<PAGE>
REGISTRATION NO. 33-55289
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
AMENDMENT NO. 1 ON FORM S-3
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
U S WEST, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COLORADO 84-0926774
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
U S WEST, INC.
7800 EAST ORCHARD ROAD
ENGLEWOOD, COLORADO 80111
(303) 793-6500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
STEPHEN E. BRILZ, ESQ.
U S WEST, INC.
7800 EAST ORCHARD ROAD
ENGLEWOOD, COLORADO 80111
(303) 793-6500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
DENNIS J. BLOCK, ESQ.
WEIL, GOTSHAL & MANGES
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
(212) 310-8000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE
PUBLIC: From time to time after the effective date of this Registration
Statement.
If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment plans,
please check the following box. / /
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) OFFERING PRICE PER UNIT(2) AGGREGATE OFFERING PRICE(2) REGISTRATION FEE(3)
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<S> <C> <C> <C> <C>
Common Stock,
without par value(4) 12,248,748 $39.625 $485,356,641 $167,364
- ---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The number of shares of common stock, without par value, of the
Registrant ("U S WEST Common Stock") to be registered has been
estimated based on an assumed aggregate merger consideration of
$485,361,000 and the market value of the U S WEST Common Stock
($39.625 per share, which was the average of the high and low sale
prices of a share of U S WEST Common Stock on the New York Stock
Exchange (the "NYSE") on September 16, 1994).
(2) Estimated solely for purposes of determining the registration fee,
based on the average of the high and low prices of a share of U S
WEST Common Stock on the NYSE on September 15, 1994.
(3) The Registrant has previously paid $9,212 of this amount in
connection with its filing of the Registration Statement on Form
S-4 on August 30, 1994.
(4) Includes Preferred Stock Purchase Rights which, prior to the
occurrence of certain events, will not be exercisable or evidenced
separately from the U S WEST Common Stock.
</TABLE>
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 21, 1994
PROSPECTUS [LOGO]
12,248,748 SHARES OF
U S WEST, INC.
COMMON STOCK
This Prospectus relates to the offer and resale of up to
12,248,748 shares (the "Shares") of common stock, without par value, of
U S WEST, Inc. ("U S WEST"). The Shares will be issued initially by U S
WEST on or about ________, 1994 to Peachtree Cable Holdings, Ltd.
("Peachtree") pursuant to that certain Agreement and Plan of Merger,
dated as of July 15, 1994, among U S WEST, Multimedia Cable, Inc.,
Wometco Cable Corp. ("Wometco"), Peachtree and Peachtree Cable
Associates, Ltd. (the "Merger Agreement").
The Shares may be offered by Peachtree (the "Selling Stockholder")
or by its pledgees, donees, distributees, transferees or other
successors in interest pursuant to this Prospectus from time to time in
transactions on the New York Stock Exchange or other exchanges to which
shares of the common stock of U S WEST have been or may be admitted for
trading privileges, or in the over-the-counter market, at market prices
obtainable at the time of sale, or otherwise in privately-negotiated
transactions at prices determined by negotiation at the time of such
sales. See "Selling Stockholder" and "Plan of Distribution."
None of the proceeds from the sale of the Shares by the Selling
Stockholder will be received by U S WEST. U S WEST has agreed to bear
all expenses with respect to the registration of the Shares being
offered for resale hereby, other than underwriting and brokerage
discounts and commissions and transfer taxes, if any, incurred in
connection with any resale of the Shares, which will be paid by the
Selling Stockholder. See "Selling Stockholder."
U S WEST's common stock is listed on the New York Stock Exchange,
Inc. (the "NYSE") and the Pacific Stock Exchange under the symbol "USW".
Application will be made to have the Shares authorized for listing on
the NYSE. On September 16, 1994, the closing price on the New York
Stock Exchange Composite Transactions Tape of U S WEST's common stock
was $39 3/8.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ____________, 1994.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAW OF ANY SUCH STATE.
<PAGE>
No person is authorized to give any information or to make any
representation with respect to the matters described in this Prospectus
other than those contained or incorporated by reference herein or any
accompanying Prospectus Supplement and, if given or made, such
information or representation must not be relied upon as having been
authorized by U S WEST. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to make
such offer or solicitation in such jurisdiction. Neither the delivery
of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in
the affairs of U S WEST since the date hereof.
-------------------------------
AVAILABLE INFORMATION
U S WEST is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and,
in accordance therewith, files reports, proxy statements, and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements, and other information
concerning U S WEST can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, and at the Commission's Regional Offices
at Seven World Trade Center, 13th Floor, New York, New York 10048, and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60601. Copies of such material can be obtained from
the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. Such
reports, proxy statements and other information concerning U S WEST may
also be inspected at the offices of the NYSE, 20 Broad Street, New York,
New York 10005 and the Pacific Stock Exchange, 301 Pine Street, San
Francisco, California 94104, the securities exchanges on which shares of
U S WEST's common stock are listed.
U S WEST has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments and exhibits, referred to
as the "Registration Statement") under the Securities Act. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed by U S WEST with the
Commission (File No. 1-8611) are incorporated herein by reference: (i)
Annual Report on Form 10-K for the year ended December 31, 1993,
(ii) Quarterly Report on Form 10-Q for the quarter ended March 31, 1994,
(iii) Quarterly Report on Form 10-Q for the quarter ended June 30, 1994,
(iv) Current Reports on Form 8-K dated January 21, 1994, February 24,
1994, April 1, 1994, April 18, 1994, June 24, 1994, July 15, 1994, July
18, 1994 and July 25, 1994, (v) the description of the Common Stock of U
S WEST contained in Item 11 of U S WEST's Registration Statement on Form
10, filed with the Commission on November 16, 1983, as amended, and (vi)
the description of the Preferred Stock purchase rights as set forth in
Item 1 of U S WEST's Registration Statement on Form 8-A, filed with the
Commission on April 18, 1989.
All documents filed by U S WEST pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the consummation of the Merger shall be deemed
to be incorporated by reference into this Prospectus and to be a part
hereof from the date any such document is filed.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a
statement contained herein (or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein)
modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
U S WEST WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A
PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A
COPY OF ANY OR ALL OF THE DOCUMENTS WHICH ARE INCORPORATED BY REFERENCE
HEREIN, OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS
SHOULD BE DIRECTED TO THE TREASURER, U S WEST, INC., 7800 EAST ORCHARD
ROAD, ENGLEWOOD, COLORADO 80111 (TELEPHONE NUMBER (303) 793-6500).
----------------------------------
3
<PAGE>
THE COMPANY
U S WEST is a diversified global communications company engaged in
the telecommunications, directory publishing, marketing and
entertainment services businesses. Telecommunications services are
provided by U S WEST's principal subsidiary to more than 25 million
residential and business customers in the states of Arizona, Colorado,
Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota,
Oregon, South Dakota, Utah, Washington and Wyoming (collectively, the
"U S WEST Region"). Directory publishing, marketing and entertainment
services as well as cellular mobile communications services are provided
by other U S WEST subsidiaries to customers both inside and outside the
U S WEST Region. U S WEST was incorporated in 1983 under the laws of
the State of Colorado and has its principal executive offices at 7800
Orchard Road, Englewood, Colorado 80111 (telephone number (303) 793-
6500).
SELLING STOCKHOLDER
The 12,248,748 Shares to which this Prospectus relates will be
issued by U S WEST to the Selling Stockholder in connection with the
consummation of the merger of Multimedia Cable, Inc. with and into
Wometco (the "Merger"). U S WEST has agreed, pursuant to the terms of
the Merger Agreement and as a condition to the consummation of the
Merger, to register the Shares for resale by the Selling Stockholder.
Assuming an aggregate merger consideration of $485,361,000 and a
market value of U S WEST's common stock of $39.625 per share (the
average of the high and low sale prices of a share of U S WEST's common
stock on the NYSE on September 16, 1994), upon the consummation of the
Merger the Selling Stockholder will own 12,248,748 shares of U S WEST's
common stock. After the completion of this offering, the Selling
Stockholder will not own any shares of U S WEST's common stock, assuming
all of the Shares offered pursuant to this Prospectus are sold. The
Selling Stockholder does not hold, and during the past three years has
not held, any position, office or other material relationship with U S
WEST or any of its predecessors or affiliates.
U S WEST has agreed to bear all expenses with respect to the
registration of the Shares being offered for resale hereby, other than
underwriting and brokerage discounts and commissions and transfer taxes,
if any, incurred in connection with any resale of the Shares, which will
be paid by the Selling Stockholder.
PLAN OF DISTRIBUTION
U S WEST has been advised that the Shares may be sold by the
Selling Stockholder or by its pledgees, donees, distributees,
transferees or other successors in interest pursuant to this Prospectus
from time to time in transactions on the NYSE or other exchanges to
which shares of the common stock of U S WEST have been or may be
admitted for trading privileges, or in the over-the-counter market, at
market prices obtainable at the time of sale, or otherwise in privately-
negotiated transactions at prices determined by negotiation at the time
of such sales. Such transactions may be effected by selling shares
directly to purchasers or to or through broker-dealers that may act as
agents or principals. Such broker-dealers may receive compensation in
the form of underwriting discounts, concessions or commissions from the
Selling Stockholder, or its successor or successors in interest, and/or
the purchasers of shares for whom broker-dealers may act as agent or to
whom they may sell as principal or both (which compensation as to a
particular broker-dealer may be less than or in excess of customary
commissions). U S WEST will not receive any of the proceeds from any
sale of the Shares. This Prospectus may only be used in connection with
sales of the Shares so long as the Shares are "restricted securities"
within the meaning of Rule 144 of the Securities Act.
The Selling Stockholder, its successor or successors in interest,
and any broker-dealers who act in connection with the sale of Shares
hereunder may be deemed to be "underwriters" as that term is defined in
the Securities Act of 1933, as amended (the "Securities Act"), and any
commissions received by them and profit on
4
<PAGE>
any resale of the Shares as principal might be deemed to be underwriting
discounts and commissions under the Securities Act.
EXPERTS
The consolidated financial statements and the consolidated
financial statement schedules included in U S WEST's Annual Report on
Form 10-K for the year ended December 31, 1993 are incorporated herein
by reference in reliance on the reports of Coopers & Lybrand,
independent certified public accountants, given upon the authority of
that firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the Shares and certain legal matters relating
thereto will be passed upon for U S WEST by Stephen E. Brilz, Senior
Attorney of U S WEST.
5
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
The table below sets forth the expenses expected to be incurred
and borne by U S WEST in connection with the registration of the Shares
offered hereby.
<TABLE>
<S> <C>
Securities and Exchange Commission
registration fee. . . . . . . . . . . . . . . . . . . $167,364**
Accounting fees and expenses. . . . . . . . . . . . . . 15,000
Legal fees and expenses . . . . . . . . . . . . . . . . 50,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 2,000
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . $234,364
____________________
<FN>
*Except for the SEC registration fee, all expenses are estimated.
**The Registrant has previously paid $9,212 of this amount in
connection with its filing of the Registration Statement on Form S-4
on August 30, 1994.
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-laws of U S WEST provide for the indemnification of
directors and officers to the extent permissible under applicable law.
Sections 7-109-101 through 7-109-110 of the Colorado Business
Corporation Act (the "CBCA") specify the circumstances under which a
corporation may indemnify its directors, officers, employees,
fiduciaries or agents. For acts done in a person's "official capacity,"
the CBCA generally requires that an act be done in good faith and in a
manner reasonably believed to be in the best interests of the
corporation. In all other civil cases, the person must have acted in
good faith and in a way that was not opposed to the corporation's best
interests. In criminal actions or proceedings, the CBCA imposes an
additional requirement that the actor had no reasonable cause to believe
his conduct was unlawful. In any proceeding by or in the right of the
corporation, or charging a person with the improper receipt of a
personal benefit, no indemnification, can be made, except that in a
proceeding by or in the right of the corporation, indemnification for
reasonable expenses incurred in connection with such proceeding is
permitted. Indemnification is mandatory when any director or officer is
wholly successful, on the merits or otherwise, in defending any civil or
criminal proceeding.
The directors and officers of U S WEST are covered by insurance
policies indemnifying against certain liabilities, including certain
liabilities arising under the Securities Act, which might be incurred by
them in such capacities and against which they cannot be indemnified by
U S WEST.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
Exhibits identified in parentheses below are on file with the SEC
and are incorporated herein by reference to such previous filings. All
other exhibits are provided as part of this electronic transmission.
II-1
<PAGE>
**2 - Agreement and Plan of Merger, dated as of July 15, 1994,
among U S WEST, Inc., Multimedia Cable, Inc., Wometco Cable
Corp., Peachtree Cable Holdings, Ltd. and Peachtree Cable
Associates, Ltd.
(3-A) - Articles of Incorporation of U S WEST, Inc. dated September
23, 1983 (Exhibit 3a to Registration Statement No. 2-87861).
(3-B) - Articles of Amendment to the Articles of Incorporation of
U S WEST, Inc. dated June 6, 1988 (Exhibit 3b to Form 10-K,
date of report March 29, 1989, File No. 1-8611).
(3-C) - Articles of Amendment to the Articles of Incorporation of
U S WEST, Inc. dated May 3, 1991 (Exhibit 3c to Form SE
filed on March 5, 1992, File No. 1-8611).
(3-D) - Bylaws of U S WEST, Inc. as amended February 5, 1993
(Exhibit 3b to Form 10-K, date of report March 19, 1993,
File No. 1-8611).
(4-A) - Rights Agreement dated as of April 7, 1989 between U S WEST,
Inc. and American Transtech Inc., as Rights Agent (Exhibit
4d to Form SE filed on April 11, 1990, File No. 1-8611).
(4-B) - Agreement for Appointment and Acceptance of Appointment as
Successor Rights Agent dated July 15, 1992 between U S WEST,
Inc. and State Street Bank and Trust Company (Exhibit 4-F
to Registration Statement No. 33-50047).
**5 - Opinion of Stephen E. Brilz regarding the legality of the
securities being registered.
(12) - Computation of Ratio of Earnings to Fixed Charges of U S
WEST, Inc. (Exhibit 12 to Form 10-Q for quarter ending June
30, 1993 File No. 1-8611).
**23-A - Consent of Coopers & Lybrand.
**23-B - Consent of Stephen E. Brilz is contained in the opinion of
counsel filed as Exhibit 5.
**24 - Powers of Attorney.
_______________
*Previously filed.
**Filed herewith.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
II-2
<PAGE>
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (ii) do not
apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
U S WEST, Inc. certifies that it has reasonable grounds to believe that
it meets all the requirements for filing on Form S-3 and has duly caused
this amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Denver,
State of Colorado, on the 21st day of September, 1994.
U S WEST, Inc.
By /s/ STEPHEN E. BRILZ
-------------------------------
Stephen E. Brilz
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
PRINCIPAL EXECUTIVE OFFICER:
RICHARD D. McCORMICK* Chairman of the Board,
President and Chief Executive
Officer
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
JAMES M. OSTERHOFF* Executive Vice President and
Chief Financial Officer
DIRECTORS:
RICHARD B. CHENEY*
REMEDIOS DIAZ-OLIVER*
GRANT A. DOVE*
MARY M. GATES*
ALLAN D. GILMOUR*
PIERSON M. GRIEVE*
ALLEN F. JACOBSON*
RICHARD D. MCCORMICK*
GLEN L. RYLAND*
JERRY O. WILLIAMS*
DANIEL YANKELOVICH*
MARILYN CARLSON NELSON*
FRANK POPOFF*
SHIRLEY M. HUFSTEDLER*
*By /s/ STEPHEN E. BRILZ
-----------------------
Stephen E. Brilz
Attorney-in-Fact
Dated: September 21, 1994
II-4
<PAGE>
EXHIBIT INDEX
SEQUENTIAL
EXHIBIT PAGE
NUMBER NUMBER
- ------- ----------
**2 Agreement and Plan of Merger, dated as of July 15, 1994,
among U S WEST, Inc., Multimedia Cable, Inc., Wometco
Cable Corp., Peachtree Cable Holdings, Ltd. and
Peachtree Cable Associates, Ltd.
(3-A) Articles of Incorporation of U S WEST, Inc. dated
September 23, 1983 (Exhibit 3a to Registration Statement
No. 2-87861).
(3-B) Articles of Amendment to the Articles of Incorporation of
U S WEST, Inc. dated June 6, 1988 (Exhibit 3b to Form 10-K,
date of report March 29, 1989, File No. 1-8611).
(3-C) Articles of Amendment to the Articles of Incorporation of
U S WEST, Inc. dated May 3, 1991 (Exhibit 3c to Form SE
filed on March 5, 1992, File No. 1-8611).
(3-D) Bylaws of U S WEST, Inc. as amended February 5, 1993
(Exhibit 3b to Form 10-K, date of report March 19, 1993,
File No. 1-8611).
(4-A) Rights Agreement dated as of April 7, 1989 between U S WEST,
Inc. and American Transtech Inc., as Rights Agent (Exhibit 4d
to Form SE filed on April 11, 1990, File No. 1-8611).
(4-B) Agreement for Appointment and Acceptance of Appointment as
Successor Rights Agent dated July 15, 1992 between U S WEST,
Inc. and State Street Bank and Trust Company (Exhibit 4-F to
Registration Statement No. 33-50047).
**5 Opinion of Stephen E. Brilz regarding the legality of the
securities being registered.
(12) Computation of Ratio of Earnings to Fixed Charges of U S WEST,
Inc. (Exhibit 12 to Form 10-Q for quarter ending June 30, 1993
File No. 1-8611).
**23-A Consent of Coopers & Lybrand. 12
**23-B Consent of Stephen E. Brilz is contained in the opinion of
counsel filed as Exhibit 5.
**24 Powers of Attorney.
_______________
*Previously filed.
**Filed herewith.
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
U S WEST, INC.,
MULTIMEDIA CABLE, INC.,
WOMETCO CABLE CORP.,
PEACHTREE CABLE HOLDINGS, LTD.
AND
PEACHTREE CABLE ASSOCIATES, LTD.
Dated as of July 15, 1994
<PAGE>
ANNEX A
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS
ARTICLE II
THE MERGER
2.01 The Merger....................................................... 12
2.02 Effective Time................................................... 12
2.03 Closing.......................................................... 12
2.04 Conversion and Exchange of Shares................................ 13
2.05 Calculation of Merger Consideration; Adjustment of Merger
Consideration; Exchange of Certificates.......................... 14
2.06 Charter and Bylaws............................................... 17
2.07 Officers and Directors........................................... 18
2.08 Dissenting Shares................................................ 18
2.09 Stockholder Representative....................................... 18
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WOMETCO
3.01 Organization and Authority of Wometco and Wometco Subsidiaries... 18
3.02 Legal Capacity; Approvals and Consents........................... 19
3.03 Financial Statements; Undisclosed Liabilities.................... 20
3.04 Capitalization................................................... 21
3.05 Legal and Governmental Proceedings and Judgements................ 21
3.06 Finders and Brokers.............................................. 21
3.07 Real Property.................................................... 22
3.08 Easements and Rights-of-Way...................................... 22
3.09 Tangible Personal Property....................................... 22
3.10 Receivables...................................................... 23
3.11 Compliance with Law.............................................. 23
3.12 Business Contracts............................................... 23
3.13 Taxes............................................................ 24
3.14 Intangible Property.............................................. 25
3.15 Environmental Matters............................................ 25
3.16 Labor............................................................ 26
3.17 Absence of Changes or Events..................................... 27
3.18 Insurance........................................................ 28
3.19 Information Supplied............................................. 28
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3.20 Transactions with Affiliates..................................... 28
3.21 Employee Benefits................................................ 28
3.22 Cable Television Franchises...................................... 31
ARTICLE III-A
REPRESENTATIONS AND WARRANTIES OF PEACHTREE
3.01-A Organization and Authority of Peachtree...................... 34
3.02-A Legal Capacity; Approvals and Consents....................... 35
3.03-A Ownership of Stock........................................... 35
ARTICLE III-B
REPRESENTATIONS AND WARRANTIES OF ASSOCIATES
3.01-B Organization and Authority of Associates..................... 36
3.02-B Legal Capacity; Approvals and Consents....................... 36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF U S WEST AND ACQUISITION SUB
4.01 Organization and Authority; Ownership of Acquisition Sub; No Prior
Activities of Acquisition Sub; Assets of Acquisition Sub......... 37
4.02 Legal Capacity; Approvals and Consents........................... 38
4.03 Legal and Governmental Proceedings and Judgments................. 38
4.04 Finders and Brokers.............................................. 39
4.05 Capitalization................................................... 39
4.06 Compliance with Laws............................................. 39
4.07 U S WEST SEC Documents........................................... 39
4.08 U S WEST Common Stock............................................ 40
4.09 Registration Statement........................................... 40
4.10 Section 368(a)................................................... 40
ARTICLE V
COVENANTS OF THE PARTIES
5.01 Wometco's Covenants.............................................. 41
5.02 Covenants of U S WEST and Acquisition Sub........................ 45
5.03 Mutual Covenants................................................. 45
5.04 Access to Information............................................ 50
5.05 Indebtedness of Wometco.......................................... 51
5.06 Investigation with Respect to Environmental Matters.............. 51
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5.08 Effect of Cable Act.............................................. 54
5.09 Tax Matters...................................................... 55
5.10 Closing Without All Consents..................................... 60
5.11 Compliance with MFJ.............................................. 60
5.12 Wometco Indemnitor............................................... 62
5.13 Preparation of Restated March 31 Working Capital Statement....... 63
ARTICLE VI
CONDITIONS PRECEDENT
6.01 Conditions to the Obligations of U S WEST, Acquisition Sub and
Wometco to Effect the Merger..................................... 64
6.02 Conditions to the Obligations of U S WEST and Acquisition Sub.... 64
6.03 Conditions to the Obligations of Wometco and Peachtree........... 65
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
7.01 Survival......................................................... 66
7.02 U S WEST Right to Indemnification................................ 67
7.03 U S WEST Agreement to Indemnify.................................. 69
ARTICLE VIII
TERMINATION
8.01 Termination...................................................... 71
8.02 Effect of Termination............................................ 72
ARTICLE IX
MISCELLANEOUS
9.01 Expenses......................................................... 72
9.02 Legal Costs...................................................... 73
9.03 Amendments; Waivers.............................................. 73
9.04 Entire Agreement................................................. 73
9.05 Binding Effect; Assignment....................................... 73
9.06 Construction; Counterparts....................................... 73
9.07 Notices.......................................................... 73
9.08 GOVERNING LAW.................................................... 75
9.09 Further Assurances............................................... 75
9.10 Personal Liability............................................... 75
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SCHEDULES
Schedule 1.01-A Required Consents
Schedule 1.10-B 1994 Budget
Schedule 3.01 Subsidiaries
Schedule 3.02 Governmental and Third-Party Consents
Schedule 3.03 Financial Statement Matters
Schedule 3.04 Rights to Acquire Capital Stock
Schedule 3.05 Legal Matters
Schedule 3.06 Finders' Fees
Schedule 3.07 Real Property
Schedule 3.08 Exceptions to Necessary Easements
Schedule 3.09 Tangible Personal Property
Schedule 3.11 Compliance with Law
Schedule 3.12 Business Contracts
Schedule 3.13 Tax Matters
Schedule 3.14 Intangible Property
Schedule 3.15 Environmental Matters
Schedule 3.16 Labor Matters
Schedule 3.17 Changes or Events Since Balance Sheet Date
Schedule 3.18 Insurance Policies
Schedule 3.20 Affiliate Transactions
Schedule 3.21 Employee Benefit Plans
Schedule 3.22(a) Franchise Matters
Schedule 3.22(b) Rate and Related Information
Schedule 3.22(c) Rights to Acquire Interest in CATV Systems;
Retransmission Agreements
Schedule 3.22(d) Rights to Operate a CATV System
Schedule 3.22(e) Non-Standard Rates
Schedule 3.22(g) Compliance with FCC Rules and Regulations
Schedule 3.22(h) Leakage Matters
Schedule 3.22(i) Copyright Matters
Schedule 3.22(j) Carriage Matters
Schedule 3.22(l) Benchmark I Rates
Schedule 3.22(n) Rate Regulation
Schedule 4.04 U S WEST Finder's Fees
Schedule 5.01 Permitted Transactions
Schedule 5.13 March 31 Working Capital Statement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of this 15th
day of July, 1994, by and among U S WEST, Inc., a Colorado corporation ("U S
WEST"), MULTIMEDIA CABLE, INC., a Delaware corporation ("Acquisition Sub"),
WOMETCO CABLE CORP., a Delaware corporation ("Wometco"), PEACHTREE CABLE
HOLDINGS, LTD., a Texas limited partnership ("Peachtree"), and PEACHTREE CABLE
ASSOCIATES, LTD., a Texas limited partnership ("Associates").
W I T N E S S E T H:
WHEREAS, U S WEST owns all of the issued and outstanding shares of capital
stock of Acquisition Sub; and
WHEREAS, Peachtree owns all of the issued and outstanding shares of the
voting common stock of Wometco; and
WHEREAS, Peachtree Investors Limited Partnership, a Delaware limited
partnership ("Investors"), is the sole general partner of Peachtree; and
WHEREAS, Associates, is the sole general partner of Investors; and
WHEREAS, Group Management, Inc., a Texas corporation ("Group"), is the
manager and a general partner of Associates;
and
WHEREAS, the respective Boards of Directors of U S WEST, Acquisition Sub,
Wometco and Group deem it advisable and in the best interests of such
corporations, Peachtree, Associates and Investors and their respective
stockholders and partners that Acquisition Sub merge with and into Wometco, with
Wometco to continue as the surviving corporation (the "Surviving Corporation")
and a wholly-owned Subsidiary of U S WEST, upon the terms and subject to the
conditions set forth herein; and
WHEREAS, for federal income tax purposes, it is intended that such merger
will qualify as a tax-free reorganization within the meaning of Section
368(a)(2)(E) of the Code;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, representations, warranties, conditions and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
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ARTICLE I
DEFINITIONS
Unless otherwise stated in this Agreement, the following terms used herein
shall have the following meanings (terms defined in the singular to have the
same meanings when used in the plural and VICE VERSA):
ACQUISITION SUB: As defined in the preamble to this Agreement.
ACQUISITION SUB STOCK: The Common Stock, par value $.01 per share, of
Acquisition Sub.
AERONAUTICAL FREQUENCIES: Frequencies in the band 108-137 and 225-400
MHz, when carried at peak power levels of 10(-4) watts or greater.
AFFILIATES: With respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such other
Person.
AGREEMENT: This Agreement and the Disclosure Schedule and Exhibits
attached hereto.
APPLICABLE LAWS: As defined in Section 3.11.
ARBITRATOR: As defined in Section 2.05(a)(iii)(D).
ASSOCIATES: As defined in the preambles to this Agreement.
ATLANTA CABLE AGREEMENT: As defined in Section 6.02(d).
ATLANTA CABLE GROUP: Atlanta Cable Partners, L.P., a Georgia limited
partnership and Georgia Cable Partners, a Georgia general partnership.
AVERAGE CLOSING PRICE: As defined in Section 2.04(a)(iv).
BALANCE SHEET: As defined in Section 3.03(a).
BASIC CABLE SERVICE: The level of CATV service defined in 47 C.F.R.
Section 76.901(a) that includes, without limitation, signals of domestic
television broadcast stations (except for satellite-delivered "superstations"),
public, educational and governmental access channels required by Franchise.
BENCHMARK I RATES: As defined in Section 3.22(l).
BENCHMARK II RATES: As defined in Section 3.22(l).
BUSINESS CONTRACT: As defined in Section 3.12.
BUSINESS DAY: Any day of the year on which national banking
institutions in New York are open to the public for conducting all regular
business and are not required or authorized to close.
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CABLE ACT: As defined in Section 5.08.
CABLE PROGRAMMING SERVICE: The level of CATV service defined in 47
C.F.R. Section 76.901(b) including video programming other than Basic Cable
or Premium Service.
CATV: Cable television.
CATV BUSINESS: The cable television business owned or operated by the
Wometco Group, including, without limitation (i) the transmission, distribution
and local origination of audio and video signals over the Wometco Group's CATV
Systems, (ii) the operation of competitive access provider Local Interconnect,
L.P., a Texas limited partnership, (iii) the operation of a cable advertising
business through Cable Ad Associates, L.P., a Texas limited partnership
("CAMA"), and The Classified Channel, Inc., and (iv) the non-paying limited
partner equity position in SportSouth Network, Ltd. referred to in that certain
letter dated August 3, 1990 between SportSouth Network, Ltd. and Wometco (the
"SportSouth Interest").
CATV SYSTEM: A complete CATV reception and distribution system operated
by the Wometco Group as part of the CATV Business consisting of one or more
head-ends, trunk cable, subscriber drops and associated electronic equipment,
which is, or is capable of being, operated as an independent system without
interconnections to other systems.
CERTIFICATE: As defined in Section 2.05(b).
CERTIFICATE OF MERGER: The certificate of merger to be executed by
Wometco and Acquisition Sub and to be delivered for filing and recording with
the Secretary of State and the appropriate County Recorder of the State of
Delaware in accordance with Sections 103 and 251 of the DGCL to effect the
Merger.
CLI: As defined in Section 3.22(h).
CLOSING: As defined in Section 2.03.
CLOSING DATE: The date fixed for the Closing in accordance with Section
2.03.
CLOSING PRICE: As defined in Section 2.04(a)(iv).
CLOSING STATEMENT: As defined in Section 2.05(a)(i).
COBRA: As defined in Section 3.21(m).
CODE: The Internal Revenue Code of 1986, as amended.
COMMUNICATIONS ACT: The Communications Act of 1934, as amended, 47
U.S.C. Section 151, et seq.
CONTROL PARTIES: As defined in Section 5.09(e)(1).
COPYRIGHT ACT: As defined in Section 3.22(i).
CURRENT RATES: As defined in Section 3.22(b).
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CURRENT WOMETCO RETURNS: As defined in Section 5.09(d).
