SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
MediaOne Group, Inc.
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(Name of Issuer)
Common Stock, $.01 par value per share
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(Title of Class of Securities)
58440J104
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(CUSIP Number)
Amos B. Hostetter, Jr.
The Pilot House
Lewis Wharf
Boston, Massachusetts 02110
(617) 854-3000
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 22, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g),
check the following box. [X]
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Section 240.13d-7(b)
for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject
class of securities, and for any subsequent amendment containing
information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
SCHEDULE 13D
CUSIP No. 58440J104
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1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
Amos B. Hostetter, Jr.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) ( )
(b) (X)
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3. SEC USE ONLY
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4. SOURCE OF FUNDS (See Instructions)
PF/00 (See Item 3)
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) ( )
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7. SOLE VOTING POWER (See Item 5)
NUMBER OF
SHARES 54,363,719
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BENEFICIALLY 8. SHARED VOTING POWER (See Item 5)
OWNED BY
EACH 1,831,497
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REPORTING 9. SOLE DISPOSITIVE POWER (See Item 5)
PERSON
WITH 54,363,719
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10. SHARED DISPOSITIVE POWER (See Item 5)
1,956,472
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
56,320,191
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12. CHECK IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES
(See Instructions) ( )
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
9.33%
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14. TYPE OF REPORTING PERSON (See Instructions)
IN
Note: This Schedule 13D amends a Statement on Schedule 13G filed on
behalf of Amos B. Hostetter, Jr. relating to the Common Stock
(as defined herein) and is being filed to reflect that Mr.
Hostetter currently holds the Common Stock with a purpose or
effect of changing or influencing control of the issuer or in
connection with or as a participant in a transaction having
that purpose or effect.
Item 1. Security and Issuer.
The title of the class of equity securities to which the Schedule 13D
relates is the Common Stock, par value $.01 per share (together with the
Preferred Stock Purchase Rights associated therewith, the "Common Stock")
of MediaOne Group, Inc., a Delaware corporation (the "Company"), 188
Inverness Drive West, Englewood, Colorado 80112.
Item 2. Identity and Background.
(a) This Schedule 13D is filed on behalf of Amos B. Hostetter, Jr.
(b) Mr. Hostetter's business address is The Pilot House, Lewis Wharf,
Boston, Massachusetts 02110.
(c) Mr. Hostetter is a principal of Pilot House Associates, LLC, a
family investment office. Pilot House Associates, LLC is located at The
Pilot House, Lewis Wharf, Boston, Massachusetts 02110.
(d) and (e) During the past five years, Mr. Hostetter has not (i)
been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction which resulted in
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating any activities subject to, federal or state
securities laws or finding any violation of such laws.
(f) Mr. Hostetter is a citizen of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
Mr. Hostetter became the beneficial owner of the shares of Common
Stock held by him as a result of the "separation" of the Company and U.S.
West, Inc., effective June 12, 1998.
Item 4. Purpose of the Transaction.
In response to the public announcement by the Company and Comcast
Corporation on March 22, 1999 that they had entered into a definitive
merger agreement (the "Comcast Agreement"), on March 25, 1999 Mr. Hostetter
delivered a letter to the Company, a copy of which is attached as Exhibit B
to this Schedule 13D and which is incorporated herein by reference. Mr.
Hostetter noted in his letter his belief that the consummation of the
proposed transaction would result in the Roberts family, with less than a
1% economic interest in the combined entities, controlling more than 80% of
all voting power and further noted the apparent failure of the Company to
secure any protections in the Comcast Agreement to assure shareholders of
the Company participation in any subsequent sale of control. In view of the
foregoing, Mr. Hostetter requested that the board of directors of the
Company (the "Board") agree on behalf of the Company that any and all
standstill restrictions in the Shareholders Agreement dated February 26,
1996 to which Mr. Hostetter is a party (the "Shareholders Agreement") be
declared null and void and of no further effect, in order to permit Mr.
Hostetter to publicly express his view that the proposed sale of control to
Comcast is inadvisable and to work with others to develop a superior
proposal.
By letter dated March 31, 1999, a copy of which is attached as
Exhibit C to this Schedule 13D and which letter is incorporated herein by
reference, Mr. Eichler on behalf of the Company agreed to waive Section
3.5(a)(ii)(B) of the Shareholders Agreement through May 6, 1999. Mr.
Eichler stated that this waiver allows Mr. Hostetter (or a group including
Mr. Hostetter) to make a Superior Proposal (as defined in the Comcast
Agreement) and that the Company has no objection to Mr. Hostetter speaking
with third parties about participating in any Superior Proposal he is
developing.
By letter dated April 1, 1999, a copy of which is attached as Exhibit
D to this Schedule 13D and which letter is incorporated herein by
reference, Mr. Hostetter asked the Company to acknowledge that his
obligation of confidentiality to the Company is subject to Mr. Hostetter's
obligations under the federal securities laws.
By letter dated April 1, 1999, a copy of which is attached as Exhibit
E to this Schedule 13D and which letter is incorporated herein by
reference, Mr. Eichler on behalf of the Company acknowledged that Mr.
Hostetter may be required under the federal securities laws to make a
public statement should he develop a firm plan or proposal.
Since April 1, 1999, Mr. Hostetter has engaged in conversations with
various third parties, including AT&T Corp. ("AT&T"), as to the possibility
of making a Superior Proposal. At a meeting on April 21, 1999 and in
subsequent discussions, Mr. Hostetter and representatives of AT&T discussed
the terms of a possible alternative proposal to the Comcast Agreement,
including Mr. Hostetter's possible role with respect to the resulting
entity, and determined to present such proposal (the "Proposal") to the
Board.
AT&T has submitted the Proposal to the Board and Mr. Hostetter has
determined that the Proposal is a Superior Proposal to the Comcast
Agreement for the reasons set forth below. Mr. Hostetter currently intends
to vote his shares in favor of the Proposal and against the Comcast
Agreement so long as the Proposal remains outstanding.
(1) The value of the Proposal is superior to the value of the Comcast
common stock to be delivered to the Company's stockholders
pursuant to the Comcast Agreement (the "Comcast Shares") by
approximately $13 per share, based on the closing prices of AT&T
common stock and Comcast common stock on April 22, 1999.
(2) The cash component of the Proposal provides a buffer against the
risk of a decline in the value of the stock to be received by the
Company's stockholders (the "AT&T Shares").
(3) The Proposal includes an adjustment mechanism under which the
amount of cash to be received by the Company's stockholders would
increase in the event of decline of up to 10% in the price of the
AT&T Shares.
(4) The AT&T Shares are voting stock, while the Comcast Shares are
non-voting.
(5) AT&T has historically paid a cash dividend while the holders of
the Comcast Special Class A shares to be issued pursuant to the
Comcast Agreement have not historically received a cash dividend.
(6) Mr. Hostetter believes that the future prospects of a combination
of the Company and AT&T are excellent, and is demonstrably
superior to the prospects of a combination between the Company and
Comcast. For this reason, Mr. Hostetter believes that the future
value of the AT&T Shares is greater than the future value of the
Comcast Shares.
(7) AT&T has stated that it is confident it can obtain all of the
required regulatory approvals in a timely manner and will take all
actions necessary to obtain such approvals. Accordingly, Mr.
Hostetter believes there is a high probability that the Proposal
would be completed.
(8) Mr. Hostetter believes that AT&T possesses superior financial,
technical, training and customer service resources, and is
uniquely positioned to deliver on the promise of "Broadband". He
therefore believes that the Company's customers, host communities
and employees will benefit from a merger of the Company and AT&T.
