . . . . . . . . . 2,666.7 142.8 14.1 (5.5) 2,789.9
Station and Terminal Equipment. . . . . 1,976.7 232.0 83.5 9.7 2,134.9
Other . . . . . . . . . . . . . . . . . 1,008.7 128.3 110.8 0.8 1,027.0
Plant Under Construction. . . . . . . . . 811.5 1,633.6 1,781.3(e) 30.1 693.9
Other . . . . . . . . . . . . . . . . . . 206.7 9.7 19.9 (2.7) 193.8
TOTAL PLANT . . . . . . . . . . . . . . . 31,653.6 4,265.6(d) 2,872.2 31.4 33,078.4
See page 4 of 4 for description of (a), (b), (c), (d), (e), and (f).
</TABLE>
<PAGE>
<TABLE>
Schedule V - Page 3 of 4
NYNEX CORPORATION
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(Dollars in Millions)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Balance Balance
at Other at
12/31/90 Additions (a) Retirements (b) Changes (c) 12/31/91
<S> <C> <C> <C> <C> <C>
Land and Land Improvements. . . . . . . . 148.1 9.1 - 1.7 158.9
Buildings . . . . . . . . . . . . . . . . 2,405.8 240.8 12.7 (59.5) 2,574.4
Furniture and Other Equipment . . . . . . 1,105.4 236.6 64.8 (23.9) 1,253.3
Telephone Plant and Equipment
Central Office Equipment. . . . . . . . 12,171.9 913.4(f) 812.6 12.4 12,285.1
Cable and Wiring. . . . . . . . . . . . 8,218.5 669.1(f) 173.3 (2.7) 8,711.6
Conduit and Poles . . . . . . . . . . . 2,512.0 154.1 17.3 17.9 2,666.7
Station and Terminal Equipment. . . . . 1,835.2 173.4 41.0 9.1 1,976.7
Other . . . . . . . . . . . . . . . . . 1,077.8 81.9 138.1 (12.9) 1,008.7
Plant Under Construction. . . . . . . . . 771.1 1,702.7 1,659.5(e) (2.8) 811.5
Other . . . . . . . . . . . . . . . . . . 269.6 10.2 50.4 (22.7) 206.7
TOTAL PLANT . . . . . . . . . . . . . . . 30,515.4 4,191.3(d) 2,969.7 (83.4) 31,653.6
See page 4 of 4 for description of (a), (b), (c), (d), (e), and (f).
<PAGE>
Schedule V - Page 4 of 4
NYNEX CORPORATION
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOOTNOTES
<F01>
(a) These additions, other than additions to Land and Buildings, include material purchased from affiliated companies.
Additions shown also include (1) allowance for funds used during construction and (2) transfers, principally
Telephone Equipment completed, from Plant Under Construction and Property Held for Future Use to the applicable
classifications of Plant in Service.
<F02>
(b) Items of telephone plant when retired or sold are deducted from the property accounts at the amounts at which they are
included therein (estimated if not known).
<F03>
(c) Includes (1) the original cost (estimated if not known) of reused material, which is concurrently credited to inventory,
and (2) reclassifications between the classifications listed.
<F04>
(d) Additions on this Schedule V do not equal Capital expenditures on the Company's Consolidated Statements of Cash Flows
due primarily to the exclusion of additions under capital lease obligations, the equity component of allowance for
funds used during construction and construction transfers.
<F05>
(e) Principally Central Office Equipment completed and transferred to plant in service accounts as "Additions" in Column C.
<F06>
(f) Additions are due principally to the upgrade of outside plant facilities and switching and circuit equipment.
</TABLE>
<PAGE>
<TABLE>
Schedule VI - Page 1 of 4
NYNEX CORPORATION
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
(Dollars in Millions)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Balance Balance
at Other at
12/31/92 Additions Retirements(a) Changes(b) 12/31/93
<S> <C> <C> <C> <C> <C>
Land Improvements . . . . . . . . . . . . 2.3 0.1 - - 2.4
Buildings . . . . . . . . . . . . . . . . 650.6 75.9 43.7 (8.7) 674.1
Furniture and Other Equipment . . . . . . 736.3 177.7 83.3 1.2 831.9
Telephone Plant and Equipment
Central Office Equipment. . . . . . . . 5,055.7 1,253.8 784.8 (11.6) 5,513.1
Cable and Wiring. . . . . . . . . . . . 3,506.7 692.0 171.5 (13.3) 4,013.9
Conduit and Poles . . . . . . . . . . . 892.2 92.0 15.6 (8.1) 960.5
Station and Terminal Equipment. . . . . 1,536.8 146.4 665.9 (4.2) 1,013.1
Other . . . . . . . . . . . . . . . . . 582.3 68.1 76.8 0.6 574.2
Other . . . . . . . . . . . . . . . . . . 142.3 17.3 13.1 (10.3) 136.2
TOTAL ACCUMULATED DEPRECIATION. . . . . . 13,105.2 2,523.3 1,854.7 (54.4) 13,719.4
See page 4 of 4 for description of (a) and (b).
</TABLE>
<PAGE>
<TABLE>
Schedule VI - Page 2 of 4
NYNEX CORPORATION
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
(Dollars in Millions)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Balance Balance
at Other at
12/31/91 Additions Retirements(a) Changes(b) 12/31/92
<S> <C> <C> <C> <C> <C>
Land Improvements . . . . . . . . . . . . 2.1 0.2 - - 2.3
Buildings . . . . . . . . . . . . . . . . 605.0 75.2 23.2 (6.4) 650.6
Furniture and Other Equipment . . . . . . 596.6 183.2 50.2 6.7 736.3
Telephone Plant and Equipment
Central Office Equipment. . . . . . . . 4,190.5 1,264.5 616.3 217.0 5,055.7
Cable and Wiring. . . . . . . . . . . . 3,072.7 628.5 186.6 (7.9) 3,506.7
Conduit and Poles . . . . . . . . . . . 829.4 87.2 18.1 (6.3) 892.2
Station and Terminal Equipment. . . . . 1,465.7 138.9 67.6 (0.2) 1,536.8
Other . . . . . . . . . . . . . . . . . 589.2 73.0 108.2 28.3 582.3
Reserve Deficiency. . . . . . . . . . . . 250.7 - - (250.7) -
Other . . . . . . . . . . . . . . . . . . 136.8 26.6 22.0 0.9 142.3
TOTAL ACCUMULATED DEPRECIATION. . . . . . 11,738.7 2,477.3 1,092.2 (18.6) 13,105.2
See page 4 of 4 for description of (a) and (b).
</TABLE>
<PAGE>
<TABLE>
Schedule VI - Page 3 of 4
NYNEX CORPORATION
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
(Dollars in Millions)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Balance Balance
at Other at
12/31/90 Additions Retirements(a) Changes(b) 12/31/91
<S> <C> <C> <C> <C> <C>
Land Improvements . . . . . . . . . . . . 2.1 - - - 2.1
Buildings . . . . . . . . . . . . . . . . 520.4 75.8 19.5 28.3 605.0
Furniture and Other Equipment . . . . . . 478.7 170.2 46.6 (5.7) 596.6
Telephone Plant and Equipment
Central Office Equipment. . . . . . . . 4,335.7 1,214.7 836.4 (523.5) 4,190.5
Cable and Wiring. . . . . . . . . . . . 3,272.7 496.2 197.7 (498.5) 3,072.7
Conduit and Poles . . . . . . . . . . . 817.9 84.8 22.8 (50.5) 829.4
Station and Terminal Equipment. . . . . 1,356.6 134.4 37.4 12.1 1,465.7
Other . . . . . . . . . . . . . . . . . 638.5 93.6 135.7 (7.2) 589.2
Reserve Deficiency. . . . . . . . . . . . (801.2) 58.2 - 993.7 250.7
Other . . . . . . . . . . . . . . . . . . 165.1 38.8 51.6 (15.5) 136.8
TOTAL ACCUMULATED DEPRECIATION. . . . . . 10,786.5 2,366.7 1,347.7 (66.8) 11,738.7
See page 4 of 4 for description of (a) and (b).
<PAGE>
Schedule VI - Page 4 of 4
NYNEX CORPORATION
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
FOOTNOTES
<F01>
(a) Retirements on this Schedule VI do not equal retirements per the related Schedule V due to the effects of accounting for
cost of removal and salvage as prescribed by the FCC.
<F02>
(b) Comprises principally (1) depreciation provision for vehicles and other work equipment charged initially to clearing
accounts and apportioned to Maintenance, Telephone Plant and other accounts on the basis of the usage of such
equipment and (2) accumulated depreciation related to used plant acquired during the year.
</TABLE>
<PAGE>
<TABLE>
NYNEX CORPORATION
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in millions)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
(1) (2)
Balance at Charged to Costs Charged to Balance at
Description Beginning of and Expenses Other Accounts Deductions End of
Period Period
<S> <C> <C> <C> <C> <C>
Allowance for Uncollectibles
Year 1993 . . . . . . . . . . 190.3 144.0 134.0 (a) 262.4 205.9
Year 1992 . . . . . . . . . . 169.9 139.4 164.8 (a) 283.8 (b) 190.3
Year 1991 . . . . . . . . . . 173.0 156.6 133.7 (a) 293.4 (b) 169.9
Restructuring
Year 1993 . . . . . . . . . . 274.0 1,570.1 31.0 (c) 352.6 1,522.5
Year 1992 . . . . . . . . . . 697.3 - - 423.3 274.0
Year 1991 . . . . . . . . . . 309.8 585.4 85.3 (c) 283.2 697.3
Valuation Allowance for Deferred
Tax Assets
Year 1993 . . . . . . . . . . - 113.9 - - 113.9
<F01>
(a) Includes amounts to establish a reserve for purchased accounts receivables.
<F02>
(b) Amounts written-off as uncollectible. Amounts previously written-off are credited directly to this account when
recovered.
<F03>
(c) Amounts charged to revenues and/or other income.
</TABLE>
<PAGE>
<TABLE>
NYNEX CORPORATION
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1993
(Dollars in millions)
<CAPTION>
COLUMN A COLUMN B
Charged to Costs
Item and Expenses
<S> <C> <C>
Advertising Costs 1993................................................... 206.4
1992................................................... 148.0
1991................................................... 145.7
</TABLE>
<TABLE>
Exhibit 11
NYNEX CORPORATION
COMPUTATION OF EARNINGS PER SHARE
(In millions, except per share amounts)
<CAPTION>
For the
Year Ended December 31,
1993 1992* 1991*
<S> <C> <C> <C>
Earnings (loss) before cumulative
effect of change in
accounting principle $(272.4) $1,311.2 $600.8
Cumulative effect of change in
accounting for postemployment
benefits, net of taxes (121.7) - -
Net income (loss) $(394.1) $1,311.2 $600.8
I. Earnings (loss) per share
(used for financial reporting):
Weighted average number of
common shares outstanding (a) 412.7 409.8 403.0
Earnings (loss) per share before
cumulative effect of change
in accounting principle $(.66) $ 3.20 $ 1.49
Cumulative effect per share of
change in accounting principle (.29) - -
Earnings (loss) per weighted
average share of common stock $(.95) $3.20 $ 1.49
II. Primary earnings (loss) per share
(including common stock
equivalents ) (b):
Weighted average number of
common shares outstanding 412.7 409.8 403.0
Dilutive effect of outstanding
options (determined by application
of the treasury stock method) 3.3 1.2 .2
Total shares used in calculation
of primary earnings (loss) per share 416.0 411.0 403.2
Primary earnings (loss) per share
before cumulative effect of change
in accounting principle $ (.66) $ 3.19 $ 1.49
Cumulative effect per share of
change in accounting principle (.29) - -
Primary earnings (loss) per share $ (.95) $ 3.19 $ 1.49
III. Fully diluted earnings (loss)
per share (b):
Weighted average number of common
shares used in calculation of primary
earnings (loss) per share above 416.0 411.0 403.2
Additional dilutive effect of
outstanding options (as determined by
application of treasury stock method) .2 .4 .2
Total shares used in calculation of
fully diluted earnings (loss)
per share 416.2 411.4 403.4
Fully diluted earnings (loss) per share
before cumulative effect of change
in accounting principle $(.66) $ 3.19 $ 1.49
Cumulative effect per share of
change in accounting principle (.29) - -
Fully diluted earnings (loss)
per share $(.95) $ 3.19 $ 1.49
*Amounts for 1991 and 1992 have been restated to reflect a two-for-one common
stock split in the form of a 100 percent stock dividend declared on July 15,
1993.
<F01>
(a) Excludes common stock equivalents in accordance with provisions of
Accounting Principles Board Opinion No. 15, "Earnings Per Share"
("APB No. 15") because such equivalent shares result in dilution of
less than 3%.
<F02>
(b) This calculation is submitted in accordance with Item 601 of Regulation
S-K of the Securities and Exchange Commission, although not required
by APB No. 15 because it results in dilution of less than 3%.
</TABLE>
<TABLE>
Exhibit 12
NYNEX CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In millions)
<CAPTION>
Year
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Earnings
Income Before Interest Expense................ $387.1 $1,995.8 $1,326.8 $1,649.4 $1,499.0
and Cumulative Effect of Change
in Accounting Principle
Federal, State and Local Income Taxes......... (172.7) 570.4 192.1 368.3 265.9
Estimated Interest Portion of Rental Expense*. 112.3 120.9 123.9 123.8 117.1
Total Earnings*............................. $326.7 $2,687.1 $1,642.8 $2,141.5 $1,882.0
Fixed Charges
Total Interest Expense........................ $659.5 $ 684.6 $ 726.0 $ 700.0 $ 691.4
Estimated Interest Portion of Rental Expense*. 112.3 120.9 123.9 123.8 117.1
Total Fixed Charges*........................ $771.8 $ 805.5 $ 849.9 $ 823.8 $ 808.5
Ratio of Earnings to Fixed Charges**.......... .42 3.34 1.93 2.60 2.33
* Amounts for years prior to 1991 have been restated for adjustments to rent expense.
** Earnings were inadequate to cover Fixed Charges by $445.1 million for the year ended December 31, 1993 as a
result of $1.4 billion of fourth quarter 1993 after-tax business restructuring charges.
</TABLE>
<TABLE>
EXHIBIT 21
MAJOR SUBSIDIARIES
(as of March 1, 1994)
<CAPTION>
State or Country
Name of Organization
<S> <C>
New England Telephone and Telegraph Company New York
Telesector Resources Group, Inc.* Delaware
New York Telephone Company New York
Empire City Subway Company (Limited) New York
Telesector Resources Group, Inc.* Delaware
NYNEX Capital Funding Company Delaware
NYNEX Credit Company Delaware
NYNEX Government Affairs Company Delaware
NYNEX Information Resources Company Delaware
NYNEX Mobile Communications Company Delaware
NYNEX Science & Technology, Inc. Delaware
NYNEX Trade Finance Company Delaware
NYNEX U.K. Telephone and Cable T.V. Holding Company Limited England
NYNEX CableComms Limited England
NYNEX Venture Company Delaware
NYNEX Worldwide Services Group, Inc. Delaware
NYNEX Network Systems Company Delaware
* Telesector Resources Group, Inc. is a wholly-owned subsidiary of New York
Telephone Company and New England Telephone and Telegraph Company.
</TABLE>
Exhibit 23
CONSENT of INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the following Registration
Statements of NYNEX Corporation of our reports dated February 9, 1994 on our
audits of the consolidated financial statements and financial statement
schedules of NYNEX Corporation and its subsidiaries as of December 31,
1993 and 1992, and for each of the three years in the period ended December
31, 1993, which reports are included or incorporated by reference in this
Annual Report on Form 10-K:
- Registration Statements No. 2-94110, 33-16570 and 33-27802 on Form S-8
relating to the NYNEX Corporation Savings and Security Plan;
- Registration Statements No. 2-95141 and 33-23156 on Form S-3
relating to the NYNEX Corporation Share Owner Dividend
Reinvestment and Stock Purchase Plan;
- Registration Statements No. 2-95634, 2-95780 and 33-21635 on
Form S-8 relating to the NYNEX Corporation Savings Plan for Salaried
Employees;
- Registration Statement No. 2-97813 on Form S-8 relating to the
NYNEX 1984 Stock Option Plan;
- Registration Statement No. 33-23447 on Form S-8 relating to
the NYNEX Corporation UK Savings-Related Share Option Scheme;
- Registration Statement No. 33-33592 on Form S-3 relating
to $500,000,000 of NYNEX Corporation Debt Securities;
- Registration Statement Nos. 33-34401 and 33-34401-01 on Form S-3 (as
coregistrant and guarantor) relating to $300,000,000 of NYNEX Capital
Funding Company Debt Securities, unconditionally guaranteed by NYNEX
Corporation;
- Registration Statement No. 33-35212 on Form S-3 relating to the
resale of shares of NYNEX Common Stock in connection with the
acquisition of Lamarian Systems, Inc.;
- Registration Statement No. 33-35919 on Form S-8 relating to the
NYNEX 1990 Stock Option Plan;
- Registration Statement No. 33-36342 on Form S-4 relating to the
acquisition of Stockholder Systems, Inc.;
<PAGE>
- Registration Statement No. 33-48647 on Form S-8 relating to the
NYNEX 1992 Non-Management Stock Option Plan;
- Registration Statement No. 33-48648 on Form S-8 relating to the
NYNEX 1992 Management Stock Option Plan;
- Registration Statement No. 33-49105 on Form S-3 relating to the
NYNEX Corporation Share Owner Dividend Reinvestment and Stock
Purchase Plan;
- Post-Effective Amendment Nos. 1 and 2 to Registration Statement
No. 33-49105 on Form S-3 relating to the NYNEX Corporation Share Owner
Dividend Reinvestment and Stock Purchase Plan;
- Registration Statement Nos. 33-51147 and 33-51147-01 on Form S-3, (as
coregistrant and guarantor) which also constitutes Post-Effective
Amendment No. 1 to Registration Statement Nos. 33-34401 and
33-34401-01, relating to $1,331,000,000 of NYNEX Capital Funding
Debt Securities, unconditionally guaranteed by NYNEX Corporation;
- Registration Statement No. 33-51897 on Form S-8 relating to the NYNEX
Corporation Savings and Security Plan (Non-Salaried Employees);
- Registration Statement No. 33-51993 on Form S-8 relating to the Upstate
Partners Employees' Retirement Savings Plan; and
- Post-Effective Amendment No. 1 to Registration Statement Nos. 33-51147
and 33-51147-01 on Form S-3, which also constitutes Post-Effective
Amendment No. 2 to Registration Statement Nos. 33-34401 and
33-34401-01, relating to $1,331,000,000 of NYNEX Capital
Funding Company Debt Securities, unconditionally guaranteed by
NYNEX Corporation.
COOPERS & LYBRAND
New York, New York
March 25, 1994
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, NYNEX Corporation, a Delaware corporation (hereinafter
referred to as the "Corporation"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Exchange Act
of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended
December 31, 1993; and
WHEREAS, each of the undersigned is an Officer or both an Officer
and a Director of the Corporation as indicated below under his name;
NOW, THEREFORE, each of the undersigned hereby constitutes and
appoints W. C. Ferguson, J. S. Rubin and P. M. Ciccone and each of
them severally, as attorneys for him and in his name, place and stead,
and in each of his offices and capacities as an Officer or as both an
Officer and a Director of the Corporation, to execute and file such
Annual Report, and thereafter to execute and file any amendment or
amendments thereto on Form 8, hereby giving and granting to said
attorneys full power and authority to do and perform all and every act
and thing whatsoever requisite, necessary and/or desirable to be done in and
about the premises as fully, to all intents and purposes, as he might or
could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do, or cause
to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand this 18th day of March, 1994.
W. C. Ferguson
Chairman of the Board and
Chief Executive Officer
J. S. Rubin
Executive Vice President and
Chief Financial Officer
P. M. Ciccone
Vice President and Comptroller
<PAGE>
- 2 -
State of New York )
) ss.:
County of Westchester)
On the 18th day of March, 1994, personally appeared before me, W. C.
Ferguson, J. S. Rubin and P. M. Ciccone to me known and known to me to be
the persons described in and who executed the foregoing instrument, and
they severally duly acknowledged to me that they and each of them executed
and delivered the same for the purposes therein expressed.
Witness my hand and official seal this 18th day of March, 1994.
Ina H. Callery
Notary Public, State of New York
No. 4834371
Qualified in Westchester County
Commission Expires June 30, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, NYNEX Corporation, a Delaware corporation (hereinafter
referred to as the "Corporation"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Exchange Act
of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended
December 31, 1993; and
WHEREAS, the undersigned is a Director of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
W. C. Ferguson, J. S. Rubin and P. M. Ciccone and each of them
severally, as attorneys for the undersigned and in the
undersigned's name, place and stead, as a Director of the
Corporation, to execute and file such Annual Report, and thereafter to
execute and file any amendment or amendments thereto on Form 8, hereby
giving and granting to said attorneys full power and authority to do
and perform all and every act and thing whatsoever requisite, necessary
and/or desirable to be done in and about the premises as fully, to all
intents and purposes, as the undersigned might or could do if personally
present at the doing thereof, hereby ratifying and confirming all that said
attorneys may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
17th day of March, 1994.
John Brademas
State of New York )
) ss.:
County of New York )
On the 17th day of March, 1994, personally appeared before me
John Brademas, to me known and known to me to be the person described
in and who executed the foregoing instrument, and such person duly
acknowledged to me that such person executed and delivered the
same for the purposes therein expressed.
Witness my hand and official seal this 17th day of March, 1994.
Hannelore Koller
Notary Public, State of New York
No. 4687105
Qualified in Westchester County
Commission Expires December 31, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, NYNEX Corporation, a Delaware corporation (hereinafter
referred to as the "Corporation"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Exchange Act
of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended
December 31, 1993; and
WHEREAS, the undersigned is a Director of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
W. C. Ferguson, J. S. Rubin and P. M. Ciccone and each of them
severally, as attorneys for the undersigned and in the
undersigned's name, place and stead, as a Director of the
Corporation, to execute and file such Annual Report, and thereafter to
execute and file any amendment or amendments thereto on Form 8, hereby
giving and granting to said attorneys full power and authority to do
and perform all and every act and thing whatsoever requisite, necessary
and/or desirable to be done in and about the premises as fully, to all
intents and purposes, as the undersigned might or could do if personally
present at the doing thereof, hereby ratifying and confirming all that said
attorneys may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
17th day of March, 1994.
R. W. Bromery
State of New York )
) ss.:
County of New York )
On the 17th day of March, 1994, personally appeared before me
Randolph W. Bromery, to me known and known to me to be the person
described in and who executed the foregoing instrument, and such person
duly acknowledged to me that such person executed and delivered the same
for the purposes therein expressed.
Witness my hand and official seal this 17th day of March, 1994.
Hannelore Koller
Notary Public, State of New York
No. 4687105
Qualified in Westchester County
Commission Expires December 31, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, NYNEX Corporation, a Delaware corporation (hereinafter
referred to as the "Corporation"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Exchange Act
of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended
December 31, 1993; and
WHEREAS, the undersigned is a Director of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
W. C. Ferguson, J. S. Rubin and P. M. Ciccone and each of them
severally, as attorneys for the undersigned and in the
undersigned's name, place and stead, as a Director of the
Corporation, to execute and file such Annual Report, and thereafter to
execute and file any amendment or amendments thereto on Form 8, hereby
giving and granting to said attorneys full power and authority to do
and perform all and every act and thing whatsoever requisite, necessary
and/or desirable to be done in and about the premises as fully, to all
intents and purposes, as the undersigned might or could do if personally
present at the doing thereof, hereby ratifying and confirming all that said
attorneys may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
15th day of March, 1994.
John J. Creedon
State of New York )
) ss.:
County of New York )
On the 15th day of March, 1994, personally appeared before me
John J. Creedon, to me known and known to me to be the person
described in and who executed the foregoing instrument, and such
person duly acknowledged to me that such person executed and delivered
the same for the purposes therein expressed.
Witness my hand and official seal this 15th day of March, 1994.
Cornelius M. McShane
Notary Public, State of New York
No. 31-4845520
Qualified in New York County
Commission Expires December 1, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, NYNEX Corporation, a Delaware corporation (hereinafter
referred to as the "Corporation"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Exchange Act
of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended
December 31, 1993; and
WHEREAS, the undersigned is a Director of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
W. C. Ferguson, J. S. Rubin and P. M. Ciccone and each of them
severally, as attorneys for the undersigned and in the
undersigned's name, place and stead as a Director of the
Corporation, to execute and file such Annual Report, and thereafter
to execute and file any amendment or amendments thereto on Form 8, hereby
giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite, necessary
and/or desirable to be done in and about the premises as fully, to all
intents and purposes, as the undersigned might or could do if personally
present at the doing thereof, hereby ratifying and confirming all that
said attorneys may or shall lawfully do, or cause to be done, by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
11th day of March, 1994.