DEFERRAL NOTICE: As defined in Section 5.03(a)(ix).
DETERMINATION DATE: As defined in Section 2.04(a)(iii)(E).
DGCL: The General Corporation Law of the State of
Delaware, as it may be amended from time to time.
DISAGREEMENT NOTICE: As defined in Section 5.09(d).
DISCLOSURE SCHEDULE: Collectively, the Schedules to this Agreement
provided by Wometco to U S WEST or Acquisition Sub, and provided by U S WEST and
Acquisition Sub to Wometco and Peachtree.
DISSENTING SHARES: As defined in Section 2.08.
DOJ: The United States Department of Justice.
EASEMENTS: As defined in Section 3.08.
EFFECTIVE TIME: As defined in Section 2.02.
EMPLOYEE BENEFIT PLAN: As defined in Section 3.21(a).
ENVIRONMENTAL REQUIREMENTS: As defined in Section 3.15.
EQUITY APPRECIATION RIGHTS PLANS: As defined in Section 3.21(b).
ERISA: Employee Retirement Income Security Act of 1974, as amended.
ERISA AFFILIATE: As defined in Section 3.21(a).
EXCHANGE ACT: As defined in Section 3.20.
FCC: The Federal Communications Commission or any successor agency
thereto performing similar functions to those performed by the Federal
Communications Commission on the date hereof.
FCC COMMUNITY UNITS: A CATV System, or portion of a CATV System, that
operates or will operate within a separate and distinct community or municipal
entity (including unincorporated communities within unincorporated areas and
including single, discrete unincorporated areas).
FCC LICENSES: All licenses, permits and other authorizations relating
to the operation of the CATV Business granted by the FCC pursuant to FCC Rules
and Regulations.
FCC RULES AND REGULATIONS: The rules and regulations of the FCC.
FINAL STATEMENT: As defined in Section 2.05(a)(iii)(A).
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FINANCIAL STATEMENTS. As defined in Section 3.03(a).
FTC: The Federal Trade Commission.
FRANCHISES: As defined in Section 3.22(a).
FRANCHISING AUTHORITY: A Governmental Authority empowered by federal,
state or local law to issue the Franchises.
GOVERNMENTAL AUTHORITY: The Federal government, any state, county,
municipal, local or foreign government and any governmental agency, bureau,
commission, authority or body.
GOVERNMENTAL CONSENTS: As defined in Section 3.02(c).
GROUP: As defined in the preamble to this Agreement.
HSR ACT AND RULES: The Hart-Scott-Rodino Antitrust Improvements Act of
1976, and the rules and regulations promulgated thereunder, as from time to time
in effect prior to the Closing.
HSR REPORT: The Notification and Report Form for certain mergers and
acquisitions mandated by the HSR Act and Rules.
INDEBTEDNESS: With respect to any Person, any indebtedness, secured or
unsecured, (i) in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), including accrued or accredited interest thereon and prepayment
penalties and rate breakage fees incurred with respect thereto, and evidenced by
bonds, notes, debentures or similar instruments or letters of credit, to the
extent of the face value thereof (or, in the case of evidence of indebtedness
issued at a discount, the current accredited value thereof), or (ii)
representing the balance deferred and unpaid of the purchase price of property
or services and shall also include, to the extent not otherwise included, (A)
any capitalized lease obligations and (B) the face value of guaranties of items
of other Persons which would be included within this definition for such other
Persons (whether or not such items would appear upon the balance sheet of the
guarantor). No item constituting Indebtedness under any of the definitions set
forth above shall be counted twice by virtue of the fact that it constitutes
"Indebtedness" under more than one of such definitions, and no intercompany item
within the Wometco Group shall be included as "Indebtedness." In addition,
notwithstanding anything in the foregoing to the contrary, Indebtedness of a
Person shall not include (1) amounts available for borrowing by such Person
under any commitment letter or loan agreement; and (2) surety or performance
bonds or letters of credit submitted to Franchising Authorities or in connection
with pole attachment agreements in the ordinary course of business consistent
with past practices.
INTANGIBLE PROPERTY: All copyrights, patents, trademarks, service
marks, trademark and service mark registrations and applications, and trade
names used by the Wometco Group in connection with the CATV Business, and all
applications for, or licenses or other rights to use, any thereof, trade
secrets, technology, and all other material intangible property of any nature
whatsoever, which are used or held for use in the CATV Business.
INVESTORS: As defined in the preamble to this Agreement.
IRS: As defined in Section 3.21(c).
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JUDGMENT: Any judgment, writ, order, injunction, award or decree of or
by any court, judge, justice or magistrate, including any bankruptcy court or
judge, and any order of or by any Governmental Authority.
LAW: Applicable common law and any statute, ordinance, code or other
law, rule, regulation, order, requirement or procedure enacted, adopted,
promulgated or applied by any Governmental Authority or court.
LAWSUIT: As defined in Section 7.02(b)(iv)(3).
LIEN: Any security agreement, financing statement filed with an
appropriate Governmental Authority, conditional sale or other title retention
agreement, any lease, consignment or bailment given for security purposes, any
lien, mortgage, pledge, option, encumbrance, adverse interest, constructive
trust or other trust, claim, attachment, exception to or defect in title or
other ownership interest (including, without limitation, reservations, rights of
entry, possibilities of reverter, encroachments, easements, rights of way,
restrictive covenants, leases and licenses) of any kind, which (i) creates or
confers an interest in property to secure payment or performance of a liability,
obligation or claim, or which retains or reserves such an interest for such
purpose; (ii) grants to any Person the right to purchase or otherwise acquire,
or obligates any Person to sell or otherwise dispose of, or otherwise results or
may result in any Person acquiring, any property or interest therein; (iii)
restricts the transfer of, or the exercise of any rights or the enjoyment of any
benefits arising by reason of ownership of, any property; or (iv) otherwise
constitutes an interest in or claim against property whether arising pursuant to
any Law, Business Contract or Judgment.
MARCH 31 BALANCE SHEET: As defined in the definition of Restated
March 31 Working Capital Statement.
MARKETABLE SECURITIES: U S WEST Common Stock and/or other equity
security of U S WEST listed on a national securities exchange or quoted on the
National Association of Securities Dealers Automatic Quotation System and having
liquidity and market value comparable to the U S WEST Common Stock.
MATERIAL ADVERSE EFFECT: Any effect that is materially adverse to the
results of operations, properties, assets, liabilities or financial condition of
the Wometco Group, taken as a whole; provided that in no event shall a Material
Adverse Effect include or be deemed to include an effect resulting from
expiration of the term of a Franchise during the period from the date hereof
until the Closing.
MERGER: As defined in Section 2.01.
MERGER AGREEMENTS: As defined in Section 3.02(a).
MERGER CONSIDERATION: As defined in Section 2.04(a)(ii).
MERGER CONSIDERATION PER SHARE: The Merger Consideration divided by the
aggregate number of shares of Wometco Voting Stock and Wometco Non-Voting Stock
outstanding at the Effective Time, other than treasury shares.
MFJ: The decree entered August 24, 1982, in UNITED STATES V. WESTERN
ELECTRIC, Civil Action No. 82-0192 (United States District Court, District of
Columbia) as modified by the Civil Enforcement Consent Order, filed February 2,
1989 and the Enforcement Order, filed on February 14, 1991.
MULTIEMPLOYER PLAN: As defined in Section 3.21(a).
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NOTICE OF DISAGREEMENT: As defined in Section 2.05(a)(iii)(C).
NYSE: As defined in Section 2.04(a)(iv).
OBJECTION: As defined in Section 2.04(e).
ORIGINAL WORKING CAPITAL STATEMENT: As defined in the definition of
Restated March 31 Working Capital Statement.
PEACHTREE: As defined in the preamble to this Agreement.
PENSION PLANS: As defined in Section 3.21(a).
PERMITTED LIENS: Any Lien for (i) landlord's liens and liens for
property taxes not delinquent, (ii) statutory liens which do not materially
detract from the value of the properties subject to such liens or materially
impair the use thereof in the operation of the CATV Business and which are
incurred in the ordinary course of the Wometco Group's business, (iii) the Liens
listed on Schedules 3.07 or 3.09, (iv) leased interests in property owned by
others and leased interests in property leased to others, (v) restrictions set
forth in, or rights granted to Franchising Authorities as set forth in, the
Franchises, the FCC Licenses or applicable Law relating thereto; and (vi)
zoning, building or similar restrictions, easements, rights-of-way, reservations
of rights, conditions or other restrictions or encumbrances relating to or
affecting the Real Property, that do not, individually or in the aggregate,
materially interfere with the use of such Real Property in the operation of the
CATV Business as presently conducted.
PERSON: Any natural person, corporation, general or
limited partnership, limited liability company, limited liability partnership,
joint venture, estate, trust, association or unincorporated entity of any kind.
PREMIUM SERVICE: Video programming provided by a CATV system for a
separate charge per channel or per program.
PRIME RATE: The rate of interest announced by Citibank, N.A. as its
base rate, as such rate shall be in effect from time to time.
REAL PROPERTY: As defined in Section 3.07.
REGISTRATION STATEMENT: The Registration Statement(s) on Form S-4 or
such other appropriate forms to be filed by U S WEST in accordance with the
provisions of Section 5.03.
REQUIRED CONSENTS: The consents set forth on Schedule 1.01-A.
RESTATED MARCH 31 WORKING CAPITAL STATEMENT: The working capital
statement to be prepared following the date of this Agreement in accordance with
Section 5.13 hereof, which shall restate the original working capital statement
attached hereto as Schedule 5.13 ("Original Working Capital Statement"), which
has been derived from the unaudited consolidated March 31, 1994 balance sheet of
Wometco attached hereto as part of Schedule 3.03 (the "March 31 Balance Sheet"),
to accurately reflect the adjustments agreed upon pursuant to Section 5.13, in
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accordance with generally accepted accounting principles as modified in
accordance with the definitions of Working Capital Assets and Working Capital
Liabilities.
SALE NOTICE: As defined in Section 5.03(a)(viii).
SEC: As defined in Section 3.19.
SECTION 262: As defined in Section 2.08.
SECTION 5.09 MAXIMUM AMOUNT: As defined in Section 5.09(a).
SECURITIES ACT: As defined in Section 3.19.
SELLING STOCKHOLDERS: As defined in Section 5.03(a)(i).
STOCKHOLDER REPRESENTATIVE: As defined in Section 2.09.
STOCKHOLDERS: As defined in Section 2.09.
STRADDLE PERIOD: As defined in Section 5.09(d).
SUBSCRIBER: An active subscriber for Basic Cable Service either in a
single household or in a multi-unit dwelling (including a hotel unit); provided,
however, that the number of subscribers in a multi-unit dwelling that obtains
service on a "bulk-rate" basis shall be determined by dividing the bulk-rate
charge by the basic subscription rate for individual households subscribing to
the same level of service as the multi-unit dwelling (E.G., if the basic
subscription rate for individual households is $10 and a multi-unit dwelling
paid a bulk-rate fee of $100 for the same level of service, then that multi-unit
dwelling shall be considered as having 10 subscribers). For purposes of this
definition, an "active subscriber" shall mean any Person at any given time that
is paying for and receiving any level of CATV service from any CATV System who
(i) has an account that is not more than 61 days past due (except for amounts
which are past due pending the resolution of a bona fide dispute or past due
amounts of $10 or less, provided such account is otherwise current), and (ii) if
such Person has been sent a disconnect notification by any CATV System prior to
the Closing, pays all amounts past due within 30 days after the Closing and is
not disconnected. For purposes of this definition, the number of days past due
of a Subscriber account shall be determined from the last day of the period for
which the applicable billing for services for that period is made.
SUBSIDIARY: With respect to any Person means any corporation,
partnership, joint venture or other legal entity of which such Person (either
directly or through or together with any other Subsidiary of such Person), owns,
directly or indirectly, 50% or more of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the board of
directors or similar governing body of such corporation, partnership, joint
venture or other legal entity.
SURVIVING CORPORATION: As defined in the preamble to this Agreement.
SURVIVING CORPORATION STOCK: The Common Stock, par value
$1.00 per share, of the Surviving Corporation.
TANGIBLE PERSONAL PROPERTY: As defined in Section 3.09.
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TAX CLAIMS: As defined in Section 5.09(e).
TAXES: All taxes, charges, fees, imposts, levies or other assessments,
including, without limitation, all net income, gross receipts, capital, sales,
use, ad valorem, value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, together with any
interest and any penalties, fines, additions to tax or additional amounts, in
each case, imposed by any taxing authority (domestic or foreign) and shall
include any transferee liability in respect of Taxes.
TAX RETURNS: As defined in Section 3.13.
THIRD PARTY CONSENTS: As defined in Section 3.02(c).
TRADING DAY: As defined in Section 2.04(a)(iv).
U S WEST: As defined in the preamble to this Agreement.
U S WEST CLAIMS. As defined in Section 7.02(c).
U S WEST COMMON STOCK: The Common Stock, without par value, of U S WEST.
U S WEST DAMAGES: As defined in Section 7.02(a).
U S WEST GROUP: As defined in Section 5.09(a).
U S WEST INDEMNITEES: As defined in Section 7.02(a).
U S WEST SEC DOCUMENTS: As defined in Section 4.07.
VALUE PAYABLE AT CLOSING: An amount equal to:
(a) the portion of $1,215,100,000 allocated to this Agreement in
accordance with the opinion of an investment banker or bankers selected by
Wometco and Holdings (as defined in the Atlantic Cable Agreement), which
opinion shall be delivered as soon as practicable after the date hereof
and shall be reasonably acceptable to U S WEST, with the cost of such
opinion being borne by Wometco and Holdings; MINUS
(b) the aggregate Indebtedness of the Wometco Group as of the
Closing Date; MINUS
(c) the increase, if any, in the Wometco Group's Working Capital
Deficit from that to be reflected in the Restated March 31 Working Capital
Statement to the Working Capital Deficit as of the Closing Date; PLUS
(d) the decrease, if any, in the Wometco Group's Working Capital
Deficit from that to be reflected in the Restated March 31 Working Capital
Statement to the Working Capital Deficit as of the Closing Date; MINUS
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(e) the proceeds from the disposition of the SportSouth Interest,
if any, received by Wometco prior to the Closing.
WOMETCO: As defined in the preamble to this Agreement.
WOMETCO ASSETS: All assets and properties owned or leased by the
Wometco Group of every kind and description, wherever located, whether tangible
or intangible, real, personal or mixed, used in connection with the ownership or
operation of the CATV Business.
WOMETCO CLAIMS: As defined in Section 7.03(b).
WOMETCO DAMAGES: As defined in Section 7.03(a).
WOMETCO GROUP: Wometco and the Wometco Subsidiaries.
WOMETCO INDEMNITEE: As defined in Section 7.03(a).
WOMETCO INDEMNITOR: Associates or such other Person or Persons
substituted for or added in addition to, Associates, as provided for in Section
5.12 hereof.
WOMETCO NON-VOTING STOCK: The Class B Non-Voting Common Stock, par
value $1.00 per share, of Wometco.
WOMETCO PARTIES: As defined in Section 7.02(b)(vi).
WOMETCO STOCK: The Wometco Voting Stock and the Wometco Non-Voting Stock.
WOMETCO SUBSIDIARIES: Subsidiaries of Wometco.
WOMETCO VOTING STOCK: The Class A Voting Common Stock, par value $1.00
per share, of Wometco.
WORKING CAPITAL ASSETS: The sum of (i) cash on hand or in banks, cash
equivalents, prepaid pole attachment rentals, prepaid rentals and prepaid
insurance premiums (but only to the extent the Surviving Corporation retains the
related policy or to the extent that the Surviving Corporation receives a rebate
attributable to the cancellation of such policy) and other prepaid items; (ii)
Subscriber and other receivables or deposits; (iii) payments of rate refunds,
credits or penalties (other than such refunds, credits or penalties as may
result from Wometco's failure to comply with the covenants set forth in Section
5.07 and such refunds, credits or penalties for the period from May 14, 1994 to
July 14, 1994 arising from any failure or alleged failure of Wometco to give
notice of the implementation of Benchmark II Rates by June 14, 1994 ("Potential
Refund Liability")) made to Subscribers or Governmental Authorities by the
Wometco Group from the date hereof through and including the Closing Date in
connection with or resulting from the Cable Act; and (iv) the amount of all tax
refunds available to the Wometco Group with respect to (x) the Wometco Group Tax
Returns for the taxable year ending on or including the Closing Date and (y) all
other Wometco Group Tax Returns arising out of the carryback of a taxable loss
of the Wometco Group for its taxable year ending on or including the Closing
Date; with the items in clauses (i) and (ii) determined in accordance with
generally accepted accounting principles on a basis consistent with, and without
modification of the accounting principles used in the preparation of, the
Restated March 31 Working Capital Statement.
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Notwithstanding anything to the contrary contained herein, Working Capital
Assets for purposes of this definition shall not include: (1) all deferred loan
fees, and (2) receivables from any Affiliate of Wometco Group other than members
of the Atlanta Cable Group and the Wometco Group and Local Interconnect, L.P.
WORKING CAPITAL DEFICIT: The excess of Working Capital Liabilities over
Working Capital Assets.
WORKING CAPITAL LIABILITIES: The sum of (i) accounts payable, other
current liabilities and accrued expenses (which shall include, without
limitation, amounts due and payable in respect of current Taxes that have not
been paid, all accrued and unpaid transaction expenses, all out-of-pocket
expenses with respect to any Indebtedness, all severance or similar payments, if
any, required to be made solely as a result of the consummation of the
transactions contemplated hereby, all accrued amounts of bonus payments listed
on Schedules 3.21 and 5.01 and all amounts of bonus and severance payments
payable on or prior to the Closing to the extent they remain unpaid following
the Closing), and (ii) Subscriber prepayments and deposits, with the items
described in clauses (i) and (ii) to be determined in accordance with generally
accepted accounting principles on a basis consistent with, and without
modification of the accounting principles used in the preparation of, the
Restated March 31 Working Capital Statement.
Notwithstanding anything to the contrary contained herein, Working Capital
Liabilities for purposes of this definition does not include (1) Indebtedness of
the Wometco Group, including interest, rate breakage fees and prepayment
penalties with respect thereto; (2) payments due or which may become due under
any severance agreements other than those, if any, which are to be made solely
upon the occurrence of a change of control of Wometco; (3) liabilities or
obligations of the type described in Section 5.08 hereof (other than liabilities
and obligations resulting from Wometco's failure to comply with Section 5.07 and
all Potential Refund Liability); (4) liabilities or obligations arising out of a
Lawsuit (as defined in Section 7.02(b)(iv)(3)) of the type described in Section
7.02(b)(iv)(3); (5) deferred tax liabilities; (6) tax liabilities arising from
any disposition of the SportSouth Interest; or (7) payables from any Affiliate
of the Wometco Group other than members of the Atlanta Cable Group and the
Wometco Group and Local Interconnect, L.P.
Notwithstanding anything to the contrary contained herein, in no event
shall the amount of any reserve (other than reserves for trade and other
receivables) included on the Closing Statement be less than the amount of the
corresponding reserve on the Original Working Capital Statement, provided that
any payment made or accrual of liability in respect of Potential Refund
Liability shall not reduce any reserve to be reflected on the Restated March 31
Working Capital Statement or the Closing Statement. In determining the amount
of current Taxes under Working Capital Liabilities, the aggregate amount of
payments made by the Wometco Group, on or prior to the Closing, to the
participants under the Equity Appreciation Rights Plans, together with bonuses
in lieu thereof and special bonuses in addition thereto, shall be deducted in
determining the taxable income of the Wometco Group.
1994 BUDGET: The planning budget prepared with respect to the operation
of the CATV Business in 1994, in the form attached hereto as Schedule 1.01-B.
ARTICLE II
THE MERGER
2.01 THE MERGER. At the Effective Time (as defined in Section 2.02
hereof) and upon the terms and subject to the conditions set forth in this
Agreement and the DGCL, Acquisition Sub shall be merged with and into
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Wometco (the "Merger"), with Wometco to continue as the Surviving Corporation
and a wholly-owned Subsidiary of U S WEST. From and after the Effective Time,
the separate existence of Acquisition Sub shall cease and the Surviving
Corporation shall succeed to, possess and assume all rights, privileges, powers,
assets, liabilities and obligations of Acquisition Sub in accordance with the
provisions of the DGCL.
2.02 EFFECTIVE TIME. The Merger shall become effective at the time of
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware, in accordance with Section 251 of the DGCL, which Certificate of
Merger shall be so filed concurrent with the Closing. The date and time when
the Merger becomes effective are herein referred to as the "Effective Time."
2.03 CLOSING. The closing (the "Closing") of the transactions
contemplated hereby shall take place at 10:00 a.m. on a date which shall be a
Business Day specified by Wometco and reasonably acceptable to U S WEST, which
date shall be not less than five (5) Business Days nor more than ten (10)
Business Days after the satisfaction or, to the extent permissible by law,
waiver (by the party for whose benefit the closing condition is imposed) of the
conditions precedent set forth in Article VI hereof (other than the following
conditions which are to be satisfied at the Closing: 6.01(b), 6.02(a) through
(h); 6.03(a) through (d)) (the "Closing Date"); provided, however, that if on
the date otherwise scheduled for Closing hereunder the conditions set forth in
Section 6.02(d) and 6.03(d) are not satisfied or cannot be satisfied on such
date, either party may postpone the Closing to the date specified for Closing
under the Atlanta Cable Agreement.
The Closing shall take place at the offices of Weil, Gotshal & Manges at
767 Fifth Avenue, New York, New York or at such other place as shall be agreed
upon by U S WEST and Wometco.
2.04 CONVERSION AND EXCHANGE OF SHARES. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of the
Wometco Stock:
(a) CONVERSION OF SHARES OF WOMETCO STOCK.
(i) Each share of the Wometco Voting Stock and the Wometco
Non-Voting Stock outstanding on the date hereof shall be converted into the
right to receive the Merger Consideration Per Share. As of the Effective Time,
all such shares of Wometco Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such shares of Wometco Stock shall cease to
have any rights with respect thereto, except the right to receive the Merger
Consideration Per Share to be issued in consideration therefor upon surrender of
such certificate in accordance with Section 2.05, without interest, including
the cash to be paid in lieu of issuing any fractional shares of U S WEST Common
Stock pursuant to Section 2.05(e).
(ii) The "Merger Consideration" shall consist of such number
of shares of U S WEST Common Stock, or, if U S WEST requests and with the
consent of Wometco (which consent may be withheld in the sole and absolute
discretion of Wometco), shares of a Marketable Security, rounded to the nearest
hundredth or if there shall not be a nearest hundredth, to the next highest
hundredth, equal to (A) the Value Payable At Closing, divided by (B) the Average
Closing Price; in the event that Wometco agrees that the holders of Wometco
Stock shall receive shares of a Marketable Security as Merger Consideration,
each of the parties to this Agreement agree to enter into an amendment hereto
providing for the determination of the Average Closing Price and for
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other appropriate provisions with respect to the shares of the Marketable
Security to be received, with such provisions to be similar in effect to those
provided herein with respect to the U S WEST Common Stock.
(iii) If between the date of this Agreement and the Effective
Time the outstanding shares of U S WEST Common Stock shall have been changed
into a different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the number of shares of U S WEST Common Stock comprising the
Merger Consideration shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares.
(iv) For the purposes of the foregoing, (x) the "Average
Closing Price" means the average of the daily Closing Prices (as defined below)
per share of U S WEST Common Stock for the 5 consecutive Trading Days (as
defined below) immediately preceding the third Business Day prior to the Closing
Date; (y) the "Closing Price" of U S WEST Common Stock shall mean the last
reported sale price of such stock (regular way) as shown on the Composite Tape
of the New York Stock Exchange, Inc. ("NYSE"); and (z) "Trading Day" shall mean
a day on which the NYSE is open for the transaction of business.
(b) CANCELLATION OF TREASURY STOCK. All shares of the Wometco
Stock held by Wometco or by Wometco Subsidiaries as treasury shares, if any,
shall be cancelled and no payment shall be made in respect thereof.
(c) CANCELLATION OF OPTIONS, WARRANTS. All options, warrants or
other rights to acquire shares of Wometco Stock shall be cancelled and no
payment shall be made in respect thereof.
(d) CONVERSION OF ACQUISITION SUB SHARES. Each share of
Acquisition Sub Stock outstanding immediately prior to the Effective Time shall
be converted into one share of Surviving Corporation Stock.
(e) CONVERSION OF SHARES OF OBJECTING STOCKHOLDERS. Any shares of
Wometco Stock outstanding at the Effective Time and held by any stockholder of
Wometco who filed a written objection to the Merger in accordance with the DGCL
(an "Objection") but whose right of appraisal shall not have been perfected as
provided therein shall be deemed changed in the same manner as provided for
other outstanding shares of the Wometco Stock of the same class.
2.05 CALCULATION OF MERGER CONSIDERATION; ADJUSTMENT OF MERGER
CONSIDERATION; EXCHANGE OF CERTIFICATES.
(a) PAYMENT OF MERGER CONSIDERATION; ADJUSTMENT OF MERGER
CONSIDERATION.
(i) For the purpose of determining the calculation of the
Merger Consideration, at least three (3) Business Days prior to Closing, Wometco
shall provide U S WEST with a statement (the "Closing Statement") setting forth
in reasonable detail its calculation of the Merger Consideration and the Merger
Consideration Per Share, based upon Wometco's good faith estimates of the
components of Value Payable At Closing. The Closing Statement shall be
accompanied by an officer's certificate to the effect that the Merger
Consideration shall have been determined in accordance with the provisions of
this Agreement.
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(ii) The Merger Consideration shall be subject to adjustment
after Closing in accordance with the following procedures and the parties hereto
agree that such procedures shall be the exclusive mechanism for the proposal by
the parties of adjustments to the Merger Consideration:
(A) U S WEST shall as soon as practicable (and in any
event within 60 days) after the Closing Date prepare and deliver to Peachtree a
final statement (the "Final Statement") setting forth any and all proposed
adjustments to the Value Payable at Closing. The Final Statement shall be
accompanied by an officer's certificate to the effect that the proposed
adjustments to the Value Payable At Closing have been determined in accordance
with the provisions of this Agreement.
(B) U S WEST shall assist Peachtree and Peachtree's
independent auditors in their review of the Final Statement and in connection
therewith shall provide Peachtree and Peachtree's independent auditors access at
reasonable times to the personnel, properties, assets, books and records of the
Wometco Group. Peachtree and Peachtree's independent auditors will be provided
with reasonable access to the working papers of U S WEST relating to the Final
Statement and with reasonable access to U S WEST's independent auditors. If U S
WEST shall fail to deliver a Final Statement within the period set forth in
Section 2.05(a)(ii)(A) above, Peachtree may, if it believes any adjustments to
the Value Payable At Closing are appropriate submit its proposed adjustments
within the time period specified in Section 2.05(a)(ii)(C) below, which
submission shall be treated as a Notice of Disagreement (as defined in Section
2.05(a)(ii)(C) below).
(C) The Final Statement shall become final and binding
upon the parties at the close of business on the thirtieth day (or if such day
shall not be a Business Day on the next Business Day) following receipt thereof
by Peachtree unless Peachtree shall give written notice of its disagreement with
the Final Statement ("Notice of Disagreement") to U S WEST on or prior to such
date. Any such Notice of Disagreement shall specify in reasonable detail the
nature of any disagreement so asserted, accompanied by a calculation by
Peachtree of its proposed adjustments to the Value Payable at Closing. If
Peachtree does not deliver a Notice of Disagreement within the period specified
in this Section 2.05(a)(ii)(C), the adjustment to the Value Payable At Closing
proposed by U S WEST shall be final and binding upon the parties.
(D) Following the delivery of a Notice of Disagreement,
U S WEST and Peachtree shall seek in good faith to resolve such disagreement.
If no such resolution shall have been achieved by U S WEST and Peachtree after
thirty (30) days, the parties shall submit to an arbitrator (the "Arbitrator")
for review and resolution any and all matters which remain in dispute. The
Arbitrator shall be Deloitte & Touche or if such firm is unable or unwilling to
act, such other nationally recognized independent public accounting firm as
shall be agreed upon by the parties, and if the parties are unable to so agree,
U S WEST, on the one hand, and Peachtree, on the other hand, shall each select
an independent accounting firm and the two firms so selected shall agree upon a
third independent accounting firm to act as the Arbitrator; provided, however,
that in no event shall the principal independent accounting firm which is the
auditor of U S WEST, Peachtree (and any Person controlling Wometco or Peachtree)
or Lehman Brothers Inc. be the Arbitrator. U S WEST and Peachtree shall submit
the adjustments to the Value Payable At Closing proposed by both U S WEST and
Peachtree to the Arbitrator, and the Arbitrator shall determine the adjustments
to the Value Payable At Closing (which may be an amount other than the
adjustments to the Value Payable At Closing proposed by either U S WEST or
Peachtree). The Arbitrator shall render a decision regarding the adjustments to
the Value Payable at Closing within thirty (30) days of submission thereto, and
shall notify U S WEST and Peachtree of such determination in writing. The fees
and expenses of the Arbitrator shall be borne equally by U S WEST and Peachtree.