(9) Upon completion of a merger with AT&T, Mr. Hostetter would become
non-executive chairman of AT&T's Broadband and Internet Services
business unit and join the board of directors of AT&T. In these
capacities, Mr. Hostetter believes that he will be able to
facilitate the integration of the Company's cable operations with
those of AT&T, further enhance the operations of AT&T's Broadband
and Internet Services unit, enrich its services and add to the
value of the AT&T Shares.
Although he has no current plans to do so (other than as disclosed in
this Schedule 13D), from time to time Mr. Hostetter may acquire additional
shares of Common Stock (including without limitation through the conversion
of the Company's Series D Preferred Stock held by Mr. Hostetter as
described herein) or dispose of some or all of the shares of Common Stock
beneficially owned by him.
With respect to the Company and except as set forth or incorporated by
reference in this Schedule 13D, Mr. Hostetter currently has no plans or
proposals which would relate to or which would result in:
(a) the acquisition by any person of additional securities of the
Company or the disposition of securities of the Company;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its
subsidiaries;
(c) a sale or transfer of a material amount of assets of the Company or
any of its subsidiaries;
(d) any change in the present board of directors or management of the
Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board of directors;
(e) any material change in the present capitalization or dividend
policy of the Company;
(f) any other material change in the Company's business or corporate
structure;
(g) changes in the Company's certificate of incorporation, by-laws or
instruments corresponding thereto or other actions which may impede the
acquisition of control of the Company by any person;
(h) causing a class of securities of the Company to be delisted from a
national securities exchange or to cease to be authorized to be quoted in
an inter-dealer quotation system of a registered national securities
association;
(i) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934; or
(j) any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) and (b) Mr. Hostetter beneficially owns 56,320,191 shares of Common
Stock (including 8,694,047 shares issuable upon conversion of 4,389,781
shares of the Company's Series D Preferred Stock), representing
approximately 9.33% of the total number of shares of Common Stock
outstanding as of February 26, 1999 as set forth in the Form 10-K filed by
the Company for the year ended December 31, 1998. Such shares of Common
Stock include (i) 61,690 shares which are beneficially owned by Barbara W.
Hostetter, Mr. Hostetter's wife (Mrs. Hostetter's powers to vote or dispose
are treated as if they belonged to Mr. Hostetter for purposes of this
Schedule 13D), (ii) 1,681,964 shares which are beneficially owned in trusts
or as custodian for members of Mr. Hostetter's family and (iii) 9,562,671
shares beneficially owned by a charitable foundation of which Mr. and Mrs.
Hostetter are trustees.
(c) Mr. Hostetter has not effected any transaction in the shares of
Common Stock during the past sixty days.
(d) Mr. Hostetter is not aware of any other person who may be deemed to
have the right to receive or direct the receipt of the dividends from, or
the proceeds from the sale of, such shares.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
Mr. Hostetter is a party to the Shareholders Agreement which prohibits
Mr. Hostetter, without the prior written consent of the Board, from taking
certain actions including (i) agreeing to acquire or making any proposals
to acquire any equity securities of the Company, (ii) proposing to enter
into a merger or other business combination involving the Company, (iii)
participating in the any solicitation of proxies or consents, or seeking to
advise or influence any person with respect to the voting of any voting
securities of the Company, (iv) forming or joining a group for the purpose
of acquiring or voting of any equity securities of the Company, (v) seeking
to control or influence in any public forum the management or policies of
the Company, (vi) disclosing any plan or arrangement inconsistent with the
foregoing, (vii) assisting or encouraging any person with respect to any of
the foregoing, or (viii) taking any action which might require the Company
to make a public announcement regarding the possibility of a transaction
between Mr. Hostetter and the Company. The Shareholders Agreement is
attached as Exhibit A to this Schedule 13D and is incorporated herein by
reference. The Shareholders Agreement has been amended by a series of
letters between Mr. Hostetter and the Company. See Item 4.
Except as set forth or incorporated by reference in the Schedule 13D,
Mr. Hostetter does not have any contracts, arrangements, understandings or
relationships (legal or otherwise) with any person with respect to any
securities of the Company, including, but not limited to the transfer or
voting of any of such securities, finder's fees, joint ventures, loan or
option agreements, puts or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit A: Shareholders Agreement dated as of February
27, 1996 by and between the Company and Amos
Hostetter
Exhibit B: Letter dated March 25, 1999 from Amos Hostetter
to the Board of Directors of the Company
Exhibit C: Letter dated March 31, 1999 from Frank M.
Eichler, Executive Vice President - Law and
Public Policy, General Counsel and Secretary
of the Company, to Amos Hostetter
Exhibit D: Letter dated April 1, 1999 from Amos Hostetter
to Frank M. Eichler, Executive Vice President - Law
and Public Policy, General Counsel and Secretary
of the Company
Exhibit E: Letter dated April 1, 1999 from Frank M.
Eichler, Executive Vice President - Law and
Public Policy, General Counsel and Secretary
of the Company, to Amos Hostetter
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true,
complete and correct.
Dated: April 22, 1999
/s/ Amos B. Hostetter, Jr.
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Amos B. Hostetter, Jr.
EXHIBIT INDEX
Exhibit Description
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A Shareholders Agreement dated as of February 27, 1996 by and
between the Company and Amos Hostetter
B Letter dated March 25, 1999 from Amos Hostetter to the Board of
Directors of the Company
C Letter dated March 31, 1999 from Frank M. Eichler, Executive Vice
President - Law and Public Policy, General Counsel and Secretary
of the Company, to Amos Hostetter
D Letter dated April 1, 1999 from Amos Hostetter to Frank M.
Eichler, Executive Vice President - Law and Public Policy, General
Counsel and Secretary of the Company
E Letter dated April 1, 1999 from Frank M. Eichler, Executive Vice
President - Law and Public Policy, General Counsel and Secretary
of the Company, to Amos Hostetter
Exhibit A
STOCKHOLDERS' AGREEMENT
AGREEMENT, dated as of February 27, 1996, among Amos B.
Hostetter, Jr. ("Hostetter"), the Amos B. Hostetter, Jr. 1989 Trust (the
"Hostetter Trust"), Timothy P. Neher ("Neher"), Corporate Advisors, L.P., a
Delaware limited partnership ("Corporate Advisors"), the stockholders set
forth on Schedule A-1 (collectively, the "Boston Ventures Stockholders"),
the stockholders set forth on Schedule A-2 (collectively, the "Other
Stockholders"), and U S WEST, INC., a Delaware corporation ("Acquiror").
Hostetter, the Hostetter Trust, Neher, the Boston Ventures Stockholders,
and the Other Stockholders sometimes are referred to herein collectively as
the "Stockholders" and individually as a "Stockholder."
W I T N E S S E T H:
WHEREAS, each of the Stockholders is the beneficial and record
owner of the shares of capital stock of CONTINENTAL CABLEVISION, INC., a
Delaware corporation (the "Company"), set forth opposite each such
Stockholder's name on Schedule B-1;
WHEREAS, Corporate Advisors possesses certain rights with respect
to the shares of capital stock of the Company owned by the entities listed
on Schedule A-3 (the "CP Entities");
WHEREAS, concurrently with the execution of this Agreement,
Acquiror and the Company are entering into an Agreement and Plan of Merger
(the "Merger Agreement") pursuant to which the Company will be merged with
and into Acquiror (the "Merger"), with Acquiror continuing as the Surviving
Corporation; and
WHEREAS, in order to induce Acquiror to enter into the Merger
Agreement, the Stockholders and Corporate Advisors wish to make certain
representations, warranties, covenants and agreements in connection with
the merger.
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Capitalized terms used herein but not
otherwise defined herein shall have the respective meanings ascribed
thereto in the Merger Agreement and the following terms shall have the
following meanings:
"beneficially own" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
"Control" shall mean, as to any person, the power to direct or
cause the direction of the management and policies of such person, whether
through the ownership of voting securities, by contract or otherwise. The
term "Controlling Person" shall have a correlative meaning.