Stanley P. Goldstein
State of New York )
) ss.:
County of Westchester)
On the 11th day of March, 1994, personally appeared before me
Stanley P. Goldstein, to me known and known to me to be the person
described in and who executed the foregoing instrument, and such person
duly acknowledged to me that such person executed and delivered the same
for the purposes therein expressed.
Witness my hand and official seal this 11th day of March, 1994.
Diana Epstein
Notary Public, State of New York
No. 4780715
Qualified in Putnam County
Commission Expires February 28, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, NYNEX Corporation, a Delaware corporation (hereinafter
referred to as the "Corporation"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Exchange Act
of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended
December 31, 1993; and
WHEREAS, the undersigned is a Director of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
W. C. Ferguson, J. S. Rubin and P. M. Ciccone and each of them
severally, as attorneys for the undersigned and in the
undersigned's name, place and stead as a Director of the
Corporation, to execute and file such Annual Report, and thereafter
to execute and file any amendment or amendments thereto on Form 8, hereby
giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite, necessary
and/or desirable to be done in and about the premises as fully, to all
intents and purposes, as the undersigned might or could do if personally
present at the doing thereof, hereby ratifying and confirming all that
said attorneys may or shall lawfully do, or cause to be done, by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this
10th day of March, 1994.
Helene L. Kaplan
State of New York )
) ss.:
County of New York )
On the 10th day of March, 1994, personally appeared before me
Helene L. Kaplan, to me known and known to me to be the person
described in and who executed the foregoing instrument, and such
person duly acknowledged to me that such person executed and delivered
the same for the purposes therein expressed.
Witness my hand and official seal this 10th day of March, 1994.
Beverly Jaeger
Notary Public, State of New York
No. 41-4666996
Qualified in Queens County
Certificate Filed in New York County
Commission Expires August 31, 1994
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, NYNEX Corporation, a Delaware corporation (hereinafter
referred to as the "Corporation"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Exchange Act
of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended
December 31, 1993; and
WHEREAS, the undersigned is a Director of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
W. C. Ferguson, J. S. Rubin and P. M. Ciccone and each of them
severally, as attorneys for the undersigned and in the
undersigned's name, place and stead as a Director of the
Corporation, to execute and file such Annual Report, and thereafter
to execute and file any amendment or amendments thereto on Form 8, hereby
giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite, necessary
and/or desirable to be done in and about the premises as fully, to all
intents and purposes, as the undersigned might or could do if personally
present at the doing thereof, hereby ratifying and confirming all that
said attorneys may or shall lawfully do, or cause to be done, by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this
10th day of March, 1994.
Elizabeth T. Kennan
State of Massachusetts )
) ss.:
County of Hampshire )
On the 10th day of March, 1994, personally appeared before me
Elizabeth T. Kennan, to me known and known to me to be the person
described in and who executed the foregoing instrument, and such person
duly acknowledged to me that such person executed and delivered the same
for the purposes therein expressed.
Witness my hand and official seal this 10th day of March, 1994.
Teresa Reed
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, NYNEX Corporation, a Delaware corporation (hereinafter
referred to as the "Corporation"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Exchange Act
of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended
December 31, 1993; and
WHEREAS, the undersigned is a Director of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
W. C. Ferguson, J. S. Rubin and P. M. Ciccone and each of them
severally, as attorneys for the undersigned and in the
undersigned's name, place and stead as a Director of the
Corporation, to execute and file such Annual Report, and thereafter
to execute and file any amendment or amendments thereto on Form 8, hereby
giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite, necessary
and/or desirable to be done in and about the premises as fully, to all
intents and purposes, as the undersigned might or could do if personally
present at the doing thereof, hereby ratifying and confirming all that
said attorneys may or shall lawfully do, or cause to be done, by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
16th day of March, 1994.
David J. Mahoney
State of New York )
) ss.:
County of New York )
On the 16th day of March, 1994, personally appeared before me
David J. Mahoney, to me known and known to me to be the person
described in and who executed the foregoing instrument, and such
person duly acknowledged to me that such person executed and delivered
the same for the purposes therein expressed.
Witness my hand and official seal this 16th day of March, 1994.
Herbert Vine
Notary Public of New Jersey
My Commission Expires December 6, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, NYNEX Corporation, a Delaware corporation (hereinafter
referred to as the "Corporation"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Exchange Act
of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended
December 31, 1993; and
WHEREAS, the undersigned is a Director of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
W. C. Ferguson, J. S. Rubin and P. M. Ciccone and each of them
severally, as attorneys for the undersigned and in the
undersigned's name, place and stead as a Director of the
Corporation, to execute and file such Annual Report, and thereafter
to execute and file any amendment or amendments thereto on Form 8, hereby
giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite, necessary
and/or desirable to be done in and about the premises as fully, to all
intents and purposes, as the undersigned might or could do if personally
present at the doing thereof, hereby ratifying and confirming all that
said attorneys may or shall lawfully do, or cause to be done, by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
17th day of March, 1994.
Edward E. Phillips
State of New York )
) ss.:
County of New York )
On the 17th day of March, 1994, personally appeared before me
Edward E. Phillips, to me known and known to me to be the person
described in and who executed the foregoing instrument, and such person
duly acknowledged to me that such person executed and delivered the same for
the purposes therein expressed.
Witness my hand and official seal this 17th day of March, 1994.
Hannelore Koller
Notary Public, State of New York
No. 4687105
Qualified in Westchester County
Commission Expires December 31, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, NYNEX Corporation, a Delaware corporation (hereinafter
referred to as the "Corporation"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Exchange Act
of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended
December 31, 1993; and
WHEREAS, the undersigned is an Officer and a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
W. C. Ferguson, J. S. Rubin and P. M. Ciccone and each of them
severally, as attorneys for the undersigned and in the
undersigned's name, place and stead, and in each of the
undersigned's offices and capacities as an Officer and a Director of
the Corporation, to execute and file such Annual Report, and thereafter to
execute and file any amendment or amendments thereto on Form 8, hereby
giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite, necessary and/or
desirable to be done in and about the premises as fully, to all intents
and purposes, as the he might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
21st day of March, 1994.
F. V. Salerno
State of New York )
Westchester ) ss.:
County of )
On the 21st day of March, 1994, personally appeared before me
F. V. Salerno, to me known and known to me to be the person described
in and who executed the foregoing instrument, and such person duly
acknowledged to me that such person executed and delivered the
same for the purposes therein expressed.
Witness my hand and official seal this 21st day of March, 1994.
Joanna Versaci
Notary Public, State of New York
No. 4809035
Qualified in Westchester County
Cert. Filed in Bronx County
Commission Expires October 31. 1994
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, NYNEX Corporation, a Delaware corporation (hereinafter
referred to as the "Corporation"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Exchange Act
of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended
December 31, 1993; and
WHEREAS, the undersigned is an Officer and a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
W. C. Ferguson, J. S. Rubin and P. M. Ciccone and each of them
severally, as attorneys for the undersigned and in the
undersigned's name, place and stead, and in each of the
undersigned's offices and capacities as an Officer and a Director of
the Corporation, to execute and file such Annual Report, and thereafter to
execute and file any amendment or amendments thereto on Form 8, hereby
giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite, necessary and/or
desirable to be done in and about the premises as fully, to all intents
and purposes, as he might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
21st day of March, 1994.
Ivan Seidenberg
State of New York )
) ss.:
County of Westchester )
On the 21st day of March, 1994, personally appeared before me
Ivan Seidenberg, to me known and known to me to be the person
described in and who executed the foregoing instrument, and such
person duly acknowledged to me that such person executed and delivered
the same for the purposes therein expressed.
Witness my hand and official seal this 21st day of March, 1994.
Joanna Versaci
Notary Public, State of New York
No. 4809035
Qualified in Westchester County
Cert. Filed in Bronx County
Commission Expires October 31, 1994
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, NYNEX Corporation, a Delaware corporation (hereinafter
referred to as the "Corporation"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Exchange Act
of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended
December 31, 1993; and
WHEREAS, the undersigned is a Director of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
W. C. Ferguson, J. S. Rubin and P. M. Ciccone and each of them
severally, as attorneys for the undersigned and in the
undersigned's name, place and stead as a Director of the
Corporation, to execute and file such Annual Report, and thereafter
to execute and file any amendment or amendments thereto on Form 8, hereby
giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite, necessary
and/or desirable to be done in and about the premises as fully, to all
intents and purposes, as the undersigned might or could do if personally
present at the doing thereof, hereby ratifying and confirming all that
said attorneys may or shall lawfully do, or cause to be done, by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
11th day of March, 1994.
Walter V. Shipley
State of New York )
) ss.:
County of New York )
On the 11th day of March, 1994, personally appeared before me Walter
V. Shipley, to me known and known to me to be the person described in and
who executed the foregoing instrument, and such person duly acknowledged
to me that such person executed and delivered the same for the purposes
therein expressed.
Witness my hand and official seal this 11th day of March, 1994.
John B. Wynne
Notary Public, State of New York
No. 31-4357105
Qualified in New York County
Commission Expires February 28, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, NYNEX Corporation, a Delaware corporation (hereinafter
referred to as the "Corporation"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Exchange Act
of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended
December 31, 1993; and
WHEREAS, the undersigned is a Director of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
W. C. Ferguson, J. S. Rubin and P. M. Ciccone and each of them
severally, as attorneys for the undersigned and in the
undersigned's name, place and stead as a Director of the
Corporation, to execute and file such Annual Report, and thereafter
to execute and file any amendment or amendments thereto on Form 8, hereby
giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite, necessary
and/or desirable to be done in and about the premises as fully, to all
intents and purposes, as the undersigned might or could do if personally
present at the doing thereof, hereby ratifying and confirming all that
said attorneys may or shall lawfully do, or cause to be done, by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
14th day of March, 1994.
John R. Stafford
State of New Jersey )
) ss.:
County of Morris )
On the 14th day of March, 1994, personally appeared before me John
R. Stafford, to me known and known to me to be the person described in and
who executed the foregoing instrument, and such person duly acknowledged to
me that such person executed and delivered the same for the purposes
therein expressed.
Witness my hand and official seal this 14th day of March, 1994.
Brenda L. Santuccio
Notary Public of New Jersey
My Commission Expires May 26, 1998
<TABLE>
NYNEX CORPORATION
VOLUNTARY SCHEDULE - CERTAIN FINANCIAL INFORMATION
DATA STATED IN MILLIONS
<CAPTION>
REGULATION STATEMENT CAPTION 1993 1992 1991
<S> <S> <S> <S> <S>
5-02(1) Cash and temporary cash investments $ 158 $ 89 $ 158
5-02(4) Allowance for doubtful accounts 206 190 170
5-02(9) Total current assets 3,922 3,524 3,818
5-02(18) Total assets 29,458 27,732 27,503
5-02(21) Total current liabilities 6,807 4,795 5,400
5-02(22) Long-term debt 6,938 7,018 6,833
5-02(29) Preferred stock - no mandatory redemption - - -
5-02(30) Common stock 431 214 211
5-02(31) (a) (1) Additional paid in capital 6,625 6,520 6,282
5-03(b) (8) Interest expense 660 685 726
5-03(b) (10) Earnings (loss) before income taxes and
cumulative effect of change in accounting
principle (445) 1,882 793
5-03(b) (11) Income tax (173) 570 192
5-03(b) (16) Earnings (loss) before cumulative effect of
charge in accounting principle (272) 1,311 601
5-03(b) (18) Cumulative effect of change in accounting
for postemployment benefits, net of taxes (122) - -
5-03(b) (19) Net income(loss) (394) 1,311 601
</TABLE>
Exhibit 10(ii)2
[CONFORMED COPY]
VIACOM INC.
1515 Broadway
New York, New York
October 4, 1993
NYNEX Corporation
335 Madison Avenue
New York, New York 10017
Dear Sirs:
1. Subject to the terms and conditions set forth
herein, NYNEX Corporation, a Delaware corporation (the
"Purchaser"), hereby subscribes for, and agrees to purchase,
and Viacom Inc., a Delaware corporation (the "Company")
agrees to issue and sell, 24,000,000 shares of a new
series of convertible preferred stock of the Company
designated Series B Convertible Preferred Stock, par
value $0.01 per share (the "Preferred Stock"), for an
aggregate purchase price of $1,200,000,000, representing a
purchase price of $50.00 per share. The terms of the Preferred
Stock are set forth in the form of Certificate of Designation
attached as Annex I hereto (the "Certificate of
Designation"), which terms are subject to amendment in accordance with
the provisions hereof.
2. (a) The closing (the "Closing") of the purchase
provided for in paragraph 1 shall take place five Business
Days after satisfaction of the conditions specified in
paragraph 5 at the offices of Shearman & Sterling, 599
Lexington Avenue, New York, New York. The date and time of
the Closing are referred to herein as the "Closing Date". The
Company and the Purchaser currently anticipate that the
Closing Date shall be on or about November 30, 1993.
(b) At the Closing, the Purchaser shall deliver
to the Company $1,200,000,000 in cash by wire transfer in
immediately available funds to an account of the Company
designated by the Company, by notice to the Purchaser prior
to the Closing Date, and the Company shall deliver to the
Purchaser a certificate representing the shares of
Preferred Stock, registered in the name of the
Purchaser.
3. (a) The Purchaser represents and warrants to the
Company that: (i) the execution and delivery of this Agreement
by the Purchaser and the performance of its obligations
hereunder have been duly and validly authorized
<PAGE>
2
by all necessary corporate action on the part of the Purchaser;
(ii) this Agreement has been duly and validly executed and
delivered by the Purchaser and, assuming the due
authorization, execution and delivery by the Company
and subject to compliance with the MFJ (as defined in paragraph
24 hereof) , constitutes a legal, valid and binding obligation
of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or
other similar laws relating to or affecting enforcement of
creditors' rights generally and except as enforcement thereof
is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in
equity or at law); (iii) the execution, delivery and
performance of this Agreement by the Purchaser and the
purchase of Preferred Stock by the Purchaser do not
conflict with or violate or result in any breach of or
constitute a default (or an event which with notice or lapse
of time or both would become a default) under the Certificate
of Incorporation or By-Laws or equivalent organizational
documents of the Purchaser; (iv) the execution, delivery
and, subject to compliance with the MFJ, performance of this
Agreement by the Purchaser do not, and the consummation of
the transactions contemplated hereby by the Purchaser will
not, require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental
authority with respect to the Purchaser, except under
the 1934 Act; (v) the Purchaser is acquiring the Preferred
Stock and the Common Stock of the Company issuable upon
conversion of the Preferred Stock for its own account for
the purpose of investment and not with a view to or for sale in
connection with any distribution thereof; and (vi) the
Purchaser is an "accredited investor" within the
meaning of Rule 501 under the 1933 Act.
(b) Except as set forth in this paragraph 3, the
Purchaser makes no other representation, express or
implied, to the Company.
4. (a) The Company represents and warrants to the
Purchaser that (i) each of the Company and each Subsidiary
(as defined below) is a corporation, partnership or other
legal entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation or organization and has the requisite
power and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its
business as it is now being conducted, except where the
failure to be so organized, existing or in good standing
or to have such power, authority and governmental approvals
would not, individually or in the
<PAGE>
3
aggregate, have a Material Adverse Effect (as defined below);
(ii) the execution and delivery of this Agreement by the
Company and the issuance of the Preferred Stock in
accordance with the terms of this Agreement and the
Certificate of Designation have been duly and validly
authorized by all necessary corporate action on the part
of the Company; (iii) this Agreement has been duly and validly
executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the Purchaser,
constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with
its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws relating
to or affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles
of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law); (iv) the execution,
delivery and performance of this Agreement by the
Company do not, and the issuance of the Preferred Stock
and the performance of the Company's obligations in
accordance with the terms of this Agreement and the
Certificate of Designation will not, conflict with or violate
or result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a
default) under (A) the Certificate of Incorporation or
By-Laws or equivalent organizational documents of the
Company or any Subsidiary, (B) any law, rule,
regulation, order, judgment or decree applicable to
the Company or any Subsidiary, or (C) any note, bond,
mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or
obligation to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary or any
property or asset of the Company or any Subsidiary is
bound or affected, except in the case of subclauses (B) and
(C) above, for any such conflicts, violations, breaches,
defaults or other occurrences which would not prevent or
delay the issuance of the Preferred Stock in accordance with
the terms of this Agreement and the Certificate of Designation
in any material respect, or otherwise prevent the Company from
performing its obligations under this Agreement and the
Certificate of Designation in any material respect, and
would not, individually or in the aggregate, have a Material
Adverse Effect; (v) the execution, delivery and performance
of this Agreement by the Company do not, and the performance
of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or
filing with or notification to, any governmental
authority with respect to the Company, except for the
filing with the Secretary of State of the State of Delaware of
the Certificate
<PAGE>
4
of Designation, filings after the Closing of the Certificate of
Designation with appropriate authorities in states in which
the Company is qualified as a foreign corporation, any
filings required to effect the registration pursuant to
paragraph 8 and any filings pursuant to federal and state
securities laws which will be timely made after the Closing
hereunder; (vi) the Preferred Stock to be issued hereunder has
been duly authorized and, upon issuance at the Closing, will be
validly issued, fully paid and nonassessable, and free and
clear of all security interests, liens, claims,
encumbrances, pledges, options and charges of any
nature whatsoever, and the issuance of such Preferred Stock
will not be subject to preemptive rights of any other
stockholder of the Company; (vii) prior to the
Closing, the Certificate of Designation will have been
filed with the Secretary of State of the State of Delaware in
accordance with the Delaware General Corporation Law;
(viii) the shares of Class B Common Stock, par value
$0.01 per share ("Class B Common Stock"), of the Company
issuable upon conversion of the Preferred Stock have been
duly authorized and reserved for issuance upon such conversion
and, upon issuance of such shares in accordance with the
Certificate of Designation, will be validly issued,
fully paid and nonassessable; (ix) the authorized capital
stock of the Company consists of 100,000,000 shares of the
Company's Class A Common Stock, 150,000,000 shares of
Class B Common Stock and 100,000,000 shares of Preferred
Stock, par value $0.01 per share ("Company Preferred Stock");
(x) as of August 31, 1993, (A) 53,431,699 shares of the
Company's Class A Common Stock and 67,282,799 shares of
Class B Common Stock were issued and outstanding, all of which
were validly issued, fully paid and nonassessable, (B) no
shares were held in the treasury of the Company, (C) no
shares were held by the Subsidiaries, and (D) 3,843,000
shares were reserved for future issuance pursuant to
employee stock options or stock incentive rights granted
pursuant to the Company's 1989 Long-Term Management Incentive
Plan and the Company's Stock Option Plan for Outside
Directors; (xi) as of the date hereof, no shares of
Company Preferred Stock are issued and outstanding and there
are no agreements, arrangements or understandings with
respect to the issuance of any Company Preferred Stock
other than the Stock Purchase Agreement dated September 29,
1993 between the Company and Blockbuster Entertainment
Corporation; (xii) the Company has filed all forms,
reports and documents required to be filed by it with the
Securities and Exchange Commission ("Commission") since
December 31, 1990, and has heretofore made available to
the Purchaser, in the form filed with the Commission
(excluding any exhibits thereto), (A) its Annual
Reports on Form 10-K for the fiscal years ended December
31, 1990, 1991 and 1992, respectively, (B) its Quarterly
Reports on
<PAGE>
5
Form 10-Q for the periods ended March 31, 1993 and June 30,
1993, (C) all proxy statements relating to the Company's
meetings of stockholders (whether annual or special) held
since January 1, 1991 and (D) all other forms, reports and
other registration statements (other than Quarterly Reports on
Form 10-Q not referred to in clause (B) above and preliminary
materials) filed by the Company with the Commission since
December 31, 1990 (the forms, reports and other documents
referred to in clauses (A), (B), (C), and (D) above being
referred to herein, collectively, as the "SEC Reports");
(xiii) the SEC Reports and any other forms, reports and other
documents filed by the Company with the Commission after the
date of this Agreement (A) were or will be prepared in
accordance with the requirements of the 1933 Act and the
1934 Act, as the case may be, and the rules and regulations
thereunder and (B) did not at the time they were filed, or
will not at the time they are filed, contain any untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the
circumstances under which they were made, not
misleading; (xiv) the consolidated financial
statements (including, in each case, any notes thereto)
contained in the SEC Reports were prepared in accordance with
generally accepted accounting principles applied on a
consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and each
fairly presented the consolidated financial position, results
of operations and cash flows of the Company and its
consolidated subsidiaries as at the respective dates
thereof and for the respective periods indicated therein
(subject, in the case of unaudited statements, to normal
and recurring year-end adjustments which were not and are not
expected, individually or in the aggregate, to be material in
amount); (xv) since December 31, 1992 there has not been any
change, occurrence or circumstance in the business, results of
operations or financial condition of the Company or any
Subsidiary having, individually or in the aggregate, a
Material Adverse Effect, other than changes, occurrences and
circumstances referred to in any subsequently filed SEC
Reports; (xvi) there is no claim, action, proceeding or
investigation pending or, to the best knowledge of the
Company, threatened by any public official or
governmental authority, against the Company or any
Subsidiary, or any of their respective property or assets
before any court, arbitrator or administrative,
governmental or regulatory authority or body, which
challenges the validity of this Agreement, the Certificate of
Designation or the Preferred Stock or any action taken or to
be taken pursuant hereto or, except as set forth in the SEC
Reports, which is reasonably likely to have a Material
<PAGE>
6
Adverse Effect; and (xvii) neither the Company nor any
Subsidiary is in conflict with, or in default or
violation of, (A) any law, rule, regulation, order,
judgment or decree applicable to the Company or any
Subsidiary or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (B)
any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or
obligation to which the Company or any Subsidiary is a party
or by which the Company or any Subsidiary or any property or
asset of the Company or any Subsidiary is bound or affected,
except for any such conflicts, defaults or violations that
would not, individually or in the aggregate, have a
Material Adverse Effect.
(b) Except as set forth in this paragraph 4, the
Company makes no representation, express or implied, to
the Purchaser.
(c) "Subsidiary" means a "significant subsidiary" of
the Company, as such term is defined in Regulation S-X
promulgated under the 1933 Act.
(d) The term "Material Adverse Effect" means any
change or effect that is or is reasonably likely to be
materially adverse to the business, results of operations or
financial condition of the Company and its Subsidiaries, taken
as a whole.
(e) Notwithstanding anything to the contrary in this
paragraph 4, any change to or effect on the business, results
of operations or financial condition of the Company and its
Subsidiaries that results, directly or indirectly, from (a)
regulations adopted by the Federal Communications Commission,
whether before or after the date hereof, governing financial
interest in and syndication of broadcast programming or
implementing the Cable Television Consumer Protection
and Competition Act of 1992 or (b) the subject matter
contemplated by the Company's Current Report on Form
8-K, dated September 13, 1993 (the "Paramount
Transaction"), shall not be considered for purposes of determining
whether a breach has occurred of any representation or
warranty, covenant or agreement of the Company contained
herein.
5. (a) The obligation of the Purchaser to
consummate the Closing is subject to the satisfaction
(or waiver by the Purchaser, at its sole discretion, except for
clause (iv) below, which may not be waived by the Purchaser
without the Company's consent) of the following conditions:
<PAGE>
7
(i) (A) the Company shall have performed in all
material respects all of its obligations hereunder
required to be performed by it at or prior to the Closing
Date, (B) the representations and warranties of the Company
contained in this Agreement shall be true in all material
respects (other than those contained in Paragraph
4(a)(xv), which shall be true in all respects) as
of the Closing Date, as if made at and as of such date
(except for any such representations and warranties that
are expressly stated to be as of a different date) and (C)
the Purchaser shall have received a certificate signed by
an executive officer of the Company to the foregoing
effect;
(ii) no judgment, injunction, order or decree shall
materially restrict, prevent or prohibit the
consummation of the Closing;
(iii) the Purchaser shall have received an opinion of
Shearman & Sterling, dated the Closing Date,
substantially in the form of Exhibit A hereto;
and
(iv) as of the Closing, in the Purchaser's judgment,
neither the Company nor any Company Affiliate (as
defined in paragraph 24) shall be engaged in any
Restricted Activity (as defined in paragraph 24).