(E) In the event that the Value Payable At Closing
determined at Closing is greater than the Value Payable At Closing as determined
pursuant to this Section 2.05(a)(ii), then U S WEST shall
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be entitled to receive, not later than five (5) days after, as applicable, (1)
the Final Statement becoming final and binding on the parties pursuant to
Section 2.05(a)(ii)(C), (2) the resolution of any dispute regarding the Final
Statement by U S WEST and Peachtree, or (3) receipt of notice from the
Arbitrator of the actual adjustments to the Value Payable At Closing (such date,
as the case may be, being hereinafter referred to as the "Determination Date"),
an amount equal to such difference, plus an amount equal to the dividends paid
during the period from the Closing Date to the date of payment with respect to
U S WEST Common Stock in an amount of U S WEST Common Stock equal in value to
such difference (based on the Average Closing Price used in determining the
Merger Consideration), together with interest thereon (which shall accrue at the
Prime Rate from the Closing Date (except with respect to interest payable on
the amount equal to dividends paid with respect to U S WEST Common Stock, which
shall accrue from the date of payment of such dividend) to the date of payment)
which amount shall be paid by the Wometco Indemnitor in immediately available
funds. In the event that the Value Payable At Closing as determined pursuant to
this Section 2.05(a)(ii) is greater than the Value Payable At Closing determined
at Closing, then U S WEST shall pay to Peachtree (for the benefit of all
Stockholders), not later than five (5) days after the Determination Date, in
immediately available funds, an amount equal to such difference, plus an amount
equal to the dividends paid during the period from the Closing Date to the date
of payment with respect to U S WEST Common Stock in an amount of U S WEST Common
Stock equal in value to such difference (based on the Average Closing Price used
in determining the Merger Consideration), together with interest thereon (which
shall accrue at the Prime Rate from the Closing Date (except with respect to
interest payable on the amount equal to dividends paid with respect to U S WEST
Common Stock, which shall accrue from the date of payment of such dividend) to
the date of payment).
(F) U S WEST and Peachtree agree that judgment may be
entered upon the determination of the Arbitrator in and by any court having
jurisdiction over the party or parties against which such determination is to be
enforced.
(b) EXCHANGE PROCEDURES. At least three (3) Business Days prior to
the Effective Time, U S WEST shall deliver to the Stockholder Representative (as
defined in Section 2.09) with respect to each certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of
Wometco Stock (the "Certificates") instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing the
shares of U S WEST Common Stock comprising the Merger Consideration. Upon
surrender of a Certificate for cancellation to U S WEST, together with such
documents as reasonably may be required by U S WEST, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing the shares of U S WEST Common Stock comprising the Merger
Consideration that such holder has the right to receive pursuant to the
provisions of this Article II (together with any dividends or distributions made
with respect to the U S WEST Common Stock after the Effective Time and any cash
to be paid in lieu of fractional shares pursuant to Section 2.05(e)). The
Certificate so surrendered pursuant to the preceding sentence shall forthwith be
cancelled. In the event of a transfer of ownership of Wometco Stock which is
not registered in the transfer records of Wometco, a certificate representing
the shares of U S WEST Common Stock comprising the Merger Consideration may be
issued to a Person other than the Person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the Person requesting such payment
shall pay any transfer or other taxes required by reason of the issuance of the
shares of U S WEST Common Stock comprising the Merger Consideration to a Person
other than the registered holder of such Certificate or establish to the
satisfaction of U S WEST that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.05, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender a certificate representing the shares of U S WEST
Common Stock comprising the Merger Consideration (together with any dividends or
distributions made with respect to the U S WEST Common Stock after the Effective
Time and any cash to be paid in lieu of fractional shares pursuant to Section
2.05(e)). Subject to the effect of applicable laws, following
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surrender of any such Certificate, there shall be paid to the Stockholder
Representative for the benefit of the record holder of the Certificate
certificates representing whole shares of U S WEST Common Stock issued in
exchange therefor, without interest, (x) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of U S WEST Common
Stock to which such holder is entitled pursuant to Section 2.05(e), (y) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such whole
shares of U S WEST Common Stock and (z) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of U S WEST Common Stock.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions declared or made after the Effective Time with respect to
U S WEST Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate, or to the Stockholder
Representative for the benefit of such holder, with respect to the shares of U S
WEST Common Stock represented thereby and no cash payment in lieu of fractional
shares shall be paid to any such holder, or to the Stockholders Representative
for the benefit of such holder, pursuant to Section 2.05 (e) until the holder of
record of such Certificate, or the Stockholder Representative on behalf of such
holder, shall surrender such Certificate.
(d) FURTHER OWNERSHIP RIGHTS IN WOMETCO STOCK. All shares of U S
WEST Common Stock comprising the Merger Consideration issued or issuable upon
the surrender for exchange of Certificates in accordance with the terms of this
Article II (including any cash paid pursuant to Sections 2.05(b) and 2.05(e))
shall be deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to the shares of Wometco Stock theretofore represented by such
Certificates, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Wometco Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or U S
WEST for any reason, they shall be cancelled and exchanged as provided in this
Article II.
(e) NO FRACTIONAL SHARES. No certificates or scrip evidencing
fractional shares of U S WEST Common Stock shall be issued upon the surrender
for exchange of the Certificates, but in lieu thereof each holder of
Certificates who would otherwise have been entitled to a fraction of a share of
U S WEST Common Stock, upon surrender of such Certificates by such holder, or
the Stockholder Representative for the benefit of such holder, will be paid the
cash value of such fractional share based upon the value of the U S WEST Common
Stock determined pursuant to Section 2.04 hereof.
(f) WITHHOLDING RIGHTS. U S WEST shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of shares of Wometco Stock such amounts as U S WEST is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by U S WEST, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Wometco Stock in respect of which such deduction and withholding was made by U S
WEST.
(g) NO LIABILITY. None of U S WEST or Wometco shall be liable to
any person in respect of any shares of U S WEST Common Stock comprising Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) LOST CERTIFICATES. If any certificate representing shares of
Wometco Stock shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such certificate to be
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lost, stolen or destroyed, U S WEST will issue in exchange for such lost, stolen
or destroyed certificate the shares of U S WEST Common Stock (and any dividend
or distribution with respect thereto made after the Effective Time and any cash
payable in lieu of fractional shares pursuant to Section 2.05(e)) deliverable in
respect thereof as determined in accordance with the terms of this Agreement.
2.06 CHARTER AND BYLAWS. At the Effective Time, the Certificate of
Incorporation of Wometco shall be the Certificate of Incorporation of the
Surviving Corporation, until amended, altered or repealed as therein provided
and in accordance with the DGCL. The By-Laws of Acquisition Sub shall be the
By-Laws of the Surviving Corporation until amended, altered or repealed as
therein provided and in accordance with the DGCL.
2.07 OFFICERS AND DIRECTORS. The officers and directors of Acquisition
Sub immediately prior to the Effective Time shall be the officers and directors
of the Surviving Corporation, each to hold office in accordance with the By-Laws
of the Surviving Corporation and the DGCL.
2.08 DISSENTING SHARES. Notwithstanding anything in this Agreement to
the contrary, each outstanding share of Wometco Stock, the holder of which has
demanded and perfected his demand for appraisal of his shares in accordance with
Section 262 of the DGCL ("Section 262") and has not effectively withdrawn or
lost his right to such appraisal ("Dissenting Shares"), shall not represent a
right to receive U S WEST Common Stock pursuant to Section 2.04 hereof, but the
holder thereof shall be entitled only to such rights as are granted by Section
262. Each holder of Dissenting Shares who becomes entitled to payment for his
Wometco Stock pursuant to Section 262 shall receive payment therefor from the
Surviving Corporation (but only after the amount thereof shall have been agreed
upon or finally determined pursuant to Section 262). Wometco shall within two
days after receiving any written demands for appraisal, withdrawals of demands
for appraisal or any other instruments served pursuant to Section 262, notify U
S WEST of such demands, withdrawals or other instruments. Wometco agrees that
it will not without the written consent of U S WEST voluntarily make any payment
with respect to, or settle or offer to settle any such demand.
2.09 STOCKHOLDER REPRESENTATIVE. Each holder of Wometco Stock
(individually a "Stockholder" and collectively the "Stockholders") by the
approval of the Merger by the requisite vote of the Stockholders pursuant to the
DGCL, designates Peachtree to be the representative of each Stockholder (the
"Stockholder Representative") for the purpose of receiving and disbursing to the
Stockholders the amounts to be received by such Stockholder under this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WOMETCO
Wometco hereby represents and warrants to U S WEST and Acquisition Sub as
follows:
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3.01 ORGANIZATION AND AUTHORITY OF WOMETCO AND WOMETCO SUBSIDIARIES. (a)
Wometco is a corporation validly formed, existing and in good standing under the
laws of the State of Delaware. Wometco is qualified to do business as a foreign
corporation and is in good standing under the laws of the State of Florida and
in each other jurisdiction in which the operation of the CATV Business requires
it to be so qualified except where the failure to be so qualified would not have
a Material Adverse Effect. Wometco has all requisite corporate power and
authority to conduct its business and operations as presently conducted and to
own and hold as lessee the property and assets that it owns or leases.
(b) Schedule 3.01(i) sets forth a complete and correct list of all
of the Wometco Subsidiaries, (ii) indicates the percentage of each Wometco
Subsidiary owned by Wometco, (iii) lists the state or other jurisdiction of
incorporation or organization of each such Wometco Subsidiary, and (iv) lists
the state or other jurisdiction in which each such Wometco Subsidiary is
qualified or licensed to do business as a foreign corporation or partnership.
(c) Each corporate Wometco Subsidiary (i) is duly incorporated or
organized, validly existing and in good standing under the laws of its state of
incorporation as set forth in Schedule 3.01; (ii) has all requisite corporate
power and authority to own, operate and lease its properties and to carry on its
business as now conducted; and (iii) is qualified and in good standing to do
business in each jurisdiction in which the operation of the CATV Business
requires them to be so qualified, except to the extent the failure to so qualify
would not have a Material Adverse Effect. Each partnership Wometco Subsidiary
(x) is duly organized and validly existing in its jurisdiction of organization
as set forth in Schedule 3.01; (y) has all requisite partnership power and
authority to own, operate and lease its properties and to carry on its business
as now conducted; and (z) each partnership Wometco Subsidiary that is a limited
partnership is qualified and in good standing to do business in the State of
Georgia and in each jurisdiction in which the operation of the CATV Business
requires them to be so qualified, except to the extent the failure to so qualify
would not have a Material Adverse Effect.
(d) Except for the Wometco Subsidiaries or as otherwise disclosed
on Schedule 3.01, Wometco does not, directly or indirectly, own any equity
interest in any person, corporation, partnership, joint venture or other
business association. Wometco has delivered to U S WEST copies of (i) the
Articles or Certificate of Incorporation, as amended, of each of Wometco and the
corporate Wometco Subsidiaries, and the bylaws of each of Wometco and each
corporate Wometco Subsidiary, and (ii) the partnership agreement, as amended,
and the certificate of limited partnership, if any, of each Wometco Subsidiary
that is a partnership. There has been no change in such Articles or
Certificates of Incorporation, bylaws or partnership agreements since the
delivery of copies thereof to U S WEST, and each of such documents is in full
force and effect.
3.02 LEGAL CAPACITY; APPROVALS AND CONSENTS. (a) Wometco has all
requisite corporate power and authority to execute, deliver and perform this
Agreement and the other agreements contemplated hereby (this Agreement together
with such other agreements are hereinafter referred to collectively as the
"Merger Agreements") to which it is a party. Wometco has taken all requisite
corporate actions necessary to authorize the execution, delivery and performance
of the Merger Agreements to which it is a party. The Merger Agreements to which
Wometco is a party have been or will be, as the case may be, duly executed and
delivered by Wometco and are or will be, as the case may be, the valid and
binding obligations of Wometco enforceable in accordance with their respective
terms, except (x) as rights to indemnity, if any, thereunder may be limited by
federal or state securities Laws or the public policies embodied therein, (y) as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
similar Laws affecting creditors' rights generally, and (z) as the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
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(b) Subject to obtaining the consents and approvals set forth on
Schedule 3.02 and the satisfaction of the condition described in Section
6.01(c), the execution, delivery and performance by Wometco of the Merger
Agreements to which Wometco is a party do not and will not contravene the
Certificate of Incorporation or Bylaws of Wometco or any corporate Wometco
Subsidiary or the partnership agreement of any Wometco Subsidiary that is a
partnership, and do not and will not (with the passage of time or the giving of
notice or both): (i) conflict with or result in a breach or violation by any
member of the Wometco Group of, or (ii) constitute a default by any member of
the Wometco Group under, (iii) create or impose any Lien upon, or (iv) result
in the termination, cancellation, acceleration of obligations under, suspension,
modification or impairment of or pursuant to, any Franchise, FCC License, Law,
Judgment, Business Contract, leases of Real Property, agreements listed on
Schedule 3.21 hereof or other contracts listed on other schedules to this
Agreement to which any member of the Wometco Group is a party or by which any of
them is subject or bound, other than (1) except in respect of Law, as to which
the provisions of this clause (1) shall not apply, any violations, conflicts,
breaches, defaults, liens, terminations, suspensions, modifications or
impairments that would not individually or in the aggregate have a Material
Adverse Effect or prevent the consummation by Wometco of the transactions
contemplated hereby, or (2) violations, conflicts, breaches, defaults, Liens,
terminations, suspensions, modifications or impairments attributable solely to
the legal status and activities of U S WEST or its Subsidiaries.
(c) Except as set forth on Schedule 3.02 and other than compliance
with and filings under the HSR Act, no consents, approvals, licenses, permits,
orders or authorizations of, or registrations, declarations, notices or filings
with, any Governmental Authority (collectively, "Governmental Consents") or any
third party (collectively, "Third Party Consents") are required to be obtained
or made by or with respect to Wometco or the Wometco Subsidiaries in connection
with (i) the execution, delivery and performance by Wometco of this Agreement or
any of the other agreements contemplated hereby to which Wometco is a party, the
consummation of the transactions contemplated hereby and thereby or the taking
by Wometco of any other action contemplated hereby or thereby and (ii) the
continuing validity and effectiveness of (and prevention of any material default
under or violation of the terms of) any Franchise, FCC License, or Business
Contract listed on Schedule 3.12.
(d) All consents, approvals and notices from or to Lehman Brothers
Inc. and/or any of its Affiliates required to be obtained or made by or with
respect to Wometco, any member of the Wometco Group or any Stockholder in
connection with the execution, delivery and performance of this Agreement or any
of the other agreements contemplated hereby to which Wometco, any member of the
Wometco Group or any Stockholder is a party and the consummation of the
transactions contemplated hereby or thereby have been obtained or made.
3.03 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. (a) Attached as
Schedule 3.03 hereto are the (i) audited consolidated balance sheet of the
Wometco Group at December 31, 1991, 1992, and 1993; (ii) the audited
consolidated statements of operations and income for the Wometco Group for the
periods ended December 31, 1991, 1992, and 1993; (iii) the notes and schedules
and certain supplementary information to all of the financial statements
specified in (i) and (ii); and (iv) the unaudited consolidated balance sheets of
the Wometco Group as of March 31, 1994 and consolidated statements of operations
and income for the Wometco Group for the three month period ended March 31, 1994
(all of such financial statements and notes being hereinafter referred to as the
"Financial Statements"). Except as set forth in Schedule 3.03, the Financial
Statements (x) are in accordance in all material respects with the books and
records of the Wometco Group; (y) present fairly in all material respects the
financial condition of the Wometco Group as at the dates shown and for the
periods therein indicated; and (z) have been prepared in accordance with
generally accepted accounting principles, applied on a consistent basis, except
as may be described therein and in the case of financial statements for interim
periods, subject to normal year-end audit adjustments (which are not,
individually or in the aggregate, material in amount).
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The March 31, 1994 unaudited consolidated balance sheet of the Wometco Group is
herein called the "Balance Sheet".
(b) At the date hereof, the Wometco Group has no liabilities
required by generally accepted accounting principles to be reflected or reserved
against therein which were not fully reflected or reserved against on the
Balance Sheet, other than liabilities incurred in the ordinary course of
business since the date of the Balance Sheet or as set forth on Schedule 3.03.
3.04 CAPITALIZATION. (a) The authorized capital stock of Wometco
consists of 5,000,000 shares of Wometco Voting Stock, of which, as the date
hereof, 5,000,000 shares are issued and outstanding; and 1,000,000 shares of
Wometco Non-Voting Stock, of which, as of the date hereof, 882,354.941 shares
are issued and outstanding (the Wometco Voting Stock and the Wometco Non-Voting
Stock collectively is referred to herein as the "Wometco Stock"). All of the
outstanding shares of Wometco Stock have been validly issued and are fully paid
and nonassessable. Except as described in the first sentence of this Section
3.04 or on Schedule 3.04, there are no other outstanding securities of Wometco
convertible into or exchangeable or exercisable for any shares of its capital
stock, nor are there any other outstanding or authorized subscriptions, options,
warrants, calls, rights, commitments or any other contracts, agreements or
understandings of any character obligating Wometco to issue, sell or transfer
any additional shares of its capital stock or any other securities convertible
into or evidencing the right to subscribe for any shares of its capital stock.
(b) Except as described on Schedule 3.04, the capital stock or
other equity interest of each Wometco Subsidiary is owned free and clear of any
Liens. The shares of capital stock of each corporate Wometco Subsidiary are
validly issued, fully paid and nonassessable. Except as described on Schedule
3.04, no Wometco Subsidiary has outstanding securities convertible into or
exchangeable or exercisable for any shares of its capital stock or other equity
interests, nor are there any outstanding or authorized subscriptions, options,
warrants, calls, rights, commitments or any other contracts, agreements or
understandings of any character obligating Wometco or any of the Wometco
Subsidiaries to issue, sell or transfer any additional shares of the capital
stock or other equity interests of any of the Wometco Subsidiaries or any other
securities convertible into or evidencing the right to subscribe for any shares
of capital stock or other equity interests.
3.05 LEGAL AND GOVERNMENTAL PROCEEDINGS AND JUDGEMENTS. Except as may
affect the cable television industry in the United States generally, and except
as set forth on Schedule 3.05, as of the date hereof: (i) there is no legal or
governmental action, proceeding or investigation (insofar as such investigation
is known to Wometco) pending or, to the knowledge of Wometco, threatened against
the Wometco Group, the CATV Business or the Wometco Assets which (a) relate to
or involve more than $10,000 individually or $100,000 in the aggregate; (b)
seeks the suspension, modification or revocation, or could result in the
non-renewal, of any of the Franchises; or (c) seek any injunctive relief; and
(ii) there are no Judgments outstanding against the Wometco Group, or to or by
which the Wometco Group, any of the Wometco Assets or the CATV Business is
subject or bound.
3.06 FINDERS AND BROKERS. Except as set forth in Schedule 3.06, (i)
neither Wometco nor any Person acting on its behalf has entered into any
contract, arrangement or understanding with any Person which will entitle such
Person to any finder's fees, brokerage or agent's commissions or other like
payments in connection with the consummation of the transactions contemplated
hereby; and (ii) Wometco is not aware of any claim or
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basis for any claim for payment of any finder's fees, brokerage or agent's
commissions or other like payments in connection with the consummation of the
transactions contemplated hereby.
3.07 REAL PROPERTY. All of the real property owned by any member of the
Wometco Group and all leases of real property to which any member of the Wometco
Group is a party as of the date hereof, but excluding, however, easements,
rights-of-way and similar interests in real property (collectively, the property
listed in Schedule 3.07, the "Real Property") are listed in Schedule 3.07.
Wometco has furnished to U S WEST true and complete copies of all such leases of
Real Property. As to the Real Property which is designated in Schedule 3.07 as
being owned by a member of the Wometco Group, except as set forth in Schedule
3.07, such member of the Wometco Group has good and marketable title in fee
simple to such premises and all buildings, improvements and fixtures thereon,
free and clear of all Liens, except for Permitted Liens. As to the Real
Property which is designated on Schedule 3.07 as being leased to a member of the
Wometco Group, except where the failure of the representations made in this
sentence to be true and correct would not have a Material Adverse Effect, such
member of the Wometco Group is the sole owner of the leasehold interest in such
Real Property, such leases are valid and subsisting and in full force and effect
and, as of the date hereof, no other party to such lease has given written
notice to any member of the Wometco Group of or made a written claim with
respect to any breach or default thereof and Wometco is not aware of any fact
giving rise to a breach or default thereof. Except where the failure of the
representations made in this sentence to be true and correct would not have a
Material Adverse Effect, all of the Real Property, buildings, fixtures and
improvements thereon owned or leased by any member of the Wometco Group are in
good operating condition and repair (subject to normal wear and tear). Except
where the failure of the representations made in this sentence to be true and
correct would not have a Material Adverse Effect or interfere in any material
manner with the provision of CATV service by a CATV System serving in excess of
10,000 Subscribers, the CATV Systems' towers, anchors and support structures,
related buildings, base and receive stations, office buildings and warehouses
all are located entirely on the Real Property listed in Schedule 3.07.
3.08 EASEMENTS AND RIGHTS-OF-WAY. Except as set forth on Schedule 3.08,
each person, firm, corporation or other entity upon or under whose property any
of the Wometco Assets are located, maintained, installed or operated (other than
drop lines to subscriber dwellings) has granted to the members of the Wometco
Group such easements, licenses or rights of way as are necessary for the
location, maintenance, installation and operation of such Wometco Assets upon,
over or under such property, and for ingress or egress to CATV System premises
(the "Easements"), except where the failure to have any such Easement will not,
individually or in the aggregate, have a Material Adverse Effect or interfere in
any material manner with the provision of CATV service by a CATV System serving
in excess of 10,000 Subscribers. The Wometco Group has not received written
notice from any Person upon or under whose property any Wometco Assets are
located, maintained, installed or operated of an intention to challenge such
Easement on such property, the consequences of which, individually or in the
aggregate, would have a Material Adverse Effect or interfere in any material
manner with the provision of CATV service by a CATV System serving in excess of
10,000 Subscribers.
3.09 TANGIBLE PERSONAL PROPERTY. Schedule 3.09 contains a list of
certain major components of material tangible personal property as of the date
of this Agreement included in the Wometco Assets (all tangible personal property
of the Wometco Group, including the tangible personal property listed on
Schedule 3.09, the "Tangible Personal Property"). Except as set forth in
Schedule 3.09, the members of the Wometco Group have good and marketable title
to, all owned Tangible Personal Property, free and clear of all Liens except
Permitted Liens. Except as set forth in Schedule 3.09, the Tangible Personal
Property, as an integrated system and in its
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material component parts, has been constructed, installed, operated and
maintained in accordance with the requirements of all Applicable Law and
Franchises (except for such noncompliance as would not have a Material Adverse
Effect) and, taken as a whole, is in all material respects in good operating
condition and repair (ordinary wear and tear excepted) and, without material
exception, constitutes all of the Tangible Personal Property necessary for the
operation of the CATV Business as currently conducted. The amount of the
Wometco Group's inventory on the Closing Date will be sufficient to permit the
continued maintenance and operation of the CATV Business substantially
consistent with the manner theretofore maintained and operated by the Wometco
Group.
3.10 RECEIVABLES. All the accounts receivable of the Wometco Group have
arisen from bona fide transactions in the ordinary course of business consistent
with past practice.
3.11 COMPLIANCE WITH LAW. Except as set forth on Schedule 3.11, each
member of the Wometco Group holds all licenses, permits or other authorizations
from Governmental Authorities necessary for the lawful conduct of their
respective businesses, except where the failure to hold the foregoing would not,
individually or in the aggregate, have a Material Adverse Effect. Except as set
forth on Schedule 3.11, each member of the Wometco Group is in compliance with
all Law applicable to it as to the operation of the CATV Business or the
ownership of the Wometco Assets ("Applicable Laws"), except for such
non-compliance which would not, individually or in the aggregate, have a
Material Adverse Effect. Except as set forth on Schedule 3.11, no member of the
Wometco Group has received any written communications during the past three
years prior to the date hereof from a Governmental Authority that remain
unresolved and that allege that any member of the Wometco Group is not in
compliance with any Applicable Laws, the consequences of which would have a
Material Adverse Effect.
3.12 BUSINESS CONTRACTS. Schedule 3.12 contains a list of all contracts,
leases, agreements and arrangements, written or oral, in force on the date
hereof to which any member of the Wometco Group is a party and which
individually involve the payment to or from any member of the Wometco Group of
amounts in excess of $100,000 per year, including, without limitation,
programming contracts, channel leases, and management and consulting contracts
involving such amounts, but excluding all Franchises and those contracts listed
on Schedules 3.07, 3.08, 3.16, 3.17, 3.18, 3.20, 3.21 or 3.22 (each such
contract listed on Schedule 3.12, together with those contracts listed on
Schedules 3.07, 3.08, 3.16, 3.17, 3.18, 3.20, 3.21 or 3.22, being herein
referred to as a "Business Contract"). Except as disclosed on Schedule 3.12,
and except where the failure of the representations in this sentence to be true
and correct would not, individually or in the aggregate, have a Material Adverse
Effect, (i) each of the Business Contracts, notwithstanding the consummation of
the transactions contemplated herein (assuming receipt of any necessary
consent), constitutes a valid and binding obligation of the member of the
Wometco Group which is a party thereto, and, to the knowledge of Wometco is in
full force and effect and legally enforceable in accordance with its terms
against the other parties thereto, (ii) such member of the Wometco Group has
complied with all of the provisions of such Business Contracts, and (iii) there
has not occurred any event which (whether with or without notice, lapse of time,
or the happening or occurrence of any other event) would constitute a default
thereunder. To the knowledge of Wometco, and except as disclosed on Schedule
3.12 the parties to the Business Contracts other than the members of the Wometco
Group are not in default under any such Business Contracts, except for defaults
which would not, individually or in the aggregate, have a Material Adverse
Effect. Except as set forth on Schedule 3.12, the amounts due and payable under
each of the programming contracts of the Wometco Group have been properly paid
or accrued in accordance with generally accepted accounting principles.
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3.13 TAXES. (a) Except as set forth in Schedule 3.13(a), (i) all
federal, state, local and foreign income, information, franchise, sales, use,
property, excise, payroll and other material tax returns, declarations and
reports ("Tax Returns") required to be filed by or on behalf of any member of
the Wometco Group have been filed on a timely basis with the appropriate
Governmental Authorities in all jurisdictions in which such Tax Returns are
required to be filed (after giving effect to any valid extensions of time in
which to make such filings), and all such Tax Returns were true, correct and
complete in all material respects; (ii) all amounts due and payable in respect
of such Tax Returns (including interest and penalties) have been fully and
timely paid or are or will be adequately provided for in the appropriate
Financial Statements of the Wometco Group; (iii) no waivers of statutes of
limitations have been given or requested with respect to any member of the
Wometco Group in connection with any Tax Returns covering any member of the
Wometco Group with respect to any Taxes payable by any of them; and (iv) each
member of the Wometco Group has duly and timely withheld from salaries, wages
and other compensation of its employees and paid over to the appropriate taxing
authorities all amounts required to be so withheld and paid over for all periods
under all Applicable Laws.
(b) Except as set forth in Schedule 3.13(b), all deficiencies
asserted or assessments made as a result of any examinations by the IRS or any
other taxing authority of the Tax Returns of or covering any member of the
Wometco Group have been fully paid, and there are no other unpaid deficiencies
asserted or assessments made by any taxing authority against any member of the
Wometco Group.
(c) Except as set forth in Schedule 3.13(c), neither the
Stockholders nor any member of the Wometco Group, nor any other Person on behalf
of any member of the Wometco Group: (i) has filed a consent pursuant to Section
341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by any member of the Wometco Group; (ii) has
executed or entered into a closing agreement pursuant to Section 7121 of the
Code or any predecessor provision thereof or any similar provision of state,
local or foreign law; or (iii) has agreed to or is required to make any
adjustments pursuant to Section 481(a) of the Code or any similar provision of
state, local or foreign law by reason of a change in accounting method initiated
by any member of the Wometco Group or has any knowledge that the IRS has
proposed any such adjustment or change in accounting method, or has any
application pending with any taxing authority requesting permission for any
changes in accounting methods that relate to the business or operations of any
member of the Wometco Group.
(d) None of the Stockholders is a foreign person within the meaning
of Section 1445 of the Code.
(e) Except as set forth in Schedule 3.13(e), none of the Wometco
Assets is property required to be treated as being owned by another Person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect immediately prior to the enactment of the Tax
Reform Act of 1986 or is "tax-exempt use property" within the meaning of Section
168(h)(l) of the Code.
(f) The federal income Tax Returns of any member of the Wometco
Group, any predecessor of any such member or any affiliated group of which any
member of the Wometco Group is or was a member have been examined by the IRS, or
the periods covered by such Tax Returns have been closed by applicable statute
of limitations, for all periods through December 31, 1989. The state income or
franchise Tax Returns of any member of the Wometco Group, any predecessor of any
such member or any affiliated, combined or unitary group of which any member of
the Wometco Group is or was a member have been examined by the relevant taxing
authorities, or the periods covered by such Tax Returns have been closed by
applicable statute of limitations, in each case through at least December 31,
1989. With respect to any Tax Returns referred to in this
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Section 3.13(f) for taxable periods ended on or prior to December 23, 1986, such
representations shall be to the knowledge of Wometco.
(g) Except as set forth in Schedule 3.13(g), (i) no Tax audits or
other administrative proceedings are pending with regard to any Taxes for which
any member of the Wometco Group may be liable, for taxable periods beginning on
or after December 23, 1986, and to the knowledge of Wometco no such audits or
proceeding are pending for prior taxable periods and (ii) no written notice of
any such audit has been received by any member of the Wometco Group.
3.14 INTANGIBLE PROPERTY. (a) Schedule 3.14 sets forth a true and
complete list of all material Intangible Property as of the date of this
Agreement. Except as set forth on Schedule 3.14, the current operation of the
CATV Systems does not conflict in any way with any Intangible Property of any
third party, except for any conflict that would not have a Material Adverse
Effect.
(b) All Intangible Property owned by each member of the Wometco
Group is owned by such member of the Wometco Group free and clear of all Liens
except for Permitted Liens. Except as set forth on Schedule 3.14, all
Intangible Property under which any member of the Wometco Group is a licensee is
valid and enforceable against such member of the Wometco Group and, to the
knowledge of such member of the Wometco Group, the other parties thereto in
accordance with their terms, except for any invalidity or unenforceability that
would not have a Material Adverse Effect.