"CP Shares" shall mean the shares of Company Preferred Stock
owned by the CP Entities set forth on Schedule B-2.
"Equity Securities" shall have the meaning set forth in Rule 405
under the Securities Act.
"Permitted Assignee" shall mean (i) with respect to Hostetter and
the Hostetter Trust, (w) Hostetter, (x) Hostetter's lineal descendants, (y)
a trust for the benefit of, the estate of, executors, personal
representatives, administrators, guardians or conservators of, any of the
individuals referred to in the foregoing clauses (w) and (x) (but only in
their capacity as such) and (z) charitable trusts and charitable
foundations formed by Hostetter (including, without limitation, the
Hostetter Foundation); (ii) with respect to Neher, (w) Neher, (x) Neher's
lineal descendants, (y) a trust for the benefit of, the estate of,
executors, personal representatives, administrators, guardians or
conservators of, any of the individuals referred to in the foregoing
clauses (w) and (x) (but only in their capacity as such) and (z) charitable
trusts and charitable foundations formed by Neher and (iii) with respect to
the CP Entities, the Boston Ventures Stockholders and the Other
Stockholders, (x) any Person Controlled by such Stockholder or CP Entity
and (y) its respective partners, members, stockholders or other holders of
equity interests in such Stockholder or CP Entity.
"Representatives" shall have the meaning set forth in Section
3.4.
"Restricted Stockholder" shall mean any Stockholder that,
individually or together with its Affiliates, beneficially owns, or is a
member of a "group" (within the meaning of Section 13(d)(3) of the Exchange
Act) that beneficially owns, 5% or more of Media Stock.
"Stockholder Disclosure Letter" shall have the meaning set forth
in Section 2.1.
"Voting Securities" shall have the meaning set forth in Rule 405
under the Securities Act.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
2.1 Representations and Warranties of the Stockholders. Each
Stockholder represents and warrants, severally but not jointly, to Acquiror
as follows:
(a) Ownership of Company Shares. Except as disclosed in Section
2.1 (a) of the letter from the Stockholders to Acquiror, dated the date
hereof (the "Stockholder Disclosure Letter"), such Stockholder is the
beneficial owner of the shares of Company Capital Stock set forth opposite
such Stockholder's name on Schedule B-1, free and clear of all liens,
claims, charges, security interests or other encumbrances and, except for
this Agreement and the Merger Agreement, there are no options, warrants or
other rights, agreements, arrangements or commitments of any character to
which such Stockholder is a party relating to the pledge, disposition or
voting of any shares of capital stock of the Company or any of its
Subsidiaries that are owned by such Stockholder, and there are no voting
trusts or voting agreements with respect to such shares. The shares of
Company Capital Stock set forth opposite such Stockholder's name on
Schedule B-1 constitute all of the outstanding shares of capital stock of
the Company owned beneficially or of record by such Stockholder and such
Stockholder does not have any options, warrants or other rights to acquire
any additional shares of capital stock of the Company or any security
exercisable or exchangeable for, or convertible into, shares of capital
stock of the Company.
(b) Authority to Execute and Perform Agreements. Such
Stockholder has the full legal right and power and all authority required
to enter into, execute and deliver this Agreement and to perform fully such
Stockholder's obligations hereunder. The execution and delivery of this
Agreement by such Stockholder have been duly authorized by all requisite
organizational action, if any, on the part of such Stockholder. This
Agreement has been duly executed and delivered and constitutes the legal,
valid and binding obligation of such Stockholder enforceable against such
Stockholder in accordance with its terms, except as the enforceability may
be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or similar laws now or hereafter in effect generally
affecting creditors' rights or by general principles of equity, regardless
of whether such enforceability is considered in a proceeding in equity or
at law.
(c) No Conflicts, Consents. (i) Except as set forth in Section
2.1(c) of the Stockholder Disclosure Letter, the execution and delivery by
such Stockholder of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, conflict with or result in any
violation of or default (with or without notice or lapse of time, or both)
under (A) any contract, agreement or other binding arrangement to which
such Stockholder is a party or (B) any judgment, order, writ, injunction,
or decree of any court, governmental body, administrative agency or
arbitrator applicable to such Stockholder.
(ii) Except as set forth in Section 2.1(c) of the Stockholder
Disclosure Letter, no consents, approvals or authorizations of, or notices
or filings with, any Governmental Authority or any Third Party are required
to be obtained or made by such Stockholder in connection with the execution
and delivery by such Stockholder of this Agreement and the consummation of
the transactions contemplated hereby.
(d) Ownership of Acquiror Common Stock. As of the date hereof,
except as disclosed in Section 2.1(d) of the Stockholder Disclosure Letter
or provided for in this Agreement, (i) such Stockholder does not, and, to
its best knowledge, its Affiliates do not, beneficially own, directly or
indirectly, shares of Communications Stock or Media Stock (or securities
convertible into or exchangeable for any shares of Communications Stock or
Media Stock) and (ii) such Stockholder is not, and, to its best knowledge,
its Affiliates are not, parties to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of, shares of Communications Stock or Media Stock (or securities
convertible into or exchangeable for any shares of Communications Stock or
Media Stock).
(e) Information Supplied. None of the information specifically
supplied or to be supplied by such Stockholder with respect to such
Stockholder for inclusion or incorporation by reference in (i) the Form S-4
will, at the time the Form S-4 is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and (ii)
the Proxy Statement will, at the date the Proxy Statement is first mailed
to Stockholders and at the time of the Stockholders' Meeting, 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.
2.2 Authority of Corporate Advisors to Act.
(a) Corporate Advisors represents and warrants that it has full
power and authority: (i) pursuant to the provisions of an Investment
Management Agreement dated as of June 17, 1988, between the State Board of
Administration of Florida (the "SBA") and Corporate Advisors, as amended
(the "Management Agreement"), to act on behalf of the SBA in connection
with the transactions contemplated by this Agreement, (ii) pursuant to the
provisions of an Amended and Restated Limited Partnership Agreement dated
as of June 20, 1988, to act on behalf of each of Corporate Partners, L.P.
and Corporate Offshore Partners, L.P. in connection with the transactions
contemplated by this Agreement, and (iii) pursuant to the provisions of a
Co-Investment Agreement dated as of April 27, 1992 (the "Co-Investment
Agreement") to control the voting and, except as set forth in section 2.2
of the letter from Corporate Advisors to Acquiror, dated the date hereof
(the "Corporate Partners Disclosure Letter"), the disposition of the
securities of the Company owned by Vencap Holdings (1992) Pte Ltd. and
Contcable Co-Investors, L.P. (the "Co-Investors") identified on Schedule B-
2 hereto.
(b) Corporate Advisors also represents and warrants that it has
been granted irrevocable proxies to vote all shares of Company Preferred
Stock indicated as owned by the SBA and the Co-Investors on Schedule B-2
hereto as well as any shares of Company Common Stock issued upon the
conversion or redemption of such shares of Company Preferred Stock and all
other equity securities of the Company having voting rights obtained by it
pursuant to ownership of the shares of Company Preferred Stock.