(b) The obligation of the Company to consummate the
Closing is subject to the satisfaction (or waiver by the
Company at its sole discretion) of the following conditions:
(i) (A) the Purchaser shall have performed in all
material respects all of its obligations hereunder
required to be performed by it at or prior to the
Closing Date, (B) the representations and warranties
of the Purchaser contained in this Agreement shall be true
in all material respects at and as of the Closing Date, as
if made at and as of such date (except for any such
representations and warranties that are expressly
stated to be as of a different date) and (C) the Company
shall have received a certificate signed by an executive
officer of the Purchaser to the foregoing effect;
(ii) no judgment, injunction, order or decree shall
materially restrict, prevent or prohibit the
consummation of the Closing; and
(iii) the Company shall have received an opinion of
Raymond F. Burke, Esq., Executive Vice President,
General Counsel and Secretary of the Purchaser, dated
the Closing Date, substantially in the form of Exhibit B
hereto.
<PAGE>
8
6. Effective as of the Closing and for so long as the
Purchaser and its Affiliates Beneficially Own at least
6,000,000 shares of Preferred Stock or the equivalent
in number of shares of Preferred Stock and shares of Class B
Common Stock issuable upon conversion of the Preferred Stock,
the Purchaser shall be entitled to one representative on the
Board of Directors of the Company, who shall serve in such
capacity in accordance with the Restated Certificate of
Incorporation and the By-Laws of the Company. Such
representative shall initially be William C. Ferguson,
who shall become a member of the Company's Board of
Directors simultaneously with the Closing, and the
Purchaser shall receive satisfactory evidence of this
action.
7. (a) The Purchaser acknowledges that the shares
of Preferred Stock and Class B Common Stock into which such
Preferred Stock is convertible have not been registered under
the 1933 Act or any state securities law, and hereby agrees not
to offer, sell or otherwise transfer, pledge or hypothecate
such shares unless and until registered under the 1933 Act
and any applicable state securities law or unless, in the
opinion of counsel reasonably satisfactory to the Company,
such offer, sale, transfer, pledge or hypothecation is exempt
from registration or is otherwise in compliance with the 1933
Act and such laws.
(b) Upon issuance of the Preferred Stock, and until
such time as the same is no longer required under the
applicable requirements of the 1933 Act, the
certificates evidencing the Preferred Stock (and
all securities issued in exchange therefor or substitution
thereof) shall bear the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS, IN
THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
ISSUER, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
TO THE ISSUER, SUCH OFFER, SALE, TRANSFER, PLEDGE OR
HYPOTHECATION IS EXEMPT FROM REGISTRATION OR IS
OTHERWISE IN COMPLIANCE WITH THE ACT AND SUCH LAWS.
8. Effective at the Closing, the Purchaser shall have
the registration rights, and the Company shall have the
obligations, set forth in Annex II.
<PAGE>
9
9. (a) During the Put/Call Period (as defined
below), the Company, at its option, shall have the right
to purchase from the Purchaser and the Purchaser, at its
option, shall have the right to sell to the Company, in
each case at the Put/Call Price (as defined below),
12,000,000 shares of the Preferred Stock.
(b) The Company or the Purchaser may each exercise the
right granted to it in paragraph 9(a) by written notice to the
other party at any time during the Put/Call Period and in the
event such a notice is so delivered, the repurchase of the
12,000,000 shares of Preferred Stock by the Company (the
"Put/Call Closing") shall occur at 10:00 a.m. at the place
specified in paragraph 2 hereof on the twentieth Business
Day following the date such written notice is delivered.
(c) At the Put/Call Closing, the Company shall deliver
to the Purchaser the Put/Call Price in cash by wire transfer in
immediately available funds to an account of the Purchaser
designated by the Purchaser by notice to the Company at
least two Business Days prior to the date of the Put/Call
Closing, and the Purchaser shall deliver to the Company a
certificate representing the 12,000,000 shares of Preferred
Stock, duly endorsed to the Company or accompanied by a stock
power duly executed to the Company, in proper form for
transfer, which shares shall be transferred by the
Purchaser to the Company free and clear of any
encumbrances or adverse claims.
(d) For the purposes of this paragraph 9, the
following terms shall have the following meanings:
(i) "Put/Call Period" shall mean the period of 120 days
following the earlier of (A) August 31, 1994, if, and
only if, the Company or any of its Affiliates has not
acquired Beneficial Ownership of a majority of the
outstanding voting capital stock of Paramount
Communications Inc. ("PCI") prior to August 31,
1994 or (B) the date on which any party other than the
Company or any of its Affiliates acquires Beneficial
Ownership of a majority of the voting capital stock of
PCI; and
(ii) "Put/Call Price" shall mean $600,000,000, representing
the aggregate liquidation preference of the 12,000,000
shares of Preferred Stock, plus the aggregate amount of
accrued and unpaid dividends on such shares of Preferred
Stock to the date of the Put/Call Closing (whether or
not earned or declared).
<PAGE>
10
(e) The Company agrees not to enter into any contract,
agreement, arrangement or understanding, nor to take or omit to
take any action, that would restrict or impair the performance
of its obligations under this paragraph 9, and the Company
represents and warrants that it is neither a party to nor
bound by any such contract, agreement, arrangement or
understanding on the date hereof.
10. In the event that, until the earlier of (a) the
date of the expiration of the Put/Call Period or (b) the
consummation of the acquisition by the Company or any of
its Affiliates of Beneficial Ownership of a majority of the
outstanding voting capital stock of PCI, the Company issues
new shares of preferred stock (other than through an
offering intended to result in a distribution thereof
to more than 35 non-accredited investors, which shall be on
market terms) the terms of the Preferred Stock and the terms
of Annex II hereto shall be amended in order to be at least as
favorable to the holders of such Stock as those of such new
shares.
11. (a) In the event of a Change of Control (as
defined below) of the Company, the Purchaser, at its
option, shall have the right to sell to the Company or its
assignee, at the Designated Price (as defined below), all
shares of the Preferred Stock then held by the Purchaser
and its Affiliates.
(b) The Purchaser may exercise the right granted to it
in paragraph 11(a) by written notice to the Company at any time
during the 30-day period following public announcement of such
Change of Control and in the event such a notice is so
delivered, the repurchase of such shares of Preferred
Stock by the Company (the "Paragraph 11 Closing") shall occur
at 10:00 a.m. at the place specified in paragraph 2 hereof on
the twentieth Business Day following the date such written
notice is delivered.
(c) At the Paragraph 11 Closing, the Company or its
assignee shall deliver to the Purchaser the Designated Price
in cash by wire transfer in immediately available funds to an
account of the Purchaser designated by the Purchaser by
notice to the Company at least two Business Days prior to
the date of the Paragraph 11 Closing, and the Purchaser shall
deliver to the Company a certificate representing the shares
of Preferred Stock referred to in paragraph 11(a), duly
endorsed to the Company or accompanied by a stock power
duly executed to the Company, in proper form for transfer,
which shares shall be transferred by the Purchaser to the
Company free and clear of any encumbrances or adverse claims.
<PAGE>
11
(d) For the purposes of this paragraph 11, the
following terms shall have the following meanings:
(i) A "Change of Control" of the Company shall occur
if a Person Beneficially Owns more voting capital stock,
on a fully diluted basis, of the Company than National
Amusements, Inc., Sumner M. Redstone, any trust
established by Mr. Redstone or of which he is the
settlor, beneficiary or trustee and any heir, executor,
administrator, or personal representative of Mr.
Redstone or his estate, and any person or entity in
any similar capacity, or any Affiliate of any of the
foregoing (collectively, the "Group"), or the Group
Beneficially Owns 30% or less of the voting capital stock,
on a fully diluted basis, of the Company.
(ii) "Designated Price" shall mean the sum of (A) 110%
multiplied by the aggregate liquidation preference of the
shares of Preferred Stock referred to in paragraph 11(a),
plus (B) the aggregate amount of accrued and unpaid
dividends on such shares of Preferred Stock to the
date of the Paragraph 11 Closing.
12. (a) From and after the Closing and for so long as
the Purchaser is a significant investor in the Company (which
is understood to mean Beneficial Ownership by the Purchaser
and its Affiliates of at least 10,000,000 shares of the
Preferred Stock or the equivalent in number of shares of
Preferred Stock and shares of Class B Common Stock issuable
on conversion of the Preferred Stock), subject to any
conflicting arrangements existing on the date hereof
and applicable laws, (i) the Company agrees to provide the
Purchaser and the Purchaser's Affiliates access to video
programming and programming packages originated (or
supplied, if the Company has the right to provide such
access) by the Company or any controlled Affiliates of the
Company, and (ii) the Purchaser agrees to provide the
Company and the Company's Affiliates access to the
distribution systems of the Purchaser and any controlled
Affiliates of the Purchaser for video programming and
programming packages originated (or supplied, if the
Company has the right to provide such access) by the Company
or any Affiliates of the Company, in the case of both (i) and
(ii) on aggregate terms negotiated in good faith by the
Company and the Purchaser to permit the Purchaser to
effectively compete in the delivery of video programming.
(b) From and after the Closing and for so long as the
Purchaser is a significant investor in the Company (as
specified in paragraph 12(a) above), subject to any
conflicting arrangements existing on the date hereof and
applicable laws,
<PAGE>
12
(a) the Purchaser shall have a right of first refusal,
exercisable within 60 days of written notice by the
Company, with respect to providing telephony service upgrade
expertise to the Company's controlled cable systems and (b)
with respect to any non-controlled cable systems of the
Company, the Company shall use its reasonable best efforts
to offer the Purchaser an opportunity to provide telephony
service upgrade expertise to such non-controlled cable
systems.
(c) The Purchaser and the Company agree, for a period
of 24 months following the Closing, in good faith to explore
and pursue appropriate strategic partnership opportunities in
the domestic and international media, entertainment, video
transport and telecommunications sectors (including,
without limitation, domestic and international cable
systems); provided that the provisions of this paragraph
12(c) shall terminate, at the option of either the Company or
the Purchaser, in the event that paragraph 24(g) shall become
applicable, unless and until the Purchaser reinvests in
Preferred Stock and/or Class B Common Stock as
contemplated by paragraph 24(g)(iv).
13. (a) The representations and warranties contained
in this Agreement shall survive the Closing until the first
anniversary of the Closing Date.
(b) The Purchaser and its Affiliates, officers,
directors, employees, agents, successors and assigns shall be
indemnified and held harmless by the Company for any and all
liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including,
without limitation, reasonable attorneys' fees and
expenses) (a "Loss") actually suffered or incurred by
them, arising out of or resulting from the breach of any
representation or warranty or covenant of the Company
contained in this Agreement.
(c) The Company and its Affiliates, officers,
directors, employees, agents, successors and assigns shall
be indemnified and held harmless by the Purchaser for any and
all Losses actually suffered or incurred by them, arising out
of or resulting from the breach of any representation or
warranty or covenant of the Purchaser contained in this
Agreement.
14. (a) The Purchaser agrees that neither the
Purchaser nor any of its Affiliates shall participate in
any transaction that, directly or indirectly, would have the
effect of precluding or competing with the Paramount
Transaction.
<PAGE>
13
(b) The Company agrees that in the event the
Company intends to engage in additional equity financing in
connection with the Paramount Transaction (other than equity to
be issued to stockholders of PCI as consideration in such
transaction), the Company shall consult with the
Purchaser.
(c) The Company agrees that prior to
consummation of the Paramount Transaction, the
Company shall receive an opinion from Smith Barney
Shearson Inc. that the consideration actually to be
paid by the Company in such transaction is fair, from a
financial point of view, to the stockholders of the Company.
15. The Purchaser, on the one hand, and the Company,
on the other, acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to
equitable relief (including injunction and specific
performance) in any action instituted in any court
of the United States or any state thereof having subject
matter jurisdiction, as a remedy for any such breach or to
prevent any breach of this Agreement. Such remedies shall not
be deemed to be the exclusive remedies for a breach or
anticipatory breach of this Agreement, but shall be in
addition to all other remedies available at law or equity to
the parties hereto. To the extent permitted by applicable
law, the parties hereto irrevocably submit to the exclusive
jurisdiction of the courts of the State of New York and the
United States of America located in the State of New York
for any suits, actions or proceedings arising out of or
relating to this Agreement. Notwithstanding the
foregoing, any dispute as to the matters specified in
the proviso to paragraph 24(g)(i)(A) as being subject to
arbitration shall be subject to arbitration in the
Borough of Manhattan in the City of New York in
accordance with the commercial arbitration rules of
the American Arbitration Association, and judgment upon the
award returned by the arbitrators may be entered in any court
having jurisdiction thereof. The expenses of arbitration shall
be borne by the party against whom the decision is rendered.
16. This Agreement, its Annexes and Exhibits contain
the entire understandings of the parties with respect to the
subject matter hereof, thereby superseding all prior
agreements of the parties relating to the subject
matter hereof (other than the Confidentiality Agreement
entered into between the Purchaser and the Company dated
September 24, 1993), and may not be amended except by a
writing signed by the parties.
<PAGE>
14
Except as otherwise provided herein, this Agreement is not
assignable by any of the parties; provided that the
Purchaser may assign its rights and obligations under
this Agreement to a wholly owned subsidiary of the
Purchaser, so long as the Purchaser shall remain
liable for all financial and performance obligations of
the Purchaser hereunder. This Agreement shall be binding
upon, and inure to the benefit of, the respective
successors of the parties. This Agreement may be
executed in counterparts, each of which shall be deemed an
original, but all of which together will constitute one and
the same instrument.
17. Any notices and other communications required to
be given pursuant to this Agreement shall be in writing and
shall be given by delivery by hand, by mail (registered or
certified mail, postage prepaid, return receipt requested)
or by facsimile transmission or telex, as follows:
If to the Company:
Viacom Inc.
1515 Broadway
New York, New York 10036
Attention: Philippe P. Dauman
Facsimile No.: 212-258-6134
With a copy to:
Shearman & Sterling
New York, New York 10022
Attention: Stephen R. Volk
Facsimile No.: 212-848-7179
If to the Purchaser:
NYNEX Corporation
1113 Westchester Avenue
White Plains, New York 10604-3510
Attention: Frederic V. Salerno
Facsimile No.: 914-644-7649
With copies to:
NYNEX Corporation
1113 Westchester Avenue
White Plains, New York 10604-3510
Attention: Raymond F. Burke
Facsimile No.: 914-644-6604
<PAGE>
15
and
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Roger S. Aaron
Facsimile No.: 212-735-2001
or to such other addresses as either the Company or the
Purchaser shall designate to the other by notice in
writing.
18. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) "Affiliate" shall mean any Person that (i)
directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or
is under common control with, the Person specified or (ii) is
(A) the specified Person's spouse, parent, child, brother or
sister or any issue of the foregoing (for purposes of the
definition of Affiliate, issue shall include Persons legally
adopted into the line of descent), (B) any corporation or
organization of which the Person specified or such
specified Person's spouse, parent, child, brother or
sister or any issue of the foregoing is an officer or
partner or is, directly or indirectly, the beneficial
owner of ten percent or more of any class of voting stock,
and (C) any trust or other estate in which the specified
Person or such specified Person's spouse, parent, child,
brother or sister or any issue of the foregoing serves as
trustee or in a similar fiduciary capacity and (D) the
heirs or legatees of the specified Person by will or under
the laws of descent and distribution.
(b) "Beneficially Own" with respect to any securities
and "Beneficial Ownership" shall mean having beneficial
ownership as determined pursuant to Rule 13d-3 under the
1934 Act including pursuant to any agreement, arrangement or
understanding, whether or not in writing.
(c) "Business Day" has the meaning specified in the
Certificate of Designation.
(d) "Person" shall mean any individual, partnership,
joint venture, corporation, trust, incorporated organization,
government or department or agency of a government, or any
entity that would be deemed to be a "person" under Section
13(d)(3) of the 1934 Act.
<PAGE>
16
(e) "1933 Act" means the Securities Act of 1933, as
amended.
(f) "1934 Act" means the Securities Exchange Act of
1934, as amended.
19. Subject to the terms and conditions of this
Agreement, each of the parties hereby agrees to use all
reasonable 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, rules and regulations to
consummate and make effective the transactions contemplated
by this Agreement, including using its best efforts to obtain
all necessary waivers, consents and approvals. In case at any
time after the execution of this Agreement, further action is
necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each of
the parties shall take all such necessary action.
20. (a) For so long as the Purchaser and its
Affiliates shall Beneficially Own all of the
outstanding Preferred Stock, the provisions of this
paragraph 20 shall apply.
(b) In case the Company shall distribute (in one
distribution or a series of related distributions) to all
holders of its Class A and Class B Common Stock any
Securities (as defined in Section 7(d)(iii) of the
Certificate of Designation) with an aggregate fair
market value (as determined by the Board of Directors of
the Company, whose determination shall, if made in good faith,
be conclusive) of more than $300,000,000, then in each such
case, unless the Company elects to reserve shares or other
units of such Securities for distribution to the holders of
the Preferred Stock as described in Section 7(d)(iii) of the
Certificate of Designation, the following provisions shall
apply, at the election of the Purchaser by written notice
to the Company as provided in paragraph 20(f) below (the
"Election Notice"):
(i) Securities shall be distributed to the Purchaser
in the amount and kind which the Purchaser would have
received if the Purchaser had, immediately prior to the
record date for the distribution of the Securities,
converted its shares of Preferred Stock into Class
B Common Stock;
(ii) The Purchaser shall be deemed to have consented by
delivery of the Election Notice, without the need for
further vote or action on the part of the Purchaser,
to amend the Certificate of Designation, effective on the
date
<PAGE>
17
of the distribution of the Securities, to change the terms
of the Preferred Stock to reflect the terms of the
Redesignated Preferred Stock (as defined below) as
determined by the Redesignation Agent (as defined below)
in accordance with the provisions of paragraph 20(c)
below; and
(iii) Prior to the date of distribution of the
Securities, the Company shall file with the
Secretary of State of the State of Delaware the
Certificate of Designation as amended as provided in
clause (b)(ii) above.
(c) The terms of the Redesignated Preferred
Stock shall be determined by the Redesignation Agent as
follows:
(i) The Redesignation Agent shall determine the Trading
Price (as defined below) for the twenty trading days
immediately prior to the record date for the
distribution of the Securities and the Trading
Price for the twenty trading days immediately after
the record date for the distribution of the Securities
and shall determine the difference, stated as a dollar
amount, in the per share Trading Price between such two
periods (the "Dollar Trading Difference");
(ii) The Redesignation Agent shall then multiply the
Dollar Trading Difference by the total number of shares
of Class B Common Stock that the Preferred Stock would be
convertible into immediately prior to the record date for
the distribution of the Securities (the product of such
multiplication, the "Aggregate Dollar Trading
Difference"); and
(iii) The Redesignation Agent shall then adjust the
dividend rate, redemption prices, liquidation
preference and/or conversion price (without
affecting the number of underlying shares of Class B
Common Stock) of the Preferred Stock as specified in the
Certificate of Designation, but no other terms of the
Preferred Stock, as necessary so that the difference in
the fair market value, in the aggregate, of the Preferred
Stock prior to the distribution of the Securities and
after the distribution of Securities shall be as
closely as possible equivalent to the Aggregate
Dollar Trading Difference (the Preferred Stock with
the terms so adjusted, the "Redesignated Preferred
Stock").
<PAGE>
18
(d) "Trading Price" for the Class B Common Stock
for any given period shall be the average of the closing prices
for the Class B Common Stock for the trading days included in
such period on the American Stock Exchange or, if the
American Stock Exchange is not the exchange on which
the Class B Common Stock is principally traded, such
exchange.
(e) (i) "Redesignation Agent" shall mean an
investment banking firm of national standing chosen in
the following manner: the Purchaser shall propose three
such investment banking firms to the Company in writing
within five Business Days of the delivery of the Election
Notice by the Purchaser to the Company and within five
Business Days of such firms being so proposed, the
Company shall select by written notice to the
Purchaser one such firm to serve as the
Redesignation Agent.
(ii) All determinations of the Redesignation
Agent shall, if made in good faith, be conclusive.
(iii) All fees of the Redesignation Agent
shall be paid by the Company.
(f) If at any time the Board of Directors of the
Company determines to make a distribution of Securities to
which the provisions of this paragraph 20 would apply, the
Company shall notify the Purchaser in writing as soon as
practicable and, if the Purchaser decides to elect to
have the provisions of this paragraph 20 apply to such
distribution, the Purchaser shall so notify the Company
within 15 Business Days of such notice from the Company. The
record date for any such distribution of Securities shall not
be before the earlier of 15 Business Days after the Purchaser
gives such notice to the Company and the expiration of the 15
Business Day period for the giving of such notice.
(g) If the Purchaser elects to have the
provisions of this paragraph 20 apply in the case of a
distribution of Securities, (i) the Purchaser shall thereby
waive compliance with the provisions of Section 7 of the
Certificate of Designation that would otherwise apply in
such case; (ii) the put/call provisions of paragraph 9 of
this Agreement shall apply to the Redesignated Preferred
Stock and the Put/Call Price shall be appropriately
adjusted; and (iii) the Purchaser agrees that it shall
not trade in the Class B Common Stock during either of the
Trading Periods referred to in paragraph 20(c)(i) above.
<PAGE>
19
21. The Company agrees that, for so long as the
Purchaser holds Preferred Stock, the term "ratably", as
used in the Company's Restated Certificate of Incorporation
with respect to the rights of holders of the Company's
common stock to receive dividends and distributions of
assets upon liquidation, will be interpreted to mean
treating Class A Common Stock and Class B Common Stock
as a single class.
22. The Company agrees that, for so long as the
Purchaser and its Affiliates Beneficially Own all of the
outstanding Preferred Stock, upon the conversion of any shares
of Preferred Stock the Purchaser shall be entitled to receive
an amount equal to dividends accrued during the Dividend
Period in which such conversion occurs and up to the date
of the conversion, less any amounts previously paid with
respect to any portion of such Dividend Period. Such
amounts shall be paid promptly after such conversion.
23. The parties agree to consult with each other
before taking any action that would require the issuance
of, or issuing, any press release or making any public
statement with respect to this Agreement or the
transactions contemplated hereby and, except as may be
required by applicable law or any listing agreement with any
securities exchange, will not take any such action, issue any
such press release or make any such public statement prior to
such consultation.
24. (a) The Company agrees that it shall take, and
shall cause its Affiliates to take, Corrective Action (as
defined in paragraph 24(d)) so that, in the Purchaser's
judgment, as of and from and after the Closing, neither the
Company nor any Company Affiliate, shall, directly or
indirectly and whether by acquisition or otherwise,
engage in any Restricted Activity.
(b) Both before and after the Closing, in performing
its obligations under this paragraph 24, the Company shall
consult with the Purchaser in good faith regarding which
activities are Restricted Activities and which Persons are
Company Affiliates, and the Company and the Purchaser shall
consult in good faith and cooperate with respect to any
Corrective Action.
(c) For the purposes of this paragraph 24 and
paragraph 5(a)(iv):
(i) an activity shall be a Restricted Activity if, in
the Purchaser's judgment, such activity would be
reasonably likely to violate the "Modification of
Final Judgment"
<PAGE>
20
consent decree entered in United States v. American
Telephone and Telegraph Co., 552 F. Supp. 131
(1982) (the "MFJ"); and
(ii) a Person shall be a Company Affiliate if, in the
Purchaser's judgment, such Person would be reasonably
likely to be considered a "Bell Operating Company" or
an "affiliated enterprise" of the Purchaser because of a
relationship with the Company (as such terms in quotes are
defined in or interpreted under the MFJ).
(d) "Corrective Action" shall mean any and all action
necessary to assure that neither the Company nor any Company
Affiliate is engaged in any Restricted Activity, including
but not limited to discontinuing, modifying or transferring
ownership of activities, deferring commencement of proposed
activities or proposing alternative structures of the
Purchaser's investment that, in the Purchaser's
judgment, are of the same kind and magnitude
(including aggregate strategic and economic rights
and benefits) as the investment contemplated by this
Agreement, all within the framework of not materially
and adversely affecting the business or strategic objectives
of the Company.
(e) (i) The Purchaser agrees to deal in good faith
with the Company under this paragraph 24 and the
Purchaser agrees to consider in good faith any
request by the Company that the Purchaser apply for
waivers, clarifications or other relief from the
relevant competent authority that would permit the
Company and Company Affiliates to engage in activities
that would or might constitute Restricted Activities in
the absence of such waivers, clarifications or other
relief and the Company acknowledges that the
Purchaser is not required to file such
applications if, in the Purchaser's judgment,
such applications could materially and adversely affect
matters affecting the Purchaser or its Affiliates pending
before such authority.
(ii) The Purchaser also agrees to consider in good
faith the restructuring of the Purchaser's investment
contemplated by this Agreement so as to permit activities
by the Company and its Affiliates that would otherwise
constitute Restricted Activities, while maintaining for
the Purchaser, in its judgment, an investment of the same
kind and magnitude (including aggregate strategic and
economic rights and benefits) as the investment
contemplated by this Agreement.