3.15 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 3.15, there
are no flammable, explosive or radioactive materials, toxic substances, friable
asbestos or other hazardous substances or wastes on, under or about any of the
properties included in the Wometco Assets which could reasonably be expected to
result in any governmental or third-party action, proceeding or claim against
the members of the Wometco Group that, individually or in the aggregate, would
have a Material Adverse Effect. The members of the Wometco Group are in
compliance with all requirements for the operation of the CATV Systems or use of
the Wometco Assets under federal, state, or local laws relating to pollution or
protection of the environment, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, or hazardous or
toxic substances, materials or wastes into ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic substances, materials or wastes
(collectively, "Environmental Requirements"), except for any noncompliance which
would not have a Material Adverse Effect. Except as set forth in Schedule 3.15,
to the knowledge of Wometco, there are no underground storage tanks storing
petroleum substances or any other hazardous substances at any of the Real
Property owned by the Wometco Group. Wometco has provided to U S WEST, to the
extent available, copies of any and all environmental audits, investigations,
studies or reports that have been performed by or at the direction of the
members of the Wometco Group or to the extent such audits, investigations,
studies and reports concern any Real Property of the Wometco Group, of which
Wometco has knowledge or possession. For the purpose of this Section,
"hazardous substances", "hazardous materials" and "hazardous waste" shall have
the meaning set forth in, as the case may be, the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended, 42 U.S.C. Section 9601,
et. seq., and regulations thereunder ("CERCLA"); the Resources Conservation and
Recovery Act; or any applicable federal, state or local laws pertaining to
environmental matters. As of the date hereof, none of the members of the
Wometco Group are listed as a Potentially Responsible Party under CERCLA, or any
similar state or local statute, ordinance or regulation, nor has any such member
received any CERCLA 104(e) letters or similar letters under state or local laws.
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3.16 LABOR. (a) As of the date hereof, except as set forth in
Schedule 3.16, the members of the Wometco Group are not a party to any labor or
collective bargaining agreement and there are no labor or collective bargaining
agreements which pertain to employees of the members of the Wometco Group.
(b) As of the date hereof, except as set forth in Schedule 3.16,
(i) no employees of the members of the Wometco Group are represented by any
labor organization; (ii) no labor organization or group of employees of the
members of the Wometco Group has made a demand against the members of the
Wometco Group for recognition that is still pending, and there are no
representation proceedings or petitions seeking a representation proceeding
presently pending against the members of the Wometco Group or, to the knowledge
of Wometco, threatened to be brought or filed against the members of the Wometco
Group, with the National Labor Relations Board or other labor relations
tribunal; and (iii) there is no organizing activity involving the members of the
Wometco Group pending or, to the knowledge of Wometco, threatened by any labor
organization or group of employees of the members of the Wometco Group.
(c) As of the date hereof, except as set forth in Schedule 3.16,
there are no (i) strikes, work stoppages, slowdowns, lockouts or arbitrations,
(ii) material grievances or other material labor disputes pending or, to the
knowledge of Wometco, threatened against or involving the members of the Wometco
Group or (iii) unfair labor practice charges, grievances or complaints pending
or, to the best knowledge of Wometco, threatened by or on behalf of any employee
or group of employees of the members of the Wometco Group.
(d) Except as set forth in Schedule 3.16, as of the date hereof,
there are no complaints, charges or claims against any member of the Wometco
Group pending or, to the knowledge of Wometco, threatened to be brought or filed
with any Governmental Authority based on, arising out of, in connection with, or
otherwise relating to the employment by the members of the Wometco Group of any
individual, including any claim for workers' compensation.
(e) Hours worked by and payments made to employees of the members
of the Wometco Group have not been in violation of the federal Fair Labor
Standards Act or any other Applicable Law dealing with such matters, except for
such violations as would not have a Material Adverse Effect.
(f) The members of the Wometco Group are in compliance with all
Applicable Laws relating to the employment of labor, including all such
Applicable Laws and relating to wages, hours, collective bargaining, employment
discrimination, civil rights, safety and health, worker's compensation, pay
equity and the collection and payment of withholding and/or social security
taxes and similar Taxes, except for any noncompliance would not have a Material
Adverse Effect.
3.17 ABSENCE OF CHANGES OR EVENTS. Since the date of the Balance Sheet,
except as set forth in Schedule 3.17, members of the Wometco Group have operated
the CATV Business only in the ordinary and usual course substantially in the
same manner as previously conducted and, since the date of the Balance Sheet to
the date hereof, there has not been:
(a) except for matters relating to or affecting the cable
television industry generally (including without limitation, legislative,
regulatory or litigation matters) and matters relating to or arising from local
or national economic conditions (including financial and capital markets), any
changes, occurrences or circumstances which have had, individually or in the
aggregate, a Material Adverse Effect;
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(b) any damage, destruction or loss with respect to the Wometco
Assets whether covered by insurance or not, which has had or would have,
individually or in the aggregate, a Material Adverse Effect;
(c) any declaration, payment or distribution of cash, securities or
property to any shareholder of Wometco or any repurchase, acquisition or
extinguishment for value of any ownership interest in Wometco;
(d) any change in its accounting methods, principles or practices;
(e) any failure by any member of the Wometco Group to pay and
discharge current liabilities within 90 days, except where disputed in good
faith by appropriate proceedings;
(f) any loans, advances or capital contributions to, or investments
by any member of the Wometco Group in, any Person, other than loans or advances
to employees in the ordinary course of business of such member of the Wometco
Group and which loans and advances in the aggregate, do not exceed $100,000;
(g) any acquisition or sale, assignment, transfer, conveyance,
lease or other disposition of any material System Assets, except in the ordinary
course of business consistent with past practice;
(h) any (or any commitments to make any) capital expenditures or
capital additions or betterments to the CATV Systems or Wometco Assets in excess
of the projected capital expenditures set forth in the 1994 Budget; or
(i) other than as set forth in Schedule 3.17 and other than in the
ordinary course of business consistent with past practice, any increase in,
establishment of or amendments to any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing or other employee benefit
plan, or any other increase in the compensation payable or to become payable to
any officers or employees of the members of the Wometco Group.
3.18 INSURANCE. (a) Schedule 3.18 lists all insurance policies of the
members of the Wometco Group which relate to the ownership, operation or use of
the CATV Systems and Wometco Assets. All of such policies are in full force and
effect and the members of the Wometco Group are not in default of any provision
thereof, except where the failure of such policies to be in full force and
effect or the existence of such defaults would not, individually or in the
aggregate, have a Material Adverse Effect.
3.19 INFORMATION SUPPLIED. None of the information relating to Wometco
furnished or to be furnished in writing to U S WEST by or on behalf of Wometco
for inclusion in the Registration Statement to be filed with the Securities and
Exchange Commission (the "SEC") by U S WEST as such information is timely
supplemented or amended by or on behalf of Wometco, will, at the time the
Registration Statement is filed with the SEC and at the time it becomes
effective under the Securities Act of 1933, as amended (the "Securities Act"),
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
3.20 TRANSACTIONS WITH AFFILIATES. Except as set forth in Schedule 3.20,
there is no lease, sublease, indebtedness, contract, agreement, commitment,
understanding, or other arrangement of any kind whatsoever entered into by
Wometco with any officer, director or stockholder of the Wometco Group or the
Atlanta Cable
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Group or any "affiliate" or "associate" of any of them (as such terms are
defined in the rules and regulations of the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), nor
since March 31, 1994 to the date hereof, except as set forth in Schedule 3.20,
has there been any amount paid or assets sold by Wometco to any such Person
except, in each case, for management fees, inter-company debt and for
compensation to directors, officers and employees in the ordinary course of
business consistent with past practice (including normal merit increases in such
compensation in the ordinary course of business consistent with past practices),
reimbursements of ordinary and necessary expenses incurred in connection with
their employment, and amounts paid pursuant to employee benefit plans disclosed
pursuant to Schedule 3.21 or in Section 3.21.
3.21 EMPLOYEE BENEFITS. (a) Schedule 3.21 lists all "employee benefit
plans," as defined in Section 3(3) of ERISA, and any other employee benefit
arrangements or payroll practices (each, an "Employee Benefit Plan" and,
collectively, the "Employee Benefit Plans"), including, without limitation,
severance or termination pay, sick leave, vacation pay, salary continuation for
disability, change in control, compensation and death benefit agreements, other
compensation agreements, retirement, deferred compensation, bonus, incentive,
stock purchase, hospitalization, medical insurance, life insurance, educational
assistance programs and scholarship programs, any executive compensation
arrangements (other than Equity Appreciation Rights Plans as disclosed in
Section 3.21), employee fringe benefit arrangements, and all "employee pension
plans," as defined in Section 3(2) of ERISA, but excluding a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA ("Multiemployer Plan") (the
"Pension Plans"), (i) currently maintained by (A) any member of the Wometco
Group (which for purposes of Section 3.21 shall include Local Interconnect,
L.P.) or (B) any trade or business which is or, to the knowledge of Wometco,
ever has been treated as a single employer with or which is, to the knowledge of
Wometco, under common control with Wometco, within the meaning of Section
414(b), (c) or (m) of the Code ("ERISA Affiliate") and under which any current
or former employees of Wometco or any ERISA Affiliate thereof are covered, or
(ii) to which Wometco or any ERISA Affiliate thereof is obligated to contribute
on behalf of any current or former employee of Wometco or any ERISA Affiliate
thereof.
(b) Set forth in Part 4 of Schedule 3.21 is a list of all
compensation or benefit plans maintained by any member of the Wometco Group
which provide for a benefit based upon the issuance of (i) stock options, (ii)
restricted stock, (iii) equity appreciation rights or incentive awards
determined by the book, fair market or formula value of a share of common stock
of Wometco or (iv) bonus awards of common stock of Wometco ("Equity Appreciation
Rights Plans").
(c) Prior to Closing true, correct and complete copies of the
following documents, with respect to each of the Employee Benefit Plans, where
applicable, will be delivered or made available to U S WEST by Wometco: (i) any
plans and related trust documents, and amendments thereto, (ii) the Internal
Revenue Service ("IRS") Forms 5500 with respect to the last three years with all
attachments thereto, (iii) the last IRS determination letter, (iv) summary plan
descriptions, (v) written communications to employees relating to the Employee
Benefit Plans and (vi) written descriptions of all non-written agreements
relating to the Employee Benefit Plans.
(d) True, correct and complete copies of all Equity Appreciation
Rights Plans and schedules of all estimated payments to be made thereunder have
been delivered to U S WEST and such schedules reflect the estimated payments to
be made under each Equity Appreciation Rights Plan as a result of the Merger and
were calculated based on the methodology reasonably expected to be utilized for
the final calculation of the payments to be made under such Equity Appreciation
Rights Plans.
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(e) Neither Wometco nor any ERISA Affiliate thereof currently has
or in the preceding six (6) years has (i) had any obligation to make any
contribution to a Multiemployer Plan, (ii) incurred any withdrawal liability
under Section 4201 of ERISA, or (iii) sponsored or maintained any Pension Plan
subject to Title IV of ERISA.
(f) Except as set forth on Schedule 3.21, each Pension Plan
intended to qualify under Section 401 of the Code and each trust maintained
pursuant thereto are the subjects of favorable determination letters from the
IRS regarding their exemptions from federal income taxation under Section 501 of
the Code, and no plan amendment that is not the subject of a favorable
determination letter would affect the validity of the Pension Plan's letter.
(g) All contributions (including all employer contributions and
employee salary reduction contributions) required to have been made under the
terms of any of the Employee Benefit Plans or by law (without regard to any
waivers granted under Section 412 of the Code), to any funds or trusts
established thereunder or in connection therewith have been made by the due date
thereof (including any valid extension or grace period), and all contributions
for any period ending on or before the Closing Date which are not yet due will
have been paid or accrued on or prior to the Closing Date. No accumulated
funding deficiencies exist in any of the Employee Benefit Plans subject to
Section 412 of the Code.
(h) There is no violation of ERISA, the Code or any other
applicable laws with respect to the filing of applicable reports, documents, and
notices regarding the Employee Benefit Plans with the Secretary of Labor and the
Secretary of the Treasury or the furnishings of such documents to the
participants or beneficiaries of the Employee Benefit Plans which would have a
Material Adverse Effect.
(i) As of the date hereof, there are no pending or, to Wometco's
knowledge, overtly threatened actions, claims or lawsuits which have been
asserted or instituted against any of the Employee Benefit Plans, the assets of
any of the trusts under such plans or the plan sponsor or the plan
administrator, or against any fiduciary of any of the Employee Benefit Plans
with respect to the operation of such plans (other than routine benefit claims).
(j) All amendments and actions required to bring the Employee
Benefit Plans into conformity in all material respects with the applicable
provisions of ERISA and other applicable laws have been made or taken except to
the extent that such amendments or actions are not required by law to be made or
taken until a date after the Closing Date.
(k) Any bonding required with respect to the Employee Benefit Plans
in accordance with applicable provisions of ERISA has been obtained and is in
full force and effect.
(l) The Employee Benefit Plans have been maintained in accordance
with their terms and with the provisions of ERISA and other applicable federal
and state law, except for such noncompliance as would not have a Material
Adverse Effect. Neither Wometco, nor any ERISA Affiliate thereof, has engaged
in a non-exempt "prohibited transaction" within the meaning of Section 4975 of
the Code or Section 406 of ERISA with respect to the Employee Benefit Plans.
(m) Except as disclosed in Schedule 3.21, neither Wometco nor any
ERISA Affiliate thereof maintains retiree life and retiree health insurance
plans which are "welfare benefit plans" within the meaning of Section 3(1) of
ERISA and which provide for continuing benefits or coverage for any participant
or any beneficiary or any participant, except as may be required under Section
4980B of the Code and Part 6 of Subtitle
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B of Title I of ERISA ("COBRA"). Neither Wometco nor any ERISA Affiliate
thereof which maintains a "group health plan" within the meaning of Section
5000(b)(1) of the Code has violated the notice and continuation requirements of
COBRA in a manner which would have a Material Adverse Effect.
(n) No liability under any Employee Benefit Plan is funded with a
contract from an insurance company that is not rated AA by Standard & Poor's
Corporation or the equivalent by another nationally recognized rating agency.
(p) No stock or other security issued by Wometco forms or has
formed a material part of the assets of any Employee Benefit Plan.
(q) With respect to any period for which any contribution to or in
respect of any Employee Benefit Plan (including workers compensation) is due,
Wometco has made sufficient current accruals for such contributions and other
payments in accordance with generally accepted accounting principles, and such
current accruals through March 31, 1994 are duly and fully provided for in the
Balance Sheet.
(r) Except with respect to payments under the Equity Appreciation
Rights Plans, bonuses in lieu thereof or special bonuses granted after the date
hereof in addition thereto, all of which will be paid or satisfied in full by
Wometco on or prior to Closing, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any payment becoming due to any employee (current, former or retired)
of the Wometco Group, (ii) increase any benefits otherwise payable under any
Employee Benefit Plan or Equity Appreciation Rights Plan or (iii) result in the
acceleration of the time of payment or the vesting of any benefits under any
Employee Benefit Plan or Equity Appreciation Rights Plan.
(s) Except as disclosed on Schedule 3.21, none of the executives
who are parties to those certain severance agreements disclosed in Schedule 3.21
are eligible to receive any payment under any other severance pay plan, program
or arrangement or any stay bonus or retention plan or program of the Wometco
Group.
(t) Except as otherwise disclosed in Schedule 3.21 and as referred
to in Section 3.21(s) above, no employee of the Wometco Group is entitled to any
severance payments upon the sale of any of its divisions, Subsidiaries or any
business unit, absent an employee's actual loss of employment.
(u) Wometco has previously delivered to U S WEST a schedule of the
estimated payments to be made under those certain severance agreements disclosed
in Schedule 3.21 and a separate schedule of the payments to be made under the
home office severance policy disclosed in Schedule 3.21.
3.22 CABLE TELEVISION FRANCHISES. (a) Schedule 3.22(a) sets forth a
list of the CATV Systems, FCC Community Units and the geographic area served by
each CATV System and the name of the legal entity that owns each such CATV
System and holds the applicable Franchise and, the FCC Community Units, and the
approximate number of subscribers served by each such CATV System by franchise
area. As of June 30, 1994, there were at least 230,000 Subscribers served by
the CATV Systems based on the Wometco's month-end billing report as of such
date. Schedule 3.22(a) also contains, for each CATV System, a true, complete
and correct list of all of the franchise agreements and similar governing
agreements, instruments, resolutions, statutes or ordinances which are necessary
or required in order to operate the CATV Systems as of the date hereof
(collectively, the "Franchises"). To the extent that the same are in possession
of members of the Wometco Group, Wometco has made available to U S WEST for its
review descriptions or copies of other governmental permits or licenses,
including without limitation, railroad crossing and department of transportation
permits. The
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members of the Wometco Group have furnished to U S WEST true, complete and
correct copies of each of the Franchises. The Franchises contain all
commitments and obligations of the members of the Wometco Group to each of the
Governmental Authorities granting such Franchises with respect to the
construction, ownership and operation of the CATV Systems. Except as set forth
in Schedule 3.22(a) and except for any noncompliance or default that would not
have a Material Adverse Effect, the operations of the CATV Systems by the
members of the Wometco Group are in compliance with the terms and conditions of
the Franchises and are not in default thereunder.
(b) Schedule 3.22(b) sets forth the following technical and
business information relating to the operation of each of the CATV Systems as of
June 30, 1994 with respect to: (i) a rate card setting forth rates currently
being charged by the members of the Wometco Group in connection with the CATV
Systems for every service, level of service, package of service(s),
installations and outlets or other services or items for which the members of
the Wometco Group have an established charge (the "Current Rates"), and rate
cards setting forth all such rates as of (v) September 30, 1992 and (w)
September 1, 1993; (ii) the signals carried on the CATV Systems as of (x) June
2, 1993, (y) October 6, 1993 and (z) June 30, 1994; (iii) surety and performance
bonds required by the Franchises or otherwise maintained by the members of the
Wometco Group with respect to the CATV Systems, and the amount so required; (iv)
the number of Persons that receive CATV service free of charge; and (v) the
franchise fees being charged by the Franchising Authority for each of the CATV
Systems as of the date hereof. An accurate description of all contracts or
agreements for the provision of CATV services on a "bulk rate" basis ("Bulk
Service Agreements") as of the date hereof has been provided to U S WEST.
(c) Except as set forth in Schedule 3.22(c), no Person (including,
without limitation, any Governmental Authority) has any right to acquire any
interest in any of the CATV Systems or the Wometco Assets (including without
limitation any right of first refusal or similar right to purchase any interest
in the CATV Systems or any of the Wometco Assets). Except as set forth in
Schedule 3.22(c), the members of the Wometco Group have not entered into any
agreement and are not bound by any commitment with respect to retransmissions of
broadcast television signals relating to any of the CATV Systems.
(d) Except as set forth in Schedule 3.22(d), as of the date hereof,
to the knowledge of Wometco, no other Person:
(i) has been granted or has applied for the consent or
approval of any Governmental Authority for the installation,
construction, development, ownership or operation of a CATV System
or any MDS or MMDS system within all or part of the territory
covered by any of the CATV Systems;
(ii) operates any of the foregoing within all or part of the
territory covered by any of the CATV Systems, regardless of whether
the consent or approval of any Governmental Authority is required or
has been obtained;
(iii) has commenced, or has received or applied for the
consent of any Governmental Authority for, the construction,
installation, development or operation of a CATV System which has
resulted, or could result, in such system being overbuilt with any
of the CATV Systems; or
(iv) has announced its intentions to undertake any of the
activities set forth in (i)-(iii) above.
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(e) Except as set forth in Schedule 3.22(e), the members of the
Wometco Group do not provide CATV System services to any person or entity in the
service area covered by the CATV Systems at rates not reflected in the
applicable subscriber rate card for each CATV System.
(f) The members of the Wometco Group have filed with the
appropriate Governmental Authority all appropriate requests for renewal under
the Communications Act within 30 to 36 months prior to the expiration of each
Franchise. As of the date hereof, the members of the Wometco Group have not
received any written notice from any Franchising Authority with respect to
Franchises (other than in respect of Franchises which have been renewed after
receipt of any such notice) that the quality of service provided by any of the
CATV Systems, including signal quality, response to consumer complaints and
billing practices, but without regard to the mix or quality of cable services or
other services provided over the CATV Systems, has not been reasonable in light
of community needs, within the meaning of Section 626(c)(1)(B) of the
Communications Act, and, as of the date hereof, Wometco does not have any
knowledge that such a notice is to be received.
(g) Except as set forth in Schedule 3.22(g), the operations of the
CATV Systems are in compliance with the Communications Act and the FCC Rules and
Regulations and the members of the Wometco Group have submitted to the FCC all
filings, including but not limited to cable television registration statements,
annual reports and Aeronautical Frequency usage notices, that are required under
the FCC rules and regulations, except for such noncompliance or failure to file
that would not have a Material Adverse Effect or would interfere in a material
manner with the provisions of CATV service by a CATV System serving in excess of
10,000 Subscribers.
(h) Except where the failure of any of the following to be true
would not have a Material Adverse Effect or as set forth in Schedule 3.22(h)(i)
the members of the Wometco Group each have the right to use Aeronautical
Frequencies currently in use and have conducted all CATV Systems and microwave
performance tests and all Cumulative Leakage Index ("CLI") related tests
applicable to the CATV Systems, and have maintained records which accurately and
completely reflect in all material respects all results required to be shown
thereon, (ii) the members of the Wometco Group have corrected any radiation
leakage of the CATV Systems required to be corrected in connection with the
monitoring obligations and have otherwise complied with all applicable CLI rules
and regulations; (iii) the CATV Systems are in compliance with all signal
leakage criteria set forth in 47 CFR Section 76.611, and (iv) the members of the
Wometco Group have approval of the Federal Aviation Administration for all
towers requiring such approval.
(i) Except where the failure of any of the following to be true
would not have a Material Adverse Effect or as set forth in Schedule 3.22(i) (i)
for each relevant semi-annual reporting period, members of the Wometco Group
have filed with the United States Copyright Office all required Statements of
Account in true and correct form in all material respects, and have paid when
due all required copyright royalty fee payments in the correct amount, relating
to the CATV Systems' carriage of television broadcast signals; (ii) carriage of
all broadcast signals is in compliance with the Copyright Act of 1976, as
amended (the "Copyright Act") and the rules and regulations of the Copyright
Office and the members of the Wometco Group are eligible for the compulsory
license under Section 111 of the Copyright Act; (iii) within the last three (3)
years, none of the members of the Wometco Group has received any inquiry which
is still outstanding from the Copyright Office or any third party challenging or
questioning the information submitted in any Statement of Account or the amount
of any royalty payment; (iv) within the last three years, members of the Wometco
Group have not been subject to any judgment or order or settled any claim
concerning any Statements of Account; and (v) as of the date hereof, there is no
outstanding claim of copyright infringement against any member of the Wometco
Group.
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(j) Other than requests of network non-duplication and syndicated
exclusivity protection and other than as set forth in Schedule 3.22(j), as of
the date hereof, none of the members of the Wometco Group have outstanding any
written requests, notices or demands, from the FCC, any other Governmental
Authority or other Person, challenging or questioning the rights of the members
of the Wometco Group to operate the CATV Systems or carry any signal or
requesting signal carriage. All of the broadcast television signals carried by
the CATV Systems are carried either pursuant to the must-carry requirements or
pursuant to executed retransmission consent agreements. Except as set forth in
Schedule 3.22(j), as of the date hereof, no member of the Wometco Group has
outstanding any notification of any petition or submission to the FCC to modify
any television market or for a waiver of the Commission's rules as they apply to
the CATV Systems.
(k) Wometco has made available to U S WEST copies of (i) all
Franchise Authority certifications to regulate Basic Cable Service rates and/or
complaints against Cable Programming Service rates on FCC Forms 328 and 329,
respectively; (ii) FCC Forms 393 filed with the FCC for each of the CATV Systems
that are required to file such forms and all material correspondence, motions or
submissions related thereto; and (iii) copies of any correspondence, including
without limitation informal inquiries, requests for information, extensions of
time, accounting orders or rate determinations of Governmental Authorities
and/or the FCC in response thereto).
(l) The rates for regulated equipment and service tiers for each
community unit served by the members of the Wometco Group as calculated by
Wometco pursuant to FCC Rules and Regulations applicable between September 1,
1993 and May 15, 1994 ("Benchmark I Rates") have been made available to U S
WEST. Wometco has made available to U S WEST complete and accurate copies of
all justifications submitted to the FCC and any Governmental Authority and
Wometco's internal work papers detailing the derivation of their Benchmark I
Rates. The Benchmark I Rates became effective in the communities listed in
Schedule 3.22(l) hereto on September 1, 1993. Between September 1, 1993 and the
date hereof, the Wometco Group did not alter the Benchmark I Rates in the
communities listed in Schedule 3.22(l) hereto except as disclosed in
Schedule 3.22(l). As of the date hereof, the members of the Wometco Group have
not been ordered to modify their Benchmark I Rates for any community unit by
either theFCC or by any Governmental Authority. Wometco has made available to
U S WEST Wometco's calculation of the reductions to be made pursuant to
Section 76.922(b)(2) of Subpart N of the FCC Rules and Regulations for the
Wometco Group's regulated service tiers for each community unit served by the
Wometco Group ("Benchmark II Rates"). The Wometco Group has made available to U
S WEST complete and accurate copies of all justifications submitted to the FCC
and any Governmental Authority and the Wometco Group's internal work papers
detailing the derivation of their Benchmark II Rates. Wometco has made
available to U S WEST a description of its calculation of the price cap
adjustments in rates for Basic Cable Service and Cable Programming Service which
may be implemented in accordance with Subpart N of the FCC Rules and
Regulations.
(m) Wometco has made available to U S WEST accurate and complete
copies of each inquiry, request for information, report, directive and similar
communication received by the members of the Wometco Group from the FCC, if any,
relating to the implementation of the Cable Act and each written response and
each written summary of each oral response, if any, thereto of the Wometco
Group.
(n) Except as set forth in Schedule 3.22(n), as of the date hereof,
no CATV System has received any notice from any Governmental Authority of its
intent to (i) assert jurisdiction to regulate the CATV Systems' subscriber rates
or (ii) investigate such rates or business practices, pursuant to a subscriber
complaint or otherwise, including without limitation, under any state or local
so-called consumer protection, trade practice or other similar law or any other
law, rule or regulation applicable to the members of the Wometco Group or to any
of the CATV Systems.
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ARTICLE III-A
REPRESENTATIONS AND WARRANTIES OF PEACHTREE
Peachtree hereby represents and warrants to U S WEST and Acquisition Sub
as follows:
3.01-A ORGANIZATION AND AUTHORITY OF PEACHTREE. Peachtree is a limited
partnership duly organized and validly existing under the laws of the State of
Texas and is duly qualified to do business as a foreign limited partnership in
each other jurisdiction in which the conduct of its business requires it to be
so qualified except where the failure to be so qualified would not impair the
validity or enforceability of Peachtree's obligations hereunder. Peachtree has
all requisite partnership power and authority to conduct its business and
operations as presently conducted and to own and hold as lessee the property
that it owns or leases.
3.02-A LEGAL CAPACITY; APPROVALS AND CONSENTS.
(a) Peachtree has all requisite partnership power and authority to
execute, deliver and perform the Merger Agreements to which it is a party.
Subject only to obtaining the consents and approvals set forth on Schedule 3.02,
Peachtree has taken all requisite partnership actions necessary to authorize the
execution, delivery and performance of the Merger Agreements to which it is a
party. The Merger Agreements to which Peachtree is a party have been or will
be, as the case may be, duly executed and delivered by Peachtree and are or will
be, as the case may be, the valid and binding obligations of Peachtree
enforceable in accordance with their respective terms, except (x) as rights to
indemnity, if any, thereunder may be limited by federal or state securities Laws
or the public policies embodied therein, (y) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar Laws affecting
creditors' rights generally, and (z) as the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) Subject to obtaining the consents and approvals set forth on
Schedule 3.02 specifically identified with respect to Peachtree, the execution,
delivery and performance by Peachtree of the Merger Agreements to which
Peachtree is a party do not and will not contravene the partnership agreement of
Peachtree, and do not and will not (with the passage of time or the giving of
notice or both): (i) conflict with or result in a breach or violation by
Peachtree of, or (ii) constitute a default by Peachtree under, (iii) create or
impose any Lien upon, or (iv) result in the termination, cancellation,
acceleration of obligations under, suspension, modification or impairment of or
pursuant to, any Law, Judgment or other contract or agreement to which Peachtree
is a party or by which Peachtree is subject or bound, other than any violations,
conflicts, breaches, defaults, liens, terminations, suspensions, modifications
or impairments that would not individually or in the aggregate impair the
validity or enforceability of Peachtree's obligations hereunder, or violations,
conflicts, breaches, defaults, Liens, terminations, suspensions, modifications
or impairments attributable solely to the legal status and activities of U S
WEST or its Subsidiaries.
(c) Except as set forth on Schedule 3.02 and other than compliance
with and filings under the HSR Act, no Governmental Consents or Third Party
Consents are required to be obtained or made by or with respect to Peachtree in
connection with the execution, delivery and performance by Peachtree of this
Agreement or any of the other agreements contemplated hereby to which Peachtree
is a party, the consummation of the transactions contemplated hereby and thereby
or the taking by Peachtree of any other action contemplated hereby or thereby.
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3.03-A OWNERSHIP OF STOCK. Except as set forth on Schedule 3.04
specifically identified with respect to Peachtree, Peachtree owns all of the
issued and outstanding shares of Wometco Voting Stock and Wometco Non-Voting
Stock, free and clear of any Liens.
ARTICLE III-B
REPRESENTATIONS AND WARRANTIES OF ASSOCIATES
Associates hereby represents and warrants to U S WEST and Acquisition Sub
as follows:
3.01-B Organization and Authority of Associates. Associates is a limited
partnership duly organized and validly existing under the laws of the State of
Texas and is duly qualified to do business as a foreign limited partnership in
each other jurisdiction in which the conduct of its business requires it to be
so qualified except where the failure to be so qualified would not impair the
validity or enforceability of Associates' obligations hereunder. Associates has
all requisite partnership power and authority to conduct its business and
operations as presently conducted and to own and hold as lessee the property
that it owns or leases.