ARTICLE III
COVENANTS
3.1 No Disposition or Acquisition of Shares. Subject to Section
3.5 hereof, each of the Stockholders agrees that, except as set forth in
Section 3.1 of the Stockholder Disclosure Letter, such Stockholder shall
not, and, except as set forth in Section 3.1 of the Corporate Partners
Disclosure Letter, Corporate Advisors agrees, with respect to the CP
Shares, to cause the CP Entities not to, sell, transfer, pledge,
hypothecate, encumber or otherwise dispose of (except upon such
Stockholder's death), or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, pledge,
hypothecation, encumbrance or other disposition of, any of the shares of
Company Capital Stock set forth opposite such Stockholder's name on
Schedule B-1 or the CP Shares, as applicable; provided, however, that such
Stockholder or CP Entity shall have the right to transfer such shares to a
Permitted Assignee if such Permitted Assignee becomes a party to this
Agreement and agrees to be bound by the terms hereof. Each Stockholder and
Corporate Advisors agrees that the certificates representing the shares of
Company Capital Stock owned by such Stockholder or the CP Entities, as
applicable, shall bear a legend indicating that such shares are subject to
this Agreement, which legend may be removed upon termination of this
Agreement. Except as specifically set forth herein, each Stockholder and
Corporate Advisors agrees, with respect to the CP Shares to cause the CP
Entity, not to exchange or convert any shares of Class B Comon Stock for or
into shares of Class A Common Stock. Each Stockholder agrees that, during
the Measurement Period (as such term is defined in the Certificate of
Designation or Series B Convertible Preferred Stock of the Company attached
as Exhibit E to the Merger Agreement), such Stockholder shall not, and
shall use its best efforts to cause its Affiliates not to, purchase or
otherwise acquire (including through any derivative transactions) any
shares of Company Capital Stock.
3.2 Voting Arrangements. Each of the Stockholders agrees, and
Corporate Advisors agrees with respect to the CP Shares, that, except
pursuant to this Agreement, it shall not grant any proxies, deposit any
shares of Company Capital Stock into a voting trust or enter into any
voting agreement with respect to any shares of Company Capital Stock now or
hereafter owned by such Stockholder or now owned by the CP Entities, as
applicable, other than proxies to vote such shares at any annual or special
meeting of stockholders of the Company on matters unrelated to the matters
set forth in Section 4.1 hereof.
3.3 Satisfaction of Conditions to the Merger. Each of the
Stockholders agrees and Corporate Advisors agrees with respect to the CP
Shares that such Stockholder, in its capacity as such, and Corporate
Advisors, acting on behalf of the CP Entities, shall assist and cooperate
with the parties to the Merger Agreement in doing all things necessary,
proper or advisable under the Applicable Laws as promptly as practicable to
consummate and make effective the Merger and the other transactions
contemplated by the Merger Agreement and the Transaction Documents and such
Stockholder and Corporate Advisors shall not take any action that would or
is reasonably likely to result in any of its representations and warranties
set forth in this Agreement being untrue as of the date made or in any of
the conditions set forth in Article VIII of the Merger Agreement not being
satisfied.
3.4 No Solicitation. Each of the Stockholders agrees that such
Stockholder shall not, and, except as set forth in Section 3.4 of the
Corporate Partners Disclosure Letter, Corporate Advisors agrees that it
shall not, nor shall it permit any of its Subsidiaries or Affiliates to,
nor shall it authorize or permit any of its officers, directors, employees,
agents, investment bankers, attorneys, financial advisors or other
representatives (collectively, "Representatives") to, directly or
indirectly, solicit, initiate or encourage (including by way of furnishing
information or assistance) or take other action to facilitate any inquiries
or the making of any proposal that constitutes or may reasonably be
expected to lead to, an Acquisition Proposal from any Third Party, or
engage in any discussions or negotiations relating thereto or in
furtherance thereof or accept or enter into any agreement with respect to
any Acquisition Proposal; provided, however, that, notwithstanding any
other provision of this Agreement, if such Stockholder or any
representative of Corporate Advisors is a member of the Board of Directors,
such Stockholder or representative may take any action in such Person's
capacity as a director that the Board of Directors would be permitted to
take in accordance with Section 7.10 of the Merger Agreement. Such
Stockholder and Corporate Advisors shall immediately cease and cause to be
terminated any existing solicitation, initiation, encouragement, activity,
discussion or negotiation with any parties conducted heretofore by such
Stockholder or Corporate Advisors, as the case may be, or any of its
Representatives with respect to any of the foregoing. Each such
Stockholder and Corporate Advisors shall promptly (but in any event within
24 hours thereafter) notify Acquiror orally and in writing of any
Acquisition Proposal or any inquiry which could lead to an Acquisition
Proposal, within 24 hours of the receipt thereof, including the identity of
the Third Party making any such Acquisition Proposal or inquiry and the
material terms and conditions of any Acquisition Proposal, and if such
inquiry or proposal is in writing, such Stockholder shall deliver to
Acquiror a copy of such inquiry or proposal.
3.5 Standstill; Transfer Restrictions.
(a) Each of Hostetter and the Hostetter Trust agrees that, (i)
from the date hereof until the Closing Date and (ii) from and after the
Closing Date for so long as such Stockholder shall be a Restricted
Stockholder, such Stockholder shall not, and shall use its best efforts to
cause its Affiliates not to, without the prior written consent of the board
of directors of Acquiror, (A) in any manner acquire, agree to acquire or
make any proposal to acquire, directly or indirectly, any Equity Securities
of Acquiror, or any rights or options to acquire such Equity Securities
(other than the shares of Media Stock and Series D Preferred Stock received
by such Stockholder in the Merger or acquisitions of Equity Securities of
Acquiror in aggregate amounts not to exceed $20 million), (B) propose to
enter into, directly or indirectly, a merger or other business combination
involving Acquiror or propose to purchase, directly or indirectly, a
material portion of the assets of Acquiror, (C) make, or in any way
participate, directly or indirectly, in, any "solicitation" of "proxies"
(as such terms are used in Regulation 14A under the Exchange Act) to vote
or consent or seek to advise or influence any Person with respect to the
voting of, or granting of a consent with respect to, any Voting Securities
of Acquiror, (D) form, join or in any way participate in a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) for the purpose of
acquiring, holding, voting or disposing of any Equity Securities of
Acquiror (other than any such group consisting solely of Hostetter, the
Hostetter Trust and their Permitted Assignees), (E) otherwise act, alone or
in concert with others, to seek to control or influence in any public
manner or public forum the management or policies of Acquiror; provided,
however, that the foregoing shall not limit the ability to vote any shares
of any Equity Securities of Acquiror, (F) disclose any intention, plan or
arrangement inconsistent with the foregoing, (G) advise, assist (including
by knowingly providing or arranging financing for that purpose) or
encourage any other Person in connection with any of the foregoing, (H)
request Acquiror or any agent of Acquiror, directly or indirectly, to amend
or waive any provision of this Section 3.5(a) (including this sentence) or
(I) take any action which might require Acquiror to make a public
announcement regarding the possibility of a transaction between such
Stockholder and Acquiror (including any of their respective Affiliates).
(b) Hostetter, the Hostetter Trust and, subject to Section 3.5
of the Corporate Partners Disclosure Letter, Corporate Advisors agree that,
from the date hereof until the Closing Date, such Stockholder and Corporate
Advisors shall not, and shall use its best efforts to cause its Affiliates
not to, without the prior written consent of the board of directors of
Acquiror, sell, transfer, pledge, encumber or otherwise dispose of, or
agree to sell, transfer, pledge, encumber or otherwise dispose of
(including through any "short sales"or derivative transactions), any Equity
Securities of Acquiror or any of its Subsidiaries or any rights or options
to acquire such Equity Securities.