<PAGE>
21
(f) If after the Closing, the Company or any Company
Affiliate proposes to, directly or indirectly and whether by
acquisition or otherwise, engage in an activity that may fall
within the MFJ, the Company shall notify the Purchaser as soon
as practicable but in no event less than 30 days in advance of
doing so and the Company and the Purchaser shall, as provided
in paragraph (b) above, consult in good faith regarding
whether such activity is a Restricted Activity. If the
Company and the Purchaser mutually agree in writing that such
activity is not a Restricted Activity, such activity shall be
an "Agreed Unrestricted Activity". If the Company and the
Purchaser mutually agree in writing that such activity is a
Restricted Activity, such activity shall be an "Agreed
Restricted Activity". If the Company determines that
such activity is not a Restricted Activity and the Purchaser
determines that such activity is a Restricted Activity, such
activity shall be a "Disputed Restricted Activity".
(g) (i) If, after the Closing, in the Purchaser's
judgment, the Company or any Company Affiliate, directly or
indirectly and whether by acquisition or otherwise, engages in
any Restricted Activity, and the Company fails or is unable to
take Corrective Action that, in the Purchaser's judgment, is
reasonably likely to eliminate the Restricted Activity on a
timely basis, then the Purchaser, at its option and by
written notice to the Company, shall have the right to
elect to do one or more of the following: (x) require the
Company to purchase (the "Put Right") all or part of the
Preferred Stock and any Class B Common Stock issued upon
conversion of the Preferred Stock then Beneficially Owned by
the Purchaser (together, the "Subject Stock") at a price (the
"Put Price") specified below; (y) require the Company to
promptly register all or part of the Subject Stock
pursuant to the registration rights provided in paragraph
8 (a "Registered Offering"); and (z) sell all or part of the
Subject Stock privately (a "Private Sale"). If the Purchaser
exercises the Put Right because (x) the MFJ was judicially
modified after the date hereof so as to cause an activity
that was not previously a Restricted Activity to become a
Restricted Activity or (y) a court having jurisdiction
over the interpretation and enforcement of the MFJ
determines that an Agreed Unrestricted Activity is a
Restricted Activity, then the Put Price shall be the Market
Price. If the Purchaser exercises the Put Right because of
(x) an activity which the Company did not previously notify
the Purchaser of in accordance with paragraph (f) above, (y)
an Agreed Restricted Activity, or (z) a Disputed Restricted
Activity, then the Put Price shall be the Default Price.
<PAGE>
22
(A) The "Default Price" shall mean:
(1) With respect to Preferred Stock, the aggregate
liquidation preference of all shares of Preferred Stock
purchased by the Company (the "Aggregate Liquidation
Preference"), plus accrued and unpaid dividends
through the date of such purchase (whether or not
earned or declared), plus an amount equal to a 7%
annual compounded rate of return on the Aggregate
Liquidation Preference from the date of Closing to the
date of purchase by the Company; provided that if (a) the
activity (other than an Agreed Restricted Activity) with
respect to which the Purchaser exercised the Put Right is
later determined by the arbitration provided for in
paragraph 15 not to be a Restricted Activity or (b)
if the activity with respect to which the Purchaser
exercised the Put Right is an activity of which the
Company did not previously notify the Purchaser in
accordance with paragraph (f) above and it is
determined by the arbitration provided for in
paragraph 15 that, notwithstanding such failure,
the Company was exercising reasonable due diligence to
identify Restricted Activities and to notify the
Purchaser thereof pursuant to paragraph (f) above,
then, the annual compounded rate of return on the Aggregate
Liquidation Preference shall be 2%, instead of 7% (and any
payments made on the basis of the 7% rate shall be subject
to refund to implement such adjustment); and
(2) With respect to Class B Common Stock, the price
per share equal to 100% of the Trading Price (as defined
in paragraph 20(d)) for the 20 trading days immediately
prior to the date of purchase by the Company.
(B) The "Market Price" shall mean:
(1) With respect to the Preferred Stock, the price per
share equal to its stated liquidation preference, plus
accrued and unpaid dividends to the date of purchase
by the Company (whether or not earned or declared); and
(2) With respect to Class B Common Stock, the price
per share equal to 100% of the Trading Price for the 20
trading days immediately prior to the date of purchase by
the Company.
<PAGE>
23
(iii) In any instance in which the Purchaser or its
Affiliates would be entitled to receive the Default
Price under this paragraph 24(g) and elects to dispose
of the Preferred Stock to which such Default Price would
be applicable either in a Registered Offering or a
Private Sale, the Company shall be obligated to pay
to the Purchaser or such Affiliates the amount, if any, by
which the gross proceeds to the Purchaser or such
Affiliates, after deducting underwriting
commissions and discounts or agency fees, realized
in such disposition is less than the aggregate Default
Price that would have been payable to the Purchaser
and such Affiliates by the Company had the Purchaser or
such Affiliates elected to require the Company to purchase
such Preferred Stock under this paragraph 24(g); provided,
however, that the Company shall not be obligated to make
any such payment in any instance in which the Purchaser
or any Affiliate rejects the Company's written request, if
such a request is made by the Company by written notice to
the Purchaser within 5 Business Days of receipt by the
Company of Purchaser's notice pursuant to (g)(i) above
(and which the Company shall be entitled to make in its
discretion), to purchase such Preferred Stock from the
Purchaser or such Affiliate at the Default Price, which
right the Purchaser shall have in its discretion.
(iv) In any instance in which (A) the Company has
purchased Preferred Stock or Class B Common Stock
from the Purchaser or its Affiliates pursuant to this
paragraph 24(g) and (B) the Company has taken Corrective
Action within 180 days after the date of such purchase so
that the Company and Company Affiliates are not engaged,
in the Purchaser's judgment, in any Restricted Activity,
the Purchaser shall be obligated to reinvest as soon as
commercially possible in such number of shares of
Preferred Stock and of Class B Common Stock as were
so purchased by the Company for a purchase price, in cash,
equal to the amount paid to the Purchaser by the Company
pursuant to this paragraph 24(g). From and after any
purchase by the Company of Preferred Stock or Class B
Common Stock from the Purchaser or its Affiliates
pursuant to this paragraph 24(g), at the option of
either the Company or the Purchaser by written notice to
the other, the Company and the Purchaser shall continue to
take Corrective Action in accordance with this paragraph 24
for a period of 180 days after the date of such purchase by
the Company.
<PAGE>
24
(v) In recognition of time being of the essence with
respect to any purchase by the Company of Preferred Stock
or Class B Common Stock pursuant to this paragraph 24(g),
such purchase shall occur as soon as commercially
possible, but in no event more than 20 Business
Days, after receipt of a written notice by the Purchaser
to the Company requesting such purchase in accordance with
the terms of this paragraph 24(g). Unless otherwise
agreed by the Purchaser, all payments due to the
Purchaser from the Company under this paragraph 24(g)
shall be in cash.
(h) The Purchaser agrees that paragraph 5(a)(iv) and
his paragraph 24 embody the Purchaser's exclusive remedies
against the Company under this Agreement with respect to the
MFJ.
25. The Company agrees that, for so long as the
purchaser and its Affiliates Beneficially Own all of the
outstanding Preferred Stock, the Purchaser shall not amend,
alter or repeal any of the provisions of the Certificate of
designation without the consent of the Purchaser.
26. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York
applicable to contracts executed in and to be
performed in that state.
Very truly yours,
VIACOM INC.
By /s/ Sumner M. Redstone
Accepted and agreed on
the date written above:
NYNEX CORPORATION
By /s/ W.C. Ferguson
Exhibit 10(ii)2
ANNEX I
CERTIFICATE OF THE DESIGNATIONS, POWERS, PREFERENCES
AND RELATIVE, PARTICIPATING OR OTHER RIGHTS, AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF, OF
SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK
($0.01 Par Value)
OF
VIACOM INC.
-----------------
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
-----------------
VIACOM INC., a Delaware corporation (the
"Corporation"), does hereby certify that the
following resolutions were duly adopted by the Board of
Directors of the Corporation pursuant to authority
conferred upon the Board of Directors by Article IV of
the Restated Certificate of Incorporation of the Corporation,
which authorizes the issuance of up to 100,000,000 shares of
preferred stock, and by the Securities Committee of the Board
of Directors pursuant to authority conferred upon such
Committee by the Board of Directors in accordance with
Section 141(c) of the General Corporation Law of the State of
Delaware and Article Section 11 of the By-Laws of the
Corporation at a meeting of the Board of Directors
duly held on September 28, 1993:
RESOLVED, that the issue of a series of preferred
stock, $0.01 par value, of the Corporation is hereby
authorized and the designation, powers, preferences and
relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof, in
addition to those set forth in the Restated Certificate of
Incorporation of the Corporation, are hereby fixed as
follows:
<PAGE>
2
(1) Number of Shares and Designation. 24,000,000 shares of
the preferred stock, $0.01 par value, of the Corporation are
hereby constituted as a series of the preferred stock
designated as Series B Cumulative Convertible Preferred
Stock (the "Series B Preferred Stock"). The number of shares
of Series B Preferred Stock may not be increased and may not
be decreased below the number of then currently outstanding
shares of Series B Preferred Stock.
(2) Definitions. For purposes of the Series B Preferred
Stock, the following terms shall have the meanings indicated:
"Board of Directors" shall mean the board of directors
of the Corporation or any committee authorized by such
Board of Directors to perform any of its
responsibilities with respect to the Series
B Preferred Stock.
"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.
"Class A Stock" shall mean the Class A Common Stock of
the Corporation, par value $0.01 per share.
"Common Stock" shall mean the Class B Common Stock of
the Corporation, par value $0.01 per share.
"Conversion Price" shall mean the conversion price per
share of Common Stock for which the Series B Preferred
Stock is convertible, as such Conversion Price may be
adjusted pursuant to Section (7). The initial Conversion
Price will be $70.00 (equivalent to the rate of .7143 of a
share of Common Stock for each share of Series B Preferred
Stock).
"Current Market Price" shall mean, as of a particular
date, the closing sale price at which Common Stock shall
have been sold regular way on the American Stock Exchange
or such other exchange or inter-dealer quotation system on
which the Common Stock is principally traded or authorized
to be quoted.
"Dividend Periods" shall mean quarterly dividend
periods commencing on the first day of October,
January, April and July of each year and ending on and
including the day preceding the first day of the next
succeeding Dividend Period (other than the initial
Dividend Period which shall commence on the Issue Date
and end on and include December 31, 1993).
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3
"Issue Date" shall mean the first date on which shares
of Series B Preferred Stock are issued.
"Person" shall mean any individual, firm, partnership,
corporation or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"Securities" shall have the meaning set forth in
paragraph (d)(iii) of Section (7) hereof.
"Trading Day" means a day on which the American Stock
Exchange, or such other exchange or inter-dealer
quotation system on which the Common Stock is
principally traded or authorized to be quoted, is open
for the transaction of business.
"Transaction" shall have the meaning set forth in
paragraph (e) of Section (7) hereof.
"Transfer Agent" means The First Chicago Trust Company
of New York or such other agent or agents of the
Corporation as may be designated by the Board of
Directors of the Corporation as the transfer agent for the
Series B Preferred Stock.
(3) Dividends. (a) The holders of shares of the Series B
Preferred Stock shall be entitled to receive, when and if
declared by the Board of Directors out of funds legally
available therefor, cash dividends at the rate per annum of
$2.50 per share of Series B Preferred Stock. Such dividends
shall be cumulative from the Issue Date, whether or not in
any Dividend Period or Periods there shall be funds of the
Company legally available for the payment of such dividends,
and shall be payable quarterly, when and as declared by the
Board of Directors, on the first Business Day of January,
April, July and October of each year, commencing on January
1, 1994 or at such additional times and for such interim
periods, if any, as determined by the Board of Directors.
Each such dividend shall be payable in arrears to the holders
of record of shares of the Series B Preferred Stock, as they
appear on the stock records of the Corporation at the close
of business on such record dates, not more than 60 days
preceding the payment dates thereof, as shall be fixed by
the Board of Directors. Accrued and unpaid dividends for any
past Dividend Periods may be declared and paid at any time,
without reference to any regular dividend payment date, to
holders of record on such date, not exceeding 45 days
preceding the payment date thereof, as may be fixed by
the Board of Directors. Accrued and unpaid
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4
dividends for any past Dividend Periods shall accrue interest at
the Base Rate as announced from time to time by Citibank, N.A.,
which interest, until paid, shall be treated for all purposes
of this Certificate of Designation as accrued and unpaid
dividends.
(b) The amount of dividends payable for each full Dividend
Period for the Series B Preferred Stock shall be computed by
dividing the annual dividend rate by four. The amount of
dividends payable for the initial Dividend Period on the
Series B Preferred Stock, or any other period shorter or
longer than a full Dividend Period on the Series B
Preferred Stock shall be computed on the basis of
twelve 30-day months and a 360-day year. Except as
provided in Section 5(a), holders of shares of Series B
Preferred Stock called for redemption on a redemption date
between a dividend payment record date and the dividend
payment date shall not be entitled to receive the dividend
payable on such dividend payment date. Holders of shares of
Series B Preferred Stock shall not be entitled to any
dividends, whether payable in cash, property or stock,
in excess of cumulative dividends, as herein provided, on the
Series B Preferred Stock.
(c) So long as any shares of the Series B Preferred Stock
are outstanding, no dividends, except as described in the
next succeeding sentence, shall be declared or paid or set
apart for payment on any class or series of stock of the
Corporation ranking, as to dividends, on a parity with
the Series B Preferred Stock, for any period, nor shall any
shares ranking on a parity with the Series B Preferred Stock
be redeemed or purchased by the Corporation or any
Subsidiary, unless full cumulative dividends have
been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for
such payment on the Series B Preferred Stock for all
Dividend Periods terminating on or prior to the date of
payment of such full cumulative dividends. When dividends are
not paid in full or a sum sufficient for such payment is not
set apart, as aforesaid, upon the shares of the Series B
Preferred Stock and any other class or series of stock
ranking on a parity as to dividends with the Series B
Preferred Stock, all dividends declared upon shares of the
Series B Preferred Stock and all dividends declared upon such
other stock shall be declared pro rata so that the amounts of
dividends per share declared on the Series B Preferred Stock
and such other stock shall in all cases bear to each other
the same ratio that accrued dividends per share on the shares
of the Series B Preferred Stock and such other stock bear to
each other.
<PAGE>
5
(d) So long as any shares of the Series B Preferred Stock
are outstanding, no dividends (other than dividends or
distributions paid in shares of, or options, warrants or
rights to subscribe for or purchase shares of Common Stock,
Class A Stock or other stock ranking junior to the Series B
Preferred Stock, as to dividends and upon liquidation) shall be
declared or paid or set apart for payment or other distribution
declared or made upon the Common Stock, Class A Stock or any
other stock of the Corporation ranking junior to the Series
B Preferred Stock, as to dividends or upon liquidation nor
shall any Common Stock, nor any Class A Stock nor any other
such stock of the Corporation ranking junior to the Series B
Preferred Stock, as to dividends or upon liquidation be
redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any
shares of any such stock) by the Corporation (except by
conversion into or exchange for stock of the Corporation
ranking junior to the Series B Preferred Stock, as to
dividends and upon liquidation) or any Subsidiary
unless, in each case (i) the full cumulative dividends on
all outstanding shares of the Series B Preferred Stock and any
other stock of the Corporation ranking on a parity with the
Series B Preferred Stock, as to dividends or upon
liquidation shall have been paid or set apart for
payment for all past Dividend Periods and dividend periods
with respect to such other stock and (ii) sufficient funds
shall have been set apart for the payment of the dividend
for the current Dividend Period with respect to the Series B
Preferred Stock and the dividend period with respect to any
other stock of the Corporation ranking on a parity with the
Series B Preferred Stock, as to dividends or upon liquidation.
(4) Liquidation Preference. (a) In the event of any
liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary,
before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or
set apart for the holders of Common Stock, Class A Stock or any
other series or class or classes of stock of the Corporation
ranking junior to the Series B Preferred Stock, upon
liquidation, dissolution or winding up, the holders of
the shares of Series B Preferred Stock shall be entitled to
receive $50.00 per share plus an amount equal to all
dividends (whether or not earned or declared) accrued
and accumulated and unpaid thereon to the date of final
distribution to such holders; but such holders shall not
be entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable
<PAGE>
6
among the holders of the shares of Series B Preferred Stock
shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any other
shares of stock ranking, as to liquidation, dissolution or
winding up, on a parity with the Series B Preferred Stock,
then such assets, or the proceeds thereof, shall be
distributed among the holders of shares of Series B
Preferred Stock and any such other stock ratably in
accordance with the respective amounts which would be
payable on such shares of Series B Preferred Stock and any
such other stock if all amounts payable thereon were paid in
full. For the purposes of this Section (4), (i) a
consolidation or merger of the Corporation with
one or more corporations, (ii) a sale or transfer of all or
substantially all of the Corporation's assets or (iii) a
statutory share exchange shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or
involuntary.
(b) Subject to the rights of the holders of shares of any
series or class or classes of stock ranking on a parity with
or prior to Series B Preferred Stock, upon liquidation,
dissolution or winding up, upon any liquidation,
dissolution or winding up of the Corporation, after
payment shall have been made in full to the holders of
Series B Preferred Stock, as provided in this Section (4),
any other series or class or classes of stock ranking junior to
Series B Preferred Stock, upon liquidation, dissolution or
winding up shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or
distributed, and the holders of Series B Preferred Stock
shall not be entitled to share therein.
(5) Redemption at the Option of the Corporation.
(a) Series B Preferred Stock may not be redeemed by
the Corporation prior to October 1, 1998, after which the
Corporation, at its option, may redeem the shares of Series
B Preferred Stock, in whole or in part, for an aggregate
redemption price of at least $100,000,000 (provided that
no partial redemption shall reduce the Series A Preferred Stock
outstanding below $100,000,000 aggregate liquidation value) out
of funds legally available therefor, at any time or from time
to time, subject to the notice provisions and provisions for
partial redemption described below, during the 359-day period
beginning on October 1, 1998 and during the twelve-month
periods beginning on October 1 of the years beginning
with 1998 shown below at the following redemption prices
plus an amount equal to accrued and unpaid dividends, if
any, to the date fixed for redemption, whether or not
earned or declared:
<PAGE>
7
<TABLE>
<CAPTION>
<S> <C>
Year......................... Price
1998........................$ 52.50
1999........................$ 52.00
2000 .......................$ 51.50
2001 .......................$ 51.00
2002 .......................$ 50.50
2003 and thereafter.........$ 50.00
</TABLE>
(b) In the event that full cumulative dividends on the
Series B Preferred Stock and any other class or series of
stock of the Corporation ranking, as to dividends, on a parity
with the Series B Preferred Stock have not been paid or
declared and set apart for payment, the Series B
Preferred Stock may not be redeemed in part and the
Corporation may not purchase or acquire shares of Series B
Preferred Stock or such other stock otherwise than pursuant to
a purchase or exchange offer made on the same terms to all
holders of shares of Series B Preferred Stock and such
other stock.
(c) In the event the Corporation shall redeem shares of
Series B Preferred Stock, notice of such redemption shall
be given by first class mail, postage prepaid, mailed not
less than 10 nor more than 60 days prior to the redemption
date, to each holder of record of the shares to be redeemed,
at such holder's address as the same appears on the stock
records of the Corporation, which notice shall be
unconditional and irrevocable. Each such notice
shall state: (1) the redemption date; (2) the number of
shares of Series B Preferred Stock to be redeemed and, if
less than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from
such holder; (3) the redemption price; (4) the place or
places where certificates for such shares are to be
surrendered for payment of the redemption price; (5) the
then current conversion price; and (6) that dividends on the
shares to be redeemed shall cease to accrue on such
redemption date. Notice having been mailed as
aforesaid, from and after the redemption date (unless
default shall be made by the Corporation in providing money
for the payment of the redemption price), (i) dividends on
the shares of the Series B Preferred Stock so called for
redemption shall cease to accrue, (ii) said shares shall no
longer be deemed to be outstanding, and (iii) all rights of the
holders thereof as stockholders of the Corporation (except the
right to receive from the Corporation the redemption price
without interest thereon after the redemption date) shall
cease. The Corporation's obligation to provide moneys in
accordance with the preceding sentence shall be deemed
fulfilled if, on or before the redemption date, the
Corporation shall deposit with a bank or trust company
<PAGE>
8
(which may be an affiliate of the Corporation) having an office
in the Borough of Manhattan, City of New York, and having a
capital and surplus of at least $50,000,000, funds necessary
for such redemption, in trust, with irrevocable instructions
that such funds after the redemption date be applied to the
redemption of the shares of Series B Preferred Stock so called
for redemption. Any interest accrued on such funds after the
redemption date shall be paid to the Corporation from time to
time. Any funds so deposited and unclaimed at the end of two
years from such redemption date shall be released or repaid
to the Corporation, after which, subject to any applicable
laws relating to escheat or unclaimed property, the holder
or holders of such shares of Series B Preferred Stock so
called for redemption shall look only to the Corporation
for payment of the redemption price.
Upon surrender in accordance with said notice of the
certificates for any such shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors
shall so require and the notice shall so state), such shares
shall be redeemed by the Corporation at the applicable
redemption price aforesaid. If fewer than all the
outstanding shares of Series B Preferred Stock are to be
redeemed, shares to be redeemed shall be selected by the
Corporation from outstanding shares of Series B Preferred
Stock not previously called for redemption by lot or pro rata
(as nearly as may be) or by any other method determined by the
Corporation in its sole discretion to be equitable. If fewer
than all the shares represented by any certificate are
redeemed, a new certificate shall be issued representing
the unredeemed shares without cost to the holder thereof.
(6) Shares to be Retired. All shares of Series B Preferred
Stock purchased or redeemed by the Corporation or converted
shall be retired and cancelled and shall be restored to the
status of authorized but unissued shares of preferred stock,
without designation as to series.
(7) Conversion. Holders of shares of Series B Preferred
Stock shall have the right to convert all or a portion of
such shares into shares of Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of
this Section (7), a holder of shares of Series B Preferred
Stock shall have the right, at his or her option, at any
time to convert such shares into the number of fully paid
and nonassessable shares of Common Stock (calculated as to
each conversion to the nearest 1/100th of a share) obtained
by
<PAGE>
9
dividing the aggregate liquidation preference of such shares by
the Conversion Price and by surrender of such shares so to be
converted, such surrender to be made in the manner provided in
paragraph (b) of this Section (7); provided, however, that the
right to convert shares called for redemption pursuant to
Section (5) shall terminate at the close of business on
the date fixed for such redemption, unless the Corporation
shall default in making payment of the amount payable upon
such redemption. Any share of Series B Preferred Stock may
be converted, at the request of its holder, in part into
Common Stock. If a part of a share of Series B Preferred
Stock is converted, then the Corporation will convert such
share into the requested shares of Common Stock (subject
to paragraph (c) of this Section (7)) and issue a fractional
share of Series B Preferred Stock evidencing the remaining
interest of such holder.
(b) In order to exercise the conversion right, the holder
of each share of Series B Preferred Stock to be converted
shall surrender the certificate representing such share,
duly endorsed or assigned to the Corporation or in blank, at
the office of the Transfer Agent in the Borough of Manhattan,
City of New York, accompanied by written notice to the
Corporation that the holder thereof elects to convert
Series B Preferred Stock or a specified portion thereof.
Unless the shares issuable on conversion are to be issued in
the same name as the name in which such share of Series B
Preferred Stock is registered, each share surrendered for
conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Corporation, duly executed by the
holder or such holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid).
Holders of shares of Series B Preferred Stock at the close
of business on a dividend payment record date shall be
entitled to receive the dividend payable on such shares
(except that holders of shares called for redemption on a
redemption date between such record date and the dividend
payment date shall not be entitled to receive such dividend on
such dividend payment date) on the corresponding dividend
payment date notwithstanding the conversion thereof
following such dividend payment record date and prior to
such dividend payment date. However, shares of Series B
Preferred Stock surrendered for conversion during the
period between the close of business on any dividend record
date and the opening of business on the corresponding dividend
payment date (except shares called for redemption on a
redemption date during such period) must be
<PAGE>
10
accompanied by payment of an amount equal to the dividend
payable on such shares on such dividend payment date. A
holder of shares of Series B Preferred Stock on a dividend
record date who (or whose transferee) tenders any such
shares for conversion into shares of Common Stock on such
dividend payment date will receive the dividend payable by
the Corporation on such shares of Series B Preferred Stock
on such date, and the converting holder need not include
payment of the amount of such dividend upon surrender of
shares of Series B Preferred Stock for conversion. Except as
provided above, the Corporation shall make no payment or
allowance for unpaid dividends, whether or not in
arrears, on converted shares or for dividends on the
shares of Common Stock issued upon such conversion.