3.02-B LEGAL CAPACITY; APPROVALS AND CONSENTS.
(a) Associates has all requisite partnership power and authority to
execute, deliver and perform the Merger Agreements to which it is a party.
Subject only to obtaining the consents and approvals set forth on Schedule 3.02
specifically identified with respect to Associates, Associates has taken all
requisite partnership actions necessary to authorize the execution, delivery and
performance of the Merger Agreements to which it is a party. The Merger
Agreements to which Associates is a party have been or will be, as the case may
be, duly executed and delivered by Associates and are or will be, as the case
may be, the valid and binding obligations of Associates enforceable in
accordance with their respective terms, except (x) as rights to indemnity, if
any, thereunder may be limited by federal or state securities Laws or the public
policies embodied therein, (y) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar Laws affecting creditors'
rights generally, and (z) as the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
(b) Subject to obtaining the consents and approvals set forth on
Schedule 3.02 specifically identified with respect to Associates, the execution,
delivery and performance by Associates of the Merger Agreements to which
Associates is a party do not and will not contravene the partnership agreement
of Associates, and do not and will not (with the passage of time or the giving
of notice or both): (i) conflict with or result in a breach or violation by
Associates of, or (ii) constitutes a default by Associates under, (iii) create
or impose any Lien upon, or (iv) result in the termination, cancellation,
acceleration of obligations under, suspension, modification or impairment of or
pursuant to, any Law, Judgment or other contract or agreement to which
Associates is a party or by which Associates is subject or bound, other than any
violations, conflicts, breaches, defaults, liens, terminations, suspensions,
modifications or impairments that would not individually or in the aggregate
impair the validity or enforceability of Associates' obligations hereunder, or
violations, conflicts, breaches, defaults, Liens, terminations, suspensions,
modifications or impairments attributable solely to the legal status and
activities of U S WEST or its Subsidiaries.
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(c) Except as set forth on Schedule 3.02 and other than compliance
with and filings under the HSR Act, no Governmental Consents or Third Party
Consents are required to be obtained or made by or with respect to Associates in
connection with the execution, delivery and performance by Associates of this
Agreement or any of the other agreements contemplated hereby to which Associates
is a party, the consummation of the transactions contemplated hereby and thereby
or the taking by Associates of any other action contemplated hereby or thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF U S WEST AND ACQUISITION SUB
U S WEST and Acquisition Sub, jointly and severally, hereby represent and
warrant to Wometco and Peachtree as follows:
4.01 ORGANIZATION AND AUTHORITY; OWNERSHIP OF ACQUISITION SUB; NO PRIOR
ACTIVITIES OF ACQUISITION SUB; ASSETS OF ACQUISITION SUB.
(a) U S WEST and Acquisition Sub are corporations validly formed,
existing and in good standing under the laws of the State of Colorado and the
State of Delaware, respectively, with all requisite corporate power and
authority to conduct their respective businesses and operations as presently
conducted. Each of U S WEST and Acquisition Sub is qualified to do business as
a foreign corporation and is in good standing under the laws of each
jurisdiction in which its operations requires it to be so qualified except where
the failure to be so qualified would not have a material adverse effect on the
results of operations, properties, assets, liabilities or financial condition of
U S WEST and its Subsidiaries, taken as a whole.
(b) Acquisition Sub was formed by U S WEST solely for the purpose
of engaging in the transactions contemplated hereby.
(c) As of the date hereof and the Effective Time, the capital stock
of Acquisition Sub is and will be owned 100% by U S WEST directly. Further,
there are not as of the date hereof and there will not be at the Effective Time
any outstanding or authorized options, warrants, calls, rights, commitments or
any other agreements of any character which Acquisition Sub is a part to, or may
be bound by, requiring it to issue, transfer, sell, purchase, redeem or acquire
any shares of capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for or acquire, any
shares of capital stock of Acquisition Sub.
(d) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated thereby and hereby, Acquisition
Sub has not and will not have incurred directly or indirectly through any
Subsidiary or affiliate, any obligations or liabilities or engaged in any
business or activities of any type or kind whatsoever or entered into any
arrangements or agreements with any Person or entity.
(e) U S WEST will take all actions necessary to ensure that
Acquisition Sub at no time prior to the Effective Time owns any assets other
than an amount of cash necessary to incorporate Acquisition Sub and to pay the
expenses of the Merger attributable to Acquisition Sub if the Merger is
consummated.
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4.02 LEGAL CAPACITY; APPROVALS AND CONSENTS.
(a) Each of U S WEST and Acquisition Sub has all requisite
corporate power and authority to execute, deliver and perform the Merger
Agreements to which it is a party. Each of U S WEST and Acquisition Sub has
taken all requisite corporate actions necessary to authorize the execution,
delivery and performance of the Merger Agreements to which it is a party. The
Merger Agreements to which each of U S WEST and Acquisition Sub is a party have
been or will be, as the case may be, executed and delivered by each of U S WEST
and Acquisition Sub and are the valid and binding obligations of each such party
enforceable in accordance with their respective terms, except (x) as rights to
indemnity, if any, thereunder may be limited by federal or state securities laws
or the public policies embodied therein, (y) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar Laws affecting
creditors' rights generally, and (z) as the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) Subject to the satisfaction of the conditions described in
Sections 6.01(a), 6.01(c), 6.01(e), 6.01(f) and 6.02(e), the execution, delivery
and performance of the Merger Agreements to which each of U S WEST and
Acquisition Sub is a party does not and will not contravene the Articles or
Certificate of Incorporation or By-laws of either of U S WEST or Acquisition Sub
and does not, and will not (with the passage of time or the giving of notice or
both): (i) conflict with or result in a breach or violation by U S WEST or
Acquisition Sub of, (ii) constitute a default by U S WEST or Acquisition Sub or
(iii) create or impose any Lien upon or result in the termination, suspension,
modification or impairment of or under, any Law, Judgment, contract, arrangement
or understanding to which U S WEST or Acquisition Sub is a party or by which U S
WEST or Acquisition Sub is subject or bound, other than any violations,
conflicts, breaches, defaults, Liens, terminations, suspensions, modifications
or impairments that would not individually, or in the aggregate, have a material
adverse effect on the results of operations, properties, assets, liabilities or
financial condition of U S WEST and its Subsidiaries, taken as a whole and that
would not prevent the consummation of the transactions contemplated hereby.
(c) Based on the information provided to U S WEST by Wometco with
respect to the CATV Business, subject to compliance with the provisions of
Section 5.11 hereof, the consummation of the transactions hereunder by U S WEST
will not conflict with or result in a breach of or violation by U S WEST or any
of its Subsidiaries of the MFJ nor will the MFJ prevent U S WEST from
consummating the transactions contemplated hereby.
4.03 LEGAL AND GOVERNMENTAL PROCEEDINGS AND JUDGMENTS. Except as may
affect the cable television and telecommunications industries as a whole or as
disclosed in the U S WEST SEC Documents, as of the date hereof, there is no
legal or governmental action, proceeding or investigation (insofar as such
investigation is known to U S WEST or Acquisition Sub) pending or, to the
knowledge of U S WEST and Acquisition Sub, threatened against Acquisition Sub or
U S WEST (or its Subsidiaries), which individually or in the aggregate if
adversely determined would have a material adverse effect on the results of
operations, properties, assets, liabilities or financial condition of U S WEST
and its Subsidiaries, taken as a whole, nor are there any Judgments outstanding
against Acquisition Sub or U S WEST or to or by which Acquisition Sub or U S
WEST is or may be subject or bound, which individually or in the aggregate would
have a material adverse effect on the results of operations, properties, assets,
liabilities or financial condition of U S WEST and its Subsidiaries, taken as a
whole.
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4.04 FINDERS AND BROKERS. Except as disclosed in Schedule 4.04, neither
Acquisition Sub nor U S WEST has entered into any contract, arrangement or
understanding with any Person which will entitle such Person to any finder's
fees, brokerage or agent's commissions or other like payments in connection with
the consummation of the transactions contemplated hereby; and Acquisition Sub is
not aware of any claim or basis for any claim for payment of any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
consummation of the transactions contemplated hereby.
4.05 CAPITALIZATION. The authorized capital stock of U S WEST consists
of 2,000,000,000 shares of U S WEST Common Stock, of which 454,299,067 shares
were issued and outstanding as of June 30, 1994 and 50,000,000 shares of
Preferred Stock, $1.00 par value, of which 50,000 shares of Series B Cumulative
Redeemable Preferred Stock will be designated and issued prior to the Closing
Date pursuant to the terms and conditions of that certain Securities Purchase
Agreement dated April 10, 1994, as amended on May 6, 1994 among Fund American
Enterprises Holding, Inc., U S WEST, U S WEST Capital Corporation and Financial
Security Assurance Holdings, Inc. The authorized capital stock of Acquisition
Sub consists of 1000 shares of Acquisition Sub Stock, of which 100 shares are
issued and outstanding. All of the outstanding shares of U S WEST Common Stock
and Acquisition Sub Stock, respectively, have been validly issued and are fully
paid and nonassessable. Except as described in the U S WEST SEC Documents,
there are no other outstanding securities of U S WEST or Acquisition Sub
convertible into or exchangeable or exercisable for any shares of their
respective capital stock, nor are there any other outstanding or authorized
subscriptions, options, warrants, calls, rights, commitments, or other
contracts, agreements or understandings of any character obligating U S WEST or
Acquisition Sub to issue additional shares of their respective capital stock or
any other securities convertible into or evidencing the right to subscribe for
any shares of their respective capital stock.
4.06 COMPLIANCE WITH LAWS. U S WEST and Acquisition Sub hold all
licenses, permits and other authorizations from Governmental Authorities
necessary for the lawful conduct of their respective businesses except where the
failure to hold the foregoing would not have, individually or in the aggregate,
a material adverse effect on the results of operations, properties, assets,
liabilities or financial condition of U S WEST and its Subsidiaries, taken as a
whole. To the knowledge of U S WEST, the business and operations of U S WEST
and its Subsidiaries are being conducted in compliance with all applicable laws,
rules, and regulations of any Governmental Authority having jurisdiction over
such businesses and operations, except for such noncompliance as would not have,
individually or in the aggregate, a material adverse effect on the results of
operations, properties, assets, liabilities or financial condition of U S WEST
and its Subsidiaries, taken as a whole.
4.07 U S WEST SEC DOCUMENTS. Each annual and quarterly report,
registration statement on Form S-3 and definitive proxy statement filed by U S
WEST with the SEC since January 1, 1992 and each current report filed since
January 1, 1994 (as such documents have since the time of their filing been
amended, the "U S WEST SEC Documents"), as of their respective dates, complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as applicable, and the rules and regulations of the SEC thereunder
applicable to such U S WEST SEC Documents and none of the U S WEST SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
financial statements of U S WEST included in the U S WEST SEC Documents filed
with the SEC by U S WEST comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes
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thereto) and fairly present (subject, in the case of the unaudited financial
statements, to normal, recurring audit adjustments, which were not individually
or in the aggregate material) the consolidated financial position of U S WEST
and its consolidated Subsidiaries as at the date thereof and the consolidated
results of their operations and cash flows for the periods then ended. Except
for matters relating to or affecting the telecommunications industry generally,
including without limitation, legislative, regulatory or litigation matters and
matters relating to or arising from local or national economic conditions,
including financial and capital markets, there has not been any change,
occurrence or circumstance, which, individually or in the aggregate, will have a
material adverse effect on the results of operations, properties, assets,
liabilities or financial condition of U S WEST and its Subsidiaries, taken as a
whole, which is not set forth in the U S WEST SEC Documents.
4.08 U S WEST COMMON STOCK. The shares of U S WEST Common Stock
comprising the Merger Consideration, when issued to the holders of the Wometco
Stock, in accordance with this Agreement, will be duly authorized, validly
issued, fully paid and non-assessable.
4.09 REGISTRATION STATEMENT. The Registration Statement will not, at the
time the Registration Statement is filed with the SEC, at the time it becomes
effective under the Securities Act and at the time of the issuance of any U S
WEST Common Stock as Merger Consideration, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading; provided, however, U S
WEST and Acquisition Sub make no representations or warranties as to information
provided in writing by Wometco and the Selling Stockholders or any of their
representatives for inclusion in the Registration Statement, including, without
limitation, the description of the tax consequences to the Stockholders and any
opinion with respect thereto. The Registration Statement (other than the tax
opinion required to be filed as an exhibit thereto) will comply as to form in
all material respects with the provisions of the Securities Act and the rules
and regulations thereunder.
4.10 SECTION 368(a).
(a) Neither U S WEST nor Acquisition Sub is an investment company
as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(b) U S WEST has no plan or intention to cause Wometco to issue
additional shares of Wometco stock that would result in U S WEST losing control
of Wometco. For purposes of this representation, control means the direct
ownership of stock in Wometco possessing at least eighty percent (80%) of the
total combined voting power of all classes of stock of Wometco entitled to vote
and at least eighty percent (80%) of the total number of shares of each other
class of stock of Wometco.
(c) Acquisition Sub will have no liabilities assumed by Wometco in
the Merger, and will not in the Merger transfer to Wometco any assets subject to
liabilities.
(d) U S WEST has no plan or intention to liquidate Wometco, to
merge Wometco with or into another corporation, to sell or otherwise dispose of
Wometco Stock acquired in the Merger except for the transfer of all of Wometco
Stock to a corporation controlled by U S WEST, or to cause Wometco to sell or
otherwise dispose of any of its assets or of any of the assets acquired from
Acquisition Sub, except for dispositions made in the ordinary course of business
or transfers of assets to a corporation controlled by Wometco.
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(e) U S WEST has no plan or intention to redeem or otherwise
reacquire the U S WEST Common Stock issued in the Merger.
(f) Before the Merger, U S WEST will be in control of Acquisition
Sub. For purposes of this representation, control means the direct ownership of
stock in Acquisition Sub possessing at least eighty percent (80%) of the total
combined voting power of all classes of stock of Acquisition Sub entitled to
vote and at least eighty percent (80%) of the total number of shares of each
other class of stock of Acquisition Sub.
(g) U S WEST intends to cause Wometco to continue its historic
business or use a significant portion of its historic business assets in a
business.
(h) U S WEST, Acquisition Sub and Wometco will report the Merger
for federal income tax purposes as a reorganization pursuant to Section
368(a)(1)(A) and 368(a)(2)(E) of the Code.
ARTICLE V
COVENANTS OF THE PARTIES
5.01 WOMETCO'S COVENANTS. From the date hereof until the Closing, and
except as otherwise consented to or approved by U S WEST in writing, Wometco
covenants and agrees as follows:
(a) BUSINESS IN ORDINARY COURSE. Except as otherwise permitted by
the terms of this Agreement, the Wometco Group shall conduct its business in the
usual, regular and ordinary course substantially consistent with past practices,
and (i) will (1) file, with the appropriate Governmental Authority, appropriate
requests for renewal under the Communications Act of all Franchises due to
expire within 30 to 36 months prior to the expiration of each such Franchise;
and (2) except as otherwise provided in Section 5.01(b)(xvi), proceed with all
routinely scheduled increases in compensation consistent with past practices
with respect to employees involved in the operations of the CATV Systems; (ii)
will use reasonable efforts to (1) preserve intact its current business
organizations; (2) keep available the services of their current officers and
employees and (3) preserve their relationships with customers, suppliers and
others having business dealings with them to the end that their goodwill and
ongoing businesses shall not be impaired in any material respect at the Closing
Date; and (iii) to the extent practicable, will make expenditures described in
the 1994 Budget at such times and in such amount as set forth therein, subject
to customary changes in the ordinary course of business that are not substantial
in amount.
(b) NEGATIVE COVENANTS. Except as otherwise permitted by the terms
of this Agreement, or as set forth in Schedule 5.01, the Wometco Group will not
do or agree to do any of the following acts:
(i) grant any promotion to any employee or provide for any
new pension or welfare plan, severance or other retirement plan or other
retirement or employment benefits to any of its employees or any increase in any
existing benefits or otherwise amend any such plan or benefits;
(ii) merge, amalgamate or consolidate with any other entity,
sell all or substantially all of its business or assets, or acquire all or
substantially all of the business or assets of any other Person;
(iii) enter into or amend any employment, consulting,
severance or similar agreement with any Person;
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(iv) declare, set aside or make any payments or distribution
in cash, securities or property to the Stockholders of Wometco or repurchase,
acquire or extinguish for value any of the ownership interest in Wometco;
(v) incur or assume any liabilities, obligations or
indebtedness for borrowed money or guarantee any such liabilities, obligations
or indebtedness, other than in the ordinary course of its business consistent
with past practice;
(vi) waive any claims or rights having a value in excess of
$10,000 individually or $100,000 in the aggregate (except for cancellation of
receivables from Peachtree);
(vii) make any change in any method of accounting or
accounting practice or policy;
(viii) make or incur any capital expenditures in excess of
the projected capital expenditures taken in the aggregate set forth in the 1994
Budget made available to U S WEST except for customary changes in the ordinary
course of business that are not substantial in amount;
(ix) sell, lease or otherwise dispose of any of the Wometco
Assets except in the ordinary course of business consistent with past practice
and not having a fair market value of more than $25,000 individually or $150,000
in the aggregate;
(x) abandon, avoid, dispose, surrender or materially amend
the terms of any of Franchises; provided that in connection with any amendment
or renewal arising in connection with the renewal of any Franchise during the
period between the date hereof and Closing, such renewed Franchise may be
entered into with the consent of U S WEST, whose consent shall not be
unreasonably withheld;
(xi) delete any programming service on the Systems other than
in the ordinary course of business or as required by the Cable Act;
(xii) enter into, amend or terminate any contracts, leases,
commitments, understandings, licenses, or other agreements other than in the
ordinary course of business consistent with past practice or as required by the
Cable Act; provided that the Management Agreement dated as of July 31, 1991 by
and among Wometco and the Atlanta Cable Group will be terminated as of Closing;
(xiii) offer free or reduced price service as an inducement
to any person, except in the ordinary course of business consistent with past
practice or as required by the Cable Act;
(xiv) amend, propose to amend, or otherwise change the
Certificate of Incorporation or By-Laws of Wometco or any corporate Wometco
Subsidiary or the partnership agreement of any Wometco Subsidiary that is a
partnership;
(xv) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, or any securities convertible into, any
additional shares of stock of any class or grant any warrants, options or rights
to subscribe for or acquire any such shares or convertible securities, other
than pursuant to arrangements which are disclosed in Schedule 3.04; or
(xvi) (1) grant or agree to grant any increase in the rate of
salary or compensation to any employee of the Wometco Group whose base salary
is, as of the date of this Agreement, in excess of
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$100,000 per annum; provided, however, that in the event the Closing is on or
after May 1, 1995, salary or compensation increases which would otherwise be
made to such employees in the ordinary course of business in accordance with
past practices may be granted, (2) grant or agree to grant any increase in the
rate of salary or compensation of any employee of the Wometco Group whose base
salary is, as of the date of this Agreement, $25,000 or more and less than
$100,000 per annum, other than any merit increase which would otherwise be made
in the ordinary course of business in accordance with past practice, with the
amount of such merit increases to be limited to 7% per annum per employee, or
(3) grant or agree to grant any bonus or incentive award to any Wometco Group
employee other than pursuant to existing incentive bonus plans disclosed in
Schedule 3.21 or allowable under Section 3.21(r), provided further that the 1994
bonuses paid to all Wometco Group employees shall not exceed, in the aggregate,
110% of the 1993 total bonus payments. For employees of Wometco earning less
than $25,000 per annum, Wometco may grant or agree to grant increases in base
salary which would otherwise be made in the ordinary course of business in
accordance with scheduled increases and no other approval of U S WEST is
required in such instances.
(c) REGISTRATION STATEMENT. Wometco shall furnish in writing all
information concerning Wometco and the Stockholders as may be reasonably
requested by U S WEST in connection with preparing and filing the Registration
Statement and listing the U S WEST Common Stock comprising the Merger
Consideration on the NYSE, including, without limitation, a description of the
tax consequences to the Stockholders and a tax opinion related thereto to be
filed as an exhibit to the Registration Statement.
(d) NON-SOLICITATION. Each of Wometco and Peachtree agree that
between the date hereof and the Closing Date, it will not, directly or through
any Affiliates or representatives, (i) furnish any written or oral information
relating to the CATV Systems, or afford access to any facilities or management
of the Systems, to anyone other than U S WEST or its representatives (except to
the extent required in the ordinary course of the operation of the CATV Business
consistent with past practice); or (ii) distribute a proposed agreement
contemplating, engage in any negotiations relating to, or solicit, initiate,
encourage, discuss or accept any offers for, the merger of Wometco with or into
any Person or the sale of the CATV Systems or Wometco Assets to anyone other
than U S WEST. In the event that Wometco or Peachtree or any Affiliate thereof
receives a proposal relating to any such transaction, Wometco or Peachtree shall
promptly notify U S WEST of such proposal.
(e) "WOMETCO" TRADE NAME. Wometco shall use its reasonable best
efforts to obtain a license from Wometco Enterprises, Inc. for the Surviving
Corporation to use the "Wometco" name as a service mark and/or trade name in
connection with the operation of the CATV Business until June 30, 1995, subject
to the provisions of Section 5.03(g) below.
(f) EQUITY APPRECIATION RIGHTS PLANS. Wometco shall on the day
immediately preceding the Closing Date pay all amounts due to the respective
participants under the Equity Appreciation Rights Plans.
(g) PROGRAMMING AGREEMENTS. (i) At the request of U S WEST,
Wometco shall use its reasonable best efforts to enter into effective upon
consummation of the Closing programming agreements with those parties from whom
the members of the Wometco Group currently purchase programming and related
products to the extent that such agreements or arrangements are not evidenced by
any written agreement or have expired, such agreements to be on terms reasonably
acceptable to U S WEST and Wometco.
(ii) The members of the Wometco Group shall not enter into
new programming agreements or renewals of existing programming agreements
without the prior consent of U S WEST, whose consent shall not be unreasonably
withheld or delayed.
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(h) CERTAIN TAX DOCUMENTS. On or prior to the Closing Date,
Wometco shall prepare and submit for U S WEST's prior written approval documents
that confirm the application of Section 280G(b)(5)(A)(ii) of the Code to
payments pursuant to the Equity Appreciation Rights Plans and any other payments
that would otherwise be subject to Section 280G of the Code.
(i) AMENDMENT TO SEVERANCE AGREEMENTS. Wometco agrees that it
shall amend Paragraph 2(b) of those certain severance agreements disclosed on
Schedule 3.21 in the following manner with such amendments to be effective as of
the Closing:
"(b) EMPLOYEE BENEFIT PLANS - The Company shall continue to provide
the Employee with the term life and health insurance benefits (or
shall provide substantially comparable benefits) as were applicable
to him, his spouse and dependents on the date hereof or the date of
Termination, whichever is more beneficial to the Employee. The
Company shall pay the premiums associated with such benefit
programs. The benefits provided under this Paragraph (2)(b) shall
continue until such time as the Employee becomes eligible to be
covered by substantially comparable benefits offered by another
employer."
(j) AFFILIATE INDEBTEDNESS. On or prior to the Closing, all
Indebtedness, liabilities and other obligations owed by or to Wometco to or from
any Affiliate of Wometco other than members of the Wometco Group and the Atlanta
Cable Group or Local Interconnect, L.P. shall be cancelled, discharged or
otherwise satisfied in full.
(k) DOUGLASVILLE LEASE. At the request of U S WEST, Wometco shall
use its reasonable best efforts to obtain a lease for the property located at
5979 Fairburn Road, Douglasville, Georgia, on terms reasonably acceptable to
Wometco and U S WEST.
5.02 COVENANTS OF U S WEST AND ACQUISITION SUB. From the date hereof and
until the Closing, and after the Closing to the extent provided for herein, and
except as otherwise consented to or approved by Wometco in writing, U S WEST and
Acquisition Sub, jointly and severally, covenant and agree as follows:
(a) CONSENTS. EACH OF U S WEST AND ACQUISITION SUB SHALL EXERCISE
ITS REASONABLE BEST EFFORTS PROMPTLY TO OBTAIN ALL CONSENTS, APPROVALS OR
WAIVERS REQUIRED UNDER THE TERMS OF THE MFJ OR OTHER APPLICABLE LAW SPECIFIC TO
THE REGULATORY STATUS OF U S WEST OR ITS SUBSIDIARIES TO CONSUMMATE THE
TRANSACTION CONTEMPLATED BY THE TERMS OF THE AGREEMENT.
(b) U S WEST COMMON STOCK. Between the date hereof and the Closing
Date, U S WEST will not redeem, repurchase, retire or acquire, directly or
indirectly, shares of U S WEST Common Stock or any warrants, rights or options
to directly or indirectly purchase or acquire any such U S WEST Capital Common
Stock or any securities exchangeable for or convertible into any such shares,
other than (i) in the ordinary course of business and consistent with past
practice under the terms of U S WEST plans and agreements for employees,
officers and directors currently in force and (ii) repurchases from time to time
of outstanding Liquid Yield Option Notes of U S WEST.
5.03 MUTUAL COVENANTS. During the period from the date of this Agreement
and (unless a longer period is otherwise provided below) continuing until the
Closing Date, each of U S WEST, Acquisition Sub and
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Wometco agrees that, except as expressly contemplated or permitted by this
Agreement, or to the extent that the other party shall otherwise consent in
writing:
(a) REGISTRATION STATEMENT.
(i) On or before September 1, 1994, U S WEST, at its expense,
shall have prepared and filed with the SEC the Registration Statement covering
the U S WEST Common Stock to be issued in connection with the Merger and to
permit the public resale by Peachtree and its distributees (the "Selling
Stockholders") of the shares of U S WEST Common Stock to be issued and delivered
to the Stockholders upon the Closing. U S WEST will have exclusive
responsibility for the preparation, filing, accuracy and completeness of the
Registration Statement, and any amendments or supplements thereto (including the
exhibits thereto), except as to information in the Registration Statement, and
any amendments or supplements thereto, which the Selling Stockholders or any of
their representatives have furnished in writing to U S WEST expressly for
inclusion in the Registration Statement or any amendment or supplement thereto.
U S WEST will furnish to Peachtree copies of the Registration Statement, the
prospectus relating to the Registration Statement, and any amendments or
supplements thereto, immediately upon the filing of such documents with the
SEC. U S WEST shall furnish to Peachtree, for Peachtree's review and comment,
copies of the Registration Statement and any amendments or supplements thereto
prior to filing the Registration Statement and any amendments or supplements
thereto with the SEC. Peachtree shall advise U S WEST of any recommended
changes to the Registration Statement and any amendments or supplements thereto
promptly following receipt thereof from U S WEST.
(ii) U S WEST covenants to Peachtree that the Registration
Statement, the prospectus relating to the Registration Statement, and any
amendments or supplements thereto (other than any information which the Selling
Stockholders or any of their representatives have furnished in writing to U S
WEST expressly for inclusion in any such document) (i) will comply in all
material respects with the Securities Act, and (ii) will not contain any untrue
statements of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements contained therein,
in light of the circumstances under which they are made, not misleading;
provided, however, that U S WEST and Acquisition Sub make no covenant as to
information provided in writing by Wometco or the Selling Stockholders or any of
their representatives for inclusion in the Registration Statement. Peachtree
covenants to U S WEST that the information supplied or to be supplied in writing
to U S WEST by Peachtree or any of its representatives expressly for inclusion
in the Registration Statement, the prospectus relating to the Registration
Statement and any amendments and supplements thereto, will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(iii) Peachtree shall promptly furnish to U S WEST all
information, and take such other actions as may reasonably be requested by U S
WEST in connection with any action or filing by U S WEST in connection with this
Section 5.03(a). U S WEST will proceed in good faith and use its best efforts
to cause the Registration Statement to become effective as soon as reasonably
possible after filing but in no event later than the Closing Date.
(iv) Except as otherwise provided in clause (ix) of this
Section 5.03, until such time as the Selling Stockholders have sold all of the U
S WEST Common Stock covered by the Registration Statement, but in no event later
than two years from the Closing, U S WEST shall prepare and file with the SEC
such amendments, post-effective amendments and supplements to the Registration
Statement or the prospectus relating to the Registration Statement which U S
WEST or its counsel reasonably determine to be necessary or appropriate to keep
the Registration Statement effective and current and to comply with the
provisions of the Securities Act
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with respect to the disposition by the Selling Stockholders of all shares of U S
WEST Common Stock covered by the Registration Statement.
(v) Except as otherwise provided in clause (ix) of this
Section 5.02, U S WEST shall, as promptly as reasonably practicable following
the date on which the Registration Statement or the prospectus relating to the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, prepare and file with the SEC and furnish to
Peachtree a supplement or amendment to the Registration Statement or such
prospectus so that, as thereafter delivered to purchasers of the Selling
Stockholders' shares of U S WEST Common Stock, such prospectus will not contain
any untrue statement of any material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading in light of the circumstances then existing.
(vi) U S WEST shall notify Peachtree immediately upon (A) the
declaration by the SEC of the effectiveness of the Registration Statement, (B)
the issuance or threatened issuance of any stop order or other order preventing
or suspending the use of any prospectus relating to the Registration Statement,
(C) any suspension or threatened suspension of the use of any prospectus
relating to the Registration Statement in any state, (D) any proceedings
commenced or threatened to be commenced by the SEC or any state securities
commission which would result in the issuance of such stop order or other order
or suspension of use, or (E) any request by the SEC to supplement or amend any
prospectus relating to the Registration Statement after the effectiveness of the
Registration Statement. Except as otherwise provided in clause (ix) of this
Section 5.02, U S WEST shall use its reasonable best efforts to prevent or
promptly remove any stop order or other order preventing or suspending the use
of any prospectus relating to the Registration Statement and to comply with any
such request by the SEC to amend or supplement such prospectus.