(c) Each of Hostetter and the Hostetter Trust agrees that, from
and after the Closing Date, for so long as such Stockholder shall be a
restricted Stockholder, such Stockholder shall not, and shall use its best
efforts to cause its Affiliates not to, without the prior written consent
of the board of directors of Acquiror, sell, transfer, pledge, encumber or
otherwise dispose of (including through any "short sales" or derivative
transactions), any Equity Securities of Acquiror, or any rights or options
to acquire such Equity Securities, except (i) to the underwriters in
connection with an underwritten public offering of shares of such
securities on a firm commitment basis registered under the Securities Act
in accordance with the terms of the Registration Rights Agreement, pursuant
to which the sale of such securities is in a manner that will effect a
broad distribution, (ii) to any Permitted Assignee, provided that such
Permitted Assignee becomes a party to this Agreement and agrees to be bound
by the terms of this Section 3.5(c), (iii) to a Third Party in a
transaction that complies with the volume and manner of sale provisions
contained in Rule 144(e) and (f) as in effect on the date hereof under the
Securities Act, (iv) to any Third Party in a transaction or series of
related transactions (other than "short sales" or derivative transactions)
whenever occurring, provided that this clause (iv) shall be unavailable in
any case where such Stockholder sells more than 3% of any class or series
of Equity Securities of Acquiror to a Person or "group" (within the meaning
of Section 13(d)(3) of the Exchange Act), (v) a bona fide pledge of shares
of Equity Securities of Acquiror to a financial institution to secure
borrowings of such Stockholder as permitted by Applicable Laws, and (vi)
pursuant to the terms of any tender or exchange offer for Equity Securities
of Acquiror made in compliance with the applicable provisions of the
Exchange Act (but only so long as such Stockholder is at the time in
compliance with the provisions of section 3.5(a) hereof and such tender or
exchange offer does not involve any past violation of such provisions by
such Stockholder).
(d) Each of Hostetter and the Hostetter Trust agree that from
and after the Closing Date until the one-year anniversary thereof, such
Stockholder shall not sell, transfer, pledge, encumber or otherwise dispose
of (including through any "short-sales" or derivative transactions) any
equity securities of Acquiror received by such Stockholder pursuant to the
Merger; provided, however, that such stockholder shall have the right to
transfer such shares to a Permitted Assignee if such Permitted Assignee
becomes a party to this Agreement and agrees to be bound by the terms
hereof.
(e) For the purposes of this Section 3.5, the term Acquiror
shall include any successor, by operation of law or otherwise, or any
Person that acquires or succeeds to all or substantially all of the assets
of the Media Group. In the event of any such succession or acquisition,
notwithstanding anything to the contrary contained herein, the provisions
of Section 3.5(a) hereof shall continue for a period of five years from the
consummation of such event.
3.6 Non-Competition.
(a) Except as otherwise provided in Section 3.6(b), (1)
Hostetter shall not, until the first anniversary of the date (the
"Termination Date") Hostetter ceases to be an employee of the Company or
Acquiror or their respective Subsidiaries or Affiliates or, if the
Termination Date is after December 31, 2001, the six month anniversary of
the Termination Date and (2) Neher shall not, until the later of (x) the
first anniversary of the date Neher ceases to be an employee of the Company
or Acquiror or their respective Subsidiaries or Affiliates and (y) December
31, 1998, directly or indirectly:
(i) engage in any activity in the telecommunications business
(which shall include, but not be limited to, the provision of video, voice
and data services), directly or indirectly (whether as an employee,
officer, director, agent, consultant, proprietor, partner, principal
stockholder or otherwise), other than as required for the performance of
his employment by the Company or by a Subsidiary. For the purposes of this
Section 3.6, the telecommunications business shall include the acquisition
of existing telecommunications systems and the obtaining of franchises (or
the renewal of existing franchises) for the construction and operation of
telecommunications systems to provide voice, data and video services in
communities throughout the United States of America and in certain foreign
countries and the investment in and participation in the operating of other
telecommunications and cable programming ventures; or
(ii) engage in any action, activity or course of conduct which is
detrimental to the business or business reputation of the Company or any of
its Subsidiaries, including (A) soliciting, recruiting or hiring any
employees of the Company or any of its Subsidiaries and (B) soliciting or
encouraging any employee of the Company or any of its Subsidiaries to leave
the employment of the Company or any of its Subsidiaries and (C) disclosing
or furnishing to anyone any confidential information relating to the
Company or any of its Subsidiaries or otherwise using such confidential
information for its own benefit or the benefit of any other person.
(b) Nothing contained in Section 3.6(a) shall prohibit or
otherwise restrict Hostetter from acquiring or owning, directly or
indirectly, for investment or other legitimate business purposes not
intended to circumvent this Agreement, securities of any entity engaged,
directly or indirectly, in a business engaged in the telecommunications
business if either (i) such entity is a public entity and Hostetter (A) is
not a Controlling Person of, or a member of a group which Controls, such
entity and (B) owns, directly or indirectly, no more than 5% of any class
of Equity Securities of such entity or (ii) such entity is not a public
entity and Hostetter (A) is not a Controlling Person of, or a member of a
group that Controls, such entity and (B) owns, directly or indirectly, no
more than 10% of any class of Equity Securities of such entity.
(c) Hostetter and Neher acknowledge and agree that the covenants
and restrictions contained in this Section 3.6 are reasonable and that they
shall not in any way challenge the reasonableness or the enforceability of
this Section 3.6 or any covenant or restriction contained herein.
3.7 Conversion of Class B Common Stock. In the event the
Charter Amendment is not approved at the Initial Stockholders' Meeting,
then promptly thereafter, but in any event prior to the record date
established by the Company for the Additional Stockholders' Meeting,
Hostetter and the Hostetter Trust agree to convert a number of shares of
Class B Common Stock into Class A Common Stock in an amount equal to the
lesser of (i) all of their respective shares of Class B Common Stock or
(ii) that number of shares of Class B Common Stock such that Hostetter will
beneficially own at least a majority of the outstanding shares of Class A
Common Stock as of such record date. Hostetter and the Hostetter Trust
agree to comply with the provisions of Section 4.1 hereof with respect to
such shares including, without limitation, voting all of such shares of
Class B Common Stock in favor of the Charter Amendment. The number of
shares of Class B Common Stock to be converted by Hostetter and the
Hostetter Trust shall be reduced by the number of shares of Class A Common
Stock beneficially owned by Persons other than Hostetter for which an
irrevocable voting agreement or proxy has been submitted to Acquiror to
vote such shares in favor of the Charter Amendment and the Merger
Agreement.
ARTICLE IV
PROXY; CONVERSION; ELECTIONS; WAIVER OF RIGHTS
4.1 Proxy. Each Stockholder hereby agrees and Corporate
Advisors agrees with respect to the CP Shares that, at any meeting of the
stockholders of the Company, however called, including any Stockholders'
Meeting, and at every adjournment thereof, and in any action by written
consent of the stockholders of the Company, to (a) vote all of the shares
of Company Capital Stock then owned by such Stockholder of the CP Shares,
as applicable, in favor of the adoption of the Merger Agreement as in
effect on the date hereof (as such agreement may be amended (1) as
contemplated by Section 7.16(b) of the Merger Agreement or (2) with the
consent of such Stockholder or Corporate Advisors, as the case may be) and
each of the other transactions contemplated thereby and any action required
in furtherance thereof, (b) vote such shares in favor of adoption of the
Charter Amendment, (c) vote such shares against any action or agreement
that would result in a breach in any material respect of any covenant,
representation or warranty or any other obligation of the Company under the
Merger Agreement, and (d) vote such shares against any Acquisition Proposal
or any other action or agreement that, directly or indirectly, is
inconsistent with or that would, or is reasonably likely to, directly or
indirectly, impede, interfere with or attempt to discourage the Merger or
any other transaction contemplated by the Merger Agreement, including, but
not limited to (i) any extraordinary corporate transaction (other than the
Merger on the terms set forth in the Merger Agreement), such as a merger,
consolidation, business combination, reorganization, recapitalization or
liquidation involving the Company or any of its Subsidiaries, (ii) a sale
or transfer of a material amount of assets of the Company or any of its
Subsidiaries, or (iii) any material change in the Company's corporate
structure or business; provided, however, that, if such Stockholder or any
representative of Corporate Advisors is a member of the Board of Directors
of the Company, nothing herein shall be construed to obligate such
Stockholder or representative to act in such Stockholder's or
representative's capacity as a director in any manner which may conflict
with such Person's fiduciary duties as a director of the Company.