As promptly as practicable after the surrender of
certificates for shares of Series B Preferred Stock
as aforesaid, the Corporation shall issue and shall deliver at
such office to such holder, or on his or her written order, a
certificate or certificates for the number of full shares of
Common Stock issuable upon the conversion of such shares in
accordance with the provisions of this Section (7), and any
fractional interest in respect of a share of Common Stock
arising upon such conversion shall be settled as provided
in paragraph (c) of this Section (7).
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date
on which the certificates for shares of Series B Preferred
Stock shall have been surrendered and such notice received
by the Corporation as aforesaid, and the person or persons in
whose name or names any certificate or certificates for shares
of Common Stock shall be issuable upon such conversion shall
be deemed to have become the holder or holders of record of
the shares represented thereby at such time on such date and
such conversion shall be at the Conversion Price in effect at
such time on such date, unless the stock transfer books of the
Corporation shall be closed on that date, in which event such
person or persons shall be deemed to have become such holder
or holders of record at the close of business on the next
succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Price
in effect on the date upon which such shares shall have been
surrendered and such notice received by the Corporation.
All shares of Common Stock delivered upon conversions of the
Series B Preferred Stock will upon delivery be duly and validly
issued and fully paid and nonassessable.
<PAGE>
11
(c) No fractional shares or scrip representing fractions of
shares of Common Stock shall be issued upon conversion of the
Series B Preferred Stock. Instead of any fractional interest
in a share of Common Stock which would otherwise be deliverable
upon the conversion of a share of Series B Preferred Stock, the
Corporation shall pay to the holder of such share an amount in
cash (computed to the nearest cent) based upon the Current
Market Price of Common Stock on the Trading Day immediately
preceding the date of conversion. If more than one share shall
be surrendered for conversion at one time by the same holder,
the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the
aggregate number of shares of Series B Preferred Stock so
surrendered.
(d) The Conversion Price shall be adjusted from time to
time as follows:
(i) In case the Corporation shall after the Issue Date
(A) pay a dividend or make a distribution on its Common
Stock in shares of its Common Stock, (B) subdivide its
outstanding Common Stock into a greater number of shares,
(C) combine its outstanding Common Stock into a smaller
number of shares or (D) issue any shares of capital
stock by reclassification of its Common Stock, the
Conversion Price in effect immediately prior thereto
shall be adjusted so that the holder of any share of
Series B Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of
shares of Common Stock of the Corporation which such
holder would have owned or have been entitled to
receive after the happening of any of the events
described above had such share been converted
immediately prior to the happening of such event
or the record date therefor, whichever is earlier. An
adjustment made pursuant to this subparagraph (i) shall
become effective immediately after the close of business
on the record date (except as provided in paragraph (h)
below).
(ii) In case the Corporation shall issue after the
Issue Date (a) rights or warrants to all holders of
Class A Stock or Common Stock entitling them (for a
period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase Class A
Stock or Common Stock at a price per share less than
the Conversion Price at the record date for the
determination of stockholders entitled to receive
such rights or warrants or (b) shares of Class A Stock or
Common Stock or securities exercisable for (including
rights or warrants other than those referred to
<PAGE>
12
in (a) above and subparagraph (iii) below) or exchangeable
or convertible into shares of Class A Stock or Common
Stock at a price per share (or having an exercise,
exchange or conversion price per share) less than the
then current Conversion Price (other than securities
issued in a transaction in which a pro rata share of
such securities have been reserved by the Corporation for
distribution to the holders of Series B Preferred Stock
upon conversion), then in each such case the Conversion
Price in effect immediately prior thereto shall be
adjusted to equal the price determined by
multiplying (I) the Conversion Price in effect
immediately prior to the date of issuance of such
rights, warrants or shares of Class A Stock or
Common Stock (or securities exercisable for or
exchangeable or convertible into shares of Class A
Stock or Common Stock) by (II) a fraction, the numerator
of which shall be the sum of (A) the number of shares of
Class A Stock or Common Stock outstanding on the date of
issuance of such rights, warrants or shares of Class A
Stock or Common Stock (or securities exercisable for or
exchangeable or convertible into shares of Class A Stock or
Common Stock) (without giving effect to any such issuance)
and (B), in the case of (a) above, the number of shares
which the aggregate proceeds from the exercise of such
rights or warrants for Class A Stock and Common Stock or,
in the case of (b) above, the number of shares which the
aggregate consideration receivable by the Corporation
for the total number of shares of Class A Stock and
Common Stock (or securities exercisable for or
exchangeable or convertible into shares of Class A
Stock or Common Stock) so issued would purchase at the
Conversion Price in effect immediately prior to the
date of issuance, and the denominator of which shall be
the sum of (A) the number of shares of Class A Stock and
Common Stock outstanding on the date of issuance of such
rights, warrants or shares of Class A Stock or Common Stock
(or securities exercisable for or exchangeable or
convertible into Class A Stock or Common Stock)
(without giving effect to any such issuance) and (B), in
the case of (a) above, the number of additional shares of
Class A Stock or Common Stock offered for subscription or
purchase or, in the case of (b) above, the number of
shares of Class A Stock and Common Stock so issued or
into which the exercisable, exchangeable or convertible
securities may be exercised, exchanged or converted.
Such adjustment shall be made successively whenever any
such rights, warrants or shares of Class A Stock or
Common Stock (or securities exercisable for or
exchangeable or convertible into Class A Stock or
Common Stock) are issued, and shall become effective
immediately
<PAGE>
13
after such record date or, in the case of the issuance of
Class A Stock or Common Stock after the date of issuance
thereof (or in the case of securities exercisable for or
exchangeable or convertible into shares of Class A Stock
or Common Stock, the date on which holders may first
exercise, exchange or convert the same in accordance
with the respective terms thereof). In determining whether
any rights or warrants entitle the holders of Class A Stock
or Common Stock to subscribe for or purchase shares of
Class A Stock or Common Stock at less than the
Conversion Price in effect immediately prior to the
date of such issuance, and in determining the aggregate
offering price of shares of Class A Stock or Common
Stock (or securities exercisable for or exchangeable or
convertible into shares of Class A Stock or Common Stock),
there shall be taken into account any net consideration
received or receivable by the Corporation upon issuance
and upon exercise of such rights or warrants or upon
issuance of shares of Class A Stock or Common Stock
(or securities exercisable for or exchangeable or
convertible into shares of Class A Stock or Common
Stock), the value of such consideration, if other than
cash, to be determined by the Board of Directors or, if
higher, the aggregate exercise, exchange or conversion
price set forth in such exercisable, exchangeable or
convertible securities.
(iii) In case the Corporation shall distribute to all
holders of its Common Stock any shares of capital stock
of the Corporation (other than Common Stock) or evidences
of its indebtedness or assets (other than a regular cash
dividend that the Board of Directors determines, in good
faith, can be maintained by the Company for at least four
consecutive periods covering not less than one year and
that the Board of Directors intends to maintain for at
least four consecutive periods covering not less than
one year or a dividend that, together with all dividends
paid in the prior twelve months, does not exceed one
percent (1%) of the aggregate fair market value of
the Series B Preferred Stock and the Common Stock on the
date such dividend is declared, in each case, out of
profits or surplus) or rights or warrants to
subscribe for or purchase any of its securities
(excluding those referred to in subparagraph (ii)(a)
above) (any of the foregoing being hereinafter in this
subparagraph (iii) called the "Securities"), then in each
such case, unless the Corporation elects to reserve shares
or other units
<PAGE>
14
of such Securities for distribution to the holders of the
Series B Preferred Stock upon the conversion of the
shares of Series B Preferred Stock so that any such
holder converting shares of Series B Preferred Stock
will receive upon such conversion, in addition to the
shares of the Common Stock to which such holder is
entitled, the amount and kind of such Securities
which such holder would have received if such holder
had, immediately prior to the record date for the
distribution of the Securities, converted his or her
shares of Series B Preferred Stock into Common Stock (such
election to be based upon a determination by the Board of
Directors that such reservation will not materially
adversely affect the interests of any holder of
Series B Preferred Stock in any such reserved
Securities), the Conversion Price shall be
adjusted so that the same shall equal the price
determined by multiplying (I) the Conversion Price in
effect immediately prior to the date of such distribution
by (II) a fraction, the numerator of which shall be the
Current Market Price per share of the Common Stock on
the record date mentioned below less the then fair market
value (as determined by the Board of Directors, whose
determination shall, if made in good faith, be
conclusive) of the portion of the capital stock or
assets or evidences of indebtedness so distributed or of
such rights or warrants applicable to one share of Common
Stock, and the denominator of which shall be the Current
Market Price per share of the Common Stock. Such
adjustment shall become effective immediately,
except as provided in paragraph (h) below, after the
record date for the determination of stockholders
entitled to receive such distribution.
(iv) Notwithstanding anything in subparagraphs (ii) and
(iii) above, if such exercisable, exchangeable or
convertible securities, rights or warrants shall
by their terms provide for an increase or increases with
the passage of time or otherwise in the price payable to
the Corporation upon the exercise thereof, the Conversion
Price upon any such increase becoming effective shall
forthwith be readjusted (but to no greater extent than
originally adjusted by reason of such issuance or sale) to
reflect the same. Upon the expiration or termination of
such rights or warrants, if any such rights or warrants
shall not have been exercised, and upon the expiration or
termination of the exercise, exchange or conversion rights
under such exercisable, exchangeable or convertible
securities, if any such exercisable, exchangeable or
convertible securities shall not have been exercised,
exchanged or converted, then the Conversion Price
thereof shall forthwith be readjusted
<PAGE>
15
and thereafter be the rate which it would have been had an
adjustment been made on the basis that (x) the only
rights or warrants so issued or sold were those so
exercised and they were issued or sold for the
consideration actually received by the
Corporation upon such exercise, plus the
consideration, if any, actually received by the
Corporation upon such exercise, plus the consideration,
if any, actually received by the Corporation for the
granting of all such options, rights or warrants
whether or not exercised and (y) the Corporation issued
and sold a number of shares of Common Stock equal to those
actually issued upon exercise of such exercise, exchange
or conversion rights, and such shares were issued and
sold for a consideration equal to the aggregate
exercise, exchange or conversion price in effect
under the exercise, exchange or conversion rights
actually exercised at the respective dates of their
exercise. An adjustment made pursuant to this subparagraph
(iv) shall be made on the next Business Day following the
date on which any such issuance is made and shall be
effective immediately after the close of business on
such date, but shall not affect the Conversion Price
applicable to shares of Series B Preferred Stock
converted prior to the date notice of such adjustment
is given to the holders of Series B Preferred Stock. For
purposes of subparagraphs (ii) and (iv), the aggregate
consideration received by the Corporation in connection
with the issuance of shares of Common Stock or of rights,
warrants or securities exercisable for or exchangeable or
convertible into shares of Common Stock shall be deemed to
be equal to the sum of the aggregate net offering price of
all such securities plus the minimum aggregate amount, if
any, payable upon exercise of such rights or warrants and
conversion of any such exercisable, exchangeable or
convertible securities into shares of Common Stock.
(v) No adjustment in the Conversion Price shall be
required unless such adjustment would require an
increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason
of this subparagraph (v) are not required to be made
shall be carried forward and taken into account in any
subsequent adjustment; and provided further any adjustment
shall be required and made in accordance with the
provisions of this Section (7) (other than this
subparagraph (v)) not later than such time as may be
required in order to preserve the tax-free nature of a
distribution to the holders of shares of Common Stock.
All calculations under this Section (7) shall be made to
the nearest cent (with $.005 being rounded upward) or to
the nearest 1/100 of a share (with .005 of a
<PAGE>
16
share being rounded upward), as the case may be. Anything
in this paragraph (d) to the contrary notwithstanding,
the Corporation shall be entitled, to the extent
permitted by law, to make such reductions in the
Conversion Price, in addition to those required by this
paragraph (d), as it in its discretion shall determine to
be advisable in order that any stock dividends,
subdivision of shares, distribution of rights or
warrants to purchase stock or securities, or a distribution
of other assets (other than cash dividends) hereafter made
by the Corporation to its stockholders shall not be
taxable.
(e) In case the Corporation shall be a party to any
transaction (including without limitation a merger,
consolidation, sale of all or substantially all of the
Corporation's assets or recapitalization of the Common
Stock and excluding any transaction as to which paragraph
(d)(i) of this Section (7) applies) (each of the foregoing
being referred to as a "Transaction"), in each case as a
result of which shares of Common Stock shall be converted
into the right to receive stock, securities or other property
(including cash or any combination thereof), each share of
Series B Preferred Stock which is not converted into the
right to receive stock, securities or other property in
connection with such Transaction shall thereafter be
convertible into the kind and amount of shares of stock
and other securities and property receivable (including
cash) upon the consummation of such Transaction by a
holder of that number of shares or fraction thereof of
Common Stock into which one share of Series B Preferred
Stock was convertible immediately prior to such
Transaction. The Corporation shall not be a party
to any Transaction unless the terms of such Transaction are
consistent with the provisions of this paragraph (e) and it
shall not consent or agree to the occurrence of any
Transaction until the Corporation has entered into an
agreement with the successor or purchasing entity, as the case
may be, for the benefit of the holders of the Series B
Preferred Stock which will contain provisions enabling
the holders of the Series B Preferred Stock which remains
outstanding after such Transaction to convert into the
consideration received by holders of Common Stock at the
Conversion Price immediately after such Transaction. The
provisions of this paragraph (e) shall similarly apply to
successive Transactions.
<PAGE>
17
(f) If:
(i) the Corporation shall declare a dividend (or any
other distribution) on the Common Stock (other than a
regular cash dividend that the Board of Directors
determines can be maintained by the Company for at
least four consecutive periods and that the Board of
Directors intends to maintain for at least four
consecutive periods, or a dividend that, together
with all dividends paid in the prior twelve months, does
not exceed one percent (1%) of the aggregate fair market
value of the Series A Preferred Stock and the Common
Stock on the date such dividend is declared, in each
case, out of profits or surplus); or
(ii) the Corporation shall authorize the granting to
the holders of the Common Stock of rights or warrants to
subscribe for or purchase any shares of any class or any
other rights or warrants; or
(iii) there shall be any reclassification of the Common
Stock (other than an event to which paragraph (d)(i) of
this Section (7) applies) or 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,
then the Corporation shall cause to be filed with the Transfer
Agent and shall cause to be mailed to the holders of shares
of the Series B Preferred Stock at their addresses as shown
on the stock records of the Corporation, as promptly as
possible, but at least 15 days prior to the applicable
date specified in clauses (A) and (B) below, a notice
stating (A) the date on which a record is to be taken
for the purpose of such dividend, distribution or rights or
warrants, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to
such dividend, distribution or rights or warrants are to be
determined or (B) the date on which such reclassification,
consolidation, merger, sale or transfer is expected, that
holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or
other property deliverable upon such reclassification,
consolidation, merger, sale or transfer. Failure to give
such notice or any defect therein shall not affect the
legality or validity of the proceedings described in
this Section (7).
<PAGE>
18
(g) Whenever the Conversion Price is adjusted as herein
provided, the Corporation shall promptly file with the
Transfer Agent an officers' certificate setting forth the
Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment.
Promptly after delivery of such certificate, the Corporation
shall prepare a notice of such adjustment of the Conversion
Price setting forth the adjusted Conversion Price and the
date on which such adjustment becomes effective and shall
mail such notice of such adjustment of the Conversion Price
to the holder of each share of Series B Preferred Stock at his
or her last address as shown on the stock records of the
Corporation.
(h) In any case in which paragraph (d) of this Section (7)
provides that an adjustment shall become effective immediately
after a record date for an event, the Corporation may defer
until the occurrence of such event (A) issuing to the
holder of any share of Series B Preferred Stock converted
after such record date and before the occurrence of such event
the additional shares of Common Stock issuable upon such
conversion by reason of the adjustment required by such
event over and above the Common Stock issuable upon such
conversion before giving effect to such adjustment and (B)
paying to such holder any amount in cash in lieu of any
fraction pursuant to paragraph (c) of this Section (7).
(i) For purposes of this Section (7), 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.
(j) Notwithstanding any other provision herein to the
contrary, the issuance of any shares of Common Stock
pursuant to any plan providing for the reinvestment of
dividends or interest payable on securities of the
Corporation and the investment of additional optional
amounts in shares of Common Stock under any such plan at a
price per share of at least 95% of Current Market Price,
and the issuance of any shares of Common Stock or options or
rights to purchase such shares pursuant to any employee benefit
plan or program of the Corporation or pursuant to any option,
warrant, right or exercisable, exchangeable or convertible
security (including, but not limited to, Class A Stock)
outstanding as of the date the Series B Preferred Stock
was first designated, shall not be deemed to constitute an
issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Corporation to which this
Section (7) applies. There shall be no adjustment of the
Conversion Price in case of the
<PAGE>
19
issuance of any stock of the Corporation in a reorganization,
acquisition other similar transaction except as specifically
set forth in this Section (7). If any action or transaction
would require adjustment of the Conversion Price pursuant to
more than one paragraph of this Section (7), only one
adjustment shall be made and such adjustment shall be
the amount of adjustment which has the highest absolute value.
(k) In case the Corporation shall take any action affecting
the Common Stock, other than action described in this Section
(7), which in the opinion of the Board of Directors would
materially adversely affect the conversion rights of the
holders of the shares of Series B Preferred Stock, the
Conversion Price for the Series B Preferred Stock may be
adjusted, to the extent permitted by law, in such manner, if
any, and at such time, as the Board of Directors may
determine to be equitable in the circumstances.
(l) The Corporation covenants that it will at all times
reserve and keep available, free from preemptive rights,
out of the aggregate of its authorized but unissued shares
of Common Stock or its issued shares of Common Stock held in
its treasury, or both, for the purpose of effecting conversion
of the Series B Preferred Stock, the full number of shares of
Common Stock deliverable upon the conversion of all
outstanding shares of Series B Preferred Stock not
theretofore converted. For purposes of this paragraph (l),
the number of shares of Common Stock which shall be
deliverable upon the conversion of all outstanding
shares of Series B Preferred Stock shall be computed as if at
the time of computation all such outstanding shares were held
by a single holder.
Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value of
the shares of Common Stock deliverable upon conversion of the
Series B Preferred Stock, the Corporation will take any
corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may
validly and legally issue fully-paid and nonassessable shares
of Common Stock at such adjusted Conversion Price.
The Corporation will use all reasonable efforts to list the
shares of Common Stock required to be delivered upon
conversion of the Series B Preferred Stock prior to
such delivery, upon the American Stock Exchange or such other
exchange or inter-dealer quotation system on which the Common
Stock is principally traded or authorized to be quoted.
<PAGE>
20
Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon
conversion of the Series B Preferred Stock, the
Corporation will use all reasonable efforts to comply
with all federal and state laws and regulations thereunder
requiring the registration of such securities with, or any
approval of or consent to the delivery thereof by, any
governmental authority.
(m) The Corporation will pay any and all documentary stamp
or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on conversion of
the Series B Preferred Stock pursuant hereto; provided,
however, that the Corporation shall not be required to
pay any tax which may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock
in a name other than that of the holder of the Series B
Preferred Stock to be converted and no such issue or
delivery shall be made unless and until the person
requesting such issue or delivery has paid to the
Corporation the amount of any such tax or has
established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
(8) Ranking. Any class or classes of stock of the
Corporation shall be deemed to rank:
(i) prior to the Series B Preferred Stock, as to
dividends or as to distribution of assets upon
liquidation, dissolution or winding up, if the
holders of such class shall be entitled to the
receipt of dividends or of amounts distributable
upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders
of Series B Preferred Stock;
(ii) on a parity with the Series B Preferred Stock, as
to dividends or as to distribution of assets upon
liquidation, dissolution or winding up, whether or
not the dividend rates, dividend payment dates or
redemption or liquidation prices per share
thereof be different from those of the Series B
Preferred Stock, if the holders of such class of stock
and the Series B Preferred Stock shall be entitled to the
receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may
be, in proportion to their respective amounts of accrued
and unpaid dividends per share or liquidation prices,
without preference or priority one over the other; and
<PAGE>
21
(iii) junior to the Series B Preferred Stock, as to
dividends or as to the distribution of assets upon
liquidation, dissolution or winding up, if such stock
shall be Common Stock or Class A Stock or if the holders
of Series B Preferred Stock shall be entitled to receipt
of dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in
preference or priority to the holders of shares
of such stock.
(9) Voting. Except as herein provided or as otherwise from
time to time required by law, holders of Series B Preferred
Stock shall have no voting rights. Whenever, at any time
or times, dividends payable on the shares of Series B
Preferred Stock at the time outstanding shall be in
arrears for such number of Dividend Periods, which Dividend
Periods need not be consecutive, which shall in the aggregate
contain not less than 360 days, the holders of Series B
Preferred Stock shall have the exclusive right, voting
separately as a class with holders of shares of any one or
more other series of preferred stock ranking on a parity with
the Series B Preferred Stock as to dividends, or on the
distribution of assets upon liquidation, dissolution or
winding up and upon which like voting rights have been
conferred and are exercisable, to elect two directors
of the Corporation at the Corporation's next annual meeting of
stockholders and at each subsequent annual meeting of
stockholders. At elections for such directors, each
holder of Series B Preferred Stock shall be entitled to one
vote for each share held (the holders of shares of any other
series of preferred stock ranking on such a parity being
entitled to such number of votes, if any, for each share
of stock held as may be granted to them). Upon the vesting of
such right of the holders of Series B Preferred Stock, the
maximum authorized number of members of the Board of
Directors shall automatically be increased by two and
the two vacancies so created shall be filled by vote of the
holders of outstanding Series B Preferred Stock (either alone
or together with the holders of shares of any one or more
other series of preferred stock ranking on such a parity
and having like voting rights) as hereinafter set forth. The
right of holders of Series B Preferred Stock, voting separately
as a class, to elect (either alone or together with the holders
of shares of any one or more other series of preferred stock
ranking on such a parity and having like voting rights)
members of the Board of Directors as aforesaid shall
continue until such time as all dividends accumulated on
Series B Preferred Stock shall have been paid in full, at
which time such right shall terminate, except as herein or
by law expressly provided, subject to
<PAGE>
22
revesting in the event of each and every subsequent default of
the character above mentioned.
If the office of any director elected by the holders of
Series B Preferred Stock, voting as a class, becomes
vacant by reason of death, resignation, retirement,
disqualification or removal from office or otherwise, the
remaining director elected by the holders of Series B Preferred
Stock, voting as a class, may choose a successor who shall hold
office for the unexpired term in respect of which such vacancy
occurred. Upon any termination of the right of the holders of
Series B Preferred Stock to vote for directors as herein
provided, the term of office of all directors then in
office elected by Series B Preferred Stock, voting as a
class, shall terminate immediately. Whenever the term of
office of the directors elected by the holders of Series B
Preferred Stock, voting as a class, shall so terminate and
the special voting powers vested in the holders of Series B
Preferred Stock shall have expired, the number of directors
shall be such number as may be provided for in the By-Laws
irrespective of any increase made pursuant to the
provisions of this Section (9).
So long as any shares of the Series B Preferred Stock remain
outstanding, the consent of the holders of at least two-thirds
of the shares of Series B Preferred Stock outstanding at the
time given in person or by proxy, either in writing or at any
special or annual meeting, shall be necessary to permit, effect
or validate any one or more of the following:
(a) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any
class or series of stock ranking prior to Series B
Preferred Stock as to dividends or the distribution of
assets upon liquidation, dissolution or winding up, or
(b) The amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the
Restated Certificate of Incorporation of the Corporation
which would materially and adversely affect any right,
preference or voting power of Series B Preferred Stock or
of the holders thereof; provided, however, that any increase in
the amount of authorized preferred stock or the creation and
issuance of other series of preferred stock, or any increase
in the amount of authorized shares of such series or of any
other series of preferred stock, in each case ranking on a
parity with or junior to the Series B Preferred Stock with
respect to the payment of dividends and the distribution of
assets upon liquidation, dissolution or winding up, shall not
be deemed to materially and adversely affect such rights,
preferences or voting powers.
<PAGE>
23
The foregoing voting provisions shall not apply if, at or
prior to the time when the act with respect to which such
vote would otherwise be required shall be effected, all
outstanding shares of Series B Preferred Stock shall have
been redeemed or sufficient funds shall have been deposited in
trust to effect such redemption, scheduled to be consummated
within three months after such time.