(vii) Peachtree hereby agrees that, upon receipt of any
notice from U S WEST delivered pursuant to Section 5.03(a)(v) or clauses (B),
(C), (D) or (E) to Section 5.03(a)(vi), Peachtree shall, and shall cause each
Selling Stockholder to, forthwith discontinue disposition of the shares of U S
WEST Common Stock covered by the Registration Statement until the Selling
Stockholders receive copies of the applicable supplement or amendment to the
Registration Statement or the failure to exist of the facts prompting the
discontinuance of dispositions.
(viii) Peachtree shall give U S WEST not less than five (5)
Business Days prior written notice (a "Sale Notice") of any Selling
Stockholder's intention to sell any shares of U S WEST Common Stock covered by
the Registration Statement. At any time after delivery of a Sale Notice and
during the related Sale Period (as defined below), Peachtree and U S WEST shall
each promptly notify the other if they learn of any event as a result of which
the Registration Statement or the prospectus relating thereto, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing. If, within
10 days after receipt of a Sale Notice from Peachtree, U S WEST delivers to
Peachtree a Deferral Notice (as defined in and in accordance with Section
5.03(a)(ix) below), the Selling Stockholder shall defer such sale, and Peachtree
shall cause the Selling Stockholder to defer such sale, in accordance with such
Deferral Notice. If U S WEST does not deliver a Deferral Notice within such 10
day period, the Selling Stockholder may, within 30 days (the "Sale Period"),
consummate the sale contemplated by the Sale Notice unless, prior to the
consummation of such sale, U S WEST has delivered to Peachtree a Deferral
Notice.
(ix) U S WEST may (A) defer compliance with
Sections 5.03(a)(iv), 5.03(a)(v) or 5.03(a)(vi) or (B) require that any Selling
Stockholder with respect to whom U S WEST has received a Sale
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Notice postpone such sale, in each case for such period of time as U S WEST
shall deem reasonable, not to exceed 90 consecutive days, if U S WEST, in its
good faith judgment, determines that U S WEST is in possession of material
information that has not been disclosed to the public and U S WEST reasonably
deems it to be advisable not to publicly disclose such information at such time
in a supplement or amendment to the Registration Statement or in any document
incorporated therein by reference and, in such case, U S WEST shall give
Peachtree written notice of such determination (a "Deferral Notice"), which
notice shall, if the period of such postponement is less than 90 days, specify
the period of the required postponement (such 90 day period or shorter required
period being referred to herein as the "Deferral Period"). In the event U S
WEST gives Peachtree such a Deferral Notice, Peachtree agrees that it shall not,
and shall immediately notify the Selling Stockholders that they have an
obligation not to, purchase or sell any U S WEST security during the Deferral
Period or use their knowledge of the Deferral Notice in violation of the
securities laws during the Deferral Period. U S WEST shall immediately notify
Peachtree at such time as the reason for such postponement shall cease to exist
(if earlier than the expiration of the Deferral Period) and upon receipt of
such notice or the expiration of the Deferral Period, as applicable, and for a
period of 30 days thereafter the Selling Stockholder may consummate the sale
contemplated by the Sale Notice unless during such period U S WEST shall deliver
to Peachtree another Deferral Notice. Notwithstanding anything herein to the
contrary, U S WEST shall not be entitled to require postponement of sales for
more than an aggregate of 180 days during any 365-day period.
(x) U S WEST shall file with the SEC in a timely manner all
reports and other documents required of U S WEST under the Securities Act and
the Exchange Act.
(xi) U S WEST shall be responsible for all expenses incurred
by U S WEST in complying with this Section 5.02(b), including without
limitation, all United States registration, qualification and filing fees,
printing expenses, fees and disbursements of counsel for U S WEST, applicable
blue sky fees and expenses, and the expense of any special audits incident to or
required by the registration contemplated hereby. The Selling Stockholder shall
be responsible for all underwriting discounts and commissions and transfer
taxes, if any, relating to the resale by the Selling Stockholders of the U S
WEST Common Stock.
(xii) Until such time as the Selling Stockholders have sold
all of the U S WEST Common Stock covered by the Registration Statement, but in
no event later than two years from the Closing, Peachtree shall cause each of
the Selling Stockholders to take and U S WEST will take such other actions and
enter into such other agreements as may be reasonably necessary or advisable in
connection with the resale by the Selling Stockholders of the U S WEST Common
Stock covered by the Registration Statement.
(xiii) U S WEST shall use its best efforts to qualify the
shares of U S WEST Common Stock to be issued and delivered to the Selling
Stockholders in the Merger under the securities or "blue-sky" laws of any
jurisdiction in which such qualification is required in connection with (A) the
distribution of such shares to the Selling Stockholders pursuant to the terms
hereof, and (B) any resale by the Selling Stockholders of U S WEST Common Stock
during the period U S WEST has agreed hereunder to keep the Registration
Statement effective.
(b) CONFIDENTIALITY. Each party shall, and shall use its
reasonable best efforts to cause its Affiliates and its and their respective
agents to, keep secret and hold in strictest confidence for a period of two (2)
years following the Closing Date any and all information relating to any other
party that is proprietary to such other party, other than the following: (i)
information that has become generally available to the public other than as a
result of a disclosure by such party, its Affiliates or its agents; (ii)
information that becomes available to such party or an agent of such party on a
nonconfidential basis from a third party having no obligation of confidentiality
to a party to this Agreement; (iii) information that is required to be disclosed
by applicable law,
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judicial order or pursuant to any listing agreement with, or the rules or
regulations of, any securities exchange on which securities of such party or any
such affiliate are listed or traded (including information that is required to
be disclosed in connection with filing the Registration Statement with the SEC);
and (iv) disclosures made by any party as shall be reasonably necessary in
connection with obtaining the Required Consents or disclosures made to lenders
or direct or indirect shareholders or partners of the Wometco Group; provided,
however, in connection with disclosure of confidential information under (iii)
and (iv) hereof, the disclosing party shall give the other party hereto timely
prior notice of the anticipated disclosure and the parties shall cooperate in
designing reasonable procedural and other safeguards to preserve, to the maximum
extent possible, the materials' confidentiality.
(c) PUBLICITY. None of the members of the Wometco Group will issue
any press release or otherwise make any public statement with respect to this
Agreement and the transactions contemplated hereby without the prior consent of
U S WEST (which consent shall not be unreasonably withheld), except as may be
required by Applicable Laws, in which event the Wometco Group party required to
make the release or announcement shall, if possible, allow U S WEST reasonable
time to comment on such release or announcement in advance of such issuance.
Except as required by Applicable Laws or stock exchange regulations, U S WEST
will not issue any press releases or otherwise make any public statement with
respect to this Agreement and the transactions contemplated hereby without
giving Wometco and Peachtree prior notice and allowing Wometco and Peachtree
reasonable time to comment on such release or announcement in advance of
issuance. Nothing set forth in the foregoing sentences of this subsection (b)
shall prohibit U S WEST or Wometco from meeting with employees of the Wometco
Group involved in the operation of the CATV Systems and discussing with and
distributing to such employees information regarding this Agreement and the
transactions contemplated hereby.
(d) SATISFACTION OF CONDITIONS; ADDITIONAL AGREEMENTS. Subject to
the terms and conditions of this Agreement, but without modifying Section
5.03(f) each of the parties hereto agrees to use its reasonable best efforts to
cause the conditions set forth in Article VI to be satisfied, and to take, or
cause to be taken, all action and to do, or cause to be done, and to assist and
cooperate fully with the other parties in doing, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
in the most expeditious manner possible the transactions contemplated by this
Agreement, including (i) the provision of information and making of all
necessary filings in connection with, among other things, the HSR Act; (ii) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Authorities and the making of all necessary
registrations and filings (including filings with Governmental Authorities) and
the taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by any Governmental
Authorities; (iii) the obtaining of all necessary consents, approvals or waivers
from third parties, it being agreed by the parties hereto that if a party whose
consent is required imposes conditions as a condition to granting its consent, U
S WEST and Wometco shall negotiate jointly with such party with respect to such
conditions, with such conditions to be acceptable only if consented to by U S
WEST, whose consent shall not be unreasonably withheld; (iv) the defending of
any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby including seeking to have any stay or temporary restraining order entered
by any court or other Governmental Authority vacated or reversed; and (v) the
execution and delivery of any additional instruments necessary to consummate the
transactions contemplated by this Agreement.
(e) HSR ACT FILING. Each of the parties hereto will, within 30
days following the date of execution of this Agreement, file the HSR Report
required to be filed by them or by any Person which is part of the same "person"
(as defined in the HSR Act and Rules) as any of them, and will file as promptly
as practicable after receipt thereof, a response to any further request for
information made by the FTC or the Antitrust Division of the DOJ as is
reasonably or customarily requested, and will use its reasonable best efforts to
promptly as is reasonably practicable comply with any and all other applicable
reasonable or customary requirements under the
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HSR Act and rules relating to filing and furnishing of information to the FTC
and the Antitrust Division of the DOJ, the parties' actions to include, without
limitation, (i) taking all other reasonable or customary action required by the
HSR Act or Rules; (ii) coordinating the filing of such HSR Reports (and
exchanging drafts thereof) so as to present both HSR Reports to the FTC and the
DOJ at the same time and to avoid substantial errors or inconsistencies between
the two in the description of the transaction; and (iii) using their reasonable
best efforts to comply with any additional request for documents or information
made by the FTC or the DOJ or by a court and assisting the other parties to so
comply as is reasonably or as is customarily requested.
(f) REQUIRED CONSENTS. Wometco and U S WEST shall each use their
respective reasonable best efforts to obtain all Required Consents, including
taking the actions specified herein. In order to secure the Governmental
Consents from Franchising Authorities Wometco shall proceed immediately in good
faith and using its reasonable best efforts, to prepare, file and prosecute
each Governmental Consent from a Franchising Authority, with the full right of
participation by U S WEST including, without limitation, the right of prior
review and approval of correspondence or forms of transfer resolutions,
ordinances or agreements to be submitted to Franchising Authorities (which
approval shall not be unreasonably withheld or delayed) and to be represented
at all meetings or hearings as may be scheduled to consider such submissions.
U S WEST and Wometco shall submit to each Franchising Authority whose consent
is required a form of ordinance or resolution, as appropriate, relating to the
transfer of the Franchise, which ordinance or resolution shall be in a form
reasonably acceptable to U S WEST and Wometco. Wometco shall consult with U S
WEST and promptly and regularly notify U S WEST with regard to all material
developments of the transfer consent process, and shall give U S WEST reasonable
prior notice of all meetings scheduled with the Franchising Authorities. U S
WEST shall use its reasonable best efforts to promptly assist Wometco and shall
take such prompt and affirmative actions as may reasonably be necessary in
obtaining such approvals and shall cooperate with Wometco in the preparation,
filing and prosecution of such applications as may reasonably be necessary,
including the preparation, filing and prosecution of any joint applications
required to be filed with the Franchising Authorities or the FCC, and agrees to
use its reasonable best efforts to furnish all information as is reasonably or
as is customarily required by the approving entity, and, if requested by Wometco
upon reasonable notice, U S WEST shall have the obligation to be represented at
such meetings or hearings as may be scheduled to consider such applications.
Any administrative filing fees imposed in connection with obtaining the
Governmental Consents shall be borne by Wometco and each of the parties shall
bear its own legal fees or other costs of professional advisors incurred in the
filing and prosection of such applications. If, in connection with obtaining
Governmental Consents from a Franchising Authority, a Franchising Authority
imposes conditions as a condition to granting its consent, U S WEST and Wometco
shall negotiate jointly with such Franchising Authority with respect to such
conditions, with such conditions to be accepted only if consented to by U S WEST
and Wometco, which consent shall not be unreasonably withheld. U S WEST and
Acquisition Sub agree that prior to the Closing Date, they will not, without
the prior written consent of Wometco, seek amendments, modifications or other
changes to Franchises or Business Contracts and shall not institute or
participate in any discussions with Franchising Authorities without the prior
written consent of Wometco and without offering a representative of Wometco an
opportunity to participate or observe such discussions.
(g) CHANGE OF NAME. If by September 30, 1994, Wometco has not
obtained the license referred to in Section 5.01(e) above, U S WEST and Wometco
shall negotiate in good faith to agree on a new name for the operation of the
CATV Business as soon as practicable thereafter.
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5.04 ACCESS TO INFORMATION.
(a) ACCESS BY U S WEST. Between the date of this Agreement and the
Closing, subject to legal and contractual restrictions applicable to the Wometco
Group, U S WEST and its counsel, accountants and other representatives shall
have access during normal business hours to all of the properties, books,
reports and records of the Wometco Group, and Wometco shall furnish U S WEST
with all information it may reasonably request relating to the properties,
books, reports and records of the Wometco Group. Between the date of this
Agreement and the Closing, U S WEST shall have the right to locate employees of
U S WEST or Acquisition Sub on the premises of the CATV Business facilities
during normal business hours; provided, however, that the presence of such U S
WEST employees does not unreasonably interfere with the operation of the CATV
Business; provided, however, that U S WEST (and its employees) shall not be
entitled to access to any information which is subject to any confidentiality
agreement. Between July 15, 1994 and the Closing, U S WEST shall have the right
to initiate (in good faith and without unreasonable interference to the
operation of the CATV Business) discussions with employees of the Wometco Group
concerning employment with the Surviving Corporation upon the consummation of
the Merger. After the date of this Agreement, Wometco will cooperate with U S
WEST in conducting a physical inventory of the tangible personal property of the
Wometco Group.
(b) ACCESS BY PEACHTREE. For the duration of the indemnity under
Sections 5.09 and 7.02, U S WEST shall retain and shall give to Peachtree and
its counsel, accountants and other representatives reasonable access during
normal business hours to all of the properties, books, reports and records of
the Wometco Group, existing at the time of Closing, in respect of any matters
arising out of or related to this Agreement that are at issue at the time of a
request for such access.
5.05 INDEBTEDNESS OF WOMETCO. U S WEST shall cooperate with Wometco to
obtain any necessary consents from the lenders under that certain Revolving
Credit and Term Loan Agreement by and among certain members of the Wometco
Group, as Borrowers and The First National Bank of Boston, as Co-Agent, The
Toronto-Dominion Bank Trust Company, as Co-Agent, CIBC, Inc., as Co-Agent, NCNB
National Bank of North Carolina, as Co-Agent and the Banks named therein, dated
as of March 29, 1991, as amended, to consummate the transactions contemplated
hereby; provided that if prior to the Effective Time such consents have not been
obtained, U S WEST shall cause, immediately after the Closing, all outstanding
principal and accrued interest and any related obligations thereunder to be
discharged in full.
5.06 INVESTIGATION WITH RESPECT TO ENVIRONMENTAL MATTERS. Wometco shall
(i) allow U S WEST and its representatives and agents, including an
environmental consultant, after the date of this Agreement, access, during
normal business hours, upon reasonable advance notice, to properties of the
Wometco Group and (ii) make available to U S WEST, during business hours those
employees of the Wometco Group as shall reasonably be available who have been
involved in environmental compliance or facilities management, in order to allow
U S WEST and such representatives and agents to investigate the condition of the
properties, plants and facilities of the Wometco Group. Specifically, U S WEST
and other advisers shall have the right to conduct a Phase I environmental
audit, and if after conducting such audit U S WEST reasonably determines that
there could be any contamination which could have a Material Adverse Effect or
constitute a breach of the representations and warranties set forth in Section
3.15, U S WEST may take soil samples or other measures for the purpose of
verifying such contamination. "Phase I environmental audits" shall be
understood to consist of walk-throughs of any of the facilities, review of
documents relating to environmental issues, interviews of personnel with
knowledge relating to environmental issues, and review of public records.
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5.07 SUBSCRIBER RATES. (a) Benchmark II Basic Rates: In accordance
with the rate schedules made available to U S WEST ("Benchmark II Basic Cable
Service Rates"), Wometco shall begin charging rates for Basic Cable Service in
all Franchises effective July 14, 1994, subject to subsections (b) and (c)
below.
(b) SUBSCRIBER NOTIFICATION OF BENCHMARK II RATES: In connection
with subsection (a) above, Wometco has begun notifying subscribers of changes in
Basic Cable Service rates through bill inserts, cablecast announcements on the
CATV Systems and, at the first possible opportunity, shall include notification
through a message in the bill itself ("Benchmark II Subscriber Notifications").
Wometco has disclosed examples of its previous Benchmark II Subscriber
Notifications to U S WEST. From the date hereof, Benchmark II Subscriber
Notifications shall be subject to prior approval of U S WEST, which approval
shall not be unreasonably withheld.
(c) SUBSCRIBER BILLING OF BENCHMARK II RATES: In any case where it
is not possible to bill subscribers in accordance with Benchmark II Basic Cable
Service rates as contemplated in subsection (a) above on or prior to July 14,
1994 as a result of the timing of the CATV Systems' normal billing cycle,
Wometco shall begin billing subscribers for such rates in the first possible
billing cycle, accompanied by a credit to appropriate Subscribers of any amount
collected above the Benchmark II rates for Basic Cable Service retroactive to
July 14, 1994.
(d) MOTIONS TO DISMISS CABLE PROGRAMMING SERVICE RATE COMPLAINTS:
For any Franchise with respect to which as of the date hereof there are Cable
Programming Service complaints pending (as shown on the records of the FCC),
that the complainant has not voluntarily withdrawn, then, to the extent that
grounds exist for filing a petition to dismiss with respect to such complaint
and such a petition has not previously been filed, Wometco shall, within a
reasonable period of time after the date hereof, file a petition to dismiss such
complaint with the FCC, which petition shall be subject to the prior approval of
U S WEST, whose approval shall not be unreasonably withheld.
(e) BENCHMARK II CABLE PROGRAMMING SERVICE RATES FOR HEADENDS WITH
FRANCHISES WITH PENDING COMPLAINTS: For any Franchise served by a headend where
a Cable Programming Service complaint filed by February 28, 1994 remains pending
for one or more Franchises (as shown on the records of the FCC) because the FCC
does not want Wometco's motion to dismiss or complainant's request to withdraw,
Wometco shall, at its option:
(i) timely file and prosecute one or more petitions for
reconsideration, applications for review, motions or request for stay, and
appeals or petitions for review seeking to overturn, stay or set aside the
FCC's action affecting the motion or request; and/or
(ii) notify subscribers and appropriate Governmental Authorities of
Benchmark II Cable Programming Service Rates as soon as possible after the
FCC action affecting the motion or request is announced or has become a
final order no longer subject to reconsideration or review; and begin
charging Benchmark II Cable Programming Service rates and reflect such
rates in the first possible billing cycle 30 days following notification;
provided, however, that if Wometco selects this option (e) (ii), Wometco
must obtain U S WEST's consent prior to charging Benchmark II Cable
Programming Service Rates in any Franchise that does not have a complaint
pending.
In either or both events, Wometco shall comply with any FCC order requiring a
change in, or the issuance of refunds regarding, any of Wometco's cable
programming service rates, provided such order is in full force and effect and
has not been reversed, vacated, stayed or set aside by the FCC or any court of
competent jurisdiction.
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(f) BASIC SERVICE RATE INFLATION INCREASES: With respect to
inflation increases for Basic Cable Service rates for all Subscribers, to the
extent permitted by law Wometco shall:
(i) notify Governmental Authorities that have asserted jurisdiction
of such increases by the later of September 1, 1994 or three (3) days
following release of GNPPI figures for the second quarter of 1994;
(ii) notify subscribers of such increase by separate mailing by the
later of September 1, 1994 or seven (7) days following notification of
Governmental Authorities or include such notices in the next possible
billing cycle commencing after notification of Governmental Authorities
pursuant to subsection (i) (i) above and complete notification of all
subscribers within thirty (30) days after such notification commences;
(iii) pursue any necessary approval of Governmental Authorities in
connection with such increases; and
(iv) make such increases in accordance with schedules provided to
U S WEST effective 30 days after notification and reflect such increases
in the first possible billing cycle.
For any Franchise where it is not legally permitted to put such inflation
increases into effect within 30 days after notification, Wometco shall put such
increases into effect as soon as legally permitted and reflect such increases in
the first possible billing cycle thereafter. To the extent that compliance with
any other phase of the timetable in this subsection (f) is not permitted by law,
the parties shall cooperate in good faith to establish a revised timetable, with
Sellers using their best efforts to implement inflation increases at the
earliest opportunity permitted by law.
(g) ADJUSTMENTS IN EQUIPMENT CHARGES: With respect to adjustments
for charges for regulated equipment for all Subscribers, Wometco shall:
(i) notify Subscribers and Governmental Authorities that have
asserted jurisdiction over Basic Cable Service rates of such adjustments
concurrently with the notification required by subsection (f) above;
(ii) pursue any necessary approvals of Governmental Authorities in
connection with such adjustments; and
(iii) where legally permitted, make such adjustments effective in
accordance with schedules provided to U S WEST and reflect such
adjustments in the first possible billing cycle 30 days after
notification.
To the extent possible, adjustments pursuant to this subsection (g) for any
Franchise shall be made concurrently with the inflation adjustment in subsection
(f) above; provided, however, that for any adjustment made after
October 1, 1994, appropriate Subscribers shall receive a credit of any amount
collected above the permitted equipment charges retroactive to October 1, 1994;
and provided further that all equipment charge adjustments pursuant to this
subsection (g) shall be made by no later than November 15, 1994.
(h) CABLE PROGRAMMING SERVICE RATES INFLATION INCREASES: With
respect to inflation increases for Cable Programming Service rates for any
Franchise served by a headend where a Cable Programming Service complaint filed
by February 28, 1994 remains pending for one or more Franchises (as shown on the
records of the
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FCC) because the FCC does not grant Wometco's motion to dismiss or complainant's
request to withdraw, Wometco shall, at its option:
(i) timely file and prosecute one or more petitions for
reconsideration, applications for review, motions or requests for stay,
and appeals or petitions for review seeking to overturn, stay or set aside
the FCC's action affecting the motion or request; and/or
(ii) notify Governmental Authorities and Subscribers in any such
Franchise of inflation increases as soon as possible and make such
increases in accordance with schedules provided to U S WEST effective 30
days after notification and reflect such increases in the first possible
billing cycle; provided, however, that if Wometco selects this option (h)
(ii), Wometco must obtain U S WEST's consent prior to making such
increases in any Franchise that does not have a complaint pending.
In either or both events, Wometco shall comply with any FCC order requiring a
change in, or the issuance of refunds regarding, any of Wometco's cable
programming service rates, provided such order is in full force and effect and
has not been reversed, vacated, stayed or set aside by the FCC or any court of
competent jurisdiction.
(i) BULK RATES: No member of the Wometco Group shall enter into or
renew any Bulk Service Agreement without the prior approval of U S WEST, whose
approval shall not be unreasonably withheld. Sellers and U S WEST shall
cooperate in the development of a plan to establish and implement bulk service
rates consistent with FCC rules and policies where necessary or appropriate.
(j) NOTIFICATION OF PROCEEDINGS, ETC.: Wometco shall notify U S
WEST promptly if any member of the Wometco Group receives or otherwise becomes
aware of any inquiry or of any written certification, challenge, complaint,
order or determination of or before the FCC or any Franchising Authority
affecting or concerning the rates or marketing practices of Wometco or any CATV
System and shall consult with U S WEST prior to taking any course of action or
making any filing in respect thereto.
5.08 EFFECT OF CABLE ACT. U S WEST and Acquisition Sub hereby
acknowledge and agree that notwithstanding anything to the contrary contained in
this Agreement, including without limitation, Section 3.22 and Articles VI or
VII, any matters relating to or arising from, or any actions taken prior to the
date hereof or to be taken after the date hereof by the Wometco Group to comply
with or in an attempt to comply with: (i) the rate regulation provisions of the
Cable Television Consumer Protection and Competition Act of 1992 (the "Cable
Act"), and any FCC Rules and Regulations or state or local rules or regulations
promulgated thereunder or in connection therewith (whether promulgated prior to
the date hereof or promulgated hereafter); or (ii) any investigation,
certification, proceeding, inquiry or the like by or before the FCC, any
Franchising Authority, other court or Governmental Authority or agency or other
Persons arising from, relating to or in connection with such Laws, rules or
regulations described in the preceding clause, including, without limitation,
(1) any rate reductions, refunds, penalties or the like (or investigations,
certifications, proceeding or inquiries relating thereto) instituted or imposed
by the Wometco Group, the FCC, any Franchising Authority, other Governmental
Authority or agency or other Persons or (2) changes to programming, billing or
marketing practices instituted or implemented by the Wometco Group shall not (a)
cause or constitute, directly or indirectly, a breach by Wometco or any member
of the Wometco Group of any of its representations, warranties, covenants or
agreements set forth in this Agreement (and such representations, warranties,
covenants and agreements shall hereby be deemed to be modified appropriately to
reflect and permit the impact and existence of such laws, rules or regulations
and investigations, certifications, proceedings, inquiries or the like arising
therefrom, relating thereto or in connection therewith and to permit any actions
by the Wometco Group, to comply with or attempt to comply with such Laws, rules
or
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regulations or such investigations, certifications, proceedings, inquiries or
the like), (b) otherwise cause or constitute a default or breach by Wometco or
any member of the Wometco Group under this Agreement, (c) result in the failure
of any condition precedent to the obligations of U S WEST and Acquisition Sub
under the Agreement to be satisfied (and each of U S WEST and Acquisition Sub
hereby irrevocably waives any failure of a condition precedent to be satisfied
as a result of such matters or circumstances), (d) otherwise excuse U S WEST's
or Acquisition Sub's performance of its obligations under this Agreement or (e)
give rise to any claim for indemnification by U S WEST or any U S WEST
Indemnitee against the Wometco Indemnitor or any adjustment to Value Payable At
Closing under any of the provisions of this Agreement. Nothing herein shall be
deemed to deprive U S WEST of any rights it may have hereunder, including for
indemnification in accordance with and subject to the limitations of Article VII
hereof: (i) in the event of a breach by Wometco of the provisions of Section
5.07 hereof; or (ii) with respect to any Lawsuits covered by Section
7.02(b)(iv)(3) hereof.
5.09 TAX MATTERS.
(a) TAX INDEMNIFICATION. To the extent set forth in this Section
5.09, the Wometco Indemnitor shall indemnify and hold harmless the U S WEST
Indemnitees, including from and after the Closing Date, all members of the
Wometco Group (collectively, the "U S WEST Group") from and against all claims,
losses, damages, liabilities and out-of-pocket expenses including, without
limitation, reasonable attorney fees, resulting from a breach of the
representations contained in Section 3.13 hereof and against any and all tax
liability of the Wometco Group or any member thereof, including, without
limitation any and all Taxes resulting from any member of the Wometco Group
having been included in any affiliated, consolidated, combined or unitary Tax
Return pursuant to Treasury Regulation Section 1.1502-6(a) or any analogous or
similar state, local or foreign law for any taxable period ending on or prior to
the Closing Date (or treated as ending on the Closing Date as provided in
Section 5.09(d) below) in excess of any amount of Taxes that is included as a
Working Capital Liability on the Closing Date and is part of the Working Capital
Deficit calculations used to determine the Value Payable At Closing. In
calculating the tax liability under this Section 5.09 any net operating loss,
credit, or other carryforwards available to the Wometco Group shall be utilized,
and any such tax liability shall be net of the amount of any tax benefits (e.g.,
tax savings from increased basis, depreciation, deductions, etc.) of the U S
WEST Group that arise from any adjustment to any Wometco Group Tax Return for
any tax period ending (or treated as ending) on or prior to the Closing Date.
If the amount of any such benefit to the U S WEST Group is not otherwise readily
determinable (e.g., through an actual refund claim or a reduction in the current
tax liability of U S WEST Group), then such amount shall be the present value of
such net tax benefit as reasonably determined by U S WEST Group and the Wometco
Indemnitor. The tax liability under this Section 5.09 shall be the net amount
finally due and owing (net of the tax benefit described above) on the applicable
Wometco Group Tax Returns or as a result of the settlement, agreement, or
determination of the Tax Claims (as defined below) relating to the applicable
Wometco Group Tax Returns. The liability of the Wometco Indemnitor to U S WEST
Group under this Section 5.09 shall not exceed the sum of $15,000,000 in the
aggregate ("Section 5.09 Maximum Amount"). Any amount payable as a result of
any indemnity given under this Section 5.09 shall be without recourse to any
direct or indirect partner of the Wometco Indemnitor or any entity in which the
Wometco Indemnitor is a direct or indirect partner. Payment of the
indemnification obligations hereunder shall be made in accordance with Sections
5.09(b) and (c) below. The indemnity under this Section 5.09(a) shall be the
sole indemnity available to U S WEST Group under this Agreement with respect to
any tax liability. The indemnity under this Section 5.09 shall not apply to any
tax liability relating to any action taken by the Wometco Group pursuant to
Section 5.11 hereof and the Wometco Indemnitor shall have no obligations
hereunder with respect to the related tax liability, and any tax liability
related thereto shall be paid by the U S WEST Group.
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(b) OTHER COSTS. As used in this Section 5.09, the term "tax
liability" shall include any and all Taxes, and all costs and expenses,
including, without limitation, reasonable attorneys' fees incurred in connection
with the applicable Tax Claim (as hereinafter defined).
(c) PAYMENT OF INDEMNIFICATION. All payments for any
indemnification under this Section 5.09 shall be required when the associated
payment of the tax liability is finally due and payable to the appropriate
Governmental Authority after all reasonable action jointly deemed appropriate by
the Wometco Indemnitor and U S WEST Group has been taken under this Agreement;
provided, however, that the Wometco Indemnitor shall have no obligation to make
payments to U S WEST Group pursuant to this Section 5.09 until aggregate
payments required hereunder exceed $100,000, and at such time the full amount of
such payments (including the prior amounts) shall be paid by the Wometco
Indemnitor to U S WEST Group, it being agreed by the parties hereto that the
provisions of this Section 5.09(c) shall not apply to any payments required to
be made under Section 5.09(f)(10).