In furtherance of the foregoing, (i) each Stockholder hereby
appoints Acquiror and the proper officers of Acquiror, and each of them,
with full power of substitution in the premises, its proxies to vote all
such Stockholder's shares of Company Capital Stock at any meeting, general
or special, of the stockholders of the Company, and to execute one or more
written consents or other instruments from time to time in order to take
such action without the necessity of a meeting of the stockholders of the
Company, in accordance with the provisions of the preceding paragraph and
(ii) Acquiror hereby agrees to vote such shares or execute written consents
or other instruments in accordance with the provisions of the preceding
paragraph.
The proxy and power of attorney granted herein shall be
irrevocable during the term of this Agreement, shall be deemed to be
coupled with an interest and shall revoke all prior proxies granted by such
Stockholder. Such Stockholder shall not grant any proxy to any person
which conflicts with the proxy granted herein, and any attempt to do so
shall be void. The power of attorney granted herein is a durable power of
attorney and shall survive the disability or incompetence of such
Stockholder.
4.2 Conversion. Immediately prior to the Effective Time,
Corporate Advisors agrees to cause the conversion of all of the CP Shares
into shares of Company Common Stock.
4.3 Waiver of Appraisal Rights. Each Stockholder and Corporate
Advisors, with respect to the CP Shares, hereby waives its rights to
appraisal under Section 262 of the DGCL with respect to any shares of
Company Capital Stock owned by it or the CP Shares, as applicable, in
connection with the transactions contemplated by the Merger Agreement.
4.4 Waiver of Certain Rights. Each Stockholder hereby waives
and agrees not to assert any claims or rights it may have against any
director of the Company in respect of approval or adoption of the Merger
Agreement or the consummation of the Merger or the other transactions
contemplated thereby.
ARTICLE V
MISCELLANEOUS
5.1 Termination. This Agreement shall terminate upon the
earlier to occur of (i) the mutual consent of Acquiror, all of the
Stockholders and Corporate Advisors, (ii) the termination of the Merger
Agreement prior to the consummation of the Merger (except that if the
Merger Agreement is terminated pursuant to Section 9.1(h) thereof, the last
sentence of Section 3.1 of this Agreement shall not terminate), and (iii)
the tenth anniversary of the Closing Date.
5.2 Amendment. This Agreement may be amended only by a written
instrument executed by the parties or their respective successors or
assigns.
5.3 Notices. Notices, requests, permissions, waivers and other
communications hereunder shall be in writing and shall be deemed to have
been duly given if signed by the respective persons giving them (in the
case of any corporation the signature shall be by an officer thereof) and
delivered by hand, deposited in the United States mail (registered or
certified, return receipt requested), properly addressed and postage
prepaid, or delivered by telecopy:
If to Acquiror, to:
U S WEST, INC.
7800 East Orchard Road
Englewood, Colorado 80111
Telephone: (303) 793-6500
Telecopy: (303) 793-6654
Attention: General Counsel
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Telecopy: (212) 310-8007
Attention: Dennis J. Block, Esq.
If to Amos B. Hostetter, Jr., the Hostetter Trust
or to Timothy P. Neher, to:
c/o Continental Cablevision, Inc.
The Pilot House
Lewis Wharf
Boston, Massachusetts 02110
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Telephone: (617) 338-2800
Telecopy: (617) 338-2880
Attention: Patrick K. Miehe, Esq.
If to Corporate Advisors, the Boston Ventures Stockholders or to
the Other Stockholders, at such address as may be furnished to
Acquiror from time to time.
5.4 Counterparts. This Agreement may be executed in one or more
counterparts and each counterpart shall be deemed to be an original, but
all of which shall constitute one and the same original.
5.5 Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without
reference to choice of law principles, including all matters of
construction, validity and performance.
5.6 Severability; Enforcement. The invalidity of any portion
hereof shall not affect the validity, force or effect of the remaining
portions hereof. If it is ever held that any restriction hereunder is too
broad to permit enforcement of such restriction to its fullest extent, each
party agrees that a court of competent jurisdiction may enforce such
restriction to the maximum extent permitted by law, and each party hereby
consents and agrees that such scope may be judicially modified accordingly
in any proceeding brought to enforce such restriction. In furtherance of
the foregoing, if any court construes any of the provisions of Section 3.6,
or any part thereof, to be unreasonable because of the duration of such
provision or the geographic scope thereof, such court shall have the power
to reduce the duration or restrict the geographic scope of such provision
and to enforce such provision as so reduced or restricted.
5.7 Further Assurances. Each party hereto shall execute and
deliver such additional documents as may be necessary or desirable to
consummate the transactions contemplated by this Agreement.
5.8 Parties in Interest; Assignment. Neither this Agreement nor
any of the rights, interest or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties.
5.9 Entire Agreement. This Agreement and the Merger Agreement
and the Transaction Documents contain the entire understanding of the
parties hereto and thereto with respect to the subject matter contained
herein and therein, and supersede and cancel all prior agreements,
negotiations, correspondence, undertakings and communications of the
parties, oral or written, respecting such subject matter. There are no
restrictions, promises, representations, warranties, agreements or
undertakings of any party hereto or to the Merger Agreement or any of the
Transaction Documents with respect to the transactions contemplated by this
Agreement and the Merger Agreement and the Transaction Documents other than
those set forth herein or therein or made hereunder or thereunder.
5.10 Specific Performance. The parties hereto agree that the
remedy at law for any breach of this Agreement will be inadequate and that
any party by whom this Agreement is enforceable shall be entitled to
specific performance in addition to any other appropriate relief or remedy.
Such party may, in its sole discretion, apply to a court of competent
jurisdiction for specific performance or injunctive or such other relief as
such court may deem just and proper in order to enforce this Agreement or
prevent any violation hereof and, to the extent permitted by applicable
law, each party waives any objection to the imposition of such relief.
5.11 Headings; References. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. All
references herein to "Sections" or "Exhibits" shall be deemed to be
references to Articles or Sections hereof or Exhibits hereto unless
otherwise indicated.
IN WITNESS WHEREOF, each of the parties hereto had caused this
Agreement to be duly executed and delivered as of the day and year first
above written.
U S WEST, INC.
By:________________________________
Name:
Title:
__________________________________
Amos B. Hostetter, Jr.
THE AMOS B. HOSTETTER, JR. 1989 TRUST
By:________________________________
Name: Amos B. Hostetter, Jr.
Title: Trustee
By:________________________________
Name: Timothy P. Neher
Title: Trustee
___________________________________
Timothy P. Neher
SCHOONER CAPITAL CORPORATION
By:________________________________
Name:
Title:
BOSTON VENTURES LIMITED PARTNERSHIP III
By: BOSTON VENTURES COMPANY LIMITED
PARTNERSHIP III
By:________________________________
Name:
Title:
BOSTON VENTURES LIMITED PARTNERSHIP IIIA
By: BOSTON VENTURES COMPANY LIMITED
PARTNERSHIP III
By:________________________________
Name:
Title:
BOSTON VENTURES LIMITED PARTNERSHIP IV
By: BOSTON VENTURES COMPANY LIMITED
PARTNERSHIP IV
By:________________________________
Name:
Title:
BOSTON VENTURES LIMITED
PARTNERSHIP IVA
By: BOSTON VENTURES COMPANY LIMITED
PARTNERSHIP IV
By:________________________________
Name:
Title:
CORPORATE PARTNERS, L.P.
By: CORPORATE ADVISORS, L.P.
By: LFCP CORP.
By:________________________________
Name:
Title:
MELLON BANK, N.A., AS TRUSTEE FOR
FIRST PLAZA GROUP TRUST
By: CORPORATE ADVISORS, L.P.