(10) Record Holders. The Corporation and the Transfer Agent
may deem and treat the record holder of any shares of Series B
Preferred Stock as the true and lawful owner thereof for all
purposes, and neither the Corporation nor the Transfer Agent
shall be affected by any notice to the contrary.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate to be made under the seal of the
Corporation and signed by , its
, and attested by , its
[Assistant] Secretary, this day of , 1993.
VIACOM INC.
By
[Name]
[Title]
(Corporate Seal)
Attest:
By
[Name]
[Assistant] Secretary
Exhibit 10(ii)2
Exhibit A
1. The execution and delivery of the Agreement by the
Company and the performance of its obligations thereunder have
been duly and validly authorized by all necessary corporate
action on the part of the Company.
2. The Agreement has been duly and validly executed
and delivered by the Company and, assuming the due
authorization, execution and delivery by the
Purchaser, constitutes a legal, valid and binding
obligation of the Company, enforceable against the
Company in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or other
similar laws affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject
to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or
at law).
3. The Preferred Stock has been validly issued, is
fully paid and nonassessable, has not been issued in
violation of or subject to any preemptive rights and
has the rights set forth in the Company's Restated
Certificate of Incorporation, as amended through the
date hereof.
4. When each share of Common Stock deliverable upon
conversion of the Preferred Stock has been delivered upon
such conversion in accordance with the terms of the
Company's Restated Certificate of Incorporation, as
then amended, such shares of Common Stock will be validly
issued, fully paid and nonassessable, will not have been
issued in violation of or subject to any preemptive rights
and will have the rights set forth in the Company's Restated
Certificate of Incorporation, as then amended.
Exhibit 10(ii)2
Exhibit B
1. The execution and delivery of the Agreement by the
Purchaser and the performance of its obligations thereunder
have been duly and validly authorized by all necessary
corporate action on the part of the Purchaser.
2. The Agreement has been duly and validly executed
and delivered by the Purchaser and, assuming the due
authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser in
accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or other similar
laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general
principles of equity (regardless of whether
enforcement is considered in a proceeding in equity
or at law).
Exhibit 10(ii)2
VIACOM INC.
1515 Broadway
New York, New York
November 19, 1993
NYNEX Corporation
335 Madison Avenue
New York, New York 10017
Dear Sirs:
Reference is made to the Agreement between NYNEX
Corporation and Viacom Inc., dated October 4, 1993 (the
"Agreement"). Terms defined in the Agreement are used herein
as therein defined, unless otherwise defined herein.
1. The Agreement is hereby amended as follows:
(a) Paragraph 2 is amended by deleting paragraph 2(a)
in its entirety and by replacing it with the following:
"(a) The closing (the "Closing") of the purchase
provided for in paragraph 1 shall take place as soon
as practicable, but in no event more than five Business
Days, after satisfaction of the conditions specified in
paragraph 5 at the offices of Shearman & Sterling, 599
Lexington Avenue, New York, New York. The date and
time of the Closing are referred to herein as the
"Closing Date". The Company and the Purchaser
currently anticipate that the Closing Date shall
be on or about November 19, 1993."
(b) Paragraph 5(a) is amended by deleting the word
"and" at the end of paragraph 5(a)(iii) and by adding after
paragraph 5(a)(iv) the following new paragraphs 5(a)(v), (vi),
(vii), and (viii):
"(v) PVI Transmission Inc. ("Transco") shall have been
duly and validly incorporated under the laws of the State
of Delaware, the Identified Activities (as hereinafter
defined) shall have been transferred to Transco as
described in the certificate referred to in paragraph
5(a)(i)(C) above, and the shares of common stock and
Non-Participating Preferred Stock (as hereinafter
defined)
<PAGE>
of Transco shall have been issued, all as provided in
paragraph 25 hereof;
(vi) No claims, proceedings, suits or investigations
shall have been initiated or threatened by or before any
court, governmental department, commission, bureau, board,
agency or instrumentality, against the Purchaser or any
other "Bell Operating Company" or any "affiliated
enterprise" of a "Bell Operating Company" (as such
terms in quotes are defined in or interpreted under the
MFJ (as defined in paragraph 24)) that challenge or
otherwise call into question the effectivness, as a
means of insuring from and after the Closing the
Purchaser's compliance with the MFJ, of the
transfer of the Identified Activities and the PCI
Activities (as hereinafter defined) to Transco in
consideration of the issuance of the Transco
Non-Participating Preferred Stock to the Company
(or its subsidiaries) or, in the case of the PCI
Activities, to PCI (or its subsidiaries);
(vii) There shall exist no writ, judgment, order,
ruling, decree or interpretation by a court,
governmental department, commission, bureau,
board, agency or instrumentality that changes or
modifies prior interpretations of the MFJ or other
precedent involving the MFJ such that the ownership of
the Preferred Stock by the Purchaser, in the Purchaser's
judgment, would cause the Company or any Company Affiliate
to be engaged in a Restricted Activity, notwithstanding the
formation of Transco, the transfer thereto of the
Identified Activities and the PCI Activities and
the issuance to the Company (or it subsidiaries) or, in
the case of the PCI Activities, to PCI (as hereinafter
defined) (or its subsidiaries) of the Non-Participating
Preferred Stock of Transco, all as provided in paragraph
25 hereof; and
(viii) The certificate referred to in paragraph
5(a)(i)(C) above shall describe procedures and
undertakings by the Company and PCI to provide for the
implementation of the provisions of paragraph 25 hereof as
regards the PCI Activities, which procedures and
undertakings, and the proposed implementation
thereof, shall be reasonably satisfactory to the
Purchaser."
<PAGE>
(c) Paragraph 11 is amended by deleting paragraph
11(d)(i) in its entirety and by replacing it with the
following:
"(i) A "Change of Control" of the Company shall occur
if a Person Beneficially Owns more voting capital stock,
on a fully diluted basis, of the Company than National
Amusements, Inc. ("NAI"), Sumner M. Redstone, any trust
established by Mr. Redstone or of which he is the settlor,
beneficiary or trustee and any heir, executor,
administrator, or personal representative of
Mr. Redstone or his estate, and any person or entity in
any similar capacity, or any Affiliate of any of the
foregoing, (collectively, the "Group"), or the Group
Beneficially Owns 30% or less of the voting capital stock,
on a fully diluted basis, of the Company; provided,
however, that NAI shall no longer be included in
the Group if a Person Beneficially Owns more voting
capital stock, on a fully diluted basis, of NAI than
the Group, or the Group Beneficially Owns 30% or less of
the voting capital stock, on a fully diluted basis, of
NAI."
(d) Paragraph 15 is amended by inserting in the
penultimate sentence thereof, after "paragraph
24(g)(i)(A)", the following:
"or paragraph 25(g)".
(e) Paragraph 16 is amended by inserting in the first
sentence thereof, after "Annexes", the following:
", the Disclosure Schedule (as hereinafter defined)".
(f) Paragraph 24 is amended by deleting the first
sentence of paragraph 24(c) and replacing it with the
following:
"(c) For the purposes of this paragraph 24, paragraph
25 and paragraphs 5(a)(iv) and 5(a)(vii):",
and is further amended by deleting paragraph 24(h) in its
entirety and by replacing it with the following:
"(h) The Purchaser agrees that paragraph 5(a)(iv), this
paragraph 24 and paragraph 25 embody the Purchaser's
exclusive remedies against the Company under this
Agreement with respect to the MFJ."
<PAGE>
(g) The Agreement is amended by adding new
paragraph 25 as set forth below:
"25. (a) The Company agrees that it shall take, and
shall cause its Affiliates to take, as promptly as
practicable, all action necessary (i) to duly and
validly incorporate Transco as a Delaware corporation
having a certificate of incorporation and by-laws
substantially in the form of Annex III hereto, (ii)
to contribute (or cause its subsidiaries to contribute) to
the capital of Transco the several assets identified in the
disclosure schedule (the "Disclosure Schedule") delivered
by the Company to the Purchaser on November 19, 1993 (the
"Identified Activities"), subject to the liabilities
associated therewith, in consideration of the
issuance to the transferor(s) of the Identified
Activities of a number of shares of non-participating
preferred stock of Transco, with the rights and
preferences specified in the certificate of
designation included in Annex III (the
"Non-Participating Preferred Stock"),
determined pursuant to paragraph (c) below. Such
contribution shall be made concurrently with the
contribution by NAI (or a subsidiary of NAI) of
$1,850,000 in consideration of the issuance to NAI (or
such subsidiary) of 100 shares of common stock of Transco.
(b) Notwithstanding any other provision in
paragraph 24 to the contrary, (i) the Company
and the Purchaser, in anticipation of the acquisition by
the Company and/or its Affiliates of more than 50% of the
outstanding shares of common stock of PCI (the
"Acquisition"), shall continue good faith
discussions with each other so as to identify the
specific assets and operations of PCI which constitute
Restricted Activities (the "PCI Activities") (which assets
and operations, based on such discussions to date, are
described in the Disclosure Schedule), it being
understood that in the case of disagreement, the
Purchaser ultimately shall have the right to determine,
the Purchaser's judgment, which assets and operations of
PCI constitute Restricted Activities, and (ii) the
Company agrees that it shall take, and cause its
Affiliates to take, all action necessary to contribute
(or cause to be contributed) the PCI Activities, subject to
the liabilities associated therewith, to Transco in
consideration of the issuance to the transferor(s)
of the PCI Activities of a number of shares of
Non-Participating Preferred Stock of Transco
determined pursuant to paragraph (c) below. The
contirbution of the PCI Activities to Transco
provided for in this paragraph (b) shall be made
concurrently with the consummation of the Acquisition;
<PAGE>
except, that, if approval of the Acquisition shall not have
been obtained from the Federal Communications Commission
prior to the consummation of the Acquisition and as a
result the shares of PCI acquired by the Company are
deposited at the time of the Acquisition in a voting
trust prusuant to a special temporary authorization
granted by the Federal Communications Commission, which
voting trust prevents the Comany and its Affiliates from
directly or indirectly influencing the trustee under
such voting trust concerning the operation or
management of the PCI Activities, then such
contribution of the PCI Activities to Transco need
not be made until the date of termination of such voting
trust.
(c) The contributions to Transco of the Identified
Activities and the PCI Activities as described in (a)
and (b) above shall be in consideration of the issuance
to the respective transferors of such number of shares of
Non-Participating Preferred stock of Transco having an
aggregate liquidation preference equalling the fair
value of the activities contributed, determined on an
arms-length basis, the fairness of which from a
financial point of view shall be evidenced by the
opinion of an investment bank reasonably satisfactory to
the Company, NAI and the Purchaser.
(d) Notwithstanding any other provision of this
Agreement to the contrary, if, at any time, in the
Purchaser's judgment, the continued ownership by the
Company or its subsidiaries of an interest in Transco
would cause the Compnay or any Company Affilaite to be
engaged in a Restricted Activity by virtue of Transco's
ownership of Identified Activities and/or PCI Activities,
and the Purchaser determines in good faith that it would
be detrimental to the Purchaser's best interests either to
initiate efforts or to continue pursuing existing efforts
to confirm the propriety under the MFJ of the ownership
by the Company or its subsidiaries of shares of
Non-Participating Preferred Stock in Transco or
any other interest in Transco, the Company shall take any
and all action necessary to cause the Company (and all of
its subsidiaries) to dispose of all interests in Transco
owned by the Company (or any of its subsidiaries), and/or
take such other action as, in the Purchaser's judgment, is
necessary so that neither the Company nor any Company
Affiliate will be engaged in a Restricted Activity
(such obligation to divest and take other action being
collectively referred to as the "Divestment Action").
The Divestment Action shall be taken as promptly as
practicable, but in no event later than thirty (30)
Business Days after the Purchaser notifies the Compnay
in writing of such determination.
<PAGE>
(e) In the event the Purchaser determines, in its
judgment, that the direct ownership by the Company (or
any of its subsidiaries) of all or any portion of the
Identified Activities or the PCI Activities would not
result in the Purchasers's being in violation of the MFJ,
the Company will, upon written notice from the Purchaser,
acquire (or cause a wholly-owned subsidiary to acquire),
for fair value determnined or an arm's-length basis, the
fairness of which from a financial point of view shall be
evidenced by the opinion of an investment bank reasonably
satisfactory to the Company, NAI and the Purchaser, (i) all
of the capital stock of Transco not then owned by the
Company and its subsidiaries, or (ii) specific
Identified Activities or PCI Activities identified
in writing by the Purchaser, as determined by the
Purchaer; provided that the Company shall be
entitled to defer, for a reasonable period of time,
any such acquisition if the Company determines in good
faith, and so notifies the Purchser in writing, that
consummating such acquisition at such time would be
detrimental to the Company's best interest.
(f) If the Company fails or is unable to implement the
Divestment Action within the period set forth in (d) above,
then the Purchaser, at its option, by written notice to the
Company, shall have the right to elect to do one or more of
the following: (i) exercise the Put Right with respect to
all or part of the Subject Stock at the Divestment Price
(as defined below); (ii) require the Company to promptly
register all or part of the Subject Stock in a Registered
Offering; and/or (iii) sell all or part of the Subject
Stock privately in a Private Sale. If the Purchaser is
entitled to receive the Divestment Price under this
paragraph 25(f) and elects to dispose of the
Preferred Stock or any portion thereof either in a
Registered Offering or a Private Sale, the Company agrees
to pay to the Purchaser the amount, if any, by which the
gross proceeds to the Purchaser, after deducting
underwriting commissions and discounts or agency
fees, realized in such disposition is less than the
aggregate Divestment Price that would have been
payable to the Purchaser by the Company had the
Purchaser elected to require the Company to purchase
such Preferred Stock under this paragraph 25(f);
provided, however, that the Company shall not be obligated to make
any such payment in any instance in which the Purchaser
rejects the Company's written request, if such a request
is made by the Company by written notice to the
<PAGE>
Purchaser within 5 Business Days of receipt by the Company
of the Purchaser's notice pursuant to this paragraph
25(f) (and which the Company shall be entitled to make
in its discretion), to purchase such Preferred Stock from
the Purchaser at the Divestment Price, which right the
Purchaser shall have in its discretion. The Purchaser's
rights under this paragraph 25 shall be enforceable by any
Affifliate to which it has transferred Subject Stock. For
purposes of this paragraph 25, the "Divestment Price" shall
mean (A) with respect to Preferred Stock, the Aggregate
Liquidation Preference plus accrued and unpaid
dividends through the date of such purchase
(whether or not earned or declared), plus an amount
equal to a 7% annual compounded rate of return on the
Aggregate Liquidation Preference from the date of
Closing to the date of purchase by the Company, and
(B) with respect to Class B Common Stock, the price per
share equal to 100% of the Trading Price for the 20
trading days immediately prior to the date of
purchase by the Company.
(g) Nothwithstanding any other provision of this
Agreement, the remedy provided in (f) above is in
addition to any and all other remedies that may be
available to the Purchaser, at law or in equity,
including, without limitation, the right to seek
damages, unless it is determined by the arbitration
provided for in paragraph 15 that the Company and its
Affiliates shall have acted reasonably in failing to
implement the Divestment Action as set forth in (d)
above, in which event such remedy in (f) above shall be
the exclusive remedy available to the Purchaser. In the
event that the Purchaser is entitled to seek damages as
provided above in this paragraph 25(g), such damages shall
be offset by an amount equal to the 7% annual compounded
rate of return on the Aggregate Liquidation Preference
included in the Divestment Price if (but only if) the
Divestment Price both was determined by reference to
Preferred Stock and already has been paid to the
Purchaser."
<PAGE>
(h) ANNEX II of the Agreement is amended by deleting
the second sentence of the first paragraph, which currently
reads "In addition, at any time that the Purchaser shall have
the right to require the Company to purchase shares of
Preferred Stock and Class B Common Stock pursuant to
paragraph 24(g) of the Agreement, the Purchaser shall have
the right to make a request to register under the 1933 Act
any or all of such shares of Preferred Stock and Class B
Common Stock (the "Paragarph 24(g) Stock")", and by
replacing it with the following:
"In addition, at any time that the Purchaser shall have
the right to require the Company to purchase shares of
Preferred Stock and Class B Common Stock pursuant to
paragraph 24(g) and/or paragraph 25(f) of the Agreement,
the Purchaser shall have the right to make a request to
register under the 1933 Act any or all of such shares of
Preferred Stock and Class B Common Stock (in the case of
either paragraph 24(g) or paragraph 25(f), the
"Paragraph 24(g) Stock")".
(i) Paragraph 25 is deleted in its entirety and is
hereby replaced with the following new paragraph 26:
"The Company agrees that, for so long as the Purchaser
and its Affiliates Beneficially Own all of the outstanding
Preferred Stock, the Company shall not amend, alter or
repeal any of the provisions of the Certificate of
Designation without the consent of the Purchaser."
(j) The Agreement is amended to change current
paragraph number "26" to "27".
(k) The Agreement is hereby amended to add thereto as
"Annex III" the attached forms of the certificate of
incorporation, by-laws and certificate of designation
of Transco.
2. This Amendment Agreement may be executed in
multiple counterparts, each of which when so executed
shall be deemed to be an origianl, and such counterparts
together shall constitute and be one and the same
instrument.
<PAGE>
3. This amendment to the Agreement shall be governed
and construed in accordance with the laws of the State of New
York applicable to contracts executed in and to be performed
in that state.
Very truly yours,
VIACOM INC.
By: Philippe P. Dauman
Accepted and agreed on
the date written above:
NYNEX CORPORATION
By: W. C. Ferguson
Exhibit 10(ii)2
ANNEX II
Registration Rights
(a) The Purchaser shall have the right at any time
after the earlier of (i) the date of exercise of the
Purchaser's put right under paragraph 9 of the agreement
dated as of October 4, 1993 between the Purchaser and the
Company (the "Agreement"), (ii) the acquisition by the
Company or any of its Affiliates of Beneficial Ownership of
a majority of the outstanding voting capital stock of PCI and
(iii) the expiration of the Put/Call Period to make three
requests of the Company in writing: with respect to the
first such request to register under the 1933 Act at least
$25 million in value (stated value in the case of the
Preferred Stock and market value in the case of the
Class B Common Stock) of the Preferred Stock or the Class B
Common Stock (collectively, the "Securities") Beneficially
Owned by the Purchaser, and with each subsequent such
request being at least 6 months following such prior
request which resulted in a registration statement with
respect to the Subject Stock (as defined below) which was
effective until the earlier of the completion of the
offering of such Subject Stock or three months. In
addition, at any time that the Purchaser shall have the
right to require the Company to purchase shares of Preferred
Stock and Class B Common Stock pursuant to paragraph 24(g) of
the Agreement, the Purchaser shall have the right to make a
request to register under the 1933 Act any or all of such
shares of Preferred Stock and Class B Common Stock (the
"Paragraph 24(g) Stock"). The shares of Preferred Stock and
Class B Common Stock subject to any request for registration
pursuant to either of the foregoing sentences of this clause
(a) are referred to as the "Subject Stock". The Company
shall use all reasonable efforts to cause the Subject
Stock to be registered under the 1933 Act as soon as
reasonably practicable after receipt of a request so as
to permit promptly the sale thereof, and in connection
therewith, the Company shall prepare and file, on such
appropriate form as the Company in its discretion shall
determine, a registration statement under the 1933 Act to
effect such registration. The Company shall use all reasonable
efforts to list all Subject Stock covered by such registration
statement on any national securities exchange on which
Securities of the same class and, if applicable,
series, covered by such registration statement or on
which the underlying common stock of the same class and, if
applicable, series, are then listed or, if such listing cannot
be made, to list such Subject Stock on the National
Association of Securities Dealers Automated
Quotation System or National Market System. The
Purchaser hereby undertakes to provide all such
information and materials and take all such action as
may be required in order to permit the Company to comply with
all
<PAGE>
2
applicable requirements of the Commission and to obtain any
desired acceleration of the effective date of such
registration statement. Any registration statement
filed at the Purchaser's request hereunder will not count
as a requested registration unless effectiveness is
maintained until the earlier of completion of the
offering and three months. Notwithstanding the foregoing,
the Company (i) shall not be obligated to cause any special
audit to be undertaken in connection with any such
registration (provided that this provision shall not
relieve the Company of its obligation to obtain any required
consents with respect to financial statements in prior
periods) and (ii) shall be entitled to postpone for a
reasonable period (not to exceed 180 days) of time the
filing of any registration statement otherwise required
to be prepared and filed by the Company if the Company is, at
such time, either (A) other than in the case of a registration
statement relating to the Paragraph 24(g) Stock, conducting or
about to conduct an underwritten public offering of equity
securities (or securities convertible into equity
securities) or is subject to a contractual obligation
not to engage in a public offering and is advised in writing
by its managing underwriter or underwriters (with a copy to
the Purchaser) that such offering would in its or their
opinion be adversely affected by the registration so
requested or (B) subject to an existing contractual
obligation to its underwriters not to engage in a public
offering.
At any time after January 1, 1995, if the Company
proposes to file a registration statement under the
Securities Act with respect to an offering of its equity
securities (i) for its own account (other than a registration
statement on Form S-4 or S-8 (or any substitute form that may
be adopted by the Commission)) or (ii) for the account of any
holders of its securities (including any pursuant to a demand
registration), then the Company shall give written notice of
such proposed filing to the Purchaser as soon as practicable
(but in any event not less than 5 Business Days before the
anticipated filing date), and such notice shall offer the
Purchaser the opportunity to register such number of shares
of Securities as the Purchaser requests. If the Purchaser
wishes to register securities of the same class or series
as the Company or such holder, such registration shall be on
the same terms and conditions as the registration of the
Company's or such holders' securities (a "Piggyback
Registration"). Notwithstanding anything contained
herein, if the lead underwriter of an offering involving
a Piggyback Registration delivers a written opinion to the
Company that the success of such offering would be
materially and adversely affected by
<PAGE>
3
inclusion of all the securities requested to be included, then
the number of securities to be registered by each party
requesting registration rights shall be reduced in
proportion to the number of securities originally
requested to be registered by each of them. Nothing
contained herein shall require the Company to reduce the
number of shares proposed to be issued by the Company.
No securities may be registered on a registration
statement requested by the Purchaser under this Agreement
without the Purchaser's express written consent.
(b) In connection with any offering of shares of
Subject Stock registered pursuant to this Annex II, the
Company (i) shall furnish to the Purchaser such number of
copies of any prospectus (including any preliminary
prospectus) as it may reasonably request in order to
effect the offering and sale of the Subject Stock to be
offered and sold, but only while the Company shall be
required under the provisions hereof to cause the
registration statement to remain current and (ii) take
such action as shall be necessary to qualify the shares covered
by such registration statement under such "blue sky" or other
state securities laws for offer and sale as the Purchaser
shall request; provided, however, that the Company shall
not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it shall
not then be qualified or to file any general consent to service
of process in any jurisdiction in which such a consent has not
been previously filed. If applicable, the Company shall enter
into an underwriting agreement with a managing underwriter or
underwriters selected by it (reasonably satisfactory to the
Purchaser) containing representations, warranties,
indemnities and agreements then customarily included
by an issuer in underwriting agreements with respect to
secondary distributions; provided, however, that such
underwriter or underwriters shall agree to use their best
efforts to ensure that the offering results in a
distribution of the Subject Stock sold in accordance
with the terms of the agreement. In connection with any
offering of Subject Stock registered pursuant to this
Annex II, the Company shall (x) furnish to the underwriter,
at the Company's expense, unlegended certificates representing
ownership of the Subject Stock being sold in such denominations
as requested and (y) instruct any transfer agent and registrar
of the Subject Stock to release any stop transfer orders with
respect to such Subject Stock. Upon any registration becoming
effective pursuant to this Annex II, the Company shall use all
reasonable efforts to keep such registration statement current
for such period as shall be
<PAGE>
4
required for the of all of said Subject Stock; provided,
however, that such period need not exceed three months.
(c) The Purchaser shall pay all underwriting discounts
and commissions related to shares of Subject Stock being sold
by the Purchaser. The Company shall pay all other fees and
expenses in connection with any registration statement,
including, without limitation, all registration and
filing fees, all fees and expenses of complying with
securities or "blue sky" laws, fees and disbursements of
the Company's counsel, the counsel of the Purchaser,
accountants (including the expenses of "cold comfort"
letters required by or incident to such performance and
compliance) and any fees and disbursements of
underwriters customarily paid by issuers in
secondary offerings.