(d) FILING OF TAX RETURNS. U S WEST Group shall be obligated to
prepare and timely file all Tax Returns of the Wometco Group that are due after
the Closing Date for all taxable periods ending on or before or including the
Closing Date ("Current Wometco Returns"). The due date of any Current Wometco
Return shall include any proper extensions thereof. All items reported in the
Current Wometco Returns shall be reported in a manner consistent with the prior
practice of the Wometco Group to the extent there is a reasonable basis for such
treatment. U S WEST Group and the Wometco Indemnitor shall jointly decide all
issues relating to the preparation and filing of the Current Wometco Returns.
U S WEST Group shall deliver a draft copy of any Current Wometco Return to the
Wometco Indemnitor for its review at least 15 business days prior to its due
date. The Wometco Indemnitor shall have ten (10) business days in which to
notify ("Disagreement Notice") the U S WEST Group that the Wometco Indemnitor
disagrees with any position taken in the applicable Current Wometco Return. If
U S WEST Group and the Wometco Indemnitor are unable to resolve such matters,
then the specific items shall be submitted to the Arbitrator. Any such
arbitration shall assume that the Wometco Group is a stand alone group of
entities unrelated to the U S WEST Group and the Wometco Indemnitor and that any
such Tax Return shall be filed in the manner most beneficial to the Wometco
Group. The failure of the Wometco Indemnitor to give the Disagreement Notice as
provided above shall be deemed acceptance hereunder by the Wometco Indemnitor of
all items reported as shown on the applicable proposed Current Wometco Return.
Any taxable period that includes but does not begin or end on the Closing Date
(a "Straddle Period") shall be treated as ending on the Closing Date, and Taxes
(and credits or refunds of such Taxes) attributable to that portion of the
Straddle Period ending on the Closing Date shall be determined based on the
permanent books and records of Wometco Group maintained for federal income tax
purposes. State, local, or other Taxes based on items other than income or
sales (and credits or refunds attributable to such taxes) shall be prorated
based on the number of days in that portion of the Straddle Period which ends on
the Closing Date and the number of days in that portion of the Straddle Period
which begins on the day after the Closing Date.
(e) TAX CLAIMS. All proposed audits, notices, proposed
adjustments, assessments, claims, liabilities, or other potential tax
proceedings relating to any Tax Returns of the Wometco Group for taxable periods
ending on or prior to the Closing Date or for Straddle Periods ("Tax Claims")
shall be handled by the U S WEST Group and the Wometco Indemnitor on a joint
basis and both parties shall cooperate to the extent necessary in order to
resolve any such Tax Claims. All decisions relating to any Tax Claims shall
require the approval of both parties. At such time as the Wometco Indemnitor
has either paid the Section 5.09 Maximum Amount or has agreed to settle Tax
Claims which will require payment of the Section 5.09 Maximum Amount by the
Wometco Indemnitor, then the U S WEST Group shall have the sole and exclusive
right to handle, dispose of, and/or settle any future Tax Claims related to any
Wometco Group Tax Return. So long as the Wometco Indemnitor has not agreed in
writing to settle a Tax Claim and a challenge of such Tax Claim can continue (by
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any available means), the U S WEST Group agrees that none of its members will
make any payment of such Tax Claim or consent to the assessment of any
deficiency relating to such Tax Claim as long as such forbearance of payment of
Tax or consent to assessment is permitted by law. If any dispute arises, other
than a dispute over whether or not to settle a Tax Claim, over the handling,
strategy or approach (e.g., proper forum) of any matter with respect to a Tax
Claim and after reasonable efforts such dispute cannot be resolved on a joint
basis by the U S WEST Group and the Wometco Indemnitor, then the matter shall be
submitted to the Arbitrator. The decision by the Arbitrator shall be made based
upon the assumption that the Wometco Group is a stand-alone group of entities
unrelated to the U S WEST Group or the Wometco Indemnitor and in the manner most
beneficial to the Wometco Group. All positions taken herein by both the U S
WEST Group and the Wometco Indemnitor shall be in good faith and based upon
treatment of such item in the best interests of the Wometco Group.
(f) GENERAL TERMS RELATING TO TAX INDEMNIFICATION.
(1) The U S WEST Group shall cooperate with the Wometco
Indemnitor in connection with any Tax Claim. The U S WEST Group
shall furnish the Wometco Indemnitor with all information,
including, without limitation, any and all documents, that the
Wometco Indemnitor may reasonably request in connection with any Tax
Claim relating to any Wometco Group Tax Return for taxable periods
ending on or prior to the Closing Date or for Straddle Periods, or
to otherwise carry out the provisions of this Agreement. The U S
WEST Group shall allow the Wometco Indemnitor, or any representative
thereof, complete access during normal business hours to any and all
records, files, receipts, books, accounts, documents, and other
items the Wometco Indemnitor reasonably deems necessary or proper in
connection with any Tax Claim, or to otherwise carry out the
provisions of this Agreement.
(2) The Wometco Indemnitor shall cooperate with the U S WEST
Group in filing any Current Wometco Return or in connection with any
Tax Claim, the Wometco Indemnitor shall furnish the U S WEST Group
with all information, including, without limitation, any and all
documents, that the U S WEST Group may reasonably request to enable
the U S WEST Group to file any Current Wometco Return, or in
connection with a Tax Claim, or to otherwise carry out the
provisions of this Agreement. The Wometco Indemnitor shall allow
the U S WEST Group, or any representative thereof, complete access
during normal business hours to any and all records, files,
receipts, books, accounts, documents, and other items the U S WEST
Group reasonably deems necessary or property to file properly any
Current Wometco Return, or in connection with any Tax Claim, or to
otherwise carry out the provisions of this Agreement.
(3) Any and all records, documents, returns, extensions, and
amendments, including, without limitation, all original documents,
relating to any Wometco Group Tax Return and all other items
relating thereto shall be transferred to and/or retained by the U S
WEST Group, provided, however, to the extent not transferred to the
U S WEST Group, the Wometco Indemnitor shall provide the U S WEST
Group complete access to such items as provided above. The Wometco
Indemnitor shall have the right to review and copy such items at any
time during normal business hours, provided that the Wometco
Indemnitor pays all reasonable costs relating thereto.
(4) For the term of this indemnity, the U S WEST Group shall
promptly notify (and such notice may be given telephonically, but
any telephonic notice shall be promptly followed by written notice)
the Wometco Indemnitor of any written notice that any applicable
taxing authority has proposed a review of any Wometco Group Tax
Return for taxable periods ending on or prior
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to the Closing Date or for Straddle Periods, and the U S WEST Group
shall promptly send to the Wometco Indemnitor a copy of any written
notices or documents received by the U S WEST Group from any taxing
authority with respect to a Wometco Group Tax Return.
(5) If the U S WEST Group or any member thereof fails to
cooperate with or to allow access to records to the Wometco
Indemnitor as required hereunder or otherwise breaches any of its
obligations hereunder, then any payments required to be made by the
Wometco Indemnitor to the U S WEST Group for the applicable Tax
Return or Tax Claim shall be reduced, and the rights of the U S WEST
Group to indemnification from the Wometco Indemnitor hereunder shall
be reduced, by an amount equal to the damages (including costs,
expenses, and attorneys' fees) resulting solely from such failure,
provided that the Wometco Indemnitor shall retain all rights to
participate in the resolution of any such Tax Claims in accordance
with this Agreement. Notwithstanding any other provision of this
Agreement, if the U S WEST Group settles or approves any Tax Claim
with any applicable Governmental Authority without the prior written
consent or approval of the Wometco Indemnitor, then the Wometco
Indemnitor shall have no liability with respect to such Tax Claim.
(6) The Wometco Indemnitor shall notify the U S WEST Group in
writing, within thirty days of receipt of notice of any Tax Claim or
any proposed adjustment or settlement thereof for any Wometco Group
Tax Return if the Wometco Indemnitor wants to settle such Tax Claim
as proposed by the applicable Governmental Authority. If the
Wometco Indemnitor sends such notice of agreement to a settlement
but the U S WEST Group does not want to settle, then with respect to
the applicable Tax Claim, the liability of the Wometco Indemnitor
shall be limited to the tax liability that would have been incurred
had such Tax Claim been settled in the manner and at the time agreed
upon by the Wometco Indemnitor.
(7) If amounts required to be paid under this Section 5.09
are not paid within ten (10) days of the date required herein, the
unpaid balance shall bear interest at the applicable underpayment
rate under Section 6621(a)(2) of the Code from the date required
herein for payment until the actual date of payment.
(8) The U S WEST Group shall cause each member of its group
to comply with or perform all of the terms, covenants and provisions
of this Section 5.09 to be complied with or performed by each of
them hereunder.
(9) The U S WEST Group shall not amend any Tax Return of the
Wometco Group which could result in a tax liability that is
indemnified by the Wometco Indemnitor hereunder without the prior
written consent of the Wometco Indemnitor, provided, however, that
the U S WEST Group can amend any Wometco Group Tax Return as long as
U S WEST Group assumes and agrees to pay any and all tax liabilities
arising from such amended Tax Return, including but not limited to
any issues raised by the applicable Governmental Authority upon
audit of any such amended Tax Return. The preceding sentence shall
not apply (i) to the filing of a claim for refund arising from a
loss of the Wometco Group for its taxable year ending on the Closing
Date as reflected on the applicable Tax Return as originally filed,
and (ii) to the filing of an amended return by the U S WEST Group to
reflect the carryback of a loss or credit arising in a taxable
period beginning on or after the Closing Date, provided that if as a
result of such carryback or refund claim, the statute of limitations
with respect to such Tax Return is extended by reason of the filing
of such amended return, then any Tax Claim with respect to
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such Tax Return that first arises after the expiration of the
statute of limitations without such extension shall be borne solely
by the U S WEST Group and the Wometco Indemnitor shall have no
liability with respect to such Tax Claim under this Section 5.09.
(10) Except as provided in the succeeding sentence, Tax
refunds of any kind relating to any taxable period ending (or
treated as ending) on or prior to the Closing Date shall inure to
the benefit of the Wometco Indemnitor and the U S WEST Group shall
pay the full amount of any such refund (including interest thereon),
net of any tax liability related to the receipt of such refund, to
the Wometco Indemnitor promptly upon receipt of such refund by the U
S WEST Group. The U S WEST Group shall be entitled to (i) any Tax
refunds resulting from the carryback of any loss or credit arising
in a taxable period ending on the Closing Date or beginning on or
after the Closing Date and (ii) all Tax refunds to which the Wometco
Indemnitor is otherwise entitled in excess of $15,000,000 in the
aggregate; provided, however, if any tax refund referred to in (iv)
of the definition of Working Capital Assets actually received by the
Wometco Group is greater or less than the amount originally
determined under such definition, then the U S WEST Group (if such
amount is greater) or the Wometco Indemnitor (if such amount is
less) as the case may be shall pay such difference to the other
party.
(11) U S WEST Group and the Wometco Indemnitor shall jointly
appoint counsel for any Tax Claim, provided, however, if the parties
are unable or unwilling to appoint one counsel to handle such Tax
Claim each party shall be able to appoint their own counsel for such
Tax Claim and each party shall pay all costs associated with counsel
selected by such party.
(g) EXPIRATION. The indemnity in this Section 5.09 shall expire
upon the expiration of the applicable statute of limitations for all Tax Returns
of the Wometco Group (or any member thereof) for taxable periods ending on or
before or including the Closing Date; provided, however, that the indemnity in
this Section 5.09 shall terminate in all events and for all Tax Returns upon
payment by the Wometco Indemnitor of the Section 5.09 Maximum Amount.
Notwithstanding the foregoing, at any time after three years from the date of
filing of the Current Wometco Return for Federal income Taxes, at the request of
the Wometco Indemnitor, U S WEST Group and the Wometco Indemnitor shall act in
good faith to determine the present value of any tax liability that may be or
become due with respect to any Tax Return of the Wometco Group for a taxable
period ending on or before or including the Closing Date for which the
applicable statute of limitations had not yet expired by mutual agreement or by
submitting such determination to the Arbitrator as provided below; provided,
however, if the statute of limitations with respect to the Wometco Group Federal
income tax return for the taxable period ending on the Closing Date has been
extended with the written consent of the Wometco Indemnitor then any such
request by the Wometco Indemnitor cannot be made until such statute of
limitations, as extended, has expired or all Tax Claims with respect to such Tax
Return have been settled or, with respect to the Wometco Indemnitor, have been
deemed to have been settled pursuant to the last sentence of Section 5.09(f)(6)
herein. In the event of a settlement or deemed settlement of such Tax claims,
the present value of the tax liability under this Section 5.09(g) with respect
to the federal income Tax Return of the Wometco Group for the taxable period
ending on the Closing Date shall be the actual amount of such settlement or
deemed settlement to the extent not previously paid by the Wometco Indemnitor.
In determining whether the statute of limitations applicable for a particular
taxable year has expired for purposes of calculating the present value of any
tax liability, each statute of limitations shall be deemed to have expired three
years after the date the applicable Tax Return in respect of such year was filed
unless (i) such statute was extended by the mutual consent of the U S WEST Group
and the Wometco Indemnitor, or (ii) there is a reasonable basis to conclude that
a longer statute of limitations is applicable to such Tax Return for such
taxable year. The value of any tax liability assigned to any Tax Return with
respect to which the applicable statute of limitations has expired or deemed to
have expired hereunder shall be zero for purposes of this
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Section 5.09(g). If the U S WEST Group and the Wometco Indemnitor are unable to
resolve such issue within 90 days, the matter shall be referred to the
Arbitrator. Upon the determination of the present value of any such tax
liability, the Wometco Indemnitor shall have the right to make the payment of
the tax liability as so determined, and upon such payment by the Wometco
Indemnitor to the U S WEST Group (or upon such determination if the present
value of such tax liability is zero) the indemnity under this Section 5.09 shall
terminate in all events and for all Tax Returns.
5.10 CLOSING WITHOUT ALL CONSENTS. Wometco and U S WEST agree to take
such steps and to enter into such agreements, including trust and/or management
agreements, as the parties may mutually determine are reasonably appropriate in
the event that the transactions contemplated hereunder are consummated without
the requisite approval of all Franchising Authorities. Peachtree and Associates
agree that in the event the Closing occurs without the requisite approval of all
Franchising Authorities, they shall continue to cooperate with Wometco and U S
WEST from and after the Closing and use their reasonable best efforts to assist
Wometco and U S WEST in securing such requisite approvals.
5.11 COMPLIANCE WITH MFJ. Each of U S WEST and Wometco shall use their
respective reasonable best efforts and shall mutually cooperate in taking such
reasonable actions as are necessary to ensure that the transactions contemplated
hereby comply with the restrictions of the MFJ. Without limiting the generality
of the foregoing, U S WEST, Acquisition Sub and Wometco agree as follows:
(a) U S WEST and/or Acquisition Sub, as appropriate, shall, as soon
as practicable after the date hereof, apply for an appropriate waiver under the
MFJ to permit the indirect ownership by U S WEST and Acquisition Sub of the
earth station licenses and related assets held by the Wometco Group; provided
that if on the date notice of Closing hereunder is given pursuant to Section
2.03 hereof, such waiver has not been obtained, U S WEST shall designate a
Person to whom the appropriate members of the Wometco Group shall assign such
earth station licenses and related assets and Wometco shall cause such
assignment to be made on or prior to the Closing Date. U S WEST and Wometco
shall cooperate in giving appropriate notice to the FCC of such assignment. U S
WEST shall have no claim hereunder, including any adjustments to Value Payable
At Closing, against Wometco or the Wometco Indemnitee arising out of or relating
to such assignment.
(b) U S WEST and/or Acquisition Sub, as appropriate, as soon as
practicable after the date hereof, may at its or their option apply for an
appropriate waiver under the MFJ to permit the indirect ownership by U S WEST
and Acquisition Sub of the SportSouth Interest held by Wometco. In addition,
the parties will negotiate in good faith to take appropriate actions in respect
of the SportSouth Interest, including the following:
(i) if requested by U S WEST, Wometco shall undertake prior
to the Closing to obtain from all appropriate parties a waiver of
any restrictions imposed upon Wometco pursuant to the documents
relating to SportSouth Network, Ltd., respecting a transfer of the
SportSouth Interest including, without limitation, any right of
first refusal to allow an assignment, effective as of the Closing,
of the SportSouth Interest to such Person(s) as U S WEST shall
direct and an assignment by such Person(s) to Wometco of the
SportSouth Interest following receipt of a waiver under the MFJ;
(ii) if requested by U S WEST, Wometco shall undertake prior
to Closing (subject to compliance with any restrictions imposed upon
it pursuant to the documents relating to SportSouth, Ltd.,
respecting a transfer of the SportSouth Interest including, without
limitation,
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any right of first refusal to the extent not waived), to assign,
effective as of the Closing, the SportSouth Interest to such
Person(s) as U S WEST shall direct;
(iii) if immediately prior to the Closing, U S WEST and/or
Acquisition Sub has not obtained the appropriate waiver under the
MFJ, and the SportSouth Interest has not been sold or assigned by
Wometco or is not to be sold or assigned at Closing, Wometco shall
disclaim any interest in the SportSouth interest and shall quitclaim
such SportSouth Interest back to SportSouth, Ltd;
(iv) if the waiver referred to in paragraph (i) above is not
obtained and if U S WEST elects to cause Wometco to sell or assign
the SportSouth Interest to a third party, such third party shall
provide a bona fide offer to Wometco for the SportSouth Interest
based upon a mutually agreed value for the SportSouth Interest and
Wometco shall be permitted to sell its SportSouth Interest to the
other partners of SportSouth, Ltd. pursuant to the provisions of the
right of first refusal set forth in the SportSouth, Ltd. partnership
agreement;
(v) notwithstanding anything in this Agreement to the
contrary, U S WEST shall have no claim against Wometco or the
Wometco Indemnitor arising out of any sale or assignment of the
SportSouth Interest made in compliance with the provisions of this
Section 5.11(b);
(vi) in the event of the initiation of the buy-sell procedure
pursuant to Section 6.3 of the SportSouth partnership agreement, U S
WEST and Wometco shall consult in good faith on the appropriate
steps to be taken by Wometco under such circumstance and, if the
parties conclude that Wometco should not purchase the interests of
other partners in connection with such provision, Wometco shall be
permitted to sell its SportSouth Interest in accordance therewith;
and
(vii) U S WEST acknowledges the provisions relating to
"change of control" in the SportSouth documents and agrees that it
shall have no claim, including any adjustments to Value Payable At
Closing, against Wometco or the Wometco Indemnitor arising out of or
in connection therewith.
(c) From the date hereof until the Closing, the Wometco Group shall
be permitted to continue the maintenance and repair, consistent with its past
practices (not beyond original manufacturer's specifications), of converters
used by the Wometco Group or designated for use in the operation of the CATV
Business, but shall not engage in the enhancement beyond original manufacturer's
specifications of converters.
5.12 WOMETCO INDEMNITOR. (a) Prior to Closing, Associates may propose
to U S WEST a Person or Persons to be substituted for it, or added in addition
to it, as the Wometco Indemnitor hereunder. Approval of such substitution or
addition shall be in the sole discretion of U S WEST and shall be subject to
execution of such documents by such Person or Persons as U S WEST may reasonably
request.
(b) If Associates is the Wometco Indemnitor, it agrees that it
shall maintain collateral, in the form of cash or cash equivalents, including a
letter of credit in form and substance reasonably acceptable to U S WEST from a
financial institution having at least $500,000,000 in capital (or marketable
securities or other collateral as approved by U S WEST in its sole discretion)
as follows:
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(i) in respect of indemnification obligations under Section
7.02 hereof, for a period of one year after the Closing Date,
collateral in the form of cash, cash-equivalents or letters of
credit having a value of at least $20,000,000 and, in the case of
collateral consisting of marketable securities or other collateral
having a value agreed upon with U S WEST (which value shall be
reduced from time to time by any payments under Section 7.02
hereof); provided that if on the date one year after the Closing
Date valid claims for indemnification are pending, Associates shall
maintain collateral in an amount (but not exceeding the amount
specified in the first clause of this Section 5.12(b)(i)) equalling
the amount of such pending claims until such claims are resolved;
and
(ii) in respect of indemnification obligations under Section
5.09 hereof, for a period until the expiration of the indemnity
provided for in Section 5.09, collateral in the case of cash, cash
equivalents or letters of credit having a value of at least
$15,000,000 and, in the case of collateral consisting of marketable
securities or other collateral having a value agreed upon with U S
WEST (which value shall be reduced from time to time by any payments
under Section 5.09 hereof).
If Associates is the Wometco Indemnitor, Associates shall at Closing grant
to U S WEST a security interest in the collateral described above pursuant to
such documentation as U S WEST may reasonably request.
5.13 PREPARATION OF RESTATED MARCH 31 WORKING CAPITAL STATEMENT. (a)
Within thirty (30) days of the date hereof, Wometco shall prepare and deliver to
U S WEST the Restated March 31 Working Capital Statement, which shall reflect
Wometco's proposed adjustments with respect to any component of the original
working capital statement (the "Adjustable Items") attached hereto as Exhibit
5.13 (the "Original Working Capital Statement") other than reserves or other
similar discretionary items, which shall not be subject to such adjustment.
Wometco shall assist U S WEST and U S WEST's independent auditors in their
review of the Restated March 31 Working Capital Statement and the Original
Working Capital Statement and in connection therewith shall provide U S WEST and
U S WEST's independent auditors access at reasonable times to the personnel,
properties, assets, books and records of CATV Systems, including all documents
and work papers relating to the March 31 Balance Sheet, the Original Working
Capital Statement and the Adjustable Items. U S WEST and U S WEST's independent
auditors will be provided with reasonable access to the working papers of
Wometco's independent auditors relating to the March 31 Balance Sheet and with
reasonable access to U S WEST's independent auditors.
(b) The Restated March 31 Working Capital Statement shall become
final and binding upon the parties at the close of business on the thirtieth day
following receipt thereof by U S WEST unless U S WEST shall give written notice
of its disagreement with any of the Adjustable Items on the Original Working
Capital Statement (whether or not adjusted by Wometco) and the Restated March 31
Working Capital Statement. Any such notice shall specify in reasonable detail
the nature of any disagreement so asserted, accompanied by a calculation by U S
WEST of its proposed modifications to the Adjustable Items. Both Wometco and U
S WEST may propose additional modifications to any Adjustable Item at any time
prior to the submission of any disputes with respect to such adjustments to an
Arbitrator in accordance with clause (c) below.
(c) Following the delivery of the notice described in Section
5.13(b), U S WEST and Wometco shall seek in good faith to resolve such
disagreement. If no such resolution shall have been achieved by U S WEST and
Wometco after fifteen (15) days, the parties shall submit to an Arbitrator
(selected in the same manner set forth in Section 2.4(a)(iv)) for review and
resolution of any and all matters which remain in dispute. Wometco shall submit
to the Arbitrator the Restated March 31 Working Capital Statement and U S WEST
shall
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submit its proposed modifications to the Adjustable Items. The Arbitrator
shall, within 20 days of submission thereto, determine the amount of all
adjustments to the Restated March 31 Working Capital Statement which are in
dispute, and shall notify U S WEST and Wometco of such determination in writing.
The fees and expenses of the Arbitrator shall be borne equally by U S WEST and
Wometco.
ARTICLE VI
CONDITIONS PRECEDENT
6.01 CONDITIONS TO THE OBLIGATIONS OF U S WEST, ACQUISITION SUB AND
WOMETCO TO EFFECT THE MERGER. The respective obligations of each party to
effect the Merger shall be subject to the satisfaction, at or before the Closing
Date, of the following conditions, any or all of which may be waived in whole or
in part by the party being benefited thereby, to the extent permitted by
applicable law:
(a) BLUE SKY LAWS. U S WEST shall have received all state
securities or "blue-sky" permits and other authorizations necessary to issue the
shares of U S WEST Common Stock comprising the Merger Consideration and to
consummate the Merger.
(b) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect.
(c) HSR ACT. The waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated.
(d) RECEIPT OF REQUIRED CONSENTS. All Required Consents (other
than consents relating to Franchises) have been obtained. The aggregate number
of Subscribers covered by (i) Franchises as to which consents for the
consummation of the Merger have been obtained in accordance with the terms of
Section 5.03(f) and (ii) Franchises that do not require such consent, shall
equal at least ninety percent (90%) of the total number of Subscribers as of
June 30, 1994 based on Wometco's month-end billing report as of such date. The
aggregate number of Franchises as to which consents for the consummation of the
Merger have been obtained in accordance with the terms of Section 5.03(f) and
Franchises that do not require such consent, shall equal at least eighty percent
(80%) of the Franchises as of the date hereof.
(e) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.
(f) NYSE LISTING. The shares of U S WEST Common Stock comprising
the Merger Consideration issuable to the holders of Wometco Stock pursuant to
this Agreement shall have been authorized for listing on the NYSE, subject only
to official notice of issuance.
6.02 CONDITIONS TO THE OBLIGATIONS OF U S WEST AND ACQUISITION SUB. The
obligations of U S WEST and Acquisition Sub to effect the Merger shall be
subject to satisfaction, at or before the Closing Date, of the following
conditions, any or all of which may be waived in whole or in part by U S WEST
and Acquisition Sub, to the extent permitted by law:
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(a) ACCURACY OF REPRESENTATIONS. The representations and
warranties of Wometco, Peachtree and the Wometco Indemnitor set forth in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same effect as if made on and as of the Closing Date,
except (i) as a result of actions taken by any Person permitted by the terms of
this Agreement; or (ii) insofar as any such representation or warranty relates
to or is stated as of a specified earlier date, in which case such
representation and warranty shall have been true and correct as of such date. U
S WEST and Acquisition Sub shall have received a certificate dated as of the
Closing Date, signed by an officer of Wometco certifying to the fulfillment of
this condition.
(b) PERFORMANCE OF AGREEMENTS. Wometco shall in all material
respects have performed and complied with all covenants and agreements contained
in this Agreement required to be performed and complied with by Wometco at or
prior to the Closing Date. U S WEST and Acquisition Sub shall have received a
certificate dated as of the Closing Date, signed by an officer of Wometco
certifying to the fulfillment of this condition.
(c) OPINIONS OF COUNSEL. U S WEST and Acquisition Sub shall have
received the opinions of counsel to Wometco to be negotiated promptly after the
date hereof and in form and substance reasonably satisfactory to U S WEST dated
the Closing Date.
(d) CLOSINGS UNDER ATLANTA CABLE AGREEMENT. A closing shall occur
simultaneously with the Closing hereunder under that certain Asset Purchase
Agreement of even date herewith among Georgia Cable Partners, Atlanta Cable
Partners, L.P., U S WEST and U S WEST Multimedia Communications, Inc. (the
"Atlanta Cable Agreement").
(e) MFJ COMPLIANCE. On the Closing Date, the transactions
contemplated hereby and by the Atlanta Cable Agreement shall comply with the
restrictions of the MFJ.
(f) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, (i)
except for matters relating to or affecting the cable television industry
generally (including without limitation legislative, regulatory or litigation
matters) and matters relating to or arising from local or national economic
conditions (including financial and capital markets), there shall have been no
Material Adverse Effect; and (ii) no proceeding of the type set forth in Section
7.02(b)(iv)(3) shall have been instituted or threatened by any Governmental
Authority that may reasonably be expected to have a Material Adverse Effect.
(g) LOCAL INTERCONNECT AND CAMA. Documents reasonably satisfactory
to U S WEST shall have been delivered such that, as of the Closing Date, (i) any
partnership interests in Local Interconnect, L.P. held by persons other than
Wometco, Atlanta Cable Partners, L.P. or Georgia Cable Partners shall have been
conveyed to either Wometco and/or Georgia Cable Partners and (ii) any
partnership interests in CAMA held by persons other than Wometco shall have been
conveyed to Wometco or a Wometco Subsidiary.
(h) RELEASES UNDER EQUITY APPRECIATION RIGHTS PLANS. Wometco shall
have received releases, in form and substance reasonably satisfactory to U S
WEST, from participants under the Equity Appreciation Rights Plans entitled to
receive, in the aggregate, at least 90 percent of the dollar amount of such
payments.
6.03 CONDITIONS TO THE OBLIGATIONS OF WOMETCO AND PEACHTREE. The
obligations of Wometco and Peachtree to effect the Merger shall be subject to
the satisfaction, at or before the Closing Date, of the following conditions,
any or all of which may be waived in whole or in part by Wometco and Peachtree
to the extent permitted by law:
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(a) ACCURACY OF REPRESENTATIONS. The representations and
warranties of U S WEST and Acquisition Sub, respectively, set forth in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same effect as if made on and as of the Closing Date,
except (i) a result of actions taken by any Person permitted by the terms of
this Agreement; or (ii) insofar as any such representation or warranty relates
to or is stated as of a specified earlier date in which event such
representation and warranty shall have been true and correct as of such date.
Wometco shall have received a certificate dated as of the Closing Date, signed
by an officer of U S WEST and Acquisition Sub, respectively, certifying to the
fulfillment of this condition.
(b) PERFORMANCE OF AGREEMENTS. U S WEST and Acquisition Sub,
respectively, shall in all material respects have performed and complied with
all covenants and agreements contained in this Agreement required to be
performed and complied with by U S WEST and Acquisition Sub, respectively, at or
prior to the Closing Date. Wometco shall have received a certificate dated as
of the Closing Date, signed by an officer of U S WEST and Acquisition Sub,
respectively, certifying to the fulfillment of this condition.
(c) OPINIONS OF COUNSEL. Wometco and Peachtree shall have received
the opinions of counsel to U S WEST and Acquisition Sub to be negotiated
promptly after the date hereof and in form and substance reasonably satisfactory
to Wometco and Peachtree, dated the Closing Date.