By: LFCP CORP.
By:________________________________
Name:
Title:
VENCAP HOLDINGS (1992) PTE LTD
By: CORPORATE ADVISORS, L.P.
By: LFCP CORP.
By:________________________________
Name:
Title:
CORPORATE OFFSHORE PARTNERS, L.P.
By: CORPORATE ADVISORS, L.P.
By: LFCP CORP.
By:________________________________
Name:
Title:
CONTCABLE CO-INVESTORS, L.P.
By: CORPORATE ADVISORS, L.P.
By: LFCP CORP.
By:________________________________
Name:
Title:
THE STATE BOARD OF ADMINISTRATION
OF FLORIDA
By: CORPORATE ADVISORS, L.P.
By: LFCP CORP.
By:________________________________
Name:
Title:
CORPORATE ADVISORS, L.P.
By: LFCP CORP.
By:________________________________
Name: Jonathan Kagan
Title: President
Schedule A-1
Boston Ventures Limited Partnership III
Boston Ventures Limited Partnership IIIA
Boston Ventures Limited Partnership IV
Boston Ventures Limited Partnership IVA
Schedule A-2
Schooner Capital Corporation
Schedule A-3
Corporate Partners, L.P.
The State Board of Administration of Florida
Vencap Holdings (1992) Pte Ltd
Corporate Offshore Partners, L.P.
ContCable Co-Investors, L.P.
Schedule B-1
Stockholder Shares Class
----------- ------ -----
Amos B. Hostetter, Jr. 1,266,025 Class B Common Stock
The Amos B. Hostetter, Jr.
1989 Trust 42,843,550 Class B Common Stock
Timothy P. Neher 1,451,725 Class B Common Stock
Schooner Capital Corporation 5,558,700 Class B Common Stock
Boston Ventures Limited
Partnership III 3,034,525 Class B Common Stock
Boston Ventures Limited
Partnership IIIA 799,825 Class B Common Stock
Boston Ventures Limited
Partnership IV 2,381,725 Class B Common Stock
Boston Ventures Limited
Partnership IVA 1,298,000 Class B Common Stock
Schedule B-2
CP Entity CP Shares
--------- ---------
Corporate Partners, L.P. 728,953
The State Board of Administration
of Florida 76,084
Vencap Holdings (1992) Pte Ltd 71,428
Corporate Offshore Partners, L.P. 52,107
ContCable Co-Investors, L.P. 42,857
February 27, 1996
US WEST, Inc.
7800 East Orchard Road
Englewood, CO 80111
RE: Disclosure Letter to the Stockholders' Agreement
dated as of February 27, 1996
Ladies and Gentlemen:
This Disclosure Letter is delivered pursuant to the Stockholders'
Agreement dated as of February 27, 1996 (the "Stockholders' Agreement),
among Amos B. Hostetter, Jr. ("Hostetter"), the Amos B. Hostetter Jr. 1989
Trust, certain other stockholders of Continental Cablevision, Inc. (the
"Company") and US West, Inc. (the "Acquiror").
The captions, headings and organization of this Disclosure Letter
and any cross references herein to the Stockholders' Agreement are for
convenience of reference only and in no way define, limit or describe the
scope or intent of the matters set forth herein. Matters set forth herein
under any one or more captions or with respect to any particular references
to the Stockholders' Agreement are disclosed for all purposes under the
Stockholders' Agreement, whether or not express cross references are
provided.
Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Stockholders' Agreement.
Section 2.1. Ownership of Company Shares. Shares of capital
stock of the Company owned by Hostetter are subject to the following
agreements:
(a) Stock Liquidation Agreement dated as of March 6, 1989,
as amended as of September 28, 1990, replacing and restating the
Stock Acquisition Agreement made as of December 19, 1988 by and
among the Company, H. Irving Grousbeck, MD Co., Burr, Egan,
Deleage & Co., Roderick A. MacLeod and Amos B. Hostetter, Jr., as
amended;
(b) Stockholders' Agreement dated as of June 22, 1992 among
Amos B. Hostetter, Jr. and the Corporation Partners Investors;
and
(c) Stockholders' Agreement dated as of July 15, 1992 among
Amos B. Hostetter, Jr. and the Boston Ventures Investors.
Section 2.3. No Conflicts; Consents. No additional disclosures
required.
Section 2.4 Ownership of Acquiror Stock. No additional
disclosures required.
Section 3.1 No Disposition or Acquisition of Shares. No
additional disclosures required.
Very truly yours,
________________________________
Amos B. Hostetter, Jr.
THE AMOS B. HOSTETTER, JR.
1989 TRUST
By:_____________________________
Name: Amos B. Hostetter, Jr.
Title: Trustee
February 27, 1996
US WEST, Inc.
7800 East Orchard Road
Englewood, CO 80111
RE: Disclosure Letter to the Stockholders' Agreement
dated as of February 27, 1996
Ladies and Gentlemen:
This Disclosure Letter is delivered pursuant to the Stockholders'
Agreement dated as of February 27, 1996 (the "Stockholders' Agreement"),
among Schooner Capital Corporation ("Schooner"), certain other stockholders
of Continental Cablevision, Inc. (the "Company") and U S WEST, Inc. (the
"Acquiror").
The captions, headings and organization of this Disclosure Letter and
any cross references herein to the Stockholders' Agreement are for
convenience of reference only and in no way define, limit or describe the
scope or intent of the matters set forth herein. Matters set forth herein
under any one or more captions or with respect to any particular references
to the Stockholders' Agreement are disclosed for all purposes under the
Stockholders' Agreement, whether or not express cross references are
provided.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Stockholders' Agreement.
Section 2.1. Ownership of Company Shares. Pursuant to Revolving
Credit Agreement, dated as of March 1, 1988 (the "Credit Agreement"),
between Schooner and Citibank, N.A. ("Citibank"), Schooner has pledged to
Citibank all of its shares of Company Capital Stock as security for its
obligations thereunder. In addition, Schooner retains the right to make a
bona fide pledge of its shares of Company Capital Stock and any equity
securities of Acquiror to secure the indebtedness evidenced by the Credit
Agreement and any other indebtedness of Schooner and its Affiliates.
Section 2.3. No Conflicts; Consents. Under the Credit Agreement,
Schooner has agreed not to offer for redemption, exchange or
recapitalization, or agree to vote for any redemption, exchange or
recapitalization, involving any shares of Company Capital Stock, without
the prior written consent of Citibank. Since the Stockholders' Agreement
contemplates the merger of Continental with and into the Acquiror and, in
connection therewith, an exchange of shares of Company Capital Stock for
shares of stock of the Acquiror, and, furthermore, since Schooner agrees in
the Stockholders' Agreement to vote its shares of Company Capital Stock in
favor of such merger, the prior written consent of Citibank is required
under the terms of the Credit Agreement. Schooner has not yet obtained
such consent from Citibank.
Section 2.4. Ownership of Acquiror Common Stock. No additional
disclosures required.
Section 3.1. No Disposition or Acquisition of Shares. As disclosed
in Section 2.1 above, Schooner has pledged its shares of Company Capital
Stock to Citibank to secure Schooner's obligations under the Credit
Agreement. If an event of default shall occur under the Credit Agreement,
Citibank shall have the right to take title to such shares in its own name
or to sell, assign or otherwise dispose of such shares. In addition, the
Credit Agreement will, by its terms, terminate on June 1, 1996. At such
time, Schooner expects to enter into new financing arrangements with either
Citibank or another lender, pursuant to which Schooner anticipates pledging
all of its shares of Company Capital Stock to Citibank or such other lender
as security for such financing arrangements.
Very truly yours,
SCHOONER CAPITAL CORPORATION
By:_________________________________
Name:
Title:
Corporate Partners Disclosure Letter
Section 2.2 Authority of Corporate Advisors to Act.