(d) In the case of any offering registered pursuant to
this Annex II, the Company agrees to indemnify and hold the
Purchaser, each underwriter of Securities under such
registration and each person who controls any of the
foregoing within the meaning of Section 15 of the 1933 Act
and the directors and officers of the Purchaser, harmless
against any and all losses, claims, damages, liabilities
or action to which they or any of them may become subject
under the 1933 Act or any other statute or common law or
otherwise, and to reimburse them for any legal or other
expenses reasonably incurred by them in connection with
investigating any claims and defending any actions, insofar
as any such losses, claims, damages, liabilities or actions
shall arise out of or shall be based upon (i) any untrue
statement or alleged untrue statement of a material fact
contained in the registration statement relating to the sale
of such Subject Stock, or the omission or alleged omission to
state therein 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 or
(ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus (as
amended or supplemented if the Company shall have filed
with the Commission any amendment thereof or supplement
thereto), if used prior to the effective date of such
registration statement, or contained in the prospectus
(as amended or supplemented if the Company shall have filed
with the Commission any amendment thereof or supplement
thereto), or the 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; provided, however, that
the indemnification agreement contained
<PAGE>
5
in this paragraph (d) shall not apply to such losses, claims,
damages, liabilities or actions which shall arise from the
sale of Subject Stock by the Purchaser if such losses,
claims, damages, liabilities or actions shall arise out
of or shall be based upon any such untrue statement or alleged
untrue statement, or any such omission or alleged omission, if
such statement or omission shall have been (x) made in
reliance upon and in conformity with information
furnished in writing to the Company by the Purchaser or
any such underwriter specifically for use in connection with
the preparation of the registration statement or any
preliminary prospectus or prospectus contained in the
registration statement or any such amendment thereof or
supplement thereto or (y) made in any preliminary
prospectus, and the prospectus contained in the
registration statement in the form filed by the
Company with the Commission pursuant to Rule 424(b)
under the 1933 Act shall have corrected such statement or
omission and a copy of such prospectus shall not have been
sent or given to such person at or prior to the
confirmation of such sale to him.
(e) In the case of each offering registered pursuant
to this Annex II, the Purchaser and each underwriter
participating therein shall agree, in the same manner
and to the same extent as set forth in paragraph (d) of this
Annex II severally to indemnify and hold harmless the Company
and each person, if any, who controls the Company within the
meaning of Section 15 of the 1934 Act, and the directors and
officers of the Company, and in the case of each such
underwriter, the Purchaser, each person, if any, who
controls the Purchaser within the meaning of the 1934 Act and
the directors, officers and partners of the Purchaser, with
respect to any statement in or omission from such
registration statement or any preliminary prospectus
(as amended or as supplemented, if amended or supplemented as
aforesaid) or prospectus contained in such registration
statement (as amended or as supplemented, if amended or
supplemented as aforesaid), if such statement or omission
shall have been made in reliance upon and in conformity
with information furnished in writing to the Company by the
Purchaser or such underwriter specifically for use in
connection with the preparation of such registration
statement or any preliminary prospectus or prospectus
contained in such registration statement or any such
amendment thereof or supplement thereto.
(f) Each party indemnified under paragraph (d) or (e)
of this Annex II shall, promptly after receipt of notice of
the commencement of any action against such indemnified
party in
<PAGE>
6
respect of which indemnity may be sought hereunder, notify the
indemnifying party in writing of the commencement thereof.
The omission of any indemnified party to so notify an
indemnifying party of any such action shall not relieve
the indemnifying party from any liability in respect of such
action which it may have to such indemnified party on
account of the indemnity agreement contained in
paragraph (d) or (e) of this Annex II, unless the
indemnifying party was prejudiced by such omission, and in
no event shall relieve the indemnifying party from any other
liability which it may have to such indemnified party. In
case any such action shall be brought against any indemnified
party and it shall notify an indemnifying party of the
commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it may
desire, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, 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
paragraph (d) or (e) of this Annex II for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof, other than reasonable
costs of investigation.
(g) If the indemnification provided for under
paragraph (d) or (e) shall for any reason be held by a
court to be unavailable to an indemnified party under paragraph
(d) or (e) hereof in respect of any loss, claim, damage or
liability, or any action in respect thereof, then, in lieu
of the amount paid or payable under paragraph (d) or (e)
hereof, the indemnified party and the indemnifying party
under paragraph (d) or (e) hereof shall contribute to the
aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred
in connection with investigating the same), (i) in such
proportion as is appropriate to reflect the relative
fault of the Company and the prospective seller of
Securities covered by the registration statement which
resulted in such loss, claim, damage or liability, or action in
respect thereof, with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other relevant
equitable considerations or (ii) if the allocation
provided by clause (i) above is not permitted by
applicable law, in such proportion as shall be
appropriate to reflect the relative benefits received
by the Company and such prospective seller from the offering
of the securities covered by such registration statement. No
Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be
entitled to
<PAGE>
7
contribution from any Person who was not guilty of such
fraudulent misrepresentation. In addition, no Person
shall be obligated to contribute hereunder any amounts in
payment for any settlement of any action or claim effected
without such Person's consent, which consent shall not be
unreasonably withheld.
(h) Capitalized terms not defined in this Annex shall
have the meanings set forth in the Agreement.
Exhibit (10)(iii)(A)24
EXECUTIVE RETENTION AGREEMENT
AGREEMENT, effective as of January 3, 1994, between NYNEX Corporation,
a Delaware corporation (the "Company"), and (Name), an individual (the
"Executive").
In consideration of the mutual agreements and covenants contained
herein, the Company and the Executive hereby agree as follows:
1. Executive Duties. The Company hereby employs the Executive and
assigns this agreement to (Company Name), and the Executive hereby
agrees to serve the Company in the capacity of (Title) and that the
Executive's entire business time and best efforts during the Term
of Employment (as hereinafter defined) will be devoted to the
performance of the Executive's duties, as now or hereafter
assigned to the Executive by the Chairman of the Board and Chief
Executive Officer of the Company or in the case of a subsidiary that
subsidiary's Board of Directors.
2. Term of Employment. The term of employment (the "Term of Employment")
shall commence on January 1, 1994 and shall continue day to day.
3. Compensation. Except as hereinafter provided, the Company shall pay
to the Executive, and the Executive shall accept from the Company, for
the services and duties to be rendered and performed by the Executive
during the Term of Employment:
(a) Base Compensation. During the Term of Employment, base
compensation at the annual rate of $(Salary) (subject
to applicable withholding and other taxes), (i) payable in equal
monthly installments on or before the first day of the month
following each of the months during such period, and (ii) as
subsequently adjusted by the NYNEX Board of Directors or the
Board of Directors of the company to which this Agreement
has been assigned.
-1-
<PAGE>
(b) Short Term Incentive Plan. During the Term of Employment, the
Executive shall participate in the Company's Senior
Management Short Term Incentive Plan (the "STIP") as a
tier (Letter) member of the Senior Management Compensation Group.
(c) Long Term Incentive Plan. During the Term of Employment, the
Executive shall participate in the NYNEX Senior Management
Long Term Incentive Plan (the "LTIP") as a tier (Letter) member
of the Senior Management Compensation Group.
(d) Stock Options. During the Term of Employment, the Executive will
be eligible to participate in the NYNEX Stock Option Plan to the
extent options are offered to tier (Letter) members of the Senior
Management Compensation Group.
(e) Retention Award. On January 3, 1994, the Company will award the
Executive (Number) shares of restricted stock (the "Award"),
pursuant to the terms of the NYNEX 1987 Restricted Stock Award
Plan, (1987 Plan) under the following terms:
(i) dividends on the Award will be used to purchase additional
shares of restricted stock (the additional shares and the
Awarded shares shall be referred to collectively as the
"Retention Award");
(ii) the shares which comprise the Retention Award shall be
subject to the terms and conditions provided in the
1987 Plan;
(iii) the Restriction Period for the Retention Award as defined in
the 1987 Plan shall end when the Executive:
(A) voluntarily separates from service with the Company
with the consent of the Chairman and Chief
Executive Officer of the Company;
(B) dies; or
(C) is terminated without cause.
-2-
<PAGE>
(f) Benefits. In addition to the compensation, STIP, LTIP and Stock
Option Plan grants and awards payable to the Executive pursuant
to this paragraph 3, the Company shall provide the following
benefits to the Executive during the Term of Employment:
(i) The Executive, to the extent eligible, shall participate in
the Company's current and future employee benefit plans
and programs for members of the Senior Management
Compensation Group and employees generally.
(ii) The Executive, as a member of the Senior Management
Compensation Group as defined by the NYNEX Board
of Directors, shall be entitled to all perquisites and
benefits available to members of the Senior Management
Compensation Group of the Company.
(g) Termination of Payments and Severance Pay. Compensation and
benefits under this subparagraph 3 shall terminate as
follows:
(i) If the Executive voluntarily separates from service with the
Company without the consent of the Chairman and Chief
Executive Officer of the Company:
(A) the Company shall make no further payments to the
Executive under sub-paragraph 3(a) for any
period of time subsequent to the date of such
separation;
(B) grants and awards previously made to the Executive
under the LTIP, STIP and the Stock Option Plan
shall be governed by the terms of those plans;
(C) the Retention Awards under sub-paragraph 3(e), shall be
forfeited;
(D) all benefits provided under sub-paragraph 3(f) hereof
shall cease as of the date of such separation,
except as may be provided in the plans and
programs; and
(E) the Executive shall not be entitled to severance pay
pursuant to the NYNEX Executive Severance Pay Plan
("Severance Pay Plan").
-3-
<PAGE>
(ii) If the Executive voluntarily separates from employment with
the Company with the consent of the Chairman and Chief
Executive Officer of the Company:
(A) the Company shall make no further payments to the
Executive under sub-paragraph 3(a) for any
period of time subsequent to the date of
separation;
(B) grants and awards previously made to the Executive
pursuant to the LTIP, STIP, and the Stock Option
Plan shall be governed by the terms of those plans;
(C) the restrictions on the Retention Awards, under
sub-paragraph 3(e), shall lapse;
(D) all benefits provided under sub-paragraph (f) hereof
shall cease as of the date of such separation,
except as may be provided in the plans and
programs; and
(E) the Executive shall be entitled to severance pay
pursuant to the Severance Pay Plan 7 days after
the Executive signs the release provided for in the
Severance Pay Plan.
(iii) If the Executive dies at any time during the Term of
Employment:
(A) the Company shall make no payments under sub-paragraph
3(a) of this Agreement to the Executive or the
Executive's executors, administrators, assigns,
beneficiaries or estate for any period of time
subsequent to the date of the Executive's
death;
(B) grants and awards previously made to the Executive
pursuant to the LTIP, STIP and the Stock Option
Plan shall be governed by the terms of those plans;
(C) the restrictions on the Retention Awards, under
sub-paragraph 3(e), shall lapse;
(D) the continuation, expiration and termination of the
benefits provided under sub-paragraph 3(f) shall
be governed by the terms of the Company's employee
benefit plans and programs applicable in the event
of the death of an employee as in effect on the date
of death; and
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<PAGE>
(E) the Executive's heirs shall be entitled to severance
pay pursuant to the Severance Pay Plan 7 days after
the Executive's heirs sign the release provided for in
the Severance Pay Plan.
(iv) If the Executive's employment is terminated for cause as
defined in Paragraph 4 below:
(A) the Company shall make no payments under sub-paragraph
3(a) for periods of time subsequent to the date of
such termination;
(B) grants and awards previously made to the Executive
pursuant to the LTIP, STIP and the Stock Option
Plan shall be governed by the terms of those plans;
(C) the Retention Awards, under sub-paragraph 3(e), shall
be forfeited;
(D) all benefits provided under sub-paragraph 3(f) shall
cease as of the date of such termination except as
may be provided in the plans and programs; and
(E) the Executive shall not be entitled to severance pay
pursuant to the Severance Pay Plan.
(v) If the Executive becomes and remains totally disabled during
the Term of Employment:
(A) the Company shall pay the monthly payments or the
portion thereof specified in sub-paragraph 3(a)
to the Executive, pursuant to the terms of the
Company's Short Term Disability Plan;
(B) grants and awards previously made to the Executive
pursuant to the LTIP, STIP, and the Stock Option
Plan shall be governed by the terms of those plans;
(C) the Retention Awards under sub-paragraph 3(e) shall be
continued until the expiration of the Term of
Employment; and
(D) all benefits provided under sub-paragraph 3(f) shall
continue to be provided until the expiration of the
Term of Employment.
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<PAGE>
(vi) If the Executive's employment is terminated by the Company
without cause:
(A) the Company shall make no payments specified under
sub-paragraph 3(a) to the Executive after the
date of termination;
(B) grants and awards previously made to the Executive
pursuant to the LTIP, STIP, and the Stock Option
Plan shall be governed by the terms of those plans;
(C) the restrictions on the Retention Awards under
sub-paragraph 3(e) shall lapse;
(D) the continuation, expiration and termination of all
other benefits provided under sub-paragraph 3(f)
shall be governed by the terms of the Company's
employee benefit plans and programs as in effect
on the date of such termination; and
(E) the Executive shall be entitled to severance pay
pursuant to the Severance Pay Plan 7 days after
the Executive signs the release provided for in the
Severance Pay Plan.
4. Termination of Employment.
(a) The Executive may voluntarily terminate employment with the
Company at any time with or without cause at the sole
discretion of the employee.
(b) The Executive's employment may be terminated by the Company at any
time with or without cause at the sole discretion of the Company.
The Company shall give the Executive 90 days' notice if the
Executive's employment is being terminated without cause.
If the Company terminates the Executive's employment without
cause and without 90 days notice, not withstanding the
provisions of 3(g)(vi)(A), the Company will pay the
Executive's Base Compensation for each day that the period
between notice and termination of employment is less than 90
days. The term "cause" in this subparagraph (b) shall mean
grossly incompetent performance or substantial or continuing
inattention to or neglect of the duties and responsibilities
assigned to the Executive, as determined in the sole
discretion and judgment of
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<PAGE>
the Chairman and Chief Executive Officer of the Company: fraud,
misappropriation, embezzlement, involving the Company or any of
its subsidiaries or affiliates; or commission of any felony of
which the Executive is finally adjudged guilty in a court of
competent jurisdiction; or a breach of Paragraphs 8
(Non-Competition and Non-Solicitation), 9
(Intellectual Property and Proprietary Information),
10 (Company Rules; Code of Business Conduct), or 11
(Modification of Final Judgment) of this Agreement.
In the event that the Company terminates the employment of the
Executive for cause, it will state in writing the grounds for
such termination and provide this statement to the Executive
within 10 business days after the date of termination, except
that, in the event that the reason for termination for cause is
grossly incompetent performance or substantial or continuing
inattention to or neglect of the duties and responsibilities
assigned to the Executive, the Company will give the Executive
60 calendar days prior written notice and an opportunity to cure
the performance within these 60 calendar days. Evidence of such
cause or evidence of other cause discovered after the notice may
also be considered to support the termination decision and will,
by itself, be sufficient to constitute cause.
5. Expenses. In accordance with the Company's usual practices and
procedures, the Company agrees to reimburse the Executive for
reasonable travel expenses (other than normal commutation expenses)
and other reasonable out-of-pocket expenses directly related to the
Executive's work for the Company.
6. Holidays and Vacation. The Executive shall have the same holidays per
calendar year recognized by the Company for its management employees
(presently 11). During each calendar year during the Term of
Employment, the Executive shall have an aggregate of 4 Management
Personal Days and 5 weeks vacation. Notwithstanding the foregoing, such
Management Personal Days and vacation days shall be scheduled at such
times and in such number with due regard to the needs of the business.
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<PAGE>
7. Capacity.
(a) The Executive hereby warrants and represents that the Executive is
legally capable and now physically capable (with or without
reasonable accommodation) of performing the duties
contemplated in this Agreement and that such performance
will not violate any agreements the Executive has with, or breach
any duties owed to, any other employer or organization.
(b) The Company hereby warrants and represents that this Agreement has
been duly and validly authorized, executed, and delivered.
8. Non-Competition and Non-Solicitation.
(a) Without the prior written consent of the Company, the Executive
shall not, during the Term of Employment and for a period of
two years from the date of termination of employment with the
Company, or its Affiliates, either for himself or herself or as
an agent, partner, joint venturer or employee of any Person,
other than the Company, or its Affiliates, or in any other
capacity, directly or indirectly:
(i) engage in Competitive Services for any Customer or any
Prospective Customer; or
(ii) contact, solicit or attempt to solicit, whether for the
Executive's own account or for the account of any
Person other than the Company, or its Affiliates, any
Customer or any Prospective Customer; or
(iii) induce away from the Company, or its Affiliates, or
facilitate the inducement away from the Company,
or its Affiliates of, any personnel of the Company, or
its Affiliates, or interfere with the faithful discharge
by such personnel of their contractual and fiduciary
obligations to serve the interests of the Company,
or its Affiliates and their Customers; or
-8-
<PAGE>
(iv) invest in or otherwise be connected with, in any manner, any
Person that provides or intends to provide products or
services of the type provided by the Company for any
Customers or any Prospective Customer.
(b) For purposes of this Paragraph 8, the following terms shall have
the following definitions:
(i) "Affiliate" of a Person means any Person directly or
indirectly controlling, controlled by, or under
common control with, such other Person.
(ii) "Customer" means any Person for whom the Company performed
Competitive Services within the 18 months immediately
preceding such engagement, contact, solicitation
attempted solicitation or inducement, or the
Executive's termination of employment.
(iii) "Competitive Services" means any business activity which is,
being conducted or planned during the Term of Employment or
was being conducted or planned by the Company at the time
of the Executive's termination of employment.
(iv) "Person" means an individual, a corporation, a partnership,
an association, a trust or any other entity, including a
government or political subdivision or an agency or
instrumentality thereof.
(v) "Prospective Customer" means any Person to whom the Company
submitted, or assisted in the submission of, a proposal
for Competitive Services during the 18 months
immediately preceding such (x) engagement,
contact, solicitation, attempted solicitation or
inducement, or (y) the Executive's termination of
employment.
(c) Ownership of less than 5% of the securities in a publicly traded
corporation shall not constitute a violation of this Agreement.
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<PAGE>
9. Intellectual Property and Proprietary Information. The Executive has
executed the NYNEX Employee Agreement Regarding Intellectual Property
and Proprietary Information which is attached hereto as Appendix A and
made a part of this Agreement.
10. Company Rules; Code of Business Conduct. The Executive agrees to
abide by all of the rules applicable to Company employees as such
rules are made known to the Executive from time to time. The
Executive has received and read the publication entitled the
NYNEX Code of Business Conduct.
11. Modification of Final Judgment. The Executive has received and read
the publication entitled NYNEX Policy for Compliance with the
Modification of Final Judgment (August 1988) and has executed
the Acknowledgment attached thereto. Such Acknowledgment is attached
hereto as Appendix B and made a part of this Agreement.
12. Additional Remedies. In addition to any other rights or remedies,
whether legal, equitable or otherwise, which each of the parties may
have:
(a) The Executive acknowledges that Paragraphs 8, 9, 10 and 11 of this
Agreement are essential to the continued good will and
profitability of the Company and its subsidiaries and
affiliates and further acknowledges that the application and
operation thereof shall not involve a substantial hardship
upon the Executive's future livelihood. Should any court or
arbitrator determine that any or all of such paragraphs of this
Agreement are unenforceable in respect of scope, duration or
geographic area, such court or arbitrator shall substitute,
to the extent enforceable, provisions similar thereto or other
provisions, so as to provide to the Company and its
subsidiaries and affiliates, to the fullest extent
permitted by applicable law, the benefits intended by this
Agreement.
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<PAGE>
(b) The parties hereto further recognize that irreparable damage to
the Company and its subsidiaries and affiliates will result in
the event that Paragraphs 8, 9, 10 and 11 of this Agreement are
not specifically enforced and that monetary damages will not
adequately protect the Company and its subsidiaries and
affiliates from a breach of this Agreement. If any
dispute arises concerning the violation by the Executive
of this Agreement, the parties hereto agree that an injunction
may be issued restraining such violation pending the
determination of such controversy, and no bond or
other security may be required in connection therewith.
13. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver
of such term, covenant or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any one or
more times be deemed a waiver or relinquishment of such right or power
at any other time or times.
14. Reformation and Severability. The Executive and the Company agree
that the agreements contained herein shall each constitute a separate
agreement independently supported by good and adequate consideration,
shall each be severable from the other provisions of the Agreement,
and shall survive the Agreement. If an arbitrator or court of
competent jurisdiction determines that any term, provision or
portion of this Agreement is void, illegal or unenforceable, the other
terms, provisions and portions of this Agreement shall remain in full
force and effect and the terms, provisions and portions that are
determined to be void, illegal or unenforceable shall be limited so
that they shall remain in effect to the extent permissible by law.
15. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by
hand or messenger, transmitted by telex or telegram or mailed by
registered or certified mail, return receipt requested and postage
prepaid, as follows:
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<PAGE>
(a) If to the Company, to:
With a copy to:
NYNEX Corporation
1113 Westchester Avenue
White Plains, New York 10604
Attention: Executive Vice President
and General Counsel
(b) If to the Executive, to:
or to such other person or address as either of the parties shall
hereafter designate to the other from time to time by similar
notice.
16. Assignability. This Agreement is personal in nature. The Executive
shall have no right to assign or transfer this Agreement. In the event
of any attempted assignment or transfer by the Executive of the
Executive's duties and obligations contrary to this paragraph,
all the Executive's rights under this Agreement shall be forfeited, and
the Company shall have no further liability under this Agreement. The
Company may assign or transfer its rights under this Agreement only to
a subsidiary or affiliate of the Company. No assignment by the Company
shall relieve the Company of the liabilities and responsibilities
created by this Agreement.
17. Entire Understanding. This Agreement constitutes the entire
understanding between the Company and the Executive with
respect to the subject matter hereof, superseding any and all
prior written or oral understandings which may have existed.
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<PAGE>
18. Amendment. This Agreement may be amended or modified, in whole or in
part, only by an agreement in writing signed by the Company and the
Executive.
19. Headings. The headings in this Agreement are inserted for convenience
of reference only and are not to be considered in the construction of the
provisions herein.
20. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to the
principles of conflicts of laws of that State.
21. Arbitration. Any disputes under this Agreement shall be submitted to
Arbitration. The Arbitration shall be conducted under the rules of the
American Arbitration Association.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day of ,
1994.
EXECUTIVE COMPANY
By
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Exhibit
(10)(iii)(A)25
NYNEX EXECUTIVE
SEVERANCE PAY PLAN
1. Overview
The NYNEX Executive Severance Pay Plan ("Severance
Pay Plan") is designed to provide specified
post-employment payments to certain
executives.
This Severance Pay Plan replaces and supersedes the
New York Telephone policy "Separation Allowance
and other Payments", the New England Telephone
policy "Separation from Active Service with the
Company" as to managers only and the NYNEX
Management Severance Pay Plan, and any other
management severance or separation pay plan or
program currently in effect in each Employing
Company.
2. Type of Plan
The Severance Pay Plan is classified as a welfare
plan under the provisions of the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"). It is intended to be a
Severance Pay Plan as defined in Federal
Regulation 29 CFR 2510-3-2(b) for a select
group of management or highly compensated
employees of NYNEX Corporation and its
subsidiaries.
3. Employing Companies
An "Employing Company" means NYNEX Corporation and
each Subsidiary of NYNEX Corporation which elects
to participate in the Severance Pay Plan.
4. Participation
A "Participant" means any full or part-time
management employee who is a member of the
Senior Management Compensation Group as designated
by the Board of Directors of the manager's
Employing Company.
<PAGE>
5. Eligibility
a. "Eligible Participant" -- In order to be
eligible to receive benefits under the
Severance Pay Plan, a Participant must:
(i) (Single Executive) --
(A) separate from service, with
the consent of the
Chairman and Chief
Executive Officer of NYNEX
Corporation, and
(B) sign a release in the form of
Attachment A, or.