(d) CLOSINGS UNDER ATLANTA CABLE AGREEMENT. A closing shall occur
simultaneously with the Closing hereunder, under the Atlanta Cable Agreement.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
7.01 SURVIVAL. The respective representations, warranties, covenants and
agreements of Wometco, Peachtree, the Wometco Indemnitor, U S WEST and
Acquisition Sub contained herein or in documents or instruments delivered
pursuant hereto shall not be deemed waived or otherwise affected by any
investigation made by any party hereto. Except where a longer period of
survival or right to indemnity is otherwise provided for in this Agreement, each
and every such representation, warranty, covenant or agreement contained herein
or in any document or instrument delivered pursuant hereto shall survive the
Closing for a period of one year after the Closing Date, but all claims made by
virtue of such representations, warranties, covenants or agreements shall be
made under and subject to the limitations set forth in this Article VII;
provided that to the extent a claim for indemnification is presented within the
time periods specified in this Agreement, the obligation to provide for
indemnification shall survive until resolution of such claim. Notwithstanding
the foregoing or anything to the contrary contained herein, including Section
7.02 below, any claim made in respect of a breach of the representations as to
Taxes or otherwise relating to Taxes shall be governed solely by the provisions
of Section 5.09 hereof.
7.02 U S WEST RIGHT TO INDEMNIFICATION. (a) Subject to the limitations,
conditions and provisions set forth in this Agreement, from and after Closing,
the Wometco Indemnitor shall indemnify and hold harmless U S WEST and its
officers, directors, shareholders, employees, agents or Affiliates (such Persons
and U S WEST, individually, a "U S WEST Indemnitee" and collectively, the "U S
WEST Indemnitees") from and against all demands, claims, actions, losses,
damages, liabilities and out-of-pocket costs and expenses, including,
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without limitation, reasonable attorney's fees, incurred by the U S WEST
Indemnitees based upon or arising from (i) a breach of any covenant, agreement,
representation or warranty of Wometco, Peachtree or the Wometco Indemnitor
contained in this Agreement or in any other document or instrument delivered
pursuant hereto, (ii) a Lawsuit (as defined in Section 7.02(b)(iv)(3) below) of
the type described in Section 7.02(b)(iv)(3) below or (iii) claims by, through
or under Persons from whom a release of the type described in Section 6.02(h)
was not delivered to U S WEST alleging a violation by any member of the Wometco
Group of any obligation under an Equity Appreciation Rights Plan (collectively,
"U S WEST Damages"). For purposes of determining the right of a U S WEST
Indemnitee hereunder with respect to any representation and warranty in Article
III that is qualified by reference to Material Adverse Effect, the U S WEST
Indemnitees shall be entitled to indemnification hereunder if, without giving
effect to the Material Adverse Effect qualification in such representation and
warranty, such representation and warranty has been breached.
(b) The right of the U S WEST Indemnitees to indemnity for U S WEST
Damages shall be subject to all of the following limitations:
(i) Any claims for U S WEST Damages relating to a breach of
the representation set forth in Section 3.13 or otherwise with respect to Taxes
shall be governed exclusively by the provisions of Section 5.09 hereof.
(ii) No indemnification shall be required to be made under
this Section 7.02 (other than in respect of indemnity under Section 7.02(a)(iii)
above, as to which this limitation shall not apply) until the aggregate amount
of U S WEST Damages (together with claims hereunder and under Sections 8.2(a)
and 8.3(a) of the Atlanta Cable Agreement) exceeds $2,000,000 (the "Basket"),
provided that once such amount is exceeded the U S WEST Indemnitees shall be
entitled to the full amount of the U S WEST Damages, without regard to the
amount of the Basket, subject to Section 7.02(b)(iv).
(iii) U S WEST Indemnitees shall be entitled to indemnity
only for those U S WEST Damages as to which U S WEST has given the Wometco
Indemnitor written notice thereof within one year after the Closing Date except
for U S WEST Damages arising under Section 7.02(a)(iii) above, which shall
survive for the duration of the applicable statute of limitations. Any written
notice delivered by U S WEST to the Wometco Indemnitor pursuant to this
subparagraph (iii) shall set forth with specificity the basis of the claim for U
S WEST Damages and a reasonable estimate of the amount thereof.
(iv) The following provisions shall apply to claims for U S
WEST Damages:
(1) In no event shall the right of the U S WEST Indemnitees
to indemnity for U S WEST Damages pursuant to this Section 7.02
exceed the amounts specified in this Section 7.02(b)(iv);
(2) The U S WEST Indemnitees' right to indemnity under this
Section 7.02 and under Sections 8.2 or 8.3 of the Atlanta Cable
Agreement shall in no event exceed $15,000,000 in the aggregate,
except for U S WEST Damages arising under Section 7.02(a)(iii) above
which shall not be subject to any limitations contained in this
Section 7.02(b)(iv), and except as specified in Section
7.02(b)(iv)(3) below. Without limiting the generality of the
foregoing, the U S WEST Indemnitees understand and agree that to the
extent any payment for indemnity is made under Sections 8.2 or 8.3
of the Atlanta Cable Agreement, the amount available for indemnity
hereunder shall be reduced by a corresponding amount;
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(3) To the extent any lawsuits or administrative proceedings
(collectively "Lawsuits") are properly filed or commenced under
applicable Georgia law within one year of the Closing Date alleging
a violation of Georgia law arising from the offering prior to the
date hereof by the Wometco Group of certain of its CATV services on
an "a la carte" basis, the U S WEST Indemnitees shall also have a
right to indemnity in respect of such lawsuits, but such right to
indemnity with respect to such lawsuits and any Lawsuits brought
with respect to the Sellers under the Atlanta Cable Agreement
relating to the same subject matter shall in no event exceed
$5,000,000 in the aggregate for all such Lawsuits (plus any amounts
available under Section 7.02(b)(iv)(2) which have not previously
been claimed or paid); provided that any payment for indemnity
pursuant to this Section 7.02(b)(iv)(3) shall be deducted first from
the $5,000,0000 amount referred to in this Section 7.02(b)(iv)(3)
and only after such amount has been reduced to $0 shall payments be
made pursuant to Section 7.02(b)(iv)(2); and provided further that
nothing herein shall entitle or be construed to entitle any U S WEST
Indemnitee to indemnity for any claims made under or arising from
the provisions of the Cable Act or any FCC Rules and Regulations or
state or local rules promulgated thereunder or in connection
therewith.
(v) Notwithstanding anything to the contrary contained
herein, no U S WEST Indemnitee shall have any claim for indemnification or
otherwise against the Wometco Indemnitor or any Stockholder, nor any of their
Affiliates or any direct or indirect partner, shareholder, director, officer,
employee, agent or Affiliate of any member of the Wometco Group (the foregoing,
individually a "Wometco Party" and collectively, the "Wometco Parties"), arising
out of the consummation of the transactions contemplated hereby without having
received all necessary consents of any Person, including any Governmental
Authority.
(vi) Anything in this Agreement or applicable law to the
contrary notwithstanding, it is understood and agreed by U S WEST (on its behalf
and on behalf of all U S WEST Indemnitees) that, other than with respect to the
Wometco Indemnitor (but not including its direct or indirect partners, officers,
directors, employees, agents or Affiliates) as expressly provided for in this
Section 7.02, none of the Wometco Parties shall have any obligation or
liability to any U S WEST Indemnitee, and U S WEST (on its behalf and on behalf
of all U S WEST Indemnitees) hereby waives and releases, and shall have no
recourse against, any Wometco Party as a result of the breach of any
representation, warranty, covenant or agreement of any Wometco Party contained
herein or otherwise arising out of or in connection with the transaction
contemplated hereby or the operations of the CATV Systems, other than for fraud,
it being understood that the remedies provided for in this Section 7.02 shall be
the sole and exclusive remedy for any such claims by any U S WEST Indemnitee for
any such matters, whether such claims are framed in contract, tort or otherwise.
(c) CONDITIONS OF INDEMNIFICATION. The right of the U S WEST
Indemnitees to indemnity under Section 7.02 hereof with respect to claims for U
S WEST Damages ("U S WEST Claims"), shall be subject to the following terms and
conditions:
(i) U S WEST will give the Wometco Indemnitor notice of any U
S WEST Claim promptly (and, in any event, within thirty (30) days) after
receiving notice, or becoming aware, thereof.
(ii) After the Wometco Indemnitor receives notice of a U S
WEST Claim which relates to an assertion of liability by a third party other
than U S WEST or related to U S WEST, the Wometco Indemnitor shall have the sole
and exclusive right to defend any such claim and to control negotiations toward
resolution of such claim, and, if litigation ensues, to defend the same with
counsel chosen by the Wometco Indemnitor at the Wometco Indemnitor's expense,
and U S WEST shall extend reasonable cooperation in connection with such
defense. U S WEST Indemnitees shall have the right to employ their own counsel
in any
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such case, but the fees and expenses of such counsel shall be at the expense of
the U S WEST Indemnitees unless the Wometco Indemnitor shall not have promptly
employed counsel to take charge of the defense of such action. The Wometco
Indemnitor shall have the right, in its sole discretion, to settle any claim for
which indemnification has been sought and is available hereunder; provided,
however, that neither the Wometco Indemnitor on the one hand nor the U S WEST
Indemnitees on the other hand, shall settle, compromise or make any disposition
of any third-party claim subject to the indemnity hereunder which would or may
result in liability to or impose any obligation upon the other party (or parties
affiliated or related to it) without the written consent of the other party.
(iii) Notwithstanding anything in subparagraphs (i) and (ii)
of this Section 7.02(c) to the contrary, a failure by any party to meet the time
limits prescribed in such subparagraphs shall not affect the rights provided to
the parties in this Agreement, unless and only to the extent that the rights of
the party not required to meet such time limits are materially and adversely
affected by the failure to comply with such time limit.
(d) Notwithstanding anything herein to the contrary, any payment of
a U S WEST claim hereunder for indemnification by the Wometco Indemnitor will
not give rise to any claim by the Wometco Indemnitor against Wometco.
7.03 U S WEST AGREEMENT TO INDEMNIFY. (a) Subject to the limitations,
conditions and provisions set forth in this Agreement, U S WEST hereby agrees to
indemnify, defend and hold Peachtree, each other Stockholder and their
respective direct and indirect partners, officers, directors, shareholders,
employees, agents and Affiliates (such parties individually, a "Wometco
Indemnitee" and collectively, the "Wometco Indemnitees") against all demands,
claims, actions, losses, damages, liabilities and out-of-pocket costs and
expenses, including, without limitation, reasonable attorney's fees, incurred by
the Wometco Indemnitees based upon or arising from a breach of any covenant,
agreement, representation or warranty of U S WEST or Acquisition Sub contained
in this Agreement or any other document or instrument delivered pursuant hereto
(collectively, "Wometco Damages"). For purposes of determining the right of a
Wometco Indemnitee hereunder with respect to any representation and warranty in
Article IV that is qualified by reference to a material adverse effect on U S
WEST and/or its Subsidiaries, the Wometco Indemnitees shall be entitled to
indemnification hereunder if, without giving effect to such material adverse
effect qualification in such representation and warranty, such representation
and warranty has been breached.
(b) The right of the Wometco Indemnitees to indemnity for Wometco
Damages made under this Section 7.03 shall be subject to all of the following
limitations:
(i) No indemnification shall be required to be made under
this Section 7.03 (other than with respect to Section 4.10, as to which this
limitation shall not apply) until the aggregate amount of Wometco Damages
(together with claims hereunder and under Section 8.4(a) of the Atlanta Cable
Agreement) exceeds $2,000,000 (the "Basket"), provided that once such amount is
exceeded the Wometco Indemnitees shall be entitled to the full amount of Wometco
Damages in respect thereof without regard to the amount of the Basket, subject
to Section 7.03(b)(iii).
(ii) Wometco Indemnitees shall be entitled to indemnity
(other than with respect to Sections 4.10 and 5.03(a) as to which this
limitation shall not apply only as to which the Wometco Indemnitees have given U
S WEST written notice thereof within one year after the Closing Date; provided
that with respect to indemnification claims based on a breach of Section 4.10,
notice must be given within the applicable statute of limitations. Any written
notice delivered by the Wometco Indemnitees to U S WEST pursuant to this
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subparagraph (ii) shall set forth with specificity the basis of the claim for
Wometco Damages and a reasonable estimate of the amount thereof.
(iii) In no event shall the right of the Wometco Indemnitees
to indemnity for Wometco Damages (other than with respect to Section 4.10, as to
which this limitation shall not apply) hereunder and under Section 8.4 of the
Atlanta Cable Agreement exceed $15,000,000 in the aggregate. Without limiting
the generality of the foregoing, the Wometco Indemnitees understand and agree
that to the extent any payment for indemnity is made under Section 8.4 of the
Atlanta Cable Agreement, the amount available for indemnity hereunder shall be
reduced by a corresponding amount.
(iv) Notwithstanding anything to the contrary contained
herein, no Wometco Indemnitee shall have any claim for indemnification or
otherwise against U S WEST nor any of its Affiliates or any shareholder,
director, officer, employee or agent thereof, arising out of the consummation of
the transactions contemplated hereby without having received all necessary
consents of any Person, including any Governmental Authority.
(v) Anything in this Agreement or applicable law to the
contrary notwithstanding, it is understood and agreed by the Wometco Parties
that, other than with respect to U S WEST (but not including its officers,
directors, employees, agents or Affiliates) as expressly provided for in this
Section 7.03, U S WEST shall not have any obligation or liability to any Wometco
Indemnitee and the Wometco Parties hereby waive and release, and shall have no
recourse against, U S WEST, or any of its Affiliates or any shareholder,
director, officer, employee or agent thereof as a result of the breach of any
representation, warranty, covenant or agreement of U S WEST or Acquisition Sub
contained herein or otherwise arising out of or in connection with the
transaction contemplated hereby, other than for fraud, it being understood that
the remedies provided for in this Section 7.03 shall be the sole and exclusive
remedy for any such claims by any U S WEST Indemnitee for any such matters,
whether such claims are framed in contract, tort or otherwise.
(vi) Notwithstanding anything to the contrary provided for
herein, at such time as the Wometco Indemnitor first has the right to request a
resolution of its indemnification obligations pursuant to Section 5.09(g)
herein, the U S WEST Group has the right to request that the Wometco Indemnitor
and the U S WEST Group act in good faith to determine the present value of any
indemnification obligations of the U S WEST Group in respect of the
representations of the U S WEST Group in Section 4.10 hereof. If the U S WEST
Group and the Wometco Indemnitor are unable to resolve such issue within 90
days, the matter shall be referred to the Arbitrator. Upon the determination of
the present value of any such indemnification obligations, the U S WEST Group
shall have the right to make the payment of the indemnification obligations as
so determined, and upon such payment by the U S WEST Group to Peachtree (or upon
such determination if the present value of such indemnification obligations is
zero) the indemnity under this Section 7.03 shall terminate in all events with
respect to the representations of the U S WEST Group in Section 4.10 herein.
(c) CONDITIONS OF INDEMNIFICATION. The obligations and liabilities
of U S WEST under Section 7.03(a) hereof with respect to claims for Wometco
Damages ("Wometco Claims"), shall be subject to the following terms and
conditions:
(i) Peachtree will give U S WEST notice of any Wometco Claim
promptly and in any event within thirty (30) days after receiving notice, or
becoming aware, thereof.
(ii) After U S WEST receives notice of a Wometco Claim which
relates to an assertion of liability by a third party other than a Wometco
Indemnitee or related to a Wometco Indemnitee, U S WEST
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shall have the sole and exclusive right to defend and to control negotiations
toward resolution of such claim and, if litigation ensues, to defend the same
with counsel chosen by U S WEST, at U S WEST's expense, and the Wometco
Indemnitees shall extend reasonable cooperation in connection with such defense.
Wometco Indemnitee shall have the right to employ their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of the
Wometco Indemnitees unless U S WEST shall not have promptly employed counsel to
take charge of the defense of such action. U S WEST shall have the right, in
its sole discretion, to settle any claim for which indemnification has been
sought and is available hereunder; provided, however, that neither U S WEST, on
the one hand nor the Wometco Indemnitee on the other hand shall settle,
compromise or make any disposition of any third-party claim subject to the
indemnity hereunder which would or may result in liability to or impose any
obligation upon the other party (or parties affiliated or related to it) without
the written consent of the other party.
(iii) Notwithstanding anything in subparagraphs (i) and (ii)
of this Section 7.03(c), to the contrary, a failure by any party to meet the
time limits prescribed in such subparagraphs shall not affect the rights
provided to the parties in this Agreement, unless and only to the extent that
the rights of the party not required to meet such time limits are materially and
adversely affected by the failure to comply with such time limit.
ARTICLE VIII
TERMINATION
8.01 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by the mutual written consent of Wometco and U S WEST;
(b) by either Wometco or U S WEST (if the terminating party is not
in breach or default of its covenants, agreements or obligations hereunder) if
the Closing has not taken place on or before April 15, 1995, provided, however,
that if the Closing has not taken place on or before (1) April 15, 1995 because
the condition set forth in Section 6.02(e) is not satisfied by such date, this
Agreement may be extended by written notice of Wometco to a date not later than
July 15, 1995; or (2) April 15, 1995 because the conditions set forth on Section
6.01(d) has not been satisfied by such date, this Agreement may be extended by
written notice of U S WEST to a date not later than July 15, 1995;
(c) by U S WEST, if any of the conditions to the obligations of U S
WEST and Acquisition Sub set forth in Section 6.01 and 6.02 shall not have been
satisfied or waived by the date scheduled for the Closing under Section 2.03,
unless satisfaction has been frustrated or made impossible by an act or failure
to act of U S WEST or Acquisition Sub in breach or violation of their covenants,
agreements or obligations hereunder; or
(d) by Wometco, if the conditions to the obligations of Wometco and
Peachtree set forth in Section 6.01 and 6.03 shall not have been satisfied or
waived by the date scheduled for the Closing under Section 2.03, unless
satisfaction has been frustrated or made impossible by an act or failure to act
of Wometco or Peachtree in breach or violation of their covenants, agreements or
obligations hereunder.
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Notwithstanding the foregoing or anything contained herein to the
contrary, if on April 15, 1995 or July 15, 1995, as applicable, the Closing has
not occurred solely because any required notice period for Closing has not
lapsed, such date shall be extended until the lapse of such notice period.
8.02 EFFECT OF TERMINATION. In the event this Agreement is terminated
pursuant to Section 8.01, all further obligations of the parties hereunder shall
terminate except that the obligations set forth in Sections 5.03(a) and (b) and
Sections 9.01 and 9.02 shall survive; provided that, notwithstanding anything to
the contrary contained in this Agreement, if this Agreement is so terminated by
a party because either one or more of the conditions to such party's obligations
hereunder is not satisfied or the Agreement is otherwise not consummated, in
either case as a result of the other party's breach or failure to comply with
its covenants, agreements or obligations under this Agreement, the terminating
party's right to pursue all legal remedies for breach of contract or otherwise,
including without limitation, damages relating thereto, shall also survive such
termination unimpaired. Without limiting the foregoing, neither Wometco or
Peachtree, on the one hand, nor U S WEST or Acquisition Sub, on the other hand,
may rely on the failure of any condition precedent set forth in Article VI to be
satisfied if such failure was caused by such party's (or parties') failure to
act in good faith or to perform its obligations in accordance with the terms of
this Agreement or, to the extent relevant, the Atlanta Cable Agreement.
ARTICLE IX
MISCELLANEOUS
9.01 EXPENSES. Except as otherwise specified herein, each of the parties
shall pay all costs and expenses incurred or to be incurred by it in negotiating
and preparing this Agreement and in closing and carrying out the transactions
contemplated by this Agreement.
9.02 LEGAL COSTS. If any legal action or proceeding is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
9.03 AMENDMENTS; WAIVERS. This Agreement cannot be changed or terminated
orally and no waiver of compliance with any provision or condition hereof and no
consent provided for herein shall be effective unless evidenced by an instrument
in writing duly executed by the party hereto sought to be charged with such
waiver or consent. No waiver of any term or provision hereof shall be construed
as a further or continuing waiver of such term or provision or any other term or
provision. Any condition to the performance of any party hereto which may
legally be waived at or prior to the Closing may be waived in writing at any
time by the party or parties entitled to the benefit thereof.
9.04 ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties and supersedes any and all prior agreements,
memoranda, arrangements and understandings relating to the subject matter
hereof. Except for any instrument executed in connection herewith making
specific reference to this
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Agreement, no representation, warranty, promise, inducement or statement of
intention has been made by any party which is not contained in this Agreement,
and no party shall be bound by, or be liable for, any alleged representation,
promise, inducement or statement of intention not contained herein.
9.05 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement may not be assigned by any party without the
prior written consent of the other parties hereto. Nothing in this Agreement,
express or implied is intended to confer upon any Person, other than the parties
hereto any right or remedies of any nature whatsoever or by reason of this
Agreement, except for Sections 7.01, 7.02, 7.03 and 9.10 (which are intended to
be for the benefit of the Persons provided for therein, and may be enforced by
such Persons).
9.06 CONSTRUCTION; COUNTERPARTS. The Article and Section headings of
this Agreement are for convenience of reference only and do not form a part
hereof and do not in any way modify, interpret or construe the intentions of the
parties. The figures included in this Agreement setting thresholds and maximums
for the indemnification rights provided for herein were negotiated by the
parties hereto for the purpose of specifically defining the rights and
obligations of the parties with respect to such matters and are not intended to
constitute and shall not be construed to constitute, a standard for defining the
phrases "in all material respects," "Material Adverse Effect" or similar
phrasings used in this Agreement. This Agreement may be executed in one or more
counterparts, and all such counterparts shall constitute one and the same
instrument.
9.07 NOTICES. All notices and communications hereunder shall be in
writing and shall be deemed given to a party when delivered personally upon a
receipt of a transmittal confirmation if sent by telecopy or like transmission
and on the next Business Day when sent by Federal Express, Express Mail or
similar overnight courier service to the parties addressed as follows:
If to U S WEST: U S WEST, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Attention: Associate General Counsel
- Corporate and Commercial Law
Telephone: (303) 793-6500
Facsimile: (303) 793-6303
With a copy to: Weil Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attention: Dennis J. Block, Esq.
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
A-69
<PAGE>
If to Wometco, c/o Peachtree Cable Holdings, Ltd.
Peachtree or 201 Main Street
Associates: Fort Worth, Texas 76102
Attention: Mr. J. Taylor Crandall
Telephone: (817) 390-8507
Facsimile: (817) 338-2064
With copies to: Kelly, Hart & Hallman
201 Main Street
Suite 2500
Fort Worth, Texas 76102
Attention: Kevin G. Levy, Esq.
Telephone: (817) 332-2500
Facsimile: (817) 878-9285
and
Dow, Lohnes & Albertson
1255 Twenty-Third Street, N.W.
Washington, D.C. 20037
Attention: John T. Byrnes, Esq.
Telephone: (202) 857-2500
Facsimile: (202) 857-2900
Any party may change its address for the purpose of notice by giving notice in
accordance with the provisions of this Section 9.07.
9.08 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS, AND NOT THE LAW OF
CONFLICTS, OF THE STATE OF GEORGIA; PROVIDED THAT MATTERS OF CORPORATE LAW
RELATING TO THE MERGER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
9.09 FURTHER ASSURANCES. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use all reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated under this
Agreement.
9.10 PERSONAL LIABILITY. Except with respect to the parties hereto to
the extent and only to the extent expressly provided for herein, this Agreement
shall not create or be deemed to create or permit any personal right, liability
or obligation on the part of any direct or indirect stockholder of any party
hereto or any officer, director, employee, agent, representative of any party
hereto.
A-70
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
U S WEST, INC.
By: /s/ Thomas E. Pardun
-----------------------------------
Name: Thomas E. Pardun
Title: Authorized Representative
MULTIMEDIA CABLE, INC.
By: /s/ Thomas E. Pardun
-----------------------------------
Name: Thomas E. Pardun
Title: President
WOMETCO CABLE CORP.
By: /s/ Victor S. Falk
-----------------------------------
Name: Victor S. Falk
Title: Vice President
PEACHTREE CABLE HOLDINGS, LTD.
By: Peachtree Investors Limited Partnership,
General Partner
By: Peachtree Cable Associates, Ltd., General
Partner
By: Group Management, Inc., Manager and a
General Partner
By: /s/ W. Robert Cotham
-----------------------------------
Name: W. Robert Cotham
Title: Vice President
A-71
<PAGE>
PEACHTREE CABLE ASSOCIATES, LTD.
By: Group Management, Inc., Manager and a
General Partner
By: /s/ W. Robert Cotham
-----------------------------------
Name: W. Robert Cotham
Title: Vice President
A-72
<PAGE>
EXHIBIT 5
August 30, 1994
U S WEST, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Re: U S WEST Registration Statement on Form S-4
-------------------------------------------
Gentlemen and Ladies:
I have examined the Registration Statement on Form S-4 filed on August 30,
1994 (the "Registration Statement") by U S WEST, Inc. (the "Company"), with the
Securities and Exchange Commission (the "Commission") in connection with the
registration under the Securities Act of 1933, as amended, of shares of the
Company's common stock without par value (the "Securities"). I have examined
the Company's articles of incorporation and bylaws, as amended, and such other
documents, certificates and matters of fact as I have deemed necessary for
purposes of this opinion. I am familiar with the proceedings taken and proposed
to be taken by the Company in connection with the issue and sale of the
Securities.
Based upon the foregoing, it is my opinion that, subject to the receipt of
payment for the Securities, when the Securities have been issued and delivered
in accordance with the terms of the Registration Statement, such Securities
shall be legally issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and I further consent to the use of my name under the
caption "Legal Matters" in the prospectus forming a part of the Registration
Statement.
Very truly yours,
/s/ Stephen E. Brilz
Stephen E. Brilz
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
of U S WEST, Inc. (the "Company") on Form S-3 of our reports, which include an
explanatory paragraph regarding the Company's discontinuance of accounting for
the operations of U S WEST Communications, Inc. in accordance with Statement of
Accounting Standards No. 71, "Accounting for the Effects of Certain Types of
Regulation," in 1993, and a change in the method of accounting for
postretirement benefits other than pensions and other postemployment benefits in
1992, dated January 20, 1994, except for the last paragraph in Note 8, for which
the date is February 23, 1994, on our audits of the consolidated financial
statements and the consolidated financial statement schedules of U S WEST, Inc.,
as of December 31, 1993 and 1992, and for the three years ended December 31,
1993, 1992 and 1991. We also consent to the reference to our firm under the
caption "Experts."
/s/ Coopers & Lybrand L.L.P.
- ----------------------------
Denver, Colorado
September 21, 1994
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, U S WEST, Inc., a Colorado corporation (hereinafter referred to as
the "Company"), proposes to file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1933, as amended, a
Registration Statement with respect to an issue of common stock to be issued by
the Company to or in the name of the holders of Wometco Cable Corp. Stock with
respect to the merger to be effected pursuant to the Agreement and Plan of
Merger, dated as of July 15, 1994, among U S WEST, Inc., Multimedia Cable, Inc.,
Wometco Cable Corp., Peachtree Cable Holdings, Ltd., and Peachtree Cable
Associates, Ltd.; and
WHEREAS, each of the undersigned is an Officer or Director, or both, of the
Company as indicated below each signature;
NOW, THEREFORE, each of the undersigned constitutes and appoints JAMES T.
ANDERSON, BARBARA M. JAPHA, STEPHEN E. BRILZ, and CHARLES J. BURDICK, and each
of them, as attorneys for him and in his name, place, and stead, and in his
capacity as an Officer or Director of the Company, to execute and file such
Registration Statement, including the related prospectus, and thereafter to
execute and file any amended registration statement or statements and amended
prospectus or prospectuses or amendments or supplements to any of the foregoing,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary 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 executed this Power of
Attorney this 5th day of August, 1994.
/s/ Richard D. McCormick /s/ James M. Osterhoff
- ------------------------------ ------------------------------
Richard D. McCormick James M. Osterhoff
Chairman of the Board, Chief Executive Vice President and
Executive Officer and President Chief Financial Officer
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, U S WEST, Inc., a Colorado corporation (hereinafter referred to as
the "Company"), proposes to file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1933, as amended, a
Registration Statement with respect to an issue of common stock to be issued by
the Company to or in the name of the holders of Wometco Cable Corp. Stock with
respect to the merger to be effected pursuant to the Agreement and Plan of
Merger, dated as of July 15, 1994, among U S WEST, Inc., Multimedia Cable, Inc.,
Wometco Cable Corp., Peachtree Cable Holdings, Ltd., and Peachtree Cable
Associates, Ltd.; and
WHEREAS, each of the undersigned is a Director of the Company;
NOW, THEREFORE, each of the undersigned constitutes and appoints JAMES T.
ANDERSON, BARBARA M. JAPHA, STEPHEN E. BRILZ, and CHARLES J. BURDICK, and each
of them, as attorneys for him or her and in his or her name, place, and stead,
and in his or her capacity as a Director of the Company, to execute and file
such Registration Statement, including the related prospectus, and thereafter to
execute and file any amended registration statement or statements and amended
prospectus or prospectuses or amendments or supplements to any of the foregoing,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully, to all intents and purposes, as he or
she 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 executed this Power of
Attorney this 5th day of August, 1994.
/s/ Richard Cheney /s/ Allen F. Jacobson
- ---------------------------- --------------------------------
Richard Cheney Allen F. Jacobson
/s/ Remedios Diaz-Oliver /s/ Marilyn Carlson Nelson
- ---------------------------- --------------------------------
Remedios Diaz-Oliver Marilyn Carlson Nelson
/s/ Grant A. Dove /s/ Frank Popoff
- ---------------------------- --------------------------------
Grant A.Dove Frank Popoff
<PAGE>
/s/ Allan D. Gilmour /s/ Glen L. Ryland
- ---------------------------- --------------------------------
Allan D. Gilmour Glen L. Ryland
/s/ Pierson M. Grieve /s/ Jerry O. Williams
- ---------------------------- --------------------------------
Pierson M. Grieve Jerry O. Williams
/s/ Shirley M. Hufstedler /s/ Daniel Yankelovich
- ---------------------------- --------------------------------
Shirley M. Hufstedler Daniel Yankelovich