Under the Co-Investment Agreement, if the continued ownership by
any Co-Investor of the Company securities would result in, or there is a
substantial likelihood that the continued ownership would result in, a
violation of law or a material conflict with a regulation promulgated by a
regulatory agency applicable to such Co-Investor, then such Co-Investor has
certain rights to dispose of such Company securities, first, to the other
Corporate Partners stockholder group entities if they so elect and, if such
entities do not so elect, to third parties who must agree to be bound by
the Co-Investment Agreement.
Under the Co-Investment Agreement, the Co-Investors also have rights
to offer Company securities to other Co-Investors and to the other
Corporate Partner stockholder group entities pro rata and, thereafter, to
transfer such Company securities to such Corporate Partner stockholder
group entities in accordance therewith (in which case, such Company
securities would become subject to the terms of the applicable agreement in
which Corporate Advisors is given control over such Company securities).
Section 3.1 No Disposition or Acquisition of Shares.
See disclosure under Section 2.2 - Authority of Corporate Advisors to
Act.
Section 3.4 No Solicitation.
Lazard may take any actions permitted by the Merger Agreement in
its capacity as financial advisor to the Company.
Section 3.5 Standstill; Transfer Restrictions.
(b) (1) Lazard Freres & Co. LLC ("Lazard") shall be
permitted to trade in any securities of Acquiror
or any of its Subsidiaries, as agent or fiduciary,
in the ordinary course of its brokerage or other
businesses (including money management business).
(2) The agreements contained herein shall not apply to
the partners of Lazard or any Lazard affiliated
entity other than Corporate Partners, Corporate
Offshore Partners or Corporate Advisors or Lazard
itself.
Exhibit B
[Pilot House Associates, LLC Letterhead]
March 25, 1999
The Board of Directors
MediaOne Group, Inc.
188 Inverness Drive West
Englewood, Colorado 80112
Ladies and Gentlemen:
It appears that the proposed acquisition of MediaOne by Comcast
will result in the Roberts family, with less than a 1% economic interest in
the combined companies, controlling more than 80% of all voting power.
Because MediaOne stockholders would give up voting stock for non-voting
stock in an entity controlled by the Roberts family, this transaction
constitutes a sale of control with the result that your duty is to maximize
the price for stockholders, who under the proposed transaction will lose
any further opportunity to realize a control premium for their shares.
As best I can determine, you have failed to secure any
protections to assure MediaOne stockholder participation in any subsequent
sale of control; those in control of Comcast could turn around after the
proposed merger and auction off their voting control of MediaOne or the
combined entity at a huge premium. If I am correct, there is nothing in
the proposed transaction to permit or assure MediaOne stockholders the
opportunity or right to participate pro rata in that subsequent sale.
In addition, the proposed sale of control at an uncollared value
has been advantaged prematurely and excessively by defensive deal
protections such as the no solicitation provisions and the $1.5 billion
termination fee payable to Comcast. These might have been sustainable as
post-auction measures if needed to preserve maximized value, but they are
entirely inappropriate as pre-auction measures, given their deterrent
effect on other offers and the dollar-for-dollar reduction in benefit to
stockholders if a topping offer were to be made.
I am advised that, as the Delaware Supreme Court stated in its
Revlon decision and reiterated in its Paramount/QVC ruling, once you took
steps to sell control of MediaOne and to protect that sale rather than to
maximize value for shareholders, all defensive measures became moot. Your
duty was and is to be especially active and diligent to get the best price
for MediaOne stockholders.
Accordingly, I request that the board of directors on behalf of
the Company agree that any and all standstill restrictions in the
Shareholders Agreement dated February 27, 1996 to which I am a party
(including Section 3.5 thereof) are now null and void and of no further
effect, and that the board on behalf of the Company consent to the waiver
of all such terms in order to permit me to publicly express my view that
this sale of control is inadvisable and work with others to develop a
superior proposal. I am prepared to enter into a confidentiality agreement
with the Company on terms no less favorable to the Company than those
previously agreed to by Comcast.
Although time is limited, I believe that you have a duty under
these circumstances to permit me to seek superior value and terms.
In light of the restrictions imposed on the Company by its
Acquisition Agreement with Comcast, and the importance of proceeding
quickly to formulate the precise terms of an alternative transaction, I
need your earliest response. Until I hear from you, it is my intention to
keep this communication to you confidential.
And as always, I am sure that we can continue to agree or
disagree while each being considerate of other points of view.
Very truly yours,
Amos B. Hostetter, Jr.
Exhibit C
[Media One Group Letterhead]
March 31, 1999
Amos B. Hostetter, Jr.
c/o Pilot House Associates, LLC
The Pilot House
Lewis Wharf
Boston, MA 02110
Dear Amos:
Thank you for your letter of today responding to our letter dated March 30,
1999.
As we stated on March 30, MediaOne Group agrees to waive Section
3.5(a)(ii)(B) of the February 27, 1996 Stockholders' Agreement through May
6, 1999. Waiver of this provision allows you (or a group including you) to
make a Superior Proposal. We have no objection to your speaking with third
parties about participating in any Superior Proposal you are developing.
This appears to us to address your current concerns and intentions, as
expressed in your letters.
Further, in your letter dated March 25, 1999, you indicated that you were
"prepared to enter into a confidentiality agreement with the Company on
terms no less favorable to the Company than those previously agreed to by
Comcast." By enclosing the confidentiality agreement with our previous
letter, our intent was only to respond to your offer. Since you are not
interested in obtaining any non-public information, we are comfortable with
removing this as a condition to the waiver of Section 3.5(a)(ii)(B) of the
Stockholders' Agreement.
We also acknowledge and accept your agreement not to make any public
announcement of your efforts to develop a Superior Proposal without the
Board's written consent, and to respond with "no comment" if a press
inquiry is made.
Please consider this letter to be an amendment to the Stockholders'
Agreement, dated as of February 27, 1996, and subject to the same
applicable law. Other than as modified by this letter, the remaining
provisions of such Stockholders' Agreement remain in effect. If
acceptable, please confirm by signing and returning a copy of the letter to
me.
Very truly yours,
Frank M. Eichler
Executive Vice President
Law and Public Policy
General Counsel and Secretary
Accepted and agreed to as of the date first written above:
____________________________
Amos B. Hostetter, Jr.
Exhibit D
[Pilot House Associates, LLC Letterhead]
April 1, 1999
BY FAX
Mr. Frank M. Eichler
Executive Vice President
Law and Public Policy
General Counsel and Secretary
MediaOne Group, Inc.
188 Inverness Drive West, Suite 500
Englewood, CO 80112-5209
Dear Frank:
Thank you for your prompt reply to my March 31 letter. I have
signed your March 31 response and a copy is included in this fax. Both
your March 30 letter and my March 31 letter acknowledge that my obligation
of confidentiality is subject to my obligations under the securities laws.
Please countersign below to clarify that the executed March 31 amendment
(page 1, last paragraph) is subject to my obligations under the federal
securities laws.
Very truly yours,
Amos B. Hostetter, Jr.
Enclosure
Accepted by MediaOne Group, Inc.
------------------------------------
Title:
Date:
Exhibit E
[Media One Group Letterhead]
April 1, 1999
Amos B. Hostetter, Jr.
c/o Pilot House Associates, LLC
The Pilot House
Lewis Wharf
Boston, MA 02110
Dear Amos:
Thank you for your letter of today accepting the terms of our letter dated
March 31, 1999. We acknowledge that you may be required under the federal
securities laws to make a public statement should you develop a firm plan
or proposal. In such event, we also accept your offer to use your best
efforts to give us advance notice on the timing and content of each such
public statement.
Very truly yours,
Frank M. Eichler
Executive Vice President
Law and Public Policy
General Counsel and Secretary