(ii) (Multiple Executives) --
(A) separate from service pursuant
to the terms of the NYNEX
Force Management Plan
("FMP")
1. having been designated as
either Eligible for
Voluntary Separation
("EVS") or Eligible for
Voluntary Separation and
At-Risk ("EVS-AR"), but
2. notwithstanding the provisions
ofsub-paragraph (a)(ii)(A)1.
of this paragraph 5., in the
event that the number of
volunteers who are EVS
or EVS-AR exceeds the
designated number of
volunteers who will be
accepted in a given
Banding Entity as
determined by the Chief
Executive Officer of the
Business Unit which
contains the volunteers
or the Chief Executive
Officer of NYNEX, then
the volunteers who volunteer
after the designated number
is reached will not be
Eligible Participants
under this Severance Pay
Plan, and
(B) sign a release in the form of
Attachment B.
b. Disqualifications -- A Participant is not an
Eligible Participant and may not receive
benefits or payments under this Severance
Pay Plan:
(i) Separation for Cause -- if the
Participant is separated from
service for cause. The term "cause"
in this sub-paragraph shall mean
grossly incompetent performance
or substantial or continuing
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<PAGE>
inattention to or neglect of the
duties and responsibilities
assigned to the Participant as
determined in the sole discretion
and judgment of the Chairman and
Chief Executive Officer of NYNEX,
including but not limited to fraud,
misappropriation and embezzlement,
involving the Employing Company or
any of its subsidiaries or
affiliates, or commission of
any felony of which the Executive is
finally adjudged guilty in a court
of competent jurisdiction or a
violation of the provisions of
the Participant's Executive
Retention Agreement entitled
Non-Competition and
NonSolicitation,
Intellectual Property and
Proprietary Information,
Company Rules; Code of Business
Conduct and Modification of Final
Judgment, or
(ii) Divestiture -- if the participant is
separated from service with an
Employing Company as a
consequence of the sale or
transfer to another party of the
stock or assets of that Employing
Company under circumstances where
employees are hired or offered
employment by the purchaser or
transferee or its successors or
assignees within (60) days of the
employee's separation of service
from any Employing Company, or
(iii) Employment Agreement -- if the
Participant has an employment
agreement, other than the
Executive Retention
Agreement, with an Employing
Company which provides for notice
from that company prior to the
Executive's separation from
service, and the Executive is
not required to provide services
for compensation during that
period of time.
6. Severance Payment
a. The Benefit -- The Severance Payment shall be
equal to the Value of the shares of
Restricted Stock including
reinvested dividends, which are
identified as the Retention Award in the
Executive's Retention Agreement, but not to
exceed two times the Executive's Annual
Compensation at the time of separation
from service.
(i) The Value shall be the mean between the
high and lowsale prices of the shares
as quoted by the New York Stock
Exchange-Composite Transactions
listing for the last day of employment,
or such other appropriate measurement of
fair market value as the Committee on
Benefits of the NYNEX Corporation
Board of Directors shall select. If
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<PAGE>
the last day of employment is a non-trading
day,then the high and low sale prices for
the last trading day prior to such date
shall be used.
(ii) "Annual Compensation" means the total
of all compensation, including
wages, salary, and any other
benefit of monetary value, whether
paid in the form of cash or otherwise
which was paid as consideration for
the Executive's service during the
year preceding the Executive's
separation from service, or
which would have been so paid at
the Executive's usual rate of
compensation if the Executive
had worked a full year.
b. Time of Payment -- The Severance Payment shall
be madeas soon as practicable after the date
the Executive separates from service, but in
no event, earlier than 7 days after the
Executive has executed and delivered to
the Executive's Employing Company a release
in the form of either Attachment A, in the
case of a single Executive separating from
service, or Attachment B, in the case of a
group of Executives separating from service.
In the case of a group of Executives
separating from service, Attachment C
should also be prepared and distributed with
Attachment B forty-five (45) days before the
group of Executives is scheduled to be
separated from service.
c. Tax Withholding -- the amount of Severance
Payment issubject to the withholding of
federal, state and local taxes, FICA and
FUTA and SUTA (unemployment taxes) at the
time of payment and will be reported on IRS
form W-2.
d. Forfeiture -- if an Eligible Participant is
re-employed by the Employing Company or by
NYNEX Corporation or any Subsidiary prior to
the end of one year, a pro rata share of the
Severance Payment shall be repaid to the
Company.
7. Financing of Benefits
The Severance Payment shall be paid out of the
Employing Company's general assets.
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<PAGE>
8. Administration
a. Administrator -- NYNEX Corporation, 1113
Westchester Avenue, White Plains, New
York 10604, solely administers the Severance
Pay Plan through the Vice President - Human
Resources.
b. Named Fiduciary -- the Committee on Benefits of
the NYNEX Corporation Board of Directors is
the named fiduciary which shall serve as
the final review committee, under the
Severance Pay Plan, to determine
conclusively any and all questions
arising from the administration of the
Severance Pay Plan and shall have sole and
complete discretionary authority and control
to manage the operation and administration
of the Severance Pay Plan including but not
limited to, the determination of all
questions relating to eligibility for
participation and benefits, interpretation of
all Plan provisions, determination of the
amount of benefits payable to any Eligible
Participant, spouse, heirs or estate, and
construction of disputed or doubtful
terms.
c. Delegation -- the named fiduciary under the
Severance Pay Plan has delegated to the
Vice President - Human Resources (in
accordance with paragraph 9) the
authority to review all initial claims
for severance payments under the terms of the
Severance Pay Plan. Any named fiduciary or
any fiduciary designated by a named
fiduciary may delegate any
responsibilities hereunder.
9. Claims Procedure
a. Who May File -- a Participant, or any person
duly authorized by such a participant, may
file a written claim for benefits under this
Severance Pay Plan if the Participant
believes benefits have been unfairly
denied under the Severance Pay Plan. Such a
claim may only relate to a benefit under the
Severance Pay Plan and not any matter under
the NYNEX Force Management Plan, the
Executive's Employment Agreement, or
any other policy, practice or guidelines of
the Executive's Employing Company.
b. The written claims may be sent to:
Vice President - Human Resources
NYNEX Corporation
1113 Westchester Avenue
White Plains, New York 10604
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<PAGE>
c. When to File Claim -- such claim must be
received within 60 days of the events
which give rise to the claim.
d. Disposition of Claims -- if the claim is
denied, the claimant will receive
written notice of the decision,
including the specific reason for the
decision, within 90 days of the date the claim
was received.
In some cases, more than 90 days may be needed
to make a decision. In such cases the
claimant will be notified in writing,
within the initial 90-day period, of the
reason more time is needed. An additional
90 days may be taken to make the decision if
the claimant is sent such a notice. The
extension notice will show the date by
which the decision will be sent.
10. Appeal Procedure
a. When to Appeal -- a claimant may use this
procedure if:
(i) no reply at all is received by the claimant
within 90 days after filing the claim;
(ii) a notice has extended the time an
additional 90 days and no reply
is received within 180 days after
filing the claim; or
(iii) written denial of the claim for
benefits or other matters is
received within the proper time
limit and the claimant wishes to
appeal the written denial.
If a claim for benefits or review of any other
matter under the Severance Pay Plan is
denied, the participant, or other duly
authorized person, may appeal this denial in
writing within 60 days after it is received.
b. Where to Appeal -- Written request for review of
any denied claim should be sent directly to the:
Committee on Benefits of the NYNEX
Board of Directors
1113 Westchester Avenue
Attention: Secretary
The Committee on Benefits of the NYNEX Corporation
Board of Directors serves as the final review
committee under the Severance Pay Plan for all
participants.
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<PAGE>
Unless the Committee on Benefits of the NYNEX
Corporation Board of Directors sends notice
in writing that the claim is a special case
needing more time, the Committee on Benefits
of the NYNEX Board of Directors will conduct a
review and decide on the appeal of the denied
claim within 60 days after receipt of the written
request for review. If more time is required to
make a decision, the Committee on Benefits of the
NYNEX Corporation Board of Directors will send
notice in writing that there will be a delay
and give the reasons for the delay. In such
cases, the Committee on Benefits of the NYNEX
Corporation Board of Directors may have 60 days
more, or a total of 120 days, to make a decision.
c. A claimant who sends a written request for
review of a denied claim, has the right
to:
(i) review pertinent Severance Pay Plan
documents which may be obtained by
writing to the Committee on Benefits of
the NYNEX Corporation Board of
Directors and
(ii) send to the Committee on Benefits of
the NYNEX Corporation Board of
Directors a written statement of
the issues and any other documents in
support of the claim for benefits or
other matters under review.
d. Disposition of Appeal -- the Committee on
Benefits of the NYNEX Corporation Board
of Directors' decision shall be given to the
claimant in writing within 60 days or, if
extended, 120 days, and shall include
specific reasons for the decision. If
the Committee on Benefits of the NYNEX
Corporation Board of Directors does not
give its decision on review within the
appropriate time span, the claimant may
consider the claim denied. The decision of
the Committee on Benefits of the NYNEX
Corporation Board of Directors is final
and binding on all parties.
A participant in the Severance Pay Plan may
have further rights under ERISA, as
described in Section 16 entitled
"Rights of a Plan Participant."
11. Legal Service
Process can be served on the Severance Pay Plan
Administrator by directing such service to
Vice President-Human Resources, NYNEX
Corporation, 1113 Westchester Avenue,
White Plains, New York 10604.
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<PAGE>
12. Benefits Not Assigned or Alienated
Assignment or alienation of any benefits provided
by the Severance Pay Plan will not be permitted
or recognized except as otherwise authorized by
applicable law. This means that, except as
required by applicable law, benefits
provided under the Severance Pay Plan may
not be sold, assigned, or otherwise transferred
by or on behalf of a participant.
13. Plan Records
The NYNEX Executive Severance Pay Plan and all of
its records are kept on a calendar year basis
beginning January 1 and ending December 31 of
each year.
14. Plan Identification Numbers
This Severance Pay Plan is identified by the
following numbers under the Internal
Revenue Service (IRS) Rules.
a. Number 13-3180909 assigned by the IRS.
b. Number 571 assigned by NYNEX Corporation.
15. Plan Continuance
The Committee on Benefits of the NYNEX Corporation
Board of Directors may amend or terminate this
Severance Pay Plan at any time. Any
amendments or the termination of the
Severance Pay Plan shall not result in the
forfeiture of the benefits previously awarded
under the Severance Pay Plan.
16. Plan Documents
This document is both the Severance Pay Plan and a
Summary Plan Description as such terms are
defined in ERISA.
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<PAGE>
17. Rights of a Plan Participant
As a Participant in this Severance Pay Plan, you
are entitled to certain rights and protection
under the Employee Retirement Income Security
Act of 1974 (ERISA).
ERISA provides that all Severance Pay Plan
participants shall be entitled to:
a. Examine, without charge, all Severance Pay Plan
documents and copies of all documents filed by
the Severance Pay Plan with the U. S.
Department of Labor, if any;
b. Obtain copies of all Severance Pay Plan
documents and other Plan information
upon written request to the Severance Pay
Plan Fiduciary. There may be a reasonable
charge for such copies.
In addition to creating rights for Severance Pay
Plan participants, ERISA imposes duties upon
those who are responsible for the operation of
employee benefit plans. The people who operate
your Severance Pay Plan, called "fiduciaries"
of the Plan, have a duty to do so prudently and
in the interest of you and other Severance Pay
Plan participants. No one, including your
employer, or any other person, may terminate
your employment or otherwise discriminate
against you in any way to prevent you from
obtaining a benefit or exercising your right
under ERISA. If your claim for benefits is
denied, in whole or in part, you have certain
rights of review as described under Claims and
Appeal Procedure Section 9 and 10, respectively,
of this Plan.
Under ERISA, there are steps you can take to
enforce the above rights. For instance, if
you request materials from the Plan Fiduciary and
do not receive them within 30 days, you may file
suit in a federal court. In such case, the
court may require the Plan Fiduciary to
provide the materials and pay up to $100 a
day until you receive the materials, unless the
materials were not sent because of reasons beyond
the control of the Plan Fiduciary. If you have a
claim for benefits which is denied or ignored, in
whole or in part, you may file suit in a state or
federal court. If you are discriminated against
for asserting your rights, you may seek
assistance from the U. S. Department of
Labor or you may file suit in a federal court.
The court will decide who will pay court costs
and legal fees. If you are successful, the
court may order the person you have sued to
pay these costs and fees. If you lose, the
court may order you to pay these costs and
fees if, for example, it finds your claim is
frivolous. [Arbitration being considered.]
- 9 -
<PAGE>
If you have any questions about the Severance Pay
Plan, you should contact the Severance Pay Plan
Fiduciary. If you have any questions about this
statement of your rights, or about your rights
under ERISA, you should contact your nearest
Area Office of the U. S. Labor Management
Services Administration, Department of
Labor.
- 10 -
<PAGE>
NYNEX EXECUTIVE SEVERANCE PAY PLAN
Attachment A
SEPARATION AGREEMENT AND RELEASE
In consideration of the fact that I, (the
employee), have voluntarily and of my own free
will, elected to resign and accept a payment
("Severance Payment") in the amount of
, and that NYNEX Corporation, or its subsidiaries and
affiliates (hereinafter "NYNEX Corporation" or "the
Company") has agreed to pay me the above amount, I
acknowledge and agree to the following:
1. I understand that as of my
employment with (the
Company) will cease.
2. I understand that the Severance Payment is being
paid as consideration for my signing this
Separation Agreement and Release and that
these are benefits to which I would not
otherwise have been entitled had I not
signed this Separation Agreement and Release.
3. I also understand that, pursuant to the Older
Workers Benefit Protection Act of 1990, I
have the right to consult with an attorney
before signing this Separation Agreement and
Release, I have 21 days to consider the Release
before signing it, and I may revoke the Release
within 7 calendar days after signing it.
4. I realize that there are various State and Federal
laws that govern my employment relationship with
the Company and/or prohibit employment
discrimination on the basis of age,
color, race, gender, sexual
preference/orientation, marital
status, national origin, mental or physical
disability, religious affiliation or
veteran status and that these laws are
enforced through the courts and agencies such
as the Equal Employment Opportunity Commission,
Department of Labor and State Human Rights
Agencies. Such laws include, but are not
limited to, Title VII of the Civil Rights Act
of 1964, as amended, the Age Discrimination in
Employment Act of 1967, as amended, the
Employee Retirement Income Security Act of
1974, as amended, and the Americans with
Disabilities Act of 1990. In
consideration of the Severance Payment
provided for in this Agreement, I intend to give
up any rights I may have under these or any other
laws or agreements with respect to my employment
and termination of employment at the Company and
acknowledge that the Company (including NYNEX
Corporation, its subsidiaries and affiliates)
has not (a) discriminated against me, (b) breached
any express or implied contract with me, or (c)
otherwise acted unlawfully toward me.
<PAGE>
NYNEX EXECUTIVE SEVERANCE PAY PLAN
5. Subject to paragraph 6 herein, on behalf of myself,
my heirs, executors, administrators, successors
and assigns, I release and discharge NYNEX
Corporation, its successors, assigns,
subsidiaries, affiliates, directors,
officers, representatives, agents and
employees and the fiduciaries of any
employee benefit plan maintained by any of
the foregoing ("Releasees") from any and all
claims, including claims for attorneys' and
experts' fees and costs, charges, actions and
causes of action with respect to, or arising
out of, my employment or termination of
employment with the Company. This
includes, but is not limited to, claims
arising under contract, federal, state, or
local laws prohibiting age, color, race,
gender, sexual preference/orientation,
marital status, national origin, mental or
physical disability, religious affiliation or
veteran status or any other forms of
discrimination or claims growing out of
the Company's termination of its employees. With
respect to any charges that have been or may be
filed concerning events or actions relating to
my employment or the termination of my employment
and which occurred on or before the date of this
agreement, I additionally waive and release any
right I may have to recover in any lawsuit or
proceeding brought by me, an administrative
agency, or any other person on my behalf or
which includes me in any class. If I breach
this paragraph, I understand that I will be
liable for all expenses, including costs and
reasonable attorney's fees, incurred by any
Releasee in defending the lawsuit or charge
of discrimination, regardless of the outcome. I
agree to pay such expenses within thirty (30)
calendar days of written demand. This
paragraph is not intended to limit me from
instituting legal action for the sole purpose of
enforcing this Agreement.
6. I understand that this Separation Agreement and
Release in no way affects any rights I may
have for benefits under the NYNEX Corporation
Management Pension Plan or any other applicable
NYNEX Corporation benefit plan.
- 2 -
<PAGE>
NYNEX EXECUTIVE SEVERANCE PAY PLAN
7. In accordance with my existing and continuing
obligations to the Company, I have returned
or will immediately return to the Company, on or
before my termination date, all Company property,
including, but not limited to, files, records,
computer access codes, computer programs,
instruction manuals, business plans, and other
property which I prepared or helped to prepare or
which came into my possession in connection with
my employment with the Company.
8. I affirm my obligation to keep all proprietary
Company information confidential and not to
disclose it to any third party in the future. I
understand that the term "proprietary Company
information" includes, but is not limited to,
technical, marketing, business, financial or other
information which constitutes trade secret
information or information not available
to competitors of the Company, the use or
disclosure of which might reasonably be
construed to be contrary to the interest of the
Company or its subsidiaries or affiliates. I
understand that this paragraph does not
prevent me from talking with any regulatory
or law enforcement agencies.
9. The construction, interpretation and performance of
this Agreement shall be governed by the laws of
[the state in which I am working on the date of
my separation from the Company's payroll].
10. In the event that any one or more of the
provisions contained in this Agreement
shall for any reason be held to be
unenforceable in any respect under
the law of any state or of the United States
of America, such unenforceability shall not
affect any other provisions of this
Separation Agreement and Release,
but, with respect only to that
jurisdiction holding the provision
to be unenforceable, this Separation Agreement
and Release shall then be construed as if such
unenforceable provision or provisions had
never been contained herein.
11. This Separation Agreement and Release contains
the entire agreement between the Company and
me and fully supersedes any and all prior
agreements or understandings pertaining to
the subject matter hereof. I represent and
acknowledge that in executing this
Separation Agreement and Release I
have not relied upon any representation or
statement not set forth herein made by any of
the Releasees or by any of the Releasee's
agents, representatives or attorneys with
regard to the subject matter of this
Separation Agreement and Release.
- 3 -
<PAGE>
NYNEX EXECUTIVE SEVERANCE PAY PLAN
BY SIGNING THIS SEPARATION AGREEMENT AND RELEASE, I
STATE THAT: I HAVE READ IT; I UNDERSTAND IT AND
KNOW THAT I AM GIVING UP IMPORTANT RIGHTS; I
AGREE WITH EVERYTHING IN IT; I AM AWARE OF MY
RIGHT TO CONSULT AN ATTORNEY BEFORE SIGNING IT;
AND I HAVE SIGNED IT KNOWINGLY AND VOLUNTARILY.
Date:
Employee Signature
Employee Name Printed
- 4 -
<PAGE>
NYNEX EXECUTIVE SEVERANCE PAY PLAN
Attachment B
(for use until January 1, 1996)
SEPARATION AGREEMENT AND RELEASE
In consideration of the fact that I, (the
employee), have voluntarily and of my own free
will, elected to accept ("Severance
Payment"), and that NYNEX Corporation, or its
subsidiaries and affiliates (hereinafter "NYNEX
Corporation" or "the Company") has agreed to pay me
the above amounts, I acknowledge and agree to the
following:
1. I understand that as of ,
my employment with (the
Company) will cease.
2. I have been advised by the Company that I am
being separated from the payroll pursuant
to the terms of [the NYNEX Corporation Force
Management Plan/a force reduction].
3. I understand that the Severance Payment is
being paid as consideration for my
signing this Separation Agreement and
Release and that these are benefits to which
I would not otherwise have been entitled had I
not signed this Separation Agreement and
Release.
4. I also understand that, pursuant to the Older
Workers Benefit Protection Act of 1990, I
have the right to consult with an attorney
before signing this Separation Agreement and
Release, I have 45 days to consider the
Release before signing it, and I may
revoke the Release within 7 calendar days
after signing it.
5. I realize that there are various State and
Federal laws that govern my employment
relationship with the Company and/or
prohibit among other things employment
discrimination on the basis of age, color,
race, gender, sexual
preference/orientation,
marital status, national origin, mental or
physical disability, religious affiliation
or veteran status, and that these laws are
enforced through the courts and agencies
such as the Equal Employment Opportunity
Commission, Department of Labor and State
Human Rights Agencies. Such laws include,
but are not limited to, Title VII of the
Civil Rights Act of 1964, as amended, the
Age Discrimination in Employment Act of
1967, as amended, the Employee Retirement
Income Security Act of 1974, as
<PAGE>
NYNEX EXECUTIVE SEVERANCE PAY PLAN
amended, and the Americans with Disabilities
Act of 1990. In consideration of the
Severance Payment provided for in this
Agreement, I intend to give up any rights I
may have under these or any other laws or
agreements with respect to my employment
and termination of employment at the Company
and acknowledge that the Company (including
NYNEX Corporation, its subsidiaries and
affiliates) has not (a) discriminated
against me, (b) breached any express or
implied contract with me, or (c) otherwise
acted unlawfully toward me.
6. Subject to paragraph 7 herein, on behalf of
myself, my heirs, executors,
administrators, successors and
assigns, I release and discharge NYNEX
Corporation, its successors, assigns,
subsidiaries, affiliates, directors,
officers, representatives, agents and
employees and the fiduciaries of any
employee benefit plan maintained by
any of the foregoing ("Releasees") from any
and all claims, including claims for
attorneys' and experts' fees and
costs, charges, actions and causes of
action with respect to, or arising out
of, my employment or termination of
employment with the Company. This
includes, but is not limited to, claims
arising under contract, federal, state, or
local laws prohibiting age, color, race,
gender, sexual preference/orientation,
marital status, national origin, mental or
physical disability, religious affiliation or
veteran status or any other forms of
discrimination or claims growing out
of the Company's termination of its employees.
With respect to any charges that have been or
may be filed concerning events or actions
relating to my employment or the
termination of my employment, and
which occurred on or before the date of
this Agreement, I additionally waive and
release any right I may have to recover in
any lawsuit or proceeding brought by me, an
administrative agency, or any other person
on my behalf or which includes me in any
class. If I breach this paragraph, I
understand that I will be liable for all
expenses, including costs and reasonable
attorney's fees, incurred by any Releasee
in defending the lawsuit or charge of
discrimination, regardless of the
outcome. I agree to pay such expenses
within thirty (30) calendar days of
written demand. This paragraph is not
intended to limit me from instituting legal
action for the sole purpose of enforcing
this Agreement.
7. I understand that this Separation Agreement and
Release in no way affects any rights I may
have for benefits under the NYNEX
Corporation Management Pension Plan
or any other applicable NYNEX Corporation
benefit plan.
- 2 -
<PAGE>
NYNEX EXECUTIVE SEVERANCE PAY PLAN
8. In accordance with my existing and continuing
obligations to the Company, I have returned
or will immediately return to the Company, on
or before my termination date, all Company
property, including, but not limited to,
files, records, computer access codes,
computer programs, instruction manuals,
business plans, and other property which I
prepared or helped to prepare or which came
into my possession in connection with my
employment with the Company.
9. I affirm my obligation to keep all proprietary
Company information confidential and not to
disclose it to any third party in the
future. I understand that the term
"proprietary Company information"
includes, but is not limited to,
technical, marketing, business, financial
or other information which constitutes trade
secret information or information not
available to competitors of the
Company, the use or disclosure of
which might reasonably be construed to be
contrary to the interest of the Company or its
subsidiaries or affiliates. I understand that
this paragraph does not prevent me from
talking with any regulatory or law
enforcement agencies.
10. The construction, interpretation and
performance of this Agreement shall
be governed by the laws of [the state in which
I am working on the date of my separation from
the Company's payroll].
11. In the event that any one or more of the
provisions contained in this Agreement
shall for any reason be held to be
unenforceable in any respect under
the law of any state or of the United States
of America, such unenforceability shall not
affect any other provisions of this
Separation Agreement and Release,
but, with respect only to that
jurisdiction holding the provision
to be unenforceable, this Separation Agreement
and Release shall then be construed as if such
unenforceable provision or provisions had
never been contained herein.
12. This Separation Agreement and Release contains
the entire agreement between the Company and
me and fully supersedes any and all prior
agreements or understandings pertaining to
the subject matter hereof. I represent and
acknowledge that in executing this
Separation Agreement and Release, I
have not relied upon any representation or
statement not set forth herein made by any of
the Releasees or by any of the Releasee's
agents, representatives, or attorneys
with regard to the subject matter of this
Separation Agreement and Release.
- 3 -
<PAGE>
NYNEX EXECUTIVE SEVERANCE PAY PLAN
BY SIGNING THIS SEPARATION AGREEMENT AND RELEASE, I
STATE THAT:I HAVE READ IT; I UNDERSTAND IT AND
KNOW THAT I AM GIVING UP IMPORTANT RIGHTS; I
AGREE WITH EVERYTHING IN IT; I AM AWARE OF MY
RIGHT TO CONSULT AN ATTORNEY BEFORE SIGNING IT;
AND I HAVE SIGNED IT KNOWINGLY AND VOLUNTARILY.
Date:
Employee Signature
Employee Name Printed
- 4 -
<PAGE>
NYNEX EXECUTIVE SEVERANCE PAY PLAN
Attachment "C"
The information on this page is being furnished in
order to comply with the Older Workers Benefit
Protection Act of 1990. This information does
not in any way affect the benefits that you will
receive under this Plan.
Retained/or Not Participating in the Plan
(Job title and age)
Eligible for Voluntary Separation
(Job title and age)
